COMBO ANALYSIS TITLE AND SECURITIZATION
Bank of America Corp’s
Countrywide mortgage unit is being sued for Fraud!
Investors claiming they were victimized by Bank of America’s Countrywide in a “massive fraud” when they bought mortgage-backed securities.
“Investors now seem to be conforming their allegations to those set forth on my blog 3 years ago — that they were not just sold an empty bag — it was more like they were sold a holographic image of an empty bag. The obvious fraud here extends much further than investors who purchased bogus mortgage backed securities. In order to complete the scheme they were required to lie not only to the investors who supplied the money, but the borrowers as well who were taking it. The common denominator is the use of a third party rating or appraisal upon which everyone hung their hat for “plausible deniability.” Now the deniability is not so plausible. The rating of the bogus securities and the appraisal of the property did not make the securities or property value any more real than it would have been without the made-as -instructed rating or appraisal.
They now seek to again make real what is unreal — the chain of title. This cannot be done without putting ALL TITLE to ALL PROPERTY under a cloud. The substance of the transaction was that investors advanced money to investment bankers and homeowners in the expectation of getting it back along with a return. The terms of that transaction were neither disclosed to the investor, disclosed to the borrower nor described in the promissory note executed by the homeowner. Thus the actual transaction is undocumented and hence unsecured, and the transaction described in the note and mortgage does not exist.
An examination of title immediately following any auction sale corroborates the fact that the investors and the homeowners are kept in the dark through the bitter end, at which point they are both told they have a loss and they must live with it.”
— Neil F Garfield, 1-28-11
REUTERS: 12 companies in New York, including New York Life Insurance Co and Dexia Holdings Inc, filed a lawsuit on Monday, January 23, against Bank of America and Countrywide for fraud (The case is Dexia Holdings Inc et al v. Countrywide Financial Corp et al, New York State Supreme Court, New York County, No. 650185/2011.) The plaintiffs are claiming that the millions of dollars that they had invested in what they were told was safe and performing investments were actually junk. To make matters worse, the lawsuit alleges that Countrywide devalued the investment even more by failing to follow its own underwriting rules.
Reuters reports that “According to the complaint, the investors bought hundreds of millions of dollars of Countrywide securities from 2005 to 2007 that they thought were “conservative, low-risk investments.” However, most of the securities now carry “junk” credit ratings rather than the “triple-A” ratings they once had, resulting in “significant losses.”
As a result, the plaintiffs want compensatory and punitive damages. The lawsuit alleges Countrywide “was an enterprise driven by only one purpose – to originate and securitize as many mortgage loans as possible into (mortgage-backed securities) to generate profits for the Countrywide defendants, without regard to the investors that relied on the critical, false information provided to them.”
This claim of fraud is not new to Countrywide. Countrywide’s Chief Executive Angelo Mozilo’s attorney, David Siegel, said the lawsuit has no basis in law or fact. Of course, with Countrywide’s recent losses in the courtroom lately, the investors may have a case. Remember, in October, Mozilo and Countrywide agreed to a $67.5 million settlement of a U.S. Securities and Exchange Commission civil fraud lawsuit accusing him of misleading investors.
Also, the insurer Allstate Corp sued Bank of America last month over the alleged misrepresentation of risks on more than $700 million of mortgage debt it bought from Countrywide.
