Tag: Housing

As David Dayen puts it, “it isn’t prison” but the consequences are at least a bit satisfying.

Finally, a Financial Executive Is Sacked for His Company’s Misdeeds

By David Dayen, The New Republic

Lets say you run a company whose misdeeds are splashed across the pages of the business section on an almost weekly basis. you might reasonably expect to be fired without delay. But then let’s stipulate that you’re in the financial service industry. Recent history suggest that you’ll be able to keep your job and your handsome bonus, and that even if law enforcement decide to penalize the company for improprieties, somebody else – like your shareholders – will pay those fines, leaving you to continue your charmed life unscathed.

William erbey, the billionaire chairman of the mortgage serving giant Ocwen, probably thought that would be his fate as well, but he didn’t anticipate the determination of New York Superintendent of Financial Services Benjamin Lawsky. On Monday, Lawsky announced that Erbey would step down from Ocwen and four related businesses, as part of the settlement of an investigation into the companies sad enduring legacy of ripping off homeowners.

The consequences for Erbey have been huge financial losses as Ocwen shares dropped 31% “after agreeing to a settlement that prevents it from acquiring mortgage-servicing rights until the company makes improvements to satisfy New York regulators.” The company must also provide $150 million for relief to homeowners and hire a monitor who will approve the appointment of two independent directors to Ocwen’s board and continue to oversee the business.

According to Forbes, poor Erbey is no longer a billionaire:

Erbey, according to Forbes’s Real Time Wealth Rankings for billionaires, lost over $300 million on Monday causing his net worth to fall to around $800 million and knocking him out of the billionaire ranks. He was worth as much as $2.5 billion in March when we published our annual listing of the world’s wealthiest. [..]

Forbes now calculates Erbey’s net worth at $802 million, as of late afternoon trading.

As Atrios said, “it’s sad that this is all we’ll get.”  

It’s been one of those weeks where so many things have come to light that I simply do not know where to begin writing first. I sit there and think, which of the various things that I have been listening to or reading about have actually annoyed me to the point of actually writing about. I have realised that I am just generally annoyed.

When I thought about it more, I concluded that the underlying theme of these various stories is a complete and utter contempt by bourgeois governments (that lay claim to being utterly democratic) of the vast majority of people that they govern. Whether they govern competently or not, whether there is anything resembling a democratic mandate or not; it is the utter contempt in which they hold the majority of the population that has really gotten my goat.

I also realised that this is not only confined to governments, it is a view shared by the leadership of religious authorities, by arms of the state (police, armies, etc.) and even by the heads of sporting associations.  This contempt is a reflection of the fact that those in power think/know that when push comes to shove, they know who they serve and it is not the vast majority of people; it is a tiny elite hiding behind the word “democracy” while actually not even slightly being accountable to that majority. It is the abuse of power by those that have it wielded against those that view themselves as powerless. Having just spoken to my postman about my frustration, he agreed and said “this is a long term problem, what can you and I do about it”?

The state funding of a funeral for Margaret Thatcher (estimated cost £10m) and the claims that she was the greatest post-war prime minister mourning for “Boadicea in pearls” (yes, I couldn’t make that up) in the Commons is still not ringing true on the streets of Glasgow, Brixton, Leeds, and Bristol where impromptu parties celebrating her death sprung up; the police are so worried that they have started monitoring social media sites fearing demonstrations at the funeral.

Given that the last funeral of this type for a politician (as opposed to a member of the royal family) was held for Winston Churchill, the “everything but state funeral in name” is causing a bit of a fuss, especially as austerity is taking food out of the mouths of the poor and disabled. The arrogance and cynicism of the ruling class in Britain in the face of the misery they are causing is making even the most resigned of the British population to grumble.

Disregard all cheery news you hear from the MSM that the housing crisis is over and housing prices are stable and on the rise. It’s not over. We are still bailing out the banks over the troubled homeowner.

“The evidence is overwhelming: home prices are anything but stable.”

