Navigating LOST COMMUNICATION With “Servicers” Who Are in Reality Merely Steering You Into Foreclosure

Posted on December 26, 2019 by Neil Garfield

The main point is that borrowers must calibrate their thinking. Debtors are not dealing with anyone who wants to collect payments. They are dealing with someone who wants a foreclosure so they can steal the proceeds. The forced sale of the house generates revenue that is distributed to several players involved in the foreclosure effort and several players involved in the REO sale and eviction.

The rest of the money goes to the securities brokerage firm (investment bank) where there is no loan receivable account against which to credit the deposit. In short, while labeled as various vaguely described transactions, the substance of the deposit is that it is revenue even if it is not declared as such for tax purposes.

Against this backdrop a common complaint I receive is that borrowers are in good faith attempting to make payments or send documents requested by the “servicer” only to find that they are unable to do so or that the documents were lost. So they ask me what to do next.

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RULE #1: STOP CALLING THEM “THE BANK.” THEY ARE MOST LIKELY NOT THE BANK — AND THEY DO NOT EVEN QUALIFY AS SERVICERS IN MOST INSTANCES. THINK OF THEM AS SCAM ARTISTS WHO HAVE GAINED YOUR CONFIDENCE (I.E. CON MEN) TO PREVENT YOU FROM INQUIRING ABOUT WHO SHOULD BE RECEIVING YOUR PAYMENTS OR THE PROCEEDS OF A FORECLOSURE SALE. 

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Technically you are most likely NOT dealing with anyone who qualifies as a creditor nor even a debt collector, who could only be functioning on authority from an actual creditor. So theoretically you would be well within your legal rights to simply not pay money to a party who is not entitled to receive them.
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Reality is different from theory. While in past times anyone attempting to collect, process or enforce a debt would be required to disclose everything about their ownership, agency or authority, today virtually everyone presumes that any such party has legal status. Because of that presumption, refusing to make payments as demanded is fraught with the risk that (1) the pretender lender will declare you to be in default and (2) start enforcement proceedings against you based upon fabricated but nonetheless facially valid documentation.
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So my usual and primary advice is to refrain from any action or inaction that puts you in a worse position than the one you find yourself. And I always recommend at least consulting with local counsel before deciding on any course of action.
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That usually means you make the payments.
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The only other alternative is to file a lawsuit in which you ask to deposit the funds in the court registry because you want to make the payments but you don’t believe the party demanding those payments has any actual legal right to do so.
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INTERPLEADER: An interesting twist on this type of pleading could be that you file your lawsuit, asking for attorney fees, and name both the servicer demanding payment and the investment bank (securities brokerage firm(s)) that is/are most likely behind the securitization scheme. This would be an interpleader lawsuit that basically says I have this money, it is for a debt I owe, Party A demands it, but I think Party B might be the one to whom it is owed. I have no assurance from Party A that the money would be given to Party B or any other entity that has paid for the debt and is therefore entitled to receive the proceeds of my payments. I don’t care who gets it. I just want to know who to pay. 
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In a further twist (which could negate your right to receive attorney fees) such an action could also include a count for disgorgement if the court finds that the party demanding payment was not entitled to receive it. That could mean return or deposit of all money ever received by the parties named as respondents in the interpleader action.

Generally, disgorgement is a form of “[r]estitution measured by the defendant’s wrongful gain.” Restatement (Third) of Restitution and Unjust Enrichment § 51, Comment a, p. 204 (2010) (Restatement (Third)). Disgorgement requires that the defendant give up “those gains … properly attributable to the defendant’s interference with the claimant’s legally protected rights.” Ibid . Beginning in the 1970’s, courts ordered disgorgement in SEC enforcement proceedings in order to “deprive … defendants of their profits in order to remove any monetary reward for violating” securities laws and to “protect the investing public by providing an effective deterrent to future violations.”Texas Gulf,312 F.Supp., at 92.

Kokesh v. Sec. & Exch. Comm’n, 137 S. Ct. 1635, 1640 (2017)

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Federal jurisdiction could apply.

Whereas statutory interpleader may be brought in the district where any claimant resides ( 28 U.S.C. § 1397), Rule interpleader based upon diversity of citizenship may be brought only in the district where all plaintiffs or all defendants reside ( 28 U.S.C. § 1391 (a)). And whereas statutory interpleader enables a plaintiff to employ nationwide service of process ( 28 U.S.C. § 2361), service of process under Rule 22 is confined to that provided in Rule 4. See generally 3 Moore, Federal Practice ¶ 22.04.

State Farm Fire Cas. Co. v. Tashire, 386 U.S. 523, 530 n.3 (1967)

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In all events any attempts at communication or payment that are frustrated by the party demanding that payment should be documented by U.S. Postal Service, Certified Mail, return receipt requested — because your attempts will be denied. The robowitness or affiant on an affidavit will say there is no record of such attempts. LIke the above, an interim measure would be to pay the money into a trust account administered by an attorney or some other legally recognized escrow agent.
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I have seen many judges ask the borrower who relates this story what they did with the money after it was refused. If there answer is that they spent it, the judge often construes that as undermining the credibility of the borrower’s testimony. But if the borrower says it was paid into escrow where it still remains most judges regard that in a light favorable to the borrower and it raises their antagonism toward the lawyers and the servicer who are now presumed to have screwed things up even if they were actually entitled to collect, process or enforce the debt.
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PRACTICE NOTE: While actual tender of actual payment certainly bars any legal enforcement action to collect the tendered payment, it does not render the entire lien unenforceable. BUT if the notice of default and end of month statements show an amount due that should have been reduced by the amount of the tendered payment then the notice of default and subsequent notice of sale or lawsuit could be defective. And if the refusal to accept payment was part of a larger scheme to steer the borrower into foreclosure, that i sone building block in a case for illegal, fraudulent and/or wrongful foreclosure. 
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Beware of the proof requirements against a court bias that the borrower was probably trying to game the system. We all know that it is the other side gaming the system but the court presumes otherwise, partly because it is legally required to do so based upon the facial validity of the documents presented — even if they are fabricated. For that reason I frequently suggest attempts at payment or delivery of documents in person at a branch or regional office, witnesses to such attempts, photos, and even video, where it is legal to do so. Signs posted to the effect that there is video surveillance might suffice as permission to record. Check with local counsel.
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In addition, in litigation you can demand copies of recordings made at particular locations and/or times. The response will be they don’t have that recording but if you can get a judge to require them to produce the recordings on either side of the time frame in which the contact occurred, they will likely retreat because the absence of the video or audio recording will speak volumes about their conduct.

Filed under: burden of persuasion, burden of pleading, BURDEN OF PROOF, discovery, Discovery -Subpoena, evidence, Fabrication of documents, foreclosure, foreclosure defenses, Pleading, Presumptions, prima facie case | Tagged: , , , , , , | 1 Comment »

Hawaii Supreme Court: Yes to wrongful foreclosure counterclaim BEFORE foreclosure is completed and no to”plausible” pleading

Posted on October 12, 2018 by Neil Garfield

Now that the courts are no longer in fear of precipitating an economic meltdown, it’s time to return to legal decisions instead of political decisions. The Hawaii Supreme Court has done just that in a common sense decision that sweeps aside most of the Wall Street arguments against allowing homeowners to raise the fraudulent foreclosure issue. The decision goes back decades in reaffirming the law and the intent of the rules of civil procedure.

The bottom line is that homeowners must be allowed an opportunity to prove their claim at the same time they are defending a foreclosure action. This levels the playing field and hopefully is a harbinger of future decisions from the high court in each of the states.

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

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

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

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see Landmark Hawaii Supreme Court Case

BANK OF AMERICA, N.A., SUCCESSOR BY MERGER TO BAC HOME LOANS SERVICING, LP FKA COUNTRYWIDE HOME LOANS SERVICING LP, Respondent/Plaintiff-Appellee, vs. GRISEL REYES-TOLEDO, Petitioner/Defendant-Appellant,

Remember that while this decision could be used as persuasive authority, it is not binding authority over the courts of any state other than Hawaii.

There are several parts to this decision each consistent with the others.

  1. On a motion to dismiss, plausibility of the allegations are now irrelevant. The homeowner must be given the opportunity to prove the allegations of the complaint. As the Court correctly points out, the plausibility test requires some consideration of some facts that have not been proven or disproven. Hence the plausibility test conflicts directly with the presumption, on a motion to dismiss, that all allegations are true. “Notice pleading” is the law in Hawaii and purportedly is so in many other states where plausibility tests are nonetheless applied. This opinion may go a long way to reversing that erroneous trend.
  2. Notice pleading requires only a short plain statement of ultimate facts upon which the relief sought could be granted. But I would add that the rules about fraud and deceit are still in play, i.e., I don’t believe that any state, including Hawaii would allow a count sounding in fraud without giving some examples in the pleading of the misleading and/or deceitful way that the defendant(s) acted. This decision basically addresses violation of statute and similar kinds of actions.
  3. The implication of this decision is that the pleading should be short and that the homeowner must be given a fair chance to prove his/her allegations.
    1. I am quite certain that this Court would insist on allowing discovery to penetrate far more deeply that is currently generally allowed.
    2. The arguments that the actual transactions and the actual creditor’s identities are private, proprietary and remote was silly to begin with.
    3. This decision will be used by practitioners in Hawaii to demand access to records and to get it through court orders. This alone will result in a landslide of settled cases under seal of confidentiality — if lawyers for homeowners insist on such discovery.
  4. Further moving the ball forward, this Court decided emphatically that claims of wrongful foreclosure can be filed in a counterclaim against the parties involved with the  initiation of wrongful or illegal foreclosure proceedings. That means that contrary to California law and other states, the homeowner does not need to wait to file the claim.
    1. This is a two edged sword. It virtually mandates the filing of the wrongful foreclosure claim because the clock is probably ticking on the statute of limitations the moment the foreclosure is initiated by either judicial or nonjudicial means.
    2. The California doctrine has always been ridiculous and anti-consumer. By denying access to the courts for what is already known to be a wrongful foreclosure based upon false documentation they tie both hands behind the backs of attorneys representing homeowners in foreclosure cases.
    3. Knowing this, most lawyers are now declining representation of homeowners despite clear defects, lies and fabrication of documents relied upon by the lawyers supposedly representing a foreclosing party that many times does not even exist.
    4. Hence the doctrine that wrongful foreclosure claims ONLY arise after the foreclosure is complete produces an absurd result. Once the homeowner proves his/her claims they shouldn’t have lost their home, their life-style and their credit reputation, all based upon illegal acts that were known at the outset, the only remedy under that doctrine is money damages.
  5. The decision also addresses the very important issue of standing. Simply stated, if some party is designated as the foreclosing party, it is the duty of that party and the attorney representing that party to perform sufficient due diligence as to
    1. whether the entity exists,
    2. whether it has possession of the note,
    3. whether the note is endorsed to them by a party who owned the debt,
    4. whether the mortgage or deed of trust was assigned to them by a party that owned the mortgage and the debt, and
    5. whether the debt was in fact transferred from a party who owned the debt to the party claiming the right to foreclose.
  6. If they fail or refuse to perform that due diligence they are violating the law in Hawaii and most likely in dozens of other states. In Hawaii that alone gives rise to a cause of action for damages if damages can be proven, which in most cases is fairly easy. So they are liable for damages if they didn’t perform due diligence.
  7. If they did perform the due diligence and filed knowing that the threshold markers of legal standing are absent, it is malicious abuse of process, it is breach of statutory duties, and it is fraud because the filing of the the lawsuit is a representation that the due  diligence was completed and showed legal standing. And it is probably RICO.

Summary: While it is difficult to predict how and when other states will react to this opinion, it seems likely that this decision in the State of Hawaii will make jurists in other states very uncomfortable. The bias to rule for the alleged foreclosing party just received a blow to any rationality supporting that bias.

Filed under: foreclosure | Tagged: , , , , , , , , , , , , | 10 Comments »

Banks and Servicers Really DO Tell Homeowners Not to Pay — To Trap Them Into Foreclosure

Posted on November 1, 2016 by Neil Garfield

The story is basically the same. Hundreds of thousands of homeowners were told that in order to get refinancing or modification they needed to stop paying their monthly mortgage payments. This was a ruse. It was also practicing law without a license. It was a lie aimed at trapping homeowners into a position where they could not recover. Thousands of judges have heard the same story from hundreds of thousands of homeowners and still they refuse to believe it.

