Editorial Comment: I like the intent behind this and the potential effect it will have as investors, servicers and investment banks fight out the losses created by the Great Securitization Scam. BUT the presumptions behind these plans demonstrates that the AG offices still have not drilled down to the facts. They are stuck looking at paperwork, analyzing what it means when they should be following the money, start to finish.
If they did that, they would find an absence of key elements for modification, including a viable contract and two parties that are bound by it.  They would find that the loan funding occurred without any agreed transaction between the lender (investor) and the borrower (homeowner). In short, they would find that the paperwork they are looking at is meaningless trivia unrelated to the intent of the lender or borrower and which does not bind either one to the other. So they would find that there is no documentation for the transaction although there are certainly equitable rights arising from the fact that the lender parted with money and the borrower received the benefit of PART of that money.
They would be forced to conclude that modification of the contract cannot occur before the terms of the agreement are set forth in a proper instrument binding on both parties. And, as we have been saying for years now, the parties whose cooperation is sought in modification have nothing. They have no agreement with the borrower, they have no valid written instrument or note or security instrument (mortgage or deed of trust). If the reality of this situation was addressed, then the leverage that the banks are exercising would vanish just like the alleged value of the bogus mortgage bonds and the alleged value of the property upon which bogus loans were funded.

Mortgage Modification Overhaul Sought by States



State attorneys general have presented the nation’s five biggest banks with a list of demands that could drastically alter the foreclosure process and give the government sweeping authority over how mortgage servicers deal with millions of Americans in danger of losing their homes.

Under the blueprint, banks would be prohibited from starting foreclosure proceedings while a borrower was actively trying to lower the interest rate or ease other terms of the home loan, a process known as a mortgage modification.

Any borrower who successfully made three payments in a trial modification would be given a permanent modification. When a modification was denied, it would be automatically reviewed by an ombudsman or independent review panel.

The proposed changes, which will be discussed by the attorneys general when they meet in Washington early next week, would compel the banks to treat each borrower in default individually.

It was the banks’ attempt to process foreclosures on a large scale that led to robo-signing, in which lawyers and bank officials signed thousands of documents a month after only a cursory review.

The ensuing furor over robo-signing, and other abuses like foreclosures that proceeded with missing documentation, prompted the attorneys general and regulators to begin a broad investigation last fall.

The blueprint from the attorneys general, obtained by The New York Times, is still just a draft, and weeks, if not months, of tough negotiations with the banks remain. Several big banks, including Citigroup, Bank of America and JPMorgan Chase, declined to comment.

The government’s current program to help troubled home borrowers, known as HAMP, continues to face fierce criticism. Both conservatives and liberals have found fault with the program, which aided far fewer homeowners than originally promised.

The latest proposal, delivered to the banks late Thursday, represents an expansion of powers for the newly created Consumer Financial Protection Bureau, which government officials say has taken a more aggressive stance in the talks than some other banking regulators.

The big banks are already wary of the new bureau and its overseer, Elizabeth Warren, a former Harvard law professor who has been sharply critical of the financial services industry and has pushed for a separate financial penalty of $20 billion or more.

“This further cements the C.F.P.B.’s authority in the financial space and puts them at the top of the pyramid when it comes to the mortgage modification fight,” said Jaret Seiberg, a policy analyst at MF Global in Washington. “From the perspective of the banks, this is the last place you want to be.”

On Capitol Hill, many conservatives are also wary of Ms. Warren, a sentiment echoed by Representative Scott Garrett, an influential Republican member of the House Financial Services Committee.

“I have deep concerns that an unconfirmed political appointee is making calls that affect the safety and soundness of our financial institutions,” Mr. Garrett said in a statement. “This is another attempt by the Obama administration to circumvent the rule of law and unilaterally implement its failed housing agenda at the expense of responsible homeowners.”

In addition to the attorneys general and the consumer bureau, the package is backed by the Department of Housing and Urban Development, Treasury, the Department of Justice, and the Federal Trade Commission.

If adopted in anything like its current form, the proposal would probably compel banks to hire many more customer service employees, or slow the foreclosure process even further. Many households are already in foreclosure for more than 500 days.

But a program aimed at reducing the volume of foreclosures would affect far more than the families in distress. It would also help reshape the housing market.

About two million households are in foreclosure, and 2.2 million more are severely delinquent. Housing analysts have been waiting for these properties to make their way back onto the market, where they will swell available inventories and, at least initially, depress prices. Housing prices are already on the verge of falling through the floor established in the spring of 2009.

