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LPS, DocX Lorraine Brown sentenced in Michigan

LPS, DocX Lorraine Brown sentenced in Michigan

Wood TV8-

The former president of a mortgage document processing company has been sentenced for racketeering.

Lorraine Brown was sentenced to 40 months to 20 years in a Michigan state prison. That will be served concurrently with any sentence received for federal crimes.

[WOOD TV8]

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Michigan AG Schuette Announces Guilty Plea for Former Mortgage Processor DOCX President Responsible for Fraudulent Robo-Signing Scandal

Michigan AG Schuette Announces Guilty Plea for Former Mortgage Processor DOCX President Responsible for Fraudulent Robo-Signing Scandal

Contact:  Joy Yearout 517-373-8060

February 11,  2013

         LANSING – Michigan Attorney General Bill Schuette today announced Lorraine Brown, former president of mortgage document processor DocX, pleaded guilty to racketeering for her alleged role in authorizing the fraudulent signing of mortgage documents filed in Michigan.  Brown pleaded guilty today to one count of Conducting Criminal Enterprises (Racketeering), a 20-year felony, before Kent County Circuit Court Judge Mark Trusock.  She will return for sentencing on May 2, 1:30 PM.  The guilty plea follows an Attorney General investigation into questionable mortgage documentation filed with Michigan’s Register of Deeds offices during the foreclosure crisis. 

 “Shortcuts like robo-signing are just one part of the mortgage foreclosure crisis,” said Schuette.  “The message here is clear – if you break the law, there are consequences.  We will continue to prosecute criminals who target and exploit Michigan homeowners.”

In April 2011, Schuette launched an investigation after county officials across the state reported that they suspected Assignment of Mortgage documents filed in their offices may have been forged.  A “60 Minutes” news broadcast had shown that the name “Linda Green” was signed to thousands of mortgage-related documents nationwide, but with many different variations in handwriting.  County officials in Michigan reviewed their files and found similar documents, thus raising questions about the authenticity of the documents filed.

As part of his investigation, Schuette reviewed documents filed in Michigan and prepared by DocX, a document processing company located in Georgia.  DocX processed mortgage assignments and lien releases for residential lenders and servicers nationwide.  Schuette’s investigation revealed that former DocX president Lorraine Brown, 51, of Alpharetta, Georgia, allegedly established and orchestrated a widespread scheme of “robo-signing,” a practice in which employees were directed to fraudulently sign another authorized person’s name on mortgage documents in order to execute these documents as quickly as possible.

Internally, DocX identified this practice as “facsimile signing” or “surrogate signing.”  Schuette alleges that from 2006 through 2009, these improperly executed documents were created and recorded at Brown’s direction.  Schuette’s investigation revealed that more than 1,000 unauthorized and improperly executed documents were filed with county registers of deeds throughout Michigan. 

In addition to the criminal charge brought against Brown, Schuette announced on January 31, 2013 that he had reached a $2.5 million civil settlement with Lender Processing Services, Inc., the parent company of the now defunct DocX.  The settlement funds will go to the State of Michigan, and the legislature will decide how they will be spent.  Affected consumers will have their documents corrected by LPS. 

Earlier this year, Schuette joined 48 other state attorneys general in entering into a settlement with the five leading bank mortgage servicers. The settlement addresses allegations of faulty foreclosure processes and poor servicing of mortgages that harmed Michigan homeowners. The settlement also requires comprehensive reforms of mortgage loan servicing to improve customer service for Michigan borrowers.  More information on the 2012 Mortgage Settlement is available on the Attorney General’s Website at www.michigan.gov/mortgagesettlement.

-30-

Source: http://www.michigan.gov/ag/0,4534,7-164-46849-294807–,00.html

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DocX | MI AG Schuette Files Criminal Charges Against Former Mortgage Processor President for Role in Fraudulent Robo-Signing

DocX | MI AG Schuette Files Criminal Charges Against Former Mortgage Processor President for Role in Fraudulent Robo-Signing

Contact: Joy Yearout 517-373-8060

November 26, 2012

LANSING – Michigan Attorney General Bill Schuette today announced he charged Lorraine Brown, former president of mortgage document processor DocX, with racketeering for her alleged role in authorizing the fraudulent signing of mortgage documents filed in Michigan. The felony charge comes as the result of an ongoing Attorney General investigation into questionable mortgage documentation filed with Michigan’s Register of Deeds offices during the foreclosure crisis.

“Shortcuts like robo-signing are just one piece of the mortgage foreclosure crisis,” said Schuette. “Our investigation remains ongoing, and we will bring to justice every lawbreaker we find.”

In April 2011, Schuette launched an investigation after county officials across the state reported that they suspected Assignment of Mortgage documents filed in their offices may have been forged. A “60 Minutes” news broadcast had shown that the name “Linda Green” was signed to thousands of mortgage-related documents nationwide, but with many different variations in handwriting. County officials in Michigan reviewed their files and found similar documents, thus raising questions about the authenticity of the documents filed.

As part of his investigation, Schuette reviewed documents filed in Michigan and prepared by DocX, a document processing company located in Georgia. DocX processed mortgage assignments and lien releases for residential lenders and servicers nationwide. Schuette’s investigation revealed that former DocX president Lorraine Brown, 51, of Alpharetta, Georgia, allegedly established and orchestrated a widespread scheme of “robo-signing,” a practice in which employees were directed to fraudulently sign another authorized person’s name on mortgage documents in order to execute these documents as quickly as possible.

Internally, DocX identified this practice as “facsimile signing” or “surrogate signing.” Schuette alleges that from 2006 through 2009, these improperly executed documents were created and recorded at Brown’s direction. Schuette’s investigation revealed that more than 1,000 unauthorized and improperly executed documents were filed with county registers of deeds throughout Michigan.

Lorraine Brown has been charged with one count of Conducting Criminal Enterprises (Racketeering), a 20-year felony, in Kent County’s 61st District Court. Arrangements are being made for Brown to surrender to Michigan authorities, and arraignment will be scheduled at a later date.

In 2010, DocX suspended operations, halting its work as a mortgage document processor. Schuette noted that while the criminal charges against Brown address her role in the scheme, his office’s overall investigation into robo-signing remains ongoing and is not yet complete.

A criminal charge is merely an accusation, and the defendants are presumed innocent unless proven guilty.

[MICHIGAN.GOV]

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BREAKING: Michigan attorney general to announce criminal charges linked to possible DocX, LPS investigation

BREAKING: Michigan attorney general to announce criminal charges linked to possible DocX, LPS investigation

UPDATE: From the press conference this am– This is about DocX criminal charges and Lorraine Brown, former Founder-President of DocX faces up to 20 years. AG Schuette’s office is still working on the arraignments. 

Michigan Attorney General Bill Schuette is holding a press conference Monday at 11 am to announce criminal charges in a significant case involving the mortgage foreclosure crisis.

H/T Click on Detroit

Recap:

FLORIDA: INDICTMENT & PLEA AGREEMENT | Lorraine Brown, Former Founder-President of DOCX Pleads Guilty

MISSOURI: Attorney General Koster announces plea agreement with Lorraine Brown – Former President of DocX to plead guilty for national mortgage document robo-signing practices

 

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Gretchen Morgenson: DocX Founder Pleads Guilty in Foreclosure Fraud

Gretchen Morgenson: DocX Founder Pleads Guilty in Foreclosure Fraud

Few follow ups:

How exactly did they correct over 1 million documents?

What a bout the forgeries coming out of LPS in Minnesota?

What will happen to all the investor lawsuits/investigations against LPS?