Get a consult! 202-838-6345

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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see http://ijr.com/2016/10/725120-bank-told-couple-not-to-pay-mortgage-while-refinancing-then-they-got-a-letter-that-ruined-their-lives/

The goal is to get homeowners into foreclosures. The plan is pretty simple. Use any means available to force the homeowner into a foreclosure. This takes several forms — one of which is the intentional “negligence” in the posting of payments and forced placed insurance that I have previously written about.

But by far the the largest scheme at work is the wrongful representation that homeowners must be 90 days behind in their payments in order to be considered for any modification or refinancing. It just is not true. And it never was true.

The script given to “representatives” (call centers) is careful not to specifically say “you must stop making payments and continue to make no payments for at least 90 days”. Instead the script contains a lie about how if they are current they cannot be considered for a workout, refinancing or modification.

And getting them to stop payments means that they won’t get refinancing because they will already be delinquent on their current “mortgage” loan.

And getting them to stop for at least 90 days means that for three months the beleaguered homeowners THINK they have some relief, while at the same time the “delinquency” is mounting to levels from which they can never recover.

All this is happening while the frightful homeowners receiving notices of foreclosure are told not to worry about it — it’s just one hand not knowing what the other is doing. But in the vast majority of cases the foreclosure notices are real and the promise of refinancing or modification is simply a lie.

ESTOPPEL: There actually is a legal doctrine that covers this situation without establishing a fiduciary relationship. Reasonable reliance upon a representation that misleads the homeowner into taking actions that work to their detriment is covered by the doctrine of estoppel. It works in many situations. The statement that homeowners must be 90 days behind to be considered for a workout, refinancing or modification is untrue. The homeowner is reasonably relying upon a large financial or non financial institution to give them correct information inasmuch as the institution has greater access better understanding of the laws and rules. If the homeowner reasonably relies upon such representations to his/her detriment the bank or servicer should be stopped, in a court  of equity, from taking advantage of an action that was the proximate result of their own representation.

Most judges and lawyers still look at the mortgage situation through the lens of law school and their early practice — before the era of “securitization fail” (Adam Levitin). The thought that banks would want loans to be non-performing is preposterous through that lens. But it would also be preposterous for those same banks to have spawned an era of fabricated, fraudulent and forged paperwork that led to multiple consent decrees and the 50 state settlement.

The plain truth is that the old lens is occluded, in need of cataract surgery.

If you remove the premise that the banks want the “loans” to be performing and substitute the premise that they want the loans to be non-performing, everything makes sense. Of course this dove-tails with my many earlier articles about the absence of an actual loan contract. The business model of the banks is essentially a cover-up and making a profit from the cover-up as much as the original illegal acts.

What the banks have succeed in doing in millions of foreclosures is the introduction of a court order into an otherwise false and broken chain of claims of ownership and authority by those who stole money from investors and now regard the loss of homestead as collateral damage to people who just don’t matter.

The court order or Judgment does something that none of the prior fabricated, forged, robo-signed documents could do on their own — it provides cover for all the preceding illegal acts because a court order is presumed to be the law of the case. The courts have been the unwitting pawns in this game whose strategy crosses both state and international boundaries.

And perhaps the really shocking thing about all this is that the bank crisis in 2008 was in actuality an illusion. The only thing the banks stood to lose was prospective profits. Their scheme hoodwinked the highest levels of government. That’s what happens when you rely on the conspirators to provide data on a crisis they created out of thin air. They knew there was nobody in government who could figure out why the banks were hard selling loan products that were (a) unprofitable and (b) doomed to fail. The banks did not engage is risky behavior. There was no risk to them. It was only risky for the rest of us.

Somewhere along the line here the courts are going to get cornered into finally deciding what happens when a thief steals money from someone and then uses some of the money to lend to someone else, without either the victim of theft or the “borrower” knowing the truth.

Filed under: foreclosure | Tagged: , , | 12 Comments »

“Credit Bid” Comes Under Scrutiny in 9th Circuit

Posted on September 16, 2016 by Neil Garfield

As I have been writing and talking about the forced judicial sales, my opinion has always been that in most cases there is an absence of evidence that the party making the credit bid was in fact the creditor thus entitled to make a “credit bid” at the auction. The credit bid is an allowance for the creditor to bid up to the amount of the debt owed to them without paying cash at the sale. This has been ignored since I first started writing about it. I think the credit bid is void and fraudulent if a non-creditor submits a credit bid when it is not the creditor. In nonjudicial states this is an easier proposition than in judicial states where a Final Judgment has been rendered.

This case is also notable because it finally addresses the issue of the liability of the Trustee on a deed of trust, concluding that if the party claiming to be the beneficiary was in fact not the beneficiary, and there is no evidence to suggest otherwise, the trustee is potentially liable. It would be helpful to pursue discovery against the Trustee, since it is always a “substituted trustee” that is in fact under the thumb or owned by the parties who are making self-serving declarations of their status as “beneficiaries” under the deed of trust. THAT of course provides grounds to object and challenge the substitution of trustee and everything that follows. If the self-proclaimed beneficiary is a nonexistent entity or otherwise does not conform to the statutory definition of a beneficiary, then it has no power to substitute a new trustee. And everything that the trustee does after that point is void. In discovery look for the agreement that says the new Trustee is indemnified and held harmless for all claims, violations etc. It’s there — but you need to force the issue.

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER. ALSO NOTE THAT THIS IS NOT YET PUBLISHED AND THEREFORE IS NOT MANDATORY AUTHORITY YET.
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see 9th Circuit decision, Jacobsen v. Aurora Loan Services, Case No. 12-17021

Wrongful foreclosure. We reverse the district court’s grant of summary judgment in favor of Aurora on the wrongful foreclosure claim. In California, the elements of a wrongful foreclosure action are (1) the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering. Sciarratta v. U.S. Bank Nat’l Ass’n, 202 Cal. Rptr. 3d 219, 226 (Ct. App. 2016). The district court erred by granting summary judgment on the ground that it found nothing wrong with the foreclosure sale.
First, the district court failed to review the record in the light most favorable to the non-movants when the district court assumed that the form of Aurora’s bid at the foreclosure sale was a cash bid. On appeal, the parties now agree that the form of the bid was a credit bid.
Second, a genuine dispute of material fact remains regarding whether Aurora properly made a credit bid. California law permits “present beneficiary of the deed of trust” to credit bid at the foreclosure sale. Cal. Civ. Code § 2924h(b). However, it is not uncontroverted that Aurora was the present beneficiary of the deed of trust. A deed of trust is “inseparable from the note it secures.” Yvanova v. New Century Mortg. Corp., 365 P.3d 865, 850 (Cal. 2016); see also Domarad v. Fisher & Burke, Inc., 76 Cal. Rptr. 529, 536 (Ct. App. 1969) (“[A] deed of trust has no assignable quality independent of the debt, it may not be assigned or transferred apart from the debt, and an attempt to assign the deed of trust without a transfer of the debt is without effect.”). The record contains evidence that Aurora did not “own” O’Brien’s loan before the foreclosure. ER 19-20, 136-38, 181. However, the record also contains evidence that Aurora is “currently in possession” of the original promissory note, which was endorsed in blank, although it is not clear from Aurora’s declaration when Aurora became the holder of the note.[4] [ER 179-80; 185-195]. It appears that there remains a question of fact whether Aurora was the “beneficiary” of the deed of trust at the time of the foreclosure and thus whether it was entitled to make a credit bid at the foreclosure sale, and we remand for the district court to address this issue in the first instance.
Moreover, in order to prevail on their claim of wrongful foreclosure, Plaintiffs must also show that they suffered prejudice or harm as a result of irregularities or illegalities in the foreclosure sale. Sciarratta, 202 Cal. Rptr. 3d at 226. Because the district court granted summary judgment to Aurora on a different ground, the court did not address the element of prejudice or harm. In the circumstances, we also deem it prudent to remand this claim to the district court to consider the prejudice question in the first instance. We therefore reverse the district court’s grant of summary judgment on the wrongful foreclosure claim and remand for further proceedings.[5]
AFFIRMED IN PART AND REVERSED AND REMANDED IN PART. The parties shall bear their own costs on appeal.
[**] The Honorable James V. Selna, United States District Judge for the Central District of California, sitting by designation.
[*] This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.
[1] The district court did not address standing. However, “[w]e may affirm on any ground supported by the record, even it if differs from the rationale used by the district court.” Buckley v. Terhune, 441 F.3d 688, 694 (9th Cir. 2006) (en banc).
[2] We GRANT both parties’ requests for judicial notice.
[3] In their reply, Plaintiffs suggest that their cancellation of instruments claim survives their contention that the note and deed of trust were void ab initio. Because this argument was first raised in the reply brief, we deem it waived. Delgadillo v. Woodford, 527 F.3d 919, 930 n.4 (9th Cir. 2008).
[4] Note that in today’s modern mortgage world, the “owner” of the underlying debt (that is, the entity who will receive the ultimate economic benefit of payments from the note, less a servicing fee) and “holder” of the note (the party legally entitled to enforce the obligations of the note) are not always one and the same. See, e.g., Brown v. Wash. State Dep’t of Commerce, 359 P.3d 771, 776-77 (Wash. 2015) (discussing modern mortgage practices and the secondary market for mortgage notes; “Freddie Mac owns [borrower’s] note. At the same time, a servicer . . . holds the note and is entitled to enforce it.“)(emphasis added). It thus appears possible that the “beneficiary” under the deed of trust would follow with the note (and with the entity “currently entitled to enforce [the] debt”), rather than the income stream. See Yvanova, 365 P.3d at 850-51; see also Hernandez v. PNMAC Mortg. Opp. Fund Investors, LLC, 2016 WL 3597468, *6 (Cal. Ct. App. June 27, 2016) (unpublished) (if the foreclosing party “could properly and conclusively establish . . . that it did hold the Note at the [time of foreclosure], that would be dispositive and preclude a wrongful foreclosure cause of action because a deed of trust automatically transfers with the Note it secures—even without a separate assignment.”)(citing Yvanova).
[5] We also reverse the district court’s grant of Cal-Western’s motion to dismiss the wrongful foreclosure claim. The trustee must conduct the foreclosure sale “fairly, openly, reasonably, and with due diligence” “to protect the rights of the mortgagor and others.” Hatch v. Collins, 275 Cal. Rptr. 476, 480 (Ct. App. 1990). Here, the complaint alleges that Cal-Western’s acceptance of a void credit bid was unlawful. If the credit bid was void and the acceptance of the credit bid was unlawful, Cal-Western failed to conduct the foreclosure sale with due diligence, and thus the complaint states a claim against Cal-Western.

 

Filed under: foreclosure | Tagged: , , , , , , , , | 8 Comments »

Does Yvanova Provide a Back Door to Closed Cases?

Posted on March 18, 2016 by Neil Garfield

That is the question I am hearing from multiple people. My provisional answer is that in my opinion there is a strong argument for using it if the property has not been liquidated after the foreclosure auction. There might be a grey area while the property is REO and there might be a grey area where the property has been sold but the issue of a void assignment is raised in an eviction procedure. It will strain the minds of judges even more, but these issues are certain to come up. As things continue to progress Judges will shift from looking askance at borrowers and thinking their defenses are all hairsplitting ways to get out of a debt and get a free house. Upon reflection, over the next couple of years, you will see an increasing number of judges taking the same cynical view and turning it toward the banks and servicers who in most cases function neither as banks or servicers.

The Yvanova court took great pains to say that this was a very narrow ruling. Starting with that one might argue it only applied to that specific case. But they went further than that and we all know it. SO it stands for the proposition that a void assignment can be the basis of a wrongful foreclosure. AND most BANK LAWYERS agree that is a huge problem for them, at least in California but they think it will adopted across the country and I agree with the Bank lawyers on that assessment.

The reason is simple logic. If the foreclosure is wrongful then it seems stupidly simple to say that it was wrong in the first place. If it was “wrong” the questions that emerge in legal scholarship arise from two main paths.

What does “wrong” mean. Or to put it in Yvanova language is wrong the same as void or is it voidable. This would have a huge impact on issues of jurisdiction, res judicata, collateral estoppel etc. Does it mean that it was wrong and you can get damages or does it mean that it was wrong and therefore the homeowner still owns the house. I lean towards the former not by preference but by what I think the court was saying between the lines. The whole point of nonjudicial foreclosure (amongst two other points that are obvious) is to provide stability and confidence in the title system. So if a wrong foreclosure occurs the title would most likely remain in whoever bought it at auction — although the purgatory in which many properties remain (REO) might create a grey area in which there is no prejudice in vacating the sale. Indeed if the party holding the “FINAL” title did so by fraud (using a void assignment) then equity would seem to demand return of title to the homeowner. AND THEN you still have the problem of evictions or writs of possession or whatever they are called in your state. Title is one thing but possession is another. If you raise the void assignment can you defeat possession even if you can’t defeat the title transfer? It would SEEM not but equity would demand that a thief not further the rewards of his ill-gotten gains.

