Where is Chip Brian when we need him? He is suppose to monitor this like he said.

Goldman? I think  another boost is needed ASAP!

Today at 12:18pm ET they were at 37.43 then at 2:48pm they took a nose dive down to 34.90…PHEW!

Ended the day at 35.82…I think this is the lowest they have gone this year.

LPS? – Lender Processing Services, Inc. (NYSE)?

Citigroup probing rumor of erroneous trade

International Business Times –

Citigroup is investigating a rumor that one of its traders entered a trade that helped precipitate a drop of almost 1,000 points in the Dow Jones Industrial Average, a spokesman for the bank said on Thursday. Citigroup, the third-largest US bank, currently has no evidence that an erroneous trade …

Citigroup probing rumour of erroneous NYSE trade Economic Times

How the major stock indexes fared on Thursday BusinessWeek

Dow   S&P 500   Nasdaq

Citigroup probing rumour of erroneous NYSE trade

Posted: May 6, 2010 – 1:19pm Jacksonville.com

By Mark Basch

Two large private equity firms are in talks to buy out Jacksonville-based Fidelity National Information Services Inc., according to news reports today.

The Wall Street Journal reported that Blackstone Group LP was considering the deal along with other firms. Bloomberg News later reported that Thomas H. Lee Partners LP is joining Blackstone in the bid.

Fidelity said the company’s policy is to not comment on speculation about acquisitions.

Fidelity National Information Services, or FIS, provide technology services for financial companies. It was spun off from title insurance company Fidelity National Financial Inc. Another publicly-traded company, Lender Processing Services Inc., was spun off from FIS.

The two Fidelity companies and LPS are all headquartered in Jacksonville, but all three operate independently.

Bloomberg reported that “two people with knowledge of the situation” said the deal is “under discussion and may not happen.”

mark.basch@jacksonville.com, (904) 359-4308

RELATED STORIES: HERE

Via: Livinglies

GMAC has failed to demonstrate that it is the holder of the Note because, while it was in possession of the Note at the evidentiary hearing, it failed to demonstrate that the Note is properly payable to GMAC

Once the securities have been sold, the SPV is not actively involved.

IN RE WEISBAND

In re: BARRY WEISBAND, Chapter 13, Debtor.

Case No. 4:09-bk-05175-EWH.

United States Bankruptcy Court, D. Arizona.

March 29, 2010.

Barry Weisband, Tucson, AZ, Ronald Ryan, Ronald Ryan, P.C., Tucson, AZ, Attorney for Debtor.

MEMORANDUM DECISION

EILEEN W. HOLLOWELL, Bankruptcy Judge

I. INTRODUCTION

The debtor, Barry Weisband (“Debtor”), has challenged the standing of creditor, GMAC Mortgage, LLC (“GMAC”), to seek stay relief on his residence. After reviewing the documents provided by GMAC and conducting an evidentiary hearing, the court concludes that GMAC, the alleged servicer of the Debtor’s home loan, lacks standing to seek stay relief. The reasons for this conclusion are explained in the balance of this decision.

II. FACTUAL AND PROCEDURAL HISTORY

A. Creation of Debtor’s Note And Asserted Subsequent Transfers

On or about October 6, 2006, the Debtor executed and delivered to GreenPoint Mortgage Funding, Inc. (“GreenPoint”) an adjustable rate promissory note in the principal sum of $540,000 (“Note”) secured by a Deed of Trust (“DOT”) on real property located at 5424 East Placita Apan, Tucson, Arizona 85718 (“Property”).

On a separate piece of paper, GreenPoint endorsed the Note to GMAC (“Endorsement”). The Endorsement is undated. The DOT was signed by the Debtor on October 9, 2006, and recorded on October 13, 2006. The DOT lists GreenPoint as the lender, and Mortgage Electronic Registration Systems, Inc. (“MERS”) as the beneficiary of the DOT “solely as nominee for [GreenPoint], its successors and assigns.”

Approximately five months before the creation of the Note and DOT, on April 10, 2006, GreenPoint entered into a Flow Interim Servicing Agreement (“FISA”) (Exhibit D)^{[ 1 ]} with Lehman Capital, a division of Lehman Brothers Holdings, Inc. (collectively “Lehman”), pursuant to which Lehman agreed to purchase conventional, residential, fixed and adjustable rate first and second lien mortgage loans from GreenPoint. Under the FISA, GreenPoint agreed to service the mortgage loans it sold to Lehman. According to GMAC, GreenPoint transferred the Note and DOT to Lehman under the FISA.

On November 1, 2006, Lehman entered into a Mortgage Loan Sale and Assignment Agreement (“MLSAA”) with Structured Asset Securities Corporation (“SASC”) (Exhibit E). Under that agreement, Lehman transferred a number of the mortgage loans it acquired under the FISA to SASC. GMAC claims that the Note was one of the mortgage loans transferred to SASC. SASC created a trust to hold the transferred mortgages — GreenPoint Mortgage Funding Trust (“Trust”). The MLSAA also transferred the right to receive principal and interest payments under the transferred mortgage loans from Lehman to the Trust.

Also, on November 1, 2006, SASC entered into a Trust Agreement (Exhibit F) with Aurora Loan Services (“Aurora”) as the master servicer, and U.S. Bank National Association (“U.S. Bank”) as the trustee. A Reconstituted Servicing Agreement (Exhibit G) was executed the same day, which provided that GreenPoint would continue to service the mortgages transferred to the Trust under the MLSAA, but that the Trust could change servicers at any time. Also, according to GMAC, on November 1, 2006, GMAC, Lehman, and Aurora entered into a Securitization Servicing Agreement (“SSA”) (Exhibit H), pursuant to which GMAC would service the loans transferred to the Trust. GMAC claims that under the SSA it is the current servicer of the Note and DOT.

Thus, according to GMAC, as of November 1, 2006, the Note and DOT had been transferred to the Trust, with SASC as the Trustor, U.S. Bank as the Trustee, Aurora as the master servicer, and GMAC as the sub-servicer. GreenPoint went out of business in 2007. According to GMAC, it remains the sub-servicer of the Note, and that is its only financial interest in the Note and DOT. (Transcript Nov. 10, 2009, pp. 44, 47, 75.)

B. Bankruptcy Events

As of March 1, 2009, the Debtor was in default of his obligations under the Note. Debtor filed his petition for relief under Chapter 13 of the Bankruptcy Code on March 19, 2009. On May 16, 2009, GMAC filed a proof of claim (“POC”), which attached the Note and DOT. The Endorsement from GreenPoint to GMAC was not attached to GMAC’s proof of claim. On May 12, 2009, MERS, as nominee for GreenPoint, assigned its interest in the DOT to GMAC (“MERS Assignment”). The MERS Assignment was recorded on July 16, 2009.

