War on the Home Front | Mortgage Loan Investigations | Securitization Audits

May

SHOW THE JUDGE THE REAL FACTS!!

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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.

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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

May

Rally in Tally and Other News

By LH | Foreclosure Blog News, Homeowner Resources

6993Leave a CommentRally+in+Tally+and+Other+News2010-05-04+16%3A12%3A08LH

It looks bad for the Florida Banker’s Association (FBA) effort to convert Florida into a non-judicial foreclosure state. Wrong time in the wrong place under the wrong circumstances. Attorney Weidner was seen on TV giving instructions to homeowners to have them lobby legislators who were not too keen on the idea anyway, but you can never be sure when you have a strong bank lobby. Once there was a Community Bankers Association in Florida, but it was gobbled up by FBA. FBA is dominated by the major banks and does little to foster the interests of consumers or small banks who serve consumers.

Don’t expert FBA to give up. It is a time honored practice to be persistent and tack on unrelated legislation to an otherwise acceptable bill. State legislators in all 50 states have precious little time to actually read all proposed legislation and they often vote off of summaries prepared by legislative aides or third parties. (That is how the Boston Strangler was cited for his efforts at population control by the Texas legislature about 20 years ago). So expect them to attempt to strangle their victims by surprise. Maintain vigilance.

In the meantime, here’s a call for some help for attorney Weidner and frankly for everyone else. It’s all about the fix in the auction of foreclosed homes and who is getting the benefit of a wrongful foreclosure with control of the title being directed by a non-creditor:

——-

From Matt Weidner Esq at http://www.mattweidnerlaw.com

I’ve been hearing chatter and rumors about parties affiliated with the foreclosure mills buying properties after they have completed the foreclosure and now apparently reporters have been hearing such chatter as well.

If anyone has details on such transactions from anywhere in the state, please email that information to me at weidnerlaw@yahoo.com. Some of you good researchers out there, this could be bombshell material. If you’ve got the time, I would be looking at all sales in a given area, then backtrack that sale to see if the last record was a certificate of title. I would suspect that properties would first be going into LLCs or land trusts so multiple deeds going into these would catch my attention.

We uncovered a mountain of questionable information last time I asked for Assignments, and federal investigations across the country are currently underway into the assignment practices, most notably into the practices of Lender Processing Services, LLC… but that’s just the tip of the iceberg. The feds move slowly, but unlike other crimes, these paper crimes leave a long, recorded trail.

So get out there are poke around…let me know what you find

Filed under: CORRUPTION, Eviction, expert witness, foreclosure, foreclosure mill, Forensic Analysis Workshop, GTC | Honor, HERS, investment banking, Investor, MODIFICATION, Mortgage, Motion Practice and Discovery, securities fraud, Securitization Survey, Servicer, STATUTES, trustee, workshop Tagged: assignments, Community Bankers Association, Florida, foreclosure mills, HERS, land trusts, legislation, Lender Processing Services, LLC, lobby legislators, State legislators, Weidner

Apr

Credit Buster: Tucson Accountant Katz Shows Debtors How to Fight Back and Collect Damages and Attorney Fees

By LH | Foreclosure Blog News, Homeowner Resources

6846Leave a Comment2010-04-28+16%3A29%3A09LH

Editor’s Note: I don’t know him but I am going to get to know him. It sounds like you should too. Every time the servicer violates the law, you have a remedy. Katz is leading the charge collecting damages and there are usually awards of attorneys fees. I would add that if they don’t pay the judgment you can levy on an asset you know about — like your own mortgage. Think about it.

Servicers usually try to get out of being called a debt collector even if they put it on their demand letters and other correspondence. The way they do it is by saying they are not collecting the debt for another, they are collecting it for themselves. That’s fine. It brings us right back to proving that the identity of the creditor is being hidden from the court. Just because they say it doesn’t make it so. And while they can say it and that is evidence if the Judge allows it in, it cannot be presumed from an affidavit or some other document. You have every right to challenge that assertion and to ask for discovery demanding answers to questions (interrogatories) and demanding documents (requests to produce.)

April 23, 2010

Learning How to Fight the Collector

By ANDREW MARTIN

Among debt collectors, Steven Katz is known as a “credit terrorist.” For years, he has run what he calls the Steven Katz School of Bill Collector Education, otherwise known as the “credit terrorist training camp.”

Mr. Katz, a 58-year-old accountant in suburban Tucson, spends his free time schooling debtors on the finer points of consumer protection law to help them turn the tables on debt collectors. On occasion, he thumbs his own nose at them too.

“How many times can I sue you? Let me count the ways,” he wrote under his pseudonym, Dr. Tax, in a March posting on Inside ARM, a debt collectors’ Web site.

A former bill collector himself, Mr. Katz rebelled after a debt buyer damaged his credit score with what he says was a bogus bill. Mr. Katz sued, and in 2003 he collected his first damage award, a $1,000 check that he now keeps framed behind his desk.

“The bill collectors, when they call, make you feel like the only option you have is to lay down and play dead. That’s not true,” said Mr. Katz said, who does not charge for his advice. “Nothing validates this more than getting a check.”

Call this movement revenge of the (alleged) deadbeats. Even as collectors try to recoup debts from millions of Americans struggling to pay their bills, a small but growing number of lawyers and consumers are fighting back against what they describe as harassment, unscrupulous practices — and, most important to their litigiousness, violations of the Fair Debt Collection Practices Act.

In fact, 8,287 federal lawsuits were filed citing violations of the act in 2009, a 60 percent rise over the previous year, according to WebRecon, a site that tracks collection-related litigation and the most litigious consumers and lawyers on behalf of debt collectors.

On Wednesday, the Supreme Court made it even easier for consumers to use the courts to fight debt collectors, ruling that collectors cannot be shielded from suits by claiming they made a mistake in interpreting the law.

When a consumer stops paying a bill, creditors often try to collect on their own for a few months. In many instances, the creditor hires another company to collect the debt. In other cases, they may dispose of the debt by selling it to a debt buyer for a steep discount.

Debt collectors and debt buyers are the targets of litigious consumers, since the debt collection law primarily applies to third-party collectors.

Peter Barry, a Minneapolis trial lawyer, is so bullish on the future of debt collection litigation that he holds several “boot camps” each year to share his secrets with other lawyers who want in on the action. If the debtor wins a court case under the act, the debt collector must pay the lawyer’s fees.

The next boot camp is being held in early May in San Francisco, at a cost of $2,495 a person for two and a half days of instruction.

“I can’t sue every illegal debt collector in America, although I’d like to try,” Mr. Barry said.

Mr. Katz can also claim some credit for the increase in lawsuits. For six years, he has run a free Web site called Debtorboards.com, where people share tips on topics like keeping a paper trail and recording calls from collectors.

He said the site received two million hits in 2009, a 60 percent increase over the previous year.

“Debtorboards is geared to help people use the laws as they are on the books as both a shield and a sword,” said Mr. Katz, who says he has won $36,000 from his own litigation against collection agencies. (Since many of the settlements are confidential, it is difficult to prove the claims of Mr. Katz and others).

Of course, debt collectors are hardly pleased with the litigation trend.

Rozanne M. Andersen, chief executive of ACA International, a trade association for the debt collection industry, said she was “extremely concerned” about the increase in lawsuits, which she said cost her industry hundreds of millions of dollars a year. She said much of the increase was the result of ambiguous language in the Fair Debt Collection Act.

Debt collectors are required, for example, to identify themselves on a voice message left for a consumer, she said. But they are also prohibited from telling a third party — including someone who might overhear a phone message — about a consumer’s debt.

“We are between a rock and a hard place,” Ms. Andersen said.

Ms. Andersen said she had little patience for Web sites that encouraged consumers to thwart debt collectors.

“We believe those types of Web sites are encouraging people to not take responsibility for just debt,” she said.

Jack Gordon, who runs the fee-based WebRecon site, said it was no wonder lawsuits were increasing, because consumers were being bombarded with ads from lawyers when they searched online for information on debt collection. He said the proliferation of discussion sites like Mr. Katz’s had, to a lesser extent, also contributed to the trend.

On the boards, he said, “There’s a lot of hot air, a lot of people who overinflate their accomplishments.”

Regardless, Mr. Gordon’s database has become a badge of honor among the devotees of Debtorboards.com. As Brandon Scroggin, a 37-year-old from Little Rock, Ark., puts it, “That’s one list I’m a proud card-carrying member of.”

Mr. Scroggin, who provides price estimates at a body shop, said he was the type of person who refused to be taken advantage of, even for petty offenses. For instance, years ago, he said he joined in the class-action suit against the pop group Milli Vanilli, accused of lip synching, and collected a $1.25 check.

After a messy divorce, Mr. Scroggin was stuck with a $7,000 bill that he said belonged to his ex-wife. Instead of paying it, he began researching the law and stumbled on Debtorboards.com.

Armed with lessons he learned on the site, he demanded proof of the debt from the collection agency, and the calls stopped. But two and a half years later, they started up again so he sued the collection agency, National Loan Recoveries, for failing to provide proof of the debt, among other things.

The case was settled in 2008. The terms were confidential, but he says he never paid National Loan a dime. “Let’s just say I’m a very happy person,” he said. A lawyer for National Loan, Kathryn Bridges, did not return messages seeking comment.

Mr. Katz said his Web site was not intended to help people avoid paying legitimate debts. But if they do so, so be it — he feels no need to apologize.

He said Congress gave consumers certain rights, and he is simply making people aware of them, sometimes colorfully.

As Mr. Katz says at the bottom of each Dr. Tax posting, “A telephone in the hands of a collector is like a crowbar — it can be used to pry a mouth open wide enough to insert a foot.”

Barbara Thompson, 46, of Atlanta, said she challenged $11,000 in credit card debt using online research about collection laws. She does not dispute the debts but reasons that the credit card company wrote off her charges long ago. By her account, she owes the credit card company, not the debt collector.

“The credit card company, they sell it off, they charge it off, it’s just business as usual,” she said, adding, “I’m adamant about not paying a collection agency.”

Filed under: CORRUPTION, foreclosure, foreclosure mill, Forensic Analysis Workshop, GTC | Honor, HERS, Investor, MODIFICATION, Mortgage, Motion Practice and Discovery, securities fraud, Securitization Survey, Servicer, STATUTES, trustee, workshop Tagged: ACA International, ARIZONA, collection agency, consumer protection law, Fair Debt Collection Practices Act, Jack Gordon, Minneapolis trial lawyer, National Loan Recoveries, Peter Barry, Rozanne M. Andersen, Steven Katz, Tucson, WebRecon

Apr

SEPARATION OF DEED OF TRUST FROM NOTE: Bellistri Opinion

By LH | Foreclosure Blog News, Homeowner Resources

6844Leave a Comment2010-04-28+11%3A50%3A48LH

There is a lot of conflicting opinions about this. My opinion is that the confusion arises not from the law, not from application of the law and not from what is written on the note or deed of Trust. If you look at the Bellistri Missouri case the issue is well settled. And the problem is not what is written, it is what is assumed to be written. The Bellistri case, 284SW 3d 619, (Missouri Appeal, cert. reportedly denied) coupled with its quote from Restatement 3^rd is simple: put one name on the note and another on the DOT as beneficiary (particularly when the beneficiary is MERS and therefore an undisclosed principal) and you have direct evidence that the intention of the parties was to separate the note from the mortgage. The burden of proof thus shifts to the alleged creditor.

Conflict comes not from the law or the wording on the instruments but from the inherent question of “why would anyone want to do that?” There are of course many answers to that question in a securitized mortgage context. But it is the existence of the question that causes people to lean toward the idea that no reasonable person would have intended that and to assume that the parties, including the borrower, would never have intended WHAT WAS WRITTEN.

I think the point of the Bellistri case is simple: factually, the note and DOT are split and according to the Restatement 3^rd, they can never be put back together again. The note, while still enforceable as an instrument by itself, is no longer secured by an encumbrance on the property. The “mistake” is that of the drafter of the instruments. They want to say, much later in time, what we NOW mean is that the beneficiary is X, who is not the payee on the note,, but X has received an assignment of the note. Thus NOW the beneficiary and the payee are the same which means we can foreclose.

So the question put to the Judge is can a note and security instrument, initially made out to two different parties be LATER joined and if so, what does that mean for enforcement. My first comment is that once you have established that facially the note and DOT were split, your prima facie case is met and the burden goes to the “lender” to prove they are the creditor along with a whole bunch of other things that are not unlike the elements of proving up a lost or destroyed note. You can’t just say it happened. You must explain and prove HOW it happened.

But the simple answer to the question as per the Restatement 3^rd, is “NO.” The reason why they cannot be joined later is not just because Restatement 3^rd says so, it is the reason Restatement 3^rd says that, to wit: if you allowed, particularly in a non-judicial setting, parties not named on the note and not named as beneficiary to later act because of a claim as being both, you are introducing uncertainty into the marketplace which is the precise reason we have the law of contracts, property records and such. The moral hazard is raised from possibility to near certainty when you KNOW from the beginning that the payee and the beneficiary are two different parties and the beneficiary is not the real party so the knowledge includes, from the beginning, that there is at least one additional undisclosed party.

Let’s take the simplest example we can given the complexity of securitized residential mortgages. ABC is named the Payee on the note. MERS is named the beneficiary. MERS obviously has some understanding with a third party DEF not to make a claim on the loan (according to their website). So we must presume that they have that understanding and that maybe it is in writing in some general type of contract which was neither disclosed nor revealed to exist at the time of the closing with the borrower. DEF defaults in its payment obligations to MERS. MERS now says we refuse to perform under our contract with DEF. Borrower knows nothing of DEF nor of DEF’s payment default to MERS. Borrower pays the note in full to ABC. ABC returns the note as paid in full. Borrower wants a release and reconveyance (satisfaction) so the title record is clear.

Now it MIGHT be that DEF=ABC. But we don’t know that. So for purposes of your case, you MUST assume that DEF is simply an undisclosed third party. Borrower asks MERS for the release and reconveyance. MERS refuses because it wasn’t paid by DEF and because it has no idea whether you paid the right person. With MERS refusing to execute a document releasing the lien, Borrower now has a defect in title that is unmarketable.

