Do you remember the brouhaha over testimony by a senior executive in Countrywide’s mortgage servicing unit last year? It called into question whether mortgages had been conveyed properly to securitizations, which in turn would impair Bank of America’s ability to foreclose.
Testimony in a New Jersey bankruptcy court case provides proof of the scenario we’ve depicted on this blog since September, namely, that subprime originators, starting sometime in the 2004-2005 timeframe, if not earlier, stopped conveying note (the borrower IOU) to mortgage securitization trust as stipulated in the pooling and servicing agreement….
As we indicated back in September, it appeared that Countrywide, and likely many other subprime orignators quit conveying the notes to the securitization trusts sometime in the 2004-2005 time frame. Yet bizarrely, they did not change the pooling and servicing agreements to reflect what appears to be a change in industry practice. Our evidence of this change was strictly anecdotal; this bankruptcy court filing, posted at StopForeclosureFraud provides the first bit of concrete proof. The key section:
As to the location of the note, Ms. DeMartini testified that to her knowledge, the original note never left the possession of Countrywide, and that the original note appears to have been transferred to Countrywide’s foreclosure unit, as evidenced by internal FedEx tracking numbers. She also confirmed that the new allonge had not been attached or otherwise affIXed to the note. She testified further that it was customary for Countrywide to maintain possession of the original note and related loan documents.
Fortune examined hundreds of foreclosure documents to determine the validity of mortgage securitizations after Bank of America debunked testimony about them last fall. The results raise more questions than they answer.
Are Countrywide mortgage-backed securities really mortgage-backed? Do banks even have the legal right to foreclose on certain homes?
The very fact that this item “LPS fires back with motion seeking sanctions against Alabama attorney,” was treated as a news story by Housing Wire is further proof that Housing Wire is above all committed to promoting client and mortgage industry interests and only incidentally engages in random acts of journalism.
LPS is desperate to create a shred of positive-looking noise in the face of pending fines under a Federal consent decree, mounting private litigation, and loss of client business under the continued barrage of bad press. Housing Wire, who has LPS as one of its top advertisers, is clearly more than willing to treat a virtual non-event as newsworthy to help an important meal ticket.
If you know anything about litigation, particularly when small fry square off against large companies, it’s standard for the well funded party to engage in a war of attrition against the underdog. One overused device is to threaten or file for sanctions. Even when they are weak or groundless, they still waste opposing counsel’s time and energy.
Q. So through that corporate authority as
Exhibit 4 to this deposition, MERS assented to the terms
Of this assignment of mortgage?
A. Through me.
Q. So it was you that assented to the terms of
This assignment of mortgage.
A. The one in this case, yes.
Q. And no one else.
A. Correct
Q. And you signed as vice president of MERS
acting solely as a nominee for America’s Wholesale
Lender; is that correct?
A. Yes, it is.
Q. How did you know that MERS was nominee for
America’s Wholesale Lender?
A. By reviewing documentation.
Q. What documentation?
A. I don’t specifically recall what I reviewed
In this case to see that, to determine that, but I would
have reviewed either the mortgage or I would have
reviewed other documentation that would have established
that to me.
Q. So in this case you don’t remember a single
Document that you looked at that would establish the
Nominee status of MERS for America’s Wholesale Lenders;
Is that correct?
A. I don’t
Q. Did someone at America’s Wholesale Lender
Tell you that MERS was acting as the nominee?
A. No.
Q. Did someone at MERS tell you they were
Acting as Nominee for America’s Wholesale Lender?
A. NO.
Q. Was America’s Wholesale Lender in existence
On May 19, 2010?
A. don’t now.
Q. Did you check that before signing this
assignment of mortgage?
A. No.
<SNIP>
Q. Now, you’ve said you review the MERS
Website and you’ve seen documents like this, like
Composite Exhibit 6. Any reason why you wouldn’t review
the documents contained in Exhibit 6 before executing the
assignment of mortgage?
A. It’s not necessary.
Q. Why not?
A. Because it’s not. Because I decided it’s
not.
Q. You as vice president of MERS?
A. In every possible capacity as it relates to
This case.
Q. Did you sign this assignment of mortgage
after being retained as counsel for the plaintiff?
