How to Beat the Shell Game

Posted on November 19, 2018 by Neil Garfield

The bottom line is that the foreclosures are a sham. The proceeds of the foreclosure never go into a REMIC Trust because there is neither a REMIC election nor a Trust, much less any entity that outright owns the debt, note or mortgage. In order to win, you must know that the securitization players use sham conduits and fictitious names at will, leaving an ever widening gap between the real and the unreal. It’s the gap that enables so many homeowners to win.

Without getting too metaphysical about it, I am reminded by what Ghandi said when he won India’s independence against all perceived odds. He said that in the end truth always wins out. Always. Of course he didn’t say when that happens.

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

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

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

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

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

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I recently received an email from someone dealing with “Shellpoint” servicing. I thought it might be beneficial for everyone to see my response, to which I have added some edits.

Shellpoint is an apt name. It is a Shell company organized to deflect inquiries and claims from the real actors. The “point” is how they stab homeowners. Modifications are pointless in most cases, designed to place the homeowner in a hopeless economic situation in which they cannot avoid foreclosure.

Mods are intentionally convoluted and virtually nothing is happening on their side except the process of asking for more documentation when you have already sent or they already have it. Some mods are “granted” but only after they have raked the homeowner over the coals and they offer ice in the inter, along with their outright theft of the debt from the actual legal or equitable owner.

The new lender, effectively, is the so-called servicer who in turn has a Purchase and Assumption Agreement with the underwriters of so-called mortgage bonds or certificates. They are not bonds and they are not actual certificates. While those underwriters do business in the  fictitious name described as a REMIC trust when dealing with homeowners, they do not use the fictitious name when they create the illusion of ownership of the debt, note or mortgage.

CWABS is Countrywide. CW was an aggregator only in the loosest sense of the word. Most believe that CW acquired the loans and then was the seller to REMIC Trusts. The entire scheme was a sham. CW did not acquire any loans and was therefore not the seller of the debt, note or mortgage. The REMIC Trust was legally nonexistent and /or had no transaction conducted in its name in which the Trustee of the so-called REMIC Trust was entrusted with your loan to manage on behalf of beneficiaries who also were nonexistent.

The investors who purchased certificates issued in the name of the fake trust are not beneficiaries. The Trustee has absolutely no power to even inquire as to the affairs of the Trust much less actively manage them. Read the PSA — all the way through.

Although there are a few exceptions the investors disclaim any right, title or interest to the debt, note or mortgage. If they were beneficiaries they would have rights to the loans and rights regarding the management of those loans.  The named Trustee would have fiduciary duty to the investors regarding those loans. In truth the underwriter of the certificates was actually the issuer acting under the name of the nonexistent trust which was neither the direct nor indirect owner of any assets, much less loans. And the Trustee is merely a rent-a-name to make it look like a serious financial institution was at the head of this scheme.

Companies like Shellpoint claim their power is derived from the nonexistent trust that does not own the debt, note or mortgage and which will not receive the proceeds of foreclosure.

If their powers and rights are said to derive from the existence of the Trust, then they have no power. They have no right to collect anything or enforce anything unless a specific owner of the debt, note and mortgage is (a) identified and (b) the owner gives specific rights and direction to an agent (servicer) to conduct business in the name of the owner or for the benefit of the owner of the debt, note and mortgage.

Proving this to a judge who is at best skeptical of such claims is essentially impossible. That is because the defense narrative would require digging deep into the books and records of the trust (there are none) and deep into the records of the previous and current servicers to determine where they sent money that they collected from homeowners supposedly pursuant to the terms of a promissory note. The current state of such narratives is that they are deemed not credible or “not proven” even though they are true. And accordingly the attempts at such discovery and investigation are thwarted by the court sustaining objections to such discovery.

Those objections are lodged by lawyers who claim that they represent the named claimant. That is also a misrepresentation in many cases because the claimant they have named does not exist and has no direct or indirect power or rights over the debt, note mor mortgage. Since the claimant does not exist, that should be the end of the matter. But once again rebuttable presumptions come to the rescue of the lawyers of nonexistent clients. And once again those presumptions are not rebuttable without getting proof from sources who simply will never comply even if ordered by a court.

