BANK OF NEW YORK, AS TRUSTEE FOR THE CERTIFICATE-HOLDERS CWABS, INC. ASSET-BACKED CERTIFICATES SERIES 2006-14, C/O BAC HOME LOANS SERVICING, L.P., PLAINTIFF-RESPONDENT,
v.
DIANE G. CANO AND UNKNOWN SPOUSE OF DIANE G. CANO [MARIO CANO], DEFENDANTS-APPELLANTS,
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., AS NOMINEE FOR S&L INVESTMENT LENDING, INC., DEFENDANT.

No. 2010AP477.

Court of Appeals of Wisconsin, District IV.

Opinion Filed: January 20, 2011.

Before Vergeront, P.J., Lundsten and Blanchard, JJ.

¶ 1 PER CURIAM.

Diane and Mario Cano appeal a foreclosure judgment. The Canos contend that (1) the circuit court erroneously exercised its discretion in granting the Bank of New York’s motion to reopen its foreclosure action against the Canos; and (2) the court erred in granting summary judgment to the Bank. We conclude that the court properly reopened the foreclosure action, but that the Bank did not establish a prima facie case for summary judgment. Accordingly, we reverse and remand for further proceedings.

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Shahien Nasiripour

shahien@huffingtonpost.com | HuffPost Reporting

First Posted: 01/24/11 07:27 PM Updated: 01/24/11 07:29 PM

The bipartisan panel appointed by Congress to investigate the financial crisis has concluded that several financial industry figures appear to have broken the law and has referred multiple cases to state or federal authorities for potential prosecution, according to two sources directly involved in the deliberations.

The sources, who spoke on condition they not be named, declined to identify the people implicated or the names of their institutions. But they characterized the panel’s decision to make referrals to prosecutors as a significant escalation in the government’s response to the financial crisis. The panel plans to release its final report in Washington on Thursday morning.

In the three years since major lenders teetered on the brink of collapse, prompting huge taxpayer rescues and amplifying an already painful recession into the most punishing downturn since the Depression, public indignation has swelled while few people who played prominent roles in the crisis have faced legal consequences.

That may be about to change. According to the law that created the Financial Crisis Inquiry Commission, the panel has a responsibility to refer for prosecution any evidence of lawbreaking. The offices that have received the referrals — the Justice Department, state attorneys general, and perhaps both — must now determine whether to prosecute cases and, if so, whether to pursue criminal or civil charges.

Countrywide Is Sued by TIAA-Cref, Investors in Mortgage-Backed Securities

By Karen Freifeld – Jan 24, 2011 5:35 PM ET

Bank of America Inc.’s Countrywide Financial unit was sued by investors in mortgage-backed securities who alleged a “massive fraud” in a complaint filed today in New York state court.

TIAA-CREF Life Insurance Co., New York Life Insurance Co., and Dexia Holdings Inc. are among about a dozen plaintiff institutional investors in mortgage-backed securities issued by Countrywide’s subsidiaries, according to the complaint.

The investors claim they bought hundreds of millions of dollars of Countrywide mortgage-backed securities from 2005 to 2007 because they wanted conservative, low-risk investments and relied on term sheets, prospectuses and other materials provided by the firm that they say were recklessly or knowingly false, according to the complaint.

“In reality, Countrywide was an enterprise driven by only one purpose — to originate and securitize as many mortgage loans as possible into MBS to generate profits for the Countrywide defendants without regard to the investors that relied on the critical, false information provided to them with respect to the related certificates,” according to the complaint.

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2011 Ohio 218
Grove Court Condominium Unit Owners’ Association, Plaintiff-Appellee,
v.
Dorothy M. Hartman, et al., Defendants-Appellees,
[Appeal by Appellant Wells Fargo Bank, N.A.]
No. 94910.

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

RELEASED AND JOURNALIZED: January 20, 2011.

Deanna C. Stoutenborough, Romi T. Fox, M. Elizabeth Hils, Lerner, Sampson & Rothfuss, 120 E. Fourth Street, 8th Floor, Cincinnati, OH 45202, For Wells Fargo Bank, N.A. Scott A. King, Terry W. Posey, Jr., Thompson Hine LLP, P.O. Box 8801, 2000 Courthouse Plaza, N.E., Dayton, OH 45401-8801, Dale S. Smith, Thompson Hine LLP, 3900 Key Center, 127 Public Square, Cleveland, OH 44114, Attorneys for Appellant.

James C. Wrentmore, Singerman, Mills, Desberg & Kauntz Co., LPA, 3401 Enterprise Parkway, Suite 200, Beachwood, OH 44122, For Grove Court Condominium Unit Owners’ Association, Kevin M. Fields, Darcy Mehling Good, Robert E. Kmiecik, Kimberly L. Strauss, Kaman & Cusimano, LLC, 50 Public Square, Suite 2000, Cleveland, OH 44113, Elizabeth A. Meers, 1370 Ontario Street, Suite 2000, Cleveland, OH 44113-1726, For Dorothy M. Hartman, et al., Jason P. Hager, Douglass & Associates Co., LPA, 4725 Grayton Road, Cleveland, OH 44135, For Plymouth Park Tax Services, Alexander E. Goetsch, Megan R. Miller, Cavitch, Familo & Durkin Co., LPA, 1300 East Ninth Street, 20th Floor, Cleveland, OH 44114, For Dino Selvaggio, Third Federal Savings & Loan Association, Legal Department, 7007 Broadway Avenue, Cleveland, OH 44105, For Third Federal Savings & Loan Association, Attorneys for Appellees.

