March 28, 2024

Monitor Finds Mortgage Lenders Still Falling Short of Settlement’s Terms

The nation’s five biggest mortgage lenders have largely satisfied their financial obligations under last year’s $25 billion settlement over mortgage abuses, helping hundreds of thousands of families keep their homes. But four of the five have yet to meet their commitment to end the maze of frustrations that borrowers must navigate to modify their loans, according to a report on Wednesday by the settlement’s independent monitor.

The most common failure involved a requirement that borrowers be notified in a timely manner of any documents missing from their applications. Banks also failed to meet strict timelines for approving applications. The settlement requires that borrowers be notified of missing documents within five days and given 30 days to supply the missing paperwork and that decisions be rendered at most 30 days after an application is completed.

“I think what you see is there’s still a communication problem,” said Joseph A. Smith Jr., the monitor. “If there’s a unifying feature, it’s that the servicers who failed these things are not yet communicating effectively.”

The mortgage settlement came after the housing crash led to a wave of foreclosures across the country and after widespread improprieties in mortgage lending and in the foreclosure process were uncovered.

The banks report their own performance on 29 loan servicing criteria, and their findings are then tested in a random sampling by outside consultants overseen by the monitor.

Citibank failed three metrics, two of which involve notifying borrowers of missing documents in a timely fashion and one that requires that a letter containing accurate information be sent to a homeowner before foreclosure.

Bank of America failed two metrics, one regarding missing documents and the other regarding the pre-foreclosure letter. Wells Fargo also flunked on the missing documents.

JPMorgan Chase failed to adhere to the prescribed timeline for reviewing loan modification requests and notifying customers of its decision. It also failed to remove home insurance policies, known as forced-place insurance, within two weeks of a homeowner’s submitting proof that he or she had insurance.

The fifth lender, ResCap, formerly the mortgage subsidiary of Ally Financial, whose mortgage servicing is now handled by other companies, was not found to have failed on any of the metrics.

The banks are required to submit a corrective action plan and compensate affected borrowers. Chase, for example, has already refunded insurance premiums charged to 2,000 borrowers. “We quickly fixed the issue,” said Amy Bonitatibus, a spokeswoman for Chase, adding that the timeline problem had been remedied as well.

Wells Fargo said that its internal reviews showed that it had already fixed its problem. Citi said it had fixed one of its issues and was working on the other two.

Dan Frahm, a spokesman for Bank of America, which is responsible for about 60 percent of the total financial obligation under the settlement, said, “While neither area of noncompliance resulted in inaccurate foreclosures or improper loan modification denials, we took immediate action and resolved one area and will soon return to compliance in the other.”

The servicers also submitted to the monitor almost 60,000 complaints received from elected officials on behalf of their constituents. The most common complaints, the monitor’s report said, were related to the bank’s obligation to provide a single point of contact to borrowers seeking modification of their loans. There were also complaints about “dual tracking,” in which the foreclosure process is begun before a borrower’s request for a loan modification is resolved.

Despite the volume of complaints, none of the banks failed the requirement to provide a single point of contact, leading Mr. Smith to conclude that he needed to add more criteria in that area. He said at least three new metrics measuring the efficacy of the single point of contact would be added.

This article has been revised to reflect the following correction:

Correction: June 19, 2013

An earlier version of this article referred imprecisely to a lender that was not found to have failed on any of the metrics. It is ResCap, the mortgage subsidiary of Ally Financial, not Ally Financial itself.

 

Article source: http://www.nytimes.com/2013/06/20/business/economy/monitor-finds-lenders-failing-terms-of-settlement.html?partner=rss&emc=rss

Full Tilt Poker Site Misused Players Money, U.S. Says

That is the essence of a civil complaint that federal prosecutors filed on Tuesday. It asserts that players around the world entrusted Full Tilt with $390 million in gambling money, and that the company promised to keep those funds in secure accounts. In reality, prosecutors found, the money wasn’t there; instead, much of it had been transferred to the owners and management of Full Tilt, some of whom were themselves among the most prominent and popular poker players in the world.

