CITIES FIGHT BACK AGAINST WALL STREET: REDLINING UNSOPHISTICATED BORROWERS

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary SEE LIVINGLIES LITIGATION SUPPORT AT LUMINAQ.COM

EDITOR’S ANALYSIS: Even in the most unlikely places where consumers are generally treated as deadbeats, when an institution sues alleging much the same facts as individual borrowers, Judges take it more seriously. Part of the securitization scam that fueled the appearance of a successful strategy for homeowners, investors and Wall Street, was the practice of redlining poor neighborhoods consisting of poorly educated unsophisticated people who could easily be bamboozled into investing a home that had had been in their family for generations. It’s called predatory lending and fraud.

They sent sale people with no training other than a script to the doors of people who didn’t need or want a loan, offered them tons of money and used inflated appraisals that were completely false to convince people that their houses were worth far more than they thought (wrong) and to sign up for loan products that lacked any semblance of viability.

In a short period of time, the teaser rates and other inducements all failed and the loan, based upon false premises, failed. The people were right when they thought their houses were worth less but they relied upon appraisers and so-called lenders because a lender obviously would not offer money on the house unless the property was worth more than the loan product and the loan was viable. It didn’t make sense to any of the homeowners but they were assured by people in suits that everything was on the up and up.

It was all part of a scam on investor-lenders using the homeowners as pawns. None of it was true, and the people lost their homes, neighborhoods were emptied, and cities and counties lost millions in revenue and now face default on their municipal obligations and the possibility of some sort of receivership or bankruptcy. It took a while, but city administrators and city attorneys finally “get it.” None of this was real and all of it was a scheme to deplete the meager resources of cities unacquainted with the high finance tactics of Wall Street. Now they are suing, saying what the borrowers said when they objected to the foreclosures. When the little guy says it, the Judge pays no attention — but when the City of another institution says it, then it is taken more seriously. We’ll see plenty more suits just like this one. Follow them. Get the discovery requests and see if you can get hold of the answers.

Judge Allows Redlining Suits to Proceed

By

Two lawsuits accusing Wells Fargo of discriminatory lending practices have been allowed to move forward, a victory for plaintiffs that have accused the bank of steering African-Americans toward predatory loans.

In one lawsuit, brought by the city of Memphis and Shelby County, Tenn., Judge S. Thomas Anderson of Federal District Court for the Western District of Tennessee on Wednesday denied a motion from Wells Fargo to dismiss, partly on the grounds that the suit was too broadly drawn. Both jurisdictions accused the lender of improperly steering African-Americans toward loan products that ultimately led to foreclosures, vacancies and increased government costs.

“The City of Memphis and Shelby County have not alleged that Wells Fargo lending practices resulted in a host of social and political ills plaguing entire sections of the community,” Judge Anderson wrote in a 32-page order. “Rather plaintiffs contend that defendants have targeted individual property owners with specific lending practices (reverse redlining), resulting in specific effects (foreclosures and vacancies) at specific properties, which in turn created specific costs (services and tax revenue) for local government.”

Judge Anderson’s ruling came two weeks after Judge J. Frederick Motz, of Federal District Court in Maryland denied Wells Fargo’s attempt to dismiss a similar lawsuit brought by the mayor and city council of Baltimore. Two previous versions of that lawsuit, claiming reverse redlining, in which the bank steered African-Americans toward more predatory loans, had been dismissed by the court.

But this time, Judge Motz said city officials had narrowed the allegations enough to show a plausible link between Well Fargo’s actions and its impact on the city. The issue, he said, was whether “the city has plausibly alleged that the properties in question would not have become vacant but for the allegedly improper loans made by Wells Fargo.”

He said the city provided the link by claiming that Wells Fargo deliberately steered African-American borrowers who qualified for prime mortgages into subprime loans. As a result, the plaintiffs claim, borrowers who could have kept up with payments on a prime loan defaulted because of the more expensive subprime payments.

The city also contends that Wells Fargo approved mortgage refinancing or home equity loans for African-American borrowers even though it knew or should have known that the borrowers couldn’t afford the payments.

Decades of economic gains by African-Americans in many of the nation’s cities have been reversed by unemployment and foreclosures. While many factors have contributed to the decline, some have accused the nation’s largest banks of pushing blacks toward predatory loans that ultimately led to more foreclosures and vacancies. Asked about the two recent rulings, a Wells Fargo spokeswoman, Teri Schrettenbrunner, said: “We disagree with these rulings, and we will present the facts which we believe will ultimately win these cases. Our team members make loan pricing decisions based on credit and transaction risks, consistently treating our customers fairly.”

In its legal responses to the lawsuit, Wells Fargo had also maintained that Baltimore’s housing woes were caused by “a complex weave of social and economic factors” rather than its own lending practices.

43 Responses

  1. Dying Truth
    My apologies for the delayed response, but I’m eternally grateful for the information you’ve provided, your post is a TREMENDOUS help!!! Thanks so much for the feedback!!!

  2. ANONYMOUS, on May 8, 2011 at 8:39 am said:

    “Also — failing to identify the current creditor is not the only violation of the FDCPA — there are other violations.”

    Like using improper documentation to intimidate a borrower into not resisting foreclosure—making it look like govt action–ie the notary verification is by a licensed govt annointed person–an agent of the court

  3. Make It Happen,
    If you’re suing them or have counterclaims that will stick, YES a motion to enjoin the parties you have claims against is of benefit to you. But if they’re taking you to court for foreclosure, I would not recomend it unless they disclose their authority and involvement and provide a written and signed statement attesting to some set of specified facts, so if they switch up their credibility goes out the window.

