DOJ Press Release | $25 Billion Mortgage Servicing (Foreclosure Fraud) Agreement Filed in Federal Court

$25 Billion Mortgage Servicing Agreement Filed in Federal Cour

SETTLEMENT PARTIES

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WASHINGTON – The Justice Department, the Department of Housing and Urban Development (HUD) and 49 state attorneys general announced today the filing of their landmark $25 billion agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses.

The federal government and state attorneys general filed in U.S. District Court in the District of Columbia proposed consent judgments with Bank of America Corporation, J.P. Morgan Chase & Co., Wells Fargo & Company, Citigroup Inc. and Ally Financial Inc., to resolve violations of state and federal law.

The unprecedented joint agreement is the largest federal-state civil settlement ever obtained and is the result of extensive investigations by federal agencies, including the Department of Justice, HUD and the HUD Office of the Inspector General (HUD-OIG), and state attorneys general and state banking regulators across the country.

The consent judgments provide the details of the servicers’ financial obligations under the agreement, which include payments to foreclosed borrowers and more than $20 billion in consumer relief; new standards the servicers will be required to implement regarding mortgage loan servicing and foreclosure practices; and the oversight and enforcement authorities of the independent settlement monitor, Joseph A. Smith Jr.

The consent judgments require the servicers to collectively dedicate $20 billion toward various forms of financial relief to homeowners, including: reducing the principal on loans for borrowers who are delinquent or at imminent risk of default and owe more on their mortgages than their homes are worth; refinancing loans for borrowers who are current on their mortgages but who owe more on their mortgage than their homes are worth; forbearance of principal for unemployed borrowers; anti-blight provisions; short sales; transitional assistance; and benefits for service members.

The consent judgments’ consumer relief requirements include varying amounts of partial credit the servicers will receive for every dollar spent on the required relief activities. Because servicers will receive only partial credit for many of the relief activities, the agreement will result in benefits to borrowers in excess of $20 billion. The servicers are required to complete 75 percent of their consumer relief obligations within two years and 100 percent within three years.

In addition to the $20 billion in financial relief for borrowers, the consent judgments require the servicers to pay $5 billion in cash to the federal and state governments. Approximately $1.5 billion of this payment will be used to establish a Borrower Payment Fund to provide cash payments to borrowers whose homes were sold or taken in foreclosure between Jan. 1, 2008, and Dec. 31, 2011, and who meet other criteria.

The court documents filed today also provide detailed new servicing standards that the mortgage servicers will be required to implement. These standards will prevent foreclosure abuses of the past, such as robo-signing, improper documentation and lost paperwork, and create new consumer protections. The new standards provide for strict oversight of foreclosure processing, including third-party vendors, and new requirements to undertake pre-filing reviews of certain documents filed in bankruptcy court. The new servicing standards make foreclosure a last resort by requiring servicers to evaluate homeowners for other loss mitigation options first. Servicers will be restricted from foreclosing while the homeowner is being considered for a loan modification. The new standards also include procedures and timelines for reviewing loan modification applications and give homeowners the right to appeal denials. Servicers will also be required to create a single point of contact for borrowers seeking information about their loans and maintain adequate staff to handle calls.

The consent judgments provide enhanced protections for service members that go beyond those required by the Servicemembers Civil Relief Act (SCRA). In addition, the servicers have agreed to conduct a full review, overseen by the Justice Department’s Civil Rights Division, to determine whether any service members were foreclosed or improperly charged interest in excess of 6 percent on their mortgage in violation of SCRA.

The oversight and enforcement authorities of the settlement’s independent monitor are detailed in the court documents filed today. The monitor will oversee implementation of the servicing standards and consumer relief activities required by the agreement and publish regular public reports that identify any quarter in which a servicer fell short of the standards imposed in the settlement. The consent judgments require servicers to remediate any harm to borrowers that are identified in quarterly reviews overseen by the monitor and, in some instances, conduct full look-backs to identify any additional borrowers who may have been harmed. If a servicer violates the requirements of the consent judgment it will be subject to penalties of up to $1 million per violation or up to $5 million for certain repeat violations.

