Housing: State AGs testify before Senate Banking Cmte on foreclosure fraud 2:30pm ET; securitization lobby strikes back at TARP COP report on failures
Update 7: Video added of Levitan explaining the losses must be taken, still, and the US taxpayer isnt taking them this time, no more bailouts, thus the TBTF need to eat the shxt they created. and added video of NACA calling out Lowman of Chase. Clips courtesy of CSPAN and FDL TV
Update 6: Perfect end to this, Diana Olick, via ZeroHedge, reports the AGs are gonna kill the investigation and cut a WEAK deal to have some pitiful fund for possible restitution to ‘wronged’ homeowners, and an attempt to end the two track system wherein banks keep foreclosure proceedings open, timeline evolving, while evaluating homeowners for mods. Like I said, WEAK. We need HOLC but we arent gonna get it. Lack of leadership.
My totally unprofessional advice: if you were reamed by servicers with fees and gouged with atty fees or forced placed insurance, or foreclosed on while in HAMP trial modification, or HAMP application process, then contact your STATE AG NOW. File a complaint with your state AG NOW.
Update 5: WSJ reports on modifications being the tool of choice for the AG settlement options and the legislators.
Update 4: Hmmm. CFO of Fannie resigns.
Update 3: Well it’s an oligarchy folks and the TBTF are in control. WASS. I disagree with David Dayen of FDL on practically everything, but he has been doing an excellent job following the foreclosure and housing crisis and the impact on the economy at large and we concur on this issue. He live blogged the hearing today here.
…Dodd says he held a summit on how to handle foreclosures with servicers in 2007. Servicers agreed to modifications, added resources to deal with the scale of delinquencies. Despite agreeing to that, the servicers simply failed to do any of this.
Dodd mentions people losing their homes without having mortgages. Banks were “too quick” to call robo-signing scandal a technical problem, seem emblematic of much deeper problems with servicing practices “putting homeowners at risk.” The current servicer business model “is broken” and not equipped to deal with the current crisis. Mentions financial disincentives to modification among servicers. Could be “extensive problems” throughout the servicing process. Quotes Sarah Bloom Raskin on all the servicer fraud. “Service-driven defaults,” mentions “forced-place insurance” scandal, failure to record transfer, failure to administer HAMP, failure to meet requirements of foreclosure process, and failure to manage trusts under pooling and servicing agreements.
Mentions COP report and systemic risk.
Dodd says he created Financial Stability Oversight Council to deal with exactly this issue. That’s a big deal; the FSOC doesn’t think this is a systemic risk.
Dodd says we need more robust loan modifications with real principal forgiveness, but should expedite foreclosures where the homes are vacant. Must put an end to this housing crisis….(go read the whole live blog!)
Chase claimed they never wrongfully foreclosed, at which point Bruce Marks of NACA jumped up with around 20 supporters and he yelled Perjury! and called the Chase Suit a liar, which the Chase suit clearly is. NACA has been unable to get JPMChase to throw any modification action their way so Marks is pixxed. BofA and others get a ‘pass’ from Marks and NACA because they play ball. If you want help from NACA you sign an agreement to go ‘protest; several times a year at their request.
Consumers are so screwed. Nary a peep from the much vaunted Consumer Protection Team led by the suddenly mute Elizabeth Warren.
The economy will not recover until the American consumer can deleverage and the TBTF MUST take a hit on the books a big hit to do that. It is the simple truth, let;s see how long they can pump $ to try to make the TBTF whole, they do not get it. UE will continue and more homeowners will default.
If the incentives which securitization skewed are not realigned and I would say restored, then there is NO PROFIT MOTIVE for the TBTF Servicers to make meaningful mods the way banks did time immemorial pre MSB bullshxt.
Bank of America is responding to the securitization fiasco by proclaiming they are in HAND TO HAND COMBAT with bondholders on putbacks of Countrywide loans that failed to comply with the PSAs. Fabulous.
To fix what the TBTF geniuses did by overleveraging the world on bad MBS loans they, the TBTF must take a hit, the GLOBAL taxpayers of the industrialized world have ALREADY taken HUGE hits, time to share the pain big boyz, write down losses on HELOCS, release the dead equity off the loans, let ALL refi to 3%
Give all GIs a home loan! There are answers but since they all involve the TBTF taking huge hits and decimating their bonus pools geithner and co cannot see them as options. Frakkers.
Update 2: The complete PDF of the Congressional Oversight Panel report on the mortgage securitization/foreclosure fraud fiasco.
Update: CSPAN now has the hearing listed as 3:15pm ET. Will be carried here
The Senate Banking Committee will hear testimony from the State AGS investigating what IS SYSTEMIC FORECLOSURE FRAUD AND A FAILURE OF THE SERVICING AND SECURITIZATION PROCESS today. Bankstas will be there to whine as well.
