FLORIDA (un)Fair Foreclosure Act On The Move!


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EMERGENCY- FLORIDA (un)Fair Foreclosure Act On The Move!
February 6th, 2012 | Author: Matthew D. Weidner, Esq.
It looks like the Florida House of Representatives will move on Wednesday, February 8 to hear the Florida (un)Fair Foreclosure Act.

The bill number currently under consideration is Committee Substitute for House Bill 213. Please take the time to read the bill in full here.


It is especially important to call the chairperson Dorothy Hukill and make sure she knows this is a bad, bad bill:

Capitol Office
204 House Office Building
402 South Monroe Street
Tallahassee, FL 32399-1300
Phone: (850) 488-6653

But make sure you hit all the legislators on the committee. They need to know that this bill it toxic and will be very, very controversial. It is still being amended and more bad news is being thrown into this every day. The bottom line is it is a reward to the banksters that caused all this mess, paid for by the little guy.

Among the most disturbing aspects is that it would turn some foreclosures into “show cause” proceedings that could deprive a homeowner of the right to raise defenses and could result in a sale in as little as 90 days!

The bill would require some Defendants to make payments to the pretender lender as a condition of having their voice heard in court.

The bill would apply to all foreclosures currently pending



Bank Settlement Close with New York and California Signing On


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EDITOR’S COMMENT: The probabilities of a settlement are rising. The $25 Billion settlement actually settles very little but it probably will suffice for the vast majority of homeowners who were displaced wrongfully by foreclosure. This is not because they are getting proper restitution. It is because these represent the people who have had the fight crushed out of them. They are absorbing the loss to the great advantage of the banks and servicers.

According to most published reports, this is not an obstacle for homeowners who wish to pursue individual claims for wrongful foreclosures and associated claims. On the other hand, it will invite argument as to whether the settlement does pre-empt certain types of claims, which will muddy the waters just as the banks and servicers want it to be.

All this in the context of hundreds of articles containing copies and proof of wrongdoing by the banks, failure to establish the basic elements of a claim against anyone, much less a homeowner with whom they have no contract, and actual criminal conduct to cover-up the wrong-doing. This has been chronicled by DCB who submitted the following list of articles as proof that we have known for years, but as a society, we are reluctant to restore to the victims the available restitution from the Banks and servicers.

MOTION TO SHIFT THE BURDEN OF NON-PERSUASION: One additional note: at the very end there is a decision that I had missed which could have some persuasive authority. The decision is a bit muddled but it addressed a strategy I have long championed — putting the burden of proof where it belongs.

It is axiomatic that a party wishing to have a claim enforced must make the claim, plead the elements of the cause of action and then prove it. The general rule is that the party who brings up the matter seeking affirmative relief (like collection on a debt or a foreclosure) has the burden of pleading and proving his case BEFORE anything is required of the opposing party.

In my opinion lawyers should file a motion to re-align the parties so that once in court, the party seeking to foreclose would be requried to plead and prove their case. In non-judicial states, this could serve to change things considerably. There a simple denial and motion to realign would convert the case to a judicial caase, which is the way it ought to be. If the pretender has the goods, they should have no objection. Instead non-judicial process is used as an end run around the usual requirement of pleading and proving their case.

The result, as we have seen repeatedly, is that a foreclosure that would not be granted in a judicial foreclosure is rubber stamped because of incorrect presumptions about the nature and constitutionality of non-judicial process. As practiced, it clearly violates the due process rights set forth clearly in our U.S. Constitution.

Following is submitted by DCB

List of Documents for JUDICIAL NOTICE
1. New York Sues Banks Over Mortgage Registry System, WSJ, MARKETS FEBRUARY 3, 2012, BY CHAD BRAY NEW YORK—New York Attorney General Eric T. Schneiderman sued three of the nation’s largest banks over a private national mortgage registry system, contending it has resulted in a wide range of deceptive and fraudulent foreclosure filings. The lawsuit, filed in New York State Supreme Court in Brooklyn, names units of Bank of America Corp., J.P. Morgan Chase & Co. and Wells Fargo & Co. as defendants, as well as MERSCorp., which owns and operates the Mortgage Electronic Registration Systems, known as MERS. In his complaint, Mr. Schneiderman alleges that MERS has effectively eliminated the public’s ability to track property transfers http://online.wsj.com/article/SB10001424052970203889904577201060859616158.html

2. “Fed’s Raskin: Mortgage Servicers Must Fix ‘Deceptive’ Practices,” WSJ, JANUARY 8, 2012, By ERIC MORATH; “ WASHINGTON—Federal Reserve Gov. Sarah Bloom Raskin called upon mortgage servicers to fix their “sloppy and deceptive practices” and said the Fed must impose fines on servicers as part of a push for more forceful government action to fix the broken housing market… It is important “that the severe misconduct that has been uncovered in the mortgage servicing sector be addressed through intensified public enforcement of the law… “The Federal Reserve and other federal regulators must impose penalties for deficiencies that resulted in unsafe and unsound practices,” Ms. Raskin said…. Regulators, including the Fed, must take action against mortgage servicers to correct bad practices, Ms. Raskin said. For example, the Fed and other federal regulators investigated 14 of the largest mortgage servicers and last April found each had “significant problems. The review process is one of several efforts to address revelations that surfaced a year ago over banks’ use of so-called robo-signers, bank employees who signed off on huge numbers of legal foreclosure filings daily and falsely claimed to have personally reviewed each case. Ms. Raskin and fellow Fed Governor Elizabeth Duke have led the central bank’s study of housing policy, an area normally outside the central bank’s purview ” [Emphasis Added.]

DECEMBER 16, 2011. “Nevada’s attorney general filed a lawsuit against Lender Processing Services Inc. (LPS) alleging widespread fraud and misleading of consumers, adding to legal woes at the mortgage-services company and sending its shares lower.

The company’s shares were down 8.7% at $15.83 in
4. “BANKS IN PUSH FOR PACT,” WSJ, BUSINESS DECEMBER 13, 2011. BY RUTH SIMON, NICK TIMIRAOS AND DAN FITZPATRICK “Five large lenders could be forced to make concessions worth roughly $19 billion as bank representatives and government officials push to put the finishing touches on a settlement of most state and federal investigations of alleged foreclosure improprieties…” http://online.wsj.com/article/SB10001424052970204336104577094772749499652.html

5. “MASSACHUSETTS SUES BANKS OVER FORECLOSURES,” WSJ, DECEMBER 1, 2011, Associated Press, NEW YORK — “Massachusetts sued five major banks Thursday over deceptive foreclosure practices such as the “robo-signing” of documents, potentially undermining negotiations between lenders and state prosecutors across the nation over the same issue…” http://online.wsj.com/article/AP42fa25a884654772aaf9a9ec07459844.html

6. “NEVADA GRAND JURY INDICTS TWO IN ALLEGED ROBO-SIGNING SCHEME ,” WSJ, U.S. NEWS, NOVEMBER 16, 2011. BY RUTH SIMON, “A Nevada grand jury has handed up criminal indictments against two title officers employed by Lender Processing Services Inc. for allegedly directing and supervising a robo-signing scheme, in which documents filed in foreclosure cases were signed without proper legal review…” http://online.wsj.com/article/SB10001424052970203699404577042961074968218.html
7. “MORGAN STANLEY IN N.Y. PACT, Wall Street Firm Agrees to Foreclosure Standards and End to ‘Robo-Signing’.” WSJ LAW NOVEMBER 11, 2011, BY LIZ RAPPAPORT, “…Morgan Stanley on Thursday became the second Wall Street giant to agree to a set of standards that aim to halt foreclosure abuses. Under a pact with Benjamin M. Lawsky, superintendent of New York’s Department of Financial Services, the New York securities firm and three other companies pledged to adhere to business practices that aim to prevent mishandling of loans and end “robo-signing,” in which bank employees signed foreclosure documents without reviewing case files as required by law…” http://online.wsj.com/article/SB10001424052970204224604577030010982458588.html

8. “PRICE OF FORECLOSURE SETTLEMENT CLIMBS HIGHER”,. WSJ BUSINESS NOVEMBER 1, 2011 BY RUTH SIMON, NICK TIMIRAOS AND DAN FITZPATRICK “The price tag to settle the state and federal investigation of bank foreclosure practices has increased by at least $5 billion in recent weeks, people familiar with the negotiations say. The proposal on the table now puts a $25 billion value on a settlement by the nation’s five largest mortgage servicing companies—Ally Financial Inc., Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Wells Fargo & Co. In exchange for picking up a bigger tab, banks would be released from certain legal claims tied to mortgage originations. Representatives of the five banks declined to comment…” http://online.wsj.com/article/SB10001424052970203707504577010421094503502.html

9. “BANKS, STATE REACH A DEAL” WSJ MARKETS SEPTEMBER 1, 2011. BY LIZ RAPPAPORT “The mortgage industry will take a step toward cleaning up some of its most controversial practices under a deal between a New York regulator and three financial firms, including Goldman Sachs Group Inc. Under the agreement with the state’s financial-services superintendent, Benjamin M. Lawsky, the three firms—Goldman, its Litton Loan Servicing business and Ocwen Financial Corp.—promised to end so-called robo-signing, in which bank employees signed foreclosure documents without reviewing case files as required by law. They also agreed to comb through loan files for evidence they mishandled borrowers’ paperwork and to cut mortgage payments for some New York homeowners….” http://online.wsj.com/article/SB10001424053111904716604576543021468088268.html

10. “AMERICAN HOME MORTGAGE FILES ‘ROBO-SIGNING’ SUIT,” WSJ, MARKETS AUGUST 23, 2011, BY NICK TIMIRAOS; One of the nation’s largest mortgage servicers filed a lawsuit on Tuesday against Lender Processing Services Inc., a top mortgage industry technology and services vendor, alleging that the firm improperly signed mortgage documents on its behalf and triggered millions of dollars in legal expenses as a result. American Home Mortgage Servicing Inc. said in the lawsuit that it had incorrectly processed more than 30,000 mortgage assignments when seeking foreclosure on properties in all 50 states as a result of the work by an LPS subsidiary. http://online.wsj.com/article/SB10001424053111904279004576526500703056250.html

11. “BANKS HIT HURDLE TO FORECLOSURES,” WSJ BUSINESS JUNE 1, 2011. By NICK TIMIRAOS Banks trying to foreclose on homeowners are hitting another roadblock, as some delinquent borrowers are successfully arguing that their mortgage companies can’t prove they own the loans and therefore don’t have the right to foreclose. These “show me the paper” cases have been winding through the courts for several years. But in recent months, some judges have been siding with borrowers and stopping foreclosures after concluding that banks’ paperwork problems are more serious than previously thought and raise broader ethical questions. This year, cases in California, North Carolina, Alabama, Florida, Maine, New York, New Jersey, Texas, Massachusetts and others have raised questions about whether banks properly demonstrated ownership. http://online.wsj.com/article/SB10001424052702304563104576357462376821094.html

