Respa | War on the Home Front

Feb

Attorney Wins “Free House” in Case Before 9th Circuit Court of Appeals – A Mandelman Matters Podcast

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

67764Leave a Comment2012-02-04+19%3A59%3A19Mandelman

When it comes to defending homeowners against wrongful foreclosure, or suing banks on behalf of homeowners, Attorney Nathan Fransen, of the firm Fransen & Molinaro in Corona, California is a very smart, experienced and dedicated attorney. This I know for a fact.

How do I know this? It’s simple. Over the last few years, I’ve watched him literally bang his head against the wall as California’s courts have unabashedly approved of MERS, disregarded flaws in the securitization process, not cared one bit who signed what, and in general ignored everything having to do with foreclosure cases except the fact that the borrowers hadn’t made mortgage payments in so many months. He argued complex legal theory and simple fraud… he was honing his approach, and although he had his share of frustrating days, he was careful which cases he took on, never following an unproductive path twice. I’d refer potential clients to him fairly often, and in most cases, he’d talk them out of filing suit against whoever they had thought they had wanted to file suit against.

Don’t tell him I said it, but he’s also just generally a very smart person, you know, paid attention in school kind of person… fairly well-read… knew about things outside his area of expertise… the whole bit. He also had both the patience and ability to explain things about the law to me when I was frustrated over how things weren’t working. When someone can keep complicated things simple, you know they understand them inside and out… and when they can hold their own in a debate with me… well, I’m sorry but that’s saying something.

So, he called me a few weeks back and told me quite nonchalantly that he’d had a very good week. I was happy to hear that someone had. What was so good about it? Well, he had won two of his cases and at least one would result in his client getting a “free house.” The other might be a free house too, or maybe just a pretty good size pile of money. It’s true… Nathan had gone in front of the 9th Circuit Court of Appeals… his first time, by the way… and beaten US Bank, hands down… in Causey v. US Bank.

It seemed to me to be an impressive win, because he was appealing after losing in the lower court. He’s smart, patient and methodical… three things that tend to pay off eventually, but he wasn’t just going up against US Bank… no, he was going up against the dreaded “free house,” meaning that if the court ruled in his favor, his client would no longer have a mortgage secured by real property. At best, the amount owed would be unsecured debt, like credit card debt, and that would mean it could potentially be discharged in bankruptcy.

But, don’t jump to conclusions because it’s not what you’re thinking.

He showed me how I could actually listen to him argue the case in court, the 9th Circuit has audio files of the courtroom proceedings online, and listening to it was fascinating. So I figured out how to download it and then convert it to a file format that I could put inside a podcast. Then I asked him to comment before and after the case so listeners would really get valuable information and be able to learn from his experience.

I don’t want to spoil it, so I won’t say anything more… well, okay I’ll say one more thing. As I listened to him argue his case in court, one thing came through loud and clear: Judges hate the dreaded “free house.”

This is one Mandelman Matters Podcast that you definitely don’t want to miss. Nathan sets it up in the beginning, then you hear the audio of the actual courtroom arguments, both his and the lawyer for US Bank… and then he and I argue various topics such as whether robo-signing should be prosecuted and by whom, along with several other things that I know are frustrating homeowners today.

This is the real deal… you could call it “reality podcasting.” Turn up your speakers, sit back, relax, and listen as three justices from the 9th Circuit Court of Appeals struggle to balance the rule of law against the dreaded “free house.” I hope you enjoy it as much as I did…

CLICK BELOW:

Mandelman Out.

Sep

$6 Billion in Reinsurance Kickbacks to the Banks – Un-reported, Un-Acted Upon & Un-believable

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

36080Leave a Comment2011-09-08+23%3A17%3A17Mandelman

Oh, for crying out loud, banker people… can’t you EVER do ANYTHING that’s not illegal? Ever? Like, just once? Are we going to find out one day that you’ve all been engaged in money-laundering related to your purchases of those little pens with the chains on the ends? Or will it be extorting senior citizens related to their Christmas Club accounts?

I mean, don’t get me wrong… I realize it’s not really your fault. You’re bankers, after all, and like sharks bite, banks lie, cheat, steal, pilfer, skim and defraud, I suppose. And were that not enough of an explanation, it’s obvious that our government could care less even when you swindle well into the billions, so I would think that after a while, it’s like you might as well do what’s expected.

I actually imagine that whenever some government regulatory agency inadvertently discovers that you have done it again, they react like I would upon finding I’d stepped in dog droppings. Oh my, damn it… well, just scrape it off and hope no one was watching. I imagine that the regulators actually draw straws to see who among them has to bring up their decidedly inconvenient discovery of bank malfeasance to the banksters-in-charge. As in…

Federal Regulator: “Excuse me, sir? Might I have a moment of your time?”

Bankster-in-Charge: “What? Why would I give you a moment of my time? Get out.”

Federal Regulator: “I’m so sorry, sir, but one of our investigators accidentally stumbled into one of your off-the-books slush funds, and I just thought you should…”

Bankster-in-Charge: Are you f#@king kidding me, I told you last time never to let your clods go snooping around in our files… I’m calling your boss… you’re through.”

Federal Regulator: No, no… that won’t be necessary sir, I already fired the investigator involved.”

