Az Statute on Mortgage Fraud Not Enforced (except against homeowners)

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Editor’s Comment:

With a statute like this on the books in Arizona and elsewhere, it is difficult to see why the Chief Law Enforcement of each state, the Attorney General, has not brought claims and prosecutions against all those entities and people up and down the fraudulent securitization chain that brought us the mortgage meltdown, foreclosures of more than 5 million people, suicides, evictions and claims of profits based upon the fact that the free house went to the pretender lender.

Practically every act described in this statute was committed by the investment banks and all their affiliates and partners from the seller of the bogus mortgage bond (sold forward, which means that the loans did not yet exist) all the way down to the people at the closing table with the homeowner borrower.

I’d like to see a script from attorneys who confront the free house concept head on. The San Francisco study and other studies clearly show that many if not most foreclosures resulted in a “sale” of property without any cash offered by the buyer who submitted a credit bid when they had not established themselves as creditors nor had they established the amount due. And we now know that they failed to establish themselves as creditors because they neither loaned the money nor purchased the loan in any transaction in which they parted with money. So the consideration for the sale was not present or if you want to put it in legalese that would effect those states that allow review of the adequacy of consideration at the auction.

I’d like to see a lawyer go to court and say “Judge, you already know it would be wrong for my client to get a free house. I am here to agree with you and state further that whether you rule for the borrower or this pretender lender here, you are going to give a free house to somebody.

“Because this party initiated a foreclosure proceeding without being the creditor, without spending a dime on the loan or purchase of the loan, and without any right to represent the multitude of people and entities that should be paid on this loan. This pretender, this stranger to this transaction stands in the way of a mediated settlement or HAMP modification in which the borrower is more than happy to do a traditional workout based upon the economic realities.

“And they they maintain themselves as obstacles to mediation or modification because they have too much to hide about the origination of this loan.

“All I seek is that you recognize that we deny the loan on which this party is pursuing its claims, we deny the default and we deny the balance. That puts the matter at issue in which there are relevant and material facts that are in dispute.

“I say to you that as a Judge you are here to call balls and strikes and that your ruling can only be that with issues in dispute, the case must proceed.”

“The pretender should be required to state its claim with a complaint, attach the relevant documents and the homeowner should be able to respond to the complaint and confront the witnesses and documents being used. And that means the pretender here must be subject to the requirements of the rules of civil procedure that include discovery.

“Experience shows that there have been no trials on the evidence in all the foreclosures ever brought during this period and that the moment a judge rules on discovery in favor of the borrower, the pretender offers settlement. Why do you think that is?”

“If they had a good reason to foreclose and they had the authority to allege the required the elements of foreclosure and they had the proof to back it up they would and should be more than willing to put a stop to all these motions and petitions from borrowers. But they don’t allow any case to go to trial. They are winning on procedure because of the assumption that the legitimate debt is unpaid and that the borrower owes it to the party making the claim even if there never was transaction with the pretender in which the borrower was a party, directly or indirectly.”

“Neither the non-judicial powers of sale statutes nor the rules of civil procedure based upon constitutional requirements of due process can be used to thwart a claim that has merit or raises issues that have merit. You should not allow the statute and rules to be applied in a manner in which a stranger to the transaction who could not even plead a case in good faith would win a foreclosed house at auction without court review and a hearing on the merits.”

Residential mortgage fraud; classification; definitions in Arizona

Section 1. Title 13, chapter 23, Arizona Revised Statutes, is amended by adding section 13-2320, to read:
13-2320.

