Chief Justice Charles T. Canady
Florida Supreme Court
500 South Duval Street
Tallahassee, FL 32399-1900
Dear Chief Justice Canady,
I am disturbed by the increasing reports of predatory ‘foreclosure mills’ in Florida. The New York Times and Mother Jones have both recently reported on the rampant and widespread practices of document fraud and forgery involved in mortgage assignments. My staff has spoken with multiple foreclosure specialists and attorneys in Florida who confirm these reports.
Three foreclosure mills – the Law Offices of Marshall C. Watson, Shapiro & Fishman, and the Law Offices of David J. Stern – constitute roughly 80% of all foreclosure proceedings in the state of Florida. All are under investigation by Attorney General Bill McCollum. If the reports I am hearing are true, the illegal foreclosures taking place represent the largest seizure of private property ever attempted by banks and government entities. This is lawlessness.
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.
Marcia Heroux Pounds, Sun Sentinel
August 20, 2010
After months of wrangling with CitiMortgage, Dennis and Joyce Brown got fed up and hired an attorney to fight CitiMortgage’s foreclosure on their Lauderdale Lakes home. The Browns claim they are victims of fabricated documents used to foreclose after CitiMortgage failed to credit them for mortgage payments.
“They ran my blood pressure up so bad,” said Dennis Brown, who hired Fort Lauderdale lawyer Kenneth Eric Trent to fight the foreclosure.
CitiMortgage and its lawyers, David Stern Law Offices, voluntarily withdrew the case against the Browns in Broward County Circuit Court on June 16. But the Browns can’t rest easy. Recently, they’ve received newforeclosure letters from another lawyer representing CitiMortgage.
The Browns’ story is just one example of foreclosures resulting from allegedly fraudulent mortgage assignments and other tactics that “eliminate due process for the homeowner,” Trent said.
He also is suing Stern and his Plantation law firm in federal court in a separate foreclosure case with similar allegations.
In that lawsuit, on behalf of Oakland Park homeowner Ignacio Damian Figueroa, Trent contends that Stern and a mortgage registration firmgenerated fraudulent mortgage documents that are intentionally ambiguous to cloud the real ownership of the Figueroa’s mortgage note.
The foreclosure practices of Stern and two other law firms are under investigation by the Florida Attorney General’s Office. The attorney general recently requested records going back to Jan. 1, 2008, from Stern as well as The Law Offices of Marshall C. Watson, P.A., and Shapiro & Fishman, LLP.
Thousands of Florida homeowners may have lost their homes as a result of improper actions by the firms under investigation. In announcing the probe, Attorney General Bill McCollum, a Republican who is a running for governor, said the law firms may have presented fabricated documents in court to speed the foreclosure process and obtain judgments against homeowners.
Jeffrey Tew, a Miami attorney who represents Stern’s firm, said while the attorney general may have received complaints, there “will not be evidence of fraud.” Due to the large volume of foreclosures, there may have been clerical mistakes, he said. “In past two to three years, the Stern law firm has processed probably 100,000 foreclosures.”
But he disputes that Stern’s law firm fabricated any documents. “I haven’t seen any example where a bank didn’t have a mortgage in default,” Tew said.
Stern represents well known mortgage lenders including Bank of America, Chase, CitiMortgage, Inc., Fannie Mae, Freddie Mac, HSBC, SunTrust, and Wells Fargo. These lenders also are the shareholders of Mortgage Electronic Registration Systems (MERS).
MERS is at the heart of the matter for Trent and other lawyers trying to stop what they view as illegal foreclosures in the nation.
The mortgage registry was created by lenders in the early 1990s to track home loans, including those repackaged as securities and sold to investors. When such loans were in foreclosure, MERS – not the original lender — was often the entity foreclosing. Some lawyers have successfully fought foreclosures by contending that MERS doesn’t own the note, or the borrower’s obligation to repay.
University of Utah law professor Christopher Peterson said MERS mortgage processing system goes against long-standing principles of property law in assigning rights to a note or mortgage. He said the “owner” of a mortgage can’t be the same as the “agent” representing the homeowner, for example.
