Ally reaches settlement with Fannie Mae over mortgage-backed securities

Fannie Mae and Ally Financial Inc. have reached a #462 million settlement agreement which relieves the company from its obligation to buy back trouble mortgages it sold.

Ally, then GMAC, has taken at least $17 billion in federal bail-out money and is 56 percent-owned by the U.S. government. The company, like many of the other “big banks”, are being threatened with lawsuits from investors who purchased mortgage-backed securities from the banks.

They allege the bank knew they were selling bad mortgages that would eventually default, but did not inform those investors of that risk.

The same banks are facing even more scrutiny over the wrongful foreclosure debacle in which it hired a “robo-signing” firm to quicly process foreclosures, including falsely signing court documents authorizing foreclosures.

This has led to thousands of wrongful home foreclosures across the country.

Bank of America Hit with Another Foreclosure Class Action Suit

The seemingly endless string of class actions against Bank of America continues as the class now claims that BofA and BAC Home Loans Servicing refused to participate in foreclosure prevention programs, despite taking $25 billion in Troubled Asset Relief Program money.

Bank of America, by accepting the TARP money, agreed to participate in at least one TARP-authorized program to minimize foreclosures.

Bank of America signed a contract with the US Treasury as well, agreeing to comply with the Home Affordable Modification Program to perform loan modifications and other foreclosure prevention services.

The suit claims that although Bank of America accepted TARP funds and entered into a HAMP contract, the bank has systematically failed to comply with the terms of the HAMP directives and has regularly and repeatedly violated several of its prohibitions.

The class consists of all eligible homeowners who have been serviced by one or both defendants who have not received a permanent modified loan; the class seeks an injunction and damages.

Banks looting wrongfully foreclosed homes

Reports of foreclosing banks looting homes are on the rise.

According to an MSNBC.com report, the story of Mimi Ash is being repeated across the country as homeowners who’ve wrongfully had their homes taken from them are returning to their homes to find them completely empty.

Ash, a Truckee, Calif., woman, said she arrived at her weekend home for a ski trip to find her hoe completely empty. It was not thieves who robbed her however, it was her bank, Bank of America.

Ash is one of thousands of Americans who’ve filed a wrongful foreclosure lawsuit against her bank for illegally seizing her home amid a flurry of foreclosure filings nationwide.

America’s top banks hired the services of a robo-signing firm to file foreclosure documents on millions of home seizures nationwide. Many of those filings however, were incorrect and illegal.

Ash said Bank of America representatives broke into her home, changed the locks and discarded everything inside, including her son’s ski medals and the ashes of her deceased husband.

“Every day, smaller wrongs happen to people trying to save their homes: being charged the wrong amount of money, being wrongly denied a loan modification, being asked to hand over documents four or five times,” Ira Rheingold, executive director of the National Association of Consumer Advocates, told MSNBC.

Ash said she was behind in her house payments but believed she was working on a foreclosure modification allowing her to keep her home.

Similar to Ash, a Florida woman arrived at her home to found it was entered illegally and representatives of Chase Bank had helped themselves to six bottles of wine, the homeowner’s laptop, iPod, a cordless drill and one beer, which was left half-drunk on the counter.

Obama Signs Exemption to Identity Theft Red Flags Rule

President Obama has signed legislation that exempts lawyers, doctors and accountants from having to comply with the FTC’s Red Flags Rule.

The Red Flags Rule requires financial institutions and other organizations classified as “creditors” to develop programs to identify, detect and respond to indications of identity theft.

The Red Flag Program Clarification Act of 2010 limits the scope of who is covered by the rule, essentially giving an exemption to lawyers, doctors, accountants, dentists, orthodontists, pharmacists, veterinarians, nurse practitioners and social workers and other service providers.

Under the new exemption law, the rule only applies to organizations that use consumer reports in connection with credit transactions, provide information to consumer reporting agencies or loan money.

Dannon Settles Activia, DanActive Health Claim Suit

The Dannon Company agreed to settle FTC charges that it had improperly claimed that some of its popular yogurt and dairy drinks could help prevent common illnesses and relieve irregularity.

Dannon had asserted that a single daily serving of its Activia yogurt could ease irregularity and that its DanActive dairy drink could reduce a person’s likelihood of catching a cold or the flu.

Dannon said it had scientific evidence to back up its assertions, but the commission said that Dannon lacked sufficient medical evidence to make those claims.

The commission said it had worked with 39 state attorneys general in its investigation that Dannon had agreed to pay $21 million to those states to settle the charges.

