If you think foreclosures are a thing of the past, think again

In order to maintain the illusion of legality and an orderly marketplace the banks and their servicers must continue to push foreclosures even if it means going after people who are not actually withholding payments. The legacy of the mortgage meltdown and the brainless government policies that let the banks get away with what they had done, is that the crime not only continues but is being repeated with each new claimed securitization or “resecuritization” of residential loans.

As I predicted in 2006, the  tidal wave of foreclosures was in fact unprecedented, underestimated and continues to this day. With a starting point of around 2002, foreclosures attributed to the mortgage meltdown have continued unabated for 17 years. I said it would 20-30 years and I am sticking with that, although new evidence suggests it will go on much longer. So far more than 40 million people have been displaced from their homes and their lives.

Google Buffalo and New Jersey, for example and see whether they think foreclosures are a thing of the past. They don’t. And the people in Buffalo are echoing sentiments across the nation where the economy seems better, unemployment is down, wages are supposedly increasing but foreclosures are also increasing.

And let’s not forget that back in the early and mid 2000’s foreclosures did not mention trustees or trusts. In fact when the subject was raised by homeowners it was vehemently denied in courts cross the country. The denials were that the trusts even existed. This was not from some homeowner or local lawyer. This was from the banks and their attorneys. It turns out they were telling the truth then.

The trusts didn’t exist and there were no trustees. But in the upside down world of foreclosure here we are with most foreclosures filed in the name of a nonexistent implied trust on behalf of a “trustee” with no trustee powers, obligations or duties to administer any assets much less loans in foreclosure.

In order to understand this you must throw out any ideas of a rational market driven by fundamental economics and accept the fact that the banks  and their servicers continue to be engaged in the largest economic crime in human history. Their objective is foreclosure because that accomplishes two goals: first, it rubber stamps prior illegal practices and theft of borrowers’ identities for purposes of trading profits and second, it gives them a free house and free money.

If they lose a foreclosure case nobody suffers a financial loss. If they win, which they do most of the time (except where homeowners aggressively defend) they get a free house and the proceeds of sale are distributed to the players who are laughing, pardon the pun, all the way to the bank. Investors get ZERO.

As for modifications, look closely. The creditor is being changed along with the principal interest and payments. It might just be a new loan, except for the fact the new “lender” is a servicer like Ocwen who has not advanced any money for the purchase or acquisition the loan. But that’s OK because neither did the lender or the claimant. Modification is a PR stunt to make it look like the banks are doing something for borrowers when in fact they are stealing or reassigning the loan to a totally different party from anyone who previously appeared in the chain of title.

Modification allows the banks to claim that the loan is performing — thus maintaining the false foundation supporting trades and profits amounting to dozens of times the amount of the loan. Watch what happens when you ask for acknowledgement from the named Plaintiff in judicial states or the named beneficiary in nonjudicial states. You won’t get it. If US Bank was really a trustee then acknowledging a settlement on its behalf would not be a problem. As it stands, that is off the table.

The mega banks, with unlimited deep pockets derived from their massive economic crimes, began a campaign of whack-a-mole to create the impression that foreclosures were on the decline and the crisis is over. Their complex plan involves decreasing the number of filed foreclosures where the numbers are climbing and increasing the filed foreclosures where they have allowed the numbers to sink. Add that to their planted articles in Newspapers and Magazines around the country and it all adds up to the impression that foreclosures derived from claimed securitized loans are declining.

Not so fast. There were over 600,000 reported foreclosures last year and the numbers are rising this year. Most of them involve false claims of securitization where the named claimant is simply appointed to pretend to be the injured party. It isn’t and in many cases a close look at the “name” of the claimant reveals that no legal person or entity is actually named.

US Bank is often named but not really present. It says it is not appearing on its own behalf but as Trustee. The trust is not specifically named but is implied without the custom and practice of naming the jurisdiction in which the trust was organized or the jurisdiction in which it maintains a business. That’s because there is no trust and there is no business and US Bank owns no debt, note or mortgage in any capacity. The certificates are held by investors who acknowledge that they have no right, title or interest in the debt, note or mortgage. So who is the claimant? Close inspection reveals that nobody is named.

In fact, those foreclosures proceed often without contest because homeowners mistakenly believe they are in default. In equity, if the facts were allowed in as evidence, the homeowner would be entitled to a share of the bounty that was a windfall to the investment bank and its affiliates by trading on the borrower’s signature. A “free house” only partially compensates the homeowner for the illegal noncensual trading on his name with the intent of screwing him/her later.

Upon liquidation of the property the proceeds of sale are deposited not by an owner of the debt, but by one of the players who just added insult to injury to both the borrower and the original investors who paid real money but failed to get an interest in the fabricated closing documents — i.e., the note and mortgage.

The Banks have succeeded in getting everyone to think about how unfair it is that homeowners would even think of pursuing a “free house”. By doing that they distract from the fact that the homeowners and the investors who put up the origination or acquisition money are both excluded from the huge profits generated by trading on the signature of borrowers and the money of investors who do not get to share in the bounty, which is often 20-40 times the amount of the loan.

The courts don’t want to hear about esoteric arguments about the securitization process. Judges assume that somewhere in the complex moving parts of the securitization scheme there is an owner of the debt who will get compensated as a result of the homeowner’s refusal or failure to make monthly payments of interest and principal. That assumption is untrue.

This is revealed when the money from the sale of property is traced. If you trace the check you will be mislead. Regardless of where the check is mailed, the check is actually cashed by a servicer who deposits it to the account of an investment bank who has already received many times the amount of the loan principal. That money is neither credited to the account of the borrower nor reported, much less distributed to investors who bought certificates (wrongly named “mortgage bonds”).

Neither the investors who bought the original uncertificated certificates nor the investors who purchased contracts based upon the apparent value of the certificates ever see a penny of the proceeds of a foreclosure sale.

In order to maintain the illusion of legality and an orderly marketplace the banks and their servicers must continue to push foreclosures even if it means going after people who are not actually withholding payments. The legacy of the mortgage meltdown and the brainless government policies that let the banks get away with what they had done, is that the crime not only continues but is being repeated with each new claimed securitization or “resecuritization” of residential loans.

When the economy contracts, as it always does, the number of foreclosures will shoot up like a thermometer held over a steam radiator. And instead of actually looking for facts people will presume them. And that will lead to more tragedy and more inequality of income, wealth and opportunity in a country that should be all about a level playing field. This is not the marketplace doing its work. It is the perversion of the marketplace caused by outsized and unchecked power of the banks.

My solution is predicated on the idea that everyone is to blame for this. Everyone involved should share in losses and gains from this illicit scheme. Foreclosures should come to a virtual halt. Current servicers should be barred from any connection with these loan accounts. Risk and loss should be shared based upon an equitable formula. And securitization should be allowed to continue as long as securitization is actually happening — so long as the investors and borrowers are aware that they are the only two principals on opposite sides of a complex transaction in which trading profits are likely as part of the disclosed compensation of the intermediaries in the loans originated or acquired.

Disclosure allows the borrowers and the investors to bargain for better deals — to share in the bounty. And if there is no such bounty with full disclosure it will then be because market forces have decided that there should not be any such rewards.

Why Fabrications? Why Forgeries?

In an increasing number of foreclosure cases, homeowners are going head to head with the lawyers who file claims on behalf of entities on the basis of fabricated and/or forged instruments that in many cases were also recorded in county records. Lawyers like Dan Khwaja in Illinois are getting clearer and clearer about it. They hire experts who understand exactly how the notes are mechanically created and the endorsements are not real signatures.

The key question is why would the notes have been fabricated and forged when there actually was a closing and a note was actually signed? We’re talking about the financial industry whose reputation depends upon safeguarding all signed documents. If they didn’t safeguard the documents and instead destroyed them or “lost” them, why was that allowed to happen?

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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.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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So we have a case in Illinois where lawyers filed a judicial foreclosure on behalf of Bank of New York/Mellon (BONY) as trustee (i.e. representative of) “holders” of certificates. The lawyers attach a copy of a note and indorsements. Khwaja hired an expert who found quite definitively that the note and the endorsements were all fabricated (forged). Khwaja has filed a motion for summary judgment.

