Judge Bashes Bank in Foreclosure Case: “Criminal Probe in Florida.”

Judge Bashes Bank and Stern Law Firm in Foreclosure Case

By AMIR EFRATI

A Florida state-court judge, in a rare ruling, said a major national bank perpetrated a “fraud” in a foreclosure lawsuit, raising questions about how banks are attempting to claim homes from borrowers in default.

The ruling, made last month in Pasco County, Fla., comes amid increased scrutiny of foreclosures by the prosecutors and judges in regions hurt by the recession. Judges have said in hearings they are increasingly concerned that banks are attempting to seize properties they don’t own.

The Florida case began in December 2007 when U.S. Bank N.A. sued a homeowner, Ernest E. Harpster, after he defaulted on a $190,000 loan he received in January of that year.

The Law Offices of David J. Stern, which represented the bank, prepared a document called an “assignment of mortgage” showing that the bank received ownership of the mortgage in December 2007. The document was dated December 2007.

But after investigating the matter, Circuit Court Judge Lynn Tepper ruled that the document couldn’t have been prepared until 2008. Thus, she ruled, the bank couldn’t prove it owned the mortgage at the time the suit was filed.

The document filed by the plaintiff, Judge Tepper wrote last month, “did not exist at the time of the filing of this action…was subsequently created and…fraudulently backdated, in a purposeful, intentional effort to mislead.” She dismissed the case.

Forrest McSurdy, a lawyer at the David Stern firm that handled the U.S. Bank case, said the mistake was due to “carelessness.” The mortgage document was initially prepared and signed in 2007 but wasn’t notarized until months later, he said. After discovering similar problems in other foreclosure cases, he said, the firm voluntarily withdrew the suits and later re-filed them using appropriate documents.

“Judges get in a whirl about technicalities because the courts are overwhelmed,” he said. “The merits of the cases are the same: people aren’t paying their mortgages.”

Steve Dale, a spokesman for U.S. Bank, said the company played a passive role in the matter because it represents investors who own a mortgage-securities trust that includes the Harpster loan. He said a division of Wells Fargo & Co., which collected payments from Mr. Harpster, initiated the foreclosure on behalf of the investors.

Wells Fargo said in a statement it “does not condone, accept, nor instruct counsel to take actions such as those taken in this case.” The company said it was “troubled” by the “conclusions the Court found as to the actions of this foreclosure attorney. We will review these circumstances closely and take appropriate action as necessary.”

Since the housing crisis began several years ago, judges across the U.S. have found that documents submitted by banks to support foreclosure claims were wrong. Mistakes by banks and their representatives have also led to an ongoing federal criminal probe in Florida.

Some of the problems stem from the difficulty banks face in proving they own the loans, thanks to the complexity of the mortgage market.

The Florida ruling against U.S. Bank was also a critique of law firms that handle foreclosure cases on behalf of banks, dubbed “foreclosure mills.”

Lawyers operating foreclosure mills often are paid based on the volume of cases they complete. Some receive $1,000 per case, court records show. Firms compete for business in part based on how quickly they can foreclose. The David Stern firm had about 900 employees as of last year, court records show.

“The pure volume of foreclosures has a tendency perhaps to encourage sloppiness, boilerplate paperwork or a lack of thoroughness” by attorneys for banks, said Judge Tepper of Florida, in an interview. The deluge of foreclosures makes the process “fraught with potential for fraud,” she said.

At an unrelated hearing in a separate matter last week, Anthony Rondolino, a state-court judge in St. Petersburg, Fla., said that an affidavit submitted by the David Stern law firm on behalf of GMAC Mortgage LLC in a foreclosure case wasn’t necessarily sufficient to establish that GMAC was the owner of the mortgage.

“I don’t have any confidence that any of the documents the Court’s receiving on these mass foreclosures are valid,” the judge said at the hearing.

A spokesman for GMAC declined to comment and a lawyer at the David Stern firm declined to comment.

Write to Amir Efrati at amir.efrati@wsj.com

22 Responses

  1. Hi Bert,
    I have an identical issue with the same people “Stephen C. Porter and Donna G. Workman”. I’d like to exchange information with you. cindyforthepeople@yahoo.com please contact asap.

  2. Simply desire to say your article is as astounding. The clarity for your publish is simply spectacular and i can assume you are an expert in this subject. Fine with your permission let me to clutch your feed to keep up to date with forthcoming post. Thanks 1,000,000 and please keep up the enjoyable work.

  3. Bert,

    I would like to speak with you….ric juarez is on this deed and notarized in texas also…my mom lives in rancho cucamonga….please help! Email me asap….thanks…they are trying to push us out right now

  4. bert,

    ric juarez is the name this deed and they are forcing us out. My mom foreclosed on her house in rancho cucamonga. can you asisit us and give us more information on how you came about your information.

  5. Several commented on a Joseph J Cariola a MD notary, who works for Wells Fargo. I would appreciate you contacting Neil, as I am writing to him as well, as I need to contact you and exchange information. Thanks very much!!

  6. 38. This David J. Stern case is a classic example of how the foreclosure mills have resorted to fraudulent lost note claims, filing false affidavits, creating in house back dated mortgage assignments to give the illusion of legal transfers, and wholesale fraud and forgery in order to “PUSH” foreclosure summary judgments through the court system.

    a) The plaintiff is a trustee for investors that own The Structured Asset Securities Corporation Mortgage Pass-Through Certificate. This certificate is an investment instrument created by pooling thousands of notes and mortgages together.
    b) In order to create this certificate, the note is sold from the originator to a sponsor; it is then sold to a depositor who creates the note-pooled certificate. The certificate is then sold to a trustee that governs the pool. The note passes through 3 or 4 owners before the trustee of the pool, in this case, US Bank National gains possession.
    c) In a rush to create these note-securitized MBA’s, “Mortgage Backed Assets”, laws requiring signatures, notaries, recording and time in order to prove legal transfers are ignored. In order to GIVE THE ILLUSION OF LEGALLITY, foreclosure mills such as David J. Stern have to resort to fraudulent lost note claims, fraudulent affidavits, in-house backdated assignments, and forgery.

  7. AlvieC,
    I appreciate the reply.

    I think you’ve highlighted the problem well. That these notes where pledged to 2 parties.
    I have heard of the BIC program. I also believe there is another FED program like it that allows banks to monetize the notes.
    I think the scenerio that has been played out is substantially the following.

    1. Bank monetizes note through discount window and uses those funds to pay the seller.
    2. Bank sells a copy of the note (or the right to it) into secondary. MERS e-note or autopen copy
    3.”Borrower” defaults and foreclosure starts. Bank can produce the note up because of the reasons above.

    The bottom line is there is no loan there is simply a sale with the note as cash.
    The no recourse proves it is a sale as a matter of law.

    Think about it . If the FED prints currency that it gives to the seller and that currency is actually backed by my currency there is no loan. There is just a scam to tender currency of a different maker to the seller. The substance of the paper is the same because the collateral is the same as if the individual note was tendered directly.

    Combine this with the fact that the note is sold (either to the FED a third party or both) before the seller realizes payment IN FACT. It is the bank that is doing the borrowing because of the simple fact that the note originally issued has backing whereas the check doesn’t have ANY FUNDING until they have the note.

    This is a fraud of epic proportions.

  8. indio007,
    Where have all these missing mortgage backed notes actually went?

    First, lets clear up a couple of things

    1. Assume that “mortgage backed notes” is the homeowners blue inked signed paper note.

    2. They are not missing. They are two possible paths..
    A. The paper notes after scanning into electronic form are vaulted with a custodian at origination and closing.
    At alleged default the “Servicer” for the “Trustee” of the “Investment Vehicle Trust” retrieves the paper note from the custodian and endorsements are added to give the impression that proper negotiation had been executed. Usually in “blank”. In “blank” would allow the note to negotiate by physical transfer of the note. However, these negotiions need to be properly reflected in public records to maintain a continuous perfected lien, perfected “Security Instrument”.
    Hold on Boo-Boo, the chain of endorsements on the paper note does not match the chain of title reflected in public records, simple proof that lien perfection has been lost. As lien perfection has been lost the “Security Instrument” has become a nullity and not only has the “Power of Sale Clause” been placed out of reach, the “Mortgage Payment Insurance” clause has also been placed out of reach.

    B. The paper notes after scanning is destroyed.
    Gotta love them “Lost Note Affidavits”, along with a valid “Lost Note Affidavit” you need to establish from a second source the validity of the indebtedness which would be in this case public records. Slap my Hiney, the information normally filed in public records does not support the “Lost Note Affidavit” as usually it is a bank’s “Trustee” that is providing the affidavit and here again the chain of title does not match the affiant’s claim to make such an affidavit.

    C. The scrapped data from the paper note along with the digitized graphic image is registered with the MERS Registry as being an “eNote”.

    3. If the notes enter the BIC (Borrower In Custody) federal reserve program the paper has to be within possesion of a custodian approved by the federal reserve and annual audits and reports are required. This would be the 10 to 1 value exchange from fed bank to local bank. This procedure has nothing to do with Mortgage Backed Securities so shall discount this process as per the question, “mortgage backed notes”.

    4. The Investors do not buy the “blue inked signed paper notes”, the investors buys a secondary market “Certificate/Reflecting Ownership of the Investment Vehicle” that entitles the Certificates to collect the principal and interest payments contained in the underlying collateral (homeowners blue inked signed paper notes) which is owned by the “Investment Vehicle”.

    Hope that helped.

  9. I was unable to find the exhibit to go along with

    Judge bashes bank in foreclosure criminal probe. Looking for Joseph Cariola MD notary, and again you guys had him. Thanks SO VERY MUCH for all of youre wonderful work here. You are saving my home, as I have been able to get my lawyer to look at your documents too. Three years fighting ASC, HSBC ace 2004-he3, which I have followed to the caymans and ireland… I need to see Cariola involved please help!!.

  10. Bert – can you fax or email me your exhibit G – the document signed by Presley and notarized by Cariola? I have a case involving Cariola in a different capacity. Fax is 941-747- 4976. Thank you!

  11. Bert,
    I have Stephen C. Porter on my assignment also. Please send me an email. Mr. Porter is Chief Litigation Counsel for Barrett Daffin Frappier Turner and Engle in Texas and works closely for NDEx West. How close? How about the same address and telephone numbers. I am in CA and would love to see your assignment.

    Thanks,
    Dan Edstrom
    dmedstrom@hotmail.com

  12. FORECLOSURE LAWYERS FACE NEW HEAT IN FLORIDA
    By Amir Efrati

    These are precarious times for lawyers in the business of filing foreclosure cases for banks. This is particularly true in one of the epicenters of the foreclosure crisis, Florida.

    As we’ve noted before, the feds in Jacksonville recently started a criminal investigation of a company that is a top provider of the documentation used by banks in the foreclosure process. And a state-court judge ruled that a bank submitted a “fraudulent” document in support of its foreclosure case. That document was prepared by a local law firm.

    For more Law Blog background on the foreclosure mess in our nation’s courts, this post will help.

    The news today: the Florida Attorney General’s office said it has launched a civil investigation of Florida Default Law Group, based in Tampa, which is one of the largest so-called foreclosure-mill law firms in the state.

    According to the AG’s website, it’s looking at whether the firm is “fabricating and/or presenting false and misleading documents in foreclosure cases.” It added: “These documents have been presented in court before judges as actual assignments of mortgages and have later been shown to be legally inadequate and/or insufficient.”

    The issue: judges are increasingly running into situations in which banks are claiming ownership of properties they actually don’t own. Some of them end up chewing out the lawyers representing the banks.

    The AG’s office said Florida Default Law Group appears to work closely with Lender Processing Services — the company we referenced earlier that is being investigated by the Justice Department.

    LPS processes and sometimes produces documents needed by banks to prove they own the mortgages. LPS often works with local lawyers who litigate the foreclosure cases in court. Sometimes those same law firms produce documents that are required to prove ownership.

    We’ve reached out to Florida Default Law Group and LPS and will let you know if we hear back.

    http://blogs.wsj.com/law/2010/04/29/foreclosure-lawyers-face-new-heat-in-florida/

  13. Office Of The Attorney General Of Florida
    (The case file cited below relates to a
    **civil ** — not a criminal — investigation. )

    Case Number: L10-3-1095

    Subject of investigation:
    Florida Default Law Group, PL (FORECLOSURE MIILL)

    Subject’s address:
    9119 Corporate Lake Drive, Suite 300, Tampa, Florida 33634

    Subject’s business:
    Law Firm, Foreclosures

    Allegation or issue being investigated:
    APPEARS TO BE FABRICATING AND/OR PRESENTING FALSE AND MISLEADING DOCUMENTS IN FORECLOSURE CASES. These documents have been presented in court before judges as actual assignments of mortgages and have later been shown to be legally inadequate and/or insufficient. Presenting faulty bank paperwork due to the mortgage crisis and thousands of foreclosures per month.This firm is one of the largest foreclosure firms in the State. This firm appears to be one of Docx, LLC a/k/a Lender Processing Services’ clients, who this office is also investigating.

    AG unit handling case:
    Economic Crimes Division in Ft. Lauderdale, Florida
    http://myfloridalegal.com/__85256309005085AB.nsf/0/A4F1B85DCC5D5ACD852577130045B63F?Open&Highlight=0,florida,default

  14. I wish I had this judge in MA. Our bank returned our payment and sold our home before the due date. We found out that the bank claimed we signed an agreement to change our due date which was not true. The bank never complied with chapter 244: section 14. We were never notified nor was it published in the newspaper. We had proof of all payments, proof that the bank refused our payments, proof that we paid 150,000 in 5 yrs and zero was applied to our principal and provided proof that we never got our closing papers until 4 1/2 yrs after the closing. They forged our right to cancel forms, the loan amounts and interest amounts were different on the TILA and the note. Payments the bank claimed were paid from the closing were for thousands less than the amount they claimed to pay. We never had a note so legally we didn’t have a contract. The bank knew when we finally got the closing papers and I sent everything to them that we had a right of rescission. We had a HUD counselor that testified on our behalf anf the bank could not produce any evidence. We paid $45,000 to any atty and the judgement was made against us. It is unfathomable that judges are allowing this fraud to continue and ruining lives. Our son is coming home in June he has served 2 tours in Iraq and the bank sold our home when he was on his 1st deployment. I can’t afford to pay another atty but I want to sue the bank employees who were responsible. I am trying to get in touch with a reporter to expose our story and tose involved. We had a lot of equity we bought the home prior to our wedding 24 yrs ago. A subsidiary from the bank bought the house and they bought it for almost 13,000 more than our balance. They were the only bidders because it was an illegal foreclosure so why would they pay more and under one of the sections of 244 we are supposed to get the extra funds. Any advice would be greatly appreciated.

  15. SIMON

    Maybe this party should appeal. Maybe they should focus on agency – who represented who??? Who was an agent for who?? Who was the actual funder?? Who did the broker actually represent?? Who was the broker an agent for???

    I am not an attorney and this is not meant to be construed as legal advise and only for educational purposes.

  16. MICHAEL MILKEN SHOULD BE RECRUITED FOR OUR CAUSE.

    MR GARFIELD PLEASE CONTACT MICHAEL MILKEN OR I WILL BE MORE THAN HAPPY TO DO IT UNDER YOUR GUIDANCE.

    MICHAEL MILKEN HAS THE RESOURCES AND THE KNOWLEGE TO UNTANGLE THIS.

    I AM SURE MR GARFIELD KNOWS WHO MR MICHAEL MILKEN MR JUNK BOND

  17. On the subject of federal TILA claims…this is a recent case where the plaintiff(borrowers) were unsuccessful:
    http://www.leagle.com/unsecure/page.htm?shortname=infdco20100421b59

    There was no livinglies-esque arguments of ‘who is the real creditor’ or ‘undisclosed middlemen/fees’, securitization, tender, etc.

    Is there any case law yet at the federal level where a borrower has brought these arguments to a successful conclusion?

  18. I need some help figuring this out.

    Where have all these missing mortgage backed notes actually went?
    I have talked to court recognized expert witnesses (federally and several states) on mortgage fraud and even they have no clue.

    In 1999 the Federal Reserve Act was amended to let the FED issue Federal Reserve Notes on against deposits of residential mortgages.
    Is this where they went? Does the FED have the notes?

    Public Law 106–122
    106th Congress
    An Act
    To amend the Federal Reserve Act to broaden the range of discount window loans which may be used as collateral for Federal reserve notes
    Be it enacted by the Senate and House of Representatives of
    the United States of America in Congress assembled, That the
    third sentence of the second undesignated paragraph of section
    16 of the Federal Reserve Act (12 U.S.C. 412) is amended by
    striking ‘‘acceptances acquired under the provisions of section 13
    of this Act’’ and inserting ‘‘acceptances acquired under section 10A,10B, 13, or 13A of this Act’’.
    Approved December 6, 1999.[/quote]

    from 10B of the Federal Reserve Act

    …..may make advances to any member bank on its time notes having such maturities as the Board may prescribe and which are secured by mortgage loans covering a one-to-four family residence.

    Does anyone have any clue?

  19. DATED 4/20/2010

    07/21/06 I REFINANCED MY HOME.15720 OLIVER ST MORENO VALLEY CA.MY LENDER IS BNC MORTGAGE DOING BUSSINESS IN CALIFORNIA UNDER DELAWARE LAWS.MY ORIGINAL TRUSTEE IS T.D SERVICE COMPANY.08/06/2007 A ILLEGAL NOTICE OF DEFAULT WAS RECORDED ON MY PROPERTY IN CA. ON 09/20/2007 A ILLEGAL ASSIGNMENT OF DEED OF TRUST WAS NOTARIZE BY DONNA G WORKMAN AND SIGNED BY STEPHEN C PORTER FOR MERS AGAIN ON MY FIRST HOUSE WITH NO AUTHORITY TO SIGN AS ASSISTANT SECRETARY RECORDED IN CA. AGAIN I HAVE A AGREEMENT FOR SIGNING AUTHORITY FROM THE VICE PRESIDENT OF MERSCORP CERTIFYING OFFICERS EFFECTIVE 10/15/2009 ( FRAUD )THIS ASSIGNMENT WAS CREATED TO DEFRAUD ME AND THE CALIFORNIA COURTS.FURTHERMORE I ALSO HAVE A STATEMENT FROM THE CEO OF MERSCORP. RK ARNALD CEO/PRESIDENT ADMITTED MERS DOES NOT HAVE A BENEFICIAL INTEREST IN ( ANY ) MORTGAGES; DOES NOT LOAN MONEY; DOES NOT SUFFER A DEFAULT IF MONIES ARE NOT PAID.THIS STATEMENT WAS MADE IN A ALABAMA COURT UNDER PENALTY OF PURJURY.MERS,TEXAS ATTORNEY STEPHEN C PORTER,TEXAS NOTARY DONNA G WORKMAN,TEXAS NOTARY PATRICK DE JESUS, TEXAS NOTARY KELLIE C BOSWELL, TEXAS NDEXWEST,RANDY MIDDLETON,CHINA BROWN A NAME ON MY SECOND HOUSE, NDEX WEST AUTHORIZE AGENT RIC JUAREZ,US NATIONAL BANK ASSOCIATION,BNC MORTGAGE,WELLS FARGO BANK NA, WELLS FARGO HOME MORTGAGE INC.AMERICAN SERVICING COMPANY,STEWART TITLE OF CALIFORNIA FUTHERMORE IN MY DOT IT SAID MY LOAN MAY BE SOLD TO OTHER INVESTERS.THEY DID NOT TELL ME MY LOAN WAS GOING TO BE SECURITIZED. ALL COMMITED FRAUD AND ILLEGALY FORECLOSED ON MY HOME.THIS IS A STATE TO STATE RACKETEERING PONZI SCAM.

    EXHIBITS

    EXHIBIT A-1-2 FRAUD N.O.D. SIGNED BY STEWART TITLE FOR NDEX WEST.LLC AS AGENT FOR BENIFICIARY.AMERICAN SERVICING COMPANY C/O NDEX WEST. FRAUD TRUSTEE # 20070134006413 C.A PC 8214.2

    EXHIBIT B-1 FRAUD ASSIGNMENT SECOND FRAUD SIGNITURE ON MY FIRST HOUSE BY TEXAS ATTORNEY STEPHEN C PORTER FOR MERS AS ASSISTANT SECRETARY. NOTARIZED BY TEXAS NOTARY DONNA G WORKMAN DATED 09/11/2007. C.A. PC 8214.2

    EXHIBIT C-1 FRAUD SUBSTITUTION OF TRUSTEE SIGNED BY CHINA BROWN ANOTHER NAME ON MY SECOND HOUSE. NOTARIZED BY JENNIFER E MOSCA SOUTH CAROLINA NOTARY. C.A. PC 8214.2

    EXHIBIT D-1 FRAUD AFFIDAVIT SIGNED BY RANDY MIDDLETON ANOTHER NAME ON MY SECOND HOUSE. NOTARIZED BY TEXAS NOTARY PATRICK DE JESUS DATED SEP 12 2007. CA 8EXHIBIT E-1 FRAUD N.O.T.S. SIGNED MY RIC JUAREZ. C.A. PC 8214.2 FELONY

    EXHIBIT F-1 FRAUD DOC SIGNED BY RIC JUAREZ AND NOTARIZED BY TEXAS NOTARY KELLIE C BOSWELL TRUSTEE # 20070134006413. DATED 03/03/2008 C.A. PC 8214.2 FELONY

    EXHIBIT G-1 FRAUD DOC SIGNED BY JINNIFER PRESLEY AND NOTARIZED BY JOSEPH J CARIOLA A MARYLAND NOTARY. C.A. PC 8214.2 FELONY

    EXHIBIT H-1-2. PAGE 1 DEED OF TRUST. LENDER IS BNC A DELAWARE CORP OPERATING IN CALIFORNIA AS A LENDER UNDER DELAWARE LAWS.
    DOT WAS RECORDED 07/21/2006. PAGE 2 OF DOT IS MERS FRAUD BENEFICIARY UNDER THIS SECURITY INSTRUMENT. ALSO THE ORIGINAL TRUSTEE IS TD SERVICE.

    EXHIBIT I-1-2 FRAUD GRANT DEED THIS IS A ILLEGAL FORCLOSURE . THIS IS A STATE TO STATE RACKETEERING PONZI SCAM .

    8214.2 IS A CALIFORNIA PC CODE. I BERT IS LOOKING FOR JUSTICE IN ALL STATES.

  20. Today, President Obama – speaking in NYC, still blamed the people for buying too much house that they could not afford (although he did say some homeowners were “duped”). The truth is that people bought homes based on inflated appraisals – they believed the value of the asset they were purchasing was far greater than today’s actual value – and that they could refinance or sell at any time. In fact, home values plummeted at super-speed, and refinance became impossible. As a result, homeowners are still being held accountable to pay for a fraudulent loan based on a false inflated appraisal. This is the fraud – along with everything else out there that has been discovered by Mr. Garfield and readers.

    How can they justify holding borrowers accountable for inflated loans bases on inflated appraisals?? There is still no voice for the people in the media – and Mr. Obama refuses to challenge financial institution/media propaganda.

  21. At this point the homeowners are well justified to file suit against the David Stern law firm. Ask for a jury trial. that should prove interesting.

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