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CFPB Says Four Insurers Made Kickbacks to Mortgage Lenders

Submitted by webadmin on Fri, 2013-04-05 00:00

A federal regulator set up after the financial crisis to protect consumers announced enforcement actions against four insurance companies yesterday, asserting that the firms paid kickbacks to mortgage lenders for more than 10 years, the New York Times DealBook blog reported yesterday. The accusations by the Consumer Financial Protection Bureau (CFPB) focus on mortgage insurance, a product that many borrowers were required to purchase if they did not make a sizable down payment when buying a house. The bureau claims that, because of the kickbacks, home buyers may have had to pay more for the mortgage insurance.

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Friday, April 5, 2013 - 12:00

Wells Fargo Criticized by New York Attorney General on Pace of Mortgage Relief

Submitted by webadmin on Fri, 2013-04-05 00:00

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.

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Friday, April 5, 2013 - 12:00

GAO Cites Regulators Flaws in Foreclosure Review

Submitted by webadmin on Thu, 2013-04-04 00:00

The Government Accountability Office (GAO) drafted a report faulting U.S. bank regulators for a flawed review of foreclosure documents, saying that the agencies did not establish consistent procedures or adequately monitor the consulting firms performing the work, the Wall Street Journal reported today. The GAO's report criticized the Office of the Comptroller of the Currency and Federal Reserve for not ensuring banks were using consistent methods to determine which foreclosure files to scrutinize for possible errors. The regulators ordered an independent review of banks' foreclosure files in April 2011 to determine how many borrowers should be compensated for foreclosure-processing and other mistakes. Earlier this year, the regulators reached a $9.3 billion settlement with banks, saying that the review threatened to drag on into 2014, delaying compensation to borrowers. So far, 13 of 16 banks have signed the agreement.

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Thursday, April 4, 2013 - 12:00

JPMorgan Wins Round in Dexia SA Mortgage-Bond Lawsuit

Submitted by webadmin on Thu, 2013-04-04 00:00

JPMorgan Chase & Co., the biggest U.S. bank, defeated most of a lawsuit brought by Dexia SA over about $1.6 billion in mortgage-backed securities it bought before the financial crisis, Bloomberg News reported yesterday. U.S. District Judge Jed Rakoff narrowed the case to five securitization deals from 65 at issue in a complaint brought by Dexia, according to an order filed today. Rakoff said he would issue an opinion later explaining his reasoning. Dexia, based in Brussels, sued JPMorgan in 2012 along with the Bear Stearns and Washington Mutual businesses JPMorgan acquired, accusing the lender of "egregious fraud" in the sale of mortgage bonds. Dexia claimed loans backing securities purchased between 2005 and 2007 were riskier than promised.

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Mortgage

Finance and Banking

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Thursday, April 4, 2013 - 12:00

Wells Fargo Becomes Dominant Mortgage Holder

Submitted by webadmin on Wed, 2013-04-03 00:00

San Francisco-based Wells Fargo & Co. has become the dominant U.S. mortgage lender, grabbing an unprecedented 28.8 percent share of all home loans issued nationwide last year, up from 11.2 percent in 2007, the year before it bought Wachovia, the Wall Street Journal reported today. Its home-loan production hit $524 billion last year, the largest annual total ever for one lender and greater than the output of the next five largest lenders combined, according to the publication Inside Mortgage Finance. The mortgage-banking operations of U.S. banks and thrifts reported profits of $31.9 billion last year, about six times the $5.2 billion notched in 2011 and the largest total in at least a decade, according to Inside Mortgage Finance. Wells recorded income of $11.6 billion from mortgage banking last year, up nearly 50 percent from 2011.

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Wednesday, April 3, 2013 - 12:00

Big Profits at Fannie and Freddie Reignite Debate on Housing Supports

Submitted by webadmin on Wed, 2013-04-03 00:00

Fannie Mae, the government-backed company that insures mortgages against default, made $17.2 billion last year, making it the third-most profitable financial firm in 2012, after JPMorgan Chase and Wells Fargo, the New York Times DealBook blog reported yesterday. But this year, Fannie's earnings could exceed even those of JPMorgan and Wells Fargo, if it decides to book a large tax-related gain. The huge profits rolling in at Fannie, and at its corporate sibling Freddie Mac, reflect the enormous role the government is playing in the housing market nearly five years after the crisis. As a result, the earnings will intensify the debate over the amount of involvement that government should have in housing. Fannie and Freddie charge fees in return for a guarantee that they will pay back mortgages that default. In the first years after the crisis, that fee revenue was overwhelmed by losses. As those have abated, profits have returned for the two mortgage giants. The big question looming over the housing market is how quickly to remove the support provided by Fannie and Freddie.

