Cal. 3d DCA: WRONGFUL FORECLOSURE — You Can Cancel the Assignment, Notice of Default, Notice of Sale and Reverse the Sale.

This decision “Not for publication” takes one more step toward unravelling the false claims of securitization that resulted in millions of fake foreclosures over at least 15 years. The pure nonsense being peddled by Wall Street investment banks still remains as the underlying basis for assumptions and presumptions that are contrary to fact and contrary to legal and equitable principles.

But the window is now open to include the investment banks as defendants in complaints for damages and disgorgement, because as this decision reveals, the courts may not be willing to take a giant leap of faith that someone must be the lender and that “someone” is part of the chain of players who are pursuing foreclosure. Without that leap of faith, without that bias, their “doctrine” is left dangling in the wind.

GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================

See http://lawzilla.com/blog/rainn-gauna-v-jpmorgan-chase-bank/

YES it does stand for the proposition that at least this court says that cancellation of instruments is the one cause of action that in fact does exist because the assignment was from an assignor that had no interest in the debt. I think that it is important to make it clear that the words “no beneficial interest” means “no ownership of the debt.” But the use of the words “no beneficial interest” implies the validity of the deed of trust by which the property was encumbered in favor of a “lender” (or its agent “MERS”) who was a sales agent and not a lender and from whom the borrower received no funds.

*
This twisted concept seems to be saying to the judicial world that we know that table funded loans occur but we are not going to invalidate the enforcement of contracts lacking in consideration because there must be someone in the mix who did provide consideration and who was in some kind of relationship with the sales agent. Hecne the courts are thinking that they are following substance over form and thus preventing a windfall to borrowers. Instead they are stepping over the facts.
*
The money came from an investment bank and yes the investment bank knew that the “originator” would be named as lender. The purpose of this arrangement was to shield the investment bank from liability for violations of lending laws of which we all know there were many spanning the categories of appraisal fraud, avoidance of underwriting risk (without which nobody could be considered a lender), to concealment instead of disclosure of terms, compensation etc.
*
You can’t pick up one end of the stick without  picking up the other. If we are going to accept the notion that in foreclosure cases we are going to treat a contract as enforceable even though it lacked consideration and nobody else that is named in the chain has ever paid value, then the assumption is that an unnamed party who actually did pay value, is the real party in interest. That is the investment bank. And THAT can ONLY mean that the investment bank was present in underwriting and granting the loan through its naked nominee, the sales agent or “originator.”
*

If that is so then the liability for lending violations MUST attach to the investment bank. And if that is so then at least in judicial states, by alleging those lending violations through the affirmative defense of recoupment, the foreclosure can be mitigated or defeated entirely. In nonjudicial states one would need to allege active concealment preventing the borrower from knowing the real party in interest with whom he was dealing.

*

This could be the end of nonjudicial foreclosures at least as to LBMT-WAMU-Chase. It should be treated as such. If I had time, I could literally write a book about this decision as it is so instructive as to pleading requirements and common mistakes made by trial and appellate courts like for example, assuming that a legal default exists when nobody who owned the debt declared such a default or even said that payment was delinquent in some way.

*
It also shows the lengths that many courts will go to avoid “fraud.” While they will accept the notion that something was wrongful and that the defendants knew it was wrongful, contrary to fact and law, they refuse so see it as fraud. A quick look at any FTC action will reveal that such restrictions do not apply if the same allegations come from a governmental agency.
*

The case is also instructive in that it repeats a very common scenario regarding the origination and progression of the loan. This court and other courts will eventually face the day when their assertions come full circle: for now, they are saying that just because there was no consideration between then named lender and the borrower doesn’t mean there was no enforceable contract.

*

Yes it does mean that in every context other than foreclosure litigation. But because of the rules in UCC Article 3 the maker of a note takes a risk when they execute the promissory note without having received any consideration because the note represents, under law, the right to enforce it, which if it is acquired for value might mean the enforcement would be free from borrower”s defenses. That liability does not create an enforceable loan contract. Even common sense dictates that for a loan contract to be enforceable there must be a loan between the parties to the contract.

*

PRACTICE NOTE: All that said, this case only stands for the proposition that a complaint is sufficient when it pleads that the party on whose behalf an assignment was made had no ownership in the debt. The proof of the pudding will be at trial. How will you prove this basic proposition. The answer is that you have taken the first step which is that you put the matter in issue. The second step is discovery. And the third step, if it ever gets to that, is establishing at trial that the supposed beneficiary under a deed of trust or the mortgagee under a mortgage deed had not satisfied its burden of proof showing an ownership interest in the underlying debt.”

*

The opposition to that narrative will be what it has always been. That possession of the “original” note raises the legal presumption that the named beneficiary under the deed of trust in fact was the legal beneficiary under the deed of trust. Possession of the note, they will argue equals ownership of the debt. If the judge accepts that proposition, the burden of proof will then fall on the borrower to rebut that presumption — a leap that most judges have already demonstrated they don’t want to make. So the persuasiveness of then presentation including an unrelenting march toward revelation of the truth is the only thing that carries the day.

*

The banks know that what they’re doing is wrong. But history shows that they can get away with it except with the apparently rare homeowner who aggressively and relentlessly defends the foreclosure.

Investigator Bill Paatalo: A Plea To These Conspirators – You Have The Power To End This Nightmare.

 http://bpinvestigativeagency.com/a-plea-to-these-conspirators-you-have-the-power-to-end-this-nightmare/

I received an email yesterday morning that starts out with this:

On Mon, Apr 24, 2017 at 9:18 AM, the author wrote:

Please help save longtime Sandy Oregon resident Robynne Fauley’s life. She had major cancer surgery less than two weeks ago is getting chemo and is VERY ill. She will be evicted from her home on May 1st if we don’t help.  She has nowhere to go. The ordeal is very likely to kill he[r;].
I happen to have some knowledge about this case, as I was called in as an expert last year to assist an ABC News investigative journalist in Dallas, TX. Unfortunately, after all the time spent conducting interviews and laying out the evidence of fraud on a platter, corporate counsel for ABC News quashed the story. I’m sure this surprises no one. The reality is that the media will continue to plug its ears, while law enforcement will continue to view and categorize crimes of counterfeiting, forgery, tax evasion, and mail/wire fraud as “civil matters” in the context of foreclosures.
So with the clock ticking, I thought I’d throw up a “Hail Mary” plea in the direction of “Diane Meistad” and the rest of these conspirators. Diane, Michael, and the rest of you –  if you’re out there and see this, fix it!
The following email strand (2008 Internal Emails – MGC – RFC – Quality Loan Servicing – Fauley Case) is a rare glimpse of bank employees conspiring to forge, back-date, and fraudulently produce a chain of title.
July 11, 2008
From: Monica Hadley – MGC Mortgage
To: Chris Malapit – (Trustee) Quality Loan Service of Washington
Hadley: Chris, Does this loan have title issues? I was going through the original documents and the chain of title seems to be missing some assignments. It could have been that this was missed in the file and all is well. I want to make sure.
July 11. 2008
From: Chris Malapit
To: Monica Hadley
Subject: *12125 Se Laughing Water, Sandy, OR 97055* Robynne Fauley
The DOT was assigned to WAMU,FA as of 5/3/2007 by instrument#2007-038181. Once we are able to proceed we will then need an assignment from WAMU, FA in LNV Corporation.
July 14, 2008
From: Monica Hadley
To: Chris Malapit
Chris, That is what I see too. We received the loan from Residential Funding Company, LLC and have an AOM from RFC to LNV Corporation. Why did RFC assign the loan to WAMU? Do you have a contact at WAMU who will assign the file to LNV Corporation?
July 14, 2008
From: Chris Malapit
To: Monica Hadley
Doing more research I don’t think Residential Funding Co, LLC had the authority to transfer the interest as the last bene of record per our title report was Deutsche Bank Trust not Residential Funding Co.
July 16, 2008
From: Monica Hadley – MGC Mortgage
To: Chris Malapit – (Trustee) Quality Loan Service of Washington
Subject: Subject: *12125 Se Laughing Water, Sandy, OR 97055* Robynne Fauley
Here is a copy of the most recent title update from the attorney office and the email chain from our attorney.
[FAST FORWARD]
October 17, 2008
From: Michael Barnett (MGC Mortgage, Inc.)
To: Shanda Foreman (entity unknown)
Cc: Carissa Golden (entity unknown)
Subject: Intervening Assignments to Deutsche Bank
 
Shanda, I have 2 RFC loans that are needing assignments from Deutsche Bank to RFC. Please check to see if they are on the list you sent to RFC. See the loan numbers below.
 
17103058/Robynne Fauley, Oregon
17102692/Stuart Berg, New Jersey
 
 
October 24, 2008
From: Michael Barnett
To: ‘Meistad, Diane’ (entity unknown)
 
Diane, this loan was last assigned to Washington Mutual from RFC but, prior to this assignment was assigned from Washington Mutual to Deutsche Bank and recorded in Clackamas County, Oregon. We need an assignment from Deutsche Bank to RFC and from Washington Mutual to LNV Corp. I have templates for both assignments. We will be re-recording the assignment from RFC to Washington Mutual to correct the chain of title with both of these assignments. Also, please find Note Allonge from Deutsche Bank to RFC as well. Please forward these signed assignments back to me via our federal express account #252870180. Thanks Michael.
 
(Assignments & Allonge attached)
[Note: WAMU no longer existed on October 24, 2008. This is a huge problem! But this doesn’t stop MGC from creating the necessary “templates” to solve this problem. Furthermore, Diane Meistad is believed to have been employed by RFC. Yet, MGC creates an “Alonge” from Deutsche Bank to RFC seeking RFC’s execution, not Deutsche Bank.]
October 27, 2008
From: Diane Meistad
To: Michael Barnett
Subject: RE: Default Assignment Request loan #7889719/17103058 (Fauley, Robynne)
 
Michael, If the assignment was recorded from WAMU to DB and another assignment f/RFC to WAMU – technically the second assignment is ‘invalid’ because RFC was not in title to record the second assignment and it should not effect title.
 
Because of the assignment was invalid technically it didn’t transfer ownership.
 
October 27, 2008
From: Michael Barnett
To: Diane Meistad
 
Diane, since the assignment from RFC to WAMU is of record we have to correct the chain of title. At this point the county recorder’s office shows that WAMU is the assignee of record for this loan (which is wrong), right? RFC did assign this loan and shouldn’t have but, in order to fix this one the correct chain should be from Deutsche to RFC, then from RFC to WAMU, then WAMU to LNV Corp, which will correct the chain of title. Litton Loan Servicing LP prepared and recorded the assignment from RFC to WAMU, which should not have been recorded. We still need to get this loan from RFC to LNV to properly convey this property, since we purchased it from RFC. Please call me if you still concerns about the chain of assignments. Borrower loan #7889719/17103058 – Robynne Fauley. Thanks Michael.
 
[NOTE: This was a WAMU originated loan. WAMU sold this loan in a number of undocumented transactions that wound up in the hands of “Deutsche Bank as Trustee.” This means that the Fauley loan was securitized into some trust years prior, to which Deutsche Bank was acting as Trustee. MGC is claiming they purchased this loan when they clearly do not have clear title. They admit in this email that in order to correct the chain of title, they need the final transfer from WAMU to LNV Corp, which at this point in time is an impossibility. The next responsive email shows that Diane Meistad disagrees with MGC’s position / request.]
October 27, 2008
From: Diane Meistad
To: Michael Barnett
Subject: RE: Default Assignment Request loan (Fauley, Robynne)
 
I disagree since RFC was not in position (title position) to transfer the asset.
 
I will need to refer your request for this assignment to our Records Services team in Iowa to begin the process. Diane
[NOTE: Meistad, who is believed to work for RFC, does not believe RFC was in title position to transfer the Deed of Trust. The reference to the “Records Services team in Iowa” means it is likely that Wells Fargo was involved as a master servicer / custodian for the unidentified trust for which Deutsche Bank was Trustee.]
October 27, 2008
From: Michael Barnett
To: Diane Meistad
Subject: RE: Default Assignment Request loan (Fauley, Robynne)
 
Okay Diane, I had my manager look at this file with me and we have determined that we need the following assignments to correct the chain of assignments:
 
1) Corrective Assignment from WAMU TO Deutsche Bank (to correct the assignment from RFC to WAMU, which was recorded in error) & Note Allonge
2) Assignment from Deutsche Bank to RFC & Note Allonge
3) Assignment from RFC to LNV Corp (Note allonge in file already)
 
The assignment from RFC to WAMU was recorded in error so it is not needed. We also have 2 endorsements on the original Note WAMU to RFC to Deutsche Bank which should be cancelled, to correct the Endorsement chain on the Note. We will just need the okay from you via email to cancel these endorsements. Will this work for you? Thanks Michael.
[NOTE: MGC has decided what was done right and wrong in prior transactions for which it has no knowledge, and what now needs to be done in its own best interest to steal and harvest the home. The transfers to and from WAMU as described above would be fraud due to WAMU being defunct. Then there is the request to have RFC cancel out the endorsements and replace with allonges. The third request in the sequence states that an allonge is already in the file from RFC to LNV Corp even though there are no assignments, yet, to support that allonge. That allonge created by MGC is fraudulent, and represents yet another broken sequence in the chain of title.]
Four days after this last email on October 27, 2008, the following two attached assignments are recorded simultaneously in Clackamas County, Oregon (Recorded Assignments – October 31 2008 – Fauley). The first assignment (and I call it the “first” because of its fraudulently back-dated) is executed on “March 10, 2008″ and notarized as such by “Diane Meistad” – Notary Public – State of Minnesota.” The assignor is “Residential Funding Company, LLC fka Residential Funding Corporation” with no Assignee named. NO ASSIGNEE! However, the second assignment is executed on October 27, 2008 with the Assignor named as “Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company) and the Assignee – “Residential Funding Company, LLC.” This assignment is also notarized by “Diane Meistad.” As admitted by Meistad above, RFC was not in title position to transfer the asset as of October 27, 2008. Yet, she acquiesced to MGC’s fraudulent conspiracy to forge, fabricate, and alter documents.
So, Diane Meistad, Michael Barnett, and all the rest of you who where involved in this deceit, this one’s on you. You are the only ones who can put a stop to this injustice. Robynne Fauley, who is elderly and very sick, has suffered immensely from your actions. In six-days she is scheduled to be evicted from her home. Fix this!
Bill Paatalo
Private Investigator – OR PSID$ 49411
BP Investigative Agency, LLC
(406) 328-4075
bill.bpia@gmail.com

Wells Fargo Skewered by Federal Judge For Forgery as a Pattern of Conduct

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

==============================

http://nypost.com/2015/01/31/ny-federal-judge-slams-wells-fargo-for-forged-mortgage-docs/

COURT FINDS PRESUMPTIONS CAN BE REBUTTED BY A SHOWING OF SOME EVIDENCE THAT THE INSTRUMENT AND/OR SIGNATURE IS NOT AUTHENTIC

What I like about the Federal Judge decisions is that they express the reasons for their orders and judgments with much greater specificity than State Court judges tend to do — probably because they have a lighter case load and when they get promoted it can go pretty high (like the US Supreme Court). So it should come as no surprise that a New York Federal Bankruptcy Judge issued a 30 page opinion that essentially said what people have been saying since 2007 — the entire foreclosure process is an exercise in illegal patterns of conduct to the detriment of the homeowners. Since he also made clear that the debt remains, we have yet to get a definitive opinion from a Judge that questions whether the original closing was valid and enforceable. for that we still need to wait.

But by ruling on the specifics of how to rebut presumptions that are used in cases involving negotiable instruments, this Court has definitely opened the door to requiring the banks to do something that he suspects and I know the banks cannot do — prove the loan transaction, and the loan transfers with actual transactions in which a purchase and sale occurred and money exchanged hands after which there was delivery of the paper. Once THAT cat is out of the bag, the banks are doomed. People are going to start asking the question they have been asking for years — except this time it won’t be a rhetorical question: “If the originator didn’t loan the money then who did? And if there was no consideration for the transfer of the loan documents then whose money was used to originate or acquire the loan?” The answers will surprise even veterans of this war.

see franklin-opinion

Excerpts—

The debtor herein (the “Debtor”) has objected to a claim filed in this case by Wells Fargo Bank,

NA (“Wells Fargo”), Claim No. 1‐2, dated September 29, 2010 (amending Claim No. 1‐1), on the basis that Wells Fargo is not the holder or owner of the note and beneficiary of the deed of trust upon which the claim is based and therefore lacks standing to assert the claim.1 This Memorandum of Decision states the Court’s reasons, based on the record of the trial held on December 3, 2013 and the parties’ pre‐ and post‐trial submissions, for granting the Claim Objection….

(i) how could Wells Fargo or Freddie Mac assert a claim under the Note when the Note was neither specifically indorsed to either of them nor indorsed in blank (and was specifically indorsed to ABN Amro, although ABN Amro had subsequently assigned its interest therein to MERS as nominee for Washington Mutual Bank, FA), and (ii) how could Wells Fargo properly assert any rights under the July 12, 2010 Assignment of Mortgage when the person who signed the Assignment of Mortgage from MERS in its capacity “as nominee for Washington Mutual Bank, FA” to Wells Fargo was an employee of Wells Fargo (as well as of MERS),3 and there was no evidence that Washington Mutual Bank, FA authorized MERS to assign…….

if Freddie Mac was the owner of the loan, as both Wells Fargo and Freddie Mac contended, why was Claim No. 1‐1 filed by Wells Fargo not as Freddie Mac’s agent or servicer, but, rather, in its own name? (The ownership/agency issue had practical as well as possible legal consequences because counsel for Wells Fargo contended that Freddie Mac guidelines precluded Wells Fargo from considering loan modification proposals for the Debtor.)….

the parties engaged in discovery disputes that resulted in an order compelling the deposition of John Kennerty, who by then no longer worked for Wells Fargo, see Kennerty v. Carrsow‐Franklin (In re Carrsow‐Franklin), 456 B.R. 753 (Bankr. D. S.C. 2011), and Wells Fargo’s production of a woefully unqualified initial Rule 30(b)(6) witness…..

Wells Fargo responded that it did not need to be the owner of the loan in order to enforce the Note and a secured claim for amounts owing under it. Instead, Wells Fargo relied, under Texas’ version of Article 3 of the Uniform Commercial Code (the “U.C.C.”), solely on being the “holder” of the Note indorsed in blank by ABN Amro that appeared for the first time as an attachment to Claim No. 1‐2.7…

In a bench ruling on March 1, 2012, memorialized by an order dated May 21, 2012, the Court agreed with Wells Fargo, concluding that, under Texas law, if Wells Fargo were indeed the holder of the Note properly indorsed in blank by ABN Amro, Wells Fargo could enforce the Note and the Deed of Trust even if it was not the owner or investor on the Note or properly assigned of Deed of Trust,8 citing SMS Fin., Ltd. Liab. Co. v. ABCO Homes, Inc., 167 F.3d 235, 238 (5th Cir. 1999) (under Texas law, “[t]o recover on a promissory note, the plaintiff must prove: (1) the existence of the note in question; (2) that the party sued signed the note; (3) that the plaintiff is the owner or holder of the note; and (4) that a certain balance is due and owing on the note”) (emphasis added), and In re Pastran, 2010 Bankr. LEXIS 2237, ….

