Last week, the Department of Justice (DOJ) filed a civil suit in the Central District of California against Standard & Poor’s Financial Services (S&P) and its parent company McGraw-Hill. The suit alleges that S&P engaged in a scheme to defraud investors in Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations(CDOs). As noted in the DOJ’s… Continue Reading
Category Archives: Residential Mortgage-Backed Securities (RMBS)
Subscribe to Residential Mortgage-Backed Securities (RMBS) RSS FeedNew Precedent that Holds Banks Responsible?
Judge Rakoff awards $90.1 million judgment to Assured Guaranty Corp The legal press is abuzz with reports of a New York federal judge’s award of a $90.1 million judgment to mortgage insurer Assured Guaranty Corp. after a lengthy trial in its suit against Flagstar Bank FSB. The lawsuit arose from Assured’s claims that Flagstar had… Continue Reading
SEC Investigating ResCap for Possible Mortgage Fraud
The U.S. Securities and Exchange Commission is investigating bankrupt Ally Financial mortgage unit Residential Capital, LLC, for possible misconduct and misrepresentation in its mortgage lending and underwriting practices. The SEC disclosed in court documents on Monday that it formerly commenced an investigation in February of this year to probe possible fraud in the offer and… Continue Reading
Judge Rakoff v. SEC and Citigroup
Judge Rakoff Not Going Out Quietly In a story we’ve been following since the outset, on Monday, Judge Rakoff filed his brief before the Second Circuit Court of Appeals. It is not every day that you see a federal judge litigating against two parties who were theoretically adverse before him. But that is precisely the… Continue Reading
The FHFA’s New Buy-Back Statement
Higher Degree of Certainty and Clarity? The Federal Housing Finance Agency, the regulator of Fannie Mae and Freddie Mac, released a statement yesterday saying it was working with those two entities, which are the nation’s major government-backed mortgage securities investors, to “provide lenders a higher degree of certainty and clarity around repurchase exposure and liability… Continue Reading
Credit Rating Agencies’ Opinions Are Not Immune
Recently, U.S. District Judge Shira A. Scheindlin, Southern District of New York, rejected the contentions of Morgan Stanley & Co. Inc. and several ratings agencies, including Standard & Poor’s, Moody’s and Fitch, that credit ratings are merely “predictive opinions” that cannot give rise to actions for negligence. The suit involves a consolidation of two lawsuits brought… Continue Reading
Future With Fannie and Freddie Lesser Evil Than With Wall Street?
A Rare Point of Agreement Margaret Chadbourn of Reuters recently reported {April 23} that both Republicans and Democrats have “found a rare point of agreement.” They want to phase out or at least substantially reduce the role of the Federal National Mortgage Association (Fannie Mae ) and the Federal Home Loan Mortgage Corporation (Freddie Mac… Continue Reading
$10 Million Default Judgment Obtained Against CEO of Brookstreet Securities
Charged for Misleading Investors as the Subprime Mortgage Crisis Began to Deepen The interplay of federal judges, the SEC and the Residential Mortgage Backed Securities disaster continues (and probably will for a long time to come). In Los Angeles, U.S. District Judge David Carter fined former Brookstreet Securities Corp CEO, Stanley Brooks, the sum of… Continue Reading
Bank of America to Mortgage Originators on Buyback Claims: “Heads I Win, Tails I Still Win”
Bank of America (aka BofA) has decided to stop selling mortgages to Fannie. (Check out David Benoit’s recent Wall Street Journal blog post.) This development underscores yet another reason why mortgage loan originators should be extremely hesitant to enter into big-dollar “global” settlements with BofA. Estimated Future Losses A large component of the “damages” that BofA… Continue Reading
Settling with Government – SEC Gets Paid and Subprime Mortgage Securities Investors Suffer Huge Losses
Citimortgage Admits Liability On February 15th, 2012, in a clearly pre-negotiated deal between the US Attorney’s Office, on behalf of the Department of Housing and Urban Development and CITIMORTGAGE, INC. (a subsidiary of CITIBANK, N.A., and “CMI”), a complaint was filed against CMI in the US District Court in Manhattan and simultaneously settled for $158.3… Continue Reading