Before: Gallagher, P.J., Kilbane, A.J., and Celebrezze, J.

JOURNAL ENTRY AND OPINION

SEAN C. GALLAGHER, P.J.

{¶ 1} Appellant Wells Fargo Bank, N.A. (“Wells Fargo”) appeals the judgment of the Cuyahoga County Court of Common Pleas that denied its emergency motion to intervene. For the reasons stated herein, we affirm.

{¶ 2} This is a foreclosure action that was instituted by plaintiff Grove Court Condominium Owners’ Association, Inc. (“Grove Court”), on December 28, 2006. At the time the action was filed, defendants Dorothy and Richard Hartman (“the Hartmans”) owned two condominiums, units 307 and 405, in the Grove Court condominium development, located at 1900 Grove Court in Cleveland. They acquired ownership to the units in 1986 through separate and distinct instruments. Unit 405 is the subject property in this matter.

{¶ 3} After purchasing the units, the Hartmans added an internal stairway to connect the units in accordance with Grove Court’s declaration and Ohio law. They did not combine the units into a single unit for legal and tax purposes. Rather, the units retained their separate addresses and parcel numbers.

{¶ 4} In 2005, the Hartmans obtained refinancing from Wells Fargo. The legal description on the mortgage and title commitment only included unit 307. There was no recorded interest on unit 405.

{¶ 5} On December 28, 2006, Grove Court filed this foreclosure action against the Hartmans. Grove Court sought to foreclose on a certificate of lien recorded against unit 405, for unpaid maintenance fees and condominium assessments. The parties named in the action were consistent with the preliminary judicial report, which did not show any mortgages of record on unit 405.

{¶ 6} On August 7, 2007, Grove Court filed an unopposed motion for summary judgment against the Hartmans. On October 22, 2007, the trial court adopted a magistrate’s decision, granted Grove Court judgment against the Hartmans, and issued a decree of foreclosure.

{¶ 7} In the meantime, Wells Fargo had initiated foreclosure proceedings on unit 307 on June 8, 2007. After discovering this action, Wells Fargo filed an emergency motion to intervene, motion for relief from judgment and to vacate sale, and motion to quiet title. The motion was filed two months after judgment had been granted to Grove Court, four days prior to the scheduled foreclosure sale, and almost a year after the case had commenced. Wells Fargo did not attach any pleading to the motion to intervene.

{¶ 8} In its motion, Wells Fargo asserted that it had issued a refinance loan to the Hartmans in October 2005, that the parties intended the loan to be secured by both units 307 and 405, and that as a result of a scrivener’s error, only unit 307 was identified in the legal description on the mortgage. Wells Fargo sought an order recognizing that it had a superior lien interest in unit 405.

{¶ 9} Before the motion was ruled upon, unit 405 was sold at a sheriff’s sale to Dino Selvaggio for $76,667. Thereafter, a court magistrate issued an order denying Wells Fargo’s motion to intervene. The trial court confirmed the sale on June 6, 2008.

{¶ 10} Various distributions were made from the proceeds of the sale, including $10,256.49 to Grove Court in satisfaction of its judgment. A portion of the funds remain pending with the clerk of court.

{¶ 11} Wells Fargo filed objections to the magistrate’s decision. On February 26, 2010, the trial court overruled the objections, adopted the magistrate’s decision, and denied Wells Fargo’s motion to intervene. The trial court, through the adopted decision, found that Wells Fargo’s motion failed to attach a pleading detailing its claim as required by Civ.R. 24(C). The court further found the motion raised a number of new liability issues that would operate to severely prejudice the ability of Grove Court to satisfy its judgment, that Wells Fargo did not maintain an interest in the subject property, and that the motion was untimely.

{¶ 12} Wells Fargo has appealed the trial court’s decision. In its sole assignment of error, Wells Fargo claims “[t]he trial court erred in denying the motion to intervene.”

{¶ 13} Wells Fargo asserts that it had a right to intervene in this action pursuant to Civ.R. 24(A)(2), which provides for intervention of right in civil cases. The rule provides as follows: “Upon timely application anyone shall be permitted to intervene in an action: * * * (2) when the applicant claims an interest relating to the property or transaction that is the subject of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant’s ability to protect that interest, unless the applicant’s interest is adequately represented by existing parties.” Civ.R. 24(A)(2).[1]

{¶ 14} The rule is to be liberally construed in favor of intervention. State ex rel. Watkins v. Eighth Dist. Court of Appeals, 82 Ohio St.3d 532, 534, 1998-Ohio-190, 696 N.E.2d 1079. Nevertheless, the putative intervenor still bears the burden of establishing the right to intervene.

