By Susan Chana Lask, Esq.
Foreclosure complaints routinely allege that because homeowners fail to pay their mortgage then the bank must take the home to recover its losses. However, the bank may not be at a loss according to the Pooling and Servicing Agreement (“PSA”) trusts terms. Notably, banks never inform the courts of the PSA terms in their foreclosure complaints.
To establish a prima facie case in an action to foreclose a mortgage, the plaintiff bank must establish “the existence of the mortgage and mortgage note, ownership of the mortgage and note, and the Defendant’s default in payment.” Campaign v. Barba, 23 AD3d 327 (2nd Dept. 2005). The PSA is the insurance existing specifically to protect the banks from homeowner’s default, which by its terms always pays any defaulting mortgage and other fees, including real estate taxes. Logically, if the bank is paid then there is no default or damage to the bank. How can a loan be in default if the servicer advanced every payment to cover any alleged default?
For example, the PSA for a trust called OAR2 names not one but two servicers as Wells Fargo Bank, N.A. (the master servicer and securities administrator) and Wilshire Credit Corporation. Those servicers are responsible to advance payments to protect all mortgaged property in the trust in the event a homeowner defaults in payment (at PSA pages 53 and 116) as follows:
“Servicing Advances: All customary, reasonable and necessary “out of pocket” costs and expenses incurred in the performance by a Servicer of its servicing obligations hereunder, including, but not limited to, the cost of (1) the preservation, inspection, restoration and protection of a Mortgaged Property, including without limitation advances in respect of prior liens, real estate taxes and assessments, (2) any collection, enforcement or judicial proceedings, including without limitation foreclosures, collections and liquidations, (3) the conservation, management, sale and liquidation of any REO Property, (4) executing and recording instruments of satisfaction, deeds of reconveyance, substitutions of trustees on deeds of trust or Assignments of Mortgage to the extent not otherwise recovered from the related Mortgagors or payable under this Agreement, (5) correcting errors of prior servicers; costs and expenses charged to such Servicer by the Trustee; tax tracking; title research; flood certifications; and lender paid mortgage insurance, (6) obtaining or correcting any legal documentation required to be included in the Mortgage Files and reasonably necessary for the Servicer to perform its obligations under this Agreement and (7) compliance with the obligations under Sections 13.01 and 13.10.” and
“Section 6.04 Advances. If the Monthly Payment on a Mortgage Loan that was due on a related Due Date and is Delinquent other than as a result of application of the Relief Act and for which the applicable Servicer was required to make an advance pursuant to this Agreement exceeds the amount deposited in the Master Servicer Collection Account that will be used for a Advance with respect to such Mortgage Loan, the Master Servicer will deposit in the Master Servicer Collection Account not later than the Distribution Account Deposit Date immediately preceding the related Distribution Date an amount equal to such deficiency, net of the Servicing Fee for such Mortgage Loan, except to the extent the Master Servicer determines any such Advance to be nonrecoverable from Liquidation Proceeds, Insurance Proceeds or future payments on the Mortgage Loan for which such Advance was made. If the Master Servicer has not deposited the amount described above as of the related Distribution Account Deposit Date, the Trustee will, subject to applicable law and its determination of recoverability, deposit in the Master Servicer Collection Account not later than the related Distribution Date, an amount equal to the remaining deficiency as of the Distribution Account Deposit Date. Subject to the foregoing, the Master Servicer shall continue to make such Advances through the date that the applicable Servicer is required to do so under the Applicable Servicing Agreement. If applicable, on the Distribution Account Deposit Date, the Master Servicer shall present an Officer’s Certificate to the Securities Administrator (i) stating that the Master Servicer elects not to make a Advance in a stated amount and (ii) detailing the reason it deems the advance to be nonrecoverable.”
Pursuant to the above PSA terms, if a homeowner misses a payment under the loan then the servicer makes the payment. Moreover, the PSA terms mandate that the servicer is obligated to commence foreclosure proceedings, not the trustee that is usually the bank named as the plaintiff in every foreclosure complaint. In fact, review the foreclosure complaint carefully because in a recent HSBC foreclosure complaint I reviewed they plaintiff bank states it “or its agent has paid” the charges for the premises. “Or its agent” is the servicer pursuant to the PSA terms and conclusively then the servicer who paid the fees is the real party suffering damages. Conspicuously, that complaint like all complaints fails to state the fact that the servicer advances all defaulted monthly payments whenever a homeowner defaults. Foreclosure complaints then are actually requests for permission from the courts by banks who are not the real party in interest to double-dip and profit hand over fist first from the servicer who paid them and then from the homeowner. Lets not forget the fact that they also profited from slicing and dicing the mortgage into various Mortgage Backed Securities (“MBS”) sold to investors through the PSAs.
