BANKS COULD FACE KNOCKOUT PUNCH FROM ILLEGAL PRACTICES

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

Banks Could Face $60 Billion Tab on Bad Mortgage Loans

Thus no matter how well certain mortgages or “pools” performed on their own, they were still guaranteed to fail because they had assumed the liability of the worst mortgages.

I believe this is called trading on inside information but oops, that’s right these were neither securities nor insurance products, they were entirely unregulated. Had they stuck to their game plan, they might have had a chance of staying unregulated. But on close examination of just the FACTS, this was a PONZI scheme that was NOT exempted by the 1998 legislation.

$60 Billion? No more like $6 trillion or more.


By BEN PROTESS

The banking industry may have to spend more than $60 billion to buy back troubled mortgages, according to a report released on Tuesday by Standard & Poor’s.

The exposure stems from risky loans that the banks packaged and sold as securities at the height of the mortgage bubble. The terms of the mortgage security deals often required lenders to repurchase loans that failed to meet certain underwriting criteria.

S.&.P., the credit rating agency, said the nation’s six largest banks face the brunt of the liability. Bank of America and JPMorgan Chase “have the highest exposure,” the report said.

S.&.P. expects the so-called mortgage put backs to hang over the industry for the next two years. Yet the lingering problem “should have no direct impact” on the industry’s credit ratings, the report said, because most banks have plenty of cash to cover the expenses.

Banks have been stocking their litigation reserves in recent months, preparing for an onslaught of lawsuits, the report noted. JPMorgan, for instance, increased its litigation reserves by more than $6.7 billion in 2010.

Banks are facing calls to repurchase soured loans from three distinct players: private investors who bought mortgage-backed securities, companies that insured the mortgage bonds and Fannie Mae and Freddie Mac, the government-controlled mortgage finance companies.

The most potent threat, S.&.P. said, comes from Fannie and Freddie. Banks could ultimately pay the companies $31 billion — more than half the industry’s total exposure — to buy back demands. Bank of America announced in January that it paid more than $2.5 billion to buy back troubled mortgages from Fannie and Freddie.

Investor and bond insurers, meanwhile, could each collect about $15 billion from a variety of banks, the report said.

S.&.P.’s estimates are largely in line with those of other analysts, who have predicted that banks could spend anywhere from $20 billion to $150 billion to repurchase roughly $2 trillion of bad loans.

12 Responses

  1. UBS To Buy Back $1.5B In ARS To Settle NJ Claims

    Two UBS AG subsidiaries will repurchase $1.5 billion in auction rate securities sold to New Jersey clients and pay a $3.79 million fine to settle allegations that their securities dealers sold ARS without disclosing known market risks.

    Who’s next?

  2. […] This post was mentioned on Twitter by kim thomas, Teri Sherwood. Teri Sherwood said: BANKS COULD FACE KNOCKOUT PUNCH FROM ILLEGAL PRACTICES: http://t.co/trUpeev […]

  3. BAILOUT. Did not the banks payoff the security investors?? That is what the BAILOUT was for!!!!!

    Not talking about the insurance fraud prior to the bailout — the bailout was to payoff security investors.- because of all the fraud. WHAT ARE security ‘Investors” now demanding by the repurchases??? Not foreclosure proceeds – they will never be entitled to foreclosures proceeds. Nothing — they no longer have rights. They have been paid back!!! Except — they did not earn the interest rate that they counted on. That is what repurchases are for — fraud — for not being able to earn the interest rate security investors were promised — or trade a mezzanine/derivative swap for more than it’s current value.

    The other non-security “investors” – to whom collection rights have been “swapped” — have proprietary relationship with bank. Banks are protecting them. These debt collectors are not “investors” — call them what you may — but they are not “investors.” And, if they want to still be called investors — force them to identify themselves. The way things are going –sooner or later — they will have to. .

  4. Just a drop in the bucket for BofA. They need to pay more and go out of business.

    I am not so sure that they have all the assets they say they have. There is a huge amount of accounting fraud going on. I do not think they have as many assets (dollars) as they say they have. Complete transparency needs to be intiated into ALL procedures in the banking quarter. Too much funny money floating around with no transparent accounting practices. We need a whistleblower from Fannie or Freddie, too. We still have not heard from WikiLeaks, and it is now February. Burmese8@yahoo.com

  5. Neil, I have interesting info regarding what you have said in this article. Please email me and I’ll send you what I have. BTW, I know Charles Koppa and Dan Edstrom. I passed this info to them, and they may already have forwarded it on to you, but in case they have not yet done so, I would like for you to see this. It’s going to raise some eyebrows on the issue raised in the above article!

