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RBS bankers joked about destroying the US housing market
By Editor August 16, 2018
http://www.theeventchronicle.com/finanace/rbs-bankers-joked-about-destroying-the-us-housing-market/


A boarded up building in Cleveland, Ohio, in January 2008. In the build up to the crisis mortgage lenders were incentivised to make as many loans as possible. Photograph: Timothy A. Clary/AFP/Getty Images
Transcripts of pre-financial crisis conversations show senior bankers’ disregard for customers

By Rob Davies

RBS bankers joked about destroying the US housing market after making millions by trading loans that staff described as “total fucking garbage”, according to transcripts released as part of a $4.9bn (£3.8bn) settlement with US prosecutors.

Details of internal conversations at the bank emerged just weeks before the 10-year anniversary of the financial crisis, which saw RBS rescued with a £45bn bailout from the UK government.

The US Department of Justice (DoJ) criticised RBS over its trade in residential mortgage backed securities (RMBS) – financial instruments underwritten by risky home loans that are cited as pivotal in the global banking crash.

It said the bank made “false and misleading representations” to investors in order to sell more of the RMBS, which are forecast to result in losses of $55bn to investors.

Transcripts published alongside the settlement reveal the attitude among senior bankers at RBS towards some of the products they sold.

The bank’s chief credit officer in the US referred to selling investors products backed by “total fucking garbage” loans with “fraud [that]was so rampant … [and]all random”.

He added that “the loans are all disguised to, you know, look okay kind of … in a data file.”

The DoJ said senior RBS executives “showed little regard for their misconduct and, internally, made light of it”.

In one exchange, as the extent of the contagion in the banking industry was becoming clear, RBS’ head trader received a call from a friend who said: “[I’m] sure your parents never imagine[d]they’d raise a son who [would]destroy the housing market in the richest nation on the planet.”

He responded: “I take exception to the word ‘destroy.’ I am more comfortable with ‘severely damage.’”

Another senior banker explained to a colleague that risky loans were the result of a broken mortgage industry that meant lenders were “raking in the money” and were incentivised to make as many loans as possible.

Employees who might raise the alarm about the riskiness of such lending “don’t give a shit because they’re not getting paid”, he said.

The bank made “hundreds of millions of dollars” from selling RMBS, the DoJ said, while disguising the risk they posed to investors, which included a group of nuns who lost 96% of their investment.

By October 2007, as signs of stress began to show in the banking system, RBS’ chief credit officer wrote to colleagues expressing his true feelings about the burgeoning volume of subprime loans in the housing market.

He said loans were being pushed by “every possible … style of scumbag”, adding that it was “like quasi-organised crime”.

“Nobody seems to care,” he added.
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The DoJ criticised RBS’ failure to do due diligence on the loans it was packaging, saying the bank feared it would lose out to rivals if it performed stricter tests.

One analyst at the lender referred to the bank’s due diligence procedures as “just a bunch of bullshit”, according to the transcripts.

When the bank became concerned about the poor quality of loans and started imposing tighter due diligence, one senior banker complained, saying: “Oh, God. Does anyone want to make money around here any more?”

RBS expected to make $20m from one deal that involved trading particularly risky loans, but faced resistance from the bank’s chief credit officer.

A senior executive responded to the concerns by telling the bank’s head trader: “Please don’t fuckin’ blow this one. We need every dollar we can get our hands on.”

Internal conversations between bankers also offer some insight into their growing realisation of the poor quality of the loans the bank owned and sold.

In September 2007, one trader referred to an appraisal of loans as giving “pretty shitty results”.

The transcripts were released by the DoJ as it confirmed the details of the settlement with the bank over its trading in RMBS.

RBS said: “Under the terms of the settlement, RBS disputes the allegations but will not set out a legal defence, while the settlement does not constitute a judicial finding.”

Certainty over the scale of the settlement will allow the bank to pay its first dividend in a decade this year.

The dividend is worth £240m and the Treasury will receive £149m as RBS is still 62%-owned by the government.

Ross McEwan, RBS chief executive, said: “This settlement dates back to the period between 2005 and 2007. There is no place for the sort of unacceptable behaviour alleged by the DoJ at the bank we are building today.”

He added that the bank could now “focus our energy on serving our customers better”.

But league tables published by the Competition and Markets Authority on Wednesday placed RBS joint bottom for customer service, with fewer than half of customers saying they would recommend the bank to a friend.

RBS will have to publish the results in branches, on its website and mobile app from today.

This article (RBS bankers joked about destroying the US housing market) was originally published on The Guardian and syndicated by The Event Chronicle.

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Pay Attention! Look at the money trail AFTER the foreclosure sale
Posted on July 3, 2018 by Neil Garfield
https://livinglies.wordpress.com/2018/07/03/pay-attention-look-at-the-money-trail-after-the-foreclosure-sale/

My confidence has never been higher that the handling of money after a foreclosure sale will reveal the fraudulent nature of most “foreclosures” initiated not on behalf of the owner of the debt but in spite of the the owner(s) of the debt.

It has long been obvious to me that the money trail is separated from the paper trail practically “at birth” (origination). It is an obvious fact that the owner of the debt is always someone different than the party seeking foreclosure, the alleged servicer of the debt, the alleged trust, and the alleged trustee for a nonexistent trust. When you peek beneath the hood of this scam, you can see it for yourself.

Real case in point: BONY appears as purported trustee of a purported trust. Who did that? The lawyers, not BONY. The foreclosure is allowed and the foreclosure sale takes place. The winning “bid” for the property is $230k.

Here is where it gets real interesting. The check is sent to BONY who supposedly is acting on behalf of the trust, right. Wrong. BONY is acting on behalf of Chase and Bayview loan servicing. How do we know? Because physical possession of the check made payable to BONY was forwarded to Chase, Bayview or both of them. How do we know that? Because Chase and Bayview both endorsed the check made out to BONY depositing the check for credit in a bank account probably at Chase in the name of Bayview.

OK so we have the check made out to BONY and TWO endorsements — one by Chase and one by Bayview supposedly — and then an account number that might be a Chase account and might be a Bayview account — or, it might be some other account altogether. So the question who actually received the $230k in an account controlled by them and then, what did they do with it. I suspect that even after the check was deposited “somewhere” that money was forwarded to still other entities or even people.

The bid was $230k and the check was made payable to BONY. But the fact that it wasn’t deposited into any BONY account much less a BONY trust account corroborates what I have been saying for 12 years — that there is no bank account for the trust and the trust does not exist. If the trust existed the handling of the money would look very different OR the participants would be going to jail.

And that means NOW you have evidence that this is the case since BONY obviously refused to do anything with the check, financially, and instead just forwarded it to either Chase or Bayview or perhaps both, using copies and processing through Check 21.

What does this mean? It means that the use of the BONY name was a sham, since the trust didn’t exist, no trust account existed, no assets had ever been entrusted to BONY as trustee and when they received the check they forwarded it to the parties who were pulling the strings even if they too were neither servicers nor owners of the debt.

Even if the trust did exist and there really was a trust officer and there really was a bank account in the name of the trust, BONY failed to treat it as a trust asset.

So either BONY was directly committing breach of fiduciary duty and theft against the alleged trust and the alleged trust beneficiaries OR BONY was complying with the terms of their contract with Chase to rent the BONY name to facilitate the illusion of a trust and to have their name used in foreclosures (as long as they were protected by indemnification by Chase who would pay for any sanctions or judgments against BONY if the case went sideways for them).

That means the foreclosure judgment and sale should be vacated. A nonexistent party cannot receive a remedy, judicially or non-judicially. The assertions made on behalf of the named foreclosing party (the trust represented by BONY “As trustee”) were patently false — unless these entities come up with more fabricated paperwork showing a last minute transfer “from the trust” to Chase, Bayview or both.

The foreclosure is ripe for attack.

Spread the word

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Hi yall!

What I am searching for, is anyone in Georgia that has been, is in the middle of, or will be in foreclosure, in which at any time during their loan, Konaur Capital Corp. was either Lender, Servicer, Assignee, or Assignor.


If anyone in Georgia has ever had Kondaur involved with their loan/loan documents,

Please respond here to this post, or contact me any other way, but contact me…


Thanks yall and have a wonderful day!

🙂

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FDIC Employee Quits and Goes Public With Complaint Against Chase, WAMU, Citi and two law firms
Posted on March 25, 2015 by Neil Garfield
https://livinglies.wordpress.com/2015/03/25/fdic-employee-quits-and-goes-public-with-complaint-against-chase-wamu-citi-and-two-law-firms/
 
For further information and assistance please call 954-495-9867 or 520-405-1688
=======================

See Eric Mains Federal Complaint
https://livinglies.wordpress.com/2015/03/25/fdic-employee-quits-and-goes-public-with-complaint-against-chase-wamu-citi-and-two-law-firms/eric-mains-federal-complaint/

See Mains – Table of Contents.petition 2 transfer
https://livinglies.wordpress.com/2015/03/25/fdic-employee-quits-and-goes-public-with-complaint-against-chase-wamu-citi-and-two-law-firms/mains-table-of-contents-petition-2-transfer/

On Monday Eric Mains resigned from his employment with the FDIC. He had just filed a lawsuit against Chase, Citi, WAMU-HE2 Trust, Cynthia Riley, LPS, WAMU, and two law firms. Since he felt he had a conflict of interest, he believed the best course of action was to resign effective immediately.
His lawsuit, told from the prospective of a true insider, reveals in astonishing detail the worst of the practices that have resulted in millions of illegal foreclosures. Some of his allegations cast a dark shadow over claims of Chase Bank on its balance sheet, as reported to the public and the SEC and the reporting of both Chase and Citi as to their potential liability for wrongful foreclosures. If he is right, and he proves these allegations, much of what Chase has reported as its financial condition will vanish from its financial statements and the liability side of the balance sheets of both Citi (as Trustee) and Chase (as servicer and “owner’) will increase exponentially. This may well have the effect of bringing both giants into the position of insufficient reserve capital and force the government to take action against both entities. Elizabeth Warren might have been right when she said that Citi should have been broken into pieces. And the same logic might apply to Chase.

He has also penned the phrase “wild goose Chase” referring to discovery of the true creditors and processing of applications for modification of loans. And he has opened the door for RICO actions against the banks and individuals who did the bidding of the banks as well as the individuals who directed those actions.


His Indiana lawsuit is filed in federal court. He alleges that
1. WAMU was not the actual lender in his own loan
2. That the loan was part of an illegal scheme from the start
3. That his loan was subject to claims of securitization but that those claims were false
4. That the REMIC Trust was never funded and therefore never had the capacity to originate or buy loans
5. That the intermediaries never followed the law or the documents for securitization of his loan
6. That the REMIC Trust never did purchase his loan
7. That Citi was therefore “trustee” for an unfunded trust
8. That Chase never purchased the loans from WAMU
9. That Chase could not have been the legal servicer over the loan because the loan was not in the trust
10. That Chase has filed conflicting claims as to ownership of the loans
11. That the affidavit of Robert Schoppe, whom Mains worked for, as to ownership of the loans was false when it states that Chase owned the loans
12. That the use of WAMU’s name on the loan documents was a false representation
13. That his loan may have been pledged several times by various parties
14. That multiple payments from multiple parties were likely received by Chase and others on account of the Mains “loan” but were never accounted for to the investors whose money was being used as though it was the Banks themselves who were funding originations and a acquisitions of loans
15. That the industry practice was to reap multiple payments on the same loan — and the foreclose as though there was balance due when in fact the balance claimed was entirely incorrect
16. That the investors were defrauded and that foreclosure was part of the fraudulent scheme
17. That Mains name and identity was used without his consent to justify numerous illegal transactions in which the banks repeated huge profits
18. That neither WAMU nor Chase had any rights to collect money from Mains
19. That Citi had no right to enforce a loan it did not own and had no authority to represent the owner(s) of the loan
20. That the modification procedures adopted by the Banks were used intentionally to force the borrower into the illusions a default
21. That Sheila Bair, Chairman of the FDIC, said that Chase and other banks used HAMP modifications as “a kind of predatory lending program.”
22. That Mains stopped making payments when he discovered that there was no known or identified creditor.
23. The despite stopping payments, his loan balance went down, according to statements sent to him.
24. That Chase has routinely violated the terms of consent judgments and settlements with respect to the processing of payments and the filing of foreclosures.
25. That the affidavits filed by persons purportedly representing Chase were neither true nor based upon personal knowledge
26. That the note and mortgage are void from the start.
27. That Mains has found “incontrovertible evidence of fraud, forgery and possibly backdating as well.” (referring to Chase)
28. That the law firms suborned perjury and intentionally made misrepresentations to the Court
29. That Cynthia Riley “is one overwhelmingly productive and multi-talented bank officer. Apparently she was even capable of endorsing hundreds of loan documents a day, and in Mains’ case, even after she was no longer employed by Washington Mutual Bank. [Mains cites to deposition of Riley in JPM Morgan Chase v Orazco Case no 29997 CA, 11th Judicial Circuit, Florida.
30 That Cynthia Riley was laid off in November 2006 and never again employed as a note review examiner by WAMU nor at JP Morgan Chase.
30. That LPS (now Black Knight) owns and operates LPS Desktop Software, which was used to create false documents to be executed by LPS employees for recording in the Offices of the Indiana County recorder.
31. That the false documents in the mains case were created by LPS employee Jodi Sobotta and signed by her with no authority to do so.
32. Neither the notary nor the LPS employee had any real documents nor knowledge when they signed and notarized the documents used against Mains.
33. Chase and its lawyer pursued the foreclosure with full knowledge that the assignment was fraudulent and forged.
34. That LPS was established as an intermediary to provide “plausible deniability” to Chase and others who used LPS.
35. That the law firms also represented LPS in a blatant conflict of interest and with knowledge of LPS fraud and forgery.

Some Quotes form the Complaint:
“Mains perspective on this case is a rather unique one, as Main is an employee of the FDIC (hereinafter, FDIC) who worked in the Dallas field office of the FDIC in the Division of Resolutions and Receiverships (hereinafter DRR), said division which was the one responsible for closing WAMU and acting as its receiver. Mains worked with one Robert Schoppe in his division, whom the defendant Chase Bank often cites to when pulling out an affidavit Robert signed. This affidavit states that Chase Bank had purchased “certain assets and liabilities” of WAMU in the purchase transaction from the FDIC as receiver for WAMU in 2008. Chase Bank uses this affidavit ad museum to convince the court system in foreclosure cases that this affidavit somehow proves that Chase Bank purchased “every conceivable asset” of WAMU, so it must have standing in all cases involving homeowner loans originated through WAMU, or to put it simply that this proves Chase became a holder with rights to enforce or a holder in due course of the loan as defined by the Uniform Commercial Code. Antithetically, when it wants to sue the FDIC for a billion dollars… due to mounting expenses from the WAMU purchase transaction, it complains that the purchase agreement it signed didn’t really entail the purchase of “every asset and liability” of WAMU… Chase Bank claims this when it is to their advantage in a lawsuit to do so.

Mains worked as team leader in the DRR Dallas field office
[The] violation of REMIC trust rules occurred because the entities involved, for reasons of control, speed of transaction, and to hide what they were actually doing with the investors money


Unfortunately for the investors, many of the banks involved in the securitization process (like Wahoo) failed to perform the securitizations properly, hence as mentioned above, the securitizations were botched and ineffective as to passing ownership of the notes or underlying collateral. The loans purchased were not purchased THROUGH the REMIC. … The REMIC trust entity must be the one actually purchasing the mortgages directly.
This violation of REMIC trust rules occurred because the entities involved, for reasons of control, speed of transaction, and to hide what they were actually doing with the investors funds once received, held the investor funds in the “lender” banks owned subsidiary accounts, instead of funding the REMIC trusts with the money so that the trust could then purchase the loan from the “lender”, making it an actual buy and sell transaction.”

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I keep thinking about that.  Being told that it really isn’t as bad as I think.  Hell if it ain’t!

When I was a little girl, we walked to school.  We would get there in the morning, and there would be the morning prayer.  Right after that, we all said I Pledge Allegiance to the Flag, and they played the National Anthem.  I started to school when I was four (4).  By the time I was in fourth grade, it was like the second elementary school.  They did not say the morning prayer, or play the anthem, but by golly, the whole time I was in school, we Pledged Allegiance to the Flag.  We were proud to be Americans.

Now, you get suspended for wearing anything with a flag on it.  The Ten Commandments, Pledge of Allegiance, and anything having to do with our natural heritage is bad.  Christians are bad.  Americans are bad.  Christian Americans must be very, very bad.  And who the hell decided all that?  That is bullshit.  Plain and simple, bullshit.  Since when have other people gone to live in another country, and was allowed to claim they were offended by the customs of that country, and the country changed for the outsiders?  Someone tell me when.  That is bullshit!  Plain and simple bullshit.

Seems like it began several years ago… SuperTarget in our area, told the GoodWill people at Christmas, not to come there any more.  Of course, after that, we never went back to that store, and it closed shortly thereafter.  For some reason, outsiders that had moved to the United States, were offended by Christmas, Nativity scenes, and GoodWill ringing their little bells at Christmas.  Those dedicated, hardworking GoodWill employees, trying to make a difference to others at a very hard time of year.  They never asked anyone for anything.  Just stood, ringing the bell and smiling.  It was tradition.  Christmas trees, nativity scenes, GoodWill.

So, in order to not to offend those, who are not from here, America changed? Bullshit.  I say, if our traditions offends you, you came into this country, you know you can leave the same damned way!  Every time I turn around, someone is explaining that such and such offends them.  Screw it!  I am offended by what people do in other countries, but I don’t move there, then expect them to change their country for me.  That is bullshit.  Plain and simple bullshit.

Now, they tell us that our forefathers were terrorists.  Do what?  So what kind of History lessons are they giving kids now a days?  Speaking of kids.  Since when does the govt. have balls enough to tell parents what they are or not going to feed their kids for lunch during school?  The other thing about kids, is that they belong to the community, not their parents?  Bullshit!  Plain and simple bullshit!  And these idiots put up with that?  I sure as hell am glad that my Mama was who she was.  She would have not only told them what horse to get on, she would have had them direct that horse, on out of the country.  And my Daddy, lo and behold, I am glad that he is not here to see this shit.  Daddy was gung-ho Marine.  He is probably rolling in his grave right now.

And someone wants to tell me, that it ain’t as bad as I think it is?  Bullshit!  Plain and simple bullshit!!!

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Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Tuesday, November 19, 2013
Justice Department, Federal and State Partners Secure Record $13 Billion Global Settlement with JPMorgan for Misleading Investors About Securities Containing Toxic Mortgages
 

*CORRECTION: The release below previously stated that New York is receiving $613.8 million in this settlement, however, the number is $613.0 million. This correction notice was posted on Nov. 20, 2013.*

The Justice Department, along with federal and state partners, today announced a $13 billion settlement with JPMorgan – the largest settlement with a single entity in American history – to resolve federal and state civil claims arising out of the packaging, marketing, sale and issuance of residential mortgage-backed securities (RMBS) by JPMorgan, Bear Stearns and Washington Mutual prior to Jan. 1, 2009.  As part of the settlement, JPMorgan acknowledged it made serious misrepresentations to the public – including the investing public – about numerous RMBS transactions.  The resolution also requires JPMorgan to provide much needed relief to underwater homeowners and potential homebuyers, including those in distressed areas of the country.  The settlement does not absolve JPMorgan or its employees from facing any possible criminal charges.

This settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group. 

“Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” said Attorney General Eric Holder.  “JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behavior.  The size and scope of this resolution should send a clear signal that the Justice Department’s financial fraud investigations are far from over.  No firm, no matter how profitable, is above the law, and the passage of time is no shield from accountability.  I want to personally thank the RMBS Working Group for its tireless work not only in this case, but also in the investigations that remain ongoing.”

The settlement includes a statement of facts, in which JPMorgan acknowledges that it regularly represented to RMBS investors that the mortgage loans in various securities complied with underwriting guidelines.  Contrary to those representations, as the statement of facts explains, on a number of different occasions, JPMorgan employees knew that the loans in question did not comply with those guidelines and were not otherwise appropriate for securitization, but they allowed the loans to be securitized – and those securities to be sold – without disclosing this information to investors.  This conduct, along with similar conduct by other banks that bundled toxic loans into securities and misled investors who purchased those securities, contributed to the financial crisis.
                                    
“Through this $13 billion resolution, we are demanding accountability and requiring remediation from those who helped create a financial storm that devastated millions of Americans,” said Associate Attorney General Tony West.  “The conduct JPMorgan has acknowledged – packaging risky home loans into securities, then selling them without disclosing their low quality to investors – contributed to the wreckage of the financial crisis.  By requiring JPMorgan both to pay the largest FIRREA penalty in history and provide needed consumer relief to areas hardest hit by the financial crisis, we rectify some of that harm today.”