Michael Olenick: Still Looking for a Housing Bottom

Two trends are apparent. One is that banks are delaying foreclosures, or not foreclosing at all despite long-term delinquencies. The other is that private equity firms – flush with cash thanks to Tim Geithner’s religious devotion to trickle-down economics and the resulting cascade of corporate welfare – have been bidding up and holding foreclosed houses off the market. These two factors have artificially limited supply and, combined with cheap mortgages rates, driven up prices. While we can debate whether these strategies represent the best public policy, these policies are obviously not long-term sustainable. [..]

Holding back inventory means that the houses that are put on offer sell faster and at higher prices. That creates an incentive to delay foreclosures or not foreclose at all even when a home is delinquent. Though this seems obvious, the mainstream housing finance community – aided by a freelance “housing analyst,” – uses the faster figures to somehow prove banks are not holding houses. [..]

Besides lower foreclosure activity, the government is going all out to give away houses to private equity firms. Recently Fannie Mae sold 275 properties across metro Phoenix in one sale to a mystery buyer, according to a report by Catherine Reagor of the Arizon Republic. [..]

Anybody who has been a landlord seems to quickly tire of it so, assuming there isn’t a pending planned mass immigration to Phoenix, these investors will eventually want to cash out by selling these houses. Further, they will want to minimize maintenance expenses while they are renting out these houses, so the eventual sale of these houses will increase supply and prolong the housing crisis. Geithner’s policy of shaking down Main Street to help Wall Street continues to hurt your street. [..]

Taking account of the delayed foreclosures and the beginning of mass purchases of houses would mean there should be a surge in home prices, but we’re still seeing little movement in many areas. This is especially puzzling given how inexpensive mortgage are. [..]

Of course, this assumes that people can get mortgages for these houses, though many can’t. Young people especially are hopelessly in debt thanks to out-of-control tuition hikes predictably caused by equally out-of-control student loan policies. [..]

Thanks to low lower foreclosures, real-estate speculators buying in bulk, and low interest rates there is enough direct and anecdotal evidence to suggest that we may be seeing a real-estate recovery on paper. Further, these policies are clearly calibrated to bring about a bubble, despite that bubbles are difficult to control and are not, by definition, sustainable: they always eventually pop. Let’s at least hope that when this bubble bursts the new Wall Street bulk buyers are treated with the same ruthless “free market” vigor that the prior owners of these houses were treated with after the last bubble burst. However, I doubt the mystery Asian money buyer, that Fannie sold Phoenix to, will ever be subject to something like the rocket docket.

Washington’s Blog goes down the list of evidence that “the government’s “Homeowner Relief” Programs are disguised bank bailouts … not even AIMED at helping homeowners. It’s a fascinating piece with all the links to this sham.

Former special inspector general overseeing TARP Neil Barofsky (@neilbarofsky) joined Up w/ Chris Hayes to talk about his book “Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street.” Along with panel guests Heather McGhee (@hmcghee), vice president of policy and research at the progressive think tank Demos; Josh Barro (@jbarro), who writes “The Ticker” for Bloomberg View; Michelle Goldberg (@michelleinbklyn), senior contributing writer for Newsweek/Daily Beast; and Up host Chris Hayes (@chrislhayes), Barofsky shares his thoughts on the failure of TARP and the housing crisis.

While the attention was on the SCOTUS ruling on the affordable Care Act, this is what was going on under the radar at the Federal Reserve:

Federal Reserve, Regulators Arguing for More, Quicker Foreclosures

by David Dayen

The Federal Reserve has decided to put their thumbs on the scales of justice, explicitly attempting to overturn state-based anti-foreclosure laws on the spurious grounds that they hurt the economy.

This story by Tim Reid in Reuters cites the Fed arguing against the kind of laws in states like Nevada – and soon, California – that have saved hundreds of thousands of homes from foreclosure.

   “State and federal laws enacted to protect homeowners from eviction in the wake of the 2008 housing crash may be extending the slump, according to a growing number of economists and industry experts.

   Foreclosures have all but ground to a halt in Nevada, which passed one of the stiffest borrower-protection laws in the country last year. Yet the housing market is further than ever from recovery, local real estate agents say, with a lack of inventory feeding a “mini-bubble” in prices that few believe is sustainable.

