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The Pooling and Servicing Agreement: Why eat just half the enchilada?

The Pooling and Servicing Agreement: Why eat just half the enchilada?

cross posted via clouded titles

Securitization Issues — Throughout the trials and tribulations of pouring over thousands of documents, the same issue keeps popping up in my head.  Why are attorneys claiming to rely ONLY on the Pooling and Servicing Agreement (the “PSA”) to establish REMIC failure and nothing else?

How many cases have you read in the last two years that there was strict reliance on the use of the PSA to win a foreclosure case?

I have read of very few instances that go into extreme detail in an attempt to educate a judge (unless you’re in one of the “sand states”, which got hit the hardest and well before the rest of the nation caught on), who really didn’t major in securities law (unless you happen to be “seated” somewhere in the Southern District of New York), all the while opposing counsel is objecting to entering the PSA into evidence at trial.  At the end of the day, who has the note with the right to enforce it seems to be the bottom line.  This issue has also come under severe scrutiny, because when MERS and securitization are involved, it means the promissory note you signed is now an electronic memory and does not consist of what the bank’s attorneys claim is “the original note”.  (I will save the forensic discussion of promissory notes for another argument and another article!)

Perhaps it’s because some well-meaning individuals out there in the legal world told the attorneys that the crux of their argument was in the PSA.

I say, “No, it’s not just the PSA! You’re only eating half the enchilada!”

I am writing this piece (not for my own self-gratification) for the sake of those who have gotten past Securitization 101.  I know most of the blog readers understand what a PSA is and what it contains.  They subscribed to this blog in the past because there was something worthwhile posted on here, so the assumption is … the PSA to the readers of this blog is at least within their sphere of knowledge.  This may be a little “deep” for those of you reading this post for the first time.

In my travails, I have discovered that the “blind eye” seems to include such terms as “Cut-off Date” and “Closing Date”, when referencing the PSA, yet these terms are not found in the PSA.  They are merely referenced.  To find these two dates, what must one do?   Go to the front of the bloody 424(b)(5) Prospectus and find it within the first few pages of the document’s definitions.

I am not being paid by SECINFO.COM to tell you that it is much easier to search for REMIC information on this website than many of you have experienced on SEC.GOV.  I only use SEC.GOV to order complete certified copies of the 424(b)(5) Prospectus, because I want to eat and digest the whole enchilada. Why?  Because I’m hungry for the truth, that’s why.  I want the truth, the WHOLE truth and nothing BUT the truth (the WHOLE truth).  That means, if I have to peruse a bloody 400+ page prospectus that defines the parameters of how a REMIC behaves, I’m going to get this knowledge in my craw, because it’s going to come in real handy and some point and this is an RMBS Trust we’re talking about, it’s somebody’s house that is affected by what’s in this bloody document!

If man’s thought processes anything like electricity, it’s following the path of least resistance.  There are “securitization gurus” out there in the hinterland that I tip my hat to because they’ve gone above and beyond the call of duty in reading and understanding the entire “enchilada” (the sales pitch), and you know who you are, but they keep pointing to Section 2.01 (or its relative counterpart in some other types of PSA’s) and not referencing (and including as evidence) the WHOLE truth.

I say, the judge needs to “get smart” in order to play the game.  But … most won’t.

I’ve also heard that judges in America really don’t give a shit about you and whether you lose your home. You didn’t make your payments so you deserve to, whether someone else made them for you or not.  Judges just want to clear their court dockets as quickly as possible to convince the populace and hierarchy that keeps putting them on the bench that they are efficient in their duties and that their political careers and pensions are priority #1 (and go play golf and vacation with their families).

If you wonder what others are saying about judges across America, just dial up The Robing Room and see for yourself!

It seems like the foreclosure defense community just wants to “cut to the chase” to inform the judge that the “path of least resistance” is out there.  All of us lazy folk don’t have time to read the whole enchilada.  (“Your Honor, we know you have a full docket today, so out of professional legal courtesy, we’re not going to waste your time … because after all, we’re ‘officers of the court’ and we have a duty to represent the concerns of the court first, the public second and our clients … in last place!  We have a business model to run, Your Honor, and we can’t do that wasting time in court, when we can make money playing the delay game.  Oh, wait!  That’s part of Your Honor’s game too!  Drag the proceeding out as long as possible so the homeowner runs out of money, gives up and walks away, right?  Either way, the banks win!”)

The foregoing thought process sounds like many a pissed-off homeowner that has lost faith in America.  You know what?  I don’t blame you.  I’ve lost faith in America too.  I’ve learned that you cannot depend on the charity of others in your quest to survive. However, we live in a society that condones and promotes such behaviors (it’s called socialism) and the multiculturalized American society gobbles it up like a hot enchilada.  But … they eat it so fast they don’t take the time to digest it and it passes through their systems like “shit through a goose” (to quote Gen. George Patton). Yet these same pissed off homeowners are quick to criticize anyone else that’s trying to do the right thing, as if we’re all destined to be miserable in life.

This is the chief concern when I don’t see the entire 424(b)(5) Prospectus (in certified form) being offered as evidence at trial. One can always “tab” the document with miniature, self-adhesive type notes or make reference to those sections of the document in their written arguments so the judge will see it.  Bankruptcy judges have to deal with this all the time, because they’re concerned about debt, not chain of title.

So the question then becomes: Does securitization actually have anything to do with chain of title?  Do you know the answer?

YES! 

It’s just that Wall Street’s idea of “pure intellectual masturbation” hasn’t permeated into the crevices of America’s primary educational system.  Kids in school today don’t even learn “Checkbook 101”.  Nope!  They just want their allowance so they can go out and blow it on junk.  Wait a minute!  That sounds kind of like Wall Street in 2008 when everyone in the securitization game was being compensated into the millions so they could go out and party in blow, booze and hookers, doesn’t it?  Now, I suppose some of you out there are also picturing Dante’s Inferno, right?  Especially the Third, Fourth and Eighth Circles. 

When it comes to securitization, you simply CANNOT cut corners.  If you’ll notice, the entire 424(b)(5) Prospectus document, in whatever form, has some commonalities:

  1. It was signed under penalty of perjury under the Sarbanes-Oxley (“SOX”) Act.
  2. Virtually ALL of the REMICs have Cut-off and Closing Dates.
  3. The chain of title to the subject property (under attack) probably contains an Assignment of Mortgage or Assignment of Deed of Trust that makes reference to a REMIC by name (if it’s written correctly, some aren’t). This is where the REMIC shows up in the chain of title and becomes a “party” in the “adverse claimants to title” category.
  4. Most if not all of the time, the Assignment in question (also suspect to this very day) was drafted by the employees of the mortgage loan servicer you’re trying to deal with, using MERS or some other “made up” interest so the servicer can “hide behind the scenes”.
  5. All prospectuses make reference (somewhere in the document) of who the “players” in the securitization game are, generally they’re right up front.  These are offered to investors right up front, prior to investing, which also promoted the caveats (there were no guarantees), when the creators of the REMICs knew exacting what they were doing in running the reader around in circles (the “pure intellectual masturbation”) until they’re so confused they don’t know which end of the document is “up”.
  6. All make reference to who collects the money to support the distribution payments to the investors at the other end of the REMIC who claimed to be harmed when the REMIC drags you into court or announces it’s selling your home on the courthouse steps.
  7. In some way, shape or form, most if not all prospectuses contain a Pooling and Servicing Agreement of some sort, which explain HOW mortgage loans are supposed to be conveyed into the trust pool and when.

The problem is, none of the banks ever followed their own rules.  The servicers of the mortgage loans began paying your mortgage loans for you when you hit your financial “tipping point” and couldn’t make them any longer (or wouldn’t because you found out the truth).  When the borrower stops making payments, the servicer starts making the payments for the borrower.  This is mandated by the Prospectus, but again, how convenient THAT was left out of the legal equation brought before the Court.  We couldn’t have the judge thinking some rich uncle was making our mortgage payments now, could we?

The judges just want to give your homes to the bank.  They really don’t have time for details.  Right?

Again, I post the following for your consideration: Ocwen’s Letter to 6 Government Agencies

The foregoing transmission is 9 pages long.  I would suggest, as part of your digestion process of “the whole enchilada”, you focus on the parts of the Prospectus that talk about payments being made to investors to keep the REMIC going.  What happened in 2008 was pure “overload” on Wall Street’s financial system.  When you read this Ocwen transmission, you will probably be infuriated, because this affects NOT JUST OCWEN, but EVERY mortgage loan servicer out there!

