FDIC Employee Quits and Goes Public With Complaint Against Chase, WAMU, Citi and two law firms

Posted on March 25, 2015 by Neil Garfield

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

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See Eric Mains Federal Complaint

see Mains – Table of Contents.petition 2 transfer

On Monday Eric Mains resigned from his employment with the FDIC. He had just filed a lawsuit against Chase, Citi, WAMU-HE2 Trust, Cynthia Riley, LPS, WAMU, and two law firms. Since he felt he had a conflict of interest, he believed the best course of action was to resign effective immediately.

His lawsuit, told from the prospective of a true insider, reveals in astonishing detail the worst of the practices that have resulted in millions of illegal foreclosures. Some of his allegations cast a dark shadow over claims of Chase Bank on its balance sheet, as reported to the public and the SEC and the reporting of both Chase and Citi as to their potential liability for wrongful foreclosures. If he is right, and he proves these allegations, much of what Chase has reported as its financial condition will vanish from its financial statements and the liability side of the balance sheets of both Citi (as Trustee) and Chase (as servicer and “owner’) will increase exponentially. This may well have the effect of bringing both giants into the position of insufficient reserve capital and force the government to take action against both entities. Elizabeth Warren might have been right when she said that Citi should have been broken into pieces. And the same logic might apply to Chase.

He has also penned the phrase “wild goose Chase” referring to discovery of the true creditors and processing of applications for modification of loans. And he has opened the door for RICO actions against the banks and individuals who did the bidding of the banks as well as the individuals who directed those actions.

His Indiana lawsuit is filed in federal court. He alleges that

1. WAMU was not the actual lender in his own loan
2. That the loan was part of an illegal scheme from the start
3. That his loan was subject to claims of securitization but that those claims were false
4. That the REMIC Trust was never funded and therefore never had the capacity to originate or buy loans
5. That the intermediaries never followed the law or the documents for securitization of his loan
6. That the REMIC Trust never did purchase his loan
7. That Citi was therefore “trustee” for an unfunded trust
8. That Chase never purchased the loans from WAMU
9. That Chase could not have been the legal servicer over the loan because the loan was not in the trust
10. That Chase has filed conflicting claims as to ownership of the loans
11. That the affidavit of Robert Schoppe, whom Mains worked for, as to ownership of the loans was false when it states that Chase owned the loans
12. That the use of WAMU’s name on the loan documents was a false representation
13. That his loan may have been pledged several times by various parties
14. That multiple payments from multiple parties were likely received by Chase and others on account of the Mains “loan” but were never accounted for to the investors whose money was being used as though it was the Banks themselves who were funding originations and a acquisitions of loans
15. That the industry practice was to reap multiple payments on the same loan — and the foreclose as though there was balance due when in fact the balance claimed was entirely incorrect
16. That the investors were defrauded and that foreclosure was part of the fraudulent scheme
17. That Mains name and identity was used without his consent to justify numerous illegal transactions in which the banks repeated huge profits
18. That neither WAMU nor Chase had any rights to collect money from Mains
19. That Citi had no right to enforce a loan it did not own and had no authority to represent the owner(s) of the loan
20. That the modification procedures adopted by the Banks were used intentionally to force the borrower into the illusions a default
21. That Sheila Bair, Chairman of the FDIC, said that Chase and other banks used HAMP modifications as “a kind of predatory lending program.”
22. That Mains stopped making payments when he discovered that there was no known or identified creditor.
23. The despite stopping payments, his loan balance went down, according to statements sent to him.
24. That Chase has routinely violated the terms of consent judgments and settlements with respect to the processing of payments and the filing of foreclosures.
25. That the affidavits filed by persons purportedly representing Chase were neither true nor based upon personal knowledge
26. That the note and mortgage are void from the start.
27. That Mains has found “incontrovertible evidence of fraud, forgery and possibly backdating as well.” (referring to Chase)
28. That the law firms suborned perjury and intentionally made misrepresentations to the Court
29. That Cynthia Riley “is one overwhelmingly productive and multi-talented bank officer. Apparently she was even capable of endorsing hundreds of loan documents a day, and in Mains’ case, even after she was no longer employed by Washington Mutual Bank. [Mains cites to deposition of Riley in JPM Morgan Chase v Orazco Case no 29997 CA, 11th Judicial Circuit, Florida.
30 That Cynthia Riley was laid off in November 2006 and never again employed as a note review examiner by WAMU nor at JP Morgan Chase.
30. That LPS (now Black Knight) owns and operates LPS Desktop Software, which was used to create false documents to be executed by LPS employees for recording in the Offices of the Indiana County recorder.
31. That the false documents in the mains case were created by LPS employee Jodi Sobotta and signed by her with no authority to do so.
32. Neither the notary nor the LPS employee had any real documents nor knowledge when they signed and notarized the documents used against Mains.
33. Chase and its lawyer pursued the foreclosure with full knowledge that the assignment was fraudulent and forged.
34. That LPS was established as an intermediary to provide “plausible deniability” to Chase and others who used LPS.
35. That the law firms also represented LPS in a blatant conflict of interest and with knowledge of LPS fraud and forgery.

