ONE ON ONE WITH NEIL GARFIELD
| COMBO ANALYSIS TITLE AND SECURITIZATION |
A Reservist in a New War, Against Foreclosure
EDITOR’S NOTE: This case highlights many of the defects that exist, but which are still being ignored in the marketplace, in the courts and in the media.
Start first with the premise that regardless of the facts, if the owner is in active duty his home cannot be foreclosed and that Deutsch, Morgan Stanley and its subsidiary Saxon Mortgage did it anyway. It’s the law and it should be the law. And the pretender lenders admit that the foreclosure was wrong, which is no great admission since a Federal Judge said it anyway. Somehow, they are struggling with the concept that a wrongful foreclosure is somehow made right by selling the property again.
And by the way, that same law CAPS interest at 6%. So if the loan involved something more than an interest rate of 6%, the notice of default would be wrong even if it came from a creditor. I believe the same holds true for other kinds of debt, but I’m not positive of that. If the notice of default was wrong, then the rest of the foreclosure is void or voidable in most states.
There was an auction in which SOMEBODY showed up and bid on the house. They didn’t use money to pay for the house. They merely represented themselves to be the creditor and so they submitted a “credit bid.” This is allowed when, like in the old days, the creditor was readily identified and could hardly be expected to pay cash on a debt that was owed to themselves. But in this case, there was no creditor at the auction and yet the “credit bid” was accepted.
So in a nutshell, someone — not the borrower — got a free house. Despite statutes and rules to the contrary, title was issued in the name of either the bidder or another third party with nothing to do with this transaction, just to obfuscate title even further. Eventually the house was again “sold” for $76,000 no doubt to some friend of a friend of the people involved.
According to most states, the foreclosure of property by the wrong the party is slander of title entitling the owner to damages. Also, if the bidding process was defective then the issuance of title resulting from the “auction” is void or voidable. That means whoever bought the house for $76,000 may have a good cause of action against whoever sold it to him, but it doesn’t mean that he owns the house.
To own a house or any real property, there must be an unbroken chain of title leading to you. Here the chain of title was mangled beyond recognition because of presumptions that the pretender lenders were creditors and because of the presumption that the mortgage was in default, both of which are both untrue and unsupported by any evidence.
An interesting question would be to ask where the the $76,000 went if in fact it was ever paid.
The bottom line, in my opinion is that Sergeant Hurley should get his house back, pure and simple along with money damages and attorney fees, costs and possibly punitive damages.
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NY Times
By DIANA B. HENRIQUES
While Sgt. James B. Hurley was away at war, he lost a heartbreaking battle at home.
In violation of a law intended to protect active military personnel from creditors, agents of Deutsche Bank foreclosed on his small Michigan house, forcing Sergeant Hurley’s wife, Brandie, and her two young children to move out and find shelter elsewhere.
When the sergeant returned in December 2005, he drove past the densely wooded riverfront property outside Hartford, Mich. The peaceful little home was still there — winter birds still darted over the gazebo he had built near the water’s edge — but it almost certainly would never be his again. Less than two months before his return from the war, the bank’s agents sold the property to a buyer in Chicago for $76,000.
Since then, Sergeant Hurley has been on an odyssey through the legal system, with little hope of a happy ending — indeed, the foreclosure that cost him his home may also cost him his marriage. “Brandie took this very badly,” said Sergeant Hurley, 45, a plainspoken man who was disabled in Iraq and is now unemployed. “We’re trying to piece it together.”
In March 2009, a federal judge ruled that the bank’s foreclosure in 2004 violated federal law but the battle did not end there for Sergeant Hurley.
Typically, banks respond quickly to public reports of errors affecting military families. But today, more than six years after the illegal foreclosure, Deutsche Bank Trust Company and its primary co-defendant, a Morgan Stanley subsidiary called Saxon Mortgage Services, are still in court disputing whether Sergeant Hurley is owed significant damages. Exhibits show that at least 100 other military mortgages are being serviced for Deutsche Bank, but it is not clear whether other service members have been affected by the policy that resulted in the Hurley foreclosure.
A spokesman for Deutsche Bank declined to comment, noting that Saxon had handled the litigation on its behalf. A spokesman for Morgan Stanley, which bought Saxon in 2006, said that Saxon had revised its policy to ensure that it complied with the law and was willing to make “reasonable accommodations” to settle disputes, “especially for our servicemen and women.” But the Hurley litigation has continued, he said, because of a “fundamental disagreement between the parties over damages.”
In court papers, lawyers for Saxon and the bank assert the sergeant is entitled to recover no more than the fair market value of his lost home. His lawyers argue that the defendants should pay much more than that — including an award of punitive damages to deter big lenders from future violations of the law. The law is called the Servicemembers Civil Relief Act, and it protects service members on active duty from many of the legal consequences of their forced absence.