Next path. Procedure, evidence and objections. Going back in time the homeowner might have objected or even alleged things that the Yvanova court now finds to have merit. So a lay person might think that is all they need is to show the void assignment and presto they have title or money or both in their hands. Not so fast. Due process is intended to allow a person to be heard and the justice system is designed and created to FINALIZE disputes, whether the decision is right or wrong. SO questions abound about what happened at the trial court level. But there was a remedy for that. It is called an appeal. And there are choices to even go to Federal Court if the state court is rubber stamping void instruments. But the time for doing that has expired on all but a few cases and the judicial doctrine of finality is the most difficult to overcome. Even a condemned man usually will be put to death even if there is actual evidence of innocence after a period of time has expired and a number of appeals have been exhausted.

SO that is my long winded way of saying I don’t know. If Yvanova opens the door to many new openings of closed cases, it certainly doesn’t say so. But a defense of a current case — even one amended to cite Yvanova, might fare much better.

The real answer: pick a path and try it.

Filed under: foreclosure | Tagged: , , , , , , , , , , , , , | 19 Comments »

Getting Your Goals Set on the Right Conclusions

Posted on December 28, 2015 by Neil Garfield

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

This for general information only and NOT an opinion on your case.
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I was responding to a client about the goals in opposing the wrongful foreclosures. These are hard to write or say. It might seem to be a contradiction in terms to walk away with a waiver of deficiency or some other “Settlement” or “Modification” with a party whom you know (but may not be able to prove) is false party with fake papers.

You might believe there might be as much as $50,000 in equity if and when repairs are made. My concern is that we don’t get pulled into reverse logic here. If the house is barely break-even without the repairs, then it could be wise to pursue short-sale or modification.  The real question is how much will it really cost to make the required repairs and where would you get the money from?

This is where most lay people put the cart before the horse. Equity in the home is not a matter for speculation, nor should it be calculated from a starting point of “after repairs.”

If you are looking for the pretenders to pay you damages sufficient to pay for the repairs and for them to give up on the foreclosure, it would be a mistake to assume that is going to happen without full scale litigation for wrongful foreclosure seeking money damages. That would require a lot of money in fees, costs and other expenses. You should determine whether  you have any appetite for that.

If you did have the money for repairs, then it would seem that you would have made the repairs and then sold the house, taking your equity and paying off whoever is claiming to own the loan, even if they don’t. If you don’t have the repair money, that leaves the only source of money to fix the house as the parties who wish to foreclose on it.

I have never seen them  agree to anything like that for one simple reason: They are not interested in either the house or the money. They want a foreclosure judgment and sale — that is the only path that will give them some protection against accusations of stolen money and stolen homes.

 

Since the goal of your opposition is NOT to break-even or minimize damages on the loan itself, and since their real goal is more closely related to off-record transactions in which your loan was sold multiple times, they obviously are not going to make it easier for you to save the home, save the equity, and especially [not] save the loan. They want the loan to fail not succeed. They want the foreclosure sale.

 

Now the anger and frustration nationwide with all forms of institutions flows in large part from the simple fact that we all know that the banks committed serious fraud and other illegal acts in creating these loans. We all know that there was nothing but pretense and presumption in transferring these loans and steering loans to foreclosure — rather than a workout where the original loan investments were protected, and of course foreclosure with fabricated, forged, back-dated documentation that included notes and sometimes mortgages — even if they were rescinded.

“We all know” is insufficient to prove a case or a defense. The courts have added to the problem by restricting discovery, restricting evidence on the basis that the off-record transactions (even in discovery) are irrelevant, that the money trail for the subject loan is irrelevant, and then entering orders and judgments consistent with the conclusion that might be stated as follows: “Judgment is entered in favor of the one with the most paper even if the paper does not speak the truth.”

 

My tentative conclusion, if all of my presumptions are correct, is that in situations where this analysis is relevant, on an individual basis, as a life decision, the only real goal might be to walk away without a deficiency judgment and leave it at that. Any other course of action in litigation will lead to a judgment in the trial court that statistically speaking is going to be against the homeowner, leaving the issues to be decided on appeal. That is process that will likely take at least one year and probably 2 years to complete.
From my perch of course I want all notes and mortgages to be contested if there are any claims of securitization or sale. And the proof of concept is already established — those who truly litigate all the way down to trial, have a much better chance to see a much better result than those who simply walk away. But that costs money, time and energy. And that is why I often tell lawyers and homeowners that the only right decision is what the homeowner decides to do and is willing to pay for.

Filed under: CORRUPTION, discovery, foreclosure, Servicer | Tagged: , , , , , | 38 Comments »

Missouri Wrongful Foreclosure: Trial Court Awards over $3 Million Including Punitive Damages and Quiet Title

Posted on January 29, 2015 by Neil Garfield

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

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see Quiet title Wrongful foreclosure Punitive Damages Missouri judgment.1-26-15.pdf ocr

Missouri had been impenetrable. Things change. This case finds that neither the GSE nor anyone else in the chain had the power to enforce the paper because they did not really have ownership of the loan, that their title was false, that quiet title is granted to plaintiffs, that foreclosure was wrongful, that compensatory damages are awarded and that punitive damages would be awarded. Total Judgment $3 million +.

Important takeaways —

  1. The tide has turned. Courts are no longer looking the other way on intentionally sloppy foreclosures that cover up a larger fraud on investors. The courts are not clear on how that occurred, partially because nobody has been allowed to present  it, but they have enough of a feel of the situation to see that there is something fundamentally wrong with the mortgage origination and foreclosure practices.
  2. Quiet title can be awarded supported only by a finding that the mortgage is unenforceable. Whether this will stick on appeal is unknown. My view is that the mortgage stays although there is nobody (yet) claiming a genuine right to enforce it.
  3. At this point, if the foreclosing parties don’t have it right, it is viewed as an intentional or grossly negligent act, giving rise to compensatory damages, attorney fees, costs, and punitive damages.
  4. The value of a wrongful foreclosure case might be $3 million + which falls into line with other decisions.
  5. Judges are getting angry over the fact that they accepted false representations in the past.
  6. Judges are perceiving the difference between the debt and the paper that purports to describe the debt — i.e., the note and mortgage. While it is not expressed in so many words, this decision and others like it, sees the paper as largely fictitious even though there is a genuine debt out there. By implication, the courts are saying the debt has no paper that applies and that therefore nobody should be allowed to enforce the paper. It is close to declaring the mortgage void ab initio.

Filed under: foreclosure | Tagged: , , , , | 10 Comments »

Title After Wrongful Foreclosure: Martha Coakley Getting to Heart of the Problem of Fraudulent Foreclosures

Posted on January 21, 2015 by Neil Garfield

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

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see Massachusetts Settlement: Fine PLUS Curing Title Defects

Martha Coakley gets it. She is the attorney general of Massachusetts. And she alone has enforced the law the way it should be enforced. When a bank or anyone else files a fraudulent foreclosure action they should pay for it AND the title should be corrected. If the foreclosure was false then the title is defective as shown in the county records. All previous national and state settlements were for money only. In this case four banks have agreed that they will pay a fine AND take all necessary steps to cure title. The four banks are the usual suspects — Bank of America (BOA), Chase, Citi, Wells Fargo.

Bank of America, Citi, JPMorgan Chase, and Wells Fargo were accused of violating Massachusetts foreclosure laws and the Massachusetts Consumer Protection Act by foreclosing on properties in the Commonwealth when they did not hold the rights to the mortgages, and therefore did not legally have the right to foreclose….

The Massachusetts AG office alleges in the amended complaint that the four banks ignored a fundamental legal mandate established in the Supreme Judicial Court’s Ibanez decision in January 2011 that mortgagees must strictly comply with the Commonwealth’s foreclosure laws. The Massachusetts foreclosure law states that a mortgage is void if whoever initiates the foreclosure does not hold the mortgage through valid assignment or is not the mortgagee of record at the time the foreclosure notice is published.

The complaint further alleges that the four banks did not obtain a valid assignment of the mortgage prior to publishing foreclosure notices on the properties and therefore the foreclosures should be invalidated. Also according to the complaint, the banks’ actions adversely affected the marketability and insurability of titles to numerous properties in the Commonwealth.

As part of the settlement, the banks will be required to assist consumers who claim the title to his or her residence is void from an unlawful foreclosure. Assistance will likely include conducting a thorough title review, providing curative documents, releasing junior leans held by banks, and paying costs associated with the title cure in cases where consumers do not have title insurance, according to the Massachusetts AG office.

Filed under: foreclosure | Tagged: , , , , , , | 50 Comments »

Pleading Wrongful Foreclosure

Posted on January 9, 2015 by Neil Garfield

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

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see https://fightforeclosuredotnet.wordpress.com/2013/12/12/what-homeowners-must-know-about-pleading-their-wrongful-foreclosure-cases-in-the-courts/
The above link provides some very good guidance about pleading wrongful foreclosure although it appears to relate more to non-judicial states than judicial states. Remember that pleading fraud not only requires specificity but must be proved. The fact that the foreclosure filing was wrong is one thing but proving it was fraudulent rather than negligent or breach of contract is quite another.

If you are in active litigation then seeking sanctions might be either an alternative or something in addition to a separate lawsuit that arises when the case is decided in favor of the homeowner. As we have seen over the last few years, the grounds upon which these cases are decided in favor of the homeowner vary widely. Some decisions show that the acts of Deutsch or Chase or Wells Fargo or CitiMortgage et al were committed with full knowledge of what they were doing and that they were playing a shell game on the court and on the borrower. Those cases seem more conducive for fraud or spurious litigation or wrongful foreclosure. A decision based upon non-compliance with paragraph 22 — defects in the notice of default or right to reinstate or notice of acceleration might be the subject of abuse of process and might not. But without more in the proof or opinion from the Court the issue of fraud or intentional tort of some other kind seems more difficult.

Lack of standing means the homeowner wins but it does not mean necessarily that a case for fraud or wrongful foreclosure will be successful. The opposition will respond (affirmative defense) that the mistake in standing does not establish any entitlement to damages or any other action by the court because the right to foreclose still exists on behalf of some entity. But this defense is basically a crystal ball defense unless there is an established creditor who is legally pursuing collection on the loan.

Cases in which the bank blocked the sale or refinance of the property, or unilaterally tried to avoid a modification, or where the borrower was in fact current when actions by the bank forced the borrower into the illusion of default are the best cases, in my opinion, for a wrongful foreclosure.

In short, the law is murky on these issues because the whole truth about securitization “fail” has not been fully absorbed and processed by the judicial system. Right now most judges are making rulings based upon the assumption that securitization is irrelevant — a view that is inconsistent with the the alleged right of the beneficiary or mortgagee to initiate foreclosure and pursue collection. The rights to do so exist in the PSA which is often admitted into evidence. Thus the same court that accepts the PSA into evidence will often rule that the provisions that require servicer advances (hence, no default as per books of the Trust or Holders of Certificates) or PSA provisions that block any right to pursue foreclosure or collection by the Trustee or the Trust are not relevant. But the general rule is that once a document is admitted into evidence the parties can use it any way they want.

Filed under: foreclosure | Tagged: , , , | 57 Comments »

Ocwen Settlement with NY AG Could Spell Doom for Servicers

Posted on December 23, 2014 by Neil Garfield

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

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The new settlement with New York’s Department of Financial Services calls for resignation of the Chairman (Erbey), payment of a $100 million fine, Payment of $50 million in restitution to borrowers who were wrongfully foreclosed, and a set of rules requiring Ocwen to help borrowers avoid foreclosure. Schneiderman, Attorney General, was prosecuting the case aggressively. This will add to the growing list of questions from judges over rotating servicers and trustees, servicing practices, robo-signing, forgery, fabrication of documents and the refusal of the foreclosing party to simply show the funding for the loan and the consideration paid for the acquisition of the loan.

Why is this important: it reflects an administrative finding that Ocwen has been wrongfully foreclosing on people from 2009 to the present. And it directs money and other assistance to homeowners who find themselves tangled in the complex web of deceit that we call securitization (Adam Levitin calls it “securitization fail” because the loans never actually made it into the trust — because the proceeds of sale of mortgage bonds were never given to the trust by the investment bank who sold them).

The fine is a fraction of what it should be and the amount set aside for victims of wrongful foreclosure is pathetic. And it basically leaves the completed foreclosures to stand even though it is obvious that Ocwen was following the directive “We are in the business of foreclosure, not modification). And while the settlement requires Ocwen to provide the complete loan file on request it fails to state what happens if they don’t and perhaps more importantly it fails to give details of what must be in that loan file even though they are widely known. Specifically, the completed loan file would show wire transfer receipts and wire transfer instructions from a party who was acting as a conduit for the investor money — a party unrelated to the REMIC Trust and not tied to the investors by contract.

Another key provision requires Ocwen to provide a detailed explanation of why and how a request for workout or modification was denied.

But remember this is one state. If all 50 states demanded the same results, based upon the New York findings there could be a global fine of $5 Billion and restitution ($2.5 Billion) for U.S. homeowners who are victims of wrongful foreclosure in the amount of $2.5 billion. And if you add the other servicers who have been doing exactly the same thing as Ocwen, the amounts increase geometrically.

A key provision of the settlement is continued monitoring. So if there is an issue with a foreclosure of a mortgage serviced by Ocwen, a complaint to the office of the attorney general or the office of the New York Department of Financial Services will help — perhaps even if you are not a resident of the state of New York.

One obvious concession to the banks is the reference to the onboarding process. In allowing Ocwen to purchase servicing rights (MSR) the reference is vague as to defining “onboarding.” This phrase is often being used in Court to avoid producing real records and real testimony from real companies who were real servicers. Judges, seeing only what is in front of them, are forced to rule that the records of the new “servicer” are business records within the exception provided under the hearsay rule in most states.

PRACTICE POINTER FOR LAWYERS: If you fail to argue that the business record must contain entries made at or near the time of the transaction, you will most likely end up with records from a “new” party who is not a servicer but whose records contain the alleged records of other servicers. I don’t see how the onboarding process could ever be accepted in lieu of records and testimony from companies who actually did servicing of the account — i.e., receipt of payments from the borrower and remittance to the creditors.

Here are some salient quotes from the article:

ATLANTA, Dec. 22, 2014 (GLOBE NEWSWIRE) — Ocwen Financial Corporation (OCN) (“Ocwen”) today announced that it has reached a comprehensive settlement with the New York Department of Financial Services (“DFS”) related to the agency’s recent investigation.

“We are pleased to have reached a comprehensive settlement with the DFS and will act promptly to comply with the terms,” said CEO Ronald Faris. “We believe this agreement is in the best interests of our shareholders, employees, borrowers and mortgage investors. We will continue to cooperate with the DFS in the implementation of the terms of this settlement which we believe will allow Ocwen to continue to focus on what we do best — helping homeowners.”

Under the terms of the settlement, Ocwen will pay a civil monetary penalty of $100 million to the DFS by December 31, 2014, which will be used by the State of New York for housing, foreclosure relief and community redevelopment programs. The Company will also pay $50 million as restitution to current and former New York borrowers who had foreclosure actions filed against them by Ocwen between January 2009 and December 19, 2014. As previously communicated in the third quarter of 2014, Ocwen recorded a charge of $100 million to increase its legal reserves in anticipation of a potential settlement with the DFS. Ocwen will record an additional $50 million charge in its fourth quarter 2014 financial statements to reflect the final settlement amount.

…. founder William C. Erbey will step down from his position as Executive Chairman of Ocwen, effective January 16, 2015. Barry Wish, a current director of Ocwen, will assume the role of Non-Executive Chairman on that date.

Ocwen has also agreed to non-monetary provisions relating to New York borrower assistance measures, a monitor-led oversight of Ocwen’s operations, interactions with related parties and certain corporate governance measures. MSR acquisitions will be subject to Ocwen meeting specified benchmarks as well as DFS approval.

A summary of the settlement terms is below.

Settlement Summary of Monetary Provisions

  • Ocwen will pay a civil monetary penalty of $100 million to the DFS by December 31, 2014, which will be used by the State of New York for housing, foreclosure relief and community redevelopment programs.
  • Ocwen will also pay $50 million as restitution to current and former New York borrowers in the form of $10,000 to each borrower whose home was foreclosed upon by Ocwen between January 2009 and December 19, 2014, with the balance distributed equally among borrowers who had foreclosure actions filed, but not completed, by Ocwen between January 2009 and December 19, 2014.

Settlement Summary of Non-Monetary Provisions

Borrower Assistance

Beginning 60 days after December 19, 2014, and for two years, Ocwen will:

  • Provide upon request by a New York borrower a complete loan file at no cost to the borrower;
  • Provide every New York borrower who is denied a loan modification, short sale or deed-in-lieu of foreclosure with a detailed explanation of how this determination was reached;
  • Provide one free credit report per year, at Ocwen’s expense, to any New York borrower on request if Ocwen made a negative report to any credit agency from January 1, 2010, and Ocwen will make staff available for borrowers to inquire about their credit reporting, dedicating resources necessary to investigate such inquiries and correct any errors.

Operations Monitor

  • The DFS will appoint an independent Operations Monitor to review and assess the adequacy and effectiveness of Ocwen’s operations. The Operations Monitor’s term will extend for two years from its engagement, and the DFS may extend the engagement another 12 months at its sole discretion.
  • The Operations Monitor will recommend and oversee implementation of corrections and establish progress benchmarks when it identifies weaknesses.
  • The Operations Monitor will report periodically on its findings and progress. The currently existing monitor will remain in place for at least three months and then for a short transitional period to facilitate an effective transition to the Operations Monitor.

Related Companies

  • The Operations Monitor will review and approve Ocwen’s benchmark pricing and performance studies semi-annually with respect to all fees or expenses charged to New York borrowers by any related party.
  • Ocwen will not share any common officers or employees with any related party and will not share risk, internal audit or vendor oversight functions with any related party.
  • Any Ocwen employee, officer or director owning more than $200,000 equity ownership in any related party will be recused from negotiating or voting to approve a transaction with the related party in which the employee, officer or director has such equity ownership, or any transaction that indirectly benefits such related party, if the transaction involves $120,000 or more in revenue or expense.

Corporate Governance

  • Ocwen will add two independent directors who will be appointed after consultation with the Monitor and who will not own equity in any related party.
  • As of January 16, 2015, Bill Erbey will step down as an officer and director of Ocwen, as well as from the boards of Ocwen’s related companies.
  • The Operations Monitor will review Ocwen’s current committees of the Board of Directors and will consult with the Board relating to the committees. This will include determining which decisions should be committed to independent directors’ oversight, such as approval of transactions with related parties, transactions to acquire mortgage servicing rights, sub-servicing rights or otherwise to increase the number of serviced loans and new relationships with third-party vendors.
  • The Board will work closely with the Operations Monitor to identify operations issues and ensure that they are addressed. The Board will consult with the Operations Monitor to determine whether any member of senior management should be terminated or whether additional officers should be retained to achieve the goals of complying with this Consent Order.

MSR Purchases

  • Ocwen may acquire MSRs upon (a) meeting benchmarks specified by the Operations Monitor relating to Ocwen’s onboarding process for newly acquired MSRs and its ability to adequately service newly acquired MSRs and its existing loan portfolio, and (b) the DFS’s approval, not to be unreasonably withheld.
  • These benchmarks will address the compliance plan, a plan to resolve record-keeping and borrower communication issues, the reasonableness of fees and expenses in the servicing operations, development of risk controls for the onboarding process and development of a written onboarding plan assessing potential risks and deficiencies in the onboarding process.

Filed under: foreclosure | Tagged: , , , , , , , , , | 22 Comments »

Articles of Deception: PSA and Reynaldo Reyes Affidavit for Deutsch Bank as Trustee

Posted on November 17, 2014 by Neil Garfield

WITHOUT CONFUSION AND OBFUSCATION, COMBINED WITH STONEWALLING, THERE WOULD BE NO FORECLOSURE OF ANY DEBT SUBJECT TO CLAIMS OF SECURITIZATION —- NEIL GARFIELD, WWW.LIVINGLIES.ME

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

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Hat tip to Carol Molloy who sent me the affidavit

See Reynaldo Reyes Affidavit New Jersey Union County 2010 CCF11162014

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Reynaldo Reyes, AVP of Deutsch Bank said to a borrower, in a taped interview, that the whole scheme was “counter-intuitive.” In plain language that means that nothing is what it appears to be. And THAT in turn means that disclosures” were deceptive or “counter-intuitive.” And THAT means that the disclosures at closing were also “counter-intuitive” or deceptive. Reyes in a sworn affidavit drafted many times and edited by various top level attorneys for the banks has submitted an affidavit on behalf of Deutsch Bank but which will be used by Banks to try to legitimize their deceptive tactics. Again, to put it simply, they were lying to everyone — investors, borrowers, regulators, law enforcement, Congress, and the President.

Witness the following paragraph from Reyes’ affidavit. Here he says in the affidavit in Paragraph 1, that the Trustees serve the Trust. But then he takes it all back by saying that the Servicers perform all the functions of administering the loans — not on behalf of the Trustee, but rather on behalf of the Trust. THAT can only mean that the named Trustee, is not the Trustee. It means that the power of administering the Trust assets is with the servicers. Does that mean the servicers should be sued for wrongful foreclosures? Then why is the Trust named or the Trustee named?

So the beginning of the PSA, which designates a Trustee, is merely window dressing to give the impression that Deutsch Bank is the Trustee with all the powers of a Trustee, when in fact, the servicer is the one who performs most or all of the functions of a Trustee. But they do so giving the impression that they must go back to the Trustee or the “investor” when in fact they assert the power to do everything. In their circular reasoning, they could say to the court that they must get approval from the investor and then leave the court room. Then they speak for the investors, according to the servicers. So now they come back to the homeowner or homeowner’s counsel and say the application for modification or settlement has been declined. Whether that assertion turns out to be true after analysis in court is another story.

This is contrary to the position taken by U.S. Bank and Deutsch Bank and BONY Mellon in foreclosure cases where they sue for foreclosure in their own name as Trustee for the REMIC Trust. It also accounts for why they sometimes sue as Trustees for the certificate holders, and sometimes even get away with saying they are trustees only for the certificates delivered to the investors. This of course makes no sense, since they are neither holding nor asserting ownership over the certificates.

Paragraph 7: No entity services loans on behalf of the trustees. The trustees and the loan services that are appointed by the the PSA’s each perform their designated functions on behalf of the trusts. In other words, loan servicers to service mortgage loans that have been pooled and sold into a securitization trust are performing services on behalf of the trusts, not on behalf of the trustees.

Then we get to Paragraph 10 which admits that the Trustee has neither any accounts nor any information or business records of its own. According to this paragraph 10, the Trustee receives loan level data from the servicers “to facilitate certain payments to bondholders.” But wait here comes the language that takes all THAT away: “However, for a number of trusts” [unspecified, but probably all of them] “a party other than the Trustee handles those payments responsibilities.” And then the rest is taken away by his statement that “With respect to the Trusts for which the Trustees serve as a Trustee but not as securities administrators, the Trustee do not receive loan level data.”

Get it? Just like the PSA, Reyes’ affidavit says one thing and then takes it all away in the next breath. The fact is that in virtually no case is the Trustee the securities administrator. And that, Reyes, says means that the Trustee neither gets loan level data, nor does it make payments to the bondholders. “Other parties” perform those functions. Who? The servicer who is according to Reyes the party with the actual powers of the Trustee. So why is Deutsch claiming to be a Trustee.

The answer is very simple — MONEY. The sellers of mortgage bonds pay Deutsch to rent their name to underwriters to make it appear as though an independent fiduciary is handling the money, the purchase or origination of loans, and the enforcement or modification of loans. This is meant to deceive the investors into a false sense of complacency. The same is true for borrowers, although at this point “complacency” would hardly be the word.

Everyone believed the wording at the beginning of the PSA and practically nobody read the PSA from end to end to see that the beginning was sales material and the end was a hodgepodge of obfuscation to make it difficult if not impossible to determine the identity of the players or what they were doing. This analysis can certainly NOT be done without reference to the underlying transaction in which we see who actually sent money to originate the loans, from whom they received the money etc.

The fact is that that while most people think the Trusts acquired the loans by sale of the loans into the trust, the evidence shows that practically none of them were sold to the Trust. The only logical conclusion from the facts at hand is that the investors’ money was pooled in an entirely different scheme while hiding behind claims of securitization.

