News, Research & Insights for American Homeowners, Patriots & Constitutional Conservatives
Terrific.
The ruling’s a few days old but this morning’s Fox News interview with one of the plaintiffs and his lawyer makes for a timely blog peg. When I read about the case last week, I thought the court had upheld the banning because there’d been some sort of tension among the students over the shirts. [...]
A "stand-up guy"?
His lawyer calls former US Attorney Dennis Burke a “stand-up guy” for finally admitting that he leaked an internal Department of Justice memo to smear a whistleblower in the Operation Fast and Furious scandal. Wouldn’t a “stand-up guy” have blown the whistle himself rather than smear someone who did? Former Arizona U.S. Attorney Dennis Burke, [...]
"I want you to come clean, Mr. Cain."
A week after Politico published vague, second-hand accounts of possible sexual harassment by Herman Cain during his tenure at the National Restaurant Association, one woman has gone on the record with specific allegations from fourteen years ago. Sharon Bialek, described by her representative Gloria Allred as a single mom, says that Cain groped her — [...]
Vapors.
No video yet, but it sure sounds like that’s the end of that. For now. Who knew the big finale would end Sopranos-style? Bennett said his client sees “no value” in revisiting the issue now, but “stands by the complaint that she made.” Bennett said his client would disagree with Cain’s characterization of the alleged [...]
"I would challenge anybody that has these statements to be made to come forward..."
Three problems here. One: If ever there was a moment to light one up, this was it. Imagine how bad-ass this segment would have been with Block laying into Perry between drags on a Kool. A lost opportunity. Two: He claims that Politico’s using anonymous sources, but that’s not strictly true. They told Cain’s camp [...]
Confidentiality.
She wants to, but … she can’t because of the confidentiality provisions in the settlement agreement. That puts Cain in a tough spot. Even though it’s up to the NRA, not him, to waive those provisions, the media will want to know if he thinks they should. If he says no, it looks like he [...]
The Arizona Supreme Court currently has under review a mortgage documentation case, Vasquez v. Saxon Mortgage, Inc. Just by chance, the Court was on its annual visit to the University of Arizona law college, where I teach, for the oral argument on Sept. 22. So of course I was in the audience at the argument, along with my students from our new Mortgage Clinic and a related course, called the Mortgage Crisis. We’ve been analyzing and debating the opposing arguments since.
Although Arizona law is at issue, the questions presented may have resonance elsewhere. It is always hazardous to guess what any group of justices is thinking from the questions they ask, but of course, that’s what court watchers do. So here is my take: it was palpable that the bubble over the justices’ heads during the argument read: “Fixing this mess isn’t our job. Talk to the legislature.” And the burden of argument seemed to be on the homeowner side, to show where explicitly it says in the state’s statutes that any documentation is needed to conduct a non-judicial foreclosure sale. The most vocal members of the court seemed to join the lender side of the argument. As the lawyer for the Arizona Attorney General, arguing as an amicus on the borrower side, astutely noted in response to one loaded question, “That’s the bankers’ argument.” Alas, no member of the court raised the concerns of homeowners in general.
All Arizona homeowners (and I’m one) should care about having a transparent system of real estate ownership, including liens. Lax documentation affects property rights and real estate values. Foreclosure sales are a significant portion of all sales in Arizona these days, in some areas exceeding non-distressed sales. When purported owners of security interests in real estate pursue forced sales without having good evidence of a right to do so, prices are likely to be further depressed. Buyers may hesitate to show up at a foreclosure sale to buy from someone without an interest of record, and in cases where the property may be worth more than the debt outstanding, the absence of such buyers matters. The creditor will only bid in the loan amount. Also, even a very small number of mistaken foreclosures should concern us. Since most foreclosure sales in Arizona are non-judicial, after only 90-days’notice, they can easily go forward even if mistaken. Under the statutory scheme, later recourse is difficult at best.
The particular case is complex. It came to the Arizona Supreme Court on certified questions and a statement of facts from the Bankruptcy Court for the District of Arizona. When Deutsche Bank sought to foreclose on Julia Vasquez’s property non-judicially, she filed in bankruptcy to assert a predatory lending claim, but was barred by the statute of limitations, and then she sought to modify her loan in chapter 13. Halfway through the briefing period in the Arizona Supreme Court case, the lenders fired their lawyer and brought in new ones along with an army of heavy-hitting amici, from the Mortgage Bankers Association on down. Also during this period, the National Consumer Law Center, an amicus for the borrower/homeowner, discovered that the stipulated “facts” about how Deutsche Bank, the trustee for a securitized pool of loans, got the note were contrary to provisions of the sales and servicing agreement filed with the Securities and Exchange Commission (SEC). It seems that if Deutsche Bank got the note directly from the originator (Saxon Mortgage), as it said it did, it didn’t follow the securitization agreement designed to protect the investors in the pool for which the bank was trustee.
But let’s cut to the chase of the questions before the Arizona Supreme Court, awaiting decision. The questions boil down to: What does Arizona law require in the way of documentation to foreclose under a deed of trust (DOT), a type of real estate security interest, in a non-judicial sale? And why should anyone care? The Bankruptcy Court’s statement of facts includes that Deutsche Bank was assigned the note, but nothing is said about whether the note is a negotiable instrument. Indeed, use of the word “assigned” rather than “negotiated” suggests a non-negotiable instrument. The note, a copy of which is attached to the certified questions, provides for late fees, which may mean the note is not negotiable under Section 3-104(a) of the Uniform Commercial Code, which requires an “unconditional” promise, not a promise dependent in part on an event that may or may not occur. If the note isn’t negotiable, mere possession of it doesn’t by itself give a right to payment. Proof of the chain of assignments would be relevant to the question who currently owns the contract right to payment. This may be why the sale and servicing agreement (SSA) for this securitization, filed with the SEC, requires delivery to the investment pool’s trustee, Deutsche Bank, of “the original Mortgage note . . . with all intervening endorsements showing a complete chain of endorsement from the originator” as well as delivery of “each interim recorded assignment of such Mortgage, or a copy of each such interim recorded assignment of Mortgage. . . .” (Pp. 37-38)
As noted above, the loan was originated by Saxon Mortgage, and that happened back in 2005. There is no chain of endorsements on the note, and a written assignment of the deed of trust was executed and recorded only after an initiation of a foreclosure sale in 2008, with a purported retroactive effective date, to a few months earlier in 2008 (but long after a copy of a recorded assignment was supposed to be in the possession of the securitized trust, that is in 2005, as provided in the SSA, which contemplated transfers from Saxon Mortgage through at least one other Saxon entity, Saxon Asset Securities Company, to the trust, with Deutsche Bank as trustee, in order to make the trust bankruptcy-remote and the investments under it eligible for pass-through tax treatment).
In addition to whether the note is negotiable, other issues in the case are whether the security interest under the deed of trust was timely assigned or recorded. The Arizona deed of trust (DOT) statute, in Arizona Revised Statutes (A.R.S.) section 33-817, includes a provision that the security follows the contract obligation. However, the lack of clear proof of who owns the obligation (that is, through what chain of transfers), if not a negotiable instrument, and the belated effort in 2008 to assign the DOT directly from the originator to Deutsche Bank and to record Deutsche Bank’s DOT nterest at that time, both contrary to the SSA, raise questions about whether the note and security were separated and thus about who, if anyone, had rights to foreclose under the DOT. If no one did, Deutsche Bank might have to use a judicial foreclosure and go into court and prove its interest before trying to sell a home.
Because Deutsche Bank did not record an assignment of the DOT before it started the process of non-judicial foreclosure, there is an issue about compliance with the Arizona recording statute. The first sentence of A.R.S. section 33-411.01 requires that any document evidencing the transfer of “any legal or equitable interest” in real estate “shall be recorded by the transferor. . . within sixty days of transfer.” If Deutsche Bank got the interest in the DOT by virtue of assignment of a note in 2005, the assignment should have been recorded in the county records by 60 days later, not in 2008. A second sentence provides that in lieu of recording, “the transferor shall indemnify the transferee in any action in which the transferee’s interest in such property is at issue . . .,” a provision that is inapplicable as between a transferor and someone holding a prior interest in the property (that is the trustor/borrower, with its equitable ownership interest).
The recording statute goes on to deal with the effectiveness of unrecorded instruments of conveyance, explicitly mentioning deeds of trust and providing that unrecorded conveyances “shall be void” as to creditors and subsequent purchasers for value and without notice. A.R.S. 33-412.A. (And A.R.S. 33-818 repeats the importance of recording “assignment of a beneficial interest under a trust deed” as against subsequent purchasers for value.) So non-recording of assignment of an interest under a DOT, as in this case, certainly could dampen enthusiasm for purchasing at foreclosure, driving down prices. Buyers should be suspicious of a DOT sale initiated by someone not of record, because there might be an intervening claimant with priority.
In addition, A.R.S. 33-412.B provides that unrecorded instruments of conveyance “as between the parties and their heirs” shall be “valid and binding.” Notably missing from that provision is any reference to assigns. At the oral argument, one of the Arizona justices read this provision to the bankers’ attorney as though it supported that side of the argument, but of course Deutsche Bank and the borrower, Vasquez, were not both parties to an instrument. Deutsche Bank did not appear on the DOT (only Saxon Mortgage did). The formulation “parties, their assigns and heirs” or the like is common in the law; the pointed omission of assigns in the recording statute provision on the validity of unrecorded interests implies a lack of validity as between an assignee and the trustor. (The borrower, Vasquez, was the trustor who signed the DOT making Saxon Mortgage beneficiary; and the DOT was recorded in that form, with no further recording of any transfers prior to initiation of the foreclosure.)
At a minimum, the statute is ambiguous, saying that an unrecorded DOT conveyance is “void” against a good faith purchaser for value and “valid and binding” between immediate parties and their heirs. So where does the statute come down as between a trustor/borrower and an assignee from the beneficiary? The statute does not say either that the unrecorded remote assignee has a valid interest or an invalid interest, although it implies invalidity in the absence of recording. In these circumstances, it is open to the Court to interpret the statute according to the implication of invalidity. The recording statutes pre-date securitization, and the SSA here strongly suggests that the lender complex involved in this loan thought it necessary to document transfers of the note with a chain of endorsements and transfers of the DOT interest by recorded assignments. Securitizers could have complied with the law (as apparently intended under the SSA), or, if they wanted to be free not to provide documentation, they should have gotten statutory changes clearly saying so before proceeding with their new model. Instead, Deutsche Bank acted as though it knew the documentation was messed up, filing a recorded assignment with a purported retroactive effective date in 2008, only after initiating a foreclosure.
Now to perhaps the key question: does proper documentation matter? As I have already suggested, all homeowners in Arizona should care that real estate values not be dragged down by lenders’ failure to document who owns a loan, holds a security interest in a home, and thus who has a right to foreclose upon default. Deutsche Bank did not follow its own roadmap, laid out in the SSA filed with the SEC, for the documentation of the transaction. It was supposed to get delivery of both the note, with the chain of ownership established by endorsements, and a copy of a recorded assignment of the DOT. When purported owners of loans cannot crisply show that they are entitled to enforce, this will discourage potential buyers at DOT sales, with ripple effects for all homeowners. This is particularly true with the volume of distressed sales occurring during the current mortgage crisis, brought on by a spree of extreme risk-taking and now compounded by sloppy documentation (and failure to make modification deals that would be win-win, compared to foreclosure). With no competitors at a DOT sale, purported owners of a loan can buy with a credit bid at the loan amount; there is no reason to bid more even when the home might be worth more.
We should also care about mistaken foreclosures, which are a risk with a quick non-judicial process, and it would be unfortunate if the Arizona Supreme Court blesses sloppy procedures that can lead to them. The dimensions of that problem have not been studied, and we cannot assume it away.
Finally, borrowers have an interest in being able to find out who owns their loans. Servicers all too frequently refuse to say but also say they lack authority and refuse to approve modifications that would improve returns to investors while providing relief to borrowers. Having a placeholder in the real estate records makes it hard or even impossible to find out whom to approach about a modification. In 2010, Arizona’s legislature added a provision to the DOT statute (A.R.S. 33-808.01.A) requiring “the lender” (undefined) on a residential loan to contact the borrower at least 30 days before notice of sale to explore options to avoid foreclosure, showing a legislative interest in more workouts. Interpreting the recording statute to make assignees have to be of record, as implied by the Arizona recording statute, would make the entire system more coherent.
A homeowner from Tennessee called me today in a panic because she had just been notified that Bank of America is planning to sell her home at auction on October 19th. She was very upset, and even downright scared, truth be told. She’s disabled and has lived in the home for the past 16 years. She doesn’t know where she’d go, and doesn’t see how she could possibly move out in under a month.
Her name is Cynthia McMahan and she lives in Knoxville.
She also admitted to being quite confused, and understandably so, because she’s not in foreclosure. Nor, is she late on her mortgage payments.
I tried to explain to her that none of that mattered. Bank of America obviously wants her out, so she had better start packing.
She became even more upset. She explained that after a positively joyous year spent applying for a loan modification at Bank of America, making all of her trial payments and the rest, three months ago Bank of America offered her a permanent loan modification… and she signed the contract, accepted the deal, and has made all of her payments on time and as agreed.
“So what?” I replied. “Why should any of that mean that you get to keep living in your house?”
Silence. Clearly, I had her.
“But… I signed the contract they sent me, and I made all my payments…” her voice was trembling now and I could tell that she was less and less sure of her position.
“Who said that your home was to be auctioned off on October 19th?” I asked.
“A lawyer from Wilson & Associates PLLC in Little Rock, Arkansas. Her name is Shellie Wallace, Attorney at Law,” she replied.
“And did you call Bank of America to beg and plead?” I inquired.
“Yes,” she said. “But first they left me on hold for an hour, and then when the woman came back on she said there was nothing to worry about because I’m not in foreclosure… that I should put my trust in trust Bank of America and everything would be just fine.”
“Okay, so what’s the problem?” I asked.
“Well, I called that lawyer from Wilson & Associates to tell her that Bank of America said that I’m not even in foreclosure, and that my home isn’t going to be sold on October 19th,” she explained. “But she said the bank was wrong and that I’d be out on the street if I didn’t make some plans to live somewhere else.”
“Okay, so are you making plans to live somewhere else? I mean, that lawyer sounds like she knows what she’s talking about,” I said bluntly.