Of the record-breaking $13 billion resolution, $9 billion will be paid to settle federal and state civil claims by various entities related to RMBS.  Of that $9 billion, JPMorgan will pay $2 billion as a civil penalty to settle the Justice Department claims under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), $1.4 billion to settle federal and state securities claims by the National Credit Union Administration (NCUA), $515.4 million to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $4 billion to settle federal and state claims by the Federal Housing Finance Agency (FHFA), $298.9 million to settle claims by the State of California, $19.7 million to settle claims by the State of Delaware, $100 million to settle claims by the State of Illinois, $34.4 million to settle claims by the Commonwealth of Massachusetts, and $613 million to settle claims by the State of New York. 

JPMorgan will pay out the remaining $4 billion in the form of relief to aid consumers harmed by the unlawful conduct of JPMorgan, Bear Stearns and Washington Mutual.  That relief will take various forms, including principal forgiveness, loan modification, targeted originations and efforts to reduce blight.  An independent monitor will be appointed to determine whether JPMorgan is satisfying its obligations.  If JPMorgan fails to live up to its agreement by Dec. 31, 2017, it must pay liquidated damages in the amount of the shortfall to NeighborWorks America, a non-profit organization and leader in providing affordable housing and facilitating community development. 

The U.S. Attorney’s Offices for the Eastern District of California and Eastern District of Pennsylvania and the Justice Department’s Civil Division, along with the U.S. Attorney’s Office for the Northern District of Texas, conducted investigations into JPMorgan’s, Washington Mutual’s and Bear Stearns’ practices related to the sale and issuance of RMBS between 2005 and 2008.

“Today’s global settlement underscores the power of FIRREA and other civil enforcement tools for combatting financial fraud,” said Assistant Attorney General for the Civil Division Stuart F. Delery, co-chair of the RMBS Working Group.  “The Civil Division, working with the U.S. Attorney’s Offices and our state and agency partners, will continue to use every available resource to aggressively pursue those responsible for the financial crisis.”

“Abuses in the mortgage-backed securities industry helped turn a crisis in the housing market into an international financial crisis,” said U.S. Attorney for the Eastern District of California Benjamin Wagner.  “The impacts were staggering.  JPMorgan sold securities knowing that many of the loans backing those certificates were toxic.  Credit unions, banks and other investor victims across the country, including many in the Eastern District of California, continue to struggle with losses they suffered as a result.  In the Eastern District of California, we have worked hard to prosecute fraud in the mortgage industry.  We are equally committed to holding accountable those in the securities industry who profited through the sale of defective mortgages.”
                                
“Today’s settlement represents another significant step towards holding accountable those banks which exploited the residential mortgage-backed securities market and harmed numerous individuals and entities in the process,” said U.S. Attorney for the Eastern District of Pennsylvania Zane David Memeger.  “These banks packaged and sold toxic mortgage-backed securities, which violated the law and contributed to the financial crisis.  It is particularly important that JPMorgan, after assuming the significant assets of Washington Mutual Bank, is now also held responsible for the unscrupulous and deceptive conduct of Washington Mutual, one of the biggest players in the mortgage-backed securities market.”

This settlement resolves only civil claims arising out of the RMBS packaged, marketed, sold and issued by JPMorgan, Bear Stearns and Washington Mutual.  The agreement does not release individuals from civil charges, nor does it release JPMorgan or any individuals from potential criminal prosecution. In addition, as part of the settlement, JPMorgan has pledged to fully cooperate in investigations related to the conduct covered by the agreement.

To keep JPMorgan from seeking reimbursement from the federal government for any money it pays pursuant to this resolution, the Justice Department required language in the settlement agreement which prohibits JPMorgan from demanding indemnification from the FDIC, both in its capacity as a corporate entity and as the receiver for Washington Mutual.   

“The settlement announced today will provide a significant recovery for six FDIC receiverships.  It also fully protects the FDIC from indemnification claims out of this settlement,” said FDIC Chairman Martin J. Gruenberg.  “The FDIC will continue to pursue litigation where necessary in order to recover as much as possible for FDIC receiverships, money that is ultimately returned to the Deposit Insurance Fund, uninsured depositors and creditors of failed banks.”

“NCUA’s Board extends our thanks and appreciation to our attorneys and to the Department of Justice, who have worked closely together for more than three years to bring this matter to a successful resolution,” said NCUA Board Chairman Debbie Matz.  “The faulty mortgage-backed securities created and packaged by JPMorgan and other institutions created a crisis in the credit union industry, and we’re pleased a measure of accountability has been reached.”

“JPMorgan and the banks it bought securitized billions of dollars of defective mortgages,” said Acting FHFA Inspector General Michael P. Stephens.  “Investors, including Fannie Mae and Freddie Mac, suffered enormous losses by purchasing RMBS from JPMorgan, Washington Mutual and Bear Stearns not knowing about those defects.  Today’s settlement is a significant, but by no means final step by FHFA-OIG and its law enforcement partners to hold accountable those who committed  acts of fraud and deceit.  We are proud to have worked with the Department of Justice, the U.S. attorneys in Sacramento and Philadelphia and the New York and California state attorneys general; they have been great partners and we look forward to our continued work together.”

The attorneys general of New York, California, Delaware, Illinois and Massachusetts also conducted related investigations that were critical to bringing about this settlement.

“Since my first day in office, I have insisted that there must be accountability for the misconduct that led to the crash of the housing market and the collapse of the American economy,” said New York Attorney General Eric Schneiderman, Co-Chair of the RMBS Working Group.  “This historic deal, which will bring long overdue relief to homeowners around the country and across New York, is exactly what our working group was created to do.  We refused to allow systemic frauds that harmed so many New York homeowners and investors to simply be forgotten, and as a result we’ve won a major victory today in the fight to hold those who caused the financial crisis accountable.”

“JP Morgan Chase profited by giving California’s pension funds incomplete information about mortgage investments,” California Attorney General Kamala D. Harris said. “This settlement returns the money to California’s pension funds that JP Morgan wrongfully took from them.”

“Our financial system only works when everyone plays by the rules,” said Delaware Attorney General Beau Biden.  “Today, as a result of our coordinated investigations, we are holding accountable one of the financial institutions that, by breaking those rules, helped cause the economic crisis that brought our nation to its knees.  Even as the American people recover from this crisis, we will continue to seek accountability on their behalf.”

“We are still cleaning up the mess that Wall Street made with its reckless investment schemes and fraudulent conduct,” said Illinois Attorney General Lisa Madigan.  “Today’s settlement with JPMorgan will assist Illinois in recovering its losses from the dangerous and deceptive securities that put our economy on the path to destruction.”

“This is a historic settlement that will help us to hold accountable those investment banks that played a role in creating and exacerbating the housing crisis,” said Massachusetts Attorney General Martha Coakley.  “We appreciate the work of the Department of Justice and the other enforcement agencies in bringing about this resolution and look forward to continuing to work together in other securitization cases.”

The RMBS Working Group is a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that helped lead to the 2008 financial crisis.  The RMBS Working Group brings together more than 200 attorneys, investigators, analysts and staff from dozens of state and federal agencies including the Department of Justice, 10 U.S. attorney’s offices, the FBI, the Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Federal Reserve Board’s Office of Inspector General, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network, and more than 10 state attorneys general offices around the country.

The RMBS Working Group is led by five co-chairs: Assistant Attorney General for the Civil Division Stuart Delery, Acting Assistant Attorney General for the Criminal Division Mythili Raman, Co-Director of the SEC’s Division of Enforcement George Canellos, U.S. Attorney for the District of Colorado John Walsh and New York Attorney General Eric Schneiderman.

Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at: http://www.stopfraud.gov. 

Related Material:

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Settlement can be found at:

Click to access 471201471413656848428.pdf

This Settlement Agreement (“Agreement”) is entered into between the United States
acting through the United States Department of Justice (“Department of Justice”), along with the
States of California, Delaware, Illinois, and New York and the Commonwealth of Massachusetts,
acting through their respective Attorneys General (collectively, “the States”), and Citigroup Inc.
(“Citigroup”). The United States, the States, and Citigroup are collectively referred to herein as
“the Parties.”
RECITALS
A. The Department of Justice conducted investigations of the packaging, marketing,
sale, structuring, arrangement, and issuance of residential mortgage-backed securities (“RMBS”)
and collateralized debt obligations (“CDOs”) by Citigroup between 2006 and 2007. Based on
those investigations, the United States believes that there is an evidentiary basis to compromise
potential legal claims by the United States against Citigroup for violations of federal laws in
connection with the packaging, marketing, sale, structuring, arrangement, and issuance of RMBS
and CDOs.
B. The States, based on their independent investigations of the same conduct, believe
that there is an evidentiary basis to compromise potential legal claims by California, Delaware,
Illinois, Massachusetts, and New York against Citigroup for state law violations in connection
with the packaging, marketing, sale, structuring, arrangement, and issuance of RMBS and CDOs.
C. Citigroup has resolved claims filed by the Federal Deposit Insurance Corporation
as Receiver for Strategic Capital Bank, and the Federal Deposit Insurance Corporation as
Receiver for Colonial Bank (collectively, “FDIC”), alleging violations of federal and state
securities laws in connection with private-label RMBS issued, underwritten, and/or sold by
Citigroup. The terms of the resolution of those claims are memorialized in a separate agreement,
attached as Exhibit A.
D. Citigroup acknowledges the facts set out in the Statement of Facts set forth in
Annex 1, attached and hereby incorporated.
E. In consideration of the mutual promises and obligations of this Agreement, the
Parties agree and covenant as follows:
TERMS AND CONDITIONS
1. Payment. Citigroup shall pay a total amount of $4,500,000,000.00 to resolve pending
and potential legal claims in connection with the packaging, marketing, sale, structuring,
arrangement, and issuance of RMBS and CDOs by Citigroup (“Settlement Amount”). As set out
below, $4,000,000,000.00 of that amount will be deposited in the United States Treasury and the
remainder is paid to resolve the claims of the States and the FDIC, pursuant to the subsequent
provisions of this Paragraph 1.
A. Within fifteen business days of receiving written payment processing instructions
from the Department of Justice, Office of the Associate Attorney General, Citigroup shall pay
$4,208,250,000.00 of the Settlement Amount by electronic funds transfer to the Department of
Justice.
i. $4,000,000,000.00 of the Settlement Amount, and no other amount, is a civil
monetary penalty recovered pursuant to the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 (“FIRREA”), 12 U.S.C. § 1833a. It will
be deposited in the General Fund of the United States Treasury.
ii. $208,250,000.00 and no other amount, is paid by Citigroup in settlement of the
claims of the FDIC identified in Recital Paragraph C, pursuant to the settlement
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agreement attached hereto as Exhibit A, the terms of which are not altered or
affected by this Agreement.
B. $102,700,000.00, and no other amount, will be paid by Citigroup to the State of
California pursuant to Paragraph 6, below, and the terms of written payment instructions from
the State of California, Office of the Attorney General. Payment shall be made by electronic
funds transfer within fifteen business days of receiving written payment processing instructions
from the State of California, Office of the Attorney General.
C. $7,350,000.00, and no other amount, will be paid by Citigroup to the State of
Delaware pursuant to Paragraph 7, below, and the terms of written payment instructions from the
State of Delaware, Office of the Attorney General. Payment shall be made by electronic funds
transfer within fifteen business days of receiving written payment processing instructions from
the State of Delaware, Office of the Attorney General.
D. $44,000,000.00, and no other amount, will be paid by Citigroup to the State of
Illinois pursuant to Paragraph 8, below, and the terms of written payment instructions from the
State of Illinois, Office of the Attorney General. Payment shall be made by electronic funds
transfer within fifteen business days of receiving written payment processing instructions from
the State of Illinois, Office of the Attorney General.
E. $45,700,000.00, and no other amount, will be paid by Citigroup to the
Commonwealth of Massachusetts pursuant to Paragraph 9, below, and the terms of written
payment instructions from the Commonwealth of Massachusetts, Office of the Attorney General.
Payment shall be made by electronic funds transfer within fifteen business days of receiving
written payment processing instructions from the Commonwealth of Massachusetts, Office of the
Attorney General.
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F. $92,000,000.00, and no other amount, will be paid by Citigroup to the State of
New York pursuant to Paragraph 10, below, and the terms of written payment instructions from
the State of New York, Office of the Attorney General. Payment shall be made by electronic
funds transfer within fifteen business days of receiving written payment processing instructions
from the State of New York, Office of the Attorney General.
2. Consumer Relief. In addition, Citigroup shall provide $2.5 billion worth of consumer
relief as set forth in Annex 2, attached and hereby incorporated as a term of this Agreement. The
value of consumer relief provided shall be calculated and enforced pursuant to the terms of
Annex 2. An independent monitor will be appointed to determine whether Citigroup has
satisfied the obligations contained in this Paragraph (such monitor to be Thomas J. Perrelli), and
any costs associated with said Monitor shall be borne by Citigroup.
3. Covered Conduct. “Covered Conduct” as used herein is defined as the creation,
pooling, structuring, arranging, formation, packaging, marketing, underwriting, sale, or issuance
prior to January 1, 2009 by Citigroup of the RMBS and CDOs identified in Annex 3, attached
and hereby incorporated. Covered Conduct includes representations, disclosures, or nondisclosures
to RMBS investors made in connection with the activities set forth above about the
underlying residential mortgage loans, where the representation or non-disclosure involves
information about or obtained during the process of originating, acquiring, securitizing,
underwriting, or servicing residential mortgage loans included in the RMBS identified in
Annex 3. Covered Conduct also includes representations, disclosures, or non-disclosures made
in connection with the activities set forth above about the CDOs identified in Annex 3, attached
and hereby incorporated. Covered Conduct does not include: (i) conduct relating to the
origination of residential mortgages, except representations or non-disclosures to investors in the
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RMBS listed in Annex 3 about origination of, or about information obtained in the course of
originating, such loans; (ii) origination conduct unrelated to securitization, such as soliciting,
aiding or abetting borrower fraud; (iii) the servicing of residential mortgage loans, except
representations or non-disclosures to investors in the RMBS listed in Annex 3 about servicing, or
information obtained in the course of servicing, such loans; or (iv) representations or nondisclosures
made in connection with the trading of RMBS, except to the extent that the
representations or non-disclosures are in the offering materials for the underlying RMBS listed in
Annex 3.
4. Cooperation. Until the date upon which all investigations and any prosecution arising
out of the Covered Conduct are concluded by the Department of Justice, whether or not they are
concluded within the term of this Agreement, Citigroup shall, subject to applicable laws or
regulations: (a) cooperate fully with the Department of Justice (including the Federal Bureau of
Investigation) and any other law enforcement agency designated by the Department of Justice
regarding matters arising out of the Covered Conduct; (b) assist the Department of Justice in any
investigation or prosecution arising out of the Covered Conduct by providing logistical and
technical support for any meeting, interview, grand jury proceeding, or any trial or other court
proceeding; (c) use its best efforts to secure the attendance and truthful statements or testimony
of any officer, director, agent, or employee of any of the entities released in Paragraph 5 at any
meeting or interview or before the grand jury or at any trial or other court proceeding regarding
matters arising out of the Covered Conduct; and (d) provide the Department of Justice, upon
request, all non-privileged information, documents, records, or other tangible evidence regarding
matters arising out of the Covered Conduct about which the Department or any designated law
enforcement agency inquires.
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5. Releases by the United States. Subject to the exceptions in Paragraph 12 (“Excluded
Claims”), and conditioned upon Citigroup’s full payment of the Settlement Amount (of which
$4 billion will be paid as a civil monetary penalty pursuant to FIRREA, 12 U.S.C. § 1833a), and
Citigroup’s agreement, by executing this Agreement, to satisfy the terms in Paragraph 2
(“Consumer Relief”) and Paragraph 4 (“Cooperation”), the United States fully and finally
releases Citigroup and each of its current and former subsidiaries and affiliated entities
(collectively, the “Released Entities”), and each of their respective successors and assigns from
any civil claim the United States has against the Released Entities for the Covered Conduct
arising under FIRREA, 12 U.S.C. § l833a; the False Claims Act, 31 U.S.C. §§ 3729, et seq.; the
Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801, et seq.; the Racketeer Influenced and
Corrupt Organizations Act, 18 U.S.C. §§ 1961, et seq.; the Injunctions Against Fraud Act, 18
U.S.C. § 1345; common law theories of negligence, payment by mistake, unjust enrichment,
money had and received, breach of fiduciary duty, breach of contract, misrepresentation, deceit,
fraud, and aiding and abetting any of the foregoing; or that the Civil Division of the Department
of Justice has actual and present authority to assert and compromise pursuant to 28 C.F.R.
§ 0.45.
6. Releases by the California Attorney General. Subject to the exceptions in
Paragraph 12 (Excluded Claims), and conditioned solely upon Citigroup’s full payment of the
Settlement Amount (of which $102,700,000.00 will be paid to the Office of the California
Attorney General, in accordance with written payment instructions from the California Attorney
General, to remediate harms to the State, pursuant to California Government Code §§ 12650-
12656 and 12658, allegedly resulting from unlawful conduct of the Released Entities), the
California Attorney General fully and finally releases the Released Entities from any civil or
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administrative claim for the Covered Conduct that the California Attorney General has authority
to bring, including but not limited to: California Corporate Securities Law of 1968, Cal.
Corporations Code § 25000 et seq., California Government Code §§ 12658 and 12660 and
California Government Code §§ 12650-12656, common law theories of negligence, payment by
mistake, unjust enrichment, money had and received, breach of fiduciary duty, breach of
contract, misrepresentation, deceit, fraud and aiding and abetting any of the foregoing. The
California Attorney General executes this release in her official capacity and releases only claims
that the California Attorney General has the authority to release for the Covered Conduct. The
California Attorney General agrees that no portion of the funds in this paragraph is received as a
civil penalty or fine, including, but not limited to any civil penalty or fine imposed under
California Government Code § 12651. The California Attorney General and Citigroup
acknowledge that they have been advised by their attorneys of the contents and effect of Section
1542 of the California Civil Code (“Section 1542”) and hereby expressly waive with respect to
this Agreement any and all provisions, rights, and benefits conferred by Section 1542.
7. Releases by the State of Delaware. Subject to the exceptions in Paragraph 12
(Excluded Claims), and conditioned solely upon Citigroup’s full payment of the Settlement
Amount (of which $7,350,000.00 will be paid to the State of Delaware, in accordance with
written payment instructions from the State of Delaware, Office of the Attorney General, to
remediate harms to the State allegedly resulting from unlawful conduct of the Released Entities),
the Delaware Department of Justice fully and finally releases the Released Entities from any civil
or administrative claim for the Covered Conduct that it has authority to bring, including but not
limited to: 6 Del. C. Chapter 12 (the Delaware False Claims and Reporting Act), 6 Del. C.
§§ 2511 et seq. (the Delaware Consumer Fraud Act), 6 Del. C. Chapter 73 (the Delaware
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Securities Act), and common law theories of negligence, payment by mistake, unjust enrichment,
money had and received, breach of fiduciary duty, breach of contract, misrepresentation, deceit,
fraud and aiding and abetting any of the foregoing. The State of Delaware agrees that no portion
of the funds in this paragraph is received as a civil penalty or fine, including, but not limited to
any civil penalty or fine imposed under 6 Del. C. § 1201 or § 2522.
8. Releases by the State of Illinois. Subject to the exceptions in Paragraph 12 (Excluded
Claims), and conditioned solely upon Citigroup’s full payment of the Settlement Amount (of
which $44,000,000.00 will be paid to the State of Illinois, Office of the Attorney General, in
accordance with the written payment instructions from the State of Illinois, Office of the
Attorney General, to remediate harms to the State allegedly resulting from unlawful conduct of
the Released Entities), the Illinois Attorney General of the State of Illinois fully and finally
releases the Released Entities from any civil or administrative claim for the Covered Conduct
that it has authority to bring, including but not limited to: Illinois Securities Law of 1953, 815
Ill. Comp. Stat. 5/1 et seq., and common law theories of negligence, payment by mistake, unjust
enrichment, money had and received, breach of fiduciary duty, breach of contract,
misrepresentation, deceit, fraud and aiding and abetting any of the foregoing. The State of
Illinois agrees that no portion of the funds in this paragraph is received as a civil penalty or fine.
9. Releases of the Commonwealth of Massachusetts. Subject to the exceptions in
Paragraph 12 (Excluded Claims), and conditioned solely upon Citigroup’s full payment of the
Settlement Amount (of which $45,700,000.00 will be paid to the Commonwealth of
Massachusetts, in accordance with the written payment instructions from the Commonwealth of
Massachusetts, to remediate harms to the Commonwealth allegedly resulting from unlawful
conduct of the Released Entities), the Attorney General of the Commonwealth of Massachusetts
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fully and finally releases the Released Entities from any civil claim for the Covered Conduct that
she has authority to bring, including but not limited to: M.G.L. c. 93A, M.G.L. c. 12, and
common law theories of negligence, payment by mistake, unjust enrichment, money had and
received, breach of fiduciary duty, breach of contract, misrepresentation, deceit, fraud and aiding
and abetting any of the foregoing. The payment to the Commonwealth of Massachusetts shall be
made to a trustee chosen by the Commonwealth, which shall hold the monies and distribute them
as directed by the Massachusetts Office of the Attorney General for consumer relief,
compensation to the Commonwealth and its entities, and pursuant to M.G.L. c. 12 § 4A,
implementation of this Agreement and related purposes. Funds or portions of the funds
remaining in the trust after 90 days, at the discretion of the Massachusetts Office of the Attorney
General, may be transferred to the Massachusetts Treasury. The Commonwealth of
Massachusetts agrees that no portion of the funds in this paragraph is received as a civil penalty
or fine.
10. Releases by the State of New York. Subject to the exceptions in Paragraph 12
(Excluded Claims), and conditioned solely upon Citigroup’s full payment of the Settlement
Amount (of which $92,000,000.00 will be paid to the State of New York, in accordance with
written payment instructions from the State of New York, Office of the Attorney General, to
remediate harms to the State allegedly resulting from unlawful conduct of the Released Entities),
the State of New York, by Eric T. Schneiderman, Attorney General of the State of New York,
fully and finally releases the Released Entities from any civil or administrative claim for the
Covered Conduct that it has authority to bring, including but not limited to any such claim
under: New York General Business Law Article 23A, New York Executive Law § 63(12), and
common law theories of negligence, payment by mistake, unjust enrichment, money had and
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received, breach of fiduciary duty, breach of contract, misrepresentation, deceit, fraud and aiding
and abetting any of the foregoing. The payment to the State of New York shall be used, to the
maximum extent possible, for purposes of redeveloping and revitalizing housing and home
ownership and rebuilding communities in the State, and for programs intended to avoid
preventable foreclosures, to ameliorate the effects of the foreclosure crisis, to provide funding for
housing counselors and legal assistance, housing remediation and anti-blight projects, for code
enforcement, and to enhance law enforcement efforts involving financial fraud or unfair or
deceptive acts or practices. The State of New York agrees that no portion of the funds in this
paragraph is received as a civil penalty or fine.
11. Releases by the FDIC. The release of claims by the FDIC is contained in a separate
settlement agreement with Citi, attached as Exhibit A. Any release of claims by the FDIC is
governed solely by that separate settlement agreement.
12. Excluded Claims. Notwithstanding the releases in Paragraphs 5-11 of this Agreement,
or any other term(s) of this Agreement, the following claims are specifically reserved and not
released by this Agreement:
a. Any criminal liability;
b. Any liability of any individual;
c. Any liability arising under Title 26 of the United States Code (the Internal
Revenue Code);
d. Any liability to or claims of the FDIC (in its capacity as a corporation, receiver, or
conservator), except as expressly set forth in the separate agreement with the
FDIC;
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e. Any claim related to compliance with the National Mortgage Settlement
(“NMS”), or to compliance with the related agreements reached between the
settling banks and individual states;
f. Any liability to or claims of the United States of America, the Department of
Housing and Urban Development/Federal Housing Administration, the
Department of Veterans Affairs, or Fannie Mae or Freddie Mac relating to whole
loans insured, guaranteed, or purchased by the Department of Housing and Urban
Development/Federal Housing Administration, the Department of Veterans
Affairs, or Fannie Mae or Freddie Mac, except claims based on or arising from
the securitizations of any such loans in the RMBS or CDOs listed in Annex 1.
g. Any administrative liability, including the suspension and debarment rights of any
federal agency;
h. Any liability based upon obligations created by this Settlement Agreement;
i. Any liability for the claims or conduct alleged in the following qui tam actions,
and no setoff related to amounts paid under this Agreement shall be applied to any
recovery in connection with any of these actions:
(i) United States, et al. ex rel. Szymoniak v. American Home Mortgage
Servicing, Inc. et al., No. 0:10-cv-01465-JFA (D.S.C.), and United States
ex rel. Szymoniak v. ACE Securities Corp. et al., No. 13-cv-464-JFA
(D.S.C.); and
(ii) United States ex rel. [Sealed] v. [Sealed], as disclosed to Citigroup;
j. Claims raised in Commonwealth of Massachusetts v. Bank of America, N.A., et
al., Civ. No. 11-4363 (BLS1)(Massachusetts Suffolk Superior Court); and
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k. Any claims related to the alleged manipulation of the London Interbank Offered
Rate or other currency benchmarks.
13. Releases by Citigroup. Citigroup and any current or former affiliated entity and any of
their respective successors and assigns fully and finally release the United States and the States,
and their officers, agents, employees, and servants, from any claims (including attorney’s fees,
costs, and expenses of every kind and however denominated) that Citigroup has asserted, could
have asserted, or may assert in the future against the United States and the States, and their
officers, agents, employees, and servants, related to the Covered Conduct and the investigation
and civil prosecution to date thereof.
14. Waiver of Potential FDIC Indemnification Claims by Citi. Citigroup hereby
irrevocably waives any right that it otherwise might have to seek (and in any event agrees that it
shall not seek) any form of indemnification, reimbursement or contribution from the FDIC in any
capacity, including the FDIC in its Corporate Capacity or the FDIC in its Receiver Capacity for
any payment that is a portion of the Settlement Amount set forth in Paragraph 1 of this
Agreement or of the Consumer Relief set forth in Paragraph 2 of this Agreement, including
payments to the United States and the States made pursuant to Paragraphs 1 and 2 of this
Agreement.
15. Waiver of Potential Defenses by Citigroup. Citigroup and any current or former
affiliated entity (to the extent that Citigroup retains liability for the Covered Conduct associated
with such affiliated entity) and any of their respective successors and assigns waive and shall not
assert any defenses Citigroup may have to any criminal prosecution or administrative action
relating to the Covered Conduct that may be based in whole or in part on a contention that, under
12
the Double Jeopardy Clause in the Fifth Amendment of the Constitution, or under the Excessive
Fines Clause in the Eighth Amendment of the Constitution, this Agreement bars a remedy sought
in such criminal prosecution or administrative action.
16. Unallowable Costs Defined. All costs (as defined in the Federal Acquisition Regulation,
48 C.F.R. § 31.205-47) incurred by or on behalf of Citigroup, and its present or former officers,
directors, employees, shareholders, and agents in connection with:
a. the matters covered by this Agreement;
b. the United States’ audit(s) and civil investigation(s) of the matters covered by this
Agreement;
c. Citigroup’s investigation, defense, and corrective actions undertaken in response
to the United States’ audit(s) and civil and any criminal investigation(s) in
connection with the matters covered by this Agreement (including attorney’s
fees);
d. the negotiation and performance of this Agreement; and
e. the payment Citigroup makes to the United States pursuant to this Agreement, are
unallowable costs for government contracting purposes (hereinafter referred to as
“Unallowable Costs”).
17. Future Treatment of Unallowable Costs. Unallowable Costs will be separately
determined and accounted for by Citigroup, and Citigroup shall not charge such Unallowable
Costs directly or indirectly to any contract with the United States.
18. This Agreement is governed by the laws of the United States. The Parties agree that the
exclusive jurisdiction and venue for any dispute relating to this Agreement is the United States
District Court for the Eastern District of New York.
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19. The Parties acknowledge that this Agreement is made without any trial or adjudication or
finding of any issue of fact or law, and is not a final order of any court or governmental
authority.
20. Each Party shall bear its own legal and other costs incurred in connection with this
matter, including the preparation and performance of this Agreement.
21. Each party and signatory to this Agreement represents that it freely and voluntarily enters
into this Agreement without any degree of duress or compulsion.
22. Nothing in this Agreement in any way alters the terms of the NMS, or Citigroup’s
obligations under the NMS.
23. Nothing in this Agreement constitutes an agreement by the United States concerning the
characterization of the Settlement Amount for the purposes of the Internal Revenue laws,
Title 26 of the United States Code.
24. For the purposes of construing the Agreement, this Agreement shall be deemed to have
been drafted by all Parties and shall not, therefore, be construed against any Party for that reason
in any dispute.
25. This Agreement constitutes the complete agreement between the Parties. This
Agreement may not be amended except by written consent of the Parties.
26. The undersigned counsel represent and warrant that they are fully authorized to execute
this Agreement on behalf of the persons and entities indicated below.
27. This Agreement may be executed in counterparts, each of which constitutes an original
and all of which constitute one and the same Agreement.
28. This Agreement is binding on Citigroup’s successors, transferees, heirs, and assigns.
14
29. All parties consent to the disclosure to the public of this Agreement, and information
about this Agreement, by Citigroup, the United States, the States, and the FDIC whose separate
settlement agreement is referenced herein and attached as an exhibit to this Agreement.
30. This Agreement is effective on the date of signature of the last signatory to the
Agreement (“Effective Date of this Agreement”). Facsimiles of signatures shall constitute
acceptable, binding signatures for purposes of this Agreement.
15
For the California Department of Justice:
California Attorney General
California Department of Justice
455 Golden Gate, Suite 1000
San Francisco, CA 941 02
Phone: (415) 703-5500
Dated: 7 I!J I/ [ I I

