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Bankers Told Recovery May Be Slow

By SEWELL CHAN

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In Hard Times, One New Bank (Double-Wide)

By ANDREW MARTIN

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Editor’s Comment: Without inventing anything, an increasing number of Judges are coming to the same conclusion. If they apply the rules and deny the pretender lender the benefit of presumptions to which they were not entitled in the first place, the case can be heard on the merits. They don’t need to decide who is right or who is wrong. They need to call balls and strikes.

In this submission from 4closurefraud.com the Judge simply states the obvious — an affidavit from some stranger who says that he looked at some papers and arrived at some conclusions in his or her own mind is not evidence or even a proffer of evidence. It is nonsense. Summary Judgment denied. Motion to lift stay should similarly be denied. Any motion based upon such an affidavit from EITHER side should be denied. AND NOW THEY ARE…..

I SHOULD ADD THAT THE NAME “ICE” ESQ. IS COMING UP MORE FREQUENTLY. I’D LIKE TO SEE MORE FROM THIS LAWYER. He seems to be talking the same tack as Gator Bradshaw in Central Florida (Ocala et al) , Jon Lindemen (S. Fla and Orlando), George Gingo (Northern Florida) and others, to wit: we are out to win these cases not just “mix it up” to justify the fees. Very gratifying to me. 3 years ago, nobody would listen. Now they are taking the ideas developed here, by Max Gardner and April Charney and taking it to the next level. I hope they leave us in the dust.

Full Hearing Transcript attached . Courtesy of T. Ice Esq. Palm Beach Florida

Florida – June 2010 – MSJ denied. Affidavits Hearsay Insufficient

What we are starting to see here is a pattern of Judges not excepting these affidavits from these robo-signers.

I can tell you that, if properly challenged, they will pull the affidavits across the board.

Don,t let that stop you from deposing these people, because once you do it will clearly show that they DO NOT have the authority to produce them. It will also show you they know absolutely nothing about the documents that they are signing even though they state it is of their personal knowledge.

Below is a transcript of how one Judge, in Palm Beach County, DENIED a motion for summary judgment on pending issues, including the insufficient affidavit.

Another key issue was an affidavit presented by the defense from Expert Witness Lynn Szymoniak regarding the fraudulent assignment presented in the case.

Lynn’s expert testimony has stopped many foreclosures in its tracks.

If you are interested in talking to Lynn about her services she can be reached at szymoniak@mac.com and just tell her 4closureFraud sent ya…

Some excerpts from the transcript…

THE BANK OF NEW YORK TRUST
COMPANY, N.A., AS TRUSTEE FOR
CHASEFLEX TRUST SERIES 2007-3,
Plaintiff,
-vs-
DAVID J. MOSQUERA; ELIZABETH

~

THE COURT: Okay. Without going into
anything else, I’m not about to enter a motion –
granting a motion for summary judgement based onan affidavit of Mr. Reardon.
~
MR. CHANE: Your Honor, there is simply no — there’s no basis to –
~
THE COURT: I’m sorry. It’s just — it
basically just says he looked at some records. I
don’t know what he looked at and he plugged some
numbers in.
~
MR. CHANE: Your Honor, it’s based on his
personal knowledge. That’s all he needs to do
according to the Rule.
~
THE COURT: Well, motion denied.
~
MR CHANE: On what basis, Judge?
~
THE COURT: On the basis that the Court
fears that there are many issues of fact to be
determined. This is not a matter in which
everything is undisputed.
~
MR. CHANE: What issues of fact?
~
THE DEPUTY: Sir, the Judge ruled. The
hearing is over.

http://www.scribd.com/doc/36551048/Full-Transcript-M-S-J-denied-Hearsay-Affidavit-not-Valid

4closureFraud.org

THE BANK OF NEW YORK TRUST COMPANY, N.A., AS TRUSTEE FOR CHASEFLEX TRUST SERIES 2007-13 PLAINTIF VS. DAVID MOSQUERA

CASE NUMBER 50 2008 CA 04969 XXXX MB PALM BEACH COUNTY FLORIDA

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With the left hand in the right pocket and the left foot in the left pocket and the right foot in the back pocket. Read the whole thing through and give me comments.

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U.S. Judges Sound Off on Bank Settlements

By BINYAMIN APPELBAUM

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SEE $9.95 PER MONTH DONATION/SUBSCRIPTION LLB

SEE LL SUBSCRIPTION MEMBERSHIP $49.95 PER MONTH

REQUEST FOR LEGAL SERVICE IN CALIFORNIA:

We have a customer who has gone through the title search, securitization search and who has filled out the GTC Registration form on the right hand side of the Blog. Reference #5198002. California Property. Any attorney wishing to offer to provide services to this customer should write to neilfgarfield@hotmail.com. You will receive the completed registration form. No referral fee or co-counsel fee is expected and none will be accepted. Arrangements with client are your own. Expert declarations and other forensic help are available through the blog, the blog store and through anyone else of your choosing. The customer may supply you with title report, securitization report and commentaries if they so wish.

“I am looking for an attorney who will help with a simple and effective quiet title action. No assignments are done at the courthouse, only the original deed of trust. B of A sent me a copy of their note after I requested it. This is a copy with NO ENDORSEMENTS OR ALLONGES, only a scanned copy they received before they went out of business. They totally blew off my QWR I got from this site. A QTA should be pretty straight forward and require very little in regards to representation, I am sure the biggest part will be to use the word ‘objection’ repeatedly when they show their freshly created bogus documents. Please help Obi Wan Kenobi! You’re my only hope!! “

Click here to read the complete story at Livinglies's Weblog.

I have always said that the power of sale raises constitutional questions — namely, that no  person should be deprived of life, liberty or property without due process of law. The fiction is that you can waive that right by contract. That premise is questioned here. But in addition, this piece raises the stronger point that even if one were to conclude that it is possible to contract away your most basic constitutional rights (like agreeing to be a slave), the manner in which it is being applied in the era of securitized loans is clearly unconstitutional.

There is also the fiction that use of the power of sale is not state action and THAT evades the issue of constitutionality. The answer to that argument is that if there is no state action then there is no sale, there is no new owner, and there is no new deed. The proponents speciously argue that you can take one part of the foreclosure process out of the courts and call that private while the rest is state action rubber stamping a foreclosure sale without due process under a set of presumptions that in most cases no longer apply.

The arguments for judicial economy and waste of money that lay at the foundation of the statutes permitting non-judicial sale simply are not present anymore. The obvious identities of the proper parties, accounting for the entire transaction, and the inevitability of the foreclosure by default without any real meritorious defenses that existed when these statutes were passed, do not pass even the smell test in today’s environment.

But the court need not reach the constitutional question. It is also a matter of breach of contract, jurisdictional standing and procedural due process. Once the borrower OBJECTS to the sale on the grounds that he denies the default, or denies the default as to the pretender lender, or denies the standing of the would-be forecloser as a creditor at all, the question should be resolved in the courts with all the usual trappings of proper pleading by the party seeking affirmative relief (the one seeking foreclosure). The requirements of good faith pleading and joining issues to be tried according to the normal rules of evidence should apply.

As it stands now, the power of sale is being used as an end-run around the requirements that the borrower even owe anything, much less to the party seeking foreclosure.

PLEASE KEEP US IN THE LOOP OF THIS DISCUSSION.

REUBEN NIEVES: As an addendum to my prior comment on the unconstitutionality of a power of sale provision in a mortgage contract with respect to federally chartered bank corporations created for public and national purposes I am submitting my research to this site and invite any opposition or legal commentator to dispel or affirm my research

The issue is one of First Impression because the Supreme Court of the United States has never decided whether a federally chartered bank corporation created under an act of Congress to provide an important public and national purpose could use a non- judicial procedure that allows the taking of a property interest without a hearing thus violating the 5th Amendment. The Court, however, has made numerous decisions which would have been relevant in determining whether non-judicial procedures were applicable given the nature of these corporations. Though several appellate courts have had occasion to determine the constitutionality of non-judicial procedures in the form of a trustee sale provision, none have vetted the corporations seeking this remedy. The issue goes to the core of the nature of federally chartered corporations created under special law for public and national purposes. This issue deals with the right of these corporations to put such a provision in a contract and rests on whether the act of foreclosure is a governmental act or a proprietary act. It is an issue which, in the context of the current economic crisis and massive foreclosures, sweeps the breadth of this nation like a plague destroying families and communities as it spreads, swelling the homeless population in its wake. This issue involves a constitutional right affecting the lives of millions of families across this nation.
It would allow homeowner a level playing field with the banks to negotiate loan modification. If the bank had to take them to court, the homeowner could raise affirmative defenses and a right to a jury trial. I ask that you look at the arguments proffered in this letter to make your decision and that you act quickly.
ARGUMENT
I. BANK’S USE OF NON-JUDICIAL FORECLOSURES
IS NOT WITHIN THE SCOPE OF A LAW OF CONGRESS
To resolve the issue of the constitutionality of a trustee sale by National banks and federal savings associations , we must first identify the nature of the corporations . NATIONAL BANKS AND FEDERAL SAVINGS ASSOCIATIONS are federally chartered corporations created under acts of Congress (The Homeowner Loan Act (HOLA) and the National Bank Act(NBA) for a public and national purposes. In Conference of Federal Savings and Loan Associations et al v. Alan L. Stein et al. 604 F.2d 1256 (9th Circuit) (1979) the court related the history of HOLA and the reason for its’ creation:
The Home Owners’ Loan Act of 1933, 12 U.S.C. §§ 1461 Et seq. (HOLA), was the result of congressional dissatisfaction with state law and practice in the financing of home construction.
….. The Federal Home Loan Bank Board (the Bank Board) was created with extremely broad powers to promulgate rules and regulations. 12 U.S.C. § 1464(a) provides in part:
…[T]he Board is authorized, under such rules and regulations as it may prescribe, to provide for the organization, incorporation, examination, operation, and regulation of associations to be known as ‘Federal Savings and Loan Associations’ * * * and to issue charters therefore, giving primary consideration to the best practices of local mutual thrift and home-financing institutions in the United States.” [bold added]

A. BANKS CAN BE A GOVERNMENTAL
ACTOR IN VIOLATION OF THE 5TH AMENDMENT
National banks and federal savings banks are agencies of the United States created to promote its fiscal policies. National banks and federal savings banks benefit by not paying state taxes, avoiding state predatory lending laws through the concept of Federal preemption, allowing them to export high interest for the credit card thus avoiding the state usury laws. Federal Savings banks also have the same benefits and are no less instrumentalities of the federal government than national banks whose purpose is to promote its fiscal policies. Alexander Hamilton argued that the Central Bank was necessary to the nation in cases of emergency such as the financing of war… Hamilton believed that there was a symbiotic relationship between agriculture, commerce, and manufacturing, and that progress in each of these sectors was necessary for America’s economic development. (In the Report of Credit II, Dec. 1790)

B. A PARTY MUST STATE FACTS
SUFFICIENT TO STATE A EITHER A
5th or 14th AMENDMENT DUE PROCESS CLAIM
Non-judicial foreclosures have been the subject of a flurry of cases including the most current Apao v. San Diego Home Loans, Inc.,324 F3d 1091, Ninth Circuit (2002) a California corporation. Margaret Apao lost her home to a foreclosure and sale under Hawaii’s non-judicial foreclosure statute. The federal district court dismissed the complaint for failure to state a claim and that the sale was a purely private remedy. Apao appealed to the Ninth Circuit. The Ninth Circuit affirmed the district court’s decision on the grounds that previous decisions of appellate courts upheld the constitutionality of similar non-judicial procedures. The Ninth Circuit held in Apao that the case of Charmicor v. Deaner, 572 F2nd 694 “was controlling” although the consumers in Apao attempted to distinguish it. In Charmicor, the consumers claimed that the statute offended due process by failing to provide a pre-sale hearing and that it offends civil rights statutes and the equal protection clause by discriminating against appellant’s shareholders, who are black. The court in Charmicor noted that the “complaint failed to state a claim for relief under the civil rights statutes, because the record was utterly barren of any facts or allegations that could support a claim under the equal protection clause”, the Ninth Circuit affirmed. The court in these cases made no reference to several Supreme Court decisions which examined the nature of corporations created under an act of Congress and were content with the notion that Congress could adopt the local customs on debtor creditor relations without further analysis. The fact of the matter is that the issue should be determined under federal law.

C. NATIONAL BANKS ARE PUBLIC
NOT PRIVATE CORPORATIONS

In Easton v. Iowa,188 U.S.220 (1903) the Court said of national banks:
. . .[W]e cannot concur in the suggestions that national banks, in respect to the powers conferred upon them, are to be viewed as solely organized and operated for private gain.
The Court in Easton went on to say at 188 U.S. 220 at p. 230 that the principles enunciated in McCullough v Maryland, 17 U.S. 316(1819), and in Osborn v Bank of United States, 22 U.S.738 (1824), though expressed in respect to banks incorporated directly by acts of Congress, were still applicable to the later and present system of national banks. The Court cited with approval the holding of the latter as expressed by Chief Justice Marshall:
The bank is not considered as a private corporation whose principal object is individual trade and individual profit, but as a public corporation created for public and national purposes. That the mere business of banking is, in its own nature, a private business, and may be carried on by individuals or companies having no political connection with the government, is admitted, but the bank is not such an individual or company. It was not created for its own sake or for private purposes. It has never been supposed that Congress could create such a corporation.[bold and italics added]

The court in Easton goes on to say:

‘National banks are instrumentalities of the Federal government, created for a public purpose, and as such necessarily subject to the paramount authority of the United States. It follows that an attempt by a state to define their duties or control the conduct of their affairs is absolutely void, wherever such attempted exercise of authority expressly conflicts with the laws of the United States, and either frustrates the purpose of the national legislation or impairs the efficiency of these agencies of the Federal government to discharge the duties for the performance of which they were enacted.

