New York to Assure Legal Aid in Foreclosure Cases




New York court officials outlined procedures Tuesday aimed at assuring that all homeowners facing foreclosure were represented by a lawyer, a significant shift that could give thousands of families a chance to strike a better deal with lenders.

Yana Paskova for The New York Times

Jonathan Lippman, New York’s chief judge, wants all homeowners facing foreclosure in the state to have legal representation.

Criminal defendants are guaranteed a lawyer, but New York will be the first state to try to extend that pledge to foreclosures, which are civil matters. There are about 80,000 active foreclosure cases in New York courts.

Under the procedures, which will be put in place in Queens and Orange Counties in the next few weeks and then across the entire state, any homeowner in foreclosure who does not have a lawyer will be supplied one by legal aid groups or other volunteer groups.

New York has been successful in getting foreclosure defendants to show up at settlement meetings overseen by a judge and attended by the lender, but most are unassisted and have little idea how to proceed. The cases are overwhelming the courts.

The state’s chief judge, Jonathan Lippman, said the current system was “such an uneven playing field.”

“Banks wind up with the property and the homeowner winds up over the cliff, on the street,” Judge Lippman said. “It doesn’t serve anyone’s interest, including the bank’s.”

Legal aid groups will find the task of representing foreclosure defendants easier if the state legislature agrees to Judge Lippman’s request for a $100 million increase in legal services programs spread over the next four years. Current funding for legal services in the state is about $200 million a year drawn from a variety of public and private sources.

New York, which is one of the 23 states where foreclosures must be overseen by a judge, has been more aggressive than most in trying to reshape the housing cases flooding its courts. Lawyers in New York are now personally liable for the accuracy of the documents they represent in foreclosure cases, a requirement that some find onerous.

Legal aid organizations in the 23 states say that they do not have enough money or lawyers to help everyone who wants to be helped. New Mexico has started classes to help train people to represent themselves in court. Legal aid groups in other states are forced to choose among families, helping some but not others.

The Legal Aid Society, which assists families and individuals in New York City, will be working with the courts to supply the necessary lawyers in Queens, a foreclosure hotbed.

“There’s a huge demand,” said Steven Banks, the society’s attorney in chief. “The new model is focused on redeploying resources to attempt to take more of an early intervention in the case rather than at the 11th hour when the sheriff is on the way.”

Judge Lippman said he hoped that the lawyers would reach out to defendants before they even appeared in court.

Citing the 1963 ruling by the United States Supreme Court that state courts are required by the Constitution to provide counsel in criminal cases to defendants who cannot afford their own, Mr. Lippman said in an interview this was the right moment to extend that provision.

“Today it is an equally obvious truth that people in civil cases dealing with the necessities of life can’t get a fair day in court without a lawyer,” he said.

52 Responses

  1. Joyce Louise

    Yes — absolutely. And, if you submit to “agencies” — they will reroute you to another jurisdiction or agency. No one wants to take responsibility – or just want to cover.


  2. Cubed2K

    Briefly, in your opinion, what does this mean to the homeowner? Just to make sure we are all on the same page.

  3. Anonymous:

    OMG – Wow!!! And yes, we were elected. But I sure did not have the real picture until I read this.

    A real piece of work. Thank you.

    So true about the real creditor. I asked one of the big boys today who the current creditor was and they told me it was proprietory. They could only tell me if it was a Fannie or FReddie and now I know why. And they said further that they weren’t going to reveal it. This cannot be right.

  4. ANONYMOUS- glad to see you’ve uncovered the whole story on changing loan numbers. I wondered where you were earlier today. I have to read and re-read this until I understand all the nuances involved. Thanks for all your great work and due diligence.

  5. How does smiley face get there??? I did not do!!
    But – Okay anyway.

  6. Joyce Louise and Ian

    Not on vacation — just really busy.

    Here is the problem with refinances.

