Chase-WAMU Letter Reveals”Expungement” and “Assignments” of Alleged Mortgages ” Not on the Books and Records of WAMU”

There is an old saying on Wall Street that “Bulls make money, Bears make money but Pigs never do.” The obvious circumstances of Chase claiming ownership to nonexistent loan portfolios contained within WAMU coupled with the admission in this letter to the FDIC, shows just how arrogant Chase felt when they informed the FDIC that they wanted to get paid by the FDIC for expunging documents and fabricating other instruments for “loans” that were not on the books and records of WAMU at the time of their purchase and sale agreement wherein Chase acquired the WAMU estate.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
 
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-
see Letter from Chase to FDIC: chase-letter-to-fdic-2014
*
Hat tip to Bill Paatalo who reminded me of this letter that surfaced in the dispute over FDIC indemnification of Chase for the takeover of WAMU operations. Chase expressly admits to defects in the chain of title and erroneous mortgage documentation.
*
It has been central to the defense of foreclosures based upon alleged “loans” originated by Washington Mutual (WAMU) that Chase never acquired any loans. It is obvious from the the transaction where Chase agreed to pay around $2 Billion to the estate but received more than that in a tax refund due to the WAMU estate. So the consideration was zero.
*
Yet Chase has persistently asserted claims of ownership and direct or indirect authority to foreclose on loans that were not in the books and records of WAMU at the time of the FDIC sale to Chase.
Along with several others, I have stated the fact that Chase (1) acquired no loans (2) because they were not in the WAMU portfolio and that (3) a check of the WAMU books and records in the bankruptcy court will not show the loans that Chase says it acquired from WAMU. If WAMU didn’t own them then Chase could not have acquired them from WAMU.
*
In order to perpetuate this farce we have alleged that Chase was directly involved in the fabrication and forgery of documents to create the illusion of loans that didn’t exist on WAMU books and records and schedules in the receivership and schedules in bankruptcy.
*
Even a non-lawyer can see the problem for Chase. The letter in the link below clearly shows the lawyers asserting a claim for expenses in expunging records (i.e., destroying them) and fabricating other records which obviously leads to the issue of forging since the document itself was knowingly fabricated at the expense of Chase.
*
Somehow Chase came to the conclusion that having paid for the destruction of documents and having paid for fabricating documents, they were now entitled to call themselves owner of the “Loan portfolio” which according to the schedules never existed.
*
They admit to fabricating documents to create the illusion of a chain of title. Now they want payment from the FDIC to cover the expense of fabrication and forgery. Perhaps more importantly they admit “errors in mortgage documentation occurring prior to September 25,2008.”
  • Please Donate to Support Neil Garfield’s Efforts to stop Foreclosure Fraud.

    Please Donate to Support Neil Garfield’s Efforts to stop Foreclosure Fraud.

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

Email from Bill Paatalo:
Neil,
Have you seen this letter? The collusion between JPMC and the FDIC could not be any more transparent.
Excerpts from letter in italics:

The additional matters giving rise to JPMC’s indemnity rights relate to costs incurred in connection with mortgages held by WMB prior to September 25,2008. These costs have resulted from aspects of-and circumstances related to- WMB mortgages that were not reflected on the books and records of WMB as of September 25, 2008, and include:

[HERE IS A DIRECT ADMISSION THAT THERE IS A SCHEDULE OF LOANS “NOT REFLECTED ON THE BOOKS AND RECORDS OF WMB.” IF NO SCHEDULE EXISTS SHOWING WHAT WAS “ON THE BOOKS AND RECORDS,” THEN WE SHOULD NOW INQUIRE AS TO THE SCHEDULE SHOWING THOSE LOANS NOT REFLECTED ON THE BOOKS AND RECORDS.]

(a) Costs incurred by JPMC associated with individual assignments of WMB mortgages. Where JPMC has initiated foreclosures on properties associated with mortgages that were held by WMB prior to its Receivership, JPMC has performed individual assignments of the associated mortgages/deeds of trust and allonges to comply with a recent appellate-level court decision in Michigan so as avoid potential additional expense and/or liability. In so doing, JPMC has incurred additional recording and legal fees, Limited Power of Attorney costs, as well as quantifiable costs associated with increased staffing to address these issues.

[THIS IS A DIRECT ADMISSION THAT ASSIGNMENTS AND ALLONGES ARE BEING EXECUTED BY JPMC (AS BENEFICIARIES AND MORTGAGEES) FOR WMB LOANS THAT WERE “NOT REFLECTED ON THE BOOKS AND RECORDS OF WMB.”]

(c) Costs incurred by JPMC to expunge records associated with WMB mortgages as a result of errors in mortgage documentation occurring prior to September 25,2008, including erroneously recorded satisfactions of mortgages and associated legal fees and disbursements.

[“EXPUNGING RECORDS ASSOCIATED WITH WMB MORTGAGES AS A RESULT OF ERRORS IN MORTGAGE DOCUMENTATION?” THIS IS A DIRECT ADMISSION THE JPMC HAS DESTROYED RECORDS RELATED TO WMB MORTGAGE FILES.]

(d) Costs incurred by JPMC to correct various defects in the chains of title for WMB mortgages occurring prior to September 25, 2008, including recording and legal services fees.

[WHAT “CHAINS OF TITLE?” JPMC TAKES THE POSITION THAT THESE LOANS WERE NEVER SOLD BY WMB. THIS IS A DIRECT ADMISSION THAT JPMC IS ATTEMPTING TO CORRECT DEFECTS IN THE CHAINS OF TITLE FOR WMB LOANS THAT WERE NOT REFLECTED ON THE BOOKS AND RECORDS OF WMB. THESE “CORRECTIONS” UNIVERSALLY INVOLVE ASSIGNMENTS OF BENEFICIAL INTERESTS FROM THE FDIC, AND/OR BY VIRTUE OF THE PAA.]

At the time of WMB’ s closure, the above liabilities were not reflected on its books and records.

Bill Paatalo
Oregon Private Investigator – PSID#49411

BP Investigative Agency, LLC
P.O. Box 838
Absarokee, MT 59001
Office: (406) 328-4075

The Dangers of Disregarding the Uniform Commercial Code

There is a trend nationwide where judges are ruling that broken chains of title are not relevant.

 
The UCC is one of the least favored courses in law school. Judges hate it because they didn’t pay attention during class. But it’s the law. So the courts are ruling by the seat of their pants instead of following the law. Banks like it for now but be careful what you wish for — these rulings are undermining the marketplace for negotiable instruments.

 
Eventually lenders and factoring companies are going to come face to face with the “law” they have created through the courts — the UCC doesn’t mean anything and there are no protections against a party with a broken chain pursing a competing claim. The end result is that they will start lending or trading in negotiable instruments or even non-negotiable instruments. That could stop the economy dead in its tracks as the credit markets freeze up because players have lost confidence in the courts applying the rule of law instead of following statutes that have been on the books for generations.

 
The second problem with the current approach is that it leads inescapably to a constitutional crisis: if the Courts can ignore the rule of law as set forth in a statute, then legislation is final only after a court rules on it. This is a fundamental break with the express provisions of the US Constitution which provides for separation of powers within three independent branches of government — executive, legislative and judicial. This takes us far from the rule of law and into the third world nation context where it is the the rule of men in power that prevails, that changes the laws at their whim, and that enables such leaders to line their pockets with Government money.

 
Also arising out of their inattention to the UCC — which is adopted into the laws of every state in the union — courts are left with applying their own sense of what SHOULD happen as an end result. And by their reckoning, the most important thing is that the marketplace SHOULD be a place where you can be assured that borrowers repay their debts or suffer the consequences.

 
Add the political fear factor and you have a mess. The political fear factor is that most judges are laboring under the delusion that ruling for the borrower will cause the entire financial system to crash. This has been the most powerful weapon used by the banks in creating the myth of too big to fail. But as I predicted years ago during the bailout, this policy — of deferring to the thieves that undercut all world markets — will prevent Government or anyone else from pursuing policies of growth.

 
No judge wants to be responsible, even in part, for the downfall of the entire financial system. The irony is that their rulings are doing exactly that — holding the economy back from a real rebound. Nearly all of the foreclosures were wrongful. As a result the modifications and deeds in lieu of foreclosure were also wrongful — a continuing pattern of converting investor wealth into bank wealth.

 
Nearly all foreclosures could have been settled under the premise that everyone, including the banks, should share in the losses created by the false claims of securitization. Merely applying the rule of law as it has existed for decades would have stopped the foreclosures, stopped the loss of wealth, and stopped the loss of jobs and income for wage earners. We continue to see a “recovery” that has none of the ear-marks of a strong economy.

 
The reason is simple. We are a consumer driven economy and many of the consumers now have been stripped of the ability to buy anything. Until that fundamental element is addressed, the economy will never recover in actuality. We will continue to have the bubble and illusion that the economy is strong because the stock market has gone up. But ask any financial analyst and they will say that the stock market itself has taken on all the attributed of a bubble that will burst.

 
Stocks are over-valued by a factor of as much as 3, which means that for stocks falling into that category, they should be selling at one-third of their current share price. Averaging out the price earnings multiples and comparing it with traditional fundamental securities analysis and you come up with the inescapable conclusion that the DOW ought to be under 10,000.

 
When that correction happens, the last vestige of the illusion of economy recovery will be gone — because Government never addressed the fundamental element of our economy — consumer wealth and income.

David Dayen’s Chain of Title Interview Confirms What You Always Suspected: The Game is Rigged

Chain of Title should be required reading in every college-level business ethics class in America. At a time when “business ethics” is an oxymoron, perhaps the current generation that adores Bernie Sanders might better understand the dangers big banking monopolies hold. David Dayen’s book, Chain of Title, unearths a system with the power and collateral to stonewall millions of homeowners from obtaining one very simple answer: Who owns my mortgage?

 
If you haven’t been able to wrap your head around why the federal government has failed to prosecute one banker for the foreclosure crisis there is a very simple answer that Chain of Title alludes to. The federal government has a dark secret: the trusts are empty and the falsified notes cannot be traced back to their true owners so they must be “recreated” if a default occurs. This means that the investors, the pensions and the trusts own nothing. It also means that the banks now own everything- including the U.S. federal government. It hardly matters that we have separation of powers if the bankers and elite control all three branches.

 
Salon contributing writer David Dayen and winner of the coveted Ida and Studs Terkel Prize, illuminates how home buyers have ended up illegally evicted from their homes as the result of dishonesty, greed, and deception at the hands of mortgage lenders, servicers, investment bankers, and unscrupulous lawyers. Dayen states that Alan Greenspan “viewed regulations the way an exterminator viewed termites.” If this is true, then the President viewed homeowners the way a sunbather views 300 million gnats at the beach.

 
What is truly amazing about this book is how Dayen who has never gone through foreclosure himself is able to recreate the desperation, optimism, and naiveté of homeowners fighting foreclosure while concurrently examining the systematic collapse of the economy. The insight into his three protagonists borders on the voyeuristic and compels the reader to proceed voraciously. The reader keeps rooting for the underdogs to prevail-but it never happens. Through Dayen’s expose you can literally smell the black mold on vacant houses, and feel the desperation of those who lack the tools and resources to fight back- but try with all their might to do so.

 
Dayen’s writing explores the possibilities for the housing crash while remaining detached from the outcome.  For example, he writes, “There is a rot at the heart of our democracy, rooted in a nagging mystery that has yet to be unraveled. It gnaws at people, occupies their thoughts, leaves them searching for answers in the chill of the night. Americans want to know why no high-ranking Wall Street executive has gone to jail for the conduct that precipitated the financial crisis. The oddest thing about the predominance of the question is that everyone already assumes they know the answer. They believe that too many politicians, regulators, and law enforcement officials, bought off with campaign contributions or the promise of a future job, simply allowed banker miscreants to annihilate the law in pursuit of profit.”

 
Dayen’s story begins when two of the protagonists start corresponding via discussion posts on Neil Garfield’s Living Lies blog, and come to the conclusion that they are being deceived by unscrupulous loan servicers. The homeowners will eventually meet other activists along their journey including Lynn Szymoniak and decide to take on the Foreclosure Machine. The personal sacrifices they make to become activists will leave all but Szymoniak permanently altered, and uncompensated for their efforts.

 
The homeowners include Lisa Epstein, a cancer nurse; Michael Redman, an auto dealership employee; and Lynn Szymoniak, a lawyer who investigates insurance fraud. Dayen chronicles their almost futile and life altering battles to save their homes from illegal foreclosure while acting on behalf of millions of homeowners without voices to complain. The author begins with Epstein’s case, followed by Redman’s; one-third of the way into the narrative, the two of them meet Szymoniak, who then pool their meager resources to raise public consciousness about banks who forge, fabricate and robosign to create the appearance of standing.

 
Dayen profiles hundreds of other individuals, many of them crooks, cowards, or corrupt men and women, many of whom had the authority to halt the fraudulent activities but were unwilling to do anything that would undermine their position or social standing.  Although the efforts of the whistle-blowers educated millions of homeowners wrongfully facing foreclosure—ultimately hundreds of thousands of houses remain empty and only now are people starting to put their lives back together with a paradigm shift- that their government doesn’t care. Dayen relates how prosecutors, judges, and the Department of Justice have caved to powerful mortgage industry donors while illegal foreclosures continue.

 
Whereas politicians and the banks have been indifferent that a mortgage is properly endorsed and assigned, Dayen believes that the technicalities matter and are there to protect the homeowner and investors. Without a clear chain of assignment from one entity to the next, there is no way to determine how the loan is transferred except to rely on banks who are not noted for their honesty or accurate business records.

 
Exposing the lies of the banks becomes a moral crusade for the three main characters and their decision to pursue justice will create an emotional smorgasbord, which Dayen meticulously reports. Chain of Title settles on the fact that the banks’ behavior not just indefensible, but criminal and duly executed with precision. This book won’t tell readers of Living Lies anything they don’t already know- but it will help the victims of foreclosure to recognize that the United States is now full of hard working Americans who were sucked into the vortex of banking greed- and who will never again believe in the rule of law or their leaders. This is a yet undiagnosed disease in the general public and the long-term repercussions are not yet known.

 
Dayen describes a bank pursuing foreclosure without legal signatures as “flailing away like a boxer in the dark”- and this is a feeling that also captures the feelings of many homeowners who continue to fight illegal foreclosure. Not sure where their well-funded opponent will come from next or what tactic will be used, the homeowner will flail away like a boxer in the dark hoping that some tactic will create sympathy or even due process from the court or cause the bank to retreat back to their hellish cave.
After reading this epic novel, it can’t be avoided that a free-market economy will function best when people have the ability to prove they own what they own and owe who they owe.