    Reason I say this is, (with all the confusion going on) you don’t want to give the courts an impression by misinterpretation that all or any opposing parties have standing authority and a cause of action against you (which they never even come out and allege).

    When filing the motion state in the facts that they are evading their obligation to disclose their authority and prove their standing and violating your rights to due process by keeping those omissions concealed from you and the court. If the judge can maintain the integrity of the judicial process, file a motion to disqualify the judge for recklessness and professional misconduct.

  4. ANONYMOUS, on May 8, 2011 at 8:39 am said:

    “Also — failing to identify the current creditor is not the only violation of the FDCPA — there are other violations.”

    Yup, like extortion on such a grand scale that it makes RICO look like a (dull) pocket knife. But RICO does have an extender of sorts for statutes of limitations which have expired.

  5. YIPPY YI YO YIPPY YI YAY!!! North Carolina is getting it!!! North Carolina is getting it!!! Another foreclosure reversal…THANK YOU NC COURT OF APPEALS!!!!
    http://appellate.nccourts.org/opinions/?c=2&pdf=MjAxMS8xMC0zNjEtMS5wZGY=

    Thanks again ANONYMOUS!!!!

  6. Make It Happen,

    You are right. I am not an attorney — but, believe a Motion is the right procedure..

  7. Would you publish the complaint I sent to the Fulton County Georgia Clerk of Courts 10-10-09 that lead to investigation of the DOCX’ agents like Linda Green–and the subsequent disclosure in the LPS 2009 10K of notary issues, under “Regulatory matters”?

  8. In a related predatory scheme, the originators must search out added suckers to set up arrangements that enable seizure of homes and sevicer profits. Who else is as unsuspecting as the minority neighborhood–your Grandmother—elderly people that actually trust the originators. These people face increased living costs and are trying desperately to stay in the homes that their families grew up in—–homes that were PAID OFF. So the originators come along and say -you have X equity that you can cash in now to make expensive repairs to our house –sorry I mean “your” house granny . And well take care of the rel estate taxes and insurance —–make life easy on you–maybe cut you a check for awhile before we take the house.

    As we all know, the initial cost disclosed to poor granny is a fraction of the real expected cost after the reset kicks in and granny’s equity disappears about 2-3 times faster than she was lead to believe–but whatever-she needed a new water heater–and so the originator’s in law–or corporate affiliate does the inspection and it turns out Gee-Whiz that Granny REALLY needs a new roof, a new furnace, etc etc and why not throw in some nice new appliances too? its all ok because granny has a lot of equity–after all her deceased spouse spent 30 years paying it off ! Until the rate jumps because it was tied to some volatile index voted most likely to rise by the financiers —this is the best area for growth for the predators.

    My question is if the originator manages to cajole an open-end note with a max amount on it, gets a mortgage on the home, the originaor must fund the up-front monies they push at Granny–so they must be securitizing these things–how much is the crooked originator selling the note for to investors? My guess is full face. Then the originator keeps the difference to be paid out to granny in monthly payments etc-it becomes an unsecured general obligation of the fly-by-nite originator. Whe originator goes belly up—granny loses right to receive payments as promised but cant get back the note——-or reduce it—we know how those mods work already.

    Please agencies do not let them predate our parents, grandparents–its bad enough to attack young families like sharks after fresh meat——they can recover after 5-10 years sort of——but don’t let them do this to the elderly at the same time you take away or reduce their “entitlements”–like health care, drugs [now must be patented highest cost for those who havent been to the drugstore recently]. It is simply intolerable for the agencies to put the elderly in stress then turn loose these wolves on them. The best they can hope for is to die before the house is seized.

    Living Lies: Why will you not publicly post my comments?

  9. Thank you for all your contributions ANONYMOUS, but somehow, I don’t believe the Attorney for Homeq is going anywhere or that he’s going to make any disclosure about Ocwen because we’ve already had a hearing and he’s responded to two motions since the acquisition. Does anyone know the proper procedure for the adverse party to join a company to a lawsuit after its acquired/merged with the original party? Generally speaking of course… Is it a Motion to Join?

  10. cubed2k,

    Also — failing to identify the current creditor is not the only violation of the FDCPA — there are other violations.

  11. cubed2k,

    You are right about the FDCPA as to “A debt collector is not somebody or a company that obtains a debt or “concerns a debt which was not in default at the time it was obtained by such person;”” — this means the debt must be in default when acquired in order to be a debt collector.

    The debt collector is NOT collecting for the original creditor — unless the original creditor has not sold collection rights. Most often, original creditor does NOT retain collection rights.

    Thus, the “loan” is not sold to debt collector — only collection rights are ASSIGNED.. FDCPA requires identification of both the original creditor AND the current creditor to who collection rights have been assigned (and they must prove assignment)..

    In the case of mortgage loans — it is my premise that subprime mortgage loans were nothing more than modification of already classified default debt. And, believe this will eventually surface. Thus, servicers are immediately a “debt collector” – and subject to the FDCPA. (most servicers do identify themselves as a debt collector).

    The trust is “securities.” (how collection rights were ever securitized is beyond me — but, believe this is what occurred — and this is what eventually brought down the market). Nevertheless, anything with a “Cash flow” can be securitized. But, security investors – to any cash flow — are NOT the creditor.

    When default occurs while in the trust ( actually default on collection rights if, as I believe, subprime loans were mods of default debt), then, as SEC has emphatically stated to me, collection rights are “not sold”, but, rather “swapped out” of the trust. The security does not change hands — loan security is “zero balanced” by the trust. Servicer is now a debt collector (again), as they already were one, but Servicer only feels that they have to identify the trust as the “original creditor” –(even though the trust was never the original creditor – or any creditor at all) BECAUSE the security does not change hands by the “SWAP Out” of collection rights.