Our conclusions, upon principle and authority, are that Congress, having power to create a system of national banks, is the judge as to the extent of the powers which should be conferred upon such banks, and has the sole power to regulate and control the exercise of their operations…[bold, underline and italics added]
In view of the holding in Osborn which Justice Marshall held that banks were public and not private bank corporations, which was approved and held applicable to later national bank corporations not directly created by Congress by the Supreme Court in Easton, why should we now consider national banks private corporations? And why not consider them “agencies of the Federal government” as referred to in Easton? And why should the same reasoning not apply to FEDERAL SAVINGS ASSOCIATIONS .
In Osborn at p. 22 U.S. 823 the court said of these national banks:
The charter of incorporation not only creates it, but gives it Every faculty which it possesses. The power to acquire rights of any description, to transact business of any description, to sue on those contracts, is given and measured by its charter, and that charter is a law of the United States. Take the case of a contract, which is put as the strongest against the Bank. . . [H]as this being a right to make this particular contract? .. . .[T]his question, too, depends entirely on a law of the United States [underline added]

The court in Osborn at p. 823, made it clear that federally chartered corporations created under acts of Congress could “. . .acquire no right, make no contract, bring no suit, which is not authorized by a law of the United States. It is not only itself the mere creature of law, but all its actions and all its rights are dependent on the same law”.[underline and bold added]
In an excerpt from Shoshone Mining Co. v. Rutter, 177 U.S. 505,509,510 ,citing Osborn, the court said:
A corporation has no powers and can incur no obligations except as authorized or provided for in its charter. Its power to do any act which it assumes to do, and its liability to any obligation which is sought to be cast upon it, depend upon its charter, and when such charter is given by one of the laws of the United States there is the primary question of the extent and meaning of that law;[underline & bold added]

In Runyan v. Lessee of Coster, 39 U .S. 122 , p. 129 (1840) the court Said:

…[T]hat a corporation “possesses only those properties which the charter of its creation confers upon it, either expressly, or as incidental to its very existence. That corporations created by statute must depend for their powers and the mode of exercising them, upon the true construction of the statute.
… The corporation must show that the law of its creation gave it authority to make such contracts.” . [underline and bold added]
Did the law of its creation (HOME OWNER LOAN ACT or NATIONAL BANK ACT ) give National banks and federal savings associations the right to make this contract with this provision?
Can it then be said that the provision in a mortgage contract requiring a mortgagor to transfer his rights to a trustee with a power of sale for the non-payment of a mortgage is authorized by the federal charter? Is this not the right to foreclose on an owner without resort to judicial process and a hearing? Is this not the right to deprive a person of procedural due process? We must then ask the question: Is the act of the national or federal savings association in foreclosing non-judicially within the scope of a law of Congress? Can the government by way of a federal charter authorize a right to a bank to do what it is forbidden to do itself? It is fundamentally clear that the government can impart no greater power through a charter than they possess themselves. The power to deny a person of procedural due process is denied to the government under the 5th Amendment and is equally denied to the banks. As John Locke said nearly 300 years ago: “…Nobody can transfer to another more power than he has in himself “ [John Locke, TWO TREATISE OF GOVERNMENT, BOOK II] The courts in Osborn and Shoshone and Runyan show us that the conduct of banks in pursuit of non-judicial foreclosures must be done under the authority of the federal charter which is a “law of the United States” and therefore “under color of federal law”. Thus National banks and federal savings associations Mortgage fsb could be considered a “governmental actor” like the assumption made by the First Circuit in Gerena v Puerto Rico Legal Services, Inc., 697 F. 2d 447(1st Cir. 1983)

D. CONGRESS CANNOT AUTHORIZE OR
DELEGATE A RIGHT OR POWER THAT
IT CANNOT EXERCISE ITSELF
If all the acts, rights and obligations of corporations with federal charters must be done under the authority of the federal charter and a law of the United States, including rights created in contract, how can Congress authorize a provision that it could not exercise itself? The provision can only be validated by what it represents and the constitutional implications it may give rise to. In United States v Grimaud, 220 U.S. 506 (1911) the Supreme Court decided that very issue and the court citing Justice Marshall at 220 US pg. 517 said.

It will not be contended that Congress can delegate to the courts, or to any other tribunals, powers which are strictly and exclusively legislative. But Congress may certainly delegate to others powers which the legislature may rightfully exercise itself. [underline bold & italics added]

E. A POWER OF SALE PROVISION UPON DEFAULT IS
ULTRA VIRES AND NULL AND VOID
As the Supreme Court said in Concord First Nat’l Bank v Hawkins 174 U.S. 364 p. 371:
The doctrine of ultra vires, by which a contract made by a corporation beyond the scope of corporate powers is unlawful and void and will not support an action, rests as the Court has often recognized and affirmed, upon three distinct grounds: the obligation of anyone contracting with a corporation to take notice of the legal limits of its powers, the interest of the stockholders not to be subject risks which they have never undertaken, and above all, the interest of the public that the corporation shall not transcend the powers conferred upon it by law.[bold added]
The powers of a corporation are express and incidental. Runyan at p. 129 supra. If Congress cannot confer the power to foreclose non judicially to National banks and federal savings associations then the provision is ultra vires and void.

II. THE LENDING FUNCTIONS OF
OF NATIONAL BANKS AND FEDERAL SAVINGS ASSOCIATIONS ARE GOVERNMENTAL
In Federal Land Bank v. Bismarck Co. of St. Paul, 314
U. S. 95 (1941) the court was faced with determining
whether the lending functions were proprietary or governmental. The court said:
The argument that the lending functions of the federal land banks are proprietary, rather than governmental, misconceives the nature of the federal government with respect to every function which it performs. The federal government is one of delegated powers, and from that it necessarily follows that any constitutional exercise of its delegated powers is governmental. Graves v. New York ex rel. O’Keefe, 306 U. S. 466, 306 U. S. 477. It also follows that, when Congress constitutionally creates a corporation through which the federal government lawfully acts, the activities of such corporation are governmental. (cites)
As part of their general lending functions, the land banks are authorized to foreclose their mortgages and to purchase the real estate at the resulting sale. They are “instrumentalities of the federal government, engaged in the performance of an important governmental function.”(cites)
In Federal Land Bank v. Board of Kiowa County., 368 U.S. 146 the court said :

“the Federal Government performs no ‘proprietary’ functions. If the enabling Act is constitutional and if the instrumentality’s activity is within the authority granted by the Act, a governmental function is being performed.”
It is well settled that the enabling Act, Home Owner Loan Act (HOLA) is constitutional . Pittman v. Home Owners’ Loan Corp., 308 U. S. 21. Like federal land banks, the lending functions including foreclosures of federal savings assn’s/federal savings banks, such as National banks and federal savings associations Mortgage fsb, a federal instrumentality , should be treated as governmental just as the court in Bismarck held. Federal Land Bank v. Bismarck Co. of St. Paul, 314 U. S. 95, p. 102 (1941)
A. GOVERNMENT CANNOT EVADE ITS MOST SOLEMN CONSTITUTIONAL OBLIGATIONS BY SIMPLY RESORTING TO THE CORPORATE FORM
Can Congress divest itself of its identity with a corporation created and participated in for a public purpose sufficiently to allow the corporation to use a procedure that does not allow a hearing? That question was asked and answered in Lebron v National Railroad Passenger Corporation. 513 U.S. pgs 374, 375 when the court said:
c) There is a long history of corporations created and participated in by the United States for the achievement of governmental objectives. Like some other Government corporations, Amtrak’s authorizing statute provides that it “will not be an agency or establishment of the United States Government,” [cite]
(d) Although § 541 is assuredly dispositive of Amtrak’s governmental status for purposes of matters within Congress’s control–e. g., whether it is subject to statutes like the Administrative Procedure Act-and can even suffice to deprive it of all those inherent governmental powers and immunities that Congress has the power to eliminate-e. g., sovereign immunity from suit-it is not for Congress to make the final determination of Amtrak’s status as a Government entity for purposes of determining the constitutional rights of citizens affected by its actions. The Constitution constrains governmental action by whatever instruments or in whatever modes that action may be taken…
(e) Amtrak is an agency or instrumentality of the United States for the purpose of individual rights guaranteed against the Government by the Constitution. This conclusion accords with the public, judicial, and congressional understanding over the years that Government-created and -controlled corporations are part of the Government itself.(cites) ; A contrary holding would allow government to evade its most solemn constitutional obligations by simply resorting to the corporate form, Bank of United States v. Planters’ Bank of Georgia, 9 Wheat. 904, 907, 908 (other cites).
Like Amtrak, national banks and federal savings associations are federal instrumentalities and members in banking systems created for a public purposes and controlled by the director of The Office of Thrift Supervision and the director of the Comptroller of the currency. Like Amtrak it is not for Congress to make the final determination of the status of these corporations as government entities for purposes of determining the constitutional rights of citizens affected by its actions. Consumers are citizens whose constitutional rights are affected when non- judicial foreclosures are exercised by federally chartered corporations like National banks and federal savings associations . To paraphrase an old saying, “that with great power comes great obligations.” This is no less true when Congress confers enumerated and incidental powers on a corporation it creates for an important governmental function. It must follow that with the immunities from taxation and state laws that frustrate the activities of corporations for which an act of Congress was enacted, the constitutional obligations of the government must also attach. For as Justice Scalia said in Lebron, at p. 399:
But it does not contradict those statements to hold that a corporation is an agency of the Government for purposes of the constitutional obligations of Government rather than the “privileges of the government,” when the State has specifically created that corporation for the furtherance of governmental objectives, and not merely holds some shares but controls the operation of the corporation through its appointees.
In this case control of the operations is exercised by the director of the Office of Thrift Supervision and the director of the Office of the Comptroller of Currency independent federal regulatory agencies vested with plenary authority to administer the Home Owners’ Loan Act of 1933 (HOLA) and the National Bank Act, The Director of the OTS is appointed by the President, by and with the advice and consent of the senate. (12 USC §1462c) The Director of the Comptroller of the Currency is appointed by the President, by and with the advice and consent of the senate.(12 USC § 2) The issue of the government’s control over the operations of federal savings associations is clarified by the court in Fidelity Fed. S. & L. v. De la Cuesta, 458 U.S. 141 (1982) at p. 161 when the court said:
The broad language of § 5(a) expresses no limits on the Board’s authority to regulate the lending practices of federal savings and loans. As one court put it, “[I]t would have been difficult for Congress to give the Bank Board a broader mandate.” [cites] And Congress’ explicit delegation of jurisdiction over the “operation” of these institutions must empower the Board to issue regulations governing mortgage loan instruments.

In National Banks the governments control was made clear in Easton when the court said:
Our conclusions, upon principle and authority, are that Congress, having power to create a system of national banks, is the judge as to the extent of the powers which should be conferred upon such banks, and has the sole power to regulate and control the exercise of their operations…[bold, underline and italics added]

B. THE POWER TO FORECLOSE IS AN
INCIDENTAL POWER OF THE NATIONAL BANKS
AS WELL AS FEDERAL SAVINGS BANKS
The history of national banking legislation has been “one of interpreting grants of both enumerated and incidental `powers’ to national banks” as well as federal savings associations[which include savings banks]. Bank of America et al v City of San Francisco et al 309 F.3d 551 (Ninth Circuit) (2002) Consider this hypothetical. The California legislature would makes a law that as a matter of public policy foreclosures of any kind will not be permitted on a homeowner’s primary residence. The OTS is charged with the supervision of the Home Owner Loan Act like the Office of the Controller of Currency is ”charged with supervision of the National Bank Act” NationsBank of N.C.N.A. v Variable Annuity Life Ins. Co. 513 U.S. 252, 256(1995) The OTS and the OCC would promulgate rules allowing the banks to foreclose on the homes that have defaulted and in concert with the banks claim that the power to foreclose was an incidental power of national banks and also federal savings banks and therefore would preempt state law. The State would challenge that decision in court. Both Acts are silent on the necessity of banks foreclosures to secure the residential property in the event of default. The Acts, however, do bestow upon banks the authority to exercise by its board of directors, or duly authorized officers or agents, subject to law, all such incidental powers as necessary to carry on the business of banking. . .”12 U.S.C.§24(Seventh). The OTS authority to preempt state laws affecting its lending practices lies in 12 cfr §560.2. Because these sections are not explicit on the limits of “incidental powers”, an inquiry as to whether the NBA or HOLA would support the use of either one or both methods of foreclosures (Judicial foreclosures and/or non-judicial foreclosure) would be necessary. The holding in United States v. Grimaud, 220 U.S. 506(1911) would apply. The NBA or HOLA could authorize the former but not the latter because the government could not exercise the power to foreclose non-judicially itself.
C. NATIONAL BANKS AND FEDERAL SAVINGS ASSOCIATIONS MORTGAGE FSB CAN BE
CONSIDERED “AGENCIES” OF THE GOVERNMENT
In Acron Investments, Inc. et al v Federal Savings and Loan Insurance Corporation , 363 F.2nd 236 (9th Circuit, 1966) the court was given the task of determining if the Federal Savings & Loan Insurance Corporation (FSLIC) was an “agency”. After reviewing all the relevant code sections the court concluded that the corporation was an “agency” under 28 USC 451 because the control of the government over the corporation was more than custodial or incidental. In Acron at paragraphs 27 & 28 the court said:
…[T]he Reviser’s Note under 18 U.S.C. § 6 states that “The phrase `corporation in which the United States has a proprietary interest’ is intended to include those governmental corporations in which stock is not actually issued, as well as those in which stock is owned by the United States. It excludes those corporations in which the interest of the Government is custodial or incidental.” (Emphasis added.) 28 …Since the control which Congress and the United States exercise over the Corporation is clearly more than “custodial or incidental,” it would appear that the Corporation fits within the definition of “agency” of 28 U.S.C. § 451 and thus within the terms of 28 U.S.C. § 1345. [bold added]
Under the Ninth Circuit’s own test national banks and federal savings associations are “agencies”. Any doubt as to government’s control over the “operations” as being “custodial or incidental” is dispelled in Fidelity Fed. S. & L. v. De la Cuesta, 458 U.S. 141 (1982) at p. 161 when the court said:
The broad language of § 5(a) expresses no limits on the Board’s authority to regulate the lending practices of federal savings and loans. As one court put it, “[I]t would have been difficult for Congress to give the Bank Board a broader mandate(cites) And Congress’ explicit delegation of jurisdiction over the “operation” of these institutions must empower the Board to issue regulations governing mortgage loan instruments

With respect to National Banks the holding in Easton would apply as the court said:
Our conclusions, upon principle and authority, are that Congress, having power to create a system of national banks, is the judge as to the extent of the powers which should be conferred upon such banks, and has the sole power to regulate and control the exercise of their operations…[bold, underline and italics added]

CONCLUSION
The subject corporations cited share a common heritage with National banks and federal savings associations. They are corporations federally chartered and created under acts of Congress for important public and national purposes for which the Supreme Court has ruled on that premise in a number of cases that their activities were governmental. Thus in Bismarck the Court ruled that the lending functions were governmental not proprietary; and that foreclosure was part of the general lending functions. In Lebron, the Court ruled that the corporation was part of the government for the purpose of determining its constitutional obligations toward the rights of citizens affected by its actions.
The Ninth Circuit and other appellate courts have yet to apply the settled principles enunciated by these Supreme Court cases which lead to one conclusion— that National banks and federal savings associations’ use of a Trustee Sales(non-judicial foreclosures) must be a governmental acts and a 5th amendment violation of due process.
Constitutional powers conferred on a corporation should not be used to produce an unconstitutional result. The fallacy is that state law cannot determine the manner of foreclosure, but federal law with respect to the corporations created under acts of Congress. And federal law cannot authorize a non-judicial foreclosure , nor can the Constitution allow it.
Respectfully submitted,

___________¬¬¬¬¬¬¬¬________ Date:___________, 2010
Reuben Nieves

Click here to read the complete story at Livinglies's Weblog.

