Credit Unions’ Claims Accrued Before They Owned Securities, Says Federal Judge

LOS ANGELES – A federal judge issued a ruling this morning suggesting that the statute of limitations may have expired on NCUA’s claims that Wall Street banks sold mortgage-backed securities they knew were faulty to corporate credit unions, potentially rendering NCUA suits filed earlier this year moot.

In a preliminary ruling filed in U.S. District Court, Judge George Wu said NCUA claims in a suit brought against RBS Securities for the sale of $1.2 billion of MBS to WesCorp FCU  are “insufficient thus far to demonstrate compliance with at least the applicable federal statute of limitations.”

The Judge’s ruling jeopardizes billions of dollars in claims brought by NCUA in five separate suits against Wall Street banks for the failure of WesCorp and four other corporates.

Wu, the same judge who dismissed NCUA’s civil claims against WesCorp directors earlier this year, said the relevant statute of limitations in such tort cases is three years from the time of the purchase of the securities, some of which were bought as early as 2005, and the clock began running even before NCUA took the one-time $34 billion corporate under conservatorship in March 2009. NCUA , which brought the suit in July as liquidating agent for WesCorp, has argued the clock on the statute of limitations should not start running until then.

NCUA’s argument that the clock did not begin until it took WesCorp under conservatorship is “misdirected,” wrote the Judge. “the correct question is whether the three-year period expired before (NCUA) filed this lawsuit.”

In fact, RBS argues that WesCorp should have known of the claims long before the NCUA take over. “Defendants assert that it is clear that WesCorp, had it been diligent, could have known about the basis for its claims (to the extent those claims have any basis) long enough ago that the applicable statutes of limitation would have run before (NCUA) implemented the conservatorship,” wrote Judge Wu.

“Ultimately,” wrote Judge Wu,“with respect to most claims, the defendants’ explanations for why WesCorp should have known of these particular claims earlier is insufficiently persuasive for purposes of ruling as a matter of law, at least at this stage, that the statutes of limitation have run.”

This morning’s ruling casts also doubt on four other suits brought by NCUA against Wall Street banks for their sale of faulty MBS to failed corporate, including U.S. Central FCU, Members United Corporate FCU, Southwest Corporate FCU and Constitution FCU, as well as WesCorp.  Defendants in the other suits include JP Morgan Chase, Goldman Sachs, Wachovia Securities ( now a unit of Wells Fargo), and numerous other Wall Street banking subsidiaries.

Judge Wu has asked NCUA and RBS to file supplemental briefs to bolster the cases and indicated he will issue a ruling on the RBS motion to dismiss in early 2012.

Foreclosure CSI

Treat   foreclosure as a crime scene
By: Matt Stoller
December 15, 2011 11:45 PM EST

Bubbling under the surface   of politics is the foreclosure crisis — where the power of big finance is   brushing up against the rule of law. The party leaders seem to have decided   it is essentially a giant — but unavoidable — tragedy. GOP presidential candidate   Mitt Romney said foreclosures have to clear for the housing market to reset.   The Obama administration, meanwhile, has spent only about $2 billion of the   $75 billion authorized for the Home Affordable Modification Program.But the foreclosure crisis   is not only a few million personal tragedies. It is a few million crime   scenes.. . .

Turning our markets into   playpens for predatory behavior didn’t happen overnight, and it will not be   fixed overnight. But until we have public servants strongly focused on   justice for all, we can expect the crime spree to go on. After all, what   we’re all learning is that, at least for large banks, crime pays.

Matt Stoller worked on   the Dodd-Frank financial reform law and Federal Reserve transparency issues   as a staffer for Rep. Alan Grayson (D-Fla.). He is now a fellow at the   Roosevelt Institute.

Be a DOER with Martin Andelman

We could all do more.  We really could.

Attorney Tom Cox knows it:

Guest Post on Action Steps

Martin Andelman shows it:

Join his army of Doers.  Spend Two Minutes to Help a Disabled War Veteran Being Put Through the BoA Rigors

As Martin notes, we need to get better organized.  And these action steps, if everybody does them, can have a great impact.

It makes me think of an old joke that we used to have, based on a Jon Stewart Daily Show skit, where after 9/11, people would put an American flag sticker on their SUV, and he would say, “It’s the least you can do.  No seriously, the very least.”  So Marc and I would always say that when we saw people putting for the absolute minimal effort on something.  But in some cases, like here, minimal effort times a hundred thousand people can make a real impact.

As we’ve always known, in this homeowner/middle class/foreclosure fight, our greatest strength is strength in numbers.  They might have more money, more politicians in their pockets, more judicial allegiance (for some reason), but we have the masses.

