DUAL Tracking: The Game of “Chicken”

In their quest for a windfall they have given the homeowners a path to justice — one where the notice of default, notice of sale, notice of acceleration notice of right to reinstate and redemption rights are all screwed up (i.e., wrong and invalid). With 80%+ of the losses already paid, the loans could have been modified down to nothing or nearly nothing compared with the original balance showed on the note, whether the note was fabricated or not. The problem is not whether the remedy exists. The problem is whether the lawyers and litigants have the guts to pursue it.” Neil Garfield, http://www.Livinglies.me

OneWest was formed over a weekend by several wealthy investors who paid virtually nothing for billions of dollars in what were claimed as “portfolio” loans owned by IndyMac which went bankrupt and into FDIC receivership in September, 2008. The agreement specified that the FDIC would pay 80% of the losses incurred on the loans. The first problem is that it said it would pay OneWest the 80%.

The second problem is that One West maintained their claim for the full amount against homeowners even though they had already submitted the claims and collected — many times more than once, from our analysis. That payment was not subject to repayment, subrogation or anything else that we can find, so the “creditor” or “agent” of the creditor has been paid on that account, but the balance has not been reduced.

In their quest for a windfall they have given the homeowners a path to justice — one where the notice of default, notice of sale, notice of acceleration notice of right to reinstate and redemption rights are all screwed up (i.e., wrong and invalid). With 80%+ of the losses already paid, the loans could have been modified down to nothing or nearly nothing compared with the original balance showed on the note, whether the note was fabricated or not.

The real problem is that most lawyers are not presenting their cases with the confidence of knowing that whatever the position of their opposition, it is probably a misstatement of the truth — the opposing lawyers in most cases don’t even know that they are making false statements and representations. Practically every foreclosure trial or hearing begins with the words “This is a simple foreclosure, your honor.” Nothing could be further from the truth.

Patrick Giunta, Esq. is co-counsel on several cases we are litigating in South Florida. One of them is a qui tam action against OneWest for false claims to the government. He has again brought to my attention the case decided in California (where almost everyone says it is hopeless) in which the homeowner stuck to their guns instead of accepting various offers of settlement. The reason we bring it to your attention again is that it demonstrates the fact that if you know you are right and you have the Judge on your side just for the raw elements of pleading or discovery, the confidence of the opposition is shattered even if they put on a good show of appearing otherwise.

My article from September 13, 2013 explains the scenario from the California case. Our current case goes even further alleging that OneWest intentionally misrepresented losses to the FDIC and the Federal Home Loan Housing Agency (and probably other private and public institutions) in order to collect multiple times on nonexistent losses. But it also dove-tails with the California case because they were steering homeowners into “modification” programs by the old trick “You have to be 90 days behind before you can be considered for modification.”

And by the way that trick phrase is not only untrue (designed to keep the modification “in house”) but also potentially criminal and illegal, because for one thing HAMP does not require delinquency in loans for modification. It gets worse. Most of the loans submitted for modification were in fact subject to claims of securitization and the authority of OneWest is questionable at best. The 90 day delinquency trick is wrong. It also constitutes the unauthorized practice of law. If a lawyer says it or anyone from his or her office under instructions from the lawyer, it might be grounds for a bar grievance. Practicing law without a license is an actual felony in many states subject to imprisonment, fine or both.

Virtually all servicers have trained their employees on how to say that without it appearing to be advice — but the homeowner hears it just the way the servicer wants them to hear it — I must go into default if I want the modification. THUS THE DEFAULT IS PROCURED INTENTIONALLY BY THE SERVICER WHICH IS INTENTIONAL INTERFERENCE WITH THE CONTRACT, IF IT EXISTS, BETWEEN THE BORROWER AND THE TRUST.That is an intentional tort enabling the Plaintiff Homeowner to allege damages far beyond economic damages and to even ask for punitive damages, exemplary damages or treble damages under statutory authority, sometimes including the cost of attorneys fees and costs.

The problem is that no modification is offered even if the homeowner makes trial payments on an “approved” modification. Worse yet, those payments are also frequently missed when the servicer or “creditor” issues a statement, report or notice. Or the modification actually raises the payments and makes it more impossible for the loan to work — which brings the servicer to the point they want: foreclosure to collect or keep the money they received on that loan, directly or indirectly, and which they never reported to the court, the borrower or anyone else.

The OneWest situation is only symptomatic of the rest of the “industry.” Virtually all servicers play the same games. These intermediaries and their co-venturers are collecting over and over again from loss sharing agreements, insurance, credit default swaps, and guarantees and other hedges, over and over again. They report it to nobody. And neither the Justice department or even our new CFPB seem to have any interest in the one factor that would bring down the number of foreclosures to nearly zero — giving credit where credit is due.

Practice Hint: For the bold and creative I would argue that that the entire profit earned from using the name of the homeowner to sell bonds,and profit from loss sharing and loss mitigation techniques should be disgorged to the borrower, whose note specifies how the payments are to be applied. One lawyer in Phoenix refers to this as my most obnoxious theory. I bet. It would disgorge all the money the banks made by declaring non existent losses.

