How to Beat the Shell Game

Posted on November 19, 2018 by Neil Garfield

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

The Neil Garfield Radio Show at 6pm Eastern: JPMorgan Chase operates a Racketeering Enterprise according to Plaintiffs

Posted on June 8, 2017 by Neil Garfield

The Neil Garfield Show LIVE today at 6 pm Eastern/3 pm Pacific.  Join us!

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

For a copy of the LIST OF LOANS involved in the RICO lawsuit Click the following link: First Fidelity loans purchased from Chase

For a copy of this case click here: RICO Complaint – Chase

JPMorgan Chase has been accused of creating a “racketeering enterprise” whose purpose was to evade legal duties owed to borrowers, regulators and Plaintiffs, among others, to appropriately service federally regulated mortgage loans.  Basically, JPMorgan Chase cannot provide the necessary documentation to the Plaintiff’s regarding the loans they purchased, while borrowers whose loans were sold to JPMorgan Chase cannot obtain proof regarding the ownership of their loans (likely because all documentation was intentionally destroyed). The loans are void without the proper documentation (notes, reconveyances and assignments).   It is noteworthy, that when JPMorgan Chase went to foreclose on the “loans” with no legitimate documentation,  they would use entities like Nationwide Title Clearing to create false title and paperwork necessary to foreclose or to attach to a proof of claim in bankruptcy.

This blockbuster lawsuit illuminates the fact that JPMorgan Chase was selling thousands of loans it didn’t own including loans it had previously sold to other MBS trusts!  It is alleged that Chase transferred these defective “loans” in order to avoid non-reimbursable advances and expenses.

S&A Capital Mortgage Partners, Mortgage Resolution Servicing and 1st Fidelity Loan Servicing are suing JPMorgan Chase in the Southern District of New York District court for failure to service loans in a manner consistent with its legal obligations under: RESPA, TILA, FTC violations, the FDCPA, The Dodd Frank Wall Street Reform act, the Equal Credit Opportunity Act, the Fair Housing Act; and other applicable state and federal usury, consumer credit protection and privacy, predatory and abusive lending laws (collectively “the Acts”).  It is likely that this is not an isolated incident, but JPMorgan Chase’s normal operational standard.

The Plaintiffs complain that JPMC, rather than comply with the costly and time consuming legal obligations it faced under the Acts, the Defendants warehoused loans in a database of charged-off loans known as RCV1 and intentionally and recklessly sold these liabilities to unaware buyers such as the Plaintiffs.

To accomplish the transfer of these obligations Defendants prevented Plaintiff’s from conducting normal due diligence, failure to provide information, and changing terms of transactions after consummation; as well as failure to transfer mortgages to them. Because the Plaintiff’s did not receive the information about the loans purchased, the Defendants tortuously interfered with the Plantiff’s relationships with the borrowers including illegally sending borrowers debt forgiveness letters and releasing liens.   These actions not only resulted in specific damage to said lien’s value, but caused Plaintiffs reputational harm with borrowers, loan sellers, investors, lenders and regulators.

In reality both investors and borrowers should unite and sue JPMorgan Chase for Fraud and Fraudulent Inducement, Tortious Interference with Business Relations, conversion, breach of contract, and promissory estoppel and additional relief.

Highlights from the case include these bombshells accusing JPMorgan Chase of:

(iv) Knowingly breached every representation they made in the MLPA, including failing to legally transfer 3,529 closed-end 1st lien mortgages worth $156,324,399.24 to the Plaintiffs, and to provide Plaintiffs with the information required by both RESPA and the MMLSA so that Plaintiffs could legally service said loans.

(v) Took numerous actions post-facto that tortiously interfered with Plaintiffs’ relationships with borrowers including illegally sending borrowers debt forgiveness letters and releasing liens.

RCV1 Evades Regulatory Standards and Servicing Requirements

  1. Defendants routinely and illicitly sought to avoid costly and time-consuming servicing of federally related mortgage loans. Since 2000, Defendants maintained loans on various mortgage servicing Systems of Records (“SOR”) which are required to meet servicing standards and regulatory mandates. However, Defendants installed RCV1, an off-the-books system of records to conduct illicit practices outside the realm of regulation or auditing. Defendants’ scheme involves flagging defaulted and problem federally related loans on the legitimate SOR and installing a subsequent process to then identify and transfer the loan records from the legitimate SOR to RCV1. The process could be disguised as a reporting process within the legitimate SOR and the data then loaded to the RCV1 repository on an ongoing basis undetected by federal regulators.
  2. Defendants inactivated federally related mortgage loans from their various SORs such as from the Mortgage Servicing Platform (“MSP”) and Vendor Lending System (“VLS”).

 

  1. RCV1’s design and functionality does not meet any servicing standards or requirements under applicable federal, state, and local laws pertaining to mortgage servicing or consumer protection. Instead, the practices implemented by Defendants on the RCV1 population are focused on debt collection.

 

  1. Defendants seek to maximize revenue through a scheme of flagging, inactivating, and then illicitly housing charged-off problematic residential mortgage loans in the vacuum of RCV1, improperly converting these problematic residential mortgage loans into purely debt collection cases that are akin to bad credit card debt, and recklessly disregarding virtually all servicing obligations in the process. In order to maximize revenue, Defendants used unscrupulous collection methods on homeowners utilizing third-party collection agencies and deceptive sales tactics on unsuspecting note sale investors, all the while applying for governmental credits and feigning compliance with regulatory standards.

 

  1. In short, the RCV1 is where mortgage loans and associated borrowers are intentionally mishandled in such a manner that compliance with any regulatory requirements is impossible. In derogation of the RESPA, which requires mortgage servicers to correct account errors and disclose account information when a borrower sends a written request for information, the information for loans in RCV1 remains uncorrected and is sent as an inventory list from one collection agency to another, progressively resulting in further degradation of the loan information. In dereliction of various regulations related to loan servicing, loans once in RCV1 are not verified individually and the identity of the true owner of the note per the Truth in Lending Act (TILA) is often concealed. Regulatory controls regarding grace periods, crediting funds properly, charging correct amounts are not followed.

 

  1. More specifically, a borrower sending a qualified written request under Section 6 of RESPA concerning the servicing of his/her loan or request for correction under 12 U.S.C. §2605(e), 12 CFR §1024.35 could not obtain resolution because RCV1 is a repository for housing debt rather than a platform for housing and servicing federally related loans. RCV1 contains no functionalities for accounting nor escrow management in contravention of §10 of RESPA, Regulation X, 12 CFR §1024.34.

 

In contravention of 12 CFR §1024.39, Chase failed to inform Borrowers whose loans were flagged, inactivated, and housed in RCV1, about the availability of loss mitigation options, and in contravention of 12 CFR §1024.40. Chase also failed to make available to each Borrower personnel assigned to him/her to apprise the Borrower of the actions the Borrower must take, status of any loss mitigation application, circumstances under which property would be referred to foreclosure, or applicable loss mitigation deadlines in careless disregard of any of the loss mitigation procedures under Reg X 12 CFR § 1024.41.

 

  1. Unbeknownst to Plaintiffs and regulatory agencies, Chase has systematically used RCV1 to park flagged loans inactivated in the MSP, VLS, and other customary SORs to (1) eschew Regulatory requirements while publicly assuring compliance, (2) request credits and insurance on the charge-offs., (3) continue collection, and (4) sell-off these problematic loans to unsuspecting investors to maximize profit/side-step liability, all with the end of maximizing profit.

 

Specifics of Defendants’ RICO Scheme and Conduct:

  1. Since at least 2000, Defendants evaded their legal obligations and liabilities with respect to the proper servicing of federally related mortgages, causing Plaintiffs damage through Defendants’ misconduct from their scheme to violate:
  • The Real Estate Settlement Procedures Act (RESPA);
  • The Truth in Lending Act (TILA);
  • The Federal Trade Commission Act (FTC);
  • The Fair Debt Collection Practices Act (FDCPA);
  • The Dodd Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank);
  • The Equal Credit Opportunity Act; and
  • The Fair Housing Act.
  1. After Plaintiffs acquired mortgage loans from Defendants, during the period 2011 through at least 2016, Defendants released thousands of liens related to RCV1 loans, including RCV1 loans Defendants no longer owned, to avoid detection of non-compliance with the Lender Settlements. These lien releases caused harm to the Plaintiffs and to numerous other note sale investors.

 

  1. Similarly, in September 2008, Chase Bank entered into an agreement with the FDIC as receiver for WAMU-Henderson. Chase Bank made a number of representations in its agreement with the FDIC, including that Chase Bank and its subsidiaries were in compliance with all applicable federal, state and local laws. However, at the time of execution and delivery of the agreement, Chase owned thousands of loans with respect to which, through its improper servicing and other misconduct relating to the RCV1, it was in violation of many federal and state laws. These circumstances created a further motive for Chase Bank to participate in the scheme to transfer thousands of noncompliant loans to Plaintiffs and others.

 

  1. Plaintiff MRS purchased loans from Chase pursuant to the MLPA that were actually Chase’s most problematic loans and mostly housed in the RCV1 repository. In March, 2009, bare notes and deeds, without the promised required loan files documenting servicing and borrower information, were simply shipped to Plaintiffs as the “loan files”. Plaintiffs also received loans for which no notes, deeds or loan files were provided at all. Nevertheless, Defendants kept promising that the complete loan files were forthcoming, with no intent of ever providing them. Without the necessary documentation, it was difficult or impossible for Plaintiffs to service and collect on the loans. And despite herculean efforts, most often Plaintiffs could not locate the necessary information to service and collect on the loans.

 

  1. Defendants’ plan to entice an existing and approved, but unsuspecting note sale buyer to purchase these toxic loans is in plain view in various recently produced email exchanges discussing Defendant’s fraudulent scheme to dump non-serviced loans with inadequate documentation on Plaintiffs from October 2008 through February 2009.

 

  1. As early as 2008, Defendants’ knew the public was becoming more aware of its the scope of its improper actions. Ultimately, in 2012, public pressure prompted the federal government and many states to bring a complaint against JPMorgan and Chase Bank, as well as other banks responsible for fraudulent and unfair mortgage practices that cost consumers, the federal government, and the states tens of billions of dollars. The complaint alleged that JPMorgan and Chase Bank, as well as other financial institutions, engaged in improper practices related to mortgage origination, mortgage servicing, and foreclosures, including, but not limited to, irresponsible and inadequate oversight of the banks’ quality control standards. Unfortunately, the complaint failed to note, and the government appeared unaware of, the Defendants’ deeper institutional directives designed to hide their improprieties (such as the establishment of the RCV1 and its true purpose).

 

  1. 48. At all applicable times, Defendants had been continuing to utilize its RCV1 database.

 

  1. However, as in 2008, the loans housed in the RCV1 repository presented a huge reputational risk and legal liability as the loans housed in RCV1 were not being treated as federally related mortgage loans, were not in compliance, were no longer being serviced as such, but were being collected upon.

 

  1. By 2012, the RCV1 database contained hundreds of thousands of federally related mortgage loans, which had been inactivated in regular systems of records and whose accounts were no longer tracked pursuant to regulatory requirements, including escrow accounting.

 

  1. Other knowing participants in the conspiracy include third party title clearing agencies, such as Nationwide Title Clearing Company (NTC), Pierson Patterson, and LCS Financial Services, who were directed by Defendants to prepare and then file fraudulent lien releases and other documents affecting interests in property. Either these entities were hired to verify liens and successively failed to properly validate the liens before creating documents and lien releases containing false information, or these entities were directed by Chase to create the documents with the information provided by Defendants. In either case, these title clearing agencies which recorded fraudulent releases of liens and related documents in the public record, had independent and separate duty from Defendants to file, under various state laws, all relevant documents only after a good faith proper validation of the liens. Instead these entities deliberately violated their duty of care by knowingly or recklessly filing false lien releases and false documents on properties not owned by Defendants.

 

  1. In many states, the act of creating these documents is considered the unauthorized practice of law. In Florida, where NTC is organized, there is a small exception for title companies who are only permitted to prepare documents and perform other necessary acts affecting the legal title of property where the property in question is to be insured, to fulfill a condition for issuance of a title policy or title insurance commitment by the Insurer or if a separate charge was made for such services apart from the insurance premium of the Insurer. Plaintiffs have not ascertained whether Nationwide Title or any other agencies created documents for Chase as a necessary incident to Chase’s purchase of title insurance in Florida.

 

  1. Chase used Real Time Resolutions, GC Services, and Five Lakes Agency, among other collection agencies, to maximize its own back door revenues on loans that were problematic and had been inactivated/“charged off” and thereby were invisible to regulatory agencies.

 

  1. At all times, Defendants directed the collection of revenue on problematic federal mortgage loans, placing them in succession at third party collection agencies. Those third party collection agencies included:

 

  1. The third-party collection agencies had a duty to verify whether the debts were owned by Chase, offer pre-foreclosure loss mitigation, offer Borrowers foreclosure alternatives, and comply with any of HUD’s quality control directives and knowingly or recklessly failed to do so. The third-party collectors knew that the debts they were collecting at Defendants’ directions were mortgage loans. They also knew they did not have the mechanisms to provide any regulatory servicing. Nonetheless, the third-party collection agencies continued collection on behalf of Chase for RCV1 loans. The collection agencies continued to collect without oversight or verification and did in fact continue collecting on debt on behalf of Defendants, despite the mortgage loans being owned by the Schneider entities. The ongoing collection gave Chase continued windfalls.

