USA v. Minas Litos and Adrian and Daniela Tartareanu | 7th Circuit halts fraud restitution, urges fine for ‘reckless’ Bank of America

http://stopforeclosurefraud.com/2017/02/13/usa-v-minas-litos-and-adrian-and-daniela-tartareanu-7th-circuit-halts-fraud-restitution-urges-fine-for-reckless-bank-of-america/?utm_source=feedburner&utm_medium=twitterutm_campaign=Feed%3A+ForeclosureFraudByDinsfla+%28FORECLOSURE+FRAUD+%7C+by+DinSFLA%29

The Indiana Lawyer-

Three defendants convicted of wire fraud in the purchase of 16 properties in Gary were clearly guilty of the crimes, but the 7th Circuit Court of Appeals Friday threw out a restitution order against them and urged the district court in Hammond to consider fining Bank of America for “facilitating a massive fraud.”

“The bank was reckless,” Judge Richard Posner wrote in United States of America v. Minas Litos and Adrian and Daniela Tartareanu, 16-1384, -1385, 2248, 2249, 2330. The defendants were convicted of wire fraud, and the 7th Circuit affirmed those convictions, but reversed an order that they pay the bank restitution of $893,015, the amount it claimed was lost in the scheme.

The defendants were convicted on wire fraud charges filed in 2012 for a scheme in which home buyers were provided down payment kickbacks from the defendants after mortgages were secured on loan applications that provided false information. The defendants then walked away with the purchase price of the properties. But the 7th Circuit wrote Bank of America didn’t have clean hands, and there was little evidence that the bank would not have made the loans had it know the true source of the down payments — the defendants, not the buyers.

[THE INDIANA LAWYER]

http://www.theindianalawyer.com/th-circuit-halts-fraud-restitution-urges-fine-for-reckless-bank-of-america/PARAMS/article/42783

Editor’s note: This article has been corrected. In reversing a restitution order for Bank of America, the 7th Circuit urged a fine against the criminal defendants in this case.

Three defendants convicted of wire fraud in the purchase of 16 properties in Gary were clearly guilty of the crimes, but the 7th Circuit Court of Appeals Friday threw out a restitution order in favor of Bank of America and urged the district court in Hammond to consider fining the defendants instead.

“The bank was reckless,” Judge Richard Posner wrote in United States of America v. Minas Litos and Adrian and Daniela Tartareanu, 16-1384, -1385, 2248, 2249, 2330. The defendants were convicted of wire fraud, and the 7th Circuit affirmed those convictions, but reversed an order that they pay the bank restitution of $893,015, the amount it claimed was lost in the scheme.

The defendants were convicted on wire fraud charges filed in 2012 for a scheme in which home buyers were provided down payment kickbacks from the defendants after mortgages were secured on loan applications that provided false information. The defendants then walked away with the purchase price of the properties. But the 7th Circuit wrote Bank of America didn’t have clean hands, and there was little evidence that the bank would not have made the loans had it know the true source of the down payments — the defendants, not the buyers.

Posner detailed the bank’s dubious mortgage-lending history during the real-estate bubble leading up to the Great Recession, noting for instance one woman to whom the bank issued six mortgages in a 10-day period. Posner noted that District Judge Philip Simon said during sentencing in this case, “Bank of America knew [what] was going on. They’re playing this dance and papering it. Everybody knows it is a sham because no one is assuming any risk. So what’s wrong with saying they’re [of] equal culpability?”

“Indeed,” Posner continued, “and we are puzzled that after saying this the judge awarded Bank of America restitution — and in the exact amount that the government had sought.”

“Restitution for a reckless bank? A dubious remedy indeed — which is not to say that the defendants should be allowed to retain the $893,015. That is stolen money,” he wrote. “We don’t understand why the district judge, given his skepticism concerning the entitlement of Bank of America to an award for its facilitating a massive fraud, did not levy on the defendants a fine of not more than the greater of twice the gross gain or the gross loss caused by an offense from which any of  $893,015. 18  U.S.C. § 3571(d) authorizes a fine of not more than the greater of twice the gross gain or the gross loss caused by an offense from which any person either derives pecuniary gain or suffers pecuniary loss.”

The 7th Circuit vacated the restitution order as to the Tartareanus and remanded for full resentencing with the alternative remedy of a heavy fine on the defendants. The panel remanded Litos’ sentencing for the limited purpose of reconsideration of the restitution order with direction to consider whether a fine is possible.

 

Pinning Them Down on Musical Chairs

In the final analysis there is nothing about the business model that makes sense. Switching servicers and owners is simply not the norm of the industry except in relation to cases in foreclosure. It only makes sense if you assume that they are hiding the truth.

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.
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So I just responded to a homeowner who, with a little help from us, sent out a QWR and DVL and received a response that was quite revealing.  The homeowner was dealing with the usual chorus line of ever-changing servicers and alleged “lenders” (pretender lenders).
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After YEARS of denying that anyone other than BOA owned the loan they now admit that they are now asserting that Freddie Mac owns the loan, although, despite the QWR and DVL letters, they have never produced a single document that shows that.
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And after years of denying the involvement, Bayview makes the singular uncomfortable admission that LPS/Blacknight in Jacksonville maintains the system of records for Bayview (along with most everyone else in the “securitization” scheme). I say that means LPS is the servicer. If that opinion is right, then LPS is the servicer for virtually every loan made in the last 15 years. [Remember this is the company who published a menu of services that included the fabrication and forgery of documents]
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What they don’t say is that LPS (now known as Blacknight) maintained everything from the beginning because the loan didn’t legally exist nor was it ever purchased or acquired by anyone. The debt was and remains owing to institutional investors who don’t know they are owed money from the party who received their money. Neither the creditor nor the debtor know of each other’s identity or existence.
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So here are some of my responses to the array of documents sent to the homeowner leading one to the inevitable conclusion that they are intended merely to confuse and obfuscate.
  1. Freddie Mac is the owner. When did it become the owner?
  2. Did Freddie Mac approve the modification?
  3. Does Bayview have the right to commit to modification? ON behalf of whom did Bayview approve the modification? Who is bound by the modification agreement?
  4. Servicing changed from BAC—>BOA effective 7/11/11. BAC was the new name of Countrywide. So when did Countrywide get involved and how?
  5. When was servicing changed from BOA (the original pretender lender) to BAC or Countrywide?
  6. Servicing changed from BOA—>Bayview 8/1/15. It would be interesting to learn what other events may have prompted this change of servicer.
  7. What documents exist showing BOA right to service the loan?
  8. What documents exist showing Countrywide right to service the loan?
  9. What documents exist showing BAC right to service the loan?
  10. What documents exist showing Bayview right to service the loan.
  11. Request copies of servicing agreement.
  12. Who was the owner of the loan when the loan was first originated?
  13. Who was the owner of the loan when the servicing of the loan was transferred to Countrywide?
  14. Who was the owner of the loan when the servicing of the loan was transferred to BAC?
  15. Who was the owner of the loan when the servicing of the loan was transferred back to BOA?
  16. Who was the owner of the loan when the servicing of the loan was transferred to Bayview?
  17. Why was I not notified that Freddie Mac has become the owner of the loan? [Suggest letter to Freddie Mac asking if they are the owner and if they are aware there is a modification.]
  18. LPS/Blacknight: I am surprised they admitted it. So the question to them would be (a) are all records concerning my loan maintained by Blacknight and (b) is Blacknight actually my servicer? — Since Bayview says Blacknight has the records you could write to Blacknight and ask where your records are kept and who has access to them.
  19. The other question is if LPS/Blacknight maintains the system of records, what does Bayview do?
  20. 11/22/16 statement was prepared by Blacknight? where did they get information from? If there is a credit balance shouldn’t you get the money?
  21. If Freddie Mac is the owner then why did Bayview sign the acknowledgment as lender?
  22. If Bayview is the servicer why doesn’t the acknowledgment say that they are signing on behalf of FreddieMac, the owner?
  23. If Freddie Mac is the owner, why does the modification not state that and why does Bayview sign as and have you sign “in witness whereof, lender and Borrower have executed this agreement.”
  24. Since the modification has supposedly been completed, why hasn’t Freddie Mac or its authorized agent sent a correction to the credit bureaus — with the foreclosure dismissed?

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?

Banks Struggling with Notices of Rescission

For further information please call 954-495-9867 or 520-405-1688

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We are starting to get a peek at the strategy the banks will employ in dealing with notices of rescission. In one case the homeowner sent the notice of BOA, who answered that they received it (one problem solved) and that the new servicer is Ocwen (whose business practices have been the subject of a cease and desist order for failing to comply with prior “settlements” and “consent judgments.”)
The obvious strategy of the banks is to try to raise issues that the foreclosure judge can rule upon, in which the notice of rescission is declared void WITHOUT the required lender lawsuit seeking declaratory relief from the rescission — an absolute 20 day requirement under the Truth in Lending Act (TILA). And no matter how much philosophical discussion might ensue, this is precisely why TILA was drafted and passed by Congress and signed into law by the president — all in the wake of the savings and loan scandal that shook the industry in the 1980’s and put over 800 bankers in jail. As the US Supreme Court ruled in a unanimous decision written by Justice Scalia a couple of weeks ago TILA is specific consumer remedy that must be strictly construed.
When they tell you there is another servicer they are trying to re-start the 20 days to file a lawsuit they don’t want to file containing allegations they don’t want to allege, and requiring proof they cannot satisfy. It won’t work. So far, so good. They will probably try to say you sent it to the wrong “servicer” and that therefore your notice of rescission was invalid.

The foreclosure judge will be inclined to accept any argument against the effect of rescission. But TILA is very specific, it is Federal law, and the CFPB regulations under Dodd-Frank make it pretty clear that the shell game won’t work with respect to the notice of rescission. AND their response corroborates your position that they have been continually withholding the information that should have been disclosed at the fake loan closing.

According to CFPB regulations they are all servicers and they are all “good” for service of the rescission letter. You COULD send a COPY of the letter you sent to BOA to Ocwen Certified, return receipt requested. My suggestion is do not send a brand new letter. The clock is ticking. After 20 days has passed we will move to dismiss on the basis of the rescission. The so-called “old servicer” has an obligation to forward the letter to the lender and any other servicers. The 20 days, in my opinion, keeps running from the date of the mailing of the notice.

The long and short of it is that once the notice of rescission is sent (certified mail, return receipt requested) you are now in process on this strategy. The best is that (a) they won’t respond at all which your lawyer can argue they waived the defenses because of the statute of limitations contained in the Truth in Lending Act (TILA) for failing to file the required lawsuit within 20 days or (b) they will write back threatening something, which is not the response called for by TILA or (c) they will bring a lawsuit to declare your rescission void. No matter how this turns out I see it as being potentially beneficial to the homeowner.

If they sue then they need to establish standing and allege facts that they are not being required to allege and prove in foreclosure actions. They have been fighting against being required to plead or prove those facts for 10 years. So we can safely assume they can’t allege those thing and they certainly can’t prove those things.

By “those things” I mean ownership and balance. They have to allege they are the lender or they are representing a lender and SHOW that authorization. Contrary to foreclosure actions where courts have been incorrectly ruling that they only need to prove they are holding the paper, the Declaratory action that must be filed to counter your notice of rescission must allege and prove the identity of the “lender” (i.e., the party who loaned you the money or a true successor — i.e., a successor who actually purchased the debt and wasn’t simply a naked recipient of the the bogus paperwork).

Either way you are

(a) going to get rid of the mortgage and note and you will receive a ton of money just for what you paid the pretender lender at closing or the transferees of the bogus paper — which means that you cancel the note, void the mortgage so it is no longer in your chain of title — AND a receive a ton of money for the payments you made for interest and principal on a monthly basis going back to the inception of the fake loan closing, AND/OR

(b) going to get a ton of information that the foreclosure court might not otherwise allow you to reach in discovery (request for admissions, interrogatories, request to produce, depositions) .

My guess is that they are not ready to file any such lawsuit and will try arguing to the foreclosure judge that they didn’t need to because the rescission letter was defective on its face — usually the statute of limitations or the failure “to identify the violations in the letter.”

On that last point, there is no doubt in virtually all cases across the board that the notice letter need only state your rescission. Any reason for the rescission becomes a question of fact later only if the “lender” challenges the rescission letter within the 20 day period.

