Daily Real Estate News, June 29, 2011
Bank of America Corp. is near a settlement to pay $8.5 billion to mortgage investors who claim the bank sold them fraudulent mortgage securities, The Wall Street Journal reports.
The mortgage securities in question, originally valued at $105 billion, contained home mortgages that faltered after the financial and housing crisis. Investors claim they were misled by the mortgage securities packages, arguing the securities were highly rated despite being full of loans that had borrowers with questionable credit.
The $8.5 billion payout would be the largest settlement by a financial services firm.
The settlement could prompt other mutual-fund managers and investors to seek similar settlements from other banks for loans they purchased before the housing collapse that didn’t meet expectations or were not properly managed, The Wall Street Journal reports. Bank of America, Wells Fargo & Co and J.P. Morgan Chase & Co. collect loan payments on about half of all outstanding mortgages in the country.
Investors accused Countrywide of misleading them with the securities. Bank of America purchased Countrywide in 2008 for $4 billion.
Source: “BofA Nears Huge Settlement--$8.5 Billion Payment to Investors in Mortgage Securities Would Be Biggest Yet,” The Wall Street Journal (June 29, 2011)
Wednesday, June 29, 2011
Wednesday, June 22, 2011
Couple Served Foreclosure Notice Via Facebook
Daily Real Estate News June 22, 2011
For lenders who can’t find a defaulting home owner, they may turn to Facebook or other social networking sites to track them down. That’s what a lender in Australia did. The lender used Facebook to track the defaulting couple down and send them a foreclosure notice via the social networking site, AOL Real Estate reports.
The lender was unable to find a physical address or e-mail for a couple in Australia who defaulted on their six-figure mortgage. So the lender’s lawyer located them on Facebook, verifying the couple’s identities by matching up names, birthdates, and the fact that they “friended” one another.
Australian courts recently upheld the lender’s right to use Facebook to send foreclosure notices. The court ruled that the couple didn’t have any privacy protections on their Facebook accounts and were frequent visitors so it served as a reasonable way to send a notice.
While industry experts say they haven’t heard of lenders sending foreclosure notices via social networking sites in the United States, “it’s bound to happen,” Marc Rotenberg, president of the Electronic Privacy Information Center in Washington, told AOL Real Estate. "The real concern the courts have is whether it's a fair notice that the person actually receives."
As long as it’s obvious the person is a frequent user of the site, legal experts say the ability to serve foreclosure documents via social network sites seems like a justifiable way to send a foreclosure notice.
Source: “Your Facebook Status: Foreclosed,” AOL Real Estate (June 17, 2011)
For lenders who can’t find a defaulting home owner, they may turn to Facebook or other social networking sites to track them down. That’s what a lender in Australia did. The lender used Facebook to track the defaulting couple down and send them a foreclosure notice via the social networking site, AOL Real Estate reports.
The lender was unable to find a physical address or e-mail for a couple in Australia who defaulted on their six-figure mortgage. So the lender’s lawyer located them on Facebook, verifying the couple’s identities by matching up names, birthdates, and the fact that they “friended” one another.
Australian courts recently upheld the lender’s right to use Facebook to send foreclosure notices. The court ruled that the couple didn’t have any privacy protections on their Facebook accounts and were frequent visitors so it served as a reasonable way to send a notice.
While industry experts say they haven’t heard of lenders sending foreclosure notices via social networking sites in the United States, “it’s bound to happen,” Marc Rotenberg, president of the Electronic Privacy Information Center in Washington, told AOL Real Estate. "The real concern the courts have is whether it's a fair notice that the person actually receives."
As long as it’s obvious the person is a frequent user of the site, legal experts say the ability to serve foreclosure documents via social network sites seems like a justifiable way to send a foreclosure notice.
Source: “Your Facebook Status: Foreclosed,” AOL Real Estate (June 17, 2011)
Monday, June 20, 2011
Scam Cheats Borrowers Out of Loan Payments
From Daily Real Estate News - June 20, 2011
Warn your home owner clients to beware of a scam growing in many parts the country that tries to trick home owners out of a month or two of their mortgage payments.
