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

May

If you want to know how to strategic default, ask the MBA… Mortgage Banking Association.

The CEO of the powerful Mortgage Bankers Association, John Courson, has said that underwater borrowers should keep paying on their mortgage loans and “should not walk away from lawful debts”. In an interview this past year, Courson appeared genuinely concerned adding:

“What about the message they will send to their family and their kids and their friends?”

Obviously, Mr. Courson was not just speaking as a defender of financial institutions. Clearly, he was showing how much he cares for people and their personal relationships. He believes the children are our future. He thinks we should teach them well and let them lead the way. That we should show them all the beauty they posses inside. Give them a sense of pride. To make it easier… let the children’s laughter… remind us how we used to be.

Thank you John… you’re no Whitney Houston, but you’ve got me all teary eyed over here.

There’s just one little, teeny-tiny, almost insignificant smidgeon of a problem with what the Mortgage Bankers Association’s CEO was saying: He was completely full of shit.

This past week, the Co-Star Group, Inc., indicated that it had agreed to buy the MBA’s 10-story headquarters building in DC for $41.3 million. The only problem is that $41.3 million comes up a skosh shy of the $75 million first mortgage on the building that the MBA took out from PNC Financial Group way back in 2007, when they purchased the property for $79 million.

You remember 2007, don’t you John? That was the last year that all of those irresponsible homeowners, thinking real estate prices would go up forever, kept over leveraging themselves, buying properties without the traditional 20% down payment. What a bunch of irresponsible idiots, right Johnny Boy? Now that the bubble has popped, those homeowners should just be taking their medicine like men, don’t you agree John? The last thing they should do is walk away from their lawful debts, isn’t that what you said?

So I mean, what kind of message are YOU now sending to your family, your children, and your friends by walking away from your lawful $75 million debt? Are they being morally harmed by your decision to stick the bank with close to $25 million? And why aren’t you simply paying your mortgage as agreed, Mr. Courson? You’re not trying to destroy prices of commercial properties in Washington D.C. are you?

Just last year, you pointed out that defaults hurt neighborhoods by lowering property values, so borrowers would do less harm to our society were they just to repay what they owe. You know… like the responsible homeowners.

(Oh, and this just in from my favorite bankruptcy attorney and all-around thought leader, Max Gardner, the MBA also defaulted on their payments and secured a forbearance agreement, prior to the short sale. Nicely done, Johnny-O. Maybe you should open a loan mod firm and start helping homeowners.)

Well, I think I’ve got your message, Mr. Courson. I know exactly what you wanted to say to your family, your children and your friends…

Do as I say. Not as I pay.

Does that about sum it up for you, Mr. John Courson?

Yeah, I thought so.

Jackass.

May

Utah Foreclosure News is Based on Garbage Stats

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

87620Leave a Comment2012-05-18+14%3A43%3A31Mandelman

In Utah, foreclosures in March were up 74 percent over February. In New Jersey, foreclosures in in April were up 72 percent over March. In Tampa and Chicago, foreclosures in February were up 64 and 43 percent over January, respectively.

Now, here we are in mid-May and we’re to believe that everything has changed for the better? That was then this is now, is that the idea? Poppycock.

The Mortgage Bankers Association yesterday released a report claiming that the share of Utah’s home loans at least 30 days late dropped to 7.4 percent… from 7.58 percent in the previous three months.

Well, so what and who cares? First of all, that’s just not a statistically significant difference, in fact, it would be well within the margin of error for any legitimate survey of such data. And secondly, it’s an incomplete comparison. One point being compared is presumably the “drop to 7.4 percent.” And the other point against which the dropped 7.4 percent is to be compared, is a three month average of 7.58 percent.

If the last month of the three month average was 7.o percent, then this month’s 7.4 percent was actually an increase.

The Mortgage Bankers Association (MBA”) also claimed that in the first quarter of this year, six percent of loans in Utah were in default — which the association defines being at least 30 days behind on payments.

Now, and you have to read this carefully to see the deception, they’re saying that at the end of the first quarter of this year… “2.5 percent of mortgage loans in Utah were in the foreclosure process.”

What the heck does that tell us? Not a darn thing, although if you like to guess at things, here are a few things it could mean:

Nothing has changed – That’s right, based on those two claims by the MBA, the State of Utah could still have six percent of loans at least 30 days late and 2.5 percent in the foreclosure process.
Things have gotten worse – That’s right, based on those two claims, it’s possible that today there are more than six percent of loans in Utah more than 30 days late, and the 2.5 percent in the foreclosure process could be an increase from prior months.
Servicers are still preparing to comply with DOJ settlement – If the 2.5 percent in the foreclosure process is lower than expected it could be… and moreover likely is, due to servicers getting ready to comply with the DOJ settlement, meaning they have to foreclose without robo-signing and the like.

The point is that reports like this one are a study in obfuscation, which means: “muddying” or “confusing,” or refers to a “smokescreen.” They don’t really tell us anything, but they’re designed to make us think something has changed, when it has not.

Why do I say that? For several reasons…

To begin with, nothing we’re dealing with is going to change that quickly. It was a huge problem yesterday… it’ll be a huge problem tomorrow. If positive trends stay constant over the course of a year… then that will be something to cheer about.

Another reason for my skepticism is that none of the underlying fundamentals have changed one bit. In fact, last month’s unemployment data was a nightmare, much worse than expected. How could things have improved so dramatically so quickly when things have otherwise been moving so slowly? Answer: They couldn’t.

And lastly, it’s the report itself. The comparison of loans “in default,” which they defined as being over 30 days late, with loans “in the foreclosure process,” which they do not define, is an attempt to set up a deceptive or fallacious argument.

At the very least it’s an “incomplete or inconsistent comparison,” meaning that either not enough information is provided to make a complete comparison, or where different methods of comparison are used in order to create a false impression of the overall comparison.

The data above also was surrounded by irrelevant comparisons that I removed to show the deceptive structure of the argument being made. In the original presentation of the data, the MBA compared the loans in default to the national average, which they claimed to be 6.9 percent, and loans in foreclosure, which they claimed to be 4.4 percent.

Why should we care about such comparisons by themselves? We shouldn’t. They tell us absolutely nothing. It’s like saying, “In recent coin tossing experiments more coins preferred heads over tails.”

RealtyTrac chimed in with other statistics designed to be both encouraging and misleading:

1. “Foreclosure starts decreased in 41 states and the rate of loans in foreclosures fell in 22 states.”

2. “Foreclosure activity in all the judicial foreclosure states combined jumped 15 percent versus April last year.”

3. “Taken together, non-judicial states saw foreclosure activity fall 29 percent.”

The first one is total junk, it is meaningless… and confusing… in fact, if you study it too long your hair will likely fall out. Foreclosure starts decreasing may just mean that banks decreased the number they started. And the same for the loans in foreclosure garbage.

Banks control how many foreclosures start and how many are in foreclosure process, not borrowers.

The last two are more devious. They are woven throughout stories in the media this week in order to make us believe that it’s the courts that are causing the foreclosure crisis to be prolonged. Bad courts. The clear implication being that if the courts weren’t in the way of the banks, we’d all be much better off, much sooner. Abigail Field wrote a fabulous piece HERE. Among many other things in her article, she wrapped up flawlessly:

Those darn courts, wrecking the housing market by slowing foreclosures and costing all of us more money.

Due Process is the Solution, Not the Problem

See where all this is going? Enough messaging like this and some states may change foreclosure laws more to the bankers’ liking. Short of that, people will target the courts as the problem instead of the bankers.

Whenever you read banker talking points embedded in news like this, remember: our Constitution guarantees Due Process for a reason. Due Process is essential to the rule of law and a fundamental check against the abuse of power. Don’t let the bankers sell you or your representatives into taking it away.