Some Quotes form the Complaint:

“Mains perspective on this case is a rather unique one, as Main is an employee of the FDIC (hereinafter, FDIC) who worked in the Dallas field office of the FDIC in the Division of Resolutions and Receiverships (hereinafter DRR), said division which was the one responsible for closing WAMU and acting as its receiver. Mains worked with one Robert Schoppe in his division, whom the defendant Chase Bank often cites to when pulling out an affidavit Robert signed. This affidavit states that Chase Bank had purchased “certain assets and liabilities” of WAMU in the purchase transaction from the FDIC as receiver for WAMU in 2008. Chase Bank uses this affidavit ad museum to convince the court system in foreclosure cases that this affidavit somehow proves that Chase Bank purchased “every conceivable asset” of WAMU, so it must have standing in all cases involving homeowner loans originated through WAMU, or to put it simply that this proves Chase became a holder with rights to enforce or a holder in due course of the loan as defined by the Uniform Commercial Code. Antithetically, when it wants to sue the FDIC for a billion dollars… due to mounting expenses from the WAMU purchase transaction, it complains that the purchase agreement it signed didn’t really entail the purchase of “every asset and liability” of WAMU… Chase Bank claims this when it is to their advantage in a lawsuit to do so.

Mains worked as team leader in the DRR Dallas field office

[The] violation of REMIC trust rules occurred because the entities involved, for reasons of control, speed of transaction, and to hide what they were actually doing with the investors money

Unfortunately for the investors, many of the banks involved in the securitization process (like Wahoo) failed to perform the securitizations properly, hence as mentioned above, the securitizations were botched and ineffective as to passing ownership of the notes or underlying collateral. The loans purchased were not purchased THROUGH the REMIC. … The REMIC trust entity must be the one actually purchasing the mortgages directly.

This violation of REMIC trust rules occurred because the entities involved, for reasons of control, speed of transaction, and to hide what they were actually doing with the investors funds once received, held the investor funds in the “lender” banks owned subsidiary accounts, instead of funding the REMIC trusts with the money so that the trust could then purchase the loan from the “lender”, making it an actual buy and sell transaction.”

Filed under: foreclosure | Tagged: , , , , , , , , , , , | 20 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 »

Weidner: Perjury is Acceptable Practice

Posted on May 1, 2014 by Neil Garfield

I am a fan of Matt Weidner. Like a breath of fresh air he understands the full implications of the false claims of securitization, the fraudulent foreclosures, the fraudulent reporting by banks to regulatory agencies and the false statements of financial condition they report to the SEC. Best of all he has maintained his sense of outrage at the banks, at the regulators, at law enforcement and the courts.

If you read his article, you can see why he is so angry. We know as lawyers what SHOULD be required in litigation. The fact that basic standards not being met in foreclosure litigation is a present problem for everyone who is involved or affected by the title and money issues; but it is also a future problem for all of us in the decisions, opinions and actions by the courts using a presumption that in the end it doesn’t make any difference how many ways the banks lied, cheated and stole money and title, the homeowner should be the one to bear the full burden of the problem.

This is why I am seriously entertaining a lawsuit in Federal court against the State of Florida for creating a new and wholly dysfunctional standard for the introduction of evidence and the burden of proof in foreclosure cases versus all other civil cases.

