BKR Trustees Getting Really Suspicious of Pretender Lenders’ Last Minute Documents



The United States Trustee has reviewed the documents filed by Deutsche in this case and has concerns about the integrity of those documents and the process utilized by Deutsche….Bankruptcy Courts have discussed the need for secured lenders to provide accurate information in filings before the Court… Consequently, “cause” exists authorizing the issuance of a subpoena to compel document production under Bankruptcy Rules 2004(c) and 9016…

“Ta Dah” Documents Mysteriously Appearing in Foreclosures

EDITOR’S NOTE: MAX GARDNER HAS ALWAYS CONTENDED THAT BANKRUPTCY COURT IS WHERE YOU ARE GOING TO FIND PEOPLE WHO ARE ACCUSTOMED TO DEALING WITH CHICANERY. I agree. Judges, Trustees, and even the Judicial Assistants and Clerks are better equipped to deal with pretender lenders, prioritization and perfection of liens, and establishment of a creditor’s status and the amount of the debt. They especially are fine tuned on the issue of whether an obligation is secured. The problem is that not all people can seek bankruptcy protection because of personal or professional factors.

In the article below we have a Trustee who has become weary of the sudden appearance of documents that should have been present in the first place. I have received more than 100 reports of Trustees in bankruptcy court and Judges sitting on the bench getting the idea that the pretender lenders at very least might be fabricating documents and some are concluding that they are indeed not creditors and have no interest in the transaction.

US Bankruptcy Trustee Takes Interest in “Ta Dah” Documents Mysteriously Appearing in Foreclosures (aka Probable Fabrications)

Today, January 27, 2011, 7 hours ago | Yves SmithGo to full article

One of the sorry reminders of the decline of the rule of law in the United States is the frequency with which incidents of what look like document forgeries take place in foreclosure cases. The fact that a now-shuttered subsidiary of Lender Processing Services, a vendor to the servicing industry, had a price list for creating mortgage-related documents out of whole cloth attests to the long-standing demand for this sort of product.

The reason for this activity is simple. As we’ve stressed in various posts, in so-called private label securitizations (the non-Fannie/Freddie type), a great deal of evidence indicates that the originators and packagers of these deals did not bother complying with the contracts they created to govern these transactions on a widespread, perhaps pervasive basis sometime after 2003. And their shortcomings only come to light in foreclosures, and then (possibly) if the foreclosure is contested. Given how low foreclosure rates were historically, this was a risk the securitization industry seemed willing to take, and it is now reaping the fruit of this short-sighted bet.

The big problem for servicers and trustees (the parties that are responsible for the trust that holds the assets of the securitization) is that the pooling and servicing agreement which governs the securitization required that the note (the borrower’s IOU) be transferred though a specific set of parties by a specified time not all that long after the deal closed. Increasingly savvy anti-foreclosure lawyers recognize that the party attempting to foreclose may not have the legal standing to do so.

A new development is that the US Bankruptcy Trustee, which is part of the Department of Justice, has started poking around the nether world of slipshod and possible made-up documents, and is asking banks to explain what they are up to. These inquiries may be paving the ground for broader-based action.

The case in question is a Connecticut Chapter 13 filing (hat tip April Charney).

US Trustee Motion in CT for 2004 Examination

DeutscheBank purports to be the trustee for a particular 2005 mortgage securitization which contains the mortgage at issue. This is a partial list of the documentation problems; the motion itself makes for instructive reading:
In the first filing, Deutsche provides a copy of an undated promissory note which is not made out to the trust but the originator. A few days later, Deutshce filed an objection to the debtor’s plan of reorganization, and in it said the mortgage (the lien, not the note) had been recorded as transferred from the originator to Sand Canyon (a unit of Option One) in 2005 and then transferred to Deutsche less than two weeks before the bankruptcy filing. Note that a 2010 transfer is well outside the time parameters stipulated in the pooling and servicing agreement.

