Tuesday, March 22, 2011

At Last! Word from $hiti!

After waiting months and months (after filing complaint with Comptroller of Currency on 10/21/2010) we finally (on 3/21/2011) got a call from Shila Jones of the Executive Response Team at $hitiFinancial who asks that we reeturn her call....at 877-245-2511 Ex. 1803231.

Which I did return today (just now at approx 11:40 am EST) but got a message that Shila will be out of the office until wenesday. So left a message that we had returned her call and would appreciate a call back on wenesday when she returns to the office.

Wednesday, March 16, 2011

Bless a Little Fraud and More Will Surely Follow

By George W. Mantor

On Thursday, the Financial Crisis Inquiry Committee released its long awaited report on how the destruction of the middle class was engineered.

If you listen to three dissenting members, it was a form of suicide. Like Lemmings, we raced to the cliff of financial destruction and hurled ourselves into poverty because all of the rest of the Lemmings were doing it.

Not with a bang, but a whimper did this nearly seven hundred page whitewash land with a thud in the halls of congress.

In the days leading up to the release of the report, some of the dissenting members…those who didn’t think there was quite enough whitewash…came out ahead of the report and blamed it all on the goal of homeownership.

Wait a minute! They want us to believe that Americans’ desire to own the roof over our heads destroyed the global economy?

It wasn’t the inflated appraisals, the predatory servicing fraud, the new and improved loan terms designed to assure default?

Nor, apparently, was it the fact that Wall Street bet massive amounts of other people’s money that the economy would collapse; it did, and they got huge bonuses.

All of that was said in testimony before the committee. It’s all in the report, as they say.

But, there has been no call for prosecutions or to apply the law equally to the middle class.

As to “foreclosure gate”, you have to pile through over 400 pages to get to this relating to MERS; but, it is exactly what I have been saying for nearly two years. The following italicized section is directly from the report.

“The standing of MERS or its designees to foreclose has been called into question by courts and academics, however. In a hearing before the House Judiciary Committee on the foreclosure crisis, New York State Supreme Court Justice F. Dana Winslow testified that “standing has become such a pervasive issue that I frequently use the term ‘presumptive mortgagee in foreclosure’” to describe MERS. Because of “multiple unrecorded transfers of the legal ownership of the mortgage,” it is unclear whether MERS continued to be the mortgagee after subsequent sales of the loan, according to Winslow.

Moreover, courts have held that MERS does not own the underlying note and therefore cannot transfer the note or the deed of trust, or foreclose upon the property.

Winslow also highlighted other deficiencies in MERS’ standing, many involving sloppy paperwork: the failure to produce the correct promissory notes in court during foreclosure proceedings; gaps in the chain of title, including printouts of the title that have differed substantially from information provided previously; retroactive assignments of notes and mortgages in an effort to clean up the paperwork problems from earlier years; questionable signatures on assignments and affidavits attesting to the ownership of the note and mortgage; and questionable notary stamps on assignments.

Recently, a bankruptcy court ruled that the Bank of New York could not foreclose on a loan it had purchased from Countrywide, because MERS had failed to endorse or deliver the note to the Bank of New York as required by the pooling and servicing agreement. This ruling could have further implications, because it was customary for Countrywide to maintain possession of the note and related loan documents when loans were securitized.

Across the market, some mortgage securities holders have sued the issuers of those securities, demanding that the issuers rescind their purchases. If the legal challenges succeed, investors that own mortgage-backed securities could force the issuers to buy them back at the original price­possibly with interest. The issuers would then be the owners of the securities and would bear the risk of loss.

The Congressional Oversight Panel said it is on the lookout for such risks: “If documentation problems prove to be pervasive and, more importantly, throw into doubt the ownership of not only foreclosed properties but also pooled mortgages, the consequences could be severe.”

This sentiment was echoed by University of Iowa law professor Katherine Porter who has studied foreclosures and the law: “It is lack of knowledge of how widespread the problems may be that is turning the allegations into a crisis. Lack of knowledge feeds speculation and worst-case scenarios.”

Adam Levitin, a Georgetown University associate professor of law, has estimated that the claims could be in the trillions of dollars, rendering major U.S. banks insolvent.”

Well, we wouldn’t want that now, would we?

It sounds too dire. And so, the question becomes what to do about it. Apparently, nothing.

There is so much guilt involved that it touches the majority of the privileged class.