“But where will I go,” she cried out. I’m disabled. I’ve lived here 16 years. I made all my payments. I have nowhere to go…”
“Look, this is Bank of America we’re talking about here, so I really don’t see that you have much choice,” I said trying to be helpful. “What about a tent, do you own a tent?”
“Isn’t there anything you can do? I read your blog… can’t you help me in any way? Everyone said you’d be able to help,” she pleaded.
“I’m trying to help you… I mean, come on… who was it that came up with the tent idea? Me, right? So, don’t say I’m not trying to help. Sheesh. Okay, what about a homeless shelter? Is there a homeless shelter near where you live? Or, I know… how are you fixed for cardboard boxes?”
“This isn’t fair… it’s not right. Bank of America has been torturing me for over two years… I’ve done everything they asked, over and over again. And after all that… they’re going to sell my house right out from under me and there’s nothing I can do? How can that be? You have to help me… ” Her breathing was getting heavier as she spoke.
“I’m sorry, did you say something… I was just watching a Gomer Pyle re-run,” I explained. The one where Sergeant Carter makes Gomer go on a double date… that show always cracks me up… sorry, go on, what were you saying?”
She was sobbing now…
“Can you hold on for a sec,” I asked. “The dryer just buzzed and I don’t want my shorts to wrinkle. Hang on, I’ll be right back…”
“Oh my God,” she screamed into the phone…
“Okay, okay… don’t get your panties in a bundle… there is one thing I could try…” I said, not really having any idea what I was talking about at the time.
But then… all of a sudden… out of nowhere… it came to me. And the voice said… If you post it, they will come…
Just in case you’ve forgotten, the homeowner’s name is Cynthia McMahan from Knoxville.
And I’m just sure she’d be very appreciative if anyone could lob a call or an email on her behalf over to the nice trust worthy folks at Bank of America and maybe that nice lawyer too. So, what do you think, DOERS?
Let’s hit this one out of the park for Cynthia in Knoxville, shall we? Come on… did you have a frustrating day? Me too. So, here’s something to take all that frustration out on, what do you say? The woman is current… just signed her permanent loan modification three months ago. And now this?
I don’t know about you, but I’m damn tired of Bank of America torturing folks on a daily basis, especially the ones like Cynthia. Let’s do something memorable, shall we?
1521 Merrill Drive, Suite D-220
Little Rock, AR 72211
Phone: 501-219-9388
Email: swallace@wilson-assoc.com
Shellie Wallace is a Partner and Supervising Attorney of the Foreclosure Legal and Foreclosure Title Departments. She received her education from Arkansas Tech University (B.A., 1989, Highest Honors) and the University of Arkansas at Little Rock School of Law (J.D., 1992). She was admitted to the Bar of the State of Arkansas in 1992. She is a member of the Arkansas Bar Association, serving on the Debtor/Creditor and Real Estate Law Committees.
Matthew Task, Executive Relations, Office of the CEO (At BofA)
Phone: 813-805-4873
The word on the street is that if you call enough, Matthew Task will answer his phone eventually, but that sending emails directly to Bryan Moynihan generally gets a lot more attention.
Oh, and Bryan Moynihan… you should thank me for only sending my DOERS… ‘cause if they don’t take care of this… I’m coming… and hell’s coming with me. Fix this and fix it now…
Mandelman out.
And if you haven’t already donated in support of the documentary I’m in the middle of producing on the foreclosure crisis, you’re letting the rest of the homeowners down. It doesn’t matter how much… send a dollar for heaven’s sake… sign on as someone who wants the voice of homeowners to be heard. Seriously, what’s holding you back?
"It happened. It's terrible. That's life, okay? We move on."
It’s not an ATF agent who utters those magical words, it’s the Arizona gun dealer who was working with the ATF on Fast & Furious. He utters them to an ATF agent, though, to which she replies with a cryptic “mm-hmm.” Callousness — or strategy? However, the lawyer representing the Lone Wolf Trading Co. says [...]
Bank of America foreclosed on a home in Collier County, Florida. That’s certainly not news. The home’s owners, Warren and Maureen Nyerges, had paid cash for the property, so there was no mortgage on which to foreclose, but Bank of America foreclosed anyway… and that’s not news either. It may sound crazy, but it doesn’t even make the top 10 list of crazy where BofA or any other of the mortgage servicers are concerned.
I mean, as far as headlines go, “Bank of America Does Something Stupid,” is about as newsworthy as, “Cat Chases Mouse in Kentucky.”
The home’s actual owners hired a lawyer, Todd Allen, and a judge finally told Bank of America to give back the house they stole. Okay, that’s sort of news, I suppose, because all too often that doesn’t happen and the bank gets away with it.
And in this case, the judge even ordered BofA to pay the homeowner’s legal fees of $2,534. News? I don’t know… not to me.
Five months passed since the judge’s order and Bank of America still hadn’t paid the homeowners their twenty-five hundred and change… well… yawn and double yawn. Bank of America didn’t pay their bill yet. Yeah, like I’m shocked to hear that. Countrywide was supposed to pay homeowners something like $8 billion like two years ago and I haven’t heard anything about those checks going out either. So… big deal.
Now, don’t get me wrong, the homeowner’s lawyer showing up with the local Sheriff to repossess the bank’s desk and computers in order to satisfy the judgment entered against BofA… okay, that’s somewhat funny… hysterical even. Here’s how WINK News reported it:
The couple took their case to court and after a year and a half nightmare the foreclosure was dropped. A Collier County judge said Bank of America has to pay the couple’s $2,534 legal fees for the error. After more than five months the bank still hadn’t paid up. So, the homeowners’ attorney did just what the bank would do to get their money, legally seize their assets.
“I instructed the deputy to go in and take desks, computers, copiers, filing cabinets, including cash in the drawers,” Attorney Todd Allen told WINK News.
Outside the Bank of America on Davis Boulevard, several deputies stood by with movers ready to start hauling out the bank’s office supplies and furniture.
Inside, the homeowners’ attorney was locked out of the bank manager’s office by deputies while the bank manger tried to figure out what to do.
WINK News was quite proud of their reporting of this story, calling it: “A WINK News exclusive,” and crap like that. And, if course, the Internet lit up like Rockefeller Center’s Christmas tree at the news of a homeowner supposedly “foreclosing on Bank of America.”
Here’s WINK’s headline:
Tables Turn: Deputies and movers show up at bank to seize property for homeowner.
Tables turned? Which tables turned? I missed the tables turning, damn it.
Okay… look… I’m in this fight too and I know we can all use some good news… and just about anything might pass for being good news, at times. We’re up against the largest and most politically influential financial institutions the world has ever known. Oh, and don’t forget corrupt, disingenuous, heartless, morally bankrupt… you know… the words that go right along side “largest and most politically influential” when describing the to-big-to-fail banks of today.
So, it hasn’t been an easy fight to fight, and it won’t be an easy to one to win. There will be many setbacks and may times we who are fighting the banksters will feel like giving up. So, I get it that this story was one that everyone wanted to read and pass around to others… going viral, I think they call it. I must have received 200 emails containing a link to this story, for example. People went out of their way to pass it along… so… I don’t know… I guess that’s fine.
Here’s how the WINK News story ended, by the way:
After about an hour the bank finally cut a check to satisfy the debt, and no furniture was taken. A representative for Bank of America issued a statement saying they are sorry for the delay in issuing funds. They claim the original request went to an outside attorney who is no longer in business.
Awww, golly… see… the bank wasn’t trying to hurt anybody… it was just an error and they fixed it once it was brought to their attention. Why did that homeowner have to be such a bully… bringing the Sheriff and all that… probably scared some of the nice folks that were there to do their banking… probably some women and children there at the time too. Bad homeowner. Bad homeowner.
What the heck is going on around here? We’re now passing around a story about a stupid PR stunt by a lawyer that ended up making Bank of America look REASONABLE? Oh my God, people… listen to me here… this is pure insanity.
Say the following sentence out loud and slowly to a child or anyone under the age of 30, or someone from another country regardless of age:
BANK OF AMERICA STOLE SOMEONE’S HOUSE. THEY FORECLOSED ON A FREE AND CLEAR HOME… THEY TOOK IT FROM THE PEOPLE THAT OWN IT.
If you really tried saying that to someone as I suggested… how did the person react? Did he or she even believe you? What did his or her face look like, assuming he or she did believe you? What questions did they ask you after they heard the incredibly shocking and disturbing news?
Now try telling them that it took 18 MONTHS for the home’s owners to get the home back. EIGHTEEN MONTHS. A week would have been outrageous. Eighteen months is unconscionable, unless perhaps we’re talking about Russia-under-Stalin, or something like that.
And need I remind you that Florida is a judicial foreclosure state? So, that means that a judge allowed Bank of America to steal this home. And… what? Is the judge sorry? Does he get fired for that? Is he even aware of what his incompetence facilitated? Why wasn’t he quoted by WINK?
And about WINK News being so proud of their “exclusive.” Where were they during the last 18 months, while this family was living in absolute hell on earth? Did they lift a finger to publicize their plight? Did they even care?
And can we just talk for a minute about the penalty for stealing a home in this country? Because, come to find out… it’s just a fine… on the scale of maybe a parking ticket to a bank. Let’s see… stole a home… okay, that’ll be $2534. No problem let me make a call and I’ll get you a check.
That’s quite a deterrent, wouldn’t you say? For $2534, there might be some at banks capable of stealing someone’s home on purpose… you know, just for fun… because they’re pissed at them, or whatever… in order to watch the home’s owner twist in the wind helplessly for a year and a half.
“Come her… this is funny stuff… watch them move into a motel with their kids… Hahahahahaha… watch what happens next… the Dad shoots himself in the head, or has a heart attack… it’s priceless.”
Cheap entertainment, right? Where is the outrage at this having happened in this country? Has it just become the norm that people occasionally have their homes stolen from them, for a year or two from time to time? Cars have always been stolen on occasion, so now it’s homes too? Seriously?
Here’s an idea for the homeowner’s attorney Todd Allen. If you want to try a PR stunt… go get $2534 in one dollar bills, call up WINK NEWS… and the judge who allowed this to happen and levied the paltry fine… and set the money on fire in the middle of the down square.
Now, that might get someone’s attention… or maybe not.
NOW, ABOUT MISH SHEDLOCK…
Even Mike “Mish” Shedlock, who writes the blog Global Economic Analysis, which is one that I happen to like a great deal, doesn’t have a clue what’s going on in this country, in fact he spends most of his column covering this sensationalistic piece of garbage story talking about homeowners squatting while not paying mortgages.
He did get some of it right. He thought the $2534 fine was absurd, and that it took 18 months to correct… well, preposterous. So, that’s the Mish I know and love… one of the only sites out there to have gotten something right here. Here’s how he started…
Sensational cases like this make all the headlines, but are statistically meaningless, with a bordering on zero percentage.
That said, I side with the couple. Indeed I think suing for expenses only is a travesty of justice. Something like $100,000 would be more appropriate.
It is preposterous that it would take 18 months to determine there was never a mortgage. Unfortunately, that is how fooked the system is. Alternatively, that is how fooked Bank of America is. Most likely, it’s both.
But after that, Mish showed me that’s he’s been a little too busy reading up on the EU, because he knows nothing about what’s happening on the street where he lives. He said:
“… I do not object to huge fines for complete blatant stupidity as depicted by Bank of America in the above article. If there are more cases than I think, so be it.
First we need to start with a realistic assessment of errors and a breakdown of how serious those errors are. In the above instance, it is clear there was a severe error, and an errors that should have been rectified in 2 days, not 18 months. I do not object to punitive fines in such instances.”
IF THERE ARE MORE ERRORS, Mish? IF? Gee, well… maybe there are? Do you think? Could be? Might be? Gosh, I’m not sure? Should we do a study on this to see if we can’t find out? You know… get to the bottom of things?
This is proof positive for me that our government has no idea what to do because they have no idea what’s going on. Because if Mish doesn’t know, then no one does.
Then Mish goes on… and on… on a subject about which he clearly knows almost nothing. It’s really very unlike him, shockingly so… so I figure someone should say something.
“I see cases like the above trumped up as if they are common, and I see people clamoring to give homes to people free and clear because of a messed up MERS and “show me the note” objections.”
Do you really see all that, Mish? Where? Where exactly are the cases like this being “trumped up” as being common? They ARE common, and I’d love to see who’s doing the trumping. I’m not saying there are thousands of cases EXACTLY like this, but I’m sure as hell saying that there are tens of thousands… and maybe hundreds of thousands of cases where the abuse by the mortgage servicer would shock any thinking and caring person’s sensibilities… and where the laws of this country have unquestionably been broken.
Not that you’ll find them in many mainstream media outlets going back two years, but I think you can probably figure out what that might be, can’t you, Mish? And lately, I believe 60 Minutes has exposed quite a bit on the topic… unless of course you don’t consider banks committing fraud and forgery anything to get all worked up about.
Mish, for the record there are thousands that have been turned into virtual shut-ins as a result of the bank’s illegal behavior and tactics. Some have taken their own lives. Are they all, in your mind, just a bunch of deadbeats that bought homes they can’t afford… shame on them? I’ve read your column for two straight years… and you’re much smarter than that, so I can only assume you’ve spent no time on this issue… and if that’s the case, why start now when the only possibility is that you’ll either preach to the choir or embarrass yourself?
Unfortunately, he went on…
“The current focus is not on justice, but rather maximum punishment.
Those who want the courts to conclude that MERS has clouded every title, better be careful of what they wish. Should that be the ultimate ruling, no one who owns a home that went through the MERS system will currently have a valid title.
Want to sell your home? Sorry you can’t. Want to buy a home? Sorry, you better not because the title will be clouded. This is serious stuff. If the MERS opponents get their way, Housing in the US would literally shut down.
In their desire to punish banks and let people live in their houses for free, few have bothered to figure out the severe consequences on innocent parties who simply want to sell or buy a home.
Punishing the banks to the maximum extent possible to slay the evil MERS dragon, consequences be damned, should not be the focus. Instead, we need to determine actual damages before sensible fines can be levied. Meanwhile, and far more importantly, we need to determine what we need to do to fix this mess, determine how to fix or scrap MERS, and do everything we can to get the foreclosure backlog behind us.”
There’s just so much wrong with his take on this, I hardly know where to begin.
First of all, this is not all about MERS, in fact, very little of it is about MERS. Have you read the OCC’s Consent orders? MERS itself has said it will not be foreclosing going forward. Forget about MERS, Mish… there are much weightier issues with which to grapple here.
(At the bottom, I’ve provided links to ALL of the OCC’s COnsent Orders, by the way.)
