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EDITOR’S COMMENT: Even if you think that foreclosed homeowners deserve it, you wouldn’t like these pictures. It’s like being in favor of the war in Iraq and then seeing pictures of American soldiers torturing prisoners. There is something distinctly unAmerican in treating the victims of foreclosure as objects of ridicule and disdain — by people who have been shown time and time again to have violated the law in their fervor to push through tens of thousands of foreclosures. The culture of that firm must sicken anyone and the employee who took these pictures did us a favor. If you were not angry yet about the Banks and their “tools” like Baum, you are at least uncomfortable.

Even if you take as gospel the ideology that their misfortune is their own fault” how can anyone take pleasure and fun out of the misery of those who are overburdened with debt? How can we stand by as the numbers increase geometrically on suicides, attempted suicides, domestic violence and death? Wouldn’t you rather see that stop than to continue? Unfortunately it seems that the only thing that moves most people is when it finally happens to them and they have the time and the anger to figure things out, fight back or give in and give up.

But these pictures show us something more. They show us how man’s inhumanity to man is alive and well. It isn’t gallows humor. It is a tableau of those who, as predators, have made a good business out of sucking out the lifeblood of the average person and how even the average person, once employed by one of these predators, becomes corrupted not necessarily by greed, but by need of a job. If you want to know what Bankers think of us, look at these pictures. And see if you are moved to write a letter, join a protest or speak out against the Banks who drove this Country to ruin. If it isn’t you now, you’re next.

What the Costumes Reveal

By

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

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

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

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

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

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

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

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

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

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

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

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

 

HAPPY ENDINGS WITH PAIN AND LOSS

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Analyst Note: This transaction was probably really a securities transaction. The homeowner was converted from an owner in real property to an investor in a security that was issued, sold and documented illegally. The obligation was to pay for the security and not for a loan. It probably was unsecured. The mortgage of record probably was thus likely a wild deed — void when executed, void when recorded and probably conveys or grants no interest. Any assignment that occurred would have therefore conveyed no interest. The mortgagor named in the recorded documents never lent any money and was probably not even a conduit for the money that was used to fund the mortgage. Therefore the DOCUMENTS for the so-called mortgage loan are most likely fatally defective in failing to identify the correct parties, contrary to requirements of state and federal statutes. The promissory note is most likely fatally defective in that it relates to a transaction that never occurred between the payee and payor. The obligation, if it still exists, is undocumented, unsecured and subject to affirmative defenses, off-set, and counterclaims. It is probably subject to rescission under the same conditions. Check with a licensed attorney. There may be causes of action for quiet title, slander of title (money damages), fraud, rescission, violation of TILA, RESPA and other claims.

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What happened over the course of the next few years can only be described as Kafka-esque. Wilshire Credit asked her for a hardship letter; she sent one. Nothing happened. Three separate times, Wilshire set up short-term payment agreements — two of which included $7,000 upfront payments — claiming that it would make a decision on a long-term modification once the agreement expired. She paid every penny — to no avail.

“It’s offensive that BofA thinks a foreclosure action, an eviction notice of an elderly woman sitting in her house fearing that she will spend the remainder of her days in a shelter, is some sort of party invitation that can be ‘rescinded,’ ” she wrote in an e-mail. “Their disrespect for the law is appalling. But it is a pattern of behavior that led to this crisis and that is continuing to keep this country in this crisis.”

Let’s face it: Ms. Roberts got a break. Because she had a dogged lawyer, who had the wit to get a New York Times columnist interested in her case, a terrible mistake was uncovered. As a result, an unjustified foreclosure may well be reversed.

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EDITOR’S COMMENT AND NOTE: First, don’t pay those “upfront payments” to someone who is actually promising nothing. You’ll probably need that money when they throw you out anyway — unless of course you stand your ground and fight them. The woman in this story paid $30,000 without knowing if she was really saving her home and probably would have lost it but for the intervention described here.

Second, there is no question in my mind that NONE of the so-called servicers can or want to modify your mortgage. They want to stretch out the period that you are in “default” even though you don’t owe THEM a dime and the real creditor has also been paid off. Of course check with an attorney and if you can get press attention like this woman did, BofA or whoever the servicer is will step up and “prove” that we are all wrong and that modifications are going just fine.