For the State of Illinois:
LISA MADIGAN
Attorney General State of Illinois
500 South Second Street .
Springfield, IL 62706
Phone: (217) 782-1090
Dated: -vr, I’1 I L1)’ 2A> /,,( —–f—-‘——–.,
For the Commonwealth of Massachusetts:
Office of the Attorney General
Attorney General Martha Coakley
GLENN KAPLAN
Assistant Attorney General
One Ashburton Place
Boston, MA 02108
Phone: (617)727-2200
Dated:
By:

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Department of Justice

http://www.justice.gov/opa/pr/2014/July/14-ag-733.html

Office of Public Affairs

FOR IMMEDIATE RELEASE

Monday, July 14, 2014

Justice Department, Federal and State Partners Secure Record $7 Billion Global Settlement with Citigroup for Misleading Investors About Securities Containing Toxic Mortgages

Citigroup to Pay the Largest Penalty of Its Kind – $4 Billion

The Justice Department, along with federal and state partners, today announced a $7 billion settlement with Citigroup Inc. to resolve federal and state civil claims related to Citigroup’s conduct in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) prior to Jan. 1, 2009.  The resolution includes a $4 billion civil penalty – the largest penalty to date under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).  As part of the settlement, Citigroup acknowledged it made serious misrepresentations to the public – including the investing public – about the mortgage loans it securitized in RMBS.  The resolution also requires Citigroup to provide relief to underwater homeowners, distressed borrowers and affected communities through a variety of means including financing affordable rental housing developments for low-income families in high-cost areas.  The settlement does not absolve Citigroup or its employees from facing any possible criminal charges.

This settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group, which has recovered $20 billion to date for American consumers and investors.  

“This historic penalty is appropriate given the strength of the evidence of the wrongdoing committed by Citi,” said Attorney General Eric Holder.  “The bank’s activities contributed mightily to the financial crisis that devastated our economy in 2008.  Taken together, we believe the size and scope of this resolution goes beyond what could be considered the mere cost of doing business.  Citi is not the first financial institution to be held accountable by this Justice Department, and it will certainly not be the last.”

 The settlement includes an agreed upon statement of facts that describes how Citigroup made representations to RMBS investors about the quality of the mortgage loans it securitized and sold to investors.  Contrary to those representations, Citigroup securitized and sold RMBS with underlying mortgage loans that it knew had material defects.  As the statement of facts explains, on a number of occasions, Citigroup employees learned that significant percentages of the mortgage loans reviewed in due diligence had material defects.  In one instance, a Citigroup trader stated in an internal email that he “went through the Diligence Reports and think[s] [they] should start praying . . . [he] would not be surprised if half of these loans went down. . . It’s amazing that some of these loans were closed at all.”  Citigroup nevertheless securitized the loan pools containing defective loans and sold the resulting RMBS to investors for billions of dollars.  This conduct, along with similar conduct by other banks that bundled defective and toxic loans into securities and misled investors who purchased those securities, contributed to the financial crisis.                                  

“Today, we hold Citi accountable for its contributing role in creating the financial crisis, not only by demanding the largest civil penalty in history, but also by requiring innovative consumer relief that will help rectify the harm caused by Citi’s conduct,” said Associate Attorney General Tony West.  “In addition to the principal reductions and loan modifications we’ve built into previous resolutions, this consumer relief menu includes new measures such as $200 million in typically hard-to-obtain financing that will facilitate the construction of affordable rental housing, bringing relief to families pushed into the rental market in the wake of the financial crisis.”

Of the $7 billion resolution, $4.5 billion will be paid to settle federal and state civil claims by various entities related to RMBS: Citigroup will pay $4 billion as a civil penalty to settle the Justice Department claims under FIRREA, $208.25 million to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $102.7 million to settle claims by the state of California, $92 million to settle claims by the state of New York, $44 million to settle claims by the state of Illinois, $45.7  million to settle claims by the Commonwealth of Massachusetts, and $7.35 to settle claims by the state of Delaware.

Citigroup will pay out the remaining $2.5 billion in the form of relief to aid consumers harmed by the unlawful conduct of Citigroup.  That relief will take various forms, including loan modification for underwater homeowners, refinancing for distressed borrowers, down payment and closing cost assistance to homebuyers, donations to organizations assisting communities in redevelopment and affordable rental housing for low-income families in high-cost areas.  An independent monitor will be appointed to determine whether Citigroup is satisfying its obligations.  If Citigroup fails to live up to its agreement by the end of 2018,  it must pay liquidated damages in the amount of the shortfall to NeighborWorks America, a non-profit organization and leader in providing affordable housing and facilitating community development.  

The U.S. Attorney’s Offices for the Eastern District of New York and the District of Colorado conducted investigations into Citigroup’s practices related to the sale and issuance of RMBS between 2006 and 2007.

“The strength of our financial markets depends on the truth of the representations that banks provide to investors and the public every day,” said U.S. Attorney John Walsh for the District of Colorado, Co-Chair of the RMBS Working Group.  “Today’s $7 billion settlement is a major step toward restoring public confidence in those markets.  Due to the tireless work by the Department of Justice, Citigroup is being forced to take responsibility for its home mortgage securitization misconduct in the years leading up to the financial crisis.  As important a step as this settlement is, however, the work of the RMBS working group is far from done, we will continue to pursue our investigations and cases vigorously because many other banks have not yet taken responsibility for their misconduct in packaging and selling RMBS securities.”

“After nearly 50 subpoenas to Citigroup, Trustees, Servicers, Due Diligence providers and their employees, and after collecting nearly 25 million documents relating to every residential mortgage backed security issued or underwritten by Citigroup in 2006 and 2007, our teams found that the misconduct in Citigroup’s deals devastated the nation and the world’s economies, touching everyone,” said U.S. Attorney of the Eastern District of New York Loretta Lynch.  “The investors in Citigroup RMBS included federally-insured financial institutions, as well as a host of states, cities, public and union pension and benefit funds, universities, religious charities, and hospitals, among others.  These are our neighbors in Colorado, New York and around the country, hard-working people who saved and put away for retirement, only to see their savings decimated.”

This settlement resolves civil claims against Citigroup arising out of certain securities packaged, securitized, structured, marketed, and sold by Citigroup.  The agreement does not release individuals from civil charges, nor does it release Citigroup or any individuals from potential criminal prosecution. In addition, as part of the settlement, Citigroup has pledged to fully cooperate in investigations related to the conduct covered by the agreement.

 Michael Stephens, Acting Inspector General for the Federal Housing Finance Agency said, “Citigroup securitized billions of dollars of defective mortgages, after which investors suffered enormous losses by purchasing RMBS from Citi not knowing about those defects. Today’s settlement is another significant step by FHFA-OIG and its law enforcement partners to hold accountable those who committed acts of fraud and deceit in the lead up to the financial crisis, and is a necessary step toward reviving a sound RMBS market that is crucial to the housing industry and the American economy.  We are proud to have worked with the Department of Justice, the U.S. Attorneys’ Offices in the Eastern District of New York and the District of Colorado. They have been great partners and we look forward to our continued work together.”

The underlying investigation was led by Assistant U.S. Attorneys Richard K. Hayes, Kevin Traskos, Lila Bateman, John Vagelatos, J. Chris Larson and Edward K. Newman, with the support of agents from the Office of the Inspector General for the Federal Housing Finance Agency, in conjunction with the President’s Financial Fraud Enforcement Task Force’s RMBS Working Group.

The RMBS Working Group is a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that helped lead to the 2008 financial crisis.  The RMBS Working Group brings together more than 200 attorneys, investigators, analysts and staff from dozens of state and federal agencies including the Department of Justice, 10 U.S. Attorneys’ Offices, the FBI, the Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Federal Reserve Board’s Office of Inspector General, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network, and more than 10 state Attorneys General offices around the country.

The RMBS Working Group is led by its Director Geoffrey Graber and its five co-chairs: Assistant Attorney General for the Civil Division Stuart Delery, Assistant Attorney General for the Criminal Division Leslie Caldwell, Director of the SEC’s Division of Enforcement Andrew Ceresney, U.S. Attorney for the District of Colorado John Walsh and New York Attorney General Eric Schneiderman.

Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at: http://www.stopfraud.gov .

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After I read some posts on others’ blogs, I really do feel much better. Wanna know which ones I read? Here they are:

“NO ENDORSEMENT, NO NEGOTIATION–NO NEGOTIATION, NO SECURITIZATION” On Liberty Road Media: http://libertyroadmedia.wordpress.com/2014/06/20/no-endorsement-no-negotiation-no-negotiation-no-securitization/

and I read this and it helped too!:

Ineptocracy from here:
http://tomfernandez28.com/2014/06/20/ineptocracy-3/

Of course this Helped a lot!:

http://www.newser.com/story/188674/miss-usa-doesnt-know-her-state-capital.html
but I actually read that here:
https://wordpress.com/

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Officials: Leakage seen on “many” nuclear waste drums in WIPP underground — We think the seals have degraded — Public “should be concerned” about another explosion — 1,000s of radioactive drums now seen as too risky to move (VIDEO)

 
http://enenews.com/officials-leakage-seen-on-many-nuclear-waste-drums-in-wipp-underground-we-think-the-seals-have-degraded-public-should-be-concerned-
about-another-explosion-1000s-of-radioactive-drums
Published: June 13th, 2014 at 11:30 pm ET 
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AP, June 11, 2014 (emphasis added): Scientists investigating a mysterious radiation leak at the federal government’s underground nuclear waste dump have identified five other potentially explosive containers of waste from Los Alamos National Laboratory that are being stored at a site in West Texas, New Mexico Environment Secretary Ryan Flynn told a legislative panel Tuesday. […] Asked if the public should be worried, Flynn said: “Every member of the community should be concerned. … But I don’t think they should be worried. I don’t think people should be panicked about another drum exploding because we required (the U.S. Department of Energy) to plan for that and have a system in place to protect the public.” […] The Department of Energy has dozens of the world’s finest scientists trying to identifying what type of reaction could have caused the leak, Flynn said after the hearing. But he estimated it would be months before a definitive cause is determined. Until then, Flynn said, it is hard to speculate on what if any action can be taken to finish getting the last of thousands of barrels of decades-old waste off the Los Alamos campus in northern New Mexico. […] given the uncertainty of what caused the radiation leak, transporting the waste now is seen as too risky. Flynn said it also remains unclear how long the Waste Isolation Pilot Plant will be closed or how long it will take the [WIPP] plant to seal off the rooms where more than 350 other barrels of suspect waste from Los Alamos are currently stored.

Northern New Mexico Citizens’ Advisory Board, May 21, 2014 (at 57:00 in):

  • Question: Have you all identified if it’s one drum, 20 drums, three drums? I’ve been hearing one drum a lot…
  • Dana Bryson, Deputy Manager for the Dept. of Energy’s Carlsbad Field Office (CBFO manages DOE’s WIPP program): Well, we have one drum, that is pretty clear. We have other possibilities — and if you look at the pictures… you’ll see weepage on many containers in the heat-affected area. What we’re postulating is that the seals have basically degraded. So those could be potential sources from that aspect as well.
  • Question: And could the denigration of any one particular drum have impacts on other adjacent drums?
  • Bryson: Absolutely.

Watch Bryson’s presentation here

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It never ceases to amaze me.  With all these numerous govt. programs that are supposed to be helping Homeowners/Borrowers stay in their homes, I have to wonder just who the hell it is that they are allegedly helping.  A case in Colorado, that I have become aware of, the 83 year old woman is most likely going to be on the streets next week.  And guess who is putting her out of her home.?.  Freddie Mac.

For some stupid reason, I was under the impression that Fannie Mae, Freddie Mac, and others, along with all these billions of dollars from the robo-signing settlements, and the numerous entities alleging to be aiding those being foreclosed upon, and not one of them does a damned thing that I can see.  The propaganda they feed to everyone in the media, might sound good…You know that the housing market has picked up, foreclosures are down, new home buyers are up.?.  Yea right.  Somebody forgot to tell our neighborhood.  The vacant houses are still vacant.  Houses that should sale for $90,000, sell for $36,000.

But hey, the housing market has recovered.  RRRRiiiiiiiiiiiiggggggggggghhhhhhhhhhhhhtttttttttttttttt!!!  In your dreams.

Unless and until the someone steps in, slaps these foreclosure mill attorneys around, you know, the ones that make up the fictional documents in the County’s Land Records, throw their asses in jail for the forgery, fraud, perjury, that they are so used to committing,  they ain’t ever gonna stop.  