Giving some of these households loan modifications, allowing families to stay in their houses at least for a while, might help stabilize the market. But it also might prolong the day of reckoning, shifting a housing recovery to 2013 or 2014.

“Do you rip the Band-Aid off and deal with a shorter and sharper housing decline that ultimately puts homes in the hands of borrowers who can afford them for the long term?” said Mike Larson of Weiss Research. “Or do you let this drag on and on?”

Indeed, the big banks are already arguing that the recommendations, especially the consumer bureau’s new powers, will slow the foreclosure process and inhibit lending in the future. Banks would have to provide the agency with their formulas for determining if and when modifications would proceed, as well as quarterly reports on their internal procedures.

Training documents and videos for employees at the servicing centers would have to be reviewed by the consumer bureau and the attorneys general, who would also appoint an independent monitor to examine the banks’ compliance with any eventual settlement.

Among the provisions being proposed, the banks would have to reward their employees for pursing modifications over foreclosures. Late fees would be curtailed. A fund would compensate borrowers who were victims of banks’ misconduct, while mortgage balances would be cut in “appropriate circumstances.”

The initial reaction to the proposed changes by those who work with families in default ranged from quietly optimistic to disbelief that the banks could be compelled to change. Many earlier programs to provide homeowner relief were voluntary and did not achieve expectations.

“If these changes are enforceable and enforced, it will make a significant difference,” said Michael Calhoun, president of the Center for Responsible Lending. But he said it would require the banks to make radical changes: “This is very hands-on, time-intensive, one-off stuff.”

Walter Hackett, a former banker and managing attorney at Inland Counties Legal Services in Riverside, Calif., was less hopeful. “For 20 years I’ve watched bankers try to find ways around the rules,” he said. “They are adept.”

17 Responses

  1. […] modification-plan-sought-follow-the-money-not-the-paperwork EDITOR’S NOTE: Moynihan is pulling out the old argument, trying to stir up people who have […]

  2. to John Gault: when and where is this case, would like to follow it. kindly post.

  3. The “loan” is unrescindable why concede thst it is Its fraud and so based on fraud nothing else can arise. But I hear ya John

  4. My guess is the first time Soliman’s issues will ever be considered by a court is going to be in an
    amicus brief.
    It’s unfortunte, but it’s one chip in the wall at a time.
    Right now we’re busy getting courts to see the fallacy of “MERS”. MERS is legally messed. Some of us get this and some of us don’t: the principal is acting in the name of the agent. This is legally messed. Even when an agency actally exists, it is supposed to be that the agent acts in the name of the principal.
    There is a case under submission right now wherein the court must determine if, as alleged,
    “MERS” has violated state recording laws by recording a document which alleges to assign the note as well as the dot. The courrt is also asked to consider if such an assignment is a false document which has been submitted to the court
    for (bogus) reliance by the court. This same case asks the court to also determine if the assignment done in the name of “MERS” but actually executed by the bankster’s own employee (remember, that’s who does these self-assignments) is collusive.

  5. Here’s a link to the most interesting and insightful notice of rescission and QWR I have ever seen.
    This guy asks for everything from BAC but the kitchen sink. There’s something of interest in here for the anonymous and the soliman – all of us. Labelle managed to dodge the inevitable sop motion to dismiss. Those guys just hate it, too, when a jury trial is asked for. Interesting, also, is that BAC first swore, like so many banksters, that it owned the loan, but now that liability is on the table – Psych! “We’re just the servicer”. I highly recommend reading this. Some of it was over my head, I admit, but Soliman might appreciate it.
    Some of it will be procedurally useful for most of us; some not because we won’t know what some of it means and then it’s not a good idea to go off about that which we don’t fully get:, and as I have yakked about previously, it is the lender who must act first, not the borrower (tender), after rescission is demanded.
    Simply put, Labelle rescinded his loan and BAC did not then follow the law as to his rescission. I will be posting Labelle’s amended complaint and the court’s denial of the motion to dismiss. Here is the rescission and QWR:

    I’d like to remind you that there is an effective strategy to force multiple defendants to get separate counsel, and this as I say, is hitting them where it hurts. I also posted that earlier.