 

 

If we don’t return to the rule of law soon, the average American’s confidence will be undermined and alternatives will be sought.  Remember, those who tired of the Federal Reserve created Bitcoin and lending isn’t so complicated to enact that a similar solution among revolutionaries will not be created. It is amazing that the greed of banks, to save a recording fee, or pass around notes like bubblegum cards could undermine an entire industry- but that is exactly what has happened. Ominously, the first housing crash has yet to be resolved and it appears that the second wave, or what we call 2008 Part II is on the horizon. David Dayen’s book will be read well into the next century- and hopefully Americans will one day say, “How could people standby and let that happen?”  We won’t, but sometimes the wheels of justice take time.
CHAIN OF TITLE
How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud
By David Dayen
385 pp. The New Press.

Tonight on the Neil Garfield Show — The Foreclosure Opus: Chain of Title by David Dayen

Listen to David Dayen tonight on the Neil Garfield Show at 6 pm EST.

Click in to tune in The Neil Garfield Show Or call in at (347) 850-1260.

Chain of Title should be required reading in every college-level business ethics class in America. At a time when “business ethics” is an oxymoron, perhaps the current generation that adores Bernie Sanders might better understand the dangers big banking monopolies hold. David Dayen’s book, Chain of Title, unearths a system with the power and collateral to stonewall millions of homeowners from obtaining one very simple answer: Who owns my mortgage?

*
If you haven’t been able to wrap your head around why the federal government has failed to prosecute one banker for the foreclosure crisis there is a very simple answer that Chain of Title alludes to. The federal government has a dark secret: the trusts are empty and the falsified notes cannot be traced back to their true owners so they must be “recreated” if a default occurs. This means that the investors, the pensions and the trusts own nothing. It also means that the banks now own everything- including the U.S. federal government. It hardly matters that we have separation of powers if the bankers and elite control all three branches.

*
Salon contributing writer David Dayen and winner of the coveted Ida and Studs Terkel Prize, illuminates how home buyers have ended up illegally evicted from their homes as the result of dishonesty, greed, and deception at the hands of mortgage lenders, servicers, investment bankers, and unscrupulous lawyers. Dayen states that Alan Greenspan “viewed regulations the way an exterminator viewed termites.” If this is true, then 2 President viewed homeowners the way a sunbather views 300 million gnats at the beach.

*
What is truly amazing about this book is how Dayen who has never gone through foreclosure himself is able to recreate the desperation, optimism, and naiveté of homeowners fighting foreclosure while concurrently examining the systematic collapse of the economy. The insight into his three protagonists borders on the voyeuristic and compels the reader to proceed voraciously. The reader keeps rooting for the underdogs to prevail-but it never happens. Through Dayen’s expose you can literally smell the black mold on vacant houses, and feel the desperation of those who lack the tools and resources to fight back- but try with all their might to do so.

*
Dayen’s writing explores the possibilities for the housing crash while remaining detached from the outcome.

*

For example, he writes, “There is a rot at the heart of our democracy, rooted in a nagging mystery that has yet to be unraveled. It gnaws at people, occupies their thoughts, leaves them searching for answers in the chill of the night. Americans want to know why no high-ranking Wall Street executive has gone to jail for the conduct that precipitated the financial crisis. The oddest thing about the predominance of the question is that everyone already assumes they know the answer. They believe that too many politicians, regulators, and law enforcement officials, bought off with campaign contributions or the promise of a future job, simply allowed banker miscreants to annihilate the law in pursuit of profit.”

*
Dayen’s story begins when two of the protagonists start corresponding via discussion posts on Neil Garfield’s Living Lies blog, and come to the conclusion that they are being deceived by unscrupulous loan servicers. The homeowners will eventually meet other activists along their journey including Lynn Szymoniak and decide to take on the Foreclosure Machine. The personal sacrifices they make to become activists will leave all but Szymoniak permanently altered, and uncompensated for their efforts.

*
The homeowners include Lisa Epstein, a cancer nurse; Michael Redman, an auto dealership employee; and Lynn Szymoniak, a lawyer who investigates insurance fraud. Dayen chronicles their almost futile and life altering battles to save their homes from illegal foreclosure while acting on behalf of millions of homeowners without voices to complain. The author begins with Epstein’s case, followed by Redman’s; one-third of the way into the narrative, the two of them meet Szymoniak, who then pool their meager resources to raise public consciousness about banks who forge, fabricate and robosign to create the appearance of standing.

*
Dayen profiles hundreds of other individuals, many of them crooks, cowards, or corrupt men and women, many of whom had the authority to halt the fraudulent activities but were unwilling to do anything that would undermine their position or social standing.

*
Although the efforts of the whistle-blowers educated millions of homeowners wrongfully facing foreclosure—ultimately hundreds of thousands of houses remain empty and only now are people starting to put their lives back together with a paradigm shift- that their government doesn’t care. Dayen relates how prosecutors, judges, and the Department of Justice have caved to powerful mortgage industry donors while illegal foreclosures continue.

*
Whereas politicians and the banks have been indifferent that a mortgage is properly endorsed and assigned, Dayen believes that the technicalities matter and are there to protect the homeowner and investors. Without a clear chain of assignment from one entity to the next, there is no way to determine how the loan is transferred except to rely on banks who are not noted for their honesty or accurate business records.

*
Exposing the lies of the banks becomes a moral crusade for the three main characters and their decision to pursue justice will create an emotional smorgasbord, which Dayen meticulously reports. Chain of Title settles on the fact that the banks’ behavior not just indefensible, but criminal and duly executed with precision. This book won’t tell readers of Living Lies anything they don’t already know- but it will help the victims of foreclosure to recognize that the United States is now full of hard working Americans who were sucked into the vortex of banking greed- and who will never again believe in the rule of law or their leaders. This is a yet undiagnosed disease in the general public and the long-term repercussions are not yet known.

*
Dayen describes a bank pursuing foreclosure without legal signatures as “flailing away like a boxer in the dark”- and this is a feeling that also captures the feelings of many homeowners who continue to fight illegal foreclosure. Not sure where their well-funded opponent will come from next or what tactic will be used, the homeowner will flail away like a boxer in the dark hoping that some tactic will create sympathy or even due process from the court or cause the bank to retreat back to their hellish cave.

*
After reading this epic novel, it can’t be avoided that a free-market economy will function best when people have the ability to prove they own what they own and owe who they owe.

If we don’t return to the rule of law soon, the average American’s confidence will be undermined and alternatives will be sought. Remember, those who tired of the Federal Reserve created Bitcoin and lending isn’t so complicated to enact that a similar solution among revolutionaries will not be created. It is amazing that the greed of banks, to save a recording fee, or pass around notes like bubblegum cards could undermine an entire industry- but that is exactly what has happened. Ominously, the first housing crash has yet to be resolved and it appears that the second wave, or what we call 2008 Part II is on the horizon. David Dayen’s book will be read well into the next century- and hopefully Americans will one day say, “How could people standby and let that happen?”  We won’t, but sometimes the wheels of justice take time.
CHAIN OF TITLE
How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud
By David Dayen
385 pp. The New Press.

Judges Resist Proactive Homeowners Challenging Servicers and Pretender Lenders

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

This is for general information only. It should never be used as a substitute for the advice of an attorney licensed in the jurisdiction in which your property is located.

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

see also 201306_cfpb_laws-and-regulations_tila-combined-june-2013

I’ve been busy dealing with Judges who are resisting meritorious defenses and proactive lawsuits challenging the validity of the mortgage, note, debt or assignments. I had one Judge order me to remove America’s Wholesale Lender — an entity that doesn’t exist — as a party Defendant.

But an increasing number of homeowners are seeking to challenge, rescind, or otherwise put the pretender lenders on defense, along with the “servicers” who have no authority and question the enforceability of a modification agreement in which the countersigning party is a “servicer” with dubious or nonexistent rights to enforce a modification agreement.

This is reminiscent of when I wrote in 2008 that the Courts are getting it wrong about rescission. I said then that rescission is a specific statutory remedy which is clear on its face and not subject to interpretation that the “borrower” is getting a free house. I said that applying common law rules on rescission was wrong. There was no requirement for the homeowner to file suit and no requirement for the homeowner to tender money to the “lender” (who can’t be known because of the lack of disclosure). Hundreds of state and Federal Courts all the way up to the appellate level disagreed with me. But I stuck to my guns and continued to advance the legal theory that the statute was explicit and that Courts did not have the right to legislate from the bench.

The US Supreme Court eventually agreed with me recently overturning hundreds of final judgments, orders on dismissal and discovery. The effective on past cases is not yet known. If they have already been concluded right through sale it might be that local law might make the wrong decision final anyway. But my opinion is that if we go by what the statute says, once the notice of rescission was sent, the mortgage and note were nullified “by operation of law.” And the effect is simple: there can be no foreclosure on a mortgage and note that don’t legally exist, even if the mortgage is still recorded in the chain of title. Closings — even short sales — are cast into doubt as to whether the title or the money was handled properly.

As a result, the general consensus about the borrower was turned on its head. The “enforcement” of the rescission was not required by the borrower, it was required to be challenged within 20 days of the notice of rescission. The tender of money by the borrower is similarly turned on its head — it is the lender who owes money (a lot of it) to the borrower. And the threat of foreclosure is totally removed. The statute of limitations doesn’t just apply to borrowers. it also applies to “lenders.”  Once the borrower gives notice of rescission, the “lender” must file a declaratory action contesting the rescission within 20 days. If they don’t file that action, they waive any potential defense to the rescission.

Many individuals are sending notices of rescission even on old loans based upon the premise that they only recently discovered the defects in the loan and defects in the loan closing procedures. If the lender fails to file a lawsuit saying that they are a “lender” and where they prove their status as a lender, they lose. If they can’t prove that the disclosures at closing were true and correct within the tolerances specified in the statute (TILA), they lose. If they fail to file within 20 days, they lose.

The requirement that the “lender” record a satisfaction of mortgage and return the canceled note is just to make it easier for the homeowner to get alternative financing. And the requirement that the “lender” disgorge or pay all money paid in the origination of the loan including brokers’ fees, together with all payments of interest and principal was also teeth in the law to level the playing field, reducing the amount that the homeowner might need to pay to the lender LATER.

The idea behind the law was to address predatory or wrongful lending or enforcement tactics by banks whose dubious business plans were far too sophisticated for any normal borrower to understand what was really happening. TILA and Regulation Z were written to level the playing field. Once the borrower discovered material defects in the loan or loan procedure, they are allowed to get rid of that loan and go get another loan. The primary impact, from a legal point of view, is that the mortgage is gone “by operation of law” and the note is nullified, leaving a bare debt for the “lender” to allege and prove. But whatever the debt might be, it is UNSECURED, and thus subject to discharge in bankruptcy.

Rescission is a drastic remedy that puts the “bank” at a  spectacular disadvantage. But it is the law. and the same holds true when you have fatal defects in the origination of the loan. If the named lender doesn’t exist or didn’t make the loan, the note and mortgage should not have been released to anyone, much less recorded. That means that the mortgage was essentially a wild deed. The mortgage is not voidable, it is void. And THAT means, just like in the case of rescission that the mortgage must be removed from the chain of title on the property. Like rescission, the note and mortgage are void or nullified by operation of law, if the Judges would only apply it.

My group has several of these cases on appeal and we are confident that the appellate courts will turn the corner on proactive cases where the homeowner is current on the so-called payments due (and which are extracted under threat of enforcement and foreclosure). The current thinking of the courts in many cases is neither based in fact nor logic. If the borrower is declared in default they are regarded as deadbeats. If they are current, they are regarded as greedy deadbeats. We think that like several cases have already shown, the “servicer” or “lender” will be forced to defend cases that were dismissed by trial judges.

In the end, we think that homeowners will not only get rid of the note and mortgage, but potentially also the debt because only someone who actually did the funding could come forward with a legal or equitable claim for unjust enrichment. Such creditors will have a difficult time making the claim because (a) they don’t know anything about the case and (b) in order to do so they would be required to track and prove the money trail to show that they are in fact the creditors. Modifications by volunteer intermeddlers — like servicers who lack actual authority to service the loan because they are relying on the Trust that is falsely claiming ownership of the loan — will in our opinion also be deemed a nullity.

What Lawyers Are Being Taught in Current Seminars About Foreclosure

It might strike a note of dissonance when you realize that all the knowledge, facts and theories are well-known by title experts and they are teaching mostly correct things to lawyers. The problem is not whether the information is being disseminated. The problem is that the Lawyers are either not paying attention at these seminars or they are refusing or failing to follow what they have been taught. That includes lawyers who become Judges.

If you don’t know these things, you should be a member of this blog, participate in our twice monthly teleconferences, and attend any seminar you can lay your hands on. NBI has several although they shy away from the third rail of securitization.

In the end BOTH the Max Gardner of approaching the documents and the Neil Garfield method of following the money will be needed to drill the point home — i.e., that the mortgages, notes and obligations were faked from beginning to end and then covered up with false assignments, indorsements, “allonges” and other affidavits or instruments that make it look pretty but fail to meet the test of a proper foreclosure.

And you arrive at the same conclusion regardless of whether you start with first money exchanging hands with the investor or first funding with the borrower at the time of origination.

As the pace picks up on government, borrower and investor lawsuits that soon will be facing statute of limitations arguments from the banks, the realities are closing in on the banks and servicers. Any Bank will tell you that you can’t go in in with a gun, make a “withdrawal” and then settle the case with pennies on the dollar. ALL the money is seized, and the perpetrator goes to jail. I predict some nasty surprises for the megabanks next year and some of those will lead to break up of those banks into smaller banks that are more easily regulated. Glass Steagel might not come back completely but administratively we are headed in that direction.

The following is from my notes taken from many different seminars at which the presenters were title examiners, real estate lawyers, professors of law and even executives from the title insurance industry who articulated the situation quite clearly. Title is corrupt, but they fault the banks for misleading the title carriers as to the character and content of the closing. They understand the problems with “credit bids” and that is why they charge extra for a title guarantee — an instrument that is usually not even mentioned to ordinary people buying property.

Heads up to those on the fringe of real estate transactions. Title must be clear, not clouded or defective and must be insurable. In the case of transactions in which securitization and assignment claims are being made, the “economic interest” rule of thumb and industry standard is the sticking point. When you actually follow the money the documents don’t add up, which is layman’s way of saying what lawyers call an absence of a nexus between the transaction and the documents.

This is where the giants will fall. In fact, it was the the improper, illegal and fraudulent use of the money and the signatures of the parties that got them to appear so fat to begin with. When the dust clears, banks like BOA, (which is already executing on a contingency plan for a breakup by quietly dumping all contested foreclosures into third party hands), will not exist in their present form.