Has anyone other than myself noticed that the foreclosure mill attorneys, and other attorneys who on a regular basis have been foreclosing on Borrowers/Homeowner and manufacturing documents to use to foreclose with; sign the Assignments, Deeds Under Power, and lie to the Courts; an have been doing it so long now, yes, they have been breaking the law for so long now in foreclosure cases, it has spilled over to other types of cases.  No matter what kind of case it is, there are certain attorneys, who continue breaking the law as if they were working a foreclosure case.  And the worst part, is the judges let them.  WTF?  It is bad.  They are violating the RICO, committing fraud, forgery, theft, perjury, and God only knows what else.

Now you have the full swat teams going to evictions.  If the cops don’t like the way things are going, they just kill the homeowner.  It has gotten way out of hand.   Looks like if you fight the banks and win, you either go to jail, or die.

Be safe yall!

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Exclusive: NY Judge in Largest Bankruptcy Case in History Receives IRS & SEC Whistleblower Filing

24 APRIL 2014 63 COMMENTS

**WORLD EXCLUSIVE BREAKING STORY.** **MUST CREDIT INVESTIGATIVE JOURNALIST MARINKA PESCHMANN**

Creditor and Whistleblower evidence alleges securities fraud, income tax fraud and income tax evasion. Further investigation is necessary to protect millions of homeowners.

If you have not read this story, it is a must read!!!

Read it here:

http://www.marinkapeschmann.com/2014/04/24/exclusive-ny-judge-in-largest-bankruptcy-case-in-history-receives-irs-sec-whistleblower-filing/

 

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Former FHFA Head DeMarco Targeted by Disgruntled Ex-COO

Handcuffs_Blue_Pic_05_07_14

Last week, Federal Housing Finance Agency (FHFA) Chief Operating Officer Richard Hornsby reportedly threatened to shoot the Agency’s former top official, Edward DeMarco. According to Bloomberg, the threat was made as part of a murder-suicide Hornsby had planned regarding Hornby’s job performance ratings as reported by DeMarco.

Hornsby was arrested April 29, charged with a single felony of threatening to kidnap or injure a person. DeMarco was taken to a secure location the following day. Hornsby has since been released as long as he does not assault, harass, threaten or stalk DeMarco. There is also a restraining order placed on Hornsby as a result of the threat.

The threat reportedly stems from a negative performance rating. This resulted in Hornsby making overtly threatening comments toward DeMarco at an accelerated rate. May 14 has been set as the date for when the next hearing is held for this case.

Hornsby began working at the FHFA in November 2011, after 25-plus years in various management roles at the Federal Reserve Bank of San Francisco. FHFA Head Mel Watt has named Eric Stein, a Treasury Department official who joined the FHFA in early 2014, as interim FHFA COO.

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Have you ever been to Office Depot, where everyone wants to act like an idiot?

I sent someone to Office Depot today.  All he needed was three cover sheets printed onto 50-65# card stock.  He knows nothing about these things, and is from another country.

Anyway, the idiots in there told him that it would be 3-4 hours to make three copies on 50-65# card stock, because they have to change the paper?  What kind of bullshit is that?  3-4 Hours?  Hell, all they have to do, is take the three pieces of card stock over to the copier, stick those three blank pieces of card stock on top of the paper in the copier, and but the document to be copied onto the scanner, punch 3 for 3 copies, and hit enter.

How hard is that?  I swear Alex Jones and the others are absolutely right about us being “dumbed down”, that is about the dumbest thing I have ever heard.  3-4 hours for 3 copies.  I was in printing back before computers took over, and hell, you could wash up the printing press, put the new ink in, warm it up, install the plate on the drum, and get it registering, and print 3 sheets of card stock in 15 minutes tops.  And they are going to tell me that it will take 3-4 hours to change a copier over to print on card stock, when I know for a fact, it will print on that stock, without changing a damned thing.

Ok, Good Luck To All Out There Having to Get Something Printed on Card Stock at the Office Depot Memorial Drive Stone Mountain, GA!

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FHFA Settles With BofA for $5.83 Billion Over Countrywide Legacy Loans

http://nationalmortgageprofessional.com/news47937/FHFA-Settles-With-BofA-%245.83-Billion-Over-Countrywide-Legacy-Loans?utm_source=MadMimi&utm_medium=email&utm_content=NMP+Daily%3A+FHFA+Settles+With+BofA+for+%245_83+Billion+Over+Countrywide+Legacy+Loans+and+More+___&utm_campaign=20140327_m119753830_NMP+Daily%3A+FHFA+Settles+With+BofA+for+%245_83+Billion+Over+Countrywide+Legacy+Loans+and+More+___&utm_term=FHFA+Settles+With+BofA+for+_245_83+Billion+Over+Countrywide+Legacy+Loans

FHFA_Logo_04_13_12

The Federal Housing Finance Agency (FHFA) has announced it has reached a settlement in cases involving Bank of America, Countrywide Financial, Merrill Lynch, and certain named individuals totaling approximately $5.83 billion. Bank of America Corporation owns Countrywide and Merrill Lynch. The cases alleged violations of federal and state securities laws in connection with private-label, residential mortgage-backed securities (PLS) purchased by Fannie Mae and Freddie Mac between 2005 and 2007. Allegations of common law fraud were made in the Countrywide and Merrill Lynch cases.

The Agreement provides for an aggregate payment of approximately $9.33 billion by Bank of America that includes the litigation resolution as well as a purchase of securities by Bank of America from Fannie Mae and Freddie Mac.

“FHFA has acted under its statutory mandate to recover losses incurred by the companies and American taxpayers and has concluded that this resolution represents a reasonable and prudent settlement of these cases,” said FHFA Director Melvin L. Watt. “This settlement also represents an important step in helping restore stability to our broader mortgage market and moving to bring back the role of private firms in providing mortgage credit. Many potential homeowners will benefit from increasing certainty in the marketplace and that is very much the direction we should be taking.”

Of the 18 PLS suits filed in 2011, FHFA now has claims remaining in seven suits against various institutions and remains committed to satisfactory resolution of these pending actions.

The settlement agreement regarding private label securities claims between FHFA and Bank of America involves the following cases: Federal Housing Finance Agency v. Bank of America Corp., et al., No. 11 Civ. 6195 (DLC) (S.D.N.Y.); Federal Housing Finance Agency v. Countrywide Financial Corp., et al., No. 12 Civ. 1059 (MRP) (C.D. Cal.); Federal Housing Finance Agency v. Merrill Lynch & Co., Inc., et al., No. 11 Civ. 6202 (DLC) (S.D.N.Y.); as well as one Merrill Lynch security in Federal Housing Finance Agency v. First Horizon National Corp., No. 11 Civ. 6193 (DLC) (S.D.N.Y.).

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Inside Source: Gov’t officials are withholding Fukushima radiation data — Levels much higher than expected — Releasing numbers would “have a huge impact” — Over 2,000 millisieverts per year where residents are being encouraged to return

 
Published: March 25th, 2014 at 2:49 pm ET 
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http://enenews.com/inside-source-govt-officials-are-withholding-fukushima-radiation-data-levels-much-higher-than-expected-releasing-numbers-would-have-a-huge-impact-over-2000-millisieverts-per-year-wher

Mainichi, Mar. 25, 2014: A Cabinet Office team has delayed the release of radiation measurements from three Fukushima Prefecture municipalities, and plans to release them later with lower, recalculated results, the Mainichi learned on March 24. […] According to one source, the original measurements were higher than expected, prompting the Cabinet Office team […] to hold the results back over worries they would discourage residents from returning. The Mainichi has acquired documents drawn up in November last year detailing the radiation measurements and intended for release. The documents, however, were never made public. According to this and other sources, the measurements were taken in September last year in the city of Tamura’s Miyakoji district, the village of Kawauchi and the village of Iitate […] According to an inside source, the Cabinet Office team had noticed that measurements taken with older dosimeters distributed by Fukushima Prefecture municipalities to residents showed radiation measurements much lower than those recorded by aerial surveys. The Cabinet Office team had planned to release the latest measurements […] putting special emphasis on how low the figures were. The new results, however, were significantly higher than expected, with the largest gap coming in Kawauchi. There, the Cabinet Office team had predicted radiation doses of 1-2 millisieverts per day, but the data showed doses at between 2.6 and 6.6 millisieverts. Cabinet Office team members apparently said that the numbers would “have a huge impact” […] and release of the results was put off. At the request of the Cabinet Office team, the JAEA and NIRS then recalculated the results by ditching the assumption that people would be outside eight hours a day […] Under these new assumptions, a farmer was now expected to spend around six hours a day outdoors.

Atsuo Tamura, official on the Cabinet Office team: “We did not hold the results back because they were too high. We did so because it was necessary to look into whether the assumptions for residents’ lifestyle patterns matched reality.”

Shinzo Kimura, associate professor of radiation and hygiene at Dokkyo Medical University: “The assumption of eight hours a day outside, 16 hours inside is commonly used, and it is strange to change it. I can’t see it as anything but them fiddling with the numbers to make them come out as they wanted.”

See also: Asahi: ‘Mind-boggling’ cesium levels far from Fukushima plant — Japan Times: “Health ministry in denial” — Interview: “They force us to forget everything”; Gov’t radiation levels “complete fiction”; “Mass media is biggest criminal… worse than Tepco”

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Hearsay on Hearsay: Bank Professional Witnesses Using Business Records Exception as Shield from Truth

by Neil Garfield

Wells Fargo Manual “Blueprint for Fraud”

Well that didn’t take long. Like the revelations concerning Urban Lending Solutions and Bank of America, it is becoming increasingly apparent that the the intermediary banks were hell bent for foreclosure regardless of what was best for the investors or the borrowers. This included, fraud, fabrication, unauthorized documents and signatures, perjury and outright theft of money and identities. I understand the agreement between the Bush administration and the large banks. And I understand the reason why the Obama administration continued to honor the agreements reached between the Bush administration and the large banks. They didn’t have a clue. And they were relying on Wall Street to report on its own behavior. But I’m sure the agreement did not even contemplate the actual crimes committed. I think it is time for US attorneys and the Atty. Gen. of each state to revisit the issue of prosecution of the major Wall Street banks.

With the passage of time we have all had an opportunity to examine the theory of “too big to fail.” As applied, this theory has prevented prosecutions for criminal acts. But more importantly it is allowing and promoting those crimes to be covered up and new crimes to be committed in and out of the court system. A quick review of the current strategy utilized in foreclosure reveals that nearly all foreclosures are based on false assumptions, no facts,  and a blind desire for expediency that  sacrifices access to the courts and due process. The losers are the pension funds that mistakenly invested into this scheme and the borrowers who were used as pawns in a gargantuan Ponzi scheme that literally exceeded all the money in the world.

Let’s look at one of the fundamental strategies of the banks. Remember that the investment banks were merely intermediaries who were supposedly functioning as broker-dealers. As in any securities transaction, the investor places in order and is responsible for payment to the broker-dealer. The broker-dealer tenders payment to the seller. The seller either issues the securities (if it is an issuer) or delivers the securities. The bank takes the money from the investors and doesn’t deliver it to an issuer or seller, but instead uses the money for its own purposes, this is not merely breach of contract —  it is fraud.

And that is exactly what the investors, insurers, government guarantors and other parties have alleged in dozens of lawsuits and hundreds of claims. Large banks have avoided judgment based on these allegations by settling the cases and claims for hundreds of billions of dollars because that is only a fraction of the money they diverted from investors and continue to divert. This continued  diversion is accomplished, among other ways, through the process of foreclosure. I would argue that the lawsuits filed by government-sponsored entities are evidence of an administrative finding of fact that closes the burden of proof to be shifted to the cloud of participants who assert that they are part of a scheme of securitization when in fact they were part of a Ponzi scheme.

This cloud of participants is managed in part by LPS in Jacksonville. If you are really looking for the source of documentation and the choice of plaintiff or forecloser, this would be a good place to start. You will notice that in both judicial and non-judicial settings, there is a single party designated as the apparent creditor. But where the homeowner is proactive and brings suit against multiple entities each of whom have made a claim relating to the alleged loan, the banks stick with presenting a single witness who is “familiar with the business records.” That phrase has been specifically rejected in most jurisdictions as proving the personal knowledge necessary for a finding that the witness is competent to testify or to authenticate documents that will be introduced in evidence. Those records are hearsay and they lack the legal foundation for introduction and acceptance into evidence in the record.

So even where the lawsuit is initiated by “the cloud” and even where they allege that the plaintiff is the servicer and even where they allege that the plaintiff is a trust, the witness presented at trial is a professional witness hired by the servicer. Except for very recent cases, lawyers for the homeowner have ignored the issue of whether the professional witness is truly competent,  and especially why the court should even be listening to a professional witness from the servicer when it is hearing nothing from the creditor. The business records which are proffered to the court as being complete are nothing of the sort. There documents prepared for trial which is specifically excluded from evidence under the hearsay rule and an exception to the business records exception.

Lately Chase has been dancing around these issues by first asserting that it is the owner of a loan by virtue of the merger with Washington Mutual. As the case progresses Chase admits that it is a servicer. Later they often state that the investor is Fannie Mae. This is an interesting assertion which depends upon complete ignorance by opposing counsel for the homeowner and the same ignorance on the part of the judge. Fannie Mae is not and never has been a lender. It is a guarantor, whose liability arises after the loss has been completely established following the foreclosure sale and liquidation to a third-party. It is also a master trustee for securitized trusts. To say that Fannie Mae is the owner of the alleged loan is an admission that the originator never loaned any money and that therefore the note and mortgage are invalid. It is also intentional obfuscation of the rights of the investors and trusts.

The multiple positions of Chase is representative of most other cases regardless of the name used for the identification of the alleged plaintiff, who probably doesn’t even know the action exists. That is why I suggested some years ago that a challenge to the right to represent the alleged plaintiff would be both appropriate and desirable. The usual answer is that the attorney represents all interested parties. This cannot be true because there is an obvious conflict of interest between the servicer, the trust, the guarantor, the trustee, and the broker-dealer that so far has never been named. Lawsuits filed by trust beneficiaries, guarantors, FDIC and insurers demonstrate this conflict of interest with great clarity.

I wonder if you should point out that if Chase was the Servicer, how could they not know who they were paying? As Servicer their role was to collect payments and send them to the creditor. If the witness or nonexistent verifier was truly familiar with the records, the account would show a debit to the account for payment to Fannie Mae or the securitized trust that was the actual source of funds for either the origination or acquisition of loans. And why would they not have shown that?  The reason is that no such payment was made. If any payment was made it was to the investors in the trust that lies behind the Fannie Mae curtain.

And if the “investor” had in fact received loss sharing payment from the FDIC, insurance or other sources how would the witness have known about that? Of course they don’t know because they have nothing to do with observing the accounts of the actual creditor. And while I agree that only actual payments as opposed to hypothetical payments should be taken into account when computing the principal balance and applicable interest on the loan, the existence of terms and conditions that might allow or require those hypothetical payments are sufficient to guarantee the right to discovery as to whether or not they were paid or if the right to payment has already accrued.

I think the argument about personal knowledge of the witness can be strengthened. The witness is an employee of Chase — not WAMU and not Fannie Mae. The PAA is completely silent about  the loans. Most of the loans were subjected to securitization anyway so WAMU couldn’t have “owned” them at any point in the false trail of securitization. If Chase is alleging that Fannie Mae in the “investor” then you have a second reason to say that both the servicing rights and the right to payment of principal, interest or monthly payments in doubt as to the intermediary banks in the cloud. So her testimony was hearsay on hearsay without any recognizable exception. She didn’t say she was custodian of records for anyone. She didn’t say how she had personal knowledge of Chase records, and she made no effort to even suggest she had any personal knowledge of the records of Fannie and WAMU — which is exactly the point of your lawsuit or defense.
 

If the Defendant/Appellee’s argument were to be accepted, any one of several defendants could deny allegations made against all the defendants individually just by producing a professional witness who would submit self-serving sworn affidavits from only one of the defendants. The result would thus benefit some of the “represented parties” at the expense of others.

Their position is absurd and the court should not be used and abused in furtherance of what is at best a shady history of the loan. The homeowner challenges them to give her the accurate information concerning ownership and balance, failing which there was no basis for a claim of encumbrance against her property. The court, using improper reasoning and assumptions, essentially concludes that since someone was the “lender” the Plaintiff had no cause of action and could not prove her case even if she had a cause of action. If the trial court is affirmed, Pandora’s box will be opened using this pattern of court conduct and Judge rulings as precedent not only in foreclosure actions, disputes over all types of loans, but virtually all tort actions and most contract actions.

Specifically it will open up a new area of moral hazard that is already filled with debris, to wit: debt collectors will attempt to insert themselves in the collection of money that is actually due to an existing creditor who has not sold the debt to the collector. As long as the debt collector moves quickly, and the debtor is unsophisticated, the case with the debt collector will be settled at the expense of the actual creditor. This will lead to protracted litigation as to the authority of the debt collector and the liability of the debtor as well as the validity of any settlement.

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Banks, Mortgage Companies Defrauded HUD, Veteran Whistleblower Says

FEB 5, 2014 1:30pm ET
 

A whistleblower with a track record of wresting large settlements from banks is suing 22 companies for allegedly filing fraudulent mortgage documents with the Department of Housing and Urban Development.

Lynn E. Szymoniak, famous for her 2011 “60 Minutes” interview on the robo-signing scandal, filed a lawsuit late Monday against the companies, including Deutsche Bank, Wells Fargo, JPMorgan Chase and Bank of America. The Palm Beach, Fla., plaintiff’s lawyer alleges the 22 banks, mortgage servicers, trustees, custodians and default management companies created fraudulent mortgage assignments and submitted tens of thousands of false claims to HUD.

The lawsuit is a stark reminder that banks still face massive litigation and potential settlements for wrongdoing from the mortgage boom and financial crisis. On Wednesday, JPMorgan Chase acknowledged that it violated the False Claims Act and agreed to pay $614 million to settle claimsthat it improperly approved Federal Housing Administration and Veterans Affairs loans that did not meet underwriting standards.

HUD oversees the FHA, which reimburses servicers for losses and fees when government-guaranteed loans go into foreclosure.

Banks can be held liable for treble damages under the False Claims Act if they are found to have “falsely certified” that mortgages met all FHA requirements. The act also gives whistleblowers the right to file suit on behalf of the government.

“It’s been very difficult to uncover how fraudulent documents were created and spread through the system,” says Reuben Guttman, Szymoniak’s attorney at the firm of Grant & Eisenhofer. “Lynn Szymoniak did the original analysis, looked at documents and put the pieces together in a way that nobody else did.”

The new lawsuit was filed in the U.S. District Court in South Carolina. Several of the defendants, including Deutsche Bank and Wells Fargo, said they are reviewing the lawsuit and could not immediately comment.

In 2012, Szymoniak helped the government recover $95 million from the top five mortgage servicers, as part of the $25 billion national mortgage settlement. She personally received $18 million for providing information on the filing of false claims on FHA loans.

The suit also seeks to recover damages and penalties on behalf of the federal government, 16 states, the District of Columbia and the cities of Chicago and New York for the financial harm incurred in the purchase of private-label mortgage-backed securities that allegedly used fraudulent documents in foreclosure filings since 2008.

As investors in mortgage bonds, the government and others paid fees and expenses for services such as reviewing all mortgage documents put into trusts that were supposed to be performed by trustees. The federal government bought mortgage-backed securities with missing or forged documents through several avenues, including the Federal Reserve’s direct purchases and Maiden Lane vehicles, and the Treasury Department’s purchases through public-private partnership investment funds, the suit states.

The complaint does not specify damages but Szymoniak says she expects them to total around $10 billion.

The fraudulent mortgage documents were created because the original loans documents either were never delivered to the securitization trusts, or they were lost or destroyed, the lawsuit states. Many of the documents were created years after the trusts’ closing dates and showed the trusts acquired the loans only after they were in default.

Servicers “devised and operated a scheme to replace the missing documents,” the lawsuit states, and to conceal the fact that the trusts and servicers never actually held the mortgage notes and assignments, which are needed to initiate a foreclosure.

Szymoniak was also instrumental in uncovering fraud and forged documents at DocX, a now-defunct subsidiary of Lender Processing Services. She worked with the Federal Bureau of Investigations and U.S. Attorney’s office in Jacksonville, Fla., that ultimately led to the conviction of an LPS executive, the closure of DocX, firm, and varioussettlements by LPS, which is now owned by Black Knight Financial Services.

 

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NEW LEGAL ISSUES COMING UP IN TRIAL AND APPELLATE COURTS

DECEMBER 16, 2013

With the release of the US Bank admissions per our post of November 6, 2013; the issuance of the opinions from the Supreme Courts of Oregon and Montana holding that MERS is not the “beneficiary”; and recent opinions from various jurisdictions which are now, finally, holding that securitization-related issues are relevant in a foreclosure, a host of new legal issues are about to be litigated in the trial and appellate courts throughout the country. It has taken six (6) years and coast-to-coast work to get courts to realize that securitization of a mortgage loan raises issues as to standing, real party in interest, and the alleged authority to foreclose, and that the simplistic mantra of the “banks” and servicers of “we have the note, thus we win” is no longer to be blindly accepted.