A. After my law firm was retained?
Q. (Nods head.)
A. Is that the question?
Q. Sure.
A. Yes.
Q. Okay. So you executed an assignment to be
Used as evidence in your case, correct?
A. Sure.
Q. Is that a yes?
A. It’s a sure.
Q. Is that a yes o a no?
A. You said sure earlier. Was that a yes or a
No?
Q. Okay. So…
A. It’s a yes.
Q. It’s a yes.
And were you aware when you signed the
assignment of mortgage that MERS was a defendant in this
Case?
According to AP, the court on Monday issued a high profile-case order in the matter of Pino v. Bank of New York Mellon. One of the issues in the case is whether there was a fraud on the trial court.
And we all now the original work behind this was none other than Law Offices of David J. Stern, who has recently shut down as of March 31, 2011.
On February 2, 2011 the Florida 4th DCA said
We conclude that this is a question of great public importance, as many, many mortgage foreclosures appear tainted with suspect documents. The defendant has requested a denial of the equitable right to foreclose the mortgage at all. If this is an available remedy as a sanction after a voluntary dismissal, it may dramatically affect the mortgage foreclosure crisis in this State. Accordingly we certify the following question to the Florida Supreme Court as of great public importance
At Lender Processing Services workers who signed tens of thousands of sworn foreclosure affidavits with someone else’ name were called “surrogate signers”, according to Cheryl Denise Thomas, a former LPS worker who admitted to notarizing as many as 1,000 sworn affidavits daily – often without witnessing the signature.
Thomas said despite “raised eyebrows” her supervisors never used the word “forge” and repeatedly told workers the practice of signing someone else’ name on a sworn affidavit was legal. Thomas detailed the company’s foreclosure document processing practices during a deposition in an Orange county foreclosure case on March 23.
that’s when they — well, upon us leaving
anyway, they took up our notary stamps and
everything and destroyed them. But I was
relieved of my duties once moved to
Gwinnett County.
Q. Who — who — I’m sorry, did I miss
that? Who destroyed those documents?
A. I can’t say exactly who destroyed
them. All I know is that Jeffrey
the supervisor in the signing room at that
times, he picked up everyone’s stamp, the
notaries’ stamps.
Q. He took your stamps?
A. He took our stamps. And — and
they were destroying them.
Q. How were they destroying them?
A. I don’t know how. He just said
they were picking up all the stamps, all
of the notary stamps. And they were going
to destroy them, because the company was
closing. And they were only suppose to be
used for that company.
Q. Would Litton have reached out to — I’m going to
13 call it MERS in place of Mortgage Electronic
14 Registration Systems. Would Litton have reached out to
15 MERS to execute this assignment?
16 A. Actually, Marti Noriega and Denise Bailey are
17 employed by Litton Loan Servicing. They have authority
18 to sign on behalf of MERS.
19 Q. Does either of those parties have authority to
20 sign on behalf of Accredited Home Lenders?
21 A. No, not to my knowledge.
22 Q. Do you know if Accredited Home Lenders was still
23 in place on the date that this assignment of mortgage
24 was executed?
THE WITNESS: I’m not certain of Accredited
2 Home Lenders’ status at this time.
3 BY MR. KORTE:
4 Q. As of April of 2009, are you aware if Accredited
5 Home Lenders was in bankruptcy?
6 A. I don’t know what their status was.
7 Q. Are there any other assignments of mortgage other
8 than this one as Composite Exhibit C that you’re aware
9 of?
10 A. No.
<SNIP>
Q. Well, is this Allonge a copy of the Allonge; or
3 is this the original Allonge copied with the correct
4 endorsement?
5 A. The only way I could verify that is to see the
6 actual, original note which is on file with the court.
7 Q. Do you know why the Allonges are different from
8 the one that was filed with the complaint and the one
9 that was filed with the court several months later?
10 A. No, I do not.
Q Have you reviewed the Pooling and
Servicing Agreement in this case?
A No, I haven’t.
Q It’s my understanding I believe it was
objected to being produced. So up till today, have
you reviewed any document that allows you to speak
on behalf of Bank of New York?
A I haven’t.
Q Have you spoken to anyone at Bank of New
York to confirm that you are allowed to speak on
behalf of a separate corporate entity here today?
A No.
Q So as you sit here, do you know whether
you have the authority from the Bank of New York to
testify to these matters and to bind the Bank of New
York as a corporation?