MAIN TAKEAWAY ITEMS:

1. Title insurance only applies if there is an insurable interest. It was universally
accepted by the conference (including those who were there to protect the interests of the banks and pretenders), that an insurable interest includes two elements: (a) a recorded instrument naming that party and (b) an economic interest in the property. Thus if we take the position that an insurable interest is based upon law and not just policy, it can be argued that in the absence of an insurable interest, the title company will not issue the policy and the Court should not and may not validate the interest, since it is ipso facto, uninsurable.
2. As the number of transfer of the “indebtedness” (the note) increases, the duty to inquire increases, and the more nervous the title examiner or transactional lawyer becomes.
3. Producing the note is universally accepted as law despite some court decisions to the contrary. In Florida and other states the forecloser must produce and tender the original note to the court in order to obtain an order from a Judge to sell the property, and without the note, the forecloser cannot submit a credit bid. So even if the Judge lets the case go through, the sale can be attacked as being no sale (Void, not voidable) because the forecloser did not comply with the requirements of law to establish itself as the creditor.
4. Title insurance policies universally have an exception for the rights of the parties in possession. Presumably that means at the time of the transaction. So if the transaction was are financing (which accounts for more than half of all mortgage transactions, the party in possession is the homeowner. The argument can be made that the title carrier made the exception — and that assuming they are experts in title — that exclusion should be used in any litigation of the parties regardless of whether the issue involves the title policy. Thus the homeownerʼs rights include multiple affirmative defenses, counterclaims and cross claims which need to be heard in a hearing in which actual evidence is heard which means that actual COMPETENT witnesses must be heard to authenticate any documents proffered into evidence.
5. Any situation in which the named insured on the title policy is different than the instrument on record identifying the mortgagee or beneficiary results in an uninsurable interest which can be translated as non-marketable title. Hence the originated loan documents prove that the transaction was a table-funded loan in which the true lender was not disclosed. This means the original documents are fatally defective and cannot be cured without the signature of the borrower or a Court order which would require a hearing in which actual evidence is heard which means that actual COMPETENT witnesses must be heard to authenticate any documents proffered into evidence.
6. Only a creditor may submit a credit bid. If anyone else bids, the Trustee or clerk usually has no discretion but to issue a certificate of title (deed) which gives clear title to the grantee, which can either be the borrower or someone standing in for the borrower.
7. Title insurance is not a magic bullet. It does not prove the status of title.
8. Generally unrecorded instruments are not covered by title insurance. In Arizona and other states there is general acceptance of the idea that based upon statute and ATLA standards successors in interest to the debt do not need a new title policy. By inference this would mean that they are giving credence to the idea that the mortgage follows the note, whether the transfer was recorded or not. But upon questioning the experts who delivered the presentation agreed that as the number of transfers increased the transaction becomes suspicious and that the rule regarding successors was probably meant for single transfers.
9. A transfer by a corporation not in good standing in the state or states in which it is required to be registered may not transact business nor bring any judicial proceeding. Mere ownership of property is not considered doing business. But a pattern of conduct of transactions is all that is needed. If the entities (any of them) that are involved in the chain of title are either defunct or in bankruptcy, any assignment, allonge or other instrument is invalid. It can be cured but there are time limits on how long they have before they cure, and it may be that reinstatement may require a name change. After 6 months in Arizona the name of the entity that should have registered is up for grabs which means you can incorporate under that name. What you can do with that name is an interesting proposition that was not discussed.
10.Conflicts of interests apparent on the face of the document or otherwise known to the title examiner create a duty to inquire. Therefore, since the usual pattern is that these documents are created after notice of default and usually after the matter is in litigation and sometimes not until hours or days before a hearing in which the documents need to be produced, the matter is a question of fact that needs to be decided after hearing evidence which requires competent witnesses testifying from personal knowledge.
11.BOARD RESOLUTION REQUIRED: No officer may sign a deed without board resolution. It is possible that estoppel, waiver or apparent authority might apply in the situation where the complaining party is a bona fide third party arms length purchaser for value.
12.In Arizona the knowledge of the Trustee is not imputed to the Lender, but there is no reference or prohibition against imputing the knowledge of the Lender to the Trustee. The practice of ALWAYS substituting trustees instead of using the old one is a cover for the fact that the old trustee would probably ask some questions rather than simply follow orders and send the notice of default, notice of sale etc.

Retirees Buying Trouble When They Buy Foreclosure

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Editor’s Notes:  

there are a lot of good blogs out there on retirement. Some like the Top Retirement blog, whose link is included here, try to give retirees guidance on where to live in retirement. While these blogs do a pretty good job of covering many of the major issues in retirement, they are mostly targeting people who are looking at monetary issues, like taxes, rather than satisfaction and comfort. I’d like to see more people issues than money issues.

But if you want to talk money issues, these blogs are clueless about the mortgage meltdown and how that changes the equation. First and foremost the cost of buying a home that has been foreclosed or has a “securitized loan” in it’s chain of title greatly increases that either they or their loved ones are going to end up in a title dispute that can only be resolved in court.

So the admonition here is that before you consider that cute house with the low real estate taxes and no income taxes, figure in the cost of an attorney who can negotiate a REAL title policy rather than the junk paper they are giving out. That can amount to hours of work. And even after you get a qualified title policy you still need good title, so someone needs to file a lawsuit that asks the court to confirm the title. What if someone in the securitization chain didn’t get the memo and defends the quiet title action? Now you have an adversary proceeding on your hands.

The cost of getting good, quiet title can run high. But the people part of this is what really counts. Do you really want that hassle? Just check the title of any property you are buying and ask one question: has this property ever been the subject f claims of assignment or securitization of loans? If the answer is yes and you love the property then make sure you have a very competent property lawyer and lay the financial price to avoid trouble later.

Worst States to Retire 2012: Northeast and Midwest Come Up Losers

January 10, 2012 — There are plenty of best places to retire lists. But how about the places where it’s not such a good idea to retire? Last year our “worst 10 states” list caused quite a sensation, so we are back at it again for 2012. The purpose is to try to help baby boomers understand where, all other things being equal, they can enjoy their hard-earned retirement without taking on more problems. To make sure you don’t miss updates to this and other lists like it, sign up for our free weekly “Best Places to Retire” newsletter. And of course, don’t miss our 2012 list of the 10 Best States for Retirement.

Your retirement is unique
.  Every individual has to consider his or her own criteria for identifying the worst or best states to retire. One of the most important factors for anyone is proximity to family and friends. So, if you want to be near your grandchildren the worst state on our list could be the best state on your list. Likewise, you might not share the same considerations we used to develop this list. Tax issues might be most important for you, or you might not care about spending winters in a warm state. Our 2012 list is based on 5 considerations that we think will be important to most people, but freely admit that these factors could be totally irrelevant to many other folks.

Our Top Weighting Criteria.  
This year we expanded the criteria we used from 3 to 5 factors. The factors for 2012 are: Fiscal health, property taxes, income taxes, cost of living, and climate. Each criterion was worth up to 1 negative point. If these are not key factors for you, your list might look very different. Also new this year is a page where you can customize your “worst states” list by eliminating criteria that might not be important to you. You will find detailed explanations of these factors along with our sources following the list. The negative point range this year went from 4.05 for #1 CT to 2.45 for #10 WI.

The 10 Worst States for Retirement – 2012
  Three new states made our list this year: Vermont, Minnesota, and Maine. That means that 3 states were lucky enough to leave the list: Ohio (low property and income taxes), Nevada (in terrible financial shape but no income tax and low property taxes), California (bad financial shape and high property taxes, but almost no income tax on our prototypical couple, plus a great climate). The additions and subtractions do not necessarily mean that these states got worse or better since last year; that probably has more to do with the changes from our new rating factors. And, since the data is always trailing, the ratings might not be a perfect reflection of today’s reality.

1. Connecticut. We actually had a numerical tie for 1st place. CT won the tie-breaker because it has much higher property taxes, income taxes, and cost of living than Illinois. Most pension income is taxable, although there are some significant exemptions for social security, depending on income. CT had the 3rd highest tax burden of any state in 2009. The Nutmeg State does have considerable charm and some terrific places to live like the resurging city of New Haven, the quaint village of Stonington, or upscale Madison.

2. Illinois. Illinois (along with Nevada) faces serious economic troubles. Its pension funding, deficit spending, unemployment, and foreclosure rates are among the worst of any states. The state began to address its problems last year when it raised income tax rates. Although Illinois does not tax most pension or social security, other earnings and investment income are taxed at a fairly high rate thanks to its 5% flat tax rate.

3. Rhode Island. The Ocean State has severely underfunded pension/health liabilities and budget deficits. It has the 5th highest median property taxes paid. Our prototypical couple would face much higher income taxes here than they would in most other states. It does have some great places to live like in the bustling city of Providence, or along its extensive coastline and numerous bays and harbors in towns like Westerly.

4. Vermont. The Green Mountain State has very high median property and income taxes, with a top 10 cost of living. Winters here are better for skiing than golf.

5. Massachusetts. In the Bay State our prototypical retiree couple would face property taxes that are among the highest of any state. Even though social security income is exempt, income taxes would be high for our couple because of the flat rate applied to other earnings. Most government pensions are exempt, but private sector ones are taxed. The cost of living is high. See reviews of great places to retire like the college towns of Williamstown or Northampton.

6. New Jersey. New Jersey residents are the biggest losers when it comes to property taxes – the median property tax in the Garden State is the highest in the U.S. at $6579. It also has the highest tax burden (as reported by the Tax Foundation), a large budget deficit issue, and a very high cost of living. New Jersey has both an estate and an inheritance tax. On the plus side, it excludes most pension and social security income for couples making less than $100,000.

7. Minnesota. Another newcomer to our list, Minnesota, would impose the 4th highest income tax on our prototypical couple. That is mostly due to the absence of any pension or social security exemptions. Property taxes are just below the top 10. Minnesota has a

large budget deficit issue. Anyone care to winter in Minnesota?

8. New York. The Empire State was essentially tied with #9 Maine. We broke the tie because New York has the 4th highest median property taxes and one of the highest tax burdens. Surprisingly, the state did not earn any negative points for income taxes, since it offers generous exemptions for social security and pensions, along with a high standard deduction. Its cost of living is one of the highest, plus a very cold winter climate. On the plus side, New York’s Governor Cuomo is waging a campaign to limit property tax increases and improve the state’s fiscal condition. College towns like Ithaca can be awfully nice though.

9. Maine. Maine’s property taxes are much lower than New York’s, while Maine’s income tax on our prototypical couple would be about $1000 higher. Winters are even colder, but cost of living is lower. Maine’s governor has vowed to try to exempt retirement income from taxation, although nothing has happened on that front yet.

10. Wisconsin. Property taxes are among the highest in the country. It has a high foreclosure rate. Wisconsin’s high income taxes are mitigated somewhat for retirees because social security income is exempt and because there is a high standard deduction. Madison, of course, is a great place to live.

See our entire list of great places to retire by state.

Criteria used in developing this listFiscal health. Just as the U.S. government is spending more than it takes in, many of the 50 states have serious financial problems of their own. “The Widening Gap:” from the Pew Center on the States provides a good understanding of the problem. To determine the fiscal health component of our rankings we used 4 inputs this year: deficit, unfunded pension liabilities, unemployment rates, and foreclosures. Why do we think these are important things to rate on, you might ask? Just think about the turmoil Greece and Spain are experiencing as they are finally start to address their deficits and borrowing. Social services are being cut, taxes are being raised, and there is civil unrest. Similarly for states that run into financial trouble, the pain will be acute when the piper is paid, and you probably don’t want to be part of it. We combined these factors; if a state was in the top 10 for all four problems it received 1 negative point in the rankings (.25 each).

Property taxes. In our opinion property taxes are usually the most oppressive taxes for retirees, since they can be so high in some states and bear no relation to one’s income. The 10 states with the highest property taxes were awarded 1 point on a sliding scale, with New Jersey actually earning 1.1 points since its median taxes are so much higher than any other state.

State income taxes. We think too many baby boomer retirees focus too much attention on state income taxes as a reason to move. That’s because unless you have a lot of income, they are not a factor. In our analysis we created a hypothetical couple that has $70,000 in earnings from social security, pension, earnings, and retirement savings; equal to the top earning quartile of people 65+. Using data from the Congressional Research Service we assumed this couple received 20% of its income from social security, 23% from pension, and 47% from earnings and investments. We used those inputs to estimate income taxes for each state at tax-rates.org. Obviously, your earning profile will probably be different. If your joint earnings are significantly below $70,000, this rating component is probably not significant. Here is where you can see the ratings with this component eliminated. The 10 states with the highest taxes on this factor earned up to 1 negative point.

Cost of living. Most people retiring today are very concerned about how they are going to make it work financially. We awarded states with the highest cost of living 1 negative point.

Climate. We believe the majority of today’s retirees have a bias towards places with warmer winters. States north of the Mason-Dixon line were awarded a negative 1 point for their colder climate. (See also our 2011 article – “Worst Places to Retire for Weather and Natural Disasters“)

You can customize your “worst states” list by using the rankings on this rankings page.

Other criteria for identifying the best or worst retirement state:
While our rankings concentrated on fiscal health, taxes, cost of living, and climate, here is a more complete list of possible criteria for developing your personal rankings of retirement states and towns:

– Proximity to friends and family
- Sales taxes (Not usually a deal breaker, but annoying)
- Inheritance and Estate taxes (Some states have neither, a few have both)
- Crime
- Recreation
- Transportation
- Healthcare
- Education including colleges
- Cultural resources
- Natural disasters
- Fitting in socially, politically, religiously

Should the States Be Trying to Attract Retirees – and What Should They Do?
There are some states that actively try to attract retirees – notably Texas, Louisiana, West Virginia, Mississippi, and Tennessee. They have bought into the idea that the “mailbox” economic value of retirees (the pension and social security checks arrive in the mailbox) is as important as attracting new industries. Most of those retirees are being recruited are coming from the high tax states up north, only a few of which are actively trying to stem that tide. Property tax freezes for seniors, taxation of pensions and social security, and investments in infrastructure are some ideas that could help states in the northeast and midwest avoid losing valuable citizens whose retirements are being compromised by indifferent legislators. Share your ideas with them, and us!

More about our sources and criteria:
Pension/Health Funding and Budget Deficit data – Pew Center
Budget Deficit data – Center on Budget and Policy Priorities
Unemployment data – Bureau of Labor Statistics
Foreclosure rates – CNBC.com
Property Taxes – Tax-rates.org
Income taxes – here we used the income tax calculator from Tax-rates.org
Cost of Living – Missourieconomy.org

For further reference:Worst States for Retirement – 2011State Retirement Guides

Tax Foundation Tax Burden by StateTax Friendly StatesThe Most Important Issue Might Not Be What You Think
Our 2011 List of the “100 Best Retirement Towns”
Best Retirement States for 2012

We were happy to have seen this article extensively quoted by Yahoo.Finance, Money.msn, MarketWatch, and AOL.DailyFinance

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Editor’s Comment: The very same people who so ardently want us to remain strong and fight wars of dubious foundation are the ones who vote against those who serve our country. Here is a story of a guy who was being shot at and foreclosed at the same time — a blatant violation of Federal Law and good sense. When I practiced in Florida, it was standard procedure if we filed suit to state that the defendant is not a member of the armed forces of the United States. Why? Because we don’t sue people that are protecting our country with their life and limb.

