by Jim the Realtor | Feb 19, 2011 | Mortgage Lawsuits, Scams |
From the latimes.com:
Federal prosecutors have shelved a criminal investigation of Angelo R. Mozilo after determining that his actions in the mortgage meltdown — which led to $67.5-million settlement against him — did not amount to criminal wrongdoing.
As the former chairman of Countrywide Financial Corp., Mozilo helped fuel the boom in risky subprime loans that led to the crippling of the banking industry and the near-collapse of the financial system.
A federal grand jury in Los Angeles began probing Mozilo in 2008, and four months ago he agreed to pay a $22.5-million fine and to repay $45 million in what the government said were ill-gotten gains to former Countrywide shareholders. The payments settled a civil action by the Securities and Exchange Commission.
But the criminal investigation has wound down without indictments of Mozilo or others at his Calabasas company, according to people familiar with both the prosecution and the defense teams, all of whom spoke on condition of anonymity because they were not authorized to discuss the matter.
“Sometimes the public thinks all you have to do is to indict someone and that’s it,” one of the federal sources said. “But you have to be able to prove your case, and it can be worse losing a case than not bringing one at all.”
The 72-year-old Mozilo hung up the phone when contacted for comment at his home in the Lake Sherwood golf community of Ventura County.
The criminal investigation into Mozilo was never announced publicly, and as a rule federal prosecutors make no formal announcement when such cases are closed.
One defense attorney, however, said the government would probably keep a close watch on civil litigation by Countrywide shareholders against Mozilo and could still decide to bring charges depending on what develops in those cases.
“He may have to testify, and you never know what may come up,” the attorney said.
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by Jim the Realtor | Feb 10, 2011 | Mortgage Lawsuits |
Hat tip to MB for sending this along, from the pressdemocrat.com:
The pilot who earned international acclaim for safely landing a stricken airliner in the icy waters of the Hudson River in 2009 is suing officials at the former Sonoma National Bank and others for fraud related to a real estate deal that included a Jiffy Lube franchise.
Chesley Sullenberger and his wife, Lorraine, claim that bank officials and a real estate broker duped the Danville couple into purchasing the property in the city of Paradise in Butte County for an over-inflated price of $935,000 in 2002.
The couple is seeking to have the original loan nullified and to be reimbursed for what they contend have been overpayments.
But the lawsuit has the Hero on the Hudson fending off accusations that he is trying to use his celebrity status to recoup financial losses that otherwise might be attributed to the collapse of California’s real estate market.
“I think it’s unfortunate that he’s taking advantage of his notoriety to try and pursue a lawsuit, when the building was leased and they were enjoying the benefits of an income stream,” said Cherie Huillade, a senior vice president for Grubb & Ellis who brokered the real estate deal and is named as a defendant in the lawsuit.
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by Jim the Realtor | Feb 2, 2011 | Mortgage Lawsuits |
LOS ANGELES (AP) — The state of California has reached a settlement in a predatory lending lawsuit against former executives at Countrywide Financial Corp. that will pour $6.5 million into a fund to help foreclosed homeowners.
The state had sued Countrywide, CEO Angelo Mozilo and President David Sambol under former Attorney General Jerry Brown. The 2008 lawsuit alleged that the company lured borrowers with low “teaser” rates on adjustable rate loans. Loan officers didn’t tell borrowers that the rates would jump, that prepayments would be penalized, and the total loan costs would skyrocket, even if they made additional payments, the state alleged.
The settlement filed Wednesday in Los Angeles Superior Court says Countrywide agreed to pay $6.5 million to a Foreclosure Crisis Relief Fund. It will provide restitution, loan modification services and relocation assistance for foreclosed homeowners, plus money for state and local agencies to prosecute mortgage fraud, Attorney General Kamala Harris said.
The lawsuit claimed that Countrywide engaged in unfair business practices and false advertising laws with just about every action it took to market and originate some of the most popular — and potentially risky — types of home loans.
Countrywide allegedly loosened its mortgage standards and verification procedures and agents overrode warnings from a computerized underwriting system that analyzed the ability of applicants to repay.
The company paid higher commissions to agents who put borrowers into loans with higher rates and fees than they qualified for based on their credit scores.