   A recent U.S. Federal Reserve study found that in states requiring a judicial review for foreclosure, delays associated with the process had no measurable long-term benefits and often prolonged the problems with the housing market.”

There’s been a concerted effort to overturn due process in these judicial foreclosure states, on the theory that foreclosures must be quickly flushed through the system so the market can “clear.” Incredibly, house organs like the Fed still express this opinion even after years of documented evidence of illegal foreclosures using false and forged documents in court. The explicit recommendation from the Federal Reserve is to react to systematic foreclosure fraud by closing the courthouse doors to troubled borrowers.

The entire premise that judicial foreclosure states are prolonging the housing slump is completely spurious. Nothing furthers the housing slump more than a spate of foreclosures flooding the market, increasing the supply of distressed homes that sell cheaply and bringing down property values in a particular area. That’s what the Fed is arguing for.

Yes, they’re serious. This is basically siding with the banks, giving fraud as pass and screwing the homeowners and housing market with a flood of foreclosures. And Reuters and other trade publications have decided to publish the propaganda that keeping people in their homes is causing the market to slump and the solution is more foreclosures.

Freelance writer and attorney who helped expose the foreclosure fraud, Abigail Field takes on the Reuters “b.S.” sentence by sentence, shredding the propaganda that the housing crisis was caused by homeowners but by the banks themselves who created the shadow market of foreclosed homes and the underwater crisis. She makes these four points:

First, en route to committing mass securities fraud the banks dishonored their contracts and failed to document the mortgage loans as they promised investors they would. As a result, they’ve had to fabricate nonsensical, obviously fraudulent and often sworn statements to try to foreclose. It’s that swamp of fraud that’s causing the delays.

Second, banks are manipulating housing market inventory, letting properties they own rot, not listing them for sale, and when auctioning them, sometimes outbidding third parties.

Third, bankers’ securities fraud broke the secondary market for non-government backed mortgages. As a result, there’s a lot less capital to lend wannabe homeowners.

Fourth, lender-driven appraisal fraud led to such inflated prices that the underwater problem is directly attributable to them.

Rather than deal in the reality that our housing crisis is banker driven and dare push the meme that bankers must be held accountable, Reuters is helping bankers (and their government allies) push the idea that if only we made it easy for bankers to use their fraudulent documents, the housing market would heal quickly.

There’s even more that exposes not just the Federal Reserve’s pass on bank fraud but the how the Obama administration’s so called homeowner bail out is just more hand outs to the banks:

Sentences ten and eleven:

“The increasing doubt about the impact of anti-foreclosure laws on the long-term health of the housing market calls into question a basic principle of the Obama Administration’s approach to the housing crisis.

Many Democrats, including Obama, say struggling homeowners should get more time to make good on their mortgage arrears, or have the breathing room to renegotiate their loans with lenders, especially in the wake of the “robo-signing” scandal in which banks were found to have falsified foreclosure paperwork.”

How I wish the Obama Administration’s approach had really been about helping struggling homeowners. Instead it has been mostly theatrics with gifts to the banks thrown in. Most recent example – the latest refinancing program has become a fee/profit center for the big banks. Moreover, if homeowners did “make good”, that would be better for everyone involved, including the broader market, but in the era of maximally predatory servicing, it’s not easy. Ditto with mortgage mods that work – and when they include principal reduction that’s meaningful, they work.

Hey, look! In sentence 11 we get the first whiff of banker wrongdoing. And wow, he not only uses the misleading “robo-signing“, but he also says “falsified foreclosure paperwork.” Foreclosure “paperwork” doesn’t sound that serious, though, does it? How about “falsified documents affecting property title”? Or, “lied under oath about how much borrowers owed and to whom?”