{¶ 15} In this case, Wells Fargo claims that it has an interest in the subject property. Although its alleged interest was not recorded and does not appear of record, Wells Fargo asserts that this was the result of a scrivener’s error and that it has a legal or equitable lien on the property that is superior to other interests.

{¶ 16} In interpreting analogous Fed.R.Civ.P. 24(a)(2), federal courts have stated that intervention of right requires the interest to be “direct, substantial, and legally protectable.” U.S. v. Vasi (Mar. 6, 1991), N.D. Ohio Nos. 5:90 CV 1167 and 5:90 CV 1168; Grubbs v. Norris (C.A. 6, 1989), 870 F.2d 343, 346. Ohio courts have found the same requirements implicit in Civ.R. 24(A)(2). Duryee v. PIE Mut. Ins. Co. (Dec. 1, 1998), Franklin App. No. 98AP-535; Fairview Gen. Hosp. v. Fletcher (1990), 69 Ohio App.3d 827, 591 N.E.2d 1312. Further, the Ohio Supreme Court specifically has stated that the claimed interest under Civ.R. 24(A)(2) must be one that is “legally protectable.” State ex rel. Dispatch Printing Co. v. Columbus, 90 Ohio St.3d 39, 2000-Ohio-8, 734 N.E.2d 797; In re Schmidt (1986), 25 Ohio St.3d 331, 336, 496 N.E.2d 952.

{¶ 17} In this case, the trial court determined that the documentation provided by Wells Fargo only demonstrates that its mortgage encumbers a wholly different parcel than the parcel at issue in this matter. The court found that without the exercise of the court’s equitable power of reformation, Wells Fargo has no interest in the subject property.

{¶ 18} We recognize that Wells Fargo does not have a present interest in the property and that its claimed interest is contingent on a determination of the merits of the issues it seeks to raise in the action.[2] However, even assuming that Wells Fargo’s claimed interest is a direct, substantial and legally protectable interest, we still find that the trial court did not error in denying the motion to intervene on the grounds that a required pleading was not attached to the motion and the motion was untimely.

{¶ 19} Civ.R. 24(C) mandates that the motion to intervene “shall be accompanied by a pleading, as defined in Civ.R. 7(A) setting forth the claim or defense for which intervention is sought.” Civ.R. 7(A) defines a pleading as a complaint, an answer, a reply to a counterclaim, an answer to a cross-claim, a third-party complaint, or a third-party answer. No such pleading accompanied the motion to intervene filed by Wells Fargo.

{¶ 20} The Ohio Supreme Court has repeatedly held that a motion to intervene is properly denied when the “motion is not accompanied by a pleading setting forth the claim or defense for which intervention is sought” as mandated by Civ.R. 24(C). State ex rel. Sawicki v. Court of Common Pleas of Lucas Cty., 121 Ohio St.3d 507, 2009-Ohio-1523, 905 N.E.2d 1192, ¶ 21; State ex rel. Polo v. Cuyahoga Cty. Bd. of Elections, 74 Ohio St.3d 143, 144, 1995-Ohio-269, 656 N.E.2d 1277.[3] Thus, we do not find that the trial court erred in denying the motion on this ground.

{¶ 21} “The timeliness of a motion to intervene pursuant to Civ.R. 24(A) is a matter within the sound discretion of the trial judge.” Univ. Hosps. of Cleveland, Inc. v. Lynch, 96 Ohio St.3d 118, 2002-Ohio-3748, 772 N.E.2d 105, ¶ 47. When determining the timeliness of the motion, the court should consider the following factors: “(1) the point to which the suit has progressed, (2) the purpose for which intervention is sought, (3) the length of time preceding the application during which the proposed intervenor knew or reasonably should have known of his interest in the case, (4) the prejudice to the original parties due to the proposed intervenor’s failure after he or she knew or reasonably should have known of his or her interest in the case to apply promptly for intervention, and (5) the existence of unusual circumstances militating against or in favor of intervention.” Id., quoting Triax Co. v. TRW, Inc. (C.A.6, 1984), 724 F.2d 1224, 1228.

{¶ 22} “Intervention after final judgment has been entered is unusual and ordinarily will not be granted.” Meagher, 82 Ohio St.3d at 504, 1998-Ohio-192, 696 N.E.2d 1058. However, intervention after final judgment may be allowed when the intervenor has no other alternative remedy and intervention is the only way to protect the intervenor’s rights. See Owens v. Wright (Feb. 18, 1993), Cuyahoga App. No. 64031; Likover v. Cleveland (1978), 60 Ohio App.2d 154, 159, 396 N.E.2d 491. Ultimately, the determination of whether a Civ.R. 24 motion to intervene is timely depends on the facts and circumstances of the case. Meagher, 82 Ohio St.3d at 503, 1998-Ohio-192, 696 N.E.2d 1058.