http://www.reuters.com/article/idUSTRE70O7X820110125?feedType=RSS&feedName=topNews
Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: appraisals, Bank of America, countrywide, fraud, ratings |
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Hi, I’ve been struggling with B of A over a HAMP modification since January 2010. For the first 6 months (while I was keeping my payments current but unemployed) they claimed that because my loan was backed by a VA guarantee – they couldn’t, wouldn’t, shouldn’t…then after I fell behind – I called the VA to ask them why they wouldn’t cooperate with B of A – I mean…isn’t it in everyone’s best interest to cooperate and work on keeping this house? The VA told me it was very common for B of A to blame the VA for the hold up – when in fact there is no hold up. The VA wants us to work with our bank to keep our homes, after all they have to pay out 36,000 to B of A if I default and foreclose. So long story short (because my financial situation got really erratic) I’m officially in foreclosure – and I’d like to keep my house but I’m still unemployed. My thoughts are this…if B of A had worked with me in the first place I might have been able to keep up. I think B of A – looked at this as a possible opportunity to gain easy 36,000 (from the VA) and sell a foreclosed home – easier than working with me to lower the interest rate (current 7.2), etc…Additionally, my original loan was with Taylor, Bean and Whittaker. Is it possible, my mortgage with B of A is one of those lost papers? How would I go about finding out – without further jeopardizing my credit. I had read a number of people inquiring through B of A were dinged up to 40 points after requesting proof. Thanks in advance. 🙂
So, I have an orig countrywide loan that orig in 2007. It is with bofa now. I refi”d. Since all this was done wrong in the first place via mers, and my promissory is no where… what the hell happens. I’m damn certain I’m not paying anything else till this is resolved
Ian
Been searching through many Countrywide “securitizations.” As stated — most set up with weak credit enhancement to senior tranches — often all appear to be senior tranches. The main purpose of subprime securitization was to provide support to senior pass-through tranches by multiple supporting “mezzanine or junior” tranches — who WOULD take the hit — should major default occur. (this was Louis Ranieri’s brainchild.)
Thus, higher credit rating could be “generated” (actually bogus) because of the “hit” the lower tranches would take by providing support to the high tranches. The second credit enhancement was protection in the form of credit default swaps — insurance to guarantee return of principal investment — again, should a major “trigger” default event occur.
Not only were Countrywide securitizations poorly set up for credit enhancement, MOST were labeled as “Alternative Loan Trusts” — meaning they never warranted triple A rating — which the investors in suit are claiming. But, the investors were told from the prospectus — the loans are “alternative” investments to traditional MBS. They were never intended to be guaranteed — they were clearly labeled “Alternative Loans”
Further, all of the trusts named in the suit were “issued” by subsidiaries of Countrywide. And, more important, many were place for sale by CountryWide Securities Corp itself (another subsidiary) — not a “recognized” investment bank capable of syndicating sales that could generate a high rating.
Some of the trust certificates/derived securities were sold through the likes of investment banks — Lehman Brother, Bear Stearns, and Goldman Sachs — who would then also purchase tranches for utilization in CDOs (and maybe the whole loans themselves — but the prospectus gives no clue).
It is doubtful that default credit swap protection was provided by large companies such as AIG — who was bailed out for swap obligations. There may have been other financial guarantee coverage by swaps providers – not as lucky as AIG.
Competitors to Countrywide sold loans directly to Wall Street investment/commercial banks. Although there were attempts to do the same as Countrywide — securitize their own receivables — which may be the case in certain New Century issues and issues by Ameriquest. For the large part, ;however, It was the Wall Street banks that purchased the loans — and then securitized their now owned receivables. Also, there may be some Assignment and Assumption Agreements (difficult to find) by Countrywide — in which sale of loans is clear — but, again, for the most part – Countrywide securitized their own receivables — syndicated sales themselves — or hired BS/Lehman to do the job for them. This is reflective in the NJ Kemp case — it which it was admitted — the note never left Countrywide.
As a result, investors in Countrywide securities may not have been bailed out — to the extent investors in MBS “issues” by major financial institutions were bailed out by TARP.
This may be a very interesting case as it progresses — but, likely, it will be settled. Have to remember, also, that banks that purchased these floundering subprime lenders for a reason — they had involvement — whether by lines of credit, assignment and assumption, contracts, etc. Bank of America would not have bailed out CW — if it did not have involvement.
Finally, investors are going to have a tough time with this case. Prospectus is loaded with warnings and “Alternative Loan Trust” label. Due diligence is standard for liability. Consumers are not held to same standard. And, what happened to the AG settlement with Countrywide (now BofA) in which loans were to be reasonably modified. Clearly, AG was onto the fraud. But, know many victims of Countrywide — not one has been able to get a reasonable modification. .
Countrywide was a different “duck.” Where the SEC with this one??? Think they were there — check under Depositor — one is CWABS, Inc. — and letters filed on SEC site — under “UPLOAD.” They were onto it — and so was AG for consumers. But, BofA — what is their real role — besides successor in interest?????
Not a pretty picture.
.
Their basically saying that we have no right to live in “OUR” own homes, unless we pay someone we’ve never agreed to pay. And because they’re using Government authority to in enforcing this mandate it qualifies as EXTORTION.
