The House Financial Services Financial Institutions and Consumer Credit Subcommittee will hold a hearing today at 10 a.m. ET entitled "Examining How the Dodd-Frank Act Hampers Home Ownership." To view the witness list and read the prepared witness testimony, please click here:
http://financialservices.house.gov/calendar/eventsingle.aspx?EventID=337590
Bank of America Corp., the second-biggest U.S. lender, rewarded staff with cash bonuses and gift cards for meeting quotas tied to sending distressed homeowners into foreclosure, former employees said in court documents, Bloomberg News reported on Saturday. Mortgage workers falsified records and were told to delay U.S. loan-assistance applications by requesting paperwork that the Charlotte, N.C.-based bank had already received, according to statements from ex-employees filed last week in federal court in Boston. The lender improperly disqualified applicants to the Home Affordable Modification Program, according to a May 23 statement from Simone Gordon, a loss-mitigation specialist who left the company in 2012.
A surprise spike in mortgage rates threatens to halt a refinancing boom that has delivered strong profits for U.S. banks over the past two years, the Wall Street Journal reported today. The average rate on a 30-year mortgage rose to 4.15 percent last week, a 14-month high and up sharply from 3.59 percent in early May, according to the Mortgage Bankers Association. A separate survey released yesterday by Freddie Mac said the rate this week was at 3.98 percent, up from 3.35 percent last month. Refinancing applications last week were down 36 percent from the first week of May, before rates began climbing, according to the bankers association.
Residential Capital LLC won bankruptcy court permission to repay more than $1.9 billion in debt immediately, including $1.1 billion to parent Ally Financial Inc. that the defunct mortgage company borrowed before filing for bankruptcy, Bloomberg News reported yesterday. ResCap will make the payments before finishing a plan to distribute more than $4 billion in cash to all creditors, who are owed at least $6.3 billion. ResCap has said that the payments will save it more than $3 million a month in interest costs and won’t be unfair to lower-ranking creditors because the money will go to pay senior debt. The payments are supported by its unsecured creditors' committee and are related to a deal negotiated last month among Ally, ResCap and its major creditors, ResCap said in court papers.
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Royal Bank of Canada, the country’s largest lender, and several units were sued by Rakuten Bank Ltd. over claims it marketed and sold unsuitable securities backed by deteriorating mortgage loans that wiped out a $10 million investment, Bloomberg News reported yesterday. RBC induced Rakuten to invest 1 billion Japanese yen ($10.3 million) in a tranche of notes in a collateralized debt obligation called Logan CDO III Ltd. in June 2007. The notes ultimately became worthless when Rakuten sold them in December 2008 “for a nominal sum equivalent to approximately one cent,” according to a summons filed yesterday in state court in Manhattan. The lawsuit, which accuses RBC of fraudulent misrepresentation, is seeking to recover the U.S. dollar equivalent of the investment plus interest.
Fannie Mae and Freddie Mac shareholders sued the U.S., alleging that the 2008 takeover of the housing lending giants was illegal and cost investors billions of dollars, Bloomberg News reported yesterday. The takeover of the mortgage companies by the Federal Housing Finance Agency, “while beneficial to the economic welfare of the nation, destroyed the value of Fannie Mae’s and Freddie Mac’s common and preferred stock and trampled the private ownership rights” of shareholders, according to the complaint filed yesterday in the U.S. Court of Federal Claims in Washington, D.C. The shareholders’ complaint, seeking $41 billion in damages, was filed by the Seattle-based law firm Hagens Berman Sobol Shapiro LLP. Investors in Fannie Mae and Freddie Mac have taken a renewed interest in the companies’ future now that they have started posting record profits as the housing market rebounds. Fannie Mae had its best year ever in 2012, reporting net income of $17.2 billion for 2012. Freddie Mac, the smaller of the two, reported earning $11 billion last year. Both have said they expect to remain profitable.
Bank of America Corp. could put its Countrywide Financial unit into bankruptcy if it fails to win court approval for an $8.5 billion settlement with mortgage investors, a bank executive said yesterday, according to Reuters. Chief Risk Officer Terrence Laughlin was testifying at a hearing in New York state court on whether to approve the deal, which would settle claims by investors who said Countrywide misrepresented the mortgages underlying bonds they bought. During negotiations leading up to the June 2011 settlement, Bank of America threatened to put Countrywide, which it had rescued at the height of the financial crisis in 2008, into bankruptcy. That possibility was still on the table, Laughlin said yesterday. American International Group Inc. and a handful of other investors are challenging the deal, saying that it offers only pennies on the dollar.
Bank of America Corp.’s $8.5 billion mortgage-bond settlement is “outstanding” for investors, said a Pacific Investment Management Co. executive, who defended the deal against opposition, Bloomberg News reported yesterday. The settlement was reached after an investor group that included Pimco and BlackRock Inc. at first demanded $12 billion, eventually coming down to a “take it or leave it” offer of $8.5 billion, Kent Smith, an executive vice president at Newport Beach, Calif.-based Pimco who helped negotiate the agreement, testified on Thursday. Smith was the first witness to testify in a trial over the agreement, which is being considered by Justice Barbara Kapnick in New York State Supreme Court in Manhattan. The accord resolves claims from Countrywide Financial mortgage-bond investors over loans bundled into securities. American International Group Inc. is fighting the settlement, saying that Bank of America isn’t paying enough to compensate investors.
Bank of America Corp.’s $8.5 billion mortgage-bond settlement is “outstanding” for investors, said a Pacific Investment Management Co. (Pimco) executive, who defended the deal against opposition, Bloomberg News reported today. The settlement was reached after an investor group that included Pimco and BlackRock Inc. at first demanded $12 billion, eventually coming down to a “take it or leave it” offer of $8.5 billion, Kent Smith, an executive vice president at Pimco who helped negotiate the agreement, testified yesterday. Smith was the first witness to testify in a trial over the agreement, which is being considered by Justice Barbara Kapnick of New York State Supreme Court in Manhattan. The accord resolves claims from Countrywide Financial mortgage-bond investors over loans bundled into securities. American International Group Inc. is fighting the settlement, saying that Bank of America isn’t paying enough to compensate investors.