Obviously, the banking lobby would like it much more if they didn’t have to deal with things like… well, you know… like laws, for example. Courts can be a real nuisance, I completely understand.

Look, if you’re doing just fine and you want to buy a house, go for it… I don’t care one way or the other. If you’re planning on living there for a long time and you can afford the payments, what difference does it make if it goes up or down in the next so many years? It’s a house, not a stock. Buy it to live in it, not as an investment you’ll flip out of in five years.

But, of you’re struggling in this economy, at risk of losing a home, and stories like these make you feel like you’re alone in your financial misery, and that everyone is doing better while you’re not… please don’t feel that way because it’s all nothing more than one big pile of steaming freshness. I’m not seeing anything improve anywhere. In fact, I’m only seeing things worsen ahead.

So, just ignore it, and it will go away. It’s like a ghost in your closet… go back to sleep and it’ll be gone in the morning.

Mandelman out.

Mar

MUST SEE TV: WA State Supreme Court Hears Arguments in Case Against MERS

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

78734Leave a Comment2012-03-29+16%3A07%3A43Mandelman

“May a party be a lawful ‘beneficiary’ under Washington’s Deed of Trust Act if it never held the promissory note secured by the Deed of Trust?”

That’s the key question the Washington State’s Supreme Court heard arguments in the potentially pivotal case, Bain v. Mortgage Electronic Registration Systems, et al and Selkowitz v. Little “Litton” Loan Servicing, LP, et al. It’s also a form of the same question that’s been asked by countless homeowners and their lawyers as they’ve fought to prevent their homes from being lost to foreclosure over the last 3-4 years.

Go back in time fewer than five years and you’d be hard pressed to find anyone who had ever heard of Mortgage Electronic Registration Systems, but today the acronym “MERS,” is a household dirty word in American homes from coast-to-coast.

Although the mortgage banking industry would say that they created Mortgage Electronic Registration Systems for the benefit of mankind, there’s no question that its creation also provided the industry with a way to avoid having to pay the costs involved in recording mortgage transfers. Lenders permanently list MERS as the “mortgagee of record,” and by doing so the avoid the expense of recording any subsequent transfers.

MERS makes the claim that it is both an “agent” of the lender and the “mortgagee,” but the practice has fueled a firestorm of debate over a wide range of legal issues, and although many courts seem to have accepted the MERS way… it’s often not clear whether such decisions were actually made in favor of MERS, or just against homeowners not making their mortgage payments.

What MERS does is operate a computer database that’s supposed to track mortgage servicing and the ownership rights of mortgage loans throughout the U.S. And when I first heard that explanation, I thought… well, that sounds incredibly boring.

Frankly, as a layperson… the whole thing is kind of insane, especially when you stop to consider that although MERS would readily admit that it doesn’t own any mortgage loans… it is also the recorded owner of over half of the nation’s residential real estate. At least I think that’s right… every time I try to understand it better, the whole thing confuses me and then I have to take a nap.

The best way to understand the issue I’ve seen…

The video below puts you in the courtroom to watch as both sides of the debate present oral arguments related to MERS’ involvement in the foreclosure process in front of the nine justices of the Washington State Supreme Court.

I found it fascinating to watch… almost as good as an episode of “Boston Legal,” in fact, the MERS lawyer kind of reminded me of Bill Shatner’s character on that show, Denny Crane.

You’ll watch the plaintiff’s attorneys who are representing homeowners at risk of foreclosure argue that MERS violates the state’s Deed of Trust Act, among other things… followed by the attorney flown in from Minnesota to appear “pro hac vice,” on behalf of defendant MERS, who basically argues that MERS isn’t the problem no matter what because no one ever needs to know who owns their loan.

