Affidavits | FORECLOSURE FRAUD | by DinSFLA

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Action Alert – Facing foreclosure in Massachusetts? Please call your reps asap – the vote is 5/16/2012!

Action Alert – Facing foreclosure in Massachusetts? Please call your reps asap – the vote is 5/16/2012!


via: BOSTON67

Jamie Ranney, Esq. vs FRAUDclosures

There is a bill pending in the Massachusetts Legislature called H-04083 that is designed to provide more requirements that lenders work with  borrowers to provide real loan modifications before they can commence foreclosure and to hold lenders accountable where they unlawfully foreclose.  Unfortunately, the bill suffers from some substantial weaknesses which I have tried to remedy with edits and amendments.

The bill is scheduled to be voted on – THIS WEDNESDAY MAY 16, 2012 – so your immediately action is needed.

I would ask that you take the time to immediately contact your state representative and state senator, ask them to stand up for  the homeowners and borrowers of the commonwealth and request that they amend H-04083 to include these changes and amendments.  You can email the edits and comments directly to your state rep and state senator.

Their contact list can be found here: http://www.malegislature.gov/People/FindMyLegislator

Please email the following amendments and a memo explaining them:
Bill H-04083 edits    Memo RE H-04083 amendments and edits

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BRANNAN v. WELLS FARGO – Is Fraud and Forgery Destructive To The Federal Bankruptcy Process?

BRANNAN v. WELLS FARGO – Is Fraud and Forgery Destructive To The Federal Bankruptcy Process?


Thanks to  Matt Weidner for flagging this one down, and a must read

In Re: MARK JOSEPH BRANNAN, KELLY ANN BRANNAN, Debtors.
MARK JOSEPH BRANNAN, KELLY ANN BRANNAN, Plaintiffs,
v.
WELLS FARGO HOME MORTGAGE, INC. f/k/a NORWEST MORTGAGE, INC., Defendant.

 

 

Case No. 02-16647, Adv. Proc. No. 04-01037.
United States Bankruptcy Court, S.D. Alabama. 

November 7, 2011.
Steve Olen, Attorney for Plaintiffs, Mobile, AL.Benjamin T. Rowe, Attorney for Plaintiffs, Mobile, AL.Ian David Rosenthal, Attorney for Plaintiffs, Mobile, AL.Henry A. Callaway, III, Attorney for Defendant, Mobile, AL.Jennifer S. Morgan, Attorney for Defendant, Mobile, AL.

ORDER DENYING PLAINTIFF’S MOTION TO CERTIFY THE PROPOSED CLASS BUT ALLOWING LEAVE TO AMEND

MARGARET A. MAHONEY, Bankruptcy Judge

This case involves the affidavit preparation, signing and filing practices of Wells Fargo, its employees, and the law firms representing it over a period from 1996 through 2008 in the Southern District of Alabama Bankruptcy Court. The debtor asserts that the practices were so pervasively improper and/or fraudulent as to require relief for all debtors in this district even if the information contained in each debtor’s particular affidavit was true. The Court has jurisdiction to hear this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the Order of Reference of the District Court. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2) and the Court has authority to enter a final order. The case is presently before the court at the class certification stage. For the reasons indicated below, the Court is denying the plaintiff’s motion to certify the class proposed by her, but will allow 30 days for plaintiff to amend the proposed class, if appropriate.

FACTS

A.

Wells Fargo was the mortgage and note holder for an unknown but substantial number of homes of people who filed bankruptcy in the Southern District of Alabama from 1996 through 2008. In order to be able to foreclose on the home of any debtor who was delinquent in his or her payments, Wells Fargo needed relief from the automatic stay that was imposed in every bankruptcy case at filing. This relief was necessary until the debtor obtained a discharge or had his or her case dismissed. Kelly Brannan, with her then husband, filed a Chapter 13 bankruptcy case in the Southern District of Alabama on November 21, 2002. Kelly and Mark Brannan owned a home at 1309 Mixon Avenue in Bay Minette, Alabama. They became delinquent in their payments to Norwest Mortgage, Inc., n/k/a Wells Fargo Home Mortgage, Inc., their mortgagee. In order to foreclose on the house, Wells Fargo sought relief from the automatic stay by motion filed pursuant to 11 U.S.C. § 362. The motion was filed on March 31, 2003. In conjunction with the motion, Wells Fargo filed an affidavit supporting the motion.

The affidavit was filed on March 31, 2003. The affiant was Teresa Diaz-Cochran and the notary public was Marian W. Hudson. The affidavit and notary public acknowledgment were dated March 28, 2003. The affiant signature and notary signature were on a page separate from the other two pages of the affidavit. The affiant attested to the financial data surrounding the loan such as the amount owed and the amount in arrears, and stated facts about the mortgage and note. The affidavit also stated that copies of the note and mortgage were attached to the affidavit. The affidavit had only one attachment—the mortgage. From testimony offered at the certification hearing, it is clear that the Brice Vander Linden firm prepared and filed the Motion for Relief from the Stay and it prepared the affidavit that Theresa Diaz-Cochran signed. The testimony also shows that the affidavit was “presigned.” The Wells Fargo employees had sent to Brice Vander Linden multiple signature pages with the affiant’s signature and the notary’s signature on the page as well as the notary seal, with the dates of signing blank. The employee reviewed the affidavit online when it was sent to the employee’s email. If the financial data was correct, the employee emailed approval to the Brice firm and it attached a presigned signature page to the approved wording. The Brice firm also apparently filled in the dates of the affiant’s and notary’s signatures.

The Brannans and Wells Fargo agreed to a conditional denial of the motion for relief from the stay at a hearing held on April 23, 2003. The court signed an order on April 25, 2003 stating, in general terms, that the arrears of the Brannans on their mortgage would be paid through their Chapter 13 plan together with attorney’s fees of $350 and a filing fee of $75. Ms. Brannan never personally paid the mortgage payments after that date. She deeded the home to Wells Fargo in a deed-in-lieu of foreclosure arrangement.

Debtor offered into evidence 631 affidavits with a variety of alleged flaws. Wells Fargo listed the defects in its brief.

1. A person other than the affiant mistakenly named in the body of the affidavit

2. Misdescription of the affiant’s job (i.e., called “bankruptcy representative or “bankruptcy specialist” as opposed to “bankruptcy supervisor”)

3. Notarization undated

4. Missing page

5. Affidavit refers to an exhibit containing an indication that it was printed or faxed later

6. Affidavit refers to an exhibit attached to a motion for relief from stay which had not been filed at the time of the affidavit’s execution

7. First page of the affidavit appears to have been “updated” after the affidavit’s signature to reflect a missed payment subsequent to the date of the affidavit (without the knowledge or consent of any Wells Fargo employee)

8. Handwriting of the date on the notarization appears to be different from that of the notary

9. Affidavit exhibit(s) missing

10. Affidavit refers to a note as an exhibit but instead there is a Lost Note Affidavit

11. Different font for some part of the affidavit

12. Affiant date blank

13. Notarization state or county incorrect

14. McCalla Raymer attorney signed as Assistant Secretary of Wells Fargo

15. Blanks in affidavit not filled in

16. Affiant’s name misspelled

17. Affiant and notary dates are different

18. Affiant’s name wrong in body of affidavit

19. Affiant was allegedly not assistant secretary of MERS

20. Handwritten changes on affidavit

21. Affidavit refers to delinquent payment for month after affidavit filed

22. Missing affiant signature

23. Debtor’s name wrong in some places in affidavit

24. Affiant did not sign in presence of notary

25. Affidavit refers to property value in debtor’s bankruptcy schedules, but affiant does not know whether she/he personally reviewed the schedules[1]

B.