A No.
Q Okay. And let me go back before I get
into the question one. You are not an officer of
the Bank of New York, correct?
A That’s correct.
Q You’re not a director of the Bank of New
York?
A Correct.
Q You’re not a managing agent of the Bank of
New York?
A Correct.
<SNIP>
Q What I’m getting at is the ownership of
the actual note and mortgage, not the servicing, but
the ownership. Do you have any other document that
would either confirm or contest whether
NationsCredit Mortgage Corporation of Florida owned
this note and mortgage in order to assign it as set
forth in Exhibit 2?
A Not that I know of
<SNIP>
Q So again, do you have anything at all that
suggests that NationsCredit Home Equity Services
Corporation ever owned this note?
A I don’t.
<SNIP>
Q Do you agree that the Bank of New York
lacked standing to file the 2004 case?
A Can you be more specific on your question?
Q Do you agree that the Bank of New York did
not own the note and mortgage at the time it filed
the 2004 case?
A Well, I can say that there’s no recorded
document showing that date.
<SNIP>
Q Do you agree that the lack of standing was clear? A No.
Q Why not? A Because of the overlapping of dates and
the obvious issues with the assignment chain, it’s not clear that it was straightforward.
Foreclosure proceedings in courts nationwide have exposed a swamp of fraudulent documents, and in some cases — though perhaps far too few — those bad docs have sunk attempts by banks to take people’s homes.
In a reflection of how bad things have gotten, lenders are asking judges to “ratify” foreclosures done with robo-signed documents, the Palm Beach Post reported on Saturday. While such“ratification” would not, as a matter of law, mean much, the Post says, it might discourage people from challenging the foreclosures.
With luck, two recent developments may help really clean up the fraud in the Sunshine State. First, an appeals court has asked the Florida Supreme Court to clarify judges’ power to address the fraud, and second, the Florida Bar Association is finally taking a stand.
Asking for Power to Punish Foreclosure Fraud
A Palm Beach county homeowner fighting alleged foreclosure fraud has ended up before the Florida Supreme Court.
An appeals court last week requested that the high court consider the case of Greenacres homeowner Roman Pino as a matter of “great public importance.” The decision by the 4th District Court of Appeal in West Palm Beach was unusual as neither the bank nor the homeowner requested such a review.
“We conclude that this is a question of great public importance, as many, many mortgage foreclosures appear tainted with suspect documents,” the appeals court wrote in certification to the Supreme Court.
Should the case be accepted by the Florida Supreme Court and a decision rendered in favor of Pino, thousands of cases could be impacted as allegations of document fraud run rampant throughout the state.
JUDGE POLEN: I’m afraid I’m not following
that. David Stern’s client at the time was BNY
Mellon Bank, right?
MR. NIEVES: Yes.
JUDGE POLEN: Okay. And that’s evidence of
what, an assignment to a bank?
MR. NIEVES: Basically, the law firm
manufactured evidence for the client’s case.
JUDGE POLEN: Okay.
MR. NIEVES: It was signed and executed by
Cheryl Samons, who works for David Stern, and
executed the assignment solely for the litigation,
and, in the assignment, posed as an officer of a
different entity.
<SNIP>
MS. GIDDINGS: Well, Your Honor, if you look at
the allegations that they have made, almost all of
those allegations pertain to a different case.
They’re not this particular case. I don’t know what
that document — what occurred in that document. But
I think this court is probably going to have a number
of cases that come up before it where that issue
is — it may be at issue in subsequent proceedings.
And when you reopen — if you’re going to reopen
those cases, you have to make sure that you’re
reopening it for something that is material.
JUDGE FARMER: Fraud on the Court is not
material?
MS. GIDDINGS: Your Honor, fraud on the
Court —
JUDGE FARMER: Publishing false documents is
not material?
<SNIP>
MS. GIDDINGS: Because there was no affirmative
relief obtained in this case, Your Honor. And, in
fact, the relief was that Mr. Pino has been living in
the house for a long time, apparently without making
any payments. And I understand your concerns, Your Honor.
But I’m urging you to consider this case in the grand
scheme of things. If you allow courts to go back and
open up all of these cases, when it’s clear on the
face that there was no affirmative relief obtained,
or that the affirmative relief would not have been
material, then you’re going to create chaos in the
court system.