And the current focus is neither on justice nor maximum punishment, as far as the foreclosure crisis is concerned. In fact, to-date I’d say the focus is on looking the other way and pretending we’ve just got a few million irresponsible deadbeats who need to be thrown out of their homes for the betterment of our economic society. So far, Mish, the focus has been moronic and uneducated, and since you’re neither of those things, it’s time to look closely for yourself.
We don’t need you fear mongering about how no one will be able to buy or sell a house in this country, because for one thing… that’s already the case, for the most part. And for another, if we don’t get some smart people like you looking at this crisis and making intelligent suggestions as to what might be done to fix it, no one will want to buy or sell a house in this country for 50 years, any more than they want to in other dual economies… as is the case in… let’s say the Philippines.
And no one with any credibility is advocating that the solution be that people should get to live in homes for free in order to punish banks. The banks have broken very serious laws… many of them and repeatedly, and they should face whatever punishment is deemed appropriate under the law. We’re still a country of laws, aren’t we Mish? How about we just stay with the whole law thing and let whatever the law says handle the punishing part? Sound fair?
And three are lots of innocent people that have either already been run over by this crisis or who will be very soon, and for years to come, if our current stance on this issue doesn’t change. Lots and lots… as in millions upon millions. And we need people like you to help stop that process, because it benefits no one. The foreclosure crisis today can NOT be accurately characterized as as bunch of people borrowing too much or an emerging inability to handle debt.
The crisis we are facing today is the fault of many things, as you know, and most notably the utter failure of our government to handle anything effectively… properly… with the use of a brain.
You don’t hear me coming out saying that you’re wrong about Greece, China, markets, debt ceilings, and the like… do you? No you don’t. Because I respect your views on those global economics issues. But on this, Mish… you’re just plain wrong.
I know, you want to work through the foreclosure backlog… we all want things to improve in the housing markets. But not at the expense you’re advocating. Not by allowing the economic and psychological slaughter of millions of working class Americans who’ve done nothing wrong and yet are being inappropriately vilified by those who don’t understand the situation in the least.
We’ve already got enough people doing that… we call them “BANKERS”. And they’re the people that coopt the courts in order to steal homes in an attempt to cover up the biggest case of fraud in the history of the world.
That’s all I have to say about that… for now. I wonder if this article will even reach 10 percent of the one about the homeowner foreclosing on Bank of America.
No, actually I don’t.
Mandelman out.
CONSENT ORDERS ISSUED BY THE OCC AFTER CONCLUDING THEIR INVESTIGATION:
I’m not a lawyer, so let’s be very clear about that, but I’m about to tell you how the law has always worked in this country, as far as I have understood it.
If you came to repossess my car, then you were required to be the person or entity that held the pink slip to my car, or you had to be working for the person or entity that held the pink slip to my car. If you were not the person or entity holding my pink slip, then you couldn’t come repossess my car.
In fact, if you came and repossessed my car but were NOT the person or entity holding my pink slip, then we had a phrase to describe that occurrence as well … you were STEALING MY CAR.
Pretty straightforward, right? I don’t even think you need to finish law school if that’s the extent to which you want to understand the law. And don’t let any of the attorneys that may be reading this around you try to make it more complicated, because it’s not. It is that simple… you can’t repossess someone’s car unless you’re the person or entity that holds the pink slip, or title, to that car… or are working for that person or entity, of course.
That’s the same way it’s supposed to work where houses are concerned. If you don’t make your mortgage payments, that doesn’t mean that everyone in the country is allowed to throw you out of your home… only the person or entity that holds your mortgage is supposed to be able to do that, right? Of course that’s right, silly. And don’t play semantics with me, that’s the deal.
But in this country today, there appears to be a new exemption to quite a few laws… it’s called the “But you didn’t make your mortgage payments” exemption, and when it comes into play, nothing else seems to much matter… you just lose.
Like, what if you don’t make your mortgage payments and the entity that comes to evict you from your home is one that you’ve never heard of before. And they have no proof whatsoever that they own your loan or represent the entity that owns your loan. Well, in general it’s tough cheese. The judge just says, “But you didn’t make your mortgage payments,” and that’s the end of that. And most everyone seems to be in agreement with this line of thinking.
You say, “But, your Honor… they’ve broken a dozen laws here… important laws… laws governing the transfer of property rights upon which the country has been built.” And the judge just gets annoyed saying, “But you didn’t make your mortgage payments,” and that’s the end of that. It’s almost like a get out of jail free card.
So, you say, “But your Honor, they’ve forged the documents, falsified the records, committed fraud on your court.” But he says it doesn’t matter… you didn’t make your mortgage payments… you have no rights and the party that’s foreclosing is now exempt from all of the laws that might otherwise apply. In fact, those laws are now reduced to being mere “technicalities.” And no one cares about technicalities as compared to you not making your mortgage payments.
So, I’m just wondering… don’t you think this sets kind of a dangerous precedent?
Let’s say that you’re not making your mortgage payments. And one night after dinner, the doorbell rings and you answer the door and it’s a representative of your mortgage servicer… and he punches you right in the face and then proceeds to beat the crap out of you.
And you end up in court. And the judge says, “But you didn’t make your mortgage payments, “ and dismisses the case. And you say, “But, your Honor… my mortgage servicer beat the crap out of me and that’s against the law, in fact there are all sorts of laws broken by him beating the crap out of me.” But the judge just replies, “But you didn’t make your mortgage payments, “ and that’s the end of that.
Do you think I’m being ridiculous? Why? What’s the difference between ignoring one set of laws and another set of laws? If you’re allowed to foreclose and kick someone out of his or her home without being the party that either owns the loan or represents the person who owns the loan… if you can ignore those laws, why can’t you ignore other laws too? Which laws apply, when one of the parties didn’t make his or her payments?
You see, I think the reason we have laws about the transfer of property is because it was important that someone not lose their property without those laws being followed. Whether one made their payments or not, wasn’t the point… the point was simply that the transfer of property rights has always been seen as a pretty big deal under the law, as far as I can tell.
I think the reason we let things get a little loose concerning foreclosure is that we trusted the bankers who were foreclose. In California, and all of the non-judicial foreclosure states, as far as I know, you don’t need to prove to the court that you hold the title to someone’s home in order to foreclose, and I’m pretty sure that the reason that was okay to our lawmakers was that they trusted the bankers… and they never envisioned not trusting them in that regard.
The problem is that today there is an abundance of evidence that says we cannot trust our bankers… quite often they lie, commit fraud on the courts, and in general are more than willing and able to fabricate and falsify whatever is required to foreclose on someone’s home… period. They don’t care at all… and they don’t get in trouble for it either, which I find the most disturbing part of the whole thing.
So, since its become clear that bankers lie, and cannot be trusted, we’re going to need to bring back the old laws about having to prove you’re the right party to be foreclosing on someone’s home before you’re allowed to do so. Several states have already done this… Hawaii and Arkansas, most recently. Arizona tried to pass such a law, but the banking lobby got to them and killed them both.
California had a bill that would have come close, but the banking lobby killed it in committee, for heaven’s sake. It was too dangerous to even debate in the legislature.
Some have said to me, “But Mandelman… the banks need to be able to foreclose or repossess when people don’t make their house or car payments.” And I reply… “No one is debating that point. Of course they can foreclose when payments are not made. If they’re the party who holds the beneficial interest, as the lawyers says, in the loan. If they lost the pink slip, they’ll have to correct that problem before they can come take back my car.”
It’s no different than if my car gets impounded for being parked in the wrong spot. When I show up to get it out of impound, I better have the registration, right? If I don’t, what am I told by the man at the impound lot? No ticket, no laundry, right?
We have laws about the transfer of property in this country and there are reasons for these laws. None of these laws say anything about banks only being required to follow them when someone is current on his or her payments.
Let’s stop making this more complicated than it needs to be… if the trust can prove that it does hold the note, that the note was properly assigned to that trust, that the note was endorsed… or whatever was supposed to happen according to the laws and rules, did in fact happen, then fine… foreclose away. But if that’s not the case, banker people… then you have to fix it… before you’re allowed to foreclose.
Sorry, and I know how unfair you think this is, but forging the documents isn’t an okay answer to this problem. Like if you want to repossess my car and you lost the pink slip, the acceptable answer is not to fake one on your laser printer and get Linda Green to sign it, got it? That’s not how we fix things in this country, and it doesn’t matter who made payments on time and who didn’t.
If that’s inconvenient, then so be it. And I have to think it’s a damn sight less inconvenient than what’s going on today, and if it’s even more inconvenient than that, then the bankers in this country have really screwed up bad, and we should all be shown what they’ve done.
I ran all of this by a lawyer friend of mine and here is the language from the Deed of Trust (page 23):
“Reconveyance. Upon payment of all sums secured by this security instrument, lender shall request trustee to reconvey the property and shall surrender this security instrument and all notes evidencing debt secured by this security instrument to trustee. Trustee shall reconvey the property without warranty to the person or persons legally entitled to it.”
So, apparently this language appears in EVERY Deed of Trust, including yours, your Honor. So when you want your pink slip/title/note in order to have your mortgage burning party, you may be disappointed to find that no one seems to have it.
And what about title insurance in the future? Will we be able to get it as a result of this whole mess being allowed to go on unchecked? I don’t think anyone really knows the answer to that question.
Lastly, the question always seems to come around to one of damages. How did the note not being properly endorsed to the trust and the trust being permitted to foreclosing anyway damage the homeowner? Again, it’s quite simple, really…
If someone is allowed to repossess my car even though that entity doesn’t hold my pink slip or work for the entity that holds my pink slip, then whoever repossessed my car STOLE IT. And that, by itself, sounds pretty damaging.
But what if someone shows up later and says they have the pink slip? What then? Will they be understanding and say, “Oh, someone else got it. No problem, we’re sorry to have bothered you. We’ll follow up with them.”
Somehow I doubt that will happen that way. And there are several reasons I’m not at all sure that this won’t be the case in the years to come. For one thing, both Taylor Bean & Whittaker and New Century Mortgage were found to have sold mortgages to more than one person at the same time, and others have admitted that it happens all the time.
And for another, I know of several homeowners who have filed quiet title actions and are still waiting for someone to show up and say they own the loan… in one case that’s recently been brought to my attention, it’s been almost a year and still no one has shown up. Does that mean no one will? Or will someone show up years from now? (Here’s the case, click it and you’ll see.)
Harvey v Garbett, Quiet Title Case in Draper Utah
I don’t really know, but wouldn’t it just be easier for the entity foreclosing to be the entity that actually holds the beneficial interest in the loan? You know, just as the law has always intended?
There’s another reason that it makes sense to require the right entity to foreclose… because the right entity, the entity that does in fact hold the beneficial interest in the loan would be much more likely to want to modify the loan as opposed to foreclosing on it, in instances where the payments have not been made.
You see, servicers chose to foreclose because it’s in their own best interests to foreclose, but what about the investor’s best interests? After all the investor is who put up the money in the first place, so what about the investor’s best interests?
Surely the investor would rather have a modified loan, especially in instances where the home is terribly underwater and by foreclosing the investor will realize an enormous loss and then not be able to sell it… perhaps for several years… wouldn’t you think that investor would prefer to modify the loan and get payments again?
Louis Ranieri, who is often referred to as the father of mortgage-backed securities had the following to say about foreclosing:
“The cardinal principle in the mortgage crisis is a very old one. You are almost always better off restructuring a loan in a crisis with a borrower than going to a foreclosure.
In the past that was never at issue because the loan was always in the hands of someone acting as a fiduciary. The bank, or someone like a bank owned them, and they always exercised their best judgment and their interest. The problem now with the size of securitization and so many loans are not in the hands of a portfolio lender but in a security where structurally nobody is acting as the fiduciary.”
Well, what do you know about that? So, it seems there are lots of good reasons that we should make sure that the entity foreclosing is the entity who does in fact own the loan, or at least work for the entity that owns the loan.
So, why are we making this so damn difficult? And why is it such a big problem for a bank-servicer-whatever to show up and actually prove that the trust actually holds the note in question? They don’t really expect us to buy into that whole, “But we lost them, your Honor. All of them, your Honor. It was a mass misplacement, your Honor.”
I mean, come on now… are we really supposed to believe that ALL of the major banks lost ALL of the notes and ALL at the same time? Seriously? I know 14 year-old boys that could tell you that such a story is simply not believable.
It’s time to come clean banker-people. Your story stinks to high heaven and the homeowners, lawyers, investors, and even the government investigators are all getting closer to uncovering the truth every day.
And until the banks start telling the truth, or modifying loans in the best interests of the investors and homeowners like they are supposed to…
… how about we the people pass a bill that requires the entity foreclosing to prove they are the entity that owns the loan… because it’s clear… abundantly clear… that we certainly can’t trust the trustee any more.
Mandelman out.
The Consent Orders issued by federal banking regulators a few weeks back said that the country’s largest bank-servicers had to conduct “a thorough independent review” of their foreclosures.
So, on Friday, the OCC met with representatives from the banks to hand them their marching orders. According to American Banker magazine, the bankers were hoping to be instructed to review a few hundred cases, but instead they got a lot more than they’d hoped.
The OCC’s deputy comptroller for large banks, Joe Evers, told American Banker:
“Just pulling a high-level sample isn’t going to cut it. Some of the early thinking we’ve heard of isn’t acceptable. … If anyone thinks there are going to be shortcuts here, it’s not going to happen.”
Okay, so you get that far and you’re thinking: “Wow, cool. Could it be that…?”
And then WHAMO! You get kicked right in the stomach and all the air rushes out of you… you can’t breathe… or if you can, then you just don’t want to.
I’m not a lawyer, so could one of the lawyers reading this please write in and remind me which article of, or amendment to the constitution covers the whole “sealed and secret” thing. Or is it covered by statute, as in perhaps the, “Sealed and Secret Act of 1922.” I only ask because I’m a taxpayer, no big deal.
American Banker says that the scale of the reviews means that Bank of America and Wells Fargo will each have to allow auditors to review thousands of foreclosure files, with dates from Joanuary of 2009 through December 2010. And the OCC says that if they find mistakes… I love it when they call stealing someone’s house a “mistake”… they will broaden their review to incorporate the entire portfolio of necessary… and that they will look at even more files from the six states with the highest numbers of foreclosures.
Evers went on to say that, “even a single error in the sample population is going to require a deeper dive.” The independent auditors will determine if a given “mistake” resulted in financial damages.
