Lawsuits vs. Banks - Aggregation, Analysis, Predictions

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California Lawyer
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Lawsuits vs. Banks - Aggregation, Analysis, Predictions

These lawsuits and the related stories are too important to the current end of the Keynesian experiment to allow them to drift off unattended.  I wanted to create one forum to aggregate these lawsuits, and any commentaries I find so that I can offer my insights and analysis, as well as predictions.  Please join in, offering your own take. 

I will add all other news links and analysis I find, particularly from zerohedge, since that site has been unbelievably journalistic about this whole mess.

Federal Housing Finance Agency vs. [Seventeen Banks, but strangely, not including Wells Fargo]:

The official website, with the list of the various of lawsuits is here.

The actual complaints are linked, below:

1. Federal Housing Agency, as Conservator for the Federal Home Loan Mortgage Corporation v. Ally Financial, et al. [GMAC]; [filed in the Supreme Court, State of New York]

2.  FHFA v. Bank of America Corporation, et al.; [filed in the United States District Court, Southern District of New York]

3.  FHFA v. Barclays Bank PLC, et al.; [filed in the USDC NY]

4.  FHFA v. Citigroup, Inc., et al.; [filed in USDC NY]

5.  FHFA v. Countrywide Financial Corporation; [filed in Supreme Court NY]

6.  FHFA v. Credit Suisse Holding (USA) Inc., et al.; [filed in USDC NY]

7.  FHFA v. Deutsche Bank AG, et al.; [filed in USDC NY]

8.  FHFA v. First Horizon National Corporation, et al.; [filed in USDC NY]

9.  FHFA v. General Electric Company, et al.; [filed in Supreme Court NY]

10.  FHFA v. Goldman, Sachs & Co., et al.; [filed in USDC NY]

11.  FHFA v. HSBC North America Holdings Inc., et al.; [filed in USDC NY]

12.  FHFA v. JPMorgan Chase & Co., et al.; [filed in USDC NY]

13.  FHFA v. Merrill Lynch & Co., Inc., et al.; [filed in USDC NY]

14.  FHFA v. Morgan Stanley, et al.; [filed in Supreme Court NY]

15.  FHFA v. Nomura Holding America Inc., et al.; [filed in USDC NY]

16.  FHFA v. The Royal Bank of Scotland Group PLC, et al.; [filed in USDC NY]

17.  FHFA v. SG America, Inc., et al.; [filed in USDC NY]

At some point, I will be able to post the case number, so those of you wanting to go to the actual docket can do so.

Meanwhile, I have collected some analysis of these and link to them below:

http://www.zerohedge.com/news/massive-wave-lawsuits-be-filed-us-against-americas-biggest-banks-soon-tomorrow

http://www.zerohedge.com/news/two-down-many-more-go

http://www.zerohedge.com/news/full-fhfa-statement-disclosing-suits-against-17-banks-including-such-dead-man-walking-socgen

http://www.zerohedge.com/news/fhfa-lawsuit-against-banks-just-subversive-res-judicata-bail-out-banks

I am about to go live and listen to the Rep. Brad Miller conference call right now, and will report in a bit.

p.s. I have collected this material solely from public, on-line sources.  I do not have any other information other than what I have gleaned from the public records.

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"To save yourself from all this that has happened and will continue to happen requires commitment and courage. You have it or you do not. Admit who you are and act accordingly."
Jim Sinclair, December 18, 2012.

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@Californialawyer

Always enjoy your posts.

Great idea posting this forum thread and look forward to your analysis.

While it may be outside your expertise, I am sure many would welcome any educated insight you might have re the German court case concerning constitutionality of the Eurozone bailouts.

A well earned hat tip....

Bay of Pigs
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Thanks Cali

Your posts are impressive. Well written and on point.

Clearly, it's all FUBAR now. These banks are on the slippery slope...

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Quick Take on the Lawsuits - Political in Nature, Alas

I wanted to start this new forum here.  I wanted to be able to keep this discussion going, and keep it concentrated on the main theme.  It is going to be an ongoing thread to discuss the pending lawsuits against the banks, the legal theories, and the political and economic ramifications.  I see this as being integral to the continued bull market in physical gold and silver.  The reason, is that stresses of the TBTF banks require Fed intervention, meaning further debasement of the FRNs, and further price appreciation in terms of FRNs for gold and silver. 

Legal developments of these unbelievably important lawsuits may tie into gold/silver futures pricing as well, so I am happy to share what I can so that those of you who trade paper can make use of this information for your purposes.

Latest on the political side of things:

Here are my notes from the Rep. Brad Miller conf. call, Sep. 6, 2011, 11:00 a.m. to 11:26 a.m. [NOTE: only credentialed reporters were allowed to ask questions]:

Miller opening comments: Subpoenas were issued last July; question of liability has been an issue; this was not considered in stress test in 2009; but did get considered in this year’s stress test;

Allegations of the seventeen suits filed are substantially the same as the allegations of pending suits by mortgage investors and insurers;

Q: Dow Jones - if govt goes too far, risk is banks are pulled under, another financial crisis, systemic risk; Miller: regulators and banks should have been taking this into account for years; failure by govt to pursue legitimate claims is just a subsidy to the banks and “there is not public patience for that”; reference specific legal questions to lawyers;

Q: re Bank of America; Miller: 1/4 of securities involved are BAC’s;

Q: Catastrophic effect?  Miller: solvency is a concern, capital requirements are a concern; “the rule of law requires that we pursue those claims”; “undermin[ing] the rule of law is more damaging”; “public has the right to know that largest banks are not getting another indirect subsidy by having federal agencies turn their head away from these issues”; “this has been a long time in coming”; “BAC was in far better position to raise capital 6 months ago than they are now”;

Q: Reuters, re banks defense is same as from subprime; Miller; “argument that he is bad guy too does not strike me as strong legal defense”;

Q: Reuters, comment from Republicans on this issue; Miller: republicans are not seemingly interested in pursuing claims vs. banks; leadership of financial services committee not interested;

Q: treasury to continue funding losses?  Miller: not much appetite, wants our money back; I want them to pursue legitimate claims to reduce taxpayer losses; “not pursuing claims would be a subsidy for that industry”;

Q: Dow, can BAC handle all of this?  Miller: “I do not know”; BAC continues to say they are adequately capitalized; they were not allowed to increase dividends or buy back stock; I know there would be a great sense of injustice if they were given a pass on their legal liabilities”; “the same rules ought to apply”;

Here is my take:

This whole charade is beginning to resemble a political move.  First, note that Brad Miller is a Democrat, in a safe district in California.  That he is out front on this issue, and not republicans is very telling.

