Pretender Lenders Try to Get Third Parties to Clear Up Title, Assignments

Editor’s Note: Nationwide (described in the article below) is not the only company that is in the business of trying to “clear up” the title, assignment and, ownership and recording problems caused by the manner in which the loans were securitized. In many cases we are seeing fabricated documents, signatures from unauthorized people, notarization in a place where the signatory was clearly not present and false dating. Which goes back to my basic strategy: CHALLENGE EVERYTHING, IT IS GENERALLY ALL A LIE. THAT IS WHY WE CALL THIS LIVINGLIES. Just because they are big doesn’t mean they are right or even honest. Chances are, even if you have served time for bank robbery, you are more honest than the people put this scam over on the American borrowers and foreign investors.

Just think about it. Who is signing this new documentation? Most of the originating lenders are dead and buried. How can someone claim to be a VP of a dead company? And even if that signature was authorized, so what? The loan belongs to some group of investors or some insurance company that bailed out the investors, or the counterparty to a credit default swap, or the U.S. Treasury who paid $600 billion so far for “Troubled Assets” or the Federal reserve which has extended credit taking the “troubled assets” as collateral. This isn’t complicated from the borrower’s point of view. The borrower has a right to know the identity of the true lender as of the current time whether his loan is in default, foreclosure or already has been foreclosed.

AND the borrower has a right to know if someone has paid off the obligation and if there is some new obligation or new contract caused by the various permutations of pooling, insuring, cross collateralizing, bailouts etc. If there is an obligation who is the obligor? Whop is the obligee? What is the current amount of the obligation? What are the terms? In simple terms, who owns this mortgage (if anyone) who owns the note (if anyone) who do I pay my monthly payment to? Am I at risk of making payment to some company just because they said so, and then receiving a claim from several other companies having the original paperwork on the same loan, the same note, the same mortgage, and the same property?

Tampa Bay companies help lenders transfer home loans, foreclose

By Susan Taylor Martin, St. Petersburg Times Senior Correspondent
In Print: Sunday, May 3, 2009

Despite the turmoil in the lending industry, Bryan Bly seems to have no trouble finding a job.
On Aug. 3, 2007, Bly signed a document as vice president of Option One Mortgage.
On Feb. 13, 2009, Bly signed a document as vice president of Deutsche Bank.
And on Feb. 18, 2009, Bly initialed dozens of documents — this time as vice president of Citi Residential Lending.
In fact, Bly never worked for any of those. His real employer is Nationwide Title Clearing, a Pinellas County company that helps lenders clean up problems that can complicate efforts to foreclose.
Bly, who lives in a Clearwater trailer park, is one of several Nationwide employees authorized by lenders to sign as “vice president” in assigning loans from one company to another. Assignments are key in determining who actually owns the loan, an issue that has become all-important as banks foreclose on millions of loans that were bundled into securities and sold to investors.
Nationwide says the assignments and other services it handles for lenders help ensure everything is legal and above board if they sell a loan or need to foreclose.
“We’re pretty much sticklers that what we put in the record is legitimate,” says Jeremy Pomerantz, a Nationwide spokesman.
Critics, though, say that Bryan Bly and “vice presidents” like him at similar companies are part of an assembly-line process designed to resolve a big problem: In the rush to “flip” loans as fast as possible in order to make more money, the new loan holders often failed to get the proper paperwork showing they owned the loan and had the right to foreclose.
“The problem is that when lenders foreclose, they have to have all their ducks in a row,” says Rob Napolitano, a New Jersey mortgage expert. “They’re trying to doctor up these assignments in order to create an ownership trail that didn’t exist in the first place.”

Signatures challenged
At a time when one in every 159 American homes is in foreclosure, the seemingly slapdash way in which loans change hands is giving homeowners a tool to delay or even stop the foreclosure process. More and more judges are demanding that the party seeking to foreclose prove that it owns the loan “note” — the borrower’s promise to repay the debt.
In New York, a judge dismissed Deutsche Bank’s motion to foreclose on a $408,000 loan last year because it had started foreclosure proceedings while the loan was still owned by IndyMac Bank.
The judge said he wouldn’t reconsider the case unless Deutsche explained why one woman — Erica Johnson-Seck — had signed as vice president of two different companies. The judge also said he was “perplexed” as to why both Deutsche and IndyMac had the same address, and why an affidavit by Johnson-Seck, who supposedly worked in California, was notarized in Texas.
In New Jersey, another foreclosure case was thrown out after the “vice president” for Deutsche Bank acknowledged she was only an assistant secretary. “She said she was told to fill out the paperwork however it needed to be done in order to make the document look valid,” Napolitano said.
To help homeowners protect themselves from questionable, even illegal foreclosures, Tampa attorney Chris Hoyer started the Consumer Warning Network last year. The Web site, which now gets as many as 80,000 hits a day, gives tips on challenging foreclosures — “Make ‘em produce the note!” — and sample letters for contacting lenders.
“The intent is not to get someone a free house, but to delay the foreclosure and put pressure on the lender to negotiate,” said Hoyer, a former federal prosecutor.
Among those who have been helped by the site is Thomas Worthington, who lost his information technology job in November. Although he has yet to miss a payment on his Sarasota home, he decided in February to try to modify his loan terms.
That’s when Worthington learned that the right to collect his payments had been sold to American Home Mortgage Servicing, AHMS. But public records showed that the loan itself had been assigned to Deutsche Bank on a document signed by Crystal Moore, a vice president of Citi Residential Lending.
“So I called AHMS and asked them who owned my mortgage,” Worthington said. “I got a service rep in India, and he said, ‘We own your mortgage.’ ”
Suspicious, Worthington sent the company a letter asking for the loan note, appraisal and other documents proving that it really did own his loan. The response he received might help him fight foreclosure if it ever comes to that.
“What I got back was a copy of the title report,” Worthington said, “which leads me to believe they have squat.”
Nationwide steps in
Worthington’s loan wasn’t the only one assigned to Deutsche Bank in February. Records in Pinellas, Pasco and Hillsborough counties show scores of assignments with Crystal Moore as vice president. Moore appears to have been in a big hurry — instead of signing her full name she scrawled a single loopy initial.
Like Bryan Bly, Moore is actually an employee of Nationwide Title Clearing. And the assignments she and Bly initialed in February were done under a contract with Citi Residential to make sure Deutsche Bank was shown as the owner of thousands of securitized loans.
Founded in 1992, Nationwide is a private company that occupies a swath of low, white buildings in Palm Harbor.
From 300 to 400 employees at the peak of the real estate boom, Nationwide now has about 115 who handle tax and title searches, lien releases and other services for dozens of lenders. It also updates information for MERS, the electronic mortgage tracking system created by the lending industry to reduce paperwork and recording fees as loans change hands.
To expedite transactions, Nationwide gets resolutions from lenders that authorize Bly, Moore and other employees of “proven reliability” to sign as their vice presidents, said Pomerantz, the Nationwide spokesman. On a big project like the Citi-to-Deutsche loan assignments, “they may sit there all day for a week and sign.”
“We follow every little requirement, far better than most banks do,” Pomerantz said, adding that “every one of our competitors uses the same methodology.”
But it is exactly that assembly-line process that makes critics wonder if “vice presidents” can be certain that what they are signing is accurate and legal.
“Papering over a hole doesn’t make the hole disappear,” Hoyer said. “Using this device to present an air of legitimacy is an affront to the judicial system and a stain on society.”
Susan Taylor Martin can be reached at

