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

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


Via: Max Gardner

Are You PSA Literate?

.

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

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

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

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

(1) The holder of the instrument;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

April Carrie Charney

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



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A Foreclosure Film in the Making Awaits Final Scene

A Foreclosure Film in the Making Awaits Final Scene


American Banker-

What do an insurance agent in Tennessee, a homemaker in Ohio, a private investigator from Wisconsin and a helicopter stunt pilot in Hollywood have in common?  Well, for one thing, they’ve all participated in some fashion in “Foreclosure Diaries,” the documentary that my company, Pacific Street Films, has been producing, in fits and starts, since 2006.

When work first started on the film, the original tag was “Follow the Money,” and the road seemed to lead towards a dark and confusing destination. There was all this talk in the industry about scads of money to be made in servicing “subprime” loans.  There were seminars, conferences, it seemed all the rage. 

[AMERICAN BANKER]

image: macgasm.net

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



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Alison Frankel: How BofA could lose big if it wins MBIA regulatory challenge

Alison Frankel: How BofA could lose big if it wins MBIA regulatory challenge


Alison Frankel’s On The Case-

I’ve spent a lot of time talking about what I consider Bank of America’s risky gamesmanship in its multi-pronged litigation with the bond insurer MBIA, but it may be that I’ve underestimated that risk by focusing on the downside for the bank in MBIA’s breach of contract and fraud suit. Under a not-implausible scenario, BofA faces serious risk in its regulatory challenge to MBIA’s transformation that’s going to trial on May 14. And ironically, the risk comes not from losing the case — but from winning it.

According to a sophisticated and well-advised MBIA institutional investor that has devoted serious resources to analyzing the issue — trust me, even though the investor doesn’t want to broadcast its involvement, this is a seriously savvy player — if Bank of America and two French banks succeed in overturning MBIA’s 2009 split into separate muni bond and structured finance businesses, there’s a reasonable likelihood that BofA could wind up at the back of the line of MBIA claimants, waiting years for whatever scraps are left over from payouts to municipal bond insurance policyholders.

Here’s why. For all sorts of reasons…

[REUTERS ON THE CASE]

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Alison Frankel: NY AG’s curious new bid to intervene in $8.5 bl BofA MBS deal

Alison Frankel: NY AG’s curious new bid to intervene in $8.5 bl BofA MBS deal


Reuters Legal-

New York Attorney General Eric Schneiderman still wants a say in whether Bank of America’s proposed $8.5 billion settlement with Countrywide mortgage-backed securities investors should be approved by a state-court judge. The AG’s new intervention motion, filed more than seven months after Schneiderman first moved to join the case, makes the exact same arguments as the old motion, which was pending before New York State Supreme Court Justice Barbara Kapnick when the settlement was removed from state court to Manhattan federal court last August. There’s just one notable exception: The AG’s office “deleted” its explosive fraud counterclaims against Countrywide MBS trustee Bank of New York Mellon. Is playing nice (or, at least, nicer) enough to win the AG a seat at the table?

Those fraud counterclaims, as you’ll surely recall, caused quite a stir when Schneiderman’s office tacked them onto its original motion to intervene. One Manhattan business development official questioned the wisdom of attacking a trustee that was at least making an effort to respond to investors’ concerns and warned that the AG was endangering the city’s standing as the preferred home of financial institutions. BNY Mellon and the institutional investors backing the proposed $8.5 billion settlement responded in kind to the AG’s intervention motion, asserting that Scheiderman didn’t have standing to intervene because he’s not a Countrywide MBS investor.

[REUTER’S ON THE CASE]

[ipaper docId=88979010 access_key=key-1qpcvmn3n6t0p8xg505g height=600 width=600 /]

 

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NY pushes objection to BofA $8.5 billion mortgage pact

NY pushes objection to BofA $8.5 billion mortgage pact


Reuters-

Bank of America Corp’s proposed $8.5 billion mortgage bond settlement received fresh opposition on Tuesday from New York’s attorney general, who said the accord appears unfair to investors who may deserve to recover more.

Eric Schneiderman, the attorney general, filed papers on Tuesday asking a New York State Supreme Court justice for permission to intervene.

He had made the same request last August before the case moved to federal court. It returned to the state court in February.

The settlement announced last June arose from Charlotte, North Carolina-based Bank of America’s 2008 purchase of Countrywide Financial Corp, once the nation’s largest mortgage lender.

[REUTERS]

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CREDO: Tell President Obama: 55 investigators aren’t enough to investigate Wall Street criminals.

CREDO: Tell President Obama: 55 investigators aren’t enough to investigate Wall Street criminals.


Via CREDO

Back in January, President Obama announced during the State of the Union speech the creation of a new financial crimes task force to investigate the crimes and misdeeds that led to the economic collapse and “hold accountable those who broke the law.”

Yet, despite the enormity of the issue, its direct impact on millions of Americans and the widespread nature of crimes and wrongdoing, the new financial crime unit has been allocated a paltry 55 staff members to undertake this enormous task.1

And now we’re hearing from insiders in Washington DC, that the full complement of 55 promised investigators — which is already not nearly enough — haven’t even been deployed to the task force.

