I provide a flow chart complete with the scrutinized loan investigation, which effectively identifies, the real party in interest, if one exist. I do not provide legal advice, the report is excellent to provide added information for your lawyer to litigate your case in court for you.
During the past years I have become very familiar with the SEC filings of loans of all types, home loans, student loans,and Auto loans. I have seen where loans can become unsecured if certain conditions exist. I point out these possible elements and other possible causes of action, highlighting and making special notes for the attention of the lawyer.
**CONTRACT WORK PROVIDED FOR ATTORNEYS ONLY**
Description of work
Determination of the relation between, the indenture, the issuer and the indenture trustee.
Identify the indenture trustee and its relation to the note.
Demonstrate the probable date the loan was placed in the PSA
Provide information on the trust agreement relating to the seller, the owner, the trustee and the trustee of the pool.
Demonstrate the manner in which the trust agreement governs the creation of the trust and how it provides for the terms relating to the certificates.
Identify the sale and servicing agreement with the trust, the servicer and the seller.
Demonstrate the sale and servicing agreement and the manner how it governs the transfer, of the receivables, by the seller to the trust and the servicing of the receivables by the servicer.
Identify the administration Agreement between the originator, the seller, the depositor the owner, the trustee and the indenture trustee.
Identify the administration agreement and how it governs the provision of reports by the administrator and the performance by the administrator and the originator, the seller, the depositor. the owner, the trustee and the indenture trustee.
Identify all “other” administrative duties for the trust, which impacts the subject matter specifically.
Identify the receivables and purchase agreement between the originator, the seller, the depositor, the owner, the trustee and the indenture trustee.
Demonstrate the assignment and or assumption agreement relating to all parties.
Static performance is not provided, in this study.
Provide the flow charts.
Demonstrate the risk factors and rating factors.
Identify the rating agencies.
Provide name and address of all parties complete with fax numbers.
Our beautiful sunny state does smell like a backed up sewer. The Representative from my district, Darren Soto, is supposedly an attorney who co-sponsored legislation entitled the Florida Foreclosure Relief Act (HB895) which would have expanded the time to hold a judicial sale in all foreclosures arising in subprime loans from 1 month to 3 months, giving valuable leverage to negotiate the loans.
Rep. Soto also co-sponsored the foreclosure fraud bill (HB643 – Ford) giving greater authority to our Attorney General to prosecute mortgage fraud and the subprime loan bill (HB 979 – Randolph), which increases lending standards/disclosures and provided for a private cause of action for violations.
Given his above mentioned credentials and the fact that he is an attorney who has defended foreclosures (I found several cases in Orange and Osceola Counties where he represented the homeowners), I presumed he would be someone who “gets it.” I contacted his offices (he has 3 – one in Tallahassee, one in Kissimmee, and one in Orlando). However, I never received any response from him. I even found his email address and sent him an email with no results.
As a paralegal with a real estate background, I contacted several attorneys in Orlando who I thought would be inclined to “get it.” None had the slightest clue as to what I was talking about. One attorney told me that my best bet is to mail the keys to the lender and hope they do not go after a deficiency judgment.
I have to say, though, that if it had not been for my personal experience, I probably would not have understood this also. I did not understand the magnitude of the problems created through securitization. And quite frankly, I still do not quite understand the mechanical aspects of securitization. It has been quite a learning experience for me. You are absolutely correct when you say that you have to be your own paralegal. Research everything. In the 2 1/2 years since I have been fighting for my house, I have discovered that one link leads to another and then to another. Keep searching.
Download and organize all the documents, orders, sample pleadings, etc that you come across. I have a flashdrive that I carry with me everywhere. It seems as if I add something to it every day.
Now for a bit of ranting – I absolutely hate the fact that Wall Street in its quest for more and more money, created the fiasco we are having to deal with. And then, when everything exploded, their PR people have victimized the victims (us homeowners) again by accusing us of being deadbeats, lying on our mortgage applications, etc.
Additionally consider my continued rant; I do these rants free hand, check out this link while you are here http://www.slate.com/id/2239555/, or you can see the article on my blog all the same http://mariokenny.wordpress.com/2009/12/25/if-billionaires-dont-feel-guilty-about-walking-away-from-their-debts-should-homeowners/. I fail to see or understand why, if, the home in front of my home is cheaper to rent, which reason shall I concoct to not move into this home in front of me? especially when I believe the market will not come back for an untold amount of time.
The author [Mr. Dimarco ] seems to touch on some moral, that a borrower should have in repaying a debt that cannot be verified by existing law, so the question is then which moral is of more value, the moral of being legally compliant or the moral of being personally compliant?. I would think, but of coarse I am biased, that legal compliance is more righteous and proper.
Then we have the other question, are banksters morally compliant, do banksters use morality in their dealings or decision making processes? I move that the answer is, NO. The morals of a bankster are the ones that are fashioned on the bottom line, banksters have no regard for the rule of law or for easement of personal suffering caused by their reckless actions on unsuspecting borrowers, it is all profit driven. Have you seen the mountains of lawsuits that banks lodge on each other lately? The beasts of the banksters are consuming each other, with voracious intent. The borrowers are looking at this and we are taking heed, these cases are showing us the nature of the actions, in clear sight nationwide.
The bankster has cut the same branch they sat on and now the branch has broken, but we bailed you out all the same, why do you still have to take the property?, why do you wish to cast so many millions of people into life long misery? , Children have lost opportunities to get further education, families have, under stress of the bankster riddled cunning, have been broken apart, pets have been slain and put to roam the streets, and we bailed you out, plus you got insurance payments for losses, and the IRS has also given you write off and write downs, how much do you want?
What more does the bankster want? who will buy all these houses? The foreign people do not want them. Who will pay the taxes, do the upkeep, and cut the grass?
In then end the house sells for next to nothing on the court house step, why did the bankster not give the homeowner this price? In the first place, or, in the second place.
So tell me are the banksters going to seek the scrapping of the UCC and the many other black letter law that has been on our books for hundreds of years just because the greed of a few people, was left to rampage a whole nation? Yeah right aint gonna happen.
Daniel Gross
Default Nation
If billionaires don’t feel guilty about walking away from their debts, should homeowners?
Dec 21, 2009
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Strategic defaults—the phenomenon of people who could continue to make payments on the mortgages on their homes deciding to walk away from their obligations—are rising. According to the Wall Street Journal, strategic defaults are likely to exceed 1 million in 2009. This is making some worry about the very future of capitalism. Georgetown University business ethics professor George Brenkert told the Journal that borrowers who can afford to stay current are morally required to do so, and that were Americans to conclude they could just walk away from obligations, it would be disastrous. Mortgage Bankers Association CEO John Courson wondered about “the message they will send to their family and their kids and their friends?” Blogger Megan McArdle expressed disdain for people who chose to indulge themselves on consumer goods and services while not keeping current with their mortgages.
Um, do any of these people read the Wall Street Journal? Strategic defaults are the American way, and I’m not talking about strapped middle-class borrowers who prefer spending money on vacations to staying current on their payments. Deep-pocketed companies, billionaires, and institutions that can afford to stay current on payments strategically default all the time.
Morgan Stanley, for example, is a gigantic corporation. As of the second quarter, it boasted total capital of $213.2 billion. It certainly has the ability to make good on obligations incurred by its many operating units. But earlier this month Morgan Stanley said it would turn over five San Francisco office buildings to lenders rather than pay the debt on them. Why? Morgan Stanley foolishly paid top dollar for the buildings in 2007, when prices were really high. The values have plummeted, and tenants are hard to come by. “This isn’t a default or foreclosure situation,” spokeswoman Alyson Barnes told Bloomberg News. “We are going to give them the properties to get out of the loan obligation.” Smells like a strategic default to me.
It’s not just happening in real estate. According to Standard & Poor’s, through Dec. 18, 262 corporations had defaulted on bonds they had sold to the public, twice the total of 2008 and “the highest default count since our series began in 1981.” Like mortgages, corporate bonds are legal arrangements in which parties—in this case companies, or partnerships, or limited liability corporations—agree to pay money back. Sometimes companies default on these bonds because they’re broke (see: Lehman Bro.). But sometimes they simply default because they don’t want to pay out for them. Investors and managers, who have spent hundreds of millions of dollars on personal toys, aircraft, headquarters buildings, and compensation, simply can’t seem to find the cash to stay current on debts.
KKR, the original private-equity firm, manages about $55 billion. Its founders are billionaires several times over. But when Canadian door-maker Masonite, one of KKR’s portfolio firms, ran into trouble staying current on $2 billion in debt, the partners were content to let the firm miss an interest payment and file for Chapter 11. Of course, the debt in this case rested on Masonite, not KKR. But firms whose business model rests on constantly borrowing large sums of money should, in theory, be taking heroic steps to avoid defaulting on debt.