The evidence shows that two law firms handled all or substantially all of the bankruptcy cases in this district from 1996-2008 for Wells Fargo — the Brice Vander Linden firm and the McCalla Raymer firm. The Brice Vander Linden firm has admitted it filed “presigned” affidavits and has provided a list of many of them. Those affidavits are included in plaintiff’s list of 631 affidavits. The affidavits it handled also included affidavits that exhibited most if not all of the other infirmities listed. The McCalla Raymer firm does not admit to filing any presigned affidavits. However, all of the other infirmities appeared in its affidavits.

1.

The Brice Vander Linden firm commenced its representation of Wells Fargo no later than 1996. From 1996-2003, it used (at least part of the time) presigned affidavits from Wells Fargo representatives which it filed in conjunction with relief from stay motions. These presigned affidavits were provided by Wells Fargo and were sanctioned by Wells Fargo’s own Guidelines dated May 27, 2003[2] which authorized the procedure. It is not clear how long the presigned affidavit process was used except that Hillary Bonial, the lawyer from Brice in charge of bankruptcy operations, knows it ended on April 15, 2003 when the Brice Vander Linden firm sent an email to Wells Fargo stating that the firm was terminating the procedure. The Brice firm itself terminated the process, at least in part, because a bankruptcy judge in California called the process into question. Another Brice client, Mitsubishi, had been providing presigned signature pages to Brice and an affidavit with a presigned signature page was discovered to have been filed in Judge Klein’s court. Wells Fargo never told Brice Vander Linden to stop using the procedure. After terminating the policy, the Brice firm provided full affidavits to Wells Fargo by email, using what it called the “corrected execution” procedure. Wells Fargo employees were responsible for reviewing, signing and notarizing the affidavits and returning them by overnight mail to the Brice firm. The Brice firm did not attach any documents that an affidavit stated were attached unless it determined it was not a document available on Wells Fargo’s computer system. If a document came from a third party, some evidence indicated that the Brice firm forwarded it to Wells Fargo.

The evidence is repetitiously substantial that the Brice firm filed the affidavits returned to them by Wells Fargo regardless of condition. Many affidavits bore no date for an affiant’s signature and/or a notary’s signature; many had mistakes as to the names of affiants or job titles; many had statements that documents were attached that were not.

2.

The McCalla Raymer law firm did a substantial amount of Wells Fargo’s work in the Southern District of Alabama over the period 2004-2008. There is no evidence that McCalla Raymer used presigned affidavits. However, the McCalla Raymer affidavits had many of the same defects as the Brice firm affidavits. Many had undated affiant or notary signatures. Many had wrong affiant names or job titles.

In addition, McCalla Raymer affidavits had three other defects. Some McCalla affidavits had attachments added to affidavits after they were signed. This is clear because some affidavits stated that a note was attached, but a lost note affidavit was attached instead. Most troubling was the fact that there were numerous affidavits which stated that payments were in default for periods of time in the future, i.e., an affidavit dated August 25, 2004 stated that the September 2004 payment was in default.

3.

Wells Fargo had guidelines for attorneys working on its bankruptcy cases. In the 2003 version of the guidelines, attorneys were advised that Wells Fargo would supply presigned affidavit signature pages for bankruptcy cases if requested. It is unclear if that was in the guidelines before that date. After the 2003 version, the presigned affidavit signature language was deleted. The guidelines said nothing else about procedures to be followed in regard to affidavit preparation by law firms. Wells Fargo employees repeatedly stated that they relied on their attorneys to tell them what to do. Wells Fargo had no organized training for affidavit signing employees or notary signing employees. When hired, they were told how to do their jobs by their predecessors or supervisors.

Employees signed numerous affidavits every day. One employee described receiving and handling 80-100 affidavits before lunch each day. She averaged about 2 ½-3 minutes per affidavit for collating, stapling, checking content and signing. One employee admitted she didn’t read any of the affidavits she signed. Others testified they read the financial information. When confronted with affidavits with wrong names, wrong job titles, missing or incorrect attachments, they expressed surprise. If the affidavit stated that the debtors’ bankruptcy schedules indicated a property value of a certain amount, the employees testified that they did not verify that fact because they had no access to PACER.

Many affidavits had mortgage and note attachments which appeared to be attached after the preparation and signing of the affidavit. Many affidavits had Lost Note affidavits attached that said a copy of the mortgage and note were attached. Other affidavits stated that the Mortgage and Note were attached to the motion for relief from stay but were not.

The employees signing affidavits testified in numerous instances that the date of their signing of the affidavit was not filled in by them. Notary employees also often testified that they did not fill in the dates on their notarizations. Someone else had done it. Employees signing affidavits did not always sign the affidavits in front of a notary. The affidavits were placed in a file folder and delivered to the notary by the affiant or another employee.

Some notarizations were not dated the same date as the affiant’s signature date. Some affidavits stated that a debtor was in default as to payments which were not yet due. The Wells Fargo employees stated that they did whatever their attorneys told them to do.

4.

Wells Fargo employees, high and low, and its attorneys testified that they saw nothing wrong with their affidavit preparation, signature and notarization procedures. If the financial data in the affidavit was correct, they testified that the affidavit was okay. Their focus was solely on the financial data. The rest was “technicalities.”

LAW

The issue to be decided is whether a class of debtors can be certified pursuant to Fed. R. Bankr. P. 7023. Rule 7023 incorporates Fed.R.Civ.P. 23 into adversary proceedings. The requirements for a class are set forth in the rule.

(a) Prerequisites. One or more members of a class may sue or be sued as representative parties on behalf of all members only if:

(1) The class is so numerous that joinder of all members is impracticable;

(2) There are questions of law or fact common to the class

(3) The claims or defenses of the representative parties are typical of the claims or defenses of the class; and

(4) The representative parties will fairly and adequately protect the interests of the class.

Brannan seeks to certify a class that includes every debtor that had a case in the Southern District of Alabama from 1996 through 2008 in whose case an affidavit was filed by Wells Fargo. Brannan asserts that, based upon the facts outlined above, every affidavit is improper or fraudulent due to the policies and procedures followed by Wells Fargo and its agents and employees in preparing, executing and filing affidavits in debtors’ cases. The Court concludes that a class defined as proposed cannot be certified. However, the Court concludes that Brannan’s case can serve as a vehicle for sanctioning Wells Fargo for its behavior, and/or, perhaps the class can be redefined to include those who have suffered actual harm.

There are three reasons the Court concludes that the proposed class cannot be certified. First, abuse of the bankruptcy process or fraud on the court is a remedy that is based upon injury to the court system as a whole rather than an injury to individual debtors. Therefore, to the extent this case is about punishment of Wells Fargo for all debtors, regardless of actual injury, the relief given must necessarily be to the system—not individuals. Second, no other court that has dealt with similar practices has done more than sanction creditors who use improper practices. Although not determinative of the right to a class wide remedy, it is evidence that such abuses, involving numerous debtors, have been dealt with by courts in a more summary fashion. Third, although the proposed class of debtors was “harmed” in a way by the practices of Wells Fargo, the harm cannot be quantified meaningfully for each debtor. A class that specifically focused on debtors who actually paid an attorneys’ fee or filing fee for Wells Fargo’s shoddy filings might be able to be certified because such debtors suffered actual monetary damages. What the debtors received was actually worth less than the $350-$500 charged and paid by them.