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A Happy Ending to a Raw, but Common, Tale

By JOE NOCERA, NY TIMES

Lilla Roberts is a 73-year-old retired physical therapist, a pleasant, engaging woman who moved to this country from Jamaica 46 years ago. In 1988, she bought a small house in Jamaica, Queens, putting down $25,000, and taking out a mortgage for around $120,000. For many years, she religiously made her mortgage payments.

Like most homes in this part of Queens, this one is a little on the ramshackle side: a small, two-story home, part brick, part faded gray siding, with a red awning out front and a large backyard. But she raised her children and several of her grandchildren in this home. Her life’s memories are in this home. It means a lot to her.

“My whole life is here,” she said on Tuesday, when I visited her. “Every penny I ever had I put into this house.”

Ms. Roberts pointed down. “I finished the basement,” she said. She pointed up. “I had to put in new windows and repair all the rotting wood,” she said, referring to an upstairs apartment she rents out.

She pointed toward the back of the house, to the yard beyond her cramped kitchen and her two crowded bedrooms. “I love my garden,” she said. She paused, and then sighed. Between her pension, Social Security and rental income, she said, “I have enough income to pay my mortgage. I would love to enjoy the rest of my life here.”

Sitting across from Ms. Roberts was Elizabeth Lynch, a 30-something lawyer who works for MFY Legal Services. Ms. Lynch is a foreclosure specialist who has spent the last few months trying desperately to keep Ms. Roberts from losing her home. In 2007, a year after a refinancing, Ms. Roberts suffered a temporary setback that caused her to stop paying her mortgage for less than a year. Given her situation — steady income, a history of reliability — you would think that she would be a perfect candidate for a mortgage modification.

Instead, her servicer, Bank of America, foreclosed on the property in late August and handed it off to Fannie Mae, which owned the mortgage. Ms. Roberts first learned this when she saw Fannie Mae’s eviction notice taped to her front door.

As part of her effort to save Ms. Roberts’ house, Ms. Lynch filed a lawsuit to undo the foreclosure, on the grounds that fraud had been committed at various points along the way. Although such suits rarely succeed, a judge agreed to hear the case in early January.

Another part of her effort, though, was to try to create some media interest, which is how I got involved. “With all of the foreclosure cases I have seen,” Ms. Lynch wrote in an e-mail, “this is the one that gets at me the most.”

Truth to tell, Ms. Roberts’s story got to me too. Even putting aside the possibility of fraud, nobody should have to endure what she’s been through. Since March 2008 — that’s right, two and a half years — she has spent nearly $30,000 trying to hold onto her home. She has had to deal with a nasty foreclosure mill law firm, with servicing employees who gave her the runaround and with a foreclosure process that took place behind her back. And she has had to deal with the anxiety of not knowing whether she would be able to keep her home.

Yes, there are people who took out mortgages knowing they could never pay the money back. Ms. Roberts is not one of them. Rather, she is one of the many Americans, mostly poor and lower-middle class, who have been devastated by a system that is as rapacious, uncaring — and sloppy — in tossing people out of their homes as it once was in foisting predatory mortgages on them.

Two days after I spoke with Ms. Roberts, Bank of America and Fannie Mae acknowledged that foreclosing on her home had been a mistake, and they vowed to give her back the house. “We are going to work with her on a loan modification,” a Bank of America spokesman promised.

Yet, while Ms. Roberts’s story has a happy ending, it is hard to get too excited — not when so many others are in the same awful place, losing homes as much because of the system’s callousness as because of their own precarious finances.

Ms. Roberts’s troubles began with the rotting wood and upstairs windows. In 2006, her longtime tenant, who paid her $600 a month, moved out; she needed to fix the apartment before she could get a new tenant. The only way she could afford it was by refinancing her home.

The company that gave her the new mortgage was a now-bankrupt outfit, Mortgage Lenders Network, which a former employee described to me as “one of the bad actors” during the subprime bubble. It is hard to know now what kind of mortgage Ms. Roberts got; although it had a fixed interest rate below 6 percent, Ms. Roberts recalls having very little cash left over after the repairs were made — even though, at more than $300,000, the new mortgage was more than double the size of her original mortgage. Her new monthly payment was around $1,700 a month, a $500 increase. But with a new renter paying $900 a month, she felt it was well within her means.

