Gary Dubin: Proposed Mortgage Integrity Act (MIA):

For ten years, Gary Dubin in Hawaii has been practicing law defending homeowners from foreclosure. He has preached his own version of how to combat foreclosure fraud. And he has practiced what he preached. I find his work enlightening and refreshing. So when I read his Proposed Mortgage Integrity Act (MIA) I decided to republish it in its entirety. Some of what he proposes is new but most of it, in my opinion, is a much needed tune-up of the wording of existing law.

His article and proposals are extremely well-written, objectively stated, reasonable and necessary. In my opinion Dubin’s quest  should be supported by homeowners and non homeowners alike as it proposes to correct a deficit in our legal system, our economic system, and our society. The inequality of wealth that was exacerbated by what amounts to outright theft by a handful of banks can be corrected and our economic system can be stabilized if we return to the rule of law.

I have added commentary where I thought it might help readers understand WHY homeowners should win and how the current system is rewarding theft.

Go here listen to replays of previous Gary Dubin shows and find reference documents:

By Gary Dubin

The Proposed Mortgage Integrity Act (MIA): Some Common Sense Urgently Needed Practical Institutional Reforms For A Foreclosure System Completely Out Of Service…

I am entering my tenth year as a radio commentator specializing in developments in the foreclosure field following the Mortgage Crisis of 2008.

Despite isolated legislative and judicial attempts at reform during the last ten years discussed on The Foreclosure Hour, for the vast majority of American homeowners facing foreclosure little unfortunately has really changed.

False documentation and myopic judicial oversight still predominate in foreclosure courts, while hundreds of millions of dollars in hard earned equity is literally stolen in the loan securitization process in one of the largest fraudulent transfers of wealth to a few inside traders in United States history.

[EDITOR’S NOTE: He’s right. The direct meaning of this is that a handful of investment banks received trillions in investments. Then they originated or acquired loans eventually using the fictitious name of a nonexistent trust. But it was the investment bank that was the real player.
Then they sold the debt and the paper multiple times through disguised derivatives. This disbursed claims to debt ownership to dozens of players, who eventually came to rely on the value of the paper (contract or derivative) they acquired as set by the marketplace in private transactions rather than the intrinsic value of the debt, thus freeing the investment bank from ever accounting for the debt.
In short, none of the players are desirous or expecting any payment from parties who were borrowers with a debt that has now been completely satisfied. And claimants in foreclosure neither expect nor receive the remedy (foreclosure) that lawyers claim. The proceeds of foreclosure sale never go to the party named as claimant.
So the bottom line is that the investment bank is behind everything and it has long since received multiples of its investment in the loan. Having raked in an average of $3-$4 million on each $200,000 loan “repayment” of the loan was irrelevant and unwarranted. Neither the original investors nor the borrowers are given any credit for the receipt of proceeds of sale of the debt.
But foreclosure served as a vehicle to galvanize the myth that the debt still existed (and the note and mortgage could be enforced) and was owned by at least someone in the orbit of the investment bank, when it had long since departed. Judicial oversight has both failed and refused to consider the possibility that any alleged owner of the debt has already been paid in full and many times over.
That recognition of these basic facts produces a windfall for the homeowner and a death blow to the shadow banking market is not a consequence of anything the borrowers did, but rather a consequence of running a PONZI scheme. The windfall aspect might be corrected through the use of equitable doctrines; but in all events the promissory note and mortgage cannot be enforced to collect on a debt that has been sold to third parties.
The actual truth is that the actual claims to the debt, note and mortgage are buried deep within the shadow banking market and cannot be traced because they are, according to law, private contracts that need not be registered anywhere and are transferred in trading that is never recorded anywhere. The current remedy allowed by the courts is based entirely on the premise that someone who actually owns the debt is getting paid from the proceeds of liquidation of the “collateral.” This is entirely untrue. It never happens except for instances where the original lender is still the creditor.
The declaration of delinquency or default from a lawyer purporting to represent a nonexistent trust or an existing servicer when the declaration relates to a party who is entirely removed from ownership or any right to the debt, note or mortgage is obviously fatally defective, as many court cases have demonstrated. But the players, for a fee, must pretend that the debt is real and the the note and mortgage need to be enforced. That is the origin of the need for fabrication, backdating, forgery and robosigning.]