    1) These were subprime — borrowers did not qualify to begin with – but, banks qualified anyway. (borrowers cannot qualify themselves- speculators were small percentage). Borrowers thought they could get out before interest rate reset — but government put halt to that when crisis hit the media.
    2) Any party (call them what you may) who held rights to mortgage loan prior to refinance — was NOT about to just give it away to another “PartY.” They were going to do everything they could — to keep it — it was a windfall. Borrower was subprime — a guaranteed default – who would never be able to make payments – and property values were falsely inflated — thus, huge profit potential.. So what do they do? Bump you out of prior trust (falsely) — just before refinance — and then give you a “default loan” modification on the prior bumped out loan. New refinance is just a front — (eventually rejected from any earmarked trust) – and that is why there was no “funding.”.
    3) check credit reports — every field and every entry. Most who do default — do not even want to look at credit reports. But, they are loaded with contradictions and errors – and informative errors. Go in to “details” in credit reports – must click on..
    4) As to loan numbers — you only have one loan number — the original loan number. But, if loan was modified before the refinance — you would have another loan number – a default loan number for the prior loan.. And, if loan is also sold because it then actually goes into default — you would have another loan number. Check the “date opened” on credit reports for the loan numbers — must match the date you actually took out the loan.
    5) Allonges are rarely attached — although they should be. All emphasis on note production and allonge manipulation is misplaced — IF — you are in a refinance and the prior loan was NEVER paid off to the prior trust by payoff. And, this IS investor fraud — but not your doing. No agency to look out for you — only agency is for investors. This was up to DOJs — but they have to get their finance masters degree first – in order to understand. -THAT will take awhile..
    6) Did you see the article on AOL about couple who never missed a payment — but the first payment went “missing” — and they are now in foreclosure.
    This was typical — manufactured “first missing payment”. Falsely in default — before you are even in default. Had to do this — because loan never went to earmarked trust by refinance for payoff of prior loan – would never qualify for stated standards..
    7) It is typical procedure for any asset-backed trust – to charge off loan at delinquency — and sell collection rights under a new loan number. Why does this occur??? Because you cannot payoff a charged-off loan. The “bank” (or whomever) has written off that loan number — and can NO LONGER COLLECT ON IT — if they attempt to collect than they have to do a reverse accounting entry to the IRS – which is tedious and simply not profitable and not done. So — the account number is changed when collection rights are sold/swapped out – the old loan number is gone. – there can be NO collection on old loan number.
    And, in the process of the changing of the account number — the new collection rights buyer continues to assess accrued interest — that the original lender — who wrote off the loan — can no longer charge. This is typical — and occurs on every securitized loan from credit card debt to student loans to car loans — to mortgages — which were never qualified mortgages to begin with — but, rather just another “debt” loan — likely only a modification and, therefore, subject to bankruptcy discharge. (TARP Oversight Committee also pointed this out — Footnote 35 in report — because current collection rights cannot be traced to original loan).
    8) Not happy that investors are getting attention in court – when homeowners do not even get discovery. And, if authorities were to seriously investigate what “trusts” were paid off by refinances — and what trusts were not paid off — this would be a huge enlightening. But, investigation is always for investors — when it was the borrowers who were the true victims. Investors sought high return — and are accountable to due diligence — borrowers are just victims and not held to the same standard of due diligence.
    9) Like any other debt — borrower has a right to know his/her creditor. And, to challenge “accrued” interest” on the loan. The document borrowers signed had one and ONLY one loan number. If servicers chose to change that number — they MUST state that this is only a ministerial change and the original loan number remains. But, servicing only changed when one is bumped from a trust– or if subsequently sold to another debt buyer who subsequently purchased bumped trust collection rights from ANOTHER debt buyer. No borrower has any obligation to pay any other loan account number. If you do — the original loan number and creditor remains —- UNPAID – by YOU.
    10) This is about debt collection and fraudulent debt collection. Every servicer will tell you that they are a debt collector. That means your original loan was charged-off. And, that debt collector is NOT following federal law because they fail to identify the CURRENT creditor — who owns collection rights to your new and changed loan number (and accrued interest which should NOT be happening under HAMP) – for which the original loan number was charged off.
    11) Attachment to any “earmarked” trust/trustee — is old — multiple transactions have occurred since then. Even if loan was earmarked — it was for your original loan number — and original loan number ONLY. No data can be changed.
    12) Derivative swaps outs are NOT part of any original “earmarked” trust — even IF your loan was properly conveyed to that trust (which it was NOT).
    13) Deregulation has allowed debt buyers/hedge funds to escape disclosure. Authorities have failed to understand and, therefore, failed to investigate.