Yet MERS records “false documents” with names of people who are not executives of the registry system, but often paralegals and clerks of law firms, he said. “It’s an extremely controversial and arguably fraudlent practice,” Peterson said.
Merscorp spokeswoman Karmela Lejarde declined to comment on the criticism of MERS or Trent’s lawsuit, citing company policy not to comment on pending lititgation.
Tew, who represents Stern’s Law Offices, called Trent’s lawsuit “fiction.” He points to Florida’s 5th District Court of Appeal that ruled in July against a homeowner who tried to fight foreclosure on the basis that MERS didn’t own the note or mortgage.
For the Browns’, foreclosure troubles began with not getting credit for their payments fromCitiMortgage, their mortgage servicer.
The couple says they couldn’t clear it up with the lender. “They were claiming I was behind in payment, but I was paying every month,” said Brown, a carpenter who works for the Broward County School System and whose three children and four grandchildren also live in his Lauderdale Lakes home.
They stopped paying on their mortgage in late 2007 and sought legal help.
Another issue in Browns’ case isthe signature on the assignment of Brown’s mortgage, giving rights to CitiMortgage, Trent said. The signature is by Cheryl Samons, who is identified as “assistant secretary of Merscorp.” In reality, Samons is an employee of Stern’s law office.
Tew confirmed Samons’ employment by Stern, but said “it’s very common for companies to appoint a registered agent. That process is absolutely legal and normal.”
But Trent contends that mortgage assignments need to be made on personal knowledge, not hearsay, to be admissible in court.
The Browns could be facing another foreclosure action, but Trent said he is confident he can fight it again. “They don’t have the basis to foreclose,” he said.
CitiMortgage spokesman Mark Rodgers said privacy restrictions prevent the financial institution from discussing a customer’s foreclosure action. But Rodgers said procedures may resume in cases “where, despite our best efforts, we have been unable to arrive at a satisfactory resolution acceptable to all the parties involved.”
Tew said foreclosure defense lawyers are portraying homeowners who have defaulted on their mortgages as helpless victims. “Everyone is sympathetic, including us, for the homeowner who can’t pay his mortgage. But it’s not fair to paint the banks and law firms that represent them as wearing the black hats.”
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DinSFLA here: This was a huge problem in Florida where a family was renovating a kitchen or bathroom and out of the blue bam you receive a letter stating that you no longer have a HELOC!
My guess is they knew what was coming and they “suspended” the helocs! Birds of a feather flock together!
Date: August 5, 2010
Contact: Dan Okenfuss, (916) 319-2053
Banks Refuse to Testify at California Consumer Protection Hearing
Nation’s Largest Banks Reject Opportunity to Explain Home Equity Line of Credit Suspension Practices
(SACRAMENTO) – Large national banks with a substantial presence in California, including Chase, Citibank, Wells Fargo and Bank of America, have refused to testify at a hearing originally scheduled this week by the Assembly Select Committee on Consumer Financial Protection and Assembly Banking & Finance Committee. The hearing was planned to investigate the banks’ practice of suspending and reducing the home equity lines of credit (“HELOCs”) of homeowners across California.
Representatives from the large banks were invited to explain the justification behind the tying up of millions of dollars of credit lines throughout the State. The hearing has now been cancelled due to the banks’ unwillingness to participate.
“It’s very frustrating,” says Assemblyman Ted Lieu, Chair of the Assembly Select Committee on Consumer Financial Protection. “I have heard from many constituents who have had their HELOCs stripped away from them, often without any apparent legitimate basis. The banks owe the people of the State of California an explanation for these credit line suspensions that have had significant adverse effects on individuals, families and the California economy. It’s very suspicious that the banks would turn down an opportunity to explain themselves.”
Large national and regional banks have been suspending HELOCs and reducing credit lines since 2008 as a result of declines in the values of the properties securing those credit lines. But many borrowers and consumer advocates have stated that banks have gone too far – suspending HELOCs en masse for their own benefit and often in the absence of circumstances warranting such suspensions. Many of these banks have been sued in California and other states for engaging in HELOC practices alleged to be in violation of federal regulations and state consumer protection statutes.
