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ATTORNEY GENERAL CUOMO EXPANDS PROBE OF NEW YORK FORECLOSURE ACTIONS

ATTORNEY GENERAL CUOMO EXPANDS PROBE OF NEW YORK FORECLOSURE ACTIONS

Demands information from Bank of America, JP Morgan Chase, Wells Fargo and GMAC Mortgage/Ally ~Calls for suspension of foreclosures by mortgage servicers engaged in “robo-signing” in New York until accuracy of court documents and integrity of process are assured

NEW YORK, NY (October 12, 2010) – Attorney General Andrew M. Cuomo today announced that he is seeking information from four major mortgage servicers – Bank of America, JP Morgan Chase, Wells Fargo and GMAC Mortgage/Ally – concerning the filing of affidavits that falsely attest the signer has personal knowledge of the facts presented in home foreclosure proceedings, a practice known as “robo-signing.”

In view of the prevalence of this practice in the industry, Cuomo also called on mortgage servicers engaged in “robo-signing” in New York to immediately suspend all foreclosure actions in the state until they correct their procedures to comply with New York law and can assure the public and the courts that integrity has been restored.

“I will not allow New Yorkers to lose their homes due to mortgage goliaths that buck the system by submitting affidavits signed without knowledge of the facts,” said Attorney General Cuomo. “Such conduct is a fraud upon our courts and a slap in the face of New Yorkers struggling to get by in this economy. My office will continue to root out these practices so homeowners receive the full protections afforded by our judicial system.”

Recent reports indicate that employees of these mortgage servicers routinely signed affidavits submitted in foreclosure proceedings without personal knowledge of the underlying facts or verification of loan file information, and without even reading the documents they signed. This practice, known as “robo-signing,” has tainted the integrity of the foreclosure process by which homeowners in New York lose their homes. Bank of America, JP Morgan Chase and GMAC Mortgage announced that they were temporarily halting pending foreclosures, while Wells Fargo has not suspended foreclosures despite the deficiencies uncovered.

Attorney General Cuomo is calling on these mortgage servicers to submit documents and information to his office concerning how foreclosure documents are prepared, verified, attested to and notarized, and how required notices are provided to New York homeowners. The letters request that the mortgage servicers stop re-filing foreclosures that had been suspended (and in Wells Fargo’s case, cease proceeding with pending foreclosures) until the Attorney General’s Office is assured that reliable and fair procedures are in place and that accurate, trustworthy documentation will be submitted to the New York courts. The letters also request that the mortgage servicers refrain from filing any new foreclosures until they can provide assurances that their procedures comply with New York law and are neither tainted nor inaccurate.

Because of the gravity of these transgressions and the high volume of foreclosures, Attorney General Cuomo is calling on all mortgage servicers engaged in “robo-signing” in New York to immediately suspend all pending foreclosure actions in the state, including evictions and foreclosure sales. Cuomo is also requesting that the mortgage servicers not file any new foreclosures until the companies correct their procedures.

Tens of thousands of New Yorkers have been devastated by the foreclosure crisis. In fact, the foreclosure rates in Nassau and Suffolk Counties rank among the ten highest in the nation. More than 60,000 New York homes are currently in foreclosure, and 130,000 New York homeowners have received pre-foreclosure notices this year after falling behind on their mortgage payments.

In addition to his office’s review of Bank of America, Chase, Wells Fargo and GMAC Mortgage/Ally, Attorney General Cuomo is working with other state attorneys general, banking regulators and other interested parties to assess the veracity of servicers’ foreclosure filings and ensure the fairness and accuracy of their processes.

Attorney General Cuomo advises New York homeowners who are facing foreclosure proceedings to do the following:

  • Contact the court to find out the status of your foreclosure proceeding.
  • Seek representation or advice from a qualified attorney. If necessary, contact your local bar association or legal services office for a referral. If you are unable to retain counsel, carefully review any documents filed thus far with the court to ensure their accuracy.
  • If you have not done so already, immediately contact your lender or servicer to discuss available alternatives to foreclosure such as a loan modification.
  • For a general description of the foreclosure process, refer to www.nyprotectyourhome.com/fc_timeline.html.
  • Consult with a government-approved housing counseling agency. To find counselors approved by the U.S. Department of Housing and Urban Development (HUD) in your local area, call 800-569-4287 or visit www.hud.gov. A list of housing counselors also can be found via the NYS Banking Department at www.banking.state.ny.us.
  • Call HOPE NOW at 1-888-995-HOPE. HOPE NOW is an alliance of housing counselors, mortgage companies, investors and other mortgage market participants that provides free foreclosure prevention assistance.
  • If you live in New York City, call 311 to schedule free foreclosure counseling sessions at the Center for New York City Neighborhoods.

New York homeowners who believe their homes were foreclosed based upon false or inaccurate documents filed in court by their lender or servicer should seek representation from an attorney. They may also file a complaint with the New York Attorney General’s Bureau of Consumer Frauds & Protection by calling 800-771-7755 or visiting www.ag.ny.gov.

The investigation, led by Special Deputy Attorney General for Consumer Frauds & Protection Joy Feigenbaum, is being handled by Special Counsel Mary Alestra, Assistant Attorney General Brian Montgomery and Deputy Bureau Chief Jeffrey Powell of the Bureau of Consumer Frauds & Protection under the direction of Executive Deputy Attorney General for Economic Justice Maria Vullo and Deputy Attorney General for Economic Justice Michael Berlin.


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



Posted in assignment of mortgage, bank of america, CONTROL FRAUD, corruption, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, forgery, GMAC, investigation, jpmorgan chase, MERS, MERSCORP, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., rmbs, robo signers, securitization, servicers, STOP FORECLOSURE FRAUD, Supreme Court, Susan Chana Lask, Violations, washington mutual, wells fargo6 Comments

Wells Fargo to Forgive $772 Million in Risky Home Loans

Wells Fargo to Forgive $772 Million in Risky Home Loans

By DANNY KING Posted 6:00 PM 10/06/10

Homeowners struggling to repay adjustable-rate mortgages from Wachovia and World Savings Bank, subsidiaries of Wells Fargo (WFC), got some good news Wednesday. The company has agreed to pay $24 million to settle allegations of deceptive marketing about the risky loans from eight states and also to forgive more than $772 million in outstanding loan balances owed by more than 8,700 borrowers.The states’ probe was spurred by Wachovia’s so-called “Pick-A-Payment” adjustable-rate mortgages. Arizona Attorney General Terry Goddard, who led the investigation, said in a statement that Wachovia — which Wells Fargo acquired after the loans were granted — failed to sufficiently inform borrowers of the risks involved in such loan programs. Wells Fargo said it had already forgiven $3.4 billion in loans as of August.
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See full article from DailyFinance: http://srph.it/cD47FQ
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© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in mortgage, Real Estate, rmbs, securitization, servicers, settlement, wachovia, wells fargo1 Comment

CAVEAT EMPTOR |MERS Transfers May Have Cloud Homeownership With `Blighted Titles’

CAVEAT EMPTOR |MERS Transfers May Have Cloud Homeownership With `Blighted Titles’

This is what this site is about…”ClOUDED TITLES”! This quote below should have added that it was in 65 Million mortgages not in some. I hope you all read my NO. THERE’S NO LIFE AT MERS…I highly recommend it because it came the heart.


In some cases, mortgages were conveyed using the Reston, Virginia-based Mortgage Electronic Registration System, or MERS, designed to cover transfers among system members. Promissory notes also often were endorsed as payable to the bearer to avoid the need for multiple transfers. Both practices have been challenged in court.

Foreclosure Errors Cloud Homeownership With `Blighted Titles’

By Kathleen M. Howley – Oct 1, 2010 12:00 AM ET

U.S. courts are clogged with a record number of foreclosures. Next, they may be jammed with suits contesting property rights as procedural mistakes in those cases cloud titles establishing ownership.

“Defective documentation has created millions of blighted titles that will plague the nation for the next decade,” said Richard Kessler, an attorney in Sarasota, Florida, who conducted a study that found errors in about three-fourths of court filings related to home repossessions.

Attorneys general in at least six states are investigating borrowers’ claims that some of the nation’s largest home lenders and loan servicers are making misstatements in foreclosures. JPMorgan Chase & Co. is asking judges to postpone foreclosure rulings, while Ally Financial Inc. said Sept. 21 its GMAC Mortgage unit would halt evictions. The companies said employees may have completed affidavits without confirming their accuracy.

Such mistakes may allow former owners to challenge the repossession of homes long after the properties are resold, according to Kessler. Ownership questions may not arise until a home is under contract and the potential purchaser applies for title insurance or even decades later as one deed researcher catches errors overlooked by another. A so-called defective title means the person who paid for and moved into a house may not be the legal owner.

‘Nightmare Scenario’

“It’s a nightmare scenario,” said John Vogel, a professor at the Tuck School of Business at Dartmouth College in Hanover, New Hampshire. “There are lots of land mines related to title issues that may come to light long after we think we’ve solved the housing problem.”

Almost one-fourth of U.S. home sales in the second quarter involved properties in some stage of mortgage distress, RealtyTrac Inc. said yesterday. In August, lenders took possession of record 95,364 homes and issued foreclosure filings to 338,836 homeowners, or one out of every 381 U.S. households, according to the Irvine, California-based data seller.

The biggest deficiency in foreclosure suits is missing or improperly handled documents, Kessler found in his study of court filings in Florida’s Sarasota County. When home loans are granted, borrowers sign a promissory note outlining payment obligations and a separate mortgage that puts an encumbrance on the property in the lender’s name. If mortgages are resold, both documents must be properly conveyed to prevent competing claims.

Mortgage Bonds

Most of the document errors involved mortgages that had been bundled into securities sold to investors, Kessler said. At the end of the U.S. real estate boom in 2005 and 2006, about 70 percent of the $6.1 trillion in mortgage lending was packaged into bonds, according to the Securities Industry and Financial Markets Association in New York.

Continue reading…BLOOMBERG

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



Posted in assignment of mortgage, auction, Bank Owned, bloomberg, bogus, chain in title, CONTROL FRAUD, corruption, deed of trust, DOCX, Economy, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, forgery, jpmorgan chase, Lender Processing Services Inc., LPS, MERS, MERSCORP, mortgage, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., note, rmbs, robo signers, securitization, servicers, stopforeclosurefraud.com, sub-prime2 Comments

FORECLOSURES TO COME TO A HALT IN FLORIDA? WE WROTE THEY READ IT!

FORECLOSURES TO COME TO A HALT IN FLORIDA? WE WROTE THEY READ IT!

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THIS IS HUGE! Coming in… Florida might halt all Foreclosures…While pending investigation of MILLS!

SUPREME COURT,

Do what is right and protect these families. This involves children that do not understand what is going on. I lost my home to this fraud and they do not have to go through my stressful experience. You set new rules and these foreclosure mills continued to ignore you. What is it going to take?

Sincerely,

Damian-

Supreme Court spokesman Craig Waters said Friday that the court was preparing a response, but did not elaborate.

All anyone has to do is click the link below for all the evidence I included of this massive nationwide fraud of all of Fannie and Freddie Baron’s:

FORECLOSURE FRAUD LETTER TO FANNIE MAE FROM GRAYSON, FRANK and BROWN

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Creed of Professionalism

I revere the law, the judicial system, and the legal profession and will at all times in my professional
and private lives uphold the dignity and esteem of each.
I will further my profession’s devotion to public service and to the public good.
I will strictly adhere to the spirit as well as the letter of my profession’s code of ethics, to the extent
that the law permits and will at all times be guided by a fundamental sense of honor, integrity, and fair
play.
I will not knowingly misstate, distort, or improperly exaggerate any fact or opinion and will not
improperly permit my silence or inaction to mislead anyone.

I will conduct myself to assure the just, speedy and inexpensive determination of every action and
resolution of every controversy.
I will abstain from all rude, disruptive, disrespectful, and abusive behavior and will at all times act
with dignity, decency, and courtesy.
I will respect the time and commitments of others.
I will be diligent and punctual in communicating with others and in fulfilling commitments.
I will exercise independent judgment and will not be governed by a client’s ill will or deceit.
My word is my bond.

Oath of Admission to The Florida Bar

The general principles which should ever control the lawyer in the practice of the legal profession
are clearly set forth in the following oath of admission to the Bar, which the lawyer is sworn on
admission to obey and for the willful violation to which disbarment may be had.
“I do solemnly swear:
“I will support the Constitution of the United States and the Constitution of the State of Florida;
“I will maintain the respect due to courts of justice and judicial officers;
“I will not counsel or maintain any suit or proceedings which shall appear to me to be unjust, nor
any defense except such as I believe to be honestly debatable under the law of the land;
“I will employ for the purpose of maintaining the causes confided to me such means only as are
consistent with truth and honor, and will never seek to mislead the judge or jury by any artifice or false
statement of fact or law;
“I will maintain the confidence and preserve inviolate the secrets of my clients, and will accept no
compensation in connection with their business except from them or with their knowledge and approval;
“I will abstain from all offensive personality and advance no fact prejudicial to the honor or reputation
of a party or witness, unless required by the justice of the cause with which I am charged;
“I will never reject, from any consideration personal to myself, the cause of the defenseless or
oppressed, or delay anyone’s cause for lucre or malice. So help me God.”

