1. TILA Rescission Success Without Tender – HENRY BOTELHO, Plaintiff, v. U.S. BANK, N.A., as Trustee for the LXS 2007-4N Trust, Defendant
2. Full Deposition of Angela Nolan Robo Signer at Chase Home Finance – Foreclosure Fraud on Record – DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR JPMAC 2007-CH5 – J.P. MORGAN CHASE BANK NATIONAL ASSOCIATION, Plaintiff, VERSUS ROBERT H. OBRIEN CASE NO. 50 2008 CA 018964XXXX MB
3. Deutsche Bank National Trust Company, As Trustee for FFMLT 2006-FF13, Plaintiff, v. Terry A. McRae a/k/a Terry McRae, et. al., Defendants.

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

EDITOR’S NOTE:  POINTS TO BE MADE:

• Investors’ are proving the case for appraisal fraud, aligning themselves with borrowers. They are doing the borrower’s work. Get yourself copies of these complaints, discovery etc., send them to me and use them in your own case.
• The little guy is starting to get attention. The court’s are getting the point that these loans were fraudulent. In my surveys I have found that appraisal fraud accounts for nearly all the loans 2003-2008, and that the amount of the fraud was a s much as 150% in some cases with an average of around 35%. The moment you closed, whatever down payment you made was lost and you were underwater.
• The obligation to present a proper appraisal is on the lender not the borrower.
  
• Just like the investors, borrowers were deprived of vital information about their loan that would have prevented any reasonable person from closing. Thus whether the Court’s like it or not, rescission, is a proper remedy, if not under TILA then under fraud statues and common law doctrines of fraud. Combine that with damages available, and the prospect of getting loan reduction and adjustment of loan terms comes into clearer view.
• THE CONNECTION BETWEEN THE INVESTOR’S ADVANCE OF FUNDS AND THE HOME APPRAISAL IS PRESUMED AND ALLEGED. THUS THE ARGUMENT THAT THE INVESTOR WAS THE CREDITOR AND THE BORROWER IS THE DEBTOR IS CORROBORATED BY THE PLEADINGS OF THE INVESTORS.
  

The Inflatable Loan Pool

By GRETCHEN MORGENSON

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May 23-24, 2010 2 days. 9am-5pm. Neil F Garfield. CLE credits pending but not promised. Register Now. Seating limited to 18. INCLUDES LUNCH AND EXTENSIVE MANUAL OF FORMS, NARRATIVE AND CASES. An in-depth look at securitized residential mortgages and deeds of trust. Latest cases on standing, nominees, splitting note from security instrument, bankruptcy strategies, expert declarations, forensic analysis reports.

Lawyers, paralegals, experts, forensic analysts will all benefit from this. This workshop includes monthly follow-up teleconferences and continuing on-going support with advance copies of articles, cases and analysis.

1. STRATEGIC REVIEW: WHY THESE CASES ARE BEING WON AND LOST IN MOTION PRACTICE.
2. SECURITIZATION REVIEW
3. USE OF FORENSIC REPORTS AND EXPERT DECLARATIONS
4. RAISING QUESTIONS OF FACT IN CREDIBLE MANNER
5. SETTING UP AN EVIDENTIARY HEARING
   
6. FOLLOW THE MONEY
   
7. OBLIGATION, NOTE, BOND, MORTGAGE, DEED OF TRUST ANALYSIS
8. TILA, RESPA, QWR, DVL AND RESCISSION — WHY JUDGES DON’T LIKE TILA RESCISSION AND HOW TO OVERCOME THEIR RESISTANCE.
   
9. NOTICE OF DEFAULT, TRUSTEE, STANDING, REAL PARTY IN INTEREST EXAMINED AND REVIEWED
10. INVESTORS, REMICS, TRUSTS, TRUSTEES, BORROWERS, CREDITORS, DEBTORS, HOMEOWNERS
    
11. FACT EVIDENCE ON MOTIONS
12. FORENSIC EVIDENCE ON MOTION
13. EXPERT EVIDENCE ON MOTION
14. ORAL ARGUMENT
15. WHAT TO FILE
16. WHEN TO FILE
17. EMERGENCY MOTIONS — MOTION TO LIFT STAY, MOTION TO DISMISS, TEMPORARY RESTRAINING ORDERS, MOTION TO COMPEL DISCOVERY
18. DISCOVERY: INTERROGATORIES, WHAT TO ASK FOR, HOW TO ASK FOR IT AND HOW TO ENFORCE IT. REQUESTS TO PRODUCE. REQUESTS FOR ADMISSIONS. DEPOSITIONS UPON WRITTEN QUESTIONS.
    
19. FEDERAL PROCEDURE
20. STATE PROCEDURE
21. BANKRUPTCY PROCEDURE
22. ETHICS, BUSINESS PLANS, AND PRACTICAL CONSIDERATIONS

Editor’s Note: Judges are quick to jump on the TILA Statute of Limitations by imposing the one year rule for rescission and damages. But there is more to it than that.

First the statute does NOT cut off at one year except for items that are apparent on the face of the closing documentation; so for MOST claims arising under securitization where almost every real detail of the transaction was hidden and intentionally withheld, the one year rule does not apply.

Second, the statute of limitations does not BEGIN to run until the date that the violation is revealed. In most cases this will be when the homeowner knows or should have known that the loan was securitized. Since the pretender lenders are so strong on the point that securitization does not affect enforcement, the best point in time for the statute to run is when a forensic analyst or expert tells the homeowner that TILA violations exist.

And THEN, in those cases where the information was hidden, the statute of limitations is three years from the date the information was revealed.

So when you go after undisclosed fees, profits and other compensation of any kind, you are not cut off by one year because — by definition they were not disclosed. The only way the other side can get out of that is by admitting the existence of the fee, and then showing that it WAS disclosed — presumably through yet another fabricated document, signed by a non-existent person with non existent authroity with non- existent witnesses and notarized by someone three thousand miles away (whose notary stamp and forged signature was applied to hundreds of pages of blank documents for later use). [Brad Keiser was the one who discovered this tactic by doing what most forensic analysts don't do --- actually reading every piece of paper sent by the pretender lender and every piece of paper provided by the homeowner. Case law shows that where the notary was improperly applied --- and there are many ways for it to be improperly applied, the notary is void. If the statute requires recording the document in the public records, then the document so notarized shall be considered as NOT being in the public records and is ordered expunged from those records].