    All of this is in violation of the FDCPA — as to identification of the current creditor to who collection rights are assigned. Courts have failed to give discovery — as many have pointed out – because courts generally feel “you owe the debt — so what difference does it make who is the creditor”. This is, of course, wrong because if the debt is paid to the wrong party — you always will owe the debt. If debt is falsely discharged by wrong party in BK – you will always owe the debt. And, as to mortgage, by failing to identify the current creditor, homeowners have been denied the right to directly negotiate with their current creditor – who purchased collection rights at a steep discount. Never mind that the mortgage loan was likely originated by fraud to begin with.

    I have taken exception here with some that claim since trusts “investors” have already been paid by swaps — homeowners owe nothing. The harm in this approach is that courts still believe the debt is owed to someone. And, the actual fraud in debt collection is glossed over by ignoring the process I describe.

    Most homeowners are not looking for a free house — they are looking for reasonable and fair loan modifications that restore mortgage title to their home. But, this is impossible without first exposing the debt collection fraud.

    Happy Mothers Day to everyone.

  12. carie

    Dying Truth addresses this well. And, yes, there are many problems in courts. That is why government needed to get involved — but, still waiting for that – as government intended to push through foreclosures from onset. Do believe, however, the tide is turning. .

  13. ANONYMOUS,

    not sure why you mention “Collection Rights”. Collection rights are DEBT Collectors per the definition of debt collectors per FDCPA

    In the language of the FDCPA –
    http://www.yourcollectionrights.com/page/FDCPA-Fair-Debt-Collection-Practices-Act.aspx

    A debt collector is somebody who collects debts due another.—-

    “The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another”

    If a debt is written off or charged off, that is it with the debt. It is gone as far as the original creditor or person who loaned the money or credit. Now if the creditor sells the debt, for whatever amount, that amount is now added in as income.

    A debt collector is not somebody or a company that obtains a debt or “concerns a debt which was not in default at the time it was obtained by such person;” —–

    From FDCPA –

    “The term does not include-

    (A) any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor;

    (B) any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only § 803 15 USC 1692a for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts;

    (C) any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties;

    (D) any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt;

    (E) any nonprofit organization which, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in the liquidation of their debts by receiving payments from such consumers and distributing such amounts to creditors; and

    (F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity
    (i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement;
    (ii) concerns a debt which was originated by such person;
    (iii) concerns a debt which was not in default at the time it was obtained by such person; or
    (iv) concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor.”

    So the question becomes if your credit card or loan was in default and gets written off by the creditor, and then they sold the “Loan” to somebody, does that somebody become a debt collector??????????? Per above NO. All the so called “debt collector” did was purchase an old debt but it is written off.

    So the question becomes when you receive a letter from a debt collector – are they in fact collecting for the original creditor (debt has not been written off) or are they collecting for themselves a written off debt?

    If the former, they must follow FDCPA. If the latter, your communication with them and what you communicate to them, may form a new contract.

    That is how I see it.

  14. carie,
    Re: N Rec. SOT. Very common. Check here > http://search.dre.ca.gov/integrationaspcode/ to see if said alleged ‘trustee’ has a valid and active license. But from the sound of it said culprit is Quality Loan Service Corp. appointed by Litton Loan, in which case NO they do not have a valid license. it expired in like 2002.

    Would such a defect nullify any subsequent actions taken and instruments recorded by said (non)trustee? YES

    Is there another way to have a Trustee appointed other than by recording said substitution in the county where the property is located? YES, but requires an affidavit with the signatures of at least a majority (50%) of the certificate holders to said loan.

    It’s kind of like Mickey Mouse attempting to perform the part of the Sorcerer’s Apprentice in Fantasia without ever receiving the magical hat.

    Will judges in CA let that stand in the way of their Racketeering partnership’s profits? NOT LIKELY. All they care about is their pensions getting those high expected yeilds for their ROI.

    Could you beat the rap in court? YES, but only if judges in CA Fed & State weren’t extortionists, so NO. You could prove in court with evidence and a signed confession from the Defendant(s) that they stole money from you by maxing out the equity on your home and keeping an amount exceeding your loan balance that you paid off and that they fabricated the foreclosure to cover it up. YOU KNOW WHAT THE JUDGE WILL SAY? “Plaintiff has not stated a claim because Plaintiff has not offered to tender or showed that s/he is capable of making such an offer”.

    By the time we either get a new judiciary or they change their attitudes the 3 year statute of limitations to recover the property will have long passed.

  15. ANONYMOUS—thank you for your kind reply…of course I have another question ;)…:

    With regards to recording of substitution of trustee—doesn’t it have to be in the county of my property? I don’t know if you saw my comment below re. this…I was emailed an SOT document that said state of Texas, county of Travis—and I’m in LA, CA…and it says 2010—and is not recorded at my county recorders office…seems really fishy to me…and the notary signature is a “squiggle’!

  16. Why have there been no reports — from agencies who claimed to “have out soon” — but, have not reported??

    Have to be strong and stand together –change in the wind. Keep up the battle — never give up.

  17. Let’s face the facts, I think we’re still a colony and am having a hard time finding proof to the contrary. This is the same kind of crisis (Shays’ Rebellion) which triggered the conversion from a Confederation to a more National Government with more centralized power.

    Regardless of what happens (judging from our disorganization and lack of getting anywhere) expect the crisis to elevate and to bring about a drastic change to our Federal/State form of Government. It is a large part of the desired result.

  18. carie,

    Guess you could say it means both as to new and knew!!!

