I have just received a copy of a daring and tempestuous motion for rehearing en banc filed by the winner of the appeal. The homeowner won because of precedent, law and common sense; but the court didn't like their own decision and certified an absurd question to the Florida Supreme Court. The question was whether the Plaintiff in a foreclosure case needs to have standing at the commencement of the action. Whether it is jurisdictional or not (I think it is clearly jurisdictional) Stopa is both right on the law and right on his challenge to the Court on the grounds of BIAS. The concurring opinion of the court actually says that the court is ruling for the homeowner because it must --- but asserts that it is leading to a result that fails to expedite cases where the outcome of the inevitable foreclosure is never in doubt. In other words, the appellate court has officially taken the position that we know before we look at a foreclosure case that the bank should win and the homeowner should lose. The entire court should be recused for bias that they have put in writing. What homeowner can bring an action or defend an action where the outcome desired by the courts in that district have already decided that homeowners are deadbeats and their defenses are quite literally a waste of time? Under the rules, the Court should not hear the the motion for rehearing en banc, should vacate that part of the decision that sets up the rube certified question, and the justices who participated must be recused from hearing further appeals on foreclosure cases. Lest their be any mistake, and without any attempt to step on the toes of Stopa's courageous brief on an appeal he already won, I wish to piggy back on his brief and expand certain points. The problem here might be the subject of a federal due process action against the state. Judges who have already decided foreclosure or mortgage litigation cases before they even see them are not fit to hear them. It IS that simple. The question here was stated as the issue of standing at the commencement of the lawsuit. Does the bank need to have a claim before it files it? The question is so absurd that it is difficult to address without a joke. But this is not funny. The courts have rapidly evolved into a position that expedited decisions are better than fair decisions. There is NOTHING in the law that supports that position and thousands of cases that say the opposite is true under our system of law. Any judge who leans the other way should be recused or taken off the bench entirely. In lay terms, the Appellate Court's certified question would allow anyone who thinks they might have a claim in the future to file the lawsuit now. And the Court believes this will relieve the clogged court calendars. If this matter is taken seriously and the Supreme Court accepts the certified question for serious review it will merely by acceptance be making a statement that makes it possible for all kinds of claims that anticipate an injury. It is bad enough that judges appear to be ignoring the requirement that there must be an allegation that a loan was made by the originating party and that the Plaintiff actually bought the loan. This was an obvious requirement that was consistently required in pleading until the courts were clogged with mortgage litigation, at which point the court system tilted far past due process and said that if the borrower stopped paying there were no conditions under which the borrower could win the case. It is bad enough that Judges appear to be ignoring the requirement that the allegation that the Plaintiff will suffer financial damage unless relief is granted. This was an obvious requirement that was consistently required in pleading until the mortgage meltdown. Why is this important? Because the facts will show that lenders consistently violated basic and advanced protections that have been federal and State law for decades. These violations more often than not produced an unenforceable loan --- as pointed out in law suits by federal and state regulators, and as pointed out by the lawsuits of investors who were real lenders who are screwed each time the court enters foreclosure judgment in favor of the bank instead of the investor lenders. It is not the fault of borrowers that this mess was created. It is the fault of Wall Street Bankers who were working a scheme to defraud investors by diverting the real transaction and making it appear that the banks were principals in the loan transaction when in fact they were never real parties in interest. Nobody would seriously argue that this eliminates the debt. But why are we enforcing that debt with completely defective mortgage instruments in a process that confirms the fraud and ratifies it to the damage of investors who put up the money in the first place? The courts have made a choice that is unavailable in our system of law. This is also judicial laziness. If these justices want to weigh in on the mortgage mess, then they should have the facts and not the stories put forward by Wall Street that have been proven to be pure fiction, fabrication, lies and perjury. That the Court ignores what is plainly documented in hundreds of thousands of defective mortgage transactions and the behavior of banks that resulted in "strangers to the transaction" being awarded title to property --- that presents sufficient grounds to challenge any court in the system on grounds of bias and due process. If ever we had a mass hysteria for prejudging cases, this is it.
WHIST
|
As a California appellate court decision several years ago noted, “For homeowners struggling to avoid foreclosure, this dual tracking might go by another name: the double-cross.” - See more at: http://calcoastnews.com/2013/09/
As a California appellate court decision several years ago noted, “For homeowners struggling to avoid foreclosure, this dual tracking might go by another name: the double-cross.” - See more at: http://calcoastnews.com/2013/09/
"As a California appellate court decision several years ago noted, 'For Homeowners struggling to avoid foreclosure, this dual tracking might go by another name: the double-cross.'" Daniel Blackburn, http://www.calcoastnews.com, 9/11/13.
Internet Store Notice: As requested by customer service, this is to explain the use of the COMBO, Consultation and Expert Declaration. The only reason they are separate is that too many people only wanted or could only afford one or the other — all three should be purchased. The Combo is a road map for the attorney to set up his file and start drafting the appropriate pleadings. It reveals defects in the title chain and inferentially in the money chain and provides the facts relative to making specific allegations concerning securitization issues. The consultation looks at your specific case and gives the benefit of litigation support consultation and advice that I can give to lawyers but I cannot give to pro se litigants. The expert declaration is my explanation to the Court of the findings of the forensic analysis. It is rare that I am actually called as a witness apparently because the cases are settled before a hearing at which evidence is taken.
If you are seeking legal representation or other services call our South Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. In Northern Florida and the Panhandle call 850-765-1236. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services. Get advice from attorneys licensed in the jurisdiction in which your property is located. We do provide litigation support — but only for licensed attorneys.
Neil Garfield, the author of this article, and Danielle Kelley, Esq. are partners in the law firm of Garfield, Gwaltney, Kelley and White (GGKW) based in Tallahassee with offices opening in Broward County and Dade County.
See LivingLies Store: Reports and Analysis
Neil F Garfield, Esq. http://www.Livinglies.me, 9/13/13
Victory in California, as we have predicted for years. Maria L. Hutkin and Jude J Basile were the attorneys for the homeowners and obviously did a fine job of exposing the truth. Their tenacity and perseverance paid off big time for their clients and themselves. They showed it is not over until the truth comes out. So for all of you who are saying you can't find a lawyer who "gets it" here are two lawyers that got it and won. And for all those who were screwed by the banks, it isn't over. Now it is your turn to get the rights and damages you deserve.
Maria L. Hutkin and Jude J. Basile
Maria L. Hutkin and Jude J. Basile
The homeowners won flat out at a trial --- something that should have happened in most of the 6.6 million Foreclosures conducted thus far. U.S. Bank showed its ugly head again as the alleged Trustee of a trust that was most probably nonexistent, unfunded and without any assets at all much less the homeowners alleged loan. Still the settlement shows how far Wall Street will go to pay damages rather than admit their liability to investors, insurers, counterparties in credit default swaps, and the Federal Reserve.
When you think of the hundreds of millions of wrongful foreclosures that were the subject of tens of billions of dollars in "settlements" that preserved homeowners rights to pursue further damages and do the math, it is obvious why even the total of all the "settlements" and fines were a tiny fraction of the total liability owed to pension funds and other investors, insurers, CDS parties, the Federal Government and of course the borrowers who never received a single loan from the banks in the first place. If 5 million foreclosures were wrongful, as is widely suspected at a minimum, using this case and some others I know about the damages could well exceed $5 Trillion. Simple math. Maybe that will wake up the good trial lawyers who think there is no case!
Maria L. Hutkin and Jude J. Basile
A fitting announcement on the 5th anniversary of the Lehman Brothers collapse. the economy is still struggling as more than 15 million American PEOPLE were displaced, lost equity and forced into bankruptcy by imperfect mortgages that were a sham, and thus imperfect foreclosures that were also a sham. Another 15 million PEOPLE will be displaced if these wrongful, illegal and morally corrupt sham foreclosures are allowed to continue.
