Allocation of National Mortgage Settlement

Have you wondered about what really happened to the money negotiated through the National Mortgage Settlement Agreement? I wonder. I still wonder. Nobody seems to know exactly where the money went. A recent article on The Bryan Ellis Investing Letter breaks it down, sort of. Nobody seems to know where all the money went. I looked at on the site for the National Conference of State Legislators and found a break down for allocations state by state which was published around the time of the settlement date. The allocation of funds for Florida follows. But how the money was actually spent, remains a mystery. It seems abundantly clear that the monies did not go to beleaguered former homeowners who had already lost their homes in foreclosure.

FLORIDA ALLOCATION OF NATIONAL MORTGAGE SETTLEMENT MONIES:

$334,073,974.00 - Florida's Share

$35 million for down payment assistance;
$10 million for housing counseling;
$5 million for the state court system to help with foreclosure-related issues;
$5 million to the Office of the Attorney General to fund legal aid programs;
$9,117,895 to the Florida Prepaid Tuition Scholarship Program;
$5,262,579 to the state courts system to provide technology solutions that expedite foreclosure cases through the judicial process;
$16 million to the state courts system to provide supplemental resources to reduce the backlog of pending foreclosure cases;
$9.7 million to the clerks of the court to enhance service levels to assist and support the courts in expediting processing backlogged foreclosure cases;
$10 million to the Office of the Attorney General to provide legal aid to low- and moderate-income homeowners facing foreclosure;
$10 million to the Department of Children and Families for capital improvements to certified domestic violence centers;
$20 million to Habitat for Humanity of Florida;
$50 million to reduce rents on new or existing rental units through the State Apartment Incentive Program;
$10 million to fund the construction or rehabilitation of units through the State Apartment Incentive Loan Program;
$40 million to fund the State Housing Initiative Program;
$10 million to the Department of Economic Opportunity to fund a competitive grant program to provide housing for homeless persons;
$10 million to the Department of Economic Opportunity to fund a competitive grant program to provide housing for persons with developmental disabilities;
$5 million to the Office of the Attorney General to reimburse the office for costs and fees;
The remaining funds are directed to the state General Fund as civil penalties.

And stated on the Florida Attorney General, Pam Bondi's site:

"Attorney General Bondi formally entered a landmark $25 billion joint federal-state agreement with the nation's five largest mortgage servicers over foreclosure abuses and unacceptable nationwide mortgage servicing practices. The proposed agreement provides an estimated $8.4 billion in relief to Florida homeowners and addresses future mortgage loan servicing practices. The settlement generally releases civil claims related to robo-signing, other foreclosure-related abuses, and loan origination misconduct, but it provides no release of criminal claims or of claims related to mortgage securitization.

'This settlement will provide substantial relief to struggling Florida homeowners, and ensures that our state gets its fair share of the relief being provided nationally,' stated Attorney General Pam Bondi. "This agreement holds banks accountable and puts in place new protections for homeowners in the form of strict mortgage servicing standards.'"

AND

"Florida’s share of the total monetary benefits under the settlement is approximately $8.4 billion.

• Florida borrowers will receive an estimated $7.6 billion in benefits from loan modifications, including principal reduction, and other direct relief.
• Approximately $170 million will be available for cash payments to Florida borrowers who lost their home to foreclosure from January 1, 2008 through December 31, 2011 and suffered servicing abuse.
• The value of refinanced loans to Florida’s underwater borrowers would be an estimated $309 million.
• The state will receive a direct payment of $334 million.

In addition to the terms of the national settlement agreement, Attorney General Bondi separately negotiated an agreement with the nation’s three largest mortgage servicers to ensure that a guaranteed portion of the overall settlement funds goes to Florida borrowers.

For more information about eligibility and filing a claim:
Website: NationalMortgageSettlement.com
Email: administrator@nationalmortgagesettlement.com
Call toll-free: 1-866-430-8358 (Hearing Impaired: 1-866-494-8281).
*The line is staffed Monday through Friday from (7 a.m. to 7 p.m. Central)."

In fact, some former homeowners received checks for $300.; and a few others I know of received around $1400. The state of Florida has gleefully participated in the fleecing of Florida citizens perpetrated by the banks and that fleecing continues to this day. The mortgage crisis and great recession is the result of the biggest Ponzi scheme ever that makes Bernie Madoff look like a kindergartner.

If I had never purchased a home, a potential first time home buyer, there is no way that I would buy a home now. Not in this economy. Not after witnessing these recent events. I would stay home with Mom as long as she could stand it, and then after that I would rent. The media can blame the slow down in purchases on the weather, or alternately claim that the mortgage crisis ended. But, you don't need a weatherman to tell which way the wind blows.  

