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Big Banks Told Not to 'Fix' a Fraud - (online.wsj.com) Ohio's attorney general threw a wrench into the banking industry's push to quickly restart foreclosures by fixing faulty paperwork, and pressed them to modify mortgage loans.In two letters released Friday, Attorney General Richard Cordray criticized a number of banks and loan-servicing companies, including Wells Fargo & Co.; Ally Financial Inc.'s GMAC Mortgage; Bank of AmericaCorp.; and J.P. Morgan Chase & Co. Mr. Cordray said the banks are trying to paper over fraud committed in foreclosures with temporary fixes that don't address underlying problems in the banks' practices. "It is not acceptable for a party who believes they submitted false court documents to merely replace those documents. Wells Fargo and any other banks are not simply allowed a 'do-over,'" he wrote in the letter to Wells. The other letter was sent to Ohio judges, who were asked to notify Mr. Cordray when banks file substitute affidavits. He demanded that the banks vacate any court order or motion that was based on an improper paperwork. In an interview Friday, Mr. Cordray said the banks would "be well-served to work out a settlement with the borrowers to modify the loans and work out payments." Mr. Cordray's letters come as several banks say they have reviewed their foreclosure procedures and are resuming evictions. But his insistence that they go beyond replacing affidavits by employees who have been labeled "robo-signers"—who didn't adequately review underlying foreclosure documentation—threatens to upend banks' efforts to resolve their foreclosure problems. Mr. Cordray's strategy provide clues as to the goals of a 50-state probe, which was announced two weeks ago. Led by Iowa Attorney General Tom Miller, the effort was joined by top law-enforcement officers from all 50 states in response to reports of widespread errors in foreclosure filings and allegations of robo-signing. "The banks are committing fraud on the court, essentially perjury, and then saying 'Whoops! You caught me! Here's some different evidence and use that instead,' " Mr. Cordray said in an interview Friday. "I know a lot of judges are not going to take kindly to that."
Amid mortgage mess, owners blindsided - (www.washingtonpost.com) After Valarie Stovall fell behind on the mortgage on her home near Hagerstown, her lender agreed in April to slash her monthly payment by $300, and she immediately started paying the reduced amount. That's why, Stovall said, she thought nothing of the yellow flier she ripped off her screen door as she returned from the grocery store one afternoon last July. "Then I read it and went 'Oh my God,'" she said. "It was a notice of eviction." Across the country, struggling homeowners are increasingly tripped up by mortgage lenders that press ahead with foreclosures regardless of any effort they make to provide borrowers with relief on unaffordable mortgages. Amid the worst housing crisis since the Great Depression, mortgage companies have established a dual-track approach toward troubled homeowners, negotiating with them over loan modifications while trying to seize their homes.
The States Take on Foreclosures - (www.nytimes.com) Have you noticed that the lead dogs investigating the mortgage foreclosure mess are not any federal prosecutors or national bank regulators, but rather the state attorneys general? I sure have. I can’t think of a more encouraging development. Yeah, yeah, a handful of federal investigations have also been announced, but we all know that they’re not going to amount to a hill of beans. Ever since the financial crisisbegan two years ago, the federal overseers of the banking industry have been consistently unwilling to take the rod to the institutions they regulate. The robo-signing scandal — and it is, unquestionably, a scandal — hasn’t changed that attitude one iota. The Treasury Department and the Federal Reserve have made it clear that they are more concerned about keeping the foreclosure mill going full speed than they are about determining whether the banks broke the law. Somehow throwing people out of their homes quickly is supposed to help the economy. Or so they keep telling us.
Asset purchases like ‘Ponzi scheme’ - (www.ft.com) Markets are poised for the Federal Reserve to announce this Wednesday large-scale Treasury bond purchases designed to boost the economy and risky assets. But some notable investors are not cheering. “Cheque writing in the trillions is not a bondholder’s friend; it is, in fact, inflationary, and, if truth be told, somewhat of a Ponzi scheme,” says Bill Gross, founder and managing director at Pimco. His remarks came as the yield on the 30-year Treasury bond – a barometer of future inflation risk – returned above 4 per cent for the first time since August. Meanwhile, equities and commodity prices have paused after their sharp rises since September, when the US central bank tilted in the direction of another round of quantitative easing, dubbed QE2. As some investors cast doubts as to whether QE2 will work – a view that policymakers themselves concede is a risk – there is a growing sense of unease that the potential costs of the programme could well haunt markets and the Fed in years to come.
OTHER STORIES:
Dollar Declines for Second Month on Prospects of Fed Easing - (www.bloomberg.com)
After China’s Rare Earth Embargo, a New Calculus - (www.nytimes.com)
QE2 prospects add poise to precious metals - (www.ft.com)
Portuguese Government, Opposition Reach Agreement on Budget - (www.bloomberg.com)
Europe Plans System to Handle Debt Crises - (www.nytimes.com)
Fed set for higher stakes in the crisis casino - (www.ft.com)
US economic recovery remains sluggish - (www.ft.com)
Britain's property market in 'double-dip' - (www.telegraph.co.uk)
Asian Stocks Decline for Second Week on Earnings, Fed Concern - (www.businessweek.com)
U.S. Michigan Consumer Sentiment Index Decreased in October- (www.bloomberg.com)
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