Homeowners Sue SPS in Class Action Over Failure to Mitigate

Thousands of cases like this one have pointed out that SPS and other servicers like Ocwen do not consult with any investor, do not evaluate the case for settlement, modification or mitigation. The answer to questions arising from the unwillingness of those companies to comply with law stems from the fact that the  vast majority of their income comes from undisclosed third parties (the TBTF Banks).

TBTF Banks (BofA, Chase, Wells Fargo, Citi, etc.) do not want settlements or modifications or anything that will make the loan start performing. Subservicers like SPS and Ocwen are used as conduits to other conduits that provides window dressing for claims of compliance or efforts to comply.

Contrary to common sense nobody wants a settlement or modification. The players would rather have the value of the alleged loan reduced to zero or less in the case of foreclosures requiring the bank to maintain the property without any hope of selling it. Common sense says that faced with a value of ZERO versus a value of $200,000, for example, any normal business would select the obvious —- $200,000.

The most extreme cases are where the modification is deemed approved and a new servicer comes in to dishonor it and forecloses, even though the homeowner made the trial payments. Yet Petitions to Enforce the modification agreement are rare; but when they are filed they are usually successful. And in many of those cases the modification is modified for a greater principal reduction than was originally offered.


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Whether or not the class gets certified or settled the suit brings up certain salient points which again give rise to the most common question of all, to wit: “Why is that?”

The answer is hiding in plain sight: None of these parties represent a creditor or owner of the debt . All of them represent undisclosed third parties who are making money hand over fist in the shadow banking market. A completed foreclosure represents the first and only valid legal document in their long train of lies promulgated by piles of fabricated, forged, robo-signed paper. The justice system isn’t always right but it is always final. That is the game the banks are playing.

If SPS or Ocwen actually was set up to help homeowners avoid foreclosure and preserve the value of the loan receivable they would lose virtually all their business. A performing loan would change the makeup of the pools that the players claim to have created. All the re-sales of the same loan would be based upon a loan, even if it existed at one time, that doesn’t exist presently.

So the players NEED that foreclosure not for investors or a trust that doesn’t exist, but for themselves because most of the proceeds of the re-sales of the same loan went the TBTF Banks. They want to preserve their ill-gotten gains rather than do anything that could possibly benefit investors. And the best way they can do that is with an Order or Judgment signed by a duly authorized judge in a court of competent jurisdiction — not with a modification.

Practice Hint: If you see a case that has been ongoing for 8-10 years that is a strong indicator that the investors have received a settlement and no loner have any claim for payment and/or that the “Master Servicer” is continuing to allow payments to investors out of a pool of investor money — i.e., a Ponzi scheme. Those continuing payments have been inappropriately named “servicer advances.” They are not “advances” because it is merely return of investor capital. And since the payments come from an investor pool of cash the payments are not from the servicer since the money came from the same or other investors.

They are called servicer advances because using that name fictitiously allows the “Master Servicer’ (actually the underwriter of the certificates) to claim a “recovery” of “servicer advances.” The recovery is ONLY allowed after sale of the property after a foreclosure where the buyer is a BFP.

So for example if payments to investors attributed to the subject loan are $2,000 per month, 10 years worth of “servicer advances” results in a “recovery claim” of $240,000. Generally that is enough to wipe out any equity. The investors get nothing. The foreclosure was actually for the sole interest and benefit of the banks, not the investors. And the homeowner again finds himself used as a pawn for others to make money over the rotting carcass of what was once his home.

Hence the trial strategy suggested would be drilling down on whether the trust is receiving payment from a “third party,” whether that party has rights of subrogation or is satisfied by some other fee or revenue. If you get anywhere near this issue the bank will fold up like a used tent. They will pay for confidentiality.

11 Responses

  1. SPS Acct # 0015160716 Relationship Mgr – Y. M.
    My house has been up for a Short Sale, for over 6 months.
    I have already lost one buyer, and now about to lose another.
    Due to SPS denying submitted paperwork, making claims that paperwork was not received, making unreasonable requests that when fulfilled they later deny.
    On Saturday June 8th, 2019 there were five SPS letters in the mail denying and requesting more information.
    I believe that SPS is doing everything that they can in order to achieve their Final Judgment Day Goal of spending eternal damnation in Hell.
    I would like to prevent that wish of theirs …

  2. I try to not watch my forclosed auctioned sold house while remodeling and they’ll enjoy the profit out of what we squeezing our last drop of our effort gardening transform from weeds to fruit able trees, intertaining himself my vet raising chicken birds puppy cats feeding himself from his back yard no this disable is on the street due to WFB f modification. But thank you Mr Garfield for brightening our brain

  3. Roger, and all – -partly right. The servicer collect payments for the undisclosed debt buyer – until enough fees are racked up whereby nothing will even go to the debt buyer.