It IS that simple, and if the banks are still doing this after having been caught several times, fined a number of times and sanctioned and number of times, then it is time to take the Bank’s charter away. Nothing could undermine the defense and sovereignty of our country more than to have soldiers on the battlefield worrying about their families being thrown out onto the street.

One woman’s story:

My husband was on active duty predeployment training orders from 29 May 2011 to 28 August 2011 and again 15 October 2011 to 22 November 2011. He was pulled off the actual deployment roster for the deployment date of 6 December 2011 due to the suspension of his security clearance because of the servicer reporting derogatory to his credit bureau (after stating they would make the correction). We spoke with the JAG and they stated those periods of service are protected as well as nine months after per the SCRA 50 USC section 533.

We have been advised that a foreclosure proceeding initiated within that 9 month period is not valid per the SCRA. I have informed the servicer via phone and they stated their legal department is saying they are permitted to foreclose. They sent a letter stating the same. I am currently working on an Emergency Ex Parte Application for TRO and Preliminary Injunction to file in federal court within the next week. It is a complicated process.

The servicer has never reported this VA loan in default and the VA has no information. That is in Violation of VA guidelines and title 38. They have additionally violated Ca Civil Code 2323.5. They NEVER sent a single written document prior to filing NOD 2/3/2012. They never made a phone call. They ignored all our previous calls and letter. All contact with the servicer has been initiated by us, never by them. This was a brokered deal. We dealt with Golden Empire Mortgage. They offered the CalHFA down payment assistance program in conjunction with their “loan” (and I use that term loosely). What we did not know was that on the backside of the deal they were fishing for an investor.

Over the past two years CalHFA has stated on numerous occasions they do not own the 1st trust deed. Guild (the servicer) says they do. I have a letter dated two weeks after closing of the loan saying the “servicing” was sold to CalHFA. Then a week later another letter stating the “servicing” was sold to Guild. Two conflicting letters saying two different things. The DOT and Note are filed with the county listing Golden Empire Mortgage as the Lender, North American Title as the Trustee and good old MERS as the Nominee beneficiary.

There is no endorsement or alonge anywhere in the filing of the county records. We signed documents 5/8/2008 and filings were made 5/13/2008. After two years of circles with Guild and CalHFA two RESPA requests were denied and I was constantly being told “the investor, the VA and our legal department” are reviewing the file to see how to apply the deferrment as allowed by California law and to compute taxes and impound we would need to pay during that period. Months of communications back in forth in 2009 and they never did a thing. Many calls to CalHFA with the same result. We don;t own it, call Guild, we only have interest in the silent 2nd.

All of a sudden in December 2011 an Assignment of DOT was filed by Guild from Golden Empire to CalHFA signed by Phona Kaninau, Asst Secretary MERS, filed 12/13/2011. om 2/3/2012 Guild filed a Cancellation of NOD from the filing they made in 2009 signed by Rhona Kaninau, Sr. VP of Guild. on the same date Guild filed a substitution of trustee naming Guild Admin Corp as the new trustee and Golden Empire as the old trustee, but on out DOT filed 5/13/2008 it lists North American Title as the Trustee. First off how can Rhona work for two different companies.

Essentially there is no fair dealing in any of this. Guild is acting on behalf of MERS, the servicing side of their company, and now as the trustee. How is that allowed? Doesn;t a trustee exist to ensure all parties interests are looked out for? It makes no sense to me how that can be happening. On the assignment I believe there is a HUGE flaw… it states ….assigns, and transfers to: CalHFA all beneficial interest…..executed by Joshua as Trustor, to Golden Empire as Trustee, and Recordeed….. how can you have two “to’s” .. shouldn’t after Trustor it say FROM???? Is that a fatal flaw???

And then looking at the Substitution it states “Whereas the undersigned present Beneficiary under said Deed of Trust” (which on the DOT at that time would show MERS but on the flawed assignment says Golden Empire was the trustee), it then goes on the say “Therefore the undersigned hereby substitutes GUILD ADMIN CORP” and it is signed “Guild Mortgage Company, as agent for CalHFA”, signed by Rhona Kaninau (same person who signed the assignment as a MERS Asst Secretary). I mean is this seriously legal??? Would a federal judge look at this and see how convoluted it all is?

I appreciate the offer of the securitization discount but in out current economic situation and having to pay $350 to file a federal case we just can’t afford it right now. I hope you will keep that offer open. Will this report cover tracking down a mortgage allegedly backed by CalHFA bonds? This is their claim.

Thank you so much for your assistance. This is overwhelming. Do you have any attorneys here in Southern California you world with I might be able to talk to about what they would charge us for a case like this?

Now They See the Light — 40% of Homes Underwater

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Editor’s Comment:

They were using figures like 12% or 18% but I kept saying that when you take all the figures together and just add them up, the number is much higher than that. So as it turns out, it is even higher than I thought because they are still not taking into consideration ALL the factors and expenses involved in selling a home, not the least of which is the vast discount one must endure from the intentionally inflated appraisals.

With this number of people whose homes are worth far less than the loans that were underwritten and supposedly approved using industry standards by “lenders” who weren’t lenders but who the FCPB now says will be treated as lenders, the biggest problem facing the marketplace is how are we going to keep these people in their homes — not how do we do a short-sale. And the seconcd biggest problem, which dovetails with Brown’s push for legislation to break up the large banks, is how can we permit these banks to maintain figures on the balance sheet that shows assets based upon completely unrealistic figures on homes where they do not even own the loan?

Or to put it another way. How crazy is this going to get before someone hits the reset the button and says OK from now on we are going to deal with truth, justice and the American way?

With no demographic challenges driving up prices or demand for new housing, and with no demand from homeowners seeking refinancing, why were there so many loans? The answer is easy if you look at the facts. Wall Street had come up with a way to get trillions of dollars in investment capital from the biggest managed funds in the world — the mortgage bond and all the derivatives and exotic baggage that went with it. 

So they put the money in Superfund accounts and funded loans taking care of that pesky paperwork later. They funded loans and approved loans from non-existent borrowers who had not even applied yet. As soon as the application was filled out, the wire transfer to the closing agent occurred (ever wonder why they were so reluctant to change closing agents for the convenience of the parties?).

The instructions were clear — get the signature on some paperwork even if it is faked, fraudulent, forged and completely outside industry standards but make it look right. I have this information from insiders who were directly involved in the structuring and handling of the money and the false securitization chain that was used to cover up illegal lending and the huge fees that were taken out of the superfund before any lending took place. THAT explains how these banks are bigger than ever while the world’s economies are shrinking.

The money came straight down from the investor pool that included ALL the investors over a period of time that were later broker up into groups and the  issued digital or paper certificates of mortgage bonds. So the money came from a trust-type account for the investors, making the investors the actual lenders and the investors collectively part of a huge partnership dwarfing the size of any “trust” or “REMIC”. At one point there was over $2 trillion in unallocated funds looking for a loan to be attached to the money. They couldn’t do it legally or practically.

The only way this could be accomplished is if the borrowers thought the deal was so cheap that they were giving the money away and that the value of their home had so increased in value that it was safe to use some of the equity for investment purposes of other expenses. So they invented more than 400 loans products successfully misrepresenting and obscuring the fact that the resets on loans went to monthly payments that exceeded the gross income of the household based upon a loan that was funded based upon a false and inflated appraisal that could not and did not sustain itself even for a period of weeks in many cases. The banks were supposedly too big to fail. The loans were realistically too big to succeed.

Now Wall Street is threatening to foreclose on anyone who walks from this deal. I say that anyone who doesn’t walk from that deal is putting their future at risk. So the big shadow inventory that will keep prices below home values and drive them still further into the abyss is from those private owners who will either walk away, do a short-sale or fight it out with the pretender lenders. When these people realize that there are ways to reacquire their property in foreclosure with cash bids that are valid while the credit bid of the pretender lender is invlaid, they will have achieved the only logical answer to the nation’s problems — principal correction and the benefit of the bargain they were promised, with the banks — not the taxpayers — taking the loss.

The easiest way to move these tremendous sums of money was to make it look like it was cheap and at the same time make certain that they had an arguable claim to enforce the debt when the fake payments turned into real payments. SO they created false and frauduelnt paperwork at closing stating that the payee on teh note was the lender and that the secured party was somehow invovled in the transaction when there was no transaction with the payee at all and the security instrumente was securing the faithful performance of a false document — the note. Meanwhile the investor lenders were left without any documentation with the borrowers leaving them with only common law claims that were unsecured. That is when the robosigning and forgery and fraudulent declarations with false attestations from notaries came into play. They had to make it look like there was a real deal, knowing that if everything “looked” in order most judges would let it pass and it worked.

Now we have (courtesy of the cloak of MERS and robosigning, forgery etc.) a completely corrupted and suspect chain of title on over 20 million homes half of which are underwater — meaning that unless the owner expects the market to rise substantially within a reasonable period of time, they will walk. And we all know how much effort the banks and realtors are putting into telling us that the market has bottomed out and is now headed up. It’s a lie. It’s a damned living lie.

One in Three Mortgage Holders Still Underwater

By John W. Schoen, Senior Producer

Got that sinking feeling? Amid signs that the U.S. housing market is finally rising from a long slumber, real estate Web site Zillow reports that homeowners are still under water.

Nearly 16 million homeowners owed more on their mortgages than their home was worth in the first quarter, or nearly one-third of U.S. homeowners with mortgages. That’s a $1.2 trillion hole in the collective home equity of American households.

Despite the temptation to just walk away and mail back the keys, nine of 10 underwater borrowers are making their mortgage and home loan payments on time. Only 10 percent are more than 90 days delinquent.

Still, “negative equity” will continue to weigh on the housing market – and the broader economy – because it sidelines so many potential home buyers. It also puts millions of owners at greater risk of losing their home if the economic recovery stalls, according to Zillow’s chief economist, Stan Humphries.

“If economic growth slows and unemployment rises, more homeowners will be unable to make timely mortgage payments, increasing delinquency rates and eventually foreclosures,” he said.

For now, the recent bottoming out in home prices seems to be stabilizing the impact of negative equity; the number of underwater homeowners held steady from the fourth quarter of last year and fell slightly from a year ago.

Real estate market conditions vary widely across the country, as does the depth of trouble homeowners find themselves in. Nearly 40 percent of homeowners with a mortgage owe between 1 and 20 percent more than their home is worth. But 15 percent – approximately 2.4 million – owe more than double their home’s market value.

Nevada homeowners have been hardest hit, where two-thirds of all homeowners with a mortgage are underwater. Arizona, with 52 percent, Georgia (46.8 percent), Florida (46.3 percent) and Michigan (41.7 percent) also have high percentages of homeowners with negative equity.

Turnabout is Fair Play:

The Depressing Rise of People Robbing Banks to Pay the Bills

Despite inflation decreasing their value, bank robberies are on the rise in the United States. According to the FBI, in the third quarter of 2010, banks reported 1,325 bank robberies, burglaries, or other larcenies, an increase of more than 200 crimes from the same quarter in 2009. America isn’t the easiest place to succeed financially these days, a predicament that’s finding more and more people doing desperate things to obtain money. Robbing banks is nothing new, of course; it’s been a popular crime for anyone looking to get quick cash practically since America began. But the face and nature of robbers is changing. These days, the once glamorous sheen of bank robberies is wearing away, exposing a far sadder and ugly reality: Today’s bank robbers are just trying to keep their heads above water.

Bonnie and Clyde, Pretty Boy Floyd, Baby Face Nelson—time was that bank robbers had cool names and widespread celebrity. Butch Cassidy and the Sundance Kid, Jesse James, and John Dillinger were even the subjects of big, fawning Hollywood films glorifying their thievery. But times have changed.

In Mississippi this week, a man walked into a bank and handed a teller a note demanding money, according to broadcast news reporter Brittany Weiss. The man got away with a paltry $1,600 before proceeding to run errands around town to pay his bills and write checks to people to whom he owed money. He was hanging out with his mom when police finally found him. Three weeks before the Mississippi fiasco, a woman named Gwendolyn Cunningham robbed a bank in Fresno and fled in her car. Minutes later, police spotted Cunningham’s car in front of downtown Fresno’s Pacific Gas and Electric Building. Inside, she was trying to pay her gas bill.

The list goes on: In October 2011, a Phoenix-area man stole $2,300 to pay bills and make his alimony payments. In early 2010, an elderly man on Social Security started robbing banks in an effort to avoid foreclosure on the house he and his wife had lived in for two decades. In January 2011, a 46-year-old Ohio woman robbed a bank to pay past-due bills. And in February of this year, a  Pennsylvania woman with no teeth confessed to robbing a bank to pay for dentures. “I’m very sorry for what I did and I know God is going to punish me for it,” she said at her arraignment. Yet perhaps none of this compares to the man who, in June 2011, robbed a bank of $1 just so he could be taken to prison and get medical care he couldn’t afford.

None of this is to say that a life of crime is admirable or courageous, and though there is no way to accurately quantify it, there are probably still many bank robbers who steal just because they like the thrill of money for nothing. But there’s quite a dichotomy between the bank robbers of early America, with their romantic escapades and exciting lifestyles, and the people following in their footsteps today: broke citizens with no jobs, no savings, no teeth, and few options.

The stealing rebel types we all came to love after reading the Robin Hood story are gone. Today the robbers are just trying to pay their gas bills. There will be no movies for them.

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.


HOAs Retaliate Against Banks Skipping Out on Paying Maintenance Expenses

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Editor’s Comment: 

Having had the experience of representing Condominium Associations, Cooperatives and Homeowners Associations in Florida on a large scale, I am acutely aware of the pain they feel when “neighbors” don’t pay their monthly fees. The rest of the homeowners must pick up the slack and in many cases there were special assessments against the owners to pay for the shortfall.

The Banks, always playing the game, would get their Judgement of Foreclosure and then postpone the actual sale indefinitely because they could and because they didn’t want the liability of association dues, association compliance etc. So Florida actually had to pass a law that required the bank to start paying maintenance after they received a Final Judgment of foreclosure. Apparently, judging from the article below, that law has been rescinded or eviscerated by the intensive bank lobbying going on in all 50 state legislatures and in Congress.