I am not proposing that homeowners should not pay their loans; however, consistent with the facts of most foreclosure cases between the “too big to fail” banks and the homeowners is the fact that the banks created this system of selling mortgages knowing homeowners would default then banks refuse to workout loans and communicate with homeowners before and during their foreclosure filings. My position is that if the banks want to profit from the plight they caused homeowners when they created MERS[1] and all their layers of protection with PSAs and MBS’ filed with the SEC then the banks better stop the BS and prove their case with more than shoddy and fictional mass produced foreclosure documents.
To expose the double dipping docket of baseless foreclosure complaints, ask the court to review an accounting from the plaintiff banks of who got paid what and from whom and how many times the bank got paid on the same mortgage from the PSA, servicers, investors of the MBS’ and everywhere else they received payment from that loan. The court may find that a bank is not the plaintiff, there is no case and some servicer and/or investors out there need to come forth. “Will the real slim shady please stand up?”[2]
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[1] www.mersinc.org/about-us/shareholders –The following organizations are current MERSCORP Holdings shareholders: American Land Title Association, Bank of America, CCO Mortgage Corporation, CitiMortgage, Inc.,CRE Finance Council. CoreLogic, Corinthian Mortgage Corporation, EverHome Mortgage Company, Fannie Mae, First American Title Insurance Corporation, Freddie Mac, GMAC Residential Funding Corporation, Guaranty Bank, HSBC Finance Corporation, MGIC Investor Services Corporation, Morserv, Inc., Mortgage Bankers Association,PMI Mortgage Insurance Company, Stewart Title Guaranty Company, SunTrust Mortgage, Inc., United Guaranty Corporation, Wells Fargo Bank, N.A.,WMC Mortgage Corporation
[2] © 1999 Eminem, Marshall Mathers Sony/ATV Music Publishing LLC,
Susan Chana Lask is an author, lecturer and accomplished attorney litigating in State and Federal Courts, including the United States Supreme Court for the past 25 years. She is named by the media as “New York’s High Profile Attorney” who consistently makes headlines worldwide and changes history with her controversial dogged lawsuits. Her 2010 lawsuit shut down the country’s most notorious Foreclosure Mill in New York State for the benefit of the public suffering from fraudulent foreclosure filings. In 2011 she appeared before the Supreme Court of the United States with the support of five Attorneys General where she obtained a historical decision that strip searching non-criminal offenders is unacceptable unless they are in the general population. Her 2006 lawsuit against the makers of Ambien resulted in the FDA complying with her demands to change prescription drug warnings to protect some 26 Million consumers. Her cases are monumental and have changed history.
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@SusanChanaLask
This article is for informational purposes only. It is not legal advice. You should seek counsel from a licensed attorney if you have legal questions.
© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.
Nice article…susan has hit on the very premise that we have known for years, the double dipping servicers are the ones who bring everything against the borrowers with the full knowledge that they have been acting as a surety or guarantor the entire time (one should verify the language in their Note under “Persons Obligated under This Note”, where it states that if a guarantor or surety is making the payments, then the contract is fulfilled). The reason that they do not attack the alleged default themselves is simple…they have waived their right to subrogation in the PSA as a condition precedent.
Here in California, they are also violating the statute of frauds by asserting that they somehow, by osmosis, are able to assign the deed of trust several years after the trust has closed (See: Glaski opinion) which is evident on the face of the assignment that is a statutory violation of the statute of frauds and the IRC at 860 et. seq. The statute of frauds says that when a grant is made in writing, then…and only then, does an interest in real property convey, and not before. Therefore, the assignment made to the REMIC Trust many years after the closing date is a known false instrument (a felony in California under Cal. Penal Code 115.5). Since the alleged assignment does not comport to the REMIC provisions of IRC 860 et. seq., a judge may not ratify the fraudulent transfer that knowingly violates a prohibited act under the statute. Now..try telling that to a limited jurisdiction Unlawful Detainer Judge or Commissioner who has been directed by his Administrative Judge to get these damned cases off the docket as quickly as possible!
