Monday, July 20, 2009



April 30, 2009

Filed under: Mortgage, Foreclosure

In an era where a very large portion of mortgage obligations have been securitized, by assignment to a trust indenture trustee, with the resulting pool of assets being then sold as mortgage backed securities, foreclosure becomes an interesting exercise, particularly where judicial process is involved. We are all familiar with the securitization process. The steps, if not the process, is simple. A borrower goes to a mortgage lender. The lender finances the purchase of real estate. The borrower signs a note and mortgage or deed of trust. The original lender sells the note and assigns the mortgage to an entity that securitizes the note by combining the note with hundreds or thousands of similar obligation to create a package of mortgage backed securities, which are then sold to investors.

Unfortunately, unless you represent borrowers, the vast flow of notes into the maw of the securitization industry meant that a lot of mistakes were made. When the borrower defaults, the party seeking to enforce the obligation and foreclose on the underlying collateral sometimes cannot find the note. A lawyer sophisticated in this area has speculated to one of the authors that perhaps a third of the notes “securitized” have been lost or destroyed. The cases we are going to look at reflect the stark fact that the unnamed source’s speculation may be well-founded.


If the issue were as simple as a missing note, UCC §3-309 would provide a simple solution. A person entitled to enforce an instrument which has been lost, destroyed or stolen may enforce the instrument. If the court is concerned that some third party may show up and attempt to enforce the instrument against the payee, it may order adequate protection. But, and however, a person seeking to enforce a missing instrument must be a person entitled to enforce the instrument, and that person must prove the instrument’s terms and that person’s right to enforce the instrument. §3-309 (a)(1) & (b).


Enforcement of a note always requires that the person seeking to collect show that it is the holder. A holder is an entity that has acquired the note either as the original payor or transfer by endorsement of order paper or physical possession of bearer paper. These requirements are set out in Article 3 of the Uniform Commercial Code, which has been adopted in every state, including Louisiana, and in the District of Columbia. Even in bankruptcy proceedings, State substantive law controls the rights of note and lien holders, as the Supreme Court pointed out almost forty (40) years ago in United States v. Butner, 440 U.S. 48, 54-55 (1979).

However, as Judge Bufford has recently illustrated, in one of the cases discussed below, in the bankruptcy and other federal courts, procedure is governed by the Federal Rules of Bankruptcy and Civil Procedure. And, procedure may just have an impact on the issue of “who,” because, if the holder is unknown, pleading and standing issues arise.


Article 3 governs negotiable instruments – it defines what a negotiable instrument is and defines how ownership of those pieces of paper is transferred. For the precise definition, see § 3-104(a) (“an unconditional promise or order to pay a fixed amount of money, with or without interest . . . .”) The instrument may be either payable to order or bearer and payable on demand or at a definite time, with or without interest.

Ordinary negotiable instruments include notes and drafts (a check is a draft drawn on a bank). See § 3-104(e).

Negotiable paper is transferred from the original payor by negotiation. §3-301. “Order paper” must be endorsed; bearer paper need only be delivered. §3-305. However, in either case, for the note to be enforced, the person who asserts the status of the holder must be in possession of the instrument. See UCC § 1-201 (20) and comments.

The original and subsequent transferees are referred to as holders. Holders who take with no notice of defect or default are called “holders in due course,” and take free of many defenses. See §§ 3-305(b).

The UCC says that a payment to a party “entitled to enforce the instrument” is sufficient to extinguish the obligation of the person obligated on the instrument. Clearly, then, only a holder – a person in possession of a note endorsed to it or a holder of bearer paper – may seek satisfaction or enforce rights in collateral such as real estate.

NOTE: Those of us who went through the bank and savings and loan collapse of the 1980’s are familiar with these problems. The FDIC/FSLIC/RTC sold millions of notes secured and unsecured, in bulk transactions. Some notes could not be found and enforcement sometimes became a problem. Of course, sometimes we are forced to repeat history. For a recent FDIC case, see Liberty Savings Bank v. Redus, 2009 WL 41857 (Ohio App. 8 Dist.), January 8, 2009.