Vitamin maker must refund $2.1M for unsubstantiated claims

The makers of two children’s vitamins featuring Marvel and Disney characters have been ordered to pay back $2 million for using misleading and false advertising.

According to The Epoch Times, NBTY Inc. made misleading statements about the amount of an Omega-3 fatty acid known as DHA. These vitamins were sold in gummy and tablet form. The featured characters from Disney Channel, Cars, Marvel Comics, Snow White and Cinderella and Winnie the Pooh.

These vitamins were sold at national retailers like Walmart and Walgreens.

NBTY and its two subsidiaries NatureSmart LLC and Rexall Sundown, also made the claim that a daily serving of the vitamins promoted healthy brain and eye development. The Federal Trade Commission accused the companies of not being able to back those claims with scientific evidence.

Further, bold letters on the packaging of the vitamins promote their having DHA, but in reality they only have trace amounts of it. Instead of having 100 milligrams of DHA, the products usually have one-tenth of a milligram.

The companies will refund $2.1 million to people who bought these vitamins, as per the FTC order. They are also barred from promoting the inclusion of DHA in the vitamins.

DirecTV to Pay $13 Million to Settle Consumer Fraud Suit

DirecTV has agreed to pay $13.25 million to settle a 48-state lawsuit charging that it misled consumers about pricing and contracts.

The lawsuit centered largely on DIRECTV’s practice of requiring consumers to enter into two-year contracts for a variety of services from the initial subscription to replacing the satcaster’s equipment, even if it was defective.

DirecTV has now agreed to fully disclose prices and contract terms, tell consumers if they are required to pay for sports packages after the first year of subscribing to it, and when the consumer is entering into a binding contract.

DirecTV also agreed not to require consumers to extend their contracts when they got a replacement for defective equipment.

Auto warranty robo-calling scam operators face federal judge, admit fault

Two Florida men have admitted to operating an auto-service warranties scam which netted them $40 million over the last two years.

According to a report from The Carmi (Ill.) Times, Christopher Cowart and Cris Sagnelli admitted in a federal court in Illinois they operated the bogus Transcontinental Warranty Inc., selling auto-service warranties to consumers over the phone.

The scam operated since June 2007 until a federal judge in Chicago ordered the pair to stop using a robo-call service. During the time in business, Transcontinental Warranty placed more than one billion phone calls.

Each defendant in the case faces up to 25 years in prison and fines of up to a quarter-million dollars.

Consumers would receive a pre-recorded phone call telling them their auto warranty was about to expire and if they stayed on the line long enough, were switched to a telemarketer who identified themselves as the “Warranty Service Center.”

TWI had no relationships with any auto maker, or its warranty departments, and was therefore forwarding a lie onto consumers. The company claimed it could extend a warranty.

In fact, the product being sold to consumers through the scam was a service contract. Details of the contract required a waiting period for services on vehicles and also allowed a repair shop to use junkyard parts on newer cars.

One victim from Alabama said the person on the phone sounded legit, and she paid $290 as down payment for the extended warranty on her vehicle. At the end of the call however, the woman said the person on the other line could be heard proclaiming, “We got another one.”

After that, Vickie Ames said to The Carmi Times, she canceled the order on her credit card.

State Attorneys General, Banking Regulators Investigating Foreclosure Problems

14 state attorneys general and three or four banking regulators are investigating how banks and mortgage servicers handle foreclosures.

The investigation, which began with the industry’s use of “robo-signers,” prompted a temporary moratorium on foreclosures and sparked concerns about the impact to the national economy.

The group met with the five largest servicers that service 59 percent of the mortgages in America, namely Bank of America, Wells Fargo, JPMorgan Chase, Citibank and Ally Financial/GMAC.

The group has suggested the setup of a compensation fund to pay homeowners who were foreclosed upon that shouldn’t have been.

Banks, Fannie Mae and Freddie Mac Pass Foreclosure Moratorium Over Holidays

Joining Bank of America, JP Morgan Chase and Wells Fargo, both Fannie Mae and Freddie Mac are freezing all foreclosure evictions on the mortgage loans they own or back from December 20 through January 3.

To go along with this good news at least one company, Trans Union Credit Bureau, is predicting the pace of mortgage delinquency to drop to 4.98 percent by the end of next year from 6.21 percent at the end of 2010.

The rate would still top historical levels of 1.5 percent to 2 percent.

The firm, which analyzed 27 million randomly selected consumer records, believes the decrease could buoy the economy.