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UnitedBank’s Cash for Keys offers to homeowners: Are the offers credible?

On Sunday January 15, 2012, frequent poster on Foreclosure Defense matters, and respected Florida foreclosure defense attorney, Mark Stopa, posted the following disclosures with respect to offers made to Florida homeowners-borrowers to give up deeds in lieu of foreclosure, possession of their homes, and releases of liability for predatory conduct—all in favor of “BankUnited” in exchange for BankUnited’s legal promises to forgive them of debt in future.

Thus UnitedBank’s financial stability and its credibility are of critical importance to homeowners’ decision-making.. If UnitedBank asserts a right or makes a promise of current right to seize, as well as future conduct, can a homeowner dare rely on those representations and promises? To answer these questions It is necessary to review UnitedBank’s recent history and associations with offshore hedge funds, and current government scrutiny focused on this particular group in recent days. What role does the Deed in Lieu play in enabling the claims they make for FDIC insurance for every house they can cause to become vacant? Is it effective public policy that effectively converts Florida and New York home value into offshore cash holding accounts?

At the end of the day, one might wonder if it is appropriate government policy to pay questionable offshore hedge funds to dispossess US homeowners—or should the FDIC money be placed in escrow until all the comparative rights are carefully verified. Even if the entity manages to push the current owner out through intimidation and abuse? Should FDIC take the incentive out of this rush?

Background: old Bank United Failed
The backdrop is significant in setting the tenor of this deal-making. The trademark “Bank United” has a tortured and unique past. Bank United suffocated from losses on its own predatory mortgage loan products. Like WAMU, AHM etc.
According to a Supplemental FDIC release dated January 26, 2011,
“•BankUnited failed because it was a badly deteriorated institution with significant problems, primarily due to heavy use of non-traditional mortgage products.
•Over 60% of the loans in BankUnited’s portfolio were pay-option arm mortgages. BankUnited (prior to failure) was the country’s second largest writer of these types of mortgages” http://www.fdic.gov/news/news/press/2009/pr09072a.html
Other predatory lenders of this ilk either went bankrupt or were acquired by Big banks. However –unique to regulated banking—the purchase of control of this subprime bank’s assets was by a syndicate of unregulated offshore hedge funds including : ”Carlyle, Blackstone and Wilbur Ross”, per Reuters as published by New York Times. http://dealbook.nytimes.com/2010/10/26/silver-lining-in-f-d-i-c-s-bankunited-deal
Ross’ syndicate had already sounded out a smaller Florida Bank target.
According to an article in South Florida Business Journal by Brian Bandell , Date: Thursday, May 21, 2009, Ross is targeting elderly Floridians to increase his access to low cost cash deposits.
“Restructuring specialist Wilbur Ross runs New York-based W.L. Ross, which is buying a majority stake in First Bank & Trust of Indiantown. Ross said that bank wouldn’t be part of BankUnited. Instead, the new holding company will have W.L. Ross, Carlyle and Blackstone as the largest investors, and the other groups as minority partners, he said.
‘While the asset side of the bank has been very problematic, Florida, because it has so many prosperous retirees, has a good deposit base,’ Ross said. ‘The growth opportunities in Florida, with internal growth and further acquisition growth, are very considerable.’”
However, the South Florida Journal report was premature. The Ross syndicate had already focused on bigger game; BankUnited.
“Palm Beach billionaire Wilbur Ross last year announced a deal to pay $7.3 million for 68 percent of the bank’s shares, but the deal later fell apart as Ross focused on his stake in much larger BankUnited of Coral Gables.” http://www.palmbeachpost.com/money/well-known-treasure-coast-bankers-plan-to-take-732059.html
GOVERNMENT ROLE IN UNITEDBANK OPERATION to January 16, 2012