Borrower files a quiet title suit against MERS. MERS says it was named as beneficiary but that the DOT clearly states it serves only as nominee and therefore has no power to do anything. Now you have, on record, that the beneficiary is not MERS but the undisclosed third party DEF. The court MIGHT grant the final judgment, but it would then be adjudicating the rights of other parties who are not present in court, thus leaving the title clouded and possibly still unmarketable.

Another possibility is that the Court would inquire or allow discovery to allow the identification of DEF. Assuming MERS wishes to comply, there is still a problem. Data entry is NOT performed by MERS employees. Data entry is performed by “members” with passwords and user ID’s. Thus all MERS can say is that at a particular point in time MERS computer records show DEF, which was assigned to ABC or perhaps yet another party. The assignment is executed by Jane Jones as “limited signing officer” for MERS. MERS can’t say they know Jane Jones or anything about her because she doesn’t work for MERS. Therefore the only competent evidence from MERS is the data in fields populated by unknown sources of data input, and references to documents that were never seen or kept by MERS. The evidence from MERS thus has little or no probative value.

So now the Court or borrower goes to DEF and says “Who is Jane Jones?” DEF replies they don’t know because the assignment document was prepared by a foreclosure processing firm in Jacksonville, Florida named DOCX. DOCX has no contract with ABC or DEF or MERS. They were just following orders from yet a fourth party who is unidentified, and whose instructions were relayed through a fifth firm that serves as the correspondent or document manager once the loan goes into foreclosure (perhaps ordered by the servicer, BAC).

Thus the reason that a note and DOT can never be joined at any time other than the creation of those documents and executed contemporaneously with the funding of the obligation is that the contract and its performance is not based upon a condition subsequent (because such a condition would render the contract inchoate until the condition subsequent arrived or which would extinguish the obligation, note and mortgage). For there to be enforceability there must be certainty in the contract. Certainty can only be achieved if the terms and parties who are expected to perform are identified with sufficient clarity that any reasonable person would say they are known.

A borrower who signs papers without having a known party who is required by law to execute a satisfaction (release and reconveyance) has in effect executed documentation without a counterparty. The document is therefore void. Since the document (note, DOT, etc.) is only evidence of the obligation that arose because the borrower did in fact receive a benefit from the funding of the loan, the obligation survives while the note and/or DOT do not. However, in order to achieve certainty in the marketplace, the obligation is not secured unless and until some party identifies itself as the creditor and establishes a subsequent encumbrance through judgment lien, equitable or constructive trust or some other means.

Such a creditor action would be subject to rigorous requirements of pleading and proof. In the context of a securitized residential mortgage, the creditor can only be the party(ies) who advanced actual money, from which money the borrower’s loan was funded. In the context of mortgage-backed securities, a creditor who pleads that he expected a secured loan, must also plead all the documents and transactions that gave rise to advancing the money. This would mean that the creditor would be required to disclose and account for credit enhancements, insurance, credit default swaps, over-collateralization, cross-collateralization, and payments received from all sources pursuant to the terms under which the creditor advanced said funds.

Those terms are included in the prospectus and bond indenture which incorporate the pooling and service agreement, Depositor Agreement, Assignment and Assumption Agreements etc. In other words, the actual terms upon which the creditor advanced money were different from the actual terms accepted by the borrower. A court in equity would thus be required to allocate equity and liability for the various unpaid and paid obligations of multiple parties whose existence was unknown to borrower at the time of the loan closing, and whose existence even now would be at best dimly understood by the borrower or any other person who was not extremely well-versed in the securitization of credit.

Filed under: CDO, CORRUPTION, Eviction, expert witness, foreclosure, foreclosure mill, Forensic Analysis Workshop, GTC | Honor, HERS, Investor, MODIFICATION, Mortgage, Motion Practice and Discovery, securities fraud, Securitization Survey, Servicer, workshop Tagged: Bellistri case, Bellistri v Ocwen Loan Servicing, beneficiary, borrower, Certainty, creditor, DEED OF TRUST, defect in title, DOT, enforceability, HERS, MERS, Moral Hazard, multiple parties, nominee, note, Obligation, Ocwen, Payee, quiet title suit, release and reconveyance, Restatement 3rd, SEPARATION OF DEED OF TRUST FROM NOTE, unmarketable

Apr

AZ STATUTE DEFINES BENEFICIARY and CREDIT BID: NOT “NOMINEE”

By LH | Foreclosure Blog News, Homeowner Resources

6716Leave a Comment2010-04-24+17%3A28%3A20LH

33-801. Definitions

In this chapter, unless the context otherwise requires:

1. “Beneficiary” means the person named or otherwise designated in a trust deed as the person for whose benefit a trust deed is given, or the person’s successor in interest. [Note that this does not include a nominee like MERS. There is a reason for that. The legislature intended to create certainty in contracts and actions on contracts. Using a nominee immediately creates the question of agency. The question of agency immediately raises the question of "who is the principal?" As long as that question exists, this statute is violated. If this statue is violated the deed of trust is void.]

2. “Business day” means any day other than a saturday or a legal holiday.

3. “Cash” means United States currency.

4. “Contract” means a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty, including but not limited to a note, A promissory note or provisions of any trust deed.

5. “Credit bid” means a bid made by the beneficiary in full or partial satisfaction of the contract or contracts which are secured by the trust deed. [Note that such credit bids are the rule rather than the exception and that the person making the credit bid is almost never the named the beneficiary. hence the sale is void]. [Note also that without an accounting for third party payments to the creditor in the securitization chain who has succeeded to the position of beneficiary BECAUSE THE SUCCESSION IS SHOWN IN THE COUNTY RECORDS, is voidable because the amount is incorrect, which is a question of fact that must be judicially resolved, which is why NO NON-JUDICIAL sale of securitized property is appropriate.] Such credit bid may only include an amount up to the full amount of the contract or contracts secured by the trust deed, less any amount owing on liens or encumbrances with interest which are superior in priority to the trust deed and which the beneficiary is obligated to pay under the contract or contracts or under the trust deed, together with the amount of other obligations provided in or secured by the trust deed and the costs and expenses of exercising the power of sale and the sale, including the trustee’s fees and reasonable attorney fees actually incurred. (e.s.)

6. “Force majeure” means an act of God or of nature, a superior or overpowering force or an event or effect that cannot reasonably be anticipated or controlled and that prevents access to the sale location for conduct of a sale.

7. “Parent corporation” means a corporation which owns eighty per cent or more of every class of the issued and outstanding stock of another corporation or, in the case of a savings and loan association, eighty per cent or more of its issued and outstanding guaranty capital.

8. “Trust deed” or “deed of trust” means a deed executed in conformity with this chapter and conveying trust property to a trustee or trustees qualified under section 33-803 to secure the performance of a contract or contracts, other than a trust deed which encumbers in whole or in part trust property located in Arizona and in one or more other states.

9. “Trust property” means any legal, equitable, leasehold or other interest in real property which is capable of being transferred, whether or not it is subject to any prior mortgages, trust deeds, contracts for conveyance of real property or other liens or encumbrances.

10. “Trustee” means an individual, association or corporation qualified pursuant to section 33-803, or the successor in interest thereto, to whom trust property is conveyed by trust deed. The trustee’s obligations to the trustor, beneficiary and other persons are as specified in this chapter, together with any other obligations specified in the trust deed.

11. “Trustor” means the person conveying trust property by a trust deed as security for the performance of a contract or contracts, or the successor in interest of such person.

Filed under: CDO, CORRUPTION, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud Tagged: agency, ARIZONA, Arizona statutes, beneficiary, credit bid, DEED OF TRUST, judicial sale, MERS, nominee, NON-JUDICIAL SALE, principal, UNDISCLOSED PRINCIPAL, VIOLATION OF STATUTE, VOID, VOIDABLE

Apr

Magnetar Echoes Livinglies call for Alignment of Investors, Servicers and Borrowers

By LH | Foreclosure Blog News, Homeowner Resources

6622Leave a Comment2010-04-22+15%3A55%3A15LH

see Magnetar%20Mortage%20Recovery%20Backstop%20Whitepaper%20Jun09.pdf

Magnetar Mortage Recovery Backstop Whitepaper Jun09

Two things jump out at me with this paper from June, 2009.

First it is obvious that the “real money” investors are defined as those seeking low risk and willing to take lower yield. The fact that they are called “Real Money Investors” underscores my point about the identity of the creditor. Those “traditional” investors are no longer available to buy the mortgage backed securities or any other resecuritized derivative package based upon mortgage backed securities. Legal restrictions requiring the securities to be investment grade would prevent them from jumping back in even if they wanted to do so, which they obviously don’t.

Thus the inevitable conclusion drawn almost a year ago and borne out by history, is that the fair market value of the securities, trading as pennies on the dollar, is reflective of a lack of demand for mortgage backed securities no matter how high the yield (i.e., no matter how low the price).

Second there is a growing realization that the interests of the investor and the borrowers are actually aligned in many ways and that the solution to mortgage modification, principal reduction, and other aspects of the mortgage mess and the foreclosure crisis lies in recognizing certain realities and then dealing with them in an equitable manner. The properties were never worth the amount of the appraisal in most instances and now they are worth even less than they were when the loan deals were closed. The securities were also “appraised” far too high thus creating a giant yield spread premium for the investment bank-created seller of mortgage backed securities.

In my opinion, based upon a sampling of the data available, it is entirely possible that the “true” fair market value of those securities in the best of circumstances is probably less than 40% of the initial offering price. It is this well-hidden analysis that is not getting the attention of the Obama administration and which completely explains why servicers are obstructing modifications under instruction from investment banking intermediaries like the “Trustee”.

Leaving the servicers and other parties as the middlemen “in the middle” to sort this out is another license to steal creating another mark-up applied against both borrowers and investors as the “real money” parties. The status quo is what is causing the stagnation in lieu of recovery. Until everyone accepts basic notions of “real party in interest” and eliminates those who don’t fit that description, the moral hazards will remain and escalate.

As concluded in this paper, either judicial or executive intervention is required to kick the middlemen out of the way and let the light in. When investors and borrowers are able to compare notes and work with each other the figures for both will be enhanced, foreclosures will decline, losses will be taken, and yes it is highly probable that the number of investor lawsuits will proliferate against those who defrauded them.

The lender is identified as the investor in this paper (indirectly) and the party who defrauded them is not some greedy borrower with stars in his eyes, it was the usual suspect — a financial wizard making a sales pitch that was so complex, the buyer basically was forced to rely upon the integrity of the investment banking house for appropriate pricing. That is where the system fell apart. Moral hazard escalated to moral mess.

Filed under: bubble, CASES, CDO, CORRUPTION, credit unions, currency, Eviction, expert witness, 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: "true" fair market value, borrower, creditor, DEBTOR, fair market value, HERS, identity of the creditor, infrastructure, Investor, Magnetar, Moral Hazard, mortgage backed securities, mortgage modification, principal reduction, real money, real money investors, REAL PARTY IN INTEREST, recovery, risk, status quo, whitepaper, yield

Apr

Magnetar Echoes Livinglies call for Alignment of Investors, Servicers and Borrowers

By LH | Foreclosure Blog News, Homeowner Resources

6621Leave a Comment2010-04-22+15%3A55%3A15LH

see Magnetar%20Mortage%20Recovery%20Backstop%20Whitepaper%20Jun09.pdf

Magnetar Mortage Recovery Backstop Whitepaper Jun09

Two things jump out at me with this paper from June, 2009.

First it is obvious that the “real money” investors are defined as those seeking low risk and willing to take lower yield. The fact that they are called “Real Money Investors” underscores my point about the identity of the creditor. Those “traditional” investors are no longer available to buy the mortgage backed securities or any other resecuritized derivative package based upon mortgage backed securities. Legal restrictions requiring the securities to be investment grade would prevent them from jumping back in even if they wanted to do so, which they obviously don’t.

Thus the inevitable conclusion drawn almost a year ago and borne out by history, is that the fair market value of the securities, trading as pennies on the dollar, is reflective of a lack of demand for mortgage backed securities no matter how high the yield (i.e., no matter how low the price).

Second there is a growing realization that the interests of the investor and the borrowers are actually aligned in many ways and that the solution to mortgage modification, principal reduction, and other aspects of the mortgage mess and the foreclosure crisis lies in recognizing certain realities and then dealing with them in an equitable manner. The properties were never worth the amount of the appraisal in most instances and now they are worth even less than they were when the loan deals were closed. The securities were also “appraised” far too high thus creating a giant yield spread premium for the investment bank-created seller of mortgage backed securities.

In my opinion, based upon a sampling of the data available, it is entirely possible that the “true” fair market value of those securities in the best of circumstances is probably less than 40% of the initial offering price. It is this well-hidden analysis that is not getting the attention of the Obama administration and which completely explains why servicers are obstructing modifications under instruction from investment banking intermediaries like the “Trustee”.

Leaving the servicers and other parties as the middlemen “in the middle” to sort this out is another license to steal creating another mark-up applied against both borrowers and investors as the “real money” parties. The status quo is what is causing the stagnation in lieu of recovery. Until everyone accepts basic notions of “real party in interest” and eliminates those who don’t fit that description, the moral hazards will remain and escalate.

As concluded in this paper, either judicial or executive intervention is required to kick the middlemen out of the way and let the light in. When investors and borrowers are able to compare notes and work with each other the figures for both will be enhanced, foreclosures will decline, losses will be taken, and yes it is highly probable that the number of investor lawsuits will proliferate against those who defrauded them.

The lender is identified as the investor in this paper (indirectly) and the party who defrauded them is not some greedy borrower with stars in his eyes, it was the usual suspect — a financial wizard making a sales pitch that was so complex, the buyer basically was forced to rely upon the integrity of the investment banking house for appropriate pricing. That is where the system fell apart. Moral hazard escalated to moral mess.