I’m paraphrasing, of course, but you’ll see what I’m saying when you watch it. It’s not quite 45 minutes long, but it feels shorter… and afterwards, I’ll pick up the discussion below and share my thoughts on the matter.

~~~

A simplified view of how we got here…

The foreclosure crisis put MERS in the national spotlight as it started filing foreclosure lawsuits on behalf of financiers and servicers against millions of American families.

These people losing homes to something using the name MERS had been told by President Obama that because of his new government program, Making Home Affordable, they would be able to get their loans modified and hence save their homes from foreclosure simply by calling their bank… assuming, of course, they weren’t “irresponsible borrowers.”

So, believing that he was both smart and “a man of the people,” they did what he said they should do… but he wasn’t, and it didn’t work.

But, more than just “didn’t work,” the experience was nothing short of torturous, and in fact, I’m quite certain that many who lived through it, would have jumped at waterboarding as an alternative.

Lawyers representing homeowners who had clearly been wronged tried turning to the courts to enforce the HAMP guidelines, but to no avail. So, they went after anything and everything… TILA/RESPA… MERS and the failings of securitization… and most recently robo-signing related allegations are all the rage…

“I’ll take one securitization audit, and one forensic… oh… and give me one of those fraud reports too… to-go, please… how much? Oh my. Do you take Texaco cards?”

The thinking was obvious… judges and everyone else could see them coming a mile away… cause enough trouble for the servicers and they’d offer to modify loans and hence save homes. And soon… when even that wasn’t working… well, then even just delaying the loss of a home was something of a win, right?

Right… wrong… it didn’t matter… homeowners not making their mortgage payments was the issue at hand, as far as the vast majority of judges went, and today, although the battle rages on fueled by words like “forgery and fraud,” the outcomes are fundamentally the same as far as homeowners at risk of foreclosure are concerned.

Oh sure, some states became better than others, and bankruptcy courts seemed to fare better than others, but homeowners became more and more confused as courts of appeals, in some cases, tooketh away, what lower courts had given.

The OCC turned out to be an acronym for the Office of Ceremonial Complacency.

Many states today have bills on their legislative calendars that could help in some ways, but banking lobbyists don’t give up a single yard without a fight.

And finally it was OCCUPY… the blunt force edition of the foreclosure defense game, but again, to most… sort of a delay with a side of pepper spray.

So… now what? What’s next? The UCC 9 v. UCC 3 argument? Okay, fair enough. Not as exciting as securitization fail and REMICs exploding all over the place, but I’m in… why not?

I don’t like it any more than anyone else, but the fact is that in 2011… a year during which in some states like New Jersey and Nevada, foreclosures were said to be down year over year by something like 80 percent, even with the servicers waiting for the settlement to be reached so they could pick up their “Get Out of Fail Free” card… even with all of the things that caused delays… foreclosures were essentially flat when compared with 2010. Absent anything new that I’m not seeing… can you imagine how bad this year and next are going to be?

Well, of course, there is the $2,000 if you were foreclosed on in 2009-2011… do I have that right? I think so, but every time I type that out my mind says… no, that can’t be right… and then it is.

So, in the Bain case you watched on the video… what happens if the court sides with the plaintiffs? Says that MERS does violate the state’s Deed of Trust Act… does that save homes in a way that I’m not seeing. Or, will the servicers just start foreclosing judicially, as they’ve done in response in Hawaii, for example.

So… I called a couple of lawyers licensed to practice in the State of Washington to ask if their views of the Bain case confirmed mine… and they did.

Please understand what I’m trying to say, because I’m not saying everyone shouldn’t fight this year and next and next and next… and harder than ever, for that matter. I know I will…

BUT, WAIT A MINUTE… some changes have come to pass.

Like what? Like, the new servicer standards, for one.

Remember… the servicers and their propensity to ignore the toothless HAMP guidelines is one of the main reasons we’re all here, right? Well, now we have new servicer guidelines that are part of the settlement agreement between the 49 AGs and the five largest servicers that doesn’t quite exist as yet, but I’m willing to believe if you are.

Ever since the day that the Obama administration prematurely asseverated that the AG settlement had arrived, I’ve had only one thought on my mind… what happens if servicers don’t adhere to the new standards?

Is there a private right of action? I don’t think so… they’re not even laws, right? So what good are ANOTHER set of servicing guidelines related to loan modifications that no one can enforce when they’re ignored? We’ve already got a perfectly good set of servicing guidelines related to loan modifications that no one can enforce when ignored… they’re called HAMP guidelines and they’re like new, hardly used at all. If they were a car they might be a 2009, but they’d have no miles on them and still come with the full factory warranty and that new car smell.

Why are we troubling the servicers with having to come up with another set of guidelines they don’t have to follow? Don’t they have enough on their plates already? I mean… they’ve got all those foreclosures still to get handled… and without several of their biggest mills, like Stern and Baum.

Then there’s designing the next phase of document creation, that’s not going to be done in a day or two. And I hear that some servicers may actually have to get things notarized… no, I mean for real… actually notarized.

I think we should just call the five servicers involved and tell them not to bother with the new guidelines… we don’t need them.

Either that, or we should put some pressure on our AGs and our state legislatures to give the new standards or guidelines the force of law… you know… including a private right of action for homeowners, and a provision for attorneys fees.

What are the banking lobbyists going to say in response to that? There will never be lending again in this state? No chance. Plus, even if the new standards were made into state law, it would be very easy for the banks to not get sued and lose… just don’t break the new law and follow the standards you agreed to follow in the settlement, which you said you’d follow… so, what’s the problem?

To the AGs and state legislators, I would put forth that we don’t need new rules that lack teeth… that no one who agreed to them has to follow. We’ve got plenty of those kinds of rules related to loan modifications already. Why would the AGs oppose taking the terms and making them law?

I realize the states are gong to have “independent monitors,” but I’m not worried about the monitors getting screwed over and losing their homes… monitors aren’t being damaged by rules being broken, it’s the homeowners, silly. They’re the ones that need to be able to assert their rights under the agreement.

And to the homeowners not at risk of foreclosures just yet… forget about the deadbeat cracks, shouldn’t any rules of any federal program or settlement with our government be followed? Period? Of course they should. So, since we KNOW the last set were ignored, let’s make these new standards into a law with a private right of action and a provision for attorneys fees and let’s see what happens from there.

Maybe with such a law and attorneys fees clause, the trial bar will get interested, and they’ve got a lobby in DC that’s pretty effective, I hear.

I know… there are allowable margins for error in the settlement agreement, and extended timeframes for compliance… but, so what? Whatever we’ve got, make it a law… something that must be adhered to, or consequences might result.

Embrace incremental improvements…

If you’re waiting for a BIG BANG, you’re going to be waiting for a long time. It’s become obvious that, as I’ve been saying for so long I’m tired of saying it… it’s a game of inches.

And it’s a simple game. You hit the ball… you catch the ball. Sometimes you win, sometimes you lose and sometimes it rains.

Well, some things are actually better. Over 80 percent of trial modifications become permanent modifications today… that didn’t used to be true. And I’ve checked with lawyers all over the country and they’re seeing what I’m seeing… better modifications… and principal reductions more and more.

Bank of America has started granting principal reductions as part of their loan mods. I’ve seen eight in the last two weeks, and a dozen lawyers from around the country, including Bruce Levitt in New Jersey, have reported the same thing. And how about BofA’s new rent-for-three-years-if-you-can’t-afford-it-any-more program? I call it a soft landing.

And Ocwen is offering shared appreciation modifications (“SAM”) and they’re offering quite a few of them by the way. But they are still awaiting approval from several states… it’s a requirement, I’m told.

And look… I’m not just saying this stuff to protect homeowners from bankers… I’m saying it to protect the bankers and our society too. I just don’t believe many people can take another failed program that happened because no one followed the rules. Last time, well… that’s one thing… it wasn’t pretty, but we made it through.

Not to put too fine a point on it but there are more than a few programs I could reference… like, dozens… that have failed so spectacularly that… and I do mean this literally… their reported outcomes would have been identical had they been administered by farm animals or house pets. And that would be funny, were it not so entirely accurate.