Sometime in 2007, however, the tenant stopped paying his rent. Thanks to New York’s tough rental laws, she couldn’t easily evict him. Without that $900 a month, she couldn’t make ends meet and still pay her mortgage. Thus it was that in March 2008, she requested a mortgage modification from her servicer, the Wilshire Credit Corporation, a division of Merrill Lynch that specialized in delinquent mortgages.

What happened over the course of the next few years can only be described as Kafka-esque. Wilshire Credit asked her for a hardship letter; she sent one. Nothing happened. Three separate times, Wilshire set up short-term payment agreements — two of which included $7,000 upfront payments — claiming that it would make a decision on a long-term modification once the agreement expired. She paid every penny — to no avail.

Sometimes, when she was between short-term agreements, Wilshire would refuse to take her check. Sometimes, it cashed them. Sometimes she was told her request for a modification had been denied. Other times she was told it was being considered. At one point, the foreclosure mill law firm of Steven J. Baum, which represented Wilshire, tried to get her to waive her legal rights as part of the third short-term agreement. (The firm would not discuss the details of the case on the record.) All the while, behind Ms. Roberts’s back, Wilshire was inching toward foreclosure.

In March 2010, Bank of America, which got Wilshire when it bought Merrill Lynch in 2008, sold the servicing company to I.B.M. As part of the deal, though, it kept Wilshire’s servicing clients.

Was life any better with the mighty Bank of America now servicing her mortgage? Not a chance. Bank of America took her money in May and June. But in July and again in August, a bank employee told her not to send a payment because the bank was close to offering her a new repayment plan. Instead, in late August, the bank foreclosed and turned the property over to Fannie Mae.

After taking on Ms. Roberts’s case, Ms. Lynch uncovered the unseemly back story — a story that is playing out in poor neighborhoods all over the country. She found clear evidence of robosigning. She also discovered that the transfer of the mortgage from Mortgage Lenders Network to Wilshire appeared to have been backdated by two years — making it appear that it took place before M.L.N.’s bankruptcy. Assets cannot be sold by a bankrupt company without the assent of a trustee, thus suggesting that the transfer of Ms. Roberts’s mortgage might have been improper. And she found evidence that Ms. Roberts had never been served with the foreclosure papers — something Ms. Roberts swore to in an affidavit. These are the grounds for her lawsuit.

But as I discovered when I began asking around, the story is even worse than that. Why did Fannie Mae begin eviction proceedings? Because Bank of America claimed, wrongly, that Ms. Roberts was a deadbeat who hadn’t made a mortgage payment since March 2008. When Fannie Mae asked the bank to double-check, Bank of America simply repeated this false information. In other words, Ms. Roberts was being thrown out of her house because of Bank of America’s carelessness.

Stunned at what I was hearing, I sent James Mahoney, a bank spokesman, a copy of Ms. Roberts’s legal complaint, which documented all the payments she’d made over the year. Less than 24 hours later, he called to tell me that the bank had requested a “rescission” of the foreclosure sale to Fannie Mae — and that “this decision is receiving favorable consideration from Fannie.”

To Mr. Mahoney, this reversal showed that Bank of America was trying to do right by homeowners. “We have made 700,000 mortgage modifications this year,” he said. He described the bank’s willingness to give Ms. Roberts a loan modification as a “microcosm of Bank of America’s role” in the foreclosure crisis. I agree that it’s a microcosm, though not necessarily in the same way that Mr. Mahoney does.

To my surprise, when I called Ms. Lynch with the good news late Thursday, she did not jump for joy. Although she was pleased for her client, she was furious at what she saw as Bank of America’s presumption.

“It’s offensive that BofA thinks a foreclosure action, an eviction notice of an elderly woman sitting in her house fearing that she will spend the remainder of her days in a shelter, is some sort of party invitation that can be ‘rescinded,’ ” she wrote in an e-mail. “Their disrespect for the law is appalling. But it is a pattern of behavior that led to this crisis and that is continuing to keep this country in this crisis.”

Let’s face it: Ms. Roberts got a break. Because she had a dogged lawyer, who had the wit to get a New York Times columnist interested in her case, a terrible mistake was uncovered. As a result, an unjustified foreclosure may well be reversed.

But it has to make you wonder how many other people have lost their homes because of similar mistakes. I can’t bear to venture a guess. It’s too sickening to contemplate.

Can I Borrow Your Law License?