    Deustche is acting in capacity as Trustee to trust, — Transfer to any trust — on behalf of whom trustee claims to act — must follow the PSA “chain” to the tee!!! This includes POAs, Mortgage Schedule, Mortgage Loan Purchase Agreement, REMIC 90 day rule – etc etc. If any assignment/endorsement/document is missing (or ROBO signed)– they cannot show conveyance — and without conveyance there is no possession. They have to follow PSA and Prospectus.

    Sure experts here can provide Distribution reports that demonstrate tranches to trusts have been prematurely “Paid-off” — thus, “waterfall structure” is dismantled — with only remnants remaining.
    Then you have to find out who is the Securities Administrator — and along with the trustee, the SA will have ledgers to show when servicer ceased making advance payments to the trustee for your loan.

    PSA/Prospectus — public information at SEC site.

    I am not an attorney and this is not meant for legal advise – but only for educational purposes.

    Make It Happen,

    I would think that the attorney would be notifying the court that Homeq no longer exists!!

  19. Ok—I’m confused again—this was on Neil’s site:

    “SUBSTITUTION OF TRUSTEE: a written document that appoints a successor trustee to the trustee named in the deed of trust, (or present trustee). This document must be acknowledged by a notary public and recorded with the county recorder in the county in which the property is located.”

    So—-‘Angry and NOT TAKING IT’—you said Texas was okay—????? Even though my property is in LA county??

  20. Question: If during foreclosure litigation, Ocwen acquires Homeq and counsel is still actively representing Homeq as if they are the current servicer, with no mention of Ocwen, should the court be moved to join Ocwen? I’m confused. What happens when a company has been transferred during litigation?

  21. ANONYMOUS–I’m so sorry—did you mean “all knew” as to mortgage debt? or all “new”—as you wrote in last comment here—

  22. And as I said before, my servicer says Deutsche bank owns my loan (in the securitized trust)—can I ask him to prove it? Or is his only obligation to show me a (possibly bogus), “substitution of trustee”?

    thanks so much!

  23. Ian

    I am not an accountant – but has to do with accounting – Allowance for Loan Losses – non-accrual — and IRS guidelines for accounting. If anything is paid on charge-off accounts, which was reported as a loss to IRS — their must be a reverse accounting entry – if it is to be applied to that charged -off loan number. In practice — not done.

    Makes sense — that once an account is charged-off — interest cannot accrue on it. But, this is not the rule for debt buyers — they may continue to accrue interest — and late fees. .

    Interesting that servicers may cease advancing delinquent payments to trustee/trust — if they deem the loan “not collectible.” Same principle applies as to when loan is placed on non-accrual basis and – charged-off (deemed not- collectible).. This does not mean that the bank has to sell collection rights — they do not have to — and can then still ask for full payment to date. But, if they receive it will be recorded differently — and not against the original account number. Most often, banks dispose of charged-off debt as it affects capital requirements.

    So – question is — who holds the collection rights to the new account number?? This new account number is not a loan — it is for collection rights purposes.

    Is is legal?? Suppose so — been going on with debt collection for a very long time. What is not legal — is that the current creditor must be identified to borrower. Cannot claim the bank is still current creditor — when the collection rights have been sold. But, debt collectors seem to ignore this — they will only tell you the original creditor – not the current creditor. FDCPA – enforces this — and so does new TILA Amendment. But, most often they get away with concealing in court — and, even if they get caught — nothing more that a slap on wrist. However, all new as to mortgage “debt” — this is much more serious

  24. ANONYMOUS, (or anyone else):

    First of all, I apologize if this is a redundant question that has already been answered:

    If it can be proven or shown that the “securitized trust” has no actual transfer (of loan or asset ) going into the trust, or cannot be found, or trust does not exist, or my name or property cannot be found on the trust—will the judge recognize it as unsecured debt, (for bk), and/or dismiss the foreclosure?
    And how would one go about finding out/proving if their loan is actually in the trust, or if the trust even exists?

  25. ANONYMOUS- you said “when a loan is charged off by a bank, that loan number is gone”. Is this an observation, or is there an accounting rule which charged-off debt must follow? Or an IRS rule? Or an SEC rule?
    So now the only thing remaining are the collection rights to each “loan”, and a new number is assigned for appearances. This isn’t right, of course, but is it illegal? If so, under which rules/laws?

  26. saveamericaone, on May 7, 2011 at 6:46 am said:
    Lehman Brothers, Inc. is a Securities Broker/Dealer. RSSD ID 2380144 12/23/1913 located in New York.

    Federal Reserve System’s classification of Securities Broker/Dealer Entities’ primarily engaged in acting as agents (i.e., brokers) between buyers and sellers in buying or selling securities on a commission or transaction fee basis.

    RSSD-ID 2976042
    Lehman Brothers Trust a Non-Depository Trust Company accepts and executes trusts, does not issue currency. Non-Depository Trust Company a Federal Reserve Non-member RSSDID 2911221
    Activity: TRUST, FIDUCIARY and CUSTODY Activities. NOT FDIC INSURED.
    Born 6/28/1996. MOVED ON morphed into new form 1/25/2001.

    Lehman Brothers Trust Company, National Association – Federal Regulator OCC RSSD ID 2976042. Routing Transit Number (RTN) 021052338, FDIC Certificate 57204
    Activity: TRUST, FIDUCIARY, and CUSTODY ACTIVITIES.

    The very date Lehman moved on, no they were renamed? No Institutions reported as ‘acquired’ by the selected instituion.

    01/05/2001 NEUBERGER BERMAN NATIONAL TRUST COMPANY located at 701 5th Ave, Suite 3600, Seatttle Washington was established as a Non-deposit Trust Company – MEMBER (of the Federal Reserve System).