Same thing happening in cook county illinois. Wells Fargo Home Mortgage is servicer. Pierce & Associates, PC is the attorney representing Wells Fargo Bank, NA (plaintiff, not lender named on note).
We have a partial payment history showing that in 2010 WFHM received a settlement payment in full (of more than the note amount) during the lawsuit. In 2012 WFB, NA filed affidavit in court saying it knows of no other parties with an interest, but recently we discovered that Fannie owns the loan.
We can’t get attorney and no one will tell us who made the payment. A Pierce & Associates attorney posed as a MERS officer and recorded her sworn affidavit 30 days after the 2008 foreclosure complaint was filed, saying that MERS assigned the note, mortgage, and property to WFB, NA a week before the foreclosure was filed. The affidavit states that MERS is acting on behalf of the lender named on the note. This MERS affidavit was characterized as a lien so WF could justify its foreclosure filing. That affidavit, along with a hand-altered, unrecorded, copy of the mortgage was also filed as evidence in court.
The foreclosure was filed while we were awaiting a response to our notice to rescind and disputing the refi debt. The lender-on-note had given us a predatory refi and we signed under duress. During app for the 2005 refi, and at closing, the loan officer lied to us, and when we couldn’t contact him, we immediately notified the servicer WFHM. We later realized that the closing docs given to us were not simply a mistake, but were actually not in lawful order/missing, and our home was overappraised to convince us to do the refi. WF knew about it since the beginning, and started messing with our escrow and confusing us to cause delay. We tried to sell 2 yrs later (2007) but were told that the home was worth much less than the mortgage, couldn’t be listed. We were not in default and we then exercised right to rescind within 3 years. We stopped making payments 4 months after our notice to rescind, as we presumed that TILA allowed us to do so if the creditor does not act upon the notice. But WF had more knowledge and proceeded to delay and destroy our financial ability thru derogatory credit reporting, then filed foreclosure 8 months later while ignoring our letters of debt dispute and notice to cancel. We could not get an affordable complex litigation attorney and judge refused counsel to help us, so because of 1yr sol we had to file suit in Federal court pro se, for TILA (failure to timely rescind) RESPA FCRA violations, and fraud; cases still open (WF foreclosure and our Federal)and we are losing because of procedure, and judge unfairly twisting consumer laws in favor of defendants.
Plus we had been forced to stay in and maintain the property we do not want for the past 4 years, this year 2013 we finally had to go bankrupt, which has not helped much because we are still responsible to maintain building we don’t want/need. We are family of 7, WF has refused to take possession of the property and we were never offered a fair mitigation, would not let us sell at market all these years. WF said it would consent-foreclose if we admit default, drop suit, and keep quiet about it all. We have lost so much, WF got repaid and will get home as well, and worthless notes are still out there making profit for these predators.
We never received a dime of the refi loan at the 2005 closing, and we also later discovered that satisfaction for the previous mtg was never recorded. Lender and servicer both say in court that the loan officer at closing was not lender’s employee (but our closing papers say otherwise) say the title company was the only rep for lender (never disclosed this to us until 2012). Lender says that MERS was a contract party to refi, WF says MERS was NOT a party to refi. Lender says loan was sold back in 2005, therefore it had no obligation nor authority to rescind in 2008. In Fed suit, Wells Fargo says it does not own the note, and was not liable to act upon our paperwork issues, nor our notice to cancel, as it is only the servicer (contradicts this in state court foreclosure case). Fannie never responded to our letters, never joined in cases either. WF has sued the lender (its warehouse affiliate) and got repurchase payment for several misrepresented loans – cannot find out which loans or if ours was one of them. Due to Fannie listed as owner on its website, we believe that WF got the 2010 full repayment from either predatory lender repurchase or gov insurance claim, but we as laypeople are unable to find out (to prove that the foreclosing party is not a real party who suffered damages). We are losing, or have lost the cases and we stand financially and emotionally damaged for life. No justice for the victims. Paid high payments for 15 years, forced to unhappily live there and maintain for another 5 to preserve rights which are not upheld. Total over 20 years of income and credit reputation taken from us unlawfully, nothing to show for it except financial damage, mental anguish, uncertain future for us and our children.
Just wanted to tell someone our side of the story.
Not a coincidencd that the bank “charged off” the mortgage debt the same month as my foreclosure, then try to get a deficiency judgement. In top of it all…accounting shows the loan was subsequently liquidated TWICE! Amazing