Perhaps wary of relying on an assignment by the assignee to itself without authorization by the purported assignor, Wells Fargo has waived reliance on the July 12, 2010 Assignment of Mortgage to establish its right to assert Claim No. 1‐2, looking only to its status as a holder of the Note. It indeed appears that Mr. Kennerty’s signature on the Assignment of Mortgage was improper in either of his capacities, as an officer of Wells Fargo or as an officer of MERS, without further authorization from Washington Mutual Bank, FA, because ABN Amro assigned MERS the Deed of Trust solely in MERS’ capacity as nominee for Washington Mutual Bank, FA, without the power of foreclosure and sale in its own right and not for its own successors and assigns as well as Washington Mutual Bank, FA’s; and MERS (through Mr. Kennerty) executed the Assignment of Mortgage solely as nominee for Washington Mutual Bank, FA. Compare Kramer v. Fannie Mae, 540 Fed. Appx. 319, 320 (5th Cir. 2013), cert. denied, 134 S. Ct. 1310, 188 L. Ed. 2d 305 (2014) (MERS could assign deed of trust made out to it that specifically granted MERS the power to foreclose and assign its rights); Silver Gryphon, L.L.C. v. Bank of Am. NA, 2013 U.S. Dist. LEXIS 168950, at *11‐12 (S.D. Tex. Nov. 7, 2013) (same); Richardson v. CitiMortgage, Inc., 2010 U.S. Dist. LEXIS 123445, at *3, *13‐14 (E.D. Tex. Nov. 22, 2010) (same), and Nueces County v. MERSCORP Holdings, Inc., 2013 U.S. Dist. LEXIS 93424, at *20 (S.D. Tex. July 3, 2013); In re Fontes, 2011 Bankr. LEXIS 1792, at *11‐13 (B.A.P. 9th Cir. Apr. 22, 2011); and In re Weisband, 427 B.R. 13, 20 (Bankr. D. Az. 2010) (MERS as mere “nominee” of mortgage holder lacks power to transfer enforceable mortgage)…..

Because it is undisputed that (a) the Debtor signed the Note (and received the loan proceeds)11 and (b) a properly recorded lien on the Property secures the Debtor’s obligation under the Note (albeit that Wells Fargo does not rely independently on the Deed of Trust assigned to ABN AMRO and then

10 See Supplement to Emergency Motion to Reopen and for Leave to Propound Additional Discovery to Defendant for Additional Evidence Withheld Prior to Trial, dated March 11, 2014.

11 See Trial Tr. at 95‐6 (testimony of the Debtor).

9

10-20010-rdd Doc 109 Filed 01/29/15 Entered 01/29/15 11:01:42 Main Document Pg 10 of 30

assigned to MERS as nominee for Washington Mutual Bank, FA (none of which has filed a proof of claim) or the Assignment of Mortgage to sustain its claim), the only issue addressed by the parties is whether Wells Fargo has standing to enforce the Note, and, thus, assert Claim No. 1‐2.12 This is because, as stated above, Texas follows the majority rule that “[w]hen a mortgage note is transferred, the mortgage or deed of trust is also automatically transferred to the note holder by virtue of the common‐law rule that ‘the mortgage follows the note.’” Campbell v. Mortg. Elec. Registration Sys., Inc., 2012 Tex. App. LEXIS 4030, at *11‐12 (Tex. App. Austin May 18, 2012), quoting J.W.D., Inc. v. Fed. Ins. Co., 806 S.W.2d 327, 329‐30 (Tex. App. Austin 1991). See also Kiggundu v. Mortg. Elec. Registration Sys., Inc., 469 Fed. Appx. 330, 332; Richardson v. Ocwen Loan Servicing, LLC, 2014 U.S. Dist. LEXIS 177471, at *13 n.4 (N.D. Tex. Nov. 21, 2014); Nguyen v. Fannie Mae., 958 F. Supp. 2d 781, 790 n.11 (S.D. Tex. 2013); Trimm v. U.S. Bank., N.A., 2014 Tex. App. LEXIS 7880, at *14 (Tex. App. Fort Worth July 17, 2014)…..

Wells Fargo’s right to enforce the Note, and thus its standing to assert Claim No. 1‐2, derives from the Note’s status as a negotiable instrument under Texas’ version of the U.C.C. See Tex. Bus. & Com. Code § 3.104(a). The Debtor has not disputed that the Note is negotiable, and the Note in any event satisfies the requirements of a negotiable instrument under Texas law, as it is “an unconditional promise . . . to pay a fixed amount of money . . . payable to . . . order at the time it [was] issued; . . . payable . . . at a definite time; and does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money” except as permitted by the statute. Id. See also Farkas v. JP Morgan Chase Bank, 2012 U.S. Dist. LEXIS 190194, at *6‐7 (W.D. Tex. June 22, 2012), aff’d, 544 Fed. Appx. 324 (5th Cir. 2013), cert. denied, 134 S. Ct. 628, 187 L. Ed. 411

12 One might argue, although Wells Fargo has not, that the parties’ pre‐bankruptcy course of dealing, including the Loan Modification Agreement signed by the Debtor on February 12, 2008 and attached to Claim No 1‐2 (See also Trial Tr. at 96‐104), would independently support Wells Fargo’s right to assert Claim No. 1‐2; however, if the blank ABN Amro indorsement were forged, the Loan Modification Agreement and course of dealing would ultimately improperly derive from Wells Fargo’s fraudulent assertion of the right to enforce the Note and Deed of Trust.

10

10-20010-rdd Doc 109 Filed 01/29/15 Entered 01/29/15 11:01:42 Main Document Pg 11 of 30

(2013); Steinberg v. Bank. of Am., N.A., 2013 Bankr. LEXIS 2230, at *12‐14 (B.A.P. 10th Cir. May 30, 2013)…..

“The presumption rests upon the fact that in ordinary experience forged or unauthorized signatures are very uncommon, and normally any evidence is within the control of, or more accessible to, the defendant.”15 Official Comment to Tex. Bus. & Com. Code § 3.308 (“Off. Cmt.”). The presumption is effectively incorporated into Fed. R. Evid. 902(9), which provides that no extrinsic evidence of authenticity is required to admit “[c]ommercial paper, a signature on it, and related documents, to the extent allowed by general commercial law,” and it is loosely analogous to the rebuttable presumption of the prima facie validity of a properly filed proof of claim under Fed. R. Bankr. P. 3001(f).

While Tex. Bus. & Com. Code §§ 3.308(a) and 1.206(a) provide that the presumption of an authentic signature applies “unless and until evidence is introduced that supports a finding of nonexistence,” they do not state the quantum of evidence to overcome the presumption. The Official Comment to § 3.308, however, refers to “some evidence” and to “some sufficient showing of the grounds for the denial before the plaintiff is required to introduce evidence,” and then states, “[t]he defendant’s evidence need not be sufficient to require a directed verdict, but it must be enough to support the denial by permitting a finding in the defendant’s favor.” Off. Cmt. 1 to § 3.308.16 This suggests that the required evidentiary showing to overcome the presumption is similar to that needed to defeat a summary judgment motion: the introduction of sufficient evidence so that a reasonable trier of fact in the context of the dispute could find in the defendant’s favor. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587‐88 (1986); 11 Moore’s Fed. Prac. 3d § 56.22[2] (2014). Because of the general factual context described in the Official Comment, which recognizes that “in ordinary experience forged or unauthorized signatures are very uncommon,” Off. Cmt. 1 to § 3.308, courts have nevertheless required a significant amount of evidence to overcome the presumption. See In re Phillips, 491 B.R. 255, 273 n. 37 (Bankr. D. Nev. 2013) (“This evidence was inconclusive at best. Against this background, the court is prepared to believe that it is more likely that [the claimant] negligently failed to copy the Note and First Allonge when it filed its [first] Proof of Claim rather than it forged the First Allonge later on. In short, when both are equally likely, the court picks sloth over venality.”); see also Congress v. U.S. Bank. N.A., 98 So. 3d 1165, 1169 (Civ. App. Ala. 2012) (referring to requirement of substantial, though not clear and convincing, evidence to rebut the presumption under U.C.C. §§ 3‐308(a) and 1‐206(a), although directing trial court on remand to apply preponderance‐of‐ the‐evidence standard to whether the presumption was overcome)….

See People v. Richetti, 302 N.Y. 290, 298 (1951) (“A presumption of regularity exists only until contrary substantial evidence appears. . . . It forces the opposing party (defendant here) to go forward with proof but, once he does go forward, the presumption is out of the case.”). Thus, in In re Phillips, 491 B.R. at 273 n. 37, quoted above, if the presumption had been overcome by a preponderance of the evidence and the burden shifted and forgery and negligence were found to be equally likely, the holder of the note should lose.

Because Wells Fargo does not rely on the Assignment of Mortgage to prove its claim, the foregoing evidence is helpful to the Debtor only indirectly, insofar as it goes to show that the blank indorsement, upon which Wells Fargo is relying, was forged. Nevertheless it does show a general willingness and practice on Wells Fargo’s part to create documentary evidence, after‐the‐fact, when enforcing its claims, WHICH IS EXTRAORDINARY…..

Wells Fargo has not carried that burden. To do so, it offered only Mr. Campbell’s testimony and, through him, certain exhibits copied from Wells Fargo’s loan file. That testimony was not helpful to it. Mr. Campbell was not involved in the administration of the Debtor’s loan until he became a potential witness in 2013. Trial Tr. at 37. He was not involved in the preparation of Claim No 1‐2. Id. at 37. He had nothing to say about the circumstances under which the blank ABN Amro indorsement appeared on the Note attached to Claim No. 1‐2, with the exception that he located the earliest entry in the electronic loan file where that version of the Note was recorded, pulled up its image and compared it to the original shown him by Wells Fargo’s counsel. Id. at 33, 36, 49‐50. He was offered, therefore, only to qualify Wells Fargo’s proposed exhibits, copied from Wells Fargo’s loan file, as falling within Fed. R. Evid. 803(6)’s business records exception to a hearsay objection under Fed. R. Evid. 802 and to testify that a copy of the Note with the blank ABN Amro indorsement appears in Wells Fargo’s electronic records before the preparation of Wells Fargo’s initial proof of claim in this case….

In large measure, Mr. Campbell was not up to that task (and Wells Fargo offered no other evidence to meet that standard, were the Court to impose it). Mr. Campbell did not know whether there was any person overseeing the accuracy of how the records in the system were stored and maintained. Id. at 32, 40, 42‐3. He did not know who controlled access to the system or the procedure for limiting access, except to say “[A]ccess is granted as needed.” Id. at 40‐1. He did not know of any procedures for backing up or auditing the system. Id. at 42. He stated, “I am not a technology person” and was not able to answer what technology ensures the accuracy of the date and time stamping of the entry of documents into the imaging system. Trial Tr. at 22. In his deposition, he testified that he did not know whether the dates and times of the entry of documents in the system could be changed, but at trial he stated that, after his deposition, “I attempted to look into this, and, to my knowledge, I am not aware of any way to change or remove attachments into the imaging system,” id. at 43, which, given his general lack of knowledge about how the system works and failure to explain the basis for his assertion, did not inspire confidence….

Moreover, in addition to the fact that the specially indorsed version of the Note appears on its own in the file on March 27, 2007, and not as part of an “origination file,” Wells Fargo has offered no explanation, let alone evidence, of who else, if not Wells Fargo, held the original of the Note with the blank ABN Amro indorsement before December 28, 2009, if, in fact, such a version then existed. The file provided by the transferor should have included it, if it did exist during that period, because Washington Mutual Bank, FA would not have been able to enforce the Note, either, without the blank indorsement, and the Assignment of Deed of Trust attached to the proofs of claim states that both the Note and Deed of Trust were transferred to MERS as nominee for Washington Mutual Bank, FA on June 20, 2002, effective November 16, 2001. In other words, why would only an outdated and unenforceable version of the Note have been logged in by Wells Fargo when it took over the file in February 2007 if the only enforceable version of the Note had in fact existed at that time (and should have existed since 2002)? The far more likely inference, instead, is that when the loan was transferred to Wells Fargo, the Note with the blank ABN Amro indorsement did not exist.

Why would the Note with the blank ABN Amro indorsement have appeared in Wells Fargo’s file only on December 28, 2009, twenty‐two months later? Wells Fargo has not provided an explanation, supported by evidence, replying only that the question is irrelevant. All that matters, Wells Fargo contends, is that the enforceable document was imaged into its records before the Debtor’s counsel started raising questions about Claim No 1‐1.

 

BAP Panel Raises the Stakes Against Deutsch et al — Secured Status May be Challenged

Fur Further Information please call 954-495-9867 or 520-405-1688

——————————–

ALERT FOR BANKRUPTCY LAWYERS — SECURED STATUS OF ALLEGED CREDITOR IS NOT TO BE ASSUMED

——————————–

I have long held and advocated three points:

  1. The filing of false claims in the nonjudicial process of a majority of states should not result in success where the same false claims could never be proven in judicial process. Nonjudicial process was meant as an administrative remedy to foreclosures that were NOT in dispute. Any application of nonjudicial schemes that allows false claims to succeed where they would fail in a judicial action is unconstitutional.
  2. The filing of a bankruptcy petition that shows property to be encumbered by virtue of a deed of trust is admitting a false representation made by a stranger to the transaction. The petition for bankruptcy relief should be filed showing that the property is not encumbered and the adversary or collateral proceeding to nullify the mortgage and the note should accompany each filing where the note and mortgage are subject to claims of securitization or a “new” beneficiary.
  3. The vast majority of decisions against borrowers result from voluntary or involuntary waiver, ignorance and failure to plead or object on the basis of false claims based on false documentation. The issue is not the signature (although that probably is false too); rather it is (a) the actual transaction which is missing and the (b) false documentation of a (i) fictitious transaction and (ii) fictitious transfers of fictitious (and non-fictitious) transactions. The result is often that the homeowner has admitted to the false assertion of being a borrower in relation to the party making the claim, admitting the secured status of the “creditor”, admitting that they are a creditor, admitting that they received a loan from within the chain claimed by the “creditor”, admitting the default, admitting the validity of the note and admitting the validity of the mortgage or deed of trust — thus leaving both the trial and appellate courts with no choice but to rule against the homeowner. Thus procedurally a false claim becomes “true” for purposes of that case.

see 11/24/14 Decision: MEMORANDUM-_-ANTON-ANDREW-RIVERA-DENISE-ANN-RIVERA-Appellants-v.-DEUTSCHE-BANK-NATIONAL-TRUST-COMPANY-Trustee-of-Certificate-Holders-of-the-WAMU-Mortgage-Pass-Through-Certificate-Series-2005-AR6

This decision is breath-taking. What the Panel has done here is fire a warning shot over the bow of the California Supreme Court with respect to the APPLICATION of the non-judicial process. AND it takes dead aim at those who make false claims on false debts in both nonjudicial and judicial process. Amongst the insiders it is well known that your chances on appeal to the BAP are less than 15% whereas an appeal to the District Judge, often ignored as an option, has at least a 50% prospect for success.

So the fact that this decision comes from the BAP Panel which normally rubber stamps decisions of bankruptcy judges is all the more compelling. One word of caution that is not discussed here is the the matter of jurisdiction. I am not so sure the bankruptcy judge had jurisdiction to consider the matters raised in the adversary proceeding. I think there is a possibility that jurisdiction would be present before the District Court Judge, but not the Bankruptcy Judge.

From one of my anonymous sources within a significant government agency I received the following:

This case is going to be a cornucopia of decision material for BK courts nationwide (and others), it directly tackles all the issues regarding standing and assignment (But based on Non-J foreclosure, and this is California of course……) it tackles Glaski and Glaski loses, BUT notes dichotomy on secured creditor status….this case could have been even more , but leave to amend was forfeited by borrower inaction—– it is part huge win, part huge loss as it relates to Glaski, BUT IT IS DIRECTLY APPLICABLE TO CHASE/WAMU CASES……….Note in full case how court refers to transfer of “some of WAMU’s assets”, tacitly inferring that the court WILL NOT second guess what was and was not transferred………… i.e, foreclosing party needs to prove this!!

AFFIRMED- NO SECURED PARTY STATUS FOR BK PROVEN 

Even though Siliga, Jenkins and Debrunner may preclude the

Riveras from attacking DBNTC’s foreclosure proceedings by arguing

that Chase’s assignment of the deed of trust was a nullity in

light of the absence of a valid transfer of the underlying debt,

we know of no law precluding the Riveras from challenging DBNTC’s assertion of secured status for purposes of the Riveras’ bankruptcy case. Nor did the bankruptcy court cite to any such law.

We acknowledge that our analysis promotes the existence of two different sets of legal standards – one applicable in nonjudicial foreclosure proceedings and a markedly different one for use in ascertaining creditors’ rights in bankruptcy cases.

But we did not create these divergent standards. The California legislature and the California courts did. We are not the first to point out the divergence of these standards. See CAL. REAL EST., at § 10:41 (noting that the requirements under California law for an effective assignment of a real-estate-secured obligation may differ depending on whether or not the dispute over the assignment arises in a challenge to nonjudicial foreclosure proceedings).
We must accept the truth of the Riveras’ well-pled
allegations indicating that the Hutchinson endorsement on the
note was a sham and, more generally, that neither DBNTC nor Chase
ever obtained any valid interest in the Riveras’ note or the loan
repayment rights evidenced by that note. We also must
acknowledge that at least part of the Riveras’ adversary
proceeding was devoted to challenging DBNTC’s standing to file
its proof of claim and to challenging DBNTC’s assertion of
secured status for purposes of the Riveras’ bankruptcy case. As
a result of these allegations and acknowledgments, we cannot
reconcile our legal analysis, set forth above, with the
bankruptcy court’s rulings on the Riveras’ second amended
complaint. The bankruptcy court did not distinguish between the
Riveras’ claims for relief that at least in part implicated the
parties’ respective rights in the Riveras’ bankruptcy case from
those claims for relief that only implicated the parties’
respective rights in DBNTC’s nonjudicial foreclosure proceedings.

THEY REJECT GLASKI-

Here, we note that the California Supreme Court recently

granted review from an intermediate appellate court decision
following Jenkins and rejecting Glaski. Yvanova v. New Century
Mortg. Corp., 226 Cal.App.4th 495 (2014), review granted &
opinion de-published, 331 P.3d 1275 (Cal. Aug 27, 2014). Thus,
we eventually will learn how the California Supreme Court views
this issue. Even so, we are tasked with deciding the case before
us, and Ninth Circuit precedent suggests that we should decide
the case now, based on our prediction, rather than wait for the
California Supreme Court to rule. See Hemmings, 285 F.3d at
1203; Lewis v. Telephone Employees Credit Union, 87 F.3d 1537,
1545 (9th Cir. 1996). Because we have no convincing reason to
doubt that the California Supreme Court will follow the weight of
authority among California’s intermediate appellate courts, we
will follow them as well and hold that the Riveras lack standing
to challenge the assignment of their deed of trust based on an
alleged violation of a pooling and servicing agreement to which
they were not a party.

BUT……… THEY DO SUCCEED ON SECURED STATUS

Even though the Riveras’ first claim for relief principally

relies on their allegations regarding the assignment’s violation
of the pooling and servicing agreement, their first claim for
relief also explicitly incorporates their allegations challenging
DBNTC’s proof of claim and disputing the validity of the
Hutchinson endorsement. Those allegations, when combined with
what is set forth in the first claim for relief, are sufficient
on their face to state a claim that DBNTC does not hold a valid
lien against the Riveras’ property because the underlying debt
never was validly transferred to DBNTC. See In re Leisure Time
Sports, Inc., 194 B.R. at 861 (citing Kelly v. Upshaw, 39 Cal.2d
179 (1952) and stating that “a purported assignment of a mortgage
without an assignment of the debt which it secured was a legal
nullity.”).
While the Riveras cannot pursue their first claim for relief
for purposes of directly challenging DBNTC’s pending nonjudicial
foreclosure proceedings, Debrunner, 204 Cal.App.4th at 440-42,
the first claim for relief states a cognizable legal theory to
the extent it is aimed at determining DBNTC’s rights, if any, as
a creditor who has filed a proof of secured claim in the Riveras’
bankruptcy case.

TILA CLAIM UPHELD!—–

Fifth Claim for Relief – for violation of the Federal Truth In Lending Act, 15 U.S.C. § 1641(g)

The Riveras’ TILA Claim alleged, quite simply, that they did
not receive from DBNTC, at the time of Chase’s assignment of the
deed of trust to DBNTC, the notice of change of ownership
required by 15 U.S.C. § 1641(g)(1). That section provides:
In addition to other disclosures required by this
subchapter, not later than 30 days after the date on
which a mortgage loan is sold or otherwise transferred
or assigned to a third party, the creditor that is the
new owner or assignee of the debt shall notify the
borrower in writing of such transfer, including–

(A) the identity, address, telephone number of the new

creditor;

(B) the date of transfer;

 

(C) how to reach an agent or party having authority to

act on behalf of the new creditor;

(D) the location of the place where transfer of

ownership of the debt is recorded; and

(E) any other relevant information regarding the new

creditor.

