Creditor | War on the Home Front

Jan

Someone who wanted to be very mean to the Germans just leaked this document, where they manage to come off as both desperate and inept. The proposal purports to address Greek failure to meet program targets by installing an EU overlord, whose job it would be among other things to pay off the foreign bondholders before funding public services in Greece.

The strategy goes back to the days when imperial gunboats took over debtors' customs houses to pay foreign bondholders, but has been considered impolite in creditor country circles for a century or so. Now it is back as an EU institutional innovation. As for the business of "absolute priority" for foreign creditors, the statement is nonsensical on its face: Greece will enact a law that would make creditors feel "de facto" senior. At best, this would be "de jure," and without a shred of credibility. The actual phrase used--"De facto elimination of the possibility of a default"--surely qualifies for an Oscar nomination.

All this innovating does follow a pattern: take a program that does not work, double down on it, and ratchet up enforcement to the point where no one would ever dream of it. Genius.

And further to my last post, it looks like Richard Barley and Felix Salmon took sides on the EFSF swap possibility a couple of days ago, except that they seem to operate on the assumption (which I shared last May) that EFSF would have to take the loss up front. Now I think that the swap would be worth it even if it only captured the discount for Greece. Phase Two happens when it does.

Jan

Anna’s Revenge, Episode I

By Bob Lawless | Securitization-MBS

60799Leave a CommentAnna%27s+Revenge%2C+Episode+I2012-01-03+22%3A01%3A30Bob+Lawless

We may be beginning to see the fallout from Stern v. Marshall, the Supreme Court case on bankruptcy jurisdiction courtesy of Anna Nicole Smith's bankruptcy. Last week, the U.S. Court of Appeals for the Seventh Circuit issued a broad decision that would call into question the power of the bankruptcy court to hear many state-law defenses to creditor's claims in bankruptcy. To the best of my knowledge, this is the first court of appeals decision applying Stern.

The Seventh Circuit, in a case called In re Ortiz, held the bankruptcy court could not hear claims that a health care company had violated Wisconsin state law by making bankruptcy court filings containing private medical information of bankruptcy debtors. The irony is that the bankruptcy court had found the debtors had failed to establish a claim under state law, thus making the Seventh Circuit's decision a victory for the debtors involved in that particular appeal. For other bankruptcy debtors, however, the Seventh Circuit's decision could hinder their ability to assert state-law defenses such as violations of state UDAP laws (unfair deceptive acts and practices laws).

In Stern, the Supreme Court ruled that the bankruptcy court could not exercise jurisdiction over a state-law counterclaim Smith filed against her deceased husband's son. The son alleged Smith had tortiously interfered with his inheritance and had filed a claim in her bankruptcy case. Because federal bankruptcy courts are not full-fledged Article III courts, staffed by judges appointed by the president and holding life-tenure, a bankruptcy court could not hear Smith's counterclaim, which was a traditional state-law claim.

The legal answer to any of these problems is to have the federal district courts hear claims the bankruptcy courts cannot. Because federal district courts are full-fledged Article III courts, they clearly have the power to rule on any claim arising in or related to a bankruptcy case. This answer, however, is more theoretical than practical. District courts have standing orders to refer all bankruptcy cases to bankruptcy courts precisely because there are not enough district court judges to handle the enormous docket load from the bankruptcy system. Sure, individual matters in bankruptcy cases can be referred back to the district courts, but even referrals of individual matters will be expensive and full of delay.

Stern thus promised to gum up the works for bankruptcy debtors, but just how much gum had been stuck into the system depended on how one read the Supreme Court's opinion. Legal scholars disputed the breadth of the Stern decision, which the Court itself had characterized as "narrow."

Legal eagles might assert that just how narrow depends a lot on the technicalities of federal courts law. But, here is a secret. Federal courts law does not actually exist. It is something we made up to help the federal courts run better. Federal courts law is no more or no less than what the federal courts say it is.

Commentators generally agreed that the bankruptcy courts would "fix" Stern by issuing pragmatic rulings that respected the basic holding of Stern while keeping in mind the practical problems that an overly broad reading would create. My concern was expressed as follows:

Anna's case, or Stern v. Marshall as it will go down in history, could make life a little tougher for bankruptcy courts and consumer debtors as they try to wrestle with the implications of the majority's reasoning. I predict that lower courts, who are probably more concerned with keeping the system working than federal courts theory, will try to interpret the decision narrowly. My musings above will be worst-case scenarios that will not come to pass in the short run. As time goes by and cases work their way up the federal court appellate structure, Anna's case could have significant effects on practice in the federal bankruptcy courts.

In a probably undeserved self-congratulatory moment, I will say that the Seventh Circuit has done exactly what I feared. The case has moved up the federal system where it got heard by judges less familiar with the day-to-day workings of the bankruptcy system. The Seventh Circuit suggests that bankruptcy courts will lack the power to hear most claims arising between private parties disputing interests defined by state law (slip opinion at p. 14), which would seem to encompass most any claim based on state law.

For those who doubt the breadth of the Seventh Circuit's decision, consider that it involves a lawsuit of allegedly wrongful conduct during the filing of a proof of claim in a bankruptcy case. The bankruptcy court was hearing a matter that involved policing its own docket. The Seventh Circuit even holds that the lawsuit "arises under" bankruptcy law and would not exist but for the bankruptcy case. If such a lawsuit cannot be heard by a bankruptcy court, what sort of suit can?

Jan

Maryland Courts Require More Proof in Debt Collection Cases, Ringing in Some Debt Collection Cheer

By Nathalie Martin | Securitization-MBS

60694Leave a Comment2012-01-03+17%3A13%3A53Nathalie+Martin

In many states, a creditor or debt collector can easily obtain a default judgment with just a person’s name, last known address and Social Security number, and the judgment can follow the person around for years despite that the debt was never proven. Due to a flood of uncontested debt collection cases in Maryland, its high court has just ruled that for all cases filed on or after January 20, 2012, collectors and creditors must produce actual proof that the debtor incurred the debt. This can be done by producing a copy of a signed bill or contract, or other evidence of the debt. Debt buyers also must prove they actual hold the debt through a valid purchase, a common stumbling block for collecting debt buyers. In making this decision, the Maryland Court of Appeals (which is Maryland’s high court) took into consideration that many cases end in default judgments, a problem Nationwide. The decision also evidences a distrust of those pesky (often fraudulent) affidavits. Let’s hope other states decide to follow suit and put collectors to their proof.

Sep

Chapter 11 Bankruptcy Venue Reform

By Adam Levitin | Securitization-MBS

35397Leave a CommentChapter+11+Bankruptcy+Venue+Reform2011-09-06+02%3A06%3A26Adam+Levitin

This Thursday, the House Judiciary will be holding a hearing on H.R. 2533, which would reform Chapter 11 venue and require corporations (which includes more than true corporations under the Bankruptcy Code) to file in the district in which they are headquartered or in the district in which a controlling affiliate has filed. So no more bootstrapping of Eastern Airlines, Enron, or GM via tiny affiliates. And no more Los Angeles Dodgers of Delaware.

I've submitted a letter in support of the bill to the House. My previous posts on this topic earned me no love from some former colleagues (some of whom told me as much), and I don't expect this letter (or this blog post) will endear me to them either. The letter rehearses the problems that stem from forum shopping: debtors (and DIP lenders) picking and choosing the law they prefer; debtors opting for districts that are more lax in their application of discretionary standards like for cause appointment of trustees; professionals steering cases to districts that will sign off on higher fees, thereby increasing the costs of bankruptcies; the cutting out of local/small creditor constituencies by moving cases to inconvenient fora; and avoidance of labor protests and other informal pressures on courts.

I continue to be struck by what a weak argument specialization/expertise is for the current system. We've seen courts outside of SDNY/Delaware handle large bankruptcies extremely well, and we've also seen some disasters in those popular filing jurisdictions. Frankly, it's not clear to me how much case outcomes depend on the judge. But be that as it may, expertise is an argument for a single court to handle all large cases, not a pick-your-own-venue system, even if the menu is limited to SDNY and Delaware. So if it's about expertise, which court is it? SDNY or Delaware? It surely can't be the debtor's choice if it's about expertise.

Also, in drafting this letter, I realized that Chrysler may well have lacked proper venue in SDNY. IIt's a stretch to claim that Chrysler Realty Co. LLC, a Delaware LLC headquartered in Michigan had its principal assets located in SDNY, when the only SDNY assets scheduled are the realty for Jeep-Chrysler-Dodge of Manhattan and Yonkers Avenue Dodge. By dollar amount these were less than 3% of Chrysler Realty Co., LLC's scheduled assets. I wonder how many other cases have been filed recently in which there isn't compliance with the venue statute. (Note that this is not like GM, which bootstrapped its way in to SDNY, which complies with the statute. That's legal, but it's a bad statute. Borders--also here--and perhaps Chrysler don't even appear to in compliance with the statute.)

Finally, I'm left pondering where is the UST on this. Checking on venue seems like it should be a rote part of UST review. If the UST is really concerned about fee levels in bankruptcy, policing Chapter 11 venue is a far better way to deal with it than objecting to fee applications, where the dollars saved are offset by the cost of arguing the objection.

My former WGM colleagues have a couple of blog posts of their own on HR 2533 (here and here). These posts make the very good point that the local rules for the SDNY and Delaware bankruptcy courts are friendly to out-of-state attorneys (no local counsel required for pro hac vice admission). It's point about telephonic and video hearings really cuts both ways. But I think it's a stretch to say that because local creditors are get some protection via 503(b)(9) administrative expense claims, 546(c) reclamation claims, 547(c)(2) ordinary course exception to voidable preferences, and 365(d)(4) and 366 protections for landlords and utilities that it's therefore not a problem that venue is being abused.

None of these protections help employees, for example. Admin priority only doesn't apply to prepetition claims. The ordinary course preference exception is temporally narrow and 546(c) reclamation is not a very powerful tool for most creditors. But even if these were always meaningful protections for all local creditors, I don't see how that in any way justifies abuse of venue. Is the argument no harm-no foul? If so, none of these provisions mitigates the harm caused by debtors being able to choose venues with easier rejection of CBAs or in which they can funnel more funds to professionals or DIP lenders. The provisions cited on the WGM blog crumbs in comparison to what's at stake with venue.

Aug

Your Government Prefers Chapter 13

By Katie Porter | Securitization-MBS

33761Leave a CommentYour+Government+Prefers+Chapter+132011-08-25+10%3A57%3A00Katie+Porter

Today, I went looking for the court costs payable by chapter 13 debtors who wants to convert their cases to chapter 7. I admit that like many Americans my starting point was Google. I quickly landed here, at the Bankruptcy Basics page provided by the Administrative Office of the U.S. Courts, a division of the judiciary. The site says that it "provides basic information to debtors, creditors, court personnel, the media, and the general public on different aspects of federal bankruptcy laws. It also provides individuals who may be considering bankruptcy with a basic explanation of the different chapters under which a bankruptcy case may be filed." From this description, you might expect a factual, value-neutral description of the fundamental choice facing all consumer debtors: whether to chose chapter 7 or chapter 13. But look what I found when I read up on Chapter 7 and Chapter 13 . . .

If you click on Chapter 7, the first heading is "Alternatives to Chapter 7." Therein is a description of alternatives such as not filing, choosing chapter 11 or chapter 13, etc. I didn't think too much about this. People should think about alternatives when they are making the big decision of bankruptcy. But then I clicked on Chapter 13, and was immediately struck that instead of a parallel heading of "Alternatives to Chapter 13" that might discuss Chapter 7, people instead are directed immediately to learn about the "Advantages of Chapter 13."

Hmmm . . . what is the message here? Could it be that our government thinks chapter 13 is better? I thought that was a creditor position but I think it's a fair reading of the Administrative Office's website to say that their presentation of the relative benefits and drawbacks of the two chapters skews toward Chapter 13. The website directs people to think carefully about alternatives to Chapter 7 and to consider the benefits of Chapter 13 , but not do the converse: consider alternatives to Chapter 13 and to consider the benefits of Chapter 7.

I think this is lousy advice because I am increasingly discouraged about Chapter 13 given the problems of today's families, but the real point is that this Chapter 13 preference is an inappropriate perspective for the judiciary. Putting the means test limitations to one side for a moment, the Bankruptcy Code embraces the idea of informed debtor choice between Chapters 7 and 13. Information about the two chapters is a good government service. Prefering one chapter, and doing so in a subtle way that will largely escape anyone's attention, is not a good government service. This is especially true in light of the government's own statistics that show that Chapter 13 debtors are much less likely to receive a discharge than Chapter 7 debtors. That key fact never makes it onto the Bankruptcy Basics website, although it is surely one to balance against the potential benefits of Chapter 13.

p.s. If you think the website is simply ignorant of research on bankruptcy outcomes, consider that it contains this advice: "A debtor may make plan payments through payroll deductions. This practice increases the likelihood that payments will be made on time and that the debtor will complete the plan." An accurate description of the research, and perhaps good advice, but perhaps just a wee bit less relevant than that less than one-third of filings will end without the debtor getting a Chapter 13 discharge.

p.p.s. The conversion fee from Chapter 13 to Chapter 7 is $25, according to the website. Good to know given that so many people will need to consider conversion when they do not complete their Chapter 13 plans!

Aug

Your Government Prefers Chapter 13

By Katie Porter | Securitization-MBS

33762Leave a CommentYour+Government+Prefers+Chapter+132011-08-25+10%3A57%3A00Katie+Porter

Aug

Defies Credulity Eupdate

By Anna Gelpern | Securitization-MBS

33748Leave a CommentDefies+Credulity+Eupdate2011-08-25+04%3A25%3A37Anna+Gelpern

Bad news: Eupdate is back. The last big fix to the European debt crisis, quietly unraveling since its announcement on July 21, is loudly imploding over collateral. Turns out that Finland, representing less than 2% of the Eurozone package and 37.876% of the political noise about the package, was promised Euro 500 million in cash collateral for its participation. The side deal makes little sense as an incentive to repay for Greece, or as a source of repayment for Finland. In a world where Greece is willing to default on another European state, Euro 500 million is the least of anyone's worries--the Euro is collapsing, Spain and Italy are going down, bank runs are rampant, etc. The primary purpose of the collateral trick must be political -- to assure Finnish voters that they are not in fact bailing out Greece.

Other European governments must have known, but were willing to let it go as chump change for the sake of appearing united, so long as their voters did not find out. But since the deal was all about Finnish political theater, it had to be publicized, which made all the others look like chumps, forcing them to demand collateral too ... demonstrating the very sort of disunity Europe had sought to avoid by buying off Finland, now freaking out Moody's. All this is quite apart from the negative pledge, CDS, and IMF preferred creditor status headaches.

But wait, a brilliant fix is in the works from the folks who brought you all the brilliant fixes that came before. Forget cash collateral, the EU will take Greek real estate! Picture EU enforcers marching into Greece to seize real estate and sell it on the courthouse steps (to whom???). Picture the Greek population placidly going along with it, as in the good old days of gunboat diplomacy and seizing customs houses ... (Greek title worries are quite beside the point in this big picture.) No doubt the idea looked attractive precisely because it was so utterly implausible--replace cash collateral, which hurts Greek liquidity, with collateral that no one would ever seize. No harm, no foul.

No voters are that stupid. And the peripheral collateralness of the incident has a funny Archduke assassination feel to it.

(Don't miss Stephen's post, casting Finland as the perennial restructuring holdout. Sovereign bankruptcy, anyone?)

Mar

RED ALERT! RED ALERT!- THE NON JUDICIAL FORECLOSURE BILL IS ALIVE AND KICKING!