Election year promises aren’t nearly enough. President Obama needs to prove his commitment to the financial crimes task force is real and provide the task force with the resources it needs to investigate Wall Street criminals.

Tell President Obama: 55 investigators are not enough. We need 20 times more staffing to launch a real investigation into Wall Street’s crimes.

After the much smaller savings and loan scandal of the ’80s approximately 1,000 FBI agents and dozens of federal prosecutors were assigned to prosecute related cases2. And 100 FBI agents were tasked with investigating the Enron scandal3, which involved just one company and caused none of the economy-wide damage we’ve seen since the collapse of the housing bubble.

The 55 investigators promised to the financial crimes task force is not nearly enough. And to find out that President Obama hasn’t delivered on those investigators, let alone resourced the effort at the levels appropriate to the biggest financial fraud in U.S. history, is shocking.

President Obama’s record on Wall Street accountability is abysmal. But because of enormous grassroots pressure from activists like you and polling that suggests he needs to take on Wall Street as a part of his election campaign, we have a real opportunity to move President Obama to meaningful action on Wall Street accountability. Time, however, is running out.

President Obama’s first task force at the Department of Justice did little if anything to prosecute Wall Street for crimes that led to the financial crisis. But because of your activism, he announced a new task force and named progressive champion and New York Attorney General Eric Schneiderman one of its five co-chairs.

Now we need to pressure the White House to give that task force the resources it needs to pursue justice. Without sufficient staff to conduct thorough investigations, it’s hard to see how this task force could bring indictments quickly or even beforesStatutes of limitations run out.

Tell President Obama: 55 investigators are not enough. We need 20 times more staffing to launch a real investigation into Wall Street’s crimes.

The economic crisis we’re in demands a response commensurate with the damage done by Wall Street crooks. But the 55 promised investigators don’t even come close to being adequate. If the White House hasn’t even followed through on its promise of a paltry 55 investigators, it’s clear that massive pushback is needed to get the level of staffing we truly need to bring Wall Street criminals to justice.

Aside from the appointment of Attorney General Schneiderman, none of the other co-chairs of the new task force has done literally anything that achieves our goal of holding banks accountable or prosecuting bankers for criminal activity.

In fact, three of his co-chairs served on the earlier failed Department of Justice task force that the new investigation was created to supersede.

In an election year when we know the Obama reelection campaign wants to frame his race as opposing the candidate of the one percent, President Obama will be particularly sensitive to public perception of whether his efforts to hold Wall Street accountable are meaningful and represent the full force of his office.

Tell President Obama: 55 investigators are not enough. We need 20 times more staffing to launch a real investigation into Wall Street’s crimes.

We want, and our country needs, indictments. The collapse of the housing bubble led directly to the economic crisis we’re in. But not one of the Wall Street crooks who drove our economy off a cliff has gone to jail. And without aggressive investigations and prosecution for misconduct, none of them will.

President Obama needs to give the Department of Justice task force the resources required to launch a serious investigation that will bring about real accountability before the statutes of limitations run out for Wall Street’s crimes.

It’s been months already. We can’t waste any more time. We must act now before we lose our opportunity to do anything significant at all.

1. “Details Emerge of New Financial Fraud Unit ,” Huffington Post, 01-26-12.
2. FBI Deputy Director John S. Pistole’s statement before the Senate Judiciary Committee, 02-11-09
3. “In Past Financial Crises, Fewer Pursued In Courts,” NPR, 08-14-11.

http://act.credoaction.com/campaign/fraud_task_force/?rc=tw1

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The Magic of the Mortgage Electronic Registration System: It Is and It Isn’t

The Magic of the Mortgage Electronic Registration System: It Is and It Isn’t


“Never imagine yourself not to be otherwise than what it might appear to others that what you were or might have been was not otherwise than what you had been would have appeared to them to be otherwise.”1

Excerpt:

While MERS may be named as the actual mortgagee
or its equivalent on the security instrument, in
substance its role is that of a nominee or agent.23
The language in the mortgage generally states:
“‘MERS’ is Mortgage Electronic Registration
Systems, Inc. MERS is a separate corporation that
is acting solely as nominee for Lender and
Lender’s successors and assigns. MERS is the
mortgagee under this Security Instrument.”24 Here
then begins the magic that is MERS—the dual claim
that it is both a principal (mortgagee) and
nominee/agent of the lender/factual mortgagee.25
MERS undertakes these roles but never lends
money and never gives value for the mortgage, nor
does it benefit from the proceeds of foreclosure
and/or collection actions.26 Were MERS’s
involvement in the mortgage market insignificant,
it might not pose much of a legal problem;however,
MERS appears to be involved in sixty
million loans—roughly half of all U.S. home
mortgages.27 The legal role MERS attempts to fill
and MERS’s argument as to standing is: 1) provide
a mortgage clearinghouse and eliminate recording
obligations by having MERS itself act as mortgagee
of record;28 2) allow the promissory note
evidencing the debt to be transferred freely among
MERS members ad infinitum; and 3) when default
occurs, act as the nominee of the current note
holder and mortgagee of record (rejoining the two
interests) even though the current “lender” did
not appoint MERS as mortgagee and may never have
had the right to do so. Ultimately, the argument
is something akin to a merger argument where MERS
claims that the severed interests, that of
security interest and note, are recombined in MERS
at a later date even though it received those
interests from separate entities. As others have
pointed out, MERS is attempting to derive powers
as an agent greater than the sum of the powers of
its principals.29

