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.