This Big Week in Foreclosure Fraud News: Ibanez, AGs, Servicer Regulation, Issa, Daley.

Five big things for those trying to keep current as things happen very quickly. To start, this presentation by the AG of Florida will bring you up to speed (and is a great one-stop shop to introduce people to the topic).

Ibanez

The biggest news is the decision in Massachusetts’ “Ibanez case”, where the Massachusetts Supreme Court voided the seizures of two homes by Wells Fargo and US Bank based on their inability to show that they owned the mortgages at the time of foreclosure. Tracy Alloway walks you through the case, David Dayen has more including the PDF of the decision, and analysis from Yves Smith and Felix Salmon.

From the opinion: “Where, as here, mortgage loans are pooled together in a trust and converted into mortgage-backed securities, the underlying promissory notes serve as financial instruments generating a potential income stream for investors, but the mortgages securing these notes are still legal title to someone’s home or farm and must be treated as such.”

They ruled through Massachusetts law instead of New York law, so no answers on looming New York trust law. Bank stocks are down. This is likely to have major implications down the road. We’ll have more on this opinion later.

Are AG’s Settling? Miller Walks Back Criminal Comments

From Bloomberg, more stories floating that the State AG investigations will be settling early in their foreclosure fraud investigations. Let’s hope this isn’t the case, though 50 states are an unwieldy group to manage. A big thing to watch is whether or not settling with preclude further investigations by individual state AGs.

From David Dayen, Iowa Attorney General Tom Miller is walking back his promise he made to foreclosure activists that, “We will put people in jail.” PICO urges Miller to stand strong. CREDO is asking the new New York AG Schneiderman to stand strong on criminal charges.

Federal Reserve to Support Servicer Regulations

From Zach Carter (now at Huffington Post, make sure to get his new individual rss feed here) “The Federal Reserve has reversed its opposition to new rules reining in foreclosure abuses, and will support stronger regulations on the nation’s largest banks, according to a source familiar with the matter.” The OCC is still opposed, but the Fed moving is a big deal.

We discussed the specific servicer regulation letter that was signed by 50 economists and activists before (One, Two). With servicers remaining unregulated with an indifferent OCC doing nothing, as well as servicers harming both investors and borrowers, something needed to be done for the economics recovery and for securitization to start again. It is good to see it going.

Issa Investigates HAMP

From Bloomberg, “Representative Darrell Issa is broadening his list of investigations into President Barack Obama’s administration, saying difficulties in a government program for helping homeowners avoid foreclosure are “deeply troubling.”” Most observers of the HAMP program consider it a large failure, and there are very few quantitative ways to defend any part of it, especially with the recent discovery that 21% of ‘successful mods’ redefault in the first year.

William Daley to Chief of Staff Job

William Daley, a J.P. Morgan Chase executive, is moving to the Obama White House with a Chief of Staff job. He opposed the creation of a Consumer Financial Protection Agency. He Co-Chaired a Chamber of Commerce report in 2007, Commission on the Regulation of U.S. Capital Markets in the 21st Century, noted for entirely missing most of the issues that became a problem in the crisis (off-balance sheets, MBS/CDO, derivatives, housing, etc.) and for advocating allowing the SEC to write exemptions for Sarbanes-Oxley and shielding audit firms, deregulating the regulations put in place after Enron and Worldcom.

J.P. Morgan has, according to Reuters, 12.6% of the servicing market, servicing $1.3 trillion dollars in debt. This is the servicing model that has broken down amidst the current crisis. At the time of the stress test J.P. Morgan had $144 bilion dollars in second or junior lien exposure, exposure that creates conflict for servicers.

These are exciting times to be watching the foreclosure fraud crisis – hope you get involved in whatever ways you can.

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6 Responses to This Big Week in Foreclosure Fraud News: Ibanez, AGs, Servicer Regulation, Issa, Daley.

  1. a citizen says:

    Mike,
    I am a person with an education (MSW), homeowner, worker in the non-profit field (dealing with my own budget cuts), struggling taxpayer who has recently tried to educate myself on the current financial mess. I’ve already read the some of the pieces you linked to. I want to get involved in fight against this criminality. I also read your “Losing well” piece and couldn’t have agreed more. But, and its a big one, how do we fight back? Are there grassroots organizations that are doing a good job of at least trying to push back against the titans of wall street? I suspect that the same anger that got us the teapartiers could be channeled to push for policies that really would benefit those of us who can only dream of having a six figure income, let alone how it is taxed. If we are gonna really get the pitchforks out it would be great if you, Yves, Felix, David, Ezra, Paul, Matt, Simon, William, et. al point us to those groups you folks think are doing a good job pushing back. My fear is that there really are none on our side and the oligarchs have won. Thanks for the work you do in spreading the word and listening to one small voice in the hinterland.

  2. K. Williams says:

    “From the opinion: “Where, as here, mortgage loans are pooled together in a trust and converted into mortgage-backed securities, the underlying promissory notes serve as financial instruments generating a potential income stream for investors, but the mortgages securing these notes are still legal title to someone’s home or farm and must be treated as such.””

    But this is precisely the part of the opinion that is applicable only in Massachusetts and the few other title-theory states, which hold that both the notes and the mortgages must be assigned. In most states, the mortgage follows the note — if you own the note, you also have the right to foreclose. The same also holds for assignments in blank, which Massachusetts case law has historically frowned upon. The impact of this decision nationally, at least in legal terms, is likely to be more muted than initial reactions suggest.

  3. Pingback: FT Alphaville » Further reading

  4. Pingback: Banks Suffer Major Setback « Pilant's Business Ethics Blog

  5. Elina says:

    On Sat 02/12 & Tues 02/15, the legal team behind the U.S. Bank v. Ibanez decision will host a live online panel discussion on the Ibanez ruling and its implications for the mortgage industry, legal practitioners and consumers. The panel will consist of top foreclosure defense experts: Attorney Max Gardner, Mortgage Analysis Specialist Marie McDonnell, Attorney Jamie Ranney, and Attorney Glenn F. Russell, Jr. The panel will share their insights in analyzing mortgages and building a foreclosure defense case. The panelist will answer questions from the audience and share the research and evidence gathering tools they used to build their case. The webinars will take place on Sat 02/12 at 12pm eastern & Tues 02/15, 8pm eastern time. To attend use this link https://www.eiseverywhere.com/ereg/newreg.php?eventid=19733&eb=currentblast

  6. Pingback: Banks Suffer Major Setback: The Use of MERS - electronic property transfers - is not valid for mortgage foreclosures - Pilant's Business Ethics | Pilant's Business Ethics

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