Tuesday, November 16, 2010
02:30 PM – 05:00 PM
538 Dirksen Senate Office Building
The witnesses will be: The Honorable Tom Miller, Attorney General, State of Iowa; Ms. Barbara J. Desoer, President, Bank of America Home Loans; Mr. David Lowman, CEO, Chase Home Lending; Mr. Adam J. Levitin, Associate Professor of Law, Georgetown University Law Center; and Ms. Diane Thompson, Counsel, National Consumer Law Center. Additional witnesses may be announced at a later date.
TBTF are still fraudulently foreclosing on Americans. Regardless of your feelings on this issue you should recognize the extreme danger to property rights and rule of law if the securitization fiasco via MERS is allowed to continue to bypass state courts. No one’s property will be safe if TBTF can manufacture documentation and take your property without due process. PEOPLE WITHOUT LOANS ARE LOSING HOMES ALREADY. HOLC FTW. Sept 28 2008 HRC in WSJ on HOLC here.
The Senate Banking Committee will hear testimony Tuesday from both sides of recent foreclosure problems at the major banks.
…Senate Banking Committee will hear testimony on the issue from Bank of America Home Loans President Barbara Desoer and JPMorgan Chase Home Lending CEO David Lowman. Speaking first will be Iowa AG Tom Miller, who is heading up the 50-state investigation.
Diane Thompson, counsel for the National Consumer Law Center, and Adam Levitin, an associate professor of law at Georgetown University will also testify.
Those listening in can expect Desoer and Lowman to elaborate on the amount of volume the banks are facing, and the others to demand action to sure up servicing operations…..
Oh cry me a fxckin river. The poor poor TooBigToFail shxtheads that took down the global economy are whining b/c they don’t have enough staff to foreclose?
I CALL BULLSHIT! They DELIBERATELY left peeps in homes to AVOID TOO MUCH INVENTORY DRAGGING DOWN PRICES.
They DELIBERATELY used HAMP as an EXTEND AND PRETEND vehicle to DRAIN FAMILY’S LAST RESOURCES only to turn around and deny the mod when the family had nothing left.
FXCK the TBTF. And Fxck the banksta backed Obamaites like Geithner who are selling Americans PROPERTY RIGHTS and RIGHTS TO DUE PROCESS down the river to avoid WRITING DOWN BAD PAPER, AND HELOCS.
The TBTF MADE THE LOANS, the TBTF DESIGNED THE ENTIRE SECURITIZATION PROCESS.
We, taxpayers, made them whole. They have failed to do jack shxt to help families.
Obama is an utter failure. Hillary would have done HOLC, This would be BEHIND US. We would be RECOVERING.
As we have said for THREE YEARS, there will be NO ECONOMIC RECOVERY if HOUSING is not addressed. DO THE DAMNED HOLC.
..”I’m concerned about Treasury making representations categorically that you don’t see a systemic risk,” Silvers told Treasury’s chief homeownership officer. “And let me walk you through exactly why.”
“That letter asks for $47 billion of mortgages — of mortgage- backed securities to be repurchased at par,” Silvers went on. “Do you know what those mortgages are currently carried at … the market value of those bonds today?”
Caldwell declined to comment.
“OK, fine. Let me tell you what the Fed says they’re worth. The Fed tells us they’re worth 50 cents on the dollar. So if the Fed’s request to Bank of America is honored, right, Bank of America, assuming they are carrying these bonds, assuming when they buy them back they mark them to market, Bank of America will take a $23 billion loss.
“The Federal Reserve further informs us that there is nothing particularly unique about that particular set of mortgage-backed securities — meaning they have not been chosen…because they’re particularly bad. They believe they are of a common quality with the rest of Bank of America’s underwritten mortgage-backed securities. There are $2 trillion [worth] of Bank of America’s underwritten mortgage-backed securities.
“Five such deals — five such requests, if honored to Bank of America…will amount to more than the current market capitalization of Bank of America, which is $115 billion.
“Now do you wish to retract your statement that there is no systemic risk in this situation? And the word is ‘risk’ — not ‘certainty’ — but ‘risk’? And I would urge you to do so, because these things can be embarrassing later.”…
From the report issued today:
…”Clear and uncontested property rights are the foundation of the housing market,” the report said. “If these rights fall into question, that foundation could collapse. Borrowers may be unable to determine whether they are sending their monthly payments to the right people. Judges may block any effort to foreclose, even in cases where borrowers have failed to make regular payments.”…
Better do HOLC now Bankstas NO MORE TAXPAYER BAILOUT $ FOR YOU!!!! FHA will take until 2014 to get to 2% MANDATED reserves!! Good Grief!! And ‘experts’ agree, HOUSING IS GOING DOWN AGAIN.