The OCC also mandated the design and publication of a “consumer complaint review process.” The idea is that borrowers who lost homes to foreclosure will now be able to complain to an independent auditor… who will do what? Get their house back? Send over a hooker? What will the independent auditor do in response to a homeowner’s complaint? Where’s the rest of that sentence?
Sorry, stuff like that makes me crazed. How can they fail to finish a sent…
Want to have some fun… let’s start a pool on number of complaints received by bank at end of first week, second week, and so on. Oh wait, never mind… we’ll never know the real numbers, will we… no… I forgot.
The OCC urged banks to build the consumer complaint process and channel for communication immediately… so whatever that means in terms completion… I wouldn’t have any idea. In fact, truth be told, I don’t care when they start, I only care when they’re done and yet the OCC tells me the part of the story I could care less about… again. As of right now, I’d peg the completion date sometime between this summer and… the end of time.
The OCC is saying that borrowers will be guaranteed a response from the auditors, so if they don’t get a response they get their home free and clear? No, then what’s the guarantee? A gift certificate? movie tickets… come on, give them something.
And wee already know that the borrower, assuming they do get a response, will never know who specifically adjudicated the complaint, because the OCC is not even disclosing the identities of the companies conducting the reviews Not even the investors who lost money as a result of the servicers practices won’t know who was used or what they found.
Sheila Bair, now a short-timer as chair of the FDIC, argued in front of the Senate Banking Committee this past Friday for both “thoroughness and transparency” of these reviews. Sheila’s point was well taken when she said that only “credible and public reviews” will be accepted by the public and therefore allow the industry to go forward.
No kidding, Sheila… in fact, at this point in the game… I’m not sure I’d believe anything said by a bank or servicer… what would lead me to think they might not be lying? Am I forgetting something? Did they tell the truth once in 2005 and it’s slipped my mind?
As quoted in American Banker’s coverage of this announcement, Kathleen Day, for the Center for Responsible Lending, said:
“Unless they make that review process public, who is to believe it? We’re supposed to take the banks’ and the OCC’s word on this?”
The OCC will have law firms reviewing issues such as whether the servicers had proper legal standing in foreclosure cases, and I’m sure these are law firms that don’t represent banks or want to get future legal work from banks, so let’s not start worrying about that.
Wait, what did I just say? The only type of lawyers that don’t represent banks or want future work from banks… and that are qualified to review issues such as proper standing in a foreclosure case are foreclosure defense lawyers… are they getting the job? Why do I think the answer is no… and I’ll never know anyway, so what am I talking about?
The auditing of fees and penalties assessed will go to PricewaterhouseCoopers LLP, Navigant Consulting Inc. and Promontory Financial Group LLC, et al, which is funny because some of these companies are the same companies that were around when the failure in compliance were occurring… and still are occurring, so the question on everyone’s mind is whether the accounting firm can be credibly independent. And I say, after Enron, and the like… why would anyone think they could? If fees and/or penalties were charged incorrectly, the consulting firm will be responsible to calculate the financial injury to the borrower.
That sounds like a few people are going to find a couple of hundred bucks… it’ll be like a lottery.
In the American Banker story, right after it talked about this issue of whether firms like PwC could be credibly independent, it said: “A spokesman for PwC did not comment by press time.” Funny stuff in American Banker at times… they had to do that on purpose, right?
For example, one of the questions the external consultants are supposed to ask servicers is whether the servicers had adequate compliance and risk management systems to monitor themselves, which is awkward of your PwC and you were supposed to be supplying such systems to the servicer you’re now asking. Good grief, Charlie Brown, do you see how entirely worthless this is guaranteed to be?
The servicers and the OCC are said to still be debating the specifics of the reviews, such as whether a servicer that misidentified a property address in a foreclosure but still properly notified the defaulting borrower? Would that be considered a technical or a material flaw, would it require remuneration to the borrower, if so how much… and does the borrower prefer cash, check or charge… okay, not the last part.
Or, what if a borrower stopped making payments on a modified loan after a bank improperly notified her of its intent to foreclose?
I could care less about this entire exercise in futility because only regulators will know the results, so even if they try to present stats on how borrowers were improperly foreclosed upon, I can’t imagine anyone saying, “Oh, okay then,” and then leaving it at that.
I mean, it’s far from being a secret at this point that the lawyers who foreclosure for banks have no ethics whatsoever and have been willing to get involved in countless schemes to get around the laws, and that’s to say nothing of robo-signing documents presented in court.
David Dunn, a partner at the law firm Hogan Lovells, told American Banker:
“Were there significant numbers of people who were subjected to foreclosures where they shouldn’t have been? We don’t know the answer to that.”
Well, but that’s only because you’re a lazy and dishonest underachiever who hasn’t read a book since law school, right David?
Lastly, the reviewers are also going to be responsible for determining if borrowers were properly offered loan modifications and if servicers’ denials were done properly, and that should be worth the price of admissions, right there. And the OCC has said that the review of loan modification issues should not be limited to whether a bank’s own accounts showed the borrower was in default at the time of foreclosure.
The American Banker story using the following sentence to describe… I think… the money paid to borrowers should “mistakes” be uncovered… you know, like IF they are:
Only material errors will be eligible for redress, though the OCC has not yet determined how it would define such a benchmark.
Well… to wrap things up, I suppose I should say that with findings submitted directly to regulators, like the OCC, and not to the banks themselves, let alone to the public, I think this actually scores a bull’s eye as either the most insulting program design I have ever seen my government announce, or the most uncaring.
So, very well done, fellas in government… you have done it once again… you have managed to take something of critical importance to millions and after spending time and money, make it entirely worthless. It’s not that I didn’t figure this review thing would be useless… I did, and I wrote it in past articles so I’m on the record. I just failed to realize just HOW useless you could make something. You’ve really outdone yourselves and you should be quite proud.
That’s really something… I’m going to have to study your methodology here… it must be the key to consistently producing failed programs, because without the system, probability would dictate that you’d do something at least close to correctly, once in a great while… but no. Stunning… just stunning.
Mandelman out.
I grew up watching LA Law and Matlock and later, LA Law and reading novels about swashbuckling criminal attorneys fighting for their clients. I don’t ever remember that any stories featured foreclosure defense attorneys, but the times they are a changin. Matthew McConaughey played an attorney in Mcconnell’s last book, The Lincoln Lawyer, but now it looks like there’s a new genre of hero attorneys….the Foreclosure Defense Attorney….
It seemed as though nobody had money to pay any lawyer,” he tells us, explaining why — with his bills to pay, an estranged wife, and a 14-year-old daughter who fancies going to USC — he’s been forced to mine one of the few growth industries in contemporary law: foreclosure defense.
See the New York Times Book Review Here
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The foreclosure mills have gutted our court systems and are costing taxpayers millions of dollars…and none has cost you and I more money than David J. Stern from South Florida. Where are any state or federal or Bar officials? Why is nothing being done to seize assets to help pay the public back for all this loss? It’s just a disgusting tragedy that will apparently keep costing all of us major money…..and now from the Sun Sentinel:
Two announcements last week appear to have doomed Plantation foreclosure attorney David J. Stern’s ambitions to become a national player in the repossession of homes lost by Americans during the economic downturn.
It was only a little over a year ago that Stern jumped at the opportunity to push his business and wealth to a whole new level. The underlying plan was to take the legal and financial model that had made Stern rich and successful, and reproduce it in other states.
In January 2010, the Plantation-based lawyer consummated a deal under which he took a key piece of his law firm’s operations public, with Wall Street backers agreeing to buy him out for a staggering $145 million, plus reams of stock in the newly minted corporation.
The last hopes for that grand venture appear to have vanished.
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I think it’s fair to say that I’ve written more on the subject of lawyers and loan modifications than anyone else… I’m not bragging, in fact I wish it had never been necessary for me or anyone else to write about the topic in the first place. The question of whether a homeowner at risk of foreclosure and who is seeking a loan modification should be able to hire a lawyer to represent them, if that’s what they want to do, should never have been a question. It just shouldn’t have ever been all that complicated an issue, in my mind anyway.
A few years back, I was teaching 5-6th grade US History/Social Studies at a nearby elementary school and I’m quite sure that if I would have asked my students who they should call if they needed help when at risk of losing a home, they would have all picked “lawyer” off of the list of options. And, as to whether lawyers do a better job getting loans modified than homeowners on their own, the answer is also yes, no question about it. That doesn’t mean that a given homeowner can’t get their mortgage modified without being represented by an attorney, some can and some do. But overall, the vast majority of the hundreds of homeowners that contact me for one reason or another each month, all have similar stories… they’ve been tryingon their own to get their bank to modify their loan for a year or more and to no avail. They hire an attorney to represent them and lo and behold, in almost every instance, their loans get modified.
Moat recently, there was a woman who called me days before Christmas with Bank of America having already turned her down for a loan modification and set a sale date of January 7th. I referred her to a lawyer I know well, and two days before New Years her loan was permanently modified. Would that have happened without an attorney… no, it would not.
Another couple from Northern California also comes to mind. They had been trying to get Chase to modify their loan for over a year. Chase was talking to them but it was going nowhere and they were scared that they could lose their home of 20 years. Again, I referred them to a law firm I’ve gotten to know well, and a few months later, they not only got a modification, but a great modification, in my view, including a principal forbearance of $200,000. Do I think that would have happened without a lawyer involved… not a chance in the world.
I’ve simply seen too many similar stories over the last couple of years for just anyone to tell me I’m wrong about this, but if anyone has any data that says otherwise, I’m certainly open to taking a look or hearing about someone else’s experience if different than my own.
The issue has been muddied ever since President Obama, Treasury Secretary Geithner, and Attorney General Holder, all told the nation in so many words that, “loan modifications are free… you don’t need a lawyer, you just call a HUD counselor or your bank directly.” I was shocked when I heard that message coming from Washington D.C. because it never made any sense at all to me… because nothing that comes from a bank is ever free.
And the idea that a homeowner calling a HUD counselor or their bank directly would be as effective as paying a private sector attorney to handle things just never seemed likely to me. And I don’t think it was much of a mystery to many homeowners either.
To the California State Bar, however, I think it would be fair to say that the whole subject of attorneys being involved in loan modifications has been hard to understand. And much of the reason for this apparent difficulty, is that there have been far too many scams out there from which homeowners can far too easily choose.
It’s astounding, actually. I mean, I realize that our state and federal governments have limited resources when it comes to enforcing the law in certain areas, but my God… I have to believe that if drug dealers had Websites, wouldn’t law enforcement have moved in to shut them down faster than it has taken to go after the innumerable scams that have proliferated around the Internet claiming to be able to save someone’s home from foreclosure? Maybe I’m wrong, maybe the response would be about the same if it were drug dealers… but would it really?
To make matters worse, there have unquestionably been many firms that opened with the best of intentions only to discover that the banks were on a mission to make their lives miserable and their jobs next to impossible. I can’t mention any names, but I happen to know of one loan modification company that was opened by a retired banker… and not just any banker, but a senior level banking executive that ran an entire region of the country for one of the largest banks in the U.S. He came out of retirement to open a company that helped homeowners get loans modified. Why? Because he knew what he was doing, obviously, that’s why. But, today… his company could easily find itself branded a scammer for accepting a fee in advance of getting a loan modified.
I think there were a lot of companies, in other words, that tried and failed when it came to loan modifications, and with our government’s only advice being call HUD or your bank directly, it was left to homeowners to figure out where real help could be found and who might be in business tomorrow.
Then you had the “salesperson effect”. Salespeople working on commission who told a homeowner with monthly income of $2,000 that they could expect to keep their home even though their first mortgage was $475,000, and their current payment with which they were struggling was interest only. Again, I don’t think there should be any question that government could have done a lot to prevent that sort of thing from happening as well. They just didn’t. They rolled out a loan modification program, called Making Home Affordable, that sounded wonderful, but they failed to enforce its rules, and allowed servicers to do as they pleased… and the litigation won’t end for years to come as a result… not that it should.
What the banks have done while Treasury looked the other way, represents the worst abuses to American citizens I’ve ever seen, read about, or imagined could occur… at least since the pre-union abuses of laborers by Robber Barons at the beginnings of the 20th Century.
No one is pro-scammer, mind you… everyone hates the idea of a homeowner being scammed out of money when at risk of losing a home, or at any time, for that matter. But I think it should be clear that the only way to stop the spread of scammers is to make legitimate assistance abundant. Just imagine if the State of California had announced that you could find legitimate assistance with a loan modification at every Starbucks… no more scammers, right? Why would you need to search for such assistance using Google when you could get meaningful help while your decaf low-fat latte was being prepared?
Our regulators need to understand, and it’s about time they did, that homeowners at risk of foreclosure are going to try to get their loan modified on their own if that’s what the government says they should do, but when they find out that they can’t get it done… well, they’re going to write someone a check before they give up and look for a place to rent. If they find legitimate help, great. But they’ll write a check to organized crime before they walk away from their homes without trying something else. And no one is going to change that fact… water is wet, the sky is blue, and… you get the idea, right?
Think about prohibition. Want to get rid of bootleggers? Only way to do that is to put legal liquor stores on the corners. You can break up stills, and chase down illegal rum runners all you want, but put a legal liquor store on the corner and presto… no more bootlegger.
We need our lawyers to get us through this… simple as that.
The one thing you don’t want to do is pass a law that removes only legitimate attorneys from the marketplace, and yet that’s precisely what California did in 2009 with the passage of SB 94. I know… the state didn’t know what else to do… they thought the new law would help, but they were wrong on all counts. SB 94 hasn’t eliminated or even reduced the number of scammers preying on homeowners at risk of foreclosure. In the last few days alone, I’ve received links to Websites offering the most insane schemes to prevent foreclosure I’ve ever seen and some that I couldn’t have come up with in a hundred years.
Have you heard of “assets for value”? Who came up with that convoluted concept that requires you to buy into the supposed fact that there is no federal government having something to do with our nation coming off of the gold standard? Or how about some sort of club that you join to get your house free and clear? There’s a whole slew of “put-off-your-trustee-sale-date-for-a-grand companies. And others that claim to represent a hedge fund that’s going to buy your note from your bank and then sell it to you for less, but they can bever seem to be able to tell you the name of a homeowner fro whom their plan worked, or even the name of the hedge fund, as if such a thing would be kept secret were it in any way true.
And, of course, we’ve all heard about the forensic loan audit that is going to bring your bank to its knees for failing to do something for which the statute of limitations has expired years ago, or that requires you to get relief by refinancing and repaying your loan.