Here is my analysis:

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The lawyers who filed the claim have a serious problem. If they cannot convince the judge that they have no need to respond they are dead in the water. They must either pay someone to commit perjury or seek to amend with an actual original note. In view of prior studies that show that most (or at least half) of all notes were “lost or destroyed” immediately following the “closing” combined with your expert on hand, coming up with the original note is not an option.
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And that brings us to the question of “why?” If there really was a closing at which the borrower signed documents, why do they need fabricated documents? To me, the answer is simple. In order to sell the same loan multiple times they needed to convert from actual to imaged documents. The actual one had to disappear. And the handful of megabanks who had a virtual monopoly on tens of millions of mortgage transactions made it “custom and practice” to use images rather than actual documents. [This practice has spilled over to property sale contracts where neither party gets an original].
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And we have the additional issue which is presented by the foreclosure complaint. It says that BONY appears on behalf of the holders of certificates. The simple question is “so what?”
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Being holders of certificates means nothing. It leaves out any assertion that the holders of the certificates are owners of the certificates, or anything that might identify those “holders”. So the proceeds of foreclosure could then go to whoever was chosen by the parties actually pulling the strings.
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They are asking the court to fill in the blanks. They want the court to draw an inference without ever stating the fact to be inferred, to wit: the holders of the certificates are owners of the certificates who are therefore owners of the debt, note and mortgage. There simply is no such allegation nor any exhibit indicating that is true. The reason is that it is not true.
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So who is really the Plaintiff? Supposedly not BONY who is appearing in a representative capacity.
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If “sanctions” were applied against the “Plaintiff” BONY would claim it is not the actual party and that the unidentified “holders” of certificates are the proper party or perhaps an implied trust.
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So then is it the certificate holders, represented by BONY? But they don’t have any right, title or interest to the subject debt, note or mortgage. The prospectus and certificate indentures make that abundantly clear in most cases.
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Examining what happens after a foreclosure is “successful” provides clues. Neither BONY nor any certificate holder ever receives the actual money from the proceeds of the purported sale of the property.
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So who does?
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As the one party with actual control over the loan receivable, the investment bank that created the “securitization” scheme is the only party that comes close to being an actual creditor. But here is their problem: that loan receivable has been sold multiple times. This not only leaves them with no claim to the debt, but a surplus of funds over and above the amount due on what was the loan receivable. It’s basic accounting and bookkeeping. And if that were not true the banks would not be doing it.
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So in the real world it is the investment bank that gets the proceeds of a foreclosure sale. But they do it as the “Master Servicer” of an implied (and nonexistent) trust. The money simply disappears.
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In order to get away with selling the debt multiple times they had to make each sale a non recourse sale. And they did that. So the buyers of the debt, note and mortgage had no actual legal title to the debt, note and mortgage and no recourse to the borrower to collect on the unpaid debt.
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THAT leaves NOBODY as owner of a debt that has probably been extinguished and reveals the paper issued to buyers/investors as essentially the issuance of cash equivalent instruments (also known as currency). And THAT is the reason the banks, after  two decades of this nonsense, have yet to come to court and simply say “here is proof of our funding of the origination or purchase of the debt, note and mortgage.”
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If they did, they would be admitting to lying in millions of foreclosure cases over at least a 15 year period of time. Their scheme effectively concentrated the risk of loss on investors and borrowers while literally retaining all the benefits of supposed loan transactions for the sole benefit of the intermediaries, who then leveraged loans multiple times.
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This translates as follows: the money taken from investors is an unsecured liability of the investment bank. To be sure that has a value — but not a value derived from loans to homeowners. THAT value was taken by the investment bank who cashed in on it already.
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Note: For certain second tier investment bankers there were transition periods in which they were at actual risk. Examples include Lehman and Bear Stearns. But the top tier was able to sell forward on the certificates and never commit a single dime of their own money into the securitization scheme even in transition. But by pointing to Lehman and Bear Stearns they were able to convince policy makers that they were in the same position. This produced the “bailout” which was essentially the payment of even more money for losses that did not exist.
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In an odd twist of irony, Wells Fargo was the only party (2009) that admitted to no loss but was forced to take bailout money so that other “less fortunate” parties would not be singled out as weak institutions.
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In truth the AIG bailout and similar bailouts were merely payments of extra profits to Goldman Sachs and some other players, leaving investors and borrowers stranded with nearly worthless investments and collapsed markets for both homes, whose prices had been inflated by over 100% over value, and a nonexistent market for the bogus certificates that the Fed chose to revive by its purchasing program of “mortgage bonds” that were neither bonds nor backed by mortgages.
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Despite the complexity of all this, on a certain level most people understand that the banks caused the misery of the meltdown and profited from it.  They also understand that it is still happening. The failure of government to deal appropriately with the existential threat posed by the megabanks clearly played into and perhaps caused the social unrest around the world in the form of “populist” movements. And until governments deal with this issue head-on, people will be looking for political candidates who show that they are willing to take a wrecking ball to the banks and anyone who is protecting them.
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In the meanwhile, an increasing number of homeowners (again) are walking away from homes in the mistaken belief that they have an unpaid debt to the party named as the claimant against them.

Sheila Bair Had a Plan to Make Banks Pay for Dishonest Dealing Causing the 2008 Crash

Sheila Bair (ex FDIC Chairwoman) has always understood. She was fired for understanding. It’s hard to understand that the TBTF banks were NOT speculating and never lost any money. Harder still to understand how they stole trillions of dollars from the US economy. And finally harder still to understand how “lenders” could cause a crash.

It’s really quite simple. Usually prices and values are within the same range. Fair market value has always been closely related to the ability of people to pay for housing — i.e., household income. Prices rise when demand becomes high OR, and this is the big one, when the big banks flood the market with money.

Like the 2008 crisis if you look at the Case Schiller Index, you will see that prices went through the roof by unprecedented increases while fair market value was flatlined. The crash was thoroughly predictable and was predicted on these pages and by many other economists and financial analysts.

For more than two decades, maybe three, the housing market has been floating on a sea of unsustainable debt because the investment banks became the “source” of funds in a marketplace where their principal objective was movement of money instead of management of risk. That is because investment banks do that while commercial banks and other lenders don’t — unless they are paid to act as though they are the lender in a transaction where they have no risk. Then they will advertise to people with low FICO scores and anyone else whose loan is likely to fail. They bet on the failure of the loan and the collapse of certificates issued as derivatives.

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

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

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

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

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

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Hat tip Greg da Goose

https://www.huffingtonpost.com/entry/why-does-wells-fargo-still-exist_us_5b80148ee4b0729515126185

From Huffington Post:

“Wells Fargo may not even be the worst big bank out there. Citigroup, another merger monstrosity, is so poorly pieced together that today, Wall Street investors don’t even believe the bank is worth its liquidation price. JPMorgan Chase has notched 52 fines and settlements since the crash. Goldman Sachs has 16, three of them this year.

In a revealing interview with New York Magazine earlier this month, former FDIC Chair Sheila Bair said she wished regulators had broken up a bank after the crisis, probably Citigroup. [Editor’s note: Obama initially gave that order but Tim Geithner refused]. Forcing at least one institution to pay the ultimate corporate price would have put pressure on other major firms to clean up their acts.

Both the Bush and Obama administrations rejected Bair’s plan. And so today, the American banking system ― rescued by taxpayers a decade ago to protect the economy ― has transformed into a very large, very profitable criminal syndicate.”

So I ask the question again: “Why are foreclosure defense lawyers not more aggressive about challenging legal presumptions upon which the banks and judges rely?”
Legal presumptions are ONLY supposed to be used in cases where (1) the source of the document or testimony is credible and has no interest in the outcome of the litigation and (2) it serves “judicial economy.”
The banks have been publicly humiliated for acting like thieves, liars, fabricators, and the source of sophisticated mechanical forgeries. Neither they nor their puppet “servicers” are entitled to a presumption of anything. If they want to proffer a fact, make them prove it. These people are so not credible that we regularly talk about robosigners, robowitnesses and other people who are hired to say or write something about which they have no knowledge or understanding. Where is the credibility in that?
And equally where is the judicial economy? In all cases where the presumptions are used and the homeowner contests the foreclosure it would take FAR LESS time for the so-called lender to prove its case with actual facts (not presumed facts) than to spend years changing servicers, changing recorded documents, changing Power of Attorney, etc.
Where is the prejudice?  If the Defense raises issues as to the standing and facts alleged in the complaint or initiation of foreclosure proceedings, then the obvious answer is to have the “lender” prove their case with real facts in the real world that do not rely upon jsut testimony from robowitnesses or documents that have been robosigned.

Wells Fargo Bank: Fraud or “Error”

This was no mistake. It is one of many ploys to make modification unlikely or impossible. WFB wants foreclosures not modifications. That way they get to steal from investors, steal from homeowners and get away with it!

Once again, WFB is caught cheating homeowners, producing needless foreclosures (using the so-called “modification” process), leaving the homeowners in the dirt with an offer of $20,000 to settle the claims of fraudulent foreclosures.

Even though they claim the “error” existed — adding the attorney fees to the amount supposedly due — they knew three years ago and did nothing to  make the homeowners whole.

And this is a company that gets the benefit of the doubt when their lawyers proffer “documents” (i.e., fabrications) to the court seeking legal presumptions of validity.