This comment from Rob elaborates:

Regarding the TILA Statute of Limitations:

STATUTE OF LIMITATIONS
When a violation of TILA occurs, the one-year limitations period applicable to actions for statutory and actual damages begins to run. U.S.C. § 1641(e).
A TILA violation may occur at the consummation of the transaction between a creditor and its consumer if the transaction is made without the required disclosures.
A creditor may also violate TILA by engaging in fraudulent, misleading, and deceptive practices that conceal the TILA violation occurring at the time of closing. Often consumers do not discover any violation until after they have paid excessive charges imposed by their creditors. Consumers who later learn of the creditor’s TILA violations can allege an equitable tolling of the statute of limitations. When the consumer has an extended right to rescind or
pursue other statutory remedies because a violation occurs, the statute of limitations for all the damages the consumers seek extends to three years from the date the violation is revealed.
McIntosh v. Irwin Union Bank & Trust Co., 215 F.R.D. 26, 30 (D. Mass. 2003).

Editor’s Note: Most of what we have seen reported indicates that although TILA is clear in is legislative expression that NO TENDER is required for the rescission remedy under TILA, Judges don’t like it. It seems they feel that Big Bad Borrowers are taking advantage of Bambi Banks. Yet here is a case where the Judge DID apply the law as written.

TILA was written with teeth, but Judges are reluctant to apply it. Yet on its face TILA possesses the strongest remedy against predatory loan practices in existence. It allows the borrower to declare a rescission which requires the alleged lender to (a) step forward (which they don’t want to do) (b) file a satisfaction of mortgage and (c) negotiate return of the money, less of course any claims for damages that the borrower has claimed and can prove.

This comes back to the issue of the real creditor, the pretender lender etc. In the current environment, there is nobody around who actually has the authority to satisfy a mortgage. But TILA addresses that too. It says that by operation of law the security instrument is void not voidable. Thus the mortgage or deed of trust no longer applies because it is void even if it was properly recorded. In turn, this means the debt, if any, has been converted from secured to unsecured.

The bargaining power of the borrower cannot be overstated if this provision of TILA is applied. By eliminating the secured aspect of the mortgage, the loan is easily stripped down to fair market value less damages, attorneys fees, interest paid, etc. We can only hope that we see more application of law as written and less hip-shooting from the bench creating uncertainty and complexity where the law could not be more clear.

Defendant U.S. Bank, N.A., as Trustee for the LXS2007-4N Trust (“U.S. Bank”), seeks dismissal under Federal Rule of Civil Procedure 12(b)(6) of a complaint filed by plaintiff
homeowner Henry Botelho. Specifically, U.S. Bank claims that Botelho cannot state a claim for rescission of his mortgage loan under the Truth in Lending Act, 15 U.S.C. § 1601 et seq., unless he alleges a present ability to tender the loan proceeds. As discussed in
further detail in the Order, such an allegation is not necessary for Botelho’s case to survive the pleading stage.
Accordingly, U.S. Bank’s motion is denied.
Hat tip to Boot Camp Grad Carmen Dellutri http://www.ca11.uscourts.gov/opinions/ops/
200814991.pdf

Forensic Mortgage Analysis Workshop

Hosted By Brad Keiser Of Foreclosure Defense Group

CLICK HERE FOR MORE INFORMATION

Winning Strategies Require Attorneys Have:

• Leverage of a credible threat
• Issues of fact that shift or heighten the burden of proof to the foreclosing party
• Evidence vs Allegations
• Understanding of your Opponent – Right hand isn’t often talking to the Left hand
• Guns with only one bullet (e.g. produce the note) are for Russian Roulette
• You need a full magazine in case you misfire a couple rounds
• KISS – Keep it Simple Stupid…so the Judge can Understand

Difference between a “Loan Audit” and Mortgage Analysis

Assessing Lender Compliance at Origination

It’s all about Disclosure Requirements

How to Analyze and Identify Material TILA RESPA HOEPA Violations Yourself

Rescission: What it is and what it isn’t

Right ways and Wrong ways to apply TILA and other Loan Compliance Findings

Evidence or Characteristics of “Predatory” Lending

Using the Qualified Written Request (QWR)

Requirement to Disclose the True Owner

What Forensic Mortgage Analysis uncovers that the “canned TILA audit” doesn’t

Securitization for Dummies

Public Domain Evidence – SEC filings and What They Can Reveal

Important Questions SEC Filings Don’t Reveal That Should be Answered

What a periodic distribution report to the Certificate holders can determine

Chain of Title – Perfected Interest or Clouded Toxic Title?

APPRAISAL REVIEW AND ASSESSMENT

The story below from Zach Carter at salon.com is all too familiar for me. I’ve been saying this since mid-2008 and I just told our local Ft. Myers News Press this a couple weeks ago. Click Here to read that post…

Namely, that what the media is widely reporting on the loan modifcations and HAMP program, at least until recently has been a lie by the government and the institutions like Citi, Wells, Chase, Bank of America, ASC, Aurora Loan Services, and the list goes on and on. The lie the Obama Administration has been feeding is how much they are doing for you, Mr. and Mrs. Homeowner in distress. How much Making Home Affordable program is helping folks like you. They’ve thrown out numbers like 3-5 million homeowners are being helped by this program. Blah blah.

All I can say is that is unequivocally a lie. Here’s the number of homeowners HAMP has helped to date… you ready? 235,247 – No, we’re not missing a digit.

I have about 10 clients who are 10 of those 235,247. But folks this is joke. Dealing with the servicers is like dealing with a crack addict. Nothing they say can be trusted and they’ll do anything to squeeze another $100 out of you if they can. They’re unscrupulous debt collectors – the whole lot. Oh, but the government put them in charge of policing themselves and all the tax payer dollars going to them through the HAMP program. Looks like the Chicago mafia is running the country…

Let me give you some input that no one in this administration would ever give… “You’re best bet is to find all the TILA violations, the RESPA violations, the Servicing violations and anything else you can find and even the playing field.” The servicers and institutions only know how to play dirty and you better man up if you don’t want them to clean your clock. Reference the stories below for more…

If you’re one of the lucky few who qualify for a TILA Mortgage Rescission you’ll really have them. Remember: valid TILA mortgage rescission is a COMPLETE defense to foreclosure. When you have the valid legal right to rescind and do so, the security instrument (mortgage) becomes VOID by operation of law. The mortgage (or trust deed) is the security instrument and the only thing that gives the real party in interest the legal right to foreclose. When that instrument is voided automatically upon lawful rescission, they real party in interest, the servicer or anyone else claiming a right have no legal standing to foreclose anymore.

