Government Fraud Case Against Bank of America Moves Forward

A court in New York ruled that there are “genuine factual disputes” that justify letting the case continue against the second-largest U.S. bank. Only a few prominent cases tied to the financial crisis have ever gone to trial.

Judge Rakoff also stated that he will decide before trial which specific legal theories he will allow the government to pursue. Presumably, he will announce that aspect of his decision within the next couple of weeks.

What he determines about what the proper scope of the trial should be of great interest to correspondent lenders who sold loans to Countrywide/BofA in the past, and who are now facing repurchase demands from that bank (or other investors) now. In fact, that “scope” ruling could be of great value to correspondents regardless of whether Rakoff allows few or many legal theories and claims to be pursued by the government.

If he rules that certain types if theories or claims cannot properly be pursued, then it stands to reason that correspondents should be able to defend themselves against similar claims by BofA by reminding the bank that those types of claims have been adjudicated to be legally impermissible by a prominent judge in this very prominent case.

Likewise, BofA cannot possibly suffer damages related to certain types of claims by the government if the government is not even allowed to pursue those claims at trial — therefore, any subsequent attempt by BofA to force correspondents to “make it whole” for supposed losses on such claims would be presumptively fraudulent.

On the flip side, if Rakoff allows a broad spectrum of types of claims to go to trial, correspondents should benefit from noting the lengths to which BofA goes to demonstrate that there was no problem whatsoever with the loans, underwriting practices, and loan programs in dispute.

All of BofA’s public protests about the quality and accuracy of the loan data and underwriting will be useful to quote back to the bank when it does a shameful about-face and demands that the third-party originators who sold it these loans should pay up for supposed “defects” related to loan file information and alleged poor underwriting.

Case Background

To recap the pertinent case background, the U.S. Department of Justice sued Bank of America last October, joining a whistleblower lawsuit originally brought by former Countrywide Financial Corp executive Edward O’Donnell.

It alleged that Countrywide, acquired by Bank of America in July 2008, caused more than $1 billion of taxpayer losses by selling defective home loans to Fannie Mae and Freddie Mac, the mortgage financiers seized by the government in September 2008.

The government said the loans went through a program called the “High Speed Swim Lane” – also known as “HSSL” and “Hustle” – that Countrywide devised in 2007 to speed up loan processing, even if it meant ignoring safeguards to help ensure that loans were sound and not tainted by fraud.

Bank of America, in court papers, countered that HSSL was a “legitimate and good-faith effort” to develop systems for making prime loans after the collapse of the subprime market.

Paddy Deighan J.D. Ph.D

http://www.homesavers.pro

Litigation Reveals ASTOUNDING Claims of Abuse During Bank of America Loan Modification Applications

Well, the happy news out of BofA’ville just never seems to end. Last month I read that according to their CEO, Bank of America’ problems are behind them!!!! Really??  Wall Street is buying it but I am not!!! Recent litigation has revealed numerous statements by former Bank of America employees that are ASTOUNDING and SHOCKING!!!

According to Bank of America employees, the lender offered employees incentives for sending homeowners into foreclosure rather than modifying their loans!!! Special!!! The BofA employees stated under oath that they were “told to lie to homeowners about loan modifications and were rewarded for sending homeowners to foreclosure rather than modifying their loans”. The allegations and incriminating statements are part of the evidence being presented in a federal class-action lawsuit brought by homeowners against BofA. The homeowners say that the lender deliberately “thwarted their attempts to take advantage of the federal Home Affordable Modification Program (HAMP).” Former employees of BofA involved in the suit testified that they were “instructed to deny modifications for no reason, to pretend they had not received documents they received, to hold documents and then claim they were too old, and to cancel trial modifications for ‘nonpayment’ even when all payments had been received.” The employees also reported that the bank “drilled” into them that the longer loan modifications were delayed, the more fees the bank could collect, even if this meant “lying to customers.”

The mortgage workers reportedly received cash bonuses and gift cards for meeting quotas for sending distressed homeowners into foreclosure. Not surprisingly, BofA has denied all of these allegations and pointed to the fact that it has, so far, helped the most homeowners under HAMP of any lender. “[BofA] is committed to assisting customers at risk of foreclosure,” said spokesman Rick Simon via email. A former loan collector for the bank disputes this claim, saying that he received $500 for every 10 customers he put into foreclosure and adding that other collectors received gift cards to Target and Bed, Bath & Beyond for putting homeowners in trial modifications into foreclosure.