Judge Bufford addressed the rules issue this past year. See In re Hwang, 396 B.R. 757 (Bankr. C. D. Cal. 2008). First, there are the pleading problems that arise when the holder of the note is unknown. Typically, the issue will arise in a motion for relief from stay in a bankruptcy proceeding.

According F.R.Civ. Pro. 17, “[a]n action must be prosecuted in the name of the real party in interest.” This rule is incorporated into the rules governing bankruptcy procedure in several ways. As Judge Bufford has pointed out, for example, in a motion for relief from stay, filed under F.R.Bankr.Pro. 4001 is a contested matter, governed by F. R. Bankr. P. 9014, which makes F.R. Bankr. Pro. 7017 applicable to such motions. F.R. Bankr. P. 7017 is, of course, a restatement of F.R. Civ. P. 17. In re Hwang, 396 B.R. at 766. The real party in interest in a federal action to enforce a note, whether in bankruptcy court or federal district court, is the owner of a note. (In securitization transactions, this would be the trustee for the “certificate holders.”) When the actual holder of the note is unknown, it is impossible – not difficult but impossible – to plead a cause of action in a federal court (unless the movant simply lies about the ownership of the note). Unless the name of the actual note holder can be stated, the very pleadings are defective.


Often, the servicing agent for the loan will appear to enforce the note. Assume that the servicing agent states that it is the authorized agent of the note holder, which is “Trust Number 99.” The servicing agent is certainly a party in interest, since a party in interest in a bankruptcy court is a very broad term or concept. See, e.g., Greer v. O’Dell, 305 F.3d 1297, 1302-03 (11th Cir. 2002). However, the servicing agent may not have standing: “Federal Courts have only the power authorized by Article III of the Constitutions and the statutes enacted by Congress pursuant thereto. … [A] plaintiff must have Constitutional standing in order for a federal court to have jurisdiction.” In re Foreclosure Cases, 521 F.Supp. 3d 650, 653 (S.D. Ohio, 2007) (citations omitted).

But, the servicing agent does not have standing, for only a person who is the holder of the note has standing to enforce the note. See, e.g., In re Hwang, 2008 WL 4899273 at 8.

The servicing agent may have standing if acting as an agent for the holder, assuming that the agent can both show agency status and that the principle is the holder. See, e.g., In re Vargas, 396 B.R. 511 (Bankr. C.D. Cal. 2008) at 520.


For those of you who are not familiar with the entity known as MERS, a frequent participant in these foreclosure proceedings:

MERS is the “Mortgage Electronic Registration System, Inc. “MERS is a mortgage banking ‘utility’ that registers mortgage loans in a book entry system so that … real estate loans can be bought, sold and securitized, just like Wall Street’s book entry utility for stocks and bonds is the Depository Trust and Clearinghouse.” Bastian, “Foreclosure Forms”, State. Bar of Texas 17th Annual Advanced Real Estate Drafting Course, March 9-10, 2007, Dallas, Texas. MERS is enormous. It originates thousands of loans daily and is the mortgagee of record for at least 40 million mortgages and other security documents. Id.

MERS acts as agent for the owner of the note. Its authority to act should be shown by an agency agreement. Of course, if the owner is unknown, MERS cannot show that it is an authorized agent of the owner.


This structure also possesses practical evidentiary problems where the party asserting a right to foreclose must be able to show a default. Once again, Judge Bufford has addressed this issue. At In re Vargas, 396 B.R. at 517-19. Judge Bufford made a finding that the witness called to testify as to debt and default was incompetent. All the witness could testify was that he had looked at the MERS computerized records. The witness was unable to satisfy the requirements of the Federal Rules of Evidence, particularly Rule 803, as applied to computerized records in the Ninth Circuit. See id. at 517-20. The low level employee could really only testify that the MERS screen shot he reviewed reflected a default. That really is not much in the way of evidence, and not nearly enough to get around the hearsay rule.


In a foreclosure proceeding in a judicial foreclosure state, or a request for injunctive relief in a non-judicial foreclosure state, or in a motion for relief proceeding in a bankruptcy court, the courts are dealing with and writing about the problems very frequently.