12. “MORTGAGE OWNERSHIP MISCUES THREATEN FORECLOSURES,” WSJ Real estate news and analysis, June 1, 2011, “…one reason why mortgage companies have struggled to get foreclosures back on track: Banks are running into more challenges questioning whether they have properly documented ownership of mortgages. The speed of bundling loans from nonbank lenders into mortgage securities sold by Wall Street has now spawned some confusion as banks’ lawyers have struggled to properly file foreclosures showing that mortgage trusts own their loans. Some lawyers say that confusion has prompted some attorneys and other mortgage firms to fabricate and backdate documents. In January, the U.S. Trustee Program, a division of the Justice Department that oversees bankruptcy cases, raised “concerns about the integrity” of documents filed on behalf of Deutsche Bank…lawyers for American Home submitted new paperwork showing that the loan had been transferred last June to a company called Sand Canyon Corp., the parent of Option One. But that raised eyebrows because Sand Canyon executives previously testified that the firm exited the mortgage business entirely in 2008, meaning it wouldn’t have been able to assign anything in 2010…. Mark Polen, a judge on the [Florida] appellate court, wrote… ‘Decision-making in our courts depends on genuine, reliable evidence,’ he wrote. ‘The system cannot tolerate even an attempted use of fraudulent documents.’” [Emphasis added.] http://blogs.wsj.com/developments/2011/06/01/mortgage-ownership-miscues-threaten-foreclosures/
13. “JUDGES SEE LITTLE IMPROVEMENT IN FORECLOSURE PROCEDURES,” WSJ, HOMES APRIL 29, 2011. By RUTH SIMON, “Some judges are skeptical of claims by lenders that they have substantially improved their foreclosure procedures since controversy over the practices exploded last fall F. Dana Winslow, a N.Y. State Supreme Court Justice in Long Island’s Nassau County, said there has been only “a marginal improvement in what is being submitted to the court.…For example, financial institutions are ‘showing a better chain of title’ about who owns the debt, he said. “But I’m not seeing any additional clarity on who has control over the actual mortgage note signed by the borrower and lender and where the note is….’ In New York, foreclosure filings have declined sharply since New York State Chief Judge Jonathan Lippman issued an order in October requiring lawyers to sign an affidavit affirming that foreclosure paperwork was properly reviewed and to their knowledge is accurate. ‘There’s almost a presumption that there may be something wrong with the documentation,’ said O. Max Gardner III, a lawyer in Shelby, N.C., who represents borrowers in bankruptcy cases. U.S. regulators have ordered banks to take steps to “ensure the accuracy of all documents” used in the foreclosure process….” [Emphasis added.] Write to Ruth Simon at ruth.simon@wsj.com http://online.wsj.com/article/SB10001424052748703367004576289241312106726.html

14. “FANNIE REPORT WARNED OF FORECLOSURE PROBLEMS IN 2006,” WSJ MARKETS MARCH 25, 2011, By CARRICK MOLLENKAMP And NICK TIMIRAOS, “Fannie Mae was warned in a 2006 internal report of abuses in the way lenders and their law firms handled foreclosures, long before regulators launched investigations into the mortgage industry’s practices. The report said foreclosure attorneys in Florida had “routinely made” false statements in court in an effort to more quickly process foreclosures and raised questions about whether some mortgage servicers or another entity had the legal standing to foreclose… In recent months, federal and state officials have initiated probes into whether banks and foreclosure law firms improperly seized homes by using fraudulent or incomplete paperwork. Some U.S. banks temporarily froze foreclosures to review their processes and now face the prospect of a multibillion-dollar settlement with federal and state officials. Elizabeth Warren, the White House adviser in charge of establishing the new Bureau of Consumer Financial Protection, said in congressional testimony last week that with proper oversight, “the problems in mortgage servicing would have been exposed early and fixed while they were still small.” Ms. Warren didn’t name Fannie Mae and referred to the industry in general….” http://online.wsj.com/article/SB10001424052748703784004576220582457540372.html
15. “FORECLOSURE TALKS SNAG ON BANK LIABILITY”, WSJ, LAW AUGUST 22, 2011. BY RUTH SIMON, VANESSA O’CONNELL AND NICK TIMIRAOS: “Efforts to reach a settlement that would end the long-running probe of foreclosure practices are snagged over whether banks will get broad legal immunity from state officials for mortgage-related claims. Federal and state officials are seeking penalties of $20 billion to $25 billion from Bank of America Corp., J.P. Morgan Chase & Co. and other financial firms under investigation since last fall. The banks are pushing hard for a deal, but they have insisted on a wide-ranging legal release from state attorneys general. ‘They wanted to be released from everything, including original sin,” said a U.S. official involved in the …’” http://online.wsj.com/article/SB10001424053111904070604576521282894534152.html

16. “BANKS IN PUSH FOR PACT” WSJ: BUSINESS, DECEMBER 13, 2011.. BY RUTH SIMON, NICK TIMIRAOS AND DAN FITZPATRICK, ”Five large lenders could be forced to make concessions worth roughly $19 billion as bank representatives and government officials push to put the finishing touches on a settlement of most state and federal investigations of alleged foreclosure improprieties…” http://online.wsj.com/article/SB10001424052970204336104577094772749499652.html

17. “U.S. PROBES FORECLOSURE-DATA PROVIDER-LENDER PROCESSING SERVICES UNIT DRAWS INQUIRY OVER THE STEPS THAT LED TO FAULTY BANK PAPERWORK.” WSJ LAW APRIL 3, By AMIR EFRATI and CARRICK MOLLENKAMP “A subsidiary of a company that is a top provider of the documentation used by banks in the foreclosure process is under investigation by federal prosecutors. The prosecutors are “reviewing the business processes” of the subsidiary of Lender Processing Services Inc., based in Jacksonville, Fla., according to the company’s annual securities filing released in February. People familiar with the matter say the probe is criminal in nature. Michelle Kersch, an LPS spokeswoman, said the subsidiary being investigated is Docx LLC. Docx processes and sometimes produces documents needed by banks to prove they own the mortgages. LPS’s annual report said that the processes under review have been “terminated,” and that the company has expressed its willingness to cooperate. Ms. Kersch declined to comment further on the probe. A spokesman for the U.S. attorney’s office for the middle district of Florida, which the annual report says is handling the matter, declined to comment. The case follows on the dismissal of numerous foreclosure cases in which judges across the U.S. have found that the materials banks had submitted to support their claims were wrong. Faulty bank paperwork has been an issue in foreclosure proceedings since the housing crisis took hold a few years ago. It is often difficult to pin down who the real owner of a mortgage is, thanks to the complexity of the mortgage market.” http://online.wsj.com/article/SB10001424052702303450704575160242758576742.html

18. “UNDER PILES OF PAPERWORK, A FORECLOSURE SYSTEM IN CHAOS” (pgs A1, A24) THE WASHINGTON POST, September 23, 2010), By Ariana Eunjung Cha and Brady Dennis Washington Post Staff Writers; “The nation’s overburdened foreclosure system is riddled with faked documents, forged signatures and lenders who take shortcuts reviewing borrower’s files, according to court documents and interviews with attorneys, housing advocates and company officials.” [See also Department of Homeland Security: http://www.fbiic.gov/public/2010/oct/Financial_Services_SOSD_September2010.pdf
19. “ERRORS LEAVE FORECLOSURES IN QUESTION” (pgs B1, B7), THE NEW YORK TIMES, September 25, 2010: “The recent admission by a major mortgage lender that it had filed dubious foreclosure documents is likely to fuel a furor against hasty foreclosures, which have prompted complaints nationwide since housing prices collapsed…While GMAC is the first big lender to publicly acknowledge that its practices might have been improper, defense lawyers and consumer advocates have long argued that numerous lenders have used inaccurate or incomplete documents to remove delinquent owners from their houses….J. Thomas McGrady, chief judge in the foreclosure hotbed of St. Petersburg, said the problems went far beyond GMAC. Four major law firms doing foreclosures for lenders are under investigation by the Florida attorney general… ‘Some of what the lenders are submitting in court is incompetent, some is just sloppy,’ said Judge McGrady of the Sixth Judicial Circuit in Clearwater, Fla. ‘And somewhere in there could be a fraudulent element.’” [Emphasis added.] http://www.nytimes.com/2010/09/25/business/25mortgage.html

Approval and Order of Judicial Notice: E.R. 21; Wall Street Journal
The Court hereby approves the list of Wall Street Journal Articles attached as evidence of the facts set out therein as evidence of an industry practice of filing defective documents to obtain possession of homes, and other similar described failures, and such other information as is set out therein; and ORDERS that the plaintiff shall have the to use the articles in part or in full for purposes of pleadings, motions, and as admissible evidence at trials in this case.
So-Approved and ORDERED:
Judge ______________
Plaintiff herein respectfully moves this court order the burden of proof to shift in respect of industry practices described in the WALL STREET JOURNAL. The issues presented there included but were not limited to defective documents filed with the court to obtain possession or title to the subject homeowner real estate. Movant requests that the court ORDER that the burden to shall and has shifted to defendant debt collector to shall show cause why his activities were held to a higher standard of care than the “industry practice, or the evidence of industry practices stated in the Wall Street Journal Articles admitted as evince into this record by Judicial Notice of Adjudicative facts” filed herewith as conclusive evidence of such industry practices ALSO FOLLOWED BY DEFENDANT DEBT COLLECTOR, and if he shall not make a persuasive demonstration as he may show cause, then he shall be conclusively presumed to have followed those practices.
This Court hereby issues this ORDER that the burden to shall and has shifted to defendant debt collector and he shall show cause within 30 days why his activities were held to a higher standard of care than the “industry practice, or the evidence of industry practices stated in the Wall Street Journal Articles admitted as evince into this record by Judicial Notice of Adjudicative facts” filed herewith as conclusive evidence of such industry practices ALSO FOLLOWED BY DEFENDANT DEBT COLLECTOR, and if he shall not make a persuasive demonstration as he may show cause, then he shall be conclusively presumed to have followed those practices.




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(CLOUD) Approved Vendor List 7/19/2011

Definition of a UDC
Document File ID ’1100000A2D’
File Identifer listed inside of CTS-Link Remitter & Collateral Files links Appraisal submissions of Appraiser, Lender, Seller, Purchaster to INVESTOR including both (GSEs) INVESTOR & LENDER & SELLER Loan# documented inside of UDC documents processed via portal by Lender Admistrator and

eFannieMae . com
Uniform Collateral Data Portal (UCDP)
September 1, 2011 effective date for use of Uniform Appraisal Data set (UAD)-compliant forms quickly approaching.

Appraisal report forms for all conventional mortgage loans delivered to Fannie Mae on or after March 19, 2010 must be submitted to UCDP if:
– The loan application is dated on or after December 1, 2011, and
– An appraisal report is required.

INFORMATION TECHNOLOGISTS UNDERSTAND ‘data’ bases must be updated, tested, for new open system platform development, systems wil run parallel. Major changes underway include dissolution of MERS entity and the National Registry status? of MIN Identifer 18 digits (7 Member ID) 10 Agreement Numeric Identifer -1 Control Prefix insuring unique number.

UCDP General User Guide discusses new 15 digit numeric placeholder. New number? Unique to FREDDIE/FANNIE/LENDERS/SELLERS?

Vendor-provided solutions that offer an integrated system interface to UCDP. A list of technology vendors that plan to provide a vendor solution with an integrated system interface to UCDP is provided below. The list will be updated frequently over the next several months as vendors are added.

FIS – ORIGINATION – GSE Vendor approved Freddie & Fannie

Loan Syndication and Trading – integrated functional modules that support the lending process from deal building through servicing and trading

FIS is one of the world’s top-ranked technology providers to the banking industry. With more than 30,000 experts in 100 countries, FIS delivers the most comprehensive range of solutions for the broadest range of financial markets, all with a singular focus: helping you succeed. Every FIS solution has the strength you need for profitability today, and the power to help you manage whatever comes next.

FIS is part of the S&P 500. FIS has also been named the number one overall financial technology provider in the world by American Banker and Financial Insights (FinTech 100).

FIS ‘PREFERRED AND ONLY ORIGINATOR’ LISTED AS APPROVED VENDOR OF NEW PROGRAMS. VENDOR LIST BELOW incorporates all of its global subscribers related to real estate industry. ‘EXCLUDES’ Small …’

Midtier and Large Banking – flexible channel, integration and core solutions to meet every banking need from originations to servicing.