Apr

Discovery Issues Revealed: PRINCIPAL REDUCTION IS A RIGHT NOT A GIFT – CA Class Action V BOA on TARP funds

By LH | Foreclosure Blog News, Homeowner Resources

6536Leave a Comment2010-04-19+16%3A09%3A19LH

REGISTER NOW FOR DISCOVERY AND MOTION PRACTICE WORKSHOP MAY 23-24

PRINCIPAL REDUCTION IS A RIGHT NOT A GIFT. IF THE OBLIGATION HAS BEEN PAID BY THIRD PARTIES, THEN THE OBLIGATION HAS ALREADY BEEN REDUCED. THE ONLY FUNCTION REMAINING IS TO DO THE ACCOUNTING.

“

There should be no doubt in your mind now that virtually none of the foreclosures processed, initiated or threatened so far have been anything other than wrong. The payments from third parties clearly reduced the principal due, might be allocable to payments that were due (thus eliminating even the delinquency status) and thus eviscerates the amount demanded by the notice of delinquency or notice of default.

Thus in addition to the fact that the wrong party is pursuing foreclosure, they are seeking to enforce an obligation that does not exist.”

Editor’s Note: This is what we cover in the upcoming workshop. Connect the dots. Recent events point out, perhaps better than I have so far, why you should press your demands for discovery. In particular identification of the creditor, the recipients of third party payments, and accounting for ALL financial transactions that refer to or are allocable to a specific pool in which your specific loan is claimed to have been pledged or transferred for sale to investors in pieces.

This lawsuit seeks to force BOA to allocate TARP funds to the pools that were referenced when TARP funds were paid. In turn, they want the money allocated to individual loans in those pools on a pro rata basis. It is simple. You can’t pick up one end of the stick without picking up the other end too.

The loans were packaged into pools that were then “processed” into multiple SPV pools, shares of which were sold to investors. Those shares “derived” their value from the loans. TARP paid 100 cents on the dollar for those shares. Thus the TARP payments were received based upon an allocation that “derived” its value from the loans. The only possible conclusion is to allocate the funds to the loans.

But that is only part of the story. TARP, TALF and other deals on a list that included insurance, and credit default swaps (synthetic derivatives) also made such payments. Those should also be allocated to the loans. Instead, BOA wants to keep the payments without applying the payments to the loans. In simple terms they their TARP and then still be able to keep eating, even though the “cake” has been paid off (consumed) by third party payments.

Now that the Goldman Sachs SEC lawsuit has been revealed, I can point out that there are other undisclosed fees, profits, and advances made that are being retained by the intermediaries in the securitization and servicing chains that should also be allocated to the loans, some of which are ALSO (as previously mentioned in recent articles posted here) subject to claims from the SEC on behalf of the investors who went “long” (i.e., who advanced money and bought these derivative shares) based upon outright lies, deception and an interstate and intercontinental scheme of fraud.

In plain language, the significance of this accounting is that if you get it, you will have proof beyond any doubt that the notice of default and notice of sale, the foreclosure suit and the demands from the servicer were all at best premature and more likely fraudulent in that they KNEW they had received payments that had paid all or part of the borrower’s obligation and which should have been allocated to the benefit of the homeowner.

There should be no doubt in your mind now that virtually none of the foreclosures processed, initiated or threatened so far have been anything other than wrong. The payments from third parties clearly reduced the principal due, might be allocable to payments that were due (thus eliminating even the delinquency status) and thus eviscerates the amount demanded by the notice of delinquency or notice of default.

Thus in addition to the fact that the wrong party is pursuing foreclosure, they are seeking to enforce an obligation that does not exist. This is a breach of the terms of the obligation as well as the pooling and service agreement.

INVESTORS TAKE NOTE: IF THE FUNDS HAD BEEN PROPERLY ALLOCATED THE LOANS WOULD STILL BE CLASSIFIED AS PERFORMING AND THE VALUE OF YOUR INVESTMENT WAS MUCH HIGHER THAN REPORTED BY THE INVESTMENT BANK. YOU TOOK A LOSS WHILE THE INVESTMENT BANK TOOK THE MONEY. THE FORECLOSURES THAT FURTHER REDUCED THE VALUE OF THE COLLATERAL WERE ILLUSORY SCHEMES CONCOCTED TO DEFLECT YOUR ATTENTION FROM THE FLOW OF FUNDS. THUS YOU TOO WERE SCREWED OVER MULTIPLE TIMES. JOINING WITH THE BORROWERS, YOU CAN RECOVER MORE OF YOUR INVESTMENT AND THEY CAN RECOVER THEIR EQUITY OR AT LEAST THE RIGHTS TO THEIR HOME.

On Thu, Apr 15, 2010 at 9:35 PM, sal danna <saldanna@gmail.com> wrote:

California homeowners file class action suit against Bank of America for withholding TARP funds

Thu, 2010-04-08 11:43 — NationalMortgag…

California homeowners have filed a class action lawsuit against Bank of America claiming the lending giant is intentionally withholding government funds intended to save homeowners from foreclosure, announced the firm of Hagens Berman Sobol Shapiro. The case, filed in United States District Court in Northern California, claims that Bank of America systematically slows or thwarts California homeowners’ access to Troubled Asset Relief Program (TARP) funds by ignoring homeowners’ requests to make reasonable mortgage adjustments or other alternative solutions that would prevent homes from being foreclosed.

“We intend to show that Bank of America is acting contrary to the intent and spirit of the TARP program, and is doing so out of financial self interest,” said Steve Berman, managing partner of Hagens Berman Sobol Shapiro.

Bank of America accepted $25 billion in government bailout money financed by taxpayer dollars earmarked to help struggling homeowners avoid foreclosure. One in eight mortgages in the United State is currently in foreclosure or default. Bank of America, like other TARP-funded financial institutions, is obligated to offer alternatives to foreclosure and permanently reduce mortgage payments for eligible borrowers struck by financial hardship but, according to the lawsuits, hasn’t lived up to its obligation.

According to the U.S. Treasury Department, Bank of America services more than one million mortgages that qualify for financial relief, but have granted only 12,761 of them permanent modification. Furthermore, California has one of the highest foreclosure rates in the nation for 2009 with 632,573 properties currently pending foreclosure, according to the California lawsuit.

“We contend that Bank of America has made an affirmative decision to slow the loan modification process for reasons that are solely in the bank’s financial interests,” Berman said.

The complaints note that part of Bank of America’s income is based on loans it services for other investors, fees that will drop as loan modifications are approved. The complaints also note that Bank of America would need to repurchase loans it services but has sold to other investors before it could make modifications, a cumbersome process. According to the TARP regulations, banks must gather information from the homeowner, and offer a revised three-month payment plan for the borrower. If the homeowner makes all three payments under the trial plan, and provides the necessary documentation, the lender must offer a permanent modification.

Named plaintiffs and California residents Suzanne and Greg Bayramian were forced to foreclose their home after several failed attempts to make new arrangements with Bank of America that would reduce their monthly loan payments. According to the California complaint, Bank of America deferred Bayramian’s mortgage payments for three months but failed to tell them that they would not qualify for a loan modification until 12 consecutive payments. Months later, Bank of America came back to the Bayramian family and said would arrange for a loan modification under the TARP home loan program but never followed through. The bank also refused to cooperate to a short-sale agreement saying they would go after Bayramian for the outstanding amount.

“Bank of America came up with every excuse to defer the Bayramian family from a home loan modification which forced them into foreclosure,” said Berman. “And we know from our investigation this isn’t an isolated incident.”

The lawsuits charge that Bank of America intentionally postpones homeowners’ requests to modify mortgages, depriving borrowers of federal bailout funds that could save them from foreclosure. The bank ends up reaping the financial benefits provided by taxpayer dollars financing TARP-funds and also collects higher fees and interest rates associated with stressed home loans.

For more information, visit www.hbsslaw.com.

Filed under: CDO, CORRUPTION, Eviction, expert witness, foreclosure, foreclosure mill, Forensic Analysis Workshop, GTC | Honor, HERS, Investor, MODIFICATION, Mortgage, Motion Practice and Discovery, securities fraud, Securitization Survey, Servicer, STATUTES, workshop Tagged: accounting, allocation of payments, and advances, Bank of America, CALIFORNIA, creditor, delinquency status, discovery, foreclosure suit, foreclosures, Goldman Sachs, Hagens Berman Sobol Shapiro, INVESTORS TAKE NOTE, Notice of Default, Notice of Sale, Obligation, payments, pool, principal reduction, profits, sale to investors, SEC, SPV pools, Steve Berman, TARP, TARP regulations, third party payments, undisclosed fees

Apr

Allocating Bailout to YOUR LOAN

By LH | Federal Reserve, Foreclosure Blog News, Homeowner Resources

6518Leave a CommentAllocating+Bailout+to+YOUR+LOAN2010-04-18+15%3A18%3A04LH

Editor’s Note: Here is the problem. As I explained to a Judge last week, if Aunt Alice pays off my obligation then the fact that someone still has the note is irrelevant. The note is unenforceable and should be returned as paid. That is because the note is EVIDENCE of the obligation, it isn’t THE obligation. And by the way the note is only one portion of the evidence of the obligation in a securitized loan. Using the note as the only evidence in a securitized loan is like paying for groceries with sea shells. They were once currency in some places, but they don’t go very far anymore.

The obligation rises when the money is funded to the borrower and extinguished when the creditor receives payment — regardless of who they receive the payment from (pardon the grammar).

The Judge agreed. (He had no choice, it is basic black letter law that is irrefutable). But his answer was that Aunt Alice wasn’t in the room saying she had paid the obligation. Yes, I said, that is right. And the reason is that we don’t know the name of Aunt Alice, but only that she exists and that she paid. And the reason that we don’t know is that the opposing side who DOES know Aunt Alice, won’t give us the information, even though the attorney for the borrower has been asking for it formally and informally through discovery for 9 months.

I should mention here that it was a motion for lift stay which is the equivalent of a motion for summary judgment. While Judges have discretion about evidence, they can’t make it up. And while legal presumptions apply the burden on the moving party in a motion to lift stay is to remove any conceivable doubt that they are the creditor, that the obligation is correctly stated and to do so through competent witnesses and authenticated business records, documents, recorded and otherwise. All motions for lift stay should be denied frankly because of thee existence of multiple stakeholders and the existence of multiple claims. Unless the motion for lift stay is predicated on proceeding with a judicial foreclosure, the motion for lift stay is the equivalent of circumventing due process and the right to be heard on the merits.

But I was able to say that the the PSA called for credit default swaps to be completed by the cutoff date and that obviously they have been paid in whole or in part. And I was able to say that AMBAC definitely made payments on this pool, but that the opposing side refused to allocate them to this loan. Now we have the FED hiding the payments it made on these pools enabling the opposing side (pretender lenders) to claim that they would like to give us the information but the Federal reserve won’t let them because there is an agreement not to disclose for 10 years notwithstanding the freedom of information act.

So we have Aunt Alice, Uncle Fred, Mom and Dad all paying the creditor thus reducing the obligation to nothing but the servicer, who has no knowledge of those payments, won’t credit them against the obligation because the servicer is only counting the payments from the debtor. And so the pretender lenders come in and foreclose on properties where they know third party payments have been made but not allocated and claim the loan is in default when some or all of the loan has been repaid.

Thus the loan is not in default, but borrowers and their lawyers are conceding the default. DON’T CONCEDE ANYTHING. ALLEGE PAYMENT EVEN THOUGH IT DIDN’T COME FROM THE DEBTOR.

This is why you need to demand an accounting and perhaps the appointment of a receiver. Because if the servicer says they can’t get the information then the servicer is admitting they can’t do the job. So appoint an accountant or some other receiver to do the job with subpoena power from the court.

Practice Hint: If you let them take control of the narrative and talk about the note, you have already lost. The note is not the obligation. Your position is that part or all of the obligation has been paid, that you have an expert declaration computing those payments as close as possible using what information has been released, published or otherwise available, and that the pretender lenders either refuse or failed to credit the debtor with payments from third party sources —- credit default swaps, insurance and other guarantees paid for out of the proceeds of the loan transaction, PLUS the federal bailout from TARP, TALF, Maiden Lane deals, and the Federal reserve.

The Judge may get stuck on the idea of giving a free house, but how many times is he going to require the obligation to be paid off before the homeowner gets credit for the issuance that was was paid for out of the proceeds of the borrowers transaction with the creditor?

Fed Shouldn’t Reveal Crisis Loans, Banks Vow to Tell High Court

By Bob Ivry

April 14 (Bloomberg) — The biggest U.S. commercial banks will take their fight against disclosure of Federal Reserve lending in 2008 to the Supreme Court if necessary, the top lawyer for an industry-owned group said.

Continued legal appeals will delay or block the first public look at details of the central bank’s $2 trillion in emergency lending during the 2008 financial crisis. The Clearing House Association LLC, a group that includes Bank of America Corp. and JPMorgan Chase & Co., joined the Fed in defense of a lawsuit brought by Bloomberg LP, the parent company of Bloomberg News, seeking release of records related to four Fed lending programs.

The U.S. Court of Appeals in Manhattan ruled March 19 that the central bank must release the documents. A three-judge panel of the appellate court rejected the Fed’s argument that disclosure would stigmatize borrowers and discourage banks from seeking emergency help.

“Our member banks are very concerned about real-time disclosure of information that could cause a run on the banks,” said Paul Saltzman, the group’s general counsel, in an interview yesterday. “We’re not going to let the Second Circuit opinion stand without seeking a review.”

Regardless of whether the Fed appeals, the Clearing House will take the next legal step by asking for a review by the full appellate court, Saltzman, 49, said at his office in New York. If the ruling is unfavorable, the bank group will petition the Supreme Court, he said.

Joined Lawsuit

The 157-year-old, New York-based Clearing House Payments Co., which processes transactions among banks, is owned by its 20 members. They include Citigroup Inc., Bank of New York Mellon Corp., Deutsche Bank AG, HSBC Holdings Plc, PNC Financial Services Group Inc., UBS AG, U.S. Bancorp and Wells Fargo & Co.

The Clearing House Association, a lobbying group with the same members, joined the lawsuit in September 2009, after an initial ruling against the central bank in federal court in Manhattan.