And as Yves Smith at naked capitalism notes in her article the lies get repeated ad nauseum:

The way Big Lies get sold is by dint of relentless repetition. In the wake of the heinous mortgage settlement, foreclosure fatigue has set in. A lot of policy people want to move on because the topic has no upside for them. Nothing got fixed, the negotiation process took a lot of political capital (meaning, as we pointed out, it forestalls any large national initiatives in the near-to-medium term), and Good Dems don’t want to dwell on a crass Obama sellout (not that that should be a surprise by now). But the fact that this issue, which ought to be front burner given its importance both to individuals and the economy, is being relegated to background status creates the perfect setting for hammering away at bank-friendly memes. When people are less engaged, they read stories in a cursory fashion, or just glance at the headline, and don’t bother to think whether the storyline makes sense or the claims are substantiated.

Just look at the headline: “Evidence suggests anti-foreclosure laws may backfire.” First, it says there are such things as “anti-foreclosure laws.” In fact, the laws under discussion are more accurately called “Foreclose legally, damnit” laws. Servicers and their foreclosure mill arms and legs have so flagrantly violated long-standing real estate laws in how they execute foreclosures that some states have decided to up the ante in terms of penalties to get the miscreants to cut it out. [..]

And that is perhaps the most remarkable bit, the failure to consider that gutting the protections to the parties to a contract undermines commerce. Borrowers in judicial foreclosure states paid higher interest rates due to the greater difficulty of foreclosure. So now they are to be denied what they paid for because the banks recklessly disregarded the procedures they set up and committed to perform? What kind of incentive system is it when we reward massive institutional failure with a bank-favoring settlement and supportive messaging from central bank economists? As Dayen stated:

   “So when these officials argue against laws like those in Nevada, which merely criminalize a criminal practice, or California, which provides due process for people having their homes taken from them, they’re arguing in favor of what amounts to a dissolution of justice.”

I don’t think you’ll read anything like this at Reuters. Shameful

“Irrational exuberance”, “unrealistic expectations” accurately describe some of the reports about the alleged rebound in the housing market, such as this report on the increase in housing prices:

Home prices rose in nearly all major U.S. cities in April from March, further evidence that the housing market is slowly improving even while the job market slumps.

The Standard & Poor’s/Case-Shiller home price index shows increases in 19 of the 20 cities tracked. That’s the second straight month that prices have risen in a majority of U.S. cities.

And a measure of national prices rose 1.3 per cent in April from March, the first increase in seven months.

San Francisco, Washington and Phoenix posted the biggest increases. Prices fell 3.6 per cent in Detroit, the only city to record a drop.

The month-to-month prices aren’t adjusted for seasonal factors. Still, prices in half of the cities are up over the past 12 months.

Then there was this news in Bloomberg about the increase in demand for new homes:

Demand for new U.S. homes rose more than forecast in May as mortgage rates dropped, bolstering the residential real-estate market while other parts of the world’s largest economy cool.

Purchases climbed to a 369,000 annual rate, the most since April 2010 and up 7.6 percent from the prior month, the Commerce Department reported today in Washington. The median estimate in a Bloomberg News survey of 67 economists was 347,000. The number of houses on the market held near a record low.

The problem with this rise in housing prices and an increase in new home sales is that its a poor indicator of the real “health” of the housing market. Even Yale Prof. Robert Shiller, co-creator of the quoted Case-Shiller house price index, takes a cautious view of these optimistic predictions of a housing recovery:

MUCH hope has been pinned on the recovery in home prices that began about a year ago. A long-lasting housing recovery might provide a balm to households, mortgage lenders and the entire United States economy. But will the recovery be sustained? [..]

The most obvious reason for hope is that, unlike stock prices, home prices tend to show a great deal of momentum. Correcting for seasonal effects, home prices as measured by the S.&P./Case-Shiller 10-City Home Price Index increased each month from June 1995 to April 2006, then decreased almost every month to May 2009. Since then, they have risen through January, the latest month for which data is available.

So, because home prices have been climbing of late, isn’t it plausible that they’ll keep doing so?

If only it were that simple.

Home price booms and busts do end, sometimes quite suddenly, as was the case for the boom of 1995 to 2006 and the bust of 2006 to 2009. Today, we need to worry about strong headwinds, as the government begins to withdraw its support of a still-troubled lending industry and as foreclosures are dumping millions of homes onto the market.