Uniform Collateral Data Portal (UCDP)
Solution Providers as of (Vendor/AMC List) July 19, 2011

-ACI – appraisal . com
-a la mode, inc. Mercury Network
-Avista Solutions, inc. – Avista Agile(tm) Loan Origination System (LOS)
-Bradford Technologies, inc. – Appraisal/World Connection
-Calyx Software – Point(r) PointCentral(r)
-Fisserv – EasyAccess & Unlflo Pro Mortgage
-FNC, Inc. – Collateral Management System (r) (CMS) & Collateral -Headquarters ™ (CHQA)
-Global DMS, LLC – OASIS Valuation Management Platform & ——–Global Klnex WebServices
-IBM – Impact Loan Origination System
-InHouse, Inc – Connexions (AssS&Appraisal Management Services)
ISGN – Appraisal Services
-Kirchmeyer & Associates, Inc – Kichmeyer Order Management System
-RealEC Technologies – RealEC Collaborative Partner Network
-LenderVend LLC – Appraisal Fufilment Services
-MortgageFlex System – The Residential Lending System
-Prime Alliance Solutions – Lending Suite
-ServiceLink Valuation Solutions, LLC – Vision Integrations, Valuation Products
-Solidifil – Solidifil Values ™
-Veros Real Estate Solution – VeroSELECT & Valuation Risk –Management System (VRM) Sapphire (backoffice UCDP)
-ValuAmerica – ValuNet

https : // www . efanniemae . com/sf/technology / commitloandel / ucdp / pdf / ucdpvendorlist . pdf

Data and open system platform changed economic landscape and intent of INVESTORS’s TRUSTEE taking possession of property in deceptive — perhaps larcenous manner.

Data portals ‘Servicer’ OWNER OF MORTGAGE LOAN
FANNIE’s new open system platform ‘FIS’ Originator controls the nationwide network of bank attorney’s, lawyers, title & settlement agents, agencies, insurance companies, who are ‘authorized’ integrators on the ‘Cloud.’


Attorney’s and client’s of Origination transaction documents, servicing transactions documents, and BATES ‘discovery’ documents, may not realize data identifiers in report reveal the system,, gateways, portals, requests for documents passed through will have detailed data records defending Investor, Lender, Seller, Appraiser, Underwriter, …

Accurate business documents exist stored in specified locations of ‘originator’ or evault provider identified in MERS data records, an example.

Transactions via CLOUD may affix in image “TD” ‘LPS’ ‘LSI’ ‘eLYNX’ are data identifier’s on data reports, forms related to Escrow Services c/o Qualified Intermediary directly related to ‘Certificate Insurance Guaranty’

ORIGINATOR Fidelity Information Services, MERS, eLynx, Services-Link, LPS/DOCX,
including FREDDIE MAC UMD ID: 1100000A2D 10 digit document file identification.

FREDDIE MAC ‘website: freddiemac.com ‘search’ collateral
June 2011
Uniform Collateral Data Portal ‘UCDP’

Users CREATED in UDCP “Lender Administrator’
Users INVITED INto UCDP ‘Invited General User’

Lender Administrator (Organizational setup) or Lender Admin is a UCDP user who has the authority to set up and manage your company’s business structure within the portal, including the access privileges of other users, at the business unit or enterprise level.

The Lender Admin can either “create” a general user in UCDP (created users) or “invite” a general user to register for UCDP (invited user).

General users have access to all of the functions described herein (except the ability to change passwords and to invite and/or create users, which is reserved for the Lender Admin). Read-only users can only read information on the screen and do not have a Submit Appraisal option on their Home page

GSE Sellers acess to ‘joint’ GSE website. UCDP user agreement does not amend or supplement Agreemnt between you and either GSE.




Who should read this manual?
This User Guide is intended for loan officers, underwriters, appraisal management companies, and others who use UCDP to submit appraisal data files to the GSEs, resolve problems with the appraisal data file submissions, and generate reports from UCDP

The Uniform Collateral Data PortalSM (UCDPSM) is the Web-based portal lenders and their designated agents use to electronically submit appraisal data files prior to loan delivery to Fannie Mae and/or Freddie Mac (Government Sponsored Enterprises or GSEs). Through UCDP, you can submit up to 10 appraisal data files at a time, search for previously submitted appraisal data files, clear exceptions, and view reports. NOTE: The use of UCDP does not relieve lenders of any obligations under the Fannie Mae or Freddie Mac Guides, as applicable, including the representations and warranties they are required to make about the accuracy and sufficiency of appraisals relating to mortgages that are sold to either Freddie Mac or Fannie Mae, including adherence to the Uniform Appraisal Dataset (UAD) standards

FannieMae & FreddieMac
Uniform Collateral Data Portal (UCDP) General User Guide
[PDF 4.7M] New
Uniform Collateral Data Portal (UCDP) Lender Agent Admin User Guide [PDF 2.8M] New
Uniform Collateral Data Portal (UCDP) Reference Series for the Lender Admin [PDF] New


SUBMIT APPRAISAL ‘Electronic Appraisal data file (XML with embedded PDF) FOR A LOAN.



BUSINESS UNIT – UCDP assigned business units
NON S/SN ID (Select the Seller Servicer Number (S/SN) or
Non-Seller Service Number (Non S/SN
FREDDIE MAC S/SN OR TPO# – Select Seller/Servicer Number (S/SN or Third Party Originator Number (TPO) from dropdown
FILE NAME LOCATION: Uploan appraisal data file ‘Appraisal 1′…


Inside SEC Documents, information captured in ‘FWP’ Free Writing Prospectus, Lender Loan Number, Zip Code, Appraisal Value
source data from ‘appraisal documentation’ reviewed by GSE via UCDP

‘Consumer name and physical address as borrower omitted inside FWP. Deal between FREDDIE MAC ‘Investor’ and LENDERS Loan# and info inside UCDP includes borrower’s name and physical address, and appraisal, and Loan Information for approval.



Doc File ID
Date Submitted
Last Update
Business Unit
FNM Status
FRE Status

UCDP ‘User’ submits changes.






Appraisal freport forms for all conventional mortgage loans delivered to Fannie Mae on or after March 19, 2010 must be submitted to UCDP if:
– The loan application is dated on or after December 1, 2011, and
– An appraisal report is required.

eFanniemae approved vendor of ‘Origination’

Loan Originator Solutions serves as a point of sale component for retail and third party origiantion of mortgage and home equity loans in the top 100 lending financial institutions, like TD Financial Services. Subscribers via CLOUD submit electronic home equity and mortgage applications. Loan Originator pricing engine for real estate eligibility and pricing, as well as vendor selection engien to manage connections to third party service ordering for loan fulfillment (LOS) enables LENDERS fully automate Origination, processing and closing functions for their residential mortgage and consumer operations. LOS is the community bank and credit union mortgage loan origination solution for FIS, supporting the origination of mortgage loans sold on the secondary market. FLO services wide range of domestic banks and thrifts seeking automation to originate consumer, commercial, HELOC and portfolio mortgage eloans. FLO browser based provides wide range of loan origination functionality including warranted document selections, flexible IntelleDoc technology, and third party interfaces all coupled with SEAMLESS CORE INTEGRATION.

PIP is available as open source software & GT.M
GT.M is a database engine with scalability, proven in the largest real-time core processing systems in production at financial institutions worldwide

‘Trust Organization’ on the CLOUD, integrated trust and investment accounting solutions deliver flexibility and responsiveness affluent and high-net-worth clients demand FIS produce suite straight-through processing:
Cash Sweep Services; Trust Accounting Processing, Integrated portfolio management, Trust Operations Outsourcing…offers proven treasury management solutions for commercial and corporate banking institutions

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Technorati Names Livinglies to Top 100 Real Estate Blogs


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EDITOR’S NOTE: We keep climbing, bit by bit. We are now at 34. When we started we were off the charts, and I don’t mean that in a good way.

The “over the top” characterization of our resources, articles and information here has come from people who were too ignorant and too disinterested to take the time to believe that something was especially wrong in the mortgage industry, that housing would be dragged down to ever lower levels, and that millions of homes were being stolen by unsavory characters using big brand names.

We’ll be closer to the top as people realize that denying the debt, denying the default, denying the authority to foreclose, denying the validity of the auction, denying the validity of the credit bid, denying the validity of the eviction are normal requirements in litigation in which the party seeking affirmative relief actually need to prove their case with competent evidence. They can’t do that because the whole notion of securitization was a scam, and the  whole process of foreclosure on those loans is a scam. 

When Judges start ordering a FULL accounting, not just the bookkeeping between borrower and servicer, we will see a paradigm shift in the judiciary. So far everyone of your allegations has been corroborated in the marketplace and in the courtrooms around the country. We deeply appreciate the recognition from Technorati for our efforts thus far.

Nye Lavalle’s Early Warning in 2003 Profiled In New York Times


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“The Fraud of Our Lifetime”

Robert D. Drain, a federal bankruptcy judge in the Southern District of New York, said in court last month that the failure of the mortgage industry to deal with pervasive problems involving inaccurate documentation and improper court filings amounted to “the greatest failure of lawyering in the last 50 years.”

In an interview last week, Judge Drain said several practices have contributed to the foreclosure mess. One is that Fannie and the rest of the industry failed to ensure that MERS was operating legally in all states. Another is that the industry failed to perform due diligence on documentation.


EDITOR’S NOTES: Nye has contributed to these pages and while he attended my workshop, he was as much a contributor there as a participant. For homeowners, lawyers, judges, legislators, and law enforcement officials, here are the take-away points that are documented by Lavalle and referred to in this article. Lavalle is a heavy hitter, and despite the obvious clarity of his projections and observations in 2003 and the years going forward, everyone ignored him — stating that he was “over the top.” I know how that feels. But here are some actual facts that can be found and used in your litigation with the banks and servicers, Fannie and Freddie. It was a dirty business from the start:

  1. Anyone who gains control of a note can try to force the borrower to pay it — even if it has already been paid. In our current context the burden mysteriously shifts to the borrower to prove information that is solely in the possession of the their opponent who has no intention of giving it up. By pretending to be a lender or successor, banks and servicers have foreclosed on millions of properties not just improperly from a procedural point of view, but wrongfully because there was no debt, there was no default and there was no security instrument that was enforceable.
  2. In at least 2 million foreclosures,, extrapolating from currently available figures, the debt was paid in full to the creditor but the note was not cancelled, so that the same note could be subject to collection multiple time. These uncancelled notes were routinely sent by Fannie and Freddie as parties complicit in a monumental fraud. Everyone knew better but the prospect of grabbing homes from unsuspecting homeowners who knew they had stopped making payments was irresistible. Why tell the homeowner that the debt was paid? Why tell the homeowner that there was no default? It certainly looked like there was a debt and it looked like a default. So the banks and servicers ran with it.
  3. Most of the remaining 5 million foreclosures were based upon false declarations of default because the note was partially paid by third parties as set forth in the contracts between the investors, servicers and banks. These also include debts that had been paid or settled in full by receipt of servicer payments, insurance, and credit default swaps as well as commingling of funds between tranches in each REMIC.
  4. Destruction of 40% of the notes ( at a minimum) was a planned strategy to create a grey area in which anyone who could create the “original note” (even though it was lost or shredded) was able to bring enforcement actions against hapless homeowners who had no way or knowing nor any access to information as to the reality of these exotic transactions.
  5. Lavalle warned Fannie and Freddie in 2005 — 2 years before this blog began — that David Stern’s office was being cited for using fabricated, fraudulent instruments. They didn’t care.
  6. The findings in confidential analyses and reports corroborated the observations and analysis of Lavalle. But the Conclusion is what will send occupiers and others through the roof — they concluded that most people would not have the resources of knowledge to attack the system of corruption and so it was decided to allow it to continue. In other words because you are ignorant of how the money was handled, because the banks and servicers were allowed to deceive you and you were deceived, because you didn’t understand the exotic instruments in which your your signature was used, and most of all because you didn’t have the money to challenge them, you would lose your home, all the money you put into it and never know that the parties who foreclosed were literally laughing all the way to the Bank. 
  7. The solution is to get help. The analytical tools offered on this web site are now being used with some success in courtrooms across the country. We are in the process of combining the tools into packages such that the inexperienced homeowner is not forced to choose between products that he or she does not understand. And we have paralegals support services for a legion of lawyers who will shortly announce their ability to process large volumes of case competently, methodically and successfully. We are ending the days where you order a report that contains helpful information but there is no instruction or manual that explains how to use the information on title, securitization Forensic Loan (TILA) Analysis and Loan Level Accounting. Now you only need to know that the consortium of analysts, paralegals and lawyers will bring the facts of your case together for the best possible presentation. Take hope from this but no sense of guarantee. Many Judges and lawyers and even the homeowners) have trouble with the notion that the debt was extinguished without borrower payment and was instead paid by others.