But just to be clear, this is a possible basis for suing the lawyers who filed such claims either knowingly or by failing to conduct basic due diligence. Any normal lawyer would not knowingly take directions from a third party in which they were to file suit or start a nonjudicial foreclosure on behalf of a nonexistent entity that neither exists nor has any interest in the subject matter of litigation. So later when you file suit for wrongful foreclosure, abuse of process, RICO or whatever you decide are proper grounds and causes of action, consider the foreclosure litigation to be  a vehicle for laying the groundwork for actions in fraud, misrepresentation and negligence.

So the lawyers who win these cases enter the courtroom knowing that the defense narrative is true but they do not assert it as a claim they must prove.  They are adept at keeping the burden of proof away from their client homeowner. The winning lawyers basically follow the track of keeping the burden of proof on the claimant who seeks foreclosure. The lawyers know that the the claimant simply will not and cannot answer certain questions that can be used to undermine the legal presumptions on which the entire claim is based, contrary to the actual facts. The winning defense lawyers are the ones who use timely objections and good cross examination (i.e., constant follow-up). In the end the witness or the document will collapse under its own weight.

 

Filed under: burden of persuasion, burden of pleading, BURDEN OF PROOF, CORRUPTION, discovery, evidence, Fabrication of documents, foreclosure, investment banking, Investor, MODIFICATION, Mortgage, Motions, Servicer, TRIAL OBJECTIONS, TRUST BENEFICIARIES, trustee | Tagged: , , , , , , , , | 4 Comments »

Chase Admits Violations of Consent Order

Posted on March 5, 2015 by Neil Garfield

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

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see http://dtc-systems.net/2015/03/jpmorgan-chase-admits-failure-comply-april-13-2011-independent-foreclosure-review-consent-order/#more-2157

see also 27_page_settlement2

We already knew that the servicers, banks and trustees were violating the settlements and consent orders that were entered against them for filing fraudulent papers in fraudulent foreclosures. Now the question is what to do about it.

With respect to the 2011 consent orders Chase admitted the wrongdoing and the settlement was supposed to compensate and give notice to borrowers who had been defrauded.

In the proposed settlement, Chase acknowledges that it filed in bankruptcy courts around the country more than 50,000 payment change notices that were improperly signed, under penalty of perjury, by persons who had not reviewed the accuracy of the notices.  More than 25,000 notices were signed in the names of former employees or of employees who had nothing to do with reviewing the accuracy of the filings.  The rest of the notices were signed by individuals employed by a third party vendor on matters unrelated to checking the accuracy of the filings.

The first question that SHOULD come to mind is WHY a multi trillion dollar bank would need or want to engage in such practices? After all they were committing perjury by their own admission. The second question is why borrowers who were hurt by this behavior have not used the admissions to win their foreclosure cases? And the third question is what is the effect of these admissions?

The answer lies in the lies. The plain truth is, based upon my direct knowledge in several cases, that Chase did not own the loans, the Trusts therefore could not have purchased the loans and that not only Chase was lying but so was US Bank when it was named in foreclosure actions as Trustee for a Trust that plainly did not purchase the loans nor was any of the paperwork showing a transfer authentic. The underlying transaction simply isn’t there and Chase (and other banks) successfully hoodwinked courts into applying legal presumptions that were plainly contrary to the facts.

I think the admission could be used as an argument that the banks are not entitled to the legal presumptions that normally apply because of the wrongful behavior that they have admitted. If they want to show that the Trust bought the loan then they must prove it and not just produce a self-serving piece of paper that says it happened. we know it didn’t happen. Why should the burden of proof fall on a homeowner with limited resources?

The bank, with virtually unlimited resources and exclusive access to all the information, should be able to show the transaction date, amount and proof of payment (wire transfer receipt, wire transfer instructions, canceled check etc.) for the loans that were allegedly acquired and/or conveyed by the assignor and the assignee. With obviously unclean hands, the banks should not be rewarded for their subterfuge. The bank should not be allowed to claim any presumptions, legal or otherwise, that are normally applied to documents or commercial paper. If they really have a case, let them prove it — or at least respond to discovery without objection on various spurious grounds.