In many if not almost all cases, the party seeking to exercise the rights of the creditor will be a servicing company. Servicing companies will be asserting the rights of their alleged principal, the note holder, which is, again, often going to be a trustee for a securitization package. The mortgage holder or beneficiary under the deed of trust will, again, very often be MERS.

Even before reaching the practical problem of debt and default, mentioned above, the moving party must show that it holds the note or (1) that it is an agent of the holder and that (2) the holder remains the holder. In addition, the owner of the note, if different from the holder, must join in the motion.

Some states, like Texas, have passed statutes that allow servicing companies to act in foreclosure proceedings as a statutorily recognized agent of the noteholder. See, e.g., Tex. Prop. Code §51.0001. However, that statute refers to the servicer as the last entity to whom the debtor has been instructed to make payments. This status is certainly open to challenge. The statute certainly provides nothing more than prima facie evidence of the ability of the servicer to act. If challenged, the servicing agent must show that the last entity to communicate instructions to the debtor is still the holder of the note. See, e.g., HSBC Bank, N.A. v. Valentin, 2l N.Y. Misc. 3d 1123(A), 2008 WL 4764816 (Table) (N.Y. Sup.), Nov. 3, 2008. In addition, such a statute does not control in federal court where Fed. R. Civ. P. 17 and 19 (and Fed. R. Bankr. P. 7017 and 7019) apply.


These cases are arranged by state, for no particular reason.


In re Schwartz, 366 B.R.265 (Bankr. D. Mass. 2007)

Schwartz concerns a Motion for Relief to pursue an eviction. Movant asserted that the property had been foreclosed upon prior to the date of the bankruptcy petition. The pro se debtor asserted that the Movant was required to show that it had authority to conduct the sale. Movant, and “the party which appears to be the current mortgagee…” provided documents for the court to review, but did not ask for an evidentiary hearing. Judge Rosenthal sifted through the documents and found that the Movant and the current mortgagee had failed to prove that the foreclosure was properly conducted.

Specifically, Judge Rosenthal found that there was no evidence of a proper assignment of the mortgage prior to foreclosure. However, at footnote 5, Id. at 268, the Court also finds that there is no evidence that the note itself was assigned and no evidence as to who the current holder might be.

Nosek v. Ameriquest Mortgage Company (In re Nosek), 286 Br. 374 (Bankr D Mass. 2008).

Almost a year to the day after Schwartz was signed, Judge Rosenthal issued a second opinion. This is an opinion on an order to show cause. Judge Rosenthal specifically found that, although the note and mortgage involved in the case had been transferred from the originator to another party within five days of closing, during the five years in which the chapter 13 proceeding was pending, the note and mortgage and associated claims had been prosecuted by Ameriquest which has represented itself to be the holder of the note and the mortgage. Not until September of 2007 did Ameriquest notify the Court that it was merely the servicer. In fact, only after the chapter 13 bankruptcy had been pending for about three years was there even an assignment of the servicing rights. Id. at 378.

Because these misrepresentations were not simple mistakes: as the Court has noted on more than one occasion, those parties who do not hold the note of mortgage do not service the mortgage do not have standing to pursue motions for leave or other actions arising form the mortgage obligation. Id at 380.

As a result, the Court sanctioned the local law firm that had been prosecuting the claim $25,000. It sanctioned a partner at that firm an additional $25,000. Then the Court sanctioned the national law firm involved $100,000 and ultimately sanctioned Wells Fargo $250,000. Id. at 382-386.

In re Hayes, 393 B.R. 259 (Bankr. D. Mass. 2008).

Like Judge Rosenthal, Judge Feeney has attacked the problem of standing and authority head on. She has also held that standing must be established before either a claim can be allowed or a motion for relief be granted.


In re Foreclosure Cases, 521 F.Supp. 2d (S.D. Ohio 2007).

Perhaps the District Court’s orders in the foreclosure cases in Ohio have received the most press of any of these opinions. Relying almost exclusively on standing, the Judge Rose has determined that a foreclosing party must show standing. “[I]n a foreclosure action, the plaintiff must show that it is the holder of the note and the mortgage at the time that the complaint was filed.” Id. at 653.

Judge Rose instructed the parties involved that the willful failure of the movants to comply with the general orders of the Court would in the future result in immediate dismissal of foreclosure actions.