A.

Abuse of the bankruptcy process and/or rules and fraud on the court are complaints which go to the heart of the bankruptcy system—not to any particular debtor. In fact, as Wells Fargo has pointed out, Ms. Brannan can point to no actual monetary harm suffered by her. What is the harm in Wells Fargo’s practices? That Wells Fargo “took the law into its own hands.” It decided unilaterally to disregard South Carolina notary public requirements, this Court’s local practices, and the ages old law of signature or declaration under oath or penalty of perjury. Testimony under oath may not be foolproof, but it is the lifeblood of the courts. If parties have no regard for what it means, those parties’ testimony is suspect and unreliable. The only reason this Court allows evidence to be presented by Wells Fargo and other parties by affidavit is to make the process more convenient and streamlined for the Court and litigants. If the testimony is not trustworthy because the safeguards of the process are not observed, this Court (and one would suspect others too) will have to require parties to appear in person. Disregard of court procedures and rules, notary law and signatures under oath is a courtwide concern.

In Travelers Indemnity Company v. Gore, 761 F.2d 1549, 1552 (11th Cir. 1985) the Eleventh Circuit defined fraud on the court as “that species of fraud which does or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery cannot perform in the usual manner its impartial task of adjudicating cases that are presented for adjudication.” It is an abuse that must be corrected regardless of harm to any individual debtor or creditor. To the extent Brannan seeks to correct or address this courtwide concern, the remedy is not one for damages to be awarded to specific debtors.

Several cases similar to this case are pending in the Middle District of Alabama Bankruptcy Court. Judge Sawyer concluded that a single false affidavit might not be a fraud on the court but an intra-party fraud. However, five factors made the facts alleged in Judge Sawyer’s cases and this Court’s cases fraud on the court. Woodruff v. Chase Home Finance, LLC, 2010 WL 386209 (Bankr. M.D.Ala. 2010).

(1) Large numbers of motions for relief from the automatic stay are filed.

(2) There is only a short period of time to dispose of these motions.

(3) There is a huge economic disparity between the resources available to the parties.

(4) The subject matter is critical to the debtor’s survival.

(5) These matters are only rarely litigated to a final order after a hearing on evidence.

Woodruff, 2010 WL 386209, at *6.

These factors make the actions of Wells Fargo, if proven, a fraud on the court. The sheer numbers, the reliance of the court on the affidavits, and the subject matter of the Wells Fargo motions (debtors’ homeplaces) make even careless, negligent procedures inexcusable.

The facts also can be seen as a ground for this Court to exercise its inherent authority to impose sanctions “to enforce court . . . rules, or to prevent an abuse of process.” 11 U.S.C. § 105(a). Franken v. Mukamal, 2011 WL 4584767 (11th Cir. 2011) (citing to In re Walker, 532 F.3d 1304, 1309 (11th Cir. 2008) and In re Sunshine Jr. Stores, Inc., 456 F.3d 1291, 1304 (11th Cir. 2006)); Hardy v. U.S., 97 F.3d 1384 (11th Cir. 1996); In re Mroz, 65 F.3d 1567 (11th Cir. 1995). “The power to punish for contempts is inherent in all courts.” Chambers v. NASCO, Inc., 501 U.S. 32, 44, 111 S.Ct. 2123 (1991) (citing Ex parte Robinson, 19 Wall. 505, 510, 22 L.Ed. 205 (1874)). The Chambers court indicated that one type of contempt the courts may sanction under their inherent powers is “tampering with the administration of justice . . . [which] involves far more than an injury to a single litigant. It is a wrong against the institutions set up to protect and safeguard the public.” Id. (citing Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 246, 64 S.Ct. 997, 88 L.Ed.1250 (1944)). This is precisely the type of wrong allegedly committed in this case as it pertains to all debtors in this district.

B.

The Court has found no cases that have certified a class like this one. That alone is not sufficient reason not to certify a class, but it is some support for this ruling. This is particularly true when there is another remedy, a sanction, which is clearly within this Court’s authority.

C.

To have standing to sue, a plaintiff must have “suffered . . . injury in fact,’. . . the injury[] . . . [must be] `fairly traceable’ to the actions of the defendant, and . . . the injury[] . . . [must] likely be redressed by a favorable decision.” Bennett v. Spear, 520 U.S. 154, 162, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). An “injury in fact” must be “(a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical.” Lujan, 504 U.S. at 560-61, 112 S.Ct. 2130; Griffin v. Dugger, 823 F.2d 1476, 1482 (11th Cir. 1987) (stating that “[u]nder elementary principles of standing, a plaintiff must allege and show that he personally suffered injury”). Although plaintiff characterizes the harm to plaintiff as the order of this Court requiring payment of attorney’s fees and expenses and the posting of the same to plaintiff’s account, Brannan can offer no proof that any information in her tainted affidavit was untrue, nor can she prove she paid Wells Fargo anything for production of the shoddy document. This will be true of many of the proposed class members. Only debtors who actually paid fees for the offending affidavits had an “injury in fact.” The injury was overpayment for improper document preparation. The cause of action of abuse of the rules and process under 11 U.S.C. § 105 is a sufficient basis for this claim coupled with 11 U.S.C. § 506 allowing a creditor to recover only “reasonable costs or charges” from a debtor. If plaintiff can redefine the class to encompass only those debtors who actually paid a fee to Wells Fargo, the class may be able to be certified.

IT IS ORDERED that:

1. The motion of the plaintiff to certify her proposed class is DENIED;

2. The plaintiff shall have 30 days from the date of this order to amend the proposed class, if she desires to do so;

3. A hearing on any amended class proposal shall be held on January 10, 2012, at 1:00 p.m. in Courtroom 2, U.S. Bankruptcy Court, 201 St. Louis Street, Mobile, AL 36602;

4. The plaintiff may file a brief in support of any amended class by December 12, 2012 and the defendant may file any responsive brief by December 23, 2012; and

5. At the hearing on January 10, 2012, the Court will discuss with counsel how to proceed with any sanction hearing in regard to Wells Fargo’s actions as the Court indicated might be appropriate in this ruling.

[1] Defendant’s Brief in Opposition to Plaintiffs’ Motion for Class Certification, Docket Entry #200, pages 4-5.

[2] “If our (Wells Fargo’s) signature is necessary, please send us a supply of the last page of the document and we will pre-sign them (sic) for future use by your firm.” Home Mortgage Default Management Guidelines, May 27, 2003, page 23.

Down Load PDF of This Case

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MUST READ: Prisoners of Debt

MUST READ: Prisoners of Debt


A fresh start with bankruptcy? Big lenders keep squeezing money out of consumers whose debts were canceled by the courts

BUSINESS WEEK-

In a financial version of Night of the Living Dead, debts forgiven by bankruptcy courts are springing back to life to haunt consumers. Fueling these miniature horror stories is an unlikely market in which seemingly extinguished debts are avidly bought and sold.

The case of Van Rathavongsa illustrates how canceled debts regain vitality. The Raleigh (N.C.) factory worker pulled himself out from beneath a mountain of bills by means of a bankruptcy proceeding that wrapped up in 2002. One of the debts the judge canceled, or “discharged,” was $9,523 Rathavongsa owed to Capital One Financial (COF), the big credit-card company. But Capital One continued to report the factory worker’s discharged debt to credit bureaus as a live balance, according to documents filed in U.S. Bankruptcy Court in Raleigh.

