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Archive for March, 2011

ING divulges US RMBS class-action lawsuit

Thursday, March 17th, 2011

Netherlands-based ING Group divulged in a filing with the Securities and Exchange Commission that it is the focus of several lawsuits in the United States.

"In certain of such proceedings, very large or indeterminate amounts are sought, including punitive and other damages," the insurance conglomerate reveals in its annual 20-F report.

ING is winding down its United States real estate holdings by 2013, a mandate that is part of its $13.5 billion bailout deal from the Dutch government.

Class litigation filed in the United States District Court in New York alleges violations of federal securities laws. The lawsuit charges that ING failed to make certain disclosures in connection with the 2007 and 2008 offerings of ING's Perpetual Hybrid Capital Securities.

The Court dismissed the claims relating to the 2007 offerings.

Yet the challenge to the June 2008 offering still stands as it relates to ING Group investments in certain residential mortgage-backed securities.

"Additional purported class litigation challenges the operation of the ING Americas Savings Plan and ESOP and the ING 401(k) Plan for ILIAC Agents," the statement adds.

"These matters are being defended vigorously; however, at this time, ING is unable to assess their final outcome," the form states.

Write to Jacob Gaffney.

Follow him on Twitter @JacobGaffney.

Tags: ING Group, lawsuit, mortgage, RMBS, SEC
Posted in Secondary Market/Investors, Top Stories | No Comments »

CMBS data provider buys Investcap Advisors

Thursday, March 17th, 2011

Trepp, a provider of commercial mortgage-backed securities data, acquired market intelligence firm Investcap Advisors this week to dig deeper into commercial loans underlying securities.

Massachusetts-based Investcap is bringing its two web-based platforms to the merged company. Both applications allow analysts to cut through streams of data to discover valuable information on the quality of loans backing CMBS.

Trepp plans to pass this data onto primary and secondary mortgage market participants who continue to demand in-depth information about systematic risks underlying portfolios of commercial mortgage-backed securities.

The value of the transaction was not disclosed.

“We are constantly striving to increase the value of our services and I am confident that our acquisition of Investcap is aligned with that objective,” said Annemarie DiCola, CEO, Trepp. “We have great respect and admiration for Investcap and I look forward to leveraging their great real estate and technology expertise.”

Write to Kerri Panchuk.

Tags: CMBS, Investcap Advisors, LoanAdvisor
Posted in Secondary Market/Investors, Top Stories | No Comments »

TARP was no win for the taxpayers

Thursday, March 17th, 2011

Today the Senate Banking Committee will explore the Troubled Asset Relief Program (TARP). Almost 30 months after its birth, TARP is far from dead. More than 550 banks, AIG, GM, Chrysler and others still have approximately $160 billion of taxpayer money outstanding.

Even so, the administration would have us believe that TARP has been a success because it supposedly alleviated the financial crisis and is (so far) being paid back at an apparent profit for taxpayers. Perhaps because he helped invent TARP before he joined the Obama administration, Treasury Secretary Timothy Geithner has called TARP the "most effective government program …

Posted in Around the Web | No Comments »

Bachus bill would install commission, not director at CFPB

Thursday, March 17th, 2011

Rep. Spencer Bachus (R-Ala.) introduced a bill Wednesday that would establish a five-member bipartisan commission to carry out the duties of a director at the Consumer Financial Protection Bureau.

The CFPB is scheduled to open July 21, and under the Dodd-Frank Act, it would oversee the transparency and fairness of financial instruments for consumers. It would become the de facto overseer for the entire mortgage market, including mortgage servicers. Elizabeth Warren, the special adviser to the Treasury Department, is setting up the CFPB and is likely to get the nomination as director of the bureau.

But Bachus said these powers would be in better hands with a commission, not a director.

"It always seemed clear to me that the Dodd-Frank Act put too much power in the hands of one person," Bachus said. "Under the Dodd-Frank Act, the director of the CFPB is given a broad and virtually unlimited mandate to substitute his or her judgment for that of consumers and the free market. Because the CFPB might be the most powerful agency ever created, I am introducing this bill to ensure that a non-partisan, balanced approach to consumer protection prevails."

But in a hearing Wednesday, Warren said the CFPB will not be the most powerful agency in the U.S.

The Financial Oversight Stability Council, which will be a mix of other regulators, will have the ability to override any rule the CFPB writes. And because the bureau cannot set its own budget and must go to Congress for any additional funds it needs, it will be one of the most accountable agencies in government, Warren said.

Still, Bachus said the commission he recommends would mirror other regulatory bodies such as the Federal Deposit Insurance Corp. and the Securities and Exchange Commission.

"Empaneling a five-member commission is an important first step in ending predatory financial practices without inappropriately limiting access to credit that small businesses and individuals want and need," Bachus said. "We can achieve consumer protection without a credit czar."

Write to Jon Prior.

Follow him on Twitter: @JonAPrior

Tags: bureau, CFPB, Elizabeth Warren, Lending, Servicing/Default, Treasury
Posted in Origination/Lending, Slider, Top Stories | 9 Comments »

Jobless claims drop 4%

Thursday, March 17th, 2011

The number of initial jobless claims filed by unemployed Americans fell 4% last week to 385,000 initial claims filed on an seasonally adjusted basis, according to the most recent Labor Department survey.