Read the 9 pages again!  The servicers are the parties doing the foreclosures in the name of the lender.  The problem is, you don’t have a written agreement with the servicer.  You have a written agreement with the Lender.  If the lender’s out of business, the servicer is still collecting mortgage payments and is still paying the REMIC’s investors.  When you stop making the mortgage payments, along with your taxes and insurance payments, the servicer makes them for you!

In the case of a GSE, like Fannie Mae, Freddie Mac, Ginnie Mae or Sallie Mae (WHAT?  Student loans are securitized too?), they too manage REMICs and are knee deep in securitization failure just like the rest of the published REMICs contained within the SEC’s databases.

THE SECURITIZATION CHAIN

The way that the OCC Asset Securitization Handbook contemplated the path of cash flows through the securitization chain started at the top, with the Borrower.  Even U. S. Bank, N.A. admits the Borrower is a party to the Securitization Chain in its 4-page brochure, here:  US Bank Brochure – Role of the Corporate Trustee

So then, why do bank attorneys in court keep downplaying that the Borrower has nothing to do with the Assignment of Mortgage, when the Borrower clearly is AT THE TOP OF THE CHAIN? (taken from p. 8, virtually right up front, just like the Cut-off and Closing Dates are located in a Prospectus).

The “Originator” and “Servicer” work in tandem with (but independent of) each other to make the loans and then collect the payments so the investors who “buy into” the securitization scheme get paid (on the distribution date, generally the 25th of every month).   The “Rating Agency” issues ratings for the bonds the investors would be able to buy (this is shown in the Prospectus, NOT in the PSA).  How much more evidence do you need that the Borrower’s payments to the chain have everything to do with compliance of the entire Prospectus, even when the Borrower DOESN’T MAKE THE PAYMENTS!

For the purposes of this discussion, we move within the path of the securitization chain to discuss WHO makes your payments when you can’t.

The following item was taken from the front end of the Prospectus (NOT in the PSA, which I why I say ya’ll spend so much time focusing on the PSA, you miss the good shit**):

 

 

So, if you think I’m making this stuff up, think again.  This paragraph (taken out of the front end of a Free Writing Prospectus in conjunction with the REMIC paperwork offered on SECINFO.com, which I subscribe to) explains the same thing that the 9-page letter Ocwen wrote about who makes the payments when the Borrower doesn’t.  So, these are the “baker’s dozen” questions I leave you with:

  1. Is your written contract (the Security Instrument) with the mortgage loan servicer or with the lender?
  2. Does it say anything in your Mortgage or Deed of Trust that the Servicers may change during the life of your loan?
  3. Did anyone tell the mortgage loan servicer to make your payments for you when you couldn’t?
  4. Did the mortgage loan servicer handling your loan tell you that it was making your payments for you when you couldn’t?
  5. Did the foreclosure mill law firm mention in the foreclosure complaint that the servicer made the payments for you?
  6. When you asked the servicer (in discovery or through a QWR) for a payment history, did the servicer disclose ALL the payments made (including the payments the servicer made)?
  7. Did the servicer’s law firm misrepresent the character and status of the debt as being in “default” when it really wasn’t? [FDCPA § 807(2)(A)]
  8. As the result of Question #7, has the servicer been wrongfully trashing your credit reports? (FUTURE CREDIT DAMAGE, actual harm under Spokeo v. Robins)
  9. As the result of Question #7, did the foreclosure mill law firm attempt to collect payments from you that you believe were already paid by the servicer?
  10. As the result of Question #7, did the foreclosure mill law firm allege that the REMIC was the Plaintiff when the servicer had been paying the REMIC’s investors all along?
  11. If the servicer had been making the payments all along, was the REMIC and its investors actually harmed?
  12. In deed of trust states, are you non-judicial foreclosure victims now kicking yourself because you didn’t realize this information was in the Prospectus … and you could have truly fought this?
  13. If you retained an attorney to fight your foreclosure, why didn’t your foreclosure defense lawyer pick up on this?  (Remember, the path of electricity?)

Therefore, it would stand to reason that if everyone stopped making their mortgage payments on known securitization chains, the mortgage loan servicers now in existence would go broke overnight making everyone’s payments, as there isn’t enough money in their coffers to support doing that.  All of the RMBS’s on Wall Street would go under on the distribution date following the borrowers’ loan payment stoppage.

See how easy it would be to collapse part of the U.S. economy?

We’re not talking about the TBTF institutions that started all this garbage, we’re talking about the loan servicers that are the real parties filing foreclosure complaints trying to collect their “servicer advances” before the REMIC itself, which has been getting paid all along, gets any residual payments.  It’s the servicers that are lying to the courts in an attempt to reimburse their coffers for all the money they’ve stolen from everyone’s escrow accounts to keep securitization afloat! 

Eventually however, the investors would get stung.

Ignorance is bliss.

For now, I rest my case.

**The information shown above came from SEC filings on behalf of the Bear Stearns Asset Backed Securities I Trust 2006-AC1.

cross posted via clouded titles

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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TFH 6/25 |  10 Easy Ways To Lose a Judicial Foreclosure Case: The Most Common Mistakes Made Defending Against Foreclosure

TFH 6/25 | 10 Easy Ways To Lose a Judicial Foreclosure Case: The Most Common Mistakes Made Defending Against Foreclosure

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL)

ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET

.

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Sunday –  June 25

10 Easy Ways To Lose a Judicial Foreclosure Case: The Most Common Mistakes Made Defending Against Foreclosure
———————

Many homeowners fighting foreclosure in court wind up actually defeating themselves by not understanding the law and how the judicial system works.

Since we have many new listeners, on this Sunday’s show John and I will summarize some of the most common pitfalls that homeowners need to avoid to have any chance of saving their home.

We will discuss some of the following common mistakes:

1. Relying entirely upon judicial decisions outside your jurisdiction.

2. Arguing a kooky defense.

3. Making unnecessary admissions.

4. Hiring others to prepare loan modification applications for you.

5. Filing against your lender in federal district court.

6. Disputing standing based solely upon a securitized trust’s PSA cut-off date.

7. Believing that your loan is cancelled just because you sent a TILA cancellation letter to your lender.

8. Falling prey to mortgage rescue scams.

9. Handling your own case pro se.

10. Ignoring letters from your lender and its attorneys and court papers served upon you.

~

.
Host: Gary Dubin Co-Host: John Waihee

.

CALL IN AT (808) 521-8383 OR TOLL FREE (888) 565-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

EVERY SUNDAY
3:00 PM HAWAII
6:00 PM PACIFIC
9:00 PM EASTERN
ON KHVH-AM
(830 ON THE DIAL)
AND ON
iHEART RADIO

The Foreclosure Hour 12

 

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US Office of the Solicitor General files Amicus Brief in Investor False Claims Suit re: Schneider v JP Morgan Chase

US Office of the Solicitor General files Amicus Brief in Investor False Claims Suit re: Schneider v JP Morgan Chase

IN THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT

UNITED STATES OF AMERICA, EX REL. LAURENCE SCHNEIDER, ET AL.,
Plaintiffs,

LAURENCE SCHNEIDER,
Plaintiff-Appellant,

v.
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION; JPMORGAN
CHASE & CO.; CHASE HOME FINANCE, LLC,
Defendants-Appellees.

