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Loan Assignee Liability
BANKING & MORTGAGE LENDING LITIGATION | SETTLEMENTS:
Assignee Trust Loan Liability | BuyBack Litigation |
BuyBack Negotiation | BuyBack Settlement
"Secondary Market Liability for Originating Predatory Loans and Assignee Liability vs.
Public Policy Concerns"
BuyBack and Assignee Trust Loan Litigation or Liability
Wall Street is not sitting around waiting to lose-their-shirt in this recent SubPrime Default & Foreclosure meltdown. If Wall Street implements a policy of demand and litigation against the Lenders for buy-backs of bad loans, the lenders/brokers and consumers may end up holding the loss. This may result in substantial BuyBack and Assignee Trust loan litigation or liability. This move has the potential to allow Wall Street to buy the bad and good loan portfolios for pennies on the dollar in bankruptcy court. The kicker is, they may try to do so without the liability exposure, leaving the risk and liability to the Lenders/Brokers and Consumers. Talk about follow the money. That area itself will be subject to huge litigation challenges for “public policy violations” to say the least.
Who in the funding and lending process knew that the price/risk formula was corrupt? Did investors know or understand the affect that mal-priced non-mitigated piggybacks (ARMs, etc.) would have on long term affordability? Did investors know or understand, or intend to accept or assign (bad) loans?
Problems & Solutions re Banking, Brokers, Lenders, Investors: In 2007, Mr. Rydstrom, Esq. was published by Chairman Rangel of the House Ways and Means Committee for the 110th Congress of the United States on Solutions to the Economy, Predatory Lending, Defaults & Foreclosures. Mr. Rydstrom created new Suitability Disclosures (TID) and risk mitigation devices (SHILO and FMII, DMII, IMII, BMII) that resolve issues for all market participants, including the borrower. Mr. Rydstrom created non-cash substitutes or equivalent risk-pricing (ERP) mortgage insurance investment funds (investment devices tradeable on Wall Street) to pay for the enhanced risk of the subprime borrower without overloading the borrower with unaffordable monthly cash payments. Risk must be paid for or the risk price formula becomes corrupt. The last round of nonprime lending contained “foreseeable ‘failed’ affordability” (“FFA”) due to overly cash-burdened risk mitigation. Which is by definition, failed risk mitigation. The question is, can this real risk inherent in the nonprime market be paid for with non-cash equivalents? Insurance, Funds, etc.? Will "Wall Street" step up and create such vehicles? Or will Wall Street attempt another round without correcting FFA? Will Lenders and Brokers? Will congress and consumers?
Questions Abound: Similar questions of the Lender/Broker, can be asked of Wall Street. Did they take all reasonable steps to avoid ‘foreseeable’ defaults and foreclosures (FFA), or did they act knowingly? Did or will Wall Street (or GSEs) take any responsibility for suitability or affordability as to the consumer (borrower). Who are all of the responsible parties to assignments of known defective products, originations, or workouts? Stay tuned.
Sponsored Sites:
Problems / Solutions: Congressional Paper: Visit: www.bankriskmitigation.com
Observations re Lenders/Brokers/WallStreet:
(1) New laws aimed at Lenders/Brokers are coming down the line like a runaway freight train {and the apparent strategy is to deny that a (suitability) duty is owed}
(2) Legal judgments or settlements are already staggering, but the industry fails to conference this material issue. For example, on our LendingLiabilityCheckUpReport™ before the May 2007, one law firm alone had long reported verdicts for Predatory Lending Lawsuits of $580,975,000; $50,005,000; $45,000,000; $34,500,000; $2,000,000; $1,600,000; and settlements of $4,100,000; $1,750,000; $1,500,000; $1,240,962; $1,100,000; and $1,000,000.
(3) Wall Street is not sitting around waiting to lose-their-shirt in this recent SubPrime Default & Foreclosure meltdown. Wall Street has implemented a policy of demand and litigation against the Lenders for buy-backs of bad loans (or M&A). This will result in BuyBackLitigation. This move has the potential to allow Wall Street to buy the bad and good loan portfolios for pennies on the dollar in bankruptcy court. The kicker is, they may attempt to do so without the liability exposure, leaving the risk and liability to the Lenders/Brokers (and Consumer).
Lending/Broker Industry Lesson: This tells you among many things, that huge awards are probable especially when pushed to trial. It also tells you that Wall Street is making an end run around liability, leaving the Lending/Broker industry (and the Consumers) holding the bag. Lender/Brokers are you ready for this? What is this your risk mitigation policy?
BUSINESS | ASSET & LEGAL RISK PROTECTIONS: If you expect to be sued or to be liable on a debt or lawsuit, the general law precludes asset protection intended to hide or hinder creditors. In California however, there are a few other specialized procedures that may or may not be available. eMail
Help4TheLenders™
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WARNING: LIMITATIONS OF USE OF SITE: YOU MAY NOT RELY ON SITE INFORMATION, ARTICLES OR LINKS AS LEGAL, TAX OR FINANCIAL ADVICE. YOU MUST HIRE AN ATTORNEY TO ADVISE YOU AS TO YOUR UNIQUE FACTS AND CIRCUMSTANCES. LEGAL NOTICE: This article is not legal, tax or financial advice, and you may not rely on it for same. This is a brief non exhaustive newsworthy article and may be deemed an advertisement from the State Bar. All Rights Reserved ©2007 Richard I. Rydstrom IRS CIRCULAR 230 DISCLOSURE NOTICE: To ensure compliance with IRS requirements, we inform you that any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used by any taxpayer, for the purposes of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
Contact: BuyBack and Assignee Trust Loan Litigation or Liability Counsel
Richard Ivar Rydstrom, Esq., LL.M.
O’Connell & Rydstrom, LLP
Attorneys & Counselors at Law
4695 MacArthur Ct. 11th Flr.
Newport Beach, Ca 92660
Tel: (949) 798-6206
Fax: (949) 606-9716
www.oconnellandrydstrom.com
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