GMAC filed a Motion for Relief from Stay (“Motion”) on May 29, 2009, on the grounds that the Debtor had no equity in the Property and the Property was not necessary for an effective reorganization. The Motion also requested adequate protection payments to protect GMAC’s alleged interest in the Property. GMAC attached the Note with the Endorsement and DOT as exhibits to the Motion.

The Debtor filed a response challenging GMAC’s standing to seek relief from stay. After various discovery disputes, GMAC sent a letter dated September 17, 2009, to the Debtor which purported to explain the various transfers of the Note and the DOT. (Docket #90). The letter explained that GreenPoint transferred the “subject loan” to Lehman under the FISA, that Lehman sold the “subject loan” to SASC under the MLSAA, that SASC, Aurora Loan Services, and U.S. National Bank entered into a trust agreement, which created the Trust and made Aurora the master servicer for the “subject loan,” and, that GMAC was the servicer of the “subject loan” under the SSA. According to GMAC, its status as servicer, along with the Endorsement of the Note to GMAC and the assignment of the DOT from MERS to GMAC, demonstrated that it had standing to bring the Motion.

On November 10, 2009, the Court conducted an evidentiary hearing on the Motion. GMAC offered the original Note at the hearing and admitted into evidence a copy of the Note, DOT, copies of the FISA, MLSAA, Trust Agreement, the Reconstituted Servicing Agreement and the SSA. However, GMAC did not offer any documents demonstrating how the Note and DOT were conveyed by GreenPoint to the FISA. No document was offered demonstrating how the Note and DOT were conveyed from the FISA to the MLSAA or from the MLSAA into the Trust. Schedule A-1 of the MLSAA, where the transferred mortgages presumably would have been listed, only has the words “Intentionally Omitted” on it, and Schedule A-2 has the word “None.” (Exhibit F, pp. 19-20). Similarly, there is no evidence that the Note and DOT are subject to the SSA. Exhibit A to the SSA, titled “Mortgage Loan Schedule,” is blank. At the conclusion of the hearing, this Court ordered the Debtor to begin making adequate protection payments commencing on December 1, 2009 to the Chapter 13 Trustee. The Court further ordered GMAC and the Debtor to negotiate the amount of the adequate protection payments. When the parties were unable to reach agreement, the Court set the amount of the monthly payments at $1,000.

III. ISSUE

Does GMAC have standing to bring the Motion?

IV. JURISDICTIONAL STATEMENT

Jurisdiction is proper under 28 U.S.C. §§ 1334(a) and 157(b)(2)(G).

V. DISCUSSION

A. Introduction

Section 362(a) of the Bankruptcy Code provides that the filing of a bankruptcy petition operates as a stay of collection and enforcement actions. 11 U.S.C. § 362(a). The purpose of the automatic stay is to provide debtors with “protection against hungry creditors” and to assure creditors that the debtor’s other creditors are not “racing to various courthouses to pursue independent remedies to drain the debtor’s assets.” In re Tippett,Dean v. Trans World Airlines, Inc., 72 F.3d 754, 755-56 (9th Cir. 1995)); see also In re Johnston, 321 B.R. 262, 2737-4 (D. Ariz. 2005). Despite the broad protection the stay affords, it is not without limits. 542 F.3d 684, 689-90 (9th Cir. 2008) (citing Section 362(d) allows the court, upon request of a “party in interest,” to grant relief from the stay, “such as terminating, annulling, modifying, or conditioning such stay.” 11 U.S.C. § 362(d)(1). The court may grant relief “for cause, including the lack of adequate protection.” Id. The court may also grant relief from the stay with respect to specific property of the estate if the debtor lacks equity in the property and the property is not necessary to an effective reorganization. 11 U.S.C. § 362(d)(2).

Any party affected by the stay should be entitled to seek relief. 3 COLLIER’S ON BANKRUPTCY ¶ 362.07[2] (Henry Somers & Alan Resnick, eds. 15th ed., rev. 2009); Matter of Brown Transp. Truckload, Inc., 118 B.R. 889, 893 (Bankr. N.D. Ga. 1990); In re Vieland, 41 B.R. 134, 138 (Bankr. N.D. Ohio 1984)). Relief from stay hearings are limited in scope — the validity of underlying claims is not litigated. In re Johnson, 756 F.2d 738, 740 (9th Cir. 1985). As one court has noted, “[s]tay relief hearings do not involve a full adjudication on the merits of claims, defenses or counterclaims, but simply a determination as to whether a creditor has a colorable claim.” In re Emrich, 2009 WL 3816174, at *1 (Bankr. N.D. Cal. 2009).

Nevertheless, in order to establish a colorable claim, a movant for relief from stay bears the burden of proof that it has standing to bring the motion. In re Wilhelm, 407 B.R. 392, 400 (Bankr. D. Idaho 2009). The issue of standing involves both “constitutional limitations on federal court jurisdiction and prudential limitations on its exercise.” Warth v. Seldin, 422 U.S. 490, 498 (1975). Constitutional standing concerns whether the plaintiff’s personal stake in the lawsuit is sufficient to have a “case or controversy” to which the federal judicial power may extend under Article III. Id.; see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 559-60 (1992); Pershing Park Villas Homeowners Ass’n v. United Pac. Ins. Co., 219 F.3d 895, 899 (9th Cir. 2000).

Additionally, the “prudential doctrine of standing has come to encompass several judicially self-imposed limits on the exercise of federal jurisdiction.'” Pershing Park Villas, 219 F.3d at 899. Such limits are the prohibition on third-party standing and the requirement that suits be maintained by the real party in interest. See Warth v. Seldin, 422 U.S. at 498-99; Gilmartin v. City of Tucson, 2006 WL 5917165, at *4 (D. Ariz. 2006). Thus, prudential standing requires the plaintiff to assert its own claims rather than the claims of another. The requirements of Fed. R. Civ. P. 17, made applicable in stay relief motions by Rule 9014, “generally falls within the prudential standing doctrine.” In re Wilhelm, 407 B.R. at 398.

B. GMAC’s Standing

GMAC advances three different arguments in support of its claim to be a “party in interest” with standing to seek relief from stay. First, GMAC asserts it has standing because the Note was endorsed to GMAC and GMAC has physical possession of the Note. Second, GMAC asserts that by virtue of the MERS Assignment, it is a beneficiary of the DOT and entitled to enforce and foreclose the DOT under Arizona law. Third, GMAC asserts it has standing because it is the servicer of the Note. The court addresses each of GMAC’s claims in turn.