Bankster-in-Charge: “Fired? And you think that’s enough? What if he goes to the press? What a hassle that will be… you’ll have to cover it up, of course, but I’ll probably have to attend a meeting about it and you know how I hate anything that clogs my schedule.”

Federal Regulator: “Oh, no sir. I remembered what you told me last time. Before I fired him, I made sure he was accused of sexual harassment by an underage underling, so I don’t think we’ll be hearing from him again, sir.”

Bankster-in-Charge: “Did you make sure his wife knows about whatever he was supposed to have done?”

Federal Regulator: “Of course, sir.”

Bankster-in-Charge: Okay, so from now on where do your investigators stay when they’re in the building?

Federal Regulator: “In their cars parked in the garage, sir.”

Bankster-in-Charge: “Good man. Well, I’m off to the Caymans. Try not to get us into any more trouble while I’m gone.”

Federal Regulator: “Don’t give it another thought, sir.”

~~~

Come on… someone write in and tell me the truth… I know it was an exaggeration, but how close was I? Is it true that you made the SEC guys shine your shoes for a year for bringing up your unfunded pension liabilities a few years back? You can tell me… it’ll be our secret, I promise.

So… guess what just came out? No, wait… I know… let’s play knock-knock. I’ll start…

ME: Knock, knock.

YOU: Who’s there?

ME: Country’s largest bankers.

YOU: Country’s largest bankers who?

ME: Country’s largest bankers strong-armed $6 billion in illegal kick-backs from mortgage insurers over the course of a decade, a violation of RESPA at the very least, and the investigation was first kept under wraps by HUD’s Inspector General and then not acted upon by the Justice Department.

YOU: Hahahahaha…

ME: Why are you laughing?

~~~

According to a story in National Mortgage News:

“The allegations, since referred to the Department of Justice, stem from lenders’ demand that insurers cut them in on the lucrative business of insuring the mortgages they produced during the housing boom.

In exchange for the their business, companies such as Citigroup Inc, Wells Fargo & Co, SunTrust Banks Inc. and Countrywide allegedly required reinsurance partnerships on generous terms that violated the Real Estate Settlement Procedures Act, a 1974 law prohibiting abusive home sales practices.”

According to unnamed individuals that National Mortgage News described as “familiar with the investigation,” a HUD “team” turned over a “thick” binder containing evidence of major banks’ involvement in an illegal kickback operation to DOJ attorneys in the summer of 2009. Insiders say that the Justice Department did essentially nothing with the case, and when contacted by American Banker, a Justice Department spokeswoman declined to comment.

So, very well done there.

Apparently the documents show that HUD investigators concluded that “banks and insurance companies had created elaborate financial structures that had the appearance of reinsurance but failed to transfer significant amounts of risk to their bank underwriters.”

According to the National Mortgage News story:

“Some of the deals were designed to return a 400% profit on a bank’s investment during good years and remain profitable even in the event of a real estate collapse.

Making matters worse, banks allegedly forced unknowing consumers to buy more insurance than they needed and failed to properly disclose the reinsurance agreements, another RESPA violation.”

Michael Stephens, who is HUD’s acting inspector general, is said to have worked on the case prior to this past year when he was moved upstairs where he could begin concealing even more important and damaging secrets as the head of HUD’s inspector general’s office.

And here’s the best part… the National Mortgage News story said that Stephens “acknowledged the investigation’s existence and expressed frustration that the case had not yet produced a settlement or prosecution.” The story went on to quote him as saying: “This thing has been going on for too damn long.”

Obviously I wasn’t there, but I’d like to think that he put on his best “I’m frustrated” face and perhaps even stomped his feet when he said that.

Stephens also told the reporter that he was still “hopeful” that prosecutors would bring a case, and thank the Lord for that. I would hate it if he weren’t still “hopeful.” I mean… three’s always hope, right? And where there’s Hope, there’s Crosby. Bada-bing… whoa! (Thank you, thank you… I’m here all week.)

But wait… there’s more. Again, quoting from the National Mortgage News story:

“Market observers, analysts and ratings agencies long questioned the reinsurance deals, but banks and insurers publicly maintained they met the standard for arms-length transactions set out in a 1997 policy letter circulated by HUD. The deals, they said, were not the result of coercion… and it’s none of anyone’s business, besides.” (Actually, I made that last part up.)

But… the story went on to say that Wells Fargo and Bank of America both settled class action lawsuits that alleged the very same sort of misconduct, and internal documents show “banks and insurers viewed the arrangements as a thinly veiled pay-to-play scheme.” And in true mobster fashion, “even as insurers complained they couldn’t afford the escalating cost of the reinsurance payments, banks threatened or punished companies that balked at providing them, documents obtained by American Banker show.”

Apparently, Wells Fargo told at least one insurer that if it wanted business referrals, it should consider making such kickback deals with the bank. And, according to the story, after MGIC Investment Corp., an insurer, made it known that it was planning to cut back on bank kickbacks in 2003, Countrywide’s bosses complained to an MGIC executive and then threatened to move Countrywide’s kickback business to MGIC’s competitors.

When it comes to kickbacks and defrauding homeowners, timing is everything.

When the HUD investigators handed over the binder containing their case to federal prosecutors, it came with a suggestion made by the HUD inspector general that much of the penalty be “stayed,” which I guess means “waved.”

