"If the American People allow private banks to control the issuance of the currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered." Thomas JeffersonCalifornia :Aceves ruling:
Foreclosed homeowner
has cause to sue bank for fraud
A California appeals court ruled that U.S. Bank reneged on its promise to negotiate a mortgage modification, which is sufficient cause for the homeowner to sue the bank for fraud in a scathing ruling alleging the bank never had any intention of working with the homeowner.
However, the court also ruled that the homeowner, Claudia Jacqueline Aceves, lacked sufficient cause to get her home back after the foreclosure sale. Arguments related to robo-signing and alleged irregularities in the foreclosure process were dismissed and were not enough to set aside the completed foreclosure.
What could become a landmark foreclosure ruling is both a win and a loss for mortgage servicers. While servicers prevailed on issues of alleged defects in the foreclosure process, the court spent most of its 15-page ruling discussing how U.S. Bank promised to negotiate a potential loan modification if the homeowner agreed to dismiss her bankruptcy case, which protected the home from seizure. Yet, when the homeowner exited bankruptcy to negotiate a modification, the bank 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.
"We conclude plaintiff could have reasonably relied on the bank’s promise to work on a loan reinstatement and modification if she did not seek relief under Ch. 13; the promise was sufficiently concrete to be enforceable; and plaintiff’s decision to forgo Ch. 13 relief was detrimental because it allowed the bank to foreclose on the property," according to the ruling, filed Jan. 27, in the Court of Appeal of the State of California’s second appellate district.
In April 2006, Aceves took out a 30-year, $845,000 loan at a rate of 6.35% with original payments about $4,860 per month. After two years, the rate became adjustable. In January 2008, Aceves could no longer make her payments, and a notice of default was filed in March of that year. Shortly thereafter, Aceves filed for Chapter 7 bankruptcy protection, which automatically stops foreclosure proceedings.
Aceves contacted U.S. Bank, which told her it "would work with her on a mortgage reinstatement and loan modification" as soon as the loan was out of bankruptcy, according to the ruling. Aceves said her intention was to convert the Chapter 7 case to Chapter 13, which allows a homeowner in default to reinstate original loan payments, pay the arrears over time and avoid foreclosure. U.S. bank, meanwhile, filed a motion to lift the bankruptcy stay.
In November 2008, Aceves’ bankruptcy attorney received a letter from the attorney for the loan's servicer, American Home Mortgage Servicing. The letter asked for an agreement in writing to allow American to contact Aceves to "explore loss mitigation possibilities." When Aceves contacted the servicer, she was told American Home would not speak to her before the motion to lift the bankruptcy stay was granted. Aceves decided not to pursue Chapter 13 bankruptcy protection based on U.S. Bank’s promise to reinstate and modify the loan, according to the appellate court.
On Dec. 4, 2008, the bankruptcy stay was lifted. Five days later, without contacting Aceves, U.S. bank scheduled the home for a Jan. 9, 2009, foreclosure sale. Aceves sent documents to American Home on Dec. 10 and was told on Dec. 23 that a negotiator would contact her on or before Jan. 13 (four days after the scheduled auction.). On Dec. 29, a negotiator called and said to forget about the foreclosure because the "file" had been "discharged" in bankruptcy. On Jan. 2, the negotiator called again and said American Home was incorrect and that it would reconsider.
On Jan. 8, the day before the scheduled sale, the negotiator said the loan's new balance was $965,926, the new monthly payments would be $7,200 and a $6,500 deposit was due immediately. The negotiator refused to put the terms in writing, according to the court order. Aceves did not accept the offer, and the house was subsequently sold back to U.S. Bank the next day.
"U.S. Bank never intended to work with Aceves to reinstate and modify the loan," the latest ruling said. "The bank so promised only to convince Aceves to forgo further bankruptcy proceedings, thereby permitting the bank to lift the automatic stay and foreclose on the property."
During the lower court case, U.S. Bank prevailed with the court ruling there was no promissory fraud. Aceves filed the appeal on which the appellate court based its ruling.
For its part, U.S. Bank alleged that Aceves' bankruptcy case was filed in "bad faith." U.S. Bank prevailed on the issues of foreclosure irregulatories, with the court stating, "We see no irregularities that would justify relief."