1. GMAC Has Not Demonstrated That It Is A Holder Of The Note

If GMAC is the holder of the Note, GMAC would be a party injured by the Debtor’s failure to pay it, thereby satisfying the constitutional standing requirement. GMAC would also be the real party in interest under Fed. R. Civ. P. 17 because under ARIZ. REV. STAT. (“A.R.S.’) § 47-3301, the holder of a note has the right to enforce it.^{[ 2 ]} However, as discussed below, GMAC did not prove it is the holder of the Note.

Under Arizona law, a holder is defined as “the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.” A.R.S. § 47-1201(B)(21)(a).^{[ 3 ]} GMAC has failed to demonstrate that it is the holder of the Note because, while it was in possession of the Note at the evidentiary hearing, it failed to demonstrate that the Note is properly payable to GMAC. A special endorsement to GMAC was admitted into evidence with the Note. However, for the Endorsement to constitute part of the Note, it must be on “a paper affixed to the instrument.” A.R.S. § 47-3204; see also In re Nash, 49 B.R. 254, 261 (Bankr. D. Ariz. 1985). Here, the evidence did not demonstrate that the Endorsement was affixed to the Note. The Endorsement is on a separate sheet of paper; there was no evidence that it was stapled or otherwise attached to the rest of the Note. Furthermore, when GMAC filed its proof of claim, the Endorsement was not included, which is a further indication that the allonge containing the Endorsement was not affixed to the Note.^{[ 4 ]}

In Adams v. Madison Realty & Dev., Inc., 853 F.2d 163 (3d Cir. 1988), the plaintiffs executed promissory notes which, after a series of transfers, came into the defendant’s possession. At issue was whether the defendant was the rightful owner of the notes. The court held that the defendant was not entitled to holder in due course status because the endorsements failed to meet the UCC’s fixation requirement. Id. at 168-69. The court relied on UCC section 3-202(2) [A.R.S. § 47-3204]: “An indorsement must be written by or on behalf of the holder and on the instrument or on a paper so firmly affixed thereto as to become a part thereof.” Id. at 165. Since the endorsement page, indicating that the defendant was the holder of the note, was not attached to the note, the court found that the note had not been properly negotiated. Id. at 166-67. Thus, ownership of the note never transferred to the defendant. Applying that principle to the facts here, GMAC did not become a holder of the Note due to the improperly affixed special endorsement.

While the bankruptcy court in In re Nash, 49 B.R. 254 (Bankr. D. Ariz. 1985) found that holder in due course status existed even though an allonge was not properly affixed to an instrument, the court based its determination on the clear intention that the note assignment be physically attached because: (1) the assignment was signed and notarized the same day as the trust deed; (2) the assignment specifically referenced the escrow number; (3) the assignment identified the original note holder; and (4) the assignment recited that the note was to be attached to the assignment. Id. at 261.

In this case, however, there is no proof that the allonge containing the special endorsement from GreenPoint to GMAC was executed at or near the time the Note was executed. Furthermore, the Endorsement does not have any identifying numbers on it, such as an account number or an escrow number, nor does it reference the Note in any way. There is simply no indication that the allonge was appropriately affixed to the Note, in contradiction with the mandates of A.R.S. § 47-3204. Thus, there is no basis in this case to depart from the general rule that an endorsement on an allonge must be affixed to the instrument to be valid.

GMAC cannot overcome the problems with the unaffixed Endorsement by its physical possession of the Note because the Note was not endorsed in blank and, even if it was, the problem of the unaffixed endorsement would remain.^{[ 5 ]} As a result, because GMAC failed to meet its burden of demonstrating that the Endorsement was proper, it has failed to demonstrate that it is the holder of the Note.

2. The MERS Assignment Of The DOT Did Not Provide GMAC With Standing

GMAC argues that it has standing to bring the Motion as the assignee of MERS.^{[ 6 ]} In this case, MERS is named in the DOT as a beneficiary, solely as the “nominee” of GreenPoint, holding only “legal title” to the interests granted to GreenPoint under the DOT. A number of cases have held that such language confers no economic benefit on MERS. See, e.g., In re Sheridan, 2009 WL 631355, *4 (Bankr. D. Idaho 2009); In re Mitchell, 2009 WL 1044368, *3-4 (Bankr. D. Nev. 2009); In re Jacobson, 402 B.R. 359, 367 (Bankr. W.D. Wash. 2009). As noted by the Sheridan court, MERS “collect[s] no money from [d]ebtors under the [n]ote, nor will it realize the value of the [p]roperty through foreclosure of the [d]eed of [t]rust in the event the [n]ote is not paid.” 2009 WL 631355 at *4.

Because MERS has no financial interest in the Note, it will suffer no injury if the Note is not paid and will realize no benefit if the DOT is foreclosed. Accordingly, MERS cannot satisfy the requirements of constitutional standing. GMAC, as MERS’ assignee of the DOT, “stands in the shoes” of the assignor, taking only those rights and remedies the assignor would have had. Hunnicutt Constr., Inc. v. Stewart Title & Trust of Tucson, Trust No. 3496, 187 Ariz. 301, 304 (Ct. App. 1996) citing Van Waters & Rogers v. Interchange Res., Inc., 14 Ariz. App. 414, 417 (1971); In re Boyajian, 367 B.R. 138, 145 (9th Cir. BAP 2007). Because GMAC is MERS’ assignee, it cannot satisfy the requirements of constitutional standing either.^{[ 7 ]}

3. GMAC Does Not Have Standing As The Servicer Of The Note

(a) Servicer’s Right To Collect Fees For Securitized Mortgages

Securitization of residential mortgages is “the process of aggregating a large number of notes secured by deeds of trust in what is called a mortgage pool, and then selling security interests in that pool of mortgages.” Kurt Eggert, Held Up In Due Course: Predatory Lending, Securitization, and the Holder in Due Course Doctrine, 35 CREIGHTON L. REV. 503, 536 (2002). The process begins with a borrower negotiating with a mortgage broker for the terms of the loan. Then, the mortgage broker either originates the loan in its own name or in the name of another entity, which presumably provides the money for the loan. Almost immediately, the broker transfers the loan to the funding entity. “This lender quickly sells the loan to a different financial entity, which pools the loan together with a host of other loans in a mortgage pool.” Id. at 538.

The assignee then transfers the mortgages in the pool to another entity, which in turn transfers the loans to a special purpose vehicle (“SPV”,) whose sole role is to hold the pool of mortgages. Id. at 539. “The transfer to the special purpose trust must constitute a true sale, so that the party transferring the assets reduces its potential liability on the loans and exchanges the fairly illiquid loans for much more liquid cash.” Id. at 542. Next, the SPV issues securities which the assignee sells to investors. Id. at 539.

