Distilling the 20 Points of TILA Rescission: 9th Circuit Allows “Claim” for Rescission Under WA Statute of Limitations

I have distilled the legal points and procedure of TILA Rescission down to their essentials and specifics as you can see below. In the case presented the 9th Circuit ruled in favor of the homeowner but in so doing continued to violate the law of the land enunciated by the Supreme Court of the United States and Congress.

Yes the homeowner should win but no, the homeowner should not be treated as having any burden of proof as to effectiveness of the TILA Rescission because the TILA Rescission statute is a self-executing statute that is effective by operation of law. It is not and never was a claim.

Astonishing. The 9th Circuit is drilling down on the premise that TILA Rescission is a claim rather than a self executing statutory event. This decision, favorable to the homeowner, not only engraves the “claim” theory in concrete, it applies a 6 year statute of limitations in Washington State.

The fact that the statute says the rescission is effective “by operation of law” is once again ignored. This may cause the Supreme Court of the United States (SCOTUS) to finally accept certiorari in cases involving TILA Rescission and to once again (See Jesinoski v Countrywide 135 S. Ct. 790, 792 (2015) scold all the lower courts for their excess in reading into the statute what is either not there at all or which is in direct contradiction to what the TILA rescission statute says. 15 U.S.C. §1635(f).

The message from SCOTUS should be clear: Just because you don’t like the result doesn’t mean you can reinvent the statute to say what you think it should have said. Both the trial court and the 9th Circuit were massively wrong, and eventually that will be made clear — but not until considerably more damage is done to American homeowners, the real estate market, our society, and the financial system generally. If you really want to see a correction to bad bank behavior this is the tool.

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Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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see 9th cir hoang v bank of america 17-35993

Had they accepted the simple wording of the statute and the wording of the SCOTUS decision in Jesinoski, the decision of the 9th Circuit would have been on target. As it is, they have muddied the waters even further.

They continue to regard TILA Rescission as a claim, thus applying the statute of limitations and avoiding the distasteful issues (for the courts) that would be raised by recognizing what SCOTUS and the TILA Rescission statute have already said: the TILA Rescission statute is procedural.

Upon sending the required notice the claim of the creditor is changed from the note and mortgage to a claim under the statute. The note and mortgage vanish just like the debt vanishes and when the note is executed (assuming the Payee is the same party to whom the debt is owed). The purpose both the TILA Rescission statute and the merger doctrine is to to bar two claims on the same debt.

The problem that the courts have manufactured is based upon the premise of “I don’t’ like that statute.” But if the statute is to be changed it MUST be done ONLY by Congress. SCOTUS (Jesinoski) has already pronounced the TILA Rescission statute clear and unambiguous permitting no interpretation based upon any perceived “ambiguity.” The courts hands are legally tied but they continue to operate in derogation of the statute and SCOTUS.

Here is the ONLY correct application of the statute — according to 15 USC §1635 and SCOTUS in Jesinoski v Countrywide 135 S. Ct. 790, 792 (2015):

  1. Upon sending a clear notice of a desire or intent to cancel the loan contract, and either its actual or presumed receipt (i.e. US Mail) by the owner of the debt or the owner’s authorized representative (or agent with apparent authority) the loan contract is canceled “by operation of law”.
  2. This renders the note and mortgage void. There is no “but”.
  3. The statute substitutes a different creditor claim for what was the note and mortgage, to wit:  a statutory obligation to pay the debt after the owner complies with three conditions: (a) payment of money to the borrower (b) cancellation of note and sending it to borrower and (c) satisfaction of mortgage filed in the county records.
  4. The three duties are conditions precedent to demanding tender of property or money to pay off the debt.
  5. The fact that the three duties MAY be subject to an enforcement action by the borrower does nothing to change the effect of the cancelation of the loan contract by notice of TILA Rescission.
  6. There is no claim for enforcement of the three duties if the TILA statute of limitations has run.
  7. There is no claim for TILA Rescission. Either it was mailed or it wasn’t. There is no case or prima facie case except in enforcement of the three duties.
  8. There is no lawsuit required or even applicable to demand a court declare that the Rescission was effective. It is already effective simply by mailing. It already happened by operation of law. All decisions by all courts to the contrary are wrong. SCOTUS already said that.
  9. If the owner of the debt fails to either sue to vacate the rescission and/or follow the statutory duties, the statute of limitations under TILA is running and they may lose their right to demand payment of the debt completely. Once the TILA SOL runs out the right to collect the debt is dead after TILA Rescission.
  10. If the borrower fails to sue to enforce the three creditor duties, he/she is gambling on the TILA SOL cutting off the debt. The same statute of limitations cuts off the right of the borrower to sue based upon TILA claims.
  11. If the borrower does sue to enforce the three statutory Rescission duties the ONLY thing he/she should be claiming is that the statutory duties exist by virtue of 15 USC §1735 and that the Defendants failed to comply. Such an action could be after the SOL has run out seeking a declaration that the debt is dead (depending upon how SOL is treated).
  12. Neither the borrower nor the owner of the debt can reverse the effect of the TILA Rescission law. It is effective by operation of law and self-executing.
  13. Whether the notice is sent within 3 years or outside of the 3 years could be grounds to vacate the rescission which was already effective by operation of law. But that creditor lawsuit must be brought within the 20 days due for compliance with the three statutory duties. Minutes of the congressional discussion on this statute are quite clear — there should be no possibility at all for the presumed creditor to stonewall the borrower. SCOTUS said as much in Jesinoski, when it declared that no further action is required from the borrower other than the sending of the notice.
  14. The notice of rescission is facially valid if it declares the intention or desire to cancel the loan contract. There are dozens of cases saying exactly that. But it might be facially invalid if it expressly states that the contract it seeks to eliminate is outside of the three year limitation of “Consummation” (otherwise the 3 year limitation requires parole or extrinsic facts and requires finding of facts). This admission on the face of the instrument used to declare TILA Rescission MIGHT enable the presumed creditor to ignore it and ask the court to ignore it, at their own peril.
  15. If the creditor’s claim is that the rescission should be vacated (especially if it is recorded) or ignored because of the three year limitation or for any other reason, that is a lawsuit or an affirmative defense requiring allegation and proof of facts that are parole or extrinsic to the fact of the notice of TILA Rescission.
  16. There is no statute of limitation on anything that is effective by operation of law. It is an event, not a claim. Hence notice of TILA Rescission cannot be subject to interpretation as a claim and therefore cannot be subject to any statute of limitations.
  17. Thus all claims upon which courts took action or are taking action or will take any action based upon a loan contract that was canceled are VOID and completely undermine judicial standing and jurisdiction of the court. Subject matter jurisdiction is absent because the loan contract no longer exists. The creditor may either sue to revoke the rescission and cancel the instrument of rescission if recorded or make a claim based upon the statutory debt created by 15 USC §1635.
  18. The ONLY thing that could make void “sales” (of title to real property) final is Adverse Possession which typically takes around 20 years to establish. Check state statutes. The elements of adverse possession include but are not limited to continuous, open, notorious, peaceful, hostile (to actual owner), actual, visible, exclusive, and adverse. This is the “reset” that I forecasted 12 years ago. State legislatures are being lobbied to make such sales final even though they are legally void.
  19. All attorneys for the financial industry are in agreement with this analysis. The industry rejects the analysis because they correctly believe that they can persuade judges to act and rule opposite to the express provisions of the statute. So far they are right — except for the the  Supreme Court of the United States who is the sole source of a final definition of the law in this country.
  20. Anyone who seeks a change from the the current statute or the Supreme Court decision must do so through efforts to have Congress change the law.  If the rule of law is to prevail, the above procedural analysis must be followed in every instance.

Hawaii Supreme Court: Yes to wrongful foreclosure counterclaim BEFORE foreclosure is completed and no to”plausible” pleading

Now that the courts are no longer in fear of precipitating an economic meltdown, it’s time to return to legal decisions instead of political decisions. The Hawaii Supreme Court has done just that in a common sense decision that sweeps aside most of the Wall Street arguments against allowing homeowners to raise the fraudulent foreclosure issue. The decision goes back decades in reaffirming the law and the intent of the rules of civil procedure.

The bottom line is that homeowners must be allowed an opportunity to prove their claim at the same time they are defending a foreclosure action. This levels the playing field and hopefully is a harbinger of future decisions from the high court in each of the states.

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM. A few hundred dollars well spent is worth a lifetime of financial ruin.

PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.

Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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see Landmark Hawaii Supreme Court Case

BANK OF AMERICA, N.A., SUCCESSOR BY MERGER TO BAC HOME LOANS SERVICING, LP FKA COUNTRYWIDE HOME LOANS SERVICING LP, Respondent/Plaintiff-Appellee, vs. GRISEL REYES-TOLEDO, Petitioner/Defendant-Appellant,

Remember that while this decision could be used as persuasive authority, it is not binding authority over the courts of any state other than Hawaii.

There are several parts to this decision each consistent with the others.

  1. On a motion to dismiss, plausibility of the allegations are now irrelevant. The homeowner must be given the opportunity to prove the allegations of the complaint. As the Court correctly points out, the plausibility test requires some consideration of some facts that have not been proven or disproven. Hence the plausibility test conflicts directly with the presumption, on a motion to dismiss, that all allegations are true. “Notice pleading” is the law in Hawaii and purportedly is so in many other states where plausibility tests are nonetheless applied. This opinion may go a long way to reversing that erroneous trend.
  2. Notice pleading requires only a short plain statement of ultimate facts upon which the relief sought could be granted. But I would add that the rules about fraud and deceit are still in play, i.e., I don’t believe that any state, including Hawaii would allow a count sounding in fraud without giving some examples in the pleading of the misleading and/or deceitful way that the defendant(s) acted. This decision basically addresses violation of statute and similar kinds of actions.
  3. The implication of this decision is that the pleading should be short and that the homeowner must be given a fair chance to prove his/her allegations.
    1. I am quite certain that this Court would insist on allowing discovery to penetrate far more deeply that is currently generally allowed.
    2. The arguments that the actual transactions and the actual creditor’s identities are private, proprietary and remote was silly to begin with.
    3. This decision will be used by practitioners in Hawaii to demand access to records and to get it through court orders. This alone will result in a landslide of settled cases under seal of confidentiality — if lawyers for homeowners insist on such discovery.
  4. Further moving the ball forward, this Court decided emphatically that claims of wrongful foreclosure can be filed in a counterclaim against the parties involved with the  initiation of wrongful or illegal foreclosure proceedings. That means that contrary to California law and other states, the homeowner does not need to wait to file the claim.
    1. This is a two edged sword. It virtually mandates the filing of the wrongful foreclosure claim because the clock is probably ticking on the statute of limitations the moment the foreclosure is initiated by either judicial or nonjudicial means.
    2. The California doctrine has always been ridiculous and anti-consumer. By denying access to the courts for what is already known to be a wrongful foreclosure based upon false documentation they tie both hands behind the backs of attorneys representing homeowners in foreclosure cases.
    3. Knowing this, most lawyers are now declining representation of homeowners despite clear defects, lies and fabrication of documents relied upon by the lawyers supposedly representing a foreclosing party that many times does not even exist.
    4. Hence the doctrine that wrongful foreclosure claims ONLY arise after the foreclosure is complete produces an absurd result. Once the homeowner proves his/her claims they shouldn’t have lost their home, their life-style and their credit reputation, all based upon illegal acts that were known at the outset, the only remedy under that doctrine is money damages.
  5. The decision also addresses the very important issue of standing. Simply stated, if some party is designated as the foreclosing party, it is the duty of that party and the attorney representing that party to perform sufficient due diligence as to
    1. whether the entity exists,
    2. whether it has possession of the note,
    3. whether the note is endorsed to them by a party who owned the debt,
    4. whether the mortgage or deed of trust was assigned to them by a party that owned the mortgage and the debt, and
    5. whether the debt was in fact transferred from a party who owned the debt to the party claiming the right to foreclose.
  6. If they fail or refuse to perform that due diligence they are violating the law in Hawaii and most likely in dozens of other states. In Hawaii that alone gives rise to a cause of action for damages if damages can be proven, which in most cases is fairly easy. So they are liable for damages if they didn’t perform due diligence.
  7. If they did perform the due diligence and filed knowing that the threshold markers of legal standing are absent, it is malicious abuse of process, it is breach of statutory duties, and it is fraud because the filing of the the lawsuit is a representation that the due  diligence was completed and showed legal standing. And it is probably RICO.

