Showing posts with label Kamala Harris. Show all posts
Showing posts with label Kamala Harris. Show all posts

Tuesday, September 30, 2014

Los Angeles County Superior Court Accuses Prominent Foreclosure Attorneys Philip Kramer and Mitchell Stein and at least 17 other individuals and businesses of ensnaring Borrowers in a Scheme that Falsely Promised a Cut of Future Settlements

APNewsBreak: Lawyers accused of scam in bank suits
California prosecutors sued several lawyers and call center operators for allegedly duping desperate homeowners across the country into paying thousands of dollars to join dubious lawsuits against big banks.
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COSTA MESA, Calif.
California prosecutors sued several lawyers and call center operators for allegedly duping desperate homeowners across the country into paying thousands of dollars to join dubious lawsuits against big banks.
The complaint unsealed Thursday in Los Angeles County Superior Court accuses prominent foreclosure attorneys Philip Kramer and Mitchell Stein and at least 17 other individuals and businesses of ensnaring borrowers in a scheme that falsely promised a cut of future settlements.
The lawsuit portrays the defendants as the most recent in the chain of mortgage-related scammers who helped fuel the housing bubble and have cashed in on its collapse. The defendants previously worked in the fraud-ridden loan modification industry, in which lawyers offer to negotiate better mortgage terms on behalf of troubled borrowers in exchange for a fee.
They are accused of telling borrowers that they had a solid claim to being victims of predatory lending because courts had already found most lenders to have approved inappropriate mortgages.
"They essentially took advantage of what we know is a growing sentiment out there," California Attorney General Kamala Harris said Thursday. "They suggested that by joining this lawsuit, the banks would have to pay. But the only people who paid were those homeowners who were victimized for the second time."
Investigators are aware of some 2,500 California residents who have been listed as defendants in the lawsuits, but there could be many more who paid fees and were never actually added to the suits or are out of the state, Harris said.
Up to 2 million official-looking mailers advertising the lawsuits were sent to homes in at least 16 other states, including Arizona, Florida, Nevada, New York and New Jersey, Harris' office said in a release.
Some borrowers had their homes foreclosed on after paying to join the suits filed by Kramer and Stein, according to the complaint.
Defendants in the complaint are all based in California, but the investigation could eventually ensnare associates in other parts of the country.
Florida bar spokeswoman Zannah Lyle confirmed that her organization was looking into allegations of rule violations concerning Tallahassee-based lawyer and lobbyist David Ramba's work with Kramer to recruit struggling homeowners to join lawsuits against banks. Ramba did not immediately respond to a message seeking comment.
The attorney general's complaint was unsealed a day after state bar investigators and state Department of Justice agents served defendants with copies of the complaint at 14 locations in Los Angeles and Orange counties.
Officials loaded boxes of seized documents into moving vans Wednesday. Armed police guarded the entrances to emptied offices, which appeared to contain wall-to-wall cubicles for phone center workers. The Orange County raids took place in sprawling office parks with manicured lawns surrounding Irvine's airport.
Outside one office, a man in a business suit said he had worked for the raided company but refused to answer any other questions as he carried a stack of framed pictures from the building and oversaw the removal of a small refrigerator by younger apparent employees.
At another office, a manager who would only give his first name, David, said he and his colleagues had been questioned about their connection with Kramer. He said they had done business with the lawyer two years ago but not since.
Prosecutors accuse the defendants of making false representations and three counts of unfair competition. They are seeking an injunction stopping the defendants from continuing with the business in addition to unspecified monetary damages.
No criminal charges have been filed in connection with the case.
Kramer's firm and the other defendants' were placed into receivership on Monday and have had their assets seized, the attorney general's office said.
Harris said that bar association lawyers were reviewing the suits against the banks to determine whether any plaintiffs had legitimate complaints that could be pursued against the lenders.
Calls to Kramer's office were being forwarded to a state bar phone number Thursday. Calls to Stein, who refers to himself on his firm's website and other communications as "The Doberman," went straight to a busy signal.
Prosecutors accuse Kramer and Stein of exploiting an existing lawsuit known as Ronald v. Bank of America NA filed in Los Angeles Superior Court in March 2009. Stein was one of the lawyers who first filed that case, which alleged on behalf of a few dozen clients that the bank committed mortgage-related improprieties. Kramer later joined as counsel to another defendant who was added to the case.
The lawyers used the Ronald case to drum up business and have since filed separate lawsuits against JPMorgan Chase & Co, Wells Fargo Bank NA, Citibank NA and others to broaden their base of clients, the complaint alleges.
The lawyers and their associates sent mailers that looked like official class-action lawsuit notifications and stated that their recipients were potential plaintiffs in a litigation settlement. The letters claimed they could cut their mortgage to as little as 70 percent of their value, prevent foreclosure and get $75,000 in damages.
They directed people to phone supposed law offices that were actually call centers staffed by operators with no legal expertise.
In addition to using mailers, Stein used his law firm's Facebook page to make overblown claims about bank behavior and his ability to seek retribution, according to the complaint.
"Look for Patriot Act violations in your mortgage," Stein wrote in a Jan. 17 posting. "Talk to a lawyer. You might just cancel the mortgage."
Prosecutors estimated hundreds or even thousands of people paid between $5,000 and $10,000 to join the lawyers' suits.
Kramer gloated in an October 2010 e-mail to another defendant about the virtues of their new undertaking compared with the loan modification business.
"Only morons would prefer to `sell' mods from this day forward," Kramer wrote, according the complaint.
Bank records show more than $7 million deposited in three of Kramer's accounts connected to the investigation, with millions more paid to call centers that provided answers to prospective clients responding to the mailers, the complaint said.
Those workers are accused in the complaint of overstating lawyers' progress in the lawsuits, all of which are in their earliest stages, and of misrepresenting judges' apparent disposition toward the banks.
Some salespeople are alleged to have told borrowers that the judge in the Ronald v. Bank of America has told the lender it has "no defense" and that its main argument is "absurd."
The salespeople also tell homeowners that the case's lawyers have proven banks have taken money from investors that can't be accounted for, the complaint says.
Philip Warmanen, a 71-year-old travel agent in Jacksonville, Fla., was among those who joined the lawsuit. Warmanen said he responded to a mailer that turned out to be from Kramer's law firm early this year after Bank of America failed to offer him a modification on his home that had lost about half its value since he paid $525,000 for it in 2006.
Warmanen was told he should receive a modification and other settlement benefits in just a couple months when he paid $4,000 to join the lawsuit but has heard little of the case since then.
"They said there was a strong likelihood that this would be successful and that they had a few cases where the judgment had come through positively in favor of the complainants," he said. "They led me to believe that that might be my case."
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Jacob Adelman can be reached at http://twitter.com/jacobadelman