27 Responses

  1. I like the idea of criminaly prosecuting the lender and his attorneys who fabricated the assignment for forgery. Has anybody done that yet?

  2. Neil
    On 4/9/09 I sent Litton another extended Recission certified RR, this time I stated some specific facts on my grounds for rescission but I made sure to clearly offer tender of the property in exchange for the proceeds lien release original note & all that demanding response within 20 days. while all this is going on my attorney that sat on my case forever & soaked up my cash is asking the court to withdraw from the case leaving me lawyerless. I’ve sorted through some of the FDCPA statutes that Litton violated & I know if you do answer your gonna tell me “Quiet Title” but I can’t find a competent lawyer anywhere. Walter said he might be able to find someone… I whould try to do it myself but because my Dad’s the Primary I can’t. So if you can think of any..body..thing I can Hire…Buy for drafting or recording something like that please don’t hesitate to humor me even if it’s for your own ammusement at my expense.

  3. Here is a link to one of the articles:


  4. This is from the The Home Equity Theft Reporter:

    Sloppy Lender Lawyers Making False Statements Running Rampant In C. Florida Foreclosures? Chief Judge To Recruit Law Students To Review Court Files
    In Central Florida, the Sarasota Herald Tribune reports:

    * Foreclosure lawyers want to take back property as fast as possible, and sometimes they do not let the facts slow them down. In case after case, lawyers representing banks are giving false statements in court about who owns mortgages, or whether the homeowner is willing to negotiate, or whether they have completed all the legal steps to put a foreclosed house back on the market.

    * The errors and fabrications in the court files are seldom caught by judges with hundreds of foreclosure cases before them.(1) The judges say they can only hope to catch a few of the offending lawyers in hopes of keeping the rest honest. The courts usually rely on defendants to point out problems in the cases against them.


    * Nobody knows how common it is for foreclosure cases to be based on untrue statements or incomplete proof. More than half of all foreclosure defendants simply walk away, and never show up in court to defend themselves.

    * A Sarasota attorney, Richard Kessler, enlisted a few friends to go through 180 foreclosure cases in Sarasota County looking for errors. They found three out of four cases proceeded with incomplete or improper documentation. For instance, the survey found that only one in 12 cases had the documents to prove the company foreclosing on the property was also the company holding the mortgage note. In half of the cases reviewed, the plaintiff said the mortgage note had been lost.

    * Kessler contacted [Florida’s 12th Judicial Circuit Chief Judge Lee] Haworth and offered to have his business double check the paperwork for the courts, proposing that his fee could be charged to the company filing the case. Haworth declined, saying he cannot add such a filing fee, and the courts have no money to pay for the service.

    * Instead, Haworth is recruiting volunteer law students to review all the cases for foreclosure judges this summer to verify documents. “We think having cops on the beat will help,” Haworth said.


    * A judge in Miami fined Wells Fargo bank $95,000 late last year because of sloppy paperwork filed by Florida Default Law Group, one of a handful of companies that handle the majority of foreclosures in the state. Judge John K. Olson blasted Florida Default, saying the firm seemed to believe that “filing any old pleading without undertaking any investigation into its accuracy is perfectly acceptable practice.”

    For more, see Lies a new tool in foreclosure (Lawyers, in rush to regain properties, can exploit judges’ workload).

    Go here for other posts on sloppy foreclosures and assembly line lawyering.

    For posts that reference the failure of mortgage lenders and their attorneys to file the proper paperwork when bringing foreclosure actions, Go Here, Go Here, Go Here, Go Here, Go Here, Go Here, and Go Here.