CALIFORNIA ATTORNEY GENERAL BROWN NAILS THEM AGAIN!!!!

Brown Wins $1 Million in Restitution for Victims of Attorney-Backed Foreclosure Rescue Scam

LOS ANGELES – Attorney General Edmund G. Brown Jr. today announced a $1.1 million judgment against longtime Los Angeles attorney Mitchell Roth after he conned 2,000 desperate homeowners into paying him thousands of dollars to file “frivolous and phony” lawsuits that didn’t reduce a penny of mortgage debt for a single client.

“Roth promised foreclosure relief through aggressive litigation, but the frivolous and phony lawsuits he filed instead left 2,000 desperate homeowners in even greater debt,” Brown said. “This settlement forces Roth to pay $1.1 million and prohibits him from ever again preying on new victims.”

In 2008, Roth, a seasoned Los Angeles attorney, joined with Nevada-based United First, Inc. and the company’s owner, Paul Noe, to provide foreclosure relief services to homeowners struggling to pay their mortgages. Noe, who was previously convicted of wire fraud and the subject of a 2004 Department of Insurance Cease and Desist Order, operated the company and handled client solicitations, while Roth provided legal services.

Homeowners were told that if they worked with United First and hired Roth to pursue their cases in court, they could lower or eliminate their mortgage debt and save their homes.

United First charged homeowners some $1,800 in up-front fees, plus at least $1,250 each month, and 50 percent of the cash value of any settlement. If a homeowner’s debt was eliminated altogether, the homeowner was required to pay United First 80 percent of the value of the home.

After collecting up-front fees, Roth filed lawsuits on behalf of homeowners, pushing a novel legal argument that a borrower’s loan could be deemed invalid because the mortgages had been sold so many times on Wall Street that the lender could not demonstrate who owned it.

Once the lawsuit was filed, Roth did next to nothing to advance the case and often failed to make required court filings, respond to legal motions, comply with court deadlines or appear at court hearings. Instead, Roth tried to extend the lawsuits as long as possible to collect additional monthly fees from clients.

This approach did not generate a single victory in court and did not lower or eliminate the mortgage debt for a single one of the 2,000 homeowners who hired Roth and United First.

Brown filed suit last July, alleging that Roth, Noe and United First engaged in unfair competition, made untrue and misleading statements and violated California’s credit counseling and foreclosure consultant laws.

The settlement announced today requires Roth to pay $1 million in restitution to defrauded homeowners plus $125,000 in penalties, and prohibits him from ever engaging in similar conduct in the future.

Roth was admitted to the California State Bar in 1977 and resigned in April 2009, after the State Bar ordered his law firm closed.

Brown’s office continues to litigate the case against Noe and United First.

Homeowners who were defrauded by Roth and United First, or victimized by any other foreclosure rescue scam, should contact Brown’s office at 1-800-952-5225 or file a complaint online at: http://www.ag.ca.gov/consumers/general.php

.

Homeowners can also file a complaint against a lawyer, a legal specialist or a company purporting to operate as a law firm with the State Bar by calling 1-800-843-9053 or visiting http://www.calbar.ca.gov

.

United First customers who are eligible for a refund will be contacted by mail.

By law, all individuals and businesses offering mortgage-foreclosure consulting, loan modification and foreclosure-assistance services must register with Brown’s office and post a $100,000 bond. It is also illegal for loan modification consultants and businesses to charge up-front fees for their services.

Non-profit housing counselors certified by the U.S. Department of Housing and Urban Development provide free help to homeowners. To find a counselor in your area, call 1-800-569-4287.

Brown has sought court orders to shut down more than 30 fraudulent foreclosure-relief companies and has brought criminal charges and obtained lengthy prison sentences for dozens of deceptive loan modification consultants.

For more information on Brown’s action against loan modification fraud visit: http://ag.ca.gov/loanmod

.

Copies of Brown’s original complaint, filed in Los Angeles County Superior Court, and the settlement announced today are attached.
# # #

You may view the full account of this posting, including possible attachments, in the News & Alerts section of our website at: http://ag.ca.gov/newsalerts/release.php?id=1979

Click here to read the complete story at Livinglies's Weblog.

Sunday 22 August 2010

Some sources for what to demand in discovery:

From “Mass Extinction Of Pools Becomes Clearer” on this site. Do a search under that title and look for the post by…wait. Let me paste the post:

avirani0203, on July 29, 2010 at 11:24 am Said:
So true ANONYMOUS. This is where you have to get down to the nitty gritty. I am seeing too many old-fashioned requests for document production. By old-fashioned, I mean that they are asking for paper documents.
In order to get to the heart of the real fraud, e-discovery is a must. The federal courts and some state courts like Texas have very strong e-discovery rules. What everyone is looking for is in the metadata. Remember, MERS is one huge computer database. The loans were transferred electronically. MERS has an e-note registry. The key information is in those native files. Any tampering or destruction of the metadata is grounds for a spoliation order.
Following is a sample of some definitions that I believe should be included in each and every document production request:
ESI” means electronically stored information including, but not limited to, information electronically, magnetically or optically stored as: (a) digital communications (e.g., e-mail, voice mail, instant messaging); (b) word processed documents (e.g., Word or WordPerfect documents and drafts); (c) spreadsheets and tables (e.g., Excel or Lotus 123 worksheets); (d) accounting application data (e.g., QuickBooks, Money, Peachtree data files); (d) image and facsimile files (e.g., PDF, TIFF, JPG, GIF images); (e) sound recordings (e.g., WAV and MP3 files); (d) video and animation (e.g., AVI and MOV files); (e) databases (e.g., Access, Oracle, SQL Server data, SAP); (f) electronic mail, contact and relationship management data (e.g., Outlook, Maximizer, ACT!), including emails resident on Plaintiff’s and/or Plaintiff’s agent(s)’ servers or computers; (g) calendar and diary application data (e.g., Outlook PST, Yahoo, blog tools); (h) online access data (e.g., temporary internet files, history, cookies); (i) presentations (e.g., PowerPoint, Corel Presentations); (j) network access and server activity logs; (k) project management application data; (l) computer aided design/drawing files; and (l) back up and archival files (e.g., ZIP, GHO)
“Metadata” means system and application metadata. System metadata is information describing the history and characteristics of other ESI. This information is typically associated with tracking or managing an electronic file and often includes data reflecting a file’s name, size, custodian, location, and dates of creation and last modification or access. Application metadata is information automatically included or embedded in electronic files but which may not be apparent to a user, including deleted content, draft language, commentary, collaboration and distribution data and dates of creation and printing. For electronic mail, metadata includes all header routing data and Base 64 encoded attachment data, in addition to the To, From, Subject, Received Date, Sent Date, Time Sent, CC, BCC and Body fields.
“Documents” means the original and each non-identical copy of any written, graphic, electronic, or magnetic matter, however produced, whether sent or received, or neither, including drafts and both sides thereof, in your possession, custody, or control and specifically includes ESI and metadata (as defined). The term shall include handwritten, typewritten, printed, photocopied, or recorded matter. It shall include communications in words, symbols, pictures, sound recordings, films, tapes, drawings, blueprints, charts, maps, graphs, photographs, still or moving picture films, parts or components of equipment, models, information stored in, or accessible through, computer or other information storage or retrieval systems, all other “documents and tangible things,” and any physical object in the possession of, subject to the control of, or within the knowledge of the party responding to these requests for production, including their counsel, experts or investigators. Any and all documents and data existing as electronic or magnetic data shall be produced on disc, either DVD (digital versatile disc) or CD (compact disc) or on external hard drive in the following format: (a) documents in WordPerfect 5.1 or higher shall be produced in the format in which they are maintained (*.wpd); (b) documents in Microsoft Word for Windows 2.x or higher shall be produced in the format in which they are maintained (*.doc); (c) documents in Microsoft Works 4.0 for Windows shall be produced in the format in which they are maintained (*.wps); (d) documents in Microsoft Excel for Windows 4.0 or higher shall be produced in the format in which they are maintained (*.xl*); (e) documents in Lotus 1-2-3 shall be produced in the format in which they are maintained (*.wk?); (f) web pages which cannot be produced as a hard copy shall be produced in *.htm or *.html format; (g) encoded text files shall be produced in the format in which they are maintained (*.txt); (h) Adobe Acrobat .pdf files shall be produced in *.pdf format; (i) electronic mail shall be produced in .pst, .msg or .nsf format; and (j) all other electronic documents and data shall be produced in native format, or in ASCII format, delimited appropriately, with a key, if necessary, identifying the data fields, if production in native format is not feasible. All hard copy (e.g., paper) documents shall be produced as Group IV, black and white, single-page .tiff or color .jpg images with a standard Summation (.dii) load file.

—
Max Gardner’s Top Reasons For Wanting A Pooling Servicing Agreement:

http://blog.ncblc.com/?s=pooling+and+servicing+agreement

The Alphabet Problem And The PSA:

http://www.maxbankruptcybootcamp/alphabet-problem-pooling-servicing-agreement

Source for the above two is a neat little site:

http://homeequietytheft.blogspot.com/

Click here to read the complete story at Livinglies's Weblog.

EDITOR’S COMMENT: Here is an interesting comment from Scott Baker — someone who “has no dog in the race.” They paid off their mortgage. The point here is that Lenders knew exactly who their customer was, but the borrowers never did. In a “free” marketplace, this choice was taken out of the hands of the borrowers by concealing the real source of funds and the identities of the players.

The comment makes a good point when he says that he chose a Lender based upon reputation and his perception of the relationship he wanted with a Lender. This was also eviscerated. And his point is fairly made — there was no disclosure and he was coerced into doing the deal because “everybody’s doing it.”

Sound familiar? If it does, it is because that is exactly how the rest of the deal went and our society is slow to realize that amongst the many freedoms we gave up over the last decade was the freedom to choose the party with whom we do business.

I’m not in the same dire situation as so many commenters on this page, having paid off my mortgage before the s*^t hit the fan.
However, I did try to object to the clause in my mortgage that allowed my bank to split my mortgage via securitization to other investors. My reasoning was that not only should a lender be able to choose their borrowers, but a borrower should be able to choose their lender, even if the terms ostensibly don’t change. In fact, I specifically chose (what I thought) was a reputable lender, based on size, reputation (at the time), and, finally, terms. I specifically did not want any of the fly-by-night lenders that flooded my spam folder in those days (thankfully, these seem to have disappeared).
However, my RE lawyer said I had no right to object to securitization because “they all do that.” So, reluctantly, I signed the contract with that clause. It turns out that the bank did, indeed, securitize my loan, and virtually all others, but I paid it off in full shortly after anyway.
I still maintain that a borrower has a full right to decide to borrow from one party and not another.

Click here to read the complete story at Livinglies's Weblog.

Editor’s Comment: THIS IS WHY EVERYONE SHOULD BE ALARMED AT THE FAILURE OF THE COURTS AND GOVERNMENT AGENCIES TO GIVE THE STOLEN PURSE BACK TO INVESTORS AND BORROWERS. EVEN IF YOU ARE NOT UPSIDE DOWN, EVEN IF YOU DON’T HAVE A PREDATORY LOAN YOUR HOME, YOUR LIFE AND THE ECONOMIC HEALTH OF YOUR SOCIETY IS CRUMBLING UNDER THE WEIGHT OF SOME IDEOLOGICAL NOTION THAT IT IS BETTER TO FORCE MILLIONS FROM THEIR HOMES AND CHEAT INVESTORS THAN TO LET THEM HAVE RELIEF. THE FIGURES WERE BOGUS. PRINCIPAL REDUCTION IS NOT A GIFT IT IS A RECOGNITION OF REALITY.

Home Sales at Lowest Level in More Than a Decade

By DAVID STREITFELD

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EDITOR’S NOTE: Lest people think I invented this whole field of law just because I’m loudest about it, here is a post from Max Gardner, who only a few days after I started this blog had already figured out everything I had figured out and was already doing something about it.

Max Gardner’s Top Reasons for Wanting a Pooling Servicing Agreement

Monday, November 5th, 2007

Every time I file a civil action against a mortgage servicer the very first document I want is a copy of the “Pooling and Servicing Agreement.”  This is the legal document that creates the securitized trust of mortgage loans and also strictly provides for the duties of all entities who are assigned the responsiblity of servicing loans for the Trust.

For all “public placements” or “public offerings,”  the Pooling and Servicing Agreement is always filed on Form 8-K with the Securities and Exchange Commission.  All such documents can be found by conducting a search of the SEC’s website through an internal search engine known as “Edgar.”  But, what is a PSA?  Why do I want to see it? What can be found in the PSA?  Kevin Byers, a forensic accountant, who works with me on these cases, has assisted me in developing the following list of reasons why any consumer must have the PSA.  The reasons are as follows:

Pooling and Servicing Agreements (PSA)Top Twenty Reasons to Request ProductionKevin Byers and O. Max Gardner III

In no particular order, these are some of reasons you need to request through formal discovery in any mortgage-related case the PSA Agreement and why it is relevant:

1.     It is a contractual document naming the parties to any given securitization, important for standing issues.  The document will list the Sponsor, the Trustee for the Securitized Trust, the Master Servicer, and all primary and secondary servicers.

2.     It provides address for all necessary parties including “notice” addresses for the service of legal process. 3.     It outlines the specific duties of the Servicer and/or the Master Servicer as well as the Trustee on behalf of a respective trust. 4.     It contains the representations and warranties of all parties to the agreement, including the Servicer and/or Master Servicer.