Backlogged courts applying mostly outdated traditional mortgage concepts remain ill-equipped to protect American homeowners from mortgage abuse.

Waging a foreclosure defense is still beyond the financial means of most homeowners, and those that can find the money to hire an attorney, find that few if any attorneys are trained in foreclosure defense and those that are, are usually less than adequately competent.

New and reform minded decisions by State Supreme Courts are nevertheless rarely adhered to by many of their state trial courts.

Hundreds of billions of dollars in sanctions levied by state and federal governments against lenders and loan servicers detailing mortgagee abuses have nevertheless failed to stop such identical abuses, and sanction money earmarked to assist borrowers has been largely diverted to other State uses.

Meanwhile, there is literally a war against foreclosure defense attorneys still taking place in our courts and among attorney regulators who think homeowners in foreclosure are just deadbeats and attorneys representing them are just preying on vulnerable defendants.

The present mortgage and trust deed foreclosure systems in the States simply do not work except for lenders and pretender lenders, whereas the federal banking system, specifically the Government Sponsored Enterprises Fannie Mae and Freddie Mac as well as MERS, are the real cause of and not the cure for most of the present serious problems in the foreclosure field.

Nevertheless, the reforms that are needed are not expensive nor complex, just a matter of simple common sense adjustments to a foreclosure system that is centuries old and no longer compatible with the needs of a democratic society under siege by greedy and unscrupulous quick-buck securitization thieves.

On today’s show John and I unveil our view of the general outlines of a proposed overhaul of the foreclosure system in the States, what we call legislation wise “The Mortgage Integrity Act” (MIA for short).

We intend to present this proposal later this year in the format of model legislation for adoption by State Legislatures.

Meanwhile, we hope to get our listeners’ comments and suggestions before drafting the actual Legislation in the form of a Model Act to be sent to the judiciary committees of every State Legislature.

The Model Act will have three main parts. Part One will address the nature of the emergency, Part Two will address the enacted institutional reforms, and Part Three will address transitional issues.

Part One, to be drafted in whereas clauses, will state the following:

1. Keeping record track of and protecting interests in land within each State has historically been an exclusive State function in the United States presumably protected by the Tenth Amendment to the United States Constitution;

2. Such protection has also been a strong State public policy, affecting the economic as well as the social and political well being and health of citizens in each State since respective statehood.

3. That exclusively State function has been recently undermined by the federal government in numerous ways and is responsible for the present mortgage crisis.

4. The result has been the fostering of corruption at virtually all levels of state foreclosure systems.

5. As a result, the State Legislature hereby declares a State Emergency, requiring a restructuring of the State foreclosure system through immediate institutional reforms as well as transitional measures to safeguard the wealth and well being of our citizens from increasing confiscatory forfeitures.

6. Ironically a foreclosure system said to have its goal to stabilize real estate markets in the United States has to the contrary destabilized real estate markets in this State, driving down the value of properties and dislocating tens of thousands of homeowners annually.

Part Two, to be drafted in enactment clauses, will state the following:

1. The existing foreclosure related statutes in this jurisdiction [setting forth the affected statutes by name and number] are hereby amended, abolished and/or replaced, as follows;

2. The exercise of personal jurisdiction by State Courts shall henceforth require service of all complaints by personal service, the proof of which shall henceforth require contemporaneous photographs of those being served. Substitute service is abolished.

3. Service by publication in lieu of personal service shall require attempts to serve defendants first by certified mail, return receipt requested, and next by certification first that an independent investigative agency licensed by the State has made a diligent effort to locate the defendant and within a reasonable time no shorter than two months has failed to do so, using nationwide tracking services.

4. There shall be only one form of combined promissory note and mortgage (or deed of trust) enforced in this jurisdiction, an inseparable ‘Mortgage Note”, which shall only be valid and enforceable if and when duly recorded at a County or Statewide recording office, and which shall not be classified as a negotiable instrument, which may only be transferred by an assignment similarly required to be recorded to be valid and enforceable.