U.S. Bank referred comments to the servicer, American Home Mortgage Servicing. A request for comment from American Home Mortgage wasn't immediately returne
California Rep. Issa wants explanation
for Fannie, Freddie legal fees 2-1-11
Rep. Darrell Issa (R-Calif.) wrote a letter to Federal Housing Finance Agency Acting Director Edward DeMarco, demanding more information on legal fees paid in defense of former executives at Fannie Mae and Freddie Mac and vowing to keep taxpayers from paying additional legal bills.
Last week, Rep. Randy Neugebauer (R-Texas) released the results of his investigation into the fees. Since entering conservatorship in September 2008, Fannie and Freddie have spent more than $160 million in legal fees, including $24 million in defense of former Fannie CEO Frank Raines ($7.9 million), former Chief Financial Officer Tim Howard ($4.5 million) and former Controller Leanne Spencer ($11.8 million), according to the data.
"At a time of runaway federal deficits and 10% unemployment, it is extremely distasteful for the American taxpayers to be forced to pay the legal bills of former executives of Fannie Mae and Freddie Mac, companies which were central players in the financial crisis and which have cost taxpayers nearly $151 billion in bailouts since being taken over by the government," Issa wrote.
In response to the Neugebauer investigation, DeMarco defended his decision to clear the payments.
"I understand the frustration regarding the advancement of certain legal fees associated with ongoing litigation involving Fannie Mae and certain former employees," DeMarco said. "It is my responsibility to follow applicable federal and state law. Consequently, on the advice of counsel, I have concluded that the advancement of such fees is in the best interest of the conservatorship."
Issa said he wants a "complete explanation of the FHFA's decision," and asked the agency to provide the state and federal laws and agency bylaws that give it the authority to clear such payment. Issa wants the information by Friday. He also asked for all records and communications between Fannie, Freddie, the FHFA, the Treasury Department and the White House in reference to the legal fees.
Issa, chairman of the House Oversight and Government Reform Committee, said in January that he plans to lead six investigations, including one on the role Fannie and Freddie played in the foreclosure crisis. Democratic members of the Financial Crisis Inquiry Commission found the GSEs followed Wall Street into the subprime risks, while a dissenter claims their failure resulted from flawed housing policy.
Ally Financial fixes 90% of foreclosure affidavits
( how can you fix fraud , illegal assignments ???)
2-1-11
Ally Financial (GJM: 23.80 +0.89%) said in its fourth quarter statement Tuesday that it has corrected roughly 90% of the approximately 25,000 foreclosure affidavits employees signed and filed improperly.
The bank earned $79 million during the fourth quarter. But it proved to be a period of corrections for the lender. Along with a multi-million dollar settlement with Fannie Mae over representations and warranties, the bank began correcting affidavits signed en masse and without a review of the documentation as required by law in 23 states.
Ally said all but 2,548 affidavits in three states have been remediated or re-executed. The bank did not disclose which states exactly, but added the delay was due to stricter foreclosure processes in those areas.
"As each of the files were addressed and deemed to be appropriate, the foreclosure process for those select cases continued to move forward," Ally said. "The company has not found any evidence of inappropriate foreclosures in its review process to date related to the affidavit matter."
But the cleanup at Ally and other lenders has not stopped regulators from starting down the path of a national servicing standard or the Iowa Attorney General Tom Miller from pursuing a settlement for homeowners.
"It is time for government and industry to reach an agreement," said Federal Deposit Insurance Corp. Chairman Sheila Bair at a Mortgage Bankers Association summit in January. "We cannot afford to wait for Congress to take action on this issue. Regulators and Attorneys General need to work together now to create strong servicing standards for the future. Otherwise, we will have missed a historic opportunity."
Inland California Region
among tops in mortgage modifications,
but more foreclosures loom 2-1-11
WASHINGTON - An Obama administration program meant to stem the tide of foreclosures across the nation has helped to lower mortgage payments for more than 28,000 households across Inland Southern California, new federal data shows.
The figures released Monday come amid mounting calls for the termination of the Home Affordable Modification Program, which has been criticized as ineffective and fraught with problems since its 2009 inception.
The Inland region ranks behind only the Los Angeles and New York metropolitan areas in the number of mortgages that were permanently modified through the end of last year as part of the program, according to the data released by the U.S. Treasury Department.