5.     It includes all representations provided by the Depositor of the loans into the trust as the same relate to important consumer protection issues related to the underwriting and origination of the loan, such as conformity with anti-predatory lending laws, full-file credit reporting, title insurance coverage, and validity and content of individual loan files.

6.     It gives the conditions under which a prepayment penalty may be waived or modified by the Servicer and/or Master Servicer. 7.     It oftentimes will outline specific loss mitigation and foreclosure avoidance measures available to the Servicer, including, for example, forbearance and loan modification, principal reductions, interest reductions and interest changes.

8.     It defines a “defective mortgage loan” and describes the circumstances and process by which the lender must repurchase a loan.

9.     It establishes the rights of the Trustee under the Trust to force the Depositor/Originator of any loan to repurchase a loan under the recourse provisions. 10.    It describes the specific process by which a delinquent loan can be charged off and the subsequent servicing party and procedures that apply to such charged-off loan. 11.    It provides guidelines on loan-level advances that must be paid by the servicer. 12.    It provides details regarding the mechanics of how the Servicer must go about foreclosing on property, what documents need to be requested and/or recorded and what authorizations need to be granted to foreclose, and in whose name the foreclosure must be filed. 13.    It provides guidance on the fees a Servicer may retain as compensation in the administration of the loans, for example, NSF fees, late fees, loan modification or assumption fees.

14.    It will contain the Mortgage Loan Schedule, important to verify the ownership of the loan on behalf of the Trust.

15.    It details the requirements for mortgage assignments and when these will or will not be recorded and the implications of the failure to record such assignments. 16.    It details the specific loan documents contained in each loan file that will be delivered to the Trustee or Document Custodian on behalf of the trust, establishing who holds the original Note and where it may be found.

17.    It describes the credit enhancements that have been deployed to enhance the rating of the most secure certificates of investment in the Trust.

18.    It provides rules and procedures for the rights of the Master Servicer or the Primary Servicer to accept a deed-in-lieu of foreclosure or a short sale of the property so as to avoid a foreclosure.

19.    It describes the rights the Originator/Depositor may retain the Residual Value of the Trust and the extent to which the residuals may be used as credit enhancements.

20.    It will name a default servicer and describe when a loan is considered to be in default and outline the process for the transfer of servicing rights.

O. Max Gardner IIIHistoric Webbley House

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EDITOR’S NOTE: Today’s editorial in the New York Times mirrors the outlook of most Americans. It’s time to pass some new rules. I agree but I think that puts the emphasis on the wrong place. Most of these “new rules” were already in the old rules. They were not enforced. So the first new rule I would propose is “let’s enforce the old rules.”

While the writer of the opinion acknowledges that it has become fashionable to blame the borrowers, there is not one word of why and how that is simply not an adequate explanation for the mortgage mess, nor does it give us a proper starting point for correcting it.

Here is why we got into this mess: borrowers and investors who advanced the funds for the borrowers to borrow were fooled by clickety-clack quant language and assurances about “this is standard”, and other meaningless phrases. The result was that they relied upon the persons who were offering them a financial product that actually had a negative value. Nearly all borrowers and nearly all investors who participated were genuinely fooled. It was the equivalent of a business calling itself a bank taking deposits and then not giving it back. It was the equivalent of selling a poison pill as a natural herb supplement.

It was fraud that got us into this mess and it is prosecution of fraud that will get us out. Anything else, any other way of looking at it, merely compounds the record title problems that will soon explode in our faces, the economic problems that can’t go away unless they are actually addressed (as opposed to “dressed” in nice clothes).

Any Judge who allows another one to slip by thus giving a free house to a snickering lawyer and his client who has the name “Bank” is compounding problems that are already projected to last for more than three decades.

Any lawyer who fails to object to a proffer of evidence without the real evidence being required is aiding and abetting the enemy. They were lying when they started this and they are lying now.

This wasn’t an event. Is was and remains an on-going process of fraudulent transfers and shell games building on an already successful ponzi scheme that has never been taken down.

Now, the Rules

Click here to read the complete story at Livinglies's Weblog.

The Quote of the day in the New York Times reflects the main sentiment: to most people the economic recovery doesn’t look real. REALITY is what I’ve been seeking from government, the marketplace and the judicial system, but we just can’t seem to get it.

• They want a housing recovery but there is no plan in place to increase median income, which is the only reliable indicator or predictor of housing prices. Increase jobs, increase income, and you increase economic activity, tax revenue and the economy thrives.
  
• They measure and proclaim rising reported profits under a wink and nod accounting system that began in the 1960′s and which led to items being taken off the balance sheet or income statement if they looked bad on a company’s financial statements — but they don’t talk about median income which has shrunk for more than three decades, “offset” they say by rising debt. Exactly how is a lack of income offset by increasing debt. Could someone explain that to me?
• They want people to have confidence in the financial system that has tricked, scammed and stuck American and foreign citizens with a bill whose proceeds went into the pockets of the management of companies whose sole purpose was to get people into more debt. For every dollar spent by a consumer, business or governmental entity, $10 in fake and real money went into the pockets of “financial innovators.”
  
• They want people to have more confidence in the marketplace and start buying things they don’t need, when they don’t have the income, the savings or the credit to buy the things they DO need.
• They see the problem with mortgages and foreclosures but their plan is to get them modified without actually changing the terms.
  
• They send money into the financial system to get the players to modify the mortgages, but the players they are talking to don’t have the mortgages, don’t have the authority, and make a lot more money by (a) pretending to modify mortgages and then taking federal money and (b) foreclosing on property so they can apply unconscionable fees to the detriment of both the borrower and the lender (investor) who advanced the funds for the deal.
• They want more jobs created but they don’t do anything to stimulate the creation of small businesses which for 2 centuries have been the sole engine of economic growth and median income. Liquidity from the Fed has been reserved for financial institutions to keep trading with each other creating fictitious profits, creating no added value to society or the marketplace — no service, no products, just trades that give the appearance of profit.
• They want the deficit down which has largely resulted from a decrease in REAL economic activity, so they want to cut expenses which will decrease economic activity even further. Just what do you think those people losing jobs are going to buy? What businesses are they going to start? How will they capitalize their businesses or their life-style with no money? What we are seeing is an instant replay of the 1937 error, which FDR admitted, when he finally gave into the deficit hawks and the Country plunged even deeper into depression.
• What business has ever prospered by cutting revenues, channels of growth, innovation and employment? NONE. But that’s the plan that is being seriously considered for government by people more interested in their election prospects than they are in the prospects of the country as a whole.
• What business allows it’s biggest customer to not only skip paying their bills but gives them more money without any hope of getting it back? NONE. But that is what the State and Federal governments are doing when they fail to collect taxes, interest, fees, costs, penalties and damages from enterprises doing business, making money and not even reporting the trade as a profit, much less paying taxes, recording fees etc. That is what they did when they pumped $5 trillion into the financial sector to prop it up so that the world would not see how stupid and greedy our financial geniuses were and how relentless they were at pursuing and creating even fake money at the expense of the welfare of the entire world?

The problem is not that we are broke. The problem is that Wall Street has our money and won’t give it back. The problem is that they did it by tricking citizens into fake deals (stealing the purse) and making a culture out of life-styles of debt. The problem is that they took the one asset consumers had left — their house — and inflated the apparent value using sophisticated means far beyond the ability of the understanding of the average person, and then had these hapless people sign onto deals that were “backed” by property that was not worth half of the deal. Both the borrowers and the investors got stuck with the same lie.

So, Mr. President and the rest of your genius dream team of economic advisers, I realize that you are trying to do your best to avoid drama. I realize that you are trying to prop up an unsustainable economic infrastructure in which more money was created ($600 trillion) than we could ever hope to cover in a world where the real amount of government issued currency is less than 1/1oth that amount. And I realize there is no precedent for what has occurred here and the magnitude of the problem. It is brand new in human history. It is a fraud of unimaginable scope. But using old techniques of trying to kick the can down the road is not going to work. It can’t.

The likelihood is that if you let the bubble burst, which most people don’t realize exists, but investors are starting to get nervous about, the real loss is going to fall on the financial players who created this mess and who incidentally are holding the real money; the counter-party trades will neutralize a large part of the apparent money bubble that looks like it is there (but isn’t); and demonstrating that you are dealing with truth and reality will allow people, companies and government to deal with reality instead of maintaining the fantasy of Wall Street infallibility. THAT is when people will have confidence — when they know they are being told the truth.

If you have guts in addition to hope, if you have grit in addition to steadiness, if you have imagination in addition to your formidable intelligence and knowledge, you know that eventually REALITY will govern whether we like it or not. The quicker we get there the fewer people will suffer. The faster we take the brave steps amidst loud crises of “traitor!” the faster will have REAL RECOVERY. There is nothing in the world that is ever going to bring home prices back to where they were quoted when these deals were done. We ALL know that. The economy cannot really recover until median income and housing needs are fixed.

The goal here is not to assess blame but to QUICKLY spread the risk of loss in a fair and equitable way — just like derivatives were supposedly doing but in the hands of liars and cheats did quite the opposite. Right now the consumer is taking the brunt of this in debt, taxes, expenses that can’t be met and loss of self-esteem. American ingenuity has taken a direct hit and it is up to you, Mr. President to revive it in a wholesale shift, not in your favorite incremental steps.

NEIL F GARFIELD AUGUST 22, 2010 WWW.LIVINGLIES.WORDPRESS.COM

Click here to read the complete story at Livinglies's Weblog.

August 21st, 2010
Dear John Q Public
I am concerned over the massive amounts of foreclosures that have plagued this nation, robbed homeowners of their equity and their homes by the predatory lending practices of the banks. Many of these foreclosures are done through “Trustee sales” which do not allow a hearing and a right to a jury trial.

I am concerned because the entities seeking this remedy are overwhelmingly federally chartered corporations created under acts of Congress for public and national purposes.

Several Supreme Court decisions have ruled that the activities of these type of corporations are governmental not propriety.

I am seeking help from the city of Sacramento based on my research to send a letter to the regulatory authorities—The Office of Thrift Supervision and The Office of the Comptroller of the Currency to issue “Cease and Desist Order” to its members to use only Judicial Foreclosure which does not violate the 5th Amendment.

Most of these lenders are not making meaningful modifications. They would rather foreclose and affect everyone’s equity downward than modify the loans.

If the banks were required to go to court, the homeowner could raise affirmative defenses like unclean hands because most of the loans were inherently predatory because they were not intended to go to term but to be refinanced in a couple of years creating a revenue stream for the banks.

The city would be impacted by revenues tied to the sinking value of the homes through lower property taxes thus forcing severe budget shortfalls. If the regulatory authorities failed to comply with the cities demand, then the city could seek a writ of mandamus coupled with a preliminary injunction prohibiting banks from foreclosing until the legal issue as to their right to foreclose non judicially could be established.
On July 13th, 2010 I spoke before the city council of Sacramento. You can see my video plea on the website of the city of Sacramento. If there is anyone who can help stop these foreclosures with funding, you can contact me at reuben.nieves@yahoo.com I will send you a copy of my research.

Thank you

Reuben Nieves

Click here to read the complete story at Livinglies's Weblog.

——–

August 20, 2010 by Neil F Garfield

HI there!. I received an inquiry that was forwarded to me about your “title review.” Since this has gone through several different people, I wanted to contact you directly. You placed your  $149 deposit for a securitization search, review, report, copies of relevant documents and strategic commentary. You were one of the first people to help us get started in launching a search tool for homeowners and their lawyers and we thank you for your support.

The services we subscribed to and which told us we can find anything in a snap if we pay all this money over-stated their capability, in part because they were not actually automated and in part because they depended upon the voluntary reporting of the underwriters. So we had the issue of getting all the precise details of each transaction.

That means that without charge you can fill out this form: —> GTC Registration Form For Seach Services
Or purchase this service — > CLICK THIS LINK TO DO LOAN SPECIFIC TITLE RECORDS SEARCH, ANALYSIS AND COMMENTARY

THEN AFTER YOU HAVE DONE THAT YOU CAN COMPLETE THE SECURITIZATION SEARCH BY PURCHASING THIS SERVICE WHICH IS EXCLUSIVE TO EARLY PEOPLE WHO SUPPORTED THIS EFFORT: —>COMPLETION OF SPECIAL OFFER SUBSCRIPTION FOR SECURITIZATION SEARCH (YOUR $149) IS TREATED AS A THREE MONTH SUBSCRIPTION MEMBERSHIP.

Hopefully this clears things up for you. I know it is complicated, but we didn’t make it that way — Wall Street did.

Regards,
Neil

Click here to read the complete story at Livinglies's Weblog.

August 20, 2010 by Barry Nilson:

Click here to read the complete story at Livinglies's Weblog.

EDITOR’S NOTE: YES IT MEANS WHAT IT SAYS — WHICH IS WHAT I HAVE BEEN SAYING FOR THREE YEARS. BUT JUST BECAUSE SOME JUDGES REALIZE THAT THIS IS THE ONLY CORRECT LEGAL INTERPRETATION DOESN’T MEAN ALL OF THEM WILL ABIDE BY THAT. QUITE THE REVERSE. MOST JUDGES REFUSE TO ACCEPT AND CAN’T WRAP THEIR BRAINS AROUND THE FACT THAT THE FINANCIAL  INDUSTRY THAT SET THE LEGAL STANDARDS FOR PERFECTING A SECURITY INTEREST IN RESIDENTIAL HOME MORTGAGES COULD HAVE SCREWED UP LIKE THIS.

THE ANSWER OF COURSE IS THAT THEY DIDN’T — WALL STREET DID IT. I KNOW FOR A FACT AND HAVE SEEN THE INTERNAL MEMORANDUM WRITTEN IN 2003-2006 THAT LAWYERS WHO WERE PREPARING THE SECURITIZATION DOCUMENTS KNEW AND INFORMED THEIR CLIENTS THAT THIS COULD NOT WORK.