As to the statute of limitations, it doesn’t apply if the “lender” withheld the information that should have been disclosed. THAT is a question of fact, and THAT too must be brought up in their lawsuit (which is the ONLY way to comply with TILA on a TILA rescission).

But they will try to lure the state court judges into ruling on the sufficiency of the notice of rescission. The state court judge will be tempted to do it because he or she will see that the house is about to become free of the of the mortgage and that the lender will owe money to the borrower — two results the judges still dislike.

That strategy might work a few times but it won’t work long, in my opinion. TILA is a specific, explicit statutory remedy that cannot be interpreted in the context of common law rescission or any other rescission for that matter. The Court is required to treat these “lender” arguments (and even the question of whether the presenting party is in fact a “lender’) as a question of fact that MUST be raised in a separate lender collateral action seeking declaratory relief in a separate lawsuit.

Appellate Court Wrestling with Inconsistent Facts in Foreclosure Cases

For further information please call 954-495-9867 or 520-405-1688

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IT ISN’T BOTCHED PAPERWORK. IT’S FAKE PAPERWORK

It should come as no surprise that Judges have been confused since the dawning of the mortgage crisis launched by Wall Street. Wall Street was counting on it. And the problem they are having is that most courts, including appellate courts, are presuming the loans existed in the first place. You can’t blame for that because nearly everyone still makes that presumption. How could it not be true? What do you mean the loan came from someone else? Then why didn’t that third person  make sure they were made the payee on the note and the mortgagee on the mortgage? The real lenders didn’t know about the loan and would never have approved it? Preposterous!

Yes, I concede it all sounds like nonsense. But here is something that does NOT sound like nonsense. If the loan actually existed (between the named payee on the note and the named mortgagee or beneficiary on the mortgage) there is no circumstances under which a lawyer for the “lender” or “investor” would withhold proof of that transaction to the borrower, the Court or anyone else that was entitled to that information. If they had proof of payment on the loan they would rush to show it. If they had proof of payment on the alleged purchase of the loan, they would rush to show it — because that would make them a holder in due course (where the borrower has virtually no defenses).

The problem is that with the shell game of plaintiffs, servicers and trustees, Judges are getting distracted as they start picking at the foreclosure actions and entering some judgments in favor of the homeowners but failing to even consider the possibility that the entire scheme is fraudulent. Instead we see articles like the one below where the paperwork is considered “botched.” It isn’t botched. It is part of a fraudulent scheme. Look for any case where the underlying monetary transaction has been shown or proven. It isn’t there. 6-7 million foreclosures and still no money changing hands. What lender would endorse a note and assign a mortgage without receiving payment for it? (Unless of course they didn’t pay anything either at the loan closing table).

And why would anyone endorse a note or assign a mortgage without a sale of the loan and without receiving payment for it? The answer is very clear. They wouldn’t.

But the Courts are starting with the premise that the loan, and the transfer of the loan is presumptively legal and valid. And part of that presumption starts with the wrong question in the minds of judges — why would anyone file a foreclosure action if they were not the injured party whose legitimate interests were abridged when the borrower stopped paying? That slippery slope leads them to ratify unsigned, robo-signed, fabricated, forged paperwork in the belief that it really doesn’t matter how much is wrong with the paperwork.

Judges still assume that the underlying transactions must be real; hence judgment for the homeowner is necessary to avoid a windfall. It is circular reasoning to assume that the claim must be true if it was filed — that is what our constitution is all about preventing.

see The Fate of Foreclosure Cases

Will botched paperwork affect the outcome of foreclosure appeals? It depends on the judges.

The decisions in three cases came down to paperwork and procedure Wednesday before the Fourth District Court of Appeal.

For BAC Home Loans Servicing LP, botched documentation at the height of the robo-signing scandal cost it a foreclosure judgment when the court ruled the lender failed to prove standing to sue homeowner Rosanie Joseph.

The appeals court reversed a foreclosure judgment issued by Palm Beach Circuit Judge Diana Lewis since there was no evidence to show Taylor Bean & Whitaker Mortgage Corp. owned the mortgage when filing to foreclose on Joseph in July 2009.

The 2008 mortgage issued by Key Mortgage Associates was attached to the lawsuit, but no note or assignments accompanied the filing by Ocala-based Taylor Bean, a leading wholesale mortgage lender. The company reported the note was lost or stolen.

Taylor Bean, one of the spectacular bankruptcies of the housing crash, later assigned the note to BAC, which picked up the foreclosure ball.

In trial, BAC produced the original note and mortgage. The note offered two endorsements by the same person, Erica Carter-Shaw as a Key Mortgage attorney and Taylor Bean “E.V.P.” Neither endorsement was dated.

“A party must establish its standing to bring a mortgage foreclosure complaint by establishing an assignment or equitable transfer of the note and mortgage prior to instituting the complaint,” Judge Martha Warner wrote for the unanimous panel. Judges Carole Taylor and Mark Klingensmith concurred.

No File Review

A different panel split in similar litigation: Gafoor Jaffer and Nina Jaffer v. Chase Home Finance.

The homeowners claimed Chase attached a mortgage note payable to a third party without any proof of transfer and used an amended foreclosure complaint that failed to state a cause of action. However, the Jaffers waived the question of Chase’s standing by failing to respond to the lawsuit before default was entered.

Chase conceded some of its employees signed affidavits about the loan documents without first reviewing the loan file.

But the Fourth DCA upheld summary judgment issued by Broward Circuit Judge Sandra Perlman.

In the 2-1 unsigned decision, Judges Spencer Levine and Klingensmith concurred. Judge Burton Conner dissented, citing Chase’s failure to file an accurate copy of the mortgage note.

Deutsche Bank National Trust Co. wasn’t as lucky when it moved to overturn Broward Circuit Judge Kathleen Ireland’s ruling in favor of homeowner Theresa Boglioli.

Attorneys say the decisions may further complicate already-lengthy and expensive foreclosure litigation.

“Normally you see discrepancies of this nature within different circuits. But what we’re seeing in the Fourth is discrepancies among themselves,” said foreclosure defense attorney Roy Oppenheim of Weston. “It just makes this more complex. When there is cloudiness, it just creates more ambiguity and delays the conclusion of the foreclosure mess. In the end it doesn’t help anybody when you have inconsistent rules.”

“The judges themselves are coming up with different rationale based on the same facts, which makes for wildly different outcomes.”

Powers of Attorney — New Documents Magically Appear

For more information on foreclosure offense, expert witness consultations and foreclosure defense please call 954-495-9867 or 520-405-1688. We offer litigation support in all 50 states to attorneys. We refer new clients without a referral fee or co-counsel fee unless we are retained for litigation support. Bankruptcy lawyers take note: Don’t be too quick admit the loan exists nor that a default occurred and especially don’t admit the loan is secured. FREE INFORMATION, ARTICLES AND FORMS CAN BE FOUND ON LEFT SIDE OF THE BLOG. Consultations available by appointment in person, by Skype and by phone.

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BONY/Mellon is among those who are attempting to use a Power of Attorney (POA) that they say proves their ownership of the note and mortgage. In No way does it prove ownership. But it almost forces the reader to assume ownership. But it is not entitled to a presumption of any kind. This is a document prepared for use in litigation and in no way is part of normal business records. They should be required to prove every word and every exhibit. The ONLY thing that would prove ownership is proof of payment. If they owned it they would be claiming HDC status. Not only doesn’t it PROVE ownership, it doesn’t even recite or warrant ownership, indemnification etc. It is a crazy document in substance but facially appealing even though it doesn’t really say anything.

The entire POA is hearsay, lacks foundation, and is irrelevant without the proper foundation be laid by the proponent of the document. I do not think it can be introduced as a business records exception since such documents are not normally created in the ordinary course of business especially with such wide sweeping powers that make no sense — unless you recognize that they are dealing with worthless paper that they are trying desperately to make valuable.

They should have given you a copy of the settlement agreement referred to in the POA and they should have identified the original PSA that is referred to in the settlement agreement. Those are the foundation documents because the POA says that the terms used are defined in the PSA, Settlement agreement or both. I want all documents that are incorporated by reference in the POA.

If you have asked whether the Trust ever paid for your loan, I would like to see their answer.

If CWALT, Inc. or CWABS, Inc., or CWMBS, Inc is anywhere in your chain of title or anywhere else mentioned in any alleged origination or transfer of your loan, I assume you asked for those and I would like to see them too.

The PSA requires that the Trust pay for and receive the loan documents by way of the depositor and custodian. The Trustee never takes possession of the loan documents. But more than that it is important to distinguish between the loan documents and the debt. If there is no debt between you and the originator (which means that the originator named on the note and mortgage never advanced you any money for the loan) then note, which is only evidence of the debt and allegedly containing the terms of repayment is only evidence of the debt — which we know does not exist if they never answered your requests for proof of payment, wire transfer or canceled check.

If you have been reading my posts the last couple of weeks you will see what I am talking about.

The POA does not warrant or even recite that YOUR loan or anything resembling control or ownership of YOUR LOAN is or was ever owned by BONY/Mellon or the alleged trust. It is a classic case of misdirection. By executing a long and very important-looking document they want the judge to presume that the recitations are true and that the unrecited assumptions are also true. None of that is correct. The reference to the PSA only shows intent to acquire loans but has no reference or exhibit identifying your loan. And even if there was such a reference or exhibit it would be fabricated and false — there being obvious evidence that they did not pay for it or any other loan.

The evidence that they did not pay consists of a lot of things but once piece of logic is irrefutable — if they were a holder in due course you would be left with no defenses. If they are not a holder in due course then they had no right to collect money from you and you might sue to get your payments back with interest, attorney fees and possibly punitive damages unless they turned over all your money to the real creditors — but that would require them to identify your real creditors (the investors who thought they were buying mortgage bonds but whose money was never given to the Trust but was instead used privately by the securities broker that did the underwriting on the bond offering).

And the main logical point for an assumption is that if they were a holder in due course they would have said so and you would be fighting with an empty gun except for predatory and improper lending practices at the loan closing which cannot be brought against the Trust and must be directed at the mortgage broker and “originator.” They have not alleged they are a holder in course.

The elements of holder in dude course are purchase for value, delivery of the loan documents, in good faith without knowledge of the borrower’s defenses. If they had paid for the loan documents they would have been more than happy to show that they did and then claim holder in due course status. The fact that the documents were not delivered in the manner set forth in the PSA — tot he depositor and custodian — is important but not likely to swing the Judge your way. If they paid they are a holder in due course.

The trust could not possibly be attacked successfully as lacking good faith or knowing the borrower’s defenses, so two out of four elements of HDC they already have. Their claim of delivery might be dubious but is not likely to convince a judge to nullify the mortgage or prevent its enforcement. Delivery will be presumed if they show up with what appears to be the original note and mortgage. So that means 3 out of the four elements of HDC status are satisfied by the Trust. The only remaining question is whether they ever entered into a transaction in which they originated or acquired any loans and whether yours was one of them.

Since they have not alleged HDC status, they are admitting they never paid for it. That means the Trust is admitting there was no payment, which means they were not entitled to delivery or ownership of the note, mortgage, or debt.

So that means they NEVER OWNED THE DEBT OR THE LOAN DOCUMENTS. AS A HOLDER IN COURSE IT WOULD NOT MATTER IF THEY OWNED THE DEBT — THE LOAN DOCUMENTS ARE ENFORCEABLE BY A HOLDER IN DUE COURSE EVEN IF THERE IS NO DEBT. THE RISK OF LOSS TO ANY PERSON WHO SIGNS A NOTE AND MORTGAGE AND ALLOWS IT TO BE TAKEN OUT OF HIS OR HER POSSESSION IS ON THE PARTY WHO TOOK IT AND THE PARTY WHO SIGNED IT — IF THERE WAS NO CONSIDERATION, THE DOCUMENTS ARE ONLY SUCCESSFULLY ENFORCED WHERE AN INNOCENT PARTY PAYS REAL VALUE AND TAKES DELIVERY OF THE NOTE AND MORTGAGE IN GOOD FAITH WITHOUT KNOWLEDGE OF THE BORROWER’S DEFENSES.