    Welcome to Stop Foreclosure Fraud latest update…
    READ | The 27-Page Foreclosure Fraud Settlement Terms Document – 2011-03-07 18:53:21-05
    Via: American Banker WASHINGTON — The 27-page term sheet handed to the five largest mortgage servicers last week is a detailed, dense list of requirements that, if implemented as proposed, would fundamentally change the relationship between servicers, investors and borrowers. Scribd iPaper(50237713, ‘key-2oxldsv0dsjuj63e5vnf’, 600, 600); © 2010-11 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

  7. MSoliman,

    Because – Mr. Soliman- you must present truth with the intent of really helping someone. You may have “great” “ideas” — but you do not talk legal precedence. You place too much emphasis on bogus accounting — and, thereby, give it validity, thus, supporting the fraud. Need legal precedent.. Do not buy the accounting gimmicks — never did — and believe fraud must be challenged by already established law.

    As to accounting — take it up with appropriate regulators and authorities. Courts have no interest – outside their jurisdiction.

    As to MERS and FDIC — not every loan is even affected. And, — it is those loans that will give the real answers as to much of the fraud.

    Not to criticize you – as you like to do others — but you are simply too focused on your own issues — not relevant to many. Need to spread your wings — believe you will then have more to offer to most.
    Believe you have some important input — but you remain too limited in your focus as to the law and foreclosures.

    But, good luck to you. – my best. Maybe you can change accounting regulations. Will watch for your progress!!!! GAAP — are you listening to M. Soliman???

  8. Anonymous s

    Why do you fear the truth? You ride my ^$$ like a cheap suit. Why does the truth threaten you? I spend 22 years in capital markets and secondary trading over a billion in subprime assets. Analyst in NY and was there at the time of the markets birth in 1985 Garn St Germain and Section 32 etc. Sold to Sears, Westinghouse, Ford and Conti, CBass and Bof A warehoused with Citi financial group and part of teh Nat City start up that sold in 1998. Want me to really turn it up. Want to really know about MERS and open assignments and endorsements. MERS is for you as lenders will never go uncovered with out an assignment. NEVER.

    They did not sell any loans into a security. Told people this from day one. Reverting equity to debt is impossible. Got it. Each trustee sale is a reverse repurchase for capitation of a divested asset brought back to life by establishing a new basis and flipping it through loss risk under FDIC control receivership etc. NO MODIFICATION IS POSSIBLE – Over 10 hours invested with the FDIC and with attorneys on the line. Look at the European web sites and periodicals It’s hard now that these mickey mouse foreclosure sites are polluting the web – (Livinglies is premiere and excluded of course) but read and get informed. If you think I am arrogant – I am . . . the most arrogant member of a team the opposition will ever face and ready to crush their lies in settlement before you get to court. Stay off the subject matter if you not certain thats all. And attorneys I refer you to order the title search product this site sells and then hire an accountant and get started there. I’m not soliciting (learned my lesson well) – just getting the word out.


    “Not a day goes by where I don’t regret having stayed on the other side . . . $ $ $ $ $. That’s where the money is. I’m more aligned with whistle blowers, investors and civl / criminal claims unraveling the fraud and keeping execs out of jail.)

  9. We are largely dealing with — ON THE FACE — banks with NA after their name – regulated by the OCC (finally – a protest – today).

    Cuomo tried to subpoena files from the NA banks — OCC fought this and won at the Supreme Court level. AGs cannot do their job without obtaining records from the banks. They may “know” all — but need the records for proof. Settlement talks a front without a complete and thorough investigation. AGs cannot get records — but OCC CAN get records. But OCC will not get records — and OCC fighting for an “easy” settlement with banks.

  10. the problem is that most of these people are up for reelection, most homeowners have no idea they were duped and the bank propaganda sells them tge idea they are helping and that they as borrowers are morally obligated to perform.

    we need to do a better job at sharing this information and applying pressure where it matters.

    Where are the complaints on all the state bars?

    where is the flood of actions to quiet title?

    what do we do we the predatory lawyers that have made it the mission to leave you worse than when you started?

  11. “AG offices still have not drilled down to the facts”.

    Correct. Cause v effect!

    Is this perhaps because some lawyers (and judges) practice complex economics or complex finance without a license, unable to ask the right questions – or understand the right answers?

    Would you agree that if complex economics is downgraded to a legal ‘paper’ matter, run by lawyers for lawyers, natural laws of economics and accountancy fly out of the window resulting in counterfeit, predatory economies?

    Reference for concerned judges:
    “The Business Model of Fraud”.

  12. All the facts about the real problem are, at least in my opinion already know by the AG’s, if they’re not(which is not the case) they would have to be retarded!! I know I know!! they act like it but they’re not, this is once more another attempt to hush hush us all with some “proposal” so full of crap that in reality should be called a TOILET not proposal. In my opinion what it should be happening right now is the issuing of LETTRES DE CACHET for all involved in the ponzy scheme, that’ll save us (for a change) some money and trail and BS, and just to make it more fun and aggravating to all the thieves, we should ROBO SIGN those letters by the same robos that signed all the documents against us, so there!!!! goooooddd mmmooorrrning America!!!!!