By Matthew D. Weidner, Esq. | Weidner

22035Leave a Comment2011-03-01+21%3A14%3A52Matthew+D.+Weidner%2C+Esq.

Last year the Florida Legislature made a late session move to remove foreclosure cases from the supervision of judges. THAT DANGEROUS LEGISLATION IS BACK!

While the bill as drafted applies on to commercial properties, this is a dangerous step toward turning the whole state into a non judicial foreclosure state.

Noone is safe while the legislature is in session.

(1) This chapter may be cited as the “Nonjudicial
39	Foreclosure of Commercial Real Property Act.”
40	(2) In lieu of any other foreclosure remedy that may be
41	available under the laws of this state within the judicial
42	system, this chapter may, at the option of the foreclosing
43	creditor, be used to effect a foreclosure of a security
44	instrument in commercial real property. However, if the
45	foreclosing creditor does not elect to use this chapter to
46	effect a foreclosure, this chapter does not modify any other
47	foreclosure remedy available to the foreclosing creditor under
48	the laws of this state.

Tweet this! Share and Enjoy:

Scridb filter

Aug

LivingLies UPDATED Plan of Engagement: What to Do

By LH | Foreclosure Blog News, Homeowner Resources, Weidner

4832Leave a Comment2010-08-20+10%3A58%3A38LH

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.

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?

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.

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.

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.

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.

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.

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.

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.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud Tagged: debt validation, expert declaration, forensic analysis, qualified written request, TILA audit, trustee

Aug

FLA State probes whether three law firms falsified foreclosure documents

By LH | Foreclosure Blog News, Homeowner Resources, Weidner

11624Leave a Comment2010-08-10+17%3A45%3A09LH

Editor’s Note: The REAL BOTTOM LINE POINT is not some technicality wherein the paperwork wasn’t done right, which frankly is reason enough to deny the foreclosure, it is that this “technical” deficiency is “derived” from the fact that there is no note or mortgage or deed of trust that can be enforced. There might not even be any obligation at all if the creditor received payment in full.

LAWYERS TAKE NOTE: Go back to the law books. There are essential differences between the obligation that arises as a matter of law, the note that is offered as proof of the obligation, and the mortgage or deed of trust which is incident to the note.

Don’t dispute the obligation. It DID arise by operation of law. And by operation of law it may still exist, be partially extinguished or entirely extinguished. The documents signed at closing were only PART of the deal in a securitized residential loan. The borrower signs a note and the lender (investor) gets a bond (or evidence of a bond). [THE NOTE AND BOND HAVE DIFFERENT TERMS AND PARTIES BUT THE BOND REFERS TO SECURITIZATION DOCUMENTS THAT IN TURN DESCRIBE LOANS OF WHICH THE BORROWER'S LOAN IS ONE CLAIMED TO BE IN A POOL FORMING THE SOURCE OF REVENUE].

WITHOUT REAL DOCUMENTS SIGNED BY REAL PEOPLE WITH REAL AUTHORITY WITH REAL EFFECTIVE DATES, THE CHAIN IS BROKEN.

The borrower signs the note to a party whom the investor never heard of nor could the investor have uncovered the payee on the note because the information was withheld. The investor receives a bond which is an assignment of all right, title and interest to the receivables, but the security instrument is left where it always was — with the mortgage originator (the only one in county records with an interest). The lender (investor) doesn’t know the borrower and the borrower doesn’t know the lender, while each of them receives different terms and [promises from different parties.

But by operation of law, the originator’s interest is extinguished the moment it arises because it is in most cases a table funded loan in which the originator acted as a broker not a lender, and performed no underwriting tasks. So the legal obligation is extinguished at the same time that the legal obligation arises.

BUT that is not the end of the story.

The equitable powers of the court come into play to prevent unjust enrichment. So the next time a Judge says he doesn’t want the borrower to get a house for free, your answer should be you don’t want anyone to get the house for free. And if the Court wishes to exercise its equitable powers to allocate any equity in the home, after due consideration for the obligations of the borrowers and many others who promised to pay the bond holder then the party seeking affirmative relief must make a short plain statement of ultimate facts upon which relief could be granted and then prove their case.

What these law firms and fabrication mills are doing is fabricating and forging documents to create the illusion that those complexities don’t exist — a conclusion that every Judge would like to reach.

Ultimately, the die is cast — the Courts are required to consider the complexity and force the real party in interest, the party with standing to say they lost money on the deal and to show exactly how they did lose money — not merely point to the borrower’s non-payment.

The non-payment by borrower ONLY comes into play if the payment is due and the “creditor” can prove their standing and prove the obligation, complete with an accounting from beginning to end. The fact that the note SAYS the payment is due does not make the payment due — not if the payment was made or the obligation has been changed or satisfied.The note is evidence that must be proffered though the rules of evidence with authentication from competent witnesses or admission from the borrower. Don’t be so quick to admit that they have the note. Even if it is right in front of you, close examination may well reveal that it came off a color printer that morning.

The reason the die is cast is that ultimately this comes down to property law. The breaks in the chain of title render every title in whichever a securitized loan was involved susceptible to being identified as unmarketable or defective title. This threatens the entire marketplace. It is this issue that these firms and the large banks are continuing to finesse with their freshly color-printed “original” documents, indorsements, assignments and powers of attorney.

NEWS RELEASE

For Immediate Release

August 10, 2010

Contact: Sandi Copes

Phone: 850.245.0150

Sandi.Copes@myfloridalegal.com

FLORIDA LAW FIRMS SUBPOENAED OVER FORECLOSURE FILING PRACTICES
——————————————————————

TALLAHASSEE, FL – Attorney General Bill McCollum today announced his office has launched three new investigations into allegations of unfair and deceptive actions by Florida law firms handling foreclosure cases.

The Attorney General’s Economic Crimes Division is investigating whether improper documentation may have been created and filed with Florida courts to speed up foreclosure processes, potentially without the knowledge or consent of the homeowners involved.

The new investigations name The Law Offices of Marshall C. Watson, P.A.; Shapiro & Fishman, LLP; and the Law Offices of David J. Stern, P.A. The law firms were hired by loan servicers to begin foreclosure proceedings when consumers were in arrears on their mortgages.

Because many mortgages have been bought and sold by different institutions multiple times, key paperwork involved in the process to obtain foreclosure judgments is often missing. On numerous occasions, allegedly fabricated documents have been presented to the courts in foreclosure actions to obtain final judgments against homeowners.

Thousands of final judgments of foreclosure against Florida homeowners may have been the result of the allegedly improper actions of the law firms under investigation.

The Attorney General’s Office is also investigating whether the law firms have created affiliated companies outside the United States where the allegedly false documents are being prepared and then submitted to the law firms for use.

Subpoenas have been served on each of the law firms listed above, and the investigations are ongoing.

For an official, downloadable photograph, please visit http://www.myfloridalegal.com/picture.html. Also, follow the Attorney General’s Office on Twitter! http://www.twitter.com/myfloridalegal

By KIMBERLY MILLER

Palm Beach Post Staff Writer

Posted: 11:48 a.m. Tuesday, Aug. 10, 2010

The Florida Attorney General’s office announced this morning investigations into the state’s three largest foreclosure law firms for allegations of unfair and deceptive actions.

The firms, sometimes called “foreclosure mills,” are the Fort Lauderdale Law Offices of Marshall C. Watson, Tampa-based Shapiro & Fishman, and the Law Offices of David J. Stern, based in Plantation.

Last month, a lawsuit seeking class action status was filed by a Fort Lauderdale attorney against Stern claiming the firm generated fraudulent mortgage assignments when pursuing foreclosures.

An assignment is held by the entity that has the right to receive mortgage payments.

Stern’s practice, which the lawsuit claims filed up to 7,000 foreclosure cases in Florida every month last year, also is alleged in the suit to have pursued foreclosures for lenders that didn’t own the debt on the homes.

Miami attorney Jeffrey Tew is representing Stern. Last week, he said Stern and his company have done nothing wrong.

“This foreclosure crisis was not created by David Stern, but it is so huge and a lot of people are in very bad shape, so some of the finger-pointing goes to him,” Tew said.

Tew called portions of the lawsuit that claim Stern conspired to confuse ownership of homes “fantastical.”

A press release from Attorney General Bill McCollum’s office says because many mortgages have been bought and sold by financial institutions multiple times, key paperwork involved in the process to obtain foreclosure judgments is often missing.

“On numerous occasions, allegedly fabricated documents have been presented to the courts in foreclosure actions to obtain final judgments against homeowners,” the press release states. “Thousands of final judgments of foreclosure against Florida homeowners may have been the result of the allegedly improper actions of the law firms under investigation.”

Filed under: CASES, CORRUPTION, Eviction, evidence, expert witness, foreclosure, foreclosure mill, GTC | Honor, HERS, Investor, Mortgage, Motions, Pleading, trustee

Aug

FACTUAL CONSTIPATION: THE URGE TO NOT DISCLOSE

By LH | Foreclosure Blog News, Homeowner Resources, Weidner

11543Leave a Comment2010-08-09+11%3A57%3A18LH

EDITOR’S NOTE: FACTUAL CONSTIPATION is our current state of reality. It is the universal strategy across the board from Wall Street, the pretender lenders, servicers, and all other intermediaries in the gross illusion known as “securitization” of debt. We can’t get the information in court from Judges who can’t or won’t allow the inquiry, we can’t get the information using federal statutes (TILA, RESPA, UDCPA) that were specifically written with teeth to allow us to find out the identity of the creditor and to get a full accounting of all debits and credits related to our obligation, and we can’t examine the skeletons in the closets of Wall Street investment banking firms, the rating agencies, the counterparties in credit enhancements, or the insurers.

We are left with naked “assurances” from the same sources that created awesome illusions of wealth in the minds of the people they were robbing. No proof required. And if the “creditors” found a way to get paid AND take the house, that’s OK too. And if the actual creditors did not get paid, but their agents collected insurance and other proceeds amounting to multiples of what the investors actually received — that is a matter for the creditors to work out. Obligation extinguished? No problem, enforce it anyway!! Receivables from obligation assigned to multiple sources of cash WITHOUT the mortgage? No problem, foreclose anyway in the name of some party who never had a dime in the deal.

You say you’re a trust but you have no trust documents or any evidence of your existence? No problem! You say the loan was securitized into a pool where the documents show co-obligors added to the obligation. No Problem! Forget those insurance policies whose premiums were paid from proceeds of the investor lending money to the borrower. Why should that count for anything? So what if it is in the note that the borrower signed! So what if it isn’t in the bond that the investor received! So what if all the documents you have were freshly printed fabricated and forged the morning of the hearing in court? This is big business. The little guy doesn’t get to win, no matter what the law says and no matter what was done to him. And if that undermines our country’s strength and national security, so much the better for those who would take over lock, stock and barrel.

Just how close do we have to get to the legal nightmare of unmarketable title for most residential and commercial property in the United States before we start addressing reality? The Judicial branch of government, the last bastion of protection of the constitution and our whole body of laws has failed miserably in the basic requirements of law, procedure, fairness and equity. A handful of Judges have clearly stated that upon closer scrutiny of the documents submitted to support foreclosure, they don’t hold up to even basic elements of proof or evidence. Some State Supreme Courts have issued opinions on the same thing. Sanctions have been issued against major names like Wells Fargo and Bank of America for misrepresenting themselves as the creditor. Settlements for hundreds of millions of dollars are being paid to investors who advanced the funds for the loans to borrowers. Where is the allocation of that money to reduce the obligation? If they received the money, why is it still owed?

WHAT IS SO DIFFICULT ABOUT THIS? EITHER WE HAVE A CLEARLY DEFINED BORROWER, OBLIGATION, CREDITOR, AND BALANCE DUE OR WE DO NOT. IF NOT, THE BURDEN IS ON THE PARTY SEEKING FORECLOSURE TO CORRECT IT. IF YES, THE FORECLOSURE PROCEEDS. WE ALL KNOW THIS — WHY ARE WE NOT FOLLOWING LAW THAT IS ESTABLISHED FOR CENTURIES?

The fact remains that our government not only regulates these entities and has huge powers of subpoena and other investigation tools, but is now a significant shareholder, if not the major shareholder of most of these entities. The current plans to disengage the US government from ownership in these entities under the guise of giving back to the taxpayers their money, merely enlists the government as a co-conspirator in withholding essential information from both claimants and policy makers.

AIG and the rating agencies lie at the root of the mortgage bond and mortgage security ripoff that brought down the economy of the nation, the states, the cities, counties and even neighborhoods. And it was the fraud and nondisclosure at the top that enabled and encouraged the fraud and nondisclosure at the bottom––where unsuspecting borrowers who were totally ignorant of the complexities of Wall Street “innovations” signed documents that in most cases did not represent the deal that was offered to them, nor even a transaction that could ever have been completed. The misinformation leading to the ridiculous valuations of mortgage-backed securities was identical to and part of the plan of misinformation and ridiculous valuations of the underlying property values.

Unless and until the reality of the situation is fully disclosed and we are relieved of the mental and factual constipation that is being perpetuated by the courts and by government policy, we cannot effectuate a remedy to an economic nightmare that continues everyday. Our economy can be fixed, but not by participating in a cover-up plan. Here is the truth: all the money is sitting on Wall Street, which continues to report high profits, Grant high bonuses, and incredibly comes up with hundreds of billions of dollars to “repay” the American taxpayers out of money stolen from those same taxpayers.

Here is the remedy: restore the American taxpayer and the American homeowner to the positions they were in before the fraud. This means a transfer of wealth back to those who have been reduced to poverty or simply untenable financial condition. It means reducing the clout of Wall Street from being 40% of our GDP back to 16% of our GDP where it belongs. The other 24% was mere illusion covering up the fact that we were in fact producing no goods or services of value.

This restoration is not a gift anymore than returning the purse to a woman from a thief that snatched it. Anything less, will leave us with a perpetual state of unemployment, under employment, lack of innovation and lack of prospects. Anything less will leave us falling further and further behind the other countries of the world and further behind the American dream. The question is whether we allow a twisted ideology and bad politics to award the thief with the purse or decide that we a nation of laws where we punish the thief and return the purse.

August 6, 2010
A.I.G. in Talks to Pay U.S. Debt, Chief Says
By MICHAEL J. de la MERCED

The American International Group has begun talks with the federal government over how to finish repaying its $130 billion taxpayer-financed bailout, its chief executive said on Friday.

Separately, he said, the company was making progress toward a potential sale of its consumer finance unit, one of several divisions it planned to shed as part of its turnaround.

“We’ll make sure taxpayers get paid back in full, and they will,” the executive, Robert H. Benmosche, said in an interview on Friday, as the company reported financial results that seemed to signal progress toward the repayment goal. “They’ll get paid back at a profit.”

The company reported a $2.7 billion loss for its second quarter, but the loss stemmed from a $3.3 billion charge related to the sale of a major international unit to MetLife. Excluding the charge, A.I.G. reported $1.3 billion in profit and $2.2 billion in operating income. Both figures showed improvement over the same time last year.

Mr. Benmosche, approaching his first anniversary as A.I.G.’s chief, has embarked on an aggressive campaign to sell off businesses, making the company much smaller than it was at the height of the financial crisis, when it faced possible collapse.

Along the way, Mr. Benmosche has clashed with some of the company’s overseers, including Harvey Golub, who stepped down as A.I.G.’s chairman last month. The company replaced Mr. Golub with Robert S. Miller, a turnaround expert with whom Mr. Benmosche said he worked well.

A.I.G. has begun holding talks with the Federal Reserve about ways to pay down its credit line, which had $20.5 billion outstanding as of June 30, plus an additional $6 billion in accrued interest and fees.

Already, the company is moving forward with the sale of two units: the American Life Insurance Company, an overseas insurance business, and Nan Shan, a Taiwanese life insurance company. It is also on track to sell American International Assurance, its Asia life insurance business, in an initial public stock offering.

A.I.G. is also accepting bids for its consumer lending unit, American General Financial Services, and hopes to announce a sale sometime this month, Mr. Benmosche said.

The stakes of the turnaround strategy are high: only after shedding its reputation as a ward of the state can A.I.G. again flourish as a company, Mr. Benmosche said. So long as questions remain about its dependence on government borrowings, the insurer could be hard-pressed to tap the stock and credit markets for fresh capital, he said.

Once the debt is paid off, Mr. Benmosche said, the company can hold serious negotiations with the Treasury Department about the government’s shedding of its nearly 80 percent stake in A.I.G. One option is to convert the government’s preferred shares into common stock that can be sold off over time, as is happening with Citigroup. Mr. Benmosche did not give a timeline for any possible sale.

“What’s important is that we have to get it right,” he said. “We have to make sure that we’re not leaving a lot on the table.”

Meanwhile, A.I.G. has made big strides in the businesses it is keeping, Mr. Benmosche said. Investment income in both its general and domestic life insurance operations is up, and while revenue from premiums written has fallen, that was in part because A.I.G. refused to cut its prices too far.

“A year ago, analysts were talking about a potentially enormous erosion of our business,” he said. “We have in fact been very successful in retaining business.”

Mr. Benmosche said that earlier this year, he visited 50 of A.I.G.’s biggest customers, and described the feedback as positive. So long as the company continued to make progress in paying back the government, customers indicated that they would most likely stay put, he said.

Another major A.I.G. business, the aircraft leasing company International Lease Finance Corporation, plans to raise up to $4 billion from the debt markets to help pay off a lifeline extended by the Fed. It also recently named a new management team led by Henri Courpron, a former Airbus executive.

The company is continuing to wind down A.I.G. Financial Products, the unit whose deteriorating credit-default swap business was at the center of the 2008 financial crisis. A.I.G. said on Friday that the unit had reduced the notional amount of its supersenior credit-default swap portfolio by 51 percent from Dec. 31, 2009 to June 30, to $89.5 billion.

Filed under: foreclosure Tagged: AIG, Benmosche, MetLife, RESPA, TILA, UDCPA

Jul

Mass Extinction of Pools Becomes Clearer

By LH | Foreclosure Blog News, Homeowner Resources

11069Leave a Comment2010-07-29+14%3A33%3A16LH

Our good friend “Anonymous” has piped up with more vital information and expressed it more succinctly than I did.

“The senior tranches have largely already been paid and closed. Since the junior tranches are paid only if there is left over current payment – after the senior tranches have been paid. Thus, junior tranches are paid nothing (this is evident in investor lawsuits – damages do not deduct foreclosure recovery). If anything remains today from the toxic mortgage loan securitizations, it is the residual tranche – which has likely been resecuritized into a separate Trust – that is not a current pass-through security – but, rather, synthetically derived from a dismantled original Trust structure. “

Editor’s Note: In other words, if you have a high quality loan wherein you have a high credit score and received relatively good terms, it was in the “senior tranches.” The senior tranches were paid and closed. They were paid from the meager proceeds of the junior tranches, from insurance, credit default swaps etc. Bottom Line: If you got one of those mortgages, it has almost certainly been paid in full. So why are they still collecting your payments? Because they can.

Your obligation has most likely been satisfied long ago without any rights of subrogation. If you are in foreclosure now with one of these loans, the “Trustee” is in actuality out of the picture because the “Trust” was closed out (IF IT EVER LEGALLY EXISTED). All of this leads to the politically incorrect conclusion that people gt their houses for “nothing.” But that is not true.

ALL THE MONEY THAT WAS OWED ON THAT LOAN HAS BEEN PAID. WHY SHOULD ANYONE COLLECT ANYTHING FURTHER?

More comments from “Anonymous”

2010/07/29 at 5:47 am

This is a very important post. I have been aware of cases where the defendant is sent to mediation without first identifying the real creditor. Some here have stated that the real party issue is not relevant because eventually the plaintiff will get his “ducks in a row” and proceed with the foreclosure under the real party name.

Not identifying the real party in court is not only fraud but also deprives the defendant of direct and timely negotiation with the real party true creditor. Thus, damages accrue to the defendant.

Although real party, in my opinion, is the single most important issue, I am not seeing courts enforce discovery to ascertain the real party. Once it can be established that the real party is not before the court, all the produced documents are also subject to question. I have seen cases where the real party is at issue – but most of the cases simply state that the plaintiff does not have standing – without attempting to demonstrate why the plaintiff is not the real party.

Since foreclosure cases most often are indicative of securitization, knowing the chain of sale/assignment in a securitization is crucial. Also, knowing what the “investors” are entitled to is important. Again, while I think this post is very important – i disagree with “there is nothing left to pay the investors who advanced money into a pool from which some mortgages were funded” 1) any investors who indirectly funded a “pool” – did not directly fund mortgages and 2) tranche “investors” – for which there a limited number of tranches – were only entitled to current income pass-through – not foreclosure recovery (which is not current and not passed on to pass-through security investors. (However, the residual tranche is not a pass-through – and is usually held by the servicer – who may -or may not be the current creditor). 3) the Trust is likely dissolved.

The fact that mediation is being conducted without identification of the current creditor – in whose name any modification must be contracted – is simply additional fraud upon the borrower defendant. This fraud is akin to “loan modification” scams that are being currently investigated by some state Department of Justices.

How and why the courts are allowing this to happen – and actually promoting it – is beyond me.

Editor’s Note: Legally this puts us at the horns of a dilemma. If we want to travel the path of “PAID IN FULL” then we are treading on the thin ice of accepting or admitting that the loan was actually legally and correctly assigned and indorsed into the pool, in addition to the usual “free house” talk. If we travel the path of UNSUCCESSFUL ATTEMPTED ASSIGNMENT then we get to the conclusion that the loan is still owned by the originating lender, who was PAID IN FULL at the time of the loan closing, but still is the owner of record. If we travel both paths, we are presenting a highly complex argument that most judges won’t understand. This is why the winners out there are not making big splashes with exotic legal arguments (even though they would be right), the winners are getting down to the details that any Judge would understand — SHOW ME THE TRUST DOCUMENT, SHOW ME THE NOTE, SHOW ME THE ASSIGNMENT, SHOW ME THE INDORSEMENT, SHOW ME THE ACCOUNTING, SHOW ME THE CREDITOR ETC.

MANY THANKS, ANONYMOUS!!!

Filed under: bubble, CDO, CORRUPTION, Eviction, evidence, expert witness, foreclosure mill, GTC | Honor, HERS, investment banking, Investor, MODIFICATION, Mortgage, Motions, Pleading, securities fraud, Servicer, STATUTES, trustee Tagged: creditor, fraud, mediation, REAL PARTY IN INTEREST

Jul

Non-Securitization Effect on Title

By LH | Foreclosure Blog News, Homeowner Resources

10641Leave a CommentNon-Securitization+Effect+on+Title2010-07-21+18%3A42%3A54LH

I just finished a seminar given by NBI which was basically in lay terms “How to Repair the Chain of Title.” We covered everything about assignments, breaks in the chain etc. The opportunity arose for questions. I was the first to ask a question, in which I posed a hypothetical that is an accurate reflection of the manner in which foreclosures are being completed and deeds are issued upon the close of bidding at the auction, which it turns out was a question that was on the mind of some other listeners. The answer was that the foreclosure sale is invalid, the deed is in essence a Wild Deed, which under most state statutes is simply void, and does not require any action by the court or anyone else to invalidate it. In other words, in the typical Wild Deed situation, it is simply ignored.

A Wild Deed in simplistic terms is a Deed from someone who is not already in the title chain. The mere filing of self-serving documents as the pretender lenders have done, is a nullity. Any act proceeding from a nullity is also a nullity including the foreclosure and the deed that was issued is a nullity. This is because of the alleged auction sale in which the alleged creditor made a credit bid, was outside of the chain of title. What chain of title? Of course the one in the public records of the county in which the property is located. Add to that the fact that the party who made the credit bid was not a creditor and you can see how messy this venture is getting. The illusion of finality of foreclosure is creating a very expensive nightmare.

I’ll write more about this later. But it certainly corroborates the statement I made starting three years ago — that even if the “foreclosure sale” has already occurred, legal title to the house is still in the name of the homeowner and the deed issued from the foreclosure sale is void. It also means that legal title to the security instrument (deed of trust or mortgage) remains in the name of the loan originator.

If the loan originator is still alive and well, it is possible to re-create the assignment that was intended, but it isn’t easy as you must recite in each affidavit and post hac assignment the actual facts and circumstances surrounding the transfers, why they were not done before etc. This is basic property law.

If the loan originator is dead, it might not be possible to correct the title deficiency as to the loan, without a court order. This also corroborates my prior statements that non-judicial sale is not available in claimed securitized mortgages, because the chain of title does not exist. The only available remedy is judicial foreclosure — if they can make the required allegations in good faith and then prove those allegations to be true, with the burden squarely on the party seeking foreclosure.

One would think that in a State like Arizona they would want to file judicial foreclosures, because they can probably make a case for a deficiency as well. But the pretender lenders are fighting any notion that judicial foreclosure is required or even appropriate. Why? Because they cannot in good faith make the necessary allegations in a lawsuit that would support the relief they seek, and they certainly cannot prove those allegations. The facts are in nearly all cases, that there was no assignment, indorsement or delivery before the notice of default and no self-serving document can change that simple fact. The record is clear and MERS is not “PUBLIC RECORDS” (just ask them).

Bottom line: They want ONLY non-judicial sales because they could not even file a foreclosure lawsuit without suffering defeat, fines and penalties for filing frivolous pleadings. Put another way, they want non-judicial sale because they know they would lose in a judicial proceeding. And the Courts that allow this are contributing to a growing mountain of title problems that are starting emerge now as literally not subject to correction. The outcome? Well, if the courts keep ruling for the pretender lenders, the homeowners — even the ones foreclosed long ago — are still the legal owners of the property and the pretender lenders are going to get more objections from the attorneys for buyers saying that Seller cannot provide clear title. Those buyers without an attorney or whose attorney miss this central, simple record title issue, will have the problem passed on to them. This type of situation has occurred before. It always ends the same way — with the Courts and legislature back-tracking and arbitrarily creating a fix to the dismay and loss, usually of the banks and those who relied upon them.

Filed under: foreclosure

Jul

Banks Fighting Subpoenas From FHFA Over Access to Loan Files

By LH | Foreclosure Blog News, Homeowner Resources

10543Leave a Comment2010-07-19+13%3A47%3A38LH

WHAT IF THE LOANS WERE NOT ACTUALLY SECURITIZED?

In a nutshell this is it. The Banks are fighting the subpoenas because if there is actually an audit of the “content” of the pools, they are screwed across the board.

My analysis of dozens of pools has led me to several counter-intuitive but unavoidable factual conclusions. I am certain the following is correct as to all residential securitized loans with very few (2-4%) exceptions:

Most of the pools no longer exist.

The MBS sold to investors and insured by AIG and the purchase and sale of credit default swaps were all premised on a general description of the content of the pool rather than a detailed description with the individual loans attached on a list.

Each Prospectus if it carried any spreadsheet listing loans, contained a caveat that the attached list was by example only and not the real loans.

Each distribution report contained a caveat that the parties who created it and the parties who delivered it did not guarantee either authenticity or reliability of the report. They even had specific admonitions regarding the content of the distribution report.

NO LOAN ACTUALLY MADE IT INTO ANY POOL. The evidence is clear: nothing was done to assign, indorse or deliver the note to the investors directly or indirectly until a case went into litigation AND a hearing was scheduled. By that time the cutoff date had been breached and the loan was non-performing by their own allegation and therefore was not acceptable into the pool.

AT ALL TIMES LEGAL TITLE TO THE PROPERTY WAS MAINTAINED BY THE HOMEOWNER EVEN AFTER FORECLOSURE AND SALE. The actual creditor who submitted a credit bid was not the creditor. The sale is either void or voidable.

AT ALL TIMES LEGAL TITLE TO THE LOAN WAS MAINTAINED BY THE ORIGINATING “LENDER”. Since there was no assignment, indorsement or delivery that could be recognized at law or in fact, the originating lender still owns the loan legally BUT….

AT ALL TIMES THE OBLIGATION WAS BOTH CREATED AND EXTINGUISHED AT, OR CONTEMPORANEOUSLY WITH THE CLOSING OF THE LOAN. Since the originating lender was in fact not the source of funds, and did not book the transaction as a loan on their balance sheet (in most cases), the naming of the originating lender as the Lender and payee on the note, both created a LEGAL obligation from the borrower to the Lender and at the same time, the LEGAL obligation was extinguished because the LEGAL Lender of record was paid in full plus exorbitant fees for pretending to be an actual lender.

Since the Legal obligation was both created and extinguished contemporaneously with each other, any remaining obligation to any OTHER party became unsecured since the security instrument (mortgage or deed of trust) refers only to the promissory note executed by the borrower.

At the time of closing, the investor-lenders were the real parties in interest as lenders, but they were not disclosed nor were the fees of the various intermediaries who brought the investor-lender money and the borrower’s loan together.

ALL INVESTOR-LENDERS RECEIVED THE EQUIVALENT OF A BOND — A PROMISE TO PAY ISSUED BY A PARTY OTHER THAN THE BORROWER, PREMISED UPON THE PAYMENT OR RECEIVABLES GENERATED FROM BORROWER PAYMENTS, CREDIT DEFAULT SWAPS, CREDIT ENHANCEMENTS, AND THIRD PARTY INSURANCE.

Nearly ALL investor-lenders have been paid sums of money to satisfy the promise to pay contained in the bond. These payments always exceeded the borrowers payments and in many cases paid the obligation in full WITHOUT SUBROGATION.

NO LOAN IS IN ACTUAL DEFAULT OR DELINQUENCY. Since payments must first be applied to outstanding payments due, payments received by investor-lenders or their agents from third party sources are allocable to each individual loan and therefore cure the alleged default. A Borrower’s Non-payment is not a default since no payment is due.

ALL NOTICES OF DEFAULT ARE DEFECTIVE: The amount stated, the creditor, and other material misstatements invalidate the effectiveness of such a notice.

NO CREDIT BID AT AUCTION WAS MADE BY A CREDITOR. Hence the sale is void or voidable.

ANY BALANCE DUE FROM THE BORROWER IS SUBJECT TO DEDUCTIONS FOR THIRD PARTY PAYMENTS.

ANY BALANCE DUE FROM THE BORROWER IS SUBJECT TO AN EQUITABLE CLAIM FOR UNJUST ENRICHMENT THAT IS UNSECURED.

ANY BALANCE DUE FROM THE BORROWER IS SUBJECT TO AN EQUITABLE CLAIM FOR A LIEN TO REFLECT THE INTENTION OF THE INVESTOR-LENDER AND THE INTENTION OF THE BORROWER. Both the investor-lender and the borrower intended to complete a loan transaction wherein the home was used to collateralize the amount due. The legal satisfaction of the originating lender is not a deduction from the equitable satisfaction of the investor-lender. THUS THE PARTIES SEEKING TO FORECLOSE ARE SUBJECT TO THE LEGAL DEFENSE OF PAYMENT AT CLOSING BUT THE INVESTOR-LENDERS ARE NOT SUBJECT TO THAT DEFENSE.

The investor-lenders ALSO have a claim for damages against the investment banks and the string of intermediaries that caused loans to be originated that did not meet the description contained in the prospectus.

Any claim by investor-lenders may be subject to legal and equitable defenses, offsets and counterclaims from the borrower.