 

  1. A September 30, 2014 document shows that as late as September 30, 2014, Defendants had charged-off and ported 699,541 loans into RCV1.

 

  1. Unbeknownst to Plaintiffs, Chase was selling non-compliant and thus no longer “federally related mortgage loans” to Plaintiff which Chase had ported and inactivated within their regulated systems of records but had copied over to a separate data repository solely for the purpose of collecting without servicing.

 

 

  1. Plaintiff MRS was not privy to Defendants’ internal communications of October 30, 2008, which clarify that Chase knew that the loans it was intending to off load onto the Plaintiff were not on the primary system of record and were being provided from the un-serviced repository called RCV1. The information in RCV1 was not complete because it was not a regulated system of record. As indicated by Chase’s communications, Chase purposefully cut and pasted select information where it could from other systems of records to the information in RCV1. Defendants’ emails discuss data from the FORTRACS application, the acronym for Foreclosure Tracking System, which is an automated, loan default tracking application that also handles the loss mitigation, foreclosure processing, bankruptcy monitoring, and whose data would have originally come from a primary system of record. Rather than a normal and customary data tape, Chase was providing a Frankenstein of a data tape, stitched together from a patchwork of questionable information.

 

  1. Despite its representation and warranty that Chase “is the owner of the Mortgage Loans and has full right to transfer the Mortgage Loans,” a significant portion of the loans listed on Exhibit A were not directly owned by Chase.

 

  1. Upon information and belief, some of the loans sold to MRS were RMBS trust loans which Chase was servicing. Chase had transferred these to MRS in order to avoid non-reimbursable advances and expenses. The unlawful transfer of these loans to MRS as part of the portfolio of loans sold under the MLPA aided the Defendants in concealing Regulatory non-compliance and fraud while increasing the liabilities of MRS.

 

  1. Chase committed, inter alia, the following violations of law with respect to the loans sold to MRS: a. Chase transferred the servicing of the mortgage loans to and from multiple unlicensed and unregulated debt collection agencies which lacked the mortgage servicing platforms to account for or service the borrowers’ loan with any accuracy or integrity.

Investigator Bill Paatalo of the BP Investigative Agency points out that allegations in this case support accusations in other lawsuits against JPMorgan Chase including that:

  1. Chase knowingly provided collection agencies with false and misleading information about the borrowers.
  2. Chase failed to provide proper record keeping for escrow accounts.
  3. Chase stripped loan files of most origination documentation, including federal disclosures and good faith estimates, thus putting MRS in a positionwhere it was unable to respond to borrower or regulatory inquiries.
  4. Chase failed to provide any accurate borrower payment histories for any of the loans in theMLPA.
  5. Chase knowingly executed assignments of mortgage to MRS for mortgage loans that Defendants knew had been foreclosed and sold to third parties.
  6. Chase circumvented its own operating procedures and written policies in connection with servicing federally-related mortgage loans by removing the loans from its primary record-keeping platform and creating an entry in its RCV1 repository. This had the effect of denying the borrowers their rights concerning federally related mortgages yet allowed Chase to retain the lien and the benefit of the security interest,
  7. Chase included on Exhibit A loans that it had previously sold to third parties and loans that it had never owned.
  8. Chase knowingly and deliberately changed the loan numbers of numerous valuable loans sold to MRS after the MLPA had been fully executed and in force. This allowed Chase to accept payments from borrowers whose loans had been sold to MRS without its own records disclosing the wrongful acceptance of such payments.
  9. Chase’s failure to provide the assignments of the notes and mortgages was not an act of negligence. As events unfolded, it became clear that Chase failed to provide the assignments of the notes and mortgages because it wanted, in selective instances, to continue to treat the sold loans as its own property.
  10. Chase converted payments from borrowers whose loans it had sold

At what point does the Federal Government take action against these fraudulent practices?  It is likely that ALL major banks are participating in the exact same racketeering enterprises so obvious at JPMorgan Chase.

Bill Paatalo, Private Investigator:
BP Investigative Agency, LLC
P.O. Box 838
Absarokee, MT 59001
Office: (406) 328-4075
Attorney Charles Marshall, Esq.
Law Office of Charles T. Marshall
415 Laurel St., #405
San Diego, CA 92101

 

 

Filed under: foreclosure | Tagged: , , , , , , | 15 Comments »

BOA, Urban Lending Sued for Rackateering on Fraudulent “Modification” Program

Posted on July 12, 2013 by Neil Garfield

In a case that may have far-reaching consequences, a lawsuit was filed in federal court in Colorado accusing Bank of America of racketeering, which is what borrowers have been screaming about for years. It was a game to the bank. They intentionally lured people into what they thought was a good faith modification program, encouraged people to get deeper and deeper into “debt”, and then foreclosed when they were sure that the person could not reinstate nor exercise a right of redemption. A key player in this scheme was Urban Lending Solutions.

In a case that I am currently litigating, Bank of America at first denied any knowledge of Urban Lending Solutions. When confronted with correspondence issued from urban lending solutions under the letterhead of Bank of America, they finally conceded that they knew who who the company was.  In a Massachusetts case depositions were taken and it is quite clear that this affiliate of Bank of America had their employees working off of Scripts and that anyone who went off the reservation would be disciplined or fired. Going off the reservation merely meant that they actually tried to help a borrower achieve a modification.

There are at least six whistleblowers who have executed sworn affidavits stating that the modification program was a sham. I think we might be getting closer to the point where whistleblowers tell us that the origination of the loan was a sham and that the so-called sales of loans were also sham transactions. Those employees of Bank of America or their affiliates who were successful in throwing homeowners into foreclosure were rewarded with $500 gift certificates to Target and other stores.

The claims against Bank of America are using laws that were designed to target organized crime. For seven years experts and laymen have been claiming that the banks were engaged in organized crime in the  the sale of mortgage mines, origination of loans, the assignment of loans, the recording of unperfected mortgage liens, wrongful foreclosures, illegal foreclosure sales in which the property was sold without any cash being paid, interference  in the right of the borrower to reinstate, modify, or redeem.

We are just around the corner from the key question, to wit: why would the banks engage in organized crime to create foreclosures when it is painfully obvious to homeowners and local government officials across the country that the banks have no interest in acquiring the property but only causing the sale of the property at a foreclosure auction?  Why would the banks delay the prosecution of their cases for years? Why would the banks argue against expediting discovery against them and against the borrower? Why would the banks argue for less money in foreclosure rather than more money in modification?

The answer to all of those questions is simply that there is more money in this scheme than has been divulged.  In the coming weeks and months the revelations about the true nature of these transactions will shock the conscience of the country and cause voters and politicians to rethink their position regarding the ability of regulators and courts to clawback illegally obtained proceeds that started with the transactions originated with the money of investors and somehow ended up with the banks growing by 30% despite a failing economy and a diving housing market.

We are now at the point where filing RICO charges against the banks is likely to gain traction whereas in prior years it was considered overkill for what appeared to be negligence in paperwork caused by the volume of mortgages and foreclosures. Volume had nothing to do with it. The banks made a ton of money selling those mortgage bonds.  Out the money they made selling the mortgage bonds was dwarfed by the amount they made when they received insurance, credit default swap proceeds, and taxpayer money on investments owned by the investors and not by the banks. So far more than 5 million foreclosures have proceeded illegally which means that 5 million families have been disrupted in some cases beyond repair. Recent estimates suggest that another 5 million foreclosures will be added to the list unless the banks are required to conform with their regulations and the laws of the federal and state government.

BOA and Urban Lending Sued on Racketeering Charges

Filed under: AMGAR, CORRUPTION, Fannie MAe, foreclosure, foreclosure mill, GARFIELD GWALTNEY KELLEY AND WHITE, GTC | Honor, Investor, MODIFICATION, Mortgage, Pleading, securities fraud, Servicer, STATUTES | Tagged: , , , , , , , , , , , , , , | 382 Comments »

Thank you for the inspiration

Posted on July 20, 2012 by Neil Garfield

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Editor’s Comment:  

We get many letters thanking us for our efforts to set things straight. And as I embark on escalating those efforts I found this letter especially timely and uplifting. While many of our readers write in with their successes, the distinguishing feature of this thank you letter was despite losses, so far in the courts. I think the next major push should be with administrative agencies regulating the banks where there are procedures for review and the possibility of administrative hearings to consider the quest for truth.

I have followed your blog semi-religiously for several years now.  I started long before I filed a RICO suit against IndyMac/MERS in Federal District Court in Seattle (May 2011).  So for certain my complaint was laced as best I could with the very arguments which you have been espousing and refining over the years.  Of course my Complaint was dismissed (not unexpected since, after all, I am a pro se know-nothing in the eyes of the “justice system”).  I appealed to the Ninth Circuit case No. 11-358626, got evicted in the interim and now await a decision from the Appeals Court.  I am telling you this not as a plea for assistance or pity but as a thank you for your tenacity in trying to set things straight.

Until the bubble burst in 2008, I was a self-employed homebuilder for the previous 35 years. Prior to that, I had obtained a 2 year associates degree in Tampa (1975). Dealing with an unconscionable truth has different impacts on different people. For me (and I am only 3 years or so younger than yourself), the impact prompted me to return to college at the University of Washington at the branch campus in Bothell.  This town is nearby to my former home which I still own but from which I was exiled.  Soon after my exile I became intrigued by a new degree program offered by UWB called “Law, Economics and Public Policy”.  I wondered if it was what it appeared to be and if my college credits from 37 years ago would transfer, well, yes and yes.  I am midway through my second quarter now.  Doing great.  The class sizes are quite small, usually 25 or less, so in-class discussions are encouraged and frequent.   This quarter, the book “The Big Short” was a required reading for one class.  Having already read that book 2 years ago, I’m sure you can imagine what sort of flavor that a fellow of my background and attitude might bring to the table in a room full of clueless kids who could easily pass as my grandchildren.

I know you’ve had some recent health issue which I hope are behind you.  I don’t have the time (or patience, quite frankly) to engage in the blogging which follows your every post, including your most recent one regarding the familiar theme of corrupted titles and Canadian neophytes.  On this Friday evening, I just wanted to wish you well and thank you for your inspiration.  The next generation must not be denied the truth.  I’ll keep talking to the kids (and the professors, some half my age) at UWB.  In a classroom environment, none of them can hide from me.  So yes, thanks once again.  We hear you and by proxy, they hear you too.

Best regards,

Name redacted for privacy


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Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , , | 23 Comments »

CORRUPTION OF TITLE CHAINS IS PANDEMIC

Posted on July 10, 2012 by Neil Garfield

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Editor’s Notes:  

As we predicted more and more County recorder offices are suing to collect transfer fees on loans that have gone to foreclosure under the allegation that a valid loan and lien was transferred.  Expect other revenue collectors in the states to start doing the same for registration fees, taxes, interest, penalties and fines. This battle is just beginning. We are now about to enter the phase of finger pointing in which each type of defendant — bank, servicer, MERS, Fannie, Freddie etc. defends with varying exotic defenses that more or less point the finger at some other part of the securitization chain. 
The real story is that title chains have been irretrievably corrupted — which means that title cannot be established by using the documents alone. Parole evidence from witnesses and production of back-up documents must show the path of the loan and the proof that the transaction was real. Defenders of these lawsuits may be forced to admit that there was no actual financial transaction and that the assignments were assignments of “convenience” negating the reality of the transfer or of any transaction at all. 
Either way they are going to have a problem that can’t be fixed. They can’t prove up the documents because the documents are contrary to the path of monetary transactions and recite facts that are untrue —- in addition to the fact that the documents themselves were fabricated, forged, robo-signed and fraudulently presented. This is why I say that regardless of how hard anyone tries to do the wrong thing, the only right way to correct these problems is to negate the foreclosures that have already been concluded, stop the ones that are being conducted in the same way as the old way, and make them prove up their right to foreclose. They either must admit that there were not valid transactions — including the original note and mortgage — or they won’t be able to prove a valid transaction because the money came from sources other than those shown on the closing documents. 
The actual sources of the money loaned the money to borrowers without documentation believing they had the documentation. But the mere fact that borrowers signed documents is not an invitation for any stranger to imply that it was for their benefit. For these reasons the mortgage in most cases was never perfected into a valid lien and cannot be perfected without corrective instruments signed by the borrower or upon some order by a court. But the courts are going to be far more careful about the proof here. Most Judges are going to take the position that they could be fooled once when the foreclosure originally went through on the premise of valid documents and an actual financial transaction attached to THOSE documents, but that they won’t be fooled a a second time. They will demand proof. And proof according to the normal rules of evidence is completely lacking because the entire securitization chain was a lie from one end to the other.
The borrower will end up owing the money less offsets for payments received by the real creditor, once the identity of the real creditor is revealed, but the absence of a mortgage or deed of trust naming that actual creditor will void the mortgage and negate the credit bid at the auction.

Ohio lawsuit accuses Freddie Mac of fraud

by Tara Steele

The battle between Fannie Mae, Freddie Mac, and various government entities continues, each taking a different approach on the battlefield.