The court is empowered to tell them they have no such presumptions and to prove the truth of the matters asserted. It’s time they did so.

see Wells Fargo Admits 400 Wrongful Foreclosures

Forbes: TBTF Banks have $3.8 Trillion in Reported Loan Portfolios — How much of it is real?

The five largest U.S. banks have a combined loan portfolio of almost $3.8 trillion, which represents 40% of the total loans handed out by all U.S. commercial banks.

See Forbes: $3.8 Trillion in Portfolio Loans

I can spot around $300 billion that isn’t real.

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

Purchase now Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense webinar including 3.5 hours of lecture, questions and answers, plus course materials that include PowerPoint Presentations. Presenters: Attorney and Expert Neil Garfield, Forensic Auditor Dan Edstrom, Attorney Charles Marshall and and Private Investigator Bill Paatalo. The webinar and materials are all downloadable.

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

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!

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

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When interviewing the FDIC receiver back in 2008 he told me that WAMU had originated around $1 Trillion in loans. He also told me that most of them were subject to claims of securitization (i.e., they had been sold). Then when I asked him how much had been sold, he said that Chase had told him the total was around 2/3. Translation: With zero consideration, Chase was about to use the agreement of October 25, 2008 as an excuse to claim ownership and servicing rights on over $300 billion in loans. Chase was claiming ownership when it suited them. By my count they foreclosed on over $100 billion of those “WAMU” loans and, for the most part, collected the proceeds for itself.

Point One: If there really were $300 Billion in loans left in WAMU inventory, there would have been no receivership nor would there have been any bankruptcy.

Point Two: If there were $300 Billion in loans left in WAMU inventory, or even if there was 1/10th that amount, neither the FDIC receiver nor the US Trustee in WAMU bankruptcy would have allowed the portfolio to be given to Chase without Chase paying more than zero. The receiver and the US Trustee would have been liable for civil and even criminal penalties. But they were not liable because there were no loans to sell.

So it should come as no surprise that a class action lawsuit has been filed against Chase for falsely claiming the payments from performing loans and keeping them, and for falsely claiming the proceeds on foreclosure as if they were the creditor when they were most clearly not. whether the lawyers know it or not, they might just have filed the largest lawsuit in history.

see Young v Chase Class Action – WaMu Loans – EDNY June 2018

This isn’t unique. Chase had its WAMU. BofA had its Countrywide. Wells Fargo had its Wachovia. Citi had lots of alter egos. The you have OneWest with its IndyMac. And there are others. All of them had one thing in common: they were claiming ownership rights over mortgages that were falsely claimed to have been “acquired through merger or acquisition using the FDIC (enter Sheila Bair screaming) as a governmental rubber stamp such that it would appear that they purchased over a trillion dollars in residential mortgage loans when in fact they merely created the illusion of those loans which had been sold long ago.

None of this was lost on the insurers that were defrauded when they issued insurance policies that were procured under false pretenses on supposedly non-securities where the truth is that, like the residential loans themselves, the “securities” and the loans were guaranteed to fail.

Simplistically, if you underwrite a loan to an family whose total income is less than the payments will be when the loan resets to full amortization you can be sure of two things: (1) the loan will fail short-term and (2) the “certificates” will fail along with them. If you know that in advance you can bet strong against the loans and the certificates by purchasing insurance from insurers who were inclined to trust the underwriters (a/k/a “Master Servicer” of nonexistent trust issuing the certificates).

see AMBAC Insurance Case vs U.S. Bank

The bottom line is that inside the smoke and mirrors palace, there is around $1 Trillion in loans that probably were sold (leveraged) dozens of times where the debt is owned by nobody in particular — just the TBTF bank that claims it. Once they get to foreclosure, the presumption arises that everything that preceded the foreclosure sale is valid. And its very hard to convince judges that they just rubber stamped another theft.

Add your name: Wells Fargo must root out fraud and corruption

https://johnchiang.com/add-your-name-wells-fargo-must-root-out-fraud-and-corruption/

 The John Chiang for California Governor is asking for a full, transparent investigation to fire executives responsible for the latest Wells Fargo scandals.  At least he acknolwedged Wells Fargo is a criminal enterprise.
Wells Fargo just admitted signing up hundreds of thousands of customers for auto-loan insurance they didn’t want or need.

It’s time for Wells Fargo to take responsibility for changing their corrupt corporate culture, so this doesn’t happen again.

I’m calling on Wells Fargo to begin a full, transparent investigation and fire the executives responsible for their latest scandal. Will you join me?

 https://johnchiang.com/add-your-name-wells-fargo-must-root-out-fraud-and-corruption/

Wells Fargo has ripped off Veterans, Auto Loan customers and Homeowners: The Feds do nothing.

Wells Fargo’s legal challenges pile up as the bank tries to rebuild customer trust

 https://www.usatoday.com/story/money/2017/08/08/wells-fargo-legal-challenges-pile-up/548186001/
Play Video

Wells Fargo CEO Tim Sloan took over the company last year after the fake accounts scandal. Time

LINKEDINCOMMENTMORE

New legal challenges are piling up for Wells Fargo as the U.S. banking giant tries to rebuild trust with customers and investors after a scandal over millions of unauthorized accounts.

The San Francisco-based bank says it has discovered “issues” involving customer refunds from optional guaranteed asset protection or so-called GAP coverage that’s sold to auto loan borrowers when they buy a vehicle.

Separately, a new federal lawsuit has accused Wells Fargo’s merchant services unit of misleading businesses about fees for credit card processing.

Added to a collision insurance policy, GAP coverage can help pay the difference between the amount a borrower would owe on a car lease or loan, and the total the insurer would pay if the vehicle is stolen or declared a total loss after an accident.

Borrowers typically are entitled to refunds for a portion of the GAP insurance premiums if they repay their auto loans early.

However, In the bank’s second-quarter earnings report issued Friday, Wells Fargo said it had discovered issues involving GAP insurance that could result in paying overdue refunds to customers in some states.

“During an internal review, we discovered issues related to a lack of oversight and controls surrounding the administration of guaranteed asset protection products,” Wells Fargo spokeswoman Catherine Pulley said in a statement issued Tuesday. “We believe we can make the refund process more consistent for customers in the future and make things right for customers in the past.”

Two of the bank’s federal regulators, the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau, declined to comment on the refund issue.

The Federal Reserve, which oversees the bank’s overall risk management compliance, as well as financial safety and soundness, said it does not comment on “confidential, firm-specific supervisory matters.”

The separate lawsuit against Wells Fargo’s merchant services unit was filed Friday by a Patti’s Pitas, a Pennsylvania restaurant, and Queen City Tours, a tour operator based in Charlotte, N.C.

Wells Fargo uses a confusing, 63-page program guide that outlines fees charged for processing credit card payments, the lawsuit alleged. However, the bank unit improperly “implements mark-ups by inflating ‘pass through’ costs, increasing agreed-upon fees, and imposing new junk fees,” the lawsuit alleged.

The lawsuit seeks class-action status on behalf of other companies that may have been overcharged.

“The accusations outlined against Wells Fargo in this lawsuit do not reflect how we operate our Merchant Services business. We believe our negotiated pricing terms are fair and were administered appropriately,” the bank said in a statement that added it plans “to defend against the misrepresentations outlined in the lawsuit.”

Wells Fargo has labored to make amends since the bank was hit with $185 million in penalties by federal and state officials for opening millions of accounts that may not have been authorized by customers.

The scandal stemmed from internal sales goals that pushed bank employees to open multiple accounts, credit cards, and other financial products for customers. The bank has since ousted some top managers, paid $3.26 million in customer refunds and revamped its compensation program to remove the sales goals from decisions on employee pay raises.

However, the bank’s latest quarterly earnings report disclosed that a continuing review of the embarrassing episode “may lead to a significant increase in the identified number of potentially unauthorized accounts” that tops earlier estimates.

Wells Fargo also acknowledged in late July that it would issue $80 million in refunds or account adjustments to more than 570,000 auto loan customers who were charged for vehicle insurance without their knowledge.

New York state’s banking and insurance regulator issued subpoenas for Wells Fargo records related to the forced insurance payments.

Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc

Wells Fargo customer: It felt like my car was held as extortion

Wells Fargo customer: It felt like my car was held as extortion

 http://money.cnn.com/2017/08/08/investing/wells-fargo-auto-insurance-scandal/index.html
Wells Fargo CEO: We must get back America’s trust

Imagine keeping up with your Wells Fargo car loan payment every month — but having your vehicle repossessed anyway. That’s exactly what Samir Hanef said happened to him.

“My car was held as extortion and I was forced to pay for Wells Fargo’s mistake,” Hanef told CNNMoney.

“The stress and anxiety … are truly indescribable,” said the clinical social worker from Durham, North Carolina.