    (1) In one case cited in the article, minutes after a foreclosure attorney told her everything was in order in a recent case, Circuit Judge Donna Berlin was ready to sign off. Then she happened to glance at the file, and realized that the two properties were in Miami, a few hundred miles outside her jurisdiction. “I didn’t have time to go through and read it,” Berlin told a group of attorneys at a meeting last weekend. “And it was not something that I normally look at.” SloppyForeclosuresAlpha EpsilonMissingDocsMtg

    posted by Home Equity Theft Reporter at 4:13 AM


    Finally, we are seeing a clear breakthrough from local judges. I thought it was the bankruptcy judges who “get it,” but this indicates that local judges are beginning to “get it.”

    It’s up to us to continue to keep the spotlight on the falsity of the documents being filed.


  5. Where in Florida are you Sandy?

  6. I’m in the midst of defending against several foreclosure cases (Tampa Bay area) and I have noticed a new trend with the two most recent cases I have taken on. Wells Fargo has shifted away from naming themselves as “trustee” and are now just filing in their own name straight up. They have attached a copy of the note with stamped indorsements (but two of the endorsements have the same person signing for two different lenders – a flaw I will exploit). The last indorsement is a blank endorsement from Wells. It is evident that this lender is trying to wiggle into standing as a “Holder” of the note hoping that will be enough. They are splitting hairs, in essence, and will be depending on the Reveredo case (Fla 3d DCA, 2007) as authority. This case misquotes the law in florida and cuts against the prevailing procedure in Florida that requires a foreclosing lender to plead and prove that it both HOLDS AND OWNS the note. And, true to form, Wells Fargo has only pled that they Hold the note. This is their attemp to protect and keep from the light of day the true owners of your note and mortgage and frustrate your attempt to look behind the curtain and see the real party in interest, whom you may have a counterclaim against.
    I intend on ripping that curtain down.

  7. civil judge ruled against us on may 5th, plaintiff/servicer produced the mortgage and note signed in blue. i think it was in blank because that is the copy i was given, however i’m not sure. two requests for discovery to inspect the note and mortgage for possible fraud and i still don’t know. the first time they said it was propriatory information, second time they requested an extention of time to produce. then they filed a motion to strike the lost note affidavide and mailed it to me on april 27th and foreclosed may 5. and i still don’t have the information i asked for, i was trying to defend this myself because i have little to no extra money, and all the judge would say to my questions was “you need to ask a lawyer”. this was in florida. anybody have any ideas? the stress is tearing us down, both my husband and i have ended up in the hospital since this has started, and we were never sick before.

  8. All the dirty laudry in CA is in the County Recorders office.

  9. Hi Neil ,
    Keep up the good work !! Bless you and Brad !

    I live in Florida ..I am in a foreclosure battle against the alleged final “Lender ” ‘

    I am not a lawyer , nor pretend to give any legal advice.

    I have been reading lately about how the ” Lenders ” are fixing their paperwork with bogus signatures ,and ” Vice Presidents” ( VP )s are signing important transfers /
    assignments documents so as to provethat they are the real holders of the note.

    Who are these V.P. ?? anyway ??

    In my case I was presented in my foreclosure with a alleged copy of the
    ” Original note ” with the original Lender ” A” paying to the order of Lender ” B ” and lender B paying to the order of

    Lender ” C “…my foreclosing “lender” ..

    They were signed in a stamp identifying their different , and signed by both Vice .President..for lender’s A & lender B..

    ## Hint : Big Office supply stores , sell customized stamps with whatever names you want on them for..
    for $ 10.00 more or less. ???

    Guess what I did ..I’ve was a tax collector many years ago , and had experience in searching Corporation registers at the State Dept. to find the name of the officer’s involved and responsible for the

    I looked into my Florida State Dept.on line register and found the ” Profit Corp. Annual Report ”
    of both ” lender’s A” and “lender’s B ” and checked the list of officer’s : ..the Director’s, Secretary, CEO’s..who are responsible for each of the different business’s .

    Well guess what ? those two ” Vice President’s ” . who signed those ” Pay to the Order ” stamps were not in any of the Corporate officers list .

    Guess what ! Both Corp. have closed in the past years.

    In my case ..My foreclosing ” lender ” claims to be the owner of the note , thanks to these two mysterious Vice President’s who have transferred the original note to them ..

    I don’t know if Vice Presidents are excluded from appearing in the Profit Annual Reports or not in Florida.

    In my earlier job as a tax collector in another state not Florida where I live today..

    …the President, Vice President, Secretary ,and Treasurer had to be in all Official Corp. documents. Especially the corporation profit annual report …

    Check the Corporations in the State dept. if you have a case similar to mine, where you see several transfers in the alleged Plaintiff’s note .

    This information may help you in your defense ..if the Corp. officer ‘s paying to / or transferring the note’s are impostor’s or a fraudulent move by your foreclosing
    ” lender” .!!

    Lots of Luck my friends ..I am fighting all the way ..until I win my case.

    L Fitzgerald ProSe

  10. Here follows a summary and analysis of the Judge Sigmund opinion by Texas Bankruptcy Attorney Stephen Sather

    SUNDAY, APRIL 26, 2009

    Pennsylvania Judge Writes Epic Opinion on Technology and Professional Responsibility

    Technology has dramatically changed the practice of law. Thanks to Westlaw and Lexis, it is no longer necessary to keep large expensive libraries. PACER and ECF have made court filings and filing documents available 24/7. I recently observed a case where the parties used GoToMeeting to handle thousands of pages of exhibits electronically. All of these developments have made the practice of law more efficient. However, a recent opinion from Judge Diane Weiss Sigmund highlights that professionals must be masters of the technology rather than being mastered by it. In re Taylor, No. 07-15385 (Bankr. E.D. Pa. 4/15/09).

