COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary


EDITOR’S NOTE: The committees should be interviewing title agents, closing agents, title examiners and independent experts in real property law (Professors of Law with no ties to banking industry) with three basic questions to start the correct path of inquiry — stating as a premise that the context of the questions are strictly within the scope of loan receivables that were purportedly securitized:

  1. Were the mortgages valid encumbrances when they were originated and are they valid encumbrances now?

  2. Did the obligation of the borrower originate from acceptance of the loan benefits or the execution of the note and mortgage?

  3. What is the description of a party who could be called the mortgagee under a mortgage deed or beneficiary under a deed of trust?

As far as the banks are concerned, if you want to ask meaningful questions that would, if answered, provide Congress with real facts and information, these are the questions that should be asked:

  1. Provide us with some real life examples with a letter of opinion from a qualified real estate attorney or law professor, in which you trace the chain of title of a securitized mortgage transaction beginning with the original execution of the closing documents, the parties and terms on those documents and ending with a party possessing the power to execute a satisfaction of mortgage, a reconveyance, the submission of a credit bid at a foreclosure auction, or the full power of modification of any or all terms of a mortgage.

  2. What is the financial incentive for any servicer, if it had the power, to modify mortgages?

  3. Is there a conflict of interest between the servicer and the bank that owns the servicer in connection with the potential modification of mortgages?

  4. If the mortgage of record is void or unenforceable, what do you expect Congress to do about it?

  • I make no bones about it. I believe that the originating documents were fatally defective and that those defects were supplemented and compounded by the behavior of the so-called securitization intermediaries who were so busy splitting up the money they had no interest in covering their tracks with the proper paperwork. The result is that, in my opinion, there is no mortgage or deed of trust that can be enforced and it should be expunged from the title records.

  • However, that does not relieve the borrower from an obligation to repay money. That obligation is presently unsecured.

  • The question that must actually be answered is the one that the banks are avoiding at all costs: the identity of  party who can be called a creditor under terms and conditions that any 5 year old would understand. And then the second question is what is left of the obligation from the borrower and what claims do the investors have against the investment banks.

  • The two are related because it is entirely possible that the investment banks made more money than the investors advanced in a fraudulent, potentially criminal scheme.

  • If the investors are made whole by their claims against the banks what is left of the obligation? If there is some obligation left, how should that be computed and should the newly found “creditor” be allowed to impose an equitable lien for the obligation?

  • Is that a possible solution to principal correction, appraisal fraud, failure to perfect the lien (intentionally) and the deception of the homeowners and investors?


The question is whether it will be a meaningful resolution that will make a real difference or a missed opportunity. It’s not entirely clear at this point.” – AG Cordray

The banks hope to buy off the attorneys general with money, perhaps to establish a compensation fund for victims, Mr. Levitin said. That, he said, would prevent attorneys general from “digging deeper and uncovering more rot in the mortgage system. My fear is that the banks’ calculus is correct.”
November 17, 2010

Changing the face of foreclosure in America will take some time, several state attorneys general said Wednesday, cautioning that an agreement with major lenders over revamped foreclosure practices was not imminent.

“We want to move as quickly as possibly but it has to be done right,” said Roy Cooper, the attorney general of North Carolina. “We have plowed this ground before.”

Ever since the law enforcement officials from all 50 states signed on last month to a highly publicized investigation of big mortgage lenders, there has been a public tug of war.

The banks, who have been subjected to bad publicity, have played down the investigation and want to see it end as quickly as possible. The state attorneys general, however, say that there is an opportunity to fundamentally change the way banks deal with defaulting borrowers so that more people can stay in their homes by modifying their mortgages, and that they will take the time needed.

“The large banks say they are doing everything they can to avoid foreclosure, but that is not the reality on the ground,” said Patrick Madigan, an assistant attorney general in Iowa who is a lead figure in the investigation. “The question is, Why?”

Mr. Madigan mentioned some theories, saying any or all could be true: “Is it the fact that the current servicing system was not designed to do large numbers of loan modifications, is it being understaffed, incompetence or the servicers having the wrong financial incentives?”