When I represented banks if someone had said that we didn’t own the loan or never funded the loan I would have stopped them dead with proof of the actual movement of money and that would have ended the discussion. Instead we are splitting hairs in court with the banks saying they don’t want to produce actual proof. All they need, according to them, is some self-serving piece of fabricated paper with a forged signature containing perjurious statements and the court is bound to accept such paper and apply legal presumptions that what is written on the paper is true. They have the temerity to argue that when we all know that the paper is inherently untrustworthy and not credible, given their admissions and continuous behavior.

I think discovery directed at compliance with the settlements and consent orders ought to be pressed against the banks, on the grounds that they could not have fulfilled all conditions precedent because among the conditions precedent are the requirements set forth in the settlements and consent orders. At trial I think the argument should be made, using the settlements and consent orders as exhibits, with Judicial notice, that the banks are not entitled to the presumptions and that they must prove every fact they would otherwise have the court “presume” or “assume.”

Comments invited

see also Katie Porter on servicing

Filed under: foreclosure | Tagged: , , , , , , , , , | Leave a comment »

LAST CHANCE FOR JUSTICE

Posted on August 19, 2013 by Neil Garfield

“We are still in the death grip of the banks as they attempt to portray themselves as the bulwarks of society even as they continue to rob us of homes, lives, jobs and vitally needed capital which is being channeled into natural resources so that when we commence the gargantuan task of repairing our infrastructure we can no longer afford it and must borrow the money from the thieves who created the gaping hole in our economy threatening the soul of our democracy.” Neil Garfield, livinglies.me

We all know that dozens of people rose to power in Europe and Asia in the 1930’s and 1940’s who turned the world on its head and were responsible for the extermination of tens of millions of people. World War II still haunts us as it projected us into an arms race in which we were the first and only country to kill all the people who lived in two cities in Japan. The losses on both sides of the war were horrendous.
Some of us remember the revelations in 1982 that the United States actively recruited unrepentant Nazi officers and scientists for intelligence and technological advantages in the coming showdown with what was known as the Soviet Union. Amongst the things done for the worst war criminals was safe passage (no prosecution for war crimes) and even new identities created by the United States Department of Justice. Policy was created that diverted richly deserved consequences into rich rewards for knowledge. With WWII in the rear view mirror policy-makers decided to look ahead and prepare for new challenges.

Some of us remember the savings and loans scandals where banks nearly destroyed everything in the U.S. marketplace in the 1970’s and 1980’s. Law enforcement went into high gear, investigated, and pieced together the methods and complex transactions meant to hide the guilt of the main perpetrators in and out of government and the business world. More than 800 people went to jail. Of course, none of the banks had achieved the size that now exists in our financial marketplace.

Increasing the mass of individual financial institutions produced a corresponding capacity for destruction that eclipsed anything imagined by anyone outside of Wall Street. The exponentially increasing threat was ignored as the knowledge of Einstein’s famous equation faded into obscurity. The possibilities for mass destruction of our societies was increasing exponentially as the mass of giant financial service companies grew and the accountability dropped off when they were allowed to incorporate and even sell their shares publicly, replacing a system, hundreds of years old in which partners were ultimately liable for losses they created.

The next generation of world dominators would be able to bring the world to its knees without firing a shot or gassing anyone. Institutions grew as malignancies on steroids and created the illusion of contributing half our gross domestic product while real work, real production and real inventions were constrained to function in a marketplace that had been reduced by 1/3 of its capacity — leaving the banks in control of  $7 trillion per year in what was counted as gross domestic product. Our primary output by far was trading paper based upon dubious and fictitious underlying transactions; if those transactions had existed, the share of GDP attributed to financial services would have remained at a constant 16%. Instead it grew to half of GDP.  The “paradox” of financial services becoming increasingly powerful and generating more revenues than any other sector while the rest of the economy was stagnating was noted by many, but nothing was done. The truth of this “paradox” is that it was a lie — a grand illusion created by the greatest salesmen on Wall Street.

So even minimum wage lost 1/3 of its value adjusted for inflation while salaries, profits and bonuses were conferred upon people deemed as financial geniuses as a natural consequence of believing the myths promulgated by Wall Street with its control over all forms of information, including information from the government.