    The Taylor case started with a simple question that comes up frequently in consumer bankruptcy cases: Why couldn’t the creditor’s lawyer get a payment history? The answer given to this question prompted Judge Sigmund to launch a one year investigation into the technology behind the case and how it was being used and to award some very creative sanctions. The Judge authored a 58 page opinion ”to share my education with participants in the bankruptcy system who may be similarly unfamiliar with the extent that a third party intermediary drives the Chapter 13 process.” Opinion, p. 30.

    What Happened

    Taylor involved a chapter 13 filing to try to keep a house. Two firms appeared on behalf of HSBC, the mortgage holder. A national firm filed a proof of claim, while a local firm filed a motion for relief from stay and responded to an objection to claim. All three documents were defective. The proof of claim attached the wrong mortgage and listed the wrong payment amount. The motion for relief from stay recited that the debtors had failed to make their post-petition payments for three months, when in fact they had been making the payments, but at a lower amount due to a dispute over flood insurance. According to the Court, “at the time the Stay Motion was filed, the Debtors were short $360 for payments more than 60-days overdue, a fact not clear from the canned pleading prepared by a paralegal from New Trak screens. The Debtors were charged $800 for the cost of the motion.” Opinion, p. 14. The motion also recited that the debtors had no equity in the property which the attorney later attributed to being part of a boilerplate form. The response to the objection to claim said that the claim was just fine when it was not.

    The Debtor’s attorney did not do much better. She filed a late response, which incorrectly stated that the debtors had made all of their payments but they had been returned by HSBC. The Debtor’s attorney also failed to respond to requests for admission tendered with the motion, incorrectly believing that her response to the motion was sufficient.

    Upon receiving the Debtor’s attorney’s response, HSBC’s local counsel continued the hearing for further investigation. The Debtor’s lawyer then filed an amended response, which included copies of the checks for the months of September through January with both front and back and the checks for February and March with just the front. The amended response alleged that the payments for September through March had all been made. As it turns out, the reason that there were only copies of the front side of the February and March payments was because the Debtor’s counsel was still in possession of these checks which had not yet been tendered. Debtor’s counsel erroneously mailed these checks to the person at HSBC’s attorney’s office who handled Sheriff’s Sales rather than to the Bankruptcy Department. The person in the Sheriff’s Sale department sat on the checks and did not inform the Bankruptcy Department that they had been received. The Debtor’s counsel also requested a payment history.

    On May 1, a young associate appeared for HSBC and insisted on prosecuting the motion even though he had been provided with proof of payments. The young attorney sought to proceed based on the deemed admissions even though he knew they were not accurate. The court denied the motion and instructed the debtor to escrow the disputed flood insurance premiums while the parties worked through the issue.

    One month later, the parties appeared on the claims objection and things rapidly escalated. The young associate (he had been licensed a few months at the time) stated that he could not get a payment history from his client. He explained that he had submitted a request for a payment history through an electronic system, but that he was forbidden to speak directly with the client. This statement caused the Court to issue a show cause order.

    In response to the Court’s Show Cause Order, HSBC retained new counsel and the problem with the claim was quickly settled. As noted by the Court, “What could not be accomplished for six months through the use of electronic communication was finalized in an hour the old way, by people sitting down with all relevant information and talking to each other.” Opinion, p. 19.

    While the contested matters were quickly settled, the Court was not satisfied. It launched an inquiry which brought the technology center stage.

    The Technology and Professional Responsibility

    The technology involved was the NewTrak system developed and operated by Lender Processing Services, Inc. f/k/a Fidelity Information Services, Inc. To its credit, LPS was “extremely cooperative” with the court’s inquiry and “provided a detailed demonstration of how NewTrak works in a hypothetical case.” Opinion, p. 9, n. 15. As a result, the Court had a substantial knowledge base to draw on when writing her opinion. NewTrak is an automation system which allows lenders and attorneys to communicate with each other. The lender uploads its information onto the system which then generates a referral to an attorney on the approved list. The attorney receives the information and generates the proof of claim, motion for relief from automatic stay or other pleading. The system also allows the attorney to request information from the client by opening an issue on the system. Another system called the mortgage servicing platform handles routine mortgage servicing. According to LPS, it was used by 39 of the 50 largest banks in 2007 and processed approximately 50% of the loans in the United States.

    While NewTrak provides a flow of information between attorney and client, it is not meant to prohibit direct contact between the parties. The Default Services Agreement specifically provides that “The Firm will never be prohibited from directly contacting any client where, in the professional opinion of the Firm such contact is necessary.” Opinion, p. 34, n. 45. As a result, the agreement contemplates that the Firm will exercise professional judgment. However, the Court found that when an attorney mechanically uses the system “the attorney abandons any pretense of independent judgment to the greater goal of expeditious and economical client service.” Opinion, p. 31.

    The Court contrasted the benefits of using the technology with its pitfalls when a matter is not routine.

    It is a regrettable reality, especially in this economic climate, that many homeowners are defaulting on their mortgages. While bankruptcy affords an opportunity to save the family home through a Chapter 13 plan that stretches the payments of mortgage arrears, it also requires debtors to maintain current payment on their mortgages. (citation omitted). This obligation is beyond the capability of many debtors who use a bankruptcy to forestall the inevitable. It seems reasonable that a mortgage lender should be able to avail itself of economic and expeditious means of collecting defaulted loans through the use of technology and delegation of tasks to lower cost labor. In many cases, the motions are granted by default, the debtors, or often more accurately their attorneys, filing no answer or making no appearance, where there is simply no defense to the relief sought. However, where, as here, the debtor contests the relief sought, the flaws in the automated process become apparent. At this juncture, an attorney must cease processing files and act like a lawyer. That means she must become personally engaged, conferring with the client directly and abandoning her reliance on computer screens as an expression of her client’s will. This did not happen in this case until the Court became involved. It should not have taken judicial intervention to bring the Claim Objection to its conclusion.
    Opinion, p. 32 (emphasis added).

