4ClosureFraud Posts Lender Processing Services Mortgage Document Fabrication Price Sheet

DOCX Price List for Perjury

A bombshell has dropped in mortgage land.

We’ve said for some time that document fabrication is widespread in foreclosures. The reason is that the note, which is the borrower IOU, is the critical instrument to establishing the right to foreclose in 45 states (in those states, the mortgage, which is the lien on the property, is a mere “accessory” to the note).

The pooling and servicing agreement, which governs the creation of mortgage backed securities, called for the note to be endorsed (wet ink signatures) through the full chain of title. That means that the originator had to sign the note over to an intermediary party (there were usually at least two), who’d then have to endorse it over to the next intermediary party, and the final intermediary would have to endorse it over to the trustee on behalf of a specified trust (the entity that holds all the notes). This had to be done by closing; there were limited exceptions up to 90 days out; after that, no tickie, no laundry.

Evidence is mounting that for cost reasons, starting in the 2004-2005 time frame, originators like Countrywide simply quit conveying the note. We are told this practice was widespread, probably endemic. The notes are apparently are still in originator warehouses. That means the trust does not have them (the legalese is it is not the real party of interest), therefore it is not in a position to foreclose on behalf of the RMBS investors. So various ruses have been used to finesse this rather large problem.

The foreclosing party often obtains the note from the originator at the time of foreclosure, but that isn’t kosher under the rules governing the mortgage backed security. First, it’s too late to assign the mortgage to the trust. Second. IRS rules forbid a REMIC (real estate mortgage investment trust) from accepting a non-performing asset, meaning a dud loan. And it’s also problematic to assign a note from the originator if it’s bankrupt (the bankruptcy trustee must approve, and from what we can discern, the note are being conveyed without approval, plus there is no employee of the bankrupt entity authorized to endorse the note properly, another wee problem).

We finally have concrete proof of how widespread document fabrication was. For some reason the ScribD embeds aren’t working correctly, you can view the entire Lender Processing Services price sheet here, and here are the germane sections.

6 Responses

  1. I have a unique situation I am trying to sort out and I probably am not the only one in this. I was offered a refinance on my mortgage, but never received paperwork showing the original note was satisfied. Now I have a note from the refinance and the lender is not sure if they have the original note or proof of having it. What would that mean? Would that mean they never had the right to offer me a refinance making the refinance more of an equity loan that I never received cash from? What would you make of this situation?

  2. What if your old loan was marked suspese for a few months and the payoff was done after that? And the “new’ loan was held without recording for 2 weeks after the “close” Any thoughts?

  3. I would suggest that what you fellows are forgetting is that it became a practice to actually destroy the original Note, and convert it to some electronic storage form, so that it could be tracked easier and the bother of chasing down a paper note could be eliminated. Then, when an actual Note was required, it was fabricated by a replicator machine, that could do so in colors if necessary. So there is no “original” to Indorse.

    They escape the problem of Indorsement of notes of bankrupt entities by use of one abstruse part of the bankruptcy code, that allows for “unpaid” notes to be pulled back out of the assets of the bankrupt entity without going to the Court for an Order. The “finance” industry put this tidbit in there in the infamous 2005 rules revision.

    And if the bankrupt entity gets an Order allowing for it to conduct its affairs as debtor-in-possession, then the argument is presented that, under the securities industry exemption, it can continue to sign off on note transfers as “ordinary business” without court approval. In actuality, what this is, is without court supervision, so that they can do the back-dating and phony paperwork thing.

    Forget the idea that nay of these Notes were Indorsed as per the protocols outlined by Neil. Never happened. They get finessed and back-engineered, which is why you see these unattached and undocumented “allonges” floating around so much.

  4. zurenarrh

    My premise is that the prior mortgage note MAY not have been PROPERLY paid off – by a subsequent refinance.

    There may have been payoff on loan twice. 1) they falsely place you in default just before new refinance – and the prior lender collects insurance proceeds. 2) by the subsequent refinance (which occurs after the insurance proceeds are collected) your payoff is collected by someone else. You start your new refinance by being falsely in default – and are never placed in SPV trust due to repurchase. But, they will still say you are in the trust – and there is no way to check this. The original Mortgage Schedule is old and outdated. It will not give you updates.

    The fact that $2000 remained on your mortgage is a red flag..

    Much occurred for insurance fraud.

  5. Anonymous,
    My lawsuit stems from a refinance transaction, and to answer your question, no, my refinance did not pay off the prior loan–in full. For some reason, all but about $2,000 of my balance was paid off, and the party that was not completely paid off kept sending me statements after the refinance and even threatened foreclosure. During this time, my house had two live deeds of trust–one from the party that the refinance was supposed to pay off, and one from the party that was refinancing.
    After about 7 or 8 months of this, my original loan was in fact finally paid off–don’t know by whom. I did receive a note stamped paid in full with an allonge attached as a separate piece of paper even though there are no indorsements anywhere on the note itself. The allonge purports to indorse the note from my mortgage broker to the order of his warehouse lender and then at the bottom of the allonge is an indorsement in blank from the warehouse lender.

    As I examine the note more closely, I am beginning to feel that it is not the original. Could be, but have reason to believe it’s not.

  6. Another problem with the original note – even if it is still in warehouse – is that there are probably lots of endorsements and/or allonges that should be affixed – but are not.

    And, the problem may go back further. If your current loan was a refinance – did the refinance actually ever pay off the prior loan? Did you receive the original note stamped PAID from the prior mortgage? And, were the allonges in place with that note?

    You have to realize that the mortgage frenzy beginning in 2004 was largely an orchestrated solicitation to the people. I remember reading advertisements that would state – “Just refinanced?? We can help you do it AGAIN!” This is why home appraisals were inflated – to make the people believe they had lots of equity in their home. – plenty of room to refinance. All was well planned by the banks. The banks siphoned every penny out of the one major asset middle America had – their home. In addition, due to repeal of the Glass – Steagal Act – the banks had your number by the credit card debt that they also solicited. They knew how much equity you supposedly had in your home. They knew everything about you.

    This was not just fraud – it was racketeering. The jig is up.

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