Certified Forensic Loan Auditors, LLC

 
  Upcoming Classes

Search CFLA's Article Archive:

Wells Fargo Seeks to End Mortgage - Repurchase Duties as Trustee

businessweek.comFeb 24, 2012

by Jody Shenn

Feb. 24 (Bloomberg) -- Wells Fargo & Co.’s mortgage-bond trustee division is planning to hand its duties to investigate soured home loans and pursue lender repurchases to other companies, in a move meant to address the appearance of conflicts of interests, an executive said.

The country’s largest home lender, which serves as trustee on about 700 mortgage-bond transactions, expects to take the step for at least 20 in the next few months, said Brian Bartlett, head of corporate trust services at the San Francisco- based bank. It asked a Minnesota court on Feb. 10 to validate the move for a securitization involved in separate litigation against JPMorgan Chase & Co.

Wells Fargo is seeking to avoid suggestions its trustee work can be influenced by unrelated repurchase demands against its own home-lending unit, as investors seek compensation for debt that never matched its promised quality, Bartlett said. The bank will probably use the approach, which wasn’t requested by bondholders, on other transactions, he said.

“We’re exercising an abundance of caution,” Bartlett said yesterday in a telephone interview. “We want to make sure, especially in this environment, we avoid even the appearance of any potential conflicts.”

The strategy probably hasn’t been used in the industry before, he said. Some bondholders have contacted Wells Fargo to say they liked the idea, Bartlett said.

Conflicts of Interest

Under mortgage-bond contracts, investors typically can’t pursue loan repurchases without action by trustees. Bondholder advocates say those companies have often failed to do enough to facilitate buybacks after record homeowner defaults. Trustees’ conflicts of interest can also include their reliance on banks for new business, said Isaac Gradman, an attorney and managing member of IMG Enterprises LLC.

“They want to serve their masters, but they also have a duty to investors,” said Gradman, whose consulting firm in Petaluma, California advises on legal and contractual matters.

Bank of New York Mellon Corp., another trustee, resisted an investor group’s push in 2010 to get Bank of America Corp. to repurchase mortgages in securities created by the lender’s Countrywide Financial Corp., before joining in talks that created a proposed $8.5 billion settlement. Bank of New York has said it acts as required by bond contracts.

Representing Bondholders

Gibbs & Bruns LLP, the law firm representing bondholders who negotiated the Countrywide agreement, said in a statement last month they are now seeking information on $19 billion of mortgage bonds issued by affiliates of Wells Fargo, adding to efforts involving home-loan securities issued by JPMorgan and Morgan Stanley.

In September, Wells Fargo, acting as trustee on behalf of mortgage-bond holders, filed suit in Delaware against JPMorgan’s EMC Mortgage unit seeking loan repurchases. In January 2011, Wells Fargo had sued seeking files to pursue an investigation after JPMorgan resisted a request, a case that was later settled.

In its petition in Minnesota, Wells Fargo said it wants to hire Law Debenture Trust Co. of New York to handle issues related to the so-called representations and warranties on loan quality in the deal involved in the suit, Bear Stearns Mortgage Trust Fund 2007-AR2.    “When we get to a point where investors are asking for files to be reviewed by a third-party expert or investors request a repurchase, we’re going to let someone else handle it going forward,” Bartlett said.

Market Practices

Wells Fargo was hired as trustee on the fifth-most U.S. asset- and mortgage-backed bond deals in 2006 as markets boomed, trailing U.S. Bancorp, Deutsche Bank AG, Bank of New York, and HSBC Holdings Plc, according to newsletter Asset-Backed Alert. It would be “extremely rare” for the bank to be trustee for debt in which it was the lender because of market practices and legal requirements for new transactions, Bartlett said.

Still, without splitting off the repurchase duties, the bank could find itself in court setting legal precedents that could be disadvantageous to it, according to Gradman, the consultant. For example, there is debate about whether misstatements about mortgages need to be responsible for defaults, to trigger the right to force buybacks, he said.

“At the same time when they’re defending against that kind of thing” as a lender, “they’re going to be arguing the other side” as a trustee, Gradman said in a telephone interview. “I’d imagine that’s part of why they would have done this.”

The Delaware case is Bear Stearns Mortgage Funding Trust 2007-AR2 by Wells Fargo Bank NA as Trustee v. EMC Mortgage LLC, CA6861, Delaware Chancery Court (Wilmington).


Back to February 2012 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

SEE BELOW- http://www.certifiedforensicloanauditors.com

Call us toll free at 888-758-2352

Bookmark and Share
spacer
Facebook Like us on Facebook
Twitter Follow us on Twitter
YouTube View our YouTube Videos
LinkedIn Connect to us on Linkedin
 
BBB Logo

 

spacer
Contact us or view our Sample Documents & Audits by completing the form below.

  • Reload
  • Should be Empty:


 

DVD Sets Only $99

 

FREE Mortgage Fraud Analysis

 

Order Cutting-Edge Services Now

 

Quiet Title Packages from Licensed Attorneys

 

Affiliate Services

 

CFLA Sponsored Attorney Links

 

Take-Home Education Package

 

ALB Law Firm

 

Advocate Legal

 

The True News Network

 

Sutton Law Firm, P.L.L.C.

 

Rubenstein Business Law

 

Atighechi Law Group

 

Scunziano & Associates

 

Get Certified to Perform Mortgage Securitization Audits

 

CFLA Training Academy

 

Expert Witness Services

 

Cutting Edge Expert Securitization Reports

 

CFLA Credit Cards

 

Breaking News

 

Letters to the Editor

 

CFLA Weekly Newsletters

 

Code of Ethics

 

Testimonials

 

Instructional Videos

 

Job Opportunities

 

License Opportunities

 

MARS Rule

 

Product Samples

 

Resource Links

 

Servicer Information

 

Foreclosure Laws

 

REST Report

 

Quiet Title Packages from Licensed Attorneys

 

Advertise on CFLA

 

Advertising Space: Mortgage Securitization, Quiet Title

 

Certified Forensic Loan Auditors, LLC
13101 West Washington Blvd.
Suite 444
Los Angeles, CA 90066

Phone: 832-932-3951
Toll Free: 888-758-CFLA (2352)
Mobile Users: CLICK TO CALL
info@certifiedforensicloanauditors.com

   
 
CFLA IS NOT A LAW FIRM AND DOES NOT PROVIDE ANY LEGAL ADVICE. CFLA DOES NOT OFFER FORECLOSURE CONSULTING OR FORECLOSURE RELIEF
SERVICES. CFLA DOES NOT OFFER OR ASSIST WITH ANY LOAN MODIFICATION SERVICE. CFLA ALWAYS RECOMMENDS THAT CLIENTS RETAIN COMPETENT COUNSEL IN THEIR RESPECTIVE JURISDICTION. CFLA HAS A FREE PROGRAM TO REFER CFLA CLIENTS TO LAW FIRMS IN NEARLY EVERY STATE AND CFLA
DOES NOT CHARGE OR OBTAIN REFERRALS FEES FOR THESE SERVICES. SERVICES NOT OFFERED TO RESIDENTS OF THE STATE OF NEVADA.


     
 
Home About Us Privacy Policy Terms of Service Disclaimer SERVICES Careers Contact Us
 
COPYRIGHT © 2007-2016 Certified Forensic Loan Auditors ™ All rights reserved