5. Recording offices shall be staffed by attorneys who shall be responsible for researching and approving the standing of all claimed holders of recordable Mortgage Notes prior to their recordation, their compensation to be adequately funded through increases in recording fees taxed upon recorders of securitized trust instruments.

6. Enforcement of Mortgage Notes shall require proof of notices of default consisting of return receipt requests together with personal knowledge affidavits attesting to preparation and mailing by the preparers and mailers.

7. Enforcement of Mortgage Notes shall also require verification of the entire loan general ledger by an independent CPA with no institutional connections, direct or indirect, to the foreclosing plaintiff or its representatives or affiliates.

8. The State Insurance Commissioner is directed to investigate providing mortgage default insurance for the benefit of homeowners.

9. There shall be a specialized foreclosure court in every County in the State, whose Judges shall be prohibited from directly or indirectly having any ownership interest in or any other connection with any financial institution.

10. Mortgage defaults shall by law be considered confidential and not disclosed to anyone other than the affected borrowers, accommodating mortgagors, and guarantors under penalty of fines and imprisonment, to avoid foreclosure blight lowering the market value of affected properties.

11. Foreclosure complaints shall similarly be considered confidential and filed under seal, to avoid foreclosure blight lowering the market value of affected properties.

12. Foreclosure auctions are hereby abolished. Properties subject to foreclosure shall be sold in the ordinary market place by licensed real estate brokers and listed in the Multiple Listing Service as directed by the Foreclosure Court.

13. Deficiency judgments are hereby abolished.

14. In cases in which the Foreclosure Court finds that there is little or no equity remaining after payments required to be made to a foreclosing plaintiff, a foreclosure defendant must vacate the premises within a reasonable time no less than 90 days or must elect to forfeit ownership in exchange for an immediate lease agreement preserving possession for a stated period of time including indefinitely as determined by the Foreclosure Court provided a monthly market leasehold rental payment is agreed to and timely paid.

15. In cases where the Foreclosure Court finds that there is substantial equity remaining after payments required to be made to a foreclosing plaintiff, a foreclosure defendant my elect to retain possession as a tenant as aforesaid and shall have the right to recover title including therefore his equity in the property within a time period of at least one year to be determined by the Foreclosure Court provided at the time of the exercise of that right the foreclosure defendant reimburses the foreclosing plaintiff for whatever amounts may then be due on the mortgage note.

Part Three, covering transitional matters, as follows:

1. The dates of effectiveness of the various enactments will have to be tailored to existing conditions and between new and existing secured loans.

2. The respective powers between the States and the federal government in various respects above will likely require negotiation and litigation. Fortunately, the United States Supreme Court has recently shown deference to the States in related issues involving financial regulation.

Please join John and me today and email us your comments and suggestions. Let us know if you think we missed anything and if there any other way you can think of to change a system so badly out of service?

Gary Victor Dubin
Dubin Law Offices
Honolulu, Hawaii 96813
Office: (808) 537-2300
Licensed in California and Hawaii

8 Responses

  1. Judicial Integrity Act would be more helpful.

    Judges are main enablers of banksters fraud upon the Court, perjuries, forgeries, and abuses of American families

  2. I agree with this proposal and I believe that every state should pass this proposed Mortgage Integrity Act.

  3. 1031frscom, — EXCELLENT POST

  4. I have listen to Gary Dubin many times and he is not a fan of rescission at all. Neil and Gary should have a conversation and compare notes. I really like the way Neil views rescissions but the courts do not agree with him….I sure wish the courts would abide by Neil’s views concerning rescission’s…it would sure make our lives easier and saving our homes would be a blessing. Judges simply do not want to hear it nor abide by it. At least here in Colorado they do not

  5. Hats off to you all and particularly to Neil for ALL the great work he has done all these past years. It has all been of tremendous help to me as a now 75 year old Vietnam Veteran who does not have the money to fight all these dirty SOBs.