Hanef is a victim in the latest Wells Fargo scandal. He is one of up to 570,000 auto loan borrowers that Wells Fargo has said it may have enrolled and charged for car insurance without their knowledge. Wells Fargo has admitted that as many as 20,000 of those customers may have defaulted on their car loans or had their vehicles repossessed in part due to these unnecessary insurance costs.

Wells Fargo told CNNMoney that it plans to work directly with Hanef to give him a refund.

“We are truly sorry for any inconvenience this caused our customers,” a Wells Fargo spokeswoman said in an email to CNNMoney.

Related: Wells Fargo may have forced 570,000 into unneeded auto insurance

Unlike most big banks, Wells Fargo’s auto loan contracts allowed the lender to obtain collateral protection insurance on a customer’s behalf if they failed to buy liability coverage themselves. Wells Fargo conceded that it bought insurance for some customers — and charged them for it — even when they had their own.

Lenders can impose collateral protection insurance on borrowers if their normal coverage lapses. It’s designed to protect from a financial loss in the event the borrower gets hit with an insurance claim, such as for an accident, and doesn’t have any coverage.

Wells Fargo told CNNMoney that it has discontinued this insurance program after “finding errors” that hurt some customers.

Most big banks don’t force auto insurance on borrowers who don’t have it. JPMorgan Chase (JPM), Bank of America (BAC), PNC Financial (PNC) and Santander Consumer USA told CNNMoney that they do not follow this practice.

This week, a New York regulator subpoenaed two Wells Fargo divisions, demanding the bank turn over loan agreements and other documents related to the auto insurance charges, a source told CNNMoney.

Related: Wells Fargo hit with subpoenas over auto insurance scandal

Wells Fargo’s auto insurance scandal comes nearly a year after the bank said it had created about 2 million potentially unauthorized checking and credit card accounts.

Hanef, a Wells Fargo customer for 23 years, said he took out a Wells Fargo auto loan in June 2014 to purchase a used Honda Civic. To be safe, Hanef said he always paid $300 per month, even though the bill was only $280.

The problem was that starting around March 2016, Wells Fargo (WFC) raised his monthly bill to $374 because it added the collateral protection insurance. Hanef insists he had auto insurance, so there was no need for Wells Fargo to charge him for more.

“My insurance never lapsed,” he said, echoing the claims of other customers. Wells Fargo told Hanef that it sent him notices about the insurance charges, but he never saw them.

Hanef said that he didn’t notice the insurance charges added to the monthly invoices sent to his home. He admits he stopped looking at the bill closely because for almost two years the amount due never changed.

“It always stayed the same,” Hanef said.

wells fargo insurance customer samir hanef
Wells Fargo customer Samir Hanef had his Honda Civic reposessed as part of the bank’s auto insurance scandal.

He didn’t know there was a problem until it was too late. Hanef’s Honda Civic was repossessed on December 27, 2016, according to a letter sent by Wells Fargo to Hanef and viewed by CNNMoney. Losing his car meant that Hanef missed work and inconvenienced his patients, many of whom have mental health and substance abuse problems.

Before he got his car back on January 10, 2017, Hanef said he was forced to pay the repo fee and get current on the loan — or risk losing the car for good.

“They told me the car would be sold on auction if I didn’t pay the ransom,” Hanef said.

Wells Fargo wrote Hanef a letter on January 31 saying it removed the insurance surcharge after he proved he had insurance. But the bank refused to refund the repo fee because it said he would have been late on his payments in any case.

The worst part? Hanef said his credit score has been “decimated” by the Wells Fargo experience, dropping more than 100 points. Now he’s not able to refinance his house.

Related: Wells Fargo ordered to rehire whistleblower

Wells Fargo said last week it’s “extremely sorry” for the auto insurance debacle. The bank promised to pay $80 million in refunds and account adjustments. Wells Fargo said it will also work with credit bureaus to correct errors in customers’ credit records.

Hanef is considering joining a class action lawsuit launched this week by the law firm Keller Rohrback over the auto insurance scandal. The firm reached a $142 million preliminary class action settlement with Wells Fargo earlier this year over the fake account scandal.

Senator Elizabeth Warren and some of her Democrat colleagues want to grill Wells Fargo CEO Tim Sloan and Chairman Stephen Sanger about the recent scandals. They wrote a letter on Tuesday to Mike Crapo, the Republican chairman of the Senate banking committee, requesting a September hearing. Crapo’s committee did not respond to a request for comment from CNNMoney.

Wells Fargo Alert: Shares fall Friday after filing warns ‘significant increase’ in unauthorized accounts

https://www.cnbc.com/2017/08/04/wells-fargo-shares-fall-after-filing-warns-may-find-significant-increase-in-unauthorized-accounts.html

Wells Fargo shares fall after filing warns may find ‘significant increase’ in unauthorized accounts

Tim Sloan, Chief Executive Officer of Wells Fargo & Company

Lucas Jackson | Reuters
Tim Sloan, Chief Executive Officer of Wells Fargo & Company

Wells Fargo shares fell Friday after a filing with the U.S. Securities and Exchange Commission showed a new review of the bank’s consumer sales scandal could reveal a “significant increase” in unauthorized accounts.

“We expect that our review of the expanded time periods … may lead to a significant increase in the identified number of potentially unauthorized accounts,” the firm said in the filing. “However, we do not expect any incremental customer remediation costs as a result of these efforts to have a significant financial impact on the Company.”

Wells Fargo said in the filing it expects legal costs could exceed what it has already set aside by $3.3 billion.

“To regain the trust we have lost, we must continue to be transparent with all our stakeholders and go beyond what has been asked of us by our regulators by reviewing all of our operations —leaving no stone unturned — so we can be confident we have done all that we can do to build a better, stronger Wells Fargo,” CEO Tim Sloan, who took the position in the wake of the sales scandal, said in a separate press release Friday.

Shares traded 1 percent lower.

Wells Fargo one-day performance

Source: FactSet

Wells Fargo said it has expanded the review to “cover the entire consent order period of January 2011 through September 2016, and to perform a voluntary review of accounts from 2009 to 2010.” The firm expects to complete the review by the end of the third quarter of this year.

The Consumer Financial Protection Bureau (CFPB) has also begun an investigation into whether customers were affected by Wells Fargo’s freezing and, in many cases, closing, of consumer deposit accounts, the filing said.

 

David Dayen Broadcasts: Wells Fargo deserves the Corporate Death Penalty

 

David Dayen also joins Ring of Fire Radio withScott Millican today.

https://www.youtube.com/watch?v=2DAvoAxehGw

Today on Ring of Fire, Investigative Journalist, David Dayen, will join us to unpack the latest Wells Fargo Bank scandal and why he thinks they should receive the corporate death penalty.

 

David Dayen: Wells Fargo Is Trying to Bury Another Massive Scandal

The bank became notorious last year for creating fake accounts on behalf of customers. Now it’s trying to kill a class-action lawsuit over shady debit card fees.

Wells Fargo became a poster child for corporations that abuse their own customers last year when it got fined for ginning up roughly 2 million (maybe even more) fake accounts to meet high sales goals. The bank has since tried to block customer lawsuits over that misconduct, using fine print buried in contracts known as the forced arbitration clauses, which force customers to go not before judges but a secretive non-judicial process to get relief.

It turns out Wells Fargo has a long history of using arbitration to evade legal scrutiny. In fact, for the past six years, Wells has tried to use arbitration to block a class-action suit that every other major bank in America long ago settled. This has not only delayed restitution for regular customers, but revealed exactly why Elizabeth Warren’s brainchild Consumer Financial Protection Bureau (CFPB) moved to eliminate class-action bans through arbitration clauses earlier this month: It hands big banks a license to steal with impunity.

The case centers on something called debit card reordering. Let’s say you have $100 in your bank account, and you make three purchases, costing $20, $30, and $110. Under Wells Fargo account guidelines, the bank can charge you a $35 overdraft fee for taking out more than you have in your account. But by reordering the transactions from highest to lowest, putting the $110 charge first, the bank could charge three separate overdraft fees, one for each attempt to draw insufficient funds. Simply by altering the transaction order, Wells Fargo could make an additional $70.

Multiply that by millions of customers, and you’re talking about serious money.

This was a common scheme in the banking industry for years, affecting the poorest customers—those most likely to overdraw their account. A 2014 federal report showed that approximately 8 percent of the US customer base paid nearly 74 percent of all overdraft fees. High fees are one reason the poor often stay out of traditional banks, but lack of access to banking also imposes large burdens from check-cashing and payday lending. In short, it’s very expensive to be poor in America.

Reordering has been ruled deceitful in federal court. Starting around 2008, consumers filed national class-action lawsuits against more than 30 different banks over these bogus overdraft fees. The cases got consolidated in 2009, in the Miami federal courtroom of US district court Judge James King. Most banks eventually settled with the plaintiffs: Bank of America agreed to pay $410 million in 2011; JPMorgan Chase promised $162 million in 2013. To date, banks have shelled out $1.1 billion in restitution for overdraft abuses.