A Mortgage Tornado Warning, Unheeded


YEARS before the housing bust — before all those home loans turned sour and millions of Americans faced foreclosure — a wealthy businessman in Florida set out to blow the whistle on the mortgage game.

His name is Nye Lavalle, and he first came to attention not in finance but in sports and advertising. He turned heads in marketing circles by correctly predicting that Nascar and figure skating would draw huge followings in the 1990s.

But after losing a family home to foreclosure, under what he thought were fishy circumstances, Mr. Lavalle, founder of a consulting firm called the Sports Marketing Group, began a new life as a mortgage sleuth. In 2003, when home prices were flying high, he compiled a dossier of improprieties on one of the giants of the business, Fannie Mae.

In hindsight, what he found looks like a blueprint of today’s foreclosure crisis. Even then, Mr. Lavalle discovered, some loan-servicing companies that worked for Fannie Mae routinely filed false foreclosure documents, not unlike the fraudulent paperwork that has since made “robo-signing” a household term. Even then, he found, the nation’s electronic mortgage registry was playing fast and loose with the law — something that courts have belatedly recognized, too.

You might wonder why Mr. Lavalle didn’t speak up. But he did. For two years, he corresponded with Fannie executives and lawyers. Fannie later hired a Washington law firm to investigate his claims. In May 2006, that firm, using some of Mr. Lavalle’s research, issued a confidential, 147-page report corroborating many of his findings.

And there, apparently, is where it ended. There is little evidence that Fannie Mae’s management or board ever took serious action. Known internally as O.C.J. Case No. 5595, in reference to the company’s Office of Corporate Justice, this 2006 report suggests just how deep, and how far back, our mortgage and foreclosure problems really go.

“It is axiomatic that the practice of submitting false pleadings and affidavits is unlawful,” said the report, a copy of which was obtained by The New York Times. “With his complaint, Mr. Lavalle has identified an issue that Fannie Mae needs to address promptly.”

What Fannie Mae knew about abusive foreclosure practices, and when it knew it, are crucial questions as Congress and the Obama administration weigh the future of the company and its cousin, Freddie Mac. These giants eventually blew themselves apart and, so far, they have cost taxpayers $150 billion. But before that, their size and reach — not only through their own businesses, but also through the vast amount of work they farm out to law firms and loan servicers — meant that Fannie and Freddie shaped the standards for the entire mortgage industry.

Almost all of the abuses that Mr. Lavalle began identifying in 2003 have since come to widespread attention. The revelations have roiled the mortgage industry and left Fannie, Freddie and big banks with potentially enormous legal liabilities. More worrying is that the kinds of problems that Mr. Lavalle flagged so long ago, and that Fannie apparently ignored, have evicted people from their homes through improper or fraudulent foreclosures.

Until a few weeks ago, Mr. Lavalle, 54, had never seen O.C.J. 5595. He had hoped to get a copy after helping Fannie’s lawyers, at Baker & Hostetler in Washington, complete it. He didn’t.

But after learning about its findings from a reporter for The Times, Mr. Lavalle said, “Fannie Mae, its directors, servicers and lawyers appeared to have an institutional policy of turning a willful blind eye to evidence of mortgage origination and servicing fraud.”

He went on: “When confronted directly with this evidence, Fannie not only failed to correct and remedy the abuses, it assisted in continuing the frauds via institutional practices that concealed fraudulent foreclosures.”

A spokesman for Fannie Mae said in a statement last week that the company quickly addressed several issues that were raised in the 2006 report and that it took action on other issues associated with foreclosures in 2010. “We want to prevent foreclosure whenever possible, but when foreclosures cannot be avoided they must move forward in a timely, appropriate fashion,” he said.

Fannie Mae would not say whether it had shared O.J.C. 5595 with its board of directors or its regulator, then known as the Office of Federal Housing Enterprise Oversight. James B. Lockhart III, who headed that regulator in 2006, said he did not recall reading the report. “I probably did not see it as back then foreclosures were not a very big deal,” he said.

But another report published last fall by the inspector general of the Federal Housing Finance Agency, the current regulator, briefly mentioned some of the problems that Mr. Lavalle had raised. (It didn’t mention him by name.) It also faulted Fannie Mae, saying it failed to address foreclosure improprieties that had surfaced years before.

LIKE most people, Nye Lavalle had little interest in the mortgage industry until things got personal. Raised in comfortable surroundings in Grosse Pointe, Mich., just outside Detroit, he began his business career in the 1970s, managing professional tennis players. In the 1980s, he ran SMG, a thriving consulting and research firm.

Then he tried to pay off a loan on a home his family had bought in Dallas in 1988. The balance was roughly $100,000, and the property was valued at about $175,000, Mr. Lavalle said. But when he combed through figures provided by his lender, Savings of America, he found substantial discrepancies in the accounting that had inflated his bill by $18,000. The loan servicer had repeatedly charged him late fees for payments he had made on time, as well as for unnecessary appraisals and force-placed hazard insurance, he said.

Mr. Lavalle refused to pay. The bank refused to bend. The balance rose as the bank tacked on lawyers’ fees and the loan was deemed delinquent. The fight continued after his mortgage was allegedly sold to EMC, a Bear Stearns unit.

Unlike most people, Mr. Lavalle had the time and money to fight. He persuaded his family to help him pay for a lawsuit against EMC and Bear Stearns. Seven years and a small fortune later, they lost the house in Dallas. Back then, judges weren’t as interested in mortgage practices as some are now, he said.

The experience lit a fire. Mr. Lavalle set out to learn everything he could about the mortgage industry. In a five-hour interview in Naples, Fla., last month, he described his travels nationwide. He dove into mortgage arcana, land records and court filings. By 1996, he had identified what appeared to be forged signatures on foreclosure documents, foreshadowing troubles to come. He took his findings to big players in the industry: Banc One, Bear Stearns, Countrywide Financial, Freddie Mac, JPMorgan, Washington Mutual and others. A few responded but later said his claims were not valid, he said.

Now he splits his time between Orlando and Boca Raton, advising lawyers as an expert witness. “From my own personal experience and 20 years of research and investigation, nothing — and I mean nothing — that a bank, lender, loan servicer or their lawyer says or puts on paper can be trusted and accepted as true,” Mr. Lavalle said.

FANNIE MAE, now in government hands, has acknowledged how abusive foreclosure practices can hurt its own business. “The failure of our servicers or a law firm to apply prudent and effective process controls and to comply with legal and other requirements in the foreclosure process poses operational, reputational and legal risks for us,” it said in a 2010 filing with the Securities and Exchange Commission.

Five years earlier, Fannie seemed to have taken a different view. That was when Mr. Lavalle pointed out legal lapses by some of its representatives. Among them was the law offices of David J. Stern, in Plantation, Fla., which was handling an astonishing 75,000 foreclosure cases a year — more than 200 a day. In 2005, Mr. Lavalle warned Fannie Mae that some judges had ruled that the Stern firm was submitting “sham pleadings.” Nonetheless, Fannie continued to do business with the firm until it closed its doors last year, after evidence emerged of rampant forgeries and fraudulent filings.

O.C.J. Case No. 5595 found that Stern wasn’t the only firm working for Fannie that seemed to be cutting corners. It also found that lawyers operating in seven other states — Connecticut, Georgia, New York, Illinois, Louisiana, Kentucky and Ohio — had made false filings in connection with work for Fannie Mae or the Mortgage Electronic Registration System, or MERS, a private mortgage registry Fannie helped establish in 1995.

“While Fannie Mae officials do not have a single opinion, some officials believe foreclosure counsel are sacrificing accuracy for speed,” the report said.

The lawyers at Baker & Hostetler did not agree with everything Mr. Lavalle said. Mark A. Cymrot, a partner who led the investigation, discounted Mr. Lavalle’s fear that Fannie could lose billions if large numbers of foreclosures had to be unwound as a result of misconduct by its lawyers and servicers.

Even so, the report didn’t conclude that Mr. Lavalle was wrong on the legal issues. It simply said that few people would have the financial resources to challenge foreclosures. In other words, few people would be like Mr. Lavalle.

“Courts are unlikely to unwind foreclosures unless borrowers can demonstrate that the foreclosure would not have gone forward with the correct pleadings, which is a difficult burden for most borrowers to meet,” the report said. “Nevertheless, the issues Mr. Lavalle raises should be addressed promptly in order to mitigate the risk of exposure to lawsuits and some degree of liability.” Mr. Cymrot declined to comment for this article.

O.C.J. 5595 also questioned Mr. Lavalle’s contention that improprieties by loan servicers were pervasive. But based on interviews with 30 Fannie employees, the report conceded that the company had no mechanism to ensure that servicers were charging borrowers appropriate fees.

Other oversight at Fannie was similarly lacking, the Baker & Hostetler lawyers found. For instance, when Fannie identified fraud by a lender or servicer, it didn’t notify the homeowner. Nor did it police activities of lawyers or servicers it hired. As a result, the report said, Fannie might not be insulated from liability for their misconduct.

Lewis D. Lowenfels, a securities law expert, said he was perplexed that Fannie’s board appeared to have done nothing to correct these practices. “If it had been brought to the board’s attention that specific acts of illegality were being committed, it should have directed that relationships with the transgressors be terminated forthwith and Fannie Mae’s regulator be advised accordingly,” he said.

Daniel H. Mudd, Fannie’s chief executive at the time, declined to comment through his lawyer. Mr. Mudd was recently sued by the S.E.C., accused of failing to disclose Fannie’s participation in the subprime mortgage market.

PERHAPS no development has done more to obscure the forces behind the foreclosure epidemic than the rise of the MERS, the private registry that has all but replaced public land ownership records. Created by Fannie, Freddie and big banks, MERS claims to hold title to roughly half the nation’s home mortgages. Judges and lawmakers have questioned MERS’s legal authority to initiate foreclosures, and some judges have thrown out foreclosures brought in its name. On Friday, New York’s attorney general sued MERS, contending that its system led to fraudulent foreclosure filings. MERS refuted the claims and said it would fight.

Mr. Lavalle warned Fannie years ago that MERS couldn’t legally foreclose because it didn’t actually own notes underlying properties.

The report agreed. MERS’s approach of letting loan servicers foreclose in its own name, not in that of institutions owning the notes, “is not accepted legal practice in all states,” the report said. Moreover, “MERS’s counsel conceded false allegations are routinely made, and the practice should be ‘modified.’ ”

It continued: “To our knowledge, MERS has not addressed the issue of its counsels’ repeated false statements to the courts.”

Janis L. Smith, a spokeswoman for MERS, said it had not seen the Baker & Hostetler report and declined comment on its references to the false statements made on its behalf to the courts. She said that MERS’s business model is legal in all states and that as a nominee, it has the right to foreclose. MERS stopped allowing its members to foreclose in its name in all states in 2011.

Robert D. Drain, a federal bankruptcy judge in the Southern District of New York, said in court last month that the failure of the mortgage industry to deal with pervasive problems involving inaccurate documentation and improper court filings amounted to “the greatest failure of lawyering in the last 50 years.”

In an interview last week, Judge Drain said several practices have contributed to the foreclosure mess. One is that Fannie and the rest of the industry failed to ensure that MERS was operating legally in all states. Another is that the industry failed to perform due diligence on documentation.

MERS no longer participates in foreclosures. But a lot of damage has already been done, Mr. Lavalle said.

“Hundreds of thousands of foreclosures in Florida and across America were knowingly conducted unlawfully, for which there are still severe liabilities and implications to come for many years,” he said.

THERE was a time when Americans had mortgage-burning parties: When they paid off a promisory note, they celebrated by burning the release of the lien.

But they kept the canceled promissory note — and there was a reason for that. Promissory notes, like dollar bills, are negotiable currency. Whoever holds them can essentially claim them.

According to O.C.J. Case No. 5595, Fannie held roughly two million mortgage notes in its offices in Herndon, Va., in 2005 — a fraction of the 15 million loans it actually owned or guaranteed. Who had the rest? Various third parties.