Deutsche Bank Nat’l Trust Co. v. Steele, 2008 WL 111227 (S.D. Ohio) January 8, 2008.

In Steele, Judge Abel followed the lead of Judge Rose and found that Deutsche Bank had filed evidence in support of its motion for default judgment indicating that MERS was the mortgage holder. There was not sufficient evidence to support the claim that Deutsche Bank was the owner and holder of the note as of that date. Following In re Foreclosure Cases, 2007 WL 456586, the Court held that summary judgment would be denied “until such time as Deutsche Bank was able to offer evidence showing, by a preponderance of evidence, that it owned the note and mortgage when the complaint was filed.” 2008 WL 111227 at 2. Deutsche Bank was given twenty-one days to comply. Id.


U.S. Bank, N.A. v. Cook, 2009 WL 35286 (N.D. Ill. January 6, 2009).

Not all federal district judges are as concerned with the issues surrounding the transfer of notes and mortgages. Cook is a very pro lender case and, in an order granting a motion for summary judgment, the Court found that Cook had shown no “countervailing evidence to create a genuine issue of facts.” Id. at 3. In fact, a review of the evidence submitted by U.S. Bank showed only that it was the alleged trustee of the securitization pool. U.S. Bank relied exclusively on the “pooling and serving agreement” to show that it was the holder of the note. Id.

Under UCC Article 3, the evidence presented in Cook was clearly insufficient.

New York

HSBC Bank USA, N.A. v. Valentin, 21 Misc. 3D 1124(A), 2008 WL 4764816 (Table) (N.Y. Sup.) November 3, 2008. In Valentin, the New York court found that, even though given an opportunity to, HSBC did not show the ownership of debt and mortgage. The complaint was dismissed with prejudice and the “notice of pendency” against the property was cancelled.

Note that the Valentin case does not involve some sort of ambush. The Court gave every HSBC every opportunity to cure the defects the Court perceived in the pleadings.


In re Vargas, 396 B.R. 511 (Bankr. C.D. Cal. 2008)


In re Hwang, 396 B.R. 757 (Bankr. C.D. Cal. 2008)

These two opinions by Judge Bufford have been discussed above. Judge Bufford carefully explores the related issues of standing and ownership under both federal and California law.


In re Parsley, 384 B.R. 138 (Bankr. S.D. Tex. 2008)


In re Gilbreath, 395 B.R. 356 (Bankr. S.D. Tex. 2008)

These two recent opinions by Judge Jeff Bohm are not really on point, but illustrate another thread of cases running through the issues of motions for relief from stay in bankruptcy court and the sloppiness of loan servicing agencies. Both of these cases involve motions for relief that were not based upon fact but upon mistakes by servicing agencies. Both opinions deal with the issue of sanctions and, put simply, both cases illustrate that Judge Bohm (and perhaps other members of the bankruptcy bench in the Southern District of Texas) are going to be very strict about motions for relief in consumer cases.


The cases cited illustrate enormous problems in the loan servicing industry. These problems arise in the context of securitization and illustrate the difficulty of determining the name of the holder, the assignee of the mortgage, and the parties with both the legal right under Article 3 and the standing under the Constitution to enforce notes, whether in state court or federal court.

Interestingly, with the exception of Judge Bufford and a few other judges, there has been less than adequate focus upon the UCC title issues. The next round of cases may and should focus upon the title to debt instrument. The person seeking to enforce the note must show that:

(1) It is the holder of this note original by transfer, with all necessary rounds;
(2) It had possession of the note before it was lost;
(3) If it can show that title to the note runs to it, but the original is lost or destroyed, the holder must be prepared to post a bond;
(4) If the person seeking to enforce is an agent, it must show its agency status and that its principal is the holder of the note (and meets the above requirements).

Then, and only then, do the issues of evidence of debt and default and assignment of mortgage rights become relevant.



APRIL 3, 2009

Comments are closed.

Back to Broken Credit Blog

No Note, No Possession, Conn. Ct. Says

Daily Development for Wednesday, June 25, 2003
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri

MORTGAGES; ASSIGNMENT; Connecticut court concludes
assignee of mortgage that lacks possession or formal assignment of note
may not foreclose.