In one case described in the lawsuit, the company provided a mortgage for an 85-year-old disabled veteran with such a low credit score and high debt that he defaulted on an adjustable rate mortgage in less than six months.
The state claimed that these practices led to tens of thousands of homeowners with Countrywide loans defaulting and losing their homes to foreclosure. The attorney general’s lawsuit alleged that Mozilo and Sambol knew of these practices and allowed them to continue.
The state settled with Countrywide in October 2008, with the company agreeing to provide loan modifications and other foreclosure relief worth $8.68 billion nationwide, with $3.5 billion for California borrowers.
The executives left the company when Bank of America Corp. bought it in July 2008.
Bank of America assumed responsibility for loan modifications for Countrywide borrowers and for paying restitution to those who qualify under the terms of the settlement.
by Jim the Realtor | Feb 2, 2011 | Loan Mods, Mortgage Lawsuits |
From HW:
A California appeals court ruled that a former homeowner’s lawsuit against U.S. Bank for fraud may continue after the bank allegedly reneged on a promise to negotiate a mortgage modification, opening the door for claims from potentially thousands of similarly situated troubled borrowers in the Golden State.
While the court ruled that a case for fraud–which includes claims for damages–could proceed, it also ruled that the homeowner, Claudia Jacqueline Aceves, lacked sufficient cause to get her home back after the foreclosure sale.
What could become a landmark foreclosure ruling appears to be both a win and a loss, for mortgage servicers and foreclosure defense attorneys alike. Mortgage servicers prevailed on issues of alleged defects in the foreclosure process, with the court ruling that none of the Aceves allegations of irregularities “would permit the trial court to void the deed of sale or otherwise invalidate the foreclosure.” Aceves had claimed, for example, that the notice of default was defective and therefore void, a claim the court rejected outright. “Absent prejudice, the error does not warrant relief,” according to the ruling.
The court spent most of its 15-page ruling, however, discussing how U.S. Bank had purportedly promised to negotiate a potential loan modification if the homeowner agreed to allow the bank to lift a bankruptcy stay, which had protected the home from seizure. Yet, when the homeowner agreed and attempted to begin negotiation on a loan modification, the bank allegedly opted to foreclose without negotiating.
For homeowners, the case affirms their ability to go after banks and mortgage lenders for monetary damages when lenders promise to negotiate mortgage modifications but fail to do so in good faith.
Read full details of story here.
by Jim the Realtor | Jan 28, 2011 | Fraud, Mortgage Lawsuits |
From HW:
One of the many villains in the Financial Crisis Inquiry Commission report out Thursday is Goldman Sachs. According to page 235 of the report, they recognized the delusion in the subprime mortgage market and decided to short it before the crash in 2008.
Goldman came under fire following the crisis by allegedly selling clients on mortgage-backed securities and other various financial instruments it was allegedly betting against on the side. Bond insurer ACA Financial Guaranty filed suit in January seeking $30 million in compensation and $90 million in punitive damages from how Goldman marketed the synthetic collateralized debt obligation named ABACUS.
In 2010, Basis Yield Alpha Fund, a hedge fund and Goldman client, sued the firm alleging it was frauded out of $11.25 million in investments in the Timberwolf CDO.
Goldman CEO Lloyd Blankfein told an FCIC hearing on Jan. 13, 2010 that the bank regretted selling clients MBS that it believed would default while shorting them simultaneously. But the bank reversed course and issued a press release the day after the testimony, clarifying that Blankfein was “responding to a lengthy series of statements followed by a question that was predicated on the assumption that a firm was selling a product that it thought was going to default…Mr. Blankfein does not believe, nor did he say, that Goldman Sachs had behaved improperly in any way.”
But the FCIC report shows that in December 2006, Goldman executives “decided to reduce the firm’s subprime exposure” after an initial decline in its asset-backed securities indices and 10 consecutive days of trading losses.
Analysts at the firm submitted a report on “the major risk in the Mortgage business” to Chief Financial Officer David Viniar and Chief Risk Officer Craig Broderick on Dec. 13, 2006, the commission reports. The next day, executives began reducing their mortgage exposure.
What follows is a narrative of Goldman employees moving the subprime risk, and when customers began to dwindle, the FCIC cites documents indicating that the firm “targeted less-sophisticated customers in its efforts to reduce subprime exposure” rather than hedge funds that were on the same side of the trade as Goldman. From December 2006 to August 2007, Goldman sold roughly $25.4 billion of CDOs, including $17.6 billion in synthetic CDOs, according to the FCIC.