At that time, Fannie typically destroyed 40 percent of the notes once the mortgages were paid off. It returned the rest to the respective lenders, only without marking the notes as canceled.

Mr. Lavalle and the internal report raised concerns that Fannie wasn’t taking enough care in handling these documents. The company lacked a centralized system for reporting lost notes, for instance. Nor did custodians or loan servicers that held notes on its behalf report missing notes to homeowners.

The potential for mayhem, the report said, was serious. Anyone who gains control of a note can, in theory, try to force the borrower to pay it, even if it has already been paid. In such a case, “the borrower would have the expensive and unenviable task of trying to collect from the custodian that was negligent in losing the note, from the servicer that accepted payments, or from others responsible for the predicament,” the report stated. Mr. Lavalle suggested that Fannie return the paid notes to borrowers after stamping them “canceled.” Impractical, the 2006 report said.

This leaves open the possibility that someone might try to force homeowners to pay the same mortgage twice. Or that loans could be improperly pledged as collateral by some other institution, even though the loans have been paid, Mr. Lavalle said. Indeed, there have been instances in the foreclosure crisis when two different institutions laid claim to the same mortgage note.

In its statement last week, Fannie said it quickly addressed questions of lost note affidavits and issued guidance to servicers that no judicial foreclosures be conducted in MERS’s name. It also said it instructed Florida foreclosure lawyers “to use specific language to assure no confusion over the identity of the ‘owner’ and the ’holder’ of the note.”

The 2006 report said Mr. Lavalle at times came across as over the top, that he was, in its words, “partial to extreme analogies that undermine his credibility.” Knowing what we know now, he looks more like one of the financial Cassandras of our time — a man whose prescient warnings went unheeded.

Now, he hopes dubious mortgage practices will be eradicated.

“Any attorney general, lawyer, bank director, judge, regulator or member of Congress who does not open their eyes to the abuse, ask pertinent questions and allow proper investigation and discovery,” he said, “is only assisting in the concealment of what may be the fraud of our lifetime.”



Pension and Union Funds Were Upside Down the Moment They Bought MBS


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Editor’s comment: Smith’s statement about the passivity of investors is well taken. Up until recently, they were content to let the Banks and servicers fight it out and they assumed they would get their fair share of the money that was due to them. Remember that these are NOT just “institutional investors” like banks — they are pension funds, unions, cities, counties and states that invested in what was thought to be investment grade securities Triple A rated and insured.

So it isn’t surprising that the investors are now going on the attack. It is obvious that the banks and servicers are having a field day feeding off the carcass of what was purported to be good collateral — the homes of the borrowers. The starting insult though was the money the banks took out of the funds advanced by investors before they started funding mortgages. In some cases the percentage is a staggering 40%. So for each million dollars that your pension fund put in, the banks immediately removed $400,000 and booked it as trading profits. Now with only $600,000 left, the pool was supposed to make enough money to pay the interest expected by investors plus the principal.

Those figures don’t work and Wall Street knew it. So all they needed was to place bets that the pool would fail and that is what they did under the guise of merely covering the “minor” risk of loss with yet another hedge. But the proceeds of insurance and credit default swaps were received by the banks who did not report those proceeds to investors, much less pay them. The whole thing was carried in a classic PONZI scheme where the money from the investor was paid to the investor without investing or funding any other income-producing asset.

So now Goldman Sachs has a genuine class action (approved by Federal Judge) on its hands, the major banks and MERS have a major lawsuit (Schneiderman) that will completely upend the mortgage transactions and foreclosures that have taken place, as well as eliminating the secured portion of the loans. The Banks are right where I predicted they would be when I projected the path of this long road. The banks and servicers are intermediaries and conduits with no interest in the loans other than some vague contractual rights that were long ago breached by the banks.

The interests of the investors and the interests of the homeowners have thus become strangely but inevitably aligned. Neither one would have entered into the deals if they knew the truth and both were defrauded by inflated appraisals, inflated securities ratings, misrepresentations about the loans, misrepresentations about the loan underwriting process, and neither want to be part of any large-scale foreclosure process. The investors want as much of their money back as possible and then the right to get the rest from the banks, who stole their money. The borrowers want to stay in their homes so much so that they are willing to accept mortgage balances in excess of the fair market value of the home.

Both the investors and the homeowners are underwater — some for the same reasons and some for different reasons. But the full accounting of all money in and all money out will restore far more of the original capital that was siphoned out of the nation’s economy than the current foreclosure process — even if the foreclosures were valid and enforceable which they clearly are not because they are based upon documentation that was intentionally fabricated, forged, misrepresented and a direct breach of the duties of the originators to perform due diligence.

The choice is the same one I stated 5 years ago — which will be more important — the power and wealth of these overs-zed banks or the rights guaranteed by the U.S. Constitution. We can’t have both. In order to give the banks what they want, with amnesty, further bailouts etc., we must surrender our sovereignty and consent to being subject to the rule of Banks without any governing charter. In order to ratify the millions of foreclosures that have already taken place and allow the millions more to proceed, we must abandon all notions of due process, equity and fairness.

by Yves Smith

Investors (and Others) Realizing Their Ox is About to be Gored in Mortgage Settlement

Investors have been remarkably passive as banks and servicers have taken advantage of them. We’ve heard numerous reports of servicer fee abuses that amount to stealing from investors (remember, if you overcharge a stressed borrower and that borrower loses his home, the money in the end comes out of pension funds and 401 (k)s when the excessive fees are deducted from the proceeds of the sale of the home). Investors can even see suspicious patterns in investor reports. We’ve also pointed out that they are guaranteed even more pain, since $175 billion of losses that have already recorded on loans in MBS pools have not yet been allocated to the related bonds.

But the fees to manage bond funds are pretty thin, and fixed income investors are generally a risk averse lot, and are not well set up to litigate. But the biggest obstacle to them Doing Something is that they don’t want to rile the banks. They think they need them for information and transaction execution.

So it shouldn’t be surprising that investors have sat on the sidelines during the mortgage settlement and “fix the housing market” debates, even as becomes clearer and clearer that the solution envisaged is to take from investors to make the banks whole. Remember, the major banks have very large second lien portfolios that should be written down. The banks claim the second loans, almost entirely home equity lines of credit, are current, but that is often an accounting fiction. The banks are often engaging in negative amortization (as in taking any trivial amount and deeming it to be acceptable and adding any shortfall to what should be a proper minimum payment to principal) and allowing customers to borrow in order to make their payments. MBS investors have told me that realistic marks on Bank of America’s second lien portfolio would exceed the market value of its equity, and would also take a big cut out of the equity bases of Citi, JP Morgan, and Wells.

So the plan, which was messaged in an interview with William Dudley in the Financial Times in early January and is embodied in the mortgage settlement plan, is to write down first liens and leave seconds largely intact (there have been some indications that seconds might get a modest ding in the case of a principal mod on the first, but that is backwards. The second should be WIPED OUT before anything modification is made to the first mortgage). Any principal mods on the first lien that leaves the second in place amounts to a transfer from retirement plans to banks. Pensions are being raided to avoid exposing the insolvency of the big banks.

We are, rather late in the game, getting some plaintive bleats from investors as they are being led to slaughter. Reader Deontos sent us a statement from the Association of Mortgage Investors:

The state Attorneys General, federal agencies, and certain mortgage servicers have worked for approximately one year on developing a solution to address our national foreclosure crisis. The time now may be nearing for a settlement of claims of alleged wrongdoing by servicers. AMI and mortgage investors have neither been involved in the negotiations nor are aware of the ultimate settlement terms. In anticipation of a possible settlement, however, AMI cautions these negotiators not to rush into a settlement, but rather work to get a properly constructed settlement that helps distressed homeowners with the right solutions. “Investors in mortgage trusts, such as unions and pensions, do not service these loans and certainly did not create these woes for borrowers. The use of mortgage trust money (from pensions funds, unions and charities) to settle the investigation is tantamount to a bank bail-out. We expect that principal modifications of private mortgages made to satisfy any kind of settlement will involve only mortgages held by the settling parties and that the criteria for all additional principal modifications be firmly established,” explained Chris Katopis, AMI’s Executive Director.

AMI would only support such a resulting settlement, if any, if appropriately designed to address such alleged wrongdoing while not implicating innocent parties. AMI is on-record as supporting long-term, effective, sustainable solutions to the housing foreclosure crisis. It is generally supportive of a settlement if it ensures that responsible borrowers are treated fairly throughout the foreclosure process; while at the same time providing clarity as to investor rights and servicer responsibilities. The settlement should be designed in a way that ensures that investors, who were not involved in the alleged activities and, who likewise were not a participant in any negotiations, do not bear the cost of the settlement. Specifically, mortgage servicers should not receive credit for modifying mortgages held by third parties, which are often pension plans, 401K plans, endowments and “Main Street” mutual funds. To do otherwise, will damage the RMBS markets further and limit the ability of average Americans to obtain credit for homes for generations to come.

Erm, the fact that you weren’t given a seat at the table means the power that be thought you were dispensable.

More amusingly, a Bloomberg report reveals what most insiders know full well, that industry associations that supposedly represent the buy side and the sell side, like the American Securitization Forum and the Securities Industry and Financial Markets Association, really take care only of the sell side, meaning Wall Street. SIFMA’s Asset Management Group, which represents investors, wanted to issue a statement objecting to the use of investor funds to settle bank misdeeds, but it was squelched by management:

Wall Street’s biggest lobbying group is split over a proposed settlement of state and federal foreclosure probes, after a committee of money managers signaled it opposes terms letting banks push some costs onto bondholders.

The Securities Industry and Financial Markets Association’s Asset Management Group planned to release a statement last week urging government negotiators to protect innocent investors, amid reports that banks will get credit for lowering the balances of mortgages packaged into bonds, three people familiar with the matter said. Sifma’s leadership said no. The panel’s members oversee $20 trillion and include BlackRock (BLK) Inc. and Pacific Investment Management Co.

Sifma elected not to issue the statement “because the settlement surrounds potential legal issues involving the commercial interests of many of our members,” said Cheryl Crispen, a spokeswoman for the group in New York. “Sifma generally does not intervene in such matters and remains focused on matters of policy and advocacy.”

What bullshit. This is a “all animals are equal, but some are more equal than others” statement.

Needless to say, as the propagandizing gets louder, a few lonely voices are decrying the settlement. For instance, Daily Kos had a refreshing piece, “Stop the Delusional Celebration: Victims of Foreclosure Fraud Have Little to Celebrate.” Dave Dayen gets to an aspect of the settlement that I have not had time to cover, namely, that the enforcement is a joke. A story by Loren Berlin and D.M. Levine at Huffington Post remind us “Robo-Signing Settlement Might Not Provide Homeowners With Needed Help.” The short form of their story: the deal looks to be targeting mods to not that deeply underwater borrowers. Addressing a related Administration PR effort, Alan White at Credit Slips, in The Permanent Foreclosure Crisis and Obama’s Refinancing Obsession says, in no uncertain terms, that refis won’t solve the mortgage mess.

There is a possible saving grace here. I am told by a principal that if this settlement goes through, the odds are 100% that it will be challenged on Constitutional grounds, as a violation. Taking from the first lienholders to save the second lienholders to keep otherwise insolvent banks from going under amounts to a transfer from private parties to the government, as in it saves the FDIC from needing an emergency injection from Congress, as it did in the savings and loan crisis. So as much as I’d rather see this deal scuttled, it would terribly amusing to see Obama tidy’s efforts to generate pretend to help homeowners while really helping the banks sidetracked by litigation. The courts have stymied bank efforts to get away with their heist, and they may prove to be their bane yet again.