The Chicago Tribune referred to it as the “handoff rip-off” scheme, in which scammers send letters to borrowers informing them that a new company has assumed the management of their loans and to start making mortgage payments to the new company.
Many home owners aren’t familiar with the rules when it comes to the transfer of mortgage-servicing so they follow the letter's directions in sending their payments to the new company and could possibly lose thousands in mortgage payments.
Inform your home owner clients of mortgage-servicing transfer rules so they won’t be duped. For example, the law requires a company that provides a mortgage on behalf of the loan’s owner to send a "goodbye" letter notifying them that at a specific date their payment should be sent to a new company. Then, a week or so later, the home owner is legally to receive a second letter from the new servicer that provides mortgage payment information (their principal, interest, and escrow). Both letters should include the home owner's loan number, the Tribune article explains.
When in doubt, contact your original servicer to find out if the letter received is legit or fraud.
The scheme "works for maybe two months" because that is usually how long it takes for borrowers to realize they've been tricked, says Becky Walzak, a loan-quality assurance expert. "But if the bad guys are any good, they've taken in thousands of payments from thousands of people. They cash them, and they move on to the next batch of borrowers."
Source: “Home Owners, Beware of ‘Handoff Rip-Off’ Scheme,” Chicago Tribune (June 19, 2011)
Warn your home owner clients to beware of a scam growing in many parts the country that tries to trick home owners out of a month or two of their mortgage payments.
The Chicago Tribune referred to it as the “handoff rip-off” scheme, in which scammers send letters to borrowers informing them that a new company has assumed the management of their loans and to start making mortgage payments to the new company.
Many home owners aren’t familiar with the rules when it comes to the transfer of mortgage-servicing so they follow the letter's directions in sending their payments to the new company and could possibly lose thousands in mortgage payments.
Inform your home owner clients of mortgage-servicing transfer rules so they won’t be duped. For example, the law requires a company that provides a mortgage on behalf of the loan’s owner to send a "goodbye" letter notifying them that at a specific date their payment should be sent to a new company. Then, a week or so later, the home owner is legally to receive a second letter from the new servicer that provides mortgage payment information (their principal, interest, and escrow). Both letters should include the home owner's loan number, the Tribune article explains.
When in doubt, contact your original servicer to find out if the letter received is legit or fraud.
The scheme "works for maybe two months" because that is usually how long it takes for borrowers to realize they've been tricked, says Becky Walzak, a loan-quality assurance expert. "But if the bad guys are any good, they've taken in thousands of payments from thousands of people. They cash them, and they move on to the next batch of borrowers."
Source: “Home Owners, Beware of ‘Handoff Rip-Off’ Scheme,” Chicago Tribune (June 19, 2011)
Monday, June 13, 2011
2 Executives Sentenced in $3 Billion Fraud Ring
Two executives were sentenced to several years in prison for their involvement in a massive fraud ring — estimated at $3 billion — that led to the collapse of one of the country’s largest privately held mortgage lending companies, as well as a bank.
Taylor, Bean & Whitaker Mortgage Corp.’s former president Raymond Bowman and its former treasurer Desiree Brown were convicted for their part in trying to cover up major losses by the company in moving money between accounts at Colonial Bank and selling mortgage loans that never existed or that had previously been sold. TBW’s former chairman Lee Farkas, who prosecutors have called the ring leader of the fraud, is set to be sentenced June 27.
Bowman was sentence to 30 months in prison while Brown was sentenced to six years in prison.
"It was never my intent to commit a crime," Brown told the court. "It was always my intent to fix the problem."
Prosecutors say the mortgage fraud at TBW lasted more than seven years up until August 2009, which ultimately led to the collapse of TBW and Colonial BancGroup Inc.’s Colonial Bank. Prior to its collapse, TBW was one of the nation’s largest privately held mortgage lenders with some $20 billion in mortgage sales a year. Meanwhile, Colonial Bank — before regulators took it over — was once one of the top 50 U.S. banks.
