JPMorgan Chase will compensate State for selling mortgage-backed securities that were central to economic crisis; Biden says “we will continue to seek accountability”

 

Wilmington – In the latest effort by his office to hold accountable those responsible for the mortgage foreclosure crisis, Delaware Attorney General Beau Biden announced that JPMorgan Chase will pay $19.7 million to settle allegations stemming from conduct that helped cause the greatest economic downturn since the Great Depression.

 

Tuesday’s settlement is part of a global agreement that JPMorgan also reached today with the U.S. Department of Justice and four other states resolving allegations concerning the bundling and sale of mortgages to investors. The investments – bought by pension funds, mutual funds and other investors – were much riskier than advertised. The resulting losses were catastrophic for the economy.

 

“Our financial system only works when everyone plays by the rules,” Biden said. “As a result of our coordinated investigations, we are holding accountable one of the financial institutions that broke the rules and helped cause the economic crisis that brought our nation to its knees.  Even as the American people recover from this crisis, we will continue to seek accountability on their behalf.”

 

Delaware’s $19.7 million will be used to compensate a variety of state entities for their losses on these investments and to fund further efforts to help Delawareans emerge from the financial crisis, strengthen Delaware’s communities and alleviate other harm caused by the financial crisis.

 

The Delaware settlement resolved a joint investigation by Biden’s Fraud Division and Massachusetts Attorney General Martha Coakley’s Insurance and Financial Services Division that examined JPMorgan’s conduct when issuing mortgage-backed securities. The federal investigation was led by the U.S. Department of Justice’s Residential Mortgage-Backed Securities Working Group, under the leadership of Associate U.S. Attorney General Tony West and New York Attorney General Eric Schneiderman. Biden, also a member of the RMBS Working Group, thanked West and Schneiderman for their leadership.

 

Tuesday’s settlement is Biden’s latest enforcement action in response to the mortgage foreclosure crisis. His office has been a national leader in seeking accountability for the crisis and helping homeowners.

 

“As a prosecutor and a consumer protector, I have an obligation to hold those responsible for causing the crisis accountable – and that work is not done,” Biden said.

 

Recent actions by Biden and his office include:

 

• In February 2012, Biden, 48 of his colleagues and the federal government signed a $25 billion settlement with the nation’s five largest mortgage-servicing banks (including JPMorgan). That settlement brought $11.7 million to the State and has, so far, meant $75 million in financial benefits to 3,000 Delawareans. It also included important new protections for America’s military personnel that Biden fought to include in the settlement.

 

• In July 2012, Biden secured important operational reforms from MERS – a national shadow mortgage registry at the heart of the mortgage crisis – in a settlement of a lawsuit he filed the year before. MERS’ inaccurate and unreliable records made it difficult if not impossible for homeowners to determine which financial institution owned their mortgage.

 

• In October 2012, Biden announced that an investigation by his office into allegations of “robo-signing” and other improper mortgage services provided by subsidiaries of Lender Processing Services, Inc. (LPS) led to the Florida-based company paying $250,000 to the State of Delaware.

 

• In January 2013, Biden, 12 of his colleagues and the federal government filed separate suits against Standard & Poor’s, charging the rating agency with violating state law by misrepresenting that its evaluations of mortgage-backed securities were fair and impartial when actually S&P made decisions based on its own financial interests. That suit is still pending.

 

This matter was handled for Delaware by Fraud Division Director Matthew Lintner, Investor Protection Director Owen Lefkon, Assistant Attorney General David Casler, and Paralegal Debra Szymurski.

 

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Wilmington – Attorney General Beau Biden today announced that free state housing workshops will take place next week to assist homeowners who have fallen behind on their mortgage payments and face foreclosure.  Both workshops – to be held Monday in Wilmington and Tuesday in Dover – bring together mortgage servicers, state employees, and HUD-certified housing counselors who will discuss mortgage modifications, government homeowner programs, and foreclosure scams with homeowners.

 

“I urge Delawareans who are facing the loss of their home to foreclosure and who have had difficulty discussing their mortgage with their bank to attend our free workshops, where homeowners can meet face-to-face with their lenders and receive in-person assistance from housing counselors, staff from my office, and other housing professionals,” Biden said.

 

No reservations are needed to attend the workshops, which will take place as follows:

 

Monday, November 18, 2013

3 – 7 pm

Chase Center on the Riverfront

815 Justison Street, Wilmington

 

Tuesday, November 19, 2013

1 – 7 pm

Modern Maturity Center

1121 Forrest Avenue, Dover

 

Homeowners who wish to meet on-site with their mortgage servicer should bring information about current income and details about their current mortgage, including loan number, monthly payment, interest rate, and loan balance.

