Bye Bye Bank of America

[seanD]

Bank of America is in a load of hurt not only because of their declining shares, and not only are they screwed when it comes foreclosuregate and the fraudulent (not just "sloppy" as is being sold to us) procedures they and other banks were engaging in, but the whole foreclosuregate scandal has a couple of other dynamics. First of all, you better believe that if a majority of the mortgages that were made to borrowers were shady, in addition to the procedures being used to seize foreclosed homes, as well as the procedures to package those mortgages into securities then rate and sell those loans on the open market, the investors who bought those shady securities are gonna come stampeding to claim their money back, otherwise litigation will ensue. And if those securities were fraudulent, then the companies that insured those securities with credit default swaps are gonna come stampeding to claim their money back, otherwise litigation will ensue. And the MSM is rarely even covering this potential economic tsunami...

http://www.bloomberg.com/news/2010-1...ihan-says.html



I don't why I"m laughing really. Either the tsunami that's about to come crashing down on this institution of criminals, or the tsunami that's about to come crashing down on the heads of most Americans who are willfully oblivious and complacent about all this. Oh yeah, Paulson, the same scammer involved in the Goldman Sachs Abacus charade, recently dumped his BoA stocks

[seanD]

"The New York Federal Reserve has joined the Pacific investment Management Company, better known as Pimco, and investment management firm BlackRock in a move to make Bank of America purchase back $47 billion in mortgage bonds. The news was reported by Bloomberg Tuesday. Later Kathy Patrick, lead attorney for the consortium, confirmed that the group owns more than 25% of the voting rights in more than $47 billion worth of Bank of America securities.

According to the letters sent by a law firm Bank of America’s Countrywide Financial failed to properly service loans that were part of certain mortgage-backed securities.

'We want to enforce the holders' contract rights,' Kathy Patrick, the lead attorney representing the bond holders, told CNBC. 'Today's action begins the clock ticking ... If these issues of non-performance are not addressed and cured, then our clients will be able to enforce their rights in court.'"

http://ecommerce-journal.com/node/30112

[Dee Dee Warren]

BoA sux

[seanD]

And the lawsuits keep pouring in...

"Foreclosure-fraud class action lawsuits are starting to pile up against major banks across the country, threatening a besieged industry with billions more in potential losses.

Bank executives are swarming Capitol Hill this week to defend themselves against multiple foreclosure-related investigations, including one by all 50 state attorneys general. Talks are under way in that probe in hopes of reaching a settlement, but that wouldn't extinguish the mounting threat of an avalanche of class actions.

A congressional watchdog said in a report issued Tuesday that the foreclosure document debacle could threaten major banks with billions of dollars in losses, further prolong the housing depression and damage the government's effort to keep people in their homes.

The class actions, which could be expanded nationally, seek damages for homeowners whose properties were illegally foreclosed upon by banks using fraudulent documents. Suits have been filed in Maryland, New Jersey and Massachusetts that target Bank of America Corp., Wells Fargo & Co., HSBC PLC and JPMorgan Chase & Co. In Florida and Maine, Ally Financial, formerly known as GMAC Mortgage, is also being targeted."

http://www.google.com/hostednews/ap/...63a5a38b049ec8

And these are just the individual homeowners. These aren't the inventors who bought the securities

[seanD]

This is the beginning of the security fraud avalanche...

"America's biggest names in banking have been slapped with a fraud lawsuit in Indianapolis by a home loan bank trying to recover $3 billion.

In a hangover from the 2000s' easy-money spree, the Federal Home Loan Bank of Indianapolis filed the lawsuit on Monday in U.S. District Court.

The lawsuit claims investments bought from 37 banks, including Bank of America, Goldman Sachs and JP Morgan, are based on home loans whose paperwork is riddled with inaccurate appraisals and other flaws."

http://www.indystar.com/article/2010....com|default|t

Tack on another $3 bil from Federal Home Loan Bank unto Kathy Patrick's $47 bil class action.

[seanD]

In an unrelated scandal, Lehman Brothers wants a piece • Edited by a Moderator •

"Bank of America Corp., a lender to Lehman Brothers Holdings Inc. in September 2008, must return $500 million of deposits it seized in violation of bankruptcy law, a judge ruled.