    Ahaaaa moment 11/01/2001
    NEUBERGER BERMAN NATIONAL TRUST COMPANY was renamed to NEUBERGER BERMAN TRUST COMPANY, National Association.
    10/31/2002 NEUBERGERM BERMAN moved to 605 3rd Ave 44th Floor NY NY

    1/1/2005 – Neuberger Berman Trust Company, National Association moved to 605 Third Avenue, 44th Floor New York.

    On 1/1/2005 RENAMED to Lehman Brothers Trust Company, National Association.

    Conglomerate did not go out of business.

    Was the debt moved around in order that the UNITED STATES GOVERNMENTS’ egregious resale of the bogus CERTIFICATEGATE Transactions, Credit Enhancements, Business Insurance feeds the beast? 1/2/2007 LEHMAN Brothers Trust Company, National Association moved to 399 Park Ave, NY NY. ON 4/8/2009, Lehman Brothers Trust Company, National Association moved back to 605 Third Avenue, NY NY. Finally 5/26/2010 Institution is closed.

    Consumers as the weakest link targetted by foreign organizations who coveted your proeprty you are not protected.

    Not even the inferior class of consumer protected categorized ‘investor’ based on $100K or more ‘investment’ in the bogus CERTIFICATES and NOTES.

    Only the superior class of consumer created for Federal Reserve members and nonmembers were protected.

    The Federal Reserve Classifications are a loophole and Congress does nothing allowing owners of foreign organizations to harm the economy, third element of our national security.

    Did Congress approve the superior class of consumers?

    Did Congress modify and Amendment? Create an Act? Create Statutory Laws to protect the welfare of the nation! NO so here we go sorry Mr. Soliman
    Stranger Danger Alert.

    Only those Federal Reserve Members and non-members who area private trusts alike REDWOOD TRUST Inc., who procure credit enhancements and secure the AAA Ratings from MOODY, S&P, FITCh, for the CREEPERS are going to be classified as SENIOR parties who get the cash before the regular ‘joe’ investor.l

    Sorry, investors. No you were not part of the credit enhancements, and special certificates and special notes who have superior claims over INVESTORS!
    On purpose! You bet.

    Lehman Brothers Holdings Inc. UNDERWRITER got all their money upfront and sold all originations and servicing so what are they crying about?

    Once the Bear stopped feeding LBHI regrouped and organized for the intentional fall.

    Lehman Commodities relationship and Aurora Loan Services – Corporate

    Investor Services group manages the risk and operations associated with the purchase and sale of mortgage assets. Our experience from loan set-up to capital market distribution distinguishes us as an industry leader. As one of the largest master servicers in the country, we are uniquely positioned to offer our services to third-party clients.

    Correspondent Lending
    Our experienced Sales and Operations teams work diligently to fund your loans as quickly and efficiently as possible to meet your business needs. Offering you excellent customer service builds the foundation for a long-term, rewarding relationship for years to come. Experience the Aurora advantage today

    Correspondent Portal – The Correspondent Portal offers an easy-to-use, Web-based way to manage an individual or a company loan pipeline. Correspondents can use the portal to upload, float, and lock loans.

    Secure File Upload – Our Secure File Upload allows for the secure exchange of data between Aurora and our business partners and clients

    Residential Subservicing
    We are a rated servicer with a 29 year track record of working with virtually every type of investor, property, and loan product. We integrate industry standard technology and best practices with our own proprietary systems to achieve metrics that meet and exceed industry benchmarks

    https://services.aurorab2b.com/UI/SSL/Authentication/LoginLinks.aspx

  27. Dear Joyce Cauthen,

    Smoke and mirrors on the Federal Savings Bank
    side. 7/1/1999 in anticipation of Former President Clinton passing Gramm-Leach-Bliley Act –

    Delaware Savings Bank, FSB (RSSD ID 759072)
    921 Orange Street, Wilmington DE (2/1/1998 changed to FSB) was renamed 7/1/1999 to Lehman Brothers Bank, FSB.

    NOT UNTIL 4/27/2009 did Lehman Brothers Bank, FSB rename itself to Aurora Bank FSB and moved to 1000 N. West St, Suite 200 Wilmington DE.

    Aurao Bank FSB 759072 active.

    PARENT: Lehman Brothers Holdings Inc.

    All circles back like a neck jerk.

    CERTIFICATEGATE
    NOT POSSIBLE WITHOUT OFFICERS OF ‘AURORA’ ROBOSIGNING!

    Wonder why they did not keep their EVP E. Todd Whittemore?
    Maybe they wanted him at long-arms reach?
    Article 2/7/21 listed updated November 2010:
    A List of Mortgage Closures, Mergers and Layoffs
    21Feb07Aurora – stopped wholesale and correspondent lending
    Aurora Loan Services – 160 employees laid off
    Aurora Loan Services – laid off 70 in Florida,
    139 in NJ
    Aurora Loan Services – cut 93 jobs in El Toro, CA
    AURORA’ IS A PRETENDER LENDER. NEVER A LENDER THEY ARE SINCE 2005 A ‘LOAN MITIGATOR’ FOR LEHMAN COMMODITIES.
    AUROA LOAN SERVICES
    http://www.thetruthaboutmortgage.com/a-list-of-recent-mortgage-closures-mergers-and-layoffs

    Don’t believe that the federal savings bank rules apply here. Each transaction will control what rules, laws, acts, reguations, apply.

  28. uprootedone,

    Thanks for the video. Very important. As I have said before, subprime loans cannot be refinanced due to invalid mortgage title — and prior loans not paid off.

    This is part of the reason that “modifications” do not include principal correction. Although any modification should be a new contract since original “lender” is gone, a mod with principal correction is DEFINITELY a new contract — and must be insured with mortgage title insurance. No mortgage title insurer is going insure any new contract as loan is bogus from the onset!!

