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).
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.