Allow the same exact things to happen back-to-back and I’m not at all sure… all bets could be off.

Or… tell me I’m wrong. I’m always willing to be wrong. I actually like being wrong because I always learn something… and it happens so infrequently these days… lol.

Mandelman out.

Mar

New Panel Data!

By Alan White | Securitization-MBS

78546Leave a CommentNew+Panel+Data%212012-03-28+19%3A35%3A37Alan+White

The Fed has just released their data from the 2007-2009 panel Survey of Consumer Finances. The SCF, conducted every three years, includes hundreds of variables on the assets, liabilities, income, and financial product shopping and utilization of American consumers. Some questions include "what was the most important factor in your decision to refinance your mortgage?" and "during the past year, have you taken out a payday loan?". The 2007-2009 panel data set is especially valuable because it offers a picture of household finances before and after the Global Financial Crisis; the 2007 survey respondents were resurveyed in 2009. There is also a separate 2010 SCF survey, but those data have not been released yet.

Possible research subjects one might explore with this data set include the relative wealth loss of different racial and ethnic groups, what type of consumers chose different types of mortgage loans and other credit products, and how financial product choice interacted with changes in consumer finances as the crisis unfolded.

The Fed staff's own summary of the data is here. The paper describes wealth losses by wealth category and geographic region, but not by race or ethnicity.

Mar

Sand Canyon Sues American Home Mortgage Servicing for Making it Too Easy for MBS Trustees and Insurers to Get Hold of Underlying Loan Files

By 4closureFraud | Bankruptcy, Foreclosure Fraud, News for the Patriot

77348Leave a Comment2012-03-22+15%3A08%3A354closureFraud

“In short, Sand Canyon is claiming that it has bought American Home’s complicity in a scheme to help Sand Canyon escape liability to the trustees and investors to whom it sold mortgage loans,” the American Home brief said. “But American Home is not Sand Canyon’s accomplice in such a scheme.” ~ New MBS twist: Sand … Read more Related posts:

Mar

Sand Canyon Sues American Home Mortgage Servicing for Making it Too Easy for MBS Trustees and Insurers to Get Hold of Underlying Loan Files

By 4closureFraud | Bankruptcy, Foreclosure Fraud, News for the Patriot

77349Leave a Comment2012-03-22+15%3A08%3A354closureFraud

Mar

Exclusive Smoking Gun | The Sophisticated and The Scammed IV – It Appears We Now Have PROOF That Mortgage Loans Were Pledged to Multiple Trusts

By 4closureFraud | Bankruptcy, Foreclosure Fraud, News for the Patriot

75616Leave a Comment2012-03-13+17%3A12%3A324closureFraud

Good thing our .gov settled with the CRIMINALS or else someone might be in real trouble here… ~ Exclusive Smoking Gun | The Sophisticated and The Scammed IV – It Appears We Now have PROOF that Mortgage Loans Were Pledged to Multiple Trusts So last night we got word from Virginia Parsons, our friend over … Read more No related posts.

Mar

The Association of Mortgage Investors Laments the AG Foreclosure Settlement Filing; It Fails to Adequately Protect Homeowners; Will Likely Negatively Affect Average Americans, Unions, and Seniors

By 4closureFraud | Bankruptcy, Foreclosure Fraud, News for the Patriot

75588Leave a Comment2012-03-13+14%3A04%3A314closureFraud

The Association of Mortgage Investors Laments the AG Foreclosure Settlement Filing; It Fails to Adequately Protect Homeowners; Will Likely Negatively Affect Average Americans, Unions, and Seniors Embargoed until the Settlement Court Filing Contact: 202-327-8100 Monday, March 12, 2012 The Association of Mortgage Investors Laments the AG Foreclosure Settlement Filing; It Fails to Adequately Protect Homeowners; … Read more Related posts:

Feb

Bias v. Wells Fargo, JPMorgan Chase, et al | Homebuyers Sue in RICO Class Action

By 4closureFraud | Bankruptcy, Foreclosure Fraud, News for the Patriot

71074Leave a Comment2012-02-20+17%3A49%3A294closureFraud

SAN FRANCISCO (CN) – Wells Fargo Bank and J.P. Morgan Chase charge homebuyers who go into default inflated fees and interest rates, customers say in a federal RICO class action. Lead plaintiff Latara Bias claims the defendants, including Chase Home Finance, service almost 20 million mortgage loans, approximately 25 percent of the home loans made … Read more No related posts.

Feb

Fraudclosure Fail | More than 40 States Agree to Settlement Over Foreclosure Fraud Abuses

By 4closureFraud | Bankruptcy, Foreclosure Fraud, News for the Patriot

68180Leave a Comment2012-02-07+03%3A04%3A374closureFraud

More than 40 states agree to settlement over foreclosure abuses WASHINGTON – More than 40 U.S. states have agreed to a nationwide settlement over foreclosure abuses. The deal would force the five largest mortgage lenders to reduce loans for about 1 million households. And the remaining holdouts could sign onto a deal in the coming … Read more Related posts:

Jan

KABOOM | JPMORGAN FAILED TO ENSURE THAT TITLE TO THE UNDERLYING MORTGAGE LOANS WAS EFFECTIVELY TRANSFERRED

By 4closureFraud | Bankruptcy, Foreclosure Fraud, News for the Patriot

65860Leave a Comment2012-01-25+19%3A06%3A254closureFraud

Yesterday we put up John Hancock Life Insurance Co. v. JPMorgan Chase | JPMorgan Chase Sued by John Hancock Life Over Mortgage-Backed Securities. Unfortunately I do not have time to read every complaint I put up. That is what I rely on you all for. Well, someone just brought to my attention section IX from … Read more Related posts:

Jan

KABOOM | JPMORGAN FAILED TO ENSURE THAT TITLE TO THE UNDERLYING MORTGAGE LOANS WAS EFFECTIVELY TRANSFERRED

By 4closureFraud | Bankruptcy, Foreclosure Fraud, News for the Patriot

65859Leave a Comment2012-01-25+19%3A06%3A254closureFraud

Jan

Should the Government or the Market Set Mortgage Down Payments? A New Study

By Melissa Jacoby | Securitization-MBS

65611Leave a Comment2012-01-24+17%3A47%3A18Melissa+Jacoby

UNC's Center for Community Capital has posted a new analysis of 19.5 million mortgage loans originated between 2000 and 2008 finding that mandatory down payments of 10% would lock out nearly 40% of all creditworthy borrowers while a 20% down payment would exclude 60%. The study finds a significantly higher exclusion rate for African American and Latino borrowers. The authors (Roberto Quercia of UNC, Lei Ding of Wayne State University, & Carolina Reid from the Center for Responsible Lending) do find valuable default-reduction benefits of other forms of strong underwriting as the Dodd-Frank Act already requires (through the "QM" and "QRM" classifications), but signal caution about the significant access costs of government-mandated down payment levels that government regulators may be currently considering.

Jan

WMC Mortgage | GE Lending Unit Said to be Target of U.S. Probe for Selling Fraudulent Loans

By 4closureFraud | Bankruptcy, Foreclosure Fraud, News for the Patriot

64822Leave a Comment2012-01-20+17%3A27%3A174closureFraud

GE Lending Unit Said to be Target of U.S. Probe At issue is whether WMC Mortgage knowingly wrote fraudulent loans it later sold to investors. Federal authorities are investigating possible fraud at General Electric Co.’s former subprime mortgage arm amid increased public pressure to hold Wall Street accountable for its role in the financial crisis. … Read more Related posts:

Jan

Delaware | New Mandatory Foreclosure Mediation Program Goes into Effect

By 4closureFraud | Bankruptcy, Foreclosure Fraud, News for the Patriot

64768Leave a Comment2012-01-20+15%3A26%3A024closureFraud

New mandatory foreclosure mediation program to start Thursday A new mandatory foreclosure mediation program goes into effect in Delaware tomorrow/Thursday. This was established by Attorney General Beau Biden’s office and state lawmakers as part of a legislative package to respond to the foreclosure crisis in the state – and is modeled after other successful programs. … Read more Related posts:

Jan

Delaware | New Mandatory Foreclosure Mediation Program Goes into Effect

By 4closureFraud | Bankruptcy, Foreclosure Fraud, News for the Patriot

64769Leave a Comment2012-01-20+15%3A26%3A024closureFraud

Jan

Bear Stearns Asset Backed Securities Trust 2005-4 v. EMC Mortgage Corp | JPMorgan Sued for $95 Million Over Mortgage Securities

By 4closureFraud | Bankruptcy, Foreclosure Fraud, News for the Patriot

60995Leave a Comment2012-01-04+18%3A24%3A274closureFraud

JPMorgan Sued for $95 Million Over Mortgage Securities (Reuters) – JPMorgan Chase & Co has been sued for $95 million by the trustee for securities marketed in 2005 by the former Bear Stearns Cos over alleged misrepresentations regarding the underlying mortgage loans. US Bank NA wants to force JPMorgan to buy back the mortgage loans … Read more Related posts:

Dec

White Paper | Property Title Trouble in Non-Judicial Foreclosure States: The Ibanez Time Bomb?

By 4closureFraud | Bankruptcy, Foreclosure Fraud, News for the Patriot

55371Leave a Comment2011-12-09+20%3A19%3A034closureFraud

Property Title Trouble in Non-Judicial Foreclosure States: The Ibanez Time Bomb? Abstract: The economic crisis gripping the United States began when large numbers of homeowners defaulted on poorly underwritten subprime mortgage loans. Demand from Wall Street seduced mortgage lenders, brokers, and other players to churn out mortgage loans in extraordinary numbers. Securitization, the process of … Read more Related posts:

Nov

2004 GAO Report | Federal and State Agencies Face Challenges in Combating Predatory Lending

By 4closureFraud | Bankruptcy, Foreclosure Fraud, News for the Patriot

50309Leave a Comment2011-11-15+16%3A31%3A224closureFraud

Executive Summary Purpose Each year, millions of American consumers take out mortgage loans through mortgage brokers or lenders to purchase homes or refinance existing mortgage loans. While the majority of these transactions are legitimate and ultimately benefit borrowers, some have been found to be “predatory”—that is, to contain terms and conditions that ultimately harm borrowers. … Read more Related posts:

Oct

Outrageous | Good Deeds Punished: State-Run Mortgage Lender Forecloses on Californians Current on Their Loans

By 4closureFraud | Bankruptcy, Foreclosure Fraud, News for the Patriot

45585Leave a Comment2011-10-24+22%3A05%3A084closureFraud

Now this makes sense… /sarcasm ~ Good Deeds Punished: State-Run Mortgage Lender Forecloses on Californians Current on Their Loans A report prepared for the California Senate Rules Committee October 24, 2011 California Senate Office of Oversight and Outcomes Executive Summary Despite the housing slump, the California Housing Finance Agency is taking an unusually strict line … Read more Related posts:

Sep

Wells sues JPMorgan over 800 mortgage loans

By 4closureFraud | Bankruptcy, Foreclosure Fraud, News for the Patriot

38004Leave a Comment2011-09-19+18%3A24%3A154closureFraud

Wells sues JPMorgan over 800 mortgage loans (Reuters) – JPMorgan Chase & Co (NYSE:JPM – News) was sued by Wells Fargo & Co (NYSE:WFC – News), which seeks to force it to buy back more than 800 soured mortgage loans that it oversees as trustee. In a complaint made public on Wednesday in the Delaware … Read more

Aug

Mass. Bankruptcy Judge Voids Foreclosure of MERS Mortgage – Judge Tells Lenders You Can’t Have Your MERS Cake & Eat It Too

By 4closureFraud | Bankruptcy, Foreclosure Fraud, News for the Patriot

33659Leave a Comment2011-08-24+19%3A38%3A384closureFraud

Mass. Bankruptcy Judge Voids Foreclosure Of MERS Mortgage Judge Tells Lenders You Can’t Have Your MERS Cake & Eat It Too The sophisticated financial minds who wrought the MERS regime sought to simplify the process of repeatedly transferring mortgage loans by obviating the need and expense of recording mortgage assignments with each transfer. No doubt … Read more

Aug

Foreclosure Crisis in Europe vs US

By Alan White | Securitization-MBS

33612Leave a CommentForeclosure+Crisis+in+Europe+vs+US2011-08-24+16%3A38%3A01Alan+White

While European markets have seen increases in mortgage foreclosures, more robust regulatory intervention seems to have kept defaults and foreclosures to much lower levels than we are experiencing in the United States. At the peak of the crisis a year ago, about 9% of US mortgages were in serious default (90 days or more past due or in foreclosure.) The United Kingdom and Spain had default rates of less than 3%, which they still regard as a crisis. The only EU country with mortgage defaults exceeding US levels is Latvia. Detailed information on European foreclosure rates and prevention measures are available at the EU web site on the new mortgage credit legislation. The report containing the table on the right is available here.

European banks argue that the lower default rates are a result of less reckless lending prior to the crisis, compared to the US subprime market, and that may be true. It is also clear from the EU Commission summaries that most European countries have actively required or strongly encouraged lenders to work out as many troubled mortgage loans as possible, and have introduced delays and procedural hurdles in the foreclosure process to further stimulate workouts.

The UK launched two subsidy programs at about the same time that the US Administration launched HAMP in 2009. The Homeowner Mortgage Support allowed borrowers with a temporary income loss to defer payments for up to two years, with the government providing the lender a guarantee in the event the borrower defaults in repaying the deferred interest. It expired in April 2011. The Mortgage Rescue Scheme provided government support for shared equity and right to rent programs, and the Support for Mortgage Interest program subsidizes interest payments for homeowners receiving income support benefits.

In 2009 there were about one million completed foreclosure sales in the US (out of about 60 million mortgages outstanding.) In the UK there were 54,000 (out of about 15 million mortgages.)

Mar

The U.S. residential real estate market is in a full-blown crisis. And there’s no easy way to solve it

By Matthew D. Weidner, Esq. | Weidner

22094Leave a Comment2011-03-02+20%3A15%3A43Matthew+D.+Weidner%2C+Esq.

From the Worthy Intellectual Wharton Magazine:

Wharton Magazine

Equally troubling is the number of homeowners underwater, with mortgage loans that exceed the value of their property, which ticked up to 23.2 percent, meaning nearly 14 million U.S. homes have negative equity—a statistic unlikely to shore up home values. All of this has economists, politicians and the American people wondering how much longer the country will remain mired in the housing mess, and how we can pull ourselves out without sliding into the no-growth economy of 1990s Japan.

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Jan

Nationwide Title and Weidner Resolve Litigation, Case to Be Dismissed

By Matthew D. Weidner, Esq. | Weidner

19201Leave a Comment2011-01-13+20%3A42%3A13Matthew+D.+Weidner%2C+Esq.

After reviewing evidence furnished by Nationwide Title Clearing, Inc. (“NTC”), I have removed from my blog prior posts which stated that NTC was a foreclosure document company or that NTC was involved in something that was illegal or improper. My intent was to assist the general public and other attorneys by informing them of something that I believed to be true, but my assertions were based on reports in the press or blogs that, it turns out, did not provide full or correct information about NTC.

Since my blog posts, I have learned that NTC does not sign foreclosure affidavits, nor does it directly facilitate or involve itself in foreclosures as a company. I have been informed that NTC is a specialized company in the industry and that it provides many services such as searching land records for recorded documents, imaging land record documents, tracking recorded documents, etc. It is my understanding that NTC primarily prepares and signs only two specific documents for land records—lien releases and assignments of mortgages.

The vast majority of the documents NTC signs are lien releases (also known as satisfactions and reconveyances), which are for the direct benefit of borrowers and are recorded when a mortgage is paid in full. I have been advised that NTC is hired directly by the owners of the loans to prepare these documents, and that NTC does not itself make any decisions regarding on whose behalf the assignments are made or to whom the mortgages are transferred—that decision is dictated by the seller or buyer of the loans. NTC has advised that it simply provides a service to the mortgage lending industry at or after the time that mortgage loans are initially made. NTC does not file any documents with the court in foreclosure actions.

There is no evidence that NTC back-dates or falsifies information on these assignment documents. I may not personally agree with the business practice of granting signing authority to NTC to sign documents on behalf of its institutional clients, but I have been advised that NTC has valid authorizations to sign on behalf of those clients, and there is nothing inappropriate or illegal about this practice. Please note that the assignment documents executed by NTC are different from affidavits in that assignments do not require a statement of personal knowledge by the person signing the document. The purpose of signing mortgage assignments is to complete the transaction, and the purpose of notarization of the signature on the mortgage assignment is to prove it was signed. I have been advised that before the mortgage assignments are signed in the presence of a notary, numerous NTC employees have researched, reviewed, and verified the information in the mortgage assignment to ensure accuracy. Assignments are normally and customarily researched and prepared by people other than the person who signs them. There is nothing wrong with this practice.

In summary, I regret and retract any statement that implies that NTC has falsified any documents or that NTC is involved in foreclosures. These statements were based on general misinformation that appeared elsewhere in the press and on the internet. I apologize to NTC and its employees for any harm caused by my posts.

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Dec

Anatomy of Mortgage Fraud, Part I: (Big Time Economist/Reporter Headline…Not Me)

By Matthew D. Weidner, Esq. | Foreclosure Fraud, Weidner

17154Leave a Comment2010-12-13+18%3A35%3A10Matthew+D.+Weidner%2C+Esq.

This is all madness on such a grand scale that the biggest and brightest minds in our country are still struggling to wrap their heads around it. No one has yet to provide any credible explanations that suggests this is anything other than absolute and complete MADNESS. The article is terrifying…

Here’s the deal. This financial crisis is like Shrek’s onion. As you peel back layer after layer of sleaze, you find that the whole damn thing is fraud. We are talking about tens of trillions of dollars of it. Tens of thousands of individuals were involved. It was thorough. It was blatant. It was even transparent, right under the noses of regulators and supervisors. It was normal business practice. It never had any fear of prosecution or punishment. Even today, it taunts the impotent administration, daring President Obama to do anything.

And it expects to win. The fraudsters have Congress in their back pocket and plan to rush through legislation to validate ex post all of their illegal activity. It is almost a foregone conclusion that Congress will pass a law early next year to legalize everything MERS and the big banks did — lending fraud, recording fraud, tax fraud, securities fraud, and foreclosure fraud. There will be no rule of law to protect private property in the United States.

Anatomy of Mortgage Fraud

BAC-Home-Loans-v-White-Decision-OK-Court-of-Appeals-03-Dec-2010

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Dec

Important Commentary on Changes to UCC and Impact on Foreclosures– Ignored by Almost Everyone.

