Lawsuits
Aline van Duyn of FT.com wrote a great article that explains a few things about mortgage modifications. I quote part of van Duyn’s article below. But that is not the real shocker. While approximately 35 percent of people are struggling with mortgages, what really drives me wild is what happens when the neighbor gets $100,00 knocked off of the mortage balance while others in the neighborhood keep paying on time like they should.
Orson Benn, a former VP of subprime lender Argent Mortgage is off to prison for 18 years. Argent was one of Ameriquest’s divisions. Although it doesn’t do much for homeowners, it is nice to see something has happened. Remember, if you will, that George Bush named Ameriquest’s owner, Roland Arnall, as ambassador to The Netherlands. Some say Ameriquest settled charges of predatory lending so Arnall would be confirmed as ambassador. In 2005, Ameriquest Capital and three of its subsidiaries comprised four of the 53 entities that each contributed the maximum of $250,000 to the second inauguration of President George W. Bush.
The New York attorney general’s office is issuing subpoenas to several Bank of America Corp executives as the state broadens its probe into the bank’s marketing of auction-rate securities, a person familiar with the investigation said on Wednesday. As it should be, we say. The lawyers are coming out in droves, asking the question “Did you lose money?” Two credit Suisse brokers took auction rate securities fraud to a new level (or new low depending on your outlook) by telling investors that the securities were backed by school loans, when in fact the securities were backed by subprime mortgages.
Lender liability lawsuits are beginning as builders see banks pulling back from their contractual agreements. In some cases it is due to lack of funds, while in other cases lines of credit are reduced as new appraisals come in millions of dollar lower than previous appraisals. Developer John Thomas says he had nearly finished building a 222-unit condominium and hotel project in Stockton, Calif., when his lender, First Banks Inc.’s Missouri-based First Bank, wouldn’t release the final $6 million from his $40 million construction loan. There are other similar cases.
U.S. prosecutors are preparing to file criminal charges against managers of two Bear Stearns hedge funds whose collapse helped kick off the credit crisis last year, the Wall Street Journal reported on Monday, according to Reuters. For those who remember the day to day events of last year the subprime markets was failing before the funds collapsed. Banks specializing in subprime, such as HSBC’s subsidiary HSBC Finance, has already announced major losses. But who cares about the exact timing – this is a major announcement as responsibility may have a high price.