Thursday, July 26, 2012

MATT TABBI, AN OLDIE BUT A GOODIE, WHERE DO WE STAND NOW?

A Victory for the Public on Foreclosures?
by Matt Tabbi, Rolling Stone

So there was big news yesterday on the foreclosure settlement front. We still have to wait and see what the final deal looks like, but there are reports out that the long-awaited settlement is a far, far better deal for the public than expected. If these reports are true, it looks like New York Attorney General Eric Schneiderman and California AG Kamala Harris have scored an enormous victory in narrowing the scope of the settlement to the point where it really only covers robosigning abuses.

According to reports (like this one in the Huffington Post), the deal will not include:
  1. Criminal liability.
  2. Tax liability
  3. Fair lending, fair housing, or any other civil rights claim.
  4. Federal Housing Finance Agency or the GSEs [Fannie Mae and Freddie Mac]
  5. CFPB claims for the period after they came into existence in July 2011
  6. SEC claims
  7. National Credit Union Association Claims
  8. FDIC claims
  9. Federal Reserve Board claims
  10. MERS claims
If that is true, and all of those things are out of the deal, and the banks are still exposed to liability not only for all of those things, but also for the broad range of offenses related to securitization, then $25 billion, dare I say it, might not even be a completely sucky number. It's far less than the real liability, but it's a much bigger sum than I ever thought would be negotiated just for robosigning.

I'm interested to see what the market reaction will be if this deal goes through. On the one hand the banks will all obtain some certaintly and relief from robosigning claims. But on the other hand, all the banks are still on the hook in other areas, nost notably putbacks of bad loans.

Score one for Schneiderman/Harris. Coupled with the news that the subpoenas have already started dropping on the securitization front, I'm almost optimistic.
p.s. let me clarify something, for readers who might mistake my meaning here. Robosigning is not a small offense. It's not a "clerical" issue. It's a mass-perjury issue, a tax evasion issue, a contractual fraud issue, and it's a criminal conspiracy issue (the banks' highest executives were engaged in planning it) and it resulted in millions of errors that resulted in untold numbers of premature foreclosures.