So if they did not allege they are an HDC then they are admitting they don’t own the loan papers and admitting they don’t own the loan. Since the business of the trust was to pay for origination of loans and acquisition of loans there is only one reason they wouldn’t have paid for the loan — to wit: the trust didn’t have the money. There is only one reason the trust would not have the money — they didn’t get the proceeds of the sale of the bonds. If the trust did not get the proceeds of sale of the bonds, then the trust was completely ignored in actual conduct regardless of what the documents say. Which means that the documents are not relevant to the power or authority of the servicer, master servicer, trust, or even the investors as TRUST BENEFICIARIES.

It means that the investors’ money was used directly for fees of multiple people who were not disclosed in your loan closing, and some portion of which was used to fund your loan. THAT MEANS the investors have no claim as trust beneficiaries. Their only claim is as owner of the debt, not the loan documents which were made out in favor of people other than the investors. And that means that there is no basis to claim any power, authority or rights claimed through “Securitization” (dubbed “securitization fail” by Adam Levitin).

This in turn means that the investors are owners of the debt but lack any documentation with which to enforce the debt. That doesn’t mean they can’t enforce the debt, but it does mean they can’t use the loan documents. Once they prove or you admit that you did get the loan and that the money came from them, they are entitled to a money judgment on the debt — but there is no right to foreclose because the deed of trust, like a mortgage, is made out to another party and the investors were never included in the chain of title because the intermediaries were  making money keeping it from the investors. More importantly the “other party” had no risk, made no money advance and was otherwise simply providing an illegal service to disguise a table funded loan that is “predatory per se” as per REG Z.

And THAT is why the originator received no money from successors in most cases — they didn’t ask for any money because the loan had cost them nothing and they received a fee for their services.

The US BANK-BOA-LaSalle-CitiGroup Shell Game

‘The bottom line is that the notice of substitution of Plaintiff in judicial states, or notice of substitution of Trustee in non-judicial states should be the first line of battle. Neither one of them is valid and in both cases you have a stranger to the transaction being allowed to name itself as creditor, name its own controlled entity or subsidiary as trustee, and then ignore the realities of the money paid to the real creditor. They are claiming damages from the borrower — all for a debt that in the ordinary course of things has already been paid several times over. But it is true that it wasn’t paid to THEM because THEY were never and are not now the creditor fulfilling the definition of a creditor who could bid at the foreclosure auction. It is not that the borrower doesn’t owe money when he borrows it, it is that he doesn’t owe it to any of the people who are claiming it. And that is what gives rise to liability of law firms to borrowers.” Neil F Garfield, www.livinglies.me

If our information can be corroborated through discovery with a corporate representative of US BANK or Chase Bank as the servicer, it is possible that a solid cause of action can be filed against the law firm that brought the action, particularly if the law firm took its instructions from the Desktop system of LPS.

In that system law firms are instructed to file foreclosures without contact with the actual client. We saw several cases where sanctions were levied against lawyers and their alleged clients, but none so stark as the one in Florida where the lawyer for US Bank as Trustee for XXX, when faced with questions he couldn’t answer admitted that he had never spoken with anyone from U.S> Bank and didn’t know who had retained his firm.

The law firm that brought the foreclosure action and especially the law firm that is demanding an assignment of rent to protect a creditor who has already been paid through non stop servicer advances was most likely not authorized to demand the assignment of rents which might be why there was no written demand as required by statute. I am considering the possibility of an actual lawsuit against one such law firm for interference with contract on both the foreclosure and the assignment of rents issue.

The Banks are being very cagey about this system — one which they would never use for their own portfolio loans, which begs the question of why they would have two entirely different system of accounting and legal process. But the long and the short of it is that LPS in Jacksonville, Florida is used much the same way as MERS. It maintains a database service that requires a user name and password and that gives unlimited access to the client folders. Anyone can go in and authorize the foreclosure based upon a default that is invested by the person entering the data. They leave out any servicer advances or other third party payments and arrive at an amount to reinstate that is just plain wrong. So virtually all notices of default are wrong which means that the required notice is defective.

You should know that many judges appear unimpressed that there was no valid assignment of the mortgage. I think that it is clearly reversible error. The assignment frequently is clearly fabricated and back-dated because of references to events that happened a year after the assignment was executed. The assignment clearly did not exist at the time of the lawsuit and the standing issue is clear under Florida law although some courts are balking at the idea that standing cannot be cured after the lawsuit. The reasoning is quite simple — if it were otherwise, you could file suit against a grocery store for a slip and fall, and the go over to the store to have your slip and fall.

In one of my cases involving multiple properties, they have an assignment that was prepared and executed by Shapiro and Fishman supposedly dated in 2007 —- but it refers to Bank of America as successor by merger to LaSalle. it is backdated, fabricated and fictional, which is to say, fraudulent.

The assignment has two problems –— FACIALLY DEFECTIVE FABRICATION OF ASSIGNMENT:  the first problem is that the alleged BOA merger with LaSalle could not have happened before 2008 — one year after the assignment was executed. So the 2007 assignment refers to a future event that was not reported by BOA until 2008, and was not approved by the Federal Reserve until 2008. On its face, then, based upon public record, the assignment is void as a total fabrication.

The second problem is that it is unclear as to how the merger could have occurred between BOA and La Salle, to wit:. you might need to read this a few times to understand the complexity of the issues involved — issues that few judges or lawyers are interested enough to master.

LASALLE ABN AMRO ACQUISITION:
Since neither entity vanished in the deal it is an acquisition and not a merger. LaSalle and ABN AMRO did a reverse merger in 2007.

That means that while LASalle was technically the acquirer, because it “bought” ABN AMRO, and ABN AMRO became a subsidiary — the reality is that LaSalle issued so many shares for the acquisition of ABN AMRO that the ABN AMRO shareholders received the overwhelming majority of LaSalle Shares compared to the former owners of LaSalle shares.

Hence in substance LaSalle Bank was a subsidiary of ABN AMRO and the consolidated financial statements show it. But in form it appears as the parent.

So if someone, like BOA, was to say they merged with or acquired LaSalle, they would also be saying that included its subsidiary ABN AMRO — and they would have to do the deal with the shareholders of ABN AMRO because those shareholders control LaSalle Bank, which brings us to CitiGroup —-

CITIGROUP MERGER WITH ABN AMRO: Also in 2007, CitiGroup announced and continues to file sworn statements with the SEC that it had merged with ABN AMRO, which means, if you followed the above, that CitiGroup actually owned LaSalle. It looks more like an acquisition than a merger to me but the wording makes it unclear. This would mean that LaSalle still technically exists as a subsidiary of  CitiGroup.

ALLEGED BOA MERGER WITH LASALLE: In 2008 the Federal Reserve issued an order approving the merger of BOA and LaSalle, in which case LaSalle vanishes — but ABN AMRO is the one with all the assets. BUT LaSalle is named as Trustee of the asset pool. And the only other allowable trustee would be another bank that merged with LaSalle as a successor without the requirement of filing more papers to be a Trustee and BOA clearly qualifies on all counts for that. Section 8.09 of PSA.

But the Federal Reserve order states that the identities of ABN AMRO and LaSalle are the same and the acquisition of one is the acquisition of the other — thus unintentionally ratifying CitiGroup’s apparent position that it owns ABN AMRO and thus LaSalle.

Findings of fact by an administrative agency are presumptively true although subject to rebuttal.

Here is the kicker: there is no further mention in any SEC filings of a merger between BOA and LaSalle, unless I missed it. There is no reference to the fact that CitiGroup controlled LaSalle and ABN AMRO at the time of the Federal Reserve order approving the BOA merger with LaSalle Bank in 2008.

CitiGroup has not, to my knowledge ever reported the sale or loss or merger of LaSalle. Since Citi made the acquisition before BOA, and since BOA apparently did not buy LaSalle from Citi, how could BOA claim to be a successor by merger with LaSalle?

Hence there are questions of fact as to whether BOA ever consummated any transaction in which it acquired or Merged with LaSalle, which while technically possible, makes no business sense. UNLESS the OBJECTIVE was to transfer the interest of LaSalle as trustee to BOA, as a precursor to a much wider deal in which BOA then sold its position as Trustee to US Bank as a  commodity and then filed in the Kalam cases a notice of substitution of Plaintiff without amending the pleadings.

US BANK Notice of Substitution of Plaintiff without Any Motion to Amend Pleadings: The reason they filed it as a notice was that they obviously did not want to allege the purchase of “being a trustee”, which would have been a contested issue in the pleadings. But the amendment is required in my opinion and there should be a motion to strike the notice of substitution of Plaintiff without amendment. The motion to strike should state that no objection to granting the order to amend, but that the circumstances should be pled and we should be able to respond with a denial and affirmative defenses if you choose.

Reuters: BOA Paid Bonuses of Target Gift Cards To Modification Employees For Steering Cases Into Foreclosure, Fired Them If They Didn’t Go After the Foreclosure

SIX FORMER BOA EMPLOYEES TESTIFY THAT BOA MODIFICATION AND FORECLOSURE SPECIALISTS WERE PAID AND INSTRUCTED TO LIE TO HOMEOWNERS, PAID WITH GIFT CARDS IF THEY SUCCESSFULLY THREW THE HOMEOWNER INTO FORECLOSURE AND WERE DISCIPLINED OR FIRED IF THEY FAILED TO TURN OVER THE REQUESTS FOR MODIFICATION INTO THE RIGHT NUMBER OF FORECLOSURES.

IF YOU WANT A MODIFICATION, YOU NEED A LAWYER TO CHALLENGE THE REPRESENTATIONS OF LOST DOCUMENTS AND INCOMPLETE APPLICATIONS FOR MODIFICATION. AND YOU ESPECIALLY NEED A LAWYER OR HUD COUNSELOR TO SUBMIT THE COVER LETTER AND THE SPECIFIC PROPOSAL FOR MODIFICATION WITH AFFIDAVITS FROM EXPERTS — (usually absent because the bank doesn’t request it). LIVINGLIES PROVIDES SUPPORT TO ANY ATTORNEY NEEDING ASSISTANCE IN DRAFTING THE COVER LETTER, AFFIDAVITS AND PROPOSAL. CALL CUSTOMER SUPPORT EAST COAST 954-495-9867 OR CUSTOMER SERVICE WEST COAST 520-405-1688 FOR PRICE QUOTES AND REQUIREMENTS. GGKW PROVIDES LEGAL SERVICES ONLY IN FLORIDA.

If you are seeking legal representation or other services call our South Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. In Northern Florida and the Panhandle call 850-765-1236. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services.

SEE ALSO: http://WWW.LIVINGLIES-STORE.COM

The selection of an attorney is an important decision  and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available TO PROVIDE ACTIVE LITIGATION SUPPORT to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field. Garfield is a partner of Garfield, Gwaltney, Kelley and White

Danielle Kelley, Esq. is a partner in the firm of Garfield, Gwaltney, Kelley and White (GGKW) in Tallahassee, Florida 850-765-1236

Our very own Danielle Kelley was quoted in a Reuters article yesterday that laid out in exquisite detail the endemic practice of lying, layering, laddering and forcing homeowners into foreclosure when a modification was better for both the homeowner and the investor. The article is by Michelle Conlin and Peter Rudegeair, Reuters, News Agency. Article carried in New York Times and other periodicals. Story picked up by several investigative reporters for in depth reports on TV, radio and other news media.

Since BOA might be successful in killing story, we produce most of it here:

The full article can be found at: FORMER BANK OF AMERICA WORKERS ALLEGE IT LIED TO HOMEOWNERS

EDITOR’S NOTE:  As we have been saying for 6 years, sometimes alone in the wilderness, this is not a conspiracy theory, it is a fact. The entire securitization scheme was a lie, a Ponzi scheme to steal trillions of dollars from the U.S. Economy, and trillions of dollars from other countries around the world.

In order to make it work, the big banks had to set up an infrastructure in which they would lie, cheat and steal, sending the profits off to other jurisdictions and covering up the crimes by using companies at each layer of the scheme who channeled a large portion of investor funds and most of the recovery from insurance, credit default swaps, and government bailouts away from the investors and away from the borrowers.

The essential capstone of the strategy was the foreclosure sale and the expiration of the right of redemption. Without it, the banks could owe as much as $25 trillion back to insurers, credit default swap counterparties, government agencies, government sponsored entities (Fannie and Freddie) and the investors who provided all the money that was used to create the largest liquidity boom in history. And then there were the extra fees for servicing a loan that was deemed non-performing (even though it was the bank who lied to homeowners telling them to stop paying). So far it has been the perfect crime.