On Appeal from the United States District Court for the District of Columbia

<excerpt>

STATEMENT OF THE CASE

I. False Claims Act

The False Claims Act, 31 U.S.C. § 3729 et seq., is used broadly “in defending the
Federal treasury,” and it is a “powerful tool in deterring fraud.” S. Rep. No. 345, 99th
Cong., 2d Sess. 4 (1986). Congress enacted the FCA in 1863 “with the principal goal
of stopping the massive frauds perpetrated by large private contractors during the
Civil War.” Vermont Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765, 781
(2000) (brackets and internal quotation marks omitted). But the Act was intended to
“reach all types of fraud, without qualification, that might result in financial loss to the
Government.” United States v. Neifert-White Co., 390 U.S. 228, 232 (1968).
Many of the Act’s “prohibitions can be enforced through both criminal and
civil actions by the federal government.” United States ex rel. Heath v. AT&T, Inc., 791
F.3d 112, 116 (D.C. Cir. 2015).1
“In addition, the Act authorizes private individuals—
known as relators—to bring a qui tam civil action ‘in the name of the Government,’
and to share in any damages recovered.” Ibid. (citation omitted); 31 U.S.C.
§ 3730(b)(1), (d); see generally Vermont Agency, 529 U.S. at 781. A civil suit may be
brought either by the Attorney General or a relator seeking civil penalties plus three
times the amount of the government’s damages. 31 U.S.C. § 3729(a), (b)(1).
The FCA imposes civil liability for a variety of deceptive practices involving
government funds and property. Among other things, the Act renders liable any
person who “knowingly presents, or causes to be presented, a false or fraudulent
claim for payment or approval,” 31 U.S.C. § 3729(a)(1)(A); any person who
“knowingly makes, uses, or causes to be made or used, a false record or statement
material to a false or fraudulent claim,” id. § 3729(a)(1)(B); any person who
“knowingly makes, uses, or causes to be made or used, a false record or statement
material to an obligation to pay or transmit money or property to the Government, or
knowingly conceals or knowingly and improperly avoids or decreases an obligation to
pay or transmit money or property to the Government,” id. § 3729(a)(1)(G); and any
person who “conspires” to engage in such acts, id. § 3729(a)(1)(C); see id. § 3729(b)(1)
(defining “knowingly”).

II. Factual Background and Prior Proceedings

A. National Mortgage Settlement
In March 2012, the United States, forty-nine states, and the District of
Columbia filed a complaint and proposed consent judgment in the United States
District Court for the District of Columbia against several mortgage servicers,
including JPMorgan Chase. JA2; United States v. Bank of Am. Corp., 753 F.3d 1335,
1336 (D.C. Cir. 2014) (per curiam).
2
The complaint alleged a variety of misconduct in
the servicers’ home mortgage practices, and the proposed consent judgment
implemented a negotiated settlement. Ibid.; see Dkt. Nos. 10-14, United States v. Bank
of Am., No. 12-cv-361 (D.D.C.).
Under that consent judgment, Chase agreed to pay a penalty; to provide
approximately $3.675 billion in various forms of consumer relief, such as loan
forgiveness; and to comply with certain business practice requirements called
“Servicing Standards.” Consent Judgment, No. 12-cv-361 ¶¶ 3, 5 (D.D.C. Apr. 4,
2012) (Consent J.); Consent J. Ex. D. The United States released a number of claims
but did not release “[a]ny liability based upon obligations created by th[e] Consent
Judgment.” Consent J. Ex. F, § (11)(n).
The consent judgment also contains provisions for monitoring the banks’
compliance. The agreement established a Monitoring Committee, Consent J. Ex. E,
§ B; an Independent Monitor to assess compliance, Consent J. ¶ 7; Consent J. Ex. E
§§ C(1), (5), D; creation of metrics for evaluating compliance with certain servicing
standards, Consent J. Ex. E § C(12), (23) & Sch. E-1; and rules governing
enforcement actions by the parties or Monitoring Committee, id. § J.
The parties agreed that if Chase fails to meet its consumer relief obligations,
Chase would “pay an amount equal to 125% of the unmet commitment,” or 140% in
specific circumstances. Consent J. Ex. D(10)(d).3 With respect to servicing standards
for which there are established metrics, if the Monitor concludes that Chase is
exceeding the allowable error rate, the Monitor notifies Chase of a “Potential
Violation,” and Chase has a right to cure within a set time frame. Consent J. Ex. E,
§§ D(3), (5), E(1)-(6). If Chase cures, there is no other “remedy under th[e] Consent
Judgment . . . with respect to such Potential Violation.” Id. § E(6). If Chase does not
timely cure such a “Potential Violation,” “[i]n the event of an action to enforce
[Chase’s] obligations,” the court can order “non-monetary equitable relief, including
injunctive relief, directing specific performance under the terms of th[e] Consent
Judgment, or other non-monetary corrective action,” and the court “may award”
agreed-to “civil penalties.”4
Id. § J(3)(a), (b). With respect to other alleged
noncompliance—such as violation of servicing standards not subject to a metric or
other obligations—the court may order only non-monetary injunctive relief. Id.
§ J(3), (a); see United States v. Bank of Am., 78 F. Supp. 3d 520, 530 (D.D.C. 2015).
The “Enforcement Terms” also state that Chase’s “obligations under this
Consent Judgment shall be enforceable solely in the U.S. District Court for the
District of Columbia” and that “[a]n enforcement action under th[e] Consent
Judgment may be brought by any Party to this Consent Judgment or the Monitoring
Committee.” Consent J. Ex. E, § J(2). Ordinarily “prior to commencing any
enforcement action, a Party must provide notice to the Monitoring Committee of its
intent to bring an action to enforce th[e] Consent Judgment.” Ibid. The committee
then has “21 days to determine whether to bring an enforcement action.” Ibid. If the
committee declines to do so, “the Party must wait 21 additional days . . . before
commencing an enforcement action.” Ibid.
The United States has not invoked the consent judgment’s procedures or
otherwise asked the district court to enforce the terms of the judgment against Chase.
Based on the information currently available to it, including the reports filed by the
Monitor, the United States is unaware of any violation of the agreed-to terms.

B. Factual Background and Procedural History

1. The plaintiff in this case is a relator who filed a qui tam suit against
JPMorgan Chase under the False Claims Act and similar state laws. JA27, JA39,
JA94-JA116 (Second Am. Compl.). As relevant here, relator alleges that Chase
violated the so-called “reverse” provision of the False Claims Act when Chase claimed
to have complied with various aspects of the National Mortgage Settlement, thereby
avoiding additional payments and penalties required under the consent judgment.
JA27, JA35, JA70-JA75, JA80-JA95. That FCA provision imposes liability on any
person who, among other things, “knowingly makes, uses, or causes to be made or
used, a false record or statement material to an obligation to pay or transmit money or
property to the Government” or who “knowingly conceals or knowingly and
improperly avoids or decreases an obligation to pay or transmit money or property to
the Government.” 31 U.S.C. § 3729(a)(l)(G).5

2. The district court granted Chase’s motion to dismiss. JA1-JA22 (opinion);
JA23 (order). As relevant here, the court held that relator could not sue because he
“failed to exhaust the dispute resolution procedures required by the National
Mortgage Settlement before filing suit.” JA12-JA14. The court reasoned that in a
False Claims Act suit, “Relator stands in the position of the Federal Government,”
and the federal government could not sue Chase before following the consent
judgment’s “mandatory pre-litigation steps.” JA13. In the court’s view, these
included “notice to the allegedly noncompliant bank, the Monitor, and the
Monitoring Committee,” “good faith efforts to reach agreement,” notification of the
Monitoring Committee of intent to file an enforcement action, waiting twenty-one
days for the Monitoring Committee to consider whether it would sue, and then
waiting an additional twenty-one days. Ibid

[…]

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Trump seeks sharp cuts to housing aid, except for program that brings him millions

Trump seeks sharp cuts to housing aid, except for program that brings him millions

WaPO-

President Trump’s budget calls for sharply reducing funding for programs that shelter the poor and combat homelessness — with a notable exception: It leaves intact a type of federal housing subsidy that is paid directly to private landlords.

One of those landlords is Trump himself, who earns millions of dollars each year as a part-owner of Starrett City, the nation’s largest subsidized housing complex. Trump’s 4 percent stake in the Brooklyn complex earned him at least $5 million between January of last year and April 15, according to his recent financial disclosure.

Trump’s business empire intersects with government in countless ways, from taxation to permitting to the issuing of patents, but the housing subsidy is one of the clearest examples of the conflicts experts have predicted. While there is no indication that Trump himself was involved in the decision, it is nonetheless a stark illustration of how his financial interests can directly rise or fall on the policies of his administration.

[WASHINGTONPOST]

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Blockchain: Digitally Rebuilding the Real Estate Industry by Avi Spielman

Blockchain: Digitally Rebuilding the Real Estate Industry by Avi Spielman

Blockchain: Digitally Rebuilding the Real Estate Industry
by
Avi Spielman

ABSTRACT

There are tremendous potential applications for blockchain technology, an innovative distributed
ledger database system, within the real estate industry. This paper will explore one aspectrecording
property titles- by comparing the benefits and limitations of a blockchain with those of
the current record keeping system.

