With Banks Under Fire, Some Expect a Settlement: NYTimes.com

From left, Chester Higgins Jr./The New York Times; Andrew Harrer/Bloomberg News; Ramin Talaie for The New York Times

From left, Andrew Cuomo, the New York attorney general; Robert Khuzami, of the S.E.C.; and Preet Bharara, of the United States attorney’s office. The agencies are investigating Wall Street.

By NELSON D. SCHWARTZ and ERIC DASH

Published: May 13, 2010

It is starting to feel as if everyone on Wall Street is under investigation by someone for something.

News on Thursday that New York State prosecutors are examining whether eight banks hoodwinked credit ratings agencies opened yet another front in what is fast becoming the legal battle of a decade for the big names of finance.

Not since the conflicts at the center of Wall Street stock research were laid bare a decade ago, eventually resulting in a $1.4 billion industrywide settlement, have so many investigations swirled across the financial landscape.

Nearly two years after Washington rescued big banks with billions of taxpayer dollars, half a dozen government agencies are still trying, with mixed success, to peel back the layers of the collapse to determine who, if anyone, broke the rules.

The Securities and Exchange Commission, the Justice Department, the United States attorney’s office and more are examining how banks created, rated, sold and traded mortgage securities that turned out to be some of the worst investments ever devised.

Virtually all of the investigations, criminal as well as civil, are in their early stages, and investigators concede that their job is daunting. The S.E.C. has been examining major banks’ mortgage operations since last summer, but so far, it has filed a civil fraud claim against just one big player: Goldman Sachs. Goldman has vowed to fight.

But legal experts are already starting to handicap potential outcomes, not only for Goldman but for the broader industry as well. Many suggest that Wall Street banks may seek a global settlement akin to the 2002 agreement related to stock research. Indeed, Wall Street executives are already discussing among themselves what the broad contours of such a settlement might look like.

“I would be stunned if any of these cases go to trial,” said Frank Partnoy, a professor of law at the University of San Diego. “I think Wall Street needs to put this scandal behind it as quickly as possible and move on.”

As part of the 2002 settlement, 10 banks paid $1.4 billion total and pledged to change the way their analysts and investment bankers interacted to prevent conflicts of interest. This time, the price of any settlement would probably be higher and also come with a series of structural reforms.

David Boies, chairman of the law firm Boies, Schiller & Flexner, represented the government in its case against Microsoft and is now part of a federal challenge to California’s same-sex marriage ban. He said a settlement by banks might be painful but would ultimately be something Wall Street could live with. “The settlement may be bad for everyone, but not disastrous for anyone,” he said.

A settlement also would let the S.E.C. declare victory without having to bring a series of complex cases. The public, however, might never learn what really went wrong.

“The government doesn’t have the personnel to simultaneously prosecute several investment banks,” said John C. Coffee, a Columbia Law School professor.

The latest salvo came on Thursday from Andrew M. Cuomo, the New York attorney general. His office began an investigation into whether banks misled major ratings agencies to inflate the grades of subprime-linked investments.

Many Americans are probably already wondering why this has taken so long. The answer is that these cases are tricky, like the investments at the center of them.

But regulators also concede that they were reluctant to pursue banks aggressively until the financial industry stabilized. The S.E.C., for one, is now eager to prove that it is on its game after failing to spot the global Ponzi scheme orchestrated by Bernard L. Madoff, or head off the Wall Street excesses that nearly sank the entire economy.

The stakes are high for both sides. At a minimum, the failure to secure a civil verdict, or at least a mammoth settlement, would be another humiliation for regulators.

Wall Street wants to put this season of scandal behind it. That is particularly so given the debate over new financial regulations that is under way on Capitol Hill. The steady flow of new allegations could strengthen calls for tougher rules.

Even worse would be a criminal charge, which could put a firm out of business even if that firm were ultimately found not guilty, as was the case with the accounting giant Arthur Andersen after the fraud at Enron.

“No firm in the financial services field has the stomach for a criminal trial,” Mr. Coffee said.