    Carie

    Talked about loan number changes – some time ago- with several readers who post here. Called changed loan numbers a “red flag.” Most judges ignore — but, a loan number change is a serious problem as the trusts contain original loan number only. Once a loan is charged off by a bank — that loan number is gone — you can no longer pay under that loan number. But, that loan number is the original loan/note number recorded — thus, valid discharge (if refinanced) was impossible.

  29. And to quote from ANONYMOUS:

    “Foreclosure proceeds are not going to the Trust/Trustee—or servicer to the trust.
    None of these parties can be plaintiff in foreclosure actions—and cannot be current creditor in BK.”

  30. Ok, thanks. I’ll look into the notary thing…also, do you know if the “loan number” that is on my original promissory note and original loan papers has to be the same number on the loan papers that the servicer is attempting to foreclose with? It is not the same number.
    Also, on the NOD there is a Trustee sale # and a Title order #, but no loan #.
    I also thought that they cannot foreclose without an affidavit/witness from the Depositor to testify?

  31. carie…
    they are going to foreclose if they have substituted the trustee. file the notary complaint. it works -it requires you to start doing the notary research so you know”why” it works.- the results = SOS suspends or revokes the notary’s commission = this impeaches the “rebuttal presumption” the recorded docs are correct & valid.

  32. carie
    it should be “under the laws of texas ” if thats where the notary is at.
    if its is not already recorded then its not valid as to the psa – assuming its securitized , but ca does not require a recorded assignment in re to rights ,but no memorialized assignment-[the recorded doc validates a “date & claim “] is a problem for the servicer in re – nonjudicial foreclosure.
    ck to see if its a robo signer & info so file a REAL notary complaint with the SOS . ck here http://showmetheloan.net/documents.html re notary complaint.

  33. Carie, that would be comical if they weren’t trying to steal your house. Maybe if we neutered a few servicers they’d straighten up.

    Question: has anyone negotiated down a Wells 2nd that’s been charged off? Can anyone explain to me how that even works….how can Wells still “own” the mortgage if it’s been charged off?

    They offered me 15 cents to the dollar, they being by their own words the third debt collection firm to be on this case, and when I refused, he asked me what I could do. I’m wondering if anyone here has knowledge as to what these underwater 2nds are actually being settled for. The only reason I’m interested is if I get quiet title on the 1st, I’d like to have the 2nd go away, even if it costs a couple grand. I can foresee this worthless 2nd suddenly becoming 1st lien position.

  34. OK, somebody help me out with this one…

    I emailed my “servicer” at Indymac, (who is trying to extort money from me via a “trial loan mod”), and asked him for proof of assignment of mortgage to Deutsche bank, which he said “owns” my loan, (all I have is a securitized trust number), and he ignores me for 2 weeks, finally sends me via email an UNSIGNED “substitution of Trustee’ document…I said…”it’s not signed”…hello?
    1 hour later he sends me a “signed” and “notarized” substitution of Trustee—but, it says state of TEXAS—county of TRAVIS…doesn’t it have to say state of CALIFORNIA—county of LOS ANGELES—where my property is recorded? Not to mention I was AT my county recorders office 2 weeks ago, and this “document” was NOT recorded…oh, and it was “dated” as signed on Nov. 30, 2010 !!!!

    This “document” also says that Deutsche Bank as Trustee, “desires to substitute a new Trustee…Aztec Foreclosure Corporation”…blah blah…

    It also contains this sentence—word for word:

    “Whenever the context hereof so requires, the masculine gender includes the feminine and/or neuter, and the singular number indicates the plural”

    Huh? Neuter?

  35. “Unsophisticated eh?” Well, the borrowers have been accused of much worse. What would we say of the appraisers and realtors and brokers? Even more unsophisticated? Fannie Mae executives, regulators, economists – are they less enlightened too? Some of them sure were!

    I don’t buy that borrowers were unsophisticated, if we assume that a Bank is a trusted institution and most everyone has housing needs, what level of sophistication would be needed to assume that working with a broker would be a set up for predatory failure? Why wouldn’t we expect these same “benevolent” institutions to at least try to help people in a bad economy?
    A bank isn’t some criminal enterprise that’s set up to empty folks savings, shake people down and then take their houses – but that’s what they did.

    Borrowers are: black, white, yellow, tan, young, old, smart, strong, not so tall, me, you, them – you know, just plain folk who were victimized.

  36. On a scale of 1-10 what is the gravity here?

  37. And it wasn’t just unsophisticated borrowers. People with good credit who handled their finances well for decades who could qualify for fixed rate products got streamlined into alt a and even subprime in some cases. It included seniors and even busy professionals accepting the advice of brokers and bank officers. “We never do fixed rate mortgages anymore – this is a better product – and you qualify instantly – take the opportunity to borrow more because you qualify – homes never go down in value here and you can sell or refiance in five years or before the payment goes up. The beauty of this product is that your payment stays low whether the rate goes up or down – the docs are already printed – sign here and here and here – you have three days to change your mind anyway and you can look it over later”.

  38. Top Five Reasons that MBS Lawsuits Are Just Beginning
    Posted on May 5, 2011 by igradman
    http://www.subprimeshakeout.com/2011/05/top-five-reasons-we-havent-seen-the-last-of-the-mbs-lawsuits.html
    After a few quiet months in the world of mortgage crisis litigation, we have seen a flurry of activity over the last six weeks that should put to rest speculation that mortgage derivative lawsuits are winding down. To recap these developments, I bring you The Subprime Shakeout’s Top Five Reasons that MBS Lawsuits Are Just Beginning:

    Number 5: Statistical Sampling Gains Widespread Acceptance in MBS Cases. I have reported previously on Judge Bransten’s decision in New York state court in the case of MBIA v. Countrywide/BofA to allow MBIA to use statistical sampling and extrapolation to prove its claims for breach of reps and warranties. I also noted how, in subsequent litigation, Allstate cited those holdings in its complaint as a shortcut to proving widespread breaches in its MBS investments.