[BUSINESS WEEK]

Image source: Business Week

The document submitted by a former Equifax employee. It asserts that credit files with incorrectly reported pre-bankruptcy debts were “an extremely frequent and reoccurring problem.”

 

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CA AG Harris (and others): Where Are the Search Warrants?

CA AG Harris (and others): Where Are the Search Warrants?


Important: This post earlier goes hand in hand with Abigail’s story, must read both if you haven’t yet: (In)validity and (in)admissibility of out-of-state documents and affidavits: the CPLR 3212/2309(c) – RPL 299-a ‘Bermuda triangle’

Abigail C. Field-

At Naked Capitalism Michael Olenick detailed how easy it is to spot the industrialization of document creation and execution–really, evidence manufacture–by looking at where people signing the documents are. Based on his analysis of Palm Beach County records, there’s factory floors in:

“35 different states, and 101 different counties…

“…California overall notarized 815 Florida assignments, 32.6% of the total. Florida, which you’d expect, came next with 610 assignments, or 24.4% of the total, followed by Minnesota (9.3%), Texas (7.3%), Ohio (4.8%), Georgia (4.5%), Louisiana (2.8%), and Nebraska (2.6%). All other states had less than 2%.

Banks and their vendors like LPS run these knock-off document factories, producing documents that are just like those cheap purses with fake luxury labels sold in Chinatown. That is, the documents look right but couldn’t be more false.

[REALITY CHECK]

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(In)validity and (in)admissibility of out-of-state documents and affidavits: the CPLR 3212/2309(c) – RPL 299-a ‘Bermuda triangle’

(In)validity and (in)admissibility of out-of-state documents and affidavits: the CPLR 3212/2309(c) – RPL 299-a ‘Bermuda triangle’


Isn’t this about 95% of all foreclosure cases? Hmm the other 5% in case a foreclosure mill has to make one ASAP in-house!


Listen up folks, this could be the start of a new storm!

Reuters-

You represent the plaintiff-assignee on motion for summary judgment  under Civil Practice Law and Rule 3212 in a commercial mortgage foreclosure action. Your “affirmation of regularity” is supported by a complaint verified in New Jersey.  The assignment was effected and acknowledged, in Pennsylvania, under a power of attorney notarized in California.  All documents – the power of attorney, the assignment of mortgage and the verification – were properly executed in the jurisdictions where they were signed. 

So “all of your [predicate legal] ducks are lined up.”  No heavy lifting here. File the motion and “judgment day” is near. (Sorry for the mixed metaphors.)  But wait a minute!!  None of the documents signed outside the state contain the so-called “certificate of conformity” required by CPLR 2309(c) and Real Property Law § 299-a.  Was the assignment of the mortgage effective? And is your evidence in admissible form? 

[REUTERS]

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Florida judge on foreclosures “no confidence that any of the documents the court is receiving…are valid”

Florida judge on foreclosures “no confidence that any of the documents the court is receiving…are valid”


It’s still inconceivable that not one attorney has been reprimanded, no suspensions after so much fraud. How long do investigations take? How long will this go on? After millions of hits on this blog…you would imagine it stop, a long time ago. But no...

 

WSJ-

After the robo-signing mess exploded last September, court officials in Florida, the nation’s busiest state for foreclosures, required lenders to swear that all the information in their foreclosure lawsuits was “true and correct.”

The new affidavits have made judges quicker to pounce on obvious flaws in foreclosure documents, such as when the loan amount doesn’t match the number included in the lawsuit. But some judges say the foreclosure process suffers from broader problems beyond their control.

[WALL STREET JOURNAL]

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Robo-signed mortgage docs date back to late 1990s

Robo-signed mortgage docs date back to late 1990s


In case you missed it.. I put together Special Events that Happened in 1999 …Welcome to the 99 Club. It’s incomplete but it was a start to the mess we have today.

AP- By PALLAVI GOGOI, AP Business Writer

Counties across the United States are discovering that illegal or questionable mortgage paperwork is far more widespread than first thought, tainting the deeds of tens of thousands of homes dating to the late 1990s.

The suspect documents could create legal trouble for homeowners for years.

Already, mortgage papers are being invalidated by courts, insurers are hesitant to write policies, and judges are blocking banks from foreclosing on homes. The findings by various county registers of deeds have also hindered a settlement between the 50 state’s attorneys general who are investigating big banks and other mortgage lenders over controversial mortgage practices.

The problem of shoddy mortgage paperwork, which comprises several shortcuts known collectively as “robo-signing,” led the nation’s largest banks, including Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., and other lenders to temporarily halt foreclosures nationwide in the fall of 2010.

At the time, “robo-signing” was thought to be contained to the affidavits that banks file and use to prove they have the right to seize a home for foreclosure. Companies that process mortgages said they were so overwhelmed with paperwork that they cut corners.

But now …

[ASSOCIATED PRESS]

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MARTINEZ v. AMERICA’S WHOLESALE LENDER | 9th Cir. Court of Appeals Reverses Part/Remands “Declarations Fail, QUIET TITLE, ReconTrust”

MARTINEZ v. AMERICA’S WHOLESALE LENDER | 9th Cir. Court of Appeals Reverses Part/Remands “Declarations Fail, QUIET TITLE, ReconTrust”


NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

PETRA MARTINEZ,
Plaintiff – Appellant,

v.

AMERICA’S WHOLESALE LENDER;
COUNTRYWIDE HOME LOANS
SERVICING LP; BANK OF AMERICA,
RECONTRUST COMPANY N.A.; and
BANK OF NEW YORK MELLON,
Defendants – Appellees.

Appeal from the United States District Court
for the Northern District of California
William H. Alsup, District Judge, Presiding

Argued and Submitted May 12, 2011
San Francisco, California

Before: GOULD and M. SMITH, Circuit Judges, and ST. EVE, District Judge.**

In this appeal, Petra Martinez contends that the district court erroneously
granted summary judgment in favor of Defendants. As the facts and procedural
history are familiar to the parties, we do not recite them here except as necessary to
explain our disposition. For the reasons explained below, we affirm the district
court’s grant of summary judgment in part and reverse it in part.

We review a district court’s grant of summary judgment de novo. See
Florer v. Congregation Pidyon Shevuyim, N.A., 639 F.3d 916, 921 (9th Cir. 2011).
In doing so, we view the evidence in the light most favorable to the nonmoving
party, and determine both whether any genuine dispute as to any material fact
exists and whether the district court correctly applied the substantive law. See id.

In her Complaint, Martinez brought a number of causes of action against
Defendants based on their alleged role in foreclosing on a property over which she
held a mortgage interest. The relevant causes of action were to quiet title, for an
accounting, for tortious violation of statute (the Real Estate Settlement Procedures
Act), for unfair competition, for unfair debt-collection practices, for declaratory
relief, for slander of title, for intentional infliction of emotional distress, and for
negligent infliction of emotional distress.

