FORECLOSURE DEFENSE AND OFFENSE DISCUSSED: APPRAISAL FRAUD

QUESTION/COMMENT: ANSWERS IN BOLD

A client in NorCal was referred to me.  She took out an 80/20 loan first and second for about $650,000 total in 2005.  She has paid over $150,000 towards interest, payments and fees. SEE APPRAISAL FRAUD, CNN ARTICLE FOR 2005, APPRAISAL FORUM SPEECH FROM 2006, RECENT POSTS. TITLE COMPANY/TRUSTEE, LENDER AND OTHERS MAY BE LIABLE FOR INTENTIONALLY MISLEADING BORROWER AND INVESTORS UPSTREAM AS TO VALUE OF PROPERTY, WITHHOLDING FEES THAT THEY HAD KNOWLEDGE OF, KICKBACKS AND REBATES.
Besides the typical servicing, standing, and fraudulent assignment issues, I found the following after reviewing the file. The original lender is infamous New Century.  NEW CENTURY TAKEN OVER BY CMS FOR SERVICING ONLY. WELLS FARGO IS TRUSTEE. NEW TRUSTEE MIGHT BE REPLACING TRUSTEE IN DEED OF TRUST EVEN IF THEY DIDN’T MEAN TO DO SO. ACTUAL BENEFICIARY AS A RESULT OF POOLING AGREEMENT DATED AROUND SEPTEMBER 1, 2006 SHOWS THAT REAL PARTIES IN INTEREST (HOLDERS IN DUE COURSE) ARE HOLDERS OF PASS THROUGH CERTIFICATES OF ASSET BACKED SECURITIES. IN papers, they claim New Century still was beneficiary of deed when foreclosure started a few months ago then they substituted parties and trustees. IMPOSSIBLE. NEW CENTURY SOLD SERVICING RIGHTS AND OTHER ASSETS UNDER BANKRUPTCY COURT ORDER IN DELAWARE IN 2007.
In any event, TILA and ALL disclosures including the 2nd note (they did not provide copy of first note) shows a 30 yr term. Good faith estimate, payment coupons, EVERY DOC EXCEPT ONE shows show 30 yr term and final balloon payment in December of 2035 (30 years after taking out in dec 2005).
However, there is ONE DOC given at closing that shows loan is a 40 year LIBOR ARM NEWS ARTICLES SHOW THAT LIBOR RATES WERE WRONG BECAUSE OF FRAUDULENT REPORTING FROM AMERICAN BANKS) 2 year lock and details THAT loan program that she signed up for. THIS ALONE IS PROBABLY GROUNDS FOR RESCISSION AND BRINGING UP REAL PARTIES IN INTEREST, REPLACING TRUSTEE, REQUIRING JUDICIAL FORECLOSURE RATHER THAN NON-JUDICIAL SALE ETC.
Next, a letter she received when rate changed shows “remaining” 456 months due on note (minus 24 months = 480 for 40 years!) IMPROPER DEMAND: BASIC BLACK LETTER LAW, THEY HAD NO RIGHT TO PROCEED UNDER NORMAL COLLECTION LAWS.
I also cannot find right to rescind notices. RESCISSION AVAILABLE THROUGH MANY MEANS AND IF THE APPRAISAL FRAUD WAS BIG ENOUGH IT MIGHT INCREASE THE APR TO USURY RATES, WHICH ENABLES THE NOTE TO BE DECLARED VOID AND THE MORTGAGE SATISFIED. IF NO RIGHT TO RESCIND WAS EVEN PRESENTED THEN THE TILA-BASED RESCISSION TIME LIMITS WERE TOLLED MEANING YOU COULD DO IT ANYTIME.
Here’s the $300,000 question!!!!
The house NOW is only worth $350,000 for a $300,000 loss and almost half its value (maybe some appraisal fraud, they wont giver her appraisal).
So, if she rescinds and demands all money paid back, she’d have to tender the $650,000!  I know there are recoupment options in foreclosure (btw, she is Plaintiff in her suit and they are defendants)  but, what options on rescission do we have when someone is so upside down and does it even make sense to rescind or should we rescind on common law fraud and just ask  for money back and give the house back?
What do we do for all the people upside down when it comes to rescissions? I AM FOR THE ALL OR NOTHING STRATEGY THAT AIMS TO GET RID OF THE NOTE AND MORTGAGE IN THEIR ENTIRETY AND I HAVE DEVELOPED NUMEROUS STRATEGIES SUPPORTING THAT POSITION. LEGALLY YOU ARE NOT SAYING YOU WANT THE HOUSE FOR NOTHING, YOU ARE SAYING THAT THE REAL HOLDER IN DUE COURSE IS THE INVESTOR AND THAT THEY ARE THE ONLY ONES WHO CAN FORECLOSE. BUT IN ANY EVENT, BECAUSE OF THE APPRAISAL FRAUD AND THE DAMAGES CAUSED BY THAT, THE MORTGAGE CAN BE VASTLY REDUCED BY EQUITABLE POWERS OF THE COURT. KEEP IN MIND THAT DEBT CONVERTS FROM SECURED TO UNSECURED. IT IS THEN POTENTIALLY DISCHARGEABLE IN BANKRUPTCY BUT BE CAREFUL WITH PEOPLE WHO HAVE OTHER ASSETS AND IN STATES WHERE HOMESTEAD EXEMPTION IS LIMITED. FILING BANKRUPTCY LIMITS HOMESTEAD EXEMPTION TO $125,000 EVEN IN FLORIDA WHERE IT IS THOUGHT TO BE UNLIMITED. NEW BANKRUPTCY BILL MADE IT RISKY TO GO INTO BKR COURT IN FLORIDA BECAUSE OF THAT.
Nye
PS if workable, will be sending you her file in PDF later for audit, but before we spend money on audit, need to figure if anything to be gained! GET THE AUDIT!!!!

