Posted on 12/02/2013 8:08:29 AM PST by whitedog57
Bank of America has agreed to pay Freddie Mac $404 million in a mortgage settlement over 716,000 loans, many purchased from Countrywide.
This is one of many lawsuits by the Federal government over Countrywide and related mortgages. One wonders when the litigation will end.
Here is the thing. These suits are largely about representations and warranties between the loan seller and the loan purchaser concerning underwriting standards. The reps and warranties provide relief to the loan purchaser if the underwriting of the loans by the loan seller proves to be misleading or false.
But there is another issue called causality. Did the alleged misrepresentations on underwriting cause the defaults?
Let’s look at this chart of house prices (Case-Shiller 20 metro index in blue), unemployment (U6 in red) and the delinquency rate on single family mortgages (in green). Notice that in Q4 2007 and after, house prices were falling, then unemployment and mortgage delinquencies rapidly rose.
cs20u6delinq
From a causality point of view, alleged bogus appraisals, for example, did not cause default. Loss of job, income impairment and plummeting house prices caused the default.
And look at the chart once again. Unemployment was declining through the last decade when these loans were originated. Single family mortgage delinquencies were also falling prior to the Great Recession.
I am not arguing about the alleged quality of the underwriting. What I am arguing is that the housing bubble burst and shocking rise in unemployment was the cause of the defaults, not the alleged underwriting quality.
As we undertake GSE reform in Congress, let’s ensure that Fannie Mae and Freddie Mac pay closer attention to what loans they purchase (such as sampling 1 in 100 loan packages). And please, Congress, stop pushing home ownership at all costs. nhsdream2
On a final note, I did not see any protections in the Corker-Warner GSE reform for taxpayers, such as sampling or auditing 1 in 100 loan packages. Corker-Warner is following the dreaded practice of letting unelected bureaucrats write the laws AFTER passage.
How much of the $404 million will end up in DNC coffers? Inquiring minds want to know.
This will not stop because no one will suspend the responsible people from a rope.
What chart?
Typing must be more on target than in a long while ... Virus protection working overtime.
Obama's speech on the US economy spelled out the beginning of the end for federally-controlled mortgage buyers Fannie Mae and Freddie Mac. “We’ll work with both parties to turn the page on Fannie and Freddie, and build a housing finance system that’s rock-solid for future generations,” Obama said, according to a copy of his prepared remarks
The House Financial Services Committee approved a bill in July that would get rid of the firms in five years, to be replaced by a National Mortgage Market Utility to help "securitize" mortgages. (Excerpt) more at blogs.marketwatch.com
NOTE WELL---what Obama left out of his remarks Wall Street Journal report on page A15---article entitled “Treasury’s Fannie Mae Heist“.
WSJ: The Federal government is seizing the substantial profits of the government-chartered mortgage firms, Fannie Mae and Freddie Mac, taking for itself the property and potential gains of private investors the government induced to help prop up these companies. This conduct is intolerable.” A scathing article follows--a must read.
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ANOTHER POSSIBILITY IS A HOLDER COVER-UP for the massive mtge fraud perpetrated by the Congressional Hispanic Caucus (O's gotta show "he cares" ---b/c he's paranoid about getting latino votes). More below.
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FANNIE-MAE--THE DEMOCRATS' CRIMINAL ENTERPRISE / By Michelle Malkin
Fannie/Freddie are centerpieces of the criminal enterprise called the Democrat Party-—where Dem cronies and collaborators loot the organization, get cushy jobs, bonuses, and the like.
Fannie Mae’s political machine dispensed campaign contributions, gave jobs to friends and relatives of legislators, hired armies of lobbyists (even paying lobbyists not to lobby against it), paid academics who wrote papers validating the home ownership mania, and spread “charitable” contributions to housing advocates across the congressional map.
Fannie Mae serves as an industrial-sized patronage factory — sharing profits with political allies, spreading taxpayer funds to voting blocs——like ethnic groups-——and doling out jobsto left-wing academics, Washington has-beens and back-scratching buddies.