Fleet National Bank v. Nazareth, 818 A. 2d 69 (Conn. App. 2003)

In 1994, Nazareth executed a promissory note and mortgage, securing
repayment of $184,000, in favor of Shawmut Mortgage Company.

Later, Shawmut Mortgage merged with, and became known as, Fleet
Mortgage Corporation. Fleet Mortgage assigned its interest in the
mortgage, but not the note, to Fleet National Bank (which appears to
have been a sister corporation to Fleet Mortgage). Fleet National Bank
then assigned the mortgage to R.I. Waterman Properties, Inc. (which was
a subsidiary of Fleet National Bank, responsible for handling the Bank's

The Nazareth loan became delinquent and Fleet National Bank filed an
action for judicial foreclosure. In due course, Waterman Properties was
substituted as plaintiff in the judicial foreclosure action.

At trial, defendants Nazareth claimed that Waterman Properties lacked
standing to bring the action because it was not a holder of the underlying
note. The court stated that it was "undisputed" that Fleet Mortgage was
still the holder (i.e., owner) of the note, while Waterman Properties was
holder (i.e., owner by assignment) of the mortgage. It appears Waterman
Properties argued that failure to assign the note with the mortgage was
clearly an oversight. The trial court ruled in favor of Waterman
Properties, and defendants appealed.

The Court of Appeals reversed, holding there is no legal authority for the
assignee of a mortgage to foreclose absent proof of assignment of the
underlying note. The court distinguished prior Connecticut cases
upholding enforcement of a mortgage where the holder was shown to
have an interest in the underlying note but, as in one case, the note was

Likewise, the Court said the Connecticut statute permitting a note holder
to foreclose a related mortgage, even though the mortgage has not been
assigned, did not help Waterman Properties in this 'opposite' situation.
Said the Court, "(w)e conclude, therefore, that the legislature did not
intend to permit the holder of the mortgage, without having been
assigned the note, the ability to foreclose on the property." (See
Connecticut General Statutes section 49-17.)

Reporter's Comment: There's a familiar rule that "the security follows
the debt,"
or the mortgage interest goes with the note, but, as illustrated in this case,
the converse may not always be true.

I'll confess this result doesn't make perfect sense to me. Wouldn't it seem
that assignment of the mortgage evidences an intention to assign at least
some part of the underlying debt? If not, why was the mortgage
assigned? Rhetorical question--or at least one, in Connecticut anyway, to
be put to the legislature rather than a court.

A tough result for mortgage assignees, and their lawyers, who may seek
to enforce mortgages that have been passed through now defunct
corporations, with neither records nor witnesses to explain what was

Editor's Comment 1: The critical fact to the editor here is the statement
in the opinion that it was "undisputed" that the party bringing the
foreclosure action was not the owner of the obligation.

Editor's Comment 2: The prevailing rule is to assume that the parties
intended to assign the debt along with the mortgage, even if there is no
evidence of anything by the mortgage assignment. Nelson and Whitman
discuss this concept and cite cases in their treatise: Real Estate Finance
Law pp 373-374 (4th Ed. West 2001) They also recommend this approach
in the Restatement of Mortgages, Sec. 5.4b. This presumption solves
most problems. But it does not solve the problem where the holder of
the debt does not agree that it is no longer the owner of the debt and
insists that it assigned the mortgage separately. In that case, then at best
the owner of the debt ought to be an additional party plaintiff in the
mortgage foreclosure action. At worst, the transfer is a nullity and only
the debt holder can foreclose. For this more conservative position that
the transfer is a nullity, the minority rule, Nelson and Whitman cite case
law in Florida, Arizona, New York, California, Indiana, and South
Dakota. Even though a minority rule, when you've got New York and
California following it, you've got a rule with some "legs."

Editor's Comment 3: The lender brought this on itself by establishing a
foreclosure method that seemed quite likely to fail, especially in a title
theory state like Connecticut. The editor wonders why the lender would
take this case up on appeal rather than clean up the ownership problem -
either transferring the note to the foreclosing party or transferring the
mortgage to the note holder and then reforeclosing. Maybe there were
statute of limitations issues or bankruptcy issues, but that does seem to
have been a smoother path.