Summary: While it is difficult to predict how and when other states will react to this opinion, it seems likely that this decision in the State of Hawaii will make jurists in other states very uncomfortable. The bias to rule for the alleged foreclosing party just received a blow to any rationality supporting that bias.

Forbes: TBTF Banks have $3.8 Trillion in Reported Loan Portfolios — How much of it is real?

The five largest U.S. banks have a combined loan portfolio of almost $3.8 trillion, which represents 40% of the total loans handed out by all U.S. commercial banks.

See Forbes: $3.8 Trillion in Portfolio Loans

I can spot around $300 billion that isn’t real.

Let us help you plan your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

Purchase now Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense webinar including 3.5 hours of lecture, questions and answers, plus course materials that include PowerPoint Presentations. Presenters: Attorney and Expert Neil Garfield, Forensic Auditor Dan Edstrom, Attorney Charles Marshall and and Private Investigator Bill Paatalo. The webinar and materials are all downloadable.

Get a Consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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When interviewing the FDIC receiver back in 2008 he told me that WAMU had originated around $1 Trillion in loans. He also told me that most of them were subject to claims of securitization (i.e., they had been sold). Then when I asked him how much had been sold, he said that Chase had told him the total was around 2/3. Translation: With zero consideration, Chase was about to use the agreement of October 25, 2008 as an excuse to claim ownership and servicing rights on over $300 billion in loans. Chase was claiming ownership when it suited them. By my count they foreclosed on over $100 billion of those “WAMU” loans and, for the most part, collected the proceeds for itself.

Point One: If there really were $300 Billion in loans left in WAMU inventory, there would have been no receivership nor would there have been any bankruptcy.

Point Two: If there were $300 Billion in loans left in WAMU inventory, or even if there was 1/10th that amount, neither the FDIC receiver nor the US Trustee in WAMU bankruptcy would have allowed the portfolio to be given to Chase without Chase paying more than zero. The receiver and the US Trustee would have been liable for civil and even criminal penalties. But they were not liable because there were no loans to sell.

So it should come as no surprise that a class action lawsuit has been filed against Chase for falsely claiming the payments from performing loans and keeping them, and for falsely claiming the proceeds on foreclosure as if they were the creditor when they were most clearly not. whether the lawyers know it or not, they might just have filed the largest lawsuit in history.

see Young v Chase Class Action – WaMu Loans – EDNY June 2018

This isn’t unique. Chase had its WAMU. BofA had its Countrywide. Wells Fargo had its Wachovia. Citi had lots of alter egos. The you have OneWest with its IndyMac. And there are others. All of them had one thing in common: they were claiming ownership rights over mortgages that were falsely claimed to have been “acquired through merger or acquisition using the FDIC (enter Sheila Bair screaming) as a governmental rubber stamp such that it would appear that they purchased over a trillion dollars in residential mortgage loans when in fact they merely created the illusion of those loans which had been sold long ago.

None of this was lost on the insurers that were defrauded when they issued insurance policies that were procured under false pretenses on supposedly non-securities where the truth is that, like the residential loans themselves, the “securities” and the loans were guaranteed to fail.

Simplistically, if you underwrite a loan to an family whose total income is less than the payments will be when the loan resets to full amortization you can be sure of two things: (1) the loan will fail short-term and (2) the “certificates” will fail along with them. If you know that in advance you can bet strong against the loans and the certificates by purchasing insurance from insurers who were inclined to trust the underwriters (a/k/a “Master Servicer” of nonexistent trust issuing the certificates).

see AMBAC Insurance Case vs U.S. Bank

The bottom line is that inside the smoke and mirrors palace, there is around $1 Trillion in loans that probably were sold (leveraged) dozens of times where the debt is owned by nobody in particular — just the TBTF bank that claims it. Once they get to foreclosure, the presumption arises that everything that preceded the foreclosure sale is valid. And its very hard to convince judges that they just rubber stamped another theft.

Bank of American Class-Action Certified: Countrywide via LandSafe used inflated Real Estate Appraisals

First a little background.  On February 6, 2018 a California federal judge certified a nationwide class of borrowers accusing Countrywide Financial Corporation of using inflated real estate appraisals to inflate its loan origination business from 2003 to 2008, overturning successor Bank of America’s claims that borrowers won’t be able to back up their racketeering claims with  proof.

The class-action covers borrowers who received an appraisal from LandSafe Inc. between 2003 to 2008 in connection with a loan that was originated by Countrywide. Countrywide, that owned LandSafe, was acquired by Bank of America in July 2008. LandSafe was sold and is now owned by CoreLogic Inc.

The Plaintiffs have submitted substantial evidence that could be used to prove an alleged RICO scheme existed.  The lead attorney is Roland Tellis who believes the class-action reflects the fact that borrowers were scammed by phony appraisals but never received a refund, despite the fact that there have been massive settlements with regulators and investors.

The suit states that prior to the financial crisis, Countrywide and LandSafe “knowingly, fraudulently, systematically and uniformly” generated false appraisals so Countrywide could close as many home loans as possible.  Borrowers were required to use LandSafe to close, but thought they were paying for an independent, objective appraisal service when the appraisals had a “predetermined value”  to ensure the loans would close rapidly.

The plaintiffs claim they were charged between $300 and $600 each for allegedly corrupt appraisals.  While it is great news that the courts are starting to recognize that a mass-fraud was perpetrated on homeowners, it is unlikely the Appellate court will see the situation the same way as the lower court.  There is also the fact that most class-members receive much in the way of compensation.  The cases typically settle once the numbers get high enough to satisfy the class-action attorneys.

However, there is still a lot of proof that will come out if the case is isn’t settled quickly — damaging proof.  And it is worth noting that the Judge is giving at least some credence to the idea that the entire mortgage meltdown was based upon multiple frauds perpetrated by the banks — not 30 million people waking up one morning and deciding to borrow more than they could afford. I might add that affordability is the responsibility of the lender, not the borrower.  See TILA.  It is presumed by all lending laws that borrowers lack the sophistication to understand the deal they are signing.

Matt Taibbi likened securitization and Goldman Sachs in particular to a vapid squid with many tentacles reaching into the pockets and lives of millions of people. I would extend the analogy further if memory serves, to wit: the squid has three hearts. Appraisal fraud at the instigation of the banks was one of the hearts of the illegal securitization fail scheme — a plan that was, at its heart, nothing more than a Ponzi scheme. They could mollify investors by having them receive monthly payments and even encourage the investors to buy more “mortgage bonds.”
It was the purchases of those bogus securities that fueled everything. When that stopped the entire system collapsed — the hallmark of every Ponzi scheme. And it all happened because of the revolving door between Wall Street and regulators who quickly discovered that by accepting placement inside a regulatory agency, they could emerge within 2 years and take jobs at salaries that were geometrically higher than where they started.
So the people who were working as regulators didn’t want to kill the golden goose, much the same as the appraisers who ultimately caved under pressure from the banks. Of all people the appraisals and the banks knew exactly what was happening. And people who worked in the agencies were loathe to restrain or punish the banks because the banks were their next employer. It was no accident that so many agencies and even the Fed were asleep at the wheel. They were not asleep. They were just biding their time until they left the agency and took a job with the perpetrator of the scheme that they were charged with monitoring.
The banks were flooding the market with money — other people’s money, not their own. I personally witnessed the appraisal fraud in Arizona on several closings where in each case the appraiser came back with an appraisal that pegged the value of the property $20,000 higher than the contract price. In each case the appraiser was given the contract or at least the contract price and the direct or tacit instruction to come back with an appraisal that made the deal appear viable. It wasn’t. Looking at the Case-Schiller Index it is easy at a glance to see how PRICE was driven far above VALUE of property. All housing prices and values were closely related to household income. There was no spike in income for household, but prices were moved ever higher by the banks who were manipulating appraisers.
In 2005 8,000 appraisers petitioned Congress saying that they were being coerced into false appraisals. They either did the appraisal as instructed or they would never see another appraisal job. Congress ignored it. Many appraisers dropped out of the market. The rest were tempted by oversize fees (that in many cases were partially kicked back to the loan originator) or felt compelled to stay in the market because they had nowhere else to go.
The banks were trying all sorts of ways to maximize the amounts of money being moved from the investment sector to the benefit, as it turned out, of themselves and nobody else. The entire time they were driving demand up for loans sold by fraudulent promises from mortgage brokers, who in some cases were convicted felons who had been found guilty of economic crimes. At one point there were 10,000 felons who were registered as salesman for loan products that had no possibility of being sustained.
And it wasn’t that the banks were unaware of the defective loans that violated TILA in multiple ways. They were counting on it. On the way up they sold defective loan products that were never subjected to due diligence by anyone. They, above all others, knew the loans would fail; in fact they were counting on it. They were betting against the performance of the loans by negotiating insurance contracts for either the loans or the “mortgage bonds” or both and selling derivative futures that in many cases were disguised sales of entire loan portfolios that were never owned by the “Seller.”
The big payoff came when the loans and the “mortgage bonds” failed and all sorts of people and entities were caught having to either cough up money or declaring bankruptcy. The AIG insurance [packages were specifically written such that AIG would NOT be subrogated and be able to make claims on the underlying loans nor the “mortgage bonds”].  For a few dollars in premiums the suckers on Wall Street had bought themselves a world of trouble.
Appraisal fraud lies at the heart of the scheme. The illusion of an ever-climbing market kept people refinancing their property, buying overpriced property, and, most importantly buying bogus “mortgage bonds” issued by the underwriter of the bonds utilizing the fictitious name of a REMIC Trust. This was the holy grail of securities underwriting: what if you could sell shares of a nonexistent entity, keep the proceeds, and then sell securities and contracts that derived from the nonexistent value of the Trust?
The average homeowner knows nothing of any of this and reasonably relied upon the representations by sellers of defective loan products; besides reposing trust in such entities just because they appeared to be an institutional lender, borrowers believed the rationale that banks would not lend money they knew they would never collect. That would be true if the banks were making loans. In truth, they were intermediaries with contractual and legal duties to everyone with whom they did business. They breached those duties to everyone in multiple ways but none so glaring as appraisal fraud and kickbacks on fraudulent appraisal fees.

The judge also certified a subclass of Texas borrowers who are bringing an unjust enrichment claim under Texas law and appointed Baron & Budd PC and Hagens Berman Sobol Shapiro LLP to serve as class counsel.

All plaintiffs are represented by Hagens Berman Sobol Shapiro LLP and Baron & Budd PC

The cases are Waldrup v. Countrywide Financial Corp. et al., case number 2:13-cv-08833, and Williams et al. v. Countrywide Financial Corp. et al., case number 2:16-cv-04166, in the U.S. District Court for the Central District of California.

Royal Bank of Scotland Trained Employees on How to Forge Signatures

Fraud for the first time in history has been institutionalized into law.

It is foolishness to believe that the banking industry is trustworthy and that they have the right to claim legal presumptions that their fabricated documents, and the forged documents are valid, leaving consumers, borrowers and in particular, homeowners to formulate a defense where the banks are holding all the information necessary to show that the current foreclosing parties are anything but sham conduits.

Here we have confirmation of a practice that is customary in the banking industry today — fabricating and forging instruments that sometimes irreparably damage consumers and borrowers in particular. Wells Fargo Bank did not accidentally create millions of “new accounts” to fictitiously report income from those accounts and growth in their customer base.

Let us help you plan your narrative : 202-838-6345. Ask for a Consult.

Video available now for Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense webinar.