But calling out Wall Street would mean admitting that the United States had made a wrong turn with horrendous results. No longer the supreme leader in education, medical care, crime, safety, happiness and most of all prospects for social and economic mobility, the United States had become supreme only through its military strength and the appearance of strength in the world of high finance, its currency being the world’s reserve despite the reality of the ailing economy and widening inequality of wealth and opportunity — the attributes of a banana republic.

All of us remember the great crash of 2008-2009. It was as close as could be imagined to a world wide nuclear attack, resulting in the apparent collapse of economies, tens of millions of people being reduced to poverty, tossed out of their homes, sleeping in cars, divorces, murder, riots, suicide and the loss of millions of jobs on a rising scale (over 700,000 per month when Obama took office) that did not stop rising until 2010 and which has yet to be corrected to figures that economists say would mean that our economy is functioning at proper levels. Month after month more than 700,000 people lost their jobs instead of a net gain of 300,000 jobs. It was a reversal of 1 million jobs per month that could clean out the country and every myth about us in less than a year.

The cause lay with misbehavior of the banks — again. This time the destruction was so wide and so deep that all conditions necessary for the collapse of our society and our government were present. Policy makers, law enforcement and regulators decided that it was better to maintain the illusion of business as usual in a last ditch effort to maintain the fabric of our society even if it meant that guilty people would go free and even be rewarded. It was a decision that was probably correct at the time given the available information, but it was a policy based upon an inaccurate description of the disaster written and produced by the banks themselves. Once the true information was discovered the government made another wrong turn — staying the course when the threat of collapse was over. In a sense it was worse than giving Nazi war criminals asylum because at the time they were protected by the Department of Justice their crimes were complete and there existed little opportunity for them to repeat those crimes. It could be fairly stated that they posed no existing threat to safety of the country. Not so for the banks.

Now as all the theft, deceit and arrogance are revealed, the original premise of the DOJ in granting the immunity from prosecution was based upon fraudulent information from the very people to whom they were granting safe passage. We have lost 5 million homes in foreclosure from their past crimes, but we remain in the midst of the commission of crimes — another 5 million illegal, wrongful foreclosures is continuing to wind its way through the courts.

Not one person has been prosecuted, not one statement has been made acknowledging the crimes, the continuing deceit in sworn filings with regulators, and the continuing drain on the economy and our ability to finance and capitalize on innovation to replace the lost productivity in real goods and services.

We are still in the death grip of the banks as they attempt to portray themselves as the bulwarks of society even as they continue to rob us of homes, lives, jobs and vitally needed capital which is being channeled into natural resources so that when we commence the gargantuan task of repairing our infrastructure we can no longer afford it and must borrow the money from the thieves who created the gaping hole in our economy threatening the soul of our democracy. If the crimes were in the rear view mirror one could argue that the policy makers could make decisions to protect our future. But the crimes are not just in the rear view mirror. More crimes lie ahead with the theft of an equal number of millions of homes based on false and wrongful foreclosures deriving their legitimacy from an illusion of debt — an illusion so artfully created that most people still believe the debts exist. Without a very sophisticated knowledge of exotic finance it seems inconceivable that a homeowner could receive the benefits of a loan and at the same time or shortly thereafter have the debt extinguished by third parties who were paid richly for doing so.

Job creation would be unleashed if we had the courage to stop the continuing fraud. It is time for the government to step forward and call them out, stop the virtual genocide and let the chips fall where they might when the paper giants collapse. It’s complicated, but that is your job. Few people lack the understanding that the bankers behind this mess belong in jail. This includes regulators, law enforcement and even judges. but the “secret” tacit message is not to mess with the status quo until we are sure it won’t topple our whole society and economy.

The time is now. If we leave the bankers alone they are highly likely to cause another crash in both financial instruments and economically by hoarding natural resources until the prices are intolerably high and we all end up pleading for payment terms on basic raw materials for the rebuilding of infrastructure. If we leave them alone another 20 million people will be displaced as more than 5 million foreclosures get processed in the next 3-4 years. If we leave them alone, we are allowing a clear and present danger to the future of our society and the prospects for safety and world peace. Don’t blame Wall Street — they are just doing what they were sent to do — make money. You don’t hold the soldier responsible for firing a bullet when he was ordered to do so. But you do blame the policy makers that him or her there. And you stop them when the policy is threatening another crash.