That compares to the 401,000 claims filed a week earlier, the department said in data released Thursday.

Overall, the number of initial jobless claims filed by the unemployed dropped by 16,000, changing the tide from the previous week when the Department reported a 7% rise in jobless claims.

The four-week moving average also dropped by 7,000 to 386,250 from 393,250 in the most recent week ending March 12. Meanwhile, the seasonally adjusted insured unemployment rate continued to hover at 3%.

The total number of people receiving some sort of federal unemployment benefits also remained slightly under 9 million.

Analysts with Econoday noted the most recent figures conform to what has become an "improving trend" in the number of filings submitted each week. Econoday added that the most recent drop is "reversing half of the prior week's rise."

Write to Kerri Panchuk.

Tags: econoday, labor department, recovery, unemployment
Posted in Origination/Lending, Top Stories | 1 Comment »

Mortgage rates sink on crisis in Japan

Thursday, March 17th, 2011

Mortgage rates fell sharply this week as investors pulled back on fears a crisis in Japan could stall a global recovery, Bankrate Inc. said Thursday.

Japan's economy has left investors in a state of uncertainty after a Tsunami and earthquake devastated the region, leaving thousands dead and the country's nuclear facilities in an unstable state.

Mortgage rates reacted to investor fears with the 15-year, fixed-rate mortgage falling to 4.12%, down from 4.32%. Meanwhile, the 30-year, fixed-rate mortgage dropped to 4.91%, compared to 5.04% last week, Bankrate said.

The larger jumbo 30-year fixed-rate mortgage hit 5.46%, while the average 5-year adjustable rate mortgage dipped to 3.74%, Bankrate said.

Freddie Mac also linked falling interest rates to fears over Japan. The GSE said Thursday the 30-year fixed-rate mortgage fell to 4.76%, down from 4.88% a week earlier. Meanwhile, the 15-year FRM hit 3.97%, a drop from 4.15% last week and 4.33% a year earlier.

The 5-year Treasury-indexed hybrid ARM also declined to 3.57%, compared to 3.73% last week and 4.09% in February 2010.

“With the crisis in Japan, investors rushed to buy the security of U.S. Treasury bonds, which lowered its yields and other interest rates as well. This allowed fixed mortgage rates to drift lower this week," said Frank Nothaft, vice president and chief economist for Freddie Mac.

The Mortgage Bankers Association reported Wednesday that the average interest rate for a 30-year, fixed mortgage dropped to 4.79% from 4.93% during the latest full week on record. In addition, the average rate for a 15-year, fixed-rate mortgage declined to 4.03% from 4.17%.

Interest rates have been volatile all year, dropping below 5% and then rising again. The last time interest rates hit 6% was in November 2008, according to Bankrate data.

"At the time, the average 30-year, fixed rate was 6.33%, meaning a $200,000 loan would have carried a monthly payment of $1,241.86," Bankrate explained. "With the average rate now 4.91%, the monthly payment for the same size loan would be $1,062.67, a difference of $179 per month for anyone refinancing now."

Write to Kerri Panchuk.

Tags: Bankrate, mortgage rates
Posted in Origination/Lending, Top Stories | 2 Comments »

Foreclosures drop 34.7% in Colorado

Thursday, March 17th, 2011

Foreclosures filed in Colorado dropped 34.7% last month when compared to February of 2010, a new report from Colorado's Division of Housing says.

In February, the state recorded 1,986 foreclosure filings, down from 3,042 filings a year earlier.

Foreclosure sales at auction also fell 10.7% between January and February, continuing a trend that began last year when lenders slowed foreclosure auction sales in the wake of the robo-signing controversy. Year-over-year foreclosure sales in February fell 19.6% to 1,338 completed transactions.

In late 2010, companies put the breaks on the foreclosure process to check up on issues related to the robo-signing of paperwork.

By October, many lenders had phased out their delays in auction sales, which means sales at auction "continue to move upward" even though they still fell below January levels last month, the Colorado Division of Housing says.

Colorado's latest report shows an ongoing trend of fewer foreclosure filings.

In January, Northern Colorado experienced a 21% drop in foreclosure filings. Boulder County — an affluent community north of Denver — saw only 75 properties enter foreclosure.

Nationwide, lenders filed foreclosures or repossessed 225,101 properties in February, a 27% drop from one year before and the lowest total in three years, according to the most recent report from RealtyTrac.

Write to Kerri Panchuk.

Tags: Colorado Division of Housing, foreclosures, RealtyTrac
Posted in Top Stories | No Comments »

Alternative foreclosure program now available in Florida

Wednesday, March 16th, 2011

One alternative to standard residential mortgage foreclosure mediation mandated by the Florida Supreme Court in 2009 is now available statewide.

The Foreclosure Mediation Program, under the nonprofit Earth's Angels United, is an alternative mediation experience that boasts exceptional customer service and attention to homeowners. The program is managed by The Mediation Center Southeast, a woman-owned business that's driving the expansion.

