News: Banks to reduce mortgage balances?
The following is from the Huffington post:
The nation’s five largest mortgage firms may be forced to reduce loan balances for distressed homeowners as part of an agreement with state attorneys general and the Obama administration to settle claims of faulty mortgage practices, a top state official involved in the negotiations said Tuesday.
The proposal is part of a set of remedies banks would have to agree to in order to settle the state and federal probes launched last autumn, which found that the largest mortgage firms illegally seized the homes of at least dozens of borrowers and engaged in shoddy practices that short-changed troubled borrowers.
Mortgage principal reductions would comprise part of a larger fine levied on Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and Ally Financial. Penalties could reach $30 billion, officials said.
The forced reduction of mortgage principal as a penalty against flawed past practices has proven contentious. Some Republican attorneys general have objected, as have some Republican members of Congress…..
News: NY Unions Want Chase to Modify Mortgages
The following is from The New York Times:
Unions to Press Chase on Modifying Additional Mortgages
By CARA BUCKLEY
Published: February 9, 2011
Leaders of two large New York City unions said Wednesday that they would push for their pension funds to sell their stocks and bonds in JPMorgan Chase if the bank did not help more struggling homeowners avoid foreclosure.
The declarations were part of a campaign by New York Communities for Change to force the bank to modify more mortgages.
Jon Kest, the group’s executive director, said Chase was singled out because it serviced a large number of mortgages in the city yet turned down a majority of requests for long-term mortgage modifications.
In the coming weeks, Mr. Kest said, elected and union officials and religious and community leaders would urge other investors to divest their Chase assets, and would stage weekly protests outside the bank’s headquarters in Manhattan.
John Samuelsen, president of Transport Workers Union Local 100, which represents the city’s transit workers, and Michael Mulgrew, president of the United Federation of Teachers, said they would urge their pension funds’ trustees to sell holdings in Chase if the bank did not allow more people to adjust their mortgages.
About $40 million of the Teachers’ Retirement System’s $40 billion pension fund is invested in JPMorgan Chase. The transit workers are covered by the New York City Employees’ Retirement System pension fund, which has $271 million in Chase stock and bonds, out of $39 billion in assets.
It is not clear whether the union leaders could successfully sway the pension boards, which include both union and government representatives.
By one measure, JPMorgan Chase is not out of step with other big banks. According to a Treasury Department report in December on its loan-modification program, which pays banks to modify mortgages by reducing interest rates or principal or extending the loan period, JPMorgan Chase permanently modified about 34 percent of the troubled mortgage loans it held that met eligibility criteria for relief, roughly the same as the average for all banks.
According to Mr. Kest, only 6 percent of 1,027 city homeowners who sought to reduce their mortgages with Chase between July 2008 and last December were able to get permanently modified loans. Michael Hickey, executive director of the Center for New York City Neighborhoods, a nonprofit group that provides mortgage counseling, said New Yorkers had more trouble getting modifications than homeowners elsewhere because their mortgages far exceeded the national average.
In a statement, a Chase spokesman, Thomas Kelly, said the bank, which inherited thousands of troubled mortgages when it bought Washington Mutual, had avoided foreclosures twice as often as it has foreclosed on homes, and had opened five centers in the New York area for mortgage counseling.
“Chase is doing everything possible to help homeowners stay in their homes,” Mr. Kelly wrote. “If we find we have made mistakes, we try to fix them.”
News: NYC Comptroller wants audit of mortgage and foreclosure practices
NEW YORK, NY – New York City Comptroller John C. Liu, on behalf of the trustees of the New York City Pension Funds, is calling on directors at Bank of America Corporation (NYSE: BAC), Wells Fargo & Company (NYSE: WFC), JPMorgan Chase & Co. (NYSE: JPM) and Citigroup Inc. (NYSE: C) to conduct an independent audit of their banks’ mortgage and foreclosure practices. The four banks are the largest mortgage servicers in the country representing 56 percent of the nation’s $10.64 trillion mortgage industry.
Comptroller Liu – the investment advisor, custodian and trustee of the New York City Pension Funds, collectively valued at $106 billion – made the request in a shareholder proposal filed at each of the four banks. The proposal calls for the Audit Committee of the Board of Directors at each bank to conduct an independent review of the bank’s internal controls related to loan modifications, foreclosures and securitizations and to report their findings to shareholders by September 30, 2011.
“We raised concerns with the banks in July that misaligned incentives, inferior customer service and repeated requests for paperwork were undermining the loan modification process and leading to unnecessary foreclosures for homeowners,” Comptroller Liu said. “The magnitude of these problems suggests a larger systemic failure with consequences that have not only adversely affected homeowners and become a drain on regional economies, but also left shareholders vulnerable to substantial liabilities.
