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O. Max Gardner lll: The Rules of the Road for Securitization of Residential Mortgage Loans

O. Max Gardner lll: The Rules of the Road for Securitization of Residential Mortgage Loans


Written by: -

The term “Mortgage Note” or “Note” refers to the promise to pay signed by the homeowner or obligor.

The term “Mortgage” refers to the real estate security instrument (mortgage or deed of trust) that must be filed with the local land registry to perfect the rights of the holder of the note and that is subject to the Statute of Frauds.

Note that Standard Fannie and Freddie Uniform Instruments cross-reference the note and the mortgage and provide that a breach of covenants in either document provides right to accelerate balance due and declare a default.

State law determines how mortgages travel—always travel by assignment due to statute of frauds.  An assignment is a conveyance of a security interest in real property.

State law governs the necessity to record assignments.  Some state laws have been amended to accommodate MERS, but not that many.

Failure to record an assignment is a matter of priority and perfection if a bankruptcy is filed

[AVVO]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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Assured Guaranty files new claims against JPMorgan

Assured Guaranty files new claims against JPMorgan


This will never end and the fraud will go on forever with no end in sight.

 

REUTERS-

Bond insurer Assured Guaranty Ltd filed new claims against JPMorgan Chase & Co over a mortgage-backed security sold by Bear Stearns, saying more than 35 witnesses have come forward to testify about how loans in the $337 million transaction were misrepresented.

The lawsuit contends Bear Stearns and its EMC mortgage arm, acquired by JPMorgan after their collapse in 2008, knew the pool of more than 6,000 home-equity lines of credit that served as collateral for the investment was filled with defective loans.

[REUTERS]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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Texas Homeowners File Class Action Against Wells Fargo Alleging Constitutional Violations, Home Equity Loan Modifications

Texas Homeowners File Class Action Against Wells Fargo Alleging Constitutional Violations, Home Equity Loan Modifications


IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION

DAVID A. HAWKINS, and TRACY J.
HAWKINS, on behalf of themselves
and all others similarly situated,
Plaintiffs

v.

WELLS FARGO BANK, N.A.,
Defendant

Excerpt:

Defendant made Texas home equity loan modifications that did one or
more of the following in violation of the Texas Constitution’s homestead protection
provisions: (1) turned past-due interest into new principal; (2) featured a loan-to-value
ratio to a figure above 80%; and (3) failed to include mandatory disclosures concerning
the protections afforded by the Texas Constitution concerning home equity loans. These
problems are unique to home equity loans, as opposed to original purchase-money
mortgage loans, which are not at issue in this case.

[ipaper docId=67791304 access_key=key-qngqi8undph35k0whfc height=600 width=600 /]

 

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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FISETTE v. KELLER | 8th Circuit BAP Okays ‘Chapter 20′ Lien Stripping on Unsecured Homestead 2nd Mortgage

FISETTE v. KELLER | 8th Circuit BAP Okays ‘Chapter 20′ Lien Stripping on Unsecured Homestead 2nd Mortgage


Via: Max Gardner’s Bankruptcy Boot Camp-

This is an important ruling for bankruptcy attorneys and their clients in Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota and South Dakota, some of whom have been unable to lien strip as local judges waited for authority from above.

United States Bankruptcy Appellate Panel
FOR THE EIGHTH CIRCUIT

No. 11-6012

In re:
Michael James Fisette,
Debtor.

Michael James Fisette,
Debtor – Appellant,

v.

Jasmine Z. Keller,
Trustee – Appellee.

EXCERPT:

ISSUES

The issue on appeal is whether the bankruptcy court may confirm the debtor’s
plan which provides for the avoidance of two junior liens on the Debtor’s principal
residence. In particular, we consider whether: (1) 11 U.S.C. § 1322(b)(2) prevents a
debtor from modifying the rights of junior lienholders of liens on his principal
residence if the value of the residence is less than the amount owed to the senior
lienholder; and (2) if not, whether such modification is contingent upon the debtor’s
receipt of a Chapter 13 discharge.

[ipaper docId=63547013 access_key=key-1iz7pehmkvq3k9g16sqa height=600 width=600 /]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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Foreclosed? The tax man may want his cut

Foreclosed? The tax man may want his cut


Via CNN MONEY

NEW YORK (CNNMoney) — Did you lose your house to foreclosure this year? Did your lender forgive some of your mortgage debt because the house sold for less than it the mortgage balance?

If so, you could be facing a big tax hit.