The Fed is “reviewing the decision and considering our options,” said Fed spokesman David Skidmore in Washington. He had no comment on Saltzman’s plans.

Attorneys face a May 3 deadline to file their appeals.

“We’ll wait to see the motion papers,” said Thomas Golden, attorney for Bloomberg who is a partner at New York- based Willkie Farr & Gallagher LLP. “The judges’ decision was well-reasoned, and we doubt further appeals will yield a different result.”

Bloomberg sued in November 2008 under the U.S. Freedom of Information Act, after the Fed denied access to records of four Fed lending programs and a loan the central bank made in connection with New York-based JPMorgan Chase’s acquisition of Bear Stearns Cos. in March 2008.

231 Pages

The central bank contends that 231 pages of daily reports summarizing lending activity, which were prepared by the Federal Reserve Bank of New York for the Fed Board of Governors in Washington, aren’t covered by the FOIA. The statute obliges federal agencies to make government documents available to the press and the public. The suit doesn’t seek money damages.

The Fed released lists on March 31 of assets it acquired in the 2008 bailout of Bear Stearns.

The New York Times Co., the Associated Press and Dow Jones & Co., publisher of the Wall Street Journal, are among media companies that have signed up as friends of the court in support of Bloomberg.

The Fed Board of Governors’ “refusal to disclose the names of borrowers renders public oversight of its actions impossible — it prevents any assessment of the effectiveness of the Board’s actions and conceals any collusion, corruption, fraud or abuse that might have occurred,” the news organizations said in a letter to the appeals panel.

The case is Bloomberg LP v. Board of Governors of the Federal Reserve System, 09-04083, U.S. Court of Appeals for the Second Circuit (New York).

To contact the reporter on this story: Bob Ivry in New York at bivry@bloomberg.net.

Last Updated: April 14, 2010 00:01 EDT

Filed under: foreclosure Tagged: 09-04083, accounting, AMbac, appointment of a receiver, Aunt Alice, authenticated business records, Bank of America Corp, Bank of New York Mellon Corp, banks, Bloomberg LP v. Board of Governors of the Federal Reserve System, bloomberg.net., Bob Ivry, Citigroup Inc, Clearing House Association, Clearing House Payments Co, competent witnesses, conceivable doubt, credit default swaps, crisis, Deutsche Bank AG, evidence of the obligation, Fed, Freedom of Information Act, HERS, High Court, HSBC Holdings Plc, JPMorgan Chase & Co, Maiden Lane, MERS, motion for lift stay, Obligation, Paul Saltzman, PNC Financial Services Group Inc, proceeds of the borrowers transaction, PSA, receiver, Saltzman, servicers, summary judgment, TALF, TARP, The Clearing House Association LLC, The New York Times, third party sources, Thomas Golden, U.S. Bancorp, U.S. Court of Appeals in Manhattan, UBS AG, Wells Fargo & Co, Willkie Farr & Gallagher LL

Apr

Lehman dissection provides clues for discovery and motion practice

By LH | Foreclosure Blog News, Homeowner Resources

6406Leave a Comment2010-04-13+15%3A42%3A44LH

Challenge everything, assume nothing. The chances are that through this shadow banking system, your loan was paid in whole or in part through third party insurers, counterparties, federal bailout etc. Without an accounting from the CREDITOR, there is no basis for claiming a default. What the other side is doing is centering in on the note, which is only part of a string of evidence about the obligation in securitized debt. Your position is that you want ALL the evidence, so you can identify the CREDITOR,and pursuant to Federal and State law, either pay, settle, modify or litigate the case if you have legitimate defenses. You can’t do that if the party you are fighting has no power to execute a satisfaction of mortgage or release and reconveyance.

April 12, 2010

Lehman Channeled Risks Through ‘Alter Ego’ Firm

By LOUISE STORY and ERIC DASH

It was like a hidden passage on Wall Street, a secret channel that enabled billions of dollars to flow through Lehman Brothers.

In the years before its collapse, Lehman used a small company — its “alter ego,” in the words of a former Lehman trader — to shift investments off its books.

The firm, called Hudson Castle, played a crucial, behind-the-scenes role at Lehman, according to an internal Lehman document and interviews with former employees. The relationship raises new questions about the extent to which Lehman obscured its financial condition before it plunged into bankruptcy.

While Hudson Castle appeared to be an independent business, it was deeply entwined with Lehman. For years, its board was controlled by Lehman, which owned a quarter of the firm. It was also stocked with former Lehman employees.

None of this was disclosed by Lehman, however.

Entities like Hudson Castle are part of a vast financial system that operates in the shadows of Wall Street, largely beyond the reach of banking regulators. These entities enable banks to exchange investments for cash to finance their operations and, at times, make their finances look stronger than they are.

Critics say that such deals helped Lehman and other banks temporarily transfer their exposure to the risky investments tied to subprime mortgages and commercial real estate. Even now, a year and a half after Lehman’s collapse, major banks still undertake such transactions with businesses whose names, like Hudson Castle’s, are rarely mentioned outside of footnotes in financial statements, if at all.

The Securities and Exchange Commission is examining various creative borrowing tactics used by some 20 financial companies. A Congressional panel investigating the financial crisis also plans to examine such deals at a hearing in May to focus on Lehman and Bear Stearns, according to two people knowledgeable about the panel’s plans.

Most of these deals are legal. But certain Lehman transactions crossed the line, according to the account of the bank’s demise prepared by an examiner of the bank. Hudson Castle was not mentioned in that report, released last month, which concluded that some of Lehman’s bookkeeping was “materially misleading.” The report did not say that Hudson was involved in the misleading accounting.

At several points, Lehman did transactions greater than $1 billion with Hudson vehicles, but it is unclear how much money was involved since 2001.

Still, accounting experts say the shadow financial system needs some sunlight.

“How can anyone — regulators, investors or anyone — understand what’s in these financial statements if they have to dig 15 layers deep to find these kinds of interlocking relationships and these kinds of transactions?” said Francine McKenna, an accounting consultant who has examined the financial crisis on her blog, re: The Auditors. “Everybody’s talking about preventing the next crisis, but they can’t prevent the next crisis if they don’t understand all these incestuous relationships.”

The story of Lehman and Hudson Castle begins in 2001, when the housing bubble was just starting to inflate. That year, Lehman spent $7 million to buy into a small financial company, IBEX Capital Markets, which later became Hudson Castle.

From the start, Hudson Castle lived in Lehman’s shadow. According to a 2001 memorandum given to The New York Times, as well as interviews with seven former employees at Lehman and Hudson Castle, Lehman exerted an unusual level of control over the firm. Lehman, the memorandum said, would serve “as the internal and external ‘gatekeeper’ for all business activities conducted by the firm.”

The deal was proposed by Kyle Miller, who worked at Lehman. In the memorandum, Mr. Miller wrote that Lehman’s investment in Hudson Castle would give the bank and its clients access to financing while preventing “headline risk” if any of its deals went south. It would also reduce Lehman’s “moral obligation” to support its off-balance sheet vehicles, he wrote. The arrangement would maximize Lehman’s control over Hudson Castle “without jeopardizing the off-balance sheet accounting treatment.”

Mr. Miller became president of Hudson Castle and brought several Lehman employees with him. Through a Hudson Castle spokesman, Mr. Miller declined a request for an interview.

The spokesman did not dispute the 2001 memorandum but said the relationship with Lehman had evolved. After 2004, “all funding decisions at Hudson Castle were solely made by the management team and neither the board of directors nor Lehman Brothers participated in or influenced those decisions in any way,” he said, adding that Lehman was only a tenth of Hudson’s revenue.

Still, Lehman never told its shareholders about the arrangement. Nor did Moody’s choose to mention it in its credit ratings reports on Hudson Castle’s vehicles. Former Lehman workers, who spoke on the condition that they not be named because of confidentiality agreements with the bank, offered conflicting accounts of the bank’s relationship with Hudson Castle.

One said Lehman bought into Hudson Castle to compete with the big commercial banks like Citigroup, which had a greater ability to lend to corporate clients. “There were no bad intentions around any of this stuff,” this person said.

But another former employee said he was leery of the arrangement from the start. “Lehman wanted to have a company it controlled, but to the outside world be able to act like it was arm’s length,” this person said.

Typically, companies are required to disclose only material investments or purchases of public companies. Hudson Castle was neither.

Nonetheless, Hudson Castle was central to some Lehman deals up until the bank collapsed.

“This should have been disclosed, given how critical this relationship was,” said Elizabeth Nowicki, a professor at Boston University and a former lawyer at the S.E.C. “Part of the problems with all these bank failures is there were a lot of secondary actors — there were lawyers, accountants, and here you have a secondary company that was helping conceal the true state of Lehman.”

Until 2004, Hudson had an agreement with Lehman that blocked it from working with the investment bank’s competitors, but in 2004, that deal ended, and Lehman reduced its number of board seats to one, from five, according to two people with direct knowledge of the situation and an internal Hudson Castle document. Lehman remained Hudson’s largest shareholder, and its management remained close to important Lehman officials.

Hudson Castle created at least four separate legal entities to borrow money in the markets by issuing short-term i.o.u.’s to investors. It then used that money to make loans to Lehman and other financial companies, often via repurchase agreements, or repos. In repos, banks typically sell assets and promise to buy them back at a set price in the future.

One of the vehicles that Hudson Castle created was called Fenway, which was often used to lend to Lehman, including in the summer of 2008, as the investment bank foundered. Because of that relationship, Hudson Castle is now the second-largest creditor in the Lehman Estate, after JPMorgan Chase. Hudson Castle, which is still in business, doing similar work for other banks, bought out Lehman’s stake last year. The firm’s spokesman said Hudson operated independently in the Fenway deal in the summer of 2008.

Hudson Castle might have walked away earlier if not for Fenway’s ties to Lehman. Lehman itself bought $3 billion of Fenway notes just before its bankruptcy that, in turn, were used to back a loan from Fenway to a Lehman subsidiary. The loan was secured by part of Lehman’s investment in a California property developer, SunCal, which also collapsed. At the time, other lenders were already growing uneasy about dealing with Lehman.

Further complicating the arrangement, Lehman later pledged those Fenway notes to JPMorgan as collateral for still other loans as Lehman began to founder. When JPMorgan realized the circular relationship, “JPMorgan concluded that Fenway was worth practically nothing,” according the report prepared by the court examiner of Lehman.

Filed under: CDO, CORRUPTION, Eviction, foreclosure, Investor, Mortgage, securities fraud Tagged: accounting, creditor, DEBTOR, discovery, enforcement of obligation, Lehman, motino practice, Obligation, unsecured obligationunsecured note

Apr

Moral Hazard in Non-Judicial Sale: Trustee commits violations of FDCPA and other statutes!

By LH | Foreclosure Blog News, Homeowner Resources

6366Leave a Comment2010-04-11+22%3A56%3A19LH

From Eaine B

Editor’s Note: I have long advocated sending letters, objections to sale and complaints against “trustees” named (or substituted) on deeds of trust who initiate foreclosure proceedings. Indeed, it is highly probable that because of statutes attempting to protect the trustee from liability, the trustee is at best usually named only as a nominal party in a lawsuit challenging the legality of the non-judicial sale, demanding the identity and contact information of the creditor and getting a full accounting from the real creditor.

I would argue that this reader’s comment is more on target than they even know. Because that is the point — knowledge. If the “trustee” knowingly proceeds when it KNOWS there is a question of title, a question of who is the creditor, and knows that this loan was sold to third parties that have not been disclosed to the Trustor nor the Trustee, then the trustee is more than a nominal party, to wit: they are a co-venturer in a fraudulent scheme.

Typically non-judicial action commences under a “substitute trustee”. One would ask why it was necessary to call in a “substitute trustee” from the bullpen, when the current one is just fine. The only possible answer is that the old trustee either doesn’t want any part of this, or won’t do it without following industry standards to confirm ownership etc. It would seem fairly obvious that if the existing trustee is still in business and continues to qualify as a trustee, the only rational reason to change trustees is because the actors wish to do business with people who won’t ask questions.

Often the “substitution of trustee” is backdated, undated or dated after the notice of sale, notice of default etc., so there is a simple procedural angle to set back the sale if you are actually reading the documents, and getting a title report.

More substantively, the “substitute trustee” is granted that position by a party who in all probability does not have the power to grant it — but that requires a forensic analysis, title report, and probably a lawsuit to establish. For example, if some person unknown to MERS assumes the title of “assistant Vice president of Mortgage Electronic Registration Systems” and signs the substitution of trustee or any other document, they probably lack the power to do so, or they lack the documentation showing they have the power to do so.

This actually runs to the core of moral hazard in non-judicial states. Anyone who knows you have missed payments, could file a “substitution of Trustee” document in the county records, send you a notice of default, notice of sale and sell your property to the highest bidder — all BEFORE your real servicer (who we know is only a pretender lender) even knows about it. It is a scam waiting to happen. The scammer then takes the money and runs. Meanwhile you have most likely given up and left the house so it is now abandoned. This scenario can only happen in non-judicial states, where the statute authorizing a non-judicial foreclosure sale ASSUMES that the right party is doing the right thing under proper authority.

When mortgages were simple, and securitization was only an idea, the opportunity for abuse in non-judicial states was present but generally controllable because your true lender had control of the loan, they knew when you were delinquent, and they would be in touch with you, during which time it might come out that you had already received a notice of sale from a “substitute trustee.”

In the world of securitization where the potential real parties in interest are almost infinite in number, where the credit report is used rather than the title report, and where various layers of companies are used to create plausible deniability, insulation from liability and the ability to move things around “off-balance sheet” or “off record” at the county recorder’s office, the potential for abuse is practically infinite. And true to form, my experience is that virtually every foreclosure in a non-judicial state contains at least the taint of this abuse and often facially shows the failure to use proper documentation.

