What foreclosure Judges want to see in court

Posted on September 26, 2023 by Lance Denha

As Neil Garfield explained to me and many of his clients and readers, the only thing most judges are interested in is where did the money go, who paid, who received and whether it was paid, and if in part, to what extent. One must be very careful to distinguish this from the “show me the note” defense, which was effective for a while in obtaining dismissal of judicial foreclosures without prejudice. Our belief is that the Banks, servicers, and lawyers, through Loan processing Services and its various progeny overcame the missing note with the use of color printers, copiers and rob signing or surrogate signing.

The Bank’s strategy works simply because the absence of a monetary transaction is still inconceivable for most lawyers, judges and even borrowers. Everyone knows (or believes) that money exchanged hands. Everyone believes that the obligation exists, that the note is evidence of that obligation, and the mortgage secured the faithful performance of the duties (principally repayment). When the homeowner borrower or their attorney strolls into court and admits all of that, admits that there is balance outstanding, admits that the homeowner borrower failed to make a scheduled payment (without objecting on the basis that the payment was not and is not due) a first year law student could decide the case. Any homeowner borrower who enters the courtroom under those circumstances is saying “Yes I owe the money, no I didn’t pay it, but here is why you should give me a free house.” In such cases, the Bank correctly wins in motion practice and the case never gets into discovery much less pretrial or trial mode.

Most Judges seem to feel that “technical” violations included in the chain of assignments, allonges, endorsements or even the mortgage or deed of trust don’t matter. It doesn’t matter whether we agree or disagree with such judges — they must be approached with other arguments and using other strategies. They want to know one thing, and that will govern how they see the case forever: did the homeowner take a loan and did they make their payments as scheduled? If the homeowner answers affirmatively that the loan was accepted and acknowledges that payments stopped as of a certain or contested date, the Judge will presume the existence of a valid obligation that the borrower is attempting to wiggle out of using exotic theories and technical objections.

The answer and affirmative defenses to assert in court are that in which the borrowers deny any wrongdoing associated with loan, responds that there has been no default, and no demand has been made from the actual creditor. If the real lender wants their money they must demand it, which they have not done because these fake pretender lenders and servicers are initiating an action of foreclosure when they are not the ones who have paid value for this loan in court. And if these so-called lenders want to pursue the foreclose action, they must produce an agreement in which the real lender was given a security interest in the property — something that doesn’t exist. All this can be corrected, and most homeowners are willing to participate in the correction if evidence is brought forth by any party plaintiff or creditor. However the correction to perfect an interest in the loan must be based upon legal and economic reality rather than the proffers of false facts and non-existent transactions. These pretend lenders claim rights in the loan via assignment, endorsements, trustees of the named trust etc to bring forth the foreclosure action.

There are usually two outcomes to these cases, either we know at the end the identity of the creditor, the principal amount due after all appropriate deductions, and the terms of repayment or, as we have seen in thousands of cases, the case suddenly moves off the radar and upon investigation it is revealed that after a Judge orders discovery to proceed, the case is ripe for settling with the Lender or outright dismissal when these pretend lenders fail to provide answers in the discovery process. The strategic point here is to raise an issue of fact that MUST be heard by the court whether or not the Court thinks at the time that the issue of fact raised by the borrower has merit. Once the Court agrees that the issue of fact exists, then the borrower is on his way to discovery, denial of motions for summary judgment denials of motions to lift stay, etc. And that’s how you can win. That’s how Neil won and that’s how we win going forward.

Filed under: burden of persuasion, burden of pleading, BURDEN OF PROOF, discovery, foreclosure | Tagged: foreclosure, foreclosure defense, foreclosure fraud | 1 Comment »

Eric Mains: #MeToo- Is Social Justice a Viable Alternative to a Flawed and Compromised Judicial System?

Posted on December 11, 2017 by Neil Garfield

# MeToo and #MineToo revolución!

By Eric Mains, J.D, Former Federal Bank Regulator

In the last few months we have seen a literal wave of the wealthy and influential falling from grace, losing their positions of power and ducking for cover as their conduct becomes scrutinized in media and social media. They have become keenly aware if they have something to hide in their past or present that maybe, just maybe, the specter of justice, fate, retribution… call it what you will, but a reckoning of some sort may finally be coming for them.

The key difference from what we have experienced in the recent past is this is not just a few token individuals who are intentionally being sacrificed by other peers just to placate the masses, to give us a sense that there is justice out there, while a majority of the remaining transgressors remain free to go about business as usual. Until recently perpetrators of sexual harassment could expect their violations to either go unreported, or if reported by a victim to a typically “helpful” HR representative at a major corporation, would likely result in that persons termination shortly afterwards or a hushed payout and dismissal from employment. So, what’s changed? Why this sudden firestorm in the specific areas of sexual harassment & civil rights?

Well for one, the rise of social media giving voice to those who were previously either too intimidated or too ashamed to go through the regular channels of our justice system or report incidents to mainstream media. The lessening of any stigma attached with coming forward over allegations of sexual misconduct or workplace harassment to be sure; but perhaps more overlooked has been the slowly building tension from all corners of America with a justice system that over the past few decades has become ever more inaccessible and ever more compromised for certain victims.

The courts in America have slowly devolved (or evolved, depending on your perspective) into a long, drawn-out, pay-for-play system which favors those with the most money and connections. They can hire consultants to figure out how to pick and influence juries, and to try and maneuver into the most favorable venues with the most sympathetic judges. Whether the offense is sexual misconduct, civil rights violations, foreclosure fraud, etc., in many cases if the transgressors have enough resources, they are likely to see a deminimus sentence and little punishment handed out. This disparity in a lack of justice for victims, as compared with other areas of the law, has long existed due to the perceptions surrounding the victims by those in the public and in the system as well.

The above may sound cynical to some, or simply a self-evident statement of the way things are to others. Those in the former category, who are true believers in our current justice system, may think that movements like #MeToo are just mob justice, devoid of the kind of impartial and logical dissemination of fact based justice they believe our current system provides. To them, it represents chaos, it threatens the foundational platitude that, “We are a nation of laws”, with a system that meets out justice in a generally fair and impartial manner while ensuring the innocent aren’t wrongly accused or convicted. That would be a valid sentiment-IF backed factually by a system that did function as such a majority of the time. Most would simply point out to the supporters of our current system that unless they have had blinders on for the past 200 years, they would notice our system has done a pretty haphazard job at providing for such an idealized form of justice in practice.

Don’t get me wrong, having a law degree and having worked as a government regulator I want to be able to have more faith in our justice system and the rule of law, faith that we do have mostly impartial and fair judges, and a court system accessible and open for equal justice to all. I still remember from my law school days something that particularly offended me at the time, when one of my professors stated matter-of-factly to our property law class the futility of assuming case law or precedent was necessarily going to ensure victory in the court room, “Unfortunately, most of the time the law is what the judge says it is, heh, heh, haauurrgh”. In hindsight, Professor Rooney was right, and the reality of our justice system keeps smacking I & my former classmates in the face daily just to drive home that point. Looking at a crosscut of some recent data and analysis of our nations various court systems shows the general problems petitioners/consumers/victims run into once inside it.

Consider access to the judicial system: In a Propublica study of bankruptcy filings, it found for those residing in majority black zip codes who file for bankruptcy, the odds of having their cases dismissed (and failing to attain lasting relief) were more than twice as high as those of debtors living in mostly white zip codes. Why? In general, it was driven by money. Impoverished filers could not afford to file for the costlier Chapter 7 cases as opposed to Chapter 13’s, resulting in less of their unaffordable debt loads being relieved. They, ironically, could not afford to get lasting relief from the bankruptcy system because of immediate financial distress. See https://projects.propublica.org/graphics/bankruptcy-data-analysis . A facial review of our justice system shows one in which only those with income below stated poverty lines can access free legal help in general, and that help is generally outgunned and outmanned. Got $200-$350 to file your court case and pay for your attorney fees/retainer in a civil matter otherwise? Not likely, and a pretty good chunk of those between the $20K-50K range really can’t afford the cost of entry in civil litigation, and are quickly priced out of the game when litigating against corporations. Why not take advantage of some impartial arbitration if you can’t sue?….don’t make me laugh.

How about impartiality in judicial decisionmaking? In a recent paper, Judging the Judiciary by the Numbers: Empirical Research on Judges, by Jeffrey Rachlinski (Cornell) & Andrew Wistrich (CA Central Dist. Ct.), the authors found that just like most humans, judges succumb to various “mental shortcuts” that can lead them to mistakes. The paper’s abstract reads “Do judges make decisions that are truly impartial? A wide range of experimental and field studies reveal that several extra-legal factors influence judicial decision making. Demographic characteristics of judges and litigants affect judges’ decisions.

Judges also rely heavily on intuitive reasoning in deciding cases, making them vulnerable to the use of mental shortcuts that can lead to mistakes. Furthermore, judges sometimes rely on facts outside the record and rule more favorably towards litigants who are more sympathetic or with whom they share demographic characteristics. On the whole, judges are excellent decision makers, and sometimes resist common errors of judgment that influence ordinary adults. The weight of the evidence, however, suggests that judges are vulnerable to systematic deviations from the ideal of judicial impartiality.” See Cornell Legal Studies Research Paper No. 17-32, July 2017 at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2979342

Racial and gender discrimination in decisionmaking? In Examining Empathy: Discrimination, Experience, and Judicial Decisionmaking, by Laura Beth Nielsen & Jill Weinberg of Northwestern University, a 2012 paper at http://www.americanbarfoundation.org/uploads/cms/documents/weinberg_nielsen_-_examining_empathy.pdf , the researchers reported that white federal judges are about four times more likely to dismiss race discrimination cases outright, and are half as likely as black federal judges to rule in favor of people alleging racial harassment in the workplace.

The authors argue this is because African American judges have likely experienced discrimination themselves, and therefore they can recognize more complex and subtle forms of racial harassment. How about gender bias in sexual assault cases? “A Baltimore detective said 90% of sexual-assault cases are ‘bulls—,’ but that’s just the start of the department’s problems” from http://www.businessinsider.com/justice-department-slams-baltimore-police-department-gender-bias-2016-8 …and here https://www.justice.gov/opa/pr/justice-department-finds-substantial-evidence-gender-bias-missoula-county-attorney-s-office .

A DOJ investigation in Missoula in 2014 noted the following “Despite their prevalence in the community, sexual assaults of adult women are given low priority in the County Attorney’s Office; The County Attorney does not provide Deputy County Attorneys with the basic knowledge and training about sexual assault necessary to effectively and impartially investigate and prosecute these cases; The County Attorney’s Office generally does not develop evidence in support of sexual assault prosecutions, either on its own or in cooperation with other law enforcement agencies; Adult women victims, particularly victims of non-stranger sexual assault and rape, are often treated with disrespect, not informed of the status of their case and revictimized by the process; and The County Attorney’s Office routinely fails to engage in the most basic communication about its cases of sexual assault with law enforcement and advocacy partners.” This is a 2014 report of just one city…ever wonder why women from the 1970’s, 80’s & 90’s often never bothered/dared reporting any assaults until now? Enough said.

Racial discrimination in sentencing? In a first of its kind report from 2014-2015 found here http://projects.heraldtribune.com/bias/sentencing/ The Herald-Tribune in Florida spent a year reviewing tens of millions of records in two state databases. Among the stated findings: “Florida’s sentencing system is broken. When defendants score the same points in the formula used to set criminal punishments — indicating they should receive equal sentences — blacks spend far longer behind bars. There is no consistency between judges in Tallahassee and those in Sarasota. • There’s little oversight of judges in FL. The courts keep a wealth of data on criminal defendants. So does the prison system. But no one uses the data to review racial disparities in sentencing. Judges themselves don’t know their own tendencies. Across FL, when a white and black defendant score the same points for the same offense, judges give the black defendant a longer prison stay in 60% of felony cases. For the most serious first-degree crimes, judges sentence blacks to 68% more time than whites with identical points. For burglary, it’s 45% more. For battery, it’s 30%.”

Consistency in decision making and opinions based on case precedent? In a Nevada Law Journal paper entitled Stare Decisis In The Inferior Courts Of The United States, by Joseph W. Mead, his abstract notes “While circuit courts are bound to follow circuit precedent under “law of the circuit” the practice among federal district courts is more varied and uncertain, routinely involving little or no deference to their own precedent” While I simply don’t have room for his full analysis here, I will note he concludes his paper in part as follows “But we are now left with a puzzle. If district courts indeed possess the power to either adopt the law of the district or require some other level of deference to precedent, and there are good reasons to do so, why have so few followed this path? I think the answer is not that district courts are choosing not to, but that they have not yet given the matter consideration.”

Foreclosure Bias? That’s an entire book, just ask David Dayen who wrote Chain of Title, or Abigail Field who accurately noted back in 2011 http://fortune.com/2011/04/18/fighting-a-foreclosure-suit-hope-for-the-right-judge/ “Not all judges are confronting the issues in the same way. Many are adopting procedures to stop any fraudulent behavior by the banks and are investigating questionable documents submitted in their cases. Other judges are turning a blind eye, at best.”