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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READ ORDER | JPMorgan loses court ruling over ‘loan putbacks’ Syncora Guarantee Inc v. EMC Mortgage Corp

READ ORDER | JPMorgan loses court ruling over ‘loan putbacks’ Syncora Guarantee Inc v. EMC Mortgage Corp


You can read about this from REUTERS

* Syncora can pursue claims based on entire loan pool

* Insurer need not show breaches of individual loans

NEW YORK, March 28 (Reuters) – JPMorgan Chase & Co (JPM.N) could be forced to repurchase thousands of home equity loans, after a judge ruled in favor of a bond insurer that argued it could build its case based on a sampling of loans.

The ruling against EMC Mortgage Corp, once a unit of Bear Stearns Cos, comes amid many lawsuits seeking to force banks to buy back tens of billions of dollars of mortgage and other home loans that went sour. JPMorgan bought Bear Stearns in 2008.

You may read the court Order below:

SYNCORA GUARANTEE INC., f/k/a XL Capital Assurance Inc.,
v.
EMC MORTGAGE CORP.,

No. 09 Civ. 3106 (PAC).

USDC, S.D. New York.

March 25, 2011.

OPINION & ORDER


HONORABLE PAUL A. CROTTY, United States District Judge.

This breach of contract lawsuit arises out of a securitization transaction (“Transaction”), involving 9,871 Home Equity Line of Credit (“HELOC”) residential mortgage loans, which were purchased and used as collateral for the issuance of $666 million in publicly offered securities (“Notes”). (Mem. in Supp. Mot. to Am. 3). Defendant EMC Mortgage Corp. (“EMC”) aggregated the HELOCs, sold the loan pool to the entity that issued the Notes, and contracted with Plaintiff Syncora Guarantee Inc., formerly known as XL Capital Assurance Inc., (“Syncora”) to provide a financial-guaranty insurance policy protecting the investors in the Note. (Id.) Syncora claims that EMC breached its representations regarding 85% of the loan pool. It now moves for partial summary judgment or, alternatively, a ruling in limine, that it was not required to comply with a repurchase protocol as the exclusive remedy for all such claims. The Court GRANTS the motion for partial summary judgment on the grounds that, in light of the broad rights and remedies for which Syncora contracted, any such remedial limitation would have to be expressly stated.

Continue below…

[ipaper docId=51773005 access_key=key-omatq6c8r86r535pfvu height=600 width=600 /]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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Home Equity Loans are hard to recover

Home Equity Loans are hard to recover


Debts Rise, and Go Unpaid, as Bust Erodes Home Equity

By DAVID STREITFELD NEW YORK TIMES
Published: August 11, 2010

PHOENIX — During the great housing boom, homeowners nationwide borrowed a trillion dollars from banks, using the soaring value of their houses as security. Now the money has been spent and struggling borrowers are unable or unwilling to pay it back.

The delinquency rate on home equity loans is higher than all other types of consumer loans, including auto loans, boat loans, personal loans and even bank cards like Visa and MasterCard, according to the American Bankers Association.

Lenders say they are trying to recover some of that money but their success has been limited, in part because so many borrowers threaten bankruptcy and because the value of the homes, the collateral backing the loans, has often disappeared.

The result is one of the paradoxes of the recession: the more money you borrowed, the less likely you will have to pay up.

“When houses were doubling in value, mom and pop making $80,000 a year were taking out $300,000 home equity loans for new cars and boats,” said Christopher A. Combs, a real estate lawyer here, where the problem is especially pronounced. “Their chances are pretty good of walking away and not having the bank collect.”

Lenders wrote off as uncollectible $11.1 billion in home equity loans and $19.9 billion in home equity lines of credit in 2009, more than they wrote off on primary mortgages, government data shows. So far this year, the trend is the same, with combined write-offs of $7.88 billion in the first quarter.

Even when a lender forces a borrower to settle through legal action, it can rarely extract more than 10 cents on the dollar. “People got 90 cents for free,” Mr. Combs said. “It rewards immorality, to some extent.”

Utah Loan Servicing is a debt collector that buys home equity loans from lenders. Clark Terry, the chief executive, says he does not pay more than $500 for a loan, regardless of how big it is.

“Anything over $15,000 to $20,000 is not collectible,” Mr. Terry said. “Americans seem to believe that anything they can get away with is O.K.”

But the borrowers argue that they are simply rebuilding their ravaged lives. Many also say that the banks were predatory, or at least indiscriminate, in making loans, and nevertheless were bailed out by the federal government. Finally, they point to their trump card: they say will declare bankruptcy if a settlement is not on favorable terms.

“I am not going to be a slave to the bank,” said Shawn Schlegel, a real estate agent who is in default on a $94,873 home equity loan. His lender obtained a court order garnishing his wages, but that was 18 months ago. Mr. Schlegel, 38, has not heard from the lender since. “The case is sitting stagnant,” he said. “Maybe it will just go away.”