Some of the scams out there are so far out there that’s it’s hard to believe that anyone would be sucked in… until you talk to a salesperson at one of these operations and that’s when you realize how good someone of these people are at getting you to believe their stories. If you weren’t a homeowner in a panic, you’d never buy any of this, but when it comes to losing a home, people will try anything. And that’s why the unintended consequence of SB 94, although I certainly wrote about what its passage would bring on numerous occasions, has not been to stop scammers, but more so it’s made them harder to find as they carefully crafted ways to charge homeowners outside the law.
It;’s common sense really… laws only matter to law abiding people. Scammers don’t care about the laws… which is why they’re called scammers. I mean, when SB 94 was passed in California, thus making it illegal for a real estate licensed person to accept a fee for helping a homeowner get a loan modified, it was already illegal to rip someone off for three grand, wasn’t it? I’m not an attorney, but I’m pretty sure taking someone’s three grand and delivering nothing in return was always against the law.
But what it did accomplish was to take all of the legitimate companies that were offering to help homeowners out of business because no one can work to get someone’s loan modified for God only knows how long the servicer takes to stop losing paperwork and actually look at someone’s file, and then send a bill for services… a year down the road… and even then hope that the homeowner isn’t so all-fire mad by then that they will actually pay the bill. And if someone doesn’t pay, what then? Ruin their credit? Come on now… let’s be adults about this… I pay my bills but I’m not even sure I’d pay that one a year down the road after being jerked around like chum on a line for months at a time.
So, SB 94 took the legitimate providers out of the business and that includes hundreds or maybe even thousands of lawyers as well. The scammers… oh, they’re doing just fine, thank you very much.
I recently taught a continuing education class, along with two attorneys, for the Orange County Bar Association. There must have been something close to 100 lawyers in attendance, but I was shocked when the room was asked how many were offering loan modification services and less than 20% put up their hands. Why were they there, I thought to myself, and then it became clear… none of them knew for sure how they were permitted to get paid by clients needing help with a loan modification.
I’m sorry State of California, but if lawyers can’t figure out what a law allows and doesn’t… there’s a problem with the law. If travel agents weren’t sure how a new law affected them, well… that’s one thing, but an entire room full of licensed practicing attorneys? If they don’t know, who should know?
The FTC’s recently enacted final MARS (“Mortgage Assistance Relief Services”) rule, for example, regulates all providers of loan modification services nationwide, and prevents such providers from charging homeowners before a loan modification has been offered by the servicer. But the FTC’s rule also allows for licensed attorneys to be exempt from that requirement, recognizing that without a retainer up front, an attorney could not offer to represent a homeowner seeking a loan modification. Under the new MARS rule, therefore, lawyers are allowed to charge a retainer up front, as long as that money is deposited in the attorney’s trust account and earned as services are rendered.
You know… the way lawyers have always charged their clients for just about everything.
SB 94 has made it much more likely for a homeowner to find a scammer because it has taken at least hundreds and perhaps even more legitimate lawyers out of offering the services related to a loan modification, while the scammers have just found ways to appear outside the law and therefore are that much harder to catch and shut down.
Something has to be done and I’m going to take a shot at doing it. Stay tuned to Mandelman Matters for updates, and for more exposing of the scams that are turning up around every Internet search. We’re three plus years into this crisis and the government continues to fail at every turn and in every way when it comes to stopping or even slowing foreclosures. There’s just no excuse for this sort of thing to go on any longer, and I’m going to take a shot at both exposing and getting the State Bar to do something helpful. Because we need our lawyers to get us through this, and those lawyers need to know how they are permitted to practice in this area, just like the lawyers now do in the other 49 states.
To read more about why I supported the attorney exemption contained in the FTC’s final rule, here’s a link to an article I wrote last year: FTC Considers Wrong Approach to Protecting Homeowners from Loan Modification Scams… http://mandelman.ml-implode.com/2010/02/ftc-considers-wrong-approach-to-protecting-homeowners-from-loan-modification-scams/
Just a couple of days ago, I received the following letter from an attorney from San Diego. I was so moved by the letter that I asked for and received permission to post it. Needless to say, I’ll be including him on my listing of trusted lawyers, a list I’m expanding as fast as I can. No one knows what the outcome will be when negotiating with a servicer today, but if you can’t get anywhere you should be able to hire a lawyer and know that, if nothing else, he or she will do everything possible to save your home. And that you most certainly won’t get ripped off.
Here’s what a San Diego, Ret. Navy, attorney had to say after finding an article I wrote last year about SB 94…
Dear Mr. Mandelman:
I am sorry I missed your blog of September 9, 2009 concerning SB 94. I was trying to find a copy of SB 94 when I found your blog. You were so on the money!
I am an attorney and at the time I was doing loan modifications and if you read the below response, you will see I was successful with them. SB 94 killed my loan modification practice for all of the reasons you laid out in your blog.
Yesterday I saw the attached article on the State Bar web page and I nearly lost my mind. So I prepared the response you will find below.
Unlike the attorneys in your blog, if any of this is helpful, cite me. I do not care. The State Bar has harassed me before and as I told them then, dis-bar me, make my day. I am tired of dealing with lying crooked attorneys, crooked judges and a corrupt State Bar. (Oh the stories I can tell.) But I also told them they would have to prosecute me because, I will not go quietly into that good night.
I hope you enjoy the response. I did get Senator Calderon’s name and position from your blog, so thank you.
Albert M Sterwerf, USNR Ret, Attorney at Law
Dear Ms. McCarthy:
I just read your article “No let-up in loan modification complaints” about James Towery’s pursuit of the small number of lawyers who were doing improper work with regards to loan modifications. I noticed that your article did not answer some very important questions. Such as:
1. Is the State Bar going after the attorneys working for the banks who are illegally conducting the foreclosures you discussed in your article? No? Oh, that’s right SB 94 specifically exempted those attorneys working for banks who are responsible for the foreclosure crises.
2. Is the State Bar going after the attorneys working for the banks who are committing ethics violations, such as illegally contacting parties represented by a counsel (SB Rule # 2-100) or the so call “robo-signing” of thousands of documents a day without any review (SB Rule 3-110), etc.? No? Oh, that’s right SB 94 specifically exempted those attorneys working for banks from being prosecuted for their ethical violations while conspiring to steal people’s homes and life savings.
3. How is SB 94 constitutional, such as equal protection issues, right to counsel issues, right to contract and so on, when SB 94 limits the mortgagee’s ability to contract with an attorney, i.e. preventing the mortgagee from paying the attorney a retainer until the loan modification was completed, but the same requirement is not placed on any other attorneys in the state, including the attorneys working for the banks who are conducting the illegal foreclosures you referred to in your article? Again the banks’ attorneys are specifically exempted in SB 94. I am starting to see a pattern here, under SB 94 the banks’ representatives seem to be exempt from all of these rules and laws in California. Why is that? Who did write that bill? Oh yeah, California State Senator Ron Calderon, the Chair of the Senate Banking Committee. How much money do the banks have?
4. Since attorneys doing loan modifications can only be paid after they successfully get their client a loan modification, are the State Bar and the legislature going to make the payment of retainers illegal for all attorneys? After all, if it is good for attorneys doing loan modifications, it would be even better for divorces or criminal prosecutions or civil defense cases, etc. Why shouldn’t all attorneys have to wait to be paid until after all of the work is done on the case?
5. Since attorneys doing loan modifications can only be paid after they successfully get their client a loan modification, are the State Bar and the legislature going to make it illegal for all attorneys to be paid if they fail to win their cases? I do not see any rush to make criminal defense attorneys return the money to their clients in jail or prison. Or those prosecutors that we all pay for, shouldn’t they only be paid when they get a conviction? Think of how much money we could have saved on the OJ Trial if we had not had to pay Darden and Clark their bonuses! They lost didn’t they?
6. In all of the complaints you discussed in your article, how many attorneys were wrongfully accused and forced to defend themselves against frivolous complaints? You did not answer that question, but I did see that you did lump the innocent attorneys in with the guilty. I guess is sounds better if you double the number of all of the cases dismissed as if they were all against “guilty attorneys”. It seems the State Bar does not mind condemning the innocent with the guilty.
Since you are a staff attorney for the State Bar, I guess these questions were not important to you.
However, they are to me! The State Bar and SB 94 destroyed my loan modification practice so it is personal to me as is California families who have lost their homes and life savings because of SB 94 and the State Bar. I take offense at your cavalier treatment of all of the people that have been hurt by SB 94 and the State Bar.
Prior to SB 94, my office had over a 99% success rate on loan modifications and for the one failure(?) that I had, I complied with the terms of my contract and refunded my client’s money to them. I was unable to obtain the loan modification in that case because the client would not comply with the “bank’s requirement” that he miss two payments before they would even talk to him or me about a loan modification. (The requirement for the mortgagee to miss two payments was set up by the banks so that they could subsequently foreclose on the properties and in the process harm the mortgagee’s credit rating thereby making it more difficult for them to qualify for any other types of assistance including Federal HUD refinancing plans which in many instance could have assisted the mortgagees in saving their homes.)
THE STATE BAR AND CALIFORNIA STATE SENATOR RON CALDERON, THE CHAIR OF THE SENATE BANKING COMMITTEE KNEW THAT SB 94 WOULD AID THE BANKS AND HARM THE PEOPLE OF CALIFORNIA.
Prior to SB 94, I took one case in which the client was to pay me after I completed the loan modification. This resulted in me not getting paid after I successfully completed the loan modification for my client. I do not remember the State Bar offering to help me get paid by my client. This case was pre SB 94 and the law did not apply to that case, but based on that case, I realized that I could not run my practice doing loan modifications if I could not get paid up front for the work I would do on the loan modification and had to wait until the loan modification was completed in the hope that my client would pay me.
I cannot run a law practice in which I and my office would spend months of work consisting of hours of time preparing the required documentation and more hours on the phone going through the bank’s run around and transfers (On one call I was transferred between 6 different people in 4 different states over 2 ½ hours and I had to start over at the beginning with each person I spoke to.) and repeatedly faxing and mailing documents to the banks (which the banks consistently lost, ignored or simple said they did not receive despite evidence of their receipt, i.e. proof of mailing and receipt of fax verifications) to not get paid after I successfully got the client a loan modification.
The State Bar knew that SB 94 would make law practices like mine untenable and that most attorneys in the field of loan modifications would have to terminate that part of their practice. The State Bar knew it was cutting the legs out from under the attorneys who were the only ones protecting the families of California, by making it illegal and punishable as a felony the same conduct that every other attorney in the State of California is allowed to do, to accept a retainer.
But the State Bar did not care that it was hurting the people of California, as long as the attorneys working for the banks, the parties with lots of money, were protected. Which Senate Committee is Senator Caldron the Chairman of again? Oh yeah BANKING!
Thanks to SB 94, I now have people coming to me, people I could have helped save their homes, after their homes have been sold in foreclosure sales and the story these people tell me is fairly consistent, “I was doing a loan modification myself, they asked me to send them some more information, I sent them the requested documentation, then I got the notice that my home had already been sold in a foreclosure sale.”
That is okay. SB 94 makes unconscionable conduct by the bank lawful!
WHERE IS THE STATE BAR FOR THESE PEOPLE?
I can tell you. No where! When I was doing loan modifications, my clients consistently informed me that their banks continued to contact them despite the banks being on record that I was my clients’ attorney. When my clients told the banks that they had an attorney the banks told them, “We don’t like working with attorneys. You don’t need an attorney. We want to talk directly to you.”
Somehow the term, “You don’t need an attorney,” sounds familiar. Oh yeah, SB 94 again, attorneys doing loan modifications have to provide their clients with a notice that they can do loan modifications themselves and that they do not need an attorney or the attorney can go to jail and be convicted of a felony. Wow! I wonder how that got into SB 94? Who wrote that bill again? Senator Caldron the Chairman of the Senate BANKING Committee.
It is funny, I thought the State Bar was there to protect me as an attorney, not to make me a felon for helping people try to save their homes.
Do criminal attorneys have to provide written notice to their clients that they can represent themselves and that they do not need an attorney? I somehow do not remember that being a requirement.
Another funny thing I noticed, that while I would have had to tell any prospective loan modification clients that they did not need to have an attorney, not one bank gave up their attorneys and when I tried to deal directly with their attorneys, I was denied access to them.
I called the State Bar to complain about the banks’ attorneys ignoring me and my office and going around me to directly contacting my clients.
The State Bar’s response, “We don’t care.”
Then the State Bar supported SB 94, when I called about that and pointed out how SB 94 left all of the mortgagees, the people that the law was supposed to protect, without lawyers, the
State Bar response was, “We don’t care.”
When I asked how I was supposed to run a law practice doing loan modifications I was told, “If you are a competent lawyer, you will not mind getting paid after the work is done.”
So I go back to unasked questions 4 and 5 above, are all attorney retainers going to be made illegal? After all, if the lawyer is competent, they should be willing to be paid after the divorce is done or when their client is in prison, or how about prosecutors only getting paid when they get a conviction. If it is good enough for attorneys doing loan modifications, it should be good enough for all attorneys. As the State Bar says, “If you are a competent lawyer, you will not mind getting paid after the work is done.”
WHO HAS THE STATE BAR AND SB 94 HELPED? THAT’S RIGHT, THE BANKS!
As for Mr. Towery’s successes, congratulations. For the twenty lawyers that have been punished, how many thousands of California families have lost their homes to the banks who are protected by SB 94? How many billions of dollars have the banks stolen from the people so that Mr. Towery could get his twenty lawyers? Yahoo!
I would like to see the numbers breakdown for the following sentence in your article, “And between 2007 and 2010, the number of cases resolved through warning letters, stipulations, closure or filing of charges doubled from 902 to 1987.” I would like to see this broken down because I noticed that “closures” i.e. cases where no action was taken against the attorneys, i.e. the attorney was wrongfully accused, was lumped in with the warning letters, stipulations and filing of charges.
HOW MANY ATTORNEYS WERE WRONGFULLY ACCUSED?
Why has Mr. Towery’s office been able to go through so many cases as you discussed in your article? For two reasons:
The first reason is that over 90% of the complaints of misconduct was by the 20 lawyers that were prosecuted. It is my guess, since the article was not clear on the matter, that the 20 lawyers either ran or worked for the client mills that were scamming thousands of clients. When the State Bar gets a complaint against the attorneys that have already been disbarred or resigned, the complaint can be quickly dismissed since that attorney has already been punished. That means hundreds if not thousands of complaints which are due to those 20 attorneys can easily be dismissed.
