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The Beginning of the End of the Beginning of the Gutting of the Big Banks Has Begun!
- BAC
- Bank of America
- Bank of America
- Bank of New York
- Blackrock
- Capital Markets
- Citigroup
- Countrywide
- Federal Deposit Insurance Corporation
- Federal Reserve
- Federal Reserve Bank
- Federal Reserve Bank of New York
- Foreclosures
- High LTV
- High LTV loans
- Housing Market
- Insurance Companies
- JPMorgan Chase
- New York Fed
- New York State
- New York Times
- PIMCO
- Real estate
- recovery
- Reggie Middleton
- Sell Side Analysts
- Sheila Bair
- Wall Street Journal
- Wells Fargo
If readers remember back in 2009 I warned of the excessive risk
of mortgage buybacks in the banking industry. Many analysts dismissed
this risk then and still do (at least as recentely as the 1st
quarter).Yes, I know my wording can be a tad,,, "bombastic", but that
does not detract from the validity of said words. Let's parse recent
history, shall we?
The Putback Parade Cometh: Pimco, New York Fed Said to Seek Bank of America Repurchase of Mortgages
You've Been Had! You've Been Took! Hoodwinked! Bamboozled! Led Astray! Run Amok! This Is What They Do!
As far back as 2009 (yes, over a
year ago) I have been warning readers and subscribers of the (not so)
hidden risks of putbacks, warranty and rep reserves, and the overly
optimistic under reserving of the big commercial banks. I used
JP Morgan as an example (see link list below), but made it clear this
warning stood for several big banks(several of the big banks – As Earnings Season is Here, I Reiterate My Warning That Big Banks Will Pay for Optimism Driven Reduction of Reserves, As a matter of fact I said that the banks ‘May Become The “New” Tobacco Companies‘ due to legal risk. This risk was significantly exacerbated the day after making that post, Less
Than 24 Hours After My Warning Of Extensive Legal Risk In The Banking
Industry, The Massachusetts Supreme Court Drops THE BOMB! wherein the Massachusetts Land Court Decision that invalidates foreclosures based on post sale assignments was
up held by the Massachusetts Supreme Court. This is permanent, and
precedent setting, absolutely justifying and vindicating my post from
the day before and clearly demonstrates that The
Robo-Signing Mess Is Just the Tip of the Iceberg, Mortgage Putbacks
Will Be the Harbinger of the Collapse of Big Banks that Will Dwarf 2008!
The
Robo-Signing Mess Is Just the Tip of the Iceberg, Mortgage Putbacks
Will Be the Harbinger of the Collapse of Big Banks that Will Dwarf 2008!
Step one: Hide the Truth!
JP
Morgan Purposely Downplayed Litigation Risk That Spiked 5,000% Last
Year & Is Still Severely Under Reserved By Over $4 Billion!!!
Shareholder Lawyers Should Be Scrambling Now
See As Earnings Season is Here, I
Reiterate My Warning That Big Banks Will Pay for Optimism Driven
Reduction of Reserves or “After a Careful Review of JP Morgan’s Earnings
Release, I Must Ask – “What the Hell Are Those Boys Over at JP Morgan
Thinking????” As excerpted from the The Robo-Signing Mess Is
Just the Tip of the Iceberg, Mortgage Putbacks Will Be the Harbinger of
the Collapse of Big Banks that Will Dwarf 2008!
This is the part that everybody seems to be overlooking…
All you really need to do is find the
banks that accepted a lot of broker business, factor in the expense of
the class action suit litigation that is popping up in nearly every
state (try Googling it, you will be amazed as big firms and store front
lawyers alike are throwing their hats in the ring), and you will see the
easiest way out of a potentially tough bind for investors is the put
back. Where does this land? Squarely on the balance sheet of the banks –
who, BTW have the money to attract even more predatory lawyers. A
forensic review of high LTV loans between 2003 and 2007 should find that
at the very least 30% were aggressively valued, with a more realistic
number coming in at about 60%. Ask anyone who was in in the business at
that time, I doubt they will disagree.