    In this case, the court found that professional judgment was not used.
    The attorney for the national firm which filed the proof of claim testified that he reviewed only a representative sample of 10% of the claims which were electronically signed with his name. He did not review the specific claim in this case and as a result, did not find the mistakes in it.

    The president of the local firm which utilized NewTrak testified that he delegated the administrative aspects of the firm’s practice and was unaware of how NewTrak worked.

    The head of the bankruptcy section of the firm electronically signed all of the pleadings in the matter, but delegated all of the court appearances to an attorney who had been licensed for only one month when the initial pleading was filed. The court found that the head of the bankruptcy section failed to supervise the young attorney and asked the rhetorical question, “Could it be with ten lawyers and 130 paralegals and processors, a young attorney is expected to figure it out himself?” Opinion, p. 42.

    The Court also found that the client had restricted the firm’s authority.

    The Udren Firm’s authority from HSBC allowed them to take only three actions: (1) seek a continuance; (2) settle with Motion with an agreement for a six month maximum cure of the mortgage arrears with an agreement for stay relief upon certification of default of any future payment; and failing either of the foregoing; (3) press the motion. (citation omitted). No consultation with HSBC was expected nor occurred during the pendency of the contested matter.
    Opinion, p. 37, n. 49.


    The Court found that several parties to the case had violated their obligations under Rule 9011, including the obligation to make reasonable inquiry. However, the Court was also mindful that sanctions should be “limited to what is sufficient to deter a repetition of such conduct or comparable conduct by others similarly situated.” Rule 9011(c)(2). As a result, the Court granted some very creative relief.

    As to the Udren Firm, which acted as local counsel, the Court found that the expense of having to hire counsel and defend itself and the productive time lost in attending to the matter was punishment enough. However, the Court devoted additional attention to the specific lawyers from the firm.

    The Court found that the head of the Udren Firm’s bankruptcy section “may be so enmeshed in the assembly line of managing the bankruptcy department’s volume mortgage practice that she has lost sight of her duty to the court and has compromised her ethical obligations.” Opinion, p. 52. The Court ordered her to obtain 3 credits of CLE in professional responsibility/ethics in addition to her regular requirements.

    The court declined to award sanctions against the young associate, finding that “I believe these proceedings have been very hard on this young lawyer and while lack of experience is not a defense to a Rule 9011 violation, I suspect that he has learned all that he needs to learn without protracting this unfortunate time in his nascent career.” Opinion, p. 52.

    The Court found that the head of the firm “sets the tone and establishes its culture. He notes his firm’s reliance on NewTrak and other such aids as essential to the economic structure of the law practice. However, he had little familiarity with the actual operation of NewTrak and did not appear to get involved in the ‘weeds’ of the bankruptcy practice.” Opinion, pp. 52-53. The Court found this lack of involvement to be troubling and ordered relief accordingly.

    Mr. Udren may not be aware of the questionable practices imposed by his firm’s acquiescence to NewTrak and how little legal judgment is employed as a result or he may be aware and find it acceptable. To examine these practices in light of extant ethical obligations, I will direct him to obtain training in NewTrak and spend a day observing his bankruptcy attorneys, paralegals, managers and processors as they handle referrals. Since policy emanates from the top, I will also order Udren and (the head of the bankruptcy section) to conduct a training session for all members of the bankruptcy department in the appropriate use of the escalation procedure and the requirements of Rule 9011 with respect to pre-filing due diligence.
    Opinion, p. 53.

    The Court did not award sanctions against the national firm which prepared the proof of claim, but not because she found their conduct appropriate. The Court found that the record had not been fully developed with regard to this party, that the practices were national in scope and that the U.S. Trustee was investigating the firm. As a result, the Court left it to another day and another court to address these issues.

    The Court found that some of the problems in the case resulted from the Udren firm’s reluctance to contact its client directly and found that other firms used by HSBC might be under the same impression. As a result, the Court ordered HSBC “to prepare and transmit by mail and e-mail a letter to all the Network Firms outlining the escalation policy and encourage its use consistent with the Rules of Professional Conduct. HSBC should also advise the Network Firms that use of direct contact will not reflect adversely on the firm.” Opinion, p. 55.

    The Court did not sanction LPS.

    Based on the record, I find that sactions against LPS are not warranted. While it does appear from the limited screens that have been introduced in this case, that LPS’ involvement goes beyond passing data through their automatic system, I cannot conclude that it imposed restrictions on the Udren Firm’s handling of this case. (citation omitted). The Udren Firm entered into a contract with Fidelity which it viewed as advantageous to the business relationships with its mortgage lender clients and presumably its bottom line. As attorneys, the Udren Firm understood an attorney’s obligations under Rule 9011 to investigate and took a lesser approach. While NewTrak prescribed that approach, LPS did not dictate how they would handle cases referred to them when problems with the procedure were apparent. By misusing the resources made available to them, the Udren Firm, not LPS, was responsible for the Rule 9011 deficiencies in this case.
    Opinion, pp. 55-56.


