The Subprime Shakeout ~ "RMBS"
http://subprimeshakeout.blogspot.com/
In an article from the Wall St. Journal today, Greenwich attorney David Grais, of the law firm Grais & Ellsworth is quoted as saying that, "We are reviewing the opinion and considering whether to file an appeal." However, given the facts as recounted in Judge Kapnick's Order, it would seem that Greenwich has a steep hill to climb to succeed on any appeal.
In its Motion to Dismiss, Countrywide, the servicer in the challenged RMBS deals, relied on Section 10.08 of the Pooling and Servicing Agreement ("PSA"), a provision that sets forth the procedural preconditions for bondholders wishing to initiate suit. Included in these preconditions, which are standard in most PSAs, are the requirements that the bondholders to first approach the Trustee with proof of ownership of 25% of the voting rights in the Trust and proof of some Event of Default, make a written demand on the Trustee to institute an action in its own name to remedy such Default within 60 days, and provide the Trustee reasonable indemnity against costs and liabilities arising from any such suit. There is no argument from Greenwich that it failed to comply with these preconditions before bringing its action.
Instead, Greenwich argued in Opposition to the Motion to Dismiss that it was not required to comply with these preconditions for three reasons: 1) these preconditions apply only to actions that may unfairly benefit one class of bondholders over another, and Greenwich's suit would benefit all bondholders equally; 2) the preconditions only apply where there is an Event of Default, defined as the failure of the servicer to perform certain identified acts, and not including the failure to repurchase a modified mortgage; and 3) that compliance with the preconditions is excused because such a demand would have been futile. In support of the third point, Plaintiff argued that, soon after instituting suit, it served on the Trustee a request that it join in the suit, which the Trustee refused. Countrywide countered that this request did not comply with the procedural preconditions of Section 10.08.
Judge Kapnick rejected all of these arguments, essentially finding that the language of Section 10.08 applied broadly to all actions, and that Greenwich had failed to comply with any of these preconditions.
This result is surprising to me, given the experience of David Grais and Bill Frey, the principal of Greenwich Financial Services, in litigation surrounding RMBS deals (including Grais' lawsuits on behalf of the Federal Home Loan Banks and Frey's participation in the Syndicate of RMBS investors). These are sophisticated players familiar with the preconditions to suit found in nearly every PSA from this time period. It is also my understanding that Greenwich could have shown 25% ownership in at least some of the challenged deals, making it even more curious why they did not at least attempt to comply with Section 10.08 prior to filing suit. Of course, they were probably correct that such an attempt would have been futile, given that most investors have encountered general resistance from Trustees when they attempt to induce action on their behalf, but at least Greenwich would have then been able to make the argument that it attempted to comply but was rebuffed by the Trustee.
Perhaps there were other considerations at play that led Greenwich and Grais to file this suit prior to haggling with the Trustee and waiting the requisite 60 days to take action. Some readers will recall that this lawsuit was filed as a response to a broad settlement--to the tune of $8.4 billion dollars--by Countrywide with the Attorneys General of 15 states (dozens more signed on after the fact) regarding Countrywide's predatory lending practices in those states. The settlement stipulated that Countrywide would remedy these practices by agreeing to modify over 400,000 loans to allow borrowers to stay in their homes.
There were only two glitches in this settlement, which was hailed by Jerry Brown as a great success story. First, Countrywide no longer owned upwards of 80% of these loans it was agreeing to modify. Because any modification imposes some kind of cost on the ultimate holder of the loan--by either reducing principal, reducing interest rates, or prolonging the repayment period--the bulk of the $8.4 billion in loan modifications would have been borne by the bondholders. Second, the bondholders have favorable provisions in the PSAs and in the Stipulated Settlement between Countrywide and the AGs requiring the servicer to buy back any loan it agrees to modify. Maybe the rush to the courts for a declaratory action was an effort to halt these modifications prior to their institution.
And perhaps this tactic was successful. Countrywide and other servicers have been largely reluctant to carry out extensive loan modifications (see interesting stories here, here and here), in part because as reported in the Wall St. Journal, they fear being forced to repurchase those loans. And the filing set the wheels of politics in motion, resulting in a full blown lobbying effort by BofA/Countrywide to encourage the passage of a Servicer Safe Harbor to shield servicers from liability for modifying mortgages. This lobbying effort had the reciprocal effect of inducing bondholders to band together to form their own lobbying group, which group became the precursor to the Investor Syndicate gearing up to take on servicers over a broader range of originating and servicing defaults.