When I warned of this LAST YEAR, it was
not taken very seriously. I suggest all should think again – Reggie
Middleton on JP Morgan’s “Blowout” Q4-09 Results. Let’s reminisce…
-
Re: B of A - With Banks Being Forced To Admit The Inevitable Truth, How Long Will It Be Before Fundamentals Rule The Day Again?
-
As
JP Morgan & Other Banks Legal Costs Spike, Many Should Ask If It
Was Not Obvious Years Ago That This Industry May Become The "New"
Tobacco Companies -
I Warned That Banks Will Soon Be Forced To Walk Away From Homes... Guess What!
- and much more:Dexia
Sets A $5.1bn Provision For Loss On Trying To Sell The Same Residential
Real Estate Assets Upon Which JP Morgan Has Slashed Provisions 83% to
$1.2bn from $7.0bn or There's Something Fishy at the House of Morgan
By now I can assume you either catch my drift or never will. If you do catch said drift, realize that the WSJ reports:
BofA Nears Huge Settlement
Bank of America Corp.
is close to an agreement to pay $8.5 billion to settle claims by a
group of high-profile investors who lost money on mortgage-backed
securities purchased before the U.S. housing collapse, said people
familiar with the matter. The payment would be the largest such
settlement by a financial-services firm to date, exceeding the total profits of the Charlotte, N.C., bank since the onset of the financial crisis in 2008. Bank of America's board approved the settlement during a meeting Tuesday to discuss the matter, one of these people said.
... A settlement would end a nine-month
fight with a group of 22 investors who hold mortgage-backed securities
originally valued at $105 billion, including the giant money manager BlackRock Inc., the insurer MetLife Inc. and the Federal Reserve Bank of New York.
A
deal could embolden mutual-fund managers, insurance companies and
investment partnerships to seek similar settlements with other major
U.S. banks by arguing that billions of dollars in loans they bought
before the housing collapse didn't meet sellers' promises or were
improperly managed. Bank of America, Wells Fargo & Co and J.P.
Morgan Chase & Co. collect loan payments on about half of all
outstanding U.S. mortgages.
The dispute between Bank of America and
the mortgage investors began last fall when they alleged in a letter to
the bank that securities they scooped up before the financial crisis
from Countrywide Financial Corp. were full of loans that didn't meet
sellers' promises about the quality of the borrowers or the collateral.
The investors also alleged Countrywide failed to maintain accurate files
while managing the loans. Bank of America purchased Countrywide in 2008
for $4 billion.
... Bank of America would take a
corresponding pre-tax charge against earnings for the second quarter,
these people said. The after-tax cost to the bank would be roughly $5
billion, they said. The charge would increase the chances that Bank of
America will report a loss in the second quarter.
...On Wednesday, the bank is expected
to announce it is taking a separate provision of billions of dollars
during the quarter to cover future repurchase claims and other
mortgage-related issues, these people said. The trustee expects to submit a filing soon asking a New York state court to approve the transaction.
...Earlier this year, the bank said its
maximum possible loss from private mortgage put-back demands was $7
billion to $10 billion—above and beyond the $6.2 billion already
reserved for probable mortgage-repurchase losses.
A multibillion-dollar
charge would "wipe out most earnings in the first half of the year,"
said banking analyst Mike Mayo earlier this month, before news of the
potential settlement. Bank of America earned $2 billion in the first
quarter. Mr. Mayo had lowered his 2011 earnings-per-share estimate to 50
cents, from $1, based on an expectation that a settlement could amount
to $7 billion.
I urge all readers to look back through your sell side analysts notes
and ascertain whether these putback risks were adequatliy delineated
back in 2009, like they should have been. As the WSJ article stated, "A
deal could embolden mutual-fund managers, insurance companies and
investment partnerships to seek similar settlements with other major
U.S. banks by arguing that billions of dollars in loans they bought
before the housing collapse didn't meet sellers' promises or were
improperly managed. Bank of America, Wells Fargo & Co and J.P.