“Directors are elected by shareholders and as shareholders we intend to hold them accountable,” Comptroller Liu continued. “The banks are under intensive legal and regulatory scrutiny and the independent directors are ultimately responsible for compliance. It’s time they step forward and reassure shareholders that the banks’ internal controls are robust.” Under both NYSE listing requirements and the banks’ own governance documents, the Audit Committee of the respective boards — typically comprised of independent directors — is ultimately responsible for legal and regulatory compliance.
The shareholder proposal states that when the Boards of Directors report back to shareholders, the report should specifically address:
- Policies and procedures to address potential financial incentives to foreclose when other options may be more consistent with the Company’s long-term interests;
- Whether management has allocated a sufficient number of trained staff; and
- The Company’s compliance with applicable laws and regulations, and its own policies and procedures.
News: BOA to Resume Foreclosures
It appears, based on the following article, that BOA will be resuming foreclosure proceedings in NY and 22 other states. As we stated earlier, we doubt that foreclosures were ever really halted in NY (see our earlier post on NY foreclosures).
Alan Zibel, AP Real Estate Writer
WASHINGTON (AP) — The pace of U.S. home foreclosures may not slow much after all.Bank of America said Monday that it plans to resume seizing more than 100,000 homes in 23 states next week. It said it has a legal right to foreclose despite accusations that documents used in the process were flawed.
Other major lenders have yet to say whether they will follow suit and resume foreclosures in the 23 states that require a judge’s approval. But analysts said they expect the move by the nation’s biggest bank will mean other lenders will proceed with a wave of foreclosures that have depressed the housing market.
Banking analyst Nancy Bush of NAB Research said other lenders are likely to follow because foreclosure practices were similar from bank to bank.
“We’ll be back to square one by the end of the year,” she said.
The bank’s move could mean that the costs of the foreclosure-document mess will wind up being less than some investors had feared just days ago. Bank shares sank last week after JPMorgan Chase & Co. said it set aside $1.3 billion in the third quarter to cover legal expenses that include the foreclosure document problems.
Shares of Charlotte, N.C.-based Bank of America had been flat earlier Monday but jumped on the news. They rose 36 cents, or 3 percent, to close at $12.34.
Bank of America Corp. said it’s confident of its foreclosure decisions. The bank is still delaying foreclosures in the 27 states that don’t require a judge’s approval. It said it’s still reviewing its cases in those states.
The bank’s move comes two weeks after it began halting foreclosures nationwide amid allegations that bank employees signed but didn’t read documents that may have contained errors. These employees have earned the nickname “robo-signers.”
The company said it plans to resubmit documents with new signatures in the 23 states that require judicial authorization to restart the foreclosure process. It will delay fewer than 30,000 foreclosures.
“The basis for our foreclosure decisions is accurate,” Dan Frahm, a Bank of America spokesman, said in announcing the bank’s new approach.
Bank of America had been the only lender to halt foreclosures in all 50 states. Other companies, including Ally Financial Inc.’s GMAC Mortgage unit, PNC Financial Services Inc. and JPMorgan, have halted tens of thousands of foreclosures after similar practices became public.
Analysts at FBR Capital Markets said in a note to clients that the bank’s announcement demonstrates that the foreclosure document issue may be “overblown.”
Still, more problems surfaced Monday that suggest the controversy may be far from over.
A deposition released by the Florida attorney general’s office revealed that the office manager at a Florida law firm under investigation for fabricating foreclosure documents signed 1,000 files a day without reviewing them. The manager also would allow paralegals to sign her name for her when she got tired, the deposition said.
Cheryl Salmons, office manager at the Law Offices of David Stern, would sign 500 files in the morning and another 500 files in the afternoon without reviewing them and with no witnesses, former assistant Kelly Scott said in a deposition released by the Florida attorney general’s office.
Jeffrey Tew, an attorney for Stern’s firm, didn’t immediately return a phone call.
Government-controlled mortgage buyers Fannie Mae and Freddie Mac have stopped referring foreclosures to Stern’s firm while they review the firm’s filings.
In some states, lenders can foreclose quickly on delinquent mortgage borrowers. By contrast, the 23 states in which Bank of America is restarting foreclosures use a lengthy court process. They require documents to verify information on the mortgage, including who owns it.
Those states are:
Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont and Wisconsin.
Associated Press Writer Mike Schneider contributed reporting from Orlando, Fla.
As always, The Foreclosure Defense Law Firm of VAUGHN & WEBER, PLLC is here to assist you. We are conveniently located in the heart of Nassau County, Long Island, at 217 Willis Avenue in Mineola, NY 11501. Contact us at (516) 858-2620 to arrange a consultation with a foreclosure defense lawyer.
Please visit our Foreclosure category to learn more about foreclosure issues.
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