The current modification context in which the securitization intermediaries are involved in settlement of outstanding mortgages is allowing those intermediaries to make even more money at the expense of the investor-lenders.

The failure of courts to recognize that they must apply the rule of law results not only in the foreclosure of the property, but the foreclosure of the borrower’s ability to negotiate a settlement with an undisclosed equitable creditor, or with the legal owner of the loan in the property records.

Loan File Issue Brought to Forefront By FHFA Subpoena
Posted on July 14, 2010 by Foreclosureblues
Wednesday, July 14, 2010

foreclosureblues.wordpress.com

Editor’s Note….Even U.S. Government Agencies have difficulty getting
discovery, lol…This is another excellent post from attorney Isaac
Gradman, who has the blog here…http://subprimeshakeout.blogspot.com.
He has a real perspective on the legal aspect of the big picture, and
is willing to post publicly about it. Although one may wonder how
these matters may effect them individually, my point is that every day
that goes by is another day working in favor of those who stick it out
and fight for what is right.

Loan File Issue Brought to Forefront By FHFA Subpoena

The battle being waged by bondholders over access to the loan files
underlying their investments was brought into the national spotlight
earlier this week, when the Federal Housing Finance Agency (FHFA), the
regulator in charge of overseeing Fannie Mae and Freddie Mac, issued
64 subpoenas seeking documents related to the mortgage-backed
securities (MBS) in which Freddie and Fannie had invested. The FHFA
has been in charge of overseeing Freddie and Fannie since they were
placed into conservatorship in 2008.

Freddie and Fannie are two of the largest investors in privately
issued bonds–those secured by subprime and Alt-A loans that were often
originated by the mortgage arms of Wall St. firms and then packaged
and sold by those same firms to investors–and held nearly $255 billion
of these securities as of the end of May. The FHFA said Monday that it
is seeking to determine whether issuers of these so-called “private
label” MBS misled Freddie and Fannie into making the investments,
which have performed abysmally so far, and are expected to result in
another $46 billion in unrealized losses to the Government Sponsored
Entities (GSE).

Though the FHFA has not disclosed the targets of its subpoenas, the
top issuers of private label MBS include familiar names such as
Countrywide and Merrill Lynch (now part of BofA), Bear Stearns and
Washington Mutual (now part of JP Morgan Chase), Deutsche Bank and
Morgan Stanley. David Reilly of the Wall Street Journal has written an
article urging banks to come forward and disclose whether they have
received subpoenas from the FHFA, but I’m not holding my breath.

The FHFA issued a press release on Monday regarding the subpoenas
(available here). The statement I found most interesting in the
release discusses that, before and after conservatorship, the GSEs had
been attempting to acquire loan files to assess their rights and
determine whether there were misrepresentations and/or breaches of
representations and warranties by the issuers of the private label
MBS, but that, “difficulty in obtaining the loan documents has
presented a challenge to the [GSEs'] efforts. FHFA has therefore
issued these subpoenas for various loan files and transaction
documents pertaining to loans securing the [private label MBS] to
trustees and servicers controlling or holding that documentation.”

The FHFA’s Acting Director, Edward DeMarco, is then quoted as saying
““FHFA is taking this action consistent with our responsibilities as
Conservator of each Enterprise. By obtaining these documents we can
assess whether contractual violations or other breaches have taken
place leading to losses for the Enterprises and thus taxpayers. If so,
we will then make decisions regarding appropriate actions.” Sounds
like these subpoenas are just the precursor to additional legal
action.

The fact that servicers and trustees have been stonewalling even these

powerful agencies on loan files should come as no surprise based on

the legal battles private investors have had to wage thus far to force

banks to produce these documents. And yet, I’m still amazed by the

bald intransigence displayed by these financial institutions. After

all, they generally have clear contractual obligations requiring them

to give investors access to the files (which describe the very assets

backing the securities), not to mention the implicit discovery rights

these private institutions would have should the dispute wind up in

court, as it has in MBIA v. Countrywide and scores of other investor

suits.

At this point, it should be clear to everyone–servicers and investors
alike–that the loan files will have to be produced eventually, so the
only purpose I can fathom for the banks’ obduracy is delay. The loan
files should, as I’ve said in the past, reveal the depths of mortgage
originator depravity, demonstrating convincingly that the loans never
should have been issued in the first place. This, in turn, will force
banks to immediately reserve for potential losses associated with
buying back these defective mortgages. Perhaps banks are hoping that
they can ward off this inevitability long enough to spread their
losses out over several years, thereby weathering the storm caused (in
part) by their irresponsible lending practices. But certainly the
FHFA’s announcement will make that more difficult, as the FHFA’s
inherent authority to subpoena these documents (stemming from the
Housing and Economic Recovery Act of 2008) should compel disclosure
without the need for litigation, and potentially provide sufficient
evidence of repurchase obligations to compel the banks to reserve
right away. For more on this issue, see the fascinating recent guest
post by Manal Mehta on The Subprime Shakeout regarding the SEC’s
investigation into banks’ processes for allocating loss reserves.

Meanwhile, the investor lawsuits continue to rain down on banks, with
suits by the Charles Schwab Corp. against Merrill Lynch and UBS, by
the Oregon Public Employee Retirement Fund against Countrywide, and by
Cambridge Place Investment Management against Goldman Sachs, Citigroup
and dozens of other banks and brokerages being announced this week. If
the congealing investor syndicate was looking for political cover
before staging a full frontal attack on banks, this should provide
ample protection. Much more to follow on these and other developments
in the coming days…
Technorati Links • Save to del.icio.us • Digg This! • Stumble It!

Posted by Isaac Gradman at 3:46 PM

Filed under: bubble, CASES, CDO, CORRUPTION, Eviction, evidence, expert witness, Fannie MAe, foreclosure mill, forms, GTC | Honor, HERS, investment banking, Investor, MODIFICATION, Mortgage, Motions, Pleading, securities fraud, Servicer, trustee Tagged: assignment, delivery, discovery, Edward DeMarco, FHFA, foreclosureblues, indorsement, investor-lender, Isaac Gradman, pools, table funded loan, third aprty payment

Jul

Principal Reduction is Both Fair and the Only Practical Solution

By LH | Foreclosure Blog News, Homeowner Resources

9881Leave a Comment2010-07-04+12%3A52%3A11LH

From “Anonymous” in Response to Post about PAID IN FULL

Editor’s Note. I might have misstated the case when I said that investment banks are buying up the lower tranches. It’s not them. It is the people in the investment banks because they have another gambit to run on this. Anonymous, I would appreciate it if you would inquire and confirm, corroborate or rebut this statement.

The rest of your points are of course pearls. AND the specifics you offer make it increasingly clear that a principal reduction at the borrower’s end is only a reflection of the reality of the reduction on the creditor’s end — whether through payment, credit enhancement or waiver of rights that are questionable but nonetheless part of the deal.

One – in response to — “investment banks that are buying up the toxic waste tranches, ” —–investment banks are not buying up toxic tranches -they are consolidating these tranches onto their balance sheets -and writing them off the former receivable pass-through.

Two – we do not know what AIG (or other insurers) were entitled to once they honored the swap protection contract (they actually did not honor – the US Government did) – this information is not available. AIG could be entitled to whole loan collection rights. But, AIG “Obligations” are now owned by the US Government – who, by the way, is the party rejecting loan modifications – despite their law to promote them.

Three – paying an obligation for another party does not release action against the borrower. The debt remains. However, the real party must follow the law. The real party remain undisclosed. The real creditor must be divulged. And, any failure to disclose the real and current creditor deprives the borrower of the right to a modification negotiation with the actual creditor. We all know, by know, servicers are not the creditor.

Four- Use the paid “tranches” as evidence that the structure of the REMIC – as once originated (by cut-off date – ha ha) – is gone. Mezzanine tranche holders are only paid – if there is anything left after the A tranches holders are paid. And, this is ONLY for current pass-through. If the A tranches have been paid – in full- by swaps -there is nothing left to be paid to any M tranche holders. The “waterfall” structure is gone – thus, so is the pass-through REMIC that once organized the structured tranches.

Five – Balance sheet accounting is critical – who is accounting for the right to collect the loan? That is the fundamental question.

Six – As to “holder” of the note – there have been good challenges to the negotiability of the note posted here (see Collete McDonald). and post re- Professor at Pepperdine.

If you try to challenge strictly on fact that someone else “paid” the loan amount for you – you will not win. This has already been tested in debt collection. It will not work. But, this is greater than “debt” collection – as the current creditor is supposing to be negotiating with you according to Congressional law. You need to know your creditor – until you find that out – the foreclosure is a farce and and a fraud – upon you – and upon the court.

Finally, as Neil has stated many times, trying to get a complete discharge or “free home” will not work. Thus, trying to say the DEBT does not exist – will not hold. Only way you can possibly go this route is to claim that the account does not belong to you. And, that could be a focus – when a loan number has been changed (need less to say – your new loan number is not in the PSA “attached” “Mortgage Schedule.”

And, as PJ has also said – principal reduction is the key. There needs to be principal reduction with a fair interest rate.

Judges will not like hearing that the debt has been paid – and, therefore, you owe nothing. Need to shatter their “trustee” bogus Trust structure – and demand to know the current creditor. And, pursue counter-claims for a fraudulent foreclosure and fraud upon the court.

TO quote trespass unwanted,
I know nothing, and if I think I know something I know nothing. I don’t give legal advice because I don’t know legal things.

Filed under: foreclosure

Jul

GMAC v Visicaro Case No 07013084CI: florida judge reverses himself: applies basic rules of evidence and overturns his own order granting motion for summary judgment

By LH | Foreclosure Blog News, Homeowner Resources

6430Leave a Comment2010-07-02+20%3A07%3A05LH

Having just received the transcript on this case, I find that what the Judge said could be very persuasive to other Judges. I am renewing the post because there are several quotes you should be using from the transcript. Note the intimidation tactic that Plaintiff’s Counsel tried on the Judge. A word to the wise, if you are going to use that tactic you better have the goods hands down and you better have a good reason for doing it that way.

Fla Judge rehearing of summary judgement 4 04 10

5035SCAN4838_000 vesicaro Briefs

Vesicaro transcript

Posted originally in April, 2010

RIGHT ON POINT ABOUT WHAT WE WERE JUST TALKING ABOUT

I appeared as expert witness in a case yesterday where the Judge had trouble getting off the idea that it was an accepted fact that the note was in default and that ANY of the participants in the securitization chain should be considered collectively “creditors” or a creditor. Despite the fact that the only witness was a person who admitted she had no knowledge except what was on the documents given to her, the Judge let them in as evidence.

The witness was and is incompetent because she lacked personal knowledge and could not provide any foundation for any records or document. This is the predominant error of Judges today in most cases. Thus the prima facie case is considered “assumed” and the burden to prove a negative falls unfairly on the homeowner.

The Judge, in a familiar refrain, had trouble with the idea of giving the homeowner a free house when the only issue before him was whether the motion to lift stay should be granted. Besides the fact that the effect of granting the motion to lift stay was the gift of a free house to ASC who admits in their promotional website that they have in interest nor involvement in the origination of the loans, and despite the obviously fabricated assignment a few days before the hearing which violated the terms of the securitization document cutoff date, the Judge seems to completely missed the point of the issue before him: whether there was a reason to believe that the movant lacked standing or that the foreclosure would prejudice the debtor or other creditors (since the house would become an important asset of the bankruptcy estate if it was unencumbered).

If you carry over the arguments here, the motion for lift stay is the equivalent motion for summary judgment.

This transcript, citing cases, shows that the prima facie burden of the Movant is even higher than beyond a reasonable doubt. It also shows that the way the movants are using business records violates all standards of hearsay evidence and due process. Read the transcript carefully. You might want to use it for a motion for rehearing or motion for reconsideration to get your arguments on record, clear up the issue of whether you objected on the basis of competence of the witness, and then take it up on appeal with a cleaned up record.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, expert witness, foreclosure, foreclosure mill, GTC | Honor, HERS, Investor, Mortgage, securities fraud, Servicer Tagged: 07013084CI, assumptions, beyond a reasonable doubt, burden of prrof, business records, competency, due process, evidence, expert witness, florida judge, foreclosure defense, FOUNDATION, fraud, GMAC, hearsay, HERS, incompetent witness, motion for summary judgment, rules of evidence, securitization, Visicaro, witness

Jun

INVESTORS SUE FOR INFLATED HOME APPRAISALS, WHY DON’T YOU?

By LH | Foreclosure Blog News, Homeowner Resources

9389Leave a Comment2010-06-21+13%3A14%3A17LH

The model concluded that roughly one-third of the loans were for amounts that were 105 percent or more of the underlying property’s value. Roughly 5.5 percent of the loans in the pools had appraisals that were lower than they should have been.

In one pool with 3,543 loans, for example, the CoreLogic model had enough information to evaluate 2,097 loans. Of those, it determined that 1,114 mortgages — or more than half — had loan-to-value ratios of 105 percent or more. The valuations on those properties exceeded their true market value by $65 million,

EDITOR’S NOTE: POINTS TO BE MADE:

Investors’ are proving the case for appraisal fraud, aligning themselves with borrowers. They are doing the borrower’s work. Get yourself copies of these complaints, discovery etc., send them to me and use them in your own case.

The little guy is starting to get attention. The court’s are getting the point that these loans were fraudulent. In my surveys I have found that appraisal fraud accounts for nearly all the loans 2003-2008, and that the amount of the fraud was a s much as 150% in some cases with an average of around 35%. The moment you closed, whatever down payment you made was lost and you were underwater.

The obligation to present a proper appraisal is on the lender not the borrower.

Just like the investors, borrowers were deprived of vital information about their loan that would have prevented any reasonable person from closing. Thus whether the Court’s like it or not, rescission, is a proper remedy, if not under TILA then under fraud statues and common law doctrines of fraud. Combine that with damages available, and the prospect of getting loan reduction and adjustment of loan terms comes into clearer view.

THE CONNECTION BETWEEN THE INVESTOR’S ADVANCE OF FUNDS AND THE HOME APPRAISAL IS PRESUMED AND ALLEGED. THUS THE ARGUMENT THAT THE INVESTOR WAS THE CREDITOR AND THE BORROWER IS THE DEBTOR IS CORROBORATED BY THE PLEADINGS OF THE INVESTORS.

June 18, 2010

The Inflatable Loan Pool

By GRETCHEN MORGENSON

AMID the legal battles between investors who lost money in mortgage securities and the investment banks that sold the stuff, one thing seems clear: the investment banks appear to be winning a good many of the early skirmishes.

But some cases are faring better for individual plaintiffs, with judges allowing them to proceed even as banks ask that they be dismissed. Still, these matters are hard to litigate because investors must persuade the judges overseeing them that their losses were not simply a result of a market crash. Investors must argue, convincingly, that the banks misrepresented the quality of the loans in the pools and made material misstatements about them in prospectuses provided to buyers.

Recent filings by two Federal Home Loan Banks — in San Francisco and Seattle — offer an intriguing way to clear this high hurdle. Lawyers representing the banks, which bought mortgage securities, combed through the loan pools looking for discrepancies between actual loan characteristics and how they were pitched to investors.

You may not be shocked to learn that the analysis found significant differences between what the Home Loan Banks were told about these securities and what they were sold.

The rate of discrepancies in these pools is surprising. The lawsuits contend that half the loans were inaccurately described in disclosure materials filed with the Securities and Exchange Commission.

These findings are compelling because they involve some 525,000 mortgage loans in 156 pools sold by 10 investment banks from 2005 through 2007. And because the research was conducted using a valuation model devised by CoreLogic, an information analytics company that is a trusted source for mortgage loan data, the conclusions are even more credible.