While I will save that aspect for a near future article, I will simply note that some judges going beyond turning a blind eye; they are straying into obstruction of justice, using a “selectively creative” doctoring of fact patterns from homeowner complaints to suit their narratives when issuing rulings, or just outright failing to address motions to correct error or address black letter law when challenged by attorneys. Par for the course, especially in the federal court system, which took a shamefully compromised former AG Eric Holder’s call to consider his TBTF/sympathy for the devil ideology in favor of Wall Street banks, and the fed courts ran like Usain Bolt with it (All while Holder’s temporarily vacant office was being kept warm at Covington & Burling, and Fannie Mae & Freddie Mac were being systemically looted by the Obama administration). A recent article discusses how the black community and consumers suffered in the name of this flawed ideology http://peoplespolicyproject.org/2017/12/07/destruction-of-black-wealth-during-the-obama-presidency/ by Ryan Cooper and Matt Bruenig)

I know what many are thinking at this point: “So What? What are you telling us we don’t already know? The justice system is not perfect, it never will be, but it’s functional, and it’s the best we have to work with!” It would be the last part of that sentence that I would wholeheartedly disagree with, and why a platform like #MeToo is now becoming an important, and I think very valid, social justice alternative. Our system is not the best it can be in part because we have come to accept the fallacy that judges, politicians, prosecutors, police, CEO’s, talk news hosts, etc., those who help to shape, influence, or enforce our justice system in different ways, should be held to a different level of accountability, job performance, and social review than the rest of society.

You screw up on your job, make a bad decision that costs the company, hurts clients/constituents, and choose to allow an illegal or immoral activity to take place?-FIRED! Those in the aforementioned categories? Insider trading based on stock tips you get in office, OK! Screw over constituents/rear end a petitioner because his mother dresses him funny? That’s valid! Harass your office assistant or underling? You gave them a job, and they knew the game, grin and bear it! I could go on, but need not. Not only do those with access and who benefit from the system not want change, but those who work within it often don’t recognize the need for change (See Mead & FL Herald Tribune report, supra). Those within it don’t tend to question the biases that have been ingrained in them when they do make decisions (See Rachlinski, Nielsen, etc., supra). They are subject to undue influence by those with access and money who know how to “work” the justice system.

I routinely quote, and will continue to quote Frederick Douglass, because 150 years later the reality he highlighted has not changed one iota, “Power concedes nothing without a demand. It never did and it never will. Find out just what any people will quietly submit to and you have found out the exact measure of injustice and wrong which will be imposed upon them, and these will continue till they are resisted with either words or blows, or with both. The limits of tyrants are prescribed by the endurance of those whom they oppress.” Church Frederick! If we must accept that our system is biased, broken, and not soon to change, how the hell can we expect to wrangle justice out of it when all avenues for influencing seem out of our control? That’s where Douglass recognized the simplicity of the truth, and so does #MeToo-It’s demand! It’s fear of a collective and sizeable retribution for ignoring social justice & common morality. It’s creating consequences outside of a non-functional system that ultimately can lead to change in that system. Social media has given a voice to those who have not had a simple, affordable, accessible platform to demand justice denied them. Technology has now made that possible, and another old adage has proven itself to be as true as ever-“Cockroaches scurry under the light”

Can the wrong perpetrators of alleged crimes be identified or wrongly harassed by a # MeToo movement? Yes, but that risk is also true in the current system. Laws are in place to protect or compensate the innocent or wrongly accused, as well as punish those who knowingly make false statements. If the law and our justice system is a search for truth and justice, then maybe # MeToo will help expedite the administration of this in a system where it has been delayed and denied those without money and a voice. Maybe it’s time for a few more platforms like it from civil rights violations to fraudulent foreclosure….Maybe it’s time to remind those in our system who they are there to work for, and demand they do a better job of it… to demand a change from them and our system instead of quietly submitting…. Viva la # MeToo revolución!

Editor’s note: Perhaps the wronged homeowner’s call to arms simply starts with a simple hashtag called #MineToo. If you have been victimized by a loan servicer or foreclosed on fraudulently tweet #MineToo!!!

Filed under: foreclosure | Tagged: #metoo, #minetoo, bank regulator eric mains, eric mains fdc, foreclosure fraud, lendinglies, Livinglies, NEIL GARFIELD | 6 Comments »

The West Coast Foreclosure Show with Charles Marshall: The Power of FOIA requests to uncover Foreclosure Data with Eric Mains

Posted on August 3, 2017 by Neil Garfield

Thursdays LIVE! Click in to the The Neil Garfield Show

Or call in at (347) 850-1260, 6pm Eastern Thursdays

Tonight Southern California attorney Charles Marshall will host the new West Coast Radio Show with Attorney Charles Marshall with guest Eric Mains, former FDIC Team Leader.

The West Coast Radio Show will run the first and third Thursday of each month, while Neil Garfield will continue to host the second and fourth Thursday. This change will allow us to bring more relevant foreclosure news from both Coasts, and in-between.

Neil Garfield has been working diligently on his technological platform that he hopes will empower both attorneys and pro se litigants facing foreclosure to access automated court documents. He will also publish his latest foreclosure defense book in the Fall.

This episode features Eric Mains, a former FDIC Team Leader who resigned when he discovered the federal government was unwilling to go after banks that were participating in illegal conduct. Mains studied to be a lawyer, but ended up as a banker with large regional firms like PNC and National City. He was a vice president of special assets, dealing with commercial loans for multifamily housing units. If anyone knows how this game is played it is Eric Mains.

For more information about Eric Mains and his foreclosure battle see Vice article here.

Eric Mains currently has a writ of cert that has been submitted to SCOTUS appealing a recent decision in his 7th circuit court of appeals case where the federal court ruled that it lacked jurisdiction to hear his case under the Rooker Feldman doctrine. Eric is using the FOIA laws to obtain data in his own case. He was recently able to stop a sheriff’s sale on his own home just 5 hours after he issued a complaint to the Indiana State Attorney General’s office supported by an FOAI request submitted just weeks before.

The Power of FOIAs to uncover Foreclosure Data

By Eric Mains, former FDIC Team Leader

Read about Eric Mains here.

LPS Consent Judgement

In the fight for discovery of information related to wrongful foreclosure actions, many attorneys and consumers find that they run into a gamut of obstacles preventing them from garnering basic facts about what happened with their loan transactions. This ranges from the cost of trying to conduct discovery, willful non-disclosure by opposing parties, judges who either hinder needed discovery or bounce cases on motions to dismiss before discovery can be obtained, and of course, the often-heard objection from opposing counsel that items requested in discovery are somehow “privileged” or contain non-disclosable data.

Many cases are withdrawn or settled based solely on the impending threat of discovery actually being allowed by the few judges who side with homeowners to pursue the disclosure of relevant information in their cases.

While discovery in individual cases can be complex, burdensome, and costly, one simple and easy resource that can lead to potentially large benefits on a mass scale outside of traditional discovery is the use of Freedom of Information Act (FOIA) requests to seek data held by government institutions.

Many consumers and their attorneys may scoff and assume FOIA requests are not relevant to their individual cases, so why bother? There are a few reasons for bothering. First, depending on the players involved in your individual case, there may be data that is held by governmental agencies that can be obtained by FOIA requests more cheaply and easily than can be obtained otherwise, and who knows what you may find? It may be relevant to you, it may not, BUT don’t assume anything!

Second, the State agencies such as the Attorney General’s offices have already done the legwork of squeezing the servicers and obtaining potentially useful and relevant information for prosecuting offenders. Why not use it if it’s there? There could be names, dates, and other data of use, and who knows where that information may lead or if it may become of use later.

Lastly, the information you uncover may not just save you, it may save someone else…and even if it doesn’t help you specifically, you may save hundreds of other people’s homes with the data you uncover. What if someone else a few months down the road doing a similar FOIA request/research uncovers data that saves you? This goes to a “crowd funding” concept of data mining…but more on that in a bit.

While it is true that the federal government has been inclined to do everything in its power to try and block documentation related to large bank misconduct and settlements it has reached with national banks, not all useful and relevant information is held solely by federal agencies or regulators.

In the case of mortgage loan servicers, such as Ocwen, LPS/Black Knight, Green Tree, Caliber, etc., State AG’s were also very active in litigation that reached various settlements. Unlike federal entities, State entities who have data relevant to wrongful actions committed against consumers may not be as tight lipped, or as able and willing to avoid the release of information under their various FOIA/Open Records statutes. A good list of the various State FOIA laws can be found at this website: http://www.nfoic.org/state-freedom-of-information-laws .

The good news is that with a little detective work, if relevant information is suspected to be held by any of your state governmental agencies, a simple fax/letter you can send for a few dollars requesting said information is all that it takes to get the ball rolling. Most turn around periods for a response on such requests is around 30 days.

So, what if they refuse to release the records you request citing various privileges? What if they say they only can release a few of the records? Without going into long detail, just the response from the agency in and of itself may confirm that they do indeed hold suspected information of use to yourself (or other homeowners) whether they are willing to release the records or not. Even a partial release of records from the governmental agency involved may leave a bread crumb trail leading to other records that may become useful. If an agency does unlawfully or unreasonably withhold records, it may turn out that going to court to force release of the relevant records receives a much more consumer friendly response under FOIA laws as well.

Another potentially beneficial side effect- the results of the FOIA may also get the attention of local news agencies/other consumer advocacy groups if brought to their attiention. Nothing garners attention like smoke, and other interested parties may be inclined to file FOIA request of their own when they find out that there appears to be something…. some records, some data, that appears to be inherently newsworthy and publicly disclosable…but that it is being unreasonably withheld for some strange reason…..hmmmmm. If it’s one thing banks and uncooperative political entities are afraid of, it’s the nations true highest court–that of public opinion and its instantly damaging spotlight.

One last point to remember is that in an age of crowd sourcing, crowd funding, and social media driven group campaigns, something as cheap and powerful as a mass group FOIA campaign to release and share information should be central in helping to fight against wrongful foreclosures. The banks and servicers are unendingly willing to go into court and lie and produce false documentation, while the courts turn a blind eye most times…. but keeping up a lie and producing false documents leaves a trail, and it’s a hundred times harder to keep up a lie and cover for it than to simply be armed with facts and the truth.

Things start to slip, documents come out, and the next thing you know you have a smoking gun and evidence of mass fraud that can’t be ignored or denied. The simple truth of the matter is we don’t know where some of the breadcrumbs discovered in FOIA requests might lead, or how they might help us all. There are plenty of angry consumers willing to yell at TV sets, send out angry Tweets or join blog communities, but not many that are willing to invest time in actually doing something that has potential mass benefit and a real potential impact. FOIA requests are one way to do that cheaply and effectively, and it FORCES the governmental agency involved to respond to YOUR demand, usually for under $5 on your end. Where else can you get that kind of bang for your buck in an age of unaccountable government, media, and courts?

Filed under: foreclosure | Tagged: Charles Marshall West Coast Foreclosure Hour, Eric mains, foreclosure fraud, Neil Garfield Show | 4 Comments »

When Crime Pays: Bankers Behind Financial Crisis were Promoted, not Jailed

Posted on June 1, 2017 by Neil Garfield

https://www.vice.com/en_us/article/the-bankers-behind-the-financial-crisis-actually-got-promoted?curator=MediaREDEF

The Bankers Behind the Financial Crisis Actually Got Promoted

by David Dayen/VICE

Jun 1 2017, 1:00pm

Millions lost their homes and jobs, and not only did the bankers not go to jail, most of them got new and better gigs, according to a new study.

By now it’s well known that no senior bank executives went to jail for the fraudulent activities that spurred the financial crisis. But a new study shows many of the senior bankers most closely tied to pre-crisis fraud didn’t suffer one bit in the aftermath. They mostly kept their jobs, enjoying the same kinds of opportunities and promotions as their colleagues.

Worst of all, the most plausible explanation the researchers came up with for why senior management didn’t fire the people who blew up the economy is that they didn’t want to admit their own failure as bosses. And if nobody on Wall Street is willing to see the problem, and the Trump administration is stocked with bankers and corporate cheerleaders, you can bet fraud will continue to shift into other products, harming consumers and investors while executives look the other way.

The study comes from John Griffin and Samuel Kruger of the University of Texas-Austin, and Gonzalo Maturana of Emory University. They tracked 715 individuals involved in issuing residential mortgage-backed securities (RMBS) from the key housing bubble years of 2004 to 2006, including the senior managers who actually signed off on the deals.

RMBS were the building blocks of the crisis, bundles of toxic loans passed on to investors who were not told about their poor quality. Since the crash, major banks that issued RMBS have paid over $300 billion in government penalties, at least implicitly acknowledging they fucked up.

With settlements and deferred prosecution agreements, federal law enforcement tried to influence corporate culture so banks would discourage bad behavior and punish those responsible within their own ranks. But until now, nobody had studied whether the large civil fines actually did lead to internal discipline. So the researchers compared the careers of RMBS bankers after the crisis to other bank employees whose work was relatively free of fraud.

“We find no evidence that senior RMBS bankers at top banks suffered from lower job retention, fewer promotions, or worse job opportunities at other firms compared to their counterparts,” Griffin, Kruger, and Maturana write.

By 2016, according to the study, 85 percent of RMBS bankers remained in the financial industry, and 63 percent received a promotion in job title, a similar ratio to non-RMBS colleagues. They were also able to move freely to join competitors, with Bank of America, JPMorgan Chase, and Citigroup “particularly aggressive” in hiring RMBS bankers. The dynamic was true for every major underwriter. There was simply no evidence of any large-scale punishment.