Several California residents whose HELOCs had been suspended during the past two years were scheduled to testify, as well as professional appraisers and consumer advocates.
“There were plenty of borrowers and consumer advocates lining up to give their side of the story. The primary purpose of the hearing was to ask important questions of the banks and to seek some accountability. The banks apparently have something to hide,” stated Lieu. “As long as this HELOC suspension issue persists, I will continue to demand answers and to insist that California borrowers receive the fair and legal treatment that they deserve.”
Assemblymember Ted W. Lieu is Chair of the Select Committee on Consumer Financial Protection. He represents the 53rd Assembly District, which includes El Segundo, Hermosa Beach, Manhattan Beach, Redondo Beach, Torrance, Lomita, Marina Del Rey, and portions of the City of Los Angeles.
Last Updated: 12:01 PM, February 28, 2010 Posted: 12:54 AM, February 28, 2010
As the mortgage melt down paralyzed the economy across the US and throughout New York State, one company in the center of the storm had all the business it could handle.The little-known law firm of Steven J. Baum PC, which is based in suburban Buffalo, NY, and represents dozens of banks in matters of failed mortgages, last year filed a staggering 12,551 foreclosure lawsuits in New York City and the suburbs, which works out to about 48 a day.
The foreclosure mill is one of a handful of super-regional law firms used by the country’s banks — and its lawyers appear to have practiced in every county courthouse and bankruptcy court from Staten Island to Plattsburgh and from Montauk to Niagara Falls.
But as the volume of its workload increased, so did complaints from opposing lawyers and judges that some of the thousands of lawsuits contained questionable legal work.
One bank caught in the crosshairs is JPMorgan Chase Bank, one of the largest mortgage lenders in the city.
Last month, Diana Adams, the US Trustee in Manhattan, filed papers in court supporting punitive financial sanctions against the bank for a string of bad behavior, including seeking to foreclose on homes after they rejected the attempts to make on-time payments and for failing to prove they own the mortgage on a home even as they move to seize it.
Chase filed documents that appear to be patently false or misleading, Adams said in the filing.
Although Chase has recently taken steps to address concerns expressed by courts in connection with other cases, based on Chase’s past and current conduct it needs to be sanctioned, Adams wrote.
A spokesperson for Chase had no comment on the US Trustee’s action.
The complaints against Baum — on the record during hearings, in legal pleadings and, eventually, borne out in judges’ decisions — include:
* Not divulging mortgage payments: In the White Plains bankruptcy of Blanca Garcia, Baum’s firm filed papers claiming Garcia was in arrears — when she actually made payments and showed the court her receipts, but they were not credited to her account. When Garcia’s lawyer complained, Baum’s firm answered the claim but, the lawyer said in court papers, ignored the receipts and continued to claim the mortgage was in arrears.
* Creating questionable assignments: A Suffolk County judge took it upon himself to investigate a filing by Baum’s firm when it attempted to foreclose on the home of Gloria E. Marsh. “A careful review,” the judge wrote in a four-page order, “reveals a number of glaring discrepancies and unexplained issues of substance.”
Folks there is just way too many. Eventually this will all be released.
Every Foreclosure/REO/Short Sale out there is virtually like this!
via ForeclosureHamlet.org & 4closurefraud.org
The attached documents are almost always the sole “evidence” showing the right of a foreclosing entity/servicer (or their shell National Bank Cover ie: US Bank) to foreclose on an American family’s home, evicting them from the only shelter that may be available to them.
Millions of examples of this and other “robo-signers” available upon request.
Of note, please see the last attachment; her deposition where she denies any “personal knowledge” or even a cursory glance at the facts of the case.
America………..what a heartache……….
ANOTHER POINT IS THEY seem to be different signatures. Some have loops and some do not.
Three frustrated homeowners in New York City are suing JPMorgan Chase over the bank’s failure to permanently modify their mortgages under the Obama administration’s plan to help homeowners avoid foreclosure.
The complaint, filed in federal court in New York, says the plaintiffs, who are represented by attorneys with the nonprofit Urban Justice Center, relied on promises by Chase that they could have their loans modified if they made reduced payments per the Home Affordable Modification Program (HAMP). Despite making payments on time, they’ve received foreclosure threats but no modifications.