    Judge Sigmund’s remarkable opinion demonstrates that she is no Luddite. Her opinion focuses on the need to exercise professional judgment in conjunction with technology rather than mindlessly bashing the technology itself. In her conclusion, she stated:

    My research has disclosed no other published opinion that explains the NewTrak process that is utilized by so many consumer mortgage lenders seeking relief in bankruptcy cases. I have attempted to share my education in this Opinion. Finally, it is my hope that by bringing the NewTrak process to the light of day in a published opinion, system changes will be made by the attorneys and lenders who employ the system or at least help courts formulate the right questions when they have not. While NewTrak has many features that make a volume business process more efficient, the users may not abandon their responsibility for fairness and accuracy to the seduction of electronic communication. The escalation procedures in place at HSBC and the Udren Firm existed on paper only. When an attorney appears in a matter, it is assumed he or she brings not only substantive knowledge of the law but judgment. The competition for business cannot be an impediment to the use of these capabilities. The attorney, as opposed to a processor, knows when a contest does not fit the cookie cutter forms employed by paralegals. At that juncture, the use of technology and automated queries must yield to hand-carried justice. The client must be advised, questioned and consulted. Young lawyers must be trained to make those judgments as opposed to merely following the form manual. Until they are capable of doing so they should be supported and not left to sink or swim alone in an effort for the firm to be more profitable by leveraging the cheapest labor.

    At issue in these cases are the homes of poor and unfortunate debtors, more and more of whom are threatened with foreclosure due to the historic job loss and housing crisis in this country. Congress, in its wisdom, has fashioned a bankruptcy law which balances the rights and duties of debtors and creditors. Chapter 13 is a rehabilitative process with a goal of saving the family home. The thoughtless mechanical employment of computer-driven models and communications to inexpensively traverse the path to foreclosure offends the integrity of our American bankruptcy system. It is for those involved in the process to step back and assess how they can fulfill their professional obligations and responsibly reap the benefits of technology. Nothing less should be tolerated.
    Opinion, pp. 57-58 (emphasis added).



    Again, expect the Taylor case (with its watershed opinion) to be cited across the nation.


  11. (This version of this article was first published on April 16 but was inadvertently removed a short time later.)

    DOJ Probing Mortgage Data Processing Firms

    By Peg Brickley

    The Department of Justice is conducting a nationwide probe of the company whose automated systems handle half the mortgages in the U.S., looking for evidence Lender Processing Services Inc. (LPS) has “improperly directed” the actions of lawyers in bankruptcy court.

    The Jacksonville, Fla., company was spun out last year from Fidelity National Information Services Inc. (FIS), a financial technology giant that is also under scrutiny for its role in court actions, according to documents filed with the U.S. Bankruptcy Court in Philadelphia.

    Although the companies say they are providers of electronic information services, the U.S. trustee believes LPS and Fidelity play a “much greater” role in court actions where thousands of homes are at risk of foreclosure, according to Bankruptcy Judge Diane Weiss Sigmund.

    “The thoughtless mechanical employment of computer-driven models and communications to inexpensively traverse the path to foreclosure offends the integrity of our American bankruptcy system,” Sigmund wrote in a decision released Wednesday, April 15.

    A spokeswoman for Fidelity did not respond to requests seeking comment on the investigation by the Office of the U.S. Trustee, an arm of the Department of Justice whose mission includes safeguarding the integrity of the bankruptcy courts.

    Michelle Kersch, a spokeswoman for LPS, said the U.S. trustee has “advised outside counsel for LPS that it is seeking to better understand LPS’ role.” In an e-mail, Kersch pointed out that the judge held the lawyers, not LPS, responsible for the problems in the case before her.

    The probe of the mortgage technology operation surfaced in a Philadelphia case after Sigmund started asking questions about the source of false court filings that came from HSBC Mortgage Corp. In pursuit of homeowners Niles and Angela Taylor, HSBC filed the wrong mortgage, gave incorrect payment amounts and claimed the Taylors had missed monthly payments. This “was simply not true,” Sigmund wrote in a 58-page decision.

    Pressed to produce a loan history for the Taylors, HSBC’s lawyer confessed the system simply wouldn’t give it to him.

    HSBC, it turns out, had handed off servicing of the troubled loan to Fidelity, which spun out LPS last year. The processes the company uses to crank out court documents for fast, cheap foreclosures were the culprit, the judge found.

    By forcing lawyers to talk to computers rather than to their clients – the lenders – LPS makes it hard for lawyers to do right by the court and discharge their ethical obligations, Sigmund said.

    Lawyers at one level spot-check a fraction of the documents that are on their way to foreclosure actions, Sigmund found. But the business is built for profitability rather than reliability, and counts on “lower-cost labor,” according to the judge.

    Although LPS’s system “has many features that make a volume business process more efficient, the users may not abandon their responsibility for fairness and accuracy to the seduction of electronic communication,” Sigmund wrote.

    She faulted HSBC and some of the lawyers involved in the case for having “sacrificed accuracy and fairness to efficiency and cost-savings,” by relying on LPS’s systems.

    Fidelity, later LPS, is the electronic powerhouse behind the foreclosures rolling through much of the country, taking in data and spitting out loan-default notices for 16 of the 20 largest mortgage-loan servicers in the nation. Banks like HSBC and mortgage servicers outsource the handling of their troubled loans to LPS’s default management services business.

    Business is booming in the loan default unit, LPS’s financial reports say, with revenue up 68.3% for the fourth quarter of 2008, compared with the same period a year earlier.

    Consumer advocates have long complained that Fidelity and LPS are much more than electronic data providers. The companies say which lawyers get the lucrative business of foreclosing on troubled homeowners. Those who move the fastest are rewarded, said O. Max Gardner III, a consumer bankruptcy attorney. Those who pause to ask questions or to investigate whether a loan should be foreclosed, don’t last as LPS network attorneys, Gardner said.

