Pandemic Lying Admission: Deutsch Bank Up and Down the Fake Securitization Chain

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Editor’s Comment:

One problem with securitization in practice even under the academic model is the effect on potential enforcement of the obligation, even assuming that the “lender” is properly identified in the closing documents with the buyer of the loan product and the closing papers of the buyer of the mortgage bonds (and we’ll assume that the mortgage bonds are real and valid, as well as having been issued by a fully funded REMIC in which loans were properly assigned and transferred —- an assumption, as we have seen that is not true in the real world). Take this quote from the glossary at the back of this book and which in turn was taken from established authoritative sources used by bankers, securities firms and accountants:

cross guarantees and credit default swaps, synthetic collateralized asset obligations and other exotic equity and debt instruments, each of which promises the holder an incomplete interest in the original security instrument and the revenue flow starting with the alleged borrower and ending with various parties who receive said revenue, including but not limited to parties who are obligated to make payments for shortfalls of revenues.

Real Property Lawyers spot the problem immediately.

First question is when do these cross guarantees, CDS, Insurance, and other exotic instruments arise. If they are in existence at the time of the closing with the borrower homeowner then the note and mortgage are not properly drafted as to terms of repayment nor identity of the lender/creditor. This renders the note either unenforceable or requiring the admission of parole evidence in any action to either enforce against the borrower or enforce the cross obligations of the new cross creditors who supposedly are receiving not just rights to the receivable but to the actual note and the actual mortgage.

Hence even a truthful statement that the “Trustee” beings this foreclosure on behalf of the “trust” as creditor (assuming a Trust existed by law and that the Trustee, and beneficiaries and terms were clear) would be insufficient if any of these “credit enhancements” and other synthetic or exotic vehicles were in place. The Trustee on the Deed of Sale would be required to get an accounting from each of the entities that are parties or counterparties whose interest is effected by the foreclosure and who would be entitled to part of the receivable generated either by the foreclosure itself or the payment by counterparties who “bet wrong” on the mortgage pool.

The second question is whether some or any or all of these instruments came into existence or were actualized by a required transaction AFTER the closing with the homeowner borrower. It would seem that while the original note and mortgage (or Deed of Trust) might not be affected directly by these instruments, the enforcement mechanism would still be subject to the same issues as raised above when they were fully actualized and in existence at the time of the closing with the homeowner borrower.

Deutsch Bank was a central player in most of the securitized mortgages in a variety of ways including the exotic instruments referred to above. If there was any doubt about whether there existed pandemic lying and cheating, it was removed when the U.S. Attorney Civil Frauds Unit obtained admissions and a judgment for Deutsch to pay over $200 million resulting from intentional misrepresentations contained in various documents used with numerous entities and people up and down the fictitious securitization chain. Similar claims are brought against Citi (which settled so far for $215 million in February, 2012) Flagstar Bank FSB (which settled so far for $133 million in February 2012, and Allied Home Mortgage Corp, which is still pending. Even the most casual reader can see that the entire securitization model was distorted by fraud from one end (the investor lender) to the other (the homeowner borrower) and back again (the parties and counterparties in insurance, bailouts, credit default swaps, cross guarantees that violated the terms of every promissory note etc.

Manhattan U.S. Attorney Recovers $202.3 Million From Deutsche Bank And Mortgageit In Civil Fraud Case Alleging Reckless Mortgage Lending Practices And False Certifications To HUD

FOR IMMEDIATE RELEASE                  Thursday May 10, 2012

Preet Bharara, the United States Attorney for the Southern District of New York, Stuart F. Delery, the Acting Assistant Attorney General for the Civil Division of the U.S. Department of Justice, Helen Kanovsky, General Counsel of the U.S. Department of Housing and Urban Development (“HUD”), and David A. Montoya, Inspector General of HUD, announced today that the United States has settled a civil fraud lawsuit against DEUTSCHE BANK AG, DB STRUCTURED PRODUCTS, INC., DEUTSCHE BANK SECURITIES, INC. (collectively “DEUTSCHE BANK” or the “DEUTSCHE BANK defendants”) and MORTGAGEIT, INC. (“MORTGAGEIT”). The Government’s lawsuit, filed May 3, 2011, sought damages and civil penalties under the False Claims Act for repeated false certifications to HUD in connection with the residential mortgage origination practices of MORTGAGEIT, a wholly-owned subsidiary of DEUTSCHE BANK AG since 2007. The suit alleges approximately a decade of misconduct in connection with MORTGAGEIT’s participation in the Federal Housing Administration’s (“FHA’s”) Direct Endorsement Lender Program (“DEL program”), which delegates authority to participating private lenders to endorse mortgages for FHA insurance. Among other things, the suit accused the defendants of having submitted false certifications to HUD, including false certifications that MORTGAGEIT was originating mortgages in compliance with HUD rules when in fact it was not. In the settlement announced today, MORTGAGEIT and DEUTSCHE BANK admitted, acknowledged, and accepted responsibility for certain conduct alleged in the Complaint, including that, contrary to the representations in MORTGAGEIT’s annual certifications, MORTGAGEIT did not conform to all applicable HUD-FHA regulations. MORTGAGEIT also admitted that it submitted certifications to HUD stating that certain loans were eligible for FHA mortgage insurance when in fact they were not; that FHA insured certain loans endorsed by MORTGAGEIT that were not eligible for FHA mortgage insurance; and that HUD consequently incurred losses when some of those MORTGAGEIT loans defaulted. The defendants also agreed to pay $202.3 million to the United States to resolve the Government’s claims for damages and penalties under the False Claims Act. The settlement was approved today by United States District Judge Lewis Kaplan.