THIS DOES NOT MEAN YOU GET A FREE HOUSE. BUT IT DOES MEAN THAT AT THE MOMENT ANY HOUSE IN WHICH MERS WAS INVOLVED DOES NOT HAVE A PERFECTED SECURITY INTEREST AS AN ENCUMBRANCE. AND THAT MEANS THAT ANY FORECLOSURE BASED UPON DOCUMENTS OR PRESUMPTIONS REGARDING MERS ARE VOID. AND THAT MEANS THAT IF YOU FALL INTO THIS CLASS OF PEOPLE — AND MOST PEOPLE DO — IT IS POSSIBLE AND EVEN PROBABLE THAT YOU COULD BE AWARDED QUIET TITLE ON A HOME THAT WAS FORECLOSED AND SOLD EVEN YEARS AGO.

BUT BEWARE: JUST BECAUSE THEY SCREWED UP THE PAPERWORK AND THEY DON’T HAVE THE REMEDY OF FORECLOSURE IMMEDIATELY AVAILABLE DOESN’T MEAN THAT NOBODY LENT YOU MONEY NOR DOES IT MEAN THAT YOU DON’T OWE ANY MONEY NOR DOES IT MEAN THAT THEY COULD NOT CREATE AN EQUITABLE LIEN ON YOUR PROPERTY THAT COULD AMOUNT TO A MORTGAGE THAT COULD BE FORECLOSED. BUT THAT IS STRICTLY A JUDICIAL PROCESS EVEN IN SO-CALLED NON-JUDICIAL STATES.

WE ARE NOW CLOSING IN ON THE REALITY. THE INEVITABLE OUTCOME IS PRINCIPAL REDUCTION WHETHER THE BANKS LIKE IT OR NOT. EVEN IF THEIR LIEN WAS PERFECTED AND ENFORCEABLE THEY STILL CANNOT GET ANY MORE MONEY THAN THE HOUSE IS WORTH. WITHOUT THE ENCUMBRANCE, THEY ARE FORCED TO NEGOTIATE A WHOLE NEW PATH WITH ONLY THE PARTIES THAT ARE NOW LEFT HOLDING THE BAG ON THE LOSS ASSOCIATED WITH THE ORIGINAL LOAN ON YOUR PROPERTY, AFTER ADJUSTMENTS FOR PAYMENTS RECEIVED BUT NOT RECORDED OR ALLOCATED.

IN ORDER TO HOLD THEIR FEET TO THE FIRE, YOU HAVE TO KNOW THE ORIGINAL SECURITIZATION SCHEME AND INSIST ON PROOF OF WHAT HAPPENED AFTER THE INITIAL SECURITIZATION PLAN WAS PUT IN PLACE. REMEMBER THAT THIS IS NOT A FIXED EVENT. THIS IS SINGLE TRANSACTION BETWEEN THE BORROWER AND AN ONGOING PROCESSION OF SUCCESSORS EACH OF WHOM HAS QUESTIONABLE RIGHTS TO THE NOTE, MORTGAGE OR EVEN THE OBLIGATION SINCE THEY WERE ONLY ASSIGNED A RECEIVABLE FROM A PARTY WHO WAS NEITHER THE BORROWER NOR THE ORIGINATING LENDER.

A Homeowners’ Rebellion: Could 62 Million Homes be Foreclosure-Proof?

Ellen Brown
Web of Debt
August 20, 2010

Over 62 million mortgages are now held in the name of MERS, an electronic recording system devised by and for the convenience of the mortgage industry. A California bankruptcy court, following landmark cases in other jurisdictions, recently held that this electronic shortcut makes it impossible for banks to establish their ownership of property titles—and therefore to foreclose on mortgaged properties. The logical result could be 62 million homes that are foreclosure-proof.

Victims of predatory lending could end up owning their homes free and clear—while the financial industry could end up skewered on its own sword.

Mortgages bundled into securities were a favorite investment of speculators at the height of the financial bubble leading up to the crash of 2008. The securities changed hands frequently, and the companies profiting from mortgage payments were often not the same parties that negotiated the loans. At the heart of this disconnect was the Mortgage Electronic Registration System, or MERS, a company that serves as the mortgagee of record for lenders, allowing properties to change hands without the necessity of recording each transfer.

MERS was convenient for the mortgage industry, but courts are now questioning the impact of all of this financial juggling when it comes to mortgage ownership. To foreclose on real property, the plaintiff must be able to establish the chain of title entitling it to relief. But MERS has acknowledged, and recent cases have held, that MERS is a mere “nominee”—an entity appointed by the true owner simply for the purpose of holding property in order to facilitate transactions. Recent court opinions stress that this defect is not just a procedural but is a substantive failure, one that is fatal to the plaintiff’s legal ability to foreclose.

That means hordes of victims of predatory lending could end up owning their homes free and clear—while the financial industry could end up skewered on its own sword.

California Precedent

The latest of these court decisions came down in California on May 20, 2010, in a bankruptcy case called In re Walker, Case no. 10-21656-E–11. The court held that MERS could not foreclose because it was a mere nominee; and that as a result, plaintiff Citibank could not collect on its claim. The judge opined:

Since no evidence of MERS’ ownership of the underlying note has been offered, and other courts have concluded that MERS does not own the underlying notes, this court is convinced that MERS had no interest it could transfer to Citibank. Since MERS did not own the underlying note, it could not transfer the beneficial interest of the Deed of Trust to another. Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is void under California law.

In support, the judge cited In Re Vargas (California Bankruptcy Court); Landmark v. Kesler (Kansas Supreme Court); LaSalle Bank v. Lamy (a New York case); and In Re Foreclosure Cases (the “Boyko” decision from Ohio Federal Court). (For more on these earlier cases, see here, here and here.) The court concluded:

Since the claimant, Citibank, has not established that it is the owner of the promissory note secured by the trust deed, Citibank is unable to assert a claim for payment in this case.

The broad impact the case could have on California foreclosures is suggested by attorney Jeff Barnes, who writes:

This opinion . . . serves as a legal basis to challenge any foreclosure in California based on a MERS assignment; to seek to void any MERS assignment of the Deed of Trust or the note to a third party for purposes of foreclosure; and should be sufficient for a borrower to not only obtain a TRO [temporary restraining order] against a Trustee’s Sale, but also a Preliminary Injunction barring any sale pending any litigation filed by the borrower challenging a foreclosure based on a MERS assignment.

While not binding on courts in other jurisdictions, the ruling could serve as persuasive precedent there as well, because the court cited non-bankruptcy cases related to the lack of authority of MERS, and because the opinion is consistent with prior rulings in Idaho and Nevada Bankruptcy courts on the same issue.

What Could This Mean for Homeowners?

Earlier cases focused on the inability of MERS to produce a promissory note or assignment establishing that it was entitled to relief, but most courts have considered this a mere procedural defect and continue to look the other way on MERS’ technical lack of standing to sue. The more recent cases, however, are looking at something more serious. If MERS is not the title holder of properties held in its name, the chain of title has been broken, and no one may have standing to sue. In MERS v. Nebraska Department of Banking and Finance, MERS insisted that it had no actionable interest in title, and the court agreed.

An August 2010 article in Mother Jones titled “Fannie and Freddie’s Foreclosure Barons” exposes a widespread practice of “foreclosure mills” in backdating assignments after foreclosures have been filed. Not only is this perjury, a prosecutable offense, but if MERS was never the title holder, there is nothing to assign. The defaulting homeowners could wind up with free and clear title.

In Jacksonville, Florida, legal aid attorney April Charney has been using the missing-note argument ever since she first identified that weakness in the lenders’ case in 2004. Five years later, she says, some of the homeowners she’s helped are still in their homes. According to a Huffington Post article titled “‘Produce the Note’ Movement Helps Stall Foreclosures”:

Because of the missing ownership documentation, Charney is now starting to file quiet title actions, hoping to get her homeowner clients full title to their homes (a quiet title action ‘quiets’ all other claims). Charney says she’s helped thousands of homeowners delay or prevent foreclosure, and trained thousands of lawyers across the country on how to protect homeowners and battle in court.

Criminal Charges?

• A d v e r t i s e m e n t
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Other suits go beyond merely challenging title to alleging criminal activity. On July 26, 2010, a class action was filed in Florida seeking relief against MERS and an associated legal firm for racketeering and mail fraud. It alleges that the defendants used “the artifice of MERS to sabotage the judicial process to the detriment of borrowers;” that “to perpetuate the scheme, MERS was and is used in a way so that the average consumer, or even legal professional, can never determine who or what was or is ultimately receiving the benefits of any mortgage payments;” that the scheme depended on “the MERS artifice and the ability to generate any necessary ‘assignment’ which flowed from it;” and that “by engaging in a pattern of racketeering activity, specifically ‘mail or wire fraud,’ the Defendants . . . participated in a criminal enterprise affecting interstate commerce.”

Local governments deprived of filing fees may also be getting into the act, at least through representatives suing on their behalf. Qui tam actions allow for a private party or “whistle blower” to bring suit on behalf of the government for a past or present fraud on it. In State of California ex rel. Barrett R. Bates, filed May 10, 2010, the plaintiff qui tam sued on behalf of a long list of local governments in California against MERS and a number of lenders, including Bank of America, JPMorgan Chase and Wells Fargo, for “wrongfully bypass[ing] the counties’ recording requirements; divest[ing] the borrowers of the right to know who owned the promissory note . . .; and record[ing] false documents to initiate and pursue non-judicial foreclosures, and to otherwise decrease or avoid payment of fees to the Counties and the Cities where the real estate is located.” The complaint notes that “MERS claims to have ‘saved’ at least $2.4 billion dollars in recording costs,” meaning it has helped avoid billions of dollars in fees otherwise accruing to local governments. The plaintiff sues for treble damages for all recording fees not paid during the past ten years, and for civil penalties of between $5,000 and $10,000 for each unpaid or underpaid recording fee and each false document recorded during that period, potentially a hefty sum. Similar suits have been filed by the same plaintiff qui tam in Nevada and Tennessee.

By Their Own Sword: MERS’ Role in the Financial Crisis

MERS is, according to its website, “an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans.” Or as Karl Denninger puts it, “MERS’ own website claims that it exists for the purpose of circumventing assignments and documenting ownership!”

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MERS was developed in the early 1990s by a number of financial entities, including Bank of America, Countrywide, Fannie Mae, and Freddie Mac, allegedly to allow consumers to pay less for mortgage loans. That did not actually happen, but what MERS did allow was the securitization and shuffling around of mortgages behind a veil of anonymity. The result was not only to cheat local governments out of their recording fees but to defeat the purpose of the recording laws, which was to guarantee purchasers clean title. Worse, MERS facilitated an explosion of predatory lending in which lenders could not be held to account because they could not be identified, either by the preyed-upon borrowers or by the investors seduced into buying bundles of worthless mortgages. As alleged in a Nevada class action called Lopez vs. Executive Trustee Services, et al.:

Before MERS, it would not have been possible for mortgages with no market value . . . to be sold at a profit or collateralized and sold as mortgage-backed securities. Before MERS, it would not have been possible for the Defendant banks and AIG to conceal from government regulators the extent of risk of financial losses those entities faced from the predatory origination of residential loans and the fraudulent re-sale and securitization of those otherwise non-marketable loans. Before MERS, the actual beneficiary of every Deed of Trust on every parcel in the United States and the State of Nevada could be readily ascertained by merely reviewing the public records at the local recorder’s office where documents reflecting any ownership interest in real property are kept….

After MERS, . . . the servicing rights were transferred after the origination of the loan to an entity so large that communication with the servicer became difficult if not impossible …. The servicer was interested in only one thing – making a profit from the foreclosure of the borrower’s residence – so that the entire predatory cycle of fraudulent origination, resale, and securitization of yet another predatory loan could occur again. This is the legacy of MERS, and the entire scheme was predicated upon the fraudulent designation of MERS as the ‘beneficiary’ under millions of deeds of trust in Nevada and other states.

Axing the Bankers’ Money Tree

If courts overwhelmed with foreclosures decide to take up the cause, the result could be millions of struggling homeowners with the banks off their backs, and millions of homes no longer on the books of some too-big-to-fail banks. Without those assets, the banks could again be looking at bankruptcy. As was pointed out in a San Francisco Chronicle article by attorney Sean Olender following the October 2007 Boyko [pdf] decision:

The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.

. . . The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail . . . .

Nationalization of these giant banks might be the next logical step—a step that some commentators said should have been taken in the first place. When the banking system of Sweden collapsed following a housing bubble in the 1990s, nationalization of the banks worked out very well for that country.

The Swedish banks were largely privatized again when they got back on their feet, but it might be a good idea to keep some banks as publicly-owned entities, on the model of the Commonwealth Bank of Australia. For most of the 20th century it served as a “people’s bank,” making low interest loans to consumers and businesses through branches all over the country.

With the strengthened position of Wall Street following the 2008 bailout and the tepid 2010 banking reform bill, the U.S. is far from nationalizing its mega-banks now. But a committed homeowner movement to tear off the predatory mask called MERS could yet turn the tide. While courts are not likely to let 62 million homeowners off scot free, the defect in title created by MERS could give them significant new leverage at the bargaining table.

Click here to read the complete story at Livinglies's Weblog.

UPDATE: This is THE OUTLINE of a plan that is current in its evolution but by no means complete or the last word. It replaces the entry I made in February of this year. The assumption here is that even without taking mortgage foreclosure cases into consideration, the percentage of cases that actually go to trial is between 5%-15% depending upon how you categorize “cases.” On the other hand, if you are not prepared for trial and counting on settlement, your opposition will generally know it and have the upper hand in negotiating a settlement. They are going to play for keeps. You should too. Don’t assume that the note in front of you is the actual original. Close inspection often reveals it is a color copy.

And for heaven sake don’t stand there with your mouth hanging open when someone says you are looking for a free house. You are looking for justice. You had your purse snatched in this transaction, you know there is an obligation, but you also know that they didn’t perfect the security interest (not your fault) and they received multiple payments from multiple parties on these securitized loans. You want a FULL accounting of all such transactions to determine what balance is due after insurance payments, who is subrogated or substituted on claims, and an opportunity to negotiate a settlement or modification with someone who actually has advanced money on THIS transaction and can show it to be so.

WORD OF CAUTION: IF YOU ARE ALREADY IN PROCESS, YOU ARE REQUIRED TO ACT WITHIN THE TIMES SET FORTH BY STATE LAW, FEDERAL LAW, OR THE LAWS OF CIVIL PROCEDURE. FAILURE TO DO SO LEAVES YOU IN AN UPHILL BATTLE TO REVERSE ACTIONS ALREADY TAKEN. ON THE OTHER HAND ACTIONS ALREADY TAKEN “FIX” THE POSITION OF YOUR OPPOSITION, SINCE THEY CAN NO LONGER ASSERT CHANGES IN CREDITOR, LENDER OR TRUSTEE. THUS IT MIGHT BE EASIER, ACCORDING TO SOME SUCCESSFUL LITIGATORS OUT THERE, TO WAIT UNTIL THE SALE HAS OCCURRED AND THEN ATTACK IT AS A FRAUDULENT SALE, THAN TO TRY TO STOP IT WITH A TEMPORARY RESTRAINING ORDER ETC.