Michael Olenick explains at naked capitalism:

Yale Prof. Robert Shiller, co-creator of the well-known Case-Shiller house price index, takes a more sober approach. Shiller argues in the New York Times until meaningful principal reductions are put in place that house prices are hosed. Pricing may bump up on artificial scarcity caused by the relatively low number of foreclosures after the robo-signing scandal, but in the long run underwater borrowers are likely to drown. Further, because of sky-high loss severities in foreclosures – my own data shows it is not at all uncommon for investors to lose the entire face value of a mortgage in a foreclosure – principal reductions make good business sense.

Shiller embraces an idea being floated about lately; having municipalities use eminent domain to “take” mortgages at fair market value. Databases like the one I’ve been compiling clearly show the loss severity of similar mortgages in similar ZIP codes, allowing municipalities to ascertain fair market value of the mortgages, as opposed to the houses. In bubble-states, where negative equity issues are most pronounced, fair market value of most mortgage would be no more than 20-percent of the face value of the first mortgages – and oftentimes far less; no more than a few cents on the dollar – while second liens would be worthless.

Assuming this approach is only used with the consent of the homeowner, I’d suspect that one last call the servicer before implementation would magically result in an almost immediate modification: no lost paperwork, no transfers to the offshore call center, no capitalized interest.

That’s too rational for anyone to heed.

From Glen Ford at the Black Agenda Report

President Obama must fire Federal Housing Finance Agency acting director Ed DeMarco because he “has flatly refused to do any kind of principal reduction for the millions of ‘underwater’ homeowners that are suffering, that are drowning in debt because of how the banks crashed the economy,” said Tracy Van Slyke, co-director of New Bottom Line. The coalition of faith-based and community organizations demand a “minimum of $300 billion in principal reduction.” Van Slyke claims New Bottom Line and other Occupy Wall Street-related efforts have “moved the administration far along from where they were. We have moved the dial.”

The Obama administration has repeatedly refused to spend moneys a set aside for distressed homeowners and communities. Why? Because banks have refused to cooperate with such programs, fearing that intervention in the housing market “would threaten to upset the bankers’ carefully calibrated market manipulations.” They would rather continue rigging the game. “The banks have been carefully dribbling out houses for sale, attempting to artificially stabilize prices with the goal of pumping up another bubble.”

The Obama administration’s failure to spend almost any of the $7.6 billion in TARP housing money set aside for the neediest regions of the country seems counterintuitive [..]

The Hardest Hit Fund was specifically targeted to homeowners in areas most seriously impacted by unemployment and falling home values – a formula tailor made for Black and Latino communities devastated by massive foreclosures and layoffs. [..]

The problem was, Obama’s people resisted putting the program into effect. [..]

The problem begins at the top. Obama has consistently protected bankers’ rights to deal with homeowners as they please.

AS reported in the Washington Post: Fannie Mae had seen benefits to lowering some home loans, documents indicate:

Officials at government-backed mortgage giant Fannie Mae concluded years ago that the company could “reduce its losses substantially” by lowering loan amounts for some troubled borrowers, according to internal documents cited Tuesday by the top Democrat on the House oversight committee.

The new insights into Fannie Mae’s analyses about the potential benefits of so-called principal reduction surfaced in a letter from Rep. Elijah E. Cummings (D-Md.) to Edward J. DeMarco, the acting director of the independent agency that oversees Fannie Mae and Freddie Mac.

Since being appointed head of the Federal Housing Finance Agency (FHFA) in 2009, DeMarco has refused to allow Fannie and Freddie to write down loan balances, in part because he worries that some homeowners would stop paying their mortgages to get relief, ultimately costing taxpayers more money. He has been steadfast in his disapproval in recent months despite growing pressure from Obama administration officials and House Democrats to allow principal reductions.

Those “internal documents” led to accusations that DeMarco, a Republican career public servant appointed by Obama to head the FHFA, withheld information from Congress about the findings:

“This just adds to the pile of evidence that calls into question how sincere DeMarco is about treating this issue seriously,” said Ian Kim, director of campaigns for Rebuild the Dream, a progressive advocacy group that has been urging a principal reduction program.