Even though some of the nation’s military families have been sending their breadwinners into war zones for almost a decade, some of the nation’s biggest lenders are still fumbling one the basic elements of this law — its foreclosure protections.
Under the law, only a judge can authorize a foreclosure on a protected service member’s home, even in states where court orders are not required for civilian foreclosures, and the judge can act only after a hearing where the military homeowner is represented. The law also caps a protected service member’s mortgage rate at 6 percent.
By 2005, violations of the civil relief act were being reported all across the country, some involving prominent banks like Wells Fargo and Citigroup. Publicity about the violations spared some military families from foreclosure, prompted both banks to promise better compliance and put lenders on notice that service members were entitled to special relief.
But the message apparently did not get through. By 2006, a Marine captain in South Carolina was doing battle with JPMorgan Chase to get the mortgage interest rate reductions the act requires. Chase eventually reviewed its policies and, earlier this month, acknowledged it had overcharged thousands of military families on their mortgages and improperly foreclosed on 14 of them. After a public apology, Chase began mailing out about $2 million in refunds and working to reverse the foreclosures.
For armed forces in a war zone, a foreclosure back home is both a family crisis and a potentially deadly distraction from the military mission, military consumer advocates say.
“It can be devastating,” said Holly Petraeus, the wife of Gen. David Petraeus and the leader of a team that is creating an office to serve military families within a new Consumer Financial Protection Bureau.
“It is a terrible situation for the family at home and for the service member abroad, who feels helpless,” Mrs. Petraeus said. “I would hope that the recent problems will be a wake-up call for all banks to review their policies and be sure they comply with the act.”
Chase’s response, however belated, is in sharp contrast to the approach taken by Deutsche Bank and Saxon in the Hurley case.
Sergeant Hurley bought the land in 1994 and “was developing this property into something special,” he said in a court affidavit. He put a double-wide manufactured home on the site and added a deck, hunting blinds, floating docks and storage buildings.
According to his lawyers, his financial troubles began in the summer of 2004, when his National Guard unit sent him to California to be trained to work as a power-generator mechanic in Iraq. Veterans of that duty advised him to buy certain tools not readily available in the war zone, he said in his affidavit. With that expense and his reduced income, he said, he fell behind on his mortgage — a difficulty many part-time soldiers faced when reserve and National Guard units were mobilized.
Believing he was protected by the civil relief act — as, indeed, he was, as of Sept. 11, 2004 — his family repeatedly informed Saxon that Sergeant Hurley had been sent to Iraq. But Saxon refused to grant relief without copies of his individual military orders, which he did not yet have.
Although Saxon’s demand would have been legitimate if Sergeant Hurley had been seeking a lower interest rate, the law did not require him to provide those orders to invoke his foreclosure protections.
Nevertheless, Saxon referred the case to its law firm, Orlans Associates in Troy, Mich., which completed the foreclosure without the court hearing required by law. The law firm filed an affidavit with the local sheriff saying there was no evidence Sergeant Hurley was on military duty. At a sheriff’s sale in October 2004, the bank bought the property for $70,000, less than the $100,000 the sergeant owed on the mortgage.
Orlans acknowledged in a court filing that one of its lawyers learned in April 2005 that Sergeant Hurley had been on active duty since the previous October. Nevertheless, neither Saxon nor the law firm backtracked to ensure the foreclosure had been legal or took steps to prevent the seized property from being sold, according to the court record. Lawyers for Orlans Associates did not respond to a request for comment.
When Sergeant Hurley sued in May 2007, the defendants initially argued that he was not allowed to file a private lawsuit to enforce his rights under the civil relief act. Federal District Judge Gordon J. Quist agreed and threw the case out in the fall of 2008.
That drew a fierce reaction from Col. John S. Odom, Jr., a retired Air Force lawyer in Shreveport, La., who is working with Sergeant Hurley’s local lawyer, Matthew R. Cooper, of Paw Paw, Mich.
Colonel Odom, recognized by Congress and the courts as an expert on the Servicemembers Civil Relief Act, knew Judge Quist had missed a decision that overturned the one he had cited in his ruling. In December 2008, Colonel Odom appealed the ruling.
In March 2009, Judge Quist reversed himself, reinstated the Hurley case, ruled that the foreclosure had violated the civil relief act and found that punitive damages would be permitted, if warranted.
Despite that legal setback, the defendants soldiered on. As the court docket grew, they argued against allowing Sergeant Hurley to seek compensatory or punitive damages in the case. Judge Quist ruled last month that punitive damages were not warranted — a ruling Colonel Odom has said he has challenged in court and, if necessary, will appeal.