{¶ 23} In this case, Wells Fargo did not observe the alleged scrivener’s error at the time it received the title commitment or when the mortgage was recorded. It did not seek to intervene in this action until nearly a year after the case was filed, two months after final judgment was granted to Grove Court, and only four days before a scheduled sheriff’s sale of the subject property. Also, the motion was filed six months after Wells Fargo had filed its own foreclosure action against only unit 307. Wells Fargo sought to vacate the judgment, to interject newly contested issues into the matter, and to claim a potential superior interest in the subject property that would require the court to exercise its equitable powers to reform Wells Fargo’s mortgage. As a judgment had already been imposed, with priority interests established, allowing intervention would operate to prejudice the original parties. Further, the subject property was sold to Mr. Selvaggio.

{¶ 24} Considering the facts and circumstances of this case, we find the trial court did not abuse its discretion in denying Wells Fargo’s motion to intervene after judgment.[4] Accordingly, Wells Fargo’s sole assignment of error is overruled.

Judgment affirmed.

It is ordered that appellees recover from appellant costs herein taxed.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate issue out of this court directing the common pleas court to carry this judgment into execution. Case remanded to the trial court for execution of sentence.

Mary Eileen Kilbane, A.J., and Frank D. Celebrezze, Jr., J., concur.

[1] The Ohio Supreme Court has recognized that “Ohio courts have applied an abuse of discretion standard for all of the Civ.R. 24(A)(2) intervention of right requirements.” State ex rel. First New Shiloh Baptist Church v. Meagher, 82 Ohio St.3d 501, 503 fn. 1, 1998-Ohio-192, 696 N.E.2d 1058. However, we observe that there is in fact some split in authority as to whether the review for intervention of right is de novo.

[2] We note that “equity will allow reformation of a written instrument for the erroneous omission of a material provision so that the instrument will evince the actual intention of the parties.” Berardi v. Ohio Turnpike Comm. (1965), 1 Ohio App.2d 365, 368, 205 N.E.2d 23.

[3] Insofar as this court found that the failure to attach a pleading was not fatal to intervention in Crittenden Court Apt. Assoc. v. Jacobson/Reliance, Cuyahoga App. Nos. 85395 and 85452, 2005-Ohio-1993, that case is distinguishable. In that case, the purpose for intervention “did not include the addition of any new liability or damages issues to the litigation,” and the proposed intervenor explained in its motion its reason for not attaching an intervening complaint as follows: “`Because [proposed intervenor] has no separate and independent claims to assert in this litigation, it is neither necessary or appropriate that it submit a pleading in conjunction with this motion as described in [Civ.R. 24(C)].'” Id. at ¶ 6. These are not the circumstances presented herein.

[4] The facts and circumstances in Rokakis v. Martin, 180 Ohio App.3d 696, 2009-Ohio-369, 906 N.E.2d 1200, a case relied on by Wells Fargo, were different from this matter. In Martin, the intervenor was a valid lienholder with a junior interest in the property to those already named in the action, its interest could be paid out of the excess sale proceeds remaining on deposit with the court, and its intervention would not operate to prejudice the original parties to the foreclosure action.

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IMPORTANT NOTICE: On January  24, 2011 the plaintiffs, on behalf of the potential Class applied for and received another Temporary Restraining Order and Order to Show Cause against the defendants in this action. If you are a potential class member, please call this office at 714-372-2264  NOW!

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* Two defunct lenders seeking to destroy boxes of records

* One judge temporarily blocks document destruction

* In separate hearing, destruction partially allowed

* Rulings come amid wide concerns of missing loan docs

By Scot J. Paltrow

WILMINGTON, Del., Jan 24 (Reuters) – A U.S. bankruptcy judge temporarily blocked bankrupt subprime lender Mortgage Lenders Network USA from destroying 18,000 boxes of original loan files after federal prosecutors said documents in them may be needed as evidence in more than 50 criminal investigations.

In a hearing Monday before U.S. Bankruptcy Judge Peter J. Walsh, a representative from the Delaware U.S. Attorneys’ Office said she did not know details of any of the investigations.

But she said prosecutors and FBI offices around the country had requested time to access to the boxes and assess whether the contents contain needed evidence before the judge permits any destruction.

L. Randall Wray

Professor of Economics and Research Director of the Center for Full Employment and Price Stability, University of Missouri–Kansas City
Posted: January 24, 2011 09:01 AM

It is now widely recognized that MERS facilitated fraud by lenders, servicers, foreclosers and securitizers. Even on the most charitable interpretation it is very difficult to believe that MERS was not fraudulent by design. So much of the story has already been told that we do not need to rehash all of it here. Let me first concisely summarize the two main problems, and then move on to the most recent developments that put the final nails in MERS’s coffin. I’ll conclude with my argument that there really was some “not so intelligent” design behind all of this. But it is coming back to bite the hand that feeds. The big banks will not survive the monster they created.

Whenever those who are critical of MERS and the banksters post blogs about the multiple frauds, we are attacked by commentators — presumably industry hacks — who try to obfuscate the issues. But recent court cases as well as testimonies before elected representatives confirm our two main claims. First, many or most foreclosures that are taking place are illegal because those doing the foreclosing do not have legal standing. And, second, the practices that created the foreclosure problems also mean that the mortgage backed securities are actually unsecured debt. That means banks must take them back, so they are toast. It all comes back to MERS’s business model: it destroyed the chain of title.