One issue which we and others are litigating relates to mortgage loans originated by Option One, which changed its name to Sand Canyon Corporation and thereafter ceased all mortgage loan operations. Pursuant to the sworn testimony of the former President of Sand Canyon, it stopped owning mortgage loans as of 2008. However, even after this cessation of any involvement with servicing or ownership of mortgage loans, we see “Assignments” from Option One or Sand Canyon to a securitization trustee bank or other third party long after 2008.

The United States District Court for the District of New Hampshire concluded, with the admission of the President of Sand Canyon, that the homeowner’s challenge to the foreclosure based on a 2011 alleged transfer from Sand Canyon to Wells Fargo was not an “attack on the assignment” which certain jurisdictions have precluded on the alleged basis that the borrower is not a party to the assignment, but is a situation where no assignment occurred because it could not have as a matter of admitted fact, as Sand Canyon could not assign something it did not have. The case is Drouin v. American Home Mortgage Servicing, Inc. and Wells Fargo, etc., No. 11-cv-596-JL.

The Option One/Sand Canyon situation is not unique: there are many originating “lenders” which allegedly “assigned” mortgages or Deeds of Trust long after they went out of business or filed for Bankruptcy, with no evidence of post-closing assignment authority or that the Bankruptcy court having jurisdiction over a bankrupt lender ever granted permission for the alleged transfer of the loan (which is an asset of the Bankruptcy estate) out of the estate. Such a transfer without proof of authority to do so implicates bankruptcy fraud (which is a serious crime punishable under United States criminal statutes), and fraud on the court in a foreclosure case where such an alleged assignment is relied upon by the foreclosing party.

As we stated in our post of November 6, the admission of US Bank that a borrower is a party to any MBS transaction and that the loan is governed by the trust documents means that the borrower is, in fact, a party to any assignment of that borrower’s loan, and should thus be permitted to seek discovery as to any alleged assignment and all issues related to the securitization of the loan. We have put this issue out in many of our cases, and will be arguing this position at both the trial and appellate levels beginning early 2014.

Jeff Barnes, Esq., http://www.ForeclosureDefenseNationwide.com

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I was reading some information about the financial crisis in this country (USA), and ran across a paper written by US District Court Judge Jed S. Rakoff.  If we had more Judges with the mind of this one, we would not be in nearly as bad a shape as we are in.  I have not yet figured out how the Judges justify allowing foreclosures, when they know for a fact that the Banks and their attorneys are creating fraudulent documents, committing perjury in their Courtrooms, and are breaking so many laws, that it has become the norm…  

Read what Honorable Judge Jed S. Rakoff says:  http://www.ft.com/cms/cb1e43f2-4be6-11e3-8203-00144feabdc0.pdf

11/12/13
Why Have No High Level Executives Been Prosecuted In Connection With The Financial Crisis?
by Jed S. Rakoff
(U.S. District Judge)

Five years have passed since the onset of what is sometimes called the Great Recession. While the economy has slowly improved, there are still millions of Americans leading lives of quiet desperation: without jobs, without resources, without hope.

Who was to blame? Was it simply a result of negligence, of the kind of inordinate risk-taking commonly called a “bubble,” of an imprudent but innocent failure to maintain adequate reserves for a rainy day? Or was it the result, at least in part, of fraudulent practices, of dubious mortgages portrayed as sound risks and packaged into ever-more-esoteric financial instruments, the fundamental weaknesses of which were intentionally obscured?

If it was the former – if the recession was due, at worst, to a lack of caution – then the criminal law has no role to play in the aftermath. For, in all but a few circumstances (not here relevant), the fierce and fiery weapon called criminal prosecution is directed at intentional misconduct, and nothing less. If the Great Recession was in no part the handiwork of intentionally fraudulent practices by high-level executives, then to prosecute such executives criminally would be “scapegoating” of the most shallow and despicable kind.

But if, by contrast, the Great Recession was in material part the product of intentional fraud, the failure to prosecute those responsible must be judged one of the more egregious failures of the criminal justice system in many years.Indeed, it would stand in striking contrast to the increased success that federal prosecutors have had over the past 50 years or so in bringing to justice even the highest level figures who orchestrated mammoth frauds. Thus, in the 1970’s, in the aftermath of the “junk bond” bubble that, in many ways, was a precursor of the more recent bubble in mortgage-backed securities, the progenitors of the fraud were all successfully prosecuted, right up to Michael Milken. Again, in the 1980’s, the so-called savings-and-loan crisis, which again had some eerie parallels to more recent events, resulted in the successful criminal prosecution of more than 800 individuals, right up to Charles Keating. And, again, the widespread accounting frauds of the 1990’s, most vividly represented by Enron and WorldCom, led directly to the successful prosecution of such previously respected C.E.O.’s as Jeffrey Skilling and Bernie Ebbers.

In striking contrast with these past prosecutions, not a single high level executive has been successfully prosecuted in  connection with the recent financial crisis, and given the fact that most of the relevant criminal provisions are governed by a five-year statute of limitations, it appears very likely that none will be. It may not be too soon, therefore, to ask why.

One possibility, already mentioned, is that no fraud was committed. This possibility should not be  discounted. Every case is different, and I, for one, have no opinion as to whether criminal fraud was committed in any given instance.

 But the stated opinion of those government entities asked to examine the financial crisis overall is not that no fraud was committed. Quite the contrary. For example, the Financial Crisis Inquiry Commission, in its final report, uses variants of the word “fraud” no fewer than 157 times in describing what led to the crisis, concluding that there was a “systemic breakdown,” not just in  accountability, but also in ethical behavior. As the Commission found, the signs of fraud were everywhere to be seen, with the number of reports of suspected mortgage fraud rising 20-fold between 1998 and 2005 and then doubling again in the next four years. As early as 2004, FBI Assistant Director Chris Swecker, was publicly warning of the “pervasive problem” of mortgage fraud, driven by the voracious demand for mortgagebacked securities. Similar warnings, many from within the financial community, were disregarded, not because they were  viewed as inaccurate, but because, as one high level banker put it, “A decision was made that ‘We’re going to have to hold our nose and start buying the product if we want to stay in business.’”

Without multiplying examples, the point is that, in the aftermath of the financial crisis, the prevailing view of many government officials (as well as others) was that the crisis was in material respects the product of intentional fraud. In a nutshell, the fraud, they argued, was a simple one. Subprime mortgages, i.e., mortgages of dubious creditworthiness, increasingly provided the sole collateral for highly-leveraged securities that were marketed as triple-A, i.e., of very low risk. How could this transformation of a sow’s ear into a silk purse be accomplished unless someone dissembled along the way?

While officials of the Department of Justice have been more circumspect in describing the roots of the financial crisis than have the various commissions of inquiry and other government agencies, I have seen nothing to indicate their disagreement with the widespread conclusion that fraud at every level permeated the bubble in mortgage-backed securities. Rather, their position has been to excuse their failure to prosecute high level individuals for fraud in connection with the financial crisis on one or more of three grounds:

First, they have argued that proving fraudulent intent on the part of the high level management of the banks and companies involved has proved difficult. It is undoubtedly true that the ranks of top management were several levels removed from those who were putting together the collateralized debt obligations and other securities offerings that were based on dubious mortgages; and the people generating the mortgages themselves were often at other companies and thus even further removed. And I want to stress again that I have no opinion as to whether any given top executive had knowledge of the dubious nature of the underlying mortgages, let alone fraudulent intent. But what I do find surprising is that the Department of Justice should view the proving of intent as so difficult in this context. Who, for example, were generating the so-called “suspicious activity” reports of mortgage fraud that, as mentioned, increased so hugely in the years leading up to the crisis? Why, the banks themselves. A top level banker, one might argue, confronted with increasing evidence from his own and other banks that mortgage fraud was increasing, might have inquired as to why his bank’s mortgage-based securities continued to receive triple-A ratings?  And if, despite these and other reports of suspicious activity, the executive failed to make such inquiries, might it be because he did not want to know what such inquiries would reveal?  

This, of course, is what is known in the law as “willful blindness” or “conscious disregard.” It is a well-established basis on which federal prosecutors have asked juries to infer intent, in cases involving complexities, such as accounting treatments, at least as esoteric as those involved in the events leading up to the financial crisis. And while some federal courts have occasionally expressed qualifications about the use of the willful blindness approach to prove intent, the Supreme Court has consistently approved it. As that Court stated most recently in Global-Tech Appliances, Inc. v. SEB S.A., 131 S.Ct. 2060, 2068 (2011), “The doctrine of willful blindness is well established in criminal law. Many criminal statutes require proof that a defendant acted knowingly or willfully, and courts applying the doctrine of willful blindness hold that defendants cannot escape the reach of these statutes by deliberately shielding themselves from clear evidence of critical facts that are strongly suggested by the circumstances.” Thus, the Department’s claim that proving intent in the financial crisis context is particularly difficult may strike some as doubtful.

Second, and even weaker, the Department of Justice has sometimes argued that, because the institutions to whom mortgagebacked securities were sold were themselves sophisticated investors, it might be difficult to prove reliance. Thus, in  defending the failure to prosecute high level executives for frauds arising from the sale of mortgage-backed securities, the then head of the Department of Justice’s Criminal Division, told PBS that “in a criminal case … I have to prove not only that you made a false statement but that you intended to commit a crime, and also that the other side of the transaction relied on what you were saying. And frankly, in many of the securitizations and the kinds of transactions we’re talking about, in reality you had very sophisticated counterparties on both sides. And so even though one side may have said something was dark blue when really we can say it was sky blue, the other side of the transaction, the other sophisticated party, wasn’t relying at all on the description of the color.”

Actually, given the fact that these securities were bought and sold at lightning speed, it is by no means obvious that even a sophisticated counterparty would have detected the problems with the arcane, convoluted mortgage-backed derivatives they were being asked to purchase. But there is a more fundamental problem with the above-quoted statement from the former head of the Criminal Division, which is that it totally misstates the law.  In actuality, in a criminal fraud case the Government is never required to prove reliance, ever. The reason, of course, is that would give a crooked seller a license to lie whenever he was  dealing with a sophisticated counterparty.  The law, however, says that society is harmed when a seller purposely lies about a material fact, even if the immediate purchaser does not rely on that particular fact, because such misrepresentations create problems for the market as a whole. And surely there never was a situation in which the sale of dubious mortgage-backed securities created more of a huge problem for the marketplace, and society as a whole, than in the recent financial crisis.

The third reason the Department has sometimes given for not bringing these prosecutions is that to do so would itself harm the economy. Thus, Attorney General Holder himself told Congress that “it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute – if we do bring a criminal charge – it will have a negative impact on the national economy, perhaps even the world economy.” To a federal judge, who takes an oath to apply the law equally to rich and to poor, this excuse — sometimes labeled the “too big to jail” excuse – is disturbing, frankly, in what it says about the
Department’s apparent disregard for equality under the law.

In fairness, however, Mr. Holder was referring to the prosecution of financial institutions, rather than their
C.E.O.’s. But if we are talking about prosecuting individuals, the excuse becomes entirely irrelevant; for no one that I know of has ever contended that a big financial institution would collapse if one or more of its high level executives were prosecuted, as opposed to the institution itself.

Without multiplying examples further, my point is that the Department of Justice has never taken the position that all the top executives involved in the events leading up to the financial crisis were innocent, but rather has offered one or another excuse for not criminally prosecuting them – excuses that, on inspection, appear unconvincing. So, you might ask, what’s really going on here? I don’t claim to have any inside information about the real reasons why no such prosecutions have been brought, but I take the liberty of offering some speculations, for your consideration or amusement as the case may be.

At the outset, however, let me say that I totally discount the argument sometimes made that no such prosecutions have been brought because the top prosecutors were often people who previously represented the financial institutions in question and/or were people who expected to be representing such
institutions in the future: the so-called “revolving door.” In my experience, every federal prosecutor, at every level, is seeking to make a name for him-or-herself, and the best way to do that is by prosecuting some high level person. While companies that are indicted almost always settle, individual defendants whose careers are at stake will often go to trial. And if the Government wins such a trial, as it usually does, the prosecutor’s reputation is made.My point is that whatever small influence the “revolving door” may have in discouraging certain white-collar prosecutions is more than offset, at least in the case of prosecuting high-level individuals, by the career-making benefits such prosecutions confer on the successful prosecutor.  So, one asks again, why haven’t we seen such prosecutions growing out of the financial crisis? I offer, by way of speculation, three influences that I think, along with others, have had the effect of limiting such prosecutions.

First, the prosecutors had other priorities. Some of these were completely understandable. For example, prior to 2001, the FBI had more than 1,000 agents assigned to investigating financial frauds, but after 9/11 many of these agents were shifted to anti-terrorism work. Who can argue with that?  Eventually, it is true, new agents were hired for some of the vacated spots in fraud detection; but this is not a form of detection easily learned and recent budget limitations have only exacerbated the problem.

Of course, the FBI is not the primary investigator of fraud in the sale of mortgage-backed securities; that responsibility lies mostly with the S.E.C. But at the very time the financial crisis was breaking, the S.E.C. was trying to deflect criticism from its failure to detect the Madoff fraud, and this led it to concentrate on other Ponzi-like schemes, which for awhile were, along with accounting frauds, its chief focus. More recently, the S.E.C. has been hard hit by budget limitations, and this has not only made it more difficult to assign the kind of manpower the kinds of frauds we are talking about require, but also has led S.E.C. enforcement to focus on the smaller, easily resolved cases that will beef up their statistics when they go to Congress begging for money.

As for the Department of Justice proper, a decision was made around 2009 to spread the investigation of these financial fraud cases among numerous U.S. Attorney’s Offices, many of which had little or no prior experience in investigating and prosecuting sophisticated financial frauds. At the same time, the U.S. Attorney’s Office with the greatest expertise in these kinds of cases, the Southern District of New York, was just embarking on its prosecution of insider trading cases arising from the Rajaratnam tapes, which soon proved a gold mine of good cases that absorbed a huge amount of the attention of the securities fraud unit of that office. While I want to stress again that I have no inside information, as a former chief of that unit I would venture to guess that the cases involving the financial crisis were parceled out to Assistants who also had insider trading cases. Which do you think an Assistant would devote most of her attention to:  an insider trading case that was already nearly ready to go to indictment and that might lead to a highvisibility trial, or a financial crisis case that was just getting started, would take years to complete, and had no guarantee of even leading to an indictment? Of course, she would put her energy into the insider trading case, and if she was lucky, it would go to trial, she would win, and she would then take a job with a large law firm. And in the process, the financial fraud case would get lost in the shuffle.

Alternative priorities, in short, is, I submit, one of the reasons the financial fraud cases were not brought, especially cases against high level individuals that would take many years, many investigators, and a great deal of expertise to investigate.  But a second, and less salutary, reason for not bringing such cases is the Government’s own involvement in the underlying circumstances that led to the financial crisis.

On the one hand, the government, writ large, had a hand in creating the conditions that encouraged the approval of dubious mortgages. It was the government, in the form of Congress, that repealed Glass-Steagall, thus allowing certain banks that had previously viewed mortgages as a source of interest income to become instead deeply involved in securitizing pools of mortgages in order to obtain the much greater profits available from trading. It was the government, in the form of both the executive and the legislature, that encouraged deregulation, thus weakening the power and oversight not only of the S.E.C. but also of such diverse banking overseers as the O.T.S. and the O.C.C. It was the government, in the form of the Fed, that kept interest rates low in part to encourage mortgages. It was the government, in the form of the executive, that strongly encouraged banks to make loans to low-income persons who might have previously been regarded as too risky to warrant a mortgage. It was the government, in the form of the government-sponsored entities known as Fannie Mae and Freddie Mac, that helped create the fora-time insatiable market for mortgage-backed securities. And it was the government, pretty much across the board, that acquiesced in the ever greater tendency not to require meaningful documentation as a condition of obtaining a mortgage, often preempting in this regard state regulations designed to assure greater mortgage quality and a borrower’s ability to repay.

The result of all this was the mortgages that later became known as “liars’ loans.” They were increasingly risky; but what did the banks care, since they were making their money from the securitizations; and what did the government care, since they  were helping to boom the economy and helping voters to realize their dream of owning a home.

Moreover, the government was also deeply enmeshed in the aftermath of the financial crisis. It was the government that proposed the shotgun marriages of Bank of America with Merrill Lynch, of J.P. Morgan with Bear Stearns, etc. If, in the process, mistakes were made and liabilities not disclosed, was it not partly the government’s fault?

Please do not misunderstand me. I am not alleging that the Government knowingly participated in any of the fraudulent practices alleged by the Financial Inquiry Crisis Commission and others. But what I am suggesting is that the Government was deeply involved, from beginning to end, in helping create the conditions that could lead to such fraud, and that this would give a prudent prosecutor pause in deciding whether to indict a C.E.O. who might, with some justice, claim that he was only doing what he fairly believed the Government wanted him to do.

 The final factor I would mention is both the most subtle and the most systemic of the three, and arguably the most important, and it is the shift that has occurred over the past 30 years or more from focusing on prosecuting high-level individuals to focusing on prosecuting companies and other institutions. It is true that prosecutors have brought criminal charges against companies for well over a hundred years, but, until relatively recently, such prosecutions were the exception, and prosecutions of companies without simultaneous prosecutions of their managerial agents were even rarer. The reasons were obvious. Companies do not commit crimes; only their agents do. And while a company might get the benefit of some such crimes, prosecuting the company would inevitably punish, directly or indirectly, the many employees and shareholders who were totally innocent.   Moreover, under the law of most U.S. jurisdictions, a company cannot be criminally liable unless at least one managerial agent has committed the crime in question; so why not prosecute the agent who actually committed the crime?

 In recent decades, however, prosecutors have been increasingly attracted to prosecuting companies, often even without indicting a single individual. This shift has often been rationalized as part of an attempt to transform “corporate cultures,” so as to prevent future such crimes; and, as a result, it has taken the form of “deferred prosecution agreements” or even “non-prosecution agreements,” in which the company, under threat of criminal prosecution, agrees to take various prophylactic measures to prevent future wrongdoing. But in practice, I suggest, it has led to some lax and dubious behavior on the part of prosecutors, with deleterious results.    

If you are a prosecutor attempting to discover the individuals responsible for an apparent financial fraud, you go about your business in much the same way you go after mobsters or drug kingpins: you start at the bottom and, over many months or years, slowly work your way up. Specifically, you start by “flipping” some lower level participant in the fraud whom you can show was directly responsible for making one or more false material misrepresentations but who is willing to cooperate in order to reduce his sentence, and – aided by the substantial prison penalties now available in white collar cases – you go up the ladder. For a detailed example of how this works, I recommend Kurt Eichenwald’s well-known book The Informant, which describes how FBI agents, over a period of three years, uncovered the huge price-fixing conspiracy involving high-level executives at Archer Daniels, all of whom were successfully prosecuted.

But if your priority is prosecuting the company, a different scenario takes place. Early in the investigation, you invite in counsel to the company and explain to him or her why you suspect fraud. He or she responds by assuring you that the company wants to cooperate and do the right thing, and to that end the company has hired a former Assistant U.S. Attorney, now a partner at a respected law firm, to do an internal investigation. The company’s counsel asks you to defer your investigation until the company’s own internal investigation is completed, on the condition that the company will share its results with you. In order to save time and resources, you agree. Six months later the company’s counsel returns, with a detailed report showing that mistakes were made but that the company is now intent on correcting them. You and the company then agree that the company will enter into a deferred prosecution agreement that couples some immediate fines with the imposition of expensive but internal prophylactic measures. For all practical purposes the case is now over. You are happy because you believe that you have helped prevent future crimes; the company is happy because it has avoided a devastating indictment; and perhaps the happiest of all are the executives, or former executives, who actually committed the underlying misconduct, for they are left untouched. 

I suggest that this is not the best way to proceed. Although it is supposedly justified in terms of preventing future crimes, I suggest that the future deterrent value of successfully prosecuting individuals far outweighs the prophylactic benefits of imposing internal compliance measures that are often little more than window-dressing. Just going after the company is also both technically and morally suspect. It is technically suspect because, under the law, you should not indict or threaten to indict a company unless you can prove beyond a reasonable doubt  that some managerial agent of the company committed the alleged crime; and if you can prove that, why not indict the manager?  And from a moral standpoint, punishing a company and its many innocent employees and shareholders for the crimes committed by some unprosecuted individuals seems contrary to elementary notions of moral responsibility.

These criticisms take on special relevance, however, in the instance of investigations growing out of the financial crisis, because, as noted, the Department of Justice’s position, until at least very, very recently, is that going after the suspect institutions poses too great a risk to the nation’s economic recovery. So you don’t go after the companies, at least not criminally, because they are too big to jail; and you don’t go after the individuals, because that would involve the kind of years-long investigations that you no longer have the experience or the resources to pursue.

In conclusion, I want to stress again that I have no idea whether the financial crisis that is still causing so many of us so much pain and despondency was the product, in whole or in part, of fraudulent misconduct. But if it was — as various governmental authorities have asserted it was –- then, the failure of the government to bring to justice those responsible for such colossal fraud bespeaks weaknesses in our prosecutorial system that need to be addressed.