Why? Well, it’s simple really. Back in ’09, the mortgage industry was still reeling from defrauding the global financial system, and… well… I mean… we wouldn’t want to be a burden. After all, fining the bankers back in 2009 or 2010 could have negatively impacted their taxpayer funded record bonuses, and no one wanted to have to explain that to Jamie Dimon.

National Mortgage News wrapped up by pointing out that even the proposed settlement amount would constitute “the most aggressive action ever pursued under RESPA, requiring banks to pay hundreds of millions of dollars in fines and restitution.”

Yeah right… like that’s really going to happen.

And, former HUD Inspector General Ken Donohue, likely unable to avoid the question by slipping out the back door of wherever he was cornered said: “I’m bewildered by why this wasn’t pursued on an aggressive basis.”

Oh, are you bewildered Ken? Bewildered? Are you sure you’re not befuddled or perhaps even bemused? How about flummoxed, Kenny-boy. Might you be flummoxed or nonplussed? Flabbergasted? Astonished? Dumbfounded?

Tell you what, Kenneth-my-boy… if you’re even remotely any of those things, then I’d suggest that you need round-the-clock care, because I’m worried that you may hurt yourself while tying your shoes.

Save it, Inspector Gadget… you’re not fooling anyone.

Mandelman out.

Jul

Why 99% of All “Forensic Audits” are Scams

By LH | Featured, Forensic Loan Audits

28168Leave a Comment2011-07-12+04%3A45%3A03LH

Ok, it really bothers me… I’ve been wanting to write this post for a very long time. I’ve just been so stinkin’ busy it’s been put on the shelf several times. I’ve just tried to address this issue one by one as homeowners call me. But I cringe every time I hear the words “forensic audit” and I hate having to even say the words but sometimes I have to in order to help a homeowner or attorney understand what I (and a very select few others) do versus what the vast majority of these other individuals/companies out there are doing. That is why I have a category on this blog called “Forensic Loan Audits…” because the scammers that used to be in the “Loan Modification” business got put out of business by most Attorney Generals around the US after they saw millions scammed on that cottage industry. Nearly overnight, a new cottage industry of “retired” shall we say loan mod experts became “forensic auditors.”

Let me say this from the outset… there is a wide range of people and companies out there (including even some attorneys) who are selling “Forensic Audits.” They vary from outright scam artists to slick salespeople performing some [overly simplistic] level of some sort of a mortgage loan transaction audit but who charge exorbitant prices for the services and, ultimately, the work product they produce rises to the level of a scam as well because their fee and what they produce are universes apart – so I deem that a scam as well – that’s just my humble opinion of course.

There is one fairly high profile retired attorney out there operating a very popular blog selling extremely high-priced garbage [in my opinion]; unfortunately, many of his victims, I mean clients, have purchased this “audit” are left with many pages of virtual nothing-ness that they will never be able to use in a court of law. Quite ironic that it’s coming from an “attorney” or “counselor at law” – so to speak.

But, I don’t think any of you reading this right now are actually surprised of the story of another attorney or ex-banker taking advantage of people because they have a license, degree or bar number and using that “credential” to sell people on a scam. There are many prisons with such people calling those places home for these types of crimes.

So, now that I’ve spent a minute on the soap box, let me get to work to explain the difference between a “Forensic Audit” and a “Mortgage Loan Compliance Analysis” because there is a difference – like night and day. I think it’s a good place to start to say that I come from the mortgage banking industry and I have over a decade in actual experience in the inner workings of this industry and I have had to demonstrate continued competence in the actual compliance with the very laws we are looking into to see if these loans complied with these laws. I challenge you to find a “forensic mortgage loan auditor” out there in or even around the mortgage banking or finance industry. You won’t. You will find compliance officers. You will find fraud investigators. You will find compliance analysts and underwriters and risk managers. The closest thing might be the field of Forensic Accounting. But you will never find a legitimate forensic mortgage loan compliance officer using the term “forensic audit” or “forensic auditor” or even “forensic loan audit.” This is simply some deceptive marketing term invented by slick scammers who could probably sell a lot of people a box of coal and pass it off as a box of diamonds.

“Forensic” literally means “suitable for use in a court of law.” So the layman’s translation means that whatever report or whatever you might get from a “forensic auditor” must, and I mean MUST, withstand the legal scrutiny of a judge, jury and opposing counsel.

So, I’ll just dive right in here and make a point: you can use the word “forensic” if – and only if – your work product is deemed suitable for use in a court of law. So that’s the lens that any and all investigation by YOU as a homeowner MUST use in conducting your due diligence if you’re in the position of needing help to defend yourself from foreclosure or the potential illicit collection of mortgage loan debt.

I will say this… if you see ANYONE pitching a “Forensic Audit,” I would just turn and run. Even the simple use of that title – forensic audit – should set of alarm bells. What is it a forensic audit of? What does that even mean? Really, it doesn’t even tell you anything – other than it’s a slick marketer using a buzz term to sell you something. The question really is or should be – “will it be suitable in a cour of law?”