Employees at smaller firms were hit marginally harder after the crisis. But there’s an easy explanation for that: The market for residential mortgage-backed securities disappeared after the crisis. While bigger banks had the ability to fold RMBS bankers into their larger operations, smaller firms couldn’t.

The study doesn’t just lay out this lack of consequences, but tries to explain the reasons why. The evidence contradicts the idea that the most culpable senior managers or those who caused the biggest penalties were held accountable, or that discipline was merely delayed until after public knowledge of fraud, or that employees were kept at their companies so they wouldn’t turn on their employers in future litigation.

The researchers concluded that one main explanation is that upper management “is concerned that large-scale discipline would implicitly acknowledge widespread wrongdoing and lack of oversight.” In other words, if the executives fired too many bankers for fraud, they would point the finger back at their own loss of control, and risk their own job.

We don’t necessarily see such fear with smaller-scale bank crimes. But, Griffin, Kruger, and Maturana write, “An important difference is that RMBS fraud was widespread.” While executives can cultivate a zero-tolerance reputation through disciplining small-time frauds, they’re less willing to do so when their own lack of awareness or oversight would come into question. So they accepted self-serving explanations that the crisis resulted from mass hysteria, that nobody was truly “responsible,” and moved the employees seamlessly into other parts of their business.

In other words, these bankers were too big to fail—too entrenched to get in real trouble.

This totally alters the perception of whether Wall Street is safer now than it was before 2008. If the response to industry-wide fraud was to pretend it didn’t exist, of course you would expect more fraud to occur in the future. And that’s exactly what seems to be happening. Banks have started to run screaming from the subprime auto-loan market, after spiking defaults raised questions about the same deceptions foisted on auto borrowers that we saw with mortgage borrowers a decade ago. The long post-crisis rap sheet, from rigging foreign exchange rates to saddling customers with fake accounts, suggests the same triumph of short-term profits over ethics. And these are just the abuses we know about today.

This all stems from the failure to hold individuals directly accountable. As the researchers conclude, “these employment outcomes send a message to current and future finance professionals that there is little, if any, price to pay for participating in fraudulent and abusive practices.” If you can help generate the worst meltdown since the Great Depression—arguably helping set the stage for a populist demagogue to take the presidency—and keep your job, why would you care about the implications of your next great swindle?

Follow David Dayen on Twitter.

Filed under: foreclosure | Tagged: criminal behavior, DAVID DAYEN, foreclosure fraud | 4 Comments »

Florida Attorney Mark Stopa: The party seeking foreclosure must demonstrate that it has standing to foreclose.

Posted on April 28, 2017 by Neil Garfield

Editor’s Note: Mark Stopa is an excellent foreclosure attorney located in Tampa, Florida. We highly recommend his foreclosure blog a www.stayinmyhome.com.

https://scholar.google.com/scholar_case?case=16000307729425709560&hl=en&as_sdt=2006

PATRICK WALSH AND CATHERINE WALSH, Appellants,
v.
BANK OF NEW YORK MELLON TRUST, ETC., ET AL., Appellees.

Case No. 5D15-1898.District Court of Appeal of Florida, Fifth District.Opinion filed April 21, 2017.Appeal from the Circuit Court for Lake County, Carven D. Angel, Judge.

Mark P. Stopa, of Stopa Law Firm, Tampa, for Appellants.

Matthew A. Ciccio, of Aldridge/Pite, LLP, Delray Beach, for Appellee, Bank of New York Mellon Trust.

No appearance for other appellees.

PALMER, J.

Patrick and Catherine Walsh (borrowers) appeal the trial court’s final judgment of foreclosure entered in favor of Bank of New York Trust (the bank). Determining that the bank failed to prove standing, we reverse and remand for the entry of an involuntary dismissal.

“A crucial element in any mortgage foreclosure proceeding is that the party seeking foreclosure must demonstrate that it has standing to foreclose.” McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012) (citations omitted). Additionally, a “party must have standing to file suit at its inception and may not remedy this defect by subsequently obtaining standing.” Venture Holdings & Acquisitions Grp., LLC v. A.I.M Funding Grp., LLC, 75 So. 3d 773, 776 (Fla. 4th DCA 2011). Thus, in order to prove standing, the bank was required to introduce admissible evidence that it (or its agent) possessed a properly-indorsed note at the inception of the case. Focht v. Wells Fargo Bank, N.A, 124 So. 3d 308, 310-11 (Fla. 2d DCA 2013).

Here, the copy of the note attached to the original complaint did not contain any indorsements, and the copy of the note attached to the amended complaint contained an undated blank indorsement. Such proof was insufficient to demonstrate standing because “standing cannot be established by simply filing a note with an undated indorsement or allonge months after the original complaint was filed.” Sorrell v. U.S. Bank Nat’l Ass’n, 198 So. 3d 845, 847 (Fla. 2d DCA 2016) (citing Focht, 124 So. 3d at 310; Cutler v. U.S. Bank Nat’l Ass’n, 109 So. 3d 224, 226 (Fla. 2d DCA 2012)). In addition to introducing the note, the bank presented a witness who testified that, based on his review of the business records, the bank had possession of the note at the time the bank filed its complaint. Yet, his testimony was not based on personal knowledge, but rather, on his review of a screenshot, which was not offered or admitted into evidence. Thus, that testimony was also insufficient to prove standing. Therefore, the trial court committed reversible error in entering final judgment of foreclosure in favor of the bank. See Gonzalez v. BAC Home Loans Servicing, L.P., 180 So. 3d 1106 (Fla. 5th DCA 2015) (holding that the testimony of a witness regarding business records that are not entered into evidence at trial is insufficient to prove standing in a foreclosure case).

Accordingly, we reverse and remand for the entry of an involuntary dismissal. REVERSED and REMANDED.

COHEN, C.J., and SAWAYA, J., concur.

NOT FINAL UNTIL TIME EXPIRES TO FILE MOTION FOR REHEARING AND DISPOSITION THEREOF IF FILED

Filed under: foreclosure | Tagged: foreclosure fraud, Walsh v Bank of New York Mellon Trust | 4 Comments »

Bank of America fined $45 million for Abusive Foreclosure

Posted on March 29, 2017 by Neil Garfield

A bankruptcy judge issued a $45 million fine against Bank of America Corp. , calling the bank’s treatment of a California couple who fought to save their home “brazen” and “heartless” and should have added the words “illegal”, “fraudulent” and “unconscionable”.

Judge Christopher Klein of the U.S. Bankruptcy Court in Sacramento said the bank’s mortgage modification process and mistaken foreclosure on Erik and Renee Sundquist’s home left them in “a state of battle-fatigued demoralization.”

The case brings renewed attention to the mortgage industry’s loan servicing business. Klein alluded to systemic problems, saying the bank had little incentive to alter the mortgage terms and “kill a goose that keeps laying 6% golden eggs,” referring to the interest rate that the bank collected.

The fine money, earmarked mostly for law schools and consumer advocacy organizations, is meant to be large enough that it won’t “be laughed off in the boardroom as petty cash or ‘chump change,’” Klein said in the ruling, published Thursday. “It is apparent that the engine of Bank of America’s problem in this case is one of corporate culture…not rogue employees betraying an upstanding employer,” he added.

An expanded version of this report appears on WSJ.com.

To read the entire opinion go here: sundquist-opinion

Filed under: foreclosure | Tagged: Bankruptcy fraud, foreclosure fraud, Sundquist v Bank of America | 4 Comments »

The FBI convicts a small time operator while the Big Banks continue their Crime Spree unabated

Posted on February 17, 2017 by Neil Garfield

The FBI proudly announces they have convicted a California mortgage rescue operation but pays no attention to the fact that banks are continuing their unabated crime spree that way surpasses a small time mortgage rescue operation. The government has hard evidence that bank servicers are participating in criminal conduct that includes forging instruments, perjured affidavits, predatory servicing and modification scams and does nothing of impact to address the rampant fraud.

To date no executive calling the shots has gone to prison, further emboldening their illegal behavior. In fact, most executives who designed the greatest financial fraud scheme the world has ever seen, are promoted or enter government. Steven Mnuchin perfectly executed the OneWest master crime spree and instead of a stint in federal prison he was promoted to Secretary of Treasury.

The government has sanctioned and fined the banks hundreds of millions of dollars. The paltry fines have done nothing to curtail their fraudulent behaviors. A fine of $500 million is simply a tax write-off and a cost of doing business for the big servicers who are collecting billions in profits for foreclosing on loans they can’t prove they own.

At this point, servicing fraud, securitization fraud, foreclosure fraud and modification fraud are considered acceptable operating procedures for the big banks. The Federal Bureau of Investigation has not done their job and are part of the cover up. Meanwhile the FBI tries to distract people with stories about saving vulnerable homeowners from small time operators while the guilty go free.

In fact, if you have hard proof of fraud or criminal behavior and report it to the FBI, you will be told that your problem is a civil matter. If the FBI is interested we would be happy to share dozens of cases where the bank and their counsel forged documents, submitted fraudulent affidavits to the court and foreclosed on homes they didn’t own by resorting to forgery and fraud. The evidence we have is 100% conclusive and yet no governmental agency has any interest in what the big banks are doing to steal homes.

https://www.fbi.gov/news/stories/foreclosure-rescue-scheme

False Promises

California Man Sentenced for Operating Foreclosure Rescue Scheme

When California homeowners couldn’t make their mortgage payments and faced foreclosures during the Great Recession in 2008, some turned to a Long Beach church pastor for help.

For almost six years, Karl Robinson offered mortgage rescue services under his name and through companies such as Stay in Your Home Today, 21st Century Development, and Genesis Ventures Corporation. Now he’s serving four years in federal prison for his role in a scheme that brought in nearly $3 million in fees from unknowing clients.

Robinson and a group of co-conspirators attracted distressed homeowners with the promise of delaying foreclosures and evictions. They claimed to offer services that connected clients to experienced consultants who could keep them in their homes for an affordable fee.

It was all too good to be true—until an FBI-led investigation in 2013 determined that the mortgage rescue programs were far from legitimate.

“Robinson joined a growing number of con artists surfacing throughout the country during the subprime mortgage crisis focused on lining their own pockets instead of actually helping clients,” said FBI Special Agent Kevin Danford, who investigated the case out of the Bureau’s Los Angeles Field Office.

During the housing crisis, opportunistic groups like Robinson’s preyed on vulnerable and desperate homeowners through common scams such as offering affordable refinancing with lower monthly payments, low-interest deals, and delinquent mortgage pay-offs.

In 2008, Robinson began offering fraudulent foreclosure delay solutions by taking part in what were known as partial-interest bankruptcy scams (see sidebar). The process went on for months, providing Robinson with a steady flow of income as long as his clients were willing to pay.

Another scam delayed evictions for Robinson’s clients whose homes had been sold in foreclosure proceedings. Robinson falsely claimed in state court eviction actions that his clients still had tenants in those homes. Robinson would then file bankruptcies for the fictional tenants, postponing the evictions.

By 2011, clients and lenders were starting to catch on to Robinson’s scams. They turned to their local police, who confirmed the suspected fraud and alerted the FBI.

“Robinson joined a growing number of con artists surfacing throughout the country during the subprime mortgage crisis focused on lining their own pockets instead of actually helping clients.”

Kevin Danford, special agent, FBI Los Angeles

The Bureau opened an investigation on Robinson in August 2013 and subsequently obtained an external hard drive from his home that contained documents such as fake driver’s licenses, false identities, and incomplete bankruptcy petition drafts—which revealed the steps he was using to carry out his fraud scheme.

Following his arrest, Robinson confessed to knowingly defrauding his clients and the state and federal courts. Robinson pleaded guilty in August 2016 to the role he played in running the multi-year foreclosure rescue scheme.

“Robinson was able to delay foreclosure sales for more than 100 properties, and he filed at least 200 bankruptcy petitions,” said Danford. “His scheme not only impacted more than 60 lenders and clogged both federal bankruptcy court and state and local eviction court systems but also caused undue stress to numerous purchasers.”

Partial-Interest Bankruptcy Scams

The scam operator asks you to give a partial interest in your home to one or more persons. You then make mortgage payments to the scam operator in lieu of paying the delinquent mortgage. However, the scam operator does not pay the existing mortgage or seek new financing. Each holder of a partial interest then files bankruptcy, one after another, without your knowledge. The bankruptcy court will issue a “stay” order each time to stop foreclosure temporarily. However, the stay does not excuse you from making payments or from repaying the full amount of your loan. This complicates and delays foreclosure, while allowing the scam operator to maintain a stream of income by collecting payments from you, the victim. (Source: FDIC)

Filed under: foreclosure | Tagged: federal burea of investigation, foreclosure fraud | 14 Comments »

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

Posted on February 15, 2017 by Neil Garfield

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

The Indiana Lawyer-

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

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

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

[THE INDIANA LAWYER]

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

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

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

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

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

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

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

Filed under: foreclosure | Tagged: BOA, foreclosure fraud, indiana foreclosure | 6 Comments »

Fill the Swamp: Former Goldman Sachs executive and “foreclosure expert”, confirmed as US Treasury Secretary

Posted on February 15, 2017 by Neil Garfield

Editor’s Note: The story below may induce your gag reflex. Read at your own risk.

http://en.mercopress.com/2017/02/14/former-goldman-sachs-executive-and-foreclosure-expert-confirmed-as-us-treasury-secretary

A bitterly divided Senate on Monday confirmed Steven Mnuchin as United States treasury secretary despite strong objections by Democrats that the former banker ran a “foreclosure machine” when he headed OneWest Bank. Republicans said Mnuchin’s long tenure in finance makes him qualified to run the department, which will play a major role in developing economic policy under President Donald Trump.