Comment submitted by Eaine B—–

Trustee commits violations of Fair Debt Collections Practice Act!
A good cause of action against Northwest Trustee Services Inc, Routh Crabtree Olsen PS is that I have found they sell your private information to the public. Go to http://www.usa-foreclosoure.com and find your foreclosure….then buy for $39.00 a copy of the title report that is supposed to be private between the trustee and the beneficiary. Any public person can order your report online. This is mail and interstate violations. Make a complaint to the Bar association, and the FTC and your state Attorney General.
Call the title company on the top of the form and ask them. Then perhaps you can file a suit against Routh Crabtree Olsen and Northwest Trustee Services Inc for violations of 15 USC 1692 Fair Debt Collection Practices Act violation. It’s triple damages. Most likely they will have sent you a letter from Routh Crabtree Olsen. One I got even quotes the 15 USC 1692. So obviously THEY know about it. The owner of Routh, Crabtree and Olsen is Stephen Routh and Lance Olsen. Routh has various companies in AK, MT, AZ, CA etc. Just look at the list on the various web sites. http://www.usa-foreclosure.com has the same address as Routh Crabtree Olsen and Northwest Trustee Services and as Routh in AK.
Also, the process serving company that they use is owned by them.

Filed under: CDO, CORRUPTION, Eviction, expert witness, Fannie MAe, foreclosure, foreclosure mill, GTC | Honor, HERS, Investor, securities fraud, Servicer Tagged: 15 USC 1692, accounting, backdated, county records, credit report, creditor, Eaine B, Fair Debt Collections Practice Act, FDCPA, Foreclosure scams, forensic analysis, fraudulent scheme, HERS, Lance Olsen, MERS, Moral Hazard, Mortgage Electronic registration Systems, nominal party, non-judicial states, Northwest Trustee Services Inc, objections to sale, pretender lender, procedural, process serving company, Routh Crabtree Olsen, servicer, Stephen Routh, Substitute Trustee, Substitution of Trustee, title, title report, triple damages, TRUSTEES, undated, usa-foreclosoure.com, violation

Apr

Court Denies Motion to Dismiss and Holds Backdated Mortgage Assignments May be Invalid

By LH | Foreclosure Blog News, Homeowner Resources

6309Leave a Comment2010-04-09+19%3A43%3A47LH

The bad news is that the Court mistakenly assumes that MERS must be the party to enforce because the MERS assignment was backdated. MERS specifically and publicly disclaims any interest in the mortgage, note or obligation. How can MERS assign something it disclaims? MERS internet site and promotional literature all say the same thing — use us to record your assignments and transfers, we promise we’ll never assert any interest or ownership in the property, loan, note or mortgage.

The court also mistakenly quotes statute saying that a beneficiary under a deed of trust need not record the assignment of the beneficial interest. That may be true, but if the assignment is of the DOT without concurrent assignment of the note (and notice to the Trustor/Homeowner) the assignment is of dubious quality.

It is also curious why anyone would assign the deed of trust or a beneficial interest, since the assignment of the note would incorporate all interests under the security instrument under NORMAL conditions. But this isn’t normal, is it. They split the note from the mortgage and both the note and mortgage are split from the original obligation because the actual creditor is not even mentioned in the closing documents.

On March 30, 2010, in the case of Ohlendorf v. Am. Home Mortg. Servicing

, (2010 U.S. Dist. LEXIS 31098) on Defendants’ 12(B)(6) Motion, United States District Court for the Eastern District of California denied the motion to dismiss Plaintiffs wrongful foreclosure claim on grounds that the assignment of mortgage was backdated and thus may have been invalid.

“On or about June 23, 2009, defendant T.D. Service Company (a foreclosure processing service) filed a notice of default in Placer County, identifying Deutsche Bank as beneficiary and AHMSI as trustee. In an assignment of deed of trust dated July 15, 2009, MERS assigned the deed of trust to AHMSI. This assignment of deed of trust purports to be effective as of June 9, 2009. A second assignment of deed of trust was executed on the same date as the first, July 15, 2009, but the time mark placed on the second assignment of deed of trust by the Placer County Recorder indicates that it was recorded eleven seconds after the first. In this second assignment of deed of trust, AHMSI assigned the deed of trust to Deutsche. This assignment indicates that it was effective as of June 22, 2009. Both assignments were signed by Korell Harp. The assignment purportedly effective June 9, 2009, lists Harp as vice president of MERS and the assignment purportedly effective June 22, 2009, lists him as vice president of AHMSI. Six days later, on July 21, 2009, plaintiff recorded a notice of pendency of action with the Placer County Recorder. In a substitution of trustee recorded on July 29, 2009, Deutsche, as present beneficiary, substituted ADSI as trustee.”

The court stated that “while California law does not require beneficiaries to record assignments, see California Civil Code Section 2934, the process of recording assignments with backdated effective dates may be improper, and thereby taint the notice of default.”

Plaintiff’s argument was interpreted by the court to be that the backdated assignments were not valid or at least were not valid on June 23, 2009, when the notice of default was recorded. As such the court assumed Plaintiff argued that MERS remained the beneficiary on that date and therefore was the only party who could enforce the default.

Judge Lawrence K. Karlton invited Defendants to file a motion to dismiss as to plaintiff’s wrongful foreclosure claim insofar as it is premised on the backdated assignments of the mortgage.

Dean Mostofi

301-867-3887

Filed under: CDO, CORRUPTION, foreclosure, GTC | Honor, HERS, Investor, Mortgage, Servicer Tagged: 12(B)(6) Motion, 2009, 2010, 2010 U.S. Dist. LEXIS 31098, ADSI, AHMSI, Am. Home Mortg. Servicing, assignments, backdated assignments, California Civil Code Section 2934, CASES, DEED OF TRUST, Deutsche, Eastern District of California, foreclosure processing service), HERS, Judge Lawrence K. Karlton, June 22, Korell Harp, March 30, MERS, MOTION TO DISMISS, Notice of Default, Ohlendorf v. Am. Home Mortg. Servicing, Placer County Recorder, T.D. Service Company, taint the notice of default, United States District Court, vice president of AHMSI, vice president of MERS, wrongful foreclosure claim

Apr

U.S. Starts Criminal Probe of Lender Processing Services Inc. Foreclosure-Data Provider

By LH | Foreclosure Blog News, Homeowner Resources

6252Leave a Comment2010-04-07+15%3A28%3A16LH

The case follows on the dismissal of numerous foreclosure cases in which judges across the U.S. have found that the materials banks had submitted to support their claims were wrong. Faulty bank paperwork has been an issue in foreclosure proceedings since the housing crisis took hold a few years ago. It is often difficult to pin down who the real owner of a mortgage is, thanks to the complexity of the mortgage market.

the majority of foreclosures go unchallenged, some homeowners have won the right to keep their homes by proving the bank couldn’t show, on paper, that it owned the mortgage.

[LPS a/k/a DOCX] produces documents needed by banks to prove they own the mortgages. LPS’s annual report said that the processes under review have been “terminated,” and that the company has expressed its willingness to cooperate. Ms. Kersch declined to comment further on the probe.

Editor’s Note: The executive branch is finally becoming involved. The foreclosure mills have been producing dubious and/or fraudulent, fabricated, forged documentation for 3 years or more. Some of these foreclosure mills are operating in the same office and owned by the law firms prosecuting foreclosures. Maybe sooner than later these unethical, illegal practices will stop and the people responsible will be prosecuted for criminal violations, civil fines, and administrative grievances in which their licenses will be revoked.

But in the end we still have millions of homes whose title is at least clouded, probably defective and will soon become unmarketable as title companies realize the issues presented by fraudulent foreclosures by entities other than the creditor.

Wall Street Journal

April 3, 2010

U.S. Probes Foreclosure-Data Provider

Lender Processing Services Unit Draws Inquiry Over the Steps That Led to Faulty Bank Paperwork

By AMIR EFRATI and CARRICK MOLLENKAMP

A subsidiary of a company that is a top provider of the documentation used by banks in the foreclosure process is under investigation by federal prosecutors.

The prosecutors are “reviewing the business processes” of the subsidiary of Lender Processing Services Inc., based in Jacksonville, Fla., according to the company’s annual securities filing released in February. People familiar with the matter say the probe is criminal in nature.

Michelle Kersch, an LPS spokeswoman, said the subsidiary being investigated is Docx LLC. Docx processes and sometimes produces documents needed by banks to prove they own the mortgages. LPS’s annual report said that the processes under review have been “terminated,” and that the company has expressed its willingness to cooperate. Ms. Kersch declined to comment further on the probe.

A spokesman for the U.S. attorney’s office for the middle district of Florida, which the annual report says is handling the matter, declined to comment.

The case follows on the dismissal of numerous foreclosure cases in which judges across the U.S. have found that the materials banks had submitted to support their claims were wrong. Faulty bank paperwork has been an issue in foreclosure proceedings since the housing crisis took hold a few years ago. It is often difficult to pin down who the real owner of a mortgage is, thanks to the complexity of the mortgage market.

During the housing boom, mortgages were originated by lenders, quickly sold to Wall Street firms that bundled them into debt pools and then sold to investors as securities. The loans were supposed to change hands but the documents and contracts between borrowers and lenders often weren’t altered to show changes in ownership, judges have ruled.

Related Documents

Documents processed by LPS that said an entity called “Bogus Assignee” owned the mortgage:

That has made it hard for banks, which act on behalf of mortgage-securities investors in most foreclosure cases, to prove they own the loans in some instances.

LPS has said its software is used by banks to track the majority of U.S. residential mortgages from the time they are originated until the debt is satisfied or a borrower defaults. When a borrower defaults and a bank needs to foreclose, LPS helps process paperwork the bank uses in court.

LPS was recently referenced in a bankruptcy case involving Sylvia Nuer, a Bronx, N.Y., homeowner who had filed for protection from creditors in 2008.

Diana Adams, a U.S. government lawyer who monitors bankruptcy courts, argued in a brief filed earlier this year in the Nuer case that an LPS employee signed a document that wrongly said J.P. Morgan Chase & Co. had owned Ms. Nuer’s loan.

Documents related to the loan were “patently false or misleading,” according to Ms. Adams’s court papers. J.P. Morgan Chase, which has withdrawn its request to foreclose, declined to comment.

Linda Tirelli, a lawyer for Ms. Nuer, declined to comment directly on the case.

Ms. Kersch said LPS didn’t actually create the document and that the company’s “sole connection to this case is that our technology and services were utilized by J.P. Morgan Chase and its counsel.”

While the majority of foreclosures go unchallenged, some homeowners have won the right to keep their homes by proving the bank couldn’t show, on paper, that it owned the mortgage.

Some lawyers representing homeowners have claimed that banks routinely file erroneous paperwork showing they have a right to foreclose when they don’t.

Firms that process the paperwork are either “producing so many documents per day that nobody is reviewing anything, even to make sure they have the names right, or you’ve got some massive software problem,” said O. Max Gardner, a consumer-bankruptcy attorney in Shelby N.C., who has defended clients against foreclosure actions.

The wave of foreclosures and housing crisis appears to have helped LPS. According to the annual securities filing, foreclosure-related revenue was $1.1 billion last year compared with $473 million in 2007.

LPS has acknowledged problems in its paperwork. In its annual securities filing, in which it disclosed the federal probe, the company said it had found “an error” in how Docx handled notarization of some documents. Docx also has processed documents used in courts that incorrectly claimed an entity called “Bogus Assignee” was the owner of the loan, according to documents reviewed by The Wall Street Journal.

Ms. Kersch said the “bogus” phrase was used as a placeholder. “Unfortunately, on a few occasions, the document was inadvertently recorded before the field was updated,” she said.

Write to Amir Efrati at amir.efrati@wsj.com and Carrick Mollenkamp at carrick.mollenkamp@wsj.com

Filed under: bubble, CDO, CORRUPTION, credit unions, currency, Eviction, expert witness, Fannie MAe, foreclosure, foreclosure mill, Forensic Analysis Workshop, GTC | Honor, HERS, Investor, MODIFICATION, Mortgage, Motion Practice and Discovery, securities fraud, Securitization Survey, Servicer, STATUTES, workshop Tagged: AMIR EFRATI, CARRICK MOLLENKAMP, civil fines, cloud on title, creditor, criminal violations, defective title, Docx LLC, fabricated, foreclosure mills, forged documentation, fraudulent foreclosures, HERS, J.P. Morgan Chase & Co, Kersch, licenses, Linda Tirelli, LPS, Michelle Kersch, unmarketable title, Wall Street Journal

Apr

DISCOVERY AND MOTION PRACTICE: SHOW ME THE BOND

By LH | Foreclosure Blog News, Homeowner Resources

6215Leave a Comment2010-04-06+14%3A52%3A13LH

REGISTER NOW FOR DISCOVERY AND MOTION PRACTICE WORKSHOP

SHOW ME THE BOND!: 9th CIRCUIT AFFIRMS BACKDOOR REQUIREMENT FOR ENHANCED “CREDITOR” DISCLOSURE REQUIREMENTS IN CHAPTER 13 PLAN: SEE chapter 13 debtorsHerrera Monroy opinion 09-1175 (9th Cir BAP 01 05 2010)

Among the things we will cover at the May workshop on Motion Practice and Discovery, are the many ways the pretender lender lenders are obfuscating the truth. Practitioners and litigants need to know the progression of building a case and the progression of presenting a case. They are not the same thing. Pleading-Motions-Hearings-Argument-Exhibits-Raising Issues of Fact- Discovery-Evidentiary hearings is the rough order of things while lawyers may have stylistic differences. Here are your bullet points when you go to court:

The money for the funding of the borrower’s loan came from the investor. Thus the borrower is or at least was the debtor and the investor is or at least was the creditor. In old style transactions the borrower would sign a note and it would be kept by the bank that gave him the loan. Why? Because the note was evidence, presumptively correct of the terms of the obligation that came into existence when the borrower accepted the benefits of the funding of the loan.
If the borrower did not execute a note, the obligation would still exist, if the borrower accepted the benefit of the funding the loan.
If the bank did not fund the loan, the note would not be evidence of any obligation, because there was no obligation. Signing a note does not create the obligation. It is the monetary transaction — the transfer of actual money — that gives rise to the transaction.
In securitized residential mortgages, the borrower signs a note which is conveyed to the investor as the lender by way of a mortgage backed bond. Hence the evidence of the holder of the note is in the bond.
The only place to start is where the bond was issued and to see the bond that conveyed the ownership interest in the loan pool to the investor.
So you want them to produce all the mortgage backed bonds that conveyed an ownership interest in the pool. Without the bond there is no evidence of who owns the note.
Remember the terms of the bond: (1) conditional non-recourse payment of interest; (2) conditional non-recourse payment of principal; and (3) conditional non-recourse conveyance of the borrower’s note. The SPV that issued the bond is not the actual Payor or obligor on the Bond. The mortgage backed bond is strictly dependent upon the various conditions, provisions and terms contained in the indenture, prospectus, pooling and service agreement and assignment and assumption agreement.
Hence legally the note is “given” to the investor both as collateral and as owner for the obligation acquired when the investor advanced funds to purchase these unregistered securities.
The reason why “show me the note” is so powerful is that 40% of them were destroyed and the pleaders have no credible story to explain why or when (key elements in establishing a “lost instrument”). But the reason it creates a trap door for borrowers is that 60% of the time they do have the note, or they create one using advanced color copying and printing technology off of copies. So if you don’t know the story behind securitization and the litigation tools — motions, discovery, compelling answers, use of qualified written requests etc. you are left with your mouth hanging open.
Since you know the loan has a 96% statistical probability of having been securitized, you know that an investor funded it, you have a forensic analysis and expert declaration to support and corroborate your pleading and argument, and a question of fact exists as to how and when the investor received and/or parted with possession of the note and under what circumstances.
The only way then that the transaction can be completely presented in court or out of court is for the them to show you the note AND SHOW YOU THE BOND WITH THE INVESTOR’S NAME ON IT. This requires a request to produce the minute books, trustee’s records and actual copies of the certificates, or failing that the names, addresses and contact information of the investor, so you can get a copy from them and find out if they still have it or if they ever had it.
You may find they never received the note. You may find that the “depositor” or “trustee” or any other “entity in the securitization chain either never received the note or doesn’t have it anymore. That doesn’t mean the obligation is dead. It means that the two pieces of evidence of the obligation are deed and the court has the power to reform the transaction into what “the parties” (i,e, the real parties) intended.
But it also means that if the investor, his agents, servants or employees or servicers or affiliates have received payoffs from insurance, credit default swaps or otherwise that the obligation would of necessity be correspondingly reduced. The corroboration of the existence of the likely reduction is the current opinion evidence and allegation that the entire transaction was based upon fraud — inflated appraisal of the property, inflated rating of the mortgage, inflated appraisal of the mortgage backed bond and inflated rating of the collateral resulting in the issuance of a fictitious security without the collateralization upon which both the borrower and the investor relied.
And the last point for today’s “lesson” is that you are entitled to the same presumptions that your allegations are true as they are — nothing more and nothing less. So you better know how to plead, and how to argue when you’re dealing with a presumption of credibility in the brand name of a big bank and a judge who isn’t interested in complex theories. That’s why your argument boils down to “show me the BOND.”
So don’t try to win the whole case in the first or even the 10th motion hearing. You should use each hearing as an opportunity to educate the Judge on a little more of securitization and plan out your educational curriculum, demonstrative exhibits, affidavits, declarations, and forensic analysis reports.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, expert witness, foreclosure, foreclosure mill, Forensic Analysis Workshop, GTC | Honor, HERS, Investor, MODIFICATION, Mortgage, Motion Practice and Discovery, securities fraud, Securitization Survey, Servicer, workshop Tagged: actual Payor or obligor on the Bond, argument, conditional non-recourse conveyance of the borrower's note, conditional non-recourse payment of interest, conditional non-recourse payment of principal, DISCOVERY AND MOTION PRACTICE, elements in establishing a "lost instrument, expert declaration, forensic analysis, HERS, request to produce the minute books, securitized, show me the BOND, trustee's records and actual copies of the certificates, unregistered securities

Apr

EVIDENCE OF THE OBLIGATION IS THE NOTE PLUS THE BOND

By LH | Foreclosure Blog News, Homeowner Resources

6138Leave a Comment2010-04-03+10%3A35%3A21LH

Assume that the transaction is a single transaction. The investor (creditor) lends the homeowner (debtor) money. Thus arises the obligation from the debtor to pay the creditor. In securitized loans a peculiar thing happens. The debtor signs a note like in all the old kind of mortgage loans, but the creditor gets a bond. As stated elsewhere on this blog this shell game leads to different or changing terms, conditions and even parties to the original obligation undertaken by the debtor, thus negatively impacting negotiability of the note, obligation and bond and probably negatively affecting the effectiveness of the security instrument (mortgage or deed of trust).

If the pretender lenders were legally correct in their premise the transaction would cease becoming an event and forever become a dynamic process wherein the beneficiary, payee, lender, and others would be constantly in motion depending upon the exigencies of the moment.

Their argument is that the reason their position should be sustained is the desirability of certainty in the marketplace. But their own behavior undermines their contention. By using nominees (e.g. MERS, or a “Trust” or “Trustee”) they fail to identify the real parties, whose identity is only revealed upon the happening of a future event or at least the passage of time. The hapless borrower is left waiting in limbo for the creditor to be revealed.

It is usually stated in law books that the note is evidence of the obligation, it is not the obligation itself. And it is further stated that the mortgage or deed of trust is incident to the note and not the note. In securitized residential mortgage transactions, the evidence of the obligation is the note PLUS the mortgage backed bond, because it is the bond which the investor has received.

The bonds are sold with wording similar to JP Morgan wording as follows:

“The underlying certificates represent beneficial ownership interest in fixed-rate and adjustable-rate, conventional, first lien residential mortgage loans, substantially all of which have original terms to stated maturity of 30 years.”

It therefore follows that the evidence of the obligation consists of the NOTE and the BOND, since it is the BOND indenture that provides for conveyance of an ownership of the loans.

The obligation arose when the funds were advanced for the benefit of the homeowner. But the pool from which those funds were advanced came from investors who purchased certificates of asset backed securities. Those investors are the creditors because they received a certificate containing three promises: (1) repayment of principal non-recourse based upon the payments by obligors under the terms of notes and mortgages in the pool (2) payment of interest under the same conditions and (3) the conveyance of a percentage ownership in the pool, which means that collectively 100% of the investors own 100% of the the entire pool of loans. This means that the “Trust” does NOT own the pool nor the loans in the pool. It means that the “Trust” is merely an operating agreement through which the ivnestors may act collectively under certain conditions. The evidence of the transaction is the note and the mortgage or deed of trust is incident to the transaction. But if you are following the money you look to the obligation.

The other peculiarity is that the name of the mortgagee or beneficiary is the name of an entity who serves as a nominee or in other words, in name only.

They never were the real beneficiary. In all securitized loans the named beneficiary is the nominal beneficiary — i.e., in name only. It means the Deed of Trust is void or voidable, but subject to reformation in court, which means they must file a lawsuit to reform the mortgage to comply with the real terms.

Filed under: foreclosure

Apr

Credit Card Companies geting tougher? FIGHT BACK with securitization defenses!

By LH | Foreclosure Blog News, Homeowner Resources

6115Leave a Comment2010-04-02+18%3A04%3A28LH

See the thing about the arrogance of these non-bank and bank financial institutions is they are rushing to get under the wire before the truth is revealed: they are not the creditor and they never were. Send your debt validation letters and don’t let them sue without filing a motion to dismiss the same as the foreclosure actions. They have nothing. They are just pretender lenders just like the mortgage companies.

Filed under: bubble, CDO, CORRUPTION, currency, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud Tagged: bailout, credit cards, disclosure, Federal reserve, fraud, Lender Liability, mortgage meltdown, pretender lender, securitization

Apr

John Crandall — Litton Mortgage — Promiss Solutions

By LH | Foreclosure Blog News, Homeowner Resources

6116Leave a Comment2010-04-02+17%3A45%3A28LH

If you have documents signed by John Crandall, here is some information on him that might assist in determining whether he was truly authorized to execute any documents. His close association with Litton indicates to me that he would be incapable of providing, knowing or even having access to a full accounting from the creditor although he might have information on the identity of the creditor in your loan. Note also the connection between Litton and Promiss Solutions. Depending upon the exigencies of the moment they either present themselves as independent or as agent for each other.

John.Crandall@littonloan.com. Litton Mortgage c/o Prommis Solutions. Brad Norwood. 770-
643-7288 Tel. 1-866-480-4949 Fax. Bradlv.Norwood@Prommis.com …
www.btruelaw.com/Loss%20Mitigation%20Contacts.pdf - Similar
Nov 29, 2008 … Litton Mortgage Loss Mitigation Department Randy Reynolds
rreynolds@litton.c-bass.com 713-966-8985. John Crandall John.Crandall@littonloan. …
myvesta.org/articles/articles/177/1/Mortgage-Lender…/Page1.html
setstats.
portfoliojc.com/ – Similar
713‐793‐4304 john.crandall@littonloan.com. Litton Mortgage. Reynolds, Randy. 713‐966‐
8985 rreynolds@litton.c‐bass.com. Litton Mortgage c/o Prommis Solutions …
www.ch13edky.com/LossMitContactList%2011-24-08.pdf – Similar
File Format: PDF/Adobe Acrobat – Quick View
May 14, 2009 … Litton Mortgage. Randy Reynolds rreynolds@litton.c-bass.com. 713-966-
8985. John Crandall. John.Crandall@littonloan.com. 713-561-8211 (phone) …
www.las13.com/forms/LossMitigationContactList5-14-09.pdf – Similar
El Paso, TX information and business listings such as John Crandall Appraisal Svc. … Home
Builders (2). Home Inspectors (1). Mortgage Companies (4) …
elpaso.bestoftexas.com/real…/John-Crandall-Appraisal-Svc-El-Paso/ – Cached
John Crandall sat at his office desk and thought the situation over. …. and I don’t care to
mortgage what I have and pay a high rate of interest when, …
www.classicreader.com/book/2579/20/ – Cached
Elder John Crandall of Rhode Island And His Descendents … Mortgage discharged in 1777.
15 Nov.1770 deeds land to Samuel Button, Jr. 8 Feb. …
www.myancestrallegacy.com/crandall/pafg54.htm – Cached
Title: Senior Mortgage Banker; Company: 1omni.com; Job History: 2 jobs. Jamar Crandall …..
John Crandall. Title: Manager of Public Power Finance Group …
www.spoke.com/info/index-person/cp-c%7B-173 – Cached
File Format: PDF/Adobe Acrobat – Quick View
defraud National City Mortgage Co. and National City Bank, … John Crandall. Christopher
Crandall. Yelitza Crux’ Roman. Colleen Curr. Lee Davis …
www.mortgagefraudblog.com/images/uploads/VTMullaneyIndictment

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, foreclosure mill, GTC | Honor, HERS, Investor, Mortgage, securities fraud Tagged: 713-561-8211, 713-966-8985, 713‐793‐4304, 770- 643-7288, 866-480-4949, Brad Norwood, Bradlv.Norwood@Prommis.com, documents, foresnic analysis, HERS, John Crandall, John.Crandall@littonloan., Litton Mortgage, Loss Mitigation Department, mortgagefraudblog.com, myvesta.org/articles/articles/177/1/Mortgage-Lender, National City Bank, National City Mortgage Co., Promiss Solutions, Randy Reynolds, rreynolds@litton.c-bass.com, TILA audit, VTMullaneyIndictment, www.btruelaw.com/LossMitigationContacts.pdf, www.las13.com/forms/LossMitigationContactList5-14-09.pdf

Apr

Forensic analysis, DISCOVERY: BofA Hides Behind Reconstrust Subsidiary

By LH | Foreclosure Blog News, Homeowner Resources

6113Leave a Comment2010-04-02+16%3A22%3A15LH

Editor’s Notes: Bank of America is smarter than most. It has created a web of companies whose function is to perform activities that hide the fact that it is Bank of America, and there are other pretender lenders who hide behind this entity who suddenly appears as “trustee” or some other entity claiming the right to enforce the note, foreclose the mortgage, lift the stay or whatever. Recontrust is one of them, and it agrees with its “customers” that it will never make a REAL claim to the obligation, note or mortgage. But it also agrees to make claims and pursue foreclosures as though they were the creditor, reporting back later on what happened.

RECONTRUST APPARENTLY HAS 12 EMPLOYEES. Yet it handles virtually the whole country for Countrywide Loans, BofA and others. From what I can see it is a sham corporation with sham functions much the same as MERS and other players invented to make this process more complicated. Taking the cue from one of our readers, I did some additional research and found no less than four addresses in four states for this company, obviously designed to give you the run-around. So if you contact one office you are told to contact another. And if you contest their right to issue a notice of default, notice of sale or file a foreclosure lawsuit or defend your own lawsuit to stop them they have plenty of newly fabricated paperwork to justify their position, because that is apparently all they do.

If you want to test this, just call them and ask about a property that is not in foreclosure. They have nothing. So the only reason we see them is to provide cover for the pretender lenders and give them plausible deniability if they come up against a judge or has their number and now wants to award damages, attorney fees, or fines.

Lien Release Services: Consistent. Accurate. Timely.

Lien Release Services

Phone:1-866-207-0573

Address:

1330 West Southern Avenue
Tempe, AZ 85282-4545
Mail Stop: TPSA-88

Default and Special Release Services

Phone:1-800-281-8219

Address:

2380 Performance Drive,
Richardson, TX 75082
Mail Stop: RGV-C4-450

Real Estate Owned (REO)
If you have questions or inquiries regarding REO purchases, unlisted purchases, investor-owned information, city violations, REO broker applications, REO vendor management, or broker complaints please call the REO Customer Escalation Team at: (866) 781-0029.

The following states have sold properties.
Click on the state to view information.

State	Number of Properties
Alaska	18
Arizona	1783
Arkansas	66
California	4430
Idaho	214
Mississippi	50
Montana	47
Nebraska	26
Nevada	586
Oregon	114
Tennessee	107
Texas	99
Utah	185
Virginia	156
Washington	135

The following states have properties
listed for Trustee Sale.