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Mortgage

Real Estate

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Wednesday, April 3, 2013 - 12:00

MBIA Wins Ruling on Loan Buybacks in Bank of America Suit

Submitted by webadmin on Wed, 2013-04-03 00:00

MBIA Inc., the bond insurer suing Bank of America Corp. to recover losses tied to mortgage loans, won an appeals court ruling that the lender could be required to repurchase securitized loans even if they are not in default, Bloomberg News reported yesterday. MBIA is entitled to have Bank of America buy back a performing loan that it can prove "materially and adversely" affected its interest, the New York state appeals panel said in a decision yesterday, reversing part of a ruling by a lower court. The panel also reversed a decision that MBIA could seek so-called rescissory damages. The decision stems from MBIA's lawsuit against Bank of America and its Countrywide Financial unit. MBIA, which sued Countrywide in 2008, guarantees payments to investors that bought securities backed by pools of the lender's loans. The insurer says the loans were riskier than represented by Countrywide, and as the loans went into default, the Armonk, N.Y.-based company was forced to pay investors.

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Wednesday, April 3, 2013 - 12:00

Merrill Sued for 309 Million by Trust over Mortgages

Submitted by webadmin on Mon, 2013-04-01 00:00

A unit of Bank of America Corp.’s Merrill Lynch was sued by a trust seeking more than $309 million in damages for alleged breaches of representations and warranties related to the sale of more than 5,000 mortgages, Bloomberg News reported on Saturday. The trust filed the lawsuit in New York State Supreme Court on Friday accusing Merrill Lynch Mortgage Lending of failing to buy back loans as required by agreements reached in 2007, according to a court filing. The trust also accused Merrill Lynch and H&R Block Inc.'s Sand Canyon unit of breaching similar representations and warranties made about other mortgage loans. Sand Canyon, formerly known as Option One Mortgage Corp., stopped originating mortgage loans in December 2007, sold its servicing assets to American Home Mortgage Servicing, and discontinued remaining operations in April 2008. Merrill Lynch in or about 2007 securitized more than 5,900 residential mortgage loans from two separate originators to serve as the basis for securities sold to investors, the trust said in the court filing.

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Monday, April 1, 2013 - 12:00

BofA Tops Financial-Complaint List

Submitted by webadmin on Fri, 2013-03-29 00:00

Bank of America Corp. accounted for the largest share of consumer complaints lodged with the Consumer Financial Protection Bureau over the past 16 months, the Wall Street Journal reported today. The CFPB's expanded database unveiled yesterday shows the majority, or nearly 55 percent, of the more than 90,000 complaints filed with the agency relate to mortgages, the latest indication of the problems banks face in response to a surge in foreclosures. Credit cards ranked as the second-biggest source of complaints, accounting for almost 22 percent of the total. Complaints about Bank of America outpaced Wells Fargo & Co. and JPMorgan Chase & Co., whose consumer operations are comparable in size. The Charlotte, N.C.-based bank accounted for about 23 percent of the total complaints related to mortgages, credit cards, student loans and other consumer products filed with the agency since December 2011.

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Friday, March 29, 2013 - 12:00