Therefore, the majority of the valid complaints to the State Bar came from a few client mills, which were simply churning clients and performing no work. (Before you become too judgmental on these organizations, there unconscionable conduct is much the same actions that the banks were doing to obtain the illegal loans in the first place and when people contacted them for loan modifications and are what the banks are now doing to get their illegal foreclosures. Let us not forget, the State Bar and SB 94 protects the banks and their attorneys.) Just one of these client mills had over a thousand files or cases. So that means over 1,000 possible complaints against the lawyer involved with this client mill could be dismissed out of hand because the attorney responsible has already been punished.
I was contacted by one of these client mills to see if I would assist them, but I was unwilling to work under the conditions they desired and we went our separate ways. I did not know at that time that the organization was not performing the work or any other ethical violations; I simply was not willing to work on the large volume of cases they demanded and therefore I maintained a client base that I was able to manage.
The second reason that Mr. Towery could clear up so many backlogged cases is because most of them are frivolous! I had to defend myself against a claim based on one of my loan modification clients. I got the loan modification for my client (Pre SB 94) as per our contract and then months later the client tried to get the money back that I had earned and in an effort to coerce me into paying them the money, they first threatened and then filed a complaint with the State Bar.
So I had to spend valuable time and effort, away from helping my clients, defending myself against the frivolous claim of a client who was satisfied with my work until he heard about the State Bar prosecuting attorneys doing loan modifications and thought he could get his money back.
If Mr. Towery believes he is going to bust a lot of attorneys for loan modification scams, he needs to contact the substance abuse counselors at the State Bar. Most of the attorneys and other professionals that were doing loan modifications stopped after SB 94 leaving the mortgagees without any legal help and the majority of the people who are still doing loan modifications will be following the letter if not the intent of the law.
I am sorry, I made a mistake. The mortgagees are not totally without legal assistance. They can call the HUD recommended free services for help. I called a few of them to see who I could recommend to the people coming to me to for assistance. From what I could determine from my communication with these “free services”, two proverbs that came to mind, “You get what you pay for,” and “When you buy a diamond for a dime, you get a diamond not worth a dime.” I could not recommend any of the services I spoke with to the people who came to me for help.
I have had clients, post SB 94 clients, whose houses have been sold in unannounced foreclosure sales and they want me to help them get their houses back after the HUD recommended agencies had failed to perform. Yahoo SB 94!
That is another of those interesting little tidbits of SB 94, attorneys doing loan modifications have to tell their clients, in writing, that they do not need an attorney and to tell them they can go to the HUD recommended free services for help. I do not remember that requirement for criminal attorneys or divorce attorneys or malpractice attorneys or the attorneys working for banks.
The point is I know where the majority of the complaints to the State Bar came from and therefore I know that the number of attorneys involved has to be fairly limited. So to punish a few (20) bad attorneys, who could have been punished under existing ethics rules and laws, the State of California and the State Bar have allowed hundreds of thousands of California families to be thrown out of their homes. Again Yahoo!
So to answer the implicit question in the first sentence of your article, i.e. “Despite extensive efforts over the past two years to rein in improper loan modification activities by some lawyers, including legislation and aggressive prosecution by the State Bar and the attorney general, complaints from clients continue unabated.” The complaints keep coming in because people are losing their homes and life savings because the State Bar and the State of California threw them to the wolves, i.e. the banks, and then cut them off from the only people who could have protected them, their attorneys. Then after throwing them to the wolves, the State Bar has said, complain to us about your attorney and get your money back. So it is no surprise that the complaints continue to come in.
Not only did the State Bar throw the people of California to the wolves, it threw us attorneys helping them under the train. Thank you!
In case you are thinking that I am making up the above observations about SB 94 below are significant portions of SB 94.
SEC. 6. Section 10133.1 of the Business and Professions Code is amended to read:
10133.1. (a) Subdivisions (d) and (e) of Section 10131, Section 10131.1, Article 5 (commencing with Section 10230), and Article 7 (commencing with Section 10240) of this code and Section 1695.13 of the Civil Code do not apply to any of the following: (1) Any person or employee thereof doing business under any law of this state, any other state, or the United States relating to banks, trust companies, savings and loan associations, industrial loan companies, pension trusts, credit unions, or insurance companies.
To be completely clear, SB 94 explicitly states that Civil Code Section 1695.13 does not apply to banks and their employees, yet that code section states:
CC § 1695.13. It is unlawful for any person to initiate, enter into, negotiate, or consummate any transaction involving residential real property in foreclosure, as defined in Section 1695.1, if such person, by the terms of such transaction, takes unconscionable advantage of the property owner in foreclosure.
SB 94 SEC. 10. Section 2944.7 is added to the Civil Code, to read:
2944.7. (a) Notwithstanding any other provision of law, it shall be unlawful for any person who negotiates, attempts to negotiate, arranges, attempts to arrange, or otherwise offers to perform a mortgage loan modification or other form of mortgage loan forbearance for a fee or other compensation paid by the borrower, to do any of the following:
(1) Claim, demand, charge, collect, or receive any compensation until after the person has fully performed each and every service the person contracted to perform or represented that he or she would perform.
(2) Take any wage assignment, any lien of any type on real or personal property, or other security to secure the payment of compensation.
(3) Take any power of attorney from the borrower for any purpose.
(b) A violation of this section by a natural person is a public offense punishable by a fine not exceeding ten thousand dollars ($10,000), by imprisonment in the county jail for a term not to exceed one year, or by both that fine and imprisonment, or if by a business entity, the violation is punishable by a fine not exceeding fifty thousand dollars ($50,000). These penalties are cumulative to any other remedies or penalties provided by law.
(c) Nothing in this section precludes a person, or an agent acting on that person’s behalf, who offers loan modification or other loan forbearance services for a loan owned or serviced by that person, from doing any of the following:
(1) Collecting principal, interest, or other charges under the terms of a loan, before the loan is modified, including charges to establish a new payment schedule for a nondelinquent loan, after the borrower reduces the unpaid principal balance of that loan for the express purpose of lowering the monthly payment due under the terms of the loan.
(2) Collecting principal, interest, or other charges under the terms of a loan, after the loan is modified.
(3) Accepting payment from a federal agency in connection with the federal Making Home Affordable Plan or other federal plan intended to help borrowers refinance or modify their loans or otherwise avoid foreclosures.
Sub-Section C is the interesting paragraph, especially when it is understood that a “bank” is considered a “person” for this section. How about that, the prohibitions do not apply to the banks or their agents.
So SB 94 makes it a crime for an attorney to represent property owners punishable by incarceration simply for being paid for work to be performed just like every other attorney in the State of California is allowed to do, yet it allows banks and their employees, i.e. attorneys working for the banks, to unlawfully and unconscionably take advantage of property owners in foreclosure.
Please tell the president of the State Bar not to send me any more requests for donations. I gave with the rest of California with SB 94.
Respectfully,
Albert M Sterwerf, USNR Ret., Attorney at Law
~~~
Mr. Sterwerf, I just can’t thank you enough, if for no other reason, than to make me feel that much less alone.
What’s being allowed to go on in this country is not something I could have ever imagined. It’s no different that were I to be forced to watch the U.S. Army water-boarding American citizens. Our government has simply sat idly by while literally millions of American homeowners have been tortured mercilessly and without recourse by our banks and mortgage servicers.
In fact, I’ll go even further… I’ll bet money that I can find thousands of homeowners in this country that would have volunteered for a couple of days of water-boarding if it meant not having to endure the torture meted out by their servicers that they all-too-often have endured for a year or more… before losing their home anyway.
“I’m sorry, Mrs Smithstone, we’ve gone and lost your paperwork once again. We’re so sorry, but you have to understand… we’re a bank… we lose stuff all the time. Not our money, of course, but yours… well, it comes and goes… that’s just the way it is around here. Complain? Why sure you can complain… hold on while I get you the number for our complaint line… click… dial tone.”
“Oh, Mr. Stonesmith, now you’re taking those HAMP guidelines awfully literally, don’t you think? I know it says you’ll get a loan modification if you make all your trial payments on time, but did you read our addendum to those rules? I didn’t think so… our rules say that you have to be wearing a purple hat every time you call and then say the magic word: “Pluthtarth Ingybingy” within 5 seconds of when we answer the phone. So, you’re home was actually sold last Thursday.”
Is this Ms. Smithrock? Yes, well hi to you too. Listen you’ve been denied once again for a loan modification, but I do have some good news for you… we’ll go ahead and let you reapply for another loan modification, and all you have to do is send us a check for $10,000 and keep making those trial payments that don’t apply to anything. Plus, I asked my boss, and he said we wouldn’t be denying you again for another four or five months… as long as you’ll pay the property tax bill that’s coming up.”
Oh, Mr. Rocksmith, you don’t want to refinance, you want a loan modification. Just stop making your payments and call us in say eight or nine months, and we’ll be taking care of that bothersome mortgage payment you’ve got hanging around your neck before you know it. That’s right, don’t worry about a thing…”
Look, anyone that doesn’t realize that we need our lawyers to get us through this simply isn’t paying attention. From robo-signers to trustees that can’t even prove they own the loan they want to foreclose on… to GAMC who just keeps foreclosing on one couple in Ohio even though they keep making those pesky payments on time. The cases of servicers breaking laws and rules are coming at us faster every day.
And our government obviously doesn’t care… or at least they don’t care much. Why, cause as far as they’re concerned, we’re all nothing but a bunch of irresponsible homeowners that caused this financial catastrophe, and we don’t deserve anything better than what we’re getting already. I’m sorry to have to break it to you, but that much is clear.
Luckily, we still have laws and lawyers. We’re a nation of laws, as a matter of fact, forged by lawyers. And, as we’re seeing happen more and more each day, the banks may be able to buy our legislators, and even our president, but they just aren’t having much luck getting to the thousands of judges in this country who are starting to smell a rat, and by rat I mean banker.
The FTC’s rule is good enough to protect the homeowners in the other 49 states, why can’t we live by it here in California. SB 94 isn’t doing anything but making it impossible for licensed attorneys to help homeowners when they are being jerked around by their banks and servicers. Isn’t it clear yet?
SB 94 is simply a law written by the Senate Banking Committee to make it next to impossible for a homeowner to hire a lawyer when at risk of foreclosure. I bet the banks wish they could have passed such a thing in Florida and then maybe none of this nasty robo-signer business would have come out, and they could have just kept on illegally foreclosing with fraudulent documents for as long as they pleased. That would have been nice for the banks, wouldn’t it?
Something else you should know… remember all those scamming lawyers that we were told were raoming the countryside scamming everyone out of their money left and right? And remember the 8,000 complaints that are now 2,000 complaints? Yeah, well a year later, the State Bar has taken action against 20 lawyers… TWENTY LAWYERS, and that includes lawyers who didn’t get convicted of anything… 12 of the 20 simply resigned.
There are 200,000+ lawyers in California. We needed to take thousands of legitimate lawyers away from homeowners because 20 were doing something wrong?
It’s ridiculous. To any thinking adult, it’s just plain ridiculous. Stop the banking lobby from making laws that only help them not get caught. Write to your state senator and tell them you’re paying attention to what’s happening as a result of SB 94. Tell them you don’t want it to be difficult or even impossible to hire an attorney if you want to hire an attorney. We have a right to legal representation in this country.
We need our lawyers to level the playing field and fight the banks who are unjustly taking our homes even when the investor would make more money by modifying the loans. And put the bad guys in jail where they belong… for a change.
And me? I’ll take water-boarding for $200, Alex.
Mandelman out.
Want to read more about what I’ve written on this topic… here’s a few just to get you started… why am I like the only person writing about this topic… I don’t even know anymore, but it sucks, I’ll tell you that. And it’s pissing me off because I could keep adding links below until there were so many I’d want to eat a gun. Can’t we just get this one thing right? Do I have to make an entire f#@king career out of this one stupid easy subject? Dear God…
Loan Modifications and the Right to Representation (May 2009)
Did Attorneys “Turn Bad” in 2009? What… is there Something in the Water (August 2009)
Journalists on Crack… Are Lawyers Turning to Crime in Tough Times? (January 2010)
Kings of Loan Mod Scams – Arizona, Nevada Sue Bank of America Over Loan Mod Program (December 2010)
Chris Adams, McClatchy Newspapers, Get It! Servicers Suck. (October 2009)
A Bill in California Will Establish That Lawyers Cannot Be Trusted (August 2009)
My Year in a Trance: What I’ve Learned About Loan Modifications (May 2010)
Like my favorite quote from my favorite lawyer movie, A Few Good Men, “And the hits just keep on coming.” Or take this quote I picked off in the comments on Nake Capitalism’s website…..
Why do bankers wear tassled loafers?
Because they can’t tie their own shoelaces.
These are major decisions from important courts all across this country that are finding fatal problems with the entire foreclosure, mortgage and real estate servicing industries. We’ve been screaming about these problems forever and now our courts are really starting to hammer away at the practices that have infected our court system. These two decisions are long, but incredibly important….read them carefully….
b+r+US+Trustee+Response+in+Support+of+Debtor’s+Objection+to++GMAC+Proof+of+Claim[1]
b+r+US+Trustee+Response+to+Debtor’s+Motion+Objecting+to+BAC+Home+Loans+Proof+of+Claim[1]
Finally, read the commentary from Yves Smith’s Naked Capitalism Site….and bookmark hers for excellent commentary on all these issues……
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I remember a couple of years back now, when Arizona Attorney General Terry Goddard was watching his state go down the foreclosure rat hole, and he was being greeted most days by a parade of banking types who were telling him that it was they who had the answer, and certainly not the law firms and other professionals who were offering to help homeowners get their loans modified for the dreaded up front fee.
Back then, if you recall, President Obama was new in his office, and he had told us all that loan modifications were free. He had recently given a speech, in Arizona by the way, announcing his new Making Home Affordable plan that he said would save 3-4 million homes from foreclosure, and the cheering in response was louder than at any speech I could remember.
Back then, for the most part, we all believed that Barack Obama was two things: smart, and a man of the people more than a man of Wall Street. We believed that, although Bush’s plan to save homeowners from foreclosures was an abysmal failure, certainly Obama’s plan would not meet the same, or even similar fate.
So, when he said that loan modifications were “free,” and that all one needed to do was call the government’s toll-free hotline or, in lieu of that, their bank directly, people believed him. And very soon, that made anyone who charged a fee to help a homeowner get their loan modified, a “scammer,” just by virtue of them charging a fee for their services.