The major lenders are scheduled to appear on Capitol Hill on Thursday for the second hearing this week on their foreclosure procedures. The pressure to reach a settlement with the attorneys general will likely intensify after the hearing, which will be led by Representative Maxine Waters, a Democrat from California and outspoken critic of the mortgage lending industry.

But quick fixes are not likely, the attorneys general said. Richard Cordray, the Ohio attorney general who lost his bid for re-election this month, was hesitant to predict a significant outcome.

“Something will come of this, no question,” Mr. Cordray said of the inquiry. “The question is whether it will be a meaningful resolution that will make a real difference or a missed opportunity. It’s not entirely clear at this point.”

Some experts were willing to go even further, saying the lenders were impervious to change. For 18 months, the Obama administration has promoted modifications that would keep families in their homes over foreclosures that would kick them out. The programs have had some success but ultimately have done little to stem the tide.

“The banks’ act was to put their tail between their legs, act contrite before Congress and change nothing,” said Adam Levitin, an associate profesor of law at Georgetown University who testified before Congress on Tuesday and will testify again on Thursday.

The banks hope to buy off the attorneys general with money, perhaps to establish a compensation fund for victims, Mr. Levitin said. That, he said, would prevent attorneys general from “digging deeper and uncovering more rot in the mortgage system. My fear is that the banks’ calculus is correct.”

There were fresh reports on Wednesday that the foreclosure situation was deteriorating. Another 35,000 households entered foreclosure in October, the data company Lender Processing Service said, despite freezes instituted by lenders as they reviewed their practices. About 4.3 million households are either in serious default or in foreclosure.

The housing market also showed fresh signs of trouble. CoreLogic, a data company, said Wednesday that home prices fell 2.8 percent in the last year. Earlier this week, another information company, DataQuick, said sales in the Southern California market had dropped 24 percent in October from last year.

“We agree with the attorneys general that a housing market recovery is vital to restoring economic growth, and the sooner we resolve the outstanding issues, the better,” said Lawrence Di Rita, a Bank of America spokesman.

For the banks, the immediate cost of halting foreclosure is not significant. Brian Moynihan, the chief executive of Bank of America, said it totaled $10 million to $20 million a month. Bank of America has frozen foreclosures in 27 states.

A far greater threat to the broader financial system is the possibility that investors will force financial institutions to buy back hundreds of billions of dollars in soured mortgages, according to a Congressional Research Service report prepared for Thursday’s hearing and obtained by The New York Times.

Loan buybacks could shift $425 billion in losses on mortgage-backed securities from the investors that owned them to the banks that helped originate or assemble the securities, according to the report, far more than most estimates floated on Wall Street.

“Loan buybacks have the potential to cause the banking system to become undercapitalized once again or to cause individual large banks to fail,” the report says, “even if that outcome is unlikely.”

While bank officials agree that a settlement with the attorneys general is not in the making anytime soon, they remain eager to put the controversy behind them. Bank of America’s reputation, in particular, was hammered last month as the uproar grew over claims that the industry had pursued foreclosures in cases where documents were lost, missing or barely reviewed before they were signed by bank officials, a practice known as robo-signing.

What is more, as the nation’s largest mortgage servicer — it handles roughly 14 million home loans, or one in five American mortgages — it has more to lose as the investigation drags on. The majority of its troubled portfolio was picked up in 2008 when it bought Countrywide, whose aggressive subprime lending practices made it a symbol of industry excess.

“What makes it a little more pressing for Bank of America is their level of exposure,” said Guy Cecala, publisher of Inside Mortgage Finance. “Whatever the issue is, Bank of America seems to have a target on its back from people looking to be compensated for losses.”

As the beneficiary of two government bailouts, both repaid, it has been eager to maintain good relations with regulators.

Representatives from Bank of America and the other main players in the mortgage servicing industry — Ally Financial, JPMorgan Chase, Wells Fargo and Citigroup — will testify at Thursday’s hearing. A top mortgage executive at Citi plans to testify that the company identified 14,000 foreclosure cases where errors may have been made, including 4,000 where a notary may have been absent when they were signed. The bank, which until now has defended its processes, still insists that in each case the original decision to foreclose was correct and that the paperwork will be refiled.