Wells Fargo was the only one to keep fighting.

The bank knew it could be liable for a big payout. In 2010, a California judge ordered it to pay $203 million to customers in that state alone over deceptive overdraft practices. Wells fought that all the way to the US Supreme Court but lost last spring; they finally starting paying Californians in 2016.

A national class-action suit was supposed to compensate Wells Fargo customers in the other 49 states, but a 2011 US Supreme Court ruling offered the bank a potential reprieve. In AT&T Mobility v. Concepcion, a 5-4 decision effectively said companies could use arbitration agreements to ban class-action lawsuits. “Before that, it was assumed that consumers had a right to join a class action,” said Amanda Werner, campaign manager with the consumer groups Americans for Financial Reform and Public Citizen.

Literally two days after the Concepcion ruling was released, Wells Fargo filed to dismiss the overdraft case in favor of arbitration. But Wells had a problem: In both 2009 and 2010, Judge King explicitly asked banks if they wanted to file a motion to move to arbitration, and Wells Fargo declined, apparently preferring to try to win the case. Wells told the court then it “did not move for an order compelling arbitration… nor does it intend to seek arbitration of their claims in the future.” For two years, company lawyers took depositions and filed motions and did everything a litigant would do. Then, after receiving more favorable precedent from the Supreme Court on arbitration, Wells Fargo changed course.

Judge King denied the bank’s motion to dismiss at the end of 2011; Wells appealed to the 11th Circuit. In a unanimous ruling in 2012, the higher court denied appeal, arguing that Wells Fargo missed its chance at arbitration, and pointing out that lots of money and resources had already been spent on the case.

Two years ago, Judge King certified the class, meaning he officially allowed defrauded customers to band together and sue jointly. But the bank again tried to move to arbitration. This would have blocked anyone not named in the lawsuit from joining the suit, limiting millions of potentially affected customers. Judge King again denied the motion last year, writing, “Wells Fargo deliberately chose to pursue a strategy of litigation… it would be unfair to permit Wells Fargo to effectively ‘wait in the weeds’ and invoke arbitration… now that the alternate path the bank chose did not turn out as it had hoped.”

I think you can guess the next sentence: Wells Fargo appealed again, and the 11th Circuit will hear arguments next month. If the bank loses, it could appeal to the US Supreme Court—and all of this is happening before the trial can even begin. “The bank is being uniquely aggressive,” as Lauren Saunders, associate director at the National Consumer Law Center, a consumer justice organization, told me.

In a statement to VICE, Wells Fargo spokesman Kristopher Dahl said, “Wells Fargo continues to believe that arbitration is a fair, efficient and effective way for a customer to pursue a legal claim and resolve a legal dispute.” Dahl added that Wells Fargo stopped reordering debit card transactions in 2010, although they continued to do so for checks and automatic account withdrawals until 2014.

While Wells Fargo has been unsuccessful in blocking the overdraft case, they’ve already managed to punt for six years without having to pay up. (Even after the initial ruling in the California overdraft case, the bank spent six years appealing before eventually complying.) So through legal maneuvering, Wells Fargo could keep accountability for its deceptive practices at bay for years to come.

If the bank does prevail in moving the case to arbitration, people who got screwed and charged extra fees would have to pursue overdraft complaints by themselves. They would be at a major disadvantage: A recent study by the non-profit Level Playing field found that Wells Fargo customers have won only seven arbitration cases in the past eight years, out of just 48 that actually got to a final hearing. And just to pursue the case, consumers would have to spend heavily on legal representation and hearings. As federal judge Richard Posner of the Seventh Circuit Court of Appeals once wrote in a ruling, “The realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30.”

In this sense, arbitration can stop people from enjoying their legal rights, effectively allowing corporations to overturn the law by making it unenforceable. Deepak Gupta, who argued the Concepcion case in 2011, calls arbitration “a basic threat to our democracy.”

Incredibly, Wells Fargo went so far as to try and use a separate case to sweep this whole overdraft saga under the rug. In a $142 million settlement over the fake account scandal, Wells Fargo tried to fashion such a broad release—”any and all claims and causes of action of every nature and description”—that it could conceivably have forced some overdraft victims to give up their suits. Lawyers for the overdraft plaintiffs objected, and US district court Judge Vince Chhabria ordered the settlement rewritten to be narrower.

Congressional Republicans have been making noise in recent days about overturning the new federal ban on arbitration clauses that prevent customers from joining class-action lawsuits against their banks. Congress can use the Congressional Review act to kill regulations within 60 legislative days of their release; the rule was made final last week. But Republicans will have to explain why corporations like Wells Fargo would benefit from the rollback; the Consumer Protection Bureau’s director Richard Cordray even cited Wells Fargo—albeit over its fake account scandal—when announcing it.

We have an excellent idea of what corporations could do with such a gift: like Wells Fargo, they might try and make it virtually impossible for customers to prevent small-time rip-offs and change their shady behavior. And that could serve to just enable petty theft. In fact, according to one FDIC study, overdraft fee income at Wells Fargo in the first quarter of 2016 increased 16 percent relative to a year earlier, the largest uptick of 600 banks reviewed. We don’t know whether any of those fees were illegally gained, and if Wells Fargo has its way, we never will.

The new federal regulation on class-action suits against banks will not affect the Wells Fargo overdraft case; it doesn’t apply retroactively. But this real-world example of arbitration in action is so blatant that a Republican-led reversal of the rule would seem like a giant upturned middle finger at millions of Americans.

As Amanda Werner of Public Citizen put it, “I don’t know how [Republicans] can look a Wells Fargo customer in the eye.”

Follow David Dayen on Twitter.

Wells Fargo as MBS trustee ‘looted’ trusts to pay legal fees

http://www.reuters.com/article/us-otc-pimco-idUSKBN19X2NV

(Reuters) – Several Pimco investment funds are accusing the mortgage-backed securities trustee Wells Fargo of misusing noteholder money to pay its own legal expenses.

In a newly filed complaint in Manhattan State Supreme Court, the Pimco funds are asking for a declaratory judgment that Wells Fargo is not entitled to use MBS trust money to fund its defense against noteholder claims that the bank breached its duties as an MBS trustee. Pimco’s lawyers at Bernstein Litowitz Berger & Grossmann allege that Wells Fargo has improperly reserved about $95 million across 20 MBS trusts.

The Pimco complaint is the latest wrinkle in increasingly complex litigation between MBS noteholders and trustees. Pimco is one of several major institutional investors pursuing Wells Fargo, Deutsche Bank, HSBC and other MBS trustees for supposedly failing to take action against MBS sponsors as the trusts began to lose money. As I’ve reported, noteholders have managed to get past trustee dismissal motions in several big cases in state and federal court, but still face the considerable obstacle of providing loan-specific proof that trustees were obliged to demand the repurchase of deficient underlying mortgages and didn’t live up to that obligation.

The trustees have aggressively defended the cases. In May, for example, Wells Fargo’s lawyers at Jones Day filed third-party complaints in Manhattan federal court against the advisory arms of three of the funds suing the trustee, claiming that the advisory firms knew as much as Wells Fargo about problems in the MBS market and should be jointly liable if the trustee is socked with a judgment for tort damages.

The new Pimco complaint alleges that Wells Fargo is improperly paying its lawyers in the trustee breach cases with money that rightfully belongs to noteholders. The trustee’s litigation reserves were exposed in April, according to the complaint, when an entity called New Residential Investment Corp exercised rights to call in Wells-overseen trusts with an unpaid principal balance of about $309.5 million. The complaint alleges that Wells Fargo withheld $57.2 million to establish “trustee reserve accounts” to cover legal expenses stemming from litigation over its conduct as trustee. (Nomura analysts disclosed the Wells Fargo reserve accounts in a report in June.)

Pimco contends Wells Fargo is not permitted, under the MBS contracts for the 11 trusts at issue in its suit, to use trust money to defend against allegations of willful wrongdoing, bad faith or negligence. Those are precisely the claims at issue in noteholder litigation against the MBS trustee, according to the complaint. “Neither the (MBS contracts) nor the law permit Wells Fargo’s taxing of the investors it was supposed to protect to indemnify itself and to finance its actual and expected defense costs,” the complaint said.

Pimco’s suit isn’t the first time a noteholder has raised questions about the funding of an MBS trustee’s defense in this wave of investor litigation. In March, lawyers for Royal Park Investment (RPI) moved for a court order requiring MBS trustee Deutsche Bank to disclose any legal fees and expenses it had billed to MBS trusts at issue in RPI’s case against the trustee. Like Pimco in the new Wells Fargo case, RPI and its lawyers from Robbins Geller Rudman & Dowd claimed that the trust contracts did not indemnify Deutsche Bank for claims of negligence or misconduct.