    Now, United States District Court Judge Paula Crotty in the Southern District of New York has lent a new level of credibility to this line of reasoning, becoming the first federal judge to hold that a plaintiff could use statistical sampling to prove a generalized claim for breach, rather than being limited by the “sole remedy” language of the PSA to a loan-by-loan approach (opinion available here). Though the analysis applied by Judge Crotty in Syncora v. EMC rested on the unique rights of Syncora as a bond insurer, and thus may not be entirely applicable to private investors seeking to employ the same remedy, judges in investor lawsuits may find the opinion’s common-sense approach to the complexities of MBS litigation persuasive.

    In particular, Judge Crotty was highly skeptical that the loan-by-loan repurchase protocol was intended to be applied to situations where widespread breaches of reps and warranties were alleged. This discussion, found in footnote 4 of the opinion, is worth reading in its entirety:

    The repurchase protocol is a low-powered sanction for bad mortgages that slip through the cracks. It is a narrow remedy (“onesies and twosies”) that is appropriate for individualized breaches and designed to facilitate an ongoing information exchange among the parties. This is not what is alleged here. Here, Syncora alleges massive misleading and disruption of any meaningful change by distorting the truth. The futility of applying an individualized remedy to allegedly widespread misrepresentations is evident in the fact that, of the 1,300 loans actually submitted under the repurchase protocol, EMC has remedied only 20. This .015% success rate does not bode well for the efficiency of employing the repurchase protocol for a generalized claim of breach. Accordingly, EMC cannot reasonably expect the Court to examine each of the 9,871 transactions to determine whether there has been a breach, with the sole remedy of putting them back one by one. This transaction was put together in days and months. It is now in its second year of litigation.

    You heard that right: of the 1,300 loans that Syncora has tried to put back to EMC to date under the repurchase protocol, EMC has agreed to repurchase only 20. Again, given the evidence emerging about the conduct of that lender, I shouldn’t be surprised that it is ignoring its contractual repurchase obligations entirely. Yet, somehow, this intransigence still makes my head spin.

    Crotty’s language echoes the comments of Judge Bransten during the hearing on MBIA’s statistical sampling motion – that it is simply impractical to think that any court could adjudicate thousands of individual loans – but goes further, finding that the purpose of the repurchase protocol being to address “onesies” and “twosies.” I believe that other jurists will find this analysis persuasive, thereby encouraging other MBS plaintiffs to come forward with claims of widespread breach, as the pathway to judgment will be significantly shorter and cheaper if sampling can be used.

    Number 4: Bank of America Settles Repurchase Claims with AGO for $1.6 billion. On April 15, bond insurer Assured Guaranty, Ltd. (AGO) announced that it had reached a settlement with Bank of America, including Countrywide Financial and its subsidiaries, to resolve rep and warranty issues on 29 MBS deals that AGO had insured on a primary basis. The settlement included $1.1 bn of cash up front and, according to Bank of America, up to another $500 million through a reinsurance agreement with BofA. AGO is projecting its losses from first lien Countrywide deals to be $490 million and losses from its second lien deals with Countrywide to top out at $2.4 billion. If BofA’s estimates of the value of this deal are correct, it could mean the bank is covering over 55% of AGO’s projected losses.

    Though some would argue that the amount of this settlement was small compared to the number of breaches of reps and warranties that AGO was finding across all of its loan pools (88% of second liens and 93% of first liens according to AGO’s 2010 10-K), I see this as an out-and-out win for insurers and investors facing MBS losses. This is the first time that a major bank has settled for any sizeable amount with a private party over rep and warranty liability, and it undermines the banks’ party line–repeated ad nauseum–that these claims were nothing more than sophisticated parties seeking to pass their losses onto somebody else.

    Indeed, as commentators have begun to recognize, this settlement gives credence to the notion that monolines and private investors stand to recover a significant portion of their losses related to MBS from the banks that originated or packaged the loans into securities. The accord may also embolden other plaintiffs to come forward with claims of their own, as it appears that BofA is making a concerted push to put its legacy issues from Countrywide’s portfolio behind it.

    Number 3: AIG Jumps into the Fray. The sleeping giant has finally awoken. Monolithic insurance company AIG, whose investments in the mortgage market forced Uncle Sam to swoop in to its rescue, has finally started taking legal action against some of the banks that induced it to insure mortgage products designed to fail and engaged in other underhanded conduct with respect to these investments. Last Thursday, April 28, AIG sued two little-known CDO managers, saying they had conspired with affiliates to inflate the prices of these CDOs and create windfall profits and management fees for themselves.

    As I’ve discussed before, AIG was forced to release its claims against the issuers of the mortgage securities it had insured through Credit Default Swaps and other derivatives when it accepted bailout money from the New York Fed. However, AIG did not waive its claims as to the managers of those deals or as to the $40 billion of MBS that AIG purchased outright. According to several people familiar with this matter, AIG is planning to bring additional lawsuits regarding those investments. The insurer has hired Quinn Emmanuel, which also represents MBIA and several other bond insurers in MBS litigation, so it certainly looks like AIG is taking these issues seriously.