This paper will begin with a brief overview of the current state of the title recording system in
the U.S. followed by a deeper look into the procedures of one rapidly growing American city,
Nashville (Davidson County), Tennessee. The goal is to understand current real estate title
systems and technologies in order to identify their benefits and limitations.

Next, this paper will introduce the concept of blockchain technology, starting with a high level
technical overview of how the technology works, as well as its benefits and limitations. It will
also examine Bitcoin, which operates on the largest blockchain, as a potential model, whose
practical applications may be adapted in creating a more efficient and safer title registry system.
Recommendations will then be made for possible methods of implementing a blockchain-based
registry and how its use might change the way real estate title transactions are handled in
Davidson County, TN in order to determine if the collective benefits outweigh the costs.

The research to date leads to the following conclusions: A blockchain title recording system is
the future of title record keeping and would provide immediate benefits over the current title
recording system, with additional benefits accruing in the future as blockchain technology grows
in acceptance. However, at the moment, these benefits do not yet outweigh the costs and
challenges associated with implementing a prototype blockchain title registry system in
Davidson County, or elsewhere in the country. That being said, steps can, and should be taken
now to lay the foundation for a blockchain system.

Down Load PDF of This Case

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Thomas Gaffney: THE PEER-TO-PEER BLOCKCHAIN MORTGAGE RECORDING SYSTEM: SCRAPING THE MORTGAGE ELECTRONIC REGISTRATION SYSTEM AND REPLACING IT WITH A SYSTEM BUILT OFF OF A BLOCKCHAIN

Thomas Gaffney: THE PEER-TO-PEER BLOCKCHAIN MORTGAGE RECORDING SYSTEM: SCRAPING THE MORTGAGE ELECTRONIC REGISTRATION SYSTEM AND REPLACING IT WITH A SYSTEM BUILT OFF OF A BLOCKCHAIN

THE PEER-TO-PEER BLOCKCHAIN MORTGAGE RECORDING SYSTEM: SCRAPING THE MORTGAGE ELECTRONIC REGISTRATION SYSTEM AND REPLACING IT WITH A SYSTEM BUILT OFF OF A BLOCKCHAIN.

Spring, 2017

Wake Forest Journal of Business and Intellectual Property Law

17 Wake Forest J. Bus. & Intell. Prop. L. 349

Author

Thomas Gaffney +

Excerpt

I. INTRODUCTION

This Comment examines the mortgage recording system and suggests that the current system–from registering and tracking the generation of mortgages, to the transfer of mortgages, and the securitization of those mortgages–is inherently flawed. In order to overcome these obstacles, the current system should be replaced with a new decentralized peer-to-peer blockchain network. This form of peer-to-peer recording technology was first developed in the summer of 2008 and is the underlying technology for the ever-increasingly popular cryptocurrency, Bitcoin. 1 Bitcoin is completely decentralized in the sense that the network is not run on one specific server owned by an entity, but rather it is run by every single person or computer operating on the Bitcoin network. 2 The network is maintained by Bitcoin “miners” who are rewarded by a distributed consensus system to confirm and verify transactions between users on the network and for recording those transactions to the shared public ledger otherwise known as the Blockchain. 3

The biggest challenge facing a cryptocurrency is the threat of someone making an exact digital copy of the denomination and selling both the fake copy and real version, which undermines the entire system of trust in the cryptocurrency. 4 The Blockchain eliminates this issue by creating a system to verify, record, and track the integrity and chronological order of each transaction on the network. 5“The integrity and the chronological order of the [B]lockchain are enforced with cryptography.” 6 Each time a …
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CenturyLink Faces Class-Action Lawsuit Seeking Up to $12 Billion For Wells Fargo Like Scheme

CenturyLink Faces Class-Action Lawsuit Seeking Up to $12 Billion For Wells Fargo Like Scheme

Bloomberg-

CenturyLink Inc., sued last week by a former employee for allegedly running a sales incentive scheme and firing her for drawing attention to it, is now the subject of a class-action complaint seeking damages as high as $12 billion.
The complaint, which comes as the Monroe, La., telecommunications company is in the midst of a $34 billion merger with Level 3 Communications Inc., seeks to establish a class of consumers harmed by an alleged high-pressure sales culture. Last week’s self-proclaimed whistleblower, Heidi Heiser, says such a culture left customers paying millions of dollars for accounts they didn’t request.
The new lawsuit, filed in the central district of California late Sunday night, cites Heiser’s suit, as well as similar accusations posted on social media and consumer review websites by people identifying themselves as CenturyLink customers, and accuses CenturyLink of fraud, unfair competition, and unjust enrichment.
“Ms. Heiser’s allegations of what she observed, and what CenturyLink corporate culture encouraged, are consistent with the experiences of hundreds of thousands and potentially millions of consumers who have been defrauded by CenturyLink,” the complaint states. “It is estimated that the damages to consumers could range between $600 million and $12 billion, based on CenturyLink’s 5.9 million subscribers.”
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TFH 6/18 | Special Re-Broadcast of the Exclusive Tell-All Interview with Bank of America Robo Whistle Blower — Identifying Alleged Manufacturing Plants Nationwide Creating Counterfeit Loan Documents

TFH 6/18 | Special Re-Broadcast of the Exclusive Tell-All Interview with Bank of America Robo Whistle Blower — Identifying Alleged Manufacturing Plants Nationwide Creating Counterfeit Loan Documents

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL)

ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET

.

.

Sunday –  June 18

Special Re-Broadcast of the Exclusive Tell-All Interview with Bank of America Robo Whistle Blower — Identifying Alleged Manufacturing Plants Nationwide Creating Counterfeit Loan Documents

———————

Trial and appellate judges throughout the United States continue to unthinkingly appear to allow their courts to be used as collection agencies for crooks who constantly seem to launder real estate titles through the judicial issuing and/or enforcing seemingly unthinkingly of foreclosure-generated false deeds.

Succumbing to the word wizardry of attorneys who have sold out to big buck pretender lenders, our courts have been unwittingly invoking every inapplicable legal doctrine imaginable to protect in effect criminal enterprises preying on America’s homeowners, if 250 billion dollars in regulatory fines the past ten years is evidence of anything.

In the protection, for instance, of false deeds, sometimes mistakenly thought necessary to safeguard real estate markets, judicial opinions today are peppered with numerous prophylactic theories protective of false real estate titles, such as those applied artificially in this area of the law distinguishing between constitutional versus prudential standing, and void versus voidable instruments, and through the application of such otherwise inapplicable doctrines such as res judicata, collateral estoppel, issue preclusion, laches, and the assumed superior equities of allegedly bonafide third-party purchasers.

However, all such concepts protecting “clouded titles” are mere smokescreens used by institutionally timid judiciaries often simply self-imprisoned by the otherwise often inapplicable doctrine of stare decisis, unwilling to break from a Rule Ritual tradition and recognize the obvious.

What they are really enforcing are not merely “clouded titles,” but actually “counterfeit titles” of no force or effect whatsoever, no matter how prettied up with judiciary and recording office imprimatur stamps or red-ribboned title insurance policies they may be, anymore than courts accord any value whatsoever to good looking counterfeit currency.

Yet “counterfeit titles” are the principal currency of the hidden secondary mortgage market casinos in the United States who through incompetence or outright theft resort to manufacturing false promissory notes, false endorsements, false allonges, false mortgage assignments, and even false default notices, often no more artfully printed than old fashion Monopoly money, in order to maneuver their way through our courts, printing phony loan documents in the same manner that counterfeiters churn out phony money.

But there is one major difference. Currency counterfeiters when caught are prosecuted and go to prison. Robos and their organ grinders aren’t. They are financially rewarded.

But the courts are not the only ones to blame. After all, it is the principal job of American legislatures and not the courts to make law.

This Sunday’s revealing show exclusively features a former robo employee of the Bank of America, exposing in his own words, if he is to be believed, how he was hired to manufacture falsely sworn loan documents, and he even identifies the location of some of the Bank of America’s alleged counterfeiting plants nationwide.

Are any legislators, judges, or prosecutors listening? Shouldn’t homeowners be entitled to learn the truth before they are evicted?

~

.
Host: Gary Dubin Co-Host: John Waihee

.

