Modification: Banks (US Bank and Wells’ ASC) Meet Their Match in Tennesee Judge Jeffrey Atherton

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This might well be the smoking gun that proves, with the actions of the banks and servicers, that they have no actual interest in the debt when they foreclose and that they are acting against the interest of both the creditor and the debtor by intermediating themselves into a process in which they should be considered a disinterested party who is not a stakeholder. Judges and policy makers are looking at the numbers. In virtually every other kind of litigation, the matter is settled during litigation”

It has been obvious that the banks and servicers have been using the obligation “to consider” as a license not to consider and therefore not approve a modification, short-sale or other mediation or settlement. They are, as their own employee reported being told by a superior, in the foreclosure business, not the modification business.

The reason they are in the foreclosure business is that in foreclosure they reap large rewards, whereas in modification, short-sale or other settlement or mediation, they receive only normal fees, which they deem to be far too small for the immense opportunity they see laid out before them.

The investors having abandoned the claim, the banks and servicers are having a feeding frenzy on the $7 trillion already lost in homeowner equity and the additional loss of another like amount. It is hard to resist, I know. But after all, if you are stealing, you should resist temptation. If you can’t do the time then don’t do the crime.

Judge Barnes here fences very well with the banks. They sought to dismiss a claim from a borrower that they had failed to consider the modification. They probably did what many borrowers are now doing — performing calculations that show clearly the benefit to the creditor in accepting the modification proposal as being far more valuable to the creditor over waiting for the proceeds of foreclosure.

The borrower filed a claim alleging negligence in that the proposal for HAMP modification was never considered and that therefore the bank and servicer had failed to meet the standard of care required in implementing HAMP, a Federal program in which banks received the consideration of money from TARP in exchange for their promise to consider modifications of loans.

It was of course assumed that once forced to the bargaining table the banks and servicers would immediately set out to bargain for something that had a value in excess of foreclosure, right? But that is not what happened and Judges all over the country are starting to take notice of this, as borrowers bring more and more proof into court that clearly shows a large difference in the the lower value of foreclosure compared tot he much higher value of modification, short-sale, settlement etc.

This might well be the smoking gun that proves, with the actions of the banks and servicers, that they have no actual interest in the debt when they foreclose and that they are acting against the interest of both the creditor and the debtor by intermediating themselves into a process in which they should be considered a disinterested party who is not a stakeholder. Judges and policy makers are looking at the numbers. In virtually every other kind of litigation, the matter is settled during litigation and the case does not go to court for trial. Here there have been no trials because the banks, up till now, had convinced judges that the issue was simple: the borrower didn’t pay. Summary Judgment was usually granted. When it wasn’t granted, the bank or servicer quickly reversed its position and settled on very favorable, but confidential terms, with the borrower.

I have personally heard several Judges express comments about the “haphazardness” of the granting of modifications and expressing their doubt as to what went into the process of “considering” a loan for modification. Those of us on the front line know this: the banks and servicers don’t consider loans for modifications, they only pretend to do so, just like the original loan was a pretender sitting at the closing table not actually making the loan, the actual creditor is not in court  making claims against the homeowner, and banks and servicers are dubbed pretender lenders or non-creditors because that is what they are. The whole thing is made of of sham parties and representations or fabricated documents establishing an elaborate ruse.

In denying the motion to dismiss Judge Barnes essentially said that in a court of equity, the Judge is required to fashion a remedy if the pecuniary gain of one side is procured with unclean hands. He parses words as well as they do — saying that the borrower might not have an actual private cause of action under HAMP, but that given the duties imposed on banks and servicers by HAMP, they could be negligent in their processing of applications for modifications — especially if it turns out that they are not considering them at all and just moving papers around to create a show for the Court.

6 Responses

  1. The truth of the matter is the fact that everything the Banksters say or do is a lie and is more than likely illegal.

    There actions are designed to acquire as many properties as they can and to retain these REO’s on the books to offset losses and in hopes of someday (when the market recovers) reselling these properties at 100% profit and again returning to the system of MBS.