Let me make the case.  As you can see from Rep. Miller's repeated talking points sound bites, the political angle on this is that the lawsuits were filed in order to prevent another subsidy to the banks.  That deals directly with the public outcry over TBTF banks getting taxpayer money while Main street gets the shaft.  That is pure politics.

So . . .

That to me means that the banks have realized that democrats in general, and the manchild in particular are vulnerable to ouster in November 2012. So, that tells me that the big banks are hedging, by funneling money to the republicans in the house, so that they go soft on any regulations, and also that perhaps a horse trade on some sweetheart deal can be made to settle these suits after the election.

Why would this administration sue the banks now?  If the administration was serious, why would they not just go after them criminally with indictments?  So, the administration is not serious, but they want to be able to posture for next year's election.  Thus, a raft of civil suits by this administration allows all the democrats to play class warfare and target the banks.

Lawsuits take YEARS to resolve.  So, expect there to be nothing good which will come of these lawsuits, but political spin and demagoguery.  Well, almost nothing good.  The law firms representing all the banks will make tons of money, for sure.  Trickle down if I have ever seen it.

I am going to go grab all the other headlines and takes that I can, and put them here.

__________________

"To save yourself from all this that has happened and will continue to happen requires commitment and courage. You have it or you do not. Admit who you are and act accordingly."
Jim Sinclair, December 18, 2012.

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List of Law Firms

Representing FHFA [vs. GMAC]: Kasowitz, Benson, Torres & Friedman, LLP, New York, Marc E. Kasowitz, Hector Torres, Michael S. Shuster, Christopher P. Johnson, Michael Hanin, Kanchana W. Leung;

Representing FHFA [vs. BOA]: Quinn Emanuel Urquhart & Sullivan, LLP, New York, Christine H. Chung, Julia M. Guaragna;

Representing FHFA [vs. Barclays]: Quinn Emanuel, Manisha M. Sheth, Adam Abensohn;

Representing FHFA [vs. Citibank]: Quinn Emanuel, Philippe Z. Selendy, Manisha M. Sheth;

Representing FHFA [vs. Countrywide]: Quinn Emanuel, Christine H. Chung, Leah McCallister Ray;

Representing FHFA  [vs. Credit Suisse]: Quinn Emanuel, Christine H. Chung, Wing F. Ng;

Representing FHFA [vs. Deutsche Bank]: Quinn Emanuel, Phillippe Z. Selendy, Adam Abensohn;

Representing FHFA [vs. First Horizon]: Quinn Emanuel, Christine H. Chung;

Representing FHFA [vs. GE]: Kasowitz, Benson, Marc E. Kasowitz, Hector Torres, Michael S. Shuster, Christopher P. Johnson, Charles M. Miller, Michael A. Hanin;

Representing FHFA [vs. Goldman, Sachs]: Quinn Emanuel, Philippe Z. Selendy, Adam Abensohn;

Representing FHFA [vs. HSBC]: Quinn Emanuel, Richard A. Schirtzer, Adam M. Abensohn;

Representing FHFA [vs. JP Morgan]: Quinn Emanuel, Philippe Z. Selendy, Manisha M. Sheth;

Representing FHFA [vs. Merrill Lynch]: Manisha M. Sheth, Leah McCallister Ray;

Representing FHFA [vs. Morgan Stanley]: Kasowitz, Benson, Marc E. Kasowitz, Hector Torres, Michael S. Shuster, Christopher P. Johnson, Michael Hanin, Kanchana Wangkeo Leung;

Representing FHFA [vs. Nomura Holdings]: Quinn Emanuel, Adam M. Abensohn, Richard A. Schirtzer;

Representing FHFA [vs. Royal Bank of Scotland]: Shipman & Goodwin LLP, Hartford, CT, Ross H. Garber, Sara J. Goldfarb [Of Counsel: Quinn Emanuel, Adam M. Abensohn, Philippe Z. Selendy, Julia M. Guaragna];

Representing FHFA [vs. SocGen]: Kasowitz, Benson, Marc E. Kasowitz, Hector Torres, Michael S. Shuster, Christopher P. Johnson, Michael A. Hanin, Kanchana Wangkeo Leung.

Next post explains the listing.

__________________

"To save yourself from all this that has happened and will continue to happen requires commitment and courage. You have it or you do not. Admit who you are and act accordingly."
Jim Sinclair, December 18, 2012.

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@Ca

Thanks CA, appreciate all your perspectives. Especially enjoy the back and forth with DPH. Wanted to get your thread into my history. Many times lurking.

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good stuff

Thanks for posting this, the more people aware of these suits the better. Very much enjoy your insights, I agree it is likely to have political motivations. 

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Law Firms, Conflicts, Etc.

Legal housekeeping, but important.

I made the long list of firms and the individual attorneys representing FHFA in order to help illustrate a point.

Conflicts of Interest

Attorneys are guided by mandatory ethical rules.  One such rule regards conflicts of interest.  This is a very complicated area, but the simple premise is that a lawyer cannot represent two clients with adverse interests.  Thus, a lawyer cannot on behalf of one client file suit against another current client.  A lawyer also cannot sue a former client, but there are some exceptions, such as if both clients consent in writing.

Anyhow, this is important for two reasons: (1) the ethical rules; (2) business.

If a law firm or an individual attorney in a law firm represents FHFA in a lawsuit vs. a bank, then FOREVER that firm and lawyer are in all likelihood PROHIBITED from ever representing that bank EVER.

So, as for any of the attorneys who are representing the FHFA against the seventeen banks, they will never, the rest of their lives, be able to represent any of the defendants they are suing.  This makes the lawyers less marketable in the future.  Why?

The banks file suits, and get sued, all the time.  Hence, the banks have BIG, HUGE, BEHEMOTH law firms that represent them.  These big firms are MASSIVE, and POWERFUL; think revolving door between Goldman Sachs and the SEC, and you get the idea.

These big, huge banks will have to lawyer-up, to use a slang phrase.  But, in each one of these seventeen lawsuits, there are MULTIPLE defendants.  As such, there are SURE to be multiple conflicts of interest, requiring MULTIPLE lawyers and law firms. 

Think about it: if you are an individual named in one of the lawsuits, would you agree to have the same lawyer represent you AND the big bank?  HELL NO!  If my assets were on the line, I would want my own lawyer, and I would be for SURE blaming my bosses and everyone else but myself.  Down in the trenches of litigation, where I am very comfortable since I practice there since 1993, these kinds of issues are REAL, and THORNY.

All of the big banks have to close ranks, and defend as a team.  If just one of the named individual defendants elects to tell the truth, the whole house of cards will collapse.  Hence, the tell, in my book, will be if only one firm ends up representing the bank and the individuals.  That to me will signal a massive, orchestrated scheme, all orchestrated by the top of the food chain. Remember, each defendant has the right to have its own, individual lawyer.  If the bank wants to maintain control of the litigation, then the bank needs to be sure it can control all of the defendants.  The easiest way to do that is for the bank to hire the lawyer, and get a conflict waiver from the individual defendants.