Those that were reading me back then know that I never was comfortable drawing that conclusion. Not that I wanted to ever see a homeowner at risk of foreclosure get ripped off, in fact that’s the last thing I’d ever want to happen. But it never made sense to me that something like getting a loan modified would be “free”. I mean, getting my loan in the first place wasn’t free. And I’d never hired a lawyer or other professional for free in the past. Why would that now be free?
Oh sure, I recognized that the government had a toll-free hotline, and in fact when Obama announced its availability, I called it myself dozens of times… and it worked about as well as I expected a government hotline to work, that is to say, not at all.
But the idea that one could simply call their bank directly and ask them to modify their loan, and that would lead to their loan being modified, never rang true with me. I’ve tried calling my bank many times in the past, and for many reasons. And it never had gone well. I said recently in an article that it would be faster for me to drive to my bank to see if it’s open than it would be for me to call and find out.
Banks don’t reduce the amount of money you owe them easily… they don’t have a give-the-money-back department. So, when Obama said call your bank directly, or that there was a government hotline available, neither option sounded better than me paying a lawyer or other professional to help me get it done. Maybe some would call a HUD counselor, and maybe it would work out okay for them, but for me personally, I knew that I’d rather pay for the services I need, and that’s just me.
So, back then Terry Goddard was finding himself being approached on numerous occasions by bank industry people and they were all assuring him that the homeowners of his state were perfectly right to simply contact their banks directly when they needed to get their loans modified… and that would help control the growing foreclosure crisis that was fast destroying his state’s economy and the lives of countless homeowners.
So, he believed them, and he went out and told the homeowners of Arizona that they should not pay someone to help modify their loans, but rather they should contact their banks directly. And people listened to what he said, and they followed his advice. But it didn’t work, and in fact it became a nightmare for all who tried it his way. And many came back to his office and said… WTF?
And Terry Goddard felt like he had been deceived. He wasn’t exactly sure what the answer was, but he now knew that it certainly wasn’t as simple as telling folks to call their banks directly.
So, when the opportunity came up to investigate the banks as a result of things like robo-signers fraudulently signing affidavits in order to foreclose on people’s homes, came to light, Terry Goddard was one of the state attorneys general to jump in with both feet. And this past week it was announced that the state of Arizona and Nevada are both suing Bank of America.
Is it “the” answer? Probably not. But is it a step in the right direction? I think it unquestionably is.
In broad terms, Arizona’s lawsuit accuses the bank of misleading consumers. According to Bloomberg:
“The bank is accused in the Arizona and Nevada lawsuits filed yesterday of misleading consumers about requirements for the modification program and how long it would take for requests to be decided. The bank provided inaccurate and deceptive reasons for denying modification requests, according to the suits.”
In a statement released by the office of Arizona’s Attorney General, Goddard explained that instead of working to modify loans in a timely basis, Bank of America went ahead and foreclosed on homes while the borrowers were awaiting a decision on their application for such a modification, and that violates a 2009 agreement with the state to help people who were at risk of losing homes.
Again, according to Bloomberg:
“The Arizona lawsuit, filed in state court in Phoenix, seeks a court order holding the Charlotte, North Carolina-based bank in contempt for violating the agreement and requiring it to pay as much as $25,000 for each violation of the accord plus as much as $10,000 for each violation of the state’s consumer-fraud law.”
I also think it’s more than safe to assume that the announcement by Arizona and Nevada that they are suing Bank of America is the beginning of a much larger movement, and not the end. All 50 states attorneys general are currently investigating whether the bankers have used fraudulent documents to provide the legal justification to foreclose on homes. And that’s not the sort of investigation likely to go away quickly or without some price being paid by someone, in my view.
The Bloomberg story also quoted Bank of America spokesperson, Dan Frahm, as saying:
“We are disappointed that the suit was filed at this time. We and other major servicers are currently engaged in multistate discussions led by Attorney General Miller in Iowa to try to address foreclosure related issues more comprehensively.”
And all I have to say to that, is that, as statements go, is it is beyond disingenuous. No one involved believes that your bank gives a damn, Mr. Frahm. Oh, we believe your bank is disappointed, all right, but only that it was caught, and that now someone with some legal clout is finally taking you to task and using the court system to do it.
Remember… Bank of America is one of the banks that announced that it was stopping foreclosures in the 23 judicial foreclosure states back in October, and then in all 50 states, but just a couple of weeks later announced that it had reviewed more than a hundred thousand loans and determined that everything was just fine and dandy. Nonsense, Mr. Frahm… even a child could see through that and say… nonsense.
Bloomberg’s story lists the following case specific information:
The Arizona case is Arizona v Bank of America, CV2010- 33580, Maricopa County Superior Court (Phoenix). The Nevada case is Nevada v. Bank of America, Eighth Judicial District Court, Clark County (Las Vegas).
To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net.To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.
Mandelman out.
~~~
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Their most recent lender, American Brokers Conduit, transferred custody of the loan to Mortgage Electronic Registration Systems, a digital database owned by huge lenders such as Bank of America (BAC). When the Hassells defaulted in 2008, MERS kicked the debt to American Home Mortgage Servicing, a company that specializes in handling subprime mortgages. AHMS filed a foreclosure suit against the Hassells—admitting in court papers that the couple’s promissory note had been “lost, stolen, or destroyed.”
Yet Matthew Weidner, the Hassells’ lawyer, is still fighting the claim. “This is a microcosm of the financial crisis,” he says.
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By now, I would think, most of my readers know that when homeowners ask me questions about today’s loan modification process, I tell them that, if it were me… and it certainly could be one day… I’d run a REST Report. In fact, I wouldn’t even consider applying for loan modification, without running my own REST Report, and assuming it was NPV positive, sending it to my mortgage servicer, along with the other documents required, to my mortgage servicer.
I say this without hesitation, because the REST Report has now been used by more than 1,000 homeowners facing foreclosure, and it is the only way, outside of a HAMP servicer, that you can know with certainty whether you qualify for a loan modification under the president’s HAMP program. And should the REST Report show that you do not qualify under HAMP, the report shows whether the NPV of other loan modification scenarios would cause the investor who holds your note to come out ahead financially as compared with foreclosure.
In point of fact, it’s the only tool or practice I’ve ever seen that’s made a consistent, measurable, and highly positive difference for homeowners, attempting to get their loans modified. Last year at this time, if someone asked for my advice on how to increase the odds that a servicer would ultimately modify a loan, I would have said “get a lawyer.” Now I respond to those inquiries, by saying, “get a REST Report.” You can always hire a lawyer later, should you feel the need.
There are law firms and individual attorneys stretching from coast-to-coast that offer the REST Report along side loan modification services, and in fact several have told me that they are no longer accept a new client until he or she has run the report, and that report shows a positive NPV as compared with the costs of foreclosure.’
Enter REST Report Matters…
Founded a few months ago, with offices in San Diego, California, REST Report Matters is the brainchild of partners, Michael Nazarinia and Charlie Rose. But even though it’s their vision and leadership that drives their organization forward each day, the pair has also made a special commitment to supporting the readers of Mandelman Matters.
For example, they invited me to their offices to provide three days of training to their staff, in addition to the extensive training they themselves offer, and that training not only covered the technical aspects of the REST platform, but also created a professional atmosphere designed to be more consultative than sales driven, according to Charlie. He wanted me to tell my readers that they should feel free to call REST Report Matters with questions anytime, without worrying that the person they speak with will be singularly focused on selling them something.
I’ve known Michael for about a year now. In his last position, his firm helped support my efforts to protect the rights of a homeowner to hire an attorney when at risk of foreclosure. He and I got along from the very first time we spoke on the phone, as I recall… you’ll find him to be smart, knowledgeable and caring. Like me, Michael is a lifetime learner, which I believe is a euphemism
for what we used to call a nerd, in my day.
The team at REST Report Matters also stands out in my mind, as many have worked with Charlie and Michael in past positions so there is a sense of shared purpose beyond what one would expect in a young company. Oh, and that’s the company that’s young, the staff… not so much, which I also like a great deal. Call me crazy, but I’m not sure I’d care much for talking about my mortgage with someone whose experience with mortgages consists of hearing about them from Mom & Dad, so no worries about that here. Charlie is actually pretty young… 30 years-old, I believe, and I although I usually don’t find myself in conversations with too many thirty year-olds, entirely by design actually, but Charlie’s certainly the exception. He’s quick to grasp the significance of new things, and I can’t imagine any homeowners not liking him and appreciating his candor right away.
But, I am perhaps most excited about a new password protected section of the firm’s site, that although still under construction as I write this, REST Report Matters is in the process of incorporating several unique features into their “clients only” Website that, soon will be capable of delivering a unique, technology-driven ongoing educational support and community component that I think homeowners will find both valuable and even enjoyable… to the extent that anything having to do with this topic can be considered enjoyable… perhaps stimulating is a better word in this instance.
I wouldn’t want to spoil anything that’s in development and only a few weeks away from the public launch, so suffice it to say that the suite of services the firm is developing are designed to fit together and complete the picture of what optimal support for working with the REST Report to get a loan modified should look like.
REST Report Matters is not a law firm, and as such they do not represent homeowners with their lenders and servicers, nor do they provide advice to homeowners, or in any sense offer comprehensive loan modification services. It’s just the REST Report, packaged with other important support tools and educational programs… delivered by the highly trained, compassionate professionals at REST Report Matters.
And, as always, you can reach me for further discussions at mandelman@mac.com.
Mandelman Matters is a California Nonprofit Corpooration and does receive a small percentage of the revenue generated by sales of the REST Report.
However, you may be assured that it a very small percentage and nowhere near enough to get me to recommend something I wouldn’t be recommending regardless. If you want any additional details, including, email me and I’ll be happy to disclose anything and everything.
Because if I can’t disclose it, I don’t do it.
Read the attached article on Fraud in Foreclosures that recently appeared in the Jacksonville Times Union. Then read carefully the huge dodge of responsibility set up by ProVest’s mouthpiece:
“I expect them to sign their returns of service,” said Karen M. Kelly, the general counsel and chief compliance officer for ProVest.
She said her company has routines for checking the quality of work but adds the servers are independent contractors with their own licenses who are responsible for their actions.
“It’s his job to do it according to the law. We’re not that involved with how they do what they do,” Kelly said. She said she didn’t think ProVest carried any legal responsibility for work done improperly “unless I’m sitting there doing it with him.”
I’m expecting that every reporter and lawyer who’s already sniffing around about fraud in foreclosures and looking for the next big case or story would be reading these statements very, very carefully. Apparently Provest, “one of the nation’s largest legal support services firms” has attempted to insulate itself from any of the massive liability that is coming from the tsunami of litigation surrounding fraud in service of process.
Remember I reported earlier that title to real estate and now a huge portion of our economy are based on “independent contractors” who are “responsible for their own actions”…….sounds like more fuel for the fire……
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An excellent article on the development of foreclosure defense and how it has developed nationwide. My only comment is that it misses the most important piece of the puzzle….April Charney. We all know that April has done more to help homeowners and advance this area of the law than any other lawyer or advocate in this country!
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The stunning reports from across the state that Florida Default Law Group was “withdrawing” affidavits that were submitted in foreclosure cases signed by Jeffrey Stephan are just mind blowing. I’ve posted two depositions below. What we’re all trying to figure out is just what this all means. The Rule of Professional Conduct cited by the law firm as the basis for withdrawing the affidavits is very serious and citing it has profound consequences. Here is the rule:
RULE 4-3.3 CANDOR TOWARD THE TRIBUNAL
(a) False Evidence; Duty to Disclose. A lawyer shall not knowingly:
(1) make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer;
(2) fail to disclose a material fact to a tribunal when disclosure is necessary to avoid assisting a criminal or fraudulent act by the client;
(3) fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel; or
(4) offer evidence that the lawyer knows to be false. A lawyer may not offer testimony that the lawyer knows to be false in the form of a narrative unless so ordered by the tribunal. If a lawyer, the lawyer’s client, or a witness called by the lawyer has offered material evidence and the lawyer comes to know of its falsity, the lawyer shall take reasonable remedial measures including, if necessary, disclosure to the tribunal. A lawyer may refuse to offer evidence that the lawyer reasonably believes is false.
(b) Criminal or Fraudulent Conduct. A lawyer who represents a client in an adjudicative proceeding and who knows that a person intends to engage, is engaging, or has engaged in criminal or fraudulent conduct related to the proceeding shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal.
(c) Ex Parte Proceedings. In an ex parte proceeding a lawyer shall inform the tribunal of all material facts known to the lawyer that will enable the tribunal to make an informed decision, whether or not the facts are adverse.
(d) Extent of Lawyer’s Duties. The duties stated in this rule continue beyond the conclusion of the proceeding and apply even if compliance requires disclosure of information otherwise protected by rule 4-1.6.
By filing these notices across the state the foreclosure mills have opened up a Pandora’s box big enough to fit every single foreclosure courtroom in the State of Florida, perhaps even the country. Just what is the magnitude of these disclosures? How many were sent out? Are the notices limited to Jeffrey Stephan? To GMAC? To just this law firm? Finding out the answers to these important questions should keep this nation’s best and brightest reporters and journalists busy for quite some time. Whatever the answers to those questions, the implications are so profound.
I have been saying for months now, and I will state again for the record that,
“IN THE VAST MAJORITY OF FORECLOSURE CASES, THERE IS NOT A SINGLE PIECE OF CREDIBLE, ADMISSABLE EVIDENCE UPON WHICH A COURT SHOULD RELY TO GRANT SUMMARY JUDGMENT”
Let me add to that statement the following:
“THERE ARE TENS OF THOUSANDS OF FORECLOSURE JUDGMENTS AND TITLES TO FORECLOSED PROPERTIES THAT ARE VOID OR VOIDABLE AND WILL BE CHALLENGED AND TOSSED OUT WHEN THE GLARING ERRORS THAT HAVE BEEN COMMITTED ARE PURSUED AFTER THE FACT.”
And the following:
“IF THE FLORIDA ATTORNEY GENERAL CONTINUES TO AGGRESSIVELY PURSUE ALLEGATIONS OF FRAUD AND DECEPTIVE PRACTICES IN FORECLOSURE CASES, THE RESULTS WILL BE A BROAD INDICTMENT OF THE FAILURES OF FLORIDA’S ENTIRE COURT SYSTEM.”