Manhattan U.S. Attorney Preet Bharara stated: “MORTGAGEIT and DEUTSCHE BANK treated FHA insurance as free Government money to backstop lending practices that did not follow the rules. Participation in the Direct Endorsement Lender program comes with requirements that are not mere technicalities to be circumvented through subterfuge as these defendants did repeatedly over the course of a decade. Their failure to meet these requirements caused substantial losses to the Government – losses that could have and should have been avoided. In addition to their admissions of responsibility, Deutsche Bank and MortgageIT have agreed to pay damages in an amount that will significantly compensate HUD for the losses it incurred as a result of the defendants’ actions.”

Acting Assistant Attorney General Stuart F. Delery stated: “This is an important settlement for the United States, both in terms of obtaining substantial reimbursement for the FHA insurance fund for wrongfully incurred claims, and in obtaining the defendants’ acceptance of their role in the losses they caused to the taxpayers.”

Giving Back to the Community through a variety of venues & initatives.

Making sure that victims of federal crimes are treated with compassion, fairness and respect.                  1/45/16/12                  USDOJ: US Attorney’s Office – Southern District of New York

HUD General Counsel Helen Kanovsky stated: “This case demonstrates that HUD has the ability to identify fraud patterns and work with our partners at the Department of Justice and U.S. Attorney’s Offices to pursue appropriate remedies. HUD would like to commend the work of the United States Attorney for the Southern District of New York in achieving this settlement, which is a substantial recovery for the FHA mortgage insurance fund. We look forward to continuing our joint efforts with the Department of Justice and the SDNY to combat mortgage fraud. The mortgage industry should take notice that we will not sit silently by if we detect abuses in our programs.”

HUD Inspector General David A. Montoya stated: “We expect every Direct Endorsement Lender to adhere to the highest level of integrity and accountability. When the combined efforts and attention of the Department of Justice, HUD, and HUD OIG are focused upon those who fail to exercise such integrity in connection with HUD programs, the end result will be both unpleasant and costly to the offending party.”

The following allegations are based on the Complaint and Amended Complaint (the “Complaint”) filed in Manhattan federal court by the Government in this case:

Between 1999 and 2009, MORTGAGEIT was a participant in the DEL program, a federal program administered by the FHA. As a Direct Endorsement Lender, MORTGAGEIT had the authority to originate, underwrite, and endorse mortgages for FHA insurance. If a Direct Endorsement Lender approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD for the costs associated with the defaulted loan, which HUD must then pay. Under the DEL program, neither the FHA nor HUD reviews a loan before it is endorsed for FHA insurance. Direct Endorsement Lenders are therefore required to follow program rules designed to ensure that they are properly underwriting and endorsing mortgages for FHA insurance and maintaining a quality control program that can prevent and correct any deficiencies in their underwriting. These requirements include maintaining a quality control program, pursuant to which the lender must fully review all loans that go into default within the first six payments, known as “early payment defaults.” Early payment defaults may be signs of problems in the underwriting process, and by reviewing early payment defaults, Direct Endorsement Lenders are able to monitor those problems, correct them, and report them to HUD. MORTGAGEIT failed to comply with these basic requirements.

As the Complaint further alleges, MORTGAGEIT was also required to execute certifications for every mortgage loan that it endorsed for FHA insurance. Since 1999, MORTGAGEIT has endorsed more than 39,000 mortgages for FHA insurance, and FHA paid insurance claims on more than 3,200 mortgages, totaling more than $368 million, for mortgages endorsed for FHA insurance by MORTGAGEIT, including more than $58 million resulting from loans that defaulted after DEUTSCHE BANK AG acquired MORTGAGEIT in 2007.

As alleged in the Complaint, a portion of those losses was caused by the false statements that the defendants made to HUD to obtain FHA insurance on individual loans. Although MORTGAGEIT had certified that each of these loans was eligible for FHA insurance, it repeatedly submitted certifications that were knowingly or recklessly false. MORTGAGEIT failed to perform basic due diligence and repeatedly endorsed mortgage loans that were not eligible for FHA insurance.

The Complaint also alleges that MORTGAGEIT separately certified to HUD, on an annual basis, that it was in compliance with the rules governing its eligibility in the DEL program, including that it conduct a full review of all early payment defaults, as early payment defaults are indicators of mortgage fraud. Contrary to its certifications to HUD, MORTGAGEIT failed to implement a compliant quality control program, and failed to review all early payment defaults as required. In addition, the Complaint alleges that, after DEUTSCHE BANK acquired MORTGAGEIT in January 2007, DEUTSCHE BANK managed the quality control functions of the Direct Endorsement Lender business, and had its employees sign and submit MORTGAGEIT’s Direct Endorsement Lender annual certifications to HUD. Furthermore, by the end of 2007, MORTGAGEIT was not reviewing any early payment defaults on closed FHA-insured loans. Between 1999 and 2009, the FHA paid more than $92 million in FHA insurance claims for loans that defaulted within the first six payments.


Pursuant to the settlement, MORTGAGEIT and the DEUTSCHE BANK defendants will pay the United States $202.3 million within 30 days of the settlement.