Get a Consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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Across the pond the signs all point to the fact that the custom and practice of the financial industry is to practice fraud. In fact, with the courts rubber stamping the fraudulent representations made by attorneys and robo-witnesses, fraud for the first time in history has been institutionalized into law.

RBS here is shown in one case to have forged a customer’s signature to a financial product she said she didn’t want —not because of some rogue branch manager but because of a sustained institutionalized business plan based solidly on forgery and fabrication in which employees were literally trained to execute the forgeries.

The information is in the public domain — fabrication, robo-signing and robo-winesses testifying in court — and yet government and the courts not only look the other way, but are complicit in the pandemic fraud that has overtaken our financial industries.

Here are notable quotes from an article written by J. Guggenheim.

Once upon a time, in a land far, far away- forgery, fabrication of monetary instruments, and creating fake securities were crimes that would land you in prison.  If you forged the name of your spouse on a check it was a punishable crime.  The Big Banks now forge signatures and fabricate financial instruments on a routine basis to foreclose on homes they can’t prove they own, open accounts in unsuspecting customer’s names, and sign them up for services they don’t want.  If this isn’t the definition of a criminal racketeering enterprise- what is?

RBS, following the Wells Fargo Forgery model, conceded that a fake signature had been used on an official document, which means a customer was signed up to a financial product she did not want.  RBS’s confession comes only two weeks after whistle-blowers came forward claiming that bank staff had been trained to forge customer signatures. [e.s.]

The confession comes only two weeks after The Scottish Mail on Sunday published claims by whistle-blowers that bank staff had been trained to forge signatures.

At first, RBS strenuously denied the allegations, but was forced to publicly acknowledge this was likely a widespread practice. [e.s.]  The bank was forced to apologize publicly after retired teacher Jean Mackay came forward with paperwork that clearly showed her signature was faked on a bank document.  The great-grandmother was charged for payment protection insurance (PPI) back in 2008 even though she had declined to sign up for the optional product.

At first the bank refunded her fees but refused to admit the document was forged.  [e.s.]A forensic graphologist confirmed the signatures were ‘not a match’, forcing the bank to concede and offered her a mere £500 in compensation for their fraudulent act.

Forensic Graphologist Emma Bache, who has almost 30 years’ experience as a handwriting expert, examined the document and said the fundamental handwriting characteristics do not match.

The Banks in Britain, Australia, New Zealand and Canada, along with the United States include forgery and fabrication in their business models to increase profits.  Why shouldn’t they?  There is NO THREAT because they know they will not be held accountable by law enforcement or the courts- so they continue to fleece, defraud, and steal from their customers.

Homeowners must force an urgent investigation into claims of illegal practices by the banks.  Wells Fargo is not doing anything that CitiBank, JPMorgan Chase, Bank of America and others aren’t doing.  To remain competitive in an unethical marketplace, you almost have to resort to the same fraudulent tactics.[e.s.]

However, whistle-blowers have now revealed that managers were coached on how to fake names on key papers.  Whistle-blowers said that staff members had received ‘guidance’ on how to download genuine signatures from the bank’s online system, trace them on to new documents then photocopy the altered paperwork to prevent detection.  When in fact the bank taught its employees how to engage in criminal conduct.

Although clearly against the law, the whistle-blowers claim it was “commonly done to speed up administration and complete files.”  Just like American banks forge notes and assignments to ‘speed up foreclosures and complete files.’  They claim the technique was also used to sign account opening forms – and even loan documents. [e.s.]

Forgery

According to Justia.com, the “criminal offense of forgery consists of creating or changing something with the intent of passing it off as genuine, usually for financial gain or to gain something else of value.” This often involves creation of false financial instruments, such as mortgage notes, assignments, checks, or official documents. It can also include signing another person’s name to a document without his or her consent or faking the individual’s handwriting.  Forgery often occurs in connection with one or more fraud offenses. 

Maine Case Affirms Judgment for Homeowner — even with admission that she signed note and mortgage and stopped paying

While this case turned upon an  inadequate foundation for introduction of “business records” into evidence, I think the real problem here for Keystone National Association was that they did not and never did own the loan — something revealed by the usual game of musical chairs that the banks use to confuse and obscure the identity of the real creditor.

When you read the case it demonstrates that the Maine Supreme Judicial Court was not at all sympathetic with Keystone’s “plight.” Without saying so directly the court’s opinion clearly reveals its doubt as to whether Keystone had any plight or injury.

Refer to this case and others like it where the banks treated the alleged note and mortgage as being the object of a parlor game. The attention paid to the paperwork is designed by the banks to distract from the real issue — the debt and who owns it. Without that knowledge you don’t know the principal and therefore you can’t establish authority by a “servicer.”

The error in courts across the country has been that the testimony and records of the servicer are admissible into evidence even if the authority to act as servicer did not emanate from the real party in interest — the debt holder (the party to whom the MONEY is due.

Note that this ended in judgment for the homeowner and not an involuntary dismissal without prejudice.

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Hat Tip to Bill Paatalo

Keybank – maine supreme court

Here are some meaningful quotes from the Court’s opinion:

KeyBank did not lay a proper foundation for admitting the loan servicing records pursuant to the business records exception to the hearsay rule. See M.R. Evid. 803(6).

KeyBank’s only other witness was a “complex liaison” from PHH Mortgage Services, which, he testified, is the current loan servicer for KeyBank and handles the day-to-day operations of managing and servicing loan accounts.

The complex liaison testified that he has training on and personal knowledge of the “boarding process” for loans being transferred from prior loan servicers to PHH and of PHH’s procedures for integrating those records. He explained that transferred loans are put through a series of tests to check the accuracy of any amounts due on the loan, such as the principal balance, interest, escrow advances, property tax, hazard insurance, and mortgage insurance premiums. He further explained that if an error appears on the test report for a loan, that loan will receive “special attention” to identify the issue, and, “[i]f it ultimately is something that is not working properly, then that loan will not . . . transfer.” Loans that survive the testing process are transferred to PHH’s system and are used in PHH’s daily operations.

The court admitted in evidence, without objection, KeyBank’s exhibits one through six, which included a copy of the original promissory note dated April 29, 2002;3 a copy of the recorded mortgage; the purported assignment of the mortgage by Mortgage Electronic Registration Systems, Inc., from KeyBank to Bank of America recorded on January9, 2012; the ratification of the January 2012 assignment recorded on March 6, 2015; the recorded assignment of the mortgage from Bank of America to KeyBank dated October 10, 2012; and the notice of default and right to cure issued to Kilton and Quint by KeyBank in August 2015. The complex liaison testified that an allonge affixed to the promissory note transferred the note to “Bank of America, N.A. as Successor by Merger to BAC Home Loans Servicing, LP fka Countrywide Home Loans Servicing, LP,” but was later voided.

Pursuant to the business records exception to the hearsay rule, M.R. Evid. 803(6), KeyBank moved to admit exhibit seven, which consisted of screenshots from PHH’s computer system purporting to show the amounts owed, the costs incurred, and the outstanding principal balance on Kilton and Quint’s loan. Kilton objected, arguing that PHH’s records were based on the records of prior servicers and that KeyBank had not established that the witness had knowledge of the record-keeping practices of either Bank of America or Countrywide. The court determined that the complex liaison’s testimony was insufficient to admit exhibit seven pursuant to the business records exception.

KeyBank conceded that, without exhibit seven, it would not be able to prove the amount owed on the loan, which KeyBank correctly acknowledged was an essential element of its foreclosure action. [e.s.] [Editor’s Note: This admission that they could not prove the debt any other way means that their witness had no personal knowledge of the amount due. If the debt was in fact due to Keystone, they could have easily produced a  witness and a copy of the canceled check or wire transfer receipt wherein Keystone could have proven the debt. Keystone could have also produced a witness as to the amount due if any such debt was in fact due to Keystone. But Keystone never showed up. It was the servicer who showed up — the very party that could have information and exhibits to show that the amount due is correctly proffered because they confirmed the record keeping of “Countrywide” (whose presence indicates that the loan was subject to claims of securitization). But they didn’t because they could not. The debt never was owned by Keystone and neither Countrywide nor PHH ever had authority to “service” the loan on behalf of the party who owns the debt.]

the business records will be admissible “if the foundational evidence from the receiving entity’s employee is adequate to demonstrate that the employee had sufficient knowledge of both businesses’ regular practices to demonstrate the reliability and trustworthiness of the information.” Id. (emphasis added).

 

With business records there are three essential points of reference when several entities are involved as “lenders,” “successors”, or “servicers”, to wit:

  1. The records and record keeping practices of the initial “lender.” [If there are none then that would point to the fact that the “lender” was not the lender.] Here you are looking for the first entries on a valid set of business records in which the loan and fees and costs were posted. Generally speaking this does not exist in most loans because the money came a third party source who knows nothing of the transaction.
  2. The records and record keeping practices of any “successors.” Note that this is a second point where the debt is separated from the paper. If a successor is involved there would correspondence and agreements for the purchase and sale of the debt. What you fill find, though, is that there is only a naked endorsement, assignment or both without any correspondence or agreements. This indicates that the paper transfer of any rights to the “loan” was strictly for the purpose of foreclosing and bore new relationship to reality — i.e., ownership of the debt.
  3. The records and record keeping practices of any “servicers.” In order for the servicer to be authorized, the party owning the debt must have directly or indirectly given authorization and come to an agreement on fees, as well as given instructions as to what functions the servicer was to perform. What you will find is that there is no valid document from an owner of the debt appointing the servicer or giving any instructions, like what to do with the money after it is collected from homeowners. Instead you find tenuous documentation, with no correspondence or agreements, that make assertions for foreclosure. The game of musical chairs has bothered judges for a decade: “Why do the servicers keep changing” is a question I have heard from many judges. The typical claims of authorization are derived from Powers of Attorney or a Pooling and Servicing agreement for an entity that neither e exists nor does it have any operating history.

Another Countrywide Sham Goes Down the Drain

Banks use several ploys to distract the court, the borrower and the foreclosure defense attorney from the facts. One of them is citing a merger in lieu of presenting documents of transfer of the debt, note or mortgage. We already know that the debt is virtually never transferred because the transferor never had any interest in the debt and thus had no authority to administer the debt (i.e., as servicer).

So the banks have successfully pulled the wool over everyone’s eyes by citing a merger, as though that automatically transferred the note and mortgage from one party to another. Mergers come in all kinds of flavors and here the 5th Circuit in Florida recognizes that simple fact and emphatically states that the relationship between the parties must be proven along with proof that the note, or authority to enforce the note, must be proven by competent evidence.

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see Green v Green Tree Servicing Countrywide Home Loans et al 5D15-4413.op

*Judgment for Borrower (Involuntary Dismissal)
*Failure to provide evidence to explain relationships in mergers
*Failure to provide evidence of the terms of the merger and the transfer of the subject loan
* Failure to to provide evidence of standing at commencement of the lawsuit

An interesting side note to this case is that it never mentions the debt, which is the third rail of all claims of transfers and securitization. The opinion starts off with a recital of facts that differs from most other cases, to wit: it talks about how the homeowner signed the note and mortgage, and does not reference a loan made to him by the originator, Countrywide Home Loans (CHL).

The court remains strictly in the confines of who owns, controls or has the right to enforce the note — a fact that is relevant only if the note is evidence of an underlying debt. If no such debt exists between CHL and the homeowner, then the note is irrelevant — unless a successor possessor actually paid for it, in which case the successor could claim that it is a holder in due course and that the risk of loss shifts to the maker of the note under such circumstances.

The Green case here stands for the proposition that the banks may not paper over ownership or control or the right to enforce the note with vague references to a merger. The court points out that a merger might not include all the assets of one party or the other. More particularly, a merger, if it occurred must be proven along with some transfer of the subject note and mortgage.

And very specifically, the court says that entities may not be used interchangeably. The foreclosing party must explain the relationship between the parties affiliated with the “merged” entities.