What will happen to former LPS CEO’s who knew this was going on back in 2009 but did not alert anyone, especially their investors?

What happens to all the people who were damaged by these documents?

What happens to the two ousted former FL Assistant AG’s from Florida, June Clarkson and Theresa Edwards, who were fired for investigating LPS?

NYT-

The founder and former president of DocX, once one of the nation’s largest foreclosure-processing companies, pleaded guilty on Tuesday to fraud in one of the few criminal cases to have arisen out of the housing crisis.

The executive, Lorraine O. Brown, 56, entered a guilty plea in federal court in Florida and a plea agreement in state court in Missouri related to DocX’s preparation of improper documents used to evict troubled borrowers from their homes. Ms. Brown’s guilty pleas will lead to a prison term of at least two years, the Missouri attorney general said.

[NEW YORK TIMES]

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Attorney General Koster announces plea agreement with Lorraine Brown – Former President of DocX to plead guilty for national mortgage document robo-signing practices –

Attorney General Koster announces plea agreement with Lorraine Brown – Former President of DocX to plead guilty for national mortgage document robo-signing practices –

Via MO AG-

Attorney General Chris Koster today announced that the state of Missouri and Lorraine Brown, former President of DocX, LLC, have reached a plea agreement. Under the agreement, Ms. Brown will plead guilty to one felony count of forgery, one felony count of perjury, and one misdemeanor count of making a false declaration.

Brown will be sentenced to a term of imprisonment of not less than two years and not to exceed three years in the Missouri Department of Corrections.

Ms. Brown is the former President of the company DocX, LLC. During the period of March to October 2009, DocX, at the direction of Brown, instituted a surrogate signing policy whereby employees signed, not their name, but the names of other employees on thousands of mortgage documents that were notarized and filed across the country. Prior to 2009, similar signing practices were also employed at DocX. Brown concealed these practices from her clients, the national mortgage servicers, and the parent company of DocX. The practices of DocX were brought to national attention by a “60 Minutes” report and resulted in several major lenders temporarily suspending foreclosures in 2010.

“DocX’s robo-signing practices were the worst in the county. Surrogate-signing crosses the threshold into criminal activity,” Koster said. “This agreement brings to justice the person most responsible for these activities and upholds the principle that when you sign your name to a legal document, it matters.”

Brown’s plea of guilty to forgery and making a false declaration will be entered in Boone County where a criminal prosecution is ongoing by the Missouri Attorney General and the Boone County Prosecutor. Brown’s plea of perjury will be entered in Jackson County where a criminal prosecution is also ongoing by the Missouri Attorney General and the Jackson County Prosecutor.

The Attorney General’s Office worked in coordination with the Boone County Prosecutor, the Jackson County Prosecutor, the Boone County Recorder of Deeds, and the Jackson County Recorder of Deeds.

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INDICTMENT & PLEA AGREEMENT | Lorraine Brown, Former Founder-President of DOCX Pleads Guilty

INDICTMENT & PLEA AGREEMENT | Lorraine Brown, Former Founder-President of DOCX Pleads Guilty

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
JACKSONVILLE DIVISION

UNITED STATES OF AMERICA

vs

LORRAINE BROWN

EXCERPT:

LORRAINE BROWN,
the defendant herein , did knowingly and willfully combine, conspire, confederate
and agree with others to commit certain offenses, to wit:

a. execute and attempt to execute a scheme and artifice to
defraud, and to obtain money and property by means of material false and
fraudulent pretenses, representations, and promises, by utilizing the United
States mail and private and commercial interstate carriers, for the purpose of
executing such scheme and artifice, in violation of Title 18, United States Code,
Section 1341 ; and,

b. execute and attempt to execute a scheme and artifice to
defraud, and to obtain money and property by means of material false and
fraudulent pretenses, representations, and promises, by transmitting and causing
to be transmitted by means of wire communications in interstate and foreign
commerce, writings, signs, visual pictures, and sounds, for the purpose of
executing such scheme and artifice, in violation of Title 18, United States Code,
Section 1343.

Manner and Means of the Conspiracy and Scheme and Artifice

8. The manner and means by which Brown, co-conspirators, and
others sought to accomplish the purposes and objectives of the conspiracy
include, but are not limited to, the following :

a. Beginning in or about 2005, employees of DocX, at the
direction of Brown and others, began forging and falsifying signatures on the
mortgage-related documents that they had been hired to prepare and file with
property recorders’ offices throughout the United States.

b. Unbeknownst to DocX’s clients, the Authorized Signers were
instructed by Brown and other DocX employees to allow other, unauthorized,
DocX employees to sign, and to have the document notarized as if the actual
Authorized Singer had executed the document.

c. Brown also hired temporary workers to sign as Authorized
Signers. These temporary employees worked for much lower costs and without
the quality control represented by Brown to DocX’s cl ients. In fact, some of
these temporary workers were able to sign thousands of documents a day.
These mortgage-related documents were fraudulently notarized by DocX
employees even though the Authorized Signer did not actually sign the
document.

d. These unauthorized signing and notarization practices
allowed DocX, Brown, and others to generate greater profit and make more money.

e. After these false documents were signed and notarized,
DocX filed them through the mails or by electronic methods with local county
property records offices. Many of these documents, particularly mortgage
assignments and lost note or assignment affidavits, were later relied upon in
court proceedings, including property foreclosures and in federal bankruptcy
court. Brown knew that these property recorders, as well as those who received
the documents such as courts, title insurers, and homeowners, relied on these
documents as genuine.

f. Brown and others also took various steps to conceal their
actions from detection from clients, LPS corporate headquarters, law
enforcement authorities, and others.

[…]

9. Factual Basis

Defendant is pleading guilty because defendant is in fact guilty. The
defendant certifies that defendant does hereby admit that the facts set forth in the
attached “Factual Basis,” which is incorporated herein by reference, are true, and were
this case to go to trial, the United States would be able to prove those specific facts and
others beyond a reasonable doubt.

[…]

[ipaper docId=113941489 access_key=key-18hunkknb5w8dehddxkn height=600 width=600 /]

 

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The Shuman Law Firm Investigates Lender Processing Services, Inc. For Alleged Illegal Activity in DocX

The Shuman Law Firm Investigates Lender Processing Services, Inc. For Alleged Illegal Activity in DocX

Hat Tip to Citi Group for this! 🙂


Citi-

The Shuman Law Firm announces that it is investigating potential claims
against certain officers and directors of Lender Processing Services,
Inc. (“LPS” or the “Company”) (NYSE: LPS).

LPS provides integrated technology and outsourced services to the
mortgage lending industry in the United States.

The firm’s investigation primarily concerns allegedly illegal activity
that occurred at LPS’s subsidiary, DocX LLC (“DocX”) from 2007 through
2010. On August 2, 2012, the Missouri Attorney General’s office
announced a settlement with LPS of criminal charges of forgery and
making false statements by DocX and DocX’s former president. These
charges arose out of the mortgage document surrogate signing scandal
(robo-signing) which became public in 2010. As a part of the settlement,
LPS agreed to pay the state of Missouri $2 million.

[CITI]

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Missouri Attorney General Agreement NOT to Prosecute Docx, LLC (LPS) and Assurance of Voluntary Compliance

Missouri Attorney General Agreement NOT to Prosecute Docx, LLC (LPS) and Assurance of Voluntary Compliance

NOTE: This agreement was not out in the public.

Via JN

Under the agreement, LPS will pay the state of Missouri $2 million and will cooperate with the Attorney General’s Office in its continuing criminal investigation of founder and former president of DOCX, Lorraine Brown.