But in a region where roughly 40 percent of homeowners are underwater -- meaning their loan balance exceeds the value of their home -- the program has had little impact on the lingering foreclosure crisis.
"It's a drop in the bucket," economist John Husing said. "Given the size of the problem, it's not a big deal for this region."
The modification program, the centerpiece of the White House's affordable housing initiative, was designed to help as many as 3 to 4 million at-risk homeowners to avoid foreclosure, though administration officials have since stepped back from that goal.
Through the end of December, 521,630 permanent modifications have been put in place, with a median reduction of $520 per month, figures show.
A total of 28,036 homeowners in the Riverside-San Bernardino-Ontario metropolitan area had their mortgages modified, the figures showed.
An additional 7,105 trial modifications are currently ongoing. Yet those numbers amount to a fraction of the 101,210 households, or one of every 14 Inland Southern California households, that received some kind of foreclosure notice last year.
Click here for full story
http://www.pe.com/localnews/politics/stories/PE_News_Local_D_housing01.207fa68.html
Avoiding Foreclosure
Small Steps That Can Make
A Big Difference 2-1-11
Currently, an estimated 6.7 million borrowers are delinquent or in foreclosure. During a recent month, one in every 492 U.S. housing units received a foreclosure filing during the month. Here are some simple steps that can make a big difference.
One of the first things you can do to prevent foreclosure is find out about what assistance your state can offer now that you are faced with losing your home. Loan modification and mortgage assistance may be available if you are delinquent on your home loan, unemployed, or are suffering from an underwater mortgage. These funds may be able to offer you aid to keep you in your home.
One example is the Hardest Hit Fund (HFA) an Obama administration initiative which is providing $1.5 billion to state agencies where house prices have fallen more than 20% from their peak. To see if your state is participating go to:
http://www.treasury.gov/initiatives/financial-stability/housing-programs/hhf/Pages/default.aspx
Read more: http://society.ezinemark.com/avoiding-foreclosure-small-steps-that-can-make-a-big-difference-31f0391efee.html#ixzz1CjTSvHp7
Empty Houses:
Ownership Society Is Over 2-1-11
Following up on yesterday's post on the latest homeowner vacancy report, I wanted to point out a significant shift in the makeup of not just how, but where we live.
While the overall number of empty homes rose nationwide, the biggest vacancy jump was in what's called "principal cities."
These are the lower income, higher crime areas that Fannie Mae and Freddie Mac and prior administrations tried to bolster homeownership in. It’s close-in areas that are not attractive, according to Stephen East of Ticonderoga Securities.
Vacancy rates actually fell in the suburbs to 2.3 percent in Q4 '10 from 2.5 percent a year ago and 2.4 percent in Q3. The increase in the overall rate was really driven by a 3.6 percent vacancy rate in "principal cities," up from 3.1 percent a year ago and 2.9 percent in Q3.
"The increase in the vacancy rates in principal cities continues to illustrate the hangover from the 'ownership society' supported by the Clinton and Bush administrations," notes East. "We speak often to clients about the dichotomous market that does not get enough attention. Draw concentric rings around a city center. Two primary areas that drive the housing malaise—in close, out far. The sweet spot belt in nearly every city is seeing a significantly better housing market than broad numbers show. Fortunately, this is where most of today’s qualified buyers want to live."
I am not sure why that's fortunate. The "sweet spot belts" around the country have not seen nearly the foreclosures nor the price drops that the close-in and far out bands have seen, so we don't need so much demand there. There needs to be more demand in the "principal cities," but it's just not there. Prices have dropped the most, and most borrowers there are lower income and cannot qualify in today's tough mortgage market. That's why, again, apartment rentals are seeing such high demand.
Click here for full story
http://www.cnbc.com/id/41370476
Lawyers' Carelessness
Was Key to the Mortgage Mess 2-1-11
Two of my biggest concerns about the mortgage mess involve the conduct of lawyers at every stage, from creating the toxic securities to foreclosing on homes, and that so far the major players haven't been held accountable for their actions in creating the crisis. Both concerns are neatly encapsulated by an enforcement action taken by the Securities and Exchange Commission at the end of last week.