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US BANK ADMITS, IN WRITING FROM THEIR CORPORATE OFFICE, THAT THE BORROWER IS A PARTY TO AN MBS TRANSACTION; THAT SECURITIZATION TRUSTEES ARE NOT INVOLVED IN THE FORECLOSURE PROCESS; HAVE NO ADVANCE KNOWLEDGE OF WHEN A LOAN HAS DEFAULTED; THAT THE “TRUE BENEFICIAL OWNERS” OF A SECURITIZED MORTGAGE ARE THE INVESTORS IN THE MBS; AND THAT THE GOAL OF A SERVICER IS TO “MAXIMIZE THE RETURN TO INVESTORS”                                                                                                                                                                                                 November 6, 2013

 We have been provided with a copy of U.S. Bank Global Corporate Trust Services’ “Role of the Corporate Trustee” brochure which makes certain incredible admissions, several of which squarely disprove and nullify the holdings of various courts around the country which have taken the position that the borrower “is not a party to” the securitization and is thus not entitled to discovery or challenges to the mortgage loan transfer process. The brochure accompanied a letter from US Bank to one of our clients which states: “Your account is governed by your loan documents and the Trust’s governing documents”, which admission clearly demonstrates that the borrower’s loan is directly related to documents governing whatever securitized mortgage loan trust the loan has allegedly been transferred to. This brochure proves that Courts which have held to the contrary are wrong on the facts. 

The first heading of the brochure is styled “Distinct Party Roles”. The first sentence of this heading states: “Parties involved in a MBS transaction include the borrower, the originator, the servicer and the trustee, each with their own distinct roles, responsibilities and limitations.” MBS is defined at the beginning of the brochure as the sale of “Mortgage Backed Securities in the capital markets”. The fourth page of the brochure also identifies the “Parties to a Mortgage Backed Securities Transaction”, with the first being the “Borrower”, followed by the Investment Bank/Sponsor, the Investor, the Originator, the Servicer, the Trust (referred to “generally as a special purpose entity, such as a Real Estate Mortgage Investment Conduit (REMIC)”), and the Trustee (stating that “the trustee does not have an economic or beneficial interest in the loans”). 

The second page sets forth that U.S. Bank, as Trustee, “does not have any discretion or authority in the foreclosure process.” If this is true, how can U.S. Bank as Trustee be the Plaintiff in judicial foreclosures or the foreclosing party in non-judicial foreclosures if it has “no authority in the foreclosure process”? 

The second page also states: “All trustees for MBS transactions, including U.S. Bank, have no advance knowledge of when a mortgage loan has defaulted.” Really? So when, for example, MERS assigns, in 2011, a loan to a 2004 Trust where the loan has been in default since 2008, no MBS “trustee” bank (and note that it says “All” trustees) do not know that a loan coming into the trust is in default? The trust just blindly accepts loans which may or may not be in default without any advanced due diligence? Right. Sure. Of course. LOL. 

However, that may be true, because the trustee banks do not want to know, for then they can take advantage of the numerous insurances, credit default swaps, reserve pools, etc. set up to pay the trust when loans are in default, as discussed below. 

The same page states that “Any action taken by the servicer must maximize the return on the investment made by the ‘beneficial owners of the trust’ — the investors.” The fourth page of the brochure states that the investors are “the true beneficial owners of the mortgages”, and the third page of the brochure states “Whether the servicer pursues a foreclosure or considers a modification of the loan, the goal is still to maximize the return to investors” (who, again, are the true beneficial owners of the mortgage loans). 

This is a critical admission in terms of what happens when a loan is securitized. The borrower initiated a mortgage loan with a regulated mortgage banking institution, which is subject to mortgage banking rules, regulations, and conditions, with the obligation evidenced by the loan documents being one of simple loaning of money and repayment, period. Once a loan is sold off into a securitization, the homeowner is no longer dealing with a regulated mortgage banking institution, but with an unregulated private equity investor which is under no obligation to act in the best interest to maintain the loan relationship, but to “maximize the return”. This, as we know, almost always involves foreclosure and denial of a loan mod, as a foreclosure (a) results in the acquisition of a tangible asset (the property); and (b) permits the trust to take advantage of reserve pools, credit default swaps, first loss reserves, and other insurances to reap even more monies in connection with the claimed “default” (with no right of setoff as to the value of the property against any such insurance claims), and in a situation where the same risk was permitted to be underwritten many times over, as there was no corresponding legislation or regulation which precluded a MBS insurer (such as AIG, MGIC, etc.) from writing a policy on the same risk more than once. 

As those of you know who have had Bloomberg reports done on securitized loans, the screens show loans which have been placed into many tranches (we saw one where the same loan was collateralized in 41 separate tranches, each of which corresponded to a different class of MBS), and with each class of MBS having its own insurance, the “trust” could make 41 separate insurance claims AND foreclose on the house as well! Talk about “maximizing return for the investor”! What has happened is that the securitization parties have unilaterally changed the entire nature of the mortgage loan contract without any prior notice to or approval from the borrower. 

There is no language in any Note or Mortgage document (DOT, Security Deed, or Mortgage) by which the borrower is put on notice that the entire nature of the mortgage loan contract and the other contracting party may be unilaterally changed from a loan with a regulated mortgage lender to an “investment” contract with a private equity investor. This, in our business, is called “fraud by omission” for purposes of inducing someone to sign a contract, with material nondisclosure of matters which the borrower had to have to make the proper decision as to whether to sign the contract or not. 

U.S. Bank has now confirmed, in writing from its own corporate offices in St. Paul, Minnesota, so much of what we have been arguing for years. This brochure should be filed in every securitization case for discovery purposes and opposing summary judgments or motions to dismiss where the securitized trustee “bank” takes the position that “the borrower is not part of the securitization and thus has no standing to question it.” U. S. Bank has confirmed that the borrower is in fact a party to an MBS transaction, period, and that the mortgage loan is in fact governed, in part, by “the Trust’s governing documents”, which are thus absolutely relevant for discovery purposes. 

Jeff Barnes, Esq.,

http://www.ForeclosureDefenseNationwide.com

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I have been trying to get the time to post something, anything.  I hate my Blogs to sit without activity, and I appreciate all my followers and readers.  I really do.

I have to be honest with yall.  I have been overwhelmed.  I’ve tried not to be.  I’ve tried to let it all go, and not worry about things.  I failed to do so.  

Between the Banksters, the Globalists, the Feds, ObamaCare Joke, DHS, Cops shooting people all over the place, Cops shooting dogs for wagging their tails, Seven cops beating a dead man.  

Then there is Fukushima, and Foreclosure Hell going 100 mph.  Where does it end?  It don’t, it just gets worse.

So…we do what we can, and this week, I have decided that we will warn others about eating the fish!  Don’t eat seafood and don’t eat the fish for God’s sake, unless it came from the local catfish farm or whatever.

We went to netc.com and purchased our monitoring station, and we are up and running and monitoring for radiation spikes.  At least we are informed, and we are not walking around like sheeple.  

You must realize that our government is not going to talk about Fukushima, no one is talking about it.

http://enenews.com/magazine-the-fukushima-crisis-comes-to-the-u-s-professor-new-and-improved-version-of-the-original-atomic-plague-is-spreading-the-truth-is-so-incomprehensible-its-easier-to-pretend-it-does

I promise, I will try to find time to write every few days.  You promise not to eat seafood…. Please.

 

J&J

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New post on Livinglies’s Weblog

Fannie and Freddie Demand $6 Billion for Sale of “Faulty Mortgage Bonds”

by Neil Garfield

You read the news on one settlement after another, it sounds like the pound of flesh is being exacted from the culprits again and again. This time the FHFA, as owner of Fannie and Freddie, is going for a settlement with Bank of America for sale of “faulty mortgage bonds.” And most people sit back and think that justice is being done. It isn’t. $6 Billion is window dressing on a liability that is at least 100 times that amount. And stock analysts take comfort that the legal problems for the banks has basically been discounted already. It hasn’t.

For practitioners who defend mortgage foreclosures, you must dig a little deeper. The term “faulty mortgage bonds” is a euphemism. Look at the complaints there filed. When they are filed by agencies it means that after investigation they have arrived at the conclusion that something was. very wrong with the sale of mortgage bonds. That is an administrative finding that concluded there was at least probable cause for finding that the mortgage bonds were defective and potentially were criminal.

So what does “defective” or “faulty” mean? Neither the media nor the press releases from the agencies or the banks tell us what was wrong with the bonds. But if you look at the complaints of the agencies, they tell you what they mean. If you look at the investor lawsuits you see that they are alleging that the notes and mortgages were “unenforceable.” Both the agencies and the investors filed complaints alleging that the mortgage bonds were a farce, sham or in other words, a PONZI Scheme.

Why is that important to foreclosure defense? Digging deeper you will find what I have been reporting on this blog. The investors money was not used to fund the REMIC trusts. The unfunded trusts never had the money to buy or fund the origination of bonds. The notes and mortgages were never sold to the Trusts even though “assignments” were executed and shown in court. The assignments themselves were either backdated or violated the 90 day cutoff that under applicable law (the laws of the State of New York) are VOID and not voidable.

What to do? File Freedom of Information Act requests for the findings, allegations and names of investigators for the agency that were involved in the agency action. Take their deposition. Get documents. Find put what mortgages were looked at and which bond series were involved. Get a list of the mortgages and the bonds that were examined. Get the findings on each mortgage and each mortgage bond. Use the the investor allegations as lender admissions admissions in court — that the notes and mortgages are unenforceable.

There is a disconnect between what is going on at the top of the sham securitization chain and what went on in sham mortgage originations and sham sales of loans. They never happened in the real world, no matter how much paper you throw at it.

And that just doesn’t apply to mortgages in default — it applies to all mortgages, which is why all the mortgages that currently exist, and most of the deeds that show ownership of the property have clouded and probably “defective” and “faulty” titles. It’s clear logic that the government and the banks are seeking to avoid, to wit: that if the way in which the money was raised to fund the loans or purchase the loans were defective, then it follows that there are defects in the chain of title and the money trail that were obviously not disclosed, as per the requirements of TILA and Reg Z.

And when you keep digging in discovery you will find out that your client has some clear remedies to collect the profits and compensation paid to undisclosed recipients arising out of the closing of the “loan.” These are offsets to the amount claimed as due. If the loan was not funded by the Trust, then the false paper trail used by the banks in foreclosure is subject to successful attack. If the loans were in fact funded directly by the trust complying with the REMIC provisions of the Internal Revenue Code, then the payee on the note and the mortgagee on the mortgage would be the trust — or if the loan was actually purchased, the Trust would have issued money to the seller (something that never happened).

And lastly, for now, let us look at the capital structure of these banks. A substantial portion of their capital derives from assets in the form of mortgage bonds. This is the most blatant lie of all of them. No underwriter buys the securities issued by the company seeking financing through an offering to investors. It is an oxymoron. The whole purpose of the underwriter was to create securities that would be appealing to investors. The securities are only issued when you have a buyer for them, and then the investor is the owner of the security — in this case mortgage bonds.

The bonds are not issued to the investment bank as an asset of the investment bank. But they ARE issued to the investment bank in “street name.” That is merely to facilitate trading and delivery of certificates which in most cases in the mortgage bond market don’t exist. The issuance in street name does not mean the banks own the mortgage bonds any more than when you a stock and the title is issued in street name mean that you have loaned or gifted the investment to the investment bank.

If you follow the logic of the investment bank then the deposits of money by depository customers could be claimed as assets — without the required entry in the liabilities section of the balance sheet because every dollar on deposit is a liability to pay those monies on demand, which is why checking accounts are referred to as demand deposits.

Hence the “asset” has been entered on the investment bank balance sheet without the corresponding liability on the other side of their balance sheet. And THAT remains that under cover of Federal Reserve purchase of these bonds from the banks, who don’t own the bonds, the value of the bonds is 100 cents on the dollar and the owner is the bank — a living lies fundamental. When the illusion collapses, the banks are coming down with it. You can only go so far lying to the public and the investment community. Eventually the reality is these banks are underfunded, under capitalized and still being propped up by quantitative easing disguised as the purchase of mortgage bonds at the rate of $85 Billion per month.

We need to be preparing for the collapse of the illusion and get the other financial institutions — 7,000 community and regional banks and credit unions — ready to take on the changes caused by the absence of the so-called major banks who are really fictitious entities without a foundation related to economic reality. The backbone is already available — electronic funds transfer is as available to the smallest bank as it is to the largest. It is an outright lie that we need the TBTF banks. They have failed and cannot recover because of the enormity of the lies they told the world. It’s over.

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Mortgage group concerned about payment structures for fines 

http://www.insidecounsel.com/2013/10/08/mortgage-group-concerned-about-payment-structures?t=litigation 

Group says large banks have the option to leverage loans they don’t own in order to settle violations

BY CHRIS DIMARCO

October 8, 2013 • Reprints 

While the Department of Justice (DOJ) and J.P. Morgan and Chase Co. have still yet to reach a settlement to resolve a number of pending probes, investors are concerned that they could be unfairly required to shoulder the burden the banks pay out. 

A group of mortgage bond investors has penned a letter to the DOJ, asking it to prevent any bank from using mortgage-backed security adjustments to pay fines. They did not directly imply that the settlement they were talking about stemmed from the ongoing discussions between JP and the DOJ, but raised concerns surrounding settlements with any major bank. 

The group, the Association of Mortgage Investors (AMI), represents about 25 individuals and controls about $56 billion in assets under its organization. In the letter, which was reviewed by The Wall Street Journal, the group’s executive director Chris Katopis says, “Parties sued by the government or third-parties should not be able to settle with assets that they do not own, namely other people’s money.” 

As of last week, J.P. Morgan and the DOJ had yet to come to agreement terms that would end a series of investigations pending for the bank. Settlement figures as high as $11 billion have been kicked around, according to individuals close to the case, although no official word has been made. According to speculation, $7 billion of that total would be paid out in fines, with an additional $4 billion going towards relief for struggling homeowners. 

The Association of Mortgage Investors is said to be posturing proactively because of previous mortgage settlements made this year. In these settlements, banks could receive partial settlement credit if they reduced loan-balances. However, many of the mortgages they reduced balances on were managed by investors, and therefore not technically owned by the banks. 

There has been little news out of the J.P. Morgan talks outside of speculation, and it is not known if the Department of Justice is considering the type of payment structure the AMI is fearful of in their talks.

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Foreclosure Court: The Erosion of the Judiciary                                                                                                   http://www.stayinmyhome.com/foreclosure-court-the-erosion-of-the-judiciary/

Posted on September 2nd, 2013 by Mark Stopa 

I’m a big believer in the justice system.  In fact, that’s part of why I became a lawyer.  I believe in every litigant’s right to obtain a fair hearing and trial before a neutral judge and/or impartial jury.  It sounds cliché, but that’s what I do – help people navigate the judicial system in their time of need. 

In recent months, though, the judiciary in many parts of Florida (not all, but many) has turned into something I don’t recognize.  The change has been so sudden and so extreme that it’s altering the face of the judiciary and hindering that which I hold so dear – the right to fair hearings and due process.  Yes, what I consider the “core” of a fully-functioning judicial system is eroding. 

If you’re a Florida lawyer but you don’t handle foreclosure cases, you likely have no idea what I’m talking about.  After all, outside of foreclosure-world, Florida’s courts are operating like normal, business as usual.  Sure, the down economy has brought some minor changes, but all in all, our courts are functioning in a normal way. 

Foreclosure cases, though, are a totally different animal. 

I was chatting with a colleague the other day, an attorney who doesn’t handle foreclosure lawsuits, and he was shocked as I described the things I see in foreclosure court on a daily basis.  This is a seasoned attorney who was SHOCKED at what I see every day.  That made me realize … I’m not doing a good enough job of explaining the travesties I see every day in foreclosure-world. 

It’s a tough line to toe, frankly.  Bar rules prohibit me from disparaging any particular judge, so it’s sometimes difficult to explain what’s happening in foreclosure court without crossing that line.  In this blog, though, I’m going to toe that line.  Don’t misunderstand – I’m not criticizing anyone in particular.  Rather, my critique – and that’s what I see this as, a constructive critique, coupled with a hope that everyone will realize just how flawed our system has become – is aimed at the entire institution.  My concerns aren’t with any particular judge or any one ruling – they lie with the entire judicial system, the way the entire judiciary is operating right now, at least as it pertains to foreclosure cases. 

I know what you’re thinking.  I’m just a self-interested, foreclosure defense attorney who’s trying to delay foreclosures and let people live for free.  I’m upset because the courts are making that more difficult.  Right?

Before you blow off my concerns in that manner, you tell me.  Are my concerns legitimate?  Is this how a judicial system should operate?  You tell me … 

As a foreclosure defense lawyer, I’ve seen pro se homeowners attend hearings in their cases and not be allowed to speak.  Not one word.  It wasn’t that the judge didn’t hear the homeowner or didn’t realize he/she was present, either – the homeowner asked the judge to speak at a duly-noticed hearing and was not permitted to do so.  Homeowner loses, yet couldn’t say one word.  Isolated incident, you say?  I’ve personally seen it more than once. 

Not being permitted to speak has not been limited to pro se homeowners.  I have personally been threatened with criminal contempt – criminal contempt – for moving to disqualify a judge after striking my defenses without letting me say one word about those defenses.  Your defenses are stricken, you can’t talk, and if you complain about it, I’ll throw you in jail. 

In many parts of Florida, attorneys are not permitted to attend foreclosure hearings by phone – regardless of how insignificant or short the hearing may be.  Never mind that the Florida Supreme Court created a rule of judicial administration which requires phone appearances be permitted for hearings that are 15 minutes or less absent “good cause” – in many parts of Florida, attendance by phone is simply not permitted. 

I’ve heard some justify this procedure by explaining how it’s difficult to deal with phone appearances in foreclosure cases.  Really?  How is it any more difficult than in other types of cases?  Frankly, I can’t help but wonder if the prohibition on phone appearances is designed to make it harder for defense lawyers to appear in cases for homeowners, enabling the courts to push through those cases faster.  (Prohibiting phone appearances obviously makes it harder and more expensive to attend hearings, often making the difference in a homeowner’s ability to afford counsel.) 

That’s an absurd proposition, though, right?  Why would our courts care how quickly foreclosure lawsuits are litigated?  Judges are neutral arbiters – they don’t care how quickly the cases are adjudicated.  Do they? 

The answer to that question is at the heart of the problem.  In recent months, the Florida legislature has been putting immense pressure on Florida judges to clear the backlog of foreclosure lawsuits.  How much pressure?  Well, the legislature controls the amount of funding that goes to our courts – funding that is needed to retain new judges, senior judges, court staff, and clerks (basically, the funding necessary to keep all judges and JAs from being totally overwhelmed).  Unfortunately, the legislature has been giving these judges an ultimatum, kind of like parents do to their children regarding allowance.  Basically, it works like this … “if you don’t finish these foreclosure cases, we won’t give you more funding.”  As such, the legislature holds the judiciary hostage … if the judiciary doesn’t clear cases, then the legislature doesn’t give the judiciary the funding necessary to manage the many thousands of foreclosure lawsuits pending before it. 

Perhaps worse yet, and to my sheer disgust, I’m told the legislature recently cut the pay of Florida judges (for the first time in years), and the clear understanding was that it was done as a way to punish/blame the judges for not clearing up the backlog of foreclosure cases faster.  “You won’t enter judgments fast enough for our liking … we’ll cut your pay.” 

(The pay of Florida judges is public record, right?  Why is nobody talking about this?) 

The judicial system shouldn’t operate this way.  We all learned it in elementary school, how the three branches of government exist as “separate but equal” branches of government, employing a system of “checks and balances” to ensure a fully-functioning government.  But that’s not what’s happening right now, certainly not in foreclosure court.  In foreclosure-world, the legislature is king. 

You might think this is conjecture and speculation on my part.  It’s not.  I can’t go a week without hearing how the legislature is forcing judges to move cases.  Judges discuss it openly in open court, and not just to me – to everyone.  As a result of this dynamic – judges wanting to move cases – I see all sorts of crazy things I’d never see in any other area of law. 

I’ve mentioned the homeowners who can’t speak, the threats of incarcertaion, and the prohibition on phone appearances, but let’s get to some more egregious concerns. 

Judges sua sponte set trials in foreclosure cases (without a Notice of Trial having been filed, without a CMC or pretrial conference, and without discussing/clearing the date with an counsel).  This is now routine, virtually everywhere in the state. 

Judges sua sponte set trials in foreclosure cases where a motion to dismiss is outstanding and the defendant has not filed an answer. 

Judges sua sponte set trials with less than 30 days’ notice (such that, as defense counsel, you randomly receive a trial Order in the mail, reflecting you have a trial in 2 weeks).

 The sua sponte setting of trials dominates the landscape of foreclosure-world.  Banks often don’t want trials in foreclosure cases, but the judges will set them anyway.  Then, even when the plaintiffs are vocal about not wanting a trial in that particular case, judges often insist they go forward anyway.  Even stipulated/agreed Orders to continue a trial or vacate a trial Order often go unsigned. 