Consider this ominous sign: Iowa Attorney General, Tom Miller, is heading the 50 state investigation into this fraud. At the beginning of the investigation, he was gung ho to keep families in their homes and put bankers in jail.

Then, last week, they propped his hollowed out former persona in front of the cameras and from his eyes you could see that the fire was out. Like a Stepford Wife, he appeared to have been “gotten to”.

Hey, Tom it doesn’t matter. The banks cannot be saved. They are already on life support and will succumb whether we pull the plug or not. But, we will never forget where you and others whose job it is to enforce the law took your paychecks and blessed the fraud.

Do the math. Foreclosing on 15 million homes won’t help; it actually will make things worse. Banks are already abandoning homes before the final sale all over the country because they have learned that if you seize too many, they aren’t worth much.

But, it wouldn’t matter if they foreclosed on every home in America. There isn’t enough equity to ever dig out of the massive global asset bubble they created.

So, we have a dilemma. The proverbial slippery slope. Do we let the banks get away with it and create a tidal wave of homelessness, or do we uphold the laws that make all of this a crime?

All of the above constitutes a massive fraud perpetrated on investors, borrowers, and law enforcement. The prospectuses are full of lies; the pooling and servicing agreements were routinely violated by the very people who wrote them. Tax and securities laws were repeatedly broken. Then, they forged documents and proffered perjured testimony to complete the final chapter of the business plan.

The evidence obtained by the committee through sworn testimony proves that there was, and continues to exist, numerous crimes in progress, and yet, there is little in the committee report that suggests that it will be anything but business as usual.

What ever happened to our lofty ideals about America being “a nation of laws”? Even more perplexing, how can someone who studies the law and chooses to become an “officer of the court” have as little regard for the law than the lawyers who represent financial intermediaries who routinely commit fraud upon the court?

But, where the real problem lies is with the judges who look the other way as foreclosure mills submit obviously forged documents and commit perjury for the most sinister of purposes.

Some won’t. Not judges Schack or Long or Tepper or Buford or Dawson whose levelheaded decisions have reverberated around the country; but still, people who never missed a payment are losing their homes to a system that cannot be stopped.

While foreclosure mills implement the final stage of a business plan based on illegally seizing 15 million homes and emptying all pension funds, a handful of court cases suggest that the banks may not be too big to fail after all.

Although most foreclosures, about 95%, go uncontested, a few have finally made their way through a more thorough review of the facts, and well-informed, fair-minded judges are concurring that, in most cases, the foreclosing entity lacks the legal right to do so.

The reason isn’t something that can be fixed by simply altering county recordings. The chain of title was willfully and deliberately breached in order to pledge the receivables, principal and interest payments, to multiple pools.

In order to save the banks, all of the following frauds will have to be blessed.

Fraud by mortgage originators against lender/investors.

Here are but two of hundreds of examples.

Bank of America Inc.’s Countrywide Financial unit, acquired by the bank in 2008, was accused of “massive fraud” in a lawsuit by investors who claim they were misled about mortgage-backed securities.

TIAA-CREF Life Insurance Co., New York Life Insurance Co. and Dexia Holdings Inc. are among a dozen institutional investors who filed complaints in New York State Supreme Court.

The investors claim they bought hundreds of millions of dollars of Countrywide mortgage-backed securities from 2005 to 2007 because they wanted conservative, low-risk investments. They said they relied on term sheets, prospectuses and other materials provided by the firm that were recklessly or knowingly false.

“Countrywide was an enterprise driven by only one purpose ­ to originate and securitize as many mortgage loans as possible into MBS to generate profits for the Countrywide defendants without regard to the investors that relied on the critical, false information provided to them with respect to the related certificates,” according to the complaint.

In October, Mozilo agreed to pay a record $67.5 million to settle U.S. Securities and Exchange Commission allegations that he misled investors.

Former Bear Stearns mortgage executives who now run mortgage divisions of Goldman Sachs, Bank of America, and Ally Financial have been accused of cheating and defrauding investors through the mortgage securities they created and sold while at Bear. According to e-mails and internal audits, JPMorgan had known about this fraud since the spring of 2008, but hid it from the public eye through legal maneuvering. Recently, a lawsuit filed in 2008 by mortgage insurer Ambac Assurance Corp against Bear Stearns and JPMorgan was unsealed. The lawsuit’s supporting e-mails, going back as far as 2005, highlight Bear traders telling their superiors they were selling investors like Ambac a “sack of shit.”