Housing Program Seeks to Cut Monthly Payments for Distressed Borrowers

Submitted by webadmin on Thu, 2013-03-28 00:00

ABI Bankruptcy Brief | March 28 2013

March 28, 2013

NEWS AND ANALYSIS

HOUSING PROGRAM SEEKS TO CUT MONTHLY PAYMENTS FOR DISTRESSED BORROWERS

Federal housing regulators took a significant step yesterday toward helping borrowers who are falling behind on their mortgage payments — a move that will help more people but will also introduce new risks that some homeowners could deliberately stop paying in order to become eligible for assistance, the Washington Post reported today. The Federal Housing Finance Agency, which oversees mortgage finance giants Fannie Mae and Freddie Mac, announced that borrowers who are more than 90 days late on their mortgages become automatically eligible for a modification to the terms of the home loan. In the past, to be eligible for a mortgage modification, borrowers had to provide documentation that they had a financial hardship. They will no longer be required to do so — though providing such documentation will make borrowers eligible for more substantial monthly savings. "This new option gives delinquent borrowers another path to avoid foreclosure," said Edward DeMarco, the acting director of FHFA. "We will still encourage such borrowers to provide documentation to support other modification options that would likely result in additional borrower savings." The program is only available to loans owned or guaranteed by Fannie and Freddie, which have been government-backed and controlled since late 2008. The relief would come in the form of a reduced interest rate, extended timeline for payments, or other measures. The goal is to reduce monthly payments. Read more.

S&P SEEKS TO MERGE STATE SUITS INTO ONE FEDERAL CASE

While 17 lawsuits have been filed against Standard & Poor's Ratings Services by state attorneys general who claim that the firm churned out shoddy ratings before or after the financial crisis, S&P wants to move the cases into a federal court—and shrink the total number of cases to one, the Wall Street Journal reported today. Winning the fight to merge the cases into a single lawsuit in federal court could help S&P limit its legal exposure by streamlining the potential damage claims against the rating firm, a unit of McGraw-Hill Cos. In recent court filings from Connecticut to Colorado, lawyers for S&P contend that the 17 state-court suits should be removed from those courts because rating firms are regulated under U.S. securities laws. "Congress has expressly found credit ratings and the management of potential conflicts of interest related to them to be 'of national importance,' " S&P said in a filing on Monday in an Iowa district court. In addition, S&P contends that it should only have to defend itself against only one merged case. Read more. (Subscription required.)

ANALYSIS: "TOO BIG TO FAIL" FEARS RISE AS BANKS BULK UP

Nearly three years after Congress passed the most far-reaching new regulations on Wall Street since the Great Depression, worries have resurfaced that the biggest U.S. banks have only grown in size and remain bailout candidates because they are “too big to fail,” the Washington Times reported on Tuesday. The latest fears cropped up as a result of statements by Attorney General Eric H. Holder Jr., who raised hairs on Capitol Hill last month when he testified that the Justice Department has not indicted any of the major U.S. banks or their top officers in cases of financial crimes in the wake of the 2008 global financial crisis because there has been concern that doing so might hurt the economy or destabilize financial markets. "I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy," he told the Senate Judiciary Committee. Though Holder's testimony did not initially get much publicity, his comments soon provoked outrage across a broad spectrum of legislators, from conservatives such as House Financial Services Committee Chairman Jeb Hensarling (R-Texas) to liberals such as Sen. Sherrod Brown (D-Ohio). Key legislators have since written Holder to demand an elaboration of his statement, which on its face amounts to an admission that the 2010 Dodd-Frank Wall Street reform law signed by President Obama did not accomplish one of its major goals: ensuring that the government would never again have to worry about “too-big-to-fail” banks. Read more.

SCHEDULED BANKRUPTCY COST INCREASES SET TO TAKE EFFECT ON APRIL 1

Certain dollar amounts in title 11 and title 28 of the U.S. Code will be increased for cases commencing after April 1, 2013. Seven Official Bankruptcy Forms (1, 6C, 6E, 7, 10, 22A and 22C) and two Director's Forms (200 and 283) will also be amended to reflect these adjusted dollar amounts. For a list of the sections in title 11 and 28 of the Bankruptcy Code affected by the increases, please click here.

Looking for more information? ABI’s Interactive Code and Rules (http://law.abi.org) is always up to date!

TRANSCRIPT NOW AVAILABLE FROM THE CHAPTER 11 COMMISSION'S HEARING ON LABOR AND BENEFITS ISSUES

The March 14 hearing of the ABI Commission to Study the Reform of Chapter 11 brought together two panels of top experts on labor and benefits issues. What were some of the topics discussed during the proceedings? Read the transcript here.

HOTEL BLOCK FOR ABI'S ANNUAL SPRING MEETING ALMOST SOLD OUT! REGISTER TODAY!