Here’s the story from salon.com…

David and Marilyn Baldwin live in the same modest house in rural Pennsylvania where David grew up. David’s brother lives in a house behind them, while his cousin owns a farm visible from the couple’s front door. They’ve lived there for 25 years, but when I went to interview them in April, they were on the verge of losing their home.

A battle with congestive heart failure and diabetes forced David to leave his job as a car salesman in August of 2007. He and Marilyn — both in their early 60s — tried to keep up on their mortgage as best they could until David’s disability payments started arriving in April of 2008. But once they started receiving the checks, it became clear their existing mortgage was now beyond their means.

“We didn’t think that Dave was going to be at a point where he’d have to be on disability,” Marilyn said. “We always paid it before, we just can’t do it now.”

In February of 2009, newly inaugurated President Obama unveiled a foreclosure prevention program called Making Home Affordable, promising to keep “up to 3 to 4 million” borrowers from losing their homes. But like a similar initiative adopted under the Bush administration, the Obama plan is flawed because it relies on the housing industry itself — namely the industry’s debt collectors, known as mortgage servicers — to fix the problem. And like the Bush plan, it isn’t working especially well, as the Obama administration’s own numbers now show. While 1.5 million homes have gone into foreclosure in 2009 as of June 30, just 235,247 borrowers have been granted trial loan modifications under the Obama plan since its inception, according to an Aug. 4 U.S. Treasury Department report.

Helping homeowners is not what mortgage servicers do. Making Home Affordable asks mortgage servicers to identify troubled borrowers and fast-track them to relief. But servicers specialize in squeezing borrowers for money, and have never been interested in devising long-term solutions for people in trouble. The poorly paid individuals, some of them offshore, that they hire to contact homeowners are not trained to renegotiate loans. Obama’s program, like the Bush plan, is strictly voluntary — if servicers don’t want to participate, they don’t have to. As in the Bush plan, servicers who do participate face no penalties for failing to assist qualified borrowers, and no government agency is policing servicers to make sure they live up to the terms of the contract. Meanwhile, they actually benefit from letting homes fall into foreclosure, because foreclosure means they are guaranteed an upfront payment from the sale of the home.

“Nothing has changed,” says Daniel Lindsey, an attorney with Legal Assistance Foundation of Metropolitan Chicago who heads the group’s home ownership preservation effort.

The Baldwins’ loan is handled by CitiMortgage, a mortgage servicer owned by Citigroup Inc., the foundering finance behemoth that has received $45 billion in direct bailout funds from the U.S. government and hundreds of billions in federal guarantees. As a condition for taxpayer support, Citi agreed to implement a major borrower relief effort, and was one of the first companies to adopt Obama’s anti-foreclosure plan when it was unveiled earlier this year.

In April of 2008, when the Baldwins realized they were in serious financial trouble, Citi was signed on to the Bush administration’s private-sector mortgage fix-it plan, Hope Now. Hope Now was a coalition of banks organized by then-Treasury Secretary Henry Paulson. Members of Hope Now held several splashy press conferences in late 2007 and early 2008 encouraging people who were having trouble paying their mortgages to contact their loan servicers and work out a new arrangement.

But there wasn’t much more to Hope Now than press conferences. The government’s role was that of a cheerleader, encouraging servicers to help borrowers, but providing no guarantees or penalties. The data for the program — the stats on the number of loans modified — was even collected by the Financial Services Roundtable, a lobby group for the banking industry that pushed hard against multiple congressional efforts to reduce foreclosures. (The data collected by the Financial Services Roundtable gives Hope Now credit for loan modifications from July 2007, even though the program wasn’t announced until Oct. 10, 2007.) Servicers were free to do what they wanted with troubled borrowers, and usually, that meant foreclosure.

But in April 2008 David and Marilyn Baldwin did what Hope Now encouraged them to do and contacted their loan servicer. David had earned about $50,000 a year when he was working, but only receives $1,800 a month on disability. Marilyn takes home $1,000 a month driving a van for the local public school district, putting their $2,250 monthly mortgage payment well out of reach

Citi wasn’t interested in helping.

“They told me flat-out, they wouldn’t accept any partial payments,” David said. “To put it plainly, they’ve been jerking me around ever since.”

Over the next several months, Citi alternately cut off contact with the Baldwins for weeks on end, and made threatening phone calls to demand money. The company repeatedly insisted that the Baldwins would lose their house if they didn’t pay up everything they owed in full, immediately. Sometimes the bank would make vague promises of debt relief, but always refused to put any agreement in writing, or even specify the terms of a solution over the phone. The mantra was always the same: Send us the full payment, and send it now.

“This woman told me, ‘If you can’t send me this money and we can’t arrange this right now, then we can’t help you. Don’t bother calling me anymore,’” David said.

Hope Now bragged about helping 1 million families avoid foreclosure in 2008 by modifying their loans, at least according to the figures assembled by the Financial Services Roundtable. That’s more than the Obama plan has modified — but the Hope Now modifications were apparently crap.

Economists at the Boston Federal Reserve published a paper last month indicating that only 8.5 percent of seriously delinquent borrowers received any kind of loan modification in 2007 and 2008, while only 3 percent received a loan modification that actually reduced their monthly payment. A lot of this so-called help actually drove borrowers deeper into debt and increased their monthly bills. Instead of cutting the interest rate or the loan principal — that is, the total amount the borrower owes — servicers would add missed payments and penalty fees to the principal, resulting in more overall debt and higher monthly bills for borrowers. According to an analysis by the Center for Responsible Lending, an advocacy group that promotes fair lending practices, less than 20 percent of the loan modifications reported by Hope Now actually reduced borrowers’ monthly payments.

When David and Marilyn felt like they had reached a dead end with CitiMortgage, the couple got in touch with the National Community Reinvestment Coalition (NCRC), a nationwide borrower advocacy group that helped the couple consider their legal options and fend off foreclosure proceedings for nearly a year, until the Obama plan, Making Home Affordable, took effect in 2009.