Specifically, LPS will pay $1.5 million into the Missouri state treasury and will pay $500,000 to the Merchandising Practices Revolving Fund of the Attorney General’s Office as reimbursement for the costs of the investigation.

DOCX earned approximately $363,000 in total revenue from the execution and filing of mortgage-related documents in the state of Missouri for the years 2008-2010. Consequently, LPS’s payment of $2 million to the state is well in excess of the revenue earned by the company in the state of Missouri during the relevant time period, and is approximately two and a half times the amount that could be obtained as a result of convictions on the previously pending indictments. LPS discontinued the operations of DOCX in May 2010. LPS terminated Lorraine Brown in November 2009.

[ipaper docId=106278945 access_key=key-2dnpkev5tddpzwcxx0m6 height=600 width=600 /]

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William P. “Bill” Foley II, (DOCX, LPS, Fidelity National, FIS, FNF etc.) Quietly Buys Actor Rob Lowes Californa Beach House for $5.9 Million

William P. “Bill” Foley II, (DOCX, LPS, Fidelity National, FIS, FNF etc.) Quietly Buys Actor Rob Lowes Californa Beach House for $5.9 Million

The Real Estalker-

Not only does always-working actor and former Brat Packer Rob Lowe (Parks and Recreation, Brothers& Sisters, The West Wing) own a substantial estate with a 14,000-plus square foot mansion in Montecito, CA with distant, over-the-tree-tops ocean views, until last September (2011) he and the Missus also owned an ocean side getaway just 6.5 miles away in Carpinteria, CA that they quietly sold for $5,900,000 to title insurance tycoon William P. “Bill” Foley II.

[THE REAL ESTALKER]

image: The Real Estalker

Below is the only video I could find of this beach house.

by

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Attorney General Koster announces settlement of criminal proceedings against mortgage surrogate signing company DOCX and agreement with parent company LPS

Attorney General Koster announces settlement of criminal proceedings against mortgage surrogate signing company DOCX and agreement with parent company LPS

— LPS to pay Missouri $2 million and cooperate in ongoing criminal investigation of DOCX president Lorraine Brown —

Jefferson City, Mo. – Attorney General Chris Koster today said his office has negotiated a settlement of criminal proceedings against mortgage-services company DOCX and an agreement with DOCX parent company Lender Processing Services, Inc. (LPS). In February 2012, Koster obtained criminal indictments against DOCX related to its alleged role in the mortgage-document surrogate-signing scandal of 2010.

Under the agreement, LPS will pay the state of Missouri $2 million and will cooperate with the Attorney General’s Office in its continuing criminal investigation of founder and former president of DOCX, Lorraine Brown.

Specifically, LPS will pay $1.5 million into the Missouri state treasury and will pay $500,000 to the Merchandising Practices Revolving Fund of the Attorney General’s Office as reimbursement for the costs of the investigation.

DOCX earned approximately $363,000 in total revenue from the execution and filing of mortgage-related documents in the state of Missouri for the years 2008-2010. Consequently, LPS’s payment of $2 million to the state is well in excess of the revenue earned by the company in the state of Missouri during the relevant time period, and is approximately two and a half times the amount that could be obtained as a result of convictions on the previously pending indictments. LPS discontinued the operations of DOCX in May 2010. LPS terminated Lorraine Brown in November 2009.

Koster obtained the indictments against Brown and DOCX for forgery and making false declarations related to mortgage documents processed by DOCX in the state of Missouri. The Attorney General’s indictments alleged that DOCX directed employees of the company to falsely sign mortgage documents in the names of various bank vice presidents without proper authorization. Furthermore, the indictments alleged that such forged signatures were then falsely notarized by DOCX as though such bank vice presidents had actually signed the documents. Finally, the forged documents were then filed in courthouses across Missouri.

“My office has taken the position that when you sign your name to a legal document, it matters,” Koster said. “The monetary disgorgement and the agreement we have reached in this criminal case with DOCX should remind all mortgage-services processers that our system of titling real property will be held to a standard of accuracy and truth expected by homeowners across the country.”

“I appreciate LPS taking responsibility for the actions of its subsidiary, and for their agreeing to cooperate in our continuing criminal investigation of this matter.”

Koster noted that LPS has also entered into a separate consent order with the Federal Reserve, the FDIC, and the Office of the Comptroller of the Currency that requires LPS to allow an independent, third-party consultant to conduct a review of document execution services provided by subsidiaries of LPS, such as DOCX, between January 1, 2008, and December 31, 2010. The review is intended to assess potential financial injury to borrowers. Under the federal consent order, LPS has agreed to prepare a remediation plan to provide restitution to borrowers if any such financial harm is found. Under the terms of today’s agreement, LPS has agreed to report to the Attorney General’s Office on a quarterly basis to provide the status of its compliance with the federal consent order as it pertains to Missouri residents.

The Attorney General’s Office has agreed not to prosecute LPS or DOCX for DOCX’s previous surrogate-signing related conduct so long as LPS makes the above-referenced payments and complies with the terms of the agreement.

The indictments against DOCX and Lorraine Brown were the result of months of investigation by the Missouri Attorney General’s Office into the robo-signing scandal that injected thousands of questionable mortgage documents into the market. The 68 documents on which the indictments were based were purportedly signed by an employee of DOCX, Linda Green, in her role as a designated vice president for several of the nation’s leading banks, but were in fact signed by someone else, and subsequently notarized and filed in Missouri.

The pending charges against the defendant are merely accusations. As in all criminal cases, the defendant is presumed innocent unless or until proven guilty.

Source: http://ago.mo.gov

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DE AG Beau Biden Speaks To Dylan Ratigan on State Foreclosure Settlement $$ Raid, Indictments, DOCX, Linda Green, Banks still unsure who owns what

DE AG Beau Biden Speaks To Dylan Ratigan on State Foreclosure Settlement $$ Raid, Indictments, DOCX, Linda Green, Banks still unsure who owns what

“Banks are not sure if they have their “I’s” dotted or “T’s” crossed”….”Don’t know who is the beneficiary of the mortgages”.

Visit msnbc.com for breaking news, world news, and news about the economy

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Guilford County, NC vs LPS/DocX, MERSCORP, MERS, Inc. et al

Guilford County, NC vs LPS/DocX, MERSCORP, MERS, Inc. et al

STATE OF NORTH CAROLINA

IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION

COUNTY OF GUILFORD

GUILFORD COUNTY, ex rel. JEFF L.
THIGPEN, GUILFORD COUNTY
REGISTER OF DEEDS,
Plaintiff,

v.

LENDER PROCESSING SERVICES, INC.;
DOCX, LLC; LPS DEFAULT SOLUTIONS,
INC.; MERSCORP HOLDINGS, INC.;
MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.; WELLS
FARGO BANK, N.A.; WELLS FARGO
HOME MORTGAGE, INC.; BANK OF
AMERICA, N.A.; JPMORGAN CHASE
BANK, N.A.; CHASE HOME FINANCE
LLC; EMC MORTGAGE CORPORATION;
MIDFIRST BANK; SAND CANYON
CORPORATION; CITI RESIDENTIAL
LENDING, INC.; GREEN TREE
SERVICING, LLC; AMERIQUEST
MORTGAGE COMPANY; USAA
FEDERAL SAVINGS BANK; AMERICAN
HOME MORTGAGE SERVICING, INC.;
MOREQUITY, INC.; U.S. BANK
NATIONAL ASSOCIATION;
EQUICREDIT CORPORATION OF
AMERICA; NATIONSCREDIT
FINANCIAL SERVICES CORP.; ARGENT
MORTGAGE COMPANY, LLC; THE
BANK OF NEW YORK MELLON; THE
BANK OF NEW YORK MELLON TRUST
COMPANY, N.A.; CAPITAL ONE, N.A.;
FIRST FRANKLIN FINANCIAL CORP.;
NAVY FEDERAL CREDIT UNION; and
WEICHERT FINANCIAL SERVICES;
Defendants.

