REVERSE “MORTGAGES” ARE SUBJECT TO SAME DEFENSES AS ANY OTHER HOMEOWNER TRANSACTION

Posted on November 17, 2021 by Neil Garfield

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I am getting a lot more inquiries about reverse mortgages in which Foreclosure is threatened. That’s far, there appears to be no difference in the challenges and offenses available to homeowner homeowners between what is ordinarily falsely described as a “conventional Loan” and a “reverse mortgage loan.” The goal of the finance side of these transactions is the same: the sale of securities.

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So here is a common response that I am giving to people to make inquiries:

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The only players you have mentioned or companies that are claiming to be servicers. Based upon my research and analysis in other cases, I think it is highly unlikely that PHH, Ocwen, or Celink ever performed any services that are ordinarily associated with the use of the term “servicer.” I don’t think they are even authorized to perform those services. They are placeholders whose names are used to deflect attention from a real players, none of whom on or maintain a loan account receivable. In all probability, this transaction was subject to false claims of securitization, which means that securities were issued, but they did not represent any interest in any debt, note or mortgage.
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The procedures that are being offered to you or merely devices for you to waive rights to challenge their claim. I think there’s a high probability that the apparent debt has been extinguished through the process of securitization. At securitization, many layers of securities are issued and sold that re-pay the players and produce outsized profits that are not disclosed to the homeowners. On the finance side, nobody treats the transaction with the homeowner as though it was a loan except for purposes of “enforcement.”  In order to achieve their goal, it is necessary to fabricate false documentation and present them as valid and authentic memorialization of transactions. But the transactions never occurred.
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This is very confusing to anyone who is not fairly knowledgeable about investment banking, accounting and law. So that includes homeowners, lawyers and judges. Using the label of a “loan” the players are able to use the label of “lender” and “servicer.” None of these labels are true in the sense that they describe the actual function of the company is described as performing some role in connection with the loan.
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What all of that means is that if you are going to challenge them, you have an uphill battle to convince a skeptical judge that you were not simply trying to wiggle out of a legitimate debt. I’ve been litigating these specific cases for nearly 16 years. While I have been either instrumental or the actual lead attorney defending homeowners from these false claims, I can say that without any doubt, the process is a lot easier if the homeowner starts early and does not wait to assert challenges until they are actually in court. I have won cases in both categories, but it is a lot easier if the attorney can state and show that there were previous statutory attempts to obtain knowledge of the identity alleged creditor, and the existence and status of the alleged loan account.
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Filed under: foreclosure | Tagged: , , , , , | 1 Comment »

Those letters from the lawyer for the “servicer”: PHH

Posted on November 2, 2021 by Neil Garfield

It is true that someone will execute a release of the lien. What is not true is that they have any authority to do so — nor is it true that PHH has any right to receive any money, whether it is a monthly payment or a payoff.

In fact it is not true that PHH will receive any money. They won’t and they don’t. All payments are  directed through lockbox contracts and FINTECH companies into accounts that may bear the name of a company claiming to be a serrvicer but which are owned by someone else.

This is why I keep successfully annoying opposing counsel about the payment history they wish to introduce as a business record exception to the rule against the use of hearsay evidence.

Since none of the data was entered by anyone employed by the company that is claimed to be the servicer, the payment history is neither a business record that is an exception to the rule against hearsay, nor an acceptable substitute for what has always been required: the accounting ledger showing the history (cradle to grave) of the loan account receivable. In fact, the payment history is not even a partially acceptable substitute for that ledger because it does not reflect payments to creditors.

PHH, Ocwen and Reverse Mortgage Solutions (among others) are all part of the same organization. In a recent dialogue between my client and the lawyer for PHH, he stated that payment to PHH will cause the lien to be released. This got me started thinking about the way he worded that. Normally the lawyer would write something like “Payment to PHH, as agent for XYZ Creditor, will satisfy the debt, note and mortgage. Upon receipt of such payment,m the lien will be released.”

Note that this was a representation from the lawyer not PHH and not any creditor. And the lawyer is protected by a form of immunity as long as he is not intentionally misstating the facts knowing that they’re false. If PHH said that, it could be the basis for a fraud action.  It is true that someone will execute a release of the lien. What is not true is that they have any authority to do so nor is it true that PHH has any right to receive any money, whether it is a monthly payment or a payoff.

It is true that someone will execute a release of the lien. What is not true is that they have any authority to do so nor is it true that PHH has any right to receive any money, whether it is a monthly payment or a payoff.

So this is what I said in a comment to the receipt of an email displaying the comments of the lawyer claiming to represent “somebody” which we presume is a claim to represent PHH which in turn is a claim to represent some company claiming to be a creditor merely because they have some paperwork — and not because they ever entered into any purchase and sale transaction in which they bought the underlying obligation, the legal debt, note or mortgage:

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Of course, what is interesting is that the lawyer is saying that payment to PHH will cause the lien to be released. But it doesn’t say who will release it. It’s leaving the rest to your imagination. Any lien release under this scenario would be executed by a person working for a company that has no legal authority to sign it.

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The way it is set up, the person is authorized by the company he works for, but the company lacks the authority to authorize him to sign it. The company, in turn, claims authority by virtue of some contract or document in which the counterparty grants the company the authority. But the grantor also lacks authority.