On Friday, the SEC announced it is taking administrative action against David M. Tamman, a partner at Greenberg Traurig, a major international law firm. (Or at least, he was a partner: His page on the firm's website has been removed.) The SEC is going after Tamman because it says he falsified a document that described securities he helped a client sell. That is, when the SEC asked Tamman for copies, it says he altered the real document and gave the SEC the fake.
While that conduct is egregious -- and kudos to the SEC for going after him -- it's not that different than the ways many, many lawyers have behaved throughout this documentation debacle. For example, attorneys for multiple banks have been giving courts fraudulent documents in order to speed foreclosures, in many cases "robo-signing" the documents themselves. And consider the magnitude of the carelessness -- it seems at least like malpractice to me -- employed by the big firms involved in the securitization deals.
How Did Thousands of Lawyers
Miss the Problems?
The Ibanez decision in Massachusetts exposed the fact that the standard securitization deal violated a century of Massachusetts real estate law, and recently filed lawsuits against JPMorgan Chase (JPM) and Bank of America (BAC) hint at how far astray the big law firms went. And not just one firm -- the scale of the problems alleged in those cases suggest the problem was systemic.
See full article from DailyFinance: http://www.dailyfinance.com/story/credit/mortgage-document-mess-lawyers-foreclosure-securities-fraud/19821995/
Wells Fargo Cutting
145 Mortgage Jobs in Irvine 2-1-11
Wells Fargo & Co. said Monday it will cut 145 employees from its wholesale mortgage lending division in Orange County.
All of the positions were temporary and most were based in the Irvine offices of the San Francisco-based banking giant, officials said.
“This is a very difficult decision,” said Wells spokeswoman Julie Green Rommel.
The wholesale division works with third party mortgage brokers after loans are originated and processed. Major responsibilities include underwriting, approving and closing loans.
Wells’ local wholesale lending division was expanded in the last 12 to 18 months to accommodate new business, but demand had waned recently, Green Rommel said.
“And even though interest rates are still favorable the demand is still slowing,” she said. “We expect to still have a significantly reduced mortgage market throughout 2011. As our business is constantly evolving, we need to make sure our team is aligned with the demands of the market and earnings expectations for the company.”
The cuts come in the wake of record quarter and year-end profits at Wells.
In the fourth quarter ending Dec. 31, Wells recorded net income of $3.4 billion, up 21% from a year earlier. For 2010, the bank topped $12.4 billion in net income.
Click here for full story
http://www.ocbj.com/news/2011/jan/31/wells-fargo-cutting-145-mortgage-jobs-irvine/
Wells Fargo suffers setback
in N.J. foreclosure case 2-1-11
(maybe that is why their income was so high last quarter, gains from illegal foreclosures?)
As it joins other major lenders in opposing closer scrutiny of their New Jersey foreclosure practices, Wells Fargo Bank has suffered a setback because of missing documentation in a Bergen County case.
In blunt language, a three-judge appellate court rejected the bank's attempt to foreclose on a Westwood property. Significantly, the case began in 2006, raising questions about mortgage and foreclosure practices well before the collapse of the national housing bubble.
The ruling underscores the issues that caused New Jersey Chief Justice Stuart Rabner to order Ally Bank (GMAC), Bank of America, CitiBank, JPMorgan Chase, OneWest and Wells Fargo to justify their foreclosure actions after improprieties surfaced in other cases.
Rabner acted in December after a report from Legal Services of New Jersey about "robo-signings" of mortgage documents by employees of banks or other companies with no direct knowledge of the transactions. Rabner designated Judge Mary C. Jacobson to oversee the review.
She also required two dozen other smaller lenders to demonstrate there are no irregularities in their foreclosure proceedings. Retired Superior Court Judge Walter R. Barisonek has been recalled to handle those responses.
In the current case, appellate Judges Stephen Skillman, Joseph L. Yannotti and Marianne Espinosa found in favor of homeowner Susan Ford of Westwood.
Ford had attempted without success to question mortgage and foreclosure practices in trial court, challenging the sequence of events after she took out a loan from Argent Mortgage in March 2005. Ford claimed she was the victim of "predatory and fraudulent acts" by Argent.
But just five days after Ford closed on her loan, Argent purportedly assigned the mortgage and note to Wells Fargo, according to the lenders. Wells Fargo filed for foreclosure in July 2006, at the time saying the assignment had occurred but had not yet been recorded.