[ipaper docId=85235617 access_key=key-1g5fk84g1cy0nyzvnllk height=600 width=600 /]

 

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Michigan Attorney General Bill Schuette has issued a second criminal investigative subpoena against DocX

Michigan Attorney General Bill Schuette has issued a second criminal investigative subpoena against DocX

Our Midland-

Michigan Attorney General Bill Schuette has issued a second criminal investigative subpoena against national mortgage servicing support provider DocX as his office continues to investigate questionable mortgage documentation filed with Michigan’s Register of Deeds offices during the current foreclosure crisis.  

“We are moving forward with our investigative efforts to find answers on behalf of Michigan homeowners,” said Schuette.  

Schuette’s office has requested documents and information regarding DocX operations in relation to foreclosure and/or bankruptcy-related document processing. The subpoena was approved by the 54B District Court in Ingham County, and the information must be provided to the Attorney General’s Office on or before April 4.

This is the second criminal subpoena filed during the course of Schuette’s investigation. Schuette previously filed a criminal subpoena against DocX on June 12, 2011.

[OUR MIDLAND]

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Arizona, Michigan and Florida set to join FORECLOSURE FRAUD Deal, Michigan to Pursue Criminal Investigation into LPS’s DOCX

Arizona, Michigan and Florida set to join FORECLOSURE FRAUD Deal, Michigan to Pursue Criminal Investigation into LPS’s DOCX

AP –

Arizona, Michigan and Florida, three of the states hit hardest by the housing crisis, will join a nationwide settlement over foreclosure abuses, officials with direct knowledge say. They will join more than 40 other states in approving a deal that would benefit many Americans who lost their homes or can’t afford their mortgages.

The three states’ involvement buoys hopes that a full 50-state deal is imminent.

Formal announcements from Arizona and Florida could come within a week, according to the officials, who spoke on condition of anonymity because they weren’t authorized to discuss the settlement publicly.

Arizona Attorney General Tom Horne said he first wants to resolve a separate foreclosure-related lawsuit his state filed against Bank of America.

Florida officials say they are still in discussions. Attorney General Pam Bondi “remains engaged in the settlement discussions in order to ensure that Floridians receive their fair share in the agreement,” she said in a statement. Other officials said Florida intends to back the deal.

Michigan announced Tuesday it would join the settlement. Officials said the state would receive about $500 million in aid.

Michigan officials also said they would continue a criminal investigation into Docx, a unit of Lender Processing Services of Jacksonville, Fla. The company is accused of using fake signatures on phony foreclosure documents. Missouri filed criminal charges against the firm and its founder Friday, saying it falsified 68 notarized deeds on behalf of mortgage lenders.

[AP]

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DOCX | The first case in which a senior officer of a mortgage document company was charged with crimes relating to mortgage document preparation.

DOCX | The first case in which a senior officer of a mortgage document company was charged with crimes relating to mortgage document preparation.

Action Date: February 7, 2012
Location: Boone Country, MO

DocX, LLC, a mortgage document company and a subsidiary of Lender Processing Services (“LPS”) in Jacksonville, Florida, was indicted on February 6, 2012, by a grand jury in Boone County, Missouri. Lorraine O’Reilly Brown, a former Senior Vice President of Lender Processing Services, and the founder of DocX, was also indicted. This was the first case in which a senior officer of a mortgage document company was charged with crimes relating to mortgage document preparation.

Brown and DocX were each charged with 68 counts of forgery, a class C felony in Missouri and 67 counts of False Declaration, a Class B misdemeanor.

The felony charges can each carry a term of imprisonment not to exceed seven years and a fine not to exceed $5,000 or double the gain from the crime up to $20,000. The misdemeanor charges each carry a term not to exceed six months, and a fine of $500 or double the gain up to $20,000.

The case will be prosecuted by Missouri Attorney General Chris Koster. “Today’s indictment reflects our firm conviction that when you sign your name to a legal document, it matters,” Koster said. “Mass-producing fraudulent signatures on millions of real estate documents across America constitutes forgery. When you file those documents in our state, you are committing a crime under Missouri law.

The indictment focuses on Deeds of Release, documents issued by banks and mortgage companies when a homeowner/borrower successfully pays off their loan. In some states, these are also called Satisfaction of Mortgages. The documents examined by the grand jury and identified in the indictments were signed by many different people signing the name Linda Green. This practice was first exposed in a segment of 60 Minutes that aired in 2011.

Other employees of a subsidiary of Lender Processing Services were indicted in 2011 in Nevada by Attorney General Catherine Cortez Masto. These employees notarized mortgage documents that had been signed by LPS employees using false names and false job titles.

LPS has steadfastly defended these practices and even coined a term, calling the forgeries “surrogate signing.” Regarding the use of false job titles, LPS has defended this practice by saying such titles were authorized by corporate resolutions from many different banks and mortgage companies.

But while publicly defending these practices, lawyers working for LPS have been filing thousands of “corrective” mortgage assignments in county records throughout the country. In tens of thousands of cases, employees signed the name Linda Green to mortgage documents and identified Green as an officer of Mortgage Electronic Registration Systems (“MERS”) though the real Linda Green did not qualify to serve as a MERS certifying officer because she was not an officer of her actual employer.

Conferring of officer titles to non-employees via corporate resolutions was one of the many practices challenged in a civil lawsuit brought by Illinois Attorney General Lisa Madigan against another mortgage document mill, Nationwide Title Clearing, on February 2, 2012.

Employees in the DocX office signed names to mortgage documents 4,000 times a day for several years. They most often signed false names and false officer titles to mortgage satisfactions and mortgage assignments. The assignments were very often used in foreclosure cases to prove that residential mortgage-backed trusts owned the mortgages and had the right to foreclose even though the trusts had never obtained the necessary documents during the securitization process.

These practices will be a significant part of the examination to be conducted by the mortgage securitization fraud task force, announced by President Obama during the State of the Union address. The taskforce will be co-chaired by New York Attorney General Eric Schneiderman who filed a lawsuit against MERS and three major banks on February 3, 2012. The New York lawsuit was similar to the lawsuits filed by Delaware Attorney General Beau Biden on October 27, 2011 and by Massachusetts Attorney General Martha Coakley in December, 2011.

According to the lawsuit filed by Attorney General Biden, “MERS engaged and continues to engage in a range of deceptive trade practices that sow confusion among consumers, investors, and other stakeholders in the mortgage finance system, damage the integrity of Delaware’s land records, and lead to unlawful foreclosure practices.”

The DocX mortgage documents permeate the records of almost every county recorder in the country. From July 1, 2008 through December 31, 2009, 1,742 DocX mortgage assignments were filed in Palm Beach County, transferring mortgages valued at $560,239,797. Deutsche Bank National Trust Company and American Home Mortgage Servicing were two of the most frequent users of the DocX documents, but over 30 banks and mortgage companies were clients of DocX.

 

FRAUD DIGEST by Lynn E. Szymoniak, ESQ.

Image: X-Files

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Posted in STOP FORECLOSURE FRAUD0 Comments

INDICTMENT | State of Missouri vs DOCX, LLC a Georgia corporation

INDICTMENT | State of Missouri vs DOCX, LLC a Georgia corporation

IN THE CIRCUIT COURT OF BOONE COUNTY, MISSOURI

STATE OF MISSOURI
Plaintiff,

v.