Robosigning had a profound and immediate impact on large numbers of actual human beings, and I don't want people to think I'm dismissing it as unimportant. I probably also shouldn't celebrate news like this until I see how the actual deal looks, what wording is used to narrow the deal's purview, how homeowners and other victims will be compensated, what will be done to prevent it in the future, and so on.

But my point was that, while a gross crime and one of the more obvious (and easily provable) parts of the criminal scheme common during the mortgage bubble years, robosigning is really an ancillary part of an even more enormous fraud that went on, and is still going on, in securitization/origination. Many homeowners were victimized by robosigning, but your more common victim of bank fraud during this time was an investor in MBS -- maybe even another WallStreet entity like a hedge fund or a bond insurer, maybe a foreign trade union, maybe a state worker whose pension fund lost 40% of its value because it was sold bad bonds by a too-big-to-fail bank. And the hook that snared those victims was securitization.

When I first heard about the foreclosure settlement, I thought it might contain a broad waiver for everything, including the tax evasion issues, the fair lending issues, securitization, and all the other things on that list above. If they did that, that would be TARPx10. My only point about this deal is that it appears to have been effectively negotiated down from a bloocurdling outrage to whatever it is now, which is probably something far less than that: it may still be a serious underpay, but it's not the unreal, criminal giveaway it was originally meant to be.

And it still leaves plenty of room for criminal investigation and reform. The people who organized and supervised the robosigning could and should still be targets of criminal prosecution, deal or no deal: this won't change that.

All I'm saying is, good for Schneiderman/Harris for holding out and preventing this settlement from being another AIG -- a secret backroom bailout in which everybody at the table got the government to solve their balance sheet problems in 24-48 hours of frenzied, disorganized discussion. This is still a bailout, but at the very least, someone represented the public this time around.

We still have to see what it looks like in the end, but I'm encouraged.
I talked more on this with the excellent Bill Press on Countdown last night:
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  • Matthew Weidner |1 hour, 59 minutes ago
    oh god no. they've finally gotten to taibbi...now he's a government troll. that's the only explanation that makes sense for this cheer-leading piece. remember, all the announcements speak of maybe a hundred attorneys and investigators...Enron had thousands. remember, Holder already said most of the conduct was not criminal in his speech. remember schneiderman has no real authority. remember they've already been investigating for years and no arrests. until we see real indictments this is all just theater.
  • Kurt Duffy |7 hours, 13 minutes ago

    While interest rates have never been more attractive, the number of people taking advantage of the historically low rates and refinancing their mortgages has dropped substantially, most of them dont even aware of the rates, i recommend 123 Refinance for refinance
  • Lee AuCoin |10 hours, 20 minutes ago
    So there will be a deal limiting liability on the crimes (perjury, fraud, conspiracy) while the larger, more complicated & difficult to prove crimes will begin and continue.... at least until the election. Why am I suspicious?
  • Don Fahnestock |19 hours, 35 minutes ago
    Two steps back, instead of four, for the possibility to maybe perhaps, after hell freezes over, take one step forward. The financial industry's strategy to wear folks down to the point where the most ardent critics will call just about anything, "A Victory for the Public....."
  • Richard Davet |Yesterday, 8:18 AM EDT
    the deal will not include:

    Criminal liability.
    Tax liability
    Fair lending, fair housing, or any other civil rights claim.
    Federal Housing Finance Agency or the GSEs [Fannie Mae and Freddie Mac]

    Since 1996 bac has sold 94% of their mortgages to fnma. If 94% are left out of settlement...................what is being settled?
  • Richard Davet |Yesterday, 8:14 AM EDT
    the deal will not include:

    Criminal liability.
    Tax liability
    Fair lending, fair housing, or any other civil rights claim.
    Federal Housing Finance Agency or the GSEs [Fannie Mae and Freddie Mac]

    As far back as 1996, bac sold 94% of all their mortgages to fnma. If 94% are left out of settlement...................................what is being settled???????????