As part of the settlement, the defendants admitted, acknowledged, and accepted responsibility for certain misconduct. Specifically,

MORTGAGEIT admitted, acknowledged, and accepted responsibility for the following:                  2/4

5/16/12                  USDOJ: US Attorney’s Office – Southern District of New York

MORTGAGEIT failed to conform fully to HUD-FHA rules requiring Direct Endorsement Lenders to maintain a compliant quality control program;

MORTGAGEIT failed to conduct a full review of all early payment defaults on loans endorsed for FHA insurance;

Contrary to the representations in MORTGAGEIT’s annual certifications, MORTGAGEIT did not conform to all applicable HUD-FHA regulations;

MORTGAGEIT endorsed for FHA mortgage insurance certain loans that did not meet all underwriting requirements contained in HUD’s handbooks and mortgagee letters, and therefore were not eligible for FHA mortgage insurance under the DEL program; and;

MORTGAGEIT submitted to HUD-FHA certifications stating that certain loans were eligible for FHA mortgage insurance when in fact they were not; FHA insured certain loans endorsed by MORTGAGEIT that were not eligible for FHA mortgage insurance; and HUD consequently incurred losses when some of those MORTGAGEIT loans defaulted.

The DEUTSCHE BANK defendants admitted, acknowledged, and accepted responsibility for the fact that after MORTGAGEIT became a wholly-owned, indirect subsidiary of DB Structured Products, Inc and Deutsche Bank AG in January 2007:

The DEUTSCHE BANK defendants were in a position to know that the operations of MORTGAGEIT did not conform fully to all of HUD-FHA’s regulations, policies, and handbooks;

One or more of the annual certifications was signed by an individual who was also an officer of certain of the DEUTSCHE BANK defendants; and;

Contrary to the representations in MORTGAGEIT’s annual certifications, MORTGAGEIT did not conform to all applicable HUD-FHA regulations.


The case is being handled by the Office’s Civil Frauds Unit. Mr. Bharara established the Civil Frauds Unit in March 2010 to bring renewed focus and additional resources to combating financial fraud, including mortgage fraud.

To date, the Office’s Civil Frauds Unit has brought four civil fraud lawsuits against major lenders under the False Claims Act alleging reckless residential mortgage lending.

Three of the four cases have settled, and today’s settlement represents the third, and largest, settlement. On February 15, 2012, the Government settled its civil fraud lawsuit against CITIMORTGAGE, INC. for $158.3 million. On February 24, 2012, the Government settled its civil fraud suit against FLAGSTAR BANK, F.S.B. for $132.8 million. The Government’s lawsuit against ALLIED HOME MORTGAGE CORP. and two of its officers remains pending. With today’s settlement, the Government has achieved settlements totaling $493.4 million in the last three months. In each settlement, the defendants have admitted and accepted responsibility for certain conduct alleged in the Government’s Complaint.

The Office’s Civil Frauds Unit is handling all three cases as part of its continuing investigation of reckless lending practices.

The Civil Frauds Unit works in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

Mr. Bharara thanked HUD and HUD-OIG for their extraordinary assistance in this case. He also expressed his appreciation for the support of the Commercial Litigation Branch of the U.S. Department of Justice’s Civil Division in Washington, D.C.                  3/4

5/16/12                  USDOJ: US Attorney’s Office – Southern District of New York

Assistant U.S. Attorneys Lara K. Eshkenazi, Pierre G. Armand, and Christopher B. Harwood are in charge of the case.

42 Responses

  1. @johngault

    “group of A-list attorneys working together at a number one, the number one, target: MERS”

    The non mers assignments and foreclosures are just as blatant and very prevalent in some states. Even more blatant in some respects because not hidden behind the curtain of mers which some courts seem to think is just fine….. The recorded docs showing fraudulent conveyance are as plain as day. Just get to the root of “standing” of the forecloser in every foreclosure for God’s sake. Real property 101. UCC 101 and or other 101. Is it too much to ask? Doesn’t the law already exist? I really think what has happened in many (most) courts is the judges don’t even bother to read the complaint or the denfense as the case may be for either the homeowner or the bank’s blatant pure stuff. They just bring the gavel down. Bank says so – homeowner delinquent – nuff said.

  2. johngault, do you know bench in latin means the BANK. Judging are judging from the bench, instead of by oath of office, Constitutional law. Melissa Hullman asked the WA U.S. SUPREME court ,does the rule of law still stand in the State of Washington? for a reason. Seems to be bench law stands not the rule of law.

  3. The motion for proof of authority to represent, has definately been a plus. That is how my son recieved a letter asking his permission to represent Countrywide, instead of BOA.,US bank, MERS, and RECONTRUST. He refused to sign the approval. I know they know they are in hot water now. This puts the foreclosure lawyers on the hot seat and they dont like it. Should put the demand to prove authority to represent on the FDCPA letters also.

  4. @carie – I can’t know if the judiciary somehow is given any particular message or if they are just ignorant. How do you get to be a judge if you’re ignorant? Stinking got me. What I do think is that the judges just can’t get it that the suits that walk into their courtroom on a daily basis are *&^!@#@! pedigree’d liars for hire. They are so good at it, it makes me sick. I’m pretty certain some judges have a definite bent. I recently saw a judge, the same one I had theretofore admired but then pi$$ed me off, do it again. Well, never mind. Not gonna put it here. Don’t want to give any more of them such an idea for what was patently bench law. Who knows who reads this stuff. Judges don’t get to implement bench law, which is law which is not law, but is based on their own idea of how things should go. But it isn’t all the judge’s doing, what’s going on, or even that of the liars-for-hire. Some pretty lame-a$$ arguments are often made instead of the ones which should be made. imo. I’m afraid, literally, we won’t see light at the end of the tunnel until we have a group of A-list attorneys working together at a number one, the number one, target: MERS and its stinking illegitimate m.o.

