“Modifications” and Mediations are Opportunities for Homeowners to Deliver Blows and Setbacks to Self-proclaimed “Servicers”

When presented with a situation in which a court has ordered mediation or where a proposed modification has been offered, practicitioners (lawyers) should be asking themselves what they would do if they knew for a fact that all of the correspondence, notices and proposed agreements were coming from a party who neither owned the alleged debt, relating to an obligation that did not exist or no longer existed, and who did not have any grant of legal authority from any creditor who even claimed to own an account receivable bearing the name of the homeowner.
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The answer is obvious. No practicing attorney would accept such a  circumstance. To do so would be malpractice of the highest order — pushing clients into a loss of the biggest investments in their lives.
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So the next step is to ask whether the lawyers have made sufficient inquiries, performed sufficient research, and performed sufficient analysis to assure that the proposed modification relates to an existing obliguation of the homeowner, as legally represented by companies claiming to be “servicers,” acting on behalf of the owner of the account receivable.
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This article is the result of an analysis of a proposed modification agreement on a homeowner transaction originated by Bank of the West and currently involved NEWRez, PHH and Ocwen names being used as implied representations that those companies are authorized servicers.
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Proposed Modifications represent one of many opportunities that are presented for homeowners to set the self-proclaimed servicer back on its heels and force a settlement if the homeowner pursues the issues with confidence and persistence. These opportunities are often concealed behind smoke and mirrors.
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Another example is mediation where the named successor to the lender is required to appear and doesn’t. Or where the order for mediation requires the presentation of a party who possesses the authority to settle the matter without making a phone call. No such person is ever presented.
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The bottom line here is that the homeowner is being coerced, under duress, to execute a document that waives important rights to compensation due to the homeowner, and waives important rights to challenge the existence, ownership and authority over the alleged debt or underlying obligation as stated in Article 9 §203 of the Uniform Commercial Code.
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The parties involved in this proposed modification are basically a snowstorm of names without any entity having authority to administer, collect or enforce any alleged debt from the homeowner, even if one exists (which in this case is doubtful).
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Reading the correspondence and proposed agreement we see the names New Rez, PHH and Ocwen referenced, none of whom claim or warranty to be authorized agents or servicers for an identified creditor who owns the account receivable bearing the name of the homeowner.
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Because of the threat of foreclosure, I strongly recommend the engagement of local counsel who can make inquiries and upon receiving no satisfactory answers can immediately file a Petition for TRO or Inunction, to wit: a pretender is coercing the homeowner into signing an agreement that binds no lender and waives important contractual statutory and civil rights. Sending a QWR, DVL, and complaint to the CFPB and State AG could be very helpful at this juncture in time.
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This is an attempt by foreclosure and securitization players to reinvent the pretender lender in the name of a servicer who (a) never paid any money to the homeowner and (b) never paid any money to anyone else who had paid money to the homeowner.
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Absence of “lender.” The word “lender” is used but nobody is identified as the lender. This means that only the homeowner is identified as a party to the agreement. Under contract law that is no contract at all because a contract with only one party identified is not a meeting of the minds, nor can consideration pass from one party to another — because there is no other party.
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The path to the securitization of transactions originated by Bank of the West is unclear. What we do know is that BOW was very active in claimed securitization of auto loans, and that origination of transactions with homeowners was probably on a balance sheet and funded by BOW.
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But the absence of any reference to BOW in the recent correspondence and proposed modification strongly indicates that they have been paid off completely and have no further right, title or interest to any part of the transaction in which the homeowner executed a note and mortgage, among other documents.
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It would be appropriate to send a QWR and DVL on this point that simply asks for the identity and contact information of the “lender” that is mentioned in the modification agreement. It might also be wise to ask for the basis of any authority of the many players posing as servicers.
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It is doubtful that any such authority exists because it is probable that the loan account has been extinguished as a result of payments received from investors who purchased securities that were indirectly related or a data reference to the reports of “performance” of the BOW transaction with the homeowner.
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This is a typical ploy in which various dubious parties — NewRez, PHH, Ocwen etc. have their names bandied about but nobody makes any representation of authority. Standard custom and practice in a loan modification agreement would be to recite the authority and basis of the authority of the parties entering into the agreement. In this case, the homeowner is invited to sign an agreement with a company that is a self-proclaimed servicer for an unknown lender who probably no longer exists.
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No bank of any size would accept such an agreement as evidence of anything. All investors or financial institutions require representations of ownership and authority and the existence of the alleged debt. In many cases, they include a provision that such representations are subject to independent confirmation by the bank. None of that is present here. There are no such warranties of authority nor any basis to confirm such authority.
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The lender does not exist in a legal sense if the account receivable no longer exists. Without ownership of the account receivable nobody has the right to enforce nor the legal authority to grant to a third party to administer, collect or enforce any obligation that might have previously existed, but does not exist anymore.
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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4 Responses

  1. CFPB, this time, was trying to help borrowers. The judge blocked them.

  2. QWR, DVL and complaints to AGs, CFPB and all other banks protecting agencies are helpful to receive an avalanche of absurd runarounds.

    In most situations your complaints will be ignored because everyone in AG , CFPB, SEC, ect know the truth but are not paid enough by Big Banks to lie directly in your face like fake Servicers who make their living from lies.

    All Big Banks fraud is covered from the top and promoted by Judges.

  3. Oh – and the reason for 2017 by the judge? Because a “Monitor” monitored Ocwen for three years from 2014 and found no violations of “metrics” articulated in 2014 settlement. Well, the “Monitor” was monitoring on “incomplete and inaccurate histories” recorded by Ocwen. Great monitoring.

  4. Modifications are a trap. They just affirm the fraud. But, want to emphasize here again — transfer of debt collection rights would not be accounted for on a Balance Sheet Accounts Receivable or Notes Receivables ledger as current or long-term asset (debt collection is recorded as income- on income statement). The effect is, of course, is no receivables on ledgers, but what was the cause? Manufactured debt collection. And, who knew about it?
    For anyone who has Ocwen/PHH/NewRez as their non-friendly servicer, the judge affirmed summary judgment to Ocwen in CFPB case against Ocwen. The reason claimed? Res Judicata on the “settlement” back in early 2014. The judge basically told CFPB – you could have brought your “new” allegations back then as they all “relate.” CFPB was newly alleging Ocwen was using, in effect, bad records from prior servicers with incomplete and inaccurate histories. Oh — so the CFPB should have known that back then? Well, maybe if the DOJs had done their job there would have been a proper investigation. They were too quick to cover-up. No investigation was ever done – due to fast and furious settlements. This does not affect independent actions (so could be used – although records not in possession), but that any judge would allow “incomplete and inaccurate” histories to stand of record is beyond me. CFPB has 15 days to come up with new allegations and only from 2017. Nothing can even remotely “relate” to was alleged in 2014 settlement, or COULD have been alleged. Only avenue is fraud. Nothing like pushing the CFPB (and borrowers) into a hall of silence. “No speak, no hear, no see.”

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