Weidner Takes Court System to Task

Filed under: CORRUPTION, discovery, escrow agent, evidence, Fannie MAe, foreclosure, foreclosure defenses, foreclosure mill, GTC | Honor, investment banking, Investor, MBS TRUSTEE, MODIFICATION, Mortgage, Pleading, securities fraud, Servicer, Title, TRUST BENEFICIARIES, trustee | Tagged: , , , | 40 Comments »

Bank Lawyers Beware!

Posted on February 24, 2014 by Neil Garfield

I know from past experience that the prosecuting attorneys at bar associations tend to move in packs. There is actually a pretty good reason for this. Certain practices by attorneys are emulated by other attorneys and spreads from state to state. Based upon a recent decision in New York State, I believe we’re going to see some serious prosecutions against attorneys for the pretender lenders.

In this case the censured attorney, David A. Cohen,  and his Long Island firm was trying to collect debts from people who weren’t already pay their bills or were not the ones who owed money to the firm’s client – creditors. I will concede that this is not the case against a foreclosure mill. And I think there is still political resistance to going after the lawyers  who represent the pretender lenders. But if you look at the reasoning in this case, it is not hard to see where the New York State Bar Association is going with this.

There were voluminous complaints about the firm spanning a 16 year period. That suggests that in cases where the homeowner believes that the attorney representing the pretender lender is violated ethical rules, or where the attorney for the homeowner believes that to be the case, a grievance should be filed.  But I caution people about doing this because they  frequently don’t know enough about the facts to be sure if a violation occurred.  It is unfair to attribute unethical conduct to an attorney who was merely advocating on behalf of a client and taking positions with which you do not agree. False filings will also create a paper jam in which the real filings for real violations get lost. SO don’t take this article as a green light to pepper the Bar Associations with vague grievances.

Cohen and his firm received numerous admonitions about his firm’s practices.

The court concluded in Matter of Cohen & Slamowitz, 2008-10218, that Cohen and Cohen & Slamowitz “engaged in a pattern and practice of conduct prejudicial to the administration of justice” under the Code of Professional Responsibility DR 1-102(A)(5)(223 NYCRR 1200.3[a][5]. The judges said an attorney does not necessarily have to have personal knowledge of the specifics of his firm’s misconduct to be held responsible.“Even if the individual respondent lacked personal knowledge of the particular client matters … the pattern and practice of misconduct established at the hearing, which were pervasive within C&S [Cohen & Slamowitz] since 1996, were sufficient to impute such knowledge to him as senior partner of C&S,” [e.s.] the panel held in its per curiam ruling. The judges added that not only was Cohen personally advised in 2002 to “exercise caution,” “supervise [his] staff adequately,” and put in place “appropriate and reasonable procedures” that could be monitored, but he and his firm also received numerous letters of caution and admonition. The court said Cohen & Slamowitz has about 300 employees, including attorneys, paralegals and other staff.