[NOTE: Bank of America did not directly acquire CHL. CHL was merged into Red Oak Merger Corp., controlled by BofA. One of the reasons for doing it that way is to segregate questionable assets and liabilities from the rest of the BofA. BofA claimed ownership of CHL, and changed the name of CHL to BAC Home Loans. But it didn’t just change the name; it also made assertions, when it suited BofA that BAC was a separate entity, possibly an independent entity, which is also not true. So the Court’s objection to the lack of evidence on the merger is very well taken].

The Court also takes note of the claim that DiTech Financial was formerly known as Green Tree Servicing. That is not true. The DiTech name has been used by several different entities, been phased out, then phased in again. Again a reason why the court insists upon evidence that explains the actual relationship between actual entities, and not just names thrown around as though that meant anything.

Ultimately Green Tree, which no longer existed, was made the Plaintiff in the action. Some certificate of merger was introduced indicating a merger again, this time between DiTech Financial and GreenTree. In this lawsuit Green tree was presented as the surviving entity. But in all other cases DiTech Financial is presented as the surviving entity — or at least the DiTech name survived. There is considerable doubt whether the combination of Green Tree was anything more than rebranding an operation merging out of the Ally Financial bankruptcy and ResCap operations.

A sure sign of subterfuge is when the lawyer for the foreclosing party attempts to lead the court into treating multiple independent companies as a single entity. That, according to this court, would ONLY be acceptable if there was competent evidence admitted into the court record showing a clear line of succession such that a reasonable person could only conclude that the present successor company in fact encompasses all of the business activities and assets of the predecessors or, at the very least, encompasses a clear chain of possession, title and authorization of the subject loan.

[PRACTICE NOTES: Discovery of actual merger documents and documents of transfer should be vigorously pursued against expected opposition. Cite this case as mandatory or persuasive authority that the field of inquiry is perfectly proper — as long as the foreclosing entity is attempting tons the mergers and presumptive transfers against the homeowner.]

 

 

 

NO TRUST ASSETS: In the eye of the storm

This is one more nail in the coffin of false securitization: the only assets attributed to apparent “Buyers” were those related to and including servicer advances. By severing the investors from their positions as creditors, the banks were able to create the illusion that they — or their “originators”, brokers, nominees, fronts and sham operators — were the owners of the debt. NONE of the “transfers” of the “loan documents” involved a purchase and sale of a loan. NONE of the original “loan documents” referred to an actual transaction between the homeowner and the originator. That is because at the base of the paper chain was an entity that served only as a conduit for the paperwork and which had nothing to do with the advance of money to or on behalf of any homeowner. The paper trail and the money trail diverged the moment the loan papers were executed.

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—————-

Hat tip to CC who wrote to me with the following:

In the eye of the storm

I also wanted to share with you the LinkedIn career history of a young “document specialist” who claims familiarity with executing and creating loan documents. (Document specialist Matt Byas maintains a profile on LinkedIn.) He worked his way up through such foreclosure/loan mod fraud luminaries as Saxon Mortgage (Dennis G. Stowe, COO, later acquired by Ocwen), Bank of America (where his job was “filing back several file folders containing loan information and processing them at various points along the line as well”), Homeward Residential, Inc. (later acquired by Ocwen, received $1.31B in TARP money, disbursed $280M) where his job included “creating allonges”), Residential Credit Solutions, Inc. (plaintiff in the successfully appealed judgement above, beneficiary of Geithner’s first, entirely bogus PPIP auction and another less well-known, similar sweetheart deal with Tim and Amtrust’s loans in 2010, which led to the $2M verdict for the Illinois widow in Hammer vs RCS, receiver of $43M in TARP money, $6.6M spent aiding borrowers, dissolved in 2016 by 2013 acquirer MTGE after non-stop quarterly losses from the point of acquisition onwards, and again featuring Dennis G. Stowe, CEO). His services were also utilized at a law firm that collapsed into a spectacular heap of revealed fraud, Butler & Hosch, P.A., and a loan servicer prone to deals so distant from comprehensibility that they had to issue this clarification to a press release in 2009:
No actual mortgage loans were part of the transaction. The acquired assets consisted principally of advances made on behalf of borrowers who are in arrears and of the Master Servicing Rights pursuant to which the loans are serviced. (e.s.) Mortgage servicing consists of collecting payments from homeowners, remitting them to appropriate parties and managing the default cycle. The transaction with Citi Residential Lending is similar to AHMSI’s earlier acquisitions from Option One and other sellers of servicing. In addition, while $1.5 billion has been described in a number of media reports as a “payment” in the transaction for the Master Servicing Rights, the vast portion of this amount is related to outstanding servicing advances.”
That loan servicer, American Home Mortgage Servicing, Inc. eventually changed its name to Homeward Residential, and the document specialist no longer names it as a separate entity on his LinkedIn profile.

CA law schools will receive awarded damages after wrongful foreclosure by Bank of America

This decision is brilliant. If this actually is paid (which is some time off) then the large award to the homeowners who will gift most of it to the law schools in California will have penetrated academia and therefore the education of law students who will learn, for the first time, what is wrong with virtually all the foreclosures in the United States.

Listen to the Last Neil Garfield Show at http://tobtr.com/s/9673161

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A federal bankruptcy judge awarded $45 million in punitive damages for wrongful foreclosure to a Sacramento couple on March 23rd — much of which will go to University of California law schools.

The judge ruled the couple will give each of the five campuses — UC Berkeley School of Law, UC Davis School of Law, UC Hastings College of Law, UCLA School of Law and UC Irvine School of Law — $4 million of the punitive damages. The couple will receive a little over $1 million in actual damages despite suffering years of abuse by their loan servicer Bank of America.

Additionally, the judge ruled that $10 million of the punitive damages to both the National Consumer Bankruptcy Rights Center and the National Consumer Law Center.  No comment if the couple believes a punishment of $1 million dollars compensates them for the trauma, health issues and life altering experience Bank of America subjected them to.

According to court documents, the couple filed a chapter 7 bankruptcy case to clear debt, thus enhancing their ability to pay Bank of America on a modified loan. After a discharge of the chapter 7 case, the couple received no benefit to their credit profile. The couple faced with “imminent foreclosure,” caused them to file a subsequent Chapter 13 case  in order to move forward with loan modification.  The combination of a Chapter 7 bankruptcy discharge followed by a Chapter 13 filing is sometimes referred to as a “Chapter 21”.  This sequence allows a debtor to discharge unsecured debt in the Chapter 7 and then file a Chapter 13 to deal with secured debt.

Bank of America expressed their understanding that their performance in this foreclosure was not satisfactory and that they have since changed their processes in a public statement.  Where have we heard that before?  At this time criminal charges should apply.

“We believe some of the court’s rulings are unprecedented and unsupported, and we plan to appeal,” the statement from Bank of America said.  This case showcases the fraud and incompetence that occurs by loan servicers who are attempting to engineer a foreclosure through intimidation and other illegal tactics.  Bank of America participates in this type of unconscionable fraud on a daily basis.  Despite a $45 million dollar fine, when you are making billions of dollars by illegally foreclosing, this is hardly a dent in the bucket.

Download Sundquist v. Bank of America opinion here

David Dayen: How a Cruel Foreclosure Drove a Couple to the Brink of Death

https://www.vice.com/en_us/article/how-a-cruel-foreclosure-drove-a-couple-to-the-brink-of-death

A married couple resorted to self-harm after being physically and psychologically terrorized by Bank of America over their house—until a judge fined the bank $46 million.

“Franz Kafka lives… he works at Bank of America.”

Judge Christopher Klein’s words kick off an incredible ruling in a federal bankruptcy court in California last week, condemning Bank of America for a long nightmare of a foreclosure against a couple named Erik and Renee Sundquist. Klein ordered BofA to pay a whopping $46 million in damages, with the bulk of the money going to consumer attorney organizations and public law schools, in hopes of ensuring these abuses never happen again—or at least making them less likely.

The ruling offers numerous lessons in the aftermath of a foreclosure crisis that destroyed millions of lives. First of all, the judge specifically cited top executives as responsible, not lower-level employees. Second, the sheer size of the fine—for just one foreclosure—is a commentary on the failure of America’s regulatory and law enforcement system to protect homeowners, despite the financial industry’s massive legal exposure.

Here are the horrific facts of the case: the Sundquists purchased a home in Lincoln, California, in 2008, but ran into financial trouble when Erik’s business faltered in the recession. Like so many others, the Sundquists were told by Bank of America’s mortgage servicing unit to deliberately miss three payments to qualify for a loan modification. Despite agonizing over ruining their perfect credit, they did so.

Inspectors contracted by the bank staked out the home, banged on the doors and tailed the family in cars, terrorizing them to keep tabs on the property.

Bank of America promptly lost or deemed inadequate roughly 20 different applications for a loan modification. At the same time, BofA pursued foreclosure, a dubious practice known as “dual-tracking.”

The Sundquists eventually filed bankruptcy in June 2010, triggering an automatic stay, whereby Bank of America couldn’t foreclose until after the case concluded. But BofA sold the house anyway at a trustee sale and ordered eviction. Inspectors contracted by the bank staked out the home, banged on the doors and tailed the family in cars, terrorizing them to keep tabs on the property.

The bank didn’t correct the violation for six months, by which time the Sundquists, spooked by the constant surveillance and belief they would be evicted, moved into a rental property. Bank of America finally rescinded the sale, but that put the Sundquists back on the house’s title, which is to say on the hook for mortgage payments and maintenance fees.

By the time the Sundquists got the keys back to the home in April 2011, they found all furnishings and appliances removed and the trees dead. The homeowner’s association charged them $20,000 for the substandard landscaping. Bank of America refused to take responsibility for the damages; in fact, they were still threatening to foreclose. Interest on the loan accrued at $35,000 a year this whole time, increasing the amount due.

The couple, both world-class athletes (Renee was an Olympic–level ice skater in Italy, Erik an NCAA champion soccer player) were physically and emotionally broken by the ordeal, what Judge Klein termed “a state of battle-fatigued demoralization.” Erik attempted suicide with pills. Renee suffered a stress-related heart attack and was diagnosed with post-traumatic stress disorder. She routinely cut herself with razors as an outlet for her pain. In a journal documenting six years of this nightmare, Renee Sundquist described constant stress. “All I do is cry,” she wrote.

The Sundquists won a case in state court against Bank of America in September 2013, but the violation of the stay, the heart of the wrongful foreclosure claim, had to be decided in federal bankruptcy court. There, the Sundquists found a judge who empathized with the abuse layered upon them.

In a 107-page opinion, Judge Klein found that BofA definitively violated the automatic stay and wrongfully foreclosed on the homeowners. “Throughout, the conduct of Bank of America has been intentional,” Judge Klein wrote.

By law, judges can impose actual and punitive damages in this type of case. Judge Klein ordered $1.074 million to the Sundquists in actual damages, for housing expenses, attorney fees, lost income, damaged property, medical bills, and emotional distress.

For punitive damages, Judge Klein stressed that the award had to be “sufficient to have a deterrent effect on Bank of America,” especially because of the role of top management and corporate culture in the case. The judge cited communications from the office of Bank of America’s CEO, both to the Sundquists and to the Consumer Financial Protection Bureau, the watchdog agency currently under attack by the Trump administration. After the Sundquists petitioned CFPB about the case, Judge Klein wrote that BofA lied to the agency by denying that they ever foreclosed.

“The oppression of the Sundquists cannot be chalked off to rogue employees betraying an upstanding employer,” Judge Klein wrote. “This indicates that the engine is driven by direction from senior management.” He even added that the misconduct of the CEO’s office “strayed across the civil-criminal frontier.”

This unusual candor hints at executive culpability for foreclosure fraud. “The judge signaled something very important here, which every regulator knows,” said Eric Mains, a former FDIC official who left the agency to fight his own foreclosure case. “This kind of corrupt culture can only be maintained with knowing approval from the top executives.”