Call to Action From National Ass’n Independent Land Title Agents (NAILTA)

I think that anybody familar with the title issues facing this country following the foreclosure crisis could agree that we need to continue to foster the independent title business,  if we ever want certainty in land sales again.  Or should we just keep rewarding cronyism and monolopolies by the banks/title companies?  It’s all so very cozy, especially when you add the politicians to the mix.  It’s just one big, happy family, kind of like La Familia or the cartels.

Dear Beth K.,

RESPRO and those who support the proliferation of anti-competitive affiliated businesses in the settlement services industry are at it again.

Legislation which would exempt controlled business arrangements from certain provisions in the Dodd-Frank Act regarding Qualified Residential Mortgages may be considered in Congress before the end of the year, according to an article in the Source of Title.

Legislation providing relief to affiliated businesses from regulation that counts fees paid to affiliated businesses toward a 3% cap on closing fees on Qualified Residential Mortgages could be considered by the House Financial Services Committee as soon as the week of December 19th. If not taken up then, the legislation would likely be considered in January or February, when Congress reconvenes.

If successful, a CBA exemption to Dodd-Frank would allow bank-owned and real estate firm-owned title companies to play under a different set of rules than all other settlement service providers, including independent land title agents like you who depend upon a fair market to do business.  RESPRO and the Realty Alliance, along with the bank and realtor lobbies, are pushing hard to obtain this exemption and pushing harder to take away more of your market.  Having this exemption allows referral sources to streamline a large percentage of their mortgage business to captive providers leaving independent title agents and their colleagues on the outside looking in.

In order to stop them, we need your help!  We need each of you to contact the members of the House Financial Services Committee, by phone and email, and tell them you are from NAILTA and a small business owner and you do not support exempting affiliate settlement service providers from Dodd-Frank’s 3% cap on QRM. 

For those who want to spread the word on Twitter, the HFSC Twitter site is located at @FinancialCmte.  Tweet at them as many times as possible!

On behalf of the NAILTA Board, we appreciate your attention and support to these important issues and encourage you to stay involved!



Rob Holman & John Novarina


NAILTA Policy and Legal Affairs Committee

Calling All Notaries: Save Yourselves!

Woman in Loan Fraud Scheme Granted Bail

Posted: Dec 14, 2011 12:01 PM PST Updated: Dec 14, 2011 12:01 PM PST

By Nathan Baca, Investigative Reporter



LAS VEGAS — One of two accused home loan robo-signers faced a judge for the first time Wednesday. Former loan title officer Gerri Shepperd pleaded not guilty to more than 600 counts of fraud.

The Nevada Attorney General’s Office charged Shepperd with paying notaries to forge signatures on home loans to speed up the foreclosure process. The AG says this fraud affects tens of thousands of Nevada home loans.

Three notaries who once worked for Fidelity National Title and Lender Processing Services in Las Vegas are cooperating with the investigation. Prosecutors say they can use more help from the public.

“We encourage them to call and file a complaint with our office. And I can’t say enough; we urge employees, if you’re working for a company or you have worked for a company, and you’re aware that this type of activity was going on or is going on, please come forward,” said Chief Deputy Attorney General John Kelleher.

Shepperd surrendered to AG investigators. She was booked and released on $50,000 bail. Her bail had been reduced from $500,000.

Shepperd’s co-defendant, Gary Trafford, is scheduled to appear in court Friday.


Catherine Cortez Masto, Attorney General

555 E. Washington Avenue, Suite 3900
Las Vegas, Nevada 89101

Telephone – (702) 486-3420
Fax – (702) 486-3283

Web –

Arizonans: Call to Action

If this article is true, it’s time to contact Representative Jack Harper, people.  Not only have they failed to help homeowners in any meaningful way, they’re going to make it easier for the banks to loot:

Planned Arizona bill lets banks go after ‘underwater’ homeowners who bail

Arizona Daily Star | Posted: Saturday, December 10, 2011 12:00 am

PHOENIX – The head of a key House committee wants to scrap state laws that let homeowners who are “underwater” on their homes simply walk away.

Rep. Jack Harper says Arizona’s status as one of a handful of “nonrecourse” states is keeping the real estate market from recovering here. He said having people abandon their homes further depresses the value of nearby homes.

“The idea is to keep people from being encouraged to just walk away from their house any time they’re a little bit upside down” on their mortgage, said Harper, chairman of the House Ways and Means Committee.

But the move is getting a fight from the Arizona Association of Realtors. Tom Farley, the group’s chief executive officer, vows to “utilize every resource that we have here in protecting consumers.”

Under current law, if a homebuyer walks away from a house and the amount still owed is more than the value of the property, the lender cannot recover the difference from the homeowner. By contrast, owners of commercial property who stop making mortgage payments can be sued for the balance.

None of this was an issue during the red-hot days of the real estate market, when home values continued to skyrocket above what buyers paid.

