Bank of America and Other Major Banks Allegedly Violated Terms of $25 Billion Settlement

May 25, 2013
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The New York Attorney General claims there is evidence that Bank of America, Wells Fargo and other banks violated the terms of a settlement designed to end mortgage servicing abuses, according to Reuters.

Attorney General Eric Schneiderman, “who has said he plans to sue Bank of America and Wells Fargo for failing to live up to their obligations under the deal, said other states had found similar problems.”

“Several other states have identified similar recurring deficiencies by the participating servicers,” Schneiderman said in a letter dated Thursday to the monitor for the settlement, former North Carolina Banking Commissioner Joseph Smith. The letter was obtained by Reuters on Friday.

“The $25 billion settlement was brokered last year between five banks and 49 state attorneys general. The other banks are JPMorgan Chase, Citigroup, and Ally Financial. The banks agreed to provide relief to homeowners and comply with a set of servicing standards to atone for foreclosure misconduct.”

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One Response to Bank of America and Other Major Banks Allegedly Violated Terms of $25 Billion Settlement

  1. ronny on May 27, 2013 at 1:36 pm

    The Connecticut Department of Banking Commissioner fails to act.
    Is banking fraud continuing in Connecticut. Post mortgage crisis and who is protecting the users of financial services? April 6, 2013

    No matter what your belief is for the cause of the mortgage crisis, such as bad underwriting, faulty appraisals, reselling loans to investors in bulk, zero down financing, falsification of borrower documentation, etc, it is widely accepted that greed and fraud were at the root of it all. The collapse began more than five years ago and the economy appears to be turning around. So what happened to the money-hungry people that stretched the truth in order to make a buck or the ones that outright committed fraud to make a ton of bucks? Are they still committing fraud to desperately try to sustain their lifestyle? Are they in hibernation? Have they really changed? Or, is fraud continuing to be committed right under our noses?

    A true optimist believes that yes, everyone learned their lesson and we can move on and rebuild what we lost. However, can we really trust that these same people are not continuing with business as usual?? And if we can’t trust them, who is assigned to monitor these same banks and lenders so that the American consumers can feel confident in lending practices and know that their loan is secure and legitimate?

    In Connecticut, the answer is The Connecticut Department of Banking.(CDB) But are they performing their job, or are they just another collection of the same bankers perpetuating the fraud under the guise of oversight??

    To decide, let’s examine the case of the Neilander family, who only wanted to know “Who is the owner/holder of our note?” They had received numerous notices from varying parties and no one would (could) tell them who was the rightful owner of the note. So the Neilander’s turned to the CDB to assist, only to be led down another path of confusion, misleading information, and possible fraud on the part of the CDB.

    So before we get into the specific’s of their case, let’s take a brief look at the mission statement of the CDB.

    “To Protect users of financial services from unlawful or improper practices by requiring that regulated entities and individuals adhere to the law, assuring the safety and soundness of state chartered banks and credit unions, educating and communicating with the public and other stakeholders, and promoting cost-effective regulation.”

    They will “protect users” – The Neilanders acquired a loan in the state of Connecticut, so they qualify as a “user” of financial services. It seems the CBD may have fell short and that’s an understatement

    “Requiring that regulated entities and individuals adhere to the law.” –Aegis Lending Corporation and Specialized Loan Servicing LLC (SLS) was a regulated entity at the time providing the Neilander’s a loan.

    “Assuring the safety and soundness of state chartered banks and credit unions. –Aegis subsequently filed bankruptcy and was neither safe nor sound.

    “Educating and communicating with the public and other stakeholders” –The Neilander’s will take exception to how well the CDB communicates with anyone.

    The Neilander’s definitely believed that they had turned to the right organization for help, so let’s hear the facts of their case.

    On January 4, 2011, the Neilander’s filed a complaint with the Connecticut Department of Banking about alleged fraud against Aegis Lending Corporation and Specialized Loan Servicing LLC (SLS). Exactly ONE YEAR later, the Neilander’s had not heard back from the CDB, so they filed a Freedom of Information Request to find out what the CDB was doing to investigate their claim. The response that they received was that Aegis Lending Corporation or Specialized Loan Servicing never replied. So no follow up, no second request of Aegis or SLS, no demand that they respond and no letter to the Neilander’s informing them that Aegis or SLS was non-responsive.

    So it took them a year to respond, only after receipt of a Freedom of Information request. And the response was essentially a statement that, “We asked, Aegis didn’t answer.” So one has to ask, is it common procedure of the Department of Banking not to follow up when a company ignores them? Is it common procedure for a licensed company to ignore a regulator’s request? Is the CDB actually regulating, or are they just a series of initials and suits put in place to make us feel as though we are safe and protected?

    Subsequently, the Neilander’s decided that they needed to perform their own investigation. During their investigation the Neilanders discovered that the VP of SLS allegedly represented RMS Residential Properties, who allegedly purchased the loan. At this point, who knows? I am sure that this is somehow legal, or is it but to the Neilander’s, it only muddies the water as to who owns their loan. Aegis was their loan originator. SLS also claimed they owned the loan. Who owns it now?

    The Neilanders methodically documented all these events and supplied the CDB with all documents that now smacked of FRAUD. What did Commissioner Pitkin and the CDB do with this evidence? Did they in fact look into the legalities of these transfers and sales?

    So it gets better……..

    July 12, 2012, the Neilander’s received a letter from SLS stating that the loan was actually transferred to RSM Mortgage Asset Trust and securitized and bundled with many other loans . Why is this important? It’s virtually impossible to securitize a single loan more than once. In addition SLS has been claiming the Neilanders loan was in default. All the experts have told me, you can’t sell a defaulted loan into a trust. Confused yet? It’s sounding more and more like the Neilanders have uncovered major fraud.

    The Neilander’s are not banking regulators, but one could easily surmise from the documents that their loan was sold multiple times, to different parties, and that Aegis and SLS may have profited from both these multiple transactions.

    So with all of this information, letters, and documentation, the Neilander’s return to the CDB believing that they have substantial evidence of fraud and that the CDB should open an investigation. But No!! Letter after letter, claim after claim, getting reporters interested in their story, contacting senators and state representatives to pressure the CDB and finally, on March 1, 2013, the Connecticut Department of Banking James Heckman said they completed the complaint process and that the Neilander’s should have received a copy of the response from SLS. Ok, I may be a simple guy but what the hell does that mean? Didn’t the Neilanders ask the CDB to investigate. They now believe there may be a cover up by the CDB.

    If I didn’t mention earlier, reporters love cover-ups. It’s what we live for.

    So the CDB goes back to the original, offending party, SLS, is told that everything is fine, and they close the case with no exceptions. In what world can this be considered regulatory oversight? This is akin to asking the murderer if he did it and when he replies “No” us saying “Ok, set him free.”

    So the Neilander’s are now being foreclosed on by SLS, and they still do not know who actually owns their loan. The CDB did absolutely nothing to protect, regulate, inform, or communicate with them, and SLS may be perpetrating a fraud on these consumers from Connecticut.

    Commissioner Howard Pitkin failed to return our calls for comment his Chief of Staff James Heckman for the CDB responded by email.

    “There is no “cover up” or “delay” at the Department of Banking.”

    “The agency attempted to assist Mr. Neilander to the best of our ability using the tools available”
    Only in America!!!!

    To Be continued…………………

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