State	Number of Properties
Alaska	200
Arizona	18956
Arkansas	697
California	29862
Idaho	1528
Mississippi	190
Montana	493
Nebraska	129
Nevada	1560
Oregon	4584
Tennessee	480
Texas	1158
Utah	983
Virginia	515
Washington	1245

Our lien release departments, located in Simi Valley, CA, and Tempe, AZ, record documents in more than 3,600 jurisdictions.

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Filed under: bubble, CDO, CORRUPTION, currency, Eviction, expert witness, foreclosure, GTC | Honor, HERS, Investor, Mortgage, securities fraud, Servicer Tagged: (866) 781-0029, 1330 West Southern Avenue, 2380 Performance Drive, 75082, 800-281-8219, 866-207-0573, ATTORNEY FEES, AZ, AZ 85282-4545, bankofamericastore.com 2, BofA, CA, countrywide, Dallas, damages, Default and Special Release Services, Denise Sletten, Eva Tapia, file audits, fines, foreclosure services, FPS, HERS, Jeffrey Aiken, Jim Taylor, Kailash Bhuckory, lien release, Lien Release Services, Lorena Castillo-Ruiz, Mail Stop: RGV-C4-450, Mail Stop: TPSA-88, MERS, Real Estate Owned (REO), Rebecca Baney, ReconTrust, ReconTrust operating system, recontrustco.com, REO Customer Escalation Team, Richardson, Sam Shmikler, Simi Valley, Tempe, Texas, Trustee's Sale Officers, Trustee's Sale Processors, TSG, TX, unlisted purchases

Apr

Reg Z TILA Amendment requires new owners and assignees of mortgage loans to notify consumers of the sale or transfer

By LH | Foreclosure Blog News, Homeowner Resources

60721 Comment2010-04-01+13%3A31%3A54LH

The Federal Reserve Board has issued an interim final rule under Regulation Z to implement the recent Truth in Lending Act (TILA) amendment that requires new owners and assignees of mortgage loans to notify consumers of the sale or transfer.

While mostly helpful in foreclosure defense, the rule leaves open the question of ownership of the loans. Because of the practice of “assignment” of the loans to a special purpose vehicle, the Fed stopped there in its inquiry. If it had taken one step further it would have seen that the indenture to the mortgage backed bond conveyed an ownership interest in the loans supposedly assigned. it also leaves open the problem of whether the loans were accepted into the pool or were time-barred or were defective for failure to meet the requirements of recordation or recordable form set forth in the enabling documents.

The TILA requirement has been in effect since the May 20, 2009, enactment of the Helping Families Save Their Homes Act of 2009. Compliance with the specifics of the new rule is optional until January 19, 2010. As a result, new owners may (but need not) rely on the new rule immediately to ensure they are in compliance with TILA. Violations give rise to liability for statutory damages, including up to $4,000 per violation in individual actions or up to $500,000 in a class action.

The transfer notice requirement applies to all closed-end and open-end consumer-purpose mortgage loans secured by a consumer’s principal residence. It requires any person that acquires more than one mortgage loan in any 12-month period to provide a transfer notice without regard to whether the new owner would otherwise be a “creditor” subject to TILA. Mere servicers of mortgage loans and investors in mortgage-backed securities or other interests in pooled loans do not acquire legal title to loans and are not subject to the new rule. However, trusts or other entities acquiring legal title to the securitized loans are subject to the rule. The notice requirement is triggered by a transfer of the underlying loan, regardless of whether the assignment is recorded. Thus, assignees are not exempt from the duty to provide notice merely because the mortgage (as opposed to the note) is in the name of Mortgage Electronic Registration Systems (MERS), for example.

The new rule does not affect the separate notification requirement under the Real Estate Settlement Procedures Act (RESPA) for servicing transfers on mortgage loans. Accordingly, new owners who acquire both legal title to a mortgage loan and the servicing rights will need to satisfy both the TILA and RESPA notification requirements.

The notice must be given on or before the 30th calendar date after the date the new owner acquires the loan, with the acquisition date deemed to be the date that the acquisition is recognized in the new owner’s books and records. In the case of short-term repurchase agreements, the acquirer is not required to give the notice if the transferor has not treated the transfer as a loan sale on its own books and records. However, if a repurchase does not occur, the acquirer must give the notice within 30 days after it recognizes the transfer as an acquisition on its books and records.
The notice must be given even where the new and former owners are affiliates, but a combined notice may be sent where one company acquires a loan and subsequently transfers it to another company so long as the content and timing requirements are satisfied as to both entities.
The notice must contain the information specified by the new rule, including contact information for any agents used by an owner to receive legal notices and resolve payment issues.
The required information also includes a disclosure of the location where ownership of the debt is recorded. If a transfer has not been recorded in the public records at the time the notice is provided, a new owner may satisfy this requirement by stating that fact.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, expert witness, Fannie MAe, foreclosure, HERS, Investor, MODIFICATION, Mortgage, securities fraud, Servicer Tagged: agents, AGGREGATOR, consumer protection, contact information, creditor, foreclosure defense, legal notices, MERS, mortgage backed securities, mortgage loans, principal residence, Real Estate Settlement Procedures Act, Reg Z, resolve payment issues, RESPA, secured, statutory damages, TILA, violation

Mar

Wells Fargo, Option One, American Home Mortgage Relationship

By LH | Foreclosure Blog News, Homeowner Resources

5999Leave a Comment2010-03-31+04%3A47%3A00LH

Wells Fargo Bank, N.A. appears in many ways including as servicer (America Servicing Company), Trustee (although it does not appear to be qualified as a “Trust Company”), as claimed beneficiary, as Payee on the note, as beneficiary under the title policy, as beneficiary under the property and liability insurance, and it may have in actuality acted as a mortgage broker without getting licensed as such.

In most securitized loan situations, Wells Fargo appears with the word “BANK” used, but it acted neither as a commercial nor investment bank in the deal. Sometimes it acted as a commercial bank meaning it processed a deposit and withdrawal, sometimes (rarely, perhaps 3-4% of the time) it did act as a lender, and sometimes it acted as a securities underwriter or co-underwriter of asset backed securities.

It might also be designated as “Depositor” which in most cases means that it performed no function, received no money, disbursed no money and neither received, stored, handled or transmitted any documentation despite third party documentation to the contrary.

In short, despite the sue of the word “BANK”, it was not acting as a bank in any sense of the word within the securitization chain. However, it is the use of the word “BANK” which connotes credibility to their role in the transaction despite the fact that they are not, and never were a creditor. The obligation arose when the funds were advanced for the benefit of the homeowner. But the pool from which those funds were advanced came from investors who purchased certificates of asset backed securities. Those investors are the creditors because they received a certificate containing three promises: (1) repayment of principal non-recourse based upon the payments by obligors under the terms of notes and mortgages in the pool (2) payment of interest under the same conditions and (3) the conveyance of a percentage ownership in the pool, which means that collectively 100% of the ivnestors own 100% of the the entire pool of loans. This means that the “Trust” does NOT own the pool nor the loans in the pool. It means that the “Trust” is merely an operating agreement through which the ivnestors may act collectively under certain conditions. The evidence of the transaction is the note and the mortgage or deed of trust is incident to the transaction. But if you are following the money you look to the obligation. In most transactions in which a residential loan was securitized, Wells Fargo did not work under the scope of its bank charter. However it goes to great lengths to pretend that it is acting under the scope of its bank charter when it pursues foreclosure.

Wells Fargo will often allege that it is the holder of the note. It frequently finesses the holder in due course confrontation by this allegation because of the presumption arising out of its allegation that it is the holder. In fact, the obligation of the homeowner is not ever due to Wells Fargo in a securitized residential note and mortgage or deed of trust. The allegation of “holder” is disingenuous at the least. Wells Fargo is not and never was the creditor although ti will claim, upon challenge, to be acting within the scope and course of its agency authority; however it will fight to the death to avoid producing the agency agreement by which it claims authority. remember to read the indenture or prospectus or pooling and service agreement all the way to the end because these documents are created to give an appearance of propriety but they do not actually support the authority claimed by Wells Fargo.

Wells Fargo often claims to be Trustee for Option One Mortgage Loan Trust 2007-6 Asset Backed Certificates, Series 2007-6, c/o American Home Mortgage, 4600 Regent Blvd., Suite 200, P.O. Box 631730, Irving, Texas 75063-1730. Both Option One and American Home Mortgage were usually fronts (sham) entities that were used to originate loans using predatory, fraudulent and otherwise illegal loan practices in violation of TILA, RICO and deceptive lending practices. ALL THREE ENTITIES — WELLS FARGO, OPTION ONE AND AMERICAN HOME MORTGAGE SHOULD BE CONSIDERED AS A SINGLE JOINT ENTERPRISE ABUSING THEIR BUSINESS LICENSES AND CHARTERS IN MOST CASES.

WELLS FARGO-OPTION ONE-AMERICAN HOME MORTGAGE IS OFTEN REPRESENTED BY LERNER, SAMPSON & ROTHFUSS, more specifically Susana E. Lykins. They list their address as P.O. Box 5480, Cincinnati, Oh 45201-5480, Telephone 513-241-3100, Fax 513-241-4094. Their actual street address is 120 East Fourth Street, Suite 800 Cincinnati, OH 45202. Documents purporting to be assignments within the securitization chain may in fact be executed by clerical staff or attorneys from that firm using that address. If you are curious, then pick out the name of the party who executed your suspicious document and ask to speak with them after you call the above number.

Ms. Lykins also shows possibly as attorney for JP Morgan Chase Bank, N.A. as well as Robert B. Blackwell, at 620-624 N. Main street, Lima, Ohio 45801, 419-228-2091, Fax 419-229-3786. He also claims an office at 2855 Elm Street, Lima, Ohio 45805

Kathy Smith swears she is “assistant secretary” for American Home Mortgage as servicing agent for Wells Fargo Bank. Yet Wells shows its own address as c/o American Home Mortgage. No regulatory filing for Wells Fargo acknowledges that address. Ms. Smith swears that Wells Fargo, Trustee is the holder of the note even though she professes not to work for them. Kathy Smith’s signature is notarized by Linda Bayless, Notary Public, State of Florida commission# DD615990, expiring November 19, 2010. This would indicate that despite the subject property being in Ohio, Kathy Smith, who presumably works in Texas, had her signature notarized in Florida or that the Florida Notary exceeded her license if she was in Texas or Ohio or wherever Kathy Smith was when she allegedly executed the instrument.

Filed under: bubble, CDO, CORRUPTION, Eviction, expert witness, foreclosure, foreclosure mill, GTC | Honor, HERS, Investor, Mortgage, securities fraud, Servicer Tagged: 120 East Fourth Street, 2010, 2855 Elm Street, 419-228-2091, 419-229-3786, 45201-5480, 45202, 45801, 45805, 513-241-3100, 513-241-4094, 620-624 N. Main stree, agency agreement, agency authority, America Servicing Company, American Home Mortgage, appearance of propriety, as trustee, Assistant Secretary, bank charter, beneficiary, Cincinnati, co-underwriter, commercial bank, conveyance of a percentage ownership in the pool, creditor, DD615990, Depositor, documentation, Florida Notary, foreclosure, funds were advanced, HERS, HOLDER, holder of the note, homeowner, indenture, investment bank, Irving, JP Morgan Chase Bank, Kathy Smith, lender, LERNER, Lima, Linda Bayless, money, MORTGAGE BROKER, N.A, N.A Trustee, November 19, Obligation, Oh, Ohio, Option One, Option One Mortgage, Option One Mortgage Loan Trust, Option One Mortgage Loan Trust 2007-6 Asset Backed Certificates, P.O. Box 5480, P.O. Box 631730, Payee, pooling and service agreement, presumption, property and liability insurance, Prospectus, repayment of principal non-recourse, Robert B. Blackwel, SAMPSON & ROTHFUSS, securities underwriter, securitization chain, securitized loan, Series 2007-6, Suite 200, Suite 800, Susana E. Lykins, Texas, title policy, trust, Wells Fargo, Wells Fargo Bank

Mar

Wells Fargo, Option One, American Home Mortgage Relationship

By LH | Foreclosure Blog News, Homeowner Resources

5998Leave a Comment2010-03-31+04%3A47%3A00LH

Mar

Non-Profit Lenders Step in to Provide Post-Foreclosure Modification

By LH | Foreclosure Blog News, Homeowner Resources

5855Leave a Comment2010-03-26+17%3A07%3A44LH

Editor’s Note: Principal reduction can be achieved in more ways than one. Here Non-profit Lenders see the clear opportunity to buy mortgages from dubious sources and then enter into new mortgages with the homeowner thus preventing eviction and restoring the homeowner to non-distress status.

The problem here is that title is not clear and eventually there is going to be a day of reckoning. The underlying theme here is that principal reduction is the ONLY way this mess will be cleared up and getting it right about WHO can sell a mortgage, execute a satisfaction of mortgage, or otherwise enforce or foreclose a mortgage is still in flux.

The reason is that it is in flux is that Judges and lawyers are just starting to get the the counter-intuitive idea that the finance sector actually set out to make bad loans because that was how they made money.

It’s not counter-intuitive if you realize that the real creditor is the investor who put up the money and all the rest are pretenders who pocketed a big portion of the proceeds of securities sale before funding mortgages. It is those pretenders who are “selling” and “enforcing” the “loans.”

My suggestion is that regardless of how and with whom you resolved your mortgage dispute, a quiet title action needs to filed naming all potential claimants in which a Judge declares the rights of the parties and confirms your title subject to whatever new mortgage or modified mortgage you executed. I don’t see any other immediate way to resolve the title problems

March 21, 2010

Finding in Foreclosure a Beginning, Not an End

By JOHN LELAND

BOSTON — Jane Petion lived in her home for 15 years and saw its value rise slowly, rise rapidly and, when the housing bubble burst, plunge at a sickening pace that left her owing $400,000 on a house worth closer to $250,000. Last June, her lender foreclosed on the property. The family received notices of eviction and appeared in housing court.

Then they discovered a surprising paradox within the nation’s housing crisis: Their power to negotiate began after foreclosure, rather than ending there.