Freddie Mac sued by county in Ohio

Last year, Mortgage Electronic Registration Systems Inc. (MERS) became the subject of lawsuits from counties across the nation as District Attorneys allege the company never owned the loans they were facilitating foreclosures for, and in most cases, judges agree, and their authority to facilitate has been denied in several counties. Dallas County alleges the mortgage-tracking system violates Texas laws and shorted the county anywhere from $58 million to over $100 million in uncollected filing fees due to the MERS system, dating back to 1997.

Others sued MERS as well; in February, in the U.S. Court for the Western District of Kentucky, Chief Judge Joseph McKinley Jr. dismissed a lawsuit filed by the Christian County Clerk, denying relief to the County for the same relief sought by Dallas County and others.

Rampant mortgage fraud, continued robosigning

Studies have shown that MERS destroyed the chain of title in America, and other studies reveal that illegal robosigning is still in play, and that foreclosure fraud has occurred in themajority of loans.

As the courts have not yet rewarded cities, counties, or states pursuing action against MERS, other tactics are being taken by these entities, for example, Louisiana is using RICO laws to sue MERS.

Summit County, Ohio taking a different approach

Summit County, Ohio filed a lawsuit1 Tuesday against Freddie Mac, alleging a failure to pay fees on transfer taxes on over 3,500 real estate transactions over six years. Court documents show that the Federal Home Loan Mortgage Corporation is accused of committing fraud by claiming it was a government entity, thereby exempt from transfer taxes. The County has not released a final assessment of the amount they believe is due, but they will also be seeking interest and penalties.

This approach is far different than going after MERS (which coincidentally was established by Fannie Mae and Freddie Mac over 15 years ago), rather going directly after the still-functioning Freddie Mac.

“The reality is Freddie Mac is a federally chartered, private corporation and they should have been paying these fees and taxes,” Assistant Prosecutor Joe Fantozzi told the Akron Beacon Journal.

Freddie Mac and Fannie Mae began paying transfer taxes in 2009, so the lawsuit is only seeking transfer taxes due from 2002 through 2008, which in Summit County are $4 per $1,000 on all real estate transactions. Additionally, the county also charges a 50-cent lot fee and recording fees, which are $28 for the first two pages and $8 for each additional page.

Fannie Mae not named, FHFA already fighting back

Although Geauga County in Ohio sued MERS, Chase Bank, and CoreLogic, the Akron Beacon Journal reports that Summit County is believed to be the first county in the state to file legal action against Freddie Mac. Fannie Mae was not named in the suit due to the low volume of mortgages in the county it handled during the time period.

The Federal Housing Finance Agency (FHFA), the conservator of Fannie and Freddie, is fighting back on these same battle lines, suing in Illinois to validate the two mortgage giants’ tax-exempt status, the Chicago Tribune reported. This move is likely an effort to circumvent more lawsuits like the one currently being filed in Summit County.

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Discussion Started Between Livinglies and AZ Attorney General Tom Horne

Posted on May 29, 2012 by Neil Garfield

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Editor’s Comment:

Dear Kathleen,

Thank you very much for taking my call this morning.

The question that Neil F. Garfield, Esq. had asked AZ Attorney General Tom Horne at Darrell Blomberg’s meeting was:

Why is the Arizona Attorney General not prosecuting the banks and servicers for corruption and racketeering by submitting false credit bids from non-creditors at foreclosure auctions?

Please feel free to browse Mr. Garfield’s web blog, www.LivingLies.wordpress.com as you may find much of the research and many of the articles to be relevant and of interest.

Mr. Garfield wishes the following comments and observations to be added, in order to clarify the question being asked.

It should probably be noted that in my own research and from the research from at least two dozen other lawyers whose practice concentrates in real property and foreclosures have all reached the same conclusion.  The submission of a credit bid by a stranger to the transaction is a fraudulent act.  A credit bid is only permissible in the event that the party seeking to offer the bid meets the following criteria:

1.  The homeowner borrower owes money to the alleged creditor

2.  The money that is owed to the alleged creditor arises out of a transaction in which the homeowner borrower agreed to the power of sale regarding that debt

3.  Any other creditor would be as much a stranger to the transaction as a non-creditor

Our group is also in agreement that:

4.  Acceptance of the credit bid is an ultra vires act.

5.  The deed issued in foreclosure under such circumstances is a wild deed requiring the title registrar to attach a statement from the office of the title registrar (for example Helen Purcell) stating that the deed does not meet the requirements of statute and therefore does not meet the requirements for recording.

6.  In the event that nobody else is permitted to bid, the auction violates Arizona statutes.

And we arrived at the following conclusions:

7.  In the event that there is no cash bid and the only “bid” was accepted as a cash bid from either a non-creditor or a creditor whose debt is not secured by the power of sale, no sale has legally occurred.

8.  The applicable statutes preventing the corruption of the title chain by such illegal means include the filing of false documents, grand theft, and evasion of the payment of required fees.

9.  This phenomenon is extremely wide spread and based upon surveys conducted by our office and dozens of other offices (including an independent audit of the title registry of San Francisco county) strongly suggest that the vast majority of foreclosures in Arizona resulted in illegal auctions, illegal acceptance of a bid, and illegal issuance of a deed on foreclosure-which resulted in many cases in illegal evictions.

10.  Federal and State-equivalent RICO may also apply, as well as Federal mail fraud which should be referred to the US Attorney.

CONSTITUTIONAL CHALLENGE TO THE NON-JUDICIAL SALE STATUTE AS APPLIED.

It should also be noted that all the same attorneys agreed that the use of an instrument called “Substitution of Trustee” was improper in most cases in that it removed a trustee owing a duty to both the debtor and the creditor and replaced the old trustee with an entity owned or controlled by the creditor.

This is the equivalent of allowing the creditor to appoint itself as Trustee.

In virtually all cases in which a securitization claim was involved in the attempted foreclosure the Substitution of Trustee was used exactly in the manner described in this paragraph.  This method of applying the powers set forth in the Deed of Trust is obviously unconstitutional as applied.

Constitutional scholars agree that the legislature has wide discretion in substituting one form of due process for another.  In this case, non-judicial sale was permitted on the premise that an independent trustee would exercise the ministerial duties of what had previously been a burden on the judiciary.

However, the ability of any creditor or non-creditor to claim the status of being the successor payee on a promissory note, being the secured party on the Deed of Trust, and having the right to substitute trustees does not confer on such a party the right to appoint itself as the trustee, auctioneer, and signatory on the Deed upon foreclosure nor to have submitted a credit bid.

We are very interested in your reply.  If your office has any cogent reasons for disagreement with the above analysis, we would like to “hear back from you” as you promised at Mr. Blomberg’s meeting 22 days ago.  We would encourage you to stay in touch with Mr. Blomberg or myself with regard to your progress in this matter in as much as we are considering a constitutional challenge not to the statute, but to the application of the statute on the above stated grounds.

Thank you for your time and consideration,

Sincerely

Neil F Garfield esq

licensed in Florida #229318

www.LivingLies.wordpress.com

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Michigan Court Relies on New York Trust Theory, Rules Loan Never Made it to Trust

Posted on June 15, 2011 by Neil Garfield

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EDITOR’S NOTE: In plain language the “securitization” of loans at least with respect to residential mortgage loans is a myth, an illusion, A LIE. It is one of many lies about these mortgages and we are living it as though it was real, which is why this blog is entitled LIVINGLIES. If the loans never made it to the trust, there was no transfer and thus there was no securitization, which means that the investors bought empty mortgage bonds with no value and no prospects for value.

This fact does NOT invalidate the obligation, however. But the fact that securitization was faked doesn’t validate the obligation either. Nor does it create a valid perfected lien against a home. That is a lie too, but for different reasons. In most instances there is no money due to anyone (except to the investors from the investment bankers) because the obligation that would been created was contemporaneously transferred to third parties who paid it. The fact that it was paid to the agents of the investors rather than the trusts or the investors themselves does not remove the fact that the obligation is paid in full and therefore not due, much less capable of being in default.

Where the article misses a key point is in its knee-jerk reaction to the accusation of free house to the borrower. If that is the collateral benefit arising out of Wall Street misconduct, so be it.

The real issue here is not whether there is going to be a free house awarded, but to whom it will be awarded. There is no reason that interlopers (pretenders) should be allowed to get the collateral benefit of a free house, having defrauded all the real parties in interest. It stands to reason that the victims of the fraud should get the collateral benefit. If that means they get a little more than they are entitled to spending upon how you look at it, this seems far more preferable than proceeding in the business as usual manner of only letting collateral benefits flow toward big business and big banks. Every once in a while, if the banks screw up enough and step on enough rakes, the little guy should get the benefits if that is the way the cards fall.

The article below from Naked Capitalism attributes the original idea that securitization was always a myth to others. It happened here first and for a long time was ignored. Now everyone is adopting it as their own idea. That is good news for homeowners. Yet it is only fair that after nearly 4 years of work to get the message out, that credit be given here that the new decisions in the last week are the result of, and in some instances quotes from the expert declarations written and signed by me. 

Michigan Court Relies on New York Trust Theory, Rules Loan Never Made it to Trust

A June 6 trial court decision in Michigan, Hendricks v. US Bank, has not gotten the attention it warrants because to the extent it has been noticed, it has been depicted as invalidating an effort to effect a note (the borrower IOU) transfer via MERS. While that was one of the grounds for a ruling favorable to the borrower, the court also considered and gave a thumbs’ up to what we call the New York trust theory. That has far more significance, as readers will see shortly (hat tip to Foreclosure Fraud for this sighting).

This legal argument, which so far has been tested in a very few cases (primarily in Alabama, since it was perfected by Alabama attorney Nick Wooten) was the basis of a favorable ruling in Alabama trial court. The reason it bears watching is that if the New York trust theory continues to be validated in court, it has devastating consequences for most post 2004 vintage residential mortgage backed securities. it has been the subject of a long-running argument among legal experts, with the Congressional Oversight Panel, Adam Levitin, as well as consumer lawyers like respected bankruptcy attorney Max Gardner on one side, and securitization industry incumbents like the American Securitization Forum and SNR Denton.

The bare bones outline of the argument is that the trusts, the legal vehicle that holds the mortgage loan, in virtually all securitizations, elected New York law as the governing law for the trust. New York law is well established and very rigid. A trust can act ONLY as stipulated; any deviation is a “void act” and has no legal force.

But the problem is that the notes appeared not to have gotten to the trust. As we wrote earlier:

…. there is substantial evidence that in many cases, the notes were not conveyed to the trust as stipulated. As we have discussed, the pooling and servicing agreement, which governs who does what when in a mortgage securitization, requires the note (the borrower IOU) to be endorsed (just like a check, signed by one party over to the next), showing the full chain of title. The minimum conveyance chain in recent vintage transactions is A (originator) => B (sponsor) => C (depositor) => D (trust).

The proper conveyance of the note is crucial, since the mortgage, which is the lien, is a mere accessory to the note and can be enforced only by the proper note holder (the legalese is “real party of interest”). The investors in the mortgage securitization relied upon certifications by the trustee for the trust at and post closing that the trust did indeed have the assets that the investors were told it possessed.

The pooling and servicing agreement also provided that the transfers had to take place by a particular cutoff date, which was typically no later than 90 days after the closing of the deal. That means notes cannot be transferred in at a later date.

The ruling is very clear that the note never made it to the trust:

Note that the judge rules that someone can foreclose, but it’s not the trust, it’s the original lender. But that is unacceptable to the mortgage industrial complex. They cannot afford to admit they defrauded investors, which is what a foreclosure in the name of the original lender amounts to.

So when people complain about borrowers getting free houses, they act as if it’s the borrower’s fault. That’s the wrong place to assign blame. No one is saying the borrower does not owe somebody money. And the borrowers aren’t seeking a free house; they usually came to this juncture because they thought their records had overcharges in them or they thought they were a good candidate for a mod but could not get the servicer to consider their case. It’s the originators and packagers who put themselves in the situation of not being able to enforce the debt, not the borrower.

The apparent widespread abandonment of the practice of crossing the ts and dotting the is potentially devastating. If the failure to convey notes properly is as widespread as we have been told by various observers (and Abigail Field’s sample confirms), the mortgage industry has a monstrous problem on its hands. As the Michigan ruling suggests, at a minimum, notes not transferred properly are actually owned by someone earlier in the securitization chain. But no one wants to admit that; it means the investors were lied to and hold paper that does not have clear legal rights to foreclose and that originatorrs, servicers and trustees have committed massive securities fraud. And in a worse case scenario, if no notes were transferred to the trust by closing, there is a contract formation failure.

This is the sword of Damocles hanging over the bond markets. The incumbents, bizarrely, seem intent on pretending it does not exist rather than trying to do something to alleviate the damage.

I’m including the full ruling below since it’s short and readable and I know some readers enjoy court filings.