The analysis used CoreLogic’s valuation model, called VP4, which is used by many in the mortgage industry to verify accuracy of property appraisals. It homed in on loan-to-value ratios, a crucial measure in predicting defaults.

An overwhelming majority of the loan-to-value ratios stated in the securities’ prospectuses used appraisals, court documents say. Investors rely on the ratios because it is well known that the higher the loan relative to an underlying property’s appraised value, the more likely the borrower will walk away when financial troubles arise.

By back-testing the loans using the CoreLogic model from the time the mortgage securities were originated, the analysis compared those values with the loans’ appraised values as stated in prospectuses. Then the analysts reassessed the weighted average loan-to-value ratios of the pools’ mortgages.

That means inflated appraisals were involved in six times as many loans as were understated appraisals.

David J. Grais, a lawyer at Grais & Ellsworth in New York, represents the Home Loan Banks in the lawsuits. “The information in these complaints shows that the disclosure documents for these securities did not describe the collateral accurately,” Mr. Grais said last week. “Courts have shown great interest in loan-by-loan and trust-by-trust information in cases like these. We think these complaints will satisfy that interest.”

The banks are requesting that the firms that sold the securities repurchase them. The San Francisco Home Loan Bank paid $19 billion for the mortgage securities covered by the lawsuit, and the Seattle Home Loan Bank paid $4 billion. It is unclear how much the banks would get if they won their suits.

Among the 10 defendants in the cases are Deutsche Bank, Credit Suisse, Merrill Lynch, Countrywide and UBS. None of these banks would comment.

As outlined in the San Francisco Bank’s amended complaint, it did not receive detailed data about the loans in the securities it purchased. Instead, the complaint says, the banks used the loan data to compile statistics about the loans, which were then presented to potential investors. These disclosures were misleading, the San Francisco Bank contends.

The selling document for that pool said that all of the mortgages had loan-to-value ratios of 100 percent or less, the complaint said. But the CoreLogic analysis identified 169 loans with ratios over 100 percent. The pool prospectus also stated that the weighted average loan-to-value ratio of mortgages in the portion of the security purchased by Home Loan Bank was 69.5 percent. But the loans the CoreLogic model valued had an average ratio of almost 77 percent.

IT is unclear, of course, how these court cases will turn out. But it certainly is true that the more investors dig, the more they learn how freewheeling the Wall Street mortgage machine was back in the day. Each bit of evidence clearly points to the same lesson: investors must have access to loan details, and the time to analyze them, before they are likely to want to invest in these kinds of securities again.

Filed under: bubble, CASES, CDO, CORRUPTION, Eviction, evidence, expert witness, foreclosure, foreclosure mill, GTC | Honor, HERS, investment banking, Investor, MODIFICATION, Mortgage, Motions, Pleading, securities fraud, Servicer, STATUTES, trustee Tagged: CoreLogic, Credit Suisse, David J. Grais, DEUTSCHE BANK, GRETCHEN MORGENSON, HERS, Home Loan Banks, investment banks, investors, Merrill Lynch, mortgage securities, San Francisco Home Loan Bank, Seattle Home Loan Bank, UBS, VP4

Jun

MERS Attempting to Get Correct Identity of Investors

By LH | Foreclosure Blog News, Homeowner Resources

9012Leave a Comment2010-06-15+14%3A58%3A20LH

Training Bulletin

Number 2010-05

To: All MERS Members

May 26, 2010

Re: Identifying Investors on MERS® System

MERS® System Release 19.0 on June 14, 2010, will include Phase II of MERS® InvestorID. Phase I was introduced on June 19, 2009, to help our Members meet the requirements of the Helping Families Save Their Homes Act of 2009 by using information entered on the MERS® System to generate a Notice of New Creditor when a Transfer of Beneficial Rights (TOB) transaction was completed.

Besides providing a more robust solution for generating Mortgage Loan Transfer Notices, Phase II provides Investor
contact information to the public in MERS® ServicerID and the telephone Servicer Identification System, and to MERS®
Link Subscribers and MERS® Members in MERS® Link. Investor contact information also is provided to MERS
Members in MERS® OnLine, and in the XML and batch inquiry transactions.

Because of this increased visibility of Investor information, it is even more important that the Investor be represented
correctly for each loan on the MERS® System. As noted in the Draft Procedures Manual for Release 19.0 released on
April 15, 2010, Servicers may not insert their own Org ID as Investor on MINs for which they do not hold the
beneficial rights after June 14, 2010. If the actual investor does not have an Org ID, the Servicer may insert 1000002
(Undisclosed Investor) in the Investor field. Servicers may begin immediately inserting this Org ID in the Investor field
when appropriate, and may create a TOB Option 2 from their own Org ID to 1000002 to insert this Org ID on loans for
which they had previously inserted their own Org ID as Investor because the actual investor did not have an Org ID.

After the release, all MERS® InvestorID-related options will be visible to each Member in MERS® OnLine, including:



Mortgage Loan Transfer Notice (defaults to selected; if you have opted out of InvestorID it is deselected)
If selected, a Mortgage Loan Transfer Notice will be generated when a TOB transaction is completed with your Org
ID as the New Investor. Members cannot update this option. To request it be changed, currently you must email

InvestorID@mersinc.org. After the release, you will email the MERS Product Performance Department at

ppd@mersinc.org to change this option, as for other Member Profile changes.



New information display options that can only be changed by MERS (displayed under Investor Options):

Disclose Investor Information– Proprietary (defaults to selected)

If selected, Investor contact information will be included for all loans with your Org ID as Investor:



For non-rightsholder Members on the MIN Summary page in MERS® OnLine



For Members and MERS® Link Subscribers on the MIN Summary page in MERS® Link



In all Status and Summary responses in XML Inquiry and Batch Inquiry

Disclose Investor Information– Public (defaults to selected)

If selected, Investor contact information will be displayed for all loans with your Org ID as Investor:



In MERS® ServicerID



In the telephone Servicer Identification System

If you wish to have either option deselected for your Org ID before the release, please email your request to

InvestorID@mersinc.org, including your Org ID and company name, by June 9, 2010. Requests received after June

9 will be processed starting on June 14. After the release, you will email the MERS Product Performance

Department atppd@mersinc.org to change these options, as for other Member Profile changes.



New information display options that can be changed by the Member (on the Name/Address page):

Use Investor Alternate Address– Public (defaults to unselected)
If selected, the new Investor Alternate Address is used in MERS® ServicerID and the telephone Servicer
Identification System, and on Mortgage Loan Transfer Notices, for loans with your Org ID as Investor

Use Servicer/Subservicer Alternate Address– Public (defaults to unselected)
If selected, the new Servicer/Subservicer Alternate Address is used in MERS® ServicerID and the telephone
Servicer Identification System, and on Mortgage Loan Transfer Notices, for loans with your Org ID as Servicer
or Subservicer.

Filed under: foreclosure Tagged: MERS

Jun

AFTER THE SALE: PART II

By LH | Foreclosure Blog News, Homeowner Resources

8700Leave a CommentAFTER+THE+SALE%3A+PART+II2010-06-09+15%3A04%3A21LH

Submitted by VivianJ

2010/06/08 at 6:55 pm

Finally got on the list. A servicer, (not on the deed of trust) tried to execute a power of sale. Thanks Neil for your wonderful posts. I’ve been reading for months.
I showed up. Spoke to the ‘appointed’ trustee. Said, according to your appointment you have the Deed and the Note? She said, “I don’t want to talk to you.”. I told her I had a complaint for identity theft and consumer protection in a real estate transaction with the Attorney General. She gives me the law firm she’s helping (in another city) and I told her, I was disputing the sale. It was fraud. I informed her I would capture the sale with my cell phone. Eventually I was told they would not call out my home for sale. I waited through all the foreclosures. Those she called out, she stated she was authorized to bid for the “lender” (term used loosely) and she’d place the first bid, and of course had the highest bid, and would say ‘sold’. She read mine, and I started recording, I spoke while she sold, and said I never did business with this company. They are not a lender nor a creditor to me. They are not recorded in the real property records. The title is clouded. etc…so on, and eventually heard her say, sold. So I stopped talking and asked what it sold for and a person sitting by her gave a value. I said, that’s all I need and stopped recording. The cell has my voice over hers, but the point is, I was there, and have video of a fraudulent sale. I waited. No filings yet to try to transfer the title from the original trustee to the ‘substitute trustee’ (term used loosely). The acceleration (power of sale) can only be done by the ‘lender’. That definition is in the Deed of Trust. Without an ‘Assignment/Transfer’ in the Real Property Records…no one else can claim the status of the “lender’. Only the ‘lender’ can appoint a substitute trustee. The entire process was flawed. I got information from the ‘lender’ I never paid, that should prove I owed them the money (without an assignment) but their note was a certified copy from a title company, their copy of the Deed is different from a certified copy I can get from the official real estate records. I got the law firm to send their proof they have the Note and Deed as per their appointment. Their note does not match what the ‘lender’ sent, and their copy of the Deed does not match what the ‘lender’ sent nor the copy on file in Real Property records. They made it easy for me to prove to the attorney general the fraud. Problem was the AG represents that ‘state’ whereas I needed someone to represent me. Attorneys in non-judicial states do not know this part of the process so they avoid it. I found one who was new to the state, needed clients, and said if I could tell her what was wrong she’d try to help me. Well I’m on my way to either ‘reverse the sale’ (if they file something to show it was done…seems there is a delay to complete that fraudulent process), and to seek quiet title to remove all claims to this property. Sad thing is the ‘lenders’ (that term will always be used loosely) only wants the legal title to the property. They could care less about me, my payment or the house. But they can’t get it from the Trustee on my Deed of Trust because they aren’t the original Lender. The original Lender was merged away into another entity, and the Trustee would only recognize the holder of the Note and Deed. Good luck with that.

America’s property is held by legal title by the origianl Trustees of our Deeds/Mortgages and the Bankers can’t get to these titles because they split the Deed and Note. A shame the fraud they’d go through to make sure an attorney is not the final holder of all the property titles. Makes it hard to flip homes over and over again as people buy, sell, or lose their homes doesn’t it. Can’t back out of the bad documents. They did get sloppy in their greed.
They assign a substitute trustee, then force a sale or foreclosure, then get the original trustee to transfer the legal title to the substitute trustee so the substitute trustee can transfer it to the banker. The fraud is deep, pretending to pay taxes so they can set up an escrow and charge higher mortgage, pretending to not receive payments, canned letters no matter how you communicate in writing telling you they didn’t get your documentation even if you sent it three different times and three different ways. Then if you refinance to get from under them, the bank that refinanced is bound to assign you to them as a servicer again to go through the same pains over and over until they get that title!
Good luck to all. I admit, stay in the language of Love, ’cause when you operate with Love in your heart, you can see through all the darkness and all the fraud and all the deception. With Love, your eyes are open and you see the slightest details in their fraud and can expose the evil side of the business. Stay in Love, that’s the language that will open the doors to victory. Forgive the players. They are working and earning a paycheck. A few at the top caused the problems. The rest of us on both sides are the pawns and expendable. Love your neighbor, they may be the very person to help you. Keep an amount of cash, (coins) in your possession for emergency situations. Lately, there has been interruptions weather related or not, where ATMs, gas stations, food services, etc.. have not been able to process credit and debit. Seems like a test for something later to come. Not fear mongering, just making an observation and giving a heads-up. Neil, keep up the good work.

Filed under: CASES, CORRUPTION, evidence, foreclosure, foreclosure mill, Forensic Analysis Workshop, GTC | Honor, HERS, investment banking, Investor, Mortgage, Motion Practice and Discovery, securities fraud, Securitization Survey, Servicer, STATUTES, trustee, workshop Tagged: after the sale, attorney general, Fruad, servicer, trustee, wrongful foreclosure

Jun

AFTER THE SALE: PART I

By LH | Foreclosure Blog News, Homeowner Resources

8694Leave a CommentAFTER+THE+SALE%3A+PART+I2010-06-09+14%3A53%3A37LH

Submitted by Charles Koppa. 6/9/2010

Editor’s Note: We are starting to look at events AFTER the sale has taken place and we are discovering a number of things:

CREDIT BID: Only the Creditor can submit a credit bid. All others must pay actual money. If a non-creditor submitted a credit bid (essentially bidding the “amount due” which as we have seen from the FTC action against BOA is incorrectly stated) then the procedure has been violated, the sale has not legally occurred. At least that is my interpretation.

Also the submission of a credit bid locks in the position of the parties. So if you are suing for wrongful or fraudulent foreclosure, they no longer have the option of fabricating documents as you raise one objection after another.

The obligation to return money rightfully owed to the homeowner continues but it is ignored. Thus even if the property is not sold to a bonafied purchaser for value without notice of defects, the net accounting due is the same. So the receipt of third party insurance, credit default swaps, or other credit enhancement payments is still required to be allocated to this loan. Hence there is a damage claim against the participants in the foreclosure and sale.

More later. For now read Charles’ comments below

REO’s and OREO’s have NO MERS Identification Numbers.

1. Loan Servicer (as a MERS member) initiates the NOD and NOTS.
2. When the auctioneer pronounces “Back To Beneficiary”, the securitized bond trust receives the MinBid at averages of 46% below the NOTS amount posted the day before. Bondholder “paper certificate losses” are unconscionably assigned against the Real Estate asset. “The Paper Trust” gains an untitled transfer of the Real Estate Asset which it NEVER Wanted!
3. The Auction extinguishes the Toxic Security on Wall Street. Counterparties collect on their bets. Investor lose their investments” and the monthly cash interest streams are terminated.
4. Simultaneously, the Servicer (and MERS) are extinguished from all public records. Servicer collects on MGIC or other mortgage insurance to cover ALL their contrived losses and costs.
5. When the re-sale is completed, “The Bookkeeping Trust” ALSO disappears from County Property RECORDS!!!
6. Until re-sold, the real property travels at ZERO book value into an off balance sheet private entity (mostly controlled by the BHC) which was the SIV “depositor” (as an off balance entity) in setting up the REMIC and/or the Investment Trust in the first place.

Filed under: CASES, CDO, CORRUPTION, Eviction, expert witness, Fannie MAe, foreclosure, foreclosure mill, Forensic Analysis Workshop, GTC | Honor, HERS, investment banking, Investor, marketing, MODIFICATION, Mortgage, Motion Practice and Discovery, securities fraud, Securitization Survey, Servicer, STATUTES, trustee, workshop Tagged: Auction, bookkeeping trust, credit bid, fabricating documents, foreclosure, foreclosure sale, fraudulent foreclosure, Identification Numbers, Lehman Brothers, MERS, MIN, NOD, NOTS, OREO, property records, REO, sale, servicer

Jun

In States Requiring Mediation

By LH | Foreclosure Blog News, Homeowner Resources

8480Leave a CommentIn+States+Requiring+Mediation2010-06-03+14%3A20%3A14LH

More and more states are following the example set by the federal government in requiring mediation or modification attempts before going forward with litigation. We think that is a good idea in theory, but without the teeth that is in the enabling rules and statutes in Florida, you are just going to end up playing the same game of “who’s my lender.?”

Even in Florida, as in all cases, YOU must bring up the the issue of the authroity of the person being offered as a decision-maker.” 99 times out of a hundred they are not. The most they have is some authority from a dubious source to agree to some minor adjustments, like adding the payments to the back end of the mortgage.

Make no mistake about it — there is no decision-maker unless they have full power over that mortgage. That means they could if they want to, reduce the principal. They will argue that nobody has that power because the securitization documetns prohibit it. That is their little way of getting your eye off the ball.

Of course the securitization documents don’t allow certain things to be done to the mortgage. Those documents are aimed at restricting the actions of the agents of the principal (i.e. the creditor/lender).

