Archive for 'mortgages'

 Harry and Mike:

 
Here is some additional foreclosure information.
 
Bill
 
Subject: U.S. Bank v. Ibanez – AMICUS BRIEF EXPOSES FORECLOSURE FRAUD
 
Dear Friends & Family,
 
I have just filed an Amicus Brief on Friday, October 1, 2010 with the Massachusetts Supreme Judicial Court in the landmark cases that are presently on appeal from the Massachusetts Land Court styled:  U.S. Bank v. Ibanez and its companion case, Wells Fargo Bank v. LaRace. 
 
My brief reveals groundbreaking evidence that Antonio Ibanez’s loan was most likely securitized twice – a hidden fact unknown until now. 
 
Moreover, the Assignment of Mortgage allegedly conveying the Ibanez loan to U.S. Bank, executed by “robo-signer” Linda Green, violated the Pooling and Servicing Agreement and other Trust documents. 
 
Finally I expose the fact that U.S. Bank, who bought the Ibanez property at foreclosure for $94,350, sold it on December 15, 2008 for $0.00.  That’s right, they foreclosed on Ibanez’s property so that they could give it away!
 
With respect to Mark and Tammy LaRace, I am happy to report that through the efforts of Attorney Glenn F. Russell, Jr. and myself, the LaRaces moved back into their home in January of this year, two and a half years post-foreclosure! 
 
My Amicus Brief reveals that Wells Fargo Bank’s own documents prove that they did not have the authority to foreclose on the LaRaces.  Therefore, the Assignment of Mortgage, Power of Attorney, Affidavit, and Foreclosure Deed executed by “robo-signer” Cindi Ellis were all unauthorized.
 
Wells Fargo Bank’s recent statement that it does not have the same “document” problem that GMAC, JPMorgan Chase, and Bank of America have admitted to is simply not true.  I have audited many, many foreclosure files where Wells Fargo Bank employees and their agents have manufactured false documents to prosecute wrongful foreclosures such as in the LaRaces’ case.
 
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Breaking News Alert: Sen. Reid calls on major lenders to halt foreclosures in all 50 states 
October 8, 2010 12:56:49 PM
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Senate Majority Leader Harry Reid (D-Nev.) called on major lenders to halt foreclosures in all 50 states Friday following Bank of America’s announcement it was stopping proceedings until it finishes reviewing possible paperwork problems.

Reid, who had sent a letter to major banks asking them to suspend foreclosures in Nevada, extended his concern to include all 50 states. 

“I thank Bank of America for doing the right thing by suspending actions on foreclosures while this investigation runs its course," said Reid. "I urge other major mortgage servicers to consider expanding the area where they have halted foreclosures to all 50 states as well."

He emphasized, "My primary focus is to protect Nevada homeowners who have been hardest hit by foreclosures in the most recent economic downturn."

 

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

 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.

 

Another article sent from Roger

 

Flawed Paperwork Aggravates a Foreclosure Crisis

By GRETCHEN MORGENSON
Published: October 3, 2010
 
As some of the nation’s largest lenders have conceded that their foreclosure procedures might have been improperly handled, lawsuits have revealed myriad missteps in crucial documents.
 
Jay LaPrete/Associated Press
Jennifer Brunner, the secretary of state of Ohio, has highlighted examples of what her office considers possible notary abuse.
The flawed practices that GMAC Mortgage, JPMorgan Chase and Bank of America have recently begun investigating are so prevalent, lawyers and legal experts say, that additional lenders and loan servicers are likely to halt foreclosure proceedings and may have to reconsider past evictions.
 
Problems emerging in courts across the nation are varied but all involve documents that must be submitted before foreclosures can proceed legally. Homeowners, lawyers and analysts have been citing such problems for the last few years, but it appears to have reached such intensity recently that banks are beginning to re-examine whether all of the foreclosure papers were prepared properly.
 
In some cases, documents have been signed by employees who say they have not verified crucial information like amounts owed by borrowers. Other problems involve questionable legal notarization of documents, in which, for example, the notarizations predate the actual preparation of documents — suggesting that signatures were never actually reviewed by a notary.
 
Other problems occurred when notarizations took place so far from where the documents were signed that it was highly unlikely that the notaries witnessed the signings, as the law requires.
 
On still other important documents, a single official’s name is signed in such radically different ways that some appear to be forgeries. Additional problems have emerged when multiple banks have all argued that they have the right to foreclose on the same property, a result of a murky trail of documentation and ownership.
 
There is no doubt that the enormous increase in foreclosures in recent years has strained the resources of lenders and their legal representatives, creating challenges that any institution might find overwhelming. According to the Mortgage Bankers Association, the percentage of loans that were delinquent by 90 days or more stood at 9.5 percent in the first quarter of 2010, up from 4 percent in the same period of 2008.
 
But analysts say that the wave of defaults still does not excuse lenders’ failures to meet their legal obligations before trying to remove defaulting borrowers from their homes.
 
“It reflects the hubris that as long as the money was going through the pipeline, these companies didn’t really have to make sure the documents were in order,” said Kathleen C. Engel, dean for intellectual life at Suffolk University Law School and an expert in mortgage law. “Suddenly they have a lot at stake, and playing fast and loose is going to be more costly than it was in the past.”
 
Attorneys general in at least six states, including Massachusetts, Iowa, Florida and Illinois, are investigating improper foreclosure practices. Last week, Jennifer Brunner, the secretary of state of Ohio, referred examples of what her office considers possible notary abuse by Chase Home Mortgage to federal prosecutors for investigation.
 
The implications are not yet clear for borrowers who have been evicted from their homes as a result of improper filings. But legal experts say that courts may impose sanctions on lenders or their representatives or may force banks to pay borrowers’ legal costs in these cases.
 
Judges may dismiss the foreclosures altogether, barring lenders from refiling and awarding the home to the borrower. That would create a loss for the lender or investor holding the note underlying the property. Almost certainly, lawyers say, lawsuits on behalf of borrowers will multiply.
 
In Florida, problems with foreclosure cases are especially acute. A recent sample of foreclosure cases in the 12th Judicial Circuit of Florida showed that 20 percent of those set for summary judgment involved deficient documents, according to chief judge Lee E. Haworth.
 
“We have sent repeated notices to law firms saying, ‘You are not following the rules, and if you don’t clean up your act, we are going to impose sanctions on you,’ ” Mr. Haworth said in an interview. “They say, ‘We’ll fix it, we’ll fix it, we’ll fix it.’ But they don’t.”
 
As a result, Mr. Haworth said, on Sept. 17, Harry Rapkin, a judge overseeing foreclosures in the district, dismissed 61 foreclosure cases. The plaintiffs can refile but they need to pay new filing fees, Mr. Haworth said.
 
The byzantine mortgage securitization process that helped inflate the housing bubble allowed home loans to change hands so many times before they were eventually pooled and sold to investors that it is now extremely difficult to track exactly which lenders have claims to a home.
 
Many lenders or loan servicers that begin the foreclosure process after a borrower defaults do not produce documentation proving that they have the legal right to foreclosure, known as standing.
 
As a substitute, the banks usually present affidavits attesting to ownership of the note signed by an employee of a legal services firm acting as an agent for the lender or loan servicer. Such affidavits allow foreclosures to proceed, but because they are often dubiously prepared, many questions have arisen about their validity.
 
Although lawyers for troubled borrowers have contended for years that banks in many cases have not properly documented their rights to foreclose, the issue erupted in mid-September when GMAC said it was halting foreclosure proceedings in 23 states because of problems with its legal practices. The move by GMAC followed testimony by an employee who signed affidavits for the lender; he said that he executed 400 of them each day without reading them or verifying that the information in them was correct.
 
JPMorgan Chase and Bank of America followed with similar announcements.
 
But these three large lenders are not the only companies employing people who have failed to verify crucial aspects of a foreclosure case, court documents show.
 
Last May, Herman John Kennerty, a loan administration manager in the default document group of Wells Fargo Mortgage, testified to lawyers representing a troubled borrower that he typically signed 50 to 150 foreclosure documents a day. In that case, in King County Superior Court in Seattle, he also stated that he did not independently verify the information to which he was attesting.
 
Wells Fargo did not respond to requests for comment.
 
In other cases, judges are finding that banks’ claims of standing in a foreclosure case can conflict with other evidence.
 
Last Thursday, Paul F. Isaacs, a judge in Bourbon County Circuit Court in Kentucky, reversed a ruling he had made in August giving Bank of New York Mellon the right to foreclose on a couple’s home. According to court filings, Mr. Isaacs had relied on the bank’s documentation that it said showed it held the note underlying the property in a trust. But after the borrowers supplied evidence indicating that the note may in fact reside in a different trust, the judge reversed himself. The court will revisit the matter soon.
 
Bank of New York said it was reviewing the ruling and could not comment.
 
Another problematic case involves a foreclosure action taken by Deutsche Bank against a borrower in the Bronx in New York. The bank says it has the right to foreclose because the mortgage was assigned to it on Oct. 15, 2009.
 
But according to court filings made by David B. Shaev, a lawyer at Shaev & Fleischman who represents the borrower, the assignment to Deutsche Bank is riddled with problems. First, the company that Deutsche said had assigned it the mortgage, the Sand Canyon Corporation, no longer had any rights to the underlying property when the transfer was supposed to have occurred.
 
Additional questions have arisen over the signature verifying an assignment of the mortgage. Court documents show that Tywanna Thomas, assistant vice president of American Home Mortgage Servicing, assigned the mortgage from Sand Canyon to Deutsche Bank in October 2009. On assignments of mortgages in other cases, Ms. Thomas’s signatures differ so wildly that it appears that three people signed the documents using Ms. Thomas’s name.
 
Given the differences in the signatures, Mr. Shaev filed court papers last July contending that the assignment is a sham, “prepared to create an appearance of a creditor as a real party in interest/standing, when in fact it is likely that the chain of title required in these matters was not performed, lost or both.”
 
Mr. Shaev also asked the judge overseeing the case, Shelley C. Chapman, to order Ms. Thomas to appear to answer questions the lawyer has raised.
 
John Gallagher, a spokesman for Deutsche Bank, which is trustee for the securitization that holds the note in this case, said companies servicing mortgage loans engaged the law firms that oversee foreclosure proceedings. “Loan servicers are obligated to adhere to all legal requirements,” he said, “and Deutsche Bank, as trustee, has consistently informed servicers that they are required to execute these actions in a proper and timely manner.”
 
Reached by phone on Saturday, Ms. Thomas declined to comment.
 
The United States Trustee, a unit of the Justice Department, is also weighing in on dubious court documents filed by lenders. Last January, it supported a request by Silvia Nuer, a borrower in foreclosure in the Bronx, for sanctions against JPMorgan Chase.
 
In testimony, a lawyer for Chase conceded that a law firm that had previously represented the bank, the Steven J. Baum firm of Buffalo, had filed inaccurate documents as it sought to take over the property from Ms. Nuer.
 
The Chase lawyer told a judge last January that his predecessors had combed through the chain of title on the property and could not find a proper assignment. The firm found “something didn’t happen that needed to be fixed,” he explained, and then, according to court documents, it prepared inaccurate documents to fill in the gaps.
 
The Baum firm did not return calls to comment.
 
A lawyer for the United States Trustee said that the Nuer case “does not represent an isolated example of misconduct by Chase in the Southern District of New York.”
 
Chase declined to comment.
 
“The servicers have it in their control to get the right documents and do this properly, but it is so much cheaper to run it through a foreclosure mill,” said Linda M. Tirelli, a lawyer in White Plains who represents Ms. Nuer in the case against Chase. “This is not about getting a free house for my client. It’s about a level playing field. If I submitted false documents like this to the court, I’d have my license handed to me.”
 
Link to Article
http://www.nytimes.com/2010/10/04/business/04mortgage.html

Gold Member Roger Taylor emailed me this article in the New York Times.

This is huge and will greatly affect the real estate market across America.

Chew on this a bit, not only will this slow down and halt foreclosures creating a massive stockpile of defaults, but there will also be many other critical issues for both homeowners and investors alike.

For Example:

Title Companies will stop writing title insurance. Old Republic has already announced it will not insure any properties having a GMAC mortgage.

Investors and Homeowners alike, who have already purchased "bank owned" real estate or HUD properties, may find themselves with a toxic property because it may have an unmarketable title due to all of the huge lenders and law firms having openly admitted falsifying documents during the foreclosure process.

Homeowners in default, by the masses, will be filing all kinds of action demanding lenders produce all of the original and real documents involving their mortgage. Keep in mind, a California bankruptcy court has already ruled that "MERS" is NOT sufficient proof of ownership of notes and mortgages. In other words, the lender who claims to own the note and mortgage, must be able to produce the original promissory note and documents. (Notes and mortgages were sliced, diced, and chopped up and sold on the secondary market using MERS without any concern for the physical documents themselves. 

Stay Tuned…

Share Your Comments Below

 

Bank of America to Freeze Foreclosure Cases

By DAVID STREITFELD
Published: October 1, 2010 in NYT
 
Bank of America, the country’s largest mortgage lender by assets, said on Friday that it was reviewing documents in all foreclosure cases now in court to evaluate if there were errors.
 
It is the third major lender in the last two weeks to freeze foreclosures in the 23 states where the process is controlled by courts.
 
But Bank of America went further than the first two lenders, GMAC Mortgage and JPMorgan Chase, which have said they will amend paperwork only in cases they think were improperly done. So far, that has amounted to only a handful of cases.
 
Bank of America, in an e-mailed statement, said it would “amend all affidavits in foreclosure cases that have not yet gone to judgment.”
 
That could mean tens of thousands of foreclosure cases would be in limbo for months or, if the consumers in default hire lawyers, years.
 
Spokesmen for the bank said that they were uncertain how many cases the lender currently had in court. They provided no timeline or explanation for the freeze, saying only that the bank planned to eventually resubmit all the cases.
 
The moratorium is likely to further fuel the uproar over the foreclosure tactics of the big lenders, which continued to have political ramifications on Friday.
 
Before Bank of America’s announcement, Richard Blumenthal, the Connecticut attorney general, asked judges in his state to put a halt to all foreclosures for 60 days. Connecticut is one of the 23 states where foreclosure is a judicial matter. Others include Illinois, Florida, New Jersey and New York.
 
Mr. Blumenthal, who is running for senator in Connecticut, said the freeze “should stop a foreclosure steamroller based on defective documents and enable effective remedies.”
 
California’s attorney general, Jerry Brown, said that Chase should stop any foreclosures in the state until it proved that it was following the law. Mr. Brown, who is a candidate for governor, earlier made the same demand of GMAC.
 
In California, lenders generally pursue foreclosures outside of the court system, so they are presumably still proceeding with evictions. Chase declined to say whether it would comply with Mr. Brown’s comments.
 
Chase said this week that it had frozen 56,000 foreclosure cases. GMAC, which is largely owned by the Treasury after receiving $17 billion in federal bailout money to prevent its collapse, has repeatedly declined to say how many cases it is halting.
 
The nation’s two other major lenders, Citi and Wells Fargo, have issued statements maintaining they have no problems with their cases.
 
The problem for all the lenders that have announced moratoriums stems directly from their attempt to deal with an unprecedented number of foreclosures.
 
According to LPS Applied Analytics, a mortgage data firm, 2 million households are in foreclosure. Another 2.37 million households are seriously delinquent and waiting for their lender to take action.
 
Sometimes these loans are still owned by the lender but often, the banks are merely the loan servicer acting on behalf of the owner. Many of the loans are owned by Fannie Mae and Freddie Mac, the mortgage holding companies now controlled by the Treasury. In other cases the loans have been sold to private investment pools.
 
Confronted with so many cases, the lenders tried to process them on a wholesale basis, with the goal of avoiding the expense of a full trial and instead getting summary judgments.
 
The tool for doing this was the so-called robo-signers, in which midlevel bank executives would sign thousands of affidavits a month attesting that they had personal knowledge that the facts of the case were as presented. The affidavits were prepared by lawyers who were paid a flat fee, which also placed a premium on volume.
 
When defense lawyers started deposing these robo-signers, they acknowledged that they could not possibly have knowledge of all the cases. The banks say this is a technicality and they will refile the proper affidavits. The defense lawyers say the practice calls the cases, and indeed the entire process, into question.
 
Thomas Lawler, a housing economist, said the current mess was predictable and probably inevitable. Lenders made their money by making loans and then simply and efficiently servicing them by collecting the checks every month. They were never prepared to deal with the labor-intensive problems of delinquency and foreclosure.
 
“However, the foreclosure crisis is now almost three years old, and not having staffed up sufficiently to deal with the problems with inadequate staffing borders on criminal,” Mr. Lawler said. “I mean, jeepers, look at the unemployment rate; how hard would it have been to hire more folks?”
 
Mark Stopa, a Florida lawyer who represents defaulting homeowners, said the magnitude of the current troubles depends on how title insurance companies react. If those firms begin to shy away from insuring foreclosed properties because they think those properties are vulnerable to claims, he said, the entire housing market could suffer.
 
“Judges have to force banks to do foreclosures correctly,” Mr. Stopa said. But he noted that would require a significant increase in staff. “I’ll believe it when I see it,” he said.
 
Stocks of the major title insurance companies dropped on Friday amid concern that their business would suffer as a result of the foreclosure freezes. Fidelity National Financial fell more than 4 percent, while First American Financial dropped 3 percent.
 
One firm, Old Republic National Title, said this week it would not issue policies on GMAC foreclosures until further notice.

 

Gold Member Roger Taylor emailed me this article this morning. Thanks Roger!

 

Foreclosures Slow as Document Flaws Emerge

By DAVID STREITFELD
Published: September 30, 2010
 
 
The foreclosure machinery that has forced millions of Americans out of their homes is beginning to seize up as some lenders and their lawyers are accused of cutting corners in their pursuit of rapid home repossessions.
 
Matthew Staver/Bloomberg News
GMAC and JPMorgan Chase have acknowledged legal missteps, and have suspended new foreclosure actions in 23 states.
 
Evictions are expected to slow sharply, housing analysts said, as state and national law enforcement officials shine a light on questionable foreclosure methods revealed by two of the country’s biggest home lenders in the last two weeks.
 
Even lenders with no known problems are expected to approach defaulting homeowners more cautiously and look more aggressively for resolutions short of outright eviction.
 
Despite the turmoil, some economists said the breakdown could ultimately lay the groundwork for a real estate recovery.
 
Stricken neighborhoods across the country, for example, could benefit. One big factor undermining home sales is fear of a large number of foreclosed homes coming to the market. If the foreclosures are delayed or never happen, housing prices might find a floor.
 
“Maybe this is like shock therapy,” said the economist Karl E. Case. “Maybe this will actually get the lenders to the table and encourage them to work out deals that are to the benefit of everybody.”
 
While such a happy ending is possible, the near term is more likely to produce paralysis and confusion.
 
As more defaulting homeowners become aware of the lenders’ problems, they are expected to hire lawyers and challenge the proceedings against them. And if completed foreclosures were not properly done, families who bought the troubled homes could be vulnerable to claims by the former owners.
 
Apparently alarmed about such a possibility, one of the major title insurance companies, Old Republic National Title, has sent a bulletin to agents saying that “until further notice” it would not insure title to properties foreclosed upon by GMAC Mortgage, the country’s fourth-largest home lender and one of the two big lenders at the center of the current controversy.
 
GMAC declined to comment, and Old Republic representatives did not return calls.
 
GMAC has acknowledged legal missteps in processing mortgages, and JPMorgan Chase has acknowledged the possibility of missteps, and both have suspended all foreclosures in the 23 states where they need a court’s approval. That’s 56,000 in the case of Chase alone; GMAC declined to provide a number.
 
Attorneys general in half a dozen states are demanding action or opening investigations. The Treasury Department said Thursday it was asking regulators to look into “these troubling developments.”
 
“We’re seeing a fundamental breakdown in the system, because no one cared that much about getting things right,” said Representative Alan Grayson, a Democrat of Florida, who unsuccessfully asked the Florida Supreme Court to halt all foreclosures in that state.
 
Wall Street was examining the impact the disclosures could have on the lenders. Moody’s Investors Service has placed the servicer ratings of GMAC and Chase on review for possible downgrade.
 
The federal government has been the majority owner of GMAC since supplying $17 billion to prevent the lender’s failure during the financial crisis.
 
Other lenders said Thursday that their foreclosure filings, including the crucial affidavits, had been properly done.
 
A Citigroup spokesman said the lender required “annual training for our foreclosure employees on the proper execution of affidavits, including having personal knowledge of the information in the affidavit.”
 
A Wells Fargo spokeswoman said “the affidavits we sign are accurate.” A spokesman for Bank of America, Rick Simon, said, “We do not have anything to tell you at this time.”
 
GMAC and Chase are in trouble because, overwhelmed with foreclosures, they tried to process them as quickly and cheaply as possible, defense lawyers say. The companies say they are reviewing their procedures to take care of any violations.
 
The missteps stemmed from the affidavits the lenders file as they seek a quick or summary judgment in thousands of foreclosure cases. The affidavits state certain facts about the case, including the amount owed, which the signer indicates he has personal knowledge of. Without the affidavit, the lender would have to prove the facts at trial.
 
In depositions taken by lawyers for homeowners, executives at GMAC and Chase said they or their teams signed 10,000 or more affidavits and related documents a month. That did not give them time to review the cases.
 
Defense lawyers say the disclosures are symptomatic of the carelessness, if not outright fraud, that lenders have been exhibiting for years in their rush to file cases. Many necessary documents have disappeared, with defense lawyers saying the lenders often do not even have standing to foreclose.
 
In a number of pending cases in Florida, defense lawyers there said, GMAC has already withdrawn affidavits. The lawyers said they would try to have the cases thrown out for possible fraud, although they acknowledged that might be difficult.
 
GMAC said it would refile the affidavits. Chase said it had not withdrawn any affidavits.
 
“The way the plaintiffs’ lawyers have handled this has corrupted our legal system,” said Thomas Cox, a Maine lawyer whose deposition of a GMAC executive in June helped prompt the current disclosures. “They tried to manufacture foreclosures the way you’d manufacture cars, on an assembly line. It can’t be done that way.”
 
Mr. Cox is representing pro bono a rural woman who is in foreclosure on a $82,000 mortgage. The plaintiff in the case is Fannie Mae, the mortgage holding company that failed during the financial crisis and is now under government conservatorship. GMAC serviced the loan for Fannie Mae.
 
This week, the judge in the case set aside his summary judgment in favor of Fannie when he read Mr. Cox’s deposition of a GMAC executive, Jeffrey Stephan, who said he never reviewed the file he had signed. The case will now go to trial.
 
“I don’t think they are going to give up easily,” said Mr. Cox.
 
As the foreclosure crisis has deepened, the length of time borrowers spend waiting for the end has lengthened.
 
In January 2009 the time between the owner’s first missed payment and eviction was 319 days, according to LPS Applied Analytics. By August it was 478 days.
 
Since spring, the data firm says, the lenders have been trying to clear their backlog. They have stepped up the rate at which they put defaulting owners into the formal foreclosure process. In August, they started 283,000 foreclosures, up from 220,000 in April.
 
Now, as the lenders are pressed to examine more closely their filings, those foreclosure starts are likely to fall, prolonging the owner’s time in limbo. Many borrowers use this period, when they are living in their home but not paying for it, to try and get their financial house back in order.
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