With All the Settlements, What is Owed on Principal?

CREDITOR HAS BEEN PAID

The complexity and shroud of mystery surrounding claims of securitizations, assignments etc can be simplified if you just look at the money. This is why I have forensic auditors who chase this information down. Call living lies customer service 520-405-1688 if you can’t find an adequate analyst of your own who REALLY dig in.

  1. What money was paid to whom? When? How? Who is a witness that can authenticate and verify the documents used (ACH, Wire transfer, check) the documents used for money transfer?
  2. If the creditor already settled with the investment bank, then is the claim for collection or foreclosure on the mortgage still viable?
  3. How was the settlement allocated as to the investor-lenders?
  4. If the investor-lenders received all or part of the money from the investment bank, how much is owed by the homeowner and to whom?
  5. To whom was money paid? Who received the actual payments from borrowers, co-obligors, insurance, credit default swaps, federal bailouts and civil settlements? How much of this money was received as agent for the investor-lenders (creditors)?

There are lots of questions but they can all be answered with arithmetic. If investor bought a bogus mortgage bond for $100 million and received $50 million in settlement, then they are either owed still $50 million or they settled the claim and if you contact them, they will say they have no interest in pursuing the matter any further. So why the foreclosure? And if there is a foreclosure, who gets the money? Who is the “creditor that submits a “credit bid.?”

People don’t like talking about the free house syndrome, but SOMEONE IS GETTING A FREE HOUSE one way or the other — either the banks or the homeowner.

One thing I am sure about is that there is a claim that can be firmly supported by the presence of a settlement or proceeds from co-obligors (insurers, CDS counterparties etc.). Either the amount due is wrong, eliminated or at least subject to a proper accounting. This would negate the issues of foreclosure, at least for a while, in the notice of default and initiation of foreclosure based upon the assertion that the creditor has been identified as beneficiary or mortgagee and the amount due is as stated. The amount due is probably NOT as stated and the creditor identified might not even have a dog in the race anymore.

Judges get angry at borrowers for bringing this up. I think lawyers should have the guts to stand up to such judges and say your anger is misplaced. Don’t shoot the messenger! The borrower didn’t create this mess, it was the financial industry and this loan was not even originated using standard rules of underwriting and document preparation.

Investors Settle for $600 million — so which loans get credit for that payment?

Editor’s Note: This is what we are hearing about. What about the settlements that go unreported? The number of settlements that are off-record (unreported) is unknown but suspected to be very high. [One of the reasons why it is SO important to get the true CURRENT status of the SPV and the true FULL accounting of payments to the investors because THEY are the creditors.] You might be sitting on a loan where the principal balance has been paid in whole or in part, which makes those monthly statements wrong, along with notices of delinquency, notices of default, notices of sale and foreclosure suits.

These lawsuits and settlements are DIRECTLY related to the balance due on homeowner loans. The investors were the ONLY source of capital. That capital was pooled and channeled through SPV’s. It was from the pool that loans were funded. Don’t get confused by mistakes in the media. The securities were FIRST sold to investors and THEN they went looking for people to loan the money.

So each time that a payment has been made on behalf of any pool from any source there should be an allocation to the borrower’s principal balance for each of the loans in that pool. Instead, the game is on: credit the investors but don’t tell the borrowers anything. That enables the PRETENDER LENDERS to grab houses for nothing and to collect monthly payments on loans that are already paid in full, unknown to the borrower. It’s the perfect crime: the borrower knows he has missed payments. What he/she doesn’t know is that someone made the payments already.  Worst case scenario for the pretender lenders is that they collect twice (collectively as a group).

By Jef Feeley and Edvard Pettersson

April 23 (Bloomberg) — Countrywide Financial Corp. investors, led by a group of New York retirement funds, have agreed to settle a class-action lawsuit for more than $600 million, a person familiar with the case said.

U.S. District Judge Mariana Pfaelzer in Los Angeles in December certified a class of investors who bought Countrywide shares or certain debt securities from March 12, 2004, to March 7, 2008. The U.S. appeals court in San Francisco on April 19 denied the defendants permission to appeal that ruling. No settlement papers have been filed.

Shirley Norton, a spokeswoman for Bank of America Corp., which acquired Countrywide in 2008, declined to comment. Jennifer Bankston, a spokeswoman for Labaton Sucharow LLP, the firm representing the pension funds, said mediation between the parties took place this month and declined to comment on the settlement.

The New York State Common Retirement Fund and five New York City pension funds claimed former Countrywide Chief Executive Officer Angelo Mozilo and other executives hid from them that the company was fueling its growth by letting underwriting standards deteriorate. Bank of America acquired Calabasas, California-based Countrywide, which was the biggest U.S. home lender, in July of 2008.

The Daily Journal, a Los Angeles legal newspaper, first reported the settlement.

SEC Lawsuit

Mozilo, 71, is also a defendant, together with two other former Countrywide executives, in a U.S. Securities and Exchange Commission lawsuit alleging he publicly reassured investors about the quality of the company’s home loans while he issued “dire” internal warnings and sold about $140 million of his own Countrywide shares.

He wrote in an e-mail in September 2006 that Countrywide was “flying blind” and had “no way” to determine the risks of some adjustable-rate mortgages, according to the SEC complaint filed in June.

David Siegel, a lawyer for Mozilo, didn’t immediately return a call seeking comment.

The class-action lawsuit names 50 defendants, including Goldman Sachs Group Inc., Citigroup Inc., JPMorgan Chase & Co. and 23 other Countrywide underwriters. It also named the auditing firm KPMG LLP. The underwriters and KPMG are accused of securities-law violations and not fraud.

Dean Kitchens, a lawyer representing the underwriters, and Todd Gordinier, a lawyer representing KPMG, didn’t immediately return calls seeking comment.

The case is In re Countrywide Financial Corp. Securities Litigation, 07-05295, U.S. District Court, Central District of California (Los Angeles).

–Editor: Michael Hytha, Peter Blumberg.

To contact the reporter on this story: Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net; Edvard Pettersson in Los Angeles at epettersson@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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