The consent judgments filed today resolve certain violations of civil law based on mortgage loan servicing activities. The agreement does not prevent state and federal authorities from pursuing criminal enforcement actions related to this or other conduct by the servicers. The agreement does not prevent the government from punishing wrongful securitization conduct that will be the focus of the new Residential Mortgage-Backed Securities Working Group. In the servicing agreement, the United States also retains its full authority to recover losses and penalties caused to the federal government when a bank failed to satisfy underwriting standards on a government-insured or government-guaranteed loan; the United States also resolved certain Federal Housing Administration (FHA) origination claims with Bank of America as part of this filing and with Citibank in a separate matter. The agreement does not prevent any action by individual borrowers who wish to bring their own lawsuits. State attorneys general also preserved, among other things, all claims against the Mortgage Electronic Registration Systems (MERS), and all claims brought by borrowers.

Investigations were conducted by the U.S. Trustee Program of the Department of Justice, HUD-OIG, HUD’s FHA, state attorneys general offices and state banking regulators from throughout the country, the U.S. Attorney’s Office for the Eastern District of New York, the U.S. Attorney’s Office for the District of Colorado, the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Western District of North Carolina, the U.S. Attorney’s Office for the District of South Carolina, the U.S. Attorney’s Office for the Southern District of New York, the Special Inspector General for the Troubled Asset Relief Program and the Federal Housing Finance Agency-Office of the Inspector General. The Department of the Treasury, the Federal Trade Commission, the Consumer Financial Protection Bureau, the Justice Department’s Civil Rights Division, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Department of Veterans Affairs and the U.S. Department of Agriculture made critical contributions.

For more information about the mortgage servicing settlement, go to www.NationalMortgageSettlement.com. To find your state attorney general’s website, go to www.NAAG.org and click on “The Attorneys General.”

The joint federal-state agreement is part of enforcement efforts by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.

SOURCE: http://www.justice.gov

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4closureFraud.org

Comments
18 Responses to “DOJ Press Release | $25 Billion Mortgage Servicing (Foreclosure Fraud) Agreement Filed in Federal Court”
  1. Igor says:

    THE VA LOAN GUARANTEES ARE NULLIFIED IN FRAUD! THUS THE VA LOANS ARE NOT GUARANTEED! Why should the US taxpayer be on the hook for one dime on NULLIFIED GUARANTEES! I don’t see how a civil case and any money given the tax payers in a civil SETTLEMENT has to do with Loan Guarantees nullified by their fraud? SOMETHING STINKS HERE!
    The VA Loan Guarantee case is different. It is a adding of legal fees to the loan application. These fees were part of the loan origination fee, which is part of the loan originators sales commission. Thus,, apparently, the loan originators were fraudulently taking these added fees, and splitting them with the racket. This racket would necessarily have been made up of the loan brokers, the ‘inside’ the bank men, (like criminal bank tellers who are the inside men in a bank robbery, there were likely bank employees involved in this bank robbery, but these are not the ‘Banks’). But the banks did not get the illegal money, the legal fees were apparently distributed among the the network of loan brokers, lawyers, inside the bank the bank operatives (maybe) and the VA Loan Guarantee officer, who apparently would have to be in on the the bank heist. The banks would have necessarily have nothing to do with this, and would loose their loan guarantees if they did. There is no way the banks were involved. It was a syndicate operating outside the banks It.was simply organized crime.The degree to which this is not pursued criminally/civilly, is a direct indication of the reality of this, in that it suggests that the racket and its ‘lawyers’ are highly placed and provided a pro active offense versus a defense to this racket, such that the lawyers must be sued and prosecuted as co racketeers operating under cover of a law license. An agreement reached in fraud, and part of the concealment is a RICO issue? Correct? IMHO.
    http://www.myfoxatlanta.com/dpp/news/iteam/I-Team-Veteran-Fraud-Lawsuit-Settled-201203
    http://occupywallst.org/forum/prosecute-the-atlanta-va-loan-guarantee-officer-un/