Much of the rest of the fraud and scandal we are witnessing follows on from that because the banks want to foreclose the properties before the securities holders put back the fraudulent securities. The problem is that the destruction of the clear chain of title makes it impossible to foreclose, so the banks used robo-signers to forge documents in the hope they could paper over their home thefts. But homeowners, courts, legislators, securities investors, and title insurers have caught on to the scam. In addition to the forgeries, MERS and bank officials and lawyers are committing perjury in court in the hope that they can confuse the issues sufficiently that they can complete the home thefts.

By GRETCHEN MORGENSON
Published: January 24, 2011

Since the government took over Fannie Mae and Freddie Mac, taxpayers have spent more than $160 million defending the mortgage finance companies and their former top executives in civil lawsuits accusing them of fraud. The cost was a closely guarded secret until last week, when the companies and their regulator produced an accounting at the request of Congress.

The bulk of those expenditures — $132 million — went to defend Fannie Mae and its officials in various securities suits and government investigations into accounting irregularities that occurred years before the subprime lending crisis erupted. The legal payments show no sign of abating.

Documents reviewed by The New York Times indicate that taxpayers have paid $24.2 million to law firms defending three of Fannie’s former top executives: Franklin D. Raines, its former chief executive; Timothy Howard, its former chief financial officer; and Leanne Spencer, the former controller.

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Via: BankClassActions

UNITED STATES BANKRUPTCY COURT
WESTERN DISTRICT OF WASHINGTON

FOR PUBLICATION
In re:
PETER A. JACOBSON and
MARIA E. JACOBSON,
Debtors.

No. 08-45120

DECISION ON RELIEF FROM STAY

Excerpts:

Before the court is a motion for relief from the automatic stay of § 362(a)2 to enforce a deed of trust on the Debtors’ residence. As it was neither brought in the name of the real party in interest, nor by anyone with standing, the motion for relief from stay will be DENIED.

<SNIP>

Assuming the exhibits to the motion are authentic and are the same as those intended to have been attached to the declaration, the note is indorsed in blank. Without more, that and possession (rather than mere custody) suggests that Wells Fargo is the holder of the note. RCW 62A.3-20114 and 3-30115. Nothing in the record establishes on whose behalf (if other than its own) Wells Fargo Document Custody possesses the note; that (and verification of current possession and present ability to produce the original, if required) would have to come from Wells Fargo.

Nor does anything in the record establish UBS AG’s authority to enforce the Debtors’ note, for whomever holds it; and thus to foreclose the deed of trust. The declaration states that UBS AG is “servicing agent,” a term with no uniform meaning, and no definition cited. At a minimum, there must be an unambiguous representation or declaration setting forth the servicer’s authority from the present holder of the note to collect on the note and enforce the deed of trust. If questioned, the servicer must be able to produce and authenticate that authority.

UBS AG has not shown that it has standing to bring the motion for relief from stay or authority to act for whomever does.

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By Scot J. Paltrow

WASHINGTON | Sun Jan 23, 2011 2:50pm EST

WASHINGTON (Reuters) – Federal bankruptcy judges in Delaware are due to hold separate hearings Monday on requests by two defunct subprime mortgage lenders to destroy thousands of boxes or original loan documents.

The requests, by trustees liquidating Mortgage Lenders Network USA and American Home Mortgage, come despite intense concerns that paperwork critical to foreclosures and securitized investments may be lost.

A series of recent court rulings have increased the importance of original loan documents, holding that they are essential for investors to prove ownership of mortgages and to have the right to foreclose.

In the Mortgage Lenders case, the U.S. Attorney in Delaware has formally objected to the requested destruction because loss of the records “threatens to impair federal law enforcement efforts.”

The former subprime lender shut down in February 2007. In a January 6, 2010, motion, Neil Luria, the liquidating trustee, asked Bankruptcy Judge Peter J. Walsh for permission to destroy nearly 18,000 boxes of records now warehoused by document storage company Iron Mountain Inc.

Luria stated that destruction is necessary to eliminate $16,000 per month in storage costs as he disposes of the last assets of the bankrupt company.

In the American Home Mortgage case, the liquidating trustee, Steven Sass, has asked Bankruptcy Judge Christopher Sontchi to approve destruction of 4,100 boxes of loan documents stored in a dank parking garage beneath the company’s former headquarters in Melville, Long Island.

By Joe Sabo and Thom Weidlich – Jan 22, 2011 6:11 PM ET

Merscorp Inc., the parent company of Mortgage Electronic Registration Systems Inc., said R.K. Arnold has retired as chief executive officer and president, and Paul Bognanno will take the job on an interim basis.

Bognanno, former chairman of Radian Guaranty Inc., will lead the search process for a permanent replacement, Reston, Virginia-based Merscorp said in an e-mailed statement.