After a long discussion of how to best punish BofA, Judge Klein decided to award $45 million in punitive damages, but to give them to entities that fight financial abuse, including the National Consumer Law Center, the National Association of Consumer Bankruptcy Attorneys, and five public law schools in the University of California system (UC-Berkeley, Davis, Irvine, Los Angeles, and Hastings Law School). Klein added that the Sundquists would be protected from having to pay their mortgage until BofA pays up the $46 million.

“Certainly this opinion is a shot across the bow for the bank mortgage servicing operations,” said Alan White, a law professor at City University of New York.

In a statement, Bank of America stressed that the Sundquist loan dated back to 2010: “The processes in place at the time were subsequently modified; regrettably our performance in this particular case was unsatisfactory.” The statement from BofA added, “We believe some of the court’s rulings are unprecedented and unsupported, and we plan to appeal.”

But if one bank is ordered to pay $46 million for just one foreclosure, it begs the question of whether the federal government settled on the cheap in its more systemic investigations of America’s largest financial companies after the 2008 crash. “The governmental regulatory system has failed to protect the Sundquists,” Judge Klein wrote, and that goes double for the millions of homeowners who suffered similar fates, yet didn’t contest their cases or find a judge willing to act on their behalf.

The Obama administration responded to the foreclosure crisis by effectively letting banks off the hook with a series of settlements. Government officials have repeatedly touted these actions, even as subsequent scrutiny revealed the headline numbers to be grossly inflated or at least misleading. But if the going rate for mega-bank legal exposure is $46 million per egregious foreclosure, it’s safe to say the feds dropped the ball in a big way. And the judge’s hints of criminal culpability for top executives, not low-level paper-pushers, clarifies the enduring shame of law enforcement for failing to indict a single major executive for financial crisis-related crimes.

“This is not just an indictment of one big bank, but all of them that continue with this kind of illegal conduct with impunity and no measurable governmental oversight to stop them,” Mains said.

Follow David Dayen on Twitter.

BofA Slammed with $45 Million Sanction for Violation of BKR Stay Order

LAWYERS WAKE UP! THERE IS GOLD IN THESE HILLS!

The Sundquist decision stands out as the clearest denunciation of Bank of America yet. In this colorfully written opinion Judge Klein in California burst out of a shell of false orthodoxy plaguing the courts and gave us rays of sunshine.

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see sundquist-opinion

Wikipedia says that Franz Kafka, a Czech writer at the turn of the 20th century,  “fuses elements of realism and the fantastic,[3] typically features isolated protagonists faced by bizarre or surrealistic predicaments and incomprehensible social-bureaucratic powers, and has been interpreted as exploring themes of alienation, existential anxiety, guilt, and absurdity.”

Judge Klein starts his opinion with “Franz Kafka lives. This automatic stay violation case reveals that he works at Bank of America.” What he then describes is virtually identical for all the banks who make claims based upon (or related to) the patently false premise of securitization.

In short, this is another case where bank representatives were given a script in which they lured homeowners into default by misinforming them that the only way they could modify is if they were at least 90 days behind in payments. Any lawyer who has practiced for at least a year defending foreclosures knows this story — over and over again. Despite volumes of evidence corroborating this fact pattern, Judges have persisted in disregarding such evidence as so much bulls–t.

But lately as you have seen on these pages, judges are taking this more seriously. And many judges might find themselves in a bind when they are reversed on appeal, to wit: when the appellate court points out that there was no evidence that contradicted the testimony of the homeowner. Of course the reader is reminded that on appeal a decision can be affirmed anyway if the appellate panel finds that the judgment would have been granted on other grounds anyway — so be careful how you phrase this and use this.

Here you have a fact pattern that is all too common. The homeowners are not rich but they are struggling to get by. They are current on the payments as stated in the note.

[NOTE: The court assumes that the transfers were all the result of actual transactions, which is erroneous].

Then starts the nightmare of bobbing and weaving and making homeowners crazy enough to give up a home in which they made a down payment in 6 figures. They are “current.” They are told that they should stop paying in order to qualify for consideration of a modification. The bank’s plan is simple, to wit: lure the homeowner into default and drag it out long enough so that the bank’s claim for “servicer advances” piles up — along with the “arrearage” accruing from the the date the homeowner stopped paying. If you wait long enough the “recovery” of “servicer advances” (actually paid from the investors’ own money) becomes quite a chunk of change. And the amount required to reinstate slowly falls out of reach of the homeowners who stopped paying the bank and started paying professionals to help them through the modification process.

Judge Klein does not deal with the issue of real party in interest arising from the false claim for “recovery” of “servicer advances.” Instead he focuses on something more important — the persistent  absurdity and unreality of the world in which Bank of America acted as though they WERE the law, not subject to it. He is addressing the twilight zone in which the banks and servicers are operating.

But another major issue corroborates what I have been suggesting fro years. Keep a journal and record, as best you can, word for word, the content of your conversation and interaction with the bank or servicer. Judge Klein found that the homeowner’s record of conversations were “non-hearsay statements by an opposing party” and accordingly admitted them under Fed R Evid 802.(d)91). Without that ruling on evidence the case would have turned out much differently. The problem appears to be that with exception of Judge Klein, very few judges know or care about those rules of evidence which make or break the homeowner’s case.

This case also contains under the same rules of evidence that were allowed into evidence the admission by a BOA employee that mortgage modification is “not real.” Some readers will remember that the BOA manager in Massachusetts was heard to say that the goal was foreclosure, not modification. “we are not in the modification business. We are in the foreclosure business.”

Then comes the trespassing, the harassing and frightening — all to inflict pain on the homeowners so they will give up. And most homeowners do exactly that because there are too few lawyers who are willing to fight for them.

READ THE DECISION — TWICE OR MORE IF NECESSARY.

 

 

US Bank Business: Rent-A-Name, Trustee

IF THE SERVICER IS NOT AFFILIATED WITH US BANK “IN ANY WAY” THEN EITHER US BANK HAS NO TRUST DUTIES OR THE SERVICER HAS NO SERVICING AUTHORITY

BOTTOM LINE: A trust without a trustee holding fiduciary duties and actual powers over trust assets is no trust at all. This signals corroboration for what is now well known in the public domain: the REMIC trustee has no powers or duties because there is no trust and there are no trust assets.

See below for why I am re-publishing this article.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
 
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-

Until now I knew about a letter sent out by US Bank until the TBTF banks in control of the mortgage mess realized that this was a dangerous letter. It provides proof and corroboration and opportunities for further corroboration that US Bank is a fictitious trustee even when named in a PSA/Trust.

I can’t give you a copy of the actual letter as that contains private information. But I now physically have in my possession of the wild card letter sent out by US Bank filled with factual misstatement, legal absurdities, fraud, and admissions against interest that show clearly that the  entire “securitization” game is but a rotating cloud of existing and non-existing entities blinking in and out such that finding the those in charge becomes impossible to detect.

The text in blue are direct unedited quotes from the letter answering a homeowner, in 2013, who was trying to figure out who is in charge. This is a short letter and the quotes essentially make up virtually the entire letter. They are not taken out of context. The rest are my comment and opinions.

NOTE: [FORECLOSURE BY PARTY CLAIMING TO BE THE CREDITOR OR HOLDER OR OWNER WITHOUT MENTION OF TRUST;]Where the Master Servicer or a subsidiary or affiliate of the Master Servicer names itself as Plaintiff (i.e., the foreclosing party) you may not realize that you are dealing with a securitization plan that went bad or was reconstituted, but either way the Master Servicer never funded (i. e., was the source) any loans within this class of loans that were falsely represented to be subject to claims of securitization. The goal is the same because internally the Master Servicer is attempting to seal the illegal record with a legal act or judgment and is attempting to get its hands on mislabeled “servicer advances.”

Here are the quotes (in blue0 from the letter with commentary (in black):

  • I have researched your mortgage and have determined that
    • Since he disclaims any authority or responsibility for the trust assets, what “research” did he perform?
    • Where did he get his information from when the authority and responsibility for the loans rests with a third party?
    • US Bank clearly could not have business records unless the Master Servicer was reporting to the NAMED Trustee. But we know that isn’t happening because the PSA expressly prevents the beneficiaries or the trustee from getting any information about the trust assets or in even seeking such information. 
    • This letter is clearly a carefully worded document to give false impressions.
    • Upon reading the PSAs it is obvious that neither the Trustee nor the beneficiaries have any permitted access to know how the money or assets is being managed
    • This opens the door to moral hazard: i.e., that the sole source of information is coming from third parties and thus neither the beneficiaries nor the putative “borrowers” have any information disclosed about who is actually performing which task. 
    • This could be concealment fraud in which the direct victims are the investors and the indirect victims are the homeowners.
  • US Bank is merely the Trustee for the pool of mortgages in which your loans sits.
    • “Merely the Trustee” is non descriptive language that essentially disclaims any actual authority or duties. It is apparently conceding that it is “merely” named as Trustee but the actual duties and authority rests elsewhere.
  • The Trustee does not have the authority to make any decisions regarding your mortgage loans.
    • So we have a Trustee with no powers over mortgage loans even if the “loans” were in a pool in which ownership was ascribed to the Trust. Again the statement does not specifically disclaim any DUTIES. 
  • The servicer is the party to the trust that has the authority and responsibility to make decisions regarding individual mortgage loans in the trust. It is the Servicer who has taken all action regarding your property.
    • “all action” would include the origination of the loan if the investors’ money was being used to originate loans rather than buying existing loans.
    • This statement concedes that it is the servicer (actually the Master servicer) that has all power and all responsibility for administration of the trust assets. 
    • In short he is probably conceding that while US Bank is NAMED as Trustee, the ROLE of Trustee is being performed by the Master Servicer, without any information or feedback to the named Trustee as a check on whether a fiduciary duty has been created between the Master Servicer and the trust or the Master Servicer and the trust beneficiaries. 
    • Hence the actual authority and duties with respect to the trust assets lies with the Master Servicer who hires subservicers to do whatever work is required, mainly enforcement of the note and mortgage, regardless of whether the loan ever made it into the Trust. 
    • It follows that the sole discretion of the Master Servicer creates an opportunity for the Master Servicer to gain illicit profits by handling or mishandling originations, foreclosures and liquidations of property. Taking fictitious servicer advances into account it is readily apparent that the sole basis for foreclosure instead of workouts is to “recover” money for which the Master Servicer never had a claim for recovery. 
      • Reporting in actuality is nonexistent except for the reports of “borrower payments” which are massaged through multiple subservicers each performing a “boarding process” in which in actuality they merely input new data into the subservicer system and claim it came from the old subservicer.
      • This “boarding process” is a charade as we have seen in the majority of cases where the knowledge and history of the payments and alleged delinquency or default has been challenged. In nearly all cases despite the initial representation from the robo-witness, it becomes increasingly apparent that neither the witness nor his company, the subservicer, have any original data nor have they performed any reviews to determine if the data is accurate.
      • In fact, upon inquiry it is readily apparent now that the “records” are created, kept and maintained by LPS/BlackKnight who merely assigns “ownership” of the records from one assigned subservicer to the next. LPS fabricates whatever data is necessary to allow an appointed “Plaintiff” to foreclose, including the fabrication adnfoqgery of documents.
        • This is why the parties to the 50 state settlement do not perform the reviews required under the settlement and under the Dodd-Frank law: they have no records to review. 
    • in this case the current subservicer is SLS — Specialized Loan Servicing LLC
  • While US Bank understands and wishes to assist you with this matter, the servicer is the only party with the authority and responsibility to make decisions regarding your mortgage and they are not affiliated with US Bank in any way.
    • Hence he concedes that the duties of a trustee (who by definition is accepting fiduciary responsibilities to the trust entity and the trust beneficiaries) is being performed by a third party, with absolute power and sole discretion, who has no affiliation with US Bank.
      • This concedes that US Bank is not a trustee even though it is named as Trustee in some trusts and otherwise “acquired the trust business” from Bank of America and others. 
        • A Trustee without powers or duties is no trustee. Disclaimer of fiduciary duties denotes non acceptance of being the Trustee of the Trust.
        • Acquiring the trust business is a euphemism for the continuation of the musical chair business that is well known in subservicers. 
        • Being the trustee is NOT a marketable commodity without amendment to the Trust document. Hence if a Trustee is named and has no power or duties, and which then “sells” its “trust business” to US Bank the “transfer” trust responsibility is void but damnum absque injuria. 
        • No action for breach of fiduciary exists because nobody assumed the fiduciary duty that must be the basis of any position of “trustee” of any trust.
  • BOTTOM LINE: A trust without a trustee holding fiduciary duties and actual powers over trust assets is no trust at all. This signals corroboration for what is now well known in the public domain: the REMIC trustee has no powers or duties because there is no trust and there are no trust assets. 