The bankruptcy court did not explain why it considered this claim as lacking in merit. It refers to the fact that the
Riveras had actual knowledge of the change in ownership within
months of the recordation of the trust deed assignment. But the
bankruptcy court did not explain how or why this actual knowledge
would excuse noncompliance with the requirements of the statute.
Generally, the consumer protections contained in the statute
are liberally interpreted, and creditors must strictly comply
with TILA’s requirements. See McDonald v. Checks–N–Advance, Inc.
(In re Ferrell), 539 F.3d 1186, 1189 (9th Cir. 2008). On its
face, 15 U.S.C. § 1640(a)(2)(A)(iv) imposes upon the assignee of
a deed of trust who violates 15 U.S.C. § 1641(g)(1) statutory
damages of “not less than $400 or greater than $4,000.”
While the Riveras’ TILA claim did not state a plausible
claim for actual damages, it did state a plausible claim for
statutory damages. Consequently, the bankruptcy court erred when
it dismissed the Riveras’ TILA claim.

LAST, THEY GOT REAR ENDED FOR NOT SEEKING LEAVE TO AMEND

Here, however, the Riveras did not argue in either the bankruptcy court or in their opening appeal brief that the court should have granted them leave to amend. Having not raised the issue in either place, we may consider it forfeited. See Golden v. Chicago Title Ins. Co. (In re Choo), 273 B.R. 608, 613 (9th Cir. BAP 2002).

Even if we were to consider the issue, we note that the

bankruptcy court gave the Riveras two chances to amend their
complaint to state viable claims for relief, examined the claims
they presented on three occasions and found them legally
deficient each time. Moreover, the Riveras have not provided us
with all of the record materials that would have permitted us a
full view of the analyses and explanations the bankruptcy court
offered them when it reviewed the Riveras’ original complaint and
their first amended complaint. Under these circumstances, we
will not second-guess the bankruptcy court’s decision to deny
leave to amend. See generally In re Nordeen, 495 B.R. at 489-90
(examining multiple opportunities given to the plaintiffs to
amend their complaint and the bankruptcy court’s efforts to
explain to them the deficiencies in their claims, and ultimately
determining that the court did not abuse its discretion in
denying the plaintiffs leave to amend their second amended
complaint).

SPS and the Chase Servicer Shell Game

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

—————————————-

Many Judges have expressed their concern about the constant movement of servicers and trustees. They are asking why the servicer keeps changing and why the trustees are changing. And now they are asking for legal argument why the substitution of the only named Plaintiff is not an amendment to the Complaint which must specifically allege facts in support of the claim of the “new Plaintiff.” This is a result of the multifaceted fraudulent scheme where claims of securitization are unfounded and claims of debt are fictitious — in derogation of the rights of both investors on Wall Street and borrowers on main Street.

Taking an example from one case being litigated now, we have a fact pattern where WAMU was the “lender” in the purchase money mortgage. Chase steps in and refinances the loan. Long after these events and long after the “default” was declared by Chase, SPS is said to be the servicer, not Chase. This successor entity is thus the party whose corporate representative is brought to trial to testify. The witness admits to having no direct personal knowledge and has no job other than testifying. The witness has no knowledge nor employment history with Chase, WAMU or the Trust or Trustee (usually US BANK where Chase is involved). The borrower, despite encouragement to take more money on refinancing, elected only to get enough money to make repairs due to storm damage. They received $45,000 in this example.

This is an issue which is slowly dawning on me that could shake things up considerably. Whether we use it or not is a different story.

It might mean that the real loan was only $45k — in total. That would affect the collections on the loan, which could have paid off the actual loan in its entirety, as well as the validity of the declaration of default and the truth of the matters asserted in the judicial complaint or the notice of non-judicial default and notice of sale. Specifically the “reinstatement” figure or “redemption” figure might actually be a negative figure — money due from the parties stating that they are the creditors, which claim they can hardly deny since they are pursuing foreclosure.

LOAN #1 was with WAMU. WAMU according to the FDIC receiver had sold the loans into the secondary market for securitization. This was the purchase money mortgage. So at some point before the refinancing in LOAN#2 the purchase money loan was sold into the secondary market. Thus WAMU only had servicing rights — if the “purchaser” entered into an agreement for WAMU to service the loan. In the case where the loan is subject to securitization, the “purchaser” is a REMIC Trust. But it appears as though few, if any, of the REMIC Trusts ever achieved the status of the owner of the debt, holder in due course, or owner of the mortgage or note. While it is possible to start a lawsuit to collect on the note, that lawsuit can never be resolved in favor of the Plaintiff unless the maker of the note defaults.

LOAN#2 was with Chase. This was supposedly a refinancing. The loan closing documents show that WAMU was paid and WAMU issued the satisfaction of mortgage and did not return the old note cancelled.

WAMU usually retained servicing rights so it would be claimed that WAMU had every right to collect the money and issue the satisfaction. But the servicing rights only existed if LOAN#1 actually made it into a Trust. If not, the loan was NOT subject to the Pooling and Servicing Agreement. If WAMU — or Chase as successor or SPS as successor are actually the servicers, it MUST therefore be by virtue of some other document. That is why we are seeing some rather strange Powers of Attorney and other “enabling” documents appear out of nowhere in which the issues are further confused.

The borrowers received $45k which was for roof repairs from storm damage. So the borrowers did receive  $45k presumably from Chase, but not necessarily as we have already seen, where the originator, even if it was a big bank was using money from an illegally formed pool outside of the REMIC Trust that the investors thought was getting the money from the proceeds of sale of mortgage backed securities.

So the witness probably has absolutely no access to information and therefore no testimony about whether LOAN#1 got paid off. And in fact it is most likely that WAMU was either paid or not depending upon internal agreements with Chase. And the witness can only testify using hearsay about the preceding records of Chase, US Bank and WAMU. Several trial judges have refused to accept such testimony saying directly that the witness and the company represented by the witness are too far removed from the actual transactions to have any credibility as to the authenticity or accuracy of the business records of other entities and that the SPS records are simply an attempt to get around the hearsay rules without exposing the predecessors to direct discovery and questioning where the answers would either be embarrassing or perjury.

If WAMU was paid in the refinancing (proceeds from LOAN#2) the wrong party was paid and the debt still exists unless Chase can show that the real creditor was paid off. It is unlikely they can show that because it probably is not true. Chase was hiding the default status of loans, as we have seen in Matt Taibbi’s story in Rolling Stone. The reason was simple — the more it  looked like these Mortgage backed Securities were performing as expected, the more the investors were inclined to buy more mortgage bonds — and that is where the bulk of the money is for Chase.

By selling loans at 100 cents on the dollar (Par Value) when the true value might only have been 1/10th that amount, the profit was enormous and it all went to Chase (not the investors whose money was used to start the string of transactions in the first place).

The witness will not be able to say that WAMU was definitely paid, and if it was paid, whether the money was paid to the real creditor. This is probably a primary reason why SPS was inserted between Chase and the foreclosure proceedings. It is also why they are attempting to rely on the business records of SPS instead of the business records of Chase.

SPS is usually inserted AFTER all events have occurred relating to the debt, note, mortgage, “default,” and foreclosure. Using a witness from SPS is, on its face, allowing a witness with zero personal knowledge about anything to verify records of other companies whose records the witness has never seen.

This is done to camouflage the actual events — wherein the money from investors was stolen or diverted from its intended target (REMIC Trust) and then used to fund loans in the name of a naked nominee whose interest in the loan was only that of a vendor whose name was being rented to withhold disclosure of the real creditor, the compensation received, and the identity of all the real parties who were getting paid as a result of the “loan origination.”

This is a direct conflict with TILA, requiring that disclosure and Reg Z which states that such a loan is “predatory per se.” If the loan is predatory per se it might be “unclean hands” per se which would mean that the mortgage could never enforced even if the consideration was present.

BAD FAITH: Shack Decision Unravels the Chase-Wamu Mystery -At least in Part

Shack Blasts Chase, Fannie Mae for Bad Faith on Wamu Merger

It is obvious that documents were produced for Shack to issue these rulings. The affidavits to which he refers should be obtained in their entirety. There is lots to take away from this decision, but most important, is that Chase never acquired the loans from WAMU. The loans originated or acquired by WAMU were already sold to investors, trusts and Fannie or Freddie. The issue with Fannie and Freddie of course is that they were merely fronting for “private label” securitizations hiding behind the veil of the GSE’s who were mere guarantors and not lenders. I’d like to see any agreement and transactional documents showing the alleged purchase by Fannie, but it is presumed in the Shack Order and Findings.

It is also obvious that the finding that Chase was not the owner of the debt at any time came from an admission from both a Fannie Mae representative in an affidavit from an alleged Fannie Mae representative. We should direct discovery in Chase cases to that person in Fannie Mae who says they acquired the subject debt and that Chase merely received the servicing rights in the Chase-WAMU merger.

Note that Fannie Mae is considered by Shack to have acted in bad faith, and that Fannie was less than forthcoming in its description of itself stating that they might be the owner or they might be the trustee (pursuant to the Master Trustee Agreement published in 2007) for a securitized trust. Note also that Fannie at no time was chartered as a lender. Thus it could not originate any loans and never did so. The vagueness with which Fannie Mae addresses the issue of ownership shows that the hiding and non-disclosure in bankruptcy courts and state courts continues across the country.

The admission from Fannie that they “might” be the Master trustee for allegedly securitized assets (debts arising out of fictitious transactions on paper that looked like mortgage loans) is both alarming and encouraging. The rush to foreclosure is partially explained by this chaotic pile of fraudulent paper trails.

When you take into account the non stop servicer advances, you can see what the parties are hiding — that the real creditor on those debts, has been paid all the interest they were expecting, that the principal is being paid in settlements with pennies on the dollar, and that the default alleged in notices from servicers and informing the borrower of the right to reinstate were defective, to wit: that the amount stated as required to cure the alleged default was and remains incorrect. The amount should have been reduced by third party payments including but not limited to the servicer advances which were not loans, and thus could only be characterized as PAYMENT, which is the ultimate defense against a lawsuit or any enforcement mechanism designed to collect a debt.

The dirty little secret is that they diverted title and money from the investors and converted what could have been a secured loan into an unsecured loan. The advances and payments by third parties satisfied the debt that arose when the borrower took the loan. They in turn MIGHT have claims for contribution or unjust enrichment but they are most certainly not protected by a pledge of collateral either as mortgage or assignment of rents or anything else.

Note that it could not have acquired loans except with money from what were represented as securitized trusts with Fannie as master Trustee. Therefore there are no circumstances under which Fannie or Freddie could be owners of the the debt with rights to enforce except upon the only event in which money is paid by Fannie for the loan — a guarantee payment AFTER FORECLOSURE) that is the only transaction permitted under its charter. This point was missed by Shack or ignored by him, because he had bigger fish to fry — the lawyers for Chase itself with a copy of the order to be served upon Jamie Dimon, the head of Chase.
The fact is that with the WAMU bankruptcy, seizure by OTS and appointment of FDIC, there were no assignments, agreements of sale or even a permission slip under which Chase could or did acquire loans from WAMU. But that didn’t stop Chase from claiming exactly that in tens of thousands of foreclosures.
In cases where Chase is allegedly at the root of title through the merger with WAMU, it would be appropriate to site to the Shack case, get the case documents, get a Title and Securitization report (see www.livingliesstore.com) and lawyers should look into a motion for summary judgment, or a motion for involuntary dismissal with prejudice. Even where Chase might allege that it is filing the foreclosure as a representative of Fannie or Freddie, the basis for that allegation needs to be in their pleading or it is not an ULTIMATE fact upon which relief could be granted. Discovery should be aimed at getting the documents upon which Chase allegedly relies in showing that it has the authority to represent Fannie — and don’t stop there. The truth is that nearly all the so-called Fannie and Freddie loans were veils for the private label securitization in which the money was diverted from the trust, as was the title, leaving Fannie and Freddie as well as the investors and the buyers holding nothing.

In cases where the statute of limitations has already run, the dismissal of the foreclosure action, is barred in most cases from ever being brought again by anyone. But the dismissal against Chase should be with prejudice in all events because it isn’t the creditor and therefore does not satisfy the statutory requirements in Florida, and I presume all other states, to submit a credit bid at auction in lieu of cash.
The Judges are beginning to understand that by applying basic contract law, they can clear their dockets. It is up to us to help them. The offer of a loan was met with acceptance by the borrower but the loan never occurred. The transfers also had offer and acceptance but again no money because the investors’ money was used (outside the trust) directly to fund the origination or acquisition of the loan. This was part of a larger scheme to defraud to investors whose money was to have been deposited into the trust and then used to fund origination or acquisition of the he loans within 90 days (the cutoff).

The investment bank fraudulently induced (see complaints filed by investors, insurers, government guarantee entities etc.) the investors to give them money for an investment into a controlled trust when in fact they diverted the money for their own purposes, taking outsized fees for themselves as the toxic loans materialized to “support” the alleged investment into loans. That is the “mismanagement” part of investors’ allegations — diversion of money into a PONZI scheme.

The investment bank fraudulently diverted title to the loans to strawman entities or were — sometimes even by name (see American Brokers Conduit) — mere conduits for undisclosed third party lenders. The argument that the parties managed to hide this from the borrower long enough for the statute of limitations to run out on TILA claims is an affront to the court system and to the statutory scheme enacted by Congress to protect borrowers from predatory lenders and “steal” deals where huge fees were taken, rather than earned, without disclosure to the Borrower.

So the first element of fraud alleged by investors is diversion of the the money. The second is diversion of the paperwork that would have protected the investors at least to some extent. In this scheme title to the loan papers was intentionally diverted from the owners of the the debt, thus rendering the so-called mortgage documents unenforceable — all alleged by investors, insurers and other co-obligors who have discovered to their chagrin that each of them paid the investment bank 100 cents on the the dollar on each loan multiple times.

And yet borrowers continue to seek modifications, which means they are not looking for free houses. Even knowing they are dealing with criminals the borrowers are willing to start paying these thieves if the terms can be adjusted to give them the benefit of the bargain that was intended at origination of the purchase money mortgage or refinancing or second mortgage or HELOC.

That leaves the servicers and their lawyers being the only ones who want Foreclosures because they want a free house and/or they want the foreclosure to recapture Servicer advances to the creditors — advances that vastly reduce the amount owed and which cure the alleged borrower default. That has now become a foreclosure folly in which the servicers and their lawyers are the only parties who want it. The investors don’t care because they are getting settlements for the fraud of the investment banks for creating unenforceable loan documents (that are frequently enforced anyway because of judicial ignorance) and diversion of investor money.

In the end, the “clean hands” that Shack talks about are clearly absent from both Servicer and government sponsored entities and as judge Shack states in his decision, wrongdoers should not be permitted to profitf or their wrongdoing. If that means a windfall to the borrower, so be it. It can be likened to the old usury laws and the current usury laws where the principal of the debt is wiped out and the fraudster is hit with a judgment for three times the principal, three times the interest or both.

Glaski Decision in California Appellate Court Turns the Corner on “Getting It”

8/8/13 NOTE: This decision was approved for publication and therefore applies to all cases within the district of the appellate court.

On the other hand we should not assume that they have arrived nor that this decision will have pervasive effects throughout California or elsewhere in the United States or other countries.

J.P. Morgan did suffer a crushing defeat in this decision. And the borrower definitely receive the benefits of a judicial decision that will allow the borrower to sue for wrongful foreclosure including equitable and legal relief which in plain language means reversing the foreclosure and getting damages. Probably one of the most damaging conclusions by the appellate court is that an examination of whether the loan ever made it into the asset pool is proper in determining the proper party to initiate a foreclosure or to offer a credit bid at a foreclosure auction.  The court said that alleged transfers into the trust after the cutoff date are void under New York State law which is the law that governs the common-law trusts created by the banks as part of the fraudulent securitization scheme.

Before you give them a standing ovation remember that it is possible for additional documentation to be created, fabricated and forged showing that despite the apparent violation of the cutoff date, the trustee has accepted the loan into the trust. This will most likely be a lie. I don’t think there is any entity acting as trustee of a trust that doesn’t know that it is under intense scrutiny and doesn’t want to be subject to liability that could amount to trillions of dollars advanced by investors with the purchase of bogus mortgage-backed bonds that were presumably managed by the trustee but in reality not managed at all  because the bonds were worthless. This gave the banks the opportunity to claim that they owned the bonds and therefore had an insurable interest which gave rise to the whole problem with AIG and AMBAC and other insurers or parties who had guaranteed the bond, the loan or any loss (credit default swaps).

The fact that the loan in this case was definitely securitized is also interesting. Of course Washington Mutual was stating to everyone that it was not involved in the securitization of mortgage loans when in fact nearly all of the loans originated became subject to claims of securitization. This case explains why I never say that the loan was securitized or that the loan was in any particular trust, to wit: I don’t believe that a funded trust exists with the ability to purchase loans and therefore I don’t believe the loans are in any of the asset pools. So when people ask me how they can prove which trust their loan is actually in, I reply that they are asking the wrong question.

What is being played out here in this case and hundreds of thousands of other cases is a representation by the foreclosing entity that the trust owns the loan when in fact it never owned the loan nor could it because the money that was advanced by investors was never deposited into the trust. We have the same banks representing to regulatory authorities and insurers that it is the bank and not the trust that owns the loan even though the bank merely made the loan using money advanced by investors who believed that they were buying mortgage-backed bonds. The truth is they were merely making a deposit into an account maintained by the investment bank. The resulting transactions do not qualify for exemption as securities or insurance under the 1998 law. Nor do they qualify for REMIC treatment under the Internal Revenue Code.

In other words if you take a close look and actually follow the path of the money and the path of the paper you will find that despite the pronouncements from the Department of Justice and other agencies, this is a simple fraud case using a Ponzi model. The hallmark of a Ponzi model is that it collapses as soon as the investors stop buying the bogus securities. If the government cares to do so it can freely prosecute the individuals and companies involved without any air of exemption under the 1998 law because none of the parties followed the securitization path presumed by the 1998 law. So we are back to this, to wit: a security is a security and subject to SEC regulations and insurance is an insurance contract subject to insurance regulators, and fraud is fraud subject to recovery of restitution, compensatory damages, punitive damages, treble damages etc.

You should remember when reading this decision that the appellate court was not ruling in favor of the borrower granting the substantive relief the borrower  was seeking. The appellate court merely reversed the trial court decision to dismiss the borrower’s claims. That only means that the borrower now as an opportunity to prove the elements of quiet title, wrongful foreclosure, slander of title, cancellation of instruments and relief under California’s version of unfair business practices. But the devil is in the details and proving the case requires aggressive discovery and aggressive preparation for trial. It is highly probable that the case will settle. The bank will probably be willing to pay almost any amount of money to avoid a judgment setting forth the elements of a wrongful foreclosure and how the bank violated the law.

The Bank will attempt to avoid any final order that undermines the value of loans that are subject to claims of securitization, because those loans supposedly support the value of the bogus mortgage-backed bonds sold to investors.  Any such final order would also undermine the balance sheet of J.P. Morgan and any other major bank carrying the mortgage bonds as assets on their balance sheet. If those assets are diminished, then the bank is not as well funded as it has been reporting. In fact, those assets might well vanish completely from the balance sheet of those banks, causing the banks to be seized by the FDIC and broken up into smaller pieces for regional and community banks to pick up. Hence this decision represents a risk factor that could eliminate the legal fiction created by smoke and mirrors from Wall Street banks, to wit: it is not the borrowers who are deadbeats, it is the banks who are broke and whose management has run off with billions and perhaps trillions of dollars that should be in the United States economy. The absence of that money lies at the root of our unemployment and low economic activity.

This Glaski case has many of the elements that we have been discussing for years. Fabricated documents, forgeries, perjury, false affidavits and no money trail to backup the story painted by the fabricated documents. And of course it has our old friend Washington Mutual Bank And the supposed take over by Chase Bank that never actually happened.