Among the problems noted by the court was an attempt in 2005 to collect from a debtor identified as “Ghulam Mujtaba” of Flushing. The court said that Cohen & Slamowitz mistakenly pursued collection from Dr. Gholam Mujtaba of Corona.
 Given the various settlement and OCC consent decrees that have been entered against virtually all of the major banks and servicers, it is hard to imagine a scenario in which the lawyers have not been put on notice of the existence of major defects in the claims of their clients. Unlike civil litigation, lawyers are held to a higher standard of behavior in connection with their practice of law. The ethical and disciplinary rules make it clear that the lawyer should avoid even the appearance of impropriety. Here in this case, the court opened up the possibility for imputing knowledge to the attorney even though there are attempts to create compliance departments and other organizational tools that are meant to isolate the actual licensed attorneys from the illegal conduct perpetrated by their firm.
 If a bank came to me for representation in the foreclosure properties based upon loans that are subject to claims of securitization, I would make absolutely certain that there were procedures in effect within the bank to make sure that we were naming the right plaintiff, naming the right defendant, that a default was definitely present, and that we could account for the balance due. I would ask the bank “are you actually owed the money on this loan?”
 The use of professional witnesses that are hired specifically for that purpose is somewhat understandable given the volume of foreclosure litigation. What is not understandable or forgivable is hiring people specifically for the purpose of giving false testimony based upon records that were specially prepared for trial and not prepared in the ordinary course of business. It is improper and perhaps perjury to state that the entire business record is present when it clearly does not show the original loan transaction, all the transactions that occurred between the time of the loan closing and the filing of foreclosure, and all the transactions that occurred as disbursements to trust beneficiaries or other third parties. It is improper and perhaps perjury to state that the entire business record is present when the witness cannot state from personal knowledge or with the use of business records that qualify as an exception to the hearsay rule, that the record of disbursements is also present —  including all payments received by the alleged creditor.
 Some attorneys haven’t thrown under the bus, but there are dozens of other law firms that may be involved in the production or proffering of false, fraudulent, fabricated or forged documents.
 On the other hand it should be stated that withholding evidence is not necessarily a violation of the code of conduct for attorneys —  unless the withholding of that evidence results in making prior testimony or evidence subject to a charge of perjury. I don’t think that attorneys can or should be held to a standard in which their conduct is subject to variable interpretations. Any grievance filed on these grounds must be very specific as to what is being alleged is a violation. I publish this article merely as a prediction and warning that certain behavior which is now condoned in the foreclosure mills can be and probably will be imputed to the partners, regardless of how well they think they have insulated themselves.
 One of the things I wonder about is the practice of asserting in court that the attorney for the foreclosure represents “everybody.” The risk here is twofold: first that might include the trust beneficiaries that his client is screwing; second that might include the borrower because some of the parties included in “everybody” have a fiduciary duty to the borrower. I wonder if there are potential trap doors for the attorneys who are representing pretender lenders that include not only disciplinary complaints but perhaps joinder as defendants in a lawsuit filed for negligent undertaking.
 As always, nothing in this article should be interpreted as a definitive statement on the law. Pro se litigants should consult with an attorney licensed in the area in which the property is located before making a decision or taking any action. Attorneys should do their own research and make their own decisions as to what constitutes a breach of ethics or a breach of the disciplinary rules.

Filed under: CASES, CORRUPTION, Eviction, evidence, expert witness, Fannie MAe, foreclosure, foreclosure defenses, foreclosure mill, GARFIELD KELLEY AND WHITE, GTC | Honor, investment banking, Investor, MBS TRUSTEE, MODIFICATION, Mortgage, Pleading, securities fraud, Servicer, TRUST BENEFICIARIES, trustee | Tagged: , , , , , , , , , | 65 Comments »

Monday Livinglies Magazine: Crime and Punishment

Posted on June 24, 2013 by Neil Garfield

Steal this Massachusetts Town’s Toughest New Foreclosure Prevention Ideas
http://www.keystonepolitics.com/2013/06/steal-this-massachusetts-towns-toughest-new-foreclosure-prevention-ideas/

Florida leads nation in vacated foreclosures — and it’s not even close http://www.thefloridacurrent.com/article.cfm?id=33330748

Editor’s Note:  it is only common sense. There are several things that are known with complete certainty in connection with the mortgage mess.

  • We know that the banks found it necessary to forge, fabricate and alter legal documents illegally in order to create the illusion that foreclosure was proper.
  • We know that the banks manipulated the published rates on which adjustable mortgages changed their payments.
  • We know that the banks typically abandon any property that the bank has deemed to be undesirable (then why did they foreclose, when they had a perfectly good homeowner who was willing to pay something including the maintenance and insurance of the house?).
  • And we can conclude that it is far more important to the banks that they be able to foreclose and have the deed issued then to actually take possession of the property for sale or rental.
  • And so we know that the mortgage and foreclosure markets have been turned on their heads. Lynn, Massachusetts has adopted a series of regulations which appeared to be constitutional and which make it very difficult for the banks to turn neighborhoods that were thriving into blight.  The actions of this city and others who are taking similar actions will continue to reveal the true nature of the mortgage encumbrances (the lanes were never perfected because the loan was never made by the party that is claiming to be secured) and the true nature of foreclosures (the cover-up to a Ponzi scheme and an illegal securities scam that does not and never did fall within the exemptions of the 1998 law claimed by the banks).

