Mortgage Meltdown: EMS Solution — Follow-Up to Wells Fargo Lawsuit

Program Approach to the Way Out: Send this to everyone you know

Baltimore suing Wells Fargo is a wonderful first step in setting the stage for softening the landing on the mortgage meltdown. They are completely correct, and the research behind the standing of governmental entities and agencies to sue the lenders is impeccable. This will turn into the same type of litigation as the tobacco litigation. The only difference is that we don’t really need an “insider” who will give us the straight scoop. It’s obvious. But we have been in touch with insiders who could confirm the intent and knowledge on the part of the lenders in the entire scheme, the plausible deniability strategy, and the complete understanding on the part of the lenders, the investment bankers and the institutional and retail sellers of derivative securities that this would have massive impact if successful. The only thing the perpetrators didn’t realize is that their perception of “massive impact” was a tiny fraction of what actually happened.

The next step is to set up a procedure to stop the foreclosures and force the lenders into an admixture of settlements that does not attempt to discriminate between borrowers. Attempting to find borrowers who knew that the price was inflated, or who should have known the payments would go up out of reach, etc., misses the point completely. It doesn’t matter even if the borrowers were co-conspirators (which they weren’t). What matters is that the foreclosures, sales, evictions and lowering of home prices all over the world will have a devastating impact that must be stopped. 

Any attempt to provide equitable relief based upon knowledge or other factors should be AFTER the settlement is put in place and that should be done by the appropriate legislative body. This plan can be done without legislation. In short, KEEP IT SIMPLE.

GTC | Honors is setting up procedures in Arizona, Nevada and Florida, thus far to provide a procedure for immediate relief to the court system and the various victims of this massive economic fraud. 

We are publishing the plan in the hope that others will emulate it and even compete with us. The idea here is to grease the skids of settlement, provide an incentive for lawyers and government to get involved, and to bring the foreclosure nightmare to a grinding halt. In our opinion this plan ought to apply not only to homes in which owners are in distress, but also to homes that have been foreclosed, and even where the the residents have been evicted (as long as the the place has not already been resold).

Here is the EMS Plan: 

Emergency Procedures are put into place within the office of the clerk of the court and the administrative judge to halt (Stay) all foreclosures and assign them to a special master who will mediate a settlement. Older cases that have already gone to judgment, sale or eviction would require a separate filing but would subject to to the same ESM procedures. 

The local government only needs to provide offices and communication and a watchdog person to observe, but not meddle, in the procedures set up by the Emergency Mediation System (EMS). Press access would be allowed provided privacy and the procedures are not impeded.

Easy filing forms are made available at the office of the clerk of the court having jurisdiction over foreclosures. Those forms are prepared by the sponsor of the Emergency Mediation System, in our case, GTC | Honors. (this is not rocket science. For those enterprising lawyers and business people who want to steal this idea and use it, expand it, alter it or amend it, we give full permission). 

EMS also provides the Special Masters, who must be approved by the Administrative Judge of the Court system having jurisdiction based upon criteria agreed between the sponsor (GTC | Honors) and the local court system (the administrative Judge). Out of state attorneys are allowed to participate if they meet the criteria, but the sponsor must agree to train local lawyers in EMS procedures so that they can become Special Masters.

EMS will also provide at its own expense an economist who will make independent recommendations on the suggested settlement. These recommendations will be regarded as a finding of probable cause that an illegal act has been committed, but that the parties are settling their differences. 

EMS provides settlement forms that are similar in style to local mediation rules. 

The execution of a settlement will not bar criminal investigation by the State but will constitute an opt-out of any class action lawsuit brought on behalf of borrowers. It will also constitute a covenant not to sue the lender, the appraiser, the title agent, the mortgage broker, or any other third party involved in the pricing, sale, valuing, or sale of the home, derivative securities backed by the lien on the home etc. As such it would constitute an opt-out or reduction of any governmental civil lawsuit against participating lender to the extent settled by each settlement agreement executed.