============================

Update: An identical letter (see below) has been sent to me from various sources all ostensibly from US Bank. My opinion is that

  • The letter is not from US Bank
  • US Bank Corporate Trust Services has nothing on the alleged loans
  • No business records are kept by US Bank in connection with alleged loans subject to alleged claims of securitization
  • The letter was not sent out by Bank of America either although one might surmise that. It was sent by LPS/Black Night
  • The letter is pure fabrication and forgery.
  • The cutting and pasting was done by persons who have no relationship with even the false claims of the banks
  • Goldade has no trust duties in connection with the alleged loan
  • And of course the alleged loan is not in the trust, making claims by or behalf of the “trustee” or the “Servicer” completely without merit or foundation.

Here is an example of one of the letters that I used for analysis : Note that the “:,F4” indicates that the signature was pasted not executed by a real person with a pen. You can examine your own letters like this by highlighting the letter contents and then pasting to text edit rather than Word or any other program that corrects and substitutes the command rather than just printing it. The “errors” in grammar and formatting occur in text edit.

The meta data from the letter shows the following, and I have the rest of it as well.

/Type /Metadata
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>>
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<?xpacket begin=”” id=”W5M0MpCehiHzreSzNTczkc9d”?><x:xmpmeta x:xmptk=”NitroPro 9.5″ xmlns:x=”adobe:ns:meta/”><rdf:RDF xmlns:rdf=”http://www.w3.org/1999/02/22-rdf-syntax-ns#”><rdf:Description rdf:about=”” xmlns:dc=”http://purl.org/dc/elements/1.1/” xmlns:pdf=”http://ns.adobe.com/pdf/1.3/” xmlns:pdfaExtension=”http://www.aiim.org/pdfa/ns/extension/” xmlns:pdfaProperty=”http://www.aiim.org/pdfa/ns/property#” xmlns:pdfaSchema=”http://www.aiim.org/pdfa/ns/schema#” xmlns:pdfaid=”http://www.aiim.org/pdfa/ns/id/” xmlns:xmp=”http://ns.adobe.com/xap/1.0/”><xmp:ModifyDate>2016-11-04T18:28:42-07:00</xmp:ModifyDate>
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Note the reference to Nitro Pro 9.5 --- 
which is a program that allows one to edit pdf files
 and then print them out 
as though the new pdf was simply a printout 
of a pre-existing document.  
Here is how the letter appears in text edit:
I am writing in response to your Debt Elimination Scheme and complaint on the subject property sent to U.S. Bank National Association (“U.S. Bank”). On behalf of U.S. Bank, I am happy to assist you with this matter to the extent I am able to provide information.
I have researched your mortgage and have determined that U.S. Bank is merely the trustee for the Trust that owns yourmortgageandnote. PleasenotetheTrustistheownerofyourmortgageandnote,notthetrustee. Theservicer is the party to the Trust that has the authority and responsibility to make decisions and take action regarding individual mortgage loans in the Trust. The trustee has no authority or responsibility to review and or approve or disapprove of these decisions and actions. It is the servicer who has taken all action regarding your property, and has the information you have requested.
As we stated in our response of July 27, 2016 you must work with Bank of America as the servicer of your loan, to have your request addressed. I have forwarded your correspondence to Bank of America and they have responded and stated you may utilize the following email – litigation.intake@bankofamerica.com.
While U.S. Bank understands and wishes to assist you with this matter, the servicer is the only party with the authority and responsibility to make decisions regarding this mortgage and they are not affiliated with U.S. Bank in anyw ay.
Please work with Bank of America to address your concerns using the information provided to you in this letter, so they may assist you in a more timely and efficient manner.

Sincerely  :,f4

Kevin Goldade Corporate Trust Services 60 Livingston Ave
St Paul, MN 55107
cc Bank of America
  •  IF THE SERVICER IS NOT AFFILIATED WITH US BANK “IN ANY WAY” THEN EITHER US BANK HAS NO TRUST DUTIES OR THE SERVICER HAS NO SERVICING AUTHORITY

 

CHECKLIST — FDCPA Damages and Recovery: Revisiting the Montana S Ct Decision in Jacobson v Bayview

What is unique and instructive about this decision from the Montana Supreme Court is that it gives details of each and every fraudulent, wrongful and otherwise illegal acts that were committed by a self-proclaimed servicer and the “defective” trustee on the deed of trust.

You need to read the case to see how many different times the same court in the same case awarded damages, attorney fees and sanctions against Bayview who persisted in their behavior even after the judgment was entered.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
 
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-

*

This case overall stands for the proposition that the violations of federal law by self proclaimed servicers, trusts, trustees, substituted trustees, etc. are NOT insignificant or irrelevant. The consequences of merely applying the law in a fair and balanced way could and should be devastating to the TBTF banks, once the veil is pierced from servicers like Bayview, Ocwen et al and the real players are revealed.

I offer the following for legal practitioners as a checklist of issues that are usually present, in one form or another, in virtually all foreclosure cases and the consequences to the bad actors when the law is actually applied. The interesting thing is that this checklist does not just represent my perspective. It comes directly from the Jacobson decision by the high court in Montana. That decision should be read, studied and analyzed several times. You need to read the case to see how many different times the same court in the same case awarded damages, attorney fees and sanctions against Bayview who persisted in their behavior even after the judgment was entered.

One additional note: If you think about it, you can easily see how this case represents the overall infrastructure employed by the super banks. It is obvious that all of Bayview’s actions were at the behest of Citi, who like any other organized crime figure, sought to avoid getting their hands dirty. The self proclamations inevitably employ the name of US Bank whose involvement is shown in this case to be zero. Nonetheless the attorneys for Bayview and Peterson sought to pile up paper documents to create the illusion that they were acting properly.

  1. FDCPA —abusive debt collection practices by debt collectors
  2. FDCPA who is a debt collector — anyone other than the creditor
  3. FDCPA Strict Liability 
  4. FDCPA for LEAST SOPHISTICATED CONSUMER
  5. FDCPA STATUTORY DAMAGES
  6. FDCPA COMPENSATORY DAMAGES
  7. FDCPA PUNITIVE DAMAGES
  8. FDCPA INHERENT COURT AUTHORITY TO LEVY SANCTIONS
  9. CUMULATIVE BAD ACTS TEST — PATTERN OF CONDUCT
  10. HAMP Modifications Scam — initial and incentive payments
  11. Estopped and fraud: 90 day delinquency disinformation — fraud and UPL
  12. Rejected Payment
  13. Default Letter: Not authorized because sender is neither servicer nor interested party.
  14. Default letter naming creditor
  15. Default letter declaring amount due — usually wrong
  16. Default letter with deadline date for reinstatement: CURE DATE
  17. Late charges improper
  18. Extra interest improper
  19. Fees even after they lose added to balance “due.”
  20. Notice of acceleration based upon default letter which contains inaccurate information. [Not authorized because sender is neither servicer nor interested party.]
  21. Damages: Negative credit rating — [How would bank feel if their investment rating dropped? Would their stock drop? would thousands of stockholders lose money as a result?]
  22. damages: emotional stress
  23. Damages: Lost opportunities to save home
  24. Damages: Lost ability to receive incentive payments for modification
  25. FDCPA etc: Use of nonexistent or inactive entities
  26. FDCPA Illegal notarizations
  27. Illegal notarizations on behalf of nonexistent or uninvolved entities.
  28. FDCPA naming self proclaimed servicer as beneficiary (creditor/mortgagee)
  29. Assignments following self proclamation of beneficiary (creditor/mortgagee)
  30. Falsely Informing homeowner they cannot reinstate
  31. Wrongful appointment of Trustee under deed of trust
  32. Wrongful and non existent Power of Attorney
  33. False promises to modify
  34. False representations to the Court
  35. Musical entities
  36. False and fraudulent utterance of a document
  37. False and fraudulent recording of a false document
  38. False representations concerning “US Bank, Trustee” — a whole category unto itself. (the BOA deal and others who “sold” trustee position of REMICs to US Bank.) 

Feds allow high-profile case against Bank of America to quietly fizzle out

The Department of Justice had until Monday to ask the U.S. Supreme Court to take up its 2012 ‘Hustle’ lawsuit against Charlotte-based Bank of America. The DOJ let the deadline pass.

The Department of Justice had until Monday to ask the U.S. Supreme Court to take up its 2012 ‘Hustle’ lawsuit against Charlotte-based Bank of America. The DOJ let the deadline pass.

Read more here: http://www.charlotteobserver.com/news/business/banking/bank-watch-blog/article116470198.html#storylink=cpy
 The U.S. government let a high-profile mortgage case against Bank of America quietly fizzle out this week.

Who is the Creditor? NY Appellate Decision Might Provide the Knife to Cut Through the Bogus Claim of Privilege

The crux of this fight is that if the foreclosing parties are forced to identify the creditors they will only have two options, in my opinion: (a) commit perjury or (b) admit that they have no knowledge or access to the identity of the creditor

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-

see http://4closurefraud.org/2016/06/10/opinion-here-ny-court-says-bank-of-america-must-disclose-communications-with-countrywide-in-ambac-suit/

We have all seen it a million times — the “Trustees”, the “servicers” and their agents and attorneys all beg the question of identifying the names and contact information of the creditors in foreclosure actions. The reason is simple — in order to answer that question truthfully they would be required to admit that there is no party that could properly be defined as a creditor in relation to the homeowner.

They have successfully pushed the point beyond the point of return — they are alleging that the homeowner is a debtor but they refuse to identify a creditor; this means they are being allowed to treat the homeowner as a debtor while at the same time leaving the identity of the creditor unknown. The reason for this ambiguity is that the banks, from the beginning, were running a scheme that converted the money paid by investors for alleged “mortgage backed securities”; the conversion was simple — “let’s make their money our money.”

When inquiry is made to determine the identity of the creditor the only thing anyone gets is some gibberish about the documents PLUS the assertion that the information is private, proprietary and privileged.  The case in the above link is from an court of appeals in New York. But it could have profound persuasive effect on all foreclosure litigation.

Reciting the tension between liberal discovery and privilege, the court tackles the confusion in the lower courts. The court concludes that privilege is a very narrow shield in specific situations. It concludes that even the attorney-client privilege is a shield only between the client and the attorney and that adding a third party generally waives that privilege. The third party privilege is only extended in narrow circumstances where the parties are seeking a common goal. So in order to prevent the homeowner from getting the information on his alleged creditor, the foreclosing parties would need to show that there is a common goal between the creditor(s) and the debtor.

Their problem is that they can’t do that without showing, at least in camera, that the identity of the creditor is known and that somehow the beneficiaries of an empty trust have a common goal (hard to prove since the trust is empty contrary to the terms of the “investment”). Or, they might try to identify a creditor who is neither the trust nor the investors, which brings us back to perjury.

FDCPA and FCCPA: Temperatures rising

FDCPA and FCCPA (or similar state legislation) claims are getting traction across the country. Bank of America violated the federal Fair Debt Collection Practices Act (“FDCPA”) and the related Florida Consumer Collection Practices Act (“FCCPA”). (Doc. 26). The Goodin case is a fair representation of the experience of hundreds of thousands of homeowners who have tried to reconcile the numbers given to them by Bank of America and others.