A. A PERSON COMMITS RESIDENTIAL MORTGAGE FRAUD IF, WITH THE INTENT TO DEFRAUD, THE PERSON DOES ANY OF THE FOLLOWING:

  1. KNOWINGLY MAKES ANY DELIBERATE MISSTATEMENT, MISREPRESENTATION OR MATERIAL OMISSION DURING THE MORTGAGE LENDING PROCESS THAT IS RELIED ON BY A MORTGAGE LENDER, BORROWER OR OTHER PARTY TO THE MORTGAGE LENDING PROCESS.
  2. KNOWINGLY USES OR FACILITATES THE USE OF ANY DELIBERATE MISSTATEMENT, MISREPRESENTATION OR MATERIAL OMISSION DURING THE MORTGAGE LENDING PROCESS THAT IS RELIED ON BY A MORTGAGE LENDER, BORROWER OR OTHER PARTY TO THE MORTGAGE LENDING PROCESS.
  3. RECEIVES ANY PROCEEDS OR OTHER MONIES IN CONNECTION WITH A RESIDENTIAL MORTGAGE LOAN THAT THE PERSON KNOWS RESULTED FROM A VIOLATION OF PARAGRAPH 1 OR 2 OF THIS SUBSECTION.
  4. FILES OR CAUSES TO BE FILED WITH THE OFFICE OF THE COUNTY RECORDER OF ANY COUNTY OF THIS STATE ANY RESIDENTIAL MORTGAGE LOAN DOCUMENT THAT THE PERSON KNOWS TO CONTAIN A DELIBERATE MISSTATEMENT, MISREPRESENTATION OR MATERIAL OMISSION.

Those convicted of one count of mortgage fraud face punishment in accordance with a Class 4 felony.  Anyone convicted of engaging in a pattern of mortgage fraud could be convicted of a Class 2 felony


5 Responses

  1. Time to write the Arizona Attorney General Tom Horne and ask “why” the AZ AG is not prosecuting the banks and servicers for corruption and racketeering by submitting false credit bids from non-creditors at foreclosure auctions. The good ole boy auction system in AZ is a farse. It is time a few go to jail !

  2. What is it going to take for MERS to croak?

    Alabama lawsuits challenge electronic mortgage system
    Published: Tuesday, May 15, 2012, 8:36 AM

    By Kent Faulk — The Birmingham News The Birmingham News

    A national company’s mortgage registration sys­tem makes it difficult to track property title owner­ship and allows it to avoid paying county record fees, according to lawsuits filed by two Alabama counties in recent months.

    The cases filed by the Walker County Commis­sion and Barbour County’s probate judge are among a number of lawsuits filed by counties and homeowners nationwide challenging the legality of the Mortgage Electronic Registration Sys­tems Inc.’s system, known as MERS.

    The company has won a number of those court challenges and other deci­sions are pending. Walker County filed its lawsuit, which seeks to be certified as a class action complaint on behalf of all Alabama counties, against the company and its parent company, Reston, Va.­based MERS Corp, in April. The case was transferred to federal court in Birming­ham last week. The Bar­bour County case was filed in November.

    MERS maintains a pri­vate system designed to avoid recording mortgage assignments and paying as­sociated fees, Walker County’s lawsuit states. “Through the defendants’ electronic recording system MERS engaged and contin­ues to engage in deceptive practices that create confu­sion amongst property owners, damage the integ­rity of Alabama’s land re­cords and interfere with the duties of . . . (Walker County and other counties) . . . to properly record real estate interests and con­veyances,” the lawsuit states.

    Barry Ragsdale, a Bir­mingham attorney rep­resenting MERS in the Walker County lawsuit, de­clined comment. Efforts to reach MERS officials were unsuccessful.

    MERS, however, has re­peatedly argued that its sys­tem is legal.

    According to MERS and court records, the compa­ny’s electronic registry sys­tem works like this: When a bank or other mortgage lender loans money to a home buyer, two documents are ob­tained from the home buyer — a promissory note and a mortgage that estab­lishes a lien on the property to secure repayment of the loan. The mortgage, not the note, is recorded in county land records.

