Wells Fargo Robosigning

Posted by kevin on March 16, 2014 under Foreclosure Blog | Comments are off for this article

Back in February, 2012, the six largest servicers entered into a $25 billion settlement with the US DOJ and the AG’s from 49 states. Thank god. No more robo-signing. No more servicer fraud. A great day for the consumer.

Not really. I started to see evidence of robo-signing after that “historic” settlement. In fact, almost all endorsements now are on allonges, and all the allonge forms are identical irrespective of the lender. What a coincidence. I am sure that Judges who saw hundreds of these “new” allonges made the same observation. One could only hope that those observations were made on the record.

Moreover, the $65-70 million earmarked to reduce principal on NJ mortgages never really materialized. I had heard from HUD counselors that the banks were walking away from underwater second mortgages (which they would have done anyway) and getting credit toward their share of the $65-70 million.

So, my take was that the $25 billion settlement may not have been a total canard, but certainly was a lot less than met the eye

Last week, in a case pending in the federal district court for the Southern District of New York, the borrower’s counsel made reference to a 150 page Foreclosure Attorney Procedures Manual which, according to the NY Post, details a procedure for processing [mortgage] notes without endorsements and obtaining endorsements and allonges. That would be fraud on a massive level. However, a Wells Fargo spokesman denied that the manual could be used to order improper documents, and admonished the public not to believe their own lying eyes, but to take WF’s word for it. Well, at least I can now sleep peacefully.

I have a few WF cases. I also have access to the manual. The next few nights of reading may prove very interesting. If so, the next few months in discovery will be worth the price of admission. I plan to take depositions including attorney depositions in the proper cases. Stay tuned. I look forward to reporting back to you

US sues Wells Fargo

Posted by kevin on October 10, 2012 under Foreclosure Blog | Comments are off for this article

Yesterday, the feds filed suit in Manhattan against Wells Fargo for bilking the Federal Housing Administration out of hundreds of millions of dollars. The complaint alleges misconduct going back to 2001 whereby WF recklessly issued mortgages and made false certifications about their condition to FHA which then insured the loans. Many of these loans went bad and FHA was left “holding the bag”.

I love the quote from Preet Bharara, the US attorney who said.”Yet another major bank has engaged in a longstanding and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, all while relying on the convenient backstop of government insurance”.

Banks need a license from the State or federal government to do business. That license comes with strings attached. The bank has to follow the law, including the directives of its regulators. One for the fundamental regulations involving mortage loans is that the lender is required to make a mortgage loan based primarily on the ability of the borrower to repay the loan and not on the value of the collateral. Deficient underwriting (or no underwriting standards) leads to making loans that people cannot afford to repay. This not only hurts the borrower, but his or her community, the people who bought the loans and the government which insured those loans.

So what the government is alleging is that WF hired a lot of incompetent people who ignored the basic tenets of mortgage lending, lent money to people who could not afford to pay it back (definition of a predatory loan), and lied to the FHA about it. Frankly, it appears that the US attorney is giving WF the benefit of the doubt in his statement by inferring that WF was just negligent or reckless. Many believe that WF and the other ‘too big to fail banks’ knew exactly what they were doing – they were making lots of money and passing the bad paper on to investors and the government (= taxpayers= you and me) who got stuck with the loses.

We are seeing a slew of activity by prosecutors on the eve of the Presidential election. One must wonder why it took so long. I hope that when the election is over and the dust has cleared, these lawsuits do not evaporate.