Once the securities have been sold, the SPV is not actively involved. It “does not directly collect payments from the homeowners whose notes and deeds of trust are held by the SPV.” Id. at 544. Rather, servicers collect the principal and interest payments on behalf of the SPV. Id. Fees are associated with the servicing of loans in the pool. Therefore, GMAC would have constitutional standing if it is the servicer for the Note and DOT because it would suffer concrete injury by not being able to collect its servicing fees.^{[ 8 ]}In re O’Kelley, 420 B.R. 18, 23 (D. Haw. 2009) . In this case, however, the evidence does not demonstrate that the Note and DOT were transferred to the Trust, and, without that evidence, there is no demonstration that GMAC is the servicer of the Note.

(b) There Is Insufficient Evidence That The Note Was Sold To Lehman And Became Part Of The Trust

When the Debtor executed the Note and DOT, GreenPoint was the original holder of the Note and the economic beneficiary of the DOT. GreenPoint, allegedly, transferred the Note to Lehman pursuant to the FISA. However, the term “mortgage loans” is not defined in the FISA and GMAC’s documents regarding the securitization of the Note and DOT provide no evidence of actual transfers of the Note and DOT to either the FISA or the Trust. Because such transfers must be “true sales,” they must be properly documented to be effective. Thus, to use an overused term, GMAC has failed “to connect the dots” to demonstrate that the Note and DOT were securitized. Accordingly, it is immaterial that GMAC is the servicer for the Trust.

C. Debtor’s Other Arguments

1. Securities Investors Are Not The Only Individuals Who Can Satisfy Standing Requirements When Dealing With A 362 Motion on a “Securitized” Mortgage

The Debtor argues that, in an asset securitization scheme, only the securities investors have standing to seek stay relief because they are the only parties with a financial interest in the securitized notes. However, because the Debtor executed the Note and received consideration (which he used to purchase the house), the contract is enforceable regardless of who provided the funding. In other words, the fact that the funds for a borrower’s loan are supplied by someone other than the loan originator, does not invalidate the loan or restrict enforcement of the loan contract to the parties who funded the loan. A number of cases and treatises recognize that consideration for a contract, including a promissory note, can be provided by a third party. See, e.g., DCM Ltd. P’ship v. Wang, 555 F. Supp. 2d 808, 817 (E.D. Mich. 2008); Buffalo County v. Richards, 212 Neb. 826, 828-29 (Neb. 1982); 3 WILLISTON ON CONTRACTS § 7:20 (Richard A. Lord, 4th ed. 2009); RESTATEMENT (SECOND) OF CONTRACTS § 71(4) (2009).

Notes are regularly assigned and the assignment does not change the nature of the contract. The assignee merely steps into the shoes of the assignor. In re Boyajian, 367 B.R. 138, 145 (9th Cir. BAP 2007); In re Trejos, 374 B.R. 210, 215 (9th Cir. BAP 2007). No additional consideration is required, as opposed to a novation which creates a new obligation. Id. at 216-17 citing RESTATEMENT (SECOND) OF CONTRACTS § 280, cmt. e. Therefore, the Debtor’s argument that the Note is unenforceable because the funder of the Note was not the payee fails. The Note is still valid and can be enforced by the party who has the right to enforce it under applicable Arizona law.

2. Proof Of A Note’s Entire Chain Of Ownership Is Not Necessary For Stay Relief

A movant for stay relief need only present evidence sufficient to present a colorable claim — not every piece of evidence that would be required to prove the right to foreclose under a state law judicial foreclosure proceeding is necessary. In re Emrich, 2009 WL 3816174, at *1 (Bankr. N.D. Cal. 2009). Accordingly, not every movant for relief from stay has to provide a complete chain of a note’s assignment to obtain relief.

Arizona’s deed of trust statute does not require a beneficiary of a deed of trust to produce the underlying note (or its chain of assignment) in order to conduct a Trustee’s Sale. Blau v. Am.’s Serv. Co., 2009 WL 3174823, at *6 (D. Ariz. 2009); Mansour v. Cal-W. Reconveyance Corp., 618 F. Supp. 2d 1178, 1181 (D. Ariz. 2009); Diessner v. Mortg. Elec. Registration Sys., 618 F. Supp. 2d 1184, 1187 (D. Ariz. 2009). It would make no sense to require a creditor to demonstrate more to obtain stay relief than it needs to demonstrate under state law to conduct a judicial or non-judicial foreclosure. Moreover, if a note is endorsed in blank, it is enforceable as a bearer instrument. See In re Hill, 2009 WL 1956174, at *2 (Bankr. D. Ariz. 2009). Therefore, this Court declines to impose a blanket requirement that all movants must offer proof of a note’s entire chain of assignments to have standing to seek relief although there may be circumstances where, in order to establish standing, the movant will have to do so.

3. The Movant Has Not Violated Rule 9011

The Debtor argues that GMAC “violated Rule 7011” by presenting insufficient and misleading evidence. Given that there is no Rule 7011, the Court assumes that the Debtor was actually referring to Bankruptcy Rule 9011. Rule 9011 allows a court to impose sanctions for filing a frivolous suit. FED. R. BANKR. P. 9011(c); see also FED. R. CIV. P. 11(c). As noted at the evidentiary hearing, the Court did not find that GMAC filed its motion for relief stay in bad faith, nor does this Court believe GMAC filed its motion thinking it did not have proper evidentiary support. There are numerous, often conflicting, decisions on the issues of “real party in interest” and constitutional standing, and what evidence must be presented by a servicer seeking stay relief. The record in this case does not support imposition of 9011 sanctions.

VI. CONCLUSION

GMAC has not demonstrated that it has constitutional or prudential standing or is the real party in interest entitled to prosecute a motion for relief from stay.

Accordingly, its motion is DENIED without prejudice.

THE OCC IS THE BEST FOR THE DBNTC TRUSTS. This is a helpful way to get the masses to contact the regulators.