So, to recap: there are three firms that represent FHFA against seventeen banks, and about a hundred other firms and individuals, give or take (I did not count all the defendants, some one else can do that).  Even though there are three, there are basically only two, Quinn Emanuel, and Kasowitz, Benson, since Quinn Emanuel is Of Counsel for that third firm from Connecticut.  That just means that Quinn Emanuel is running the show, but the CT firm is probably politically connected somehow, and wanted in on the gravy train.

The Gravy Train

My only guess why there are two firms representing the govt is because they both were able to represent the govt with no conflicts (meaning they had never represented any of the named defendants before, and were willing to forever forego representing any of them ever in the future) and they both had political connections to get hired to do the work.  The billing rate will be at least $750 per hour.

Expect that the defendants will hire the who's who of litigation firms in the WORLD.  Those firms will at a rate exceeding $1,000 per hour.  There will be multiple law firms and lawyers representing the many named defendants.  The litigation will span years, costing in the hundreds of millions for just the lawyers, plus there are depositions and other costs which will be enormous.

Federal politicians of every stripe will be subjected to massive lobbying by these banks, for new legislation to ease the pain of the lawsuits.  The political cover has already started, with the democrats getting out front on the class warfare issue, but the banks have the more difficult legal arguments.

At some point, there will be settlements of all the lawsuits, but such settlements will not take place until well after the November 2012 elections.  There is just too much money at stake, and too much money to be made by the lawyers for all of this to go away in the near term.

More Lawsuits

I will also predict that there will be many more lawsuits filed.  Once discovery starts, expect other aggrieved investors and individuals to latch onto the coattails and file similar lawsuits all across the country.

I expect a round of federal legislation designed to bring an end to the lawsuits.  This will dovetail nicely with the federal takeover of all residential mortgage and finance.  Expect massive redistribution as a result.  These predictions and analysis are on the Show Me the Note forum.

Anyhow, please feel free to chime in and share!  This is a work in progress, and as I learn things, I will post updates here.

__________________

"To save yourself from all this that has happened and will continue to happen requires commitment and courage. You have it or you do not. Admit who you are and act accordingly."
Jim Sinclair, December 18, 2012.

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From zerohedge, here.  Text

From zerohedge, here.  Text from FHFA press release is in quotes, while my comments are in bold, italics.

"In the several years prior to conservatorship, each Enterprise bought hundreds of billions of dollars in PLS [private label mortgage backed securities] packaged and sold by large financial institutions.  To be clear, Fannie Mae and Freddie Mac were investors in these PLS, not the originators of those securities."

The GSE's thus have no independent liability for their own false statements, etc., since they did not originate the securities, and thus have no responsibility for disclosure or representations.  This also means, by reading between the lines, that other investors also have the potential to sue the banks as well, so look for many more lawsuits to result.

"The mortgages backing the PLS sold to the Enterprises were often a part of a larger pool of mortgages and the securities sold to the Enterprises were often customized for their purchase  because of the conforming loan requirements of their charters.  Like other PLS investors, the Enterprises did not have access to the loans underlying these securities and each Enterprise ultimately relied upon the security issuer to accurately describe the mortgages backing the security in the marketing and sales materials, as required under federal securities laws."

This is important since with respect to some of the legal theories that the GSE's have to prove is that they relied upon the representations contained in the marketing and sales materials.  This also makes it crystal clear that other investors can also sue under the same exact legal theories based upon the very same marketing and sales materials.  This opens up the door for boatloads of new lawsuits all over the country.  Any investor that purchased any of these suspect securities can file suit.  This crop of lawsuits only provides the opening salvo in what is sure to be a very long battle.

"At the heart of the suits is FHFA’s conclusion that the actual mortgages backing many of the
securities had characteristics that differed in a material way from what had been represented insecurities filings. Under the securities laws at issue here, it does not matter how “big” or “sophisticated” a security purchaser is, the seller has a legal responsibility to accurately
represent the characteristics of the loans backing the securities being sold."

True, and note also that the seventeen lawsuits also included state law tort claims for fraud as well.  Those common-law claims require proof of justifiable reliance.  This means that the investors must prove both false statements in the marketing materials, AND that the investor reasonably relied upon those statements in purchasing the securities.  A defense to the common-law fraud claims is that no reasonable investor would have relied upon sales or marketing materials, but instead should have done due diligence, or that the investor was sophisticated and should have known better, or that every investment is subject to risk, and that other information which was disclosed clearly showed the risks of the investment.  Thus, most of the state law claims will likely fail, but the federal securities law violation claims are more robust.

"The nation’s financial system cannot function if sellers of securities fail to fulfill this legal responsibility."

What a bunch of sanctimonious load of bull shi-!!  So where are the perp walks, then? 

"Our laws provide legal remedies through challenges such as the ones FHFA has brought.  FHFA has consistently made clear its intention to seek recoveries on losses that are the legal responsibility of others and FHFA has sought remedies short of filing formal legal complaints."

So, what sorts of discussions took place, in what context, between whom?  What remedies, under what system, civil, criminal, SEC, etc.?  Was a deal made in advance that no criminal charges would be levied, thus providing time and cover for the perpetrators to get Fed backing, bonuses, and to essentially cover their tracks?

"Now, however, FHFA has taken this action to carry out its legal responsibility as conservator. Any recoveries resulting from these efforts will reduce taxpayers’ ultimate losses from the Enterprises’ financial difficulties."

This reeks of politics.  This statement confirms the political underpinnings of the whole effort. See, the incumbents will all proclaim how they held the evil Wall Street banks accountable, when in reality, the settlements will be for fractions of pennies on the dollar.  Also, even more cynically, when will the settlements be announced, right before the November 2012 elections?  Call me cynical, but please, this is pathetic.

"Another important clarification regarding these suits is in order.  FHFA has not filed suit against every issuer, nor on every PLS purchased by the Enterprises."

Like, uhm, maybe, Wells Fargo?

"FHFA has filed suit where it believes it has evidence of violations substantial enough to warrant such remedies."

This is ridiculous!!  There is no scientific way to measure the line between criminal and civil.  In a criminal case, the prosecution bears the burden to prove violations beyond a reasonable doubt.  In a civil case, based on the very same conduct, the Plaintiff need only prove the violations are more likely true, than not true.  How can the FHFA claim something is "substantial enough" to warrant a civil suit, yet at the same time, not warrant a criminal indictment?  I am sick to my stomach about this.  Our system is so corrupt as to be demoralizing.  The normal course of events is for the prosecutors, whether local, state, fed, FBI, SEC, etc., to bring criminal charges. While those charges are pending, or shortly after, the civil suits usually begin.  [Think of the 5th Amendment privilege against self-incrimination to understand why the criminal case goes first].  For there to be a civil suit, with no criminal suit, demonstrates either that the civil suit is totally without merit, or that there has been corruption by failure of authorities to bring criminal charges.  As such, if I am the bank's lawyer, I move to dismiss forthwith and steadfastly defend.  At the end, I quietly settle the case for peanuts, and all is forgotten.