Topics: Banana republic, Banking industry, Credit markets, Investment management, Legal, Politics, Real estate, Regulations and regulators, The destruction of the middle class


State of Foreclosure as a Tool for Frauds on Investors:


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State of Foreclosure as a Tool for Frauds on Investors:submitted by DCB
The Federal Reserve Board, and the Treasury Department’s FDIC and OCC divisions have in the aggregate made a factual and legal determination statutes and rules under those agencies’ jurisdiction have been violated by fourteen (14) regulated banks. As a result of these agencies’ investigations and findings they have collectively imposed a civil order of sanctions upon the 14 banks. Implementation of the sanctions order has been assigned in a rule-making action to a 1st tier of OCC-supervised group of independent contractors—including major accounting firms. The most basic jurisdictional reason the sanctions could be imposed was the abuse of federal judicial and administrative machinery to seize or attempt to seize borrowers’ homes. The sanction was imposed through “alternative dispute resolution” process of review of a wide-swath of borrower grievances The core conduct penalized was misuse of defective documentation to motivate court actions.
Additionally, there are five (5) of these institutions that have implicitly made an admission of the abusive practices in state courts. The federal sanction against 14 signed servicer-collectors is now reinforced by an offer of $25 billion by 5 of the largest of these institutions to 40-50 states in exchange for releases of state civil liability for abuses of the processes of the state courts, and County Clerks of Court, and county records keepers generally. These filings constituted an industry practice that presumptively injured the home-owners, and abused state court processes generally. The remaining issues to be decided by the OCC though its contractors and the several states which agree involve the orderly distribution of proceeds to victims proportional to injury suffered. It is now a matter of legislative and judicial notice that misconduct and unethical conduct occurred as an industry practice.
The sanctions and settlements in lieu of civil action with states’ Attorneys General of relate exclusively to federally-regulated bank-affiliated collection agencies. There will be individual borrowers who suffered equal or greater harm from the same types of misconduct for whom no relief is granted by either the federal sanction or the planned state settlements:
1) those who were involved with the named bank-collectors but which did not elect to submit requests for review Independent collection agencies.
2) those who were not involved with the named bank-collectors—but with independent “non-bank” or private label collection agencies—these remain subject to FTC jurisdiction which has not been exercised.
3) Those who entered into SEALED or otherwise “Confidential” settlement agreements prior to the matters complained of becoming a matter of widespread public knowledge, susceptible of judicial notice. The publication of the front-page robo-signing expose by the New York Times in October 2010 is a rational cutoff date.
Private label loan origination is often associated with similar private-label debt collection. These often involve initial predatory lending and predatory collection—surpassing the misconduct found for 14 and admitted widely by 5—all banks. By implication the private labels’ securitization conduct, misrepresentations and omissions resulted in substantial investor losses. The comparative lack of regulatory oversight at all levels of these private label operations was also not disclosed to homeowners who entered into agreements with these “rogue” operations. There was a substantial undisclosed risk and future cost in dealing with these entities—fundamental to the transaction—but not disclosed to the borrower. Only now does the full cost become known to hapless homeowners.
By default, for these homeowners, David VS Goliath civil litigation is the only route allowed to preserve those citizens’ First Amendment Right to “Redress of Grievances” and Fourth Amendment Right to “Due Process of Law,” and under the Fourteenth amendment which imports those Rights into state law. The industry practice found and admitted by the regulated banks is left unbridled among the private label debt collectors. These rights have been impaired by the admitted practices and face further risk because of lack of equal application of justice among similarly situated citizens—by reason of the lack of regulation of private label enterprises.
Under the First Amendment to the Constitution of the United States, these Citizens must have a protected Rright to apply to, and state their case to: any legislative body, any judicial body and any division of the administrative branches. They would otherwise be disenfranchised from vitally protected Rights of great importance to public policy. Today these Rights are commonly impaired by secrecy imposed by these private label collectors in civil litigation. There are: Sealed and Confidential settlement talks and drafts, Sealed and Confidential enforced settlements, Sealed and Confidential Motions, Complaints, Answers and Counter-complaints. These secrets lay the foundation for demands for emergency and closed hearings, gag orders and other restraining orders and injunctions. If connected to actions taken by the unregulated collection agency, rather than simply the amount of settlement, then this course of action is taken by the collection agency is designed to prevent identification of patterns of misconduct. This cloak of secrecy substantially impedes civil and criminal, private and public, investigations—and may rise to Obstruction of Justice, commonly characterized after Nixon’s Watergate fiasco as a “cover-up”. These facts are described by the State of Arizona:
“BoA is Impeding Investigation Says Arizona Attorney General’s Office”…Jan. 26, 2012 (Bloomberg) — “Bank of America Corp. is impeding an investigation of its loan modification practices by negotiating settlements with borrowers who must agree to keep them secret and not criticize the bank in exchange for cash payments and loan relief, Arizona officials say… The borrower ‘will remove and delete any online statements regarding this dispute, including, without limitation, postings on Facebook, Twitter and similar websites,’ and not make any statements ‘that defame, disparage or in any way criticize’ the bank’s reputation, practices or conduct, according to documents filed in state court in Phoenix….” BUT, “…the…bank won’t enforce the non-disparagement provision if [the borrowers] talk to investigators, the bank’s lawyers have said in court filings.” http://findsenlaw.wordpress.com/2012/01/26/boa-is-impeding-investigation-says-arizona-attorney-generals-office/ http://www.bizjournals.com/phoenix/news/2012/01/26/arizona-attorney-general-bank-of.html?page=all8

Setting a Foreclosure Case for Trial


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Setting a Foreclosure Case for Trial

by Mark Stopa

Did you know the banks and their lawyers don’t want to have to go to trial in foreclosure cases? It’s not exactly breaking news, I realize. (Recall, for instance, this post, where I showed that just 198 trials took place in the entire state of Florida in a recent, one-year period.) In fact, those of us in the industry have known this for some time, i.e. banks want to win by default and/or summary judgment, not by trial in contested cases against lawyers who are asserting valid objections each step of the way.

Given the volume of foreclosure cases in Florida, the increasing number of homeowners defending those cases, and the banks’ aversion to trial, our court system is inundated with foreclosure cases. Personally, I don’t think this is a problem – if the banks don’t want to prosecute their cases, that’s their prerogative. However, in an attempt to push through the logjam, I’ve seen some judges take measures which, in any other time, would be considered quite unusual. One local judge, for instance, has stated setting cases for trial sua sponte, one after another, regardless of how the parties feel about it. This begs the question – what is the appropriate way to set a case for trial?

I’ve blogged about this issue for some time now, including here and here, so at this point we should all know the basics of setting a case for trial, as set forth in Fla.R.Civ.P. 1.440. First, a case can’t be set for trial unless it is “at issue,” meaning the defendant has filed an Answer to the operative Complaint and no there are no pending motions directed to the pleadings. Second, when the court sets a case for trial, it must provide at least 30 days notice; anything less is insufficient. The two cases which I love to cite for these propositions are Bennett v. Continental Chemicals, Inc., 492 So. 2d 724 (Fla. 1st DCA 1986) (en banc) and Precision Constructors, Inc. v. Valtec Constr. Corp., 825 So. 2d 1062 (Fla. 3d DCA 2002). Notably, in both cases, the Florida appellate court reversed a final judgment not because there was any substantive error at trial, but because the trial had been set prematurely, in violation of Rule 1.440. That’s how big of a deal this is – it doesn’t matter if the trial was done correctly if it was set prematurely.

I’m confident the local judge who has started setting cases for trial en masse, sua sponte, is aware of these requirements. In fact, I sincerely believe she tries to follow the law, and she has refrained from setting cases for trial that are not “at issue,” which is obviously a good thing. The question that has arisen from her rulings, in my view, is whether a judge can set a case for trial on his/her own, sua sponte, when the case has not been noticed for trial.

By way of example, and to illustrate the situation at hand, I recently had a hearing before this judge on a Motion to Substitute Party Plaintiff. The issue of trial was not set for hearing, and no party had filed a Notice for Trial, so I wasn’t even thinking about a trial at this hearing. Heck, the plaintiff’s lawyers were trying to change the identity of the plaintiff, so getting proper pleadings in place, and taking discovery regarding the new plaintiff, was paramount in my mind, not trial. Anyway, at the hearing, immediately after she allowed the new plaintiff to join the case, the judge decided to set the case for trial with, quite frankly, limited input from the parties. I objected, but it was clear to me that the court was following a procedure where foreclosure cases were being set for trial.

Respectfully, I’m troubled at this sequence of events.

Any time I go into a hearing, I expect that the only matter(s) being argued are those which have been noticed for hearing. This is fairly basic, so a Court bringing up a matter like this, sua sponte, is the last thing I’d expect at a hearing on a simple motion. I could perhaps understand this better if the plaintiff had filed a Notice for Trial. But for a court to set a case for trial, totally on its own, where the case was not even noticed for trial and the issue of trial wasn’t set for hearing … I just don’t see that. In my case, for example, I think I should get to amend my pleadings and take discovery about this new plaintiff before a trial is set.

I believe the case law supports my view that a “Notice for Trial” must be filed before a judge can set a case for trial. Rule 1.440 has three subsections, and each one is a step in a three-step process. Once a case is “at issue” (subsection (a)), then it may be noticed for trial (subsection (b)), and then the court may set it for trial (subsection (c)). As I read the cases which cite Rule 1.440, I believe they all support this interpretation. See Genuine Parts Co. v. Parsons, 917 So. 2d 419 (Fla. 4th DCA 2006) (reversing final judgment where the court set the case for trial without a notice for trial having been filed); Garcia v. Lincare, Inc., 906 So. 2d 1268 (Fla. 5th DCA 2005) (“Procedural readiness for trial differs from actual readiness for trial. It is the former, coupled with a properly filed ‘Notice for Trial,’ that imposes on the court the obligation to set a trial date.”); Hartford Fire Ins. Co. v. Controltec, Inc., 561 So. 2d 1334 (Fla. 5th DCA 1990) (“The rule requires the filing of a notice of trial for review by the court in order to determine whether the cause is ready for trial”); Balboa Ins. Co. v. Shores of Madeira, Inc., 457 So. 2d 596 (Fla. 2d DCA 1984) (“Once a proper notice of trial has been filed, the duty is on the court to set the cause for trial.”).

This may sound like procedural mumbo jumbo, and I suppose to some extent it is. That said, when trial is set, the substantive rights of the parties are being adjudicated (or about to be adjudicated), so it’s important to follow the procedure correctly. As the en banc First District explained in Bennett, “strict compliance with Rule 1.440 is mandatory.” Using my example above, if a Notice for Trial had been filed, I would have had a chance to object on the basis that trial was premature because the plaintiff had just changed. At minimum, even if it was time to set the case for trial, I could have begun preparing the file accordingly (by completing discovery or amending pleadings as necessary). In my view, all litigants are entitled to this right, and to sua sponte deprive them of that right is contrary to law.

Reasonable minds can disagree, and this is certainly not the worst thing I’ve seen in foreclosure court. That said, I’d love to see legal authority that allows a judge to set a case for trial, sua sponte, when a Notice for Trial has not been filed. In light of the cases I’ve cited above, I just don’t think it’s possible.
Mark Stopa Esq.



Personal contract and tort liability of trustee.