And it involves the issue of assignments and the fact that the assignment is not the transaction itself but only a report of a transaction. If the borrower proves that the transaction reported in the assignment or other instrument of conveyance never occurred, or if the borrower is successful in shifting the burden of proof to the bank to show that it did occur, the assignment will have no value whatsoever unless the transaction is present, to wit: that someone actually purchased the loan through the payment of money or other valuable consideration that was received by a party who actually owned the loan.

Thus even if Chase Bank were able to show that it entered into a transaction in which the loans were transferred (something we can find no evidence of which the FDIC receiver says never occurred) that would only be the equivalent of a quit claim deed, to wit: whoever received the consideration for the transfer of the loans was merely conveying any interest they had even if they had no interest at all. Hence the transactions by which Washington Mutual allegedly came to be the owner of the loan must be examined in the same way as the transaction between the Washington Mutual bankruptcy estate and chase bank.

You should also take note that the decision was published with the admonition that it is  “not to be published in the official reports.”  this is further indication that the court is concerned about the far-reaching effects of the decision and essentially tells trial judges that they do not have to follow it. So for those who wish to point to this decision and say “game over” we are not there yet. But I do think that we passed the halfway point and we are probably in the fifth or sixth inning of a nine inning game. Translating that to time, I would estimate that it’s going to take another three or four years to clean up this mess and that it might take several decades to clean up the title corruption that was created by the banks.

http://stopforeclosurefraud.com/2013/08/01/glaski-v-bank-of-america-ca5-5th-appellate-district-securitization-failed-ny-trust-law-applied-ruling-to-protect-remic-status-non-judicial-foreclosure-statutes-irrelevant-because-sa/

Perils of Pooling: OneWest

Apparently my article yesterday hit a nerve. NO I wasn’t saying that the only problems were with BofA and Chase. OneWest is another example. Keep in mind that the sole source of information to regulators and the courts are the ONLY people who understand mergers and acquisitions. So it is a little like one of those TV shows where the only way they can get an arrest and conviction is for the perpetrator or suspect to confess. In this case, they “confess” all kinds of things to gain credibility and then lead the agencies and judicial system down a rabbit hole which is now a well trodden path. So many people have gone down that hole that most people that is the way to get to the truth. It isn’t. It is part of a carefully constructed series of complex conflicting lies designed carefully by some very smart lawyers who understand not just the law but the way the law works. The latter is how they are getting away with it.

Back to OneWest, which we have detailed in the past.

The FDIC has posted the agreement at http://www.fdic.gov/about/freedom/IndyMacMasterPurchaseAgrmt.pdf

OneWest was created almost literally overnight (actually over a weekend) by some highly placed players from Wall Street. There is an 80% loss sharing arrangement with the FDIC and yes, there appears to be some grey area about ownership of the loans because of that loss sharing agreement. But the evidence of a transaction in which the loans were actually purchased by a brand new entity that was essentially unfunded is completely absent. And that is because OneWest and Deutsch take the position that the loans were securitized despite IndyMac’s assurances to the contrary. The only loans in which OneWest appears to be a player are those in which the loan was subject to (false) claims of securitization. No money went to the trustee, no money went to the trust, no assets went into the pool because the REMIC asset pool lacked the funding to purchase any assets.

Add to that a few facts. Deutsch is usually the “trustee”of the REMIC asset pool, but Reynaldo Reyes says he has nothing to do. He has no trust accounts and makes no decisions and performs no actions. Sound familiar. I have him on tape and his deposition has already been taken and publicized on the internet by others. Reyes says the whole arrangement is “counter-intuitive” (a very creative way of saying it is a lie). It is up to the servicer (OneWest) to decide what loans are subject to modification, mediation or even reinstatement. It is up to the servicer as to when to foreclose. And the servicer here is OneWest while the Master Servicer appears to be the investment banking arm of Deutsch, although I do not have that confirmed.

The way Reyes speaks about it the whole thing ALMOST makes sense. That is, until you start thinking about it. If Deutsch Bank has an extensive trust subsidiary, which it does, then why is a VP of asset management in control of the trust operations of the REMIC asset pools. Answer: because there are no funded trusts and there are no asset pools with assets. Hence any statement by OneWest that it is the owner of the loan is untrue as is the allegation that Deutsch is the trustee because all trustee duties have been delegated to the servicer. That leaves the investor with an empty box for an asset pool and no trustee or manager or even an agent to to actually know what is going on or who is monitoring their money and investments.

Note that like BOfA using Red Oak Merger Corp., there is the creation of a fictional entity that was not used by the name of, no kidding, “Holdco.” This is to shield OneWest from certain liabilities as a lender. Legally it doesn’t work that way but practically it generally does work that way because judges listen to bank lawyers to tell them what all this means. That is like asking a 1st degree murder defendant to explain to the jury the meaning of reasonable doubt.

Now be careful here because there is a “loan sale” agreement referenced in the package posted by the FDIC. But it refers to an exhibit F. There is no exhibit F and like the ambiguous agreements with the FDIC in Countrywide and Washington mutual, there are words there, but they don’t really say anything. Suffice it to say that despite some fabricated documents to the contrary, there is no evidence I have seen that any loan  receivable was transferred to or from a REMIC asset pool, Indy-mac, or Hold-co.

These people were not stupid and they are not idiots. And their lawyers are pretty smart too. They know that with the presumption of a funded loan in existence, the banks could pretty much get away with saying anything they wanted about the ownership, the identity of the creditor and the ability to make a credit bid at the auction of a property that should never have been foreclosed in the first instance — and certainly not by these people.

But if you dig just a little deeper you will see that the banks are represented to the regulatory authorities that they own the bonds (not true because the bonds were created and issued to specific investors who bought them); thus they include the bonds as significant items on their balance sheet which allows them to be called mega banks or too big to fail when in fact they have a tiny fraction of the reserve requirements of the Federal Reserve which follows the Basel accords.

Then when you turn your head and peak into courtrooms you find the same banks claiming ownership of the loan receivable, which was created when the funding occurred at the “closing” of the loan. They know they are taking inconsistent positions but most judges lack the sophistication to pinpoint the inconsistency. And that is how 5 million people lost their homes.

On the one hand the banks are claiming there was no fraud in the issuance of mortgage backed bonds by a REMIC asset pool formed as a trust. In fact, they say the loans were transferred into the REMIC asset pool. Which means that ownership of the mortgage bonds is ownership of the loans — at least that is what the paperwork shows that was used to sell pension funds on buying these worthless bogus bonds. Then they turn around and come to court as the “holder” and get a foreclosure sale in which the bank submits the credit bid and buys the property without spending one dime. What they have done is, in lay terms, offered the debt to pay for the property. But the debt, according to the same people is owned by the investors or the REMIC trust, not the banks.

Then they turn to the insurers and counterparties on credit default swaps, and the Federal reserve that is buying these bonds and they say that the banks own the bonds, have an insurable interest, and should receive the proceeds of payments instead of the investors who actually put up the money. And then they say in court that the account receivable is unpaid, there is a default, and therefore the home should be foreclosed. What they have done is create a chaotic complex of lies and turn it into an illusion that changes colors and density depending upon whom the banks are talking with.

There is no default on the account receivable if the account was paid, regardless of who paid it — as long as it was really paid to either the owner of the loan receivable or the authorized agent of the owner (i.e., the investor/lender). And so it is paid. And if paid, there can be no action on the note because the loan receivable has been satisfied. There can be no action on the mortgage because it was never a perfected lien and because the loan receivable was extinguished by PAYMENT. You can’t use the mortgage to enforce the note which is evidence for enforcement of a debt when the debt no longer exists.

Judges are confused. The borrower must owe money to someone so why not simply enter judgment and let the creditors sort it out amongst themselves. The answer is because that is not the rule of law and if a creditor has a claim against the borrower it should be brought by that creditor not some stranger to the transaction whose actions are stripping the real creditor of lien rights and collection rights over the debt. What the courts are doing, by analogy, is saying that you must have killed someone when you fired that gun so we will dispense with evidence and a jury and proceed to sentencing. We will let the people in the crowd decide who is the victim who can bring a wrongful death action against you even if we don’t even know when the gun was fired and who pulled the trigger. In the meanwhile you are sentenced to death or life in prison under our rocket docket for murders of unknown persons.

 

 

Perils of Pooling

We hold these truths to be self evident: that Chase never acquired any loans from Washington Mutual and that Bank of America never acquired any loans from Countrywide.  A review of the merger documents approved by the FDIC reveals that neither Chase nor Bank of America wanted to assume any liabilities in connection with the lending operations of Washington Mutual or Countrywide, respectively. The loans were expressly left out of the agreement which is available for everyone to see on the FDIC website in the reading room.

With the exception of a few instances in which the court pointed out that Chase only acquired servicing rights and that Bank of America may not have acquired any rights, judges have been rubber-stamping foreclosures initiated by Bank of America (or entities controlled by Bank of America like Recontrust) under the assumption that Bank of America must be the owner of the Countrywide mortgages. The same is true  for judges who have been rubber-stamping foreclosures initiated by Chase under the assumption that Chase must be the owner of the Washington Mutual mortgages. After all, if they don’t own the mortgages then who does? The answer is that in nearly all cases either BofA nor Countrywide and neither Chase nor WAMU owned the loans and their financial statements prove it.

Not only have the judges been rubber-stamping the foreclosures and participating in a scheme that is correcting our title records nationwide, the entry of judgment against the borrower and for Bank of America or for Chase completes the theft of the investors money that was used for exorbitant fees, profits and bonuses and then finally for the funding of the origination or acquisition of loans. The fact that the REMIC trust was ignored in both form and content has also been the subject of the defective rulings from the bench.  Not only have the courts ruled against the borrowers and for the banks, they have even ruled against the presentation of evidence that would have shown that the investors were being stripped of their expected lien rights and then stripped again on their expected return of principal and interest, and then barred by collateral estoppel from ever bringing it up.

Since most of the foreclosures have emanated from Bank of America and Chase it is a fair assumption that most of the foreclosure sales were void because no valid bid was received in exchange for the deed. The property is still owned by the original homeowner In any case where a credit bid was submitted by Bank of America or Chase on any loan in which either Countrywide Mortgage or Washington Mutual was involved. I might add that the Federal Reserve in New York is completely aware of these facts and is steadfastly refusing to reveal the truth to the public or even to the homeowners whose homes were illegally and wrongfully foreclosed by Bank of America and Chase for a loan where both Bank of America and Chase and their chain of affiliates had been paid multiple times on a loan receivable account owned by the source of the funds, to wit: the investors who thought they were buying mortgage bonds from a funded legally organized REMIC trust.

CAVEAT:  The courts are mainly concerned with finality. In many states there may be a statute of limitations to challenge a void deed from an auction sale. Check with an attorney who is licensed in the jurisdiction in which your property is located before you take any action or make any decision.

It seems crazy to think that someone could apply for a loan and get the benefits of funding without ever being required to pay it back to the lender.  But that is exactly what is happening as a result of defective court decisions.  The lender consists of a group of investors including pension funds that are now underfunded as a result of the civil and possibly criminal theft of funds by Bank of America and Chase or the investment firms acquired by them.

Homeowners are being forced to pay Bank of America and Chase rather than the investors who actually advanced the funds. Bank of America and Chase actively interfere and Stonewall whenever a borrower or an investor seeks to peek under the hood to see what is in the box. There is nothing in the box. The deal was always between the investors and homeowners. The bank’s lied. They pretended that they were the lenders when in fact there were only the intermediaries. The result was that all the payments received from borrowers, government, the federal reserve, insurers, guarantors, co-obligors, and counterparties on credit  default swaps went to the accounts of Bank of America and Chase rather than to the investors.

 By holding back the money, Bank of America and Chase, just like other banks created the illusion of a default and since they had created the illusion of ownership of the default they took the money instead of handing it over to the investors. You read the lawsuits that have been filed by  investors against the investment banks that sold them worthless mortgage bonds issued by an empty asset pool you will see that they allege affirmatively that the notes and mortgages are unenforceable.

That makes it unanimous! Both the lender and the borrower agree that the documentation is defective and unenforceable. Both the lender and the borrower agree that the lender should get paid.  And both the lender and the borrower agree that the lender is entitled to be paid only once for the money advanced by the lender.  And both the lender and the borrower agree that the banks are holding trillions of dollars in money that should have been used to pay off the account receivable owned by the investors.

With the lender paid off or where the account receivable has been reduced by payments to the banks who were acting as agents of the investors but breaching their duties to the investors, the amount payable by the homeowner as a borrower would be correspondingly reduced or eliminated. In fact, under the requirements of the federal truth in lending act, the overpayment is due to the borrower for failure to disclose the true facts of the transaction. In fact, under federal law, treble damages, legal interest, attorneys fees and costs probably also apply.

Nardi Deposition Reveals All about JPM-WAMU Slick Transactions

NOTE IF ANYTHING, THIS DEPOSITION PROVES THE NEED FOR AN EXPERT FORENSIC COMPUTER ANALYST TO ASSIST IN DISCOVERY AND PERHAPS EVEN PLEADING. THAT IS WHY MY LAW FIRMS AND OTHERS ARE CREATING ALLIANCES WITH LAWYERS WHO HAVE EXPERIENCE IN BOTH THE PRACTICE OF LAW, LITIGATION AND DETAILED KNOWLEDGE ABOUT WHAT TO LOOK FOR, HOW TO LOOK FOR FACTS LEADING TO THE DISCOVERY OF ADMISSIBLE EVIDENCE IN A COURT OF LAW.

I am going through the Nardi deposition a line by line. I have completed the first 50 pages. If you have a case where JPM is foreclosing even if it is doesn’t involve WAMU, you should read the whole thing. I have the link below. Below the link are my notes and comments on the first 50 pages of the deposition. IN the context of other things we know this is a picture of fraud in the making while at the same time keeping the people who are the boots on the ground actors unaware of the consequences of what they are doing.

http://www.scribd.com/doc/102949976/120509-JPMC-v-Waisome-FL-Lawrence-Nardi-Deposition

Garfield Notes on Nardi deposition JP Morgan Chase, as successor to Washington Mutual v. Waisome, 5th Judicial Circuit, Florida Case NUmber 2009-CA-005717, May 9 2012

1.  No prior banking experience. No education in banking or finance. No academic degree. No direct knowledge as to any of the events, documents, or transactions relating to the subject loan because her scope of employment was to assist in litigation or settlement of contested cases. Worked at Citibank dealing with credit cards and assisted in programming.
2. Worked with PHH on loan originations. Line 21, Page 9, I was the originations or preserve rare. I worked with the borrowers on collecting documents, getting them prepared for eventual closing of their loan, working with underwriting and making sure that the documents they needed to push the loan package forward were provided. Basically kind of the air traffic controller of the loan origination’s part of the business.
3. Line 12 page 10 I was not a supervisor. I had a support staff but they were pooled into groups that basically support in five or 10 other loan officers. So I was supervised. We were in a pool.
4. Worked with Merrill Lynch as a series 7 and series 66 broker.
5. Worked at Washington Mutual starting in September 2007.
6. My duties were to work with deceased borrowers estates at Washington Mutual
7.   line11 page 16 I didn’t have anything to do with loss mitigation. I was focusing on establishing that line of communication verifying that these people have the authority to act on behalf of of the deceased.
8. RECORDS SYSTEMS CHANGE:  line 18  page 16 I was actually going back and kind of redoing some of the filing systems that they had an kind of getting that more modernized. And that probably took me through the first 1 1/2 years or thereabouts.
9. SHELLY TREVIN BECAME MY SUPERVISOR
10. Worked with a guy named Vinnie and a lady named Laura.
11. Assigned different states. i was assigned Florida and some smaller states (line 20 page 24)
12. Line 5 page MSP: mortgage servicing platform. It’s a widely used system. In fact all of the major services I have ever worked for have used it. So Washington Mutual was using it. Chase was also using it so I had the benefit of that. So the training for that for me was kind of redundant.
13. LIne 6 page 27 (question was whether Fidelity LPS developed the software).  I am not an expert on everything at Fidelity. My understanding is that fidelity developed this software and licensed it to individual servicers. So that’s my understanding is that actually they own it. It’s their property. Where releasing it as a servicer.
14 line 3 page 28. IMAGE WEB: I believe it was called image web. Image web Wesley default software for any time you need to look up image documents, whether it be notes, mortgages, origination packages, applications. You know, whatever was deemed worthy of saving where necessary to save for servicing purposes.
15. line 13 page 28  a separate servicing system for the home-equity loans.  I think it was called ACLS.  And they had a customer service collection system called CACS  that was used for home equity collections.  those are example of systems they had that we would have used at Washington Mutual that weren’t used at the majors. The major system used being MSP.
16. LIne 21 Page 28 Outlook email was major server for communication within Chase.
17. Line 23, Page 28, MSP is really the central repository for all information related to a loan so most people work out of that anytime they’re coming in contact with, you know, servicing.
18. everyone has a unique identifying usually three digit code assigned to them and they have to set their own password.
19. I have the ability you know part of my duties were to document the things that I was doing. So yes I have the ability to enter data into certain areas. Not all areas can be manipulated. I could enter notes into the system. I could change stop code so that if I was dealing with alone that was in litigation and it needed to stop certain things like collection activities or foreclosure processing, I could put stops on the system. (line 13 Page 29)
20. Lin  se 9 page 31.   We had different client numbers that were assigned to different sets of loans. The Washington Mutual client was 156. The Chase client was like 465.
21. MAJOR PROJECT INTEGRATING CHASE AND WAMU LOANO PACKAGES: LINE 2 PAGE 33:  my understanding is that they drew resources from all areas of the business. I don’t think there was any one department that was involved in handling that transaction or that project.
22. Line 8 page 33: I don’t know if there was a specific person in charge of it. I can imagine based on my experience in some of the projects that I’ve seen in other places that there is probably a project manager and several business heads of business people that were running it but I wasn’t in charge I wasn’t part of the project specifically so I don’t really know.
23. LIne 6 page 39: CHASE LOANS VERSUS INVESTOR LOANS:    if you are looking for specific investor or owner information you would go into a screen called MAS1. And then there is a sub screen within that called INV1 which would tell you, if there is an investor, who it is. And if it’s Chase owned, it would say Chase owned.
24. line 17 page 40:  I believe that we keep records of these investor codes potentially outside the system. I’ve never accessed an investor list with an MSP, so it’s possible it’s there. I just don’t know.
25: NO NEED TO MEMORIZE THE USER ID: LINE 6 PAGE 41:  it’s not something you necessarily have to memorize because when you login using your password is going to tell you it’s going to memorialize everything. You don’t have to memorize it. I think mine was OY$.
26. IDENTIFICATION OF INVESTOR: line 17  page 41:   I believe there are also three digits for the investor codes. But when you go into MAS1 and INV1 it actually spells out the name of the investor,.    so if it’, for instance, a chase loan, it will say J.P. Morgan Chase. If it’s Bank of America, it will say Bank of America. It will spell out the name and the address of the investor or owner for you right there on the screen. So you don’t have to interpret a code it’s right there.
27. EXISTENCE OF PRIVATE INVESTOR KEPT HIDDEN FROM EMPLOYEES GIVEN THAT 96% OF ALL LOANS WERE SUBJECT TO CLAIMS OF SECURITIZATION. THIS SHOWS HOW THE BANKS TEMPORARILY CLAIMED OWNERSHIP OF THE LOANS FOR PURPOSES OF TRADING, HEDGING AND COLLECTING INSURANCE, FEDERAL BAILOUTS AND PROCEEDS OF CREDIT DEFAULT SWAPS LEAVING THE PRIVATE INVESTORS OUT IN THE COLD AND THEREFORE PREVENTING OR INTERFERING WITH THE PROCESS OF ALLOCATING SUCH PAYMENTS TO THE ACCOUNT RECEIVABLE FO THE INVESTOR AND DECREASING THE ACCOUNT PAYABLE OF THE BORROWER. LINE 11 PAGE 42:  I don’t remember a specific instance where I was dealing with a private investor loan.
28. COLLATERAL FILE SHIPPED OUT WITHIN 15 DAYS OF THE NOTICE OF CHANGE OF SERVICER — BUT HOW DOES SHE KNOW THAT ACTUALLY HAPPENED? AND WHAT DO WE KNOW ABOUT WHAT WAS IN THE COLLATERAL FILE? LINE 2 PAGE 45
29. HANDLING OF FILES AND SHIPPING OF FILES. WHO IS AUTHORIZED. collateral file and credit file: line 8. page 47:  you referenced a collateral file. There is also a credit file. Sometimes you need stuff from the credit file and sometimes you don’t. The collateral file you know sometimes you need it sometimes you don’t. So depending on what you need, there is an electronic request for each one. You send it to the customer service folks. The credit file and there is certain restrictions as to who can actually order it. You have to have certain authorization. You can only send it certain places. You have to either send it to someone if you are sending it to someone within the company they have to have it’s a very short list within the company who can get it. Generally we ship it only to counsel when it needs to go out of custody and services. So you would include your identifier to show you have the authority to order it. You need to identify where it’s going so the firm it’s being shipped to, custody services, will accept that. Basically it’s an email transmission, and that works constantly. So they will go in, pull up the work order, have a person that’s designated to be able to enter the file room, go in and pull the file, and then ship it off to the firm was requesting it. I’m almost 100% certain that they use FedEx almost exclusively for the shipping.
30.  Inside counsel is ANITA Smith or Kendall Forster LINE 3 PAGE 50.
31. NO PERSONAL KNOWLEDGE OF EXISTENCE OF THE PHYSICAL FILES. HEARSAY ON HEARSAY. LINE 10 PG 50. This would seem to indicate that all her testimony about the movement of the physical files is hearsay based upon computer entries by people she doesn’t know, or things she was told by counsel or someone else working for other departments, indicating multiple records custodians.