One of the plaintiffs, Alex Lam, a 35-year-old restaurant manager, alleges Chase told him to actually stop making payments in order to be eligible for help. In early 2009, Lam contacted Washington Mutual (since absorbed by Chase) about a modification after his adjustable-rate mortgage blew up in his face. He was told he didn’t qualify for help because he was current on his payments.
“Mr. Lam was specifically told that if he stopped making payments for several months, he could be considered for a modification,” the says the complaint.
The next big surprise came in December, when, after making trial payments of $1,568 for the previous six months, Lam was told he owed the bank $12,000. When he protested, Chase relented and told Lam to apply once again for a mod, this time under HAMP. He made his payments until March, when Chase told him he’d failed HAMP’s opaque “Net Present Value” test, meaning the bank determined the investors who owned the loan would make more money via foreclosure than modification. Lam alleges Chase used bogus inputs for the NPV test and that Chase refuses to show its work.
Lam called the situation “very upsetting” in an interview with HuffPost. “I trusted them because they’re a big bank. I did whatever they asked me to.”
HuffPost asked Lam what he wanted from suing Chase.
“Just to get a modification, that’s all I’m asking for,” he said. “Since day one, that’s all I’m asking for.”
HAMP lawsuits have been flying. Last week a 91-year-old veteran of three wars named Peter Ruplenas sued Bank of America over mortgage mod malfeasance in West Virginia.
In April, Faiz and Khadija Jahani of California sued Chase for reasons similar to Lam’s — the bank told them to stop making payments to qualify for help, then foreclosed. A similar case is brewing in Seattle.
Homeowners are supposed to be eligible for HAMP mods if they’re having trouble making monthly payments, owe less than $729,750, took out the loan before January 2009, and if their payment on their first mortgage is more than 31 percent of their income. In theory, if homeowners make reduced payments (typically $500 cheaper) for three months, they are put in “permanent” modifications that last for five years.
But the banks voluntarily participating in HAMP have given permanent mods to just 230,000 homeowners in the program’s first year, a far cry from the three to four million officials said HAMP would help. Meanwhile, frustrated homeowners’ stories of lost paperwork, dishonesty, and incompetence by banks are piling up.
A Chase spokesman declined to comment on the lawsuit.
The Duval County Clerk’s Office has offered online bidding for foreclosed properties for some time, and now Jacksonville-based Lender Processing Services is bringing bank-foreclosures all over the U.S. online.
Through its LPSAuctions.com Web site, LPS is to open bidding on single-family homes, condominiums and town homes from Coral Springs to Tacoma, Wash. The bid deadline for the homes listed in the “Spring Clearance” auction on the site is May 10.
So now it’s official they have they’re hands in all Real Estate! My question is how…why would any state permit them to sell anything if they are under the scope of the FEDS?? Take a look below.
Arthur Delaney Arthur Delaney – Tue Apr 6, 7:09 pm ET
JPMorgan Chase told a California couple to quit making mortgage payments in order to qualify for a loan modification but then foreclosed on their Sacramento home, according to a lawsuit filed in federal court.
Faiz and Khadija Jahani called Chase in December 2008 because they were having trouble making their mortgage payments. According to the suit, they were told that they wouldn’t qualify for a modification without being delinquent and that they should stop making payments for three months.
At the beginning of June, the Jahanis claim that they were told they qualified for a modification that reduced their monthly payments. Three weeks later, they received a letter telling them the bank intended to foreclose. This confusing back-and-forth continued for months, with Chase repeatedly asking them to resend paperwork, according to the complaint filed in U.S. District Court, Eastern District of California/Sacramento Division, which was first reported by Courthouse News.
The couple is demanding damages of $150,000 for breach of contract, fraud, predatory lending and violation of the Fair Credit Reporting Act.
In October, a real-estate investor knocked on the Jahanis’ door and asked them about buying the house, telling the couple that it was a bank-owned property. When the Jahanis called Chase to find out what was going on, they claim they were reassured that the bank had not foreclosed on the house.