    Banks and others finan­cial companies pay mem­bership dues and per­transaction fees to MERS. The company is recorded in local land records as the mortgagee of record on all the mortgages for mem­bers. Banks or other lend­ing institutions may sell the promissory notes to each other a number of times. But as long as both the buy­ers and sellers of the notes are both MERS members, MERS remains assigned the mortgagee of record.

    If the note is ever sold to a non-MERS member, then the new assignment is ecorded in the land records, according to a MERS court filing.

    “MERS members often only record a mortgage assignment in county recording offices when they are attempting to assign the mortgage from MERS to another entity in connection with initializing foreclosure proceedings,” Walker County’s lawsuit states. “Before this final assignment takes place there might be two, three, or a dozen assignments (sales) that are not recorded.”

    MERS estimates in court filings that in the past 10 years notes secured by MERS mortgages recorded in Walker County, with MERS as the mortgagee, have been transferred between MERS Corp. members 7,382 times. That would amount to an estimated $81,202 in recording fees that were allegedly avoided for that period, according to MERS.

    The transfers cause gaps in the record of ownership, Walker County’s lawsuit states. “Gaps in title ownership, increase questions about foreclosure procedures, and raise doubts on the accurate satisfaction of mortgages, all of which undermine the time honored recording requirements in Alabama and through out the country,” the Walker County lawsuit states.

    MERS, however, has argued in Alabama court filings that there is no requirement that they record every transfer of the notes. The company last week asked a judge in the Barbour County case to dismiss the lawsuit.

    The lawsuits by Walker and Barbour counties are among dozens that have been filed nationwide against MERS On Monday, MERSCORP Holdings Inc. announced that a lawsuit had been dismissed in the Superior Court of the District of Columbia. The lawsuit had been filed by a Nevada resident against MERS, six mortgage lenders, and two law firms in 2010. That lawsuit, according to a company statement, had alleged that “the naming of MERS as the mortgagee of record or beneficiary of a deed of trust constitutes the creation of a false record to avoid payment of recording fees to the District of Columbia (D.C.) Register of Deeds and that use of the MERS System involved fraud.”

    “We remain confident that the MERS System will continue to withstand court challenges and our outstanding benefits will only become better known in the process,” a company press release says.

  3. I would like to see the entire case here and find out why this happened, crooked judge or poor representation, not all elements stated?
    http://www.mersinc.org/newsroom/press_details.aspx?id=394

  4. @DCB,

    Keeping in mind, of course, that Ohio is the second HUD for… no other than Chase!

  5. I can top that.

    @DCB: that one’s for us… How do you like them tax breaks? Got a senator in your back pocket you could pester to stop that insanity?

    http://www.bizjournals.com/columbus/news/2012/05/17/ohio-bank-tax-reform-clears-house.html?ana=RSS&s=article_search&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+bizj_columbus+%28Business+First+of+Columbus%29

    Ohio bank tax reform clears House
    Business First by Adrian Burns, Staff reporter
    Date: Thursday, May 17, 2012, 11:30am EDT

    Adrian Burns
    Staff reporter- Business First

    A reform of taxes on Ohio’s banks moved a step closer to reality Wednesday with the passage of House Bill 510 in the Ohio House of Representatives.

    The bill states that beginning on Jan. 1, 2014, banks will be taxed at a rate of 8 mills for their first $200 million in capital, 4 mills on capital between $200 million and $1.3 billion and 2.5 mills on equity capital above $1.3 billion. The bill is also expected to close loopholes that have allowed some large, multistate banks to avoid paying some taxes in Ohio.

    The tax rate change has been largely praised by bankers since it will lower the tax paid by most, as I reported in March.

    Banks currently pay an across-the-board tax of 13 mills.

    “The new financial institutions tax, which is built on the basic taxation principle of a broad base and low rate, modernizes and streamlines how the financial industry in Ohio is taxed,” Rep. Ron Amstutz, R-Wooster, said in a press release.

    H.B. 510 must still be approved in the Ohio Senate before it can become law.

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