Too little - but not too late - we can still punish the banksters that put U.S. citizens out of their homes

A recent NY Post article caught my eye:

March 8, 2014

Ex-Jeffriestrader guilty of fraud

A federal jury found former Jefferies Group trader Jesse Litvak guilty of defrauding clients on mortgage bond trades, a victory for the government as it probes whether banks cheated their customers in the years after the financial crisis.

After reading about Litvak I wondered whether it is fact or urban myth that no top level bankers have gone to jail for perpetrating mortgage fraud. The Securities and Exchange Commission charged Angelo Mozilo of Countrywide with insider trading and securities fraud in 2009 for selling shares of his company while publicly proclaiming it was in fine shape. But those were civil charges, which Mozilo settled with $67.5 million in fines and a lifetime ban from serving as an officer of a public company. A criminal investigation was dropped.

In 2011, Michael J. McGrath Jr., former president of U.S. Mortgage Corp., was sentenced to 14 years in prison for orchestrating a conspiracy that defrauded credit unions and Fannie Mae of $136 million.

According to the DOJ press release - 2/24/11

Michael J. McGrath, Jr., the former president and controlling shareholder of closely-held U.S. Mortgage, previously pleaded guilty before U.S. District Judge Katharine S. Hayden to one count of mail and wire fraud conspiracy and one count of money laundering. Judge Hayden also imposed the sentence today in Newark federal court.

According to documents filed in this and related cases and statements made in court:

Beginning as early as 2002 to January 27, 2009, McGrath conspired to fraudulently sell Fannie Mae hundreds of loans belonging to various credit unions. Other members of the conspiracy included U.S. Mortgage’s chief financial officer and its servicing manager, Leroy Hayden. McGrath directed Leroy Hayden, who provided numerous reports to credit unions falsely stating that loans that had been sold were still in the credit unions’ portfolios, to falsify records to conceal the fraudulent sales.
McGrath admitted that he devised the scheme to prop up U.S. Mortgage, and that he used the proceeds to fund U.S. Mortgage’s operations, his personal investments, and investments he made on U.S. Mortgage’s behalf.

The pace of the fraudulent sales increased during 2008 and early 2009. On January 27, 2009, dozens of law enforcement agents executed a search warrant at U.S. Mortgage and CU National’s Pine Brook headquarters. In the following weeks, U.S. Mortgage and CU National commenced bankruptcy proceedings. Hundreds of U.S. Mortgage employees lost their jobs as a result.

In addition to the prison term, Judge Hayden sentenced McGrath to three years of supervised release. McGrath also consented to forfeiture of the proceeds of his crimes and $14 million of his assets that the government has seized or frozen. The Court postponed entry of a restitution order so that the victims’ losses could be properly allocated. The total loss amount, previously estimated at around $139 million, has been calculated as being somewhat less. The restitution order is expected to require McGrath to pay more than $136 million in restitution to his victims.

In 2011, Lee Bentley Farkas, the former chairman of a private mortgage lending company, Taylor, Bean & Whitaker (TBW), was convicted for his role in a more than $2.9 billion fraud scheme that contributed to the failures of Colonial Bank, one of the 25 largest banks in the United States in 2009, and TBW, one of the largest privately held mortgage lending companies in the United States in 2009.
After a 10-day trial, a federal jury in the Eastern District of Virginia found Farkas guilty of one count of conspiracy to commit bank, wire and securities fraud; six counts of bank fraud; four counts of wire fraud; and three counts of securities fraud.   At sentencing, one July 1, 2011, Farkas faced a maximum prison term of 30 years for the conspiracy charge and for each count of bank fraud, 20 years for each count of wire fraud related to TARP, 30 years for each count of wire fraud affecting a financial institution and 25 years for each securities fraud count.   Farkas was remanded into custody.

According to court documents and evidence presented at trial, Farkas and his co-conspirators engaged in a scheme that misappropriated more than $1.4 billion from Colonial Bank’s Mortgage Warehouse Lending Division in Orlando, Florida, and approximately $1.5 billion from Ocala Funding, a mortgage lending facility controlled by TBW.   Farkas and his co-conspirators misappropriated this money to, among other things, cover TBW’s operating expenses.   The fraud scheme contributed to the failures of Colonial Bank and TBW.  

“Today a jury convicted Lee Farkas of orchestrating one of the longest and largest bank fraud schemes in the country,” said U.S. Attorney Neil H. MacBride [at sentencing]. “In 2008, Lee Farkas boasted that he ‘could rob a bank with a pencil.’  And he did just that.  His staggering greed led him to steal nearly $3 billion from Colonial Bank and other investors.   Farkas’s mammoth fraud contributed to the toppling of a financial institution and the ripple effects were felt from Wall Street to Main Street.   Now he’s being held responsible for the financial ruin he left in his wake.”