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



Posted in assignment of mortgage, ben-ezra, bogus, chain in title, Cheryl Samons, class action, CONTROL FRAUD, corruption, Craig Waters, florida default law group, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, forgery, GMAC, investigation, jeffrey stephan, Kenneth Eric Trent, Law Offices Of David J. Stern P.A., law offices of Marshall C. Watson pa, mbs, MERS, MERSCORP, Moratorium, mortgage, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Notary, notary fraud, note, rmbs, securitization, shapiro & fishman pa, smith hiatt & diaz pa, stopforeclosurefraud.com, Supreme Court, Susan Chana Lask, trustee, Trusts, Wall Street5 Comments

HEY NY TIMES…’NO PROOF’ JEFFREY STEPHAN HAS AUTHORITY TO EXECUTE AFFIDAVIT FOR WELLS FARGO

HEY NY TIMES…’NO PROOF’ JEFFREY STEPHAN HAS AUTHORITY TO EXECUTE AFFIDAVIT FOR WELLS FARGO

I guess WELLS FARGOT…

This statement from Wells Fargo appears on NY TIMES 10/1/2010:

A Wells Fargo spokeswoman said “the affidavits we sign are accurate.”

SUPREME COURT – STATE OF NEW YORK
I.A.S. PART XXXVI SUFFOLK COUNTY

PRESENT:
HON, PAUL J. BAISLEY, JR., J.S.C.

INDEX NO.: 16038/2008
MOTION DATE: 11/24/2008
Plaintiff, MOTION NO.: 001 MI)

PLAINTIFF’S ATTORNEY:
STEVEN J. BAUM, P.C.
P.O. Box 1291
Buffalo, New York 14240- 1291

Wells Fargo v. Oleg Dmitriev

Plaintiffs application is defective because there is no “affidavit made by the party” of “the facts constituting the claim, the default and the amount due” as required by CPLR §3215(f). The proffered “affidavit of merit and amount due” of Jeffrey Stephan identifies him as “the Limited Signing Officer of GMAC MORTGAGE LLC, servicer,” but no proof of Mr. Stephan’s authority to execute such affidavit on behalf of plaintiff is offered. The proffered affidavit does not otherwise comply with the requirements of CPLR $2309(c) for an out-of-state affidavit. In addition, the facts and dates recited in the affidavit regarding the consolidated mortgage and consolidated note that are the subject of this floreclosure action are at variance with the underlying documents.

In light of the foregoing, the motion for an order of reference is denied, without prejudice to renewal on proper papers.

Proposed order of reference marked “not signed.”
Dated: March 16, 2009

Paul J. Baisley, JR
J.S.C.

[ipaper docId=37975402 access_key=key-281pa58f9x2mia6kmvxp height=600 width=600 /]

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



Posted in assignment of mortgage, chain in title, concealment, conflict of interest, conspiracy, CONTROL FRAUD, corruption, deed of trust, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, GMAC, jeffrey stephan, Law Office Of Steven J. Baum, MERS, MERSCORP, Moratorium, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., note, rmbs, robo signers, securitization, Steven J Baum, STOP FORECLOSURE FRAUD, wells fargo3 Comments

WANTED: NATIONWIDE TITLE’S ROBO-SIGNERS BRYAN J. BLY | CRYSTAL MOORE DOCUMENTS

WANTED: NATIONWIDE TITLE’S ROBO-SIGNERS BRYAN J. BLY | CRYSTAL MOORE DOCUMENTS

Remember this from 6/20/2010?

By DinSFLA 6/20/2010

Now if this isn’t another means to a massive mandatory recall for any of this robo-signer’s documents, then our judicial systems are playing with an enormous fire getting ready to ignite even more angry individuals who has his documents sworn into court!

Then again, they’re one of the same.

Today Susan Taylor Martin for Tampabay.com wrote an interesting article about a too too familiar robo-signer “Bryan J. Bly”.

In this article She states

“Over the past few years, Bly has signed countless mortgage assignments as either a notary public or “vice president” of various lenders.

In reality, Bly works for Nationwide Title Clearing, a Palm Harbor company. And he was recently reprimanded by state regulators after acknowledging in a sworn statement that Nationwide Title had him notarizing so many documents that he scribbled his initial instead of signing his full name as required by law.

Such a pace, critics say, shows that Bly and other so-called “robo signers” can’t possibly be sure that what they’re signing is accurate.”

Just by these statements alone why aren’t any of these assignments or any documents executed by Mr. Bly being pulled out from court shelves?

It’s quite simple and you don’t need to be an Einstein.

If there is a product that is shown to cause human any harm there is a mandatory recall. So where is this recall on these products? Where on earth is the government to put a stop to all this assembly line?

Does it have to take a Chinese toymaker with toxic paint, a drywall that deteriorates the guts of a home and possibly lead to possible health issues or how about a Japanese car manufacturer that makes faulty brakes? Again, where is the authority looking into these claims? And why are they NOT pulling these defective items out of our records  in the court houses? Exactly who is being notified that these documents can cause harm to you or that if you were a victim of such irresponsibility to come forward?

My point is these documents are making one extremely ill, homeless and even in some cases suicidal. If this isn’t harm than what is?

This is just wrong in every possible way! Fraud is Fraud.

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



Posted in assignment of mortgage, Bank Owned, Bryan Bly, chain in title, conflict of interest, CONTROL FRAUD, Crystal Moore, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, investigation, Nationwide Title, Notary, notary fraud, note, rmbs, robo signers, STOP FORECLOSURE FRAUD, Trusts, Violations10 Comments

‘SHITTY BANK BANKS’ Might Go Belly UP After Foreclosure Mess Hit The Fan- Secrets Of Traders

‘SHITTY BANK BANKS’ Might Go Belly UP After Foreclosure Mess Hit The Fan- Secrets Of Traders

I can tell you there is MAJOR, MAJOR panic happening “behind the scenes” since I have started this site I have not seen this kind of activity! All I can say is don’t stop what ever you are doing GMAC or not…

Foreclosure Mess

By: Secrets Of Traders Wednesday, September 22, 2010 11:56 AM

I haven’t seen the following story get much national press (Ok, none. After all, isn’t Lindsey Lohan still in the news?) but if it continues to escalate, we will. The short & sweet of the matter is that it appears most banks do not have clear title to the homes they are foreclosing. In their mad rush to capitalize on the housing bubble, bankers skipped many of the legal steps necessary to have a clear title if things went badly, which is now, and the mortgages that were bundled then securitized as MBSs (mortgage backed securities) may actually belong to the homeowners.If this plays out as described below some banks will go belly-up, which should have happened a long time ago. Since the Treasury & the Federal Reserve will not let their buddies down, however, I am certain that it is already being sorted out in back room deals. “To hell with the LAW” they will say, Shitibank is on the brink of failure.

A member of Congress has already sent a letter to the Florida Supreme Court requesting it make an order to abate all foreclosure procedures until Florida can complete investigations into the matter. A portion of Representative Grayson’s letter is below.

I respectfully request that you abate all foreclosures involving these firms until the Attorney General of the state of Florida has finished his investigations of those firms for document fraud.

I have included a court order, in which Chase, WAMU, and Shapiro and Fishman are excoriated by a judge for document fraud on the court. In this case, Chase attempted to foreclose on a home, when the mortgage note was actually owned by Fannie Mae.

Taking someone’s home should not be done lightly. And it should certainly be done in accordance with the law.

This original post can be found here

Ok, we now appear to have a pattern of conduct here where organizations trying to foreclose on homeowners are in fact submitting forged (that is, willfully known to be false) affidavits to courts around the nation.

First we had GMAC, now it appears we have JPM/Chase. Everyone’s scrambling on this, of course.

But as I pointed out, the real panic is likely still to come, because I have reason to believe (but cannot yet prove) that many if not most of the non-agency securitizations were defective at the outset.

Worse, they’re now trying to cover it up. I am amassing more and more information on the mess, and what I’m seeing is increasingly looking like a pattern of conduct that may well go far beyond “innocent mistakes” or “accidents.”

So let’s take a close look at this problem, and how we can fix it.

There’s a real visceral outrage at letting people have a “free house.” But is it really a perversity of justice if that’s what happens in point of fact – or effect? Maybe not.

Look, if I want to write you a signature loan for $200,000, I have every right to do it. If you don’t pay I’m screwed in such a case, because I have no security interest.

Continue reading …iSTOCKANALYST

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



Posted in assignment of mortgage, bifurcate, chain in title, conflict of interest, CONTROL FRAUD, corruption, deed of trust, Economy, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, forgery, jeffrey stephan, jpmorgan chase, MERS, MERSCORP, Moratorium, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., note, rmbs, robo signers, securitization, stopforeclosurefraud.com, sub-prime, trade secrets, trustee, Trusts3 Comments

U.S. Home Prices Face 3-Year Drop as Inventory Surge Looms

U.S. Home Prices Face 3-Year Drop as Inventory Surge Looms

I have the perfect solution…Why not give the current homeowner a “short sale” price modification and call it a happy ending to all? Buyers are too wise nowadays.

Besides most future homeowners will have a defective title or will have an F in the past!

Here’s an example why it makes sense to work with the current owner:

LPS using their MN address purchased my home at auction for 75% discount put it on the market for about 80% and made a few grand from the highest contract that was accepted. It benefited no one!

Now if they use my solution not only will the investors save on the fees they payout to the foreclosure mills but also on the late fees the homeowner accrues…see isn’t this economic sense for everyone?

By John Gittelsohn and Kathleen M. Howley – Sep 15, 2010 12:14 PM ET

The slide in U.S. home prices may have another three years to go as sellers add as many as 12 million more properties to the market.

Shadow inventory — the supply of homes in default or foreclosure that may be offered for sale — is preventing prices from bottoming after a 28 percent plunge from 2006, according to analysts from Moody’s Analytics Inc., Fannie Mae, Morgan Stanley and Barclays Plc. Those properties are in addition to houses that are vacant or that may soon be put on the market by owners.

“Whether it’s the sidelined, shadow or current inventory, the issue is there’s more supply than demand,” said Oliver Chang, a U.S. housing strategist with Morgan Stanley in San Francisco. “Once you reach a bottom, it will take three or four years for prices to begin to rise 1 or 2 percent a year.”

Rising supply threatens to undermine government efforts to boost the housing market as homebuyers wait for better deals. Further price declines are necessary for a sustainable rebound as a stimulus-driven recovery falters, said Joshua Shapiro, chief U.S. economist of Maria Fiorini Ramirez Inc., a New York economic forecasting firm.

Sales of new and existing homes fell to the lowest levels on record in July as a federal tax credit for buyers expired and U.S. unemployment remained near a 26-year high. The median price of a previously owned home in the month was $182,600, about the level it was in 2003, the National Association of Realtors said.

Fannie Mae Forecast

Fannie Mae, the largest U.S. mortgage finance company, today lowered its forecast for home sales this year, projecting a 7 percent decline from 2009. A drop in demand after the April 30 tax credit expiration “suggests weakening home prices” in the third quarter, according to the report.

There were 4 million homes listed with brokers for sale as of July. It would take a record 12.5 months for those properties to be sold at that month’s sales pace, according to the Chicago- based Realtors group.

“The best thing that could happen is for prices to get to a level that clears the market,” said Shapiro, who predicts prices may fall another 10 percent to 15 percent. “Right now, buyers know it hasn’t hit bottom, so they’re sitting on the sidelines.”

About 2 million houses will be seized by lenders by the end of next year, according to Mark Zandi, chief economist of Moody’s Analytics in West Chester, Pennsylvania. He estimates prices will drop 5 percent by 2013.

‘Lost Decade’

After reaching bottom, prices will gain at the historic annual pace of 3 percent, requiring more than 10 years to return to their peak, he said.

“A long if not lost decade,” Zandi said.

Continue reading….BLOOMBERG

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



Posted in bloomberg, chain in title, conspiracy, CONTROL FRAUD, fannie mae, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, mbs, mortgage, repossession, rmbs, shadow foreclosures1 Comment

Judge Bufford, Judge Ayers, MERS & The UCC Committee

Judge Bufford, Judge Ayers, MERS & The UCC Committee

UNIFORM COMMERCIAL CODE COMMITTEE

WHERE’S THE NOTE, WHO’S THE HOLDER: ENFORCEMENT OF PROMISSORY NOTE SECURED BY REAL ESTATE

HON. SAMUEL L. BUFFORD
UNITED STATES BANKRUPTCY JUDGE
CENTRAL DISTRICT OF CALIFORNIA
LOS ANGELES, CALIFORNIA

(FORMERLY HON.) R. GLEN AYERS
LANGLEY & BANACK
SAN ANTONIO, TEXAS

AMERICAN BANKRUPTCY INSTUTUTE
APRIL 3, 2009
WASHINGTON, D.C.