CONSIDER BANKRUPTCY, ESPECIALLY CHAPTER 13, WHERE THERE ARE MORE REMEDIES THAN YOU MIGHT THINK IF YOU FILL OUT YOUR SCHEDULES PROPERLY. WE ARE SEEING BETTER RESULTS IN SOME BANKRUPTCY COURTS THAN FEDERAL OR STATE CIVIL COURT PROCEEDINGS.

1. Get your act together, stop fighting amongst the members of your household and make a decision as to what you want to do — fight or flight?
2. GET SOME HELP NO MATTER WHAT YOU DECIDE. GET THE LOAN SPECIFIC TITLE SEARCH, GET A SECURITIZATION SEARCH, AND GET A LAWYER LICENSED IN THE COUNTY WHERE YOUR PROPERTY IS LOCATED AND MAKE SURE HE/SHE IS NOT STUCK ON THE PROPOSITION THAT YOU SHOULD LOSE.
3. If you choose flight, then by all means try the short-sale or jingle mail strategies that have been discussed on this blog. Do not try to make money on the short-sale, since nobody is going to give it to you. You can make a few dollars by riding out the time in foreclosure without making payments (and hopefully saving the money you would have paid) and by negotiating as high a price (a few thousand dollars)  as you can in a deal known as “cash for keys.” Even for this, you should employ the services of a local licensed attorney — at least for consultation. There are several short-sale options that have evolved. Google Edge Simonson or Prime financial. I’ve been working on a short-sale-leaseback option that seems to be picking up steam.
4. STRATEGIC DEFAULTS RISING: More and more people of all walks of life including those that have some considerable wealth, are walking away from these properties that were the subject of transactions in which the presumed value of the property was preposterous. This is an option that scare the hair off the pretender lenders because it pouts the power in your hands. They in turn are trying to scare the public with threats of deficiency judgments etc and collections. It is doubtful that many or indeed any deficiency judgments would be awarded, even if they were allowed. But in many cases, particularly in non-judicial states, deficiency judgments are NOT allowed. A version of the strategic default that many people like is to stay as long as possible without paying and then walk. If you are smart about it, you raise your own capital by socking away the payments you would have made.
5. If the decision is fight — then the second decision to make is to answer the question “fight for what?” If you want to buy time, there are many strategies that can be employed, which basically are the same strategies as those used if you are fighting for real. And you might be surprised by the result. Some people get a year or two or even more without payments. You are going to take a FICO hit anyway so why not put some cash in your pocket while you hold back payments.
6. AVOID crazy deals where you give your property or share your property with a stranger. If you persist in engaging such people at least call references and make sure the references are real. Ask questions about their situation and how they feel it worked out to them. Get as much detail as possible.
7. AVOID mortgage modification firms. If you persist in engaging such people at least call references and make sure the references are real. Ask questions about their situation and how they feel it worked out to them. Get as much detail as possible. My opinion is that if they don’t pursue an aggressive litigation strategy the statistical probability of you accomplishing anything by going to them is near zero.
8. In all cases, if at all possible:

(a) Get all your information together along with a short executive summary of your “journal” (even if you create the journal now). That means all closing documents, any information you have on title, recording in the county recorder’s office, the names of all parties who were “at” closing (that means not just the actual people who were there, but he names of companies that were represented or mentioned at closing). Also, include in the file any notices of default(NOD) or notice of Trustee sale (NOTS) or summons from a court.

(b) Get a MORTGAGE ANALYSIS of the loan transaction itself. THIS INVOLVES THREE PARTS — (1) LOAN SPECIFIC TITLE SEARCH AND CHAIN OF TITLE, EXAMINATION OF THE DOCUMENTS, SIGNATURES, AND DATES OF DOCUMENTS PURPORTING TO BE REAL, (2) SECURITIZATION SEARCH THAT CHASES THE MONEY TRAIL AND WILL PROBABLY LEAD YOU TO SOME IMPORTANT ISSUES LIKE THE VERY EXISTENCE OF THE “TRUST” ASSERTING IT HAS THE RIGHT TO FORECLOSE AS WELL AS MONETARY ISSUES SUCH AS APPLICATION OR ALLOCATION OF PAYMENTS RECEIVED BY THE INVESTOR WHO ADVANCED THE FUNDS FOR THE LOAN AND (3) COMMENTARY AND ANALYSIS THAT IS USABLE BY AN ATTORNEY IN COURT SUCH THAT HE/SHE CAN ARGUE THAT THERE ARE QUESTIONS OF FACT ENTITLING YOU TO PURSUE DISCOVERY. IF YOU WIN THAT POINT YOU ARE ON YOUR WAY TO A SUCCESSFUL CONCLUSION. BUT NOBODY IS GOING TO MAKE IT EASY FOR YOU.

(c) Who is your creditor? The TILA Audit alone does nothing without taking further steps. The Trustee’s “Take-down” report should be demanded in non-judicial states and if the house is in foreclosure, your written objection should be sent to the Trustee.

(d) If someone tells you they are “pretty sure” or can “definitely”  stop your foreclosure or promises a favorable outcome, and asks for money up front, then run like hell. This is a scam. IF THEY TELL YOU THEY WILL DO WHAT THEY CAN, AND THEY GIVE YOU SOME EXAMPLES OF WHAT THEY WILL BE DOING FOR YOU THEN LISTEN AND GET REFERENCES.

(e) Only a Court order stops foreclosure or a Trustee Sale. No letter of any form or substance will stop it unless the other side is intimidated into stopping the action, which sometimes happens when they know their paperwork is “out of order.”

(f) Get a Forensic Mortgage Analysis Report OR AN EXPERT DECLARATION that summarizes in a few pages the potential issues that you should be investigating AND WHICH LENDS SUPPORT TOY OUR DENIAL OF THE DEFAULT, DENIAL OF THE RIGHT OF THE OPPOSING PARTY TO CLAIM A DEFAULT, DENIAL OF THE RIGHT OF THE OPPOSING PARTY TO FORECLOSE.

(g) Get an Expert Declaration that uses the forensic report and the expert opinions of specific experts (like appraisers, title analysts) and which identifies the probable chain of securitization and the money trail. You’ll be surprised when you find out there were two yield spread premiums not disclosed to you and that they can total as much or more than the “loan” itself. GET EXPERT OPINION ON PROBABLE DAMAGES INCLUDING RETURN OF UNDISCLOSED FEES, INTEREST, ETC. (SEE LAWYER’S WORKBOOK FROM GARFIELD CONTINUUM).

(h) Send the Forensic Report and expert declaration to the known parties, with an instruction to forward it to all other parties known to them in the securitization chain. Include a Qualified Written Request(QWR) AND a Debt Validation Letter(DVL) (which is really a debt verification letter). Don’t be surprised if your pretender lenders will come back and tell you your QWR is defective or improper in some way, but that’s OK, you have followed statutory procedure and they didn’t. With the help of an attorney and with consultation with your experts decide on what resolution you will demand — damages, rescission, etc.

(i) Don’t believe a word about modification. Practically none of them go through. They are leading you into default so they can collect more service fees, and get money out of you that you think is stopping the foreclosure.

(j) Don’t believe a word that any pretender lender or representative says or represents, even if they are a lawyer, particularly verbal communications that they refuse to confirm in writing. Challenge everything.

(k) Don’t accept any document as authentic. Many documents are being fabricated or forged, including affidavits. This is why you need a lawyer and an expert and a Forensic mortgage analysis — to determine what documents and parties are suspect and what you should be asking for in discovery and in the QWR and DVL.

(l) YOUR FIRST STRATEGY IS TO RAISE NOT PROVE ISSUES OF FACT. BY PRODUCING A FORENSIC REPORT AND EXPERT DECLARATION, NEITHER YOU NOR YOUR LAWYER NEEDS TO ACQUIRE EXPERTISE IN SECURITIZED LOANS. YOU ONLY NEED TO RAISE THE ISSUE OF FACT BY SHOWING THE COURT THAT YOU HAVE EXPERTS WHO SAY THE PRETENDER LENDERS/TRUSTEES ETC. ARE NOT CREDITORS AND NOT AUTHORIZED AGENTS WORKING FOR THE CREDITORS. THEY SAY THEY ARE IN FACT THE CREDITORS OR HAVE SOME AUTHORITY GRANTED BY AN ALLEGED CREDITOR. IT IS NOT FOR THE COURT TO ACCEPT ONE VIEW OR THE OTHER, BUT RATHER TO ALLOW DISCOVERY AND AN EVIDENTIARY HEARING ON THE ISSUE OF STANDING (SEE MANY RECENT CASES REPORTED SINCE FEBRUARY ON THIS BLOG).

(m) Be very aggressive on discovery. They will argue that even if they are not the creditor and even if they refuse to disclose the identity of the creditor, they are still entitled to disclose because they are the holder of the note and/or mortgage. Your argument will probably be that they still have a duty to disclose the identity of the creditor and the source of the their authority to represent the creditor, along with proof that the creditor has received notice of these proceedings.

Click here to read the complete story at Livinglies's Weblog.

NEW YORK CLASS ACTION FILED AGAINST BANKS AND THEIR FORECLOSURE MILL ATTORNEYS

Today, August 20, 2010, 24 minutes ago | Foreclosureblues

Class action suit filed in New York against “foreclosure mill” attorneys and banks
Fri, 2010-08-20 10:19 — NationalMortgag…
New York-based attorney Susan Chana Lask has filed a federal class action complaint on behalf of tens of thousands of New York State homeowners who lost their homes to an alleged foreclosure fraud orchestrated for years by a New York “foreclosure mill” attorney and major mortgage companies. The case is filed in the US District Court, Eastern District of New York, entitled “Connie Campbell against Steven Baum, MERSCORP Inc., et al.”, Case #10CV3800. It alleges violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), Real Estate Settlement Procedures Act (RESPA) and the Fair Debt Collection Practices Act, and that homeowners paid inflated foreclosure and other fees fictionalized by Baum who profited from the scheme since 2005.

The action seeks to return tens of thousands of foreclosed homes to their owners or the values thereof and hundreds of millions in punitive damages against Baum, MERSCORP and HSBC.

Attorney Susan Chana Lask discovered the alleged foreclosure scheme after her client lost her $1.7 million Brooklyn Caroll Gardens Brownstone home to a $190,000 mortgage foreclosure filed by attorney Steven Baum for HSBC. The foreclosure court filings were false as filed in HSBC v. Concepcion Campbell, et al, New York Supreme Court, Kings County, Index #20393/07. Steven Baum’s foreclosure complaint he filed was for HSBC against Campbell. It admits the loan was never assigned to HSBC, yet he sued for HSBC. A later Satisfaction of Mortgage was not filed for HSBC, but for a company named MERS, admitting HSBC never owned the loan and the foreclosure complaint should have never been filed in the first place.

Also, in the original foreclosure case of HSBC, they file documents by an alleged officer of MERS named Rebecca A. Cosgrove by a notary in Erie County. But MERS is located in Virginia and Erie County is in Buffalo, N.Y. where Baum’s office is based. It is suspect that Cosgrove is not even an officer of MERS, no less that she flew to Buffalo, N.Y. for the day just to sign a document before a notary. In fact, other courts recently discovered these same false notaries and “officer” claims in other cases involving Baum and MERS.

“Mr. Baum is an attorney who knows better, yet his foreclosure filings for parties who have no standing to sue confuse the courts and homeowners while he and his banking clients profit tremendously by throwing people on the streets after their bad loans sold by the very same banks become unaffordable to innocent people,” said Lask.

The aforementioned false foreclosure filings potentially hit tens of thousands of New Yorkers who were foreclosed upon.

“Courts have rules and laws are made to be followed. Corporate America needs to follow the rules and be accountable just like the rest of us, else we’re all victims to one big Bernie Madoff scam,” said Lask.

Courts blast Baum for his sloppy filings claimed to be deliberate to hasten foreclosures on unwitting homeowners and courts. On July 29, New York County Supreme court Judge Alice Schlessinger summed up a MERS foreclosure as “I am unable to say with any confidence that this was an honest transaction.”

The Manhattan U.S. Trustees office started an investigation of Baum months ago.

Click here to read the complete story at Livinglies's Weblog.

Editor’s Note: These go up either because someone else posts them or I run across the work of a lawyer that I liked. No guarantees, no magic bullets.

Florida – Before hiring a lawyer, check his credential at the Florida Bar website member seach:
http://www.floridabar.org/names.nsf/mesearch?openform.

Go to the Court House and ask the Court Clerk to give you some cases handled by the lawyer. Ask the lawyer to show you some of his winning cases. Question him about Trustee, assignments, affirmative defenses, Pooling Service Agreement (PSA), April Charney, Mortgage securization etc.

Some excellent Florida Foreclosure Defense Lawyers :
Miami/Broward – Dillon Graham Esq.
Broward – Carol Asbury Esq.,
Palm Beach – Thomas Ice Esq.
North Florida – Chip Parker, Matt Weidner, Wasylik Esq.

Can’t afford a lawyer ? Read http://www.foreclosureprose.com

Click here to read the complete story at Livinglies's Weblog.

Ok, no offense but this Garfield has no clue what he is talking about in this article. Let me tell you how YSP actually work. Typically banks send mortgage originators (lender) rates every day. The lender then chooses which rate he is going to offer the client. Frankly the higher the rate above the raw rate the higher the yield spread premium. (Which translates to higher commission paid to the lender.) Obviously, the lender cannot offer the raw rate to the client because no profit will be reckonized unless the lender can charge for numerous fees. Normally, charging additional fees is challenging due to the competitive nature of mortgage lending. Therefore, most lenders make thier income from YSP.

When it comes to charging YSP frankly it depends on how much time is spent preparing the loan. If it is a quick and easy loan a minimum YSP can be “charged”. Therefore the loan rate should be close to the raw rate for that loan product. On the other hand, some loans can take months even up to a year to close. So obviously the YSP has to be higher to offset the time and overhead needed to prepare that loan.