Fraud upon the courts in submitting forged documents.

Fraud upon recording agencies where the bogus paperwork has been filed.

Fraud upon the IRS by violating numerous tax laws in the process of issuing and managing the investments.

Fraud upon accounting rules and regulations.

Fraud upon shareholders who suffer reduced earnings as a result of the crimes of senior executives.

Fraud upon securities laws.

Taken altogether it weaves a rich tapestry of overlapping frauds starting, not at the bottom, but the top.

And yet, there is wide spread belief that the consequences of holding the perpetrators accountable would be so horrific that lawmakers at every level are scrambling to see if there isn’t some way to retroactively change a host of laws.

Maybe we can’t do anything about it, but I did see where Al Qaeda is thought to be targeting executives of the big banks. The American middle class appears to be getting a new ally.

George W. Mantor
The Real Estate Professor
Founder, American Foreclosure Resistance Movement
1611A South Melrose Drive, #134
Vista, CA 92081

“First they ignore you, then they ridicule you, then they fight you, then you win.” ­ Mahatma Gandhi

Tuesday, March 15, 2011

BAC Home Loan Servicing LIVE Mods Run Around results Conversation- Jen's...

Guess this behavior is not unique to $hiti. Guess this is just how the Big Banks do.

Monday, March 7, 2011

For the Record / Our Complaint

June 6, 2010

George J. Jubic
118 River Rd.
Johnsonville, NY 12094

Re: CitiMortgage Run-Around
“Investor Loan” # 5001214664

United States Treasury Department
Office of Financial Stability
1500 Pennsylvania Av. NW
Washington, DC 20220

Dear Sir or Madam;

I am writing once again to complain about our problems with CitiMortage. Last September I “successfully completed” my loan modification probationary period, and was told by their loss mitigation department (Mrs. Liz Cory) that everything was set to finalize our plan…this was in November of 2009. Ever since that date, I have been making my monthly payment according to the plan,… and have been waiting for CitiMortgage to complete the paperwork to finally finalize my plan.

On or about the week of May 20-24th, 2010, I did get a call from Liz Cory from CitiMortage informing me that I would have to send more paperwork to finalize the plan. They wanted updated copies of my financial documents, such as two months worth of my last paycheck stubs and my IRS forms.

On May 25th I did fax them over (see cover sheet attached as poof of same) to Liz Cory of CitiMortage. However, when I called her today to check up on the status of my case, she informed me that she did not receive the faxes I sent and she asked me to send them again. This is not the first time CitiMortgage has claimed to lose the papers I have sent.

I informed her at this time that I would not be sending any more documents as I have been told numerous times that I did not need to send anymore. I told her I was tired of jumping through every hoop they asked of me with still no sign of finalization of the plan in sight. I also informed them that I would not be sending anymore “good faith” payments according to their supposed “plan” until which time I have some tangible evidence that they are in fact, committed to helping me keep my home and until which time I receive the finalized plan. In view of the fact that they are not showing good faith in finalizing the plan, I told them that they should either commence a foreclosure proceeding (advising them that I would fight it out in court with them) or finalize the plan.

I am writing to make you aware of the difficulties homeowners are facing when big banks such as these are granted free-rein on their discretionary powers and left to their own devices in the working out of any loan modification plans. It is my hope that the government will somehow mandate that these banks do everything within their power to work with the homeowners and NOT put stumbling blocks in their way.

Yours, etc.

George J. Jubic, Owner / Occupier


Barney Frank, Chairman
Financial Services Committee
2129 Rayburn Bldg.
Washington, DC 20515

CC: CitiMortgage
Loss Mitigation Dept.
1000 Technology Dr. MS 420
O’Fallon, MO 63368

Sunday, March 6, 2011

Homeowner Suffers Horrific Injustice at the Hands of JPMorgan Chase


For over two years I’ve had a front row seat for the foreclosure crisis, the by-product of our government’s complete mishandling of the worst economic downturn in seventy years.
During that time I’ve been exposed to some pretty horrific things… people living in their cars with a child sleeping in the trunk… the eviction of an 89 year-old couple… I’ve gotten to know what that fear sounds like and feels like… the fear of losing one’s home while the country talks about you as being nothing more than an “irresponsible borrower,” someone who never should have bought your home in the first place, even though you may have lived in it for 30 years.
What I saw this past week, however, was something new for me… I’d heard of things like this happening before, written about them, even. But, I had never seen anything like it, up close and personal.