“He has experience managing large and complicated private-sector enterprises and in negotiating difficult compromises and making tough decisions — and being accountable for those decisions,” said Sen. Orrin Hatch, R-Utah, chairman of the Finance Committee.

After Mnuchin’s swearing-in ceremony in the Oval Office Monday night, Trump said Americans should know that “our nation’s financial system is truly in great hands.”

Votes on President Donald Trump’s Cabinet picks have exposed deep partisan divisions in the Republican-controlled Senate, with many of the nominees approved by mostly party-line votes. The vote on Mnuchin followed the same pattern. He was confirmed by a mostly party-line vote of 53-47. Democratic Sen. Joe Manchin of West Virginia joined the Republicans.

Like others in Trump’s Cabinet, Mnuchin is a wealthy businessman. He is a former top executive at Goldman Sachs and served as finance chairman for Trump’s presidential campaign.

As Treasury secretary, Mnuchin is expected to play a key role in Republican efforts to overhaul the nation’s tax code for the first time in three decades. Trump has promised to unveil a proposal in the coming weeks. Mnuchin will also be in charge of imposing economic sanctions on foreign governments and individuals, including Russia.

Senate Majority Leader Mitch McConnell, R-Ky., said Mnuchin “is smart, he’s capable, and he’s got impressive private-sector experience.”

Democrats complained that Mnuchin made much of his fortune by foreclosing on families during the financial crisis. In 2009, Mnuchin assembled a group of investors to buy the failed IndyMac bank, whose collapse the year before was the second biggest bank failure of the financial crisis. He renamed it OneWest and turned it around, selling it for a handsome profit in 2014.

“Mr. Mnuchin has made his career profiting from the misfortunes of working people,” said Sen. Debbie Stabenow, D-Mich. “OneWest was notorious for taking an especially aggressive role in foreclosing on struggling homeowners.”

http://en.mercopress.com/2017/02/14/former-goldman-sachs-executive-and-foreclosure-expert-confirmed-as-us-treasury-secretary

Filed under: foreclosure | Tagged: foreclosure fraud, Mnuchin, OneWest Bank | 9 Comments »

CitiGroup Whistleblower Richard Bowen: The Immaculate Corruption

Posted on February 9, 2017 by Neil Garfield

bowen

http://campaign.r20.constantcontact.com/render?m=1118575381433&ca=a2e5c0b7-db56-42f8-9a03-3310d938cb61

Watch the video here: http://fullmeasure.news/news/cover-story/immaculate-corruption

Full Measure with Sharyl Attkisson: The Immaculate Corruption featuring Richard Bowen. Photo: Sharyl Attkisson

Full Measure News is broadcast to 43 million households in 79 markets on 162 Sinclair Broadcast Group stations, including ABC, CBS, NBC, FOX, CW, MyTV, Univision and Telemundo affiliates and streams live Sunday mornings at 9:30 a.m. ET.

In some markets they are seen more than the cable news competition in that time slot, and by more viewers than CNN, MSNBC, and CBNC combined and equal or surpass the audience size of CBS’ “Face the Nation,” NBC’s “Meet the Press,” and ABC’s “This Week.” They explore “untouchable topics in a fearless way,” from immigration, terrorism, government waste, national security and whistleblower reports on government and corporate abuse and misdeeds. It is hosted by Sharyl Attkisson, a five-time Emmy Award winner and recipient of the Edward R. Murrow award for investigative reporting.

This past Sunday, I was honored to be featured on my “experience” at Citigroup, which many have called “The Immaculate Corruption.” [watch it here].

Sharyl Attkisson and Richard Bowen

The interview started with, “This is the story of how systems intended to hold people accountable failed and Bowen claims even helped cover for them… Richard Bowen knew where the figurative bodies were buried at banking giant Citigroup, once the largest company in the world. As a senior vice president, Bowen blew the whistle on Citigroup’s practices leading up to the banking crisis – practices like buying and selling risky mortgages and misrepresenting them to the public and investors.”

Sharyl noted, ”Not much has happened in terms of from what I can see to the actual people at Citigroup who were allegedly responsible for this behavior.” “That would be very accurate,” I responded.

Sharyl continued,

In 2009, Congress created the Financial Crisis Inquiry Commission. Six members were appointed by Democrats, four by Republicans.

Bowen was asked to testify. And he was eager to do it. It was a setting where he says he could publicly tell what he knew, exempt from his Citigroup confidentiality agreement. He wrote up his testimony, naming names and laying blame. However, shortly before he testified Bowen was told to “take out much of the damning evidence that they had originally told me to put in.”

He says the commission wanted major edits; “what they also conveyed is that the edits were not optional. If I did not make the edits I would probably be taken off the witness list.” Bowen says he had to cut out eight pages, almost a third of his planned testimony. And almost nobody knew that when he testified on April 7, 2010.

Last March, the financial commission’s records were quietly unsealed for the first time. And we were able to obtain copies of Bowen’s original testimony, including parts that were cut.

Sharyl: “Did they have you take out names of people responsible”?

Richard Bowen: “Yes. They had originally wanted me to put in the names and the specific instance of cover-ups that I had witnessed. All of that had to be taken out, at least the names”.

Sharyl continued…

Financial commission staff members who dealt with Bowen say the reason his testimony was shortened is simply because it was too long. They deny suggesting any edits, say there was no attempt to censor or silence Bowen, and say that all acted with the best of intentions and followed the highest ethics…

And there’s something of a bombshell in the formerly hidden documents: In 2011, when the Financial Commission concluded work, it secretly determined some of the world’s largest financial institutions had possibly violated securities law.

The Financial Commission privately referred 11 charges against nine executives, including Robert Rubin and two other Citigroup officials, to Justice Department Attorney General Eric Holder for possible prosecution.

Now that the documents have finally been released after 5 years, Senator Elizabeth Warren has written the FBI and Justice Department Inspector General asking why nothing came of those criminal charge referrals.

“The [Department of Justice] has not filed any criminal prosecutions against any of the nine individuals,” writes Warren. “Not one of the nine has gone to prison or been convicted of a criminal offense. Not a single one has even been indicted or brought to trial.”

On the program I expressed my concern, ”If we do not hold people accountable, then we’re going to see the same behavior. In the 1980s and the banking and S&L crisis, we sent over 800 senior bankers to jail. This crisis which is 70 times worse, I’d say, maybe even greater than that, we have sent no one to jail. And, and I think we basically are saying, there’s no downside to doing this.”

I fervently believe that by allowing the big banks to get away with fraud we are condoning their behavior and it will happen again. The large banks have a stranglehold on the financial services industry. If we are going to institute real change, then we must first break up the large banks, then repeal parts of the Dodd-Frank act to open up the banking industry to real competition.

Although Dodd-Frank was originally passed to reign in the large banks, it has turned into a gift to the larger banks because they have the wherewithal to lobby and gut those provisions that directly affect them. This leaves a disproportionate share of compliance costs on the smaller banks; which then has them selling to the larger banks as they can’t afford to compete.

And Sharyl concluded the interview, “As for Citigroup, it continues to rack up the fines. Last week, it paid $28 million more to settle claims that it gave homeowners the “runaround” when refinancing their home mortgages.”

http://www.richardmbowen.com/first-time-televised-smoking-gun-evidence/

Filed under: foreclosure | Tagged: Citigroup, foreclosure fraud, Livinglies, richard bowen, whisteblower | 17 Comments »

LA Times: Report says Treasury nominee Steve Mnuchin misled senators about foreclosures by OneWest Bank

Posted on January 30, 2017 by Neil Garfield

http://www.latimes.com/business/la-fi-mnuchin-treasury-onewest-20170130-story.html

By Jim Puzzanghera

An Ohio newspaper reported that Steve Mnuchin, President Trump’s nominee to be Treasury secretary, misled senators about foreclosures by OneWest Bank while he was chief executive, providing more fuel to opponents ahead of a contentious committee confirmation vote scheduled for Monday.

The Columbus Dispatch reported Sunday that Mnuchin denied in written responses to questions from the Senate Finance Committee that OneWest engaged in so-called robo-signing of mortgage documents.

The paper said its analysis of nearly four dozen foreclosure cases in Ohio’s Franklin County in 2010 showed the bank “frequently used robo-signers.”

The practice, prevalent throughout the mortgage industry in the aftermath of the financial crisis, involved employees at financial firms signing foreclosure documents en masse without properly reviewing them.

Democrats sharply criticized Mnuchin during his confirmation hearing on Jan. 19 concerning OneWest’s foreclosures while he ran the Pasadena bank from 2009 to 2015. They called the institution, which formerly had been troubled subprime lender IndyMac Bank, “a foreclosure machine.”

“Mnuchin ran a bank that was notorious for aggressively foreclosing on homeowners, and now he’s lying about his bank’s dismal track record in his official responses to the Finance Committee,” Sen. Elizabeth Warren (D-Mass.) said Monday. “Working families simply cannot trust him to be the country’s top economic official.”

At the hearing, Mnuchin blamed the large amount of foreclosures on bad IndyMac loans he inherited. Mnuchin and other investors put up nearly $1.6 billion to buy IndyMac and renamed it OneWest. They sold the bank to CIT Group in 2015 for $3.4 billion.

The new report is expected to be raised by Democrats when the committee meets at 3 p.m. PST on Monday to vote on his nomination. Many if not all the Democrats on the committee are expected to oppose his nomination.

Sen. Sherrod Brown (D-Ohio), who sits on the committee, has said he would vote against Mnuchin.

“Mnuchin profited off of kicking people out of their homes and then gave false testimony about his bank’s abusive practices,” Brown said Sunday. “He cannot be trusted to make decisions about policies as personal to working Ohioans as their taxes and retirement.”

The Columbus Dispatch cited a foreclosure involving a mortgage signed by Erica Johnson-Seck, a OneWest vice president who said in a deposition in a 2009 Florida case that she signed an average of 750 documents a week.

Barney Keller, a spokesman for Mnuchin, said Monday that several courts had dismissed cases involving allegations of robo-signing by Johnson-Seck.

“The media is picking on a hardworking bank employee whose reputation has been maligned but whose work has been upheld by numerous courts all around the country in the face of scurrilous and false allegations,” Keller said.

In written questions to Mnuchin, Sen. Robert Casey (D-Pa.) asked if OneWest engaged in robo-signing.

“OneWest Bank did not ‘robo-sign’ documents,” Mnuchin said. He added that the bank was the only one to “successfully complete” an independent foreclosure review process by federal banking regulators looking into robo-signing allegations.

In 2011-12, several mortgage servicers agreed to pay a total of $3.9 billion to borrowers for foreclosure errors as part of a settlement with regulators.

OneWest was not part of the settlement because an independent consultant hired by the bank completed its own review and “remediation checks have been issued to those borrowers where financial injury was identified,” according to the Office of the Comptroller of the Currency.

Casey said Mnuchin “continues to deny his bank robo-signed documents, while evidence from court cases, bank regulators, and news reports continues to show the opposite.

Filed under: foreclosure | Tagged: citgroup, foreclosure fraud, INDYMAC, Mnuchin, OneWest Bank | 1 Comment »

Investigator Bill Paatalo: “Who Is Private Investor ‘AO1?” JPMorgan Chase Refuses To Reveal The Identity Of This Investor.”

Posted on November 18, 2016 by Neil Garfield

Evidence-Puzzle-via-TouroLawReview

http://bpinvestigativeagency.com/washington-mutual-bank-sold-these-67529-toxic-loans-and-not-one-single-foreclosure-by-the-investors/

In relation to my previous article, let me continue a bit further. More and more cases continue to come across my desk showing that WaMu loans claimed to be owned by JPMorgan Chase, through the “Purchase & Assumption Agreement” with the FDIC, were in fact sold by WaMu to “Private Investor – AO1” prior to the FDIC’s Receivership. Here is an excerpt from a recent affidavit I produced:

———————————————————————

“Private investors own the subject loans, and their identity is being concealed.

Attached as Exhibit 5, p.1 is a servicing system screenshot titled, “3270 Explorer” which was provided to me by Plaintiff through discovery efforts. This screenshot is dated 03/02/2009 and refers to “Loan Number [“REDACTED”] which is associated with the [“REDACTED”] mortgage. This document shows an investor code “AO1” directly beneath the top line. The same investor code “AO1” is shown on the servicing screenshot for this loan on 12/31/2005 (Exhibit 5, p. 2). Exhibit 5. P.3 is the servicer screenshot for the [“REDACTED” mortgage (“Loan Number [REDACTED]”) dated 12/31/2005 which also shows the same investor code “AO1.”

From experience, I have seen and reviewed JPMC’s servicing records for WMB originated loans within JPMC’s “3270 Explorer” servicing platform. This system / platform contains a specific screenshot which shows the “loan transfer history” (Screen: “Explorer 3270 – LNTH”) for these loans.

From experience, I have seen complete LNTH screenshots for these WaMu loans provided by JPMC, but usually they are produced with great reluctance and through motions to compel. When produced, these LNTH screens tell an entirely different story about the loans; specifically, all the sales and transfers conducted prior to the FDIC’s receivership.