CALL IN AT (808) 521-8383 OR TOLL FREE (888) 565-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

EVERY SUNDAY
3:00 PM HAWAII
6:00 PM PACIFIC
9:00 PM EASTERN
ON KHVH-AM
(830 ON THE DIAL)
AND ON
iHEART RADIO

The Foreclosure Hour 12

 

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Deutsche Bank reaches $170 million Euribor-rigging settlement

Deutsche Bank reaches $170 million Euribor-rigging settlement

Reuters-

Deutsche Bank AG (DBKGn.DE) will pay $170 million to settle an investor lawsuit claiming it conspired with other banks to manipulate the benchmark European Interbank Offered Rate and related derivatives.

A preliminary settlement was filed on Monday with the U.S. District Court in Manhattan, and requires a judge’s approval.

It follows similar settlements with Barclays Plc (BARC.L) and HSBC Holdings Plc (HSBA.L) for a respective $94 million and $45 million, which have won preliminary court approval.

Euribor is the euro-denominated equivalent of Libor, a benchmark for setting rates on hundreds of trillions of dollars of credit cards, student loans, mortgages and other debt.

[REUTERS]

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Wells Fargo Is Accused of Making Improper Changes to Mortgages

Wells Fargo Is Accused of Making Improper Changes to Mortgages

NYT-

Even as Wells Fargo was reeling from a major scandal in its consumer bank last year, officials in the company’s mortgage business were putting through unauthorized changes to home loans held by customers in bankruptcy, a new class action and other lawsuits contend.

The changes, which surprised the customers, typically lowered their monthly loan payments, which would seem to benefit borrowers, particularly those in bankruptcy. But deep in the details was this fact: Wells Fargo’s changes would extend the terms of borrowers’ loans by decades, meaning they would have monthly payments for far longer and would ultimately owe the bank much more.

Any change to a payment plan for a person in bankruptcy is subject to approval by the court and the other parties involved. But Wells Fargo put through big changes to the home loans without such approval, according to the lawsuits.

[NEW YORK TIMES]

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WOODLANDS COMMUNITY ASSOC., INC. v. Mitchell, NJ: Appellate Div. | defendant here in winterizing the unit and changing the locks do not serve to deem it a mortgagee in possession and do not render defendant responsible for the unpaid condominium fees and assessments

WOODLANDS COMMUNITY ASSOC., INC. v. Mitchell, NJ: Appellate Div. | defendant here in winterizing the unit and changing the locks do not serve to deem it a mortgagee in possession and do not render defendant responsible for the unpaid condominium fees and assessments

WOODLANDS COMMUNITY ASSOCIATION, INC., Plaintiff-Respondent,
v.
ADAM T. MITCHELL, Defendant, and
NATIONSTAR MORTGAGE, LLC, and U.S. BANK, N.A., Successor Trustee to Bank of America, N.A. as Successor to LaSalle Bank, N.A. as Trustee for the Merrill Lynch First Franklin Mortgage Loan Trust, Mortgage Loan Asset-Backed Certificate Series 2007-3, Defendant-Appellant.

Docket No. A-4176-15T2.
Superior Court of New Jersey, Appellate Division.

Argued April 24, 2017.
Decided June 6, 2017.
On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Atlantic County, Docket No. DC-2766-14.

Kathleen Cavanaugh argued the cause for appellant (Sandelands Eyet LLP, attorneys; Robert D. Bailey, of counsel and on the briefs).

Tiffany L. Byczkowski argued the cause for respondent (McGovern Legal Services, LLC; Ms. Byczkowski, on the brief).

Before Judges Sabatino, Currier, and Geiger.

The opinion of the court was delivered by

CURRIER, J.A.D.

We are asked to determine whether a lender’s assignee that takes possession of a condominium unit when the owner/mortgagor has defaulted on the loan, and thereafter winterizes the unit and changes the locks, is considered a “mortgagee in possession” of that unit, responsible for the payment of condominium fees and assessments. Because we conclude that those discrete actions are not sufficient to render the lender’s assignee a mortgagee in possession of the unit, we reverse the entry of summary judgment.

In March 2007, Adam Mitchell purchased a condominium unit in a property managed by plaintiff, Woodlands Community Association, Inc. (Association), and executed a mortgage encumbering the unit. After several assignments not pertinent to this matter, the mortgage was assigned in July 2013 to defendant, Nationstar Mortgage LLC.

Mitchell defaulted on his obligations under the mortgage loan and vacated the unit.[1]Mitchell also owed substantial sums to the Association for the unpaid monthly fees and other condominium assessments. Subsequent to his default, Nationstar replaced the locks on the unit and winterized the property.[2]

The Association instituted an action in April 2014 against Mitchell to recover the monthly maintenance association fees for general services it had provided to the property.[3] Several months later, plaintiff amended its complaint to include defendant, alleging that the lender’s assignee was responsible for the association fees as it was in possession of the property.

Both plaintiff and defendant moved for summary judgment. On April 19, 2016, the trial court granted summary judgment in favor of the Association, determining that defendant was a mortgagee in possession, and therefore, liable for the maintenance fees. The trial judge reasoned that no genuine issues of material fact existed as “[defendant held] the keys, and no one else can gain possession of the property without [defendant’s] consent. This constitutes exclusive control, which indicates the status of mortgagee in possession.” The judge also awarded attorney’s fees. This appeal followed.

On appeal, defendant argues that changing the locks and winterizing the condominium unit did not render it a mortgagee in possession of the property. We agree.

Our “review of a trial court’s grant of summary judgment is de novo.” Trinity Church v. Lawson-Bell, 394 N.J. Super. 159, 166 (App. Div. 2007). We must consider whether there are any material factual disputes and, if not, whether the facts viewed in the light most favorable to the non-moving party would permit a decision in that party’s favor on the underlying issue. See Brill v. Guardian Life Ins., 142 N.J. 520, 540 (1995). “[T]he legal conclusions undergirding the summary judgment motion itself [are reviewed] on a plenary de novo basis.” Estate of Hanges v. Metro. Prop. & Cas. Ins., 202 N.J. 369, 385 (2010).

After default by a mortgagor on a property, the lender or its assignee has “the right of possession, subject to the mortgagor’s equity of redemption.” McCorristin v. Salmon Signs, 244 N.J. Super. 503, 508 (App. Div. 1990) (citing Guttenberg Sav. & Loan Ass’n v. Rivera, 85 N.J. 617 (1981)). The mortgagee, however, is not the owner of the property unless there is a foreclosure and sale of the premises to the mortgagee. Guttenberg, supra, 85 N.J. at 630. If a mortgagee is determined to be in possession of the property, then the mortgagee is “liable for delinquent condominium common charges, which had accrued against the property’s legal owner, for services furnished during the mortgagee’s possession and control of the premises.” Woodview Condo. Ass’n, Inc. v. Shanahan, 391 N.J. Super. 170, 173 (App. Div. 2007).

Whether a mortgagee or its assignee is in possession is determined on a case-by-case basis. “[T]he acts of a mortgagee under the circumstances, determine whether or not possession and management of the premises have been undertaken by the mortgagee.” Scott v. Hoboken Bank for Sav., 126 N.J.L. 294, 298 (Sup. Ct. 1941). In Scott, the bank mortgagee had taken over the collection of the rents from the tenants and was paying the bills and making repairs in the building. Id. at 296. The Court found the bank had become a mortgagee in possession, stating that when the mortgagee “take[s] out of the hands of the mortgagor the management and control of the estate[,]” the mortgagee becomes a mortgagee in possession. Id. at 298.

In Woodview, supra, 391 N.J. Super. at 174, the mortgagee in possession had rented out the units and was collecting rents on them. We found the mortgagee to be in control and possession of those units, and therefore, responsible for the monthly condominium fees.

We must assess then whether defendant exercised the necessary level of control and management over the property to deem it a mortgagee in possession. Defendant here has not occupied the unit, is not collecting rents or any other profits, nor is it making repairs. It cannot be argued that defendant’s actions of winterizing the property and changing the locks were the equivalent of the multitude of actions and responsibilities undertaken by the mortgagees in Scott and Woodview.

Plaintiff contends, however, as did the trial judge, that the sole act of changing the locks renders defendant a mortgagee in possession as the action demonstrated that no one else could enter the unit without the consent of defendant, thus conferring upon it exclusive control. We disagree.

