In 2008 I gave a 1 1/2 day presentation in Santa Monica that not only explained securitization but also provided a hub and spoke business plan for attorneys to take on foreclosure defense cases, which are now again on the rise. Several attorneys took my advice and subsequently became millionaires, making new law and saving thousands of homes from foreclosure.
HLS presents the same opportunity not only in foreclosure defense but all areas of law. The actual profit to attorneys is higher than direct representation as attorney of record and the client often receives superior services.
The only reason why the banks have succeeded in initiating and foreclosures and selling homesteads is that the banks have a nearly overwhelming advantage in funding litigation. The fact that the names they use as “plaintiffs” or “beneficiaries” are merely a ruse and that no claim for the debt is present has not stopped them from claiming more than 14 millions homes.
Mass joinder and other strategies are effective for homeowners but they require a lot of money for promotion and it is mostly a hard sell.
The banks win because it is a case of a bottomless deep pocket against an individual homeowner who in most cases cannot afford to contest a fraudulent foreclosure if they were to hire competent trial counsel which is obviously the best possible option.
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Charles Marshall has pointed out that there is an alternative and he has now given it a name which I like and hereby adopt: Hybrid Legal Services (HLS). I have always advocated this but I never had a name for it. Charles has solved that problem.
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While consultation with local licensed counsel is always required because local procedures vary and change (sometimes without publication) and it is always helpful to receive guidance in advance on the temperament of the judge, pro se litigation with experienced trial counsel writing and guiding you is a far less costly endeavor than retaining counsel outright. The only downside is that in going to court you must master the do’s and don’ts of what to say and what not to say. But you can even hire “coverage counsel” to appear in court for just one appearance. (This strategy has NOT been extensively tested and is in a currents state of confusion).
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Hybrid Legal Services is far better than just going the non-legal route and getting someone to write what you want to see. A lawyer will write what the court needs to see and which might gain you credibility or traction. A lawyer can guide you on strategy and identify the significance of what the judge or opposing counsel is saying.
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If the choice is between no legal and hybrid legal then hybrid is the way to go, in my opinion. I have devoted my efforts for 13 years towards that service without having the name that Charles simply identified. HLS is project oriented; the client is billed for specific projects approved by the client in advance and often billed at a project fee. It eliminates a lot of time that an attorney of record MUST spend resulting in extra billing to clients.
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This is somewhat like 2008 when I identified the fact that documents were being fabricated strictly for foreclosures and signed by machines or persons acting like machines with no knowledge of the content or reason for the document on which their stamped or written signature appeared. (*See Footnote below).
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It was not until someone came up with the term “robo-signing” that anyone understood what I was talking about. I have similarly been promoting legal services without direct representation for the last 13 years. Maybe now that Charles has properly identified it as HLS, it will take hold and more attorneys will cooperate.
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Unfortunately our system is based upon money, If you want justice you must pay for it. If you refuse to pay money or are unable to pay justice will be evasive and elusive. The Banks have weaponized the judicial system based on the theory that nobody could mount a credible attack based upon RICO and other claims because of the tremendous time, money and effort that would go into that endeavor. Government law enforcement is unwilling to make that investment even though the elements are plainly present.
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I might also add that a BKR proceeding might contain admissions you wish you hadn’t made and could be used against you unless reviewed and revised. It might also contain elements you can use against your adversaries. An HLS attorney could charge you a project fee to review and suggest possible strategies and tactics in the Bankruptcy proceeding without necessarily performing a full file review, if that is what you want. But the attorney of record would be required to perform extensive file review, file analysis and legal research to perform the same work with possibly less knowledge about fraudulent foreclosures than the HLS attorney.
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Charles and I have worked hard at finding cost effective ways to keep homeowners “in the game.” While we have been successful at substantially reducing the costs and expenses of litigation it remains a project for which one should have access to at least $10,000, including forensic document examination, legal research, drafting, consulting, and prep for court appearances.