Stop them now, jail the ones who can be prosecuted, and take apart the large banks. IMF economists and central bankers around the world are looking on in horror at the new order of things hoping that when the United States has exhausted all other options, they will finally do the right thing. (see Winston Churchill quote to that effect).

But forget not that the ultimate power of government is in the hands of the people at large and that the regulators and law enforcement and judges are working for us, on our nickle. Action like Occupy Wall Street is required and you can see the growing nature of that movement in a sweep that is entirely missed by those who arrogantly pull the levers of power now. OWS despite criticism is proving the point — it isn’t new leaders that will get us out of this — it is the withdrawal of consent of the governed one by one without political affiliation or worshiping sound sound biting, hate mongering politicians.

People have asked me why I have not until now endorsed the OWS movement. The reason was that I wanted to give them time to see if they could actually accomplish the counter-intuitive result of exercising power without direct involvement in a corrupt political process. They have proven the point and they are likely to be a major force undermining the demagogues and greedy bankers and businesses who care more about their bottom line than their society that gives them the opportunity to earn that bottom line.

New Fraud Evidence Shows Trillions Of Dollars In Mortgages Have No Owner
http://thinkprogress.org/economy/2013/08/13/2460891/new-fraud-evidence-shows-trillions-of-dollars-in-mortgages-have-no-owner/

Filed under: bubble, CORRUPTION, Eviction, evidence, foreclosure, foreclosure mill, GARFIELD GWALTNEY KELLEY AND WHITE, GTC | Honor, investment banking, Investor, MODIFICATION, Mortgage, Motions, Occupy Movement, Pleading, politics, securities fraud, Servicer, Student Loans, trustee | Tagged: , , , | 22 Comments »

BANKS CONTINUE TO HOLD NEARLY 1 MILLION HOMES AS SALES AND PRICES CONTINUE TO PLUMMET

Posted on May 23, 2011 by Neil Garfield

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE

STATED INCOME, STATED ASSETS (SISA) NO DOC ASSETS AND INCOME FOR THE BANKS: AS FALSE AS IT ALWAYS WAS

EDITOR’S COMMENT: DICK DURBIN said it when the democratically controlled senate and house refused to even inquire about the real nature of the securitization illusion — “The Banks own the place.” He was of course referring to the incredible amount of influence of the banking lobby fueled by hundreds of millions of dollars in campaign cash and other benefits. Now SISA — Stated Income, Stated Assets — has acquired new meaning, this time for the banks, who are using it as fraudulently as the mortgage brokers who “corrected” homeowner applications for loans to reflect the amount of income and assets needed to justify the underwriting of the loan. Now it means to justify the stock prices, management jobs, and business viability of broken banks.

And with nearly 1 million homes “owned” by the banks, the housing market looks weaker indefinitely. How could these prices and the prospect of lower prices be possible? It’s easy. The whole thing is based upon a false premise that nobody wants to face — the banks do NOT own those properties. They are legally owned by the homeowners who were the subject of false and fabricated foreclosures initiated by non-creditors with no skin in the game except the desire to get a “free house.” They never loaned the money, they never bought the “loans,” the loans were defective from the start, and they never had the right to purchase those homes with a non-cash (credit) bid at auction because the auction was fraudulently obtained and the credit bid was devoid of any reality.

THOSE HOMES ARE STILL OWNED BY THE HOMEOWNERS WHO THINK THEY WERE FORECLOSED AND THAT THE MATTER IS OVER. THE SITUATION PERSISTS BECAUSE HOMEOWNERS, LAWYERS AND JUDGES PERSIST IN THE BELIEF THAT IT “JUST CAN’T BE SO.”

Ask any real estate professional and they won’t be able to come up with a fundamental reason why the housing market went down this far nor why the prospects for the housing market are still lower. Ask them or any economist, and the answer slowly emerges by process of elimination — there is no fundamental reason for this situation because it isn’t real. You want the economy to recover? Remove the illusion of securitization of loans, unless they are proven under existing laws and existing rules of evidence, and then the unthinkable happens — the wealth that was stolen from the American middle class turns out not to have been stolen after all — the victim is simply giving up what was stolen because the victim is convinced the scam was real.