Mr. Schlegel’s tale is similar to many others who got caught up in the boom: He came to Arizona in 2003 and quickly accumulated three houses and some land. Each deal financed the next. “I was taught in real estate that you use your leverage to grow. I never dreamed the properties would go from $265,000 to $65,000.”

Apparently neither did one of his lenders, the Desert Schools Federal Credit Union, which gave him a home equity loan secured by, the contract states, the “security interest in your dwelling or other real property.”

Desert Schools, the largest credit union in Arizona, increased its allowance for loan losses of all types by 926 percent in the last two years. It declined to comment.

The amount of bad home equity loan business during the boom is incalculable and in retrospect inexplicable, housing experts say. Most of the debt is still on the books of the lenders, which include Bank of America, Citigroup and JPMorgan Chase.

“No one had ever seen a national real estate bubble,” said Keith Leggett, a senior economist with the American Bankers Association. “We would love to change history so more conservative underwriting practices were put in place.”

The delinquency rate on home equity loans was 4.12 percent in the first quarter, down slightly from the fourth quarter of 2009, when it was the highest in 26 years of such record keeping. Borrowers who default can expect damage to their creditworthiness and in some cases tax consequences.

Nevertheless, Mr. Leggett said, “more than a sliver” of the debt will never be repaid.

Eric Hairston plans to be among this group. During the boom, he bought as an investment a three-apartment property in Hoboken, N.J. At the peak, when the building was worth as much as $1.5 million, he took out a $190,000 home equity loan.

Mr. Hairston, who worked in the technology department of the investment bank Lehman Brothers, invested in a Northern California pizza catering company. When real estate cratered, Mr. Hairston went into default.

The building was sold this spring for $750,000. Only a small slice went to the home equity lender, which reserved the right to come after Mr. Hairston for the rest of what it was owed.

Mr. Hairston, who now works for the pizza company, has not heard again from his lender.

Since the lender made a bad loan, Mr. Hairston argues, a 10 percent settlement would be reasonable. “It’s not the homeowner’s fault that the value of the collateral drops,” he said.

Marc McCain, a Phoenix lawyer, has been retained by about 300 new clients in the last year, many of whom were planning to walk away from properties they could afford but wanted to be rid of — strategic defaulters. On top of their unpaid mortgage obligations, they had home equity loans of $50,000 to $150,000.

Fewer than 5 percent of these clients said they would continue paying their home equity loan no matter what. Ten percent intend to negotiate a short sale on their house, where the holders of the primary mortgage and the home equity loan agree to accept less than what they are owed. In such deals primary mortgage holders get paid first.

The other 85 percent said they would default and worry about the debt only if and when they were forced to, Mr. McCain said.

“People want to have some green pastures in front of them,” said Mr. McCain, who recently negotiated a couple’s $75,000 home equity debt into a $3,500 settlement. “It’s come to the point where morality is no longer an issue.”

Darin Bolton, a software engineer, defaulted on the loans for his house in a Chicago suburb last year because “we felt we were just tossing our money into a hole.” This spring, he moved into a rental a few blocks away.

“I’m kind of banking on there being too many of us for the lenders to pursue,” he said. “There is strength in numbers.”

John Collins Rudolf contributed reporting.

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in Economy, helocComments (1)

CALIFORNIA Lawmakers| Banks refuse to testify at HELOC hearing

CALIFORNIA Lawmakers| Banks refuse to testify at HELOC hearing


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.


© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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Short sales not immune to debt collectors

Short sales not immune to debt collectors


DinSFLA here…take note on this “Banks usually have four years in which to file a deficiency judgment, but they can sell it to a third-party collection agency — “and the collection firms can chase you down for 20 years,” Davis said.”

This being said any of these fool third-party collection agencies that DO NOT do their due diligence will be in a world wind of a surprise! Now not only are they buying of fraud they will have a hard time getting repaid on fraud!

They are going to try to suck the living day lights out of us…Do NOT let your guard down.

ORLANDO, Fla. – July 6, 2010 – With more than half of the Central Florida’s homeowners owing more for their homes than the properties are worth, the question for some has become: How do I get out of this?

Of all the existing-home sales reported by Realtors in the core Orlando market in May, 23 percent were short sales. They are called “short” sales because the sales price come up “short” of, or less than, the amount owed on the mortgage.

What these homeowners, whose loans are “underwater,” may not realize is that they could successfully complete a short sale of their house but then face a lawsuit from their lender for not paying off the entire loan, a shortfall known as a “deficiency.”

At particular risk of being hit with such a debt judgment are owners of second homes and investment properties, homeowners who haven’t faced any kind of financial hardship, and owners who have a second mortgage.