JUDGE FARMER: So, are you suggesting that this
fraud has been that widespread that it —
MS. GIDDINGS: Your Honor, I’m not
acknowledging that any fraud occurred. I think that
there is — we all know —
JUDGE FARMER: Why would we shrink — as a
court system, why would we shrink, no matter how many
cases it might involve, from looking out for attempts
to defraud courts to publish and utter and use false
instruments? Why wouldn’t we be most vigilant?
A We don’t work in foreclosures.
Q You don’t work in foreclosures?
A No.
Q You don’t sign notices of default starting
foreclosures?
A I sign notices of default, yes.
Q And what do you understand the effect of a
notice of default is?
A It starts the clock ticking on the
formal foreclosure period.
Q But that is not working in foreclosures is your
testimony under oath here today on this video?
A Correct.
Q Does a notice of default put the property in
foreclosure?
A It starts the formal process of the foreclosure
time frames.
<SNIP>
Q What documents do you review prior to signing a
notice of default?
A We don’t review any documents.
Q What documents are provided to you in
connection with a loan where a notice of default t is
presented to you for your signature?
A Nothing.
<SNIP>
Q Let’s look at the second sentence there. It
says the amount is $9,751.03 as of 10/17/2007 and will
increase until your account becomes current. At the time you signed this document you had
absolutely no knowledge whether that was true; correct?
A Correct.
Q On the second page, the last full paragraph
above your signature line, do you see that, that by
reason thereof, the present beneficiary under such deed
of trust has executed and delivered to the duly
appointed trustee a wri t ten declaration of default and
demand for sale. You don’t know whether that was ever true, do
you?
A No.
<SNIP>
Q So to be clear, you receive an e-mail from LPS
that has as an attachment to it a notice of default?
A Yes.
Q That has names on that notice of default that
Ticor Title does not have an agency relationship with directly?
A Correct.
Q Correct?
A Right.
Q And then you sign the notice of default without
verifying the accuracy of any information in that notice
of default and cause it to be recorded?
A Correct.
4 Q. You contend that Exhibit 1 is the document
5 that authorizes you to sign on behalf of Countrywide Home
6 Loans Servicing LP?
7 A. Yes.
8 Q. Okay. How so?
9 A. Countrywide Financial Corporation
10 actually — let me correct myself.
11 The plaintiff, as listed in this particular
12 case, is owned by Countrywide Financial Corporation.
13 It’s one of their entities.
14 Q. Okay. And how do you come to that
15 information?
16 A. Because I know it. I’ve been doing it for
17 a long time. I’ve — I don’t remember at what point in
18 time I found out that knowledge, but I’ve had it.
19 Q. Okay. Now, is Countrywide Home Loans
20 Servicing LP, to your knowledge, a separate corporate
21 entity from Countrywide Financial Corporation?
22 A. I don’t know.
<SNIP>
1 Q. And was that the situation back in December
2 of 2008 when you executed the assignment?
3 A. Yes. 4 Q. Okay. At that time, who was the owner of
5 the beneficial interest in the mortgage?
6 A. The beneficial interest in the note was
7 held by Fannie Mae. The interest in the mortgage was as
8 to, arguably, the interest in the mortgage was both
9 entities, the plaintiff and the Fannie Mae. 10 Q. Do you have any documents establishing your
11 authority to execute any assignments on behalf of Fannie
12 Mae?
13 A. Did I bring them? What? Say that again.
14 Sorry. 15 Q. Do you have any documents indicating your
16 authority to execute assignments on behalf of Fannie Mae?
17 A. I don’t know. 18 Q. Fannie Mae — excuse me.
19 The mortgage is to secure the note, right?
20 A. The mortgage follows the note, yes. 21 Q. Okay. And if Fannie Mae has the note, they
22 have to transfer or assign their interest in that note —
23 MR. ROSENQUEST: Object to form.
24 BY MR. FLANAGAN: 25 Q. — to someone else.
<SNIP>
20 Q. Okay. Does the name R.K. Arnold mean
21 anything to you?
22 A. No. 23 Q. Do you know Mr. Arnold, who is the
24 president of MERS?
25 A. No. 1 Q. You never heard of him?
2 A. No. 3 Q. If he stated that in order to be a
4 certifying officer and sign an assignment on behalf of
5 MERS somebody needed to pass and complete an examination,
6 is that something that is familiar to you?