In December Ms. Petion signed a new mortgage on her house for $250,000, with monthly payments of less than half the previous level. She and her husband now have a mortgage they can afford in a neighborhood that benefits from the stability they provide. A nonprofit lender made the deal possible by buying the house from her original mortgage company and selling it to her for 25 percent more than its purchase price — a gain to hedge against future defaults.

“It was exactly what we needed to get back on our feet,” said Ms. Petion, who works for a state agency. “We have income. But another bank, it would have been easy to look at our foreclosure and say, ‘I’m sorry, we have nothing for you now.’ ”

This counterintuitive solution — intervening after foreclosure rather than before — is the brainchild of Boston Community Capital, a nonprofit community development financial institution, and a housing advocacy group called City Life/Vida Urbana, working with law students and professors at Harvard Law School.

Though the program, which started last fall, is small so far, there is no reason it cannot be replicated around the country, especially in areas that have had huge spikes in housing prices, said Patricia Hanratty of Boston Community Capital. “If what you’ve got is a real estate market that went nuts and a mortgage market that went nuts, what you’ve got is an opportunity.”

Two years into the nation’s housing meltdown, and after hundreds of billions of dollars of federal rescue programs, government officials and housing advocates denounce the unwillingness of lenders to adjust the balances on homes that are worth less than the mortgage owed on them.

Research suggests that such disparity, rather than exotic interest rates, is the main driver of foreclosures, in tandem with a job loss or another financial setback. The financial industry lobbied aggressively to defeat legislation that would empower bankruptcy judges to adjust mortgage balances to properties’ market value.

That reluctance, however, eases after foreclosure, when lenders find themselves holding properties they need to unload, Ms. Hanratty said.

“We found, frankly, the industry wasn’t ready to do much pre-foreclosure,” she said. “But once it was either on the cusp of foreclosure or had been taken into the bank portfolio, banks really do not want to hold on to these properties because they don’t know how to manage them, don’t know what to do with them.”

Working with borrowed money, Boston Community Capital buys homes after foreclosure and sells or rents them to their previous owners, providing new mortgages and counseling to the owners, who typically have ruined credit. During the process the families remain in their homes. Since late fall it has completed or nearly completed deals on 50 homes, with an additional 20 in progress, Ms. Hanratty said. The organization is now trying to raise $50 million to expand the program.

Steve Meacham, an organizer at City Life/Vida Urbana, is one reason banks may be willing to sell their foreclosed properties to Boston Community Capital. When families receive eviction notices, his group holds demonstrations or blockades outside the properties, calling on lenders to sell at market value. It also connects the residents with the Harvard Legal Aid Bureau, whose students work to pressure lenders to sell rather than evict by prolonging eviction and “driving up litigation costs,” said Dave Grossman, the clinic’s director.

“So they’re being defended legally, and we’re ramping up the pressure publicity-wise,” Mr. Meacham said. “And B.C.C. came in; they had a part that buys properties and a part that writes mortgages. It wouldn’t work without all three.”

A focus of the program has been the working-class neighborhood of Dorchester, where home prices dropped 40 percent between 2005 and 2007, compared with a 20 percent drop statewide, according to research by the Federal Reserve Bank of Boston. Foreclosures and delinquencies there are more than twice the state average, the bank found.

In such neighborhoods, lenders and residents are hurt by evictions, which often leave vacant properties that invite crime and drive down values of neighboring houses, Ms. Hanratty said. “So it’s in the lenders’ interest to get fair market value as quickly as possible, and in the interest of the community to have as little displacement as possible.”

The program is not a solution for all lenders or distressed homeowners. After months of post-foreclosure negotiations with her bank, Ursula Humes, a transit police detective, is waiting for her final 48-hour eviction notice. Her belongings are in boxes.

Mrs. Humes owed $440,000 on her home; her lender offered to sell it to Boston Community Capital for $260,000. But after assessing Mrs. Hume’s finances, the nonprofit asked for a lower selling price, and the lender refused.

On a recent evening, Mr. Grossman of the Harvard law clinic counseled Mrs. Humes on her options. “This is a case that doesn’t have a happy ending,” Mr. Grossman said.

Mrs. Humes said, “I depleted my retirement account and everything I owned, but I’m still going to lose it.”

Many commercial lenders, similarly, would shy away from such a program because it involves writing mortgages for borrowers who have already defaulted once — a high risk for a small reward.

For other homeowners, though, the program is a rescue at the last possible second. Roberto Velasquez, a building contractor, lost his home to foreclosure last November, owing the lender $550,000. After extensive wrangling, during which his family stayed in the house, he bought it again in March for $280,000, a price he can afford.

On the night after he closed, he joined other members of City Life/Vida Urbana at a foreclosed four-unit building in Dorchester from which most of the tenants had been evicted. A group of artists projected videos on sheets in the windows, showing silhouettes of families re-enacting their last 72 hours before eviction. Garbage filled one of the units. Mr. Velasquez said it hurt to stand amid such loss, but he was jubilant at his own perseverance.

“We’ve been fighting for so long,” he said, “and we win, because we’re still in the house.”

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud Tagged: clear title, distressed homeowners, JOHN LELAND, modification, mortgage modification, Non-profit lenders, Ny Times, Post-foreclosure relief, principal reduction, quiet title, title problems

Mar

Follow the Trail —Don’t get lost in the documents

By LH | Foreclosure Blog News, Homeowner Resources

5812Leave a Comment2010-03-25+15%3A49%3A10LH

I THOUGHT THIS COMMENT WAS WORTHY OF MAKING INTO A POST.

See for Deutsch bank references Prospectus offered all over the world: Anyone who had a Deed of Trust with: Indymac, Wells Fargo, Countrywide, GMAC, Ocwen, American Home, Residential Funding Company, Washington Mutual Bank, BofA, and many others you might want to check this link out. SHARPS%20CDO%20II_16.08.07_9347

Editor’s Note: The only thing I would add is that the obligation arose when the borrower executed a note, but the creditor got a securitized bond with different terms, deriving its value from your note and thousands of others. Once you realize that the obligation is NOT the same as the Note, which is only EVIDENCE of the obligation, and that the MORTGAGE is NOT the obligation, it is only incident to the note, THEN you will understand that following the money means following the obligation, not the note or the mortgage. And figuring out what effect there was on the obligation at each step that the note was transferred, bought or paid, is the key to understanding whether the note became a negotiable instrument, and if it did, if it retained that status as a negotiable instrument.

FROM Jan van Eck

to foreclosurefight:

What you are missing in your attempt to analyze this is that you are trying to follow the “mortgage,” not the Note. the reason you are doing this is that only the “mortgage,” as the Security Instrument, is being recorded on the land records – so it is all you get to see.

the reason your adversaries, whoever they really are, “withdrew” from the relief from Stay Motion in the BK Court is that they do not have the Note. Somebody else does. And you have no clue as to who that is.

You have to start by determining what has happened to the Note, and how the Indorsements on the Note flow. And you have not seen the Note, not in years, so the raw truth is that you have no clue.

the “mortgage” never went into any “Trust.” Mortgages do not go into trusts. Only the Note (“maybe”) went into a trust – and only if it had proper Indorsement. Since Deutsche is involved, you can safely bet that it did not. Deutsche is NOTORIOUS for perpetrating fraud on the Courts and by fabricating documents. You may assume that EVERYTHING that Deutsche shows up with is a fraud, and has been fraudulently fabricated, typically in their offices on Liberty Street in Downtown Manhattan NY.

What is missing in your convoluted chain of title is that there was a ton of other parties involved in setting up that “Trust”, including some Delaware sham entity known as the “Depositor,” and then another sham known as the “Seller,” and more. When you burrow through that Prospectus you will find those entities listed. Now you have to dig out the Note, and find if those entities are individually and sequentially listed on the Note by consecutive Indorsements. Since Deutsche had their sticky fingers in the pie, you already know that they did not.

What State are you in? Yes, you need new counsel. You should never have gotten into this with old counsel.

You can still defeat them, but you probably will have to go file in District (Federal ) Court. You will have to sue Deutsche. Think in terms of suing them in the USDC for the Sou.Distr. NY, in White Plains, NY. Now you are not tangled up in the State-Fed politics of your local judges.

You cannot ask for Quiet title as you are asking for that in the State Court. You have to go in with entirely new grounds or they will not hear your case. So you sue them for fraud in interstate commerce. Try the “Commerce Clause” in the US Constitution (Amendment 16? I forget), to try to get “jurisdiction.” You get “venue” easily as Deutsche Bank is in NY. You do not need to show up; you just file and do your papers by mail. If yo ask for enough money, e.g. 40 million, then DB has something to start worrying about.

Right now, DB has no downside. If they lose, all they lose is some paper on some worthless piece of property in some state that is flooded with empty foreclosed houses that nobody can sell. So what do they care? DB probably does not even know or care that your lawsuit is going on; you are just dealing with lawyers that are running up their tab with DB, and DB has so many tabs that they do not try to keep track of it all. So you have to expose them to some serious hurt. A gigantic lawsuit is a good place to start.

You may assume that everything DB and those attys produce is utterly fraudulent. I have seen documents produced where the entire Trust Agreement was fabricated, and notarized by a notary who did not even get his first commission until two years after he swore that the parties were standing in front of him. Welcome to Wall Street banks – the international predator banks.

Besides Deutsche, Credit Suisse is also notorious for this type of flagrant fraud upon our Courts.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud Tagged: American Home, Bank of MAerica, Commerce Clause, countrywide, Credit Suisse, DEED OF TRUST, Deutsch Bank, Fabrication of documents, fraud upon the court, GMAC, Indorsements, INDYMAC, Liberty Street, Manhatten, Mortgage, negotiable isntrument, note, Obligation, Ocwen, Residential Funding Company, Trust Agreement, Washington Mutual Bank, Wells Fargo

Mar

Repossession hell: 5 extremely wrongful foreclosures

By LH | Foreclosure Blog News, Homeowner Resources

56691 Comment2010-03-21+16%3A57%3A43LH

Editor’s Note: The primary reason for foreclosing on the wrong house is that the wrong party (not the creditor) is initiating the foreclosure and therefore lacks sufficient information about the loan, the property or the debtor.

These events are corroboration of stories previously published showing that loans were placed in “pools” even though they never closed and therefore didn’t exist. The mere application of a loan was sufficient for “assignment” of the “loan.” And let’s not forget that the “assignment” typically violates even the terms of the PSA either as to time cut-off or the requirement of recording or recordable form.

Repossession hell: 5 extremely wrongful foreclosures

The Pittsburgh woman whose bank ‘accidentally’ took everything she owned—even her macaw parrot—plus 4 more homeowner horror stories

posted on March 19, 2010, at 12:00 PM

Home foreclosures: The opposite of the American dream. Photo: Corbis

A Pittsburgh woman is suing the Bank of America after it wrongfully foreclosed on her home, ransacking her possessions, cutting power lines, padlocking her doors, and confiscating her pet parrot. Angela Iannelli, 46—who was away when repo men made off with her beloved blue macaw, Luke—says she’s now “afraid to set foot in her house.” She’s filed a civil suit claiming that bank representatives refused to reveal Luke’s “whereabouts” and told her they “were tired of hearing from her.” (Watch an ABC report about Angela Iannelli’s foreclosed home.) Here, four more victims of erroneous repossession:

They took her wedding dress
Last December, Nilly Mauck, 31, came home to find her décor brutally simplified. Contractors assigned to repossess condo No. 1156 had mistakenly emptied No. 1157, her Las Vegas apartment of two years. Though she’s demanded “$100,000 to $200,000″ in compensation for them taking, well, everything (including her wedding dress), the Realtor has offered only $5,000. Mauck says she’s seeking legal advice and learning “to live with the clothes on her back.”

Wrong house, but thanks for rotten halibut
Dr. Alan Schroit got a “putrid” surprise when he arrived at his Galveston, Texas, vacation home last October. Bank of America (“with which he has neither a relationship nor a mortgage”) had repossessed his home and turned off the utilities, leaving 75 pounds of frozen salmon and halibut (spoils of an Alaskan fishing trip) to rot in the fridge. Schroit, who’d been planning to grill the fish for 30 guests the next night, is suing the bank.

Luckily, he was not in a mood to swim
Kissimmee, Fla., resident Denroy Bell was living in London, England, when a confused Kissimmee bank attempted to foreclose on his Florida home in 2008. The sloppy institution, Citi-Residential, changed the locks and drained the swimming pool. “It was like an army came up and took over the house,” said Esther Goshop, Bell’s neighbor. Unusually gracious, Bell has asked only that Citi-Residential refill his pool and restore his locks.

Promises, promises …
A jury punished Countrywide Home Loans in January 2009 for failing to notice that it was repossessing and selling the wrong Las Vegas condo back in 2003. Sgt. Gerald Thitchener and his wife, Katrina, absent at the time, were awarded $3.4 million in damages. “[Countrywide] never even said they were sorry,” noted one juror, “[though they did say] it would never happen again.”

Filed under: foreclosure

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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

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

By WILLIAM GLABERSON

Learning How to Fight the Collector

By ANDREW MARTIN

California homeowners file class action suit against Bank of America for withholding TARP funds

The obligation rises when the money is funded to the borrower and extinguished when the creditor receives payment — regardless of who they receive the payment from (pardon the grammar).

Fed Shouldn’t Reveal Crisis Loans, Banks Vow to Tell High Court

Lehman Channeled Risks Through ‘Alter Ego’ Firm

By LOUISE STORY and ERIC DASH

SHOW ME THE BOND!: 9th CIRCUIT AFFIRMS BACKDOOR REQUIREMENT FOR ENHANCED “CREDITOR” DISCLOSURE REQUIREMENTS IN CHAPTER 13 PLAN: SEE chapter 13 debtorsHerrera Monroy opinion 09-1175 (9th Cir BAP 01 05 2010)

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Finding in Foreclosure a Beginning, Not an End

By JOHN LELAND

Repossession hell: 5 extremely wrongful foreclosures

The Pittsburgh woman whose bank ‘accidentally’ took everything she owned—even her macaw parrot—plus 4 more homeowner horror stories

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