Although the district court separately analyzed each of these causes of
action, as well as two implicit “overarching claims” of a “right to initiate
foreclosure proceeding[s]” and “deficient notice,” Martinez abandons all but two

of them on appeal. Specifically, in her opening brief, Martinez only addresses her
claim under California Civil Code Section 2923.5 (though her Complaint does not
identify it as a discrete cause of action) and her action to quiet title on the basis that
Defendants lacked authorization to carry out the foreclosure. She either ignores or
gives mere passing reference to her other causes of action, and so she has waived
them. See United States v. Graf, 610 F.3d 1148, 1166 (9th Cir. 2010) (citing
United States v. Williamson, 439 F.3d 1125, 1138 (9th Cir. 2006)); Rattlesnake
Coal. v. U.S. Envtl. Prot. Agency, 509 F.3d 1095, 1100 (9th Cir. 2007).

We affirm the district court’s grant of summary judgment in favor of
Defendants on Martinez’s Section 2923.5 claim. Although a private right of action
exists under this section, the remedy “is a simple postponement of the foreclosure
sale, nothing more.” Mabry v. Superior Court, 110 Cal. Rptr. 3d 201, 204 (Cal. Ct.
App. 2010). It follows that a claim under Section 2923.5 necessarily fails if a
foreclosure sale has occurred. See Hamilton v. Greenwich Investors XXVI, LLC,
126 Cal. Rptr. 3d 174, 185-86 (Cal. Ct. App. 2011). Defendants observe that the
relevant property was sold in foreclosure on April 28, 2010, and Martinez concedes
this fact in her reply. Martinez’s Section 2923.5 claim therefore fails.

The final issue concerns Martinez’s quiet-title claim. The district court
granted summary judgment to Defendants on this claim because “[u]ndisputed
facts show that plaintiff has an outstanding loan on the property, and that
defendant BNYM [Bank of New York Mellon] holds the promissory note. Plaintiff cannot
quiet the title until she repays the mortgage.” It is generally true that, in California,
“‘an action to set aside a trustee’s sale for irregularities in sale notice or procedure
should be accompanied by an offer to pay the full amount of the debt for which the
property was security.’” Ferguson v. Avelo Mortg., L.L.C., 126 Cal. Rptr. 3d 586,
591 (Cal. Ct. App. 2011) (quoting Arnolds Mgmt. Corp. v. Eischen, 205 Cal. Rptr.
15, 17 (Cal. Ct. App. 1984)). In the present case, however, Martinez has alleged
that the purported trustee, ReconTrust Company, N.A. (“ReconTrust”), had no
interest in the subject property and thus lacked authorization to attempt, or effect, a
nonjudicial foreclosure. If Martinez were to prove this allegation, the foreclosure
sale would be void under California law. See Dimock v. Emerald Props., L.L.C.,
97 Cal. Rptr. 2d 255, 261-63 (Cal. Ct. App. 2000). The tender rule does not apply
to a void, as opposed to a voidable, foreclosure sale. See Ferguson, 126 Cal. Rptr.
3d at 592; Dimock, 97 Cal. Rptr. 2d at 262-63; 4 Miller & Starr, Cal. Real Estate §
10:212 (3d ed.).

There would have been no error if Defendants had introduced admissible
evidence establishing that there is no genuine dispute that ReconTrust was
authorized to carry out the foreclosure sale, such that the sale was not void. Cf.,e.g.,
Ferguson, 126 Cal. Rptr. 3d at 595 (distinguishing Dimock and holding that
trustee’s sale conducted by authorized party is “merely voidable,” not void). In
moving for summary judgment, however, Defendants relied on documents attached
to declarations including those of Kalama M. Lui-Kwan, George Merziotis, and
Eva Tapia. Martinez, in opposing Defendants’ motion for summary judgment,
filed evidentiary objections to these declarations, which the district court overruled
without explanation. We conclude that the district court abused its discretion in
doing so.

A declarant must lay a proper foundation for evidence considered on
summary judgment. Bias v. Moynihan, 508 F.3d 1212, 1224 (9th Cir. 2007). For
documentary evidence submitted on summary judgment, however, “a proper
foundation need not be established through personal knowledge but can rest on any
manner permitted by Federal Rule of Evidence 901(b) or 902.” Secs. & Exch.
Comm’n v. Phan, 500 F.3d 895, 913 (9th Cir. 2007) (quoting Orr v. Bk. of Am., NT
& SA, 285 F.3d 764, 774 (9th Cir. 2002)). Put differently, “[t]he documents must
be authenticated and attached to a declaration wherein the declarant is the ‘person
through whom the exhibits could be admitted into evidence.’” Bias, 508 F.3d at
1224 (quoting Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542,
1551 (9th Cir. 1990)).

Lui-Kwan sought to introduce title documents, a variety of deeds, notices,
and other evidence relevant to the present case. His declaration presents numerous
authentication problems. First, he declared that he had reviewed title documents
that “appear” to have been recorded with the Monterey County Recorder’s office.
Second, he obtained copies of the relevant documents from private websites, which
are not self-authenticating. Cf. United States v. Salcido, 506 F.3d 729, 733 (9th
Cir. 2007) (per curiam); United States v. Tank, 200 F.3d 627, 630 (9th Cir. 2000).

Defendants nevertheless argue that “[a] majority of the exhibits are
documents recorded with the Monterey County Recorder bearing an official stamp
for the date and time of the recording as well as a document number . . . and, as
such, are self-authenticating[.]” The attached documents, however, are not
originals, but are copies, and therefore are not self-authenticating. Compare
United States v. Weiland, 420 F.3d 1062, 1074 (9th Cir. 2005) with United States
v. Hampton, 464 F.3d 687, 689 (7th Cir. 2006). Federal Rule of Evidence 902(4),
which governs “certified copies of public records,” requires the custodian or other
authorized person to certify that the copies are correct. Fed. R. Evid. 902(4).
Defendants failed to satisfy this requirement.

Defendants similarly failed to authenticate the documents attached to
Tapia’s declaration, which claim to be true and correct copies of documents
concerning Martinez’s loan and the Defendants’ corporate relationships. Tapia
asserted her “understanding” and “familiar[ity]” with the stated facts in a
conclusory manner that fails to establish her personal knowledge about the relevant
events and documents. Shakur v. Schriro, 514 F.3d 878, 890 (9th Cir. 2008); Bank
Melli Iran v. Pahlavi, 58 F.3d 1406, 1412 (9th Cir. 1995). Moreover, the
documents attached to her declaration are not admissible as “[c]ertified domestic
records of regularly conducted activity,” Fed. R. Evid. 902(11), because the
declaration contains no certification that ReconTrust made the records at or near
the time of the occurrence of the relevant matters, that it kept the records in the
course of a regularly conducted activity, or that it made the records by the regularly
conducted activity as a regular practice. Because Tapia failed to lay a foundation
for her personal knowledge about the documents, her testimony is not adequate
extrinsic evidence from “a witness who wrote it, signed it, used it, or saw others do
so” to establish admissibility under Federal Rule of Evidence 901(b)(1). Orr, 285
F.3d at 774 n.8 (internal quotation marks omitted). Defendants therefore failed to
authenticate the documents attached to Tapia’s declaration, and Tapia’s nondocumentary
factual assertions fail to meet the personal knowledge requirement of
Federal Rule of Civil Procedure 56(e)(1) (2009).

For the same reasons, we find that the documentary exhibits and factual assertions of
George Merziotis—to the extent that they are even relevant to the remaining
cause of action—fail to satisfy Federal Rule of Civil Procedure 56(e)
and the associated rules of evidence.

