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Bank of America said Friday it is halting all foreclosure sales and foreclosure proceedings nationwide while it reviews the documents being used to justify homeowner evictions.
 
It is the first bank to put a moratorium on foreclosures in all 50 states. Previously, Bank of America, JPMorgan Chase and others were only pausing foreclosures in states where a court has to participate in foreclosure proceedings.
 
"Bank of America has extended our review of foreclosure documents to all fifty states," the bank said in a statement. "We will stop foreclosure sales until our assessment has been satisfactorily completed. Our ongoing assessment shows the basis for foreclosure decisions are accurate. We continue to serve the interests of our customers, investors and communities. Providing solutions for distressed homeowners remains our primary focus." 
 
Article from

Breaking News Alert: President Obama will not sign foreclosure measure, says official 
October 7, 2010 1:38:33 PM
—————————————-

 
Obama won’t sign bill that would affect foreclosure proceedings


Thousands of foreclosures are put on hold
 
During the housing boom, millions of homeowners got easy access to mortgages. Now, some mortgage lenders and state governments have discovered many mortgage documents were mishandled.

By Jia Lynn Yang and Ariana Eunjung Cha
Washington Post Staff Writers 
Thursday, October 7, 2010; 4:48 PM


Amid growing furor over the legitimacy of foreclosure proceedings, White House officials said Thursday that President Obama will not sign a bill passed by Congress without public debate after critics said the legislation could loosen standards for foreclosure documents.

The bill, named the Interstate Recognition of Notarizations Act, would require courts to accept document notarizations made out of state. Its sponsors intended to promote interstate commerce. But homeowner advocates warn the bill could allow lenders to cut even more corners as they seek to evict homeowners.

White House press secretary Robert Gibbs said the president did not believe Congress meant to undermine consumer protections regarding foreclosure challenges. Still, Obama will use a "pocket veto" on the bill, which will effectively kill it.

Democratic leaders on the Hill were scrambling to figure out how the legislation managed to sail through the House and Senate without any objection.
 
The episode may prove embarrassing for Democrats, who in recent weeks have been calling for federal investigations into flawed paperwork, forged documents and other misconduct in foreclosure proceedings initiated by big lenders.

The House passed the bill in April by a voice vote, meaning there’s no record of who voted for or against the legislation. The Senate passed the bill on Sept. 27, just before recess, without any debate.

Even the bill’s main sponsor, Rep. Robert Aderholt (R-Ala.), was surprised by how quickly the legislation was greenlighted, according to D.J. Jordan, a representative for Aderholt.

Congressional staffers said lawmakers will revisit the bill to add protections for consumers.

Jordan said Aderholt had been working on the issue since April 2005, soon after hearing complaints from a court stenographer in his district that courts in other states were having trouble using documents notarized in Alabama.

"The authors of this bill no doubt had the best of intentions in mind when trying to remove impediments to interstate commerce," said Dan Pfeiffer, White House communications director. "We will work with them and other leaders in Congress to explore the best ways to achieve this goal going forward."

This would be Obama’s second pocket veto. Last December, he killed a short-term resolution that turned out to be unnecessary for extending defense funding.

Obama’s veto comes as the uproar over document processing from lawmakers, law enforcement and union officials and other stakeholders intensified on Thursday, turning the foreclosure mess into a political issue.

National civil rights groups, including the NAACP, National Council of La Raza and the Center for Responsible Lending, joined labor unions Thursday in calling for an immediate national moratorium on foreclosures.

"If we don’t take drastic measures now, we can expect millions of additional foreclosures in the coming years, with a disproportionate number of them involving Latino and African American families," Wade Henderson, president of the Leadership Conference on Civil Rights, said in a statement.

Sen. Sheldon Whitehouse (D-R.I.) also called for a national foreclosure moratorium on Thursday, while Michigan Democratic gubernatorial candidate Virg Bernero stunned an audience in Detroit with a forceful challenge to banks to halt home foreclosures in Michigan. Bernero vowed to withdraw $1 billion in state money from J.P Morgan and Chase banks because they have refused to ease up on foreclosures – an idea that is likely please the United Autoworkers of America, which has also been critical of J.P. Morgan Chase.

As many as 40 state attorneys general are joining together to coordinate investigations into the foreclosure paperwork problem.

Patrick Madigan, the Iowa assistant attorney general who is the chairman of the group, said in an interview that they have begun to call lenders to try to ascertain the scope of the problem. He said companies that have known issues with affidavits should broaden their foreclosure moratoriums beyond the 23 states that require a court to foreclose.

"We intend to fully investigate and get to the bottom of this and find out how many companies have this issue, and for those that do to remedy the situation," Madigan said.

Also on Thursday, Iowa Attorney General Tom Miller called on three large mortgage lenders to freeze foreclosures in the state and said Iowa will take the lead in coordinating with other states investigating allegations of mishandled foreclosures.

He urged other firms with "with anything less than absolute confidence in its internal foreclosure review procedures" to also stop foreclosures.

"There appears to be an emerging pattern of careless and perhaps cavalier attitudes by a growing number of lenders when it came to the seriousness of the foreclosure process," Miller said.

The nation’s banks are also being pressured by investors.

Chris Katopis, executive director of the Washington-based Association of Mortgage Investors, said securities trustees should "audit and review the resulting losses to hold servicers accountable for negligence in maintaining the assets of trusts."

"We are afraid that people’s pensions and retirement savings are being impacted," Katopis said in an interview Thursday. "Investors are deeply concerned about possible documentation inconsistencies related to mortgages. It is vital that trustees promptly address these matters."

Staff writer Scott Wilson contributed to this report.
 
Read The Entire Article

http://www.washingtonpost.com/wp-dyn/content/article/2010/10/07/AR2010100704254.html?hpid=topnews

 
Amid growing furor over the legitimacy of foreclosure proceedings, a White House official said President Obama will not sign a two-page bill passed by lawmakers without public debate after details emerged that the legislation could loosen standards for foreclosure documents.
http://link.email.washingtonpost.com/r/5O5UA2/WLT7JI/8AWG7O/0KHCE9/Z41ZI/4O/h
For more information, visit washingtonpost.com

 Mike,

Here is the latest, this is some pretty grim and scary stuff. The following information comes form John Stuart’s blog. If you’re not familiar with John he is a former attorney in Arizona who has been working feverishly, day and night uncovering the bank fraud involved in the mortgage industry.
 
It is almost game over. Whenever we discover their crimes the politicians make it not a crime.
 
It is coming quicker than anyone could have expected.  
 
– Nick Capra, Vegas
 
 
PRESIDENT OBAMA has headed for his desk a bill that would ratify the illegal practices revealed for the past three years on this blog and for the past three weeks and mainstream media. He might just as well issue Robo signed presidential pardons for the thousands of people involved in defrauding homeowners, investors and the entire judicial system. Send him a letter and tell him not to sign it.
 
Under the guise of simply reflecting changes in technology, the bill would force state and federal courts to recognize and accept the notarization from another state. This would be true even if the notary signed in blank.
– It would be true even if the witnesses were not present despite the recitation to the contrary signed by the notary.
– It would be true even if the main person signing the alleged document was not the person named as having signed the alleged document.
– t would be true even if the main person signing the alleged document was not present or identified by the notary.
– In other words under this new bill passed by both the House of Representatives and the Senate, both essentially bought and paid for by the financial services industry, all of the illegal, improper and criminal acts performed by the “lenders” (mainstream media insists on using this term even though it is not true) would be made legal.
 
That sounds like a pardon to me, how about you?
 
If Pres. Obama signs this bill it will become law.
 
At that point, more than half of the meritorious defenses of borrowers (homeowners) or petitioners in bankruptcy courts will go down the drain.
 
The fact that this bill even got introduced without the mainstream media taking note is not really surprising considering the fact that mainstream media has failed to grasp the true  scope of this fraud which began with the first sale of a fake mortgage bond to an investor.
 
A fake financial services product was marketed to investors who believed they were lenders and to homeowners who believed they were borrowers, both of whom were mere pawns in the Wall Street game.
 
In fact they supplied the only two ingredients that Wall Street wanted —money from the lenders and a signature from the homeowners. The nature of the document was immaterial.
 
Now that the foreclosures are obviously fake, lawmakers responsive to the demands of the financial services industry have quietly passed a bill in both houses of Congress that would allow the fraud to be ratified and the perpetrators to escape any accountability whatsoever.
 
If Pres. Obama signs this bill he will be condemning the victims of this fraud to bear the full cost of the losses.
 
If Pres. Obama signs this bill he will be awarding the perpetrators of this fraud all of their winnings. In case anybody hasn’t been looking, another development which has been ignored by our mainstream media is that countries around the world are looking for an alternative reserve currency to replace the once almighty US dollar. The reason they are looking is because they no longer have confidence in a system that produced a Wall Street scheme which in essence depreciated the value and viability of currencies and economies all over the world.
 
If Pres. Obama signs this bill he will be giving a signal to the world that the United States will be more vigilant, more sophisticated and much more involved in enforcement of laws, rules and regulations already existing in the marketplace and upon which all investors, lenders, homeowners, borrowers and foreign governments had placed reasonable reliance and suffered to their detriment. The loss of our status as the issuer of the world’s reserve currency will have profound consequences on our nation, our citizens, our businesses, and the prospects for generations of Americans yet unborn.
 

FULL TEXT OF BILL

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Sep 29, 2010 – Enrolled Bill. This is the final text of the bill or resolution as approved by both the Senate and House. This is the latest version of the bill currently available on GovTrack.
H.R.3808
One Hundred Eleventh Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Tuesday,
the fifth day of January, two thousand and ten
An Act
To require any Federal or State court to recognize any notarization made by a notary public licensed by a State other than the State where the court is located when such notarization occurs in or affects interstate commerce.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘Interstate Recognition of Notarizations Act of 2010’.
SEC. 2. RECOGNITION OF NOTARIZATIONS IN FEDERAL COURTS.
Each Federal court shall recognize any lawful notarization made by a notary public licensed or commissioned under the laws of a State other than the State where the Federal court is located if–
(1) such notarization occurs in or affects interstate commerce; and
(2)(A) a seal of office, as symbol of the notary public’s authority, is used in the notarization; or
(B) in the case of an electronic record, the seal information is securely attached to, or logically associated with, the electronic record so as to render the record tamper-resistant.
SEC. 3. RECOGNITION OF NOTARIZATIONS IN STATE COURTS.
Each court that operates under the jurisdiction of a State shall recognize any lawful notarization made by a notary public licensed or commissioned under the laws of a State other than the State where the court is located if–
(1) such notarization occurs in or affects interstate commerce; and
(2)(A) a seal of office, as symbol of the notary public’s authority, is used in the notarization; or
(B) in the case of an electronic record, the seal information is securely attached to, or logically associated with, the electronic record so as to render the record tamper-resistant.
SEC. 4. DEFINITIONS.
In this Act:
(1) ELECTRONIC RECORD- The term ‘electronic record’ has the meaning given that term in section 106 of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7006).
(2) LOGICALLY ASSOCIATED WITH- Seal information is ‘logically associated with’ an electronic record if the seal information is securely bound to the electronic record in such a manner as to make it impracticable to falsify or alter, without detection, either the record or the seal information.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.
 
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Check this out. Wells Fargo pays $24 million to eight states to stop investigation. These funds, apparently given to each state, will be used to "reach out" to help customers. I wonder how many customers they "reach out" to will be "tax-eaters" and how many will be "tax-payers."   Stay tuned.

$24 Million Payment to End Wells Fargo Inquiry

By THE ASSOCIATED PRESS
Published: October 6, 2010
 
WASHINGTON (AP) — Wells Fargo & Company is paying $24 million to end an investigation by eight states into whether lenders acquired by the bank made risky mortgages to consumers without disclosing their perils.
 
The states said loans known as option adjustable-rate loans, or pick-a-payment mortgages, were deceptive. Those loans allowed borrowers to defer some interest payments and add them to the principal balance. Borrowers could make payments so low that loan debt each month.
 
Wells Fargo announced the agreement Wednesday with attorneys general in Arizona, Colorado, Florida, Illinois, Nevada, New Jersey, Texas and Washington State.
 
The loans were made by the Wachovia Corporation and a California company it acquired, World Savings Bank. Wells bought Wachovia at the end of 2008. Wachovia had already stopped making those loans before that acquisition.
 
As part of the agreement, Wells has agreed to offer loan assistance worth more than $770 million to more than 8,700 borrowers through June 2013, though that amount will depend on how the economy fares. The $24 million will be used to help states reach out to such customers.
 
The agreement includes no admission of wrongdoing by Wells Fargo.

This keeps getting uglier and uglier. I’m not trying to promote "doom and gloom" so don’t shoot the messenger. My objective is to keep  you on top of today’s insane turbulent real estate market.

"He Who Masters The New Rules Firstest, WINS The MOSTEST"

 

 

Foreclosure Furor Rises; Many Call for a Freeze

By DAVID STREITFELD and GRETCHEN MORGENSON
Published: October 5, 2010
 
The uproar over bad conduct by mortgage lenders intensified Tuesday, as lawmakers in Washington requested a federal investigation and the attorney general in Texas joined a chorus of state law enforcement figures calling for freezes on all foreclosures.
 
Flawed Paperwork Aggravates a Foreclosure Crisis (October 4, 2010)
 
Representative Nancy Pelosi, the House speaker, and 30 other Democratic representatives from California told the Justice Department, the Federal Reserve and the comptroller of the currency that “it is time that banks are held accountable for their practices.”
 
In a request for an investigation into questionable foreclosure practices by lenders, the lawmakers said that “the excuses we have heard from financial institutions are simply not credible."
 
Officials from the federal agencies declined to comment.
 
Texas Attorney General Greg Abbott, a Republican, sent letters to 30 lenders demanding they stop foreclosures, evictions and the sale of foreclosed properties until they could provide assurances that they were proceeding legally.
 
Both developments indicated that scarcely two weeks after the country’s fourth-biggest lender, GMAC Mortgage, revealed that it was suspending all foreclosures in the 23 states where the process requires judicial approval, concerns about flawed foreclosures had mushroomed into a nationwide problem.
 
Some of the finger-pointing was also being directed back at Congress. The Ohio secretary of state, Jennifer Brunner, suggested in a telephone interview on Tuesday that a bill passed by Congress last week about notarizations could facilitate foreclosure fraud.
 
Dubious notary practices used by banks to justify foreclosures have come under scrutiny in recent weeks as GMAC and other top lenders suspended homeowner evictions over possible improper procedures.
 
Ms. Brunner, who has recently referred possible cases of notary fraud in her state to federal authorities, worries that the legislation would allow the lowest standard for notaries to become a nationwide practice. She said she also worried that the changes were coming in the middle of a foreclosure storm where people could lose their homes improperly.
 
“A notary’s signature is that of a trusted, impartial third party, whose notarization bolsters the integrity of the document,” Ms. Brunner said. “To take away the safeguards of notarization means foreclosure procedures could be more susceptible to fraud.”
 
As banks’ foreclosure practices have come under the microscope, problems with notarizations on mortgage assignments have emerged. These documents transfer the ownership of the underlying note from one institution to another and are required for foreclosures to proceed.
 
In some cases, the notarizations predated the preparation of the legal documents, suggesting that signatures were not reviewed by a notary. Other notarizations took place in offices far away from where the documents were signed, indicating that the notaries might not have witnessed the signings as the law required.
 
Notary practices vary from state to state and the bill, sponsored by Representative Robert B. Aderholt, a Republican from Alabama, would essentially require that one state’s rules be accepted by others. If one state allows its notaries to sign off on electronic signatures, for example, documents carrying such signatures and notarized by officials in that state would have to be recognized and accepted in any state or federal court.
 
Ms. Brunner pointed out that some states had adopted “electronic notarization” laws that ignored the requirement of a signer’s personal appearance before a notary. “Many of these policies for electronic notarization are driven by technology rather than by principle, and they are dangerous to consumers,” she said.
 
Mr. Aderholt had introduced the bill twice before and both times it passed the House of Representatives but not the Senate. Mr. Aderholt reintroduced the bill last October and it passed the Senate on Sept. 29. It is awaiting President Obama’s signature.
 
Mr. Aderholt’s press secretary, Darrell Jordan, said there was no connection between the timing of the bill and the current notarization problems with foreclosures. In a statement announcing the bill’s passage, Mr. Aderholt said: “This legislation will help businesses around the nation by eliminating the confusion which arises when states refuse to acknowledge the integrity of documents notarized out of state.”
 
Last week, JPMorgan Chase and Bank of America joined GMAC in suspending foreclosures in the states where they must be approved by a judge. The judicial states do not include California or Texas. But Mr. Abbott, the Texas attorney general, told lenders in letters dated Oct. 4 that if they used so-called robo-signers — employees who signed thousands of foreclosure affidavits a month, falsely attesting that they had reviewed the material — it would be a violation of Texas law.
 
As a result, he wrote, “the document and therefore the foreclosure sale would have been invalid.”
 
The three lenders who are at the center of the controversy, GMAC Mortgage, JPMorgan Chase and Bank of America, declined to comment. Other lenders singled out by Mr. Abbott include Wells Fargo, CitiMortgage, HSBC and National City.
 
Meanwhile, shares of a major foreclosure outsourcing company, Lender Processing Services of Jacksonville, Fla., fell 5 percent on Tuesday, adding to a slide that began last week.
 
The company’s documentation practices are stirring questions, including how the same employee can have wildly varying signatures on mortgage documents. L.P.S. blamed a midlevel manager’s decision to allow employees to sign forms in the name of an authorized employee. It says it has stopped the practice.
 
The United States Attorney’s Office in Tampa began investigating L.P.S. in February. An L.P.S. representative could not be reached Tuesday for comment.
 
Other calls for investigations came from Senators Al Franken, a Democrat from Minnesota, and Robert Menendez, a Democrat from New Jersey.
 
 

 This article from http://www.nytimes.com/2010/10/06/business/06mortgage.html

 Racketeering Case Filed Against Ally And Citigroup

POSTED ON OCTOBER 5TH 2010
 
A popular bank and a mortgage servicer are being sued by homeowners in Kentucky for conspiring with a mortgage transfers company for falsely foreclosing on loans. It is a serious allegation and when proven true, then a lot of homeowners who are currently facing foreclosures just might get a chance to save their homes.
 
Homeowners in Kentucky have filed a lawsuit against Citigroup Inc. and Ally Financial Inc., alleging that the two have conspired with Reston, Virginia-based Mortgage Electronic Registration Systems Inc. in falsely foreclosing on loans.


Filed as a civil-racketeering class action on behalf of the Kentucky homeowners facing foreclosures, the lawsuit claims that banks – via MERS, which handles mortgage transfers among banks – are foreclosing on homes to which they don’t hold titles to properties. The complaint was filed in a federal court in Louisville, Kentucky on the 24th of September.
 
The complaint reads, “Defendants have filed foreclosures throughout the state of Kentucky and the United States of America knowing that they were not the ‘owners’ or beneficiaries of the loan they filed foreclosure upon.”
 
According to the lawsuit, the defendants either filed or caused to be filed mortgages through forged signatures. It also stated that foreclosure actions were filed months before any legal interests are acquired in the properties. Own notes executed with mortgages were also falsely claimed by the defendants, the lawsuit further says.
 
The case also claims that the defendants have violated the Racketeer Influenced and Corrupt Organizations Act. Though originally passed to pursue organized crime, RICO was brought to the case since the attorneys say the cases were well-thought out.
 
The Kentucky homeowners’ case is just one of the multiple cases against several banks and MERS for wrongful foreclosures. Several cases, which were combined in a multi-district litigation in Phoenix, have been dismissed last September 30. The judge allowed the plaintiffs to re-file their complaints, though.
 
In an emailed statement, Ally spokeswoman Gina Proia called the allegations “inflammatory” and without merit. Citigroup Inc. declined to comment, while MERS had no immediate comment.
 
This article originally posited at  http://bit.ly/9IzJOe
 

On Demand Video

Office Setup Basics 

 

 

 

 

Just In from Fox News,

Lawsuit Filed in Kentucky against CitiGroup

citing forged documents involving foreclosures.

 

 

 How Will This Foreclosure Mess Affect You & Your Business?
(15 min Video)

 


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Your Comments are very valuable and important

 Hey Mike,

 
Here’s a good one, there is a company called DocX, that, for a fee researches mortgages for banks, find  what the defects are in the paperwork, then, they create new docs to make it appear everything has been done correctly. 
They even have a price list for the various docs that would need to be "created" have a look at this http://bit.ly/bcNlQC
Take care,
Nicholas Capra
 
 
SUNDAY, OCTOBER 3, 2010
4ClosureFraud Posts Lender Processing Services Mortgage Document Fabrication Price Sheet
A bombshell has dropped in mortgage land.
 
We’ve said for some time that document fabrication is widespread in foreclosures. The reason is that the note, which is the borrower IOU, is the critical instrument to establishing the right to foreclose in 45 states (in those states, the mortgage, which is the lien on the property, is a mere “accessory” to the note).
 
The pooling and servicing agreement, which governs the creation of mortgage backed securities, called for the note to be endorsed (wet ink signatures) through the full chain of title. That means that the originator had to sign the note over to an intermediary party (there were usually at least two), who’d then have to endorse it over to the next intermediary party, and the final intermediary would have to endorse it over to the trustee on behalf of a specified trust (the entity that holds all the notes). This had to be done by closing; there were limited exceptions up to 90 days out; after that, no tickie, no laundry.
 
Evidence is mounting that for cost reasons, starting in the 2004-2005 time frame, originators like Countrywide simply quit conveying the note. We are told this practice was widespread, probably endemic. The notes are apparently are still in originator warehouses. That means the trust does not have them (the legalese is it is not the real party of interest), therefore it is not in a position to foreclose on behalf of the RMBS investors. So various ruses have been used to finesse this rather large problem.
 
The foreclosing party often obtains the note from the originator at the time of foreclosure, but that isn’t kosher under the rules governing the mortgage backed security. First, it’s too late to assign the mortgage to the trust. Second. IRS rules forbid a REMIC (real estate mortgage investment trust) from accepting a non-performing asset, meaning a dud loan. And it’s also problematic to assign a note from the originator if it’s bankrupt (the bankruptcy trustee must approve, and from what we can discern, the note are being conveyed without approval, plus there is no employee of the bankrupt entity authorized to endorse the note properly, another wee problem).
 
We finally have concrete proof of how widespread document fabrication was. For some reason the ScribD embeds aren’t working correctly, you can view the entire Lender Processing Services price sheet here, and here are the germane sections.
 
 Picture 21
 
 
Picture 22 
 
 
Not only are there prices up for creating, which means fabricating documents out of whole cloth, and look at the extent of the offerings. The collateral file is ALL the documents the trustee (or the custodian as an agent of the trustee) needs to have pursuant to its obligations under the pooling and servicing agreement on behalf of the mortgage backed security holder. This means most importantly the original of the note (the borrower IOU), copies of the mortgage (the lien on the property), the securitization agreement, and title insurance.
 
Also notice that there is a price for creating allonges. We discussed earlier that phony allonges have become the preferred fix for the failure to convey notes properly:
 
The cure for the mortgage documents puts the loan out of eligibility for the trust. In order to cure, on a current basis, they have to argue that the loan goes retroactively back into the trust. This is the cure that the banks have been unwilling to do, because it is a big problem for the MBS. So instead they forge and fabricate documents.
 
The letter in particular mentions an allonge. An allonge is a separate sheet of paper which is attached to a note to allow for more signatures, in this case, endorsements, to be added. Allonges have had a way of magically appearing in collateral files while trails are in progress (I’ve seen it happen in cases I was tracking; it’s gotten so common that some attorneys warn judges to be on the alert for “ta dah” moments).
 
The wee problem with an allonge miraculously being discovered is that the allonges that show up are inherently in violation of UCC (Uniform Commercial Code) provisions (UCC has been adopted by all states, a few states have minor quirks, but the broad provisions are very similar).
 
An allonge is NOT to be used unless all the space on the original note, including the margins and the back side of pages, has been used up. This is never the case. Second, an allonge has to be so firmly attached to the original document as to be inseparable. Thus an allonge suddenly being discovered is an impossibility (well impossible if it were legit), yet it seems to happen all the time.
 
This revelation touches every major servicer and RMBS trustee in the US. DocX is a part of of Lender Processing Services. Lender Processing Services has three lines of business, the biggest of which is “default services”, representing close to half its revenues of this over $2 billion in revenues company. DocX is its technology platform it uses to manage its national network of foreclosure mills. Note that DocX closed one of its offices in Alpharatta, Georgia earlier this year, per StopForeclosures:
 
On April 12, 2010, Lender Processing Services closed the offices of its subsidiary, Docx, LLC, in Alpharetta, Georgia. That office was responsible for pumping out over a million mortgage assignments in the last two years so that banks could foreclose on residential real estate. The law firms handling the foreclosures were retained and largely controlled by Lender Processing Services, according to a Sanctions Order entered by U.S. Bankruptcy Judge Diane Weiss Sigmund (In re Niles C. Taylor, EDPA, Case 07-15385-sr, Doc. 193). Lender Processing Services, the largest “default management services company” in the country, has already made at least partial admissions that there were faults in the documents produced by the Docx office – although courts and homeowners were never notified. According to Lender Processing Services, over 50 major banks use their default management services. The banks that especially need the services provided by Lender Processing Services include Deutsche Bank, Citibank, Wells Fargo and U.S. Bank, acting as trustees for mortgage-backed securitized trusts. These trusts, in the rush to securitize mortgages and sell them to investors, often ignored the critical step of obtaining mortgage assignments from the original lenders to the securities companies to the trusts. Now, years later, when the companies “servicing” the trusts need to foreclose, they retain Lender Processing Services to draft the missing documents. The mortgage servicers, including American Home Mortgage Services, Saxon Mortgage Services, and American Servicing Company, never disclose that the trusts are missing essential documents – they just rely on Lender Processing Services to “fix” the problems. Although the Alpharetta office has been closed, Lender Processing Services continues to mass produce “replacement” assignments from its Jacksonville, Florida, and Dakota County, Minnesota offices. Law firms retained by Lender Processing Services also often use their own employees, posing as officer of Mortgage Electronic Registration Systems, to produce the needed Assignments.
 
So wake up and smell the coffee. The story that banks have been trying to sell has been that document problems like improper affidavits are mere technicalities. We’ve said from the get go that they were the tip of the iceberg of widespread document forgeries and fraud. This price sheet provides concrete proof that the practices we pointed to not only existed, but are a routine way of doing business in servicer and trustee land. LPS is the major platform used by all the large servicers; it oversees the work of foreclosure mills in every state.
 
And this means document forgeries and fraud are not just a servicer problem or a borrower problem but a mortgage industry and ultimately a policy problem. These dishonest practices are so widespread that they raise serious questions about the residential mortgage backed securities market, the major trustees (such as JP Morgan, US Bank, Bank of New York) who repeatedly provided affirmations as required by the pooling and servicing agreement that all the tasks necessary for the trust to own the securitization assets had been completed, and the inattention of the various government bodies (in particular Fannie and Freddie) that are major clients of LPS.
 
Amar Bhide, in a 1994 Harvard Business Review article, said the US capital markets were the deepest and most liquid in major part because they were recognized around the world as being the fairest and best policed. As remarkable as it may seem now, his statement was seem as an obvious truth back then. In a mere decade, we managed to allow a “free markets” ideology on steroids to gut investor and borrower protection. The result is a train wreck in US residential mortgage securities, the biggest asset class in the world. The problems are too widespread for the authorities to pretend they don’t exist, and there is no obvious way to put this Humpty Dumpty back together.

 

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