As a warning… this story is not for the squeamish. If you’re pregnant, or have heart disease, or just want to go on pretending that your country is still a place of which you’re proud… it’s better that you click off now… because this one isn’t going to make you laugh.

An Anaheim couple with an eight year-old daughter has lost their home… that would be one way of phrasing it. Another way to describe what happened would be to say that JPMorgan Chase, an outfit that I now see clearly is significantly worse than any crime family… has thus far been permitted by the courts and the laws in California to STEAL an Anaheim couple’s home.
Why do I say that Chase stole it? Well, there are lots of reasons, but I think the one that tops my list would have to be, because they never missed or were late on a payment… in every single month that JPMorgan Chase told the couple to make a payment… they paid the exact amount they were told to pay… on time and as agreed… never missed even one… never were late, not even once. “We trusted the bank,” the Mom says, “like idiots.”

The husband in this family worked for the City of Placentia in Southern California for some 27 years. The wife and mother has her own small business. Their adorable eight year-old daughter, whose life is about to be inalterably changed at the hand of JPMorgan Chase, goes to school near by and loves her home. Her parents haven’t told her anything about this yet, and I pray to God they never have to… that JPMorgan Chase comes forward and stops this egregious wrong that they have let happen… that they have created.

I can barely tell this story… I can’t imagine it ever happening to me… I can’t imagine it ever happening to anyone in this country… a place I used to proudly think of as my country. Not so much anymore though.

The husband in this family became ill a few years ago… advanced diabetes… his kidneys have failed, he’s on dialysis… heart disease… he’s spent time on a respirator while hospitalized.
Yet, they’ve made it through everything, this family, through all of that and more… stayed together… raised a daughter… found ways to laugh and play together… they must love each other very much.

They had bought their 2-bedroom home in August of 2006… as it turns out… terrible timing… but who knew that the bankers, who had leveraged themselves 40-100 to one, were about to blame homeowners for their defrauding of the investment community, bankrupting the global financial system, and destroying the credit markets? Bernanke didn’t know… Paulson didn’t know… personally, I think that lets this couple off the hook about the whole should-have-known thing.

So, for three years they made their payments without fail. And maybe if it would have just been the economy or just the medical bills, they would have made it through this… but both was too much, and they received a Notice of Default in July of 2009.They applied to JPMorgan Chase for a loan modification, and Chase granted them a trial modification in February of 2010. Chase told them to pay $869 for three months, and entered them into another program in May, telling them to make monthly payments of $1358.

They paid every month, on time every time… by cashier’s check, as required by Chase. The trial modification paperwork said something to the effect of:
“If all payments are payments are made as agreed, we will reevaluate you to determine if we can offer you a permanent modification.”

“We trusted the bank,” the Mom says, “like idiots.”

In August, they received a Notice of Sale. They called Chase… and imagine their relief when they were told not to worry one bit about that notice. Apparently, it was just the fault of Chase’s stupid computer system that just spits things like that out without anyone telling it to do so. False alarm, what a relief.

So, they paid their September payment… and paid their October payment… and it was around October 10th when they received another Notice of Sale. Again, they called Chase, perhaps a little less nervous than the last time the same thing had happened… and wouldn’t you know it… another false alarm… it was that darn computer system again. Nothing to worry about, Chase told them… just keep those payments coming.

Oh, but while we’ve got you on the phone, we need you to send in some current paycheck stubs and other miscellaneous pieces of information, which they did… and then did again… you know the standard operating procedures for servicers by now I’m sure.

I know, it’s not Chase’s fault… they’ve reportedly been having trouble hiring minimum wage people for the last three years. Or was it the investor’s who won’t let them modify? I can never remember which lie was Chase’s favorite… Bank of America was having the phone problems… Wells couldn’t stop their employees from losing stuff over and over… Yep, Chase was the can’t-hire-anyone-and-investors-won’t-modify, I’m almost positive.