WHERE’S THE NOTE, WHO’S THE HOLDER

INTRODUCTION

In an era where a very large portion of mortgage obligations have been securitized, by assignment to a trust indenture trustee, with the resulting pool of assets being then sold as mortgage backed securities, foreclosure becomes an interesting exercise, particularly where judicial process is involved.  We are all familiar with the securitization process.  The steps, if not the process, is simple.  A borrower goes to a mortgage lender.  The lender finances the purchase of real estate.  The borrower signs a note and mortgage or deed of trust.  The original lender sells the note and assigns the mortgage to an entity that securitizes the note by combining the note with hundreds or thousands of similar obligation to create a package of mortgage backed securities, which are then sold to investors.

Unfortunately, unless you represent borrowers, the vast flow of notes into the maw of the securitization industry meant that a lot of mistakes were made.  When the borrower defaults, the party seeking to enforce the obligation and foreclose on the underlying collateral sometimes cannot find the note.  A lawyer sophisticated in this area has speculated to one of the authors that perhaps a third of the notes “securitized” have been lost or destroyed.  The cases we are going to look at reflect the stark fact that the unnamed source’s speculation may be well-founded.

UCC SECTION 3-309

If the issue were as simple as a missing note, UCC §3-309 would provide a simple solution.  A person entitled to enforce an instrument which has been lost, destroyed or stolen may enforce the instrument. If the court is concerned that some third party may show up and attempt to enforce the instrument against the payee, it may order adequate protection.  But, and however, a person seeking to enforce a missing instrument must be a person entitled to enforce the instrument, and that person must prove the instrument’s terms and that person’s right to enforce the instrument.  §3-309 (a)(1) & (b).

WHO’S THE HOLDER

Enforcement of a note always requires that the person seeking to collect show that it is the holder.  A holder is an entity that has acquired the note either as the original payor or transfer by endorsement of order paper or physical possession of bearer paper.  These requirements are set out in Article 3 of the Uniform Commercial Code, which has been adopted in every state, including Louisiana, and in the District of Columbia.  Even in bankruptcy proceedings, State substantive law controls the rights of note and lien holders, as the Supreme Court pointed out almost forty (40) years ago in United States v. Butner, 440 U.S. 48, 54-55 (1979).

However, as Judge Bufford has recently illustrated, in one of the cases discussed below, in the bankruptcy and other federal courts, procedure is governed by the Federal Rules of Bankruptcy and Civil Procedure.  And, procedure may just have an impact on the issue of “who,” because, if the holder is unknown, pleading and standing issues arise.

BRIEF REVIEW OF UCC PROVISIONS

Article 3 governs negotiable instruments – it defines what a negotiable instrument is and defines how ownership of those pieces of paper is transferred.  For the precise definition, see § 3-104(a) (“an unconditional promise or order to pay a fixed amount of money, with or without interest . . . .”)  The instrument may be either payable to order or bearer and payable on demand or at a definite time, with or without interest.

Ordinary negotiable instruments include notes and drafts (a check is a draft drawn on a bank).  See § 3-104(e).

Negotiable paper is transferred from the original payor by negotiation.  §3-301.  “Order paper” must be endorsed; bearer paper need only be delivered.  §3-305.  However, in either case, for the note to be enforced, the person who asserts the status of the holder must be in possession of the instrument.  See UCC § 1-201 (20) and comments.

The original and subsequent transferees are referred to as holders.  Holders who take with no notice of defect or default are called “holders in due course,” and take free of many defenses.  See §§ 3-305(b).

The UCC says that a payment to a party “entitled to enforce the instrument” is sufficient to extinguish the obligation of the person obligated on the instrument.  Clearly, then, only a holder – a person in possession of a note endorsed to it or a holder of bearer paper – may seek satisfaction or enforce rights in collateral such as real estate.

NOTE:  Those of us who went through the bank and savings and loan collapse of the 1980’s are familiar with these problems.  The FDIC/FSLIC/RTC sold millions of notes secured and unsecured, in bulk transactions.  Some notes could not be found and enforcement sometimes became a problem.  Of course, sometimes we are forced to repeat history.  For a recent FDIC case, see Liberty Savings Bank v. Redus, 2009 WL 41857 (Ohio App. 8 Dist.), January 8, 2009.

THE RULES

Judge Bufford addressed the rules issue this past year.  See In re Hwang, 396 B.R. 757  (Bankr. C. D. Cal. 2008).  First, there are the pleading problems that arise when the holder of the note is unknown.  Typically, the issue will arise in a motion for relief from stay in a bankruptcy proceeding.

According F.R.Civ. Pro. 17, “[a]n action must be prosecuted in the name of the real party in interest.”  This rule is incorporated into the rules governing bankruptcy procedure in several ways.  As Judge Bufford has pointed out, for example, in a motion for relief from stay, filed under F.R.Bankr.Pro. 4001 is a contested matter, governed by F. R. Bankr. P. 9014, which makes F.R. Bankr. Pro. 7017 applicable to such motions.  F.R. Bankr. P. 7017 is, of course, a restatement of F.R. Civ. P. 17.  In re Hwang, 396 B.R. at 766.  The real party in interest in a federal action to enforce a note, whether in bankruptcy court or federal district court, is the owner of a note.  (In securitization transactions, this would be the trustee for the “certificate holders.”) When the actual holder of the note is unknown, it is impossible – not difficult but impossible – to plead a cause of action in a federal court (unless the movant simply lies about the ownership of the note).  Unless the name of the actual note holder can be stated, the very pleadings are defective.

STANDING

Often, the servicing agent for the loan will appear to enforce the note.   Assume that the servicing agent states that it is the authorized agent of the note holder, which is “Trust Number 99.”   The servicing agent is certainly a party in interest, since a party in interest in a bankruptcy court is a very broad term or concept.  See, e.g., Greer v. O’Dell, 305 F.3d 1297, 1302-03 (11th Cir. 2002).  However, the servicing agent may not have standing: “Federal Courts have only the power authorized by Article III of the Constitutions and the statutes enacted by Congress pursuant thereto. … [A] plaintiff must have Constitutional standing in order for a federal court to have jurisdiction.”  In re Foreclosure Cases, 521 F.Supp. 3d 650, 653 (S.D. Ohio, 2007) (citations omitted).

But, the servicing agent does not have standing, for only a person who is the holder of the note has standing to enforce the note.  See, e.g., In re Hwang, 2008 WL 4899273 at 8.

The servicing agent may have standing if acting as an agent for the holder, assuming that the agent can both show agency status and that the principle is the holder.  See, e.g., In re Vargas, 396 B.R. 511 (Bankr. C.D. Cal. 2008) at 520.

A BRIEF ASIDE: WHO IS MERS?

For those of you who are not familiar with the entity known as MERS, a frequent participant in these foreclosure proceedings:

MERS is the “Mortgage Electronic Registration System, Inc.  “MERS is a mortgage banking ‘utility’ that registers mortgage loans in a book entry system so that … real estate loans can be bought, sold and securitized, just like Wall Street’s book entry utility for stocks and bonds is the Depository Trust and Clearinghouse.” Bastian, “Foreclosure Forms”, State. Bar of Texas 17th Annual Advanced Real Estate Drafting Course, March 9-10, 2007, Dallas, Texas. MERS is enormous.  It originates thousands of loans daily and is the mortgagee of record for at least 40 million mortgages and other security documents. Id.

MERS acts as agent for the owner of the note.  Its authority to act should be shown by an agency agreement.  Of course, if the owner is unknown, MERS cannot show that it is an authorized agent of  the owner.

RULES OF EVIDENCE – A PRACTICAL PROBLEM

This structure also possesses practical evidentiary problems where the party asserting a right to foreclose must be able to show a default.  Once again, Judge Bufford has addressed this issue.   At In re Vargas, 396 B.R. at 517-19.  Judge Bufford made a finding that the witness called to testify as to debt and default was incompetent.  All the witness could testify was that he had looked at the MERS computerized records.  The witness was unable to satisfy the requirements of the Federal Rules of Evidence, particularly Rule 803, as applied to computerized records in the Ninth Circuit.  See id. at 517-20.  The low level employee could really only testify that the MERS screen shot he reviewed reflected a default.  That really is not much in the way of evidence, and not nearly enough to get around the hearsay rule.

FORECLOSURE OR RELIEF FROM STAY

In a foreclosure proceeding in a judicial foreclosure state, or a request for injunctive relief in a non-judicial foreclosure state, or in a motion for relief proceeding in a bankruptcy court, the courts are dealing with and writing about the problems very frequently.

In many if not almost all cases, the party seeking to exercise the rights of the creditor will be a servicing company.  Servicing companies will be asserting the rights of their alleged principal, the note holder, which is, again, often going to be a trustee for a securitization package.  The mortgage holder or beneficiary under the deed of trust will, again, very often be MERS.

Even before reaching the practical problem of debt and default, mentioned above, the moving party must show that it holds the note or (1) that it is an agent of the holder and that (2) the holder remains the holder.  In addition, the owner of the note, if different from the holder, must join in the motion.

Some states, like Texas, have passed statutes that allow servicing companies to act in foreclosure proceedings as a statutorily recognized agent of the noteholder.  See, e.g., Tex. Prop. Code §51.0001.  However, that statute refers to the servicer as the last entity to whom the debtor has been instructed to make payments.  This status is certainly open to challenge.  The statute certainly provides nothing more than prima facie evidence of the ability of the servicer to act.   If challenged, the servicing agent must show that the last entity to communicate instructions to the debtor is still the holder of the note.  See, e.g., HSBC Bank, N.A. v. Valentin, 2l N.Y.  Misc. 3d 1123(A), 2008 WL 4764816 (Table) (N.Y. Sup.), Nov. 3, 2008.  In addition, such a statute does not control in federal court where Fed. R. Civ. P. 17 and 19 (and Fed. R. Bankr. P. 7017 and 7019) apply.

SOME RECENT CASE LAW

These cases are arranged by state, for no particular reason.

Massachusetts

In re Schwartz, 366 B.R.265 (Bankr. D. Mass. 2007)

Schwartz concerns a Motion for Relief to pursue an eviction. Movant asserted that the property had been foreclosed upon prior to the date of the bankruptcy petition.  The pro se debtor asserted that the Movant was required to show that it had authority to conduct the sale.  Movant, and “the party which appears to be the current mortgagee…” provided documents for the court to review, but did not ask for an evidentiary hearing.  Judge Rosenthal sifted through the documents and found that the Movant and the current mortgagee had failed to prove that the foreclosure was properly conducted.

Specifically, Judge Rosenthal found that there was no evidence of a proper assignment of the mortgage prior to foreclosure.  However, at footnote 5, Id. at 268, the Court also finds that there is no evidence that the note itself was assigned and no evidence as to who the current holder might be.

Nosek v. Ameriquest Mortgage Company (In re Nosek), 286 Br. 374 (Bankr D Mass. 2008).

Almost a year to the day after Schwartz was signed, Judge Rosenthal issued a second opinion.  This is an opinion on an order to show cause.  Judge Rosenthal specifically found that, although the note and mortgage involved in the case had been transferred from the originator to another party within five days of closing, during the five years in which the chapter 13 proceeding was pending, the note and mortgage and associated claims had been prosecuted by Ameriquest which has represented itself to be the holder of the note and the mortgage.  Not until September of 2007 did Ameriquest notify the Court that it was merely the servicer.  In fact, only after the chapter 13 bankruptcy had been pending for about three years was there even an assignment of the servicing rights.  Id. at 378.

Because these misrepresentations were not simple mistakes:  as the Court has noted on more than one occasion, those parties who do not hold the note of mortgage do not service the mortgage do not have standing to pursue motions for leave or other actions arising form the mortgage obligation.  Id at 380.

As a result, the Court sanctioned the local law firm that had been prosecuting the claim $25,000.  It sanctioned a partner at that firm an additional $25,000.  Then the Court sanctioned the national law firm involved $100,000 and ultimately sanctioned Wells Fargo $250,000.  Id. at 382-386.

In re Hayes, 393 B.R. 259 (Bankr. D. Mass. 2008).

Like Judge Rosenthal, Judge Feeney has attacked the problem of standing and authority head on.  She has also held that standing must be established before either a claim can be allowed or a motion for relief be granted.

Ohio

In re Foreclosure Cases, 521 F.Supp. 2d (S.D. Ohio 2007).

Perhaps the District Court’s orders in the foreclosure cases in Ohio have received the most press of any of these opinions.  Relying almost exclusively on standing, the Judge Rose has determined that a foreclosing party must show standing.  “[I]n a foreclosure action, the plaintiff must show that it is the holder of the note and the mortgage at the time that the complaint was filed.”  Id. at 653.

Judge Rose instructed the parties involved that the willful failure of the movants to comply with the general orders of the Court would in the future result in immediate dismissal of foreclosure actions.

Deutsche Bank Nat’l Trust Co. v. Steele, 2008 WL 111227 (S.D. Ohio) January 8, 2008.