The bottom line is no one can stay in business without collecting some type of profitibility. Do you know of any business that can survive without any income?

Like any business, there are always ones that act responsible and with integrity and those that don’t. There are a number of cases where people abused the mortgage industry as it was originally intended. These people have created a black eye for the industry.

But to say that YSP is used to lie to clients claimed by Garfield is utterly ridiculous. If it wasn’t for YSP, how was a mortgage company to stay in business?? Answer that Garfield………..[OK see below]

ANSWER: NO OFFENSE TAKEN, BUT I ALWAYS KNOW WHEN SOMEONE SAYS “NO OFFENSE” WHAT THEY REALLY MEAN IS THAT THEY DON’T WANT TO HEAR AN ANSWER THAT MAKES THEM LOOK FOOLISH.

• YIELD: The rate received by the lender on a loan adjusted for the effects of amortization, points and other factors. That is why the APR is different than the nominal rate quoted to the borrower. The actual yield is considered to be the percentage return that goes to the lender, taking into consideration the amount of money the lender advanced and measured against the amount of money the lender actually receives on an annual basis.
• If there was ONE YIELD there would be no YIELD SPREAD. And if there was no YIELD SPREAD there would be no YIELD SPREAD PREMIUM.
• A Yield SPREAD arises when there are two different possible yields for the same loan. One is better for the borrower and one is better for the lender.
  
• If the spread favors the lender, then a PREMIUM is paid to the one responsible for creating it — i.e., the mortgage broker or mortgage originator.
  
• YIELD SPREAD PREMIUMS for 2001-2008 ran 3-4 times higher than the figures you quote. In some cases, they were much higher than that because all the premiums and commissions were raised to keep mouths shut who knew that the appraisal would never stand the test of time — even one day worth of time.
  
• While it is possible that an argument could have been made for the old yield spread premium of 1-1/2%, it still amounted to a commission that paid for asymmetric information — i.e., the lender/broker knew more than the borrower or the borrower would not have paid it.
• In order to “earn” a yield spread premium, the broker or originator must convince the borrower to accept a loan which gives the lender a higher yield than the borrower could otherwise pay. If the borrower takes the bait (you come to the table with less money, you reduce the the monthly payments at first anyway, etc.) then the yield spread occurs and the premium is paid.
• In order to convince the the borrower to take the loan terms that give the lender a higher yield, the broker must downplay the negative aspects of making the switch and play up the apparent advantages of the terms that give more to the lender.
• To seal the deal, the broker pretends to be acting in the best interests of the borrower when in fact he is acting in the best interests of himself and the “lender.”
• Pretending means the broker is lying to the customer about who to trust.  And the substance of the lie is that the loan that gives the higher yield to the lender is better for the borrower. This lie can only be accomplished in complex transactions like real estate purchases with one or more loans. Otherwise the borrower would see right through it.
  
• Thus I stand by my rendition of yield spread premiums and assert that you are counting the pits in the orange while someone is driving off with the grove — with your help.

Click here to read the complete story at Livinglies's Weblog.

EDITOR’S NOTE: Glad to see that April is doing what the rest of us are doing — going deeper and deeper. There are two things you need — the loan specific title search with analysis and the securitization search, report and analysis. One tracks the chain of title the other tracks the chain of money. You must track both in order to avoid the “proffers” and bogus representations of opposing counsel. The only thing I would add is that the Prospectus, Assignment and Assumption Agreement, Distribution reports and “re-stated” agreements tell a long tale as well.

The search for the securitization documents is not as simple as you might think. The claim of some “Trustee” for a “pool” is never backed up by documents showing the full chain of title of the loan, because the receivables were assigned, not the loan. More than one pool can often be found claiming “ownership” of a loan that meets MOST of the characteristics of your loan, but not all of them. It is these inconsistencies that enable you to chip away at the credibility of the pretender lenders.

COMBO TITLE and SECURITIZATION Search, Report, Documents and Comprehensive Analysis

You must realize that while the original PSA is a good starting point, it isn’t the ending point. That is because of the the dissolution of hundreds if not thousands of these special purpose vehicles which was easy because they were never officially formed in the first place. You must realize that the point of fact is that there is a “claim” that the loan is in a “pool” which may or may not have ever existed, but that the the documentary trail shows it was never really assigned tot he pool. So the money trail leads us to those people who have an actual interest in the loan — only after you can make the point that ALL transactions by or relating to the “pool” must be accounted for and allocated to individual loans.

My opinion, is that the the money people, if they can be found, have an interest that can imposed by equity and not by law. Everyone else is simply out to line their own pockets without ever having invested a dime in the loan transaction.

FROM APRIL CHARNEY—–

“You have to get the PSA and the mortgage loan purchase agreement and the hearsay bogus electronic list of loans before the court. You have to educate your judge about the lack of credibility or effect of the lifeless list of loans as the Uniform Electronic Transactions Act specifically exempts Residential Mortgage-Backed Securities from its application. Also, you have to get your judge to understand that the plaintiff has given up the power to accept the transfer of a note in default and under the conditions presented to the court (out of time, no delivery receipts, etc). Without the PSA you cannot do this.

Additionally the PSA becomes rich when you look at § 1-302 (b) which says that the obligations of good faith, diligence, reasonableness and care prescribed by the code may not be disclaimed by agreement, but may be enhanced or modified by an agreement which determine the standards by which the performance of the obligations of good faith, diligence reasonableness and care are to be measured. These agreed to standards of good faith, etc. are enforceable under the UCC if the standards are “not manifestly unreasonable.”

The PSA also has impact on when or what acts have to occur under the UCC because § 1-302 (c) allows parties to vary the “effect of other provisions” of the UCC by agreement.

Through the PSA, it is clear that the plaintiff cannot take an interest of any kind in the loan by way of an “A to D” assignment of a mortgage and certainly cannot take an interest in the note in this fashion.

Without the PSA and the limitations set up in it “by agreement of the parties”, there is no avoiding the mortgage following the note and where the UCC gives over the power to enforce the note, so goes the power to foreclose on the mortgage.

So, arguing that the Trustee could only sue on the note and not foreclose is not correct analysis without the PSA.
Likewise, you will not defeat the equitable interest “effective as of” assignment arguments without the PSA and the layering of the laws that control these securities (true sales required) and REMIC (no defaulted or nonconforming loans and must be timely bankruptcy remote transfers) and NY trust law and UCC law (as to no ultra vires acts allowed by trustee and no unaffixed allonges, etc.).

The PSA is part of the admissible evidence that the court MUST have under the exacting provisions of the summary judgment rule if the court is to accept any plaintiff affidavit or assignment.

If you have been successful in your cases thus far without the PSA, then you have far to go with your litigation model. It is not just you that has “the more considerable task of proving that New York law applies to this trust and that the PSA does not allow the plaintiff to be a “nonholder in possession with the rights of a holder.””

Click here to read the complete story at Livinglies's Weblog.

William H. Pincus
bpincus@whpincuslaw.com

I just received a Notice of Filing Assignment of Mortgage From MERS in Virginia to BAC in Texas and signed by — you guessed it — Caryn A. Graham in Florida. It was notarized by Shavonia L. Turner before her notary privileges were revoked. And it is dated Nov. 9, 2009.
However, I also have an Assignment signed by Ms. Graham in Florida between the same companies for the same property, assigning the same legal documents but this one was notarized by Evelyn Saillant (? – name is hard to read) and witnessed by 2 different witnesses than the other assigment. And its dated Oct. 28, 2009. How many times did they need to assign the same mortgage and note!?

Click here to read the complete story at Livinglies's Weblog.

A YIELD SPREAD PREMIUM IS A FEE PAID TO A BROKER FOR CREATING A FRAUDULENT PROFIT BY LYING TO THE CUSTOMER WHO BUYS A FINANCIAL PRODUCT. This particular lie would be about the rate on the loan.

One would think this was already illegal and one would be right. Not only is it specified in the Truth in Lending Act and other state and federal laws governing deceptive lending practices, it is also covered by RICO and common law actions for fraud. YSP fees and other forms of undisclosed compensation, of which there were many, are all illegal. These fees are illegal and are all due back to the borrower, along with attorney fees, interest, and potential treble damages. And states and federal government agencies that collect revenue should be interested in all this undeclared income “earned” tax-free.

Up until the era of securitization, YSP fees were limited to those situations addressed by this “new” FED ban — where a mortgage broker convinced a borrower to take a higher interest rate in exchange for some perceived advantage that was in fact disadvantageous to the customer — like coming to the table with less money in exchange for a virtual guarantee of foreclosure down the road. But what this ban does not address directly is the the “tier 2″ YSP, in which the second broker was the investment bank. Nor does it take a shot at the trillions in YSP fees ripped out of our economy up until now, which the taxpayers have guaranteed thanks to the TARP, US Treasury and Federal Reserve programs in the fall of 2008. In a hot election year, government and Wall Street guessed correctly that nobody would realize what hit them until long after the deed was done.

While the first YSP was abhorrent, paying brokers thousands of dollars for each bad loan, the second one, also undisclosed, paid investment bankers a profit that sometimes exceeded the loan itself. In the first instance the lie was that this loan is better for you because your initial payment is less, your down payment is less or whatever. In the first instance the lie was first to the prospective borrower, and second to the investor who was advancing money under the supposition that the money would be used to fund loans that had the usual risk of non-payment — which is to say that the odds were in their favor that on balance they would get the return they were looking for, get their principal back and minimize the small balance of defaults with proceeds of foreclosures.

The first lie was predicated on an even bigger lie to both the borrower and the lender (investor): that the property was worth more than the loan, so it was covered by a security interest that would minimize or eliminate the risk of an actual loss. This lie was compounded by the lie that housing prices never go down and they had the appraisals and ratings form official rating agencies to prove that these were transactions whose value was the highest grade available in the marketplace.

The compounded lie was used to convince borrowers that the fact that they knew they could not afford the loan payments when the loan reset to its real terms was “offset” by the “fact” that the broker “guaranteed” the house would later be refinanced at a higher value in which the payment would again be reduced and the borrower would actually receive extra cash. This passive return on an investment meets the definition of the sale of a security, qualifies as a fraudulent unregistered securities transaction, and should land some people in jail. So far, though, the bulk of public opinion continues to blame the victim. The fact that in a transparent transaction where the real facts were disclosed most borrowers would never have signed and no investor would have advanced money is still mysteriously being ignored by policy makers and the courts. Yet it is as plain as day.

This brings us to the second BIG LIE which was that the loan met underwriting standards for the industry, was verified in all the appropriate ways, and the money advanced by the investors was being used to fund loans, not illicit profits. All the lies overlap. The worse the loan the higher the “yield spread premium” to the broker and the higher the yield premium to the investment banker. If the lender (investor) and the borrower knew that the actual amount funded by the lender was $450,000 but the loan was only $300,000, how many people do you think would have allowed or completed that transaction. If they knew that a $150,000 yield spread premium was kept by the investment banker  on a $300,000 loan, how many readers think that NOBODY would have asked “hey! Where is the other $150,000?” How many readers think that ANYONE would say that 50% of the loan amount is a reasonable fee for the investment banker to keep?

Although they make it sound complicated the method was conventional and simple: keep the borrower and lender far away from each other so that neither one actual knew the true facts of the transaction. In other words, your standard con game.

This is why the securitization searches are SO important in confronting your adversary in a mortgage dispute. The title search is important, but the securitization search is what really traces the money. And NOBODY in the financial industry wants you to be able to trace the money because if you do, then investors and borrowers who are suing in greater and greater numbers are going to know where the money went, who got it, and they are going to want it back because it was procured by outright lies.

NOTE: The tier 2 YSP runs counter-intuitive to most people so they keep putting it aside. But it lies at the heart of the mortgage crisis. So I’ll explain it AGAIN here. I’ll use a brand new example taken from the above. It is oversimplified to make the point, but it makes the double point that every financial transaction should be allocated to every loan where it is appropriate to do so, which is why your action for ACCOUNTING and DISCOVERY is so important.

1. Teachers Pension Fund of Arizona is limited to AAA rated investments, which means the equivalent of U.S. Treasury obligations. They seek the highest possible return without going outside the lines of the primary restriction: NO RISK. They understand that in a market where AAA returns are running at 4% they are not going to get 8% without substantially increasing their risk, which is not allowed. The fund managers basically have the job of making sure that investments stay within guidelines, and that liquidity is maintained to pay the benefits to retired Arizona teachers. The fund managers generally rely upon the rating agencies (Moody’s, Standard and Poor’s, Fitch etc.) but they also “peek under the hood” now and then to make sure everything is OK. Generally they rely upon 2 or 3 investment brokerage houses that have world wide reputations to “protect” and whose objective is to keep the pension fund as a long-term client. It’s been like this for decades, so the hum drum of daily activity lulls everyone into a semi-comatose state.
   
2. So when Merrill Lynch tells them they have this “innovative financial product” that “everyone” is buying and that has the AAA rating but provides a higher return of say 5% AND is further insured by AIG and/or AMBAC, the fund managers, wanting to look pretty to management of the fund, buy some of these exotic creatures. In our case we will say for example that the fund invested $450,000 in exchange for a promised return on investment of 5%.
3. Thus our pension fund managers have partied with $450,000 and they are expecting 5% interest (RISK-FREE) which is, in dollars, $22,500 per year. And they expect the investment bank to pick up a few basis points as their fee on this no-brainer risk free investment transaction.
   
4. The investment bank goes to its mortgage aggregator, let’s say Countrywide (now Bank of America/BAC), and says give me a $300,000 loan on which the borrower has agreed to pay $22,500 in interest. CW does a quick calculation and arrives at the obvious result: Merrill Lynch is asking them for a $300,000 mortgage loan whose stated rate of interest is 7.5%. Just to check their math they multiply $300,000 times the 7.5% rate and sure enough, it is $22,500 annual interest.
   
5. CW goes to its loan originator, and asks for a $300,000 loan with a nominal rate of 9%, with a teaser payment of only 1%, because they want to make sure there is plenty of money to pay the yield spread premium to the mortgage broker, and to collect service fees, transaction fees etc.
   
6. The loan originator goes to the prospective borrower who qualifies for a 5 1/2% loan fixed rate for 30 years and can easily pay that. But that is not what Merrill Lynch, CW, or the loan originator want in order to earn their ridiculous fees.
   