Hendricks v. US Bank, June 6, 2011

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CA BKR DENIES STAY, ORDERS SANCTIONS AGAINST ONEWEST, INDYMAC

Posted on June 13, 2011 by Neil Garfield

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“the Court will not participate in a process where OneWest increases its profits by disobeying the rules of this Court and by providing the Court with erroneous information”

NEW NOTE GAMBIT ANGERS JUDGE

EDITOR’S COMMENT: We’ve been watching this for years. If one document doesn’t work, the pretender comes up with another “original” document. They are all fake, fabricated and forged. People have been asking us since 2007, “If what you are saying why are the Judges going along with it? Why are they not levying sanctions, referring the lawyers to the Bar for discipline and referring the banks to the justice system for criminal prosecution?” The simple answer is that the Judges didn’t believe it. They were stuck in the mental trap of believing that the banks would never intentionally do something in court that amounted to perjury, subornation of perjury and fraud. The Judges could not get their heads wrapped around the idea that the banks were in the process of a fraudulent land grab. It just didn’t make sense to them. It seemed far more likely to them, from their prior experience with foreclosures, that the process was largely clerical, that no bank would foreclose if there wasn’t a good reason and it couldn’t be worked out.

In California this attitude was particularly evident but in other states, Neil Garfield and Living lies was cited as the problem because we were filling the media with false statements of law and fact. Fast forward to the present and you see an increasing number of judges getting increasingly bold in switching their position on the banks and allowing for the possibility, even the probability that the homeowners win and the pretenders lose because they are pretenders, interlopers in a process meant to satisfy the requirements of judicial economy but which was being used (nonjudicial) to get around the basic requirements of black letter law and due process requirements contained in every state constitution and the United States Constitution.

Lawyers saw the references to me and my blog and the derisive wording about me, and they got scared that if they argued the same points they too would be the subject of derision, lose credibility with the court, and lose cases. And in fact, they were losing more cases than they were winning because even if they used the material on this blog, even if they got the COMBO title and securitization search, report and analysis that lays out everything chapter and verse, they were still losing — as a direct consequence of (a) Judges prejudging the cases and (b) the lawyers and litigants failing to object immediately as the first words were coming out of the mouths of the lawyers for the pretenders and failing to object to the first documents proffered. Most of all they were losing because they failed to deny the default, deny the right right of the forecloser to be initiating any collection or foreclosure proceeding, and deny that the originating papers were representative of the actual cash transaction that took place.

If you don’t object to an allegation, you are admitting it. If you don’t object to a document, it comes in as “evidence.” And the reason the lawyers were not objecting was that they had the same mindset as the Judges. How could they deny a default when they knew that the homeowner had not made payments on the note and mortgage that was attached as copies to the pleadings of the pretenders? If you don’t make the payments, you’re in default, right? WRONG! A default occurs only if the creditor fails to receive payment, not when the borrower decides to not make the payment. A default exists only if there is a gap in payments that are due, not payments that are shown on a piece of paper. If the payments were made anyway by a third party, there is no default and none can be declared.

And the declarer of the default must be someone who has an interest in the obligation. And the default must reference the obligation which normally is on the loan documents signed at closing but in the case of table funded loans that are enmeshed in a false securitization scheme, those documents do NOT set forth the terms or the parties involved in the transaction — so they can’t be used. If the loan documents at the so-called “closing” can’t be used we are left with an undocumented transaction between the homeowner, who is not known to the investor-lender, and the investors lender who is not known to the homeowner-borrower. They each got a separate set of documents including terms, conditions guarantees, cross collateralization, insurance and other third party payments (from servicers who keep paying in order to collect higher fees for “non-performing” loans. So in terms of documents there was no deal, and if the truth was told to both real parties in interest there wouldn’t have been a deal.

Nonetheless an obligation arose between the homeowner-borrower and the investor lender because the homeowner-borrower received the benefit of funding from the investor-lender, albeit under false pretenses including appraisal fraud at the loan level and ratings fraud at the investment level. The transaction is both undocumented and unsecured. And the obligation is subject to offset from a menu of affirmative defenses, rescission remedies, and counterclaims from the homeowners borrower. The property is now worth a small fraction of what was represented at the loan level closing and the investment level closing. So the investors are ignoring any remedies against homeowners because they don’t want to get tied up in litigation in which their net recovery is negative — i.e., they owe more to the homeowner than the homeowner owes on the obligation.

Enter the pretenders who figure that if the investors don’t want to go after the homes, then the banks will and who will challenge the banks since they appear to be the lenders in these transactions, even if they are not. Their defects in documentation and the facts (they were not included in the money trail of the loan transaction) were glossed over by lawyers and judges and even the media. Now, the Judges are taking a closer look and finding that not only do these pretenders lack standing, not only are they not the real parties in interest, but that that they and their lawyers are probably guilty of intentional fraud on the court and in this case, as well as others across the country, the Judge is ordering sanctions and fines.

FROM STOPFORECLOSURENOW.COM

IN RE ARIZMENDI | CA Bank. Court Denies Stay, Order to Show Cause “Contempt, Sanctions, (2) ONEWEST Notes; 1 Endorsed, 1 Unendorsed” “MERS Assignment”

In re: Jessie M. Arizmendi, Debtor.
OneWest Bank FSB, its assignees and/or successors, Moving Party,
v.
Jessie M. Arizmendi, Debtor; Thomas H. Billingslea, Chapter 13 Trustee; and Indymac Mortgage Services, Junior Lien, Respondents.

Bk. No. 09-19263-PB13, RS No. CNR-2.

United States Bankruptcy Court, S.D. California.

May 26, 2011.

Not for Publication

MEMORANDUM DECISION

LAURA S. TAYLOR, Bankruptcy Judge

EXCERPTS:

Additional Briefing.

At the trial, the Court carefully considered the demeanor of the various witnesses and the testimony provided. In connection with the trial, the Court also reviewed all other evidence and argument appropriately before the Court. Notwithstanding, however, significant questions continued, and the Court required additional briefing in connection with several issues as outlined in the Order Setting Briefing Schedule, Outlining Preliminary Determinations, and Establishing Procedures for Final Resolution of Issues (Dkt. No. 56) (the “Briefing Order”).

OneWest’s post-trial documents provided the analysis and argument required by the Briefing Order. But, these documents also contained factual assertions inconsistent with the OneWest Declaration and the Claim. OneWest now provided a standing argument based on a new version of the Note (the “Endorsed Note”).[3] The Endorsed Note attached an allonge dated July 24, 2007 evidencing a transfer from Original Lender to “IndyMac Bank, FSB” and bore an endorsement in blank from IndyMac Bank F.S.B. OneWest argued in connection therewith that it had enforcement rights under the Endorsed Note as a holder notwithstanding the admittedly accurate testimony at trial indicating that OneWest is a servicer for Freddie Mac and not the secured creditor. The OneWest post-trial memorandum also references a separate agreement with Freddie Mac, but fails to further evidence or discuss this agreement. The OneWest post-trial memorandum, finally, bases a standing argument on physical possession of the Endorsed Note and OneWest’s alleged status as a trust deed beneficiary based on the Assignment.

[…]

But, there are key assumptions that the Court must make in order for this set of facts to withstand scrutiny. And they are that OneWest, in fact, holds the Endorsed Note and held the Endorsed Note at all appropriate points in time. Frankly, the Court is not willing to make such assumptions at this time. OneWest attached the Unendorsed Note to both its Proof of Claim and the Declaration. The Declaration stated under penalty of perjury, that the Unendorsed Note was a true and accurate copy of the Note held by OneWest. The Proof of Claim implicitly stated the same and OneWest, of course, is obligated to provide only accurate information in connection with its Proof of Claim. The problem is that the Unendorsed Note does not bear the endorsement or attach the allonge found on the Endorsed Note, a document produced only after trial and the close of evidence. One West, thus, leaves the Court with the quandary of guessing which promissory note OneWest holds, whether and when One West held the Endorsed Note, and what the explanation is for the failure to provide the Endorsed Note prior to the close of evidence.[10]

A further evidentiary anomaly arises on account of the Assignment; MERS executed this document as a nominee for the Original Lender. But the allonge to the Endorsed Note makes clear that the Original Lender assigned its interests in the Note more than three years prior to execution of the Assignment. And rights under the Trust Deed follow the Note. Polhemas v. Trainer, 30 Cal. 686, 688 (1866). Thus, MERS’ purported assignment of the Trust Deed and the related note as nominee for the Original Lender and without a reference to either IndyMac Bank, FSB or Freddie Mac appears designed to disguise rather than to illuminate the facts.

And finally, even if OneWest’s second post-trial discussion of standing and submission of evidence were accurate, one thing remains clear: OneWest failed to tell the true and complete story in the OneWest Declaration and in the Claim.

The Court is concerned, as a result, that OneWest does not hold the Endorsed Note. But, perhaps more significantly, the Court is concerned that OneWest has determined that business expediency and cost containment are more important than complete candor with the courts. On these points, Ms. Arizmendi has a right to be heard, and the Court has a right to explanation.

Further, this is not the first time that OneWest has provided less than complete information in the Southern District of California. See “Memorandum Decision Re Motion to Vacate Clerk’s Entry of Default and Motion to Dismiss Complaint; Order to Show Cause for Contempt of Court”, docket no. 39, Adv. Pro. 10-90308-MM (In re Doble; Bk. Case No. 10-11296) (Defendants, including OneWest, were neither candid nor credible in explaining failure to respond timely to complaint and submitted multiple and different notes as “true and correct”); “Order to Show Cause Why OneWest Bank, FSB and Its Attorneys Law Offices of Randall Miller and Christopher Hoo Should Not Appear Before the Court to Explain Why They Should Not Be Held in Contempt or Sanctioned”, docket no. 47, In re Carter, Bk. Case No. 10-10257-MM13 (among other things OneWest provides inconsistent evidence as to its servicer status); and “Order After Hearing to Show Cause Why Indymac Mortgage Services; OneWest Bank, FSB; Randall S. Miller & Associates, P.C.; Christopher J. Hoo; Barrett Daffin Frappier Treder & Weiss, LLP; and Darlene C. Vigil Should Not Appear Before the Court to Explain Why They Should Not Be Held in Contempt or Sanctioned”, docket no. 47, In re Telebrico, Bk. No. 10-07643-LA13 (Court concerned that OneWest provided evidence that was either intentionally or recklessly false).

The curious thing about these cases is that OneWest likely would prevail in each of them if it completely and candidly explained the basis for its motion and its standing in connection therewith. Undoubtedly, however, doing so is more costly than using a form declaration that is not customized as to the facts on a case by case basis and that is signed by an uninformed declarant. OneWest perhaps assumes that it really does not matter if the Court provides relief based on erroneous information. But, OneWest should remember an earlier theme in this decision and that is that the law is the law, rules are rules, and both must be obeyed. And, when it becomes clear that OneWest did not obey the rules, the Court can and, indeed, must act.

In short, the Court will not participate in a process where OneWest increases its profits by disobeying the rules of this Court and by providing the Court with erroneous information. The Court, thus, will take two steps. First, the Court will deny the Stay Motion without prejudice based first on the evidentiary problems that make it impossible for the Court to determine that OneWest is properly before the Court and that render evidence critical to OneWest’s prima facie case unreliable and second based on the Court’s inherent authority to regulate and control proceedings. Next, the Court hereafter will issue an order to show cause why One West should not be held in contempt and/or otherwise sanctioned. In connection therewith, the Court will consider a compensatory sanction to include a recovery of any costs Ms. Arizmendi would not have incurred but for OneWest’s improper actions. The compensatory sanction, frankly, could be quite limited. But, the Court also believes that a coercive sanction may well be appropriate. Given the orders to show cause that pre-date the one this Court will issue, it appears that the Court must create an economic disincentive for OneWest that will counter balance the economic benefit of a lack of complete candor. Further detail on the Court’s sanctions considerations will be set forth in the order to show cause and will not be further discussed here.

The Court finally notes that the order to show cause will issue only as to OneWest and possibly as to MERS. OneWest uses a variety of law firms. The Court was in a position to observe the demeanor of the lawyers handling this matter when the witness stated that OneWest was a mere servicer. The Court concludes based on this observation that they were unaware of this fact and unaware that OneWest supplied questionable documentary evidence. And frankly, there is nothing to be gained in pursuing the individual attorneys who must regularly appear in front of this Court. OneWest can simply change counsel and then be less than candid with a new set of attorneys.[11] The Court is interested in modifying OneWest’s behavior at an entity level, and any coercive sanction will be designed to achieve the same.

CONCLUSION

Based on the foregoing, the Stay Motion is denied without prejudice to the right of OneWest to refile a stay relief motion. In so doing, OneWest must provide declaratory evidence that explains when and how it obtained physical possession of the Endorsed Note and/or Unendorsed Note and that otherwise provides case specific evidence of standing given its servicer status.

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WAKE UP CALL: COMPTROLLER OF THE CURRENCY STOPS MERS DEAD

Posted on June 3, 2011 by Neil Garfield

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“We’re a nation of laws. Everyone knew that MERS didn’t have the right to appear as a beneficiary, but it would have been inconvenient to act on this because MERS was in widespread use throughout the banking industry. It was wrong, wrong, wrong, but everyone was doing it. Just like they were doing ‘no-doc’ loans and other sleights of hand. Just like the banks were doing so many bad things to homeowners. All they wanted to do was increase their profits – no matter who it hurt or how wrong their practices might be.” — Philip Kramer

BANKS THOUGHT THEY HAD IT FIXED, BUT AGENCY GOES FORWARD ANYWAY

Editorial Note: The agencies are starting to realize that MERS is like a cancer that spread throughout the mortgage markets and spilled over onto the balance sheets of banks who were “members.” The banks that are regulated by OCC now must deal with the fact that their balance sheet assets, many of which are considered to be tier 1 assets are not just downgraded to Tier 3, but in actuality are wiped off completely.