The investors money was used directly, without their knowledge or consent, to fund origination of loans like the toxic Pick a Pay, reverse amortization, payment increase cap (usually 7.5%) that results in what appears to be affordable payments, but also results in uncontrolled liability.

A $139,000 loan that I recently analyzed, indicates the eventual liability could be nearly $4 million — all at the end of 30 years of payments, resulting in an undisclosed hidden balloon payment in the 13th payment and every payment thereafter which thanks to the miracles of compounding interest and an adjustable rate that could go as high as over 12% APR process an obligation that looks affordable but is infinitely not affordable. The interest alone on the new principal (original balance + deferred interest on negative amortization loan) could exceed $24,000 per month on a $139,000 loan.

Then you get to paragraph 11: Here the affidavit produces more obfuscation by referring to the Master Servicer who might (or might not) be responsible for performing any duties. But in the PSA you see the ultimate authority for virtually everything lies with the Master Servicer, who also turns out to be the the underwriter and seller of mortgage bonds. And since we now know that the Trustee had neither trust accounts nor any control or responsibility for the accounts, THAT makes it impossible for the Trustee to have received any proceeds from the sale of bonds issued by the Trust.

Since a Trust cannot operate except through the Trustee by law (see New York law and the law of your state for more information) it is an inevitable conclusion that there were no accounts established for the Trust in the manner expected by the investors who bought the mortgage bonds. And since there was no money in the Trust, the Trust could not have originate or purchased any loan documents, regardless of whether or not there was in fact an underlying loan transaction at the base of the chain relied upon by these parties when they foreclose.

Then Reyes gets to the meat of why he submitted the affidavit. BONY Mellon did the same thing by a lawsuit and so have hundreds of investors, insurers, guarantors, holders of loss mitigation hedge contracts, whose cases have been quietly settled. Reyes states that “the Trustee would not be in the best position to address further inquiries by the Court concerning any possible ‘irregularity in the handling of foreclosure proceedings.’” So to put it simply, Reyes is disclaiming any role in foreclosures and trying to distance Deutsch bank from wrongful foreclosures [i.e. most or nearly all of them] despite its APPARENT AUTHORITY.

Examination of the PSA reveals deep within its pages, prohibitions and restrictions against either the Trustee or the bond purchasers (“trust beneficiaries”) from knowing or even inquiring about anything involving the business of the trust, which we already know never existed because the trust never received its IPO (bond sale) money. This is why servicers assert control over the settlement and modification process. This is why they say the investor declined the modification or settlement because they never contacted the investor or the trust or the Trustee.

The truth is that the servicers assert, in the final analysis, the right to speak for the investors even thought they have a patent CONFLICT OF INTEREST RESULTING FROM SERVICER ADVANCES. A true servicer would be required to mitigate the damages and minimize the losses. Servicers have no interest in doing that because they can make a ton of money for having advanced the principal and interest payment to the creditors from an account that contained the investors money and that would count, as stated in the PSA, as payment in full to the creditor — so the creditor could not declare a default against the servicer.

And THAT is why these foreclosures are pushed through, among other reasons, [avoiding workouts, modifications and settlements] to wit: the foreclosures proceed even though the creditors (investors) are being paid right through the date of foreclosure. The reason is the banks want to “recover” those “advances” (paid from money stolen from the investors) not from the borrower and not from the creditors, who have already been paid, but through a claim against the final liquidation of the property to a third party “innocent” purchaser. BY controlling the foreclosure process, the servicer gets paid a lot of money and protects the banks against claims for refunds and damages arising out of the improper loan practices, loan processing by the servicer, and wrongful foreclosures.

So far the servicers have fooled the courts into thinking that their claim to recover servicer advances is somehow secured. It isn’t. In order to do that the court would be required to issue a declaratory judgment specifying the breakup of the mortgage lien on a continual basis for each servicer advance or find that the total advanced by the servicer from the underwriter’s controlled slush fund, is subject to an equitable mortgage lien. Equitable liens are not accepted in virtually any court because ti would require the buyer of property to make exhaustive investigation into matters that a re not contained on the face of the note or mortgage.

PRACTICE NOTE FOR LAWYERS:

You might want to get the court to take judicial notice of the affidavit and just to be on the safe side get a certified copy of it. You might want to file a motion for involuntary dismissal based upon the affidavit of Reyes who was THE person in charge of the trustee “program.” Think also about a subpoena for Reyes to appear at trial, if there is one.

Reyes is saying that only the servicer can enforce. And he is saying that when the servicer acts, it does so for trust NOT THE TRUSTEE. So the Trustee, according to him is not a proper party to bring the action. The inference corroborates what I have been saying all along. It is that the investors are the real parties in interest and the servicer is acting in a representative capacity — IF IT IS THE TRUSTEE NAMED IN THE TRUST INSTRUMENT (THE PSA).

Filed under: foreclosure | Tagged: , , , , , , | 14 Comments »

9th Circuit (Federal) Allows Quiet Title and Damages for Wrongful Filing of False Documents

Posted on June 13, 2014 by Neil Garfield

Hat Tip to Beth Findsen who is a good friend and a great lawyer in Scottsdale, Az and who provided this case to me this morning. I always recommend her in Arizona because her writing is spectacular and her courtroom experience invaluable.

This case needs to be analyzed further. Robert Hager (CONGRATULATIONS TO HAGER IN RENO, NV) et al has succeeded in getting at least a partial and significant victory over the MERS system, and voiding robosigned documents as being forged per se. I disagree that a note and mortgage, once split, can be reunified by mere execution of an instrument. They are avoiding the issue just like the “lost note” issue. The rules of evidence and pleading have always required great factual specificity on the path of transactions leading up to the point where the note was lost or transferred. This Court dodged that bullet for now. Without evidence of the trail of ownership, the money trail and the document trail all the way through the system, such a finding leaves us in the dark. The case does show what I have been saying all along — the importance of pleading and admitting to NOTHING. By not specifically stating that there was no default, the court concluded that Plaintiffs had failed to establish the elements of wrongful foreclosure and left open the entire question about whether such a cause of action even exists.

But the more basic issue us whether the homeowner can sue for quiet title and damages for slander of his title by the use and filing of patently false documentation in Court, in the County records etc. The answer is a resounding YES and will be sustained should the banks try to move this up the ladder to the U.S. Supreme Court. This opinion changes again my earlier comments. First I said you could quiet title, then I said you first needed to nullify title (the mortgage) before you could even file a quiet title action. Now I revert to my prior position based upon the holding and sound reasoning behind this court decision. One caveat: you must plead facts for nullification, cancellation of the instrument on the grounds that it is void before you can get to your cause of action on quiet title and damages for slander of the homeowner’s title. My conclusion is that they may be and perhaps should be in the same lawsuit. This decision makes clear the damage wrought by use of the MERS system. It is strong persuasive authority in other jurisdictions and now the law for all courts within the 9th Circuit’s jurisdiction.

Here are some of the significant quotes.

Writing in 2011, the MDL Court dismissed Count I on four grounds. None of these grounds provides an appropriate basis for dismissal. We recognize that at the time of its decision, the MDL Court had plausible arguments under Arizona law in support of three of these grounds. But decisions by Arizona courts after 2011 have made clear that the MDL Court was incorrect in relying on them.
First, the MDL Court concluded that § 33-420 does not apply to the specific documents that the CAC alleges to be false. However, in Stauffer v. U.S. Bank National Ass’n, 308 P.3d 1173, 1175 (Ariz. Ct. App. 2013), the Arizona Court of Appeals held that a § 33-420(A) damages claim is available in a case in which plaintiffs alleged as false documents “a Notice of Trustee Sale, a Notice of Substitution of Trustee, and an Assignment of a Deed of Trust.” These are precisely the documents that the CAC alleges to be false.
[Statute of Limitations:] at least one case has suggested that a § 33-420(B) claim asserts a continuous wrong that is not subject to any statute of limitations as long as the cloud to title remains. State v. Mabery Ranch, Co., 165 P.3d 211, 227 (Ariz. Ct. App. 2007).
Third, the MDL Court held that appellants lacked standing to sue under § 33-420 on the ground that, even if the documents were false, appellants were still obligated to repay their loans. In the view of the MDL Court, because appellants were in default they suffered no concrete and particularized injury. However, on virtually identical allegations, the Arizona Court of Appeals held to the contrary in Stauffer. The plaintiffs in Stauffer were defaulting residential homeowners who brought suit for damages under § 33-420(A) and to clear title under § 33-420(B). One of the grounds on which the documents were alleged to be false was that “the same person executed the Notice of Trustee Sale and the Notice of Breach, but because the signatures did not look the same, the signature of the Notice of Trustee Sale was possibly forged.” Stauffer, 308 P.3d at 1175 n.2.
“Appellees argue that the Stauffers do not have standing because the Recorded Documents have not caused them any injury, they have not disputed their own default, and the Property has not been sold pursuant to the Recorded Documents. The purpose of A.R.S. § 33-420 is to “protect property owners from actions clouding title to their property.” We find that the recording of false or fraudulent documents that assert an interest in a property may cloud the property’s title; in this case, the Stauffers, as owners of the Property, have alleged that they have suffered a distinct and palpable injury as a result of those clouds on their Property’s title.” [Stauffer at 1179]
The Court of Appeals not only held that the Stauffers had standing based on their “distinct and palpable injury.” It also held that they had stated claims under §§ 33-420(A) and (B). The court held that because the “Recorded Documents assert[ed] an interest in the Property,” the trial court had improperly dismissed the Stauffers’ damages claim under § 33-420(A). Id. at 1178. It then held that because the Stauffers had properly brought an action for damages under § 33-420(A), they could join an action to clear title of the allegedly false documents under § 33-420(B). The court wrote:
“The third sentence in subsection B states that an owner “may bring a separate special action to clear title to the real property or join such action with an action for damages as described in this section.” A.R.S. § 33-420.B. Therefore, we find that an action to clear title of a false or fraudulent document that asserts an interest in real property may be joined with an action for damages under § 33-420.A.”
Fourth, the MDL Court held that appellants had not pleaded their robosigning claims with sufficient particularity to satisfy Federal Rule of Civil Procedure 8(a). We disagree. Section 33-420 characterizes as false, and therefore actionable, a document that is “forged, groundless, contains a material misstatement or false claim or is otherwise invalid.” Ariz. Rev. Stat. §§ 33-420(A), (B) (emphasis added). The CAC alleges that the documents at issue are invalid because they are “robosigned (forged).” The CAC specifically identifies numerous allegedly forged documents. For example, the CAC alleges that notice of the trustee’s sale of the property of Thomas and Laurie Bilyea was “notarized in blank prior to being signed on behalf of Michael A. Bosco, and the party that is represented to have signed the document, Michael A. Bosco, did not sign the document, and the party that did sign the document had no personal knowledge of any of the facts set forth in the notice.” Further, the CAC alleges that the document substituting a trustee under the deed of trust for the property of Nicholas DeBaggis “was notarized in blank prior to being signed on behalf of U.S. Bank National Association, and the party that is represented to have signed the document, Mark S. Bosco, did not sign the document.” Still further, the CAC also alleges that Jim Montes, who purportedly signed the substitution of trustee for the property of Milan Stejic had, on the same day, “signed and recorded, with differing signatures, numerous Substitutions of Trustee in the Maricopa County Recorder’s Office . . . . Many of the signatures appear visibly different than one another.” These and similar allegations in the CAC “plausibly suggest an entitlement to relief,” Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009), and provide the defendants fair notice as to the nature of appellants’ claims against them, Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011).
We therefore reverse the MDL Court’s dismissal of Count I.
[Importance of Pleading NO DEFAULT:] The Nevada Supreme Court stated in Collins v. Union Federal Savings & Loan Ass’n, 662 P.2d 610 (Nev. 1983):
An action for the tort of wrongful foreclosure will lie if the trustor or mortgagor can establish that at the time the power of sale was exercised or the foreclosure occurred, no breach of condition or failure of performance existed on the mortgagor’s or trustor’s part which would have authorized the foreclosure or exercise of the power of sale. Therefore, the material issue of fact in a wrongful foreclosure claim is whether the trustor was in default when the power of sale was exercised…. Because none of the appellants has shown a lack of default, tender, or an excuse from the tender requirement, appellants’ wrongful foreclosure claims cannot succeed. We therefore affirm the MDL Court’s of Count II.
[Questionable conclusion on “reunification of note and mortgage”:] the Nevada Supreme Court decided Edelstein v. Bank of New York Mellon, 286 P.3d 249 (Nev. 2012). Edelstein makes clear that MERS does have the authority, for purposes of § 107.080, to make valid assignments of the deed of trust to a successor beneficiary in order to reunify the deed of trust and the note. The court wrote:
Designating MERS as the beneficiary does . . . effectively “split” the note and the deed of trust at inception because . . . an entity separate from the original note holder . . . is listed as the beneficiary (MERS). . . . However, this split at the inception of the loan is not irreparable or fatal. . . . [W]hile entitlement to enforce both the deed of trust and the promissory note is required to foreclose, nothing requires those documents to be unified from the point of inception of the loan. . . . MERS, as a valid beneficiary, may assign its beneficial interest in the deed of trust to the holder of the note, at which time the documents are reunified.
We therefore affirm the MDL Court’s dismissal of Count III.

Here is the full opinion:

Opinion on MDL

For further information or assistance, please call 520-405-1688 on the West Coast and 954-495-9867 on the East Coast.

Filed under: AMGAR, CASES, CDO, CORRUPTION, discovery, escrow agent, evidence, expert witness, foreclosure, foreclosure defenses, foreclosure mill, GTC | Honor, investment banking, Investor, MBS TRUSTEE, MODIFICATION, Mortgage, originator, Pleading, securities fraud, Servicer, TRUST BENEFICIARIES, trustee | Tagged: , , , , , , , , , , | 60 Comments »

New Jersey Clears Docket: Dismisses 80,000+ cases

Posted on March 13, 2014 by Neil Garfield

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GUEST TONIGHT: KENNETH HANKS, ESQ. TITLE EXPERT

One might ask why a lender would delay the prosecution of their claim. The answer is that they wouldn’t delay if they thought they had a solid claim. I know. I have represented banks on loans, foreclosures, associations in foreclosures etc. And I have proposed that if the Courts were to order the alleged ‘holders” to show the actual money trail so we would all know what transactions actually took place, their dockets would be clear, because most of the transactions described on assignments and indorsements never took place.

We have seen cases dating back to the 1990’s that have not been prosecuted and judges in all states are dismissing for failure to prosecute, which in turn brings up the statute of limitations, which I warn you is applied very differently from state to state. But in many cases they cannot refile because the statute of limitations has run and they are out of luck. So why would a bank (who is representing to the court that it the loser in a transaction with the borrower ) allow so many cases to be dismissed? Is there reason for this madness?

I believe there is. But the reason probably varies from case to case. Suffice it to say that we will see what plays out in New Jersey. My guess is that many of the documents used by foreclosers represent transactions that were fictitious or duplications of other transactions and now they are picking which story to go with in court but he courts are getting annoyed with the actual complexity of what seems to be a “simple” claim. The borrower didn’t pay, isn’t that enough? Actually no.

The essential problem that is now bubbling to the surface after years of suppression is this: the lender is receiving payments based upon a different deal and computation than the deal and computation the borrower is required to pay. The lender’s right to repayment comes from the bond indenture on the mortgage bond issued by a REMIC trust that never had any money, assets, income or expenses.

That indenture doesn’t say the investor will be paid according to the homeowner notes on loans originated or acquired by the trust or with the money from the trust beneficiaries. It provides for a specific yield of interest and principal regardless of what the notes say and even regardless (many times) of whether the borrower pays or not. Those terms are different than the terms signed by the homeowner. And the note and mortgage, were mostly executed in favor of parties who did not make any loan, never received the delivery of the note and never had any interest in the transaction. So what good are assignments from parties with zero ownership interest to convey?

We have reached a turning point where courts and others are saying to the banks, “if your claims are real, why didn’t you prosecute them for years?”

http://www.wnyc.org/story/new-jersey-breaks-foreclosure-logjam-yields-flood-dismissals/

Filed under: CASES, evidence, foreclosure, foreclosure defenses, foreclosure mill, GARFIELD KELLEY AND WHITE, Investor, MBS TRUSTEE, Neil Garfield Show, originator, Pleading, Title, TRUST BENEFICIARIES, trustee | Tagged: , , , , , , , | 42 Comments »

More Lawsuits, Still No Real Progress and No Coverage by Media

Posted on December 6, 2013 by Neil Garfield

Jon Stewart committed his entire show to the mortgage crisis last Wednesday night. Go watch it. It wasn’t funny although they added some comedic aspects. The bottom line is the question “why aren’t these people in jail?” And the media was scorched with the fact that despite a constant culture of continuing corruption and absurd “transactions” in which paper goes back and forth, and calling that economic activity with”profit,” and stories of the human tragedy of Foreclosures all based on what are now obviously fraudulent schemes, the media is silent. The number of stories on the illegal Foreclosures, the charges of FRAUD by everyone involved from lenders (investors) to insurers to guarantors to borrowers, the verdicts and judgments decided against the banks, and the analysis that the assets of the banks are fictional, the total is ZERO.

My question is why the displacement of more than 15 million people in a single scheme is not the main question in American discourse, media and politics — especially since the banks have admitted by conduct or expressly their wrongdoing? We already know it was a total fraudulent scheme. The banks are settling their ill gotten gains for pennies on the dollar while the victims absorb most of the loss. We already know that the requirements of Federal law were routinely ignored in disclosing the real terms and lenders to borrowers. And if they had made the disclosure, the deals would not have occurred, because if they were disclosed neither the lenders (investors) nor the borrowers (homeowners) would have done the deal.

One particular story was singled out by Jon Stewart to provide an example of what Gretchen Morgenson called “just another day on Wall Street” was the recent transaction between Blackrock and Corere. Blackrock loaned Corere $100 million. Blackrock purchased a credit default swap worth $15 million if there was any default for any reason. Blackrock made a deal with Corere for Corere to default. So Corere defaulted. Blackrock collected the $15 million on the credit default swap PLUS the full repayment from Corere of $100 million, plus interest. Somehow this is considered legal. I call it FRAUD.

When applied to the mortgage market you can easily see how the agent banks (investment banks or broker dealers) made a fortune by creating deals that failed on paper when in fact the loan was already covered in multiple ways. Only in the mortgage situation the lenders got screwed out of repayment and the borrowers got screwed on their deal by either losing their home or getting a deal where they would be underwater for the rest of their lives. As I have been detailing over the last week, I have a currently pending case in which the “successor” trustee with a new aggressive law firm is pursuing foreclosure and collection of rents on loans that they know have been paid, they admit have been paid, but they say it doesn’t matter. Using this theory, if the payment doesn’t come from the named Payor on the note to the now unnamed payee on exhibit note, anyone can collect multiple times on a single debt. This is crazy.

The bastion of our security — judiciary — is succumbing to expediency over truth and justice. Instead of applying the requirements of law and procedure strictly against the same entities that are repeatedly cited for FRAUD AND NON COMPLIANCE by government and lawsuits from investors, insurers and guarantors, the judiciary is ignoring the requirements or applying liberal standards to allow the foreclosure to proceed. What Judges don’t understand yet is that they can clear their docket more quickly if they demand proof of payment by the party seeking foreclosure and proof of authority to represent the real creditors, who must be identified.

If the party pursuing foreclosure has no skin in the game and doesn’t represent anyone who does, the foreclosure fails jurisdictionally. If we apply any other standard, then the courts are opening the door for uninjured people to sue for a slip and fall that happened to someone else.

These Foreclosures would disappear entirely if judges applied the law with or without a proper presentation by defense counsel. In the old days, Judges carefully reviewed the basic documents. If they found a gap, they refused to apply the most extreme remedy of foreclosure until the the creditor could comply. That is all I ask. Instead most lawyers are told to stop arguing because the Judge is uncomfortable with what he is hearing and most lawyers do not have the guts to say to the judge that the purpose of having a lawyer is to “argue” cases. Is the Judge throwing out the right to be heard altogether? That violation of undue process is something that should be taken to task.

At the end of the day, it will be accepted fact that the mortgages were fraudulent unenforceable devices that never should have been recorded, much less used for foreclosure or collection of rents, the note is a fraudulent unenforceable paper designed to mislead the borrower, the lenders, the insurers, the government guarantors, credit default counterparties, and the courts as to the lender’s identity, and the debt was always between the investors who received no documentation for their investment that was real, and the homeowners who were duped into signing papers that made them unwitting participants in a fraudulent scheme.

In the end the intermediary agent banks got paid but the lenders only get their money if they sue the investment banker because the lenders were denied the right to appear on closing paperwork as the lender or on assignments. In other words, the parties who loaned the money got pennies on the dollar. The Banks got paid multiple times on the same debt by selling it multiple times, insuring it multiple times and getting it guaranteed multiple times, and then foreclosing as if they were the lender.

My final question is this: “if we know the mortgage mess was a fraudulent scheme, why are we allowing its continuation in the courts?”

—————————————————–

DOJ plans more MBS fraud cases in New Year

The Department of Justice intends to bring cases against several financial institutions next year for what it says is mortgage-bond fraud, Attorney General Eric Holder told Reuters yesterday.
While Holder said that the DOJ would use JPMorgan’s $13B agreement as a template, he didn’t provide details about which banks are in his crosshairs.
Firms that have acknowledged that they are under investigation include Bank of America (BAC), Citigroup (C) and Goldman Sachs (GS).

Read more at Seeking Alpha:
http://seekingalpha.com/currents/post/1447021?source=ipadportfolioapp_email

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Filed under: CASES, CDO, CORRUPTION, evidence, expert witness, Fannie MAe, foreclosure, foreclosure mill, GARFIELD KELLEY AND WHITE, investment banking, Investor, MODIFICATION, Mortgage, Motions, Pleading, securities fraud, Servicer, STATUTES, TRUST BENEFICIARIES, trustee | Tagged: , , , , , , , , | 112 Comments »

Should Foreclosure Attorneys Like Stern Be Subject to Bar Complaints and Lawsuits?

Posted on October 15, 2013 by Neil Garfield

I have been receiving an increasing amount of mail and comments about whether foreclosure mills or foreclosure firms should be subject to bar discipline and whether they could be sued. The issue is complex. Here is my take—-

If the lawyer is party to fabrication of documents, forgery, and subordination of perjury (knowingly proffering a witness whose testimony is known to be false), then the answer is yes. Bar discipline and civil liability would most probably apply, assuming you could prove your case. The Bar grievance must be viewed separate from the civil liability case. It is possible that if the bar finds that a violation of the ethical and disciplinary rules apply, there might be restitution but not likely. It is generally the client that would be entitled to restitution.

You must also realize that it is a violation of the Bar rules and in Florida it is a crime to threaten criminal action or quasi criminal action (bar violation) in order to gain a civil advantage. Thus the making of a threat will put you in a worse position than your adversary even if you are right, so don’t do it. Check with a licensed attorney before you even consider action against a lawyer. And no, there is no such thing as a malpractice action by a non client. And malpractice actions are extremely difficult to prove and win.

In a malpractice action you must of course prove that the lawyer clearly made an error that goes beyond a reasonable judgment call that simply turned out wrong. The hard part is actually proving your damages. In order to do that you must prove that you suffered damages as a result of the lawyers’ malpractice and not as a result of simply a negative ruling and financial damages from the result from that ruling — AND you must prove that the ruling would have been otherwise if the lawyer had not committed the error. This has proved to be a nearly impossible threshold for malpractice.

But before I leave that subject, let me say that if a homeowner actually wins their case, the situation might be different. Any attorney in bankruptcy, general litigation or otherwise who gave advice to the homeowner that there was nothing that could be done for them where it is now known that the wrongful foreclosure has been proven, then that attorney might have significant exposure which is why my firm does risk analysis for domestic law, bankruptcy law and other cases.

Lawyers who have not researched securitization should neither be giving advice nor representing homeowners. It might seem counter intuitive. But if the homeowner vacated their home or entered into an oppressive modification or settlement agreement as a result of bad advice from an attorney ignorant of the current state of the law on wrongful foreclosure, there are significant damages.

For the most part, it is unlikely that most attorneys who represent the banks would be subject to discipline or liability. This comes down to the age old question of tainting the lawyer with the crimes of his client. Everyone is entitled and indeed required to hire a lawyer if they are a corporate entity. The fact that some lawyers are willing to represent the interests of the banks to the best of their ability does not mean they agree that their clients are good guys. I personally have represented parties I didn’t like. It just goes with the territory.

