By Jamey Dunn
As part of a $13 billion national settlement, JPMorgan Chase & Co. has agreed to pay millions to Illinois’ public employee pensions systems for not disclosing the risks associated with some investments.
As part of the settlement, JPMorgan Chase admitted that it the misrepresented the quality of mortgage-backed investments it sold. “Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” Attorney General Eric Holder said in a prepared statement. “JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behavior. The size and scope of this resolution should send a clear signal that the Justice Department’s financial fraud investigations are far from over. No firm, no matter how profitable, is above the law, and the passage of time is no shield from accountability.”
Under the deal, the bank will pay $100 million to Illinois pension systems that purchased the investments prior to 2009. “We are still cleaning up the mess that Wall Street made with its reckless investment schemes and fraudulent conduct,” Attorney General Lisa Madigan said in a written statement. “Today’s settlement with Chase will assist Illinois to recover its losses from the dangerous and deceptive securities that put our economy on the path to destruction.” Madigan has been working with President Barack Obama’s Financial Fraud Enforcement Task Force. The group’s investigations spurred this and other settlements from big banks and mortgage servicers. According to a news release from Madigan, JPMorgan Chase will pay $72.4 million to the Illinois Teachers Retirement System (TRS), $16.2 million to the State Universities Retirement System (SURS) and $11.4 million to the Illinois State Board of Investment, which oversees the State Employees’ Retirement System (SRS), General Assembly Retirement System and Judges’ Retirement System (GARS).
The settlement is the largest in U.S. history. It also includes a $4 billion settlement with the Federal Housing Finance Agency and a $4 billion for the U.S. Department of Housing and Urban Development. Some of that money will go toward loans the bank is forgiving or giving more favorable terms to borrowers. Some will go to new low-interest loans to borrowers in areas hit hardest by the housing crisis. The funds will also be used to tear down long-abandoned homes.
JPMorgan Chairman and CEO Jamie Dimon said in a prepared statement: “Today’s settlement covers a very significant portion of legacy mortgage-backed securities-related issues for JPMorgan Chase, as well as Bear Stearns and Washington Mutual.” The company recently announced it has set aside $23 billion to pay for potential settlements.
Justice Department officials say that the settlement does not absolve JPMorgan employees from future civil or criminal charges. “The agreement does not release individuals from civil charges, nor does it release JPMorgan or any individuals from potential criminal prosecution. In addition, as part of the settlement, JPMorgan has pledged to fully cooperate in investigations related to the conduct covered by the agreement,” a statement from the department said.
Showing posts with label Housing crisis. Show all posts
Showing posts with label Housing crisis. Show all posts
Tuesday, November 19, 2013
Thursday, September 12, 2013
Attorney general sues company that she says broke into homes
By Jamey Dunn
Illinois Attorney General Lisa Madigan is suing a company that she says has been locking people out of their homes when they had a legal right to stay.
Foreclosure filings in the Chicago area have dropped to the lowest level since the housing market crashed in 2008. But the fallout from the housing market collapse will likely be felt in Illinois for many years to come as older foreclosures work their way through the system. A lawsuit filed by Madigan this week alleges that one company is violating the rights of people who have fallen behind on their house payments.
Lenders and companies that service loans by collecting borrowers’ payments hire other entities to assist them with taking care of properties after a foreclosure. Safeguard Properties LLC is the largest privately held company that provides those services, which include determining if a property is vacant and boarding up windows on vacant properties. Madigan is suing the Ohio-based company because she says Safeguard has been entering homes that have not yet been foreclosed upon and evicting residents who still have the legal right to occupy their homes. In Illinois, residents are legally allowed to remain in a property until the foreclosure process has been completed. “This case shows the lengths that banks and their service providers will go to abuse and intimidate borrowers in foreclosure,” Madigan said in a prepared statement. “This company was illegally breaking into people’s homes, removing all their possessions and locking them out. It is a homeowner’s worst nightmare.”
According to the complaint from Madigan, Safeguard often hired contractors to do the actual leg-work of finding out if properties were vacant, removing items left behind by former occupants, changing the locks and winterizing them by turning off the water. But Madigan’s complaint says that those contractors were taking such steps while residents were clearly still occupying properties with the legal right to be there.
The complaint describes several incidents. In once case, Safeguard allegedly broke into the home of Mark Fencke, a reserve member of the U.S. Armed Services, who was away at mandatory military training. Fencke had fallen behind on his house payments and was working with his bank to sell the house. Madigan says Safeguard representatives broke into Fencke’s house, damaged his property, had his utility services shut off and changed the locks on the doors. In another case described in the suit, Safeguard broke into the home of a woman who had fallen behind on her house payments. She had not gone into default on her loan, and the home was not even in the foreclosure process. The company changed her locks and shut off her water service. Madigan’s office is seeking an injunction that would bar Safeguard from doing business in the state. She is also seeking a $50,000 for each violation of the Consumer Fraud Act and an additional $10,000 for each violation involving residents who are 65 or older.
The complaint says that Safeguard’s policies are a big part of the problem. The company uses contractors in the state that are paid a fee per service. Safeguard stresses that occupancy checks should be done quickly but does not have a set policy for determining if a property is occupied. The company allegedly will not accept an “unknown” status on a property and will not pay contractors if they don’t make a determination. The filing says Safeguard pushes contractors to deem a property vacant after only one visit and without trying to contact possible residents. The document says that “in many cases Safeguard or its subcontractors inaccurately deem a property vacant when the property is, in fact, legally occupied.” The suit says Safeguard representatives leave behind misleading notices that imply that occupants must leave before they are legally required to go. A call and email to Safeguard requesting comment were not returned.
“We have come across a whole range of servicer issues,” said Spencer Cowan, vice president of research at the Chicago-based Woodstock Institute. “We know, for example, that there are servicers who have been very aggressive in trying to get tenants out of the building, and sometimes they have stepped over the line.” The institute focuses primarily on the other end of the spectrum; blight caused when banks do not keep up proper maintenance on foreclosed vacant properties. These buildings can drag down property values and even become dangerous to nearby residents. However, Cowan said he was not at all surprised by the allegations in Madigan’s complaint. “Problems seem to exist at both ends of the spectrum,” he said.
Cowan said a recent court ruling could make it more difficult for Chicago to push back against blight. The decision exempts the Federal Housing Finance Agency from the city’s Vacant Buildings Ordinance. That means that buildings owned by lending giants Fannie Mae and Freddie Mac, which hold more than half of all foreclosed properties, do not have to live up to the maintenance standards in the law. It also means that Chicago and the state have no ability to enforce any maintenance standards on either entity. A news release from the FHFA said of the law: “The ordinance would create risks and liabilities for the [Fannie Mae and Freddie Mac] at a time when they are already supported by taxpayers, including those in the city of Chicago. Additionally, the ordinance would subject the [Fannie Mae and Freddie Mac] to the regulation and supervision of the Chicago Department of Buildings instead of FHFA, as Congress intended.”
Illinois Attorney General Lisa Madigan is suing a company that she says has been locking people out of their homes when they had a legal right to stay.
Foreclosure filings in the Chicago area have dropped to the lowest level since the housing market crashed in 2008. But the fallout from the housing market collapse will likely be felt in Illinois for many years to come as older foreclosures work their way through the system. A lawsuit filed by Madigan this week alleges that one company is violating the rights of people who have fallen behind on their house payments.
Lenders and companies that service loans by collecting borrowers’ payments hire other entities to assist them with taking care of properties after a foreclosure. Safeguard Properties LLC is the largest privately held company that provides those services, which include determining if a property is vacant and boarding up windows on vacant properties. Madigan is suing the Ohio-based company because she says Safeguard has been entering homes that have not yet been foreclosed upon and evicting residents who still have the legal right to occupy their homes. In Illinois, residents are legally allowed to remain in a property until the foreclosure process has been completed. “This case shows the lengths that banks and their service providers will go to abuse and intimidate borrowers in foreclosure,” Madigan said in a prepared statement. “This company was illegally breaking into people’s homes, removing all their possessions and locking them out. It is a homeowner’s worst nightmare.”
According to the complaint from Madigan, Safeguard often hired contractors to do the actual leg-work of finding out if properties were vacant, removing items left behind by former occupants, changing the locks and winterizing them by turning off the water. But Madigan’s complaint says that those contractors were taking such steps while residents were clearly still occupying properties with the legal right to be there.
The complaint describes several incidents. In once case, Safeguard allegedly broke into the home of Mark Fencke, a reserve member of the U.S. Armed Services, who was away at mandatory military training. Fencke had fallen behind on his house payments and was working with his bank to sell the house. Madigan says Safeguard representatives broke into Fencke’s house, damaged his property, had his utility services shut off and changed the locks on the doors. In another case described in the suit, Safeguard broke into the home of a woman who had fallen behind on her house payments. She had not gone into default on her loan, and the home was not even in the foreclosure process. The company changed her locks and shut off her water service. Madigan’s office is seeking an injunction that would bar Safeguard from doing business in the state. She is also seeking a $50,000 for each violation of the Consumer Fraud Act and an additional $10,000 for each violation involving residents who are 65 or older.