I am so profoundly disappointed that the charges that will come will not come because our judges stood up and put an end to it all. They will not come because the Florida Bar took a leadership role and took a stand to protect consumers and they will not come because law enforcement, legislators or consumer protection agencies and official stepped in. They will come because the perpetrators and purveyors of this flawed system turned on themselves.
But most importantly, it will come because our press is doing their vital and essential function of raising the alarm bells and sounding the alarm of a crisis that is unfolding that affects us all.
GOD BLESS OUR FOREFATHERS FOR UNDERSTANDING THE CRITICAL IMPORTANCE OF A FREE PRESS!
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Please click on the link below for an excellent news piece on the injustices that are occurring in the foreclosure rocket dockets . Please share this link with your news markets so that they pick up on this story in your market.
Listen to how the Clerk of Court provides the rationale for what is occurring in his circuit. I don’t know if he’s a lawyer or not, but he’s got the law totally wrong, but the interview makes the point….this is not about the law this is about crunching the numbers and accomplishing some absurd goal for god only knows what purpose….You could not find a judge that would offer that kind of explanation…I just want to know from judges just why they are so compelled to grant these things…it’s absurd….
Please watch the link and forward on….the more the press sees stories like these getting attention, the more the real story will be covered by the press…and the press may be our only hope out of this dark wilderness…..
http://www.fox4now.com/global/story.asp?s=13153933 http://www.fox4now.com/Global/story.asp?S=13147030
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This very public nature of this blog and the criticisms contained on it carry real liability for me. I am aware of this and do not like the feeling. I know the forces we’re fighting against read this blog and that at some point in time they will take steps to bring it and me down. Those of you who are attorney and advocates likewise feel the pressure and strains of fighting against an entire industry with teams of attorneys inside the courtrooms that have now largely been turned over to them.
Whenever I feel a bit weary, I am reminded how much harder the struggle is for my clients and for all the homeowners out there who are suffering. Many are suffering job loss, health problems, family turmoil. They are suffering in the most profound and painful ways and often their home is the last piece of humanity they have to cling to. When I started this fight I was just defending each of the client I served, but as I became aware of the systemic abuses that were being visited upon vast numbers of consumers by the lending industry and especially the abuses that were being permitted inside our courtrooms, I realized that this fight was much bigger than the individual client in foreclosure. This is a fight about the very essence of what it used to mean to be an American. Our entire way of life has been corrupted and the last refuge of protection and equity, our courtrooms, has been co opted by the forces that have laid siege to the American people.
The stories of abuse that Americans are suffering in this legal process are the most disturbing to me as a lawyer. The fundamental breakdown we see occurring in our courtrooms every single day represents the single greatest threat to our way of life since the Soviets trained nuclear weapons on our homeland. The difference between that threat and this is the current threat comes from within and this threat is far more destabilizing in the long run. We have all lost hope that there is any sort of fairness or equity in this country and when you witness the abuses that the lenders and their attorneys are permitted to visit upon normal citizens everyday, you cannot help but believe our judges either do not see the abuses, or worse they see them but do not care.
Please read the story below that was sent to me. Remember her story when you’re fighting your case. Think of her as you sit there in courtrooms and watch files and homes and lives be summarily disposed of right before your eyes. When you see Summary Judgments being signed with no real review and no appearance at all, consider how many stories and lives like the one below are represented by those files. Let the anger you feel from reading the story below build strength and resolve. To the reader who sent this in, thank you. To all of you out there fighting, she is who we are fighting for.
My husband and I purchased a home in 1996. Our lives were very good at the time. The house was a middle class 2500 square foot home outside of Tampa and a small mortgage of $113,000. Together we could easily make the payments.
Jump forward to 2002, my husband was beginning to slow down physically and became ill, we didn’t know why. My job had just been cut down in hours and half of it outsourced, so we decided to cut our payments by going through “Countrywide Home Loans” and opt for a “Streamline VA Refinance”. It cost over $21,000.00 and only dropped our payment pennies, and added a huge amount to our principal. The ½ percent “lower” interest rate made our payments go from $784.00 a month to $1080.00 a month somehow. We called and called and could never get an answer what had happened. We wrote letters and complained but resigned ourselves to believe, with what was happening to my husband and the illness, we just did not have the time to fight any more. We found this was an illegal practice and it was never remedied. It raised our mortgage and didn’t close on time, was never documented in the court records and the mortgage was never filed. Doc stamps were never paid and the books were never recorded.
By 2003, our payment had increased to $1208.00, though or insurance and taxes had actually gone down and no one would send us a reason why once again. My husband was getting sicker. We were fighting out of court with my husband’s doctor, the VA, and with his employer over lost wages, long and short term disability, workman’s comp, retirement and pension. I had seen enough of courts and lawyers and I was losing my mind. (We did not prevail on any matter, although as the law goes, we should have on all- at least that is what all the attorneys we had said).
Jump forward to 2004, my husband dies after losing his job because he was ill with Prostate Cancer… I had to give up my job to take care of him and escort him to chemotherapy…our mortgage company (Countywide had never held the note, they sold it within two business days to Wells Fargo Home Loan) had filed Foreclosure action against my husband while he lay dying in a Hospice bed in my home. One week later he did die. I never got my husband’s death pension. (I never win in or out of court. I have lost all faith in the courts, lawyers, the judges, justice and America).
The week after my husband died I am in court defending my home. They didn’t care to even give me a minute to mourn. I found out later the fees they charged were against the rules. VA Loans are not charged the same fees, as the VA Guarantees certain things. I read that Michael Echeverria is charged a found guilty of these same happenings in other cases, too bad I didn’t know at the time my husband died. I paid them the fees and all back due money to re-establish the loan.
In 2007, Wells Fargo Home Loan loses my note. Later in 2007, Wells Fargo Home Loan assigns my note to Wells Fargo Bank, NA. My note is never held by Wells Fargo Bank, NA, the “Servicer”. I became late on my mortgage after I lost my job and suffered two heart attacks. I was diagnosed with Cushing’s disease and a tumor was found on my Pituitary and a large tumor was removed from my Uterus. I became severely diabetic as a result of the Cushing’s with extreme high blood pressure.
Later in 2007, Wells Fargo Bank, NA sues my husband for Foreclosure, not me… The problem is that my husband is dead. I call them to notify them that the Bank holds a Death Certificate I had provided them with. I let them know that I had filed one with the Clerk’s Office in Hillsborough County as well.
In 2008, The Florida Default Law Group files a motion of Voluntary Dismissal to Defendant “Husband”, Tenant 1,2,3,4, spouse, heirs, and all, et al… and “Voluntary Dismissal of lost note”… saying they have found the note. They attach a copy of the mortgage and not the note…
Also in 2008, I suffered a flood in my home, due to a AC unit that caused my ceilings to collapse. The old insurance that I had was with one whom had gone bankrupt, causing me to have gone with a “Force Placed insurance through Wells Fargo Bank, NA, owned by Wells Fargo Home Loan. They came out and issued a check to Wells Fargo Bank, NA and Me for almost $9000.00, to have the loss repaired. I paid to have the repairs done and asked for the check and they did not respond, and I wrote them a letter, to which I got a call from the bank saying they would not release the funds and they had been applied to the mortgage. In my contract they cannot hold it longer than 60 days, and they had the right to ask for inspection which they did not do. They have charged me with 25 inspections that have not been performed. They would not release the funds that I am paying for them to insure me for. I plan to send this through the Insurance Commissioner’s Office for Complaint, as well as the Department of Business and Professional Regulation.
1n 2009, they dismiss tenant 1,2,3,4, and Voluntary Dismissal as to re-establishment of Lost Note again. Once again, placing a copy of the Mortgage, but not the note. Relying on the fact that the judge will see the document marked “Mortgage” and assume that they would not lie, and the note must surely be attached…but it of course is not.
In 2010, June, they file a pleading asking for court costs. Never acknowledging dismissal or never asking for a motion for hearing, or never asking even to re-open the case twice dismissed. All in my husband’s name. They also attached an affidavit…on someone who says they have seen the documents and will attest to them being there, but do not attach a copy of the note or any documents again (1.540). None of this shows up under my name in the records, none of this has ever been recorded in my name, and none of this was ever served on me, or on my deceased husband through me. I am totally unaware of any of this. It all goes on in the background somewhere, and is not noted under my name. I am totally oblivious as to any action whatsoever.
July 2010, Still no note, no attachment, more illegal fees, on a case they dismissed against a dead man and his spouse. Never did they file against me in my name…
I called Bay Area Legal Services after speaking with you. They told me to call the judge’s assistant and ask for the judgment to be set aside. They told me how to file a motion, and to ask if I could have it done under emergency since I had not been notified of any previous action on the case. I asked for Judge…It was explained by the Judge’s Assistant, that a senior judge was filling in for Judge and he was a retired Judge and he was the one who had signed the Judgment against me and she explained that they had filed a judgment and all I could do was ask for the Judge to set it aside, she then told me “Good Luck”…
I read your blog, and found by reading it and other internet blogs, what exactly went into a motion to set aside, so I did my best in writing my own motion, which took a lot of time. I deferred also to the five courses in community college I took in paralegal on how to file a motion. I remembered to always file one, deliver one to each party, and one to the judge and to have three additional copies time-stamped. I am sure whomever will read it, they would laugh as it was 13 some odd pages long, and most of it was copy and paste form everywhere on the internet, but I had to somehow make my point that laws were being bent to prevail upon the court half-truths and out-in-out lies, to get my home away from me.
I did all this work and delivered it by hand and guess what…they lost my paperwork. I had three copies time stamped initially and filed yet another copy, again they lost it, I hand delivered it to Linda, the temporary, retired judges assistant, and guess what?…It was lost too. Then I was out of time, I had one day to act before my house would be sold on the auction block…so I had to ask for a hearing. I had to write my own motion for yet another hearing, deliver it to Florida Default Law Group, get it time stamped and initialed there, deliver it back to the Judges clerk, deliver one to the assistant and have it time stamped and filed in three hours from start to finish. I was out of time.
I delivered the motion, and did all of the above, and guess what happened next? They lost it. I had to sit at the courthouse until they got the judge to approve the hearing. Because the clerk remembered the document, they issued the hearing…
I went to the hearing the next day at 9:00 in the morning, this past Friday. The Judge really admonished me, saying I had to wrap my mind around the fact that I had a judgment against me. “What about the fact that the bank never held the note and filed for “lost Note” then dismissed that and the defendant …a dead man and me “his Spouse”?” I asked. Judge told me “SO WHAT? Half these cases here have a lost note!” he angrily replied…”You have a judgment against you”. I said that the docket was even in my husband’s name and I was never notified of the hearing for summary judgment. He again said “SO WHAT?!!!” He reminded me again I had a Judgment against me and I must get used to the fact that I had not acted and that I had to “Wrap my head around it”.
I then apologized for maybe being rude and arguing, but that the fees the bank was charging were unlawful, and that they plaintiff’s attorney had already been censured by the bar and found guilty for the same things, and that an Insurance claim, for which I filed had been paid to the bank and I had never been reimbursed for repairs…per contract…and it was not mentioned anywhere in the fees and amounts due and owing breakdown. Therefore the breakdown of fees had to be incorrect, and that the affidavit never mentioned them as well. The affiant had never mentioned the payment from the insurance company, though she attested she was well aware of “all the facts of the amounts due and owing, documents, books and records…”
Retired Judge was then was very angry with me, and I could see that he had no choice, but to cancel the sale until December 3, 2010, and told the attorney to provide me with a mediation hearing for modification and to discuss the insurance check and work out the fees and payments with me. This should be interesting since I have tried to modify the loan for over two years, only to have the numerous faxes and letters fall on deaf ears, or answered with “We ran out of time, we have to start all over again”…or when I tried to pay a lump sum I heard “Call this number to get the pay-off” when you tried to call the number you get “this is not a contact number, please call your loan servicer” So I was surprised the judge ordered “Modification”.
Needless to say, after all the mess, the Judge admitted they had “Misplaced my file” and later still upheld the Judgment against me – the one in my dead husband’s name, but judgment in my name. The one they cannot find the file on, but seem to be able to direct judgment upon. The one that the Judge “Has never laid eyes on”…in his own words, and has never read the motions, however, can rule on hearsay and fraud…
If I had gone in with an attorney, I believe Judge would have acknowledged that he had accidentally signed a judgment with no note attached that attested that it had a note attached, and would have realized a VA loan had unlawful fees attached and that it was against a dead man which had been dismissed twice before and was not against the person whom had never been served a notice of hearing, whom had three times filed for this judgment to be set aside, but could be set aside since it was not in her name and the file had been lost. I know…none of this makes sense.
I called 14 times today to make sure that the judge’s orders had been filed. They had not. No one could find his orders, no one could find his judgment to cancel the sale. I called three times from the emergency room where my daughter lay with chest pains. The new file was lost again…I am feeling like there is a problem here…
I stopped on my way home from Tampa General Hospital. I told Linda, Judge’s Assistant I would stay until they found it. I stayed, and they did not find it but found a clerk whom had see it. Again, Judge’s very helpful clerk…whom has a very good memory, since this is the second time he has had to remember seeing something filed, and is maybe young enough to remember what his Law Professors taught him about Justice… Finally, the sale was canceled, until December 3rd. The Clerk’s office and acknowledged it was canceled. The Clerk’s office told me that the Judge’s office had called and told her to cancel the sale. ???
I am filing an affidavit with all attachments with the State Attorney General’s Office. They said they will overnight it to the Miami office where they are handling the current investigation. I plan to send it to the Florida Bar as well, I will attach the previous convictions for the same charges. I read the Bar is monitoring him and his firms. Also, I think I will attach the names of the three attorneys that work for Florida Default…Huffman, Hardman and Riley, these are the attorneys working on my case. I think those names seem quite notorious. I am to sit with them and figure out a modification. I wonder how that will go?
I will make modifications with the bank, I will maintain this home I have owned for 13 years, but whether the bank or the attorneys ever are held responsible for the troubles they are causing? Who knows, but I think I need an attorney, unfortunately, I cannot afford your most deserved fees. I will prevail myself to Bay Area Legal once again for advice as I did this time, and maybe they will find me someone, I am not sure, they did not this last time, but if they do, it will not be of your stature or experience, but maybe someone familiar with your work. I can only pray.
Thank you for the legal ammunition. I would have my house on the auction block tomorrow at 2:00 pm. I am not an overly religious person but I will tell you what my mother says…”Blessed art those whom seek justice, but cannot find it”, She also says then I am “surely blessed”. God Bless you and your work in justice as well!
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