By Matthew D. Weidner, Esq. | Foreclosure Fraud, Weidner

16621Leave a Comment2010-12-03+20%3A17%3A38Matthew+D.+Weidner%2C+Esq.

The new version of UCC Article 9, approved by NCCUSL at its 1998 Annual Meeting, makes important changes in the treatment of promissory notes, including notes secured by real estate mortgages. Perhaps the most significant change is the fact that outright sales of notes, as well as the use of notes as collateral security for other obligations, are now covered by Article 9 and subject to its concept of “perfection.”

I propose here to outline briefly the practical effect of these changes on certain common types of mortgage transactions. The transactions fall into two categories:

First, “outright” sales, which include:

• Ordinary secondary market sales of whole mortgages (e.g., to FNMA & FHLMC or
to other investors.

• Transfers to securitization vehicles, such as trustees or custodians, pursuant to the
issuance of mortgage-backed securities.

• Sales of participation interests, representing fractional shares of ownership in one or
more underlying notes and mortgages.

Second, transfers of security or collateral interests, which include:

• “Warehouse” lines of credit commonly made available by commercial banks to
mortgage bankers.

• Other collateral pledges of mortgage loans by mortgagees.

Outright sales of promissory notes. As observed above, even outright transfers of promissory notes are now subject to Article 9 and its rules concerning perfection. This is accomplished in a rather counterintuitive way, by virtue of the definition of “security interest” in § 1-201(37), which new Article 9 amends. Under new §1-201(37), “security interest” includes “an interest of a buyer of accounts, chattel paper, a payment intangible, or a promissory note.” Of course, the use of notes as collateral securing other obligations has always been covered by Article 9; see, e.g., In re Southern Oregon Mortg. Co., 125 B.R. 625 (Bankr.D.Or. 1991). Thus, the concepts of outright transfers and collateral transfers of notes are largely merged together for purposes of perfection under new Article 9.

This might initially seem to place outright transfers in greater jeopardy than at present, since when the transferor becomes bankrupt, the trustee in bankruptcy would now seem to be in a position to argue that the transfer was unperfected and thus subject to being set aside in favor of the bankruptcy trustee using his or her “strong-arm” powers under Bankruptcy Code § 544 as a perfected lien creditor.

However, new Article 9′s treatment of such outright transfers eliminates this risk very effectively, for it provides (in § 9-309) that the rights of a buyer in the sale of a promissory note are automatically “perfected when they attach.” Hence, as against a subsequent trustee in bankruptcy, an outright buyer of promissory notes need not take any other action to be fully perfected. Indeed, the apparent purpose of this change was to insulate issuers of mortgage-backed securities and other securitization vehicles from attacks by the trustees in bankruptcy of original payees of the obligations in question.

Pledges of promissory notes as security for other indebtedness. Two other methods of perfection are available both to outright buyers of promissory notes and to persons who take security interests in them. Those methods are (1) filing of a financing statement (§ 9-312(a)) and (2) taking possession of the note (§ 9-313(a)). From the viewpoint of one who makes an outright purchase of a note, filing seems to offer no advantages over the automatic perfection mentioned above, and presumably such buyers will not bother to file. However, the automatic perfection provisions are not available to one who takes a collateral security interest (rather than outright title) in a note. Hence, filing of financing statements by such creditors will probably become common, and will accomplish the very important objective of insulating them from the trustees in bankruptcy of their debtors (mortgagees/note payees). It is significant that they can get this insulation without the bother of taking physical possession of the notes in question, a process that they often consider irksome, especially when only a short-term line of credit is involved. (IMPORTANT POINT)

But while filing is useful to a creditor who takes a security interest in a note, it does not provide the creditor with the full protection it might wish. The creditor remains subject to the risk that, if its debtor retains possession of the promissory note in question, the debtor will “double pledge” it, giving a second security interest to another creditor, and this time transferring possession of the notes to the new creditor. (IMPORTANT POINT)

Under new § 9-330(d), “a purchaser [and the definition of "purchase" in § 1-201(32) has been amended to include the taking of a security interest] of an instrument has priority over a security interest in the instrument perfected by a method other than possession if the purchaser gives value and takes possession of the instrument in good faith and without knowledge that the purchase violates the rights of the secured party.” The knowledge mentioned here is actual knowledge.

Hence, if Creditor 1 files but does not take possession of the note, and Creditor 2 takes possession of the note, Creditor 2 will prevail (assuming it gives value) unless Creditor 2 happens to know in fact about Creditor 1′s rights. Creditor 2 is not expected to do a UCC-1 search, and is not held to constructive notice of the information that such a search would disclose. By filing but omitting to take possession of the notes, Creditor 1 has protected itself against the mortgagee/payee’s bankruptcy, but not against the risk of the mortgagee/payee’s “double-pledging” the notes. Creditor 1 should be willing to take this position only if it has reasonably strong confidence in the mortgagee/payee’s honesty.

Creditor 1 has a further reason for getting possession of the note rather than merely filing a financing statement. Only if Creditor 1 has possession can Creditor 1 become a holder in due course under UCC Article 3. If the note is negotiable in form (as some but not all real estate loan notes are), becoming a holder in due course can sometimes be a very useful status, and it can only be obtained if the creditor gets possession of the note. Even if the note is nonnegotiable, so that holder-in-due-course status is unavailable, the creditor may still find it useful in some settings to take possession of the note in order to help establish that the creditor is a bona fide purchaser under ordinary contract law.

In the past, when a creditor made a loan to a real estate mortgagee and took the real estate note and mortgage as collateral, a question existed as to whether the creditor’s rights with respect to the real estate mortgage were as firmly established as its rights to the note itself. This question is put to rest by new § 9-308(e), which provides: “Perfection of a security interest in a right to payment or performance also perfects a security interest in a security interest, mortgage, or other lien on personal or real property securing the right.” This language confirms that the mortgage “follows the note,” and that no separate act (such as recording an assignment in the real estate records) is necessary to ensure perfection with respect to the mortgage. New Article 9 includes a legislative note recommending that the state’s recording act be amended to make it clear that recording is unnecessary in this setting.

Loan Participations. The impact of the changes in new Article 9 on mortgage loan participations is significant. A participation typically involves the outright sale of one or more partial or fractional interests in one or a pool of promissory notes and their associated mortgages. Since the sale is only of a fractional interest, new Article 9 characterizes the interest received by the participants as a “payment intangible.” A payment intangible is a new subspecies of the category termed “general intangible,” which is carried over with some changes from the old version of Article 9. A “general intangible” is a catch-all category— that is, it’s any type of right that doesn’t fit into one of Article 9′s specific categories, such as accounts, instruments, etc. The definition of general intangible is found in new § 9-102(a)(42). Since there’s no specific category in new Article 9 for fractional interests in promissory notes, they seem to fit the definition of “general intangible.” A “payment intangible” is simply a general intangible in which the principal underlying obligation is the payment of money, and that is certainly the case with a mortgage loan participation. Hence, a mortgage loan participation seems to be a “payment intangible.”

What are the consequences of this categorization? If the participation is indeed an outright sale of an interest in the underlying mortgage note, perfection of the participants’ interests is automatic under new § 9-309(3) (just as perfection is automatic in the sale of a promissory note, as discussed above, under § 9-309(4)). Thus, the participants need do nothing special to assure themselves that their interests are perfected.

Even though mortgage participations are invariably described in their documentation as “sales,” there is a long history of bankruptcy trustees attempting to persuade courts to recharacterize the participations as loans if the lead lender later becomes bankrupt. Under this view, the participants are regarded as having made loans to the lead lender, and the lead lender’s obligation to repay those loans is secured by the pledge of fractional interests in the underlying real estate note and mortgage. This argument has been rejected by some courts and accepted by others, and its probability of success is strongly affected by the precise details of the participation. For example, if the lead lender guarantees payment to the participants or covenants to buy back the participation shares in the event of a default on the underlying mortgage loan, or if the interest rate earned by the participants is different than the rate on the mortgage loan, the probability increases that a court will recharacterize the participation as a loan. See, e.g., In re Coronet Capital Co., 142 B.R. 78 (Bankr. S.D.N.Y. 1992).