The Bank Of International Settlements Warns The Monetary Kool-Aid Party Is Over
http://www.zerohedge.com/news/2013-06-23/bank-international-settlements-warns-monetary-kool-aid-party-over

Wells Fargo Sells Woman’s House In Foreclosure After She Reinstates Loan for $141,441.81
http://4closurefraud.org/2013/06/20/wells-fargo-sells-womans-house-in-foreclosure-after-she-reinstates-loan-for-141441-81/

Editor’s Note: In all of these cases you need to start with the premise that the bank has a gargantuan liability in the event that it took insurance, credit default swap proceeds, federal bailouts, or the proceeds of sales of mortgage bonds to the Federal Reserve. Most experts in finance and economics agree that if the Federal Reserve stops making payments on the “purchase” of mortgage bonds the entire housing market will collapse. I don’t agree.

It is the banks that will collapse in the housing market will finally recover bringing the economy back up with it. The problem for the Federal Reserve and the economy is that most likely they are buying worthless paper issued by a trust that was never funded and that therefore could never have purchased any loan. Thus the income and the collateral of the mortgage bond is nonexistent.

Many people in the financial world completely understand this and are terrified at the prospect of the largest banks being required to mark down their reserve capital;  if this happens, and it should, these banks will lack the capital to continue functioning as a mega-bank.

So why would a bank foreclose on house on which there was no mortgage and/or no default? The answer lies in the fact that they have accepted money from third parties on the premise that they lost money on these mortgages. If that turns out not to be true (which it isn’t) then they most probably owe a lot of money back to those third parties.

My estimate is that in the average case they owe anywhere from 7 to 40 times the amount of the mortgage loan.  It is simply cheaper to settle with the aggrieved homeowner even if they pay damages for emotional distress (which is permitted in California and perhaps some other states); it is even cheaper and far more effective for the bank to give the house back without any encumbrance to the homeowner. Without the foreclosure becoming final or worse yet, as the recent revelations from Bank of America clearly show, if the loan is modified and becomes a performing loan all of that money is due back to all of those third parties.

“Deed-In-Lieu” of Foreclosure and Other Things
http://www.fxstreet.com/education/related-markets/lessons-from-the-pros-real-estate/2013/06/20/

Editor’s Note: This has come up many times in  questions and discussions regarding dealing with the Wall Street banks. It seems that the banks have borrowers thinking that in order to file a deed in lieu of foreclosure they need the permission of the bank. I know of no such provision in the law of any state preventing the owner of the property from deeding the property to anyone.  Several lawyers are seeing an opportunity, to wit: once the homeowner deeds the properties to the party pretending to foreclose on the property, the foreclosure action against the homeowner must be dismissed. That leaves the question of a deficiency judgment.

The advantages to the homeowner appears to be that any lawsuit seeking to recover a deficiency judgment would be strictly about money and would require the allegation of a monetary loss and proof of the monetary loss which would enable the homeowner, for the first time, to pursue discovery on the money trail because there is no other issue in dispute.

In the course of that litigation the discovery may reveal the fact that the party who filed the foreclosure and misrepresented their right to the collateral would be subject to various causes of action for damages as a counterclaim; but the counterclaim would not be filed until after discovery revealed the problem for the “lender.” Therefore several lawyers are advising their clients to simply file the deed in favor of the party seeking foreclosure based upon the representation that they are in fact the right party to obtain a sale of the property.

The lawyers who are using this tactic obviously caution their clients against using it unless they are already out of the house or are planning to move. Homeowners who are looking to employ this tactic should check with a licensed attorney in the jurisdiction in which their property is located.

Must See Video: Arizona Homeowners Losing their Homes to Foreclosure Through Forged Documents
http://4closurefraud.org/2013/06/21/must-see-video-arizona-homeowners-losing-their-homes-to-foreclosure-through-forged-documents/

Monitor Finds Mortgage Lenders Still Falling Short of Settlement’s Terms

By SHAILA DEWAN

The biggest mortgage lenders in the United States have not met all of the terms of the $25 billion settlement over abuses, an independent monitor found.

British Commission Calls for New Laws to Prosecute Bankers for Fraud

By MARK SCOTT

As part of a 600-page report, the British parliamentary commission on banking standards is urging new laws that would make it a criminal offense to recklessly mismanage local financial institutions.

A Fit of Pique on Wall Street

By PETER EAVIS

Perhaps more than at any time since the financial crisis, Wall Street knows it must prepare for a world without the Federal Reserve’s largess.