Curious and Shocking Failure to Follow the Law: BofA, Chase and OneWest

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

Editor’s Announcement: Based upon current information and direct interviews with participants I have come to three broad conclusions:

  1. Bank of America never acquired any loans from Countrywide.
  2. Chase never acquired any loans from Washington Mutual
  3. OneWest never acquired the Indy Mac loans but instead entered into a loss sharing arrangement wherein the FDIC would absorb 80% of the loss and OneWest would receive the proceeds from foreclosure.

BofA never merged with BAC home Loans and the entity created to merge with Countrywide was Red Oak Merger Corp. which like the REMIC trusts was completely ignored. Neither Countrywide, red Oak BAC nor Bank of America ever paid one cent to acquire the loan balances. Hence the paperwork showing “for value received” is a lie.

Chase Bank acquired the banking operations of WAMU for  consideration that is expressly stated as zero. No assignment of WAMU loans exist, according to the FDIC receiver for WAMU. In most cases neither  WAMU nor  Chase ever spent one nickle funding or acquiring loans.

OneWest was capitalized with less than $2 billion and even that is not confirmed inasmuch as there doesn’t seem to be any transaction in which money was moved into a OneWest bank account. Like the above, neither Indy Mac nor One West ever paid for the loans.

All of that means is that they are not injured parties if the borrower doesn’t pay nor are they responsible parties if the investor is not paid. Their claim of agency just doesn’t cut it. For purposes of collecting insurance and proceeds from credit default swaps and federal bailouts, they claim ownership and then after payment, they claim agency so they can chase the foreclosure too, in addition to being paid several times over. But for purposes of sharing in the bounty of betting against the same mortgage bonds as they were selling to the investors the banks consider that proprietary trading and insist on the investors (lenders) taking the loss.

Practice hint: dig deeper and follow the money trail and don’t think that the note is part of the money trail. It isn’t. Only a cancelled check or wire transfer receipt, or ACH confirmation or check 21 confirmation would be proof of ownership (proof of payment) and proof of loss (entitling them to submit a credit bid at the auction of the property). Stick with this strategy and you won’t be sorry. The failure to come up with evidence of an actual injury to an actual party is deadly not only on the facts but for jurisdictional purses of standing.

The banks have cleverly steered the conversation in court to why they should not be required to produce the actual records of actual transactions affecting the loan or the loan pool claiming an interest in the pool. They only want the  court to look at the note and mortgage and the fabricated “allonges”, endorsements, transfers, sales, assignments, all of which are evidence and carry certain presumptions. But he story told by those documents turns out to be a fiary tale when you look at where and when money exchanged hands and between what parties.

The banks are avoiding the obvious: that they claim a REMIC trust exists and was funded (both of which are probably untrue), and that the REMIC trust acquired the loan by buying it (without any evidence of a money exchange) backdated to when the loan was “closed” [note it is our position that none of these loans were closed, since they have yet to be completed].

If the Trust DID own the loan, then what effect does a fabricated assignment have from the originator, aggregator or anyone else other than the trust? The pretender lenders can’t have it both ways. They can’t say they transferred the loan into the trust in 2006 and then claim that an assignment in 2011 from Countrywide to Bank of America conveyed anything.

Like I said, the loans never made into the “pools”

Featured Products and Services by The Garfield Firm

NEW! 2nd Edition Attorney Workbook,Treatise & Practice Manual – Pre-Order NOW for an up to $150 discount
LivingLies Membership – Get Discounts and Free Access to Experts
For Customer Service call 1-520-405-1688

Want to read more? Download entire introduction for the Attorney Workbook, Treatise & Practice Manual 2012 Ed – Sample

Pre-Order the new workbook today for up to a $150 savings, visit our store for more details. Act now, offer ends soon!

Editor’s Comment:

When I first suggested that securitization itself was a lie, my comments were greeted with disbelief and derision. No matter. When I see something I call it the way it is. The loans never left the launch pad, much less flew into a waiting pool of investor money. The whole thing was a scam and AG Biden of Đelaware and Schniedermann of New York are on to it.

The tip of the iceberg is that the note was not delivered to the investors. The gravitas of the situation is that the investors were never intended to get the note, the mortgage or any documentation except a check and a distribution report. The game was on.

First they (the investment banks) took money from the investors on the false pretenses that the bonds were real when anyone with 6 months experience on Wall street could tell you this was not a bond for lots of reasons, the most basic of which was that there was no borrower. The prospectus had no loans because there were no loans made yet. The banks certainly wouldn’ t take the risks posed by this toxic heap of loans, so they were waiting for the investors to get conned. Once they had the money then they figured out how to keep as much of it as possible before even looking for residential home borrowers. 

None of the requirements of the Internal Revenue Code on REMICS were followed, nor were the requirements of the pooling and servicing agreement. The facts are simple: the document trail as written never followed the actual trail of actual transactions in which money exchanged hands. And this was simply because the loan money came from the investors apart from the document trail. The actual transaction between homeowner borrower and investor lender was UNDOCUMENTED. And the actual trail of documents used in foreclosures all contain declarations of fact concerning transactions that never happened. 

The note is “evidence” of the debt, not the debt itself. If the investor lender loaned money to the homeowner borrower and neither one of them signed a single document acknowledging that transaction, there is still an obligation. The money from the investor lender is still a loan and even without documentation it is a loan that must be repaid. That bit of legal conclusion comes from common law. 

So if the note itself refers to a transaction in which ABC Lending loaned the money to the homeowner borrower it is referring to a transaction that does not now nor did it ever exist. That note is evidence of an obligation that does not exist. That note refers to a transaction that never happened. ABC Lending never loaned the homeowner borrower any money. And the terms of repayment intended by the securitization documents were never revealed to the homeowner buyer. Therefore the note with ABC Lending is evidence of a non-existent transaction that mistates the terms of repayment by leaving out the terms by which the investor lender would be repaid.

Thus the note is evidence of nothing and the mortgage securing the terms of the note is equally invalid. So the investors are suing the banks for leaving the lenders in the position of having an unsecured debt wherein even if they had collateral it would be declining in value like a stone dropping to the earth.

And as for why banks who knew better did it this way — follow the money. First they took an undisclosed yield spread premium out of the investor lender money. They squirreled most of that money through Bermuda which ” asserted” jurisdiction of the transaction for tax purposes and then waived the taxes. Then the bankers created false entities and “pools” that had nothing in them. Then the bankers took what was left of the investor lender money and funded loans upon request without any underwriting.

Then the bankers claimed they were losing money on defaults when the loss was that of the investor lenders. To add insult to injury the bankers had used some of the investor lender money to buy insurance, credit default swaps and create other credit enhancements where they — not the investor lender —- were the beneficiary of a payoff based on the default of mortgages or an “event” in which the nonexistent pool had to be marked down in value. When did that markdown occur? Only when the wholly owned wholly controlled subsidiary of the investment banker said so, speaking as the ” master servicer.”

So the truth is that the insurers and counterparties on CDS paid the bankers instead of the investor lenders. The same thing happened with the taxpayer bailout. The claims of bank losses were fake. Everyone lost money except, of course, the bankers.

So who owns the loan? The investor lenders. Who owns the note? Who cares, it was worth less when they started; but if anyone owns it it is most probably the originating “lender” ABC Lending. Who owns the mortgage? There is no mortgage. The mortgage agreement was written and executed by the borrower securing terms of payment that were neither disclosed nor real.

Bank Loan Bundling Investigated by Biden-Schneiderman: Mortgages

By David McLaughlin

New York Attorney General Eric Schneiderman and Delaware’s Beau Biden are investigating banks for failing to package mortgages into bonds as advertised to investors, three months after a group of lenders struck a nationwide $25 billion settlement over foreclosure practices.

The states are pursuing allegations that some home loans weren’t correctly transferred into securitizations, undermining investors’ stakes in the mortgages, according to two people with knowledge of the probes. They’re also concerned about improper foreclosures on homeowners as result, said the people, who declined to be identified because they weren’t authorized to speak publicly. The probes prolong the fallout from the six-year housing bust that’s cost Bank of America Corp., JPMorgan Chase & Co. (JPM) and other lenders more than $72 billion because of poor underwriting and shoddy foreclosures. It may also give ammunition to bondholders suing banks, said Isaac Gradman, an attorney and managing member of IMG Enterprises LLC, a mortgage-backed securities consulting firm.

“The attorneys general could create a lot of problems for the banks and for the trustees and for bondholders,” Gradman said. “I can’t imagine a better securities law claim than to say that you represented that these were mortgage-backed securities when in fact they were backed by nothing.”

Countrywide Faulted

Schneiderman said Bank of America Corp. (BAC)’s Countrywide Financial unit last year made errors in the way it packaged home loans into bonds, while investors have sued trustee banks, saying documentation lapses during mortgage securitizations can impair their ability to recover losses when homeowners default. Schneiderman didn’t sue Bank of America in connection with that criticism.

The Justice Department in January said it formed a group of federal officials and state attorneys general to investigate misconduct in the bundling of mortgage loans into securities. Schneiderman is co-chairman with officials from the Justice Department and the Securities and Exchange Commission.

The next month, five mortgage servicers — Bank of America Corp., Wells Fargo & Co. (WFC), Citigroup Inc. (C), JPMorgan Chase & Co. and Ally Financial Inc. (ALLY) — reached a $25 billion settlement with federal officials and 49 states. The deal pays for mortgage relief for homeowners while settling claims against the servicers over foreclosure abuses. It didn’t resolve all claims, leaving the lenders exposed to further investigations into their mortgage operations by state and federal officials.

Top Issuers

The New York and Delaware probes involve banks that assembled the securities and firms that act as trustees on behalf of investors in the debt, said one of the people and a third person familiar with the matter.

The top issuers of mortgage securities without government backing in 2005 included Bank of America’s Countrywide Financial unit, GMAC, Bear Stearns Cos. and Washington Mutual, according to trade publication Inside MBS & ABS. Total volume for the top 10 issuers was $672 billion. JPMorgan acquired Bear Stearns and Washington Mutual in 2008.

The sale of mortgages into the trusts that pool loans may be void if banks didn’t follow strict requirements for such transfers, Biden said in a lawsuit filed last year over a national mortgage database used by banks. The requirements for transferring documents were “frequently not complied with” and likely led to the failure to properly transfer loans “on a large scale,” Biden said in the complaint.

“Most of this was done under the cover of darkness and anything that shines a light on these practices is going to be good for investors,” Talcott Franklin, an attorney whose firm represents mortgage-bond investors, said about the state probes.

Critical to Investors

Proper document transfers are critical to investors because if there are defects, the trusts, which act on behalf of investors, can’t foreclose on borrowers when they default, leading to losses, said Beth Kaswan, an attorney whose firm, Scott + Scott LLP, represents pension funds that have sued Bank of New York Mellon Corp. (BK) and US Bancorp as bond trustees. The banks are accused of failing in their job to review loan files for missing and incomplete documents and ensure any problems were corrected, according to court filings.

“You have very significant losses in the trusts and very high delinquencies and foreclosures, and when you attempt to foreclose you can’t collect,” Kaswan said.

Laurence Platt, an attorney at K&L Gates LLP in Washington, disagreed that widespread problems exist with document transfers in securitization transactions that have impaired investors’ interests in mortgages.

“There may be loan-level issues but there aren’t massive pattern and practice problems,” he said. “And even when there are potential loan-level issues, you have to look at state law because not all states require the same documents.”

Fixing Defects

Missing documents don’t have to prevent trusts from foreclosing on homes because the paperwork may not be necessary, according to Platt. Defects in the required documents can be fixed in some circumstances, he said. For example, a missing promissory note, in which a borrower commits to repay a loan, may not derail the process because there are laws governing lost notes that allow a lender to proceed with a foreclosure, he said.

A review by federal bank regulators last year found that mortgage servicers “generally had sufficient documentation” to demonstrate authority to foreclose on homes.

Schneiderman said in court papers last year that Countrywide failed to transfer complete loan documentation to trusts. BNY Mellon, the trustee for bondholders, misled investors to believe Countrywide had delivered complete files, the attorney general said.

Hindered Foreclosures

Errors in the transfer of documents “hampered” the ability of the trusts to foreclose and impaired the value of the securities backed by the loans, Schneiderman said.

“The failure to properly transfer possession of complete mortgage files has hindered numerous foreclosure proceedings and resulted in fraudulent activities,” the attorney general said in court documents.

Bank of America faced similar claims from Nevada Attorney General Catherine Cortez Masto, who accused the Charlotte, North Carolina-based lender of conducting foreclosures without authority in its role as mortgage servicer due improper document transfers. In an amended complaint last year, Masto said Countrywide failed to deliver original mortgage notes to the trusts or provided notes with defects.

The lawsuit was settled as part of the national foreclosure settlement, Masto spokeswoman Jennifer Lopez said.

Bank of America spokesman Rick Simon declined to comment about the claims made by states and investors. BNY Mellon performed its duties as defined in the agreements governing the securitizations, spokesman Kevin Heine said.

“We believe that claims against the trustee are based on a misunderstanding of the limited role of the trustee in mortgage securitizations,” he said.

Biden, in his complaint over mortgage database MERS, cites a foreclosure by Deutsche Bank AG (DBK) as trustee in which the promissory note wasn’t delivered to the bank as required under an agreement governing the securitization. The office is concerned that such errors led to foreclosures by banks that lacked authority to seize homes, one of the people said.

Renee Calabro, spokeswoman for Frankfurt-based Deutsche Bank, declined to comment.

Investors have raised similar claims against banks. The Oklahoma Police Pension and Retirement System last year sued U.S. Bancorp as trustee for mortgage bonds sold by Bear Stearns. The bank “regularly disregarded” its duty as trustee to review loan files to ensure there were no missing or defective documents transferred to the trusts. The bank’s actions caused millions of dollars in losses on securities “that were not, in fact, legally collateralized by mortgage loans,” according to an amended complaint.

“Bondholders could have serious claims on their hands,” said Gradman. “You’re going to suffer a loss as bondholder if you can’t foreclose, if you can’t liquidate that property and recoup.”

Teri Charest, a spokeswoman for Minneapolis-based U.S. Bancorp (USB), said the bank isn’t liable and doesn’t know if any party is at fault in the structuring or administration of the transactions.

“If there was fault, this unhappy investor is seeking recompense from the wrong party,” she said. “We were not the sponsor, underwriter, custodian, servicer or administrator of this transaction.”

OCC Issuing Alert to Consumers About Independent Foreclosure Reviews

MOST POPULAR ARTICLES

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary CLICK HERE TO GET COMBO TITLE AND SECURITIZATION REPORT

SEE FULL ARTICLE ON MORTGAGENEWSDAILY.COM

The OCC is rolling out its first public service announcements to alert consumers about the Independent Foreclosure Review announced by it, the Fed, and the OTS in early November.  The campaign follows the distribution of over 4 million letters to potentially eligible borrowers which include forms for submitting requests and instructions on how to use them.

The public service materials include a feature story and two 30-second radio spots in English and Spanish.  These will be distributed to 7,000 small newspapers and 6,500 radio stations throughout the U.S. The announcements inform consumers of the specifics of the program which lets borrowers who faced foreclosure during 2009 or 2010 request reviews of their cases if they believe errors in the procedures used by servicers pursuing foreclosure actions caused them to suffer financial loss. 

The parameters for determining eligibility are explained and borrowers are directed to a starting point for their requests.  Over 20 of the largest servicing companies are mandated to offer and process the reviews:  America’s Servicing Company, Aurora Loan Services, Bank of America, Beneficial, Chase, Citibank, CitiFinancial, Citi Mortgage, Country-Wide, EMC, EverBank/Everhome, Freedom Financial, GMAC Mortgage, HFC, HSBC, IndyMac Mortgage Ser vices, MetLife Bank, National City, PNC, Sovereign Bank, Sun-Trust Mortgage, U.S. Bank, Wachovia, Washington Mutual, and Wells Fargo.

STUDY: Mortgage Assignments to Washington Mutual Trusts Are Fraudulent

MOST POPULAR ARTICLES

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE

EDITOR’S NOTE: We know the foreclosures were gross misrepresentations of fact to the Courts, to the Borrowers and to the Investors. This article shows the crossover between the MegaBanks — sharing and diluting the responsibility for these fabrications as they went along. If you are talking about one big bank you are talking about all the megabanks.

The evidence is overwhelming. The reasons are many. But the fundamental theme here is that Banks are committing widespread fraud using the appearance of credibility just because they are banks.

Thus the strategy of pushing hard in discovery and persevering through adverse rulings appears to be getting increasing traction. Every time anyone, including judges, take a close look at this mess the conclusion is the same — the Banks’ foreclosures have been a sham. The homeowners still legally own their home and the lien is unenforceable or non-existent.

What part of the obligation of the borrower still exists? To whom is it payable? These are questions the Banks as servicers refuse to answer. It’s a simple set of questions that never had any bite to them until now.

From Lynn Symoniak

Mortgage Fraud

Bank of America
JP Morgan Chase
Lender Processing Services
WaMu Trusts
Washington Mutual
WMABS Trusts
WMALT Trusts

Action Date: August 6, 2011
Location: Jacksonville, FL

An examination of over 5,000 Mortgage Assignments to Washington Mutual
Trusts shows that these Trusts (WaMu, WMALT and WMABS) used Mortgage
Assignments signed by employees of JP Morgan Chase to foreclose. The
most prolific of the Chase signers, all from Jacksonville, Florida,
include Elizabeth Boulton, Margaret Dalton, Barbara Hindman, Patricia
Miner, Roderick Seda and Shelley Thieven. These Chase employees sign
as MERS officers on behalf of at least 30 different mortgage companies
to convey mortgages AND NOTES to Washington Mutual trusts that closed
years earlier.

In the vast majority of these cases, Bank of America is the Trustee.

Because the original loan documents are missing, Bank of America
allows Chase to make up new documents as needed to foreclose. The vast
majority of these Assignments state that the Trusts acquired these
mortgages in 2009 and 2010.

There are two separate frauds here:

1. not having the documents despite the promises to investors that the
documents were obtained and safely held; and

2. fabricating the replacement documents to foreclose.

In almost every case, Bank of America is the Trustee.

Did the FDIC just not notice any of this? There are thousands of these
specially-made Assignments signed by Chase employees for WaMu, WMALT
and WMABS trusts used across the country.

When Bank of America did not use documents fabricated by Chase to
foreclose, it used documents fabricated by LPS in Dakota County, MN.