Servicers participating in Making Home Affordable are supposed to determine if a troubled borrower meets a set of minimum criteria for relief, and then immediately reduce her monthly payment to 31 percent of her monthly income. If she can make the reduced payment for three months, it becomes permanent and she keeps the house.

Under the Obama plan, unlike the Bush plan, servicers don’t get to pick and choose who gets offered relief, or the terms of the relief. If a borrower meets the standards, she has to be enrolled in the program. The criteria are straightforward: The borrower has to live in her home and must actually be having trouble paying off her mortgage. Modifying the loan to the program’s standards must be cheaper for investors than foreclosure. The program provides servicers with two incentives to make modifications. If the servicer will reduce the borrower’s payment to 38 percent of her monthly income, the government will fund the reduction to 31 percent. Taxpayers are also paying servicers $1,000 for every mortgage modified under the plan.

“There’s more meat on the bone, but it’s in the form of sweeteners and encouragement,” says NCRC president John Taylor. “It’s all carrot and no stick.”

Borrowers and housing counselors who have been through the plan report intense and prolonged difficulties from working with servicers, and routine violations of the plan’s rules. Servicers frequently demand that borrowers waive their legal rights to challenge servicer actions in court in exchange for an Obama plan modification, attempt to steer borrowers into modifications much less helpful than the Obama plan modification, mislead borrowers about the terms of the Obama plan and refuse to enroll qualified borrowers in the program. The program provides no penalties for failure to follow through.

In other words, that means that for a homeowner who needs a loan modification, dealing with mortgage servicers is little different in 2009 than it was in 2008. It’s still a version of call center hell.

Talking to a mortgage servicer is like haggling with the phone company — except over hundreds of thousands of dollars, your credit rating and your future financial security. When you call a servicer, you’re first treated to an electronic call management system. A digital voice warns you that you are talking to a debt collection service and any information you offer will be used for those purposes. The voice then asks you for information about your loan, your house and yourself. Once this is over, you listen to hold music while you wait for an actual person to answer the phone. Depending on the servicer and the time of day, it can take 15 minutes just to get through to an actual human being.

When and if the caller does get through to a live person, many borrowers are simply told they cannot be helped and need to send in payments. But some borrowers get placed on hold and referred to another person in another department and another expert. This can happen several times before you speak to someone with the corporate authority to actually help you. Sometimes calls dead-end in an answering machine. Servicer employees often take down borrower information and take weeks to get back to them. And servicers rarely assign specific people to handle individual borrower cases, so every time a borrower calls, they’re subjected to the same bureaucratic mess.

Should the caller ever have a substantive conversation with an employee at the call center, however, the person on the other end of the line is not a mortgage expert, but simply a poorly paid, hourly employee whose prime directive is debt collection. “Most loan servicing personnel are poorly paid debt collectors, not credit analysts,” says Raj Date, a former executive with Capital One Financial who now heads the Cambridge Winter Center for Financial Institutions Policy. “It’s just not a skill set that is at all aligned with what they’re trying to get done here.

This is all part of the servicer business model. Servicers aren’t banks, although they’re often owned by banks. They don’t make mortgages or buy the crazy securities mortgages are packaged into. Since they communicate directly with borrowers, servicers are usually described as a customer service business, but the truth is, they’re more like specialized investment speculators. Servicers bid on contracts called mortgage servicing rights, which can be bought and sold. These contracts give the owner the right to collect payments from borrowers and skim a little off the top before forwarding the money to the investors who purchased the mortgages. If a borrower gets into trouble, the servicer is responsible for limiting any losses for investors, but the key to the servicer business is figuring out which pools of mortgages to bid on, and making the right bid. Working with troubled borrowers to avoid foreclosures is a secondary concern.

“Servicers’ contribution to corporate profits is often more tied to their ability to keep operating costs low than their ability to reduce losses,” wrote mortgage consultant and Louisiana State University finance professor Joseph Mason in a paper published in March.

Labor expenses are kept to an absolute minimum, which means fewer people answering the phones, and less expertise. The people answering the phones can be making as little as $8 an hour.

Different servicers have different standards. Christopher Orlando, a spokesman for Carrington Mortgage Services, an independent servicer who specializes in subprime loans, insists that his company has faster response times and higher staffing levels than most prime servicers, because they set up their business to be involved with customers who are more likely to have trouble paying their loans.

“We are structured for more active and regular communications with our customers, which made us well-equipped to manage the current crisis,” says Orlando. According to Treasury data, Carrington has agreed to modify 597 mortgages under the Obama plan guidelines, about 4 percent of the loans the company services that Treasury believes are eligible for the plan.

Most subprime servicers are better known for boosting their bottom line at any cost. Before subprime specialist IndyMac failed in the summer of 2008, the company had spent years outsourcing much of its servicing operations, including customer calls, to India. And many of the prime servicers Orlando references service a lot of subprime loans. The Baldwins received their loan from subprime lender Ameriquest, and the loan was sold multiple times before CitiMortgage began handling it.

When Christopher and Crystal Nndouechi of Jacksonville, Fla., heard about the Making Home Affordable plan, they’d been stuck in the Hope Now impasse for months. The couple — both teachers — had stable jobs, but their mortgage had an adjustable interest rate that reset in May of 2008, resulting in dramatically higher monthly payments.

The Nndouechis’ loan is serviced by Countrywide, a major subprime servicer whose parent company, Bank of America, has received $45 billion in government bailout funds, plus hundreds of billions in federal guarantees. Like Citi, Bank of America agreed to adopt a rigorous anti-foreclosure plan as a condition for taxpayer support, and was among the first servicers to agree to the Obama plan. According to the Treasury, the company has agreed to just 27,985 trial modifications under the program, roughly 4 percent of the seriously delinquent mortgages the company services that Treasury thinks are eligible. Bank of America did not return multiple calls for comment for this story.

When the couple called Countrywide about the Obama plan, the company told them they were not eligible. So the Nndouechis’ NCRC representative went to bat for them, but Countrywide again insisted that nothing could be done. When NCRC enlisted a lawyer to fight on the Nndouechis’ behalf, Countrywide finally acknowledged that the family did in fact qualify for the Obama plan.