And the underpinning of the strategy was that the banks could control the narrative — that it was about borrowers who were intentionally getting into deals they could not afford — when it was just the opposite, to wit: it was the banks acting through many layers of nominees, conduits and intermediaries whose goal was to rid themselves of the money on deposit from investors (money that should have been entirely into a REMIC trust account and never was). Much of the money successfully stolen was in the form of a second tier yield spread premium that was created in the spread between the loans that were promised to investors and the actual loans made to borrowers.

It was all a lie. The borrowers believed the lender was the lender and that the lender would not assume a high risk on a loan that was doomed to fail. The investors believed that since most of them were managed funds who were required to invest only in triple A rated securities that were insured and guaranteed that industry standard underwriting was under way. Nothing could have been further from the truth.

The Banks were lying and paying for others to lie about the property valuation, the safety of the collateral, the existence of the collateral for investors, and the existence of insurance and hedge products for the investors. They lied to investors, they lied to the press, they lied to the government agencies, they lied to the two presidents that were caught in the web of deceit, and they lied to the secretaries of the treasury.

And now, as predicted the tsunami is going the other way as the truth sloshes over all the lies they told. We start with the story of modification of loans which could have resulted on most of the foreclosed homes being modified. Now we have strong evidence from the actual people who worked for BOA and other large financial institutions that their strategy was to use the promise of modification to lure homeowners into default on loans owned by unidentified parties, and stretch out the time so that the hole dug for the homeowner was too deep to get out of, and eventually put a cap on the well that could spray liability all over the mega banks and end their existence.

PRACTICE HINT: WITHOUT EXPERTS IN E-DISCOVERY, YOU WILL BE UNABLE TO WIN YOUR CASES OR GET ENOUGH TRACTION TO FORCE MODIFICATION ON THE TERMS OFFERED BY THE BORROWER. GGKW, IN WHICH DANIELLE KELLEY IS  PARTNER, IS DEVELOPING RELATIONSHIPS WITH PRIVATE INVESTIGATORS AND FORENSIC  COMPUTER SPECIALISTS WHO ASSIST US ON MOST OF OUR CASES. WHEN YOUR GOAL IS TO WIN RATHER THAN DELAY, IT COSTS MONEY. ANTI-FORECLOSURE MILLS CHARGING LOW MONTHLY PAYMENTS ARE EFFECTIVE AT DELAYING THE FORECLOSURE BUT USUALLY INEFFECTIVE AT STOPPING IT OR EVEN WINNING THE CASE. YOU GET WHAT YOU PAY FOR.

 FOLLOW DANIELLE KELLEY, ESQ. ON HER BLOG

Significant quotes from Reuters article:

Borrowers filed the civil case against Bank of America in 2010 and are now seeking class certification. The affidavits, dated June 7, are the latest accusations over the mishandling of mortgage modifications by some top U.S. banks.

Six former Bank of America Corp (BAC.N) employees have alleged that the bank deliberately denied eligible home owners loan modifications and lied to them about the status of their mortgage payments and documents.

The bank allegedly used these tactics to shepherd homeowners into foreclosure, as well as in-house loan modifications. Both yielded the bank more profits than the government-sponsored Home Affordable Modification Program, according to documents recently filed as part of a lawsuit in Massachusetts federal court.

The former employees, who worked at Bank of America centers throughout the United States, said the bank rewarded customer service representatives who foreclosed on homes with cash bonuses and gift cards to retail stores such as Target Corp (TGT.N) and Bed Bath & Beyond Inc (BBBY.O).

For example, an employee who placed 10 or more accounts into foreclosure a month could get a $500 bonus. At the same time, the bank punished those who did not make the numbers or objected to its tactics with discipline, including firing.

About twice a month, the bank cleaned out its HAMP backlog in an operation called “blitz,” where it declined thousands of loan modification requests just because the documents were more than 60 months old, the court documents say.

The testimony from the former employees also alleges the bank falsified information it gave the government, saying it had given out HAMP loan modifications when it had not.

Mortgage problems have dogged Bank of America since its disastrous purchase of Countrywide Financial in 2008. The bank paid $42 billion to settle credit crisis and mortgage-related litigation between 2010 and 2012, according to SNL Financial.

Bank of America and four other banks reached a $25 billion landmark settlement with regulators in 2012, following a scandal in late 2010 when it was revealed employees “robo signed” documents without verifying them as is required by law.

But problems have persisted. Since 2012, more than 18,000 homeowners have filed complaints about Bank of America with the Consumer Financial Protection Bureau, a new agency created to help protect consumers. Recently, the attorney generals of New York and Florida accused Bank of America of violating the terms of last year’s settlement.

The government created HAMP in 2009 in response to the foreclosure epidemic and to encourage banks to give homeowners loan modifications, allowing some borrowers to stay in their homes.

THE BLITZ

The court documents paint a picture of customer service operations where managers roamed the floor with headsets, able to listen into any call without warning. Service representatives were told to lie to homeowners, telling them their paperwork and payments had not been received, when in reality they had.

“This is exactly what’s been happening to homeowners for years,” said Danielle Kelley, a foreclosure defense lawyer in Florida. “No matter how many times they send in their paperwork, or how often they make their payments, they simply can’t get loan modifications. They wind up in foreclosure instead.”

The former employees said they were told to falsify electronic records and string homeowners along in foreclosure as long as possible. The problem was exacerbated because the bank did not have enough employees handling modifications, adding to the backlog of cases purged during the “blitz” operations.

 

 

UTAH AG “Midnight Pardon”! Settles BofA Case and Joins Firm Representing BofA

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What’s the Next Step? Consult with Neil Garfield

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

In classic style, The revolving door between regulators, law enforcement and the Banks just keeps turning. The money is too good for the people to turn down, and it isn’t illegal to prosecute Bank of America, get into a winning position that will cost the Bank billions and give tens of thousands of homeowners relief they deserve, and then enter into a settlement agreement with BofA for pennies on the dollar and leaving homeowners in the dust. And it’s all because the Utah AG is stepping down from his official position and taking a position in a the private sector with a law firm that regularly represents Bank of America.

But maybe it it IS illegal if someone takes a closer look. If the new position is a bribe, the AG should be prosecuted criminally, removed from office now and disbarred.

“Just days before leaving office, Attorney General Mark Shurtleff has reversed the state’s position and personally signed on to a settlement in a foreclosure lawsuit that Bank of America appeared to be losing.

The practical effect of Shurtleff’s move, according to an attorney who filed the lawsuit, is to weaken Utah’s ability to enforce state law. It also weakens the state’s position in other lawsuits challenging foreclosures carried out by ReconTrust Co., Bank of America’s foreclosure arm, Abraham Bates said.”

“U.S. District Judge Bruce Jenkins, who presides over the case, issued a strong ruling in favor of the homeowners’ and the state’s position. The assistant attorneys general conducting the state’s case hoped to keep it alive for a final ruling by Jenkins before a likely appeal to the 10th Circuit Court of Appeals for a definitive decision that would guide other similar lawsuits.”

Midnight Pardon for Bank of America

Hat Tip to Home Equity Theft Reporter

 

Another Pennies on the Dollar Settlement

Editor’s Note: like the post before this one, it is astonishing how these settlements fall so far short of the actual damage that was created by the banks by their intentional illicit and criminal behavior.

This one “relates to conduct at Greenwich Capital, the R.B.S. unit that bundled mortgages into securities and sold them to investors. Nevada found that R.B.S. worked closely with Countrywide Financial and Option One, two of the most aggressive lenders during the boom.” They were categorized as sub-prime even if the borrower was not sub-prime. That way they loaned less of the investor money at a higher nominal rate, charged the borrower for additional underwriting risk when there was no underwriting at all, and kept the excess interest, the excess funding that should  have gone into standard loans properly underwritten according to industry standards.

The trap was teaser rates that borrowers could never decipher: “From 2004 through 2006, R.B.S. packaged $90 billion of these loans, many originated by Countrywide. The mortgages typically began with an artificially low interest rate that rose significantly after a year or two. Under the terms of these loans, borrowers could choose to pay only a fraction of what they owed monthly, resulting in a rising principle balance.”

And the media is all about how the housing problem is ending. That is nonsense. It is coming to a head, but the peak won’t be until perhaps 2014.

Bank Settles Over Loans in Nevada

By

The Royal Bank of Scotland agreed to pay $42.5 million late Tuesday in a settlement with the Nevada attorney general that ends an 18-month investigation into the deep ties between the bank and two mortgage lenders during the housing boom.

Most of the money paid by R.B.S. — $36 million — will be used to help distressed borrowers throughout Nevada. In addition, R.B.S. agreed to finance or purchase subprime loans in the future only if they comply with state laws and are not deceptive.

The settlement between the bank and Catherine Cortez Masto, Nevada’s attorney general, relates to conduct at Greenwich Capital, the R.B.S. unit that bundled mortgages into securities and sold them to investors. Nevada found that R.B.S. worked closely with Countrywide Financial and Option One, two of the most aggressive lenders during the boom.

Officials working with Ms. Masto say that they examined R.B.S.’s activities from 2004 to 2007. During those years, the bank provided funding for more than $100 billion of risky loans, many made by Countrywide and Option One. In 2005 and 2006, R.B.S. was the third-largest securitizer of subprime mortgages and adjustable-rate loans.

“I remain committed to enforcing Nevada’s laws against the players — including those on Wall Street — that contributed to and profited from reckless and deceptive mortgage lending in Nevada,” Ms. Masto said in a statement. “The payment from R.B.S. will alleviate some of the injury to the Silver State and its residents. The changes to its securitization process should help make sure that we do not go down this road again.”

In agreeing to the settlement, R.B.S. neither admitted nor denied the acusations.

During the investigation, Nevada officials examined more than one million pages of documents and interviewed former R.B.S. employees and borrowers. Ms. Masto’s office concluded that the bank had essentially created joint ventures with Countrywide and Option One and that its financing enabled those lenders to make reckless loans that were unlikely to be repaid.

The attorney general also examined whether R.B.S. reviewed the mortgages bought from Countrywide and concluded that the bank bundled and sold loans even after identifying them as problematic. Moreover, at Countrywide’s request, the bank limited the number of loans it reviewed, the attorney general’s office said.

Nevada has been hit hard by the foreclosure crisis. Some 60 percent of borrowers in the state have mortgages of greater value than the properties underlying them, according to Core Logic, a real estate data company.

Ms. Masto’s case comes after several others brought recently by state regulators against firms involved in mortgage securities. Earlier this month, the New York attorney general sued Bear Stearns over its conduct during the boom, and last week, the Massachusetts securities regulator sued Putnam Advisory, a unit of Putnam Investments, for misleading investors who bought a collateralized debt obligation it was managing. Officials at both firms rejected the allegations and said they would vigorously defend themselves in court.

Some securities lawyers say that it is easier for state officials to bring successful actions against banks for questionable activities than it is for federal investigators. That is mostly because of stringent requirements under federal securities laws.

“This strategy sidesteps the need to prove intent to defraud and to detail fraud allegations as is required for similar actions under the federal securities laws,” said Lewis D. Lowenfels, an authority in securities law in New York. According to the Nevada attorney general’s office, R.B.S. was among the larger bundlers of a risky type of loan known as a pay-option adjustable-rate mortgage. From 2004 through 2006, R.B.S. packaged $90 billion of these loans, many originated by Countrywide. The mortgages typically began with an artificially low interest rate that rose significantly after a year or two. Under the terms of these loans, borrowers could choose to pay only a fraction of what they owed monthly, resulting in a rising principle balance.

R.B.S. also worked hard to keep Countrywide generating loans for the bank’s securities, investigators said.

Ms. Masto’s office said that R.B.S.’s mortgage funding operation was widespread across Nevada, which is why most of the settlement will go to borrowers who have suffered harm.

BOA Preparing For Something? 150,000 second liens are released.

150,000 people are receiving letters now telling them that their second tier mortgages are “eliminated.” Whether BOA has the authority to do this depends upon whether they are the creditor in those loans. They may be the creditor in some of them but I suspect that the loans cannot be proven in any chain of title, chain of documents or chain of money transfers.

It eliminates, the possibility that the second tier mortgage holder could move into first position — if this is really effective — in the event that the first tier mortgage is shown to have been defective —- i.e., that the mortgage lien was never perfected. It also clears the way for short-sales that might leave the short-seller handing with one lender saying yes and the other saying no.