“Nothing says you screwed up as clearly as a big punitive damages award,” he said. “They are a deterrence that warns others not to do the same thing.”
When the trial on damages begins in early March, Sergeant Hurley will have been fighting for almost four years over the illegal foreclosure, a fight he could not have waged without a legal team that will probably only be paid if the court orders the defendants to cover the legal bills.
Regardless of the trial outcome, Sergeant Hurley’s dream home is likely to remain as far beyond his reach as it was when he was in Iraq. Its new owner has refused to entertain any offers for it and recently bought an adjoining lot.
Sergeant Hurley said he still loved the wooded refuge he drives past almost every day. “I was hoping I could get the property back,” he said. “But they tell me there’s just no way.” [Editor’s Comment: Yes there is]
Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: credit bid, Deutsch, hurley, JPMorgan, reservist, Saxon |
[…] How low do these banksters need to stoop to satisfy their greed? […]
Still reading. Pages 116-117 RE –A New Century Trust — are interesting.
Note funding and “investors” — and that 78% of tranching was in highest rated tranches. Rest in CDOs.
FCIC does not point out (at least as far as my reading) that highest rated tranches were paid by swaps via bailout help.
FCIC also does not point (again as far as my reading) that many CDOs investors have written off investments.
As I have stated, TILA Amendment mandates that current creditor with largest position on balance sheet must identify itself. So — What tranche holder – IF ANY – would remain after bailout and write-offs.
All loans were first sold to Citigroup – before securitization.
Believe SIV Cheyne -owned by Goldman.
I do think that Sargent Hurley should get his home back. But what had happened in the courts is that alot of Judges postitions have gone to their heads and their brains remained in their rumps.
What else?? Government was too late. Derivatives? Gets more interesting. Conclusion? No one knows anything – deregulation. (excuse areas where dates and numbers did not cut and paste)..
“Then, in July 2008 long after the risky, nontraditional mortgage market had disappeared
and the Wall Street mortgage securitization machine had ground to a halt,
the Federal Reserve finally adopted new rules under HOEPA to curb the abuses about which consumer groups had raised red flags for years—including a requirement that borrowers have the ability to repay loans made to them.By that time, however, the damage had been done.”
“OTC derivatives are traded by large financial institutions—traditionally, bank holding companies and investment banks—which act as
derivatives dealers, buying and selling contracts with customers. Unlike the futures and options exchanges, the OTC market is neither centralized nor regulated.”
“An enormous hedge fund, LTCM had amassed more than trillion in notional amount of OTC derivatives and billion of securities on . billion of capital without the knowledge of its major derivatives counterparties or
federal regulators.”
“In December , in response, Congress passed and President Clinton signed
the Commodity Futures Modernization Act of (CFMA), which in essence
deregulated the OTC derivatives market and eliminated oversight by both the CFTC
and the SEC.”
“A key OTC derivative in the financial crisis was the credit default swap (CDS),
which offered the seller a little potential upside at the relatively small risk of a potentially
large downside. The purchaser of a CDS transferred to the seller the default risk
of an underlying debt. The debt security could be any bond or loan obligation. The
CDS buyer made periodic payments to the seller during the life of the swap. In return,
the seller offered protection against default or specified “credit events” such as a
partial default. If a credit event such as a default occurred, the CDS seller would typically
pay the buyer the face value of the debt.
Credit default swaps were often compared to insurance: the seller was described as
insuring against a default in the underlying asset. However, while similar to insurance,
CDS escaped regulation by state insurance supervisors because they were treated as
deregulated OTC derivatives. This made CDS very different from insurance in at least
two important respects. First, only a person with an insurable interest can obtain an
insurance policy. A car owner can insure only the car she owns—not her neighbor’s.
But a CDS purchaser can use it to speculate on the default of a loan the purchaser does
not own. These are often called “naked credit default swaps” and can inflate potential
losses and corresponding gains on the default of a loan or institution”
“Much of the risk of CDS and other derivatives was concentrated in a few of the
very largest banks, investment banks, and others—such as AIG Financial Products, a
unit of AIG—that dominated dealing in OTC derivatives. Among U.S. bank holding
companies, of the notional amount of OTC derivatives, millions of contracts,
were traded by just five large institutions (in , JPMorgan Chase, Citigroup, Bank
of America, Wachovia, and HSBC)—many of the same firms that would find themselves
in trouble during the financial crisis. The country’s five largest investment
banks were also among the world’s largest OTC derivatives dealers.”