Goldman did not have a comment on the FCIC’s report, and neither did ACA Financial Guaranty. A spokesperson for Sen. Carl Levin (D-Mich.), who chairs the Permanent Subcommittee on Investigations, said that while Levin had no comment on this report, the subcommittee would have one of its own soon.
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The N.Y. Times has this article today that describes more fixes for Fannie/Freddie (dubbed “Frannie”). An excerpt:
The best proposal I have heard is a remarkably simple one put forth by John Hempton of Bronte Capital, a hedge fund based in Australia. He says Frannie should simply raise the fee for its guarantee — now about 20 basis points, or one-fifth of a percentage point — every six months by five basis points. He would have the rate continue to go up until no one wanted to buy the insurance anymore and the private market was once again lending to the vast majority of borrowers.
by Jim the Realtor | Jan 13, 2011 | Mortgage Lawsuits, Mortgage News, Scams |
Hat tip to daytrip for sending in this update from the latimes.com – an excerpt:
“I’m going back there,” Pines declared, gripping the lectern. “And I hope I get arrested.” “I certainly hope not,” Lane shot back. “That is a blatant disregard of this court’s order.”
With Pines, the threat at the October hearing couldn’t be written off as courtroom theatrics. The 58-year-old attorney admits to breaking into homes at least half a dozen times, leaving the clients to squat in their homes while he defends their legal right to possession. His unconventional methods have gotten him fined by a judge in San Diego, arrested in Newport Beach and threatened with contempt — and jail — in Ventura.
More foreclosure cases are headed for court, housing experts and legal analysts say, as troubled homeowners run out of options and lenders pick up the pace of evictions. But they also note that people who want to stay in their homes have limited options in states such as California, where a lender can seize a house without a court order. That has prompted Pines to pursue some radical tactics and might cause others to imitate him — if he ever manages to win.
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by Jim the Realtor | Apr 11, 2010 | Bailout, Loan Mods, Mortgage Lawsuits, Short Sales |
From the W-S-J:
After losing her condo in San Diego to foreclosure last year, Charissa Kolich thought that at least she was free of mortgage bills.
But Wells Fargo & Co., which holds a home-equity loan made five years ago to Ms. Kolich, last month filed a lawsuit against her in the Superior Court of California, San Diego County, seeking to collect the nearly $72,000 it said she still owed on that second mortgage. “This was all kind of a shock,” says Ms. Kolich, a food-service administrator recently diagnosed with inoperable brain cancer.
Banks are coming under increasing political pressure to write off or at least write down second-lien and other junior mortgages as a way to help borrowers keep their homes or extract themselves from heavy debt. As the Wells Fargo suit shows, however, banks often are reluctant to give up on loans when they see a chance of recovering all or part of their money.
This issue will be the focus of a hearing Tuesday by the House Financial Services Committee in Washington. Panel members are due to quiz executives from Wells Fargo, Bank of America Corp., Citigroup Inc. and J.P. Morgan Chase & Co. about their junior-lien mortgage policies.
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by Jim the Realtor | Jul 2, 2009 | Fraud, Mortgage Lawsuits |
On our regular blog watch is the Mortgage Fraud Blog:
http://www.mortgagefraudblog.com/index.php/
She added this whopper on Beazer Homes settling for $10 million now, and up to $50 million eventually to compensate for these illegal activities:
Beazer, and its subsidiary, Beazer Mortgage Corporation, admit to engaging in several fraudulent mortgage origination practices, including (1) fraudulently retaining so-called “discount points” that should have been used to provide some home-buyers with a decreased interest rate; (2) fraudulently informing some home-buyers that they were receiving a “gift” from a charity to cover their down-payment when, in truth, the price of the home was increased to offset the supposed “gift;” (3) fraudulently circumventing the “Neighborhood Watch” and “Credit Watch” programs of the Department of Housing and Urban Development to avoid action from HUD in response to the high foreclosure rate of some Beazer Mortgage offices; and (4) instituting a strategy of willful blindness with regard to some stated income loans.
But more eye-popping is that the blogger has added 70 stories on mortgage fraud since May 1st!