 

The workshops are made possible through “Delaware Homeowner Relief”, a partnership between the Attorney General’s office and the Delaware State Housing Authority which supports housing counseling, education and outreach, foreclosure mediation, mortgage fraud investigation and prosecution, emergency mortgage assistance, manufactured housing lot rent assistance, and servicer events, where homeowners can meet personally with representatives from mortgage lenders to work toward a resolution to their mortgage crisis.  The programs it supports are funded in part with a portion of funds Delaware received through the 2012 Multistate Mortgage Foreclosure Settlement between the federal government and five of the nation’s largest mortgage-servicing banks.

 

For more information about next week’s workshops, to learn more about state foreclosure prevention programs, or if you believe you have been the victim of a mortgage fraud or scam, call the Delaware Homeowner Relief Hotline toll-free at (800) 220-5424 or visit www.DelawareHomeownerRelief.com.

 

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DE Attorney General and Iraq war veteran demands information from leading lenders about compliance with the Servicemembers Civil Relief Act and plans to avoid future violations

Wilmington – In light of recent settlements between the federal government and large banks over violations of a law designed to offer financial protections to military personnel, Delaware Attorney General Beau Biden has sent letters to nearly 30 leading lending institutions asking for information about their compliance with the Servicemembers Civil Relief Act.

The letters, which were sent last week and went to credit card banks, mortgage servicers and student loan servicers, demand information about what those lenders are doing to determine whether they have violated the SCRA in the past and what steps they are taking to ensure they are in compliance with the law moving forward.

The SCRA caps interest rates on most loans, including mortgages and credit cards, at 6% and postpones civil proceedings, such as foreclosures and other debt collection lawsuits during a deployment.  The idea behind the SCRA dates back to the Civil War, when President Abraham Lincoln signed legislation protecting Union troops from civil legal actions while they were in the military.

“Our military servicemembers who risk their lives and fight to defend us overseas should not have to worry about additional financial pressures at home.  Their sole focus should be on the mission and returning home safely,” Biden said.  “I personally witnessed the sacrifices that our military makes every day for our country.  The need for full compliance with the SCRA has never been more essential. A soldier in Afghanistan should be lining up for the satellite phone to call a loved one back home, not to call a debt collector who is not following the law.”

In July, Capital One agreed with the United States Department of Justice to pay $12 million to remedy SCRA violations. And late last month, J.P. Morgan Chase also reached a settlement with the federal government that calls for the bank to financially compensate servicemembers for past violations and requires the bank to set up internal procedures to increase its compliance with the SCRA. Biden wants other lending institutions to take similar steps by reviewing past conduct, correcting mistakes and ensuring they are following the law going forward.

“These settlements serve as a reminder that we must remain vigilant in ensuring that our servicemembers receive the benefit of the SCRA’s protections,” said Biden, whose office led the effort in 2012 to ensure the National Mortgage Settlement included provisions strengthening the SCRA and giving more protections to members of the military.

Specifically, the letters Biden’s office sent seek the following information:

• Documentation of any internal review conducted to determine whether there has been compliance with the SCRA, including documents reflecting the findings of such review
• All written policies, procedures and practices in place used to verify compliance with the SCRA
• The total number of customer files reviewed for SCRA compliance, both in Delaware and nationwide
• Documentation concerning any SCRA violations identified during reviews
• All written policies, procedures and practices in place concerning the provision of remediation to account owners to address any judgments obtained in error or other actions taken in violation of the SCRA
• Documentation of steps taken to prevent future SCRA violations
• All materials used to train employees regarding compliance with the SCRA

To further strengthen protections for troops and their families, Biden also sent letters this week to the chairmen of the U.S. House and Senate’s veterans affairs committees, urging the lawmakers to change federal to allow state attorneys general to prosecute violations of the SCRA.  Granting state Attorneys General this authority, Biden said, would build on provisions in the federal Dodd-Frank banking reform law that provide for both federal and state-level enforcement of federal laws in other consumer protection matters.

“Our troops have been engaged in overseas combat for more than a decade, making strict compliance with the SCRA all the more essential,” Biden wrote in his letter to Congress. “In these times a single violation of the SCRA is one too many.  Those men and women should not be distracted from their mission by having to deal with unnecessary (and illegal) financial conflict at home. … As the chief consumer protectors in our respective states, and the ‘boots on the ground,’ state attorneys general are often the first to hear about abuses in the arena of consumer debt, including abuses of servicemembers.”

Attorney General Biden’s letters to Congress and to financial institutions are attached.  The financial institutions letter was sent to: ACS Education Services, AES/PHEAA, Ally Financial, American Express, Bank of America, Barclay’s, Citibank, Citibank the Student Loan Corporation, Discover, Fifth Third Bank, Ford Motor Credit, GE Capital Retail Bank, HSBC, Nelnet, PNC Bank, Regions Bank, Sallie Mae, Toyota Financial, U.S. Bancorp, USAA, Wells Fargo, Wells Fargo Dealer Services.

Letters provided below:

SCRA Letter to Chair of Senate Committee on Veterans’ Affairs

SCRA letter to Banks

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