If the “creditor” has received money directly or through payment to their agent, then the balance of the receivable is reduced — and in the simplest bookkeeping class we know that the corresponding payable from the borrower is also lost. The intermediaries could get to keep their ill-gotten claims on multiple reports of the same nonexistent loss, with a correction of the principal balance due from the borrower.

Instead they would rather get hit for a seven figure verdict or a six figure settlement when one out of a thousand gets up the nerve to really challenge them. The numbers all balance out in favor of Wall Street — as long as Wall Street keeps winning the game of “chicken.”


For further information please call 520-405-1688 or 954-494-6000. Consults available to homeowners’ attorneys, to wit: homeowners can attend only if they have a licensed attorney on the conference call. Workbooks on General Foreclosure Litigation, Evidence and Expert Witnesses are also available.

11 Responses

  1. Charles Reed is 100% right. The FDIC is not a public agency. It is a private insurance company for banks, and since the money is created through credit balance transactions on a lenders balance sheet, the FDIC exists merely to keep the credit in the game. If they actually paid and the homeowner benefited from the FDIC insurance they purchased through a higher rate on every loan. The credit system would be null!

  2. You could just drop the the dag gone thing on their head and call Vertigo. That makes for a shorter game time and more time for baking cookies. 🙂

  3. If you want to play, you must follow the rules. You must be willing to get your hands dirty and sink low to play. If forced to play, hold the bar 6ft be low .. Or maybe its hold the bar High? Its a gray area. And for the record, its called Chicken Limbo.

  4. @holder: the reward is operating with impunity.
    @Rico, keeping the roof over your families’ head was your priority because you made it your priority. If you’re still in your house after years of defending, you won. Maybe not in your eyes, but in the eyes of your family, you have. You got through this man-made recession, now go win your house.

    There was no “partnership” in the PPIP (Public-Private Investment Partnership) which was designed for the “private” to get the profit and the “public” gets the losses.

  5. The word I was looking for was public duty perhaps.

  6. Problem is whatever these ” many assets” that were sold to Onewest are what? It’s a broad statement isn’t it. I have pressed the FDIC with a FOIA request And I appealed the blowoff they gave me- ” all files were transferred to one west”. As you can guess no response. Just FYI the SOL regarding suit under foia ia 6 years. ( please check and do your research) I’m kinda surprised there’s been no class action to obtain the info. We are lacking in disclosures that matter to the individuals whose name they used against a ” loan” that was purportedly a mortgage loan transaction/contract. I have a 1099a that is submitted in evidence and it’s admissible I believe. It’s a material fact which impacts everything else they submitted into evidence.

  7. Dual Tracking is also known as Parallel Foreclosure. Would be nice if both terms were used since both have been used all along.

  8. How many ways can they screw the taxpayer

  9. What is puzzling is why would a “pretender lender” go into Bankruptcy Court and obtain a “Stay of Bankruptcy” for a loan that was not funded and to try collect on a note that was stamped “Pay to the Order of Without Recourse” with “Void” stamped across the pay to the Order of Without Recourse.

    Ultimately, that was the first step that had to occur before the Complaint for Foreclosure of Mortgage was filed in the State Circuit Court.

    Playing “chicken” with the Federal Courts and one’s right to practice law is extremely risky business. What’s the reward?

  10. This story seems to be winding down across the country. Many like myself who started asking questions, searching for the truth, years ago have in some cases saved the family home. We lost our good credit and have title problems but we still have a roof over our heads. Millions more who believed the bs the banks and our owe govt was selling are no longer home owners. I am so disappointed with so many in our courts and our govt who could have stepped in and put a stop to the major fraud. The banks got away with producing legal documents that on paper at least showed the banks as the party that lost money due to homeowners defaults. Our govt knew this wasn’t true but agreed to keep quiet by accepting billions in bribes or fines if you believed the bs. Our govt and those in power loves the fact that no one is asking how during the worst recession in history, how when the number of foreclose homes have set new record level, how when these homes have set unsold for years can the banks be booking record profits? We the people for the most part are dumb asses and I guess we got what was due us. For me and I know others feel the same way, never again. Don’t ever again think I will show up at what I believed was going to be a knife fight with only a knife to defend myself.

  11. Neil does not clearly understand that the FDIC was a big part of the cover-up of this Financial crisis as with IndyMac, WaMu and Countrywide are three peas in a pot.

    One only has to take the government insured loans held by each of those loans which were in Ginnie Mae pools, as 95% of all FHA & VA loan are, and understand that it was legally impossible for these loan to again be transferred after they were relinquished to Ginnie Mae in exchange for the lender to sell the securities.

    Now unless we got paid records showing payoffs to these investor who took control of the two failed bank and CW sale to BOA its a wild goose chase, but what is a fact that Ginnie did not purchase the and cannot sale the loans. Neither of the two happen so there was not a modification but also there could not be a foreclosure!

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