Bank of America (BoA) - "Brazen, Unauthorized & Impermissible"

Bank of America is NOT one of my respected or trusted financial institution by any means.  I feel sorry for their stockholders who got completely HOSED.

Article as reported in Fortune Magazine:

A Fistful of Someone Else's Dollars

Troubled homeowners aren't the only ones having their issues with Bank of America.

A federal bankruptcy judge ruled Tuesday that BofA (BAC) must return $500 million in collateral it seized without cause from Lehman Brothers two years ago, just after the investment bank collapsed in the biggest-ever U.S. bankruptcy.

Bank of America's actions were "brazen…unauthorized and impermissible," U.S. bankruptcy judge James Peck wrote in a ruling Tuesday, the Wall Street Journal reports.

BofA forced Lehman to post the collateral in August 2008 as questions started to mount about the investment bank's health. There's nothing unusual there, as rivals such as Citi (C) and JPMorgan Chase (JPM) did the same.  The problem lies with what BofA did in November 2008, when it took the cash from the collateral account to offset debts it was owed by Lehman. The bank did so without the court's permission, the Journal reports.

Peck ruled this week that BofA's moves violated rules protecting companies from having their assets seized, and made clear he wasn't overjoyed with the bank.

In his order, Judge Peck said it was "astonishing that [Bank of America] would make the premeditated tactical decision to deliberately seize the collateral" without first seeking court permission. The judge said Bank of America acted with "apparent disregard for the consequences" and ordered the bank to repay Lehman's bankruptcy estate the $500 million plus interest.

Tuesday's ruling came on the same day a top executive at BofA's home loans divisions said the bank regrets its missteps in the foreclosure fiasco. But the bank has no regrets in this case, a spokeswoman indicates.

We are disappointed with the court's decision, and we continue to believe that our actions were fully supported by well-established New York law and the unambiguous language of the Bankruptcy Code.  We are considering our appellate options.

Home Valuation Code of Conduct (HVCC) Appraisals - New Rules

Just when I thought I had beat Freddie Mac and Fannie Mae's Home Valuation Code of Conduct (HVCC) appraisal guidelines into the ground, here we go again.....  (see all my previous blog entries on this topic)

  

The Federal Reserve proposed far reaching new rules October 18, 2010 that could affect residential real estate appraisals.  The interim rules which are to take effect December 2010, and be finalized in the Spring of 2011, prohibit outside influence in appraisers' valuations and require lenders to report evidence of appraiser misconduct to regulatory authorities.  Isn't that what HVCC was designed to do in the first place?!  So why are they "re-inventing the wheel" here on this issue?

The new rules will supersede or replace HVCC.  All of this is as a result of Congress passing the "Dodd-Frank Wall Street Reform and Consumer Protection Act" in July 2010 and being signed into law by President Obama. The original sponsors of the bill were Barney Frank (D-MA) and Chris Dodd (D-CT) in the Senate Banking Committee as a result of lobbyists pressure to change or reform the appraisal rules or guidelines under HVCC which resulted in a whole host of problems and complaints with inaccurate appraisals produced by appraisers who were were working for low fees through appraisal management companies (AMC's), short turn around time, and unfamiliarity with the local market.

Appraisers were one of the principle parties that got us into this whole real estate market meltdown in the first place, then after rules and regulations were imposed on them to prevent collusion in appraisals, they have to go and screw things up even further for the consumer!  

As a result of this whole real estate market meltdown or bubble-burst, it is quite interesting and makes a very poignant statement to note that there were no "punitive" rules imposed on Realtors.  As buyer agents we assisted people who were able to obtain financing, which was contingent upon a satisfactory appraisal.  We had no part or undue influence in either the buyer obtaining financing or in the appraisal.  As long as they had a lender's approval letter, we assisted them in buying a home and assumed that lenders (and appraisers) were practicing prudent and rational guidelines in their lending practices.  As listing agents we had to work within the constraints of "fair market value", unrealistic seller expectations and perceptions of value; and work within the constraints or confines of the real estate appraisal - in other words, if the property didn't appraise for what a buyer was willing to offer for it, they weren't going to get the financing, and the deal was not going to go through.

Realtors cannot be blamed in this whole debacle; the finger points DIRECTLY back to lenders and appraisers who were in "cahoots" or collusion with each other in driving the price of housing literally through the roof.  Wall Street of course is also to blame since they provided the funding and means for this all to take place in the first place and knew damn well that this was going to happen.

"House of Cards" from CNBC is a great video piece of investigative journalism which documents how this all happened.

Push/Pull Door Design

This is a great concept...  but where does the lock set go ?

 


Obviously this application is for interior building structures, and not the main outdoor ingress/egress, but it's a cool design....  But I guarantee that folks would still try to pull the button out, and push the handle in !