  • [Deleted] |Yesterday, 7:14 AM EDT
    If it's true that this issue is focused ONLY on robo-signing - then I agree, this number doesn't suck. I only hope that the States use the funds to reimburse those who were injured by these abuses and do not earmark the funds for completely unrelated wishlists. The funds truly belong to those injured - and leaving the Ad Valorem Tax issue open for the States to recover funds should completely exclude the States from using funds from this settlement for State services.
  • Thomas Joseph |Yesterday, 6:34 AM EDT
    A judge once told me " the court house is like the Ritz Carlton, the doors are open to everyone as long as you have $600 for a room". It probably is a good settlement but the cost of litigating even the simplest claim is outrageous. Justice is out of reach for the 99%.
  • Dana Outlaw |Yesterday, 12:57 AM EDT

    Refinancing to a shorter mortgage term may allow you to build your home equity and pay off your mortgage faster. You can easily find your rates from websites like 123 Refinance in secs
  • [Deleted] |January 28, 6:14 PM ET
    The criteria for a good settlement is explained by Abigail Field on her website today.
  • Mitch Seaman |January 28, 6:13 PM ET
    Formatting's weird, can't read the first word of each line. If you could fix that would be rad.
  • [Deleted] |January 28, 6:12 PM ET
    This is not a good fraud settlement unless it meets the simple criteria for a good settlement as explained by Abigail Field here abigailcfield.com/?p=859
  • Carter Russell |January 28, 6:06 PM ET
    Robosigning has always seemed to me a case of lazy or sloppy bookkeeping, not a nefarious ripoff scheme. That said, Al Capone went down on tax evasion not his syndicate criminal activity, so it's good a dent has been made with the robosigning issue (where there was an undeniable smoking gun, if I can call the lack of something a smoking gun). And it's great that all the other abuses can still be investigated.

    Good job with the interview. I agree with your assessment of Press as excellent. When it comes to Obama, however, I hope you heed the words (more or less) of George W. Bush. "Fool me once, shame on you, fool me twice, shame on me. Won't get fooled again!" (I'm sure you don't intend the piece as an election piece, but coming in an election year, it will inevitably be interpreted that way.)
  • Abigail Caplovitz Field |January 28, 5:53 PM ET
    So much more than the liability waiver is important. Here's an idea of what a strong deal would look like: 1) Enforcement. Now, there’s been rumors about an independent court appointed monitor to do enforcement. That sounds fine as far as it goes, but here’s what real enforceability means:

    a) The monitor must have the ability to access and review servicer databases and other records at will. Servicers can’t be allowed to manage the info flow to the monitor.

    b) If the monitor finds problems, s/he must be able to impose immediate penalties of a variety of strengths without going through a process that enables the servicers to appeal and object and delay. Think of the monitor as a probation officer.

    c) The monitor should have a process for homeowners to file complaints, and a certain threshold of substantiated complaints should trigger enforcement action.

    d) The monitor must be truly independent with the skills, experience, staffing and other resources to do the job right.

    e) The monitor’s job and powers must continue into perpetuity unless the agreement is superceded by statute or regulation. This is important because homeowners are not servicers’ customers. The economic interests of the servicer do not align with homeowners, and after a deal’s expiration there’s zero reason to expect compliance to continue.

    2) Servicing Standards. When the “deal” was first leaked early last year I took it apart for DailyFinance here. What was abundantly clear from the proposal was that it mostly required servicers to obey the law, including the duties of good faith and fair dealing. That is, the document mostly exposed how much of the problem is a failure to enforce existing law. The biggest addition was the idea that servicers can’t foreclose on someone they’re considering for a modification. Of course, that is also a blatantly deceptive (and therefore illegal) practice, and that’s why Massachusetts AG Martha Coakley included it in her suit against five bailed-out banks (at paragraph 142).

    Beyond the very vanilla stuff in that original, “obey the law” term sheet, the settlement must force the banks to let the independent monitor’s team audit their account records. Evidence keeps surfacing that their records of who owes how much, to whom, are simply wrong far too much of the time. Consider these recent stories by Reuters and iWatch News or this one I wrote about a year ago. Or consider that servicers have been playing games with amounts borrowers owe in bankruptcy court so frequently that the court did a two year, seven step process to change the rules and force the banks to deal in good faith. (I write about the rule changes and background here, starting under “Measuring Up: The U.S. Trustees Program”.)

    Bottom line: mortgage servicers will never be able to do a good job unless their databases are totally overhauled, and they’ll never do that overhaul without an independent audit. And no, I don’t mean “independent” in the OCC sense; I mean actually independent, by the settlement monitor.

    What the current servicing standards are on the table isn’t clear, since we’ve not seen anything in nearly a year. It’s impossible to evaluate the terms on the table without seeing them, but unless the terms are better than that initial leak, they’re nowhere near good enough.

    3) Principal Reductions

    One of the oddest features of the settlement as discussed to date is the idea that the banks will be given total discretion to allocate most of the billions of dollars involved among borrowers. Several bad consequences flow from that.