Morgan Chase & Co. collect loan payments on about half of all
outstanding U.S. mortgages.". Oh, this is guaranteed. The
insolvent monoline industry (the very same industry whose leaders -
Ambac and MBIA - we declared insolvent in 2007) has been at the
forefront of the putback brigade, and for good reason.
Interested readers can follow my hourly updates on twitter. For the record, as quoted from Amercian Banker's daily email and just TWO years after BoomBustBlog warns:
The deal could set the stage for settlements by the other big banks
sued for mortgage securities losses — JPMorgan Chase, Citigroup and
Wells Fargo. Paul Miller of FBR Capital Markets estimated B of A's total
losses from soured mortgages could reach $25 billion. Miller predicted
Chase's losses could reach $11.2 billion, Wells Fargo could lose up to
$5.2 billion, and Citigroup could see losses of at least $3.3 billion.
Before reports of B of A's settlement came out on Tuesday, FDIC Chairman
Sheila Bair said, "Unresolved legal claims [related to these mortgages]
could serve as a drag on the recovery of the housing market." The Journal
added the $8.5 billion is more than "the total profits of the
Charlotte, N.C., bank since the onset of the financial crisis in 2008." Wall Street Journal, New York Times, Washington Post
Relevant BoomBustBlog Research
For public consumption: An Independent Look into JP Morgan
Subscriber ony:
Federal Reserve MBS Purchasing Analysis (1.96 MB 2010-12-15 13:10:09)
BAC Q1 2010 Earnings Review (272.63 kB 2010-04-21 11:32:13)
Bank Charge-offs and Recoveries 2Q10 (272 kB 2010-10-01 12:06:03)
- advertisements -
BAC total exposure is $400 billion+; if they can settle all for just 2%, isn't that a big win? If not, then TARP II is a certainty; OR, as someone mentioned: "throw the fuckers under the bus".
see
http://www.zerohedge.com/article/bank-america-non-settlement-settlement
Some curious language in the BAC settlement: “…In addition, because the settlement is with the Trustee on behalf of the Covered Trusts and releases rights under the governing agreements for the Covered Trusts, the settlement does not release investors’ securities law or fraud claims based upon disclosures made in connection with their decision to purchase, sell, or hold securities issued by the trusts. To date, various investors, including certain members of the Investor Group, are pursuing securities law or fraud claims related to one or more of the Covered Trusts. The Corporation is not able to determine whether any additional securities law or fraud claims will be made by investors in the Covered Trusts and, if made, to reasonably estimate the amount of losses, if any, with respect to such asserted or potential claims…” Uh, just how is that a settlement.
Also, did Bank of America just admit its securitization trusts violated IRS laws:
As General Jim Sinclair has stated many times, private litigation will do what (corrupt, my word) public regulators will not do... bring the big bad Banks to heal (their knees) ...years of litigation to go plus collapsing property and consumer debt, plus $600 Trillion of imploding derivatives, plus ...well that should be more than enough!
...and worse, the Govt bank bailouts, the sovereign bailouts (effectively bank bailouts in all but name) and political protection racket of banksters is all going to be a waste of time and money because they won't save what cannot be saved, stone cold bankrupt zombie banks
BofA will be the only sacrificial lamb (non-NY headquartered bank as previously noted here on ZH). None of the "Friends of Timay" will be harmed.
Foreclosures filed, MERS Titled = many
Foreclosures delayed, MERS Titled = some
Succesful Quiet Titles, F&C ownership due to title obfuscations = 0
No end to this BS, don't expect a freeloading home.