In Steele, Judge Abel followed the lead of Judge Rose and found that Deutsche Bank had filed evidence in support of its motion for default judgment indicating that MERS was the mortgage holder.  There was not sufficient evidence to support the claim that Deutsche Bank was the owner and holder of the note as of that date.  Following In re Foreclosure Cases, 2007 WL 456586, the Court held that summary judgment would be denied “until such time as Deutsche Bank was able to offer evidence showing, by a preponderance of evidence, that it owned the note and mortgage when the complaint was filed.”  2008 WL 111227 at 2.  Deutsche Bank was given twenty-one days to comply.  Id.

Illinois

U.S. Bank, N.A. v. Cook, 2009 WL 35286 (N.D. Ill. January 6, 2009).

Not all federal district judges are as concerned with the issues surrounding the transfer of notes and mortgages.  CookId. at 3.  In fact, a review of the evidence submitted by U.S. Bank showed only that it was the alleged trustee of the securitization pool.  U.S. Bank relied exclusively on the “pooling and serving agreement” to show that it was the holder of the note.  Id. is a very pro lender case and, in an order granting a motion for summary judgment, the Court found that Cook had shown no “countervailing evidence to create a genuine issue of facts.”

Under UCC Article 3, the evidence presented in Cook was clearly insufficient.

New York

HSBC Bank USA, N.A. v. Valentin, 21 Misc. 3D 1124(A), 2008 WL 4764816 (Table) (N.Y. Sup.) November 3, 2008.  In Valentin, the New York court found that, even though given an opportunity to, HSBC did not show the ownership of debt and mortgage.  The complaint was dismissed with prejudice and the “notice of pendency” against the property was cancelled.

Note that the Valentin case does not involve some sort of ambush. The Court gave every HSBC every opportunity to cure the defects the Court perceived in the pleadings.

California

In re Vargas, 396 B.R. 511 (Bankr. C.D. Cal. 2008)

and

In re Hwang, 396 B.R. 757 (Bankr. C.D. Cal. 2008)

These two opinions by Judge Bufford have been discussed above.  Judge Bufford carefully explores the related issues of standing and ownership under both federal and California law.

Texas

In re Parsley, 384 B.R. 138 (Bankr. S.D. Tex. 2008)

and

In re Gilbreath, 395 B.R. 356 (Bankr. S.D. Tex. 2008)

These two recent opinions by Judge Jeff Bohm are not really on point, but illustrate another thread of cases running through the issues of motions for relief from stay in bankruptcy court and the sloppiness of loan servicing agencies.  Both of these cases involve motions for relief that were not based upon fact but upon mistakes by servicing agencies.  Both opinions deal with the issue of sanctions and, put simply, both cases illustrate that Judge Bohm (and perhaps other members of the bankruptcy bench in the Southern District of Texas) are going to be very strict about motions for relief in consumer cases.

SUMMARY

The cases cited illustrate enormous problems in the loan servicing industry.  These problems arise in the context of securitization and illustrate the difficulty of determining the name of the holder, the assignee of the mortgage, and the parties with both the legal right under Article 3 and the standing under the Constitution to enforce notes, whether in state court or federal court.

Interestingly, with the exception of Judge Bufford and a few other judges, there has been less than adequate focus upon the UCC title issues.  The next round of cases may and should focus upon the title to debt instrument.  The person seeking to enforce the note must show that:

(1)               It is the holder of this note original by transfer, with all necessary rounds;

(2)               It had possession of the note before it was lost;

(3)               If it can show that title to the note runs to it, but the original is lost or destroyed, the holder must be          prepared to post a bond;

(4)               If the person seeking to enforce is an agent, it must show its agency status and that its principal is the holder of the note (and meets the above requirements).

Then, and only then, do the issues of evidence of debt and default and assignment of mortgage rights become relevant.


MORE INFO LINK

UNIFORM COMMERCIAL CODE AND NOTE TRANSFERS AND DEED OF TRUST-1


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Posted in conflict of interest, conspiracy, CONTROL FRAUD, corruption, deed of trust, foreclosure, foreclosure fraud, foreclosures, Judge R. Glen Ayers, judge samuel bufford, mbs, MERS, MERSCORP, mortgage, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., note, rmbs, securitization, servicers, trustee, Trusts, ucc, uniform commercial code committee1 Comment

Countrywide’s Angelo Mozilo Must Face Trial in SEC Suit, U.S. Judge Rules

Countrywide’s Angelo Mozilo Must Face Trial in SEC Suit, U.S. Judge Rules

I’m really waiting to see who else will join Madoff with “Racketeering”?

By Edvard Pettersson – Sep 17, 2010 12:01 AM ET

Countrywide Financial Corp. former Chief Executive Officer Angelo Mozilo must face trial on regulators’ claims he misled investors about risks tied to subprime lending, a judge ruled.

U.S. District Judge John F. Walter in Los Angeles yesterday denied requests by Mozilo and two other former senior Countrywide executives, David Sambol and Eric Sieracki, for a ruling that there were no genuine issues to be tried. The case is now set for a jury trial in October.

“It remains to be seen whether the Securities and Exchange Commission will be able to convince a jury that defendants’ statements were indeed misleading and material,” Walter said in his decision. “At the summary judgment stage, the judge’s function is not himself to weigh the evidence and determine the truth of the matter.”

The SEC sued Mozilo, 71, in June 2009, saying he publicly reassured investors about the quality of Countrywide’s loans while he issued “dire” internal warnings and sold about $140 million of his own shares.

Mozilo is the most prominent executive targeted by U.S. regulators examining the subprime mortgage crisis. He co-founded Countrywide in 1969 and built it into the nation’s biggest mortgage lender, helping trigger the subprime bubble by offering loans to customers with below-average credit scores.

‘Flying Blind’

He wrote in an e-mail that Countrywide was “flying blind” and had “no way” to determine the risks of some adjustable- rate mortgages, according to the SEC complaint.

Continue reading…. BLOOMBERG

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Posted in bloomberg, concealment, CONTROL FRAUD, corruption, countrywide, foreclosure, foreclosure fraud, foreclosures, investigation, mbs, mozillo, rmbs, stopforeclosurefraud.com, sub-prime, trade secrets, Violations, Wall Street0 Comments

MUST WATCH: ‘MERS’ ON FOX NEWS!!!

MUST WATCH: ‘MERS’ ON FOX NEWS!!!

I was wondering why this site blew up with hits today!

THIS INVOLVES 65 MILLION LOANS…it was ’62’ !!! I have a source that confirmed this.


“The Curse Of The MERS”

READ ALL ABOUT MERS HERE…MERS 101

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Posted in chain in title, class action, concealment, conflict of interest, conspiracy, CONTROL FRAUD, corruption, deed of trust, Economy, fannie mae, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, investigation, mbs, MERS, MERSCORP, mortgage, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, Notary, notary fraud, note, quiet title, R.K. Arnold, racketeering, Real Estate, repossession, RICO, rmbs, robo signers, stopforeclosurefraud.com, sub-prime, trade secrets, trustee, Trusts, Wall Street4 Comments

Handcuffs for Wall Street, Not Happy-Talk

Handcuffs for Wall Street, Not Happy-Talk

“If the people cannot trust their government to do the job for which it exists
– to protect them and to promote their common welfare – all else is lost.”
– BARACK OBAMA, speech, Aug. 28, 2006

Zach Carter

Zach Carter

Economics Editor, AlterNet; Fellow, Campaign for America’s Future

Posted: September 12, 2010 02:52 PM

The Washington Post has published a very silly op-ed by Chrystia Freeland accusing President Barack Obama of unfairly “demonizing” Wall Street. Freeland wants to see Obama tone down his rhetoric and play nice with executives in pursuit of a harmonious economic recovery. The trouble is, Obama hasn’t actually deployed harsh words against Wall Street. What’s more, in order to avoid being characterized as “anti-business,” the Obama administration has refused to mete out serious punishment for outright financial fraud. Complaining about nouns and adjectives is a little ridiculous when handcuffs and prison sentences are in order.

Freeland is a long-time business editor at Reuters and the Financial Times, and the story she spins about the financial crisis comes across as very reasonable. It’s also completely inaccurate. Here’s the key line:

“Stricter regulation of financial services is necessary not because American bankers were bad, but because the rules governing them were.”

Bank regulations were lousy, of course. But Wall Street spent decades lobbying hard for those rules, and screamed bloody murder when Obama had the audacity to tweak them. More importantly, the financial crisis was not only the result of bad rules. It was the result of bad rules and rampant, straightforward fraud, something a seasoned business editor like Freeland ought to know. Seeking economic harmony with criminals seems like a pretty poor foundation for an economic recovery.

The FBI was warning about an “epidemic” of mortgage fraud as early as 2004. Mortgage fraud is typically perpetrated by lenders, not borrowers — 80 percent of the time, according to the FBI. Banks made a lot of quick bucks over the past decade by illegally conning borrowers. Then bankers who knew these loans were fraudulent still packaged them into securities and sold them to investors without disclosing that fraud. They lied to their own shareholders about how many bad loans were on their books, and lied to them about the bonuses that were derived from the entire scheme. When you do these things, you are stealing lots of money from innocent people, and you are, in fact, behaving badly (to put it mildly).

The fraud allegations that have emerged over the past year are not restricted to a few bad apples at shady companies– they involve some of the largest players in global finance. Washington Mutual executives knew their company was issuing fraudulent loans, and securitized them anyway without stopping the influx of fraud in the lending pipeline. Wachovia is settling charges that it illegally laundered $380 billion in drug money in order to maintain access to liquidity. Barclays is accused of illegally laundering money from Iran, Sudan and other nations, jumping through elaborate technical hoops to conceal the source of their funds. Goldman Sachs set up its own clients to fail and bragged about their “shitty deals.” Citibank executives deceived their shareholders about the extent of their subprime mortgage holdings. Bank of America executives concealed heavy losses from the Merrill Lynch merger, and then lied to their shareholders about the massive bonuses they were paying out. IndyMac Bank and at least five other banks cooked their books by backdating capital injections.

Continue reading…..The  Huffington Post


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Posted in Bank Owned, citi, conspiracy, Economy, FED FRAUD, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, goldman sachs, hamp, indymac, investigation, jobless, lehman brothers, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., OCC, racketeering, RICO, rmbs, Wall Street, wamu, washington mutual, wells fargo0 Comments

CALL TO ACTION: MERS ASSIGNMENTS

CALL TO ACTION: MERS ASSIGNMENTS

The Time To Act Is NOW!

I am working on a special project & need your help to gather as many MERS Assignments as we can possibly get.

What is especially needed are the Certifying Officers signing these assignments for MERS. I don’t care if it’s old, new, signed, undated, unmarked, lender has gone bankrupt ages ago…I just want them ALL!


Click the Envelope to load up your MERS Assignment(s).

Or Info at stopforeclosurefraud.com

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Posted in Bank Owned, bankruptcy, chain in title, concealment, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, forgery, investigation, mbs, MERS, MERSCORP, mortgage, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, Notary, notary fraud, note, quiet title, racketeering, Real Estate, REO, RICO, rmbs, robo signers, securitization, servicers, STOP FORECLOSURE FRAUD, stopforeclosurefraud.com, Supreme Court, trade secrets, trustee, Trusts, Wall Street1 Comment

MERS FAILS AS NOMINEE, AUTHORITY TO TRANSFER OWNERSHIP OF NOTE!

MERS FAILS AS NOMINEE, AUTHORITY TO TRANSFER OWNERSHIP OF NOTE!

NEW YORK SUPREME COURT NASSAU

In support of its standing to maintain the action when the action was commenced is an “Assignment of Mortgage” executed by MERS as nominee of Home Funds Direct which includes a provision indicating the assignment is TOGETHER with the bond or note. . . ” . Not only has plaintiff failed to establish MERS’ right as a nominee for purposes of recording to assign the mortgage, more importantly, no effort has been made to establish the authority of MERS, a non-party to the note, to transfer its ownership. Without establishing ownership of the note at the time the action was instituted, the plaintiff lacked a right to maintain the action.

[ipaper docId=37175715 access_key=key-2k2arwpk653s6uaz71jr height=600 width=600 /]

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Posted in bank of new york, chain in title, concealment, conspiracy, CONTROL FRAUD, corruption, dismissed, foreclosure, foreclosure fraud, foreclosures, MERS, MERSCORP, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., note, rmbs, securitization, servicers, stopforeclosurefraud.com, Supreme Court, trustee0 Comments

NY JUDGE SPINNER DENIES Deutsche & MERS for NOT Recording Mortgage, Make up Affidavit and Assignment!

NY JUDGE SPINNER DENIES Deutsche & MERS for NOT Recording Mortgage, Make up Affidavit and Assignment!

MERS ‘QUIET TITLE’ FAIL

NY SUPREME COURT: SUFFOLK COUNTY

INDEX NO. 09-3 1067

Excerpts:

MERS alleges that the mortgage was never recorded, and upon information and belief, has been lost or inadvertantly destroyed. MERS commenced this action on August 1 1, 2009, with the filing of the summons, verified complaint, and notice of pendency.