Bankers have been reluctant until now to take their case to the public. But that is changing as Wall Street chieftains like Lloyd C. Blankfein of Goldman take to the airwaves and New York politicians warn that the city’s economy will be endangered by the attack on some of the city’s biggest employers and taxpayers.

“In New York, Wall Street is Main Street,” Gov. David A. Paterson has said. “You don’t hear anybody in New England complaining about clam chowder.”

There are broader political consequences as well. At the top, there is President Obama, who was backed by much of Wall Street in 2008. Many of those supporters now privately say they are disillusioned and frustrated by his attacks on their industry, which remains a vital source of campaign contributions for both parties.

Closer to home, the man who hopes to succeed Mr. Paterson, Mr. Cuomo, is painting himself as the new sheriff of Wall Street. Another attorney general, Eliot Spitzer, rode a series of Wall Street investigations to the governor’s mansion in 2006.

But ultimately, it is what Wall Street does best — making money — that is already on trial in the court of public opinion.

Put simply, the allegations against Wall Street were prompted by evidence that the firms may have devised and sold securities to investors without telling them they were simultaneously betting against them.

Wall Street firms typically play both sides of trades, whether to help buyers and sellers of everything from simple stocks to complicated derivatives complete their transactions, or to make proprietary bets on whether they would rise or fall.

These activities form half of the four-legged stool on which Wall Street’s profits and revenue rest, the others being advising on mergers and acquisitions and helping companies issue stocks, bonds and other securities.

“This case is a huge deal. It has the potential to be the mother of all Wall Street investigations,” said Mr. Partnoy of the University of San Diego. “The worry is that the government will go after dealings that Wall Street thought were insulated from review.”

Even some Wall Street executives concede that all the scrutiny makes proprietary trading a bit dubious. “The 20 guys in the room with the shades drawn are toast,” one senior executive of a major bank said.

MORTGAGE SERVICING COMPANIES PREPARING “REPLACEMENT” MORTGAGE ASSIGNMENTS: By Lynn E. Szymoniak, Esq., Ed.

MORTGAGE SERVICING COMPANIES

PREPARING “ REPLACEMENT” MORTGAGE ASSIGNMENTS

By Lynn E. Szymoniak, Esq., Ed. Fraud Digest, May 6, 2010

CALIFORNIA – ORANGE COUNTY

Carrington Mortgage Services, LLC

Tom Croft and others

CALIFORNIA – SAN DIEGO COUNTY

Chase Home Finance

FLORIDA – BROWARD COUNTY

Patricia Arango, Caryn Graham and others

Law Offices of Marshal Watson

FLORIDA – BROWARD COUNTY

Cheryl Samons, Beth Cerni and others

Law Offices of David Stern

FLORIDA – DUVAL COUNTY

Lender Processing Services

Valerie Broom, Margaret Dalton, Michele Halyard, Michael Hunt, Joseph

Kaminsky, Kathy Smith, Coleman Stokes and others

FLORIDA- HILLSBOROUGH COUNTY

Florida Default Law Group or Law Offices of Daniel Consuegra

FLORIDA – PALM BEACH COUNTY

Ocwen Loan Servicing

Scott Anderson, Oscar Taveras, Doris Chapman, Jonathan Burgess, Laura

Buxton and others

FLORIDA – PINELLAS COUNTY

Nationwide Title Clearing

Bryan Bly, Vilma Castro, Dhurato Doko, Jessica Fretwell and others

GEORGIA – FULTON COUNTY

Lender Processing Services

Linda Green, Korell Harp, Jessice Ohde, Linda Thoresen, Tywanna Thomas,

Cheryl Thomas, Christie Baldwin and others

MINNESOTA -DAKOTA COUNTY

Lender Processing Services

Liquenda Allotey, Topeka Love, Christine Anderson, Christine Allen, Eric Tate

OHIO – FRANKLIN COUNTY

Chase Home Finance

Christina Trowbridge, Whitney Cook and others

PENNSYLVANIA – ALLEGHANY COUNTY

Home Loan Services, Inc.