"FHFA seeks recoveries for losses associated with securities laws violations and other improper actions set forth in the complaints.  Actual recoveries will be determined based on filings by the parties, evidence and judicial findings.  At this time, it would be premature and potentially misleading to estimate the size of any potential recoveries."

Boilerplate.

"However, press reports that FHFA is seeking nearly $200 billion in damages or recoveries are excessive; such numbers reflect the original amount of such securities purchased, not the losses incurred or the potential recoveries at the end of this process.  In particular, use of original unpaid principal balance as a measure of potential recoveries is incorrect as it does not equate with the losses incurred and it does not reflect the repayments of principal that have already occurred or the remaining value of the securities."

This seems designed to soothe the market into not overreacting. This also obviously reflects that the value of the cases in the aggregate is much, much less than the $200 billion that the press is reporting.

"Some have claimed that these suits will disrupt economic recovery, or endanger the targeted banks, or increase their cost of capital.  While everyone is concerned with these important issues, the long-term stability and resilience of the nation’s financial system depends on investors being able to trust that the securities sold in this country adhere to applicable laws.  We cannot overlook compliance with such requirements during periods of economic difficulty as they form the foundation for our nation’s financial system."

This is just too rich.  I am still laughing.  So if they CANNOT "overlook compliance" during periods of economic difficulty, does this mean that they CAN overlook compliance during periods of economic prosperity?  Ha ha.  I know what they meant.  But, still, it is sanctimonious nonetheless.  They HAVE overlooked all of this with their kick-the-can-mentality since Nixon closed the gold window. Who is going to get the first perp walk of shame?  If Bentrod Bernank does not resign, then the simple answer is no one gets a perp walk.

"Therefore, through these lawsuits, FHFA turns to the courts to adjudicate the violations that it has alleged in its complaints."

But why were all the lawsuits separated when all the allegations were similar?  Why were some suits filed in state court, and not others?  Why has not the Executive branch taken executive action through an executive order.  Think about how easy that remedy would be.  "If anyone originates a loan, Freddie/Fannie will not accept it, unless that bank pays ___ % penalty for the earlier transgressions, only it is called a transaction or origination "fee."  I mean this type of federal brow-beating happens all the time.  Remember when Jimmy Carter withheld federal highway funds from those states that did not lower their speed limits?  Why the need to resort to civil litigation, which costs a ton of money and takes years and years to resolve?

"Finally, these suits are unrelated to the ongoing investigations by the state attorneys general."

Once again, this is a very clever, but sanctimonious artifice.  State attorneys general COULD pursue criminal charges against the fraudster banks and others who originated these bogus securities, based on the very same allegations of the civil lawsuits that FHFA filed against the banks.  That they have not does not excuse the fed govt or its agencies from doing their own criminal investigation. This is just spin, designed to deflect the focus from what is sure to be a back room deal down the road from now.

"While FHFA cannot speak for the attorneys general, the focus of their efforts has been the alleged failures of mortgage servicers to follow state law, particularly as it related to foreclosure processing. While those investigations cover servicing of loans that may be in the securities identified in FHFA suits, these are quite different matters. FHFA is pursuing claims pertaining to the disclosures in securities filings whereas the attorneys general are focused on foreclosure processing of delinquent mortgages. Each is a valid but separate concern, leading to separate and distinct claims for recompense."

This makes total sense, but is misleading, because it FAILS to account for the massive criminal acts that are going to go unpunished.  A deliberately false court filing could be charged criminally as perjury, or fraud, or as contempt [which is basically, a criminal remedy]. That there was fraud in the inception of the whole bunch of securities, and that there is fraud in the attempts by banks to wrongfully foreclose or cheat borrowers out of money from fake fees or inflated charges, only means that there should be increased scrutiny upon the whole sordid mess.  Like, for example, where did all the profits from the criminal scheme really end up?  Did any of that ill-gotten money end up going to politicians or their campaigns? Why have there not been claw-backs to disgorge any of the illicit profits?  What about the complete failure to pay mortgage and document recording fees, which have costs the states millions of dollars?  I mean, the list is endless.

__________________

"To save yourself from all this that has happened and will continue to happen requires commitment and courage. You have it or you do not. Admit who you are and act accordingly."
Jim Sinclair, December 18, 2012.

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Not an Expert on Germany's Situation

cris wrote:
Always enjoy your posts. Great idea posting this forum thread and look forward to your analysis. While it may be outside your expertise, I am sure many would welcome any educated insight you might have re the German court case concerning constitutionality of the Eurozone bailouts. A well earned hat tip....

The only insight I have is based on my cynicism.  In this evil world that is the reality, as opposed to the theoretical, Pollyannish fantasy-land, the outcome is what is important, so the conclusion will be reached first, then the reasons will be found to support the conclusion.

So . . .

Analyze the incentives, then answer the question.  Who stands to gain by the German court upholding the scheme, versus who stands to gain by the scheme being found unconstitutional?  From what I have read, it sure seems apparent that if the scheme is determined to be illegal, then the Euro fails along with a radical re-organization of all of Europe.  Banks that hold debt of sovereign nations, will suffer if not fail, thereby creating a domino effect.  This is most troublesome from a stability perspective, so, I cannot imagine that this outcome could be allowed to occur.

On the other hand, if the scheme is found to be within constitutional guidelines, then the German citizens continue to funnel their tax dollars south to prop up failed nations and their equally insolvent banks.  In short, there will be delay, and further kick the can until collapse.

So, from a practical standpoint, I don't believe anything happens that is not unexpected.  From a legal perspective, it seems rather obvious that the whole scheme is illegal.

__________________

"To save yourself from all this that has happened and will continue to happen requires commitment and courage. You have it or you do not. Admit who you are and act accordingly."
Jim Sinclair, December 18, 2012.

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Thank you, CA lawyer

Very insightful thread, CL. Thanks for sharing your perspective. History is in the making.

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From MISH, Nice Recap of Nevada BAC Suit, Events

From MISH on his blog, here.

Let's keep this in perspective.  One of the Fifty state attorney generals has the courage to take on the establishment.  This lawsuit is most interesting for its uniqueness.

I will keep my eye on it and post updates and developments as I find them.

__________________

"To save yourself from all this that has happened and will continue to happen requires commitment and courage. You have it or you do not. Admit who you are and act accordingly."
Jim Sinclair, December 18, 2012.