    The problem is that homeowners in default are small problem of the much bigger problem that the government is trying desperately to fix. But, fixes are temporary and will not hold. And, in the meantime — we become the ship’s — throw overboard — that no one cares about. All in the name of a (false) recovering economy. According to those in control — there must be fallout — and we were elected.

  7. Ian:

    Great and thanks, I did not know about the panel committee findings but we had to go a different route.

    Hope he does weigh in cause he knows his stuff.

  8. Joyce Louise- ANONYMOUS must be taking a day off today. Hopefully though he is doing some heavy research and will weigh in tonight. You are right, sounds like the bank is trying to outrun the appeals process.
    Over on FDN (Jeff Barnes,Esq.)site, he quotes from page 19 of the Congressional Oversight Panel report that (paraphrasing here) ” failure to transfer notes under the PSA voids the transaction under NY trust law, as if the transaction never took place”. As I see it, the prospectus,the PSA, the reps and warranties were all set up in order to obtain REMIC status under the Internal Revenue Code, in addition to selling AAA securities to investors worldwide. If the banks didn’t comply, they lose their status. This gets into msoliman’s arguments which are in a class by themselves. We cannot forget the trusts’ prohibition from buying/transferring defaulted loans, or loans included after the cutoff date. And every NOD which I have seen purports to assign the mortgage just prior to f/c, which is in most cases, years after the cutoff date.

  9. Yes, you are right about the charts. The case is n appeals and we used it there. Then we also used it when the idiots attempted to foreclose while it was in the appeals and the anciliary Judge and the regular judge found in our favor so they would not allow the F/C.

    In this case, my client is the plaintiff, he was suing the banks over violation of the DOT. Because the lender doesn’t want my client to get his day in court on his claim, they kept filing MSJ’s and finally won one. But now it is in Appeals. We won two requests for new trials so it has been a long hard battle, but we are close.

    I will refer to those references – thanks for that.

    And yes, the Judge does understand the chart, but I kept it simpe, in fact, we gave them side by side.

    First chart showed what they produced which was fraudulent. The second chart shows how they tried to correct the fraudulent records they produced in the first chart and the third shows the correct chain of title. Each one dated as they attempted to convince the Court they owned the Note. Well, they didn’t do that, but they did prove they were holding it. We claimed they came by it illegally and was not holding it legally as it was it never got into the trust and the trustee was required to have the Depositor repurchase it.

    Oh well, we will see. Anyway, they have not foreclosed and my client has not heard from any of them for months. They are going to wait out the appeals perhaps.

  10. Joyce Louise-sounds like you are right on top of your case(s). In my area, alot of attorneys have never heard of an allonge. I asked 7 or 8 over the course of several months at soccer games, church gatherings, other social events. The allonge has to be so permanently affixed to the original note as to be inseparable, and to be used only when the entire front and back of the original note has been filled. This includes the margins. I don’t know why judges are letting plaintiff’s attys to hand over the note, such as it is, and then hand over the allonge. I don’t get it. And as far as the chain of endorsement, point them to Max Gardner’s credentials and teachings whereby he underlines “the Alphabet Problem” with securitized mortgages. We need to see originator>sponsor>depositor>trust. Need 2 true sales to produce a bankruptcy-remote entity as per NY trust law. What we are seeing is originator>MERS>trust, forged and backdated. Show up with a copy of Dan Edstrom’s securitization flow chart and ask the judge if he/she can explain it to you. If not, you explain it to him/her. That ought to do it.