The reporter for this item was Bert Rush of First American Title in
California, writing in the First American newsletter, Landsakes.

Readers are encouraged to respond to or criticize this posting.

Items reported on DIRT and in the ABA publications related to it are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. The same is true of all commentary provided by contributors to the DIRT list. Accuracy of data provided and opinions expressed by the DIRT editor the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.

Parties posting messages to DIRT are posting to a
source that is readily accessible by members of
the general public, and should take that fact
into account in evaluating confidentiality


DIRT is an internet discussion group for serious
real estate professionals. Message volume varies,
but commonly runs 5 - 15 messages per work day.

Daily Developments are posted every work day. To
subscribe, send the message

subscribe Dirt [your name]


To cancel your subscription, send the message
signoff DIRT to the address:

for information on other commands, send the message
Help to the listserv address.

DIRT has an alternate, more extensive coverage that includes not only
commercial and general real estate matters but also focuses upon residential real estate matters. Because real estate brokers generally find this service more valuable, it is named “BrokerDIRT.” But residential specialist attorneys, title insurers, lenders and others interested in the residential market will want to subscribe to this alternative list. If you subscribe to BrokerDIRT, it is not necessary also to subscribe to DIRT, as BrokerDIRT carries all DIRT traffic in addition to the residential discussions.

To subscribe to BrokerDIRT, send the message

subscribe BrokerDIRT [your name]


To cancel your subscription to BrokerDIRT, send the message
signoff BrokerDIRT to the address:

DIRT is a service of the American Bar Association
Section on Real Property, Probate & Trust Law and
the University of Missouri, Kansas City, School
of Law. Daily Developments are copyrighted by
Patrick A. Randolph, Jr., Professor of Law, UMKC
School of Law, but Professor Randolph grants
permission for copying or distribution of Daily
Developments for educational purposes, including
professional continuing education, provided that
no charge is imposed for such distribution and
that appropriate credit is given to Professor
Randolph, DIRT, and its sponsors.

DIRT has a WebPage at:

Members of the ABA Section on Real Property, Probate
and Trust Law or of the National Association of Realtors can subscribe to a quarterly hardcopy report that includes all DIRT Daily Developments, many other cases, and periodic reviews of real estate oriented literature and state legislation by contacting Antonette Smith at (312) 988 5260 or

Saturday, July 11, 2009

Big Bankers Mounting Sneak Attack on Consumers

Friday 10 July 2009

by: Jim Hightower | Visit article original @ AlterNet

The largest banking chains are going out of their way to stiff us.

Have you received your thank-you note? I'm still waiting for mine.

More than a year into the Wall Street bailout, I've yet to get any sort of "thank you" from even a single one of the big banks that you and I propped up with $12 trillion in direct giveaways, indirect giveaways, government guarantees and sweetheart loans. You'd think their mommas would've taught them better. But I've begun to think that waiting on a simple gesture of banker gratitude is like waiting on Donald Trump to have a good hair day -- ain't gonna happen.

Far from showing appreciation, the largest banking chains are now going out of their way to stiff us. Instead of nice notes, they are quietly slipping new gotchas into our monthly credit card bills and bank statements. In June, for example, Bank of America abruptly raised its fee for a basic checking account by 50 percent. Citibank jacked up the interest rate on some of its cards to 29.99 percent. And JPMorgan Chase more than doubled the required minimum payment on its cards.

Across the board, fees have skyrocketed to their highest levels on record, including assessments for such common occurrences as overdrafts (as high as $39), stop-payment actions ($39 -- double what it was 10 years ago), balance transfers (up more than 50 percent in the past year) and ATM use (nearly doubled in 10 years).

To add insult to injury, the banks blame us for their rate increases. Because the economy is such a wreck (massive job losses, falling incomes, millions of home foreclosures and other unpleasantness), industry spokesmen say there is a greater risk that customers will bounce checks or fall behind on their credit-card payments. Thus, claim purse-lipped bankers, they must protect themselves from us by ratcheting up rates and fees. "There is an increased riskiness around repayment because of the recession," spaketh one lobbyist for the financial giants.