Let’s see what happens as the Title Companies start to tackle this issue because they have potential liability in the trillions, which is money they don’t have. The simplest way out for them is to state that there is no claim against the title policy because the loss never occurred. If the homeowner still owns the house then who is to be paid. If the “lender” at closing (pretender lender” never loaned any money, there is no loss. If any other named payee on the insurance policy lost no money, then the title policy does not come into play.

If you want a stimulus to the economy, the just tell the truth. The mortgages are fatally defective, they were never transferred, they were never intended to be transferred, and borrowers’ undocumented obligations have long since been extinguished by the feeding frenzy on Wall Street from the money advanced by investors and paid by borrowers, federal bailouts, insurance, credit default swaps, guarantees and settlements. Check it out yourself. This sounds crazy because it is — it is crazy-making by the world’s largest financial institutions (on paper) when in fact they are not large and not even viable if their auditors would just do their job and tell the truth.

How far will this go, dragging housing prices and the the prospects of recovery down with them? It looks like the answer is it will go as far as we let them.

May 22, 2011

As Lenders Hold Homes in Foreclosure, Sales Are Hurt

By

EL MIRAGE, Ariz. — The nation’s biggest banks and mortgage lenders have steadily amassed real estate empires, acquiring a glut of foreclosed homes that threatens to deepen the housing slump and create a further drag on the economic recovery.

All told, they own more than 872,000 homes as a result of the groundswell in foreclosures, almost twice as many as when the financial crisis began in 2007, according to RealtyTrac, a real estate data provider. In addition, they are in the process of foreclosing on an additional one million homes and are poised to take possession of several million more in the years ahead.

Five years after the housing market started teetering, economists now worry that the rise in lender-owned homes could create another vicious circle, in which the growing inventory of distressed property further depresses home values and leads to even more distressed sales. With the spring home-selling season under way, real estate prices have been declining across the country in recent months.

“It remains a heavy weight on the banking system,” said Mark Zandi, the chief economist of Moody’s Analytics. “Housing prices are falling, and they are going to fall some more.”

Over all, economists project that it would take about three years for lenders to sell their backlog of foreclosed homes. As a result, home values nationally could fall 5 percent by the end of 2011, according to Moody’s, and rise only modestly over the following year. Regions that were hardest hit by the housing collapse and recession could take even longer to recover — dealing yet another blow to a still-struggling economy.

Although sales have picked up a bit in the last few weeks, banks and other lenders remain overwhelmed by the wave of foreclosures. In Atlanta, lenders are repossessing eight homes for each distressed home they sell, according to March data from RealtyTrac. In Minneapolis, they are bringing in at least six foreclosed homes for each they sell, and in once-hot markets like Chicago and Miami, the ratio still hovers close to two to one.

Before the housing implosion, the inflow and outflow figures were typically one-to-one.

The reasons for the backlog include inadequate staffs and delays imposed by the lenders because of investigations into foreclosure practices. The pileup could lead to $40 billion in additional losses for banks and other lenders as they sell houses at steep discounts over the next two years, according to Trepp, a real estate research firm.

“These shops are under siege; it’s just a tsunami of stuff coming in,” said Taj Bindra, who oversaw Washington Mutual’s servicing unit from 2004 to 2006 and now advises financial institutions on risk management. “Lenders have a strong incentive to clear out inventory in a controlled and timely manner, but if you had problems on the front end of the foreclosure process, it should be no surprise you are having problems on the back end.”

A drive through the sprawling subdivisions outside Phoenix shows the ravages of the real estate collapse. Here in this working-class neighborhood of El Mirage, northwest of Phoenix, rows of small stucco homes sprouted up during the boom. Now block after block is pockmarked by properties with overgrown shrubs, weeds and foreclosure notices tacked to the doors. About 116 lender-owned homes are on the market or under contract in El Mirage, according to local real estate listings.