The effect of this action, is to cast doubt, at a minimum, on a substantial amount of the assets on the balance sheets of such banks. This in turn reduces the reserve that banks must keep against lending and other activities. The net effect is going to be a reduction in the size of many banks as they crank down to reflect the reality that has been true all along: the mortgage, notes and obligations claimed on the balance sheet neither existed, nor were they ever assets of the bank.

In turn, the effect on the marketplace and the cases that have gone through the court system and the cases that are going through the court system, is that any MERS mortgage or Deed of Trust is obviously flawed, defective, unenforceable just as we have been saying all along. The effect of naming MERS was the same as naming Donald Duck as Mortgagee or Beneficiary. There was, in effect, no Mortgagee or beneficiary, which means that (a) the loan specified in the promissory note executed by the borrower was never secured by a perfected lien and the Mortgage Deed or Deed of Trust, can now be attacked in a quiet title action, and (b) any foreclosure based upon a MERS deed should be dismissed. This would reduce the “asset” to an unsecured claim against a homeowner who is probably broke, and without any collateral on which to they can rely to mitigate “damages.”

But there are no damages. The effect also includes a probable consequence with respect to the obligation itself. As the agencies unravel this scheme of the illusion of securitization, they are coming to realize that the note itself does not describe the actual transaction that occurred. At a minimum this would allow in parole evidence, but beyond that it creates the presumption that the note was invalid to begin with and was merely a sham instrument used as an excuse for the feeding frenzy that followed the sale of mortgage bonds to investors. Thus not only is the “asset” unsecured, it obviously does not even exist. The real asset is the obligation that arose as a result of the Borrower accepting the benefits of funding of the loan, and that was and remains undocumented, because the real creditors are the investors — no matter how you split hairs.

Since the real creditors are the investors, the asset, if it belongs to anyone, is held strictly for the benefit of the investors who can use said asset as a derivative asset on THEIR balance sheet. In fact, this is what they do. But the investors have marked down the value of their “asset” to whatever claim they have for being tricked into buying empty defective bogus mortgage bonds. The investors, who now know of all the fraud perpetrated against themselves find no difficulty in accepting the fact that the homeowners were deceived as well by the same fraud. Thus the investors, who are the creditors, have chosen NOT to pursue the collection of the obligation against homeowners who have all sorts of affirmative defenses and counterclaims for fraud, violations of statute and a long list of other torts and breaches of contract.

Instead the investors, who are the real creditors in the actual cash transaction, since the money came from them, have elected to sue the investment bankers for 100 cents on the dollar rather than bring a claim against the homeowner for pennies on the dollar, which could morph into a net loss if the damages owed to the homeowner exceed the putative damages owed to the investor for advancing the funds.

Philip Kramer Weighs in on latest settlement agreement between the U.S. government and MERS Corp.Kramer Kaslow: Office of Comptroller of the Currency signs Cease and Desist Order with MERS Corp.

Calabasas, CA (PRWEB) June 03, 2011

The Office of the Comptroller of the Currency has just signed a Cease and Desist settlement agreement with MERS Corp (Mortgage Electronic Registration Systems). Among other things, the Cease and Desist order finds, “We have identified certain deficiencies and unsafe or unsound practices by MERS and MERSCORP that present financial, operational, compliance, legal and reputational risks to MERSCORP and MERS, and to the participating Members.” (OCC No. AA-EC-11-20; Board of Governors; Docket Nos. 11-051-B-SC-1,11-051-B-SC-2; FDIC-11-194bOTS No. 11-040; FHFA No. EAP-11-01)

Noted attorney Philip Kramer, a senior partner at the law firm of Kramer & Kaslow provides insight, “MERS Corp is the owner of Mortgage Electronic Registration Systems (MERS), one of the cornerstones of the current banking crisis. In order to cut up loans and move the pieces around the world at the speed of electronics again and again and again, until no one is sure who owns what, financial institutions have been using MERS as the “beneficiary”, a legal term which in practical terms means they are entitled to foreclose on behalf of the lender – except MERS is nothing more than an electronic database. They are often named as beneficiary. However in order to legally be named as beneficiary they would have had to put up funds on the loan. Not to mention the fact that the recordation itself is not even official. BUT most importantly, MERS is never a Holder in Due Course.”

Philip Kramer goes on to observe that, “We’re a nation of laws. Everyone knew that MERS didn’t have the right to appear as a beneficiary, but it would have been inconvenient to act on this because MERS was in widespread use throughout the banking industry. It was wrong, wrong, wrong, but everyone was doing it. Just like they were doing ‘no-doc’ loans and other sleights of hand. Just like the banks were doing so many bad things to homeowners. All they wanted to do was increase their profits – no matter who it hurt or how wrong their practices might be.”

The full text of the consent decree can be found at the following URL:

http://www.scribd.com/doc/52972728/MERS-AND-MERSCORP-AGREE-TO-A-CEASE-AND-DESIST-ORDER-OCC-INVOLVED-4-13-2011

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Foreclosure-Gate Screw Tightens: Banks Face $17 Billion in Suits Over Foreclosures

Posted on May 26, 2011 by Neil Garfield

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EDITOR’S COMMENT: Here is our problem writ large. The commentary written by Shedlock (see below) is basically on the side of punishing the banks for their wrongdoing, but not giving any relief to borrowers. The logic behind the position is that anyone who does not pay their mortgage should expect to lose their home. On its face, it would seem that nobody could reasonably argue to the contrary. The problem we face is the assumption behind that sentiment. The presumption is that the payments were due, that the creditor was not getting paid, and that the homeowner should lose the house for which they paid a “stupid price” — a slam at homeowners who accepted the lender’s appraisal of the property.

My premise goes deeper than the shallow waters of Shedlock’s position, who clearly represents the feeling of a majority of people who just take a quick glance at the problem. My premise is that anyone who has a debt that is due has the responsibility to pay it to the party to whom it is due, less any legally meritorious defenses for bad behavior on the part of those who induced him into the transaction.

So if you enter into a transaction where you get funded for $100,000, you have agreed to repay that $100,000. If you have a claim against the party who wants to enforce the obligation, then you should repay the net amount due after computation of damages for both sides. And if the amount due from the “enforcer” (pretender) is more than the amount claimed by the enforcer, there is no debt to pay from the borrower’s perspective. The borrower in that scenario is owed money which is an unsecured debt. I don’t think anyone could reasonably argue with that position either.

The first issue, though is whether the debt is due, and to whom. The debt might not be due at all if the creditor has received, directly or indirectly, payment or settlement from bailouts, insurance, credit default swaps, guarantees, etc. Shedlock’s mistake is the same as most people — assuming that because the homeowner stopped paying, there must be a default. In ordinary times with ordinary mortgage lending practices that would be true. In the context of the illusion of securitization and following the actual money trail, it is not true.

At the time of the declaration of default, the servicer is probably continuing to make the payments to the creditor, which means that from the creditor’s perspective, the obligation is NOT in default. Because the securitization scheme involves multiple obligors on the obligation, only one of which is the homeowner, it is not possible to determine a default unless one gets an accounting from all levels of the securitization chain. If the servicer is making the payments, then the original obligation to the creditor is NOT in default, but the servicer MIGHT have a claim for restitution against the homeowner for making his payment — but that claim is not secured and not  liquidated unless and until the servicer proves the actual money trial. So my premise is based upon making decisions based upon the actual facts rather than a set of incorrect presumptions.

The most serious defect in Shedlock’s position is that taken at face value, it would allow anyone to take the house away regardless of whether or not they are the creditor. Assuming the creditor is the investor-lender. Just because the actual lender refuses to enforce the obligation, and the obligation is “perceived” as due, does not give a license to ANYONE with some knowledge to make the claim in lieu of the real creditor. That is insane. If that were the law, then our marketplace would be filled with uncertainty inasmuch as it would virtually guarantee multiple claims on the same debt by multiple parties. In a race to the courthouse the first one to initiate proceedings to enforce the obligation would arguably be the winner — even though they never loaned any money and never purchased the obligation — and even though the obligation has potentially been paid in full or is being paid current by the servicer. Nobody can reasonably argue with this point either.

The last major point I would make is that Shedlock presumes the original transaction was properly documented and recorded in the form and content required by law. This is not the case in virtually all securitized loans. The documentation shows that homeowner-borrower (HB) was funded by originating lender (OL). In truth OL was merely acting as stand-in for undisclosed parties contrary to federal and state laws. The money trail clearly shows that the investor-lender (IL) was the source of the funds and was the intended beneficiary of the transaction.

So the documentation shows a transaction (HB-OL) that never existed since OL did not lend or otherwise even handle the money involved in the funding of the loan, most of which work was done by the closing or escrow agent. The documentation should have identified IL as the lender but didn’t. In fact, there is no documentation in which both IL and HB appear as parties, neither one actually knowing about the other nor the terms of the transaction by which IL advanced money and HB received the benefit of money.

And here is the rub: the investors don’t want any part of the predatory lending practices and faulty underwriting that was custom and practice in the industry during this mortgage mess, so they seek no remedy from the homeowner. IL does not want to limit itself and collect from HB because IL knows that the investment banker who sold the mortgage bonds didn’t use all the money for funding mortgages. Instead they used the money to claim fees and profits part of which funded bets against the very loans that they said they were selling to the IL but in fact never transferred from OL.

If  Shedlock’s premise were accepted, then the pretender lenders score a great victory for themselves at the expense of the IL whose money they used to fund the scheme and the HB whose obligation has been partially or entirely extinguished by trillions of dollars in payments received by the securitized parties on behalf of the IL but which was neither reported nor paid to IL. IL therefore has chosen to sue not the homeowner, where the damages would be reduced to near zero, but rather to sue the investment bank, where the damages are 100% of the money they advanced. If they went for the HB, they would end up with at best a home worth a small fraction of fraudulent appraisal OL used to get HB’s signature. Both the loan amount and the security for the loan would already be substantially lower than the money advanced by IL. So given that they are looking at 20 cents on the dollar if they go after the HB, less offset for predatory lending claims, they have chosen to sue the investment banker for 100 cents on the dollar.

The void created by the choice of IL not to enforce against HB has been filled with pretender lenders who see an opportunity to gain a free house. It is the banks who have created the choice of a free house (or HB relief for the borrower) or a free house for the pretender lenders. Given the equities and the fact that all of the fees and profits of the securitizers and pretenders are ill-gotten based upon fraudulent statements it hardly seems right to say that the collateral benefit from all this should flow to the banks rather than homeowners who were duped into the transaction to begin with.

from Mish Shedlock, http://globaleconomicanalysis.blogspot.com

Foreclosure-Gate Screw Tightens: Banks Face $17 Billion in Suits Over Foreclosures; Common Sense Says $5 Billion is Very Generous

State attorneys general are not happy with a $5 billion offer by major banks to settle lawsuits regarding robo-foreclosures and other alleged grievances. Some officials want as much as $20 billion. The compromise threat is on the high end.

Please consider Banks Face $17 Billion in Suits Over Foreclosures

State attorneys general told five of the nation’s largest banks on Tuesday they face a potential liability of at least $17 billion in civil lawsuits if a settlement isn’t reached to address improper foreclosure practices, according to people familiar with the matter.

The figure doesn’t cover additional billions of dollars in potential claims from federal agencies such as the Department of Housing and Urban Development and the Justice Department. State and federal officials haven’t proposed a specific comprehensive settlement figure, but Tuesday’s discussions represented the first effort to formally quantify potential liability.

Banks have proposed a $5 billion settlement that would be used to compensate any borrowers previously wronged in the foreclosure process and provide transition assistance for borrowers who are ousted from their homes. Federal and state officials have dismissed that as insufficient. Some officials have pushed for a total price tag of more than $20 billion to resolve foreclosure-handling abuses that surfaced last fall.

The U.S. Trustee Program, a part of the Justice Department that oversees bankruptcy cases, has asked for an additional $500 million to $1 billion in penalties, according to people familiar with the matter. Officials of the unit have raised questions in several cases over the authenticity of foreclosure documents.

Banks have argued that their problems are largely technical and that few if any borrowers have faced wrongful foreclosures. State and federal officials have faulted mortgage companies for not hiring enough staff to provide assistance to millions of borrowers that have fallen behind on their mortgages.

The latest development comes as state and federal officials are intensifying their scrutiny of other parts of the mortgage machine. Attorneys general in California and New York have announced wide-ranging mortgage investigations.

What are the Damages?

This is what I want to know:

  1. How many people lost their home to foreclosure out of an error? By error I mean the wrong person, a home with no mortgage, or a major procedural error.
  2. How many people think they deserve a free house and clear or a principal reduction over “show me the note” nonsense or other problems including unemployment?
  3. How many people did banks string along for many months with promises of work-outs, where the person paid their mortgage for months, then lost their home.

Throw Category #2 in the Ash Can

I am sure category #2 is the largest. Throw those cases in the ash can where they belong.

No one want to admit they were stupid. Yet people paid stupid prices for homes. Others were unlucky. Some lost their jobs. Even then, one can ask “did you have a year’s worth of living expenses saved up in the bank, in case you lost your job?” Regardless of the answer, banks should not be on the hook for people losing their jobs or having medical problems.