    • Igor says:

      This VA loan fraud case exposes the nature of the racke’ts protection syndicate, and how it operates. There is no such transparent case otherwise. The conflicts involved in this case are profoundly expository at levels not readily visible to most.
      This case must get public attention and scrutiny. Study it in all its conflicting elements, and post answers or questions so we can all learn and work to project it into the public discourse. It is an easy to understand type of fraud, not elaborate financial twists. IMHO
      Class Action Qui Tam suit?

  2. Ali says:

    Our VA loan was fraud upon origination. I finally comlpeted the chain of title and found the was no clear title and no one from the VA bothered to check. All we have is an “Avidavitt oF Title/Bill of Sale”. They apparently took out 2 maybe three loans on origination, I am speaking of the mortgage brokers, we paid our mortgage on time for three years first to Wahington Mutual, then to Bank Financial and we refinanced but we had put 37,ooo. down. and then before we new it our loan was transfered to countrywide by MERS thats when our touble started. They went bankrurt and we were stuck w/ BOA. We requested a loan mod, and the fun & games began. I spent hours trying to work with them & Hope for Homeowners, I sent in so much paperwork ina period of three years I gave up and filed a complaint w/ the OCC (How nieve I was) they sided w/ boa I appealed And they once again sided with BOA. So finially I did what I should have done first and got our records from the recorders office. Boy was I surprised at what I found. Enough to put together what happened . Apparently the morgage brokers were feeling the heat and released the mortgage through Wells Fargo, I never new we had Wells Fargo in 2007! Had we known we would never have refied. But from what I understand anything after the loan origination is a nullity because Washingtonton Mutual was never recorded w/ the recorders office. It looks like the mortgage broker did a doc dump at the recorders office and never informed us of the status of our loan which already had a clouded Title and still does to this day. We are in limbo. I don’t think the broker could have done all this with out help from the inside. But anyway this is a federal thing since it was a VA loan and I don’t think the settlement pertains to us. I guess we stuck out here in Limbo Land!

    • Igor says:

      Ali, Apparently the civil case has been settled with Well Fargo. 25 million. It was represented on TV that the whisleblowers were ‘loan officers’. This is misleading, or so it appears. They are Loan Brokers who are the principles in their own loan brokering companies. Apparently one man operations. There would appear to be an attempt to cloud the issues of this case with this type of language. Maybe I am wrong. It appears that the loan origination fraud might be intertwined with the multi funding of loans that you experienced. Something stinks here, IMHO. There appears to be something more to his and thus the way it has been handled. Unless an individual is sued/prosecuted it will be difficult. It appears that this is more related to the ‘lawyer protection racket’. I have to wonder what if any interest the lawyers for Wells Fargo had in this. Were they the in house lawyers for Wells Fargo? Or a law firms retained to Settle this matter? Civil cases are driven by monetary settlement. Criminal cases are driven by convictions and punishments. The apparent fact that the DOJ did not vigorously investigate this case is another alarm, IMHO.

      • Igor says:

        Also, Why ,in light that fraud in a VA loan renders the VA Loan Guarantee null and void, has the DOJ failed to investigage this case to the extent that they make sure that the VA loans invl;oved in this crime, are in fact nullified. Whu should the US taxpayer be onthe hook for one dime os a NULLIFED GAURANTEE! I dont see how a civil case and any money given the tax payers in a cicil SETTLEMENT has to do with Loan Gurantees nullified by their fraud? SOMETHING STINKS HERE!

      • Igor says:

        Obama could insure his re election by criminally prosecuting this case, and doing it in a very high profile manner.Yet, he fails to do so. I think one of his rivals would be well served by taking up the gauntlet.