    First, no state can know how much it’s getting (except the rightly-rejected CA bribe). How can an AG, in good conscience, take a deal without knowing what it’s worth to his or her state? Second, structuring the deal this way enables the banks to focus on managing their balance sheets rather than providing relief to homeowners. That is, decisions about who to help and how much will have nothing to do with who needs help or how much help they need. Third, as part of that balance sheet management, the banks will be able to shift losses from themselves to pension funds. How is that just?

    I call this feature of the settlement odd, because it’s completely unnecessary. Consider what happened after BP turned the Gulf of Mexico into a toxic waste dump: we made them stick $20 billion in a kitty, put Ken Feinberg in charge, and he cut checks to victims. Why isn’t that the model in this case?

    Instead of letting the banks manipulate the numbers to their advantage, we should require them to cough up the full amount in actual cash, and let a fully staffed and independent special master pay down the mortgages. The special master for each state should be appointed by that state’s AG, and the banks should not have a right to object to the person chosen. More; the rule should be that the payments are applied, 100%, to principal and interest. Any outstanding fees that the servicer has applied to the account only get repaid if the servicer submits a fully documented bill to the special master.

    Having a state-AG named person run a fund aimed at helping that state’s victims insures the decisions about who to help how much can be made by someone who really has homeowners’ interests at heart. Second, by forcing the banks to cough up cash, the approach is punitive, which it’s supposed to be.

    4) Regardless of how the DE’s MERS lawsuit is resolved and liability for its past actions addressed, the settlement should include an agreement to stop using MERS on all loans made after the date of the settlement. We need to limit the damage.

    5) The settlement has to deal with the fact that most mortgages’ documents are FUBAR. ‘Robosigning’ isn’t simply about signing documents in a funny way; it’s about creating documents the banks don’t have because they didn’t do their job right at the outset. Why are they creating the documents? So they can win foreclosure cases. That’s obstruction of justice. When you don’t have the evidence you need, you’re not supposed to just make sh-t up. But the servicers are, systematically. And it’s not like they’re doing things they have the right to do, just late. For a variety of reasons these documents are just fraudulent. They’re creating documents in the name of companies that have long since gone out of business, for example.

    Bottom line: You can’t solve “robosigning” simply by slowing the process down long enough for people to review newly-minted documents before submitting them. Similarly, if the database the reviewer is checking the numbers against is wrong, the review doesn’t help either. How to resolve the FUBAR documents situation? I don’t know. All I know is that the topic has to be dealt with head on.

    6) The liability waiver should be narrow. Perhaps that’s a done deal; certainly there’s considerable reporting to that effect. All I can say is 1) the text isn’t released, and 2) if the origination fraud waiver was so narrow, why were the banks willing to give CA a $15 billion bribe to sign on? What is it about California’s released liability that inspired such a big bribe?

    But let’s say, ok, the waiver’s narrow. If 1 through 5 above aren’t also part of the deal, then it’s a joke; the help for homeowners is too little in terms of dollars and too ephemeral in terms of servicing improvements. So the banks aren’t getting much liability released, but homeowners also aren’t getting much help.
  • Jessica LaRock |January 28, 5:51 PM ET
    Matt, the robosigning is not a "small" issue. It has contributed to clouding the titles of tens of millions of properties all over the country, potentially 60 million or more if you include all the MERS mortgages. The result is that homeowners will not be able to sell their homes, nor get a satisfaction/release on their mortgage if they should pay it off. Not without filing a quiet title suit, anyway. $25B is nowhere near enough to clear up this problem.
  • Garrett Rue |January 28, 4:26 PM ET
    I too want to be optimistic. I do. But it's really hard to shake the idea that this is all being run by bunch of four star clowns who are gonna end up giving the whole circus away.
  • John Regan |January 28, 4:18 PM ET
    I'm afraid this is not good news at all. The banks should not be let off the hook for robo signing, and should not be permitted to continue the practice. Please see my post at strikelawyer.wordpress.com
  • James Etling |January 28, 3:03 PM ET
    Nice to know some people in government are into that "justice" thing.

    In yor earlier post, you had pondered that Schneiderman already had the authority to take on the banks prior to this new post and responsibility. But as US Attorney for NY, would he have the rhe reach to address matters abroad? These banks are all MNCs, and have their greedy little fingerprints all over the globe - including assets offshore waiting for a tax holiday or in the Swiss accounts of the officers.

