Comments on: BofA’s legal predicament A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: actnow Mon, 25 Oct 2010 15:29:09 +0000 BOA’s questionable business ethics go back for at least several years, when they began issuing credit cards to people in this country illegally as a way to tap into new markets. As a NC native, it’s sad to see a once reputable regional business fall into the Wall Street mentality that making money at any cost is okay. It’s largely up to individuals to walk away from such businesses since we can no longer rely on Washington to protect us. Boycotts were common in the 70’s and need to be used again today.

By: garrisongold Mon, 25 Oct 2010 13:17:09 +0000 Enough is enough! First the mortgage industry completely fails at performing due diligence 101 in processing mortgage applications. Then we learn they failed to perform proper legal procedure in transferring ownership title to the trusts that supposedly hold the mortgage for benefit of the bondholders. We also learn, that the same parties who were originating the loans, along with those packaging them into pools and selling them, were actually placing side bets that the pooled securities would fail. Then we learn the companies charged with executing the foreclosure process fraudulently create legal documents to support their claims in court.

Meanwhile, our economy is dying and the markets are on life support provided by the fed and the taxpayer, with future generations of Americans on the hook for hundreds of billions if not trillions of dollars of debt to cover the mortgage and investment banking industry’s butt.

Does the government see a pattern of corruption here or are they just stupid, blind or are they an active partner in the crimes committed against the American public?

As far as I am concerned, we can take all of the garbage mortgages purchased by freddie and fannie, return them to the big investment banks and let the bondholders and banks that profited so handsomely through the incompetence, greed and fraud go belly up. After all they accepted the risk when they made these investments.

By: Danny_Black Mon, 25 Oct 2010 13:10:25 +0000 Couple of interesting Fed papers indirectly via alea:

The Incentives of Mortgage Servicers: Myths and Realities 2008/200846/revision/200846pap.pdf

Where’s the Smoking Gun? A Study of Underwriting
Standards for US Subprime Mortgages 008-036.pdf

Would be nice to see if these guys have any data on the percentage of documentation issues on securitised mortgages. I also remember reading a study that claimed that securitisation did contribute to a relaxation of standards but by a relatively small amount. Can’t remember the guy who wrote it unfortunately

By: Danny_Black Sun, 24 Oct 2010 14:38:33 +0000 Sorry hswkitty, I don’t speak fluent gibberish so you might need to translate for me:

1) When did the SEC come up with any data on documentation issues with mortgages?
2) Where did you get the 29% figure from? Or do you mean 24%? Or do you mean anything in between?
3) You know what a sample is right? You have a clue about what sampling means? No? Didn’t think so.
4) Which servicers are getting bonuses for not letting people pay their mortgages? Do you actually know what a servicer does and how they get renumerated? No again?? I am shocked.

Do yourself a favour, get a passing understanding about what you are writing about.

By: hsvkitty Sat, 23 Oct 2010 04:48:34 +0000 Danny, if the SEC found only 5% of the sampling had documentation problems, then what were the other 24% of anomalies that didn’t meet standards or are they not looking at the same samples?

It also doesn’t say what percentage of sampling the SEC looked at … it says 5% of the sampling. Is that 5% of the 5% sampling that Clayton said they did the majority of the time?? (remembering they only sampled of 5% to 10% of each bundle)

Donovan was clearly making statements to appease the press/market. It seems that the Government actually is trying to call this a paper glitch, promising to make the few homeowners who can afford a good lawyer whole.

And by making servicers pinkie-swear they are doing every thing possible to keep homeowners in their homes and give the opportunity to use Hamp and to play fair from now on … wait, wasn’t that the purpose of HAMP in the first place? Doesn’t misuse of Government funds mean huge fines?

Nah that might have a bad effect upon the market or the banks. Meanwhile there will be high fives and bonuses at the banks for another job well done…

(but there will be civil suits and damages to pay. There just isn’t any incentive to stop it from happening again.

My money is there being so much more to this and soon the lid will be lifted and all it will take is that little teacup tempest to blow the house of cards down.

By: Danny_Black Thu, 21 Oct 2010 16:28:20 +0000 ErnieD, ok well that was not how it was reported here. It may be time consuming which is presumably why they didn’t bother in the first place. Of course, someone should be suing Freddie and Fannie for not doing proper due diligence which they were paid for….

My money is still on it being a storm in a teacup. Remember the Clayton data that got Mr Salmon excited showed a grand total of 5% of loans with documentation deficiencies consistently over 2006 and 2007 origination – which was the very height of the bubble.

By: ErnieD Thu, 21 Oct 2010 15:38:44 +0000 @Danny_Black:

I think what Yves Smith was pointing out is that the non-compliant loans would need to be identified on a loan-by-loan basis with proof on why it is non-compliant which is an expensive and time-consuming proposition.

It would be interesting to see if they can identify a means to simply be able to prove that large batches of loans were non-compliant, possibly if there was some form of “robo-signing” going on at the origination where it was clear that the originator was not doing the required due diligence for that type of loan.

By: Danny_Black Thu, 21 Oct 2010 11:07:02 +0000 Smith as usual is wrong. You can put back any non-compliant loan. Of course if you are planning to **sue** for damages thats a different question.

That said, why would bondowners want performing loans bought out? Now is exactly the wrong time for that. Those loans are paying interest at a far higher rate than what the bondholders are likely to be able to reinvest at. Thats before you get into the costs of forcing a bank who is not bending over to buy back.

As for winners, as usual they are the lawyers with a sprinkling of media.

By: scotta Thu, 21 Oct 2010 02:13:22 +0000 Technically, I don’t think Bank of America NA (the bank) or Bank of America Corp (the ultimate parent company) have ever guaranteed or stood behind Countrywide Inc. (ie the entity they bought from the tan man).

It was Countrywide, not BofA, that was the aggressive packager and reseller of subprime mortgages (BofA wasn’t good at this which is why why they bought countrywide). And it is Countrywide that would have the repurchase obligation on the loans, not Bank of America. And since BofA doesn’t guarantee Countrywide if countrywide can’t pay you can’t claim on BofA.

In short I’m sure BofA’s lawyers are more focussed on makeing sure the claims don’t come back to BofA and they would allow Countrywide to be cut off like the gangrene infection it is.

By: willid3 Wed, 20 Oct 2010 23:14:22 +0000 i am guessing that wall street banks (and others) will fight this long enough that it won’t matter. but the MBS market will died long before then. which will make F&F even more important as they will be the only remaining buyers of loans.