This case, like the recent case won by Danielle Kelley (partner of GGKW) was based upon dual tracking. In Kelley's case the homeowners had completed the process of getting an approved modification, which meant that underwriting, review, confirmation of data, and approval from the investor had been obtained. In Kelley's case the homeowner had made the trial payments in full and paid the taxes, insurance, utilities and maintenance of the property.
The Bank argued they were under no obligation to fulfill the final step --- permanent modification. Kelley argued that a new contract was formed --- offer, acceptance and the consideration of payment that the Bank received, kept and credited to the homeowner's account. But the bank as Servicer was still accruing the payments due on the unmodified mortgage, which is why I have been harping on the topic of discovery on the money trail at origination, processing, and third party payments.
The accounting records of the subservicer and the Master Servicer should lead you to all actual transactions in which money exchanged hands, although getting to insurance payments and proceeds of credit default swaps might require discovery from the investment banker. So in Kelley's case, the Judge essentially said that if an agreement was reached and the homeowner met the requirements of a trial period, the deal was done and entered a final order in favor of the homeowner eliminating the the foreclosure with prejudice.
In this One West case the court went a little further. The homeowners were lured into negotiations, expenses and augments under the promise of modification and then summarily without notice to the homeowner sold the property at a Trustee sale under the provisions of the deed of trust. The Judge agreed with counsel for the homeowners that this was dual tracking at its worst, and that the bank did not have the option of proceeding with the sale.
The homeowners were forced to vacate the property and make other housing arrangements and these particular homeowners were enraged and had the resources to do what most homeowners are too fearful to do --- go to the mat (go to trial.)
One West made several offers of settlement once the Judge made it clear that the homeowners had stated a cause of action for wrongful foreclosure. Bravely the attorneys and the homeowners rejected settlement and insisted on a complete airing of their grievances so that everyone would know what happened to them. After multiple offers, with trial drawing near, OneWest finally agreed to give clear title back to the homeowners and pay $1 million+ in damages on what was a six figure loan.
We now have cases in both judicial and non-judicial jurisdictions in which the homeowner was awarded the house without encumbrance of a mortgage and even receiving monetary damages in which the attorneys achieved substantial rewards on 7 figure settlements that probably would be much higher if they ever went to trial --- particularly in front of a jury. This is only one of the paths to successful foreclosure defense. I hope attorneys and homeowners take note. Your anger can be channeled into a constructive path if the lawyers know how to understand these loans, and how to litigate them.
The accounting records of the subservicer and the Master Servicer should lead you to all actual transactions in which money exchanged hands, although getting to insurance payments and proceeds of credit default swaps might require discovery from the investment banker. So in Kelley's case, the Judge essentially said that if an agreement was reached and the homeowner met the requirements of a trial period, the deal was done and entered a final order in favor of the homeowner eliminating the the foreclosure with prejudice.
In this One West case the court went a little further. The homeowners were lured into negotiations, expenses and augments under the promise of modification and then summarily without notice to the homeowner sold the property at a Trustee sale under the provisions of the deed of trust. The Judge agreed with counsel for the homeowners that this was dual tracking at its worst, and that the bank did not have the option of proceeding with the sale.
The homeowners were forced to vacate the property and make other housing arrangements and these particular homeowners were enraged and had the resources to do what most homeowners are too fearful to do --- go to the mat (go to trial.)
One West made several offers of settlement once the Judge made it clear that the homeowners had stated a cause of action for wrongful foreclosure. Bravely the attorneys and the homeowners rejected settlement and insisted on a complete airing of their grievances so that everyone would know what happened to them. After multiple offers, with trial drawing near, OneWest finally agreed to give clear title back to the homeowners and pay $1 million+ in damages on what was a six figure loan.
We now have cases in both judicial and non-judicial jurisdictions in which the homeowner was awarded the house without encumbrance of a mortgage and even receiving monetary damages in which the attorneys achieved substantial rewards on 7 figure settlements that probably would be much higher if they ever went to trial --- particularly in front of a jury. This is only one of the paths to successful foreclosure defense. I hope attorneys and homeowners take note. Your anger can be channeled into a constructive path if the lawyers know how to understand these loans, and how to litigate them.
"There's hope. I feel their pain." --- Danielle Kelley, Esq. , partner in Garfield, Gwaltney, Kelley and White.
http://calcoastnews.com/2013/09/
Neil Garfield | September 13, 2013 at 10:23 am | Tags: CALIFORNIA, Danielle Kelley, GGKW, Greg and Irene Rigali, Jude J. Basile, Judge Charles S. Crandall, Lehman Brothers, Maria L. Hutkin, OneWest, Rik Tozzi, Steve Mnuchin, U.S. Bank, wrongful foreclosure | Categories: AMGAR, CDO, CORRUPTION, Eviction, foreclosure, GARFIELD GWALTNEY KELLEY AND WHITE, Investor, Mortgage, securities fraud, Servicer | URL: http://wp.me/p7SnH-5Fx
|
Unsubscribe or change your email settings at Manage Subscriptions. Trouble clicking? Copy and paste this URL into your browser: |
|
|
August 12, 2013
by Matt Weidner
The enormity of the crimes that have been committed against defendants in foreclosure cases is easy for much of society to ignore. Those who are defendants in foreclosure cases are, after all, those who deserve to suffer the consequences of failed generations of economic policy. Those who are defendants in foreclosure cases are, after all, the people that deserve scorn and disgust and contempt because they chose to live in a country that gave away their jobs, their industry, their future.
But far worse than the crimes and the consequences for the millions of Americans that are victims of the largest organized crime spree in the history of mankind is the fact that in order to accomplish this crime spree the criminals and their counterparts destroyed our nation’s civil legal system.
Make no mistake, the “foreclosure crisis” as it has played out, and as it continues to play out all across this country is a complex and interconnected series of state sponsored crimes. The crimes began when the loans were made, continued when the loans were sold to investors, continued when mortgage payments were loaded onto the international PONZI scheme that is mortgage securitization, then really ramped up when the criminals continued their crime sprees in state and federal courts all across this country.
The crime spree called foreclosure that continues to play out in homes and neighborhoods all across this country could not have occurred if our courts did not agree to become partners in the crime spree.
Our nation’s court system is in fact desecrated, destroyed, a crumbled heap of what it once was. We were a nation of laws. America was a nation that was governed, ultimately, by judges and a legal system that served a larger societal and historical purpose. At one point in time, judges and our nation’s court system recognized that the function of the court system was to protect The People and The Nation from the out of control evil and corporate interests that brought us all robo signing and foreclosure fraud and LIBOR rigging and HSBC money laundering and everything that is our national banking system.
To this day, banks foreclose on borrowers using fraudulent mortgage assignments, a legacy of failing to prosecute this conduct and instead letting banks pay a fine to settle it. This disappoints Szymoniak, who told Salon the owner of these loans is now essentially “whoever lies the most convincingly and whoever gets the benefit of doubt from the judge.
Allegations from today’s lawsuit:
The defendants concealed that the notes and the assignments were never delivered to the MBS trusts and disseminated false and misleading statements to the investors, including the U.S. government and the States of California, Delaware, Florida, Hawaii, Illinois, Indiana, Massachusetts, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Rhode Island, Virginia, District of Columbia, the City of Chicago and the City of New York.
Relator conducted her own investigations in furtherance of a False Claims Act qui tam action and found that the Defendants pursued and continue to pursue foreclosure actions using false and fabricated documents, particularly mortgage assignments. The Defendants used robo-signers who signed thousands of documents each week with no review nor any knowledge of their contents and created forged mortgage assignments using fraudulent titles in order to proceed with foreclosures. The Defendants used these fraudulent mortgage assignments to conceal that over 1400 MBS trusts, each with mortgages valued at over $1 billion, are missing critical documents, namely, the mortgage assignments that were required to have been delivered to the trusts at the inception of the trust. Without lawfully executed mortgage assignments, the value of the mortgages and notes held by the trusts is impaired because effective assignments are necessary for the trust to foreclose on its assets in the event of mortgage defaults and because the trusts do not hold good title to the loans and mortgages that investors have been told secure the notes.