  5. @johngault

    Wow—you’re getting it cheap—we’re at $4.35 in my neighborhood…re. the juduciary—don’t you think they KNOW what’s going on—but they’ve been “instructed” to “overlook” some things? Sure wish I could find out what the judges have really been told…

  6. @johngault,

    Indeed, a full time job. Somehow, though, I have a good feeling about the clean up. Might take longer than we wouls like but we’ve seen a lot of movement and action in the past year.

    HI just toughened up its foreclosure laws (causing an attorney for the banks to state that “It will make it near impossible to foreclose there” (that was the idea, buddy!) And MA is voting on a similar law that is viewed as a sure winner. More states are demanding that foreclosure attorney put their license on the line and certify the documents. that has slowed down foreclosures in quite a few states too. We’re moving in the right direction.

    Keep hope.

  7. @enraged: 1) yes, it would be me. I find MERS to be the number one contributing factor in our ‘economic decline’, which I as an American ‘resent terribly’. Who doesn’t? Their plan from the get-go to have members act in numerous ways under MERS’ cover allowed, enabled, and encouraged the bad acts which led to our demise and a global meltdown, the pain of which is still at 11 on a scale of 1 to 10. They also undermined the integrity of our land ownership system.
    “Under all is the land and under the land is the law”. Well, not any more. MERS, despite all the law suits, must still be laughing all the way to the bank. They are shown as the beneficiary in something like
    60 million collateral instruments and bear the cost of none of it. No employees, no fica match, no state and fed unemployment, no millions of square feet of office space.
    I am no where near a rocket scientist, but as a person who has done a couple rounds in the legal system, I have a clue. What oppresses me most, I guess, is that the judiciary doesn’t get or doesn’t want to get it.
    The whole operation is a sham. They couldn’t even get the language in the deeds of trust right, but according to the Dallas County lawsuit, they got it just the way they wanted it (so MERS would be listed as the grantee and then grantor to forever avoid the true assignments.) I better stop, except to say I’m hopeful the attorneys involved in the
    Dallas Co. suit are playing it close to the vest.
    As to the decisions on the country recorder-type suits, I think a lot of them are listed by MERS in their mtn to dismiss the Dallas Co. suit, at least ones in their favor. Their list of authorities was like 5 (or even more) pages long and then interspersed thru out the mtn. They can do that, because they’re organized and hard as we try here and there, we can’t match them in that regard. David and Goliath.
    The judiciary’s failure to see the illegitimacy of that club and its m.o. is most oppressive – to me, at least. As you know, it’s a full time job trying to stay abreast of all this stuff, and to make it even more stimulating, we’re paying $4.00 at the pump.

  8. @johngault,

    “Actually, anyone with a bone to pick with MERS will find this a very interesting, informative read”. Now would be you, right…?

    I do have a question though: of all the lawsuits filed against MERS by counties across the country, I have the hardest time finding a current status on them. I know for example, that Salem county MA, Cahoyuga OH, several in TX, one recent in NC and others have have filed but I don’t know if they were answered and if they survived motions to dismisws.

    Any idea?

  9. Well, I’ll be go to heck. Here is something else that’s HUGE. Three counties in TX are suing MERS and B of A. Among the allegations, the plaintiffs opine that every document recorded showing MERS as the beneficiary is a false instrument, the intent of which was to have the
    recorder’s officer falsely show MERS as the grantee (in the case of the original coll instrument) in the county recorder’s index or to falsely show MERS as the grantor in the county recorder’s index in the case of assignments, etc. (all subsequent documents). It includes a discussion of MERS’ 20,000+ straw officers at members for the purpose of acting in MERS’ ( the employee-less entity) name. There are 35 – that’s THIRTY FIVE – private and County DA attorney’s involved. The plaintiffs seek to pierce MERS and MERSCorp corporate veil(s). Good idea since MERS is a shell company.
    TX is a lien-theory state. For those Carpenter v Longan fans who espouse the lien following the note, you’ll really enjoy this. Actually, anyone with a bone to pick with MERS will find this a very interesting, informative read. If you don’t want to read the re-hash of securitization (tho it’s interesting), cut to page 28. This could be a very important case.
    It’s interesting to see different counties throughout the country’s impressions of MERS; maybe this will be the one that takes:

    Sure is shaping up like battle royale.

  10. @John Gault,

    “Defendants acted unlawfully, and in agreement, with the intent to defraud her through the use of sham documents and fabricated evidence, and that their actions caused her damages.”

    You’re right to insist on Coursen’s POST foreclosure lawsuit in federal court. I read the pleadings and didn’t think about adding that part when I posted it. In fact, the loss of the house is what constituted most of the damages she originally claimed, except that her RICO claim having now survived the motion to dismiss, she can now be assured a much greater compensation than just the money for the house or its return, in addition to whatever statutory damages she can collect on her other claims.

    I posted Coursen because, in my opinion, it is a very important development: it is in federal court (therefore it can be cited as precedent in any federal court proceding, across the US. This is BIG) AND it survived the foreclosure. Meaning that such a claim can be filed even IF you already lost the house.

    In other words, even if you believe that you lost everything, there is now one more door you can knock on, even after the fact. Thisd is huge.