In light of these evidentiary problems, Defendants failed to introduce
sufficient admissible evidence to establish that the foreclosure sale was valid. We
therefore reverse as to Martinez’s quiet-title claim and remand to the district court
for further proceedings consistent with this disposition. Because the sole
remaining claim is founded on state law, we invite the district court to consider
whether it has subject-matter jurisdiction over the case.

Each party shall bear its own costs.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

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GMAC LLC vs. LAW OFFICES OF DAVID J. STERN Battle it out in Federal Court

GMAC LLC vs. LAW OFFICES OF DAVID J. STERN Battle it out in Federal Court


Mortgage Fraud

GMAC Mortgage, LLC
Law Offices of David J. Stern

Action Date: August 12, 2011
Location: FT. Lauderdale, FL

GMAC Mortgage, LLC filed counterclaims in a federal court lawsuit brought against GMAC by its former lawyers, The Law Offices of David J. Stern, P.A. (“Stern”). The case, No. 11-CV-61526, was filed in federal court in the Southern District of Florida, where Stern’s offices were located.

GMAC accuses Stern of gross legal malpractice, breach of contract, breach of fiduciary duty, violating Florida’s Deceptive and Unfair Trade Practice Act and Misrepresentation/Suppression. GMAC seeks unspecified compensatory and punitive damages.

GMAC alleges that Stern:

1. caused or permitted Stern employees to execute, witness and/or notarize assignments of mortgage that were back-dated;

2. caused or permitted Stern’s employees to witness and/or notarize assignments of mortgages, affidavits of indebtedness and/or other affidavits on a daily basis prior to and without actually witnessing execution of the document by the person whose signature was to be witnessed and/or notarized;

3. caused or permitted Stern’s employees to prepare and execute affidavits of indebtedness for submission to the foreclosure court that failed to follow appropriate professional practices and procedures;

4. caused or permitted Stern’s employees to sign the name of another person on various foreclosure-related documents without any indication of that fact on the documents;

5. charged GMAC substantial fees and costs for legal services that Stern knew or should have known fell below the minimum standard of professional care owed by Stern to GMAC; and

6. committed acts or omissions that have subjected GMAC to claims, losses and liabilities of third-parties.

Essentially, GMAC claims that Stern’s malpractice carrier should be held responsible for all of the allegedly fraudulent acts of Stern’s office manager, Cheryl Samons, and other Stern employees who signed mortgage assignments and affidavits to push through foreclosures at record-breaking speed.

On July 27, 2011, Stern filed its Answer to these GMAC claims including the following:

“ 9. GMACM’s claims are barred, in whole or in part, by the doctrine of unclean hands because of GMACM’s: breach of contract; failure to retain replacement counsel in a timely manner; signing inaccurate affidavits; affidavits that were not properly notarized; not confirming whether loan and mortgage documents were properly endorsed; assigned or in possession of the appropriate party; and other misconduct identified in the Consent Order entered on April 13, 2011 by Order of the Board of Governors of the Federal Reserve System and the FDIC, and because, to the extent DJSPA committed legal malpractice, which is expressly denied, any such malpractice was the result of GMACM’s own actions and/or instructions.”

Homeowners and investors are lost in this battle of the giants. Tens of thousands of Florida homeowners lost their foreclosure cases because of the fraudulent documents produced by GMAC.

These documents most certainly came from Stern, but they also came from GMAC’s own employees, including master-signer Jeffrey Stephan, and employees in many other major foreclosure mills used by GMAC. The Stern defense that “Everybody was doing it” is unfortunately true.

An important question for homeowners and investors is whether GMAC has instructed its new lawyers to advise the Courts and homeowners of these findings.

Malpractice insurance carriers throughout the country could not imagine a more ominous case. Copies of the Counterclaim and Answer are available in the Pleadings section of Fraud Digest.


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READ LETTER | Massachusetts AG Coakley to Register of Deeds re: Meeting on MERS Fraud

READ LETTER | Massachusetts AG Coakley to Register of Deeds re: Meeting on MERS Fraud


THE COMMONWEALTH OF MASSACHUSETTS
OFFICE OF THE ATTORNEY GENERAL
ONE ASHBURTON PLACE
BOSTON, MASSACHUSETTS 02108

MARTHA COAKLEY
ATTORNEY GENERAL
(617) 727-2200
www.mass.gov/ago

July 25, 2011

William P. O’Donnell
Register of Deeds
Norfolk Registry District of the Land Court
649 High Street
Dedham, MA 02026

Re: Massachusetts Register of Deeds Association Request for Meeting

Dear Register O’Donnell,

Thank you for your letter of July 8, 2011. We look forward to meeting with you and your fellow Registers on August 11th, to discuss your concerns regarding MERS, the filing of false or misleading documents with registries, and other matters.

As you are aware, we are currently investigating creditor misconduct in connection with unlawful foreclosures, including failure to establish the right to start a foreclosure as well as filing false or misleading documents with registries in the Commonwealth. We have focused particularly on creditors’ reliance on MERS and whether MERS conforms to the requirements of Massachusetts law, in the context of foreclosures and otherwise. In the next week, we plan to send civil investigative demands (CID) to Registers in order to gather critical information to our investigation, and appreciate your continuing cooperation in this process. If the Massachusetts Registers of Deeds Associations or any individual Registers have questions or concerns about the CIDs, they should contact Public Protection and Advocacy Deputy Bureau Chief Stephanie Kahn at 617-963-2986.

Many of your fellow Registers also have asked about the impact of our investigation on the ongoing federal-state negotiations with the large banks. We have made clear that Massachusetts will not sign on to any global agreement with the banks if it includes a comprehensive liability release regarding securitization and the MERS conduct. We strongly believe that these investigations must continue and responsible parties must be held accountable in order to fully protect homeowners and return to a healthy economy.

We look forward to continuing to work with you on these important matters.

Cordially,

Martha Coakley

cc: John F. Meade, Barnstable Register
Andrea F. Nuciforo, Jr., Berkshire Middle Register
Frances T. Brooks, Berkshire Northern Register
Wanda M. Beckwith, Berkshire Southern Register
Barry J. Amaral, Bristol Northern Register
J. Mark Treadup, Bristol Southern Register
Bernard J. McDonald, III, Bristol Fall River Register
Dianna E. Powers, Dukes Register
Robert F. Kelley, Northern Essex Register
John L. O’Brien, Jr., Southern Essex Register
Joseph A. Gochinski, Franklin Register
Donald E. Ashe, Hampden Register
Marianne L. Donohue, Hampshire Register
Richard P. Howe, Jr., Northern Middlesex Register
Eugene C. Brune, Southern Middlesex Register
Jennifer H. Ferreira, Nantucket Register
Jolm R. Bucldey, Jr., Plymouth Register
Francis Roache, Suffolk Register
Kathleen Reynolds Daigneault, Northern Worcester Register
Anthony J. Vigliotti, Southern Worcester Register

MC/pas

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GMAC appeal coming to Maine Supreme Court

GMAC appeal coming to Maine Supreme Court


The Morning Sentinel-

A landmark legal case that spotlighted mishandled foreclosures by some of the country’s major lenders is likely to come before Maine’s highest court in September.

The Maine Supreme Judicial Court is expected to hear an appeal of a lower court ruling involving the mortgage servicer GMAC and its foreclosure practices.

Last September, a Maine District Court judge found that a GMAC official had signed a sworn statement supporting the foreclosure of a home owned by Nicolle Bradbury of Denmark, who had lost her job and stopped making mortgage payments. The official, however, hadn’t actually reviewed Bradbury’s foreclosure documents before signing.