Supporters of principal reduction argue that it would reduce foreclosures by lowering the monthly payments for underwater homeowners and giving them hope they would one day have more equity in their homes.

Opponents counter that reducing the principal on mortgages owned or backed by Fannie and Freddie could increase their losses and encourage homeowners who are making payments to fall behind in order to lower their debt.

The new documents contradict DeMarco’s congressional testimony in November that analyses by Fannie and Freddie concluded that other forms of homeowner assistance were less costly to taxpayers, the lawmakers said. [..]

The failure to launch a principal reduction program “was not merely a missed opportunity, but a conscious choice that appears to have been based on ideology rather than Fannie Mae’s own data and analyses,” the lawmakers said.

It’s time for DeMarco to go and the Obama administration to stop protecting the bankers who won’t support him ever.

While Iowa Attorney General Tom Miller and his merry band of AG sell outs push for an agreement to settle the mortgage fraud, it looks like California Attorney General, Kamala Harris, is sticking to her plan to hold the worst of the abusers feet to the fire.

The Miller agreement, which is also being backed by US Attorney General Eric Holder, could result in an even smaller settlement than the $25 million and would still leave the banks open to legal claims in the states that do not sign on to the agreement. While California is the state with the largest number of foreclosures, not signing onto the agreement would mean that homeowners would have to wait longer for relief but, as AG Harris has stated, it “would allow too few California homeowners to stay in their homes…. After much consideration, I have concluded that this is not the deal California homeowners have been looking for.”

Ms. Harris has been under considerable pressure from the Obama administration, who has considered her a replacement for Eric Holder should Obama be reelected. However. many community organizations, unions and liberal groups have urged to her not to sign on to the Miller agreement unless there is a larger monetary settlement or, that failing, the states are allowed to prosecute the banks for crimes they may have committed. Neither of those two stipulations appears to have happened, nor are they likely.

Along with New York’s Eric Schneiderman, Delaware’s Beau Biden, Nevada’s Catherine Cortez Masto and a couple of other state attorney generals, Ms. Harris’s position is good policy for the state, as well as, good politics for her. She has stood by the people who put her in office, the people she will need to support her should she run for governor or the US Senate. We could use a few like her in that body.

This is how foreclosure fraud should be handled on the federal level and is not. It’s not that hard.

New York Attorney General Eric Schneiderman has received a lot of the headlines for his no-holds-barred investigations against the banks, but he’s had a partner in Delaware’s Beau Biden. Because New York and Delaware were where most of the securitization trusts were originated, having a united front on this issue of fraud is vital, and despite the family ties with the White House, Biden has been uncompromising. His latest salvo is a lawsuit against MERS, the electronic registry owned and funded by the banks, which they used to evade the public land transfer system and save money on county recorder fees:

“    The Delaware attorney general’s office sued Merscorp Inc., which runs a national mortgage registry used by banks, saying its practices are deceptive and hide information from borrowers.

   The MERS database, which tracks ownership interests in mortgages, obscures information from borrowers and impeded their ability to fight foreclosures, Delaware Attorney General Beau Biden said in a complaint filed today.

   “MERS engaged and continues to engage in a range of deceptive trade practices that sow confusion among consumers, investors and other stakeholders in the mortgage finance system, damage the integrity of Delaware’s land records, and lead to unlawful foreclosure practices,” Biden said. “

(Reuters) – MERS, the electronic mortgage registry used by the banking industry, was sued by Delaware on Thursday and accused of deceptive practices that led to unlawful shortcuts in dealing with the foreclosure crisis.

New York’s attorney general also took action against MERS, subpoenaing the registry this week for information about how it is used by major banks and a foreclosure law firm, a person familiar with the matter said on Thursday.

The suit and subpoena were part of a joint New York-Delaware mortgage probe, the person told Reuters.[…]

Schneiderman’s subpoena also seeks information on Amherst, New York, foreclosure law firm Steven J. Baum, which the attorney general has been probing since at least last spring.

