Another day, another lawsuit for the big banks – in this case JPMorgan Chase and the Royal Bank of Scotland – over their mortgage and securitization practices. Only this one comes from the National Credit Union Administration, a federal agency.
The National Credit Union Administration Board, or NCUA, accused the institutions of packaging and selling mortgage bonds with loans that didn’t meet underwriting guidelines. The bonds, sold to federally chartered credit unions, were rated AAA when issued, according to the agency.
A material percentage amount of the loans included in the bonds “were all but certain to become delinquent or default shortly after origination,” the regulator said in two complaints filed in federal court in Kansas City, Kansas. It didn’t specify the amount of money sought.
JPMorgan sold credit unions almost $213 million of mortgage bonds using sale documents that contained untrue statements or lacked important information, according to one complaint. RBS used documents with the same flaws to sell credit unions about $138 million of bonds, the NCUA said in the other complaint.
Essentially, NCUA wants the put back the illegal mortgage backed securities on the banks in question. And they reportedly plan similar lawsuits against a host of other banks shortly. What’s more, the complaint specifically references the Senate Permanent Subcommittee investigation showing malfeasance toward MBS investors by Goldman Sachs.
And that’s not all. In Fulton County, Georgia, homeowners have filed claims with the clerk of court over fake notarizations. Michigan Attorney General Bill Schuette, a Republican, filed subpoenas last week in a criminal probe of the banks over forged documents. This gets added to the nearly dozen ongoing investigations in AG offices across the country, in New York, in Illinois, in Nevada, in Arizona, in Washington, in California, in Connecticut, in Utah. And you have the HUD IG report and the lawsuits under the False Claims Act. And somewhere, private and institutional investors are lurking, seeing all these lawsuits about how the banks don’t have standing to foreclose and wondering what it is they actually own, and whether they should sue to give it back.
This is still in the formative stages. The wheels of justice are still turning, as long as they have an engine.