Mr. Levitin, the Georgetown professor, will argue in Thursday’s testimony that the business model at servicing giants like Bank of America and Wells Fargo “encourages them to cut cut costs wherever possible, even if this involves cutting corners on legal requirements, and to lard on junk fees and in-sourced expenses at inflated prices.” That results in foreclosure, rather than modification, being a better bet for servicers.

In removing such incentives, the attorneys general have the task of encouraging a new system that changes behavior. “We are trying to create a paradigm shift in the way foreclosures are handled,” said Mr. Madigan, the assistant Iowa attorney general.

11 Responses

  1. I don’t understand they bought my loan from Saxon and stated they (ocwen) was my new servicing company, For whom were they servicing if not the same bank??

  2. Mary Wyatt

    Ocwen is not servicing for Deutsche Bank.

  3. What about Saxon and Ocwen whom are servicing companies for Deulch bank???? Are they being investigated I see nothing on them they are a D- rating with the BBB. Like I said before they broke 16 lending laws in my Mortgage…. What about that ???? Who is going to fight for the little guys in Maryland that they screwed…..

  4. ‘Settlements’ put money in the pockets of the government – instead of indictments of those that are physically foreclosing our homes through their corporations.

    Settlement is a form of legal extortion, that does nothing to the moral hazards created by these bankers.

    The government ‘buyers’ of MBS are all desperate for cash flow…. the people and their cash flow be damned!


    We are watching AGs.

    You shall know them by their fruits….

    Don’t be a sucker for these dances.

  5. Why are we in a redo of “Loan Modifacations”? Do they not understand fraud? If these dummies had given real modifacations 2 -3 years ago, this would not be anywhere near this magnitute. Instead they continued to bash homeowners into believing that if thet don’t anty up they will lose their assets. Close down the “banks” get rid of the FED. Then maybe a real playing field will emerge.But, it seems that no one will ever trust Banks or the FED again. Stuff your mods up your nose.We want REAL justice.

  6. We should bombard out AG offices and demand that they investigate further rather than settle. A settlement means nothing. With previous settlements, the banks have withheld those funds from those that were supposed to benefit from the settlement. Settlement agreements are just as worthless as our mortgages.


    Who is willing to do a letter writing campaign to our AGs??? I will start composing mine today.

  7. The banks and servicers (debt collectors) will continue to commit crimes and obsfucate the chain of title on mortgages as long as they can get away with it. Draconian measures must be taken by Congress and the Attorneys General in order to “fix” Wall Street and the whole financial industry. This has actually taken place before: look at the Enron scam. The mega banks must be held accountable. The US is losing credibility with the rest of the world, because our financial sector (Wall Street) caused the world recession. Who the hell wants to do business with us? Our financial sector is a criminal operation. The mega banks also have accounting procedures that are a scam as well. Enron had the same type of accounting procedures. The purpose is to hide the facts that they do not have the assets they say they have. The mega banks and their debt collectors operate outside the law. I hope the investors use them out of business. http://www.challengingforeclosure.com Sirak@challengingforeclosure.com

  8. “Too Bad Banks Missed Out on the GM Treatment”


  9. Maxine Waters? Oh I’m sure she’ll make them cry… FROM LAUGHING THEIR ASS OFF. They might as well had Mozillo, Blankfein and Bernanke do the ‘grilling’ (pork ribs? I don’t know?). I think if modifications were any kind of solution they would have worked by now. Is it some requirement that anyone that’s elected must get neutered?

    Yeah, I said they’d probably do something like that

  10. Here’s Question…

    Supposing the Notes were never legally Transferred

    Doesn’t that mean many of those Bonds are fraudulent or worthless?

    Doesn’t that mean there is nothing to repurchase?

    What exactly are the repurchasing if they never Transferred the Notes?

    Is this “repurchase” just another scheme so they can magically reconnect the dots somehow – if congress passes legislation that backed-dated assignments are merely a technicality. So, the pay a little fine – bonus to politicians then continue foreclosures full speed…?

    Just wondering

  11. Bank of America never halted a single foreclosure. That came straight from the horses mouth. It was all a lie. They continued with every foreclosure they had. No one reports on that though, despite efforts to make it public.
    This won’t stop until the full truth is discovered and told by a news outlet that does not rely on banker advertising dollars.

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