    I want to be optomistic and believe that when Obama said Jamie Dimon was smart, he was setting himself up to later point out that he wasn't smart enough to evade federal prosecutors. - that's the audacity of my hope, at least.
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Friday, October 28, 2011

WHAT ABOUT HOMEOWNER HOSKING? WAKE UP AG KAMALA HARRIS AND DOBERMAN MITCHELL J. STEIN AND HELP VIRGINIA HOSKING WHO IS SCARED OUT OF HER MIND, WAITING TO BE FORCED FROM HER HOME. FOCUS!


Lawyer accused of mortgage-related fraud sues attorney general

Jeff Turner/Flickr
Los Angeles-area attorney Mitchell J. Stein refers to himself as "The Doberman" and his website advertises, "You Hold The Leash."
In August, California Attorney General Kamala Harris raided Stein's offices and accused him and other lawyers of fraudulently misleading thousands of struggling homeowners into paying to be part of mass lawsuits against mortgage lenders like Bank of America.
But Stein sued back, after warning on his Twitteraccount that "The Doberman is about to take a large bite out of Kamala Harris." Stein has accused the attorney general of being "the pawn of America’s most powerful banks,” claiming that Bank of America "corruptly funneled money" to Harris, according to one of his lawsuits.
As the legal sparring continues, the alleged fraud victims are running out of time.
Virginia Hosking received a notice last week directing her to vacate her foreclosed Whittier house within three days.
Report an error: See something wrong in this story?
E-mail our editors.
"Now I’m sitting here freaking out, afraid to walk out my front door in case they come lock me out," Hosking said.
Hosking said her husband had just passed away and she was facing foreclosure last year when she paid $4,000 to another law firm targeted in Harris' fraud suit.
Hosking said she was told that joining the lawsuit against her mortgage lender, Bank of America, would help save her house. At some point, Stein's firm, which has been suing Bank of America since 2009, took charge of Hosking's case.
The attorney general accused the lawyers of deceiving homeowners into thinking that the lawsuits would stop foreclosures or reduce their mortgage payments. In a press conference announcing the action, Harris called it "work that will bring justice to many homeowners in California who were targeted by predators who happened to have a law license."
Stein, who signs e-mails with a picture of a Doberman pinscher, claims that he is "Bank of America’s biggest nightmare" and that Harris' suit puts struggling homeowners at risk.
He points out that Harris received four donations in February, totaling $1,500, from attorneys with the law firm representing Bank of America.
Stein's recent lawsuit accuses Harris of doing the bidding of Bank of America by removing "the superstar who had been beating the bank to a pulp for two and a half years."
Shum Preston, a spokesman for Harris, called the suit frivolous.
"We respectfully decline to address the very strange claims made in this lawsuit," he said in a statement. "It is, sadly, another example of what we uncovered during our investigations: false promises designed to lure already distressed homeowners into paying money to lawyers who refuse to properly represent them."
A Bank of America spokeswoman declined to comment.
Stein's office sent e-mails to clients like Hosking asking them to show up at a court hearing to support Stein "in the fight against bank and government corruption."
His firm sent out a press release that said hundreds of homeowners would gather in solidarity with the Occupy Wall Street movement and "against Ms. Harris' support of the 1%."
Meanwhile, the State Bar of California obtained a court order stating that Stein "has become incapable of devoting the time and attention to ... his law practice" and authorizing the bar to seize his files and freeze his bank accounts.
Stein, however, maintains the order doesn't apply because it names Mitchell J. Stein and Associates and not his newer partnership, Mitchell J. Stein & Associates LLP. For the same reason, Stein's website states, "this law Firm has never been sued by the State of California."
Stein is also trying to stop seizure of his assets through his Florida bankruptcy proceeding.
The state bar notified Hosking that she could pick up the confiscated files relating to her, but she would have to find another lawyer.
Hosking keeps getting solicitations promising to save her house if she pays a fee.
"There are all kinds of preying people out there. I don’t know who to trust anymore," she said.
The state bar will work to return money to alleged victims from Stein's frozen funds, said Suzan Anderson, an attorney for the bar. Authorities also are encouraging banks to give a break to people like Hosking.
"Right now, the attorney general and the state bar are discussing with the lenders how they might be able to put a hold on any foreclosures because of these actions and maybe work with the people and give them time," Anderson said.



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Friday, August 5, 2011

CALIFORNIA AG SUBPOENAS CITIGROUP, BOFA $14-BILLION SETTLEMENT OF COUNTRYWIDE MORTGAGE CLAIMS (WHO MADE THAT DEAL?)