Still, regardless of the political motives that may have encouraged a premature filing of suit by Greenwich, Judge Kapnick's Order illustrates the difficulties facing all bondholders wishing to pursue claims against the servicers, originators or sponsors of their RMBS holdings for losses associated with their investments. Most PSAs require, first, proof of sufficient ownership--usually 25 to 50 percent--just to get the Trustees' attention. Aggregating enough RMBS holdings to meet this requirement was the primary reason the Investor Syndicate has formed. Second, bondholders must make a demand that the Trustee institute suit in its own name. Often, the Trustee will seek unreasonable indemnity from bondholders and require the execution of onerous confidentiality agreements prior to doing so. Then, the bondholders have to sit on their hands and wait for the Trustee to decide not to institute an action before they can do so on their own. Many investors appear unwilling to navigate the complexities or incur the expense of jumping through these procedural hurdles prior to taking action. Just last month, Bank of New York, one of the primary Trustees on 2005- to 2007-vintage RMBS deals, refused a demand to investigate by a group of investors, represented by Kathy Patrick of Houston law firm Gibbs & Bruns, because of a failure to comply with procedural preconditions. Sources indicate that this investor group failed to meet the peculiar obligation of the investigation provision under which it attempted to proceed, requiring 25% ownership in every class of securities, and that the group failed to identify particular Events of Default to trigger Bank of New York's obligations. In short, as the dismissal of Greenwich's suit against Countrywide and the rejection of Gibbs & Bruns' efforts illustrate vividly, procedure cannot be ignored, and it would behoove investors to get their ducks in a row before taking expensive legal action.
I am always disheartened to see articles or blogs about title insurance in which the bloggers or commenters obviously know so little about what they speak of. Title insurance is one of the best deals going for consumers for many reasons.
When people say title insurance is a scam or pays out so little or that title insurers take on no risk, it is clear they do not understand the product or what it does. It is not good to fail to understand something and then spread the misunderstanding publicly, as has been done here. For your information, some title insurers are now reserving up to 10% of premium for losses, due to the economic times. Latest figures for property casualty are in the 60’s. Why the difference? A little bit of research will show that title insurance is a claims AVOIDANCE line of insurance. Like boiler insurance, where boilers are inspected to make sure they will not blow up and claims are very low (thank goodness!), title insurance operates in much the same way. Do you know people who want a title claim on their house? Their most important possession? Of course not! So title insurers search the title to property, as well as numerous court and other records to discover AND FIX problems with the title BEFORE closing. In fact, in about 40% of all transactions, a problem is found and identified prior to closing. That means the claim is resolved beforehand and the consumer never even knows it happened! What a great service!
Please reread what I just said so that it’s clear. The majority of claims happen before the closing because problems are identified and fixed so that consumers will not have to suffer through most claims later on as homeowners. Many of these claims involve recent problems with title, such as lenders who failed to release mortgages of record. Others pertain to foreclosure issues, tax problems or other types of liens. Most are found, fixed and resolved before closing.
What title insurers do is the equivalent of the homeowner’s insurer cutting a tree branch before it destroys the roof of the house or the auto insurer fixing a car’s brakes before they go out and cause an accident. They save heartache, trouble and avoid most claims. I would argue that is more valuable to consumers than other types of insurance that allow the claim to happen. Most of the premium goes into this claim avoidance and curative work which is performed, usually, by the title insurance agent, who gets most of this premium as compensation for the important work performed. That is why there is less paid out with title insurance than other lines. Which way would you prefer? Put less into claims avoidance and let the claim happen to most American families or spend most of the premium dollar to fix the problem up front and help people avoid a title claim? It’s a no-brainer.
Moreover, I’m sure you discovered that title insurance is not paid annually like other lines of insurance. It’s paid only when you purchase or refinance a home. Let’s say you pay $1,000 for title insurance and $1,000 a year for homeowners and auto. You own a home for 15 years. Over that time, you pay only $1,000 for title and maybe up to $100 gets paid out in claims for matters not identified and fixed prior to closing. So you spent $900 to resolve most of the title problems beforehand, which was good for 15 years or $60 per year. Does that sound overpriced to you for insuring your most important asset? Now look at what you would pay for auto and homeowners. For 15 years, you would pay $15,000 to each company and they would pay out (at 60%) $9,000. (This is generous since many people (like me) never had a claim at all on homeowners and only minor auto claims). In any event, the homeowner wound up “losing” $6,000 over 15 years which comes out to $400 per year. Now which type of insurance is cheaper? It’s obvious to see title insurance is the better bargain.
Furthermore, and this is the clincher, you may not know that the existence of title insurance saves homeowners approximately $16 billion per year in the United States in lower lending costs (per information put together by the American Land Title Association). Because of title insurance, US lenders have less risk and are willing to give mortgages at lower costs than in other developed nations where title insurance doesn’t exist. This is an added monetary benefit of title insurance. I could go on and tell you how title insurers collect hundreds of millions of dollars in child support and delinquent tax and other payments, but I think you get the idea.