Right around the third week of October, they come home to find a notice of sale pinned to their front door. Oh my God… they called Chase again. “Oh, just ignore it once again,” Chase lied. “You don’t have to worry about that, silly, you’re under consideration for a loan modification, why would we sell your house?”A few more days and another notice on the door… Chase back on the phone… but this time everything was different… Chase said they were selling their home in ONE HOUR. To stop the sale, they would need to get down to the courthouse with about twenty-five grand… in 55 minutes, 50… 45… 40…

I suppose we needed another vacant home in Anaheim in a hurry, because predictably, the home went back to Fannie Mae at the Trustee Sale. Gone, in the blink of an eye… sold October 21, 2010… just 21 days after they had made their October payment. Chase had told them not to worry… it was just the computer system… no one would sell their home.
And now it was gone.

“We trusted the bank,” the Mom says, “like idiots.”

The father has a hospital bed in the living room, he requires special care… their daughter… in school close by… eight years old… is that second or third grade?

The couple pleaded with Chase that day on the phone, I can only imagine what that felt like for them on that day. Here’s what the mom said to me:

We’re not people who simply decided to skip out on our mortgage. We did everything as upright and by the book as we were instructed to do by Chase yet we still lost our home. On the day they took back the property, I called Chase pleading for an alternative to this. Their reply to me was “I suggest you find a new place to live.”

The Unlawful Detainer or UD hearing was the next indignity the couple would suffer… and I haven’t been able to stop thinking about this next part all week.

With the medical bills they were receiving, and the uncertainty about the future, they didn’t feel they could afford a lawyer for the Unlawful Detainer trial. As the date for the UD neared, the husband was still in the hospital; he would be released roughly 48 hours before he would have to be in court.

They found an attorney who would help them and she called the opposing counsel, a lawyer from one of those scum-of-the-earth foreclosure mills that have no doubt been making untold millions intimidating homeowners, already scared to death and almost always without counsel, McCarthy & Holthus. They look like rich young men who don’t care at all about what the banks are doing to their neighbors… well, maybe not their neighbors… they probably live in some zillion-dollar beach pad.

(Hey fellas… looking forward to seeing you on Google! If you’ve been spending money on SEO trying to rank up at the top, I’ve got outstanding news… I’m going to put you right up there. May not be exactly what you had in mind, but then I don’t give a rat’s ass what’s in your under-developed minds.)

The couple’s lawyer asked the McCarthy & Holthus lawyer if there could be a continuance as the husband would be only a day or two out of the hospital…. they said they’d check with Fannie Mae… then said that Fannie said no. I guess Fannie Mae, a bankrupt and tax-payer owned mortgage company really wanted another empty condo in Anaheim.

The lawyer asked, what if the couple comes in and asks the judge for a continuance, would McCarthy & Holthus object? No, she was told, they would not object “vigorously.” So, the couple went to the UD expecting to ask the judge for a continuance, she pushing him in his wheelchair.
As soon as they walked in, another McCarthy & Malthus lawyer, Kevin Mello was walking towards them. As he approached, the couple overheard Kevin say to another, “I’m so sick of all these sob stories.”

Oh, no he didn’t… Oh, yes he did.

(And boy oh boy, is Kevin going to regret saying that… LOL… Yoohoo, Kevy, baby… you hang in the courthouse right near my house… do you know how lucky you’re aren’t? I’m actually making a documentary about the foreclosure crisis, and hadn’t yet cast the shithead. How lucky is that?)
Mello asked the couple when they could be out of their home. They said that they would need six weeks. Mello made a call and said they could have 30 days. The husband asked to talk to the judge, but our guy Kevin said, “Why, the judge has no authority… he’ll tell you to be out in 4 days… the bank has all the authority.”

Does it now, Kevin? The bank? Fannie Mae? The scandal-ridden, morally and financially bankrupt, already absorbed into the federal government, Fannie Mae?

Kevin had some papers he said that the couple needed to sign. They said no, they didn’t want to sign anything. Kevin said they had no choice… either sign or be out in four days. He put the documents in front of them… they couldn’t move his hospital bed in 4 days… they signed.

Stipulated to a judgment and waved future claims.When they appeared before the judge, he said that they should be GRATEFUL that the bank gave them 30 days.

When the couple tried to relay the story of the loan modification con job and Chase lying and then the stealing of the home… well, they didn’t use those terms, I did, but someone has to, right? Because that’s what happened, and I don’t give a damn what other factors are involved, that’s what happened, sure as shootin’.