  3. From the agreement= In confidentiality context = you have ten days to hide the info……

    Congressional demand,
    court order or other request for the production of any Confidential
    Information covered by this Order, the state or federal agency shall, unless
    prohibited under applicable law or the unless the state or federal agency
    would violate or be in contempt of the subpoena, Congressional demand,
    or court order, (1) notify the Servicer of such request as soon as
    practicable and in no event more than ten (10) calendar days of its receipt
    or three calendar days before the return date of the request, whichever is
    sooner, and (2) allow the Servicer ten (10) calendar days from the receipt
    of the notice to obtain a protective order or stay of production for the documents or information sought, or to otherwise resolve the issue, before
    the state or federal agency discloses such documents or information. In all
    cases covered by this Section, the state or federal agency shall inform the
    requesting party that the documents or information sought were produced
    subject to the terms of these provisions.

  4. From the agreement=
    4. Except as provided by these provisions, all information designated as
    “CONFIDENTIAL” shall not be shown, disclosed or distributed to any
    person or entity other than those authorized by these provisions.
    Participating states and federal agencies whose claims are released
    through this settlement agree to protect Confidential Information to the
    extent permitted by law.

  5. To Tell The Truth says:

    Why do all the PDF’s only refer to Bank of America? Each one I open is exactly the same and all for BOA…

  6. lvent says:

    Here is all of the proof of treason and crimes punishable under the RICO ACT…by our own law enforcement and Govt. that we need to bring a nationwide lawsuit against all of them..We The People have all of the documented proof in our possession of all of their crimes…

  7. Igor says:

    Loan origination fraud is NOT bank fraud, It is fraud ON the banks, where the loan brokers/orignators are involved in a network of self dealing. This case is the ONLY case that appears to punche a whole in the layers of lies. Who is up to a Federal class action law suit naming the loan BROKERS and their apparent syndicate as defendants?? LETS ROLE!
    http://occupywallst.org/forum/prosecute-the-atlanta-va-loan-guarantee-officer-un/

    • Paul L. Bishop says:

      Most Brokers were dealing with an inside ” Bank wholesale lending rep ” who was giving the Brokers the guidelines for what would be acceptable to the Bank. These Brokers submitted their files through this rep.
      it was his/her specific task to “package” the loan so the Bank could make a clear determination on the loan.
      The Bank is presumed to be sophisticated enough to do the proper due diligence, i.e. check for work history and ask for 2 years of pay stubs, etc. to have properly vetted the borrower. If they chose to forego
      that step it is then at their risk, and part of that is what they are dealing with now. I doubt that any credible Atty. will entertain this type of legal action.

      • Igor says:

        Paul, Apparently, The VA Loan Guarantee case is different. It is a adding of legal fees to the loan application. These fees were part of the loan origination fee, which is part of the loan originators sales commission. Thus,, apparently, the loan originators were fraudulently taking these added fees, and spiting them with the racket. This racket would necessarily have been made up of the loan brokers, the ‘inside’ the bank men, (like criminal bank tellers who are the inside men in a bank robbery, there were likely bank employees involved in this bank robbery, but these are not the ‘Banks’). But the banks did not get the illegal money, the ‘legal fees’ were apparently distributed among the the network of loan brokers, lawyers, inside the bank the bank operatives (maybe) and the VA Loan Guarantee officer, who apparently would have to be in on the the bank heist. The banks had nothing to do with this, and would loose their loan gaurentees if they did. There is no way the ‘banks were involved. It was a syndicate operating outside the bank.was simply organized crime the bank The degree to which this is not pursued criminally/civilly, is a direct indication of the reality of this, in that it suggests that the ‘racket’ and its ‘lawyers’ are highly placed and provided a pro active ‘offense versus a defense to this racket, such that the lawyers must be sued and prosecuted as co racketeers operating under cover of a law license. IMHO.

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