Deutsche Bank’s lawyers from Morgan Lewis & Bockius countered that the trust agreements expressly indemnify the MBS trustee from fees and costs associated with its duties as trustee. The judge overseeing the dispute, U.S. Magistrate Barbara Moses of Manhattan, ruled that RPI’s request was outside the scope of her jurisdiction. She suggested that if RPI wanted to pursue the matter, it should file a preliminary injunction motion – although she also warned at oral argument that if she were RPI, “I wouldn’t be terribly optimistic about the outcome of that motion.” (There’s no indication in the RPI docket that Robbins Geller filed a preliminary injunction motion on Deutsche Bank’s legal fees.)

Wells Fargo sent an email statement on the new Pimco suit. The bank said that as an MBS trustee, it “is entitled to indemnification of its legal fees and expenses under the contractual agreements at issue. We believe the lawsuit filed by the Pimco funds has no merit and will be vigorously defending the claim.”

Pimco counsel Blair Nicholas of Bernstein Litowitz declined to provide a statement.

NYTimes Gretchen Morgenson: Wells Fargo accused of making improper changes to Mortgages

Editor’s Note: Wells Fargo is a lawless operation that exploits unsuspecting consumers by opening accounts in their name without permission, and modifying and foreclosing on homes it doesn’t own with fabricated notes and fraudulent documents.   Not to mention participating in identity theft and accessing credit reports without authorization.

Meanwhile, for the most part, Wells Fargo operates above the law and receives pathetically inconsequential penalties and fines for its illegal conduct.   If you continue to bank with Wells Fargo we implore you to look at its track-record and move your accounts to a local credit union or small bank.

Wells Fargo targeted undocumented immigrants, stalked street corners, lawsuit claims

On “Hit the Streets Thursday,” Wells Fargo bankers and tellers, specifically those of Latino descent, scouted the streets and Social Security offices for potential clients. Their goal: Find undocumented immigrants, take them to a local branch and persuade them to open bank accounts.

Others hit construction sites and factories, according to court documents. Knowing that undocumented workers there needed a place to cash their checks, Wells Fargo employees urged them to open new accounts while promising to waive check-cashing fees. Some offered the immigrants money to open an account.

The more people signed up, whether it was for checking and savings accounts, credit and debit cards, online banking or overdraft protection, the better. If they signed up for all of the features, even better. Each new account was considered a sale, and the more sales employees rack up, the better their future was with the company.

That’s according to former employees’ sworn statements obtained last month by a law firm that has been handling a shareholder’s lawsuit against Wells Fargo. Former bank managers, personal bankers and tellers say they were forced to resort to questionable tactics to meet the company’s unrealistic sales quotas.

Mark Molumphy, an attorney for the firm, said the sales practices, which spanned 15 years, were not a secret to the bank’s executives and should have also been known to its board members.

“The conduct we have come up with is scandalous,” another attorney, Joseph Cotchett, told the San Francisco Chronicle. “It’s outrageous to think that regulators let the bank get away with this.”

The alarming statements are the latest in a massive scandal that continues to engulf the San Francisco-based banking giant.

In September, Wells Fargo was forced to pay $185 million in regulatory penalties following revelations that more than 2 million bank and credit card accounts were opened on behalf of customers without their knowledge. The fraudulent accounts netted more than $2 million in fees charged to customers for services they didn’t sign up for.

Wells Fargo has strongly denied the allegations from former employees.

“These allegations are inconsistent with our policies, values and the relationships we work hard to build with all parts of our community. Wells Fargo has long been committed to providing bank services to immigrants in a manner that complies fully with the law, and we have controls in place to ensure we comply with requirements,” spokesman Ancel Martinez said in a statement. “[T]hese assertions are offensive, because they run counter to the expectations of Wells Fargo, and would be in violation of policies we have in place to safeguard against abuses.”

Wells Fargo CEO John Stumpf apologized in front of a Senate panel on Sept. 20, 2016. Wells Fargo has faced criticism for its handling of a scandal involving fake accounts set up by Wells Fargo employees. (Reuters)

The statements reveal that personal bankers and bank managers turned to unethical and potentially illegal ways to reach their daily quotas, while those who dared to report the bad practices were fired. They also raise questions about whether the alleged tactics may have violated federal law, which requires financial institutions to verify the identity of their customers.

Some of the practices involved creating fake bank accounts with fictitious names, and opening multiple accounts for customers, including undocumented immigrants, without their authorization, according to court documents. Federal law says that banks must first obtain information such as customers’ date of birth, address and identification number before opening accounts.

Ricky Hansen Jr., who worked for several years as a manager at Wells Fargo branches in Arizona, said in court documents he witnessed sales tactics “that started out okay but then evolved into massive fraud.”

Hansen said he discovered that one employee was opening 40 to 50 bank accounts under fake names every week, and funding those accounts by transferring other customers’ money. The employee later moved the funds back, after he’d received credit for the sales, hoping the customers didn’t notice. Hansen added that customer signatures on bank records appear to have been written by the same person using the same pen.

Still, the employee was praised by upper management, Hansen said. When he reported to the bank manager what he knew, he was told the employees’ sales were legitimate.

“You have to decide if you want a job here. You can either run with us or not,” Hansen recalled his district manager telling him, according to court records. “Play ball or get out.”

Hansen was later fired, while the employee he reported was promoted, he said.

Julia Miller, who worked at a Wells Fargo branch in Pennsylvania for eight years, said she received calls from her district manager every day, multiple times a day, to check whether daily quotas were being met.

“I was told by my supervisors to work our employees ‘like dogs’ to meet our sales goals,” Miller said, according to court records. “I was not allowed to pay my employees overtime if their quotas were not met and had to stay late to meet their sales objectives. I was personally forced to stay late and cold-call customers until the sales goals established by upper management were met.”

A branch in Wisconsin had what’s called “Call Nights.” Employees were asked to stay long after their shifts ended to call customers, said Angela Payden, a former personal banker who worked for Wells Fargo for three years. The wealthy ones are the target, and employees were urged to call them around 6 p.m., when they’re most likely in the middle of family dinners and are more likely to agree to sign up just to get off the phone. Employees signed them up for new credit card accounts with limits of $25,000 or higher, Payden said.

The emphasis was on what’s called the “Great Eight,” according to the former employees. That’s eight different products and services that employees are urged to have each customer sign up for to generate fees, Molumphy, the attorney, said.

The pressure of the job became so intense that it drove some employees to panic attacks and mental breakdowns.

Sarah Rush, who worked for United Healthcare, which contracted with Wells Fargo to provide mental health services to employees and their families, said about 90 percent of calls she received were from bank workers who were stressed out, anxious and depressed. At least one woman was suicidal, Rush said.

The practices at Wells Fargo first came to light in 2013, when the Los Angeles Times published a damning investigative report describing an aggressive sales culture that “has battered employee morale and led to unethical breaches, customer complaints and labor lawsuits.”

John Stumpf, Wells Fargo’s former chairman and chief executive, resigned in the wake of the scandal. Carrie Tolstedt, the executive in charge of Wells Fargo’s community banking division, left the company last year — with more than $120 million in retirement package. More than 5,000 low-level employees have been fired.

In February, Wells Fargo fired four executives as the company’s board of directors was completing an investigation into fake accounts believed to have been set up by low-level employees to meet sales quotas.

And in April, Wells Fargo ordered Stumpf and Tolstedt to pay a total of $75 million after the board’s six-month investigation revealed that bad sales practices stretched as far back as 2002.

Martinez, the Wells Fargo spokesman, said the company has made several changes to ensure that customers receive only the products they want.

“We continue to make additional improvements in our Retail Bank operations and we have eliminated product sales goals and introduced new compensation plan focused on customer experience for branch team members,” Martinez said.

A hearing on a motion to dismiss filed by Wells Fargo in the shareholder lawsuit is scheduled on Tuesday.

Renae Merle contributed to this story.

Wells Fargo: Brand-Control gone wrong

https://seekingalpha.com/article/4062540-wells-fargo-get-past-behind

It is remarkable how well Wells Fargo is performing given all that management is facing these days resulting from the “scandal” in the retail banking division.

New leadership has been put in place, but there is still little evidence that “control” has been reestablished and a new culture has been implemented.

The future of the bank depends upon the vision of the bank leadership and the execution of this vision, and this, at least at this point, has not been accomplished.

Wells Fargo & Co. (NYSE: WFC) turned in a “peer-beating” return on equity performance in the first quarter of 2017 of 11.54 percent.

That is the good news. From here it is all “downhill.”