The settlement will result in  maintaining  or returning the owner/borrower to the home provided, at a minimum, that the borrower can and does pay all utilities, insurance and maintenance on the property, and that the borrower pays a monthly amount to be determined by the independent economist and the agreement of the parties. 

The settlement may result in the reduction of the value of the home at the time of purchase, in which case the right of the lender to pursue recompense from the seller would not be impaired.

The settlement will generally be for a term of ten (10) years and result in a reduction of payments from the amount set forth in the original mortgage and note, but will NOT contain any negative amortization features directly or indirectly, unless the residence is sold or refinanced at the option of the borrower/owner for an amount in excess of the original purchase price of the home, in which case the participation of the lender in the subsequent equity of the home shall be suggested by the independent economist and by agreement of the parties.

No settlement under these procedures shall be construed to alter, amend or otherwise change the required lending practices, securities sale practices or other disclosures or liabilities of any parties in any new purchase transactions that occurred after January 1, 2007.  

No settlement will be final until an order is entered by a Judge of competent jurisdiction. No such order will be entered unless it comes through the EMS system.

The lender shall pay a an initial fee to EMS of $5,000 payable in five semi-annual installments commencing with the day agreement is reached. The lender shall also pay a maintenance fee of $1,000 in annual installments commencing six months after the semi-annual installments are completed and continuing until the settlement is complete or the house is sold. The first installment of $1,000 shall be payable, regardless of whether settlement is reached on the day of mediation, which shall not proceed without such payment. Payment shall be made to the Clerk of the Court. In the event payment is not honored or cleared, the lender shall be subject to further prosecution and all waivers of prosecution of civil or criminal claims shall be automatically terminated. The settlement however shall remain completely enforceable and in full force and effect other than the exceptions stated in this paragraph. 

The clerk shall pay the divide the payments of $1,000 as follows: $75 to the Clerk’s Office as a special filing fee, $50 to the State General fund in which the property is located, $100 to the County in which the property is located, $75 to the Town or City in which the property is located, $75 to any local agency or entity that provides free legal services for those in need, and $625 to the EMS sponsor (GTC | Honors) generally to be divided as $325 to the Special Master, and $200 to the Independent economist and $100 for administrative overhead and profit, if any.

One-half of the fees paid by lender shall be added to the principle balance of the loan due and the value of the home when purchased for purposes of computations as set forth above. The lender shall pay for any recording fees required under the settlement agreement but shall not be required to pay documentary or value stamps or taxes as with a new loan.

This plan works! Try it.

Neil F. Garfield, Esq.

General Transfer Corporation

GTC | Honors

Customer Service 954-494-6000


One Response

  1. My house is almost in Foreclosure in spite of us trying to pull every possible trick we can to stop Wells Fargo. We are both Real Estate agents here in Las Vegas, not mortgage lenders. We send customers to companys such as ourselves they tell us the best loan and who is going to argue that? Nobody. Now look what this Illegal Lending Practice has done to this economy. How can we file a Large Class Action Lawsuit to stop Wells Fargo and other banks from kicking familys out of their homes?? This has to stop. They’ve ALL received Bailout money for the so called bad paper and yet these banks still won’t work with familys to stay in their homes. Why? Because they can and because they want to make more money on the resale of our homes!!! That’s why! This can’t be legal. If it is it’s wrong. I believe these banks owe these familys their homes now free and clear and maybe even some compensation but no one will step out and say it, but I will. This is wrong for Wells Fargo and other banks to continue to get away with this. WE WANT TO JOIN A CLASS ACTION LAWSUIT TO STOP THIS MADNESS AND GET BANKS UNDER CONTROL. Letting them continue to kick familys out of their homes is wrong. They’ve been paid by our Goverenment, and that’s enough. We’re fighting everyday alone with this to keep our home. We have until Feb. 3, 2009


    Alana Morgan
    David Morgan
    18 Big Creek
    Las Vegas NV. 89148

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