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FDIC Could Sue Those Who Brokered to WaMu

AUG 1, 2014 4:33pm ET
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Based upon the recent flurry of Federal Deposit Insurance Corp. lawsuits against lenders, brokers and loan officers, it is our opinion that the next series of lawsuits will be filed against those that brokered or sold mortgage loans to Washington Mutual during or before September 2008.

FDIC seized WaMu in that month and it has six years from the date of the takeover to sue anyone it believes owes the bank money.

As most of you are aware the FDIC has retained independent law firms to represent it in attempting to recover on losses related to mortgage loans. We have and are representing quite a few of originators in these matters.

What is now happening is that as the six years approaches when the statute of limitations generally expires, the FDIC is filing lawsuits so it can continue collection efforts through the courts.

There are 542 more banks that were closed by FDIC after Sept. 25, 2008. It is quite possible they will continue this series of lawsuits against brokers and wholesale lenders that brokered or sold loans to these banks as well as WaMu.

In another regulatory matter, are you complying with the Patriot Act? Do you have the required anti-money laundering manual?

As a brief reminder, parts of the manual state:

1. Before engaging in any money service activity which potentially may involve money laundering, and on an ongoing basis, do you check to ensure that a customer does not appear on the Treasury's Office of Foreign Assets Control "Specifically Designated Nationals and Blocked Persons" List, and is not from, or engaging in transactions with people or entities from, embargoed countries and regions listed on the OFAC website.

2. Because the OFAC website is updated frequently do you consult the list on a regular basis and subscribe to receive updates when they occur?

3. Do you provide notice to customers that the company is requesting information from them to verify their identities, as required by Federal law? Do you give the notice orally? In writing? Do you post it as follows?

"To help the government fight the funding of terrorism and money laundering activities, Federal law requires us to obtain, verify, and record information that identifies each person who cashes checks, wire funds or engages in other financial services with this establishment. We will ask for your name, address and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents."

This manual is required by federal law and if you do not have it, you will probably be cited in an audit by your regulatory agency.

Comments (4)
it s about time they brought these banksters to court. America will be a better place steven ruza
Posted by steven r | Monday, August 04 2014 at 7:03AM ET
The FDIC has been bringing suits against brokers for some time now on loans submitted and underwritten by now defunt banks. Unfortunately, many brokers don't have much room to stand on because they did sign broker agreements which rep and warrant against defects in the loan file...I.e., a stated income loan where the 4506t paints a different story from the 1003. I met with the FDIC on this issue on behalf of NAMB. It is a tough spot for small business, but the FDIC is looking for change in the sofa cushions at this point.
Posted by john h | Monday, August 04 2014 at 5:29PM ET
Yep, all those lawsuits are driving up the costs for consumers as these expenses are passed onto the consumer as are all company expenses. Note the record profits of the largest banks paying out record fines.

Ah, those in favor of Big Government raise your hand and surrender now. The banksters can then sue the consumer for providing the stated income for which they signed their name to the 1003. The Obama Administration is the lawyers dream!! No wonder lawyers are one of the largest political contributors to the Democratic Party. Let the power of Big Government, which happens to be so ethical and competent in their behaviors, mesmerize you into their clutches Steven Ruza.
Posted by Michael C | Tuesday, August 05 2014 at 6:24AM ET
In 2011, NAIHP met with the FDIC's General Counsel, two Board Members and several of their attorneys. Up until that time they were contacting brokers and trying to intimidate them into settling "claims" for small amounts. We provided evidence their staff and/or contractors were unlawfully altering IRS documents and Fannie Mae findings. We pushed back hard that they had no case against brokers, except where actual fraud took place. We advised the FDIC, should they continue to pursue brokers without justification, we would turn our evidence over to the press and DOJ. To the best of my knowledge they haven't bothered brokers since that time. Should any broker be contacted by the FDIC, let us know at info@naihp.org
Posted by naihp | Sunday, August 10 2014 at 8:53AM ET
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