  13. Also — see Cuomo v. Clearing House Association, L.L.C et al., — proof AGs could not subpoena anything – which means they did not investigate facts – and are trying to settle — without the facts..

  14. The most important information for this post is what Neil writes —- “AG offices still have not drilled down to the facts.”

    Find it quite predictable that 50 state AGs want to work out a “settlement” with banks – before the AGs have really investigated what went on behind banks closed doors. It is nothing more than a political ploy to silence the people who have been victimized. Further, AGs will have to investigate beyond the banks to ascertain all the fraud because banks, for the large part, have sold collection rights to non-banks.

    There cannot be an adequate settlement if AGs do not waive the evidence of fraud in the banks face and demand meaningful modification (with significant principal reduction) – or threaten to prosecute. In fact, if AGs had really been doing their job – investigating — there would be no need for “settlement” talks -the AGs could use their leverage to demand mandatory and meaningful modifications.

    And, Neil is also right – any modifications must be executed with a new instrument AND with the proper party (current creditor) identified.

  15. Borrowers seeking a modification maybe in for a shock

    By M.Soliman

    – It cannot happen. Not without triggering recognition and IRS recapture of nontaxable “REIT” revenue. Then you have greatest tax surpluses in history. Here are a few hurdles

    Recognition is the biggest problem facing a modification. SFAS 140 is under attack by the IASB for efforts to capitate assets from liabilites and back.

    The transferred assets have been isolated from the transferor-put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership.

    Each transferee (or, if the transferee is a qualifying special-purpose entity (SPE), each holder of its beneficial interests) has the right to pledge or exchange the assets (or beneficial interests) it received, and no condition both constrains the transferee (or holder) from taking advantage of its right to pledge or exchange and provides more than a trivial benefit to the transferor.

    The transferor does not maintain effective control over the transferred assets through either
    (1) an agreement that both entitles and obligates the transferor to repurchase or redeem them before their maturity or
    (2) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call. This is void due to instances of controlling servicing aspects evidenced prior to foreclosure.

    This published statement requires that liabilities and derivatives incurred or obtained by transferors as part of a transfer of financial assets be initially measured at fair value, if practicable. It also requires that servicing assets and other retained interests in the transferred assets be measured by allocating the previous carrying amount between the assets sold, if any, and retained interests, if any, based on their relative fair values at the date of the transfer.

    This Statement requires that servicing assets and liabilities be subsequently measured by (a) amortization in proportion to and over the period of estimated net servicing income or loss and (b) assessment for asset impairment or increased obligation based on their fair values.

    Other issues include the following:
    Foreclosure forwards backed by US Government.

    Credit bidding a contingent liability (It’s impossible)
    Foreclosure is conducted without face of lender. NOD is never a fully ripened claim and Prior Adjudication is preclusion & Res Judicatta.

    Finally, 1122AB servicing right’s violations, Divestitures of debt into equities “reversed” cause a variable charge to isolated fixed charge (Please…cannot be done)

    Other defenses are failure to identify a party of interest at time of closing on the HUD settlement is a violation of RESPA section 8 (citation) and deemed an unfair business practice that compromises the borrowers financing charges . Failure to disclose also acts as a manipulative market controls and violation of fair trade (Citation The Sherman Antitrust Act (Sherman Act,[1] February 30, 1890, ch. 647, 26 Stat. 209, 15 U.S.C. §§ 1–7) requires the United States federal government to investigate and pursue trusts, companies, and organizations suspected of violating the Act.

    Always see an attorney for questions regarding your rights and contact your state bar for assistance.

  16. It never ceases to amaze me how new paperwork can be generated to replace that which was shredded or robosigned. Unfortunately, it does not resolve issues of clouds on title.

    Three more law firms are ramping up in Florida to start filing QT actions. The QT action in Kansas City went out for publication by order of the Court.
    It’s moving forward folks!

    I will be on the Power Hour again to discuss updates in the quiet title arena on Monday, March 21, 2011 at 9 a.m. ( in streaming audio) and Matt Hale will be guesting again. Listen to the archived broadcasts on the website.

    Check for updates and to order the eBook.

  17. The proposed changes, which will be discussed by the attorneys general when they meet in Washington early next week, would compel the banks to treat each borrower in default individually

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