Saturday, March 27, 2010

THE AMERICAN HOMEOWNER IS THE ONLY RELIABLE PROTECTOR OF HOMEOWNER'S RIGHTS IN OUR COUNTRY.
















COURTS

BofA seeks to pin losses on title insurer

The banking giant sues First American Corp., alleging that it failed to do proper title searches. That led to $500 million in mortgage losses, the suit says.

BofA lawsuit
BofA alleged in a lawsuit that First American Corp. in Santa Ana relied on home buyers to tell them about liens on their properties and other matters, rather than conducting traditional title searches. Above, a BofA automated teller machine in Charlotte, N.C. (Davis Turner / Getty Images / February4, 2010)
During the subprime loan era, it's well documented that lenders took all kinds of shortcuts -- such as failing to verify borrowers' employment or income -- to sell mortgages.

Now Bank of America Corp., the nation's biggest mortgage lender, is saying the nation's second-largest title insurer did much the same thing and should be on the hook for more than $500 million in losses.

In a lawsuit filed earlier this month, BofA alleged that First American Corp. in Santa Ana relied on home buyers to tell them about liens on their properties and other matters, rather than conducting traditional title searches.

The shortcut was part of a program called QuickClose that BofA said in its suit did not require "title searches in connection with loans processed under the program."

The bank said in the suit that the insurer has not made good on more than 5,000 mortgages it was supposed to protect.

First American spokeswoman Carrie Gaska issued a statement Thursday saying the insurer regrets that its "valuable customer" has filed suit. "However, we are hopeful that we will be able to resolve this matter outside of court with continued discussions."

Bank of America declined to comment.

The suit, filed in North Carolina, where BofA is based, comes shortly after the bank sued MGIC Investment Corp., the nation's largest mortgage insurer, for allegedly denying millions of dollars in claims.

The bank's efforts to curb its losses in the mortgage fallout are indicative of what's going on in the industry, said banking analyst Bert Ely.

"Every time you have a disaster everybody sues everybody else, and mortgage financing was a disaster," he said. "You have lots of losses floating around, and companies are looking to others to eat their losses."

Fannie Mae and Freddie Mac, which together own more than half the mortgages in the nation, are increasingly asking lenders who made loans to buy them back, saying the loans were not made in accordance with their underwriting standards, said Paul Muolo, executive editor of National Mortgage News.

"It is basically pass the hot potato to the next guy," Muolo said. "It's like the lawyers have taken over and they are looking for outs."

Ely said that if First American didn't do proper title checks, it could end up on the losing end of the suit.

"If first American was dumb enough to enter into these agreements the way that Bank of America is saying they were, then the question that comes up is why was First American dumb enough to take a homeowner's word that there were no problems and not check it out," Ely said.

The title insurance policies that First American sold to Bank of America were uncommon in the industry, he said.

"The American Land Title Assn. has openly opposed these types of lien protection plans," Ely said. "First American was offering a product that at least more than a few in the industry weren't comfortable with."

nathan.olivarezgiles

@latimes.com

alejandro.lazo@
latimes.com






ATTN ALL HOMEOWNERS RUN A ($150 appro) CERTIFIED TITLE SEARCH ABSTRACT WILL SHOW YOU WHO HOLDS OPEN NOTES AND/OR MORTGAGE(S) if anyone, on your property (call a title company you've never used before!!! because a title company you used at your purchase of the home or at a refinance will have liability issues that you don't want to be a concern to anyone running your current report, who must certify the report, which means insure it for the value of your home, because you 
will use the report to submit to your County Court for a Quiet Title Action upon receipt.











Want to Buy Your Loan?: Toxic Asset Plan Foresees Big Subsidies for Investors

To start the program, Treasury will ask banks, like Citigroup or JPMorgan Chase, to identify pools of residential and commercial real estate loans that they will be willing to sell through an auction. Private investors will bid against each other, setting a market price. No bank will be required to participate.
Editor’s Note: it’s starting. Principal reductions are coming. The original plan I proposed in which everyone shares the loss is falling into place. Make sure you get a judgment quieting title as part of your mortgage modification or settlement.
March 21, 2009