But that’s just a small fraction of what is to come. An additional 491 houses are either sitting in the lenders’ inventory or are in the foreclosure process. On average, homes in El Mirage sell for $65,300, down 75 percent from the height of the boom in July 2006, according to the Cromford Report, a Phoenix-area real estate data provider. Real estate agents and market analysts say those ultra-cheap prices have recently started attracting first-time buyers as well as investors looking for several properties at once.

Lenders have also been more willing to let distressed borrowers sidestep foreclosure by selling homes for a loss. That has accelerated the pace of sales in the area and even caused prices to slowly rise in the last two months, but realty agents worry about all the distressed homes that are coming down the pike.

“My biggest fear right now is that the supply has been artificially restricted,” said Jayson Meyerovitz, a local broker. “They can’t just sit there forever. If so many houses hit the market, what is going to happen then?”

The major lenders say they are not deliberately holding back any foreclosed homes. They say that a long sales process can stigmatize a property and ratchet up maintenance and other costs. But they also do not want to unload properties in a fire sale.

“If we are out there undercutting prices, we are contributing to the downward spiral in market values,” said Eric Will, who oversees distressed home sales for Freddie Mac. “We want to make sure we are helping stabilize communities.”

The biggest reason for the backlog is that it takes longer to sell foreclosed homes, currently an average of 176 days — and that’s after the 400 days it takes for lenders to foreclose. After drawing government scrutiny over improper foreclosures practices last fall, many big lenders have slowed their operations in order to check the paperwork, and in two dozen or so states they halted them for months.

Conscious of their image, many lenders have recently started telling real estate agents to be more lenient to renters who happen to live in a foreclosed home and give them extra time to move out before changing the locks.

“Wells Fargo has sent me back knocking on doors two or three times, offering to give renters money if they cooperate with us,” said Claude A. Worrell, a longtime real estate agent from Minneapolis who specializes in selling bank-owned property. “It’s a lot different than it used to be.”

Realty agents and buyers say the lenders are simply overwhelmed. Just as lenders were ill-prepared to handle the flood of foreclosures, they do not have the staff and infrastructure to manage and sell this much property.

Most of the major lenders outsourced almost every part of the process, be it sales or repairs. Some agents complain that lender-owned home listings are routinely out of date, that properties are overpriced by as much as 10 percent, and that lenders take days or longer to accept an offer.

The silver lining for home lenders, however, is that the number of new foreclosures and recent borrowers falling behind on their payments by three months or longer is shrinking.

“If they are able to manage through the next 12 to 18 months,” said Mr. Zandi, the Moody’s Analytics economist, “they will be in really good shape.”

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 22 Comments »

U.S. Starts Criminal Probe of Lender Processing Services Inc. Foreclosure-Data Provider

Posted on April 7, 2010 by Neil Garfield

The case follows on the dismissal of numerous foreclosure cases in which judges across the U.S. have found that the materials banks had submitted to support their claims were wrong. Faulty bank paperwork has been an issue in foreclosure proceedings since the housing crisis took hold a few years ago. It is often difficult to pin down who the real owner of a mortgage is, thanks to the complexity of the mortgage market.

the majority of foreclosures go unchallenged, some homeowners have won the right to keep their homes by proving the bank couldn’t show, on paper, that it owned the mortgage.

[LPS a/k/a DOCX] produces documents needed by banks to prove they own the mortgages. LPS’s annual report said that the processes under review have been “terminated,” and that the company has expressed its willingness to cooperate. Ms. Kersch declined to comment further on the probe.

Editor’s Note: The executive branch is finally becoming involved. The foreclosure mills have been producing dubious and/or fraudulent, fabricated, forged documentation for 3 years or more. Some of these foreclosure mills are operating in the same office and owned by the law firms prosecuting foreclosures. Maybe sooner than later these unethical, illegal practices will stop and the people responsible will be prosecuted for criminal violations, civil fines, and administrative grievances in which their licenses will be revoked.

But in the end we still have millions of homes whose title is at least clouded, probably defective and will soon become unmarketable as title companies realize the issues presented by fraudulent foreclosures by entities other than the creditor.

