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A recent class action lawsuit filed on behalf of thousands of homeowners in New York against Wells Fargo alleges that while the bank received $25 billion in government bailout funds it failed to make a good faith effort to help borrowers avoid foreclosure in compliance with the federal government’s Home Affordable Modification Program (HAMP). The complaint, filed in the US District Court for the Eastern District of New York, accuses Wells of breach…
Bank of America recently moved to dismiss a lawsuit filed by Ambac Assurance Corp. in New York state court, alleging $600 million in damages for fraudulent inducement in connection with payments it made under policies insuring faulty residential mortgage-backed securities issued by Countrywide. In its complaint filed at the end of 2014, Ambac claims that it insured securities in eight RMBS trusts worth $1.68 billion at the height of the housing boom from…
The U.S. Supreme Court recently held in Jesinoski v. Countrywide Home Loans, Inc. that borrowers exercising their right to rescind mortgages under the Truth in Lending Act (“TILA”) only need to provide written notice to creditors within three years of the loan being issued, instead of bringing a lawsuit within that period. The high court concluded that TILA only states “when the right to rescind must be exercised, but says nothing about how that…
Matt Taibbi of Rolling Stone recently profiled the woman JPMorgan Chase paid one of the largest fines in American history to keep from talking in his article, The $9 Billion Witness: Meet JPMorgan Chase’s Worst Nightmare. Alayne Fleischmann, a former Chase manager, revealed the true reason why JPMorganChase settled the claims brought by the DOJ for such a seemingly staggering amount — cash in exchange for secrecy. On the eve of a civil complaint…
The Federal Reserve is expected to require the biggest U.S. banks to increase reserves in an effort to prevent the possibility of another financial crisis. Federal Reserve Governor Daniel K. Tarullo is scheduled to testify before the U.S. Senate Committee on Banking, Housing and Urban Affairs on Tuesday to introduce new rules, which would impose a so-called capital surcharge to reinforce the banking system by requiring too-big-to-fail banks to increase protections against potential losses.…
Former Moody’s analyst, Ilya Kolchinsky, has accused the credit rating powerhouse of overstating its ratings for countless toxic mortgage-backed securities that caused the financial meltdown in 2008, misleading investors and costing the U.S. billions in funds spent bailing out Wall Street’s too-big-to-fail banks. Kolchinsky’s 107-page False Claims Act complaint, filed in 2012, was recently unsealed after the government failed to intervene. The complaint alleges that from 2004 to 2007, Moody’s issued inflated ratings, often “triple-A,”…
Citigroup announced last week that it will pay $7 billion to end an investigation by the U.S Department of Justice into misconduct related to its mortgage securitization practices. The blockbuster settlement came days before DOJ lawyers were expected to file a lawsuit. $4.5 billion will go towards settling civil claims related to the DOJ probe, of which $500 million will be split among the FDIC and the attorney generals of California, Delaware, Illinois, Massachusetts, and…
The city of Miami recently sued JPMorgan Chase & Co. in Florida federal court alleging that JPMorgan violated the Federal Fair Housing Act (“FHA”) by engaging in a “continuing pattern” of discriminatory mortgage lending practices in Miami, resulting in a disproportionate number of foreclosures in minority neighborhoods. Ironically, the suit was filed on Friday the 13th, symbolizing the recent run of bad luck for JPMorgan. The suit came only two weeks after the city of
A former goliath of the non-prime lending market, Aurora Loan Services, LLC (“ALS”), recently resolved a class-action lawsuit alleging that it fraudulently induced distressed California borrowers to enter into purported “workout” agreements to extract unearned payments. ALS was one of many servicing affiliates of big banks that created, and profited off of, various reduced documentation programs, which correspondent lenders originating and funding residential home loans sold to Aurora Bank FSB were required to follow. A…
Following the financial crisis, the U.S. Securities and Exchange Commission has received sharp criticism from the public for its seemingly weak enforcement of Wall Street’s too big to fail banks. Surprisingly, this sentiment was recently echoed from within the SEC. James A. Kidney, a retiring SEC trial attorney, no longer muffled by his employment with the agency, blasted his supervisors during a retirement speech on March 27 for being too “tentative and fearful” in their…