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“In its S.E.C. filing, Prommis alerted potential investors that it could face challenges from bar associations, prosecutors or homeowners that its relationship with its law firms constituted the “unauthorized practice of law” or involved “impermissible fee sharing” arrangements.”

“The relationship between the Wall Street specialists and a law firm appears to work like this: A private equity firm, in a transaction worth tens of millions of dollars, buys a wide range of services used by the law firm, like its accounting, computer data, document processing and title search departments. Then, a subsidiary of that private equity firm or an entity it controls makes money by providing those services back to that law firm or other businesses for a fee.”

EDITOR’S COMMENT: It was a just a matter of time. Ask any of the anti-foreclosure mills how long and how much money it takes to build up an effective machine to counter the rush to foreclosure, and it doesn’t take a rocket scientist to realize that Stern, Bosco, Baum, Watson et al were getting their money from someplace, and that someplace HAD to be Wall Street. Wall Street effectively owns the foreclosure mills. Bar prosecutors in many states are taking a hard look at the referral of these cases for UPL (Unauthorized Practice of Law) and conspiracy. It’s a felony in most states and there are actual manuals published in many of these states that instruct prosecutors on how to prosecute UPL. It isn’t sexy, but it has a lot of teeth, as I have mentioned before, comparing to how they got Al Capone on income tax evasion.

So the owner of small law firm gets an offer he can’t refuse. We’ll buy out the guts of your firm whether it exists or not. We’ll put in the money to build it up with people, equipment, space, etc. We’ll lease it back to you at a guaranteed amount of money that will make you rich. Just sit back and do nothing. we’ll do the rest. Combined with the admission that the decision as to whether a homeowner would be declared in default was “outsourced” to a computer rather than a person, the pieces are falling together like a jig saw. That decision-making process was also used to “decide” which institution would foreclose — to prevent the obvious inquiries from more than one foreclosure on the same house initiated in the name of two or more supposedly separate and distinct entities. The purpose is to provide “plausible deniability” to the people involved and technical hair-slitting defenses to keep their licenses, keep the money they made, and maintain control of the biggest title fraud in the history of the world.

October 20, 2010

Foreclosures Profit Some Equity Firms

By BARRY MEIER

With a surge in lawsuits against law firms specializing in foreclosures, a case in Mississippi is casting light on another aspect of the mortgage mess — the connection between Wall Street private equity firms and those law firms, often known as foreclosure mills.

The lawsuit on behalf of homeowners claims that Great Hill Partners, a private equity firm, has benefited from what the lawsuit calls an illegal fee-splitting arrangement between Prommis Solutions and several of the busiest foreclosure law firms it controls. Great Hills is the biggest stakeholder in Prommis, a company that acts as a middleman between mortgage servicers and law firms.

A lawyer for Prommis rejected that claim, and officials of Great Hill Partners did not respond to inquiries. But a review of public filings, company news releases and other public statements shows that several private equity firms or entities they control have stakes in the business operations of some of the busiest foreclosure law firms in New York, California, Connecticut, Florida, Georgia and Texas.

Some of those law firms — like the offices of David J. Stern of Plantation, Fla., and Steven J. Baum of Amherst, N.Y. — are among those that are either under scrutiny by law enforcement officials or face actions by homeowners contending that they used inaccurate or fraudulent mortgage-related documents. Both lawyers have denied any wrongdoing, and neither has been charged with a crime.

The influence, if any, that private investors are having on the practices of the foreclosure mills is not clear. But the issue is likely to be examined in coming months in lawsuits like the one in Mississippi and as a nationwide task force of state attorneys general start their inquiry into the accuracy of mortgage documents.

To maximize investment returns, private equity firms often squeeze down costs in the operations they acquire. And some legal experts suggest that could be a factor in the quality of legal documents generated by foreclosure mills.

“The concern is that you are pushing production down to least-cost producer,” said Susan Carle, a professor at American University Washington College of Law.

Tom Miller, the Iowa attorney general who is heading up the task force investigating questionable document practices, said he was not aware that private equity firms had acquired some foreclosure-related operations. While there is no law against such purchases, Mr. Miller said the issue could prove significant because it expanded the possibilities of where and how the foreclosure system failed.

“If this is happening, this is something we are concerned about and would want to find out more about it,” Mr. Miller said in a telephone interview.