[ipaper docId=86987723 access_key=key-2k44k0z1xng0exhlu51n height=600 width=600 /]

 

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



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The End of Mortgage Securitization? Electronic Registration as a Threat to Bankruptcy Remoteness

The End of Mortgage Securitization? Electronic Registration as a Threat to Bankruptcy Remoteness


The End of Mortgage Securitization? Electronic
Registration as a Threat to Bankruptcy Remoteness

John Patrick Hunt,
Richard Stantonz and Nancy Wallacex

August 10, 2011

Abstract

A central tenet of asset securitization in the United States|that assets are bankruptcy remote from their sponsors|may be threatened by innovations in the transfer of mortgage loans from the loan-originators (sponsors) to the legal entities that own the mortgage pools (the Special Purpose Vehicles (SPVs)). The major legal argument advanced in the paper is that because the mortgage is an interest in real property, the bankruptcy-remoteness rules applicable to real property, including x544(a)(3) of the Bankruptcy Code, create a risk to the bankruptcy remoteness of mortgage transactions unless proper recording occurs. We review the traditional mortgage transfer process and discuss why the real-property characteristics of mortgages makes them special. We then discuss how the chain of title transfer using traditional recorded assignment at the local jurisdiction helps to assure that the promissory note and the mortgage that are transferred into the SPVs are, indeed, bankruptcy remote from the loan originators and sponsors. We then discuss why the more recently introduced Mortgage Electronic Registration System (MERS) method of transfer introduces significant vulnerability into the mortgage transfer process and leads to a significant risk that bankruptcy remoteness will fail. Our arguments address scholarly and case-law theories of the legal foundations of achieving bankruptcy remoteness for mortgage transfers, the eligibility requirements for “true-sale” accounting treatment of transferred mortgages under Financial Accounting Standards (FAS 140), and the finance literature that addresses the economics of securitization through bankruptcy remoteness. We conclude with a first step toward policy prescriptions concerning possible promissory note and mortgage transfer processes that could achieve bankruptcy remoteness and the associated economic efficiency objectives of mortgage securitization.

[ipaper docId=86987573 access_key=key-2mds05j1ckkam3x529pq height=600 width=600 /]

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Max Gardner & Nye Lavalle Together in Concert – A Mandelman Matters Podcast

Max Gardner & Nye Lavalle Together in Concert – A Mandelman Matters Podcast


Mandelman Matters

It’s almost been 15 years since Max Gardner and Nye Lavalle met at a conference sponsored by National Consumer Law Center that was held in Colorado, and quickly found themselves viewed as, well… heretics might be the right word.  The two became fast friends based on their shared views related to the mortgage servicing industry… and I think both knew that one plus one was about to equal eleven.

Nye was a successful sports marketer and entrepreneur, credited with correctly predicting that Nascar and figure skating would draw huge crowds back in the 1990s, but after being forced to contend with his own mortgage mess, he focused on learning everything about the mortgage industry.  As Gretchen Morgenson said in her article about Nye that appeared recently in the New York Times“In hindsight, the problems he found look like a blueprint of today’s foreclosure crisis.”

It’s hard to imagine two people more tenacious that Nye and Max.  Nye became a shareholder  in Fannie and stayed on Fannie’s case for two years until finally the GSE hired a DC law firm to investigate his claims.  The 147-page report that resulted from that investigation verified that Nye’s suspicions were correct.

Having Nye Lavalle and Max Gardner together is a rare event.  Together, they would have to be considered the founding fathers of today’s foreclosure defense movement, so this is an opportunity to learn how it all began and where two of the country’s leading experts see things going from here.  Turn up your speakers because it’s time for a very special 2-part Mandelman Matters Podcast… Nye Lavalle & Max Gardner Together in Concert.

Head over to Mandelman Matters to listen to this excellent podcast!

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



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‘Whistleblower’ Lan Pham Says Mortgage Securitization Still an Issue for U.S. Homeowners

‘Whistleblower’ Lan Pham Says Mortgage Securitization Still an Issue for U.S. Homeowners


ABC-

Lan Pham, an economist fired by the Congressional Budget Office two years ago, is still asking whether the watchdog agency appeared to “diminish or deny” the problem of foreclosure fraud while providing analysis to Congress.

As lawmakers enter budget season in Washington D.C. and wrangle over House Republicans’ new budget blueprint, Pham is hoping to draw more attention to the housing market’s woes.

“Why is one of the most powerful government agencies that can determine the direction of the nation’s policies appearing to diminish or deny that the issue of mortgage securitization is a problem?” she said. “If it is a problem, we have a $7 trillion in mortgage-backed securities that has brought chaos to homeowners, whether or not they are in foreclosure.”