In the past this sort of recharacterization could prove disastrous to the participants, since there was a high risk that the court would also find their supposed “security interests” in the underlying mortgage loan were unperfected; if this occurred, they became unsecured creditors of the lead lender’s bankruptcy estate. It was difficult for the participants to perfect under the old version of Article 9, since perfection could be accomplished only taking possession of the underlying note, and possession could not readily be transferred to multiple parties. (Sometimes the participants would have the note transferred to a trustee or custodian who acted on their behalf, but there seems to be no case deciding whether this would accomplish a perfection.)

The automatic perfection provision of § 9-309(3) won’t apply if the participation is recharacterized as a loan, since it is applicable only to outright sales. However, under § 9-309(2), an assignment (including a security assignment) of a payment intangible is automatically perfected if it “does not by itself or in conjunction with other assignments to the same assignee transfer a significant part of the assignor’s outstanding accounts or payment intangibles.” Where the assignor is a financial institution, it is exceedingly improbable that any given loan participation will, either alone or combined with other loan participations sold to the same participant, be a “significant” part of the assignor’s total payment intangibles. Hence, automatic perfection will follow under § 9-309(2). If a loan participant is concerned that the “significant part” test will be met and thus that automatic perfection will be precluded, it can completely eliminate this risk simply by filing a financing statement and thereby complying with the generic perfection rule of § 9-310(a). Since this is a simple and inexpensive precaution, all loan participation purchasers are probably well-advised to follow it as a matter of course.

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Sep

Chase Sued in NY for denying modifications

By LH | Corporate Greed & Corruption, Court Cases, General, HAMP, Housing & Economic Research

130187 Comments2010-09-13+13%3A34%3A45LH

See full story below… this is going to start happening more and more. The bottom line in this bank charade is that the big banks/servicers are NOT modifiying people’s loans according to the Making Home Affordable (HAMP) provisions and in accordance to their Servicer Participation Agreements with the US Dept. of Treasury, Fannie Mae and Freddie Mac. Why? Becasue they don’t make as much money when they modify… they’d rather keep a homeowner in default and ultimately foreclose. It all boils down to massive greed.

You know, what really galls me about all of this is that these banks took taxpayer funded bailouts which were given to them AGAINST the will of the people but they took the bailout money and now they are givin the US taxpayer the finger when it comes to modifying millions of homeowners into a federal program which would seriously stabilize the entire economy if it were truly implemented. The worst part of this situation is that the banks/servicers who received the bailout money and who are denying loan modifications really don’t have anything to lose really; they sold these mortgage loans they now service so they have already been paid on them. You know who really owns these loans? You and I do basically… city pension funds, state pension funds, mutual funds. Oh yeah… these fraudsters sold the toxic assets to the American people, insured themselves against the default of the toxic assets, came crying to the government to bail out their insurance companies when the claims exceeded the ability to pay out, took bailout money to “stabilize” the bank when they started to fail and now they treat defaulting American homeowners like complete *!$@ when they call the bank to ask for help to save their home and offer to keep paying a payment that they can afford because the whole damn economy has been imploded by their reckless and greedy behavior.

I for one will NEVER put my worthless money in any of the big banks ever again. A safe at home is safer than depositing any money in a bank. Use a small community bank or local state bank. Credit unions are just as bad if not worse. Seriously, we should all collectively bring the big banks to their knees by simply exercising our right of choice. Take your money out of their bank and go open a new account with a small community bank.

If you continue to do business with the likes of Chase, Bank of America, Wells Fargo, Wachovia, US Bank, Citibank, et al. good luck… you’ll probably be forced to sue them one day just to make sure they abide by their agreements because they really don’t care about you at all.

Chase sued in NYC for denying foreclosure relief

Three Queens homeowners allege the bank illegally delayed and denied their applications under the Home Affordable Modification Program; suit seen as first in NYC.

By Amanda Fung

Published: May 4, 2010 – 12:28 pm

Three Queens homeowners filed a lawsuit against J.P. Morgan Chase Bank N.A. and two of its subsidiaries, Chase Home Finance and Washington Mutual Bank, claiming that the groups illegally delayed and denied their applications for permanent foreclosure relief under the federal Home Affordable Modification Program. The lawsuit is seen as one of the first cases involving the modification program in New York City.

The lawsuit, which was filed in the Eastern District Federal Court in Brooklyn, claims that the bank violated the federal program that requires banks to provide permanent modifications to eligible homeowners who complete three months of trial payments and verify their income. Similar lawsuits have been filed against a number of other banks, such as Bank of America and Wells Fargo, in other states over the past year. Last month, a California couple reportedly sued Chase because it told them to stop making mortgage payments so they could qualify for loan modification. Chase then foreclosed on their home.

Chase declined to comment.

“Chase breached their contract,” said Carmela Huang, an attorney at the Urban Justice Center, which is representing the Queens homeowners in the case. “As far as we know, this is the first case in New York.”

Homeowners from three Queens neighborhoods—Queens Village, Fresh Meadows and Jamaica—are suing to force Chase to modify their loans and end foreclosure proceedings.

Despite making timely trial modification payments two of the homeowners were denied permanent loan modifications and their homes were foreclosed, according to the lawsuit. Chase claimed that their incomes were inadequate for the permanent loan modification, but refused to specify income qualifications, said Ms. Huang.

Similar to the California case, the third plaintiff in this lawsuit is a homeowner in Fresh Meadows who claims that the bank instructed him last month to deliberately miss payments so he would be eligible for a loan modification. The homeowner had refinanced in 2005. As a result of missing two monthly payments, the homeowner now faces foreclosure. While the homeowner was placed on trial modification last year, he was denied permanent status based on the value of his house. But the bank has not disclosed the value. The Home Affordable Modification Program requires banks to offer trial modifications as long as the value of modifying the loan is more than the value of foreclosing.

“Our clients’ situation is not unique. We have been inundated by people in foreclosure,” said Ms. Huang, adding that homeowners don’t have enough resources to sue banks. In this particular case, Urban Justice is providing its legal service for free. “The law is clearly on our side. We hope Chase will settle quickly.”

Loan modifications under the federal program reduce homeowners’ mortgage payments to 31% of the homeowners’ income by reducing the interest rate, extending the term of the loan or adjusting monthly payments. According to Chase, since the start of 2009 the bank has offered 750,000 homeowners loan modifications nationwide, 25% of those were permanent. The bank does not break down regional information.

Aug

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

By LH | Foreclosure Blog News, Homeowner Resources, Weidner

12319Leave a Comment2010-08-23+16%3A11%3A32LH

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

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

Monday, November 5th, 2007

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

O. Max Gardner IIIHistoric Webbley House

Filed under: bubble, CDO, CORRUPTION, Eviction, evidence, expert witness, foreclosure, foreclosure mill, GTC | Honor, HERS, investment banking, MODIFICATION, Mortgage, Pleading, securities fraud, Servicer, STATUTES, trustee Tagged: discovery, Master Servicer, MAX GARDNER, Pooling and Servicing Agreement, PSA, trust

Aug

Countrywide settlement pays fraction to investors – Shell Game Continues

By LH | Foreclosure Blog News, Homeowner Resources, Weidner

11873Leave a Comment2010-08-16+10%3A14%3A37LH

EDITOR’S NOTE: The shell game continues. While the media picks up stories about “settlements” giving rise to the presumption that Countrywide Home Loans and Bank of America and the rest of the securitization players committed various violations of statutes, duties, rules and regulations, the main point gets lost. Where is this money going and WHY? What is the tacit or express admission in paying that money and what effect does it have on the average homeowner sitting with a loan whose obligation is being paid in these settlements?