The use of the word “possession” in the designation “mortgagee in possession” is somewhat misleading. See 30 New Jersey Practice, Mortgages § 21.10, at 132 (Myron C. Weinstein) (2d ed. 2000) (citing George E. Osborne, Handbook on the Law of Mortgages § 162 (2d ed. 1970)) (stating that dominion and control are more descriptive of a mortgagee in possession, not actual possession). Indicia of control and management include elements of possession, operation, maintenance, use, repair, and control of the property such as paying bills or collecting rents. We are satisfied that the minimal efforts taken here by defendant to secure its interest in the mortgaged property are not sufficient to convert itself into a mortgagee in possession. Defendant has not taken over the control and management of the unit nor exercised the requisite dominion over the property short of securing the unit.

Upon Mitchell’s default on the mortgage, defendant was required to protect its collateral, the value of its security. See N.J.S.A. 46:10B-51 (obligating a lender or its assignee to maintain a property in foreclosure proceedings “to such standard or specification as may be required by state law or municipal ordinance.”). In addition to paying the insurance premiums and real estate taxes, defendant sought to prevent damage to the unit by winterizing the property and changing the locks. In this situation, the mortgagee has taken on the costs and borne the burden of the abandoned property. It has not availed itself of the benefits of the Association, as plaintiff argues, but rather its actions in protecting its security serve to benefit the other homeowners. Incidents of vandalism or an occurrence of frozen pipes in the vacant unit would likely lead to damage to adjoining properties. Defendant here is not benefitting from the limited actions it has taken to secure its collateral; it is simply protecting its rights.

Plaintiff argues alternatively that defendant is responsible for the unpaid assessments under equitable theories. In Woodview, supra, we advised that equitable considerations supported our determination that the mortgagee in possession, who was collecting rents on the two properties, should be responsible for the condominium assessments. 391 N.J. Super. at 178. We stated: “In our view, having enjoyed the benefit of these goods and services throughout his possession and control of the premises, and consistent with the rights and duties of mortgagees in possession generally, defendant suffers the burden of their cost.” Ibid. (emphasis added).

There was no dispute in Woodview as to the designation of “mortgagee in possession.” The only issue presented for resolution was whether the mortgagee in possession was responsible for the unpaid condominium fees. We are satisfied that our conclusion today is consistent with Woodview as we have deemed defendant not in possession or control of the property and not a mortgagee in possession.

Nor are the equitable doctrines of unjust enrichment and quantum meruit applicable in these circumstances. To establish unjust enrichment, plaintiff must show that it expected remuneration from defendant at the time it performed or conferred a benefit on defendant and that the retention of that benefit without payment would be unjust. VRG Corp. v. GKN Realty Corp., 135 N.J. 539, 554 (1994).

Recovery under quantum meruit similarly rests on the principle that one party should not be allowed to be enriched unjustly at the expense of another. Weichert Co. Realtors v. Ryan, 128 N.J. 427, 437 (1992). Recovery under both of these doctrines requires a determination that defendant has benefitted from plaintiff’s performance. It is undisputed that there was no express contract in place between plaintiff and defendant for the provision of services. Rather, the services furnished by the Association are provided for the upkeep of the entirety of the Association’s property. Defendant was not a member of the Association, and therefore, plaintiff could not have expected remuneration from it. Without defendant being designated a mortgagee in possession, we fail to see the basis of an implied contract to satisfy the equitable doctrines. Cf. Essex Cleaning Contractors, Inc. v. Amato, 127 N.J. Super. 364, 367 (App. Div.), certif. denied, 65 N.J. 575 (1974) (finding that a mortgagee determined to be in possession of the property “may be liable for services rendered to him in connection with the property during his occupancy thereof on the basis of an express or implied contract.”).

We, therefore, conclude that the minimal actions taken by defendant here in winterizing the unit and changing the locks do not serve to deem it a mortgagee in possession and do not render defendant responsible for the unpaid condominium fees and assessments. Although not raised in the argument to the trial court nor in the appellate briefs, plaintiff suggested to us at the time of oral argument that we should impose some parameters on defendant’s conduct. For example, plaintiff suggests a requirement that the mortgagee must place the defaulted unit up for sale within a certain timeframe after the entry of a final judgment of foreclosure. If a mortgagee is dilatory after the entry of a final judgment of foreclosure in proceeding to sale or has refused to go to sale on the unit, that conduct might result in the imposition of responsibility for the Association fees. While these arguments might bear some merit in a future discussion, we decline the invitation to expand on our conclusion on this record as it is void of any information regarding the circumstances surrounding the foreclosure proceeding or any events following the final judgment. See Sklodowsky v. Lushis, 417 N.J. Super. 648, 657 (App. Div. 2011) (“An issue not briefed on appeal is deemed waived.”).

We reverse the ruling granting summary judgment to plaintiff, and remand to the trial court for the entry of summary judgment on defendant’s motion.

Reversed and remanded. We do not retain jurisdiction.

[1] Final judgment was entered in the foreclosure action in December 2015. The parties advised at the time of oral argument on the appeal that the property had not been listed for sale.

[2] “Winterizing” entails draining the pipes, turning off the water and setting the thermostat for heat to protect the pipes.

[3] Plaintiff and Mitchell resolved their claims in May 2015.

 

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Inside Wells Fargo’s Plan to Fix Its Culture Post-Scandal

Inside Wells Fargo’s Plan to Fix Its Culture Post-Scandal

Fortune-

When news of the Wells Fargo fake-­accounts scandal broke this past September, the company’s stock responded as it had for much of the year: It rose.

A U.S. congressman would soon label the bank “a criminal enterprise,” late-night television hosts would bash it mercilessly, and plaintiffs would file lawsuits that the company recently estimated could cost it billions of dollars. Yet on that Thursday in September—as one of the stranger and more outrageous banking scandals in memory was being revealed to the world—Wells Fargo’s share price ticked merrily upward.

Investors merely yawned at the revelation that its employees had created as many as 2.1 million phony deposit and credit card accounts for unwitting customers—a “widespread illegal practice,” in the words of the Consumer Financial Protection Bureau, that provoked that government regulator to slam the bank with its largest-ever penalty, a $100 million fine; the bank also paid $85 million to settle with the Los Angeles City Attorney and the Office of the Comptroller of the Currency. Wall Street analysts were as nonplussed as investors; none of the 30-plus sages who cover the company—No. 25 on this year’s Fortune 500—issued any urgent reassessments. Even three weeks later, with little break in the scalding headlines, John Stumpf, then Wells Fargo’s CEO, was calmly telling a House committee that the scandal was “absolutely immaterial.”

[FORTUNE]

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TFH 6/11 | Foreclosure Workshop #35: Szymanski v. Wailea Resort Company, Ltd. — Despite Due Process and Equal Protection Requiring “Like Cases Be Treated Alike,” Homeowners in Foreclosure Have Had Those Constitutional Rights Violated Daily by American Courts.

TFH 6/11 | Foreclosure Workshop #35: Szymanski v. Wailea Resort Company, Ltd. — Despite Due Process and Equal Protection Requiring “Like Cases Be Treated Alike,” Homeowners in Foreclosure Have Had Those Constitutional Rights Violated Daily by American Courts.

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL)

ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET

.

.

Sunday –  June 11

6/11 | Foreclosure Workshop #35: Szymanski v. Wailea Resort Company, Ltd. — Despite Due Process and Equal Protection Requiring “Like Cases Be Treated Alike,” Homeowners in Foreclosure Have Had Those Constitutional Rights Violated Daily by American Courts.

———————

One of the central purposes of the Foreclosure Hour has been to inform everyone what actually transpires in American courts.

Centuries ago, in the absence of the printing press there were virtually no law books and very little means of effective communication except the pony express, and only those who actually sat in courtrooms knew what the law really was in terms of what judges actually did.

Sociologists have long taught, for example, that there is in every jurisdiction still a very sharp difference between “the law on the books” and “the law in action.”

Today, despite law books overcrowding library shelves, the availability of speedy electronic research, and increases in TV attorney talking heads, still judges carry on like feudal barons in control of their own individual fiefdom, which is not to say that they are all dictators or want to be, but only that as a practical matter there is little coordination between them or supervision of them, guaranteeing unequal treatment of homeowners in every jurisdiction.

This is especially and painfully known firsthand to millions of homeowners trapped in foreclosure proceedings in recent years.

There is, for instance, no more universally acknowledged principal of justice in virtual every legal system, past and present and future, known to humankind, from tribal days on, than “like cases should be treated alike,” an often termed “natural law concept” embedded in federal and state constitutions under the rubrics of “due process” and “equal protection.”

