From a Maine House, a National Foreclosure Freeze

By DAVID STREITFELD
Published: October 14, 2010

DENMARK, Me. — The house that set off the national furor over faulty foreclosures is blue-gray and weathered. The porch is piled with furniture and knickknacks awaiting the next yard sale. In the driveway is a busted pickup truck. No one who lives there is going anywhere anytime soon.

Nicolle Bradbury bought this house seven years ago for $75,000, a major step up from the trailer she had been living in with her family. But she lost her job and the $474 monthly mortgage payment became difficult, then impossible.

It should have been a routine foreclosure, with Mrs. Bradbury joining the anonymous millions quietly dispossessed since the recession began. But she was savvy enough to contact a nonprofit group, Pine Tree Legal Assistance, where for once in her 38 years, she caught a break.

Her file was pulled, more or less at random, by Thomas A. Cox, a retired lawyer who volunteers at Pine Tree. He happened to know something about foreclosures because when he worked for a bank he did them all the time. Twenty years later, he had switched sides and, he says, was trying to make amends.

Suddenly, there is a frenzy over foreclosures. Every attorney general in the country is participating in an investigation into the flawed paperwork and questionable methods behind many of them. A Senate hearing is scheduled, and federal inquiries have begun. The housing market, which runs on foreclosure sales, is in turmoil. Bank stocks fell on Thursday as analysts tried to gauge the impact on lenders’ bottom lines.

All of this is largely because Mr. Cox realized almost immediately that Mrs. Bradbury’s foreclosure file did not look right. The documents from the lender, GMAC Mortgage, were approved by an employee whose title was “limited signing officer,” an indication to the lawyer that his knowledge of the case was effectively nonexistent.

Mr. Cox eventually won the right to depose the employee, who casually acknowledged that he had prepared 400 foreclosures a day for GMAC and that contrary to his sworn statements, they had not been reviewed by him or anyone else.

Continue reading…NYTIMES

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Business Insider published this report yesterday:

Excerpts:

Earlier, we wrote about Felix Salmon’s contention that there’s a new mortgage fraud scandal that has the potential to dwarf Goldman’s ABACUS dealings. In this fraud scenario, banks took advantage of their information advantage and sold CDOs with mortgages they knew to be bad without clear representation to investors.

In August, Manal Mehta and Branch Hill Capital put together a presentation targeting Bank of America’s potential exposure to this mortgage fraud, as well as other problems in the mortgage market.

The presentation comes to a pretty damning conclusion: Bank of America’s exposure could nearly halve its share price.

It’s all about what capital Bank of America has in reserve for the scenario of mortgages having to come back on its balance sheet.

Read more: http://www.businessinsider.com/bank-of-america-mortgage-report-2010-10#ixzz12X9OhENP

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CONFIDENTIAL PRESENTATION

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SUPREME COURT OF THE STATE of New York
COUNTY OF ORANGE

Index No. 2593-2009
————————————–X
WELLS FARGO BANK, NA,
3476 Stateview Boulevard
Ft. Mill, SC 29715, DECISION & ORDER
Plaintiff,

-against -

A.D.PANETH A/K/A AHARON D. PANETH A/K/A Motion Date: 9-24-10
AARON D. PANETH A/K/A AD PANETH, BOARD
OF MANAGERS OF NINETEENTH SATMAR DRIVE
CONDOMINIUM, FAIRMONT FUNDING, LTD.,
NATIONAL LABOR RELATIONS BOARD, et al,
Defendants.
————————————-X
LUBELL, J.

Excerpts:

Upon Paneth’s asserted default in his monthly mortgage obligations, Wells Fargo Home Mortgage, Default Management
Department, sent a notice of delinquency to Paneth at the Premises address dated November 16, 2008. No mention is made therein of an assignment of the mortgage by Fairmont to Wells Fargo. In fact, no mention is made at all of Fairmont or MERS.

By “Assignment of Mortgage” dated March 13, 2009, some four months after the Wells Fargo notice of default, MERS, as nominee for Fairmont, assigned the mortgage to Wells Fargo.

This action was commenced by Wells Fargo on March 16, 2009. Pursuant to the affidavit of service dated March 19, 2009, Paneth was served by personal delivery of the summons and complaint at the Premises to one “Hanna Paneth – Spouse.” Service was completed on March 23, 2009 by mailing of a copy of the summons to Paneth at “his last know address”, the Premises.

Upon the expiration of defendant’s time to answer, an ex parte Order of Reference was granted by the Court on October 6, 2009. Thereafter, a Judgment of Foreclosure and Sale was executed by the Court on May 24, 2010. A foreclosure sale was then scheduled.
This application follows.

Whether or not, as Paneth contends, he was properly served with process, the Court finds merit to the application for the reasons herein stated.

Although the notice of default, a contractual condition to acceleration of the mortgage, was sent to Paneth at the proper address, the Premises, Wells Fargo has failed to establish that the notice of default was sent by the then proper party, Fairmont, or a then duly and properly authorized agent (see, HSBC Mortg. Corp. (USA) v. Erneste, 22 Misc.3d 1115(A)[Sup Ct, Kings County] citing Manufactures and Traders Trust Co. v. Korngold, 162 Misc.2d 669 [Sup Ct, Rockland County] and QMB Holdings, LLC v. Escava Brothers, 11 Misc.3d 1060[A][Sup Ct, Bronx County]).

This fatal defect is neither adequately addressed by plaintiff nor cured by plaintiff’s assertion, through counsel, that “[i]t is respectfully submitted that Plaintiff was in possession of the Mortgage and Note at the time the instance foreclosure action was commenced.”

Based upon the foregoing, it is hereby

ORDERED, that the Court hereby vacates the Judgment of Foreclosure and Sale executed by the Court on May 24, 2010; and, it is further

ORDERED, that the case be and is hereby dismissed.

The foregoing constitutes the Opinion, Decision & Order of the Court.
Dated: Goshen, New York
October 14, 2010
S/_____________________________
HON. LEWIS J. LUBELL, J.S.C.
TO: Kenneth Moran, Esq.
11 N. Airmont Road
Suffern, New York 10901

Jacob W. Osher, Esq.
Steven J. Bau, PC
220 Northpointe Parkway – Suite G
Amherst, New York 14228

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