Glade doesn't make enough "Spring Lilac" to cover up the stench of this argument. Come on -- it was the greed and incompetence of Mr. Jolly Banker that wrecked our economy, caused the recession and forced the odious bailout on us. They want us to pay for that?

The truth is, they are socking it to their customers for two reasons: 1) they can, and 2) fee hikes are a shifty way to snatch enormous levels of new income for themselves without doing anything to earn it.

These are the geniuses who made an ugly mess of the core business of banking -- which is to make good loans. To make up for their huge losses in that business, bankers have essentially been reduced to flim-flam fee-scammers. Last year, assessment of consumer fees became the main business of banks, totaling 53 percent of the industry's income!

That was before the current outbreak of fee frenzy. In the first three months of this year, for example, Bank of America's fee income rose 50 percent above the same period of 2008 -- an extra $4 billion in revenue for the bank.

"Fees 'R' Us" is what big banks have become. This is why they are panicked by reforms presently coming out of Washington. Already, President Obama has signed a bill to restrict credit-card gouging, and Bank of America, Citigroup and JPMorgan (which control about 58 percent of the nation's credit-card market) are scrambling to jack up their rates and fees before the new law takes effect next February.

Now, the bankers are lobbying frantically to kill Obama's plan to create a Consumer Financial Protection Agency, which would have regulatory power to prohibit a wide range of finance-industry abuses. For the first time, we consumers would have our own seat at the regulatory table -- an agency with the independence and clout to counter the Federal Reserve and other agencies that primarily serve big banks.

From the bailout to the explosion in fees, we've seen that Wall Street's financial titans won't control their greed. For the sake of the economy, the well-being of America's majority and the advancement of our nation's democratic values, we must do it for them. For more information, contact Americans for Financial Reform:


Jim Hightower is a national radio commentator, writer, public speaker, and author of the new book, "Swim Against the Current: Even a Dead Fish Can Go With the Flow." (Wiley, March 2008) He publishes the monthly "Hightower Lowdown," co-edited by Phillip Frazer.

Click on title above for article w/ comments;

Friday, July 3, 2009

Bank of America accused of anti-consumer practices

Tue Jun 30, 2009 1:02pm EDT

By Jonathan Stempel

NEW YORK (Reuters) - Consumer and labor groups demanded Bank of America Corp and other lenders reform their sales practices so that workers under pressure to meet sales quotas do not saddle customers with costly and unnecessary products.

The whistleblowing campaign was announced Tuesday as the U.S. Treasury Department unveiled legislation to create a Consumer Financial Protection Agency, as part of the Obama administration financial regulation overhaul.

People, who said they were former Bank of America employees, alleged that their supervisors drove them to burden consumers with needless debt and fees, to fatten the bank's earnings and the paychecks of senior executives, and threatened to retaliate if they complained. Some complained their salaries had been too low and that they had to hit quotas to earn needed bonuses.

"This is the kind of information that really needs to get out," said Representative Keith Ellison, a Minnesota Democrat who sits on the House Financial Services Committee. "Without a strong whistleblower law, we simply are not doing the things we need to do in order to manage risk properly."

He suggested that lending standards could be compromised by "the urgency to sell, sell, sell, sell, sell."

Groups conducting the campaign include the Service Employees International Union, which is trying to organize Bank of America workers; the National Association of Consumer Advocates, and the U.S. Public Interest Research Group.

Bank of America spokeswoman Anne Pace rejected the allegations, saying the SEIU misrepresented the largest U.S. bank's relationship with its customers and associates.

She said the Charlotte, North Carolina-based bank is "pro-associate and believes that managers are well-equipped to respond to associates' needs," and is committed to ensuring that customer fees are "transparent and predictable."

Christopher Feener, who said he used to work in the bank's credit card unit, was among the former workers who spoke out.

He complained that the bank regularly violated the Fair Debt Collection Practices Act, and sometimes pushed workers to falsely threaten legal action against customers. He said his team was sometimes pushed to call customers' neighbors about delinquent accounts, "to embarrass the customer and actually encourage the neighbor to bring over a message."

Shares of Bank of America rose 5 cents to $13.24 in early afternoon trading on the New York Stock Exchange.