As far as title being overpriced, I haven’t heard consumer advocates saying that as much the last couple of years with thousands of supposedly overpaid title insurance agents going out of business due to the economy. We have lost some title insurers, as well, and most lost money two years in a row. Title insurance is a cyclical business and if it was so easy to make money, there would be many more than four national families of title insurers.
Apparently, some people would prefer that title insurance doesn’t exist and that nearly 50% (remember problems are found in title in 40%of all transactions before closing plus another 5-10% later) of homeowners have a title problem that could take thousands or tens of thousands of dollars to fix (plus attorney fees and litigation costs!) and put ownership of consumers’ homes at risk. They also want lenders to assume the risk of a title defect, thus forcing lenders to raise interest rates on every loan. The result would be that consumers would pay far more for mortgages than they would ever save by not paying for title insurance. Throw in the risk to 50% of consumers’ homes and you have an expensive, gut-wrenching and potentially devastating hardship created for American families. You still think title insurance is not valuable?
bench craft companyHome | News | Style & Beauty | Moms & Babies | Movies, TV & Music | Healthy Lifestyle | Celebrities � Photos | Video. Subscribe: Magazine | Newsletter | RSS � Subscriber Services | Media Kit | Contact Us | Privacy Policy | Terms of Use ...
After voting for their favorite candidates in the midterm elections yesterday, Americans made another choice: their preferred news network. Ratings f.
UPDATED WITH FINAL NUMBERS: Fox News towered over the competition -- cable and broadcast -- with its midterm election coverage last night. According to Nielsen, Fox News averaged 7 million viewers in primetime, up 128% from the ...
bench craft company
The Subprime Shakeout ~ "RMBS"
http://subprimeshakeout.blogspot.com/
In an article from the Wall St. Journal today, Greenwich attorney David Grais, of the law firm Grais & Ellsworth is quoted as saying that, "We are reviewing the opinion and considering whether to file an appeal." However, given the facts as recounted in Judge Kapnick's Order, it would seem that Greenwich has a steep hill to climb to succeed on any appeal.
In its Motion to Dismiss, Countrywide, the servicer in the challenged RMBS deals, relied on Section 10.08 of the Pooling and Servicing Agreement ("PSA"), a provision that sets forth the procedural preconditions for bondholders wishing to initiate suit. Included in these preconditions, which are standard in most PSAs, are the requirements that the bondholders to first approach the Trustee with proof of ownership of 25% of the voting rights in the Trust and proof of some Event of Default, make a written demand on the Trustee to institute an action in its own name to remedy such Default within 60 days, and provide the Trustee reasonable indemnity against costs and liabilities arising from any such suit. There is no argument from Greenwich that it failed to comply with these preconditions before bringing its action.
Instead, Greenwich argued in Opposition to the Motion to Dismiss that it was not required to comply with these preconditions for three reasons: 1) these preconditions apply only to actions that may unfairly benefit one class of bondholders over another, and Greenwich's suit would benefit all bondholders equally; 2) the preconditions only apply where there is an Event of Default, defined as the failure of the servicer to perform certain identified acts, and not including the failure to repurchase a modified mortgage; and 3) that compliance with the preconditions is excused because such a demand would have been futile. In support of the third point, Plaintiff argued that, soon after instituting suit, it served on the Trustee a request that it join in the suit, which the Trustee refused. Countrywide countered that this request did not comply with the procedural preconditions of Section 10.08.
Judge Kapnick rejected all of these arguments, essentially finding that the language of Section 10.08 applied broadly to all actions, and that Greenwich had failed to comply with any of these preconditions.
This result is surprising to me, given the experience of David Grais and Bill Frey, the principal of Greenwich Financial Services, in litigation surrounding RMBS deals (including Grais' lawsuits on behalf of the Federal Home Loan Banks and Frey's participation in the Syndicate of RMBS investors). These are sophisticated players familiar with the preconditions to suit found in nearly every PSA from this time period. It is also my understanding that Greenwich could have shown 25% ownership in at least some of the challenged deals, making it even more curious why they did not at least attempt to comply with Section 10.08 prior to filing suit. Of course, they were probably correct that such an attempt would have been futile, given that most investors have encountered general resistance from Trustees when they attempt to induce action on their behalf, but at least Greenwich would have then been able to make the argument that it attempted to comply but was rebuffed by the Trustee.
Perhaps there were other considerations at play that led Greenwich and Grais to file this suit prior to haggling with the Trustee and waiting the requisite 60 days to take action. Some readers will recall that this lawsuit was filed as a response to a broad settlement--to the tune of $8.4 billion dollars--by Countrywide with the Attorneys General of 15 states (dozens more signed on after the fact) regarding Countrywide's predatory lending practices in those states. The settlement stipulated that Countrywide would remedy these practices by agreeing to modify over 400,000 loans to allow borrowers to stay in their homes.