“BOA’s seizure of the deposited funds was an unauthorized and impermissible setoff in violation of the automatic stay in LBHI’s bankruptcy case,” U.S. Bankruptcy Judge James Peck in New York said yesterday in a written decision."

http://www.businessweek.com/news/201...to-lehman.html

[seanD]

And the snowball continues. The state of Arizona now wants a piece • Edited by a Moderator •

Moderated By: CP

That word is not allowed, Sean... EITHER time you used it

***If you wish to take issue with this notice DO NOT do so in this thread.***
Contact the forum moderator or an administrator in Private Message or email instead. If you feel you must publically complain or whine, please take it to the Psychotherapy Room unless told otherwise.

http://www.marketwatch.com/story/ari...wsj-2010-12-17

[seanD]

"Italy’s finance police seized 22 million euros ($29 million) from six lenders including Bank of America Corp. amid allegations of fraud in a probe focusing on the sale of derivatives to five municipalities in central Italy.

Police said they took 15 million euros from Bank of America, and 1.7 million euros each from "Deutsche Bank AG and UBS AG, according to an e-mailed statement. The remainder was seized from Natixis SA, Dexia Crediop SpA and Banca Monte Paschi di Siena SpA.

The amount represents the alleged illicit profit the banks made from selling derivatives to the city of Florence, the region of Tuscany and three other municipalities in the region, the police said. The local governments have lost about 123 million euros on the swaps that adjusted payments on 1.4 billion euros of debt, the police said.

Losses on derivatives from Puglia, on the heel of Italy, to Liguria, the region that borders France along the Mediterranean, are prompting local governments to review their arrangements, while lawmakers have proposed rules that limit the use of swaps. Four banks are on trial in Milan for alleged fraud in the sale of derivatives to the city."

http://www.bloomberg.com/news/2010-1...ale-probe.html

Derivatives, derivatives, derivatives. We already know that Goldman Sachs sold a type of derivative swap to Greece before they collapsed in order to hide their debt (here). Guaranteed, if this ever becomes disclosed to the public, we will find that derivatives created by the mega banks played a major role in the implosion of the EU, as well as the economic condition the US States are currently in. The fact that Arizona is playing a major role in the foreclosuregate scandal and fighting back against BoA, and now New Jersey (another state that is in economic trouble) is attempting to block the actions of BoA (here), is becoming a very interesting development, because if derivatives had a major cause in the struggling states, you can bet other states will follow their lead.

What does this mean, other than the fact that the banking system has gone completely rogue? It means that this could be one among quite a few potential circumstances that sends the derivative house of cards market once again crumbling to the ground.

[seanD]

Allstate...

"Allstate, which filed its claim in a Manhattan federal court on Monday, is seeking unspecified damages in its complaint, which stemmed from Countrywide's sales of the securities between 2005 and 2007, Allstate said in a statement Tuesday. The company accuses Countrywide of violating its own mortgage underwriting standards starting in 2003 in order to boost its mortgage business. Countrywide was acquired by Bank of America in 2008 after it nearly collapsed during the financial crisis.

Bank of America continues to be affected by the fallout of the mortgage meltdown. The company is one of a number of U.S. institutions that said last month that they may incur costs defending lawsuits from investors in their mortgage-backed securities. Bank of America in particular said it's a defendant in cases alleging that documents relating to more than $375 billion in mortgage-backed securities may have contained misrepresentations and omissions, and failed to meet underwriting standards.

Wells Fargo (WFC) and Citigroup (C) also said in November that they were defendants in similar lawsuits, and that their costs may rise because of the resulting litigation.

Countrywide co-founder Angelo Mozilo in October reached a settlement agreement with the Securities and Exchange Commission related to charges of insider trading and civil fraud, allowing him to avoid standing trial. Mozilo will reportedly pay $67.5 million in fines. Bank of America wasn't charged by the SEC.

Bank of America didn't immediately responded to a DailyFinance request for comment."

http://www.dailyfinance.com/story/re...ties/19779494/

And the litigation snowball keeps rolling. I wonder which will spark the the next economic crisis -- the collapsing states and the municipal bonds scandals (check it out here) or foreclosuregate? The suspense is killing me.

[seanD]

"At issue is billions of dollars in mortgages sold to Fannie and Freddie by Bank of America. According to the Washington Post, the mortgage pool is worth about $530 billion. Fannie and Freddie have accused the bank of selling mortgages that appeared to fit within their desired risk profile and underwriting guidelines, but did not. That’s a form of fraud. But because Fannie and Freddie had guaranteed the loans, the government entities were going to sustain the losses even if Bank of America was to blame.