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The idea here is to get you to take your eye off the ball. The ball is always the underlying obligation. It is the legal owner of the obligation (i.e., the one who purchased it for value) who has the sole authority to grant powers to anyone else over the administration, collection, and enforcement of the underlying obligation.
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It is only when you take your eye off the ball that these companies get away with claiming the status of “holder” of the note and owner of the mortgage. The holder of the note is defined as a party who has physical possession of the note (or the right to physical possession of the note) together with the authority to enforce it.
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These players have been successfully leveraging the idea that physical possession of the promissory note, or the right to physical possession of the promissory note is all that they need in order to establish the legal presumption that they have the authority to enforce it. That has never been true. But in the absence of a persistent and aggressive challenge from the alleged debtor, these parties have been able to steamroll over all weak objections.
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Further, leveraging one presumption into another, they have been successful in raising the additional presumption that transfer of the note to a “holder” is the legal equivalent of transferring legal title to the underlying obligation, thus satisfying the requirement for enforcement that is contained in Article 9–203 of the Uniform Commercial Code. None of that is true; but all of it seems to be true.
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The bottom line is that they know there is no loan account receivable and therefore no legal owner of the underlying obligation. They have done that intentionally for the benefit of the investment banks that set up this scheme. But it has not been difficult for Wall Street to convince the rest of the world that all of these transactions are, in substance, just what they appear to be. Getting the courts, law enforcement, regulators, and even homeowners and their lawyers to look beyond the appearance has been the principal impediment to defeating the scheme.
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Neil F Garfield, MBA, JD, 74, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business, accounting and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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  • But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
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Filed under: CORRUPTION, discovery, Discovery -Subpoena, Fabrication of documents, foreclosure, foreclosure mill, hearsay, investment banking, legal standing, Presumptions, Servicer, sham transactions, TRIAL OBJECTIONS, trial strategy | Tagged: , , | 9 Comments »

Modifications Are Part of the Big Lie: Don’t send that application for modification if you don’t want to waive important rights.

Posted on May 7, 2021 by Neil Garfield

The application for modification licenses New Rez aka PHH aka Ocwen to sell, distribute the personal data and transaction data to third parties. Besides the obvious problems with data privacy, this confirms the apparent voluntary participation of the homeowner in a securities scheme that was and still is concealed from the homeowner.

By filing the application the homeowner is waiving his right to keep the compensation that was paid for the homeowner’s role in launching the securities scheme or to ask for more compensation. And it creates an assumption of risk by the homeowner that was, is, and always will be concealed from the homeowner. All of this is “illegal” but by signing the document the homeowner has launched a legal presumption that the document and everything on it is valid.

It reaffirms the concealed nature of the transaction in which the note and mortgage were executed and delivered. Instead of a loan agreement, the application alone establishes the authority of the New Rez aka PHH aka Ocwen to act as agent/servicer even though it has no such authority. It also makes New Rez aka PHH aka Ocwen the creditor, which means the homeowner is accepting a virtual creditor instead of a real one. And the homeowner is waiving any right to contest the standing of New Rez aka PHH aka Ocwen to administer, collect, and enforce the note and mortgage.

On behalf of a client, I recently received an “offer” for my client to apply for a modification. My response is going to be that we would be happy to apply for modification if New Rez aka PHH aka Ocwen can demonstrate (a) that the loan account receivable exists, (b) that U.S. Bank owns it on behalf of either a trust or certificate holders and (c) that New Rez aka PHH aka Ocwen can demonstrate that they have been authorized to act as agent/servicer for a creditor who owns the underlying obligation because (a) they paid for it and (b) they received a conveyance of ownership of the debt as part of a purchase transaction from someone who owned the loan account receivable.

Of course I know that they cannot do that. I know it because along with Patrick Giunta, Esq. in Fort Lauderdale all of that was established beyond any doubt. the Judge found that the trust, the trustee, and the agent/servicer (Ocwen) had no relationship to the debt, note, or mortgage but may have had possession of a note (now lost) that might have been an original. Final Judgment for the homeowner. In fact, at trial, the robowitness was dumbfounded when he realized that the fabricated “Power of Attorney” appointing Ocwen as servicer and as an “attorney in fact” had been not only false but incorrectly created with Chase being the grantor. Chase had nothing to do with this case.

But because they did not file the “original note” until after the lawsuit began — in 2008 — the judge felt compelled under Florida law to enter judgment for the homeowner with findings of fact that disposed of the merits of the case but dismissing the case without prejudice. that is because finding that there was not even the allegation of possession of the note before the filing of the lawsuit there was no jurisdiction. And no jurisdiction means the court is powerless to do anything but dismiss the case.

So the lawyers refiled the case even though there has been a complete negative adjudication of all facts necessary to prove a prima facie case for foreclosure. And they barely managed to squeak through a motion to dismiss because the defense of res judicata is an affirmative defense and so we will file our own motion for summary judgment.

The first interesting thing about all this is that the lawyers chose to file a case that they had already lost. Why? Well until two weeks ago, the law in that DIstrict was that there was no claim for attorney fees if the homeowner won because they established that the named claimant lacked legal standing — a fancy way of saying no case.

The recovery of attorney fees can only be based upon statute or contract. There is no statute that specifically grants the right to recover attorney fees when the named Plaintiff loses a foreclosure case. But there is the contractual provision in the note and mortgage for recovery of fees and Rule 57.105 Fla. R.C.P. that says that such provision is reciprocal.