With the foreclosure crisis desiccating entire neighborhoods, it sometimes comes down to a handful of homeowners who are paying the tab for the maintenance of the entire complex. So those homeowners, who were now on the Board of directors of the association jumped in and are now getting the benefits of self-help through renting abandoned homes and condos as though they owned it. In some cases they are turning a profit, attracting new buyers in and getting a pretty good bang for their buck — if they do it right.

You might remember the uproar that occurred when I reported that a number of people were making this situation  into a business model: by renting out at lower rates homes that were abandoned by both the homeowner and the “bank” or other pretender lender that put the home into default and foreclosure, these “entrepreneurs” are making money on assets that don’t belong to them.

That is a bad thing, right? Only if you are not a bank or pretender lender who are doing exactly the same thing. If a non-creditor took title to property by submitting a credit bid, then they don’t have real title. Whether they sell it or rent it out, they are making money off of an asset that was never owned by them and in which they never had any financial interest, risk or loss.

That of course is the problem with the corruption of our title system, and the failure of due process, especially in the non-judicial states where foreclosures are routinely processed on behalf of non-creditors who submit “credit bids” at auction. My answer as previously posted, is that the HOA and the homeowner should collude with each other the same way that the substituted trustees collude with the pretender lender. The  homeowner falls behind in payments causing the association to sue for those payments and to foreclose on the lien. The lawsuit names the homeowner and all other lenders on record reciting in the pleading that the existing mortgage on record has been satisfied or abandoned.

We all know that in many cases the lender of record is a sham corporation that was created to front as straw-man for the real lenders (investors). So the court enters a default against the lender of record, and then awards judgment to the association along with a sale date during which period the homeowner redeems the property with a settlement agreement in which the court quiets title to the homeowner.

At that point, if any party wishes to foreclose, whether they are in a judicial state or otherwise, they must proceed judicially by pleading and proving that they were a real party in interest and that they should have received notice of the foreclosure by the Association. In many cases, where it is institution versus association or another institution the same arguments advanced by homeowners are advanced by the association or institution.

The difference is that the argument coming from a creditor is taken far more seriously by the courts —- all the way up to the Supreme Court of the state (like the Landmark case in Kansas). In all such cases I have reviewed, the court found and was affirmed in its finding that the foreclosure by the first creditor to get to the mat won the case. This is one of several reasons why I have given my permission to start a national law firm rolling out into all 50 states. In a word, “if you want something done right, you have to do it yourself.”

Canceled foreclosure sales saddle neighbors, HOAs with expenses

By Mark Puente

Kathy Lane envisioned a picturesque neighborhood with tree-lined streets when she moved to FishHawk Ranch in 2004.

These days, she stares at an eyesore.

Two doors away, the back yard of an abandoned home overflows with trash; rain pours in open windows; weeds have overgrown the lawn. The pool, filled with black muck, draws swarms of bugs.

“I was expecting well-kept yards,” Lane said. “I live two doors from a dump. If it goes up in flames and catches our house on fire, who is responsible?”

The foreclosure crisis has littered the region with thousands of abandoned homes. The houses sit idle as banks have been slow to seize them in the final stage of the foreclosure process, the public auction.

Although recent headlines proclaim the worst of the housing crisis is over, the decrepit homes are a constant reminder that cleaning up the foreclosure mess remains a work in progress.

The house on Lane’s street in Lithia went into foreclosure in 2008 and has been vacant for more than a year. Aurora Loan Services had set an auction for February but canceled it.

It’s an oft-repeated pattern.

In the last 12 months, lenders have canceled auctions on 4,204 properties in Pinellas and Hillsborough counties. Sales have been canceled two, three, even nine times on some homes.

In many cases, banks delay seizures to avoid having to pay maintenance bills or homeowner association fees. Meanwhile, neighbors fend off vandals and thieves and worry about property values falling because of the deteriorating houses.

The repeated cancellations burden the court system.

“These never seem to go away,” said Thomas McGrady, chief judge of the Pinellas-Pasco County Circuit. “It’s a nuisance.”

Taxpayers also pay for the delays.

Hillsborough Circuit Judge Herbert Baumann Jr. said the Clerk of Courts’ workers spend hours filing paperwork when banks repeatedly cancel auctions.

“It does create more work,” he said. “Clerks do expend a lot of resources on this.”

• • •

No neighborhood is immune.

Even the tony streets in Tampa’s Avila and St. Petersburg’s Snell Isle have “lost houses.”

While the homes sit in limbo, homeowners associations lose money when lenders delay taking titles. The associations may mow lawns and make minor repairs, but that forces other residents to shoulder higher assessments.

Associations have few options to force lenders to sell the homes.

HOAs can seize properties through foreclosure when owners stop paying monthly assessments. Some go a step further by renting out the seized properties to recoup lost dues. Still, those actions cost the associations thousands in legal fees.

Lane, the FishHawk Ranch resident, is baffled by the banks’ inaction.

“Every day you expect a poltergeist,” she said. “We have to live here.”

She isn’t alone.

Tampa-based Rizzetta & Co. manages more than 100 community associations with 32,000 homes in Florida, including most associations in FishHawk Ranch. The firm has been deluged in recent years with calls about the abandoned homes and delinquent assessments.

Pete Williams, a Rizzetta manager, attributes the canceled auctions to money.

“The banks never want to take ownership,” he said. “They have to pay the fees going forward. The costs are considerable.”

Even McGrady, the Pinellas-Pasco judge, believes money is behind the canceled sales.

“After a while, you begin to question their motives,” the judge said.

• • •

On the flip side, some experts contend that the banks’ slowness helps stabilize the real estate market. Putting thousands of homes for sale at once could depress prices. Letting them trickle to the market brings higher prices.

And some cancellations occur because lenders and homeowners agree to loan modifications or because homeowners and defense attorneys find errors in bank documents.

The cancellations are currently down in Hillsborough and Pinellas. But that’s because lenders halted foreclosures in late 2010 amid allegations they used robo-signers and false documentation to speed up the foreclosure process.

Still, the delays have allowed some owners to live free for years and dodge assessments.

In June 2009, a Pasco judge granted U.S. Bank a final judgment to seize a home in the Valencia Gardens subdivision in Land O’Lakes. U.S. Bank scheduled the auction for September 2009 but has canceled it eight times. The most recent cancellation occurred last month.

The homeowners have lived in the home but have not paid dues to the Valencia Gardens Homeowners Association. The association is objecting to the cancellations and has asked a judge to order the bank to sell the home. Thirty-eight delinquent homeowners owe the association $56,000.

The shortfall has forced the HOA to convert water fountains into flower beds and to scale back on other projects, said Gail Spector, the president.

The group began cracking down on delinquent residents last year by threatening foreclosure lawsuits against them. Spector knows residents have lost jobs but said other homeowners shouldn’t be burdened with the unpaid dues.

“You have to treat everybody the same,” Spector said. “We are fixing and paying for everything. That’s not fair.”

Leonard J. Mankin, a Clearwater-based law firm, represents hundreds of associations across Florida. Attorney Brandon Mullis has asked a judge to sanction U.S. Bank and to force the sale of the home in Valencia Gardens.

It is now common, he said, for banks to cancel auctions seven or eight times in many foreclosure cases.

Mullis questions why lenders file court documents saying they are “negotiating or reviewing for possible loss mitigation options” when the houses have been vacant a year or longer.

He is fighting another case in Palm Harbor. The Bank of New York Mellon has canceled seven auctions — even though the homeowner defaulted on the mortgage in 2008. The bank canceled the seventh auction in February because it wanted to exhaust options to prevent the foreclosure.

Mullis scoffed.

“This action leaves the burden to fall on those neighboring residents who are forced to pay higher assessments while the property next door further deteriorates,” he said.

The Florida Bankers Association disagrees.

Anthony DiMarco, executive vice president, said lenders are overwhelmed with thousands of foreclosures and aren’t cancelling sales to skirt maintenance and assessments.

“They are trying to move cases forward,” he said. “We’d rather keep people in homes.”

You Know You are Losing When

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Taking a line from Jeff Foxworthy, I have compiled the following guidelines of how to know when you are going to lose against the thieving bank seeking to steal your property. You might call it, “You know your screwed when…”

Note: The premise of this article is taken from various points made on this blog and others. The main point is that the obligation to repay the loan arose when the money transaction took place. When money exchanged hands it is presumed that the expectation was that it would be repaid. So the only defenses that exist and the only two defenses that will get the judge’s attention are PAYMENT and WAIVER. Failing to address these issues head on right at the beginning of the first pleading and the first hearing, will most likely lead to failure in the case. Read the appellate decisions that are in favor of the banks and servicers; they all start with a recitation of “facts” that are not true but which nonetheless are taken as true because the borrower failed to put them in issue as contested facts.

Start with the origination documents. If you don’t know whether they have merely reproduced the note and mortgage, then deny it and make them prove it. They could be fabricated from whole cloth.

And the note and mortgage probably contain declarations of fact that are not true — like the fact that any of the parties shown as payee on the note or as secured parties are in fact not the lenders, creditors or have any relationship to your loan transaction other than that their names were used. The fact that you know you have signed documents doesn’t mean that the papers proffered by the banks are the same papers. The fact that you know you took a loan doesn’t mean there is any balance due or that you owe it to the party seeking to enforce the debt.

So one of the key questions to ask an attorney or other professional you seek to hire to represent you in mortgage foreclosure, collection of a debt or to provide you with services to challenge title or enforcement is an easy one: “what issues are you prepared to concede at the start of these proceedings?” If they are willing to concede the debt, the default, and other basic elements of enforcements, you have pretty much lost before you began.

Watch out for those who talk a good game and tell you what you want to hear. I have seen many attorneys fold like a house a cards once they get into court. They must be willing to be aggressive in their objections and in demanding a level playing field —  neither the proffers of counsel for the bank nor the proffers of the borrower should be taken as true without an evidentiary hearing. When hiring professionals to help you, ask for references and proof where they achieved the objectives in a hearing that was argued before a state, federal or bankruptcy judge. There is a lot of bad law and poor strategy floating around in the name of marketing for clients and getting fees either upfront, monthly or both.

Without repeating all the other points raised on this blog, let’s start cataloging those strategies and events and virtually assure the loss of the case to a bank that was and remains a stranger to the transaction, who never funded or purchased the loan.

  1. You have already conceded or alleged that there is a debt outstanding. (what if the debt was paid off?). If the bank’s lawyer speaks first, the proper objection should be raised and very aggressively. It must be made clear that the borrower denies the debt, denies the debt was ever owed to the party now seeking to enforce it, denies that perfection of the lien, denies the default because the creditor has been paid and corroborates the objection with independent third party reports that raise issues of fact that (a) put the main issues in dispute requiring a hearing on the merits and (b) getting to discovery where the bank is ordered to stop stonewalling and is required to answer the properly formed questions and demands for discovery including, most especially, a full accounting from the creditor down to the borrower and NOT just from the servicer down to the borrower.
  2. You have already conceded or alleged that you are in default. (what if someone, like the servicer, continued making payments to the creditor?)
  3. You have already conceded or alleged that you failed to make a payment. This one is tricky. You know the borrower stopped making payments so how can you deny it. easy. If the payments was made by someone else or was prepaid, then the scheduled payment may have been “missed” but it wasn’t due either.
  4. You have failed to object to the the proffer of the opposing attorney relating to (a) whom he represents, (b) the status of his client in the transaction, (c) the status of the loan, (d) a default and (e) the statement that the borrower has not made any payments in X months. These are facts not in evidence and you deny each and every one of them.
  5. You have failed to obtain a true report on the chain of title relating to the specific loan.
  6. You have failed to obtain a true report of the chain or obligations set forth in the securitization documents.
  7. Watch the demeanor of the Judge. He or she has already decided that the borrower is not going to get a free house just because some paperwork was wrong. If the obligation exists and the borrower is not paying it, the Judge is looking for ways to avoid the legal technicalities and allow enforcement of the debt and to allow the foreclosure to proceed. But if you raise the issues of payment and waiver, then the Judge doesn’t really have that option. For the sake of credibility you must make clear that you understand that an obligation arose when the money transaction was completed and that paperwork glitches don’t allow a debtor to escape payment on an otherwise legitimate debt. But then turn that on its head — just because the paperwork refers to a monetary transaction (assignment, etc.) doesn’t mean the transaction actually took place. In the absence of a real transaction where real money exchanged hands, the paperwork can’t save it. 
  8. You failed to file the right papers at the right time. A common mistake, the judges jump on this as an excuse to dismiss the claims of the borrower.
  9. Claiming due process without specifically identifying how the borrower is actually injured. You are going to lose unless you have laid the proper groundwork in which to put the issues of current status of the debt, the existence of an uncured default and the the existence of a real creditor who has not already received payment in part or in full through insurance, credit default swaps, credit enhancements and federal bailouts. Adding that the securitization documents specifically provide for payment without right of subrogation raises the issue of  waiver by the creditor — the real creditor — in the borrower’s loan transaction. Thread the needle here. If the payment has been paid and the real creditor is now identified and has received a settlement satisfactory to the investor, then the failure of the creditor to seek additional enforcement from the borrower is not a license for any stranger to the transaction to make claims on behalf of a creditor that has waived further claims or on behalf of third parties who have similar waived the rights of enforcement.
  10. Your lawyer is too timid to confront the Judge and interrupt the proceedings with appropriate objections and argument. The key here is understanding the difference between evidence, proffers of evidence, data and information. For laymen they are all the same. A lawyer who does not fully understand the differences and is not armed with case law and statutory law to corroborate his position is headed for failure regardless of how good the facts look on paper. 

A coordinated, well conceived strategy to defeat the lies being perpetrated by the banks and their attorneys in court will turn the tide. But expecting the Judge to find in favor of the borrower just because you found a forged document is pure fantasy. On the other hand, the huge volume of information in the public domain constituting an admission of material defects in the foreclosures and the originating documents with the borrowers and the investors leaves a wide open path to attack the title issues a regain title, possession and damages relating to the loss of a house that was subject to one of the millions of illegal foreclosures.

Release on Foreclosure Fraud Settlement Looks Broader Than Advertised

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Release on Foreclosure Fraud Settlement Looks Broader Than Advertised

By: David Dayen

In his statement on the Administration’s new housing policies, CFPB Director Richard Cordray makes a fairly stunning response, considering it’s posted at the White House blog:

The principles articulated by the Obama administration today are good guideposts for much-needed reforms in the mortgage market. The problems that plague consumers are well-documented. Too many consumers were steered into complicated mortgages that they did not understand and couldn’t afford. Too many families were forced into foreclosure because paperwork was lost, phone calls went unanswered, errors were not resolved, or documents were falsified.