It is ONLY an authorized representative of the investors who DO have the final say over any settlement that is needed in that mediation room and proof of that authority, which means notice to the investors, which means disclosing that notice to the investors and proof that a sufficient number of investors under the documents have approved the grant of decision-making authority to modify, amend, alter or change the obligation, note and/or mortgage.

Unless the person offered for the mediation has the authority to sign a satisfaction of mortgage on whatever terms he/she sees fit, they are not the decision-maker. If the other side refuses to comply move for contempt, sanctions and to strike their pleadings with prejudice.

If the other side fights this and they probably will, you should probably argue that this is a flat out admission that the principal (i.e., real party in interest, creditor, lender) is not represented in the proceedings because the other party in your litigation refuses to disclose them contrary to the requirements of federal law, state law and the rules of civil procedure.

If they can’t produce this authority then they also lack authority to foreclose. It might even be an admission that they are seeking to steal the house, put in their own entity and keep the proceeds of sale contrary to the interests of the investor who is entitled to be paid and contrary to the borrower who is entitled to a credit against the obligation that is due.

Filed under: CASES, CORRUPTION, Eviction, expert witness, foreclosure, foreclosure mill, foreign relations, Forensic Analysis Workshop, GTC | Honor, HERS, investment banking, Investor, MODIFICATION, Mortgage, Motion Practice and Discovery, securities fraud, Securitization Survey, Servicer, trustee, workshop Tagged: authority, decision-maker, Florida Modification, investors, mediation, modification, Mortgage, note, Obligation

Jun

Fannie Mae Policy Now Admits Loan Not Secured

By LH | Foreclosure Blog News, Homeowner Resources

84441 Comment2010-06-02+10%3A05%3A57LH

29248253-Mers-May-Not-Foreclosure-for-Fannie-Mae

Editor’s Note: Their intention was to get MERS and servicers out of the foreclosure business. They now say that prior to foreclosure MERS must assign to the real party in interest.

Here’s their problem: As numerous Judges have pointed out, MERS specifically disclaims any interest in the obligation, note or mortgage. Even the language of the mortgage or Deed of Trust says MERS is mentioned in name only and that the Lender is somebody else.

These Judges who have considered the issue have come up with one conclusion, an assignment from a party with no right, title or interest has nothing to assign. The assignment may look good on its face but there still is the problem that nothing was assigned.

Here’s the other problem. If MERS was there in name only to permit transfers and other transactions off-record (contrary to state law) and if the original party named as “Lender” is no longer around, then what you have is a gap in the chain of custody and chain of title with respect to the creditor’s side of the loan. It is all off record which means, ipso facto that it is a question of fact as to whose loan it is. That means, ipso facto, that the presence of MERS makes it a judicial question which means that the non-judicial election is not available. They can’t do it.

So when you put this all together, you end up with the following inescapable conclusions:

The naming of MERS as mortgagee in a mortgage deed or as beneficiary in a deed of trust is a nullity.

MERS has no right, title or interest in any loan and even if it did, it disclaims any such interest on its own website.

The lender might be the REAL beneficiary, but that is a question of fact so the non-judicial foreclosure option is not available.

If the lender was not the creditor, it isn’t the lender because it had no right title or interest either, legally or equitably.

Without a creditor named in the security instrument intended to secure the obligation, the security was never perfected.

Without a creditor named in the security instrument intended to secure the obligation, the obligation is unsecured as to legal title.

Since the only real creditor is the one who advanced the funds (the investor(s)), they can enforce the obligation by proxy or directly. Whether the note is actually evidence of the obligation and to what extent the terms of the note are enforceable is a question for the court to determine.

The creditor only has a claim if they would suffer loss as a result of the indirect transaction with the borrower. If they or their agents have received payments from any source, those payments must be allocated to the loan account. The extent and measure of said allocation is a question of fact to be determined by the Court.

Once established, the allocation will most likely be applied in the manner set forth in the note, to wit: (a) against payments due (b) against fees and (c) against principal, in that order.

Once applied against payments, due the default vanishes unless the allocation is less than the amount due in payments.

Once established, the allocation results in a fatal defect in the notice of default, the statements sent to the borrower, and the representations made in court. Thus at the very least they must vacate all foreclosure proceedings and start over again.

If the allocation is less than the amount of payments due, then the investor(s) collectively have a claim for acceleration and to enforce the note — but they have no claim on the mortgage deed or deed of trust. By intentionally NOT naming parties who were known at the time of the transaction the security was split from the obligation. The obligation became unsecured.

The investors MIGHT have a claim for equitable lien based upon the circumstances that BOTH the borrower and the investor were the victims of fraud.

Filed under: foreclosure

May

FREE HOUSE: THIS JUST IN

By LH | Foreclosure Blog News, Homeowner Resources

8168Leave a CommentFREE+HOUSE%3A+THIS+JUST+IN2010-05-26+00%3A31%3A36LH

WHOA! Florida Judge Wipes Out Homeowner’s $207,000 Mortgage! Read the Transcript: 5 25 10 fla miami transcript Bailey voids mortgage

Editor’s Note: Don’t expect this result every time but we are turning the corner. Also don’t tell the Judge you are there for a free house. Tell him or her that you want the benefit of the bargain you struck with the lender and the seller. You want o pay but you don’t want to pay someone who is not your creditor, who is not authorized to collect from you, and is not turning the money over to the creditor. Deny that any payments are due — your answer to “have you made all your payments? deny they have done a proper accounting for all receipts from all sources that should have been posted toy our account.

WHOA! Florida Judge Wipes Out Homeowner’s $207,000 Mortgage!

Today, May 25, 2010, 3 hours ago | Foreclosure Fraud t Orlando Eslava wanted from his lender was a loan modification to make his payments affordable. Instead, he got his $207,000 mortgage wiped out — and a crash course in the confusing way foreclosures are unfolding in a court system chock-a-blocked with cases.

The teacher was Miami-Dade Circuit Court Judge Jennifer Bailey, who cancelled Eslava’s debt after lender HSBC Bank USA ignored her previous order to post a $414,000 bond.

Bailey said the actions of William Huffman, HSBC’s lawyer from Tampa-based Florida Default Law Group, were “contemptuous,” according to a court hearing transcript.

SEE ATTCHED TRANSCRIPT

HSBC’s run-in with Bailey began in December 2009 when she granted the lender’s motion for the foreclosure sale of Eslava’s one-bedroom unit at El Dorado Tower in Aventura. But HSBC lost the note on Eslava’s property. So the judge ordered the lender to post a $414,000 bond to indemnify Eslava in case another lender filed a claim against the unit.

According to court records, HSBC and Florida Default did not post the bond and proceeded with an April 9 foreclosure sale that gave the lender title to the condo.

Eslava and his lawyer, Sheleen Khan, sought to overturn the sale, claiming the lender violated Bailey’s court order. At a May 6 hearing, Bailey dismissed the foreclosure case with prejudice, which prevents the lender from suing Eslava again. The judge also canceled the mortgage and ordered HSBC to return title of the condo to Eslava.

“None of us is above the law,” Khan said. “This is a landmark ruling.”

In addition to canceling the mortgage, Bailey chastised Huffman, according to a transcript of the hearing obtained by The Daily Business Review.

“When the order is simply ignored … at the end of the day, you’re the lawyer, you’re responsible,” she said.

Bailey did not sanction Huffman but said he should consider her order a “wake-up call.”

“Some day, this foreclosure crisis is going to be over, and you need to decide what kind of lawyer you are going to be,” Bailey told him.

“Because at the end of the day, you are responsible for your client’s compliance with court orders.”

Huffman apologized. He said his client failed to post bond because he had misunderstood the order, according to the transcript.

“I don’t want apologies,” Bailey replied. “I want performance. I want responsible attorneys who meet the basic standards of knowing what … is going on in their files.”

Huffman did not return a telephone call or e-mail seeking comment.

Bailey’s frustration with the lender and Florida Default weren’t limited to Eslava’s case. She complained about the general “chaos and disorganization” of lenders and their lawyers.

Suzanne Hill, who represented Huffman and his firm at the hearing, said Florida Default was weighing its options, which include appealing Judge Bailey’s ruling or seeking a rehearing.

Hill, who is with the law firm of Rumberger Kirk & Caldwell in Tampa, declined further comment.

An attempt to buy time

Eslava, 53, a residential agent with Carden Realty & Investment in Sunny Isles Beach, says he fell behind on his $1,800 monthly mortgage payments when home sales plummeted in 2008 and commissions became scarce.

He retained Sheleen Kahn two months before the foreclosure auction and says he never sought to get his mortgage canceled. He just wanted more time to negotiate with the lender.

“I wanted to lower the payments because I want to keep my home … this is my home,” said Eslava. He said he spent thousands of dollars to repair the unit after it was damaged by Hurricane Wilma in 2005.

Last Nov. 6, months before the foreclosure auction, HSBC had placed Eslava into the Obama administration’s Home Affordable Modification Program (HAMP). The lender reduced Eslava’s monthly payments from $1,800 to $620 and put him in a three-month trial. Under such a trial, the reduction is temporary and the bank uses the time to decide whether the borrower can afford to make the reduced payment over the long term.

Eslava said he never heard back from the lender after the trial period expired. But he says he continued to send payments to HSBC of $620 a month. Despite making those payments, the bank sold his condo.

His isn’t an isolated case, according to those who work with distressed homeowners.

“It is not infrequent,” said Arden Shank, executive director and president of Neighborhood Housing Services of South Florida in Miami.

“We worked with families who had that happen to them.”

His organization receives public funding to help owners save their home from foreclosure.

The agency recently helped another family obtain a loan modification in Miami-Dade County, but the lender did not cancel the foreclosure sale. Four months ago, the family lost the house in an auction. They got the title back after Neighborhood Housing hired a lawyer who convinced a judge to overturn the sale.

Shank said actions like that can undermine national efforts of programs like HAMP to keep homeowners in their homes.

That was the case of Eslava.

“If lenders are implementing the HAMP program and then their two different departments don’t communicate and don’t know what each other is doing, then that is kind of problem in implementing HAMP,” Shank said.

Initially, Judge Bailey sided with Florida Default’s request to proceed with the sale but ordered HSBC to post the bond by April 2.

On April 9, the bank sold the condo without posting the court-ordered bond.

Kahn. Eslava’s lawyer, filed an objection to the sale. At the May 6 hearing, Judge Bailey expressed disbelief that HSBC had opposed canceling the sale when Eslava was still in the middle of a loan modification trial.

She called the bank’s opposition “idiotic,” according to the transcript.

“You are filing pleadings in court every day and you don’t even know what’s going on with the case,” she told Huffman, the HSBC lawyer. “In no other species or kind of law would that be remotely acceptable, or frankly, anything short of malpractice. But somehow in Foreclosure World everybody thinks that is just fine, that you can know absolutely nothing about your files and walk in here and ask judges for things left and right without even knowing what’s going on.”

Eslava, who had never been to a courthouse before his foreclosure case, said he never expected he would learn so much about the court system in such a short time.

“This was a lesson for me,” said Eslava.

Fort Lauderdale attorney Jed Frankel, who witnessed the exchange while awaiting a hearing in his own case, said he was stunned by the judge’s decision to cancel the mortgage, but not by the bank’s actions.

“It is very unusual to see this type of sanction entered,” said Frankel, who frequently represents condo associations on foreclosure-related matters. “That’s a very severe sanction. But it was a very well thought out ruling.”

Frankel said he had a similar experience recently, when Deutsche Bank was sanctioned for not complying with a court order related to the foreclosure of a unit at King Cole Condominium in Miami Beach.

Frankel said Miami-Dade Circuit Court Judge William Thomas ordered the lender to pay the condo association more than $4,000 for ignoring the judge’s court order to proceed with a foreclosure sale of a condo or pay $1,221 in condo dues.

“Judges are looking at these cases a little bit differently than they would have four, five years ago,” said Frankel, who represents King Cole. “They are more aware of what is going on in the foreclosure cases.”

Paola Iuspa-Abbott can be reached at (305) 347-6657.

–

Jake Naumer Union Capital

Licensed Financial Advisor

3187 Morgan Ford

St Louis Missouri 63116

314 961 7600

Fax Voice Mail 314 754 9086

Filed under: foreclosure

May

SPECIAL OFFER ON GETTING SECURITIZATION REPORT ON YOUR MORTGAGE(S)

By LH | Foreclosure Blog News, Homeowner Resources

8184Leave a Comment2010-05-25+20%3A38%3A17LH

See the-importance-of-finding-your-securitization-documents

SHOW THE JUDGE THE REAL FACTS!!

CLICK HERE NOW–>Make Your Reservation Now Before This Offer Closes Out!

DELIVERY APPROXIMATELY 3 WEEKS.

YOU CAN’T GET THE SAME INFORMATION ANYWHERE ELSE!

click–>ADVANCE ORDER DOWN PAYMENT FOR SECURITIZATION RESEARCH

THE FIRST 100 PEOPLE TO PAY $149 WILL BE ABLE TO PURCHASE A SECURITIZATION REPORT AT A SPECIAL PRICE OF $495 THAT TELLS YOU WHICH POOL THEIR LOAN IS CLAIMED TO BE IN AND YOU WILL GET COPIES OF THE SECURITIZATION DOCUMENTS AND BRIEF COMMENTARY ON THE SIGNIFICANCE OF THE INFORMATION

PLEASE SUPPORT THIS EFFORT NOW!!!

WE ARE FINANCING THE COST OF STARTING THIS UP. IT IS VERY EXPENSIVE. AFTER WE HAVE CLOSED OUT THE PROMOTION THE PRICE FOR THIS SERVICE WILL BE AT LEAST $995. SO HELP YOURSELVES AND HELP OTHERS

The importance of this initiative cannot be overstated. Because Judges are assuming that borrowers are just trying to delay the inevitable and the information they get from the borrower is potentially wrong, they rule again and again that the foreclosure must proceed.

What if you could show that your loan closing, your loan documents were within the context of a securitization structure, that you have the documents, that the real creditor is not before the Court and that the lawyer and his client are attempting to commit a fraud upon the court?

Getting the information on which pool(s) claim ownership of your loan has been virtually impossible without relying on the information of the pretender lender. The cost is prohibitive. The subscription alone to the necessary information is more than $125,000 and might approach $250,000. The cost of automated platform could be the same.

We now have a plan and business model that we think will support this effort and get the program launched for hundreds of thousands of homeowners across the country but we need your patronage and your support. Paying $150 now will tell us we have a customer and we’ll be able to show that to the service platform that will perform this work. Then for $495 you’ll get the gold standard of foreclosure defense information.

The eventual price of this service may be more than $2500. This information is simply not available in the marketplace, on Google or anywhere else using any other method except by paying the subscription fee and programming fees yourself.

By making this a cooperative venture, we have found a way to give you the same information and possibly better information than what the banks have.

GO TO ADVANCE ORDER DOWN PAYMENT FOR SECURITIZATION RESEARCH

Filed under: foreclosure

May

House for Free? Don’t get Caught in that Trap

By LH | Foreclosure Blog News, Homeowner Resources

7881Leave a Comment2010-05-19+20%3A35%3A34LH

I’m probably partly to blame for this notion so I want to correct it. The goal is NOT to get your house for free, although that COULD be the result, as we have seen in a few hundred cases. The simple answer is “No Judge I am not trying to get my house for free, I’m trying to stop THEM from getting my house for free. They don’t have one dime invested in this deal and payments have been received by the real creditors for which they refuse to give an accounting.”

The obligation WAS created. The question is not who holds the note but to whom the note is payable, and what is the balance due on the note after a full accounting from the creditor.