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Philosophically I disagree with the system that requires payment of money — a point that was finally recognized when it was decided narrowly that criminal defendants were entitled to court-appointed counsel paid for by the government.
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Foreclosure is nearly as draconian as loss of freedom. Homeowners forced into foreclosures by lawyers representing nonexistent entities or representing parties who have no right to enforcement of the actual debt should not be forced to abandon their homes simply because they don’t know enough or don’t have enough money to raise a meritorious objection.
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*Footnote on Robosigning:
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Followers of this blog will remember or see (use the search bar on this blog) that when I was first approached by people who were looking for help with a foreclosure I performed the usual document check. And what the client did not have I asked for from the “bank” who was supposedly the lender but in fact turned out to be a pretender lender.
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Because practices in real estate closings had changed such that there was total reliance on fax images starting back in 1999, I came to suspect or at least question the existence of original documentation such as promissory notes.
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While it was counterintuitive and indeed unthinkable that anyone would destroy the original I could not quite figure out whether the reliance on images was to save money on transmission of the original or because the original had been intentionally or negligently destroyed. Destruction of the original would essentially mean the same as shredding actual currency since the notes were considered “cash equivalent.”
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As a practitioner in legal services since 1975, I was accustomed to getting copies of any and all documents reasonably requested. The banks had always complied with such requests since it was in their interest to avert senseless and frivolous litigation over slam dunk facts. And in any event their response was required by law (see RESPA).
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Because of the success of my blog I had occasion to send out over 1,000 such requests in the first few months of 2008. The results were striking. In those cases where the homeowner had “fallen behind” but where no notices had been received by the homeowner concerning default or foreclosure, there was NO RESPONSE. Calls to the “servicer” or “trustee” were to no avail. Several calls confirmed my suspicions — they didn’t have any documentation.
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However in cases where the homeowner had received notices of default or notices or summons commencing foreclosure the documents were present. This overlapped in dozens of cases where the bank had refused to respond to the initial request before the notices were sent out.
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Suddenly I understood. The unthinkable had happened. The banks were routinely shredding the original notes and encouraging the use of images rather than original documents. Recalling my days on Wall Street as an investment banker and broker, I understood what this was about. Wall Street had followed up on discussions that were considered fantasies in the late 1970’s and early 1980’s culminating in the launch of “derivatives.” I was there.
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The fantasy of every broker on Wall Street was to underwrite the sale of a security and keep the proceeds instead of turning over the proceeds to a client. The orgasmic thought was to do it multiple times where each transaction derived its “value” from the illusion of a central transaction that never occurred. Hence no accounting was required.
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In order to perform the magic trick they simply weaponized the use of legal presumptions and created or designated entities to act as Plaintiffs or beneficiaries in foreclosures, using merely image software and mechanical writing to fabricate the recreation of the destroyed promissory note (as per very credible academic studies and Senate hearings and as per admissions to the Florida Supreme Court).
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So it became custom and practice to destroy the original documentation contemporaneously with closing of the loan so the Wall Street investment bank could sell the images of the loan up to fifty times over creating as much as $10 million in profits for each $200,000 loan.
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The performance of the loan became irrelevant since even if all the loans defaulted they would still have made, using OPM (other people’s money) far more money than the loans, refi’s, HELOCs combined over 20 years of “lending.” In reality they were selling the names, signatures and reputations of the borrowers and not crediting the loan account with anything. In short it was perfect. They had little or no risk. Even if they technically had the risk they were unloading it within 30 days from the date the loan was originated or acquired.
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The dumb result was so counterintuitive that nobody accepted it — not even most borrowers, attorneys or judges. The debt from the loan was paid in full within minutes or days that the loan was originated or acquired but none of the money was or needed to be credited to the loan account. The catch of course is that the excess profits arose from the origination of the loan in most cases and therefore needed to be disclosed to the borrower who might have had something to say about that. (see TILA)
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In order to foreclose they had to comply with state statutes. The statutes required the production of a real chain of title and original documentation. The investment banks had neither one.