“I thought if we went to Countrywide in good faith, I thought they would do what they could,” Christopher said. “But it wasn’t like that. The NCRC attorney went through this intense negotiation. They were even trying to give him the runaround.”

But just one week after agreeing to enroll Christopher and Crystal in the Obama program, Countrywide told the couple that, while they were in fact eligible for the plan, company guidelines barred the NCRC lawyer from representing the Nndouechis in negotiations. As a result, Countrywide was going to deny them relief — even though the family actually qualified.

This aggression is deeply ingrained in the culture of mortgage servicers. And ultimately, it’s probably not something that would be cured by retraining or upgrading the industry’s call center employees.

Most of the mortgages that servicers handle are owned by Wall Street hedge funds and major banks. “Wall Street made a ton of money on securitized mortgages,” says Josh Zinner, co-director of the Neighborhood Economic Development Advocacy Project, an economic advocacy group based in New York City. “The servicers that got the big contracts were those that would collect most aggressively. So it wasn’t in their culture to work with a borrower and try to find something that was in their interest. They would just move as aggressively as possible.”

If the servicers could not collect, they would still win — by foreclosing. When borrowers stop making payments, the servicer is required to advance the interest payments to investors out of its own pocket. Once the servicer forecloses, it gets to recoup those payments from the sale of the home. But if the servicer works out a loan modification, it doesn’t get to recoup its out-of-pocket advances until the borrower actually pays them back, which can take a very long time, particularly if the borrower his missed several payment

“The investor losses may be very large, but the servicer will almost always benefit by completing a foreclosure sale,” wrote Valparaiso University Law School professor Alan White in a paper published in January.

So servicers opt to stonewall borrowers and foreclose on them, even when doing so sacks investors with massive losses. In March of this year, with the Baldwins scheduled to lose their home to foreclosure on April 16, Citi told the family they were prequalified for a new aid program. The company said it would postpone the foreclosure on their home until June 16 while their house was reappraised, but only if the family made a full $2,250 payment. Once again, Citi refused to detail the terms of any future relief, so the Baldwins took the NCRC’s advice and declined to pay. The very next day, their local paper featured a notice informing the entire town that their home would be foreclosed on in mid-April. When I interviewed the family on April 5, no appraiser had come by to evaluate their home after an entire month, and Citi had dropped out of contact.

“We’re hoping that nobody comes and puts locks on our doors on April 16,” Marilyn said. “They won’t eve let you come and take any of your belongings after that.”

When I called Citi for comment, a spokesman told me that the company helped four out of five distressed borrowers it serviced in 2008, and claimed Citi’s “loss mitigation successes” outnumbered foreclosures by more than 10-to-1 in the first three months of 2009. According to the Treasury, CitiMortgage has implemented 27,571 modifications under the Obama plan, about 15 percent of the number of seriously delinquent mortgages the company services that Treasury thinks are eligible.

When I contacted the Treasury Department for a comment on the success or failure of Making Home Affordable, a spokesperson directed me to the Aug. 4 report and accompanying press release, but declined to comment further. The press release claims the program is meeting Treasury’s expectations. “This pace of modifications puts the program on track to offer assistance to up to 3 to 4 million homeowners over the next three years,” Treasury says.

In the meantime, the foreclosure situation is growing increasingly bleak, pushing the entire U.S. economy deeper into recession. The foreclosure proceedings initiated on more than 1.5 million homes between Jan. 1 and June 30, 2009, represents a 15 percent increase from 2008, itself a dismal year for foreclosures. The Center for Responsible Lending estimates that 2.4 million homes will be lost to foreclosure in 2009, and 9 million by the end of 2012.

The numbers indicate that the modification program is not keeping pace with foreclosures, and that while the rate of modifications ticked up as soon as Obama took office, it has fallen since. In addition to the Treasury Department’s figures, Alan White has been tracking a database of 3.5 million subprime and Alt-A mortgages since late 2008. In November, the Valparaiso professor found that servicers modified just 21,219 mortgages, while 233,000 homes were in the foreclosure process. The Obama plan has not altered those numbers significantly. In 2009, modifications peaked at 23,749 in the month of February. In June, there were just 18,179 modifications, compared to 281,560 homes in foreclosure.

Ultimately, what is most disturbing about the Baldwin and the Nndouechi cases is the fact that both are actually success stories. Countrywide eventually sent the Nndouechis paperwork for their Making Home Affordable modification. In late May, after more than a year of talks with CitiMortgage, the Baldwins were finally approved for the plan — and given less than 24 hours to mail in their payment or be foreclosed on. This, incidentally, also violates the Obama plan. While servicers are processing a Making Home Affordable application, they have to suspend any foreclosure proceedings. The eventual enrollment of both families, of course, underscores the absurdity of the delays and diversions Citi and Countrywide deployed to deny them access. But more important, neither family would have made it through the process on their own. Even with intensive and prolonged legal assistance from a borrower advocacy group, getting relief was a tremendous struggle, making it easy to see why both Hope Now and the Obama plan have proved so disappointing.

“Everyone out there says, ‘Call your lender!,’” says Paula Sherman, a foreclosure prevention counselor with Virginia-based nonprofit Housing Opportunities Made Equal (HOME). “But for the average borrower doing this themselves, it’s impossible. They just don’t get the help they’re promised.”

– By Zach Carter

If you are facing a hardship with making your mortgage payments, you’re not alone. The national foreclosure rate is now at one in every 555 households. If you live in the Ft. Myers/Cape Coral area, that statistic jumps to 1 in every 18 households now in foreclosure.

A mortgage hardship is very common with unemployment numbers rising daily and US homeowners losing the values in their homes on a monthly basis as well

When someone loses their income they go through all sorts of emotions when they cease to have the ability to pay their bills. Fear can easily be all-consuming when facing a mortgage hardship and foreclosure.

The first thing I tell my clients is to not be afraid. Fear can take a root in our lives and cripple us from taking action and acting wisely.

Don’t cave in to the fear tactics of your mortgage servicer or lender – or any other creditor for that matter. You’re still in control even though you may not feel like it.

There are precise steps you can take to protect yourself and your interests. There are legal rights that you possess and can use to help yourself in difficult times. The biggest challenge is that most American consumers and homeowners don’t know they have legal rights. You have foreclosure rights…when you’re facing a mortgage hardship, all hope is not lost.