Attached as Exhibit 6 is a “3270 Explorer: Loan Loan Transfer History (LNTH)” screenshot provided by JPMC in a very similar case which I have been involved captioned Kelley v. JPMorgan Chase Bank, N.A., U.S. BK CT, ND CA, Adv. Case No. 10-05245. Like the [REDACTED]loans, the Kelley loan was also originated by Washington Mutual Bank, F.A. Exhibit 6 shows the entire LNTH from origination through the FDIC receivership. The beginning “Investor Code” at the inception of the loan is “030” on 08/07/07. The loan is then sold and transferred to a “New/Inv” (new investor) on 09/01/07 with the “Investor Code – AO1”: the same code for both [REDACTED] loans on 12/31/2005. It can be logically deduced from this evidence that the same originator code of “030” should also exist on the [REDACTED] loans if WMBFA was the originator.

A deposition of JPMC employee “Crystal Davis” occurred in the Kelley case on August 13, 2014. A copy of the Davis Deposition Transcript was filed in the PACER System and a copy is attached to this affidavit as Exhibit 3. Exhibit 4 is a glossary of codes exhibit provided by JPMC in that deposition. Crystal Davis explains the investor codes on p.42 as follows:

(In reference to Exhibit 4).

Q. Now if you look to the right of that, it states that the claim – the investor IDs begin with an A through V; is that correct?

A. In the current MSP platform, yes, indicates private investor loans.

Q. And what would X,Y,Z indicate?

A. Those would indicate bank-owned assets.

It is very likely that the complete LNTH screenshots for both subject loans, if ever produced, will show similar sales transactions from WMB to “New/Inv – AO1.” The identity of investor “AO1” has not been disclosed and is being concealed from the Court and the Plaintiff. I believe this is intentional.”

————————————————–

What also appears to be intentional is the fact that when JPMC is now pressured to produce these “LNTH” screenshots per my findings and recommendations to counsel, JPMC or the servicer comes back with incomplete LNTH histories for the loans; the LNTH screens begin AFTER September 25, 2008. What this means is, not only was no schedule of assets ever produced in association with “Schedule 3.1” of the PAA, but now in some of my current cases, JPMC takes the added position that it owns these WaMu loans to which there is also no record of the sales and transfer histories of the loans within their servicing platform. So, my opinion that WaMu sold and securitized the loan(s) prior to September 25, 2008 becomes a bit more difficult to rebut. The question to ask any Chase representative in a deposition is this, “If no schedule or inventory of WaMu loans has ever been produced, and there are no servicing records in existence from WaMu showing whether or not the loan was ever sold or securitized, could it be possible the loan(s) were sold by WaMu prior to September 25, 2008?” (As a reminder, few if any Chase witnesses have any personal knowledge of WaMu’s business practices.)

Bottom line – Chase’s own witness testified that “Ao1” is a private investor, and this code does not mean “bank owned.” With the LNTH screenshots now appearing with no pre-receivership sales and transfer activities entered by WaMu, it is almost too much to believe that one of the largest banking institutions in the world, would not have tracked the loans it originated and sold into the secondary market within its servicing systems.

C’mon Chase, who is “Private Investor AO1?”

Bill Paatalo – Private Investigator – OR PSID#49411

Bill.bpia@gmail.com

(406) 328-4075

http://bpinvestigativeagency.com/who-is-private-investor-ao1-jpmorgan-chase-refuses-to-reveal-the-identity-of-this-investor/

Filed under: foreclosure | Tagged: Bill Paatalo, bpinvestigativeagency, foreclosure fraud, WAMU | 7 Comments »

Casting Doubt on Validity of Servicer Affidavits in Foreclosure Litigation

Posted on November 4, 2016 by Neil Garfield

Christopher A. Gorman, New York Law Journal

October 19, 2016

Most institutional lenders, trusts and large financial institutions that loan money to borrowers or acquire distressed loans use loan servicers to service their loans after the loans are originated or otherwise assigned to them. Loan servicing is the process by which a lender uses a third party to, among other things, collect principal, interest and escrow payments from the borrower in connection with a loan.

Following a default on a loan, a lender will often rely upon its loan servicer to oversee the process of foreclosing on the mortgage securing the loan. In such instances, the foreclosure lawsuit will often be brought in the name of the lender holding the promissory note and the mortgage, but affidavits that need to be submitted to the court in order to prove the lender’s standing or the borrower’s default, among other issues, are submitted by a representative of the loan servicer that is involved in servicing the loan.

Until recently, this process by which the loan servicer oversees and manages the foreclosure litigation on behalf of a lender holding the defaulted note and mortgage that is the named plaintiff was not the subject of much controversy. Indeed, there are literally thousands of cases currently pending in New York State where a loan servicer, acting on behalf of the lender that is the named plaintiff that commenced the foreclosure action, submits affidavits and documents to the court in order to prove that the lender should be awarded a judgment of foreclosure and sale.

A number of recent decisions of the Appellate Division, Second Department, however, may cause lenders to re-think the arrangement by which a loan servicer that is not a party to the foreclosure action acts on behalf of a lender in overseeing and managing mortgage foreclosure litigation. Indeed, the court has held that documents and information attached to an affidavit of a representative of a loan servicer are inadmissible unless the loan servicer’s representative can attest to being familiar with the record-keeping practices and procedures of the lender (i.e., the plaintiff in the foreclosure action).

The statutory foundation for the recent Second Department decisions, of course, is the business records exception to the hearsay rule, which is embodied in CPLR 4518(a). CPLR 4518(a) states that “[a]ny writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any act, transaction, occurrence or event, shall be admissible in evidence in proof of that act, transaction, occurrence or event, if the judge finds that it was made in the regular course of any business and that it was the regular course of such business to make it, at the time of the act, transaction, occurrence or event, or within a reasonable time thereafter.”

‘Royal’ and Other Cases

The Appellate Division, Second Department’s most recent pronouncement concerning the business records exception to the hearsay rule in the context of mortgage foreclosure litigation can be found in HSBC Mortgage Services v. Royal, — A.D.3d —-, 37 N.Y.S.3d 321 (2d Dept. Sept. 14, 2016). The facts of Royal are similar to the facts underlying literally thousands of foreclosure actions pending in New York State, thereby suggesting that the decision could have a wide-ranging impact on mortgage foreclosure litigation currently pending in New York State.

In Royal, the plaintiff-lender commenced a foreclosure action on the basis of an alleged default by the borrower under a promissory note and mortgage. In support of its motion for summary judgment, the lender submitted the affidavit of a representative of “the loan servicer for the plaintiff’s successor in interest.” The representative of the lender’s loan servicer averred in his affidavit “that his knowledge of the relevant facts was based on his ‘examination of the financial books and business records made in the ordinary course of business maintained by or on behalf of the successor in interest to the Plaintiff,’ and that he was ‘familiar with the record keeping systems that [the] successor in interest to the Plaintiff and/or its loan servicer use[d] to record and create information related to the residential mortgage loans that it services.’” On the basis of the information and documents submitted through the loan servicer’s affidavit, the Supreme Court granted the lender’s motion for summary judgment.

On appeal, the Second Department reversed. The court concluded in Royal that “[t]he plaintiff failed to demonstrate the admissibility of the records relied upon by” the representative of the loan servicer “under the business records exception to the hearsay rule…, and, thus, failed to establish the appellant’s default in payment under the note.” Specifically, the Second Department concluded that because the representative of the loan servicer “did not allege that he was personally familiar with the plaintiff’s record keeping practices and procedures,” he “failed to lay a proper foundation for the admission of records concerning the appellant’s payment history…and his assertions based on these records were inadmissible.”

The Second Department concluded in Royal, therefore, that “[i]nasmuch as the plaintiff’s motion was based on evidence that was not in admissible form, the plaintiff failed to establish its prima facie entitlement to judgment as a matter of law” and held that the lender’s motion “should have been denied…regardless of the sufficiency of the appellant’s opposition papers.”

Of course, Royal—standing alone—would be a significant decision for mortgage foreclosure practitioners. However, Royal is not a stand-alone decision, and the Second Department has articulated principles very similar to those underlying the Royal decision in a number of other recent mortgage foreclosure cases.

For instance, in Deutsche Bank National Trust Company v. Brewton, 142 A.D.3d 683, 37 N.Y.S.3d 25(2d Dept. 2016), the Second Department held that the lender “failed to demonstrate that the records relied upon by” the representative of the lender’s loan servicer “were admissible under the business records exception to the hearsay rule (see CPLR 4518(a)) because” the representative of the lender’s loan servicer “did not attest that she was personally familiar with the plaintiff’s record-keeping practices and procedures.” Similarly, in U.S. Bank National Association v. Handler, 140 A.D.3d 948, 34 N.Y.S.3d 463 (2d Dept. 2016), the Appellate Division, Second Department held that an affidavit from the vice-president of the lender’s servicing agent “who did not attest that he was personally familiar with the plaintiff’s record keeping practices with respect to the note…failed to establish, prima facie, that the plaintiff had physical possession of the note prior to the commencement of the action.”

Finally, in Citibank v. Cabrera, 130 A.D.3d 861, 14 N.Y.S.3d 420 (2d Dept. 2015), the Second Department expressly held that where the lender’s affiant “who was employed by the plaintiff’s loan servicer, did not allege that she was personally familiar with the plaintiff’s record keeping practices and procedures,” the representative of the lender’s loan servicer “did not lay a proper foundation for the admission of the defendant’s payment history.” As the Cabrera court stated: “[a] proper foundation for the admission of a business record must be provided by someone with personal knowledge of the maker’s business practices and procedures.”

Thus, decisions such as Royal, Brewton, Handler and Cabrera, stand for the proposition that where the lender is the named plaintiff in a mortgage foreclosure action, the lender can rely on the affidavit of its loan servicer to get documents admitted into evidence under the business records exception to the hearsay rule only if the loan servicer’s representative can attest that it is familiar with the lender’s (and not the loan servicer’s) record-keeping practices and procedures. This would seem to be a somewhat difficult burden to satisfy for loan servicers, since loan servicers are often third-party entities that are separate and distinct from the lenders that are the named plaintiffs in mortgage foreclosure cases.

Meeting New Requirements

Lenders will need to find ways in which to meet the new requirements imposed in order to satisfy the business records exception to the hearsay rule announced in decisions such as Royal. For instance, lenders may seek to avoid altogether obtaining affidavits from third-party loan servicers, and instead use representatives of the lender, who can attest to their familiarity with the lender’s record-keeping practices and procedures, in order to submit affidavits and documents to the court.

Alternatively, if lenders continue to insist, even after Royal and the other decisions of the Second Department discussed above, to use affidavits from third-party loan servicers in mortgage foreclosure litigation, then the best practice will be to have loan servicers (as opposed to lenders) be the party to act as the plaintiff in the foreclosure litigation. So long as the loan servicer is authorized to do so by the lender, courts have found that loan servicers have standing to present claims for foreclosure and sale on behalf of the lender that owns and holds the note and mortgage at the time of the commencement of the action. See, e.g., Flushing Preferred Funding Corp. v. Patricola Realty Corp., 964 N.Y.S.2d 58 (Sup. Ct. Suffolk Co. 2012).

Regardless of what steps lenders and loan servicers take going forward to respond to Royal and similar Appellate Division, Second Department, decisions discussed above, it is likely that Royal is going to be cited by borrowers in already pending foreclosure cases where the requirements imposed by Royal may not otherwise be satisfied. It remains to be seen whether Royal and other Second Department authority discussed above will cause further delay in processing the already substantial backlog of mortgage foreclosure cases pending in New York State.

Casting Doubt on Validity of Servicer Affidavits in Foreclosure Litigation

Filed under: foreclosure | Tagged: citibank v cabrera, foreclosure fraud, servicer abuse | 2 Comments »

Flashback: A Foreclosure Mill Halloween Party

Posted on October 31, 2016 by Neil Garfield

2011 Halloween Flash Back from the New York Times.

On Friday, the law firm of Steven J. Baum threw a Halloween party. The firm, which is located near Buffalo, is what is commonly referred to as a “foreclosure mill” firm, meaning it represents banks and mortgage servicers as they attempt to foreclose on homeowners and evict them from their homes. Steven J. Baum is, in fact, the largest such firm in New York; it represents virtually all the giant mortgage lenders, including Citigroup, JPMorgan Chase, Bank of America and Wells Fargo.

The party is the firm’s big annual bash. Employees wear Halloween costumes to the office, where they party until around noon, and then return to work, still in costume. I can’t tell you how people dressed for this year’s party, but I can tell you about last year’s.

That’s because a former employee of Steven J. Baum recently sent me snapshots of last year’s party. In an e-mail, she said that she wanted me to see them because they showed an appalling lack of compassion toward the homeowners — invariably poor and down on their luck — that the Baum firm had brought foreclosure proceedings against.

When we spoke later, she added that the snapshots are an accurate representation of the firm’s mind-set. “There is this really cavalier attitude,” she said. “It doesn’t matter that people are going to lose their homes.” Nor does the firm try to help people get mortgage modifications; the pressure, always, is to foreclose. I told her I wanted to post the photos on The Times’s Web site so that readers could see them. She agreed, but asked to remain anonymous because she said she fears retaliation.