5 Responses

  1. […] FORECLOSURE DEFENSE AND OFFENSE DISCUSSED: APPRAISAL FRAUD […]

  2. Thanks. How do I go about getting an audit? And what does that entail. I’ve only been trying to play paralegal for my husband for what is now about 36 hours and I’m kind of punch drunk as I could not sleep. I saw a few references to this but was too busy trying to research the fraudulant docs and MERS to go much further with it.

  3. Here’s one for the experts. My husband refied in 2006 before the real estate market went into the toilet, we were not married at the time, but I was present for his closing, as he wanted a witness. Flash forward…Loan Lender was AIG. Nominee/Mortgagee is MERS. God bless this site by the way, I was up all night reading all of the wonderful information on how to spot fraudulant documents. Needless to say he is in foreclosure. We hired an attorney and paid $2000 along the way and it has been going on for a while. Litton Loan Serving was who he made the payments to and who all correspondence went through. When we are served Lis Pendens we hired the attorney. We could not continue paying him as we both were laid off on the same day and simply cannot afford it on unemployment. The attorney withdrew right after we were served with the Motion for Summary Judgement. Court ordered the summary judgement for June 10, 2010. Court accepted our request for withdrawl of counsel. Three days before the summary judgement hearing we get a cancellation of hearing requested by plaintiff attorney Shapiro (of the what I have found to be the Infamous Shapiro and Fishman in Tampa FL). We just received a motion to dismiss on the entire suit on 6/23/10. We were waiting for a new hearing to be set, but instead they “Voluntarilly requested to dismiss the action.” So now I’m really shaking my head…our attorney advised us before he withdrew that at summary judgement we would lose and that the judge would set a sale date of not less than 30 days up to 120 days or more from the date of the hearing. I’m wondering, they were so close to getting the property, what’s up? And then I found this site and I think I have found out what’s up.
    1) MERS is listed as a nominee/mortgagee on the original Mortagage.
    2) A Marti Noriega (although an employee of Litton Loan Serviing, listed her as VP MERS) signed an Assignment of mortgage to US Bank National Association on 7/28/09. It was notarized by Melissa Bell. When searching this site, both of those names popped up.
    3) Judge Rob Crown, Circuit Court Collier County case 09-142-CA ordered April 28, 2010 (again thank you for the wonderful resourses on this site!) granted defendants motion to dismiss and found as part of the order that MERS had no authority to sign the Assignment of Mortgage, as it has “limited powers” of it’s own testimonial when MERS defended itself in the Supreme Court of Nebraska and stated it’s VERY LIMITED CAPACITY to avoid licensing requirements. Apparently one judge decided they could not have it both ways! LOL
    My question is, the Lis Pendens was filed with the court on 08/04/09 the assignment was filed on 8/24/09. NOW WE ALL KNOW IT WAS BACKDATED. The best part is that according to Judge Crown, MERS did not have the authority to assign the mortgage in the first place. Now that the court has received and recorded all these documents, what do you think is going to happen next? What should our course be? I’m searching hourly on the Charlotte County website trying to find additional documents from other loans with the same signatures, etc. Not sure if we can do anything, but if it smells fishy, something ain’t right!
    Any advice would be greatly appreciated.

  4. Actually New Century’s liquidation plan wasn’t approved until August 1, 2008. Didn’t stop them from transferring my mortgage the day they filed BK on 4/2/07 though.

    Wonder how that will play out in court. Actually we’ll see because I already filed my answers including lost note, bk fraud, counter-claims, etc. I just got this funny little postcard saying “If anyone wishes to prosecute this case they need to file a dispositive motion or it will be dismissed.” What does that mean? Is that good?…lol

  5. Yes … by all means, get a mortgage audit done if you can. At least that way you’ll have proof to back up your claims in court. Just keep fighting any way you can, and don’t give up. If enough of us do so, these guys can be exposed for who they are and what they’ve done.

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