We have helped families stay in their home for an extra 6 months, 8 months and over a year. We never provide a precise time frame or outcome. There are so many variables… if you have a company giving you a bunch of promises and charging a lot of money upfront for now finite service, be extremely wary and cautious.

Another very likely issue is that the financial institution attempting to collect and/or foreclose doesn’t even own your loan or have the legal right to collect. Over 80% of all foreclosures filed in Florida right now contain a “Lost Note” count alleging that they (the plaintiff) have lost the most important document as evidence of the debt they claim you owe – the Note

There are several affirmative defenses that a qualified and competent foreclosure attorney will know how to bring in your case.

A TILA mortgage rescission may be something that you can assert if there are material disclosure violations found in a forensic loan audit of your loan documents. Obtaining a true forensic loan audit is probably the best first step you as a homeowner in mortgage hardship can take.

A forensic loan auditor will truly break down the entire package of loan documents and examine them for state and federal loan violations along with a forensic examination for fraud and failure to disclose, appraisal fraud and loan application and underwriting fraud.

Be certain that you are truly dealing with a reputable and knowledgeable auditor. I find that a very select few of us really know what to look for and truly know the laws. So many people will tell you what you want to hear without preserving integrity and honesty.

There is a litany of scams out there so be careful. Take your time, ask questions, find a professional who will help and educate you. Knowledge is truly power. The more you know and understand your foreclosure rights, the better off you’ll be.

Quantified violations of the Truth in Lending Act (TILA) and other federal violations can be used a Claims in Defense by Recoupment in any foreclosure action brought against you. A forensic loan audit (done right) is highly valuable for you.

You’ll land on your feet. You’ll make it through this tough time. Be a sponge for information, read it with common sense in mind and find a person or two who can be your mentor or advisor through this time. You’ll make it… I promise.

HOEPA is an amendment to TILA that deals with the substantive abuses of creditors offering higher costing home loans to residents in certain geographic areas. The statute was enacted to ensure that consumers most vulnerable to abuse would be afforded a safety net without impeding the flow of credit altogether.

There are certain trigger points to determine if a loan is a “HOEPA or Section 32″ Home Loan.

Triggers for HOEPA Coverage

APR more than 10% above comparable Treasury security rate (8% on first-lien loans closing on or after October 1, 2002) on the 15th day of the month before the lender received the loan application. 12 C.F.R. 226.32(a)(1)(i); 66 Fed. Reg. 65,617 (2001).

“Points and fees” exceeding 8% of the “total loan amount.” 12 C.F.R. 226.32(a)(1)(ii).

Some examples of Points are:

All prepaid finance charges. 12 C.F.R. 226.32(b)(1)(i);

All compensation paid to mortgage brokers. 12 C.F.R. 226.32(b)(1)(ii);

All items paid to the lender or to a lender affiliate. 12 C.F.R. 226.32(b)(1)(iii);

Disclosure Requirements

A special HOEPA disclosure notice must be delivered to the consumer at least three business days prior to the closing of the loan. 15 U.S.C. § 1639(b); 12 C.F.R. 226.31(c). A signed statement to the effect that the consumer received the HOEPA notice creates a rebuttable presumption only. 15 U.S.C. § 1635(c).  The notice must inform the consumer that he/she need not enter into the loan, and that if he/she does enter the loan, he/she could lose the home and any money put in it. 15 U.S.C. § 1639(a); 12 C.F.R. 226.32(c)(1).

The notice must also include an accurate statement of APR, monthly payment and balloon payment amount, and maximum payment amount on a variable-rate loan. 15 U.S.C. § 1639(a)(2); 12 C.F.R. 226.32(c)(2)-(4); Official Staff Commentary 12 C.F.R. 226.32(c)(3)-2.

Prohibited Terms

The following terms or actions are prohibited (or limited) by the statute and Regulation Z: prepayment penalties, default interest rate, balloon payments, negative amortization, prepaid payments, negligent lending, direct payments to home improvement contractors. 15 U.S.C. § 1639(c)-(h); 12 C.F.R. 226.32(d). 

Remedies

Failure to deliver the required HOEPA notice or inclusion of a prohibited term triggers an extended (three-year) right of rescission (described above; also called TILA Mortgage Rescission). 15 U.S.C. § 1639(j); 12 C.F.R. 226.23(a)(3) n.48.;

In addition to regular TILA monetary damage remedies, HOEPA violations give rise to “enhanced” monetary damages under 15 U.S.C. § 1640(a)(4), namely, all payments made by the borrower. 

PLEASE NOTE: Remember that if you have a HOEPA rescission case, this effectively gives you a double deduction– you get to deduct all payments made twice before getting to your “HOEPA-adjusted” tender amount (once in calculating the TILA tender amount, and once in calculating HOEPA damages). Also, if you’re beyond three years and can’t rescind, you can still raise a HOEPA claim and deduct all payments made in the nature of defense by recoupment.

As with any TILA violation, the rescission remedy runs against any assignee of the loan. 15 U.S.C. § 1641(c). In addition, where the loan documents demonstrate that the loan is covered by HOEPA coverage, assignees “shall be subject to all claims and defenses with respect to that mortgage that the consumer could assert against the creditor.” 15 U.S.C. § 1641(d)(1). This provision mirrors the FTC Holder Rule and creates assignee liability for all state and federal claims and defenses. For monetary damages claims under TILA, it provides an exception to general rule that violations must appear on the face of the documents. 

Statute of Limitations

• 1 year for affirmative claims.15 U.S.C. § 1640(e);
• 3 years for rescission.Beach v. Ocwen, 523 U.S. 410 (1998);
• Unlimited as a defense to foreclosure in the nature of a claim in defense by recoupment

I was on the phone yesterday with a loss mitigation rep from Washington Mutual Bank. I was calling to get the specific address to send a “Notice of Rescission” to for WAMU. Every lender/bank/servicer has specific addresses for these types of correspondence.

I asked the lady in Loss Mitigation for the “address that I can send a rescission notice to.” At first, she said, “a what?” “A notice to rescind the loan” I said. “Sir, you can’t rescind a loan” she said. I said, “ma’am, please just give me the address I can send an official notice to rescind the loan to.” She says, “why? did you just close on this loan within the last three days because I’m pretty sure you can’t just cancel a loan.”