Why did Fannie and Freddie essentially let Bank of America off the hook? And what it means for taxpayers?

“The problem is that Freddie Mac has $127 billion in mortgages from Bank of America,” said Anthony Randazzo, director of Economic Research at the Reason Foundation. “But Bank of America is only paying $1.2 billion.” Fannie Mae owns about $3.1 billion in the bank’s faulty loans, Randazzo added, but the bank is only paying 49 cents on the dollar to cover those losses.

“That means taxpayers are going to have to take all those losses,” Randazzo told The Daily Caller. “[With Fannie], the taxpayers took about a 50 percent hit.”"

http://dailycaller.com/2011/01/12/di...unded-bailout/

What does it mean when banks are so big, government goes out of its way to keep them propped up with tax payer funds even though they continue to commit massive fraud?

It means America is in trouble.

[JusticeMachine]

If you premise is predicated from this, then you are failing to understand the loan origination process and what part banks & borrowers play. Majority of mortgages were not shady, and majority of mortgage loans are performing per the terms of the note.

If you feel majority are shady, then what are you basing that on and in what way were they shady?

First of all, you better believe that if a majority of the mortgages that were made to borrowers were shady

[seanD]

If you premise is predicated from this, then you are failing to understand the loan origination process and what part banks & borrowers play. Majority of mortgages were not shady, and majority of mortgage loans are performing per the terms of the note.

If you feel majority are shady, then what are you basing that on and in what way were they shady?

There are two issues with foreclosuregate: a) Individual mortgages; b) mortgage backed securities (MBSs, CDOs).

As far as the "evidence" for fraud, this is a very complicated issue, but the evidence is scattered throughout this thread and I tried to lay it out as concise as possible (guess I failed).

The former is currently being investigated. The question is: if the banks sell and resell mortgages on the open market without the deed or proof of ownership of the mortgage, or without carrying out the legal and proper procedures, do they have a right to foreclose? And if not, then who does and how do we know just who has the legal right if the mortgage was packaged and shuffled around from bank to bank, from investor to investor? Essentially what it comes down is that they're counterfeiting mortgages. In many cases, people are getting foreclosed even though they either paid off their mortgages to a different bank that already sold their mortgage to another bank or investor, or they adjusted their loan with a bank that no longer has their mortgage. In other cases, the homeowners who already paid off the house may not even really own the house if their was a mortgage on the house previously that was never legally settled. So it's a major quagmire that is in limbo right now with State Attorneys demanding an investigation (see post #4).

The latter is much more ominous and has to do with banks packaging mortgages into securities and selling those securities on the market. So far so good. In the case of Goldman Sachs and their Abacus product, however, they intentionally packaged the riskiest mortgages, knowing the security would go bust, got them Triple-A rated, sold them on the market as less risky instruments, and then bet against them (discussed here), in which an investigation ensued that merely resulted in them being fined about a quarter of what they made on the deal (strangely no criminal charges were leveled against them).

BoA seems to be getting a lot of heat lately than most of the other banks, or at least more press than the others. This doesn't mean that all the banks did what Goldman Sachs did, however, the accusation is that the banks advertised those securities as being less risky than they actually were, which is of course fraud, and is currently under investigation (here). Although I'm not holding my breath that an official government investigation is anything but window dressing, the litigation from other corporations and especially other states is what will take down the banks because the government has no control over this. So far, Arizona, Nevada, (possibly) New Jersey, Allstate, Federal Home Loan Bank, attorney Kathy Patrick have threatened litigation against BoA (which I guess is pending), which I have documented throughout this thread. In post #10, it was a clear case of fraud, thus Bank of America settled with Fannie and Freddie about 50% of what they actually owned on the security buy-back, in which the tax payers, who now own Fannie and Freddie (being a government subsidiary) will pick up the slack, hence some are even looking at that as a guised bailout in favor of BoA.

The point is, I think most investors who got duped find it a bit dubious going up against giants such as Goldman Sachs, BoA, JP Morgan, etc., yet if this litigation proves successful, then not only will this surely take down BoA (barring just another government bailout), but other investors who got duped will most likely jump on the bandwagon out of boldness and because of the publicity of the banks' liability.

