Massachusetts Canceling of Two Foreclosures Causing Mortgage

There was a powwow between top officials in the mortgage and banking world huddling over the decision taken by the highest court of Massachusetts canceling two foreclosure filings of two banks. A group of pension funds of states took another stand aiming a shot at the mega banks.

The leadership has been given by John Liu the comptroller of New York City. Pension funds from Illinois, Oregon, North Carolina and Connecticut sent a communication to JP Morgan Chase, Bank of America, Citibank and Wells Fargo urging in no uncertain tone that these giants "conduct an independent review of Company’s internal controls related to loan modifications, foreclosures and securitizations and to include a report to shareholders with findings and recommendations in the Company/’s 2011 proxy statement.

Collective the pension funds hold stock worth $5.7 billion in these four banks; this point has been made very clear in the communication. The amount is just a drop in the ocean – the banks combined are worth $600 billion. But if the pension funds sold the interests involved the banks would be badly hit. It will be another front opening up for the banks besieged on all fronts spelling out big losses.

The communication referring to the travails of the past many months does not leave out anything – robo-signing, class action suits, various unflattering reports of the government as well as testimonies indicating that the banks are trying to make light of a serious matter.

In a press release Liu said, "The banks’ boards cannot continue to pretend the foreclosure mess is the result of technical glitches and paperwork errors. There is fundamental problem in their procedures that endangers not just homeowners, but shareholders, and local economies". Ending on a note of thanks the letter thanks the banks for their "prompt consideration" and demands by 21st January a response.

Except of JP Morgan all the other hands responded pretty quickly. Well Fargo and Citi Bank acknowledging the letter said they were reviewing it. Bank of America responded with a long letter said they too were reviewing matters as it was to the beneficial for all concerned.

The banking group is not however over-concerned with the stand taken by Liu’s coalition. Liu has made demands previously also. The banks are less afraid now that the Republicans are a majority in the house unless something untoward happens. The recent deal served out to Bank of America has been a sweet one.