“In a June 13, 2005, email, Countrywide CEO Angelo Mozilo wrote to President and COO David Sambol: “This is the third deal in the last 10 days that BOA has offered that is impossible to beat. In fact, the other two were substantially worse than this one. It appears to me that BOA is making an aggressive move into mortgages once again.’" Imagine that. Bank of America doing mortgage deals that even Mozilo found shocking.”—
from Al Lewis.
So even the king of crummy, risky mortgage products thought BofA was taking too much risk. Dumbest bank in America.
Let the Buyer Beware!
(photo credit: Erich Stüssi)
This looks like a double-dose of look-before-you-leap.
One of the country’s largest financial institutions, AIG, is suing another large financial institution, Bank of America (BofA), because of some bad purchases – on both sides. BofA recently acquired two companies, which AIG says engaged in massive fraud with all those subprime mortgages that led to the housing crisis. (Both companies were under investigation by the government for the same thing, but the criminal charges were eventually dropped.)
Makes you think that maybe BofA should’ve been a little more careful about doing its homework before buying those companies and becoming legally responsible for their subprime mortgage dalliances. Kind of like doing your homework before you buy stock in a company - you really want to know what you’re buying into when you hand over your money.
Now for another case of look-before-you-leap: BofA is saying that AIG had all the resources it needed to figure out whether it was a good idea to buy those mortgage securities in the first place. It’s not like the big bad banks were ripping off a little old grandma here…
They may all be right - who knows? But one thing seems pretty clear: CAVEAT EMPTOR!
How carefully do you do YOUR homework before shelling out a ton of cash?
BofA Ordered to Pay $930,000 to Fired Whistleblower
By Hugh Son - Sep 14, 2011 12:58 PM PT
Bank of America Corp. (BAC) must pay $930,000 to an employee who uncovered fraud at Countrywide Financial Corp. and was fired in violation of whistleblower protections, the U.S. Department of Labor said.
The employee was terminated soon after the Charlotte, North Carolina-based bank took over Countrywide in 2008, the agency said today in a statement. The worker, who must also be reinstated, led internal investigations that found “pervasive wire, mail and bank fraud involving Countrywide employees,” according to the release.
“It’s clear from our investigation that Bank of America used illegal retaliatory tactics against this employee,” said David Michaels, assistant secretary of the Labor Department’s Occupational Safety and Health Administration, in the statement. “This employee showed great courage reporting potential fraud and standing up for the rights of other employees.”
Bank of America Chief Executive Officer Brian T. Moynihan, 51, has been settling demands from buyers and insurers of soured mortgages created by Countrywide, which had been acquired by his predecessor, Kenneth D. Lewis. Countrywide was the biggest creator of subprime loans, made to homeowners with the weakest credit, and regulators and lawmakers have blamed lax underwriting for fueling defaults.
Bank of America, the biggest U.S. lender by assets, had investigated the claims and is “disappointed” with the ruling, said Dan Frahm, a company spokesman.Management Style
“The bank’s actions in dismissing this associate were solely based on issues with her management style and in no way related to the complaints and allegations she made,” Frahm said in an e-mail. “Bank of America encourages associates to raise issues they see. We take such escalations seriously and investigate them thoroughly.”
The Los Angeles-area worker claimed that people who tried to report fraud to Countrywide’s employee-relations department suffered persistent retaliation, according to the agency. The $930,000 includes back wages, interest, compensatory damages and attorney fees.
The worker and Bank of America have 30 days to appeal the monetary damages, the agency said.
Countrywide Admits Notes Were Not Transferred To Securitization Trusts
by Dean on November 22, 20101tweetretweet
Testimony in a New Jersey bankruptcy court case provides proof of the scenario we’ve depicted on this blog since September, namely, that subprime originators, starting sometime in the 2004-2005 timeframe, if not earlier, stopped conveying note (the borrower IOU) to mortgage securitization trust as stipulated in the pooling and servicing agreement. Professor Adam Levitin in his testimony before the House Financial Services Committee last week described what the implications would be:
If mortgages were not properly transferred in the securitization process, then mortgage-backed securities would in fact not be backed by any mortgages whatsoever. The chain of title concerns stem from transactions that make assumptions about the resolution of unsettled law. If those legal issues are resolved differently, then there would be a failure of the transfer of mortgages into securitization trusts, which would cloud title to nearly every property in the United States and would create contract rescission/putback liabilities in the trillions of dollars, greatly exceeding the capital of the US’s major financial institutions….
Recently, arguments have been raised in foreclosure litigation about whether the notes and mortgages were in fact properly transferred to the securitization trusts. This is a critical issue because the trust has standing to foreclose if, and only if it is the mortgagee. If the notes and mortgages were not transferred to the trust, then the trust lacks standing to foreclose…
If the notes and mortgages were not properly transferred to the trusts, then the mortgage-backed securities that the investors’ purchased were in fact non-mortgage-backed securities. In such a case, investors would have a claim for the rescission of the MBS, meaning that the securitization would be unwound, with investors receiving back their original payments at par (possibly with interest at the judgment rate). Rescission would mean that the securitization sponsor would have the notes and mortgages on its books, meaning that the losses on the loans would be the securitization sponsor’s, not the MBS investors, and that the securitization sponsor would have to have risk-weighted capital for the mortgages. If this problem exists on a wide-scale, there is not the capital in the financial system to pay for the rescission claims; the rescission claims would be in the trillions of dollars, making the major banking institutions in the United States would be insolvent.
As we indicated back in September, it appeared that Countrywide, and likely many other subprime orignators quit conveying the notes to the securitization trusts sometime in the 2004-2005 time frame. Yet bizarrely, they did not change the pooling and servicing agreements to reflect what appears to be a change in industry practice. Our evidence of this change was strictly anecdotal; this bankruptcy court filing, posted at StopForeclosureFraud provides the first bit of concrete proof.
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Alternative Press / Walmart - Mini-mag cover shoot
Things are changing rapidly. And it’s still not clear for better or for worse. With the economy dip last year lots of dinosaurs got closed down and some new forward thinking businesses opened up. What also might be a coincidence last year and with everything going down the hill, the introduction of video and traditional media going digital made us all aware how comfortable we are. This was one of the reasons for such harsh time for many photographers out there. But it’s time for next step, a rebirth of media, a fusion of technologies, partnerships, joint efforts. It’s already here and happening. While many pubs are completely going online, some are finding ways to reinvent traditional media and move forward. I recently shot a cover for a special edition of Alternative Press music magazine. They partnered with Walmart for exclusive seasonal release…
You can only find this in Walmart! It’s a mini-magazine (5.5 x 7”) with 2 audio cds, a locker poster and a band name bracelet! And it’s only $5. It’s a great example of what can be done with traditional media without going completely digital and still be very affordable! Being a small format, with some media, lots of photos and tight articles, this magazine is catered to a specific audience and will be a great success without a doubt. The band featured called Cartel, who just went to Wind Up Records, a perfect new label to be at. Check out their new release Cycles.
I know sooner than later we’ll see a lot more content being on portable media (think iPad), completely interactive and customizable. It is really amazing what Sports Illustrated got going here:
What I wish to see, is more collaborations. Unique content in unexpected format with a niche is really where it’s at and with a good distribution partner is what will drive a good quality content to people who care to spend time and money on it. And what about a fusion of magazines? Something that is catered to one person but delivered digitally. Articles pulled from various sources in one multimedia presentation. Something to think about …