Think about it. If Bank of America, which now owns Countrywide, is paying “fractions” to investors who purchased mortgage bonds then who is it that owns the underlying mortgages and loans? Did Bank of America pay the investors do it under a reservation of rights (subrogation) to enforce the underlying loans? If not, then why are they foreclosing? All evidence is to the contrary. There is no subrogation under these purchases, insurance, credit default swaps or any other contract — not that I ever saw and not that my sources in the industry tell me was ever even contemplated much less executed. The same holds true for all those bonds the Federal Reserve is holding.

If Bank of America is paying “fractions” to investors who purchased mortgage bonds, why was it a fraction? Is it because the value of the bond was much lower than the price paid by the investor? Is it just a convenient settlement? Or is it because the investors have also received funds from other sources?

This is what I am referring to when I address “factual constipation.” How are these payments being allocated? Did the owners of the bonds actually have any definable interest in the underlying mortgage loans? If they did, why are these payments not being allocated to the obligations or payments due under those underlying mortgage loans? If they didn’t, why did they get paid anything? How will we ever know without getting a full accounting from all the parties that claim some stake or ownership interest or receivable interest in me is underlying mortgage loans?

It is black letter law as well as common law dating back centuries that nobody can collect the same debt more than once. If they do collect more than once there is a clear right of action by the borrower to collect the excess payment through a lawsuit for unjust enrichment, breach of contract and other causes of action. Here we have an intentional act designed to collect the same debt multiple times. In my opinion this does not merely indicate the presence of an action for fraud, it clearly shows an interstate pattern of racketeering that at one time in our history had the Department of Justice and the FBI busy putting people in jail.

Only in America where the news has turned into an entertainment blitz used by those with the most power and the most money to get their message across, even if it is a total lie. Somehow many if not most people have the impression that the borrowers and the securitized mortgages executed between 2001 and 2009 are not entitled to the relief that any other debtor is entitled to receive––that is the obligation has been reduced for any reason, the borrowers should get credit and if any party receives money in excess of the net amount due after credits, the creditor becomes the debtor owing money to the former borrower.

The bullet point that is being used to distort the perception of our citizens and policymakers is that these borrowers should not get a “free house.” Without getting a full accounting from all parties that advanced funds to and from the original investors who purchased mortgage bonds or collateralized debt obligations and related hedge products, there is no way of knowing the amount of the credit which is due to the borrower. Yes, it is possible that the amount received by the various intermediaries in the securitization chain exceeded the original obligation due from the borrower.

In that case, the borrower owes nothing to the originating lender or the successors to that lender. But if there is still a class of investor or institution that can prove a loss resulting from the nonpayment of the obligation by the borrower (as opposed to non-payment from other parties in the securitization chain) then the law allows that party to recover the loss from those that caused it. That probably includes the borrower, which means that we are not seeking a free house, we are seeking a truthful accounting.

BUT the fact that this obligation theoretically exists does not mean and never did mean under any legal decision in existence that the obligation should be paid to anybody who claims it. By all substantive and procedural law, the obligation is payable to one who proves the obligation and to one who proves it is owed to them and nobody else.

Yet in the view of many judges the challenge by the borrower is viewed as a delay tactic or an attempt to use technical deficiencies to a gain a free house on a lawn that the borrower sought but could not pay. No doubt this is true in some cases. But in nearly all the cases, armies of salespeople using names like “loan expert” pounded on doors and rang the phones of people who had no thought of borrowing money on homes, in many cases, that were debt-free and had been in the family for generations. Now many of those homes are bank owned property.

The simple question that needs to be posed to anyone who looks at the borrower as anything other than a victim is which is more likely? Did the owners of 20 million homes enter into a conspiracy to defraud the financial system, half society and our taxpayers? Did these people have the sophistication, education, knowledge, experience or training to pull off such a caper? Or is it more likely that the Wall Street titans stepped over the line and instead of increasing liquidity for the benefit of consumers and small businesses, used their position to deplete the resources of unsuspecting citizens, pension funds, financial institutions and governmental units from the top federal levels down to the smallest local geographical areas?

Countrywide settlement pays fraction to investors

By ALAN ZIBEL (AP) – Aug 3, 2010

WASHINGTON — Former shareholders of fallen mortgage giant Countrywide Financial Corp. are in line to recoup a fraction of their investments now that a Los Angeles judge has approved a settlement worth more than $600 million settlement.

The payoff doesn’t come close to compensating for the money lost by investors. But it could prompt more lenders to settle legal disputes at the center of the housing bust.

Bank of America, which bought Countrywide two years ago, agreed to pay $600 million to end a class-action case filed against the company. KPMG, Countrywide’s accounting firm, will pay $24 million.

Several New York pension funds who served as lead plaintiffs alleged that Countrywide hid how risky its business had become during the housing market’s boom years. Calabasas, Calif.-based Countrywide was once the nation’s largest mortgage lender.

The agreement stands to return about 40 cents per share of Countrywide’s common stock, before legal fees and expenses. Consider that the stock peaked at $45 a share in February 2007, before the financial crisis. So an investor who held 100 shares could bank on receiving $40 for an investment that was once worth $4,500.

Shareholders did receive 0.1822 shares of Bank of America’s stock for each share of Countrywide they owned when Bank of America acquired Countrywide. That worked out to about one share for every 5.5 shares of Countrywide stock. Shares of Bank of America closed at $14.34 on Tuesday. So that same 100 shares of Countrywide would be worth about $261 today in Bank of America stock.

Add the $40 from the settlement and those shares are now worth little more than $300.

Lawyers for the pension funds are requesting $56 million, or 4 cents per share, for fees and other costs.

Investors “will be compensated for a significant portion of the legal damages that they suffered as a result of what we believe was a violation of the securities laws,” said Joel Bernstein, a lawyer for the pension funds. “They won’t be compensated for every penny of that.”

Bank of America has been trying to put Countrywide’s legal problems behind it. In June, the Charlotte, N.C.-based company agreed to pay $108 million to settle the Federal Trade Commission’s charges that Countrywide collected outsized fees from about 200,000 borrowers facing foreclosure.

It reached a settlement Monday primarily to keep legal fees from escalating, a bank spokeswoman said.

“Countrywide denies all allegations of wrongdoing and any liability under the federal securities laws,” said Shirley Norton, a spokeswoman for Bank of America. “We agreed to the settlement to avoid the additional expense and uncertainty associated with continued litigation.”

Plaintiffs attorneys have pursed lawsuits against numerous lenders and investment banks in the wake of the housing market’s devastating downturn, and the Countrywide settlement could encourage even more such cases, said Paul Hodgson, a senior research associate at The Corporate Library, an independent corporate governance research firm.

“There are a lot of suits out there waiting to get launched,” Hodgson said. “I think this is the opening of the floodgates.”

Former Countrywide CEO Angelo Mozilo, former President David Sambol, former CFO Eric Sieracki and former board members were named in the litigation but are not contributing to the settlement.

But it does not end their legal problems. More than a year ago the Securities and Exchange Commission brought civil fraud charges against Mozilo and the two other former executives. Mozilo, the most high-profile individual to face charges from the government in the aftermath of the financial crisis, has denied any wrongdoing.

For Countrywide, “This is only a chapter and not the end of the book,” said John Coffee, a securities law professor at Columbia University.

Filed under: bubble, CASES, CDO, CORRUPTION, education, evidence, expert witness, foreclosure, foreclosure mill, foreign relations, GTC | Honor, HERS, investment banking, Investor, MODIFICATION, Mortgage, Servicer, trustee Tagged: ALAN ZIBEL, AP, Bank of America, countrywide, Joel Bernstein, KPMG, New York pension funds

“May a party be a lawful ‘beneficiary’ under Washington’s Deed of Trust Act if it never held the promissory note secured by the Deed of Trust?”

~~~

Chase sued in NYC for denying foreclosure relief

Three Queens homeowners allege the bank illegally delayed and denied their applications under the Home Affordable Modification Program; suit seen as first in NYC.

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

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