Lauren Passalacqua, a spokeswoman for the New York attorney general’s office, declined to comment.

   The damages sought are substantial, $10,000 per violation. Since MERS is a tiny company, with under 50 employees and many of its operations outsourced (and no reason for it to maintain a substantial balance sheet), success in court would almost certainly mean bankruptcy for MERS. In theory, a new consortium or private investors could buy the database out of bankruptcy, but how would one structure its operations so as to not run afoul of the law? Yet with so many mortgages recorded in the MERS database (the registry has claimed over 60 million) the banks will need to find a way to keep it going and operate it more in line with the law […]

   Unless MERS gets injunctive relief, these two provisions effectively stop foreclosures in MERS’s name in Delware. MERS has repeatedly said it does not hold any interest in the property or note in depositions. And the mortgage registry system had also quietly put out a notice to members months ago telling members to stop foreclosing in the name of MERS. Not allowing MERS members (servicers, banks, and their foreclosure attorneys) to assign mortgages out of MERS will stop the foreclosure apparatus cold. This is a legitimate legal strategy to get a foreclosure freeze and force the servicing industry to the table to negotiate a much bigger fix.

Well, well, this is getting juicy. The FDIC has filed a lawsuit objecting to the $8.5 billion bail out of the Bank of America:

The FDIC, the receiver for failed banks, owns securities covered by the settlement and said it doesn’t have enough information to evaluate the accord, according to a filing yesterday in federal court in Manhattan.

Under the agreement, Bank of America would pay $8.5 billion to resolve claims from investors in Countrywide Financial Corp. mortgage bonds. The settlement was negotiated with a group of institutional investors, including BlackRock Inc. (BLK) and Pacific Investment Management Co. LLC, and would apply to investors outside that group.

Bank of New York Mellon Corp. (BK), the trustee for the mortgage-securitization trusts covered by the agreement, has asked a New York state judge to approve the settlement in November. An investor group is trying to move the case to federal court, which Bank of New York opposes.

Investors that would be bound by the settlement, including American International Group Inc., have criticized the deal and Bank of New York’s role representing investors in the mortgage bonds. New York Attorney General Eric Schneiderman and Delaware Attorney General Beau Biden have sought to intervene in the case and asked the court to reject it.

The Nevada Attorney General Catherine Cortez Masto has further upped the ante:

The attorney general of Nevada is accusing Bank of America of repeatedly violating a broad loan modification agreement it struck with state officials in October 2008 and is seeking to rip up the deal so that the state can proceed with a suit against the bank over allegations of deceptive lending, marketing and loan servicing practices.

In a complaint filed Tuesday in United States District Court in Reno, Catherine Cortez Masto, the Nevada attorney general, asked a judge for permission to end Nevada’s participation in the settlement agreement. This would allow her to sue the bank over what the complaint says were dubious practices uncovered by her office in an investigation that began in 2009.

In her filing, Ms. Masto contends that Bank of America raised interest rates on troubled borrowers when modifying their loans even though the bank had promised in the settlement to lower them. The bank also failed to provide loan modifications to qualified homeowners as required under the deal, improperly proceeded with foreclosures even as borrowers’ modification requests were pending and failed to meet the settlement’s 60-day requirement on granting new loan terms, instead allowing months and in some cases more than a year to go by with no resolution, the filing says.

The complaint says such practices violated an agreement Bank of America reached in the fall of 2008 with several states and later, in 2009, with Nevada, to settle lawsuits that accused its Countrywide unit of predatory lending. As the credit crisis grew, the settlement was heralded as a victory by state offices eager to help keep troubled borrowers in their homes and reduce their costs. Bank of America set aside $8.4 billion in the deal and agreed to help 400,000 troubled borrowers with loan modifications and other financial relief, such as lowering interest rates on mortgages.

I’ll bet you this has Obama and the remaining AG’s panties in a twist, since, according to rumors they were looking to settle this by Labor Day.

Here’s the link to the FDIC’s brief:

FDIC Objection to Bank of America Mortgage Settlement