S.E.C. Has a Message for Firms Not Used to Admitting Guilt

By JAMES B. STEWART

By requiring an admission of guilt in some cases, the S.E.C.’s new chairwoman is pressing for more accountability at financial firms.

Bank of America’s Foreclosure Frenzy
http://ml-implode.com/staticnews/2013-06-24_BankofAmericasForeclosureFrenzy.html

Filed under: CDO, CORRUPTION, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , , , , , , , , | 296 Comments »

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

Posted on June 15, 2013 by Neil Garfield

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 FOLLOW DANIELLE KELLEY, ESQ. ON HER BLOG

Significant quotes from Reuters article:

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

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

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

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

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

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

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

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

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

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

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

THE BLITZ

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

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

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

 

 

Filed under: CDO, CORRUPTION, Eviction, evidence, expert witness, Fannie MAe, foreclosure, GARFIELD GWALTNEY KELLEY AND WHITE, GTC | Honor, Investor, Mortgage, securities fraud, Servicer | Tagged: , , , , , , , , , , , , , , | 243 Comments »

Fake Notaries: The Weak Link of Each State

Posted on March 27, 2013 by Neil Garfield
If you are seeking legal representation or other services call our Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services.
The selection of an attorney is an important decision  and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field.

Editor’s Note: All across the country we are discovering that robo-signing and forgery of notarizations have enabled the pretender lenders to assure the court that they own the debt, note and mortgage or deed of trust. Complaints to the state agencies regulating notaries have resulted in a net loss to borrowers. In Arizona, several notaries were suspended or had their licenses revoked only to have them reinstated a short time later. Lending your notary stamp or stealing a notary stamp without the consent of the notary are both subject to administrative and criminal prosecution.

The reason why the notarizations are going nowhere is, I think, purely political. But there is a misconception about finding a fake notarization without finding that the signature that was notarized was also without authorization or was also forged.

The failure to get a proper notarization (like where the signatory signed in Florida and the notary was in Texas), does NOT invalidate the document itself. In most states where I have read the law it only effects the ability to record the document. So if you know about the document and it wasn’t properly notarized so it couldn’t be recorded, you can still be held to have notice of it and it may well be binding on your client even if it was forged. without more, the attack on the notary seems like a technicality to get out of a legitimate debt.

It is at best an add-on to other claims in which you pray the court will enter an order that removes the nullifies the recording of the offending document from the public records. That won’t get you very far since you obviously have notice of the document’s existence. So you need to attack the document itself and even there, Judges are very reluctant to enter orders granting relief where the borrower has essentially admitted the debt, note, mortgage and the default. How would you like it if you loaned money to someone for real and then were prevented from collection because of some minor technicality? It’s a windfall for the borrower.

This is why I encourage people to start with the money trail instead of the documentary trail. The documentary trail tells a story ABOUT a transaction which is presumed to be true especially if your client’s signature is on it. But the money trail reveals what SHOULD be on the documentary trail and it is by reference to transactions that were real, where money exchanged hands, that you can say that the documents upon which the other side places reliance are wrong.

Tactically the pretenders lenders are relying on the documentary trail. Don’t go there. It’s a trap. Go for the real transactions in which money is supposed to have changed hands. Then you can ask in discovery two alternative lines of questioning: explain why the documentary trail does not reflect the actual money trial and where are the receipts and disbursements (cancelled checks and wire transfer receipts) to support your documentary trail?

The last items that closes the book on them is to show that there was no privity or authorization for them to take the consideration from an independent third party transaction and apply it to their documents.

I can’t take my neighbor’s auto loan and say that proves he owes me money. I have to actually loan him the money and if his documents say that he borrowed money from a finance company, then THEY have to show the same thing I do — that they really loaned the money or really bought the loan with cash. If neither of us can prove we paid anything then the fact that he got money as a coincidence with our paperwork is not going to help either the finance company or me. It must be presumed that the money came from someone else, resulting in voiding the purported transactions and allowing for whoever actually parted with money to come forward and stake his claim.