Also, in support of its cross motion, MERS submits, inter alia, copies of the alleged note and mortgage, and the affidavit of John Burnett ( “Burnett”), a Vice President of Deutsche Bank National Trust Company as Trustee for the MLMI Trust Series 2007-MLNI (“Deutsche Bank”) who alleges that Deutsche Bank is the current owner and holder of the mortgage that is the subject of this action. Burnett claims that MERS’ mortgage has been assigned to Deutsche Bank by an unrecorded assignment of the mortgage acknowledged on September 4,2009, a copy of which has been submitted to the court. Burnett states that the assignment will be recorded once the mortgage has been established of record. Further, Burnett alleges that out of the loan proceeds that were secured by the mortgage, $641,441.54 was paid to Downey Savings and Loan to satisfy a prior mortgage Torr had given on the property, and the amount of $34,833.22 was paid directly to Torr. Burnett submits a copy of the alleged HUD- 1 A Settlement Statement from Torr’s closing.

Additionally, Burnett asserts that it has been discovered that the original mortgage was never recorded, cannot be located, and is presumed to be lost or inadvertantly destroyed. He claims that the original mortgage is not in Deutsche Bank’s files, and only a copy has been located. Burnett states that Interactive Abstract (“Interactive”) a title abstract company, presided over the November 17, 2006 closing of the mortgage and took the executed original for the purpose of recording it in the Suffolk County Clerk’s Office. He states that, upon information and belief, the mortgage was lost, misplace or destroyed while in Interactive‘s possession or after it had been submitted to the Clerk’s Office for recording. Burnett alleges that he has been advised that Interactive has ceased operating as a title abstract company and is out of business.

MERS alleges that by submitting the affidavit of Burnett, and copies of the affidavits of service, together with the relevant documentary evidence, it has satisfied the proof required by CPLR 321 5 setting forth the facts constituting the claim against Torr and establishing his default. Moreover, MERS alleges that the relief sought herein, a declaratory judgment, is necessary to enable it to realize the security interest in the property that was bargained for when MLN made its $695,000.00 loan to Torr and Torr gave the mortgage to secure the loan. MERS requests that the court render a judgment declaring that the plaintiff is the holder of a mortgage encumbering the premises under the terms and conditions set forth in the unrecorded plaintiffs mortgage, and directing the Suffolk County Clerk’s Office to record such a declaratory judgment, together with a copy of the plaintiffs mortgage.

As to Torr’s motion to dismiss the complaint for failure to state a cause of action, MERS has established that such motion is untimely. Torr was served by two different methods of service. One of the affidavits of service submitted indicates that Torr was served pursuant to CPLR 308(2) on September 2, 2009, by leaving the summons and verified complaint with a person of suitable age and discretion; mailing them to Torr’s residence on September 8,2009; and then filing proof of service with the Suffolk County Clerk’s Office on September 18, 2009. Therefore, under this method of service, Torr would have had to have served an answer or a notice of appearance by October 28,2009 (see CPLR 308[2]; CPLR 320; and CPLR 3012). The other affidavit of service submitted indicates that Torr was served pursuant to CPLR 308( 1) on September 2,2009, by personal delivery of the summons and verified complaint, and then fiIing proof of service with the Suffolk County Clerk’s Office on September 10, 2009. Thus, under this method of service, Torr would have had to have served an answer or a notice of appearance by September 22, 2009 (see CPLR 320 and CPLR 30 12). Furthermore, this motion to dismiss the complaint was made by Torr on December 2 1,2009, the date upon which it was served (see CPLR 221 1). Inasmuch as this motion was not interposed within the time required for service of responsive pleadings (see CPLR 32 1 1 [e]), no matter which of the two afl’ldavits of service submitted herein is used, the motion is untimely. Therefore, Torr’s motion to dismiss is denied.

As to MERS’ cross motion, it is well settledl that when applying for a default judgment, a plaintiff must submit evidence sufficient to demonstrate a prima facie case (see CPLR 32 lS[fl; Silberstein v Presbyterinn Hosp. in the City of New York, 96 AD2d 1096,463 NYS2d 254 [1983]). Thus, if a court finds that the allegations in a complaint or affidavit of facts fail to establish a prima facie case, a movant is not entitled to the requested relief; even on default (Dyno v Rose, 260 AD2d 694,687 NYS2d 497 [1999]; Green v Dolplzy Construction Co., Inc., 187 AD2d 635, 590 NYS2d 238 [1992]). Consistent with the foregoing, and upon review of t.he papers submitted, the court finds MERS’ application for a default judgment to be deficient.

An action to compel the determination of a claim to real property may be maintained where a plaintiff claims an estate or interest in real property (RPAPL § 150 I [ 11). Although the interest had by a mortgagee of real property or its successor in interest is an “interest in real property”(RPAPL tj 150 1 [ 5 ] ) , here MERS has failed to meet its burden by demonstrating that it has standing to maintain this action to quiet title (see Soscin v Soscin, 35 AD3d 841, 829 NYS2d 543 [2006]). MERS has failed to make a prima facie showing that it was the owner or holder of the note and the mortgage at the time this action was commenced (cc Mortgnge Elec. Registration Sys., Inc. v Conkley, 41 AD3d 674, 838 NYS2d 622 [2007]). In addition, the purported mortgage describes MERS as the nominee of MLN, and that for purposes of recording the mortgage, MERS is the mortgagee of record. Thus, MERS as nominee, is the agent of MLN, for limited purposes, “and has only those powers which are conferred to it and authorized by” MLN (Bank of New York v Aldernzi, 201 0 NE’ Slip Op. 20 167,900 NYS2d 82 1, 823 [Sup Ct, Kings County, 20101). There is no evidence that MLN, who is not a party herein, authorized MERS to bring this action’.

Moreover, the effectiveness of the assignment dated September 4, 2009, is unclear as there is no evidence that MLN ever directly assigned the note to MERS or expressly gave MERS the authority to act as MLN’s authorized agent to assign the subject note to Deutsche Bank (see In re Stralern, 303 AD2d 120, 758 NYS2d 345 [2003]; Teitz v Goettler, 191 AD 924, 181 NYS 956 [1920]).Without an effective transfer of MLN’s interest in the note to MERS or express authorization from MLN for MERS to assign the note on its behalf, the assignment of the mortgage is a nullity (see Kluge v Fugazy, 145 AD2d 537, 536 NYS2d 92 [1988]). Thus, it is also iinclear whether Deutche Bank’s Vice President had the authority to act in terms of satisfying the proof of facts constituting this claim (see CPLR 3215[fl; Wells Fargo Barzk, NA v Davilmar, 16 Misc3d 1 13 3A, 847 NYS2d 906 [2007]).

[ipaper docId=37138728 access_key=key-1brfunk8ho62g6uhl4j0 height=600 width=600 /]

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



Posted in chain in title, conflict of interest, conspiracy, deutsche bank, dismissed, foreclosure, foreclosure fraud, foreclosures, MERS, MERSCORP, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., note, quiet title, rmbs, servicers, stopforeclosurefraud.com, trustee, Trusts, Wall Street0 Comments

WHAT CERTIFIED POOLING & SERVICING AGREEMENTS LOOK LIKE

WHAT CERTIFIED POOLING & SERVICING AGREEMENTS LOOK LIKE

Our friend in California Brian Davies recently got a “Golden Ticket” in the mail. Below are certified copies of the Pooling & Servicing Agreement of his loan including the Prospectus for RAST 2007-A5, pass thru 2007E, psa 03-01-07.

Via: Brian Davies

GET THESE INTO THE COURT RECORD FOR THE DEFINITIVE WAY THE RECORD NEED TO BE JUDICIALLY NOTICED–B.DAVIESMD@GMAIL .COM

How you can get these:

http://www.scribd.com/doc/36801952/The-Securities-and-Exchange-Commission-How-to-File-to-Get-Certified-Copies-of-the-Prospectus-and-Polling-and-Servicing-Agreements

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



Posted in chain in title, deed of trust, foreclosure, foreclosures, insider, investigation, mbs, originator, pooling and servicing agreement, psa, rmbs, S.E.C., servicers, stopforeclosurefraud.com, trade secrets, trustee, Trusts, truth in lending act, Wall Street6 Comments

MICHAEL BURRY: THE HOUSING MARKET IS “ARTIFICIAL”

MICHAEL BURRY: THE HOUSING MARKET IS “ARTIFICIAL”

Michael Burry, the former head of Scion Capital LLC who predicted the housing market’s plunge, talks with Bloomberg’s Jon Erlichman about his investments in agricultural land, real estate and gold.

Michael Lewis made him famous in his book “The Big Short”.

(This is an excerpt. Source: Bloomberg)

“I believe that agricultural land, productive agricultural land with water on site, will be very valuable in the future. And I’ve put a good amount of money into that. So I’m investing in alternative investments as well as stocks.”

“I think there is some value in real estate. You have to buy it right. It’s not in general, that’s the problem. I think that there are an awful lot of people out there looking to buy these distressed properties out there and so you need to find special situations. That is how I’ve invested from the beginning. I’m looking for these special situations, these unique ideas and that’s true in real estate too.”

“In my situation I’d rather go long on housing itself, real estate itself. Depending on how you structure it, in the real market, in the physical market, you can get some pretty good deals and I’ve done some of that too.”

“Paulson is big in gold and that is something is interesting to me and given how I see the world playing out. Other than that, I’m just saying, other than gold I haven’t really bought into the other…

Source: Bloomberg TV

Photographer: Tony Avelar/Bloomberg

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



Posted in Bank Owned, bogus, CONTROL FRAUD, corruption, fannie mae, FED FRAUD, federal reserve board, foreclosure, foreclosure fraud, foreclosures, goldman sachs, heloc, insider, investigation, mbs, mortgage, naked short selling, Real Estate, rmbs, STOP FORECLOSURE FRAUD, stopforeclosurefraud.com, sub-prime, trade secrets, Wall Street1 Comment

Banks’ Self-Dealing Super-Charged Financial Crisis

Banks’ Self-Dealing Super-Charged Financial Crisis

ProPublica

Over the last two years of the housing bubble, Wall Street bankers perpetrated one of the greatest episodes of self-dealing in financial history.

Faced with increasing difficulty in selling the mortgage-backed securities that had been among their most lucrative products, the banks hit on a solution that preserved their quarterly earnings and huge bonuses:

They created fake demand.

A ProPublica analysis shows for the first time the extent to which banks — primarily Merrill Lynch, but also Citigroup, UBS and others — bought their own products and cranked up an assembly line that otherwise should have flagged.

The products they were buying and selling were at the heart of the 2008 meltdown — collections of mortgage bonds known as collateralized debt obligations, or CDOs.

As the housing boom began to slow in mid-2006, investors became skittish about the riskier parts of those investments. So the banks created — and ultimately provided most of the money for — new CDOs. Those new CDOs bought the hard-to-sell pieces of the original CDOs. The result was a daisy chain [1] that solved one problem but created another: Each new CDO had its own risky pieces. Banks created yet other CDOs to buy those.

Individual instances of these questionable trades have been reported before, but ProPublica’s investigation shows that by late 2006 they became a common industry practice.

Source: Thetica SystemsSource: Thetica Systems

An analysis by research firm Thetica Systems, commissioned by ProPublica, shows that in the last years of the boom, CDOs had become the dominant purchaser of key, risky parts of other CDOs, largely replacing real investors like pension funds. By 2007, 67 percent of those slices were bought by other CDOs, up from 36 percent just three years earlier. The banks often orchestrated these purchases. In the last two years of the boom, nearly half of all CDOs sponsored by market leader Merrill Lynch bought significant portions of other Merrill CDOs [2].ProPublica also found 85 instances during 2006 and 2007 in which two CDOs bought pieces of each other’s unsold inventory. These trades, which involved $107 billion worth of CDOs, underscore the extent to which the market lacked real buyers. Often the CDOs that swapped purchases closed within days of each other, the analysis shows.

There were supposed to be protections against this sort of abuse. While banks provided the blueprint for the CDOs and marketed them, they typically selected independent managers who chose the specific bonds to go inside them. The managers had a legal obligation to do what was best for the CDO. They were paid by the CDO, not the bank, and were supposed to serve as a bulwark against self-dealing by the banks, which had the fullest understanding of the complex and lightly regulated mortgage bonds.

It rarely worked out that way. The managers were beholden to the banks that sent them the business. On a billion-dollar deal, managers could earn a million dollars in fees, with little risk. Some small firms did several billion dollars of CDOs in a matter of months.

“All these banks for years were spawning trading partners,” says a former executive from Financial Guaranty Insurance Company, a major insurer of the CDO market. “You don’t have a trading partner? Create one.”

The executive, like most of the dozens of people ProPublica spoke with about the inner workings of the market at the time, asked not to be named out of fear of being sucked into ongoing investigations or because they are involved in civil litigation.

Keeping the assembly line going had a wealth of short-term advantages for the banks. Fees rolled in. A typical CDO could net the bank that created it between $5 million and $10 million — about half of which usually ended up as employee bonuses. Indeed, Wall Street awarded record bonuses in 2006, a hefty chunk of which came from the CDO business.