And, even though I’ve been covering the inconceivable tragedy that is the foreclosure crisis, after learning of what happened to this this couple, I couldn’t help but wonder how or why this could possibly happen… and no one cared… in this country… and no one cared. Because I know I’ve been hard on the servicers, and deservedly so, but is it really possible that they are actually inherently evil… are they literally lying to everyone and intentionally try to sabotage the nation? How could that be true? It couldn’t, right?

And something occurred to me, something that I had not previously considered. And maybe it’s important to consider.

Prior to the last three to four years tops, foreclosures were a very different animal than what we have going on today, but I’m starting to think that maybe a lot of people don’t know that. You see, prior to this crisis, foreclosures were exceedingly rare. When someone got into financial trouble they either sold their home, or borrowed against it to get through the storm. But this housing market was pushed off a cliff, the credit markets froze almost overnight, prices fell through the floor and fast. People losing homes today bear no resemblance to the foreclosures of the last 50 years… no resemblance whatsoever.

So, maybe our entire system, including the inadequate and fraudulent documentation, and the incredibly uncaring and incompetent treatment of the homeowners involved… maybe it’s happening because we haven’t stopped to realize that although today we have foreclosures and years ago we had foreclosures… they really shouldn’t be called the same thing because they’re not the same thing. In fact, they’re so different they shouldn’t share the same moniker.

Maybe we should call today’s foreclosures, fraudclosures… I mean, like all the time… like as in someone call Webster’s. Maybe if our society understood the substantive nature of the distinction, things would improve… no? I think maybe yes. Like, do the bankers think that today we’re just having more of the same foreclosures we had years ago… same thing… just more of them? Because that’s not the case.

Because in the days before this crisis, you’d never modify a loan… the person who went into foreclosure wasn’t a person that anyone would ever consider modifying a loan for, because by the time they went into foreclosure there was no hope for anything but repossession and after that, of course, liquidation was a certainty. That’s not a description of today’s situation.
Look, what happened to this couple… is it not the kind of thing that you might expect to happen in some totalitarian regime?

So, why is that okay with even one single American? We treat criminals better than this. But today’s homeowners aren’t losing homes for the same reasons as before, they’re not deadbeats, they’re victims. And something has to be done to change this, because as sure as I’m sitting here, what’s happening is going to end badly and I fear, violently. People are going to get hurt… I don’t know how, when or where… but no way does this just keep going and everyone’s okay.
Chase’s conduct was so offensive that a highly experienced trial attorney agreed to take their case.

A complaint will be filed on Tuesday in Orange County Superior court seeking compensatory and punitive damages.

The couple’s lawyer would later ask a McCarthy Holthus lawyer about the apparent preference for coercion and intimidation, and she basically replied by saying, “Hey, look… I’m not their lawyer, I’m the bank’s lawyer. If they wanted a lawyer they should have had their own.” My words, not hers… but that’s what she was saying.

No, I’m sorry McCarthy Holthus… on that point you’re entirely wrong. I mean, everyone knows you don’t need to pay a lawyer when you’re applying for a loan modification… just ask the California State Bar, the Attorney General’s office… President Obama… come on… everyone knows that.

Mandelman out.

P.S. Hey bloggers… Facebookers… please help me get the word out on this… post, repost, tweet, re-tweet. I’m hoping Chase sees this and stops the eviction… otherwise this couple could be fighting this from a homeless shelter. We can’t save everybody, so let’s save one at a time.

Oregon Puts STOP to Sale of Foreclosed Homes


INSIDE JOB: New Documentary Exposes How 'Banksters' Continue To Steal Ou...

Wednesday, March 2, 2011

California Opens New Doors to Help Families Stay in Homes


HSBC made disclosure in annual SEC report - Where is the handcuffs ??


HSBC made disclosure in annual SEC report - Where is the handcuffs ??
Full 10 K report at http://www.sec.gov/Archives/edgar/data/354964/000095012311019123/c62397e10vk.htm

HSBC Bank USA and HSBC Finance Corp. have stopped all home foreclosures until further notice and may face unspecified regulatory actions or fines, after regulators found “certain deficiencies” in servicing and foreclosure procedures, HSBC said in government filings Monday.
The disclosure by HSBC, buried deep within its annual financial report to the Securities and Exchange Commission, marks the first time HSBC has admitted to a foreclosure moratorium in the wake of a legal and paperwork crisis that swept the industry.