[ABC]

[ipaper docId=86245951 access_key=key-1qbo0nggi3s0p30uthwk height=600 width=600 /]

 

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



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Read Lan Pham’s letter to Sen. Chuck Grassley re: MERS/Securitization

Read Lan Pham’s letter to Sen. Chuck Grassley re: MERS/Securitization


LAN T. PHAM

February 23,2011

Senator Chuck Grassley
Ranking Member
United States Senate Judiciary Committee
135 Hart Senate Offrce Building
Washington, DC 20510

Re: Inquiry into Reprisal Action by the Congressional Budget Office

Dear Ranking Member Grassley:

At the suggestion of Mr. Gary Aguirre, I describe below the circumstances of my
discharge by the Congressional Budget Office and request your assistance to the extent you
believe there is something appropriate you could do on my behalf.

As the Congress grapples with the economic and budgetary challenges facing the nation,
the Congress relies on the Congressional Budget Office (CBO) to provide “objective” and “nonpartisan”
analyses to inform its policy decisions.l This mandate gives the CBO a unique status
and confers upon the agency an impression of credibility and authority, as its analyses can alter
the course of national policies. The CBO cultivates this image internally and externally, and
enjoys the protection ofthe press.

Yet, my brief time as a senior staffer financial economist at the CBO suggests that there
is room for doubt about this perception of an objective and non-partisan CBO. Alternative view
points are suppressed or questioned as “pessimistic” by CBO Director Doug Elmendorf.
Economic facts inconvenient to the CBO’s forecasts of economic growth, recovery and other
estimates are omitted or suppressed so the desired message may be delivered. For providing
truthful and correct analyses of the issues, I was abruptly fired after 2.5 months at the CBO.

Suppression of Alternative Views

In October 2010,I wrote about the conditions and developments in the banking sector
and mortgage markets. The events surrounding the collapse of the housing market triggered what
many consider to be the worst economic and financial crisis in 80 years since the Great
Depression. The effects from this market with $10 trillion in residential mortgage debt
outstanding exposed systemic risks and put into question the solvency of financial institutions
worldwide. In addition to the global response, the U.S. government and Federal Reserve have
responded with trillions of dollars in extraordinary fiscal and monetary stimulus, the bulk of
which was aimed at shoring up the banks and financial institutions.

I was repeatedly pressured by the CBO Assistant Director, Deborah Lucas, in charge of
the Financial Analysis Division to not write nor discuss issues in the banking sector and
mortgage markets that might suggest weakness in these sectors and their consequences on the
economy and households. Assistant Director Deborah Lucas explicitly sought assurances from
the Assistant Director in charge of the Macroeconomic Analysis Division that the issues I raised
would not lower the CBO’s forecasts of economic growth. More broadly, what emerges is a
pattern of suppression by the CBO to prevent public writings about the damage brought on by
the banking and financial sector and housing collapse. While disregardingfactual and empirical
evidence, the CBO leadership insisted:

  • o Statements could not be made attributing the decline in property tax revenues to
    foreclosures and the decline in home prices, which runs counter to common sense and
    the findings by the U.S. Senate Joint Economic Committee of the U.S. Congress.
  • o Foreclosures had no impact on home prices (negative extemalities, spillover effects).
    This runs counter to common sense, and a prominent national home price index by
    Corelogic in the CBO’s key database subscription showing clearly the distressed
    homes component of the index worsens home price declines.
  • o The decline in home prices had no impact on household wealth, which runs counter
    to common sense and the fact that the home is a significant asset or source of ‘wealth’
    for most households. According to the Federal Reserve, about $7 trillion in home
    equity evaporated in the housing collapse.
  • o The emerging foreclosure fraud problems in September 2010 were due to media
    “sensationalism”, “the kind of event of the moment where we should be adding
    skepticism, not just repeating the hype in the press” and discussingit “laclcs judgment
    about what is important’.

Let’s take a closer look at the implications of the unknown risks and liabilities of the
foreclosure fraud problems unfolding through the legal process, which led the nation’s largest
banks to suspend foreclosures nationwide. Issues at the heart of the foreclosure problems pertain
to securitization (pooling of mortgages that collateralize mortgage-backed securities “MBS”) and
the Mortgage Electronic Registration System (MERS), which purports to have legal standing on
electronic records of ownership on about 65 million or half of all mortgages in the country.

MERS, with Fannie Mae and Bank of America as founding members, facilitated Wall
Street’s ability to expedite the pooling of subprime mortgages into MBSs by bypassing standard
ownership transfer procedures as the housing bubble escalated, the collapse of which devastated
the economy and households. The CBO leadership suppressed and minimized concerns about
these issues, viewing these concerns in October 2010 as media “sensationalism” and “hype.”
Such statements if made public would raise serious questions about the credibility and
objectivity of the CBO, and the kinds of analyses that would be provided to Congress and
allowed to be made known to the public. This “hype” has entered the nation’s courtrooms:

  • o On January 7,2011, the Supreme Court of Massachusetts agreed with a lower court
    decision that invalidated the foreclosures actions of two of the largest banks on
    mortgages that were in MBSs; the legal right to foreclose was not proven.
  • o Courts in Florida have also followed suit.
  • On February 14,2011, U.S. Bankruptcy Judge Robert E. Grossman in Central Islip,
    New York rendered the MERS system invalid. ln rendering his decision, Judge
    Grossman acknowledged that his decision would have “significant impact.”
  • o On February 16,2011, MERS released a statement, an exce{pt which reads:
    “The proposed amendment will require Members to not foreclose in MERS’
    name…During this period we request that Members do not commence foreclosures in
    MERS’name.”