The MERS system, which Arnold helped develop, has come under fire in courts on the role it has, if any, in home foreclosures. It’s an electronic database of more than half of all the outstanding residential mortgages in the U.S. Merscorp has said it was created by the mortgage industry in 1995 to improve servicing after county offices couldn’t deal with the flood of mortgage assignments.

According to its website, MERS is owned by the largest lenders in the country including Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co., in addition to Fannie Mae and Freddie Mac.

Excerpts:

A We don’t work in foreclosures.
Q You don’t work in foreclosures?
A No.
Q You don’t sign notices of default starting
foreclosures?
A I sign notices of default, yes.
Q And what do you understand the effect of a
notice of default is?
A It starts the clock ticking on the
formal foreclosure period.
Q But that is not working in foreclosures is your
testimony under oath here today on this video?
A Correct.
Q Does a notice of default put the property in
foreclosure?
A It starts the formal process of the foreclosure
time frames.

<SNIP>

Q What documents do you review prior to signing a
notice of default?
A We don’t review any documents.
Q What documents are provided to you in
connection with a loan where a notice of default t is
presented to you for your signature?
A Nothing.

<SNIP>

Q Let’s look at the second sentence there. It
says the amount is $9,751.03 as of 10/17/2007 and will
increase until your account becomes current.
At the time you signed this document you had
absolutely no knowledge whether that was true; correct?
A Correct.
Q On the second page, the last full paragraph
above your signature line, do you see that, that by
reason thereof, the present beneficiary under such deed
of trust has executed and delivered to the duly
appointed trustee a wri t ten declaration of default and
demand for sale.
You don’t know whether that was ever true, do
you?
A No.

<SNIP>

Q So to be clear, you receive an e-mail from LPS
that has as an attachment to it a notice of default?
A Yes.
Q That has names on that notice of default that
Ticor Title does not have an agency relationship with directly?
A Correct.
Q Correct?
A Right.
Q And then you sign the notice of default without
verifying the accuracy of any information in that notice
of default and cause it to be recorded?
A Correct.

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Via: ZeroHedge

Is the biggest robosigning fraud in the history of the US housing market about to come unglued? If so, take our prediction of a $100 billion total in future BofA rep and warranty reserves and triple it.

From the WSJ:

The chief executive of the privately-held Mortgage Electronic Registration Systems, or MERS, is planning to leave the company and an announcement could come within days, according to people familiar with the matter.

The company has been under fire by Congress and state officials for its role in the mortgage-document crisis. The firm’s board of directors has met in recent days to address the fate of the company and its chief executive, R.K. Arnold, the people said.

Arnold and other MERS executives didn’t respond to requests for comment. A MERS spokeswoman Friday declined comment.  Arnold, a former U.S. Army Ranger, has served as the CEO and president of Merscorp Inc., the parent company of MERS, since 1998 and has been with the company since its inception 15 years ago, according to a corporate biography.

MERS was built by Fannie Mae (FNMA), Freddie Mac (FMCC), and several large U.S. banks in 1996 as an electronic registry of land records. That created a parallel database to facilitate the packaging of loans into securities that could be sold and re-sold without being recorded in local county courthouses, reducing costs for banks. The company’s name is listed as the agent for mortgage lenders on more than 65 million home loans.

But the company’s practices have begun to receive heavy scrutiny from state prosecutors and federal regulators, particularly in light of foreclosure-document problems that surfaced last fall. State and federal lawmakers have begun to consider bills that would make it harder for banks to use or foreclose on properties through MERS.

MERS’s legal standing also has been challenged by legal experts because it doesn’t own the underlying debt. Previously, the mortgage and the promissory note weren’t split between different parties.

Critics of the company have raised concerns over whether notes were properly assigned or tracked within the electronic system. Judges have also begun to question the company’s practices of “deputizing” hundreds of bank executives to handle foreclosures by naming them “vice presidents” of MERS.

Via: William Alexander Roper, JR.

Cardoza calls for more federal action to halt foreclosures

CBVT, WASHINGTON, D.C.
January 20, 2011 9:00pm

excerpts:

Dubbed the “Housing Opportunity and Mortgage Equity (HOME) Act,” H.R. 363 would allow as many as 30 million homeowners with mortgages backed by Fannie Mae or Freddie Mac to benefit from the current historically low market interest rates and refinance for up to 40 years at a fixed rate, Mr. Cardoza says.

[…]

“The HOME Act would provide a light at the end of the tunnel for the millions of homeowners struggling to make their monthly house payment,” says Mr. Cardoza.

Read H.R. 363 below…

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By Thom Weidlich – Jan 21, 2011 12:01 AM ET

Massachusetts’ highest court will consider whether a home buyer can rightfully own a property if the bank that sold it to him didn’t have the right to foreclose on the original owner.

The state’s Supreme Judicial Court, which agreed last month to take the appeal, already ruled Jan. 7 that banks can’t foreclose on a house if they don’t own the mortgage. The lower- court decision now under review said the buyer of residential property in Haverhill, Massachusetts, never really owned it because U.S. Bancorp foreclosed before it got the mortgage.