Administrative Action You Can Use: F.D.I.C. Sues WAMU (now Chase) Ex-Chief

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

conformedcomplaint

“They focused on short-term gains to increase their own compensation, with reckless disregard for WaMu’s long-term safety and soundness,” the agency said in the 63-page complaint. “The F.D.I.C. brings this complaint to hold these highly paid senior executives, who were chiefly responsible for WaMu’s higher-risk home lending program, accountable for the resulting losses.”

EDITOR’S NOTE: READ THE COMPLAINT. In my opinion it constitutes an administrative finding by the lead federal agency that lending practices were fatally defective. In my opinion this constitutes enough, through judicial notice, to shift the burden of proof onto the other side as to most of your defenses, affirmative defenses and counterclaims. In fact, if you look at ANY complaint filed by an administrative agency, I believe it can be used as prima facie finding of wrong-doing. To the extent that a complaint from an administrative agency states that it has performed an investigation and affirmatively alleges that a particular defendant did something wrong as specifically set forth in that complaint, it is my opinion that through judicial notice, this constitutes a final finding of fact by an official agency which MUST be taken as a prima facie case.

PRACTICE NOTE: It won’t carry the same weight as a written decision following an administrative hearing, but the same law can be applied and it will carry a lot of weight.

F.D.I.C. Sues Ex-Chief of Big Bank That Failed

By ERIC DASH

The Federal Deposit Insurance Corporation sued the former chief executive of Washington Mutual and two of his top lieutenants, accusing them of reckless lending before the 2008 collapse of what was the nation’s largest savings bank.

The civil lawsuit, seeking to recover $900 million, is the first against a major bank chief executive by the regulator and follows escalating public pressure to hold bankers accountable for actions leading up to the financial crisis.

Kerry K. Killinger, Washington Mutual’s longtime chief executive, led the bank on a “lending spree” knowing that the housing market was in a bubble and failed to put in place the proper risk management systems and internal controls, according to a complaint filed on Thursday in federal court in Seattle.

David C. Schneider, WaMu’s president of home lending, and Stephen J. Rotella, its chief operation officer, were also accused of negligence for their roles in developing and leading the bank’s aggressive growth strategy.

“They focused on short-term gains to increase their own compensation, with reckless disregard for WaMu’s long-term safety and soundness,” the agency said in the 63-page complaint. “The F.D.I.C. brings this complaint to hold these highly paid senior executives, who were chiefly responsible for WaMu’s higher-risk home lending program, accountable for the resulting losses.”

In addition, the complaint says that Mr. Killinger and his wife, Linda, set up two trusts in August 2008 to keep his homes in California and Washington out of the reach of the bank’s creditors. Months earlier, in the spring of 2008, Mr. Rotella and his wife, Esther, made similar arrangements. The F.D.I.C. is seeking to freeze the assets of both couples and named the wives as defendants in the lawsuit.

In unusually vigorous denials, Mr. Killinger and Mr. Rotella came out swinging against the F.D.I.C. Mr. Killinger said the agency’s claims were “baseless and unworthy of the government” and its legal conclusions were “political theater.” Mr. Rotella said the action “runs counter to the facts about my relatively short time at the company,” calling it “unfair and an abuse of power.” He said the trust was for normal estate planning purposes and was set up before the bank’s downfall. Mr. Schneider, who is represented by the same lawyer as Mr. Rotella, did not release a public statement.

Although the F.D.I.C. is mainly known for its role in shuttering failed lenders, the agency has a legal obligation to bring lawsuits against former directors and officers when it finds evidence of wrongdoing.

So far, the F.D.I.C. has brought claims against 158 individuals at about 20 small banks that failed during the recent crisis. The agency is seeking a total of more than $2.6 billion in damages. But the $900 million case against the former WaMu officials is its biggest and most prominent action to date.

Federal regulators have come under fire for failing to hold executives responsible for their involvement in the worst financial crisis since the Great Depression. Last fall, the Securities and Exchange Commission reached a settlement with Angelo R. Mozilo, the former chief executive of Countrywide Financial, to pay a $22.5 million penalty over misleading investors about the financial condition of the giant mortgage lender.

The New York attorney general’s office has brought a civil suit against Kenneth D. Lewis over improper disclosures related to the 2008 rescue of Merrill Lynch by Bank of America, of which he was chief executive.

But several investigations into the actions of executives at the American International Group, Lehman Brothers and other financial firms have stalled — especially criminal cases, which have a much higher burden of proof.

The F.D.I.C., meanwhile, has been under intense pressure to recoup as much money as possible on behalf of Washington Mutual bondholders, who were outraged over its sale in September 2008. Critics said the agency moved too quickly to seize the troubled bank, and then allowed JPMorgan Chase to snap up its assets and branches for a mere $1.8 billion. Ever since, they have unleashed a wave of litigation and asked lawmakers to hold hearings about the controversial rescue.

In his statement, Mr. Rotella suggested the lawsuit was a way for the F.D.I.C. to extract a windfall from directors’ and officers’ insurers, which would want to settle any claims.

The F.D.I.C. complaint says that Mr. Killinger and his top lieutenants took “extreme and historically unprecedented risks” as the savings bank plunged headlong into risky mortgage lending near the height of the housing boom. As experienced bankers, they should have tempered this growth strategy and improved risk management systems to reduce potential losses if the real estate market fell, according to the complaint.

Instead, according to the complaint, they ignored the warnings of the bank’s risk managers and sank deeper into the risky subprime lending and hot real estate markets, like Florida and California. Indeed, the complaint lists more than 26 areas in which they acted recklessly, including a failure to put adequate limits on the concentration of mortgages and employee compensation programs that encouraged high loan volume at the expense of loan quality. The complaint quotes Washington Mutual’s own chief risk officer as telling Mr. Killinger, just weeks before it was seized, that the “risk chromosome” was missing from the bank’s DNA.

In lengthy statements, Mr. Killinger and Mr. Rotella disputed the basic thrust of the F.D.I.C.’s case and reiterated their belief that Washington Mutual was prematurely and unfairly seized. They also insisted that they behaved prudently, acted with constant oversight of banking regulators and took strong action to shore up the bank’s finances when market conditions worsened in late 2007 and early 2008.

“Those initiatives — once applauded by the regulators as diligent and responsible management — have, through the alchemy of Washington, D.C., politics been turned into allegations of gross negligence,” Mr. Killinger said in a statement.

NY J SHACK FINDS WAMU ATTORNEY IMPOSTERS

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

SEE STOPFORECLOSUREFRAUD.COM

Editor’s Note: I usually advise lawyers that from the very first word that opposing counsel utters, an objection ought to be raised, because it is all a lie. A “living lie.” From the moment he states his name and then says whom he represents, you ought to have something on hand that questions the validity of whether he actually represents the party upon whose behalf he says he is making his appearance. It is usually in the rules that you can demand proof of authority to represent. I know of a few cases that ended up dismissed on those grounds alone because the attorney never came back, never called back and never filed anything.

The way you win these cases is by forming the intent to win it. You can’t form that intent unless you believe it. Believe it! These are all impostors, pretenders and people out to make a buck at the expense of the Court and your client. Don’t get lost in their narrative.

Remember that besides the monthly payment issue, you have a right to seek modification or settlement or to ask for an evidentiary hearing on the amount required for redemption — that requires an accounting from the creditor. How are you going to do that with the wrong party standing in the courtroom and a lawyer who does not even represent anyone? Judges are  latching on to this argument, because it makes sense to them. They are not absolving your client of liability but they will force the issue, and make sure the real deciders are present IF YOU AGGRESSIVELY PURSUE IT.

[NYSC] JUDGE SCHACK Tears up WaMU’s Counsel For “Defective Verification, Phony NY House Counsel” WAMU v. PHILLIP

Posted on02 December 2010. Tags: , , , , , , , , , , , , , , , , , ,

[NYSC] JUDGE SCHACK Tears up WaMU’s Counsel For “Defective Verification, Phony NY House Counsel” WAMU v. PHILLIP

Washington Mut. Bank v Phillip
2010 NY Slip Op 52034(U)
Decided on November 29, 2010
Supreme Court, Kings County
Schack, J.

Excerpts:

Further, the verification of the complaint was not executed by an officer of WAMU, but by Benita Taylor, a “Research Support Analyst of Washington Mutual Bank, the plaintiff in the within action” a resident of Jacksonville, Florida, on June 4, 2008. This is the same day that Ms. Maio claims to have communicated with “Mark Phelps, Esq., House Counsel.” I checked the Office of Court Administration’s Attorney Registry and found that Mark Phelps is not now nor has been an attorney registered in the State of New York. Moreover, the Court does not know what “House” employs Mr. Phelps. [*5]

Both Mr. Phelps and Ms. Maio should have discovered the defects in Ms. Taylor’s verification of the subject complaint. The jurat states that the verification was executed in the State of New York and the County of Suffolk [the home county of plaintiff’s counsel], but the notary public who took the signature is Deborah Yamaguichi, a Florida notary public, not a New York notary public. Thus, the verification lacks merit and is a nullity. Further, Ms. Yamaguchi’s notarization states that Ms. Taylor’s verification was “Sworn to and subscribed before me this 4th day of June 2008.” Even if the jurat properly stated that it was executed in the State of Florida and the County of Duval, where Jacksonville is located, the oath failed to have a certificate required by CPLR

<SNIP>

Ms. Maio should have consulted with a representative or representatives of plaintiff WAMU or is successors subsequent to receiving my November 9, 2010 order, not referring back to an alleged June 4, 2008 communication with “House Counsel.” Affirmations by plaintiff’s counsel in foreclosure actions, pursuant to Chief Administrative Judge Ann t. Pfau’s October 20, 2010 Administrative Order, mandates in foreclosure actions prospective communication by plaintiff’s counsel with plaintiff’s representative or representatives to prevent the widespread insufficiencies now found in foreclosure filings, such as: failure to review files to establish standing; filing of notarized affidavits that falsely attest to such review, and, “robosigning: of documents.

Finally, Borrowers Score Points

“The court certainly agrees that ‘mistakes happen,’ ” Judge Bohm wrote. “However, when mistakes happen not once, not twice, but repeatedly, and when actions are not taken to correct these mistakes within a reasonable period of time, the failure to right the wrong — particularly when the basis for the problem is a months-long violation of an agreed judgment — the excuse of ‘mistakes happen’ has no credence.”

Judge Bohm also punted Wells’s claim that its problems with the couple were anomalies. He cited three other federal cases — one in Florida and two in Louisiana — in which Wells improperly collected money from borrowers, applied payments inappropriately, overcharged borrowers or failed to keep accurate records. The judge imposed $11,825 in fines on Wells and required it to pay $4,544 in lawyer’s fees to the De La Fuentes.

Editor’s Note: Finally the ship is turning. Virtually every day I receive another trial court ruling or appellate decision that recognizes the fraudulent predatory practices of the nations largest financial institutions.

Whether it is fines, contempt, damages, title, striking pleadings, or just plain fury directed at these heretofore venerable institutions, one by one, Judges are starting to scrutinize what had been a ministerial clerk-like function of approving foreclosure. One by one they are seeing outright fraud — not just at the time of closing but during servicing, during foreclosure, and even during bankruptcy.

Lawyers who are making money hand over fist advocating for these institutions best be careful that their ankle-biting clients will point the finger at them and claim an “advice of counsel” defense. Law firms that have increased their profits a hundred fold by bringing document fabrication and forgery “in-house” are now up for criminal investigations, indictment, conviction and prison.

Pretender lenders who have been in a non-stop feeding frenzy for years are now seeing the walls close in around them. And the political capital they thought they had purchased on capital hill has depreciated. That is why they are concentrating their lobbying dollars on state legislatures.

At bottom is the sickening awareness that our nation’s finance companies betrayed the country and the world. This was not just fraud on the investors who bought mortgage backed securities and the homeowners who bought unworkable, incomprehensible loan products.

It was fraud upon the country and it worked. Instead of seeing the great wrong perpetrated upon 20 million homeowners and 300 million taxpayers, instead of seeing the storm and the victims for what it was, our leaders and our neighbors were convinced that the victims were to blame. That one assumption magnified the  loss and prevented a robust recovery.

Most of all it prevented justice.

Nobody would argue that a victim of fraud has rights in court. If the fraud is proven, then the object of the decision should be to restore the victims to the position they had before the fraud was committed.

Nobody would argue that if the crime was egregious against society that punitive damages, exemplary damages, compensatory damages and jail should be the punishment.

Somehow this simple proposition that we all believe in has been turned on its head through the purchasing of favors in legislatures. The last bastion left to protect the country from a continuation of fraud in the courts and a perpetuation of fraud upon innocent victims is the judiciary. They are starting to get it right. Let’s hope it stays that way.

June 11, 2010

Finally, Borrowers Score Points

By GRETCHEN MORGENSON

WHILE the wheels of justice have turned very slowly in the years since our nation’s financiers and regulators nearly cratered our economy, the Federal Trade Commission’s settlement last Monday with Countrywide Home Loans suggests that they haven’t entirely ground to a halt.

Countrywide, now a unit of Bank of America, was once led by Angelo Mozilo and was the nation’s largest mortgage lender in the glorious, pre-crisis days of the housing boom. But it was also a predatory institution, and the F.T.C., citing Countrywide’s serial abuse of troubled borrowers, extracted a $108 million fine from Bank of America last week.

That money will go back to some 200,000 customers whom Countrywide forced to pay outsized fees for foreclosure services. These included billing a borrower $300 to have a property’s lawn mowed and levying $2,500 in trustees’ fees on another borrower, when the going rate for that service was about $600.

Though Countrywide’s mortgage contracts specifically barred such practices, they served the company well by generating income during downturns when it was harder to keep making money off new mortgages. This “counter-cyclical diversification strategy,” as Countrywide called it, was designed to “extract the last dollar out of the pockets of the most desperate consumers,” said Jon Leibowitz, the F.T.C. chairman.

Mr. Leibowitz also said Countrywide made bogus claims about what homeowners owed during the resolution of bankruptcy cases and added fees to borrowers’ obligations without notice. His office’s investigation turned up cases in which Countrywide tried to collect improper fees years after a bankruptcy case was over.

In some cases, Mr. Leibowitz said, even after a distressed homeowner became up-to-date on all of his or her payments, Countrywide would start another foreclosure proceeding against the same borrower.

PRETTY shameful, all in all. But nothing new to lawyers who represent troubled borrowers. They say these kinds of abuses still occur.

“We’ve been screaming about these practices for I don’t know how many years now,” said David B. Shaev, a lawyer in New York City who represents consumers. “A lot of the fees seem like nickel-and-dime charges, but they add up to big money. The $108 million in the Countrywide case is the tip of the iceberg.”

The other dubious Countrywide actions identified by the F.T.C. — pursuing foreclosure improperly, adding fees without notice — also sound familiar to consumer lawyers across the country.

Consider a recent federal bankruptcy case in Houston involving Wells Fargo. The facts of the case were outlined last month in a harsh contempt ruling against the bank by Judge Jeff Bohm.

Back in 2003, Antoinette and Lenord De La Fuente filed for bankruptcy protection after they fell behind on their Washington Mutual mortgage. Court filings show they proposed a restructuring plan that called for 60 monthly payments to the bankruptcy trustee, who would in turn distribute the money to their creditors. The bankruptcy court agreed to the couple’s plan in June 2004.

The couple dutifully made their payments. Wells Fargo took over their loan in June 2007 and the next January sent the couple a letter accusing them of being delinquent by $8,400. Wells told them that they had until mid-February to come up with the money or the bank would start foreclosure proceedings.

The court documents show that the borrowers tried unsuccessfully to argue that Wells was wrong. But Wells refused to back down; afraid they would lose their home, the couple struck a forbearance agreement and received a loan modification in April 2008.

This loan modification violated the borrowers’ repayment plan. “Wells Fargo frightened the De La Fuentes into making payments to Wells Fargo in violation of the confirmation order,” Judge Bohm wrote.

In June 2008, the couple hired a lawyer to investigate the dispute with Wells; they filed a lawsuit against the bank that August. About a year later, Wells offered to settle with the couple. In a court-approved settlement, Wells stated that the couple were indeed current on their $66,572 mortgage and owed no outstanding fees or charges. Wells agreed to pay the couple about $30,000 for their legal fees.

With that, the couple thought their problem with Wells had been solved.

But in November 2009, Wells told them their mortgage balance had mysteriously increased to almost $71,000, even though they had made all of their payments. Two months later, Mrs. De La Fuente noticed that Wells had reversed several of the mortgage payments she and her husband had made. When she asked Wells why, she was told her loan was in bankruptcy status; if she wanted to resolve the problem, she would have to pay almost $9,000. Late fees were also accruing.

The couple and their lawyer went back to court and accused Wells of violating the settlement agreement. After hearing testimony, the court agreed. It also didn’t buy the argument of Wells that errors, including a computer glitch, caused the couple’s problems.

“The court certainly agrees that ‘mistakes happen,’ ” Judge Bohm wrote. “However, when mistakes happen not once, not twice, but repeatedly, and when actions are not taken to correct these mistakes within a reasonable period of time, the failure to right the wrong — particularly when the basis for the problem is a months-long violation of an agreed judgment — the excuse of ‘mistakes happen’ has no credence.”

Judge Bohm also punted Wells’s claim that its problems with the couple were anomalies. He cited three other federal cases — one in Florida and two in Louisiana — in which Wells improperly collected money from borrowers, applied payments inappropriately, overcharged borrowers or failed to keep accurate records. The judge imposed $11,825 in fines on Wells and required it to pay $4,544 in lawyer’s fees to the De La Fuentes.

Teri Schrettenbrunner, a Wells Fargo spokeswoman, said, “There is no doubt here that we didn’t handle this case well, but it is rare that you see a confluence of this many errors coming together as you did on this case.”

She contended that a vast majority of Wells’s mortgage customers are satisfied with it and that its operations are nothing like Countrywide’s. “There are significant contrasts between the way Countrywide did business and the way we do business,” she said.

NEVERTHELESS, for imperiled borrowers, the new scrutiny on foreclosure practices is long overdue. Thankfully, the United States Trustee, the Department of Justice unit that oversees the nation’s bankruptcy courts, is also investigating possible improprieties among lenders, mortgage servicers and the law firms that represent them in bankruptcy cases against homeowners. The trustee’s office assisted the F.T.C. in the Countrywide matter.

It’s a slow process, to be sure. But at least it is proceeding.

NY Appeals: AG may pursue Banks for Fraudulent Appraisal

Editor’s note: I think the standards used here apply to ALL private actions for appraisal fraud. With appraisal fraud proven, virtually all lending statutes are proven to have been violated. Appraisal fraud lies at the root of the mortgage mess with its sister, ratings fraud. Both are appraisals and both are ratings. Both were designed to track people into doing what they otherwise would never have done if they had the right information. If the either the investor to advanced the money or the borrower who took it knew that the appraisal was bogus and that there was going to be a hit virtually as fast as you drive a new car off the lot, they would not, as reasonable people, have completed the transaction or they would demanded more information.
From Jake Naumer: This goes to the root and branch of the problems we have today.The good news is that there is actually a TRUE and CORRECT VALUE for any property.It just seems that no one seems to know what it actually is.

Historically and emperically, true value has always been a fairly fixed relationship between total aggregate income and total aggregate property, with some deference for location and ammenities.All of the players with varying vested interests seek to distort the perception of value, through the use of manipulation and misinformation, in order to extract the profit that is created by the gap between true value and perceived value. Unfortunately, once the distortion machine was exposed by exacting market forces, robbery of the honorable rule abiding tax paying citizens was required to maintain the status quo.

It will not last.

Submitted by Jeff

People v First Am. Corp.
2010 NY Slip Op 04868
Decided on June 8, 2010
Appellate Division, First Department
Gonzalez, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.

Decided on June 8, 2010

SUPREME COURT, APPELLATE DIVISION
First Judicial Department
Luis A. Gonzalez, P.J.
David B. Saxe
James M. Catterson
Rolando T. Acosta, JJ.
406796/07

1308

[*1]The People of the State of New York by Andrew Cuomo, Attorney General of the State of New York, Plaintiff-Respondent,

v

First American Corporation, et al., Defendants-Appellants.