  11. Ian:

    That may be true, but unfortunately in these two cases, the originals were not only viewed in the law firm’s office, but were produced for the Judge tht it appeared to be the original he signed but, reserved the right for expert to analyze should borrower wish to do so.

    Our concern is that the allonge was not attached to the original note, but the Judge did not really care even though we quoted the case law to back it up. Since he would not pay attention to the fact that the allonge was not there he would not acknowledge that the note endorsement chain was not correct. Therefore the real chain has been distorted and untruthful.

    the Court of Appeals will however pick it up and probably sanction them for allowing it to go on especially now that we have proven the allonge was a fraud. The had the wrong lender transferring the note to the trust. Judge still not care and said, oh well, they have the original note, they prove they are the holder. Even though we proved they were not the owner.

    Their attorney stated they could do anything they wanted with that note including foreclosing on the client’s property. Got a question though for you. If the note was endorsed to the Bank as trustee, but not to the bank individually, and the note is not part of the trust legally according to the PSA, then wouldl they be allowed to negotiate it anyway they want? All of the certifications that the trustee completed said, they were accepting the notes as trustee and not individiually. Some say yes, others say no. We will see.

    We are not concerned – this horse has just about 200 feet to go to cross the finish line so it won’t be long now and hopefully my client will get the ring of roses and his house.

  12. Joyce Louise- while we are still attempting to address changed loan numbers and multiple insuror payouts for the same note, you mentioned that “… the trustee has the note on hand to show the judge in case it comes up”. I have been meaning to bring this up- The note which the trustee has on hand will no doubt be a copy, or a copy of a forged original. This can be determined by a forensic document examiner, certified of course. I believe from studying this that, under a decent handheld magnifying glass, the signatures will appear as a collection of tiny dots (laser printer) while to the naked eye will appear as a regular signature. If you sign your name with a ballpoint pen and then look at it with a magnifying glass,and then check the “signatures” on the documents, you will see the difference. The trustee is producing a copy of a copy of a forgery.

  13. Marilyn:

    You are correct about Judges hating Pro Se litigants, shameful as it is.

  14. Anonymous:

    All of this has been mind boggling to me about the change in loan numbers.

    On any refinance, the new loan refinance simply recites in the bottom of the DoT that it is a renewal and extension of the note and lien in that certain amount of dated so and so, being paid off at the time of refinance and that note is supposedly returned to the borrower. Perhaps that has changed who begins paying the newly refinanced loan. Also, some Title Companies at the request of the new lender will order the old note and send it to the new lender. but that is not appropriate – the first note needs to be returned to the borrower should it not? Otherwise, floating notes that have been refinanced is a dangerous practice.

    I also had in mind the Note that is being reassigned back to the Depositor when a Trustee of a Pool Trust finds that the loan is in default or did not qualify for any reason is a NOTE in transit. In otherwords, it has not yet been endorsed over to the Depositor but is in process and that is why I believe Trustees still have the notes when they should have been returned long ago or they are simply holding Collection Rights. Then when the foreclosure process takes place, the trustee has the note on hand to present to the Judge if it comes up. What is the deal here.? I see Ian is basically asking a similar question. Can you help us with this?


  15. In NYS, with an attorney for every foreclosure, you will not have to figure out the fraud perpertrated against you to have put you in the position of being foreclosed upon.

    The objective being not to lose your home.

    After having been fighting on my own pro se against 2 foreclosure frauds, getting Astoria Federal S & L/ Successor in Interest to Fidelity NY FSB to say in front of Judge Alice Schlesinger of NYSC “It’s indemnify Indemnify Indemnify – we are steping aside and the title companies are stepping in”, I should have had possession of my two properties. but I don’t yet because Fidelity National Title and Coronet Title do not want to indemnify the Forged deeds they insured.

