The Law Offices of Lance Denha Comments on the Continuing Mortgage Crisis

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More than four years after the financial crisis, The Law Offices of Lance Denha notes that while many big banks have regained their financial footing, Bank of America and Citigroup remain dogged by the past.

On Thursday, January 17, 2013, the New York Times reported that both Bank of America and Citigroup disclosed that substantial legal costs undercut their fourth-quarter earnings. The expenses, the banks said, stemmed from huge settlements involving their mortgage businesses.

The research firm, Morningstar, reported that while Bank of America notched strong quarterly gains across several divisions, the mortgage settlements drained the bank’s profit, which plunged 63 percent to $732 million. All told, one-time expenses wiped out $5.9 billion, from the bank’s quarterly earnings. At Citigroup, a $1.3 billion legal bill dragged down profits. The bank reported a fourth-quarter profit of $1.2 billion, significantly below analysts’ estimates. “Litigation expenses have taken a huge toll,” said James Sinegal, an analyst with Morningstar.

The New York Times further noted that now, the banks are hoping to close a dark chapter in their histories. This month, Bank of America and Citigroup, along with eight other banks, signed a sweeping $8.5 billion settlement with the Federal Reserve and the Office of the Comptroller of the Currency over foreclosure abuses like erroneous fees and flawed paperwork.

The settlement allowed them to a halt an expensive review of millions of loans in foreclosure. The pact follows a $26 billion deal in February 2012 involving the five largest mortgage servicers and 49 state attorneys general, an agreement to resolve accusations that bank employees were blowing through mountains of documents used in foreclosures without checking for accuracy.

“We put a lot of risk behind us in 2012,” Bruce R. Thompson, the company’s chief financial officer, said in a conference call on Thursday. “We just feel like we’re in a much better place going into 2013.”

Mr. Lance Denha Esq., of the Law Offices of Lance Denha, notes “That while these legal settlements lifted a dark cloud that hung over the banks, other legal problems will persist. Both banks continue to wrestle with federal authorities over claims they wrongfully evicted homeowners after using shoddy, flawed or inaccurate documents in foreclosure proceedings. Bank of America and Citigroup also face a torrent of private lawsuits asserting that the banks duped investors into buying troubled mortgage securities that later blew up.”

For example, ABC News reported in October that federal prosecutors in New York accused Bank of America of perpetrating a fraud through Countrywide by churning out loans at such a pace that quality controls were, for the most part, ignored. A high-stakes lawsuit under way in federal court could also crimp the banks’ future profits. The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, sued Bank of America and Citigroup, along with 15 other banks, in 2011, claiming that the banks sold securities backed by shaky mortgages.

Mr. Lance Denha notes that “Any ongoing or previous State and Federal settlements do not include the legal actions that an attorney can bring to defend the foreclosure process of the homeowner.” Mr. Denha further added that “Many defenses can be made by the defendant in a foreclosure defense case in court because at times it can be very difficult to determine the name of the holder of the note, the assignee of the mortgage, and the parties with both the legal right and standing under the Constitution to enforce notes, whether in state or federal court. These cases can be highly defensible if not winnable.”

It is highly advisable to seek legal expertise to determine the best course of action moving forward in order to gain an understanding of the particular direction best suited for the client. The Law Office of Lance Denha P.A. is committed to ensure that every possible avenue is pursed so that the homeowner’s legal rights are preserved. Actively monitoring the ever changing landscape of foreclosure laws, recent foreclosures across the nation as well as state imposed rules and procedures associated with foreclosure, is vital to ensure and protect these rights. The Law Office of Lance Denha P.A. is a multistate law firm and helps legally defend wrongful foreclosures against homeowners and utilize any and all legal tactics available to help accomplish preserving homeowner’s rights. For further information or assistance, please call at 954-840-0770.

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