The investors involved in foreclosure mills include a publicly traded investment fund, Ares Capital, as well as other midsized and small buyout firms like Great Hill Partners.

The involvement of private equity firms in the legal industry is not new. But their involvement with foreclosure mills appears to have started about five years ago, just as the housing market was starting to collapse and the number of foreclosure procedures was beginning to boom.

The relationship between the Wall Street specialists and a law firm appears to work like this: A private equity firm, in a transaction worth tens of millions of dollars, buys a wide range of services used by the law firm, like its accounting, computer data, document processing and title search departments. Then, a subsidiary of that private equity firm or an entity it controls makes money by providing those services back to that law firm or other businesses for a fee.

For example, about three years ago, Tailwind Capital, a private equity firm in Manhattan, acquired many of the business-related operations of a law firm near Buffalo run by Mr. Baum, which does one of the highest volumes of foreclosures in New York State. Soon afterward, the fund bought similar operations from one of Connecticut’s biggest foreclosure law firms, Hunt Leibert Jacobson of Hartford.

Ares Capital, which financed the move, is also now a co-investor in those assets, which are held in a Tailwind unit called Pillar Processing, a public filing indicates.

Similarly, a private equity firm in San Francisco, FTV Capital spearheaded a $27 million investment in 2007 in an entity that buys law firm business operations and then uses them to provide services back to firms specializing in “foreclosure, bankruptcy and eviction,” according to a news release issued by the firm.

“We have been keenly focused on the mortgage-default services space,” the buyout fund stated in a 2007 news release. “The space is important to our strategic investors which represent six of the top 10 mortgage investors/servicers.”

In an e-mail, a spokeswoman for FTV Capital said that company officials were not available for comment.

Law firms receive a relatively low fee from companies that service home loans, say about $1,200 a case for handling a foreclosure-related proceeding. But those fees can translate into big profits for lawyers and their private equity partners when tens of thousands of foreclosures are involved. The law firms and the private equity firms have structured these deals with an eye toward avoiding legal statutes and ethical rules like those that bar fee-splitting between lawyers and nonlawyers.

But that relationship has been challenged in the Mississippi lawsuit against Prommis and Great Hill Partners.

Another company, Lender Processing Services, is also accused in the lawsuit of illegally splitting fees with foreclosure law firms; it also denies doing so.

The roots of Prommis, based in Atlanta, trace back to 2006 when the company acquired the back-office operations of McCalla Raymer, one of the country’s biggest foreclosure law firms. Great Hill Partners states on its Web site that it was interested in the acquisition because it reflected a way for it to profit from the housing downturn.

In subsequent years, Prommis expanded its operations nationwide by buying the back-office operations of other major foreclosure law firms, according to a recent Securities and Exchange Commission filing made by the company in connection with a planned initial stock offering.

According to that June filing, Prommis now generates revenue by providing services like document processing to the same law firms that handle nearly all of the foreclosures initiated by the loan servicers with whom Prommis works.

In a telephone interview, Prommis’s general counsel, Richard J. Volentine Jr., said that the company did not split fees with its affiliated law firms and that those fees were paid directly to those firms by the loan servicers.

In its S.E.C. filing, Prommis alerted potential investors that it could face challenges from bar associations, prosecutors or homeowners that its relationship with its law firms constituted the “unauthorized practice of law” or involved “impermissible fee sharing” arrangements.

Prommis also stated in that filing that any steps that slowed the pace of foreclosures, like government programs that helped homeowners renegotiate loans, would hurt its revenue.

Julie Creswell contributed reporting.

Shack; JPM, Trustee Lacks Standing, Vacates Foreclosure

The true answer is that securitization is a process that is still on going and not an event.The Real Party in Interest (and the real amount of principal due, if any) is in a state of flux hidden by obscure, hidden or “confidential documentation.” Don’t make it your problem to unravel it. Use your strength to force THEM to prove their claim whether it is in a judicial or non-judicial proceeding.

Editor’s Comment: In case you haven’t noticed, this case, along with some others I’ve heard about but not received, closes the loop. The Pretender Lenders have now tried to use all the major parties and some of the minor parties in foreclosures and when tested have failed to prove standing. standing is a jurisdictional matter and it basically boils down to “You don’t belong here, you have no rights to enforce, you have no interest in this litigation, so get out of here and don’t come back.”