“When the nation’s biggest financial institutions were teetering on the edge of failure
in , everyone watched the derivatives markets. What were the institutions’
holdings? Who were the counterparties? How would they fare? Market participants
and regulators would find themselves straining to understand an unknown battlefield
shaped by unseen exposures and interconnections as they fought to keep the financial system from collapsing.”
Translation – no one knows where anything is. It was save the homeowners — or save the collapsing financial system. They chose the financial system. And, because all was deregulated — we walk into court blinded — with no idea of where collection rights really are. The fraud continues. But, in the process mistakes were made — and that is surfacing.
Still reading — see interesting chart on synthetic CDOs below. Later..
Goes into history of banking system and shadow banking system — yeah yeah yeah– we know.
And, Federal Reserve neglected its mission — yeah yeah yeah — we know.
There were warnings— yeah yeah yeah — we know
And, states — “Loans were put into packages and sold off in bulk to securitization firms—including investment banks such as Merrill Lynch, Bear Stearns, and Lehman Brothers, and commercial banks and thrifts such as Citibank, Wells Fargo, and Washington Mutual.
Oh?? We also know this , as I have said — but this is not stated in PSAs and Prospectus – “chain of title.”.
Still reading.
Anyone reading through the 600 page “BOOK” by Financial Crisis Inquiry Commission??
Nothing new — so far — I am still reading.
Odd the FCIC — still puts blame on homeowners for “dipping” into equity in their home — to send kids to college, pay medical bills, pay credit card debt, etc. Of course, they blame the banks too. They – so far — do not state that homeowners believed the false appraisals of their homes. In fact, at one point — call homeowners “naive.” So far — fails to say that all were “bailed out” — except the targeted homeowners – who believe they could either refinance — or sell their home if they could no longer make payments. Of course, both options were taken away from homeowners when banks were bailed out. Homeowners – however – were trapped.
Then — report goes on to talk about Ameriquest — and how executives knew about the fraud (predatory lending and such) — and how 50 states sued. Oh — so they knew there was fraud??? But, still the homeowners fault?? And, they do not talk about 7 million to attorneys for civil action action against Ameriquest – but homeowners got about 20 bucks.
Okay — so we knew all of this — still reading. .
They have been getting away for fraud for a long time. No investigations by DOJs., no investigations by FBI, no investigations by anyone — as far as consumer/borrower is concerned.
States say — “we have no resources” — so they send elsewhere — where it is filed away never to be looked at again. .
While some government agencies are focusing on investor fraud — there has been no agency standing up for homeowners/consumers/borrowers.
If perpetrators think they can get away with it — nothing holds them back.
Excerpt: “By now it should be clear even to the most optimistic observer that the global financial system has given itself over to systemic lawlessness. Once international banks were effectively allowed to print their own money in an unregulated “shadow” system and have it redeemed full value by national taxpayers, the charade was over. The only thing left, at this point, given the full cooperation of governments and an eerie world-wide non-enforcement of law, is for banks, like a cancer to savage and consume every concrete store of non-counterfeit productivity and asset value. Not only have governments from China to the United States committed themselves to a chess game meant to eke out relative advantages on a sinking ship, but they have positively rewarded those who are speeding the collapse. A simple, cannibalistic economic rule now persists until a new system emerges: Economic manipulation, destruction, and extortion are simply more profitable, far more profitable, than good old fashion value creation. Disaster capitalism will be pursued full force.”
http://www.zerohedge.com/article/guest-post-big-squeeze-predicting-effects-savings-extortion-and-abuse-middle-class
Greg- – MODIFY and NULLIFY !
“BUT ALSO “.. imho- sounds like an after thought .
But you know the saying re-opinions.
Fight on..
Homeowners’ Motto for 2011: MODIFY, BUT ALSO NULLIFY!
Following the old adage of “Trust, But Verify” I propose a new slogan for homeowners in 2011 in response to the foreclosure crisis: Modify, But Also Nullify.”
Nullify your mortgages (deeds of trust) during or before the “loan modification” scam process.
http://bryllaw.blogspot.com/2011/01/homeowners-motto-for-2011-modify-but.html
Nothing is sacred. Even if you have a big fat law, they will not adhere to it anyway. A nation of laws? I do not see the law even remotely considered here. I would not like to be the lawyer for the bank on this one. Really, how can they not see that this is a horrible miscarriage of justice. Mr. Hurley needs to soldier on and keep going. I think he will prevail in the end. He, apparently has good lawyers working for him. Burmese8@yahoo.com
Sergeant Hurley… YES you can ..BRING your guns!
this is a total DISGRACE !
“Sergeant Hurley said he still loved the wooded refuge he drives past almost every day. “I was hoping I could get the property back,” he said. “But they tell me there’s just no way.” [Editor’s Comment: Yes there is]”
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