  11. enraged posted a link to Coursen v JPMorgan Chase, et al decision denying defendants’ mtn to dismiss. Here is some more of the case.
    It is a POST foreclosure proceeding which at least somewhat addresses the issue of whether or not a homeowner had to raise certain defenses at the time of the foreclosure and whether or not one is barred from raising defenses post-foreclosure. (FL case but lots of Fed ‘stuff’) Attorney Mack for the homeowner. As noted, this complaint contains RICO allegations which survived the mtn to dismiss. JPMC’s attorney filed a ‘notice of unavailability’ (really?) thru the end of the month. Expect an appeal, except that JPMC did finally file an answer, so maybe not. Sort of a must-read if you are up for serious fighting. Kudos to Mack on the extreme amt of research she must’ve done for this case and also to the judge for using his God-given brain and his oath.

  12. Oops did not mean that to be a reply, just a message to Neil. Every once in a while this site has issues, and I dont know if it is technical or sabatoge.

  13. Dont know if it is my computer or what. Once again for the third or fourth time I can only get into livinglies by the email method. The on line method sends me to a sight that says this site may be up for purchasing. I am sure it is technical,or sabatoge.

  14. @las vegas,

    i did that a long time ago. mine was fined in Florida and lost the right in Arizona and Nevada to sell any mortgages. Every so often, i check him out and I check the Title Co. he owns as well, just to see if he’s (finally) being sued…

  15. @enraged

    I’d love to find out how he went to trial. It was so heartwarming to see a homeowner win and have it published. It got me thinking and so I googled the name of our loan officer. I found at least three states that he is denied a mortgage license. Go to NMLS and put the name of your loan officer in. It is interesting.

  16. @las vegas,

    I have said over and over that insisting on a jury trial is the key. Banks will have an increasingly hard time finding juries untouched by the fraud. That guy did exactly what was required to prevail. Kudo to him.

  17. I know, I know: by now, we should be seeing sixty-digit numbers. So we’re still far behind in terms of court fights but every little bit helps. And more suits get settled as fewer and fewre mortgage servicers want to risk a jury trial. That kind of news should start moving attorneys in the right direction: as neil was writing a few weeks ago, defense will soon be where the money is…

    Mortgage Litigation Reaches All-Time High: Report
    04/09/2012 By: Esther Cho

    Mortgages are becoming more and more of a litigious matter, with the number of mortgage-related cases reaching an all-time high, according to Mortgage Daily’s 2011 fourth quarter Mortgage Litigation Index, which first began in 2007.

    At 244 cases, the number rose from 218 in the 2011 third quarter and from 151 cases during the 2010 fourth quarter.

    Foreclosure-related litigation cases, which include servicer-related litigation, foreclosure lawsuits, and cases against foreclosure rescue services, reached 99 and accounted for 40 percent of the total.

    “These numbers are a reflection of both a high volume of foreclosures and a high level of awareness among borrowers that foreclosure-related issues can be litigated, sometimes successfully,” said Christopher Willis, author of the white paper on the index and an Atlanta-based partner in Ballard Spahr’s Consumer Financial Services Group.

    The number of criminal cases jumped from 34 during the 2011 third quarter to 57 in the following fourth quarter.

    “While the majority of these cases involved the alleged actions of individuals involved in frauds such as Ponzi schemes and foreclosure rescue scams, there were notable criminal indictments for alleged “robo-signing” beginning at the end of 2011,” said Willis.

    Cases involving mortgage-servicing increased from 51 cases during the previous quarter to 70 cases.

    Fee lawsuits, which involve excessive fees collected at origination, servicing fees, loan fees that exceed state maximums, and fees to county recorders, posted an all-time record number, along with title cases, which include issues with property title and title insurance claims. Fee cases jumped to 17 this quarter compared to 2 cases during the previous quarter, and title rose to 46 from 31 during the third quarter, and 6 from the second.

    According to Willis, the increases reflect the large numbers of cases challenging MERS.

    With these increases, mortgage-related lawsuits are not expected to decline. Willis cites several reasons for the projection.

    “In particular, the publicity surrounding the multi-state settlement, together with publicity surrounding other aspects of mortgage litigation, tends to stimulate borrowers and their counsel to assert claims against mortgage servicers,” said Willis. “This publicity, coupled with the continuing high rate of foreclosures, suggests that the current level of mortgage-related litigation can be expected to remain stable, if not continue to increase.”

  18. A little early to celebrate… need to wait and see who’s going to be taking over. Jamie boy, maybe? If someone is qualified, that should be him: he’s got all the inside-out goods! Piece of cake for him to figure out if the fraud was carried out as expected…

    The Office of the Comptroller of the Currency (OCC) released a statement today that it has directed Allonhill to cease reviewing files related to the Independent Foreclosure Review as a primary or subcontracted consultant.

    This action comes after Allonhill reported work for third parties that the OCC determined did not fit with the independence requirements for independent consultants.
    Part of Allonhill’s pool of loans for the Independent Foreclosure Review involved loans that the company had previously reviewed for third parties. The decision was made to remove Allonhill from the Independent Foreclosure Review to ensure the independence of the loan review process.

    Allonhill founder and CEO Sue Allon released the following statement about the OCC directive:

    “At Allonhill, we have always been committed to the highest levels of integrity and transparency. While we have the utmost regard for the objectives of the Independent Foreclosure Review process and its positive impact on the mortgage industry, we are profoundly disappointed by the OCC’s decision. We look forward to continuing to provide the highest quality of services to our clients and helping this country recover from the mortgage crisis.”