I said, “ma’am you most certainly can, up to three years from the date of closing actually if it’s a refinance loan of a primary residence and there are certain violations of the truth in lending act; but I’m not going to argue with you, just give me right address!”

This little back and forth madness just goes to show how even the banks don’t know the damn law! A legal right to TILA mortgage rescission can extend up to three (3) years out from the date of closing if:

1. It’s a REFINANCE loan transaction
2. It’s on your PRIMARY residence
3. It was closed in the last THREE years
4. A forensic loan audit reveals a MATERIAL disclosure violation

Many people ask me how to stop a foreclosure… folks, TILA mortgage rescission is a COMPLETE defense to foreclosure. In fact, it is the most POWERFUL foreclosure defense you could have. Why?

When you effect a TILA mortgage rescission, you are literally and legally canceling the loan. Here’s exactly what Regulation Z says,

12 C.F.R. § 226 et seq. (“Reg. Z”)
(a) Consumer’s right to rescind. (1) In a credit transaction in which a security interest is or will be retained or acquired in a consumer’s principal dwelling, each consumer whose ownership interest is or will be subject to the security interest shall have the right to rescind the transaction, except for transactions described in paragraph (f) of this section. 

(2) To exercise the right to rescind, the consumer shall notify the creditor of the rescission by mail, telegram or other means of written communication. Notice is considered given when mailed, when filed for telegraphic transmission or, if sent by other means, when delivered to the creditor’s designated place of business.

(3) The consumer may exercise the right to rescind until midnight of the third business day following consummation, delivery of the notice required by paragraph (b) of this section, or delivery of all material disclosures,⁴⁸ whichever occurs last. If the required notice or material disclosures are not delivered, the right to rescind shall expire 3 years after consummation, upon transfer of all of the consumer’s interest in the property, or upon sale of the property, whichever occurs first. In the case of certain administrative proceedings, the rescission period shall be extended in accordance with section 125(f) of the Act.

 12 C.F.R. § 226.23(d)
(d) Effects of rescission. (1) When a consumer rescinds a transaction, the security interest giving rise to the right of rescission becomes void and the consumer shall not be liable for any amount, including any finance charge.

(2) Within 20 calendar days after receipt of a notice of rescission, the creditor shall return any money or property that has been given to anyone in connection with the transaction and shall take any action necessary to reflect the termination of the security interest.

(3) If the creditor has delivered any money or property, the consumer may retain possession until the creditor has met its obligation under paragraph (d)(2) of this section. When the creditor has complied with that paragraph, the consumer shall tender the money or property to the creditor or, where the latter would be impracticable or inequitable, tender its reasonable value. At the consumer’s option, tender of property may be made at the location of the property or at the consumer’s residence. Tender of money must be made at the creditor’s designated place of business. If the creditor does not take possession of the money or property within 20 calendar days after the consumer’s tender, the consumer may keep it without further obligation.

(4) The procedures outlined in paragraphs (d) (2) and (3) of this section may be modified by court order.

Don’t know if you caught that above but I bolded it for you. Yes, that’s right the mortgage (the security interest) becomes VOID. Further, the borrower is NOT responsible for ANY finance charge. That means any/all closing costs and interest paid on the loan from closing to current is refunded to the borrower as a credit against the original loan amount.

So, let’s get to the foreclosure defense issue… the mortgage gives the owner of the Note the legal authority to foreclose. If the mortgage is voided, there is no longer any legal instrument to foreclose on. The creditor becomes unsecured just like a credit card creditor. The security interest has been voided by operation of law. Foreclosure becomes a legal impossibility.

The lenders don’t just roll over and go away but folks, if they violated the federal law in your loan transaction, its black and white. It’s not some subjective he said, she said issue. It’s recognizable and quantifiable. You absolutely want a forensic loan audit done by a knowledgeable analyst. If you’d like to retain me for my audit services, go to my contact page and get a hold of me.

Hopefully, this short post will help you see that a valid TILA mortgage rescission is the best remedy and defense to foreclosure if you qualify for it!

This case was just upheld in July 2009 so this is good case law for federal bankruptcy courts. Obviously there may be some judges in different districts who won’t like it or may not adhere to it because it’s not their district. This case should be good if you have to appeal if that’s the route the judge takes but this is great news for homeowners who have rescinded, tendered correctly and the lender/assignee did not respond as per the statute.

At the very least, a trail has been blazed and there is now a federal case which really follows the statute as it is truly written – which is in favor of the consumer.

CLICK HERE to read the case.

By Lane A. Houk
January 16, 2009

The Little Guy (David) vs. the Big Guy (Goliath). These classic battles are being waged in the “War on the Home Front” every single day. The subject of this post is a case that goes to the win column for the Little Guy. We are fighting for our freedom, our country, democracy… we are fighting against corporate and political corruption. I hope you are fighting too. This is a war for our rights and our homes and our American way of life. It’s all under siege folks. Don’t be fooled into complacency.

This is one of the most powerful cases I have read in a long time. CLICK HERE to read the actual case order from the Judge in the Adversary Proceeding. The borrower in this case rescinded the loan transaction because an audit of their closing documents revealed a “material disclosure” violation as is defined in 15 U.S.C. §§ 1601 et seq. (“TILA”) and its implementing regulations at 12 C.F.R. § 226 et seq. (“Reg. Z”).

Once the Consumer rescinds, the security interest arising by operation of law becomes void automatically. The promissory note is also voided since it is part of the same “transaction.”

The borrower in this case had foreclosure filed against them. After retaining an attorney for the foreclosure, the attorney advised them to have an audit of their loan closing file which revealed a material disclosure violation. It is important to note that a loan can ONLY be rescinded when:

1. The loan is a refinance transaction;
2. Funded in the last three years
3. On the borrower’s primary residence;
4. When a “material disclosure violation” is found

The term “material disclosure violation” is a very important component. Many people (including self-proclaimed experts in loan auditing) think that “any” violation of the Truth in Lending Act gives someone the right to rescind.  That is patently wrong. The four conditions above must be true in order for the borrower to have the possible “extended right to rescind” the loan transaction. There are only 4 potential “material disclosure violations.”