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“5810.10 Personal contract and tort liability of trustee.
(A) Except as otherwise provided in the contract, for contracts entered into on or after March 22, 1984, a trustee is not personally liable on a contract properly entered into in the trustee’s fiduciary capacity in the course of administering the trust if the trustee in the contract disclosed the fiduciary capacity. The words “trustee,” “as trustee,” “fiduciary,” or “as fiduciary,” or other words that indicate one’s trustee capacity, following the name or signature of a trustee are sufficient disclosure for purposes of this division.
(B) A trustee is personally liable for torts committed in the course of administering a trust or for obligations arising from ownership or control of trust property, including liability for violation of environmental law, only if the trustee is personally at fault.
(C) A claim based on a contract entered into by a trustee in the trustee’s fiduciary capacity, on an obligation arising from ownership or control of trust property, or on a tort committed in the course of administering a trust may be asserted in a judicial proceeding against the trustee in the trustee’s fiduciary capacity, whether or not the trustee is personally liable for the claim.” [Emphasis added]
It follows as a matter of logic that for there to be a trustee eligible for the special statutory privilege of immunity described below, and cited by the purported Attorney for defendant in the Motion to Dismiss, there must have been formed in fact a legal trust, ab initio. The following authorities refute that claim on the facts of this case as set out in the attached affidavit.
The Ohio codification draws upon the UNIFORM TRUST CODE (Last Revised or Amended in 2010), drafted by the NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS,
“Report on HB 416: The Ohio Trust Code
As Enacted
Prepared for the Joint Committee on the Ohio Trust Code of the Legal, Legislative, and Regulatory Committee of the Ohio Bankers League and the Estate Planning, Trust, and Probate Law Section of the Ohio State Bar Association
Alan Newman, Reporter for the Joint Committee
The University of Akron School of Law

“…Policy considerations.
Much of the OTC is a codification of the existing common law of trusts, the adoption of which will not change Ohio law. Pre-OTC Ohio trust law, however, is relatively sparse and is found in scattered statutes and sometimes difficult to locate case law. Further, on some issues of trust law there is not well defined and accepted common law.“

The prefatory statements to the Uniform Trust provisions note:

“The Code is supplemented by the common law of trusts, including principles of equity. To determine the common law and principles of equity in a particular state, a court should look first to prior case law in the state and then to more general sources, such as the Restatement of Trusts, … The common law of trusts is not static but includes the contemporary and evolving rules of decision developed by the courts in exercise of their power to adapt the law to new situations and changing conditions. It also includes the traditional and broad equitable jurisdiction of the court, which the Code in no way restricts.”

Later under the model trust law is:

The meaning and effect of the terms of a trust are determined by:
(1) the law of the jurisdiction designated in the terms unless the designation of that jurisdiction’s law is contrary to a strong public policy of the jurisdiction having the most significant relationship to the matter at issue; or
(2) in the absence of a controlling designation in the terms of the trust, the law of the jurisdiction having the most significant relationship to the matter at issue.” [Emphasis added.]

Per the comments to the Uniform Act; “the location of the trust property” is relevant in establishing the requisite “significant relationship”. Consequently, a review of Ohio law as already cited by the defendant’s purported counsel is pertinent. Ohio law as noted above draws upon the uniform trust law.

A trust may be created by:
(1) transfer of property to another person as trustee during the settlor’s lifetime or by will or other disposition taking effect upon the settlor’s death;
(2) declaration by the owner of property that the owner holds identifiable property as trustee; or
(3) exercise of a power of appointment in favor of a trustee.

Comment: [in the model act]
This section is based on Restatement (Third) of Trusts Section 10 (Tentative Draft No. 1, approved 1996), and Restatement (Second) of Trusts Section 17 (1959). Under the methods specified for creating a trust in this section, a trust is not created until it receives property. For what constitutes an adequate property interest, see Restatement (Third) of Trusts Sections 40-41 (Tentative Draft No. 2, approved 1999); Restatement (Second) of Trusts Sections 74-86 (1959)…”

A general power of appointment is one which allows the holder of the power to appoint to himself, his estate, his creditors, or the creditors of his or her estate the right to have the beneficial use and enjoyment of certain property covered by the power of appointment. In this case the trust failed under any of the three conditions by want of any reasonable description of the property to have been the trust property.

If the settlor had followed the prescription set out in the Indenture and Servicing Agreements as filed with SEC, the issue would not arise, the trust would survive as an enfranchised entity under state law and that trust would have met the requirements for tax-exempt treatment as a REMIC. However, the settlor-depositor failed to follow its own representations and warrantees as set out in the securitization documentation.

The Model law Comment adds, ironically;
“A declaration of trust can be funded merely by attaching a schedule listing the assets that are to be subject to the trust without executing separate instruments of transfer. But such practice can make it difficult to later confirm title with third party transferees and for this reason is not recommended.”
[Emphasis added.]

The foregoing described mechanism, a loan “schedule,” was exactly that contemplated by the securitization documents.

As stated in the affidavit of______, the purported trustee was not entrusted with the homeowner promissory notes by the purported settlor-“depositor” pursuant to the Indenture and Pooling and Servicing Agreement. There was no appointment of power over specified assets nor transfer of those assets. There was no appointment by a filing of a loan schedule with SEC as represented in the SEC filing. There was a mere blank page where the list was to have been appended. There was no transfer of intangible property by way of a specifically described detailed listing of loans, with the Delaware Secretary of State –UCC division. There was again a mere blank page. The assets were not even described in the most general sense. These blank filings were represented by the SEC filer, bankrupt American Home Mortgage, as the triggering events for the establishment of the trust. Hence no trust was actually created.

Thus the role of the purported trustee must be re-construed in terms consistent with the actual facts. The failed trust defaults to existence as a mere joint venture. The purported trustee is in fact the Operator of the joint venture at best. A mere operator of a failed or defunct estate of assets, however accumulated, is not entitled to the privilege of immunity granted a true trustee with property or appointed to exercise power over specified property.





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IndyMac Is Set to Be Sold to Private Investors
December 27, 2008, By DEALBOOK

IndyMac Bancorp, one of the largest banks to fail as a result of the subprime mortgage crisis, is close to being sold to a consortium of private equity and hedge fund firms, people briefed on the matter told DealBook.

The Federal Deposit Insurance Corporation, along with a team of former Lehman Brothers bankers who are now with Deutsche Bank and Barclays Capital, have been engaged in the sale process since federal regulators declared IndyMac insolvent in July and seized the company. The deal could be announced as soon as Monday, these people said.

At the time, the collapse of IndyMac ranked as the second-largest failure in FDIC history and was quickly followed by near-failures and subsequent fire sales of banking giants Wachovia and Washington Mutual.

The buyers include private equity firms J.C. Flowers & Company and Dune Capital Management and the hedge fund firm Paulson & Company, these people said.

The proposed deal is unusual because it is one of the first transactions involving unregulated private equity firms acquiring a bank holding company. Federal regulators have been locked in a heated battle throughout the credit crisis as banks continued to fail and private equity firms initially came to the rescue, but then backed off because of regulatory concerns.

In September,(2008) the Federal Reserve eased regulations to allow private equity firms and hedge funds to acquire portions of bank holding companies without being subject to undue regulation. Previously, a private equity firm that held more than 24.9 percent of a bank was required to register as a bank holding company and it restricts the investor’s ability to make investments outside of the banking industry.

The consortium would buy the entire bank, including its 33 branches, reverse-mortgage unit and $176 billion loan-servicing portfolio.
The deal is a coup for Dune Capital, founded in 2004 by the ex-Goldman Sachs partners Steven Mnuchin and Daniel Niedich, and the other partners because they are picking up a solid bank on the cheap.

J.C. Flowers, led by the former Goldman partner, J. Christopher Flowers, focuses on financial firms, having tried to acquire student lender Sallie Mae last year. But the firm has struck few deals so far amid the banking crisis.

Paulson & Company, led by John Paulson, has been one of the biggest winners in the subprime mortgage meltdown, having reaped billions of dollars by betting against risky home loans. Mr. Paulson recently indicated to investors in his hedge funds that he is prepared to start buying up low-priced debt like prime mortgages and investing in financial institutions.

When Indymac failed, more than 130 F.D.I.C. employees swooped in on the bank to prepare it to reopen under government supervision. The bank was founded in 1985 by Angelo Mozilo and David Loeb, who also founded Countrywide Financial. IndyMac once specialized in “Alt-A” home loans, which often didn’t require borrowers to fully document income or assets.

It collapsed after defaults mounted and as tight capital markets caused losses on mortgages it couldn’t sell.

The seizure came after panicked customers withdrew more than $1.3 billion of deposits over 11 business days. The withdrawals followed comments in late June by Charles E. Schumer, the Democratic senator from New York, questioning IndyMac’s survival.
–Zachery Kouwe


Release on Foreclosure Fraud Settlement Looks Broader Than Advertised


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Release on Foreclosure Fraud Settlement Looks Broader Than Advertised

By: David Dayen

In his statement on the Administration’s new housing policies, CFPB Director Richard Cordray makes a fairly stunning response, considering it’s posted at the White House blog:

The principles articulated by the Obama administration today are good guideposts for much-needed reforms in the mortgage market. The problems that plague consumers are well-documented. Too many consumers were steered into complicated mortgages that they did not understand and couldn’t afford. Too many families were forced into foreclosure because paperwork was lost, phone calls went unanswered, errors were not resolved, or documents were falsified.

“To protect consumers, there must be clear rules of the road and real consequences for breaking them. The Consumer Bureau is already hard at work making the costs and risks of mortgages clear upfront through our Know Before You Owe project. The financial reform law also requires us to create new mortgage servicing rules that hold servicers accountable for disclosing fees and fixing problems. We are also working with other federal agencies to develop common-sense national servicing standards. But having rules in place isn’t enough. We are closely monitoring mortgage servicers to make sure that no one gains an unfair advantage by breaking the law. Taking these steps to fix the mortgage market is good for consumers, honest businesses, and our entire economy.

“Documents were falsified.” Not “allegedly” falsified, not in some cases falsified, just the simple fact that documents were falsified. This is coming from the former Attorney General of Ohio, who filed the first lawsuit against a bank over the aforementioned falsified documents.

But now that bank, Ally, is banking a $270 million charge for “foreclosure-related matters.” You can reliably read this as the precursor to a settlement, where Ally and the other top banks will pay $5 billion at most, and then make principal reductions on investor-owned mortgages (paying off the penalty with other people’s money) totaling another $17 billion or so, to get out of the liability for routinely falsifying documents. We’re not talking about errors. Falsification connotes knowing fraud. It’s called foreclosure fraud for a reason.

Which brings me back to the question of why any AG would release said liability – which as we’ll soon see is probably a release of liability going forward – for a miniscule amount of relief for their constituents. In fact, as we know from Shahien Nasiripour, the only state that has any idea of the level of relief their constituents would get is California, which publicly opposes the settlement. These other AGs are flying in blind, when $15 billion of the $25 billion total is committed to another state, and there’s no guarantee that their affected customers will see one dime from the settlement.

Furthermore, in the one area where the settlement has been said to have improved, the terms of the liability release, as Yves Smith demonstrates, the letter from Nevada AG Catherine Cortez Masto about the settlement indicates that the release could be broader than recent reports suggest. Masto’s crucial Question #3 out of 38 says: “The State release contains a provision that prevents the State AGs and banking regulators from seeking to invalidate past assignments or foreclosures. Does this prevent States from effectively challenging future foreclosure actions that are based on faulty prior assignments?”

That’s a key question. All of the fabricated mortgage assignments and associated documents used to foreclose are back-dated, so the banks can simply say that they are covered by the release. Meaning that the release could cover ONGOING foreclosure fraud. The foreclosure mills basically invent new, “found” documents all the time, so this is a real concern. Yves writes:

The banks will pay an amount into the fund, and all issues relating to robo-signing and foreclosure will be released by the AGs: the banks will have a state level release from all bad assignment/transfer issues.

Note this does not stop private parties, meaning individual borrowers, from suing on these very grounds. But taking the AGs out of the picture prevents them from using their subpoena and prosecutorial powers to determine how widespread these abuses are and to negotiate broad solutions. So we’ll have the worst of all possible worlds: individual borrowers getting better and better at fighting foreclosures (or if you are a pro bank type, getting better and better at throwing sand in the gears) with the AGs sidelined in their ability to shed light on these issues and bring them to resolution on a broader basis. And given that the OCC has already entered into weak consent orders with the major servicers, and past servicing settlements have been violated, I remain skeptical that this deal will stop these abuses. Remember, bank executives piously swore in 2010 that they stopped robosigning, yet their firms continue to engage in that practice.