The borrower’s side asks what happened to the note, since there is no evidence it was transferred.

Several months later, Deutsche shows up in court with the usual fix for this sort of problem, an allonge (an attachment to a note that is so firmly secured that it is supposed to be inseparable to allow extra room for signatures. Query if the allonge were properly attached, how would it be possible to make a copy of the original note and not see at least part of the allonge?)

The truly creative part is these documents include an assignment of mortgage dated June 11, 2010, but effective as of May 1, 2005. I never knew law offices had time machines as part of their standard equipment. The trustee separately questions the 2010 assignment, since it was signed by an employee of Sand Canyon, when Sand Canyon did not own any mortgages or mortgage servicing rights at that point in time.

Even though the bankruptcy trustee is merely requesting a Rule 2004 examination (which means it wants someone from Deutsche to appear and answer questions about the case under oath), it is clear that he does not like what he sees so far:

The United States Trustee has reviewed the documents filed by Deutsche in this case and has concerns about the integrity of those documents and the process utilized by Deutsche….Bankruptcy Courts have discussed the need for secured lenders to provide accurate information in filings before the Court… Consequently, “cause” exists authorizing the issuance of a subpoena to compel document production under Bankruptcy Rules 2004(c) and 9016…

The US Trustee has asked for a pretty extensive list of documents related to this bankruptcy. I’d love to be a fly on the wall and see the Deutsche employee try to explain his way out of this one.

12 Responses

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  2. This one is big!

    Because the Judge is popping DB with a 2004, I can’t see anyway out for DB.

    Either DB will 1) commit Perjury by trying to BS the Judge, 2) Withdraw the POC & eat the Mtg..

    Its a catch 22. I hope they Lie to the Judge by throwing shame DOCS, and Attny BS. If they do, this case becomes Landmark for other cases!

    I always said it! WHY F-around with F-closure defense, when you can Beat their ass in BK court? Unlike circuit Judges who defend Bankers Pro Bono, the BK court Judges dont give a Flagg WHO YOU ARE!

    Once these discoveries by Bk Judges expose the Fraud, and corruption, like the MASS Court did, the game is over!

    This is a case to follow.

  3. angry&not taking it,
    yes I realize the gov’t will not help and they arranged out slave state.

    made in china – while at the store I went to the dog food section and thought to buy some rawhide chew bones for my little friends, I look at the package and it says made in China. I just never dreamed the things would be made in China. I put them back. They were also way to expensive for two sticks of leftover hide rolled into a stick. $3 each, the store probably paid 10 cents each.

    Every year some congress person makes a statement our tax code is too complicated, we must do away with it. EVERY YEAR this is bought up, every year nothing is done about it. In fact, it’s just the opposite, every year it is made more complicated – case in point new Heathcare law now tied into taxes, more complicated.

    How come nobody talks about the tax system being suppressive, designed to hold people down. There is no incentive for one to improve his economic lot in life. Your average working guy, says to himself, I’d like to earn some extra money and buy a car or pay off some other bill, so he figures, I’ll go out and get a night job to make some extra money. Problem is he earns more so he pays more in taxes and doesn’t really get ahead, just works a lot. After a while, the guy says this ain’t worth it, oh well. So here he is held down in income – suppressive.
    In order to really get ahead you have to jump economically a big amount. That ain’t gonna happen to your average working folk. Congress doesn’t want people really getting ahead, they say they do but yet nothing is done about it. All these great tycoons, one way or the other cheated their way to wealth. All these Wall Street guys, are tricksters under the guise of help and investment. Sure some outsiders make it, but the majority loose their money one way or the other.

    It is all too obvious that a simple one rate income tax percentage would be the answer or something simple like that, 10% whatever. the playing field is level, you work more, you make more to keep, no loopholes, tax breaks, nothing. Anybody can flourish and prosper as they wish.
    The real Tea Party should be doing away with the tax code as it stands in present time. Every year somebody brings up, every year nothing is done, just more complexity.
    But then again, why do we even have a tax system if the government has the right to issue money and deem whatever it is a legal tender. If I am the government and I issue money into the populace, why does some percentage have to come back to me the government, I issued it to begin with. Only thieves and robbers would come up with fractional reserve banking system – all designed to enslave by debt.