BUT once the homeowner proves that the Plaintiff is NOT part of the contract, the law WAS that having proven that there was no contractual relationship between the Plaintiff and the homeowner, the homeowner was barred from taking advantage of the attorney’s fees provision in that contract.

All of that may seem to have some logic except for one thing: it was the Plaintiff who invoked the contract when they started the lawsuit asking for attorney fees and when they were shown to be lying, there are about a dozen reasons why they should not escape an award of attorney fees and costs. And that is what the Florida Supreme Court found. So now the attorneys have filed a new lawsuit that they thought had no risk if they lost; but they have a huge risk because the premise under which they were operating was not only wrong but downright malevolent. The playbook is designed to wear the homeowner down even if there is no case against the homeowner.

And so it is interesting that the unauthorized agent/servicer New Rez aka PHH aka Ocwen, constantly changing names to confuse the recipient, is now sending an “offer” to allow my client to apply for a modification. And just to be clear, that is no offer at all. They’re not saying they will consider it, grant it, or even that they are offering it on behalf of some named creditor. And that is why I scored points by filing three motions for sanctions against the opposing side which were granted. They showed up at “mediation” without any authorized person to settle the case. They were only authorized to offer to allow the homeowner to apply for a modification.

This particular offer was sent pursuant to a settlement agreement with the Florida Attorney General that requires them to modify loans. The AG office of course made the same mistake as all law enforcement and all regulators, to wit: that the agent/servicer was actually authorized to modify. In fact, the agreement can now be used to argue that they must have had the authority to modify — why else would that agreement require modification? THE AG was either hoodwinked or playing along. I don’t know.

But the main point of the modification is clear. It changes the falsely labeled loan agreement executed by the homeowner into something entirely different. Instead of a loan contract, the proposed application for modification changes the transaction forever. Perhaps the better description is that it reaffirms the concealed nature of the transaction in which the note and mortgage were executed and delivered. Instead of a loan agreement, the application alone establishes the authority of the New Rez aka PHH aka Ocwen to act as agent/servicer even though it has no such authority. It also makes New Rez aka PHH aka Ocwen the creditor, which means the homeowner is accepting a virtual creditor instead of a real one. And the homeowner is waiving any right to contest the standing of New Rez aka PHH aka Ocwen to administer, collect, and enforce the note and mortgage.

So there you have it. That is the reason they sent it. It was designed to lure me into sending this to my client in order to establish a fact that doesn’t exist and a fact that has already been defeated — standing for either the named Plaintiff (U.S. Bank as trustee for SASCO, etc) or anyone else designated by New Rez aka PHH aka Ocwen. If they had been successful they might have a shot on the second lawsuit. And it now licenses New Rez aka PHH aka Ocwen to sell, distribute the personal data and transaction data to third parties. Besides the obvious problems with data privacy, this confirms the apparent voluntary participation of the homeowner in a securities scheme that was and still is concealed from the homeowner.

By filing the application the homeowner is waiving his right to keep the compensation that was paid for launching the securities scheme or ask for more. And it creates an assumption of risk by the homeowner that was, is, and always will be concealed from the homeowner. All of this is “illegal” but by signing the document the homeowner has launched a legal presumption that the document and everything on it is valid. And it makes the unauthorized agent/servicer the agent of the homeowner!

The accountholder(s) [label establishes homeowner as holder of an account that exists] consent [uninformed consent] to the disclosure by my servicer  [affirms “servicer” as agent] or authorized third party,* [i.e, anyone and there is no referenced asterisk at the end of the document], or any investor/guarantor [note the introduction of new parties] of my mortgage loan(s) [affirming it is a mortgage loan], of any personal and non-personal information during the mortgage assistance process and of any information about any relief I receive, to any third party that deals with my first lien [affirming lien] or subordinate lien (if applicable) mortgage loan(s), including Fannie Mae, Freddie Mac or any investor, insurer, guarantor, or servicer of my mortgage loans(s) or any companies that provide support to them, for purposes permitted by law. Personal information may include, but is not limited to: (a) my name, address, telephone number; (b) my Social Security Number; (c) my credit score; (d) my income; and (e) my payment history [affirming paymetns were due] and information about account balances and activity and (f) my tax return and the information contained therein. I/We hereby authorize the servicer to release, furnish, and provide information related to my/our account to: [BLANK FOR ANYONE TO FILL IN LATER IF THEY NEED IT]

The Florida AG fell for this hook, line, and sinker. So have most homeowner and their lawyers. Take a closer look and ask yourself why they would have such wording if they were truly sure of their status as an agent for a lender, and why they wouldn’t announce guidelines for what the “modifications” would look like if “granted” and on whose behalf they are allegedly “modifying” the transaction falsely labeled as a loan. Every correspondence offering the hope of modification is a potential trap for homeowners who frankly, in my opinion, owe nothing. They were paid money equal to at most 8 1/2% of their revenue generated by these securities scheme, everyone received every payment to which they were entitled, and then they signed a note to give it back because they thought it was a loan.
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But if it was a loan then there would have been an identifiable lender who had an entry on its accounting ledgers showing payment of value for the underlying debt. No such entity exists because the investment bankers were securities brokers and security brokers are interested in trading securities. They had no intention of assuming any risk of loss on nonperforming loans, so they made sure that the transaction looked like a loan but wasn’t. They had no interest in lending and they did not lend money. Investors loaned money to the brokerage firms. And nobody complied with lending statutes because there was no lender.
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
  • But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
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Please visit www.lendinglies.com for more information.