They tried MERS, Servicers, Foreclosure Specialty processors, Trustees, originating “lenders” and they come up empty. why because they are all intermediaries and as Judge Holloway put it, the note is not payable to them, the mortgage does not secure them, the obligation is not due to them and therefore they can’t proceed. In non-judicial states they get around this requirement unless the homeowner brings suit.

So who is the real party in interest? See the Fordham Law Review article posted on this blog more than two years ago “Will the Real Party in Interest Please Stand Up.”

The answer isn’t easy, but the strategy is very simple — don’t accept responsibility for the narrative or you will be taking on the burden of proof in THEIR case. They have the information and you don’t. The true answer is that securitization is a process that is still on going and not an event. The Real Party in Interest (and the real amount of principal due, if any) is in a state of flux hidden by obscure, hidden or “confidential documentation. Don’t make it your problem to unravel it. Use your strength to force THEM to prove their claim whether it is in a judicial or non-judicial proceeding.

The real reason for them NOT simply bringing in the investors who at least WERE parties in interest is multifold:

  • The meeting of the investor with the borrower will result in comparing notes and the fact that not all the money advanced by investors was actually invested in mortgages will be “problematic” for the investment bankers who put this scheme together.
  • The meeting of the investor and borrower could result in an alliance in litigation in which the shell game would be impossible.
  • The meeting of the investor and the borrower could result in a settlement that cuts the servicers and other intermediaries out of the gravy train of servicing fees, foreclosures with rigged bids, etc.
  • The conflict of interest between the intermediaries and the investors might become evident, and lead to further litigation both from the investors and the SEC, state attorneys general and Department of Justice.
  • The investment vehicle (the “trust” or Special Purpose Vehicle) might have been dissolved with the investors paid off and/or with the “assets” resecuritized into a new BBB rated vehicle. This could lead to the nuclear question: what if any, is the balance due in principal on this OBLIGATION. Warning: If you let the narrative shift to the NOTE (which is merely evidence of the obligation) you risk being entrapped by the simple question “Did you make your payments under this note?” This immediately puts you on the defensive BEFORE they have established THEIR case. Since THEY are the party seeking affirmative relief, THEY should establish the foundation first.
  • And the last thing that comes to my mind is the last thing anyone wants to hear — was this obligation satisfied in whole or in part by third party payments through credit enhancements or federal bailout?

Hon. Arthur M. Schack does it again!

JP Morgan Chase Bank, N.A. v George

2010 NY Slip Op 50786(U)
Decided on May 4, 2010

Supreme Court, Kings County
Schack, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on May 4, 2010
Supreme Court, Kings County

JP Morgan Chase Bank, N.A., AS TRUSTEE FOR NOMURA ASSET ACCEPTANCE CORPORATION MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2004-AR4, Plaintiff,

against

Gertrude George, IVY MAY JOHNSON, GMAC MORTGAGE CORPORATION, DANIEL S. PERLMAN, et. al., Defendants.

10865/06

Plaintiff– JP Morgan Chase Bank
Steven J Baum, PC
Amherst NY

Defendant– Gertrude George
Edward Roberts, Esq.
Brooklyn NY

Defendant– Ivy Mae Johnson
Precious L. Williams, Esq.
Brooklyn NY

Arthur M. Schack, J.

_______________________________________________

Accordingly, it is
ORDERED, that the order to show cause of defendant IVY MAE JOHNSON, to vacate the January 16, 2008 judgment of foreclosure and sale for the premises located at 47 Rockaway Parkway, Brooklyn, New York (Block 4600, Lot 55, County of Kings), pursuant to CPLR Rule 5015 (a) (4), because plaintiff, JP MORGAN CHASE BANK, N.A., AS TRUSTEE FOR NOMURA ASSET ACCEPTANCE CORPORATION MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2004-AR4, lacked standing to commence the instant action and thus, the Court never had jurisdiction, is granted; and it is further

ORDERED, the instant complaint of plaintiff JP MORGAN CHASE BANK, N.A., AS TRUSTEE FOR NOMURA ASSET ACCEPTANCE CORPORATION MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2004-AR4 for the foreclosure on the premises located at 47 Rockaway Parkway, Brooklyn, New York (Block 4600, Lot 55, County of Kings) is dismissed with prejudice.

This constitutes the Decision and Order of the Court.

ENTER

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Hon. Arthur M. SchackJ. S. C..

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