    I initially had five (5) loans with Countrywide Home Loans that were done between the years 2002 to 2009 and nasty,, dirty, corrupt, racketeering Bank of America has ripped me off over $1 million dollars as I have been fighting them since 2008.

    Their use of really dirty,crooked “debt collectors” like Shellpoint Mortgage, Seterus, and now Seterus dumping off their phony loans to Mr. Cooper should really prove to be interesting as many of the board members of Mr. Cooper are former Bank of America,

    Will be very interesting now as crooked old “debt collector” Seterus has now apparently sold out to Mr. Cooper. What a history on Mr. Cooper and being part of Nationstar – one of the largest mortgage servicing companies in the United States. Many of the leaders of Nationstar and Mr. Cooper seem to have worked their way up through Bank of America, Bear Sterns, and yes Washington Mutual!!

    After the thousands of complaints against nasty, inept old Seterus it looks like B of A and other lenders are looking to try and make more moves to further bury all the sins of the past. It is nearly impossible to follow the money anymore with all the twists and turns. By the way have not heard much from David Dayen. Did they end up buying his silence and initial cause to allegedly help innocent people like this ond 75 year old Vietnam Veteran who has really been screwed by the likes of Bank of America, Shellpoint Mtg. and nasty, inept, Seterus who has now sold to Mr. Cooper. Semper Fi.

  6. The major problem with many of the foreclosures, and even for those who are not in default or foreclosure, is the deregulation of the private securitization industry. Deregulation allows concealment of the true creditor – which is mandated by the TILA. We need to have stronger consumer protection laws.

    The problems with securitization are deep, and prevents borrowers from negotiating with the true creditor, and making up any missed payments, or getting a valid modification with a true newly disclosed creditor. Non-judicial and judicial states differ, and, perhaps, addressing those differences first would contribute to better disclosure of the true creditor, and equally apply consume protection laws across the country.. Without addressing these issues first, foreclosures, and title to properties that has been corrupted across the country, cannot be resolved. Lien and title application are very different between judicial and non-judicial states. However, foreclosures are pushed equally across the country.

    Foreclosure and bank attorneys are not consistent across the country as to the identity of “holder” and creditor. These attorneys will change their position at whim — even if it means contrary positions in different courts. Our courts are confused and, yes, have been brainwashed to apply “deadbeat” without discovery or application of the laws that we do have in place. The term “deadbeat” has to be eliminated. Mr. Santelli, I believe, coined the term. Shame on him.

    Bad case law started in California, and spread across the country. California representatives have done little or nothing to fix the damage that they began. Nevertheless, the problems cannot be addressed on a state level – the resources are not there and consistency across the country will not happen.

    We have no government agency that will protect the consumer. Complaints are filed away with no action, or intervention, on the agency’s part.

    Before the government disposes of the GSEs, which is on the plate of Congress, we need to 1) dispose of “non-judicial” foreclosures. 2) strengthen our consumer protection laws 3) correct deregulation so that the “creditor” cannot be concealed from borrowers 4) have a government agency that can act on individual complaints by borrowers. 5) acceleration of loans must be addressed — it is a system that borrowers do not understand. Borrowers think they can miss a few payments and then later make it up. Even if they could do this, the status of the loan does not change, and it can be liquidated, disposed of, “traded,” — anything without notice to borrower.

    We have a national system in place that invites fraud. I know that what I suggest is a tall, if not impossible, task, but our representatives have an obligation to look at the issues, understand them, and protect the people. They have miserably failed.

    Appreciate the input by Mr. Dubin,

  7. Excellent work and hats off to Mr. Dubin and Mr. Waiheʻe!

    I would like to add/suggest that the Federal or State court NOT recognize notarizations made by licensed notaries in other states, in regards to foreclosure documents. Notarizations should be done in the State where the court and foreclosure property are located. Somehow this surreptitiously became law back in 2010. Apparently Congress was still in session and it became law. Obama either knew his pocket veto wouldn’t put an end to the legislation or he slept through his class on Constitutional law. See:
    You decide.
    My foreclosure documents are notarized by “signers” in Florida, 6000 miles away from Hawaii. Really?

  8. Fannie and Freddie are the main criminals

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