“It appears to be the next step in the conversation,” Paul R. Collier III, who represented the borrower in the earlier case, U.S. Bank v. Ibanez, said in a phone interview.

Like the Ibanez case, the court’s decision may resonate with other states as they grapple with the rights of new homebuyers who may be hesitant to complete a purchase for fear of uncertain title, and with how such a trend may hobble the broader housing market.

Claims of wrongdoing by banks and loan servicers triggered a 50-state investigation last year into whether thousands of U.S. foreclosures were properly documented during the housing collapse. Last year, completed foreclosures in Massachusetts rose 32 percent to 12,233 from 9,269 in 2009, according to Boston-based Warren Group, which tracks local real estate.

Suit Seeks $30 Million in Compensatory and $90 Million in Punitive Damages from Goldman
Sachs Over Its Role in Developing and Marketing the Synthetic CDO “ABACUS”

New York, NY — January 6, 2011 — ACA Financial Guaranty Corporation (ACA), a monoline
bond insurance company now operating in run off, filed suit today against Goldman Sachs & Co.
(Goldman Sachs) for fraud and unjust enrichment in connection with a synthetic collateralized
debt obligation (CDO) called ABACUS 2007-AC1 (ABACUS), which Goldman Sachs
developed and sold on behalf of its hedge fund client Paulson & Co. Inc. (Paulson) in 2007.
ACA was misled by Goldman’s fraudulent activities and is seeking $30 million in compensatory
and $90 million in punitive damages.

According to the complaint, filed in the Commercial Division of the Supreme Court of the State
of New York, New York County, this fraud action arises from the egregious conduct of Goldman
Sachs in developing and marketing ABACUS based on a portfolio of investment securities
selected largely by its hedge fund client, Paulson. Goldman Sachs’s scheme was to design
ABACUS to fail, so that Paulson could reap huge profits by shorting the portfolio and Goldman
Sachs could reap huge investment banking fees. Goldman Sachs fraudulently induced ACA to
take a long position in and provide guaranty insurance for ABACUS. Goldman Sachs did so by
deceiving ACA into believing that Paulson also was to be a long investor in ABACUS. In fact,
as Goldman Sachs knew, Paulson intended instead to take an enormous short position in
ABACUS, reaping nearly $1 billion when the portfolio failed.

As the complaint alleges: “ABACUS was worthless at the time Goldman Sachs marketed it to
ACA. Had Paulson’s true role as a short investor selecting the portfolio been known, neither
ACA nor anyone else would have taken a long position in it. Because of Goldman Sachs’s
deceit — which led ACA to reasonably believe that ABACUS was a valuable product selected by
the equity investor with identical objectives — ACA invested in what was in fact a worthless
product. Goldman Sachs engaged in this egregious misconduct notwithstanding that it expressly
acknowledged that its participation presented ‘reputational risk’ and after at least one other major
investment bank declined to participate for that very reason.” Goldman Sachs has since settled
SEC civil charges arising out of this fraudulent conduct, agreeing to pay a $550 million fine.

ACA is represented by Marc E. Kasowitz of Kasowitz, Benson, Torres & Friedman LLP.

About ACA Financial Guaranty Corporation
Founded in 1997, ACA Financial Guaranty Corporation is a monoline bond insurance company
licensed in 50 states and 5 territories and regulated by the Maryland Insurance Administration.
On August 8, 2008, the Company and counterparties to its structured finance products reached an
agreement on a restructuring plan for ACA. The plan, approved by the Maryland Insurance
Administration, provided for settlement of the structured finance obligations and protection for
ACA’s municipal policyholders. ACA will operate as a runoff insurance company and focus on
actively monitoring its remaining insured municipal obligations. ACA’s portfolio consists of
approximately 700 policies guarantying timely payment of principal and interest on more than $7
billion of generally high yield municipal bonds.

Contact:
Elliot Sloane
212-446-1860
esloane@sloanepr.com

Whit Clay
212-446-1864
wclay@sloanepr.com

Read Complaint Below…

[ipaper docId=47293635 access_key=key-2fjm9bz5nhmn9zoqo219 height=600 width=600 /]

By LOUISE STORY
Published: January 20, 2011

As the Obama administration prepares a report on the future of Fannie Mae and Freddie Mac, some of the nation’s largest banks are offering a few suggestions.

Wells Fargo and some other large banks would like private companies, perhaps even themselves, to become the new housing finance giants helping to bundle individual mortgages into securities — that would be stamped with a government guarantee.

The banks have presented their ideas publicly through trade groups. Housing industry consultants and people familiar with recent meetings at the Treasury Department say these banks view the government’s overhaul of the mortgage market as a potential profit opportunity. Treasury officials have met with executives from several institutions, including Wells Fargo, Morgan Stanley, Goldman Sachs and Credit Suisse, according to a public listing of the meetings.

