Robosigners and Other Servicing Failures: Protecting the Rights of RMBS Investors
So, have you all heard about this conference call yesterday by all the hedge fund investors and the likes to discuss the “robosigning” scandal?
First from the wire…
Grais & Ellsworth LLP Announces Conference and Webcast to Brief Investors on ‘Robo-signers’ and other Servicing Failures
NEW YORK /PRNewswire/ — As the dubious practices of large servicers have brought foreclosures to a halt and triggered investigations by all 50 state Attorneys General, investors in residential mortgage-backed securities are again under threat. Please join us for a briefing on how RMBS investors can protect their rights against the consequences of “robo-signers” and other servicing failures.
From the WSJ
Losing your house to foreclosure seemed like a remote possibility for the roughly 125 people meeting Wednesday morning in a nondescript back room at the Core Club in midtown Manhattan.
The private club on East 55th Street touts its “exclusive access to a curated collection of compelling experiences designed around members’ cultural passions,” requires a $50,000 joining fee and costs $15,000 in annual dues. Members include Hollywood producer Harvey Weinstein and leveraged-buyout king Ron Burkle, and the club recently held “a conversation with Cristo,” the famed conceptual artist.
Wednesday’s main event was a conference called “Robosigners and Other Servicing Failures,” hosted by securities lawyer and Core Club member David J. Grais. Mr. Grais is trying to rally investors in residential mortgage-backed securities who feel burned by the foreclosure-paperwork mess — or at least worried that banks will try to pass along the costs of cleaning it up to bondholders.
The Washington Post mentions the meeting as well…
The problems have not only slowed foreclosures and provoked homeowner lawsuits across the country, they have also stoked an effort by mortgage investors to craft a legal strategy to recoup some of their losses.
Analysts have warned that banks could lose billions of dollars if investors take firms such as Bank of America to court. But attorneys representing money managers warned at a conference in New York on Wednesday that investors who want banks to buy back faulty loans should brace themselves for an ugly legal fight that could last for years.
“None of these avenues of litigation is for either the faint of heart or for those with short attention spans,” David Grais, an attorney representing investors, said at the conference, which focused on allegations that banks have not acted in the best interests of the investors.
The foreclosure debacle has raised questions about whether banks properly handled loans that were sold to investors during the housing boom. Many of those investors are seeking to band together, but with banks vowing to fight lawsuits – and holding the upper hand because they are not sharing detailed loan information that could be used against them in court – attorneys concede that their clients might not see a cent until 2013.
Any uncertainty associated with the lawsuits could also act as a drag on bank stocks, making it harder for the industry to move quickly past the foreclosure controversy.
Nearly 90 money managers and other investors attended Wednesday’s conference, but the list of attendees was closely guarded, with some refusing to give their names when approached. CNBC reported that the guest list included some of the major names in hedge funds and insurance.
In the past, such legal actions against banks have had difficulty gaining traction because investors have been reluctant to collaborate and reveal their mortgage holdings. Bill Frey, chief executive of the fund Greenwich Financial, said they’ve also been wary of antagonizing the banks.
Some of the relationships can be complicated. Merrill Lynch, a wholly owned subsidiary of Bank of America, holds a 34.1 percent interest in the giant hedge fund manager BlackRock. The hedge fund, along with the Federal Reserve Bank of New York and others, sent a letter this month to Bank of America seeking a repurchase of mortgages it said were faulty.
On Wednesday, Tal Franklin, another attorney representing investors, sent a letter to firms handling his clients’ securities, known as trustees, arguing that bondholders should not be responsible for any costs associated with foreclosure paperwork problems. Franklin has organized investors holding more than 6,000 private mortgage-backed securities.
“We don’t want anyone thinking we agreed to this,” Franklin said.
Sounds like a pretty serious meeting…
Looks like a CNBC reporter upset some people at the meeting as well…
Of course, you wouldn’t expect an event like this to go down without a hint of controversy. So here it is — an email from Grais & Ellsworth’s David Grais:
To Those Who Attended our Conference on Robosigners:
I have just learned that CNBC purports to have reviewed a list of those who attended today’s conference. This morning CNBC asked me for a list, and I refused. I told CNBC (as well as other journalists who asked) that we respected the privacy of those who did not want their attendance to be publicized. Apparently, CNBC’s reporter looked over the shoulder of our employee who was receiving our guests and who had a list of those who had registered. I have told CNBC that that reporter is not welcome to return to any conference that we sponsor.
Keeping confidences is our most important obligation. My colleagues and I apologize profusely to those whose attendance at our conference was publicized in this underhanded way.
So what is the point of all this you ask?
Well, 4closureFraud was able to get the “handout” from this meeting and has published it below…
Check it out…
Best viewed in full screen…