Continue reading [THE MORNING SENTINEL]

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PHH Mortgage fined $290,000 for Incomplete and False Foreclosure Documents

PHH Mortgage fined $290,000 for Incomplete and False Foreclosure Documents


Illinois Department of Financial and Professional Regulation

For Immediate Release:

June 23, 2011

Mortgage Company fined $290,000 for Incomplete and False Foreclosure Documents

CHICAGO – PHH Mortgage Company has been fined $290,000 for signing foreclosure affidavits that the company knew would later be altered by its attorneys and for signing affidavits using someone else’s name, according to an order released today by the Illinois Department of Financial and Professional Regulation (IDFPR).  The violations were found during an ongoing special investigation of 20 Illinois licensed mortgage servicing companies, which was launched last year after learning of foreclosure improprieties across the country.

“At a time when homeowners are facing the possible loss of their most precious asset, homeowners have a right to expect their loan servicing company to file accurate and honest paperwork,” said Brent E. Adams, Secretary of Financial and Professional Regulation. “Time and again, the Department has sought to emphasize to loan servicing companies that home foreclosure is no time to cut corners.”

The order, signed by Manuel Flores, Director of IDFPR’s Division of Banking says that in at least 19 files, PHH failed to sign affidavits after they had been altered by the company’s attorneys and that PHH’s knowledge of and complicity with this process is evidenced by the fact that the original affidavits were incomplete and contained notations such as “will add” when they were tendered to the law firm of Fisher and Shapiro.  The law firm, in turn, under penalty of perjury and acting on behalf of PHH, then attested to the completeness of the altered affidavits although they had not been reviewed or re-executed by PHH.

The Department discovered other evidence of improprieties on the part of PHH employees in 16 of the 19 affidavits.  These 16 affidavits were identified as having all been signed and attested to by the same PHH employee in his or her official capacity.  Yet, the Department noted no less than five distinctly different signatures attributed to this same PHH employee, leading the Department to conclude that at least four different people used one employee’s name to sign the affidavits.  PHH has ten days to request a hearing on the Department’s order.

In December 2010, Department issued a 9-point “affidavit preparation expectations” plan establishing best practices for the handling of foreclosure-related documents.   Under the Department’s order, PHH has violated both the Residential Mortgage License Act of 1987 and these best practices established, publicized, and agreed to by several loan servicers late last year.
The 9-point plan:

  1. Affiants who sign affidavits in connection with foreclosure proceedings shall not use signature stamps to sign affidavits.
  2. Affiants signing affidavits stating the amount owed by a borrower (hereinafter “prove-up affidavits”) shall confirm that the numbers accurately reflect the numbers in the licensee’s business records and are totaled correctly.
  3. Affiants shall be individuals, not entities.
  4. Affiants shall have the level of knowledge necessary to submit an affidavit in a judicial proceeding.
  5. Lenders and servicers shall have processes in place to seek to ensure that affidavits used in connection with foreclosure proceedings are true, accurate, and complete, including that prove-up affidavits accurately reflect the amount due to the licensee.
  6. To the extent that an affidavit is notarized, it shall be done in compliance with the law of the state in which the affidavit is being notarized, which generally requires that the affidavit be executed in the presence of the notary after the notary has administered the oath and that the notary appropriately dates the prove-up affidavit.
  7. When using a form affidavit, Affiants shall not leave blanks or incomplete statements in the affidavit. Affiants shall date their signatures by hand on affidavits.
  8. When the Affiant’s signature is not plainly legible, the name of the Affiant shall be printed on the affidavit in order to permit the identity of the Affiant to be known.
  9. Lenders and servicers shall not file unsigned affidavits with the court.

Homeowners facing foreclosure and/or who have concerns or questions about the process may contact IDFPR’s mortgage hotline (800) 532-8785 (800) 532-8785

Source: http://www.idfpr.com

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Law firm Fisher and Shapiro sued over foreclosure cases

Law firm Fisher and Shapiro sued over foreclosure cases


ChicagoTribune-

A former Chicago resident whose home is in foreclosure has filed a lawsuit against Fisher and Shapiro LLC, the law firm that admitted to Cook County Circuit Court that some of the mortgage foreclosures it handled contained altered documents.

The suit, filed in federal court in Chicago Monday, seeks class-action status and comes three months after the court’s Chancery division temporarily halted more than 1,700 mortgage foreclosure cases as a result of the law firm’s admission. Upon further review by the court, the number of cases that was temporarily stayed grew to 2,127.

Continue reading [Chicago Tribune]

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NJ RESIDENTIAL MORTGAGE FORECLOSURE RULES – AMENDMENTS TO RULES. 4:64-1 AND 4:64-2; REVISED FORM CERTIFICATIONS/ AFFIDAVITS

NJ RESIDENTIAL MORTGAGE FORECLOSURE RULES – AMENDMENTS TO RULES. 4:64-1 AND 4:64-2; REVISED FORM CERTIFICATIONS/ AFFIDAVITS


NOTICE TO THE BAR

NJ RESIDENTIAL MORTGAGE FORECLOSURE RULES – AMENDMENTS TO RULES.
4:64-1 AND 4:64-2; REVISED FORM CERTIFICATIONS/ AFFIDAVITS

[ipaper docId=57973225 access_key=key-15kct5f0vun9pigfxemy height=600 width=600 /]

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2011 MORTGAGE SERVICING by Adam Levitin and Tara Twomey

2011 MORTGAGE SERVICING by Adam Levitin and Tara Twomey


2011

Mortgage Servicing

Adam J. Levitin
Georgetown University Law Center

Tara Twomey
National Consumer Law Center

This Article argues that a principal-agent problem plays a critical role in the current foreclosure crisis.

A traditional mortgage lender decides whether to foreclose or restructure a defaulted loan based on its evaluation of the comparative net present value of those options. Most residential mortgage loans, however, are securitized.

Securitized mortgage loans are managed by third-party mortgage servicers as agents for mortgage-backed securities (“MBS”) investors.

Servicers‘ compensation structures create a principal-agent conflict between them and MBS investors. Servicers have no stake in the performance of mortgage loans, so they do not share investors‘ interest in maximizing the net present value of the loan. Instead, servicers‘ decision of whether to foreclose or modify a loan is based on their own cost and income structure, which is skewed toward foreclosure. The costs of this principal-agent conflict are thus externalized directly on homeowners and indirectly on communities and the housing market as a whole.

This Article reviews the economics and regulation of servicing and lays out the principal-agent problem. It explains why the Home Affordable Modification Program (“HAMP”) has been unable to adequately address servicer incentive problems and suggests possible solutions, drawing on devices used in other securitization servicing markets. Correcting the principal-agent problem in mortgage servicing is critical for mitigating the negative social externalities from uneconomic foreclosures and ensuring greater protection for investors and homeowners.

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Feds to Ally Bank: Shore up foreclosure practices

Feds to Ally Bank: Shore up foreclosure practices


The Salt Lake Tribune-

Federal regulators have ordered Midvale-based Ally Bank to fix significant deficiencies in its foreclosure practices covering a two-year period in which among other things it submitted bogus legal documents for bankruptcies and other court actions.

The order from the Federal Reserve and the Federal Deposit Insurance Corp. alleges employees of Ally, two sister companies and their parent company, Allied Financial, signed foreclosure documents without reading them ­— a possibly illegal practice known as “robo-signing.”


