Posted on 10/26/2010 9:19:14 AM PDT by Chunga85
The more banks foreclosed on homes, the more a little-known company in Florida called Lender Processing Services saw its revenue and stock price soar.
For a fee, the Jacksonville company would locate and assemble the documents necessary for a lender to foreclose on a borrower who defaulted on a mortgage. Working on behalf of the biggest names in the industry, including J.P. Morgan Chase, Bank of America and Citigroup, LPS says it handles more than half of all foreclosures in the country.
Now, amid reports of shoddy and possibly fraudulent paperwork, LPS as well as a handful of other document processors and law firms are coming under scrutiny for the criminal investigations into the foreclosure debacle.
Law enforcement authorities on both state and federal levels are probing whether individuals at these foreclosure companies and at the banks that hired them committed an array of possible crimes - mail and wire fraud, money laundering, conspiracy and racketeering. No charges have been filed.
(Excerpt) Read more at washingtonpost.com ...
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Mark P. Harmon has resigned as a director at the Plantation foreclosure processing company with ties to David J. Stern's law practice, as the Massachusetts Attorney General said it is investigating whether Harmon's firm illegally evicted tenants from repossessed homes in that state.
Harmon's resignation, announced by DJSP Enterprises Inc. on Monday, comes as the beleagured company said it is laying off another 198 employees, bringing the total to 300 within the past two weeks. Mortgage giants Fannie Mae and Freddie Mac, Stern's most prized clients, stopped referring foreclosures to his firm this month and Fannie has sent its legal consultants to review Stern's processes and operations.
Stern is the only major client of the publicly traded DJSP, one of the nation's largest foreclosure servicers with processing and title affiliates. It was created when Stern sold his law firm's non-legal operations to DJSP for $58 million.
Harmon's departure comes days after Stern himself, whose firm is under investigation by the Florida Attorney General, stepped down as DJSP's chairman. Stern continued on as DJSP's CEO, but president and Chief Operating Officer Richard Powers and Chief Financial Officer Howard S. Burnston voluntarily resigned at that time, according to a filing with the Securities and Exchange Commission.
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Birds of a feather...
This is just another distraction. If the borrower hadn’t DEFAULTED, this mess wouldn’t be an issue. People will do and say anything but admit that.
This is just another distraction. If the borrower hadn’t DEFAULTED, this mess wouldn’t be an issue. People will do and say anything but admit that.
NOTHING TO SEE HERE. PLEASE MOVE ALONG. JUST TECNICALITIES AND ‘DEAD BEATS”. MOVE ALONG.
The LAWYERS will feast on this. The GOVENMENT will look “compassionate”. Watch, Obama will “forgive” them and we will pay MORE in taxes because people DEFAULTED. DOn’t be fooled by this B.S.. CAPITALISM is a BAD. Being responsible is BAD. Be careful ... .
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LPS is fighting back against what it calls “misrepresentations” about the scope of its problems. It recently hired as consultants Tony Fratto, who was a spokesman for the George W. Bush administration, and Taylor Griffith, a former Treasury Department spokesman.
LPS spokeswoman Michelle Kersch on Monday said the company “is committed to providing authorities with any information that they need to better understand our business and the industry.” She declined to comment further.
...
(Communists don’tunderstand business.)
“The varying signature styles” resulted from a decision made by the manager “to allow an employee to sign an authorized employee’s name,” the company said in a statement on Oct. 4, adding that it had corrected the affected documents.
Chief executive Jeffrey S. Carbiener emphasized in a recent conference call with analysts that the company had found “isolated instances of errors.” There’s unfounded concern that a large percentage of transactions are invalid, Carbiener said. “That is just simply not the case.”
(Yes, ISOLATED ERRORS will be ginned up as the NORM.)
...
Some law enforcement officials say that a goal of their investigations is to negotiate an industrywide settlement with mortgage lenders that will include forgiving the principal on a loan and more loan modifications.
(Yes, forgivenss is the GOAL.)
Arizona Attorney General Terry Goddard, who is part of the executive committee of a joint investigation into foreclosure processes by the 50 states, said the “long list of abuses” by mortgage companies and their contractors could be cured by a clear and transparent way for borrowers to negotiate with lenders.
(Yes, the “long list of abuses” will need some EVIDENCE to support the allegations.)
Look on the side of the RMBS investors who have been defrauded and tell me that these are isolated cases.
Outfits like PIMCO and the NY Fed aren’t looking for put-backs because of “isolated errors.” This is big money talking here. 10’s of billions in RMBS. There is a PMI insurer suing for compensation for mortgage fraud causing them losses, there’s a title insurer who has stepped away from insuring foreclosed properties by GMAC/Ally.
This is not “isolated.” Only bank shills or the very uninformed can think that this is “isolated” now. There’s very big money riding on this issue, and every week that goes by, the money gets bigger.
The pull quote from Bowen:
“In mid-2006, I discovered that over 60 percent of these mortgages purchased and sold were defective,” Bowen testified on April 7 before the Financial Crisis Inquiry Commission created by Congress. “Defective mortgages increased during 2007 to over 80 percent of production.”
That’s not “isolated.” His testimony to the FCIC shows how pervasive the problem is for *only* Citi:
http://www.fcic.gov/hearings/pdfs/2010-0407-Bowen.pdf
All of that, BTW, leaves out of the picture the sham that is MERS. When it is all said and done, MERS will probably be found to be a sham corporation and the 50 states will start coming after the banks for unpaid recording fees on property transfers. That’ll be another cool billion bucks or more.