    Corrupt Thomas Malone of Fidelity and corrupt David K Fiveson of Coronet told Judge Schlesinger “we have equity” . Forged deed do not have equity and the only “Equity” the title attorneys were talking of was ” EQUITY UNDER THE TABLE FOR jUDGE SCHLESINGER” and she ruled against a very important US Supreme Court case of Elliot v. Piersol..

    I think the biggest problem a pro se individiual has is not in finding the law and proceedure but dealing with alot of Judges’ bias towards pro se people. The Court knows they can always control attorneys, but pro se people say it just like it is. With so many pro se people fighting back on their own – the Judges only defense is “get them an attorney”

  16. ANONYMOUS- thought you might like this from Matt Weidner’s Law Blog- “…..if you tell someone that you are going to marry them, but never do, can you still get a divorce? If a bank says it is going to buy a mortgage, but never completes the paperwork, can they foreclose?”

  17. In NYS, with an attorney for every foreclosure, you will not have to figure out the fraud perpertrated against you to have put you in the position of being foreclosed upon.

    The objective being not to lose your home.

    After having been fighting on my own pro se against two foreclosure frauds, getting Astoria Federal S & L Successor in Interest to Fidelity NY FSB to say in front of Judge Alice Schlesinger of NYSC “It’s indemnify Indemnify Indemnify – we are steping aside and the title companies are stepping in”, I should have had possession of my two properties. but I don’t yet because Fidelity National Title and Coronet Title do not want to indemnify the Forged deeds they insured.

    Corrupt Thomas Malone of Fidelity and corrupt David K Fiveson of Coronet told Judge Schlesinger “we have equity” . Forged deed do not have equity and the only “Equity” the title attorneys were talking of was ” EQUITY UNDER THE TABLE FOR jUDGE SCHLESINGER” and she ruled againsta very important US Supreme Court case of Elliot v. Piersol..

  18. Joyce, the TARP money was used to pay off the credit default swaps and buy up the defaulted bonds. Look up Maiden Lane (1, 2, and 3); I found my (fictitious) bond CDS there. Lots of that money went to AIG and then to Goldman to the Europeans. Also domestic banks took a lot of cash (the ARS market became “illiquid”, meaning nobody trusted anybody).

  19. Ian and Joyce Louise

    Maybe – Joyce — he has been given information that I have not seen him pursue. Thought he was okay in recent testimony — but, not completely forthcoming.

    Not talking about stimulus money here. Talking about records – disappearing. I have emphasized this before — you need to go back before current mortgage (if was a refinance) and research how all was recorded. And, this is NOT just for borrowers in default. Applies to all borrowers — including CURRENT borrowers..

    Loan numbers should not be changed — PERIOD.
    The only reason to change a loan number is — to conceal. Original loan number for a mortgage (or any other loan) should never be changed.

  20. Part of the stimulus money was sent to the banks servicer’s I presume to help them advance some of the payments to the investors in the pools, but of course since the homeowner did not make that payment, the borrower’s payment due date was not updated when these payments were made to the investor. We know the servicer never applies any government money to the loan and then through investor accounting it goes to the pool investor because they continue to show the due date based on monies received from the borrower. How does all that work, anybody know how the stimulus money got into the hands of the investor without any adjustment to the borrower’s payment due date or did servicer’s use the money for something else. Perhaps it went to maintain abandon homes and foreclosure maintenance which of course the lenders never did so the municipalities had to also request money from the stimulus. WHO IS WATCHING THE MONEY – THEN WE MIGHT KNOW MORE ABOUT ALL OF THE INSURANCE CLAIMS, ETC.

    Don’t mean to get off subject, but this has been a little confusing.

  21. Is this the same Levitin that came up with the statement that defaulters should be put into two different groups: First group if you have a job and can pay your mortgage you geta modification and the other is, if you don’t have a job and can’t pay your mortgage, your loan needs to be put on the path to foreclosure.