There were only two glitches in this settlement, which was hailed by Jerry Brown as a great success story. First, Countrywide no longer owned upwards of 80% of these loans it was agreeing to modify. Because any modification imposes some kind of cost on the ultimate holder of the loan--by either reducing principal, reducing interest rates, or prolonging the repayment period--the bulk of the $8.4 billion in loan modifications would have been borne by the bondholders. Second, the bondholders have favorable provisions in the PSAs and in the Stipulated Settlement between Countrywide and the AGs requiring the servicer to buy back any loan it agrees to modify. Maybe the rush to the courts for a declaratory action was an effort to halt these modifications prior to their institution.
And perhaps this tactic was successful. Countrywide and other servicers have been largely reluctant to carry out extensive loan modifications (see interesting stories here, here and here), in part because as reported in the Wall St. Journal, they fear being forced to repurchase those loans. And the filing set the wheels of politics in motion, resulting in a full blown lobbying effort by BofA/Countrywide to encourage the passage of a Servicer Safe Harbor to shield servicers from liability for modifying mortgages. This lobbying effort had the reciprocal effect of inducing bondholders to band together to form their own lobbying group, which group became the precursor to the Investor Syndicate gearing up to take on servicers over a broader range of originating and servicing defaults.
Still, regardless of the political motives that may have encouraged a premature filing of suit by Greenwich, Judge Kapnick's Order illustrates the difficulties facing all bondholders wishing to pursue claims against the servicers, originators or sponsors of their RMBS holdings for losses associated with their investments. Most PSAs require, first, proof of sufficient ownership--usually 25 to 50 percent--just to get the Trustees' attention. Aggregating enough RMBS holdings to meet this requirement was the primary reason the Investor Syndicate has formed. Second, bondholders must make a demand that the Trustee institute suit in its own name. Often, the Trustee will seek unreasonable indemnity from bondholders and require the execution of onerous confidentiality agreements prior to doing so. Then, the bondholders have to sit on their hands and wait for the Trustee to decide not to institute an action before they can do so on their own. Many investors appear unwilling to navigate the complexities or incur the expense of jumping through these procedural hurdles prior to taking action. Just last month, Bank of New York, one of the primary Trustees on 2005- to 2007-vintage RMBS deals, refused a demand to investigate by a group of investors, represented by Kathy Patrick of Houston law firm Gibbs & Bruns, because of a failure to comply with procedural preconditions. Sources indicate that this investor group failed to meet the peculiar obligation of the investigation provision under which it attempted to proceed, requiring 25% ownership in every class of securities, and that the group failed to identify particular Events of Default to trigger Bank of New York's obligations. In short, as the dismissal of Greenwich's suit against Countrywide and the rejection of Gibbs & Bruns' efforts illustrate vividly, procedure cannot be ignored, and it would behoove investors to get their ducks in a row before taking expensive legal action.
I am always disheartened to see articles or blogs about title insurance in which the bloggers or commenters obviously know so little about what they speak of. Title insurance is one of the best deals going for consumers for many reasons.
When people say title insurance is a scam or pays out so little or that title insurers take on no risk, it is clear they do not understand the product or what it does. It is not good to fail to understand something and then spread the misunderstanding publicly, as has been done here. For your information, some title insurers are now reserving up to 10% of premium for losses, due to the economic times. Latest figures for property casualty are in the 60’s. Why the difference? A little bit of research will show that title insurance is a claims AVOIDANCE line of insurance. Like boiler insurance, where boilers are inspected to make sure they will not blow up and claims are very low (thank goodness!), title insurance operates in much the same way. Do you know people who want a title claim on their house? Their most important possession? Of course not! So title insurers search the title to property, as well as numerous court and other records to discover AND FIX problems with the title BEFORE closing. In fact, in about 40% of all transactions, a problem is found and identified prior to closing. That means the claim is resolved beforehand and the consumer never even knows it happened! What a great service!
Please reread what I just said so that it’s clear. The majority of claims happen before the closing because problems are identified and fixed so that consumers will not have to suffer through most claims later on as homeowners. Many of these claims involve recent problems with title, such as lenders who failed to release mortgages of record. Others pertain to foreclosure issues, tax problems or other types of liens. Most are found, fixed and resolved before closing.
What title insurers do is the equivalent of the homeowner’s insurer cutting a tree branch before it destroys the roof of the house or the auto insurer fixing a car’s brakes before they go out and cause an accident. They save heartache, trouble and avoid most claims. I would argue that is more valuable to consumers than other types of insurance that allow the claim to happen. Most of the premium goes into this claim avoidance and curative work which is performed, usually, by the title insurance agent, who gets most of this premium as compensation for the important work performed. That is why there is less paid out with title insurance than other lines. Which way would you prefer? Put less into claims avoidance and let the claim happen to most American families or spend most of the premium dollar to fix the problem up front and help people avoid a title claim? It’s a no-brainer.
