March 26, 2012
By Scott D. Schwartz from Rust, Armenis & Schwartz on March 26, 2012 11:11 AM

Wells Fargo.jpgHomeowners throughout Northern California continue to suffer because of the decline of property values and loans that can not be refinanced due to the decline in property values. While some lenders have allowed borrowers to modify their loans, the modifications often do not solve the problems facing the borrower and the modifications often require the borrower to pay back arrears created by the modification process. Lenders generally will not consider a modification unless the borrower is behind in the loan. The lenders then often take months before they provide their decision on the loan. As a result, the loan cannot be modified because of the arrears that have to be paid back in the modification.

If you are having problems with a loan and the loan is not secured because the value of the property has declined, you may be able to obtain relief through bankruptcy. In some cases, a second loan that does not have security can be stripped in a Chapter 13 bankruptcy and the arrears can be paid back over five years. In the alternative, the loan arrears can be discharged if the property is surrendered in a Chapter 7 bankruptcy.

In Securities and Exchange Commission v. Wells Fargo & Co., 12-80087, U.S. District Court, Northern District of California (San Francisco) the Securities and Exchange Commission (SEC) is investigating Wells Fargo to evaluate whether or not its sale of almost $60 billion in residential mortgage-backed securities involved fraud. The SEC has been examining how many banks packaged and sold home loans to investors that resulted in the financial crisis. The SEC is looking for evidence that banks failed to disclose underlying credit weaknesses in mortgage pools and delinquencies. In other investigations, the SEC has told Goldman Sachs Group Inc. and JPMorgan Chase & Co. (JPM) that they may face civil claims.

The Securities and Exchange Commission recently asked a federal judge in San Francisco to compel Wells Fargo, the largest U.S. home lender, to deliver documents it agreed to produce under subpoenas dating from September 2011. The SEC in the Commission's San Francisco Regional Office issued several subpoenas to Wells Fargo since September 2011 seeking, among other things, materials related to due diligence and to the bank's underwriting guidelines. According to the SEC, Wells Fargo agreed to produce the documents, and set forth a timetable for doing so, but Wells Fargo has failed to produce many of the materials.

Pursuant to its Application, the Commission is seeking an order from the federal district court compelling Wells Fargo to comply with the SEC's administrative subpoenas and to produce all responsive materials to the staff. The SEC notes that it is continuing to conduct a fact-finding inquiry and has not concluded that anyone has broken the law. The SEC is examining whether Wells Fargo misrepresented or omitted facts in offerings from September 2006 to early 2008, according to the application. While the bank reviewed a sampling of loans and excluded those that failed to meet its standards, Wells Fargo may not have taken steps to address flaws in the remainder of the pool, the SEC claims
The SEC's request, if granted, would give Wells Fargo 14 days to hand over 1,365 e-mails and attachments it has withheld from the SEC, according to the court filing. Wells Fargo said in a statement that the enforcement action is unwarranted and that it will defend itself in court.

Wells Fargo said in its annual report filed February 28, 2012 that it received a notice from the SEC warning the bank that it may face civil claims tied to the sale of mortgage- backed securities. SEC lawyers send the notices when they intend to recommend that the agency take action. Four days before, on February 24, 2012 the SEC told Wells Fargo that it was considering enforcement measures, the SEC said in its court filing. The bank has attempted to use that as an "excuse to avoid complying with the subpoenas," the SEC said in the filing. "There is no basis for Wells Fargo's refusal to comply with the subpoenas because a Wells notice, such as the staff provided, does not terminate the commission's investigative power," the SEC said in its filing. The scope of the SEC's probe "involves not just Wells Fargo's own potential violations of the securities laws, but the roles played by other persons associated with the bank's residential mortgage-backed securities offerings," according to the filing.

If you are having problems with your lender and facing foreclosure, you should seek advice from a bankruptcy attorney to determine what options are available to you. We provide free legal consultations for bankruptcy in San Francisco County, Sacramento County, Alameda County, Contra Costa County, San Mateo County, Santa Clara County, Stanislaus County, San Joaquin County, Marin County, Solano County and throughout Northern California. Contact us for a free legal consultation today.