Toxic Asset Plan Foresees Big Subsidies for Investors

This article is by Edmund L. Andrews, Eric Dash and Graham Bowley.
WASHINGTON — The Treasury Department is expected to unveil early next week its long-delayed plan to buy as much as $1 trillion in troubled mortgages and related assets from financial institutions, according to people close to the talks.
The plan is likely to offer generous subsidies, in the form of low-interest loans, to coax investors to form partnerships with the government to buy toxic assets from banks.
To help protect taxpayers, who would pay for the bulk of the purchases, the plan calls for auctioning assets to the highest bidders.
The uproar over the American International Group’s bonuses has not stopped the Obama administration from plowing ahead. The plan is not expected to impose restrictions on the executive pay of private investors or fund managers who participate.
The three-pronged approach is perhaps the most central component of President Obama’s plan to rescue the nation’s banking system from the money-losing assets weighing down bank balance sheets, crippling their ability to make new loans and deepening the recession.
Industry analysts estimate that the nation’s banks are holding at least $2 trillion in troubled assets, mostly residential and commercial mortgages.
The plan to be announced next week involves three separate approaches. In one, theFederal Deposit Insurance Corporation will set up special-purpose investment partnerships and lend about 85 percent of the money that those partnerships will need to buy up troubled assets that banks want to sell.
In the second, the Treasury will hire four or five investment management firms, matching the private money that each of the firms puts up on a dollar-for-dollar basis with government money.
In the third piece, the Treasury plans to expand lending through the Term Asset-Backed Securities Loan Facility, a joint venture with the Federal Reserve.
The goal of the plan is to leverage the dwindling resources of the Treasury Department’s bailout program with money from private investors to buy up as many of those toxic assets as possible and free the banks to resume more normal lending.
But the details have been treacherously difficult, politically and financially, and some of the big decisions are the same as those that bedeviled the Treasury Department under President George W. Bush last year.
Timothy F. Geithner, the Treasury secretary, provoked scathing criticism from investors in February by announcing the broad outlines of the plan without addressing the tough questions, like how the government planned to share the risk with investors or arrive at a fair price for the assets that would neither cheat taxpayers nor harm the banks.
Although the details of the F.D.I.C. part were still being completed on Friday, it is expected that the government will provide the overwhelming bulk of the money — possibly more than 95 percent — through loans or direct investments of taxpayer money.
The hope is that such a generous taxpayer subsidy will attract private investors into the market and accelerate the recovery of the country’s banks.
The key protection for taxpayers, according to people briefed on the plan, is that the private investors will bid in auctions against each other for the assets. As a result, administration officials contend, the government will be buying the troubled loans of the banks at a deep discount to their original face value.
Because the government can hold those mortgages as long as it wants, officials are betting the government will be repaid and that taxpayers may even earn a profit if the market value of the loans climbs in the years to come.
To entice private investors like hedge funds and private equity firms to take part, the F.D.I.C. will provide nonrecourse loans — that is, loans that are secured only by the value of the mortgage assets being bought — worth up to 85 percent of the value of a portfolio of troubled assets.
The remaining 15 percent will come from the government and the private investors. The Treasury would put up as much as 80 percent of that, while private investors would put up as little as 20 percent of the money, according to industry officials. Private investors, then, would be contributing as little as 3 percent of the equity, and the government as much as 97 percent.
The government would receive interest payments on the money it lent to a partnership and it would share profits and losses on the equity portion of the investment with the private investors.
Ever since last fall, industry analysts and policy makers in Washington have argued that the banking system’s biggest problem was the huge pile of troubled mortgages and other loans on bank balance sheets.
Risk-taking institutional investors, like hedge funds and private equity funds, have refused to pay more than about 30 cents on the dollar for many bundles of mortgages, even if most of the borrowers are still current. But banks holding those mortgages, not wanting to book huge losses on their holdings, have often refused to sell for less than 60 cents on the dollar.
The result has been a paralyzing impasse. Banks, unwilling to sell their loans at fire-sale prices, have had less capital available to make new loans. Mortgage investors, unable to leverage their investments with borrowed money, have been unwilling to pay more than fire-sale prices.
To break that impasse, the government’s crucial subsidy is meant to provide investors with the kind of low-cost financing that has been utterly unavailable in today’s credit markets.
Administration officials refused to comment on the details of the plan, and refused to say what kind of interest rates the government would be charging investors. But government officials have long maintained that they could charge slightly more than the Treasury’s own cost of money and still offer rates far less than the private markets would demand.
To start the program, Treasury will ask banks, like Citigroup or JPMorgan Chase, to identify pools of residential and commercial real estate loans that they will be willing to sell through an auction. Private investors will bid against each other, setting a market price. No bank will be required to participate.
Analysts worry whether the prices investors offer will be high enough to induce the banks to sell assets. The hope is that high valuations at the auctions will increase the price of assets that remain on the books of banks, bolstering confidence in the sector.
Still, the Treasury Department’s biggest obstacle may be the current political environment in Washington, where Democratic lawmakers are furious about the pay packages and bonuses received by executives at companies being rescued by taxpayers.
Many investment executives said they were worried that participating in any bailout program would expose them to political wrath and potentially steep new restrictions on their own pay.
Treasury and Fed officials have remained firmly against imposing any restrictions on pay for companies investing money in the rescue effort rather than receiving money from it.
The plan comes as financial institutions continue to fail. Federal regulators Friday seized control of the two largest wholesale credit unions — U.S. Central Federal Credit Union and Western Corporate Federal Credit Union — which together had $57 billion in assets. They provide financing, check-clearing and other tasks for retail credit unions.
Michael J. de la Merced contributed reporting from New York.

6 Responses




  1. bur most of the present pools have been transfered to private trusts overseas like in the cayman Islands



  2. So basically the plaintiff will dismiss the foreclosure case against the home owner, and another company or individual even from another country will come to the home as a true buyer who did provide consideration by paying cash for the home and seek eviction.



  3. I already see major flaws in this plan … because of full disclosure problems. The banks cannot even begin to fully identify the PSA’s and SPV’s let alone make sure the paperwork is perfected to enforce security interest of the potential investors. I wouldn’t touch these auctions with a 10-foot pole.



  4. How do I find Lehman’s pass through mortgage certificates?
    US Bank National Association, as
    Successor Trustee to Bank of America,
    National Association, as successor by
    merger to LaSalle Bank National Association
    as Trustee for Lehman XS Trust Series 2007-9
    Instead of an Allonge the Plaintiff is using nunc pro tunc to get an assignment of judgement and rights through summary judgement (granted) from LaSalle to BA to US BANK. The note I can not find but there is no assignments with the Register of Deeds
    Stanley Putra
    Racine WI



  5. In other words some stranger will come to the door of the homeowner with some paper and claim that they are the new owners and this person or company will seek to make some deal with the homeowner.



  6. So, Neil, are you now advocating modification versus fighting all the way?

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