Moreover, I’m sure you discovered that title insurance is not paid annually like other lines of insurance. It’s paid only when you purchase or refinance a home. Let’s say you pay $1,000 for title insurance and $1,000 a year for homeowners and auto. You own a home for 15 years. Over that time, you pay only $1,000 for title and maybe up to $100 gets paid out in claims for matters not identified and fixed prior to closing. So you spent $900 to resolve most of the title problems beforehand, which was good for 15 years or $60 per year. Does that sound overpriced to you for insuring your most important asset? Now look at what you would pay for auto and homeowners. For 15 years, you would pay $15,000 to each company and they would pay out (at 60%) $9,000. (This is generous since many people (like me) never had a claim at all on homeowners and only minor auto claims). In any event, the homeowner wound up “losing” $6,000 over 15 years which comes out to $400 per year. Now which type of insurance is cheaper? It’s obvious to see title insurance is the better bargain.
Furthermore, and this is the clincher, you may not know that the existence of title insurance saves homeowners approximately $16 billion per year in the United States in lower lending costs (per information put together by the American Land Title Association). Because of title insurance, US lenders have less risk and are willing to give mortgages at lower costs than in other developed nations where title insurance doesn’t exist. This is an added monetary benefit of title insurance. I could go on and tell you how title insurers collect hundreds of millions of dollars in child support and delinquent tax and other payments, but I think you get the idea.
As far as title being overpriced, I haven’t heard consumer advocates saying that as much the last couple of years with thousands of supposedly overpaid title insurance agents going out of business due to the economy. We have lost some title insurers, as well, and most lost money two years in a row. Title insurance is a cyclical business and if it was so easy to make money, there would be many more than four national families of title insurers.
Apparently, some people would prefer that title insurance doesn’t exist and that nearly 50% (remember problems are found in title in 40%of all transactions before closing plus another 5-10% later) of homeowners have a title problem that could take thousands or tens of thousands of dollars to fix (plus attorney fees and litigation costs!) and put ownership of consumers’ homes at risk. They also want lenders to assume the risk of a title defect, thus forcing lenders to raise interest rates on every loan. The result would be that consumers would pay far more for mortgages than they would ever save by not paying for title insurance. Throw in the risk to 50% of consumers’ homes and you have an expensive, gut-wrenching and potentially devastating hardship created for American families. You still think title insurance is not valuable?
bench craft companyHome | News | Style & Beauty | Moms & Babies | Movies, TV & Music | Healthy Lifestyle | Celebrities � Photos | Video. Subscribe: Magazine | Newsletter | RSS � Subscriber Services | Media Kit | Contact Us | Privacy Policy | Terms of Use ...
After voting for their favorite candidates in the midterm elections yesterday, Americans made another choice: their preferred news network. Ratings f.
UPDATED WITH FINAL NUMBERS: Fox News towered over the competition -- cable and broadcast -- with its midterm election coverage last night. According to Nielsen, Fox News averaged 7 million viewers in primetime, up 128% from the ...
bench craft companybench craft company
bench craft companyHome | News | Style & Beauty | Moms & Babies | Movies, TV & Music | Healthy Lifestyle | Celebrities � Photos | Video. Subscribe: Magazine | Newsletter | RSS � Subscriber Services | Media Kit | Contact Us | Privacy Policy | Terms of Use ...
After voting for their favorite candidates in the midterm elections yesterday, Americans made another choice: their preferred news network. Ratings f.
UPDATED WITH FINAL NUMBERS: Fox News towered over the competition -- cable and broadcast -- with its midterm election coverage last night. According to Nielsen, Fox News averaged 7 million viewers in primetime, up 128% from the ...
bench craft company
The Subprime Shakeout ~ "RMBS"
http://subprimeshakeout.blogspot.com/
In an article from the Wall St. Journal today, Greenwich attorney David Grais, of the law firm Grais & Ellsworth is quoted as saying that, "We are reviewing the opinion and considering whether to file an appeal." However, given the facts as recounted in Judge Kapnick's Order, it would seem that Greenwich has a steep hill to climb to succeed on any appeal.
In its Motion to Dismiss, Countrywide, the servicer in the challenged RMBS deals, relied on Section 10.08 of the Pooling and Servicing Agreement ("PSA"), a provision that sets forth the procedural preconditions for bondholders wishing to initiate suit. Included in these preconditions, which are standard in most PSAs, are the requirements that the bondholders to first approach the Trustee with proof of ownership of 25% of the voting rights in the Trust and proof of some Event of Default, make a written demand on the Trustee to institute an action in its own name to remedy such Default within 60 days, and provide the Trustee reasonable indemnity against costs and liabilities arising from any such suit. There is no argument from Greenwich that it failed to comply with these preconditions before bringing its action.