The self-dealing super-charged the market for CDOs, enticing some less-savvy investors to try their luck. Crucially, such deals maintained the value of mortgage bonds at a time when the lack of buyers should have driven their prices down.

But the strategy of speeding up the assembly line had devastating consequences for homeowners, the banks themselves and, ultimately, the global economy. Because of Wall Street’s machinations, more mortgages had been granted to ever-shakier borrowers. The results can now be seen in foreclosed houses across America.

The incestuous trading also made the CDOs more intertwined and thus fragile, accelerating their decline in value that began in the fall of 2007 and deepened over the next year. Most are now worth pennies on the dollar. Nearly half of the nearly trillion dollars in losses to the global banking system came from CDOs, losses ultimately absorbed by taxpayers and investors around the world. The banks’ troubles sent the world’s economies into a tailspin from which they have yet to recover.

It remains unclear whether any of this violated laws. The SEC has said [4] that it is actively looking at as many as 50 CDO managers as part of its broad examination of the CDO business’ role in the financial crisis. In particular, the agency is focusing on the relationship between the banks and the managers. The SEC is exploring how deals were structured, if any quid pro quo arrangements existed, and whether banks pressured managers to take bad assets.

The banks declined to directly address ProPublica’s questions. Asked about its relationship with managers and the cross-ownership among its CDOs, Citibank responded with a one-sentence statement:

“It has been widely reported that there are ongoing industry-wide investigations into CDO-related matters and we do not comment on pending investigations.”

None of ProPublica’s questions had mentioned the SEC or pending investigations.

Posed a similar list of questions, Bank of America, which now owns Merrill Lynch, said:

“These are very specific questions regarding individuals who left Merrill Lynch several years ago and a CDO origination business that, due to market conditions, was discontinued by Merrill before Bank of America acquired the company.”

This is the second installment of a ProPublica series about the largely hidden history of the CDO boom and bust. Our first story [5] looked at how one hedge fund helped create at least $40 billion in CDOs as part of a strategy to bet against the market. This story turns the focus on the banks.

Merrill Lynch Pioneers Pervert the Market
By 2004, the housing market was in full swing, and Wall Street bankers flocked to the CDO frenzy. It seemed to be the perfect money machine, and for a time everyone was happy.

Homeowners got easy mortgages. Banks and mortgage companies felt secure lending the money because they could sell the mortgages almost immediately to Wall Street and get back all their cash plus a little extra for their trouble. The investment banks charged massive fees for repackaging the mortgages into fancy financial products. Investors all around the world got to play in the then-phenomenal American housing market.

The mortgages were bundled into bonds, which were in turn combined into CDOs offering varying interest rates and levels of risk.

Investors holding the top tier of a CDO were first in line to get money coming from mortgages. By 2006, some banks often kept this layer, which credit agencies blessed with their highest rating of Triple A.

Buyers of the lower tiers took on more risk and got higher returns. They would be the first to take the hit if homeowners funding the CDO stopped paying their mortgages. (Here’s a video explaining how CDOs worked [6].)

Over time, these risky slices became increasingly hard to sell, posing a problem for the banks. If they remained unsold, the sketchy assets stayed on their books, like rotting inventory. That would require the banks to set aside money to cover any losses. Banks hate doing that because it means the money can’t be loaned out or put to other uses.

Being stuck with the risky portions of CDOs would ultimately lower profits and endanger the whole assembly line.

The banks, notably Merrill and Citibank, solved this problem by greatly expanding what had been a common and accepted practice: CDOs buying small pieces of other CDOs.

Architects of CDOs typically included what they called a “bucket” — which held bits of other CDOs paying higher rates of interest. The idea was to boost overall returns of deals primarily composed of safer assets. In the early days, the bucket was a small portion of an overall CDO.

One pioneer of pushing CDOs to buy CDOs was Merrill Lynch’s Chris Ricciardi, who had been brought to the firm in 2003 to take Merrill to the top of the CDO business. According to former colleagues, Ricciardi’s team cultivated managers, especially smaller firms.

Merrill exercised its leverage over the managers. A strong relationship with Merrill could be the difference between a business that thrived and one that didn’t. The more deals the banks gave a manager, the more money the manager got paid.

As the head of Merrill’s CDO business, Ricciardi also wooed managers with golf outings and dinners. One Merrill executive summed up the overall arrangement: “I’m going to make you rich. You just have to be my bitch.”

But not all managers went for it.

An executive from Trainer Wortham, a CDO manager, recalls a 2005 conversation with Ricciardi. “I wasn’t going to buy other CDOs. Chris said: ‘You don’t get it. You have got to buy other guys’ CDOs to get your deal done. That’s how it works.'” When the manager refused, Ricciardi told him, “‘That’s it. You are not going to get another deal done.'” Trainer Wortham largely withdrew from the market, concerned about the practice and the overheated prices for CDOs.

Ricciardi declined multiple requests to comment.

Merrill CDOs often bought slices of other Merrill deals. This seems to have happened more in the second half of any given year, according to ProPublica’s analysis, though the purchases were still a small portion compared to what would come later. Annual bonuses are based on the deals bankers completed by yearend.

Ricciardi left Merrill Lynch in February 2006. But the machine he put into place not only survived his departure, it became a model for competitors.

As Housing Market Wanes, Self-Dealing Takes Off
By mid-2006, the housing market was on the wane. This was particularly true for subprime mortgages, which were given to borrowers with spotty credit at higher interest rates. Subprime lenders began to fold, in what would become a mass extinction. In the first half of the year, the percentage of subprime borrowers who didn’t even make the first month’s mortgage payment tripled from the previous year.

That made CDO investors like pension funds and insurance companies increasingly nervous. If homeowners couldn’t make their mortgage payments, then the stream of cash to CDOs would dry up. Real “buyers began to shrivel and shrivel,” says Fiachra O’Driscoll, who co-ran Credit Suisse’s CDO business from 2003 to 2008.

Faced with disappearing investor demand, bankers could have wound down the lucrative business and moved on. That’s the way a market is supposed to work. Demand disappears; supply follows. But bankers were making lots of money. And they had amassed warehouses full of CDOs and other mortgage-based assets whose value was going down.

Rather than stop, bankers at Merrill, Citi, UBS and elsewhere kept making CDOs.

The question was: Who would buy them?

The top 80 percent, the less risky layers or so-called “super senior,” were held by the banks themselves. The beauty of owning that supposedly safe top portion was that it required hardly any money be held in reserve.

That left 20 percent, which the banks did not want to keep because it was riskier and required them to set aside reserves to cover any losses. Banks often sold the bottom, riskiest part to hedge funds [5]. That left the middle layer, known on Wall Street as the “mezzanine,” which was sold to new CDOs whose top 80 percent was ultimately owned by … the banks.

“As we got further into 2006, the mezzanine was going into other CDOs,” says Credit Suisse’s O’Driscoll.

This was the daisy chain [1]. On paper, the risky stuff was gone, held by new independent CDOs. In reality, however, the banks were buying their own otherwise unsellable assets.

How could something so seemingly short-sighted have happened?

It’s one of the great mysteries of the crash. Banks have fleets of risk managers to defend against just such reckless behavior. Top executives have maintained that while they suspected that the housing market was cooling, they never imagined the crash. For those doing the deals, the payoff was immediate. The dangers seemed abstract and remote.

The CDO managers played a crucial role. CDOs were so complex that even buyers had a hard time seeing exactly what was in them — making a neutral third party that much more essential.

“When you’re investing in a CDO you are very much putting your faith in the manager,” says Peter Nowell, a former London-based investor for the Royal Bank of Scotland. “The manager is choosing all the bonds that go into the CDO.” (RBS suffered mightily in the global financial meltdown, posting the largest loss in United Kingdom history, and was de facto nationalized by the British government.)

Source: Asset-Backed AlertSource: Asset-Backed Alert

By persuading managers to pick the unsold slices of CDOs, the banks helped keep the market going. “It guaranteed distribution when, quite frankly, there was not a huge market for them,” says Nowell.The counterintuitive result was that even as investors began to vanish, the mortgage CDO market more than doubled from 2005 to 2006, reaching $226 billion, according to the trade publication Asset-Backed Alert.

Citi and Merrill Hand Out Sweetheart Deals
As the CDO market grew, so did the number of CDO management firms, including many small shops that relied on a single bank for most of their business. According to Fitch, the number of CDO managers it rated rose from 89 in July 2006 to 140 in September 2007.

One CDO manager epitomized the devolution of the business, according to numerous industry insiders: a Wall Street veteran named Wing Chau.

Earlier in the decade, Chau had run the CDO department for Maxim Group, a boutique investment firm in New York. Chau had built a profitable business for Maxim based largely on his relationship with Merrill Lynch. In just a few years, Maxim had corralled more than $4 billion worth of assets under management just from Merrill CDOs.

In August 2006, Chau bolted from Maxim to start his own CDO management business, taking several colleagues with him. Chau’s departure gave Merrill, the biggest CDO producer, one more avenue for unsold inventory.

Chau named the firm Harding, after the town in New Jersey where he lived. The CDO market was starting its most profitable stretch ever, and Harding would play a big part. In an eleven-month period, ending in August 2007, Harding managed $13 billion of CDOs, including more than $5 billion from Merrill, and another nearly $5 billion from Citigroup. (Chau would later earn a measure of notoriety for a cameo appearance in Michael Lewis’ bestseller “The Big Short [7],” where he is depicted as a cheerfully feckless “go-to buyer” for Merrill Lynch’s CDO machine.)

Chau had a long-standing friendship with Ken Margolis, who was Merrill’s top CDO salesman under Ricciardi. When Ricciardi left Merrill in 2006, Margolis became a co-head of Merrill’s CDO group. He carried a genial, let’s-just-get-the-deal-done demeanor into his new position. An avid poker player, Margolis told a friend that in a previous job he had stood down a casino owner during a foreclosure negotiation after the owner had threatened to put a fork through his eye.

Chau’s close relationship with Merrill continued. In late 2006, Merrill sublet office space to Chau’s startup in the Merrill tower in Lower Manhattan’s financial district. A Merrill banker, David Moffitt, scheduled visits to Harding for prospective investors in the bank’s CDOs. “It was a nice office,” overlooking New York Harbor, recalls a CDO buyer. “But it did feel a little weird that it was Merrill’s building,” he said.

Moffitt did not respond to requests for comment.

Under Margolis, other small managers with meager track records were also suddenly handling CDOs valued at as much as $2 billion. Margolis declined to answer any questions about his own involvement in these matters.

A Wall Street Journal article [8] ($) from late 2007, one of the first of its kind, described how Margolis worked with one inexperienced CDO manager called NIR on a CDO named Norma, in the spring of that year. The Long Island-based NIR made about $1.5 million a year for managing Norma, a CDO that imploded.

“NIR’s collateral management business had arisen from efforts by Merrill Lynch to assemble a stable of captive small firms to manage its CDOs that would be beholden to Merrill Lynch on account of the business it funneled to them,” alleged a lawsuit filed in New York state court against Merrill over Norma that was settled quietly after the plaintiffs received internal Merrill documents.

NIR declined to comment.

Banks had a variety of ways to influence managers’ behavior.

Some of the few outside investors remaining in the market believed that the manager would do a better job if he owned a small slice of the CDO he was managing. That way, the manager would have more incentive to manage the investment well, since he, too, was an investor. But small management firms rarely had money to invest. Some banks solved this problem by advancing money to managers such as Harding.

Chau’s group managed two Citigroup CDOs — 888 Tactical Fund and Jupiter High-Grade VII — in which the bank loaned Harding money to buy risky pieces of the deal. The loans would be paid back out of the fees the managers took from the CDO and its investors. The loans were disclosed to investors in a few sentences among the hundreds of pages of legalese accompanying the deals.

In response to ProPublica’s questions, Chau’s lawyer said, “Harding Advisory’s dealings with investment banks were proper and fully disclosed.”

Citigroup made similar deals with other managers. The bank lent money to a manager called Vanderbilt Capital Advisors for its Armitage CDO, completed in March 2007.

Vanderbilt declined to comment. It couldn’t be learned how much money Citigroup loaned or whether it was ever repaid.

Yet again banks had masked their true stakes in CDO. Banks were lending money to CDO managers so they could buy the banks’ dodgy assets. If the managers couldn’t pay the loans back — and most were thinly capitalized — the banks were on the hook for even more losses when the CDO business collapsed.

Goldman, Merrill and Others Get Tough
When the housing market deteriorated, banks took advantage of a little-used power they had over managers.

The way CDOs are put together, there is a brief period when the bonds picked by managers sit on the banks’ balance sheets. Because the value of such assets can fall, banks reserved the right to overrule managers’ selections.

According to numerous bankers, managers and investors, banks rarely wielded that veto until late 2006, after which it became common. Merrill was in the lead.