[scribd id=30990205 key=key-1vrttnja1ovtf5hh3iho mode=list]

MORTGAGE SERVICING COMPANIES

PREPARING “ REPLACEMENT” MORTGAGE ASSIGNMENTS

By Lynn E. Szymoniak, Esq., Ed. Fraud Digest, May 6, 2010

CALIFORNIA – ORANGE COUNTY

Carrington Mortgage Services, LLC

Tom Croft and others

CALIFORNIA – SAN DIEGO COUNTY

Chase Home Finance

FLORIDA – BROWARD COUNTY

Patricia Arango, Caryn Graham and others

Law Offices of Marshal Watson

FLORIDA – BROWARD COUNTY

Cheryl Samons, Beth Cerni and others

Law Offices of David Stern

FLORIDA – DUVAL COUNTY

Lender Processing Services

Valerie Broom, Margaret Dalton, Michele Halyard, Michael Hunt, Joseph

Kaminsky, Kathy Smith, Coleman Stokes and others

FLORIDA- HILLSBOROUGH COUNTY

Florida Default Law Group or Law Offices of Daniel Consuegra

FLORIDA – PALM BEACH COUNTY

Ocwen Loan Servicing

Scott Anderson, Oscar Taveras, Doris Chapman, Jonathan Burgess, Laura

Buxton and others

FLORIDA – PINELLAS COUNTY

Nationwide Title Clearing

Bryan Bly, Vilma Castro, Dhurato Doko, Jessica Fretwell and others

GEORGIA – FULTON COUNTY

Lender Processing Services

Linda Green, Korell Harp, Jessice Ohde, Linda Thoresen, Tywanna Thomas,

Cheryl Thomas, Christie Baldwin and others

MINNESOTA -DAKOTA COUNTY

Lender Processing Services

Liquenda Allotey, Topeka Love, Christine Anderson, Christine Allen, Eric Tate

OHIO – FRANKLIN COUNTY

Chase Home Finance

Christina Trowbridge, Whitney Cook and others

PENNSYLVANIA – ALLEGHANY COUNTY

Home Loan Services, Inc.

PENNSYLVANIA – MONTGOMERY COUNTY

GMAC (and Homecomings Financial)

Jeffrey Stephan, John Kerr and others

SOUTH CAROLINA – YORK COUNTY

America’s Servicing Company

John Kennerty, China Brown and others

TEXAS – COLLIN COUNTY

BAC Home Loan Servicing, f/k/a Countrywide Home Loans Servicing, LP

TEXAS – DALLAS COUNTY (COPPELL, TX)

American Home Mortgage Servicing

TEXAS – HARRIS COUNTY

Litton Loan Servicing, LP

Marti Noriega, Denise Bailey, Diane Dixon and others

TEXAS – TARRANT COUNTY

Saxon Mortgage Services

TEXAS – TRAVIS COUNTY

IndyMac Bank Home Loan Servicing

Brian Burnett, Kristen Kemp, Suchan Murray, Chamagne Williams and others

TEXAS – WILLIAMSON COUNTY

IndyMac Bank (years after IndyMac Bank, F.S.B. ceased to exist, many of the signers will sign as officers of IndyMac Bank, F.S.B. (the entity that should have made the assignment to the trust years ealier)

Erica A. Johnson-Seck, Dennis Kirkpatick, Eric Friedman and others

UTAH

SALT LAKE COUNTY

Select Portfolio Servicing

Luisa Alfonso, Bill Koch and others

Many mortgage-backed securitized trusts are missing critical documents needed to foreclose – i.e., the mortgage assignment. An excellent discussion of this is found in the decision of Massachusetts Land Court Judge Keith Long reaffirming a 2009 ruling (Ibanez) that invalidated foreclosures on two properties because the lenders did not hold clear title to the properties at the time of the foreclosure sale. Mortgage assignments were a key issue in Ibanez, a case that involved ineffective assignments to the Trust. Judge Long noted:

…the plaintiffs’ own securitization documents required mortgage assignments to be made to the plaintiffs in recordable form for each and every loan at the time the plaintiffs acquired them. Surely, compliance with this requirement would (and certainly should) have been a priority for an entity issuing securities dependent on recoveries from loans, such as these, known from the start to have a higher than normal risk of delinquency and default. U.S. BANK, N.A. v. Antonio Ibanez, et al., Commonwealth of Massachusetts, Land Court Dept., 08 MISC 384283 (KCL).

This Ibanez decision and many others deal with the issue of mortgage assignments prepared years after the closing date of the trust, usually when the Trustee or mortgage servicer has realized that the Trust does not have the assignment needed to foreclose or has a defective assignment – such as one issued in blank, unsigned and undated.

Many trusts and servicers try to replace the missing assignments, often with assignments executed within a few months of the foreclosure – and in many cases even after the foreclosure is filed or the home is sold (in non-judicial foreclosure states). The date and place of the Assignment often reveals whether the Assignment is actually a “replacement” – issued years after the Trust closed, and even years after the original lender supposedly making the Assignment disappeared into bankruptcy.

The servicer rarely identifies itself and discloses that this is an attempt to replace a missing assignment. It is, therefore, very useful to know that Mortgage Assignments notarized in the counties above are more often than not replacement Assignments prepared by or on behalf of the Trusts – by the servicers for the Trust or document preparation companies working for the servicers, or even law firm employees working for the Trust.

Please send corrections/additions to szymoniak@mac.com.

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

In the Matter of the Foreclosure of Tax Liens by Proceeding In Rem Pursuant to Article 11 of the Real Property Tax Law by the County of Wayne Regarding 2007 Town/County Tax.

MERS claims that the proceedings and ensuing conveyances of 4664 Smith Road were defective, because MERS was not separately noticed. There are at least two difficulties with this claim. First, the argument assumes that the County has a duty to read the Mortgage to determine whether anyone else other than the Mortgagee had a cognizable property interest warranting statutory notice under RPTL §1125. This Court does not believe this is or should be the case. The County should not have to go behind a title search to determine whether any property interests are conveyed to third parties not a party to an instrument on file. To accept MERS’ argument would require the County to read every mortgage from A to Z to make sure there are no “Nominees” of the Lender entitled to notice of tax foreclosure in lieu of or in addition to the Lender. Indeed, RPTL §1126(A) provides a vehicle for someone like MERS to receive notice without requiring the County to read every mortgage to determine whether notice should be given.

Second, the Mortgage from which MERS derives its claim of right to statutory notice under RPTL §1125 is by no means crystal clear as to what MERS’ involvement as `’Nominee” requires after the recording of the mortgage. Indeed. MERS does not explain what role the “Nominee” plays in the recording of a mortgage, or thereafter, except perhaps as something akin to a power-ofattorney or agent, albeit with independent standing. If the later is the case, it is incumbent upon the “”Nominee” to state its status as one due notice in the separate declaration of interest form required under section RPTL § 1126, which the County does have a categorical duty to read.

According, the application of MERS shall be, and the same hereby is, denied.

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Updated 1:49 PM EDT, Tue, May 4, 2010

AP

The man accused in the car bomb scare in New York over the weekend defaulted on a $200,000 mortgage on his Shelton home and the property is in foreclosure, court records show.

The Associated Press has obtained records that show that Chase Home Finance LLC sued Faisal Shahzad in September to foreclose on the home.

On Tuesday morning, authorities were at the two-story grayish-brown Colonial, which looked as if it had been unoccupied for a while, with grass growing in the driveway and bags of garbage lying about.