Instead, Greenwich argued in Opposition to the Motion to Dismiss that it was not required to comply with these preconditions for three reasons: 1) these preconditions apply only to actions that may unfairly benefit one class of bondholders over another, and Greenwich's suit would benefit all bondholders equally; 2) the preconditions only apply where there is an Event of Default, defined as the failure of the servicer to perform certain identified acts, and not including the failure to repurchase a modified mortgage; and 3) that compliance with the preconditions is excused because such a demand would have been futile. In support of the third point, Plaintiff argued that, soon after instituting suit, it served on the Trustee a request that it join in the suit, which the Trustee refused. Countrywide countered that this request did not comply with the procedural preconditions of Section 10.08.
Judge Kapnick rejected all of these arguments, essentially finding that the language of Section 10.08 applied broadly to all actions, and that Greenwich had failed to comply with any of these preconditions.
This result is surprising to me, given the experience of David Grais and Bill Frey, the principal of Greenwich Financial Services, in litigation surrounding RMBS deals (including Grais' lawsuits on behalf of the Federal Home Loan Banks and Frey's participation in the Syndicate of RMBS investors). These are sophisticated players familiar with the preconditions to suit found in nearly every PSA from this time period. It is also my understanding that Greenwich could have shown 25% ownership in at least some of the challenged deals, making it even more curious why they did not at least attempt to comply with Section 10.08 prior to filing suit. Of course, they were probably correct that such an attempt would have been futile, given that most investors have encountered general resistance from Trustees when they attempt to induce action on their behalf, but at least Greenwich would have then been able to make the argument that it attempted to comply but was rebuffed by the Trustee.
Perhaps there were other considerations at play that led Greenwich and Grais to file this suit prior to haggling with the Trustee and waiting the requisite 60 days to take action. Some readers will recall that this lawsuit was filed as a response to a broad settlement--to the tune of $8.4 billion dollars--by Countrywide with the Attorneys General of 15 states (dozens more signed on after the fact) regarding Countrywide's predatory lending practices in those states. The settlement stipulated that Countrywide would remedy these practices by agreeing to modify over 400,000 loans to allow borrowers to stay in their homes.
There were only two glitches in this settlement, which was hailed by Jerry Brown as a great success story. First, Countrywide no longer owned upwards of 80% of these loans it was agreeing to modify. Because any modification imposes some kind of cost on the ultimate holder of the loan--by either reducing principal, reducing interest rates, or prolonging the repayment period--the bulk of the $8.4 billion in loan modifications would have been borne by the bondholders. Second, the bondholders have favorable provisions in the PSAs and in the Stipulated Settlement between Countrywide and the AGs requiring the servicer to buy back any loan it agrees to modify. Maybe the rush to the courts for a declaratory action was an effort to halt these modifications prior to their institution.
And perhaps this tactic was successful. Countrywide and other servicers have been largely reluctant to carry out extensive loan modifications (see interesting stories here, here and here), in part because as reported in the Wall St. Journal, they fear being forced to repurchase those loans. And the filing set the wheels of politics in motion, resulting in a full blown lobbying effort by BofA/Countrywide to encourage the passage of a Servicer Safe Harbor to shield servicers from liability for modifying mortgages. This lobbying effort had the reciprocal effect of inducing bondholders to band together to form their own lobbying group, which group became the precursor to the Investor Syndicate gearing up to take on servicers over a broader range of originating and servicing defaults.
Still, regardless of the political motives that may have encouraged a premature filing of suit by Greenwich, Judge Kapnick's Order illustrates the difficulties facing all bondholders wishing to pursue claims against the servicers, originators or sponsors of their RMBS holdings for losses associated with their investments. Most PSAs require, first, proof of sufficient ownership--usually 25 to 50 percent--just to get the Trustees' attention. Aggregating enough RMBS holdings to meet this requirement was the primary reason the Investor Syndicate has formed. Second, bondholders must make a demand that the Trustee institute suit in its own name. Often, the Trustee will seek unreasonable indemnity from bondholders and require the execution of onerous confidentiality agreements prior to doing so. Then, the bondholders have to sit on their hands and wait for the Trustee to decide not to institute an action before they can do so on their own. Many investors appear unwilling to navigate the complexities or incur the expense of jumping through these procedural hurdles prior to taking action. Just last month, Bank of New York, one of the primary Trustees on 2005- to 2007-vintage RMBS deals, refused a demand to investigate by a group of investors, represented by Kathy Patrick of Houston law firm Gibbs & Bruns, because of a failure to comply with procedural preconditions. Sources indicate that this investor group failed to meet the peculiar obligation of the investigation provision under which it attempted to proceed, requiring 25% ownership in every class of securities, and that the group failed to identify particular Events of Default to trigger Bank of New York's obligations. In short, as the dismissal of Greenwich's suit against Countrywide and the rejection of Gibbs & Bruns' efforts illustrate vividly, procedure cannot be ignored, and it would behoove investors to get their ducks in a row before taking expensive legal action.