“I would go to Merrill and tell them that I wanted to buy, say, a Citi bond,” recalls a CDO manager. “They would say ‘no.’ I would suggest a UBS bond, they would say ‘no.’ Eventually, you got the joke.” Managers could choose assets to put into their CDOs but they had to come from Merrill CDOs. One rival investment banker says Merrill treated CDO managers the way Henry Ford treated his Model T customers: You can have any color you want, as long as it’s black.

Once, Merrill’s Ken Margolis pushed a manager to buy a CDO slice for a Merrill-produced CDO called Port Jackson that was completed in the beginning of 2007: “‘You don’t have to buy the deal but you are crazy if you don’t because of your business,'” an executive at the management firm recalls Margolis telling him. “‘We have a big pipeline and only so many more mandates to give you.’ You got the message.” In other words: Take our stuff and we’ll send you more business. If not, forget it.

Margolis declined to comment on the incident.

“All the managers complained about it,” recalls O’Driscoll, the former Credit Suisse banker who competed with other investment banks to put deals together and market them. But “they were indentured slaves.” O’Driscoll recalls managers grumbling that Merrill in particular told them “what to buy and when to buy it.”

Other big CDO-producing banks quickly adopted the practice.

A little-noticed document released this year during a congressional investigation into Goldman Sachs’ CDO business reveals that bank’s thinking. The firm wrote a November 2006 internal memorandum [9] about a CDO called Timberwolf, managed by Greywolf, a small manager headed by ex-Goldman bankers. In a section headed “Reasons To Pursue,” the authors touted that “Goldman is approving every asset” that will end up in the CDO. What the bank intended to do with that approval power is clear from the memo: “We expect that a significant portion of the portfolio by closing will come from Goldman’s offerings.”

When asked to comment whether Goldman’s memo demonstrates that it had effective control over the asset selection process and that Greywolf was not in fact an independent manager, the bank responded: “Greywolf was an experienced, independent manager and made its own decisions about what reference assets to include. The securities included in Timberwolf were fully disclosed to the professional investors who invested in the transaction.”

Greywolf declined to comment. One of the investors, Basis Capital of Australia, filed a civil lawsuit in federal court in Manhattan against Goldman over the deal. The bank maintains the lawsuit is without merit.

By March 2007, the housing market’s signals were flashing red. Existing home sales plunged at the fastest rate in almost 20 years. Foreclosures were on the rise. And yet, to CDO buyer Peter Nowell’s surprise, banks continued to churn out CDOs.

“We were pulling back. We couldn’t find anything safe enough,” says Nowell. “We were amazed that April through June they were still printing deals. We thought things were over.”

Instead, the CDO machine was in overdrive. Wall Street produced $70 billion in mortgage CDOs in the first quarter of the year.

Many shareholder lawsuits battling their way through the court system today focus on this period of the CDO market. They allege that the banks were using the sales of CDOs to other CDOs to prop up prices and hide their losses.

“Citi’s CDO operations during late 2006 and 2007 functioned largely to sell CDOs to yet newer CDOs created by Citi to house them,” charges a pending shareholder lawsuit against the bank that was filed in federal court in Manhattan in February 2009. “Citigroup concocted a scheme whereby it repackaged many of these investments into other freshly-baked vehicles to avoid incurring a loss.”

Citigroup described the allegations as “irrational,” saying the bank’s executives would never knowingly take actions that would lead to “catastrophic losses.”

In the Hall of Mirrors, Myopic Rating Agencies
The portion of CDOs owned by other CDOs grew right alongside the market. What had been 5 percent of CDOs (remember the “bucket”) now came to constitute as much as 30 or 40 percent of new CDOs. (Wall Street also rolled out CDOs that were almost entirely made up of CDOs, called CDO squareds [10].)

The ever-expanding bucket provided new opportunities for incestuous trades.

It worked like this: A CDO would buy a piece of another CDO, which then returned the favor. The transactions moved both CDOs closer to completion, when bankers and managers would receive their fees.

Source: Thetica SystemsSource: Thetica Systems

ProPublica’s analysis shows that in the final two years of the business, CDOs with cross-ownership amounted to about one-fifth of the market, about $107 billion.Here’s an example from early May 2007:

  • A CDO called Jupiter VI bought a piece of a CDO called Tazlina II.
  • Tazlina II bought a piece of Jupiter VI.

Both Jupiter VI and Tazlina II were created by Merrill and were completed within a week of each other. Both were managed by small firms that did significant business with Merrill: Jupiter by Wing Chau’s Harding, and Tazlina by Terwin Advisors. Chau did not respond to questions about this deal. Terwin Advisors could not reached.

Just a few weeks earlier, CDO managers completed a comparable swap between Jupiter VI and another Merrill CDO called Forge 1.

Forge has its own intriguing history. It was the only deal done by a tiny manager of the same name based in Tampa, Fla. The firm was started less than a year earlier by several former Wall Street executives with mortgage experience. It received seed money from Bryan Zwan, who in 2001 settled an SEC civil lawsuit over his company’s accounting problems in a federal court in Florida. Zwan and Forge executives didn’t respond to requests for comment.

After seemingly coming out of nowhere, Forge won the right to manage a $1.5 billion Merrill CDO. That earned Forge a visit from the rating agency Moody’s.

“We just wanted to make sure that they actually existed,” says a former Moody’s executive. The rating agency saw that the group had an office near the airport and expertise to do the job.

Rating agencies regularly did such research on managers, but failed to ask more fundamental questions. The credit ratings agencies “did heavy, heavy due diligence on managers but they were looking for the wrong things: how you processed a ticket or how your surveillance systems worked,” says an executive at a CDO manager. “They didn’t check whether you were buying good bonds.”

One Forge employee recalled in a recent interview that he was amazed Merrill had been able to find buyers so quickly. “They were able to sell all the tranches” — slices of the CDO — “in a fairly rapid period of time,” said Rod Jensen, a former research analyst for Forge.

Forge achieved this feat because Merrill sold the slices to other CDOs, many linked to Merrill.

The ProPublica analysis shows that two Merrill CDOs, Maxim II and West Trade III, each bought pieces of Forge. Small managers oversaw both deals.

Forge, in turn, was filled with detritus from Merrill. Eighty-two percent of the CDO bonds owned by Forge came from other Merrill deals.

Citigroup did its own version of the shuffle, as these three CDOs demonstrate:

  • A CDO called Octonion bought some of Adams Square Funding II.
  • • Adams Square II bought a piece of Octonion.
  • • A third CDO, Class V Funding III, also bought some of Octonion.
  • • Octonion, in turn, bought a piece of Class V Funding III.

All of these Citi deals were completed within days of each other. Wing Chau was once again a central player. His firm managed Octonion. The other two were managed by a unit of Credit Suisse. Credit Suisse declined to comment.

Not all cross-ownership deals were consummated.

In spring 2007, Deutsche Bank was creating a CDO and found a manager that wanted to take a piece of it. The manager was overseeing a CDO that Merrill was assembling. Merrill blocked the manager from putting the Deutsche bonds into the Merrill CDO. A former Deutsche Bank banker says that when Deutsche Bank complained to Andy Phelps, a Merrill CDO executive, Phelps offered a quid pro quo: If Deutsche was willing to have the manager of its CDO buy some Merrill bonds, Merrill would stop blocking the purchase. Phelps declined to comment.

The Deutsche banker, who says its managers were independent, recalls being shocked: “We said we don’t control what people buy in their deals.” The swap didn’t happen.

The Missing Regulators and the Aftermath
In September 2007, as the market finally started to catch up with Merrill Lynch, Ken Margolis left the firm to join Wing Chau at Harding.

Chau and Margolis circulated a marketing plan for a new hedge fund to prospective investors touting their expertise in how CDOs were made and what was in them. The fund proposed to buy failed CDOs — at bargain basement prices. In the end, Margolis and Chau couldn’t make the business work and dropped the idea.

Why didn’t regulators intervene during the boom to stop the self-dealing that had permeated the CDO market?

No one agency had authority over the whole business. Since the business came and went in just a few years, it may have been too much to expect even assertive regulators to comprehend what was happening in time to stop it.

While the financial regulatory bill passed by Congress in July creates more oversight powers, it’s unclear whether regulators have sufficient tools to prevent a replay of the debacle.

In just two years, the CDO market had cut a swath of destruction. Partly because CDOs had bought so many pieces of each other, they collapsed in unison. Merrill Lynch and Citigroup, the biggest perpetrators of the self-dealing, were among the biggest losers. Merrill lost about $26 billion on mortgage CDOs and Citigroup about $34 billion.

Additional reporting by Kitty Bennett, Krista Kjellman Schmidt, Lisa Schwartz and Karen Weise.


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



Posted in bank of america, cdo, citi, CitiGroup, concealment, conspiracy, CONTROL FRAUD, corruption, Credit Suisse, deutsche bank, Economy, goldman sachs, investigation, Merrill Lynch, racketeering, RICO, rmbs, stock, STOP FORECLOSURE FRAUD, trade secrets, Wall Street0 Comments

CLASS ACTION AMENDED against MERSCORP to include Shareholders, DJSP

CLASS ACTION AMENDED against MERSCORP to include Shareholders, DJSP

Kenneth Eric Trent, P.A. of Broward County has amended the Class Action complaint Figueroa v. MERSCORP, Inc. et al filed on July 26, 2010 in the Southern District of Florida.

Included in the amended complaint is MERS shareholders HSBC, JPMorgan Chase & Co., Wells Fargo & Company, AIG, Fannie Mae, Freddie Mac, WAMU, Countrywide, GMAC, Guaranty Bank, Merrill Lynch, Mortgage Bankers Association (MBA), Norwest, Bank of America, Everhome, American Land Title, First American Title, Corinthian Mtg, MGIC Investor Svc, Nationwide Advantage, Stewart Title,  CRE Finance Council f/k/a Commercial Mortgage Securities Association, Suntrust Mortgage,  CCO Mortgage Corporation, PMI Mortgage Insurance Company, Wells Fargo and also DJS Processing which is owned by David J. Stern.

MERSCORP shareholders…HERE

[ipaper docId=36456183 access_key=key-26csq0mmgo6l8zsnw0is height=600 width=600 /]

Related article:

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CLASS ACTION FILED| Figueroa v. Law Offices Of David J. Stern, P.A. and MERSCORP, Inc.

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



Posted in bank of america, chain in title, citimortgage, class action, concealment, CONTROL FRAUD, corruption, countrywide, djsp enterprises, fannie mae, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, forgery, Freddie Mac, HSBC, investigation, jpmorgan chase, Law Offices Of David J. Stern P.A., lawsuit, mail fraud, mbs, Merrill Lynch, MERS, MERSCORP, mortgage, Mortgage Bankers Association, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, non disclosure, notary fraud, note, racketeering, Real Estate, RICO, rmbs, securitization, stock, title company, trade secrets, trustee, Trusts, truth in lending act, wamu, washington mutual, wells fargo13 Comments

Banking Execs Say Gov’t Needs To Back Mortgages

Banking Execs Say Gov’t Needs To Back Mortgages

Banking Executives Tell Obama Officials Government Needs To Play Large Role In Mortgage Market

(AP) WASHINGTON (AP) – The Obama administration invited banking executives Tuesday to offer advice on changing the government’s role in the mortgage market. Their response: stay big.

While the executives disagreed on the exact level of support needed, the group overwhelmingly advocated the government should maintain a large role propping up the nearly $11 trillion market.

Bill Gross, managing director of bond giant Pimco, said the economic recovery required more government stimulus, particularly in the housing market. He suggested the administration push for the automatic refinancing of millions homes backed by mortgage giants Fannie Mae and Fannie Mac.

Refinancing those homes at the lowest mortgage rates in decades would give Americans more money each month. That would boost consumer spending by $50 billion to $60 billion and lift housing prices by as much as 10 percent, he said.

Without such stimulus in the next six months, Gross said, the economy will move at a “snails pace.”

Treasury officials have said they have no plans to enact such a plan, which has been the subject of intense rumors on Wall Street in recent weeks.

Tuesday’s conference at the Treasury Department is the administration’s first of many steps toward restructuring the troubled industry. So far, rescuing Fannie and Freddie has cost the government more than $148 billion. That number is expected to grow.

Treasury Secretary Timothy Geithner pledged “fundamental change” to the structure of Fannie and Freddie. The mortgage giants profited tremendously during good times but burdened taxpayers with losses when the housing market went bust. He said the two companies weren’t the only cause of the financial crisis, but made it worse.

Fannie and Freddie buy mortgages and package them into securities with a guarantee against default. They have ensured that millions of Americans can get home loans – even after the housing market collapsed.

The two companies, the Federal Housing Administration and the Veterans Administration together backed about 90 percent of loans made in the first half of the year, according to trade publication Inside Mortgage Finance.

Geithner did not offer a specific exit strategy for Fannie and Freddie. He agreed that the government could remain involved in the mortgage system by guaranteeing investors in mortgage-backed securities get paid, even when borrowers default.

There is a “strong case to be made” for such an arrangement, Geithner said.’

But Geithner suggested that Fannie and Freddie’s replacements could pay the government to insure the loans. That money could be tapped if the housing market collapses and would ensure taxpayers do not get hit with losses in the future.

