Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
Articles |The FORUM |Law Library |Videos | Fraudsters & Co. |File Complaints |How they STEAL |Search MSFraud |Contact Us

The SEC Accuses Goldman Sachs of Fraud on Mortgage Deals.

Here is the complaint:

Quote 0 0
Three cheers for the SEC!

By Paul R. La Monica, editor at large April 16, 2010: 2:13 PM ET

NEW YORK ( -- The SEC showed some major teeth Friday. It's about time. And hopefully this won't be the last time the agency bares its fangs.

The Securities and Exchange Commission is going after the biggest of the big on Wall Street. Goldman Sachs.

The SEC alleged that Goldman Sachs (GS, Fortune 500) failed to disclose to investors in a pool of subprime mortgages that Paulson & Co., one of the most influential hedge funds in the world, was making bets against the security.

If the SEC's claim is true, this is a major transgression. Even if it turns out that the wrongdoing was the work of one rogue employee -- the SEC specifically named Goldman Vice President Fabrice Tourre -- it is clear that Goldman has some explaining to do and must pay.

Since the credit markets imploded a few years ago, many financial experts have argued that Wall Street firms were coddled by Washington and were being rewarded with bailouts instead of being punished for their role in the subprime mortgage crisis.

Even former Washington Mutual CEO Kerry Killinger, who appeared before Congress earlier this week to explain the collapse of WaMu, the largest bank failure in history, claimed that there was a clubby culture on Wall Street and Washington. His Seattle-based savings and loan apparently was not part of the financial sector's too-big-to-fail cool kids clique.

I have no sympathy for Killinger. His remarks are clearly of the sour grapes variety because he got pushed out of his job before WaMu ultimately was seized by the FDIC and sold on the cheap to JPMorgan Chase (JPM, Fortune 500) -- one of the members of Wall Street's popular crowd. Heck, you could argue that Jamie Dimon is the star quarterback on the varsity football team.

But Killinger did raise an interesting point that I think is shared by many American taxpayers who are still seething about the hundreds of billions of dollars lavished on big banks. The notion that big Wall Street banks had to be protected at all costs rings hollow when you look at all the D.C. ties to them.

And Goldman Sachs has the most Washington connections of them all, which makes the SEC's targeting of it that much more significant.

Former Treasury Secretary Henry Paulson, an architect of the bailout, used to be a Goldman Sachs CEO. Neel Kashkari, a former Goldman Sachs vice president, was put in charge of the bailout by Paulson. (Kashkari has since left the Treasury.)

And if that wasn't enough, the controversial decision by the government to prop up insurance company AIG (AIG, Fortune 500) with the biggest bailout of them all has been widely criticized as a sort of second-derivative rescue of Goldman since it was on the hook to the tune of nearly $13 billion in so-called counterparty risk if AIG failed.

You don't need to be a lunatic fringe conspiracy theorist to connect the dots and declare that the U.S. government's best interests and Goldman Sachs' best interests were closely intertwined.

Goldman, in a statement Friday, defended itself, saying that "the SEC's charges are completely unfounded in law and fact."

Only time will tell if Goldman is correct and the SEC is barking up the wrong tree. But investors are presuming guilt. Shares of Goldman plummeted 11% Friday afternoon and it dragged down the rest of the banking sector -- shares of Morgan Stanley (MS, Fortune 500) and Germany's Deutsche Bank (DB) were particularly hard hit -- and broader market with it.

Of course, the last thing that Wall Street needs now is a regulatory witch hunt to kill off the market rally. But this seems to be more of a case of where there's smoke, there's fire. And that's why the SEC deserves a healthy round of applause.

The SEC has taken a lot of lumps (including from me) for not doing its job effectively. Part of that probably had to do with the fact that the agency was woefully underfunded and understaffed.

But it also seems that while state attorneys general were more active in investigating the actions of big banks, some federal regulators were simply asleep at the wheel. Instead of going after the big Wall Street powerhouses during the peak of the financial meltdown, the SEC was focusing on easier targets such as short-sellers.

Here's hoping that this is the dawn of a new age at the SEC, one where the agency is unafraid to crack down on the most egregious cases of wrongdoing on Wall Street at the firms that have the most influence.