The defaulting borrower still owes someone money. It isn’t the banks, however, it is the investors in RMBS. The banks cannot foreclose - they’ve already been paid. MERS can’t foreclose, because they neither own the note or the mortgage.
The banks screwed up the assignment of the mortgage to the investor (or more likely the investor pool), and as a result neither the banker, nor the investor (and certainly not MERS) has the power to legally foreclose on the property. The problem now is that the financial note and the mortgage need to be put back together. There really appears to be only one clean, legal way to do this right now: Put the notes back on the banks, and have the banks dissolve the trusts, pull out the individual notes and re-assign the mortgages to them, outside of MERS. Then start foreclosure.
The trouble with this is that the banks don’t have the money for the put-backs, and so when the put-backs start, they’ll likely cry for another bailout or they’ll go under.
This is all following previously observed patterns in American finance. When we’ve had huge equity bubbles, they’re quickly (in less than 10 years) followed by real estate bubbles. The real estate bubbles always collapse at the end due to a) easy credit and b) “innovative” financial instruments for debt.
There is a lot of intimation and few facts in this game.
My neighbor received over 50 certified letters in 2 days all saying the same thing - Intent to foreclose by a company Wells Fargo hired to do its foreclosures.
That is just pure intimation.
In many cases, these “defects” have nothing to do with loan quality or reason for default. PMI companies and Fannie Freddie are combing through the files for “gotcha” stuff to force originators to buy defective loans back.
Things like page 15 of 15 of the bank statement not being in the file; when that page had no information on it. That type of defect will be used as leverage to get an otherwise perfect loan at origination, put back on the originator.
Common sense has now departed from mortgage underwriting due the above reasoning.
Everyone is now paying for the sins of previous fraudulent practices and loan products from the past that should never have been used; Such as the pick a pay garbage that was offered during the boom.
Agree Law enforcement authorities on both state and federal levels,what could go wrong?.
No, that’s not the failure they’re looking for. Quit trivializing the issue. This is the sort of stuff that makes conservatives look like shills for banks.
What we have here are big issues, such as a failure of the mortgage to follow the note through the securitization process. We have a failure of compliance with lending standards (which is what Bowen was talking about) that are assured in the PSA’s for the RMBS investors.
Failure to assign or failure to perfect the collateral are very strong reasons to force a put-back. Without perfected collateral, a RMBS becomes nothing more or less than unsecured credit, and very dodgy stuff at that, because people are defaulting on their mortgages before they default on their credit cards (unsecured revolving credit) now. Failure of loans in the trust to meet lending standards is another big deal, because the security offerings specify what the parameters of the underlying loans are in furtherance of their credit quality of the overall RMBS. If the banks had a priori knowledge that the underlying borrowers were going to default (and they did) and they bundled those mortgages into higher-quality RMBS, then the investors are quite within their rights to force a put-back.
On the lending standards issue:
http://www.businessweek.com/news/2010-09-29/ambac-sues-bank-of-america-over-countrywide-bonds.html
http://www.xe.com/news/2010-09-29%2015:00:00.0/1427193.htm
97% non-compliance? Yea, that’s about right for Countrywide. You remember, the company who had as their CEO the guy the SEC just fined $57 million and prohibited from ever working in securities or banking for the rest of his life? Mozilo? Yea, that guy.
Of course, the banks aren’t making it easy to trace the paper trail:
Neat place to keep such important documents, eh?
Walk into any mortgage lender and attempt to get financing today; and see if what I said is true.
I KNOW this going on.
There MAY be other issues going also as you talked about to some degree.
Believe what you wish!
Obama is proud of people like you that THINK like him!
Actually he's more proud of people like you who are willing to throw the rule of law on the ash-heap.
Wake up.
L
If you think that Obama thinks like me, you’re in for a rude surprise as he props up his Ivy League buddies in the banks... at YOUR expense.
The bankers should never have been propped up in the first place. They created this mess, they’re going to have to swallow the results.
I don’t ‘believe’ anything by the way. I just follow the facts, and the facts support my position. Judges in multiple courts across the country have arrived at the same position - based on the facts and law.
I have talked to bankers. One from Zions Bank, one from US Bank and one from Wells Fargo on this very issue.
They’re not forced to make loans. They can’t “red-line,” they can’t make loan policy based on where someone lives, but there is nobody from Uncle Sammy saying “MAKE THIS INDIVIDUAL A LOAN OR ELSE.” No one.
They’re making these loans because that is what banks DO. Banks want to lend money. It is how they make more money. The number of qualified applicants for loans had shrunk to a fairly static pool of people by 2003, which is why the sub-prime wave took off. Housing had increased to a level where it wasn’t possible to make loans on prior loan metrics of income vs. house price, so the banks invented more and more bizarre loan products to shoehorn people into houses they could not afford on organic earnings. Many of those people had PRIME credit.
No one forced the banks to invent nonsense like Option-ARM. No one forced banks to write Alt-A loans to people who had W-2 income. No one.
You just keep telling yourself that little bank shill. The corruption is RAMPANT in the real estate system.
Look up the CRA act. Go talk to those same bankers and ask them what impact the CRA had on making loans (not sure how it works today) to maintain a satisfactory CRA rating.
Banks didn't invent the CRA, but they certainly have to comply with it.
Been there, done that.
CRA hasn’t forced the banks to make anything but a minuscule number of loans.
The largest portion of loans now defaulting are PRIME loans. The CRA is in the noise here.
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