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Link to Prediction for Germany Court

cris wrote:
Always enjoy your posts. Great idea posting this forum thread and look forward to your analysis. While it may be outside your expertise, I am sure many would welcome any educated insight you might have re the German court case concerning constitutionality of the Eurozone bailouts. A well earned hat tip....

MISH has some comments, here.

Some from zerohedge, here.

I am just cynical about it, so I do believe there will be a kick-the-can decision made, and then just more, prolonged, prodding along to the eventual collapse.  A war event could accelerate things, though, and I give that a better than 30% chance of happening in the next four months.

__________________

"To save yourself from all this that has happened and will continue to happen requires commitment and courage. You have it or you do not. Admit who you are and act accordingly."
Jim Sinclair, December 18, 2012.

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Pacer Search: The FHFA Lawsuits vs. TBTF Banks

I did a Pacer search for USDC, Southern Dist., New York, and these came up for "Federal Housing Finance Agency."  If you want to go grab documents, log into Pacer, search by case number for the USDC, Southern District of NY, and have at it.

Note that there was an earlier lawsuit filed on July 27, 2011, against UBS.  The defendants have until Sep. 20, 2011 to file their first papers.  The rest of the federal lawsuits are listed in order:

1:11-cv-05201-VM     Federal Housing Finance Agency as Conservator for the Federal National Mortgage Association et al v. UBS Americas Inc. et al     filed 07/27/11     850(Securities/Commodities)

1:11-cv-06193-PGG     Federal Housing Finance Agency as Conservator for the Federal National Mortgage Association et al v. First Horizon National Corporation et al     filed 09/02/11     850(Securities/Commodities)

1:11-cv-06196-PAC     Federal Housing Finance Agency as Conservator for the Federal National Mortgage Association et al v. CitiGroup Inc. et al     filed 09/02/11     850(Securities/Commodities)

1:11-cv-06198-DAB     Federal Housing Finance Agency as Conservator for the Federal National Mortgage Association et al v. Goldman, Sachs & Co. et al     filed 09/02/11     850(Securities/Commodities)

1:11-cv-06188-PKC     Federal Housing Finance Agency v. JPMorgan Chase & Co. et al     filed 09/02/11

1:11-cv-06189-LAK     Federal Housing Finance Agency v. HSBC North America Holdings Inc. et al     filed 09/02/11

1:11-cv-06190-DAB     Federal Housing Finance Agency v. Barclays Bank Plc, et al     filed 09/02/11

1:11-cv-06192-LAK     Federal Housing Finance Agency v. Deutsche Bank AG et al     filed 09/02/11

1:11-cv-06195-JFK     Federal Housing Finance Agency v. Bank of America Corporation et al     filed 09/02/11

1:11-cv-06200-RPP     Federal Housing Finance Agency v. Credit Suisse Holdings (USA), Inc. et al     filed 09/02/11

1:11-cv-06201-JFK     Federal Housing Finance Agency v. Nomura Holding America, Inc. et al     filed 09/02/11

1:11-cv-06202-DLC     Federal Housing Finance Agency v. Merrill Lynch & Co., Inc. et al     filed 09/02/11

1:11-cv-06203-JSR     Federal Housing Finance Agency v. SG Americas, Inc. et al     filed 09/02/11

__________________

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No Justice

Dirty rotten crooks, the Justice Department, that is.

Read this and try not to go postal:

More Proof of DoJ Lack of Interest in Enforcing the Law: The Case of the Kickback-Demanding Banks

Posted: 06 Sep 2011 10:17 PM PDT

In this world of rampant banking miscreance, it may seem hard to get worked up about $6 billion in impermissible kickbacks. But this is a case of a clear-cut legal violation, with the particulars sent to the Department of Justice by the HUD Inspector General’s office on a silver platter. And one of the alleged big bad actors was the ever-sanctimonious Wells Fargo.

American Banker has a detailed write-up of a kickback scheme between major banks who were mortgage originators, in particular Wells, Citigroup, Countrywide, and SunTrust and mortgage insurers. The mortgage insurance was to insure the riskier portion of a highly geared mortgage. The borrower would pay a higher rate to compensate for the lack of a large (or much of any) down payment. The kickback was dressed up as reinsurance, meaning the mortgage insurer was laying off some of the risk to the originator and paying a fee to do so. But what instead happened was that fees were paid but the deals were structured so that no risk was shifted over to the banks.

The violations were uncovered by HUD’s Inspector General office. IGs are tasked to prevent and uncover fraud, waste, and abuse. Its budget is separate from the rest of HUD. It has substantial law enforcement powers and can subpoena documents but not witnesses. Not surprisingly, this isn’t the first time that significant HUD IG finding has been ignored. The IG’s office found substantial evidence that the biggest servicers had defrauded taxpayers (with Wells again a particularly bad actor) But since that report contradicted the “see no evil” Foreclosure Task Force findings, nothing has been done.

The overview from the American Banker story:

In exchange for the their business, companies such as Citigroup Inc, Wells Fargo & Co, SunTrust Banks Inc. and Countrywide allegedly required reinsurance partnerships on generous terms that violated the Real Estate Settlement Procedures Act, a 1974 law prohibiting abusive home sales practices.

During a two-day presentation in the summer of 2009, HUD’s team presented DOJ attorneys with a thick binder of evidence that major banks had engineered a decade-long kickback scheme, people familiar with the investigation say.

Documents from the investigation show that the inspector general’s staff concluded that banks and insurance companies had created elaborate financial structures that had the appearance of reinsurance but failed to transfer significant amounts of risk to their bank underwriters.

Some of the deals were designed to return a 400% profit on a bank’s investment during good years and remain profitable even in the event of a real estate collapse.

Making matters worse, banks allegedly forced unknowing consumers to buy more insurance than they needed and failed to properly disclose the reinsurance agreements, another RESPA violation…

Wells Fargo and Bank of America Corp. have settled class action cases alleging the same sort of misconduct flagged by HUD, and internal documents show that banks and insurers viewed the arrangements as a thinly veiled pay-to-play scheme. Even as insurers complained they couldn’t afford the escalating cost of the reinsurance payments, banks threatened or punished companies that balked at providing them, documents obtained by American Banker show.

Wells Fargo & Co told one insurer that it should consider giving Wells such deals if it wanted business referrals. After insurer MGIC Investment Corp. announced plans to cut back on banks’ share of premiums in 2003, Countrywide executives complained to an MGIC executive and told him that they were shifting Countrywide’s business to MGIC’s competitors.