The implications have profound financial and economic consequences that would be of
compelling interest to Congress and the public, but the CBO sought to silence a discussion of
such risks, that in reality, have been mateiralizing. These risks put into question the ability of
investors or bondholders to make claims on the collateral (the homes) that underlies trillions of
dollars in MBSs, the bulk of which are now guaranteed by the govemment-sponsored enterprises
(“GSEs” Fannie Mae and Freddie Mac). This affects $10 trillion in residential mortgage debt
outstanding, of which $7 trillion in mortgage-backed securities (MBSs) are backed by about 65
million homes, and roughly $3 trillion is in the form of mortgage loans on bank balance sheets.

The $7 Trillion MBS Problem -Foreclosure Problems and Buy Backs

Banks, Private Label MBSs. About $1.5 trillion MBSs are bank-issued, private label
MBSs that were collateralized by primarily subprime mortgages, $330 billion of which is
delinquent. Banks have publicly acknowledged these risks by recently increasing reserves
against repurchase of bad mortgages from investors and litigation costs. As of third quarter 2010,
the nation’s largest four banks – Bank of America, JP Morgan Chase, Citigroup, and Wells Fargo
– have reserved about $10 billion for potential mortgage buy back demands,l a “miniscule”
amount given the $330 billion in delinquent mortgages. The combined net worth of the largest
four banks is about $700 billion.

The foreclosure problems may put even greater pressure on banks as some state courts
and legislation have made dents into the legal foundation of MERS. The implication is that
investors may be holding trillions in MBSs that are unsecured, which places even gteater
pressure on banks for mortgage buy-backs. Banks may also face greater losses in not having the
legal authority under MERS to foreclose and liquidate the collateral. These issues (among others)
are concentrated among a handful of the largest banks that hold about three quarters of the
nation’s banking assets, a concentration that has been deemed a systemic risk to the nation’s
economic and financial system. The CBO dismissing such issues prevents an analysis of the
risks, so that the public may be forced again to shoulder the consequences for which they have
not been a given a voice or a choice.

GSEs, Agency MBSs. The other $5.5 trillion MBSs are issued or guaranteed by Fannie
Mae and Freddie Mac, whose fate is currently being debated by policy makers. During the first
nine months of 2010, Fannie Mae repurchased about $195 billion in delinquent loans from its
MBSs;2 Freddie Mac faced $5.6 billion in buy back demands.3 The amount of these repurchases
in less than one year alone would wipe out Bank of America, the largest bank in the country.

The GSEs hold $266 billion in bank-issued private label MBSs, which have experienced the
highest rates of default. Recently, Bank of America paid $2.8 billion to the GSEs to settle $7
billion in mortgage buy-back requests, a private transfer of loss to the public that remains
unbeknownst to the public.

A discussion of these and other issues were not acceptable to the CBO leadership, but
unrealistic assumptions are encouraged and significant facts inconsistent with their
predetermined views are overlooked in providing economic analyses and estimates to Congress.
For instance, the CBO leadership appeared panic-stricken when I suggested that interest rates
were likely to rise in early November 2010 despite the Federal Reserye’s quantitative easing
programs, and what that may mean for example, to an already weakened housing market. Indeed,
interest rates have risen sharply since then from 4.3Yoto 5.}Yo onthe 30 year fixed-rate mortgage
“FRM” (as of 2117111). Providing a correct assessment did not seem to matter.

For presenting a truthful and correct assessment of where things stood, I was fired. I
know other economists who have been pressured to fall in line with the leadership, but are afraid
to voice their concerns for fear that it could endanger their careers. I am prepared to identify
them, but only with your assurance that their identities will be remain confidential at this time.

I deeply appreciate your taking the time to consider the information I have placed before
you.

Sincergly,

Lan T. Pham, Ph.D.

Attachments

New York Times Article
Time Line
Mortgage Forecast Memo
Banking Forecast Memo
Banking Forecast Memo: Revision of Key Points

[ipaper docId=86245951 access_key=key-1qbo0nggi3s0p30uthwk height=600 width=600 /]

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STUBBS v. Bank of America, BAC, Fannie Mae | GA Nothern District Court “BAC …was not the ‘SECURED CREDITOR’ entitled to foreclose”

STUBBS v. Bank of America, BAC, Fannie Mae | GA Nothern District Court “BAC …was not the ‘SECURED CREDITOR’ entitled to foreclose”


h/t NYE LAVALLE

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION

GARY STUBBS,
Plaintiff,

v.

BANK OF AMERICA, BAC HOME
LOANS SERVICING, LP, and
FEDERAL NATIONAL MORTGAGE
ASSOCIATION,
Defendants.