That’s a dramatic reversal from its stance just a few months ago, when it said publicly that it would not suspend home seizures because it didn’t feel its procedures were compromised by so-called “robo-signers” and faulty court affidavits.

“Robo-signing” refers to bank or law firm employees signing off on foreclosures without actually being familiar with the cases or reading paperwork.

In the SEC document, known as a 10-K, HSBC said it has “suspended foreclosures until such time as we have substantially addressed the noted deficiencies in our processes.” That suspension took effect in December, said spokesman Neil Brazil.

The company said it is also “reviewing foreclosures where judgment has not yet been entered and will correct deficient documentation and refile affidavits where necessary.”
Washington, D.C. 20549
Commission file number 1-8198

We may incur additional costs and expenses in ensuring that we satisfy requirements relating to our mortgage foreclosure processes and the industry-wide delay in processing foreclosures may have a significant impact upon loss severity. State and federal officials are investigating the procedures followed by mortgage servicing companies and banks, including HSBC Finance Corporation and certain of our affiliates, relating to foreclosures. We and our affiliates have responded to all related inquiries and cooperated with all applicable investigations, including a joint examination by staffs of the Federal Reserve and the OCC as part of their broad horizontal review of industry foreclosure practices. Following the examination, the Federal Reserve issued a supervisory letter to HSBC Finance Corporation and HSBC North America noting certain deficiencies in the processing, preparation and signing of affidavits and other documents supporting foreclosures and in governance of and resources devoted to our foreclosure processes, including the evaluation and monitoring of third party law firms retained to effect our foreclosures. Certain other processes were deemed adequate. The OCC issued a similar supervisory letter to HSBC Bank USA. We have suspended foreclosures until such time as we have substantially addressed the noted deficiencies in our processes. We are also reviewing foreclosures where judgment has not yet been entered and will correct deficient documentation and re-file affidavits where necessary.

We and our affiliates are engaged in discussions with the Federal Reserve and the OCC regarding the terms of consent cease and desist orders, which will prescribe actions to address the deficiencies noted in the joint examination. We expect the consent orders will be finalized shortly after the date this Form 10-K is filed. While the impact of the Federal Reserve consent order on HSBC Finance Corporation depends on the final terms, we believe it has the potential to increase our operational, reputational and legal risk profiles and expect implementation of its provisions will require significant financial and managerial resources. In addition, the consent orders will not preclude further actions against HSBC Finance Corporation or our affiliates by bank regulatory or other agencies, including the imposition of fines and civil money penalties. We are unable at this time, however, to determine the likelihood of any further action or the amount of penalties or fines, if any, that may be imposed by the regulators or agencies.

We expect to incur additional costs and expenses in connection with the correction or affirmation of previously filed foreclosure paperwork and the resulting delays in foreclosures, including costs associated with the maintenance of properties while foreclosures are delayed, legal expenses associated with re-filing documents or, as necessary, re-filing foreclosure cases, and costs associated with fluctuations in home prices while foreclosures are delayed. These costs could increase depending on the length of the delay. In addition, we may incur additional costs and expenses as a result of legislative, administrative or regulatory investigations or actions relating to our foreclosure processes or with respect to the mortgage servicing industry in general. We may also see an increase in private litigation concerning our practices. However, it is not possible at this time to predict the ultimate outcome of these matters or the impact that they will have on our financial results.

Due to the significant slow-down in foreclosures, and in some instances, cessation of all foreclosure processing by numerous loan servicers, including us, for some period of time in 2011 there may be some reduction in the number of properties being marketed following foreclosure. The impact of that decrease may increase demand for properties currently on the market resulting in a stabilization of home prices but could also result in a larger number of vacant properties in communities creating downward pressure on general property values. As a result, the short term impact of the foreclosure processing delay is highly uncertain. However, the longer term impact is even more uncertain as eventually servicers will again begin to foreclose and market properties in large numbers which is likely to create a significant over-supply of housing inventory. This could lead to a significant increase in loss severity on REO properties.
Well, that’s a pretty dramatic reversal from their stance from just a few months ago, when they said publicly that they would not suspend home seizures because they didn’t feel their procedures were compromised by so-called “robo-signers” and felonous court affidavits.
HSBC CEO Irene Dorner, October 2010: “We have looked. We don’t have robo-signers,” HSBC has not suspended foreclosures and “we don’t believe we have a reason to do so,” she said.
Now where are the damn handcuffs???