The article provides far more in the way of supporting detail Former members of the mortgage industry have also confirmed that the banks were aggressively demanding kickbacks. Yet look what then transpired:

HUD Inspector General Ken Donohue — and his deputy, Mike Stephens, who succeeded him last year — were confident that they had a case…

The DOJ said it wanted take the matter on, according to Inspector General Stephens and others. Six months later, HUD’s attorneys formally referred its case to prosecutors, effectively ending the housing agency’s involvement. Investigators believed a speedy settlement in the hundreds of millions of dollars was likely, and HUD’s investigators even suggested that the proceeds should be used to pay for mortgage counseling for borrowers who were allegedly victims of kickback schemes.

Major banks deny that their reinsurance agreements were illegal, but they have not been eager to defend them in court….

More than a year and a half after the Department of Justice took over the case, no settlement has been reached and there is serious doubt as to whether the case even remains active.

So why is the Department of Justice’s excuse for sitting on its hands? The excuse made is that it lacks the needed accounting skills. If you believe that, I have a bridge I’d like to sell you. Actions speak louder than words, and the evidence is overwhelming that the DoJ has no interest in inconveniencing anyone influential, particularly banks.

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Jim Sinclair, December 18, 2012.

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US Bancorp vs. WMC Corp., Equifirst Corp.

U.S. Bank National Association, a unit of U.S. Bancorp, filed a federal lawsuit last week in St. Paul against two defunct subprime mortgage lenders alleging they failed to properly vet more than 3,000 loans before packaging them for sale to investors as securities. A survey of 200 of the loan files found "material breaches" in 150 of them, "a stunning 75 percent failure rate," the lawsuit says.

The defendants are WMC Corp. and Equifirst Corp.

WMC's underwriting problems were made manifest in the mid-1990s when news reports revealed it had been targeted by property "flippers" in the Twin Cities who bought and sold homes in a flash for huge increases in value. The trades often involved poor buyers with lousy credit who were recruited by the flippers with promises of home ownership. The loans were issued based on bogus financial information and trumped up appraisals.

WMC -- once the fifth-largest U.S. subprime lender with $27.1 billion in loans -- stopped making home-purchase loans in the Twin Cities in 1998, citing rampant fraud in loan applications here. A number of individuals were prosecuted and convicted in federal court.

WMC, based in Burbank, Calif., was purchased by General Electric Co. in 2004, which shut down the wholesale mortgage originator in 2007. General Electric declined to comment.

Equifirst, based in Charlotte, N.C., is owned by Barclays bank in London. Equifirst shut down operations in February 2009, citing the collapse of the housing market. A spokesman could not be immediately reached for comment.

Tom Joyce, a spokesman for U.S. Bank, said Wednesday that it filed the lawsuit at the request of investors in the trust. As trustee, it has a fiduciary duty to them. "Beyond that, I can't comment on the specifics of the lawsuit, given the matter is in litigation," he said.

U.S. Bank filed a similar suit recently in New York seeking to force Bank of America Corp.'s Countrywide Financial unit to repurchase more than 4,000 loans in what originally was a $1.75 billion mortgage pool, according to Bloomberg News. U.S. Bank is trustee for HarborView Mortgage Loan Trust 2005-10, which held the pool.

In the St. Paul case, the bank is seeking at least $200 million in damages related to $550 million in loans contained in the trust. The loans were securitized in August 2006 through UBS Real Estate Securities Inc., which sold the loans to the trust. Wells Fargo, the trust administrator, hired Recovco Mortgage Management last year to investigate the rapidly deteriorating loans.

Recovco said it found obvious fraud, errors, misrepresentations and other underwriting shortcomings. As an example, the suit cites one loan originated by WMC in which a borrower stated on his loan application that he earned $14,782 a month performing "account analysis," when his tax returns made clear that he earned just $1,548 a month driving a taxi. The applicant's credit report also showed that he failed to disclose two mortgages totaling $435,000.

As of June 27, more than 45 percent of the original loan pool balance -- or $257 million -- had been liquidated "because of the pervasive fraud and misrepresentations in the loan applications," the suit says. More than 30 percent of the remaining mortgage loans in the pool are delinquent, it added.

U.S. Bank demanded that the originators repurchase the loans. But WMC has refused to recognize the alleged underwriting breaches, the suit says, and Equifirst has simply not responded.

The bank seeks an order requiring WMC and Equifirst to repurchase all nonconforming and defective loans in the trust, plus unspecified compensatory damages "likely in excess of $200 million."

__________________

"To save yourself from all this that has happened and will continue to happen requires commitment and courage. You have it or you do not. Admit who you are and act accordingly."
Jim Sinclair, December 18, 2012.

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Interesting Tidbits - Robosigning Was Early and Often

In Disputed Fannie and Freddie Mortgage Deals Evidence of 'Robo-Signing September 8, 2011

by: Stephen Gandel is a senior writer at TIME. Find him on Twitter at @stephengandel<http://twitter.com/#%21/stephengandel>. You can also continue the discussion on TIME's Facebook page<http://www.facebook.com/time> and on Twitter at @TIME<http://twitter.com/#%21/TIME>.

Long before the banks started evicting delinquent homeowners, Wall Street, it appears, used robo-signers to ink mortgage deals that would eventually cost investors tens of billions of dollars and in part led to the financial crisis.

According to lawsuits filed last week <http://curiouscapitalist.blogs.time.com/2011/09/02/new-mortgage-suits-u-s-financial-problems-are-far-from-fixed/> by the U.S.'s Federal Housing Financing Agency, one individual was used by three different banks to sign off on 36 different mortgage bond deals in 2006 alone. Many of the deals contained as many as 4,000 home loans. Yet, according to the lawsuits, the individual Evelyn Echevarria signed documents attesting to the fact that all the loans - well over 100,o00 in 2006 alone - met the underwriting guidelines set out in each of the deals' offering statements for potential investors. In fact, according to the FHFA lawsuits, many of the loans in the deals were of much lower quality than the offering documents suggested. "Signing these documents should have been a meaningful function," says Joel Laitman, a lawyer who suing Echevarria and Credit Suisse in a separate class action suit on behalf of investors. "But it is hard to see that one person could have fulfilled their legal obligation to vet all of these prospectuses if they were doing so many deals at the same time."

(SPECIAL: 25 People to Blame for the Financial Crisis<http://www.time.com/time/specials/packages/article/0,28804,1877351_1877350_1877339,00.html>)

Last week, the FHFA sued 17 banks on behalf of Fannie Mae and Freddie Mac for creating nearly $200 billion worth of ill-fated mortgage bonds that were purchased by the giant now-government-controlled mortgage guarantors. The government, through the FHFA suits, claims the banks mislead Fannie and Freddie into believing the loans that backed the bond deals it was buying into were safer than they turned out to be. When many of the borrowers failed to pay back their loans, the bonds plunged in value, and Fannie and Freddie lost tens of billions of dollars on the deals. The government's suits <http://curiouscapitalist.blogs.time.com/2011/09/02/new-mortgage-suits-u-s-financial-problems-are-far-from-fixed/> are bringing back fears that some of the nation's largest banks - most notably Bank of America - might not have enough capital to meet their obligations. Paul Miller, an analyst at FBR Capital Markets, estimates that the banks might have to pay out as much as $121 billion to settle the FHFA and other similar lawsuits.