    The Independent Foreclosure Review was started in April 2011 to review foreclosure actions in 2009 and 2010 and to correct any financial harm that may have been done through errors or faulty foreclosure practices. Since then, members of Congress have expressed concern about the independence of companies engaged for the review and called for more transparency in the review process

  19. Cry no more: Deutsche Bank’s executive is doing just fine. And you thought we had problems…

    Feds Slam Deutsche Bank But Next Day FINRA Nominates Executive To Its Board

    Bill Singer’s Comment

    Unless I’m missing something here, Seth Waugh has been at Deutsche Bank since 2000 and held CEO and Chair positions in that organization since 2002. Discounting all of Mortgageit’s pre-2007 misconduct, which predated its acquisition by Deutsche Bank, that still means Waugh was part of the management team from 2007 through 2009 – years covered in the settlement with the Department of Justice.

    None of which is to suggest that Waugh was personally involved in any of the alleged misconduct but it is to suggest that he was at the organization during some two years when cited misconduct occurred – misconduct that was apparently so significant as to warrant a whopping $202 million settlement. Pointedly, “Deutsche Bank Securities” is named in the DOJ’s caption and Waugh is presently Chairman of the Board of that entity.

    At a minimum, given all the above and the fair inferences a reasonable person would draw, did FINRA truly think it appropriate to nominate for the 2012 Large Firm seat (500 or more registered representatives) an individual whose firm just settled — the day before — a $202 million fraud case with the Department of Justice? FINRA loves to tout itself as follows:

    FINRA is the largest independent regulator for all securities firms doing business in the United States. We oversee nearly 4,420 brokerage firms, 162,575 branch offices and 629,280 registered securities representatives. Our chief role is to protect investors by maintaining the fairness of the U.S. capital markets.

    I guess that chief role thing about protecting investors by “maintaining the fairness of the U.S. capital markets,” is subject to quite a bit of leeway when it actually comes to putting all those fine words into practice. While the Wall Street cops at FINRA are busy drawing up names for Board nominees, perhaps they might consider today some fine men and women from, say, JP Morgan or MF Global. After all, what’s a couple of billion in trading losses or a few missing dollars in customers’ funds when we’re talking about a regulator’s chief role and the composition of its Board? We’re all just one big happy family on Wall Street, right? If the Department of Justice is going to slam one of our own, maybe there’s something that we can do to soften the blow — or maybe we can just pretend that it’s no big deal? Ultimately this isn’t about nominating Seth Waugh but it sure as hell is about nominating to a regulator’s Board a high-profile Deutsche Bank executive one day after his firm entered into a $202 million fraud settlement with the Department of Justice.

    Frankly, I have no idea what FINRA was thinking with this nomination — assuming that much, if any, thought went into it. One thing for certain: the self-regulatory organization dropped the ball when it came to fostering the impression that its core mission is maintaining the fairness of the markets. As they say, timing in life is everything. The timing here stinks.


    Annapolis retiree awarded $342,000 in bad-mortgage case
    Anne Arundel County jury finds mortgage broker violated laws

  21. a word comes to mind- symbiosis
    and one cannot survive without the other
    this is not going to end well

  22. @enraged ,

    You could buy SLV and demand delivery ,, JPM is naked short about 7x the total amount of above ground silver the world has … they’ve been pushing the price down hard for a long time and the PM’s are going to pop soon because THEY ARE REAL and nothing else is…. Will it hurt JPM? not really since they’ll just create more electronic money and put a few million more ounces on their fictional books to sell… If we had real accounting and no magic money deliveries from the FED whenever a bank wants some currency that would be different.

  23. Extremely important podcast. All about “following the money”. Don’t bother if you don’t have an attorney who knows how to use it. Indispensable if you do.

  24. The Chase demurrer harps on the point that the “servicer” can change many times as per the DOT (as if change of servicer is at issue in the complaint) and therefore the “servicer” can make the assignment whenever he wishes to anyone he wishes….I guess the note follows the servicer around according to Chase attorneys blatantly rewriting the law.

    From the Chase demurrer (I can’t believe an attorney actually wrote this and it is standard language for these guys I am sure which then makes me wonder if any judge actually reads any of it….

    “In addition, Plaintiff acknowledged and ratified the transfer of interest to JPMorgan by making their payments due under the Loan to JPMorgan for the three years from 2008 until his default in March 2011.”

    Excuse me – since when does making payments to a servicer “ratify the transfer of interest to the servicer”? What is the definition of servicer? Can a judge tell an attorney to stop practicing and go back to school? Are judges paying attention? Are the AG’s paying attention or anyone else?

    Cannot think of a better reason for not only a moratorium on foreclosures but a moratorium on payments.

  25. DEUTSCHE BANK, is not German, but a Rothschild Bank in disguise:

  26. My case is with Chase, Deutsche Bank and WAMU, and I have requested the courts to denie judicial notice to all claims in their entirety, including all allegations, & all affidavits to the court due to fraud upon the court AND lack of standing, including multiple filed fraud affidavits to the court and the county records. My claims on just this one issue, are very much the same. I have many more claims and issues I addressed, that meet all the elements of the claims.. This sure gives me releif to see this judgement. I feel good about my case, however with all the corruption, it is hard to trust justice will be done, until you see it done.

  27. Reminds me of a T shirt I once saw. I would like to see things yourway, but their is not enough rooms for both our heads up your a**(butt). We can not walk in each others shoes to see why or what or how we believe, it is going to take death and not being able to take it with them to see everyone is equal that comes before our maker. No bank accounts, no cars, no money, no house, no color of skin, but stark naked to see we are all brothers and sisters, not superior to another. Only a good heart or an evil heart. Which one will be the richer, after death, The good heart or the evil heart. It wont be judged by the silver and gold you can not take with you. The only item worth anything you will take with you is your soul. Our maker is not going to allow them to bring their property and gold & oil!. No matter how much they gobble up.

