The Senate Banking Committee’s Housing, Transportation, and Community Development Subcommittee will be holding a hearing at 10 a.m. ET titled, "Helping Homeowners Harmed by Foreclosures: Ensuring Accountability and Transparency in Foreclosure Reviews, Part II." To view the witness list and prepared witness testimony, please click here.
Bank of America did manage to cut the costs that were expected in its first quarter, but surprised investors with yet one more large payout to bond holders suing over mortgage securities, the Wall Street Journal reported today. The nation’s second-largest bank by assets said that it would pay $500 million to release it from claims on mortgage bonds that carry a current principal of $95 billion. Countrywide had been sued by several pension funds involved in the case way back in November 2007, a case that later added other pension firms including the Maine State Retirement System in January 2010. The Maine filing had attracted some attention as it sought a massive payday over $352 billion in loans originated. But a court had rejected many of the claims and reduced the suit. The $500 million settlement helped keep BofA’s overall litigation expense at $881 million for the quarter, up from $793 million a year ago and only down slightly from $916 million in the fourth quarter.
Residential Capital LLC's creditors want the right to sue ResCap parent Ally Financial Inc. over dealings between the entities before and since ResCap's bankruptcy filing, which, if successful, could put government-controlled Ally on the hook for all $20 billion to $25 billion in ResCap's liabilities, Dow Jones Daily Bankruptcy Review reported today. In a court filing on Thursday, ResCap's unsecured creditors' committee said that its investigation into the relationship between the two companies "paints a stark picture" of Ally's "domination, control, and abuse" of ResCap. A hearing on whether the creditors can sue over the matter is set for April 30.
Mark Zandi, a prominent economist, has emerged as a leading candidate to head the regulator of mortgage-finance companies Fannie Mae and Freddie Mac amid signs that he would likely attract support from Senate Republicans, the Wall Street Journal reported today. The White House has not yet decided who to nominate as the next director of the Federal Housing Finance Agency, a position it has struggled to fill. Along with Zandi, the Obama administration has also been considering Rep. Mel Watt (D-N.C.). The FHFA director has become an increasingly important economic-policy position in Washington, because the agency serves as the warden of Fannie and Freddie, which own or guarantee half of all the nation's mortgages. Zandi, co-founder of an economic-forecasting firm that was purchased by Moody's Corp. in 2005, serves as chief economist of Moody's Analytics. He speaks frequently on the economy, fiscal issues and housing—testifying before Congress at least nine times in the last two years—and played a key role advising congressional Democrats on the 2009 economic-stimulus bill. The FHFA's current director, Edward DeMarco, took the job four years ago in an acting capacity after his predecessor left for the private sector. DeMarco has at times clashed with the Obama administration over homeowner aid, and left-leaning groups have campaigned to replace him. The agency, created five years ago, has never had its own director confirmed by the Senate because of Republican opposition to an earlier nomination.
U.S. District Judge Berle Schiller ruled that Bank of America Corp., the second- largest U.S. lender by assets, must face claims by homeowners that it took kickbacks from private insurers, Bloomberg News reported yesterday. Judge Schiller denied the bank’s request to toss the lawsuit because the statute of limitations had expired on the claims. Homeowners who sued should have the opportunity to develop their argument that the claims should be allowed because the bank intentionally concealed its behavior, Schiller said. "Plaintiffs' allegations that defendants dressed up an illegal scheme to appear as a legitimate transaction is sufficient to deny defendants' motion to dismiss," Schiller said.
Mortgage rates are low, but home values compared with annual incomes are greater than before the housing bubble, the Washington Post reported today. In the fourth quarter of 2012 alone, homeowners spent almost 37 percent less on the payments than they did in the years before the housing bubble, according to real estate tracking firm Zillow. But this saving has a flip side: As home values rise, paychecks are not keeping up. At the end of 2012, buyers bought homes that were three times their annual income, on average, up from 2.6 times before the housing bubble.
Why the Residential Capital LLC examiner's report will cost almost $83 million is the first item on the new Bloomberg bankruptcy video with Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle. Click here to watch the video.
The vast majority of borrowers being compensated for mortgage-related abuses will get $1,000 or less apiece, a sobering conclusion to a protracted attempt to help those who may have been placed into foreclosure as a result of banks' mistakes, the Wall Street Journal reported today. About 4 million borrowers will share $3.6 billion in cash as part of a settlement between federal regulators and banks accused of foreclosure-processing mistakes. U.S. regulators said yesterday that banks wrongfully took away homes from 1,082 borrowers who were members of the U.S. military. Another 53 borrowers were found to have lost their homes despite not actually defaulting on their loans. Those 1,135 individuals will receive checks of $125,000. Most borrowers, however, will see far less, with about 80 percent receiving checks ranging from $300 to $1,000, according to data released by the Office of the Comptroller of the Currency and the Federal Reserve.
Residential Capital LLC wants to keep using the cash securing the claims of parent Ally Financial Inc. and bondholders, which ResCap says is necessary to complete the "great deal of work" that remains in its bankruptcy case, Dow Jones Newswires reported yesterday. In a court filing on Monday, ResCap asked Bankruptcy Judge Martin Glenn if it could continue using that cash as it works toward resolving the issues in its chapter 11 and filing a reorganization plan. The judge has already approved ResCap's prior requests to use the cash, which is secured by loans. ResCap said that it wants to use the cash to maintain certain loan portfolios, as well as to sell those loans.
New York Attorney General Eric Schneiderman is raising concerns about the pace of relief provided to the state's mortgage borrowers by Wells Fargo & Co. under a landmark $25 billion settlement, the Wall Street Journal reported today. "We are concerned that Wells Fargo is underperforming compared to other banks," Schneiderman said. "By identifying this pattern early, there is still time to address this issue and increase activity so that Wells's customers will be afforded meaningful assistance to keep their homes." New York has so far received $1.8 billion in relief under the February 2012 settlement from various banks, according to Schneiderman's office. Every dollar of relief does not translate directly into a dollar awarded under the settlement. Instead, different types of relief are assigned credits that then translate into dollar figures. The amount of relief that reaches homeowners can vary by state and by bank. Banks can be penalized millions of dollars for violating the settlement, but there is little in the way of forcing banks to evenly distribute relief by state. In New York, 48,640 loans made by Wells Fargo were more than 30 days delinquent. The bank gave relief worth an average of $76,865 to 1,051 New Yorkers, according to data provided by the banks to an independent monitor of the settlement.