The hotel block at the Gaylord National Resort and Convention Center in National Harbor, Md., is almost sold out for ABI’s 2013 Annual Spring Meeting! Held April 18-21, 2013, ASM features a roster of the best national speakers, while the depth and scope of topics offer something for everyone. Specifically, four concurrent workshops will cover various “tracks,” including programs for attorneys in commercial cases, a track for restructuring professionals, a track of professional development programming and a track dealing solely with consumer issues. More than 16 hours of CLE/CPE is offered in some states, along with ethics credit totaling 3 hours, making the cost only about $50 per credit. In addition, committee sessions will drill down on other topics to provide you with the most practical and varied CLE/CPE experience ever. Sessions include:

• 17th Annual Great Debates

• Mediation: An Irrational Approach to a Rational Result

• Creditors’ Committees and the Role of Indenture Trustees and Related Issues

• Current Issues for Financial Advisors in Bankruptcy Cases

• The Individual Conundrum: Chapter 7, 11 or 13?

• The Power to Veto Bankruptcy Sales

• Real Estate Issues in Health Care Restructurings

• How to Be a Successful Expert

• The Ethical Compass: Multiple Ethical Schemes Applicable to Financial Advisors

• Chapter 9s, Nonprofits and Other Nontraditional Restructuring Processes

• And much more!

The Spring Meeting will also feature a field hearing of the ABI Commission to Study the Reform of Chapter 11, a report from the ABI Ethics Task Force, a luncheon panel discussion moderated by Bill Rochelle of Bloomberg News, and a Final Night Gala Dinner featuring a concert by Joan Jett and the Blackhearts!

Make sure to register today!

ABI IN-DEPTH

TEE OFF ON THE NEW ABI GOLF TOUR!

Starting with the Annual Spring Meeting, ABI will offer conference registrants the option to participate in the ABI Golf Tour. The Tour will take place concurrently with all conference golf tournaments. The Tour is designed to enhance the golfing experience for serious golfers, while still offering a fun networking opportunity for players of any ability. As opposed to the format used at ABI’s regular conference events, Tour participants will "play their own ball." They will be grouped on the golf course separately from other conference golf participants and will typically play ahead of the other participants, expediting Tour play. Tour participants will be randomly grouped in foursomes, unless otherwise requested of the Commissioner in advance of each tournament. Prizes will be awarded for each individual Tour event, which are sponsored by Great American Group. The grand prize is the "Great American Cup," also sponsored by Great American Group, which will be awarded to the top player at the end of the Tour season. Registration is free. Click here for more information and a list of 2013 ABI Golf Tour event venues.

NEW BANKRUPTCY PROFESSIONALS: DON'T MISS THE NUTS AND BOLTS PROGRAM AT ABI'S ANNUAL SPRING MEETING! SPECIAL PRICING IF YOU ARE AN ASM REGISTRANT!

An outstanding faculty of judges and practitioners explains the fundamentals of bankruptcy in a one-day Nuts and Bolts program on April 18 being held in conjunction with ABI's Annual Spring Meeting. Ideal training for junior professionals or those new to this practice area!

The morning session covers concepts all bankruptcy practitioners need to know, and the afternoon session splits into concurrent tracks, focusing on consumer and business issues. The session will include written materials, practice tip sessions with bankruptcy judges, continental breakfast and a reception after the program. Click here to register!

LATEST CASE SUMMARY ON VOLO: SEAVER V. KLEIN-SWANSON (IN RE KLEIN-SWANSON; 8TH CIR.)

Summarized by Omid Moezzi from the Office of Nancy Curry, Chapter 13 Trustee

The Eighth Circuit reversed the bankruptcy court's ruling in favor of the chapter 7 trustee, stating that (1) there was no transfer of funds under § 549 or 550 to the debtor, (2) the trustee failed to show how the estate acquired an interest in the funds received by the debtor post-petition, and (3) since the trustee is no longer a prevailing party, the award of costs under Rule 7054(b) is not appropriate.

There are more than 800 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: HOUSE OVERDRAFT BILL COULD HURT CONSUMERS

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post took the position that H.R. 1261, the "Overdraft Protection Act of 2013" recently introduced by Rep. Carolyn Maloney (D-N.Y.), will penalize the very customers the bill is trying to protect. Limiting the number of overdraft fees that financial institutions can charge an individual to one per month and six per year, as the bill seeks to do, could cause some consumers to miss a monthly mortgage or auto loan payment, have their utilities turned off or have their insurance cancelled when checks begin to bounce, according to the post.

Click here to view the text of the bill.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Who will win the NCAA basketball tournament?

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

INSOL INTERNATIONAL

INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

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