  28. Why it’s going to be pretty damn difficult to clean up this worldwide mess… Off topic but I couldn’t resist. I don’t thnik there’s enough common sense anywhere to accomplish it.

    13 December 2010

    There have been many comments about American arrogance. During my travels to 48 United States and over 50 countries — most of those states and countries multiple times — some themes have emerged.

    There is a pervasive sense in the United States that we are THE best. I’ve seen this in four other countries: Canada, France, India, and China. While many Americans think they/we are THE best in the world (whatever THE best might be to the thinkers of those thoughts), significant numbers of Canadians and French will inform you they are superior to Americans (and to Germans and Brits), while Indians and Chinese are superior to all of us. Oh, and don’t forget Israelis who have a tendency to burst out saying they have the “Most moral country in the world!” (They say that with exclamation mark.) Israelis also say, “We have the most moral Army in the world!” Wasn’t so long ago that the Germans were likewise self-convinced. Today the Germans are convinced they are superior to Austrians who are superior to Germans. Both are superior to Turks and Americans, while Polish are superior to Russians who are superior to all their neighbors and to Americans. Czechs are superior to Slovaks. Many people accuse Koreans of a superiority complex. Goes on—in fact, this thought could go on for hours. There are many Thais who feel superior to hill tribesmen, Cambodians, and plenty of others, and Chinese who are superior to Tibetans, (but that’s redundant because Chinese are superior to everyone). Except Egyptians and Saudis, who both are superior to Indians and Chinese. And let’s not get started on religion—because the Hindus are convinced they are superior to all, and of course Jews have their own thoughts, as do Yezidis, Christians, and let’s not forget Muslims, Mormons, and Rastafarians, all of whom are “the chosen people,” like those found in Saudi Arabia. The first religion, and therefore most superior, is Yezidism, Hinduism, and Zoroastrianism and only God knows what else. Muslims look down on Sikhs. The first people on Earth were Koreans, Africans, Yezidis, and Adam & Eve, though some scientists say we came from monkeys. Many scientists believe all true science is superior to religions, but apparently this leaves, ironically, anthropology out in the cold, because anthropologists (isn’t that what this is all about?) can’t even make up their minds if they are scientists or not. Arabs are superior to Persians. But what exactly is an Arab? Do you know? I don’t. I tried to figure out what an Arab is and got very confused. In any case, Persians are superior to Arabs, and to Kurds, while Kurds also are superior to Arabs, though Arabs look down on Kurds. Some Arabs are Sunni Muslims while others are Shia or something else. Sunni think Shia are dumb. All Arabs and Persians are superior to Afghans who are superior to Russians and to Pakistanis who in turn are superior to Indians (apparently not realizing that Indians are superior to everyone, except Egyptians, Saudis, and Chinese), while Nepalese are superior to Indians, but again, the Nepalese apparently don’t realize the Indians don’t care because they will soon surpass China in population! (Which Indians will also say with an exclamation mark.) Inside Nepal, Brahmans are superior to Sherpas, though pretty girls prefer Gurkhas. This generation is inferior to that, while writers look down upon photographers and staff are superior to freelance. Newspapers were superior to bloggers.

    Northern Europe is superior to the whole of Southern Europe. Marines are superior to Soldiers. Oh Lord, I travel too much. Could go on for hours about all the arrogance out there. Just a little more: Aussies are superior to Americans and to Kiwis, while Kiwis are upset when we don’t know where they are. Gators are superior to Seminoles, but there is actually truth to this because Seminoles actually are inferior to Gators. Mammals are superior to reptiles. And to birds. And to fish. Bacteria and viruses are superior to mammals but neither talks about it.

    And Jamie Dimon is superior to everything in the entire world! (Add on mine) So there. Top that!


    Anyone, check out the case files at dtc above. Peruse the complaint and the judges ruling. Chase took 121 pages (standard $1000 per hour mill demurer ect) Typical and courts usually buy it. But in this one no judicial notice of recorded docs. And this is a simple case that doesn’t even get into the particulars. Pretty straight forward though and that judicial notice thing is actually a hurdle – hard to believe in a state with Calvo up its… (message from that ruling ought to be recorded docs now mean nothing so produce discovery – only way to foreclose in CA now thank you).

    Tons in CA just like the one above (jiner or joinder or…anyone?)

    Where is the outrage in CA re WAMU/Chase/CRC and nationwide similar? CRC is evil alliance with Chase. It’s chase fraud transfer to chase using chase fraud trustee – strangers and fakers – fraud docs, fraud signers and fraud conveyance…

    I know I know there is outrage but how about outright demand for moratorium? I know I know been there and done that but…..just saying somebody go on tv while Chase is finally being exposed in the news and show a theft occurs every day with no notice or intervention by anyone in non-judicial CA and the courts allow it if homeowners try to challenge it.

    Personally can’t be the activist….yet….losing all and have to survive and wheels move too slowly to help me but we need to help others. It will never happen (never say never) but there should be an emergency moratorium on WAMU/Chase foreclosures and on all foreclosures. Stop the carnage. I know I know we have all been saying that for years. Just saying maybe we should shout louder right now. Keep thinking we need a movie star on the face of it. Do any of them get it? Plenty have been foreclosed. Or how about a really wealthy guy with no worries who gets it – does he or she exist who is not in bed with Chase?

  30. “Max Keiser said a while back that if you want to take down JP Morgan, buy silver and demand physical delivery of the metal. Let them eat their naked short positions!”