Below is an article that a UM student wrote that puts my thoughts and feelings together perfectly.
There isn’t much more I could add other than my experience is exactly as indicated in this article in her work for me. Ms. Rapoport and the writer gave me permission to place this article here because it accurately reflects what I think. My lawyer, Dawn M. Rapoport’s office information is: Tel 954 712 7459 401 E Las Olas Blvd, Suite 1400 Fort Lauderdale, Florida 33301 THE RAPOPORT LAW GROUP – Dawn M. Rapoport, Esq. believes in persistence/diligence, optimism, and action.
In fact, she lives her life, manages her practice, and builds relationships with clients with a perspective fortified by these principles. Specializing exclusively in foreclosure defense, Attorney Rapoport has a passion for helping the underrepresented, uncovering injustice, exercising multiple solutions, and working to establish a fair and reasonable lending system. As founder of the Rapoport Law Group, her work ethic is known and trusted in the legal community and her advocacy penetrates the apprehension prevalent during these uncertain times. The corruption that abounds today, a result of the fake realities that many adopted as true during the formerly booming real estate market, is not the sole motivating factor fueling the Rapoport Law Group.
Her desire to help people assist themselves is evidence of her belief that reasonable and positive action is the only way to defend the homeowner’s rights and property. Attorney Rapoport’s astute ethical principles guide her understanding perspective and the advice she dispenses to her clients focuses on multiple reasonable solutions, a method she hopes will lead to the most agreeable outcome possible. Ms. Rapoport expounds on that counsel in her new guide in which she faces the topic of the foreclosure crisis head on, instilling a sense of determination, persistence, and courage in those who are victims of this staggering economy, have been unethically taken advantage of, or inadequately represented.
She expounds on varying scenarios and provides possible remedies that apply to individual situations. Attorney Rapoport hopes that this reasoning will not only place people on the track to keeping their homes, but it will also empower homeowners to realize that they have a voice, and it needs to be heard. In addition to her efforts to address the foreclosure disaster, Attorney Rapoport has recently joined forces with a group of lawyers to form the Florida Foreclosure Defense Bar Association, a montage of like-minded attorneys dedicated to advocating for the underrepresented and educating lawyers on the ethical and effective ways to fight foreclosure on behalf of their clients.
Attorney Rapoport asserts that her diligence, professionalism, and past experience have emboldened her to find assurance in this seemingly hopeless foreclosure war. A native of Los Angeles, CA., Ms. Rapoport served in the Unites States Army for just under 4 years as an intelligence analyst/linguist before returning to pursue her educational goals. Ms. Rapoport received her Doctor of Jurisprudence from Nova Southeastern University, and her undergraduate degree in international relations from the University of Tampa. She is licensed to practice in Florida as well as in the United States Federal Court. Attorney Rapoport currently has offices in the downtown Fort Lauderdale area, where she also resides.
December 22, 2009 2:38 PM
Mall defaults on $210 million loan
By ERIC CARPENTER
THE ORANGE COUNTY REGISTER
COMMENTS 34 | RECOMMEND 4 | PRINT | EMAIL | SHARE
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ANAHEIM – Developers of The Shops at Anaheim GardenWalk, an outdoor retail mall in the shadow of Disneyland, have defaulted on a $210 million loan and are facing foreclosure as the retail center struggles to attract tourists and gain its share of the regional consumer market.
Citigroup Global Markets Realty Corp. filed a notice of default saying that the equity partners who financed GardenWalk had failed to make payments on more than $188 million in outstanding loans as of Sept. 15. As of this week, the loan payments still were not current.
From left: Popular restaurants such as Roy’s, McCormick & Schmick’s Seafood, and P.F. Chang’s (pictured) await visitors along Katella Ave. and Clementine St. in Anaheim. Nightlife and restaurants are doing well at the new mall, but stores are slow.
CINDY YAMANAKA, THE ORANGE COUNTY REGISTER
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Robert Magnuson, a spokesman for GardenWalk, said Anaheim GW II, LLC – the equity partners who financed GardenWalk – is continuing to negotiate with bank officials and the property is not currently in foreclosure.
No date of sale (the next step in the foreclosure process) has been determined.
Officials with Citigroup did not return phone calls seeking comment.
“The financing in no way will affect the customer experience at GardenWalk,” Magnuson said. “We opened on a downward curve in a really tough economic environment. We’re looking forward to stability in 2010 and a more positive environment moving forward.”
Bill Stone, senior vice president of Excel Realty Holdings, which manages GardenWalk, will continue to manage the property regardless of what happens with financing, Magnuson said.
GardenWalk was approved on 19 acres on the 300 block of West Katella Avenue in 2006, during a relatively strong economy. But by the time it opened in the summer of 2008, the national and local economy had taken a sharp dive.
Restaurants such a P.F. Chang’s, The Cheesecake Factory and Bubba Gump Shrimp Co. opened strong. But once the retail shops between Katella Avenue and Disney Way began opening in the months that followed, they struggled to attract customers.
“People just don’t know that we’re here,” said Lucille Kring, an Anaheim councilwoman and owner of a wine bar called Pop the Cork, which opened in GardenWalk 17 months ago.
Kring said her shop was given a bad location by management, which told her if she didn’t sign the 10-year lease, there was a line of other lessees waiting to sign agreements. Instead, several surrounding shops have remained vacant and several tenants have since closed.
“Bottom line is that it’s been very disappointing,” Kring said. “We’re trying to look at the glass half full, but if we had a crystal ball, we wouldn’t have signed the lease.”
The city has tried to help bring in business, staging high-profile events at GardenWalk, including holding a ceremony there to welcome back the Olympic Gold Medal-wining U.S. Men’s Volleyball team. The city also held a job fair there earlier this year that attracted thousands of job-seekers and, in the process, introduced them to the shops there.
Construction was delayed on two hotels set to anchor GardenWalk – and give it a built-in customer base.
GardenWalk owners sued the owners of the movie theater, which serves as a de-facto anchor, because of a financial dispute, putting the theater’s future in doubt.
Tenants complained that parking wasn’t convenient for patrons and the shopping mall has often been a virtual ghost town during weekdays.
The tenant mix continues to shift as at least seven stores have closed in recent months. Last month, Chico’s, a women’s clothing chain store, closed. Tommy Bahama has announced it’s closing, too.
But GardenWalk officials say there are signs of growth. Last fall, 23 stores were open during the holiday season. This year 62 stores are doing business.
They changed the name of GardenWalk to include “The Shops at…” at the start, and launched a branding campaign recently calling it “The OC’s Hot Spot for Food, Fun and Fashion.”
Next year, a bookstore (DW Pages) and a menswear boutique (Bobby Chan) are set to open, Magnuson said. And construction is set to begin on the two hotels, which would add 866 rooms – and more patrons, GardenWalk officials hope.
“I think there are a lot of great shops here,” said Connie Marconi, a shopper from Anaheim. “I just think it’s a matter of more people discovering it’s here. I think some locals consider this a tourists’ area and don’t think to come down here on a regular basis.
“But look around,” she said. “We’ve got the place almost all to ourselves.”
Homeowners with mortgages of more than $1 million are defaulting at almost twice the U.S. rate and some are turning to short sales to unload properties as stock-market losses and pay cuts squeeze wealthy borrowers.
Payments on about 12 percent of mortgages exceeding $1 million were 90 days or more overdue in September, compared with 6.3 percent on loans less than $250,000 and 7.4 percent on all U.S. mortgages, according to data from First American CoreLogic Inc., a California-based research firm.
The rate for mortgages above $1 million was 4.7 percent a year earlier. Short sales almost tripled to 40,000 in the first six months of 2009 from the same period a year earlier, according to data from the Office of Thrift Supervision. The bank regulator doesn’t break out short sales by size of mortgage.
There are 114,000 home loans of more than $1 million, according to First American, and about a quarter of all mortgaged homes in the U.S. have loan balances bigger than their current value, known as being upside down or underwater, the data company said.
Luxury home prices probably will drop another 5 percent before reaching a bottom in September 2010, according to Sam Khater, senior economist at First American.
If I were a homeowner in CA this man would be my lawyer, I love his style, he has the teeth I like the best in a lawyer, this is the man, in my opinion.
overwhelmed by the onslaught of millions of defaults, modifications, foreclosures, trustees sales, notices to vacate ,unlawful detainers and sheriff’s lockouts.
Our legal system is a rigged game favoring the capital of a capitalist system. In California a nonjudicial state a foreclosure can occur on the mere word of a lender without the original note or assignment of the original deed of trust. A then former homeowner can then be evicted by giving notice to vacate constructively (without notice) have a summons “Posted and Mailed” (again no actual notice) a default judgment taken (no trial) and a writ issued and the Sheriff’s instruction to evict issued and enforced.
I am about fighting this process, by 1. providing as much information as possible to allow homeowners to fight this process and 2. by litigation to protect those rights allegedly guaranteed by our constitution.
While I am an attorney the sheer number of cases no individual firm that I know of is capable handling competently. Most all non-profit foreclosure and legal aid service can provide only limited services. We have much to talk about this year as we push forward. By all accounts, the economy, the dollar, the foreclosures, the job situation etc are all getting worse by the minute.
Even if Obama is a magician it will be 2 years before there is a glimmer of hope. The homeowner aid programs are window dressing. Even the Sheila Bair one from FDIC/Indy Mac while well-intentioned does little for most homeowners. The ONLY hope for homeowners and the only hope for our economy is if we face the music and take the free market enthusiasts at their word, to wit: everyone agrees they artificially inflated real estate values and those values are still too high for the market to support. The only reason the “values” are stated so high is that the sellers are still deluding themselves in their asking prices. There is at least another 20% to go. As the Niel Garfield Continuum says, we are only in about the 2nd or 3rd inning of a 9 inning game that might go into overtime. http://www.thestopforeclosureplan.com/Contact.html
Loan Mod’s that leave homeowners under water simply will not work. People are not that stupid. It is easier to walk from the house and rent or buy another at real (lower) values.
Thus Litigation against the lender plan is the only viable option — get rid of the note, obligation and mortgage altogether or at least force a modification that will bring the obligation to around 80% of true fair market value. Only a credible threat to the financial services sector pushing foreclosures will result in this relief. The threat comes from understanding and enforcing the basic law applicable to these mortgages — they screwed up and now they want borrowers to sign new paper that clears up their screw up and leaves the borrower in a horrible position. http://www.thestopforeclosureplan.com/Contact.html
CALIFORNIA LEGISLATURE FINDINGS
1. Recently, the California Legislature found and declared the following in enacting California Civil Code 2923.6 on July 8, 2008:
(a) California is facing an unprecedented threat to its state economy because of skyrocketing residential property foreclosure rates in California. Residential property foreclosures increased sevenfold from 2006 to 2007, in 2007, more than 84,375 properties were lost to foreclosure in California, and 254,824 loans went into default, the first step in the foreclosure process.
(b) High foreclosure rates have adversely affected property values in California, and will have even greater adverse consequences as foreclosure rates continue to rise. According to statistics released by the HOPE NOW Alliance the number of completed California foreclosure sales in 20′07 increased almost threefold from 2002 in the first quarter to 5574 in the fourth quarter of that year. Those same statistics report that 10,556 foreclosure sales, almost double the number for the prior quarter, were completed just in the month of January 2008. More foreclosures means less money for schools, public safety, and other key services.
(c) Under specified circumstances, mortgage lenders and servicers are authorized under their pooling and servicing agreements to modify mortgage loans when the modification is in the best interest of investors. Generally, that modification may be deemed to be in the best interest of investors when the net present value of the income stream of the modified loan is greater than the amount that would be recovered through the disposition of the real property security through a foreclosure sale.
(d) It is essential to the economic health of California for the state to ameliorate the deleterious effects on the state economy and local economies and the California housing market that will result from the continued foreclosures of residential properties in unprecedented numbers by modifying the foreclosure process to require mortgagees, beneficiaries, or authorized agents to contact borrowers and explore options that could avoid foreclosure. These Changes in accessing the state’s foreclosure process are essential to ensure that the process does not exacerbate the current crisis by adding more foreclosures to the glut of foreclosed properties already on the market when a foreclosure could have been avoided. Those additional foreclosures will further destabilize the housing market with significant, corresponding deleterious effects on the local and state economy.
(e) According to a survey released by the Federal Home Loan Mortgage Corporation (Freddie Mac) on January 31, 2008, 57 percent of the nation’s late-paying borrowers do not know their lenders may offer alternative to help them avoid foreclosure.
(f) As reflected in recent government and industry-led efforts to help troubled borrowers, the mortgage foreclosure crisis impacts borrowers not only in nontraditional loans, but also many borrowers in conventional loans.
(g) This act is necessary to avoid unnecessary foreclosures of residential properties and thereby provide stability to California’s statewide and regional economies and housing market by requiring early contact and communications between mortgagees, beneficiaries, or authorized agents and specified borrowers to explore options that could avoid foreclosure and by facilitating the modification or restructuring of loans in appropriate circumstances.
2. “Operation Malicious Mortgage’ is a nationwide operation coordinated by the U.S. Department of Justice and the FBI to identify, arrest, and prosecute mortgage fraud violators.” San Diego Union Tribune, June 19, 2008.
3. “Home ownership is the foundation of the American Dream. Dangerous mortgages have put millions of families in jeopardy of losing their homes.” CNN Money, December 24, 2007.
4. “Finding ways to avoid preventable foreclosures is a legitimate and important concern of public policy. High rates of delinquency and foreclosure can have substantial spillover effects on the housing market, the financial markets and the broader economy. Therefore, doing what we, can to avoid preventable foreclosures is not just in the interest of the lenders and borrowers. It’s in everybody’s best interest.” Ben Bernanke, Federal Reserve Chairman, May 9, 2008.
5. “Most of these homeowners could avoid foreclosure if present loan holders would modify the existing loans by lowering the interest rate and making it fixed, capitalizing the arrearages, and forgiving a portion of the loan. The result would benefit lenders, homeowners, and their communities.” CNN Money, id.
6. On behalf of President Bush, Secretary Paulson has encouraged lenders to voluntarily freeze interest rates on adjustable-rate mortgages. Mark Zandl, chief economist for Mood’s commented, “There is no stick in the plan. There are a significant number of investors who would rather see homeowners default and go into foreclosure.” San Diego Union Tribune, id.
7. “Fewer than l%• of homeowners have experienced any help “from the Bush-Paulson plan.” San Diego Union Tribune, id.
8. The loss belongs where it was created — on Wall Street and Main Street Banks that rented their charter to Wall Street operatives who caused an unprecedented collapse of loan underwriting standards and crossing the line into fraud, forgery, and creation of false documentation. Companies SHOULD fail. Banks SHOULD fail. Borrowers CANNOT fail — because they are the backbone of the country and the economy.
9. There are plenty of lenders, investment bankers and money managers who did not play the game and are perfectly healthy. Bailout money should go to the players who played by the rules and are healthy. They are the ONLY ones who can and will lend, thus freeing up, somewhat, the tightening death grip of no credit and thus no commerce.
When title to the property is still in dispute ie. the foreclosure was bad. They (the lender)did not comply with California civil code 2923.5 or 2923.6 or 2924. Or the didn’t possess the documents to foreclose ie. the original note. Or they did not possess a proper assignment 2932.5. at trial you will be ignored by the learned judge but if you file a Motion for Summary Judgmentevans sum ud
template notice of Motion for SJ
TEMPLATE Points and A for SJ Motion
templateDeclaration for SJ
TEMPLATEProposed Order on Motion for SJ
TEMPLATEStatement of Undisputed Facts
you can force the issue and if there is a case filed in the Unlimited jurisdiction Court the judge may be forced to consider title and or consolidate the case with the Unlimited Jurisdiction Case
2nd amended complaint (e) manuel
BAKER original complaint (b)
Countrywide Complaint Form
FRAUDULENT OMISSIONS FORM FINAL
sample-bank-final-complaint1-2.docx
California stop foreclosure and get your own shortsale COMPLAINT
elderabusecomplaint
And in some cases an injunction is in order
Foreclosure injunction TRO
and a Lis Pendence
Lastly I am devoted to fighting this process by 1. Providing as much information, pleadings, discovery, publication of relevant cases as possible to allow homeowners to fight this process 2. Through the judicial process attempt to protect those rights allegedly guaranteed by our Constitution.Southern California (866)717-0415 in Northern California(916)361-6583 http://www.thestopforeclosureplan.com/Contact.html
from http://timothymccandless.wordpress.com/2009/12/20/mortgage-chaos-add-a-bankruptcy-and-its-a-recipe-for-disaster-part-ii/
Mortgage Chaos? Add a Bankruptcy and its a Recipe for Disaster! Part II
20
12
2009
My last article laid out the framework for the bankruptcy real estate cocktail. This article will attempt to predict how that cocktail will be served and its ramifications. Remember, this recipe for disaster requires two things: a “Non-Perfected” Mortgage and a Bankruptcy.
So far, about 70 to 80% of the mortgages I see in local Bankruptcy cases here in the Southern District of California Bankruptcy Court appear to be non-perfected. Despite my continued requests to the mortgage companies to produce either proof they possess the underlying note or proof of a recorded assignment, I have received neither. Instead I get the run around, “Yes we have the original note. Really, can I see? Actually no, I thought we had the original, but we have a copy…………Yes we have the assignment. Really, can I see? Sure, here you go. But that was not recorded. Oh…….” Its the same song and dance. So what becomes of this?
Chapter 7: The trustee will most likely put on his “544 hat” and now “strip the lien off the house.”
When he does this, he creates an unencumbered piece of real estate in most cases, with the exception of a small amount of past taxes and HOA fees remaining as liens on the property. The property is then sold and net profits held in trust. A notice is then sent to the creditors of the bankruptcy to submit a claim if they want to get paid.
The claims are then reviewed, and paid pro-rata or objected to with the Bankruptcy Court issuing the final ruling. The Claims process is a complex area too lengthy to discuss for this Blog, but suffice to say, many claims will be objected to as well, since most credit card debt and collection agents have similar problems in proving they too own their debts. Moreover, you might ask what happens to the mortgage lien which has now become a large unsecured debt? It might be paid, provided they can prove they own the note. However, it also may not. There is a Bankruptcy Code section, 11 USC 502(d) which states that a creditor may not be able to share in the distribution if they did not give up there lien when requested by the trustee under 544. So, it could be that any remaining monies may even go back to the debtor if the new unsecured mortgage claim is disallowed! But this remains a grey area, and time will tell.
But what if the debtor wants to keep the house? No problem. Time to make a deal with the trustee. Suppose that the House was bought for $650,000 in 2006 with 100% financing and now is worth $500,000. The debtor is negative $150,000 in equity. Upside Down! Now lets say a bankruptcy is filed. The Mortgage Note was not perfected so Bankruptcy Trustee avoids the lien. Now he has this $500,000 piece of real estate that he wants to sell, but the debtor wants to keep it. So the debtor makes an offer of $430,000 to keep the house and the Trustee agrees. Trustee agrees since he would only net $430,000 anyways after costs of sale, attorney fees, marketing, etc. Debtor gets the $430,000 from a new loan he might qualify for, have cosigned, or have a family member engage their credit. Trustee then takes the $430,000 and distributes to creditors, which include the debtor’
s non-dischargeable taxes, non-dischargeable child support obligations, and non-dischargeable student loans.
Wow! Lets get this straight: Mortgage reduced from $650,000 to $430,000, and over $100,000 in non-dischargeable bankruptcy debt consisting of student loans, taxes, and support obligations also paid, and all other debt wiped out? Sounds like the lemon just turned into lemonade! Also, time to also read the blog on why the credit score is much better after bankruptcy than before now.
Chapter 13: In Chapter 13, the Trustee does not liquidate assets. Instead, he administers a three to five year plan by distributing the monthly payments from the debtor to the creditors, and the avoidance powers of the Chapter 7 Trustee are given to the Debtor(at least here in the Ninth Circuit….western states in the US). This includes the power to remove unperfected liens such as unperfected mortgages.
So now the debtor can remove the mortgage just like a Chapter 7 Trustee.
But that might be a problem. The Chapter 13 Trustee may object now to the bankruptcy since the debtor has too many assets. Well, as discussed above, time to get another smaller mortgage, pay that money into the Chapter 13 plan, and again pay off the non-dischargeable debt. Even better, if not all the creditors filed claims, the money then reverts to the debtor!
In the alternative, the simple threat of litigating the issues to remove the mortgage sure makes for a great negotiating tool to deal with the lender and rewrite the mortgage…..knocking off possibly hundreds of thousands of dollars and also lowering the interest rate substantially.
Involuntary Bankruptcies? Is there such a thing? Unfortunately, YES. And this could be very problematic. If several creditors are owed substantial sums of money, say a SBA Loan, large Medical Bill, or even large credit cards, they could petition the court for an involuntary bankruptcy. The debtor has no control to stop it. Next thing the debtor knows, he is in a bankruptcy and all the property is being liquidated, less the property allowed by exemption law. Then steps up the Chapter 7 Trustee and discovers that the Mortgage is not perfected. Well, there goes the house now! Or does it?
Once again, a smart debtor would argue to the trustee that he will get a loan to pay the trustee as discussed above. Problem solved, and what appears to be disaster at first, may be a blessing in disguise. The debtor keeps his home with a much smaller mortgage and removes non-dischargeable debts. He is better off now than before, even though he did not want this!
So the Recipe for Disaster appears to only affect the Mortgage Companies. They are the losing parties here, and rightly so for getting sloppy…..attempting to save $14 per loan times thousands of loans. Why didn’t they compute losing hundreds of thousands of dollars per loan times thousands of loans? Couldn’
t they connect the dots? No…..like I said, lots of smart Real Estate Attorneys and lots of smart Bankruptcy Attorneys, but not too many Bankruptcy Real Estate Attorneys and none of them worked for the Mortgage industry.
But everyone else now seems to win. The debtor reduces his mortgage, gets a better interest rate, and eliminates the rest of his debts. The trustee makes a healthy profit on distributing such a large dividend to creditors. And the creditors who obey the law now share in a large dividend.
Of course, all the forgoing is Brand New. It has not been done yet in any cases I am aware of. But since talking with other Bankruptcy Attorneys across the Nation for the past couple weeks, its starting to catch on. I’
m told a few trustees back east have started this procedure now. And just today, I get an announcement from our local Chapter 7 Trustee that he is making new requirements concerning producing documents in all cases before him so that he can start avoiding these liens. Coincidentally, this also comes after three of our Local Bankruptcy Judges started denying relief to Mortgage Creditors when coming before the Bankruptcy Court during the past week! Its brand new…but catching on like wildfire.
Housing Bubble? Mortgage Bubble? Well now it’
s a Housing Mortgage Bubble disaster about to happen in Bankruptcy Court. Congress was not able to reform the predatory lending abuses. The Lenders certainly do not seem interested in workout programs. I guess its time for a Bankruptcy Cocktail!
As I understand this news is that all subprime loans with NINJA elements are being refused and are rescinded, well this could help the banks to not bother to foreclose, in my opinion. I have always wondered how and what is the process to file on the title company, for the title insurance, now I know that subprime was not insurable and thus there are a clouds on the titles.
December 18, 2009
Insurers’ Claim Rejections Multiplying Lenders’ Pain
By Kate Berry
Private mortgage insurers have stepped up their rejections of claims on defaulted loans, compounding the pain that banks and other lenders have felt from the housing crisis.
In the second and third quarters, insurers denied 20% to 25% of claims, up from a historic rate of 7%, according to Moody’s Investors Service Inc. Though the insured party is usually Fannie Mae or Freddie Mac, lenders that do business with the government-sponsored enterprises stand to lose when claims are rejected.
This is because, when insurers deny claims, they also rescind the policies. The mortgages in question typically have loan-to-value ratios above 80%, which means Fannie and Freddie cannot hold them without the insurance. So when insurers cancel policies, the GSEs in turn make lenders buy back the loans.
“Buybacks are really the pink elephant on lenders’ balance sheets that no one wants to talk about,” said William Armstrong, the chief executive of Blueberry Systems LLC, a Greenwood Village, Colo., developer of software that captures data discrepancies to prevent repurchase requests.
Fannie and Freddie have already been forcing lenders for more than a year to repurchase greater numbers of faulty loans for reasons other than insurance rescissions. The spike in rescissions is accelerating this trend.
Freddie said in its third-quarter financial report that servicers had repurchased $960 million of loans from it during the period, nearly double the amount a year earlier. Fannie does not disclose its volume of repurchase requests, but in its third quarter report, the GSE said that its repurchase requests have been increasing since the beginning of 2008, and that it expects them to remain high into next year.
Peter Pollini, a principal of the consumer finance group at Pricewaterhouse Coopers, said repurchasing a loan whose insurance has been rescinded hits the lender with a “double-whammy.”
“They have a nonperforming loan that has been brought onto the balance sheet, and they can’t sell it, and they have to take the full risk on that loan,” Pollini said.
Insurance rescissions and buybacks reflect the dramatic loosening of underwriting standards in the middle of the decade.
“Certain product types were flawed the day they were made,” said David Katkov, an executive vice president and chief business officer at PMI Group Inc. in Walnut Creek, Calif.
Most loans whose claims are denied have “multiple reasons why they failed,” said Katkov, whose company is the second-largest private mortgage insurer as measured by insurance in force. For example, a borrower could have a low FICO score combined with a high loan-to-value ratio, no documentation of income and a questionable appraisal, he said. The combination of all those risk factors on the same loan would make it fall outside PMI guidelines. “How is that loan ever going to perform the way I priced it to perform?”
At PMI, “we’re all about paying legitimate claims,” Katkov said. “My policy is very explicit. If you went over here and did something that is black, and I said you need to do something that is white, I’m not going to be obligated for that loan.”
But others say the mortgage insurers are incorporating rescissions into their business models, using claim denial to get through the crisis. “Lenders are not happy, and the consumers paid a premium for nothing,” said Rhonda Orin, a managing partner at the Washington law firm Anderson Kill & Olick. “Lenders counted on private mortgage insurance when they made the loans, and now you have insurers saying the mere fact that a mortgage goes into default means the borrower gave false information, and they’re rescinding the policy instead of paying the claim. We call that post-loss underwriting.”
The seven private mortgage insurers have rejected $6 billion of claims since early 2008, Moody’s said. During the same period, they paid out an aggregate $18 billion to $20 billion in claims.
It is unclear how long rescission rates will remain at today’s historically high level.
Katkov said he is not prepared to say claims are near their peak. But he said the loans made during the middle of the decade, when now-discredited practices like not documenting borrower incomes prevailed, “are getting close to the end of their life.” Claims on newer loans are more driven by economic fundamentals like job losses, he said. This suggests that future claims will be harder to deny, though Katkov would not forecast rescission rates.
Banks repurchased $7.1 billion of defaulted single-family loans from various investors in the third quarter, National Mortgage News has reported, up from $1.9 billion in the second quarter. JPMorgan Chase & Co. repurchased the most loans last quarter, $2.7 billion, the newspaper said, and Bank of America Corp. was No. 2, with $2.3 billion repurchased.
B of A did not return calls. Tom Kelly, a spokesman for JPMorgan Chase, said most of its buybacks were of loans from Government National Mortgage Association pools. Such loans are insured by government agencies like the Federal Housing Administration, a part of the Department of Housing and Urban Development. So bringing them back on the balance sheet did not affect JPMorgan Chase’s reserves or chargeoffs, Kelly said.
But there also is concern that the FHA, whose capital reserves have dwindled, could become more aggressive in rejecting claims.
“HUD is acting more and more like an insurer where, if they are faced with a potential loss, they will look at the file just like a mortgage insurer, and they won’t pay the claim if there is a problem,” said Dan Cutaia, the president of Fairway Independent Mortgage in Sun Prairie, Wis. “That’s a big change because FHA has been pretty lax over the years.”
Laurence Platt, a partner at K&L Gates LLP, said lenders could take comfort that FHA has higher thresholds for claim rejections than private insurers, which can deny a claim if information is materially untrue. “FHA has to show the lender knew or reasonably should have known if information is incorrect,” he said. “So the lender never bears the risk of pure borrower fraud unless it could reasonably have been caught.”
— Kate Berry is a reporter for American Banker.
Other Lead Story items.
KEEP THE CHANGE, KEEP MY CHANGE OR KEEP YOUR CHANGE. IT IS NOT CALLED AN OVER DRAFT FEE ITS CALLED AN EXTENDED CREDIT CHARGE FEE, DIFFERENT NAME SAME FEE. THIS HAPPENED TO MY DAUGHTER. I think that BOA should keep their own change, I do not want their change, they have took thousands of dollars from me using the pending, posting and holding the check trick and they have flaunted the credit reporting and chec systems trick to force me into submission, lets talk about holding the check trick, BOA is a clearing house the money is available at midnight of the same day it was deposited, but they hold the money for as long as 14 days for out of state, but the banks are not out of state they all use the same clearing house, which is more they all use the same money, they all owe each other the same money every day, so they hold on to the change, and get a NSF fee scam, its a sham, nothing more. Some time ago they pushed a policy that they stated that if you deposited money after 2pm it will not post to the account until the following day even if it was cash, I thought that if the bankster`s doors are open and you make a cash deposit you could withdraw this money in the next instant, but no BOA held the money overnight free, free money, this happened tome many times. The banks hold online transfers of cold cash, pending clearing, but the NSF fee comes out asap, even on transaction that have previously posted, they simply un post them, so mr banksters please keep your change and stay away from my child`s money. thnx
if you need something about your bankster post it the comments section and ask me to put it here, I will if you ask me.
http://www.my3cents.com/showReview.cgi?id=38541
Here is another poster above, this is not stopping at all. BOA keeps the change.
have tried numerous times to stop this on my checking account. I am charged $3.00 monthly to have them take money from my checking account!!!!!! Do you know how much money I would have for all the $3.00 they have stolen?
How convenient to “sign-up” for Keep the Change on-line but cannot “discontinue” on-line. Apparently you can’t do it in person either because I’ve tried IN PERSON TWICE to at TWO different branches of B of America. What’s wrong with this picture?
Debra Wright
Dissatisfied Customer of Bank of America
There is no limit to opinion about BOA, I can fins stuff about them day and night, greed has struck the banking sector with a vengeance and the blows they are suffering is without limit. It is time to tumble the corrupt practices of these banksters, without regard for them in the slightest of ways. The above link is a nice short read and to the point, it is followed by a slew of comments some by reps of the bankster`s the “shills” who are those paid disinformation agents that sit behind their pcs all day searching and crashing the dirt of the banks.
Bank of America’s Keep the Change program: Keep your savings elsewhere
Posted Apr 23rd 2007 6:20PM by Zac Bissonnette
Filed under: Bad news, Consumer experience, Competitive strategy, Marketing and advertising, Scandals, Bank of America (BAC)
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When my friend warned me about Bank of America’s (NYSE: BAC) Keep the Change program, I couldn’t believe what he was saying. “They say that they round your purchases up and put the money in your savings account, but actually they just transfer it from your checking account.” I assumed there must be something he didn’t understand but, upon further investigation, he was right. Bank of America’s Keep the Change program is probably the most cynical, exploitative promotion from the financial services industry I’ve ever seen.
Read the details on Bank of America’s website. On the surface, it might sound good. The bank does match your Keep the Change savings for the first three months, and then matches 5% of any additional savings, up to $250 per year. How can Bank of America afford to pay its customers to save with them? Here’s a table of the interest rates that a few different savings accounts pay (Source: BankRate.com):
EmigrantDirect.com – 5.05% APY
PFF Bank & Trust – 5.30%
ING Direct – 4.50%
TD BankNorth Massachusetts (Money Market) – 2.00%
Bank of America (Savings) – 0.20%
Bank of America (Money Market) – 0.30%
No wonder Bank of America can afford to match 5% of your spare change! It’s amazing the things banks can do when they don’t pay interest on their savings accounts (0.20% is not interest, my friend). It’s also not surprising how excited they are about savings accounts. It’s an interest free loan for them.
If Bank of America’s savings account didn’t pay an interest rate that is 1/17th as good as PFF Bank & Trust’s, I would say sure, sign up for the the Keep the Change program. But as it is, this is just a pathetic marketing ploy by a bank that cares so little for the well-being of its customers that it preys on their naivete by offering them interest-free savings accounts.
Tags: banking, consumers, savings
BofA Moves Against Judge For Refusing To Boot Ailing Elderly Couple Onto Street Following Foreclosure Of Dilapidated Bungalow Over Unpaid $7K HELOC
In Grand Rapids, Michigan, The Michigan Messenger reports:
* Bank of America is suing a Grand Rapids District Judge Michael Christensen for allowing an ailing, elderly couple to remain in their foreclosed home until the couple can move, the Grand Rapids Press is reporting. The couple purchased the house in 1976, for $12,000 and had paid it off. However they took out a line of credit, and ended up defaulting on nearly $7,000 of that credit line. In Nov. the judge ruled they had to go, but in April he set aside that ruling, giving the couple another three months.(1)
For more, see Bank suing Grand Rapids judge for allowing elderly, ailing couple to remain in foreclosed home.
For The Grand Rapids Press story, see Grand Rapids judge tells bank to let ailing couple stay in foreclosed home until they are able to move.
(1) For story updates, see The Grand Rapids Press:
* Foreclosure eviction for Grand Rapids couple takes new twist — lender claims they defaulted on first mortgage with balance of $41,000,
* Elderly Grand Rapids couple brokers foreclosure deal with bank, given 7 weeks to move.
posted by Home Equity Theft Reporter at 2:15 PM links to this post
Bank of America tumbles on nationalization worries
* Wednesday February 4, 2009, 5:31 pm EST
* Bank of America Corporation
* , Citigroup, Inc.
By Elinor Comlay
Reuters – A Bank of America sign is seen in the Northern Virginia town of Leesburg, January 18, 2009. REUTERS/Larry
Reuters – A Bank of America sign is seen in the Northern Virginia town of Leesburg, January 18, 2009. REUTERS/Larry …
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NEW YORK (Reuters)
Bank of America Corp (NYSE:BAC – News) shares fell below $5 for the first time since 1990 on speculation that spiraling losses at newly acquired Merrill Lynch & Co might lead to government control of the largest U.S. bank, wiping out shareholders.
Shares fell more than 11 percent, marking the fifth straight decline, as rumors persisted that mounting losses on mortgages and corporate loans might lead to the nationalization of the Charlotte, North Carolina, lender, or even the ouster of Chief Executive Kenneth Lewis. Bank of America and Merrill Lynch ended 2008 with $2.49 trillion of assets.
“Until we get some clarity that even the largest banks will remain in shareholder hands, this downward spiral is just going to continue,” said Nancy Bush, an analyst with NAB Research.
A spokesman for the Office of the Comptroller of the Currency and a spokesman for Bank of America declined comment.
Bank of America shares fell 60 cents to $4.70 and slipped as low as $4.62 during trading. The cost of protecting the bank’s debt against default with credit default swaps rose 0.3 of a percentage point.
But according to the Charlotte Observer, Lewis in a memo to employees said the bank’s board “unanimously” supported Bank of America’s business model last week in “the longest board meeting in anyone’s memory.”
Lewis has come under fire from shareholders as the once-lauded Merrill Lynch acquisition has unraveled, leaving Bank of America dependent on government support to battle mounting losses and evaporating shareholder value.
“Part of what’s going on with the stock price is reflecting the uncertainty of Lewis’ position,” said Michael Nix, portfolio manager at Greenwood Capital Associates.
Nix discounted the board’s support of Lewis, noting he would not expect the board to be other than supportive and that board support has proved fleeting for bank chief executives in the recent past.
A FIASCO
Bank of America last month posted its first quarterly loss in 17 years, and said Merrill’s $15.31 billion quarterly loss was so much worse than expected that Lewis needed help from the government to complete the acquisition.
The government, which had already given Bank of America $25 billion in October under the Troubled Asset Relief Program (TARP), agreed to inject $20 billion more, and to share in losses on $118 billion of residential and commercial mortgages, derivatives and corporate debt.
“This Merrill Lynch deal has become a fiasco for Ken Lewis,” said Ralph Cole, portfolio manager at Ferguson Wellman Capital Management in Portland, Oregon. “His whole reason for grabbing Merrill Lynch was getting the brokers, and what he ended up with was gigantic writedowns from the part of the business he didn’t even want.”
Lewis had coveted Merrill for its brokerage force, often known as the “thundering herd,” which he called the “crown jewel” of the roughly $19.4 billion takeover.
Bank of America shares have fallen 67 percent this year, compared to a 41 percent decline in the broader KBW Banks Index (Philadelphia:^BKX – News).
Shares in Citigroup Inc (NYSE:C – News), which has also received a large cash injection and a government guarantee of assets, were up as much as 10 percent at $3.82 before falling back to close at $3.49 — a gain of 0.9 percent, or 3 cents.
(Reporting by Elinor Comlay; Additional reporting by Dan Wilchins; Editing by Brian Moss, Gary Hill)
Bank of America Board Under Gun From Critics
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By LOUISE STORY and JULIE CRESWELL
Published: January 27, 2009
Gen. Tommy R. Franks, the former chief of the Public Broadcasting System and the publisher of a Spanish newspaper would seem to have nothing in common — except for one thing. They all sit on the board of Bank of America.
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But as they and 13 of their colleagues meet Wednesday to discuss how to steer the bank through its troubled merger with Merrill Lynch, they are likely to be united by something else: a reluctance to undermine the bank’s embattled chief executive, Kenneth D. Lewis.
Less than a week after Mr. Lewis dismissed John A. Thain, the former chief of Merrill Lynch, contending he failed to reveal billions in bonus payouts and losses that led to a second round of taxpayer support for the bank, shareholders have turned up the pressure on Mr. Lewis to explain why he did not publicize the figures once he learned of them.
Their scrutiny has also turned an unusual spotlight on the oversight role played by the board members, many of whom were picked by Mr. Lewis from several companies that the bank, based in Charlotte, N.C., absorbed as he molded it into a sprawling financial giant.
“This board, historically, has been viewed as a board that was there on paper,” said Charles M. Elson, a corporate governance expert at the University of Delaware, who owns shares in Bank of America and voted against the Merrill merger. “But the question has been how active they have been in overseeing the C.E.O.?”
Bank of America’s board is an eclectic group, and it will grow larger this week when it adds three members from the board of Merrill. The bank’s two most powerful directors, O. Temple Sloan Jr. and Meredith R. Spangler, are close to Mr. Lewis’s predecessor, Hugh L. McColl Jr., who began building the company into the banking giant that it is today. Mr. McColl, still an influential pillar at the bank, has said in recent days that he supports Mr. Lewis. But if he changed his mind, Mr. Sloan and Mrs. Spangler would likely follow his lead, according to people with knowledge of the board’s thinking.
Four of the current members were around a decade ago when the bank took its current name after acquiring a California rival. Another handful joined in 2004, when Bank of America acquired FleetBoston. Another was an executive at MBNA, the credit card company the bank acquired, aiming to build the bank into a credit card powerhouse.
Aside from Mr. Lewis, only two people on the board — the former chief of FleetBoston and a former senior executive of MBNA — have roots in banking. While Wall Street is rife with tales of bank and brokerage directors who deferred to executives seeking faster growth through ever-riskier business, Bank of America’s shareholder advocates have grown increasingly concerned about the board’s ability to understand financial risks and rein in managers.
Until recently, Mr. Lewis was hailed as one of the saviors of Wall Street. He bought the troubled mortgage lender Countrywide and agreed to buy Merrill at the height of the financial crisis with no federal support. But by the time the merger closed, Merrill’s losses were larger than expected. The government soon handed Bank of America another multibillion-dollar cash infusion.
Initially, investors criticized Mr. Lewis for overpaying for the brokerage firm. Now, however, other questions have been raised. The office of the attorney general of New York said Tuesday it was investigating $4 billion in bonus payments made by Merrill to its employees before the deal closed. It is also examining what Bank of America’s chief administrative officer, J. Steele Alphin, and Mr. Thain knew about the payments.
Also Tuesday, the Service Employees International Union, one of the nation’s largest service sector unions, started a “fire Ken Lewis” campaign and called on the bank to replace him, claiming he had turned “a blind eye” to the bonuses doled out by Merrill.
While critics charge that Bank of America’s board has been little more than a rubber stamp in the empire-building campaign of Mr. Lewis, others describe it as independent and willing to push back against the chief executive.
“I don’t think the board would be intimidated by Ken and I don’t think he would take the board anyplace where it was uncomfortable,” said Paul Fulton, a former Bank of America director.
Members of the board, many of whom are paid upward of $200,000 a year for their service, declined to comment or did not return calls. A Bank of America spokesman declined to comment.
Its members are expected to vote Wednesday on the addition of three directors from Merrill Lynch: Charles O. Rossotti, who was the commissioner of the Internal Revenue Service in the 1990s; Joseph W. Prueher, also a retired Navy admiral and former ambassador to China; and Virgis W. Colbert, a former executive at Miller Brewing, according to two people briefed on the agenda.
Their approval would raise the number of board members to 20, and would tighten the web that already binds many of the board’s current representatives. Mr. Prueher, for example, met Mr. Franks in the 1990s, when he was commander in chief of the United States Pacific and Mr. Franks was a division commander in Korea. And Mr. Colbert is a member of Augusta National, the Georgia-based golf club, where Mr. McColl, the bank’s former chief, is also a member.
Bob Morgan, the president of the Charlotte, N.C., Chamber of Commerce, said the board had a diverse makeup. Among its members are Monica Lozano, who publishes La Opinión, a Los Angeles daily, and Patricia E. Mitchell, the former PBS chief. “The perception that Bank of America’s board is provincial and insular does not hold up when you look at the composition,” he said.
Yet some board members are connected in other ways that reveal strong cross-pollinations with other company boards. For example, two of Bank of America’s directors serve as trustees at NStar, a utility company in Massachusetts that is headed by yet another Bank of America board member, Thomas J. May. And the Lowe’s Companies, the home improvement retailer, counts one of Bank of America’s directors as its former chief executive, and another as a current member of the Lowe’s board.
Bank of America’s two most influential members hail from North Carolina. The board’s independent lead director, Mr. Sloan, the founder of an auto parts company, lives in Raleigh. Mrs. Spangler is married to a well-known local businessman, C. D. Spangler, a former president of the University of North Carolina who once shared an apartment in the city with Mr. McColl, the former leader of the bank.
Like Mr. Lewis, the Spanglers live in the Charlotte area. They are large donors in Charlotte and to the Harvard Business School, have been shareholders in the bank since the early 1980s, when they sold a local bank to the predecessor of Bank of America. But in the last year they have lost more than $1 billion on their Bank of America holdings.
“If institutional investors choose to re-elect the board, then they should stop blaming the bank,” said Orin Kramer, a hedge fund manager and chairman of the New Jersey pension fund. “They should look in the mirror.”
Eric Dash contributed reporting.
This is the last straw. In July of 2006 I called BOFA and explained to them that a charge on my account should be reversed due to no services rendered by a so called mediation company who did not want to refund my $400.00 charge. I explained BOFA that I was willing to pay something but not the entire 400.00 because in all reality I never received any services from the.
BOFA credited my account back the $400.00 and explained to me that I will be receiving a letter from them within a few days and I need to have it filled out and send it back to them right away.
As always, two weeks later and I still did not receive the letter and I decided to call BOFA and asking for the letter. They claimed they sent it to me but they will send another one right away.
I did receive the second letter, had it filled out, typed a personal statement and even made photocopies of the letter because I knew somewhere down the line they were going to screw up again. Sure enough, on August 21st my account shows a $400.00 credit take back by BOFA. I called them and asked them to explain why it was taken out being that I followed everything they have asked me to do and I even explained to them that I have a copy with me and I will fax it to them as proof that I sent it out.
To make a long story short, they will not credit the back to me, in the meanwhile I have 5 ($35.00) overdraft charges and I am overdrawn $530.00+ and all they have to say that they will investigate the matter but I will have to wait 7 to 10 days or even longer.
Today I canceled both of my direct deposits and will call them one more time to see if they are willing to help me out. I should have learned my lesson back in 1988 while I was station in Fort Ord, CA. Two times they took my entire federal pay out of my account and started to charge me for overdraft charges when in fact they were the ones who screwed up.
I would love to see a huge class action suit against them.
They are liars and cheats and they do not care for their customers. I have had my account for over two years and every singly deposit I have ever made has taken 7 to 10 days to clear not matter what type of check it was.
Their excuse is that it is out of state, it has to go through the corporate office or my account has too many bounced chaeks. Always a dam excuse.
STAY AWAY FROM THEM.
I have more reviews at my site avilesfam.com/badbusiness
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U.S., European Bank Stocks Rise on ’Bad Bank’ Plan (Update2)
Jan. 28 (Bloomberg) — U.S. and European bank stocks rose on speculation the Obama administration’s plan to absorb toxic assets will stabilize lenders’ balance sheets. Wells Fargo & Co. soared 31 percent after saying it doesn’t need more federal aid.
Citigroup Inc. and Bank of America Corp., which had both lost about half their value this year before today, gained 19 percent and 14 percent, respectively. Frankfurt-based Deutsche Bank AG climbed 23 percent and London’s Lloyds Banking Group Plc surged 50 percent.
Bank shares have slumped this month on speculation companies would write down more assets and need new capital injections, raising concern government intervention would wipe out any remaining shareholder value. The Obama administration’s plan may instead set up a so-called bad bank to absorb the hard-to-value holdings that have prevented many lenders from making new loans.
“The fact that they laid out a good bank/bad bank scenario means the nationalization of Citibank and Bank of America that people are worried about is less of a possibility,” said Warren Koontz, head of large-cap value stocks at Loomis Sayles & Co. in Boston. “The rolling fear that started with Citigroup and spread to Bank of America seems to have stopped for now.”
The KBW Bank Index of 24 U.S. banking companies climbed 14 percent, trimming this year’s decline to 26 percent.
Dividend Relief
San Francisco-based Wells Fargo, which also said today it would leave its dividend unchanged, gained $5 to $21.19. New York-based Citigroup and Bank of America, with its headquarters in Charlotte, North Carolina, both lowered their quarterly payouts to shareholders to 1 cent a share earlier this month.
While competitors reduced their lending in the quarter, Wells Fargo added $50 billion in mortgage originations and has $22 billion in new loan commitments, the company said today in announcing a fourth-quarter loss of $2.55 billion. Excluding one- time items, the profit of 41 cents a share beat the average estimate of 33 cents among analysts surveyed by Bloomberg.
Citigroup rose 66 cents to $4.21 at 4:20 p.m. in New York Stock Exchange composite trading, while Bank of America advanced 89 cents to $7.39. Morgan Stanley, the second-biggest securities firm until it converted to a bank last year, gained 18 percent to $23, the highest price since October.
The Federal Deposit Insurance Corp. may manage the Obama administration’s proposal for a “bad bank,” buying distressed assets that are clogging balance sheets, two people familiar with the situation said.
Bank Catalyst
“A catalyst for banks everywhere is the expected announcement out of the U.S.,” said Simon Willis of NCB Stockbrokers Ltd in London. “We are seeing a rebound after a sharp selloff in banks last week.”
European stocks were helped by a newsletter that said Deutsche Bank had a “sensational” start to 2009. Germany’s biggest lender may earn almost 1 billion euros ($1.3 billion) in pretax profit in January, Der Platow Brief reported today. The shares rose to 21.94 euros in Frankfurt.
Lloyds gained the most in at least two decades to 100.9 pence after Citigroup analysts led by Tom Rayner in London raised it to “buy” from “hold.” The possibility of nationalization “is more than adequately discounted in the current valuation,” Rayner said in a note today.
Lloyds Banking, formed by Lloyds TSB Group Plc’s takeover of HBOS Plc this month, is seeking to avoid an increase in the government’s 43 percent stake. Lloyds’ shares have declined 20 percent this year.
‘Dramatically Undervalued’
“The immediate worry of nationalization and recapitalization is slowing beginning to ebb away,” said Michael Trippitt, a London-based analyst at Oriel Securities Ltd. who has a “buy” rating on Lloyds. “Lloyds has been dramatically undervalued for some time,” and the revenue benefits and cost savings from the HBOS deal are “still understated,” he said.
Barclays Plc has more than doubled this week, and climbed to 107 pence in London today. The company lost almost half its value last week as investors speculated that the London-based company would need to raise money from the U.K. government or be nationalized. Barclays said Jan. 26 that it has 17 billion pounds of surplus capital and can use profit to offset about 8 billion of writedowns in 2008.
I know there is a class action on this bank for things they have done to many consumers including me,the greed of the people we have put in charge of our money has plundered our lives to tatters,what strikes me the most is the general on look of the very employees of the bank,they generally hold a feeling that since they are the only Pepsi Cola in the desert in most big cities they have the right to mooch money using the bully strategy,clad with kindness.
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Check from a scammer bounces victim into jail
David Lazarus
Wednesday, August 30, 2006
San Francisco resident Matthew Shinnick tried to sell a pair of mountain bikes on Craigslist late last year. He attracted a buyer, received a check in the mail — and ended up handcuffed by police in a downtown Bank of America branch and jailed for almost 12 hours.
BofA calls the bizarre episode “an unfortunate series of events” and says that “clearly and without equivocation, Bank of America regrets what occurred.” But the bank says it was only doing its duty by notifying the cops when a bad check surfaced.
It also says Shinnick has no grounds to sue for thousands of dollars in legal costs because of a 2004 state Supreme Court decision that shields institutions and people from liability when reporting suspected crimes to the police.
Legal experts say that BofA is right about Shinnick’s lack of recourse and that incidents like this, while unusual, could happen with greater frequency as Craigslist, eBay and other online services increasingly become hunting grounds for fraudsters and identity thieves.
Craigslist founder Craig Newmark acknowledged that cases of wrongful arrest are “an increasing possibility” and said the onus is on institutions like BofA “to show a greater commitment to customer service.”
Shinnick, 38, told me he’d received an e-mail in December from someone who said he was in Canada and was willing to pay a total of $600 for the two bikes offered on Craigslist.
“We never talked in person,” Shinnick said. “We just corresponded by e-mail over a series of weeks.”
The buyer finally said he was going to cut a check on his company’s Bank of America business account and arrange to have the bikes shipped north. Shinnick said he received a check for $2,000 shortly after Christmas and was informed that the extra cash was to cover shipping costs “and for my trouble.”
Shinnick, it appears, was a victim of the classic “Nigerian 419″ scam, adapted in this case to sucker in unwary Craigslist users.
Typically, the scam involves a bogus check being sent by a fraudster as a part of a transaction. The transaction is subsequently canceled and, before the bank has spotted the check as a phony, the fraudster requests some or all of his money back — money that the victim unknowingly pays out of his own pocket.
Shinnick said he wasn’t aware of the scam while he was negotiating to sell his bikes — his first foray onto Craigslist. But he was made suspicious by the unexpectedly large payment.
“That was kind of a red flag because it’s a lot of money,” he said. “I didn’t want to deposit it into my account because I didn’t want it to bounce.”
So Shinnick, who resides on Nob Hill, stopped by a BofA branch near Union Square in early January. He said he asked a teller if sufficient funds existed in the BofA business account to cover the check.
“She said it was a valid account and that there were funds to cover it,” Shinnick recalled. “I said, ‘Great,’ and asked to cash the check.”
He signed his name on the back.
What Shinnick didn’t know is that he’d just become party to a crime. The bank account may have been real but the check was phony.
What he also didn’t know is that, according to the police report for the case, a warning had been placed in BofA’s computer system to watch for fraudulent checks drawn on the account in question.
The teller contacted the business and was informed that no check had been written to Shinnick for $2,000 or any other amount. She immediately passed the check to the branch manager.
“I saw him talking on the phone and staring at me,” Shinnick said. “A few minutes later, four SFPD officers came into the bank. They didn’t say a thing. They just kicked my legs apart and handcuffed me behind my back.”