Obama insider Fannie Mae exec Jim Johnson got sweetheart loans from shady subprime Countrywide. Pols raked in six-figure salaries as F/F engaged in Enron-style accounting, plunged into debt and helped usher in the subprime housing meltdown through cockamamie lending practices.
Bill Clinton appointed Franklin Raines, Daley and Rahm Emanuel just as the quasi-governmental F/M engaged in rampant book-cooking so that F/M insider could help themselves to massive bonuses.
The Chi/Tribune exposed how political whore Rahm Emanuel’s “profitable stint” was low-show w/ no work involved. Emanuel was not even assigned to committees, according to company proxy statements. Immediately upon joining the board, Emanuel and other insiders qualified for $380,000 in stock and options plus a $20,000 annual fee, public records indicate. W/ Wall Street Rahm Emanuel at F/M, accounting tricks were used to mislead shareholders about outsize profits F/M reaped from risky investments.
The goal was to cook the books to keep fraudulent earnings on the books, to make Freddie Mac look profitable on paper-——AND to fraudulently obtain humongous annual bonuses for Dem political insiders.
The Congressional Hispanic Institute, Inc, is an entity organized by Cong Joe Baca (D-Cali) in his capacity as head of the Congressional Hispanic Caucus.
Cong Baca created "HOGAR" (Spanish for home) in 2003 to work with the mortgage industry, F/M, lenders, banks and latino community groups to increase mortgage lending to what savvy observers consider to be unqualified Latinos.
"HOGAR" colluded w/ Cong Baca in what was to become a massive bilking of taxpayers. Cong Baca calculatedly hyped the fact that the national Latino homeownership rate was 47%, compared with 68% for the overall population.
HOGAR was coached to call the figure "alarming," and to say "a concerted effort was required to ensure that by the end of the decade Latinos will share equally in the American Dream of home ownership."
HOGAR and Cong Baca conned the public, failing to note that most of the "dreamers" were illegals, citizens of Third World countries who had violated US borders.
Predictably, HOGAR colluded w/ co-conspirators which included:
(a) shaky mortgage companies that ran into big trouble;
(b) Fannie Mae and Freddie Mac, both now under federal control after billions in taxpayer bailouts;
(c) Countrywide Financial Corp., sold to Bank of America Corp;
(d) Washington Mutual Inc., taken over by the US government and sold to J.P. Morgan Chase & Co.; and,
(e) New Century Financial Corp. and Ameriquest Mortgage Corp, both now defunct, killed by defaulted subprime Latino mortgages.
HOGAR's ties to the subprime mortgage industry were substantial. Bribery and self-dealing were rampant:
<><> Companies that donated $150,000 to Cong Baca got the right to have their own research fellow who would conduct fraudulent studies, which were cunningly used by industry lobbyists to pump lending.
<><> Bribery and extortion in the form of $100,000 annual donations to Cong Baca, for which HOGAR provided phony news releases from Cong Baca's Hispanic Caucus promoting a lender's commercial products to the Latino market,
<><> The most shocking example of bribery well-substantitated by Hogar's literature..... HOGAR announced it worked with Freddie Mac on a self-serving two-year examination of Latino homeownership in 63 congressional districts.
The "study" found Hispanic ownership on the rise thanks to "new flexible mortgage loan products" that the industry was adopting at the urging of Cong Baca's collusive coterie.
<><> HOGAR conned lenders into even more lenient down-payment and underwriting standards.
<><> As the subprime debacle unfolded, HOGAR declined repeated requests for comment despite the economic havoc their activities precipitated.
The mortgage schemes demonstrated the criminal activities of border violators with multiple identities---perhaps violent, terrorist-connected foreigners---colluding and conspiring to defraud private companies and public entities. And mortgage racketeering enterprises which employed sub rosa finance and business practices to carry out deceptions and frauds.
The alleged ring of swindlers---a Congresman, individuals with multiple identities, banks, insurance companies, mortgage brokers--might be charged with cheating the US govt, taxpayers and bank share holders out of hundreds of millions of dollars via an elaborate web of mortgage and bank frauds.