The announcement says that the entire unpaid principal balance will be eliminated from their BofA owned OR SERVICED second tier mortgage. It is a strange announcement. If they are only the servicer, and they do not reference getting authority from the creditor, there is the probability that this is an admission that at least the second tier mortgages were somehow satisfied through other means — insurance, credit default swaps or federal bailouts.

The second strange thing is the statement from BofA that if the first mortgage is in foreclosure, then the foreclosure activities MAY continue. This should put all 150,000 homeowners on notice that BofA has some doubts about whether they can prove up a foreclosure using any means or the names of any parties.

We already know that there are tens of thousands of mortgages, notes and obligations that the megabanks cannot track. They have no idea who owns the loans. This is one of the steps taken to try to clean up the mess and stay ahead of regulators who might force a write-down of all mortgage related “assets” on their balance sheet.

And the third thing about this is the argument that only “deserving” homeowners should be getting relief. The preliminary estimate is that this amounts to more than $4.5 billion in mortgages being extinguished. This attempt to potentially ward off a tidal wave of strategic defaults may work in part, but it puts the homeowners on notice that the bank doubts that they can hold into the obligation given the facts that are now in the public domain. Strategic defaulters might just turn into strategic fighters smelling blood. And maybe lawyers will finally get the notion that these cases are winnable if presented correctly and by strictly adhering to the rules of evidence.

Bank of America to Extinguish up to 150,000 Second Liens,” HousingWire (Oct. 1, 2012)

BOA’s Recontrust Thrown Out of Washington State as Substitute Trustee

Editor’s Note: Same caveat as before — this consent ruling, although potentially persuasive to other courts is not evidence of the violations in and of itself, but provides a good pep talk to attorneys out there who are too timid to make statements about the treachery in the acts of the Bank of America, and all others who use the ‘substitution of trustee” as a vehicle to foreclose on properties.

Second caveat: this does not mean that the mortgages are invalid which is a separate subject. Nor does it necessarily mean that Joe Banker (see prior post) has problems when it comes to identifying the creditor and establishing the status of the loan receivable account (primarily because no such account exists, except at the subservicer level which is at best only a partial snapshot of the entire list of transactions concerning each loan subject to claims of securitization.

What it DOES mean is that Recontrust is not doing business in Washington anymore and can’t come back. If it wants to come back, and alternatively one might infer if ANYONE wants to be a substitute trustee or foreclosing trustee, they must meet the following requirements:

1. Maintain physical presence in the State with adequate staffing and knowledgeable people who can actually answer substantive questions about the loan status or so-called default status.

2. The office must be authorized to accept payments to reinstate a mortgage.

3. The office must be authorized in all respects to postpone, reschedule or cancel the foreclosures (this taking out the layers of corporate bureaucracy) which means that someone with real decision-making authority must be physically present in the office during normal business hours.

4. Discloses the contact information for the State office to the borrower.

5. Identifies the actual creditor with a loan receivable that is due and the same information for the authorized servicer for that loan.

6. Provides proof that the “note holder” actually has an enforceable interest. That means they must show and prove the existence of the actual loan receivable and the person or entity to whom the obligation is owed.

7. Applies fees and costs only as allowed by law.

8. Acts in good faith toward the borrower. “For purposes of this Consent Judgment only, it is a breach of good faith to enter into an agreement with a note owner, beneficiary or its agent wherein Defendant agrees to stop or postpone a foreclosure only when approved by the note owner, beneficiary or agent, or to defy solely to a single party when acting as a trustee.” [That is because it is a breach of the statutory duties of the trustee to bind itself contractually to following the orders of the beneficiary only and not include the duties of good faith toward the Trustor].

9. They cannot act as both trustee and beneficiary. [Implication: if the Trustee that is substituted is owned or controlled, contractually or otherwise, by the beneficiary they may not serve as Trustee.]

10. Trustees cannot only refer to defaults in fact, not as reported. What this means in terms the degree of due diligence required is yet to be determined.

see WA-Recontrust Consent Decree

BOA DEATH WATCH: Ironic Twist for Zombie Banks

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CITI and BOA Headed for Extinction

Editor’s Notes and Analysis:  

The bottom line here is that I have yet another prediction and I am just as certain of this as the ones Brad Keiser and I issued in September, 2008. Actually it is the same prediction all over again and for pretty much the same reason. I am not just boasting when I say that every single prediction, description and process I have been writing about has turned out to be dead on right despite the jeers it received when published. I actually have some people running through the books and the more than 3,000 Blog Articles to list those predictions, give you the cite, and describe the outcome.

In, 2007 when the DOW was around 14,000 I predicted that it would crash with a low in the 5,000 range, a rebound and then equilibrium in the 7,000 range. If you don’t want to wait for our article on our predictions and their accuracy, go look it up for yourself right here on this blog. And the reason was that the banks were playing a trick on the market and our society. They were merely the conduit for a financial transaction between investor lenders and the homeowner borrowers. They had forced appraisals into uncharted territory that we won’t see again for at least 30-40 years.

The trick was that they created a paperwork trail that they controlled absolutely, and financial trail of self-dealing that remains hidden to this day. Those deals are now dead branches hanging off of a dead tree. By originating the loans with “bankruptcy remote” vehicles the banks made it appear as though the transaction was set in stone (or rather on paper) and the appearance of the documents was like any other real estate transaction — so even seasoned professionals (at first) didn’t have a clue what was going on).

The paperwork was all about a story of a financial transaction that never happened. With very few exceptions none of the terms, conditions and recitals in the promissory note, mortgage (Deed of Trust), Settlement statement (HUD-1), Good Faith Estimate (GFE) or other disclosures  had any basis in fact. There was no financial transaction between the named parties. Consumers take out loans all the time with the assumption that the originator of the loan is the creditor in the transaction and that they are getting money or value from that originator.

Consumers also assume that the terms of repayment offered to the lender were the same as the terms offered to the borrower. And therefore the consumers assume that if the “Loan” is secured on personal property or real property, that the collector calling them  has every right to demand payment and enforce the repossession of the personal property or the foreclosure of the real property. But this wasn’t the case.

The investor lenders took it as an article of faith that banks with reputations dating back into the 1800’s wold want to keep that reputation intact. In fact the quasi public rating agencies made the same assumption. And everyone assumed that NOBODY would want to make a loan that was required to fail in order for the banks to make the ungodly amounts of money they made.

As we predicted over the last 3 years, the ratings of the big banks that led the way down the securitization rabbit hole, are headed toward junk status. As one article in the New York Times puts it, think about what would happen to your life if your credit rating went from 850 to 600 or lower. The debts of the major banks have now been reduced to near junk status and they are still headed down.

The reason these rating agencies have struck down the ratings is that they too were tricked at the front end when they gave investment grade ratings for pension funds to invest — without such ratings, the pension funds, City operating funds, sovereign wealth funds, were not allowed to make the purchase. So the game was on at the beginning to buy their way into the agencies with fishing trips and other inducements and threats, to get the rating necessary in order to receive money from public and private pension funds and trusts.

Now those rating companies have done what they should have done at the beginning. If they had done the due diligence, the entire scheme would have failed on the front end, and if the appraisers were more strictly regulated under threat of huge penalties and liabilities, the transactions would have failed on the back end.

As stated on these pages for months, these big banks are neither big nor banks. They claimed ownership of loans for the sole purpose of trading an ever widening tree of what were once legitimate hedge products wherein an investor protects themselves as to risk of loss by paying a premium that will reduce the return they’re getting but virtually eliminates the possibility of risk.

With loans, it was a simple proposition. Armed with a Triple A rating from the ratings companies, investment bankers sold loans, bundles and bonds forward when there was nothing to sell. Armed with fraudulent appraisals, documents, and disclosures, originators would offer fictitious loan products that bore no relationship to the loans offered to the lenders.

Now the rating companies have examined the books, records and process of these loans and arrived at the same conclusion we reached in 2008. None of these loans were owned by the banks, none of the obligation was subject to any documentation in favor of the actual lenders, and the “assets” on the books are pure fairy tails because they never owned the loans or the bonds. And because of a rule that allows banks to report markdowns for assets held in the United Stated states, but allows them to ignore the write-downs for “foreign” investments, they are able to lie about the assets nd ignore the incredibly huge liabilities facing these banks.

BOA is  dead man walking masquerading as what was once a bank. It cannot recover. Neither can Citi, and there is a big question mark over JP Morgan Chase. Two Banks are about to fall like the twin towers — BOA and Citi. Besides a total loss for the shareholders and most of the creditors, it will release millions of homes from the threat of foreclosure and allow for recovery of millions of homes that were illegally foreclosed. The rating agencies have realized that the foreclosures were merely a device to mask the loss and throw it onto investor lenders. But the rating agencies understand fully now that the pension fund would be violating law and contract by taking loans already declared in default. So for the lawyers out there — there was an offer, no acceptance (nor any possibility of acceptance), and no consideration for the transaction the banks want to use to pitch the loss onto the investor.

That loss cannot be thrown onto the investors because the deal the investors bought was not executed. They didn’t get a good loan within 90 days. Now when a Judge enters a foreclosure order or judgment, the Judge doesn’t realize that he has opened a can of worms. because the main interest (the loss of real creditors) was just litigated without notice or the ability to appear. And the implication of each such order and judgment is that the loan actually made it into a pool, when there were no pools, there are no pools, and the money the dealers took from the government (a) should have been paid to the investors (b) should have been paid only to the extent of their loss — not a multiple payment when the loan or “pool” failed and (c) and those payments (over leveraged in every case) exceeded the amount of the loan to the borrower or the obligation to the investor.

By entering that order, the Judge is saying to investors that THEY are deadbeats unworthy of due process. By entering that order, the Judge has ruled that contrary to the provisions of the pooling and servicing agreement, prospectus and the Internal revenue Code, he is making a factual and permanent finding that the investor must NOW accept and did accept a defaulted loan that would have been rated below junk.

There is an old expression that applies here. “You can’t pick up one end of the stick without picking up the other.” You can’t screw the homeowner borrowers also without screwing the investors — pension funds etc.. The rating agencies have come to what is a startling conclusion for them — the assets are not real and the liabilities are grossly understated. The rating for these “banks” is about to be cut to junk status or below. Citi and BOA are headed for extinction sometime in the next 6 months (last time we said 6 months it was 6 weeks, when we predicted the fall of the banks, and the order in which they would fall).

So that is the prediction — no matter who is elected to the White House or Congress or legislatures or state law enforcement the banks and the regulators stepped on a rake in 1998 and it is now coming up to bash their head into tiny pieces that more than 7,000 performing and conforming banks are ready and willing to clean up. BOA and Citi are done.

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Mass Supremes Declare Note and Mortgage Must Be Owned by Same Party

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We disagree that § 14 is unambiguous. The section is one in a set of provisions governing mortgage foreclosures by sale, and that set in turn is one component of a chapter of the General Laws devoted generally to the topic of foreclosure and redemption of mortgages. The term “mortgagee” appears in several of these statutes, and its use reflects a legislative understanding or assumption that the “mortgagee” referred to also is the holder of the mortgage note.

Editor’s Analysis:  Hat tip to stopforeclosurefraud.com. And a special hat tip to Fr. Emmanuel Lemelson, who is a Greek orthodox Priest, and author of the article below. I add the editorial comments of the blog site because they are exactly on point.