- The opinions expressed in this commentary are solely those of Paul R. La Monica.  To top of page

Quote 0 0
Unfortunately this has nothing to do with mortgage servicing. BUT - it does show how individuals in a company are more than willing to take advantage of their positions.


Quote 0 0

Check out mortgage servicers involved in GS ABACUS CDO deal:

Select Portfolio Services
EMC Mortgage Corp.
Wells Fargo Bank
Aurora Loan Services
Countrywide Home Loan Servicing LP
Option One Mortgage Corp
JP Morgan Chase National Association
Washington Mutual Bank

New Century Mortgage Corp

. . . just some of the mortgage servicers to ABACUS 2007-ACI collateral.

Moose, Don't any of these names sound at all familiar to you ?

The CDO collateral was specifically selected/targeted on the basis of complicit subsidiary servicers, as it was in many CDOs and also the ABX Index that investment banks made fortunes on shorting subprime mortgages.  Hello . . . anybody there? Hello? Hello?


Quote 0 0
4 Justice Now
The worst of the worst must go! As long as so-called companies (Greedy criminal organizations in my opinion) such as Goldman Sacs (Goldman Sucks) remain in business, and their CEOs/management stay free to create and execute additional schemes aimed to defraud and/or scam the unsuspecting, via the use of their traitor lobbyist and corrupt politicians (redundant I know) this country will never regain the financial strength, pride and confidence it once took for granted. They (GS)  must absolutely be defeated and their criminals incarcerated in order for good to triumph over evil.



Quote 0 0
The Equitable One
No it doesn't. But then neither does my situation. Or at least the biggest parts of my situation don't involve servicing fraud.

I'm primarily involved in predatory lending, fraud in origination, fabrication and forgery of documents and unlawful foreclosure. Fortunately for me has not limited the site solely to mortgage servicing fraud. Because of such it has been a valuable resource for me. Hopefully for others as well.

Quote 0 0
Yes it does. These were CDO's against subprime mortgages. They were betting against the fall.
Quote 0 0
 Hey Did anyone else notice what "The Equitable n0ne" said
"I'm primarily involved in predatory lending, fraud in origination, fabrication and forgery of documents and unlawful foreclosure."

and he mentioned that he and possibly others like him use MSFraud as a resource for doing as such. Damn That's Scandalous!! 
Quote 0 0
Blossom - you misunderstand - the SEC is not looking into mortgage servicing issues. They're investigating a back-door securities betting deal with Paulson and it's a civil fraud case, not criminal.

Let's not forget that the SEC has no investigative or regulatory authority over mortgage servicers.


p.s. I think what The Equitable One meant was the situation he/she faces involves something other than predatory servicing.

Quote 0 0

I never wrote that SEC was looking into MSF issues. What they ARE looking into is exactly how and by what criteria underlying securities for ABACUS 2007-AC1 were selected.  All I'm saying that if you look at these securities you will see who the servicers are.  Given their extensive rap sheets, it is entirely plausible that specific securities were chosen on basis of known servicer complicity in fabricating defaults.  

Of course this is a civil case. however SIGTARP Neil Barofsky is now investigating ABACUS 2007-AC1 and his TARP oversight capacity has the power to bring criminal charges via DOJ.  Though MSF per se will likely not be prosecuted, it is vital ingredient to scheme plan, thus having a lot to do with it.
Quote 0 0

Moose is correct on many points, but you also have to know that the SEC knew about this ahead of time, they regulate securities and are most likely in on most of the fraud and Goldman is a big player at the poker table. The only reason why they're rolling over on Goldman is because they got caught up and hit with a major $ 3.87 TRILLION Lawsuit, CMKM/CMKX Plaintiffs vs Securities and Exchange Commission [SEC] [Case Number: CV10-00031 JVS (MLGx)]. Its just like when someone gets popped for drugs and snitches on their dealer (they're all scum). And Blossom, please don't depend on SIGTARP, Neil Barofsky or the DOJ because with the exception of barfosky they don't have any power delegated by the Constitution and are just there for looks, if these guys actually fulfilled their job description we wouldn't be in this mess. They are the problem and at this point the problem cannot be fixed it must be eliminated(thrown out, removed).   

Quote 0 0
Write a reply...