Here’s the cold simple truth: If you do not pay your mortgage, it is reasonable to expect to lose your home. There is no other realistic way of looking at it. Robo-signing may not be right, but it is irrelevant.

Category #1 the Real Problem

I have deep sympathy for those in cases where banks foreclosed on the wrong home, the wrong address, or on homes with no mortgage at all. Those people deserve their home paid free and clear and some huge penalty on top of it.

I suspect the number of such cases is minuscule. They receive enormous publicity but is the number 10,000? 5,000? 500? or 50? I suspect the number is far closer to the lower end than the higher end. 50 might easily be on the high side.

Whatever the number is, banks should pay mightily and punitively for it. The money should go to those wronged, not to the states. Even with massive penalties I doubt the total would come close to $200 million.

Category 3 is Where the Uncertainty Is

I do not know how big the “strung along” category is, but the only ones in this category who were genuinely harmed to any significant degree are those who continued to make mortgage payments, strung along on a promise, when instead they could have and should have walked away.

How many is that? You tell me. However, the harm is easy to quantify. The harm is extra payments people made (if any), while the banks engaged in deceptive practices or were simply understaffed.

Assume banks engaged in deceptive practices and people made extra payments instead of walking away. Would those extra payments amount to as much as $1 billion? I rather doubt it.

$5 Billion is Very Generous

What is a valid penalty? $4 billion seems like a lot of money to me. That would be a 400% penalty if the total wrong-doing amounted to $1 billion which I doubt.

The sad truth of the matter is we have a full scale witch-hunt over robo-signing and other alleged grievances even though there was little actual damage caused by banks.

If you disagree then total up the damages. However, I insist you start from two essential points.

  1. If you do not pay your mortgage, it is reasonable to expect to lose your home.
  2. Robo-signing may not be right, but it is irrelevant as per point #1.

So total up the damages, add a huge penalty, and let me know what you come up with.

No doubt, many will accuse me of siding with banks. The reality is I am siding with common sense. No one fought against bank bailouts harder than I did. Banks should have been allowed to go under.

Unfortunately they were bailed out. However, two wrongs do not make a right.

I am all for punishing banks provided the punishment is based on damages rather than the widespread belief “we need to stick it to the banks”.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

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IL AG ISSUES NEW SUBPOENAS TO LPS AND NTC

Posted on May 26, 2011 by Neil Garfield

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MADIGAN ISSUES SUBPOENAS TO LPS, NationWide Title Clearing ; WIDENS ‘ROBOSIGNING’ PROBE

FROM STOPFORECLOSURENOW.COM

MADIGAN ISSUES SUBPOENAS TO LPS, NationWide Title Clearing ; WIDENS ‘ROBOSIGNING’ PROBE

Chicago — Attorney General Lisa Madigan today expanded her investigation into “robosigning” practices, issuing subpoenas against two national mortgage servicing support providers. The subpoenas are the latest effort in Madigan’s ongoing probe into the fraudulent practices used by banks and other mortgage institutions that contributed to the collapse of the U.S. housing market and the subsequent global financial crisis.

Madigan issued subpoenas against Lender Processing Services Inc. and Nationwide Title Clearing Inc., two Florida-based corporations that provide “document preparation services” and other loan management services to mortgage lenders for use against borrowers who are in default, foreclosure or bankruptcy.

“Foreclosure became a rubber-stamping operation that robbed many homeowners of the American Dream without a fair and accurate process,” Attorney General Madigan said. “I will not relent in my investigation into the fraudulent practices by lenders and others that caused and exacerbated the mortgage crisis and the resulting massive foreclosure crisis.”

Lender Processing Services (LPS) provides loan servicing support for more than 50 percent of all U.S. mortgages. More than 80 financial institutions use LPS to service more than 30 million loans. These loans have an outstanding principal balance exceeding $4.5 trillion.

Nationwide Title Clearing (NTC) provides a range of mortgage loan services to eight of the top 10 lenders and mortgage servicers in the country. NTC specializes in creating, processing and recording mortgage assignments, which are often needed for a lender to foreclose on a borrower.

Madigan will investigate reported allegations that LPS and NTC engaged in the practice of “robosigning” legal documents filed with the court to foreclose on borrowers. Robosigning occurs when an individual has no knowledge of the information contained in the document and often doesn’t even read or understand the document that he or she is signing. The use of robosigned documents was pervasive as lenders foreclosed on borrowers’ homes. The probe will also include a complete review of the accuracy of the systems and services that LPS and NTC provide to the large lenders including servicing platforms, foreclosure attorney interaction with these platforms and the assignment of mortgage process.

Attorney General Madigan said former employees of LPS, NTC, or former employees of any residential mortgage servicer or bank who have knowledge of any unlawful practices relating to mortgage servicing or the execution of documents should call her Homeowner Helpline at 1-866-544-7151 to aid in the investigation.

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

Posted on May 23, 2011 by Neil Garfield

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

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

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

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

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

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

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

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

May 22, 2011

As Lenders Hold Homes in Foreclosure, Sales Are Hurt

By

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

HOW TO INTERVIEW A LAWYER

Posted on April 27, 2011 by Neil Garfield

SUBMITTED BY ANN

http://stopforeclosurefraud.com/2010/03/20/choosing-an-attorney-who-understands/

Questions to Ask Attorney Before Retaining:

• How long has the attorney been practicing foreclosure defense?

• What are his/her strategies and tactics in that defense?

• How many foreclosure cases has the attorney defended?

• How many foreclosure cases has the attorney gotten dismissed?

• How many foreclosure cases has the attorney appealed?

• What are the names, case #s, court docket #s of those cases?

• Is the attorney a litigator? (“litigation” is filing motions, taking depositions, subpoenas and appearing in court for hearings and trial)

• Besides filing an answer or a motion for extension of time, what will the attorney do to defend the case?

• Does the attorney have a court reporter at every hearing in order to preserve issues in your case for appeal?

• Is the attorney willing to fight it all the way and not settle for a loan mod?

• Is the attorney familiar with all the hot topics of MERS, assignment fraud, signature fraud, HIDC (ownership to foreclose), securitization issues, etc.?

• Has the attorney ever been disciplined or suspended from the bar?

• Does the attorney offer bankruptcy as an integrated service?

• How do they charge? Hourly? One big retainer, pay as they bill? Small retainer, pay as they bill? Small retainer and set monthly payments? If paying initial retainer and a set monthly payment, how does that monthly payment transfere into actual billable hours? If billable hours do not use up monthly retainer, will there be a credit to future billing? (e.g. $1000 payment but that month billable was only $500, will the $500 carry over?

• Based on how they bill, will they charge for any copying, emails, phone conversations, etc. This is standard but with those that do a monthly set payment, they often will not charge for the incidentals.

• Will they provide you a copy of all pleadings, complaints, actions, filings, responses, etc. regarding your case?

Then go to the Court house and look at the attorney cases and observe him at Hearings. Case files are public info.

Recommended Reading and Resource Books

. Represent Yourself in Court by Paul Bergman Att.

. 23 Legal Defenses to Foreclosure by Troy Doucet

• Foreclosures by National Consumer Law Center

• Truth in Lending by National Consumer Law Center

• The Cost of Credit by National Consumer Law Center

• Consumer Law Pleadings by National Consumer Law Center

• 23 Legal Defenses to Foreclosure by Troy Doucet

• Structured Finance & Collateralized Debt Obligations by Janet M. Tavakoli

• Legal Research: How to Find & Understand the Law by Stephen Elias & Susan Levinkind

• Business Law by Robert W. Emerson, J.D.

• Civil Procedure: A Contemporary Approach by A. Benjamin Spence

• Creature from Jekyll Island by G. Edward Griffin

• Modern Money Mechanics by Federal Reserve Bank of Chicago

• http://www.jurisdictionary.com

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MARY COCHRANE GIVES DTC DETAILS

Posted on April 26, 2011 by Neil Garfield

DTC — The Depository Trust & Clearing Corporation

DTC is a member of the U.S. Federal Reserve System, a limited-purpose trust company under New York State banking law and a registered clearing agency with the Securities and Exchange Commission.

You know the song ‘ What’s PSA Got to do – Got to do with it?”

=====================================
Copied Article:
Mortgage Divorce! 1 Posted by jmacklin on January 27, 2011 at 8:24 pm Irreconcilable Differences… I want a Mortgage Divorce!

By James Macklin
Secure Document Research

Promissory Note Terms Vs. PSA/Prosectus Terms
http://dtc-systems.net/tag/master-servicer/

When we are handed a voluminous stack of documents at the closing table for our mortgage transaction, a Borrower is expected to make a decision based upon the duty and care that the party who drafted these “investment contracts” has placed into them.

However, none of us at the closing table has any idea what most of the words, phrases, and legal terminologies actually means… especially those affecting our rights as a consumer and as a real property owner.

Within the typical language of a Pooling and Servicing Agreement executed by the players of the securitization financing, there are countless references to the “interests” of the asset being conveyed, or, your Note and Deed. Interests are a finicky word of art used.

The word simply means this:

the asset, along with all of its’ benefits and liabilities.

These are the “interests” being conveyed with the sale, set-over, transfer, conveyance, etc.

So, under the terms of the Note we signed, look to the section titled:

“Who is obligated under the Note” (usually sec. nine (9)).

Here you will find that myriad entities may be, and probably are, also obligated under this same Note.

These are the terms you have agreed to and bargained for.

But the banking intermediaries would have us believe otherwise, as exhibited in the PSA under such language as:

“The Depositor, Sponsor/Seller, Swap Counterparty, Master Servicer, Trustee do not intend for any obligation of themselves or their agents or employees to arise as a result of this Agreement”.

This is contradictive to the terms and conditions that we have agreed to.

Because the intervening assignments are a functional necessity to the bankruptcy remoteness of these assets, the specific substance of the PSA must be followed, including the mandate for the indorsement of each intervening assignment, along with the recordation of those assignment in the proper land title records office within the State of jurisdiction.

Let’s go back to the language of the

“Who is Obligated” section of our Note.

Notice that anyone who endorses the instrument is also obligated under the Note.

Does this create an unknown Obligor at closing?

If an un-named Beneficiary is the result of the unilateral agreement known as a Promissory Note”, how do we have the understanding necessary to execute such a critical document?

It is the contention of this author, supported by the very agreements signed under oath and filed for record with the SEC, that “interests” and “obligations” are synonomous within the four corners of the agreement we signed…and the agreements signed by the intermediaries.

A court of competent jurisdiction shall be posed these foundational questions very soon, and often. Are we a party to these agreements known as PSA/Prospectus?

If we do a simple word search on each of these and look for references to:

Borrower, Mortgagor, Obligor, we find these terms are typically used in excess of 60-75 times.

Yet we were never disclosed the terms and conditions of the actual “loan” transaction as it truly was executed, and the rights, duties and responsibilities of the intermediaries.

These are material disclosures relative to fees, expenses and various credit enhancements which are attributed to the Borrowers’ payment stream.

A divorce from this menagerie of deceit is not only appropriate, but a right that is being tried in many courtrooms.

I believe that the judiciary will be tested on many platforms and small but visceral victories shall carry the day.

.end of article

http://dtc-systems.net/tag/master-servicer/

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MARY COCHRANE GIVES DETAILS ON FIRST MAGNUS

Posted on April 26, 2011 by Neil Garfield

Dear pelucheven, on October 28, 2010 at 9:15 am said: Hi Dave

I like to share with consumers you can find information to reveal how the pretender lenders do business. Example your question regarding who is:.

RE: First Magnus Financial Corporation
(12/311996) dba CHARTER FUNDING

I never would have known if I had not looked at every document filed with State of Arizona.
http://www.azsos.gov/scripts/TNT_Search_engine.dll

It’s important to know that Charter Funding is a tradename and business type ‘Mortgage Banking’
Domestic Business Entity began 8/12/1996.
Status: Active
Owner: First Magnus Financial Corporation
Renewal 8/16/2001
Amendment 11/26/2004
Renewal 5/15/2006

Charter
07826337 Corporation File:
6393 E. Tamque Verde Suite 280, Tuscon AZ 85715
Received 7/8/1997
Business Corporation Annual Report & Certificate of Disclosure Domestic
Statutory Agent: Gerald G. Hawley

Corporate Name:
First Magnus Financial Corp. &First Magnus Liquidating Trust
4909 North 44th Street
Phoenix, AZ 85018
Toll Free Number: (888) 744-5100
Direct Number: (520) 618-9255
Fax Number: (520) 901-7963
Primary Contact: MARY SLOAN
Website:
Member Org ID: 1000392

Lines Of Business:
Originator, Servicer, Subservicer, Investor, Document Custodian

eRegistry Participant: No
eDelivery Participant: No

https://www.mersonline.org/mers/mbrsearch/validatembrsearch.jsp

You can search MERS MEMBERS 0-9 and A-Z

Pervue the screens very interesting when you consider the SHAREHOLDERS (BENEFICIARIES) of the transactions required MEMBES to record in blank electronically transactions not to be lawfully recorded.

————————————————————
Interesting One – Fictitious name for ‘servicing side’ acquired for Nationsbank.

Should this name have been merged out of existence with Wells Fargo Home Mortgage, Inc. May 2004?