California attorney general subpoenas CitiGroup over mortgage practices

CitiBankCalifornia State Atty. Gen. Kamala D. Harrishas subpoenaed CitiGroup Inc. and its banking subsidiary, CitiBank, ordering the two entities to answer questions regarding the selling and marketing of mortgage-backed securities in the Golden State, a person familiar with the investigation said.
The person, who was not authorized to speak publicly about the matter and spoke on condition of anonymity, would not further characterize the nature of the investigation. Spokespeople for the attorney general’s office and Citi declined to comment.
In May, Harris announced the creation of a Mortgage Fraud Strike Force that would target mortgage fraud of any size. Harris said then that she would tackle corporate fraud, including instances in which bundled mortgages were sold as securities to the state or its pension funds under false pretenses. To prosecute some of the cases, Harris said she would use California's False Claims Act, which makes it a crime to defraud the state.
The probe comes as several other investigations into the practices of other large banks are underway.
New York and Delaware have more than a dozen attorneys working full time on a wide-ranging investigation into Wall Street's role in the mortgage meltdown. Those investigators have subpoenaed or requested information from 13 financial firms, including Goldman Sachs Group Inc. andJPMorgan Chase & Co. Citi is not a focus of that probe.
Citi is one of five large banks negotiating with a committee of all 50 state attorneys general probing banks' servicing and foreclosure practices. Those negotiations are still underway.
RELATED:
-- Alejandro Lazo
Twitter: @AlejandroLazo
Photo: A CitiBank branch in downtown Washington. Credit: EPA / Matthew Cavanaugh

Bank of America announces $14-billion settlement of Countrywide mortgage claims

Rusty BofA sign
This post has been corrected. See the note at the bottom for details.
If Countrywide Financial co-founder Angelo Mozilo had sold former Bank of America boss Ken Lewis a kitchen sink, maybe they could have tossed that in there too.
Bank of America, which under Lewis bought Countrywide in 2008 for stock then worth $2.5 billion, said in a statement Wednesday that settling claims by holders of Countrywide mortgage securities would cost it an additional $14 billion.
That amount, to be recorded in Bank of America's second-quarter earnings, is just the latest in a long string of painful payouts stemming from the takeover of Countrywide, the Calabasas lender that once was the nation's largest writer of mortgages -- many of them of the subprime and liar loan varieties.
On top of an $8.5 billion payout to 22 institutional investors, which The Times reported on Wednesday, the $14 billion includes $5.5 billion to cover other demands by holders of mortgage securities.
[For the record, 9:55 a.m. June 29: An earlier version of the paragraph above incorrectly said $14 million; the correct figure is $14 billion. It also said the $14 billion included a $2.6-billion write-off.
Bank of America says it will report a second-quarter loss of $8.6 billion to $9.1 billion after recording $6.4 billion in additional mortgage-related charges, including a $2.6-billion write-off of its Countrywide investment.]
That follows a similar action in January, when B of A Chief Executive Brian Moynihan chopped $2 billion off the value of Countrywide on the bank's books.
All told, the settlement covers the Charlotte, N.C., bank's exposure to claims by holders of securities backed by 530 trusts stuffed with Countrywide mortgages with an original principal balance of $424 billion.
"This is another important step we are taking in the interest of our shareholders to minimize the impact of future economic uncertainty and put legacy issues behind us," Moynihan said in a statement. 
"We will continue to act aggressively, and in the best interest of our shareholders, to clean up the mortgage issues largely stemming from our purchase of Countrywide."
Bank of America said the settlement would resolve "nearly all" of its exposure to claims that Countrywide misrepresented the riskiness of first mortgages backing bonds it sold to investors such as Newport Beach bond giant Pimco.
The bondholders to be paid off also include the Federal Reserve Bank of New York. The Fed wound up with them when JPMorgan Chase & Co. agreed to take over failed Wall Street giant Bear Stearns -- but only if the government pocketed Bear Stearns' most toxic securities.
There's still a lot of Countrywide liability left for Moynihan to deal with. In addition to securitized second mortgages, Bank of America still faces demands including those of mortgage insurers who claim they should be repaid for their Countrywide losses.
And let's not forget the borrowers who wound up in foreclosure on their Countrywide loans. Bank of America is among five major mortgage servicers that are negotiating with state and federal officials over botched foreclosure proceedings. The total settlement figues being bandied about for months now start at $5 billion and range upward of $20 billion.
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-- E. Scott Reckard
Photo: Rusty Bank of America sign in downtown L.A. Credit: E. Scott Reckard