First, let’s note that the Court tried to limit the effect of its ruling to future foreclosure actions and possibly those already in process. But the attempt fails because of their acknowledgment that foreclosure is not a single event but rather a process in which several elements must be present to conclude the matter. That process includes:

  1. Declaring a default and demanding a payment that is plainly wrong after taking into account the financial transactions of the Master Servicer and thus the one true creditor. As a fraud upon the court, this opens the door to going back retroactively and attacking the notice.
  2. Commencing foreclosure proceedings. Just because you are allowed to initiate a foreclosure by court order (Motion to Lift Stay) or appellate decision, doesn’t make you a creditor who can submit a credit bid at auction.his is the Achilles heal of the 5 million preceding foreclosures and all of the ones planned for the future.
  3. The court clearly states that the statutes and case law allowing the initiation of foreclosure proceedings are restricted by other statutes and legislative assumptions. The requirement of holding both the note and mortgage as owner is phrased in terms of redemption; but the logic also applies to the credit bid submitted in lieu of a cash bid at the sham auction of the property.
  4. A credit bid by definition can only be submitted and accepted if it comes from the secured creditor in the transaction that originated the paperwork giving rise to all the false claims of securitization and assignments. Thus a bid received by a party other than the secured creditor listed on the paperwork is no bid at all. We call that lack of consideration. hence the auctioneer had no choice but to ignore the “credit bid” and move on to cash bids, which is why I tell people to go to their auctions and make a bid. They should also register an objection in writing that the auction is unauthorized and fraudulent, and deny the debt, obligation, note, mortgage, default etc. If there was no cash bid, then the property is still owned by the homeowner, the deed in foreclosure should be set aside, and this new decision might apply to renewal of foreclosure proceedings.
  5. In Bankruptcy the Motion to Lift stay need only be supported by some colorable right to proceed in foreclosure. From now on unless the party can establish that it has possession and ownership of the note, they have no right to get relief from automatic stay because they have no right to submit a credit bid.
  6. The reference to redemption raises interesting issues. While the court waffled and more or less came down on the side of the banks as to prior completed foreclosures, there is still an attack left standing under the old law and the new law. How can you redeem, modify mediate or even litigate where the true creditor’s identity is being intentionally withheld from the borrower and the court? The right of redemption thus becomes a doorway to reopen the title question. If accompanied by valid causes of action for fraudulent and predatory lending, slander of title etc. the redemption price cold be reduced to zero or less — giving the homeowner both the title and possession of his home plus a monetary award.
  7. If the auction was conducted improperly and the deed issued without consideration then it follows that the eviction must be overturned as well.
  8. Hence, CAVEAT EMPTOR to those looking for bargain homes where the home is alleged to be owned as REO property or the property is being subjected to a short sale where the “prior” fraudulent mortgage is paid off to a stranger to the transaction who issues an invalid release and satisfaction.
  9. The main point is that Massachusetts foreclosures are now likely to come to a dead stop, which will have rippling effect throughout the world of mortgages, foreclosure and finance. This in turn will reveal that the assets carried on the books of the mega banks are fictitious. As those facts are revealed, BOA and Citi, as well as other banks are going to take another brutal hit on their credit ratings — enough to finish off BOA and Citi and maybe one or two others.

Watch later for our article on warnings to those purchasing US properties investment or retirement. You might well be the victim of another scam perpetrated by Wall Street.

Henrietta Eaton and the Boston Foreclosure Party

By Fr. Emmanuel Lemelson

To read entire article go to:

Henrietta Eaton and the Boston Foreclosure Party


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Everyone Else Knows: Why Do We Continue To Ignore It?

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Editor’s Comment:

In a short article by Patrick Jenkins in the Financial Times (Doubts Over Lending Push), it seems that everyone in Europe understands the problem well, and that the the consequences are dire but are unsure about what to do about it. Here in the United States housing is the elephant in the living room that nobody really wants to talk about. European leaders don’t like talking about it either but they are doing it anyway. Maybe they actually care what happens next unlike American politicians who seem to enjoy creating catastrophes, then handing power over to the other party and blaming them for the results.

Mitt Romney and Barack Obama are battling it out over economic policies and whether lower taxes and fiscal stimulus will benefit the economy. Mitt wants to cut what is left of federal and state spending thus deepening the depression or recession or whatever it is. Barack wants to stimulate economic growth with more money. How about this: they are both wrong. And the Europeans, for all their chaotic political intrigues, are zooming in on the cure a lot faster than we are because we won’t even talk about it.

Both candidates seem to think that cheaper money and more of it delivered to the banks and large corporations will stimulate borrowing and commerce. But Graeme Leach, chief economist at the Institute of Directors boiled it down to one simple sentence: “Companies alarmed by the euro crisis will not be eager to borrow, regardless of the cost.” It is obviously obvious to anyone with a brain that companies are not going to borrow unless they think they need the money.

And they are not going to think they need the money unless demand is going up. With unemployment topping out near Great Depression levels, why would anyone think that commerce can be revived? Add in the fact that real wages have declined over the last 30 years and you can easily see why companies won’t borrow unless they think they can make money increasing their debt burden. Who does the buying — fairies? It’s consumers, stupid, and they are broke, tapped out on credit, and have very little confidence in their prospects.

The Europeans actually understand that there is a difference between the real economy and the one reported in the newspapers. The real one is where a strong middle class has savings and resources and they buy things. The one in the newspapers is all about paper and trades with companies buying and selling each other and “bets” being made on who is right about bonds, stocks and other crazy financial “innovations.”

Virtually half of the GDP published by Washington is made up of paper trades where the typical citizen is left out of the equation altogether. So here is a repeat of my prediction regarding the stock market: either it will “crash” in a correction that is congruent with actual commerce levels or the financial institutions and rating agencies will continue to rate and recommend securities of companies whose substance is gone —- called zombies in the FI article.

BOA is one such Zombie institution. It’s broke. Everyone knows it’s broke and yet they persist on pretending that it is just fine. Then they want consumers to express confidence in the economy or government. Why should they?

Everyone understands that the problem is housing and the fraudulent printing of “money” by private banks dwarfing any real money supply that is supplied by world governments. $700 TRILLION is traded as cash equivalents while world governments, even with quantitative easing have issued less than $70 TRILLION in real currency. Why would anyone think that taxes or stimulus or quantitative easing (printing money) could even nick the side of this barn. We are being forced to sustain a false tree of money on which thousands of branches are hanging onto a trunk that is not there and never was. Fear is now the dominant word that describes the behavior of world leaders and the leaders of central banks.

Here is the solution and it is the application of justice at the same time: since the mortgage papers contained lies and did not disclose the identity of the lender nor the actual terms of repayment, there is no law in existence that would allow such a transaction to become  an encumbrance on the land.

Add to that the fact that the transaction recited never took place because the borrower was actually doing business with a stranger where money DID exchange hands but was never documented, and you have the answer: the mortgages are invalid, the notes are invalid and the the banks having been already paid several times over for a loss they never incurred but instead foisted upon pension funds and sovereign wealth funds from other nations, let’s call it a day.

I don’t care if people get an unfair advantage or perk for being a victim in this scheme. I don’t care if this interferes with the ideology of personal responsibility (which is being ignorantly applied to this situation). I care about the country, our society and what will happen if our economy can’t come up off the ground. I care that too many people are underemployed or unemployed. I care that average savings are zero and that most Americans have suffered a grievous loss of wealth.

I care that there are not enough people to buy things because they don’t have any money. Rescind the so-called mortgage transactions, let the branches of derivatives and credit default swaps and other bets and enhancements fall to the ground. It’s not as bad as you think. Most of the bets settle out to zero exchanges because with certain exceptions the bets are balanced.

The world will not end if we give homeowners their homes free and clear of any encumbrance. The governments could even prosper if they took an interest in those mortgages they already purchased (or think they purchased) and imposed a fair mortgage with fair terms based upon realistic current market conditions in housing and finance. Then people would be returned to their former status in far less time, the rate of commerce would improve, the real economy would recover and the fake economy and the people who go with it can take a hike or go to jail, if we dare to put them there.

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Another Ruse: Realtors Gleeful over Equator Short Sale Platform

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Editor’s Comment:

Banks have adopted a technology platform to process short sale applications. It is called Equator, presumably to imply that it equates one thing with another, and produces a result that either gives a pass or fail to the application. In theory it is a good thing for those people who want to save their homes, save their credit (up to a point) and move on. In practice it essentially licenses the real estate broker to take control over the negotiations and police the transactions so that the new “network” rules are not violated. This reminds me of VISA and MasterCard who control the payment processing business with the illusion of being a quasi governmental agency. Nothing could be further from the truth, but bankers react to net work threats as though the IRS was after them.

Equator is meant as another layer of illusion to the title problem that realtors and title companies are trying to cover up. The short sale is getting be the most popular form of real estate sale because it is a form of principal reduction where there is some face-saving by the banks and the borrowers. The problem is that while short sales are a legitimate form of workout,  they leave the elephant in the living room undisturbed — short sales approved by banks and servicers who have neither the authority nor the interest in the loan to even be involved except as an agent of Equator but NOT as an agent of the lenders,  if they even exist anymore.

So using the shortsale they get the signature of the borrower as seller which gives them a layer of protection if they are the bank or servicer approving the short-sale. But it fails to cure the title defect, especially in millions of transactions in which Nominees (like MERS and dummy originators) are in the chain of title. 

The true owner of the obligation is a group of investor lenders who appear to have only one thing in common— they all gave money to an investment bank or an affiliate of an investment bank, where it was divided up and put into various accounts, some of which were used to fund mortgages and others were used to pay fees and profits to the investment bank on the closing of the “deal” with the investor lenders. As far as the county recorder is concerned, those deposits and splits are nonexistent. 

The investor lenders were then told that their money was pooled in a “Trust” when no such entity ever existed or was registered to do business and no attempt was made to fund the trust. An unfunded trust is not a trust. This, the investor lenders were told was a REMIC entity.  While a REMIC could have been established it never happened  in the the real world because the only communications between participants in the securitization chain consisted of a spreadsheet describing “closed loans.” Such communications did not include transfer, assignment or even transmittal or delivery of the closing papers with the borrower. Thus as far as the county recorder’s office is concerned, they still knew nothing. Now in the shortsales, they want a stranger the transaction to take the money and run — with no requirement that they establish themselves as creditors and no credible documentation that they are the owner of the loan.

This is another end run around the requirements of basic law in property transactions. They are doing it because our government officials are letting them do it, thus implicitly ratifying the right to foreclose and submit a credit bid without any requirement of proof or even offer of proof.

It gets worse. So we have BOA agreeing to accept dollars in satisfaction of a loan that they have no record of owning. The shortsale seller might still be liable to someone if the banks and servicers continue to have their way with creating false chains of ownership. But the real tragedy is that the shortsale seller is probably getting the shaft on a false premise — I.e, that the mortgage or deed of trust had any validity to begin with. 

The shortsale Buyer is most probably buying a lawsuit along with the house. At some point, the huge gaps in the chain of title are going to cause lawyers in increasing numbers to object to title and demand that it be fixed or that the client be adequately covered by insurance arising from securitizatioin claims. Thus when the shortsale Buyer becomes a seller, that is when the problems will first start to surface.

Realtors understand this analysis whereas buyers from Canada and other places do not understand it. But realtors see shortsales as the salvation to their diminished incomes. Thus most realtors are incentivized to misrepresent the risk factors and the title issues in favor of controlling the buyer and the seller into accepting pre-established criteria published by the members of Equator. It is securitization all over again, it is MERS all over again, it is a further corruption of our title system and it is avoiding the main issue — making the victims of this fraud whole even if it takes every penny the banks have. Realtors who ignore this can expect that they and their insurance carriers will be part of the gang of targeted deep pockets when lawyers smell the blood on the floor and go after the perpetrators.

Latest Changes to The Bank of America Short Sale Process

by Melissa Zavala

When processing short sales, it’s important to know about how each of the lending institutions handles loss mitigation and paperwork processing. If you have done a few short sales in Equator with different lenders, you may see what while your same Equator account is used for all your short sales at all the lending institutions, each of the servicers uses the platforms in a different manner.

Using the Equator system

When processing short sales, it’s important to know about how each of the lending institutions handles loss mitigation and paperwork processing. Many folks already know that Equator is the online platform used by 5 major lenders (Bank of America, Wells Fargo, Nationstar, GMAC, and Service One). If you have done a few short sales in Equator with different lenders, you may see what while your same Equator account is used for all your short sales at all the lending institutions, each of the servicers uses the platforms in a different manner.

And, my hat goes off to Bank of America for really raising the bar when it comes to short sale processing online. And, believe me, after processing short sales with Bank of America in 2007, this change is much appreciated.

New Bank of America Short Sale Process

Effective April 13, 2012, Bank of America made a few major changes that may make our short sale processing times more efficient.  The goal of these changes is to make short sale processing through Equator (the Internet-based platform) at Bank of America so efficient that short sale approval can be received in less than one month.

First off, Bank of America now requires their new third party authorization for all short sales being processed through the Equator system. Additionally, the folks at Bank of America will be working to improve task flow for short sales in Equator by making some minor changes to the process.

According to the Bank of America website,

Now you are required to upload five documents (which you can obtain at www.bankofamerica.com/realestateagent) for short sales initiated with an offer:

  • Purchase Contract including Buyer’s Acknowledgment and Disclosure
  • HUD-1
  • IRS Form 4506-T
  • Bank of America Short Sale Addendum
  • Bank of America Third-Party Authorization Form

And, now, you will have only 5 days to submit a backup offer if your buyer has flown the coop.