PENNSYLVANIA – MONTGOMERY COUNTY

GMAC (and Homecomings Financial)

Jeffrey Stephan, John Kerr and others

SOUTH CAROLINA – YORK COUNTY

America’s Servicing Company

John Kennerty, China Brown and others

TEXAS – COLLIN COUNTY

BAC Home Loan Servicing, f/k/a Countrywide Home Loans Servicing, LP

TEXAS – DALLAS COUNTY (COPPELL, TX)

American Home Mortgage Servicing

TEXAS – HARRIS COUNTY

Litton Loan Servicing, LP

Marti Noriega, Denise Bailey, Diane Dixon and others

TEXAS – TARRANT COUNTY

Saxon Mortgage Services

TEXAS – TRAVIS COUNTY

IndyMac Bank Home Loan Servicing

Brian Burnett, Kristen Kemp, Suchan Murray, Chamagne Williams and others

TEXAS – WILLIAMSON COUNTY

IndyMac Bank (years after IndyMac Bank, F.S.B. ceased to exist, many of the signers will sign as officers of IndyMac Bank, F.S.B. (the entity that should have made the assignment to the trust years ealier)

Erica A. Johnson-Seck, Dennis Kirkpatick, Eric Friedman and others

UTAH

SALT LAKE COUNTY

Select Portfolio Servicing

Luisa Alfonso, Bill Koch and others

Many mortgage-backed securitized trusts are missing critical documents needed to foreclose – i.e., the mortgage assignment. An excellent discussion of this is found in the decision of Massachusetts Land Court Judge Keith Long reaffirming a 2009 ruling (Ibanez) that invalidated foreclosures on two properties because the lenders did not hold clear title to the properties at the time of the foreclosure sale. Mortgage assignments were a key issue in Ibanez, a case that involved ineffective assignments to the Trust. Judge Long noted:

…the plaintiffs’ own securitization documents required mortgage assignments to be made to the plaintiffs in recordable form for each and every loan at the time the plaintiffs acquired them. Surely, compliance with this requirement would (and certainly should) have been a priority for an entity issuing securities dependent on recoveries from loans, such as these, known from the start to have a higher than normal risk of delinquency and default. U.S. BANK, N.A. v. Antonio Ibanez, et al., Commonwealth of Massachusetts, Land Court Dept., 08 MISC 384283 (KCL).

This Ibanez decision and many others deal with the issue of mortgage assignments prepared years after the closing date of the trust, usually when the Trustee or mortgage servicer has realized that the Trust does not have the assignment needed to foreclose or has a defective assignment – such as one issued in blank, unsigned and undated.

Many trusts and servicers try to replace the missing assignments, often with assignments executed within a few months of the foreclosure – and in many cases even after the foreclosure is filed or the home is sold (in non-judicial foreclosure states). The date and place of the Assignment often reveals whether the Assignment is actually a “replacement” – issued years after the Trust closed, and even years after the original lender supposedly making the Assignment disappeared into bankruptcy.

The servicer rarely identifies itself and discloses that this is an attempt to replace a missing assignment. It is, therefore, very useful to know that Mortgage Assignments notarized in the counties above are more often than not replacement Assignments prepared by or on behalf of the Trusts – by the servicers for the Trust or document preparation companies working for the servicers, or even law firm employees working for the Trust.

Please send corrections/additions to szymoniak@mac.com.

Lender Processing Services LPS and ProVest: Resemblance is uncanny

We all have all got acquainted with LPS and have read about ProVest in connection with Law Offices of David J. Stern. If you take a close look at the two logo’s, don’t they have a resemblance? Look at the colors as well…Hmm are we unlocking another possible link?

 House Flipping Makes A Comeback In Florida Foreclosed Homes Sold On Court House Steps for Cash, David J. Stern Law Office Forecloses Buys and Flips for Profit, FBI Needs to Investigate.

National foreclosure auctions go online via LPS: “CAVEAT EMPTOR”

Submitted by Kevin Turner on April 16, 2010 – 4:56pm Market Value

The Duval County Clerk’s Office has offered online bidding for foreclosed properties for some time, and now Jacksonville-based Lender Processing Services is bringing bank-foreclosures all over the U.S. online.