“That’s going to be a huge problem moving forward in the next few years,” said Orlando lawyer Matt Englett, who specializes in home foreclosures. “These people who use Realtors to advise them on the transactions can end up facing deficiencies, and the deficiency notes will go to third-party collections agencies, and they will start suing and progressively pursuing those people.”

Homeowners have several options if they wish to avoid getting calls and lawsuits from debt collectors.

In a mortgage document called the “payoff letter,” a lender may include a blanket provision stating that it reserves the right to sue the seller at any time for unpaid mortgage debt. At the very least, Englett said, sellers need to make sure they do not give lenders that right.

Some lenders, particularly smaller ones, have been willing to state just the opposite — that they will not pursue any mortgage debt from the seller, he added.

Simply asking the lenders to cooperate by removing any wording about collections isn’t enough, Englett said. The seller is usually faced with building a case that details errors and omissions made by the lender in its mortgage documents, to gain leverage and force the lender to forgive the debt.

A new option that emerged in June is a federal program that calls on banks to forgive some of the mortgage debt of certain, qualified short-sale sellers. To qualify, sellers must:

Meet the criteria of the federal government’s Home Affordable Modification Program.

Have the house as their primary residence.

Face a financial hardship, and their mortgage payment must be more than 31 percent of their gross income.

The new program makes short sales a good option for homeowners facing a financial hardship, though it’s not meant for homeowners who can afford their mortgage but want to walk away from an upside-down loan, said Frank Rubino, vice president of the Chase Homeownership Center in Orlando.

“It’s not right. It’s not moral. It’s not the right thing to do,” Rubino said. “Why should customers look to the bank to substantiate a loss for the house they bought? … If they bought the house and sold it for $100,000 more than they paid, they wouldn’t share those profits with the bank.”

The decision of whether to pursue a former homeowner for outstanding debt varies from mortgage servicer to mortgage servicer, Rubino said, and can hinge on such things as whether the customer mismanaged his or her finances, Rubino said.

Sellers with a second mortgage face particular challenges if they try to walk away from a short sale without any remaining debt.

Jennifer Davis, a real estate agent for Lifestyles Home Sales Inc. of St. Cloud, said she recently almost lost a sale because of outstanding debt the seller owed on the house. Fortunately, she said, the buyer wanted the house badly enough to cover the outstanding note.

Banks usually have four years in which to file a deficiency judgment, but they can sell it to a third-party collection agency — “and the collection firms can chase you down for 20 years,” Davis said.

In cases where the seller has a second mortgage or can’t qualify for the federal programs, Davis said, she usually directs them to a real estate lawyer and a tax adviser.

Copyright © 2010, The Orlando Sentinel, Fla., Mary Shanklin, Knight Ridder/Tribune Business News. Distributed by McClatchy-Tribune Information Services.

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in Bank Owned, deficiency judgement, deficiency judgment, foreclosure, foreclosure fraud, foreclosures, mortgage modification, walk awayComments (1)

Couple says bank at fault in foreclosure proceeding

Couple says bank at fault in foreclosure proceeding


I think this is the case for many of us who needed the HELOC when times got tough or for an emergency.

A dispute over a foreclosure is headed for trial.

By: Judy Wiff, Pierce County Herald Published June 29 2010

A dispute over a foreclosure is headed for trial.

A jury trial is set for March 16-17, 2011, in a case brought by Wells Fargo Bank against Deborah and John Sherman II, 434 Court St. North, Prescott. The bank claims the Shermans failed to make payments and now owe $384,236.

According to the Shermans, they had a 10-year draw period on a line of credit, but when they went to withdraw funds, they found the bank had reduced the credit limit based on a “substantial decline” in the value of their property.

“The Shermans have never been behind on a payment and use the line of credit in the running of their business,” wrote their attorney as he challenged the foreclosure action.

Continue reading…here

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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The People of the State of California vs CountryWide Financial, Universal American Mortgage Company,

The People of the State of California vs CountryWide Financial, Universal American Mortgage Company,


Source: b.daviesmd6605

First Amended Complaint that lead to Countrywide Settlement. This is well written and shows the high pressure tactics without the ability to pay, over the top advertising.

The tactics are similar to the builder lenders who use the same tactics to create profits at the expense of the buyers. This was done with aggressive sales tactics, setting up homeowners to fail while collecting large fees at each level.

Universal American Mortgage the lender for Builder Lennar does the same, and it is mandatory to apply for their loan. There are restrictions of discounts only if their lender is used. Their loan advisors are real estate sales persons not financial lenders. It is steering at its best. Then the title company, insurance company, builder, lenders, escrow—all the same. It is really bad.

[ipaper docId=30868375 access_key=key-ntn5d3vhrh0i4gxlqel height=600 width=600 /]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in concealment, conspiracy, corruption, countrywide, foreclosure fraud, forensic mortgage investigation auditComments (0)


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