7 A. It’s not familiar to me, no. I don’t know. 8 Q. Okay. That was not something that you had
9 to do.
10 A. I did not do that. 11 Q. Okay. And if he’s saying that, if that was
12 a rule or a qualification, that was something that was
13 not made known to you.
Before you go to the deposition, take a look at R. K. Arnold’s reply to one of Senator Brown’s questions on the hearing for “Problems in Mortgage Servicing From Modification to Foreclosure” on November 15, 2010.
17 Q. Okay. And how is LPS paid? Are they paid by
18 the attorney? Are they paid by the servicer who’s
19 asked the attorney to perform that service?
20 A. It depends on the service. For many
21 services, they are — the model that we operate under
22 is a vendor supportive model, “vendor” meaning the
23 attorney office would pay for that service. There are
24 some support services that the servicer pays for
25 directly.
Page 22
1 Q. So in your scenario that you just gave me a
2 few minutes ago, a law firm drafts a document, and it’s
3 sent on to LPS to see whether or not it’s appropriate
4 for LPS to sign the document. The law firm then pays
5 LPS for that service? That’s considered a support
6 service?
7 A. That’s — that’s part of the — Yeah.
8 Correct. That would be one of the support services it
9 would provide, and part of what the fee they would pay
10 would include that activity.
11 Q. Okay. And are there also payments made for
12 using the software and the platform?
13 A. There are payments made. That’s part of the
14 technology agreement. There is a technology fee
15 assessed for each, we call it a referral, but it,
16 essentially, would be a legal action of some sort or an
17 action. It’s not always a legal action. But for every
18 referral type there is a fee, and that fee ranges
19 between $5 and $75, depending on the activity to be
20 performed and the technology in play or processes in
21 play to track it.
22 Q. Okay. So, for example, is LPS paid when a
23 servicer makes a referral to a law firm within the
24 network to do — perform some service?
25 A. Yes. LPS is paid upon referral.
Alden Berner, Legal Process Specialist Wells Fargo Home Mortgage. Signed verifications of complaints.
Courtesy of IceLegal.com
Excerpts:
8 Q. Did you do anything to attempt to
9 verify whether or not the original note and mortgage
10 were actually in the custody of the trustee by the
11 time the closing date for the trust occurred?
12 MR. WINSTON: Object to form.
13 THE WITNESS: No.
14 BY MR. FLANAGAN: (resumed)
15 Q. Do you even get involved in that at
16 all?
17 A. No.
18 Q. Have you seen any documents that
19 establish what the relationship is between HSBC Bank
20 and Wells Fargo Home Mortgage?
21 MR. WINSTON: Object to form.
22 THE WITNESS: No.
23 BY MR. FLANAGAN: (resumed)
24 Q. Do you know how it is that Wells Fargo
25 Home Mortgage came to be selected to do the
1 verification for HSBC Bank in this particular case,
2 the case?
3 MR. WINSTON: Object to form.
4 THE WITNESS: No.
5 BY MR. FLANAGAN: (resumed)
6 Q. Do you know if there is some document
7 that designates you to be the person to verify on
8 behalf of HSBC Bank.
9 MR. WINSTON: Object to form.
10 THE WITNESS: Me personally?
11 MR. FLANAGAN: Yes, sir.
12 THE WITNESS: No.
13 BY MR. FLANAGAN: (resumed)
14 Q. How about for Wells Fargo Bank, NA, is
15 there any document that you’re aware of that
16 designates you to have the authority to sign these
17 verifications on behalf of Wells Fargo Bank, NA?
18 MR. WINSTON: Object to form.
19 THE WITNESS: No, but I don’t need to,
20 because I’m an employee of Wells Fargo Home
21 Mortgage, which is owned by Wells Fargo Bank, N A.
22 BY MR. FLANAGAN: (resumed)
23 Q. Are they a subsidiary, as far as you
24 know?
25 A. Yes.
Q. So this doesn’t necessarily mean
3 that someone physically picked up the file
4 from LPS; correct?
5 A. My understanding is that this is
6 a note that automates when the attorney
7 has confirmed receipt through new image.