Filed under: CORRUPTION, evidence, foreclosure mill, Investor, MODIFICATION, Mortgage, Pleading, securities fraud, Servicer | Tagged: , , , , | 30 Comments »

VICTORY for Homeowners: Received Title and 7 Figure Monetary Damages for Wrongful Foreclosure

Posted on September 13, 2013 by Neil Garfield
As a California appellate court decision several years ago noted, “For homeowners struggling to avoid foreclosure, this dual tracking might go by another name: the double-cross.” – See more at: http://calcoastnews.com/2013/09/onewest-bank-pays-7-figures-mortgage-fraud-case/#sthash.xcKP1Tpl.dpuf
As a California appellate court decision several years ago noted, “For homeowners struggling to avoid foreclosure, this dual tracking might go by another name: the double-cross.” – See more at: http://calcoastnews.com/2013/09/onewest-bank-pays-7-figures-mortgage-fraud-case/#sthash.xcKP1Tpl.dpuf

“As a California appellate court decision several years ago noted, ‘For Homeowners struggling to avoid foreclosure, this dual tracking might go by another name: the double-cross.'” Daniel Blackburn, http://www.calcoastnews.com, 9/11/13.

Internet Store Notice: As requested by customer service, this is to explain the use of the COMBO, Consultation and Expert Declaration. The only reason they are separate is that too many people only wanted or could only afford one or the other — all three should be purchased. The Combo is a road map for the attorney to set up his file and start drafting the appropriate pleadings. It reveals defects in the title chain and inferentially in the money chain and provides the facts relative to making specific allegations concerning securitization issues. The consultation looks at your specific case and gives the benefit of litigation support consultation and advice that I can give to lawyers but I cannot give to pro se litigants. The expert declaration is my explanation to the Court of the findings of the forensic analysis. It is rare that I am actually called as a witness apparently because the cases are settled before a hearing at which evidence is taken.
If you are seeking legal representation or other services call our South Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. In Northern Florida and the Panhandle call 850-765-1236. 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. Get advice from attorneys licensed in the jurisdiction in which your property is located. We do provide litigation support — but only for licensed attorneys.
Neil Garfield, the author of this article, and Danielle Kelley, Esq. are partners in the law firm of Garfield, Gwaltney, Kelley and White (GGKW) based in Tallahassee with offices opening in Broward County and Dade County.
See LivingLies Store: Reports and Analysis

Neil F Garfield, Esq. http://www.Livinglies.me, 9/13/13

Victory in California, as we have predicted for years. Maria L. Hutkin and Jude J Basile were the attorneys for the homeowners and obviously did a fine job of exposing the truth. Their tenacity and perseverance paid off big time for their clients and themselves. They showed it is not over until the truth comes out. So for all of you who are saying you can’t find a lawyer who “gets it” here are two lawyers that got it and won. And for all those who were screwed by the banks, it isn’t over. Now it is your turn to get the rights and damages you deserve.

Maria L. Hutkin and Jude J. Basile
Maria L. Hutkin and Jude J. Basile

The homeowners won flat out at a trial — something that should have happened in most of the 6.6 million Foreclosures conducted thus far. U.S. Bank showed its ugly head again as the alleged Trustee of a trust that was most probably nonexistent, unfunded and without any assets at all much less the homeowners alleged loan. Still the settlement shows how far Wall Street will go to pay damages rather than admit their liability to investors, insurers, counterparties in credit default swaps, and the Federal Reserve.

When you think of the hundreds of millions of wrongful foreclosures that were the subject of tens of billions of dollars in “settlements” that preserved homeowners rights to pursue further damages and do the math, it is obvious why even the total of all the “settlements” and fines were a tiny fraction of the total liability owed to pension funds and other investors, insurers, CDS parties, the Federal Government and of course the borrowers who never received a single loan from the banks in the first place. If 5 million foreclosures were wrongful, as is widely suspected at a minimum, using this case and some others I know about the damages could well exceed $5 Trillion. Simple math. Maybe that will wake up the good trial lawyers who think there is no case!

Maria L. Hutkin and Jude J. Basile

A fitting announcement on the 5th anniversary of the Lehman Brothers collapse. the economy is still struggling as more than 15 million American PEOPLE were displaced, lost equity and forced into bankruptcy by imperfect mortgages that were a sham, and thus imperfect foreclosures that were also a sham. Another 15 million PEOPLE will be displaced if these wrongful, illegal and morally corrupt sham foreclosures are allowed to continue.

This case, like the recent case won by Danielle Kelley (partner of GGKW) was based upon dual tracking. In Kelley’s case the homeowners had completed the process of getting an approved modification, which meant that underwriting, review, confirmation of data, and approval from the investor had been obtained. In Kelley’s case the homeowner had made the trial payments in full and paid the taxes, insurance, utilities and maintenance of the property.

The Bank argued they were under no obligation to fulfill the final step — permanent modification. Kelley argued that a new contract was formed — offer, acceptance and the consideration of payment that the Bank received, kept and credited to the homeowner’s account. But the bank as Servicer was still accruing the payments due on the unmodified mortgage, which is why I have been harping on the topic of discovery on the money trail at origination, processing, and third party payments. 

 

The accounting records of the subservicer and the Master Servicer should lead you to all actual transactions in which money exchanged hands, although getting to insurance payments and proceeds of credit default swaps might require discovery from the investment banker. So in Kelley’s case, the Judge essentially said that if an agreement was reached and the homeowner met the requirements of a trial period, the deal was done and entered a final order in favor of the homeowner eliminating the the foreclosure with prejudice.

In this One West case the court went a little further. The homeowners were lured into negotiations, expenses and augments under the promise of modification and then summarily without notice to the homeowner sold the property at a Trustee sale under the provisions of the deed of trust. The Judge agreed with counsel for the homeowners that this was dual tracking at its worst, and that the bank did not have the option of proceeding with the sale. 

 

The homeowners were forced to vacate the property and make other housing arrangements and these particular homeowners were enraged and had the resources to do what most homeowners are too fearful to do — go to the mat (go to trial.)
One West made several offers of settlement once the Judge made it clear that the homeowners had stated a cause of action for wrongful foreclosure. Bravely the attorneys and the homeowners rejected settlement and insisted on a complete airing of their grievances so that everyone would know what happened to them. After multiple offers, with trial drawing near, OneWest finally agreed to give clear title back to the homeowners and pay $1 million+ in damages on what was a six figure loan. 

 

We now have cases in both judicial and non-judicial jurisdictions in which the homeowner was awarded the house without encumbrance of a mortgage and even receiving monetary damages in which the attorneys achieved substantial rewards on 7 figure settlements  that probably would be much higher if they ever went to trial — particularly in front of a jury. This is only one of the paths to successful foreclosure defense. I hope attorneys and homeowners take note. Your anger can be channeled into a constructive path if the lawyers know how to understand these loans, and how to litigate them.

“There’s hope. I feel their pain.” — Danielle Kelley, Esq. , partner in Garfield, Gwaltney, Kelley and White.

http://calcoastnews.com/2013/09/onewest-bank-pays-7-figures-mortgage-fraud-case/

Filed under: AMGAR, CDO, CORRUPTION, Eviction, foreclosure, GARFIELD GWALTNEY KELLEY AND WHITE, Investor, Mortgage, securities fraud, Servicer | Tagged: , , , , , , , , , , , , | 31 Comments »

OCC Announces EverBank Agrees to Pay $37 Million to Customers, $6.3 Million to Housing Assistance Groups

Posted on September 12, 2013 by Neil Garfield
Internet Store Notice: As requested by customer service, this is to explain the use of the COMBO, Consultation and Expert Declaration. The only reason they are separate is that too many people only wanted or could only afford one or the other — all three should be purchased. The Combo is a road map for the attorney to set up his file and start drafting the appropriate pleadings. It reveals defects in the title chain and inferentially in the money chain and provides the facts relative to making specific allegations concerning securitization issues. The consultation looks at your specific case and gives the benefit of litigation support consultation and advice that I can give to lawyers but I cannot give to pro se litigants. The expert declaration is my explanation to the Court of the findings of the forensic analysis. It is rare that I am actually called as a witness apparently because the cases are settled before a hearing at which evidence is taken.
If you are seeking legal representation or other services call our South Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. In Northern Florida and the Panhandle call 850-765-1236. 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. Get advice from attorneys licensed in the jurisdiction in which your property is located. We do provide litigation support — but only for licensed attorneys.
See LivingLies Store: Reports and Analysis

In its never-ending quest for putting distance between the Bank and the Homeowners who have been misled into thinking that Bank of America has any servicing or ownership rights over their mortgage, BOA has been transferring any mortgage they can to other entities — perhaps even paying the other entities to “take” the mortgages, which BOA didn’t own in the first place.

One such entity is EverBank which is a small thinly capitalized entity. The gimmick worked. Using the balance sheet of EverBank instead of Bank of America, the fine was probably one tenth or less than the the fine that would have been levied upon Bank of America. EverBank is getting paid to be thrown under the bus. The OCC used the EverBank Balance Sheet as a measuring stick and figured that $37 million fine for wrongful foreclosure processing was enough. If they had looked behind the curtain, which they most certainly had the knowledge about, they would have been fining Bank of America for the wrongful, illegal and immoral foreclosures.

And EverBank continues to file foreclosures that are riddled with obvious defects because they don’t have a real plaintiff, a real lender, a real loan, a real default or any real servicing rights. It is safe to say that they are so far removed from the realities of any actual transaction that it will be impossible to actually respond to discovery requests.

So I figured I would share with you some notes on a few of the cases with EverBank that you might find useful. As stated a thousand times before, do NOT use these forms or notes or anything else unless you ARE an attorney licensed in the jurisdiction in which the property is located or you consult with one.

NOTES ON EVERBANK FORECLOSURES

  1. The Plaintiff is self-identified in its own attachments as a servicer which means that judgment can only be rendered for the real creditor who under Florida Statutes governing credit bids can only be the actual creditor.
  2. The complaint is in rem and does not sue on the note, so there is no basis for the deficiency demanded in the wherefore clause.
  3. The servicing rights actually never existed because they would arise from a pooling and servicing agreement for a REMIC trust that was never funded nor was it able to purchase loans, nor were such loans transferred within the time limits prescribed by the REMIC laws and the terms of the pooling and servicing agreement. Since the REMIC was ignored, the terms of the PSA were ignored, no servicer could exist except with apparent authority. It remains to be seen to whom the the payments were made after receipt of payments from the Homeowner Defendant. despite the lack of any actual legal authority for servicing rights through any enforceable agreement to which the Homeowner defendant was a party  parties variously assigned servicing rights and endorsed the unenforceable note.
  4. Generally they were transferred by BOA as successor to BAC as successor to one of several Countrywide entities none of which were the lenders, servicers, or mortgage brokers for the loan. The reference to succession is false. Countrywide changed its name to BAC for a short while, following which Bank of America falsely claimed ownership, as successor to Countrywide despite the fact that the FDIC records show that a merger of some sort took place between Red Oak merger Corporation and Countrywide, but there is no indication that the agreement in the FDIC records shown in its “Reading Room” on the internet, that Bank of America ever acquired Red Oak or that Red Oak was a wholly owned subsidiary of Bank of America or anything of the sort.
  5. The mortgagee is named as either MERS as a naked nominee with no interest in the loan, or another entity that does not exist in the records of the Florida Secretary of state or anywhere else, and does not even pretend to be an entity organized and existing under the laws of any state. Hence there is no actual payee under the note and there never was, and there is no mortgagee under the mortgage, because the alleged party having an interest int he collateral is a naked nominee without any disclosure as to the true party in interest. This prevents the entire purpose of recording which is to allow for the complete transparency of ownership and encumbrances so that buyers and sellers can be certain that their transaction is valid.
  6. The complaint fails to state any loan or advance of money was ever made to the defendant Homeowner because the Homeowner has learned through hiring professional forensic auditors that none of the parties in the chain leading up to the Plaintiff Evergreen ever had ownership or servicing rights tot he loan. Instead, the loan came from the account of an investment bank that was used as a conduit for the money of investors who thought they were buying mortgage bonds from a REMIC trust organized under the laws of the State of New York. However the trust was never funded and the loan was never transferred into the trust. Accordingly the real creditor, with whom, the Defendant would like to engage in settlement or modification discussions, is a group of investors who might be loosely identified as a general partnership that does not qualify as a bank, lender, or even mortgage broker.
  7. The complaint fails to state any injury to any party in the complaint. his is because the money came from investors and on top of that, the intermediaries in the cloud of false securitization claims, received multiple payouts of the entire loan balance that should have reduced the account receivable of the investors who were the only parties who advanced money, to either zero, less than zero (with money owed back to the borrower) or at least less than the amount demanded  by Evergreen, who had no right to issue a demand letter since the actual owners of the loan had never given such an instruction.