(Reporting by Jonathan Stempel; Editing by Tim Dobbyn)

© Thomson Reuters 2009 All rights reserved

BOA Joins $hitiBank Hall of Shame

CrossPosted from Jr. Deputy Accountant;

Bank of America: Official Sponsor of California's Financial Armageddon

Posted: 02 Jul 2009 02:26 PM PDT

Bank of America wants you to know that they fully support the California budget crisis by accepting IOUs (see also: BREAKING NEWS: There are NO Zombies in California as Financial Armageddon Hits; Citizens Still Numb, Some Disappointed). While some might wonder if this had something to do with BofA's pathetic Thursday-before-a-holiday performance today, it was flippantly thrown out there via Twitter that perhaps even the Fed took a day off in honor of the holiday.


LOS ANGELES (MarketWatch) -- Bank of America Corp. (BAC 12.63, -0.03, -0.24%) said Wednesday it would accept warrants issued by the California government on a limited basis through July 10, which the state is using as a budget crisis freezes its spending. "Bank of America recognizes the State of California budget crisis will impact our clients and customers," it said. "To support our customers, while giving the state legislature additional time to pass a budget, we will accept California state-registered warrants -- or IOUs -- from existing customers and clients."

Where was the PPT today? Not on Bank of America's side, that's for sure. In fact, I haven't been able to dig deep into market performance today on account of the fact that I still have a day job (thank God, especially after those pathetic non-farm payroll numbers this morning that sent the Dow into a death spiral just after the morning bell) but I have a strange feeling PPT footprints will be conspiciously absent from today's moves.

Of course, the FDIC doesn't take a holiday, as it's already closed two Illinois banks before 2p PST. This is actually our second Bank Fail Thursday, the last being the day the FDIC announced Florida's Bank United was a bust after several weeks of threats and no one stupid enough to buy.

Wow. What a day, kids. Great way to ramp up before the holiday, eh? Hope the PPT is well-rested and ready for action come Monday morning - call me crazy but I have a feeling they'll be working overtime next week.

I mean WTF? Even oil tanked today. So either this is the precursor to very painful 3rd and 4th quarters ahead or just what happens when the children take a day off and take their funny capital with them. Who knows?

Well isn't that special?

Happy 4th of July, kids!

Thursday, July 2, 2009

OneWest a $hiti-Bank Too!

Help save millions of home owners

Wed Jul 1, 2009 11:27 am (PDT)

On Monday, ACORN members helped to save 84-year-old Irene Leary's home from foreclosure.

Her bank, OneWest, is one of the few large mortgage loan servicing companies that hasn´t signed onto President Obama´s Making Home Affordable plan, a common-sense plan that has already been signed by 80% of mortgage companies. It simply requires that banks sit down to talk with homeowners like Irene to try to mediate a solution that works for both of them before selling off people´s homes. But, so far, OneWest, Litton of Goldman Sachs, HomEq of Barclays, and American Home Mortgage Servicing Inc. have refused to sign.

These banks are unwilling to be a part of the solution to the foreclosure crisis that has been crippling our economy, and making people like Irene homeless. It´s especially upsetting that OneWest, which was founded with the taxes that you and I pay, is refusing to sign onto this plan. Please join me in demanding that they do better.

Please click on title above to learn more about our Campaign;

What to make of Citi's credit card moves?

By Jim Kim

This might shape up as an important test case of what it means to be a big bank that's owned heavily by taxpayers. The Financial Times reports that Citigroup has boosted interest rates on 15 million co-branded credit card accounts a few months before curbs on such increases are put into effect. The increase affects customers who failed to pay their balance in full at the end of the month; their rates rose by an average of 24 percent, nearly 3 percentage points.

Some lawmakers are miffed. One told FT: "It's hard to tell if rate hikes on existing balances being put in place now are the result of prior bad business decisions or getting in under the wire of the new law." We'll see how this goes over with the Treasury and the Fed. Recall that Citigroup has been forced to take various action in the past by its handlers. Almost humorously, it was forced to support a proposed rule that would give judges more say over bank issues in bankruptcy proceedings, when it had previously been a staunch opponent.

(Bloggers Note: Didnt that part of the bill that would allow BK judges to modify loans get removed?)