So don’t leave your mouth hanging open when the Judge says something like that. Tell him or her that they have the wrong impression because they are getting misinformation from the other side which is trying to get a lawyer’s argument admitted as evidence. Tell him you want the deal you signed up for — including the appraised value that the lender represented to you at closing.

Don’t say you won’t pay anything. Offer to make a monthly payment into the court registry — not in the amount demanded, but for perhaps 25% of the amount demanded. Tell him you refuse to pay someone who never lent you the money, who is not on the closing documents and is relying on securitization documents which contain multiple conditions, many of which they have violated.

Tell the Judge you deny the default because you know they received third party payments and they refuse to allocate the payments to your loan, and they refuse to inform you or the Court as to whether these third party insurers and guarantors have equitable or legal rights of subrogation. Subrogation is taking the place of another person because you are the real party in interest.

“Why should I lose my house just because I didn’t pay them. The note isn’t payable to them. Even if they have an assignment, it violates the terms under which they are permitted to accept it, and even if they were permitted to accept it, it wold be on behalf of the true creditors who were the investors who advanced the funds and now could be anyone because of the transactions in which the investors were paid or settled.

“The question is not whether I made a payment, it is whether a payment is due after allocation of third party insurance, credit default swap and guarantee payments. Who are they to declare a default when they refuse to give a full accounting?”

Filed under: foreclosure

May

Prima Facie Case and Burden of Proof

By LH | Foreclosure Blog News, Homeowner Resources

7435Leave a CommentPrima+Facie+Case+and+Burden+of+Proof2010-05-14+08%3A35%3A54LH

In Court, a prima facie case is, in plain English, the completion of a party’s burden of proof. That means if you are seeking AFFIRMATIVE relief from the Court, then you have the burden of proving your case. In order to prove your case you must present evidence. Your evidence must conform to the legal requirements or elements of your lawsuit. So for example if you want to prove a case for damages, you must prove a duty, breach of duty and damages related to the breach of that duty. If you want to prove a case for breach of contract, then you must prove up the contract, the breach of the contract and the damages from that breach. If you are seeking to have the court make the other party do something, like pay you damages, then you are seeking affirmative relief.

In judicial states, there is no issue of who has the burden of establishing a prima facie case. In non-judicial states the issue is muddled because the borrower is required to file a lawsuit even though it is the “lender” or “creditor” who is seeking affirmative relief. For reasons expressed below, it is my opinion that the prima facie burden in ALL states lies with the the party presuming to be the “lender” or “creditor.” So in all situations in all courts, federal or state, bankruptcy or civil, the burden is on the party seeking to enforce the note or foreclose on the property because when all is said and done, the party actually seeking affirmative relief is the party seeking to recover money or property or both.

Legally, tactically and strategically, it is a mistake and perhaps malpractice to ignore this point because it is at the threshold of the courtroom that the case might be won or lost. If you ignore the point or lose the argument, you are stuck with going beyond the simple position of the homeowner — denial of the claim of the opposing party. Even the petition for temporary restraining order should be translated as the homeowner’s denial of the claim of of the “creditor” and a demand that the creditor prove up its claim.

In other words, once a homeowner denies the claim, the case automatically becomes judicial simply because the parties are in court. At that point the court must adjust the orientation of the parties such that the party claiming affirmative relief becomes the plaintiff and the homeowner becomes the defendant notwithstanding the initial pleading that brought them into court.

The essential legal question is first, what is the prima facie case, and who has the burden of proof? The party seeking affirmative relief is the party seeking to enforce the note and deed of trust (mortgage). That would be the beneficiary under the deed of trust and the party to whom the note is payable. The note is payable legally and equitably to the investors if the securitization of the note was successful. The beneficiary is also the investors, making the same presumption. The party seeking negative relief (i.e., seeking to avoid the enforcement) is the homeowner who may or may not be considered a “borrower” or “debtor” depending upon the outcome of a presentation of facts that include an accounting of ALL receipts and disbursements related to or allocable to the specific loan in question.

It is obvious that in plain language, the party initiating a non-judicial sale is seeking affirmative relief and that in cases where there is an adversary judicial proceeding, the homeowner wishes to deny the claim of the creditor. In non-judicial states where the sale is essentially a private sale NOT based upon judicial proceedings, the mistake made by judges and lawyers alike is that they become confused by the fact that homeowner brought the suit to stop the sale.

That homeowner lawsuit is actually in substance no more than a denial of the claim by the alleged beneficiary under the deed of trust. In practice, the error is compounded by making the homeowner prove a “case” based upon the homeowner’s denial. In effect, this practice presumes the existence of a prima facie case by the alleged creditor or beneficiary, which is a denial of due process. Due process means that first you make a claim, second you prove it and ONLY AFTER the claim and the proof does the opposing party have ANY obligation to offer ANY proof.

Further compounding this error in process, many such states have rules that prevent the homeowner from contesting an eviction (unlawful detainer, writ of possession) even though that is the FIRST TIME the case has been in court. In effect, the Court is making the presumption that legal process has been completed, and giving the Private Sale the status of a judicial order — and then inappropriately and without realizing it, applying the doctrine of res judicata or collateral estoppel in a case where there was no other proceeding, order, adversary hearing or any hearing on law or fact.

Therefore, in my opinion, the party who must establish a prima facie case is the party assuming the position of “creditor” or substitute lender, notwithstanding the apparent orientation of parties in the pleadings. Or, the prima facie case of the homeowner would consist of a denial that the opposing party is a creditor or that any money is due or that a default has occurred. Thus the burden would shift to the party actually seeking affirmative relief anyway. The prima facie case for the party seeking affirmative relief would require the following elements:

Establishment of the originating transaction
Establishment of chain of title as to homeowner
Establishment of chain of title as to obligation
Establishment of chain of title as to note
Establishment of chain of title as to deed of trust or mortgage
Establishment of chain of securitization documents
Establishment of acceptance of subject loan into each successive loan pool
Establishment of true party in interest and standing
Establishment of 1^st party payments
Chain of 1^st party payments step by step to the true party in interest
Chain of 3^rd party payments step by step to the true party in interest
Establishment of allocation of 3^rd party payments and receipts to subject loan
Accounting for all receipts and disbursements from all sources
Establishment of default date
Establishment of current status of the loan
Establishment of balance due
Establishment of encumbrance and status
Allocation of encumbrance to the property (if encumbrance covers future payments other than principal and interest — like taxes and insurance payable to 3^rd parties, then the court must allocate a monetary value to the encumbrance for the benefit of the beneficiary)

The above elements would only be satisfied by the Court’s acceptance of testimony and documents with adequate foundation to be admitted into evidence. It would require actual persons with actual knowledge based upon personal observation, participation or experience with whatever aspect of the transaction is within the scope of their direct examination proffered by the party seeking affirmative relief. By virtue of the confusing panoply of documents, events and facts applicable to a securitized loan, it is my opinion that no legal presumptions would apply with respect to the obligation, note, encumbrance or default.

Hence, non-payment by the payor shown on the note would not give rise to the presumption of a default because of the explicit reference to third party payments, insurance and credit enhancements in the securitization documents. The party seeking affirmative relief would be required to proffer the testimony of a competent witness (probably someone from the investment banker that created the securitization chain and/or someone from the trading desk of the investment bank) that would provide a record and status of third party payments, receipts and disbursements allocable to the loan pool in which the subject loan was securitized. Failure to do so would lead to the conclusion of a failure of proof, or, in the court’s discretion, requiring the homeowner to cross examine each witness offered by the party seeking affirmative relief with the following question: “So you don’t know whether any third party made payments that would offset losses or principal in the loan pool, is that right?”

Filed under: CDO, CORRUPTION, Eviction, expert witness, foreclosure, Forensic Analysis Workshop, GTC | Honor, Investor, Mortgage, Motion Practice and Discovery, securities fraud, Securitization Survey, Servicer, STATUTES, trustee, workshop Tagged: adversary judicial proceeding, AFFIRMATIVE RELIEF, BREACH, BURDEN OF PROOF, damage, duty, evidence, judicial, negative relief, non-judicial, orientation of parties, prima facie case

May

Florida 6th District Strikes at Heart of Pretender Lenders

By LH | Foreclosure Blog News, Homeowner Resources

7217Leave a Comment2010-05-10+15%3A58%3A27LH

5 08 10 Florida mediationorder

The main message is that what we have here is a legal obligation in search of a creditor and that the opposition is trying to use the court as a vehicle to steal the house and run with it while the whole securitization mess is scrutinized.

I think this Order is far more significant than it might seem both statewide in Florida and nationally. This Order, as I read it, requires (1) verification of the Lender’s status and (2) the ACTUAL authority of a designated person in writing, as a decision-maker; in plain language it asks whether the note is actually legally payable to the (pretender) Lender that wishes to foreclose and whether they have an actual live person who has the authority to mediate, execute a satisfaction of mortgage and otherwise make any final decisions on the settlement of the matter. That eliminates virtually 100% of all pretender lenders, which in turn eliminates virtually 100% of all foreclosures.

This Order should be used as persuasive argument that an entire district has found the need to do this, which combined with the other Supreme Court and trial decisions we have reported here, should be persuasive enough to give the Judge pause about who is the REAL party trying to get a FREE HOUSE.

In the Motion Practice Workshop, an underlying theme is that you should not be arguing in the abstract or the nuances. In one hearing after another your objective is to get the Judge to agree to at least one thing that is OBVIOUS procedurally and gradually get to the next hearing and then the next, in a process of education that gives the Judge time to process and absorb the reality of the situation.

The main message is that what we have here is a legal obligation in search of a creditor and that the opposition is trying to use the court as a vehicle to steal the house and run with it while the whole securitization mess is scrutinized.

Filed under: CASES, CORRUPTION, Eviction, expert witness, Fannie MAe, foreclosure, foreclosure mill, Forensic Analysis Workshop, GTC | Honor, HERS, investment banking, Investor, MODIFICATION, Mortgage, Motion Practice and Discovery, securities fraud, Securitization Survey, Servicer, trustee, workshop Tagged: 6th District, authority, Florida, free house, holder in due course, lender status, Motion Practice, pretender lenders, real party, Shareholders

May

Insider Confirms Builder Complicity in Appraisal Fraud

By LH | Foreclosure Blog News, Homeowner Resources

7195Leave a Comment2010-05-09+14%3A54%3A57LH

Editor’s Comment: Appraisal fraud, ratings fraud, misrepresentation, steering investors and borrowers in the wrong direction — all of these amount to the same thing: DECEIT. And as everyone knows, when someone is bilked out of money or value through deceit, they are entitled to made whole — as close as possible, and probably entitled to punitive, exemplary or treble damages. This is no theory. This is hundreds of years of common law a statutes.

So why is the media narrative and the courtroom argument centered on whether the homeowner made payments on a loan that was sold to him under false pretenses? Why is the focus on the homeowner when the real creditor is not in the room? Why are they demanding so much money when part or all of the obligation has been paid (satisfied) through credit enhancements, credit default swaps, insurance and federal bailouts?

The reason why the narrative is on the wrong subject is because you let them take over the narrative. In our course coming up on Discovery and Motion Practice we’ll be talking about how to take control of the narrative. But for now, the message is this is an obligation in search of a creditor and the people who are collecting and enforcing the payments of principal and interest are ignoring the fact that payments were made by third parties, sending out statements that are incorrect or just plain lies, and sending out notices of default and notices of sale on mortgages that are paid off in whole or in part by third parties. STAY ON YOUR MESSAGE.

From Comment on Blog: May 8. 2010

Neidermeyer finds it hard to believe that Builders participated in the mortgage fraud because he has not seen it first hand like I have.

I have been in the real estate business since 1993 during that time I was a loan officer for various independent loan brokers. ( no I did not fund ANY preditory loans, option arms, 3 year pre-pay penalties..etc. and my clients were forced to read their paperwork because I was at the closing table with them)

The first fraud I was witness to was borrower steering. The builder would offer incentives to buyers for financing if only the borrower would use the builders in-house lender directly. The incentives on average would be around $3000.00 toward closing costs. At the beginning of the application buyers would be quoted a rate about 1/8 below market so it appeared that the Builders lender would give them a good deal. When the home was finished 6 months later, 9 times out of 10 the rate had risen and the rate at closing was actually 1/8 to 1/4 percent higher than the buyer could have gotten with their original broker.. So the incentive for closing costs was a sham to steer clients to in house banks.. aka Countrywide on many occasions..So new home buyers check the comparative rates the day you closed and you will see the builders lender saved you no money.

2. Appraisal fraud was rampant. New homes always cost more than comparable resale because the prices for upgrades are added into the loan at retail..

What has to be investigated are the first 3-4 sales in the development or nearby developments..who are those parties and what is their relation to the builder? And how was the comparable property purchased? Cash? Deed Transfer of some sort etc.. often employees or relatives of the builder would” buy”” a home and close on it to create a comp.. perhaps 2 and then the appraiser could go outside the development for 3rd comparable sale at another builders development.

Voila they now have comps and they just turned $200k houses into $300k houses!

Condo Developments/ condo conversions: the HOA and property management company will often still be owned by the developer under another LLC.. look for the same officers..the hoa will be asked to certify certain information about the development on the appraisal..such as owner occupancy ratios, number sold etc. And the HOA cert will lie about the ratios to get the appraisal approved in underwriting.

I just had a client win a settlement due to my research..The appraisal was one of the worst I had seen and ordered the Landsafe and Countrywide in house..The comps used were 5 miles away and 2 times the sq ft and bedrooms.. completely uncomparible properties to start with and the adjustments down for sq ft and bedrooms was laughably small..the HOA cert( by the developers other llc) stated 175 owner occupied when there were only 3 mailing addresses in the development in public records for owners that were not in another state! I also found that one of the signatories for the builder had her own LLC’s and one of her business addresses was the one comparable sale within the development included on my clients appraisal and “owned by an entirely different individual!

And the worst thing I found on this appraisal was the appraiser’s comments section where he admitted the unit had not yet been renovated and that the builder intended to do so after the next tenant changeover..NOT RENOVATED YET! and yet still he appraised the unit as/if it was renovated..the targeted client lived out of state and never saw the property he purchased..

I also looked at the early transfers..of course there were 2 that were sold at 160K when nothing prior had sold over 64k..interestingly after the initial inflated transfers there were several deeds recorded by the officers of the builder llc and friends for the same units at 48-68K done quietly so as not to hurt their comparable sales.

Check the upgrade sheets and what you were charged for certain upgrades… a client of mine was charged over $30,000 for paint upgrades! I am not talking murals here.. a sponged hallway and 2 tones for moldings and walls..

So yes the builders are more than responsible for the inflated values..the partnered with the banks to create this market..It is all in the research!

Filed under: bubble, CASES, CORRUPTION, Eviction, expert witness, foreclosure, foreclosure mill, GTC | Honor, HERS, MODIFICATION, Mortgage, Motion Practice and Discovery, STATUTES Tagged: Appraisal, appraisal fraud, appraiser’s comments section, builders, comparable property, comparable sales, Condo, countrywide, early transfers, fraud, HERS, HOA, incentives, independent loan brokers, inflated values, Landsafe, loan officer, mortgage fraud, occupancy ratios, property management company, upgrade sheet, upgrades

May

NY Judges Slamming Debt Collectors

By LH | Foreclosure Blog News, Homeowner Resources

7163Leave a CommentNY+Judges+Slamming+Debt+Collectors2010-05-08+14%3A47%3A10LH

Eltman, Eltman & Cooper was one of 35 law firms sued last July by the state, which claimed that they had improperly obtained more than 100,000 judgments in consumer-debt cases. Editor’s notes: The dubious “enforcement” of mortgages, notes and “obligations (that have been paid many times over through credit enhancement) is both mirrored and amplified in the debt collection industry. Servicers are merely debt collectors since they are collecting for a third party. In an investigative report coming soon to these pages you will see that servicers are actually the “real trustee” for the investors, separate and apart from the Special Purpose Vehicle. But that is for later.