 

Filed under: foreclosure, MODIFICATION, Mortgage, sham transactions, standing | Tagged: , , , , , , , , , , , | 5 Comments »

Processing Fees are more than illegal — by adding them to balance due, the default letter is defective.

Posted on September 2, 2020 by Neil Garfield

This is simple logic. If illegal processing fees were greedily added to the “loan accounts” falsely asserted to exist, then the amount demanded from “borrowers” was incorrect. That would make the statements sent to borrowers part of a fraudulent scheme through US Mails which would be mail fraud. And it would make the notices of delinquency and notice of default and notices of default defective and perhaps fatally defective because they were seeking to enforce an amount not due. And it would make foreclosure judgments and sales based upon such demands potentially voidable.

see https://spotonflorida.com/southeast-florida/1835819/ocwen-phh-corp-pay-125-million-settlement.html

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You know Ocwen. It’s that company that stays in business by the largess of large financial institutions that buy its stock on the open market. Investment bankers use the Company to shield themselves and their own company from potentially trillions of dollars in liability — and possibly prison. It is the company that pretends to be the “servicer” of your loan — which you readily accept because (a) someone needs to do it and (b) nobody else is saying they are “servicing” your loan.

But in reality it is not your servicer because of some technical problems – like the absence of a loan account and the absence of anyone who claims to own your loan account. Only such a company that owned your debt could give authority to a third party to administer, collect or enforce your debt or loan account. Ocwen never received that authority from anyone because in most cases (nearly all) no such creditor exists. (see previous blog articles as to how this highly counterintuitive result is created and exploited by investment banks).

And there is another sticky problem because Ocwen doesn’t actually “service” your loan payments — Black Knight does that, hidden behind the curtains that Goldman Sachs calls “layering” or laddering.” So in the musical chairs presentation of servicers, for enforcement, and Ocwen is designated by Black Knight to come forward as “servicer”, it does so as a witness once removed from the actual entity that collected payments on behalf of a loan account that doesn’t exist.

In plain language the entire process of “boarding” is a charade. The prior company that was designated as “servicer” is simply dropped from the letterhead of notices and statements generated by Black Knight, and Ocwen’s name is inserted instead. “Boarding” comprises a new login name and password to the Black Knight systems.

Ocwen/PHH (after merger) have never made a profit and never will. It is a publicly traded business entity that is waiting to be thrown under the bus. When the s–t hits the fan, and it becomes widely known and accepted that there are no loan accounts and there is nothing to administer, collect or enforce, the plan is to have Ocwen, and companies like Ocwen to take the heat, leaving the investment banks free from blame or liability for civil or criminal infractions. At least that is the plan. But if the government ever breaks free of the control by Wall Street — and clawback of money siphoned from our economy becomes a priority —then it won’t be difficult to pierce through the corporate veils of Ocwen like companies to seize assets held here and abroad.

So it should come as no surprise that such people would add on such things as “processing” or “convenience” fees when there is no processing and there is no convenience. Ocwen has now agreed to pay money because it received a slap on the wrist. But like the hundreds of preceding settlements, nobody is asking about the effect of the illegal practices on the presumed loan accounts, even if they existed.

This is simple logic. If illegal processing fees were greedily added to the “loan accounts” falsely asserted to exist, then the amount demanded from “borrowers” was incorrect. That would make the statements sent to borrowers part of a fraudulent scheme through US Mails which would be mail fraud. And it would make the notices of delinquency and notice of default and notices of default defective and perhaps fatally defective because they were seeking to enforce an amount not due. And it would make foreclosure judgments and sales based upon such demands potentially voidable.

But nobody talks about that because it is the unstated sub silentio policy to uphold the securitization infrastructure that does not exist, to wit: no loan was sold and no loan was securitized. That is impossible because for securitization to be real the loan must be sold to investors. There was never any such sale.

*Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.*

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Filed under: boarding process, CORRUPTION, discovery, Discovery -Subpoena, Fabrication of documents, foreclosure, foreclosure defenses, forgery, investment banking, Investor, prima facie case, securities fraud, Servicer, sham transactions, standing, TRIAL OBJECTIONS, trial strategy | Tagged: , , | 2 Comments »

Details in New York: Devil is in the Foreclosure

Posted on August 16, 2011 by Neil Garfield

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Submitted by “One Observer”

o Why would a non-performing loan be transferred into a Trust nearly 16 months AFTER the Trust’s closing date?
o How many other mortgages were not deposited in accordance to this Trust’s Pooling & Servicing Agreement?
o And if it contained non performing loans, why weren’t the investors notified and paid a higher interest rate?