The fraud carried out by the Defendants in this case includes, inter alia: Mortgage assignments with forged signatures of the individuals signing on behalf of the grantors, and forged signatures of the witnesses and the notaries;
The MBS Trusts and their trustees, depositors and servicing companies further misrepresented to the public the assets of the Trusts and issued false statements in their prospectuses and certifications of compliance.
Lynn Szymoniak (Credit: CBS News/60 MInutes)
By David Dayen
If you know about foreclosure fraud, the mass fabrication of mortgage documents in state courts by banks attempting to foreclose on homeowners, you may have one nagging question: Why did banks have to resort to this illegal scheme? Was it just cheaper to mock up the documents than to provide the real ones? Did banks figure they simply had enough power over regulators, politicians and the courts to get away with it? (They were probably right about that one.)
A newly unsealed lawsuit, which banks settled in 2012 for $95 million, actually offers a different reason, providing a key answer to one of the persistent riddles of the financial crisis and its aftermath. The lawsuit states that banks resorted to fake documents because they could not legally establish true ownership of the loans when trying to foreclose.
This reality, which banks did not contest but instead settled out of court, means that tens of millions of mortgages in America still lack a legitimate chain of ownership, with implications far into the future. And if Congress, supported by the Obama Administration, goes back to the same housing finance system, with the same corrupt private entities who broke the nation’s private property system back in business packaging mortgages, then shame on all of us.
The 2011 lawsuit was filed in U.S. District Court in both North and South Carolina, by a white-collar fraud specialist named Lynn Szymoniak, on behalf of the federal government, seventeen states and three cities. Twenty-eight banks, mortgage servicers and document processing companies are named in the lawsuit, including mega-banks like JPMorgan Chase, Wells Fargo, Citi and Bank of America.
Szymoniak, who fell into foreclosure herself in 2009, researched her own mortgage documents and found massive fraud (for example, one document claimed that Deutsche Bank, listed as the owner of her mortgage, acquired ownership in October 2008, four months after they first filed for foreclosure). She eventually examined tens of thousands of documents, enough to piece together the entire scheme.
A mortgage has two parts: the promissory note (the IOU from the borrower to the lender) and the mortgage, which creates the lien on the home in case of default. During the housing bubble, banks bought loans from originators, and then (in a process known as securitization) enacted a series of transactions that would eventually pool thousands of mortgages into bonds, sold all over the world to public pension funds, state and municipal governments and other investors. A trustee would pool the loans and sell the securities to investors, and the investors would get an annual percentage yield on their money.
In order for the securitization to work, banks purchasing the mortgages had to physically convey the promissory note and the mortgage into the trust. The note had to be endorsed (the way an individual would endorse a check), and handed over to a document custodian for the trust, with a “mortgage assignment” confirming the transfer of ownership. And this had to be done before a 90-day cutoff date, with no grace period beyond that.
Georgetown Law Professor Adam Levitin spelled this out in testimony before Congress in 2010: “If mortgages were not properly transferred in the securitization process, then mortgage-backed securities would in fact not be backed by any mortgages whatsoever.”
The lawsuit alleges that these notes, as well as the mortgage assignments, were “never delivered to the mortgage-backed securities trusts,” and that the trustees lied to the SEC and investors about this. As a result, the trusts could not establish ownership of the loan when they went to foreclose, forcing the production of a stream of false documents, signed by “robo-signers,” employees using a bevy of corporate titles for companies that never employed them, to sign documents about which they had little or no knowledge.
Many documents were forged (the suit provides evidence of the signature of one robo-signer, Linda Green, written eight different ways), some were signed by “officers” of companies that went bankrupt years earlier, and dozens of assignments listed as the owner of the loan “Bogus Assignee for Intervening Assignments,” clearly a template that was never changed. One defendant in the case, Lender Processing Services, created masses of false documents on behalf of the banks, often using fake corporate officer titles and forged signatures. This was all done to establish standing to foreclose in courts, which the banks otherwise could not.
Szymoniak stated in her lawsuit that, “Defendants used fraudulent mortgage assignments to conceal that over 1400 MBS trusts, each with mortgages valued at over $1 billion, are missing critical documents,” meaning that at least $1.4 trillion in mortgage-backed securities are, in fact, non-mortgage-backed securities. Because of the strict laws governing of these kinds of securitizations, there’s no way to make the assignments after the fact. Activists have a name for this: “securitization FAIL.”
One smoking gun piece of evidence in the lawsuit concerns a mortgage assignment dated February 9, 2009, after the foreclosure of the mortgage in question was completed. According to the suit, “A typewritten note on the right hand side of the document states: ‘This Assignment of Mortgage was inadvertently not recorded prior to the Final Judgment of Foreclosure… but is now being recorded to clear title.’”
This admission confirms that the mortgage assignment was not made before the closing date of the trust, invalidating ownership. The suit further argued that “the act of fabricating the assignments is evidence that the MBS Trust did not own the notes and/or the mortgage liens for some assets claimed to be in the pool.”
The federal government, states and cities joined the lawsuit under 25 counts of the federal False Claims Act and state-based versions of the law. All of them bought mortgage-backed securities from banks that never conveyed the mortgages or notes to the trusts. The plaintiffs argued that, considering that trustees and servicers had to spend lots of money forging and fabricating documents to establish ownership, they were materially harmed by the subsequent impaired value of the securities. Also, these investors (which includes the Treasury Department and the Federal Reserve) paid for the transfer of mortgages to the trusts, yet they were never actually transferred.
Finally, the lawsuit argues that the federal government was harmed by “payments made on mortgage guarantees to Defendants lacking valid notes and assignments of mortgages who were not entitled to demand or receive said payments.”
Despite Szymoniak seeking a trial by jury, the government intervened in the case, and settled part of it at the beginning of 2012, extracting $95 million from the five biggest banks in the suit (Wells Fargo, Bank of America, JPMorgan Chase, Citi and GMAC/Ally Bank). Szymoniak herself was awarded $18 million. But the underlying evidence was never revealed until the case was unsealed last Thursday.
Now that it’s unsealed, Szymoniak, as the named plaintiff, can go forward and prove the case. Along with her legal team (which includes the law firm of Grant & Eisenhoffer, which has recovered more money under the False Claims Act than any firm in the country), Szymoniak can pursue discovery and go to trial against the rest of the named defendants, including HSBC, the Bank of New York Mellon, Deutsche Bank and US Bank.
The expenses of the case, previously borne by the government, now are borne by Szymoniak and her team, but the percentages of recovery funds are also higher. “I’m really glad I was part of collecting this money for the government, and I’m looking forward to going through discovery and collecting the rest of it,” Szymoniak told Salon.
It’s good that the case remains active, because the $95 million settlement was a pittance compared to the enormity of the crime. By the end of 2009, private mortgage-backed securities trusts held one-third of all residential mortgages in the U.S. That means that tens of millions of home mortgages worth trillions of dollars have no legitimate underlying owner that can establish the right to foreclose. This hasn’t stopped banks from foreclosing anyway with false documents, and they are often successful, a testament to the breakdown of law in the judicial system. But to this day, the resulting chaos in disentangling ownership harms homeowners trying to sell these properties, as well as those trying to purchase them. And it renders some properties impossible to sell.
To this day, banks foreclose on borrowers using fraudulent mortgage assignments, a legacy of failing to prosecute this conduct and instead letting banks pay a fine to settle it. This disappoints Szymoniak, who told Salon the owner of these loans is now essentially “whoever lies the most convincingly and whoever gets the benefit of doubt from the judge.” Szymoniak used her share of the settlement to start the Housing Justice Foundation, a non-profit that attempts to raise awareness of the continuing corruption of the nation’s courts and land title system.
Most of official Washington, including President Obama, wants to wind down mortgage giants Fannie Mae and Freddie Mac, and return to a system where private lenders create securitization trusts, packaging pools of loans and selling them to investors. Government would provide a limited guarantee to investors against catastrophic losses, but the private banks would make the securities, to generate more capital for home loans and expand homeownership.
That’s despite the evidence we now have that, the last time banks tried this, they ignored the law, failed to convey the mortgages and notes to the trusts, and ripped off investors trying to cover their tracks, to say nothing of how they violated the due process rights of homeowners and stole their homes with fake documents.
The very same banks that created this criminal enterprise and legal quagmire would be in control again. Why should we view this in any way as a sound public policy, instead of a ticking time bomb that could once again throw the private property system, a bulwark of capitalism and indeed civilization itself, into utter disarray? As Lynn Szymoniak puts it, “The President’s calling for private equity to return. Why would we return to this?”
Update: This story previously suggested that banks settled this lawsuit with the federal government for $1 billion. That number is actually the total for a number of whistleblower lawsuits that were folded into a larger National Mortgage Settlement. This specific lawsuit settled for $95 million. The post above has been changed to reflect this fact.
David Dayen is a contributing writer for Salon. Follow him on Twitter at @ddayen.
|
|
Criminal and Civil Actions Against Chase and BofA Creep Forward |
The Department of Justice and the Securities and Exchange Commission are proceeding from the wrong presumption. They are starting with public policy and politics instead of enforcement of the law to maintain the fabric of our society. It results in the rule of man rather than the rule of law. And it is tearing us apart even if government refuses to talk about and mainstream medium refuses to report on it despite the constant drum beat of new lawsuits and new settlements of bank wrongdoing.
Hardly a day goes by without some settlement being announced with respect to the sale of fraudulent securities to investors. Now we have announcements that Bank of America and Chase are being investigated and sued for civil and criminal behavior with respect to the sale of mortgage bonds to investors.
They have framed their complaints in such a way that it is presumed that proper procedure was followed in the origination and assignment of loans while at the same time they are alleging that proper procedure was not followed in the origination and assignment of loans. The difference is only whether they are saying the victims are the investors or they are ignoring the fact that the victims include the homeowners. It is like a scene from Gulliver's Travels where the incredibly ridiculous is taken as true. Investors should be restored but homeowners may be cheated and bear most of the burden of the bank's misbehavior because it is convenient to do so.
Once again we have agency determination of wrongdoing and still we have a judicial system that is more concerned with validating the illegal mortgages and validating illegal foreclosure judgments and validating illegal foreclosure auctions and validating deeds issued from illegal foreclosure auctions and validating evictions of homeowners who legally should be declared the owner of the home free and clear of any encumbrance and frankly free and clear of any debt which by now has been paid multiple times by third parties who have no interest in pursuing the homeowners for payment.
This is going to be decided on a case-by-case basis in the judicial system and only successful where the attorney for the homeowner is extremely aggressive on discovery. Otherwise, the public policy and mainstream media will control the narrative on each case such that despite fatally defective fabricated documents with false signatures were used in the origination and assignment of the mortgage loan.
Attorneys have to be creative in explaining how the fraudulent sale of securities to investors is tied to the fraudulent sale of a loan product to homeowners. But you can start with the single transaction doctrine in which it can be stated with considerable certainty that had the investors known what was going on in the origination and transfer of loans they never would have advanced a penny. And the borrowers would never have signed the documents if they knew that an inflated appraisal was used in making the loan unreasonable and very expensive once the true value of the property was reflected in the marketplace. Borrowers would also have never signed documents if they knew that the undisclosed intermediaries were making a mystery profit that amounted to far more than the amount of the alleged principal due on the mortgage. They would not have signed the documents if they knew that their identities were being stolen and traded.
In other words, if federal law had been followed requiring the disclosure of all compensation and all parties to the loan transaction, none of the transactions would have occurred. The federal law is the federal truth in lending act and the federal real estate settlement and procedures act. Qualified written requests and debt validation letters are treated as jokes in the industry and irrelevant in court.
The banks are rolling in money while the rest of the economy struggles. How is that possible? Answer: they are taking the money owed to investors and which would erase the debt and they are keeping it thus maintaining the illusion that the loan to the homeowner has not been paid.
|
|
Perils of Pooling: OneWest |
Apparently my article yesterday hit a nerve. NO I wasn't saying that the only problems were with BofA and Chase. OneWest is another example. Keep in mind that the sole source of information to regulators and the courts are the ONLY people who understand mergers and acquisitions. So it is a little like one of those TV shows where the only way they can get an arrest and conviction is for the perpetrator or suspect to confess. In this case, they "confess" all kinds of things to gain credibility and then lead the agencies and judicial system down a rabbit hole which is now a well trodden path. So many people have gone down that hole that most people that is the way to get to the truth. It isn't. It is part of a carefully constructed series of complex conflicting lies designed carefully by some very smart lawyers who understand not just the law but the way the law works. The latter is how they are getting away with it.
Back to OneWest, which we have detailed in the past.
The FDIC has posted the agreement at http://www.fdic.gov/about/freedo
OneWest was created almost literally overnight (actually over a weekend) by some highly placed players from Wall Street. There is an 80% loss sharing arrangement with the FDIC and yes, there appears to be some grey area about ownership of the loans because of that loss sharing agreement. But the evidence of a transaction in which the loans were actually purchased by a brand new entity that was essentially unfunded is completely absent. And that is because OneWest and Deutsch take the position that the loans were securitized despite IndyMac's assurances to the contrary. The only loans in which OneWest appears to be a player are those in which the loan was subject to (false) claims of securitization. No money went to the trustee, no money went to the trust, no assets went into the pool because the REMIC asset pool lacked the funding to purchase any assets.
Add to that a few facts. Deutsch is usually the "trustee"of the REMIC asset pool, but Reynaldo Reyes says he has nothing to do. He has no trust accounts and makes no decisions and performs no actions. Sound familiar. I have him on tape and his deposition has already been taken and publicized on the internet by others. Reyes says the whole arrangement is "counter-intuitive" (a very creative way of saying it is a lie). It is up to the servicer (OneWest) to decide what loans are subject to modification, mediation or even reinstatement. It is up to the servicer as to when to foreclose. And the servicer here is OneWest while the Master Servicer appears to be the investment banking arm of Deutsch, although I do not have that confirmed.
The way Reyes speaks about it the whole thing ALMOST makes sense. That is, until you start thinking about it. If Deutsch Bank has an extensive trust subsidiary, which it does, then why is a VP of asset management in control of the trust operations of the REMIC asset pools. Answer: because there are no funded trusts and there are no asset pools with assets. Hence any statement by OneWest that it is the owner of the loan is untrue as is the allegation that Deutsch is the trustee because all trustee duties have been delegated to the servicer. That leaves the investor with an empty box for an asset pool and no trustee or manager or even an agent to to actually know what is going on or who is monitoring their money and investments.
Note that like BOfA using Red Oak Merger Corp., there is the creation of a fictional entity that was not used by the name of, no kidding, "Holdco." This is to shield OneWest from certain liabilities as a lender. Legally it doesn't work that way but practically it generally does work that way because judges listen to bank lawyers to tell them what all this means. That is like asking a 1st degree murder defendant to explain to the jury the meaning of reasonable doubt.
Now be careful here because there is a "loan sale" agreement referenced in the package posted by the FDIC. But it refers to an exhibit F. There is no exhibit F and like the ambiguous agreements with the FDIC in Countrywide and Washington mutual, there are words there, but they don't really say anything. Suffice it to say that despite some fabricated documents to the contrary, there is no evidence I have seen that any loan receivable was transferred to or from a REMIC asset pool, Indy-mac, or Hold-co.
These people were not stupid and they are not idiots. And their lawyers are pretty smart too. They know that with the presumption of a funded loan in existence, the banks could pretty much get away with saying anything they wanted about the ownership, the identity of the creditor and the ability to make a credit bid at the auction of a property that should never have been foreclosed in the first instance --- and certainly not by these people.
But if you dig just a little deeper you will see that the banks are represented to the regulatory authorities that they own the bonds (not true because the bonds were created and issued to specific investors who bought them); thus they include the bonds as significant items on their balance sheet which allows them to be called mega banks or too big to fail when in fact they have a tiny fraction of the reserve requirements of the Federal Reserve which follows the Basel accords.
Then when you turn your head and peak into courtrooms you find the same banks claiming ownership of the loan receivable, which was created when the funding occurred at the "closing" of the loan. They know they are taking inconsistent positions but most judges lack the sophistication to pinpoint the inconsistency. And that is how 5 million people lost their homes.
On the one hand the banks are claiming there was no fraud in the issuance of mortgage backed bonds by a REMIC asset pool formed as a trust. In fact, they say the loans were transferred into the REMIC asset pool. Which means that ownership of the mortgage bonds is ownership of the loans --- at least that is what the paperwork shows that was used to sell pension funds on buying these worthless bogus bonds. Then they turn around and come to court as the "holder" and get a foreclosure sale in which the bank submits the credit bid and buys the property without spending one dime. What they have done is, in lay terms, offered the debt to pay for the property. But the debt, according to the same people is owned by the investors or the REMIC trust, not the banks.
Then they turn to the insurers and counterparties on credit default swaps, and the Federal reserve that is buying these bonds and they say that the banks own the bonds, have an insurable interest, and should receive the proceeds of payments instead of the investors who actually put up the money. And then they say in court that the account receivable is unpaid, there is a default, and therefore the home should be foreclosed. What they have done is create a chaotic complex of lies and turn it into an illusion that changes colors and density depending upon whom the banks are talking with.
There is no default on the account receivable if the account was paid, regardless of who paid it --- as long as it was really paid to either the owner of the loan receivable or the authorized agent of the owner (i.e., the investor/lender). And so it is paid. And if paid, there can be no action on the note because the loan receivable has been satisfied. There can be no action on the mortgage because it was never a perfected lien and because the loan receivable was extinguished by PAYMENT. You can't use the mortgage to enforce the note which is evidence for enforcement of a debt when the debt no longer exists.
Judges are confused. The borrower must owe money to someone so why not simply enter judgment and let the creditors sort it out amongst themselves. The answer is because that is not the rule of law and if a creditor has a claim against the borrower it should be brought by that creditor not some stranger to the transaction whose actions are stripping the real creditor of lien rights and collection rights over the debt. What the courts are doing, by analogy, is saying that you must have killed someone when you fired that gun so we will dispense with evidence and a jury and proceed to sentencing. We will let the people in the crowd decide who is the victim who can bring a wrongful death action against you even if we don't even know when the gun was fired and who pulled the trigger. In the meanwhile you are sentenced to death or life in prison under our rocket docket for murders of unknown persons.
|
|
Perils of Pooling |
We hold these truths to be self evident: that Chase never acquired any loans from Washington Mutual and that Bank of America never required any loans from Countrywide. A review of the merger documents approved by the FDIC reveals that neither Chase nor Bank of America wanted to assume any liabilities in connection with the lending operations of Washington Mutual or Countrywide, respectively. The loans were expressly left out of the agreement which is available for everyone to see on the FDIC website in the reading room.
With the exception of a few instances in which the court pointed out that Chase only acquired servicing rights and that Bank of America may not have acquired any rights, judges have been rubber-stamping foreclosures initiated by Bank of America (or entities controlled by Bank of America like Recontrust) under the assumption that Bank of America must be the owner of the Countrywide mortgages. The same is true for judges who have been rubber-stamping foreclosures initiated by Chase under the assumption that Chase must be the owner of the Washington Mutual mortgages. After all, if they don't own the mortgages then who does? The answer is that in nearly all cases either BofA nor Countrywide and neither Chase nor WAMU owned the loans and their financial statements prove it.
Not only have the judges been rubber-stamping the foreclosures and participating in a scheme that is correcting our title records nationwide, the entry of judgment against the borrower and for Bank of America or for Chase completes the theft of the investors money that was used for exorbitant fees, profits and bonuses and then finally for the funding of the origination or acquisition of loans. The fact that the REMIC trust was ignored in both form and content has also been the subject of the defective rulings from the bench. Not only have the courts ruled against the borrowers and for the banks, they have even ruled against the presentation of evidence that would have shown that the investors were being stripped of their expected lien rights and then stripped again on their expected return of principal and interest, and then barred by collateral estoppel from ever bringing it up.
Since most of the foreclosures have emanated from Bank of America and Chase it is a fair assumption that most of the foreclosure sales were void because no valid bid was received in exchange for the deed. The property is still owned by the original homeowner In any case where a credit bid was submitted by Bank of America or Chase on any loan in which either Countrywide Mortgage or Washington Mutual was involved. I might add that the Federal Reserve in New York is completely aware of these facts and is steadfastly refusing to reveal the truth to the public or even to the homeowners whose homes were illegally and wrongfully foreclosed by Bank of America and Chase for a loan where both Bank of America and Chase and their chain of affiliates had been paid multiple times on a loan receivable account owned by the source of the funds, to wit: the investors who thought they were buying mortgage bonds from a funded legally organized REMIC trust.
CAVEAT: The courts are mainly concerned with finality. In many states there may be a statute of limitations to challenge a void deed from an auction sale. Check with an attorney who is licensed in the jurisdiction in which your property is located before you take any action or make any decision.
It seems crazy to think that someone could apply for a loan and get the benefits of funding without ever being required to pay it back to the lender. But that is exactly what is happening as a result of defective court decisions. The lender consists of a group of investors including pension funds that are now underfunded as a result of the civil and possibly criminal theft of funds by Bank of America and Chase or the investment firms acquired by them.
Homeowners are being forced to pay Bank of America and Chase rather than the investors who actually advanced the funds. Bank of America and Chase actively interfere and Stonewall whenever a borrower or an investor seeks to peek under the hood to see what is in the box. There is nothing in the box. The deal was always between the investors and homeowners. The bank's lied. They pretended that they were the lenders when in fact there were only the intermediaries. The result was that all the payments received from borrowers, government, the federal reserve, insurers, guarantors, co-obligors, and counterparties on credit default swaps went to the accounts of Bank of America and Chase rather than to the investors.
By holding back the money, Bank of America and Chase, just like other banks created the illusion of a default and since they had created the illusion of ownership of the default they took the money instead of handing it over to the investors. You read the lawsuits that have been filed by investors against the investment banks that sold them worthless mortgage bonds issued by an empty asset pool you will see that they allege affirmatively that the notes and mortgages are unenforceable.
That makes it unanimous! Both the lender and the borrower agree that the documentation is defective and unenforceable. Both the lender and the borrower agree that the lender should get paid. And both the lender and the borrower agree that the lender is entitled to be paid only once for the money advanced by the lender. And both the lender and the borrower agree that the banks are holding trillions of dollars in money that should have been used to pay off the account receivable owned by the investors.
With the lender paid off or where the account receivable has been reduced by payments to the banks who were acting as agents of the investors but breaching their duties to the investors, the amount payable by the homeowner as a borrower would be correspondingly reduced or eliminated. In fact, under the requirements of the federal truth in lending act, the overpayment is due to the borrower for failure to disclose the true facts of the transaction. In fact, under federal law, treble damages, legal interest, attorneys fees and costs probably also apply.
|
|
|
4th DCA Florida: Trustee of Asset Pool Must Join or Ratify |
"servicer may be considered a party in interest to commence legal action as long as the trustee joins or ratifies its action."
ElstonLeetsdale LLC v CWCapital Asset Management LLC-1
This ought to be interesting. If Deutsch, or U.S. Bank, or Bank of New York, or any of the other "Trustees" join or ratify the action then they are asserting, under oath (if the lawyer for the homeowner knows what he or she is doing) that (1) the Asset pool is exists, (2) that the subject loan is in the asset pool (i.e., consideration paid by the Trust and assignment before cut-off date) and (3) that the trust was properly organized and (4) that the Trustee is authorized by [fill in blank here, if the lawyer of the homeowner knows what he or she is doing] to accept the assignment, join in the lawsuit and ratifies the representations and claims made on behalf of the REMIC trust and (5) signed by a trust officer for the bank who says it is the trustee for the asset pool.
You might want to ask while you are on the subject, exactly why the Trustee wants to bind the beneficiaries of the trust to ownership of a worthless loan. This is a question raised by Judge Shack in New York 5 years ago. Nobody was listening. Now maybe some people are starting to see the wisdom of Shack's question. If securitization was on the level, then the funding, assignment, assumption and payment would have all occurred as set forth under New York Law, the Internal Revenue Code, the provisions of the Pooling and servicing Agreement, which means underwriting according to industry standards and procuring insurance and credit default swap protection FOR THE INVESTORS, NOT THE BANKS WHO HAD NO MONEY IN THE DEAL.
So while you are on the subject, you might want to ask the trustee why they have made no claim against the insurance, credit default swaps and other payments received from co-obligors that were not disclosed to the borrower. In fact, you might want to ask whether the trustee views this as an account receivable, bond receivable or note receivable? If he or she doesn't know, ask who would know --- after all a trustee is like a receiver with special skills and experience in keeping the books for each trust and assuring customers there would be no commingling of funds. If the trustee doesn't think the trust is owed any money other than the payments from the borrower, ask him or her, why not?
Once the trustee acknowledges that there were payments which should have been allocated to the bond receivable account or account receivable for the investors, then ask the big question, to wit: do your books and records show the same flow of money in and out of the trust as the figures used by the subservicer in declaring the default, and bringing the foreclosure action. Once you get by "I don't know" the answer is going to be "NO" if you drill deep enough and keep asking the questions who knows, what do they know, how do they know it and is the party claiming to be the trustee really a trustee?
I ask you this: with each of these fine banking institutions maintaining separate corporations or divisions that provide trust services for even a few hundred thousand dollars, why wasn't the same trust department used to provide trust services to the REMIC trust? Why is it managed by Reynaldo Reyes, VP, Asset management at Deutsch Bank? What fees were received by the trustee? What services did it perform?
Suddenly a new dawn is upon us. The banks knowing full well they were going to claim and get free houses started early and effectively in persuading the media, government and the public, including the borrowers themselves that to defend the foreclosure was immoral because the borrower was seeking a free house. The banks were smart enough to get out in front of that one, but it is coming back around to bite them. The homeowners are not seeking free homes, they are seeking reasonable deals based upon true facts instead of false representations, withholding of disclosures required by law and lies from the intermediaries who pretend to be the lenders or to act for the lenders when they do not.
Is there a free house? Yes, every time another Judge rubber stamps another foreclosure and allows a non-creditor to submit a "credit bid" (non-cash) and take title to a home they advanced no money to finance or purchase any loan.
David Reiss | June 6, 2013
Brad Borden and I have warned that an unanticipated tax consequence of the sloppy mortgage origination practices that characterized the boom is that MBS pools may fail to qualify as REMICs. This would have massively negative tax consequences for MBS investors and should trigger lawsuits against the professionals who structured these transactions. Courts deciding upstream and downstream cases have not focused on this issue because it is typically not relevant to the dispute between the parties.
Seems that is changing. Bankruptcy Judge Isgur (S.D. Tex.) issued an opinion in In re: Saldivar, Case No. 11-1-0689 (June 5, 2013)) which found, for the purposes of a motion to dismiss, that “under New York law, assignment of the Saldivars’ Note after the start up day [of the REMIC] is void ab initio. As such, none of the Saldivars’ claims” challenging the validity of the assignment of their mortgage to the REMIC trust “will be dismissed for lack of standing.” (8)
If this case holds up on appeal, it will have a massive impact on many purported REMICs which had sloppy practices for transferring mortgages to the trusts. That is a big “if,” as the case relies upon Erobobo for its take on the relevant NY law. Erobobo, a NY trial court opinion, itself reached a controversial result and is hardly the last word on NY trust law. The Court also acknowledges that additional evidence may be proffered relating to a subsequent ratification of the conveyance of the mortgage, but for the purposes of a motion to dismiss, the homeowners have met their burden.
For those few REMIC geeks out there, it is worth quoting from the opinion at length (everyone else can stop reading now):
The Notice of Default indicates that the original creditor is Deutsche Bank, as Trustee for Long Beach Mortgage Loan Trust 2004-6. The Trust is a New York common law trust created through a Pooling and Servicing Agreement (the “PSA”). Under the PSA, loans were purportedly pooled into a trust and converted into mortgage-backed securities. The PSA provides a closing date for the Trust of October 25, 2004. As set forth below, this was the date on which all assets were required to be deposited into the Trust. The PSA provides that New York law governs the acquisition of mortgage assets for the Trust.
The Trust was formed as a REMIC trust. Under the REMIC provisions of the Internal Revenue Code (“IRC”) the closing date of the Trust is also the startup day for the Trust. The closing date/startup day is significant because all assets of the Trust were to be transferred to the Trust on or before the closing date to ensure that the Trust received its REMIC status. The IRC provides in pertinent part that:
“Except as provided in section 860G(d)(2), ‘if any amount is contributed to a REMIC after the startup day, there is hereby imposed a tax for the taxable year of the REMIC in which the contribution is received equal to 100 percent of the amount of such contribution.”
26 U.S.C. § 860G(d)(1).
A trust’s ability to transact is restricted to the actions authorized by its trust documents. The Saldivars allege that here, the Trust documents permit only one specific method of transfer to the Trust, set forth in § 2.01 of the PSA. Section 2.01 requires the Depositor to provide the Trustee with the original Mortgage Note, endorsed in blank or endorsed with the following: “Pay to the order of Deutsche Bank, as Trustee under the applicable agreement, without recourse.” All prior and intervening endorsements must show a complete chain of endorsement from the originator to the Trustee.
Under New York Estates Powers and Trusts Law § 7-2.1(c), property must be registered in the name of the trustee for a particular trust in order for transfer to the trustee to be effective. Trust property cannot be held with incomplete endorsements and assignments that do not indicate that the property is held in trust by a trustee for a specific beneficiary trust.
The Saldivars allege that the Note was not transferred to the Trust until 2011, resulting in an invalid assignment of the Note to the Trust. The Saldivars allege that this defect means that Deutsche Bank and Chase are not valid Note Holders.
(2-4, footnotes and citations omitted) The Court agreed, at least while “accepting all well-pleaded facts as true.” (5)
(HT April Charney)
By David Bario
The Litigation Daily June 4, 2013
Over the past year we've been watching a handful of financial crisis class actions in which investors sued banks that served as mortgage-backed securities trustees, rather than targeting the banks that issued or underwrote the securities. In addition to bringing breach of contract claims, plaintiffs lawyers at Scott + Scott dusted off a 1939 law called the Trust Indenture Act that makes trustees liable for failing their duties to investors. That litigation campaign has so far survived motions to dismiss in cases against Bank of New York Mellon, Bank of America, and U.S. Bancorp's U.S. Bank National Association unit.
On Monday the plaintiffs finally hit a snag. Lawyers for U.S. Bank at Morgan, Lewis & Bockius persuaded U.S. District Judge John Koeltl in Manhattan to dismiss a big chunk of a case that Scott + Scott brought on behalf of investors in mortgage-backed securities issued by Bear Stearns. The decision endangers hundreds of millions of dollars in claims in the case before Koeltl, and if it holds up on appeal it could do the same to parallel claims in other trustee suits.
A Scott + Scott team led by Beth Kaswan and David Scott brought the case in 2011 on behalf of investors in 14 MBS trusts. Their complaint claims that U.S. Bank violated the Trust Indenture Act by failing to police the mortgages underlying the securities for inadequacies or defaults and by not forcing Bear Stearns to repurchase loans that went sour. The plaintiffs also claimed breach of contract based on U.S. Bank's alleged failure to live up to pooling and servicing agreements and indenture agreements that together cover all 14 trusts. (The PSA-governed trusts issued certificates; those covered by indenture agreements issued notes.)
Morgan Lewis's Michael Kraut and John Vassos moved to dismiss the case last June on a host of grounds. They argued that the investors, who only purchased securities in two of the trusts, lacked standing to bring class claims over most of the securities. And they targeted the plaintiffs' core theory of liability under the TIA, arguing that they failed to state a claim and that most of the trusts aren't covered by the statute.
Koeltl sided with the plaintiffs on the standing issue, citing the U.S. Court of Appeals for the Second Circuit's September 2012 ruling in NECA-IBEW Health & Welfare Fund v. Goldman Sachs. He also refused to throw out the investors' claims for breach of contract, finding that they'd sufficiently made their case that U.S. Bank skirted its obligations under the governing agreements for the securities.
But the judge was swayed by Morgan Lewis's argument that the Trust Indenture Act only applies to five of the 14 trusts in the case: those that issued certificates rather than notes. Koeltl agreed with U.S. Bank that an exemption to the TIA covers securities that are governed by a pooling and servicing agreement rather than an indenture, placing nine of the trusts beyond the statute's reach.
"The certificates are exempt from the TIA pursuant to section 304(a)(2) because they are certificates of participation in two or more securities with substantially different rights and privileges," Koeltl wrote. "This conclusion is consistent with the plain text of the TIA, the SEC's interpretation of the TIA, and the legislative history of the TIA."
At first glance Koeltl's ruling seems to be at odds with two previous decisions in MBS trustee cases, since U.S. District Judges William Pauley III and Katherine Forrest in Manhattan have both ruled (here andhere) that the TIA applies to MBS certificates. But as Koeltl noted in Monday's ruling, the defendants in the case before Pauley relied on a different exemption to the TIA in their motion to dismiss. (To be fair, Bank of New York Mellon's lawyers at Mayer Brown did cite the second exemption in a motion for reconsideration, but Judge Pauley ruled they were too late.) Forrest, meanwhile, concluded that neither of the two TIA exemptions applied to MBS certificates in trusts overseen by Bank of America and U.S. Bank.
On May 7 the Second Circuit agreed to hear an interlocutory appeal of Pauley's ruling in the BNY Mellon case, so the issue of MBS trustee liability under the TIA is already before the appeals court. Now that Koeltl has handed a different trustee a partial victory, we won't be surprised if the U.S. Bank case winds up there as well.
David Scott of Scott + Scott acknowledged Tuesday that the plaintiffs suffered a blow on the TIA exemption question, but he emphasized the bright side. "The ruling creates some open issues, but the bottom line is that the case is going forward on the breach of contract claims, and we have 14 trusts covered on class-wide standing," Scott told us. "It shows the courts understand that these trustees have real obligations and they have to be held to them."
Morgan Lewis's Kraut declined to comment. A spokesman for U.S. Bank had this statement: "We are pleased that the court held that the TIA does not apply to PSA certificates and narrowed the plaintiffs' key claims."
LOS ANGELES — Attorney General Kamala D. Harris today filed an enforcement action against JPMorgan Chase & Co. (Chase) alleging that the bank engaged in fraudulent and unlawful debt-collection practices against tens of thousands of Californians.
The suit alleges that Chase engaged in widespread, illegal robo-signing, among other unlawful practices, to commit debt-collection abuses against approximately 100,000 California credit card borrowers over at least a three-year period.
“Chase abused the judicial process and engaged in serious misconduct against California credit cardborrowers,” Attorney General Harris said. “This enforcement action seeks to hold Chase accountable for systematically using illegal tactics to flood California’s courts with specious lawsuits against consumers. My office will demand a permanent halt to these practices and redress for borrowers who have been harmed.”
From January 2008 through April 2011, Chase filed thousands of debt collection lawsuits every month in the State of California. On one day alone, Chase filed 469 such lawsuits in California. The Attorney General’s complaint against Chase alleges that, to maintain this pace, Chase employed unlawful practices as shortcuts to obtain judgments against California consumers with speed and ease that could not have been possible if Chase had adhered to the minimum substantive and procedural protections required by law.
“At nearly every stage of the collection process, Defendants cut corners in the name of speed, cost savings, and their own convenience, providing only the thinnest veneer of legitimacy to their lawsuits,” the complaint states.
Chase used California’s judicial system as a mill to obtain default judgments, the suit alleges, using illegal tactics to flood the state’s court system in order to secure default judgments and garnish wages from Californians.
The alleged misconduct includes:
The suit was filed in Los Angeles Superior Court and a copy of the complaint is attached to the online version of this release at http://oag.ca.gov.
Consumers who believe they have been victims of this misconduct may submit a complaint online athttp://oag.ca.gov/consumers.
SOURCE: http://oag.ca.gov
POSTED: 05/06/2013 06:19:38 PM MDT
UPDATED: 05/07/2013 10:20:54 AM MDT
By David Migoya
The Denver Post
Lisa Brumfiel at her home in Aurora after her hearing in federal court to stop the foreclosure proceeding. (THE DENVER POST | Joe Amon)
A federal judge on Monday made the rare move to stop the foreclosure auction of an Aurora woman's house in a case that squarely takes on the constitutionality of Colorado's foreclosure laws.
U.S. District Judge William Martinez issued a preliminary injunction against the sale of Lisa Kay Brumfiel's four-bedroom home, scheduled for Wednesday in Arapahoe County, until the judge can decide whether parts of state law are unfair to homeowners facing the loss of their house.
At issue is a provision in state law that allows lawyers to assert that their client, typically a bank, has the right to foreclose on a property even though they might not have the original mortgage paperwork to prove it.
What makes the case compelling isn't just that a federal judge was persuaded to step into an issue involving state law — extremely difficult to do — but the plaintiff in the case is a part-time saleswoman who has taken on the battle without a lawyer.
Brumfiel, 43, says she didn't know a thing about the law. Despite fumbles in decorum and formal court procedure, she has taken on U.S. Bank and Larry Castle, one of Colorado's most powerful foreclosure lawyers.
Despite several setbacks and outright losses, she has made it farther than many lawyers.
"There's an issue of fundamental rights, and I won't back down," Brumfiel said after Martinez's decision.
Though Martinez's ruling gives Brumfiel until May 15 to argue why Colorado's law violates the equal-protection clause of the 14th Amendment to the U.S. Constitution, he gave early glimpses to his thinking.
"Colorado is the only state in the country that allows an unsworn statement by an attorney for a foreclosing party — without any penalty — to say, 'Trust me, judge, these guys are the qualified holder for this deed of trust,' " Martinez said. "Is there another state that has lowered the bar for a foreclosure any lower?"
A qualified holder is typically the owner of a mortgage, such as a bank or other lender.
Brumfiel bought her tri-level home in 2006 for $169,350. It was an interest-only loan with an adjustable rate.
"I thought I could make it work," Brumfiel said.
She soon fell behind in her payments when personal issues forced her to leave her sales job in 2011. She has not paid since.
When U.S. Bank filed to foreclose later that year, Brumfiel balked because her mortgage was originally with First Franklin Mortgage.
How U.S. Bank came to hold the note was in question, and Brumfiel wanted proof. Banks often sell mortgages to one another and, rather than record those transfers at the county recorder of deeds — an expensive process — they self-track them via the Mortgage Electronic Registry System.
Though many states allow MERS to be the assignee of a mortgage and foreclose when homeowners default, Colorado doesn't. MERS often assigns ownership of the note to the foreclosing bank.
But there's no proof in public records of those transfers in ownership, because they're never recorded.
County public trustees auction foreclosed houses, but that can't happen until a district-court judge authorizes it. That occurs at a Rule 120 hearing, named for the court procedure that governs it.
Before signing, a judge is to answer two questions: Is the homeowner in default, and are they in the active military?
The judge's decision is final, cannot be appealed and allows for no discovery. Homeowners misunderstand the rule to the extent that Rule 120 hearings are rarely held. And any challenge to the decision must be taken up as a separate lawsuit, which critics say is unfair since homeowners facing foreclosure are unlikely to have the money for a lawyer.
In 1989, the Colorado Supreme Court ruled that judges must also consider at a Rule 120 hearing whether a bank has the right to foreclose, known legally as having standing.
As banks sold mortgages more and more, and MERS was to track who owned which, coming up with original paperwork to prove standing became difficult.
Then, when the mortgage crisis hit along with the economic meltdown, the flood of foreclosures made it virtually impossible to keep up.
With the backing of the state's public trustees, who are to oversee the foreclosure process impartially, Castle and other foreclosure lawyers in 2006 drafted legislation, HB 1387, that made a critical change to foreclosure rules.
Lawyers could now sign a document, called a statement of qualified holder, that was their guarantee — without the need to provide proof — that their bank client had the right to foreclose.
Critics say it takes away a homeowner's rights to due process guaranteed in the Constitution. But none has succeeded in making a challenge until Brumfiel.
"It's great the federal court is invoking fundamental constitutional principles to reviewing a foreclosure process that obviously needs to be fixed," said attorney Stephen Brunette, who has tried to change the law since.
Two legislative efforts at changing the law have failed, both by Rep. Beth McCann, D-Denver. And a voter initiative last year stalled for lack of funds to raise the signatures needed to make the ballot.
Court challenges have also failed, including at the federal level where judges are reluctant to tread on state business.
Monday's decision, however, sets the stage for a showdown over the constitutionality of the qualified-holder statement.
Castle's attorney, Phil Vagliaca, warned Martinez of treading on state business.
"What this federal court is trying to wrestle with goes way beyond just a foreclosure," Vagliaca said. "It is whether the federal court should inject itself in extreme state-court circumstances. Not without offending hundreds of years of federalism and state sovereignty."
Said Brumfiel: "This isn't about me anymore. It's not even about whether you owe the money or not. It's about someone taking something and not having to prove they can."
David Migoya: 303-954-1506,dmigoya@denverpost.comortwitter.com/davidmigoya
Read more:Federal judge questions constitutionality of Colorado foreclosure law - The Denver Posthttp://www.denverpost.com/breaki
Read The Denver Post's Terms of Use of its content: http://www.denverpost.com/termso
Follow us:@Denverpost on Twitter|Denverpost on Facebook
New York AG: Wells Fargo, BofA Violated National Foreclosure Settlement
Posted: 05/06/2013 11:27 am EDT | Updated: 05/06/2013 4:15 pm EDT
New York Attorney General Eric Schneiderman said Monday he may sue Wells Fargo and Bank of America for allegedly violating the terms of last year’s multi-state mortgage settlement, despite questions over his authority to do so.
New York Attorney General Eric Schneiderman said Monday he may sue Wells Fargo and Bank of America for allegedly violating the terms of last year’s multi-state mortgage settlement, despite questions over his authority to do so.
The agreement, reached by the Department of Justice, Department of Housing and Urban Development and 49 state attorneys general, called for the five largest mortgage companies to significantly revamp their procedures for dealing with distressed borrowers. It called on them to provide billions of dollars in aid to those borrowers and change the way they pursue home repossessions, in exchange for prosecutors dropping legal claims that the companies systematically violated borrowers’ rights when using faulty, so-called “robosigned” documents in foreclosure proceedings.
Consumer advocates have heralded the establishment of standards for how the companies would treat borrowers who fell behind on their payments as the settlement’s signature achievement. The new mortgage servicing provisions were supposed to “address the issues that led to the creation of the settlement,” according to Joseph Smith, the settlement’s official monitor.
The five banks -- JPMorgan Chase, Wells Fargo, Bank of America, Citigroup and Ally Financial -- collectively service more than half of all outstanding U.S. home loans. Since Oct. 2, 2012, they have had to comply with 304 mortgage servicing requirements, including offering struggling borrowers the opportunity to avoid foreclosure and approving or denying loan modifications within 30 days of receiving a complete application.
Schneiderman said Monday his office has uncovered 339 alleged violations of the settlement's terms, 210 concerning Wells Fargo and 129 concerning Bank of America. He said he intends to sue the banks for “repeatedly violating” the settlement if the monitoring committee of representatives from various federal and state agencies declines to take action.
But it’s unclear whether Schneiderman could successfully bring such a lawsuit. The agreement does not specify whether he can independently pursue legal action against the banks without first allowing the Office of Mortgage Settlement Oversight, run by Smith, to determine whether they are complying, a process that could take months.
Smith's office will make public by June 30 its first required report on the banks’ compliance with the mortgage servicing standards. The deal dictates that the companies shall have an opportunity to correct potential violations once they are identified. If the same violations continue, the monitoring committee could launch lawsuits and levy penalties totaling as much as $5 million for each violation.
Regardless, Schneiderman said the agreement allows him to enforce the settlement unilaterally. He said he warned his fellow regulators of his intent to sue on Friday, though some officials in the offices of other state attorneys general said they only learned of his plans in a Monday morning email from his office.
“Wells Fargo and Bank of America have flagrantly violated those obligations, putting hundreds of homeowners across New York at greater risk of foreclosure," Schneiderman said. "I intend to use every tool available to my office to hold these companies accountable."
Schneiderman said his lawsuit threat "obviously has implications" for the other three banks involved in the settlement. Housing organizations in New York said they had lodged similar complaints against the banks with Schneiderman's office.
"I continue to believe there are areas in which the banks must improve their treatment of their customers," Smith said in response. "I intend to use the full breadth of my power under the settlement to hold the banks accountable."
Both Wells Fargo and Bank of America responded to the announcement as well.
"It is unfortunate that the New York Attorney General has chosen this route rather than engage in a constructive dialogue through the established dispute resolution process," a spokesperson for Wells Fargo said. "We fully support the rules established under the Settlement."
Bank of America said it will "work quickly" to address the 129 "customer servicing problems" that Schneiderman identified. The bank added that it has provided more than 10,000 New York homeowners with more than $1 billion in aid.
The settlement for the first time legally requires the five banks to meet a variety of timelines. In addition to the 30-day window to tell borrowers whether their applications have been approved, they must notify borrowers within three business days that they have received loan modification applications and within five days if the application is missing key details or documents.
Over the last few years, consumer advocates and government officials have repeatedly complained of banks losing borrowers’ documents and forcing them to wait months for basic decisions to be made on their applications for loan modifications.
In a February report, Smith said that he had received more than 600 complaints detailing shortcomings in the banks’ dealings with borrowers. The majority of them concerned issues such as failures to decide on loan modification requests within 30 days.
Smith said that of “particular concern” were reports that borrowers were having to submit documents multiple times to their mortgage servicers, sometimes with no response or followed by requests for the same documents yet again.
"The striking thing about the timeline violation is that they’re so pervasive. It’s the exception rather than the rule when modifications requests are addressed without delay," said Joseph Sant, staff attorney with the Staten Island Legal Services Homeowner Defense Project.
Last month, The Huffington Post reported that Schneiderman has complained to key Democratic lawmakers on Capitol Hill that the Obama administration has not aggressively investigated the kind of dodgy mortgage deals that helped trigger the financial crisis. Schneiderman critics allege that he, too, has compiled a lackluster enforcement record against Wall Street.
His threat to sue Wells Fargo and Bank of America comes a few days after he withdrew his objection to a separate proposed $8.5 billion settlement between Bank of America and a group of mortgage investors over soured loans. In 2011, Schneiderman asked a state judge to reject the pact on the grounds that a party to the settlement had committed fraud and had failed to act in the best interests of the investors.
Eleazar Melendez contributed reporting.
Anti Foreclosure Network
Powered by GroupSpaces · Terms · Privacy Policy · Cookie Use · Create Your Own Group