ROUGH DRAFT OF MOTION TO DISMISS

Motion to Dismiss:
a. The pleadings conflict with the attachments. Everbank is named as either servicer or holder but no party is named as creditor. The attachments show a different party as the lender.
b. The complaint fails to allege injury to Evergreen and a short plain statement of how EverBank was financially damaged. Plaintiff fails to attach cancelled check(s) or wire transfer receipt(s) or wire transfer instructions for an actual transaction — which is the essential element and foundation for use of the note and mortgage as evidence of the transaction and the terms of repayment depending upon whether Plaintiff is attempting to enforce the terms of the NOTE, MORTGAGE, DEBT, LOAN OR ASSIGNMENT.
c. Prior communications with Countrywide, BAC and BOA and the borrower indicate alternately that each of those entities was the holder, but then revealed the existence of a loan pool claiming an interest. Plaintiff should be required to attach a copy of the cancelled checks or wire transfer receipts to show which party is actually claiming injury and a short plain statement of why their claim is secured.
d. Plaintiff has failed to allege that it or any affiliate or predecessor or successor has responded to the RESPA 6 (Qualified Written Request) sent by borrower or the Debt Validation Letter sent to the apparent servicer which alternated between Countrywide, BAC and Bank of America.
e. Plaintiff has filed to allege and attach relevant copies of documentation demonstrating proof of ANY POTENTIAL OR ACTUAL LOSS nor any authority to represent the creditor(s) and identifying the creditor who meets the standard of a party qualified to submit a credit bid at foreclosure auction, execute a satisfaction of mortgage upon payment, or a a correct accounting of the loan receivable or bond receivable if the loan is in fact claimed by any of the above stakeholders to be owned by a loan pool, REMIC, Special purpose vehicle or trust.
f. Unless the Plaintiff can allege and attach documents showing financial injury to Plaintiff as of the date that the complaint was filed, it lacks standing in this case.
g. Since the case is essentially in rem with the requested relief being the foreclosure sale of the property owned by the Defendant, Plaintiff has failed to state a cause of action upon which relief could be granted.

h. Even if the court were to rule that the Plaintiff had standing to initiate foreclosure proceedings, the Plaintiff must identify the party in the Judgement who will be  named, and supply the accounting required to show the amount of  financial injury, produce and attach the required documents to the complaint and prove its allegations and exhibits by competent evidence.

i. It is apparent here that Plaintiff lacks standing and certainly has failed to plead and attach required documents demonstrating financial injury since according to its own pleadings and attachments it was neither the lender nor the purchaser of the loan according to the existing allegations and exhibits.

WHEREFORE, Defendant prays that this Honorable Court will dismiss Plaintiff’s complaint with prejudice unless Counsel for Plaintiff can proffer in good faith that it can plead and attach the required exhibits and grant Defendant reasonable attorney fees and costs for defending a patently sham pleading.

OCC Announces EverBank Agrees to Pay $37 Million to Customers

http://www.occ.gov › News and Issuances › News Releases‎

Aug 23, 2013 – EverBank was subject to a cease and desist order for unsafe and unsound practices in mortgage servicing and foreclosure processing.

EXCLUSIVE: EverBank takes flight as regular ‘jumbo’ loan RMBS issuer
http://www.housingwire.com/news/2013/04/01/exclusive-everbank-takes-flight-regular-jumbo-loan-rmbs-issuer

Everbank Exits Wholesale Lending to Focus on Correspondent …

http://www.mortgagenewsdaily.com › News Headlines › MND NewsWire Home‎

Federal Reserve Seeks to Fine HSBC, SunTrust, MetLife, U.S. …

4closurefraud.org/…/federal-reserve-seeks-to-fine-hsbc-suntrust-metlife-…‎

Apr 1, 2012 – Last week, a senior Federal Reserve official recommended fines for these … Bank, MetLife, U.S. Bancorp, PNC Financial Services, EverBank, OneWest and … in residential mortgage loan servicing and foreclosure processing …

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

Will the Findings from the Brief “Foreclosure Review” Process Be Released?

Posted on July 26, 2013 by Neil Garfield

“The truth is that they stopped the review process and “Settled” because the regulators were under a mandate to protect the banks. They were finding far too many wrongful and illegal foreclosures. The investigator testified that the small sampling they used was not random but rather designed to show how few foreclosures were illegal. But even that showed that at least 6500 homeowners had been illegally foreclosed and evicted. The banks and regulators were sitting on a time bomb so they swept it under the rug with “settlements” to cover up the widespread pandemic rush to illegal, wrongful foreclosures where strangers to the transaction took title to property at a foreclosure sale by submitting a “Credit bid” in which they had absolutely no interest or authority.”  —- Neil F Garfield Livinglies.me

Not long ago, if someone told you that the government would review the foreclosure process, find that many people were foreclosed illegally and wrongfully — perhaps up to 90% — and then step in to protect the banks with a pennies on the dollar settlement WITHOUT TELLING THE FAMILIES THAT WERE WRONGFULLY FORECLOSED THAT IT HAD BEEN DETERMINED THAT THEY WERE ILLEGALLY AND WRONGFULLY FORECLOSED — you might have said, it can’t be true — things are not that bad.

Besides, you might say, how could the foreclosures have been illegal and wrongful to the point that the banks would agree to pay any settlement, even if it was pennies on the dollar. After all, as Judges are want to say “You took the loan, you didn’t pay, you lose your house.”

But in open session sworn testimony before the Senate Committee on banking and finance, under questioning from Senator Warren (see recent post for the video) that is exactly what the investigator admitted. In fact, it gets worse — they entered into the settlement to get this out of the way fast and sweep it under the rug.  And, the investigator admitted that they had not yet notified those whom the agency had already found had definitely been illegally and wrongfully foreclosed and evicted from their homes. Worse, the investigator admitted that no decision had been made when or if those families would be notified.

So here we have the government withholding information of civil and perhaps criminal wrongdoing, not informing the victims that they not only have a cause of action for damages, but that the proof is already in the hands of the regulatory agencies. And perhaps worse, this admission comes AFTER Bernanke assured Senator Warren that the victims would be notified.

So Judges, lawyers, borrowers and investors across the land and indeed across the world are still laboring under the misapprehension that when the dust settles the home will still be foreclosed. Not so.

If the real creditor has not stepped up to enforce the debt there can only be one reason — they have already been paid. And if they have already been paid, then the balance due from the borrower to that creditor is zero. And if someone else paid it, the most they COULD have is an action in contribution or unjust enrichment against the borrower; but they don’t have that right because they expressly waived it. Nonetheless, the Federal reserve is “buying” these mortgage bonds, supposedly backed by mortgage loans that we have now seen were paid or unenforceable at the rate of $85 Billion per month.

The presumption ought to be, based upon the filings of the regulatory agencies, the settlements and the sworn testimony before Congress, that the foreclosure is suspect and Judges should stop ramming these wrongful foreclosures down the throat of lawyers whose objections and arguments are dismissed without a thought. We don’t have to wait for the evidence before we decide. The time to decide is now because the evidence IS in.

And even if you can’t get the information from the regulatory agencies who claim the results to be confidential even though they admit what is in them, aggressive lawsuits against the pretender lenders should lead to huge awards to borrowers and their attorneys. What are you waiting for? Stop wasting time by delaying the cases so that the client gets another month of free rent and start being the aggressor in discovery, pleading and litigating.

Watch Elizabeth Warren Grill Regulators Over Illegal Foreclosures

A Brief Refresher on Glass Stegal From Barry Ritholtz

http://www.housingwire.com/fastnews/2013/07/18/bernanke-regulators-will-release-some-details-foreclosure-reviews

Filed under: foreclosure | Tagged: , , , , , , , , , | 86 Comments »

Ohio Sets Back Steamrolling: First Things First

Posted on July 25, 2013 by Neil Garfield

Mellon Bank v Shaffer Ohio Appeals Ct Says You can’t Fix Jurisdiction

In a decision that is interesting from many points of view an Ohio appellate court ruled that you can’t fix jurisdiction by assigning the loan and recording the documents after the foreclosure suit is filed. This could have substantial effects on non-judicial states as well. If at the time of the notice of sale the foreclosing party did not possess ownership of the loan the notice should be declared void and anything that happened after that point would be reversed. In this case the foreclosure judgment was reversed and so was the sale.

I find it interesting from other points of view as well. If you look at the style of the case you will see a sneaky attempt to correct fatal defects in the alleged securitization of the loan. As I have seen in numerous other cases especially those involving US Bank there is no actual trust mentioned as the plaintiff. In effect, nobody is suing. There are a lot of  places where the word “trust” is mentioned but there is nothing that actually says that interest exists or that a trust has been named as the plaintiff.

In previous articles I have outlined why I think that the investors are actually in a common-law general partnership and not as beneficiaries in the trust. In cases like this the first reason is that the trust doesn’t exist at all under the laws of any state. The second reason is that they are using the self-serving designation of “trustee” for a pile of certificates. In most cases the certificates do not exist on paper and therefore there is no pile. But even if there was a pile of certificates they would only be evidence of the issuance of a mortgage bond by an entity that doesn’t actually exist (the trust) or could only exist by operation of common law as a general partnership.  In effect each investor seems to own either an indivisible share or a divisible share of a cluster of loans —  but only if their money was used to purchase those loans or was used to pay for the origination of those loans. I have no doubt that the investor money was used for the origination of the loans.

The problem for the banks is that  the note and mortgage do not mention or name the individual investors or the investors as a group even though the money trail leads directly from the investors down to the closing agent, who will undoubtedly claim that they did not realize that the money was not coming from the party claiming to be the originator (the pretender lender) which is why the closing agent prepared a note and mortgage naming a party who was not the source of funds (and therefore not the lender) and who had no contractual relationship with the source of funds. In fact it is fair to assume that the closing agent had no idea of the identity or existence of the investors individually or as a group either as a general partnership or a trust.

This is the reason why I have expressed the opinion that the mortgage never became a perfected lien against the property even though it was recorded. It is either fraudulent or a wild deed.  whether the investors can claim the benefits of a contract signed by the borrower without assuming the liability for disclosures required under the truth in lending act is a question that has yet to be decided. But part of it has been decided. In Missouri and other states it is established law that there is no such thing as an equitable lien. It either exists because it conforms to state law or it does not exist.

Another thing about this decision which comes from the style of the case is that the plaintiff is supposedly the successor in interest to J.P. Morgan Chase Bank. This is where discovery and subpoenas aimed at the money trail will prove that no such transaction ever existed. As Judge Shack in New York has pointed out several times there is no reasonable business basis for the purchase of a loan that is already in default and where the collateral is either worthless or substantially below the amount due. While it is true that generally speaking the law does not look to the adequacy of consideration, is also true that where the consideration is wildly out of reason, that something other than the loan itself was conveyed, to wit: either the mortgage servicing rights or the right to receive income as “trustee”.

In the  last point I will make is simply that all of the entities mentioned in this specific case were heavily involved in the securitization scam. First they sold the mortgage bonds under false pretenses and then claimed ownership of the bonds and the underlying mortgages; second they received third-party mitigation payments under circumstances where there was an express waiver of subrogation or contribution from the borrower. Those payments were not sale of the bonds or the loans.

Thus the bond receivable account should have been correspondingly reduced by the amount of money received by the banks on behalf of the investors. This obviously would reduce the account receivable that was due to each investor.

If the account receivable was properly adjusted for payments received from third parties the amount due from anyone (including the borrower) would be correspondingly reduced.

Thus even if the securitization scheme was executed properly, most of the loans to borrowers should have reflected a decrease in the principal amount due because the creditors’ account receivable had been reduced by payment. This is why I say to follow the money trail before you follow the paper trail. The paper trail only talks about transactions. The money trail reveals the actual transactions against which you can compare the paper trail proffered by the banks in illegal and wrongful foreclosures.

Filed under: AMGAR, CDO, CORRUPTION, Eviction, expert witness, foreclosure, GARFIELD GWALTNEY KELLEY AND WHITE, GTC | Honor, Investor, Mortgage | Tagged: , , , , , , , , , , | 29 Comments »

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

Posted on July 12, 2013 by Neil Garfield

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

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

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

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

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

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

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

BOA and Urban Lending Sued on Racketeering Charges

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

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