In a letter to the New York State Attorney General Hon Eric Schneiderman, a consumer who is caught in the irrationality of the NY Foreclosure Courts, pleads for an investigation into yet another example of blatant securitization fraud.
• Merrill Lynch Banker ‘sells’ the ARM refinance mortgage as a cash flow enhancement product to estranged spouse. Estranged spouse decides to be sole signor on Mortgage and Note. Mortgage closes on November 1, 2004.
• Through information later obtained, this mortgage was securitized into the MERRILL LYNCH MORTGAGE INVESTORS TRUST SERIES MLCC 2004-G Pass-Through Certificates, CIK 1312848 under SEC file number 333-112231-36.
• This Trust had a closing of December 29, 2004 pursuant to its Pooling and Servicing Agreement.
• As of April 1, 2006, estranged spouse stops sending mortgage payments.
• In October 2006 an officer of the servicer PHH, Marc J Hinkle, assigns the Mortgage from MLCC (the ‘Depositor’ in the Trust) to Wells Fargo Bank, N.A., as Trustee (Trustee of what? It didn’t say).
• This begs the questions:

o Why would a non-performing loan be transferred into a Trust nearly 16 months AFTER the Trust’s closing date?
o How many other mortgages were not deposited in accordance to this Trust’s Pooling & Servicing Agreement?
o And if it contained non performing loans, why weren’t the investors notified and paid a higher interest rate?

• Sometime in late 2006, the firm Shapiro & DiCaro filed an Order of Reference to foreclose on this mortgage. Fortunately, some NY Judges ‘get it’ and the presiding Judge dismisses the motion as Plaintiffs do not submit evidence of standing and specifically had not submitted the requested Trust Agreement. One can speculate that if the Judge saw the closing date of the Trust Agreement, the Judge too would question why the mortgage was assigned AFTER it was in default and AFTER the Trust’s closing date by which all mortgages had to be transferred.
• Plaintiffs file an Appeal in 2007
• Plaintiffs withdraw the Appeal in 2008
• Plaintiffs file another Summons and Compliant in early 2008, that’s nearly two years after the first date of default.
• Suddenly, Plaintiffs motion to dismiss their complaint and it is dismissed.
• A second mortgage assignment is filed in June 2008, that is 3.5 years after the closing date of the Trust AND essentially assigning a non performing loan into a Trust whose very Pooling & Servicing Agreement disallowed such transfers as the mortgages were pooled into 2 Senior tranches. Adherence to the PSA determines whether there was a transfer effected or not because under NY trust law (which governs most PSAs), a transfer not in compliance with a trust’s documents is void.

Again, the questions raised are:
o Why did a non performing loan get transferred into a Trust belonging to an almost bankrupt holding company, Merrill Lynch? In June 2008, Merrill Lynch’s widely publicized financial problems due to the losses from its RMBS business led to the subsequent acquisition of ML by Bank of America.
o Was this untransferred and non performing loan and its losses, and I speculate many others due to the reason in the point above, included in Merrill’s calculation of operational losses and the adequate Basel and regulatory capital reserves set aside and reported?
o This assignment is from Wells Fargo Bank, NA, as Trustee to the securitized Trust. The assignment was again done by Marc J Hinkle, an officer of PHH, not the Trustee. There was no Power of Attorney attached to the assignment. So an agent assigns the ownership interest as agent for the owner before the owner is actually established established? Cart before the horse ?
• A THIRD foreclosure complaint is filed in mid 2008. The presiding Judge agrees with Shapiro, DiCaro & Barak’s reply to one of the Defendants’ Motions which stated that the many securitization issues raised above were not relevant to the Foreclosure Court proceeding. Consumer is dumbfounded by this decision–ie Plaintiff is not a ‘Person’, therefore, the means by which Plaintiff can claim standing has to be reviewed.

Again, this is just one mortgage marred with irregularities but it begs the question of how many others may have been fraudulently transferred into this and other toxic Trusts and whose investors knew nothing about this endemic toxicity?

The consumer is in communication with the SEC, the OCC and the NY AG’s Office,

Indeed, ‘unsophisticated consumers’ in foreclosure proceedings are not the foreclosuregate principals, it is the investors who are demanding answers and visibility into the lack of transparency these transactions were performed under.

Merrill Lynch is a vertically integrated firm and has a private label agreement with PHH since about 1997. ML created the mortgages (PHH created them under the MLCC name), underwrote the securitization, sold the bonds and resold them time and time again. In 2008 AIG held several toxic MLMI bonds and was bailed out by the FRB in what was called the Maiden Lane portfolios. Interestingly enough, in the example above, one of the bonds is part of Maiden Lane II. When the FRB auctioned these non-agency RMBS in April-June 2011, guess who bought the largest chunk? It’s Merrill Lynch all over again, along with JPM Chase. Guess it’s hard to resist the bargain they themselves created.

It’s getting more challenging for firms like Shapiro, DiCaro & Barak and the rest of the Shapiro mill to cover up their and their client’s ‘unclean hands’. Investors are demanding answers and it is the recent lawsuits like to AIG vs BoA on Monday Aug 8th and the Allstate vs BoA back in March that continue to pressure regulators to uncover and publicize these fraudulent transactions.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , , , , , , , , , , , , , , | 18 Comments »