Yet even such acknowledged cornerstone protections predating all federal and state constitutions have been more than frequently denied American homeowners facing foreclosure, whether it be with respect, for instance, to getting a stay pending appeal, challenging a pretender lender’s standing, calculating a deficiency judgment, applying standard contract doctrines such as adhesion, allowing redemption following confirmation of sale, and, perhaps of extra importance, disqualifying a presiding judge based on appearances of partiality, particularly as a result of stock ownership in an opposite party.

There is likely not a single one of our listeners personally unfamiliar with such abuses, made doubly disturbing when understood in the context of unequal treatment.

On this Sunday’s Foreclosure Hour we will lift that veil of ignorance that appears to have clouded a recognition and understanding of “the law in action” doubly abusing homeowners, providing some extremely troubling yet representative examples of such fundamental violations within and between United States jurisdictions, why they exist, and how they could easily be resolved with new leadership from state legislators and state appellate courts, requiring urgently needed institutional redesign.

Are any legislators and judges listening?

~

.
Host: Gary Dubin Co-Host: John Waihee

.

CALL IN AT (808) 521-8383 OR TOLL FREE (888) 565-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

EVERY SUNDAY
3:00 PM HAWAII
6:00 PM PACIFIC
9:00 PM EASTERN
ON KHVH-AM
(830 ON THE DIAL)
AND ON
iHEART RADIO

The Foreclosure Hour 12

 

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U.S. joins whistleblower lawsuit that accuses Los Angeles of misusing HUD money

U.S. joins whistleblower lawsuit that accuses Los Angeles of misusing HUD money

HW-

The federal government is joining a lawsuit that accuses the city of Los Angeles of misusing hundreds of millions of dollars from the Department of Housing and Urban Development that were earmarked for providing accessible housing for people with disabilities, the Department of Justice announced this week.

The lawsuit, which stems from a whistleblower complaint, alleges that the city of Los Angeles and the CRA/LA (formerly the Community Redevelopment Agency of the City of Los Angeles) falsely certified that they were in compliance with federal accessibility laws in connection with housing grants from HUD.

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House passes sweeping bank deregulation bill

House passes sweeping bank deregulation bill

Politico-

House Republicans on Thursday united to pass a comprehensive bill that would dismantle the landmark banking regulations enacted after the 2008 financial crisis.

The legislation, approved by a vote of 233-186, represents the GOP’s opening salvo in the coming debate over easing the rules on the financial system, a move sparked by the election of President Donald Trump and Republican control of Congress.

For now, passage of the bill amounts to little more than a 600-page political messaging exercise, since Senate Republicans do not plan to take up the legislation as written. They’re beginning to put together their own package because enacting most changes to regulations will require winning over some Democrats.

The author of the bill, House Financial Services Chairman Jeb Hensarling (R-Texas), says he hopes parts of it will become law during this session of Congress. But he has also conceded that he’s playing the long game with some of his proposals, with high political hurdles looming in the Senate.

[POLITICO]

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Former CEO of OneWest Bank is Trump’s pick for key financial regulatory post

Former CEO of OneWest Bank is Trump’s pick for key financial regulatory post

LA TIMES-

President Trump on Tuesday nominated Joseph Otting, the former chief executive of Pasadena’s OneWest Bank and an ally of Treasury Secretary Steven Mnuchin, to a key financial regulatory position.

The move drew fire from consumer advocates and Democrats, who pointed out that Otting would be in a position of overseeing banks even though one he headed up has run into trouble with regulators.

Otting is being tapped to be the comptroller of the currency, a powerful regulator who oversees federally chartered banks, the White House announced Monday night. Those include the banking arms of some of the largest financial institutions in the country, including JP Morgan Chase & Co. and Wells Fargo & Co.

His role with OneWest, which has been criticized for its foreclosure practices, made Otting’s nomination concerning, said Sen. Sherrod Brown (D-Ohio).

[LA TIMES]

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Justice Department Weighs in Against Wells Fargo in a Whistle-Blower Suit

Justice Department Weighs in Against Wells Fargo in a Whistle-Blower Suit

NYT-

Fresh woes for Wells Fargo and a victory for two of its whistle-blowers occurred late Tuesday when the Justice Department filed a friend-of-the-court brief in a lawsuit brought against the bank by two former employees, who were fired after they tried to report misdeeds they had observed to their supervisors.

The government’s filing adds heft to a long-running case that involves behavior that predates the 2008 financial crisis and the sham-accounts scandal that came to light at Wells Fargo last year.

Although the Justice Department’s filing does not opine on the whistle-blowers’ claims, it argues that an appellate court should revise the analysis it made when it dismissed the case last year. Tuesday’s filing follows a Supreme Court ruling in February that also asked the appellate court to review the matter.

The whistle-blowers who filed the case worked at Wachovia and World Savings, banks that were folded into Wells Fargo. In their complaint, filed in 2011, they contend that their employers engaged in mortgage improprieties and deceived federal regulators by hiding billions of dollars in losses from them. They filed the suit under the False Claims Act, which encourages individuals to come forward with evidence of fraud against the government. Plaintiffs who succeed in these cases receive part of the damages that are recovered.

[NEW YORK TIMES]

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US Bank v  MATTOS | HI SC – there is a genuine issue of material fact as to whether Ocwen had authority to sign the second assignment of mortgage to U.S. Bank… “Qualified” Robo-Witness Fail

US Bank v MATTOS | HI SC – there is a genuine issue of material fact as to whether Ocwen had authority to sign the second assignment of mortgage to U.S. Bank… “Qualified” Robo-Witness Fail

H/T GARY DUBIN LAW!

IN THE SUPREME COURT OF THE STATE OF HAWAII
—oOo—

_________________
U.S. BANK N.A. IN ITS CAPACITY AS TRUSTEE FOR THE REGISTERED
HOLDERS OF MASTR ASSET BACKED SECURITIES TRUST 2005-NC1,
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-NC1,
Respondent/Plaintiff-Appellee,
vs.
JOSEPH KEAOULA MATTOS, CHANELLE LEOLA MENESES,
Petitioners/Defendants-Appellants,
and
CITIFINANCIAL, INC., ASSOCIATION OF APARTMENT OWNERS OF
TERRAZA/CORTEBELLA/LAS BRISAS/TIBURON,
EWA BY GENTRY COMMUNITY ASSOCIATION,
Respondents/Defendants-Appellees

SCWC-14-0001134
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-14-0001134; CIVIL NO. 11-1-1539)
JUNE 6, 2017
RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.
OPINION OF THE COURT BY McKENNA, J.

I. Introduction
This appeal arises from a judicial decree of foreclosure
granted in favor of plaintiff “U.S. Bank N.A. in its Capacity as
Trustee for the registered holders of MASTR Asset Backed
Securities Trust 2005-NC1, Mortgage Pass-Through Certificates,
Series 2005-NC1” (“U.S. Bank”) against defendants Joseph Keaoula
Mattos (“Mattos”) and Chanelle Leola Meneses (“Meneses”)
(collectively, “Defendants”). At issue is whether the Circuit
Court of the First Circuit 1 (“circuit court”) properly granted
U.S. Bank’s “Motion for Summary Judgment and Decree of
Foreclosure Against All Defendants on Complaint Filed July 21,
2011” (“motion” or “motion for summary judgment”). In its
published opinion, the Intermediate Court of Appeals (“ICA”)
affirmed the circuit court. U.S. Bank N.A. v. Mattos, 137
Hawaii 209, 367 P.3d 703 (App. 2016).2

 

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MD Attorney General Frosh Announces $95 Million Settlement with Deutsche Bank Settlement Resolves Claims of Misleading Investors that Purchased Residential Mortgage Backed Securities

MD Attorney General Frosh Announces $95 Million Settlement with Deutsche Bank Settlement Resolves Claims of Misleading Investors that Purchased Residential Mortgage Backed Securities

Attorney General Frosh Announces $95 Million Settlement with Deutsche Bank Settlement Resolves Claims of Misleading Investors that Purchased Residential Mortgage Backed Securities; Provides $80 Million in Relief to Maryland Consumers

BALTIMORE, MD (June 1, 2017) – Maryland Attorney General Brian E. Frosh announced today that the Securities Division of the Office of Attorney General has reached a $95 million settlement with Deutsche Bank, resolving financial crisis-era civil claims that Deutsche Bank misled investors in its securitization and sale of residential mortgage-backed securities (RMBS) and related collateralized debt obligations (CDOs). As part of the settlement, Deutsche Bank will be required to provide $80 million in relief to Maryland consumers. The $95 million settlement is the largest reached by a state for Deutsche Bank’s financial-crisis era RMBSrelated conduct.