SIFMA the IDIOTS who designed the securitization process and who lobby for it madly have a typical it’s all lies! everything is fine! response courtesy the NYT acting as mouthpiece for Obama positions as always via Naked Capitalism:
It doesn’t matter when mortgage assignments and endorsements are recorded because the existence of the pooling and service agreement and purchase sale agreement is proof in itself that the loan was conveyed, said Stephen Ornstein, a partner in the Washington office of SNR Denton, a law firm that represents loan servicers and lenders.
“If the assignment is missing, you can create it by having the old assignee reassign it to you,” Ornstein said.
I’ve heard this argument before, and none of the five experts who advise New York state on trust matters (and virtually all mortgage securitizations use New York trusts) accept that point of view. New York trusts can accept assets only as stipulated in their governing agreement. The pooling and servicing agreement made very specific provisions as to how the notes (the borrower IOUs) were to be endorsed and further required that the process be completed by specific dates, typically no later than 90 days after the trust was closed, with only very limited exceptions. And the trustee, on behalf of the trust, was required to provide multiple certifications that all these steps had been taken.
Let’s put it another way: the industry position is that the underlying contract, the pooling and servicing agreement, can just be ignored if the industry screws up on a grand enough scale. Would any servicer tolerate this argument if someone, say Treasury, tried to cut their fees? Funny how the “sanctity of contract” argument is nowhere to be found when adherence to contracts might crimp industry profits….
The soopergeniuses in D.C. and on Wall St have tried everything EXCEPT meaningful mods, helping homeowners, principal writedowns-HOLC. Nothing is working. DO THE DAMNED HOLC ALREADY.
Update 3: Ahhh BofA was facing the MASS AG Suit when they found religion. This is limited to the worst products in the Countrywide portfolio:
…The bank’s program is limited to Countrywide borrowers whose loan balance is at least 120% of the estimated home value, who are at least 60 days overdue, and who can show that financial hardship makes them unable to meet current payments. The bank estimated that 45,000 customers will qualify for principal reductions averaging more than $60,000.
Only the riskiest loans will be eligible. They include subprime loans; “option adjustable-rate” mortgages entailing minimal payments now but big increases later; and certain loans that have a fixed rate for two years and then adjust annually.
The bank’s move is part of an agreement to settle claims over certain high-risk loans made by Countrywide Financial, which the bank acquired in mid-2008. The Massachusetts Attorney General’s office, which was negotiating with the bank, said it was prepared to file suit had the agreement not included principal reductions….
Update 2: Some details from Reuters by way of CalculatedRisk:
From Reuters: BofA to start reducing mortgage principal-sources
Bank of America will … announce plans to start forgiving mortgage loan principal for troubled homeowners who owe more than 120 percent of their home’s value or are battling ever-expanding “negative amortization” loans.
According to a summary of the program obtained by Reuters, Bank of America pledged to offer an “earned principal forgiveness” of up to 30 percent in two stages. The lender will first offer an interest-free forbearance of principal that the homeowner can turn into forgiven principal annually over five years, provided they stay current on their payments….
Update: In an amazing coinkydink the IG just issued a report ripping the Obama Housing Plan to shreds just as these ‘voluntary’ principal reduction programs are announced, heh:
A government watchdog agency criticized the Obama administration’s $50 billion campaign to avert foreclosures by reducing mortgage payments for millions of distressed borrowers.
A report by the inspector general of the federal Troubled Asset Relief Program, or TARP, said results of the loan-modification program so far have been disappointing. The report, released Tuesday evening, also said that the U.S. Treasury has failed to measure results properly for the Home Affordable Modification Program, known as HAMP, and that it may merely delay foreclosures in too many cases.
When President Obama launched HAMP in early 2009, the government said it would help as many as three million to four million homeowners avoid foreclosure. So far, however, about 169,000 households have successfully completed trial periods and been given long-term payment relief…
I know this is unpopular. However, if we had done what Hillary proposed in 2007 (HOLC like FDR did) or what MAC proposed in 2008 (every homeowner getting a reduction to market rates, not forgiven, but the principal being non interest bearing and tacked onto end of loan), then IMO the housing markewould have cleared already.
Instead President Credit Suisse-UBS has continued with the EPIC fails of HARP, HAMP, extend and pretend, and we STILL face 5-6 million foreclosures in the year ahead.
Now Bank of America is doing what Sheila Bair at FDIC has been proposing for two years, they are writing down principle on underwater loans. ThThey are approaching it in a manner which ties the homeowner to the home, it can be done. So you ‘earn’ the forgiveness over a 5 year period of payments. This way underwater homeowners stay and the cash flow is assured for 5 years. Good deal.