    Did anyone ask this guy about why those people may have lost their jobs and why they can’t make their mortgage payment? I could not believe what I was hearing.

    I am not sure about this person. I saw such a glimpse of him when he was commenting and thought he was just another bureaucrat trying to send the loans over to the banks from Fannie and Freddie who worked in tandem with the banks created this mess in the first place,

    Surely this is not the same person or I misunderstood what he was saying. You think..

  22. ANONYMOUS- Adam Levitin posts regularly on Naked Capitalism, you can look through his posts there.

  23. Joyce Louise/ANONYMOUS- I am having a hard time trying to figure out why,how,and for what reason the loan numbers or document control numbers have been changed, the only logical conclusion is to obscure the information from prying eyes, so that various massive frauds can continue undetected. This would involve insurance double or triple payments on the same “defaulted” loan. If I was an insurer, I would want the loan number, the actual physical address of the property,etc. If the loan data is not available on the 8k or 10k sec filings, or the loan number has been changed, I would be hard pressed to know what I was paying for. The wording in a prospectus includes an out for the securitizer, which states that the pool will contain certain percentages of certain types of loans, without actually identifying the loans, mostly they are identified by state only. This in and of itself is a dead giveaway in my book, knowing what little I know about the schemes involved. I will keep pursuing this until I have an answer.

  24. E. Tolle,

    Where are you reading this from Levitin??

  25. E. Tolle,

    Very important what you write. Levitin appears to know regulators are doing nothing. Look — government wants to turn over near entire mortgage market to the very parties they should be investigating (BofA, Wells Fargo, Chase etc. etc.).

    Borrowers were put in default before they were even in default!!! Who would question?? Who would care? They got away with it.

  26. Although this is slightly off topic, the fact that the banks would knowingly commit the insurance fraud as is being discussed here is par for the course.

    Adam Levitin over at Credit Slips writes of his concern that the banks are doctoring the notes as we speak (re: Kemp) that failed to make it into the trust (industry wide he believes). My concern is that this is the real reason many of us in default are in limbo, not in foreclosure, years after default and no payments, is actually due to the wholesale fabrication of notes that aren’t worth the paper they’re printed on in an attempt at making them appear legit. Levitin writes, concerning the notes not getting to the trust:

    I’m also very concerned that some banks might decide to start filing in chains of endorsement and backdating. But that’s fraudulent, you protest! Surely no bank would ever engage in fraud! Of course backdating signatures is fraudulent, but if the signatures aren’t there, the banks are dead, so there’s really no downside in having some underlings fill in their signatures. If caught there likelihood of jail time is low. Why not bet the farm?

    Bank regulators should be very sensitive to this potential problem. They should insist on being the ones who actually select the collateral files to be reviewed and that they are the ones who pull the actual note out of the file. The examiners should be making digital images of all notes that they review and keeping those for potential examination against the actual notes if those notes are produced in future foreclosure cases.

    His next lament goes to another of Neil’s current posts concerning the regulators, or lack thereof:

    My concern here is that the bank regulators so badly don’t want for there to be a problem that they won’t look at the notes in the hopes that this issue goes away. I hope that they are sensible enough to know that if there is a problem, they cannot prevent it, and would do best by gathering up all the information they can.

    Mobster rule.

  27. Lisa

    Now that is a problem when the number is changed under the servicing of one Servicer, but when you have three different servicers and three different loan numbers, that is different. Certainly Ian and anonymous are bringing up good information here for us to know.

    Personally, I have never run into this

  28. I have 4 different loan numbers but the same servicer-Ocwen (!?!).

  29. Anonymous –

    Now I am concerned. What is going on with the changing of loan numbers when the servicing transfer takes place. Why is it a red flag, for what? Do we have evidence of this kind of business practice. I just don’t see how they could pull it off. Are the loans covered with two MI policies and servicer collects from both.