Paddy Deighan J.D. Ph.D

http://www.homesavers.pro

Bank Of America to Transfer More Servicing

Fannie Mae and Bank of America (BOA) recently announced an $11.6 billion settlement to a long-standing dispute Monday. Fannie Mae, is a government-sponsored enterprise that buys mortgages and bundles them and then turns them into securities. It has been legally pressuring BOA to buy back a significant amount of non-performing loans issued between Jan. 1, 2000 and Dec. 31, 2008. The allegation is that these loans were poorly underwritten. The bulk of those mortgages came from Countrywide Mortgage, which was acquired by BOA in 2008. As part of the settlement, BOA agreed to pay $1.3 billion to Fannie Mae to atone for alleged poor servicing on mortgages for Fannie Mae by delaying contacts with delinquent borrowers or failing to process foreclosures properly. While the settlement is aimed at compensating Fannie Mae, there are implications for many BOA mortgage customers. In coming months, they will be notified that someone else will service their mortgages. BOA, which has been pulling back from several areas of mortgage lending, got approval from Fannie Mae to transfer certain mortgage servicing rights to two firms, Nationstar Mortgage of Lewisville, Texas, and Green Tree, part of Walter Investment Management Corp . Nationstar Mortgage, which specializes in mortgage servicing, agreed to acquire $215 billion in servicing rights from Bank of America for about $1.3 billion. Executives of Nationstar, whose shares trade on the New York Stock Exchange, said in a conference call Monday they expect to take over the massive pile of mortgage servicing rights in a series of steps over the next nine months. In the meantime, BOA will continue to handle them. Specialty servicers like Nationstar focus on customer outreach to try to reduce losses. But changing mortgage servicers can often be a challenging experience for bank customers.

Both Bank of America and Nationstar promised a smooth transition. Yeh, right!!! “Servicing of accounts acquired will be transferred throughout the year in a manner that will ensure a smooth transition for our customers,” Nationstar told The Miami Herald in a statement. Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Wall Street Doin' It All Over Again

I have mentioned this to more than a few people and they are all in disbelief. Wall Street has not learned a lesson. Why should they?? They got away with one of the biggest scams that will ever grace this great nation. We have all heard ad nauseum about the morgtgage fraud/crisis. The bankers are only hald to blame as the Wall Street pirates orchestrated the entire mortgage debacle. I can tell you that everythig that uyou have heard is true, The fraud, Securities fraud, insurance fraud - all of it. Bankers and Wall Street thieves conspired to benefit tremendouslyt from the plight of home owners. What is worse is that they did not share in the pain. Home owners default on the securitized mortgages?? No problem. Wall Street pirates are pretty smart. They had indsirance that covered more than 100% of their losses. Wall Street actually benefited from the defaults. Well, I am here to tell you that no lesson has been learned. Wall Street is at it again. NOW, they are bundling LEASES and securitizing them and selling them as securities. This is even a better scam as the tenants are never going to fight back when they lose out because the money is not enough for them to fight Wall Street. Wall Street will make billions out of securitizing leases and undoubtedly, landlords and tenants will be hurt in the process. The government sits idly by as the bankers and Wall Street cash in on the misfortune of others. Sure, the Feds are suing Bank of America for its CountryWide lending process. Where are the convictions of Wall Street pirates that knowingly hurt millions of people (including real estate agents)?? I certainly hope that the securitization of leases doeds not end in the same manner as securitization of mortgages and deeds of trusts. Time will tell... Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Feds Suing Bank of America over CountryWide Activity

The federal government appears to be looking at an alleged massive fraud case against Bank of America. Bank of America may have settled with the state attorneys general over mortgage and foreclosure fraud, but the Federal government is now looking at the bank activity. The U.S. Department of Justice announced recently that it is suing BofA for “over $1 billion [in] alleged mortgage fraud related to the sale of loans to Fannie Mae and Freddie Mac”. In the first civil fraud suit of its kind, the Justice Department is tackling BofA’s beleaguered Countrywide acquisition in 2008. The government alleges that from 2007 to 2009, Countrywide used a loan process called a “hustle” to push loans through quality checkpoints and eliminate those checkpoints whenever possible. Employees were compensated based on volume of loans originated rather than based on the quality of those loans. At first glance, this type of employee bonus program is fraught with problems and the government is likely to look into this bonus program as it attempts to prove its case against Bank of America. Industry analysts call the move by the Justice Department a “novel effort by the government to defray costs tied to the 2008 bailout of Fannie and Freddie,” and suggest that if the suit is successful, it “opens a new front against [the] banking industry”. The suit is based on violations of the Federal False Claims Act, which calls for triple damages to be paid by violators if the government can prove that their actions led to taxpayers losing money or being ripped off. Fannie Mae actually stopped buying and guaranteeing new loans from BofA this past February in response to the lender’s refusal to repurchase billions in defaulted mortgages from the GSE. This is certainly a pretty big deal and I am surprised that there has been no mention of this in the media. Paddy Deighan J.D. Ph.D http://www.homesavers.pro