Let me describe a few of the photos. In one, two Baum employees are dressed like homeless people. One is holding a bottle of liquor. The other has a sign around her neck that reads: “3rd party squatter. I lost my home and I was never served.” My source said that “I was never served” is meant to mock “the typical excuse” of the homeowner trying to evade a foreclosure proceeding.

A second picture shows a coffin with a picture of a woman whose eyes have been cut out. A sign on the coffin reads: “Rest in Peace. Crazy Susie.” The reference is to Susan Chana Lask, a lawyer who had filed a class-action suit against Steven J. Baum — and had posted a YouTube video denouncing the firm’s foreclosure practices. “She was a thorn in their side,” said my source.

A third photograph shows a corner of Baum’s office decorated to look like a row of foreclosed homes. Another shows a sign that reads, “Baum Estates” — needless to say, it’s also full of foreclosed houses. Most of the other pictures show either mock homeless camps or mock foreclosure signs — or both. My source told me that not every Baum department used the party to make fun of the troubled homeowners they made their living suing. But some clearly did. The adjective she’d used when she sent them to me — “appalling” — struck me as exactly right.

These pictures are hardly the first piece of evidence that the Baum firm treats homeowners shabbily — or that it uses dubious legal practices to do so. It is under investigation by the New York attorney general, Eric Schneiderman. It recently agreed to pay $2 million to resolve an investigation by the Department of Justice into whether the firm had “filed misleading pleadings, affidavits, and mortgage assignments in the state and federal courts in New York.” (In the press release announcing the settlement, Baum acknowledged only that “it occasionally made inadvertent errors.”)

MFY Legal Services, which defends homeowners, and Harwood Feffer, a large class-action firm, have filed a class-action suit claiming that Steven J. Baum has consistently failed to file certain papers that are necessary to allow for a state-mandated settlement conference that can lead to a modification. Judge Arthur Schack of the State Supreme Court in Brooklyn once described Baum’s foreclosure filings as “operating in a parallel mortgage universe, unrelated to the real universe.” (My source told me that one Baum employee dressed up as Judge Schack at a previous Halloween party.)

I saw the firm operate up close when I wrote several columns about Lilla Roberts, a 73-year-old homeowner who had spent three years in foreclosure hell. Although she had a steady income and was a good candidate for a modification, the Baum firm treated her mercilessly.

When I called a press spokesman for Steven J. Baum to ask about the photographs, he sent me a statement a few hours later. “It has been suggested that some employees dress in … attire that mocks or attempts to belittle the plight of those who have lost their homes,” the statement read. “Nothing could be further from the truth.” It described this column as “another attempt by The New York Times to attack our firm and our work.”

I encourage you to look at the photographs with this column on the Web. Then judge for yourself the veracity of Steven J. Baum’s denial.

Filed under: foreclosure | Tagged: foreclosure fraud, Ny Times, steven baum foreclosure halloween | 3 Comments »

The First Step in Foreclosure Defense: Title Issues

Posted on October 3, 2016 by Neil Garfield

The same judges that consistently ignore defenses with respect to the endorsements, assignments, or other issues instantly recognize that where there is an error or break in the chain of title, the “bank” must step back, dismiss the foreclosure and start over again.

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

—————-

Last Thursday night I had North Carolina Attorney James Surane as a guest on my radio show. As I suspected it was technical but VERY interesting. He gave many examples where title issues had either resulted in an outright win or much greater leverage over the party claiming to be authorized to foreclose on property. In his state of North Carolina, the judicial climate is very frosty when it comes to a homeowner challenging foreclosures. But the same judges that consistently ignore defenses with respect to the endorsements, assignments, or other issues instantly recognize that where there is an error or break in the chain of title, the “bank” must step back, dismiss the foreclosure and start over again.

Although most people have stopped ordering title searches and title analysis by a lawyer, they are throwing out the baby with the bathwater. As I have previously discussed on this blog, the problem with the title reports is not that they are useless, it is that they don’t go back far enough. In the run-up to the mortgage meltdown some closing agents were processing loan closings at the rate of 100 per day. These agents and lawyers were overwhelmed by the volume. They made mistakes.

Here is a summary of what Jim said last Thursday night:

FIRST STEP IN FORECLOSURE DEFENSE CASE:

A thorough title search of the property being subject to foreclosure is an absolute necessity. This includes researching back to the plat in the case of a home in a subdivision, and back 30 years in a case in which the property is not in a subdivision. We have won many cases based upon errors in the chain of title. It must be remembered that a large majority of the mortgages that we deal with today were closed between the years of 1992 – 2007. During these years, closing attorneys and lenders were overwhelmed with business, and as a result many errors in preparing documents that compromised the lenders lien rights. In our title search, we are looking for:

Plat was recorded prior to conveyance of lot

Errors in the legal descriptions

The legal description was attached at the time the deed of trust was signed

Errors in the timing of the recordation of documents in the chain of title

Errors in the spelling of the grantor or grantee names

Both Grantors names in the body of the Deed of Trust and not just signed

Failure to include all necessary signatures on deeds

Recordings in the wrong county

The grantor owned the property at the time of the conveyance

The date on the note matches the date of the deed of trust

The names on the note match the names on the deed of trust

The grantors signed the Deed of Trust in the proper place (not under notary)

Check the Secretary of State on all corporate grantors

The date the substitute trustee was appointed relative to the Notice of Hearing

The proper substitute trustee filed the Notice of Hearing

Surane has won at least one case for each and every issue listed above. Some of the issues listed above have resulted in our winning several cases. Clerks and Judges are not reserved about recognizing errors in the chain of title, and will readily dismiss a case if the errors are properly presented to the Court. It is very important to thoroughly examine the chain of title before proceeding to identity errors with the lenders standing and endorsements to the promissory note. As many people are aware, the standing and endorsement issues often lead to fertile ground for many additional defenses to a foreclosure action.

North Carolina is more or less a non-judicial state. But instead of the “trustee” recording a notice of default and notice of sale, the trustee in North Carolina files a Notice of Hearing. The Clerk actually has some power to either dismiss or require the filer to dismiss if the chain of title is clearly wrong. This makes North Carolina a somewhat safer place for homeowners than other non-judicial states because there is at least some minimum oversight over the process.

Not all errors in title result in an outright win in Court. But they do create a time interval that could be as long as years in which the homeowner can properly address other issues and seek modification.

At livinglies we provide a title report and an analysis, but most people don’t want to pay the extra cost of going back 3-4 owners. And they don’t want to spend time on a lawyer analyzing title issues. It’s boring stuff to most people. Most vendors providing title information CAN produce a report going back 30 years but they don’t because they have not been paid the extra money to do so — often requiring an actual trip to the building where the public records are kept in the county in which the property is located.

Some vendors, like TitleTracs, will point out potential areas of inquiry that assist a lawyer in analyzing title, but most lawyers don’t want to do the work even if they could get paid for it. It is a laborious task but people are missing “low hanging fruit” when they fail to raise a proper challenge to the substitution of trustee and other defenses.

The bad news is that Surane agrees with my current opinion — it is highly unlikely that any judge anywhere will enter an order quieting title where the mortgage or deed of trust is removed as an encumbrance to the property. Unless the mortgage or deed of trust is void, in our opinion it is not proper to bring the quiet title action. BUT, that said, as Surane pointed out on the show, he has made extensive use of declaratory actions that undermine the enforceability of the mortgage or deed of trust and potentially undermine the note as well. The catch is that courts don’t issue advisory opinions so you need a present controversy in order to get the court to rule.

If this article prompts you to order our COMBO Title and Securitization Report and you want the kind of in-depth title report that is described above the cost of the report is $1995.

Get a consult or order services! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.

Filed under: foreclosure | Tagged: foreclosure, foreclosure defense, foreclosure defense and offense, foreclosure fraud, James Surane, title issues, TitleTracs | 2 Comments »

Five Questions with David Dayen about Foreclosure Fraud, Activism and Hope

Posted on September 25, 2016 by Neil Garfield

http://www.dailykos.com/story/2016/9/24/1572040/-Five-questions-with-David-Dayen-about-foreclosure-fraud-activism-and-hope

David Dayen (dday to old-timers at Daily Kos) has been the most single most dogged journalist digging into the massive fraud perpetuated on American homeowners in the last decade, the fraud that almost brought down the global economy. In fact, he wrote the book on it—Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud, winner of the Studs and Ida Terkel Prize (reviewed here). He is a contributing writer to The Intercept, and a weekly columnist for The Fiscal Times and The New Republic. He also writes for The American Prospect, Vice, The Huffington Post, and more. He lives in Los Angeles. Here I followed up with him about his reporting on the foreclosure fraud and the book for our five questions feature.

1. You wrote about it in the book, but can you tell us how you connected with Lisa, Michael, and Lynn, the people at the heart of your story?

So there’s a scene in the second half of the book where Lisa, Michael, and Lynn are invited to Washington to discuss the foreclosure fraud scandal (that’s the mass delivery of false documents in foreclosure cases by financial institutions who do not have the legal right to foreclose) with a bunch of activists, lawyers, writers, some political staffers. I think someone from the Financial Crisis Inquiry Commission was there. And I was asked to be there. At the time I was writing for Firedoglake and was just starting to wrap my head around this particular scandal.

I knew of Michael’s website but didn’t know him. And I don’t think I knew Lisa and Lynn at all at that time. But their stories stood out, because they were the only foreclosure victims in the room. They had something to bring to the crisis that none of us shared. So they became sources of mine. I’d read their websites and ask them questions. Years later, one of them, I think Lisa, told me that they were surprised I was interested in this and even though I was not in foreclosure. In their experience everybody fighting foreclosure fraud was personally affected. So their world was foreign to me and my world was foreign to them.

2. What led to your interest in the issue?

I was blogging at FDL, I was editing the news desk. And the portfolio of what I was to write about was “the news.” So, be it The Huffington Post or Talking Points Memo while sitting in your living room 3,000 miles away from Washington, or sitting in an office, I was still working my day job off and on at that time. (I edited television shows for many years.)

So I was always looking for those stories where I could add value, something to set me apart from other writers, something I could cover that wasn’t being covered. It still kind of amazes me that foreclosures could fall into that bucket. Over 9.3 million people were evicted in foreclosures or some other transaction that forced them to give up their homes from 2006 to 2014. This is the largest financial purchase that most people will ever make, the source of a large portion of their wealth, and the human drama associated with it is really incalculable. And yet the foreclosure crisis still remains on the fringes, on the business pages if anywhere.

What brought it home for me was a personal interaction. My wife and I have a friend who was very involved with the Obama campaign in 2008, he traveled to Nevada to knock on doors for him, was a major supporter. And one day, in the middle of an email conversation, he just came out with, “What I want to know is, why was President Obama’s plan to help those struggling with their mortgage written to favor the banks instead of the people?” At the time none of us knew that he was even having a problem with his mortgage. But I asked him to tell me his story, and it turns out it was a very familiar situation, he was trying to get a loan modification from his mortgage company (Citi Mortgage), and they approved him for a trial payment that was several hundred dollars a month lower. The trial payments were supposed to convert to permanent within three months, but Citi dithered and stalled for half a year, and then told him he was denied a permanent modification, and that he owed the difference between his trial payment and his original payment within 30 days or they would kick him out of his house.

This was very common, it turned out, a way for the banks to weaponize Obama’s modification program (called HAMP) and turn it into a predatory lending scheme. And I wrote that up and posted it at FDL (using an assumed name for my friend because he was still negotiating with Citi Mortgage). And I put out the call for more stories. Dozens of them came in, and the rest is history.

3) The book has been extremely well-received and well-reviewed. In fact, Sen. Elizabeth Warren raved about it: “If you’re looking for a book to read over Labor Day weekend—one that will that will get your heart pumping and your blood boiling and that will remind you why we’re in these fights—add this one to your list.” You’ve had numerous appearances talking about it around the country. What have you learned from that experience?

First of all, this is an ongoing nightmare. I wrote this book as sort of a work of history, to rescue something that had verged on going down the memory hole—that for all the excuses about how no high-ranking executives went to jail for the sins of the financial crisis because there were no good cases or what they did wasn’t illegal, there was an alternate history to be written, led by these three remarkable people who took it upon themselves to expose the greatest consumer fraud in American history while fighting their own punishing foreclosure cases. But in talking to people and getting feedback through email and social media, it reinforced what I already knew, that this is a living history. Every day in America, someone is thrown out of their home based on false documents, and both the political system and the justice system is thoroughly disinterested in changing that fact to arrive at a different outcome.

In St. Louis, I had a guy drive four hours from Chicago to tell me his story about experiencing fraud on his home and starting to work with a half-dozen lawyers to fight foreclosures in his city. In Philadelphia a woman told me she was about to be evicted in a week; the bank just got awarded summary judgment in her case. In Los Angeles a man told me he’d been in court over his home for almost a decade. And I’m pen pals with at least two dozen other homeowners keeping up the fight. It’s remarkable that these cases go on, that these people summon the inner courage to persevere against incredible odds. But Americans have this emotional connection to their homes and a resistance to injustice. They care enough to see things through, to not extinguish the fire burning inside them. Though the stories are horrible, they’re oddly life-affirming at the same time.

4. The book leaves us with kind of a frustrating ending—as admirable and important as the work these activists have done is, it’s still happening. What would it take to fix it, and do you think your book can help kick-start a reaction?

No.