Sometimes, where trial has been set in violation of Rule 1.440, judges will recognize the error and fix it.  (The judges in Pinellas and Hillsborough in particular are good about this, striving to follow the law.)  In many others cases, though, judges will proceed with trial anyway.  In foreclosure circles, one county has become known for using a stamp – DENIED – right on the motion to vacate trial Order, without a hearing.  Case not at issue?  Doesn’t matter.  Less than 30 days’ notice?  Doesn’t matter.  Bank doesn’t want a trial?  Doesn’t matter.  We’re going to trial! 

Often, judges won’t proceed with trial where the defendant hasn’t filed an Answer but will essentially force the Answer to be filed forthwith.  How is this accomplished?  Easily – either deny the motion to dismiss (often without a hearing), or sua sponte set a CMC to ensure the case gets at issue.   Some courts use CMCs as a way to, in my view, browbeat parties into settling.  One county, for example, has started setting three CMCs at once – one per week for three consecutive weeks, requiring in-person attendance, at mass-motion calendars that last an hour or more, with no input from counsel on when the CMCs are scheduled.  You’re not available?  Too bad.  You don’t need a CMC three weeks in a row?  Yes, you do.  Your case will get at issue and it will be set for trial. 

Oh, and if you want to set a hearing in this county, you have to mail in a form – MAIL IN A FORM – and wait for them to respond to you, by mail, with a form that gives you a set hearing date, without any input from you on when that hearing takes place. 

What dominates the thinking from the judiciary – again, not my speculation, but something the judges openly discuss – is their desire to “close” cases.  That’s the monster that the legislature has created – evaluating the performance of judges not based on their work as judges but based on the results set forth in an Excel spreadsheet.  How many foreclosure lawsuits were filed in that county?  How many judgments have been entered?  If the ratio of judgments entered to cases filed is high enough, then the judges in that county are doing a good job and deserve more funding from the legislature.  If not, then those judges and JAs can all suffer through the many thousands of cases without more help. 

The dynamic is so perverse that I’ve seen judges refuse to cancel foreclosure sales even when both sides ask them to. 

Plaintiff’s lawyer:  “We don’t want this foreclosure sale to go forward, judge.” 

Defendant’s lawyer:  “We are living in this house.  We don’t want this foreclosure sale to go forward, judge.” 

Judge:  “Foreclosure sale will go forward as scheduled.” 

Huh? 

This dynamic is particularly difficult to take when the parties have reached a settlement.  For example, loan modifications sometimes happen after a judgment but before a sale.  That means, essentially, that both sides are willing to forego foreclosure with the homeowner resuming monthly mortgage payments.  Incredibly, based partly on their desire to “close” a case, some judges will force a foreclosure sale to go forward even when both parties don’t want it to, having settled their dispute via a loan modification.

 Plaintiff’s lawyer:  “We have agreed to a loan modification.  We want the foreclosure sale cancelled.” 

Defendant’s lawyer:  “We have agreed to a loan modification.  We want the foreclosure sale cancelled.” 

Judge:  “Foreclosure sale will go forward as scheduled.” 

Huh? 

Even when both sides are able to resolve disputes before trial, even then they sometimes can’t escape a dress-down from the judiciary.  For instance, I’ve watched judges threaten Bar grievances against lawyers – yes, Bar grievances – where they settled the lawsuit by consenting to a foreclosure judgment with a deficiency waiver and extended sale date.  Mind you, that’s a perfectly legitimate way to compromise and settle a foreclosure lawsuit – bank gets the house, homeowner avoids any further liability and gets to stay in the house longer so as to pack up and move – but the prospect of the sale date getting pushed out 4-5 months angers some judges.  “No, you can’t settle that way.  The sale has to happen sooner.”  Yes, I’ve seen settlements like this rejected with the sale set sooner than the parties agreed.

Huh? 

There’s absolutely no rule or law that requires a sale to happen sooner where the parties agree.  Unfortunately, the judges are motivated by having that case “closed” so the numbers on the spreadsheet look better for the legislature. 

My natural response is to lament the unfairness of it all.  After all, that homeowner gave up the chances of winning at trial predicated on getting more time in the house.  I find it terribly unfair that the homeowner gave up a right to trial in exchange for an extended sale date that the judge took away … right?  Some judges would scoff at that notion.  After all, I’ve heard several times, in open court, ”there is no defense to foreclosure,” or “I’ve never seen a valid defense to foreclosure,” or words of that ilk.  Never mind that I’ve had many dozens of foreclosure cases dismissed throughout Florida, including several at trial (25 different judges have dismissed a lawsuit of mine on paragraph 22 noncompliance, for example) … there is no valid defense to foreclosure and, hence, no reason for an extended sale date. 

Another county has become known for punishing any defendants who force a trial to proceed.  I personally observed the judge begin every hearing by telling the homeowners and their counsel that they “better” accept a 120-day extended sale date, as if that “offer” was rejected then it would be “off the table” after the trial.  The implication here was obvious to everyone in the room … You want to show up and force the bank to prove its case?  You’ll lose, and I’ll punish you by ruling against you and forcing you to move out sooner. 

Some would say that the way to deal with this madness is to appeal.  Easier said than done.  Homeowners facing foreclosure are often in no position to fund an appeal.  I’ve taken some appeals for free, but there’s only so many I can handle that way.  Oh, and even if you get beyond the issue of funding, go look for published decisions that are pro-homeowner in the First DCA, Third DCA, or Fifth DCA.  Many thousands of foreclosure cases have been adjudicated in those areas in the past several years.  How many favorable rulings do you think have come out of those jurisdictions during that time?  I’ll give you a hint – not many.  In many ways, appealing in those parts of the state is like standing at the bottom of Mount Everest and being told “climb.” 

Dealing with this dynamic has been very difficult in recent months.  It’s a hard pill to swallow.  It’s difficult to watch the judicial system bend at the direction of the legislature.  It’s tough to know the concept of “separation of powers” that we all learned in elementary school is being cast aside.  It’s hard to feel like the most fundamental concepts of due process are being sacrificed to push lawsuits faster when even the plaintiffs in those lawsuits don’t so desire.  It’s hard to feel like these procedures have made it impossible for me to help homeowners in certain parts of the state.  It’s frustrating that many reading this will be upset at the entire judiciary, not realizing there are many circuit judges – particularly in Hillsborough, Pinellas, and other areas within the ambit of Florida’s Second District – who are striving to be fair and follow the law notwithstanding all of the pressure from the legislature. 

Mostly, though, I’m disappointed.  I’m disappointed that such perverse procedures are happening in our courts every day yet nobody is talking about it – and many don’t even realize it’s happening.  I’m disappointed that the justice system I knew is eroding.  I’m not going to find a dictionary definition, but that’s what erosion is – a slow process of deterioration such that, before too long, that thing which previously existed is no more. 

I hope everyone shares this blog.  I hope my friends, colleagues, attorneys and homeowners all understand what’s happening in our courts.  I hope everyone stands up to the legislature and demands it stop this madness.  Most of all, I hope the erosion of our judiciary stops … soon.

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New post on Livinglies’s Weblog

Federal Agent Misconduct in Favor of BofA and McCarthy Holthus and Levine law firm?

http://livinglies.wordpress.com/2013/09/03/federal-agent-misconduct-in-favor-of-bofa-and-mccarthy-holthus-and-levine-law-firm/

by Neil Garfield

HAS FORECLOSURE DEFENSE BECOME A TERROR THREAT?

WHO IS TERRIFIED HERE?

This is a story about abuse of power or abuse of apparent power. The object is to cover-up crimes that remain largely undetected because the complex maze created by the “Thirteen Banks.”The stakes could not be higher. Either the current major Banks will be sustained or they will come crashing down with a feeding frenzy on a carcass of a predator that stole tens of trillions of dollars from multiple countries, hundreds of millions of people, and millions of homes across the world that should, by all accounts under the Law, still belong to the owner who was displaced by foreclosure. The banks are willing to do anything and they are paying outsize fees and other legal expenses (topping $100 Billion now).

The agents involved — Mike Lum from Homeland Security, Tim Hines, FBI Agent, and Sean Locksa, FBI agent — were either moonlighting (the agents say they were acting in their official capacity) and using their badges in appropriately or they were sent to intimidate litigants with Bank of America represented by McCarthy Holthus and Levine. A few years back, I received reports that the law firm, and in particular attorney Levine, had sent letters to local prosecutors to request action against people who were defending their property from foreclosure. The agents admitted to Blomberg today that they received a “tip” and that “it” was “no longer” a criminal manner and that they had ended their investigation.

In one prior case I saw a letter and I believe I might have seen an affidavit signed by Levine. The result was a series of indictments against one individual that were later dismissed. I have no information on the other cases all dating back to around 2010. I know one of the people, the one who I know was indicted, spent the last bit of her money hiring a criminal attorney to defend her. The case was “settled with a dismissal.” She subsequently lost two homes that were previously unencumbered in a foreclosure where different parties stepped in to foreclose than the ones who asked for lift stay in her bankruptcy. None of the parties were creditors or properly identified.

I now believe I have enough information to connect the dots, and raise the question as to whether members of local, federal and state law enforcement are colluding (or are being wrongfully used by the suggestion of false information) with Bank of America and at least one law firm — McCarthy Holthus and Levine — in which litigants and perhaps witnesses are intimidated into submission to wrongful foreclosures. The information contained in this article relates primarily to Arizona and to a lesser degree, California. I have no information on any other such activity in any other state of the union.

It also appears as though Bank of America and McCarthy Holthus and Levine were taking advantage of some sloppiness at the Post Office, for which the Postmaster in Simi Valley has apologized and sent a refund to the complainant, Darrell Blomberg whose story can be read below. The interesting thing here is that Blomberg reports that McCarthy Holthus and Levine directly received a letter that was addressed to Celia Mora, a suspected robo signor who apparently lives in Simi Valley, according to the post office, but whose mail bears a San Diego postmark.

The joint terrorism task force supposedly represented by the three men identified above, will not answer calls relating to this matter. Thus we only have Blomberg’s report and my own information and analysis — and of course public record. We do have a callback received today by Blomberg who reports that the agents answered a limited number of questions.

The information contained in this report is substantially corroborated by another source who, like Blomberg I consider to have the highest integrity and who was also visited this past week by the same agents who visited Blomberg. Since no specific act was alleged in the interviews except the perfectly legal request to the post office to confirm an address of a potential witness and test mailings to see who was receiving the mailings, it is hard to conclude anything other than that these agents were being used officially or unofficially to intimidate litigants who have been successful at defending their homes in foreclosure for years, and to intimidate them into ceasing their factual and investigative help to other homeowners who are also being wrongfully foreclosed.

If these interviews were sanctioned by the terrorism task force, the FBI or Homeland security it clearly represents the use of Federal law enforcement authority for the benefit of gaining a civil advantage — a crime in most jurisdictions. How high the orders went in those organization I do not know. If there were no such orders and these agents were doing a “favor” then they are subject to discipline for misuse of their badge and deliberately misleading the persons interviewed into thinking that this was an official investigation. The agencies involved might be negligent in supervising the activity of these agents. Neither of the sources for this story have any mark on their record except the mark of distinction — one having worked for decades in law enforcement in economic crimes.

Was Darrel Blomberg getting too close to the truth?

In litigation, one of the points raised by Blomberg was that Celia Mora — allegedly signed an affidavit perhaps by herself and perhaps as a robo signor. The issue of forgery didn’t come up. There was a San Diego post mark same day as the affidavit was allegedly signed 160 miles away. Blomberg’s position was Mora had no actual authority no actual executive position or managerial position, and signed clerically under instruction without knowledge of the contents. That is it. The fact that McCarthy Holthus and Levine actually received the letter addressed to Mora through normal postal service leads one to believe that the affidavit may have been created at the law firm and perhaps even signed there in Arizona. Hence any criminal behavior suggested was not the work of Blomberg but could have been the work of the law firm or Bank of America. To my knowledge there is no investigation pending relating to the use of the mails, false documents, improper signatures, lack of authority or any of the issues presented by Blomberg.

From there it became a vague charge of harassment communicated by three Federal Agents. Harassment was the word used by the agents in the interview with Blomberg and the interview with my other source. But no specific act was stated even in passing as to what act would be investigated as harassment, no less a matter of national security. More telling, when the agents left both interviews, neither source was instructed or requested to stop any specific act. That leads to the question, if there was no conduct they sought to stop, why were they there at all?

Note that McCarthy Malthus and Levine has been replaced by the law firm of Bryan Cave since June, 2013 in Blomberg’s case. Generally speaking Greg Iannelli, Esq. handles the more sensitive pieces of litigation that could blow the lid off of the fraudulent scheme of securitization.

Read Blomberg’s account here —> 2013-08-29, Unexpected Visit from the National Joint Terrorism Task Force

Background and analysis: Why do the banks continue to use low paid clerical workers to sign affidavits and other documents for which they obviously lack authority or knowledge? Why won’t a true executive with true authority and actual personal knowledge based upon his or her own actual observation, investigation and analysis to make sure the foreclosure is proper as to the property, the persons, the balance due and the existence of a default — especially with reference to the actual creditor’s books of account?

Convenience doesn’t cover it. With legal costs topping $100 Billion it would be impossible to pass the giggle test on any explanation of convenience when it comes to the paperwork. My conclusion is that it is worth getting embarrassed in court as long as the number of times is small enough that the overall scheme is not toppled. The use of clerical personnel to sign and approve documents relating to foreclosure is akin to allowing teller’s decide whether you can have a loan on that new car or new house. It doesn’t happen. If it doesn’t happen when the “loan” goes out, then it is fair to assume that the same standards would apply when the loan turns bad and comes back in.

Think about it. The Banks are reporting record profits. U. S. Bank reported $42 Billion in just one quarter. They are attributing their profits to proprietary trading — something I have attributed to laundering the illicit retention of funds that should have been used to pay investors the principal and accrued interest that was due on the promise of investment banks when they issued bogus mortgage bonds. That money was received by the Banks as agents for the investors and therefore, whether paid or not, is a credit against the account receivable owned by the investors.

The Glaski appellate attorneys gratuitously admitted that the true owner of the debts will never be known. Yet the true relationship between the homeowners and the lenders is regarded as known and enforceable. In short, the position of the Banks is that we don’t know who this money belongs to but it must belong to someone so we are going to collect it and foreclose. We’ll get back to you later on what we did with the money. The Banks are required to take that idiotic position because (a) it is still working in court and (b) they get to avoid liability to investors, guarantors, insurers, borrowers and government agencies that could exceed $10 trillion. So $100 Billion in legal expenses is only 1% of their exposure. It is easy to see how the Math works. If the legal expenses were a far more significant portion of the money the Banks were holding then they would find another way to deal with it. 

If the false trading and laundering of money was properly entered on the books as merely repatriating money that was hidden, the investors would be spared the losses that threaten our pensions and cities. It would also alleviate or eliminate the corresponding account payable due from homeowners, city budgets and other “borrowers” who were the unwitting pawns in a scheme to defraud investors. The collateral damage to all citizens, all taxpayers, all consumers, all workers and all homeowners has been obvious since 2007.

The extraordinary story is aggravated by the knowledge that the legal expenses of the Banks has now topped $100 Billion. Like I said, think about it. Nobody spends $100 Billion unless it is worth it. It is worth the price because of the amount of liability they are avoiding, and the amount of money they stole that went offshore. The amount of the theft can be estimated in a variety of ways, and the results are always the same. They siphoned trillions of dollars from many countries. In the U.S. alone it appears that the total was in excess of $17 Trillion, which is $3 Trillion MORE than the total amount of lending on residential “loans.” Extrapolating the most recent profit report from U. S. Bank from a quarter (three months) to a year, that one Bank is reporting annual earnings from “proprietary” trading in excess of $160 Billion per year. That is one of 18 Banks that were involved in this crime against humanity. Do the math.

So the Banks retain money that they never legally earned at the expense of deceived investors, Cities and sovereign wealth funds AND at the expense of the “borrowers” in the “underlying” deals. And by not crediting the lenders, the corresponding reduction of the account payable from “Borrowers” is also absent. No consent for principal reduction is required because the balance has also been reduced or extinguished by payment. Follow the money trail and the results was astonish you. This is like organized crime with all the trimmings of governmental complicity.

Now I am reporting that based upon a pattern of conduct that appears particularly egregious in Arizona, this unholy alliance between the people who committed the wrongs and government is becoming apparent. Who would have imagined indictments and “investigations” of people litigating their cases against the Banks after the scale the crime became apparent in 2008-2009?

CAVEAT: The agents in the Blomberg interview insist they were acting in their official capacity and I take them at their word. My problem with that assumption is that it means the system is susceptible of manipulation by attorneys who have no problem playing dirty tricks to gain a civil advantage. Or, worse, it means that there are high level people in the system who are willing to look the other way when this behavior pops up.

By this point in the savings and loan scandal in the 1980’s more than 800 bank presidents and loan officers, along with mortgage brokers and originators had been convicted by a jury and were serving their sentences. This time the tally is zero. But the reverse is not true. Mortgage brokers and originators and investors who played the system against itself have been investigated, prosecuted and sentenced to prison. And even homeowners have been accused of crimes that were identical to the crimes committed by Banks on a much larger scale. Steal a million, go to jail. Steal a Trillion and get immunity because the finance system might not survive removing the criminals from our society. No longer a nation of laws we have become a nation of men, corrupt men, who continue to accumulate wealth and power as they channel their illicit gains into reported Bank “profits” and control over world natural resources.

For about three years I have been investigating an unholy alliance between a law firm, McCarthy Holthus and Levine, Bank of America, U.S. Bank and law enforcement. It appears as though they have some special influence and that local, state and Federal law enforcement agents are acting as collectors and intimidators outside the boundaries of the law. Prosecutors have followed this line of attack against those pro se litigants who are getting close to the truth that the foreclosures — all of them — were bogus, if they were based upon mortgages and deeds of trust carrying claims of securitization, arising from Assignment and Assumption Agreements, Pooling and Servicing Agreements, and false prospectuses to investors.

The attached report from Darrel Blomberg, a person of unparalleled integrity, tells the story of agents from the FBI who (whether they realized it or not) are clearly acting at the behest and for the benefit of Bank of America, who was represented by McCarthy Holthus and Levine. In the past week, the agents have been visiting at least two people based upon a “harassment” allegation. The agents declared themselves to be part of a joint terrorism task force. The act of harassment was a request for confirmation of address and confirmation of address that ended up both in the offices of Bank of America and the office of McCarthy Holthus and Levine. It was addressed to the U.S. Postmaster who apologized for gaffes in processing the requests and even refunded money to Blomberg. No investigation has been threatened by the U.S. Postal inspector against either the Bank or the law firm. And none has been threatened against Blomberg.

Having a few pages of the attempt to get address of a robo signor whose signature appears to have been forged, these agents have interviewed two people in Arizona that have been known to provide factual assistance to other homeowners and whose own cases have been spread out over many years as the Bank continues to fail in its attempt to claim ownership or verify the balance of the debt. These agents identified themselves as having been dispatched from the FBI, Homeland security and the joint task force. Whether they were merely moonlighting or were in fact dispatched by their superiors, it is clear that no criminal matter was under investigation, and that their purpose was to intimidate two people who fortunately are not easily intimidated. Based upon my investigation it appears as though that law Firm, McCarthy, Holthus and Levine who is frequently replaced by Bryan Cave, has been doing dirty work for the banks through contacts in law enforcement.

It is happening and this should be stopped before it becomes a commonplace act throughout the country.

In the final analysis the issue of ownership of the loan is going to unravel this mess because it is only then that we can look at the books of account and see what money is owed on the original account receivable for the creditor/investor/REMIC.

The analysis of ownership does not merely look to the agreements the parties entered into because the label parties give to a transaction does not determine its character. See Helvering v. Lazarus & Co. 308 U.S. 252, 255 (1939). The analysis must examine the underlying economics and the attendant facts and circumstances to determine who owns the mortgage notes for tax purposes. See id. The court in In re Kemp documents in painful detail how Countrywide failed to transfer possession of a note to the pool backing a Mortgage Backed Security (MBS) so that Countrywide failed to comply with the requirements necessary for the mortgage to comply with the REMIC rules. See In re Kemp, 440 F.R. 624 (Bkrtcy D.N.J. 2010). Defendant in this case has done exactly what was adjudicated in Kemp, failure to sufficiently show a timely transfer that complied with the strict language of the trusts’ Agreements.

As the Kemp court notes, “[f]rom the maker’s standpoint, it becomes essential to establish that the person who demands payment of a negotiable note, or to whom payment is made, is the duly qualified holder. Otherwise, the obligor is exposed to the risk of double payment, or at least to the expense of litigation incurred to prevent duplicative satisfaction of the instrument. These risks provide makers (Plaintiff in this case) with a recognizable interest in demanding proof of the chain of title” (specifically referring to the trust participants). 440 B.R. at 631 (quoting Adams v. Madison Realty & Dev., Inc., 853 F.2d 163, 168 (3d Cir. N.J. 1988). And because the originator did not comply with the legal niceties, the beneficial owner of the debt, the trustee, cannot file its proof of claim either. 