The foreclosure records show Shahzad took out the mortgage on the property in 2004, and he co-owned the home with a woman named Huma Mian.

Nice PR move….NOT!

Bob Self/The Times-Union

Florida Governor Charlie Crist waves to employees at LPS while being introduced by Jeff Carbiener, the CEO of LPS during a visit to the business Wednesday afternoon. Crist made a stop at Lender Processing Services, Inc. on Riverside Avenue Wednesday afternoon as one of several stops in Jacksonville on the theme of jobs.

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

Extra Special Delivery…via Brian W. Davies

[scribd id=30939283 key=key-24i05tjgw2t94w9n8nye mode=list]

In the past few days CORPORATIONS involved in Assignment of Mortgage Fraud may have asked search engines nicely to keep recent news or discoveries associated with bloggers who may have been affected by this “fraud” from hitting GOOGLE, BING, YAHOO, TWITTER and the likes. NOT FOR LONG!

The damage has been caused and I can tell you from last months hits…THE WHOLE WORLD knows and ARE WATCHING!

We installed a clustrmap on the right a few days ago so we can keep track!

RELATED STORY: OPERATION “DARK CLOUD”

Last November, Michael Hill of Lexington, S.C., finally got the call he’d been waiting for. Congratulations, a rep from JPMorgan Chase told him, your trial mortgage modification is approved. Hill’s monthly payment, around $900, would be nearly halved. Except there was a problem. Chase had foreclosed on Hill’s home a month earlier, and his family was just days away from eviction.

“I listened to her and then I just said, ‘Well, that sounds good,’ ” Hill recalled. ” ‘Tell me how we’re going to do this, seeing as how you sold the house?’ ” That, he found out, was news to Chase.

 CHARTS: Tracking the U.S. housing market’s rise, fall and rebound

Millions of homeowners face losing their homes in the continuing foreclosure crisis, but homeowners often have more than the struggling economy and slumping house prices to worry about: Disorganization within the big banks that service mortgages has made a bad problem worse.

Hill was able to avoid eviction — for now. Chase reversed the sale by paying the man who’d bought the home an extra $19,500 on top of the $86,000 he’d paid at the auction. But other homeowners say they lost their homes because the communication breakdown within the banks was so complete that it led to premature or mistaken foreclosures.

“We believe in many cases people are losing their homes when they should not have,” said Kevin Stein, associate director of the California Reinvestment Coalition, which counts dozens of non-profits that work with homeowners among its members.

In the worst breakdowns, such as Hill’s, banks — and other companies that service loans — actually work at cross-purposes, with one arm of the company foreclosing on the home while the other offers help. Servicers say such mistakes are rare and result from the high volume of defaults and foreclosures.

The problems happen even among servicers participating in the administration’s $75 billion foreclosure-prevention program. Servicers operating under the year-old program are forbidden from auctioning someone’s home while a modification decision is pending.

It happens anyway.

Consumer advocates say the lapses continue because they go unpunished. “We’ve had too much of the carrot, and we need a stick,” Stein says. The Treasury Department has yet to penalize a servicer for breaking the program’s rules. The program provides federal subsidies to encourage modifications.

Treasury officials overseeing the program say they’re aware of the problems and have moved to fix them. Some states are going further to protect homeowners, however, with recent rules that stop the foreclosure process if the homeowner requests a modification.

Many homeowners, seeing no other option, have gone to court to reclaim their homes. At least 50 homeowners have recently filed lawsuits alleging the servicer foreclosed with a loan mod request pending or even while they were on a payment plan.

 Long waits for help

 In good times, banks and other servicers —Bank of America is the biggest, followed by Chase and Wells Fargo— were known mainly to homeowners simply as where they sent their monthly mortgage payment. But the companies have been deluged over the past couple years by requests for help from millions of struggling homeowners.

 Homeowners commonly wait six months for an answer on a loan mod application. The federal program for encouraging loan mods includes a three-month trial period, after which servicers are supposed to decide whether to make the modifications permanent. But some homeowners have waited as long as 10 months for a final answer.

The experience of Hill, married with two children, typifies the delays and confusion. After the mistaken foreclosure, he began the trial modification last December. He made those payments, but two months after his trial period was supposed to end, Hill is still waiting for a final answer from Chase.

The miscommunications have continued. He received a letter in January saying that he’d been approved for a permanent modification, but he was then told he’d received it in error.

His family remains partially packed, ready to move should the modification not go through. “I’m on pins and needles every time someone’s knocking on the door or calling,” he said.

Christine Holevas, a Chase spokeswoman, said that Chase had “agreed with Hill’s request to rescind the foreclosure” and was “now reviewing his loan for permanent modification.” She said Chase services “more than 10 million mortgages — the vast majority without a hitch.”

Communication breakdowns occur because of the way the servicers are structured. One division typically deals with modifications and another with foreclosures. Servicers also hire a local trustee or attorney to actually pursue foreclosure.

 “Often they just simply don’t communicate with each other,” said Laurie Maggiano, the Treasury official in charge of setting policy for the modification program. Such problems were particularly bad last summer, in the first few months of the program, she said. “Basically, you have the right hand at the mortgage company not knowing what the left hand is doing,” said Mark Pearce, North Carolina’s deputy commissioner of banks. Communication glitches and mistakes are “systemic, more than anecdotal” among mortgage servicers, he said.

 “We’ve had cases where we’ve informed the mortgage company that they’re about to foreclose on someone.” The experience for the homeowner, he said, can be “Kafkaesque.”

 “We’re all human, and the servicers are overworked and trying their best,” said Vicki Vidal, of the Mortgage Bankers Association. She said foreclosure errors are rare, particularly if struggling homeowners are prompt in contacting their servicer.

 Frances Gomez, of Tempe, Ariz., lived in her house for over 30 years. Three years ago, she refinanced it with Countrywide, now part of Bank of America, for nearly $300,000. The home’s value has declined dramatically, said Gomez, who put some of the money from the refinancing into her hair salon.

Last year, the recession forced her to close her shop. Gomez fell behind on her mortgage, and after striking out with a company that promised to work with Bank of America to get her a loan mod, she learned in December that her home was scheduled for foreclosure.

So Gomez applied herself. She twice succeeded in getting Bank of America to postpone the sale date, and she said she was assured it would not happen until her application was reviewed. Gomez had opened a smaller salon and understood there was a good chance she would qualify for a modification.

She was still waiting in March when a Realtor, representing the new owner of her home, showed up. Her house had sold at auction — for less than half of what Gomez owed. “They don’t give you an opportunity,” she said. “They just go and do it with no warning.”

It’s not supposed to work that way.