EXCERPT:

Plaintiff has alleged facts making it plausible that Fannie Mae was in fact
the secured creditor at the time of the foreclosure and has alleged that no
assignment to Fannie Mae was filed prior to the time of sale as required by
O.C.G.A. § 44-14-162(b). Therefore, based on the allegations in the amended
complaint, BAC evaded the most substantive requirements of Georgia’s
foreclosure statute in that (1) it was not the secured creditor entitled to foreclose
despite providing a notice letter affirmatively representing it was the creditor;
and (2) it failed to file the assignment of the security deed to the secured creditor
in the county deed records prior to the foreclosure. See O.C.G.A. § 162(b);
Weems v. Coker, 70 Ga. 746, 749 (Ga. 1883); Cummings v. Anderson, 173 B.R.
959, 963 (Bankr. N.D. Ga. 1994).3 The Court accordingly DENIES the motion to
dismiss Plaintiff’s claim for wrongful foreclosure based on failure to comply with
Georgia foreclosure law.

For whatever reason scribd download is not permitting this to be downloaded.

Please use this link to download Stubbs_v._Bank_of_America

[ipaper docId=85835317 access_key=key-p289vkcj1anvmg11uxn height=600 width=600 /]

 

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YVES SMITH: The Legal Lie at the Heart of the $8.5 Billion Bank of America and Federal/State Mortgage Settlements

YVES SMITH: The Legal Lie at the Heart of the $8.5 Billion Bank of America and Federal/State Mortgage Settlements


H/T Abigail – If you had any doubts about whether ‘your’ federal gov’t works for you or BofA, read Yves Smith’s latest:

One in a while, you can discern a linchpin lie on which other important lies hinge. We can point to quite a few in America: the notion of a permanent war on terror, which somehow justifies vitiating not just the Constitution, but even the Magna Carta, or the idea of an imperial executive branch.

Now the apparently-to-be-filed-in-court-today Federal/state attorneys general mortgage settlement is less consequential than matters of life and limb. But it still show the lengths to which the officialdom is willing to go to vitiate the law in order to get its way.

HUD Secretary Donovan, the propagandist in chief for the Federal/state mortgage pact, has claimed he has investor approval to do the mortgage modifications that are a significant portion of the value of the settlement. We’ll eventually see what is actually in the settlement, but the early PR was that “no less than $10 billion” of the $25 billion headline total was to come from principal reductions. Modifications of mortgages not owned by banks, meaning in securitized trusts, are counted only 50% and before Donovan realized he was committing a faux pas, he said he expected 85% of the mods to be from securitizations, so that means $17 billion.

[NAKED CAPITALISM]

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Servicers Behaving Badly: An Insider’s Perspective on the Root Cause of this Recurring Problem

Servicers Behaving Badly: An Insider’s Perspective on the Root Cause of this Recurring Problem


The Subprime Shakeout-

The Principal – Agent Problem: Part I – RMBS Data Integrity

Back near the dawn of time when I was in business school, and the faculty was hard-pressed to find topics to fill up the curriculum, they introduced the Principal – Agent Problem.  As future corporate managers and agents of the stockholders, I suppose they wanted to explain to us that our economic interests were not identical to those of the owners.  This wasn’t exactly the most shocking news we had ever received, but that was all that was said about the issue, back then.

Of course, there is considerably more to this multi-faceted problem. According to Wikipedia, “The principal–agent problem arises when a principal compensates an agent for performing certain acts that are useful to the principal and costly to the agent, and where there are elements of the performance that are costly to observe,” primarily due to asymmetric information, uncertainty and risk.

Let’s look at the relationship between the RMBS bondholder

[THE SUBPRIME SHAKEOUT]

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Robosigning focuses attention on title companies

Robosigning focuses attention on title companies


TIC-TOC…

SFGATE-

Chain of title – proof of who really owns a house – underpins the entire U.S. system of real estate.

Broken chain of title due to slipshod paperwork was a serious issue uncovered in the nationwide robosigning scandal and again last month in a city report that found San Francisco foreclosure paperwork riddled with errors.

Those revelations draw new attention to title companies, which insure a home’s clear title for both buyers and lenders.

“If there is not a clear chain of title in the foreclosure process, how can there be a clear chain of title for the person buying foreclosed property?” said San Francisco Assessor-Recorder Phil Ting, who commissioned the audit. “Given our report, it calls into question whether entities selling a foreclosure really have the right to transfer that property to somebody else.”

Read more: [SFGATE]

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The Commercial Real Estate Bubble By: Adam Levitin & Susan M. Wachter

The Commercial Real Estate Bubble By: Adam Levitin & Susan M. Wachter


The Commercial Real Estate Bubble

Adam J. Levitin

Georgetown University Law Center

Susan M. Wachter

University of Pennsylvania – The Wharton School – Real Estate Department

February 7, 2012

Georgetown Law and Economics Research Paper No. 1978264

Georgetown Public Law Research Paper No. 1978264

Abstract:     
Two parallel real estate bubbles emerged in the United States between 2004 and 2008, one in residential real estate, the other in commercial real estate. The residential real estate bubble has received a great deal of popular, scholarly, and policy attention. The commercial real estate bubble, in contrast, has largely been ignored.