But that all changed when the bottom dropped out and many homeowners found their houses were worth far less than the balance still owed on the mortgage. For many, the solution was to simply walk away and hand the keys to the bank.

The Arizona Bankers Association has fought for years to repeal or scale back the law, saying when borrowers default, that means less money available for new loans. Lenders are stuck with repossessed homes they cannot sell for enough at auction to recoup their losses. They want to be able to go after the borrowers for the difference.

But Farley, the Realtors’ advocate, said the law makes lenders more responsible.

At one time, banks and thrifts would make mortgages and then keep those in their own portfolios. Now lenders simply write the notes and sell them off, many of those to Fannie Mae and Freddie Mac, the federally backed agencies.

When the homeowners began to default, questions were raised about whether the original lenders had properly vetted the borrowers or simply wrote as many loans as they could to generate origination fees.

The law precluding them from going after homeowners “provides that pressure on the lenders to actually underwrite those loans,” Farley said.

Harper, a Republican lawmaker from Surprise, acknowledged that lenders may have ignored normal underwriting standards. But he said that’s not their fault.

“The federal government uses the Community Reinvestment Act to intimidate the federally chartered banks,” he said. “They give them goals about how many loans you have to make in underserved, low-income areas. And the banks then start making risky loans to meet the goal.”

He also said he does not believe that the banks bear some responsibility for the bad loans and should have to absorb some of the losses when borrowers default.

“The banks are taking all the risk and the buyer is taking none, other than what their down payment is,” he said.

Farley, however, said borrowers do lose more, ranging from what they’ve paid against the mortgage and the value of any improvement on the property, to dings to their credit rating.

Harper said there are situations where the value of the home is so far below what remains owed on the mortgage that there is no real chance of an owner ever catching up.

So he is willing to offer a compromise of sorts: Allow the lenders to go after the homeowner, but only up to the actual fair market value of the property.

So, in the case of a home now worth $210,000, where the remaining unpaid balance on the mortgage is $300,000, an owner would be liable only for that lower amount. The lender would have to absorb the rest.


Arizona’s laws that allow homeowners to walk away from mortgages were part of a legislative deal made in 1971, says Arizona Association of Realtors’ CEO Tom Farley.

Until then, a bank that wanted to foreclose on a home because of nonpayment on a mortgage had to go to court, a lengthy and cumbersome process.

That year, Arizona became a “deed of trust” state. The change, sought by the banks, meant lenders could foreclose on a property simply by giving notice and then taking possession 91 days later.

What the lenders gave up in exchange for that law was the ability to go after the home-loan borrowers, Farley said.

Capitol Media Services

“The banks are taking all the risk and the buyer is taking none, other than what their down payment is.”

Rep. Jack Harper,

a Republican lawmaker from Surprise


Rep. Jack Harper will introduce a bill in the next legislative session, which begins in January, to allow banks to go after homeowners who walk away from their “underwater” mortgages.

The proposal will get a hearing in a key committee, House Ways and Means, of which Harper is the chairman.

Citizens United Must Go

Independent Senator Bernie Sanders has introduced a bill to overturn Citizens United via Constitutional Amendment.  This is the Supreme Court decision (5-4) overturning precedent to hold that corporations are citizens, and giving these corporations free reign to shower our politicians with undisclosed money calling it “free speech.”  Many major cities have adopted resolutions declaring that corporations are not citizens, most recently Los Angeles.

Full article here.  Excerpt below:

Today I introduced a resolution calling for an amendment to the U.S. Constitution. A similar resolution has been offered in the house by Rep. Ted Deutsch of Florida.

I do not do this lightly nor have I ever done this before. The U.S. constitution is an extraordinary document which has served our country well for over 200 years. In my view, it should not be amended often. In light of the Supreme Court’s disastrous 5-4 decision in the Citizens United case, however, I see no alternative but a constitutional amendment.

I strongly disagree with the Supreme Court’s Citizens United decision.

In my view, a corporation is not a person.

In my view, a corporation does not have first amendment rights to spend as much money as it wants, without disclosure, on a political campaign.

In my view, corporations should not be able to go into their treasuries, spend millions and millions of dollars on a campaign in order to buy elections.

I do not believe that is what American democracy is supposed to be about.

I do not believe that that is what the bravest of the brave from our country fighting for democracy fought and died to preserve.

Almost two years ago in its now infamous Citizens United decision, the United States Supreme Court upended over a precedent, taking a somewhat narrow legal question and using it as an opportunity to radically change our political landscape, unleashing a tsunami of corporate spending on campaign ads.

Make no mistake; the Citizens United ruling has radically changed the nature of our democracy. It has further tilted the balance of the power toward the rich and the powerful at a time when the wealthiest people in this country already never had it so good. In my view, history will record that the Citizens United decision is one of the worst in the history of our country.