In a carefully worded opinion from Federal District Court Judge Corrigan in Jacksonville, the Court laid out the right to damages under the FDCPA and FCCPA. The Court found that BOA acted with gross negligence because they continued their behavior long after being put on notice of a mistake on their part and awarded the 2 homeowners:

  • Statutory damages of $2,000
  • Actual damages for emotional distress of $100,000 ($50,000 per person)
  • Punitive damages of $100,000
  • Attorneys fees and costs

 

See http://www.leagle.com/decision/In%20FDCO%2020150623E16/GOODIN%20v.%20BANK%20OF%20AMERICA,%20N.A.

The story is the same as I have heard from thousands of other homeowners. The “servicer” or “bank” misapplies payments, negligently posts payments to the wrong place and refuses to make any correction despite multiple attempts by the homeowners to get their account straightened out. Then the bank refuses to take any more payments because the homeowners are “late, ” “delinquent”, or in “default”, following which they send a default notice, intent to accelerate and then file suit in foreclosure.

The subtext here is that there is no “default” if the “borrower” tenders payment timely with good funds. The fact that the servicer/bank does not accept them or post them to the right ledger does not create a default on the part of the borrower, who has obviously done nothing wrong. There is no default and there is no delinquency. The wrongful act was clearly committed by the servicer/bank. Hence there is no default by the borrower in any sense by any standard. It might be said that if there is a default, it is a default by Bank of America or whoever the servicer/bank is in another case.

Using the logic and law of yesteryear, we frequently make the mistake of assuming that if there is no posting of a payment, no cashing of a check or no acceptance of the tender of payment, that the borrower is in default but it is refutable or excusable — putting the burden on the borrower to show that he/she/they tendered payment. In fact, it is none of those things. When you parse out the “default” none of the elements are present as to the borrower.

This case stands out as a good discussion of damages for emotional distress — including cases, like this one, where there is no evidence from medical experts nor medical bills resulting from the anguish of trying to sleep for years knowing that the bank or servicer is out to get your house. The feeling of being powerless is a huge factor. If an institution like BOA fails to act fairly and refuses to correct its own “errors,” it is not hard to see how the distress is real.

I of course believe that BOA had no procedures in place to deal with calls, visits, letters and emails from the homeowner because they want the foreclosure in all events — or at least as many as possible. The reason is simple: the foreclosure judgment is the first legally valid instrument in a long chain of misdeeds. It creates the presumption that all the events, documents, letters and claims were valid before the judgment was entered and makes all those misdeeds enforceable.

The Judge also details the requirements for punitive damages — i.e., aggravating circumstances involving gross negligence and intentional acts. The Judge doesn’t quite say that the acts of BOA were intentional. But he describes BOA’s actions as so grossly negligent that it must approach an intentional, malicious act for the sole benefit of the actor.

 

PRACTICE NOTE ON MERGER DOCTRINE AND EXISTENCE OF DEFAULT:

It has always been a basic rule of negotiable instruments law that once a promissory note is given for an underlying obligation (like the mortgage contract), the underlying obligation is merged into the note and is suspended while the note is still outstanding. Discharge on the note would (due to the rule that the two are merged) result in discharge discharge of the underlying obligation. Thus paying the note would also pay the obligation. Because of the merger rule, the underlying obligation is not available as a separate course of action until the note is dishonored.

 

The problem here is that most lawyers and most judges are not very familiar with the UCC even though it constitutes state law in whatever state they are in. They see the UCC as a problem when in fact it is a solution. it answers the hairy details without requiring any interpretation. It just needs to be applied. But just then the banks make their “free house” argument and the judge “interprets a statute that is only vaguely understood.

The banks know that judges are not accustomed to using the UCC and they come in with a presumed default simply because they show the judge that on their own books no payment was posted. And of course they have no record of tender and refusal by the bank. The court then usually erroneously shifts the burden of proof, as to whether tender of the payment was made, onto the homeowner who of course does not  have millions of dollars of computer equipment, IT platforms and access to the computer generated “accounts” on multiple platforms.

This merger rule, with its suspension of the underlying obligation until this honor of the note cut is codified in §3-310 of the UCC:

(b) unless otherwise agreed and except as provided in subsection (a), if a note or an uncertified check is taken for an obligation, the obligation is suspended to the same extent the obligation would be discharged if an amount of money equal to the amount of the instruments were taken, and the following rules apply:

(2) in the case of a note, suspension of the obligation continues until dishonor of the note or until it is paid. Payment of the note results in the discharge of the obligation to the extent of the payment.

thus until the note is dishonored there can be no default on the underlying obligation (the mortgage contract). All foreclosure statutes, whether permitting self-help or requiring the involvement of court, forbid foreclosure unless the underlying debt is in”Default.” That means that the maker of the promissory note must have failed to make the payments required by the note itself, and thus the node has been dishonored. Under UCC §3-502(a)(3) a hello promissory note is dishonored when the maker does not pay it when the footnote first becomes payable.

4th DCA Florida: Exploding the Merger Myth

Achieving standing via merger also requires that the surviving entity prove that it “acquired all of [the absorbed entity’s] assets, including [the] note and mortgage, by virtue of the merger.”Fiorito v. JP Morgan Chase Bank, Nat’l Ass’n, 174 So. 3d 519, 521 (Fla. 4th DCA 2015).

see http://4closurefraud.org/2016/06/07/fl-4th-dca-segall-v-wachovia-bank-na-reversed-wachovia-failed-to-prove-standing-to-foreclose/

Finally the courts are turning back to the simple rules of law that always applied until the era of false claims of securitization. Hopefully this decision will be persuasive authority in all jurisdictions. As stated in other cases, the banks can’t continue to operate using multiple choice assertions. Either their entity is real or it isn’t. Either they acquired the loan or they didn’t — and the fact that there was a merger does NOTHING for them in asserting transfer of the loan. They must show that the subject loan was in fact acquired by the surviving entity in the merger. This was always the law before and now we are simply turning back to it.

Red Oak Merger Corp. a/k/a Countrywide, a/k/a BAC a/k/a Bank of America

When BOA says it is a “Successor by merger” to Countrywide, it is no more true than Chase’s claims that it is the successor by merger to WAMU and no different than the false claims of OneWest as to IndyMac. In each instance there was a merger but in none of them were loans acquired because they had already been sold.
If you look at the actual merger disclosures, it is highly doubtful and even inconsistent with other disclosures that Bank of America Corp or Bank of America N.A. actually owns any loans originated by Countrywide. In fact, as you drill deeper you will be drawn to my conclusion —— that Countrywide was a conduit and not a lender, who operated through other thinly capitalized “originators” none of whom were actually making loans.
None of them were lenders. None were creditors. The money for the alleged loans came from a dynamic dark pool consisting solely of money from investors — by-passing the so called “REMIC” Trust that claims ownership even though it was never active as a business entity or as a pass-through entity. The Trust never received the proceeds of sale of securities the Trust issued.  Nobody complained because it was really not the Trust that was the active entity, it was the investment bank that had created the illusion of mortgage backed securities that were not backed by mortgages and not securities under deregulation back in 1998-1999. Investors who failed to peek under the hood jumped at high ratings and insured investments. But other fund managers who did peek under the hood, discovered at best a very high risk venture and at worst, a criminal conspiracy. These conduits were all getting signatures that were then parlayed into the illusion of assets that were sold into the secondary mortgage market and then subjected to false claims of securitization.
This situation is like Chase claims that WAMU originated mortgages. The only difference is that WAMU was actually capitalized to start off the origination of loans with its own funds and did not start acting as a mere conduit until around 2001, based upon all appearances. WAMU eventually originated almost $1 Trillion in loans despite the fact that it lacked the resources to make those loans. Likewise Countrywide, on a much larger scale was only a conduit rather than a lender for the many trillions of dollars that were originated using the Countrywide “platform.”
In both cases the loans, by all accounts, were presold or contemporaneously sold into the secondary market the moment the “borrower” signed papers that led to doom. In the case of Countrywide, MERS was used extensively, to hide the fact that there were no transactions in which anyone actually bought the loans because the loans were already paid for with investor funds. That’s why you get answers from the “corporate representative” in court saying “Fannie Mae [or Freddie Mac] was the investor “from the start.” That has been accepted in courts across the land despite the fact that the GSE’s were never direct lenders. Their only role at the origination was as guarantor, if that.
So the upshot of all this is that the mega banks are playing musical chairs as servicers and trustees, to be sure, but also playing games with corporate entities such that they shield themselves from violations of Federal and state lending laws. BOA did not merge with Countrywide or BAC (which is a mere name change of Countrywide). CW merged with Red Oak merger Corp. and BOA claims that Red Oak was a wholly owned subsidiary. There is nothing nefarious about forming a subsidiary to facilitate an acquisition. But what is wrong is that when BOA says it is a “Successor by merger” to Countrywide, it is no more true than Chase’s claims that it is the successor by merger to WAMU and no different than the false claims of OneWest as to IndyMac. In each instance there MAY have been a “merger” but in none of them were loans acquired because they had already been sold.
There were no assignments and there was no payment for the loans. The transaction that they have successfully argued in court should be legally presumed to exist, does not in fact exist. The presumption is in direct contradiction to the factual truth.
https://www.vcita.com/v/lendinglies to schedule, leave message or make payments.

SIGTARP HAMP FINDINGS: SERVICERS REVOKING COMPLIANT HAMP PLANS

Why are modifications being undermined when they would so obviously preserve the value of the “loan?” The answer is because the real party in interest in the foreclosures is the servicer, not the trust, which doesn’t own the loan anyway, nor even the investor/beneficiaries, who reap very little out of the proceeds of foreclosure.

The servicer wants the loan to fail. The investor expects the servicer and trustee of the REMIC trust to make sure value is preserved. But that isn’t the game. If the property goes to foreclosure sale then the “servicer” can make its claim for “recovery” of “servicer advances.” The fact that “servicer advances” are made from a pool of funds established by investor money and the fact that the servicer accesses these funds to make payments, regardless of whether the borrower pays or not — all of that makes no difference in the game.

In that context a modified loan is worthless. A failed loan is the gold standard.

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HAMP Modifications Sabotaged to Fail by the Usual Suspects

By William Hudson

https://www.sigtarp.gov/Audit%20Reports/Homeowners_Wrongfully_Terminated_Out_of_HAMP.pdf

On January 27, 2016 The Special Inspector General over the Troubled Asset Relief Program (SIGTARP) released data on the poorly executed and enforced Home Affordable Mortgage Program (“HAMP”) that shows that the banks not only have the right to modify loans they don’t own, but have no interest in helping homeowners save their homes through modification when they can set the homeowner up to fail.

HAMP was created to provide sustainable and affordable mortgage assistance to homeowners at risk of foreclosure but has instead forced many homeowners into foreclosure by requiring homeowners to miss payments, revoking approved modifications and a slew of other unethical practices.

The Inspector General writes that, “mortgage servicers administering HAMP will continue to need strict oversight in upcoming years because apparently the servicers are unable to implement and properly administer the program without resorting to sabotaging compliant homeowners.”

The audit notes that  the “largest seven mortgage servicers in HAMP over the most recent four quarters show disturbing and what should be unacceptable results, as 6 of 7 of the mortgage servicers had wrongfully terminated homeowners who were in “good standing”  with their HAMP modifications.”

These failure rates demonstrate that servicer misconduct is continuing to contribute to homeowners falling out of HAMP by terminating the agreement when homeowners are making timely payments.  This practice is an obvious attempt to put homeowners at risk of losing their home so that when the foreclosure occurs, the servicer can swoop in and steal the home while keeping all of the homeowner’s equity, payments and improvements.

This study provides further documentation that homeowners are being forced out of the HAMP program for no reason and that servicers are using HAMP as another tool to steal homes.  If the servicer can keep the homeowner in a state of vulnerability, create further arrearages and provide the homeowner contradictory and confusing information- their chances of taking back the home increase exponentially. This is the modification business model of the major loan servicers.