    “The Fidelity-LPS system represents a complete outsourcing of the foreclosure and bankruptcy process to a third-party, Fidelity-LPS, who then manages the entire legal process,” Gardner said in an e-mail Thursday, April 16.

    Sigmund’s opinion revealed that the Department of Justice is looking at Fidelity, LPS and the law firm that handles HSBC Mortgage Corp.’s troubled loan business nationwide, Moss Codilis LLP.

    Moss Codilis did not reply to an e-mail seeking comment on the investigation, which involves a number of bankruptcy cases, according to Philadelphia court documents.

    (Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.)

    -By Peg Brickley, Dow Jones Daily Bankruptcy Review; 302-521-2266;


    The article references an epic in-depth 58 page opinion written by Pennsylvania US Bankruptcy Judge Sigmund in which she enlightens the world to the practices of these third-party lender processing services, and calls the legal profession to adhere to higher standards of professional responsibility when engaging them. It’s a good read and most timely. It’s an opinion that will surely be controlling across this nation.


  12. To “Michael in Florida” who commented on my article and talked about his own research – could u please contact me – my email address is at the bottom of the story or can be found by searching on google
    Susan Taylor Martin
    St. Petersburg Times

  13. By “Trustee,” the author referred to below and I are meaning Trustee for the MBS, not Trustee for the Deed of Trust.

    In any event, look closely at any “assignment” – it is almost always presented as doing something that can not be done by the parties signing.

    ALWAYS question why / how a mere “servicer” should be / could be an assignee of the promissory note.

  14. i’m in cal… 2nd foreclosure BUT this time 2 substitutions of trustee filed after NOD
    1- from MERS to Quality loan
    2-org lender [fredmont]- to Quality loan.
    is this a [the] pattern ” happening at a much larger scale” referring to?

    more ammo for us to use???

    msoliman- NLS indicated that
    substitution of trustee
    The substitution of trustee is shown almost always as a trailing document to the NOD and its filing date. The Sub of Trust is often executed and recorded just prior to the filing of a Notice of Sale. Is this lawful? Why not, if it is for purposes of notice.

    Is it procedurally correct? Absolutely no, although FNMA and FHLMC would argue otherwise as they subscribe to MERS and the efficiency it provides. At the center of this debate is something obvious yet often overlooked to the benefit of the attorneys in court.

  15. This article from December 2007 titled “Rulings May Hinder Trustee’s Foreclosure Actions” (see ) is funny. The author had been general counsel for Fannie Mae until January 2006. From her position in Fannie Mae, she had often written on Fannie Mae’s behalf to fend off closer scrutiny by regulators.

    Yet, in spite of all the confidence that she has that Trustees can bring foreclosure actions with confidence, instead we are seeing ever-increasing numbers of these fraudulent assignments of mortgages (and notes?!?) to the “servicers” of the loans as a planned prelude to bringing a foreclosure action. Why is this. As LivingLies has pointed out, even the Trustees are afraid to come out into the light, afraid to become a target for counterclaims and damages, afraid to be openly deemed to “own nothing.”

  16. Hi Neil,

    I attended one of your seminars earlier this year. I was just reading the New Yorker on line and this particular line brought you to mind… “Is capitalism inherently corrupt? I don’t think the free flow of goods in and of itself is the culprit. No, it’s the complexity masked by thousands of unseen whirring widgets that beguiles people into a sense of power, a feeling of dominion over the future.”

    You can read the story here:

  17. yeah what is up with everything my crooked ass lawyer had forwarded me a proposed settlement for me to release claims against countrywide when there not the lender, servicer nor are they a party in my federal case?

  18. Most borrowers and Lawyers have not done a re appraisal on the properties they seek to defend and do not seem to know the value of such an action.I recall in the early days many of us considered the outcome of the effect of over valued homes on the APR and the interest rate.

  19. I am afraid this is happening at a much larger scale.

    I have been monitoring my county’s clerk of courts online records since receiving an acceleration letter from the largest foreclosure mill in FL. It stated that JP MORGAN CHASE was my lender, which it currently was not, and that they were trying to collect a debt.

    Shortly after the acceleration letter was sent by the foreclosure mill, an assignment of mortgage was recorded in my county’s online records assigning JP MORGAN CHASE as the mortgage holder. The assigning officers of MERS, “vice presidents”, of my original mortgage holder, which has long been defunct, were acting as nominee for for my original mortgage holder (assignor) and assigned, transferred and conveyed the mortgage to JP MORGAN CHASE. The signing “officers” for MERS as nominee for my original mortgage holder are actually Section Managers for JP MORGAN CHASE. I discovered this just by Googling their names. It is amazing what you can find on the internet. I even found the notary on the document has an address on the same street as JP MORGAN CHASE in Jacksonville.

    After doing further research I found these same “officers” of MERS, JP MORGAN CHASE employees, were acting as nominee’s of MERS for multiple other lenders assigning mortgages over to JP MORGAN CHASE. The notary’s on these mortgage assignments are the same couple of people. Sometimes the documents even say the notary’s are attorneys. I could not find them listed as active attorneys in FL with the FL BAR or anywhere else. Looks like JP MORGAN CHASE isn’t even bothering to hire an outside company to to this. They are doing it all in house.

    If you have access to your online county records, do a search on Mortgage Electronic Registration Systems. In my county records, they are posting hundreds of documents a day. Maybe you too can find a pattern that can help your case.


  20. I am afraid this is happening at a much larger scale.

    I have been monitoring my county’s clerk of courts online records since receiving an acceleration letter from the largest foreclosure mill in FL. It stated that JP MORGAN CHASE was my lender, which it currently was not, and that they were trying to collect a debt.