This Article explores the causes of the commercial real estate bubble. It shows that the commercial real estate price bubble was accompanied by a change in the source of commercial real estate financing. Starting in 1998, securitization became an increasingly significant part of commercial real estate financing. The commercial mortgage securitization market underwent a major shift in 2004, however, as the traditional buyers of subordinated commercial real estate debt were outbid by collateralized debt obligations (CDOs). Savvy, sophisticated, experienced commercial mortgage securitization investors were thus replaced by investors who merely wanted “product” to securitize. The result was a noticeable decline in underwriting standards in commercial mortgage backed securities that contributed to the commercial real estate price bubble.

The commercial real estate bubble holds important lessons for understanding the residential real estate bubble. Unlike the residential market, there is almost no government involvement in commercial real estate. The existence of the parallel commercial real estate bubble presents a strong challenge to explanations of the residential bubble that focus on government affordable housing policy, the Community Reinvestment Act, and the role of Fannie Mae and Freddie Mac. Instead, the changes in commercial real estate financing closely mirror changes in the residential real estate financing, which shifted from regulated government-sponsored securitization to unregulated private securitization. This indicates that changes in the securitization market contributed to the problems in both the commercial and residential real estate markets.

[ipaper docId=82373480 access_key=key-feg1rvbu1a2ucxa8oh3 height=600 width=600 /]

 

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Adam Levitin: Pushback on the San Francisco City Assessor-Recorder Foreclosure Audit

Adam Levitin: Pushback on the San Francisco City Assessor-Recorder Foreclosure Audit


Credit Slips-

Not surprisingly, there’s been some attempts to downplay the significance of the SF City Assessor-Recorder foreclosure audit. The attacks have come in three flavors:  questions about the auditors’ own background; questions about the accuracy of the report; and the “who cares, as these are just lousy deadbeats” argument. Even if we acknowledge that there is something to each of these attacks, they don’t take away from the core finding of the report, which is that things are FUBAR in mortgage documentation, and that is going to inevitably result in some honest, but unfortunate homeowners being harmed.

The first attack is on the credentials and former activities of the auditors. Given the deeply compromised background of the OCC foreclosure review auditors, this is a chutzpadik attack. The sad truth is that there isn’t a huge pool of people who can do this sort of audit. (Yes, takes it takes a thief and all that…) 

[CREDIT SLIPS]

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Banks face crisis in bungled commercial mortgages

Banks face crisis in bungled commercial mortgages


Oh yes, MERS is in this rabbit hole as well: From a 10/10 post EXCLUSIVE | NYSC COMMERCIAL (CMBS), MERS and a $65 MILLION NOTE

If this doesn’t do them in then look for the Next Robo-Signing Scandal: RePOST: CHASE BANK v. GERGIS | NY Civ. Court “ROBO-TESTIMONY, WAMU, CREDIT-CARD DEBT” Dismissed w/ PREJUDICE

Either way the banks are screwed on these as well.

CBS-

The nation’s banks are looking at a robo-signing problem with commercial real estate which may dwarf the one for home mortgages, according to a new study.

Research by Harbinger Analytics Group shows the widespread use of inaccurate, fraudulent documents for land title underwriting of commercial real estate financing. According to the report:

This fraud is accomplished through inaccurate and incomplete filings of statutorily required records (commercial land title surveys detailing physical boundaries, encumbrances, encroachments, etc.) on commercial properties in California, many other western states and possibly throughout most of the United States.

[CBS NEWS]

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[VIDEO] SF Assessor-Recorder Phil Ting Uncovers Widespread (FRAUD) Mortgage Industry Irregularity

[VIDEO] SF Assessor-Recorder Phil Ting Uncovers Widespread (FRAUD) Mortgage Industry Irregularity


This is an explosive video and the AG’s better listen carefully because titles are in serious jeopardy. Forget the settlement… HOW do they prepare to correct the DEFECTS in YOUR TITLE?

Watch the video and listen to how the “New Lender” is stealing assigning Your Home to themselves… I hope AG Kamala Harris follows up and why haven’t the AG’s conducted these investigations? Truly sad.

58% of conflicts with MERS.

by on Feb 15, 2012

Assessor-Recorder Phil Ting Uncovers Widespread Mortgage Industry Irregularity in San Francisco Foreclosures

 

[Click on Image Below]

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Pelosi, Speier Request Justice Department Examination into Possible Violations of Federal Law in San Francisco Foreclosures

Pelosi, Speier Request Justice Department Examination into Possible Violations of Federal Law in San Francisco Foreclosures


Washington, D.C. – Democratic Leader Nancy Pelosi and Congresswoman Jackie Speier sent a letter today to Attorney General Eric Holder requesting he direct the Justice Department’s Financial Fraud Enforcement Task Force to examine whether any violations of Federal law occurred in the processing of foreclosures in San Francisco. 

The County of San Francisco’s Office of the Assessor-Recorder recently commissioned a report assessing compliance with applicable foreclosure laws by certain entities in the mortgage industry operating in San Francisco.

Below is the full text of the letter. 