    I keep saying this. Assuming the trust was validly set up (which we know it was not), once there is a missed payment (actual or manufactured by the servicer), the servicer must advance payments to the FIDUCIARY TRUSTEE. THE TRUSTEE — NOT THE TRUST. The trustee is the only entity by which money gets to SECURITY INVESTORS. But the servicer can stop advancing at any time, and, often, it stops advancing very quickly by deeming the loan not collectible. Once that happens the loan is swapped out of the trust and the fiduciary trustee role is gone. Loan is no longer a security, but a default debt claimed by a derivative contract — and no longer part of the trust.

    However, the Pooling and Servicing Agreement allows the fiduciary trustee to wear many hats. Once the fiduciary role is gone, the trustee puts on the “security administrator” for defaults hat — and the servicer continues to falsely claim that the “trustee” is the holder/owner. But, that is false. Trustee gets nothing. The servicer directly pays the derivative contract debt buyer, if the loan is performing or modified, and claims to the borrower that it directly collecting for the trust. The trustee has jumped ship. All they have now is a document that says “DEFAULT” by security administration. Attaching the trustee to trust name is just for show in court to try to make it look legitimate. By the time the servicer is done, on loans not performing or modified, fees and interest are so high that there is nothing left for the debt buyer investor, and the servicer recoups by the foreclosure. Then they flip the house — with affiliations who hope to make profit (perhaps the debt buyer). I don’t know if many have noticed, but in my area – many homes under certain dollar amount are “purchased” for cash before a “for sale” sign even goes up. All of this is in violation of law by concealment to the homeowner in both collection and foreclosure.

    Unless people start understanding this, the courts will not turn around. And, it will continue. We will have a case here and there that wins. But, but that is rare.

  4. How does this apply to loans “orphaned” by GMAC (and it’s subsidiaries such as Homecomings et at) in their Bankruptcy and appropriated by J.P. Morgan Chase via a recorded assignment from MERS (signed by a Chase employee claiming to be a MERS Vice President) and a substitution of Trustee recorded on the same date by said employee (claiming to be a Vice President of California Reconveyance Company (a company owned by Chase at the time). Both signed and notarized on the same date?

  5. Is there a link to the lawsuit?

  6. Holms wins after paying $10,000 to reinstate and SPS failed to do that.

    And if the certificates are already paid off, who is collecting payments?
    The servicer.

  7. The way to expose this crime is showing the pattern of abuse which is that of the banks relationship with Ginnie Mae unlike the Fannie or Freddie MBS were it known to not involve sells of mortgage loans. You take the facts of the program which are that all loans must have a blank endorsement in order to be allowed in the MBS and must not contain another debtor to the 1st mortgage in which the Ginnie MBS is base on!

    The Ginnie MBS is an intangible item as it does not contain real property inside the vehicle. The investors that purchase the MBS are not and cannot purchase the FHA or VA loans and are ensure for their initial investment to a 100% of that principal amount.

    What we know for a fact is the every single mortgage loan is handled in a uniform required way under the regulation and the US Congress does not allow Ginnie buying power! Ginnie not allowed to have this mortgage debt as they are not granted monies for this purpose.

    Taking the fact that WaMu was seized Sept 25, 2008, give us an exact date they were terminated from doing banking business as they stop existing. Because under UCC3 the blank endorsed Notes are relinquished upon entering the MBS, we know for a fact there no future sale of the debt because no party purchased the debt that is permanently separated from the debt!

    TBTF Wells Fargo Bank is still servicing mortgages that don’t have a debtor as the debtor was WaMu, who could not and did not approach the court to demand debt due. Under UCC9 any and all non-originators of a mortgage loan must simply provide proof of purchase, which Wells lost the Holm v Wells & Freddie!

    People are putting too much thought in this when the law is clear, and that is to provide evidence of a financial interest in the debt. The homeowner are invested by making a principal payment each month, so we don’t have a property for free, but just a property received as a result of a broken contract between two parties only!

  8. Our house is foreclosed with defective assignment and no promissory note. Could we get it back?

  9. May or may not be the TBTF banks. Who are the derivative investors? The TBTF banks? Proprietary relationships? Others? We don’t know. But, all stems from derivative contracts — which, I keep repeating, are NOT securities. They are debt buying contracts, by which the “debt” is removed from any claimed security trust. Nevertheless, the servicer falsely “attaches” itself to the trust — without disclosing the derivative contract holder. And, without telling you the debt is not going to the fiduciary trustee to the “claimed” trust for security investors.

    THIS IS ABOUT DERIVATIVES. No law. NO case law. No government regulation. NOTHING. And, each and everyone get STUCK in the undisclosed derivative contract.

    Violation of consumer laws. And, no one argues this in court. No case law.

    This is why there is no mitigation. No settlements. No valid modifications. No clear title. No support from government or courts.

    It so massive — no one can fix it.

    Happy Memorial Day. Especially to those who gave their lives for us to be free, to have rights, to have the law behind us, to save our country from destruction. This is what they have fought for.

  10. And the lawsuit can be viewed where?

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