    I just looked at three different payment histories from each servicer for a single loan and all had to change their number to conform with their control system. MI companies don’t pay loans in full, but pay a portion of the total indebtedness and that is after the loan has foreclosed.

    Could you please help me to understand how they are working the system. Sounds like you have all come up with something that we need to know about.

  30. ANONYMOUS- I believe that it stands to reason that the loan servicer would change the loan number or change their own “document control number” or similar, in order to disguise the fraud. Which leads me to believe that that is why there is no loan level pool data? available regarding,specifically, addresses x loan number, so that an insurer could see if the loan on that address/house had been paid off. I am trying to narrow it down. Yes, we have discussed loan numbers several times, keep us all posted as to what other scathing info you dig up.

  31. Lots of avenues for insurance — as Neil once pointed out here.

    Ian — believe you are exactly right here about changed account numbers. Do no recall if it was you I discussed this with awhile ago. I called the changing of account numbers a “red flag.” Think you just pinpointed WHY!!!!

  32. sorry I did not read your first post explaining about the MI. The ones you are naming generally the lender purchases strictly for the default and the borrower generally is not billed for it. They have certain provisions but basically operate as an MI insurance such as MGIC, and others, but those are the insurers that the homeowner pays for and which are either paid monthly as an escrow item or in the case of Countrywide loans, the premium is factored into the Prin and Int. In otherwords instead of a P and I of 900.00, your P & I would be say $982.00 depending on grade of MI, etc.

    There does need to be more investigation about these MI’s that you show. Used to be MGIC and others would help assist the homeowner with his defaulted payments so they would be able to catch up. The investors put a stop to that though somewhere along the line and want their money all at one time, after they foreclose. Ummm. After they foreclose. Nothing is advanced before that time. Of course as you know, they do play games. The MI insurance companies and FHA virtually saved a lot of homeowners from foreclosure in the 80’s because they remitted help payments which were deducted from the overall claims in the event the loan did foreclose eventually.

  33. Ian – thanks

    but what insurer are you referring to?. MI insurance for defaulted loans – they only pay after the loan is foreclosed and all the expenses have been totalled up. Forecast are generally provided to the creditor so he can have some idea about potential loss. I need some hep here.

  34. Joyce Louse- sorry, I meant to say that if the borrower settles the default and continues paying their mortgage, then the servicer DOES NOT repay the insurer. Of course, why would they? Who would know? They would then “sell” or transfer the debt/note to another servicer, so that they can collect yet another “default” from their insurer. This is probably when they change the loan #, so that it doesn’t pop up on the insurers’ radar that the loan has already been paid by someone else.

  35. Joyce Louise- “following the money” regarding loans which have already been paid is the stickiest part of the whole deal. Proof is hard to come by. Theories are abundant. I know that at 45 days in default, a servicer makes a claim on PMI. I know that 7-8% of a pool of loans in default triggers a “credit event” and payment claims are submitted to the bond insurer. (MBIA, AMBAC,RADIAN,ASSURED GUARANTY) What this does and who it affects,either the borrower(homeowner) and/or the investor, is unclear. If someone is in default, I know that a claim has been made on their unpaid mortgage balance, and if they settle the default and continue paying on time, I am sure that the claim is repaid to the insurer. Federal accounting standards for banks and other financial institutions is murky, and there is alot of fraud involved, but I am trying to understand it and find answers. That is all I can say on a public site like LL.

  36. Has anyone followed the money to see how many times the debt has been paid?

  37. I wonder if the “legal aid” in NY will also require the attorneys assisting homeowners to vertify the facts in each case. Is the mortgagae assigned from originator>MERS>Trust?, thereby bypassing the depositor>sponsor? The former violates and thus voids the trusts’ beneficial interest in the note, as it was not transferred in accordance with the prospectus, PSA, reps and warranties, etc. This ABCD mandated transfer path is required by trust law in order to create a bankruptcy-remote entitiy. If this wasn’t done, or at the least is not recorded as having been done(different) then the movant in a F/C is out of luck. So I hope that the “legal aid” mandated to homeowners does not just get them to re-validate a debt, when the obligation has been paid at least once if not multiple times by an unaffiliated 3rd party. Now, with 80,000 homeowners(as per article) WITH ATTORNEYS following the same strategy, we can bring down this house of fraud.