The servicers are running the show and the government is apparently impotent to stop them from their illegal tactics. The treasury admits that they have no idea how many other homeowners were forced out of HAMP.  I can attest that I was one of the homeowners forced out of a loan modification in which I was 100% compliant. For a year I repeatedly applied for modifications, sending in documentation and spending hours and hours going through CitiMortgage’s futile application process.  Either CitiMortgage representatives are completely incompetent or their modification process is intentionally set-up to create such a diabolical application process that most borrowers give up.

Thirteen applications later and a year later I was granted an “approved repayment plan” that required three timely payments before becoming permanent.  If all three payments were made  by the first of each month I would be given a permanent modification with no need for further qualification.  After making the third timely payment by certified mail I didn’t hear back from CitiMortgage. By then I was familiar with their lack of competence and accountability so I continued to make payments hoping I would hear from them any day.

When I received the “approved repayment plan” I celebrated thinking that I was finally free from seven years of servicer torment.  The modification would allow me to immediately sell the home in which I had several buyers- and make Citi 100% whole including being paid over 15k in fees they had assessed.  At the time I received the loan modification I had over 100k in equity.  I would have paid CitiMortgage any amount they claimed I owed to be free of their tyrannical servicing practices.

Not trusting CitiMortgage to honor their word- I called CitiMortgage and once again confirmed that “approved” meant “approved” and that I could prepare the home for sale. The CitiMortgage agent promised me that as long as all three payments were made it was a done deal.  I didn’t want any surprises down the road if they changed their minds.  The home needed some updating prior to being placed on the market so I took 35k from my retirement account and went to work renovating the home top to bottom.  By the time my third payment was made I had a beautifully restored home and two anxious buyers for the property.  I was close to grasping the golden ring…..until CitiMortgage grasped the ring right out of my hands.

When I didn’t hear from Citimortgage I continued to make the modification payments for three more months while waiting to hear from them about the new loan terms. Unbeknownst to me the modification payments I had made were not being applied to my loan but placed in a suspense account while CitiMortgage was continuing to add on late payments and other delinquent fees.  I had not agreed to this arrangement but was powerless to complain.

I finally received a letter from CitiMortgage stating my check (my fifth payment) was being returned to me with no reason provided. I knew CitiMortgage was up to something, so I checked the internet to discover that CitiMortgage was dual-tracking me and had filed to foreclose on me while compliant with the modification plan. To add further injury,  I received two more offers from CitiMortgage that week offering to modify my loan! CitiMortgage did not want full payment- they wanted my house and the financial windfall that follows a successful foreclosure.

It has now been six years and the house has sat vacant since Citi revoked my modification.  All the work I did has been reversed by humidity and vacancy.  I no longer have any equity in the property.  I sued CitiMortgage over this egregious bait and switch scheme and even provided evidence to the court that I was granted an “approved repayment plan” with no contingencies.  The judge in my case, with 20 percent of his retirement in CitiMortgage, did not recuse himself but instead threw out my entire complaint and provided no reason for his decision.  Not only did CitiMortgage get away with this fraud, the corrupt judge dismissed my case on summary judgement stating there was no controversy.  Even when you have irrefutable evidence of fraud- if you have a biased and unethical judge you will not prevail.   I reported my experience to SigTarp, the CFPB, FCC and the Office of the Comptroller- and not one agency bothered to respond to my complaint or sanction CitiMortgage for this blatant contract violation.  I requested that CitiMortgage return the modification payments they fraudulently extorted from me- and of course they refused.

My situation appears to be the norm, not the exception.  SigTarp reported that one out of every three homeowners in HAMP re-defaults on their payments. They suggest that the Treasury, “research and analyze whether, and to what extent, the conduct of HAMP mortgage servicers contributed to homeowners redefaulting on HAMP permanent mortgage modifications.”  I can tell them from experience that examining the behaviors and motivations of the servicers would be a great place to start. I can almost guarantee in most modification cases that it isn’t the homeowner who defaults.  In the first place, a homeowner who prevails in obtaining a loan modification may work diligently for years before being granted a modification and persevere against great odds! I would estimate I spent around 45 hours on the phone, faxing and following up with CitiMortgage before receiving my modification.  In fact, dealing with CitiMortgage became my occupation.  The homeowner who receives a modification, in most cases, has fought a long and hard battle for the modification and has no idea that the bank can refuse to honor the agreement.

To get the true story about what is going on, the Treasury could begin by sending out questionnaires to prior homeowners in HAMP that were compliant when their modifications were revoked for no other reason than the servicer wanting to take another stab at stealing the home.  SIGTARP’s concerns over servicer misconduct contributing to homeowner redefaults in HAMP was revealed through the Treasury’s on-site visits to the largest seven mortgage servicers in HAMP over the last year and apparently reveal disturbing and unacceptable results, finding that 6 of 7 of the mortgage servicers had wrongfully terminated homeowners who were in “good standing”.

It doesn’t take a rocket scientist to assume that servicers are up to their same old tricks and forcing compliant homeowners out of HAMP.  Servicers have no incentive to not unjustly enrich themselves at the expense of the homeowner when a successful foreclosure is more lucrative than modifying a mortgage.  The usual six non-compliant culprits are named in the report:

WRONGFUL TERMINATIONS OF HOMEOWNERS FROM HAMP BY SERVICERS:

Q4 2014 TO Q3 2015    

Servicer                                       Wrongful Termination of Homeowner  From HAMP

Bank of America, N.A.                                        X

CitiMortgage Inc                                                  X

JPMorgan Chase Bank, N.A.                              X

Nationstar Mortgage LLC                                    X

Ocwen Loan Servicing, LLC                               X

Select Portfolio Servicing, Inc.

Wells Fargo Bank, N.A.                                       X

According to SIGTARP, homeowners who make their modified mortgage payments on time, or who do not fall three months behind on those payments are entitled to remain in HAMP. However, the Treasury’s results found that, within the last year, Bank of America,CitiMortgage, JP Morgan Chase, Nationstar, Ocwen and Wells Fargo all claimed that homeowners had redefaulted out of HAMP by missing three payments when, in reality, they had not.

These six mortgage servicers account for 74% of non-GSE HAMP modifications funded by TARP since the start of the program. Upon further reading, and despite the fact that the Treasury has done nothing to stop this misconduct, the servicers are engaging in a process of holding the homeowner’s payments in suspense accounts (so they can continue accruing late fees and other delinquent charges), reversing and reapplying the homeowner’s payments improperly and terminating homeowners who have not defaulted on the required three payments.

This misconduct is also probably much larger in scale than it appears because the Treasury only samples 100 redefaulted homeowners per servicer each quarter.  It is possible that the number of homeowners impacted is much, much larger.  This has been going on since the inception of the program and the Treasury’s response over time has been anemic and unresponsive.  The servicers appear to have an understanding that if they don’t comply there is no consequence other than a little bad publicity (as if a little more bad publicity would impact them at this point).

The potential profit of a fraudulent foreclosure is incentive enough to kick compliant homeowners out of the HAMP program. It should be known that many of the servicers making offers to modify do not have legal standing to make an offer to modify the loan in the first place and are simply engaging in a process to get the homeowner further into default.

In my particular case, all I wanted was to modify my mortgage, sell my home, and go forward with my life.  CitiMortgage did NOT want payment- they WANTED the HOME and used modification as a tool to  obtain this goal.  A modification is nothing short of a tool of deception used by servicers to steal a home.  Servicers use modification for these purposes:

1.  Intimidate the unsophisticated or vulnerable Homeowner- Create Fear and Confusion by processes of circular phone transfers, lost documents, false claims, conflicting messages and blatant lies.

2. Time Destruction- Time spent in modification compromises other available options like refinancing, a short sale or hiring an attorney.  A consumer’s options diminish as time goes by. It is to the bank’s benefit to not modify the loan but to paint the homeowner into a corner.

3. Equity Erosion- Every month while in a modification the equity in the home is eroded by late fees and other charges the consumer is not advised about in advance.

4. Payment Hostage- The servicer retains the monthly modification payment in a suspense account.  These funds then cannot be used for a more beneficial purpose like retaining an attorney or refinancing. The consumer is not told that the payment will not be applied to their mortgage or if the modification fails that the payments will not be returned.

5. Dual-Tracking- A homeowner in the process of modifying their mortgage or who has an approved modification may be subsequently foreclosed upon in violation of law.

6. Government Kickbacks- Servicers who engage in the modification process receive compensation for each modification attempt and successful modification.  Servicers are accepting government payments (from tax payers) only to sabotage modifications.

The time has come for a full investigation into the behavior of loan servicers.  Not only do servicers make offers to modify loans they have no legal right to modify, but they engage in fraudulent practices that are not in the best interest of the homeowner, investor or community.  This article won’t get into the fact that servicers lie about their relationship to the loan, the balance owed and need to be heavily fined and sanctioned for forging documents, filing false affidavits and other criminal acts.  The bottom line is that a servicer is incentivized to lie, to cheat and to steal by a lack of governmental oversight and by the  potential windfall of profits that occur upon a successful foreclosure (including insurance, “servicer advances” and other compensation).  The bank has bet your mortgage will fail, and you can bet they will resort to every trick in the book to take your home including the use of faux modifications.

It is ironic that two months ago I received a letter from CitiMortgage offering to modify again.  This is despite the fact that the note and mortgage were rescinded under TILA.  I’m not sure what CitiMortgage thinks they are going to modify now that the note and mortgage are void by operation of law- but why would I expect rogue servicer CitiMortgage to comply with any state or federal law?

Advice: Your servicer is not your friend and will act only in their best interest.

I have attached copies of my “approved repayment plan” as evidence of the modification agreement.

If you would like to share your modification story with us please email us at: lendingliesconsulting@gmail.com.  We would like to hear about your experiences.

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Repayment Plan One cleanRepayment Plan Two clean

BOA Settlements: $70 Billion and Counting

From www.housingwire.com —

Reuters published an article on the situation late Friday, BofA settles claims of “misleading shareholders about its exposure to risky mortgage securities and its dependence on an electronic mortgage registry known as MERS.”

So, yes, it’s just another settlement for BofA, which is probably really used to this kind of development.

“The bank has spent more than $70 billion since the financial crisis to resolve legal and regulatory matters, including those tied to its purchases of Countrywide in July 2008 and Merrill Lynch & Co six months later,” the article states.

So here are my questions:

  1. Where is BOA getting the money to pay for these settlements, fines and damages?
  2. We have many billions of dollars of reported settlements with “investors.” (and probably a lot more unreported “off-balance sheet” settlements). How are the proceeds of these settlements allocated if the investors are the end parties in interest on the alleged loans and pass through certificates. If they have been paid, is that reflected in the ending balance of individual loans? If not, why not?
  3. If the loan balances have indeed been paid down by “settlements” why is it so difficult to get principal reductions which would only reflect the fact that the creditors have already been made whole or at least partially paid?
  4. If the loans have been paid off in whole or in part, who is getting the excess and why — in the case of foreclosures and simply collections? The way this is playing out it seems that the investors are getting hush money while the banks pursue the huge rewards of getting “recovery” of servicer advances they never paid out of their own money and loan money that they never advanced out of their money or credit.
  5. Have the pass through certificate holders assigned their rights to the banks that pay them settlements? If not, why are the servicers taking most of the proceeds of a foreclosure sale?

The fundamental problem here is that the courts have been loathe to get into the complex world of financial instruments. The courts would rather simplify the matter even if it leads to the wrong result. So let’s simplify in another way. Is it right to allow the perpetrators of a fraud upon investors to reap the benefits of their fraud? Why does the “free house” myth even come in to play when the creditors have been paid and the intermediaries are soaking up everything in sight without expending a dime on the loan origination or the loan acquisition?

And then the real question — on whose behalf are these foreclosures being filed? Is it the empty trust that never operated? Is it the pass through certificate holders in the empty trust that never operated? Or is it the servicers and other conduits and sham corporations and entities who want virtually the entire proceeds of a foreclosure sale?

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