Defendants appeal from the order of the Supreme Court, New York County (Charles Edward Ramos, J.), entered April 8, 2009, which, insofar as appealed from as limited by the briefs, denied their motion to dismiss the complaint on the ground of federal preemption.

DLA Piper LLP (US), New York (Richard F. Hans,
Patrick J. Smith, Kerry Ford
Cunningham and Jeffrey D.
Rotenberg of counsel), for
appellants.
Andrew M. Cuomo, Attorney General, New York
(Richard Dearing, Benjamin
N. Gutman and Nicole
Gueron of counsel), for respondent. [*2]

GONZALEZ, P.J.

This appeal calls upon us to determine whether the regulations and guidelines implemented by the Office of Thrift Supervision (OTS) pursuant to the Home Owner’s Lending Act of 1933 (HOLA) (12 USC § 1461 et seq.) and the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) (Pub L 101-73, 103 STAT 183 [codified in scattered sections of 12 USC]), preempt state regulations in the field of real estate appraisal.

The Attorney General claims that defendants engaged in fraudulent, deceptive and illegal business practices by allegedly permitting eAppraiseIT residential real estate appraisers to be influenced by nonparty Washington Mutual, Inc. (WaMu) to increase real estate property values on appraisal reports in order to inflate home prices. We conclude that neither federal statutes, nor the regulations and guidelines implemented by the OTS, preclude the Attorney General of the State of New York from pursuing litigation against defendants First American Corporation and First American eAppraiseIT, LLC. We further conclude that the Attorney General has standing to pursue his claims pursuant to General Business Law § 349.

In a complaint dated November 1, 2007, plaintiff, the People of the State of New York, commenced this action against defendants asserting claims under Executive Law § 63(12) and General Business Law § 349, and for unjust enrichment. The complaint alleges that in Spring 2006, WaMu hired two appraisal management companies, defendant eAppraiseIT and nonparty Lender’s Service, Inc., to oversee the appraisal process and provide a structural buffer against potential conflicts of interest between WaMu and the individual appraisers. The gravamen of the Attorney General’s complaint asserts that defendants misled their customers and the public by stating that eAppraiseIT’s appraisals were independent evaluations of a property’s market value and that these appraisals were conducted in compliance with the Uniform Standards and Professional Appraisal Practice (USPAP), when in fact defendants had implemented a system allowing WaMu’s loan origination staff to select appraisers who would improperly inflate a property’s market value to WaMu’s desired target loan amount.[FN1]

Defendants moved for dismissal of the complaint pursuant to CPLR 3211, asserting that the Attorney General is prohibited from litigating his claims because HOLA and FIERRA impliedly place the responsibility for oversight of appraisal management companies on the OTS, and asserting a failure to state a cause of action. Supreme Court denied defendants’ motion, finding that HOLA and FIRREA do not occupy the entire field with respect to real estate appraisal regulation and that the enforcement of USPAP standards under General Business Law § [*3]349 neither conflicts with federal law, nor does it impair a bank’s ability to lend and extend credit. We affirm.

The Supremacy Clause of the United States Constitution provides that Federal laws “shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding” (US Const, art VI, cl [2]), and it “vests in Congress the power to supersede not only State statutory or regulatory law but common law as well” (Guice v Charles Schwab & Co., 89 NY2d 31, 39 [1996], cert denied 520 US 1118 [1997]). Indeed, “[u]nder the U.S. Constitution’s Supremacy Clause (US Const, art VI, cl 2), the purpose of our preemption analysis is . . . to ascertain the intent of Congress” (Matter of People v Applied Card Sys., Inc., 11 NY3d 105, 113 [2008], cert denied
_ US _, 129 S Ct 999 [2009]).

Congressional intent to preempt state law may be established “by express provision, by implication, or by a conflict between federal and state law” (Balbuena v IDR Realty LLC, 6 NY3d 338, 356 [2006], quoting New York State Conference of Blue Cross & Blue Shield Plans v Travelers Ins. Co., 514 US 645, 654 [1995]). Express preemption occurs when Congress indicates its “pre-emptive intent through a statute’s express language or through its structure and purpose” (Altria Group, Inc. v Good, 555 US __, __, 129 S Ct 538, 543 [2008]). Absent explicit preemptive language, implied preemption occurs when “[t]he scheme of federal regulation [is] so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it . . . [o]r the Act of Congress may touch a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject” (Rice v Santa Fe El. Corp., 331 US 218, 230 [1947]). Further, when “[a] conflict occurs either because compliance with both federal and state regulations is a physical impossibility, or because the State law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,” the State law is preempted (City of New York v Job-Lot Pushcart, 213 AD2d 210, 210 [1995], affd 88 NY2d 163 [1996], cert denied 519 US 871 [1996] [internal quotation marks and citations omitted]).

Here, defendants do not argue, nor have they directed this Court’s attention to any language within HOLA or FIRREA that establishes, that Congress expressly created these statutes to supersede state law governing the causes of actions asserted in the Attorney General’s complaint. Defendants also have not argued that there exists a conflict between federal and State laws or regulations. Rather, defendants assert that because Congress has legislated so comprehensively, and that federal law so completely occupies the home lending field, the Attorney General is precluded from bringing claims against them under the theory of field preemption. Thus, the necessary starting point is to determine whether HOLA and FIRREA so occupy the field that these two statutes preempt any and all state laws speaking to the manner in which appraisal management companies provide real estate appraisal services.

In 1933, Congress enacted HOLA “to provide emergency relief with respect to home mortgage indebtedness at a time when as many as half of all home loans in the country were in default” (Fidelity Fed. Sav. & Loan Assn. v De la Cuesta, 458 US 141, 159 [1982] [internal [*4]quotation marks and citations omitted]). HOLA
created a general framework to regulate federally chartered savings associations that left the regulatory details to the Federal Home Loan Bank Board (FHLBB). The FHLBB’s authority to regulate federal savings and loans is virtually unlimited and “[p]ursuant to this authorization, the [FHLBB] has promulgated regulations governing the powers and operations of every Federal savings and loan association from its cradle to its corporate grave” (id. at 145 [internal citations and quotation marks omitted]).

When Congress passed FIRREA in 1989, it restructured the regulation of the savings association industry by abolishing the FHLBB and vested many of its functions into the newly-created OTS (see FIRREA § 301 [12 USCA § 1461 et seq.] [establishing OTS], § 401 [12 USCA § 1437] [abolishing the FHLBB]). According to FIRREA’s legislative history

“[t]he primary purposes of the [FIRREA] are to provide affordable housing mortgage finance and housing opportunities for low- and moderate-income individuals through enhanced management of federal housing credit programs and resources; establish organizations and procedures to obtain and administer the necessary funding to resolve failed thrift cases and to dispose of the assets of these institutions . . . and, enhance the regulatory enforcement powers of the depository institution regulatory
agencies to protect against fraud, waste and insider abuse” (HR Rep 101-54 [I], at 307-308, reprinted in 1989 US Code Cong to Admin News, at 103-104).

FIRREA was also designed
“to thwart real estate appraisal abuses, [by] establish[ing] a system of uniform national real estate appraisal standards. It also requires the use of state certified or licensed appraisers for real estate related transactions with the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Fannie Mac), the RTC, or certain real estate transaction [sic] regulated by the federal financial institution regulatory agencies” (HR Rep 101-54 (I), at 311, reprinted in 1989 US Code Cong to Admin News, at 107).

Further, 12 USCS § 3331, which was enacted as part of FIRREA, states that the general purpose of this statute, is
“to provide that Federal financial and public policy interests in real estate related transactions will be protected by requiring that real estate appraisals utilized in connection with federally related [*5]transactions are performed in writing, in accordance with uniform standards, by individuals whose competency has been demonstrated and whose professional conduct will be subject to effective supervision.”

The uniform standards described in 12 USCS § 3331, are defined in 12 USCS § 3339 which requires that the OTS, as a
“Federal financial institution[] regulatory agency . . . shall prescribe appropriate standards for the performance of real estate appraisals in connection with federally related transactions [FN2] under the jurisdiction of each such agency or instrumentality. These rules shall require, at a minimum — (1) that real estate appraisals be performed in accordance with generally accepted appraisal standards as evidenced by the appraisal standards promulgated by the Appraisal Standards Board of the Appraisal Foundation; and (2) that such appraisals shall be written appraisals.”
The Appraisal Standards Board (ASB) of the Appraisal Foundation promulgates the appraisal standards mandated by 12 USC § 3339 and are called USPAP. The Appraisal Foundation is a private “not-for-profit organization dedicated to the advancement of professional valuation [and] was established by the appraisal profession in the United States in 1987″ (Welcome to The Appraisal Foundation [The Appraisal Foundation], https://netforum.avectra.com/eWeb/StartPage.aspx?Site=TAF [accessed May 27, 2010]). The ASB is responsible for “develop[ing], interpret[ing] and amend[ing]” USPAP (Welcome to The Appraisal Foundation, https://netforum.avectra.com/eWeb/
DynamicPage.aspx?Site=TAF & WebCode=ASB [accessed May 27, 2010]). However, “[e]ach U.S. State or Territory has a State appraiser regulatory agency, which is responsible for certifying and licensing real estate appraisers and supervising their appraisal-related activities, as required by Federal law” (State Regulatory Information [The Appraisal Foundation], https://netforum.avectra.com/eWeb/DynamicPage.aspx?Site=taf & WebCode=RegulatoryInfo [accessed May 27, 2010]; see also State Appraiser Regulatory Programs > State Contact Information [Appraisal Subcommittee], https://www.asc.gov/State-Appraiser- Regulatory-Programs/StateContactInformation.aspx [accessed May 27, 2010] [listing each State appraiser regulatory agency’s website]). Further, the OTS itself has determined that

“[i]t does not appear that OTS is required by title XI of FIRREA to [*6]implement an appraisal regulation that reaches all the activities of savings and loan holding companies, at least to the extent that those activities are unrelated to the safety and soundness of savings associations or their subsidiaries. Neither the language of Title XI nor its legislative history indicate that Congress intended title XI to apply to the wide range of activities engaged in by savings and loan holding companies and their non-saving association subsidiaries” (55 Fed Reg 34532, 34534-34535 [1990], codified at 12 CFR 506, 545, 563, 564 and 571).

Indeed, the OTS encourages financial institutions
“to make referrals directly to state appraiser regulatory authorities when a State licensed or certified appraiser violates USPAP, applicable state law, or engages in other unethical or unprofessional conduct. Examiners finding evidence of unethical or unprofessional conduct by appraisers will forward their findings and recommendations to their supervisory office for appropriate disposition and referral to the state, as necessary” (OTS, Thrift Bulletin, Interagency Appraisal and Evaluation Guidelines at 10 [November 4, 1994], http://files.ots.treas. gov/84042.pdf [accessed May 27, 2010]).
In looking at the legislative history it becomes clear that Congress intended to establish

“a system of uniform real estate appraisal standards and requires the use of State certified and licensed appraisers for federally regulated transactions by July 1, 1991. . . The key . . . lies in the creation of State regulatory agencies and a Federal watchdog to monitor the standards and to oversee State enforcement. . . It is this combination of Federal and State action . . . that . . . assur[es] . . . good standards are properly enforced (135 Cong Rec S3993-01, at S4004 [April 17, 1989], 1989 WL 191505 [remarks of Senator Christopher J. Dodd]).

Thus, we conclude that neither HOLA or FIRREA preempts or precludes the Attorney General from pursuing his claims.
Having rejected defendants’ general arguments for preemption under HOLA and FIRREA, “[t]he Court’s task, then, is to decide which claims fall on the regulatory side of the ledger and which, for want of a better term, fall on the common law side” (Cedeno v IndyMac Bancorp, Inc., 2008 WL 3992304, *7, 2008 US Dist LEXIS 65337, *22 [SD NY 2008] [internal quotation marks and citation omitted]). Defendants assert that the Attorney General is preempted from pursuing his claims because subsequent to FIRREA’s passage, the OTS issued extensive [*7]regulations specifically addressing the composition and construction of appraisal programs undertaken by federal savings and loans.

It is well settled that “[a]gencies delegated rulemaking authority under a statute . . . are afforded generous leeway by the courts in interpreting the statute they are entrusted to administer” (Rapanos v United States, 547 US 715, 758 [2006]). Indeed, the OTS regulations “have no less pre-emptive effect than federal statutes” (Fidelity Fed. Sav. & Loan Assn., 458 US at 153). 12 CFR 545.2, states that regulations promulgated by the OTS are “preemptive of any state law purporting to address the subject of the operations of a Federal saving association.” However, 12 CFR 560.2(a) limits the language of 12 CFR 545.2 by setting parameters to the OTS’ authority to promulgate regulations that

“preempt state laws affecting the operations of federal savings associations when deemed appropriate to facilitate the safe and sound operation of federal savings associations, to enable federal savings associations . . . to conduct their operations in accordance with the best practices of thrift institutions in the United States, or to further other purposes of the HOLA” (12 CFR 560.2[a]).
12 CFR 560.2(b) provides a non-exhaustive list of illustrative examples of the types of state laws preempted by 12 CFR 560.2(a). Further, 12 CFR 560.2(c) states that the following types of State law are not preempted

“to the extent that they only incidentally affect the lending operations of Federal savings associations . . . (1) Contract and commercial law; (2) Real property law; (3) Homestead laws specified in 12 U.S.C. 1462a(f); (4) Tort law; (5) Criminal law; and (6) Any other law that OTS, upon review, finds: (i) Furthers a vital state interest; and (ii) Either has only an incidental effect on lending operations or is not otherwise contrary to the purposes expressed in paragraph (a) of this section.”
The OTS advises that when a court is

“analyzing the status of state laws under § 560.2, the first step will be to determine whether the type of law in question is listed in paragraph (b). If so, the analysis will end there; the law is preempted. If the law is not covered by paragraph (b), the next question is whether the law affects lending. If it does, then, in accordance with paragraph (a), the presumption arises that the law is preempted. This presumption can be reversed only if the law can clearly be shown to fit within the confines of paragraph (c). For these purposes, paragraph (c) is intended to be interpreted narrowly. Any doubt should be resolved in favor of preemption” (61 Fed Reg 50951-01, 50966-50967 [1996]).
[*8]
Defendants argue that the Attorney General’s challenges to defendants’ business practices are preempted because the conduct falls within 12 CFR 560.2(b)(5), which provides examples of loan-related fees “including without limitation, initial charges, late charges, prepayment penalties, servicing fees, and overlimit fees.” Defendants also assert that their alleged conduct is within 12 CFR 560.2(b)(9), which provides

“[d]isclosure and advertising, including laws requiring specific statements, information, or other content to be included in credit application forms, credit solicitations, billing statements, credit contracts, or other credit-related documents and laws requiring creditors to supply copies of credit reports to borrowers or applicants” (id.).

Lastly, defendants assert that their alleged conduct falls within 12 CFR 560.2(b)(10) which states that “[p]rocessing, origination, servicing, sale or purchase of, or investment or participation in, mortgages” is preempted.
The Attorney General’s complaint asserts that defendants engaged in conduct proscribed by Executive Law § 63(12)[FN3] and General Business Law § 349 [FN4]. It further alleges that defendants unjustly enriched themselves by repeated use of fraudulent or illegal business practices, in that they allowed WaMu to pressure eAppraiseIT appraisers to compromise their USPAP-required independence and collude with WaMu to inflate residential appraisal values so that the appraisals would match the qualifying loan values WaMu desired.

Under the first prong of the preemption analysis, we find that this action brought pursuant to Executive Law § 63(12), General Business Law § 349(b) and on the theory of unjust [*9]enrichment is not preempted by 12 CFR 560.2(b)(5) because it involves no attempt to regulate bank-related fees. We also find, under the first prong of the preemption analysis, that there is no preemption pursuant to 12 CFR 560.2(b)(9) because these claims do not involve a state law seeking to impose or require any specific statements, information or other content to be disclosed. Although at least one case has held that claims similar to those asserted here were preempted (see Spears v Washington Mut., Inc., 2009 WL 605835 [ND Cal 2009]), we find
under the first prong of the preemption analysis that 12 CFR 660.2(b)(10) does not preclude the Attorney General’s complaint because prosecution of the alleged conduct will not affect the operations of federal savings associations (FSA) in how they process, originate, service, sell or purchase, or invest or participate in, mortgages.

The question then becomes whether the Attorney General is nevertheless precluded from litigating his claims under the second prong of the preemption analysis. Because enjoining a real estate appraisal management company from abdicating its publicly advertised role of providing unbiased valuations is not within the confines of 12 CFR 560.2(c), we answer it in the negative.

Defendants argue the OTS’s authority under HOLA and FIRREA is not limited to oversight of a FSA and that its authority under these two statues extends over the activity regulated and includes the activities of third party agents of a FSA. Defendants assert that providing real estate appraisal services is a critical component of the processing and origination of mortgages and represents a core component of the controlling federal regime. Defendants cite 12 USC § 1464(d)(7)(D) and State Farm Bank, FSB v Reardon (539 F3d 336 [6th Cir 2008]) for
support. 12 USC § 1464(d)(7) states, in pertinent part, that

“if a savings association . . . causes to be performed for itself, by contract or otherwise, any service authorized under [HOLA] such performance shall be subject to regulation and examination by the [OTS] Director to the same extent as if such services were being performed by the savings association on its own premises . . .”
Here, it is alleged eAppraiseIT and Lender’s Service, Inc., were hired by WaMu to provide appraisal services. However, defendants are incorrect in asserting that providing real estate appraisal services is an authorized banking activity under HOLA. In an opinion letter dated October 25, 2004, OTS concluded that it had the authority to regulate agents of an FSA under HOLA because

“[i]nherent in the authority of federal savings associations to exercise their deposit and lending powers and to conduct deposit, lending, and other banking activities is the authority to advertise, market, and solicit customers, and to make the public aware of the banking products and services associations offer. The authority to conduct deposit and lending activities, and to offer banking products and services, is accompanied by the power to advertise, market, and solicit customers for such products and services . . . A state may not put operational restraints on a federal savings [*10]association’s ability to
offer an authorized product or service by restricting the association’s ability to market its products and services and reach potential customers . . . Thus, OTS has authority under the HOLA to regulate the Agents the Association uses to perform
marketing, solicitation, and customer service activities” (2004 OTS Op No. P-2004-7, at 7, http://files.ots.treas.gov/560404.pdf, 2004 OTS LEXIS 6, at *15 [accessed May 27, 2010]).
State Farm Bank, FSB v Reardon (539 F3d 336 [6th Cir 2008]) follows this principle. In Reardon, the plaintiff, a FSA chartered by the OTS under HOLA, decided to offer, through its independent contractor agents, first and second mortgages and home equity loans in the State of Ohio. The Sixth Circuit concluded that although the statute at issue

“directly regulates [the plaintiff FSA’s] exclusive agents rather than [the FSA] itself . . . the activity being regulated is the solicitation and origination of mortgages, a power granted to [the FSA] by HOLA and the OTS. This is also a power over which the OTS has indicated that any state attempts to regulate will be met with preemption . . . [T]he practical effect of the [statute] is that [the FSA] must either change its structure or forgo mortgage lending in Ohio. Thus, enforcement of the [statute] against [the FSA’s] exclusive agents would frustrate the purpose of the HOLA and the OTS regulations because it indirectly prohibits [the FSA] from exercising the powers granted to it under the HOLA and the OTS regulations” (Reardon, 539 F3d at 349 [internal quotation marks and citation omitted]).
Since appraisal services are not authorized banking products or services of a FSA, defendants have failed to show that the Attorney General is preempted from pursuing his claims under 12 USC § 1464(d)(7)(D). Consequently, under the second prong of the preemption analysis, the result of the Attorney General litigating his claims against a company that independently administers a FSA’s appraisal program would “only incidentally affect the lending operations of [the FSA]” (12 CFR 560.2[c]). Thus, defendants have failed to show that OTS’s regulations and guidelines preempt or preclude the Attorney General from pursuing his claims.