Wall Street Journal

April 3, 2010

U.S. Probes Foreclosure-Data Provider

Lender Processing Services Unit Draws Inquiry Over the Steps That Led to Faulty Bank Paperwork

By AMIR EFRATI and CARRICK MOLLENKAMP

A subsidiary of a company that is a top provider of the documentation used by banks in the foreclosure process is under investigation by federal prosecutors.

The prosecutors are “reviewing the business processes” of the subsidiary of Lender Processing Services Inc., based in Jacksonville, Fla., according to the company’s annual securities filing released in February. People familiar with the matter say the probe is criminal in nature.

Michelle Kersch, an LPS spokeswoman, said the subsidiary being investigated is Docx LLC. Docx processes and sometimes produces documents needed by banks to prove they own the mortgages. LPS’s annual report said that the processes under review have been “terminated,” and that the company has expressed its willingness to cooperate. Ms. Kersch declined to comment further on the probe.

A spokesman for the U.S. attorney’s office for the middle district of Florida, which the annual report says is handling the matter, declined to comment.

The case follows on the dismissal of numerous foreclosure cases in which judges across the U.S. have found that the materials banks had submitted to support their claims were wrong. Faulty bank paperwork has been an issue in foreclosure proceedings since the housing crisis took hold a few years ago. It is often difficult to pin down who the real owner of a mortgage is, thanks to the complexity of the mortgage market.

During the housing boom, mortgages were originated by lenders, quickly sold to Wall Street firms that bundled them into debt pools and then sold to investors as securities. The loans were supposed to change hands but the documents and contracts between borrowers and lenders often weren’t altered to show changes in ownership, judges have ruled.

Related Documents

Documents processed by LPS that said an entity called “Bogus Assignee” owned the mortgage:

That has made it hard for banks, which act on behalf of mortgage-securities investors in most foreclosure cases, to prove they own the loans in some instances.

LPS has said its software is used by banks to track the majority of U.S. residential mortgages from the time they are originated until the debt is satisfied or a borrower defaults. When a borrower defaults and a bank needs to foreclose, LPS helps process paperwork the bank uses in court.

LPS was recently referenced in a bankruptcy case involving Sylvia Nuer, a Bronx, N.Y., homeowner who had filed for protection from creditors in 2008.

Diana Adams, a U.S. government lawyer who monitors bankruptcy courts, argued in a brief filed earlier this year in the Nuer case that an LPS employee signed a document that wrongly said J.P. Morgan Chase & Co. had owned Ms. Nuer’s loan.

Documents related to the loan were “patently false or misleading,” according to Ms. Adams’s court papers. J.P. Morgan Chase, which has withdrawn its request to foreclose, declined to comment.

Linda Tirelli, a lawyer for Ms. Nuer, declined to comment directly on the case.

Ms. Kersch said LPS didn’t actually create the document and that the company’s “sole connection to this case is that our technology and services were utilized by J.P. Morgan Chase and its counsel.”

While the majority of foreclosures go unchallenged, some homeowners have won the right to keep their homes by proving the bank couldn’t show, on paper, that it owned the mortgage.

Some lawyers representing homeowners have claimed that banks routinely file erroneous paperwork showing they have a right to foreclose when they don’t.

Firms that process the paperwork are either “producing so many documents per day that nobody is reviewing anything, even to make sure they have the names right, or you’ve got some massive software problem,” said O. Max Gardner, a consumer-bankruptcy attorney in Shelby N.C., who has defended clients against foreclosure actions.

The wave of foreclosures and housing crisis appears to have helped LPS. According to the annual securities filing, foreclosure-related revenue was $1.1 billion last year compared with $473 million in 2007.

LPS has acknowledged problems in its paperwork. In its annual securities filing, in which it disclosed the federal probe, the company said it had found “an error” in how Docx handled notarization of some documents. Docx also has processed documents used in courts that incorrectly claimed an entity called “Bogus Assignee” was the owner of the loan, according to documents reviewed by The Wall Street Journal.

Ms. Kersch said the “bogus” phrase was used as a placeholder. “Unfortunately, on a few occasions, the document was inadvertently recorded before the field was updated,” she said.

Write to Amir Efrati at amir.efrati@wsj.com and Carrick Mollenkamp at carrick.mollenkamp@wsj.com

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