“It is our responsibility to make sure that we create a system that is not vulnerable to these same failures happening again,” Geithner said.

Republicans are expected to pick up seats in Congress in November and the Obama administration will need support from both parties to enact changes next year.

The Obama administration’s management of Fannie and Freddie has been under fire for months from Republicans on Capitol Hill. In December, the Treasury Department eliminated a $400 billion cap on how much money it would give the mortgage giants to keep them from failing.

Rep. Spencer Bachus, the top Republican on the House Financial Services Committee, accused the Obama administration of excluding critics of the government’s role in the mortgage system from Tuesday’s conference.

In a letter to Geithner, Bachus said Treasury appears to be “laying the groundwork for a predetermined policy outcome that looks uncomfortably similar to the failed status quo.”

But the industry executives and experts at the conference seemed to agree that the government should maintain a role in the mortgage market, even if Fannie and Freddie disappear someday. Where they disagreed was on the level of government involvement and whether it should be reduced gradually.

Gross advocated the biggest government role. He said Fannie and Freddie’s function should be consolidated into one government agency that would issue mortgage-backed securities. Without such a solid guarantee, mortgage rates would soar, he warned.

Gross said he is skeptical of having those securities issued by the private sector, saying that doing so would favor “Wall Street as opposed to Main Street.”

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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



Posted in CONTROL FRAUD, corruption, fannie mae, foreclosure, foreclosure fraud, foreclosures, Freddie Mac, geithner, mbs, mortgage, non disclosure, Real Estate, rmbs, scam, sub-prime, trade secrets1 Comment

Open Letter to all attorneys who aren’t PSA literate by April Charney

Open Letter to all attorneys who aren’t PSA literate by April Charney

Via: Max Gardner

Are You PSA Literate?

Written on August 16, 2010 by admin

We are pleased to present this guest post by April Charney.

If you are an attorney trying to help people save their homes, you had better be PSA literate or you won’t even begin to scratch the surface of all you can do to save their homes. This is an open letter to all attorneys who aren’t PSA literate but show up in court to protect their client’s homes.

First off, what is a PSA? After the original loans are pooled and sold, a trust hires a servicer to service the loans and make distributions to investors. The agreement between depositor and the trust and the truste and the servicer is called the Pooling and Servicing Agreement (PSA).

According to UCC § 3-301 a “person entitled to enforce” the promissory note, if negotiable, is limited to:

(1) The holder of the instrument;

(2) A nonholder in possession of the instrument who has the rights of a holder; or

(3) A person not in possession of the instrument who is entitled to enforce the instrument pursuant to section 3-309 or section 3-418(d).

A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.

Although “holder” is not defined in UCC § 3-301, it is defined in § 1-201 for our purposes to mean a person in possession of a negotiable note payable to bearer or to the person in possession of the note.

So we now know who can enforce the obligation to pay a debt evidenced by a negotiable note. We can debate whether a note is negotiable or not, but I won’t make that debate here.

Under § 1-302 persons can agree “otherwise” that where an instrument is transferred for value and the transferee does not become a holder because of lack of indorsement by the transferor, that the transferee is granted a special right to enforce an “unqualified” indorsement by the transferor, but the code does not “create” negotiation until the indorsement is actually made.

So, that section allows a transferee to enforce a note without a qualifying endorsement only when the note is transferred for value.? Then, under § 1-302 (a) the effect of provisions of the UCC may be varied by agreement. This provision includes the right and ability of persons to vary everything described above by agreement.

This is where you MUST get into the PSA. You cannot avoid it. You can get the judges to this point. I did it in an email. Show your judge this post.

If you can’t find the PSA for your case, use the PSA next door that you can find on at www.secinfo.com. The provisions of the PSA that concern transfer of loans (and servicing, good faith and almost everything else) are fairly boilerplate and so PSAs are fairly interchangeable for many purposes. You have to get the PSA and the mortgage loan purchase agreement and the hearsay bogus electronic list of loans before the court. You have to educate your judge about the lack of credibility or effect of the lifeless list of loans as the Uniform Electronic Transactions Act specifically exempts Residential Mortgage-Backed Securities from its application. Also, you have to get your judge to understand that the plaintiff has given up the power to accept the transfer of a note in default and under the conditions presented to the court (out of time, no delivery receipts, etc). Without the PSA you cannot do this.

Additionally the PSA becomes rich when you look at § 1-302 (b) which says that the obligations of good faith, diligence, reasonableness and care prescribed by the code may not be disclaimed by agreement, but may be enhanced or modified by an agreement which determine the standards by which the performance of the obligations of good faith, diligence reasonableness and care are to be measured. These agreed to standards of good faith, etc. are enforceable under the UCC if the standards are “not manifestly unreasonable.”

The PSA also has impact on when or what acts have to occur under the UCC because § 1-302 (c) allows parties to vary the “effect of other provisions” of the UCC by agreement.

Through the PSA, it is clear that the plaintiff cannot take an interest of any kind in the loan by way of an A to D” assignment of a mortgage and certainly cannot take an interest in the note in this fashion.

Without the PSA and the limitations set up in it “by agreement of the parties”, there is no avoiding the mortgage following the note and where the UCC gives over the power to enforce the note, so goes the power to foreclose on the mortgage.

So, arguing that the Trustee could only sue on the note and not foreclose is not correct analysis without the PSA.? Likewise, you will not defeat the equitable interest “effective as of” assignment arguments without the PSA and the layering of the laws that control these securities (true sales required) and REMIC (no defaulted or nonconforming loans and must be timely bankruptcy remote transfers) and NY trust law and UCC law (as to no ultra vires acts allowed by trustee and no unaffixed allonges, etc.).

The PSA is part of the admissible evidence that the court MUST have under the exacting provisions of the summary judgment rule if the court is to accept any plaintiff affidavit or assignment.

If you have been successful in your cases thus far without the PSA, then you have far to go with your litigation model. It is not just you that has “the more considerable task of proving that New York law applies to this trust and that the PSA does not allow the plaintiff to be a “nonholder in possession with the rights of a holder.”

And I am not impressed by the argument “This is clearly something that most foreclosure defense lawyers are not prepared to do.”?Get over that quick or get out of this work! Ask yourself, are you PSA adverse? If your answer is yes, please get out of this line of work. Please.

I am not worried about the minds of the Circuit Court Judges unless and until we provide them with the education they deserve and which is necessary to result in good decisions in these cases.

It is correct that the PSA does not allow the Trustee to foreclose on the Note. But you only get there after looking at the PSA in the context of who has the power to foreclose under applicable law.

It is not correct that the Trustee has the power or right to sue on the note and PSA literacy makes this abundantly clear.

Are you PSA literate? If not, don’t expect your judge to be. But if you want to become literate, a good place to start is by attending Max Gardner’s Mortgage Servicing and Securitization Seminar.

April Carrie Charney

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



Posted in bankruptcy, chain in title, foreclosure, foreclosure fraud, foreclosures, Max Gardner, mbs, mortgage, note, psa, rmbs, securitization, trustee, Trusts, Wall Street1 Comment

Mortgage Investors Suing For MBS FRAUD… Is your Trust named?

Mortgage Investors Suing For MBS FRAUD… Is your Trust named?

Now these investors should know better…See the picture you’ll see what I mean? You can probably make out a few possibilities.

We can’t even get justice and we are quite a few million!

Mortgage Investors Turn to State Courts for Relief

By GRETCHEN MORGENSON Published: July 9, 2010
The NEW YORK TIMES

INVESTORS who lost billions on boatloads of faulty mortgage securities have had a hard time holding Wall Street accountable for selling the things in the first place.

For the most part, banks have said they can’t be called out in court on any of this because they had no idea that so many of these loans went to people who lacked the resources to make even their first mortgage payment.

Wall Street firms were intimately involved in the financing, bundling and sales of these loans, so their Sergeant Schultz defense rings hollow. They provided hundreds of millions of dollars in credit to dubious underwriters, and some even had their own people on site at the loan factories. Many Wall Street firms owned mortgage lenders outright.

Because many of the worst lenders are now out of business, investors in search of recoveries have turned to the banks that packaged the loans into securities. But successfully arguing that Wall Street aided lenders in a fraud is tough under federal securities laws. This is largely a result of Supreme Court decisions barring investors from bringing federal securities fraud cases that accuse underwriters and other third parties as enablers.

Where there’s a will, however, there’s a way. And state courts are proving to be a more fruitful place for mortgage investors seeking redress, legal experts say.

In late June, for example, Martha Coakley, the attorney general of Massachusetts, extracted $102 million from Morgan Stanley in a case involving Morgan’s extensive financing of loans made by New Century, a notorious and now defunct lender that was based in California.

Morgan packaged the loans into securities and sold them to clients, even after its due diligence uncovered problems with the underlying mortgages that New Century fed to the firm, Ms. Coakley said. In settling the matter, Morgan neither admitted nor denied the allegations. Her investigation is continuing.

One of the most interesting aspects of this case “is the active role of state regulators relying upon state law to protect investors,” said Lewis D. Lowenfels, an authority on securities law at Tolins & Lowenfels in New York. “This state focus may well fill a void left by the U.S. Supreme Court’s increasingly narrow interpretation of the antifraud provisions of the federal securities laws as well as the relatively few S.E.C. enforcement actions initiated in this area.”

Last Friday, an investment management firm that lost $1.2 billion in mortgage securities it bought for clients filed suit in Massachusetts state court against 15 banks, accusing them of abetting a fraud. The firm, Cambridge Place Investment Management of Concord, Mass., purchased $2 billion in mortgage securities from the banks, and it says the banks misrepresented the risks in the underlying loans — both in prospectuses and sales pitches.

The complaint says the banks misled Cambridge Place by maintaining that the mortgages in the securities it bought had met strict underwriting requirements related to the borrowers’ ability to repay the loans. Cambridge also contends it relied on the banks’ claims of having conducted due diligence to verify the quality of the loans bundled into the securities.

The complaint also details the anything-goes lending practices during the subprime mortgage boom.

Interviews in the complaint with 63 confidential witnesses turned up such gems as Fremont Investment & Loan, which had been based in California, approving loans for pizza delivery men with reported monthly incomes of $6,000, and management at Long Beach Mortgage, also in California, directing underwriters to “approve, approve, approve.”

One Long Beach program made loans to self-employed borrowers based on three letters of reference from past employers. A former worker said some letters amounted to “So-and-so cuts my lawn and does a good job,” adding that the company made no attempt to verify the information, the complaint stated.

Such tales are hardly shockers. But they provide important context when Cambridge moves up the ladder to the banks that bundled and sold the loans.

For example, the complaint contended that Credit Suisse, from whom it bought $88 million of mortgage securities in 2005 and 2006, told Cambridge of its “superior” due diligence, including a performance review of every loan. Three-quarters of these loans are delinquent, in default, foreclosure, bankruptcy or repossession, the complaint said.

Bear Stearns, now a unit of JPMorgan Chase, sold Cambridge $65 million of securities. It owned three mortgage lenders and told Cambridge it sampled the loans it sold to check underwriting procedures, borrower documentation and compliance, the complaint said.

Among others named in the suit are Bank of America, Barclays, Citigroup, Countrywide, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley and UBS. All of those, as well as Credit Suisse and JPMorgan, declined to comment.

CAMBRIDGE’S lawyers brought its case in Massachusetts under laws barring those who sell securities from making false statements about them or omitting material facts. Jerry Silk, a senior partner at Bernstein Litowitz Berger & Grossmann who represents Cambridge, said, “This case represents yet another example of Wall Street banks’ failure to live up to their basic responsibility to investors — to tell the truth about the securities they are selling.”

Mr. Silk’s firm has jousted with Wall Street underwriters before. In 2004, it recovered $6 billion in a suit against banks that underwrote debt issued by WorldCom, the defunct telecom. Denise L. Cote, the federal judge overseeing that matter, concluded that because investors rely so heavily on underwriters, courts must be “particularly scrupulous in examining the conduct,” she said.

It is too soon to tell if investors will recover losses in mortgage securities. But the efforts are reminiscent of those in the mid-90s against brokerage firms that cleared trades and provided capital to dubious penny-stock outfits such as A. R. Baron and Sterling Foster.

For decades, companies that cleared such trades — Bear Stearns was a big one — escaped liability for fraud at these so-called “bucket shops.” But regulators went after clearing firms by accusing them of facilitating such acts; in a 1999 lawsuit, the Securities & Exchange Commission accused Bear Stearns of enabling a fraud at A. R. Baron. Bear Stearns paid $35 million in fines and restitution to settle the case.

If trust in capital markets is to return, investors must be able to believe what they read in prospectuses. Without that minimum standard, how can Wall Street expect the markets to function again?

A version of this article appeared in print on July 11, 2010, on page BU1 of the New York edition.

COMPLAINT:

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



Posted in bankruptcy, CONTROL FRAUD, foreclosure, foreclosure fraud, foreclosures, mbs, rmbs, securitization2 Comments


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