8 Whether that’s manual or not, I couldn’t
9 say based on the notes. And then new
10 image stamps into the LPS Desktop
11 confirming that NIE ID number 0966 and on
12 was pulled in, those documents were
13 received by the attorney.
14 Q. Does LPS have any employees at
15 the Steven J. Baum law firm?
16 A. Not that I’m aware of.
<SNIP>
Q. This is from the Steven J. Baum
law firm; correct?
3 A. It appears to be.
4 Q. Would you have any reason to
5 doubt that?
6 A. No.
7 Q. And could you tell me what this
8 entry represents.
9 A. To the best of my understanding,
10 they have user has completed a POA
11 requisite data form, exactly what it says.
12 I guess I couldn’t give you a full answer.
13 I don’t manage this process, but it
14 appears they are requesting something.
15 Q. So just start me off, POA
16 underscore requisite, what does that stand
17 for?
18 A. I could guess.
19 Q. Is that a category or a type of
20 document?
21 A. Again, I could guess.
22 Q. I don’t want you to guess, but
23 can you make an educated guess?
24 A. Power of attorney.
25 Q. Who at LPS would have a better
understanding of this process? You said
3 it’s not really you.
4 A. I don’t know.
5 Q. Let’s go to entry two hundred
6 fifty-one dated 11/4/08. User has updated
7 the system for the following. Power of
8 attorney requested, completed on 11/4/08.
9 Do you see that?
10 A. Yes.
11 Q. Can you tell me what that entry
12 is.
13 A. I could give you an educated
14 guess.
15 Q. Go ahead.
16 A. My educated guess would be the
17 attorney has requested a power of
18 attorney.
19 Q. From whom?
20 A. From that note, I couldn’t say
21 for certain. But below the secondary
22 note, it seems to indicate JP Morgan to
23 Scott Walter.
24 Q. Who is asking for that? It’s
25 kind of written in the passive.
Who’s actually asking for the
3 power of attorney?
4 A. Appears to me from the notes
5 that Steven J. Baum’s office is making
6 this request.
<SNIP>
A. It appears to be Steven J. Baum
3 noting the file, memorializing that they
4 have prepared an assignment, they have
5 uploaded it into the LPS Desktop to be
6 reviewed and executed, and that it isn’t
7 back yet. 8 Q. What does it mean assignment was
9 received not signed, who’s receiving that?
10 A. I wouldn’t know.
11 Q. Well, do you read this as the
12 assignment is not signed?
13 A. I read it as an assignment is
14 not signed or, let me better state what I
15 meant to say, is that a signed assignment
16 hasn’t been received by Steven J. Baum. 17 Which assignment though I couldn’t tell
18 from this note.
19 Q. Would this assignment be signed
20 by LPS; is that what this is saying?
21 A. It appears that the attorney is
22 stating that.However, I can’t tell you
23 whether LPS would have signed this
24 document or not without seeing the
25 document that the note’s referencing.
Q. Okay. Do you know how many — on behalf of
2 how many entities you are authorized to sign documents?
3 A. I don’t have the exact number in my head.
4 Q. Can you give me your best estimate?
5 A. More than 20.
6 Q. Okay. And how often on a daily basis do you
7 execute documents?
8 A. Once a day.
9 Q. And how many do you typically sign a day?
10 A. Less than three.
11 Q. Okay. And can you describe to me the process
12 by which you receive these documents for signature?
13 A. Sure. I am delivered, via an LPS employee
14 courier, a document, and I’m advised that it is to be
15 executed. The group that receives the document request
16 from the agent reviews the document per our protocols
17 and procedures. That document is then determined that
18 LPS can execute the document.
19 Based on the various signing authorities, it
20 will be determined that I will be the one authorized to
21 sign it. It will be delivered to me. I will review
22 the document. I will ensure that I do have signing
23 authority for the document. I will verify that the
24 document is what it says it is. Then while they’re
25 watching me, I will execute the document. It is put
back — it is put into a manila envelope, and it is
2 taken away from me.
3 Q. And when you were signing the document in
4 front of this messenger, is that person the notary?
5 A. I’m unaware if they are the notary or not,
6 but they are within the same department.
7 Q. Okay. Do you ever sign a notary log?
8 A. I don’t recall ever signing one.
9 Q. Do you ever keep track of the documents that
10 you sign?
11 A. No.
12 Q. And I meant personally.
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