    Notably, AIG’s first lawsuit draws on allegations made by the SEC last year when it accused the same money managers of securities fraud. This creates a nice segue into the next item…

    Number 2: Duetsche Bank and MortgageIT Sued by U.S. Department of Justice for Reckless Lending Practices. Nothing engenders more private follow-on litigation than when the government steps in and decides to sue somebody for fraud or negligence. Similarly, the DOJ’s 48-page complaint against Deutsche Bank and its subsidiary, MortgageIT (available here), should give would-be plaintiffs substantial fodder upon which to base civil lawsuits against Deutsche for any harms stemming from MBS investments.

    The DOJ’s suit accuses Deutsche of several violations of the federal False Claims Act, (carrying the potential for treble damages), as well as common law negligence and gross negligence based upon years of reckless lending. Notably, though the complaint opens with the statements that, “This is a civil mortgage fraud lawsuit brought by the United States against Deutsche Bank and MortgageIT…[which] repeatedly lied to be included in a Government program to select mortgages for insurance by the Government,” it stops short of actually accusing the lenders of civil fraud.

    Perhaps the DOJ, based on the heightened pleading standard for civil fraud, is awaiting the acquisition of better evidence through discovery before bringing any fraud claims (as Ambac recently did), or maybe it doesn’t feel it has a strong enough case to prove all of the elements of common law fraud (including knowledge of falsity, intent to deceive, and detrimental reliance). Regardless, the allegations in the complaint suggest a strong basis for fraud, and the inclusion of such a claim would only add fuel to the fires of prospective plaintiffs.

    Furthermore, Bloomberg reports that this may be only the beginning of U.S. suits against Deutsche and other lenders. They note that the FHA and HUD are investigating existing loans for other potential claims to refer to the DOJ, and quote one commentator as saying that the Government may have filed this lawsuit as a “test case” before bringing more suit. These cases, in turn, will beget many times that number of additional civil cases.

    Number 1: Levin Report Referred to the SEC and DOJ for Potential Criminal Charges. Okay, remember when I just said that nothing brings about more private litigation than government lawsuits? Well, I should rephrase that. Nothing brings about more private litigation than government lawsuits, except for criminal charges. Of course, as was illustrated most glaringly by Matt Taibbi in the article, “Why Isn’t Wall Street in Jail?” in Rolling Stone Magazine, not a single criminal indictment has been lodged, let alone any convictions obtained, against Wall Street bankers in the wake of the mortgage crisis that destroyed more than 40% of the world’s wealth.

    However, it appears that this is about to change. First, Eric Holder testified before the House Judiciary Committee that more suits and prosecutions may follow the Deutsche Bank action discussed above. In particular, Holder stated that, “we are in the process of looking at a whole variety of these matters, and it is possible that criminal prosecutions will result.” Not exactly a guarantee, but it’s a start.

    Then, just yesterday, the Levin report issued by the U.S. Senate, which finds that Goldman Sachs misled its clients about mortgage derivatives, was formally referred to the DOJ and SEC. This puts the issue at the “top of the list” for the agencies and increases the likelihood that criminal actions will be brought. Not only could charges be brought against Goldman and its executives for its actions leading up to the mortgage crisis, but additional charges of perjury could be levied against the executives that testified before Congress, as much of their testimony ran directly contrary to the ultimate findings of the Commission.

    Though many were hopeful that all of the buzz surrounding the potential MBS litigation wave would fade with time, these five key developments over the last month or so send a strong signal that we haven’t seen the last of these lawsuits. In fact, they’re likely just beginning.

    [Many thanks to Manal Mehta from Branch Hill Capital for passing along several of the articles referenced in this post.

  39. I was just getting ready to address John Gault’s comments about no trustee and/or custodial liability to the certificate holders – interesting and that is what it says. Ridiculous.

    However, beyond that, this post today reveals how the predatory lending, etc. put people in homes that could not afford them – A little something we clearly found out back in 2006 and 2007, – why are we now just addressing it?

    But needless to say – as a federally chartered bank, this will indeed be a supplement to whether or not the trustees and the custodians have a right under their titles to not protect the certificate holders by not verifying and/or validating receipt of documents as they were received under 2.01 –

    Think of it this way – If they can’t be held liable under the PSA – then most certainly this action of predatory lending and submitting to the whims of Wall Street will most certainly take the bank out – Since when do the banks not have a fidicary duty to their stockholders to practice prudent lending and thics in the course of their business operations.

    They must do that (that is why we have auditors – which did not do their jobs of course) that are supposed to oversee the types of transactions banks are engaged in so that wrong doing will not be the result – which it was when they worked in tandem to perform under the PSA agreements – Where was the SEC, the OCC, Thrift, etc. – All of a sudden the financial servicers – banks could enter into any types of transactions without the forethought of the danger that would be the result –

    The banks are going to have to answer and the predatory lending issue will certainly help the certificate holders as well as homeowners who lost their homes.

    There was a time when I sat down in the trust department of a major bank and looked at each and every note that was sent to us as custodians and if we did not have THE PROPER DOCUMENTATION AND ENDORSEMENTS – that loan was sent back for repurchase and we didn’t take all damn day to do it.

  40. This isn’t ankle biting the banks are experiencing, it’s a good old fashion butt whooping and the pile on that’s yet to come is going to be deep and fierce.

    Karmically speaking, you just can’t do what these maniacal bastards did without experiencing paybacks of collosial porportions.

    Bring it on world! Let’s level this field and rumble! Jump you ****ers!

  41. Now the City of Los angeles is finding out who the real dead beat is. Too bad. All they had to do is follow the written law.

    http://www.dsnews.com/articles/city-of-los-angeles-sues-deutsche-bank-for-failing-to-maintain-reos-2011-05-05

    Thanks cubed2k for turning me on to dsnews.com

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