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MAINE SJC “Untrustworthy Affidavits, MERS” | HSBC MORTGAGE SERVICES v. MURPHY et al.

MAINE SJC “Untrustworthy Affidavits, MERS” | HSBC MORTGAGE SERVICES v. MURPHY et al.


MAINE SUPREME JUDICIAL COURT

HSBC MORTGAGE SERVICES, INC.

v.

DANA S. MURPHY et al.

EXCERPT:

[¶12] In this case, the affidavits submitted by HSBC contain serious irregularities that make them inherently untrustworthy. The first Vadney affidavit, submitted by HSBC in conjunction with its second motion for summary judgment identifies Vadney as “a Vice President of HSBC Mortgage Services, Inc.,” and was dated and notarized on August 24, 2009. It asserts, among other things, that HSBC is the holder of the note and mortgage deed by virtue of an assignment dated December 11, 2006, and a confirmatory assignment of the note and mortgage dated August 24, 2009. Copies of both assignments are attached to the affidavit. The affidavit states that the confirmatory assignment was recorded in the Androscoggin County Registry of Deeds in Book 7775, Page 346. The copy of the confirmatory
assignment attached to the Vadney affidavit indicates that it was also dated and notarized on August 24, 2009, and then recorded at the Registry of Deeds on August 27, 2009, three days after the date Vadney signed the affidavit swearing that it had been recorded as of August 24, 2009.

[¶13] In addition, the confirmatory assignment from MERS, as nominee for Calusa Investments, LLC, to HSBC was also signed by Vadney. It indicates that Vadney signed the confirmatory assignment on behalf of MERS in her capacity as
its vice president. The summary judgment record is otherwise silent as to whether on August 24, 2009, Maria Vadney was simultaneously an officer of both MERS, the assignor, and HSBC, the assignee, as the affidavit and the confirmatory
assignment suggest.

[¶14] HSBC filed a second affidavit on October 1, 2009, signed by Maria Vadney on September 28, 2009, in support of its statement of supplemental facts filed in response to the Murphy’s opposing statement of material facts. The
affidavit contains a notary’s jurat dated September 24, 2009, four days before Vadney signed the affidavit.

[¶15] The Murphys, noting the discrepancies in the two Vadney affidavits and further observing that in both, the signature and jurat appear on a page separate from the body of the affidavit, urge us to infer that the texts of the affidavits submitted by HSBC were attached to the signature and jurat pages after those pages were executed. The Murphys further contend that if this inference is correct, “the potential for fraud is great with all these affidavits and near certain with the August 24th Vadney affidavit.”8

Continue below…

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Rule of Law: Banker Criminality Demands Prosecution – Barry Ritholtz

Rule of Law: Banker Criminality Demands Prosecution – Barry Ritholtz


The Big Picture-

This is not a glamorous approach to law enforcement, It is a slow laborious grind. As I presented to the National Association of Attorneys General, there are 10 major areas of bank and mortgage fraud:

1. MERS
2. Mortgage Pools (Warranties & Reps)
3. Bad Securitization (Quality)
4. “Misplaced” Mortgage Notes
5. Force-Placed Insurance
6. Illegal “Pyramid” Servicing Fees
7. Document Fraud for Sale
8. False Affidavits, Perjury (Robo-Signing)
9. Foreclosure Mills, Process servers exasperate problem
10. Active Servicemen losing homes while on tour of duty

Of this list, five issues are prosecution-ready, where individual states have jurisdiction. These include: 1) Force-Placed Insurance; 2) Illegal “Pyramid” Servicing Fees; 3) Fraud Documents for Sale; 4) False Affidavits, Perjury (Robo-Signing) and 5) Foreclosure Mills, Process servers.

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Judge Calls Shapiro & Burson Law Firm, Notaries To Explain Signatures on Foreclosure Documents

Judge Calls Shapiro & Burson Law Firm, Notaries To Explain Signatures on Foreclosure Documents


You might recall this law firm who is accused of forging 1,000+ deeds, and most recently Freddie Mac instructed its mortgage servicers to stop referring foreclosure cases to them.

From The Baltimore Sun-

A Baltimore judge summoned attorneys from a large foreclosure law firm Monday to explain whether signatures on key documents were genuine, part of the fallout from revelations last year that foreclosures nationwide were being processed based on deficient — or fraudulent — paperwork.


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JPM’s Dimon says bank will pay for foreclosure errors

JPM’s Dimon says bank will pay for foreclosure errors


Jamie Dimon, chairman and chief executive of J.P. Morgan Chase & Co., says that although the bank didn’t foreclose on people who should’ve been exempted, its mistakes are “embarrassing.”

via CRAIN’S

“Some of the mistakes were egregious, and they’re embarrassing,” Mr. Dimon, 55, said Tuesday at a conference hosted by the Council of Institutional Investors in Washington. He said the bank faces extra legal and regulatory hurdles after a Florida lawsuit uncovered that bank officials had signed foreclosure affidavits without verifying their accuracy.

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Madden sponsors legislation for protection on foreclosures

Madden sponsors legislation for protection on foreclosures


From ACK.net [link]

Working with island attorney Jamie Ranney, state Representative Tim Madden has sponsored a bill that would address a number of controversial issues surrounding contested foreclosures cases, including the valid recording of assignments of securitized loans, so-called “robo-signing” by lenders and their agents, and perceived abuses by Mortgage Electronic Registration System, or MERS.

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ATTORNEY GENERAL LORI SWANSON CHARGES ONE OF NATION’S LARGEST “DEBT BUYERS” WITH DEFRAUDING MINNESOTA COURTS AND CITIZENS BY FILING “ROBO-SIGNED” AFFIDAVITS

ATTORNEY GENERAL LORI SWANSON CHARGES ONE OF NATION’S LARGEST “DEBT BUYERS” WITH DEFRAUDING MINNESOTA COURTS AND CITIZENS BY FILING “ROBO-SIGNED” AFFIDAVITS


Minnesota Attorney General Lori Swanson today in a legal filing accused one of the nation’s largest “debt buyers” of defrauding Minnesota courts and citizens by filing false and deceptive “robo-signed” affidavits—generated at its offices in St. Cloud, Minnesota—to collect on old consumer debts that it purchased from credit card companies and others for about three cents on the dollar.

The debt buyer—Midland Funding, LLC and its administrative arm, Midland Credit Management, Inc. (collectively Midland)—has purchased $54.7 billion in old consumer debt from credit card companies and other companies. In 2009, it filed 245,000 lawsuits against individual citizens nationwide, and it has filed over 15,000 lawsuits against citizens in Minnesota courts since 2008. Midland pays for its debt acquisitions with hundreds of millions in financing from some of the nation’s largest banks, including several that sell old debt to it.

“The company put its thumb on the scale of justice to unfairly tilt the collection process in its favor,” said Attorney General Swanson.

The Attorney General said that debt buyers cast a wide net to find people who may owe old bills and often pursue the wrong person altogether or pursue people who paid the bills long ago. In some cases, debt buyers pursue people solely because they have the same or similar name or address as the real debtor. The Attorney General said that Midland has created false and unreliable mass-produced, “robo-signed” affidavits as supposed “proof” of consumer debts in lawsuits against individual citizens in order to obtain judgments against or extract payments from mostly unrepresented citizens, some of whom had no knowledge of any alleged debt.

Source: http://www.ag.state.mn.us/Consumer/PressRelease/110328DebtBuyers.asp

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