"Freeloading home?" I won't take that bait as it makes a statement that's irrelevant to the law (the old saying I am mindful of is "hard cases/facts make bad law"), but you will find this one case very interesting, then (it's a state court, but a prestigious one that breeds a lot of future federal court justices):
2010–00131 (Index No. 17464–08) - Bank of New York, etc., respondent, v. Stephen Silverberg, et al., appellants, et al., defendants.The court didn't grant anyone a "freeloading home" in this case, but essentially said there can't be any foreclosure, period, as the party seeking foreclosure either doesn't posses the mortgage with the corollary note, can't produce it as evidence in a manner sufficient with protocol (rules of evidence - that whole 'technicality'), or has some other major problem in prosecuting their foreclosure action.
What will ultimately result? No one knows because this is so FUBAR, legally speaking.
Will waves of quiet title actions wash over the land? Maybe. But they don't even have to in order for the wreckage to pile up high and deep, and for a long, long time.
There are plenty more cases where the above came from, so let me know if you need help with the research.
As always Reggie....REQUIRED READING !!!!!
Hauling out cash, gold and silver out the back doors have always been a favorite banker's trick.
Now, they just need to add a few 1s and 0s here and there......
2x.
The Mkt should have been allowed to work, and they should have been left to fail.. 8.5 Bill is alot of Criminal activity.
The monetary amount of mortgages and the very title to real properties that are in legitimate dispute due to the broken chain of title and MERS infection easily surpasses a trillion dollars.
60% of all mortgages held by Fannie Mae and Freddie Mac, two of the largest GSEs, have been assigned via MERS.
Reggie - you're one of the best Cheater Analysts in the business. You're my goto source for the latest Cheater Analysis anywhere.
BAC up +3 percent at the moment.
I happen to agree that this put-back crap will "trickle down"...lol.
The borrowers at the bottom of the Ponzi food chain will crank up their own civil suits. Good.
As soon as homeowners wake up en masse and realize they can be free and clear with a Pro Se Quiet Title (if MERS named as the beneficiary in their paperwork), that's when it's really going hit the fan. Forget Class Action lawsuits! Power to the Sheeple!
The mascot for our times is not a swan but Schroedinger's cat: dead and alive @ the same time.
The reserve hit to these banks is substantial and irrelevant at the same time.
The entire economy is short of capital which central banks cannot provide. All the rest is commentary.
The (large) banks are dead and have been for awhile, propped up (alive) long enough to attract mosquitoes (lawyers). I don't believe anyone didn't see this coming ...
But Reggie,
If Jamie "Nero" Dimon can lecture the FED Chairman at a press conference and the banks buy politicians legally - how will the banks ever be held accountable for anything?
Barrack Obama: http://www.opensecrets.org/pres08/contrib.php?cycle=2008&cid=N00009638
John McCain: http://www.opensecrets.org/pres08/contrib.php?cycle=2008&cid=N00006424
Thank you, Reggie.
Greece is not the big news of the day. The BofA put back is the news of the day--the only story that matters.
The feeding frenzy of banks eatting banks has begun. BofA suffered the first bite. Blood is in the water. Mark your calendars, and finish-up your preps.
Class action you say? Fat Tony and Aunt Clarence will take care of that little problem.
Reggie is right on. There is a great domain for sale, for anyone thinking to cash in on this growing trend
www.WallStreetClassAction.com
LOL, Rock the fuck on. Wife and I just got 20 bucks and a Menards gift certificate for same amount last week from some class actions we were notified of by mail, regarding two credit cards we had subscribed to. Considering the effort expended it was still a positive ROI.
Maybe we'll win big and get an awesome family meal voucher for Applebees? The sky's the limit, biatches.
Wow, this is why plaintiff's attorneys get away with their shitty class action settlements! Idiots like yourself are happy to get twenty bucks and a gift certificate. Meanwhile, the attorneys pocket millions of dollars, while doing very little work. Rock on, moron!
That was sarcasm. Should have included the sarc/off tag.
Next lesson:
You need to roll your bubble ass into some communication classes, dickbeat.
That was honestly given advice.
The pigmen being force-fed their own crap? How can such a thing happen?
somehow the bernank will manage to get enough money to them that there won't be a problem, although all is overbought at this time.