But the suits are also shedding light on the outside firms and individuals that Wall Street used to set up and supposedly vet mortgage deals. Here's why:A number of the FHFA lawsuits name individual defendants who signed off on the mortgage deals but appear to have had little or no day-to-day role at the banks. At times, the investment banks touted the involvement of these outside individuals as extra protection for investors, making sure the loans were of proper quality. But according to the FHFA, many of the deals that Fannie and Freddie bought into included home loans - some with little or no downpayment to borrowers with low credit scores - that were riskier than banks selling the deals let on.

(SPECIALS: The 25 Most Influential Business-Management Books<http://www.time.com/time/specials/packages/article/0,28804,2086680_2086683_2086684,00.html>)

Echevarria is named in three different lawsuits involving Citigroup, Credit Suisse and Deutsche Bank. In all, according to the suits, Echevarria's name appeared on documents pertaining to 62 deals starting in 2005 and ending in 2007 in which Fannie or Freddie invested in. During that time, according to the lawsuits, Echevarria, sometimes simultaneously, held positions as a director of subsidiaries of all three banks.

Reached by phone by TIME on Tuesday, Echevarria said she knew about the FHFA lawsuits, but didn't know she was personally named in any of the suits. She said she didn't know why she would be listed as a defendant. Echevarria said she has never been employed at Citigroup, Credit Suisse or Deutsche Bank, or any large Wall Street bank for that matter.

(MORE: Bye, Bye Jobs Growth, Hello Recession<http://curiouscapitalist.blogs.time.com/2011/09/02/bye-bye-jobs-growth-hello-recession/>)

Where Echevarria does work is at a small firm in Charlotte, North Carolina called Amacar Group, which according to the firm's website "delivers consultative structure finance expertise." The company's CEO Douglas Johnson is also named as a defendant in one of the FHFA lawsuits, against Deutsche.

Spokespersons for Citigroup and Credit Suisse declined to comment on the FHFA lawsuits. A spokesperson for Deutsche says that the firm that Echevarria is listed as working for, ACE Securities, in the FHFA lawsuit against the German bank is a separate firm, and was never owned or operated by Deutsche. He said he believes ACE acted as trustee for some of Deutsche's mortgage deals, and that's its role was limited to such clerical duties as collecting and storing paperwork.

But according to Amacar's website, the firm's role in securitizations - the process that packages numerous mortgages or other loans into bonds that can be sold to investors - is different "from the specific services provided by law firms, accounting firms, trustees or administrative service providers." Johnson, before founding the firm in 1995, had been the head of asset backed securitization at First Union. Amacar's website says it's function is to bring independence to securitization deals. It's website says it does so by setting up separate legal entities for bond underwriters and finding managers and directors to run these entities for the banks.

One of the independent directors Johnson's firm found for banks was Johnson's wife. According to the FHFA lawsuits, Juliana Johnson served as a director at mortgage subsidiaries of Bank of America, Credit Suisse and Deutsche. She signed off on numerous deals for all three banks. She is named as a defendant in three of the government's lawsuits. Juliana Johnson is listed as a founder of Amacar, along with her husband. Before joining the firm, Juliana Johnson, according to her bio on Amacar's website, spent 12 years at AT&T, "including extensive sales and marketing experience." It is unclear if she has any experience with mortgage bonds or securitizations in general outside of her time at Amacar. And it's not clear how good a job she did at vetting the deals she ended up signing off on. In one such deal for Deutsche, called ACE 2006-ASAP4, the offering statement said that in nearly 80% of the loans in deal, borrowers owned at least 20% of the equity of their home. In reality, according to the FHFA lawsuit against Deutsche, borrowers had no equity at all in nearly 13% of the loans included in the deal. The percentage with 20% or more was just less than 45%.

Lawyer Joel Laitman says all individuals who signed off on these deals should be held liable for the losses because they gave the appearance that they were making sure the investment banks were following the rules. "It's not just supposed to be the investment bankers who are attesting to the fact that these deals are what they claim to be in their prospectuses," says Laitman. "It should be anyone that signs the document."

Stephen Gandel is a senior writer at TIME. Find him on Twitter at @stephengandel<http://twitter.com/#%21/stephengandel>. You can also continue the discussion on TIME's Facebook page<http://www.facebook.com/time> and on Twitter at @TIME<http://twitter.com/#%21/TIME>.

__________________

"To save yourself from all this that has happened and will continue to happen requires commitment and courage. You have it or you do not. Admit who you are and act accordingly."
Jim Sinclair, December 18, 2012.

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@CaliLawyer

This is just unbelievable stuff to read. Securitization? More like fraud, corruption and greed at it's finest.

Thanks for your efforts in bringing this information to our attention.

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Well, Lookey There . . . BAC Whistleblower Identified

The whole sordid mess is starting to become exposed.  There will be perp walks:

"Foster, who has 25 years' experience in banking, was hired by Countrywide as a first vice president in September 2005. She was later promoted to senior vice president and then, in March 2007, was elevated to executive vice president in charge of fraud risk management.

Fosters' investigations in 2007 and early 2008 turned up numerous examples of fraud within the mortgage lender. In mid-2007, for example, an investigation of Countrywide's subprime mortgage branches in and around Boston "revealed multiple incidents of egregious fraud spread throughout the entire region," according a preliminary Labor Department ruling in her case this past June.  These frauds included "loan document forgery or alteration" and "destruction of valid client documents," the preliminary ruling said.

The investigation also turned up "evidence that blank templates from several different financial institutions were emailed back and forth among loan officers in various branches for use in forging proof of borrower income and assets," the ruling said. As a result of the investigation, the ruling said, six of eight Boston-area branches were shut down and roughly 44 employees were fired.

In interviews with iWatch, Foster said that by early 2008 she became concerned that fraud was being allowed to flourish because honest employees who tried to report wrongdoing were being targeted and fired.

She claimed that after she reported her concerns up the corporate ladder, the company's employee relations department began an investigation of her."

MY TAKE:

Like all good scandals and corruption, it usually happens small then goes boom.  BAC is toog big to fail, for now, but the corruption and fraud are rampant. 

Sooooo, there has to be provable misconduct of big-enough, but not too-big company execs, the scandal has to have a nice, juicy political angle, and the timing has to coincide with a national election cycle to be of any hope to get indictements.