Government accuses Deutsche Bank of mortgage fraud

Deutsche
U.S. prosecutors are suing Deutsche Bank and accusing it of fraudulently approving mortgages over a number of years in ways that have ended up costing the government hundreds of millions of dollars.
The lawsuit filed Tuesday morning in Manhattan federal court says that Deutsche Bank and its subsidiary, MortgageIT, lied to the government and "recklessly" approved mortgages for federal mortgage insurance without fully vetting the quality of the mortgages.
From 1999 to 2009, MortgageIT was part of a government program that allowed it to approve home loans for Federal Housing Administration mortgage insurance, and it ended up doing this with 39,000 mortgages worth $5 billion, according to the complaint. After Deutsche Bank acquired MortgageIT in January 2007, it marketed and sold these mortgages to investors.
The complaint says that Deutsche Bank and MortgageIT pushed out the mortgages at a rapid pace, without worrying about the quality of the mortgages or problems with the approval process.
"When an outside auditor provided findings to MortgageIT revealing serious problems, those findings were literally stuffed in a closet and left unread and unopened," the complaint says.
The rapid production of low-quality home loans, spurred on by fee-hungry investment banks, has taken much of the blame for the financial crisis, but so far few banks have faced government lawsuits over their activities leading up to the crisis.
According to the suit, the government has already paid $386 million in insurance claims related to bad MortgageIT loans and expects to pay "hundreds of millions of dollars" more.
The government is seeking to recover in damages and penalties triple what it has paid out, which would be at least $1 billion.
The bank did not immediately respond to a request for comment.
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-- Nathaniel Popper
Photo: U.S. attorney Preet Bharara announces a lawsuit against Deutsche Bank AG, which accuses the bank of lying "repeatedly" to qualify thousands of risky mortgages for a government insurance program.   Credit: Louis Lanzano/Bloomberg

Mortgage fraud, prescription drugs, boiler room: Your weekly ScamWatch

Here is a roundup of alleged cons, frauds and schemes to watch out for.
Mortgage lawsuits -- The Better Business Bureau recommends that homeowners not respond to a mailing asking them to join a "national" lawsuit against their mortgage companies. Michelle L. Corey,  president and chief executive of the St. Louis BBB, says the mailings are a new twist on schemes to obtain upfront payments of $5,000 or more from homeowners struggling to pay their mortgages. Several property owners in Boone County, Mo., recently got letters saying their loans “may be eligible for national litigation aimed at fraudulent lender actions,” the BBB said. The letters listed no company name or return address. But public records connect the mailings to John J. Ehlinger and his company, Diversified Financial Protection Agency, the BBB said. The BBB has issued two warnings on Ehlinger and Capital Debt Management since last summer for allegedly deceptive activities.
Prescription drug extortion –- The Food and Drug Administration is cautioning consumers about criminals who pose as FDA special agents in an extortion scam. The criminals call victims and tell them they are under investigation by the FDA or another agency for illegally purchasing prescription drugs from foreign pharmacies. The callers tell victims that they’ll face prosecution unless they pay a fine over the phone with a credit card, the FDA said. Anyone who receives such a call should refuse to make the payment and hang up, the FDA said.
Ponzi scheme –- The FBI is asking for the public’s help in finding Gerald Berke, who is accused of defrauding investors of more than $80 million through a Ponzi scheme operated out of a Los Angeles company called GJB Eneterprises. Federal prosecutors have charged Berke with fraud for allegedly telling clients that he would use their money to make short-term loans to businesses, but instead spending it on personal expenses and to make interest payments to early investors. An FBI “wanted” bulletin said Berke is believed to be living in Vancouver, Canada. Anyone with information about Berke’s whereabouts can contact the FBI or any U.S. embassy or consulate, the FBI said.
Boiler room –- The Securities and Exchange Commission has filed a lawsuit accusing a Santa Ana company and three executives of defrauding investors of $10 million through a telemarketing scheme that sought investments in a proposed initial public offering of stock in a company called mUrgent Corp. The father and twin sons that ran the company used investor money to pay themselves salaries and bonuses of more than $1.3 million and to purchase luxury cars and other personal items, the SEC alleged. The lawsuit seeks a court order that would force the company to reimburse investors and refrain from similar practices.
-- Stuart Pfeifer

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