February 17, 2012

The Honorable Eric H. Holder, Jr.
Attorney General
Robert F. Kennedy Department of Justice Building
950 Pennsylvania Ave., NW
Washington, DC 20530

Dear Attorney General Holder:

We are writing to request that you direct the Justice Department’s Financial Fraud Enforcement Task Force to examine whether any violations of Federal law occurred in the processing of foreclosures in San Francisco.

The County of San Francisco’s Office of the Assessor-Recorder recently commissioned a report, which is enclosed, assessing compliance with applicable foreclosure laws by certain entities in the mortgage industry operating in San Francisco. The report, based on a review of a random sample of mortgage loans that entered into foreclosure between January 2009 and October 2011, found that 99 percent of the San Francisco mortgages reviewed showed irregularities in the foreclosure process, and 84 percent showed potential violations of California non-judicial foreclosure laws.  In addition, foreclosures involving mortgages that were part of the Mortgage Electronic Registration System (MERS), which are more likely to have been securitized, showed a high rate of conflicting information regarding the actual beneficiary, which raises questions about whether homeowners were denied their due process rights.  We find these findings very troubling. 

Because the report does not specify the mortgage servicers involved, it is not possible to determine whether affected borrowers can seek remedies under provisions in the multi-state mortgage settlement. However, even if some borrowers can seek redress through the settlement process, or through private rights of action, the irregularities and violations cited in the report convince us that further investigation at the Federal level is warranted to determine whether any violations of Federal civil and criminal laws might have occurred.

The Assessor-Recorder has already referred the report’s findings to California Attorney General, Kamala Harris, for her review.  We believe the severity of the report’s conclusions also warrant a thorough review at the Federal level by the Task Force. 

We appreciate the hard work of the Obama Administration and the state Attorneys General, including the helpful protections for borrowers secured by California Attorney General Kamala Harris, in achieving a multi-state mortgage settlement. We are hopeful that preserving the ability of the states and the Federal government to continue to pursue actions not covered by the terms of the settlement will ensure that homeowners who experienced losses unfairly, particularly where abusive practices were the cause, will be able to seek a remedy.

Thank you for your attention to this matter.

best regards,

Nancy Pelosi
Democratic Leader

Jackie Speier
Member of Congress

Cc:           The Honorable Kamala Harris, Attorney General, State of California
                The Honorable Edwin M. Lee, Mayor, San Francisco, California
                The Honorable Phil Ting, Assessor-Recorder, City & County of San Francisco

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Adam Levitin: Why No Investigation?

Adam Levitin: Why No Investigation?


The robosigning itself and similar lack of internal controls are the small potatoes. There are much more serious things in the SF City Assessor report.


Credit Slips-

Here’s a bombshell: the San Francisco City Assessor commissioned a serious audit of foreclosure documentation filed in the past few years. The audit examined 400 foreclosures.  It found problems with 85% of them, often multiple problems. What’s more, some of the problems are pretty serious as they implicate not only borrowers’ rights, but the integrity of mortgage-backed securities and the property title system.  

The San Francisco City Assessor’s audit also serves as a benchmark for evaluating the Federal-State servicing settlement.  The San Francisco City Assessor managed to accomplish in a few months what the Federal government and state Attorneys General weren’t able to do in nearly a year and a half with far greater resources at their disposal:  perform a credible investigation of foreclosure documentation with serious implications about the securitization process in general.  That’s a lot of egg on the face of Shaun Donovan, Eric Holder, Tom Miller, et al.  The SF City Assessor report shows that it really wasn’t so hard for a motivated party to undertake a serious investigation. And that raises the question of why the largest consumer fraud settlement in history proceeded with virtually no investigation. 

The lack of investigation was the compelling criticism that led the NY and DE AGs to stay out of the settlement for quite a while. I’ve never heard an answer as to why no serious investigation. As the SF City Assessor’s audit shows, the documentation is all a matter of public record.  It’s not that hard to do, especially if you have the resources of the federal government.  So the resources were there. The capability was there. So why no investigation?  The answer has to lie with lack of motivation. Were the Feds and AGs scared of what they would find if they delved too deeply into the issue? 

I hope that members of Congress will question the Attorney General and HUD Secretary the next time they show up to testify on the Hill.  The issue is also worthy of a GAO or IG examination. 

[…]

[CREDIT SLIPS]

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Foreclosure Fraud, Abuse Rampant Across U.S., experts say

Foreclosure Fraud, Abuse Rampant Across U.S., experts say


* Report found 84 pct of San Francisco disclosures illegal

* High levels found across the country, experts say

REUTERS-

A report this week showing rampant foreclosure abuse in San Francisco reflects similar levels of lender fraud and faulty documentation across the United States, say experts and officials who have done studies in other parts of the country.

The audit of almost 400 foreclosures in San Francisco found that 84 percent of them appeared to be illegal, according to the study released by the California city on Wednesday.

“The audit in San Francisco is the most detailed and comprehensive that has been done – but it’s likely those numbers are comparable nationally,” Diane Thompson, an attorney at the National Consumer Law Center, told Reuters.

Across the country from California, Jeff Thingpen, register of deeds in Guildford County, North Carolina, examined 6,100 mortgage documents last year, from loan notes to foreclosure paperwork.

[REUTERS]

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