Prosecutors say the case marks one of the few since the aftermath of the global financial crisis where charges have been brought up against executives at major firms. Usually prosecutions, up to this point, have involved lower-level employees or smaller firms.
Source: “Former Executives Get Prison Time for Mortgage Fraud,” Reuters (June 10, 2011)
Taylor, Bean & Whitaker Mortgage Corp.’s former president Raymond Bowman and its former treasurer Desiree Brown were convicted for their part in trying to cover up major losses by the company in moving money between accounts at Colonial Bank and selling mortgage loans that never existed or that had previously been sold. TBW’s former chairman Lee Farkas, who prosecutors have called the ring leader of the fraud, is set to be sentenced June 27.
Bowman was sentence to 30 months in prison while Brown was sentenced to six years in prison.
"It was never my intent to commit a crime," Brown told the court. "It was always my intent to fix the problem."
Prosecutors say the mortgage fraud at TBW lasted more than seven years up until August 2009, which ultimately led to the collapse of TBW and Colonial BancGroup Inc.’s Colonial Bank. Prior to its collapse, TBW was one of the nation’s largest privately held mortgage lenders with some $20 billion in mortgage sales a year. Meanwhile, Colonial Bank — before regulators took it over — was once one of the top 50 U.S. banks.
Prosecutors say the case marks one of the few since the aftermath of the global financial crisis where charges have been brought up against executives at major firms. Usually prosecutions, up to this point, have involved lower-level employees or smaller firms.
Source: “Former Executives Get Prison Time for Mortgage Fraud,” Reuters (June 10, 2011)
Tuesday, June 7, 2011
Couple Tells Bank: 'We'll Foreclose On You'
Florida couple Warren and Maureen Nyerges says Bank of America wrongly foreclosed on their home--which they paid cash for and didn’t even have a mortgage on--so they wanted to show the bank how it feels.
In September 2010, a judge ordered Bank of America to repay the couple’s attorney fees. As of last week, the bank still hadn’t paid the couple. So a judge gave the couple permission to seize the bank’s assets until they were repaid the fees.
Last week, the couple showed up at a branch office in Naples, Fla., with sheriff’s deputies and a moving truck with permission to seize furniture, if necessary.
"The branch manager was visibly shaken," said the couple’s attorney Todd Allen. "At that point, I was willing to take the desk and the chair he was sitting in."
The bank issued $5,772.88 to the couple an hour later, and the couple is to receive the rest of the money they are owed this week.
The couple has faced a more than yearlong battle with the bank in trying to resolve a wrongful foreclosure stemming from 2009. The couple purchased a foreclosed home in Naples in 2009 and paid Bank of America $165,000 cash for the home. However, four months after moving in, the bank issued a foreclosure notice against the couple. The mix -up took months to resolve and ultimately went to court where a judge ruled that the couple owned the home outright and the bank owed them reimbursement.
Source: “With Moving Truck, Fla. Couple Threatens Bank With Foreclosure,” MSNBC.com (June 6, 2011)
In September 2010, a judge ordered Bank of America to repay the couple’s attorney fees. As of last week, the bank still hadn’t paid the couple. So a judge gave the couple permission to seize the bank’s assets until they were repaid the fees.
Last week, the couple showed up at a branch office in Naples, Fla., with sheriff’s deputies and a moving truck with permission to seize furniture, if necessary.
"The branch manager was visibly shaken," said the couple’s attorney Todd Allen. "At that point, I was willing to take the desk and the chair he was sitting in."
The bank issued $5,772.88 to the couple an hour later, and the couple is to receive the rest of the money they are owed this week.
The couple has faced a more than yearlong battle with the bank in trying to resolve a wrongful foreclosure stemming from 2009. The couple purchased a foreclosed home in Naples in 2009 and paid Bank of America $165,000 cash for the home. However, four months after moving in, the bank issued a foreclosure notice against the couple. The mix -up took months to resolve and ultimately went to court where a judge ruled that the couple owned the home outright and the bank owed them reimbursement.
Source: “With Moving Truck, Fla. Couple Threatens Bank With Foreclosure,” MSNBC.com (June 6, 2011)
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