Wells Fargo provided the court with documents, including a certification from Josh Baxley, which identified him as an attorney representing HomEq Servicing Corp. and Wells Fargo and asserted that an attached mortgage and note were true copies.
Baxley's certification did not indicate how he knew this, and did not include the assignment of the mortgage, according to the appellate judges. Meanwhile, Ford argued that some of the documents were forgeries, including one that stated her income was much higher than the reality.
In an oral opinion, the trial judge said Ford had raised "disturbing questions" about Argent, but they did not affect Wells Fargo as the holder of the mortgage. The case proceeded to foreclosure in April 2007. Ford appealed, but everything was put on hold when she sought to file for bankruptcy.
Eventually, Ford's bankruptcy was dismissed. In June 2010, the appeals court stayed a sheriff's sale of her house, and heard arguments in October. The three judges pointed out that the bank's submitted "assignment of mortgage" had not been authenticated by Baxley or anyone else. As a result, it is unclear whether the bank is the mortgage holder, they said.
The bank's other arguments, that Ford could not contest its standing in the case; that her arguments were "counterintuitive," or that her brief, filed by New Jersey Legal Services exceeded the scope of the case, "are clearly without merit and do not warrant discussion," Skillman wrote.
"We conclude that Wells Fargo failed to establish its standing to pursue this foreclosure action," the judges found.
Click here for full story
http://www.newjerseynewsroom.com/economy/wells-fargo-suffers-setback-in-nj-foreclosure-case
Michigan Family Says
Obama Foreclosure-Prevention Program
Cost Them Their Home 2-1-11
The following story is produced in partnership with The Dylan Ratigan Show's week long "No Way To Live" series on the financial crisis and its impact on ordinary Americans, and in collaboration with Meetup.com, which is hosting HuffPost Mortgage Modification Madness Meetups across the country, where homeowners can meet others who've had similar difficulties with lenders.
After nine months of dutifully making lowered mortgage payments under the Obama administration's foreclosure-prevention program, Bea and Terry Garwood of Pinckney, Mich., are all set to move out. Despite the promise of relief, they are losing to foreclosure the two-story house that has been their family home since 1994. They say the administration's initiative has effectively pushed them out the door.
The Garwoods are among nearly 800,000 American households that have managed to enroll in the program before failing to secure permanently lowered monthly payments. Their experience underscores why many housing experts and lawmakers have proclaimed the effort a failure. Though President Barack Obama promised it would help three to four million homeowners avoid foreclosure, only 522,000 had successfully secured so-called permanent loan modifications by the end of last year, according to the Treasury Department.
More homeowners have actually been bounced from the program than have been helped, the data show. Despite widespread anticipation that foreclosures will only accelerate in 2011, breaking a record set last year, the number of new borrowers entering the program has been slowing to a trickle: Most of the potential new applicants lack sufficient income to qualify for lowered payments. The program was designed to help people confronting mortgages whose low promotional interest rates give way to much more expensive terms, and not for the circumstances at hand, with holders of traditional loans losing jobs and income.
A Treasury spokeswoman said the HAMP program was never intended as a cure-all for the foreclosure crisis. "It wasn't designed to prevent every foreclosure," said the spokeswoman, Andrea Risotto.
Click here for full story
http://www.huffingtonpost.com/2011/02/01/michigan-family-says-obam_n_816684.html
Sen. Merkley's Proposal Seeks
to Bring Back
First Time Homebuyer Tax Credits,
Simplify Loan Mods and
Provide BK Judges With
Cram-Down Power 2-1-11
Oregon Sen. Jeff Merkley has written a letter to President Barack Obama urging a greater focus on helping families stay in their homes and avoid foreclosure. In the letter, Merkley stressed that a strong housing market is essential to future job creation. Sen. Merkley noted the shortcomings of the Administration’s Home Affordable Modification Program (HAMP) program in securing mortgage modifications for families facing foreclosure and called for a renewed focus on repairing the battered housing market. More than 300,000 foreclosures have been filed against American families each month for the past 20 months.