Conversely, a Mortgage Loan Compliance Analysis is EXACTLY what it’s name implies plus a bit more. What do we do? We analyze the mortgage loan documents for actual compliance with Federal Lending Laws. Did the original lender provide the borrower with the mandated loan disclosures from the date the borrower applied for the loan through to the closing or ratification of the mortgage loan transaction and were the material Truth in Lending Disclosures such as the APR, Amount Financed, Finance Charge, Amount of Payments and Payment Schedule were properly and accurately computed – this is a mathematical process that requires a very comprehensive understanding of Regulation Z, Section 226.4 along with the Official Staff Commentary for that section. It’s also an investigation and analysis of the transaction to see if the original lender [and any mortgage broker involved] that may have been involved complied properly with underwriting guidelines and a look into any possible mortgage fraud or predatory lending violations such as bait and switch tactics or even forgery of the borrower’s initials or signature on loan disclosures or loan closing documents. Finally, it’s also an investigation into whether the lender and/or broker was properly licensed. All of these issues are examined, documents analyzed, TILA disclosures re-computed for accuracy and comparison and then all of this is [or should be] rendered in a report or affidavit format along with any and all supporting exhibits such as the loan documents and other components of the investigation.

Now, here’s the clincher… a “Forensic Audit” is almost always going to be a collection of boiler plate fluff with a few specifics strewn throughout the template to pass this garbage off as legitimate. However, any real scrutiny of these documents by someone who knows what to look for – or worse, a judge or creditors rights attorney – will easily reveal the fact that 99% of these “forensic audits” aren’t worth the paper they’re printed on [ie. utter worthlessness]; which is real shame seeing that the homeowners who get suckered into these scams have precious few economic resources. They deserve a real service and a real work product that will actually stand up in a court of law.

A real mortgage loan compliance analysis and investigation will be highly CASE SPECIFIC. For it to be considered “forensic” in any sense of the word, it MUST be specific to YOUR CASE, not boiler plate. And judges HATE boiler plate, non-specific pleadings and if you try to throw a boiler-plate, template of a “forensic audit” at a judge in your case, you are asking for his/her wrath not to mention being completely discredited which never has a happy ending. I always tell people who are inquiring to hire me that there is no shortcut to these analyses and investigations. A mortgage loan transaction and any corresponding foreclosure case is like a fingerprint… no two of them are the same. Yes, you have a set of laws and guidelines that apply to all transactions but no two transactions are the same, period. Any and all work product must reflect that level of specificity if it is to be considered “forensic” in any way and has any chance of actually helping you make valid claims in a court of law.

So here’s my tip to help any homeowners facing foreclosure reading this: ASK for attorney references even IF they are an attorney. Ask to see their credentials. Ask for actual samples. Ask to see actual court cases their work product has been filed in and/or used in. Ask for customer references. Two words: DUE DILIGENCE… plus four words: DON”T BELIEVE THEY HYPE. Because your money can either be completely wasted or put to very good use depending on WHO you hire and what they produce. Finally, call or email me… I’ll send you a couple samples with borrower info redacted so you have something to compare the garbage to. Hopefully this helps a bit… Good luck and happy hunting.

Apr

MICHELE REAGAN SENATE CANDIDATE GETS IT AND GETS SUED FOR HER TROUBLES WITHOUT DEFAULT!

By LH | Foreclosure Blog News, Homeowner Resources

6223Leave a Comment2010-04-06+18%3A10%3A01LH

SEE MICHELLE REAGAN, ARIZONA STATE SENATE CANDIDATE

Finally a politician who puts principle ahead of politics!!

Michele Reagan, currently an Arizona legislator, deserves support not only for her campaign for Arizona State Senate, but for her battle with her lender. Her lender, Colonial Savings, decided to sue her for asking too many questions about how her loan was securitized. That’s right. She never missed a payment but she became concerned that her title and her money might be going the wrong way. So she did the only sensible thing — she asked. Enforcing her TILA and RESPA rights she asked a lot of questions about who holds her note, who owns her loan, who is the current beneficiary on her deed of trust, all of which seem to be different entities.

Colonial did what you’d expect. Stonewalled. And when she pressed the point they sued the lawmaker who has sponsored dozens of bills dealing with finance, tax and other issues for her constituency and the State of Arizona. I don’t endorse candidates usually. This is the first time. Representative Reagan did the right thing — she went public with it and spoke for tens of thousands of Arizonians and Millions of Americans who have been treated the same way by their servicers, the parties they thought were lenders, the courts and the government in general.

Filed under: foreclosure Tagged: ARIZONA, Colonial Savings, HERS, Michelle, Michelle reagan, Reagan, RESPA, State Senate, TILA

Jul

Beware of Scam “Forensic” Loan Auditors/Companies

By LH | Featured, Forensic Loan Audits, Truth in Lending

586157 Comments2009-07-09+01%3A59%3A43LH

Ok, here we go go again… now the scams have hit the loan auditing industry. Most of these fakers are ex-mortgage brokers who didn’t make it in the mortgage industry and are now looking for a new way to make money. There are a few good auditors out there who have really put in the time, effort and research to actually know the laws and know how to properly state the elements of these violations in a manner that can actually help a homeowner in a foreclosure matter (and can help an attorney bring these violations as affirmative defenses or counterclaims in a foreclosure case).