Under the federal program, which requires servicers to follow a set of guidelines for modifications, servicers must give borrowers a written denial before foreclosing. When Gomez called Bank of America about the sale, she said, she was told there was a mistake but nothing could be done. She did get a denial notice — some three weeks after the house was sold and just days before she was evicted.

“I just want people to know what they’re doing,” Gomez, now living with family members, said.

After being contacted by ProPublica, Bank of America reviewed Gomez’s case. Bank spokesman Rick Simon acknowledged that Gomez might not have been told her house would be sold and that the bank made a mistake in denying Gomez, because it did not take into account the income from her new salon business. Simon said a Bank of America representative would seek to negotiate with the new owner of Gomez’s house to see if the sale could be unwound.

Simon said the bank regrets when such mistakes happen due to the “very high volume” of cases and that any errors in Gomez’s case were “inadvertent.”

Even avoiding a mistaken sale can also be a stressful process.

One day in February, a man approached Ron Bermudez of Emeryville, Calif., in front of his house and told him his home would be sold in a few hours. This came as a shock to Bermudez; Bank of America had told him weeks earlier that he’d been approved for a trial modification and that the papers would soon arrive. He made a panicked phone call to an attorney, who was able to make sure there was no auction.

To contest a foreclosure under the federal program, Maggiano, the Treasury official, said a homeowner should call the HOPE Hotline, 888-995-HOPE, a Treasury Department-endorsed hotline staffed by housing counselors. Those counselors can escalate the case if the servicer still won’t correct the problem, she said.

That escalation process has saved “a number” of homeowners from being wrongfully booted out of their homes, Maggiano said. Hill, the South Carolina homeowner, is an example of someone helped by the HOPE Hotline.

Of course, the homeowner must know about the hotline to call it. Gomez, the Arizona homeowner who lost her home to foreclosure, said she’d never heard of it.

Many homeowner advocates say the government’s effort has been largely ineffective at resolving problems with servicers.

“I uniformly hear from attorneys and counseling advocates on the ground that the HOPE Hotline simply parrots back what the servicers have said,” said Alys Cohen, an attorney with the National Consumer Law Center. Cohen said she’d voiced her concerns with Treasury officials, who indicated they’d make improvements.

Offering more protection

Under the current rules for the federal program, servicers have been barred from conducting a foreclosure sale if the homeowner requested a modification but are allowed to push along the process, even set a sale date. That allows them to foreclose more quickly if they determine the homeowner doesn’t qualify for a modification.

As a result, a homeowner might get a modification offer one day and a foreclosure notice the next. As of March, servicers were pursuing foreclosure on 1.8 million residences, according to LPS Applied Analytics.

Maggiano, the Treasury official, said that’s been confusing for homeowners. Some “just got discouraged and gave up.”

New rules issued by the Treasury in March say the servicer must first give the homeowner a shot at a modification before beginning the process that leads to foreclosure.

They also require the servicers to adopt new policies to prevent mishaps. For instance, the servicer will be required to provide a written certification to its attorney or trustee that the homeowner does not qualify for the federal program before the house can be sold.

Maggiano said the changes resulted from visits to the servicers’ offices last December that allowed Treasury officials to “much better understand (their) inner workings.”

The rules, however, don’t take effect until June. Nor do they apply to hundreds of thousands of homeowners seeking a modification for whom the process leading to foreclosure has already begun. And Treasury has yet to set any penalties for servicers who don’t follow the rules.

Maggiano said Treasury’s new rule struck a balance to help homeowners who were responsive to servicer communications to stay out of foreclosure while not introducing unnecessary delays for servicers. Some borrowers don’t respond at all to offers of help from the servicer until they’re faced with foreclosure, she said.

Some states, such as North Carolina, have recently gone further to delay moving toward foreclosure if a homeowner requests a modification. State regulators there recently passed a law that requires a servicer to halt the process if a homeowner requests a modification.

Pearce, the North Carolina official, said the rule was prompted by the delays homeowners have been facing and puts the burden on the servicer to expeditiously review the request. “They’re in total control.”

Stopping the process not only removes the possibility of a sudden foreclosure, he said, but also stops the accumulation of fees, which build up and can add thousands to the homeowner’s debt as the servicer moves toward foreclosure.

In California, state Sen. Mark Leno, a Democrat from San Francisco, is pushing a bill that would do something similar. The servicers “should be working a lot harder to keep homeowners in their home,” he said.

 Kiel is a reporter for ProPublica, an independent non-profit newsroom based in New York. USA TODAY editors worked with him in preparing this story for publication.

SHARE YOUR STORY Are you a homeowner seeking a loan modification through the government program?Click here to share your story with ProPublica.

	HELP FOR BORROWERS What should you do if you’re foreclosed on while you’re waiting for an answer on your loan modification application? Treasury officials say you should call the HOPE Hotline, 888-995-HOPE. It’s staffed by housing counselors, who will contact the servicer to try to resolve the situation. If the counselors can’t resolve the problem, they can bring the issue to a “solution center” staffed by Fannie Mae, with which Treasury contracted to administer the modification program. Those employees can intervene on behalf of the Treasury if the servicer is breaking the program’s rules, they said.

	HOW MICHAEL HILL ALMOST LOST HIS HOME A chronology of one borrower’s experience with a mistaken foreclosure.  Early 2009: After falling behind on his mortgage, Hill has many phone calls with JPMorgan Chase but is not offered a modification. April 2: Chase files to pursue foreclosure on Hill’s house. Aug. 6: Chase refers Hill to a housing counselor. With her help, he applies again for a modification. Oct. 5: Chase sells Hill’s home at a foreclosure auction for $86,000. Nov. 5: The sheriff issues Hill a notice saying he’ll be evicted in one week. Nov. 11: Chase calls to tell Hill that he’s been approved for a trial modification. Nov. 18: Chase buys the home back for $19,521 above the auction price. Dec. 9: Hill begins the trial modification. Source: ProPublica interviews with Michael Hill and Hill’s records.

	HOMEOWNER LOSES HOME More than 50 homeowners have filed lawsuits in the past year, alleging a communication breakdown led to foreclosure.In one of those suits, David Peterson of Grain Valley, Mo. says Chase Home Finance, part of JPMorgan Chase, assured him in December 2008,  that he qualified for a loan modification and would soon receive the papers in the mail. The offer was not under the government program, which didn’t launch until April 2009. When the papers had still not arrived a month later, he says he called to ask whether he should send in a payment. He was told to wait, the suit says, and was assured he would not be foreclosed on. Nevertheless, Chase sold his home. More than three weeks later, Peterson says he received the modification papers in the mail. They were dated one day after the foreclosure had occurred. Chase refused to reverse the sale, according to the suit, which was filed last month. Chase declined to comment on pending litigation. – By Paul Kiel, ProPublica

Things that make you go Hmmm…

Patent infringement lawsuit seeks damages from Zillow, LPS, others

***

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© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

Huffington Post Investigative Fund |  David Heath First Posted: 05- 3-10 09:24 PM   |   Updated: 05- 3-10 09:44 PM

Republished from the Huffington Post Investigative Fund.