DOCX, LLC,
a Georgia corporation
Registered Agent:
CT Corporation System
1201 Peachtree Street, NE
Atlanta, Georgia 30361
Defendant.

 

[ipaper docId=80741262 access_key=key-872qqc60801aaclngf4 height=600 width=600 /]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

DOCX Faces Foreclosure Fraud Forgery Charges in Mo. Foreclosures

DOCX Faces Foreclosure Fraud Forgery Charges in Mo. Foreclosures

Some tid-bits for you all from DOCX’s website in 1998:

DOCX was established in March of 1993 by its president, Lorraine O. Brown. It’s a privately held Colorado Limited Liability Company. DOCX set up headquarters in Springfield, Ohio. In October 1994, DOCX merged forces with Ontrak Services. Ontrak was a pioneer in the development of outsourcing services for assignment and satisfaction processing. With the acquisition of Ontrak, DOCX expanded its operations to Frederick Maryland. DOCX has recently established a marketing/sales office in Atlanta, Georgia. DOCX operations continue to run in both the Springfield, Ohio and Frederick, Maryland locations.

[…]

DOCX developed two software products; DOCX RID™ (Recorders Information Database) which keeps track of County Recorder fees, and the requirements for recording assignment and satisfaction documents, UCC’s, and to obtain certified true copies of recorded documents. DOCX’s latest software development, DOCX in a BOX™, takes the DOCX RID program significantly further by providing the software to produce the completed and legally-sufficient documents required to process


NYT-

One of the largest companies that provided home foreclosure services to lenders across the nation, DocX, has been indicted on forgery charges by a Missouri grand jury — one of the few criminal actions to follow reports of widespread improprieties against homeowners.

A grand jury in Boone County, Mo., handed up an indictment Friday accusing DocX of 136 counts of forgery in the preparation of documents used to evict financially strained borrowers from their homes. Lorraine O. Brown, the company’s founder and former president, was indicted on the same charges.

Employees of DocX, a unit of Lender Processing Services of Jacksonville, Fla., executed and notarized millions of mortgage documents for big banks and loan servicers over the years. Lender Processing closed the company in April 2010, after evidence emerged of apparent forgeries in these documents, a practice now called robo-signing.

[NEW YORK TIMES]

[ipaper docId=80741262 access_key=key-872qqc60801aaclngf4 height=600 width=600 /]

 

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

COMPLAINT | STATE OF NEVADA vs. LENDER PROCESSING SERVICES INC., FIS, DOCX

COMPLAINT | STATE OF NEVADA vs. LENDER PROCESSING SERVICES INC., FIS, DOCX

STATE OF NEVADA

Plaintiff

vs.

LENDER PROCESSING SERVICES INC.;

FIDELITY NATIONAL IINFORMATION SERVICES INC.;

LPS DEFAULT SOLUTIONS INC.;

DOCX, LLC; DOES 1-XX,

Defendants

EXCERPTS:

5. Following the exposure of deceptive document execution practices at DOCX

[…]

15 Georgia, LPS then misrepresented that it had processes and internal controls in place at the LPS
16 Default Solutions office in Minnesota to ensure that affidavits were signed properly and in
17 accordance with industry standard. LPS senior executives expressly contradicted these
18 representations in sworn court testimony.

[ipaper docId=75880962 access_key=key-cu3armxuntttgvwheh1 height=600 width=600 /]

 

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD4 Comments

Internal FL AG’s Office Emails Show “Secret” Discussions About LPS & DOCX

Internal FL AG’s Office Emails Show “Secret” Discussions About LPS & DOCX

A few email discussions of the FL AG’s office that show what went on behind closed doors. Go thru them and thanks to Foreclosure Hamlet for these gems.

Please click on the links below.

 

[M-Hamilton-to-LPS]

[V-Butler-to-LPS]

[B-Julian-to-LPS-1]

[B-Julian-to-LPS-2]

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Posted in STOP FORECLOSURE FRAUD0 Comments

IN RE CHALGREN, Bankr. Court, ND California “Lender Processing Services admits faults in the documents produced by the DOCX office”

IN RE CHALGREN, Bankr. Court, ND California “Lender Processing Services admits faults in the documents produced by the DOCX office”

NOTE: Korell Harp misspelled, also see signature variations below.

In re: RICHARD AND KAREN CHALGREN, Chapter 13, Debtors.
RICHARD AND KAREN CHALGREN, Plaintiffs,
v.
DEUTSCHE BANK NATIONAL TRUST COMPANY, ET AL., Defendants.

Case No. 09-56729 ASW, Adv. Proc. No. 10-5057.
United States Bankruptcy Court, N.D. California.
October 7, 2011.

MEMORANDUM DECISION ON MOTIONS TO DISMISS

ARTHUR S. WEISSBRODT, Bankruptcy Judge.

Before this Court are two motions to dismiss the First Amended Complaint of debtors Richard Scott Chalgren and Karen Chalgren (” Plaintiffs”). For the following reasons, this Court grants Defendants’ motions with leave to amend with regard to the first, second, third, and sixth causes of action. This Court denies Defendants’ motions to dismiss with regard to the fifth cause of action and grants the motions in part with regard to the fourth cause of action.

This Memorandum Decision constitutes the Court’s findings of fact and conclusions of law, pursuant to Rule 7052 of the Federal Rules of Bankruptcy Procedure.

A. PROCEDURAL HISTORY

Plaintiffs initiated this adversary proceeding on February 25, 2010. On July 27, 2010, defendants American Home Mortgage Corp. d/b/a American Brokers Conduit and AHM SV, Inc. f/k/a American Home Mortgage Servicing, Inc. filed a Suggestion of Bankruptcy in this adversary proceeding. Prior motions to dismiss were granted in part and denied in part at a hearing on September 20, 2010. Plaintiffs filed an amended complaint on November 2, 2010 (“First Amended Complaint”). The First Amended Complaint alleges six causes of action. The first cause of action is for violation of California Civil Code section 2923.5. The second cause of action is for violation of Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601-2617 (“RESPA”). The third cause of action is for violation of the automatic stay of the Bankruptcy Code. The fourth cause of action is for declaratory relief. The fifth cause of action is for injunctive relief. The sixth cause of action is for cancellation of the deed of trust and other instruments and records.

On November 16, 2010, Defendants Deutsche Bank National Trust Company, Deutsche Bank National Trust Company as Trustee of the GSR Mortgage Loan Trust 2006-OA1 (“Deutsche Bank as Trustee”), and American Home Mortgage Servicing, Inc. (“AHMSI”) filed a motion to dismiss the First Amended Complaint (“First Motion to Dismiss”). On November 29, 2010, Defendants Fidelity National Title Company and Default Resolution Network filed a motion to dismiss the First Amended Complaint (“Second Motion to Dismiss”).

The First Motion to Dismiss asserts that Plaintiffs’ response to the First Motion to Dismiss should not be considered by this Court because the response is late-filed, and that Plaintiffs have failed to meet the pleading requirements of Federal Rule of Civil Procedure 8(a). Both motions to dismiss also allege that the First Amended Complaint should be dismissed on the merits for various reasons.