The syndicate took control in mid-2009 with help from FDIC
From FDIC “open site” in respect of the end of “old” Bank United:
“II. Press Release
The FDIC has issued a press release (PR-072-2009) about the institution’s closure. If you represent a media outlet and would like information about the closure, please contact David Barr at 202-898-6992.”
May 21, 2009
According to this FDIC “Release” May 21, 2009 ; the buyout group “ownership includes WL Ross & Co. LLC; Carlyle Investment Management L.L.C.; Blackstone Capital Partners V L.P.; Centerbridge Capital Partners, L.P. LeFrak Organization, Inc; The Wellcome Trust; Greenaap Investments Ltd.; and East Rock Endowment Fund.”
The deal was generally described in that release; “BankUnited, a newly chartered federal savings bank, acquired the banking operations, including all of the nonbrokered deposits, of BankUnited, FSB, Coral Gables, Florida, in a transaction facilitated by the Federal Deposit Insurance Corporation (FDIC).
Bank United, FSB had assets of $12.80 billion and deposits of $8.6 billion as of May 2, 2009. The new BankUnited will assume $12.7 billion in assets and $8.3 billion in nonbrokered deposits. The FDIC and BankUnited entered into a loss-share transaction and will share in the losses on approximately $10.7 billion in assets covered under the agreement. The loss-sharing arrangement is projected to maximize returns on the covered assets by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers as they will maintain a banking relationship. BankUnited will recapitalize the institution with $900 million in new capital.” http://www.fdic.gov/news/news/press/2009/pr09072.html

One might say that FDIC “bailed out the defunct predatory bank by guaranteeing much of its assets—home-loans? Put backs? FDIC then Media Contact: David Barr (202) 898-6992, Cell: (703) 622-4790. E-mail: dbarr@fdic.gov
The syndicate began “cashing in” on the banks assets and FDIC bailout by year-end 2010
By late 2010, barely 18 months after the FDIC bailout, press accountsrevealed BankUnited’s plans to make an Initial public offering [IPO] of common stock by the hedge fund group owners:
“… it is not going to look pretty for the F.D.I.C. when BankUnited goes public, which it can do from late next month under the deal it brokered 18 months ago. Investors including Carlyle, Blackstone and Wilbur Ross plugged $900 million of new capital into the bank. That equity is almost certain to be worth a multiple of what they paid. “ http://dealbook.nytimes.com/2010/10/26/silver-lining-in-f-d-i-c-s-bankunited-deal
FDIC’s 2009 Release is today supplemented by information relating to new ”BankUnited IPO Supplemental Fact Sheet, January 26, 2011” That further discloses the sale by the control group of shares to the public. The control group retained majority control. http://www.fdic.gov/news/news/press/2009/pr09072a.html
Per FDIC, “the initial set of investors will retain at least 67% of their initial investment in the company after the IPO.” [ibid]
However they appeared to walk away with nearly all their investment back, according to WSJ,
“…about 86% of the shares slated to be sold were from its investors. The BankUnited investors include big names such as financier Wilbur Ross and private-equity giants Blackstone Group, Carlyle and Centerbridge. Their combined take from the IPO: roughly $2.2 billion.
A caveat: The figures here are based on the shareholders’ stock holdings disclosed in BankUnited’s most recent regulatory filing. The company last night sold more shares than expected as part of the IPO – 29 million compared to the expected 26.25 million. It’s unclear for now how much of the extra stock sold came from Ross, Blackstone et al. We’ll update this post when we know more. In any case, these guys did great.

Hereinbelow is Attorney Stopa’s post;
“Bank United Offering Deficiency Waivers, Cash for Keys
by Mark Stopa Esq.
http://www.stayinmyhome.com/blog/2012/01/bank-united-offering-deficiency-waivers-cash-for-keys/

Tags: bankruptcy, borrower, cash for keys, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, LOAN MODIFICATION, modification, quiet title, rescission, RESPA, securitization, TILA audit, trustee, WEISBAND
Posted in bubble, Corruption, Eviction, securities fraud |