“Full Tilt was not a legitimate poker company but a global Ponzi scheme,” said Preet S. Bharara, the United States attorney for the Southern District of New York in Manhattan, whose office filed the complaint.

Barry Boss, a lawyer for Full Tilt, which had its headquarters in Ireland, was on a flight and unavailable to comment, a person at his office said.

Prosecutors said they exposed the scheme this spring while investigating other problems at Full Tilt Poker and two other poker sites, Poker Stars and Absolute Poker, all of which were based outside the United States. In April, the government shut down access to the sites for American players, arguing that they were violating fraud and money-laundering laws.

Before that, American players had wagered hundreds of millions of dollars on the sites. From their home computers, players would put money into accounts with the virtual poker clubs and then bet against one another.

Full Tilt, like the others, told players that it kept their money — including their winnings — in accounts that they could tap into or close out at any time. And the company had a reputation for paying back players in a timely fashion.

When the sites were shut down, prosecutors worked out agreements with them to help them repay players what they were owed.

But reimbursements to Full Tilt players slowed or stopped altogether. The money available turned out to be insufficient, according to prosecutors, because the owners and board members of Full Tilt had themselves tapped those accounts for $440 million since April 2007.

The management’s luck, it would seem, ran out.

Among those profiting, the complaint claims, were some of the biggest names in poker: Howard Lederer, nicknamed the Professor, is said to have received payouts of $42 million. Chris Ferguson, nicknamed Jesus in the poker-playing community for his long hair, received at least $25 million and was “owed” $60 million more, prosecutors said. The two men could not be reached for comment.

Greg Brooks, an accomplished poker player who was once a regular player at Full Tilt, said the federal complaint was a painful eye-opener about what was happening behind the scenes at Full Tilt. In the past, he said, he regularly received sums in excess of $100,000 from Full Tilt, paid within a week of his request, suggesting that he could get access to his money whenever he wanted.

“My impression was that things were working well for years. I had no inkling, not even the slightest guess it wasn’t like that,” he said.

Mr. Brooks, who lives in New York, said he was owed a sum in the “low- to mid-six figures” by Full Tilt that he doubts that he will get back. (He said he was reimbursed a substantial but lesser amount by Poker Stars.) And he added that he was particularly upset with some of the fixtures in the poker community who, he said, paraded around as “brand ambassadors” for Full Tilt. Their behavior, he said, represented a major breach of trust and honor among poker players. “There’s an inherent level of trust and handshaking in the poker community that is unique to it,” he said.

In its complaint, which is meant to amend the original criminal complaint unsealed in April, the government asks that the members of Full Tilt management forfeit illicitly gained funds. Under federal rules, Full Tilt players could have the opportunity to petition for their money once the lawsuit is resolved.

Some advocates for legalizing online poker pointed to the complaint as another reason that the activity should be licensed and regulated by the United States government.

“This is a system that has been forced into place by the failure of the U.S. to regulate online gambling,” said Lawrence Walters, a Florida lawyer who specializes in gambling and First Amendment law, arguing that players were forced to send their money into risky overseas accounts. “The prohibitionists have gotten their way so far.”

He also quibbled with the government’s characterization of Full Tilt as a Ponzi scheme. He said that the government was using a “focus-group” tested term to get attention, when the allegations suggest that the management of Full Tilt may simply have been lying to players and possibly embezzling funds.

He also said he didn’t think that what prosecutors said happened at Full Tilt was happening in the rest of the industry.

“This is not endemic to the industry,” Mr. Walters said. “Sites live and die on their reputation. To the extent sites get a reputation for slow pay or no pay, that will quickly circulate.”

Article source: http://feeds.nytimes.com/click.phdo?i=81da9b518feb09a963b6528b40587605