Regarding the purported late-filing of Plaintiffs’ response to the First Motion to Dismiss, the hearing on the First Motion to Dismiss was originally set for December 16, 2010, meaning that Plaintiffs’ response should have been filed by December 2, 2010. No such response was filed. On December 6, 2010, Plaintiffs filed an opposition to a motion for relief from stay with a caption containing this adversary proceeding’s number. On December 10, 2010, pursuant to an amended notice of hearing, the hearing on the First Motion to Dismiss was continued to January 14, 2011. Plaintiffs’ response was filed on December 30, 2010, which is timely under the local rules with respect to the continued hearing date. While Plaintiffs should abide in the future with the deadlines set out in the local rules, there is no prejudice such that the First Amended Complaint should be dismissed and the merits of Plaintiffs’ opposition ignored.

In Plaintiff’s opposition filed on December 30, 2010, Plaintiffs agreed to amend the First Amended Complaint with regard to the first, second, and third causes of action in response to the motions of defendants Fidelity National Title Company, Default Resolution Network, Deutsche Bank National Trust Company, Deutsche Bank as Trustee, and AHMSI (collectively,” Defendants”), as well as to delete the sixth cause of action. The Court held a hearing on both motions to dismiss on January 14, 2011.

At the hearing on January 14, 2011, the Court provided the parties with the Suggestion of Bankruptcy filed by American Brokers Conduit and American Home Mortgage Servicing, Inc. in this adversary proceeding and asked the parties to submit supplemental briefs regarding why the motions to dismiss should proceed notwithstanding the automatic stay of the bankruptcy case of Defendant American Brokers Conduit. The matter was continued to March 1, 2011 with the parties to file a joint statement prior to the hearing.

On February 18, 2011, the parties filed a joint statement which the Court reviewed. The Court subsequently issued an order on February 23, 2011 taking the motions to dismiss off calendar without prejudice to being restored upon the filing of appropriate legal authority and/or declarations showing that this Court can proceed notwithstanding the automatic stay in Defendant American Brokers Conduit’s bankruptcy case.

On May 2, 2011, Plaintiffs dismissed American Brokers Conduit from this adversary proceeding. The motions to dismiss were re-set for hearing on June 30, 2011 at a Case Management Conference held on May 6, 2011. The June 30, 2011 hearing was continued to July 14, 2011 by stipulation of the parties. The July 14, 2011 hearing was taken off calendar to allow the Court to issue a written decision.

Meanwhile, on May 18, 2011, attorney Mitchell Abdallah substituted in as counsel for Plaintiffs.

On July 11, 2011, Plaintiffs filed a Second Amended Complaint.[1] The Second Amended Complaint named American Brokers Conduit as a defendant and did not make any substantive changes to the third, fourth, or sixth causes of action that Plaintiffs had said would be made. The Court suggests that if Plaintiffs file another amended complaint, Plaintiffs should consider that it appears to the Court that the bankruptcy case of American Brokers Conduit, case number 07-11051, is still pending in the District of Delaware. Plaintiffs should also consider that: (1) a cause of action under the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601-2617 (” RESPA”) should specify which section(s) of RESPA Defendants allegedly violated; and (2) Plaintiffs should allege sufficient facts about the contents of Plaintiffs’ alleged letters to AHMSI to show that the letters qualify as “qualified written requests” under RESPA.

B. FACTUAL BACKGROUND

The following facts are drawn from the First Amended Complaint, as alleged by Plaintiffs, but have not yet been proven. On or about April 4, 2006, Plaintiffs obtained a home loan and executed a promissory note in favor of American Brokers Conduit. The note was secured by a deed of trust on 411 Quail Run in Aptos, California (the “Property”). Defendant Mortgage Electronic Registration Systems (“MERS”) was listed as the beneficiary of the deed of trust, but MERS never held the note.

On February 1, 2009, Plaintiff Richard Chalgren became unable to work due to a physical disability and suffered a loss of income. Plaintiffs were unable to make the monthly payment on the note. Plaintiffs wrote letters to the loan servicer, AHMSI, requesting the name, address, and telephone number of the holder of the note and the name and address of any agent of the holder of the note which could discuss loan modification options with Plaintiffs. However, AHMSI did not respond to Plaintiffs’ letters and still, to this day, has failed to respond to Plaintiffs’ letters. The failure of AHMSI to respond caused Plaintiffs to suffer emotional distress.

On May 5, 2009, AHMSI, Default Resolution Network, and Fidelity National Title Company acted in concert to cause a notice of default to be recorded in the official records of the county of Santa Cruz. The notice of default falsely stated that Default Resolution Network had contacted Plaintiffs before the notice of default was recorded as required by California Civil Code section 2923.5.

On June 25, 2009, MERS as nominee for defendant American Brokers Conduit assigned the deed of trust to Deutsche Bank as Trustee. Kolrell Harper signed this document on June 30, 2009 as Vice President of MERS. The assignment was produced by defendant DOCX, LLC which is a subsidiary of defendant Lender Processing Services. Lender Processing Services has admitted that there were faults in the documents produced by the DOCX office and Plaintiffs are informed and believe that there was widespread document fraud.

The note was bundled into a pool of home mortgages which were securitized and sold to investors. At the time the note was assigned to the trust, the trust was closed. Also, at the time of the assignment, American Brokers Conduit was in a Chapter 11 bankruptcy proceeding, but the assignment was made without approval from the bankruptcy court overseeing the American Brokers Conduit bankruptcy case.

On July 6, 2009, an instrument was recorded in the official records of the county of Santa Cruz purporting to be an assignment of the deed of trust from MERS to Deutsche Bank National Trust Company.

On July 17, 2009, Plaintiffs sent demand letters via certified mail to Defendants pursuant to RESPA, wherein Plaintiffs requested the name of the holder of the note or the agent for such holder with authority to discuss loan modifications. Defendants have failed to respond to those demand letters, causing Plaintiffs to be unable to communicate with anyone with the authority to modify Plaintiffs’ loan and threatening Plaintiffs with the loss of Plaintiffs’ home of 15 years.

On August 14, 2009, Plaintiffs filed this chapter 13 bankruptcy petition.

On September 4, 2009, defendants Fidelity National Title Company, AHMSI, and Power Default Services acted in concert to cause a notice of trustee’s sale to be recorded in the official records of the county of Santa Cruz in violation of the automatic stay. This recordation caused Plaintiffs emotional distress.

C. LEGAL STANDARD

The Ninth Circuit has stated that the standard of review for motions to dismiss is:

The nature of dismissal requires us to accept all allegations of fact in the complaint as true and construe them in the light most favorable to the plaintiffs. However we are not required to accept as true conclusory allegations which are contradicted by documents referred to in the complaint, and we do not . . . necessarily assume the truth of legal conclusions merely because they are cast in the form of factual allegations.

Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003) (citations and internal quotations omitted).

D. ANALYSIS

The First Motion to Dismiss asserts that the First Amended Complaint fails to differentiate between Defendants in violation of Federal Rule of Civil Procedure 8 (a), as incorporated by Federal Rule of Bankruptcy Procedure 7008. The Court has reviewed the First Amended Complaint and has determined that the First Amended Complaint identifies the transactions giving rise to the causes of action and puts each Defendant on notice of each Defendant’s alleged conduct. The First Motion to Dismiss is denied on this basis.

(1) Plaintiffs’ First Cause of Action

The first cause of action is against AHMSI, Default Resolution Network, and Fidelity National Title Company for violation of California Civil Code section 2923.5. Plaintiffs assert that Default Resolution Network did not contact Plaintiffs about alternatives to foreclosure prior to recording the notice of trustee’s sale. The First Amended Complaint only requests damages for this statutory violation.