  38. That is good for New York. Now maybe other states will take their lead and help people that need it. I live in Tennessee and there is no one to help you unless you have a lot of money.

  39. Well, that’s all good; but New York should also require the Judges to sign an Affirmation that they are not, in any way, connected with any one of the
    (pretender) Lenders who are foreclosing on homeowners. What’s good for the “goose” is good for the “gander”!!!!

  40. Its nice to see a state that actually at least pretends to give a damn, unlike my home sucky state of missouri where they help screw you over.

  41. I just sent my State Senator a link to the bill introduced in Arizona and commended them for it. I am in California, where we are in the dust as Anonymous says here. Maybe if enough of us let our Senators know we want the F’n change they promised, they my do something.

    Here is the Scribd link:


  42. Congrats to all New Yorkers and Arizonians.

    To those of us here in Cali, “gosh darnit – what the hell is up with our Golden State?” Grrrrrr.

  43. Altho the Condo I owned in Az. was recently “sold” via Trustee Sale, my original Mortgage Docs mentioned under the Laws of new York, (probably because Countrywide used Bank of New York Mellon for receiving pmts). Would there be any chance of complaint “after the fact”? (So to speak?

  44. This is terrific! The states chief judge said that state courts are required by the Constitution to provide counsel in criminal cases to defendants who cannot afford their own Most of these cases are criminal due to all the FRAUD!

    Find out if you have Fraud in Your documents!
    go to LuminaQ and order the Forensic Loan Audit!

  45. so true – right now, Texas has a ways to go, but will they?

  46. Sorry, the article is: Goodnight Banks: Arizona

    Market Forum

  47. check out latest article on market ticker

  48. How goes California — goes New York and New Jersey — goes the rest of the country (according to legal precedents) Except — Ca still in the dust. And, Texas, as the “rest of the country” — will have to do better. Eventually, all states will.

    This is not just about “paying” — this is about “paying” under fraud. The American public has been hoodwinked — and those who committed fraud will come home to roost.

  49. Love these NY Judges. They are paving the way, but still have the wall up which some climb over.

    Keep it up Judges, don’t let us down.

  50. This is a great post and I am pleased that New York is addressing the issue. In our state we have a non judicial process and most homeowners cannot afford attorneys. Many attempt to go to legal aid but are turned away because they make too much money or some that the legal aid attempts to help just are not on top of the issues.

    That is why we have issued our proposal to partner with the legal aid groups in Texas whereby we will provide Summary of Findings for all clients whether they can pay or not. At least that way, if they are turned away by the legal aid, they will have typed affidavit of these findings to present in the event it shows they have arguments. Now, to that end, we are not providing legal advice, but we are as mortgage consultants, prepared for the homeowner with a copy for his attorney.

    We believe this will assist the legal aid division to more effectively and efficiently provide legal service.

    For those that qualify under the legal aid program, their attorney will immediately know what, if any mortgage related issues will assist him in representing the homeowner in a foreclosure action. So many of these issues can be corrected and worked out which can avoid the foreclosure altogether.

    Legal Aid has not agreed to accept our Summary Findings however, we still intend to provide the service to homeowners who request it for a very nominal fee of $100 which goes to purchase supplies and other expenses that may come up.

    This will be a two year program by our organization and we hope that it will help. Certainly, it will help curtail the operating cost to legal aid so they can continue to offer the best of services to people who need to be defended.

    Our organization does not accept money from the feds, grants, donations from realtors or attorneys and most certainly none from any financial institution. We intend to remain objective and call it based on the true facts.

    Thanks for presenting the Post Neil.

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