Colleen Sharkey, CEO of Mediation Center Southeast, claimed extra "hand holding" along with direct and timely referrals to the Department of Housing and Urban Development are what make the difference.

"We tell our homeowners going through mediation, we can get the lenders to the table if you come to the mediation session," Sharkey said. "We are more effective."

The Foreclosure Mediation Program is under the direction and guidance of Mediator and Attorney Leanne Levett. Partners of The Mediation Center Southeast include Sharkey, Mike Gross (EVP of operations), Scott Banta (VP of Facilities and Branches), and Jim Harte (chief technology officer).

Write to Christine Ricciardi.

Follow her on Twitter @HWnewbieCR.

Tags: Department of Housing and Urban Development, Earth's Angels United, The Mediation Center Southeast
Posted in Servicing/Default | 4 Comments »

Treasury: 99% of TARP investments paid back

Wednesday, March 16th, 2011

Six more financial institutions paid back their bailout through the Troubled Asset Relief Program Wednesday. The Treasury Department said 99% of the funds are now returned.

Congress cleared the Troubled Asset Relief Program in October 2008 to spend $700 billion buying preferred stock through the Capital Purchase Program and toxic holdings such as residential mortgage-backed securities from the nation's largest financial firms.

The Treasury ended up disbursing $245 billion in bank investments, and $244 billion has been repaid. It currently estimates that these specific programs under TARP will yield $20 billion in profit to taxpayers. But, including foreclosure prevention and other initiatives, TARP will cost taxpayers roughly $25 billion, according to the Congressional Budget Office.

Fifth Third Bancorp (FITB: 13.17 +0.69%) repurchased 43.6 million warrants to purchase common stock. In February, it repaid its $3.4 billion in outstanding CPP preferred shares. Total proceeds from Fifth Third reached $280 million, according to the Treasury.

National Penn Bachshares and Lakeland Bancorp also repurchased a total of $170 million in shares and paid a just over $700,000 in dividends to the Treasury for a total of $170.7 million in proceeds.

Stockmens Financial Corp., Bridge Capital Holdings and Heritage Bankshares repurchased a total of $23.1 million in shares. However, the Treasury still holds $7.5 million shares in Heritage. Total proceeds from these three will be $23.9 million.

The Congressional Oversight Panel gave few compliments to the Treasury for TARP, insisting that the foreclosure prevention programs underwhelmed and the stock and toxic asset purchases will only urge companies to continue taking these risks. The Treasury maintains, however, that because of the tools provided to regulators under the Dodd-Frank Act, these companies should not expect such a bailout again.

Write to Jon Prior.

Follow him on Twitter: @JonAPrior

Tags: bailout, COP, Fifth Third, repayment, TARP, Treasury
Posted in Origination/Lending, Top Stories | 3 Comments »

SEC accuses Colonial Bank exec of mortgage fraud totaling $1.5 billion

Wednesday, March 16th, 2011

The Securities and Exchange Commission Wednesday accused the former operations supervisor of Colonial Bank's mortgage warehouse lending division of participating in a $1.5 billion securities fraud scheme.

Teresa Kelly enabled the sale of fictitious and impaired mortgage loans and securities from her division's largest customer, Taylor, Bean & Whitaker, to Colonial Bank, according to the SEC, which is seeking an undisclosed amount in civil penalties against Kelly. Kelly misrepresented these falsified securities as high-quality, liquid assets, the SEC said.

The alleged fraud took place from March 2002 to August 2009, according to the SEC complaint. TBW relied on funding from Colonial Bank because it generally did not have enough internal capital to sustain its mortgage origination business. Once Florida-based TBW started experiencing liquidity problems, the complaint said, TBW overdrew its limited line of credit with Colonial by about $15 million a day.

Kelly and several of her colleagues covered up the overdraws with a technique called "kiting," in which certain debits were not entered until after credits due for the following day were entered. By the end of 2007, the scheme consisted of about $500 million in fake residential mortgages and $1 billion in severely impaired residential mortgages and securities, according to the SEC.

The end of the fraud scheme fell simultaneously with the 2009 bankruptcy filings from TBW and Colonial BancGroup, Colonial Bank's parent company. Regulators seized the bank shortly thereafter.

"For nearly seven years, Kelly abused her access to Colonial Bank’s accounting systems, allowing (Lee) Farkas and TBW to defraud the bank and its investors out of more than $1.5 billion," said William Hicks, associate regional director of the SEC’s Atlanta Regional Office.

The SEC previously charged former TBW chairman and majority owner Lee Farkas in June 2010, former TBW treasurer Desiree Brown last month, and the head of Colonial Bank’s mortgage warehouse lending division Catherine Kissick earlier this month, in connection with the alleged kiting scheme.

The SEC's complaint was filed with the U.S. District Court for the Eastern District of Virginia. The regulator said its investigation is still continuing.

Write to Christine Ricciardi.

Follow her on Twitter @HWnewbieCR.

Tags: Colonial BancGroup, Colonial Bank, fraud, SEC, Securities and Exchange Commission, Taylor Bean & Whitaker
Posted in Origination/Lending, Top Stories | 2 Comments »