The First Motion to Dismiss asserts that Plaintiffs need to allege tender before obtaining a postponement of the foreclosure sale. However, the case of Mabry v. Superior Court, 185 Cal. App. 4th 208, 214 (2010), relied on by Defendants, explicitly held that tender was not required to postpone a foreclosure sale under California Civil Code section 2923.5. Mabry, 185 Cal. App. 4th at 213. In any event, Plaintiffs are only required to allege that Plaintiffs attempted to tender — or were capable of tendering — the value of the property, or that such equitable circumstances existed that conditioning rescission on any tender would be inappropriate. Mangindin v. Washington Mutual Bank, 637 F. Supp. 2d 700, 706 (N.D. Cal. 2009).

However, as conceded by Plaintiffs, the remedy for a violation of California Civil Code section 2923.5 is not damages, but a postponement of the foreclosure sale to allow such communications to take place. Mabry, 185 Cal. App. 4th at 214. Because the requested damages are not available, this Court dismisses this cause of action with leave to amend.

(2) Second Cause of Action

The second cause of action is against AHMSI for violation of RESPA for failure to respond to Plaintiffs’ letters requesting information relating to the identity of the holder of the note and such holder’s authorized agent. Plaintiffs have not provided copies of the letters to this Court. The First Motion to Dismiss asserts that Plaintiffs need to specify which section of RESPA AHMSI allegedly violated, and Plaintiffs have indicated, in Plaintiffs’ opposition to that motion, that Plaintiffs plan to specify 12 U.S.C. section 2605(f)(1) in any amended complaint.

While the First Motion to Dismiss asserts that the First Amended Complaint fails to allege damages caused by AHMSI’s failure to respond, the First Amended Complaint’s statement of facts alleges that the failure of AHMSI to respond caused Plaintiffs great emotional distress. This Court notes that the courts are divided on whether emotional distress damages are recoverable under section 2605(f)(1). Compare Allen v. United Financial Mortg. Corp., 660 F. Supp. 2d 1089, 1097 (N.D. Cal. 2009), with Espinoza v. Recontrust Co., N.A., 2010 WL 2775753, *4 (S.D. Cal. July 13, 2010). However, this Court will not decide this legal issue at the pleading stage. Therefore, the cause of action is not dismissed on this basis.

The First Motion to Dismiss also asserts that Plaintiffs’ letters do not qualify as “Qualified Written Requests” under RESPA. The statute defines a Qualified Written Request as either (1) a letter saying that the account is in error, or (2) a letter requesting other information. 12 U.S.C. § 2605(e)(1)(b). The RESPA statute provides that a response is required when the letter requests information relating to the servicing of the loan. 12 U.S.C. § 2605(e) (1) (a). Servicing is defined as: “receiving any scheduled periodic payments from a borrower pursuant to the terms of any loan, . . . and making the payments of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the loan.” 12 U.S.C. § 2605(i).

While the First Motion to Dismiss asserts that Plaintiffs must allege that the letters stated that the account was in error, the statute defining what constitutes a Qualified Written Response is written in the disjunctive, and Plaintiffs have asserted that the letters contained requests for other information. This Court agrees with United States District Judge Fogel’s reading of 12 U.S.C. § 2605(e)(1)(b) found in Luciw v. Bank of America, N.A., 2010 WL 3958715, *3 (N.D. Cal. Oct. 7, 2010), which holds that a letter can be a Qualified Written Request even if the letter does not state that the account is in error. The Court notes that the statute does not clearly state that a letter is not a Qualified Written Response if the letter requests information both about the servicing of the loan and information not related to the servicing of the loan. Luciw, 2010 WL 3958715 at *3.

However, the First Amended Complaint fails to allege sufficient facts about the contents of the letters to show that Plaintiffs’ letters were related to the servicing of the loan such as to give rise to a statutory obligation by AHMSI to respond. The First Amended Complaint alleges that the letters request the identity of the holder of the note or such holder’s agent, which does not appear to relate to the receipt or application by AHMSI of periodic payments received from Plaintiffs. While Plaintiffs’ December 6, 2010 opposition to a motion for relief from stay provides a copy of the letter sent by Plaintiffs to Defendants, the Court is not considering that letter at this time because the letter was not incorporated into the First Amended Complaint.

The Court dismisses the second cause of action with leave to amend.

(3) Third Cause of Action

The third cause of action is against Fidelity National Title Company and AHMSI for violation of the automatic stay pursuant to Bankruptcy Code section 362(k). While the Second Motion to Dismiss asserts that this cause of action should be dismissed for failure to allege conduct rising to a requisite level of outrageousness, the determination of outrageousness is a factual issue, and the case relied upon in the Second Motion to Dismiss is a California state law case not involving Bankruptcy Code section 362(k).

However, both motions to dismiss assert that the First Amended Complaint fails to allege that the two defendants willfully violated the automatic stay. Bankruptcy Code section 362(k) clearly requires a willful violation. In re Bloom, 875 F.2d 224, 227 (9th Cir. 1989). The First Amended Complaint contains no allegations of willfulness and/or knowledge of the bankruptcy case on the part of Fidelity National Title Company and/or AHMSI, and Plaintiffs have indicated that Plaintiffs plan to amend the First Amended Complaint to so allege. The Court dismisses the third cause of action with leave to amend.

(4) Fourth Cause of Action

The fourth cause of action is against all Defendants for declaratory relief. The First Amended Complaint requests the following declaratory relief: (1) a finding that the deed of trust is unenforceable because the deed of trust was severed from the note, rendering the note unsecured; (2) a finding that the notice of default is void because the deed of trust was unenforceable; (3) a finding that assignment of the deed of trust to Deutsche Bank as Trustee is of no effect because the assignment was (a) made while American Brokers Conduit was in bankruptcy and (b) made after the securitized trust had closed; and (4) a finding that the notice of trustee’s sale is void for being in violation of the automatic stay. This cause of action does not request that the note and deed of trust be rescinded or otherwise set aside.

Both motions to dismiss assert that the fourth cause of action must be dismissed because the First Amended Complaint fails to allege that Plaintiffs either have tendered, or can tender, the amount of the outstanding loan balance. All but one of the cases cited by Defendants are cases in which a party requested quiet title or declaratory relief rescinding a loan contract, and those cases are not applicable.

The reasoning of Chavez v. Recontrust Co., 2008 WL 5210893 (E.D. Cal. Dec. 11, 2008), is not disposative here and this Court does not agree with it in any event. In Chavez, a plaintiff requested — among other things — an injunction against a foreclosure sale without either alleging that the plaintiff had tendered, or was able to tender, the amount outstanding on the loan. The Chavez court held: “[t]he law is long-established that a trustor or his successor must tender the obligation in full as a prerequisite to challenge of the foreclosure sale.” Chavez, 2008 WL 5210893 at *6 (quoting U.S. Cold Storage v. Great Western Savings & Loan Assn., 165 Cal. App. 3d 1214, 1222, (1985)). The quoted language is inapposite because the language of U.S. Cold Storage refers to an attempt to undo a foreclosure sale after the fact, rather than a request for declaratory relief based on a finding that a foreclosure sale cannot proceed because the wrong party is seeking to foreclose.

In the context of Truth in Lending Act (“TILA”) violations, Judge Ware has held that the Ninth Circuit “gives a trial court discretion to condition rescission on a tender by the borrower of the property, or the property’s reasonable value, to the lender. Yamamoto v. Bank of New York, 329 F.3d 1167, 1171 (9th Cir. 2003). Mangindin, 637 F. Supp. 2d at 705-06. Judge Ware stated:

Notably absent from Plaintiffs’ Complaint is any allegation that they attempted to tender, or are capable of tendering, the value of the property pursuant to the rescission framework established by TILA. Nor do Plaintiffs allege that such equitable circumstances exist that conditioning rescission on any tender would be inappropriate. Thus, the Court finds that Plaintiffs have failed to adequately allege that they are entitled to rescission under TILA.