The borrower in this case was given an insufficient amount of the Notice of Right to Cancel. A borrower should receive two (2) copies of the Notice.

If a married couple is identifiable on a Universal Residential Application, then each consumer is entitled to rescind and must be given a copy of the TILA Disclosure Statement with all material information accurately and correctly disclosed, 15 U.S.C. § 1602(u); Reg. Z § 226.23(a)(3) n.48, and two (2) copies each of the rescission notice, 15 U.S.C. § 1635(a); Reg. Z § 226.23(b), irrespective of whether both are obligated on the note (or either, for that matter).

In this case, the borrowers were married and received only 2 copies total. Material disclosure violation. Thus they rescinded. The lender Option One obviously contested the matter.

Once the Consumer rescinds, the security interest arising by operation of law becomes void automatically.  The promissory note is also voided since it is part of the same “transaction,” see i.e., 15 U.S.C. § 1635(b) and Reg. Z § 226.23(d)(1).]

This is powerful folks. This is a complete remedy to foreclosure. The mortgage is the security interest and it is the mortgage (and the mortgage only) that gives the lender the right to foreclose. In a rescission, the lender must void the mortgage within 20 days. If it does not, it is another violation of TILA.

After rescinding the loan the borrowers also filed a Chapter 13 bankruptcy. The lender refused to rescind the loan. The borrowers filed an Adversary Proceeding in the Bankruptcy Court. Bottom line: The judge heard all arguments from both Plaintiff (borrower) and the Defendant (Option One). The judge found in favor of the borrower/plaintiff and determined that they had the right to rescind. Victory number one.

But a BIG ruling in this case was that since they had rescinded the loan, the loan became an “unsecured” debt since the mortgage was automatically voided as per TILA. Since the debt became “unsecured” it was able to be discharged through bankruptcy like any other type of unsecured debt such as a credit card debt.

The moral of the story: TILA Rescission is the most powerful remedy to foreclosure if/when the borrower has this remedy afforded to them. The key is to obtain a loan audit by a real expert. Call/email me if this is something you want to do. I encourage you to read the Adversary Proceeding Case. It is highly enlightening.

 © Lane A. Houk – 2009– All Rights Reserved

In short, if a TILA violation is found within 3 years of closing on a refinance transaction of the borrower’s primary residence, the debtor/borrower can “rescind the loan.” By serving notice to the lender of the debtor’s action to rescind the loan, the lender has “20 days to return all finance charges, downpayment monies, etc.” to the borrower and must also “remove all security interests on the property” in 20 days.

If the lender fails to do so, it is in violation of TILA requirements, mainly 15 USC §1635 and, according to paragraph “b” of this section, there are some huge implications for both debtor and creditor if the creditor does not comply with these requirements.

Here’s a sample case that you can read as evidence of how powerful this remedy can be: Belini v. WAMU

Call or email me if you want help pursuing a TILA violation against you. These are cases for attorneys to take up and we have an extensive network of attorneys that we can help you get in touch with.

The neat thing about TILA violations is that they are strict liability causes of action: the aggrieved borrower doesn’t have to prove they were defrauded or misled, or that they had actual damages. The fact that the disclosures were defective or inadequate in amount gives the borrower the right to rescind the loan and deprives the lender of the right to interest on the loan. Pretty powerful stuff.

Powerful stuff is what we need to keep people in their homes: tools to bring the lender to the table to revisit the loan and find an alternative to foreclosure. Because absent some sort of restructuring, a tremendous number of these impossible loans will otherwise be foreclosed. In the long run, a foreclosure benefits neither party.

My small, unscientific sample says that I am finding TILA violations in at least half of the loans I’m reviewing these days. TILA doesn’t apply to financing of investment property, but for me, it’s the family homes that I’m intent on saving.

So, if you have a loan taken out in the past three years, gather all of the documents you got at closing and give me a call at 1-800-985-4685 to get the transaction reviewed for Truth in Lending compliance. Once those three years are past, there is little that TILA can do for you.

You need to really read what I’m about to quote from part of TILA – otherwise known as The Truth in Lending Act. This excerpt comes from 15 USC §1635 (a)(b) and (f). With our expert attorneys in our network, we can help homeowners who have refinanced in the last three years look for TILA violations. If any are found, the below excerpt applies to your situation. This is POWERFUL!

TITLE 15 > CHAPTER 41 > SUBCHAPTER I > Part B > § 1635Prev | Next

(a) Disclosure of obligor’s right to rescind
Except as otherwise provided in this section, in the case of any consumer credit transaction (including opening or increasing the credit limit for an open end credit plan) in which a security interest, including any such interest arising by operation of law, is or will be retained or acquired in any property which is used as the principal dwelling of the person to whom credit is extended, the obligor shall have the right to rescind the transaction until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission forms required under this section together with a statement containing the material disclosures required under this subchapter, whichever is later, by notifying the creditor, in accordance with regulations of the Board, of his intention to do so. The creditor shall clearly and conspicuously disclose, in accordance with regulations of the Board, to any obligor in a transaction subject to this section the rights of the obligor under this section. The creditor shall also provide, in accordance with regulations of the Board, appropriate forms for the obligor to exercise his right to rescind any transaction subject to this section.

(b) Return of money or property following rescission
When an obligor exercises his right to rescind under subsection (a) of this section, he is not liable for any finance or other charge, and any security interest given by the obligor, including any such interest arising by operation of law, becomes void upon such a rescission. Within 20 days after receipt of a notice of rescission, the creditor shall return to the obligor any money or property given as earnest money, downpayment, or otherwise, and shall take any action necessary or appropriate to reflect the termination of any security interest created under the transaction. If the creditor has delivered any property to the obligor, the obligor may retain possession of it. Upon the performance of the creditor’s obligations under this section, the obligor shall tender the property to the creditor, except that if return of the property in kind would be impracticable or inequitable, the obligor shall tender its reasonable value. Tender shall be made at the location of the property or at the residence of the obligor, at the option of the obligor. If the creditor does not take possession of the property within 20 days after tender by the obligor, ownership of the property vests in the obligor without obligation on his part to pay for it. The procedures prescribed by this subsection shall apply except when otherwise ordered by a court.

(f) Time limit for exercise of right
An obligor’s right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first, notwithstanding the fact that the information and forms required under this section or any other disclosures required under this part have not been delivered to the obligor