“It is a tragedy to see families forced from their homes, but fixing the housing crisis is about more than preventing foreclosures,” wrote Sen. Merkley in the letter. “It is about providing stability for working families, creating jobs, and making our economy work for middle class families once again. ”
As the depressed housing market continues to hinder the nation’s economic recovery, Sen. Merkley is proposing a six point plan to boost the housing market and stem the tide of foreclosures. Merkley’s plan would do the following:
►Bolster the market by providing a permanent tax credit to assist first-time homebuyers in making a downpayment;
►Assist families facing foreclosure through a national “short refinance” program that would enable some such homeowners to refinance their mortgages based on current interest rates and home values;
►Stop the “dual track” by which banks continue moving towards foreclosure while they consider homeowners’ applications for loan modifications;
►Require loan servicers to provide homeowners with a single point of access when they seek a loan modification, which will improve accountability and ensure greater clarity during the process;
►Guarantee homeowners an independent, third-party review prior to foreclosure to ensure that laws were properly followed and homeowners were treated fairly; and
►Implement the “lifeline” bankruptcy option by providing bankruptcy judges with the power to modify the terms of home loans just as they can with vacation homes and yachts.
Click here to view Sen. Merkley’s proposal, "Paving the Way to a Healthy Housing Market."
For more information, visit http://merkley.senate.gov.
Nearly 11 Percent
of US Houses Empty 1-31-11
I usually find the quarterly homeowner vacancy and homeownership report from Census pretty lackluster, but the latest one released this morning was anything but.
America's home ownership rate, after holding steady for a while, took a pretty big plunge in Q4, from 66.9 percent to 66.5 percent. That's down from the 2004 peak of 69.2 percent and the lowest level since 1998.
Homeownership is falling at an alarming pace, despite the fact that home prices have fallen, affordability is much improved and inventories of new and existing homes are still running quite high.
Bargains abound, but few are interested or eligible to take advantage.
More concerning than the home ownership rate is the vacancy rate. The Census tables don't tell the entire story, but they tell a lot of it. Of the nearly 131 million housing units in this country, 112.5 million are occupied. 74.8 million are owned, and that's only dropped by about 30 thousand in the past year. 38 million are rented, but that's up by over a million year over year. That means more new households are choosing to rent.
Now to vacancies. There were 18.4 million vacant homes in the U.S. in Q4 '10 (11 percent of all housing units vacant all year round), which is actually an improvement of 427,000 from a year ago, but not for the reasons you'd think.
The number of vacant homes for rent fell by 493 thousand, as rental demand rose. 471,000 homes are listed as "Held off Market" about half for temporary use, but the other half are likely foreclosures. And no, the shadow inventory isn't just 200,000, it's far higher than that.
Click here for full story
http://www.cnbc.com/id/41355854
One in Five Mortgages
Default Again After Modification 1-31-11
One in five U.S. homeowners whose loans were modified under a federal government program to help reduce foreclosures were at least 60 days late in their payments a year after their mortgages were reworked.
The re-default rate for the Making Home Affordable Program averaged 20.4 percent after 12 months, 15.9 percent after nine months, 10.7 percent after six months and 4.6 percent after three months, according to a report released today by the Treasury Department.
The program has been criticized by housing advocates, lawmakers and watchdog groups. The number of active, permanent modifications reached 521,630 as of Dec. 31 under the program, which originally was intended to help 3 million to 4 million homeowners save their properties from being seized by lenders.
“While we cannot prevent every foreclosure, it is important to remember that these programs have helped to create more options for affordable and sustainable assistance than have ever been available before," Tim Massad, acting assistant Treasury secretary for financial stability, said in a statement today.
CLICK HERE FOR FULL STORY
http://www.bloomberg.com/news/2011-01-31/one-in-five-mortgages-default-again-after-modification-under-u-s-program.html
Search All the Documents
in the FCIC’s Treasure Trove 1-31-11
After the Financial Crisis Inquiry Commission released its final report last Thursday, many considered it a rather lackluster report [1] telling us little more than what we already know. But while the 662-page report may not be a page-turner, the panel also released a really valuable cache of documents [2]. We've put the complete archive into our document viewer [3]. (The FCIC's site also has the archive, though its search is clunkier and often turns up fewer results.)
We’ve already dipped into it and found documents confirming the conclusion [4] of our investigation of the hedge fund Magnetar and its role in creating CDOs that it bet against.