Mangindin, 637 F. Supp. 2d at 706. Thus, Plaintiffs are only required to allege that Plaintiffs attempted to tender — or were capable of tendering — the value of the property, or that such equitable circumstances existed that conditioning rescission on any tender would be inappropriate.

The First Motion to Dismiss also asserts that the California nonjudicial foreclosure statutes do not require a foreclosing lender to produce the original copy of the note in order to foreclose. However, the First Amended Complaint does not request declaratory relief based on a finding that a foreclosure cannot take place because no party holds an original copy of the note. The First Amended Complaint seeks declaratory relief regarding whether the note is secured; whether the assignment of the note is of any legal effect; and whether the notice of trustee’s sale is void.

The First Motion to Dismiss next asserts that the First Amended Complaint fails to allege with sufficient specificity that the purported transfer of the note from American Brokers Conduit took place while American Brokers Conduit was a debtor in a bankruptcy proceeding. The First Amended Complaint clearly alleges that: “at the time of the assignment, American Broker’s Conduit was in a bankruptcy proceeding under chapter 11 of the U.S. Bankruptcy Code. Plaintiffs are informed and believe that the bankruptcy court did not authorize or approve the assignment of the deed of trust. . . .” First Amended Complaint at page 6, ¶ 20. This allegation is more than a mere threadbare recital and is sufficient to withstand this motion to dismiss. Therefore, the cause of action is not dismissed on this basis.

The First Motion to Dismiss asserts that American Brokers Conduit transferred the note and deed of trust on June 5, 2006 and provides a copy of a loan history for the property. This Court will not take judicial notice of the copy at this time because Plaintiffs have objected to the admissibility of this document and the copy was not part of an official record or court decision.

The First Motion to Dismiss also argues that — even if the deed of trust was transferred out of the bankruptcy estate of American Brokers Conduit without bankruptcy court approval — Plaintiffs have no standing to challenge the transfer. Plaintiffs assert that Plaintiffs have standing because the legal effect of the transfer directly affects Defendants’ ability to foreclose on Plaintiffs’ home. American Brokers Conduit filed for relief under chapter 11 as case number 07-11047 in the Bankruptcy Court for the District of Delaware. Bankruptcy Code section 1109(b) provides: “a party in interest . . . may raise and may appear and be heard on any issue in a case under this chapter.” 11 U.S.C. § 1109(b). The term party in interest is meant to be elastic, and whether a party is a party in interest is determined by the facts of the case. In re Amatex Corp., 755 F.2d 1034, 1042 (3d Cir. 1985). The First Amended Complaint clearly alleges that Plaintiffs have a very practical stake in the legal effectiveness of the transfer of the deed of trust. At least insofar as Plaintiffs seek to challenge that transfer, Plaintiffs’ interest in the American Brokers Conduit bankruptcy proceeding is sufficient to make Plaintiffs a party in interest.

The First Motion to Dismiss further asserts that, even if the assignment took place after American Brokers Conduit filed for bankruptcy, the assignment was in the ordinary course of business and did not require bankruptcy court approval. Under these circumstances, any assignment would be valid. 11 U.S.C. § 363(c)(1). The First Amended Complaint only alleges that the assignment was made when American Broker’s Conduit was in bankruptcy and that there was no authorization from the bankruptcy court, which is only required if the assignment was made outside of the ordinary course of business. Because the First Amended Complaint fails to allege that the assignment was not in the ordinary course of business, this Court dismisses the fourth cause of action with leave to amend with respect to the fact that the assignment from American Brokers Conduit was invalid as an unauthorized post-petition transfer from a bankruptcy debtor.

Finally, the First Motion to Dismiss asserts that the First Amended Complaint must be dismissed because Plaintiffs’ bad faith — as evidenced by Plaintiffs’ failure to tender or to make post-petition payments on the note — estops Plaintiffs from seeking equitable relief. However, the issue of Plaintiffs’ bad faith is a factual issue which this Court will not decide at the motion to dismiss stage. Also, as previously mentioned, this Court does not hold — and leaves for trial, a possible summary judgment motion or other context — Defendants’ contention that alleging tender in the particular manner that Defendants say is mandatory is a requirement to obtaining the declaratory relief sought in Plaintiffs’ First Amended Complaint. Mangindin, 637 F. Supp. 2d at 706.

For the above reasons, this Court dismisses the fourth cause of action with leave to amend only insofar as the fourth cause of action requests a finding that the assignment from American Brokers Conduit was without legal effect for being an unauthorized post-petition transfer from a bankruptcy debtor.

(5) Fifth Cause of Action

The fifth cause of action is against all Defendants for injunctive relief. Plaintiffs request an injunction against a foreclosure sale of the property. Both motions to dismiss assert that this cause of action should be dismissed because injunctive relief cannot be granted without the existence of a substantive cause of action. Shell Oil Co. v. Richter, 52 Cal. App. 2d 164, 168 (Cal. App. 1942). The First Amended Complaint has adequately pled a substantive cause of action for declaratory relief, so the motions to dismiss are denied as to the fifth cause of action.

(6) Sixth Cause of Action

The sixth cause of action is against all Defendants for cancellation of the deed of trust and other instruments and records. In Plaintiffs’ responses to both motions to dismiss, Plaintiffs have agreed to delete the sixth cause of action from future amended complaints based on Defendants’ arguments. Because, as noted earlier, Plaintiffs could allege that Plaintiffs attempted to tender — or were capable of tendering — the value of the property, or that such equitable circumstances exist that conditioning rescission on any tender would be inappropriate, this Court dismisses the sixth cause of action with leave to amend.

E. CONCLUSION

For the forgoing reasons, Defendants’ motions are granted in part with leave to amend and denied in part. Counsel for each set of moving parties shall prepare a form of order consistent with this ruling and submit the proposed order to the Court after service on counsel for Plaintiffs. The Court prefers for all counsel to sign off on the form of order.

[1] Defendants oppose Plaintiffs’ filing of the Second Amended Complaint. Plaintiffs filed the Second Amended Complaint without leave from the Court or consent from Defendants as required by Federal Rule of Civil Procedure Rule 15(a)(2), incorporated by Federal Rule of Bankruptcy Procedure Rule 7015. The Court is deciding these motions to dismiss as to the First Amended Compliant only, and not as to the Second Amended Complaint.

Various Signatures of Korell Harp

[ipaper docId=68626783 access_key=key-1axgr4k8ofuv0gvoqkf9 height=600 width=600 /]

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FOLLOWING THE MONEY: THE BENEFICIARIES OF DOCX MORTGAGE ASSIGNMENTS

FOLLOWING THE MONEY: THE BENEFICIARIES OF DOCX MORTGAGE ASSIGNMENTS

This is a study of the  DOCX mortgage assignments in just one county – Palm Beach County, FL.

In just 18 months, 1,742 such assignments were filed with a total value of mortgages of $560,239,797.

Most of these assignments transferred mortgages to residential mortgage-backed trusts.

Deutsche Bank was the number one beneficiary.

The trusts that most often used these forged documents were:

American Home Mortgage Asset Trusts
American Home Mortgage Investment Trusts
Soundview Home Loan Trusts
Option One Mortgage Loan Trusts

and

HSI Asset Securitization Trusts

When considering also the assignments from LPS/MN and from LPS Network Law firm – David Stern –
nearly $2 billion in mortgages were transferred in just 18 months in one county.

[ipaper docId=67372622 access_key=key-voc30y1g5zewwughr1w height=600 width=600 /]

 

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