    Shortly after the acceleration letter was sent by the foreclosure mill, an assignment of mortgage was recorded in my county’s online records assigning JP MORTGAGE CHASE as the mortgage holder. The assigning officers of MERS, “vice presidents”, of my original mortgage holder, which has long been defunct, were acting as nominee for for my original mortgage holder (assignor) and assigned, transferred and conveyed the mortgage to JP MORGAN CHASE. The signing “officers” for MERS as nominee for my original mortgage holder are actually Section Managers for JP MORGAN CHASE. I discovered this just by Googling their names. It is amazing what you can find on the internet. I even found the notary on the document has an address on the same street as JP MORGAN CHASE in Jacksonville.

    After doing further research I found these same “officers” of MERS, JP MORGAN CHASE employees, were acting as nominee’s of MERS for multiple other lenders assigning mortgages over to JP MORGAN CHASE. The notary’s on these mortgage assignments are the same couple of people. Sometimes the documents even say the notary’s are attorneys. I could not find them listed as active attorneys in FL with the FL BAR or anywhere else. Looks like JP MORGAN CHASE isn’t even bothering to hire an outside company to to this. They are doing it all in house.

    If you have access to your online county records, do a search on Mortgage Electronic Registration Systems. In my county records, they are posting hundreds of documents a day. Maybe you too can find a pattern that can help your case.


  21. I am going thru this very thing right now with emc mortgage and lasalle bank, sec records show lasalle bought the loan on july 22, 1998, yet assignment of mortage shows dec 31, 2001 and a now corrective assignment of mortgage show 5-30-02–why the difference the prior assignment of mortage was may 1 , 1998, yet not executed until april 1, 2002, gues who prepared it, nationwide, what they are trying to do is make it look like that have a complete chasin of assignments when they do not- i do believe the sec docs will prevail. any advice let me know dave

  22. Mario,

    It’s not the loans that have these elements but the foreclosure documents. This article profiles the pattern and practice within the mortgage/foreclosure industry of fabricating documents in order to give the foreclosing party the air of legitimacy, i.e., standing in court.

    There are very few judges who realize that it is questionable and possible fraud on the court to have one person signing affidavits, assignments, etc. under different hats. Most judges do not take the time to examine the documents presented in foreclosure actions that closely. Foreclosure has been viewed more of an administrative action, i.e., stamping the documents, rather than an actual civil action.

    Hopefully this article will come to the attention of some of the judges in Florida and they will wake up and start reviewing documents more closely. If not, it is up to us, to bring this pattern and practice to the attention of the courts.


  23. I would cancel any loan that has elements as pointed to in the above post

  24. I think this Florida Statute would apply:

    831.01 Forgery.–Whoever falsely makes, alters, forges or counterfeits a public record, or a certificate, return or attestation of any clerk or register of a court, public register, notary public, town clerk or any public officer, in relation to a matter wherein such certificate, return or attestation may be received as a legal proof; or a charter, deed, will, testament, bond, or writing obligatory, letter of attorney, policy of insurance, bill of lading, bill of exchange or promissory note, or an order, acquittance, or discharge for money or other property, or an acceptance of a bill of exchange or promissory note for the payment of money, or any receipt for money, goods or other property, or any passage ticket, pass or other evidence of transportation issued by a common carrier, with intent to injure or defraud any person, shall be guilty of a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

    History.–s. 1, ch. 1637, 1868; RS 2479; s. 6, ch. 4702, 1899; GS 3359; RGS 5206; CGL 7324; s. 1, ch. 59-31; s. 1, ch. 61-98; s. 959, ch. 71-136; s. 32, ch. 73-334.

    831.02 Uttering forged instruments.–Whoever utters and publishes as true a false, forged or altered record, deed, instrument or other writing mentioned in s. 831.01 knowing the same to be false, altered, forged or counterfeited, with intent to injure or defraud any person, shall be guilty of a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

    History.–s. 2, ch. 1637, 1868; RS 2480; GS 3360; RGS 5208; CGL 7326; s. 2, ch. 59-31; s. 2, ch. 61-98; s. 960, ch. 71-136.


  25. You’re right. I found my alleged lener’s loan is owned by Solomon Brothers. When I sent a rescession letter, the lender wrote back that I could not rescind since the loan was for Purchasing the house, and not refinance. Is that ture?

  26. I am the homeowner mentioned in the article, and I thank Susan for bringing this to light.
    This has to be brought out in the open and exposed for what it is.

    Tom W.

  27. thanks susan for the article. if that will be the case hiring a private company to speed up the foreclosure process to prove the assignment of the mortgage has been properly recorded and the note holder in due course has been identified then the homeowner must include the note holder in due course as a defendant especially when the loan documents has TILA & RESPA violation. also, if this company did it fraudulently then they are also subject to lawsuit by the homeowners. i live in california and i think we are behind in fighting against the fraudulent lender or trustee who try to foreclosed in anyway they could. so californian wake up. the state of florida has so many cases already filed against the pretender lenders and trustees. california is a non judicial state and you could still file a civil lawsuit challenging the foreclosure proceeding by these “PRETENDERS”. KNOWLEDGE IS POWER AND USE IT. YOU SHOULD HAVE YOUR DOCUMENTS FORENSIC AND IF THERE WERE A VIOLATIONS HIRE A GOOD LAWYERS OR YOU COULD REPRESENT YOURSELF AS PROP PER. GATHER ALL YOUR LOAN DOCUMENTS AND BE READY TO GO AFTER THESE LENDERS AND TRUSTEES PRETENDERS.

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