For example, watch what happens when the Solyndra Execs are indicted.  The public thirst for more criminal indictments will only grow, unsated, until someone at BAC-either a scapegoat, or hopefully, someone of note--takes a perp walk.

My estimate, at a 70% confidence level, is that as BAC is deemed too corrupt to save, it will be split off into pieces, and then, and only then, will there be heads rolling.

Man this is getting exciting [from a lawyer's perspective, sorry for the dry humorwink].

From the original Huffington Post article in March, 2011:

Bank of America Anonymous Leak Alleges Corruption and Fraud

"The WikiLeaks-allied hacker group Anonymous has posted a series of emails purported to be from a former Bank of America employee, which the organization says prove "corruption and fraud" at the nation's largest bank.

In a release announced with the Twitter hashtag #BlackMonday, Anoymous posted the emails on the site BankofAmericasuck.com, where an emailer who identifies himself as an ex-Bank Of America employee airs a number of grievances against his former employer. The website's availability was up and down early Monday morning, potentially due to high traffic. The e-mails could not be independently verified.

In a statement to Reuters on Sunday, a Bank of America spokesman said the emails are simply clerical and administrative errors. ""We are confident that his extravagant assertions are untrue," the spokesman told Reuters.

Bank of America did not immediately return multiple calls on Monday.

The claims of the person purporting to be a former employee appear to begin with so-called "forced-place insurance," in which a mortgage borrower who doesn't maintain an insurance policy on their home has a policy "placed" for them by their insurer. The problem with forced-place insurance, as Felix Salmon noted in November, comes when a mortgage servicer owns an insurer. This can allow for highly inflated premiums and inadequate policies forced upon borrowers without their knowledge.

The emailer's accusations involve Balboa Insurance, a company that Bank of America acquired in its purchase of Countrywide Financial in 2008 and recently sold to the QBE Group, an Australian insurer. Balboa is a market leader in forced-place insurance.

The following section appears to be the main thrust of the emails:

"My name is (Anonymous). For the last 7 years, I worked in the Insurance/Mortgage industry for a company called Balboa Insurance. Many of you do not know who Balboa Insurance Group (soon to be rebranded as QBE First by Australian Reinsurance Company QBE according to internal communication sent to all Balboa associates) is, but if you’ve ever had a loan for an automobile, farm equipment, mobile home, or residential or commercial property, we knew you. In fact, we probably charged you money…a lot of money…for insurance you didn’t even need.

Balboa Insurance Group, and it’s largest competitor, the market leader Assurant, is in the business of insurance tracking and Force Placed Insurance (aka Lender Placed Insurance, FOH, LPI, etc). What this means is that when you sign your name on the dotted line for your loan, the lienholder has certain insurance requirements that must be met for the life of the lien. Your lender (including, amongst others, GMAC, Aurora Loan Services [a subsidiary of Lehman Bros Holdings], IndyMac Federal Bank [a subsidiary of OneWest Bank], Saxon, HSBC, PennyMac [a collection agency started by former Countrywide Home Loans executive Stan Kurland after CHL and Balboa were sold to BAC], Downey Savings and Loans, Financial Freedom, Select Portfolio Services, Wells Fargo/Wachovia, and the now former owners of Balboa Insurance themselves…Bank of America) then outsources the tracking of your loan with them to a company like Balboa Insurance.

Balboa makes some money by charging these companies to track your insurance (the payment of which is factored into your loan). If you do not meet the minimum insurance requirements set by your lienholder, Balboa Insurance places a force placed insurance policy on your loan. You are sent a letter telling you that you do not have insurance, and your escrow account is then adjusted for the inflated premium of a full coverage policy placed by Balboa’s insurance tracking group, run by Steven Ramsthel, Sr Vice President of Loan Tracking Operations & Customer Care at Balboa Insurance Group, as seen on his LinkedIn profile below..

How is Balboa able to charge such inflated premiums and get away with it?

It’s all very simple.

First, when you call in to customer service, for say, GMAC, you’re not actually speaking to a GMAC employee. You’re actually speaking to a Bank of America associate working for Balboa Insurance who is required by their business to business contract with GMAC to state that they are, in fact, an employee of GMAC. The reasoning is that if you do not realize you’re speaking to a Bank of America/Balboa Insurance employee, you have no reason to question the validity of the information you are receiving from them. If you call your insurance agent and ask them for the lienholder information for your GMAC/Wells Fargo/etc lien (home or auto) you will be provided with their name, but the mailing address will be a PO Box at one of Balboa’s 3 main tracking locations (Moon Township/Coreaopolis, PA, Dallas/Ft Worth, TX, or Phoenix/Chandler, AZ)

The scope of these emails, according to their author, reaches far beyond poor customer service. In the email below, the author claims the bank's actions go much further, extending to what would seem to be extreme disorganization, or an allegedly willful intent to obscure Balboa's management of customer insurance policies.

BANK-OF-AMERICA.jpg The post includes what appear to be internal Balboa emails containing communications about mismatched -- and possibly deleted -- loan file numbers in Balboa's system.

In one email, a Balboa employee wonders about creating "huge red flags" for auditors over a change in record keeping, adding that it "just doesn't seem right to me."

When asked by Anonymous about his motivation for revealing this information, the author writes: "The only reason I'm doing this is because they already took everything from me…these people are still employees and have bills to pay and think it's illegal to expose fraud at this bank… Nobody wants to end up like me hiding out in my house having to talk to police officers and lawyers. Nobody will stand up until they see me in the traditional news. That's my short term goals right now."

You can read the emails here.

Marcus Baram contributed to this story.

__________________

"To save yourself from all this that has happened and will continue to happen requires commitment and courage. You have it or you do not. Admit who you are and act accordingly."
Jim Sinclair, December 18, 2012.

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Wow! Great stuff

Wow! Great stuff CaliforniaLawyer, I'm afraid I don't share your optimism about Perp walks unless the behinds the scenes people want to sate the populace with some scapegoats (even highly placed ones we can hope). Unless the PTB want perp walks I doubt we will see any, and if we do you can be assured it's to have some steam let off. If we see perp walks I would argue that means that the population has crossed some sort of anger threshold that the PTB are watching.

Please keep up the good work!

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Huge Victory for BAC Whistleblower

$930,000, and employee gets job back.

Can you imagine the atmosphere at her old job?  Read this.

Untouchable and bullet-proof are two quick adjectives I can think of.

Now what?  Will she root out more fraud?  Or will there be a strange "slip and fall" down some stairs where she suddenly succumbs to death? 

Maybe I am just paranoid, but this is a story that is just now getting legs.

__________________

"To save yourself from all this that has happened and will continue to happen requires commitment and courage. You have it or you do not. Admit who you are and act accordingly."
Jim Sinclair, December 18, 2012.

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