“To protect consumers, there must be clear rules of the road and real consequences for breaking them. The Consumer Bureau is already hard at work making the costs and risks of mortgages clear upfront through our Know Before You Owe project. The financial reform law also requires us to create new mortgage servicing rules that hold servicers accountable for disclosing fees and fixing problems. We are also working with other federal agencies to develop common-sense national servicing standards. But having rules in place isn’t enough. We are closely monitoring mortgage servicers to make sure that no one gains an unfair advantage by breaking the law. Taking these steps to fix the mortgage market is good for consumers, honest businesses, and our entire economy.

“Documents were falsified.” Not “allegedly” falsified, not in some cases falsified, just the simple fact that documents were falsified. This is coming from the former Attorney General of Ohio, who filed the first lawsuit against a bank over the aforementioned falsified documents.

But now that bank, Ally, is banking a $270 million charge for “foreclosure-related matters.” You can reliably read this as the precursor to a settlement, where Ally and the other top banks will pay $5 billion at most, and then make principal reductions on investor-owned mortgages (paying off the penalty with other people’s money) totaling another $17 billion or so, to get out of the liability for routinely falsifying documents. We’re not talking about errors. Falsification connotes knowing fraud. It’s called foreclosure fraud for a reason.

Which brings me back to the question of why any AG would release said liability – which as we’ll soon see is probably a release of liability going forward – for a miniscule amount of relief for their constituents. In fact, as we know from Shahien Nasiripour, the only state that has any idea of the level of relief their constituents would get is California, which publicly opposes the settlement. These other AGs are flying in blind, when $15 billion of the $25 billion total is committed to another state, and there’s no guarantee that their affected customers will see one dime from the settlement.

Furthermore, in the one area where the settlement has been said to have improved, the terms of the liability release, as Yves Smith demonstrates, the letter from Nevada AG Catherine Cortez Masto about the settlement indicates that the release could be broader than recent reports suggest. Masto’s crucial Question #3 out of 38 says: “The State release contains a provision that prevents the State AGs and banking regulators from seeking to invalidate past assignments or foreclosures. Does this prevent States from effectively challenging future foreclosure actions that are based on faulty prior assignments?”

That’s a key question. All of the fabricated mortgage assignments and associated documents used to foreclose are back-dated, so the banks can simply say that they are covered by the release. Meaning that the release could cover ONGOING foreclosure fraud. The foreclosure mills basically invent new, “found” documents all the time, so this is a real concern. Yves writes:

The banks will pay an amount into the fund, and all issues relating to robo-signing and foreclosure will be released by the AGs: the banks will have a state level release from all bad assignment/transfer issues.

Note this does not stop private parties, meaning individual borrowers, from suing on these very grounds. But taking the AGs out of the picture prevents them from using their subpoena and prosecutorial powers to determine how widespread these abuses are and to negotiate broad solutions. So we’ll have the worst of all possible worlds: individual borrowers getting better and better at fighting foreclosures (or if you are a pro bank type, getting better and better at throwing sand in the gears) with the AGs sidelined in their ability to shed light on these issues and bring them to resolution on a broader basis. And given that the OCC has already entered into weak consent orders with the major servicers, and past servicing settlements have been violated, I remain skeptical that this deal will stop these abuses. Remember, bank executives piously swore in 2010 that they stopped robosigning, yet their firms continue to engage in that practice.

So this is a major release of liability. And in exchange, we’re supposed to be happy about an ongoing investigation with the participation of the New York Attorney General, something Harold Meyerson lauds today. What this fails to recognize is that this release would invalidate one of Eric Schneiderman’s key motions against Bank of New York Mellon, in his bid to stop the settlement between Bank of America and investors over mortgage backed security claims. Schneiderman used the argument of mortgage originators failing to convey loan documentation to the trusts as a key part of why the settlement should be disallowed. That’s the “pre-crisis” conduct he’s going on about. This settlement would make it nearly impossible to litigate that. To quote Tom Adams (from Yves’ post):

Economically, if the banks get released from failing to properly transfer thousands of mortgages into the trusts for a mere $5 billion they will have gotten the deal of the century. Especially because this settlement will do nothing to stop borrowers and courts from challenging foreclosures and continuing to expose the failure to transfer. So not only will investors pick up the cost of most of the settlement, but they will then still be exposed to the bad transfers, while the banks get a get out of jail free card.

Bill Black has more on the lack of teeth to the prosecutions here.

When I first got wind of this new fraud unit, I thought that its goal was to grease the skids for the settlement. It’s really hard to see how events have rejected that thesis. So far, Schneiderman, Kamala Harris and Beau Biden remain nominally opposed to the deal. Their fellow AGs ought to understand what they’d be giving up here.

UPDATE: And now we have a possible indication that joining the robo-signing settlement is a condition of joining the federal/state RMBS working group:

Oregon Attorney General John Kroger likes what he sees in final deal between the multistate AG coalition and mortgage servicers and said Wednesday he will sign onto a settlement.

But Kroger also said he wants to join the federal task force investigating securitization and other lending mispractices at the largest banks […]

A spokesperson for Iowa AG Tom Miller, who has led the talks, said the deadline was extended for states to sign the deal to Feb. 6 from Friday at the request of an undisclosed AG. The multistate coalition will file the judgment in federal court assuming it gets a sufficient number of sign-ons.

Oregon was one of the states that met with dissident AGs prior to the announcement of the RMBS working group. Kroger also lists specific numbers to which borrowers in his state should expect (“$100 million to $200 million in relief”), so that’s new.

SPECTRE OF FRAUD OF ALL TYPES HAUNTING BOFA, CITI, CHASE, WELLS ET AL

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New York AG Schneiderman Comes out Swinging at BofA, BoNY
Posted By igradman On August 5, 2011 (4:28 pm) In Attorneys General

This is big.  Though we’ve seen leading indicators over the last few weeks that New York Attorney General Eric Schneiderman might get involved in the proposed Bank of America settlement over Countrywide bonds, few expected a response that might dynamite the entire deal.  But that’s exactly what yesterday’s filing before Judge Kapnick could do.

Stating that he has both a common law and a statutory interest “in protecting the economic health and well-being of all investors who reside or transact business within the State of New York,” Schneiderman’s petition to intervene takes a stance that’s more aggressive than that of any of the other investor groups asking for a seat at the table.

Rather than simply requesting a chance to conduct discovery or questioning the methodology that was used to arrive at the settlement, the AG’s petition seeks to intervene to assert counterclaims against Bank of New York Mellon for persistent fraud, securities fraud and breach of fiduciary duty.

Did you say F-f-f-fraud?  That’s right.  The elephant in the room during the putback debates of the last three years has been the specter of fraud.  Sure, mortgage bonds are performing abysmally and the underlying loans appears largely defective when investors are able to peek under the hood, but did the banks really knowingly mislead investors or willfully obstruct their efforts to remedy these problems?  Schneiderman thinks so.  He accuses BoNY of violating:

Executive Law § 63(12)’s prohibition on persistent fraud or illegality in the conduct of business: the Trustee failed to safeguard the mortgage files entrusted to its care under the Governing Agreements, failed to take any steps to notify affected parties despite its knowledge of violations of representations and warranties, and did so repeatedly across 530 Trusts. (Petition to Intervene at 9)

By calling out BoNY for failing to enforce investors’ repurchase rights or help investors enforce those rights themselves, the AG has turned a spotlight on the most notoriously uncooperative of the four major RMBS Trustees.  Of course, all of the Trustees have engaged in this type of heel-dragging obstructionism to some degree, but many have softened their stance.

since investors started getting more aggressive in threatening legal action against them.  BoNY, in addition to remaining resolute in refusing to aid investors, has now gone further in trying to negotiate a sweetheart deal for Bank of America without allowing all affected investors a chance to participate.  This has drawn the ire of the nation’s most outspoken financial cop.

And lest you think that the NYAG focuses all of his vitriol on BoNY, Schneiderman says that BofA may also be on the hook for its conduct, both before and after the issuance of the relevant securities.  The Petition to Intervene states that:

Countrywide and BoA face liability for persistent illegality in:
(1) repeatedly breaching representations and warranties concerning loan quality;
(2) repeatedly failing to provide complete mortgage files as it was required to do under the Governing Agreements; and
(3) repeatedly acting pursuant to self-interest, rather than
investors’ interests, in servicing, in violation of the Governing Agreements. (Petition to Intervene at 9)

Though Countrywide may have been the culprit for breaching reps and warranties in originating these loans, the failure to provide loan files and the failure to service properly post-origination almost certainly implicates the nation’s largest bank.  And lest any doubts remain in that regard, the AG’s Petition also provides, “given that BoA negotiated the settlement with BNYM despite BNYM’s obvious conflicts of interest, BoA may be liable for aiding and abetting BNYM’s breach of fiduciary duty.” (Petition at 7) So much for Bank of America’s characterization of these problems as simply “pay[ing] for the things that Countrywide did.

As they say on late night infomercials, “but wait, there’s more!”  In a step that is perhaps even more controversial than accusing Countrywide’s favorite Trustee of fraud, the AG has blown the cover off of the issue of improper transfer of mortgage loans into RMBS Trusts.  This has truly been the third rail of RMBS problems, which few plaintiffs have dared touch, and yet the AG has now seized it with a vice grip.

In the AG’s Verified Pleading in Intervention (hereinafter referred to as the “Pleading,” and well worth reading), Schneiderman pulls no punches in calling the participating banks to task over improper mortgage transfers.  First, he notes that the Trustee had a duty to ensure proper transfer of loans from Countrywide to the Trust.  (Pleading ¶23).  Next, he states that, “the ultimate failure of Countrywide to transfer complete mortgage loan documentation to the Trusts hampered the Trusts’ ability to foreclose on delinquent mortgages, thereby impairing the value of the notes secured by those mortgages. These circumstances apparently triggered widespread fraud, including BoA’s fabrication of missing documentation.”  (Id.)  Now that’s calling a spade a spade, in probably the most concise summary of the robosigning crisis that I’ve seen.

The AG goes on to note that, since BoNY issued numerous “exception reports” detailing loan documentation deficiencies, it knew of these problems and yet failed to notify investors that the loans underlying their investments and their rights to foreclose were impaired.  In so doing, the Trustee failed to comply with the “prudent man” standard to which it is subject under New York law.  (Pleading ¶¶28-29)

The AG raises all of this in an effort to show that BoNY was operating under serious conflicts of interest, calling into question the fairness of the proposed settlement.  Namely, while the Trustee had a duty to negotiate the settlement in the best interests of investors, it could not do so because it stood to receive “direct financial benefits” from the deal in the form of indemnification against claims of misconduct.  (Petition ¶¶15-16) And though Countrywide had already agreed to indemnify the Trustee against many such claims, Schneiderman states that, “Countrywide has inadequate resources” to provide such indemnification, leading BoNY to seek and obtain a side-letter agreement from BofA expressly guaranteeing the indemnification obligations of Countrywide and expanding that indemnity to cover BoNY’s conduct in negotiating and implementing the settlement.  (Petition ¶16)  That can’t be good for BofA’s arguments that it is not Countrywide’s successor-in-interest.

I applaud the NYAG for having the courage to call this conflict as he sees it, and not allowing this deal to derail his separate investigations or succumbing to the political pressure to water down his allegations or bypass “third rail” issues.  Whether Judge Kapnick will ultimately permit the AG to intervene is another question, but at the very least, this filing raises some uncomfortable issues for the banks involved and provides the investors seeking to challenge the deal with some much-needed backup.  In addition, Schneiderman has taken pressure off of the investors who have not yet opted to challenge the accord, by purporting to represent their interests and speak on their behalf.  In that regard, he notes that, “[m]any of these investors have not intervened in this litigation and, indeed, may not even be aware of it.” (Pleading ¶12).

As for the investors who are speaking up, many could take a lesson from the no-nonsense language Schneiderman uses in challenging the settlement.  Rather than dancing around the issue of the fairness of the deal and politely asking for more information, the AG has reached a firm conclusion based on the information the Trustee has already made available: “THE PROPOSED SETTLEMENT IS UNFAIR AND INADEQUATE.” (Pleading at II.A)  Tell us how you really feel.

[Author’s Note: Though the proposed BofA settlement is certainly a landmark legal proceeding, there is plenty going on in the world of RMBS litigation aside from this case. While I have been repeatedly waylaid in my efforts to turn to these issues by successive major developments in the BofA case, I promise a roundup of recent RMBS legal action in the near future.  Stay tuned…]

Article taken from The Subprime Shakeout – http://www.subprimeshakeout.com

 

WISCONSIN APPEALS CT: AURORA IS NOT OWNER OF NOTE — TRIAL COURT REVERSED

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EDITOR’S NOTE: WISCONSIN COURT GETS IT: HEARSAY, PROOF, HOLDER NOT THE SAME AS CREDITOR, ETC. AFFIDAVIT THROWN OUT FOR LACK OF PERSONAL KNOWLEDGE. In short everything we have been saying here was followed by the Court. Expect more decisions like this coming from other states.

In other words, false papers and representations by counsel are no substitute for good old-fashioned proof. And proof is what the pretenders don’t have which is why they are pretenders — and losers. The parties initiating foreclosures, declaring the defaults, denying modifications, and buying the home at auction with a “credit bid” are and always have been tricksters who have now screwed up at least 10 million real estate transactions and probably closer to 100 million real estate transactions. These are the people who received the bailout, while the buyers of empty bogus mortgage bonds and the owners of homes with undocumented loans looked on in disbelief.

The great securitization scam, the appraisal fraud, the predatory lending and the TILA violations are coming to light in a wave that possibly not even the trillion dollar banking oligarchy can stop. This case is one of dozens of examples.

STOP FORECLOSURE FRAUD

WIS. APPEALS COURT REVERSED “FAILED MERS ASSIGNMENT, FAILED AFFIDAVIT, FAILED STANDING, FAILED CASE” AURORA v. CARLSEN

WIS. APPEALS COURT REVERSED “FAILED MERS ASSIGNMENT, FAILED AFFIDAVIT, FAILED STANDING, FAILED CASE” AURORA v. CARLSEN

AURORA LOAN SERVICES LLC,

PLAINTIFF-RESPONDENT,

V.

DAVID J. CARLSEN AND NANCY L. CARLSEN,

DEFENDANTS-APPELLANTS.

APPEAL from a judgment of the circuit court for Rock County:

JAMES WELKER, Judge. Reversed.

Before Vergeront, P.J., Lundsten and Blanchard, JJ.

¶1 LUNDSTEN, J. This appeal involves a foreclosure action initiated by Aurora Loan Services against David and Nancy Carlsen. Following a court trial, the circuit court granted judgment of foreclosure in favor of Aurora, finding that Aurora is the holder of the note and owner of the mortgage and that the Carlsens were in default. We conclude that the circuit court’s finding that Aurora was the holder of the note, a finding essential to the judgment, is not supported by admissible evidence. We therefore reverse the judgment.