“Deutsche Bank has acknowledged that it deceived investors about the quality of the residential mortgages backing their complex securities,” said Attorney General Frosh. “Its conduct, and that of other investment banks, fueled the financial crisis and aided unfair and predatory lending practices. This settlement recoups losses that Maryland suffered through investments in Deutsche Bank securities and also ensures that Maryland consumers will receive relief from the Department of Justice settlement entered into during the Obama Administration.”

Deutsche Bank did not lend directly to consumers, but rather packaged and sold mortgages into complex securities known as RMBS and CDOs. In this process, Deutsche Bank had an obligation to provide complete and accurate information to investors. Despite this obligation, Deutsche Bank acknowledges that it misled investors. By misrepresenting key characteristics of the loans that it securitized, Deutsche Bank concealed from investors and rating agencies the true risk of losses of its RMBS. In doing so, Deutsche Bank deprived investors of their right to make an informed decision about whether they should invest in those RMBS.

The settlement announced today will provide $15 million in restitution for state and local government investments, and earmarks $80 million for consumer relief from the Department of Justice’s settlement. Consumer relief will be provided in the forms of mortgage forgiveness and forbearance, low to moderate income lending, neighborhood reinvestment and stabilization, and affordable housing financing. In addition to the monetary settlement, Deutsche Bank also reaffirmed the detailed statement of facts agreed to with the United States Department of Justice.

Maryland’s investigation began as a participant in the Department of Justice’s RMBS Working Group.

In making today’s announcement, Attorney General Frosh thanked Assistant Attorney General Max F. Brauer for his work on the case.

The entire settlement package can be found at: http://www.marylandattorneygeneral.gov/news%20documents/Deutsche_Bank_CO.pdf

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TFH 6/4 |  How To Use the Rules of Evidence To Defeat Foreclosure by Successfully Challenging the Admissibility of a Foreclosing Plaintiff’s Offers of Proof

TFH 6/4 | How To Use the Rules of Evidence To Defeat Foreclosure by Successfully Challenging the Admissibility of a Foreclosing Plaintiff’s Offers of Proof

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL)

ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET

.

.

Sunday –  June 4

How To Use the Rules of Evidence To Defeat Foreclosure by Successfully Challenging the Admissibility of a Foreclosing Plaintiff’s Offers of Proof

———————

Too many borrowers attempt to defend against foreclosures without speaking the language of the Courts which is based on the Rules of Evidence, an established body of centuries-old courtroom tests for determining the truthfulness of facts.

It is often not enough to point out, for instance, defects in a foreclosing plaintiff’s papers without also specifying how and why the Rules of Evidence in your jurisdiction are on your side.

Foreclosure attorneys continue to cavalierly and successfully constantly get away with violating the Rules of Evidence as a result of borrowers failing to make the proper objections in Court.

Remember that one of the basic tenets of our adopted Anglo-Saxon jurisprudence, right or wrong, is that the parties exclusively must present their evidence and that it is the counter responsibility of opposing parties to raise objections or an opponent’s evidence is considered admissible, the weight to be given to all admissible evidence remaining the responsibility of the trier of fact.

Some of the most egregious evidentiary errors made by foreclosure attorneys involve issues of admissibility pertaining to the business records exception to the hearsay rule, the best evidence rule, and the self-authentication of official records.

On this Sunday’s show, we will discuss some of the more important Rules of Evidence pertaining to the conduct of foreclosure litigation and the dozens of proven ways individual Rules of Evidence can be used to defeat foreclosures in the context, for instance, of challenging the admissibility of default letters, general ledgers, declarations of indebtedness, verifications to complaints, pooling and servicing agreements, endorsements, promissory notes, allonges, mortgages, mortgage assignments, notarizations, and attorney affirmations.

Please listen to this Sunday’s show and get a head start on substantially improving your courtroom skills and success.

~

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Host: Gary Dubin Co-Host: John Waihee

.

CALL IN AT (808) 521-8383 OR TOLL FREE (888) 565-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

EVERY SUNDAY
3:00 PM HAWAII
6:00 PM PACIFIC
9:00 PM EASTERN
ON KHVH-AM
(830 ON THE DIAL)
AND ON
iHEART RADIO

The Foreclosure Hour 12

 

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COMPLAINT | OCWEN LOAN SERVICING, LLC, v. FIDELITY INFORMATION SERVICES, LLC – Fraudulent Billing and billed Ocwen for money spent for expensive hotels, strip clubs, casinos, and personal gifts

COMPLAINT | OCWEN LOAN SERVICING, LLC, v. FIDELITY INFORMATION SERVICES, LLC – Fraudulent Billing and billed Ocwen for money spent for expensive hotels, strip clubs, casinos, and personal gifts

SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SACRAMENTO

OCWEN LOAN SERVICING, LLC,
Plaintiff,

v.

FIDELITY INFORMATION SERVICES,
LLC,
Defendant

COMPLAINT FOR:
(1) FRAUD AND DECEIT;
(2) NEGLIGENT
MISREPRESENTATION;
(3) VIOLATION OF CALIFORNIA
BUSINESS AND PROFESSIONS
CODE SECTION 17200, ET SEQ.;
(4) BREACH OF CONTRACT;
(5) UNJUST ENRICHMENT; and
(6) DECLARATORY RELIEF
DEMAND FOR JURY TRIAL

NATURE OF THE CASE

1. FIS was retained to conduct a two-year review of Ocwen’s loan servicing practices
in June 2015, at a budgeted-cost of $44.8 million. Throughout the engagement, FIS made
fraudulent or negligent misrepresentations in its monthly invoices to Ocwen about the services
FIS claims to have performed and the expenses FIS claims to have incurred. Whenever Ocwen
questioned the legitimacy of FIS’s invoices, or confronted FIS about their increasing enormity,
FIS reiterated its misrepresentations that the hours and expenses reflected on the invoices were
legitimately worked and incurred. By continuing to represent to Ocwen that its invoices were
legitimate, FIS induced Ocwen to continue to pay millions of dollars for work that was not
performed. FIS did so because it was incentivized to, and because it perceived that it had free
reign to lie to Ocwen without consequence.

2. Ocwen is a mortgage loan servicer subject to regulation in California by the
California Department of Business Oversight (“California DBO”). After raising concerns about
certain of Ocwen’s servicing practices for California loans, the California DBO ordered Ocwen to
undergo a 24-month independent servicing review. The California DBO selected FIS to conduct
the review, with Ocwen bearing the cost, subject to a letter of engagement with FIS (the “LOE”).

3. To secure the engagement, FIS had proposed a budget of $44.8 million to conduct
the 24-month review, which was to include a loan-by-loan review of 50,000 loan files for
California loans serviced by Ocwen.

[…]

Down Load PDF of This Case

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HOW WELLS FARGO’S CUTTHROAT CORPORATE CULTURE ALLEGEDLY DROVE BANKERS TO FRAUD

HOW WELLS FARGO’S CUTTHROAT CORPORATE CULTURE ALLEGEDLY DROVE BANKERS TO FRAUD

Vanity Fair-

Once upon a time, in 1970, long before America’s banking system was dominated by six giant institutions—JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs, and Morgan Stanley—Dennis Hambek started working as a messenger at the National Bank of Washington in Ellensburg, Washington. Over the years, as his career advanced from messenger to loan officer to branch manager, he had a front-row seat at the transformation of America’s banking system. That first year, the National Bank of Washington was swallowed up by Pacific National Bank of Seattle, which in 1981 was bought by Los Angeles-based First Interstate Bancorp, which in 1996 was bought by San Francisco-based Wells Fargo, which in 1999—as the consolidation frenzy was reaching its peak—merged with Norwest, a Minneapolis-based bank, in a $34 billion deal.

Wells Fargo, which was founded in 1852 as a stagecoach express to carry valuable goods to and from the gold mines in the West, had a storied brand, so the new, combined company kept that name. But if Norwest’s name didn’t survive, its corporate culture did. Spearheaded by the company’s then C.E.O., Dick Kovacevich, it involved a novel way of thinking about banking.

[VANITY FAIR]

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GARY DUBIN LAW OFFICES FORECLOSURE DEFENSE HAWAII and CALIFORNIA
Kenneth Eric Trent, www.ForeclosureDestroyer.com

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