QE5 = Save Fargo Bueller
To big to fail....
If the putbacks succeeded, there's a great argument to be made that the sellers of the MBS didn't own, legally speaking, what they claimed?
Now, if that's true, and I'd argue that it is, or that a strong claim can be made that it is, forget the investors of these MBS for a moment: Show me the note is alive and better than ever from the perspective of any mortgagor (borrower) having MERS in their chain of title.
This is the shot heard across the banking/lending world. The loading of the cartridge occurred with court after court essentially stating that MERS is a legal non-entity and that it has no ability to assign anything in terms of producing a legally binding result.
NO. THERE’S NO LIFE AT MERS
It is well beyond insane that every person who forged a signature is not currently behind fucking bars.
If I forged my wifes name on a four dollar check, you can rest assured that i would go directly to jail.
This is so fucked up it is beyond any ability to describe with currently existing adjectives.
.
Kudos.
The best measure of the progress of our corruption is the difference between the now tiny S&L scandal and this. I now feel remorse for every poor half-ass I put behind bars as a prosecutor for the four dollar checks. I don't excuse them but this insanity has transformed them, transformed me, and forever changed my perception of justice in this country.
Exactly.
They do not understand the moral hazard; they do not understand that this is the end of citizens honoring contracts, debts, bills, taxes; end of allegiance to the nation.
Two sides to EVERY coin, no?
I wonder if the Mortgage Bankers Association, The National Association of Realtors & Wall Street, who were the driving impetus that created what we now know to be a legal fiction, and indeed (as many courts, including federal courts have held) fraud that is MERS, had benign intent when they decided to create this fiction (MERS) from nothing, in an attempt to:
1) Bypass the necessary payment of recording fees on all conveyances of title or any conveyances of any interest in real property, including mortgage assignments;
2) Make more expedient the processing of assignments of title and other real property interests, by not having to physically record the instrument in the county register of deeds office in which the property resides;
3) Allow purported conveyances in real property interests to be "fractionalized," or otherwise sliced up into hundreds of parts, also known as synthethization, whereby each fraction of each instrument could be rated, pooled and bundled with other fractional interests, and sold en masse to investors, generating massive commissions/fees/revenue for banks, financial firms, mortgage slam shops, rating firms and Wall Street in general.
So, what to do...what to do?
If MERS broke the chain of title (and we know that it did, as banks and those purporting to hold the note went so far as to hire 'title re-creation firms' - no, I am not making that up), and if the originator of the mortgage no longer has the original mortgage and note (as they were FUBARED somewhere along the line of synthethization and MERS and being bundled and pooled and sold off in tiny pieces), what to do?
I guess we could ignore one of what the Supreme Court of the United States as well as state courts and legislatures have stated; that property rights are of such a significant matter that strict compliance with the recording of title is required.
If you don't have strict liability laws when it comes to recording title interests in land, it's no overstatement to say that the entire system of title in land in the United States is jeopardized.
If you don't enforce strict liability laws when it comes to recording title interests in land, it's no overstatement to say that the entire system of title in land in the United States is jeapardized.
Any mortgage agreement held by an institution that was bifurcated should be unwound to the point in time the bifurcation occured. Any debt payments / servicing made by an entity should be returned / refunded to the payee in full. The wet note / first deed of trust is then returned to the issuing agency for proper dispersal as the agency sees fit. (Most likely a local government agency)
If this solution is not acceptable to the criminal financial enterprise, then treble damages, liqidation and let's move on.
imho.
I like it.
Agreed.
The Supine Court made it pretty clear in KELO versus City of New London that they do not recognize individual rights to property.
+1
Keeping it real Reggie. Thanks for all the good info.
BTMF Dips!!!
You were right, Reggie, I remember the exchange we had well.
This is still far from over.
Makes names like MBIA a really interesting bet - will they ultimately recover most of their payouts?
so the bailout was for the lawyers?
By the lawyers for the lawyers, apparently they make the Masons look like a loose knit group.