  4. Rosetta, and just so everyone else knows
    that statement wasn’t mine. Look >


    I think there’s something wrong with it. It implies that it’s wrong for the Government to protect people and allow them to remain in “THEIR” homes for free. That’s problematic if your not allowed to keep anything you own yourself, if you’ve already paid for it because somebody who DOESN’T own it is telling you they want money.

  5. If you documents don’t work, then forge them and forge them again. Truly amazing that the pretender/lenders get away with all this fraud. Take a good look at Cairo, Egypt, boys and girls. You will see that soon in the U.S. Everybody is starting to get smart. Burmese8@yahoo.com

  6. A MAN
    The Judges and Sherriffs etc..have all abrogated their oath[s] ,they are all over paid & over compensated for retirement.. hahaha ..so I welcome them to the real world…

  7. cubed2k
    well stated. [ but there will be NO GOV intervention,fer christ sake they are the SAME party that arranged our [american people] “slave sale” to the banskters in 1933 .

    “Say, as an aside, where does China get their money to buy our debt, treasury bonds?”

    all that junk we buy labeled ” slave in china”

  8. “What we can’t afford, is a system that protects severely delinquent borrowers to remain in their homes for free.”

    Well, that all depends…..I’ve been living in my home for 11 years and paid for 10 years. Several refinances and 10 years later no home equity but lots of interest paid……$276k…..which is about what the house is now worth. But, we paid insurance and prop taxes…so we paid all that for rent in essence. I don’t mind not paying now for 6 months. Yes, we were stupid to refinance and fall into the low interest rate game. We were only living life trying to make ends meet, no buying of great luxuries or anything of value. Shoot, the refinance money even went back to the banks to pay off credit cards. So, 11 years later we have nothing to show but yet we have paid into the bank system lots of money. Never again for me. So, we I can live for free in the home for the next two years or whatever or even get the house for free or a settlement….all is well in my eyes. Now if somebody just bought a house and been living in it for only a year or so and they get the house for free, well that is something different. Sanity is the ability to recognize differences, similarities and identities. Each peoples have different situations, they are different. The government keeps trying to solve problems based on everything or situation being the same which is insane. They trying for one lup solution to apply to everybody. All these government panels and inquires into the mortgage breakdown. You’d think just by simple analysis you would go back to when things were normal or running along good and then things went bad. Well WHAT CHANGED when things went bad, just go back and remove those changes. So what changed? As far as I can tell the introduction of credit cards and securitization of those and then securitization of mortgage loans, glass stegal, removal of cap on interest rates. All bank related stuff. If you ask me, the goal is to keep people in perpetual debt, a toll booth. the toll booth is everywhere – bridge tolls, gas taxes, sales taxes, monthly garbage fee, monthly water fee, monthly electricity fee, yearly property tax, monthly cable fee(so now we pay for commercials), monthly internet fee, on and on, yearly taxes, on and on.

    Say, as an aside, where does China get their money to buy our debt, treasury bonds?

  9. The Judges and Sherriffs etc.. who think the ones not making their payments are ruining their pensions dont get it. The ones draining their pensions and taking the money and running with their miney are the banksters.

    The ones left with no pensions once the ponzi scheme is fully exposed are the Judges Sherriffs etc… The banksters will be long gone with their money.


  10. What people miss, is the people that are making the payments are having their blood sucked out of them too. They are giving their good money to alleged FRAUDSTERS, instead of investing their money in productive ventures.



  12. Does anybody else think there’s something wrong with this statement?

    “What we can’t afford, is a system that protects severely delinquent borrowers to remain in their homes for free.”

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