Background

¶2 Aurora Loan Services brought a foreclosure suit against David and
Nancy Carlsen, alleging that Aurora was the holder of a note and owner of a
mortgage signed by the Carlsens encumbering the Carlsens’ property. The
Carlsens denied several allegations in the complaint and, especially pertinent here,
denied that Aurora was the holder of the note. Aurora moved for summary
judgment, but that motion was denied.

¶3 A trial to the court was held on June 9, 2010. Aurora called one of
its employees, Kelly Conner, as its only witness. Aurora attempted to elicit
testimony from Conner establishing a foundation for the admission of several
documents purportedly showing that Aurora was the holder of a note that
obligated the Carlsens to make payments and that the Carlsens were in default. It
is sufficient here to say that the Carlsens’ attorney repeatedly objected to questions
and answers based on a lack of personal knowledge and lack of foundation, and
that the circuit court, for the most part, sustained the objections. Aurora’s counsel
did not move for admission of any of the documents into evidence. After the
evidentiary portion of the trial, and after hearing argument, the circuit court made
findings of fact and entered a foreclosure judgment in favor of Aurora. The
Carlsens appeal. Additional facts will be presented below as necessary.

Discussion

¶4 It is undisputed that, at the foreclosure trial, Aurora had the burden
of proving, among other things, that Aurora was the current “holder” of a note
obligating the Carlsens to make payments to Aurora. Because Aurora was not the
original note holder, Aurora needed to prove that it was the current holder, which
meant proving that it had been assigned the note. There appear to be other failures
of proof, but in this opinion we focus our attention solely on whether Aurora
presented evidence supporting the circuit court’s findings that “the business
records of Aurora Loan Services show … a chain of assignment of that … note”
and that “Aurora is the holder of the note.”

¶5 As to assignment of the note, the Carlsens’ argument is simple: the
circuit court’s findings are clearly erroneous because there was no admissible
evidence supporting a finding that Aurora had been assigned the note. The
Carlsens contend that, during the evidentiary portion of the trial, the circuit court
properly sustained objections to Aurora’s assignment evidence, but the court then
appears to have relied on mere argument of Aurora’s counsel to make factual
findings on that topic. We agree.

¶6 We focus our attention on a document purporting to be an
assignment of the note and mortgage from Mortgage Electronic Registration
Systems to Aurora. At trial, this document was marked as Exhibit D. Although
Aurora’s counsel seemed to suggest at one point that certain documents, perhaps
including Exhibit D, were certified, the circuit court determined that the
documents were not certified. Under WIS. STAT. § 889.17,1 certified copies of
certain documents are admissible in evidence based on the certification alone.
Aurora does not contend that Exhibit D is admissible on this basis.

¶7 Aurora argues that Conner’s testimony is sufficient to support the
circuit court’s finding that Aurora had been assigned the note. Our review of her
testimony, however, reveals that Conner lacked the personal knowledge needed to
authenticate Exhibit D. See WIS. STAT. § 909.01 (documents must be
authenticated to be admissible, and this requirement is satisfied “by evidence
sufficient to support a finding that the matter in question is what its proponent
claims”). Relevant here, Conner made general assertions covering several
documents. Conner either affirmatively testified or agreed to leading questions
with respect to the following:

  • · She works for Aurora.
  • · She “handle[s] legal files” and she “attend[s] trials.”
  • · “Aurora provided those documents that are in [her] possession.”
  • · She “reviewed the subject file” in preparing for the hearing.
  • · She declined to agree that she is the “custodian of records for
  • Aurora.”

  • · She “look[s] at documentation … [does] not physically handle
  • original notes and documents, but [she does] acquire
    documentation.”

  • · “Aurora [is] the custodian of records for this loan.”
  • · She is “familiar with records that are prepared in the ordinary course
    of business.”
  • · She has “authority from Aurora to testify as to the documents, of
    [Aurora’s] records.”

As it specifically pertains to Exhibit D, the document purporting to evidence the
assignment of the note and mortgage from Mortgage Electronic Registration
Systems to Aurora, Conner testified:

  • · Aurora has “possession of Exhibit D.”
  • · Exhibit D is “an assignment of mortgage.”

With respect to possession of Exhibit D, Conner did not assert that Exhibit D was
an original or that Aurora had possession of the original document. For that
matter, Conner did not provide a basis for a finding that any original document she
might have previously viewed was what it purported to be.2

¶8 Thus, Conner did no more than identify herself as an Aurora
employee who was familiar with some unspecified Aurora documents, who had
reviewed some Aurora documents, and who had brought some documents,
including Exhibit D, to court. Although Conner was able to say that Exhibit D, on
its face, was an assignment, she had no apparent personal knowledge giving her a
basis to authenticate that document. See WIS. STAT. § 909.01.

¶9 Aurora points to various provisions in WIS. STAT. chs. 401 and 403,
such as those relating to the definition of a “holder” (WIS. STAT.
§ 401.201(2)(km)), to a person entitled to enforce negotiable instruments (WIS.
STAT. § 403.301), and to the assignment of negotiable instruments (WIS. STAT.
§§ 403.203, 403.204, and 403.205). This part of Aurora’s argument addresses the
underlying substantive law regarding persons entitled to enforce negotiable
instruments, such as the type of note at issue here, but it says nothing about
Aurora’s proof problems. That is, Aurora’s discussion of the underlying law does
not demonstrate why Exhibit D was admissible to prove that Aurora had been
assigned the note and was, under the substantive law Aurora discusses, a party
entitled to enforce the note.

¶10 Similarly, Aurora discusses the relationship between a note and a
mortgage and, in particular, the equitable assignment doctrine. But here again
Aurora’s discussion fails to come to grips with Aurora’s failure to authenticate
Exhibit D, the document purporting to be an assignment of the note to Aurora.
Aurora points to testimony in which Conner asserted that Aurora acquired and
possessed Exhibit D, but possession of Exhibit D is meaningless without
authentication of the exhibit.

¶11 Aurora argues that we may look at the “record as a whole,”
including summary judgment materials, to sustain the circuit court’s factual
findings. Thus, for example, Aurora asks us to consider an affidavit filed with its
summary judgment motion. In that affidavit, an Aurora senior vice-president
avers that the note was assigned to Aurora, that the assignment was recorded with
the Rock County Register of Deeds, and that Aurora is the holder of the note. This
argument is meritless. Aurora was obliged to present its evidence at trial. It could
not rely on the “record as a whole” and, in particular, it could not rely on summary
judgment materials that were not introduced at trial. See Holzinger v. Prudential
Ins. Co., 222 Wis. 456, 461, 269 N.W. 306 (1936). For that matter, even if Aurora
had, at trial, proffered the affidavit of its senior vice-president, the affidavit would
have been inadmissible hearsay. See WIS. STAT. § 908.01(3) (“‘Hearsay’ is a
statement, other than one made by the declarant while testifying at the trial or
hearing, offered in evidence to prove the truth of the matter asserted.”).

¶12 In sum, Aurora failed to authenticate Exhibit D, the document
purporting to be an assignment of the note. Thus, regardless of other alleged proof
problems relating to that note and the Carlsens’ alleged default, the circuit court’s
finding that Aurora was the holder of the note is clearly erroneous—no admissible
evidence supports that finding. Aurora failed to prove its case, and it was not
entitled to a judgment of foreclosure.

By the Court.—Judgment reversed.

_______________________________________

1 All references to the Wisconsin Statutes are to the 2009-10 version unless otherwise noted.

2 Our summary of Conner’s testimony omits several assertions Conner made that were
stricken by the circuit court. Similarly, we have not included examples of the circuit court
repeatedly sustaining hearsay and foundation objections. For example, the court repeatedly
sustained objections to Aurora’s attempts to have Conner testify that Aurora “owns” the note.
Aurora does not and could not reasonably argue that the Carlsens have not preserved their
authentication objections. The Carlsens’ attorney repeatedly and vigorously objected on hearsay,
foundation, and authentication grounds. The record clearly reflects that the Carlsens were
objecting to the admission of all of Aurora’s proffered documents on the ground that Conner
lacked sufficient knowledge to lay a foundation for admission.

Notarized MERS Assignment of DOT as Nominee: Forensic Analysis and Motion Practice

I was looking at an assignment signed by Margaret Dalton, “Vice President”, Mortgage Electronic Registration Systems, Inc (MERS) “as nominee” for “Hoecomings” (sic) Financial Network, Inc. with an execution date of March 5, 2010 and a notarization date of the same date, notarized by D. Pakusic in Duval County, Florida, naming United Independent Title as Trustee under the Deed of Trust and purporting to assign the Deed of Trust to JP Morgan Chase Bank National Association.

A forensic analysis report would or should state as follows:

  1. The title chain reveals the property is located in the County of Los Angeles, State of California and contains a purported assignment signed by Margaret Dalton, “Vice President”, Mortgage Electronic Registration Systems, Inc (MERS) “as nominee” for “Hoecomings” (sic) Financial Network, Inc. with an execution date of March 5, 2010 and a notarization date of the same date, notarized by D. Pakusic in Duval County, Florida, naming United Independent Title as Trustee under the Deed of Trust and purporting to assign the Deed of Trust to JP Morgan Chase Bank National Association. in public records book ____, at page ____ of the County of _________, in the State of Florida. The document appears on its face to have been prepared by Malcolm-Cisneros, a Law Corporation located at 2112 Business Center Dr., Irvine, California 92612. Given the location of the property in California, the location of the law firm that prepared it in California and the location of of the other parties, the fact that it was “notarized” in Florida raises numerous forensic questions requiring production of additional documentation and facts.
  2. Location Issues: The property is located in the State of California, as are the Trustors under the Deed of Trust (DOT). Margaret Dalton is believed to be located in Irvine, California, possibly employed by or on the premises of the above-referenced Law Corporation. The Notary is located in Duval County, Florida which has no known connection with any of the parties. MERS offices are reported to be located in states other than California and the IT platform is reported to be located in the Midwest. Homecoming Financial Network, Inc. (which undersigned believes was intended by the referenced instruments and title chain) is authorized to do business in the State of California, but upon research does not appear to be a chartered bank, financial institution or lender. HFN is a mortgage originator acting on behalf of unknown sources of funds who may be located anywhere, since they are neither disclosed nor described in the closing documentation nor any document on record. Accordingly there is a question as to the identity of the creditor at the time of the origination of the loan, the identity of the creditor at the current time, and the identity of the creditor at all times between the origination of the loan and the present. There are also questions requiring additional documentation and fats to reveal whether the purported assignment was executed by or on behalf of anyone in Duval County, Florida where the instrument was notarized or in Irvine, California where the instrument may have been executed.
  3. Margaret Dalton’s employment is unknown but it does not appear that she has ever been an employee of MERS, nor that MERS is located where Margaret Dalton apparently signed the document. Previous investigations by the undersigned indicate that MERS is an electronic database privately owned and operated by fewer than 17 employees, which do not include Ms. Dalton. According to information received from MERS, the database platform operated by MERS for its members, has an access procedure consisting of a user ID and password. With such information any person could enter, alter or amend any entry in the MERS database. The procedure also provides access to an automated procedure wherein the user may name a person to serve as “vice-president” or “limited signing officer” for MERS. No record has been produced for this analysis indicating that Ms. Dalton was named as “vice-president” or whether she did so herself, nor whether she was authorized to do so or from whom said authority would be claimed. There is accordingly a question as to whether the document was in fact signed by Ms. Dalton, and if so whether she had authority to sign a document that conveyed an interest in real property.
  4. Given the above information, there is also a question as to whether the notarization was valid or void. Florida law provides that if the Notary knows that the person signing does not possess authority to sign or knows that the person is ignorant of their authority, that the oath administered is invalid and that the instrument is construed to be not notarized, despite the signature and stamp. Recording laws require notarization. Thus there is a question as to whether the document is or would be construed as a recorded instrument despite its obvious appearance in the title record. If it is not construed as a recorded instrument, then the chain of title should be amended to remove this document.
  5. The chain of title, as stated above, reveals a Deed of Trust (DOT) in favor of MERS as nominee. No issues are readily apparent as to the execution of the Deed of Trust. However, the content of the DOT raises factual issues that require further examination and the production of additional documents and information. Since MERS is an IT platform operated for the purposes of its private owners, it is not authorized by Florida Statutes nor California Statutes to serve as the equivalent of a recording record for instruments in the public records. It is a data entry and retrieval system that is private, not public. Since MERS was named as nominee and the MERS documentation available on the internet clearly state that under no circumstances will MERS ever claim an interest in the real property, the DOT, the note, nor will ever be the actual lender, beneficiary or mortgagee in any transaction, the effect of naming MERS raises factual issues since there are questions regarding title raised by the conflict between naming MERS and MERS disclaiming any such interest. There is no record of MERS accepting the position as nominee and if so under what circumstances. Those terms exist in agreements executed between members of MERS and one of the MERS corporations and are unavailable to the undersigned forensic analyst.
  6. The DOT and the above-referenced purported assignment refer to MERS as nominee for HFN, which was neither the creditor nor the lender at the time of the origination of the loan. Thus the DOT appears to name MERS (who disclaims any interest in the loan) on behalf of HFN (who served as a conduit for a table-funded loan transaction, probably as part of the securitization of the subject loan transaction) both of whom served principals that were not disclosed at the time of the origination of the loan nor, to the knowledge of the undersigned, to the present. The effect of misspelling the name of HFN on the purported assignment is unknown, but based upon advice from title agents consulted, it would be ordinarily required in any subsequent transaction, that the document be re-executed with the proper spelling. Whether this affects the legality of the instrument is unknown to the undersigned analyst.
  7. The purported assignment refers only to the DOT, which raises several questions. It is unknown whether an assignment of the note, as evidence of the underlying obligation, was executed at the same time as the purported assignment of the DOT. It is unknown whether all the necessary parties executed instruments required to authorize the assignments, and if so when this was accomplished. If there were no such other assignments then there is a question as to whether the instrument was effective, and if so, whether it intended to provide ownership of the security instrument (DOT) to one party while the ownership of the note remained or was transferred to another party, while at the same time the underlying obligation to yet another party may have existed between the Trustor as debtor and the source of funds for the origination of the loan, as creditor. Additional documentation and facts would be required to make these determinations.