So this is a major release of liability. And in exchange, we’re supposed to be happy about an ongoing investigation with the participation of the New York Attorney General, something Harold Meyerson lauds today. What this fails to recognize is that this release would invalidate one of Eric Schneiderman’s key motions against Bank of New York Mellon, in his bid to stop the settlement between Bank of America and investors over mortgage backed security claims. Schneiderman used the argument of mortgage originators failing to convey loan documentation to the trusts as a key part of why the settlement should be disallowed. That’s the “pre-crisis” conduct he’s going on about. This settlement would make it nearly impossible to litigate that. To quote Tom Adams (from Yves’ post):

Economically, if the banks get released from failing to properly transfer thousands of mortgages into the trusts for a mere $5 billion they will have gotten the deal of the century. Especially because this settlement will do nothing to stop borrowers and courts from challenging foreclosures and continuing to expose the failure to transfer. So not only will investors pick up the cost of most of the settlement, but they will then still be exposed to the bad transfers, while the banks get a get out of jail free card.

Bill Black has more on the lack of teeth to the prosecutions here.

When I first got wind of this new fraud unit, I thought that its goal was to grease the skids for the settlement. It’s really hard to see how events have rejected that thesis. So far, Schneiderman, Kamala Harris and Beau Biden remain nominally opposed to the deal. Their fellow AGs ought to understand what they’d be giving up here.

UPDATE: And now we have a possible indication that joining the robo-signing settlement is a condition of joining the federal/state RMBS working group:

Oregon Attorney General John Kroger likes what he sees in final deal between the multistate AG coalition and mortgage servicers and said Wednesday he will sign onto a settlement.

But Kroger also said he wants to join the federal task force investigating securitization and other lending mispractices at the largest banks […]

A spokesperson for Iowa AG Tom Miller, who has led the talks, said the deadline was extended for states to sign the deal to Feb. 6 from Friday at the request of an undisclosed AG. The multistate coalition will file the judgment in federal court assuming it gets a sufficient number of sign-ons.

Oregon was one of the states that met with dissident AGs prior to the announcement of the RMBS working group. Kroger also lists specific numbers to which borrowers in his state should expect (“$100 million to $200 million in relief”), so that’s new.

Our Turn to Strike Back: Schneiderman Files Massive Lawsuit Against Pretenders


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“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law,”

EDITOR’S NOTE: Don’t confuse this with other cases. This is the first shot that seeks to drive a stake into the heart of the foreclosure process and NOW, unlike before, the defendants have committed themselves in millions of foreclosures where upon challenge they had been successful at playing shell games with the documents. Everything they did is  engraved in stone now and it either can’t be justified or it can be. Schneiderman has crafted a well-written, well-reasoned lawsuit, but more than that this lawsuit in long a facts and short on presumptions. That is what makes it different.

Read this and use it in your pleadings.


Complaint Charges Use Of MERS By Bank Of America, J.P. Morgan Chase, And Wells Fargo Resulted In Fraudulent Foreclosure Filings  

Servicers And MERS Filed Improper Foreclosure Actions Where Authority To Sue Was Questionable

Schneiderman: MERS And Servicers Engaged In Deceptive and Fraudulent Practices That Harmed Homeowners And Undermined Judicial Foreclosure Process

NEW YORK – Attorney General Eric T. Schneiderman today filed a lawsuit against several of the nation’s largest banks charging that the creation and use of a private national mortgage electronic registry system known as MERS has resulted in a wide range of deceptive and fraudulent foreclosure filings in New York state and federal courts, harming homeowners and undermining the integrity of the judicial foreclosure process. The lawsuit asserts that employees and agents of Bank of America, J.P. Morgan Chase, and Wells Fargo, acting as “MERS certifying officers,” have repeatedly submitted court documents containing false and misleading information that made it appear that the foreclosing party uad the authority to bring a case when in fact it may not have. The lawsuit names JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., as well as Virginia-based MERSCORP, Inc. and its subsidiary, Mortgage Electronic Registration Systems, Inc.

The lawsuit further asserts that the MERS System has effectively eliminated homeowners’ and the public’s ability to track property transfers through the traditional public records system. Instead, this information is now stored only in a private database – which is plagued with inaccuracies and errors – over which MERS and its financial institution members exercise sole control. Additional defendants include BAC Home Loans Servicing, LP, Chase Home Finance LLC, EMC Mortgage Corporation, and Wells Fargo Home Mortgage, Inc.

“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law,” said Attorney General Schneiderman. “Our action demonstrates that there is one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously. Only through real accountability for the illegal and deceptive conduct in the foreclosure crisis will there be justice for New York’s homeowners.”

The financial industry created MERS in 1995 to allow financial institutions to evade local county recording fees, avoid the hassle and paperwork of publicly recording mortgage transfers, and facilitate the rapid sale and securitization of mortgages. MERS operates as a membership organization, and most large companies that participate in the mortgage industry – by originating loans, buying or investing in loans, or servicing loans – are members, including JPMorgan Chase, Bank of America, Wells Fargo, Fannie Mae, and Freddie Mac. Over 70 million loans nationally have been registered in MERS System, including about 30 million currently active loans.

Through their membership in MERS, these companies avoided publicly recording the purchase and sale of mortgages by designating MERS Inc. – a shell company with no economic interest in any mortgage loan – as the “nominal” mortgagee of the loan in the public records. Instead, MERS members were supposed to log mortgage transfers in the MERS private electronic registry. The basic theory behind MERS is that, because MERS Inc. serves as a “nominee” (or agent) for most major lenders, it remains the “mortgagee” in the public records regardless of how often the loan is sold or transferred among MERS members. Thus, although MERSCORP has only about 70 employees, MERS Inc. serves as the mortgagee of record for tens of millions of loans registered in the MERS System.

MERS has granted over 20,000 “certifying officers” the authority to act on its behalf, including the authority to assign mortgages, to execute paperwork necessary to foreclose, and to submit filings on behalf of MERS in bankruptcy proceedings. These certifying officers are not MERS employees, but instead are employed by MERS members, including JPMorgan Chase, Bank of America, and Wells Fargo.

MERS’ conduct, as well as the servicers’ use of the MERS System, has resulted in the filing of improper New York foreclosure proceedings, undermined the integrity of the judicial process, created confusion and uncertainty concerning property ownership interests, and potentially clouded titles on properties throughout the State of New York. In fact, several New York judges have questioned the standing of the foreclosing party in cases involving MERS loans and the validity of mortgage assignments executed by MERS certifying officers.

The lawsuit specifically charges that the defendants have engaged in the following fraudulent and deceptive practices:

  • MERS has filed over 13,000 foreclosure actions against New York homeowners listing itself as the plaintiff, but in many instances, MERS lacked the legal authority to foreclose and did not own or hold the promissory note, despite saying otherwise in court submissions.
  • MERS certifying officers, including employees and agents of JPMorgan Chase, Bank of America, and Wells Fargo, have repeatedly executed and submitted in court legal documents purporting to assign the mortgage and/or note to the foreclosing party. These documents contain numerous defects, including affirmative misrepresentations of fact, which render them false, deceptive, and/or invalid. These assignments were often automatically generated and “robosigned” by individuals who did not review the underlying property ownership records, confirm the documents’ accuracy, or even read the documents. These false and defective assignments often masked gaps in the chain of title and the foreclosing party’s inability to establish its authority to foreclose, and as a result have misled homeowners and the courts.
  • MERS’ indiscriminate use of non-employee “certifying officers” to execute vital legal documents has confused, misled, and deceived homeowners and the courts and made it difficult to ascertain whether a party actually has the right to foreclose. MERS certifying officers have regularly executed and submitted in court mortgage assignments and other legal documents on behalf of MERS without disclosing that they are not MERS employees, but instead are employed by other entities, such as the mortgage servicer filing the case or its counsel. The signature line just indicates that the individual is an “Assistant Secretary,” “Vice President,” or other officer of MERS. Indeed, these documents often purport to assign the mortgage to the certifying officer’s own employer. Moreover, as a result of the defendants’ failure to track the designation of certifying officers and the scope of their authority to act, individuals have executed legal documents on behalf of MERS, such as mortgage assignments and loan modifications, when they were either not designated as a MERS certifying officer at the time or were not authorized to execute documents on behalf of MERS with respect to the subject loan.
  • MERS and its members have deceived and misled borrowers about the importance and ramifications of MERS’ role with respect to their loan by providing inadequate disclosures.
  • The MERS System is riddled with inaccuracies which make it difficult to verify the chain of title for a loan or the current note-holder, and creates confusion among stakeholders who rely on the information. In addition, as a result of these inaccuracies, MERS has filed mortgage satisfactions against the wrong property.

The lawsuit seeks a declaration that the alleged practices violate the law, as well as injunctive relief, damages for harmed homeowners, and civil penalties. The lawsuit also seeks a court order requiring defendants to take all actions necessary to cure any title defects and clear any improper liens resulting from their fraudulent and deceptive acts and practices.

The matter is being handled by Deputy Bureau Chief of the Bureau of Consumer Frauds & Protection Jeffrey K. Powell, Assistant Attorney General Clare Norins, and Assistant Solicitor General Steven C. Wu, under the supervision of First Deputy Attorney General Harlan Levy.



Home prices fall for fifth consecutive month


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EDITOR’S NOTE: While the administration, realtors and others are trying to paint lipstick on the pig, the reality is that the housing market is as weak as ever, falling further and further in a death spiral. The number of strategic defaults projected for 2012 is in the millions, meaning that despite the incalculable pressure on prices that already exists, the housing market is going to get worse for years to come.

As stated by an increasing number experts, the only way to head off this third housing crisis in as many years is to offer something meaningful to homeowners to stay in their homes and keep paying the mortgage. That isn’t going to happen until investors get out of their passive role in this mess and start demanding answers about where the money went when the mortgage was funded, where the money went when it was getting paid, and how much money was collected from third party obligors as set forth in the PSA and Prospectus.

Unions and pension funds are the ones getting hurt most by this as they have hundreds of millions of dollars to declare in losses — unless they exercise their right to collect true information and bring lawsuits to recover it. They can start with realizing that their interests converge with those of homeowners and stop this march toward foreclosures in which everyone loses except those who never invested a dime.

Home prices fall for fifth consecutive month

Tara Steele

Home prices decline in 2011

With the release of the CoreLogic Home Price Index (HPI®) report for December, a full-year picture is now available for all price changes in 2011. According to the CoreLogic, the HPI report reveals that including distressed sales, home prices in the U.S. decreased 4.7 percent in 2011 compared with December 2010. With distressed sales excluded, home prices still decreased 0.9 percent in 2011, showing the extent of the impact of distressed sales on home prices last year.

For the month, home prices fell 1.4 percent, marking the fifth consecutive monthly decline, with distressed sales prices rising 0.2 percent, the first monthly gain since July of 2011, marking a silver lining in December’s report.

This report shows home prices continued their slide and CoreLogic notes “that home prices continued the trend of year-end decreases—this is the fifth consecutive year with a decrease in the HPI.”

“While overall prices declined by almost 5 percent in 2011, non-distressed prices showed only a small decrease. Until distressed sales in the market recede, we will see continued downward pressure on prices,” said Mark Fleming, chief economist for CoreLogic.

Montana sees highest appreciation levels

Including distressed sales, the five states with the highest appreciation were Montana (+4.4 percent), Vermont (+4.0 percent), South Dakota (+3.1 percent), Nebraska (+2.5 percent) and New York (+1.7 percent). Excluding distressed sales, the five states with the highest appreciation were Montana (+7.7 percent), South Dakota (+3.5 percent), Indiana (+3.3 percent), Alaska (+3.1 percent), and Massachusetts (+2.9 percent).

Including distressed sales, the five states with the greatest depreciation were Illinois (-11.3 percent), Nevada (-10.6 percent), Georgia (-8.3 percent), Ohio (-7.7 percent), and Minnesota (-7.5 percent). Excluding distressed sales, the five states with the greatest depreciation were Nevada (-9.7 percent), Minnesota (-5.2 percent), Arizona (-4.9 percent), Delaware (-4.2 percent) and Michigan (-3.5 percent).

Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to December 2011) was -33.7 percent. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -24.0 percent.

The five states with the largest peak-to-current declines including distressed transactions are Nevada (-60.0 percent), Arizona (-51.9 percent), Florida (-50 percent), Michigan (-43.7 percent), and California (-43.5 percent). Of the top 100 Core Based Statistical Areas (CBSAs) measured by population, 81 are showing year-over-year declines in December, one more than in November.

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