The ROE was down from the first quarter in 2016, and down from the 2012-2015 period when returns were generally well above 12.0 percent and Wells Fargo was considered to be the commercial bank of the future.

One important factor here is that Wells Fargo was and still is a commercial bank, unlike most of its large competitors. Wells Fargo does not have investment banking and trading departments that can goose up earnings during times when financial markets are volatile, like JPMorgan Chase (NYSE: JPM) and Citigroup (NYSE: C).

Both JPMorgan and Citigroup posted impressive first-quarter gains in net income, boosted by 17.0 percent increases in trading results and substantial gains in fee income from debt issues.

Wells Fargo has to rely primarily upon dull old consumer and commercial banking business for most of its revenue.

Higher interest rates, for example, have resulted in some borrower pull back in recent months. Mortgage production was down, as were the fees on mortgage originations, which fell by 26 percent. Mortgage servicing income dropped by 46 percent.

Commercial and industrial loans were up, year over year, but by only one percent.

The net interest margin earned by Wells was actually down, year over year, falling from 2.90 percent to 2.87 percent this year. Note that the NIM at JPMorgan Chase and Citigroup rose over the same time period.

Perhaps the greatest hit to the Wells Fargo bottom line was the increase in expenses. Costs at the bank were up by almost 6.0 percent, and expenses as a share of revenue, an important gauge for management referred to as the “efficiency ratio,” rose to 62.7 percent above the banks’ target range of 55 percent to 59 percent.

There were two major contributors to the increase in the efficiency ratio. First, there were the direct costs associated with the retail banking “scandal” and the efforts of the consumer areas to repair relationships and maintain customers.

Second, there were the costs associated with hiring lawyers, consultants and other “risk professionals” to deal with the aftermath of the scandal.

But, the greatest challenge that Wells Fargo has to overcome is the decline in the brand.

The top management at Wells just cannot seem to get over the scandal and move on into the future. This, to me, is a shame and points to a real concern over the leadership of the bank.

As I have written about before, the reputation of a management is an all-important element of the culture of an organization. Once damaged, it is hard to build up, once again.

Earlier on, Wells Fargo had an outstanding record and its top management received high marks for the culture that was embedded in the organization. The return on equity of the bank was well above 15.0 percent, making it a leading performer in a tough industry.

Wells Fargo retained its image as a commercial bank, emphasizing commercial lending and mortgage lending and staying away from investment banking. Its focus kept it at the top of large bank performance during the Great Recession and put it in an enviable position for the subsequent economic recovery.

Something had changed, however, and the drive to sustain business led to practices that were unacceptable. The culture of the bank, at least in certain areas, declined and created a cancer. And, these practices were denied and covered up from others along the way.

And, as I have written before, these cancers eat away at the organization and have longer-term impacts on overall performance. And, these impacts linger.

Wells Fargo is facing the longer-term consequences right now and can’t seem to get rid of them. It appeared as if the top management changes were in the right directions and that the bank was, in fact, restarting,

Subsequent events, like the $75 million claw back last week of compensation from two top executives keeps the scandal before the public.

And, there was the release by the bank’s board not long ago of an independent investigation into what had gone on. This is just one of several investigations going on conducted by state and federal officials, including the US Department of Justice and the Securities and Exchange Commission.

Finally, the Board is facing a shareholder’s meeting on April 25 and there is a movement to vote against 12 of the 15 bank directors, including the Chairman Stephen Sanger.

“Crap” happens when you lose control of your culture. Right now, the new top management team is not doing what it needs to do to get Wells Fargo “restarted.” It must gain control over the message.

The bank is performing remarkably well given all that is going on at the bank and the distractions being faced by all employees and management, not only just the top management.

However, this is the time that the “new” leader needs to step up to the podium and show us what he (or she) is made of. It is time to “get the past behind it.”

Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article

Wells Fargo loan applications and originations plunge

by the Lendinglies Team

Wells Fargo’s Q4 earnings  last year created an alarm because with rising interest rates, bad publicity, and a slew of lawsuits from investors, governmental entities and homeowners, Wells Fargo appeared to be in for a rough ride.  Residential mortgage applications also plunged in Q4 by $25 billion from the prior quarter, while the mortgage origination pipeline plunged by nearly half to $30 billion.  The scenario was starting to look like the all time record lows seen in late 2013.

It appears Well’s troubles have not improved with the results from 2017 Q1 coming in.  Mortgage applications fell by another 23% to $59 billion.  This is a new low since the financial crisis occurred.  Mortgage origination’s are Wells Fargo’s signature product.

Although the Wells’ application pipeline wasn’t terrible at $28 billion, it reflects a troubling trend.

Mortgage originations plunged by 39% sequentially from $72 billion to only $44 billion but Wells spins this loss on higher interest rates and seasonal influences.  Since this number lags the mortgage applications, analysts predict that Wells Fargo will see post-crisis lows in the second quarter.

What these number truly reveal, is that the average American consumer cannot afford to take out mortgages when rates rise by as little as 1%, which is where they peaked in the first quarter. The FED is predicting another rate increase in June.  If the rate hikes continue it is fair to predict that the US domestic housing market will falter no matter what Pollyanna-ish predictions are coming from the fake media.

Anemic US consumer demand for mortgages is indicative of a recession and confirms the Fed is unable to raise rates without crashing the housing market. Furthermore, consumer loans also show a decline in every single category for one simple reason: lack of demand.  Lack of demand stems from more than rising interest rates but the inability to take on more debt, flat wages, inflation, and an inflated housing market.  People have once again over-leveraged themselves by purchasing homes that were artificially inflated by access to cheap money.   It sounds a lot like 2008 again.

JPM, Citi and PNC also confirmed today that the loan market has slowed slowdown and that the US is quickly approaching an economic contraction caused by excessive debt accumulation.  Trump is bullish on lower rates all of a sudden and bolstering the US Dollar.  The only way out is another quantitative easing and that won’t happen this time around.

 

 

Source: Wells Fargo

Wells Fargo faces another Investor lawsuit over defective mortgage securities

By the Lending Lies Team

Too Big to Fail behemoth Wells Fargo faces another lawsuit over faulty residential mortgage-backed securities.  As investors become aware of the fraudulent securities purchased, more lawsuits are sure to be ignited.

According to a Reuters article by Jonathan Stempel, U.S. District Judge Katherine Polk Failla in Manhattan said on Thursday that Wells Fargo must face litigation seeking to hold it responsible for billions of dollars of claimed investor losses.  Judge Failla is the same judge that ruled last week in Costa v. Deutsche Bank that the New York six-year statute of limitations applied.  It appears New York has a judge who applies the law as written.

The plaintiffs in this settlement include BlackRock, Pacific Investment Management, Prudential Financial and others.

From the article:

Failla’s 80-page decision covers five lawsuits, which comprise one of the largest remaining pieces of U.S. litigation seeking to hold banks liable for risky mortgage securities that were a major cause of the 2008 global financial crisis.

“It is plaintiffs’ contention that such allegations go far beyond many other RMBS trustee complaints, which themselves have been found sufficient to state a claim,” Failla wrote, without ruling on the merits. “The court agrees.”

While litigation that dates back to the financial crisis is winding down for Wells Fargo, it wasn’t too long ago that it reached a settlement that dealt with faulty MBS from that period.

Earlier in March, Deutsche BankRoyal Bank of Scotland, and Wells Fargo reached a $165 million settlement in class action lawsuit brought by pension funds over faulty crisis-era mortgages originated NovaStar Mortgage.

The lawsuit charged NovaStar, RBS, Wells Fargo and Deutsche Bank with “misleading investors into believing that the securities they bought were safer than they proved to be.”  This is likely the tip of the iceberg as many investors discover they bought a defective and costly product called mortgage backed securities.

Dave Krieger’s Clouded Titles: MISSOURI SUPREME COURT UPHOLDS SANCTIONS AGAINST WELLS FARGO!

MISSOURI SUPREME COURT UPHOLDS SANCTIONS AGAINST WELLS FARGO!

From the Clouded Titles Blog: https://cloudedtitlesblog.com/2017/03/03/missouri-supreme-court-upholds-sanctions-against-wells-fargo/

BREAKING NEWS — 

Whether you’ve caught wind of this or not, Missouri Attorney Greg Leyh will have a shot in front of a rural Missouri county jury to convince them that Wells Fargo’s (and others’) actions in wrongfully foreclosing against David and Crystal Holm of Clinton County warrant serious money damages.

See the Missouri Supreme Court opinion here: holm-v-wells-fargo-mtg-inc-et-al-sup-ct-mo-no-sc95755-feb-28-2017

Because of Wells Fargo’s evasive actions to thwart discovery, the county judge sanctioned Wells Fargo by striking their pleadings and preventing them from (1) presenting any evidence at trial; (2) objecting to the Holms’ evidence; and (3) cross-examining any of the Holm’s witnesses.  Wells Fargo maintained it never waived its right to a jury trial.  The circuit judge denied their request, held a bench trial, and entered judgment in favor of the Holms, quieting title to their home.