  6. To Scot: Here is the link: http://bailout.propublica.org/list

  7. To Scot (from Feb 19, 2011):

    Here is a link to see just which banks received TARP funds and how much. If you want more interesting info, click on an individual bank’s name, and very detailed info will come up.

  8. At origination, you probably had no idea that your “broker” may or may not have been a front for another, unknown “lender”. To check if your broker was an operating subsidiary of a national bank, see helpwithmybank.com, and follow links, results may surprise you. Print it out,as I did, before it disappears. If you went through ABC Mortgage Solutions, in Denver, it may help to know that TBTF bank xxx owned it. Of course it has been wound down now, in order to obliterate the paper trail, the ex-employees, and all traces of what happened. But at least you will know.

  9. I had a reader write me a comment on the following OCC Interpretive Letter #1016 February 2005, and now I have a question after reading the Supreme Court Case it decided, Cuomo v Clearinghouse by US Supreme Court, June, 2009.

    If all Banks (including and especially National Banks) are subject to the laws of the State where they bring a civil foreclosure action, why do our State Courts continue to allow them to foreclose in States where they are not registered to do business with the State’s Secretary of State, nor are they licensed to conduct mortgage servicing business with the State’s Bank Commissioner, AND when they DID NOT ORIGINATE THE DEFENDANT’S MORTGAGE LOAN?

    http://wfhmcaught.blogspot.com/2010/07/daniel-p-stipano-states-national-banks.html

    http://www.supremecourt.gov/opinions/08pdf/08-453.pdf

    This reader commented:
    rod said…

    this letter is actually known as OCC Interpretive Letter #1016 February 2005.

    It took me 6 years to discover it. Same issue decided in Cuomo v Clearinghouse by US Supreme Court, June, 2009.

    We all need to stress these points of law, until the courts hear us and listen and obey their own laws.

  10. I had a reader write me a comment on the following OCC Interpretive Letter #1016 February 2005, and now I have a question after reading the Supreme Court Case it decided, Cuomo v Clearinghouse by US Supreme Court, June, 2009.

    If all Banks (including and especially National Banks) are subject to the laws of the State where they bring a civil foreclosure action, why do our State Courts continue to allow them to foreclose in States where they are not registered to do business with the State’s Secretary of State, nor are they licensed to conduct mortgage servicing business with the State’s Bank Commissioner, AND when they DID NOT ORIGINATE THE DEFENDANT’S MORTGAGE LOAN?

    http://wfhmcaught.blogspot.com/2010/07/daniel-p-stipano-states-national-banks.html

    http://www.supremecourt.gov/opinions/08pdf/08-453.pdf

    This reader commented:
    rod said…

    this letter is actually known as OCC Interpretive Letter #1016 February 2005.

    It took me 6 years to discover it. Same issue decided in Cuomo v Clearinghouse by US Supreme Court, June, 2009.

    We all need to stress these points of law, until the courts hear us and listen and obey their own laws.

  11. I have a question, all we here about is the big banks,(Bank of America, JP Morgan,Wells Fargo,etc.) what about the smaller banks how can someone find out about them? In Wisconsin M & I Bank is in trouble, recieved Tarp money and is conducting foreclosures. I can find the trust for their auto loans,but not for any mortgages. I find it hard to believe that a bank thats the 18th largest isn’t playing the same game as the big boys. Besides this bank what about home owners fighting other banks? How are homeowners able to take information from this site or other sites and help them fight banks,lenders,etc. If all the information is about the big banks. There are plenty of properties that I see in the paper for foreclosure and they are smaller banks,lenders. Does this mean a foreclosure done by a smaller bank is o.k. and just the larger lenders are the ones that caused the problems? Again I find it hard to believe that smaller lenders are using their own money to fund these loans. Because if a large lender can make money with this pratice what would stop the smaller ones from doing the same.

  12. and here’s a link to another story about homebuilders secretly, fraudulently selling houses to reap illegal finance profits at the expense of the homeowners. MOTS

    http://www.consumeraffairs.com/news04/2011/02/missouri-indicts-companies-on-real-estate-fraud-charges.html

    this again goes to 200 years of property ownership/lien law being violated, among other things.

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