There are hundreds of other documents out there. A few quick searches on “transcript," “email CDO,” and names of execs turned up these interesting items:
Transcript from a July 2007 phone conversation [5] between two AIG executives discussing potential Goldman losses as being “a fucking number that’s well bigger than we ever planned for.”
The full text of the famous email [6] between former Bear Sterns hedge fund managers Matt Tannin and Ralph Cioffi. Prosecutors built a fraud case against the two based heavily on the emails, in which Tannin and Cioffi describe the entire subprime market as “toast” just days before they told investors that their funds were in good shape [7]. The two were found not guilty [8] of lying to investors.
CLICK HERE FOR FULL STORY
http://www.propublica.org/blog/item/dig-into-the-fcics-document-treasure-trove
SEVERAL STATE ATTORNEY GENERALS
GANGING UP ON COUNTRYWIDE
Schuette Sues Countrywide Financial To Recover Taxpayer-Funded Investment Losses
Contact: John Sellek or Joy Yearout 517-373-8060
January 28, 2011
LANSING - Attorney General Bill Schuette and Treasurer Andy Dillon today announced that the State of Michigan has taken legal action against Countrywide Financial Corporation, its underwriters, auditor and some of its former executives and directors to recover $65 million in taxpayer-funded state pension funds. Schuette filed the lawsuit in the U.S. District Court for the Central District of California, accusing the defendants of participating in a massive corporate fraud scheme that depleted State of Michigan pension funds by millions of dollars.
"Protecting the hard-earned dollars of Michigan taxpayers from fraud is one of my top priorities," said Schuette.
In the complaint, the Attorney General's office alleges Countrywide had effectively become a subprime lender while telling investors that it continued to maintain stringent mortgage loan underwriting standards that differentiated it from its competitors and subprime lenders. Throughout the March 12, 2004 through March 7, 2008 time period, Countrywide assured the market that it should not be affected by a downturn in the housing market. However, during that period, Countrywide's stock price dropped about 90%, from over $35 per share to about $5 per share. This came as a result of disclosures revealing Countrywide's lax mortgage underwriting guidelines, cascading mortgage defaults, and an increased use of "pay option" adjustable rate mortgages, no documentation mortgages and other risky loan types. This represented a loss of market capitalization of approximately $17 billion. The State of Michigan Retirement Systems lost over $65 million.
Countrywide's stock was artificially inflated during the class period because defendants made these false and misleading statements, which concealed their fundamental shift in core mortgage-related business strategy. In addition, Countrywide also misstated their financial statements because reserves for loan losses, representation and warranty liability were materially understated.
"Nearly 540,000 participants and beneficiaries are depending on State Pension Funds to secure their retirement," said State Treasurer Andy Dillon. "We take our obligation to protect those funds very seriously."
The State of Michigan Retirement Systems (SMRS), which invests on behalf of Michigan Public School Employees, State Employees, State Police and Michigan Judges, hold combined assets of approximately $47.5 billion, making the SMRS one of the largest pension systems in the nation.
OREGON FILES SECURITIES LAWSUIT
AGAINST COUNTRYWIDE
FOR MISLEADING FILINGS
THAT CAUSED $14 MILLION IN LOSSES TO STATE
January 26, 2011
Oregon Treasurer Ted Wheeler and Attorney General John Kroger today announced a securities lawsuit against Countrywide Financial Corp. to recover losses to the state pension and workers' compensation funds caused by false statements that improperly inflated the prices of Countrywide's stock and bonds.
A class action lawsuit previously reached a settlement with Countrywide that may have netted the state less than $500,000 on $14 million in losses. So Treasurer Wheeler and Attorney General Kroger decided it was in the state's best interest to opt out and file their own lawsuit.
"It is time to foreclose on Countrywide's effort to pay so little for costing Oregonians so much," said Treasurer Wheeler, who sits on the Oregon Investment Council and has a fiduciary duty to protect public assets and maximize the returns for beneficiaries of trust funds including the Oregon Public Employees Retirement Fund.
"Oregon will not accept pennies on the dollar when Wall Street defrauds Oregonians," said Attorney General Kroger.
"It is important that we protect the interests of SAIF's policyholders and injured workers," said Brenda Rocklin, SAIF Corporation president and CEO.
Countrywide was among the nation's largest mortgage lenders. In 2005, Countrywide originated over $490 billion in mortgage loans.
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