By ABIGAIL FIELD Posted 12:00 PM 01/20/11

Judge Shelley C. Chapman, of the U.S. Bankruptcy Court for the Southern District of New York, has ordered HSBC and Litton Loan Servicing (a Goldman Sachs subsidiary) to send officers with some juice — and not low-level types — to her Manhattan courtroom on Feb. 10 to explain themselves. More specifically, to explain their failure to provide adequate documentation about a mortgage they claim to own and service. Judge Chapman also ordered the Texas attorney who signed the documents to show up.

At issue is the fact that HSBC (HBC) hasn’t come close to proving it owns the loan, and the documents it has submitted look funny. It also doesn’t appear to have been acting in good faith when it comes to trying to modify the loan (also known as “loss mitigation”). So, the judge wants to talk to people who actually know things and can make decisions.

How Did HSBC Get the Note?

Here’s the story:

[ipaper docId=47202520 access_key=key-vza4t37w3bicrfhw5ga height=600 width=600 /]

And exactly where are the cost savings when it’s probably costing them a ton more defending MERS??

By: David Dayen Thursday January 20, 2011 7:15 am

Laurence Platt, a partner at the firm K&L Gates, which defended Wells Fargo and US Bank in the Ibanez case, basically threatened the American homeowner with sky-high interest rates if the banks aren’t allowed to run their own private land recording system.

If local governments succeed in the fight against how banks have recorded the transfer of mortgage notes through the Mortgage Electronic Registration Systems, home loans could become as expensive as credit cards, K&L Gates Partner Laurence Platt said Wednesday […]

Platt admitted there were issues with the system, but he warned that scoring short-term political points could be the end of affordable housing.

“They are making secured credit unenforceable,” Platt said. “If you think you’re going to get 4% mortgages on unsecured loans, you’re wrong. You’re going to get credit card rates. MERS was designed to make it easy to transfer assignments in modern economics.”

This occurred on a panel at a meeting of the Mortgage Bankers Association, where Platt appeared with Georgetown Law Professor Adam Levitin, who has been critical of MERS. I corresponded with Levitin, and this was an accurate rendering of Platt’s remarks.

“My response was that’s nonsense,” Levitin wrote in an email. “No one, absolutely no one, is arguing that a valid security agreement should not be enforced. Instead, the issue is whether we should enforce invalid security interests or let parties that do not hold a security interest enforce someone else’s. I hardly think that denying parties that right will result in a change in the cost of credit. It might result in them changing law firms, however, to ones that didn’t screw up their securitization deals.”

By ABIGAIL FIELD Posted 6:30 AM 01/20/11

As the foreclosure crisis has escalated over the past several months, one overarching debate has been about who bears the most blame: homeowners or banks?

After everything I’ve learned and written about the foreclosure mess, my verdict is: The banks are responsible for 90% of the problem, troubled homeowners 10%.

Yes, every foreclosure involves a homeowner not paying his mortgage. But every foreclosure also involves a bank that made the loan. And usually another bank, or several more, that profited from securitizing the loan. And still another bank, or several, that profited from servicing the loan. Together, those banks have done three things that created the massive glut of foreclosures choking America’s legal systems and laying waste to its real estate markets:

• They knowingly made millions of loans doomed for foreclosure as soon as the check was written.
• They deliberately and/or incompetently failed to modify many salvageable mortgages.
• They were so careless with their paperwork and processes that they’ve undermined the rule of law, clouded the title to untold numbers of properties and complicated the processing of the massive backlog of foreclosures that hurts the economically crucial real estate market.

Let’s take a closer look at each factor.

William K. Black – HUFFINGTON POST

Assoc. Professor, Univ. of Missouri, Kansas City; Sr. regulator during S&L debacle
Posted: January 19, 2011 11:13 AM

‘An Economic Philosophy That Has Completely Failed’

Excerpt:

10. The Mortgage Electronic Registration Service (MERS) is unregulated. MERS, at best, was a system designed to evade county recorder fees. No one – and that includes MERS’ controlling officials – knows the true condition of the mortgage instruments that MERS is supposed to be registering. At best, it is a scandal that threatens the stability of homeowners and holders of instruments that are supposed to be secured by mortgages. MERS is an “obvious gap” in regulatory protections that demonstrates once more the wealth and job destroying consequences of the “completely failed” anti-regulatory philosophy that Obama promised to root out.

11. The foreclosure scandal revealed an “obvious gap” in regulatory protections – no one regulates the foreclosure process. (The underlying epidemic of accounting control fraud by the nonprime mortgage lenders generated the “echo” epidemic of foreclosure fraud.) Bank of America, the second largest financial institution in America, acquired Countrywide in order to secure its personnel and its mortgage servicing portfolio. Countrywide was notorious for its fraudulent and predatory mortgage lending practices. Placing its employees in charge of servicing – the banking operation that controls the foreclosure process – guaranteed epic abuses. (Bank of America also managed to generate pervasive foreclosure abuses out of the staff it had prior to acquiring Countrywide.) Bank of America personnel, and personnel of other major servicers, eventually confessed that their foreclosure actions relied on massive, universal perjury (a felony). These “robo signing” crimes occurred at a frequency of roughly 10,000 monthly at more than one large servicer. Our most elite banks have confessed to committing hundreds of thousands of felonies.