I am always disheartened to see articles or blogs about title insurance in which the bloggers or commenters obviously know so little about what they speak of. Title insurance is one of the best deals going for consumers for many reasons.
When people say title insurance is a scam or pays out so little or that title insurers take on no risk, it is clear they do not understand the product or what it does. It is not good to fail to understand something and then spread the misunderstanding publicly, as has been done here. For your information, some title insurers are now reserving up to 10% of premium for losses, due to the economic times. Latest figures for property casualty are in the 60’s. Why the difference? A little bit of research will show that title insurance is a claims AVOIDANCE line of insurance. Like boiler insurance, where boilers are inspected to make sure they will not blow up and claims are very low (thank goodness!), title insurance operates in much the same way. Do you know people who want a title claim on their house? Their most important possession? Of course not! So title insurers search the title to property, as well as numerous court and other records to discover AND FIX problems with the title BEFORE closing. In fact, in about 40% of all transactions, a problem is found and identified prior to closing. That means the claim is resolved beforehand and the consumer never even knows it happened! What a great service!
Please reread what I just said so that it’s clear. The majority of claims happen before the closing because problems are identified and fixed so that consumers will not have to suffer through most claims later on as homeowners. Many of these claims involve recent problems with title, such as lenders who failed to release mortgages of record. Others pertain to foreclosure issues, tax problems or other types of liens. Most are found, fixed and resolved before closing.
What title insurers do is the equivalent of the homeowner’s insurer cutting a tree branch before it destroys the roof of the house or the auto insurer fixing a car’s brakes before they go out and cause an accident. They save heartache, trouble and avoid most claims. I would argue that is more valuable to consumers than other types of insurance that allow the claim to happen. Most of the premium goes into this claim avoidance and curative work which is performed, usually, by the title insurance agent, who gets most of this premium as compensation for the important work performed. That is why there is less paid out with title insurance than other lines. Which way would you prefer? Put less into claims avoidance and let the claim happen to most American families or spend most of the premium dollar to fix the problem up front and help people avoid a title claim? It’s a no-brainer.
Moreover, I’m sure you discovered that title insurance is not paid annually like other lines of insurance. It’s paid only when you purchase or refinance a home. Let’s say you pay $1,000 for title insurance and $1,000 a year for homeowners and auto. You own a home for 15 years. Over that time, you pay only $1,000 for title and maybe up to $100 gets paid out in claims for matters not identified and fixed prior to closing. So you spent $900 to resolve most of the title problems beforehand, which was good for 15 years or $60 per year. Does that sound overpriced to you for insuring your most important asset? Now look at what you would pay for auto and homeowners. For 15 years, you would pay $15,000 to each company and they would pay out (at 60%) $9,000. (This is generous since many people (like me) never had a claim at all on homeowners and only minor auto claims). In any event, the homeowner wound up “losing” $6,000 over 15 years which comes out to $400 per year. Now which type of insurance is cheaper? It’s obvious to see title insurance is the better bargain.
Furthermore, and this is the clincher, you may not know that the existence of title insurance saves homeowners approximately $16 billion per year in the United States in lower lending costs (per information put together by the American Land Title Association). Because of title insurance, US lenders have less risk and are willing to give mortgages at lower costs than in other developed nations where title insurance doesn’t exist. This is an added monetary benefit of title insurance. I could go on and tell you how title insurers collect hundreds of millions of dollars in child support and delinquent tax and other payments, but I think you get the idea.
As far as title being overpriced, I haven’t heard consumer advocates saying that as much the last couple of years with thousands of supposedly overpaid title insurance agents going out of business due to the economy. We have lost some title insurers, as well, and most lost money two years in a row. Title insurance is a cyclical business and if it was so easy to make money, there would be many more than four national families of title insurers.
Apparently, some people would prefer that title insurance doesn’t exist and that nearly 50% (remember problems are found in title in 40%of all transactions before closing plus another 5-10% later) of homeowners have a title problem that could take thousands or tens of thousands of dollars to fix (plus attorney fees and litigation costs!) and put ownership of consumers’ homes at risk. They also want lenders to assume the risk of a title defect, thus forcing lenders to raise interest rates on every loan. The result would be that consumers would pay far more for mortgages than they would ever save by not paying for title insurance. Throw in the risk to 50% of consumers’ homes and you have an expensive, gut-wrenching and potentially devastating hardship created for American families. You still think title insurance is not valuable?
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After voting for their favorite candidates in the midterm elections yesterday, Americans made another choice: their preferred news network. Ratings f.