Defendants assert that Cedeno v IndyMac Bancorp, Inc. (2008 WL 3992304, 2008 US Dist LEXIS 65337 [SD NY 2008]) provides this Court with persuasive authority that the federal government and its regulators alone regulate the mortgage loan origination practices of FSAs including all aspects of the appraisal programs they utilize. In Cedeno, the Southern District found preemption precluded a private individual from maintaining a cause of action against a bank. It was alleged that the bank failed to disclose to the plaintiff that it selected appraisers, appraisal companies and/or appraisal management firms who would inflate the value of [*11]residential properties in order to allow the bank to complete more real estate transactions and obtain greater profits. This practice resulted in the plaintiff being misled as to the true
equity in her home. The Southern District found that the conduct of the bank was

“directly regulated by the OTS: the processing and origination of mortgages, a loan-related fee, and the accompanying disclosure. The appraisals are a prerequisite to the lending process, and are inextricably bound to it. Because the plaintiff’s claim is not a simple breach of contract claim, but asks the Court to set substantive standards for the Associations’ lending operations and practices, it is preempted” (Cedeno, 2008 WL 3992304, *9, 2008 US Dist LEXIS 65337, at *28 [internal quotation marks and citations omitted]).

Contrary to defendants’ assertions, we find that Cedeno is not applicable here because Cedeno does not reach the question as to whether HOLA, FIRREA or OTS’s regulations and guidelines are intended to regulate the conduct of real estate appraisal companies.
Annexed to the OTS’s October 25, 2004 opinion letter is a document entitled Appendix A – Conditions. In this document, OTS requires FSAs that wish to use agents to perform marketing, solicitation, customer service, or other activities related to the FSA’s authorized banking products or services to enter into written agreements that “(4) expressly set[] forth OTS’s statutory authority to regulate and examine and take an enforcement action against the agent with respect to the activities it performs for the association, and the agent’s acknowledgment of OTS’s authority” (2004 OTS Op No. P-2004-7, at 16, http://files.ots. treas.gov/560404.pdf, 2004 OTS LEXIS 6, at *37 [accessed May 27, 2010]). We note that defendants have neither asserted that such written agreements exist nor produced such documents. Thus, we conclude that the Attorney General may proceed with his claims against defendants because his challenge to defendants’ allegedly fraudulent and deceptive business practices in providing appraisal services is not preempted by federal law and regulations that govern the operations of savings and loan associations and institution-affiliated parties.

Defendants assert that the Attorney General cannot rely upon a substantive violation of a federal law to support a claim under General Business Law § 349 because this is an improper attempt to convert alleged violations of federal law into a violation of New York law. Defendants claim that where a plaintiff seeks to rely upon a substantive violation of a federal law to support a claim under General Business Law § 349, the federal law relied upon must contain a private right of action.

However, the Attorney General is statutorily charged with the duty to “[p]rosecute and defend all actions and proceedings in which the state is interested, and have charge and control of all the legal business of the departments and bureaus of the state, or of any office thereof which requires the services of attorney or counsel, in order to protect the interest of the state” (Executive Law § 63[1]). Indeed, when the Attorney General becomes aware of allegations of persistent fraud or illegality of a business, he [*12]

“is authorized by statute to bring an enforcement action seeking an order enjoining the continuance of such business activity or of any fraudulent or illegal acts, [and] directing restitution and damages’ (Executive Law § 63 [12]). He is also authorized, when informed of deceptive acts or practices affecting consumers in New York, to bring an action in the name and on behalf of the people of the state of New York to enjoin such unlawful acts or practices and to obtain restitution of any moneys or property obtained’ thereby (General Business Law § 349 [b])” (People v Coventry First LLC, 13 NY3d 108, 114 [2009]).
It is well settled that “[o]n a motion to dismiss pursuant to CPLR 3211, the court must accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory’” (Wiesen v New York Univ., 304 AD2d 459, 460 [2003], quoting Leon v Martinez, 84 NY2d 83, 87-88 [1994]). The Attorney General’s complaint alleges that defendants publicly claimed on their eAppraiseIT website that eAppraiseIT provides a firewall between lenders and appraisers so that customers can be assured that USPAP and FIRREA guidelines are followed and that each appraisal is being audited for compliance. The Attorney General charges that defendants deceived borrowers and investors who relied on their proclaimed independence by allowing WaMu’s loan production staff to select the appraiser based upon whether they would provide high values.

We find defendants’ assertions that the Attorney General lacks standing under General Business Law § 349 and that his complaint fails to state a cause of action are without merit. Indeed, the Attorney General’s complaint references misrepresentations and other deceptive conduct allegedly perpetrated on the consuming public within the State of New York, and “[a]s shown by its language and background, section 349 is directed at wrongs against the consuming public” (Oswego Laborers’ Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20, 24 [1995]). Therefore, we find that the Attorney General’s complaint articulates a viable cause of action under General Business Law § 349, and that this statute provides him with standing.

Consequently, we conclude that defendants have failed to demonstrate that HOLA, FIRREA or the OTS’s regulations and guidelines preempt or preclude the Attorney General from pursuing the causes of action articulated in his complaint. We additionally find that the Attorney General has standing under General Business Law § 349. We have reviewed defendants’ remaining contentions and we find them without merit.

Accordingly, the order of the Supreme Court, New York County (Charles Edward Ramos, J.), entered April 8, 2009, which, insofar as appealed from as limited by the briefs, [*13]denied defendants’ motion to dismiss the complaint on the ground of federal preemption, should be affirmed, without costs.

All concur.
Order, Supreme Court, New York County (Charles Edward Ramos, J.), entered April 8, 2009, affirmed, without costs.

Opinion by Gonzalez, P.J. All concur.
Gonzalez, P.J., Saxe, Catterson, Acosta, JJ.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: JUNE 8, 2010

CLERK

Footnotes

Footnote 1: USPAP is incorporated into New York law and it prohibits a State-certified or State licensed appraiser from accepting a fee for an appraisal assignment “that is contingent upon the appraiser reporting a predetermined estimate, analysis, or opinion or is contingent upon the opinion, conclusion or valuation reached, or upon the consequences resulting from the appraisal assignment” (NY Exec Law § 160-y; 19 NYCRR 1106.1).

Footnote 2: 12 USC § 3350(4) states that “[t]he term federally related transaction’ means any real estate-related financial transaction which—(A) a federal financial institutions regulatory agency or the Resolution Trust Corporation engages in, contracts for, or regulates; and (B) requires the services of an appraiser.”

Footnote 3: Executive Law § 63(12) states, in pertinent part, that “[w]henever any person shall engage in repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conducting or transaction of business, the attorney general may apply, in the name of the people of the state of New York . . . for an order enjoining the continuance of such business activity or of any fraudulent or illegal acts, directing restitution and damages. . .”

Footnote 4: General Business Law § 349(b) states, in pertinent part, that “[w]henever the attorney general shall believe from evidence satisfactory to him that any person, firm, corporation or association or agent or employee thereof has engaged in or is about to engage in any of the acts or practices stated to be unlawful he may bring an action in the name and on behalf of the people of the state of New York to enjoin such unlawful acts or practices and to obtain restitution of any moneys or property obtained directly or indirectly by any such unlawful acts or practices.”

Goldman Sachs Messages Show It Thrived as Economy Fell

Editor’s Note: Now the truth as reported here two years ago.
  • There were no losses.
  • They were making money hand over fist.
  • And this article focuses only on a single topic — some of the credit default swaps — those that Goldman had bought in its own name, leaving out all the other swaps bought by Goldman using other banks and entities as cover for their horrendous behavior.
  • It also leaves out all the other swaps bought by all the other investment banking houses.
  • But most of all it leaves out the fact that at no time did the investment banking firms actually own the mortgages that the world thinks caused enormous losses requiring the infamous bailout. It’s a fiction.
  • In nearly all cases they sold the securities “forward” which means they sold the securities first, collected the money second and then went looking for hapless consumers to sign documents that were called “loans.”
  • The securities created the intended chain of securitization wherein first the investors “owned” the loans (before they existed and before the first application was signed) and then the “loans” were “assigned” into the pool.
  • The pool was assigned into a Special Purpose Vehicle that issued “shares” (certificates, bonds, whatever you want to call them) to investors.
  • Those shares conveyed OWNERSHIP of the loan pool. Each share OWNED a percentage of the loans.
  • The so-called “trust” was merely an operating agreement between the investors that was controlled by the investment banking house through an entity called a “trustee.” All of it was a sham.
  • There was no trust, no trustee, no lending except from the investors, and no losses from mortgage defaults, because even with a steep default rate of 16% reported by some organizations, the insurance, swaps, and other guarantees and third party payments more than covered mortgage defaults.
  • The default that was not covered was the default in payment of principal to investors, which they will never see, because they never were actually given the dollar amount of mortgages they thought they were buying.
  • The entire crisis was and remains a computer enhanced hallucination that was used as a vehicle to keep stealing from investors, borrowers, taxpayers and anyone else they thought had money.
  • The “profits” made by NOT using the investor money to fund mortgages are sitting off shore in structured investment vehicles.
  • The actual funds, first sent to Bermuda and the caymans was then cycled around the world. The Ponzi scheme became a giant check- kiting scheme that hid the true nature of what they were doing.
April 24, 2010

Goldman Sachs Messages Show It Thrived as Economy Fell

By LOUISE STORY, SEWELL CHAN and GRETCHEN MORGENSON

In late 2007 as the mortgage crisis gained momentum and many banks were suffering losses, Goldman Sachs executives traded e-mail messages saying that they were making “some serious money” betting against the housing markets.

The e-mails, released Saturday morning by the Senate Permanent Subcommittee on Investigations, appear to contradict some of Goldman’s previous statements that left the impression that the firm lost money on mortgage-related investments.

In the e-mails, Lloyd C. Blankfein, the bank’s chief executive, acknowledged in November of 2007 that the firm indeed had lost money initially. But it later recovered from those losses by making negative bets, known as short positions, enabling it to profit as housing prices fell and homeowners defaulted on their mortgages. “Of course we didn’t dodge the mortgage mess,” he wrote. “We lost money, then made more than we lost because of shorts.”

In another message, dated July 25, 2007, David A. Viniar, Goldman’s chief financial officer, remarked on figures that showed the company had made a $51 million profit in a single day from bets that the value of mortgage-related securities would drop. “Tells you what might be happening to people who don’t have the big short,” he wrote to Gary D. Cohn, now Goldman’s president.

The messages were released Saturday ahead of a Congressional hearing on Tuesday in which seven current and former Goldman employees, including Mr. Blankfein, are expected to testify. The hearing follows a recent securities fraud complaint that the Securities and Exchange Commission filed against Goldman and one of its employees, Fabrice Tourre, who will also testify on Tuesday.

Actions taken by Wall Street firms during the housing meltdown have become a major factor in the contentious debate over financial reform. The first test of the administration’s overhaul effort will come Monday when the Senate majority leader, Harry Reid, is to call a procedural vote to try to stop a Republican filibuster.

Republicans have contended that the renewed focus on Goldman stems from Democrats’ desire to use anger at Wall Street to push through a financial reform bill.

Carl Levin, Democrat of Michigan and head of the Permanent Subcommittee on Investigations, said that the e-mail messages contrast with Goldman’s public statements about its trading results. “The 2009 Goldman Sachs annual report stated that the firm ‘did not generate enormous net revenues by betting against residential related products,’ ” Mr. Levin said in a statement Saturday when his office released the documents. “These e-mails show that, in fact, Goldman made a lot of money by betting against the mortgage market.”

A Goldman spokesman did not immediately respond to a request for comment.

The Goldman messages connect some of the dots at a crucial moment of Goldman history. They show that in 2007, as most other banks hemorrhaged losses from plummeting mortgage holdings, Goldman prospered.

At first, Goldman openly discussed its prescience in calling the housing downfall. In the third quarter of 2007, the investment bank reported publicly that it had made big profits on its negative bet on mortgages.

But by the end of that year, the firm curtailed disclosures about its mortgage trading results. Its chief financial officer told analysts at the end of 2007 that they should not expect Goldman to reveal whether it was long or short on the housing market. By late 2008, Goldman was emphasizing its losses, rather than its profits, pointing regularly to write-downs of $1.7 billion on mortgage assets and leaving out the amount it made on its negative bets.

Goldman and other firms often take positions on both sides of an investment. Some are long, which are bets that the investment will do well, and some are shorts, which are bets the investment will do poorly. If an investor’s positions are balanced — or hedged, in industry parlance — then the combination of the longs and shorts comes out to zero.

Goldman has said that it added shorts to balance its mortgage book, not to make a directional bet that the market would collapse. But the messages released Saturday appear to show that in 2007, at least, Goldman’s short bets were eclipsing the losses on its long positions. In May 2007, for instance, Goldman workers e-mailed one another about losses on a bundle of mortgages issued by Long Beach Mortgage Securities. Though the firm lost money on those, a worker wrote, there was “good news”: “we own 10 mm in protection.” That meant Goldman had enough of a bet against the bond that, over all, it profited by $5 million.

Documents released by the Senate committee appear to indicate that in July 2007, Goldman’s daily accounting showed losses of $322 million on positive mortgage positions, but its negative bet — what Mr. Viniar called “the big short” — came in $51 million higher.

As recently as a week ago, a Goldman spokesman emphasized that the firm had tried only to hedge its mortgage holdings in 2007 and said the firm had not been net short in that market.

The firm said in its annual report this month that it did not know back then where housing was headed, a sentiment expressed by Mr. Blankfein the last time he appeared before Congress.

“We did not know at any minute what would happen next, even though there was a lot of writing,” he told the Financial Crisis Inquiry Commission in January.

It is not known how much money in total Goldman made on its negative housing bets. Only a handful of e-mail messages were released Saturday, and they do not reflect the complete record.

The Senate subcommittee began its investigation in November 2008, but its work attracted little attention until a series of hearings in the last month. The first focused on lending practices at Washington Mutual, which collapsed in 2008, the largest bank failure in American history; another scrutinized deficiencies at several regulatory agencies, including the Office of Thrift Supervision and the Federal Deposit Insurance Corporation.

A third hearing, on Friday, centered on the role that the credit rating agencies — Moody’s, Standard & Poor’s and Fitch — played in the financial crisis. At the end of the hearing, Mr. Levin offered a preview of the Goldman hearing scheduled for Tuesday.

“Our investigation has found that investment banks such as Goldman Sachs were not market makers helping clients,” Mr. Levin said, referring to testimony given by Mr. Blankfein in January. “They were self-interested promoters of risky and complicated financial schemes that were a major part of the 2008 crisis. They bundled toxic and dubious mortgages into complex financial instruments, got the credit-rating agencies to label them as AAA safe securities, sold them to investors, magnifying and spreading risk throughout the financial system, and all too often betting against the financial instruments that they sold, and profiting at the expense of their clients.”

The transaction at the center of the S.E.C.’s case against Goldman also came up at the hearings on Friday, when Mr. Levin discussed it with Eric Kolchinsky, a former managing director at Moody’s. The mortgage-related security was known as Abacus 2007-AC1, and while it was created by Goldman, the S.E.C. contends that the firm misled investors by not disclosing that it had allowed a hedge fund manager, John A. Paulson, to select mortgage bonds for the portfolio that would be most likely to fail. That charge is at the core of the civil suit it filed against Goldman.

Moody’s was hired by Goldman to rate the Abacus security. Mr. Levin asked Mr. Kolchinsky, who for most of 2007 oversaw the ratings of collateralized debt obligations backed by subprime mortgages, if he had known of Mr. Paulson’s involvement in the Abacus deal.

“I did not know, and I suspect — I’m fairly sure that my staff did not know either,” Mr. Kolchinsky said.

Mr. Levin asked whether details of Mr. Paulson’s involvement were “facts that you or your staff would have wanted to know before rating Abacus.” Mr. Kolchinsky replied: “Yes, that’s something that I would have personally wanted to know.”

Mr. Kolchinsky added: “It just changes the whole dynamic of the structure, where the person who’s putting it together, choosing it, wants it to blow up.”

The Senate announced that it would convene a hearing on Goldman Sachs within a week of the S.E.C.’s fraud suit. Some members of Congress questioned whether the two investigations had been coordinated or linked.

Mr. Levin’s staff said there was no connection between the two investigations. They pointed out that the subcommittee requested the appearance of the Goldman executives and employees well before the S.E.C. filed its case.

Residential Funding Real Estate Holdings, LLC – Option One Mortgage Corporation

from June Reyno:

Once all of this information has been compiled with all their names, titles, addresses, signatures, company affiliation– we should then begin submitting these (i.e. notary public signatures) to various state agencies for confirmation and verification that these “people” are actually who say they are on the paper closing statements (if it can be found) along with the foreclosure processing paperwork from the mortgage servicers. The real class liars in the industry.

These notary public “signatures” can in fact be confirmed because they must be registered with the State Dept. We can demand a “viewing” of that persons’ notary journal in their possession at all times and no one elses. And, whether the named person as it is typewritten in the foreclosure dcouments…”Vice President” who signed payoff statements from the Bank actually holds that “typed in” title and whether they were actually and physically present at the time the notary public verified identification of that person.

By the looks of the hundreds of fradulent paperwork I have personally examined thus far and viewing the names of people pushing foreclosure we do mistakenly think (and the judges mistakenly think this way too unfortunately) that nothing except hard, cold cash green money was exchanged at the closing table to purchase the collaterallized debt obligation. No such thing with securitization is there?

I’m betting with the sensible majority that no one ever paid or had any kind of “liquid cash” to show at closing and that it is by paper appearance only to convince and mislead others that these impostors paid for the property they actually stole from the homeowner upon foreclosure and that the investor was similarly ripped off who put up the money so that only a select few companies by design (going back decades + could line their pockets in the future with billions and billions of $$$ in profit to throw into their corporate treasure chest collected from suffering hardworking middle income American taxpayers!

A perfect example of equity stripping is our San Diego home we lived in for 20+ years. It was foreclosed on 2 years before and we didn’t know it because we sought bankrutpcy protection. We were evicted from our home and thrown out on the street by the foreclosure mill lawyers hired by the Bank and their realtor cohorts March 14, 2009. They succeeded because the pretender lender submitted false forged documents to the court and the Judges.

We purchased the house for $192,900 in July 1989. Our principal balance was reduced to $164,000 under a new loan with Washington Mutual. Throughout the refinancing period in which we borrowed from our equity period we were paying an average amount of about $1,500-$2,500 per month over the course of 20+ years. In April 2006, our house came in on an inflated appraisal value of $650,000. From that, we drew out about $34,000 on equity at refinance which all went back to the economy and for the purpose of preserving our good credit standing with our creditors. The principal balance came to $588,000 according to Option One Mortgage Corporation. Residential Funding Real Estate Holdings, LLC unlawfully purchased the property without notice by bidding against themselves on the auction (again without our knowledge and we were under bankrutpcy protection) for $361,200 when they foreclosed and assigned the house to Litton Loan Servicing/Option One Mortgage/Quality Loan Servicing San Diego. In March 2009 (when I was unlawfully charged with trespassing, vandalism and re-entry of property believing we were protected under the the BK laws and after and unlawful Judgement from the UD Court and was placed under arrest by the San Diego Police Dept.) Island Source II, LLC purchased the house for $211,500 (claiming they are [innocent] Bonafide Purchasers of value under CC 1161(a) for $211,500.

This month, March 12, 2010 Island Source II, LLC dba: Homecomings Financial Network in Minnetonka MN sold it to “InSource Financial Services, Huntington New York”, again, and again in violation of the Bankruptcy automatic stay; selling and transferring this time to a community homebuyer for $385,000 despite our opposition noticesand letters stating our intent to preserve interest filed with the County Recorder’s Office. The Judges [innocently] joined in on the pretender lenders fraud upon the court. Later, our appellate lawyer whom we trusted followed them to go against our interest and helped them to continue living the lie.

We were stripped of $450,000+ in equity.

Is this you?

Our house payment at last refinance in May 2006 $3,919.60 then in April 2008 the ARM adjusted to $5,800.00 monthly payment. Whaaat! Our house was sold and wrongfully foreclosed like millions of other American families who were steered into securitized mortgage loans without their knowledge but no Judge or the court or law enforcement cared enough to help us correct these hurtful and malicious acts.

Where was our “Fiduciary ” Trustee as named in our mortgage contract that should have been of our choice to explain the terms of our mortgage contract to us at the closing table?

%d bloggers like this: