MEDIATIONS, MODIFICATIONS, SHORT-SALES AND SETTLEMENTS

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AUTHORITY AND AGENCY

In “Fair Game” Gretchen Morgenson continues to unravel the failing process of “saving homes” while the world ignores the simple truth that legally the homes are in no jeopardy but for the pranks and illusions created by the pretender lenders.

  • There is no valid foreclosure, auction, mediation, modification, short-sale, satisfaction of mortgage, release and re-conveyance, or even settlement with a party to whom the money is not owed and a party owning no rights under the security instrument (the mortgage or deed of trust).

It is all an illusion given reality by repetition not by truth. It is fraud ignored by courts who naturally find it far more likely that a deadbeat homeowner is trying to trick the court than a world class bank or someone pretending to be an agent of a world class bank. But in the end, whether title moves by foreclosure or any of the procedures mentioned above, there is no clear title. There is clouded, fatally defective title and a settlement with a party lacking any power to even be in the room.

This is why I have maintained that lawyers err when they do not aggressively (on the front end despite the rules requiring mediation etc.) insist on proof of authority to represent and proof of agency and proof that a decision-maker is in the room. If those elements are not satisfied, there can be deal — only the appearance of a deal.It is entirely possible that not even the lawyer has authority to represent and that the lawyer has conflicts of interest when you make the challenge. If a lawyer asserts he represents a party you have a right to demand proof of that. I’ve seen dozens of cases unravel at just that point.

The foreclosure mills play musical chairs but they are forgetting that this fraud on the court may come back and haunt them with liability, discipline and even criminal charges. They keep their options open until they absolutely are forced to name a pretender lender. That lawyer standing in the room has generally spoken to nobody other than a secretary in his own firm. he doesn’t know the client, or any representative of the client. He or she presumed to be authorized to represent the client because the file was given to him or her.

Think I am kidding. Try it out on Deutsch Bank or U.S. Bank or BONY-Mellon. Demand that the lawyer produce incontrovertible proof that their client knows the case even exists and that this lawyer represents them.

From what I am seeing, this interrupts the flow of plausible deniability. Nobody high up in the food chain wants to come in and say they have personal knowledge or that they have anything to do with these foreclosures. They just want their monthly fee for pretending to be Trustee over a pool that was never created, much less funded. They will try to use affidavits from people who know nothing and who are probably not even employed by the “client.” Even if they are employed a quick inquiry will reveal that the signatory lacks authority to hire legal counsel and has no personal knowledge of the case.

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September 18, 2010

When Mortgage Mediation Is a Gamble

By GRETCHEN MORGENSON

NEVADA — one of the states where home prices went stratospheric during the housing mania — is now reporting some of the nation’s most horrifying foreclosure figures. Last week, RealtyTrac said that 1 in every 84 households in the state had received a foreclosure notice in August, 4.5 times the national average.

To mitigate this continuing disaster, the Nevada Assembly created a foreclosure mediation program last year. Intended to help keep families in their homes, the program brings together troubled borrowers and their lenders to negotiate resolutions.

The program began on July 1, 2009, and in its first year, 8,738 requests for mediation were received and 4,212 completed, according to the state’s Administrative Office of the Courts. Some 668 borrowers gave up their homes and 445 were foreclosed upon in the period.

“We are the only state that requires the bank to do something — they must come to the table if the homeowner elects mediation,” said Verise V. Campbell, who administers the program. “We are now touted as the No. 1 foreclosure mediation program around the country. The program is working.”

During its first year, 2,590 cases — more than 60 percent of completed mediations — resulted in agreements between borrower and lender, Ms. Campbell said. But when asked how many actually wound up assisting homeowners through permanent loan modifications, she said her office did not track that figure.

Most of these agreements, say lawyers who have worked in Nevada’s program, were probably for temporary modifications like those that have frustrated borrowers elsewhere — you know, the kind of plan that lasts only three months until the bank decides that the borrower does not qualify for a permanent modification.

Clearly, the Nevada program is superior to the White House’s Home Affordable Modification Program, where borrowers have trouble even reaching lenders by phone. Forcing banks to meet with borrowers is definitely a good step.

But some mediators who have participated in the Nevada program and some lawyers who represent borrowers in it say it has flaws that may give the banks an advantage over borrowers.

Patrick James Martin, a lawyer in Reno who is a certified public accountant and an arbitrator for the Financial Industry Regulatory Authority, was an early mediator in the program. In a recent letter to Nevada’s state court administrator, Mr. Martin expressed concern that the program favored lenders.

“I really felt the lenders didn’t have too much interest in having the program work,” Mr. Martin said in an interview. “A lawyer would show up for the lender with none of the documents required by the program. When they got into the mediation, they would call somebody in a bullpen someplace who had a computer handy and the borrower might or might not qualify for modification. No discussion, no negotiation.”

Mr. Martin said he no longer received cases to mediate.

Another experienced mediator, who declined to be identified because he feared reprisals, was removed from the system after he recommended sanctions for banks that did not meet their obligations under the program. These duties include showing up, bringing pertinent documents and having authority to negotiate with the borrower.

After this mediator made a petition for sanctions in a case this year, Ms. Campbell sent him and the other parties in the matter a letter saying that the recommendation was not a “valid Foreclosure Mediation Program document.” The letter, on Supreme Court of Nevada stationery, also stated that nothing in the law that established the mediation program “requires or permits a mediator to recommend specific sanctions.”

But the statute governing mediations in Nevada clearly specifies that if a lender does not participate in the mediation in good faith, by failing to appear, for example, “the mediator shall prepare and submit to the mediation administrator a petition and recommendation concerning the imposition of sanctions” against the lender. The court then has the power to issue sanctions, which can include forcing a loan modification.

Keith Tierney is a veteran real estate lawyer who was until recently a mediator in the program. He, too, stopped receiving mediation assignments after recommending sanctions against lenders in a number of cases. He said that a program official told him last week that he was no longer eligible because he issued a petition and recommendation for sanctions, even though that is what the law allows.

When asked why she believed that such recommendations were not allowed, Ms. Campbell said mediators who issued them were not following the program rules as interpreted by Nevada’s Supreme Court.

But Mr. Tierney said: “The statute trumps rules. Every attorney in the world knows that if a rule is in contradiction to a statute, the rule is null and void.”

Administering the program gives Ms. Campbell great power. She issues certificates allowing foreclosures to take place after mediations occur. And while she said such certificates were submitted only when mediators’ statements showed they should be, mistakes have happened.

ONE woman went through a mediation in which the lender didn’t provide necessary documents and the mediator noted it, according to legal documents. Under the rules, no certificate is supposed to be issued in such a circumstance, but shortly afterward, the borrower received notice of a trustee sale. Ms. Campbell’s office had issued a certificate allowing foreclosure; only by filing for bankruptcy could the borrower stop it.

Ms. Campbell said such problems were rare. The state doesn’t produce data that would allow her assertion to be verified.

Ms. Campbell is not a lawyer and is not a veteran of the housing or banking industries. Before overseeing the mediation program, she worked in the casino industry. She worked for a Chinese company developing a gambling property in Macau and was director of administration for the Cosmopolitan Resort and Casino in Las Vegas.

Ms. Campbell said that her position involved administrative duties, not legal insight, and that her experience overseeing large projects amply prepared her to manage the Nevada mediation program.

But David M. Crosby, the lawyer who represented the borrower whose case resulted in an erroneous foreclosure action, said significant questions remained about the program. Among them, he said, was the role that Ms. Campbell played in the process.

“Does she just do administrative stuff or does she make decisions?” he asked. “That doesn’t seem well decided.”


7 Responses

  1. OK, stupid question time. What means are you using to get to the foreclosure mill’s authority to represent the Trustee or other entity?

  2. THE A MAN,

    You write – “loan modification with who? WITH MR. PONZI?”

    GREAT POINT!!!!

    Any modifications done today in servicer’s name are – simply- fraudulent. These modifications should be challenged.

  3. I agree.

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  5. JUST FOLOW THE LAW.

    we have been conned into a ponzi scheme the largest ponzi scheme in history. AND MY GUESS IS THAT BUSH WAS CONNED INTO THIS AND SO WAS OBAMA.

    THE JUDGES ARE CHICKEN OR DONT HAVE THE TIME TO UNRAVEL THIS SO I AM GIVING THEM THE BENEFIT OF THE DOUBT.

    WE SHOULD AT MINIMUM GET OUR HOUSES AND BUSINESSES OR PROPERTIES FREE AND CLEAR, NOT TO MENTION DAMAGES (THESE STUPID GAMES HAS COST ALL OF US OUR HEALTH AND PROSPERITY). JUST FOLLOW THE LAW.

    FACEBOOK PAGE TWEETER MYSPACE.

    NEVER AGAIN

  6. loan modification with who? WITH MR. PONZI?

  7. I Sued for wrongful forecloseure and lack of standing in a nonjudicail state against RegionsBank, they beat the the TRO/Lawsuit and the property sold at auction and they sought a defeniciency. I kept fighitng and under duress i signed a RELEASE to puruse them ever again for any claims and they did the same. THAT was late 2008,..when the Arbitrtion Judge accused me of being crazy, the bank would not say they own the loan unless they did.

    DO you think i can fight to get my release over turned? to seek damages.

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