DS News - Digital Archives

"Over the last 10 years, CRFS has remained strong throughout the many changes in the mortgage industry," said officer and founder Jodi Gaines. "I attribute our success to two main factors. First, we have a great team of managers and employees who are extremely committed and work hard day in and day out. Second, we continually look for ways to increase our quality standards in every area of the business—something we take very seriously at CRFS." CRFS was also named Business of the Year by the Orleans County Chamber of Commerce. Based in Albion, New York, CRFS processes post-foreclosure FHA, VA, MI, and investor claims and provides consulting and training services. Hurricane Sandy's Impact on RMBS May Be Smaller than Expected While the lives of those affected by Hurricane Sandy may not return to normal for some time, one research report suggests the storm's impact on non-agency residential mortgage-backed securities (RMBS) may be much less substantial than originally anticipated. With some estimates as high as $88 billion, Opera Solutions, a New Yorkbased company that specializes in machine learning, released its own estimate based on neighborhood-level data. The firm suggests the damage will be closer to $6 billion. "For most bonds in the non-agency universe, the impact will be negligible as insurance and government assistance programs will mitigate much of the potential losses," Opera Solutions stated. To predict the future impact of Hurricane Sandy on RMBS, Opera Solutions compared the physical damage to that of Hurricane Katrina, which severely damaged the Louisiana coast in 2005. Both storms resulted in significant flood damage. After Hurricane Katrina, the impacted areas experienced heightened levels of delinquencies for about two years. However, prepayments also spiked at the time due to insurance payouts and government disaster relief. It is also notable that the increase in foreclosures after Hurricane Katrina was concurrent with the start of the foreclosure crisis, and it is difficult to determine the level of impact of each cause. 118 Regardless, "[b]ased on a detailed analysis of each portion of affected ZIP codes, the ultimate exposure is much lower than originally estimated," said Bill Hunt, head of research at Opera Solutions, regarding Sandy's impact. While Opera Solutions expects the overall impact on the RMBS market to be smaller than previously anticipated, the study did find some bonds that could experience losses as high as 500 basis points. AIG's Board Elects Not to Sue U.S. When Maurice "Hank" Greenberg, former CEO of American International Group (AIG), came to officials at AIG with a lawsuit filed on behalf of AIG shareholders against the U.S. government, the insurance company's board said it was obligated to consider and respond to his demands that the firm either take over the suit or allow Greenberg and the company he currently heads, Starr International Co. (a former institutional shareholder of AIG), to proceed on their own. The $25 billion lawsuit argues the government took too much control over the company—taking away power from existing shareholders—and set too high of an interest for repayment, in effect "punishing" the company. Federal officials were reportedly angered that AIG was even entertaining the idea of a lawsuit against the government over the constitutionality of its bailout. However, AIG President Robert Benmosche said the company had a duty to its shareholders to at least hear Greenberg and Starr's arguments. Shortly after listening to representatives of Greenberg and Starr as well as Treasury and the Federal Reserve on January 9, AIG's board made its decision, unanimously rejecting the idea of joining Starr's lawsuit and prohibiting the firm from pursuing litigation on AIG's behalf. Greenberg and Starr will reportedly go it alone and take their claims against the federal government to the courts. On December 11, 2012, Treasury sold the last of its shares of AIG common stock, bringing the government's stake in the company to an end. Together, Treasury and the Federal Reserve invested $182.3 billion to stabilize the failing insurance giant in September 2008 at the start of the financial crisis. On top of repaying its debt, AIG paid an additional $22.7 billion to the government. Treasury incurred a positive return of $5 billion, primarily from common and preferred stock holdings. The Federal Reserve collected $17.7 billion thanks to profitable mortgage-related asset purchases by the limited liability companies established to facilitate the bailout of AIG's lending and credit default swap divisions—Maiden Lane II and Maiden Lane III, respectively. "On behalf of the 62,000 employees of AIG, it is my honor and privilege to thank America for giving us the opportunity to keep our promise to make America whole on its investment in AIG plus a substantial profit," Benmosche said when he announced the company's repayment to taxpayers. "Thank you, America, let's bring on tomorrow," he added. Since the financial crisis, AIG has diminished in size to about half of what it was. The company has rid itself of many of its non-core assets and now centers its business on its insurance operations. Citi, MidFirst Face Suit over Force-Placed Insurance A federal judge in New York has allowed a class action lawsuit against Citibank and MidFirst Bank over force-placed insurance practices to proceed. The plaintiffs are accusing Citibank and MidFirst Bank of maintaining a policy and practice of force-placing flood insurance above the amounts required by the borrowers' mortgage contracts and federal law. According to a statement from the plaintiffs' attorneys, Citibank and MidFirst asked the court to dismiss the case, arguing the borrowers' mortgage contracts permit them to force-place high premium flood insurance coverage in amounts the banks view as necessary. The defendants' motions to dismiss the case were denied. "Through this scheme, Citibank and MidFirst Bank have harmed thousands of borrowers by force-placing unnecessary flood insurance at extraordinarily high prices, which often results in unwarranted fees and other charges," said Shanon Carson of Berger & Montague, P.C., one of the lead attorneys for the plaintiffs. "In addition, each time the banks require such insurance, they receive lucrative financial benefits from the insurance companies who place the flood insurance policies." In an emailed statement, a spokesperson with Citibank said, "Contrary to the allegations, which the court was required to accept as true, we do not receive a

• Cover