Tag Archives: robosigner

Countrywide magnate pays $67 million – Angelo R. Mozilo former CEO pays to settle civil fraud case brought by SEC

Gretchen Morgenson of the NY Times reports on October 16, 2010:

"…the settlement by Mr. Mozilo is the fist time that a prominent executive has been penalized personally for financial excesses linked to a mortgage boom that, when it went bust, threatened to topple the economy and led to an unprescedented wave of foreclosures."

"Earlier this year, Goldman Sachs paid a $550 million fine to setle securities fraud charges. Securities regulators are also investigating former senior executives at Merrill Lynch for possible securities fraud."

The SEC sued Mr. Mozilo alleging that he improperly generated profits on insider stock sales, and that he allowed "toxic" loan products to move forward, knowing them to be toxic.

Countrywide (acquired by Bank of America) is to pay $20 million of Mr. Mozilo’s settlement. Mr. Mozilo has also agreed to never again serve in a public company. (Note: Big fat deal – he is 71 years old and recorded gains on stock sales of over $140 million on Countrywide stock and for years was among the highest-paid executives in America – and was known as an audacious and flamboyant financier)

The settlement was reached four days before the scheduled beginning of a jury trial in Los Angeles.

Other Countrywide employees sued by the SEC (and whom settled) were David Sambol (former Countrywide president, paying 5.52 million) and Eric Sieracki (former Countrywide chief financial officer, paying $130,000).


Genesis of “foreclosuregate” and “robosigners” – it all began in Denmark, Maine with Nicole Bradbury, retired lawyer Thomas A. Cox, Pine Tree Legal Assistance and GMAC’s Jeffrey Stephan

NY Times’ David Streitfeld assembles a fascinating and historically important article "From This House, a National Foreclosure Freeze" NY Times October 15, 2010.

Retired banking lawyer Thomas A. Cox, working as a volunteer at Pine Tree Legal Assistance in Maine, launched a national firestorm which helped bring the terms "foreclosuregate" and "robosigners" to the common lexicon.

Mr. Cox, a retired volunteer legal aid attorney, begain working on Ms. Bradbury’sGMAC foreclosure file in the summer of 2009.

Mr. Streitfeld’s reporting is concise: "Mr. Cox voiced to a colleague that he would expose GMAC’s proces and its limited signing officer Jeffrey Stephan, but Mr. Cox wanted to take the questioning much further. In June, he got his chance. A few weeks later, he spelled out in a court filing what he had learned from the robo-signer: ‘When Stephan says in an affidavit that he has personal knowledge of the facts stated in his affidavits, he doesn’t. When he says that he has custody and control of the loan documents, he doesn’t. When he says that he is attaching a true and accurate copy of a note or a mortgage, he has no idea if that is so, because he does not lok at the exhibits. When he makes any other statement of fact, he has no idea if it is true. When the notary says that Stephan appeared before him or her, he didn’t.’… it was not a complete loss for GMAC – Judge Powers declined to find the lender in contempt – but nearly so."

The article by Mr. Streitfeld alleges that GMAC had been admonished in another legal battle in Florida some four years ago for having used "robosigners".

Mr. Cox’s legal savvy is to be commended. But frankly, doesn’t the entire "foreclosuregate" dispute really beg the question: that despite the allegedly flawed attestation of "robosigner" Jeffrey Stephan on GMAC’s behalf – why should Ms. Bradbury of Denmark, Maine, get to live for free? Don’t you have to pay your mortgage or rent? How much free housing will Ms. Bradbury receive because of Mr. Stephan’s "robosigner" position with GMAC?


There are easily two sides to this coin….

Buying foreclosures? – Beware of what you buy – heed the story of Todd Phelps and Paul Whitehead – NY Times October 16, 2010

NY Times Financial Reporter Ron Lieber, on October 16, 2010 reported on the sad story of Todd and Paul: They purchased a Riverside, Calif. home at a foreclosure sale, only to learn that they had bid at the foreclosure of the second mortgage – and the house still remained subject to the lien/mortgage of the first mortgage company.

Todd and Paul paid $137,000 of their hard-earned cash – and faced not getting one penny back. (This story eventually has a happy ending – it appears the foreclosing bank from whom Todd and Paul purchased the property felt them to be such hayseeds that the bank relented and took the property back and returned the $137,000.

Mr. Lieber reports: "The auction process: Foreclosure auctions can be a dangerous place for people who don’t know what they’re doing or are relying on help from people who are sloppy or negligent. … Take your time. Assemble a panel of experts and apprentice yourself to them. And watch listings carefully. For better or for worse, foreclosed properties are going to be available for a very, very long time."


Title Insurance – what does it do? – be cautious if you purchase a foreclosed home to fix up

The NY Times’ Ron Lieber assembled an important article for anyone thinking of buying and then dumping money into a foreclosed home to fix it up either to live in, rent out, or to try to “flip”.

The crux is that if the foreclosure was upset due to “foreclosuregate” or “robosigner” issues – your maximum recovery might be what you paid for the home – and you could not recovery your repair or improvement costs.

Now, to date, I am not aware of alot of foreclosed homes being returned to people who lost them in some flawed foreclosure process. Usually, the foreclosure was for lack of payments and the foreclosed individual is unlikely to want to begin making payments on the old “under water” mortgage.

However, recognize that your “title insurance” only gives you what you paid for the home if your ownership and title to the home is somehow threatened by litigation.

Mr. Lieber: “While homeowners … may ahve title insurance, it generally covers them only for the purchase price of the home. When you buy a home out of foreclosure, however, it often needs a lot of work. ‘If I bought it at $200,000 and it’s a steal but I had to gut it and sink $100,000 more in, my recovery is limited if there is a problem,’ said Matthew Weidner, a lawyer in St. Petersburg, Fla.”

Mr. Lieber’s October 9, 2010, NY Times article (section B1 “Business Day”) is a “must read” for those investing in realty: