STOP MY FORECLOSURE HOME: 21 posts from October 2009

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21 posts from October 2009

October 25, 2009

Creditor Held Liable in FDCPA Class Action

Creditor Held Liable in FDCPA Class Action
by Mary Beth Guard

Ask any basic banking student and they'll tell you: The Fair Debt Collection Practices Act ("FDCPA") applies only to debt collectors -- not to creditors. As a case decided October 9, 2002 by the U.S. Court of Appeals for the Seventh Circuit shows, however, that statement is not always correct. There are some circumstances where the creditor can be held liable under the FDCPA, as the defendants learned in Nielsen v. Dickerson, et al.

In the Nielsen decision, the court affirmed a decision of the lower court granting summary judgment to the plaintiffs in a class action suit brought against an attorney who sent collection letters and the financial institution on whose behalf he sent them. The plaintiffs successfully argued that the attorney's collection letter falsely suggested that an attorney had become actively involved in the financial institution's debt collection efforts, when in fact the attorney had done little more than lend his name and firm letterhead to the collection effort. The lower court and the 7th Circuit Court of Appeals agreed with the plaintiffs contention that the defendants violated the Fair Debt Collection Practices Act, as explained below.

The Facts
Household Bank (SB), N.A. ("Household") issued GM credit cards and entered into an arrangement with the law firm of David D. Dickerson under which Dickerson agreed to issue a form "past due" letter to delinquent GM Card holders. Household approved Dickerson's form letter and typically sent Dickerson approximately 2,000 accounts per month to send collection letters to. Dickerson was compensated by a flat fee of $2.45 per account. His compensation was not tied to the effect his letters had, and even in cases where the cardholder failed to subsequently make payments, Dickerson's services were not utilized by Household for filing legal proceedings against any of the debtors.

Dickerson was apparently a very experienced attorney, with more than 30 years in practice and more than 25 years working with debt collection activities. When Household contracted with Dickerson, he signed a 9-page agreement under which he agreed to render legal services consistent with applicable laws, including the FDCPA.

The arrangement worked like this:

Household would send Dickerson a disk containing delinquent account date, including the account number, name, address, account balance, and the amount past due;

Dickerson's firm would reformat the data, then pull it up to check for any obvious gaps or errors;

After eliminating obvious gaps or errors, the firm would transmit the data to a third-party printing and mailing service, which then provided a hard copy back to Dickerson;

The hard copy list would then be subjected to a three-level review by the firm to:

ensure duplicate letters were not sent to the same debtor
flag any instances where there was incomplete or inaccurate debtor information;
check the data against a database of recent bankruptcy filings so that letters were not be sent to debtors who had declared bankruptcy. The firm also flagged any debtors in one of three "prohibited" states to which Dickerson did not send letters.

Dickerson reviewed nearly all the printouts of pertinent data himself, although the court noted that the time he spent would indicate that he devoted only a few seconds to each account.

After these reviews were completed, the firm would send an acknowledgement report to household listing the debtors to whom a delinquency letter would be sent. After transmitting the information to Household, the firm would wait a minimum of 24 hours before sending a letter to give Household the opportunity to make corrections or strike names from the list.

After the waiting period expired for Household review, the firm would forward the data to the third-party printing firm, which would then print and mail the letters on firm letterhead with a facsimile of the lawyer's signature.

Dickerson and the firm did not

make an individualized assessment of the status or validity of the debt or the propriety of sending delinquency letters to the account debtors referred to him by the bank;

receive a copy of a debtor's file;

have access to Household's account system;

pursue judgment on behalf of Household with respect to any of these debtors.

The form letter told debtors that if they did not dispute the debt, they should make payment to the client GM card or call GM Card at GM Card's 800 number to discuss payment arrangements. If the debtor disputed the debt, he was told to "notify us" (meaning the law firm). A payment coupon with GM Card's address was attached to the bottom of each letter.

While Dickerson's firm did receive calls from delinquent debtors, he had no authority to resolve matters on Household's behalf and did not attempt to do so. The firm had six different form transmittal letters that they would send to Household highlighting the nature of the response. Each time a debtor would contact the law firm by phone or letter, the appropriate form letter was selected, signed by Dickerson, and sent to Household, along with a copy to the debtor. Once Dickerson handed the responses over to Household, he took no further action.

One recipient of one of the collection letters was Ann Nielsen, a resident of Chicago. Upon receiving the letter from Dickerson, she noted he was a lawyer and assumed she might be sued on her unpaid debt. She did not respond to the letter, and subsequently filed bankruptcy. Then, she filed suit against Dickerson and Household on behalf of herself and other GM Card holders who had also received delinquency letters from Dickerson. The lower court certified a class that included every GM cardholder residing at an address in Illinois who were sent these letters between certain dates in 1997 to 1999 -- over 3500 individuals. The parties filed cross-motions for summary judgment and the lower court ruled in favor of the plaintiffs on the FDCPA claims.

The Court's Ruling
The District Court ruled

that Dickerson and Household each qualified as a "debt collector" that could be held liable under the FDCPA for misleading communications with debtors;

although Household would not normally constitute a debt collector under the Act, it qualified as one under what is known as the "false name" exception to this rule. A creditor or an affiliate of a creditor who uses someone else's name so as to suggest to the debtor that a third party is involved in the debt collection process, when in fact that party is not involved, can be treated as a "debt collector" for FDCPA purposes;

Dickerson played no genuine role as an attorney in Household's debt collection efforts;

Dickerson's letter to Nielsen and the other class members was in reality from Household and Household was simply using Dickerson's name to suggest that he and his firm were involved in the attempt to collect the debts;

Household should be treated as a debt collector and held liable to the extent the letter was false or misleading;

in order for the letter not to mislead the recipient as to the nature of the attorney's involvement with the debt, the attorney must have direct and personal involvement in the mailing of the letter -- e.g., by reviewing the file to determine whether the letter should be sent, or by approving the mailing based on recommendations by others;

the firm's "review" was no more than a deceptive "veneer of compliance" with FDCPA.

According to the lower court, this type of letter suggests that the attorney is familiar with the facts of the case and is prepared to pursue the case himself, but Dickerson did not have this level of involvement with the debt. His review of the data was superficial and amounted to little more than proofreading. The fact that after the letter was sent Dickerson was not even informed by Household about whether it received a response to the letter and Dickerson had never pursued a judgment on Household's behalf or even been asked to do so was also telling in the Court's view. The court said "We find this lack of litigation activity contradicts the impression given to an unsophisticated consumer; namely, that if she does not pay, the attorney sending her the collection letter will pursue a collection suit against her."

The court went on to say that a key factors is that the letters themselves are objectionable. The lawyer just sent a form letter that was modified to reflect what little information he was furnished by Household. He didn't even personally sign the letters. They were prepared en masse by the printing company who affixed his facsimile signature to them. In a previous 2nd Circuit case the court pointed to, the 2nd Circuit suggested that mass mailings prepared in this manner will frequently be false to the extent that they suggest that an attorney was directly involved in the process by which the letter was prepared and sent.

After the summary judgment ruling on liability, the parties reached a settlement as to damages, but defendants reserved the right to appeal the liability ruling. [In terms of the settlement, the defendants agreed to pay a total of $250,000.]

The appellate court affirmed the ruling on liability. In its opinion, it goes into great detail about Household's liability as a debt collector, the violations of section 1692(e)(3) and (10) and Household's unsuccessful assertion of the "Bona Fide Error defense" under FDCPA. It makes for some interesting reading . . .

In the wake of this decision, all financial institutions would be well-advised to review this decision and the Act to determine what changes, if any, should be made to their debt collection practices in order to avoid potential liability as a debt collector.

First published on BankersOnline.com 10/10/02

Posted by Silent Dogood JR on October 25, 2009 at 01:15 AM in Foreclosure News | Permalink | Comments (0) | TrackBack (0)

Two Bad Loans Don't Equal One Good Loan

Two Bad Loans Don't Equal One Good Loan
Bank Appeals $3 Million Judgment
by BOL Guru Sam Ott

The United States Court of Appeals for the 6th Circuit on April 15, 2002 decided the case of Sallee v. Fort Knox National Bank by holding that the bank was liable to a loan customer for failing to reveal a negative appraisal and inducing the execution of a release of all claims against the bank. The original judgment of $3,009,998.25 was reduced but the Court upheld the award of punitive damages against the holding company of the bank.

The Court was very graphic in its assessment of the actions of the bank and its customers. It described the case as the "unhappy collision between the bank's bad banking practices and the debtors' business naivete and incompetence".

The bank was painted as displaying the "go-go" mentality that infected banking in the mid-1980's. The loan officers were identified as possessing a dangerous combination of inexperience and incompetence. The bank was severely criticized for poorly documenting the loans, loosely collateralizing the loans and making loans with little financial information.

The bank's appraiser was assailed as the author of the worst prepared appraisal the court had reviewed in the last 10 years. It was noted the appraisals disingenuously found real estate had the exact value needed to support whatever loan amount that the loan officer wanted.

Keep in mind these are the comments of a Federal Judge in a legal opinion -- not a Regulator in an examination.

The Facts
The debtors were approached by another customer of the bank who wanted to sell the debtors a laundromat from which the debtors had previously purchase an adjacent convenience store. The bank that had previously financed the purchase of the convenience store for the debtors was contacted regarding the financing of the second transaction. The bank had financed both the convenience store and the laundromat originally and the loans were in default at the time of each sale.

The bank actively encouraged the sale and provided the buyers (the debtors) a pro-forma and site survey that suggested the laundromat would gross between $150,000 and $200,000 per year. In addition, the bank told the debtors it had a current appraisal of the property for $750,000.

The bank did not disclose two earlier appraisals conducted within a 1 and ½ year period showing that the appraised value rose from $469,000 to $647,000 to $726,000 (the actual final appraisal amount). The same appraiser prepared all three appraisals. The bankruptcy court later said it was the worst prepared appraisal that it has had the opportunity to review in its past ten years and the appraisal amount found the real estate in question to have the exact value needed to support whatever loan amount the bank's loan officer wanted. The increases in appraised value occurred even though no improvements were made on the launderomat and the funds generated by the business could not service the debt.

When the debtors were unable to service their loans to the bank, they sought an extension and expressed a desire to refinance their entire loan package. The bank agreed to the extension and implied that a "package loan" would be forthcoming. The extension agreement, which was prepared by the bank, released the bank from "any and all rights, claims or causes of action with respect to the Loan Documents and Collateral."

During the time the debtors were involved in extension discussions with their loan officer, the bank's holding company, upon review of the loan portfolio, stopped all commercial lending by the bank. The loan officer continued with the discussions without informing the debtors of the change in the bank's lending policy. The debtors, in part on the belief that the bank would provide them a "package loan", executed the extension agreement.

The loans went into default and the bank initiated a foreclosure suit regarding the real and personal property including ESOP stock of the debtor that had also been pledged as collateral. The debtors filed a counterclaim against the bank alleging fraud in the inducement relative to the purchase of the laundromat and breach of contract for the financing of the purchase. The debtors then filed a petition for bankruptcy and the court action was removed to the bankruptcy court as an adversary action.

The bank filed a motion for summary judgment alleging that the extension agreement released the bank form liability for all claims. The bankruptcy court disagreed and entered judgment for the debtors. The bankruptcy court held the bank owed the debtors a fiduciary duty and breached that duty by failing to reveal material facts concerning the loan. In addition, the bank defrauded the debtors by misrepresenting the value of the laundromat. The debtors were awarded compensatory damages and punitive damages in the total amount of $3,009,998.25.

The bank appealed to the district court who reversed the measure of damages, ordered a reduction in punitive damages and affirmed the remainder of the bankruptcy court judgment.

Discussion
The bank argued that the courts made five errors:

In holding the release in the extension agreement did not preclude the debtors' claims
In concluding the bank owed a fiduciary duty to the debtors
The bank is not liable for fraud because the debtors could not prove reasonable reliance
In calculating damages
In awarding punitive damages.

Fiduciary Relationship
After review of the facts and listening to the arguments of the parties, the Court held that the debtors had failed to show a fiduciary relationship existed with the bank.

The Court noted a fiduciary relationship creates the highest order of duty imposed by law. If a fiduciary relationship exists, the fiduciary cannot profit from the relationship without the knowledge and permission of the principal. A fiduciary relationship requires more than the generalized business obligation of good faith and fair dealing.

The Court stated "except in special circumstances, a bank does not have a fiduciary relationship with its borrowers." Courts traditionally view a relationship between a bank and a depositor to be one of debtor-creditor and do not ordinarily impose a fiduciary duty of disclosure upon the bank. As a matter of business, banks seek to maximize their earnings by charging interest rates or fees as high as the market will allow.

Banks seek as much security for their loans as they can obtain. In contrast, debtors hope to pay the lowest possible interest rate and fee charges and give as little as security as possible. Without a great deal more, a mere confidence that a bank will act fairly does not create a fiduciary relationship obligating the bank to act in the borrower's interest ahead of its own interest.

Fraud Claims
The Court then considered the fraud claims. The bankruptcy court found the bank defrauded the debtors when the bank gave them the misleading pro-forma, site survey and appraisals that the bank officers knew or should have known were inflated. The Court referenced a passage from an English case regarding a banker who received an inquiry about the credit-worthiness of a customer that indicated the banker has three options:

The banker can decline to give the information;
he can give an answer with a clear qualification that it is given and accepted without any responsibility or is given without reflection or research; or
the banker can give an answer without qualification.

If the banker adopts the third alternative he can be held to have accepted some responsibility for answering carefully or to have accepted a relationship with the inquirer which requires him to exercise such care as circumstances require.

The Court held the record supported the finding of the bankruptcy court. It reasoned that the bank having shown the pro forma, the site survey and one appraisal, could not avoid revealing the other appraisals without making its earlier representations fraudulent.

Extension Agreement Waiver
The bankruptcy court rejected the bank's argument that the debtors had released their fraud claims when they executed the extension agreements due to the finding that the agreement was not broad enough to release or discharge the claims. The waiver language only mentioned claims regarding the loan documents or the collateral. The district court held that the extension agreement was unenforceable because it was obtained through fraudulent misrepresentation and the promise of the "package" loan had fraudulently caused the debtors to execute the extension.

After a review of the actions of the lower courts, the Court found that the bank obtained the extension agreement through fraud and therefore rejected the bank's argument that the extension agreement language prevents the debtors' claims.

Compensatory damages
The bankruptcy court awarded damages to the debtors for the misrepresented value of the laundromat and the lost value for the sale of ESOP stock that was also pledged as collateral and punitive damages. The district court found that the bankruptcy court erred in the calculation of the value of the laundromat and adjusted the amount of damages.

The bank argued that the debtor was not entitled under state law to recover for both fraudulent misrepresentation and fraudulent inducement. The Court held that the debtors made an election to affirm the laundromat loan transaction that allowed them to sue for fraudulent misrepresentation but not for fraudulent inducement. The debtors were therefore precluded from receiving damages regarding the inducement claim.

In addition the Court determined the calculation by the district court was correct and the proper damage award was the difference between the final appraised value of the laundromat and what it was actually worth on the day the debtors purchased it.

Punitive Damages
The bank argued that the punitive award against it should be set aside due to the fact the original bank no longer existed. The original bank was sold by its holding company to a third party. The Court noted that there was a provision in the bank sale contract in which the holding company agreed to pay any damages arising from this case. The bank argued that the bankruptcy court held that the holding company was absolved of all liability in the case. The district court specifically rejected this argument. The Court also agreed that punitive damages should be awarded but the amount should be remanded to the district court for recalculation.

Summary
The Court held that a lender absent special circumstances is not in a fiduciary relationship with its borrowers. A lender however does have any obligation to disclose known facts regarding the appraisal value of real property and may be liable for fraudulent misrepresentation if such disclosures are not made. In addition the existence in an extension agreement of a blanket waiver of all claims against the bank may be held unenforceable if the bank induces the debtor to execute the agreement with the promise of future financing.

First published on BankersOnline.com 4/16/02

Posted by Silent Dogood JR on October 25, 2009 at 01:13 AM in Foreclosure News | Permalink | Comments (0) | TrackBack (0)

Where is the Lender? Where is the Counterparty?

Posted on October 22, 2009 by livinglies

EDITOR’S NOTE: usedkarguy gets it pretty well. He submitted the following comment which I have edited into this post, but I retain all his basic observations. This one deserves a re-read.

Essentially he is proving a major point: You can’t pick up one end of the stick without picking up the other.

If the pretender lenders are claiming that the loan obligations are in the “trust” (REMIC) then the securities must have been sold. But then how can they say they stuck with unsold MBS for which they needed TARP relief? That is why discovery on the TARP funds is so important. Somewhre there is a document that says we are holding the following TOXIC ASSETS. And in that list are thousands of mortgages in hundreds of pools that never made it or which have vanished into thin air.

So the representation for example that U.S. Bank is the holder of the note as Trustee for Asset backed Security Pool 1234 must be tested by discovery and an evidentiary hearing if possible. That is where the rubber meets the road.

The arrogance of the pretender lenders fades when they are requred to move from spurious attorney representations in court to production of actual evidence — documents that can be authenticated by people with personal knowledge. And remember that would be people who are COMPETENT WITNESSES.

The legal argument is that even if the loan DID make it through the trust, it therefore was sold to the investors who purchased the Mortgage Backed Securities which were hybrids, containing the language of a bond and the conveyance of a percentage equity in the pool AS OWNERS THEREOF. Thus without naming them as LENDERS and proving that the LENDERS are foreclosing with the assistance of the pretender lender, the pretender lender is simply stealing the property from a LENDER who knows nothing about the existence of the foreclosure proceedings.

The factual argument is that in many cases the loan never made it in any form, on any document, to the Trustee, the Trust, the REMIC or the investors.

THAT is why you win in discovery — unless they account for all aspects of this transaction, they have no accounting at all. A creditor’s burden of proof is simple: here are the records and our witnesses that show that you took value from us and here is all the money anyone ever paid on this obligation. So here is your balance. This is done in small claims court every day.

Without an accounting they cannot positively state whether the obligation is in default, and if so, to whom the obligation is actually owed (i.e., who lost money on the allegedly defaulted loan).

Fromusedkarguy—————————-

Where’s the counterparty? Who wrote the default swap?

In my trust, it was Bear Stearns (Now JPMChase), and the Securities administrator (seller) was Citigroup Global Markets. Trustee HSBC for the Wells Fargo Trust. Wells Fargo wore all the other hats.

Now, the vintage deals WFHome Equity Asset Backed Securities 2005-1/2/3/4 were all “left on dealers shelves” like the same vintage SASCO Deals. Anyway, if CitiGroup Global got stuck holding the bag ($62Billion writedown, anyone remember?) and the securities remained unsold, how did they (the mortgage pools) end up in the 1999 Wells Fargo/Norwest Assets 1999 Trust? It’s the “extinguishment of the liability” (140-3) wherein the problem lies (reverse-repo). It’s a modern-day version of “hot-potato”. It’s hot because they used the loan to borrow more money after dispersing the investor money. They don’t have the money to pay back the loan that constituted the proceeds of YOUR loan (it was borrowed from the investor). The AB1122 is where they defraud the investors by not reporting the actual failure of the trust (receivership). And, the REMIC trust is taking in more money in foreclosure and sheriff’s sale/liquidation (not a true open market transaction as perpetrated with fraudulent representation on the part of the foreclosing entity) than in interest pass through (the key to tax-exempt flow through (conduit) status) (more than 20%?), if the defaulted loans are indicative of 20% of the total number of loans in the pool, the mathematical consequences are supposed to trigger receivership (liquidation). The WFHEABS05-2 are running at 40% delinquent/foreclosed/bankrupt/REO. These default rates are common throughout meltdown-era MBSs.

My question, Mr. E, is who is the counterparty? They are the one who got stuck with loss on your note, but they have no note, and no claim to the collateral. They got paid a premium to perform on a contract, and lost. They don’t have any assigned interest in the house, only a receipt for paying the claim. The loan is extinguished on one set of books, but is continuously carried as an asset (money still a receivable) on another set of books (ABS) even though no such obligation exists.

Now, back to True Sale. This is the “surrender of control” issue that violates the true sale status. The loan was to be assigned “without recourse” when the Depositor agreed to deposit it with the Trust. I don’t think any of this was done other than with a passing of dollar values over a wire. There was never any “arms-length” transaction, the pretender lender stayed on immediately to “service” the loan and make sure you defaulted, they directed the appraisal of the collateral to cover the loan. Then they end up recovering the collateral at sheriffs sale to sell at a later date directing proceeds into their own pockets (the sponsor usually holds the equity tranches and the Z tranche, which receives non-regular cash flows).

11 Responses

Dan Edstrom, on October 23rd, 2009 at 8:26 am Said:

H Gosh,
Each assignment has to be verified. Remember also that each time it was “assigned” to a pool it was probably “pledged” … So you have many companies and/or people (and “holders of certificates”) who are real parties in interest (for each pool). According to FAS 140-3 the only true way they can sell it is in an open market transaction (did they?) If they did how did EMC get it back? If I sold my car and it was sold 3 times and I “found” the car and started driving it (I still had the keys), I could tell the police that I owned it at one time so I still own it. Anyway, at the very least you have JOINDER issues – all of the real parties in interest have to join together in order to properly adjudicate the issue. Are you in a judicial state or non-judicial? Of course there are many other issues, these are just the ones that jumped out.

Prove each assignment with a competent witness. Challange everything.

Disclaimer: I am not an attorney and this is not legal advice. Consult with a competent local attorney.

Thanks,
Dan Edstrom
dmedstrom@hotmail.com
DyingTruth, on October 22nd, 2009 at 9:01 pm Said:

Hey Nye Lavalle why don’t you tell your great prezident to uphold this rule of law he keeps talking about instead of giving the pretender lenders more money… THIS IS NOT THE UNITED BANKS OF AMERICA. A question that everyone in court deserves an answer to, DOES THE ATTORNEY REPRESENTING THE LENDER NEED TO SHOW THAT HE IS DULY AUTHORIZED BY THE LENDER TO REPRESENT THEM?
Dan Edstrom, on October 22nd, 2009 at 6:20 pm Said:

First, it points out the fact that a lot depends on the court that hears a case — at least until the appeal. Second, this ruling emphasizes what compliance experts have known for a long time — “when it comes to TILA, ‘hypertechnicality reigns.’”

This is from: http://www.bankersonline.com/infovault/courtwatch_hamm_jones_til_101707.pdf

Thanks,
Dan Edstrom
dmedstrom@hotmail.com
Dan Edstrom, on October 22nd, 2009 at 5:59 pm Said:

In regards to the below 2002 ruling article – the title is:

Two Bad Loans Don’t Equal One Good Loan

This seems to apply today with loan mods …

Thanks,
Dan Edstrom
dmedstrom@hotmail.com
Dan Edstrom, on October 22nd, 2009 at 5:58 pm Said:

Case from 2002 regarding fiduciary relationship, disclosure of material information and blanket waivers.

From http://www.bankersonline.com/lending/so_salleecase.html

Summary
The Court held that a lender absent special circumstances is not in a fiduciary relationship with its borrowers. A lender however does have any obligation to disclose known facts regarding the appraisal value of real property and may be liable for fraudulent misrepresentation if such disclosures are not made. In addition the existence in an extension agreement of a blanket waiver of all claims against the bank may be held unenforceable if the bank induces the debtor to execute the agreement with the promise of future financing.

Thanks,
Dan Edstrom
dmedstrom@hotmail.com
Dan Edstrom, on October 22nd, 2009 at 5:32 pm Said:

Fair Debt collection practices – check out this ruling where the creditor was actually found to be a debt collector. This may apply to many foreclosure actions, inter alia, because the attorneys are NOT reviewing the actual files … Plus the actual creditor is NOT who they say it is …

This is from: http://www.bankersonline.com/lending/mbg_fdcpacase.html#

The Court’s Ruling
The District Court ruled
that Dickerson and Household each qualified as a “debt collector” that could be held liable under the FDCPA for misleading communications with debtors;

although Household would not normally constitute a debt collector under the Act, it qualified as one under what is known as the “false name” exception to this rule. A creditor or an affiliate of a creditor who uses someone else’s name so as to suggest to the debtor that a third party is involved in the debt collection process, when in fact that party is not involved, can be treated as a “debt collector” for FDCPA purposes;

Dickerson played no genuine role as an attorney in Household’s debt collection efforts;

Dickerson’s letter to Nielsen and the other class members was in reality from Household and Household was simply using Dickerson’s name to suggest that he and his firm were involved in the attempt to collect the debts;

Household should be treated as a debt collector and held liable to the extent the letter was false or misleading;

in order for the letter not to mislead the recipient as to the nature of the attorney’s involvement with the debt, the attorney must have direct and personal involvement in the mailing of the letter — e.g., by reviewing the file to determine whether the letter should be sent, or by approving the mailing based on recommendations by others;

the firm’s “review” was no more than a deceptive “veneer of compliance” with FDCPA.

Thanks,
Dan Edstrom
dmedstrom@hotmail.com
H Gosh, on October 22nd, 2009 at 1:55 pm Said:

This is exactly what I am fighting. My note was securitized in a 1998 Trust, which disappeared into an EMC Trust, which disappeared into a SACO CDO.

In 2001, note was placed into foreclosure by Fairbanks. Federal complaint filed, and Fairbanks entered into a settlement agreement to correct. Chase reassigned note back to BFP, which has been “dead” since 1999 in 2007, effective 2001, prior to Fairbanks fradulent foreclosure. Settlement declared null and void since Fairbanks never had servicing rights based on ante-dating of assignment. Note assigned in 2004 by “Dead” corporation and resecuritized into EMC Trust. EMC Trust sold to SACO swap fund. EMC seeking to foreclose, and produced a “copy” of an allonge (not entire note) dated 1999 assigned in blank “without recourse”. Judge claims since it appears that EMC “USED” to hold the note, they can take house in rem!! What is wrong with these Judges – Willfull Blindness?
JLSemidey, on October 22nd, 2009 at 1:01 pm Said:

Thanks for the thought Nye,

and greetings from Virginia, DC and MD
Dan Edstrom, on October 22nd, 2009 at 10:48 am Said:

Here is a request for dismissal by GMAC on a case I just found involving TILA, RESPA, HOEPA, etc.

https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2008cv1853-32

GMAC’s SEC filings state that they are a party to lawsuits from time to time. If ANY law was broken in connection with the origination or servicing of a loan, they will have to repurchase it from the Trust …

It seems to me that this repurchase obligation (if identified in your lawsuit as ANY law broken) would take precedent over and invalidate your foreclosure. At the very least it now adds them (GMAC in this case) as a real an indispensible party.

Would you have to win summary judgment for them (GMAC in this case) to add them as a real party in interest? Or merely the allegation that a law was broken? Of course they should be added (through Joinder) anyway because of other reasons (pledging, advances, credit default swaps, etc).

Thanks,
Dan Edstrom
dmedstrom@hotmail.com
Nye Lavalle, on October 22nd, 2009 at 9:52 am Said:

Actually, that’s about how it works with different gestations and variations of the common theme. FRAUD!

I go back to the equation I wrote in 1998 when I was trying to get everyone on board and the Dems and Republications would trade off blame. It’s as simple as this:

Borrower Fraud/Deceit = Investor/Shareholder Fraud & Deceit

If you are cheating the borrower at origination and/or servicing, you are simply “cooking the books” creating income you are not entitled to; a debt you do not own; an inflated balance where investors are paying a higher servicing fee that rightful; a share price and book value inflated by vapor assets etc…

Get to the bottom of the accounting and show how they are defrauding the investor, shareholder and/or government and that’s when you get your cases settled!
Drew, on October 22nd, 2009 at 8:44 am Said:

WOW that is powerful stuff.

Posted by Silent Dogood JR on October 25, 2009 at 12:50 AM in Living Lies Weblog | Permalink | Comments (0) | TrackBack (0)

New Shockwaves From Courts and Accounting Board

Posted on October 22, 2009 by livinglies

Wall Street was not responding to legitimate consumer demand, it was creating an artificial demand simply to create mortgage product to feed its securitization machine and generate big fees for itself.

Comment from Reader:
“MERS and the Pretender Lenders are seeking the courts to credit them with a touchdown despite the obvious fact that they do not and never did have possession of the football. Challenge flag anyone?”

The Next Financial Crisis Hits Wall Street, as Judges Start Nixing Foreclosures

By PAM MARTENS www.counterpunch.org

The financial tsunami unleashed by Wall Street’s esurient alchemy of spinning toxic home mortgages into triple-A bonds, a process known as securitization, has set off its second round of financial tremors.

After leaving mortgage investors, bank shareholders, and pension fiduciaries awash in losses and a large chunk of Wall Street feeding at the public trough, the full threat of this vast securitization machine and its unseen masters who push the levers behind a tightly drawn curtain is playing out in courtrooms across America.

Three plain talking judges, in state courts in Massachusetts and Kansas, and a Federal Court in Ohio, have drilled down to the “straw man” aspect of securitization. The judges’ decisions have raised serious questions as to the legality of hundreds of thousands of foreclosures that have transpired as well as the legal standing of the subsequent purchasers of those homes, who are more and more frequently the Wall Street banks themselves.

Adding to the chaos, the Financial Accounting Standards Board (FASB) has made rule changes that will force hundreds of billions of dollars of these securitizations back onto the Wall Street banks balance sheets, necessitating the need to raise capital just as the unseemly courtroom dramas are playing out.

The problems grew out of the steps required to structure a mortgage securitization. In order to meet the test of an arm’s length transaction, pass muster with regulators, conform to accounting rules and to qualify as an actual sale of the securities in order to be removed from the bank’s balance sheet, the mortgages get transferred a number of times before being sold to investors. Typically, the original lender [Editor's Note: Read that as "originating lender" or "pretender lender"] (or a sponsor who has purchased the mortgages in the secondary market) will transfer the mortgages to a limited purpose entity called a depositor. The depositor will then transfer the mortgages to a trust which sells certificates to investors based on the various risk-rated tranches of the mortgage pool. (Theoretically, the lower rated tranches were to absorb the losses of defaults first with the top triple-A tiers being safe. In reality, many of the triple-A tiers have received ratings downgrades along with all the other tranches.)

Because of the expense, time and paperwork it would take to record each of the assignments of the thousands of mortgages in each securitization, Wall Street firms decided to just issue blank mortgage assignments all along the channel of transfers, skipping the actual physical recording of the mortgage at the county registry of deeds.

Astonishingly, representatives for the trusts have been foreclosing on homes across the country, evicting the families, then auctioning the homes, without a proper paper trail on the mortgage assignments or proof that they had legal standing. In some cases, the courts have allowed the representatives to foreclose and evict despite their admission that the original mortgage note is lost. (This raises the question as to whether these mortgage notes are really lost or might have been fraudulently used in multiple securitizations, a concern raised by some Wall Street veterans.)

But, at last, some astute judges have done more than take a cursory look and render a shrug. In a decision handed down on October 14, 2009, Judge Keith Long of the Massachusetts Land Court wrote:

“The blank mortgage assignments they possessed transferred nothing...in Massachusetts, a mortgage is a conveyance of land. Nothing is conveyed unless and until it is validly conveyed. The various agreements between the securitization entities stating that each had a right to an assignment of the mortgage are not themselves an assignment and they are certainly not in recordable form…The issues in this case are not merely problems with paperwork or a matter of dotting i’s and crossing t’s. Instead, they lie at the heart of the protections given to homeowners and borrowers by the Massachusetts legislature. To accept the plaintiffs’ arguments is to allow them to take someone’s home without any demonstrable right to do so, based upon the assumption that they ultimately will be able to show that they have that right and the further assumption that potential bidders will be undeterred by the lack of a demonstrable legal foundation for the sale and will nonetheless bid full value in the expectation that that foundation will ultimately be produced, even if it takes a year or more. The law recognizes the troubling nature of these assumptions, the harm caused if those assumptions prove erroneous, and commands otherwise.” [Italic emphasis in original.] (U.S. Bank National Association v. Ibanez/Wells Fargo v. Larace)

A month and a half before, on August 28, 2009, Judge Eric S. Rosen of the Kansas Supreme Court took an intensive look at a “straw man” some Wall Street firms had set up to handle the dirty work of foreclosure and serve as the “nominee” as the mortgages flipped between the various entities. Called MERS (Mortgage Electronic Registration Systems, Inc.) it’s a bankruptcy-remote subsidiary of MERSCORP, which in turn is owned by units of Citigroup, JPMorgan Chase, Bank of America, the Mortgage Bankers Association and assorted mortgage and title companies. According to the MERSCORP web site, these “shareholders played a critical role in the development of MERS. Through their capital support, MERS was able to fund expenses related to development and initial start-up.”

In recent years, MERS has become less of an electronic registration system and more of a serial defendant in courts across the land. In a May 2009 document titled “The Building Blocks of MERS,” the company concedes that “Recently there has been a wave of lawsuits filed by homeowners facing foreclosure which challenge MERS standing…” and then proceeds over the next 30 pages to describe the lawsuits state by state, putting a decidedly optimistic spin on the situation.

MERS doesn’t have a big roster of employees or lawyers running around the country foreclosing and defending itself in lawsuits. It simply deputizes employees of the banks and mortgage companies that use it as a nominee. It calls these deputies a “certifying officer.” Here’s how they explain this on their web site: “A certifying officer is an officer of the Member [mortgage company or bank] who is appointed a MERS officer by the Corporate Secretary of MERS by the issuance of a MERS Corporate Resolution. The Resolution authorizes the certifying officer to execute documents as a MERS officer.”

Kansas Supreme Court Judge Rosen wasn’t buying MERS’ story. In fact, Wall Street was probably not too happy to land before Judge Rosen. In January 2002, Judge Rosen had received the Martin Luther King “Living the Dream” Humanitarian Award; he previously served as Associate General Counsel for the Kansas Securities Commissioner, and as Assistant District Attorney in Shawnee County, Kansas. Judge Rosen wrote:

“The relationship that MERS has to Sovereign [Bank] is more akin to that of a straw man than to a party possessing all the rights given a buyer… What meaning is this court to attach to MERS’s designation as nominee for Millennia [Mortgage Corp.]? The parties appear to have defined the word in much the same way that the blind men of Indian legend described an elephant — their description depended on which part they were touching at any given time. Counsel for Sovereign stated to the trial court that MERS holds the mortgage ‘in street name, if you will, and our client the bank and other banks transfer these mortgages and rely on MERS to provide them with notice of foreclosures and what not.’ ” (Landmark National Bank v. Boyd A. Kesler)

Lawyers for homeowners see a darker agenda to MERS. Timothy McCandless, a California lawyer, wrote on his blog as follows:

“…all across the country, MERS now brings foreclosure proceedings in its own name — even though it is not the financial party in interest. This is problematic because MERS is not prepared for or equipped to provide responses to consumers’ discovery requests with respect to predatory lending claims and defenses. In effect, the securitization conduit attempts to use a faceless and seemingly innocent proxy with no knowledge of predatory origination or servicing behavior to do the dirty work of seizing the consumer’s home. While up against the wall of foreclosure, consumers that try to assert predatory lending defenses are often forced to join the party — usually an investment trust — that actually will benefit from the foreclosure. As a simple matter of logistics this can be difficult, since the investment trust is even more faceless and seemingly innocent than MERS itself. The investment trust has no customer service personnel and has probably not even retained counsel. Inquiries to the trustee — if it can be identified — are typically referred to the servicer, who will then direct counsel back to MERS. This pattern of non-response gives the securitization conduit significant leverage in forcing consumers out of their homes. The prospect of waging a protracted discovery battle with all of these well funded parties in hopes of uncovering evidence of predatory lending can be too daunting even for those victims who know such evidence exists. So imposing is this opaque corporate wall, that in a ‘vast’ number of foreclosures, MERS actually succeeds in foreclosing without producing the original note — the legal sine qua non of foreclosure — much less documentation that could support predatory lending defenses.”

One of the first judges to hand Wall Street a serious slap down was Christopher A. Boyko of U.S. District Court in the Northern District of Ohio. In an opinion dated October 31, 2007, Judge Boyko dismissed 14 foreclosures that had been brought on behalf of investors in securitizations. Judge Boyko delivered the following harsh rebuke in a footnote:

“Plaintiff’s ‘Judge, you just don’t understand how things work,’ argument reveals a condescending mindset and quasi-monopolistic system where financial institutions have traditionally controlled, and still control, the foreclosure process…There is no doubt every decision made by a financial institution in the foreclosure is driven by money. And the legal work which flows from winning the financial institution’s favor is highly lucrative. There is nothing improper or wrong with financial institutions or law firms making a profit – to the contrary, they should be rewarded for sound business and legal practices. However, unchallenged by underfinanced opponents, the institutions worry less about jurisdictional requirements and more about maximizing returns. Unlike the focus of financial institutions, the federal courts must act as gatekeepers…” (In Re Foreclosure Cases)

While the illegal foreclosure filings, investor lawsuits over securitization improprieties, and predatory lending challenges play out in courts across the country, a few sentences buried deep in Citigroup’s 10Q filing for the quarter ended June 30, 2009 signals that we’ve seen merely a few warts on the head of the securitization monster thus far and the massive torso remains well hidden in murky water.

Citigroup tells us that the Financial Accounting Standards Board (FASB) has issued a new rule, SFAS No. 166, and this is going to have a significant impact on Citigroup’s Consolidated Financial Statements “as the Company will lose sales treatment for certain assets previously sold to QSPEs [Qualifying Special Purpose Entities], as well as for certain future sales, and for certain transfers of portions of assets that do not meet the definition of participating interests. Just when might we expect this new land mine to go off? “SFAS 166 is effective for fiscal years that begin after November 15, 2009.” There’s more bad news. The FASB has also issued SFAS 167 and, long story short, more of those off balance sheet assets are going to move back onto Citi’s books.

Bottom line says Citi:

“… the cumulative effect of adopting these new accounting standards as of January 1, 2010, based on financial information as of June 30, 2009, would result in an estimated aggregate after-tax charge to Retained earnings of approximately $8.3 billion, reflecting the net effect of an overall pretax charge to Retained earnings (primarily relating to the establishment of loan loss reserves and the reversal of residual interests held) of approximately $13.3 billion and the recognition of related deferred tax assets amounting to approximately $5.0 billion….” [Emphasis in original.]

I’m trying to imagine how the American taxpayer is going to be asked to put more money into Citigroup as it continues to bleed into infinity.

Citigroup is far from alone in financial hits that will be coming from the Qualifying Special Purpose Entities. Regulators are receiving letters from Citigroup and other Wall Street firms pressing hard to rethink when this change will take effect.

Putting aside for the moment the massive predatory lending frauds bundled into mortgage securitizations, inadequate debate has occurred on whether securitization of home mortgages (other than those of government sponsored enterprises) should be resuscitated or allowed to die a welcome death. If we understand the true function of Wall Street, to efficiently allocate capital, the answer must be a resounding no to this racket.

Trillions of dollars of bundled home mortgage loans and derivative side bets tied to those loans were being manufactured by Wall Street without any one asking the basic question: why is all this capital being invested in a dormant structure? Houses don’t think and innovate. Houses don’t spawn new technologies, patents, new industries. Houses don’t create the jobs of tomorrow.

Also, by acting as wholesale lenders to the unscrupulous mortgage firms (some in house at Wall Street firms), Wall Street was not responding to legitimate consumer demand, it was creating an artificial demand simply to create mortgage product to feed its securitization machine and generate big fees for itself. Now we see the aftermath of that inefficient allocation of capital: a massive glut of condos and homes pulling down asset prices in neighborhoods as well as in those ill-conceived securitizations whose triple-A ratings have been downgraded to junk.

There’s no doubt that one of the contributing factors to the depression of the 30s and the intractable unemployment today stem from a massive misallocation of capital to both bad ideas and fraud. Today’s Wall Street, it turns out, is just another straw man for a rigged wealth transfer system.

Pam Martens worked on Wall Street for 21 years; she has no security position, long or short, in any company mentioned in this article other than that which the U.S. Treasury has thrust upon her and fellow Americans involuntarily through TARP. She writes on public interest issues from New Hampshire. She can be reached at pamk741@aol.com

Posted by Silent Dogood JR on October 25, 2009 at 12:30 AM in Living Lies Weblog | Permalink | Comments (0) | TrackBack (0)

Judge Maltese in New York Gets It: Deutsch Bank v Abbate

Posted on October 23, 2009 by livinglies

Thanks to Jeff and Judge Maltese:

“At the time that the plaintiff improperly commenced the action, the pathway to the Courthouse should have been blocked. Deutsche Bank had no legal foundation to foreclose a mortgage in which it had no interest

where there is no evidence that plaintiff, prior to commencing the foreclosure action, was the holder of the mortgage and note, took physical delivery of the mortgage and note, or was conveyed the mortgage and note by written assignment, an assignment’s language purporting to give it retroactive effect prior to the date of the commencement of the action is insufficient to establish the plaintiff’s requisite standing.

Where the plaintiff has no legal or equitable interest in a mortgage, the plaintiff has no foundation in law or in fact.

A plaintiff who has no standing in an action is subject to a jurisdictional dismissal since (1) courts have jurisdiction only over controversies that involve the plaintiff, (2) a plaintiff found to lack “standing is not involved in a controversy, and (3) the courts therefore have no jurisdiction of the case when such plaintiff purports to bring it.”[FN16]

Here is another New York case.

I think the NY Judges are ” GETTING IT”

Deutsche Bank National Trust Company, AS TRUSTEE FOR THE CERTIFICATE HOLDERS OF CARRINGTON MORTGAGE LOAN TRUST 2005-OPT2, ASSET-BACKED CERTIFICATES, SERIES 2005-OPT2, Plaintiff

against

Debra Abbate, CARMELA ABBATE, KIM FIORENTINO, BOCCE COURT HOMEOWNERS ASSOCIATION, INC., NEW YORK CITY ENVIRONMENTAL CONTROL BOARD, NEW YORK CITY TRANSIT ADJUDICATION BUREAU, NEW YORK CITY PARKING VIOLATIONS BUREAU, and “JOHN DOE No. 1″ through “JOHN DOE #10,” the last ten names being fictitious and unknown to the plaintiff, the person or parties intended being the person or parties, if any, having or claiming an interest in or lien upon the Mortgaged premises described in the Complaint, Defendants.

100893/07

Plaintiff was represented by the law firm of Frenkel Lambert Weiss & Weisman.

Defendant was represented by Robert E. Brown, Esq.

Joseph J. Maltese, J.

The defendants Kim Fiorentino, Debra Abbate, and Carmella Abbate’s motion to dismiss the plaintiff’s complaint is granted in its entirety.

This is an action to foreclose a mortgage dated February 24, 2005, upon the property located at 25 Bocce Court, Staten Island, New York. The mortgage was originated by Suntrust Mortgage Inc. (”Suntrust”) and was recorded in the Office of the Clerk of Richmond County on April 26, 2005. The plaintiff filed the Summons, Complaint, and Notice of Pendency on March [*2]1, 2007.[FN1] However, Suntrust assigned the first mortgage on this property to Option One Mortgage Corporation, which was executed on July 6, 2007. Another assignment to plaintiff Deutsche Bank National Trust Company (”Deutsche Bank”) was executed on March 7, 2007. Both assignments, which were recorded on July 23, 2007, contained a clause expressing their intention to be retroactively effective: the first one to date back to February 24, 2005, and the second one to February 28, 2007.[FN2] On November 19, 2007, this court issued an order of foreclosure and sale on the subject property. This court also granted two orders to show cause to stay the foreclosure on January 9, 2008 and April 8, 2008.[FN3]

Discussion

The Appellate Division, Second Department ruled and reiterated in Kluge v. Kugazy the well established law that “foreclosure of a mortgage may not be brought by one who has no title to it . . . .”[FN4] The Appellate Division, Third Department has similarly ruled that an assignee of a mortgage does not have a right or standing to foreclose a mortgage unless the assignment is complete at the time of commencing the action.[FN5] An assignment takes the form of a writing or occurs through the physical delivery of the mortgage.[FN6] Absent such transfer, the assignment of the mortgage is a nullity.[FN7]

Retroactive Assignments of a Mortgage are Invalid
The first issue this court must resolve is whether the clauses in the July 6, 2007 and March 7, 2007 assignments setting the effective date of the assignment to February 24, 2005 and February 28, 2007 respectively are permissible. This court rules that, absent a physical or written transfer before the filing of a complaint, retroactive assignments are invalid.

Recently, trial courts have been faced with the situation where the plaintiff commenced a [*3]foreclosure action before the assignment of the mortgage.[FN8] In those cases the trial courts have held,

. . . where there is no evidence that plaintiff, prior to commencing the foreclosure action, was the holder of the mortgage and note, took physical delivery of the mortgage and note, or was conveyed the mortgage and note by written assignment, an assignment’s language purporting to give it retroactive effect prior to the date of the commencement of the action is insufficient to establish the plaintiff’s requisite standing. . .[FN9]

In this case, the plaintiff failed to offer any admissible evidence demonstrating that they became assignees to the mortgage on or before March 1, 2007; as such, this court agrees with its sister courts and finds that the retroactive language contained in the July 26, 2007 and March 7, 2007 assignments are ineffective. This court therefore rules that it lacks jurisdiction over the subject matter when the plaintiff has no title to the mortgage at the time that it commenced the action.

The next issue this court must resolve is whether the defendants waived subject matter jurisdiction because they did not raise that issue in their prior applications to this court.

Affirmative Defense of Standing

At the outset of any litigation, the court must ascertain that the proper party requests an adjudication of a dispute.[FN10] As the first step of justiciability, “standing to sue is critical to the proper functioning of the judicial system.”[FN11] Standing is a threshold issue; if it is denied, “the pathway to the courthouse is blocked.” [FN12]

The doctrine of standing is designed to “ensure that a party seeking relief has a sufficiently cognizable stake in the outcome so as to present a court with a dispute that is capable [*4]of judicial resolution.”[FN13] “Standing to sue requires an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant’s request.”[FN14] Where the plaintiff has no legal or equitable interest in a mortgage, the plaintiff has no foundation in law or in fact.[FN15]

A plaintiff who has no standing in an action is subject to a jurisdictional dismissal since (1) courts have jurisdiction only over controversies that involve the plaintiff, (2) a plaintiff found to lack “standing is not involved in a controversy, and (3) the courts therefore have no jurisdiction of the case when such plaintiff purports to bring it.”[FN16]

On November 7, 2005, in the case of Wells Fargo Bank Minn. N.A. v. Mastropaolo ["Mastropaolo"], this court found that “Insofar as the plaintiff was not the legal titleholder to the mortgage at the time the action was commenced, [the Bank] had no standing to bring the action and it must be dismissed.”[FN17] Erroneously, this court “[o]rdered, that the plaintiff’s summary judgment motion is denied in its entirety and that this action is dismissed with prejudice.”[FN18]

This Court should have ordered that this matter was dismissed without prejudice, which would have given the plaintiff the right to start the action again after it had acquired title to the note and mortgage. Unfortunately, the plaintiff, did not seek a motion to reargue that error, which would have been corrected promptly. Instead, the plaintiff appealed the decision to the Appellate Division, Second Department, which rightfully reversed the decision 18 months later on May 29, 2007 based upon the dismissal with prejudice as opposed to a dismissal without prejudice to refile the action. However, in what appears to be dicta, the court went on to discuss whether lack of standing is tantamount to lack of subject matter jurisdiction. The court further stated that the failure of the initial pro se defendant to make a pre-answer motion or a motion to dismiss, the defense of lack of standing would be waived. But the Appellate Division did not address the issue of subject matter jurisdiction, which may not be waived. [*5]

In the instant case, this court is again faced with similar facts, which raise the issue that the Bank must have title to the mortgage before it can sue the defendant. Clearly, having title to the subject matter (the mortgage) is a condition precedent to the right to sue on that mortgage. This has always been the case, but since the Appellate Division, Second Department’s comments in Mastropaolo, that issue has been clouded.

At the time that the plaintiff improperly commenced the action, the pathway to the Courthouse should have been blocked. Deutsche Bank had no legal foundation to foreclose a mortgage in which it had no interest at the time of filing the summons and complaint. Lack of a plaintiff’s interest at the beginning of the action strips the court’s power to adjudicate over the action.[FN19] Lack of interest and controversy is protected by the umbrella of subject matter jurisdiction. Whenever a court lacks jurisdiction, a defense can be raised at any time and is not waivable.[FN20] In other words, for there to be a cause of action, there needs to be an injury. At the time that the action was commenced, the instant plaintiff suffered no injury and had no interest in the controversy. Since the plaintiff filed this action to foreclose the mortgage before it had title to it, there was no controversy between the existing parties when the action commenced. Therefore, the court lacked subject matter jurisdiction to adjudicate the present case. The defendants are consequently entitled to a dismissal without prejudice because the court lacked jurisdiction over a non-existent controversy.

Accordingly, it is hereby:

ORDERED, that the defendants Kim Fiorentino, Debra Abbate, and Carmella Abbate’s motion to dismiss the plaintiff’s complaint is granted, without prejudice to the plaintiff having the right to refile within the time provided by the Statute of Limitations; and it is further

ORDERED, that the parties and counsel shall appear before this court to further conference this matter on November 20, 2009 at 11:00AM.

ENTER,

DATED: October 6, 2009

Joseph J. Maltese

Justice of the Supreme Court

8 Responses

The Equitable One, on October 24th, 2009 at 10:19 am Said:

Some jurisdictions, courts and jurists are awake, and awakening. For people in jurisdictions that don’t care, that refuses to rule in accordance with the facts and the law…

How can we persuade a reticent court?

I’ve been involved and following the many developments in this overall issue but I’ve yet to find a way to “wake up” the judge in my case.
Matt, on October 24th, 2009 at 9:39 am Said:

None of these banks have an interest because they go about indorseing the security instrument-that is unlawful and unconscionable to begin with. My question is what is the quickest remedy? Quiet title action? Release of lien? Termination of security interest? How can it be done in the most expedited manner?
Matt
bt, on October 23rd, 2009 at 3:12 pm Said:

QUIET TITLE- is it just me for any of us with loans claimed to owned by XYZ Trust 2006-123 needs to sue for quiet title.

Can anyone help with info on how to do it? goodle is not helpful.
JLSemidey, on October 23rd, 2009 at 2:22 pm Said:

Dear Mr. Garfield,

Last week we had good friend who lost his home, he never called us to get any assistance, now we are helping him and his family get it back.

His loan appears to belong to Fannie Mae upon an initial review of his foreclosure docs.

In Fanny and Feddie cases, they sold the loans to investors, and they purchased MBS , repackaged them and resold them.

The lawyer is a little hesitant as to how to approach a Fannie MAE and FREDDIE now that they are on WELFARE.
FANNIE CLAIMS TO OWN THE LOAN< BUT THEY NEVER SHOWED ANY ORIGINAL NOTE TO ANYONE AND HAVE REFUSED TO SHOW ANY DOCUMENTATION.
JLSemidey, on October 23rd, 2009 at 2:16 pm Said:

Dear NY and Charlie A,

At the beginning most people when to talk to them about how this fraud has come to this amount of despair to a whole bunch of us, they look at you funny.

Now when the listen to us on radio interviews and when you see them in the court house, they now ask us how did we find out the truth and how they can also get the bastards.

Now is the time to press on the accelerator even harder, now it is the time to raise our voices and help others who have none.

Remember this a a war of ideas, methods and cash. But I trust that Thomas Jefferson was right and that our Constitution will at the end be respected and our rights asserted.

I thank you guys and ladies for being there for everyone else and for always sharing the good news and reassure us when we may feel down. You may lose a battle but the war rages on.

THANKS to all of you and specially to Mr. Grafield and Brad.

Jose

Mortgage Analysis and Consulting, LLC
8300 Old Court House Rd
Suite 230A
Vienna, VA 22182

703-946-5851
703-442-8828

http://www.toxicmortgageloan.com
http://www.hipotecatoxica.com
Charlie A., on October 23rd, 2009 at 12:44 pm Said:

Every time i see once of these cases posted gives me more and more hope that all pieces are beginning to fall in place, hopefully, for many of us in different states it won’t be too late. What i am intrigued about the most though is what stand will the government take in this mess once it becomes evident ( as if it needs to be more evident) that the mess it’s of a larger scale than what it seems to be or than what the government wants it to be. What makes me be skeptical about their “future” stand is the fact that they do have an “interest” on many of the mortgages out there.
I think that the biggest factor that will determine their actions will definitely be OUR protests on the subject, meaning once again that homeowners organization it’s crucial so that our voices will be heard loud and clear across the nation, so loud that the thieves and cockroaches along with their partners in crime will have nowhere to run and hide.
Regardless of the politicians’ stand, we have to continue organizing be it here in this great blog or with actual physical bodies out in our communities. Our “would be” protectors CAN NOT be trusted any longer(not that I ever had). Many of us, the victims, have to stop thinking as such and simply become our own shield and spread the word across America. I believe that even the “sold out” judges will have no choice to eventually get on with the program and stop looking the other way, educate themselves on the securitization process(scam) and start looking to every case with a magnifying glass and remove their bias glasses. The time is here, the time is now!!! Judgment day for the SCAM-MERS is here!! To victory America!!!!
ny, on October 23rd, 2009 at 10:58 am Said:

IT’S HAPPENING FOLKS…..
bt, on October 23rd, 2009 at 9:52 am Said:

great website for the report discussed in this blog post.

http://www.consumerlaw.org/

article on PDF

http://www.nclc.org/issues/mortgage_servicing/content/Servicer-Report1009.pdf

Posted by Silent Dogood JR on October 25, 2009 at 12:29 AM in Living Lies Weblog | Permalink | Comments (0) | TrackBack (0)

TWO Undisclosed Yield Spread Premiums: Why Securitization Changes the Game

Posted on October 24, 2009 by livinglies

So called “auditors” will miss the fact that there are two yield spread premiums that were not disclosed to either the homeowner or the investor. Failure to account for the movement of money through the securitization chain and failure to account for appraisal fraud, essentially leaves 95% of the money on the table. Those who get paid recovering undisclosed yield spread premiums and profits and treble damages should want to take note. But it is easier to offer the less intensive “audit” (we like to call these forensic analyses because there is no audit in the accounting sense). This leaves most of your bargaining chips for modification or settlement sitting in the pocket of the pretender lender.

And this is why forensic reviewers and lawyers who understand the basics of securitization could go after the entire cruise ship but are walking away with only peanuts from the bar. SIGN UP FOR CLEARWATER, FLORIDA SEMINAR NOW

Let’s take a look at what I’m talking about. Example: You have a $300,000 loan that was “bumped” to a higher priced loan than what you would otherwise have qualified for.

This means the salesmen who sold you the loan product convinced you through misrepresentation of the loan and the marketplace that you will be better off with the worse loan. He knows it is worse but he gets paid for putting you in a worse loan. So he skews the facts and misdirects your attention until you come to “agree” that the worse loan is “better.”

If you would have qualified for a 5% annual interest rate, fully amortized, fixed rate for thirty years and instead you took some alternative flexible “loan” product to reduce your payments initially, the loan originator gets a yield spread premium which is required to be disclosed at your loan closing. Usually it isn’t. The amount of this first yield spread premium would probably be around $3,000. This is what the usual TILA “Audit” reveals. What they don’t reveal is an additional $180,000 undisclosed yield spread premium, plus the profit from payment from credit default swaps. So they are claiming around $10,000 in damages for you but they should be going after $600,000. Oops!

Same example with extra facts: The interest rate on the alternate loan that you signed calls for prepayment penalties and adjustable rates, resets of payments from interest only to fully amortized etc. In other words the risk of you defaulting on a loan that you could otherwise have easily paid, is increased immeasurably — a fact not lost on the securitization intermediaries. They, knowing the loan will probably fail, put your loan in a pool with similar loans that are likely to fail. Then they purchase credit default swaps betting that a substantial number of loans will fail thus receiving payment on the pool perhaps as much as thirty times over, because there were no limits on how many times they could insure the pool, even if they had no interest in it and even though they didn’t lend any money.

So it turns out that your real payment and real interest rate are much higher. Let’s say that it is a modest increase to 8% over some period of time. This interest rate is applied against the loan balance, $300,000 which means that for purposes of selling your loan to an investor, they are selling an “apparent” income of $24,000 per year plus a “guaranteed” return of principal.

What the investor doesn’t know is that you don’t qualify for an 8% loan and you can’t pay it. The investor (pension fund, hedge fund etc.) only knows that they are buying a bond which also gives them ownership in your loan and others in the pool. Since the bond is Triple AAA rated and “insured” (by AIG!), the risk is perceived by the investor as very low. So the investor is willing to accept a rate of return of only 5%, which is 1% higher than similar financial products on the market. The fund manager looks like a genius because the extra 1% translates to a 20% increase in fixed income. All the investor cares about at this point is that he just got an income of $24,000 per year virtually guaranteed, which gives him his 5% return.

Now for the analysis and why lawyers and forensic reviewers need to take note: Just take out a piece of paper, a calculator and try this for yourself. A new yield spread premium appears as a result of this shifty tactic of changing loan terms and it is huge. It turns out that the amount of the purchase price of the bond for a 5% return that equals $24,000 is $480,000. You can do the calculation as many times as you like but it comes out the same every time. They took $480,000 from the investor and gave you $300,000 keeping $180,000 for themselves. That means there is an additional yield spread premium of $180,000 that was undisclosed.

Under the TILA-Respa approach this means you are entitled to the first undisclosed yield yield spread premium of $3,000 (see above) PLUS the second yield spread premium of $180,000. And you may be entitled to treble damages. That could be $540,000 or perhaps twice the amount of your loan. That means you have a set off in an amount higher than the loan itself. That means they owe you more than you owe anyone. That means you can’t be in default. It means you are not in default. It means your foreclosure is improper, illegal, and immoral.

The moral of the story is stop looking for the easy cheap way out. Your house and your life are worth far more. Yes you will have to fight harder and longer to resolve the issues. And yes lawyers are slow to realize that this is a gold mine for themselves as well as you. But increasingly, judges, lawyers and homeowners are coming to realize that this was not a case where their eyes were too big for their stomach. This was a simple case of fast talking salesmen getting people into trouble without the slightest twinge of conscience. This wasn’t your fault. You are the victim, not the perpetrator of some great fraud on the financial industry. They knew exactly what they were doing when they cheated you and the investor in exactly the same ways.

Mortgage Auditor, on October 24th, 2009 at 6:51 pm Said:

The only problem I see with the second YSP theory is that secondary market profits are exempt from RESPA disclosure requirements so under what rule can you argue for treble damages on secondary market profits????
Foreclosure Fraud, on October 24th, 2009 at 6:31 pm Said:

Diane,

Uploaded it to scribd here…

http://bit.ly/4zyyky

Thanks for sharing…

4closureFraud
Dan Edstrom, on October 24th, 2009 at 5:46 pm Said:

Diane,
Nice find. That is completely crazy. These foreclosure attorneys are out of control. What do you call it when an attorney does the following:

– Does not provide a sufficiency of pleadings
– Offers their own written affidavit of proof that a document is valid
– said affidavit contradicts previous pleadings submitted by said attorney

Thanks,
Dan Edstrom
dmedstrom@hotmail.com
Diane Barker, on October 24th, 2009 at 4:35 pm Said:

Hi,

I read your recent stories. This is unrelated to this story, but I just found an amazing Bankruptcy Opinion in Idaho regarding standing. It is short and to the point. Please post it somewhere for folks to use: http://www.id.uscourts.gov/decisions-bk/Sheridan_decision.pdf

Diane
Dan Edstrom, on October 24th, 2009 at 3:19 pm Said:

J in CO,
Lookup the following to find out why rescission probably does apply even though the statute of limitations has run out:

contra non valentem agere nulla currit praescriptio

I believe equitable tolling is only a part of this (although probably the main part, at least for me)…

Thanks,
Dan Edstrom
dmedstrom@hotmail.com
J in CO, on October 24th, 2009 at 1:58 pm Said:

Neil,

This is a timely post. I am in the process if finalizing my rescission where the lender has never given me the three day rescission(UW switched the loan at closing) My next step will be to send a tender offer to them subject to a payoff that includes a full accounting to include YSP1, YSP2?, Service Release Premiums, Resale of the note to the Trust, Failure and subsequent takeover from WAMU to Chase to include the discounted value and any and all TARP payments, CDS insurance and all fees incident to my default.

I assume they will not respond to the rescission and think it best to send immediately a tender offer to help speed the process of filing for Quiet Title if I have to bring this that far. If included in the tender offer is the request for the full accounting a sufficient way to offset the tender needed if the court forces me to citing the numerous fraudulent actions that have led to this situation?

I would think that at least if they file a declaratory action that it an be forced by the court as I have the entire history other than amounts paid by the trust, and the discounted value given the takeover of WAMU by Chase and BofA for the trust.

I think this will be a strong argument and hope my local judge is savy enough to understand where I am coming from. This is only one of two loans that I am fighting against.

What would you recommend as a course of action for a securitized loan in foreclosure that is over the 3 year mark. Is there another rescission that I can argue given non disclosure of the true Creditor to reset the rescission period?

I have other arguments such as a deed notarized by the mortgage broker and a blank assignment thus forcing the payable to bearer argument if they can even produce the note but thought Rescission would be best.

As I understand it the lender not only has to return monies paid by me but also ANY payments paid to ANYONE since the origination of the loan. This would include the insurance, SRP, YSP, Discounts and TARP funds prior to my tender and also includes a chapter 11 of the originating lender.

I have to thank you for this site and the determination of everyone as I plan to contribute to the cause in many ways after the successful conclusion of the above loans.

Keep up the fight and thanks in advance for any help!!
Matt, on October 24th, 2009 at 9:43 am Said:

what state are you in?
bt, on October 24th, 2009 at 9:13 am Said:

AUDIT referrals needed: 1) Chain of Securitization for my loan 2) loan doc audit 3) Follow the money for my table funded loan with an audit

???any referrals anyone???

Posted by Silent Dogood JR on October 25, 2009 at 12:17 AM in Living Lies Weblog | Permalink | Comments (0) | TrackBack (0)

October 18, 2009

Judge Long Massachusetts Foreclosure Decision Throws Securitization Intermediaries into Chaos, REO Sales Stopped

Posted on October 16, 2009 by livinglies

Editor’s Note: Anyone who underestimates the importance of Judge Long’s decision in Massachusetts and the combined effect with the Kansas and Arkansas Supreme Court decisions does so at their peril. Lawyers wake up! You are not just missing an opportunity, you are missing an important piece of due diligence that makes you vulnerable to claims from clients seeking advice.

“Borrowers have a right to know who owns their mortgage, and they have a right to make sure that the entity that is foreclosing has a legal right to foreclose,’’ Cohen said. “For too long these lenders have been ignoring the foreclosure laws.’’

The Boston Globe

Ruling upheld on sale of property

Ownership status of foreclosures clouded

By Jenifer B. McKim

Globe Staff / October 15, 2009

The ownership status of hundreds, and possibly thousands, of foreclosed properties in Massachusetts became muddier yesterday after a state Land Court judge reaffirmed his March decision that invalidated the sales of two Springfield homes because of improper paperwork.

In a 27-page ruling, Justice Keith C. Long described a convoluted process in which mortgages for the two homes were transferred multiple times without being properly recorded, as required by state foreclosure law. He said any problems the banks now face to clean up title questions – which could include redoing the foreclosures altogether – are “entirely of their own making.’’

“The issues in this case are not merely problems with paperwork or a matter of dotting i’s and crossing t’s,’’ Long wrote. “Instead, they lie at the heart of the protections given to homeowners and borrowers by the Massachusetts Legislature.’’

The ruling drew praise and criticism from attorneys, individuals, and housing advocates who had been anxiously awaiting word from the court.

Before the March decision, many lenders believed they could complete foreclosure transactions and later file formal proof they held the mortgages. Since then, however, some lenders have stopped selling foreclosed properties out of fear the sales later could be voided, and many title companies have refused to insure homes with ownership issues. That has affected the ability of communities and nonprofits to buy foreclosed homes in some of the state’s hardest hit areas. It has also made it more difficult for individual buyers and sellers of foreclosed properties to close deals.

The attorneys who filed the lawsuit that prompted Long’s original ruling said they are considering an appeal of yesterday’s decision. “He has thrown the entire nature of foreclosure work and thousands of titles back up in the air and doesn’t seem to care,’’ said Lawrence Scofield, an attorney with Ablitt Law Offices in Woburn, which represented the lenders in three consolidated cases ruled on by Long.

The Springfield lawsuit was filed by foreclosing lenders who said they wanted to remove a “cloud’’ from the titles of three properties created because of where they chose to publish foreclosure auction notices. But Long focused on a secondary issue – whether the foreclosures complied with the law because they did not officially name the mortgage holders.

During the housing boom, millions of mortgages were bundled into bonds and sold to investors, a process that often resulted in a twisted paper trail. Long’s decision detailed how mortgages for two of the Springfield homes changed hands as many as three times without any of the information appearing on the public record. The final owners – US Bank National Association and Wells Fargo Bank – did not record that they owned the mortgages until 14 months after the sales, he said.

Those in favor of the ruling said it will help those fighting foreclosures to find a way to remain in their homes and permit some who have already moved on to regain their homes. Long’s decision also bolsters a growing national movement among housing advocates, and some courts, to push lenders to produce accurate documentation before completing a foreclosure.

Nadine Cohen, managing attorney in the consumer rights unit at Greater Boston Legal Services, said the issues brought up in the case support the need for a state law to mandate that foreclosures of owner-occupied homes be overseen by a judge.

“Borrowers have a right to know who owns their mortgage, and they have a right to make sure that the entity that is foreclosing has a legal right to foreclose,’’ Cohen said. “For too long these lenders have been ignoring the foreclosure laws.’’

Boston attorney Paul Collier, who represented one of the defendants in the Springfield case, Antonio Ibanez, said his client never expected to win back the property he purchased for $115,000 and later lost to foreclosure. He said Ibanez overpaid for the home, which he could not afford. He said Ibanez will likely wait until the appeal process is completed before deciding whether to take any action.

Collier said there probably won’t be a flood of former homeowners fighting to get back their properties as a result of Long’s decision, but there could be enough to create problems for new owners, lenders, title companies, auctioneers, and others involved in the sale of foreclosed properties. “You are going to see a ton of payouts here,’’ he said.

Boston City Housing chief Evelyn Friedman said that although the decision protects homeowners trying to ward off foreclosures, it also is delaying the city’s efforts to clean up areas plagued by abandoned homes. Already, the judge’s March ruling stymied the city’s effort to buy 20 bank-owned properties.

“The unfortunate part is that many people already have been foreclosed upon and now their properties can’t be resold,’’ Friedman said. “That holds up quite a bit of our work in revitalizing the neighborhoods that have been most devastated.’’

Because of the ruling, Developer John O’Riordan said he worries he might now lose an investment property in Jamaica Plain he bought from a bank last year for $480,000 and renovated for $200,000. Now he can’t sell the units because of title issues and has run out of money.

“The real estate situation in Massachusetts is on its knees and this does not help the cause at all,’’ O’Riordan said.

30 Responses

stopGOVTwaste, on October 17th, 2009 at 4:13 pm Said:

CRANK UP YOUR SPEAKERS… THIS ROCKS!!!

I find it funny… I’m a card carrying Independent.
However, I’d vote for RON PAUL in a new york MILLION =~)

LYRICS:

“Only Liars But We’re The Best”

“Only Good For The Latest Trends”

“Only Good Cause You Can Have All Those Famous Friends”

“Besides We’ve Got Such Good Fashion Sense”
JohnnyB, on October 17th, 2009 at 4:00 pm Said:

* Charlie A. – LMAO (Laughing My @ss Off)!!!
SCAM-MERS

* Stanley O’Neal, the former president and CEO of Merrill Lynch, led his firm into the risky territory of subprime mortgage bonds that eventually led to its demise. O’Neal was named by CNBC one of the “Worst American CEOs of All Time,” but when he was replaced by John Thain in 2007, he took with him $161.5 million worth of stock in severance. In 2008, he was appointed to the board of the aluminum company Alcoa but reportedly still has enough downtime to play golf several times per week.

* Kerry Killinger, former CEO of Washington Mutual was Named “Banker Of The Year” by American Banker in 2001, there’s been little word of Killinger’s endeavors since he led Washington Mutual to the largest bank failure in U.S. history. Killinger’s $100 million golden parachute, however, is still fresh in the mind’s of many WaMu’s native pacific northwest. Killinger was WaMu’s CEO from 1990 until 2008, when he was forced out as the bank buckled under shaky loans and growing debts.

* Frank Raines, former CEO of Fannie Mae from 1999 to 2004, left amid accusations that he manipulated the books to rationalize exorbitant bonuses for himself and other senior managers. In 2006 the government filed suit against Raines and two of his top associates in an attempt to recoup $115 million in undeserved compensation and $100 million in fees, but the three men quietly settled for $31.8 million. Fannie Mae committed to footing the bill for any shareholder suits filed against Raines, who is now retired, and when the government took over the company in September 2008, it continued to pay his legal fees. To date, U.S. taxpayers have kicked in at least $2.43 million for Raines’s defense fund.

* Former Treasury Secretary – and Goldman Sachs chief — Hank Paulson was at the helm when the global financial system teetered in 2008, and under his leadership the government intervened to save Wall Street from outright collapse. Since leaving government service, Paulson has become a distinguished visiting scholar at Johns Hopkins University’s Paul Nitze School of Advanced International Studies as well as a fellow at the university’s Bernard Schwartz Forum on Constructive Capitalism.

* Joe Cassano, AIG’s “Man Who Crashed The World” resigned as the head of the financial products division at AIG in February 2008 after his unit’s derivatives unit blew up and caused billions of dollars in losses. Cassano, who during his tenure earned more than $300 million, fled to London, where he reportedly takes daily bicycle rides around his ‘hood. But federal prosecutors want to bring him back to New York — in September 2009 the government announced that it will soon impanel a grand jury to consider indicting him for securities fraud.

* Richard Fuld, the former CEO of Lehman Brothers, the storied
investment house whose collapse set off the financial crisis, is
starting a consulting firm Matrix Advisors and has done some work for Alvarez and Marsal, the restructuring firm helping to unwind Lehman. Last week, he told a Reuters reporter who tracked him down to his country home in Ketchum, Idaho, “I’ve been pummeled, I’ve been dumped on, and it’s all going to happen again. I can handle it. You know what, let them line up.”

* Angelo Mozilo, the former chief executive of the largest subprime lender in the country – Countrywide Financial – has been laying low at his California home and meeting with lawyers since he was charged by the SEC in June with insider trading and securities fraud. Among other things, the SEC alleges that he used words like “toxic” and “poison” to refer to Countrywide’s mortgage books. His lawyers contend that the SEC’s suit misquotes evidence and ignores company disclosures.

* Sandy Weill, the former chairman and CEO of Citigroup (pictured, with his daughter Jessica Bibliowicz) who assembled and shaped the mega-bank, was among those who pressed for the repeal of the Glass-Steagall Act and ushered in the era of deregulation in the 1990s. Shortly after Citigroup was propped up with $45 billion in taxpayer dollars, Weil used a corporate jet to take his family to a Mexican resort for New Year’s Eve (a privilege he has since forgone). He is said to be incensed that current Citigroup CEO Vikram Pandit has declined to confer with him.

* Christopher Cox, the former chairman of the Securities and Exchange Commission, who has been blamed for the agency’s lax enforcement and failure to catch Bernie Madoff, now works as a corporate partner in the Orange County office of Bingham McCutcheon law firm. Cox has defended his leadership, claiming that he provided a “steady hand” at the SEC during a moment of crisis.

* Alan Schwartz presided over Bear Stearns for a scant two months before the bank’s demise in March 2008. The former CEO is now the executive chairman of Guggenheim Partners, where he recently hired his old Bear colleague Kenneth Savio to fashion an equity-trading desk at the financial firm.

* John Thain, who was tapped to run Merrill Lynch in December 2007, was forced out by Bank of America’s CEO Ken Lewis in January 2009 shortly after BofA’s takeover of the investment bank. Thain drew fire when he reportedly attempted to accelerate bonus payments to Merrill employees — including $10 million for himself — even as the firm faltered. And he got more bad press when it was learned that he spent $1.2 million to redecorate his office suite (purchases included a $35,000 commode). Thain has not yet landed a new gig, but today he says that if he could do things over, he’d “furnish [the Merrill offices] in Ikea.”

Read more at: http://www.huffingtonpost.com/2009/09/22/financial-crisis-financie_n_294569.html
Rose, on October 17th, 2009 at 3:36 pm Said:

To all those in GA, please be aware that RON HOUCHINS , although listed on this blog is NOT a licensed attorney or a member of the state bar in GA.

I had a different experience with Mr. Houchins than “bt” did. Back in May of 2009, I spoke to him briefly on the phone, while cordial, he seemed uninterested in helping with me and my fiancee. Her basically recommended that we file for bankruptcy which we did not want to do. A couple weeks later I called him asking for his help to get together a TRO, I also sent him an email, again asking for his help, telling him we were aware of his fees and were willing to pay them. He responded to neither attempt to contact him.

Thankfully, his lack of communication spurred me to write the Emergency TRO myself, which ultimately stopped the foreclose attempt, on the day before the house was set for sale on the courthouse steps.

I am not saying the Mr. Houchins can not help anyone, I’m just telling everyone to be aware that one person’s experience with an foreclosure defense business can be different than another person’s. I don’t say “attorney” because Mr. Houchins is not able to practice law in GA.
JohnnyB, on October 17th, 2009 at 2:58 pm Said:

Glad to see you’re pulling for the right team Drew!
Drew, on October 17th, 2009 at 2:14 pm Said:

I guess you think that I am for these ghouls. Nothing can be farther from the truth. I am showing everyone information on these clowns. They are driven by the almighty dollar. someone asked if they had his email they would “let him have it.” I did one better I gave you his home phone so enjoy!! I heard he loves 3am weak up calls. nothing more than what can be found on the internet in a 30 second search. As to the ABC piece they are looking for a story on people in foreclosure. I know some of you here would like a national platform.
Charlie A., on October 17th, 2009 at 1:30 pm Said:

TW:

and the rest of you:

Judgement Day is coming for the SCAM-MERS, get it?

by the way i am so impressed by the scum bag Scofield’s education record. Wow! how impressive.
TW, on October 17th, 2009 at 8:48 am Said:

It’s not just banks… Federal Credit Unions securitize just as many loans – this includes USAA (the military’s bank), Pentagon Federal Credit Union, Navy Federal Credit Union, etc.

MERS IS ON THEIR LOANS TOO!
TW, on October 17th, 2009 at 8:41 am Said:

Oh yeah, forgot to mention they’re an AMC too. Don’t know what and Appraisal Management Company is…. how about an Automated Valuation Model or AVM. Bank Appraiser, does anyone know what a Bank Review Appraiser REALLY does? Don’t worry, you’re not alone.

In addition to being one of the largest TITLE MILLS, they’re also an AMC. Check out my blog if you are unfamiliar with these terms. Appraisal fraud equals USURY!

Functions are segregated so you have an a la carte menu of services (a neat way to get around the new rules designed to protect homeowners HVCC & IVPI, et al)
TW, on October 17th, 2009 at 8:22 am Said:

Sleep well Directors & Managers… you know who you are!!!
TW, on October 17th, 2009 at 8:19 am Said:

* Drew

The fact that this guy SHOULD KNOW BETTER is a testament to how blind, stupid or corrupt he is… which one is it?

* Charlie A

It broke my heart to see all this f***ed up stuff being slammed through the TITLE MILL at a rate of 5 to 10 THOUSAND FILES PER DAY.

* TO ALL – what we don’t know much about (but will begin to learn about in the very near future) is that these clowns own their own title & appraisal shops and are jamming these things through as fast as they can… with little regard to what is fair, proper, accurate or lawful.

IT DISGUSTS ME & I’M GLAD I DON’T WORK FOR FISERV ANY MORE – THEY ARE CROOKS!
JLSemidey, on October 17th, 2009 at 8:09 am Said:

Dear Drew,

Does the fact that someone goes around and signs up for every club is high school does not make that person a qualified expert, other than the clubbing kind.

So you tell me Drew, the fact that this paid WHOR* believes that our Constitution is worth less than toilet paper does not make him an authority.

The fact that all the people move through the halls of power pushing their way around by wining an dining government officials for the sake of the few crooks that gain from this mess does not make him better than you or I .

The fact of the matter is that the more cases move through the courts based on constitutional issues and the fraud against the middle class of this country, the more the American people will realize how they were duped.

The only sad part is the fact that now we start to see those who we have elected as our government officials for what they really are “SOLD OUT PROSTITUTES”, those dead brained people have accepted, voted and signed off on non-judicial proceedings for foreclosure making it almost impossible for the common person to seek justice and the due process.

I just cannot understand how it is easy for them to raise taxes to pay for whatever they feel is important, but allow a SCAM as MERS to permeate the real estate process and the registration of mortgages in the land records depriving all our communities from valuable taxes that could have been serving to pay for teachers, libraries, roads, hospitals, etc.

Once again, it is up to all of us, shame on those who defend the thieves of the AMERICAN DREAM.
Charlie A., on October 17th, 2009 at 7:50 am Said:

to: TW

AMEN AND AGREED 100%!!!!!

Justice will agree with you also real soon my friend, it doesn’t surprise me at all you being fired for bringing up to the BIG bad wolfe (title co.) the fact that fraud was being committed. I am dying for the day when the title cos. will start being sued by the homeowners once they (we) realized the extent to which they were participants on the biggest scam that our country has been subject to; title co’s. are also nothing but a bunch of scum bags that knowingly participated in the whole evil plan.
Furthermore now they are still actively participating once more to insure homes that have been illegally foreclosed on. TW, we need to spread the word about these other thieves and have people start making claims against them, and see how they roll out to claim that they now are being victimized by us, the deadbeat, can not afford their home, got themselves into a mortgage they can’t pay homeowners.
their attitudes are completely pathetic!!!!! are financially raping us now they want to blame it on us.
GREED is the fuel that generated this out of control incendiary wave of foreclosures and people being, these bastards made/make millions and millions of dollars at the expense of the unaware homeowners.
they along with the rest of the “evil greedy machine” shall all burn in hell real soon, and you and I shall witness and document their fall so that we can show our children how to fight the insiders that for years have been working on their plan to financially rape us and our country!!!
To victory America!!!!!
bt, on October 17th, 2009 at 7:03 am Said:

One the folks on the “attorneys that get it list” Ron Houchins is one of the best. He has helped me with all kinds of lawsuit issues and foreclosure defense. He is a must use with pleadings and filings. He can be found under Georgia on Attorney that gets it list or ron.financialfreedom@live.com
TW, on October 17th, 2009 at 7:00 am Said:

*Drew

I too worked in the title insurance industry as a title examiner for Lawyers Title (Land America) and more recently for a HUGE TITLE (THEFT) MILL that is owned by BofA, JP, et al.

I can assure you first hand that a majority of these people need their jobs to support their families. Do you think the employees & management of such companies like FISERV, FirstAM,Stewart, etc either know or care that assignments are fraudulent, that deeds coming out of Securities and Pass through certificates series XXX are kosher, that MERS being insured as mortgagee on a T.I. policy is okay – HECK NO – they need their job and need the money to pay their bills and feed their families.

The people who think MERS is a great substitution for a recorded “assignment” & “discharge” in public record are sorely mistaken. When you start rigging the system to manipulate and hide what is really going on you are nothing more than a con artist who takes advantage of unsuspecting borrowers (and investors) and commits fraud.

You think tanking the US economy is an admirable thing to do, you think American families like sleeping under bridges with their kids or having to set up in their car or minivan, do you think the seniors in our country like having their retirement nest egg obliterated? WAKE UP BRO… YOU’RE ROOTING FOR THE WRONG TEAM!!!

How do I know, I brought one of these fraudulent document to the attention of management at one of those large title mill owned by large banks… do you think they cared to listen to what I had to say? The next day I was FIRED!

So please… troll somewhere else or better yet, do something more productive with your time, like figure out how it’s okay to earn money off of a transaction that is not listed on a HUD statement or Truth In Lending statement and get back with me.
Charlie A., on October 16th, 2009 at 11:58 pm Said:

Here are SOME of the REAL American heroes that this mess is bringing up to the surface in the sea of lies and deception we are swimming in today: more to be added to the list real soon: in not particular order:
1.- Neil Garfield and Brad Keiser
2.- April Charney
3.- Judge Boyco
4.- Judge Burford
5.- Judge Arthur Schack
6.- Judge Keith Long

Thanks to all these people that understand the actual problem we are having and that are also doing something about to protect the people of this great land.
Charlie A., on October 16th, 2009 at 10:56 pm Said:

to: DREW

and your point is????!!!!
Drew, on October 16th, 2009 at 10:06 pm Said:

http://abcnews.go.com/Nightline/family-facing-foreclosure/story?id=8847102
THE A MAN, on October 16th, 2009 at 5:18 pm Said:

How come the Title Companies are willing to insure the title, in California? That is the answer I get from the Short sale people. It kind of stumped me.
Drew, on October 16th, 2009 at 3:00 pm Said:

LAWRENCE SCOFIELD
757 HIGHLAND AVE
NEEDHAM HEIGHTS, MA 02494 (781) 455-8561
Drew, on October 16th, 2009 at 2:58 pm Said:

LAWRENCE J SCOFIELD
900 MAIN ST
WINCHESTER, MA 01890

(781) 756-0510
Drew, on October 16th, 2009 at 2:50 pm Said:

Lawrence F. Scofield, Esq. – Mr. Scofield joined the firm in June, 2008 after a long and distinguished career in the title insurance industry with several national underwriters. He holds Bachelor’s and Master’s degrees from Boston College as well as a Juris Doctor from Suffolk University Law School. He is a member of the Bar of Massachusetts and the United States Supreme Court. Mr. Scofield is a member of the American College of Real Estate Lawyers, the Abstract Club, the Real Estate Bar Association of Massachusetts and the Massachusetts Bar Association. Mr. Scofield has served the American Land Title Association for many years as a member of the Forms Committee (11 years), the Special Tidelands Committee (9 years), the Judiciary Committee (4 years) and the Indian Land Claims Committee (30 years). Mr. Scofield has been a frequent writer and speaker on numerous real estate and title insurance topics. He has lectured on behalf of the American College of Real Estate Lawyers, the American Land Title Association, the Massachusetts Continuing Legal Education Association, the Massachusetts Mortgage Banker’s Association, the New Hampshire Bar Association, the New England Land Title Association, the Ohio State Bar Association and the National Association of Industrial and Office Parks. Mr. Scofield has many years of experience in commercial and residential real estate transactions, complex condominium issues, zoning issues, title insurance underwriting and claims.

http://www.acdlaw.com/index.html
angry¬ taking it, on October 16th, 2009 at 1:16 pm Said:

the homeowners they ( Boston city ) want to help are the NEW homeowners with $ to that great American milking-machine back to work in that area & resume sucking the life out of some fresh meat ready & willing to bleed.
Do i sound bitter?wtf… i’m feeling a little POSTAL to.
Charlie A., on October 16th, 2009 at 1:08 pm Said:

to: Spiritual2009:
AGREED!!!
“that” is not a reporter, but the devil in disguise! steering the interview to tell all the “sad” stories for the city, for the poor ole investor whose about to loose his money, who gives it rat’s ass about the city and the investor?? if that (*&^%^& was a REAL reporter, a section of a homeowner’s interview telling how he and his family feel about the whole deal would’ve been great.
But instead the “reporter” (another scum bag) concentrates on the wrong end of the diabolic plan carried out by the “evil greedy machine” called Wall Street, the media has not and should never be trusted to carry out our sentiments about this disgraceful situation that our beautiful country finds itself in. It is our patriotic duty to defend the real principle in the roots of our country, as it is to protect our very own butts.
No one can and should be trusted on “defending/protecting us from this despicable time in the history of our nation. We must take it upon ourselves to do so. Through ALL legal means possible. We must stop the “economic serial rape” NOW.
To victory America!!!!!
ny, on October 16th, 2009 at 1:04 pm Said:

Look at this decision.

High court upholds mortgage lenders’ registry

by Elizabeth Stawicki, Minnesota Public Radio

August 13, 2009

St. Paul, Minn. — The Minnesota Supreme Court has ruled 6-1 that the Mortgage Electronic Registration System, or MERS, did not violate Minnesota law by failing to disclose which lenders actually owned a homeowner’s mortgage.

MERS was created by the nation’s largest mortgage lenders to streamline the foreclosure process.

Five Hennepin County homeowners filed a lawsuit in January 2008, alleging that MERS violates Minnesota law by foreclosing without following two requirements — to identify all assignees of the mortgage in county land records, and list those assignees in the published foreclosure notice.

Minnesota Legal Aid attorneys, acting on behalf of the plaintiffs, argued that homeowners facing eviction in foreclosures administered by MERS often didn’t know which lending institution held their mortgage, which prevented them from negotiating a deal.

MERS argued that it should be able to foreclose in its own name without identifying the successive owners of the loan which are tracked on its private system. The Supreme Court agreed.

Writing for the court majority, Justice Paul Anderson said as the mortgage banking industry has changed, certain problems have become evident, especially in the secondary mortgage market. But resolving those problems was beyond the court’s authority.

Writing in dissent, Justice Alan Page said by allowing the identities of promissory noteholders to remain hidden, the court essentially eliminates a homeowner’s ability to assert a wide range of defenses to foreclosure.

Amber Hawkins, one of the plaintiffs’ attorneys, said she’s disappointed in the court ruling.

“As a result of the court’s decision, an agent with no responsibility or authority related to the loan can foreclose upon a homeowner through an expedited, non-judicial process without identifying who it is working for,” said Hawkins.

******************************************

I would note that the underlying lender information has always been available on the MERS website when I went to look it up. Haven’t done it in a while. Has that changed?

Steele
spiritual2009, on October 16th, 2009 at 9:58 am Said:

All the comments on this article are great and correct etc. One more glaring issue is how the reporter for the Globe leads the people she interviews in the wrong direction, just by asking leading questions from someone else who does not know what the real issues are. Our culture is do dependent on main stream media even when they make a lame attempt to get to the truth, it gets run over.
Need help in FL, ID, AZ, CA, NJ or NY with foreclosure or have a loan with Wells Fargo? Call Robert at 860-599-5557 for information.
JLSemidey, on October 16th, 2009 at 9:32 am Said:

This guy wants to foreclose without having legal authority?

SCREW HIM, can some one in the Boston AREA sue his rear end?
JLSemidey, on October 16th, 2009 at 9:29 am Said:

Yes , the decission has made the fraud impossible to be carried out, the foreclosure pomoter should be brought into malpractice and ethics proceedings
Charlie A., on October 16th, 2009 at 9:17 am Said:

somebody needs to sit down with that clown Evelyn Friedman and explain to her how exactly she can help the homeowner at “her” community, about those abandoned homes that she is talking about: i have a suggestion for that idiot: how about helping the former homeowners moving back into their homes? how come she can not think of this? well it’s simple, she does not care nor does she understands. here is in her own words: “the unfortunate part is that many people have already been foreclosed upon and now their properties can’t be resold”. Is she stupid or something? she is admitting by her very own words that those are the homeowner’s home, and that now they can’t be resold, oh how sad for the city, they can’t buy foreclosed homes that were illegally taken away from the rightful owners just so that the city can “revitalized” the neighborhoods. and how about that “investor” Jhon O’Riordan? oh poor investor, he is going to loose his investment of 680K!! trying loosing the home you are living in O’Riordan and then come back and tell me how you feel!! look at his comment: “the real estate situation in Massachusetts is on it’s knees and it does not help the case at all” allow me to translate that comment to you: that should read instead: the real estate situation is on it’s knees because the bunch of thieves in our country that call themselves “lender” are nothing but a bunch of scum bags, and it doesn’t help ME at all, cause now i about to loose my money, who cares about the illegally foreclosed on homeowners, all i care is about my money. me me me me me, that’s what these, pretender lenders/thieves are all about, well their time is coming, and they better hold on to their “cojones” they themselves may be on their knees here pretty soon. To victory America!!!!
Charlie A., on October 16th, 2009 at 8:56 am Said:

Talking about that bastard Lender’s attorney Lawrence Scofield who said: “He has thrown the entire nature of foreclosure and thousands of titles back up in the air and doesn’t seem to care” , want a crying shameless bastard he is!!! unless he is referring to his very own clients, because if he is he is right!! that’s what the “angelical” pretender lenders have done to us, it’s all their doing! we did not do that, the bastards thieves did! his clients, if we were to put a dollar more in his pocket than the pretender lenders i am sure that he would change his attitude in a second and turn against the very thieves he is trying to “defend”. I am dying to find his e-mail to let him know what i think about him, what a scum bag!!
Pheww, i am glad that’s off my chest.
In regards to the city’s “effort” to buy homes in hard hit areas, these are other bunch of idiots that are nothing but bags full of crap! helping the community???? REALLY???? why don’t they instead of buying homes put that money into hiring a bunch of qualified attorneys to fight for the homeowner’s rights??? oh wait, i know why, because there is no benefit and no money in it for them!! that’s why!. All of a sudden every part of the government wants to “help” the homeowner, HOW? by buying the homes they already lost so that they can make a profit!? please, get the (*&^%% out of here! i am sick and tired of hearing all this “humanitarian” efforts by cities across our country trying to “help” home owners, how can they help the homeowner when they are not there anymore, and please do not tell me,”well, that way they save the value of the neighborhood”. ask the homeowner that lost their home if they care about the neighborhood, the cities are doing that with the clear purpose of profit, nothing more. to profit on the foreclosed home that once belonged to an american family. Yup! dog eat dog? , no, dog eat American family!!!
We must stand up to this ball of crap rolling into our cities, we must use all legal venues to satisfy our thirst for justice!! and must start now.
To victory America!!!!
US Bank v Ibanez: Now They Are Getting the Point « Livinglies’s Weblog, on October 16th, 2009 at 8:29 am Said:

[...] See Boston Globe Article: judge-long-massachusetts-foreclosure-decision-throws-securitization-intermediaries-into-chaos-reo-sa… [...]

Posted by Silent Dogood JR on October 18, 2009 at 01:02 AM in Living Lies Weblog | Permalink | Comments (0) | TrackBack (0)

October 14, 2009

Turmoil in Arbitration Empire Upends Credit-Card Disputes

OCTOBER 15, 2009

Turmoil in Arbitration Empire Upends Credit-Card Disputes

By CARRICK MOLLENKAMP, DIONNE SEARCEY and NATHAN KOPPEL

New York financier J. Michael Cline set out to build a billion-dollar empire in the realm of consumer-debt disputes. His firm would stand at the center of a complex arrangement linking America's biggest arbitrator of consumer credit-card disputes with another business that collects debts in some of those same cases.

Instead, his grand plans have unraveled, turning the world of consumer arbitration on its head.

Amid a congressional investigation, regulatory complaints and lawsuits from consumers, Mr. Cline's woes are prompting a major shift in the way many U.S. consumer-debt disputes are settled.

For more than a decade, most credit-card companies have required customers to use arbitration, rather than the courts, to resolve disputes over unpaid bills. Minneapolis-based NAF has mediated the vast majority of these claims. But both NAF and another arbitrator have stopped hearing arbitrations of consumer-debt cases, and major banks are dropping arbitration requirements.

View Full Image

Panthera

Michael Cline, center, aimed to build a debt-collection empire. He is shown here in 2005 helping during a wildcat-conservation trip.

"I actually think there is a fairly significant change afoot," says Richard Reuben, a law professor and arbitration specialist at the University of Missouri. Banks "don't need the taint that comes with mandatory arbitration."

It's a big comedown for Mr. Cline, who helped found online movie-ticket vendor Fandango and pledged millions of dollars to save Asian tigers from extinction.

In 2006, he and his private-equity firm, Accretive LLC, set out to acquire a stake in the National Arbitration Forum, the nation's largest consumer-debt-arbitration body. An Accretive executive told NAF the organization had the potential to blossom into a billion-dollar business. By expanding beyond credit-card disputes to resolving disagreements between hospitals and patients, NAF had the potential to be "the center of a broad arbitration ecosystem," Mr. Cline's firm said, according to an Accretive presentation to NAF.

At the same time, Mr. Cline was quietly making another big bet on the debt business. Through its funds, Accretive created a separate debt-collecting business. That firm, Axiant LLC, ran call centers and helped collect consumer debt following NAF arbitrations.

In a July complaint, the Minnesota attorney general's office alleged NAF deceived consumers and engaged in false advertising. Consumers didn't realize NAF was financially affiliated with "one of the country's major debt collection enterprises," the complaint alleged. Accretive created Axiant in tandem with employees of Mann Bracken, a debt collector that represented credit-card companies in NAF arbitrations, the complaint alleged. At the same time, Accretive funds and NAF Inc. jointly own the back-office entity for NAF, called Forthright.

This structure, the complaint alleged, obscured Accretive's efforts to dominate both sides of the debt-collection business: arbitration and debt collection. While telling consumers that it was an impartial arbitrator, NAF worked closely with creditors, the regulator claimed, including drafting claims against consumers.

NAF says its arbitration system is fair. It provides "the most inexpensive option for consumers to resolve a dispute," rather than going to court, according to an NAF statement. An Accretive spokesman says that Forthright and Axiant provide information technology and processing for NAF and Mann Bracken, respectively. But Accretive doesn't control either NAF or Mann Bracken.

The 49-year-old Mr. Cline and his firm weren't named defendants in the Minnesota complaint. There is nothing in the complaint alleging Accretive and Mr. Cline condoned improper arbitration methods at NAF and Forthright. Mr. Cline declined requests for comment.

NAF settled the case with Minnesota Attorney General Lori Swanson in July without admitting the charges. It agreed in the settlement to stop arbitrating credit-card cases nationwide.

The case has made waves. Another consumer-debt-arbitration body, the American Arbitration Association, which handled far fewer of the cases than NAF, has also stopped hearing such cases. The AAA said its decision wasn't related to NAF's case, but it decided to stop those arbitrations after an evaluation revealed "weaknesses in the consumer debt collection arbitration process," according to its Web site.

The exit of the nation's two main debt arbitrators is part of a larger shift by banks away from requiring unhappy customers to arbitrate disputes, rather than go to court. In August, Bank of America Corp., which had used NAF to handle disputes, said credit-card holders now are free to go to court rather than being forced into arbitration. J.P. Morgan Chase & Co., citing recent events, ceased filing new arbitration credit-card claims in July and is evaluating whether to continue to include an arbitration clause in consumer contracts.

Arbitration and mediation have existed as ways to resolve disputes in the U.S. for more than 200 years. They became the standard practice in the financial world after 1987, when a Supreme Court decision gave securities firms the go-ahead to require arbitration to resolve brokerage-account disputes.

In a typical case, a bank refers an unpaid credit-card bill to a debt collector. If the collector is unsuccessful at recovering it, it refers the case to an arbitration body. Arbitration bodies, such as NAF and AAA, which generated revenue by charging fees to the parties involved, use retired judges and attorneys as arbitrators who decide the cases. If the arbitrator rules for the creditor, the collector can ask a court for a judgment to collect. Because a debt collector can earn up to a third of the debt outstanding when the ruling is in the bank's favor, it can be in a collector's interest for an arbitrator to rule against the card holder.

Former arbitrators, a congressional subcommittee, consumers and government suits are now alleging that NAF has been systematically ruling against consumers for years. Banks prevail over consumers in 94% of debt-collection arbitrations, an NAF official said in recent testimony to a congressional subcommittee. Arbitration advocates defend those results, citing studies that show debtors lose at a similar rate in court. They say that there is typically a long paper trail proving that customers owe the amounts in dispute.

A congressional subcommittee, which began an investigation last year to study the fairness of mandatory arbitration, concluded in July that the current arbitration system is "ripe for abuse." Arbitration, as "operated by NAF, does not provide protection for those consumers," the committee said.

A sweeping overhaul won't occur unless Congress decides whether to pass laws limiting how arbitration can be used. But arbitration experts now expect that more collection claims will be funneled into the courts.

Mr. Cline, a Harvard MBA and former McKinsey & Co. associate, formed Accretive in 1999. The firm, which counts some high-profile names such as Seagram heir Edgar Bronfman Jr. as general partners, has focused on launching new technology companies and helping spin off the information-technology operations of larger companies.

Accretive has a record of successful ventures. In 2000, it teamed up with General Atlantic, a private-equity firm where Mr. Cline was a general partner for 10 years, and started Fandango, a Los Angeles Web site that sells movie tickets and advertising. Fandango grew into one of the country's largest online movie-ticketing services before it was acquired in 2007 by cable operator Comcast Corp. for an undisclosed sum.

Mr. Cline also developed a passion for wild tigers, having served as a trustee of the Wildlife Conservation Society and a board director of Panthera, where he helped lead the Tigers Forever initiative to conserve the tiger population in Asia. Several years ago, Mr. Cline pledged $5 million to Tigers Forever over a 10-year period.

In 2006, his firm began wooing NAF. Created in 1986, NAF had become the go-to arbitrator for consumer-credit disputes, handling the bulk of such cases in the U.S. in 2006, or 214,000 claims.

Accretive had ambitious plans for NAF, according to documents presented in the Minnesota case. In established markets, such as credit cards, "arbitration should capture at least 50% of the volume currently placed in litigation," Accretive said in a presentation to NAF in August 2006, according to documents in the case. NAF could expand into new lines of business, such as helping hospitals collect bills, the documents added.

"We believe Accretive would be a great partner to help NAF become a billion dollar company," Accretive principal Madhu Tadikonda said in an email to NAF officials following a June 2006 meeting. Mr. Tadikonda, who has since left Accretive, declined to comment.

NAF earned much of its revenues from fees it charged credit-card companies. Filing an arbitration costs companies from $19 to as much as $1,750 for claims of $75,000 or more. Other fees apply to companies and consumers depending on whether an in-person hearing is sought, for instance.

While negotiating with NAF, Accretive also was finalizing the creation of a collection-processing firm in partnership with employees of Mann Bracken. Mann Bracken, a law firm, worked closely with NAF at the time. Along with another firm it would acquire, Mann Bracken filed 58% of the 214,000 consumer-debt arbitration claims sent to the NAF in 2006, according to the Minnesota complaint.

NAF "executives recognized the problems that would arise if Accretive's investment in the [NAF] -- and its ties to the Mann Bracken law firm -- became public," the complaint said.

In fall 2006, Michael Kelly, NAF's chief operating officer, emailed Accretive's Mr. Tadikonda, recommending that any Accretive stake in NAF be acquired through "a new fund as the investment vehicle," according to a copy of the email included as an exhibit in the Minnesota case. There should be "no public information connecting Accretive with the fund that ultimately acquires and holds the minority interest" in NAF.

Mr. Kelly, a former executive for the Minnesota Vikings football team and a lawyer, told Accretive officials that they would need to establish an "on-going Chinese wall between Mann Bracken and the" NAF. "I cannot overstate our concern over the Mann Bracken relationship," Mr. Kelly added in the email.

Mr. Cline had a solution, the Minnesota complaint alleges: forming several entities called Agora, "in order to conceal the conflicts inherent" with the Accretive/NAF transaction.

Mr. Kelly said through a statement from NAF that he addressed concerns about Mann Bracken by taking "very specific" actions, including establishing separate office space with secure key-card access and separate information-technology infrastructure. After taking these actions, Mr. Kelly said, he decided there were no longer any conflicts and proceeded with Accretive. Mann Bracken had no comment.

Accretive and NAF signed a letter of intent on a deal in early 2007, according to the complaint. Several weeks later, Mr. Cline set up four enterprises in Delaware. The general partner of all the entities, Agora Fund I GP LLC, shared the address of Mr. Cline's private-equity firm. The Agora entities then acquired a stake in a new company called Forthright that handled back-office and marketing duties for NAF. That step created a layer hiding Mr. Cline's partnership with NAF, according to the Minnesota complaint.

An Accretive spokesman said documents detailing the partnerships were filed with state authorities and are publicly available. The spokesman said the Delaware partnerships were created for tax-planning purposes.

Since its settlement with the Minnesota attorney general, NAF has focused on other forms of arbitration such as domain-name disputes. It has been hit by numerous complaints alleging it favored its corporate clients in credit-card disputes.

A former part-time NAF arbitrator, Harvard University law professor Elizabeth Bartholet, testified before the Senate Judiciary Committee last year that NAF discontinued sending her cases in 2004 shortly after she ruled in favor of a consumer.

Before that case, she had ruled in favor of credit-card companies 18 consecutive times, she told the committee. She says she finished several pending NAF cases after she ruled for the card holder, but then wasn't given more cases. The official reason the NAF gave for canceling more work was scheduling conflicts. But Ms. Bartholet said in an interview that an NAF manager told her she was likely removed because she ruled for the debtor. "Someone else will fill NAF's vacuum if Congress doesn't reform the [arbitration] system," Ms. Bartholet said.

NAF's Mr. Kelly said Ms. Bartholet has "testified to the fairness of arbitration and arbitrators in subsequent legal depositions."

NAF, which has a database of more than 1,000 attorneys and retired judges whom it hires as arbitrators, says it is unbiased. In Houston, NAF arbitrator James Carmody says he spent up to three hours in cases where consumers decided to fight a debt claim. When consumers didn't fight, the lawyer could clear a case in 15 minutes.

"I have bent over backward to listen to the arguments of the credit-card holder," Mr. Carmody says. Often, consumers didn't respond to the arbitration notice. "I would say in the vast majority of cases the credit-card company wins because in the vast majority of cases, the person ran up the debt on the card."

Write to Carrick Mollenkamp at carrick.mollenkamp@wsj.com, Dionne Searcey at dionne.searcey@wsj.com and Nathan Koppel at nathan.koppel@wsj.com

Printed in The Wall Street Journal, page A14

Posted by Silent Dogood JR on October 14, 2009 at 07:21 PM in Foreclosure News | Permalink | Comments (0) | TrackBack (0)

October 13, 2009

Professor Porter Does it Again: Ownership, Agency and Servicing Abuses in Bankruptcy Court

Posted on October 13, 2009 by livinglies

SEE Entire Article: porter While concentrating on Bankruptcy Court all of her points are instructive in all types of litigation.

“From external indicia, the claims process in consumer bankruptcy cases seems like an exemplar of a well-designed legal system that balances the interests of consumers and industry. The claims rules are unambiguous; all parties typically are represented; the process is uniform; the federal judicial system brings gravitas to the procedures; and specialized actors such as bankruptcy judges and trustees are present to police the system. Yet, despite these reassuring features, the empirical data show that many mortgagees fail to comply with applicable law. The data establish a widespread, current practice of filing incomplete claims with vaguely identified fees. This hinders any meaningful or effective scrutiny of whether mortgage companies are only charging the correct amounts to struggling homeowners. The structural incentives are insufficient to uphold bankruptcy’s potential as a home-saving device and to ensure the integrity of the bankruptcy system.

The problems with mortgagees’ calculations are likely to be even worse outside of bankruptcy, where the rules are less clear and the procedural safeguards are fewer. Systematic reform of the mortgage- servicing industry is needed to protect all homeowners—inside and outside of bankruptcy—from overreaching or illegal behavior. The findings on the unreliability of mortgage servicing are a high-stakes reminder of the challenges of designing a legal system that actually functions to protect
consumers.”

Posted by Silent Dogood JR on October 13, 2009 at 11:08 PM in Living Lies Weblog | Permalink | Comments (0) | TrackBack (0)

Why the SPV (TRUST) is NOT THE LENDER: Using MERS Against the Pretender Lenders

Posted on October 13, 2009 by livinglies

the use of nominees or straw men doesn’t mean they can be considered principals in the transaction anymore than your depository bank is a principal to a transaction in which you buy and pay for something with a check. The fact that the money was processed through your depository bank doesn’t make them party to the transaction.

In answer to the central question being asked let me first state the strategic error being made by lawyers and pro se litigants: you can’t prove what you don’t know and you will lose credibility if you make representations you cannot back up. You can make allegations based upon Google information or an expert witness affidavit but you must accompany it with an allegation that the pretender lenders won’t give you the detailed information required by law. Then they come in and try to pin you with the burden of proof saying that you can’t allege or prove the details of the transaction. They are right. You can’t provide that information because only they have it and they refuse to give it you.

Here is what you DO know:

Nearly all loans are securitized and your loan appears to be one of the loans that was securitized, which means that in a number of steps through intermediary conduits, the obligation either was transferred or was attempted to be transferred to what ultimately became a group of investors who funded the subject loan.

If you have an expert witness affidavit you have a witness who says that your loan was securitized.

A securitized loan by definition means that the lender is the person(s) or entity(ies) at the top of the securitization chain — i.e., the “investors” who purchased bonds that were mortgage backed securities.

Those investors meet the definition of lenders — they advanced cash with the expectation of getting it back with interest.

There are multiple stakeholders who purport to either had or have claims relating to the obligation, note or encumbrance. This creates a conflict, a cloud on title and doubt as to what to do with these people or entities that purport to have rights to enforce an obligation that was clearly funded by a real lender which was not themselves.

The identity of the lender(s) is being withheld on the basis of confidentiality or some other ruse or obstruction fabricated by the pretender lenders.

Federal Law (TILA, RESPA) requires the servicers to identify the lender, the name of a contact person at the lender, their address and phone number. They must supply the documents that show the identity of the lender. And the lender is responsible for providing a complete accounting of all transactions involving all funds paid and received by the Lender with respect to this obligation — from all sources.

Federal Law and local laws or rules require an effort be made to modify, restructure or settle competing claims on these securitized loans.

It is impossible to name the correct parties in litigation and impossible to comply with Federal Law without disclosure of the identity of the Lender.

Any entity that meets the definition of a lender or creditor appears to be absent from the proceedings.

So the pretender lenders have come back with a series of arguments as they move up the securitization chain. First they said it was MERS who was the lender. That clearly didn’t work because MERS lent nothing, collected nothing and never had anything to do with the cash involved in the transaction. Then they started with the servicers who essentially met with the same problem. Then got cute and produced either the actual note, a copy of the note or a forged note, or an assignment or a fabricated assignment from a party who at best had dubious rights to ownership of the loan to another party who had equally dubious rights, neither of whom parted with any cash to fund either the loan or the transfer of the obligation. Katherine Ann Porter and April Charney were early leaders in exposing this deficiency.

Now the pretender lenders have come up with the idea that the “Trust” is the owner of the loan and that the Trustee is the proper party to represent the Trust and that therefore the Trustee has the power to enforce the obligation, the note and the encumbrance (mortgage or deed of trust). They first tell us that although MERS was named as nominee only and was not the lender even though it was named the beneficiary or mortgagee. Then they tell us that the Trustee and the “Trust” even though it is just a nominee (just like MERS) is the sole owner of the loans and that the real parties in interest (i.e., the investors who were the source of the cash) somehow don’t count. They can’t have it both ways.

My answer is really simple. The lender/creditor is the one who advanced cash to the borrower. The money used by the homeowner at closing when the homeowner purchased the loan product from the originating seller (pretender lender, actually a mortgage broker unregulated and unregistered) came from the Lender (investor). Therefore the investor is the lender. And the use of nominees or straw men doesn’t mean they can be considered principals in the transaction anymore than your depository bank is a principal to a transaction in which you buy and pay for something with a check. The fact that the money was processed through your depository bank doesn’t make them party to the transaction.

The pretender lenders do not want you to “meet” your Lender(s) (investor(s)). If you do, and compare notes, they will know that they gave an excessive amount of money that wasn’t really used entirely to fund mortgages and that the loans were structured in pools that were guaranteed to fail providing the underwriter, not the investor, with a windfall from the trigger of credit default swaps. The obvious answer is that if you meet your Lender (investor), you can restructure the loan yourselves and then jointly go after the pretender lenders for all the money they received and didn’t disclose as “agent” or nominees for either the homeowner who purchased the financial product consisting of a loan product with a promissory note and an agreement for encumbrance nor the investor who purchased a financial product consisting of a bond, deriving its value from the note executed by the homeowner, but which was insufficient on its face to actually cover the amount invested by the investor.

You will probably find that the trust has been dissolved or that the distribution reports provided by the CDO manager for the underwriter (investment bank) tell a very different story than the one being represented in court. The SPV (Trust) is a REMIC which is a conduit that keeps nothing. It might have the documents as a nominee but that merely makes them a records custodian, since the Trust clearly has no right to keep the money. In fact in order to maintain its status as an entity that has no tax “events” it CAN’T actually own anything or have any income, losses, assets or liabilities. Ask for a copy of the the financial statements and ledgers for the Trust and watch them go nuts.

Posted by Silent Dogood JR on October 13, 2009 at 10:56 PM in Living Lies Weblog | Permalink | Comments (0) | TrackBack (0)

TOXIC TITLE: Cloud in Massachusetts: Getting Back Your Home AFTER Foreclosure Sale

Posted on October 13, 2009 by livinglies

Kathleen Engel, professor of law at Suffolk University, said the federal government should step in to help states deal with “toxic titles’’ that are clogging up the system from California to Florida. She said until recently few people were scrutinizing paperwork of foreclosing lenders, whose actions are causing problems for borrowers, investors, and municipalities. No matter how Long rules, she said, the problem isn’t going away.

Foreclosure sales in limbo over title issue

Expected ruling may complicate transactions

By Jenifer B. McKim, Globe Staff | October 9, 2009

A court decision expected as soon as today could negate the validity of sales of thousands of foreclosed homes in Massachusetts, causing havoc for buyers and sellers and further stalling the housing market’s recovery in hard-hit areas.

At issue is proof of ownership at the time of a foreclosure sale. During the housing boom, millions of mortgages were bundled into bonds and sold to investors, a process that resulted in lengthy and twisted paper trails that can obscure ownership. Many lenders believed they could complete foreclosure transactions and later produce formal proof they held the mortgage.

That changed in March when Justice Keith C. Long of Massachusetts Land Court found that two foreclosures in Springfield were invalid because ownership of the mortgages was not clear at the time of the foreclosures.

Long’s ruling, which came as a shock to many who deal with distressed properties, called into question the ownership of hundreds if not thousands of foreclosed homes in Massachusetts, prompting some lenders to delay sales out of fear they could later be voided, title companies to balk at insuring them, and nonprofits to steer away from certain foreclosed homes altogether.

“There are thousands and thousands of titles that have gone through foreclosures with these late filed’’ ownership records, said Lawrence Scofield, an attorney with Ablitt Law Offices in Woburn, who represented plaintiffs in three consolidated Springfield cases ruled on by Long. “Judge Long is saying you don’t really own it. That is the real, overwhelming, economic effect.’’

Two of the plaintiffs asked Long to reconsider the ruling, and a decision is imminent.

Among those watching the case are Boston city officials, who say they hope Long will clarify title issues for homes that have already gone into foreclosure. In the meantime, the judge’s actions have stymied the city’s effort to buy as many as 20 bank-owned properties, hurting much-needed redevelopment efforts in neighborhoods plagued by foreclosure, officials said.

“It has put some properties in the state of limbo,’’ said Evelyn Friedman, director of Boston’s Department of Neighborhood Development.

While title issues can affect any home sale, Long’s ruling addressed procedures required under foreclosure law and therefore only affects properties foreclosed on by a lender. His decision builds on a growing national movement among housing advocates, courts, and some lawmakers to push lenders dealing with foreclosed properties to produce accurate documentation before deals are consummated.

Kathleen Engel, professor of law at Suffolk University, said the federal government should step in to help states deal with “toxic titles’’ that are clogging up the system from California to Florida. She said until recently few people were scrutinizing paperwork of foreclosing lenders, whose actions are causing problems for borrowers, investors, and municipalities. No matter how Long rules, she said, the problem isn’t going away.

“The fundamental problem is the paperwork was really shoddy,’’ said Engel. “The mess was created by Wall Street.’’

Locally, the Massachusetts decision has pitted advocates trying to revive neighborhoods against others trying to help homeowners stave off foreclosures.

Gary Klein, a consumer law attorney who filed a friend of the court brief in the case, said the real estate system placed “expedience and convenience’’ before the law. Providing home buyers with a “full set of procedural protections,’’ he said, is more important than comforting lenders who ignored the law. He said the lending community created the mess and it needs to fix it.

Klein said there is a benefit to the ruling for homeowners in trouble: It is slowing the foreclosure process, allowing them more time to try to save their homes. Indeed, since March, the number of foreclosure deeds has slowed, according to Warren Group, a Boston company that provides real estate data.

“There are probably at least a thousand families who are getting at least some period of temporary delay while lenders go back and get a proper paper trail,’’ said Klein, an attorney with the Boston-based law firm Roddy, Klein and Ryan. “Slowing foreclosures down allows people to get loan modifications and other relief.’’

The Springfield lawsuit was filed not by homeowners seeking to regain their houses, but by the foreclosing lenders who were trying to remove a “cloud from the title’’ of properties created because of where the lenders chose to publish foreclosure auction notices. A secondary issue was whether the notices – which did not officially name the mortgage holders – complied with the law, and that is what Long is concerned about.

The Real Estate Bar Association for Massachusetts, a statewide group with 3,000 members, joined the plaintiff’s attorney to ask the court to reconsider its ruling. Attorney Christopher Pitt, chair of the group’s Title Standards Committee, said many banks already have changed their procedures as a result of the March decision and are now coming to foreclosure-sale closings with completed paperwork.

But that doesn’t help people who already bought a foreclosed property from a bank.

“If a property has one of those arguably defective foreclosures in its back title, right now you may not be able to refinance or sell it,’’ said Pitt, who works for the law firm Robinson & Cole, which has an office in Boston.

In Springfield, the ruling scuttled purchases of two foreclosed properties in depressed areas, said Rudy Perkins, a staff lawyer with HAPHousing, a nonprofit that promotes affordable housing. As a result, Perkins said, the agency now steers clear of properties with similar title questions.

“There is a danger that if this can’t be resolved, those properties will stay boarded up,’’ said Perkins. “It killed the deals and, unfortunately, it is going to kill deals on other properties.’’

In North Andover, real estate agent Linda Kody said some banks have moved to redo a foreclosure rather than wait for Long’s decision. Others are not moving forward with foreclosures. Twelve pending sales in her office have collapsed recently, Kody said, and another 25 bank-owned property listings are on hold as lenders wait for a ruling.

“It is very upsetting,’’ said Kody, president of the real estate firm Kody & Co. Inc.

Biju Kachappilly, a father of two, is one of the many hopeful buyers awaiting the decision. Kachappilly said his pending purchase of a four-bedroom, $400,000 Colonial in Tyngsborough in April fell through over questions about the title. He still hopes to buy the home, but in the meantime is paying higher rent on a month-to-month apartment in Billerica after notifying the landlord of his plans to move.

“We are trying to buy a house and move our family there; it is good for the neighborhood and it is good for the town,’’ said Kachappilly. “Many families and houses are in limbo because of this decision.’’

Jenifer McKim can be reached at jmckim@globe.com.

Posted by Silent Dogood JR on October 13, 2009 at 10:55 PM in Living Lies Weblog | Permalink | Comments (0) | TrackBack (0)

October 07, 2009

NEVADA BKR JUDGE KNOCKS MERS ON STANDING ON LIFT STAY MOTION

Posted on October 5, 2009 by livinglies

THANK YOU TO Deontos: This is regarding “Standing” to obtain “Relief from Stay”. Riegle concluded MERS lacks “standing”. Stay tuned on this ……. It might
really wreak havoc on the MERS menace in Nevada.

EXCERPTED CASE FILE:

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEVADA
* * * * * *
In re ) Case No. BK-S-07-16226-LBR
) Chapter 7
JOSHUA & STEPHANIE MITCHELL, )
)
Debtor(s). )
) DATE: August 19, 2008
) TIME: 3:30 p.m.
________________________________________ )

MEMORANDUM OPINION
Mortgage Electronic Recording Systems, Inc. (“MERS”) through various counsel has filed a number of motions to lift stay. Some of the motions were filed in the name of MERS, 1 while others have been filed in the name of MERS as the nominee for another entity. An order for joint briefing was entered because the substantially same issues were presented in the motions, and a joint hearing was held. Mitchell (#07-16226) has been designated as the lead case. The trustee or counsel for the debtor in these cases has opposed the lift-stay motions on the grounds of standing and that MERS is not the real party in interest.

The initial response filed by MERS contained no evidentiary support. Rather it described the role of MERS and its members by relying on law review articles and the recitation of facts in other cases in other districts involving MERS. Prior to the initial argument, MERS attempted to withdraw the motions filed in all but four of the cases. MERS then filed a declaration at the court’s direction explaining why the motions were withdrawn. The declaration of William Hultman was filed in Dart. The declaration, in addition to explaining MERS’ rationale for 3 withdrawing the motions, also attached as exhibits copies of the MERS Membership Application, the MERSCorp. Inc. Rules of Membership, the MERS Procedural Manual, and the MERS Terms and Conditions of Membership. The court also requested appropriate evidentiary 4 support for the allegations concerning the relationship between MERS and the entities for whom the motions were brought. A supplemental declaration was filed in Michell, the lead case.5 As noted, MERS has attempted to withdraw all but four of its original motions, leaving only Dart (#08-11007), Hawkins (#07-13593), Ramirez-Furiati (#08-10427), and Zeigler (#08- 10718). MERS admits that it failed to follow its own procedures in the motions it wants to withdraw. The debtor, the chapter 13 trustee, and MERS subsequently stipulated to a lift of stay 6 in Ramirez-Furiati which the court approved with the acknowledgment that the order contained no finding about MERS’ standing. This court will discuss the issues raised in the motions that MERS attempts to withdraw, and by this order issues its ruling in Dart and Hawkins, which are 8 the two cases that are now pending before it. 9

The court has advised the parties that it would consider any information contained on the MERS website at http://www.mersinc.org/ unless an objection was made. No objection has been filed by either party. The court thus takes judicial notice of the contents of the MERS website. …………………………..

CONCLUSION
The lift-stay motions in Dart and Hawkins are denied. MERS may not enforce the
notes as the alleged beneficiary. While MERS may have standing to prosecute the motion in the name of its Member as a nominee, there is no evidence that the named nominee is entitled to enforce the note or that MERS is the agent of the note’s holder. Indeed, the evidence is to the contrary, the note has been sold, and the named nominee no longer has any interest in the note.

IT IS SO ORDERED.
Motion

full file:
http://www.nvb.uscourts.gov/Opinions/Riegle/07-16226%20Opinion.pdf

8 Responses

maineloanmodifications, on October 6th, 2009 at 10:17 am Said:

A simple strategy is to claim the Assignments are clear Fraud, based on their lack of any Power of Attorney, any MERS AVP or other agent is an employee of some other company.

For example, Carrie A Hoover, who is known to sign as a MERS AVP, is a Countrywide employee.

Challenge any BOA loan, you cannot simply absorb a company in an all stock transaction and claim to have Lawful Consideration in exchange for the Endorsement of a Promissory Note. That’s bogus, insulting to the Court, but you must call out the Fraud and invoke the Judge’s rage. If you wait for the Judge to call out the Fraud, you will be waiting for a White Knight, like Judge Shack…only one Angel in the evil world of Justice.
Juli, on October 5th, 2009 at 11:20 pm Said:

zurenarrh,
I’m telling you, as simple as it soungs, check all your dates, look at all the minor details, they may lead somewhere big.

is your case posted anywhere?

It’s almost like there must be some really big secret about MERS, I mean the soap opera comes way over the line of unbelievable.
zurenarrh, on October 5th, 2009 at 7:30 pm Said:

bt,
While I believe my TRO complaint was well-written and should have been granted on its merits, I don’t believe that its merits were what got us the TRO. I think it’s more like what Neil has said here on the site: “A good lawyer knows the law and a great lawyer knows the judge.”

That said, I’ll share the gist of the complaint with you…

1) We named Bank of America, FSB, Bank of America Home Loans Servicing, and Recontrust as Defendants. We did not include MERS as Defendants even though they fraudulently assigned our Deed of Trust “together with the Note” to BAC Home Loans.

2) We made sure to point out that all the Defendants were/are foreign corporations not licensed to do business in our state with no officers on record to receive service of process.

3) We then merely recounted our story, starting with the purchase of our house and subsequent refinance which brought us into contact with the Defendants. We described the multiple instances of their unscrupulous behavior.

4) We then explained how we came to be “in default.”

5) We then described our attempts at short sale and modification (which we attempted before we–as Neil says– “got it”) and the bad faith handling of those matters by the Defendants.

6) Then we pointed out how none of the Defendants had any interest in the Deed of Trust or the Note because we knew that the Note had been sold to Fannie Mae (confirmed via the Fannie Mae online “Loan Lookup Tool”).

7) We pointed out how no public assignments had been recorded of any sales of the Note/Deed of Trust. We pointed out that, according to the language of the Deed, the Note must be sold “together with the Deed of Trust,” which was not done. The complaint summarizes this state of affairs thusly:
“However, on information and belief, there has been a severance of ownership and possession of the Note and Deed of Trust, but the chain of transfer, sale or assignment of each is not made available in the public domain and is currently unknown to Plaintiff.”

We then alleged that there was no “meeting of the minds” due to the sudden change of terms at closing. We alleged that the Defendants have “unclean hands.” As a result, we pointed out that the Note/Deed are unenforceable. We pointed out that none of the Defendants were/are the holder in due course and therefore have no right to enforce the Note/Deed.

9) We said the following:

“Plaintiffs demand an accounting of all credits and debits to the account and documentation to support each, including money received by Defendants from any and all sources.”

10) We then asked for the TRO.

Hope that helps. The Defendants sent a “Notice of Removal” to federal court. We just filed a motion to remand to state court. We’re now awaiting the decision on that motion.
Deontos, on October 5th, 2009 at 3:36 pm Said:

bt

I say never underestimate your Adversaries brilliance or STUPIDITY.
Me? I think MERS will soldier ON, where they can, while they can, because they CAN. When 80%+ people are not fighting for at least their
“own day in court”, then MERS just gets to STEAMROLL right to the goal. Until an AG stops them or a class action stymies them; “you’re on your own”! OK I’ll stop {{{RANTING}}}
bt, on October 5th, 2009 at 2:59 pm Said:

Could you expand more about what these two Supreme Court rulings mean to a few things; 1) it seems obvious MERS will not try to foreclose in its name 2) what about foreclosure suits where MERS was used to transfer the securtized loans and the suit is being brought by a Trustee for the MBO 3) What about foreclosures where MERS is a Defendant with the borrower on the loan in foreclosure.
bt, on October 5th, 2009 at 11:56 am Said:

zurenarrh- anyway to get a copy of your TRO, i just had mine dismissed and am trying again when the bank resets the sale date again. thanks
zurenarrh, on October 5th, 2009 at 11:01 am Said:

The Nevada court said:
“…there is no evidence that the named nominee is entitled to enforce the note or that MERS is the agent of the note’s holder…Indeed, the evidence is to the contrary, the note has been sold, and the named nominee no longer has any interest in the note.”

We made this very point in my successful TRO in the following language:

“Any assignment from the original beneficiary of the deed of trust is invalid as the original holder, Countrywide, no longer holds the Note. Further, the beneficiary was never a holder in due course and lacks any authority to assign any interest or to empower Recontrust to foreclose.”
Marcus, on October 5th, 2009 at 9:27 am Said:

The house of card is starting to crumble. The day of reckoning is approching.

marcus @ foreclosureProSe.com

Posted by Silent Dogood JR on October 07, 2009 at 05:31 PM in Living Lies Weblog | Permalink | Comments (1) | TrackBack (0)

Banks Ready to File Suit Against Short-Sellers

Posted on October 6, 2009 by livinglies

editor’s note: This is part of what we have been talking about. years down the road these bankers are looking to sue borrowers for deficiencies after people recover from the disaster the bankers caused. Also set to explode in a few years are title defects that are incurable resulting from the securitization of loans and incorrect parties bringing foreclosure actions and taking title while the Lender sits blithely unaware that his rights are being twittered away.

Banks Threaten Lawsuits Against Short Sales

Updated: Oct 05, 2009 4:25 PM

Banks Threaten Lawsuits Against Short Sales

There’s a new warning out for struggling homeowners who think a short sale is their way out of a foreclosure. Big name banks like Bank of America, Citibank, and Wells Fargo are threatening to come after those who sell their homes through short sales years later once their credit is restored.

Realtors say banks threatening to do this are causing some fear, but homeowners have no other options but to turn to short sales over foreclosure. Remember that bail out money these banks were given? Realtors say if banks do go after people, that bail out money should be given back to the government.

Realtor Tammy Truong started in the short sale market two years ago when she noticed home owners were desperate and didn’t consider foreclosure as an option. “They’re confused and don’t know what to do. They want to do the right thing and they don’t want to walk away and foreclose,” she said.

But short sales are now being threatened by banks. “They are pushing out the short sale process for as long as possible and looking for new avenues to try and sue people after a short sale is completed,” said Realtor Justin Chang.

Chang says at a recent realtors meeting, big name banks were on hand and made it clear they had no problem with going after homeowners who short sell years from now as they attempt to improve their credit. “In a meeting with a lot of bank officials who came out here, they came out here and said we are able to track for up to six years peoples credit, so if they do get back on track and are able to purchase again and employment comes back, that’s when they’ll try to tag them and sue them for the difference,” he said.

Both Truong and Chang say banks were given millions in bailout money to help them survive and help the crippling housing market. Going after owners who complete short sales was not part of the plan. “If they go back after all these people, I feel they should give back all the bailout money,” said Truong.

Realtors are turning to Nevada’s Congressional Delegations, hoping to get them involved in this and stop these banks before anyone is sued years from now.

8 Responses

stopgovtwaste, on October 7th, 2009 at 2:15 pm Said:

It is ironic that ‘we the people’ are some of the most manipulated on earth. It is equally odd that even though we ‘think’ we’re part of the greatest democracy the world has ever known – we do not actually participate in a democracy at all; nor do we recognize one when we see it. These facts attest to how thoroughly the ‘American people’ have been propagandized by corporate media and govt.’talking heads’. Americans are slaves to a system that preys upon them and turns around and tells them how well they are treated.
John George, on October 7th, 2009 at 5:13 am Said:

Pardon my ignorance or lack of coffee – but, am I missing something?

In a short sale, the mortgage holder (actual or pretender) issues a Discharge of Mortgage (and records it) and will return the Note marked “PAID” (hopefully). This happened in my short sale.

What basis does any entity have to sue on deficiency after that? (And yes, I did receive a Form 1099-C)
Charlie A., on October 6th, 2009 at 11:12 pm Said:

On the other hand my opinion is that the bankers/thieves/pretender lenders are trying to pull a fast one to get people scared, they want to use that as distraction so that people simply let go of their homes to land right on the thieves’ hands as foreclosures so that they can keep making millions of money and making millions homeless, it is a psychological move on their part to keep us looking the other way while they steal our homes, we all know what they want and what they will do to get it, it’s not secret folks. Let’s keep on moving forward having Neil as our guide, let’s follow the master’s steps and save whatever we have left, i am not even sure if many of these lenders/thieves will still be around many years from now after we Americans clean their clock, you see guys and gals it’s not even close to being over, the worse is yet to come, perhaps for both parts, the good and the bad guys but at the end we will raise our hands in victory as they march into the dark with their heads down in shame.
To victory America!!!!
Charlie A., on October 6th, 2009 at 10:58 pm Said:

to JL Semidey: based on your comments i feel lots of resentment in you, but i am not quiet sure for what, however i have a feeling you are using a double edge sword with sharpest edge towards yourself, here is why: first you acknowledge being a real estate agent for 15 years, then you acknowledge having had (allegedly) 120 short sale listings and having sold 3 out of 120 (pretty pathetic), and by admitting to the previous you are also admitting that you came out off of those three sales you had “with several thousand dollars in commission” and didn’t care about the other 117 people; in fact i think that you thoughts at that very particular moment must’ve been: ” who cares” I “made my money”, as for the very last paragraph “so if you are trying to sell your homes in short sales, think about who is making the money and get out of it” , i think that it should really say the following: **so if you are trying to sell your homes in a short sale, make sure you don’t even come close to JL Semidey, because chances are he will NOT get the job done! think about who is not making the money and sounding biter now** . I wonder if you ever told your clients your very own words above “get out of it. Fight for your home, it is worth it. Do not give up” i seriously doubt you did so, but instead you were probably doing what any other RE agent is doing out there today, or like the agent I used did. in short all i can say is that your bitterness is clear as water to me now.
John Woodward, on October 6th, 2009 at 7:40 pm Said:

I have said this for a couple of years, those “accounts” are being tossed into the “to be delt with later” pile. If they don’t go after the homeowners, they can sell the receivable to a collection agency. Folks that thought they had solved the problem in many cases, have solved nothing. This is not right on the banks part.

If the bank sends them a 1099 for the loss, then they are in the clear. They can’t write it off and go after them. If there is no 1099 issued to the homeowner after the sale, bet you will hear from them somewhere down the road… perhaps the best advise is to explore how to become judgement proof. Bankruptcy will wipe it out and the best time to do it is when things are there worst for the homeowner.

Also, while this applies to short sellers, the same is true of those homes foreclosed on. There really is no easy way out of this.

I just can’t believe these bankers are even American citizens…
JLSemidey, on October 6th, 2009 at 7:21 pm Said:

What a sad state of affairs. In the year 2007 I had over 120 short sale listings,, the servicers at the time were refusing as they still are doing to give up the name of the interested parties, what kind of a resolution is a short sale if out of 100 listings only 3 get approved.

As a former real estate agent for over 15 years, I feel sad about the NAR and their minions upselling a recovery that does not exist to prop up a business that they helped to kill.

I will tell you why Real Estate agents still use the insanity model for their marketing. They know their efforts a futile, how ever if they list 100 homes for short sale and only sell thee a month, and I am being very generous in my math, they come out on top with several thousand dollars in commissions, and in their ever mindset if the other 97 lose their homes who cares, they made their money.

So if you are trying to sell your homes in short sales, think about who is making the money and you get out of it. Fight for your home, it is worth it. Do not give up.
Kara, on October 6th, 2009 at 1:50 pm Said:

This disgusts me…how much more blood do they want?
Zarepheth, on October 6th, 2009 at 12:48 pm Said:

I think the banks which do this should not only return every penny of bailout money they’ve not already returned – but then those banks should have every customer’s outstanding loans forgiven and wiped off the books. The banks, their major shareholders, directors, and senior executives should have their assets auctioned to the highest bidder with the bank, its competitors, its directors, major shareholders, and senior executives prohibited from purchasing. The proceeds of the auctions should then compensate the victims of the banks evil and anything else should be divided amongst the whole nation (except the above excluded people).

Posted by Silent Dogood JR on October 07, 2009 at 05:26 PM in Living Lies Weblog | Permalink | Comments (0) | TrackBack (0)

United States is a stockholder of MERS

Posted on October 6, 2009 by livinglies

FYI – Fannie Mae and Freddie Mac became owned by and part of the United States on September 6, 2008 when FHA took them over. Consider the implications to any cause of action(s), constitutional or otherwise, and defenses, if the United States is a stock holder of MERS. In professor Christopher Peterson’s work entitled “FORECLOSURE, SUBPRIME MORTGAGE LENDING, AND THE MORTGAGE ELECTRONIC REGISTRATION SYSTEM” at page 11 he stated:

“Two years after releasing the initial white paper, MERS, Inc. incorporated in Delaware as a non-stock corporation owned by mortgage banking companies that made initial capital contributions ranging from $10,000 to $1,000,000. (fn 61) [Editor's Note: Maybe Borrowers and Investors ought to get together and do the same thing in reverse]

Foot Note 61 states: The charter members of MERS, Inc. were: 1st Nationwide Mortgage; Allied Group Mortgage, Inc.; American Home Funding; American Land Title Association; Crestar Mortgage Corp.; Fannie Mae; Freddie Mac; GE Capital Mortgage Services, Inc.; GMAC Residential Funding Corp.; HomeSide Lending, Inc.; Knutson Mortgage Corp; Lau Capital Funding; Merrill Lynch Credit Corp; Mortgage Bankers Association of America; Mortgage Guaranty Insurance Corp.; Northwest Mortgage, Inc.; ReliaStar Mortgage Corp.; Source One Mortgage Services Corp.; Texas Commerce Bank, NA; Chase Manhattan Mortgage; and, Weyerhaeuser Mortgage Company. Id. Mortgage Electronic Registration Systems, Inc. is actually a wholly owned subsidiary of MERSCORP, Inc. The dual structure of the company was designed to prevent creditors of MERSCORP from attempting to seize loans recorded in the Mortgage Electronic Registration Systems, Inc.’s name in the event that MERSCORP, Inc. declares bankruptcy. Mullen, supra note X, at 62.

George Gingo, Esquire
Foreclosure Defense Attorneys, P.A.
150 Cocoa Isles Blvd., Ste. 404
Cocoa Beach, FL 32931
Office: (321) 784-8158
Fax: (321) 784-8159

7 Responses

ny, on October 7th, 2009 at 11:20 am Said:

New REMIC Rules May Provide More Room To Modify Commercial Real Estate Loans
Distressed Real Estate and Tax Alert

by Thomas J. Lyden, David H. Jones, Anthony J. Barwick . October 5, 2009

The Internal Revenue Service (the IRS) recently released two pieces of guidance concerning the types of modifications that can be undertaken with respect to commercial mortgage loans held by a REMIC without jeopardizing its status as a REMIC or otherwise subjecting the REMIC to adverse tax consequences. The guidance provides a measure of clarity on issues confronted by mortgagors, REMICs that issue commercial mortgage-backed securities (CMBS), and investors that hold CMBS.

First, the IRS released final regulations that now permit a REMIC to change the collateral for, the guarantees on, and the credit enhancement for mortgage loan held by a REMIC or to change the recourse or non-recourse nature of a mortgage loan without jeopardizing REMIC status. The regulations also outline the circumstances in which a REMIC is allowed to release a lien on real property securing a mortgage obligation held by the REMIC without causing the mortgage obligation to cease to be a permitted asset in the hands of the REMIC.

Second, in Revenue Procedure 2009-45, the IRS describes certain situations in which it will not challenge the tax status of a REMIC due to the REMIC’s modification of a commercial mortgage loan that is currently a performing mortgage loan but where, in the view of the mortgage loan servicer, a significant risk of default exists, even if the default is expected to occur only at some distant future date. Under existing rules, a reasonably foreseeable risk of default must exist before a REMIC can modify a loan without incurring adverse tax consequences.

Industry sources report that more than $150 billion of loans held by REMICs and other CMBS issuers will come due between now and 2012. Year to date, reports indicate that 528 such loans valued at $4.7 billion were not refinanced at their maturities even though about 75% of these loans were secured by commercial real estate generating sufficient cash to service the debt. Because financing remains scarce and commercial property values continue to decline, evidence indicates that “maturity defaults” for commercial properties with little or no amortization during the loan term will continue to be a widespread problem, further constraining the capital markets and depressing property values. The recently released guidance provides servicers more flexibility to negotiate loan workouts that are in line with workouts available to traditional bank borrowers and should to some extent remove at least one tax impediment to a successful recovery in the commercial real estate markets.

A. The Regulations
Under general tax principles applicable to all debt instruments, including mortgage loans held by a REMIC, a significant modification of a mortgage loan is treated as a debt-for-debt exchange in which the debtor is considered to have issued a new debt instrument to the holder in exchange for the existing unmodified debt instrument. Generally, if a mortgage loan is acquired by a REMIC other than during a limited three month start-up period or in certain other limited circumstances, it will not be considered a “qualified mortgage” in the REMIC’s hands and will be considered to be a non-permitted asset. Put another way, a significant modification of a mortgage loan held by a REMIC is treated as an exchange of the unmodified loan for the modified loan (a debt-for-debt exchange), and if this modification happens after the start-up period, this debt-for-debt exchange would be treated as an acquisition of a new mortgage loan, and therefore, a non-permitted asset. A REMIC is subject to a tax at a rate of 100% on any income from a non-permitted asset and if more than a de minimis amount of a REMIC’s assets are non-permitted assets, it will lose its status as a REMIC. If such a result were to occur, the REMIC could become taxable as a corporation. Existing regulations provide that certain loan modifications, although treated as significant modifications under general tax principles, will not cause the modified mortgage loan to be treated as other than a qualified mortgage. In particular, the existing regulations provide that any modification of a qualified mortgage occasioned by default or a reasonably foreseeable default will not cause the modified mortgage loan to cease to be a qualified mortgage. The recently released regulations expand the list of permissible modifications.

Specifically, a servicer on behalf of a REMIC may undertake the following modifications without causing the modified mortgage loan to lose its status as a qualified mortgage:

* A modification that releases, substitutes, adds, or otherwise alters a substantial amount of the collateral for, a guarantee on, or other form of credit enhancement for a recourse or non-recourse obligation; and
* A change in the recourse nature of a mortgage loan from recourse (or substantially all recourse) to non-recourse (or substantially non-recourse) or vice versa.

Contrary to recommendations made by several commentators on earlier proposed regulations, the final regulations contain a retesting requirement under which a modification described in either of the two bullet points listed above will be a permitted modification only if, following the modification, the modified loan continues to meet a “principally secured” test.

The regulations also clarify that a release of a lien on real property collateral securing a mortgage that would not be a significant modification under general tax principles (such as a substitution of collateral under a unilateral right given to the mortgagor under the terms of the mortgage loan) will be permitted as long as the mortgage loan continues to be principally secured by an interest in real property after giving effect to any releases, substitutions, additions or other alterations to the collateral. Thus, any change to a mortgage loan that involves a lien release, even if it is in connection with a modification permitted under the “default or reasonably foreseeable default” standard of the existing regulations, will require a retesting following the release.

Generally, a mortgage loan will be a qualified mortgage only if it is principally secured by an interest in real property at the time it is contributed to the REMIC. Existing regulations provide that a mortgage loan will be considered to be “principally secured” if the REMIC sponsor (generally, the person who forms the REMIC) reasonably believes that the fair market value of the interest in real property securing the mortgage equals at least 80-percent of the mortgage’s adjusted issue price (the “80% test”) either at the time the obligation is originated or at the time it is contributed to the REMIC (in other words, the mortgage loan can have no greater than a 125% LTV). No post contribution testing was required under existing regulations.

The recently released regulations, however, provide that in the case of a modification of the type described in the two bullet points above, or in connection with any lien release (other than in a defeasance transaction where treasury securities are posted as collateral and other requirements are met), the collateral value of the obligation will need to be re-tested in order to satisfy the “principally secured” requirement. Consequently, the fair market value of the modified mortgage real property collateral must at least equal 80% of the adjusted issue price of the modified mortgage loan immediately after the modification. This standard will be difficult to satisfy if the value of the property has decreased significantly from the date of origination to the date of modification, which is precisely what one would expect when dealing with a distressed mortgage loan.

In response to comments received with respect to earlier proposed regulations, and in view of how difficult it would likely be to satisfy the 80% test, the recently released regulations provide for an alternative method for determining compliance with the “principally secured” retesting requirement. Under the alternative test, a modified loan will be principally secured if the fair market value of the interest in real property that secures the mortgage loan immediately after the modification equals or exceeds the fair market value of the interest in real property that secured the mortgage loan immediately before the modification.

The principally secured tests may be difficult to satisfy even if the lien release is accompanied by a contemporaneous partial prepayment if the overall value of the real property securing the mortgage loan has declined.

For example, assume a REMIC owns a mortgage loan that it acquired at a time when its unpaid principal balance and its adjusted issue price was $80 and that this loan was secured by two parcels of commercial real property, one having a value of $90 and one having a value of $5. Now assume that in connection with a reasonably foreseeable default, the REMIC agrees to modify the loan. Assume that immediately before the modification, the adjusted issue price of the loan was still $80 but that the fair market value of the first parcel of property had declined to $60 and the fair market value of the second parcel had declined to $2. If the modification consisted solely of a deferral of payments or a reduction in interest rate, no retesting would be required.

Assume, however, that in connection with the modification, the REMIC releases its lien on the second property for a prepayment of $2. In this case, retesting is now required and the modified loan would not satisfy either of the tests. The ratio of the fair market value of the real property, now $60, to the adjusted issue price of the loan, now $78 ($80 reduced by the $2 prepayment), would be less than 80%. Moreover, the alternative test would not be satisfied because the fair market value of the real property securing the loan immediately before the modification would be $62 and immediately after the modification it would only be $60. The IRS has been made aware of the difficulty presented in satisfying the tests in these circumstances but it remains to be seen whether the IRS will take further steps to make the rules more workable.

The final regulations improve upon the previously issued proposed regulations in that they do not require an appraisal for purposes of demonstrating compliance with the principally secured requirement under either of the above-described tests. Under the final regulations, if a servicer reasonably believes that a modified mortgage loan satisfies the principally secured requirement under either of the above-described tests, the modified loan will be considered to satisfy the principally secured requirement. A servicer can base such a reasonable belief on: (i) a current appraisal by an independent appraiser; (ii) an original appraisal undertaken in connection with the origination of the mortgage loan, updated as appropriate for any changes that might affect the value of the real property; or (iii) some other commercially reasonable valuation method. In spite of this increased flexibility, many servicers may be reluctant to proceed without a new appraisal.

The recently released regulations are effective for modifications and lien releases occurring after September 15, 2009.

B. Rev. Proc. 2009-45
Revenue Procedure 2009-45 provides that the IRS will not challenge the tax status of any REMIC or any non-REMIC investment trust and will not treat the modification of a commercial mortgage by a REMIC as a prohibited transaction if:

* The servicer reasonably believes that there is a significant risk of default on the un-modified mortgage loan upon the maturity of that mortgage loan or at an earlier date; and
* The servicer reasonably believes that the modified loan presents a substantially reduced risk of default, as compared to the un-modified mortgage loan.

For purposes of the revenue procedure, a commercial mortgage loan is any loan other than a one-to-four family residential mortgage loan.

A servicer’s “reasonable belief” that a significant risk of default exists must be based on a diligent contemporaneous determination of that risk, which may take into account credible written factual representations made by the mortgagor if the servicer has no reason to know that such representation is false. The revenue procedure specifies that a mortgage loan may be currently performing in accordance with its terms and still present a significant risk of default, and the fact that such default may not occur until some time in the distant future does not, in and of itself, negate a reasonable belief that such default will be likely. The revenue procedure provides that risk of default a year of more in the future may support a reasonable belief.

In short, in the case of commercial mortgage loans, the revenue procedure puts a gloss on the standard set out in the existing regulations that permit a REMIC to modify a mortgage loan without adverse tax consequences so long as default is reasonably foreseeable with respect to the mortgage loan. In effect, the revenue procedure provides that default can be reasonably foreseeable even if a loan is performing and even if the foreseeable default event lies in the distant future.

By its terms, the revenue procedure applies only to REMICs (and non-REMIC investment trusts) that were formed to hold pools of performing commercial mortgage loans. Specifically, for the revenue procedure safe harbor to apply, no more than 10% of the pool of loans (by unpaid principal balance) could have been more than 30 days or more delinquent at the inception of the REMIC or non-REMIC investment trust. It should be noted, however, that the revenue procedure provides a safe harbor, not a bright line test. Thus, for example, a REMIC that did not satisfy the startup-day delinquency test would not qualify for the safe harbor, but it could undertake loan modifications of the type described in the revenue procedure without automatically violating standards set out in the regulations for loan modifications.

Conclusion
The two pieces of guidance discussed above are of some help in dealing with the refinancing crisis facing the commercial real estate sector and should provide servicers with useful tools to assist the workout process in advance of an imminent default scenario. These changes remove a significant disincentive for the revision of commercial mortgages otherwise performing but at significant risk of default upon maturity. Making the servicer a more active participant in the pre-default process and accelerating discussions among all stakeholders will undoubtedly result in tensions among these parties. Servicers will be further required to quickly decide ahead of a default what will be in the best interest of the CMBS holders and which borrowers are basically sound and which loans it makes more sense to foreclose quickly.

While some of the adverse tax consequences for doing so have been removed by the recent guidance, it remains to be seen to what extent servicers will otherwise be empowered to navigate the myriad interests of the bondholders and other participants in the REMIC structure in a pre-default scenario. In many instances the pooling and servicing agreements will limit the servicer’s options for permissible loan modifications. Typically, absent a default or foreclosed property scenario, any powers of amendment vested in the servicer are limited to those that are ministerial in nature and the servicer does not have the ability to otherwise deal with the loan obligations constituting the trust property of the REMIC. As such, the servicer will not likely act on its ability to enter into one of the expanded permitted list of loan modifications without added comfort from the holders of the interests in the REMIC insuring the servicer that such modification is permissible or will not otherwise violate the terms of its pooling and servicing agreement with the holders.

If you have questions with respect to any of the foregoing, please contact the authors of this Alert.

Contacts:
Thomas J. Lyden, +1.202.778.9449, tom.lyden@klgates.com
David H. Jones, +1.704.331.7481, david.jones@klgates.com
Anthony J. Barwick, +1.919.743.7340, tony.barwick@klgates.com

This publication/newsletter is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer.
twebster321, on October 7th, 2009 at 6:01 am Said:

Exposing the 21st Century Banksters
-from the research staff at Accountable America
September 16, 2009

After the 1929 stock market crash, President Franklin Delano Roosevelt appointed Ferdinand Pecora to investigate the cause. Pecora’s investigation took on the powerful ‘banksters,’ the corrupt financial titans of his day, and revealed widespread fraud and abuse. His investigations ushered in sweeping regulatory changes.

Today, a Financial Truth Commission led by Phil Angelides is beginning to look into the fraud and abuse that helped usher in the worst financial crisis since the Great Depression. Their first public meeting is scheduled for tomorrow.

Seventy years ago,Pecora outlined Angelides’ challenge:

Above all, Pecora understood the power of public outrage.

“Pecora’s success was his ability to crystallize the anger that a lot of Americans were feeling toward Wall Street,” said Michael Perino, a law professor at St. John’s University and author of an upcoming book about the hearings. “He was able to create a clamor for reform.”

But Pecora also realized that such clamor was fleeting.

In his 1939 book, “Wall Street Under Oath,” Pecora wrote, “The public is sometimes forgetful.” As memories of the stock market crash faded, he warned, Americans “may lend at least one ear to the persuasive voices of The Street subtly pleading for a return to the ‘good old times.’ ”

Reflecting on his investigation, Pecora recalled how “the captains of Wall Street, still within the shadow of panic and depression,” had seemed at first eager to submit to oversight. But it didn’t last.

“The more business recovered, however, and the stronger it felt, the more openly and bitterly did Wall Street oppose any sound program of reform,” he wrote.

That’s what current advocates of regulatory change fear.

Wall Street wants us to forget the pain the financial collapse caused because they know that outrage begets reform. They don’t want to see the system reformed because they don’t want to be held accountable.

But, the truth is, the current system failed us. It brought job losses and financial heartache to millions of Americans. Wall Street’s abuse is responsible, but, so to is the regulatory framework that is supposed to keep abuse in check.

It’s time to hold the masterminds of the economic collapse responsible. It’s time to reform the system so that it doesn’t happen again. As Ferdinand Pecora did in his day, it’s up to the Financial Truth Commission to expose the rampant abuse of the corrupt and arrogant 21st century ‘banksters’ that continue to stand in the way of real reform.
MortgageProf, on October 7th, 2009 at 2:45 am Said:

See MERS page at http://en.wikipedia.org/wiki/MERS
John Anderson, on October 6th, 2009 at 11:03 pm Said:

The more complicated a transaction the more likely there is fraud.

Why is the NAFTA agreement ” Free Trade” the size of a phone book?

Crooks/Banksters abound, and all we can do is pray that the judiciary has not gone the way of the legislative, and perhaps the executive branch of our government.

Rule of Law, is what we seek.
Charlie A., on October 6th, 2009 at 10:26 pm Said:

Ladies and Gentlemen, please fasten your seatbelts, the (*&^^^*() it’s about to hit the fan!!! make sure you wear a hat just in case. The evil plan it’s unwinding itself and it’s way of doing so many,many many will fall victims, but wait most of those victims are wearing a “perpetrator” hat today, it’ll be sweet to see them marching down to the slaughter house in tears, while many of us leak our wounds and get back on our feet. The evil machine it’s loosing it power, perhaps they should have made it a hybrid machine!!
JLSemidey, on October 6th, 2009 at 7:33 pm Said:

stock holders in more ways than one
ALAN BARON, on October 6th, 2009 at 3:44 pm Said:

”Oh what a tangled web we weave when first we practice to deceive”

Posted by Silent Dogood JR on October 07, 2009 at 05:25 PM in Living Lies Weblog | Permalink | Comments (0) | TrackBack (0)

October 02, 2009

Mortgage Electronic Registration Systems Loses Legal Shield

By Barry Ritholtz - September 23rd, 2009, 6:47AM

Back in April, we mentioned the The Mortgage Netherworld of MERS — the Mortgage Electronic Registration Systems.

MERS is the firm that (technically) holds 60 million US (securitized) mortgages on behalf of the actual buyers. They were created by a consortium of lenders in part to save money (on paperwork and recording fees) every time a loan changes owners. In the era of securitization, these savings amounted to billions of dollars.

But MERS also acts as a shield, making it all but impossible for many borrowers to deal directly with whoever happens to be holding their mortgage at the moment. As the NYT noted, it has “made life maddeningly difficult for some troubled homeowners.”

Now, the Kansas Court of Appeals has called foul. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. (Other than GlobalResearch.ca, I have yet to see any MSM coverage of the issue). The Court stated that MERS’ relationship is not that of a true party possessing all the rights given a buyer. Hence, the court ruled:

“By statute, assignment of the mortgage carries with it the assignment of the debt. . . . Indeed, in the event that a mortgage loan somehow separates interests of the note and the deed of trust, with the deed of trust lying with some independent entity, the mortgage may become unenforceable. The practical effect of splitting the deed of trust from the promissory note is to make it impossible for the holder of the note to foreclose, unless the holder of the deed of trust is the agent of the holder of the note. Without the agency relationship, the person holding only the note lacks the power to foreclose in the event of default. The person holding only the deed of trust will never experience default because only the holder of the note is entitled to payment of the underlying obligation. The mortgage loan becomes ineffectual when the note holder did not also hold the deed of trust.” (emphasis added).

What does this mean for the 60 million people — over half of all US mortgages — whose loans have been securitized, sliced and diced, and are now held by MERS?

To start, it potentially gives a powerful weapon to homeowners who are being foreclosed upon. If their mortgage is held by MERS, they certainly have a strong basis for challenging the action on the grounds of standing. (Note that this was a Kansas COURT OF APPEALS decision, and while it is not binding on other states the way a US Supreme court ruling would be, it is likely to be influential). I also think the Kansas Court of Appeals could also review this case

I don’t quite agree with Ellen Brown, who in an extensive legal analysis of the decision, writes: “The significance of the holding is that if MERS has no standing to foreclose, then nobody has standing to foreclose.” It may be possible for trustees for the securitized loans to somehow perfect standing, i.e., develop the ability to claim loan ownership (perhaps via a purchase) and then move to foreclose. (Brown also calls it a Kansas Supreme Court decision, but it appears to be the intermediate 3 judge panel of the Court of Appeals that heard the case, not the full Kansas Supreme Court).

But Brown is correct when she states this is a very significant legal development, one that might dramatically impact foreclosure litigation.

This ruling could send the lenders who work with MERS scurrying to resolve this in their favor. Look for a lobbying effort to get some favored congresscritter to pass legislation granting them standing to sue on behalf of loan holders (Congress may be able legislate that legal right, although there are state laws to be contended with).

As foreclosures continue to ramp up, I expect a lot of rhetoric about why we need to stop them (I disagree) and modify mortgages (which have been mostly unsuccessful).

Last, you never know what someother state supreme court might rule. (Any lawyers out there know what is on upcoming dockets involving MERS ?)

Bottom line: It just got a lot harder to foreclose on homes with securitized mortgages in Kansas, and quite probably, the rest of the nation.

Previously:
The Mortgage Netherworld (April 2009)
http://www.ritholtz.com/blog/2009/04/the-mortgage-netherworld

Sources:
Landmark National Bank v. Kesler
COURT OF APPEALS OF THE STATE OF KANSAS
No. 98,489
September 12, 2008
http://www.kscourts.org/Cases-and-Opinions/opinions/ctapp/2008/20080912/98489.htm

Landmark Decision: Massive Relief for Homeowners and Trouble for the Banks
Ellen Brown
GlobalResearch.ca, September 23, 2009
http://www.globalresearch.ca/index.php?context=va&aid=15324

See also:
Six Degrees of Separation
Andrew Davidson
August 2007
http://www.securitization.net/pdf/content/ADC_SixDegrees_1Aug07.pdf

Posted by Silent Dogood JR on October 02, 2009 at 10:49 PM in Foreclosure News | Permalink | Comments (0) | TrackBack (0)

S&P Downgrades A 4 Month Old JPM Re-REMIC,

Submitted by Tyler Durden on 09/23/2009 12:28 -0500

Re-REMICs (re-securitized real estate mortgage investment conduit) recently made a splash as a way to repackage securitizations: the only component of the shadow banking system that no matter how hard Bernanke tries he has so far been unable to restore. In fact Re-REMICs were recently seen as a way to salvage the CRE market even as the TALF has been foundering, so much so that CMSA has been pushing for Re-REMIC inclusion in the TALF program. Nothing like taxpayers guaranteeing the very same leverage-expansive product that was among the key reasons why were are here now.

Amusingly, Re-REMIC, which are supposedly much safer than traditional securitization conduits as they get to pick and choose classes which are presumed to be safer and only those are sold to erudite investors, are starting to go bust. The most recent example: today's downgrade by S&P of a class of a JP Morgan Re-REMIC issued a mere four months ago in May of 2009, the JPMRT 2009-3.

Standard & Poor's Ratings Services today lowered its rating on one class of certificates from JP Morgan Resecuritization Trust Series 2009-3 (JPMRT 2009-3). We lowered the rating on class 2-A-2 to 'B' from 'BBB-'. At the same time, we affirmed our 'AAA' ratings on three other classes.

The reason:

The downgrade reflects the significant deterioration in the performance of the loans backing the underlying certificate. Although this performance deterioration is severe, we affirmed the rating on class 2-A-1, which is within loan group 2, because class 2-A-2 provides credit enhancement to it. In addition, the affirmations on the classes from loan group 1 reflect the performance of the loans and available credit enhancement for the group 1 underlying certificate.

"Significant deterioation" in loans that were expected to be stable in those long ago days of May 2009.

Based on the losses to date, the current pool factor of 0.728 (72.8%), and the pipeline of delinquent loans, our current projected loss for this pool is 2.99%, which exceeds the level of credit enhancement available to cover losses passed through to the class 2-A-2 within the re-REMIC.

That's ok. Investors in the Re-REMIC will promptly brush this off as they prepare for not debt but equity investments in IPOs of companies that invest in just such comparable loan pools. Bernanke's moral hazard bubble is the guiding light as always.

Posted by Silent Dogood JR on October 02, 2009 at 10:20 PM in Foreclosure News | Permalink | Comments (0) | TrackBack (0)

Banks Bite Bullet on Loans Lenders Start to Write Off Some Principal in Modifying Terms for Troubled Mortgages

By JAMES R. HAGERTY

(See Corrections & Amplifications item below.)

Banks and loan investors are starting to bite the bullet and lower the principal due on home mortgages for some struggling borrowers, a new report from bank regulators shows.

That's good news for some homeowners, but may portend more write-offs over the next few years for banks and other lenders now wading through hundreds of thousands of applications for loan modifications. The tradeoff for banks is that by taking the hit now they can boost their chances of being repaid.

Primary Source

Read the full OCC report.

Banks and loan servicers modify loans primarily by reducing interest rates or extending the term of the mortgage. These methods can temporarily help borrowers struggling to make payments without requiring lenders to lower the principal owed. Now, in a small but growing number of cases, banks are going further and writing off some of the loan altogether.

Part of this is due to prodding from the Obama administration, which has made saving homeowners from foreclosure a cornerstone of its economic-rescue strategy. The administration in March announced plans aimed at helping as many as nine million households struggling with mortgage debt through loan modifications or refinancings. The plans include financial incentives for mortgage-servicing firms that modify loans.

At the same time, banks now have more flexibility to modify loans because of their success in stabilizing their balance sheets and, in some cases, raising fresh capital. Banks can afford "to take the pain up front," said Kevin Fitzsimmons an analyst at Sandler O'Neill & Partners LP in New York. "If they want a legitimate chance of salvaging something out of the loans, they are better off taking the loss now."

Bloomberg News

Rows of tract houses this month in Las Vegas. The median home price in the area fell 40% to a 10-year low in August amid sales of foreclosures.

The portion of loan modifications in the second quarter that involved reducing the principal jumped to 10% from 3.1% in the first quarter, according to the report released Wednesday by the Office of the Comptroller of the Currency, or OCC, which regulates national banks.

Alejandro Estrella, a mail carrier in Riverside, Calif., said he was surprised when his lender, the Wachovia unit of Wells Fargo & Co., agreed recently to reduce the principal he owed on two mortgages on his home by 18% to about $237,000. That will lower his monthly payments to less than $1,500 from about $2,100. "I wasn't expecting it," said Mr. Estrella, who started out seeking just a reduction in his interest rate and got counseling from Springboard Nonprofit Consumer Credit Management.

Principal reductions are still the exception, though. Tom Kelly, a spokesman for J.P. Morgan Chase & Co., said the lender first tries to make loans affordable by lowering the interest rate for borrowers who qualify for modifications. If that doesn't result in a low enough payment, the bank may extend the term of the loan or defer repayments on part of the principal. That deferred principal would come due if the home is sold or refinanced.

But banks and loan servicers are recognizing that modifications don't always work if the borrowers aren't given a big enough break. Of loans modified in this year's first quarter, 28% were in default again within three months, the OCC said. Among those modified in last year's second quarter, 56% were in default again a year later.

Although the Obama administration programs for averting foreclosures got off to a slow start, they are starting to result in larger numbers of modified loans. The OCC report tallied 439,574 agreements to help troubled borrowers, including loan modifications and other repayment plans, in the second quarter. That was up 75% from a year earlier. Of that total, 142,362 of the agreements were classified as loan modifications, and 10% of those involved reducing the principal.

Beyond Housing, a nonprofit in St. Louis that counsels distressed borrowers, recently won a principal reduction for Evone Lester, a prison employee who had fallen behind on her payments and faced foreclosure. The loan was being serviced by Wells Fargo & Co. but was owned by an investor, Beyond Housing said. The investor agreed to reduce the loan balance to about $48,800 from $72,000, said Chris Krehmeyer, chief executive of Beyond Housing. That helped cut the monthly payment to $761 from $1,039.

In spite of these efforts, foreclosures continue to rise. In a report last week, Amherst Securities Group, a New York research firm, estimated that about seven million homes -- representing 12% of U.S. homes with mortgages -- will end up changing hands in foreclosures or related transactions over the next few years. The company said it doesn't expect that loan-modification efforts will ease the problem significantly, largely because so many people default again.

The OCC's report, which covers about 64% of all U.S. home mortgages outstanding, found that 11.4% of those mortgage loans were at least 30 days overdue or in foreclosure at the end of the second quarter, up from 10.2% three months earlier and 7.4% a year before.

The OCC isn't requiring banks to reduce principal, said Joseph Evers, a deputy controller at the regulatory agency. But, he said, the OCC has told banks they need to make sure modifications are "more sustainable," giving borrowers a real chance to keep up with the new payments.

Separately, the Federal Reserve Board Wednesday released a report on mortgage data from more than 8,000 lenders under the Home Mortgage Disclosure Act, known as HMDA. The report showed that blacks and Hispanic whites were far more likely to be denied last year for refinancing conventional mortgages, those that aren't insured by the federal government.

The denial rate for blacks was 61%, compared with 51% for Hispanic whites and 32% for non-Hispanic whites. That may partly reflect the larger proportion of minority borrowers who got subprime loans during the housing boom and ended up in homes whose values have crashed.

—Dan Fitzpatrick contributed to this article.

Write to James R. Hagerty at bob.hagerty@wsj.com

Corrections & Amplifications:
A report on U.S. mortgage performance in the second quarter came from the Office of the Comptroller of the Currency and the Office of Thrift Supervision. This article fails to mention the OTS.

Printed in The Wall Street Journal, page A3

Posted by Silent Dogood JR on October 02, 2009 at 10:14 PM in Foreclosure News | Permalink | Comments (0) | TrackBack (0)

Wall Street Wizardry Reworks Mortgages Repackaged Investments Are Good for Bankers and Ratings Firms, but the Regulators Scoff

By LESLIE SCISM and RANDALL SMITH

A new wave of financial alchemy is emerging on Wall Street as banks and insurers seek to make soured securities look better. Regulators are pushing back, saying the transactions don't have enough substance and stand to benefit bankers and ratings firms.

The deals come as Wall Street firms, buoyed by surging markets, are seeking to profit from the unwinding of the complicated securities that helped fuel the credit crisis. Regulators, meanwhile, are struggling to prevent a recurrence of the crisis.

The popular deals are known as "re-remic," which stands for resecuritization of real-estate mortgage investment conduits. The way it works is that insurers and banks that hold battered securities on their books have Wall Street firms separate the good from the bad. The good mortgages are bundled together and create a security designed to get a higher rating. The weaker securities get low ratings.

The net result is financial firms' books look better and they need to hold less capital against those assets, even though they are the same assets they held before the transaction.

Some state insurance regulators worry that current ratings are flawed -- perhaps even too harsh -- for determining the capital that should back up residential-mortgage securities. But they are chafing at the re-remic strategy. That's partly because of the fees and partly because re-remics rely on ratings firms -- faulted for failing early on to identify problems with mortgage-backed bonds -- to rate the new securities.

At hearings Wednesday on Capitol Hill focused on the ratings firms, U.S. Rep. Dennis Kucinich (D-Ohio) raised concerns about the mounting number of re-remics, saying, "The credit-rating agencies could be setting us up for problems all over again."

New York and some other key regulators are considering an alternative to re-remics that doesn't entail insurers paying millions in fees to investment banks and the ratings firms; they also have debated possibly unfavorable accounting treatment for the re-remic deals.

Regulators would like "a lot fewer dollars" paid to Wall Street, as well as "less reliance on the ratings agencies," said Kermitt Brooks, first deputy insurance superintendent in New York. The state is an important voice on financial matters at the National Association of Insurance Commissioners, or NAIC.

The alternative solution, proposed by trade group American Council of Life Insurers, calls for hiring an analytical firm with expertise in residential mortgage-backed securities to help regulators determine the value of deteriorated holdings on insurers' books, bypassing the ratings providers. This firm would help size up potential losses and how much capital the insurers need to hold.

The re-remic accounting treatment, meanwhile, is expected to be taken up at a meeting of NAIC regulators in December.

It is unclear how big a concern this is for banking regulators. Alabama Deputy Banking Superintendent Trabo Reed said he has seen only a few examples of re-remics. His concern is that banks engaging in this practice account for it correctly.

From a Trickle to Flood

Wall Street analysts said activity in re-remics has ramped up this year, from a trickle in January to several billion dollars from March to June, with a big increase in volume in July, partly thanks to reviving credit markets.

Estimates of volume this year range from $30 billion to more than $90 billion. The transactions are typically done as private placements and aren't disclosed publicly.

A hypothetical example cited in research by Barclays Capital said that a $100 million asset that required $2 million in capital at a triple-A rating may require $35 million if downgraded to double-B-minus. At triple-C, the capital requirement might rise to 100%, or $100 million.

In a re-remic, three-fourths of the same asset may regain a triple-A rating, requiring just $1.5 million in capital, Barclays said. The remaining one-quarter may require 100% capital, but the total capital requirement would fall to $26.5 million.

Wall Street bankers and analysts said a minority of re-remics, perhaps as little as 10% to 30%, are aimed at helping firms like insurers manage capital requirements. The general goal, as one banker put it, is to help "create buyers for orphan securities that otherwise would have languished."

"There is $350 billion to $400 billion in market value of securities with no natural buyer due to their rating," Barclays said in a June report. "The re-remic market provides a way out of this gridlock by creating new AAA securities, which are likely to be viewed as attractively priced."

Wall Street firms that have acted as middlemen in re-remics include J.P. Morgan Chase & Co., Credit Suisse Group, Jefferies & Co., Royal Bank of Scotland Group PLC, as well as Barclays PLC, according to a Barclays tally.

Citigroup Inc., meanwhile, is pursuing its own re-remic strategy, to repackage some toxic real-estate securities on its balance sheet, according to people familiar with the bank.

'Not Cheap'

Insurance executives estimate that insurers pay 0.35% or so of a deal's size in investment banking, ratings firm, legal and other costs.

American Equity Investment Life Holding Co. has told analysts that it is considering a re-remic. Recent downgrades of its mortgage bonds overstate their risk by a wide margin, its executives said.

Still, a re-remic is "not cheap," John Matovina, the company's finance chief, said in an interview.

On Sept. 15, an executive at American Financial Group Inc. noted to investors that re-remic transactions there involving about $1.2 billion of mortgage bonds provide "flexibility." And Protective Life Corp. said in August that its re-remics, totaling about $1.4 billion, improve the company's capital standing "in the ballpark" of $75 million.

At an NAIC hearing last week, ratings firms described changes over the past year to improve their analytical, compliance and corporate-governance processes. But they also generally agreed that their ratings weren't ideal as a sole basis for determining insurers' capital levels.

—Dan Fitzpatrick contributed to this article.

Write to Leslie Scism at leslie.scism@wsj.com and Randall Smith at randall.smith@wsj.com

Printed in The Wall Street Journal, page M11

Posted by Silent Dogood JR on October 02, 2009 at 10:11 PM in Foreclosure News | Permalink | Comments (0) | TrackBack (0)

Beating Lawyer Finesse: Is He/She a WITNESS or a Lawyer?

Posted on October 2, 2009 by livinglies

If the lawyer is not a competent witness with personal knowledge, then he should shut up and sit down.

So you sent a QWR and you know the loan is securitized. The orignating lender says talk to the servicer and the servicer declines to answer all the questions because they didn’t originate the loan. Or you are in court and the lawyer is trying to finesse his way past basic rules of evidence and due process by making representations to the Judge as an officer of the court.

He’s lying of course and if you let it go unchallenged, you will lose the case. Basicly opposing counsel is saying “trust me Judge I wouldn’t say it if it wasn’t so.” And your answer is that the lawyer is not a witness, that you don’t trust the lawyer or what he has to say, that if he is a witness he should be sworn in and subject to cross examaintion and if he is not a witness you are entitled to be confronted with a real wtiness with real testimony based upon real knowldge.

First Questions: When did you first learn of this case? What personal knowledge do you have concerning the payments received from the homeowner or third parties? What personal knledge do you have as to who providing the actual cash ffrom which the subject loan was funded?

Only when pressed relentlessly by the homeowner, the servicer comes up with a more and more restrictive answer as to what role they play. But they always start with don’t worry about a thing we control everything. Not true. Then later after you thought you worked out a modification they tell the deal is off because the investor declined. The investor is and always was the lender. That is the bottom line and any representation to the contrary is a lie and a fraud upon the court.

So whoever you sent the QWR to, always disclaims your right to ask, or tells you the name of the investor (i.e., your lender) is confidential, or that they have authority (but they won’t show it to you). That doesn’t seem to be a lender, does it? In fact they disclaim even knowing enough to answer your questions.

So AFTER THEY SERVE YOU with something file a motion to compel an immediate full answer to your QWR since under TILA service on the servicer is the same as service on the lender. You argue that everyone seems to be claiming rights to be paid under the original obligation, everyone seems to be claiming the right to enforce the note and mortgage, but nobody is willing to state unequivocally that they are the lender.

You are stuck in the position of being unable to seek modification under federal and State rules, unable to sell the property because you don’t know who can sign a satisfaction of mortgage or a release and reconveyance, unable to do a short-sale, and unable to refinance — all because they won’t give a simple answer to a simple question: who is the lender and what is the balance claimed by the real lender on the obligation? At this point you don’t even know that any of the real lenders wish to make a claim.

This is probably because they received TARP funds and insurance proceeds on defaults of pools that they had purchased multiple insurance policies (credit default swaps). But whether they are paid by someone who acquired rights of subrogation or they were not paid, you have a right to a FULL accounting and to know who they are and whether they received any third party money. If they were paid in part or otherwise sold their interest, then you have multiple additional unknown parties.

The reason is simple. They are not the lender and they know it. The lender is a group of investors who funded the transaction with Petitioner/Homeowner and others who purchased similar financial products from the same group of participants in the securitization chain relating to the subject loan.

The people currently in court do not include all the real parties in interest for you to make claims against the lender. Cite to the Massachusetts case where Wells Fargo and its lawyer were subject to an $850,000 sanction for misrepresenting its status to the court.

It is not enough for them to bluff their way by saying that they have already answered the interrogatories. When they lost and it came time to allocate damages and attorneys fees, Wells suddenly said they were NOT the lender, beneficiary or current holder and that therefore the damages and attorneys fees should be assessed against the real lender — who was not a party to the pending litigation and whom they refused to disclose along with their misrepresentation that they were the true lender.

It is not enough that the lawyer makes a representation to the court as an officer of the court. That is not how evidence works. If the lawyer wants to represent facts, then he/she should be sworn in and be subject to (1) voir dire to establish that he/she is a competent witness with personal knowledge and (2) subject to cross examination.

If they have documents they want the court to treat as evidence then they need a witness to provide the full foundation of the document is not merely authentication that it came from some company.

The witness must be a competent witness who takes an oath, has personal knowledge regarding the content of the document, states that personal knowledge and whose testimony conforms to what is on the document.

There is no such thing as foundation without a witness. There is no such thing as foundation without a competent witness. So if the lawyer tries to finesse the subject by making blanket representations to the court, YOU point to Wells, or even point to other inconsistencies between what counsel has represented and what now appears to be the truth, and demand an evidentiary hearing. If the lawyer is not a competent witness with personal knowledge, then he should shut up and sit down.

File a motion to extend time to file adversary proceeding, answer, affirmative defenses and counterclaim UNTIL YOU GET A FULL AND COMPLETE ANSWER TO YOUR QWR so you can determine the real parties in interest and serve them with process. Otherwise, we will have a partial result wherein the real owner of the loan can and will claim damages and injunctive relief probably against all the current parties to this action including the Homeowner.

And with every pleading ask for an evidentiary hearing and attorneys fees. Follow rule 11 procedure in Federal Court or the state law counterpart so you can get them later.

3 Responses

angry¬ taking it, on October 2nd, 2009 at 11:45 am Said:

“after demonstrating before the court that the “lender-emperor” is wearing no clothes?”
priceless!
SF_Dan, on October 2nd, 2009 at 11:25 am Said:

Please, more tactical articles such as this one.

Also, would an action to Quiet Title be filed simultaneously in the original cross-complaint, or on a later motion to amend the cross-complaint after demonstrating before the court that the “lender-emperor” is wearing no clothes?

Thank you Mr. Garfield and associates for everything.

SF_Dan
Deontos, on October 2nd, 2009 at 9:39 am Said:

So much to to learn here!

It makes me even more
respect the Pro Se’s
who PREVAIL in their
contests.

Posted by Silent Dogood JR on October 02, 2009 at 09:30 PM in Living Lies Weblog | Permalink | Comments (0) | TrackBack (0)

October 01, 2009

Getting Through to Judges Unfamiliar with Securitization

Posted on September 30, 2009 by livinglies

If I am right, then why are judges are not buying this? see msnbc discussion of “What’s in the Bag?”> object>

The problem here is becoming increasingly apparent with Judges of many different ideological persuasions. This all looks like a gimmick to them. And they are right. It’s just that the one finessing the gimmick is the pretender lender and not the borrower. That they don’t realize. These Judges have all been lawyers for 20 years or more. They went to law school before securitization was ever discussed in legal circles. So they approach a foreclosure from the standpoint of what they know. Here are their assumptions —

The loan was made properly except for possibly a few technicalities

The lender is the party named as the lender

The beneficiary is the party named as beneficiary

The note is valid and in default

The mortgage is incident to the mortgage and is foreclosure even if the party named on the mortgage is different than the party named on the note

Subsequent transfer of the note, securitization, insurance and federal bailouts are distractions from the real issue: the homeowner took out a loan, can’t pay and now wants to get out of the deal and keep his house.

THIS is why I keep harping on keeping it simple, staying with the basics, and attacking point by point and building your case to the point where it is the Judge who on his/her own comes to the conclusion that there might be something wrong with the DOT or its enforcement. You don’t want to lead with a direct challenge to the assumptions they are making because they are resistant to believing it and the more you talk, the more you lose credibility. You must concentrate on what they do understand and where they will most likely agree with you. And you must do so with facts that are not in dispute — like the fact that you sent a QWR, the date, the requirements of the statute, the equivalent statute under state law, etc. Understanding securitization is important for you as litigators or pro se litigants to know WHY you are doing what you are doing — it isn’t a strategy of opening salvo at a judge who is hearing your “theories”.

Keep in mind that with very few exceptions no judge is trying to be pig-headed about this. They are applying their knowledge or the law and their experience of life as they know it. Your job is to educate them in a way that achieves its purpose. Just because you are right does not mean you win. If that were the case computers could replace lawyers and Judges. The job you have is persausion and that means putting yourself in the shoes of a judge who does not know what you are talking about and is getting a feeling in the pit of his/her stomache that the borrower is simply a deadbeat seeking to avoid the consequences of their own poor judgment.

First start with a QWR and DVL. Then attack them for not answering fully. Demand an answer: who is my real lender and how much do I owe. I want a full accounting of everything EVERYONE has received on this loan transaction not just what you received from the borrower. This right is protected under federal and state statutes. Go to state court if you can and make it that simple. Judge we want to pursue modification, refinance or sale as per federal law and state law but we can’t do that because we don’t know who the lender is and they won’t tell us. We also have claims regarding the origination of the loan but we don’t know who to serve because they won’t tell us. They will admit the loan was securitized which means that the loan was sold off to hundreds or perhaps thousands of investors through what they call a trust or special purpose vehicle, but they won’t give us names, documents, contact information or anything else.

Simple common sense tells us that if we owe money we are entitled to know to whom we owe it and how much is outstanding. TILA and RESPA state with great clarity that they are required to give us the name of the true lender at the present time along with the name of a person and a telephone number and address. While we have our suspicions as to why they are refusing to comply with federal and state law, we don’t want to make allegations we can’t prove. So we are asking for an emergency mandatory injunction simply requiring that they answer the QWR and DVL and specifically provide us with the parties who claim or possess an ownership or other interest in this loan, along with the name and address of the person whom we can contact at the entity which they say is the lender. We can’t even seek alternative fianncing to pay off this loan because we cannot get a satisfaction of mortgage or release or reconveyance from a party whom we know to be the lender. Any such document is obviously intended to be executed by some other party who will claim some sort of agency authority, which we also want to see.

This is why we are asking for declaratory, injunctive and supplemental relief. The servicer here is (a) by definition not the lender and (b) required by law and common sense to provide us with the information we are seeking. The only argument we have heard against providing this infomration is that if they tell us, the whole financial system will collapse again. Judge, if the system is in danger of collapse if the homeowners know the truth about their loans, then that doesn’t mean the homeowners should be denied their due process and suffer all the consequences of a scheme they didn’t invent or even know about.

After a few rounds of appearing before the Judge with the pretender lender trying to explain why they cannot or will not answer the question, the judge’s aspect will change from incredulity about your position to annoyance with theirs.
7 Responses

Charlie A., on October 1st, 2009 at 12:00 pm Said:

I am certainly not the most brilliant person in the world, but i understand securitization to the degree that i knew what’s in the bag! even before watching the video above, and i am now thinking and agreeing with Stephen above that the feds also know/knew what”s in the bag, but everyone is simply looking the other way, it is so simple that to me is totally incomprehensible that all this people can not see it! it is crazy! mass economic rape, that’s what this is!!

stopgovtwaste, on October 1st, 2009 at 8:38 am Said:

at 1:39 he says they sold them unknowingly… i don’t get it, who didn’t know? the banks didn’t know they were blackballing honest appraisers and taking advantage of the HUGE Grand Canyon loophole that was and is the AMC LOOPHOLE?

who is in charge of valuation – the market, free market? i demand we see some accountability on the dumbing down of the appraisal industry and amc’s pimping out the valuation assignment to the lowest bidder they have sold out likes of which i’ve never seen before.

but like a bank that leaves the vault door open, lenders are ’surprised’ that property values were over/hyper-inflated and property conditions were misrepresented. what bank or lender loans money without knowing exactly what the collateral is worth… banks and lenders do business exactly this way!

Stephen, on September 30th, 2009 at 5:12 pm Said:

Don’t assume that judges are not familiar with securitization.

Lisa E., on September 30th, 2009 at 2:42 pm Said:

Ah, behold a thing of beauty above!

With Halloween approaching, it suits perfectly to have these lenders hiding under sheets with eye hole cut-outs with an extended arm holding a bag to be filled with “treats” earned by trickery. (If only I were a cartoonist!)

Lisa E (Pro Se, Florida)
Lisa Bep @ gmail . com (remove spaces to email)

Getting Through to Judges Unfamiliar with Securitization … | Alternative Loans, on September 30th, 2009 at 12:42 pm Said:

[...] more here: Getting Through to Judges Unfamiliar with Securitization … Share and [...]

jlsemidey, on September 30th, 2009 at 12:27 pm Said:

This is great stuff, and I agree 10000000%
it is very simple, let the other side complicate their own existence

ny, on September 30th, 2009 at 11:28 am Said:

This is PRICELESS.

Posted by Silent Dogood JR on October 01, 2009 at 09:39 PM in Living Lies Weblog | Permalink | Comments (0) | TrackBack (0)

Arkansas Supreme Court Denies MERS Legal Standing

Posted on September 30, 2009 by livinglies

Thank you Deontos
Comment:
I always thought TWO for the price of ONE was a GOOD thing.
Everybody’s talking about the Kansas Appellate Decision?
What about this one from Arkansas’s Supreme Court?
Same issues, MERS and “black letter law” ….
MERS **Lost** and the Arkansas Supreme Court
cited the Landmark v KESLER Kansas Decision.

—————————————————————

MORTGAGE ELECTRONIC REGISTRATION SYSTEM, INC., APPELLANT, VS. SOUTHWEST HOMES OF ARKANSAS, APPELLEE

No. 08-1299

SUPREME COURT OF ARKANSAS

2009 Ark. LEXIS 121

March 19, 2009, Opinion Delivered

NOTICE:

THE LEXIS PAGINATION OF THIS DOCUMENT IS SUBJECT TO CHANGE PENDING RELEASE OF THE FINAL PUBLISHED VERSION.

SUBSEQUENT HISTORY: Rehearing denied by Mortgage Elec. Registration Sys. v. Southwest Homes of Ark., Inc., 2009 Ark. LEXIS 458 (Ark., Apr. 23, 2009)

PRIOR HISTORY: [*1]

APPEAL FROM THE BENTON COUNTY CIRCUIT COURT, NO. CIV07-223-2, HON. DAVID S. CLINGER, JUDGE.

DISPOSITION: AFFIRMED.

COUNSEL: George Nicholas Arnold – Counsel for the Appellant.

Howard Keith Morrison – Counsel for the Appellant.

Thomas D. Stockland – Counsel for the Appellee.

JUDGES: JIM HANNAH, Chief Justice. IMBER, DANIELSON and WILLS, JJ., concur.

OPINION BY: JIM HANNAH

OPINION

JIM HANNAH, Chief Justice

Mortgage Electronic Registration System, Inc. (”MERS”) appeals a decision of the Benton County Circuit Court denying its motion to set aside a decree of foreclosure and to dismiss the foreclosure action. 1 MERS alleges that the circuit court erred in ordering foreclosure because as the holder of legal title it was a necessary party that was never served. We affirm the circuit court and hold that under the recorded deed of trust in this case, James C. East, as trustee under the deed of trust, held legal title. Because MERS was at most the mere agent of the lender Pulaski Mortgage Company, Inc., it held no property interest and was not a necessary party. As this case presents an issue of first impression, our jurisdiction is pursuant to Arkansas Supreme Court Rule 1-2(b)(1).

1 Mortgage Electronic Registration System, Inc.’s (”MERS”) motion was [*2] entitled Motion to Set Aside Default Judgment; however, the circuit court found, and the parties agree, that MERS was never served. Because MERS was never served, it could not have failed to respond to that service and suffer a default judgment. The relief sought was that the decree of foreclosure be set aside and the foreclosure action be dismissed.

This case arises from foreclosure on a 2006 mortgage granted in a one-acre lot. A prior deed of trust also encumbered the property. In 2003, Jason Paul Lindsey and Julie Ann Lindsey entered into a deed of trust on a one-acre lot in Benton County to secure a promissory note. The lender on that deed of trust was Pulaski Mortgage, the trustee was James C. East, and the borrowers were the Lindseys. MERS was listed on the deed of trust as the “Beneficiary” acting “solely as nominee for Lender,” and “Lender’s successors and assigns.” The second page of the deed of trust states that “the Borrower understands and agrees that MERS holds only legal title to the interests granted by the Borrower and further that MERS as nominee of the Lender has the right to exercise all rights of the Lender including foreclosure.” The deed of trust was recorded.

In [*3] 2006, the Lindseys granted the subject mortgage on the same property to Southwest Homes of Arkansas, Inc. to secure a second promissory note. This mortgage was recorded. On February 9, 2007, Southwest Homes filed a Petition for Foreclosure in Rem against the Lindseys under the 2006 mortgage. The Lindseys, the Benton County Tax Collector, and “Mortgage Electronic Registration System, Inc. (Pulaski Mortgage Company)” were listed as respondents. Pulaski Mortgage was served; however, MERS was never served. Pulaski Mortgage did not file an answer. 2 A Decree of Foreclosure in Rem was entered on April 4, 2007, and the property was auctioned to Southwest. An Order Approving and Confirming Commissioner’s Sale was entered on May 8, 2007. In February 2008, MERS learned of the foreclosure and moved for relief, arguing it was a necessary party to the foreclosure action. The circuit court denied the motion, and this appeal followed.

2 Pulaski Mortgage was the lender of record. No assignment of the deed of trust was recorded nor had Pulaski Mortgage’s security interest been satisfied of record.

MERS asserts that it held legal title to the property and, therefore, it was a necessary party to any action [*4] regarding title to the property. The deed of trust indicates that MERS holds legal title and is the beneficiary, as well as the nominee of the lender. It further purports by contractual agreement with the borrower to grant MERS the power to “exercise any and all rights” of the lender, including the right of foreclosure. However the deed of trust provides that all payments are to be made to the lender, that the lender makes decisions on late payments, and that all rights to foreclosure are held by the lender.

No payments on the underlying debt were ever made to MERS. MERS did not service the loan in any way. It did not oversee payments, delinquency of payments, or administration of the loan in any way. Instead, MERS asserts to be a corporation providing electronic tracking of ownership interests in residential real property security instruments. See In re MERSCORP, Inc. v. Romaine, 8 N.Y.3d 90, 861 N.E.2d 81, 828 N.Y.S.2d 266 (2006). According to MERS, it was developed by the “real estate finance industry” and was designed to facilitate the sale and resale of instruments in “the secondary mortgage market, which include one of the government sponsored entities.”

MERS contracts with lenders to track security [*5] instruments in return for an annual fee. MERSCORP, supra. Those who contract with MERS are referred to by MERS as “MERS members.” According to MERS, MERS members contractually agree to appoint MERS as their common agent for all security instruments registered with MERS. 3 MERS asserts that it holds the authority to exercise the rights of the lender, and for that purpose, it holds bare legal title. Thus, it is alleged that a principal-agent relationship existed between MERS and Pulaski Mortgage under the contract terms of the deed of trust. 4

3 The Kansas Court of Appeals, in Lankmark National Bank v. Kesler, 40 Kan. App. 2d 325, 192 P.3d 177 (2008), likewise found that Mortgage Electronic Registration System, Inc. acts as an agent. We note the analysis in this case is consistent with our own but also note that the Kansas Supreme Court granted review of the Landmark case.

4 MERS is listed as a nominee on the deed of trust. A nominee is “a person designated to act on behalf of another, usu. in a very limited way.” Black’s Law Dictionary 1076 (8th ed. 2004). A nominee is also a “person who holds bare legal title for the benefit of others or who receives and distributes funds for the benefit [*6] of others.” Id. As discussed above, MERS was not designated to act on behalf of another under the facts of this case. Further, it held no title in this case where title vested in the trustee, and finally, it received and distributed no funds for the benefit of others.

“An agent is a person who, by agreement with another called the principal, acts for the principal and is subject to his control.” Taylor v. Gill, 326 Ark. 1040, 1044, 934 S.W.2d 919, 922 (1996) (quoting AMI 3d 701 (1989)). Thus, MERS, by the terms of the deed of trust, and its own stated purposes, was the lender’s agent, including not only Pulaski Mortgage but also any successors and assigns.

MERS asserts authority to act, arguing that once it becomes the agent on a security instrument, it remains so for every MERS member lender who acquires ownership. This authority is alleged to arise from the contractual relationship between MERS and MERS members. Thus, MERS argues it may act to preserve the rights of the lender regardless of who the lender may be under the MERS electronic registration. We specifically reject the notion that MERS may act on its own, independent of the direction of the specific lender who holds the repayment [*7] interest in the security instrument at the time MERS purports to act. “[A]n agent is authorized to do, and to do only, what it is reasonable for him to infer that the principal desires him to do in the light of the principal’s manifestation and the facts as he knows or should know them at the time he acts.” Hot Stuff, Inc. v. Kinko’s Graphic Corp., 50 Ark. App. 56, 59, 901 S.W.2d 854, 856 (1995) (citing Restatement (Second) of Agency
§ 33 (1958)). Nothing in the record shows that MERS had authority to act. Here, Pulaski Mortgage was the lender and MERS’s principal. Pulaski Mortgage was a named party in the foreclosure action. Thus, MERS was not acting as the lender’s agent at the time it moved to set aside the decree of foreclosure.

However, MERS also argues that it holds a property interest through holding legal title. Specifically, it purports to hold legal title with respect to the rights conveyed by the borrower to the lender. We disagree.

“A deed of trust is ‘a deed conveying title to real property to a trustee as security until the grantor repays a loan.’” First United Bank v. Phase II, Edgewater Addition, 347 Ark. 879, 894, 69 S.W.3d 33, 44 (2001)(quoting Black’s Law Dictionary [*8] 773 (7th ed. 1999)); see also House v. Long, 244 Ark. 718, 426 S.W.2d 814 (1968). The encumbrance created by the deed of trust may be described as a lien. See, e.g., First Amer. Nat’l Bank of Nashville v. Booth, 270 Ark. 702, 606 S.W. 2d 70 (1980).

Under a deed of trust, the borrower conveys legal title in the property by a deed of trust to the trustee. Phase II, supra. “In this state, the naked legal title to real property included in a mortgage passes to the mortgagee, or to the trustee in a deed of trust, to make the security available for the payment of the debt.” Harris v. Collins, 202 Ark. 445, 447, 150 S.W.2d 749, 750 (1941). The trustee is limited in use of the title to passing title back to the grantor/borrower in the case of payment, or to the lender in the event of foreclosure. See Forman v. Holloway, 122 Ark. 341,183 S.W. 763 (1916). The lender holds the indebtedness and is the beneficiary of the deed of trust. House, supra. A trustee under a deed of trust is not a true trustee. Heritage Oaks Partners v. First Amer. Title, Ins. Co., 155 Cal. App. 4th 339, 66 Cal. Rptr.3d 510 (Cal. Ct. App. 2007). Under a deed of trust, the trustee’s duties are limited to (1) upon default undertaking foreclosure [*9] and (2)
upon satisfaction of the debt to reconvey the deed of trust. Id.

In the present case, all the required parties to a deed of trust under Arkansas law are present, the borrower in the Lindseys, the Lender in Pulaski Mortgage, and the trustee in James C. East. Under a deed of trust in Arkansas, title is conveyed to the trustee. Harris, supra. MERS is not the trustee. Here, the deed of trust renamed James C. East as the trustee. The deed of trust did not convey title to MERS. Further, MERS is not the beneficiary, even though it is so designated in the deed of trust. Pulaski Mortgage, as the lender on the deed of trust, was the beneficiary. It receives the payments on the debt.

The cases cited by MERS only confirm that MERS could not obtain legal title under the deed of trust. MERS relies on Hannah v. Carrington, 18 Ark. 85 (1856); however, that case stands for the proposition that a deed of trust vests legal tide in the trustee. We are also cited to Shinn v. Kitchens, 208 Ark. 321, 326, 186 S.W.2d 168, 171 (1945), where this court stated that “[t]he trustee named in the deeds of trust was a necessary party at the institution of the foreclosure suit, as also, of course, was Kitchens, [*10] the holder of the indebtedness.” East, as trustee, was a necessary party. MERS was not. Finally, we are cited to Beloate v. New England Securities Co., 165 Ark. 571, 575,265 S.W. 83 (1924), where this court stated that the real owner of the debt, as well as the trustee in the mortgage, are necessary parties in the action to recover the debt and foreclose the mortgage. Again, this case supports the conclusion that East was a necessary party and MERS was not.

Further, under Arkansas foreclosure law, a deed of trust is defined as “a deed conveying real property in trust to secure the performance of an obligation of the grantor or any other person named in the deed to a beneficiary and conferring upon the trustee a power of sale for breach of an obligation of the grantor contained in the deed of trust.” Ark. Code Ann. § 18-50-101(2) (Repl. 2003). Thus, under the statutes, and under the common law noted above, a deed of trust grants to the trustee the powers MERS purports to hold. Those powers were held by East as trustee. Those powers were not conveyed to MERS.

MERS holds no authority to act as an agent and holds no property interest in the mortgaged land. It is not a necessary party. In [*11] this dispute over foreclosure on the subject real property under the mortgage and the deed of trust, complete relief may be granted whether or not MERS is a party. MERS has no interest to protect. It simply was not a necessary party. See Ark. R. Civ. P. 19(a). MERS’s role in this transaction casts no light on the contractual issues on appeal in this case. See, e.g., Wilmans v. Sears, Roebuck & Co., 355 Ark. 668, 144 S.W.3d 245 (2004).

Finally, we note that Arkansas is a recording state. Notice of transactions in real property is provided by recording. See Ark. Code Ann. § 14-15-404 (Supp. 2007). Southwest is entitled to rely upon what is filed of record. In the present case, MERS was at best the agent of the lender. The only recorded document provides notice that Pulaski Mortgage is the lender and, therefore, MERS’s principal. MERS asserts Pulaski Mortgage is not its principal. Yet no other lender recorded its interest as an assignee of Pulaski Mortgage. Permitting an agent such as MERS purports to be to step in and act without a recorded lender directing its action would wreak havoc on notice in this state.

Affirmed.

IMBER, DANIELSON and WILLS, JJ., concur.

CONCUR BY: PAUL E. DANIELSON

CONCUR

CONCURRING [*12] OPINION.

PAUL E. DANIELSON, Associate Justice

I concur that the circuit court’s order should be affirmed, but write solely because I view the decisive issue to be whether MERS was, pursuant to Arkansas Rule of Civil Procedure 19(a) (2008), a necessary party to the foreclosure action. It can generally be said that “[n]ecessary parties to a foreclosure action are parties whose interest are inseparable such that a court would be unable to determine the rights of one party without affecting the rights of another.” 59A C.J.S. Mortgages § 708 (2008). See also 55 Am. Jur. 2d Mortgages § 647 (2008) (”[A]ll persons who are beneficially interested, either in the estate mortgaged or the demand secured, are proper or necessary parties to a suit to foreclose.”). Moreover, “[p]ersons having no interest are neither necessary nor proper parties, and the mere fact that they were parties to transactions out of which the mortgage arose does not give them such an interest as to make them necessary parties to an action to foreclose
the mortgage.” Id. Indeed, our rules of civil procedure contemplate the same.

Rule 19(a) of the Arkansas Rules of Civil Procedure speaks to necessary parties:

(a) Persons to Be [*13] Joined if Feasible. A person who is subject to service of process shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties, or, (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter, impair or impede his ability to protect that interest, or, (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple or otherwise inconsistent obligations by reason of his claimed interest. If he has not been joined, the court shall order that he be made a party. If he should join as a plaintiff, but refuses to do so, he may be made a defendant; or, in a proper case, an involuntary plaintiff.

Ark. R. Civ. P. 19(a) (2008).

Here, a review of the deed of trust for the subject property reveals four parties to the deed: (1) Jason Paul Lindsey and Julie Ann Lindsey, “Borrower”; (2) James C. East, “Trustee”; (3) MERS, “(solely as nominee for Lender, as hereinafter defined, and Lender’s successors and assigns)”; and (4) Pulaski Mortgage Company, “Lender.” The question, then, is whether MERS, [*14] as nominee, was a necessary party that had an interest “so situated that the disposition of the action in [its] absence may” have impaired its ability to protect its interest or left a subsequent purchaser or other subject to a substantial risk by reason of its interest. The answer is no; MERS, as nominee, was not a necessary party to the foreclosure action, because it held no such interest.

Initially, I must note that my review of the deed’s notice provision reveals that the deed clearly contemplated the Lender as the party with interest, in that it provided:

13. Notices. . . . Any notice to Lender shall be given by first class mail to Lender’s address stated herein or any address Lender designates by notice to Borrower. Any notice provided for in this Security’ Instrument shall be deemed to have been given to Borrower or Lender when given as in this paragraph.

Here, as stated in the circuit court’s order of foreclosure. Pulaski Mortgage, as Lender, was served with notice of the foreclosure action, in accord with paragraph thirteen.

But, in addition, MERS claims that because it holds legal title, it has an interest so as to render it a necessary party pursuant to Rule 19(a). Indeed, pursuant [*15] to the deed of trust, MERS held “only legal title to the interests granted” by the Lindseys,

but, if necessary to comply with law or custom, MERS, (as nominee for Lender and Lender’s successors and assigns) has the right to exercise any and all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument.

“Legal title” is defined as “[a] title that evidences apparent ownership but does not necessarily signify full and complete title or a beneficial interest.” Black’s Law Dictionary 1523 (8th ed. 2004) (emphasis added). Thus, as evidenced by the definition, holding legal title alone in no way demonstrates the interest required by Rule 19(a).

MERS further claims that its status as nominee is evidence of its interest in the property, making it a necessary party. However, merely serving as nominee was recently held by one court to be insufficient to demonstrate an interest rising to the level to be a necessary party. In Landmark National Bank v. Kesler, 40 Kan. App. 2d 325, 192 P.3d 177 (2008), review granted, (Feb. 11, 2009). MERS also [*16] asserted that it was a necessary party to the foreclosure suit at issue. There, the district court found that MERS was not a necessary party, and the appellate court affirmed. Just as here, MERS was a party to the mortgage “solely as nominee for Lender.” 40 Kan. App. 2d at 327, 192 P.3d at 179. Based on that status, the Kansas court found that MERS was in essence, an agent for the lender, as its right to act to enforce the mortgage was strictly limited. See id.

Agreeing with MERS that a foreclosure judgment could be set aside for failure to join a “contingently necessary party,” the Kansas court observed that a party was “contingently necessary” under K.S.A. 60-219 if “the party claims an interest in the property at issue and the party is so situated that resolution of the lawsuit without that party may ‘as a practical matter substantially impair or impede [its] ability to protect that interest.’” Id. at 328, 192 P.3d at 180 (quoting K.S.A. 60-219). Notably, the language of K.S.A. 60-219 quoted by the Kansas court is practically identical to the language of Ark. R. Civ. P. 19(a).

The Kansas appellate court noted that MERS received no funds and that the mortgage required the borrower [*17] to pay his monthly payments to the lender. See id. It also observed, just as in the case at hand, that the notice provisions of the mortgage “did not list MERS as an entity to contact upon default or foreclosure.” Id. at 330, 192 P.3d at 181. After declaring that MERS did not have a “sort of substantial rights and interests” that had been found in a prior decision and noting that “a party with no beneficial interest is outside the realm of necessary parties,” the Kansas court concluded that “the failure to name and serve MERS as a defendant in a foreclosure action in which the lender of record has been served” was not such a fatal defect that the foreclosure judgment should be set aside. Id. at 331, 192 P.3d at 181-82.

It is my opinion that the same holds true in the instant case. Here, Pulaski Mortgage, the lender for whom MERS served as nominee, was served in the foreclosure action. But, further, neither MERS’s holding of legal title, nor its status as nominee, demonstrates any interest that would have rendered it a necessary party pursuant to Ark. R. Civ. P. 19(a). For these reasons, I concur that the circuit court’s order should be affirmed.

IMBER and WILLS, JJ., join.

9 Responses

Drew, on October 1st, 2009 at 5:39 pm Said:

…I don’t care where your from that there is funny!! I am thinking both stink..
angry¬ taking it, on October 1st, 2009 at 5:07 pm Said:

hmmmm
Mers then is comparable to say quantum mechanics / quantum physics .
Hence the phenomena – of the smallest particles of matter can posses either properties of a soild [particle] & gas [wave] .
Physicists have found compelling evidence that the only time electrons and other “quanta” manifest as particles is when we are looking at them. At all other times they behave as waves.

MERS = a fart or a turd?
zurenarrh, on October 1st, 2009 at 4:37 pm Said:

Thanks, Deontos. MERS really is playing a mind game–it’s maddening to read through their policies.
Deontos, on October 1st, 2009 at 9:44 am Said:

RE: Comment: MERS=”BENEFICIARY” OR NOT?

I just emailed the Pulitzer Prize Livinglies Comment Writers
Selection Committee. {{{Laughing}}}

zurenarrh ……. They think your MERS
Metaphor Expose is a winner!

Now if we could just get a few
more JUDGES to read and
“GET” the seriousness of
what you are saying.
zurenarrh, on October 1st, 2009 at 8:22 am Said:

MERS=”BENEFICIARY” OR NOT?

From MERS forum…

-Yes, MERS is “beneficiary”:

Administrator-“When MERS is the beneficiary of the deed of trust by either being named as such on the deed of trust at the time of loan closing or by receiving an assignment of the deed of trust at a later date, then under Nevada state law MERS is the proper party. If a default occurs, then MERS, as the beneficiary, may direct the trustee to exercise the power of sale in a foreclosure under the Deed of Trust. Or, if MERS has assigned the deed of trust to another entity, perhaps to the servicer, than that entity has the authority to foreclose.”

-No, a party other than MERS is “beneficial owner”:

Administrator-“MERS serves as mortgagee of record in the public land records as nominee for the beneficial owner of the mortgage loan. ”

-So what the hell is MERS?
Administrator-“MERS is neither the lender nor the servicer for loans registered on the MERS System.”

MERS is acting like it can only be explained through Zen koans, like “Ask not what MERS is–for MERS is what it is not.” Or maybe “Neither servicer, lender, or noteholder are we; MERS is only nominee (or beneficiary–or whatever we need to say in court to pull the wool over a judge’s eyes).”

Or how about this one:
A student asks, “What is MERS’ policy?”
His master replies, “First there is an assignment. Then there is no assignment. Then there is.”

OK, last one:

A student asks, “What does MERS do?”
His master replies, “If the law is a lion, then MERS is its tamer; if the law is a cobra, MERS is its charmer; if the law is a moon, MERS is its eclipse; if the law is a raging river, MERS is its dam.”
zurenarrh, on October 1st, 2009 at 7:32 am Said:

Still reading on the MERS forum and found this very interesting reply from the forum administrator:

“MERS does not own the notes for loans that were registered on the MERS System and therefore we do not have the right to sell those notes. The mortgage company that serviced the loan has that responsibility and should be your source of information.”

This was from June 2009. So since MERS doesn’t own my note, how in hell’s bells can they legally assign my deed of trust “together with the note” as they did back in July? Short answer: they can’t.

Right?
Charlie A., on September 30th, 2009 at 8:02 pm Said:

Once again, this ruling probes not only Neil’s predictions but also the fact that “SOME” judges are starting to understand the fast one that these “thieves” are trying to pull on us, remember: it doesn’t matter how much oil these evil people put into their EVIL machine, i can hear it grinding!! slowly but surely, their time is coming, JUDGEMENT DAY it’s approaching for these unscrupulous “pretender lenders”, i shall live ’til the day i see them down on their knees just like many of us are now. They can only play their game for so long, before they strike out. They are running out of time fast; ever seen a fish out of the water taking it’s last gasps? Long live america, free of these parasites and thieves with licenses to steal from us!!!
Robert, on September 30th, 2009 at 5:51 pm Said:

Todays Phx. AZ news. Couple finds an old CD which is now worth $400,000 but the original bank had been sold and resold, now the current bank is saying they can’t find the CD in their files and they don’t know who should pay the couple. Sounds like the banks are using a reverse “produce the note” theory to keep from paying them.

http://www.kpho.com/news/21154951/detail.html
Strategic Implications of the Landmark (Kesler) Kansas Supreme Court Decision « Livinglies’s Weblog, on September 30th, 2009 at 10:05 am Said:

[...] See also Arkansas Supreme Court stating the same principles and citing to Kansas: arkansas-supreme-court-denies-mers-legal-standing [...]

Posted by Silent Dogood JR on October 01, 2009 at 09:28 PM in Living Lies Weblog | Permalink | Comments (0) | TrackBack (0)

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21 posts from October 2009

October 25, 2009

11 Responses

Wall Street was not responding to legitimate consumer demand, it was creating an artificial demand simply to create mortgage product to feed its securitization machine and generate big fees for itself.

The Next Financial Crisis Hits Wall Street, as Judges Start Nixing Foreclosures

19 Responses

8 Responses

October 18, 2009

Ruling upheld on sale of property

Ownership status of foreclosures clouded

30 Responses

October 14, 2009

By CARRICK MOLLENKAMP, DIONNE SEARCEY and NATHAN KOPPEL

October 13, 2009

Foreclosure sales in limbo over title issue

Expected ruling may complicate transactions

October 07, 2009

8 Responses

8 Responses

7 Responses

October 02, 2009

By JAMES R. HAGERTY

Primary Source

By LESLIE SCISM and RANDALL SMITH

From a Trickle to Flood

'Not Cheap'

3 Responses

October 01, 2009

7 Responses

9 Responses

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