Another issue is that the reason (I firmly believe) most of the states are in trouble now is because they used the money from municipal bonds they sold to invest in these securities that went bust when the housing market collapsed, instead of infrastructure. So being that the sates are in trouble, if they think they can win a case against the banks, you better believe they would consider this their only option of getting out of their mess.

[Pilgrim]

The reality is, though, that most of the loans were good and that the majority of defaulting loans are not from poor borrowers who were taken in with shady offers but by middle to upper class borrowers who bit off more than they could chew.

Yes, BofA has been in the wrong on many of the foreclosures but the wrong is in the way they processesed defaulting loans, not in that the loans were defaulting at all. I mean, the borrowers were still not making good on pay back. The issues is not so much that the there should be foreclosures on those homes but it is the way it was processed.

[seanD]

The reality is, though, that most of the loans were good and that the majority of defaulting loans are not from poor borrowers who were taken in with shady offers but by middle to upper class borrowers who bit off more than they could chew.

Yes, BofA has been in the wrong on many of the foreclosures but the wrong is in the way they processesed defaulting loans, not in that the loans were defaulting at all. I mean, the borrowers were still not making good on pay back. The issues is not so much that the there should be foreclosures on those homes but it is the way it was processed.

That is true overall, but it isn't that cut and dry. I laid it out the best I could in the post above yours. Securities and individual mortgages is a different issue, but they paradoxically affect each other. As in the case of individual mortgages, If the foreclosures (and in some cases even the mortgage itself) were not legally or properly processed, then this unravels the whole process, which not only puts the individual foreclosure in question, but the securities that contained the mortgages that were sold to investors. It's a snowball affect. And vice versa, if the securities were not proper or or fraudulently misrepresented as they were sold, then this obviously affects the individual foreclosures.

[JusticeMachine]

The former is currently being investigated. The question is: if the banks sell and resell mortgages on the open market without the deed or proof of ownership of the mortgage, or without carrying out the legal and proper procedures, do they have a right to foreclose?

This issue, from my understanding, revolves around MERS - MERS (Mortgage Electronic Registration System) was and is a way to change the ownership of a loan without having to do an assignment each time a mortgage is sold. Essentially, mortgagor A originates a loan, and sells to mortgagor B, mortgagor B sells the loan to Mortgagor C...etc, until the loan ends up with the servicer who pools the loan with a group of like interest rates, then the ownership passes to an Investor who sells it as a MBS and pays the servicer a servicing premium to collect payments, upkeep the escrow account and now, to negotiation on the investors behalf, in the event of a foreclosure, loan modification or short sale.

Usually, an assignment would have to be made between ever buyer and seller along the chain to keep the follow of title - Enter MERS. With MERS you assign once to them, then when the finale servicer/owner is reached, MERS assigns to the new owner. The Note would also have to follow the chain via endorsements or allonges, transferring the debt from one lender to another.

This title issue, as I understand it, is that BofA, as well as others, have foreclosed on people, while the loan is still in MERS name, meaning the final assignment was never completed. This is illegal, but can be rectified by reversing the foreclosure, having MERS assign the DOT/Mortgage, then foreclosing again. The net benefit to the borrower is staying in the home a few more months without paying the mortgage, or possible short selling the home.

There is an issue with the final destination bank, having to produce the original note in Judicial foreclosure states, that still has to be corrected, though most in the legal world see this argument as a delaying tactic as best.

I have heard of no bank counterfeiting notes and/or deeds to sell to several sources at once and would like to see an article if someone has one.

I don't think this is shadiness on the banks parts as much as it is incompetence.

The case quoted here:

The point is, I think most investors who got duped find it a bit dubious going up against giants such as Goldman Sachs, BoA, JP Morgan, etc., yet if this litigation proves successful, then not only will this surely take down BoA (barring just another government bailout), but other investors who got duped will most likely jump on the bandwagon out of boldness and because of the publicity of the banks' liability.

From one of the articles you quoted:

"There were representations made to my bond holders when they purchased these securities. They are contractual representations about the credit quality of these mortgages...and my clients are concerned," Patrick added, "that the mortgages in question did not, at the time they were securitized, conform to those representations.

We will have to see how the credit risk was sold to the investors vs. what the credit risk really was, as the sellers understood it.

Here are a coupe of good videos regarding the current situation:





BofA going under will be very bad for all of us, not to mention the financial world. I hope it doesn't happen.