So fake notarizations are indeed a bad thing and that should be cause for concern in the property records of each county where title is supposed to be recorded. But wasting your time on that attack is not likely to produce much in the way of results in the form of real relief for your client.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , | 83 Comments »

Modification Scam by Banks and Servicers

Posted on September 10, 2012 by Neil Garfield

NOTICE: IN ANSWER TO INQUIRIES RECEIVED FROM CITIES AND COUNTIES, YES EMINENT DOMAIN IS A GOOD IDEA BUT NOT BECAUSE OF THE REASONS STATED THUS FAR. IT IS A GOOD IDEA BECAUSE THE PARTIES CLAIMING TO BE INJURED BY THE SEIZURE WOULD BE REQUIRED TO SHOW THAT THEY WERE INJURED IN REAL DOLLARS AND REAL WIRE TRANSFERS, CANCELLED CHECKS AND WITNESSES. THEY CAN’T DO THAT. INITIATION OF EMINENT DOMAIN WOULD BE THE ULTIMATE DISCOVERY TOOL THAT WOULD END FORECLOSURES ANYWHERE IT IS INVOKED. AND IT WOULDN’T COST A DIME.

And see end of this article where the federal government could recoup $2.5 trillion right now and at the same time provide a $10 trillion stimulus to the economy without spending one dime.

 

Modification Scam by Banks and Servicers

The above link will tell you a lot about what is happening in the industry — but it still assumes that the loans were bundled and sold when they were not. So far as I can tell in 6 years of analysis and study by myself, my team and the published reports in the public domain, there is no evidence of bundling, no evidence the “pools” or “trusts” were ever funded by either money or loans.

To understand WHY and HOW modifications would be turned into a scam by the banks you must understand their motivation for intentionally taking less in a “foreclosure sale” than they can get in the secondary market for selling a new mortgage, modified mortgage or refinanced mortgage. As Reynaldo Reyes from Deutsch Bank put it — “it is all very counter-intuitive.” In other words, a big fat lie on a scale unparallelled in human history.

The motivation lies in the fact that everything is already paid. The money from insurance, credit default swaps and federal bailouts, together with multiple resales of the same portfolio and hence the multiple sales of each loan going into the pocket of each banker. Anytime a loan goes into foreclosure, it seals the deal — allowing the banks to keep their ill-gotten gains that could amount to as much as 40 times the principal due under the loan.

So they don’t want your $400,000 even if you have it, because it endangers the $16 million they received and might mean they must pay it back. And THAT is a contingent liability not shown on any of the mega bank financial statements. If it was, they would be declared insolvent, which is exactly the case — unless they can get all the loans into foreclosure with the exception of a few modifications or settlements done for PR, expediency or other reasons.

Hence the quote from one employee of a servicer that when he asked why a perfectly valid modification proposal was being rejected the answer from his boss was “we are in the foreclosure business, not the modification business.” Unfortunately the media report ended there. I always ask for something more, however. If they consider themselves in any business, as a “servicer” why would that not be simply to process the receipts and disbursements and correspondence with the borrower and the creditor? Why would they care one way or the other whether the loan was modified, settled, refinanced, paid through short-sale or regular sale? Why indeed.

The answer lies in the fact that the subservicers and Master Servicers are the real people handling the actual money and hiding the movement of the money, while they are forced to fabricate, forge and perjure themselves in millions of recorded documents to cover up the fact that the original loan documents were a sham.

If they did the original loan right, which would take no more effort than doing it wrong, then we wouldn’t have this mess. That would be because loan origination would return to the right business proposition — loaning money with the intention of getting repaid.

But here, because of the tricks and maneuvering of the investment banks, the goal was to fund loans that (a) would not and could not be repaid and (b) even if they were repaid, would be labelled as being devalued in a non-existent pool over which the Master Servicer had the exclusive right in its sole discretion to say that the portfolio had failed and the mortgage bonds had to be written down or written off.

It’s like buying 40 different policies of life insurance on your partner and then killing him. Without a conscience, you would be looking for lots of partners even as the grieving families buried the dead, their hopes and dreams forever changed.

Modification has never been about modification. It has always been about foreclosure, which puts the state stamp of approval that the loan failed. Everything LOOKS right, so the Judges rubber stamp them, because, as stated by thousands of Judges, these securitization arguments sound like a gimmick to get out of a legitimate debt. After all would a Bank with 150 year old gold plated reputation put itself in the position where all of its managers and executives could go to jail along with the legions of lawyers representing them? Of course not. But they did.