How to Negotiate a Modification

See how-to-negotiate-a-short-sale

See Michael Moore — Modifications

See Template-Lawsuit-STOP-foreclosure-TILA-Mortgage-Fraud-predatory-lending-Set-Aside-Illegal-Trustee-Sale-Civil-Rico-Etc Includes QUIET TITLE and MOST FEDERAL STATUTES — CALIFORNIA COMPLAINT

See how-to-buy-a-foreclosed-house-its-a-business-its-an-opportunity-its-a-risk

My statements here relate to general information and not legal advice. Generally we are of the opinion that the loan modification programs are a farce. First they end up in foreclosure in 6-7 months — more than 50-60% of the time. Then you have the problem that you signed new papers that will at least attempt to waive the rights and defenses you have now. A trial program is a trial program — it is not permanent. It is usually a smokescreen for the “lenders” (actually pretender lenders) to appear to comply with the federal mandate and thus collect the bonus from the Federal government for entering into a modification agreement. And let’s not forget that the entities with whom you would enter into this “new” agreement probably have no rights, ownership or authority over your mortgage — they are only pretending. Their game plan is that they have nothing to lose and everything to gain because they never advanced any money on the funding of your mortgage.

So the very first thing you want to do is ask for proof of real documents that can be reviewed by a forensic analyst which will demonstrate they have the power to change the terms, and assuming they can’t produce that, their agreement that any deal you enter into with them will be taken to court in a Quiet Title Action in which they will allow you to get a judgment that says you own the house free and clear except for whatever the new deal is with the new lender. The New Lender is necessary because the REAL Lender is quite gone and possibly unidentifiable.

Any failure to agree to such terms is a clear signal you are wasting your time and they are jockeying you into default, which is the only way they collect insurance on your mortgage through the credit default swaps purchased on the pool containing your mortgage. They actually make money if you default because they were allowed to buy insurance many times over on the same debt. So on your $300,000 mortgage they might actually receive (no joke) $9 million if you default. That means they have far more incentive to trick you into default than to REALLY modify your mortgage terms. and THAT means you need to be careful about what they are REALLY doing — a modification or deception. If it’s deception don’t fall into self deception and wish it weren’t so. Go after them with whatever you can. The law is on your side as to title, terms and predatory and fraudulent loan practices.

Your strategy is simple: (1) present a credible threat and (2) demonstrate that you have knowledgeable people (forensic analyst, expert witness, lawyer).

Your tactics are equally simple: (1) Present an expert declaration or affidavit that raises issues of fact regarding the representations of counsel or the pleadings of your opposition, (2) Pursue expedited discovery (ask for things that they should have had before they started the foreclosure process — a full accounting from the real creditor/lender, documentation showing chain of title/possession, documentation regarding the money that exchanged hands from the bond investor all the way down the securitization chain to the homeowner) and (3) ask for an evidentiary hearing on the factual issues.

It would probably be a good idea if you went through a local licensed attorney who really knows this stuff — like a graduate of Max Gardner’s seminars or a graduate of the Garfield Continuum. This attorney can create some credible threats like the fact that youa re claiming, under TILA, your right to undisclosed fees on your mortgage, including the SECOND yield spread premium paid in the securitization chain when the pool aggregator sold the “assets” to the SPV pool that sold bonds to investors — investors who were the the sole source of cash advanced to make this nightmare come true. Picking the right lawyer is critical. Anyone who has not studied securitization, anyone who has not been working hard in the area of foreclosure defense AND offense, should not be used because they simply don’t know enough to achieve a satisfactory result.

My rule of thumb is that I don’t like any modification unless it has the following attributes:

1. Forgiveness of all late fees, late payments etc. No tacking on fees, payments, interest or anything else to the end of the loan.
2. Removal of all negative comments from your credit rating.
3. Reduction of the principal due on your obligation in the form of a new note or an amendment executed by all relevant parties. The amount of the reduction should be no less than 30%, probably no more than 75% and should average across the board something like 40%-60%. So if your mortgage was $300,000 your reduction should be between $90,000 (leaving you with a $210,000 obligation) and $225,000 (leaving you with a $75,000 obligation).
a. How do you know what to ask for? First step is on the appraisal. Had you known that the appraisal used in your deal was unsustainable, you probably would have taken a different attitude toward the deal and would have insisted on other terms. Assuming you had a zero-down mortgage loan(s) [i.e., including 1st and 2nd mortgage] then you probably, on average have spent some $15,000-$20,000 in household improvements that cannot be recouped, but which were also spent based upon the apparent value of the house.
b. So you look at the current appraisal and let’s say in your community the actual sales prices of homes closest to you are down by 50% from what they were in 2007 or when you went to the “closing” on your loan.
(1) Write down the purchase price of your home or the original appraisal when you closed the “loan.”
(2) Deduct the Decline in Appraised Value, which in our example is a decline of 50%. If you had a zero down payment loan, this would translate as the original amount of the note minus the 50% $150,000-$160,000) reduction in value. This leaves $140,000-$150,000.
(3) Deduct the $15,000-$20,000 you spent on household improvements. This leaves $120,000 to $135,000.
(4) Deduct your attorney’s fees which will probably be around $15,000, hopefully on contingency at least in part. This leaves $105,000 to $120,000.
(5) Deduct any other related expenses such as the cost of a forensic audit (which INCLUDES TILA, RESPA, Securities, Title, Appraisal, Chain of Possession, and other factors like fabrication and forgery) that should cost around $2500, and any expense incurred retaining an expert to prepare and execute an expert declaration or expert affidavit that should cost around $1000-$1500. [Caution a declaration from someone who has no idea what is in the document, or who has very little exposure to discovery, depositions, court testimony etc. could be less than worthless. Your credibility will be diminished unless you pick the right forensic analyst and the right expert]. This leaves a balance of $101,000 to $116,000.
(6) If you did make a down payment or cash payments for “non-standard” options then you should deduct that too. So if you made a 20% down payment ($60,000, in our example) that would be a deduction too so you can recover that loss which resulted from the false appraisal and false presentation of the appraisal by the “lender” who was paid undisclosed fees to lie to you. In our example here I am going to assume you have a zero down payment. But if we used the example in this paragraph there would be an additional $60,000 deduction that could reduce your initial demand for modification to a principal reduction of $40,000.
(7) So your opening demand should be a note with a principal balance of $101,000 with a settlement probably no higher than $150,000. I would recommend a 15 year fixed rate mortgage because you will be done with it a lot sooner and convert you from debt to wealth. But a mortgage of up to 40 years is acceptable in order to keep your payments to a minimum if that is a critical issue.
4. Interest rate of 3%-4% FIXED.
5. Judge’s execution of final judgment ratifying the deal and quieting title against he world except for you as the owner of the property and the new lender who might have a new note and a new mortgage or who might just walk away completely when you present these terms. There are tens of thousands of homes in a grey area where they have not made a payment in years, the “lender” has not foreclosed, or the “lender” initiated foreclosure and then abandoned it. These people should be filing quiet title actions of their own and finish the job of getting the home free and clear from an encumbrance procured by fraud.

If you want to “up the stakes” then add the damages and rebates recoverable for TILA violations for predatory lending, undisclosed fees etc. That will ordinarily take you into negative territory where the “lender” owes you money and not vica versa. In that case your lawyer woudl write a demand letter for damages instead of an offer of modification. The other thing here is the typical demand for your current financial information. My position would be that this modification or settlement is not based upon NEED but rather, it is based upon LENDER LIABILITY. And if they are asking for proof of your financial condition on a SISA (stated income, stated asset) or NINJA (No Income, No Job, NO Assets) loan then the mere request for financial information is a request for modification. That triggers your unconditional right to ask “who are you and why are you the entity that is attempting to modify or settle this claim?”

By the way the “rule of thumb” came from the old common law doctrine that one could beat his wife and children with a stick no greater in diameter than the size of your thumb. In this case don’t let my use of the “rule of thumb” restrain you from using a bigger stick.

Neil F. Garfield, Esq.
ngarfield@msn.com

“Officials” Who Sign for MERS: False, Fraudulent, Fabricated, Forged and Void Documents in the Chain

all we have left is the obligation, unsecured and subject to counterclaims etc. MOST IMPORTANT procedurally, it requires a lawsuit by the would-be forecloser in order to establish the terms of the obligation and the security, if any. This means they must make allegations as to ownership of the receivable and prove it — the kiss of death for all would be lenders except investors who funded these transactions.

sirrowan
sirrowan@peoplepc.com

“I just thought of something. I was reading what was posted a few above me regarding MERS own rules. They claim that their “officers” tend to act without authority from MERS and they do not use any records held by MERS etc.

How can this be? How can they be officers then? They aren’t if you ask me. Now wonder all these judges are telling them they are nothing but agents if even that, lol.

But if they were officers, wouldn’t MERS be liable for the actions of their “officers” on behalf of MERS?”

ANSWER from Neil

Sirrowan: GREAT POINT! The answer is that if they have a user ID and password ANYONE can become a “limited signing officer” for MERS.

Sometimes they say they are vice-president, sometimes they use some other official title. But the fact remains that they have no connection with MERS, no employment with MERS, no access to MERS records, and definitely no direct grant of a POA (Power of attorney). It’s a game.

This is why I have repeatedly say that in every securitized chain, particularly in the case of a MERS chain, there are one or more documents that are fabricated, forged or voidable. Whether this rises the level of criminality is up to future courts to determine.

One thing is sure — a party who signs a document that has no authority to sign it in the capacity they are representing has just committed violations of federal and state statute and common law. And the Notary who knew the party was not authorized as represented has committed a violation as well. Most states have statutes that say a bad notarization renders the document void, even if it was recorded. This breaks the chain of title and reverts back to the originating lender (at best) or voids the documents in the originating transaction (at worst).

In either event, the distinction I draw between the obligation (the substance of the transaction caused by the funding of a “loan product”) and the note (which by law is ONLY EVIDENCE of the obligation and the mortgage which is ONLY incident to the note, becomes very important. If the documents (note and mortgage) are void then all we have left is the obligation, unsecured and subject to counterclaims etc. MOST IMPORTANT procedurally, it requires a lawsuit by the would-be forecloser in order to establish the terms of the obligation and the security, if any. This means they must make allegations as to ownership of the receivable and prove it — the kiss of death for all would be lenders except investors who funded these transactions.

FORECLOSURE DEFENSE: JUDGE’S ARE CATCHING UP WITH THE FACT THAT THERE ARE BREAKS IN THE CHAIN OF TITLE AND THE FORECLOSING PARTY LACKS AUTHORITY TO FORECLOSE

An Evans woman whose business dealings set off a series of foreclosures and bankruptcies fended off eviction from her own home Thursday — at least for now.
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U.S. Bankruptcy Court Judge Susan D. Barrett gave the local counsel for American Home Mortgage Servicing until next Thursday to gather information to show that through a series of sales and transfers, it is the rightful owner of Regina Preetorious’ $567,000 mortgage loan.

Ms. Preetorious obtained titles on properties owned by financially strapped people, and sold second and third mortgages to private investors who might never recover the $3.7 million they invested.

Her various companies led to more than 40 foreclosures, and about a dozen bankruptcies, including her own.

By the time she and her husband filed for bankruptcy on Aug. 4, she had been involved in the transfer of properties with a combined fair market value of more than $10.6 million.

American Home Mortgage petitioned the bankruptcy court to allow it to proceed with foreclosure on the couple’s Windmill Lane home. The company contends they haven’t made a mortgage payment since October 2007 on the 3,540-square-feet home.

The couple’s bankruptcy attorney, Todd Boudreaux, contends American Home Mortgage should prove it holds the legal security deed on their home.

Ms. Preetorious signed the original loan on Nov. 30, 2006, with Option One Mortgage Co. In January, the company’s loans were placed in a trust with Wells Fargo as the trustee. On April 30, America Home acquired all the assets and interests of Option One, company attorney James Overstreet said Thursday. The contents of the trust overseen by Wells Fargo were included, he said.

But that last step wasn’t clear Thursday. There appeared to be a break in the chain of ownership, Judge Barrett said.

Mr. Boudreaux said the couple is entitled to know exactly who owns their loan.

According to their bankruptcy petition, they owe $580,000 on the home they valued at $600,000. The Columbia County property records set the value of the home at $457,919.

According to their bankruptcy petition, the family’s only income is unemployment and child support payments. Their only assets besides the home are personal possessions and two vehicles.

They listed their liabilities at nearly $2.64 million. They did not, however, include in that total any value amount for potential claims by people whose homes were involved in Ms. Preetorious’ businesses.

Reach Sandy Hodson at (706) 823-3226 or sandy.hodson@augustachronicle.com.

Foreclosure Defense and Offense: It’s the TITLE

The essential issue remains: who if anyone has a title interest under the security instrument? It would appear that many “lenders” have attempted to make various provisions for transferring the note since they knew they would be either selling it for money or using it to replace a non-performing loan under a pooling and service agreement. However, unless the recorded instruments followed the traveling note, we still end up with the same incurable result: one party is named as mortgagee and another party is the “note holder.”

The definition of the “note holder” while attempting to be precise is not so — because of the way the process of securitization works. First you have the initial transmittal which may or may not have been executed as an assignment by allonge or indorsement. If the transaction was not an assignment and the “lender” received “payment” (cash or other consideration, like relieving it of the obligation to substitute a performing note for a non-performing note) then the note is “PAID.” If it is properly assigned, then the security instrument has one party as mortgagee with no interest in the note and another party with the note and no power over the mortgage.

Add to this the fact that co-obligors (insurers, guarantors, reserves, credit default swaps) are added to the chain as the note travels upward to the investor, and the fact that the right of allocation of payments to other notes or from other notes is present because of cross collateralization in the tranches, and then add the fact that the certificate of asset backed securities may have been transferred, sold, pledged or otherwise transmitted to yet another party and you have (a) a question over title over the note (b) a question of whether the note holder got paid even if the borrower made no payments and (c) an unsecured obligation because the investor never received a recorded interest in the underlying property.

Thus an attempt at modification of the note could be successful if the right people are involved, but that doesn’t change the essential nature of the obligation — i.e., that it is unsecured and that the homeowner has a right to quiet title — or at the very least a right to a declaration as to who is the payee and who is the proper enforcing authority under the mortgage if it somehow remains valid.

The inclusion of language in various instruments of transmittal, modification or even satisfaction of the mortgage does nothing to resolve the issue of severance of the security interest from the note and the fact that the terms of the note were changed without the borrower’s permission. It is one thing to assign a note; it is quite another to add and subtract terms and parties to it.

In my opinion modification is not possible without either producing a proper chain of title and all the required recorded instruments as per state law, or a title policy that is issued without exceptions AFTER disclosure to the title agent in writing regarding the issues raised by securitization.

I doubt if any title agency or carrier would underwrite such a policy. When I have confronted “lenders” with this issue their response, so far, is that in a modification no title policy is necessary. This is lame as well as incorrect. If they are right, they should have no problem getting the title agent who issued the original policy to confirm in writing that he/she is in possession of all the required disclosures and agrees with the lender that the original title policy is unaffected by the modification, despite the issues presented regarding securitization of the loan.

see also post #1450Mortgage Shortsales and Modifications

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