Through its LPSAuctions.com Web site, LPS is to open bidding on single-family homes, condominiums and town homes from Coral Springs to Tacoma, Wash. The bid deadline for the homes listed in the “Spring Clearance” auction on the site is May 10.

So now it’s official they have they’re hands in all Real Estate! My question is how…why would any state permit them to sell anything if they are under the scope of the FEDS?? Take a look below.

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LPS Asset Management Launches Short-Sale Service: “CAVEAT EMPTOR”

LENDER PROCESSING SERVICES (LPS) Hits Local NEWS!

After ongoing INVESTIGATIONS: Lender Processing Services (LPS) closed the offices of its subsidiary, Docx, LLC, in Alpharetta, Georgia

EXTRA! EXTRA! Read All about the misconduct of Lender Processing Services f/k/a FIDELITY a/k/a LPS

U.S. Probing LPS Unit Docx LLC: Report REUTERS

U.S. Probes Foreclosure-Data Provider:Lender Processing Services Unit Draws Inquiry Over the Steps That Led to Faulty Bank Paperwork (LPS VIDEOS)

Feds Investigating LPS Subsidiary DOCX: Jacksonville Business Journal

Fidelity’s LPS Secret Deals With Mortgage Companies and Law Firms

TOPAKO LOVE; LAURA HESCOTT; CHRISTINA ALLEN; ERIC TATE …Officers of way, way too many banks Part Deux “The Twilight Zone”

Stopping A Defective Title Wave With A Coupla Outstretched Helping Hands

BOGUS ASSIGNMENTS 2…I’m LOVING this!! LPS DOCx ADMISSIONS SEC 10K ROOFTOP SHOUT OUT!

 

The HUGE CRASH Predicted: by: Whitney Tilson

Listen carefully it’s not only the sub-prime …it’s now those who called everyone in foreclosure a dead beat. Those “who” were living in glass houses shouldn’t throw stones because one might come bouncing back to shatter. We are now in this together so I welcome you with open arms and into a hug because I know you will need one.

Hank Paulson’s Memoir: The Inside Job

By Simon Johnson

If you’ve read, are reading, or plan to read Andrew Ross Sorkin’s Too Big To Fail, you also need to pick up a copy of Hank Paulson’s memoir, On The Brink.  Sorkin has the bankers’ story, in sordid yet compelling detail, of how they received the most generous bailout in the world financial history during fall 2008 – and set us up for great problems to come.  Paulson tells us why, when, and how exactly he let them get away with this.

Hank Paulson does not, of course, intend to be candid.  As I review in detail on The New Republic’s The Book site this morning, On The Brink is actually a masterpiece of misdirection and disinformation.

But still, he gives it all away – and if any details remain obscure, check them in Sorkin.  Paulson honestly believes that the financial sector as constructed is productive, makes sense, and should continue to operate in roughly its current form. 

Whether or not Paulson really understands the functioning of big banks in the US today is an interesting question – for example he never mentions how they treated customers during the boom, and there is not one word about the need for greater consumer protection moving forward.  On the other hand, perhaps this omission tells us that he understands the game all too well – and is keen for it to continue. 

He certainly did his best to make that happen.

Source: The Baseline Scenario

 

Deposition transcript of Angela Melissa Nolan, a Robo Signer at Chase Home Finance…”Assignment Of Mortgage FRAUD”

I swear each time I hear about these ROBO-SIGNERS I immediately get this vision of the TRANSFORMER’s…more than decieves the mind!

from Matthew Weidner’s Blog

When speaking in generalities, it’s difficult for folks to understand what lawyer, judges and informed consumers are ranting about when we scream, “THE BANKS, LENDERS AND FORECLOSURE MILLS ARE COMMITTING FRAUD!”

I attach here a deposition transcript of Angela Melissa Nolan, a robo signer at Chase Home Finance.  In the deposition, she describes in detail some of the corporate processes in place that purport to give pretender lenders the evidentiary basis to pursue foreclosure cases….I’ve called these people “Robo Signers” because prior depositions indicated they don’t read anything…they just sign.  This deposition reveals another form of “Robo Signer”, a computer generated document, complete with a “real” signature scanned in…..and the rabbit hole just gets deeper and deeper.