The last change is a curious one, especially for short sale listing agents, since it often takes awhile to find a new buyer after you learn that the current buyer has changed his or her mind.

Short sale listings agents should be familiar with these changes in order to assure that they are providing their client with the most efficient short sale experience possible.


AP Fannie, Freddie and BOA set to Reduce Principal and Payments

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Editor’s Comment:

Partly as a result of the recent settlement with the Attorneys General and partly because they have run out of options and excuses, the banks are reducing principal and offering to reduce payments as well. What happened to the argument that we can’t reduce principal because it would be unfair to homeowners who are not in distress? Flush. It was never true. These loans were based on fake appraisals at the outset, the liens were never perfected and the banks are staring down a double barreled shotgun: demands for repurchase from investors who correctly allege and can easily prove that the loans were underwritten to fail PLUS the coming rash of decisions showing that the mortgage lien never attached to the land. The banks have nothing left. BY offering principal reductions they get new paperwork that allows them to correct the defects in documentation and they retain the claim of plausible deniability regarding origination documents that were false, predatory, deceptive and fraudulent. 

Fannie, Freddie are set to reduce mortgage balances in California

The mortgage giants sign on to Keep Your Home California, a $2-billion foreclosure prevention program, after state drops a requirement that lenders match taxpayer funds used for principal reductions.

By Alejandro Lazo

As California pushes to get more homeowners into a $2-billion foreclosure prevention program, some Fannie Mae and Freddie Mac borrowers may see their mortgages shrunk through principal reduction.

State officials are making a significant change to the Keep Your Home California program. They are dropping a requirement that banks match taxpayers funds when homeowners receive mortgage reductions through the program.

The initiative, which uses federal funds from the 2008 Wall Street bailout to help borrowers at risk of foreclosure, has faced lackluster participation and lender resistance since it was rolled out last year. By eliminating the requirement that banks provide matching funds, state officials hope to make it easier for homeowners to get principal reductions.

The participation by Fannie Mae and Freddie Mac, confirmed Monday, could provide a major boost to Keep Your Home California.

Fannie Mae and Freddie Mac own about 62% of outstanding mortgages in the Golden State, according to the state attorney general’s office. But since the program was unveiled last year, neither has elected to participate in principal reduction because of concerns about additional costs to taxpayers.

Only a small number of California homeowners — 8,500 to 9,000 — would be able to get mortgage write-downs with the current level of funds available. But given the previous opposition to these types of modifications by the two mortgage giants, housing advocates who want to make principal reduction more widespread hailed their involvement.

“Having Fannie and Freddie participate in the state Keep Your Home principal reduction program would be a really important step forward,” said Paul Leonard, California director of the Center for Responsible Lending. “Fannie and Freddie are at some level the market leaders; they represent a large share of all existing mortgages.”

The two mortgage giants were seized by the federal government in 2008 as they bordered on bankruptcy, and taxpayers have provided $188 billion to keep them afloat.

Edward J. DeMarco, head of the federal agency that oversees Fannie and Freddie, has argued that principal reduction would not be in the best interest of taxpayers and that other types of loan modifications are more effective.

But pressure has mounted on DeMarco to alter his position. In a recent letter to DeMarco, congressional Democrats cited Fannie Mae documents that they say showed a 2009 pilot program by Fannie would have cost only $1.7 million to implement but could have provided more than $410 million worth of benefits. They decried the scuttling of that program as ideological in nature.

Fannie and Freddie last year made it their policy to participate in state-run principal reduction programs such as Keep Your Home California as long as they or the mortgage companies that work for them don’t have to contribute funds.

Banks and other financial institutions have been reluctant to participate in widespread principal reductions. Lenders argue that such reductions aren’t worth the cost and would create a “moral hazard” by rewarding delinquent borrowers.

As part of a historic $25-billion mortgage settlement reached this year, the nation’s five largest banks agreed to reduce the principal on some of the loans they own.

Since then Fannie and Freddie have been a major focus of housing advocates who argue that shrinking the mortgages of underwater borrowers would boost the housing market by giving homeowners a clear incentive to keep paying off their loans. They also say that principal reduction would reduce foreclosures by lowering the monthly payments for underwater homeowners and giving them hope they would one day have more equity in their homes.

“In places that are deeply underwater, ultimately those loans where you are not reducing principal, they are going to fail anyway,” said Richard Green of USC’s Lusk Center for Real Estate. “So you are putting off the day of reckoning.”

The state will allocate the federal money, resulting in help for fewer California borrowers than the 25,135 that was originally proposed. The $2-billion program is run by the California Housing Finance Agency, with $790 million available for principal reductions.

Financial institutions will be required to make other modifications to loans such as reducing the interest rate or changing the terms of the loans.

The changes to the program will roll out in early June, officials with the California agency said. The agency will increase to $100,000 from $50,000 the amount of aid borrowers can receive.

Spokespeople for the nation’s three largest banks — Wells Fargo & Co., Bank of America Corp. and JPMorgan Chase & Co. — said they were evaluating the changes. BofA has been the only major servicer participating in the principal reduction component of the program.

Hiding Behind Advice of Counsel No Better Than Ratings

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Editor’s Comment:

In an article entitled “Legal Beagles in Cross Hairs” WSJ reports that the SEC and many others in law enforcement have on-going investigations into the role of attorneys not misconduct of their clients. For the most part it is an attorney’s solemn duty to represent and advocate the position of his or her client to the utmost of their ability without violating the law. Everyone is entitled to a lawyer no matter how reprehensible their conduct might have been when they committed the act.

But the SEC seems to be leading the way, starting with indictments and convictions of attorneys that kicks aside the clients’ defense of “I did it on advice of counsel.” in wide ranging probes law enforcement agencies are after the attorneys who said it was OK — upon receiving lavish payments, that what the Banks did in setting the securitization structure for the cash trail and setting up the securitization procedure for the document trail and then setting up the contents of the documents that would provide coverage for intentional acts of theft, forgery, fabrication and a variety of other acts.

The attorneys who gave letters of opinion to the investment banks blessing securitization of home and commercial mortgages as they were presented and launched are in deep hot water. This is especially true since the law firms that engaged in these “blessings” had lawyers quitting their jobs leaving behind memorandums to the partners that the law firm itself was committing crimes. The similarity between the blessing of the law firm and the ratings of Moody’s, S&P, Fitch is surprising to some people.

And the attorneys who suggested severance settlements conditioned on employed lawyers or other witnesses on a sudden onset of amnesia are also in the cross-hairs, getting stiff long-term sentences. These are all potential witnesses in what could be come nationwide probes that were blocked by “advice of counsel” claims and brings to mind those many cases where the lawyer for Wells, US Bank, or BOA was fined and sanctioned for lying to the court about facts which they most certainly knew or should have known — like the name of their client.

As these probes continue it may be seen as scapegoating the attorneys or as chilling the confidentiality of the relationship between lawyer and client. But that rule of confidentiality and the defines of advice of counsel vanishes when the conduct of the attorney or indeed a whole law firm is that of a co-conspirator. It is especially unavailable when you have a foreclosure mill that is forging, fabricating and filing documents on behalf of extremely well paying clients.

It would therefore seem to be an appropriate time to file complaints with law enforcement including police and regulatory authorities that are well-written, honed down to a sharp point and which attach at least some evidence beyond the mere allegation of wrong-doing on the part of the attorney or law firm. If appropriate lay people can file the same complaints as grievances with the state Bar Association that is required to regulate and discipline the behavior of lawyers. And attorneys for homeowners and judges who hear these cases are under an obligation to report evidence of wrongdoing or else face disciplinary charges of their own resulting in suspension or disbarment.

Legal Eagles in Cross Hairs

By JEAN EAGLESHAM

The Securities and Exchange Commission is intensifying its scrutiny of lawyers who gave a green light to certain mortgage-bond deals before the financial crisis or have tried to thwart investigations by the agency, according to people familiar with the matter.

The move is at an early stage and might not result in any enforcement action by the SEC because of the difficulty proving lawyers went beyond their legal duty to clients, these people cautioned. In the past, SEC officials generally have gone after lawyers only when accusing them of active involvement in securities fraud or serious misconduct, such as faking documents in a probe.

In recent months, though, some SEC officials have grown frustrated by what they claim is direct obstruction of a few investigations and a larger number of probes where lawyers coach clients in the art of resisting and rebuffing. The tactics include witnesses “forgetting” what happened and companies conducting internal investigations that scapegoat junior employees and let senior managers off the hook, agency officials say. “The problem of less-than-candid testimony … is a serious one,” Robert Khuzami, the SEC’s director of enforcement, said at a conference last month. The stepped-up scrutiny is aimed at both internal and outside lawyers.

Claudius Modesti, enforcement chief at the Public Company Accounting Oversight Board, an accounting watchdog created by the Sarbanes-Oxley Act, said at the same event: “We’re encountering lawyers who frankly should know better.”

The SEC enforcement staff has recently reported more lawyers to the agency’s general counsel, who can take administrative action against lawyers for alleged professional misconduct.

The SEC hasn’t disclosed the number of referrals. Only one lawyer has ever been banned for life from representing clients before the agency because of professional misconduct.

Earlier this year, Kenneth Lench, head of the SEC’s structured-products enforcement unit, said the agency needed to “seriously consider” charges against lawyers in “appropriate cases.” Mr. Lench said he saw “some factual situations where I seriously question whether the advice that was given was done in good faith.”

In July, the Commodity Futures Trading Commission gained the new power to take civil action against anyone, including lawyers, who makes “any false or misleading statement of a material fact.”

The agency, which oversees the futures and options market, hasn’t taken any action yet under the expanded power, according to a person familiar with the matter. A CFTC spokesman declined to comment.

“Frankly, I wish we had the power the CFTC has,” Mr. Khuzami said.

The SEC’s focus on advice provided by lawyers in mortgage-bond deals is part of the wider push by officials to punish alleged wrongdoing tied to the financial crisis. So far, the SEC has filed crisis-related civil suits against 102 firms and individuals, and more cases are coming, according to people familiar with matter.

Some former government officials say stepping up regulatory scrutiny of lawyers for their work on cases snared in investigations by the SEC could send a chilling message. “The government needs to be careful not to deter lawyers from being zealous advocates for their clients,” says John Wood, a former U.S. Attorney for the Western District of Missouri.

The only lawyer hit with a lifetime ban by the SEC for his work on behalf of a client is Steven Altman of New York. The client was a witness in an SEC investigation, and the agency alleged that Mr. Altman suggested in a recorded phone conversation that the client’s recollection of certain events might “fade” if she got a year of severance pay.

Last year, an appeals court rejected Mr. Altman’s bid to overturn the 2010 ban. Jeffrey Hoffman, a lawyer for Mr. Altman, couldn’t be reached for comment.

In December, a federal grand jury in Los Angeles indicted lawyer David Tamman on 10 criminal counts related to helping a former client cover up an alleged $20 million fraud. Prosecutors claim Mr. Tamman changed and backdating documents, removed incriminating documents from investor files and lied to SEC investigators in sworn testimony.

“The truth is that my client was set up and made a scapegoat,” says Stanley Stone, a lawyer for Mr. Tamman, adding that his client acted under the advice and guidance of senior lawyers at his former law firm, Nixon Peabody LLP. “We’re going to prove at trial that what was done was not criminal,” Mr. Stone says.

A Nixon Peabody spokeswoman says Mr. Tamman was fired in 2009 “as soon as we learned that he was under SEC investigation and he failed to explain his actions to us.” The law firm has asked a judge to throw out a wrongful-termination suit filed by Mr. Tamman.

A criminal trial last year shows how the SEC could face daunting hurdles in bringing enforcement actions against lawyers for providing bad advice.

“A lawyer should never fear prosecution because of advice that he or she has given to a client who consults him or her,” U.S. District Judge Roger Titus in Maryland ruled when dismissing all six charges against Lauren Stevens, a former lawyer at drug maker GlaxoSmithKline PLC. GSK +0.19%

Ms. Stevens was accused by prosecutors of lying to the FDA and concealing and falsifying documents related to an investigation by the U.S. agency. The federal judge refused to let a jury decide the case, saying that would risk a miscarriage of justice.