Evidence at trial also established that Farkas and his co-conspirators caused Colonial BancGroup to file materially false financial data with the SEC regarding its assets in annual reports contained in Forms 10-K and quarterly filings contained in Forms 10-Q.   Colonial BancGroup’s materially false financial data included overstated assets for mortgage loans that had little to no value that Farkas and his co-conspirators caused Colonial Bank to purchase.   Farkas and his co-conspirators also caused TBW to submit materially false financial data to the Government National Mortgage Association (Ginnie Mae) in order to extend TBW’s authority to issue Ginnie Mae mortgage-backed securities.

According to court documents and evidence presented at trial, Farkas also personally misappropriated more than $20 million from TBW and Colonial Bank to finance his lifestyle, including purchasing multiple homes, scores of cars, a jet and sea plane, and restaurants and bars.  

Federal prosecutors are still exploring new strategies for criminally charging Wall Street bankers who packaged and sold the bad mortgage loans behind the financial crisis, including using an old law intended to punish individuals for scamming commercial banks. The old law is FIRREA -

FINANCIAL INSTITUTIONS REFORM, RECOVERY AND ENFORCEMENT ACT OF 1989
AN ACT - To reform, recapitalize, and consolidate the Federal deposit insurance system, to enhance the regulatory and enforcement powers of Federal financial institutions regulatory agencies, and for other purposes. Which includes the following provision:

(2)  SPECIAL RULE FOR CONTINUING VIOLATIONS--
In the case of a continuing violation, the amount of the civil penalty may exceed the amount described in paragraph (1) but may not exceed the lesser of $1,000,000 per day or $5,000,000.

It all sounds like too little. But its not too late.U.S. citizens continue to lose their homes to foreclosure despite media proclamations that the foreclosure crisis is well behind us. ITS NOT. Mortgages initiated in recent history, since 2002 or so, are riddled with misrepresentation and fraud. It's not too late to punish those who steal the wealth of U.S. citizens.

Apparently it doesn't matter ...

Apparently it doesn't matter to our government that the wealth of our citizens is being systematically depleted by the banks and our government who allow them to proceed. Apparently the fact that many of the lenders have no real claim to the property for which they pursue foreclosure is of no consequence. Case in point, a representative of JP Morgan Chase admitted in a deposition which is part of the Federal Court record in that case, that JP Morgan Chase never actually received the mortgage notes supposedly transferred from Washington Mutual. Apparently it doesn't matter that this fact, and it is now accepted as fact, continues to be ignored by the circuit courts. And foreclosures continue with the named plaintiff, JP Morgan Chase as Successor in Interest for Washington Mutual, even though it isn't true.

In Federal Court, the sworn deposition testimony of Lawrence Nardi, the operations unit manager and a mortgage officer for JPM, who was previously with WaMu and was picked up by JPM after WaMu’s failure a representative for JP Morgan Chase, Nardi, admitted that these transfers never took place. See JPMorgan Chase Bank, N.A. as successor in interest to Washington Mutual Bank v. Waisome, Florida 5th Judicial Circuit Case No. 2009-CA-005717. In the deposition entered to the court record of that case:

"(page 261, beginning at line 2): No there is no assignments of mortgage. There’s no allonges. There’s no — in the thousands of loans that I have come into contact with that were a part of this purchase, I’ve never once seen an assignment of mortgage. There is simply not — they don’t exist. Or allonges or anything transferring ownership from WAMU to Chase, in other words. Specifically, endorsements and things like that.
So, JPM allegedly “purchased” mortgage loans from the FDIC out of the WaMu failure, but there is no schedule of what loans were purchased, no assignments, no allonges, no endorsements, nothing that transferred ownership of the loans from WaMu to Chase. However, as we all know, JPM goes around the country touting that it is the “successor in interest to WaMu” (which it has admitted in Federal Court that it is not) and relies on the amorphous “FDIC Affidavit” which, as far as what the “Affidavit” is proffered for, is directly contradicted by the sworn deposition testimony of JPM’s authorized representative WHO WAS FORMERLY WITH WAMU AND WAS PICKED UP BY JPM."

And further, apparently it doesn't matter that the Department of Justice went to all the trouble of hammering out a National Mortgage Settlement Agreement. Because, that, also is being systematically ignored by the banks. Dual tracking continues as it always has. The homeowner in good faith enters into mortgage modification with their lender or servicer or whoever offers a modification, provides to them an endless stream of documents, only to find themselves facing foreclosure anyway. 

It  MATTERS!