I try to be very clear with the people who ask me for advice. I’m not a lawyer and I cannot counsel them. But it’s very, very hard to win these cases. I didn’t set out to write a book that someone at the Justice Department would read and say “He’s right, we screwed up, let’s round up everyone on Wall Street.” It’s not going to happen.

I’d say two things—one looking backward, and one looking forward. One, I do think that people in high-ranking positions were shaken by the work they did, or rather didn’t do, in the face of this crisis. I have been told by people that the work of the activists, for which I was mostly a conduit, made a real difference. Someone who didn’t give me his name, but who told me he worked at a very high level on this issue, came up to me at an event and said that the $25 billion settlement we got over these practices, which was woefully inadequate, would have been much worse without my efforts. It’s not the first time I’ve heard that.

The other point is that this is a book that tells the story of a movement. And movements don’t always succeed. We hear about the great successful movements in history in our textbook, the civil rights movement and the gay rights movement, but lots and lots of smaller groups failed leading up to those victories. I say in the book that movements crash on the shore like waves, and each one gets a little bit closer to its destination. These three people didn’t have anything—no resources, no institutional knowledge, no history of activism. But they got on the Internet and built websites and collected knowledge and pushed this huge scandal into the public consciousness, if only for a brief moment. And without them, you don’t have Occupy Wall Street, and you don’t have the Elizabeth Warren wing of the party, and you don’t have the Bernie Sanders campaign. There’s a level of awareness about the financial industry now that didn’t exist in 2008, one that’s not going away. And Lisa, Michael, and Lynn helped to forge that.

5. What do Daily Kos readers need to know and do to help fight this ongoing battle?

Stay educated and involved! And recognize that the financialization of our economy, the power and hold that the banks retain, is about more than just foreclosures. Just after Labor Day we saw Wells Fargo fined for creating high sales targets that led its workers to forge documents and create millions of phony customer accounts. That’s not exactly what happened in the foreclosure fraud scandal but it’s a close cousin. And the real scandal there is not about consumer fraud actually—most of these accounts sat dormant, and only a few generated fees. It was securities fraud; Wells Fargo demanded high sales targets because they wanted to show robust growth to their shareholders and boost the stock. Incidentally, Wells Fargo’s CEO took $155 million in stock options from 2012 to 2015, giving him a real incentive to kick up the stock in whatever phantom way possible. That drive for short-term profits remains the biggest single source of recklessness among major banks, with consequences for consumers and investors and the broader economy. Dodd-Frank has not come close to wiping that away. And we need to be speaking out about how we can.

Filed under: foreclosure | Tagged: daily kos, DAVID DAYEN, foreclosure fraud, Livinglies | 2 Comments »

Mortgages: Weapons of Middle-Class Mass Destruction

Posted on July 15, 2016 by Neil Garfield

By the Lending Lies Team

http://www.zillow.com/research/foreclosures-and-wealth-inequality-12523/

Losing your home by foreclosure to a bank that used fabricated documents to foreclose is a tragedy that has tainted the American dream for millions of Americans. The process is unjust, unlawful and dehumanizing. But even years after the former homeowner has moved forward with their lives they sustain another injury they are probably not even aware of- and that is the loss of rebound gains in the market.

Oddly, homes that are foreclosed on tend to gain value back at a higher rate than properties that have not been previously foreclosed according to real estate website Zillow who conducted research on the matter. Former owners missed out on potential profits generated by the “recovery” and therefore sustained even more financial harm. Instead, the profits went to governmental agencies, GSEs (Fannie/Freddie), hedge funds, investors and flippers who bought these properties for pennies on the dollar.

In the Miami-Dade, Broward and Palm Beach, homes that were foreclosed had a 79 percent increase in price from the market’s lowest point. The research also shows that the homes that were foreclosed upon were the homes of lower-income people and young families.

These families who were illegally foreclosed upon were thrust into an inflated renters market where they likely secured accommodations that were inferior to the living conditions of the home they lost and even less affordable. The prior owner lost their down payment, any equity and any appreciation in home value. Many of these families may never recover from the financial slaughter they suffered.

“You had a ton of appreciation for these foreclosed homes, but the [prior] homeowners weren’t getting the benefits,” said Svenja Gudell, Zillow’s chief economist. “Lower-end and foreclosed homes were bought up by investors who would transform those homes into rental properties. … Had they held onto their home in many markets, homeowners would’ve made back their original investment plus much more.” The foreclosure crisis has contributed to the massive wealth gap that has evolved since the 2008 market crash.

Even more concerning are the actions of the Veteran’s Association that guarantees the loans of United States service members who obtain VA-guaranteed mortgages. The VA is not assisting veterans who served their country to retain their homes when default threatens. In fact, the VA is known to foreclose on the homes of veterans for pennies on the dollar, evict the veteran, hold the property and then sell the property at a large profit.

Recently the Lending Lies team learned of a veteran with health issues caused by Agent Orange exposure. The VA foreclosed on his home that had a remaining balance of 7k. The VA held the property for a year and then sold the home for over 100k. The displaced veteran who had paid on his home for decades did not share in the profits the VA made from the sale of his home.

Homeowners have the potential to be damaged at three different junctions during their loan: at closing, during default, and post-default. The homeowner is damaged at closing when they receive a table funded loan, there is no disclosure regarding WHO the true creditor is, and they are not told that they are signing a Note that is actually a security and not a mortgage. The homeowner does not receive disclosure that investors will make millions of dollars from the homeowner’s signature and is not told that he/she will carry all of the risk when the game of securitization is put into play.

A homeowner may be damaged during the term of their loan by the loan servicer who is looking for an opportunity to create a default so they can foreclose on the home. The homeowner may be given erroneous information by the servicer or may not receive service to resolve an issue that may occur during the life of the loan. The servicer may create a default by misapplying payments, inflating the balance by applying illegal fees, and other tactics to engineer a default. When a homeowner facing default contacts their loan servicer looking for assistance, the homeowner is not engaging with a servicer who is looking to find a solution. Instead, the homeowner is dealing with an agent who is trained to find the homeowner’s Achilles heel in which to exploit and create a default.

At this point the homeowner in default will experience the Foreclosure Machine where documents disappear into ether or magically transform, bank presidents have G.E.D’s, and due process means you had your three minutes in front of a judge. The majority of homeowners caught up in this stage of foreclosure will gladly do anything to end their misery. Despite their knowledge that the servicer foreclosing has no standing- the wounded homeowner may prefer to chew off their own arm to escape the clutches of attorneys, motions, and bank intimidation. This is the stage where the homeowner should refuse to back down and dig in their heels, but the majority flee.

After the homeowner has lost their home to an entity who had no standing to foreclose, the homeowner will suffer further economic decimation. The vultures who made millions off of the economic destruction of the American middle and lower-middle class will become their landlord. While the tenant works to make his monthly rental payment and is not building any equity, the landlord will sit back and collect the passive income while the foreclosed property appreciates at 18% plus a year.

Can there be any doubt that taking out a home mortgage from a mega-bank is not a method of middle-class mass destruction? Caveat Emptor.

Filed under: foreclosure | Tagged: foreclosure fraud, lendinglies, Livinglies, mega banks foreclose, middle class mass destruction, mortgage fraud | 10 Comments »

A Double Standard: Only Mega-Bank’s can Fabricate Mortgage Documents without Consequence

Posted on July 13, 2016 by Neil Garfield

see http://www.pe.com/articles/san-808058-defendants-homeowners.html

“The defendants filed bogus petitions and court pleadings and recorded false deeds in county recorders’ offices.”

So here is my issue. That description of what they did sounds really bad. And maybe it IS bad and should be punished. BUT has the judiciary now opened the door to calling this behavior “not so bad?”

The banks are filing bogus pleadings to support foreclosures in which they have no interest except to complete the project of stealing investors money with homeowners being collateral damage. The banks and their servicers are sending bogus notices of substitution of trustee in non judicial states and filing bogus notices of default on behalf of a “beneficiary” or “mortgagee” that is not a creditor, not a holder, not a possessor of any written instrument that is true. The banks and their servicers are creating and recording false instruments attendant to nearly every fraudulent foreclosure. Among the most egregious examples are the void assignment of mortgage and the conjured endorsement on the note.

If an assignment can suddenly create rights rather than merely transfer them, then maybe these defendants being prosecuted created false documents that now have meaning in the fight against the banks. And if that is true then maybe no crime was committed at all — as long as we follow the current legal doctrine of “protect the banks.” Once upon a time in California it was said that homeowners have no standing to challenge standing based upon a void assignment. Yvanova v Countrywide changed all that. Maybe these defendants did not have pure motives and maybe they should be punished; but if they deserve to be brought to justice then so do thousands of bankers, robo-signers, robo-witnesses and fabricators of “original” documentation.

The courts meanwhile have been open to all kinds of excuses for that behavior. Have they now opened the door for scams on the other side — in which homeowners are the direct victims — can be called “irrelevant? Can we say that the government has no standing to prosecute claims against scam artists? Is this a case of unequal protection under the law? Is this case really a scam — or just fighting fire with fire?

Those of us who have been heavily engaged in the defense of homeowners know that the banks are given so much credibility that their fabrication, forgery and robosigning of documents that are created out of thin air and then recorded is then given the benefit of a legal presumption of truth and proof of facts that we all know are in fact nonexistent and therefore making the assertion untrue. When the documents are untrue and false the Court’s rubber stamp means that false representations and false documents will be considered as true when, without the legal presumption, that can never be proven.

So in defense of fraudulent foreclosures is it possible that a new doctrine has been born: you can create and record fake documents and wait to see if anyone takes them seriously in which case they can be enforced. That is clearly the case with the banks and servicers in millions of foreclosures. And if that is the case then it follows logically that the targets of such fraud should respond in kind.

I’d like to see an explanation from prosecutors for why they don’t prosecute the banks, their “witnesses” and their robosigners for filing false documents and recording them when that is exactly their complaint on the other side of the fence. Could the State be estopped from enforcing such laws when they are giving a free pass to the main culprits?

Filed under: foreclosure | Tagged: bank fraud, falsified documents, foreclosure fraud, Foreclosure scams, mega bank fraud | 10 Comments »

“Prejudice” Element of Wrongful Foreclosure

Posted on June 22, 2016 by Neil Garfield

http://www.jdsupra.com/legalnews/court-of-appeal-addresses-prejudice-48045/

By Kevin Brodehl

If a property owner loses their property through a foreclosure sale initiated by someone who did not validly own the debt, has the property owner automatically suffered enough “prejudice” to pursue a claim for wrongful foreclosure? Or does the property owner also need to show that it would have been able to avoid foreclosure by paying the debt to the true lender?

The California Supreme Court’s recent Yvanova decision (reviewed on Money and Dirt here: California Supreme Court: Borrowers Have Standing to Allege Wrongful Foreclosure Based on Void Assignment of Note) only partially addressed the “prejudice” issue. In Yvanova, the Supreme Court discussed prejudice, but only “in the sense of an injury sufficiently concrete and personal to provide standing,” not “as a possible element of the wrongful foreclosure tort.” The Court held that the plaintiff in that case demonstrated sufficient prejudice — lost ownership of property in an allegedly illegal foreclosure sale — to confer standing to pursue a wrongful foreclosure claim.

A recent opinion by the California Court of Appeal (Fourth District, Division One, in San Diego) — Sciarratta v. U.S. Bank National Association — picks up the “prejudice” analysis where Yvanova left off, and addresses prejudice as an element of a wrongful foreclosure claim.

The facts: a twisted tale of note assignments

In 2005, the property owner obtained a $620,000 loan secured by real property in Riverside County. The note and deed of trust identified the lender as Washington Mutual (WaMu).

In April 2009, JPMorgan Chase Bank (Chase), as successor in interest to WaMu, assigned the note and deed of trust to Deutsche Bank. The trustee promptly recorded a Notice of Default, followed by a Notice of Sale.

In November 2009, Chase recorded a document assigning the note and deed of trust to Bank of America (even thought just months earlier, Chase had already assigned the note and deed of trust to Deutsche Bank — oops!). On the same date as the assignment, Bank of America recorded a Trustee’s Deed, reflecting that Bank of America had acquired the property at a trustee’s sale in exchange for a credit bid.

In December 2009, Chase recorded a “corrective” assignment of the note and deed of trust, suggesting that the April 2009 assignment to Deutsche Bank was a mistake, and was really intended to be an assignment to Bank of America.

The property owner sued the banks and the trustee for wrongful foreclosure.

The trial court’s ruling: no prejudice; case dismissed

The banks filed a demurrer, arguing that the property owner could not allege “prejudice,” which is an essential element of a wrongful foreclosure claim.

The trial court sustained the banks’ demurrer and dismissed the case.

The property owner appealed.

The court of appeal’s opinion

The Court of Appeal reversed, holding that a property owner who loses property to a foreclosure sale initiated by someone purporting to exercise rights under a void assignment suffers enough prejudice to state a claim for wrongful foreclosure.

The court first relied on the Supreme Court’s holding in Yvanova that “only the entity currently entitled to enforce a debt may foreclose on the mortgage or deed of trust securing that debt.” In this case, based on the clear paper trail of assignments, the entity entitled to enforce the debt was Deutsche Bank, but the entity that foreclosed was Bank of America.