ALLSTATE FILES SUIT LAYING OUT ALL THE ALLEGATIONS YOU NEED

Posted on February 24, 2011 by Neil Garfield

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

REQUIRED READING

2.24.2011 Chase -Allstate-Complaint

JUST LOOKING AT THE TABLE OF CONTENT WILL TELL YOU WHAT YOU NEED TO KNOW

NATURE OF ACTION …………………………………………………………………………………………………….1
PARTIES ………………………………………………………………………………………………………………………..7
JURISDICTION AND VENUE ……………………………………………………………………………………….16
BACKGROUND ……………………………………………………………………………………………………………17
A.    THE MECHANICS OF MORTGAGE SECURITIZATION …………………………………….17
B.    SECURITIZATION OF MORTGAGE LOANS: THE TRADITIONAL MODEL ……..19
C.    THE SYSTEMIC VIOLATION OF UNDERWRITING AND APPRAISAL STANDARDS IN THE MORTGAGE SECURITIZATION INDUSTRY …………………..21
D.    DEFENDANTS WERE AN INTEGRATED VERTICAL OPERATION CONTROLLING EVERY ASPECT OF THE SECURITIZATION PROCESS…………..24
(1)    JPMorgan Defendants……………………………………………………………………..24 (2)

WaMu Defendants ………………………………………………………………………….26 (3)

Bear Stearns Defendants ………………………………………………………………….27
E.    DEFENDANTS’ OFFERING MATERIALS…………………………………………………………..29 (1)

The JPMorgan Offerings………………………………………………………………….29 (2)

The WaMu Offerings………………………………………………………………………30 (3)

The Long-Beach Offering………………………………………………………………..32 (4)

The Bear Stearns Offerings………………………………………………………………32
SUBSTANTIVE ALLEGATIONS …………………………………………………………………………………..34
I.    THE OFFERING MATERIALS CONTAINED UNTRUE STATEMENTS OF MATERIAL FACT AND OMISSIONS ABOUT THE MORTGAGE ORIGINATORS’ UNDERWRITING STANDARDS AND PRACTICES, AND MATERIAL CHARACTERISTICS OF THE MORTGAGE LOAN POOLS ……………..34
A.    Defendants’ Misrepresentations Regarding Underwriting Standards And Practices …………………………………………………………………………………………………..34
(1)    JPMorgan Defendants’ Misrepresentations Regarding Underwriting Standards And Practices………………………………………………35
i
(2)    WaMu Defendants’ Misrepresentations Regarding Underwriting Standards and Practices……………………………………………………………………35
(3)    Long Beach Defendants’ Misrepresentations Regarding Underwriting Standards and Practices……………………………………………….36
(4)    Bear Stearns Defendants’ Misrepresentations Regarding Underwriting Standards and Practices……………………………………………….39
B.    Defendants’ Misrepresentations Regarding Owner-Occupancy Statistics …………40
(1)    JPMorgan Defendants’ Misrepresentations Regarding Owner- Occupancy Statistics ……………………………………………………………………….40
(2)    WaMu Defendants’ Misrepresentations Regarding Owner Occupancy Statistics ……………………………………………………………………….41
(3)    Bear Stearns Defendants’ Misrepresentations Regarding Owner Occupancy Statistics ……………………………………………………………………….41
C.    Defendants’ Misrepresentations Regarding Loan-to-Value and Combined Loan-to-Value Ratios…………………………………………………………………………………42
(1)    JPMorgan Defendants’ Misrepresentations Regarding LTV and CLTV Ratios………………………………………………………………………………….42
(2)    WaMu Defendants’ Misrepresentations Regarding LTV and CLTV Ratios ……………………………………………………………………………………………42
(3)    Bear Stearns Defendants’ Misrepresentations Regarding LTV and CLTV Ratios………………………………………………………………………………….43
D.    Defendants’ Misrepresentations Regarding Debt-to-Income Ratios …………………44
(1)    JPMorgan Defendants’ Misrepresentations Regarding Debt-to- Income Ratios ………………………………………………………………………………..44
(2)    WaMu Defendants’ Misrepresentations Regarding Debt-to-Income Ratios ……………………………………………………………………………………………44
(3)    Bear Stearns Defendants’ Misrepresentations Regarding Debt-to- Income Ratios ………………………………………………………………………………..45
E.    Defendants’ Misrepresentations Regarding Credit Ratings……………………………..46
(1)    JPMorgan Defendants’ Misrepresentations Regarding Credit Ratings ………………………………………………………………………………………….46
(2)    WaMu Defendants’ Misrepresentations Regarding Credit Ratings………..47 ii
(3)    Long Beach Defendants’ Misrepresentations Regarding Credit Ratings ………………………………………………………………………………………….48
(4)    Bear Stearns Defendants’ Misrepresentations Regarding Credit Ratings ………………………………………………………………………………………….48
F.    Defendants’ Misrepresentations Regarding Credit Enhancements……………………49
(1)    JPMorgan Defendants’ Misrepresentations Regarding Credit Enhancements ………………………………………………………………………………..49
(2)    WaMu Defendants’ Misrepresentations Regarding Credit Enhancements ………………………………………………………………………………..50
(3)    Long Beach Defendants’ Misrepresentations Regarding Credit Enhancements ………………………………………………………………………………..50
(4)    Bear Stearns Defendants’ Misrepresentations Regarding Credit Enhancements ………………………………………………………………………………..51
G.    Defendants’ Misrepresentations Regarding Underwriting Exceptions………………51
(1)    JPMorgan Defendants’ Misrepresentations Regarding Underwriting Exceptions …………………………………………………………………51
(2)    WaMu Defendants’ Misrepresentations Regarding Underwriting Exceptions ……………………………………………………………………………………..52
(3)    Long Beach Defendants’ Misrepresentations Regarding Underwriting Exceptions …………………………………………………………………53
(4)    Bear Stearns Defendants’ Misrepresentations Regarding Underwriting Exceptions …………………………………………………………………53
H.    Defendants’ Misrepresentations Regarding Alternative Documentation Loans ……………………………………………………………………………………………………….53
(1)    JPMorgan Defendants’ Misrepresentations Regarding Alternative Documentation Loans ……………………………………………………………………..54
(2)    WaMu Defendants’ Misrepresentations Regarding Alternative Documentation Loans ……………………………………………………………………..54
(3)    Bear Stearns Defendants’ Misrepresentations Regarding Alternative Documentation Loans …………………………………………………….55
I.    Defendants’ Misrepresentations Regarding Full-Documentation Loans……………55
iii
J.    Defendants’ Misrepresentations Regarding Adverse Selection of Mortgage Loans ……………………………………………………………………………………………………….56
K.    Defendants’ Failure to Disclose the Negative Results of Due Diligence …………..57
II.    ALL OF DEFENDANTS’ REPRESENTATIONS WERE UNTRUE AND MISLEADING BECAUSE DEFENDANTS SYSTEMATICALLY IGNORED THEIR OWN UNDERWRITING GUIDELINES ……………………………………………………58
A.    Evidence Demonstrates Defendants’ Underwriting Abandonment: High Default Rates And Plummeting Credit Ratings ……………………………………………..59
B.    Statistical Evidence of Faulty Underwriting: Borrowers Did Not Actually Occupy The Mortgaged Properties As Represented……………………………………….62
(1)    The JPMorgan Offerings………………………………………………………………….64 (2)