Reid Weingarten, a lawyer for Ms. Stevens, couldn’t be reached. A spokeswoman for the Justice Department declined to comment.

Despite the government’s defeat, “the mere fact she was charged sends a strong signal to other lawyers about the risks of being seen as less than forthcoming in their representation s to the government,” says Mr. Wood, the former federal prosecutor in Missouri. He now is a partner at law firm Hughes Hubbard & Reed LLP.


Fed Orders Ally, BOA, Citi, JPM, Wells Fargo to Pay $766.5 Million in Sanctions

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Unsound and Unsafe Processes and Practices in Residential Loans

Editor’s note: Once again we have an administrative finding and an admission by the BIG 5 that their servicing and practices are both unsafe and unsound. These are fines, not restitution. The Banks regard this as the price of doing business and the Federal Reserve System, led by the NY Fed, on which the likes of Jamie Dimon are Board members,  makes it look like they are doing something. But it is a long way to stretch these findings into conclusive proof that these unsafe and unsound practices apply to any particular loan.

On the other hand, it lends considerable support to the argument that the accounting is not complete, the documentation is neither complete nor does it conform to the full story — the reconciliation of money and practice with the requirements of the closing documents with the lender (investors), the requirements of the closing documents with the borrower (homeowner), the truth of the representations made in court by those seeking to foreclose, and the truth of how the money was funded and distributed, contrary to the chain of documents and the proffers made in Court by entities seeking to foreclose.

From the information we have at hand, if properly presented, the would-be forecloser should be forced in discovery to prove up the transactions that are described in assignments, substitutions of trustees and other documents. And in failing to prove the boiler plate recital “for value received” their case should collapse. The reference to transactions in which the loan was allegedly bought and sold are false in most cases, which means that there was no sale because nobody paid anything. It is the same with the auction wherein a credit bid is submitted by a non-creditor who cannot prove that they bear a risk of loss for non-payment of the loan.

Further, it probably is true that the forged, fabricated false documentation referred to in the Missouri indictment, are a cover-up for a more essential defect — that the loan origination documents lack full disclosure of the the identity of the real creditor, the fees and other compensation earned, and the actual terms of repayment to the creditor which are contained in the securitization documents, not the documents at the closing of escrow with the borrower.

The biggest cover-up is the amount due on the debt and the very existence of the declared default. With the servicer paying the creditor, the creditor is not in any position to declare a default regardless of whether the borrower made payments or not. The servicer, not being party to the mortgage has no rights to foreclose although they could allege that they have some right of restitution from the borrower, but since the servicer has no contract with the borrower, there is no basis for foreclosure.

Other payments to the creditor, or the agents of the creditor in the securitization chain by insurers, counterparties in credit default swap contracts and intermingling receipts and liabilities by cross collateralization within the pool are made with the express waiver of subrogation, which means they are making the payments but they waive any right to collect from the homeowner. Crediting these payments to the investors and the corresponding loan accounts would greatly reduce the debt due without any resort to “principal reduction” or “principal correction.” The legal principles are that the creditor is only entitled to be paid once and it is only the creditor who has the right to foreclose and submit a credit bid at auction.

A creditor who has already received a payment cannot demand the same payment again from the borrower. The strategy of the Banks is to claim ownership of the loan, auction the property and submit their own credit bid which is false. The strategy of the homeowners is to penetrate the veils of secrecy and obfuscation of the banks and show through the records or absence of records that the transactions claimed by the conduits in the securitization chain never were completed because no value was exchanged and to show that they are entitled to a full accounting of all money received by or on behalf of the creditor.

This information is especially important in exercising rights under HAMP and other debt relief and modification programs. Without a starting point in which the borrower knows the true balance of the debt, the borrower is left to guess or estimate or waive the amount of payments received by or on behalf of the creditor.

Unless and until the Court, or any of the regulatory authorities forces the creditors and the bank conduits to show all money received and all money paid out, with dates, payees and the purpose of the transaction, there is no right to pursue foreclosure. Trustees are breaching their statutory and common law duties by failing to exercise due diligence on this point especially since the information, like these sanctions and the prior Cease and Desist orders are already in the public domain.

Once the Court orders the bank or servicer to comply with the ordinary requirement to provide a FULL accounting, experience indicates that the cases will inevitably settle on favorable terms to the borrower. Failure of the Judge to grant such an order is an appealable order, that probably entitles the homeowner to obtain a review through interlocutory appeal.

Federal Reserve Board releases orders related to the previously announced monetary sanctions against five banking organizations

Release Date: February 13, 2012

For immediate release

The Federal Reserve Board on Monday released the orders related to the previously announced monetary sanctions against five banking organizations for unsafe and unsound processes and practices in residential mortgage loan servicing and processing. The Board reached an agreement in principle with these organizations for monetary sanctions totaling $766.5 million on February 9, 2012.

Attachments:

Ally Financial Inc. (PDF)
Bank of America Corporation (PDF)
Citigroup Inc. (PDF)
JPMorgan Chase & Co. (PDF)
Wells Fargo & Company (PDF)

For media inquiries, call 202-452-2955

SOURCE: http://www.federalreserve.gov

Our Turn to Strike Back: Schneiderman Files Massive Lawsuit Against Pretenders

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“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law,”

EDITOR’S NOTE: Don’t confuse this with other cases. This is the first shot that seeks to drive a stake into the heart of the foreclosure process and NOW, unlike before, the defendants have committed themselves in millions of foreclosures where upon challenge they had been successful at playing shell games with the documents. Everything they did is  engraved in stone now and it either can’t be justified or it can be. Schneiderman has crafted a well-written, well-reasoned lawsuit, but more than that this lawsuit in long a facts and short on presumptions. That is what makes it different.

Read this and use it in your pleadings.

A.G. SCHNEIDERMAN ANNOUNCES MAJOR LAWSUIT AGAINST NATION’S LARGEST BANKS FOR DECEPTIVE & FRAUDULENT USE OF ELECTRONIC MORTGAGE REGISTRY

Complaint Charges Use Of MERS By Bank Of America, J.P. Morgan Chase, And Wells Fargo Resulted In Fraudulent Foreclosure Filings  

Servicers And MERS Filed Improper Foreclosure Actions Where Authority To Sue Was Questionable

Schneiderman: MERS And Servicers Engaged In Deceptive and Fraudulent Practices That Harmed Homeowners And Undermined Judicial Foreclosure Process

NEW YORK – Attorney General Eric T. Schneiderman today filed a lawsuit against several of the nation’s largest banks charging that the creation and use of a private national mortgage electronic registry system known as MERS has resulted in a wide range of deceptive and fraudulent foreclosure filings in New York state and federal courts, harming homeowners and undermining the integrity of the judicial foreclosure process. The lawsuit asserts that employees and agents of Bank of America, J.P. Morgan Chase, and Wells Fargo, acting as “MERS certifying officers,” have repeatedly submitted court documents containing false and misleading information that made it appear that the foreclosing party uad the authority to bring a case when in fact it may not have. The lawsuit names JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., as well as Virginia-based MERSCORP, Inc. and its subsidiary, Mortgage Electronic Registration Systems, Inc.

The lawsuit further asserts that the MERS System has effectively eliminated homeowners’ and the public’s ability to track property transfers through the traditional public records system. Instead, this information is now stored only in a private database – which is plagued with inaccuracies and errors – over which MERS and its financial institution members exercise sole control. Additional defendants include BAC Home Loans Servicing, LP, Chase Home Finance LLC, EMC Mortgage Corporation, and Wells Fargo Home Mortgage, Inc.

“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law,” said Attorney General Schneiderman. “Our action demonstrates that there is one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously. Only through real accountability for the illegal and deceptive conduct in the foreclosure crisis will there be justice for New York’s homeowners.”

The financial industry created MERS in 1995 to allow financial institutions to evade local county recording fees, avoid the hassle and paperwork of publicly recording mortgage transfers, and facilitate the rapid sale and securitization of mortgages. MERS operates as a membership organization, and most large companies that participate in the mortgage industry – by originating loans, buying or investing in loans, or servicing loans – are members, including JPMorgan Chase, Bank of America, Wells Fargo, Fannie Mae, and Freddie Mac. Over 70 million loans nationally have been registered in MERS System, including about 30 million currently active loans.

Through their membership in MERS, these companies avoided publicly recording the purchase and sale of mortgages by designating MERS Inc. – a shell company with no economic interest in any mortgage loan – as the “nominal” mortgagee of the loan in the public records. Instead, MERS members were supposed to log mortgage transfers in the MERS private electronic registry. The basic theory behind MERS is that, because MERS Inc. serves as a “nominee” (or agent) for most major lenders, it remains the “mortgagee” in the public records regardless of how often the loan is sold or transferred among MERS members. Thus, although MERSCORP has only about 70 employees, MERS Inc. serves as the mortgagee of record for tens of millions of loans registered in the MERS System.

MERS has granted over 20,000 “certifying officers” the authority to act on its behalf, including the authority to assign mortgages, to execute paperwork necessary to foreclose, and to submit filings on behalf of MERS in bankruptcy proceedings. These certifying officers are not MERS employees, but instead are employed by MERS members, including JPMorgan Chase, Bank of America, and Wells Fargo.

MERS’ conduct, as well as the servicers’ use of the MERS System, has resulted in the filing of improper New York foreclosure proceedings, undermined the integrity of the judicial process, created confusion and uncertainty concerning property ownership interests, and potentially clouded titles on properties throughout the State of New York. In fact, several New York judges have questioned the standing of the foreclosing party in cases involving MERS loans and the validity of mortgage assignments executed by MERS certifying officers.

The lawsuit specifically charges that the defendants have engaged in the following fraudulent and deceptive practices:

  • MERS has filed over 13,000 foreclosure actions against New York homeowners listing itself as the plaintiff, but in many instances, MERS lacked the legal authority to foreclose and did not own or hold the promissory note, despite saying otherwise in court submissions.
  • MERS certifying officers, including employees and agents of JPMorgan Chase, Bank of America, and Wells Fargo, have repeatedly executed and submitted in court legal documents purporting to assign the mortgage and/or note to the foreclosing party. These documents contain numerous defects, including affirmative misrepresentations of fact, which render them false, deceptive, and/or invalid. These assignments were often automatically generated and “robosigned” by individuals who did not review the underlying property ownership records, confirm the documents’ accuracy, or even read the documents. These false and defective assignments often masked gaps in the chain of title and the foreclosing party’s inability to establish its authority to foreclose, and as a result have misled homeowners and the courts.
  • MERS’ indiscriminate use of non-employee “certifying officers” to execute vital legal documents has confused, misled, and deceived homeowners and the courts and made it difficult to ascertain whether a party actually has the right to foreclose. MERS certifying officers have regularly executed and submitted in court mortgage assignments and other legal documents on behalf of MERS without disclosing that they are not MERS employees, but instead are employed by other entities, such as the mortgage servicer filing the case or its counsel. The signature line just indicates that the individual is an “Assistant Secretary,” “Vice President,” or other officer of MERS. Indeed, these documents often purport to assign the mortgage to the certifying officer’s own employer. Moreover, as a result of the defendants’ failure to track the designation of certifying officers and the scope of their authority to act, individuals have executed legal documents on behalf of MERS, such as mortgage assignments and loan modifications, when they were either not designated as a MERS certifying officer at the time or were not authorized to execute documents on behalf of MERS with respect to the subject loan.
  • MERS and its members have deceived and misled borrowers about the importance and ramifications of MERS’ role with respect to their loan by providing inadequate disclosures.
  • The MERS System is riddled with inaccuracies which make it difficult to verify the chain of title for a loan or the current note-holder, and creates confusion among stakeholders who rely on the information. In addition, as a result of these inaccuracies, MERS has filed mortgage satisfactions against the wrong property.

The lawsuit seeks a declaration that the alleged practices violate the law, as well as injunctive relief, damages for harmed homeowners, and civil penalties. The lawsuit also seeks a court order requiring defendants to take all actions necessary to cure any title defects and clear any improper liens resulting from their fraudulent and deceptive acts and practices.

The matter is being handled by Deputy Bureau Chief of the Bureau of Consumer Frauds & Protection Jeffrey K. Powell, Assistant Attorney General Clare Norins, and Assistant Solicitor General Steven C. Wu, under the supervision of First Deputy Attorney General Harlan Levy.

Attachment:

 

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