TILA or supposed “Forensic” Audits that use standardized check-off lists without providing a mathematical determination of the TILA Disclosure Statement and amounts are NOT Forensic Audits. A check-off list or automated/software-driven TILA Audit describing potential violations as “Serious,” or “Moderate” is incompetent and useless. A Forensic TILA Audit must provide accurate TILA; Regulation Z citations, case law precendent, as well as actual computation of all settlement service fees properly allocated in the TILA Disclosure Statement or the Audit will NOT withstand scrutiny by legal authorities. Do not be fooled by imitations using standardized check-off lists.

There is absolutely nothing “forensic” about plugging loan data into some software and having it spit out a report. But that is exactly what most of these fakers are doing and they are charging anywhere from $395 to $995 based on what I have seen so far.

If the loan audit will NOT stand up to legal scrutiny then you have wasted your money and someone has scammed you into believing you were paying for something that would help you. Why would you pay for a loan audit that would not stand up to legal scrutiny?

The software driven report serves a limited purpose and I use a popular banking compliance software for my audits as well but this software-driven report is only a small piece of my actual audit and findings report. A true forensic auditor examines every document relevant to the loan and looks at signatures, dates, parties on the documents, who provided those disclosures or documents and also obtains the story from the client because every loan is a story. It involved people and usually quite a bit of communication between the borrower and the indispensable parties to the transaction.

I have myself setup for Google Alerts on a number of search terms so I go to these other websites pretty frequently. I also get clients who have dealt with some of these fraudsters and now want my help to clean up the mess and the wasted money. Hopefully this post will cause those who read it to really do some good checking before they part with hard-earned money.

Bottom line is to make sure you follow your gut. Do your homework, ask questions, ask for references. A good auditor will most likely have attorneys they work for and consult for.

Feel free to contact me if you have any other questions on this topic or would like a sample of my audit reports. You’ll be able to see the true forensic nature of a good audit vs. these computer-generated reports.

May

Foreclosure Rights – Basics in Homeowner Foreclosure Defense

By LH | Foreclosure Defense Research, Foreclosure Rights, Forensic Loan Audits, Truth in Lending

5623 Comments2009-05-19+13%3A50%3A29LH

By Lane Houk
May 19, 2009

I realized this morning that it’s been a while since I’ve covered the basics of foreclosure defense. For those of you readers who are behind in their mortgage and trying to work something out with the lender (who is usually just the servicer of your loan, not the owner), you should beware that MOST of these institutions do not deal with you, the homeowner in good faith. Every time I see the news media covering some ridiculous thing they call “reporting” of the facts, fair and balanced or whatever, what they “report” is that banks are hurting, the government is going to save the “people” from this mess and servicers are doing everything they can to help. Call this number, call that number and you’ll get help. Go to this government site, or that for more information… yadda yadda yadda.

If you’re reading this right now then you or someone you know is in serious hard times, you’re thinking that it must just be you and your family having such a hard time because the news is telling you how many people are getting help, you’re just not one of them.

Try again. I’m in this fight everyday with regular American people. Hard working types… and they’re trying to survive right now. But it’s not easy. Hopefully this blog can help you get pointed in the right direction…

Regarding foreclosure, you first need to know: If you’re state is a judicial state or non-judicial state. It makes a big difference in HOW the foreclosure process plays itself out. CLICK HERE for a great resource chart on this.

Basically, if you’re in a judicial state, the party claiming a right to foreclose files a lawsuit in the local court system and you’ll get served with that lawsuit. Defend yourself. In what other lawsuit would you just lay down and die. A wise person defends them self against any and all lawsuits that are filed against them. Right?

If you’re in a non-judicial state, no court case is needed. It usually starts by the part serving you with a Notice of Default. The deed in your name is probably being held in trust and will be turned over within a statutory time frame once the state laws have been followed to do so.

My expertise is in the Florida process. Florida is a judicial state. So for this article’s sake, I’ll go through the foreclosure process for Florida.

Step Two: You’ve been served with foreclosure papers (ie. the complaint). Now what? You have 20 days to respond to this lawsuit (30 days in some states). You also have 30 days to dispute the debt under your federal rights found in the Fair Debt Collection Practices Act (you may also have state collection laws that afford your rights as well). So, in other words, you have a right to dispute the exact amount they claim that you owe THEM.

Remember. You have 20 days to respond. Don’t mess around with this. If you’re in danger of missing that deadline, at least file a Motion for Enlargement of Time which is legalese for “I need more time to get my answer filed because I’m still searching for counsel to take my case.”

Which leads me to Step Three: Get an attorney! Hire one, find one but please make sure they know foreclosure defense, really. Ask them how many cases they’ve taken. Be wise, hire an attorney. If they’re being fair to you and not gouging you on the fees, hiring them will save you money, not cost you. Contact me if you don’t understand why or how…

Step Four: Read the entire complaint you were served. You need to read it and try to understand it. Don’t be fool in life… there are far too many people who just don’t take the time to learn and understand how things work. Some because of fear, some become of laziness. Neither is good, ever, but especially when you’re being sued for a lot of money.

What comes next is kind of like a game of ping pong. They file the complaint… you answer the complaint, ball is back on their side, you wait to see what they hit back at you, etc. etc.

This is also the point where every case takes on a life of its own. There’s really no set way that a foreclosure case goes from here. However, generally speaking, the Plaintiff in the case is going to attempt to get a “Summary Judgment” in the case. This is legalese for quick judgment against you. No issues of material fact present. They win, you lose and you have future financial liability with the deficiency if one will exist after they sell the home.

I’ll make the biggest point of the article right here: Most of the Plaintiff’s in these cases DO NOT, I repeat, DO NOT own the Note that they say you defaulted on. These plaintiffs are either servicers or trustees – both agents for a securitized trust. More than this, I see sloppy, missing and even fabricated paperwork filed by the attorneys representing these big institutions; or they have outsourcing companies to do their dirty (paper) work. You know, plausible deniability stuff. Just beware… if they don’t own the loan, they’ll act like they do and create documents (like an assignment of mortgage) out of thin air to make it look like they do. If you think I’m kidding, just CLICK HERE to read an article by Peg Brickley from Dow Jones and posted online at the Wall Street Journal; this article briefly exposes just a bit of what companies like Fidelity National Information Services are doing in the loan default business boon.

A good auditor/investigator knows what to look for, what documents to inspect and where to find the securitized trust documents – or how to get them.

If you and your attorney are successful in defeating summary judgment, this is a big victory. This is what a good attorney is going to do first. Win the smaller battles and you might win the war. Summary judgment is the first battle in a foreclosure case. Look at every other type of civil or criminal case in our court systems and you’ll find that Summary Judgment is rarely granted. I said rarely and you can check that.

Now compare that with civil foreclosure cases… what you’ll find is that Florida judges are granting plaintiff’s motion for summary judgment in MOST cases. Foreclosure is just another type of civil case… why the MAJOR disparity in this? You think the judges don’t have an opinion about this. There are some rare good ones who actually appreciate the law and respect due process rights of citizens and aren’t going to let these institutions just walk into court and do whatever they want with no respect for the lawful process a foreclosure is supposed to go through.

So to have the best chance at defeating summary judgment, the defendant needs to establish (for the record) genuine issues of material fact. These are your affirmative defenses and there are many standard ones that attorneys should be using and there are some “big bullets” if you will that can be quantified through a forensic analysis and audit of all loan documents, notices and disclosures by the lender, servicer, broker, title company, etc. It’s a rare occasion that I don’t find violations. These violations are absolute issues of material fact. Summary judgment would be improper and there is well established case law on this in Florida.

Once summary judgment is denied, this foreclosure case has to go to a full trial. A good attorney files comprehensive discovery on your case. I mean comprehensive too. I want every document that pertains to this loan. It’s all material… I want the transfer records of the Note, the PSA, the Prospectus and Registration Statement, the accounting records, etc. etc. etc.

These documents once requested need to be produced or the court can be moved to compel the plaintiff to produce. Yes, their attorney will try to make some garbage up about the information requested is proprietary or can’t be produced due to privilege or whatever. This is when you can tell these guys just thumb their nose at due process and say we don’t think the consumer deserves it or has a right to it. This is also when you know they’re hiding something. First off, it’s not proprietary knowledge, its PUBLIC DISCLOSURE! It’s a loan that you say some six to seven figure number is owed by the defendant, the documents for these transactions have to be disclosed to the SEC, the IRS, shareholders, certificate holders, trustees, servicers, custodians, master servicers, depositors, issuers and several other federal agencies. But the borrower has no right to see these documents and have them produced for the record in the lawsuit against them. Right. Give me a break.

This game of ping pong can carry on for many months and often times a year and more. The bottom line to this: YOU HAVE FORECLOSURE RIGHTS! You have a right to due process. You have a right to defend yourself and you should! Find the professionals to help you and fight the war on the home front!

May

Recoupment: A Powerful Claim in Foreclosure Defense

By LH | Foreclosure Defense Research, Foreclosure Rights, Forensic Loan Audits, Homeowner Resources, Truth in Lending

495Leave a Comment2009-05-18+01%3A51%3A49LH

By Lane Houk
May 18, 2009

If you are a practicing attorney: Are you using Defense by Recoupment under 15 U.S.C. 1640(e) as a strong affirmative defense for your clients?

If you are a consumer: Have you had your loan (from day of application to current) audited by a forensic consumer debt analyst?

I get a fair amount of “conspiracy theory ” calls or emails people who would swear that the CIA was covertly involved in the loan they signed for and that all measures of fraud occurred against them by everyone involved and… you get the point. My first question to this person is always: “Great, so are you prepared for the $15,000+ retainer a good attorney is going to want to spend their time investigating, quantifying, pleading and trying a case like that? Well, you know the answer…

Others have read (or have heard) that a loan audit and violations of the TILA can only help you if it’s a refinance loan on a primary residence in the last three (3) years. To have the EXTENDED RIGHT TO RESCIND, these conditions must be in place but rescission isn’t the only thing that can help someone in (or in danger of) foreclosure.

When it comes to defending yourself against foreclosure the first order of business is to establish clear and genuine issues of material fact in the case. In a Florida foreclosure defense strategy, the client wants to quantify these genuine issues of material fact in the foreclosure case because no judge should ever grant a motion for summary judgment. Why?

In the state of Florida, there is extensive established law that prevents summary judgment from being granted when there are outstanding issues of material fact. Johnson v. Boca Raton Community Hosp., Inc., 985 So.2d 141, Murphy v. Young Men’s Christian Association of Lake Wales, Inc., 974 So.2d 565. A “material fact,” for summary judgment purposes, is a fact that is essential to the resolution of the legal questions raised in the case, Continental Concrete, Inc. v. Lakes at La Paz III Ltd. Partnership, 758 So.2d 1214.

Successfully defeating summary judgment is a big score in favor of the consumer and can greatly improve the chances of obtaining a viable and fair workout and thus ultimately, avoiding foreclosure.

So, one area of practice Lane Houk and his team help consumer attorneys with is by completing a forensic loan audit on the client’s loan documents from the day they applied for that loan through to current day. Why would a foreclosure client want this done? Let’s think about it…

Often times, the client did not receive proper “pre-closing disclosures” under both Truth in Lending laws (TILA) and Real Estate Settlement Procedures Act (RESPA);
Especially when there was a mortgage broker or interim lender involved
The actual “lender” in the transaction was under same timeframe obligations to make specific disclosures to client from the day they received application
The many servicing abuses which could have taken place from day of closing to current
Insufficient amount of certain disclosure violations
Escrow mishandling abuses (I’ve seen people nearly lose their house to a bona fide mistake the bank made but wouldn’t budge until a good attorney got involved)
The list goes on…

Under the TILA civil liability section [15 U.S.C. 1640(e)] regarding violations it says that any action under that section may be brought in any United States district court, or in any other court of competent jurisdiction, within one year from the date of the occurrence of the violation. But, that subsection does not bar a person from asserting a violation of this subchapter in an action to collect the debt which was brought more than one year from the date of the occurrence of the violation as a matter of defense by recoupment…

A consumer can only bring an action for damages within one year from the date of closing. However, the consumer is not barred from bringing a claim as a “matter of defense by recoupment” in a foreclosure action because a foreclosure action is an action to collect the debt. (ie. almost all foreclosure complaints are served with some level of disclosure that “this is an action to collect on a debt”) however NOT disclosing that does not necessarily preclude that any such action is NOT an attempt to collect on the debt.)

Any such quantified claim of a violation of the TILA (Truth in Lending Act) from an expert audit report should be brought as an affirmative defense by the attorney. This is a rock solid issue of material fact. No summary judgment. The lender will have to bring the action all the way through to trial. This should give you much greater leverage to obtain a workout. At the very least, this give you/your client much greater time in the house and time to try to work something out that works for both parties; something that is much needed these days because I still see a great deal of servicer abuse/misprepresenations happening every single day.

When it comes to auditors, remember that as with any professional, most often you will get what you pay for. If you have some company offering you an audit for a couple hundred bucks, you’re going to get that level of expertise and report back. A good expert auditor and their service should be in the $750.00-1000 price range. More or less than that just be careful.

I hope this little insight gives you some ideas on how you can help yourself in a foreclosure case. If you want more information on forensic loan audit, please call me at (800) 985-4685 ext. 2 or by email at Lane@thePatriotsWar.com

Apr

What is a “Forensic Loan Audit?”

By LH | Forensic Loan Audits, Truth in Lending

4962 CommentsWhat+is+a+%22Forensic+Loan+Audit%3F%222009-04-28+02%3A52%3A49LH

Definition of the word ”Audit“

A systematic, independent and documented process for obtaining evidence.
formal examination of an organization’s or individual’s accounts or financial situation. An audit may also include examination of compliance with applicable terms, laws, and regulations.
The physical review of practice records to determine if the practice has been (and is being) compliant with carrier requirements.

Definition of the word “Forensic”

Relating to, used in, or appropriate for courts of law or for public discussion or argumentation.
Of, relating to, or used in debate or argument; rhetorical.
Relating to the use of science, specific methods or technology in the investigation and establishment of facts or evidence in a court of law:a forensic laboratory.

Loan servicing complaints

Section 6 provides borrowers with important consumer protections relating to the servicing of their loans. Under Section 6 of RESPA, borrowers who have a problem with the servicing of their loan (including escrow account questions), should contact their loan servicer in writing, outlining the nature of their complaint. The servicer must acknowledge the complaint in writing within 20 business days of receipt of the complaint. Within 60 business days the servicer must resolve the complaint by correcting the account or giving a statement of the reasons for its position. Until the complaint is resolved, borrowers should continue to make the servicer’s required payment.

A borrower may bring a private law suit, or a group of borrowers may bring a class action suit, within three years, against a servicer who fails to comply with Section 6′s provisions. Borrowers may obtain actual damages, as well as additional damages if there is a pattern of non-compliance.

According to the Truth in Lending Act even a small mistake with calculating the borrower’s annual percentage rate could be an actionable violation, enabling the borrower to rescind the loan. Therefore, the threat of a lawsuit is often sufficient to persuade an otherwise uncooperative lender to negotiate an attractive work out with the borrower. Because the Truth-in-Lending Act (TILA) requires all attorney fees to be paid by the predatory lender (in which a new servicer is now the responsible party ), the vast majority of cases settle out of court quickly.

Even non-material disclosure violations or violations over a year old can still be used as claims and defenses in recoupment in a foreclosure defense. (See 15 U.S.C. § 1640(e)) – these claims and affirmative defenses raise genuine issues of material fact sufficient to survive any motion for summary judgment.

Until recently Forensic Loan Examinations were only made available to large banks and lending institutions wanting to determine their own exposure to risk and potential legal liabilities prior to purchasing large pools of mortgage loans.

Providing the loan audit gives homeowners more ammunition so they can stand a chance in negotiating a decent modification with lenders who have far more resources than the average borrower and often play hardball unless they are faced with the risk of a costly lawsuit.

A Forensic Mortgage Loan Audit using Lane Houk’s Proprietary Methods and Technology results in the most comprehensive and thorough audit reporting process of its kind that reveals ALL violations of Federal and State Codes including RESPA, TILA, HOEPA and ECOA along with detailing EVERY VIOLATION, its severity, and the specific law/regulation in violation in an easy to read format. ALL of the forensic loan audits reports can reveal these guiding queries:

Was fraud involved?

Constructive Fraud
Misrepresentation
Victim of Bait and Switch
Straw Buying Victim
Steering
Appraisal Fraud

Common Abuses:
Predatory mortgage lending involves a wide array of abusive practices. A brief description of some of the most common are:

Excessive Fees
Hidden Fees
Abusive Prepayment Penalties
Kickbacks to Brokers (Yield Spread Premiums)
Loan Flipping
Unnecessary Products
Mandatory Arbitration
Steering & Targeting
Breach of Contract

We can help you find out…

Did the loan officer accurately disclose the loan terms to you?
Did you sign a separate broker fee agreement?
Was your home’s value inflated by the lender’s appraiser?
Did the lender fail to verify your ability to repay the loan?
Were you given all federal and state disclosures?
Were you properly notified of your right to cancel the loan?
Do your closing documents contain any technical errors?
Were you charged excessive or undisclosed fees?
Has your loan been sold without your knowledge?
Any and all applicable federal and state law violations
The real terms of your loan
Outline of hidden fees and/or commission earned by your broker or lender
A complete assessment so you can pursue possible legal claims against your broker and/or lender
Report of all factual findings of the forensic audit

In my experience, there are very few auditors out there who truly know the “forensic” aspects of the loan audit process. The real litmus test is to ask the auditor where most of their business comes from? If it’s not from consumer law attorneys walk away. Ask for attorney references at all times.

Jan

Loan Modification: It’s All About “Leverage”

By LH | Featured, Loan Modification, Truth in Lending

3053 Comments2009-01-25+23%3A15%3A21LH

Leverage: the power or ability to act or to influence people, events, decisions, etc.; sway; to exert power or influence on.

We all know by now that the lenders and loan servicers are acting in bad faith with borrowers. What’s new? Many of these loans were given to un-suspecting borrowers in bad faith to begin with. It always was, and is, about money with the root being greed. I am working with a borrower right now, a pastor and his wife, who were given a refinance loan back in 2006. They were looking for some cash out on a fixed rate loan. Unknowingly they were put into a “Pick a Payment, Option ARM” loan. A loan that adjusts monthly but has a “fixed payment” option. The broker who sold them loan sold it to them as a fixed “payment” loan – they were looking for a fixed rate.

Should they have read the loan closing documents more carefully? Sure, hindsight being 20-20. But they trusted this individual and the integrity of his company. Have you ever read every document in a closing package? I have. But most mortgage brokers and closing agents haven’t even done that… a typical borrower is reading a foreign language -practically speaking.

So, back to the word “leverage.” I have found that there’s only ONE WAY TO DEAL WITH A LENDER OR SERVICER… with the gloves off. Meaning you have to treat them as an adversary and deal with them the way they are truly dealing with you. Don’t believe what you are hearing from some voice on the other end of the 800# you called. Folks, it’s just this simple: they don’t care one iota about you. Their only motivation is money and they do NOT deal in good faith.

So what’s this issue of Leverage? I have found one thing to be true in dealing with these institutions… the little guy needs leverage to win. They hold the cards until you start putting some in your hand. Shifting the deck simply takes a methodical and strategic approach to dismantling their case – in other words, building leverage. Gaining the “ability” to influence or “sway” their decisions (on your loan).

So, if you want a “workout” of your loan, a loan modification, you need to gain this ability to influence and sway their decision making process. How you ask? Find all the holes in their case, find all the violations of state and federal laws and put them to task. They will fail most of the time because they don’t think that it matters. Why? Because they don’t think you have what it takes to take them on? They don’t think you belong at the same poker table.

The question that really matters? Are they right or wrong?

I start with a very sophisticated Qualified Written Request – QWR. They have very strict timelines to adhere to on a QWR and must answer your bona fide questions of fact. Next I go after the loan closing and disclosure documentation. 8 out of 10 or more loans have violations. Let’s start itemizing those violations, 1, 2, 3, 4… and so on. These are federal violations and usually one can find some state law violations such as Unfair and Deceptive Trade Practices. Look for a fraudulent appraisal, look for kickbacks to other settlement providers. Every violation is a shift of the deck. Leverage.

If you want help modifying your loan… if you want help shifting the deck… if you want to find the violations and put them to task, email me. “I’m your Huckleberry.”