The Missouri Supreme Court reversed the quiet title action, but refused to vacate the sanctions award, and further held that the wrongful foreclosure “was supported by substantial evidence and was not against the weight of the evidence.”  What the new trial by jury will determine is what the Holm’s damages are for the wrongful foreclosure.  A recent trial in Clinton County resulted in a $4.7-million jury award.  The Holms were originally awarded $2.92-million in punitive damages as part of their overall award.

OP-ED —

The issue here is how a jury is going to treat Wells Fargo, given the recent spate of bad press surrounding the creation of dummy accounts to get the bank’s numbers up.  With the way that most rural folks view banks these days, it’s likely that Wells’s request for a jury trial may get them in more financial hot water than they bargained for, rather than just paying up and taking their loss with grace, lesson learned.  I personally don’t think it’s going to end that way for the bank and I’m sure the quiet title action that was vacated is going to be revisited.

Wells Fargo Foreclosure: Another Unconscionable Foreclosure Tale

http://www.fltimes.com/opinion/the-bigger-picture-foreclosure-fight/article_8221132a-e7bd-11e6-a8ee-3b3290e2624c.html

THE BIGGER PICTURE: Foreclosure fight

 

  • By SPENCER TULIS nyp2904@yahoo.com

 

 

In 1998, Leanne Labadee bought a three-unit home on Ogden Street in Penn Yan for $75,000. The 50-year-old faithfully paid her mortgage every month, the majority of the time with money orders.

She never missed a payment.

Like many, she received notices about her loan being resold to another mortgage company; federal banking laws allow financial institutions to sell mortgages or transfer the servicing rights to other institutions. Consumer consent is not required. It’s a common practice, and Leanne’s mortgage has been owned by at least three different banks.

In short, the secondary mortgage industry is huge.

In 2008, out of the blue, she was informed foreclosure proceedings were being started on her home unless the mortgage was paid in full. The mortgage company? Wells Fargo, an outfit that has dealt with controversy in recent years because of questionable business practices.

Leanne has been in a fight with Wells Fargo ever since, all the while still not missing a payment. She even enlisted Congressman Tom Reed to help fight on her behalf for two years — with no success.

One would think a few phone calls would be able to straighten things out. Leanne certainly couldn’t afford to fly to Wells Fargo’s headquarters in Des Moines, Iowa. Chances are it wouldn’t have mattered anyway because it seems no one can find all the paperwork and account information that relates to her property.

Her sister, Lori, has been a tremendous help in this fight. Leanne is disabled due to a combination of diabetes, depression and anxiety. The ongoing foreclosure threats have done little to improve her health.

Lori has a file full of paperwork; it’s a foot tall. She couldn’t tell you the number of phone calls she has made on Leanne’s behalf, contacting the Consumer Financial Protection Bureau and New York State Attorney General’s Office, to name just two.

When mortgages are resold, consumers are not supposed to become collateral damage during the process. Mortgage companies have a legal obligation to protect consumers. That means paperwork should never be lost and should never hinder a consumer’s chance to save their home from unnecessary foreclosure.

Famous last words and, ultimately, empty promises for Leanne.

Two weeks ago her home was sold at foreclosure for $55,000. Not only did she lose out on all the equity she has put in through the years, but she received a bill from Wells Fargo saying the home was foreclosed for $87,200, and they insisted she has to continue making payments for the $32,200 difference.

If there is a “smoking gun” here, it may lay in some of the paperwork she possesses with the name Steven Baum on it.

In 2010, a federal, class-action complaint on behalf of tens of thousands of New York state homeowners who lost their homes to an alleged foreclosure fraud began. The fraud was orchestrated for years by a New York “foreclosure mill” attorney along with major mortgage companies. The case is filed in the U.S. District Court, Eastern District of New York, entitled “Connie Campbell against Steven Baum.

The action seeks to return tens of thousands of foreclosed homes to their owners, or its value, along with hundreds of millions in punitive damages against Baum.

“Mr. Baum is an attorney who knows better, yet his foreclosure filings for parties who have no standing to sue confuse the courts and homeowners while he and his banking clients profit tremendously by throwing people on the streets after their bad loans sold by the very same banks become unaffordable to innocent people,” said Susan Lask, who filed the claim: “The aforementioned false foreclosure filings potentially hit tens of thousands of New Yorkers who were foreclosed upon.”

Baum has been accused of deliberate sloppy filings to hasten foreclosures on unwitting homeowners and courts. In 2012, he was fined $6 million.

Last week Leanne found a Rochester attorney who has agreed to represent her in her fight against this injustice.

She is now living with her sister.

 

CHECKLIST — FDCPA Damages and Recovery: Revisiting the Montana S Ct Decision in Jacobson v Bayview

What is unique and instructive about this decision from the Montana Supreme Court is that it gives details of each and every fraudulent, wrongful and otherwise illegal acts that were committed by a self-proclaimed servicer and the “defective” trustee on the deed of trust.

You need to read the case to see how many different times the same court in the same case awarded damages, attorney fees and sanctions against Bayview who persisted in their behavior even after the judgment was entered.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
 
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-

*

This case overall stands for the proposition that the violations of federal law by self proclaimed servicers, trusts, trustees, substituted trustees, etc. are NOT insignificant or irrelevant. The consequences of merely applying the law in a fair and balanced way could and should be devastating to the TBTF banks, once the veil is pierced from servicers like Bayview, Ocwen et al and the real players are revealed.

I offer the following for legal practitioners as a checklist of issues that are usually present, in one form or another, in virtually all foreclosure cases and the consequences to the bad actors when the law is actually applied. The interesting thing is that this checklist does not just represent my perspective. It comes directly from the Jacobson decision by the high court in Montana. That decision should be read, studied and analyzed several times. You need to read the case to see how many different times the same court in the same case awarded damages, attorney fees and sanctions against Bayview who persisted in their behavior even after the judgment was entered.

One additional note: If you think about it, you can easily see how this case represents the overall infrastructure employed by the super banks. It is obvious that all of Bayview’s actions were at the behest of Citi, who like any other organized crime figure, sought to avoid getting their hands dirty. The self proclamations inevitably employ the name of US Bank whose involvement is shown in this case to be zero. Nonetheless the attorneys for Bayview and Peterson sought to pile up paper documents to create the illusion that they were acting properly.

  1. FDCPA —abusive debt collection practices by debt collectors
  2. FDCPA who is a debt collector — anyone other than the creditor
  3. FDCPA Strict Liability 
  4. FDCPA for LEAST SOPHISTICATED CONSUMER
  5. FDCPA STATUTORY DAMAGES
  6. FDCPA COMPENSATORY DAMAGES
  7. FDCPA PUNITIVE DAMAGES
  8. FDCPA INHERENT COURT AUTHORITY TO LEVY SANCTIONS
  9. CUMULATIVE BAD ACTS TEST — PATTERN OF CONDUCT
  10. HAMP Modifications Scam — initial and incentive payments
  11. Estopped and fraud: 90 day delinquency disinformation — fraud and UPL
  12. Rejected Payment
  13. Default Letter: Not authorized because sender is neither servicer nor interested party.
  14. Default letter naming creditor
  15. Default letter declaring amount due — usually wrong
  16. Default letter with deadline date for reinstatement: CURE DATE
  17. Late charges improper
  18. Extra interest improper
  19. Fees even after they lose added to balance “due.”
  20. Notice of acceleration based upon default letter which contains inaccurate information. [Not authorized because sender is neither servicer nor interested party.]
  21. Damages: Negative credit rating — [How would bank feel if their investment rating dropped? Would their stock drop? would thousands of stockholders lose money as a result?]
  22. damages: emotional stress
  23. Damages: Lost opportunities to save home
  24. Damages: Lost ability to receive incentive payments for modification
  25. FDCPA etc: Use of nonexistent or inactive entities
  26. FDCPA Illegal notarizations
  27. Illegal notarizations on behalf of nonexistent or uninvolved entities.
  28. FDCPA naming self proclaimed servicer as beneficiary (creditor/mortgagee)
  29. Assignments following self proclamation of beneficiary (creditor/mortgagee)
  30. Falsely Informing homeowner they cannot reinstate
  31. Wrongful appointment of Trustee under deed of trust
  32. Wrongful and non existent Power of Attorney
  33. False promises to modify
  34. False representations to the Court
  35. Musical entities
  36. False and fraudulent utterance of a document
  37. False and fraudulent recording of a false document
  38. False representations concerning “US Bank, Trustee” — a whole category unto itself. (the BOA deal and others who “sold” trustee position of REMICs to US Bank.) 
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