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Glaski Decision in California Appellate Court Turns the Corner on “Getting It”

Posted on August 2, 2013 by Neil Garfield  @:

http://livinglies.wordpress.com/2013/08/02/glaski-decision-in-california-appellate-court-turns-the-corner-on-getting-it/

On the other hand we should not assume that they have arrived nor that this decision will have pervasive effects throughout California or elsewhere in the United States or other countries.

J.P. Morgan did suffer a crushing defeat in this decision. And the borrower definitely receive the benefits of a judicial decision that will allow the borrower to sue for wrongful foreclosure including equitable and legal relief which in plain language means reversing the foreclosure and getting damages. Probably one of the most damaging conclusions by the appellate court is that an examination of whether the loan ever made it into the asset pool is proper in determining the proper party to initiate a foreclosure or to offer a credit bid at a foreclosure auction.  The court said that alleged transfers into the trust after the cutoff date are void under New York State law which is the law that governs the common-law trusts created by the banks as part of the fraudulent securitization scheme.

Before you give them a standing ovation remember that it is possible for additional documentation to be created, fabricated and forged showing that despite the apparent violation of the cutoff date, the trustee has accepted the loan into the trust. This will most likely be a lie. I don’t think there is any entity acting as trustee of a trust that doesn’t know that it is under intense scrutiny and doesn’t want to be subject to liability that could amount to trillions of dollars advanced by investors with the purchase of bogus mortgage-backed bonds that were presumably managed by the trustee but in reality not managed at all  because the bonds were worthless. This gave the banks the opportunity to claim that they owned the bonds and therefore had an insurable interest which gave rise to the whole problem with AIG and AMBAC and other insurers or parties who had guaranteed the bond, the loan or any loss (credit default swaps).

The fact that the loan in this case was definitely securitized is also interesting. Of course Washington Mutual was stating to everyone that it was not involved in the securitization of mortgage loans when in fact nearly all of the loans originated became subject to claims of securitization. This case explains why I never say that the loan was securitized or that the loan was in any particular trust, to wit: I don’t believe that a funded trust exists with the ability to purchase loans and therefore I don’t believe the loans are in any of the asset pools. So when people ask me how they can prove which trust their loan is actually in, I reply that they are asking the wrong question.

What is being played out here in this case and hundreds of thousands of other cases is a representation by the foreclosing entity that the trust owns the loan when in fact it never owned the loan nor could it because the money that was advanced by investors was never deposited into the trust. We have the same banks representing to regulatory authorities and insurers that it is the bank and not the trust that owns the loan even though the bank merely made the loan using money advanced by investors who believed that they were buying mortgage-backed bonds. The truth is they were merely making a deposit into an account maintained by the investment bank. The resulting transactions do not qualify for exemption as securities or insurance under the 1998 law. Nor do they qualify for REMIC treatment under the Internal Revenue Code.

In other words if you take a close look and actually follow the path of the money and the path of the paper you will find that despite the pronouncements from the Department of Justice and other agencies, this is a simple fraud case using a Ponzi model. The hallmark of a Ponzi model is that it collapses as soon as the investors stop buying the bogus securities. If the government cares to do so it can freely prosecute the individuals and companies involved without any air of exemption under the 1998 law because none of the parties followed the securitization path presumed by the 1998 law. So we are back to this, to wit: a security is a security and subject to SEC regulations and insurance is an insurance contract subject to insurance regulators, and fraud is fraud subject to recovery of restitution, compensatory damages, punitive damages, treble damages etc.

You should remember when reading this decision that the appellate court was not ruling in favor of the borrower granting the substantive relief the borrower  was seeking. The appellate court merely reversed the trial court decision to dismiss the borrower’s claims. That only means that the borrower now as an opportunity to prove the elements of quiet title, wrongful foreclosure, slander of title, cancellation of instruments and relief under California’s version of unfair business practices. But the devil is in the details and proving the case requires aggressive discovery and aggressive preparation for trial. It is highly probable that the case will settle. The bank will probably be willing to pay almost any amount of money to avoid a judgment setting forth the elements of a wrongful foreclosure and how the bank violated the law.

The Bank will attempt to avoid any final order that undermines the value of loans that are subject to claims of securitization, because those loans supposedly support the value of the bogus mortgage-backed bonds sold to investors.  Any such final order would also undermine the balance sheet of J.P. Morgan and any other major bank carrying the mortgage bonds as assets on their balance sheet. If those assets are diminished, then the bank is not as well funded as it has been reporting. In fact, those assets might well vanish completely from the balance sheet of those banks, causing the banks to be seized by the FDIC and broken up into smaller pieces for regional and community banks to pick up. Hence this decision represents a risk factor that could eliminate the legal fiction created by smoke and mirrors from Wall Street banks, to wit: it is not the borrowers who are deadbeats, it is the banks who are broke and whose management has run off with billions and perhaps trillions of dollars that should be in the United States economy. The absence of that money lies at the root of our unemployment and low economic activity.

This Glaski case has many of the elements that we have been discussing for years. Fabricated documents, forgeries, perjury, false affidavits and no money trail to backup the story painted by the fabricated documents. And of course it has our old friend Washington Mutual Bank And the supposed take over by Chase Bank that never actually happened.

And it involves the issue of assignments and the fact that the assignment is not the transaction itself but only a report of a transaction. If the borrower proves that the transaction reported in the assignment or other instrument of conveyance never occurred, or if the borrower is successful in shifting the burden of proof to the bank to show that it did occur, the assignment will have no value whatsoever unless the transaction is present, to wit: that someone actually purchased the loan through the payment of money or other valuable consideration that was received by a party who actually owned the loan.

Thus even if Chase Bank were able to show that it entered into a transaction in which the loans were transferred (something we can find no evidence of which the FDIC receiver says never occurred) that would only be the equivalent of a quit claim deed, to wit: whoever received the consideration for the transfer of the loans was merely conveying any interest they had even if they had no interest at all. Hence the transactions by which Washington Mutual allegedly came to be the owner of the loan must be examined in the same way as the transaction between the Washington Mutual bankruptcy estate and chase bank.

You should also take note that the decision was published with the admonition that it is  “not to be published in the official reports.”  this is further indication that the court is concerned about the far-reaching effects of the decision and essentially tells trial judges that they do not have to follow it. So for those who wish to point to this decision and say “game over” we are not there yet. But I do think that we passed the halfway point and we are probably in the fifth or sixth inning of a nine inning game. Translating that to time, I would estimate that it’s going to take another three or four years to clean up this mess and that it might take several decades to clean up the title corruption that was created by the banks.

http://stopforeclosurefraud.com/2013/08/01/glaski-v-bank-of-america-ca5-5th-appellate-district-securitization-failed-ny-trust-law-applied-ruling-to-protect-remic-status-non-judicial-foreclosure-statutes-irrelevant-because-sa/

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TUESDAY, JUN 18, 2013 07:45 AM EDT

Bank of America whistle-blower’s bombshell: “We were told to lie”

Bombshell: Bank of America whistle-blowers detail horrid schemes to fleece borrowers, reward foreclosures (UPDATED)

BY 

TOPICS: BANK OF AMERICAFORECLOSUREMORTGAGE CRISISMORTGAGE FRAUDMORTGAGEHAMP,WHISTLEBLOWERSEDITOR’S PICKSLOANSJP MORGAN CHASEWALL STREET

 

(Credit: Sashkin via Shutterstock/Salon)

Bank of America’s mortgage servicing unit systematically lied to homeowners, fraudulently denied loan modifications, and paid their staff bonuses for deliberately pushing people into foreclosure: Yes, these allegations were suspected by any homeowner who ever had to deal with the bank to try to get a loan modification – but now they come from six former employees and one contractor, whose sworn statements were added last week to a civil lawsuit filed in federal court in Massachusetts.

“Bank of America’s practice is to string homeowners along with no apparent intention of providing the permanent loan modifications it promises,” said Erika Brown, one of the former employees. The damning evidence would spur a series of criminal investigations of BofA executives, if we still had a rule of law in this country for Wall Street banks.

The government’s Home Affordable Modification Program (HAMP), which gave banks cash incentives to modify loans under certain standards, was supposed to streamline the process and help up to 4 million struggling homeowners (to date, active permanent modifications numberabout 870,000). In reality, Bank of America used it as a tool, say these former employees, to squeeze as much money as possible out of struggling borrowers before eventually foreclosing on them. Borrowers were supposed to make three trial payments before the loan modification became permanent; in actuality, many borrowers would make payments for a year or more, only to find themselves rejected for a permanent modification, and then owing the difference between the trial modification and their original payment. Former Treasury Secretary Timothy Geithner famously described HAMP as a means to “foam the runway” for the banks, spreading out foreclosures so banks could more readily absorb them.

These Bank of America employees offer the first glimpse into how they pulled it off. Employees, many of whom allege they were given no basic training on how to even use HAMP, were instructed to tell borrowers that documents were incomplete or missing when they were not, or that the file was “under review” when it hadn’t been accessed in months. Former loan-level representative Simone Gordon says flat-out in her affidavit that “we were told to lie to customers” about the receipt of documents and trial payments. She added that the bank would hold financial documents borrowers submitted for review for at least 30 days. “Once thirty days passed, Bank of America would consider many of these documents to be ‘stale’ and the homeowner would have to re-apply for a modification,” Gordon writes. Theresa Terrelonge, another ex-employee, said that the company would consistently tell homeowners to resubmit information, restarting the clock on the HAMP process.

Worse than this, Bank of America would simply throw out documents on a consistent basis. Former case management supervisor William Wilson alleged that, during bimonthly sessions called the “blitz,” case managers and underwriters would simply deny any file with financial documents that were more than 60 days old. “During a blitz, a single team would decline between 600 and 1,500 modification files at a time,” Wilson wrote. “I personally reviewed hundreds of files in which the computer systems showed that the homeowner had fulfilled a Trial Period Plan and was entitled to a permanent loan modification, but was nevertheless declined for a permanent modification during a blitz.” Employees were then instructed to make up a reason for the denial to submit to the Treasury Department, which monitored the program. Others say that bank employees falsified records in the computer system and removed documents from homeowner files to make it look like the borrower did not qualify for a permanent modification.

Senior managers provided carrots and sticks for employees to lie to customers and push them into foreclosure. Simone Gordon described meetings where managers created quotas for lower-level employees, and a bonus system for reaching those quotas. Employees “who placed ten or more accounts into foreclosure in a given month received a $500 bonus,” Gordon wrote. “Bank of America also gave employees gift cards to retail stores like Target or Bed Bath and Beyond as rewards for placing accounts into foreclosure.” Employees were closely monitored, and those who didn’t meet quotas, or who dared to give borrowers accurate information, were fired, as was anyone who “questioned the ethics … of declining loan modifications for false and fraudulent reasons,” according to William Wilson.

Bank of America characterized the affidavits as “rife with factual inaccuracies.” But they match complaints from borrowers having to resubmit documents multiple times, and getting denied for permanent modifications despite making all trial payments. And these statements come from all over the country from ex-employees without a relationship to one another. It did not result from one “rogue” bank branch.

Simply put, Bank of America didn’t want to hire enough staff to handle the crush of loan modification requests, and used these delaying tactics as a shortcut. They also pushed people into foreclosure to collect additional fees from them. And after rejecting borrowers for HAMP modifications, they would offer an in-house modification with a higher interest rate. This was all about profit maximization. “We were regularly drilled that it was our job to maximize fees for the Bank by fostering and extending delay of the HAMP modification process by any means we could,” wrote Simone Gordon in her affidavit.

It is a testament to the corruption of the federal regulatory and law enforcement apparatus that we’re only hearing evidence from inside Bank of America now, in a civil class-action lawsuit from wronged homeowners, when the behavior was so rampant for years. For example, the Treasury Department, charged with specific oversight for HAMP, didn’t sanction a single bank for failing to follow program guidelines for three years, and certainly did not uncover any of this criminal conduct. Steven Cupples, a former underwriter at Bank of America, explained in his statement how the bank falsified records to Treasury to make it look like they granted more modifications. But Treasury never investigated. Meanwhile, the Justice Department joined with state Attorneys General and other federal regulators to essentially bless this conduct in a series of weak settlements that incorporated other bank crimes as well, like “robo-signing” and submitting false documents to courts.

These affidavits, however, should return law enforcement to the case. William Wilson, the case management supervisor, alleges in his statement that this “ridiculous and immoral” conduct continued through August of 2012, when he was eventually fired for speaking up. That means Bank of America persisted with these activities for at least six months AFTER the main, $25 billion settlement to which they were a party. So state and federal regulators could sue Bank of America over this new criminal conduct, which post-dates the actions for which they released liability under the main settlement. Attorneys general in New York and Florida have accused Bank of America of violating the terms of the settlement, but they could simply open new cases about these new deceptive practices.

They would have no shortage of evidence, in addition to the sworn affidavits. According to Theresa Terrelonge, most loan-level representatives conducted their business through email; in fact, various email communications have already been submitted under seal in the Massachusetts civil case. State Attorneys General or US Attorneys would have subpoena power to gather many more emails.

And they would have very specific targets: the ex-employees listed specific executives by name who authorized and directed the fraudulent process. “The delay and rejection programs were methodically carried out under the overall direction of Patrick Kerry, a Vice President who oversaw the entire eastern region’s loan modification process,” wrote William Wilson. Other executives mentioned by name include John Berens, Patricia Feltch and Rebecca Mairone (now at JPMorgan Chase, and already named in a separate financial fraud case). These are senior executives who, if this alleged conduct is true, should face criminal liability.

Bank accountability activists have already seized on the revelations. “This is not surprising, but absolutely sickening,” said Peggy Mears, organizer for the Home Defenders League. “Maybe finally our courts and elected officials will stand with communities over Wall Street and prosecute, and then lock up, these criminals.”

Sadly, it’s hard to raise hopes of that happening. Past experience shows that our top regulatory and law enforcement officials are primarily interested in covering for Wall Street’s crimes. These well-sourced allegations amount to an accusation of Bank of America stealing thousands of homes, and lying to the government about it. Homeowners who did everything asked of them were nevertheless pushed into foreclosure, all to fortify profits on Wall Street. There’s a clear path to punish Bank of America for this conduct. If it doesn’t result in prosecutions, it will once again confirm the sorry excuse for justice we have in America.

Update: Read the full affidavits from the active court case here.

David Dayen is a freelance writer based in Los Angeles, CA. Follow him on Twitter at @ddayen.

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http://livinglies.wordpress.com/2013/05/07/new-york-getting-ready-to-prosecute-banks-for-violations-of-settlement/

New York Getting Ready to Prosecute Banks for Violations of Settlement

Posted on May 7, 2013 by Neil Garfield
At the end of the day everyone knows everything. If you start with the premise that the securitization of debt was a farce and that the necessary element of the false securitization of mortgage loans was the foreclosure of those loans, then you move one step closer to understanding the mortgage and foreclosure mess and a giant step forward to understanding and implementing a solution. All the actions, statements and myths promulgated by the Wall Street banks become clear, including their violation of every consent decree,order and settlement they ever made with respect to mortgage loans.
Attorney General Schneiderman of New York seems to understand this and he is taking the mega banks to task for violating a settlement that looks like pennies on the dollar. He doesn’t care why they violated the $26 Billion settlement but he is taking action for their consistent violation of the settlement. But I care about the reason and so should you. The reason is nothing less than the obvious: the mega banks expose themselves to liability that far exceeds the terms of the settlement.
In any normal circumstances when a big company enters into a settlement that amounts to pennies on the dollar, the company rushes to make the settlement final by paying the money and performing the actions required in the agreement. Thus they commit illegal acts and get away with it by entering into an agreement that looks big but doesn’t put them out of business. They are nothing but anxious to put the settlement behind them.
So why are the mega banks refusing to abide by a $26 billion settlement on a multi- trillion theft? The answer by pure logic and my sources is that if the banks actually performed on the material portions of the agreement they risk going out of business. Why?
The answer is arithmetic. The purpose of the settlement was to stop illegal foreclosure practices and compensate those who lost their homes in illegal Foreclosures (as opposed to simply reversing the Foreclosures and starting over again which is what any court of law would require if there was an admission that the documents and claims in foreclosure were false).
Arithmetic is the answer. Without Foreclosures, the banks cannot support their claim of failure of the mortgages. If the loans are reinstated then the “sales” of loans and mortgage bonds become immediately subject to an accounting and to payback to investors who bought empty bogus bonds issued by a trust that existed in name only. If the loans must be considered performing loans because of any of the reasons contained in those multistage settlements, consent decrees,orders and agency settlements, then the banks must reimburse the insurers, buyers and counter-parties on hedge products like credit default swaps.
Thus satisfactions the settlement agreement exposes the banks to a reduction in their tier 1, tier 2, and tier 3 capital such that the reality and empty underbelly of the banksia displayed for all to see. Those banks and are not nearly as big as they say they are and must be resolved by the FDIC because they actually do not have the minimum capital requirements that all banks must have to continue operations. That is why the Brown bill in the U.S. Senate is dead on right.
If the Foreclosures were invalid there is only one way to correct them, just like any title problem. Correct the defect In Title by reversing the foreclosure or get an affidavit from the homeowner joining in some correction of the corrupted title resulting from fake Foreclosures.
With trillions in liability at stake of course the banks are violating the settlement agreements and consent decrees. All they can do is try to control state and federal action by providing photo opportunities and planted articles around the media to make people feel good. But neither the housing market nor the economy will get the stimulus necessary for a full recovery until the truth is addressed instead of pretending you can fix this mortgage and foreclosure mess with Tiny settlements and promises that nobody intends to keep.

Eric Schneiderman: Banks Have ‘Confidence’ That Law Enforcement Is Not Taking Violations ‘Seriously’
http://www.huffingtonpost.com/2013/05/07/eric-schneiderman-banks_n_3226992.html

 

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Oregon Woman Wins 3-Year Fight Against Wells Fargo Foreclosure

  • Oregon Woman Wins 3-Year Fight Against Wells Fargo Foreclosure (ABC News)

    Oregon Woman Wins 3-Year Fight Against Wells Fargo Foreclosure (ABC News)

 

A woman in Tualatin, Ore., is breathing a sigh of relief after a three-year battle to prove Wells Fargo had wrongfully moved to foreclose on her home, saying she had missed mortgage payments.

A judge ruled Wednesday that Wells Fargo failed to prove she was actually behind in her payments, which Delores Dingman, 80, attributes to the bank’s simple “accounting errors.”

“I just praise God for it all because I kept praying so many times about this, because I knew I had made the payments, but their accounting errors made it hard,” she said.

The judge heard six hours of testimony and then ruled to cancel the judicial foreclosure.

Dingman and her late husband moved into their four-bedroom home in 1967, 46 years ago.

After her husband, Leland, died in March 2008, Dingman took out a new mortgage with Wachovia while she paid off his medical bills, never missing a payment. Court records show she promised to pay $308,000 plus interest June 16, 2008.

The next year, after Wells Fargo’s acquisition of Wachovia was completed in Jan. 2009, Dingman began receiving foreclosure notices. She believes the bank did not correctly process her payment since around October 2009.

But her bank records show her mortgage payments have been deposited by Wells Fargo. Despite efforts to clear up the mistake and paying more than $12,000 in attorney fees, her home went into judicial foreclosure.

Read more: U.S. Foreclosures Up 2 Percent, Second Straight Monthly Increase

She had been employed by the local Kmart since it opened 40 years ago but stopped working when the store closed last year.

She continued to pay her monthly mortgage amount of more than $2,300 while paying her attorney, Terry McLaughlin , to help her clear up the mistake.

“There is going to be more litigation,” McLaughlin said, declining to comment further.

Wells Fargo said in a statement, “We are reviewing the court’s decision and considering all of our options at this time.”

Dingman said, “I’m very sorry to say I don’t feel confident in their accounting whatsoever.”

This is not the first time Wells Fargo has been involved in an error on a foreclosed home. The bank’s contractors mistakenly cleared out the home of a retired couple twice in Twentynine Palms, Calif., after confusing it with a neighboring foreclosed home.

The bank previously said it worked with Dingman “since 2009 to identify options that would allow her to stay in the home.”

Dingman said there has been no cooperation from the bank.

“Foreclosure is always the very last option we explore with any customer,” Wells Fargo said November in a statement. “We feel foreclosure is bad for the customer, bad for their neighborhood, bad for their community and bad for us as the lender. Our goal is to keep our customers in their homes, have them pay off their loans, and own their homes outright. Given that there is active litigation around their loan we can’t discuss the case in any more detail at this time.”

In the past few years, her payments were considered missing even though she has checks that have Wells Fargo’s stamp on the back after they have been deposited, Dingman said.

When Dingman visited a Wells Fargo Branch to try to clear up the matter, they were directed to talk to a representative over the phone, White said. That person said the bank could not discuss the matter with her because her home was in foreclosure.

In the spring of 2011, Dingman wrote a certified letter asking Wells Fargo to send her a payment history. She said the bank provided her with a payment in the fall of 2012.

According to court records, Wells Fargo says that Dingman’s unpaid principal balance was $299,672.08.

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