UPDATED WITH FINAL NUMBERS: Fox News towered over the competition -- cable and broadcast -- with its midterm election coverage last night. According to Nielsen, Fox News averaged 7 million viewers in primetime, up 128% from the ...
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After voting for their favorite candidates in the midterm elections yesterday, Americans made another choice: their preferred news network. Ratings f.
UPDATED WITH FINAL NUMBERS: Fox News towered over the competition -- cable and broadcast -- with its midterm election coverage last night. According to Nielsen, Fox News averaged 7 million viewers in primetime, up 128% from the ...
bench craft companyHome | News | Style & Beauty | Moms & Babies | Movies, TV & Music | Healthy Lifestyle | Celebrities � Photos | Video. Subscribe: Magazine | Newsletter | RSS � Subscriber Services | Media Kit | Contact Us | Privacy Policy | Terms of Use ...
After voting for their favorite candidates in the midterm elections yesterday, Americans made another choice: their preferred news network. Ratings f.
UPDATED WITH FINAL NUMBERS: Fox News towered over the competition -- cable and broadcast -- with its midterm election coverage last night. According to Nielsen, Fox News averaged 7 million viewers in primetime, up 128% from the ...
bench craft companyHome | News | Style & Beauty | Moms & Babies | Movies, TV & Music | Healthy Lifestyle | Celebrities � Photos | Video. Subscribe: Magazine | Newsletter | RSS � Subscriber Services | Media Kit | Contact Us | Privacy Policy | Terms of Use ...
After voting for their favorite candidates in the midterm elections yesterday, Americans made another choice: their preferred news network. Ratings f.
UPDATED WITH FINAL NUMBERS: Fox News towered over the competition -- cable and broadcast -- with its midterm election coverage last night. According to Nielsen, Fox News averaged 7 million viewers in primetime, up 128% from the ...
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bench craft company bench craft companyHome | News | Style & Beauty | Moms & Babies | Movies, TV & Music | Healthy Lifestyle | Celebrities � Photos | Video. Subscribe: Magazine | Newsletter | RSS � Subscriber Services | Media Kit | Contact Us | Privacy Policy | Terms of Use ...
After voting for their favorite candidates in the midterm elections yesterday, Americans made another choice: their preferred news network. Ratings f.
UPDATED WITH FINAL NUMBERS: Fox News towered over the competition -- cable and broadcast -- with its midterm election coverage last night. According to Nielsen, Fox News averaged 7 million viewers in primetime, up 128% from the ...
benchcraft company scam It's taking banks so longer and longer to process home foreclosures. What does this mean for foreclosure clean up business owners? When the flood gates open, foreclosure cleaning and real estate services companies are going to be busier than ever.
Following is an explanation of how and why.
Home Foreclosures: How Long Does It Take a Bank to Foreclose?The time period from when formal home foreclosure takes place varies by state. Some states have a grace period of 30 days; others can take as long as six months. But, these are in normal times. Right now, we're in anything but normal times.
It's taking banks in states with high home foreclosure rates (eg, Florida, Georgia, California, Nevada, etc.) as long as six or nine months to even get around to even dealing with a property and processing it as an official foreclosure.
Home Foreclosures: The "Sign" (or Not) of the TimesUsually, when a home is foreclosed on, soon after the residents depart, you'll see a realtor's "For Sale" sign in the yard. Or, a bank "Foreclosure for Sale" sign. Or at the very least some kind of lock box on the door to secure the property.
Nowadays, it's not uncommon for a property to sit empty -- with none of the above present -- for months on end.
This probably means that the bank/lender hasn't gotten around to officially foreclosing on the property because once they do, they assign it to a realtor to be fixed up and ready to be marketed again (eg, put up for sale or lease).
When you consider the latest home foreclosure statistics, this makes perfect sense. According to RealtyTrac, a leading site for home foreclosure information, U.S. foreclosure filings may hit a record 1.8 million by the first half of the year (2009).
Foreclosure Cleanup and Real Estate Cleaning Firms Poised to CapitalizeOnce banks get their policies and procedures in place, foreclosure clean up and real estate services firms are poised to capitalize.
Right now, banks are just struggling to deal with the tsunami of paperwork required to process a foreclosure. This leaves little time for vetting companies to deal with what happens after this process is done, eg, getting a property ready to go back on the market again.
Want Foreclosure Clean Up Contracts? Get OfficialMan-with-a-van-type operations won't cut it. Banks and other lenders will be looking for companies that have the proper licensing and insurance, at the very least. In essence, they will be looking to hand out foreclosure clean up contracts and other real-estate-related services to "official" companies.
Many communities have federal dollars that have come in/are coming in to specifically help neighborhoods recover from the home foreclosure crisis.
Those foreclosure clean up companies (and real estate services firms) who have their "ducks in a row," so to speak, will be the ones to capitalize.