“They kept getting conflicting information,” said lawyer Piotr Reysner. He added that, as far as he can tell from public records, the bank did in fact foreclose on the property. “Unfortunately, they face a situation right now where they could easily get a three-day notice to quit the house.”
Chase did not immediately respond to a request for comment.
Reysner, a bankruptcy attorney, said he did not know whether the Jahanis had been pursuing their modification via the Obama administration’s Home Affordable Modification Program, which started in spring 2009 and gives banks incentives to modify mortgages for hard-luck homeowners. Banks are not allowed to foreclose on borrowers eligible for the program, but they are allowed to move forward with the foreclosure process during a trial modification, a source of much confusion for borrowers everywhere.
“The fact that a servicer is telling a homeowner that they’re taking care of the matter and, while they’re negotiating, the house moves into foreclosure is a completely common scenario in today’s foreclosure world,” said Ira Rheingold, director of the National Association of Consumer Advocates.
In March, HuffPost reported on Indiana law student Melissa Stuart, who had been making monthly payments under HAMP, only to be told when the trial period ended that she was delinquent. Stuart ultimately won a permanent modification.
UPDATE 6:05 PM: Several readers and commenters have written to say they’re having the same kind of problem. And Melissa Huelsman, a Seattle attorney whose practice focuses on predatory lending and wrongful foreclosure, wrote HuffPost to say clients of hers went through the same process as the Jahanis and were ultimately evicted. She wrote:
I’m just getting ready to file suit against Chase for this same thing, except my clients were actually making their trial loan mod payments up until the month before Chase foreclosed. They went to make the December payment but got a knock on the door from a realtor before they could do so. They spent a couple of weeks trying to get someone at Chase to fix the problem, except that Chase kept telling them that the property had not been foreclosed. Turns out Chase was wrong and the house was sold to a third party. They were just evicted a couple weeks ago and we’re getting ready to file.
This in combination with A.K. Barnett-Hart’s Thesis make’s one hell of a Discovery.
LEGAL AND ECONOMIC ISSUES IN
SUBPRIME LITIGATION
Jennifer E. Bethel*
Allen Ferrell**
Gang Hu***
Discussion Paper No. 612
03/2008
Harvard Law School Cambridge, MA 02138
ABSTRACT
This paper explores the economic and legal causes and consequences of recent difficulties in the subprime mortgage market. We provide basic descriptive statistics and institutional details on the mortgage origination process, mortgage-backed securities (MBS), and collateralized debt obligations (CDOs). We examine a number of aspects of these markets, including the identity of MBS and CDO sponsors, CDO trustees, CDO liquidations, MBS insured and registered amounts, the evolution of MBS tranche structure over time, mortgage originations, underwriting quality of mortgage originations, and write-downs of investment banks. In light of this discussion, the paper then addresses questions as to how these difficulties might have not been foreseen, and some of the main legal issues that will play an important role in the extensive subprime litigation (summarized in the paper) that is underway, including the Rule 10b-5 class actions that have already been filed against the investment banks, pending ERISA litigation, the causes-of-action available to MBS and CDO purchasers, and litigation against the rating agencies. In the course of this discussion, the paper highlights three distinctions that will likely prove central in the resolution of this litigation: The distinction between reasonable ex ante expectations and the occurrence of ex post losses; the distinction between the transparency of the quality of the underlying assets being securitized and the transparency as to which market participants are exposed to subprime losses; and, finally, the distinction between what investors and market participants knew versus what individual entities in the structured finance process knew, particularly as to macroeconomic issues such as the state of the national housing market. ex ante expectations and the occurrence of ex post losses; the distinction between the transparency of the quality of the underlying assets being securitized and the transparency as to which market participants are exposed to subprime losses; and, finally, the distinction between what investors and market participants knew versus what individual entities in the structured finance process knew, particularly as to macroeconomic issues such as the state of the national housing market.
Deal Journal has yet to read “The Big Short,” Michael Lewis’s yarn on the financial crisis that hit stores today. We did, however, read his acknowledgments, where Lewis praises “A.K. Barnett-Hart, a Harvard undergraduate who had just written a thesis about the market for subprime mortgage-backed CDOs that remains more interesting than any single piece of Wall Street research on the subject.”