The complaint says that Safeguard’s policies are a big part of the problem. The company uses contractors in the state that are paid a fee per service. Safeguard stresses that occupancy checks should be done quickly but does not have a set policy for determining if a property is occupied. The company allegedly will not accept an “unknown” status on a property and will not pay contractors if they don’t make a determination. The filing says Safeguard pushes contractors to deem a property vacant after only one visit and without trying to contact possible residents. The document says that “in many cases Safeguard or its subcontractors inaccurately deem a property vacant when the property is, in fact, legally occupied.” The suit says Safeguard representatives leave behind misleading notices that imply that occupants must leave before they are legally required to go. A call and email to Safeguard requesting comment were not returned.
“We have come across a whole range of servicer issues,” said Spencer Cowan, vice president of research at the Chicago-based Woodstock Institute. “We know, for example, that there are servicers who have been very aggressive in trying to get tenants out of the building, and sometimes they have stepped over the line.” The institute focuses primarily on the other end of the spectrum; blight caused when banks do not keep up proper maintenance on foreclosed vacant properties. These buildings can drag down property values and even become dangerous to nearby residents. However, Cowan said he was not at all surprised by the allegations in Madigan’s complaint. “Problems seem to exist at both ends of the spectrum,” he said.
Cowan said a recent court ruling could make it more difficult for Chicago to push back against blight. The decision exempts the Federal Housing Finance Agency from the city’s Vacant Buildings Ordinance. That means that buildings owned by lending giants Fannie Mae and Freddie Mac, which hold more than half of all foreclosed properties, do not have to live up to the maintenance standards in the law. It also means that Chicago and the state have no ability to enforce any maintenance standards on either entity. A news release from the FHFA said of the law: “The ordinance would create risks and liabilities for the [Fannie Mae and Freddie Mac] at a time when they are already supported by taxpayers, including those in the city of Chicago. Additionally, the ordinance would subject the [Fannie Mae and Freddie Mac] to the regulation and supervision of the Chicago Department of Buildings instead of FHFA, as Congress intended.”
Wednesday, March 27, 2013
Deadline nears for discriminatory lending settlement
By Jamey Dunn
Minority borrowers in Illinois may be eligible for compensation under a settlement with now-defunct Countrywide Financial over its discriminatory lending practices. But they have only a few days left to submit paperwork to get a piece of the settlement.
Bank of America, which bought Countrywide in 2008, has agreed to pay $335 million to customers affected by the racial discrimination committed by the former lender when making home loans. The U.S. Department of Justice sent letters and claim forms to the more than 200,000 people nationwide who are eligible for compensation. To receive a check, those eligible must submit their forms by March 29, this Friday.
“The relief obtained in this settlement is crucial for borrowers who’ve paid far too high a price for the risky, discriminatory lending practices Countrywide employed in the buildup to the housing collapse,” said Illinois Attorney General Lisa Madigan, who filed a discrimination suit against Countrywide in 2011. “I encourage anyone who has received information from the settlement administrator to act quickly to submit their claim before the deadline.” Madigan’s suit was ended by the federal settlement, which calls for at least $20 million to go to Illinois.
The DoJ says during that between 2004 and 2008, Countrywide lenders charged minority borrowers more in fees and other costs. According to the settlement, black and Hispanic borrowers were also more than twice as likely to end up with expensive subprime loans with ballooning interest rates than white borrowers with similar credit scores. “The steered Hispanic and African-American borrowers [who got subprime loans] paid, on average, thousands of dollars more for their loans and were subject to possible prepayment penalties, increased risk of credit problems, default, and foreclosure,” said the federal complaint.
The settlement applies to 41 states and the District of Columbia. But the DoJ focused in on Chicago as one of the examples used in its complaint against Countrywide. “In 2007, Countrywide charged a retail customer in Chicago borrowing $200,000 on average about $795 more in non-risk-based pricing adjustments if he were Hispanic, and an average of about $460 more if he were African-American, than the average amount charged to a non-Hispanic white borrower,” the compliant said. The DoJ said that at the same time, African-American and Hispanic borrowers in Chicago were also paying about $1,000 more in fees than white borrowers on the same kind of loan. The letters sent to those eligible for the settlement included a minimum amount that borrowers can expect to receive. The payouts range from $200 to $15,000. The higher amounts will go to the more than 12,000 people who were given sub-prime loans despite their solid credit histories. The final amount each borrower would receive will be determined by how many people respond by the deadline, after which the settlement will be sliced up among those that submitted to proper paperwork.