The mortgage Dreamers used multiple phony identities, fraudulent Social Security numbers, purchased from identity forgers in order to obtain govt-subsidized benefits.
L/E will find that individuals with multiple identities obtained fraudulent mortgages then flipped the houses at ever-higher prices to family member who then absconded to foreign countries, sticking banks (and taxpayers) with hundreds of millions in fraudulent mortgages.
BACKGROUND A Wall Street Journal investigative report related that, according to the Federal Financial Institutions Examination Council examination of the borrowing spree, uncovered financial schemes by low-income housing groups, Hispanic lawmakers, a congressional Hispanic housing initiative, mortgage lenders and brokers, all colluding in fraduent schemes to increase homeownership among Latinos with forged documents which enabled massive fraud.
This was not simply the mortgage market at work. It was fueled by avarice, greed, and Congressional enabling fraudulent practices. In 2005 alone, mortgages to Hispanics jumped by 29%; Latinos with multiple fraudulent identities in low-paying jobs obtained subprime mortgages for prime properties---soaring to 169%.
(Research provided by Wall Street Journal. Some material excerpted from the NY Times).
The gov’t forced B of A to take over Countrywide.
In his new book "Extortion" author Peter Schweitzer writes about Obo and Holder, using the Justice Dept and assorted govt agencies to extort Big Money ....threatening jailtime unless the targets fork over billions. Read on.
US ‘robs’ $13B from venerable bank / By Mark DeCambre, Oct 19, 2013
JPMorgan Chase has tentatively agreed to pay (Holder's) Dept of Justice a record $13 billion settlement to resolve several civil probes — a costly deal that still doesn’t protect the bank against additional criminal prosecutions.
“This is a basic and fundamental attack on capitalism,” declared Dick Bove, an influential bank analyst at Rafferty Capital. “It is possible that the government is taking away the property of the JPMorgan shareholders without the shareholders having committed any crime or having any say in the expropriation of these funds.” The deal also includes an undisclosed sum to settle a civil suit brought by NY state AG.
Under the settlement, JPMorgan must continue to cooperate with federal investigators probing the banking giant’s issuance of mortgage-backed securities from 2005 to 2007, according to sources.
Still to be ironed out are how to resolve that criminal investigation, along with the wording of any admissions of culpability the feds might require.
The general terms of the settlement deal were forged Friday in a phone conversation between Attorney General Eric Holder and JPMorgan CEO Jamie Dimon, The WSJ reported.
Analysts called the settlement a raw deal given that, by JPMorgan’s own estimate, some 80 percent of its mortgage-backed securities had been acquired at the request of the Obama-led government, when it bought Bear Stearns and Washington Mutual in 2008. “Ultimately, the earnings power of banks is being force-regulated out the (SEC), by the Department of Justice,” Kass added.
The settlement sum includes $4 billion that JPMorgan agreed this month to pay the Federal Housing Finance Agency to resolve allegations that the bank misled mortgage-finance companies Fannie Mae and Freddie Mac about the quality of loans it sold them prior to the 2008 financial crisis, the Journal reported.
SOURCE http://nypost.com/2013/10/19/jpmorgan-in-tentative-13b-deal-with-us-justice-dept/
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The twisted deranged progressive mind at work. As a community organizer, Obama sued banks to give out mtges to the underemployed----food stamps and SSI were considered "income." Now, as president, he's suing the same banks for predator lending---burdening the ne'er do well with mtges they can't possibly pay off.
I started adding up all the fines paid by banks and financial companies the other day, and I was shocked by the billions and billions of dollars that were transferred supposedly to the federal government.
Does anyone know where this money really goes?
Sounds like payola to me.
yes Liz ... they (the power brokers) learned well from Wachovia. The entire raid on Wachovia was to cover up the upcoming power play.
Am going to add to your point. 85 Billion is being printed each month through the fed and where does it go? Best educated guess ... Wall Street.
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