If you look closely at modification just as I have looked closely at the loan origination, you will see that like the original documents you are left with a holographic image of an empty paper bag.

The documents don’t track the movement of money which is to say that the payee and lender and the beneficiary had already agreed never to touch the money going in or coming out of the deal. Hence the note, which is a contract, and the mortgage or deed of trust, which is a contract was never funded. Those contracts may be in writing but they are useless pieces of paper that can’t ever be worth a dime without the signature of the homeowner on new documents connecting the dots to the the real lender and allowing the non-disclosure of the real lender to stand.

All of that is presumptively cured by the appearance of a deed on foreclosure arising out of a credit bid which we all know was not from a creditor and which the auctioneer and the trustee and the stated mortgagee and the stated substituted trustee, and the lawyers using it all know is a big fat lie. Since no cash was paid at auction, and the credit bid was invalid, the sale never occurred. Bu the issuance of the deed anyway creates the presumption that the sale did in fact occur.

Now we can look at how the modifications are a total scam just like the origination of false notes and mortgages followed by false assignments, endorsements and allonges.

Probably half the “foreclosures” (I put that in quotes because someday, I hope the homes will be returned to their rightful owner) result from the servicers telling the first lie: “stop paying your mortgage payments, because we can’t consider your offer of modification without you being delinquent.” Once again, borrowers are duped because they are hearing music in the ears. Stop paying? And it is the BANK that is telling us to stop paying? What could be better?

Then the games start. You might remember that in 2007 Katherine Ann Porter did a ground-breaking study that blew the lid off of this gigantic fraud not in theory but in a scientific study which found that no less than 40% of the notes signed by borrowers were INTENTIONALLY lost or destroyed. Once again, that is an interesting fact but I asked why a bank would take a valuable piece of paper and shred it. The answer is simple: if they showed it to the investors and others, they would be in obvious breach if not accused of Madoff or Drier type fraud and Ponzi schemes. So better to claim they can’t find it and make up the rest, than to show the actual notes, many of which were not signed by borrowers ever, but whose signature was photo-shopped onto the document.

Why mention that again? Because 80% and perhaps more, of the modification proposals are claimed as not received, lost or accidentally destroyed while month after month the homeowner gets deeper and deeper in debt on missed payments (that are actually not due at all, but that is another story). So the strategy is simple. Make sure people stop paying, make sure you can declare the default and acceleration of the full amount due, and then either foreclose or tell them their proposal for modification is rejected by the investor after consideration required by HAMP.

The homeowner is faced with 9-18 months of missed payments, plus fees and costs to reinstate the loans and some of them do just that. But most people have spent at least part of the money and are unable to reinstate the loan with this “creditor” who never funded nor purchased the loan and who is the servicer for a party that never funded or purchased the loan. Wall Street wins. Half of the people who were foreclosed were losing their homes not only to fraudulent tricky documents, but because the Bank had manipulated them into going into de fault when they were not in default, even assuming the loan origination documents were actually valid and enforceable (which of course they are not).

Sprinkle a little guilt and moral dilemma into the soup and you have the perfect scenario for Wall Street to foreclose on millions of homes, thus sealing the deal on profits that were multiples of the entire funding of the mortgages but which probably never reached the investors.

Here is something to think about: $13 Trillion in loans were written, $2.6 trillion went into “default” on which the loss was around $1.3 trillion because of the residual value of the house, and last but best of all, Wall Street has received no less than $17 Trillion more than the principal of all the loans written during the mortgage meltdown.

Is there any reason anyone should be making payments on their mortgage? If so, it should be to the federal government not the banks. If the homeowners were “given”their homes free and clear, they could be taxed on the windfall since it would not be forgiveness of debt of rather avoidance of debt through third party payment.

 

The tax liability would be a small fraction of the original mortgage which of course is invalid, but the loan proceeds were still received by or on behalf of the borrower so an obligation does exist (albeit without documentation like a note or mortgage) and its extinguishment is a taxable benefit to homeowners. The tax liability would be around $2.5 trillion, which means that the average liability of the household would be reduced by around 80% as it relates to the house. Everyone wins except the Banks who still will come out ahead because we all know that it never happens that the scam artist doesn’t have some of the money stashed away.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage | Tagged: , , , , , | 21 Comments »

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