A.K. Barnett-Hart
While unsure if we can stomach yet another book on the crisis, a killer thesis on the topic? Now that piqued our curiosity. We tracked down Barnett-Hart, a 24-year-old financial analyst at a large New York investment bank. She met us for coffee last week to discuss her thesis, “The Story of the CDO Market Meltdown: An Empirical Analysis.” Handed in a year ago this week at the depths of the market collapse, the paper was awarded summa cum laude and won virtually every thesis honor, including the Harvard Hoopes Prize for outstanding scholarly work.
Last October, Barnett-Hart, already pulling all-nighters at the bank (we agreed to not name her employer), received a call from Lewis, who had heard about her thesis from a Harvard doctoral student. Lewis was blown away.
“It was a classic example of the innocent going to Wall Street and asking the right questions,” said Mr. Lewis, who in his 20s wrote “Liar’s Poker,” considered a defining book on Wall Street culture. “Her thesis shows there were ways to discover things that everyone should have wanted to know. That it took a 22-year-old Harvard student to find them out is just outrageous.”
Barnett-Hart says she wasn’t the most obvious candidate to produce such scholarship. She grew up in Boulder, Colo., the daughter of a physics professor and full-time homemaker. A gifted violinist, Barnett-Hart deferred admission at Harvard to attend Juilliard, where she was accepted into a program studying the violin under Itzhak Perlman. After a year, she headed to Cambridge, Mass., for a broader education. There, with vague designs on being pre-Med, she randomly took “Ec 10,” the legendary introductory economics course taught by Martin Feldstein.
“I thought maybe this would help me, like, learn to manage my money or something,” said Barnett-Hart, digging into a granola parfait at Le Pain Quotidien. She enjoyed how the subject mixed current events with history, got an A (natch) and declared economics her concentration.
Barnett-Hart’s interest in CDOs stemmed from a summer job at an investment bank in the summer of 2008 between junior and senior years. During a rotation on the mortgage securitization desk, she noticed everyone was in a complete panic. “These CDOs had contaminated everything,” she said. “The stock market was collapsing and these securities were affecting the broader economy. At that moment I became obsessed and decided I wanted to write about the financial crisis.”
Back at Harvard, against the backdrop of the financial system’s near-total collapse, Barnett-Hart approached professors with an idea of writing a thesis about CDOs and their role in the crisis. “Everyone discouraged me because they said I’d never be able to find the data,” she said. “I was urged to do something more narrow, more focused, more knowable. That made me more determined.”
She emailed scores of Harvard alumni. One pointed her toward LehmanLive, a comprehensive database on CDOs. She received scores of other data leads. She began putting together charts and visuals, holding off on analysis until she began to see patterns–how Merrill Lynch and Citigroup were the top originators, how collateral became heavily concentrated in subprime mortgages and other CDOs, how the credit ratings procedures were flawed, etc.
“If you just randomly start regressing everything, you can end up doing an unlimited amount of regressions,” she said, rolling her eyes. She says nearly all the work was in the research; once completed, she jammed out the paper in a couple of weeks.
“It’s an incredibly impressive piece of work,” said Jeremy Stein, a Harvard economics professor who included the thesis on a reading list for a course he’s teaching this semester on the financial crisis. “She pulled together an enormous amount of information in a way that’s both intelligent and accessible.”
Barnett-Hart’s thesis is highly critical of Wall Street and “their irresponsible underwriting practices.” So how is it that she can work for the very institutions that helped create the notorious CDOs she wrote about?
“After writing my thesis, it became clear to me that the culture at these investment banks needed to change and that incentives needed to be realigned to reward more than just short-term profit seeking,” she wrote in an email. “And how would Wall Street ever change, I thought, if the people that work there do not change? What these banks needed is for outsiders to come in with a fresh perspective, question the way business was done, and bring a new appreciation for the true purpose of an investment bank – providing necessary financial services, not creating unnecessary products to bolster their own profits.”
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