The police report for Shinnick’s arrest says he was taken into custody “for the safety of the bank employees as well as the bank customers.”
Shinnick said he was never read his rights. He said he was instructed by one of the cops to keep his mouth shut and not say anything. Shinnick said he remained handcuffed in the bank lobby for about 45 minutes while the police spoke with BofA workers.
“As people were coming in to do their banking, I was in plain view of everyone,” he recalled. “I was absolutely mortified.”
Shinnick was taken to Central Station on Vallejo Street, according to the police report. He said he was taken by van about an hour and a half later to the Hall of Justice on Bryant Street.
At the Hall of Justice, Shinnick said, he was finally allowed to call his parents after almost five hours in custody. He said he was photographed and fingerprinted, and then strip-searched and given an orange jumpsuit to wear.
“I was so humiliated, it was beyond belief,” he recalled. “It was an absolute, living nightmare. I felt like I was going to be one of those people who gets caught in the system and has no way of getting out.”
Shinnick said he was placed in a cell with about a dozen other inmates, mostly drug dealers and drug users.
“It was a small cell,” he said. “One guy was unconscious underneath the one toilet that was there for all of us to use. There was only one bed to sit on. I sat on the ground.”
Shinnick was finally released around 11:30 p.m., after his father paid $4,500 of $45,000 in bail. Within 24 hours, the district attorney’s office dropped all charges against Shinnick.
In July, a San Francisco Superior Court judge ruled that Shinnick was innocent by “findings of fact” — a decision that essentially erases all record of the case.
But by this time, Shinnick said, he’d spent about $14,000 clearing his name. He wanted that money back and he felt BofA should pay it.
BofA felt otherwise. Earlier this month, a bank vice president, William Minnes, wrote to Shinnick’s lawyer to say that “Bank of America can certainly understand that your client is angry at the bank.”
However, he said, BofA has no legal liability in the case because of the 2004 Supreme Court ruling. Minnes warned that “litigation would not prove financially beneficial” to Shinnick.
Minnes declined to comment when reached by phone this week.
The Supreme Court case, Hagberg vs. California Federal Bank, was remarkably similar to Shinnick’s. It involved a woman who presented an unusually large check for deposit from her stockbroker.
A teller believed the check was phony and called the police. The check turned out to be real, but by then the police had arrived and had handcuffed the woman.
The woman subsequently sued for damages, but the court ruled that all reports to the police are absolutely privileged. In other words, no liability can be connected to telling police of a suspected crime, whether real or not.
“The court wants to protect people when reporting criminal activity,” said Paul Glusman, a Berkeley attorney who has written about the Hagberg case. “But this can be abused. At this point, there’s nothing that will protect ordinary citizens from a false police report.”
Jennifer Becker, a San Francisco attorney who specializes in malpractice cases, stressed that the intent of the court’s decision is important. There shouldn’t be repercussions for reporting a suspected crime, she said.
But Becker observed that incidents of wrongful arrest “could get totally out of hand with online commerce and eBay and all the opportunities for fraud.”
Shinnick, who works as a salesman in a San Francisco clothing store, said it’s up to banks not to call the police until they’re certain that a crime has been perpetrated — and that the person standing there is a crook and not a victim.
“I’ve been in retail for 18 years,” he said. “I know about customer service and dealing with fraud. The way to handle something like this is to take the person into a back room and work things out before you call the police.”
Shinnick said he feels doubly violated: once by his wrongful arrest and a second time by BofA’s refusal to compensate him for his losses.
“It’s infuriating,” Shinnick said. “And if this could happen to me, it could happen to anyone. That’s what’s so scary about this.”
David Lazarus’ column appears Wednesdays, Fridays and Sundays. Send tips or feedback to dlazarus@sfchronicle.com.
To: Federal Reserve
Overdraft protection…bounce protection…bank fees…
Banks make money off every customer they have nowadays. But one particular fee is immoral. Take a look at the following example. Bank are using a system that debits your account from highest transaction to lowest, not in order in which they were spent as most people think. This gives the bank more reasons to charge overdraft fees. If they take out the highest transactions first, all of those little transactions that your cash would have covered are each charge about $30 in overdraft fees. Take a look…
Day 1:
You have a balance in your checkbook of $100.
Stop at store, use Debit card, spend $60.
Stop for gas, use Debit card, spend $10
Have lunch use Debit, spend $15
Stopped at ATM for cash for the kids tomorrow and get $10
Quiz: what is balance? $5
That evening husband tells you he had to stop for gas and used Debit card and fill up his SUV on his way home from work that evening and it cost $45!
Balance? $-40.
Well dangit, you have overdrawn the account. But are somewhat perplexed because for some reason it let husband get $45 dollars in gas and didn’t decline the card and you were home hours before he was.
During the night the bank charges your account $6 for overdrawing.
Day 2
You think your balance should be -$76 because you know they are going to charge you $30 for the gas debit and $6 for overdrawing. Your write all this down in your register.
You go to bank make a deposit of $200 and note it in checkbook. Balance should be $124.00. Is it??? Well before you go crazy trying to figure it out, the answer is NO.
Because the bank takes the largest to the smallest out of your account while you are sleeping all snug in your bed. So you didn’t have one overdrafting transaction you had 3. The 2 $10 ones and the $15. The bank took out the $60 and $45 out first.
So that means even before the bank opened and you got your $200 deposit in there they bank already had claims to $90 for 3 transactions on day 1, $6 for overdrawing on Day 1, and another $6 for starting out Day 2 in the red. So they are going to take $102 of that $200 dollars you are going to deposit. So in your little check register that you are correctly adding and subtracting in you have your balance as $124 it’s really $58!
200
-40 cause husband spent 45 for gas and you only had 5 in there
-90 in overdraft fees b/c only the two largest transactions cleared.
-6 for overdrawing on Day 1
-6 for starting overdrawn on Day 2 (strange)
That leaves a balance of $58.00
You think you have $124 because no one from the bank has called or emailed me to tell me my balance, and I didn’t have time to call or check online this morning, soccer practice and all. We are still on Day 2 in case you have forgotten. The check register is all nice and neat and not addition or subtraction mistakes.
Husband asked how much is in the bank and you tell him $124. He says “good” because he’s got to get some stuff done to his truck today. Oil changed, tires rotated etc. Probably about 4 different stops. Doesn’t want to take the checkbook, he hates using that thing and he always brings home ATM and Debit receipts for me to record in that nice neat register.
Still on Day 2: Husband leave and does the following:
Stops at ATM for cash $60
Oil Change Debit $20
Tires rotated Debit $10
Brings receipts home and you record them in check register all nice and neat and make sure the subtraction is right on target. Your balance is: $34. But the bank has different ideas about your money. They feel that you have $-32. Now since the bank decided to set you up with the new concept called bounce protect, not to be confused with overdraft protection, where your checking account is linked to another account for a monthly fee. Husband didn’t have Debit card declined all day.
The first cash withdrawal right at the local branch should have been rejected. Which at that point he would have called and said, Hey I thought you said we had $124 in the bank. You would be in shock, get online to see what had happened.
Day 3:
Saturday and you don’t go anywhere and spend any money, husband had gotten cash yesterday if we needed anything.
Day 4: Sunday, just church and playing with kids at home.
Day 5: You think you have $34 in the bank. But in reality you start the day off -$146. Last night, while you were sleeping the bank moles were at work.
Those little boogers put their claim on $90 for all 3 transactions on Day 2 when husband was doing his thing, and then another $24 for overdrawing on Day 2, and being overdrawn on Saturday (Day 3) and Sunday (Day 4) and starting Day 5 (Monday) overdrawn.
Day 6: No activity except the $6 they charged you for being overdrawn.
Day 7: Another $6 charge and the mail man delivers you a letter that tells you that your account was charged $90 for three transactions that were presented for payment, and none of them were returned. How sweet, but that information is so old it’s nothing because even if you jotted that $90 in your checkbook, it too far gone to get it right EVER again!
Heck, I’m lost just giving this example for 7 wonderful days of banking with Fifth Third Bank.
Now do you see how quickly and how extreme this problem is? I didn’t have any idea they would let me get cash, use my ATM or even clear a check if the money wasn’t there.
From my research I have found that banks last year made 14 BILLION dollars with these fees last year. (how much was that tax cut Bush gave to help stimulate the economy)? Talk about the Fleecing of America, I would say this rates way up on the list.
This is not just hurting a few people, it’s hurting our entire nation! Less money to spend, loss of jobs, loss of income taxes, Federal, State and local. Not counting the unemployment from our government for those out of a job.
The Undersigned wish for banks to give us our money back!! These fees need to be reevaluated because it’s getting way out of hand! What is wrong with taking out transactions from the lowest-to-highest? This practice is not disclosed to consumers in any way, nor do we want it to be. We want this practice terminated.