The WaMu Offerings………………………………………………………………………64 (3)

The Bear Stearns Offerings………………………………………………………………65
C.    Statistical Evidence of Faulty Underwriting: The Loan-to-Value Ratios In The Offering Materials Were Inaccurate ………………………………………………………65
(1)    The JPMorgan Offerings………………………………………………………………….66 (2)    T

he WaMu Offerings………………………………………………………………………68 (3)

The Bear Stearns Offerings………………………………………………………………71
D.    Other Statistical Evidence Demonstrates That The Problems In Defendants’ Loans Were Tied To Underwriting Guideline Abandonment………..72
E.    Evidence Demonstrates That Credit Ratings Were A Garbage-In, Garbage-Out Process …………………………………………………………………………………75
F.    Evidence From Defendants’ Own Documents And Former Employees Demonstrates That The Representations In Defendants’ Offering Materials Were False ……………………………………………………………………………………………….76
(1)    The JPMorgan Offerings………………………………………………………………….76 (2)

The WaMu Offerings………………………………………………………………………80 (3)

The Long Beach Offerings……………………………………………………………….87 (4)

The Bear Stearns Offerings………………………………………………………………92
iv
G.    Evidence From Defendants’ Third-Party Due Diligence Firm Demonstrates That Defendants Were Originating Defective Loans………………….94
H.    Evidence Of Other Investigations Demonstrates The Falsity Of Defendants’ Representations ………………………………………………………………………97
(1)    The WaMu and Long Beach Offerings………………………………………………97
(2)    The Bear Stearns Offerings………………………………………………………………99
III.    DEFENDANTS’ REPRESENTATIONS CONCERNING UNAFFILIATED ORIGINATORS’ UNDERWRITING GUIDELINES WERE ALSO FALSE ……………102
A.    Countrywide ……………………………………………………………………………………………104
(1)    Defendants’ Misrepresentations Concerning Countrywide’s Underwriting Practices…………………………………………………………………..104
(2)    These Representations Were Untrue And Misleading………………………..105 B.

GreenPoint ……………………………………………………………………………………………..109
(1)    Defendants’ Misrepresentations Concerning GreenPoint’s Underwriting Practices…………………………………………………………………..109
(2)    These Representations Were Untrue And Misleading………………………..111 C.    PHH……………………………………………………………………………………………………….115
(1)    Defendants’ Misrepresentations Concerning PHH’s Underwriting Practices ………………………………………………………………………………………115
(2)    These Representations Were Untrue And Misleading………………………..116 D.

Option One……………………………………………………………………………………………..118
(1)    Defendants’ Misrepresentations Concerning Option One’s Underwriting Practices…………………………………………………………………..118
(2)    These Representations Were Untrue and Misleading:………………………..120 E.    Fremont ………………………………………………………………………………………………….122
(1)    Defendants’ Misrepresentations Concerning Fremont’s Underwriting Practices…………………………………………………………………..122
(2)    These Representations Were Untrue and Misleading…………………………124 IV.

THE DEFENDANTS KNEW THEIR REPRESENTATIONS WERE FALSE ………….126
v
A.    The Statistical Evidence Is Itself Persuasive Evidence Defendants Knew Or Recklessly Disregarded The Falsity Of Their Representations………………….126
B.    Evidence From Third Party Due Diligence Firms Demonstrates That Defendants Knew Defective Loans Were Being Securitized …………………………127
C.    Evidence Of Defendants’ Influence Over The Appraisal Process Demonstrates That Defendants Knew The Appraisals Were Falsely Inflated …………………………………………………………………………………………………..130
D.    Evidence Of Internal Documents And Former Employee Testimony Demonstrates That Defendants Knew Their Representations Were False ……….131
(1) (2) (3) (4)
JPMorgan Defendants Knew Their Representations Were False…………131 WaMu Defendants Knew Their Representations Were False ……………..133 Long Beach Defendants Knew Their Representations Were False………138 Bear Stearns Defendants Knew Their Representations Were False ……..140
V.    ALLSTATE’S DETRIMENTAL RELIANCE AND DAMAGES ……………………………144