C’mon take a few minutes to watch the video…I tell you it’s exactly what’s  happening here!

MORTGAGE ASSIGNMENTS AS EVIDENCE OF FRAUD, by Lynn Szymoniak, ESQ.

 MORTGAGE ASSIGNMENTS AS EVIDENCE OF FRAUD 

Lynn Szymoniak, Esq., Editor, Fraud Digest, February 9, 2010 (szymoniak@mac.com

In the past ten years, hundreds of thousands of residential mortgages were bundled together (often in groups of about 5,000 mortgages), and investors were offered the opportunity to buy shares of each bundle. This process is called securitization. 

Each such bundle of residential mortgages was given a name, such as “Soundview Home Loan Trust 2006 OPT-2.” The name indicates information about the particular trust such as the year it was created (2006) and its contents (with OPT indicating that the loans in that particular trust were originally made by Option One Mortgage). Each such bundle/trust has a Cut Off Date identified in the trust documents (specifically, in the Pooling and Servicing Agreement). The Cut Off Date is the date on which all mortgage loans in the trust must be identified. In short, a final list of all of the mortgages in the bundle is set out. Each trust also has a Closing Date which is the date that the individual mortgages are transferred to the Trust Custodian, who must certify that for each mortgage, the custodian has a mortgage note endorsed in blank and proof that the ownership of the note has been transferred. This proof is most often an Assignment of Mortgage. Most trusts included the following or equivalent language regarding the Assignments: “Assignments of the Mortgage Loans to the Trustee (or its nominee) will not be recorded in any jurisdiction, but will be delivered to the Trustee in recordable form, so that they can be recorded in the event recordation is necessary in connection with the servicing of a Mortgage Loan.” 

 Title insurance companies issued policies guaranteeing that the trust had clear title to the mortgages. 

When widespread defaults occurred, Trustees discovered that the laws regarding Mortgage Assignments varied significantly from state to state. Many issues regarding such Assignments were simply unresolved. One of the most significant issues was whether Mortgage Assignments could be back-dated or have retroactive effective dates. This issue arose because Trustees and their lawyers discovered in the foreclosure process that the Assignments could not actually be located, or that certain states did not allow blank Assignments. 

To solve the problem of the missing Assignments, new Assignments were made and recorded. Because the question of retroactive Assignments had not been 2 resolved, most of these Assignments did not set forth the actual date that the Assignment took place. The Assignments were signed and notarized as if the transfer took place many years after the actual transfer date. 

The Assignments were prepared by specially selected law firms and companies that specialized in providing “mortgage default services” to banks and mortgage companies. In jurisdictions with a high rate of mortgage defaults, over 80% of the filed Mortgage Assignments in the last three years were prepared and filed by the same five or six law firms and default processing companies. 

In many states, two such Assignments were prepared and filed. The first was prepared in the name of Mortgage Electronic Registration Systems as “nominee” for the particular bank or mortgage company. When MERS authority to file foreclosures and Assignments was challenged in most jurisdictions, with varying results, a non-MERS Assignment was prepared as well. 

In all of these cases, the Assignment was prepared to conceal the actual date that the property was acquired by the Trust. An examination of the Assignments filed showing the grantee as the Trust – such as “Soundview Home Loan Trust 2006 – OPT 2” – shows that most of these Assignments were prepared and filed in 2008 and 2009, when, in reality, the mortgages and notes were actually assigned – albeit defectively – prior to the closing date of the Trust. While the exact closing date can only be determined by looking at the trust documents, any Trust that includes the year in 2006 in its title most likely closed in 2006. 

If a Mortgage Assignment is dated, notarized and filed in a year after the year set forth in the name of the grantee trust on the Assignment, it is actually an Assignment specially, and in many cases, fraudulently, made to facilitate foreclosures.  

These Specially-Made Assignments have created havoc in the courts. In many cases, the Specially-made Assignments are dated After the foreclosure action has been initiated, making it appear that the Trust somehow magically knew prior to the assignment that it would acquire the defaulting property several months after the foreclosure action was initiated. 