DyingTruth
It is the important part of the Ibanez ruling — just have to get other states to wake up. Do not know what you are talking about with your bold print — or to who. Re-state.
**OFF TOPIC** but I need some idea of how to attack this…
My HOA is proposing a new fee/tax on title transfers in my subdivision of $500 to help pay for the losses taking care of the abandoned houses ,, the banks are forcing people out and not transferring ownership so they can avoid having a lien against themselves… I can see placing a lien but I don’t see how they can add a transfer fee … This is in Florida .. if anyone can give me some case law I’d appreciate it..
ANONYMOUS,
On the issue of convincing courts that the Notes were never assigned to the Trusts. I thought that was what the important part of the Ibanez ruling was?
WE NEVER TOOK ANY MONEY!!! STOP MAKING INCORRECT STATEMENTS LIKE THAT. CREDIT EXTENDED IS NOT COUNTED AS INCOME RECEIVED, IT’S NOT COUNTED AS TAXABLE AS SUCH SO IT CAN’T EVEN BE CONSIDERED AS SUCH.
Ian
Okay — will take awhile — looked at quickly — and compensatory damages to be determined at trial.
Strange structure for tranches by a quick look — a couple samples show almost all were rated AAA or close — very few — if not NO tranches – for “credit enhancement” to senior tranches.
Want to look closely later — have to go out now.
ANONYMOUS- I read 1/3 of BOA suit last night. Got it on Naked Capitalism, let us know what you find.
ANONYMOUS-the remaining 22% of the New Century Trust were repackaged into CDOs, this was generally done when no one would buy them as is. In a CDO they were again given an investment-grade rating. Check out Janet Tavakoli (Tabakoli Structured Finance), she rails against all the fraud in several of her articles/studies. One in particular (forget the name) but is obious from the title. New Century was another criminal organization. More on that later.
[…] This post was mentioned on Twitter by alan baron, Teri Sherwood. Teri Sherwood said: REUTERS: BANK OF AMERICA HIT WITH THREE NEW LAWSUITS FOR "MASSIVE" FRAUD: http://t.co/Lqd3Gkb #Fraud #Corruption #Bankster […]
Reposting comment here — which is under another post. RE– FCIC report.
Still reading. Pages 116-117 RE –A New Century Trust — are interesting.
Note funding and “investors” — and that 78% of tranching was in highest rated tranches. Rest in CDOs.
FCIC does not point out (at least as far as my reading) that highest rated tranches were paid by swaps via bailout help.
FCIC also does not point (again as far as my reading) that many CDOs investors have written off investments.
As I have stated, TILA Amendment mandates that current creditor with largest position on balance sheet must identify itself. So — What tranche holder – IF ANY – would remain after bailout and write-offs.
All loans were first sold to Citigroup – before securitization.
Believe SIV Cheyne -owned by Goldman.
Going to try and find this complaint. “Investors” are asking for compensatory and punitive damages. Want to see if they subtract foreclosure proceeds from compensatory damages. They would have to subtract — IF they are receiving foreclosure proceeds as trustee to trust (in court) claims the “investors” are entitled to.
Have seen no investor lawsuit in which they do the subtraction.
I agree with George. This fraud has got to come to a stop. They are still selling those bogus loans, securitizing them and putting MERS on them. It is all fraud and must be stopped. The legislation being presented by Marcy Kaptur (D-OH) is a great idea-preventing Fannie and Freddie from buying any loans with MERS on them. However, what about the 60 million or so loans already out there. Will it be retroactive? I thought that was unconstitutional. Burmese8@yahoo.com
Cairo riots is only a preview of what is coming to A United States City near you.
I hope and pray it doesnt happen and that the Judges Attorneys and Politicians realize who the real enemy deadbeats are “Banksters”. And who is gonna really take their pensions away, via this massive Ponzi Pyramid Scheme.
Those that are paying into the ponzi scheme are like Sheep going off a cliff.
As I have been saying for years, nearly every transaction that is put on title that involves these players was a fraud. They continue to commit fraud in the State of Rhode Island every day. The former attorney general and the current are in the dark and do nothing to prosecute these acts. What is happening in Egypt and Syria is not too far off if we do not reclaim the America that was founded in 1776. God Bless America