For now, before you slide into grief and shame over your financial condition, know this: the people hounding you for money are doing so in most cases illegally and Judges are reversing themselves across the country as they take a closer look at the the procedural tricks routinely employed by those who prey upon consumers with “debt” claims have that long since been extinguished, written off, repackaged into resecuritized asset backed securities, with even more credit swaps on top of the old ones.

In this article from the New York Times, the clarity of the scam is being revealed and unraveled. The ultimate conclusion of this mess will take years if not decades, to move us back to a state of equilibrium. In the meantime, the major piece of advice you will probably get from any consumer law advocate or attorney is this: don’t pay anyone unless you are sure you owe THEM the money. The question is not whether you owe money (i.e., the existence of the obligation), the question is the identity of the creditor and whether the obligation, without your knowledge was already paid in whole or in part by credit default swaps, other credit enhancement techniques, etc.

————————

May 7, 2010

In New York, Some Judges Are Now Skeptical About Debt Collectors’ Claims

By WILLIAM GLABERSON

As New Yorkers have tumbled into credit card debt in large numbers during the great recession, bill collectors have inundated the courts to get what they say is due. In turn, the courts have issued hundreds of thousands of orders against residents. Some consumer groups argue that by doing so, the courts have become little more than an arm of the debt collection industry.

Now, a few judges in New York State are suggesting that they agree, at least in part, with the consumer groups. They have fumed at debt collectors and their lawyers, scolding them for interest as high as 30 percent a year and berating them for false statements and abusive practices.

Some of the rulings have even been sarcastic or incredulous. In December, a Staten Island judge said debt collectors seemed to think their lawsuits were taking place in a legal Land of Oz, where everyone was supposed to follow anticonsumer rules invented by some unseen debt-collection wizard.

Last month, a Manhattan appeals court threw out a credit card case, saying a debt collection company had sued the wrong person but pursued the case anyway.

“I think these judges are outraged at the status quo, and they’re trying to change it,” said Janet Ray Kalson, a Manhattan lawyer who is the chairwoman of a City Bar Association committee that has studied the deluge of credit card cases.

Debt-buyer businesses purchase debts — along with lists of names and amounts supposedly due — for pennies on the dollar from credit card companies and sometimes have no real evidence about whom they are suing or why. They then file tens of thousands of suits, often with little to back up their claims.

A Nassau County District Court judge said recently, for example, that one of New York City’s high-volume debt collection law firms, which has close ties to a debt-buying company, did not provide “a scintilla of evidence” that there was even a debt in a case against a Long Island woman.

The suit received an unusual amount of attention. The judge, Michael A. Ciaffa, said that it “regrettably, involves a veritable ‘perfect storm’ of mistakes, errors, misdeeds and improper litigation practices.” Judge Ciaffa said the law firm, Eltman, Eltman & Cooper, ignored court orders, made a “demonstrably false” assertion and harassed the woman for payment even after its suit was dismissed.

The case before Judge Ciaffa ended with an order that is far from typical in a credit card suit. The woman who had been sued, Patricia Bohnet, a bookkeeper and single mother, did not have to pay anything. But Eltman, Eltman & Cooper had to pay $14,800 in sanctions for violating ethical rules at least 18 times. Under the judge’s order, $4,800 is to go to Ms. Bohnet and the remainder to a state fund that works to reimburse clients for dishonest conduct by lawyers.

“They don’t care if you’re sick; they don’t care if you’re poor,” Ms. Bohnet said in an interview at her job in Woodmere. “Their only job is to collect money, and they’ll do it in any way possible.”

In response to questions, the law firm said in a written statement that Judge Ciaffa had not had all the facts but that the firm would not appeal. “As with any firm or business that handles this type of volume,” it added, “there exists a potential for errors or omissions in the normal course of business.”

Eltman, Eltman & Cooper was one of 35 law firms sued last July by the state, which claimed that they had improperly obtained more than 100,000 judgments in consumer-debt cases. Separate files in Federal District Court in Brooklyn show that without admitting fault, the Eltman law firm settled a class-action suit in 2006 that claimed it used “false, misleading and deceptive means” to collect debts.

Privately, some judges say they are embarrassed that in many New York courts, debt-collection lawyers have grown so comfortable that they give the impression they are in charge of the proceedings and do not need prove their claims with strong evidence.

In the recent pro-consumer rulings, skepticism of the debt collectors’ claims has been obvious. A Civil Court judge in Brooklyn, Noach Dear, has written decisions that come close to saying that the collection cases are sometimes based on falsehoods.

In a case in August, Judge Dear observed that there was nothing to substantiate a lawyer’s claim that she somehow remembered mailing a document to the credit card holder that was the foundation of the collection suit. The document, Judge Dear noted archly, had been mailed three and a half years earlier.

Behind the legalese of the credit card suits, some judges have suggested, there is often a disorganized jumble of documentation. A Mount Vernon City Court judge noted that one case was based on little more than “a self-serving computer printout.” A Manhattan judge said one company that bought debt claims from credit card companies had filed suit against a cardholder although it did not own that particular debt.

In the Staten Island case, the judge, Philip S. Straniere, said a credit card company was claiming interest of 28 percent on the balance due, which would be illegal as usury under New York law. The company argued that the credit card issued to a New Yorker that seemed to be from a national company had actually been issued by a one-branch bank in Utah, which had no usury law.

“Like the Land of Oz, run by a Wizard who no one has ever seen,” Judge Straniere wrote, “the Land of Credit Cards permits consumers to be bound by agreements they never sign, agreements they may never have received, subject to change without notice and the laws of a state other than those existing where they reside.”

The judge ruled that the supposed agreement allowing unlimited interest charges was not enforceable in New York.

Industry officials said that tales of abusive collection cases were misleading. “There are certainly colorful stories,” said Joann Needleman, an officer of the National Association of Retail Collection Attorneys. “People think that handful is the rule, not the exception, but it’s not.”

But Ms. Bohnet, the Long Island woman who was sued by a New York law firm, said just one case could be harrowing. When she received a call last year at the charity where she keeps the books for $39,000 a year, the voice on the other end told her the debt collectors had a five-year-old court judgment against her for a $4,861 debt. She had to pay, or they would start taking money out of her salary, she said she was told.

The address of the debt-collection firm and its lawyers at Eltman, Eltman & Cooper seemed to be the same, she noticed.

Ms. Bohnet did not know she had ever been sued. She started to cry, she said, worried that with a chunk of money taken every month, she might lose the modest apartment she needed to share custody of her teenage daughter.

“I was in all-out fear,” she said, adding, “After I got off the phone, I realized I didn’t even know what the debt was for.” She might have had an old credit card debt, but she had had some years of problems with alcohol and drugs and tangled financial problems. In recovery, she said, she had worked to clean up her financial affairs.

The next time the collectors called, she said, she told them that she was willing to pay if she owed any money but that she needed to see some proof that they had the right person. Then, without a lawyer, she went to the court, in Hempstead, to check into the order the debt collectors said they had against her.

After some digging, she found the case. The debt-buyer’s lawyers had filed a sworn statement that they said was proof she had been given notice of the suit. A process server for Eltman, Eltman & Cooper claimed she had been given a copy of the suit personally on July 30, 2004.

Judge Ciaffa doubted that. Ms. Bohnet, he wrote, “hadn’t lived at that address since 1998.”

Filed under: CASES, CORRUPTION, foreclosure, foreclosure mill, GTC | Honor, HERS, Motion Practice and Discovery, Servicer, STATUTES, trustee Tagged: debt, Debt Collectors, Eltman, Eltman & Cooper, judges, New York, Obligation, Philip S. Straniere, usury, WILLIAM GLABERSON

May

The Importance of Discovery and Motion Practice

By LH | Foreclosure Blog News, Homeowner Resources

7010Leave a Comment2010-05-05+09%3A22%3A36LH

Practically all the questions I get relate to how to prove the case that the loan was securitized. This is the wrong question. While it is good to have as much information about the pool a loan MIGHT BE INCLUDED, that doesn’t really answer the real question.

The real question is what is the identity of the creditor(s). The secondary question is what is owed on my obligation — not how much did I pay the servicer.

It might seem like a subtle distinction but it runs to the heart of the burden of proof. You can do all the research in the world and come up with the exact pool name that lists your property in the assets as a secured loan supporting the mortgage backed security that was issued and sold for real money to real investors. But that will not tell you whether the loan was ever really accepted into the pool, whether it is still in the pool, or whether it is paid in whole or in part by third parties through various credit enhancement (insurance) contracts or federal bailout.

You must assume that everything is untrue. That includes the filings with the SEC. They may claim the loan is in the pool and even show an assignment. But as any first year law student will tell you there is no contract unless you have an offer AND an acceptance. If the terms of the pooling and service agreement say that the cutoff date is April 30 and the assignment is dated June 10, then by definition the loan is not in the pool unless there is some other documentation that overrides that very clear provision of the pooling and service agreement.

Even if it made it into the pool there are questions about the authenticity of the assignment, forgery and whether the pool structure was broken up (trust dissolved, or LLC dissolved) only to be broken up further into one or more new resecuritized pools. And even if that didn’t happen, someone related to this transaction most probably received payments from third parties. Were those allocated to your loan yet? Probably not. I haven’t heard about any borrower getting a letter with a new amortization schedule showing credits from insurance allocated to the principal originally due on the loan.

The pretender lenders want to direct the court’s attention to whether YOU paid your monthly payments, ignoring the fact that others have most likely made payments on your obligation. Remember every one of these isntruments derives its value from your loan. Therefore every payment on it needs to be credited to your loan whether the payment came from you or someone else. [You know all that talk about $20 billion from AIG going to Goldman Sachs? They are talking about YOUR LOAN!]

The error common to pro se litigants, lawyers and judges is that this is not a matter of proof from the borrower. The party sitting there at the other table in the courtroom with a file full of this information is the one who has it — and the burden of proof. Your case is all about the fact that the information was withheld and you want it now. That is called discovery. And it is in motion practice that you’ll either win the point or lose it. If you win the point about proceeding with discovery you have won the case.

You still need as much information as possible about the probability of securitization and the meaning it has in the context of the subject mortgage. But just because you don’t have it doesn’t mean the pretender lender has proved anything. What they have done, if they prevailed, is they blocked you from getting the information.

By rights you shouldn’t have to prove a thing about securitization where there is a foreclosure in process. By rights you should be able to demand proof they are the right people with the full accounting of all payments including receipts from insurance and credit default swaps. The confusion here emanating from Judges is that particularly in non-judicial states, since the borrower must bring the case to court in the first instance, the assumption is made that the borrower must prove a prima facie case that they don’t owe the money or that the foreclosing pretender lender is an impostor. That’s what you get when you convert a judicial issue into a non-judicial one on the basis of “judicial economy.”

In reality, the ONLY way that non-judicial statutes can be constitutionally applied is that if the borrower goes to the trouble of raising an objection by bringing the matter to court, the burden of proof MUST shift immediately to the pretender lender to show that in a judicial proceeding they can establish a prima facie case to enforce the obligation, the note and the mortgage (deed of trust). ANY OTHER INTERPRETATION WOULD UNCONSTITUTIONALLY DENY THE BORROWER THE RIGHT TO A HEARING ON THE MERITS WHEREIN THE PARTY SEEKING AFFIRMATIVE RELIEF (THAT IS THE FORECLOSING PARTY, NOT THE BORROWER) MUST PROVE THEIR CASE.

Filed under: CASES, CDO, CORRUPTION, Eviction, expert witness, foreclosure, foreclosure mill, Forensic Analysis Workshop, GTC | Honor, HERS, interest rates, investment banking, Investor, MODIFICATION, Mortgage, Motion Practice and Discovery, securities fraud, Securitization Survey, Servicer, STATUTES, trustee, workshop Tagged: AFFIRMATIVE RELIEF, amortization, assignment, assumption, authenticity of the assignment, BURDEN OF PROOF, credit default swaps, credit enhancement, cutoff date, DEED OF TRUST, discovery, full accounting of all payments, identity of the creditor, insurance, judicial economy, judicial proceeding, Mortgage, Motion Practice, non-judicial statutes, note, Obligation, offer AND an acceptance, owed on my obligation, payments from third parties, pooling and service agreement, prima facie case, pro se litigants, securitization, UNCONSTITUTIONAL

LAWYERS TAKE NOTE: Go back to the law books. There are essential differences between the obligation that arises as a matter of law, the note that is offered as proof of the obligation, and the mortgage or deed of trust which is incident to the note.

WITHOUT REAL DOCUMENTS SIGNED BY REAL PEOPLE WITH REAL AUTHORITY WITH REAL EFFECTIVE DATES, THE CHAIN IS BROKEN.

BUT that is not the end of the story.

What these law firms and fabrication mills are doing is fabricating and forging documents to create the illusion that those complexities don’t exist — a conclusion that every Judge would like to reach.

Ultimately, the die is cast — the Courts are required to consider the complexity and force the real party in interest, the party with standing to say they lost money on the deal and to show exactly how they did lose money — not merely point to the borrower’s non-payment.

MANY THANKS, ANONYMOUS!!!

WHAT IF THE LOANS WERE NOT ACTUALLY SECURITIZED?

The fact that servicers and trustees have been stonewalling even these

powerful agencies on loan files should come as no surprise based on

the legal battles private investors have had to wage thus far to force

banks to produce these documents. And yet, I’m still amazed by the

bald intransigence displayed by these financial institutions. After

all, they generally have clear contractual obligations requiring them

to give investors access to the files (which describe the very assets

backing the securities), not to mention the implicit discovery rights

these private institutions would have should the dispute wind up in

court, as it has in MBIA v. Countrywide and scores of other investor

suits.

The Inflatable Loan Pool

By GRETCHEN MORGENSON

WHOA! Florida Judge Wipes Out Homeowner’s $207,000 Mortgage! Read the Transcript: 5 25 10 fla miami transcript Bailey voids mortgage

See the-importance-of-finding-your-securitization-documents

SHOW THE JUDGE THE REAL FACTS!!

DELIVERY APPROXIMATELY 3 WEEKS.

YOU CAN’T GET THE SAME INFORMATION ANYWHERE ELSE!

click–>ADVANCE ORDER DOWN PAYMENT FOR SECURITIZATION RESEARCH

THE FIRST 100 PEOPLE TO PAY $149 WILL BE ABLE TO PURCHASE A SECURITIZATION REPORT AT A SPECIAL PRICE OF $495 THAT TELLS YOU WHICH POOL THEIR LOAN IS CLAIMED TO BE IN AND YOU WILL GET COPIES OF THE SECURITIZATION DOCUMENTS AND BRIEF COMMENTARY ON THE SIGNIFICANCE OF THE INFORMATION

PLEASE SUPPORT THIS EFFORT NOW!!!

WE ARE FINANCING THE COST OF STARTING THIS UP. IT IS VERY EXPENSIVE. AFTER WE HAVE CLOSED OUT THE PROMOTION THE PRICE FOR THIS SERVICE WILL BE AT LEAST $995. SO HELP YOURSELVES AND HELP OTHERS

By making this a cooperative venture, we have found a way to give you the same information and possibly better information than what the banks have.

GO TO ADVANCE ORDER DOWN PAYMENT FOR SECURITIZATION RESEARCH

In New York, Some Judges Are Now Skeptical About Debt Collectors’ Claims

By WILLIAM GLABERSON

Quick Browse | Pick A Category

Connect with Us Immediately

Daily Dose of Inspiration

Popular Tags & Terms Cloud