7. The loan originator assigns a “loan specialist” who has received been certified as a mortgage analyst after a total of 7 seconds of training on his way up the elevator to the 13th floor where his cubicle is filled with prospective deals. His conviction for mail fraud, wire fraud, and prison sentence is behind him now because this new company doesn’t care about his past.
   
8. The loan specialist is given a script to convince the borrower against paying 20% down payment, and to take a loan that allows them to pay only 1% interest only for two years. At $250 per month payment, the savings per month is enormous and the loan specialist further entices them with the fact that this is a bona fide transaction backed up by Quicken Loans or some other originator who has done the math and they have figured out that this works best for the customer.  Not only that, home prices are forecasted to continue rising by 20% per month, so in a year they will able to refinance and take out an extra $100,000 with even Lower payments.
   
9. If the borrower takes the bait, everyone gets what they want except the borrower who is in for some nasty surprises down the road when the payments rise substantially above anything the borrower can pay. This loan is identified as being in the junior tranches of a securitized pool, but subject to a credit default swap which was sold by the senior tranche thus contains toxic waste loans without anyone being the wiser. [This "sale" initially shows MORE INCOME in the senior tranche but creates an enormous liability --- the equivalent of having purchased the worst of the toxic waste loans. Thus the senior tranche "safe" asset was converted into a horrendous liability that was as guaranteed to fail as the lowest tranches. The trick on the secondary transaction was that the investment banking firm had the proceeds of the credit default swaps payable to themselves instead of the investors, by labeling the transaction as a proprietary trade instead of a fiduciary transaction].
   
10. If the borrower doesn’t take the bait, then the loan is done at 5 1/2% and is identified as being in the senior tranches of a securitized pool by virtue of a spreadsheet without any assignment, indorsement or delivery of or recording of actual documents.
    
11. So to summarize, on a $300,000 loan, the investment bank made $150,000 which was used to fund the outsized and illegal yield spread premiums to the mortgage brokers, who were incentivized to make the worst loans possible because the investment bank’s spread increases exponentially every time they get a bad loan. The Arizona Pension Fund is not wise to the fact that only $300,000 of their money was actually invested in a mortgage. Nor do they know the quality of the mortgage is virtually ‘guaranteed to fail” much less AAA.
    
12. Once the loan fails, the Pension Fund does not in theory ask any questions about what happened to all the money — except now, many investors ARE asking that that question and I encourage readers to keep track of those cases, since the discovery responses and pleadings will be very revealing regarding your own actions as borrowers to recover damages, interest, attorney fees etc for TILA, RICO and other violations.
    

——————————————

August 16, 2010

Fed Adopts Rules Meant to Protect Home Buyer

By DAVID STREITFELD

The Federal Reserve on Monday moved to end a controversial lending practice that had helped propel the housing boom to unsustainable heights and then accelerated its collapse.

The Fed announced that it was adopting new rules banning yield spread premiums, which allowed mortgage brokers and lenders to gain additional profit from loans by charging borrowers higher-than-market interest rates.

Reaction to the change was muted. For one thing, the recent package of financial reforms passed by Congress this summer already addressed the issue. And some thought a ban should have been imposed long ago, at a time when it could have directly affected loan quality.

Michael D. Calhoun, president of the Center for Responsible Lending, described the action as “a real milestone,” but he said that he had been trying to convince regulators for at least 15 years that yield spread premiums were no more than illegal kickbacks.

Many borrowers had little idea of what a yield spread premium was, even when it was costing them money.

Traditionally, mortgage brokers were paid directly by the home buyer. The rise of the premium allowed the brokers to be compensated by the lender as well. Lenders in effect started paying bonuses to brokers who brought them high-interest loans that were naturally coveted by mortgage investors.

From there, critics said, it was a short step for some brokers to put unsuspecting buyers into these loans and tell them it was the best deal they could get. Subprime lenders in particular often used yield spread premiums.

“People didn’t just happen to end up in risky loans,” Mr. Calhoun said. “Mortgage brokers and other people on the frontlines were getting two to three times as much money to push buyers into those loans than they were into 30-year fixed-rate loans. So what do you think happened?”

Brokers argued that it was frequently in the interest of the borrower, especially a low-income buyer, to pay a higher rate in exchange for bringing less cash to closing.

Attempts at reform achieved little, and during the housing boom the yield spread premiums became ever more prevalent. In many cases, groups like the Center for Responsible Lending found, borrowers never realized they were paying both higher fees and a higher rate.

While the new rules prohibit payments to a lender or broker based on the loan’s interest rate, they do allow for compensation based on a fixed percentage of the loan amount.

To avoid steering the buyer into a loan that is offering less favorable terms, the rules now say that the borrower must be provided with competing options, including the lowest qualifying interest rate, the lowest points and origination fees, and the lowest qualifying rate without risky features like prepayment penalties.

The National Association of Mortgage Brokers, which had long argued that efforts to reform the premium unfairly singled out its members, pronounced itself satisfied with the new rules.

The Fed rules “put everybody on the same footing,” including brokers and banks, said Roy DeLoach, executive vice president for the brokers’ association.

The rules take effect in April. Similar, and in some ways broader, rules in the financial reform bill will take effect later.

Click here to read the complete story at Livinglies's Weblog.

CLICK HERE –> if-you-subscribed-to-the-special-offer-at-149

Click here to read the complete story at Livinglies's Weblog.

MERS v Saunders Law Court decision[1]

Decision: Docket: Argued: Decided:
Panel:
2010 ME 79 Cum-09-640 June 15, 2010 August 12, 2010
SAUFLEY, C.J., and ALEXANDER, LEVY, SILVER, MEAD, GORMAN, and JABAR, JJ.
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. v. JON E. SAUNDERS et al.

The good news is that we have yet another state Supreme Court invalidating the legal standing of MERS. But there are many other lessons to be learned from this decision. The main lesson for litigants without legal representation is that the sophistication of legal and procedural arguments has reached a point beyond the capabilities of virtually any layman.

In this case MERS filed a foreclosure action against Saunders. In a late attempt to avoid a decision that would clearly undermine MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, Deutsche Bank National Trust Company attempted to correct the record by substituting itself in the motion for summary judgment after the trial court had already granted the motion for summary judgment in favor of MERS. It is the intricacies of legal procedure that must be observed here.

The court agreed that MERS did not have a stake in the proceedings and therefore had no standing. The court also agreed that a substitution of parties could not be used to cure a jurisdictional defect of lack of standing and was therefore an improper. (The importance of this part of the decision can only be apparent to seasoned litigators. Nearly all foreclosure cases involve late filings of papers intended to cure a jurisdictional defect or other defect).

Finally, and equally as important, the court concluded that “there are genuine issues of material fact.”

This Court made the assumption that the real party in interest was the bank but that the bank was not entitled to summary judgment as a matter of law because they were genuine issues of material fact. The assumption that the bank was a real party in interest is troublesome. It does not appear that there was any evidence in the record to support that assumption.

Before the bank had become a party to the action, it filed a motion to reconsider or amend the order denying the previous motion for summary judgment. The court noted that the bank filed an undated two-page allonge indicating that the originating lender transferred the note to the bank and also filed an assignment indicating that MERS had transferred any rights it had in the note or mortgage to the Bank.

The court also noted that the transfers occurred during the course of litigation. Of course we all know by now that MERS doesn’t have any interest or right in any note or mortgage.

The court stated “a party’s personal stake in the litigation is evidenced by a particularized injury to the party’s property, pecuniary or personal rights.” This wording is congruent with the wording of many other decisions in state and federal courts

The court specifically rejected the argument that a nominee could for any purposes be considered the mortgagee of record and therefore the party with a right to initiate foreclosure proceedings. MERS only right was the right to record the mortgage. The fact that the security instrument identified it as “the mortgagee of record does not change or expand that right.”

An interesting discussion on page 11 of the decision makes a distinction between judicial and nonjudicial states. “These cases are inapposite because nonjudicial foreclosures do not invoke the jurisdiction of the courts. Nonjudicial foreclosures proceed wholly outside of the judiciary, typically utilizing local law enforcement to affect a mortgage or and gain possession of the mortgaged property.”

The interesting procedural point was a finding by the court that Deutschbank, as a non-party had no standing to file any motion in the current proceeding. The implications of this reasoning are very interesting. Because the nominee had no jurisdictional standing, it had no right to bring the foreclosure in the first instance. Because the bank was not a party to the action filed by the nominee, it had no right to bring any motions in the foreclosure initiated by the nominee.

I think this last point is very important from both a tactical and legal perspective. The pretender lenders are using any pretense available in order to initiate a foreclosure and a judicial or nonjudicial state. Only after they are challenged do they attempt to correct obvious deficiencies and defects in the title chain relating to the original obligation between the borrower and the originating lender. Their strategy is clearly to finesse the basic requirements of due process, substantive law and the Rules of Civil Procedure. Arguing this position successfully obviously will take considerable knowledge, memorandums of law, and the ability to argue the point succinctly.

The court obviously recognized this strategy. “After substitution, the bank should have filed its own independent motion for summary judgment with a statement of material facts and supporting affidavits. The Saunders would then have had the opportunity to respond to the new motion and appropriately defend the foreclosure action against the real party in interest.”

On page 19 the court corroborates our arguments regarding evidence citing other cases in Maine. At a minimum a party attempting to foreclose a mortgage must provide proof of the existence of a mortgage and its claim on the real estate supported by evidence of a quality that could be admissible at trial. These facts must be included in the mortgage holder’s statement of facts.

In my opinion this position supports both arguments made on these pages regarding judicial and nonjudicial foreclosures, sales and evictions. None of them are valid and all of them are void unless supported by evidence of the truth of the chain of title. And non-judicial states that require minimal proffers by counsel instead of proof are committing legal error and applying nonjudicial statutes in a manner that is inconsistent with the due process requirements of the United States Constitution.

Click here to read the complete story at Livinglies's Weblog.

MERS v Saunders Law Court decision[1]

Decision: Docket: Argued: Decided:
Panel:
2010 ME 79 Cum-09-640 June 15, 2010 August 12, 2010
SAUFLEY, C.J., and ALEXANDER, LEVY, SILVER, MEAD, GORMAN, and JABAR, JJ.
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. v. JON E. SAUNDERS et al.

The good news is that we have yet another state Supreme Court invalidating the legal standing of MERS. But there are many other lessons to be learned from this decision. The main lesson for litigants without legal representation is that the sophistication of legal and procedural arguments has reached a point beyond the capabilities of virtually any layman.

In this case MERS filed a foreclosure action against Saunders. In a late attempt to avoid a decision that would clearly undermine MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, Deutsche Bank National Trust Company attempted to correct the record by substituting itself in the motion for summary judgment after the trial court had already granted the motion for summary judgment in favor of MERS. It is the intricacies of legal procedure that must be observed here.

The court agreed that MERS did not have a stake in the proceedings and therefore had no standing. The court also agreed that a substitution of parties could not be used to cure a jurisdictional defect of lack of standing and was therefore an improper. (The importance of this part of the decision can only be apparent to seasoned litigators. Nearly all foreclosure cases involve late filings of papers intended to cure a jurisdictional defect or other defect).

Finally, and equally as important, the court concluded that “there are genuine issues of material fact.”

This Court made the assumption that the real party in interest was the bank but that the bank was not entitled to summary judgment as a matter of law because they were genuine issues of material fact. The assumption that the bank was a real party in interest is troublesome. It does not appear that there was any evidence in the record to support that assumption.

Before the bank had become a party to the action, it filed a motion to reconsider or amend the order denying the previous motion for summary judgment. The court noted that the bank filed an undated two-page allonge indicating that the originating lender transferred the note to the bank and also filed an assignment indicating that MERS had transferred any rights it had in the note or mortgage to the Bank.

The court also noted that the transfers occurred during the course of litigation. Of course we all know by now that MERS doesn’t have any interest or right in any note or mortgage.

The court stated “a party’s personal stake in the litigation is evidenced by a particularized injury to the party’s property, pecuniary or personal rights.” This wording is congruent with the wording of many other decisions in state and federal courts

The court specifically rejected the argument that a nominee could for any purposes be considered the mortgagee of record and therefore the party with a right to initiate foreclosure proceedings. MERS only right was the right to record the mortgage. The fact that the security instrument identified it as “the mortgagee of record does not change or expand that right.”

An interesting discussion on page 11 of the decision makes a distinction between judicial and nonjudicial states. “These cases are inapposite because nonjudicial foreclosures do not invoke the jurisdiction of the courts. Nonjudicial foreclosures proceed wholly outside of the judiciary, typically utilizing local law enforcement to affect a mortgage or and gain possession of the mortgaged property.”

The interesting procedural point was a finding by the court that Deutschbank, as a non-party had no standing to file any motion in the current proceeding. The implications of this reasoning are very interesting. Because the nominee had no jurisdictional standing, it had no right to bring the foreclosure in the first instance. Because the bank was not a party to the action filed by the nominee, it had no right to bring any motions in the foreclosure initiated by the nominee.

I think this last point is very important from both a tactical and legal perspective. The pretender lenders are using any pretense available in order to initiate a foreclosure and a judicial or nonjudicial state. Only after they are challenged do they attempt to correct obvious deficiencies and defects in the title chain relating to the original obligation between the borrower and the originating lender. Their strategy is clearly to finesse the basic requirements of due process, substantive law and the Rules of Civil Procedure. Arguing this position successfully obviously will take considerable knowledge, memorandums of law, and the ability to argue the point succinctly.

The court obviously recognized this strategy. “After substitution, the bank should have filed its own independent motion for summary judgment with a statement of material facts and supporting affidavits. The Saunders would then have had the opportunity to respond to the new motion and appropriately defend the foreclosure action against the real party in interest.”

On page 19 the court corroborates our arguments regarding evidence citing other cases in Maine. At a minimum a party attempting to foreclose a mortgage must provide proof of the existence of a mortgage and its claim on the real estate supported by evidence of a quality that could be admissible at trial. These facts must be included in the mortgage holder’s statement of facts.

In my opinion this position supports both arguments made on these pages regarding judicial and nonjudicial foreclosures, sales and evictions. None of them are valid and all of them are void unless supported by evidence of the truth of the chain of title. And non-judicial states that require minimal proffers by counsel instead of proof are committing legal error and applying nonjudicial statutes in a manner that is inconsistent with the due process requirements of the United States Constitution.

Click here to read the complete story at Livinglies's Weblog.