Based on the complaint’s allegations, the court noted, the assignment was not merely voidable but void. The court observed, “Chase, having assigned ‘all beneficial interest’ in [the property owner’s] notes and deed of trust to Deutsche Bank in April 2009, could not assign again the same interests to Bank of America in November 2009.”

The court concluded that a property owner “who has been foreclosed on by one with no right to do so — by those facts alone — sustains prejudice or harm sufficient to constitute a cause of action for wrongful foreclosure.” The court added:

The critical issue is not the plaintiff’s ability to pay, but rather whether defendant’s conduct resulted in the plaintiff’s harm; i.e., a foreclosure that was wrongful because it was initiated by a person or entity having no legal right to do so; i.e. holding void title.

The court also offered policy grounds supporting its decision. The court’s ruling would encourage “lending institutions to employ due diligence to properly document assignments and confirm who currently holds a loan.” A contrary ruling, on the other hand, would subject property owners to unfairly losing their property in foreclosure to someone who does not even own the underlying debt, with no court oversight.

Lesson

The Sciarratta decision will make it easier for property owners to assert wrongful foreclosure claims…….

To read more please visit:

http://www.jdsupra.com/legalnews/court-of-appeal-addresses-prejudice-48045/

Filed under: foreclosure | Tagged: california foreclosure, foreclosure fraud, jesinoski, lendinglies, Livinglies, prejudice wrongful foreclosure, sciarratta | 8 Comments »

The Psychological Warfare of Loan Servicing

Posted on June 19, 2016 by Neil Garfield

Trust your Loan Servicer at your own Peril.

By William Hudson

“Emotional violence is another kind of abuse … it’s not about words because an emotionally abusive person doesn’t always resort to using the verbal club, but rather the verbal untraceable poison.” ~Augusten Burroughs

The banks commit felonious financial crimes against homeowners with impunity. But even more egregious and unconscionable than the theft of assets, is the theft of solitude, hope, and life quality. The banks decimate families and often eradicate a person’s belief in what is “just” and lawful.

Millions of American homeowners have arrived at the harsh reality that government, the judiciary and law enforcement are not to be trusted. The reality is that the banks are engaging in psychological warfare against the American homeowner- and no one is doing a thing to stop the bullying or psychological abuse.

Banks utilize the planned use of propaganda and other psychological operations to influence the opinions, emotions, attitudes, and behavior of homeowners, attorneys, the courts and policy makers. This practice is actually a breach of Article 10 of the European Convention on Human Rights, which reads, “Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers.”

The Foreclosure Machine is engaging in a deliberate strategy of emotional abuse towards desperate homeowners who are looking for an equitable solution (when most simply want an opportunity to meet the terms of their mortgage). The bank representatives may speak professionally, and even appear to be concerned, but their words are meant to deceive and may even kill. The stress created from corporate psychological abuse often culminates in health problems that may result in a silent death or even suicide. The banks do not play fair, and they will do whatever is necessary to take a home- including the destruction of a life if necessary.

The covert abuse used by banks is administered in barely detectable and cunning strategies that can, over time, cause a homeowner to doubt their own sanity. Called ‘gaslighting’ by psychologists, this process is implemented to cause the homeowner to doubt their own decisions and thoughts- and to keep them off-center. Because of the uniformity of this practice among servicers, there can be no doubt that employees were trained in this process.

The Gaslight Effect allows the loan servicer to define the reality and the rules, while the less powerful party is left vulnerable by relying on the abuser for information or validation. Many homes have been lost to a servicer who used this technique to exploit the vulnerabilities of a homeowner who has had financial problems, emotional upheaval, divorce, illness or job loss that resulted in the homeowner falling behind on their mortgage payments. The process is systematic, confuses the victim and by providing erroneous information ultimately results in the loss of a home. It is not a random practice but executed to target society’s most vulnerable.

For instance, back when banks were pushing loan modifications, the banks deliberately lost paperwork and provided contradictory information to ensure the customer would fall further behind on their mortgage. It was a uniform practice among all large servicers. The homeowner, despite having fax and mail receipts, would be told the information was never received- and often questioned their own memory of events. In our society, for hundreds of years, banking was built on the concept of “trust” and this in itself provided a false confidence that the banks would not engage in illegal acts.

There were other games the banks played to ensure they would get the foreclosure they so desperately wanted. One game was the game of “musical-chairs customer representative agent” where the homeowner was forced to start from the beginning and explain their complex situation to a new agent every time they called the bank. This was done so there was no solution continuity. Homeowners would speak to agents who provided conflicting information from each representative. Just when the homeowner thought a solution was at hand after hours on the phone, the phone call would be “accidentally” disconnected. This psychological tactic was well rehearsed, until when after years of this abuse, new rules assigned a homeowner a single point of contact.

A majority of homeowners we have spoken with at LivingLies, have reported methods of intimidation that often result in the homeowner wanting to walk away from the home. These tactics include having people sit outside their homes in cars watching the house, bank employees peering inside their windows (many owners claim they have resorted to covering all windows), and even having realtors list the home while they are still in possession and living in the home.

There have been hundreds of reports of banks breaking into occupied homes, and when the homeowner reports the break-in to law enforcement, the homeowner is told the trespass is a civil matter. The homeowner literally has no relief or protection from their loan servicer, except to sue.

The negative impact of foreclosure on emotional and physical health, as well as overall mental functioning is gradual and insidious. When the trauma of endless delays in resolution, unjust court tactics, financial burden and the feeling of having impending doom hanging over your head (sometimes for over a decade) becomes overwhelming- something has to give and it is typically either mental or physical functioning. Careers are impacted, the raising of children neglected, and other opportunities forsaken because the homeowner- armed with evidence the bank has no standing- still clings to the belief that the system is fair.

The homeowner has so much invested emotionally, financially, and in life sacrifices- there becomes a point of no return where the homeowner feels they must take the case the entire distance. To quit would be to admit yet another life failure. Therefore, many homeowners will hang on until they can no longer afford the costs (financially or emotionally). The bank has the resources to outlast, outspend and often outmaneuver but it doesn’t mean a homeowner can’t prevail. The key is to document every interaction or event that occurs over the course of negotiations, and to examine the Note, assignments, signature and balances that inevitably tell the truth about the lack of standing.

Back to the methodology employed by banks. The banks use the guise of customer service to create the appearance of assistance. Under this act the emotional abuse is passive, subtle, and covert. This strategy makes assigning blame to the bank more difficult because the bank is creating the illusion of service. “Oh go ahead and miss a few payments- we will add it back in when your modification papers are done, “ or they will say, “We can find a solution and you are a good candidate for our program.” Meanwhile, the bank has already filed to foreclose. “You can just ignore the foreclosure letters you are receiving- my notes say that your modification is waiting for final approval.” The unsuspecting homeowner is the wounded impala and the banking lion is simply toying with its prey while creating arrearages and servicing fees.

The homeowner senses that something isn’t right, but saddled with financial worries and the fear that foreclosure brings- they attempt to grasp onto anything that seems like hope. That is where homeowners can get into trouble. Desperate for a list of options or some type of solution- the homeowner, terrified and confronting a ticking clock, begin pursuing any type of remedy- instead of focusing on one that might actually work. The homeowner’s strategy becomes fragmented from the lies their servicer is telling them, the facts they see on paper, an inaccessible justice system, and a shady attorney looking for a high retainer.

Often an attorney, sensing the homeowner’s desperation, will agree to represent the homeowner when they have no knowledge of foreclosure or securitization. These attorneys are known to purchase pre-fabricated legal Motions off the internet to defend a case. The unsuspecting and naïve homeowner has no idea that their attorney is failing to properly defend their case since everything “looks” fine to a homeowner who is not familiar with law. The homeowner will lose their retainer, all payments made to date, and often the home and any equity in the property (down payment, improvements). In reality the homeowner is surrounded by vipers, opportunists, conmen and predators who will do anything to receive payment or the home.

Emotional abuse has an aim, and that is to control, belittle, isolate and shame people into subservience. It doesn’t take much skill when dealing with a vulnerable homeowner. This occurs gradually until the victim’s sense of self-worth, self-confidence, and own ideas and perceptions erode.

The banks or servicers are emotional abusers and operate under the guise that they are “helping”, “advising”, or “assisting”, and therefore fly under the radar when they are deliberately sabotaging any opportunity the homeowner has to save the home.

The bank will now attempt to extort information from the homeowner so that they know where to strike where you are vulnerable. Under the appearance of a loan modification or short sale, they will have you provide extensive personal financial information. Although they have no intention of providing assistance, this form provides your income, finances, assets, accounts and other information you might not share if you had any idea that is was being collected for nefarious purposes. Once this information is front of an agent, they can determine just how many payments at what amount you will be able to afford before you are forced into insolvency.

Because people are human and do not hide their emotions or vulnerability well, bank serving agents are able to detect blood in the water. My dealings over the years with service agents is that they treat homeowners like you are expendable, inferior, inadequate, or ignorant. Imbued with the power to engineer a default, some of them have God syndromes.

I remember a client who had less than three days before she lost her home to foreclosure. After hours on the phone she was able to speak to a senior manager who promised the homeowner she could reinstate her mortgage if she agreed to pay all late fees and arrearages. The homeowner readily agreed to accept over 50k in fees and arrearages (even if she felt they were erroneous). The manager promised to overnight the papers and they would arrive by noon the next day. The manager never had any intention of sending the documents, but it allowed the bank to consume two days where the home owner should have been pursuing other options. The empty promise was given to maximize the chance of foreclosure.
Another game the banks play is to act like they are right, while the homeowner has no valid objections or complaints. Homeowners report that they feel like they must “get permission” and beg and plead for information they have an absolute right to obtain. Bank servicers are predators and it is time that some type of legislation is passed to stop their abusive tactics. The State of California has had to intervene with legislation to protect widows and widowers who are falling prey to servicers who use a spouse’s death to engineer a default.
Although loan servicers typically will accept loan payments, if a homeowner is not on both the loan, the bank will utilize this legal gray area to refuse payment, thus causing fees and an arrearage to occur. When the surviving spouse attempts to make good on the payment they may still be prevented from doing so. The banks also has the power to deny any accommodation to assist the surviving spouse- especially if the see an area to exploit that might result in default. For example, often the widowed spouse who has temporarily lost their spouse’s income, or is waiting on life insurance proceeds will be denied a loan modification.
The problem is growing, advocates say, and the issue has caught the attention of federal regulators and state lawmakers. In just the first three months of this year, the Housing and Economic Rights Advocates, a statewide advocacy group in California, had handled 16 such cases. The California Reinvestment Coalition discovered that 44% of housing counselors said that servicers “always” or “almost always” declined to discuss loan modifications with widowed clients when they weren’t on the loan.

Last year the National Housing Resource Center gave servicers a poor rating for communication with widows, widowers and others in similar circumstances. The banks, again, have found a vulnerable client population in which to exploit by failing to provide accurate information or assistance to increase the possibility of default.
Widows and even the elderly are especially vulnerable to the predatory practices and emotional abuse by banks. With the rise of risky first and second mortgages — including many taken out by older Americans who previously avoided getting into new debt, reverse mortgages, and complex securitization schemes, servicers have created a new business model that is intent on foreclosure at all costs. In fact loan servicers no longer service- instead they provide a predatory disservice, provide pseudo-assistance, and target the most vulnerable homeowners.
Servicing companies often refuse a modification until the surviving spouse assumes the loan, which can’t happen until the owner is current on the mortgage — resulting in a catch-22. The spouse may then end up losing their life investment simply because the bank ensured there was no way to cure the default. Misinformation serves to compound the late fees and charges creating a dire situation for those who don’t have the resources (emotional or financial) to force the bank to comply with law.
The bank servicing industry is rotten to the core. It isn’t enough that they are taking a home they have no standing to foreclose upon- but to get the job done they resort to psychological warfare, target the nation’s most vulnerable homeowners, and play dirty tricks that should undermine all credibility within the financial industry. Homeowner beware- document EVERY conversation with the servicer, retain EVERY document they send you, and NEVER believe a word your servicer says. The Bank will do whatever is necessary, legal or illegal, to foreclose on your home-even if it requires resorting to mentally abusive tactics. Be prepared. The power to service- is the power to destroy.

Filed under: foreclosure | Tagged: foreclosure fraud, loan servicer abuse, loan servicer scam, Mortgage Abuse | 18 Comments »

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Millions lost their homes and jobs, and not only did the bankers not go to jail, most of them got new and better gigs, according to a new study.

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Editor’s Note: Mark Stopa is an excellent foreclosure attorney located in Tampa, Florida. We highly recommend his foreclosure blog a www.stayinmyhome.com.

PATRICK WALSH AND CATHERINE WALSH, Appellants, v. BANK OF NEW YORK MELLON TRUST, ETC., ET AL., Appellees.

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False Promises

“Robinson joined a growing number of con artists surfacing throughout the country during the subprime mortgage crisis focused on lining their own pockets instead of actually helping clients.”

Kevin Danford, special agent, FBI Los Angeles

Partial-Interest Bankruptcy Scams

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Christopher A. Gorman, New York Law Journal

October 19, 2016

‘Royal’ and Other Cases

Meeting New Requirements

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The facts: a twisted tale of note assignments

The trial court’s ruling: no prejudice; case dismissed

The court of appeal’s opinion

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PATRICK WALSH AND CATHERINE WALSH, Appellants,
v.
BANK OF NEW YORK MELLON TRUST, ETC., ET AL., Appellees.