VI.    TOLLING OF THE SECURITIES ACT OF 1933 CLAIMS …………………………………..146

FIRST CAUSE OF ACTION …………………………………………………………………………………………149

SECOND CAUSE OF ACTION …………………………………………………………………………………….150

THIRD CAUSE OF ACTION………………………………………………………………………………………..152

FOURTH CAUSE OF ACTION …………………………………………………………………………………….155

FIFTH CAUSE OF ACTION …………………………………………………………………………………………157

PRAYER FOR RELIEF ………………………………………………………………………………………………..157

JURY TRIAL DEMANDED………………………………………………………………………………………….158

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , , , , | 73 Comments »

Foreclosure Suicide — Casualties Mount From Massive Fraud

Posted on July 28, 2008 by Neil Garfield

In all probability this person was foreclosed by a party who didn’t have any right to do so.  By the way, PHH advertises itself as private labeling outsource mortgage solutions which means in simple terms, they sell the loans.

From Huffington Post:

A few days before Congress passed its Housing Bill, Carlene Balderrama of Taunton MA found her own solution to the housing crisis. Just a little over two hours in advance of the time her mortgage company, PHH Mortgage Corporation — may its name live in infamy — was to auction off her home, Balderrama killed herself with her husband’s rifle.

This is not the kind of response to hard times that James Grant had in mind when he wrote his July 19 Wall Street Journal essay entitled “Why No Outrage?” “One might infer from the lack of popular anger,” the famed Wall Street contrarian wrote, “that the credit crisis was God’s fault rather than the doing of the bankers and the rating agencies and the government’s snoozing watchdogs.” For contrast, he cites the spirited response to the depression of the 1890s, when lawyer/agitator Mary Lease stirred crowds with the message that “We want the accursed foreclosure system wiped out…. We will stand by our homes and stay by our firesides by force if necessary…”

Grant could have found even more bracing examples of resistance in the 1930s, when farmers and tenants used mob power — and sometimes firearms — to fight foreclosures and evictions. For more on that, I consulted Frances Fox Piven, co-author of the classic text Poor People’s Movements: Why They Succeed, How They Fail, who told me that in the early 30s, a number of cities were so shaken by the resistance that they declared moratoriums on further evictions. A 1931 riot by Chicago tenants who had fallen behind on their rent, for example, had left three dead and three police officers injured.

According to Piven, these actions were often spontaneous. A group of unemployed men would get word of a scheduled eviction and march through the streets, gathering crowds as they went. Arriving at the site of the eviction, they would move the furniture back into the apartment and stay around to protect the threatened tenants. In one instance in Detroit, it took 100 cops to evict a single family. Also in Detroit, Piven said, “two families protected their apartments by shooting their landlord and were acquitted by a sympathetic jury.”

What a difference 80 years makes. When the police and the auctioneers arrived at Balderrama’s house, the family gun had already been used — on the victim of foreclosure herself. I don’t know how “worthy” a debtor she was — the family had been through bankruptcies before, though probably not as a result of Caribbean vacations and closets full of designer clothes. It was an Adjustable Rate Mortgage that did them in, and Balderrama, who managed the family’s finances, had apparently been unwilling to tell her husband that their ever-rising monthly mortgage payments were eating up his earnings as a plumber.

Suicide is becoming an increasingly popular response to debt. James Scurlock’s brilliant documentary, Maxed Out, features the families of two college students who killed themselves after being overwhelmed by credit card debt. “All the people we talked to had considered suicide at least once,” Scurlock told a gathering of the National Association of Consumer Bankruptcy Attorneys in 2007. According to the Los Angeles Times, lawyers in the audience backed him up, “describing clients who showed up at their offices with cyanide, or threatened, ‘If you don’t help me, I’ve got a gun in my car.'”

India may be the trend-setter here, with an estimated 150,000 debt-ridden farmers succumbing to suicide since 1997. With guns in short supply in rural India, the desperate farmers have taken to drinking the pesticides meant for their crops.

Dry your eyes, already: Death is an effective remedy for debt, along with anything else that may be bothering you too. And try to think of it too from a lofty, corner-office, perspective: If you can’t pay your debts or afford to play your role as a consumer, and if, in addition — like an ever-rising number of Americans — you’re no longer needed at the workplace, then there’s no further point to your existence. I’m not saying that the creditors, the bankers and the mortgage companies actually want you dead, but in a culture where one’s credit rating is routinely held up as a three-digit measure of personal self-worth, the correct response to insoluble debt is in fact, “Just shoot me!”

The alternative is to value yourself more than any amount of money and turn the guns, metaphorically speaking, in the other direction. It wasn’t God, or some abstract economic climate change, that caused the credit crisis. Actual humans — often masked as financial institutions — did that, (and you can find a convenient list of names in Nomi Prins’s article in the current issue of Mother Jones.) Most of them, except for a tiny few facing trials, are still high rollers, fattening themselves on the blood and tears of ordinary debtors. I know it’s so 1930s, but may I suggest a march on Wall Street?

Filed under: CDO, Eviction, foreclosure, GTC | Honor, Mortgage | Tagged: , , | 5 Comments »

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