    BAC tendered to me an application for a home loan modification which was denied after all of the usual lost paperwork BS and the like, the reason for the denial was that my mortgage payments including escrow did not reach the 31% of my verified income requirement for the program. I later learned that my payments actually would have been 63% of my verified income. It’s no surprise, I’ve been at this since 2006 with a law suit currently in the U.S. Court of Appeals and a 5th foreclosure filing and sale coming up in late November.

    I’m exhausted and wore down from the fight but I’m not done yet. And since this fight began the pretender lenders have claimed that my note had been securitized for the benefit of UBS Warburg and only now after they failed to hold a sale for a period of 12 months during the last foreclosure they have come back claiming that BAC is now the holder of the note with the right to foreclose.

    But what’s this, a letter from one of the corporate lawyers (not directly involved with the foreclosure) in a letter acknowledging one of my many QWR stating that my note was securitized for and by Credit Suisse in 2004.

    I’ve recently asked the Bankruptcy Court from my 2007 filing to re-open the case for fraud upon the court by these fraudsters and the same attorneys then that are behind the filings now. No answer yet but the fraud is clear.

    Nail them every chance you get and never stop as long as there is a path open to you. I’ve done this pro se and not because I’ve wanted to but can you imagine what my legal fees would have been like after what will be 6 years in February 2012.

    I’m still in my home and all I’ve wanted to do form the beginning of this mess was to make a mortgage payment to anyone who was legally authorized to accept it and record it for my benefit. Ain’t found that entity yet……

    55 and holding

  2. HMan—

    I believe all servicers are merely debt collectors on unsecured debt created through the giant Wall Street derivatives Ponzi scheme (subprime especially)—with no legal right to our money.
    I did the usual—submit paperwork a million times, etc. Finally I got a trial payment plan—3 months—but by the time I made one payment, I had found out that the Deutsche Bank “trust” that supposedly “owned” my loan (he told me this), —was empty. So, since I realized I had nothing to lose—I demanded in writing that my servicer show me proof that my payments were and are going to an actual “mortgage”—in an actual “trust”. I wanted to see a ledger and a balance sheet—that this was my legal RIGHT. Well, big surprise, it was right about then that the servicer decided to stop communicating with me—and I promptly stopped sending them my money. This was in April…haven’t heard a peep since.
    I also sent a cease and desist letter to the foreclosure mill that sent the NOD —telling them to back off, and and that I knew what they were doing was illegal…and I demanded that the servicer stop all foreclosure proceedings on my house before I sent them the ONE trial plan payment. The “trial plans” are simply a ruse to extract as much money as they can from you while they continue the foreclosure “machine”.

    The point is—we have to fight back HARD—and scream at them that WE KNOW what they are doing—that it is illegal and we are on to them…BEFORE they drag you into court…if possible.

  3. RJK said:
    “Immediately – we need a uniform Federal Regulation (which can be replaced by the individual states) that the requires the parties and attorneys who make any appearance in a foreclosure action disclose all their interests in the action.”

    Some are already in place: Certificate of Interested Persons and
    Corporate Ownership/Disclosure Statement

    I know for a fact, which is going to bite a particular offender soon, that these rules are not followed by the banksters and their liarsforhire. I believe noncompliance is grounds for sanctions and not sure what else.
    One of the reasons, and only one, the courts require this info is to see
    if a judge need recuse herself.

    Here’s an example:

    XXXXXX “requires that a Certificate of Interested Persons and Corporate Disclosure Statement must be filed by the appellant with this court within 14 days after the date the appeal is docketed in this court, and must be included within the principal brief filed by any party, and included within any petition, answer, motion or response filed by any party. You may use this form to fulfill this requirement. In alphabetical order, with one name per line, please list the trial judge(s), and all attorneys, persons, associations of persons, firms, partnerships, or corporations that have an interest in the outcome of this case or appeal, including subsidiaries, conglomerates, affiliates and parent corporations, including any publicly held corporation that owns 10% or more of the party’s stock, and other identifiable legal entities related to a party.”

