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BofA Mortgage Settlements Magnify Capital Strain as $50 Billion Gap Looms - (www.bloomberg.com) Bank of America Corp. (BAC) may have to build its capital cushion by $50 billion and renege again on Chief Executive Officer Brian T. Moynihan’s pledge to raise the firm’s dividend as mortgage losses drain funds. Expenses tied to soured home loans may total $20.4 billion in the second quarter, pulling the bank further from capital ratios demanded under new international standards, the Charlotte, North Carolina-based company said June 29. The gap may equal 2.75 percent of risk-weighted assets starting in 2013 -- at about $18 billion for each percentage point -- crimping Moynihan’s ability to raise dividends and repurchase shares. “They are likely to be in capital-building mode for longer than previously anticipated,” Jason Goldberg, a Barclays Capital analyst, said in an interview. For now, he said, “I’m hard-pressed to see meaningful capital redeployment.”
Man pleads guilty to mortgage fraud in $4M scheme - (www.thestamfordtimes.com) A city man has admitted to defrauding mortgage lenders as part of a $4 million fraud scheme, according to the U.S. Department of Justice. Christian Tudorof, 43, waived his right to indictment Monday and pleaded guilty before U.S. Magistrate Judge Joan G. Margolis in New Haven to one count of wire fraud. According to court documents and statements made in court, between December 2006 and March 2007, Tudorof submitted mortgage applications to a number of different mortgage lenders in association with the purchase of residential properties in Florida, Arizona and Connecticut. In many of the mortgage applications, he provided false information and failed to disclose information to the mortgage lender, according to U.S. Department of Justice spokesman Tom Carson. Citing an example, Carson said after Tudorof obtained one mortgage to purchase a home in Florida, he deliberately failed to disclose the existence of this mortgage when he applied for mortgages on the other properties purchased in his name. He also falsely represented in the mortgage applications that he intended to live in some of the homes that he intended to purchase when, in fact, he had no intention of occupying these homes, according to Carson.
Michigan foreclosure firm implicated in robosigning - (www.michiganmessenger.com) A Massachusetts county clerk says a forensic examination of documents filed by Troy-based Orlans Associates, one of the largest foreclosure firms in Michigan, shows that the company has engaged in illegal robo-signing. Robo-signing is when a bank, mortgage company or foreclosure company has multiple people sign documents with the name of the person who is supposed to sign those documents and then has them notarized as having been signed by that person. In the case of Orlans, the signer was supposed to be attorney Marshall Isaacs, but he has now been implicated in two states for having had others sign his name and notarize that he did so. Kevin Harvey, first assistant clerk for the Southern Essex District Register of Deeds in Massachusetts, says a private mortgage fraud investigator brought the robo-signing to the attention of his boss, John O’Brien. That investigator, Steve Dibert, runs MFI-Miami which has offices in Florida as well as Traverse City. “Steve [Diberts]’s work on Marshall Isaacs was confirmed by our certified mortgage fraud examiner Marie McDonnell here in Massachusetts and his name is on our registry’s robo-signers list,” Harvey told the Michigan Messenger. Dibert spent 18 years in the mortgage industry before starting MFI-Miami, which has investigated over 700 questionable mortgage documents in 11 states and Washington, D.C. He was the primary source in providing Ingham County Register of Deeds Curtis Hertel Jr. with the information that led to a major lawsuit against banks, mortgage companies and mortgage foreclosure firms for “tens of millions” in tax payments allegedly improperly withheld from the state and county.
Invalid Mortgage Assignments Rampant in Massachusetts County - (www.totalmortgage.com) A couple of times over the past couple of months we’ve discussed the efforts being made by the Register of Deeds for South Essex County (Massachusetts) to recoup missed recording fees from MERS (the Mortgage Electronic Registration System). The Register, John O’Brien, contends that his county may have missed out on as much as $22 million worth of recording fees since 1998 as a result of MERS. MERS is an electronic system that was created in order to allow mortgage originators to more easily securitize mortgage and bundle them into mortgage backed securities. It also allowed those using MERS to avoid many of the transfer fees charges by various county and state offices under the centuries old system devised to transfer properties from one party to another. There’s only one problem, and that is that mortgage transfers through MERS may not exactly be legal. Recently, Judge Robert E. Grossman of the United States Bankruptcy Court for the Eastern District of New York ruled in a lengthy dicta that property transfers under MERS are illegal. While this ruling is not binding in Massachusetts, it may be instructive. According to a Housingwire article from last Friday, a U.S. Bankruptcy Court in Massachusetts validated some assignments through MERS. Seemingly at odds with this ruling is one from the Massachusetts Supreme Judicial Court (U.S. Bank v. Ibanez) that seemed to invalidate many assignments through MERS. I’m not a lawyer or a legal expert, but it seems clear that there is no real consensus on this issue at this time.
Foreclosure Freeze Proposed - (www.housingpredictor.com) An Ohio member of Congress has proposed a resolution that would enact a temporary freeze on foreclosures across the U.S. similar to the Great Depression. The proposal would enact a moratorium on all residential foreclosures. Rep. Marcy Kaptur (D-OH) offered the resolution before the House Financial Services Committee. The proposal asks President Barack Obama to declare a “national residential mortgage foreclosure emergency,” and also urges state lawmakers to use their “police powers” to enact moratoriums on foreclosures. The resolution sites a variety of issues troubling the housing market stating, “Whereas the United States finds its housing market in a precarious and unstable state, where homeowners' mortgage balances are routinely larger than the current value of their homes and where people are losing their homes at an alarming rate. “The President of the United States should declare a national residential mortgage foreclosure emergency and, through such declaration, encourage the States, by use of their police power, to enact a moratorium on residential mortgage foreclosures similar to the moratorium enacted by the State of Minnesota in 1933 and upheld by the Supreme Court.” Kaptur represents Ohio, which has been devastated by the foreclosure crisis and is one of 18 states designated for the federal government’s Hardest Hit Fund targeted to help mostly unemployed homeowners at risk of losing their homes to foreclosure. Rising unemployment in the region is triggering a massive second wave of foreclosures in many areas of the state, including hard hit Cleveland.
OTHER STORIES:
As Number Of Foreclosed Homes Grows, So Does Mold - (www.npr.org)
Free the Housing Finance Market from Fannie Mae and Freddie Mac - (www.heritage.org)
Advice on my situation. First time buyer. - (www.patrick.net)
Foreclosure prevention - (www.patrick.net)
San Diego House Sales Drop In June - (www.10news.com)
Bernanke Pledges More Monetary Stimulus, Dollar Tanks, Gold Soars - (www.Mish)
Poverty in America, Part I - (Charles Hugh Smith of www.oftwominds.com)
Job changes by field - (si.wsj.net)
Mortgage applications drop for the fourth week - (www.reuters.com)
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