The OCC clearly stated that all ‘Mortgage Corporation’ business had to be done inside of Wells Fargo Bank, National Association, Sioux Falls, SD May 2003 approving John Stumpf’s request to merge out of existence Wells Fargo Home Mortgage, Inc.

Remember, Wells Fargo Home Mortgage, Inc. employees were working for a general purpose entity registered in some states other states Wells Fargo did not rename ‘Norwest Mortgage, Inc.’ and other states did not rename Directors…..

When would Wells Fargo Home Mortgage employees be considered employees of a national bank? following merging out of existence ?

For example, in NJ, Wells Fargo Home Mortgage storefronts employees email address is Wells Fargo Home Mortgage div Wells Fargo Bank NA (2005 copyright) – 2701 Wells Fargo Way, Minneapolis MN.

In MERS you’ll find the entity to be recorded as a MERS MEMBER as America’s Servicing Company

Corporate Name: America’s Servicing Company
Address: 2701 Wells Fargo Way MAC x9998-012
City,State,Zip: Minneapolis, MN 55467-8000
Toll Free Number: (800) 842-7654
Direct Number: (651) 605-3711
Fax Number: (651) 605-7831
Primary Contact: Masse Adjetey
Website:
Member Org ID: 1002856
Lines Of Business: Servicer, Subservicer, Investor, Document Custodian, Master Servicer
eRegistry Participant: No
eDelivery Participant: No
———————————————-

So back to who is:

“First Magnus Financial Corporation”

In MERS we see Wells Fargo & Bear Stearns dba JPMorgan now required MEMBERS to be registered who would process transactions and paid for the Lines of Business they could process documents.

Corporate Name:
First Magnus Financial Corp. &First Magnus Liquidating Trust
4909 North 44th Street
Phoenix, AZ 85018
Toll Free Number: (888) 744-5100
Direct Number: (520) 618-9255
Fax Number: (520) 901-7963
Primary Contact: MARY SLOAN

I go and look at the Business Entity Search in AZ to find out who is: “First Magnus”
http://www.azsos.gov/scripts/TNT_Search_engine.dll

There are recorded in AZ:
ID Type Name
07826337 CORPORATION FIRST MAGNUS FINANCIAL CORPORATION
L12675977 L.L.C. FIRST MAGNUS ADMINISTRATION LLC
256780 TRADENAME FIRST MAGNUS INSURANCE GROUP
12101934 CORPORATION FIRST MAGNUS CAPITAL, INC.
N15969329 PENDING CORP. FIRST MAGNUS FINANCIAL CORPORATION
L10837499 L.L.C. FIRST MAGNUS CONSULTING LLC
N15706884 PENDING CORP. FIRST MAGNUS FINANCIAL CORPORATION
393124 TRADENAME FIRST MAGNUS HOME LOANS
L13527294 L.L.C. FIRST MAGNUS VENTURES LLC
L13765190 L.L.C. FIRST MAGNUS STRATEGIC VENTURES LLC

‘Trade Name’ First Magnus Home Loans
Owner First Magnus Financial Corporation’
603 N Wilmot Rd, Tuscon AZ 85711 Registered 1/26/2007 – Expiration 1/26/2012

Business Type: Financial Services
File ID 393124
Domestic Entity in AZ will do business in other states as foreign orgnaization

First Magnus Financial Corporation
‘Pending File Inquiry
4/24/2011
File Number: N-1596932-9
Reservation Number: 88776
Expiration Date 8/16/2010

David Kiah
PO Box 600485
Newtonville, MA 02460
_____________________________________
‘Agent’ First Magnus Financial Corp

First Magnus Financial Corporation
603 N Wismot Rd
Tucson AZ 85711
Agent: Resigned 3/8/2011
Agent Last Updated 11/01/2007
Business Type Corporation:
For Profit – Banking/Finance
Domicile:L Arizona
County PIMA
Incorporation: 7/16/1996 (perpetual)
Dissolution/Withdrawal Dates 5/30/2008

Gurpreet S. Jaggi
President/CEO
603 N Wilmot Rd
Tucson AZ 85711
Date of Taking Office 7/1/1996
Last Updated 9/29/2006

Thomas Sullivan Sr. ‘Shareholder’ over 20% of corporation when registered dba Charter FUNDING
—————————————————————–

Articles of Organization 6/27/2007
File No L-1376519-0
Forms LLC pursuant to Chapter 4 of Article 29 of the Arizona Revised Statutes as amended (supra 29-601 et seq
MEMBER c/o Douglas G. Lemke Esq.
Management Company First Magnus Administration LLC
Statutory Agent:
Douglas G.

—————————–
Prior address of Statutory Agent:
Douglas Gl. Lemke
5285 E Williams Cir #2000
Tucson AZ 85711 Changed to above address
8/27/2004
Approved by President
Gurpreet S. Jaggi President
8/26/2004

Corporate Licensing Manager
Deanna Nealon
First Magnus Financial Corporation
520-618-9226

11/30/2004
Corporation Statement of Change of Known Place of Business Statutory Aent

1. First Magnus Consulting LLC
2. Charter Insurance Group, Inc.
3. First Magnus Financial Corporation (checked)
4. FMHM Mortgage, LLC
5. Vantage Mortgage Group, LLC
6. FMLC Mortgage LLC and
7. FMFC Lender Services LLC

Jessica Whitney
Legal Assostant
12/2/2004
First Magnus Financial Corporation
President now CEO

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MORTGAGE BROKERS COMPLAIN ABOUT NEW FED RULES BARRING HIDDEN FEES

Posted on April 18, 2011 by Neil Garfield

CLE SEMINAR: SECURITIZATION WORKSHOP FOR ATTORNEYS — REGISTER NOW

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary SEE LIVINGLIES LITIGATION SUPPORT AT LUMINAQ.COM

EDITOR’S NOTE: Amazing how our culture has been one of “entitlement.” No I’m not talking about social security, medicare or medicare, or fire departments, police departments or teachers. I’m talking about the fees that mortgage brokers have been paid to steer borrowers into loans that were guaranteed to fail or at the very least, had worse terms than the broker knew the borrower could get. The Wall Street mentality of get what you can has permeated the entire marketplace.

Broker Fee Rules Take Effect

By MARYANN HAGGERTY

THERE have been changes in federal rules covering how mortgage brokers are paid, and while legal challenges to them persist, the question now is how the new system will work in practice.

Regulators and consumer advocates say borrowers are bound to benefit. Broker trade groups say their industry will shrivel and consumer costs will go up.

Mortgage brokers are middlemen who work with multiple lenders to arrange home loans for customers. They say they add value by helping borrowers find the best deal; their detractors say they add costs that have been hidden in complex fees.

The business has contracted significantly in the last five years. In 2005, during the real estate boom, brokers accounted for 31 percent of mortgages originated, according to Inside Mortgage Finance, a trade publication. Last year it was just 11 percent, and the market was only half as big.

Brokers used to be compensated by a mix of borrower-paid origination fees and lender-paid fees. The most controversial was a “yield spread premium,” paid by lenders when a broker placed a borrower in a loan that charged higher interest than other loans. The justification was that higher rates allowed lower upfront closing costs. The criticism was that the premiums were an incentive to push expensive loans and that the system contributed to a flood of risky loans and thus to the financial crisis.

In response, the Federal Reserve put out rules that prohibit loan originators from being paid by both the borrower and lender on the same deal, and also barring commissions based on anything other than loan size. The rules were set to take effect April 1; two trade groups sued, delaying enactment a few days before a federal appeals court allowed it. Both the National Association of Mortgage Brokers and the National Association of Independent Housing Professionals say they will keep pressing their lawsuits.

On the front line, the problem is that there has been “no clear guidance” on exactly how to arrange commission structures for employees who originate loans, said Melissa Cohn, the president of the Manhattan Mortgage Company, a loan brokerage firm.

“To be honest with you,” she said, “in some cases it’s going to create higher-priced mortgages.” Although the spirit of the law is to protect borrowers, she added, “the reality of it is it’s just going to cause more confusion.”

Mike Anderson, the director of the National Association of Mortgage Brokers, speaking just two days after the rules went into effect, said: “It’s already happening. Rates have already gone up; fees have gone up.” Mr. Anderson, who is also a broker in New Orleans, cited situations in which brokers could no longer cut fees to make deals go through, and others in which banks were raising charges. “The rules basically pick the winners and losers,” he said, with the winners being the big banks. “The losers are the small businesses.”

The Facebook page of the National Association of Independent Housing Professionals is full of complaints from what appear to be mortgage brokers saying the rules will hurt their business, and recounting how unnamed lenders have raised prices.

Despite industry opposition, the change is a victory for borrowers, according to representatives of the Center for Responsible Lending, an advocacy group long critical of the yield-spread premium system. Borrowers “should be getting more honest services from the originator they’re working with,” said Kathleen E. Keest, a senior policy counsel, “because that originator is no longer going to have a conflict of interest if they put a borrower in a loan with a higher interest rate or riskier terms.”

“If people were saying that the way things worked, worked well,” she added, “that’s one thing, but it’s very clear the way things worked before didn’t work for anybody. The notion we need to have the same rules is denying what happened. It’s denying that the way the market was working was disastrous for everybody.”

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , , , , , , , | 11 Comments »

MFI-Miami To File Bar Complaint Against Orlans Associates For Conspiracy and Fraud

Posted on April 7, 2011 by Neil Garfield

PERJURY ALLEGED

April 5, 2011

For Immediate Release
Contact:            Stephen Dibert, President, MFI-Miami

Email: steve@mfi-miami.com or www.mfi-miami.com

 

MFI-Miami: 888.737.6344 or Cell 561.317.9978

 

MFI-Miami To File Bar Complaint Against Orlans Associates For Conspiracy and Fraud

 

Traverse City, MI- MFI-Miami, LLC, a mortgage fraud investigation company, announced today that on Thursday, April 7, 2011, it will be filing a complaint for Attorney Misconduct with the Michigan Attorney Grievance Commission against three attorneys from the Troy, Michigan law firm of Orlans Associates.  Details of the complaint as follows: Marshall R. Isaacs for knowingly filing fraudulent documents into public record, Linda Orlans for allowing one of her Notaries to make false statements that they witnessed Marshall R. Isaacs sign an affidavit when he did not sign it, and Timothy Myers for perjury in the case of Lucas v. Orlans Associates and BAC Home Loan Servicing, LP (Case #10-113498-NO).

An MFI-Miami investigation concluded that BAC Home Loan Servicing did not own the Lucas loan when they initiated the foreclosure and at the time of the Sheriff’s sale as the three attorneys claim on public record and in public filings.  Orlans representing BAC Home Loan Servicing LP claim that they maintained the right to transfer ownership to Fannie Mae with a Sheriff’s Deed.  However, according to an Affidavit that was made public in February of 2011 by BAC Home Loan Servicing, LP, the Lucas mortgage was in fact assigned to Fannie Mae in 2005.

“The evidence suggests Orlans and Associates is using robo-signing to expedite the foreclosures for BAC Home Loan Servicing, LP,” said Steve Dibert, President of MFI-Miami.

 

MFI-Miami intends to request an investigation by the Michigan Judicial Tenure Commission into how Oakland County Circuit Judge Martha Anderson handled this case.  According to Steve Dibert, “She refused to hear key pieces of evidence of attorney misconduct committed by attorneys involved in the case.”

 

MFI-Miami is also be sending a copy of its investigation with a copy of the complaint to the offices of Michigan Attorney General Bill Schuette, Fannie Mae CEO Mike Williams and Acting Director of the Office of Thrift Supervision, John Bowman.   Copies will be sent to Barbara DeSoer, President of Bank of America Home Loans and Elizabeth Warren, Special Advisor for the Consumer Financial Protection Bureau.

About MFI-Miami

Headquartered in Boynton Beach, Florida and with an office in Traverse City, Michigan, MFI-Miami, LLC conducts compliance examinations and investigates the securitization instruments of clients’ mortgages. For more information, visit www.mfi-miami.com, contact 888-737-4366 ext. 701, or email steve@mfi-miami.com

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WELLS/WACHOVIA: NO CONSCIENCE, NO MORALS, NO REGULATION —- FRAUD

Posted on April 6, 2011 by Neil Garfield

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary SEE LIVINGLIES LITIGATION SUPPORT AT LUMINAQ.COM

GET LUMINAQ COMBO TITLE AND SECURITIZATION REPORT

WELLS FARGO KNEW THE MORTGAGE BONDS WERE WORTH LESS,

MARKED THEM DOWN THEN SOLD THEM FOR MORE

SEE RELATED STORIES: 60 MINUTES: TITLE PROBLEMS ARISING FROM SECURITIZATION A \”TRAIN WRECK\”

60 MINUTES; SECOND CRISIS IN THE MAKING

60 MINUTES OVERTIME: WHO OWNS YOUR MORTGAGE

EDITOR’S COMMENT: Again, no surprise. Artificial inflation of asset prices lies at the heart of the entire securitization illusion. Reading this story, any Wall Street insider with a long history on the street, would tell you that this would be grounds for discipline when  the industry was self regulated. Now with regulation imposed by the government, and then deregulation passed, they got away with it. It’s fraud.

They knew the mortgages were toxic, they knew the value of the mortgage bonds was questionable at best and marked it down to 52 cents on the dollar and then sold it to some unsuspecting investor for 95 cents, with the investor thinking he was getting a bargain. It is one thing to act as as broker, but this was sold from their own proprietary account. After marking the asset down, they then sold the securities and showed a “profit.” Then management took a bonus for producing this “profit.” What is wrong with this picture?