Borrowers who have questions, need help with their submission or need a new claim form should contact Independent Settlement Administrator Rust Consulting Inc, a contractor hired by DoJ to oversee the settlement. The administrator can be reached at (800) 842-5148 or by email at countrywide.settlement@usdoj.gov.
Illinois residents can also call Madigan’s Homeowner Helpline at (866) 544-7151. For more on the settlement, see Illinois Issues February 2012.
The Countrywide discriminatory lending settlement is not to be confused with the $26 billion foreclosure settlement approved in 2012. That agreement came in response to the nation’s largest lenders engaging in sloppy and sometimes fraudulent foreclosure practices, such as signing off on documents without verifying information, a practice known as robo-signing. Illinois is expected to receive $1 billion in that settlement, and most of the money is supposed to go toward keeping struggling borrowers in their homes.
Minority borrowers in Illinois may be eligible for compensation under a settlement with now-defunct Countrywide Financial over its discriminatory lending practices. But they have only a few days left to submit paperwork to get a piece of the settlement.
Bank of America, which bought Countrywide in 2008, has agreed to pay $335 million to customers affected by the racial discrimination committed by the former lender when making home loans. The U.S. Department of Justice sent letters and claim forms to the more than 200,000 people nationwide who are eligible for compensation. To receive a check, those eligible must submit their forms by March 29, this Friday.
“The relief obtained in this settlement is crucial for borrowers who’ve paid far too high a price for the risky, discriminatory lending practices Countrywide employed in the buildup to the housing collapse,” said Illinois Attorney General Lisa Madigan, who filed a discrimination suit against Countrywide in 2011. “I encourage anyone who has received information from the settlement administrator to act quickly to submit their claim before the deadline.” Madigan’s suit was ended by the federal settlement, which calls for at least $20 million to go to Illinois.
The DoJ says during that between 2004 and 2008, Countrywide lenders charged minority borrowers more in fees and other costs. According to the settlement, black and Hispanic borrowers were also more than twice as likely to end up with expensive subprime loans with ballooning interest rates than white borrowers with similar credit scores. “The steered Hispanic and African-American borrowers [who got subprime loans] paid, on average, thousands of dollars more for their loans and were subject to possible prepayment penalties, increased risk of credit problems, default, and foreclosure,” said the federal complaint.
The settlement applies to 41 states and the District of Columbia. But the DoJ focused in on Chicago as one of the examples used in its complaint against Countrywide. “In 2007, Countrywide charged a retail customer in Chicago borrowing $200,000 on average about $795 more in non-risk-based pricing adjustments if he were Hispanic, and an average of about $460 more if he were African-American, than the average amount charged to a non-Hispanic white borrower,” the compliant said. The DoJ said that at the same time, African-American and Hispanic borrowers in Chicago were also paying about $1,000 more in fees than white borrowers on the same kind of loan. The letters sent to those eligible for the settlement included a minimum amount that borrowers can expect to receive. The payouts range from $200 to $15,000. The higher amounts will go to the more than 12,000 people who were given sub-prime loans despite their solid credit histories. The final amount each borrower would receive will be determined by how many people respond by the deadline, after which the settlement will be sliced up among those that submitted to proper paperwork.
Borrowers who have questions, need help with their submission or need a new claim form should contact Independent Settlement Administrator Rust Consulting Inc, a contractor hired by DoJ to oversee the settlement. The administrator can be reached at (800) 842-5148 or by email at countrywide.settlement@usdoj.gov.
Illinois residents can also call Madigan’s Homeowner Helpline at (866) 544-7151. For more on the settlement, see Illinois Issues February 2012.
The Countrywide discriminatory lending settlement is not to be confused with the $26 billion foreclosure settlement approved in 2012. That agreement came in response to the nation’s largest lenders engaging in sloppy and sometimes fraudulent foreclosure practices, such as signing off on documents without verifying information, a practice known as robo-signing. Illinois is expected to receive $1 billion in that settlement, and most of the money is supposed to go toward keeping struggling borrowers in their homes.
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