    This may not cover all circumstances, but a version of this is what we’ve got that I know of.

  4. Yes, It’s BS. I applied for a modification. Intially they said I would have to make 3 trial payments. After my second payment I was advised the program was changed to 4 trial payments. Somehow my 4th payment was “misapplied” to another property I owned. So…Aurora said they could not start the process over and I would have to start the process over, and I was put in foreclosure.

    I submitted all new paper work and made another 4 payments. Then I waited, and waited, and waited. Several times I got notices/phone calls stating my file was “incomplete” I need to send in some form they “didn’t receive”. Then I got a letter in the mail stating I was denied because the property wasn’t my primary residence, which they new from the start. I asked to talk to a supevisor and started the process again…finally after about a year I was “approved” for a modification but my payment was about $150 higher than my premodification payment…The underwriter advised me I make to much money?

    It’s a joke. I have not attempted a Mod with my primary because I have to sign away my rights to be considered and could end up being denied anyways. I think I have a better chance in court.

  5. Neil: your observation about “[banks] intermediating themselves into a process in which they should be considered a disinterested party who is not a stakeholder” is highly interesting.

    Approaching the bench as a disinterested party who seeks no more than to unclog and reform a commercial transaction is fraud when the party is a “closet stakeholder”.

    Immediately – we need a uniform Federal Regulation (which can be replaced by the individual states) that the requires the parties and attorneys who make any appearance in a foreclosure action disclose all their interests in the action.

    The parties and attorneys are either disinterested or not: and the court needs to know the degree of self-interest and self-dealing in order to color the arguments made as to their inherent credibility.

    To ask the court to infer that an argument proferred by a putatively disinterested should be accorded greater credibility when the speaker is in fact very interested is to commit fraud upon the court.

    Conversely – there is an increasing tendency for non-lawyers to offer the court legal opinions – to cloak unlawful situations in a blizzard of legal-looking paperwork and robo-signatures that convey legality just by the weight of the forms and annexed documents.

    It has gotten to the point where judges should perhaps be requiring a second opinion on whether there exists any state of privity at all between parties appearing before the bench.

    There must be a new burden placed on these intermediating parties to exactly describe their coordinates, meaning, and import relative to a foreclosure of real property.

    Let’s get back to Neil’s original ideas about “compartmentalized fraud”: what we have before us is a situation which has been purposefully designed by banks to permit fraudulent intermediating entities to make appearances cloaked in smoke screens as to who exactly they are and what their interests are.

    Shame.

  6. i guess i am first to comment on this one…….. that is what happened to me since 2009. the modification runaround. losing paper work, moving files, and now today we heard “miscalculation” of income. i am going to foward this blog to marco rubios office not that it is going to help but they need to let the OCC aware we know what is happening. it can not be hidden from some of us. maybe those of us that are fighting this are those that will be helped? i do not hink that the others do not know. I did not in 2009 yntil i found foreclsoure

    hamlet. 1st thing i was told was DO NOT LEAVE YOUR HOUSE, the 2nd thing was to find all my mortgage paperwork, and 3rd find all my court recorded paper work. and the 4th was to write all government

    agencies. from that fateful day in 2009 i continue to fight a battle with wells fargo. they modified me larger then the original morgage, they told me not to pay to qualify for hamp which we now know was a lie just to get me out of my house faster. i live in fear of bein served. i get a letter from wells fargo telling i can reapply for hamp but foreclosure proceedings will continue. thats almost like sleeping with the enemy? am i not right. OH its ok apply for hamp will will get an easy 1k will foreclose on you any way and make 6 million. so its ok if we help you think you are going to save your house. we have no skin in this.

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