The key issue IMO is with continued UE we cannot sustain the underwater walkaways, resets in pick a pay horror products AND the natural loss of homes to UE. Something needs to be done to clear it out before it continuesto snowball. We have entered the double dip in housing already, see sidebar for HousingWire and CalculatedRisk pieces.
Also recall please that the ENTIRE BASIS OF TARP was HOUSING. The way it was sold by Paulson was that it was a vehicle to purchase MBS and CDS b and free the banks from the problem. Had they done this they could have done HOLC like FDR, bought the loans and written them down in one fell swoop (and anyone who thinks taxpayers arent already backing these collapsing loans hasnt been paying attention- FAN FRED which now have an UNCAPPED TAXPAYER GUARANTEE from treasury, are backing ALL the remaining loans being writtern today). See our piece this week on FAN FRED .
Diana Olick reported it on CNBC this morning, PS MiM are BofA shareholders) when the video comes up we will post!
forgive typos, on the go with the netpad EEEPC which is kewt but doesnt show the whole box I am typing in right now, arrgle!
Update: Sales of existing homes fall 0.6%, third month of declines. This data is PRIOR to the snowstorms, so dont believe anyone who spins it as weather related. That housing credit did just what clunkers did, it borrowed against future sales….
Key housing data points on sales coming in today (Feb home sales 10:00 am) and the critters on the Hill have decided to turn their ‘laser like focus’ to housing (Fannie Mae, Freddie Mac). And it only took them 5 years. Quick on the uptake these critters eh? Meanwhile it looks as though FAN and FRED have RADICALLY cut back on loan volume..which would be good if we were getting them out of the business, but we aren’t so what’s happening?
The government seized control of Fannie Mae // and Freddie Mac // massive companies that purchase home loans, package them into investments and guarantee them against default. The price tag has been huge—$126 billion and growing.Now comes the hard part: figuring out what to do next.
“They have a separate regulator and they are a structural problem that is very large and very difficult to deal with separately,” Paul Kanjorski, Chairman of the Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, told CNBC.
Well what does Team Obama plan for housing? (beyond the ‘extend and pretend’ BS where they string homeowners along on HAMP) Well they are voting PRESENT …AGAIN…real shockah there eh?
With the Obama administration largely mute on the issue, Congress will hold its first hearing Tuesday about how to restructure the mortgage system in the wake of the financial crisis.
…Since the government took over Fannie and Freddie, Obama officials have given few details on their long-term thinking, apart from saying that they want to delay a legislative proposal until next year. In the meantime, officials plan to seek public comment on a list of questions to be published next month….
So in this case, like every other, Obama lets Congress, specifically the House and Pelosi, lead the way. I guess that was the ‘signed, sealed, delivered’ deal he and Pelosi made when she selected him as our candidate . As usual the two parties are diametrically opposed:
Kanjorski said he was favoring some smaller Fannies and Freddies, with some government connection, so if they fail they will not bring the system down with them….
Rep. Spencher Bachus, ranking Republican on the committee, said in a subsequent CNBC interview that he would prefer government exit the industry entirely. “We need to phase it out over time,” he said. “America is about competition and innovation. The federal model simply is not the efficient model.”
So when will this CORE ECONOMIC ISSUE, be addressed?
…Working out a new system is likely to take years. For the time being, the market is still resting on three government pillars: Fannie, Freddie and the Federal Housing Administration.There has been plenty of talk in recent months about how to scale back reliance on those behemoths, which own or guarantee half of all mortgages….
Barney Frank is pushing Treasury for at least some kind of outline of their FAN FRED HOUSING plan. Gee maybe some of the critters realize they will not have a majority much less Chair of the Cmte, much longer….
Fannie Mae and Freddie Mac won’t be allowed to return to a precrisis structure that rewarded shareholders with big profits for years but ultimately saddled taxpayers with massive losses, Treasury Secretary Timothy Geithner will tell a congressional panel Tuesday.
The administration will outline broad principles for the future of the mortgage market at the hearing, including stronger consumer protections and explicit guarantees for any government backstop of mortgages.
“The housing-finance system cannot continue to operate as it has in the past,” Mr. Geithner says in prepared testimony. The administration won’t issue a detailed overhaul proposal until later this year.
The hearing comes as Congress turns up the pressure on the administration to discuss how it plans to rebuild the mortgage market, the recipient of massive government support since the credit crunch began more than two years ago.
“We need people to start focusing on it. Nobody was coming up doing the hard thinking,” said Rep. Barney Frank (D., Mass.), who said he called the hearing to accelerate debate on the future of Fannie and Freddie…
…Fannie and Freddie, together with the Federal Housing Administration, now back more than 9 in 10 home loans….