Repeatedly, courts have asked Trustees to explain why they were acquiring nonperforming loans and whether such acquisition was a violation of the trustee’s fiduciary duty to the Trust. No Trustee has ever come forth and explained that the Trust actually acquired the loan years before the Assignment. As a result, there are many decisions with observations similar to this observation made by Judge Arthur M. Schack of Kings County, New York, in HSBC Bank v. Valentin, 21Misc. 3d 1124 [A]:  

Further, according to plaintiff’s application, the default of defendants Valentin and Ruiz began with the nonpayment of principal and interest due on January 1, 2007. Yet, four months later, plaintiff HSBC was willing to take an assignment of the instant nonperforming loan. The Court wonders why HSBC would purchase a nonperforming loan, four months in arrears? 

And in Deautsche Bank National Trust Co. V. Harris, Judge ARTHUR M. SCHACK Kings, New York, Index No. 39192/2007 (05 FEB 2008): 

Further, the Court requires an explanation from an officer of plaintiff DEUTSCHE BANK as to why, in the middle of our national sub-prime mortgage financial crisis, DEUTSCHE BANK would purchase a non-performing loan from INDYMAC…

 In Massachusetts in October, 2009, Land Court Judge Keith Long reaffirmed a March, 2009, ruling that a lender cannot begin foreclosure proceedings before the lender has filed and recorded the Assignment, stating:

The blank mortgage assignments they possessed transferred nothing…in Massachusetts, a mortgage is a conveyance of land. Nothing is conveyed unless and until it is various agreements between the securitization entities stating that each had a right to an an assignment and they are certainly not in recordable form. U.S. Bank National Association v. Ibanez, Massachusetts Land Court Misc. Case No. 384283, consolidated with two other cases.

Many authors expect the Massachusetts Supreme Court to reverse the Ibanez decision, but the uncertainty itself, as in the case of the MERS challenges, caused lenders to flood recording offices with new Assignments.

In cases where the Trust failed to get a valid Assignment, the problem is complicated by the bankruptcy of the major loan originators, including American Home Mortgage, Option One Mortgage, and Countrywide Home Loans. 

When these big mortgage companies filed for bankruptcy, they did not disclose the mortgages already sold to the trusts as assets, because the transfers occurred months and years prior to the bankruptcy filing. Years later, when the Assignments were required for foreclosures, a bankruptcy court’s permission was needed to Assign billions of dollars in mortgages. Most likely in fear that a Bankruptcy Judge would not rubber stamp such a request, no such permission has ever been sought. 

In lieu of valid Assignments, Trusts continue to rely on Assignments specially made by their own law firms and mortgage default service companies. Eventually, these fraudulent Assignments are being discovered by Courts, and the foreclosing trusts required to prove that they own the Mortgage and Note in the foreclosure action without reliance on Assignments that misrepresent the date of the actual transfer to the Trust the authority of the signers of the bankrupt original lenders. For thousands of homeowners, this realization has come too late.

 

Source: ASSIGNMENTS AS EVIDENCE 

 

AIG FED FRAUD…Straight from JUDGE NAPOLITANO & RON PAUL ! MUST WATCH!

Listen to this JUDGE! He puts it all out there as we know it…who is going to argue with his points!

My Interpretation: I’ll HIDE You! Sshhhh

New “Foreclosure Mill” Service Tactic?

Whenever I get any mail from anyone I make it a point to save the envelope! Since all outgoing mail postage stamps are “created” by Pitney Bowes machines in-house (foreclosing law firms)…dates can simply be omitted, NO DATE and might have gone “Lost in the Mail” or take a long…long…long…long…time to arrive to you. Oh NO! WE JUST GOT FORECLOSED without any warning!
I know when this is coming because I check my file but those of you who don’t …Take a look at what I mean before you end up in the streets. I am not certain what Pitney Bowes guidelines are but this might be wrong for anyone to do.

CHECK THE DATES

Check out this story on “sewer service

Not only are they post dating the assignments but the material inside the envelopes might be dated months before you get it …thanks to this new tactic!