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So the investment banks hired people and companies to create the illusion and the people who signed the documents were people who were acting like machines with no comprehension or knowledge of any facts justifying the execution of the documents nor any comprehension of the content of the documents.
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I explained all this in dozens of articles. But it was not until a few months later that someone came up with term “robo-signing” — and then people actually understood what had happened.
I think that Charles Marshall has likewise narrowed down my description of legal services into a single understandable phrase – Hybrid Legal Services.
Filed under: foreclosure |
The loan could be sold many times — just not to multiple parties at once. .
I recall…. There was an FBI agent that tracked the sale of his “note?” over 40 times. He was not in arrears, just curious of what the story going around was real or not. It was. It might be googled? I will look at my notes to see if I can find it.
Bob G — I agree. Promoting that myth distracts from the truth as to what really happened.
Yes — the documents are bogus. No. It is not because the banks “generated 10 million for each $200,000 loan” The documents are bogus for other reasons. Was never a true refinance (mortgage) to begin with. .
ANON…not only that, but 49 guys would be suing the investment bankers. The banksters make enough loot operating just this side of the law…they don’t need to break the law outright and get financially broken and imprisoned. Moreover, if this were true, we would be reading about it on the front pages of the WSJ, NYT, WAPO, etc., etc.
Hah ha — Yes Bob G. I am a nut for details!!
ANON…even the Feds would pounce on that one.
typo – should be WOMEN — not “woman”
Thanks, today, to all our servicemen and woman.
Bob G — agree. Quote from above – “sell the images of the loan up to fifty times over creating as much as $10 million in profits for each $200,000 loan.” — I agree with Bob G. — there is no evidence this was done. This implies that there were multiple sales of the loan to multiple parties at the same time. No – no evidence of this. Investors would be suing each other if this were so. . . .
There is evidence that the loans were fraudulently removed from trusts, and then sold to debt buyers and hedge funds. These loans were falsely “liquidated” from the trusts (albeit – fake trusts). As this occurred – the collection rights may have now been sold multiple times to different debt buyers but over the course of time. It did not occur at at the same time “generating 10 million for each $200,000 loan.” There is only one debt buyer at a time.
I think people erroneously believe that the loan was sold multiple times at once because of bogus documents. However, It is the MISSING documents that creates this illusion. Those missing documents will show only one chain of sale of collection rights (not multiple sales) at a time.. Documents will show liquidations of loans from fake trusts for false and various reasons. it is these missing documents that will show the truth that has been concealed. .
It is extremely difficult to get the true debt path of the loan(s) – multiple here only because the single debt was just restructured at “refinances” – nothing prior was paid off by borrower. Debt was layered upon debt. But, again – only one party at a time owns the collections rights to that debt. The fraud is the concealment of the true path of the UNSECURED debt. Frankly, borrowers should have no concern about any “investor trusts.” These trusts were a cover up for the true debt buyer – which once the investment banks – who have long disposed of any collection rights.
Neil — while Hybrid Legal Services is a great idea to bring down legal costs, without additional mass intervention (by whatever means), the fraud will continue because the government is aware of the true status of the loans, and has aided in transferring collection rights.. .
In addition, any entity that has promoted the fraud with false (and recorded) documents continues to do so. We need government to change its position and help correct the mess. I don’t know if this is possible, given the systematic fraud, and government settlements, but unless we try – the mess will remain a mess.
There is only one case of record where a major player sold paper that it didn’t own, and that was Taylor, Bean, & Whitaker, and they got caught. And they only sold the paper to one other player, Colonial Bank, not 50 other players. And the principals went to prison.
So if you sell nonexistent paper to one other guy, he notices that he’s not getting paid and that the paper is bogus, you go to jail. But if you sell the same paper to 50 other guys, none of them notices that they’re not getting paid? Does this make any sense to anybody here?
I just don’t get it, with all due respect to NG.
Can someone please prove up the assertion that a single note was sold to 50 different investors?
Is that too much to ask? Is there even one iota or scintilla of evidence of such multiple sales?