Having punished the five largest mortgage servicers for their foreclosure practices to the tune of a $25 billion settlement, federal regulators are now setting their sights on the next tier of financial firms, whose methods are increasingly coming under fire.
According to the New York Times, the Federal Reserve has recommended fines for eight more firms: HSBC’s U.S. division, SunTrust Bank, MetLife, U.S. Bancorp, PNC Financial Services, EverBank, OneWest and Goldman Sachs. [more]
Financial research and ratings firm Standard & Poor’s has been pushed out of commercial mortgage-backed securities deals following a $15 billion sale that went south last year, Bloomberg News reported.
Last July, a massive deal between Citigroup and Goldman Sachs fell apart after S&P pulled its ratings for the securities in the deal, saying it had to review its model used in rating the assets. Now, Wall Street is pushing back, finally busting the trio of ratings agencies that have had a stranglehold on the U.S. bond market, Bloomberg said. [more]
320 Ridgeview Drive in Palm Beach
New York banking executive David Lambert has sold his Palm Beach home for $10.35 million, according to a deed filed in Palm Beach County Circuit Court.
The 13,479-square-foot property is located at 320 Ridgeview Drive in Palm Beach, just north of midtown.
Lambert is a retired Goldman Sachs executive, an original partner during the firm’s public offering in 1999. [more]
The Federal Housing Finance Agency plans to sue Bank of America,
JPMorgan Chase, Goldman Sachs and Deutsche Bank, accusing them of
misrepresenting the quality of mortgage securities they assembled and
sold at the height of the housing bubble, and seeking billions of
dollars in compensation, the New York Times reported. The lawsuits
follow subpoenas the FHFA issued a year ago. The timing of the suits
is related to a statute of limitations that expires next Wednesday.The
lawsuits will allege that the banks did not fulfill their duties under
securities law and didn’t pay attention to the fact that borrowers’
incomes were infalted or falsified. [more]
Goldman Sachs’ mortgage subsidiary said today it would stop the
illegal practice of robo-signing as part of a settlement with New
York’s Department of Financial Services and Banking Department, MSNBC
reported. The agreement was a precondition of allowing Goldman
Sachs’ sale of its Litton Loan Servicing subsidiary to mortgage
company Ocwen Financial. Goldman, Litton and Ocwen also agreed to
withdraw pending foreclosures if affidavits were robo-signed or
inaccurate. Under the settlement, the company is required to either
return property that was wrongfully sold back to the original
borrowers or provide compensation. [more]
Bank of America will try today to persuade a California state court judge in San Francisco to dismiss yet another suit that seeks to make it repurchase $19 billion in mortgage-backed securities. If the bank loses out, Bloomberg News said, it may open the floodgates for investors to be able to access internal bank files and correspondence about the loans for pre-trial evidence.
This marks the latest in a slew of investors suing Bank of America and other underwriters such as Goldman Sachs to force the buyback of downgraded mortgage securities, according to Bloomberg. So far, investors have defeated efforts by the banks to have cases dismissed before trial.
In several rulings over the past few months, a Washington state judge has berated banks for citing faulty data from appraisers or expired statutes of limitation to avoid Federal Home Loan Bank of Seattle’s claims. [more]
A $1.5 billion commercial mortgage bond sale between Goldman Sachs and Citigroup has been scrapped, the companies said, because Standard and Poor’s would not rate the notes. According to Bloomberg News, the deal had been slated to close today but was delayed because S&P is reviewing its criteria for rating commercial mortgage-backed securities.
“Ratings are a condition precedent to closing and settlement,” Goldman Sachs and Citigroup said in the statement to Business Wire. “Standard & Poor’s had previously informed Goldman and Citi that they were prepared to rate” the transaction, they said.
The risk assessor explained the change in a separate statement.
S&P ’’is reviewing the application of our conduit/fusion CMBS criteria in relation to the calculation of debt service coverage ratios,” it said yesterday. [more]
In a sign of Wall Street’s recovering interest in commercial property, banks such as Deutsche Bank AG, Goldman Sachs and JPMorgan Chase are weighing bids for parts of Anglo Irish Bank’s $9.5 billion U.S. real-estate portfolio, according to the Wall Street Journal.
The portfolio, the largest since the start of the recession, offers a relatively low risk opportunity to jump back into commercial property, the Journal said, as the majority of debt is concentrated in large cities such as New York, California and Chicago. There are around 250 properties in total.
“It’s the first foreign bank to sell its entire U.S. loan portfolio, and it will be a good test of the market,” said Robert Ivanhoe, head of the global real estate practice for the law firm Greenberg Traurig. [more]
JPMorgan Chase finalized a $154 million settlement with the Securities and Exchange Commission, following a lawsuit alleging it misled investors in a mortgage-backed securities transaction, Crain’s reported. The bank failed to disclose to investors that a hedge fund client, Illinois-based Magnetar Capital, was selecting the assets being traded and bet against them. Eventually, many of those mortgages defaulted, causing customers big losses. Investors in the fund included Thrivent Financial for Lutherans, a non-profit life insurer, and assets from General Motors pension plan. [more]
Goldman Sachs plans to fight back suspicions that it wrongfully profited from the housing crash by releasing documents showcasing its mortgage bets on its website, the Wall Street Journal reported. The Senate subcommittee’s investigation into the firm is fueling speculation that the firm profited from shorting the housing market while many of its clients’ funds were tied to the success of the market. The Senate panel released charts showing that Goldman had as much as $13.9 billion positioned against the market, but the firm claims the subcommittee neglected more than $5 billion of mortgage-backed loans held by the firm at the time. [more]