    Very interesting video. Actually a MUST watch. Then, run out and buy some silver and gold. Not much. Just enough to tip the scale…

  31. @Chas404,

    What’s revolting is that they congratulate themselves for recouping less than 0.1% of what they gave, behind our backs and without our say, so that those same entities would be able to take away everything we ever owned and everything our children might ever have owned.

  32. Yes. the money goes straight back to the govt. has zero help for borrower. same as AG settlement. HOW do we tie it to local cases? otherwise it is just interesting political commentary.

  33. and nobody mentions that Deutsche is the largest unsecured creditor at the GMAC/ResCap BK table?
    @enraged 6:02, good catch on that proceeding. that’s what should be going on here, not all this…crap.






  35. RICO and Conspiracy Claims Survive Federal Court Proceedings in Corsen v. JPM, WAMU and Fannie

    Plaintiff is able to overcome dismissal of her common law claims for civil conspiracy and abuse of process through her factual allegations that Defendants acted unlawfully, and in agreement, with the intent to defraud her through the use of sham documents and fabricated evidence, and that their actions caused her damages.

    Finally, her civil RICO claims under 18 U.S.C. § 1962 adequately allege facts, at least for this stage of the proceedings, to support each of the statutory elements for the predicate acts that allegedly divested her of her homestead. Plaintiff is able to avoid the time-bar of her civil RICO claim inasmuch as she alleges she was prevented from discovering that she was the victim of fraud by Defendants’ concealment of the alleged fraud.

    Coursen Response to Motion to Dismiss


    Pursuant to the settlement, MORTGAGEIT and the DEUTSCHE BANK defendants will pay the United States $202.3 million within 30 days of the settlement.

    On February 15, 2012, the Government settled its civil fraud lawsuit against CITIMORTGAGE, INC. for $158.3 million.

    On February 24, 2012, the Government settled its civil fraud suit against FLAGSTAR BANK, F.S.B. for $132.8 million.

    With today’s settlement, the Government has achieved settlements totaling $493.4 million in the last three months.


    Flagstar Bancorp, Inc. was given $266,657,000 in TARP funds on 01/30/2009 in the form of Preferred Stock w/ Warrants and their repayments were due on (unknown). They have paid back (unknown) as of July 1, 2010.

    As of August 26, 2009, they appear to be ready to take allocation of One Billion ($1,000,000,000) of TARP money. Their parent Corp, CitiGroup has already collected 45 billion.

    German and French banks got $36 billion from AIG Bailout
    Posted by: Michael Mandel on March 15

    Deutsche Bank 11.8 Germany

    Are they really thinking we are that stupid? How much more self-serving can they get? Revolt. Burn the damn place. Let’s start brand new with a whole new team. Let’s choose true leaders with morals and ethics.

  37. “As part of the settlement, the defendants admitted, acknowledged, and accepted responsibility for certain misconduct.”

    This is the part that thrills me.

  38. […] Filed under: foreclosure Tagged: Allied Home Mortgage Corp, annual certifications, Bankers, Barack Obama, beneficiaries, borrower, CDS, Christopher B Harwood, Citi, Citimortgage, closing papers, counterparties, credit default swaps, credit enhancements, creditor, cross guarantees, cross obligations, David A Montoya, DB Structured Products Inc., debt instruments, deed of sale, DEL program, Department of Justice, Deutsch Bank, Deutsche Bank Securities, Direct Endorsement Lender Program, exotic instruments, fake securitization chain, false certifications, False Claims Act, FHA, FHA insurance, Financial Fraud Enforcement Task Force., Flagstar Bank FSB, fraud patterns, Helen Kanovsky, homeowner, HUD, Judge Lewis Kaplan, Lara K Eshkenazi, lender, mortgage bonds, mortgage industry, mortgage pool, MORTGAGEIT, OIG, Pandemic Lying Admission, Pierre G Armand, Preet Bharara, President Obama, private lenders, promissory note, quality control program, reckless lending practices, REMIC, SDNY, Securities and Commodities Fraud Working Group, securities firms, securitization, security instrument, Southern District of New York, Stuart F Delery, synthetic asset obligations, trust, trustee, U.S. Attorney Civil Frauds Unit Livinglies’s Weblog […]

  39. So how are we the real titled homeowner helped by this? Not. They just buy off the officals

  40. FHFA on behalf of Fannie Mae is suing MortgIT/DB for similar damages. Similar case as above.

    My continued BURNING question is… if i have a MortgageIT originated loan/ later “FannieMae” loan that maybe was within the package of loans in that $XXX million future DB settlement with FHFA then SHOULD NOT a local lawyer defending my case not DEMAND that the judge…

    1. allow discovery to verify if my loan was within this settlement and/or

    2. offset the damages Fannie Mae is seeking in my local case


    Fannie Mae can’t go and sue DBank then at the same time sue for recovery on the SAME individual loans.

    The other question which they will never answer is if Fannie Mae is now admitting that MortgIT screwed up the origination so badly (meaning the homeowner should never have gotten the loan) then WHY is the homeowner paying all the damages for a ‘bad deal’???

    I am willing to accept that I made a bad deal but the downside should be shared. I dont see how Fannie Mae and the FHA can go around in court saying that the MortgageIT loans were all garbage then turn around and sue individual homeowners like nothing happened.

    (beating head against the wall!)

    Duetsche Bank is a non depository bank. Noun 1. nondepository financial institution – a financial institution that funds their investment activities from the sale of securities or insurance. Does this mean Duetsche only involves itself where the easy complex crime happens in the securities and insurance fraud? Where the most money out of thin air is made?

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