Inflating the apparent value of mortgage bonds, inflation of the apparent value of the the property, inflating the importance of the documents signed at closing, or inflating the appearance of compliance with industry standard underwriting, recording, transfers and assignments, the story is always the same. It is all based on deception and there is no way out. Except for the occasional trade with an unsuspecting Indian tribe which in this case blew up in their face, they can’t escape the consequences of their misdeeds.

And again I ask: If all this trading was or is going on, how can anyone in Court state with a straight face that they are the holder of the note and have the right to enforce it? The party the attorney is  purporting to represent probably doesn’t even know he is in court, and the note describes a transaction that never was consummated. The real transaction was a lender-investor who has since given up on the claim to the note and is pursuing claims against the investment bankers for selling empty mortgage bonds that had no loans in them. The lender agrees with the borrowers: the parties who would foreclose have no right to be in court.

The counterargument is that all this “technical” stuff is holding up commerce in the housing market. That might be true. But it isn’t technical if you are fraudulently representing yourself to be the creditor. The courts have consistently disregarded political arguments as an excuse for not applying law which has been cemented by precedents dating back for centuries. The recognition that the grantee on the deed is the homeowner and that the fraudulent creditor has no right to slander that title would free up the housing market a lot easier than the current spurious arguments offered by the banks.

Wells Fargo Settles Case Originating At Wachovia

By EDWARD WYATT

WASHINGTON — Even as Wall Street churned out mortgage-backed securities and derivatives in 2006, the sellers of the often-convoluted packages sometimes knew that parts of the deals — namely those that they could not sell — were worth far less than face value.

So it seemed reasonable in October 2006, when Wachovia Capital Markets, after failing to find a buyer for a tranche of a collateralized debt obligations known as Grand Avenue II, listed the securities on its books at 52.7 cents on the dollar.

Four months later, with the mortgage market starting to collapse, Wachovia sold those same securities to the Zuni Indian Tribe for 90 to 95 cents on the dollar. A year later, the deal went into default, and the tribe and other investors lost millions.

The Securities and Exchange Commission said Tuesday that it had approved an $11 million settlement for a securities fraud complaint related to the Grand Avenue II deal and a second derivatives transaction with a subsidiary of Wells Fargo, which bought Wachovia in 2008 as the troubled bank neared collapse.

“Wachovia caused significant losses to the Zuni Indians and other investors by violating basic investor protection rules,” Robert Khuzami, the director of the S.E.C.’s enforcement division, said in a statement. The rules, he added, include “don’t charge secret excessive markups, and don’t use stale prices when telling buyers that assets are priced at fair market value.”

Without admitting wrongdoing, Wells Fargo Securities agreed to pay a disgorgement of $6.75 million and a civil penalty of $4.45 million, the S.E.C. said, with $7.4 million going to a fund to be distributed to investors who had lost money on the two transactions.

In a second deal involving a C.D.O., called Longshore 3, Wachovia Capital Markets falsely told investors that it had acquired some of the assets “on an arm’s-length basis,” and at “fair market prices.” In fact, the S.E.C. said, Wachovia “transferred these assets at stale prices in order to avoid losses on its own books.”

In a statement, Well Fargo said: “The settlement relates to actions taken by Wachovia in 2007 in the early days of the credit crisis. The issues presented here were complex, and Wells Fargo is pleased to have resolved this matter with the S.E.C.”

In its order outlining the case, the S.E.C. documents numerous instances of conduct that could only have been performed by individuals who worked for Wachovia — marking up the value of the Grand Avenue securities by 70 percent, or approving the false and misleading disclosure that the Longshore securities were acquired “on an arms-length basis” and “at fair market prices.”

But no individuals were included in the complaint, or even named, in the S.E.C.’s cease and desist order or the settlement.

Both the Zuni Indian Tribe, whose reservation is in Arizona and western New Mexico, and an individual investor who bought a substantial share of the transaction, bought the Grand Avenue securities at an inflated price through a Wachovia broker in El Paso, Tex., the S.E.C. said

A spokeswoman for Wells Fargo, Mary Eshet, declined to comment on whether any of the people involved in the C.D.O. sales still worked for Wells Fargo. Regarding the lack of charges against individuals, she pointed to a footnote in the S.E.C.’s order that says C.D.O.’s trade infrequently and are not listed on an exchange, making current prices “not readily discoverable.”

Lorin L. Reisner, deputy director of the S.E.C.’s enforcement division, said that “it’s reasonable to assume that we look very carefully at the involvement of individuals” in cases like this. He said the S.E.C. had filed complaints against individuals in several cases related to the financial crisis, including senior executives of Countrywide Financial, New Century Financial and IndyMac Bancorp.

The S.E.C. complaints were brought by the enforcement division’s structured and new products unit, one of four new enforcement offices created by Mr. Khuzami after he took over as agency’s top enforcer in February 2009.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , , | 9 Comments »

Barofsky: HOW TARP FAILED HOMEOWNERS

Posted on March 30, 2011 by Neil Garfield

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary SEE LIVINGLIES LITIGATION SUPPORT AT LUMINAQ.COM

“The act’s emphasis on preserving homeownership was particularly vital to passage. Congress was told that TARP would be used to purchase up to $700 billion of mortgages, and, to obtain the necessary votes, Treasury promised that it would modify those mortgages to assist struggling homeowners. Indeed, the act expressly directs the department to do just that.”


Where the Bailout Went Wrong

By NEIL M. BAROFSKY

Washington

TWO and a half years ago, Congress passed the legislation that bailed out the country’s banks. The government has declared its mission accomplished, calling the program remarkably effective “by any objective measure.” On my last day as the special inspector general of the bailout program, I regret to say that I strongly disagree. The bank bailout, more formally called the Troubled Asset Relief Program, failed to meet some of its most important goals.

From the perspective of the largest financial institutions, the glowing assessment is warranted: billions of dollars in taxpayer money allowed institutions that were on the brink of collapse not only to survive but even to flourish. These banks now enjoy record profits and the seemingly permanent competitive advantage that accompanies being deemed “too big to fail.”

Though there is no question that the country benefited by avoiding a meltdown of the financial system, this cannot be the only yardstick by which TARP’s legacy is measured. The legislation that created TARP, the Emergency Economic Stabilization Act, had far broader goals, including protecting home values and preserving homeownership.

These Main Street-oriented goals were not, as the Treasury Department is now suggesting, mere window dressing that needed only to be taken “into account.” Rather, they were a central part of the compromise with reluctant members of Congress to cast a vote that in many cases proved to be political suicide.

The act’s emphasis on preserving homeownership was particularly vital to passage. Congress was told that TARP would be used to purchase up to $700 billion of mortgages, and, to obtain the necessary votes, Treasury promised that it would modify those mortgages to assist struggling homeowners. Indeed, the act expressly directs the department to do just that.

But it has done little to abide by this legislative bargain. Almost immediately, as permitted by the broad language of the act, Treasury’s plan for TARP shifted from the purchase of mortgages to the infusion of hundreds of billions of dollars into the nation’s largest financial institutions, a shift that came with the express promise that it would restore lending.

Treasury, however, provided the money to banks with no effective policy or effort to compel the extension of credit. There were no strings attached: no requirement or even incentive to increase lending to home buyers, and against our strong recommendation, not even a request that banks report how they used TARP funds. It was only in April of last year, in response to recommendations from our office, that Treasury asked banks to provide that information, well after the largest banks had already repaid their loans. It was therefore no surprise that lending did not increase but rather continued to decline well into the recovery. (In my job as special inspector general I could not bring about the changes I thought were needed — I could only make recommendations to the Treasury Department.)

Meanwhile, the act’s goal of helping struggling homeowners was shelved until February 2009, when the Home Affordable Modification Program was announced with the promise to help up to four million families with mortgage modifications.

That program has been a colossal failure, with far fewer permanent modifications (540,000) than modifications that have failed and been canceled (over 800,000). This is the well-chronicled result of the rush to get the program started, major program design flaws like the failure to remedy mortgage servicers’ favoring of foreclosure over permanent modifications, and a refusal to hold those abysmally performing mortgage servicers accountable for their disregard of program guidelines. As the program flounders, foreclosures continue to mount, with 8 million to 13 million filings forecast over the program’s lifetime.

Treasury Secretary Timothy Geithner has acknowledged that the program “won’t come close” to fulfilling its original expectations, that its incentives are not “powerful enough” and that the mortgage servicers are “still doing a terribly inadequate job.” But Treasury officials refuse to address these shortfalls. Instead they continue to stubbornly maintain that the program is a success and needs no material change, effectively assuring that Treasury’s most specific Main Street promise will not be honored.

Finally, the country was assured that regulatory reform would address the threat to our financial system posed by large banks that have become effectively guaranteed by the government no matter how reckless their behavior. This promise also appears likely to go unfulfilled. The biggest banks are 20 percent larger than they were before the crisis and control a larger part of our economy than ever. They reasonably assume that the government will rescue them again, if necessary. Indeed, credit rating agencies incorporate future government bailouts into their assessments of the largest banks, exaggerating market distortions that provide them with an unfair advantage over smaller institutions, which continue to struggle.

Worse, Treasury apparently has chosen to ignore rather than support real efforts at reform, such as those advocated by Sheila Bair, the chairwoman of the Federal Deposit Insurance Corporation, to simplify or shrink the most complex financial institutions.

In the final analysis, it has been Treasury’s broken promises that have turned TARP — which was instrumental in saving the financial system at a relatively modest cost to taxpayers — into a program commonly viewed as little more than a giveaway to Wall Street executives.

It wasn’t meant to be that. Indeed, Treasury’s mismanagement of TARP and its disregard for TARP’s Main Street goals — whether born of incompetence, timidity in the face of a crisis or a mindset too closely aligned with the banks it was supposed to rein in — may have so damaged the credibility of the government as a whole that future policy makers may be politically unable to take the necessary steps to save the system the next time a crisis arises. This avoidable political reality might just be TARP’s most lasting, and unfortunate, legacy.

Neil M. Barofsky was the special inspector general for the Troubled Asset Relief Program from 2008 until today.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , , , , , , , , | 11 Comments »

THE COST OF SECURITIZATION FRAUDS: SUICIDES INCREASING

Posted on March 21, 2011 by Neil Garfield

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary SEE LIVINGLIES LITIGATION SUPPORT AT LUMINAQ.COM

Statistics are not published as to the number suicides related to financial difficulty, but financial pressure is often cited in studies as a triggering event for death from “natural” causes, suicide, disease and divorce. When the pressure is not just financial but a perception of total failure through loss of home, loss of property, and bankruptcy, the numbers go up as trauma-induced events.

Starting around 4 years ago we heard of suicides and family murders across the country directly related to eviction and foreclosure. Now with the number of people ousted out of their own homes the demand for rented dwellings is rising to levels that virtually assure higher rent prices, probably making it difficult for many families to have anything but their car to sleep in.

Looking back over the last 4 years, the stories were at first fairly rare. Now things are different and from my perspective getting ominous. Let’s not forget suicides dubbed “death by police” where the frantic wounded pride of a person leads them into a confrontation certain to lead to their death in a hail of bullets.

The number of violent acts involving the death of a family member as foreclosure closes in on them appears to be rising significantly. I do not have resources to conduct an actual study, but as a lightening rod for stories and information about the foreclosure crisis, I regularly receive news of events that are not reported or not widely reported. With unrelenting momentum, these deaths are being reported to me with greater and greater frequency. I receive the reports from lawyers who represent the family in fighting the foreclosure, family members and of course those who scour local newspapers for local reports.

Where the number of such reports was about once per month when I started the blog, it is now about 3 times per week. Some of that is of course related to the fact that the blog is bigger and more well known. But it appears to me that the shock and trauma of foreclosure is having a psychological effect, a demoralizing effect on our entire society. Considering that nearly all the foreclosures are of questionable legality, and that the nearly all the mortgages, notes and other documents are of at least questionable validity, and that the transactions were procured by fraud, deceit and trickery, we should be widening the scope of our inquiry into the effects of these pernicious acts on our society as a whole.

It’s time to own up to the fact that empty houses mean in many cases hollow, desperate lives, replacing lives that were functional and contained more than a few moments of happiness, laughter and joy. Being unable to provide for one family is one of the most traumatic hits a man receives and is likened by some professionals to a trauma that later presents as post traumatic stress syndrome. If those empty homes didn’t need to happen, were not absolutely required under law and were not solely the result of bad judgment or greed of the moment, then our society — all of us — might be accessories to murder.

These deaths are tragic; but the real problem is the debris left behind in the formative minds and souls of children who live out the consequences and who have “learned” that not even their own parents can protect them against the ravages of an indifferent government and aggressive, predatory business tactics aimed at taking one more shot using one more way to take the last dollar, the last hope, and even the last roof over the head of a family. We better be damned sure that the banks have the right to foreclose. Because when we look back on all this in 20-30 years, people are going to wonder what happened to the spring in the step of Americans and maybe wonder why we didn’t consider ALL the costs of domestic and international economic terrorism.

Who is winning here? Who are all the people who are losing?

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , , | 20 Comments »

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