The financial crisis has spawned hundreds of criminal prosecutions for alleged fraud. Yet so far, defendants have been mostly minor players such as real-estate agents, mortgage brokers, borrowers and a few low-level bank employees. No senior executives at large financial institutions face criminal charges.

Thats in stark contrast to prosecutions during the savings and loan scandal two decades ago, when the government’s strategy targeted and snagged some of banking’s most powerful players. The approach back then succeeded in sending scores of S&L executives to prison, as well as junk-bond king Michael Milken and business tycoon Charles Keating Jr.

One explanation for the difference may be that key bank regulators — who did the detective work during the S&L crisis and sent more than 1,000 criminal referrals to prosecutors — have this time left reporting fraud up to the banks themselves.

Spokesmen for two chief regulators, the Comptroller of the Currency and the Office of Thrift Supervision, say that they have not sent prosecutors a single case for criminal prosecution.

An OTS spokesman said the agency, much like the banks themselves, does not see much evidence of criminal fraud inside the financial institutions. The spokesman, Bill Ruberry, citing the agency’s enforcement director, said, “There may be some isolated cases, but certainly there’s no widespread patterns.”

That surprises William K. Black, a former OTS official who helped coordinate criminal investigations during the S&L crisis.

“Dear God,” Black said when told bank regulators haven’t made any criminal referrals. “Not a single one?”

Black sees many signs the the government is less aggressive than during the S&L era — and could result in more bad behavior.

“This crisis was not bad luck,” he said. “It was done to us. When you bring those convictions, you hope that at least for a while to deter.”

Banks have reported massive amounts of fraud to the Treasury Department but have not held themselves — or their top executives — responsible, instead pinning blame on borrowers, independent mortgage brokers, and others.

That may account for the dearth of prosections against big fry. For instance, in California, among states where the mortgage meltdown hit hardest, the Huffington Post Investigative Fund identified 170 mortgage fraud prosecutions in federal courts. Only two are against employees of a regulated lender.

An Investigative Fund analysis shows that two-thirds of the 170 prosecutions are against mortgage brokers, real-estate professionals or borrowers — the same groups blamed by the banks when they report suspicious activities to regulators.

Besides the absence of criminal referrals, other plausible factors for the lack of major prosecutions may include a skittishness among prosecutors about filing cases they could have trouble winning, and a severe decline in investigative resources. The FBI dramatically shifted resources away from white-collar crime after the 2001 terrorist attacks.

To be sure, there are also notable differences between the S&L and current financial crisis, in the behavior of lenders during both periods, and between civil allegations of fraud and proving that someone committed a crime — all of which could account for the lack of big prosecutions.

But interviews with several law enforcement authorities suggest another explanation: A lack of active assistance to prosecutors by bank regulators who played key roles during the S&L crackdown. Those regulators sent detailed reports to prosecutors of known and suspicious criminal activity.

“Only the regulators can make a lot of these cases,” Black said. “The FBI can make a few, but the regulators are the ones that understand the industry.”

[youtube=http://www.youtube.com/watch?v=PR-8uVu4lPI]

Under intense political pressure in the late 1980s, the Justice Department and thrift regulators developed a strategy to thoroughly investigate failed S&Ls for evidence of fraud and to focus their resources on the highest ranking executives.

In the early years, between 1987 and 1989, there were more than 300 prosecutions. Some bank executives were already behind bars. In 1989, Woody Lemons, chairman of Vernon Savings and Loan in Texas, was sentenced to 30 years.

In June 1990, then-OTS director Timothy Ryan told Congress that his agency had established criminal-referral units in each of 12 district offices. In addition, more than 30 OTS employees were assigned as full-time agents of grand juries or assistant US attorneys to help prosecutions. And the agency prioritized prosecutions to a Top 100 list, targeting senior S&L executives and directors.

While data on criminal referrals during the S&L crisis is spotty, the Government Accountability Office reported that in the first ten months of 1992 alone — a random snapshot — financial regulators sent the Justice Department more than 1,000 cases for criminal prosecution.

One study showed that 35 percent of criminal referrals in Texas — ground zero for the S&L problems — were against officers and directors.

This time, prosecutors are relying more heavily on banks to report suspicious activity to the Treasury Department. Banks are required to report known or suspected criminal violations, including fraud, on Suspicious Activity Reports designed for the purpose. In effect, the reports, which can be many pages in length, provide substantive leads for criminal investigations.

Black scoffs at the strategy of leaving it to banks to ferret out all the fraud. “Institutions will not make criminal referrals against the people who control the institutions,” said Black.

A white-collar criminologist and law professor at the University of Missouri-Kansas City, he argues that there’s ample evidence of fraud. Insiders working for lenders openly referred to loans they made without proof of income as “liar loans.” Many banks actively sought inflated appraisals in their rush to make as many loans as possible. As previously reported by the Investigative Fund, such lending practices contributed to the demise of Washington Mutual.

Not everyone agrees that such a case can be successful. Benjamin Wagner, a U.S. Attorney who is actively prosecuting mortgage fraud cases in Sacramento, Calif., points out that banks lose money when a loan turns out to be fraudulent. An investor in loans who documents fraud can force a bank to buy the loan back. But convincing a jury that executives intended to make fraudulent loans, and thus should be held criminally responsible, may be too difficult of a hurdle for prosecutors.

“It doesn’t make any sense to me that they would be deliberately defrauding themselves,” Wagner said.

So far, only sporadic news reports suggest that the Justice Department has ongoing criminal investigations against major banks such as Washington Mutual and Countrywide, as well as investment bank Goldman Sachs.

Fewer Cops on the Beat

The Justice Department, in response to written questions from the Investigative Fund, acknowledged the absence of criminal referrals from financial regulators. Months into the financial crisis, a new Financial Fraud Enforcement Task Force, formed by President Obama last fall, was trying to work out communication problems between Justice and the regulatory agencies, according to the head of the task force, Robb Adkins. Adkins has said that criminal referrals from regulators have been “too often the exception to the rule.”

At a Congressional hearing in December, Assistant Attorney General Lanny Breuer was asked why there have been no criminal cases brought yet against CEOs. “Don’t for a moment think [these cases] aren’t being investigated,” Breuer replied. “They are complicated cases. It took a long time in hatching them and developing them. But they will be brought.”

The system that tracks Suspicious Activity Reports, or SARs, detected a dramatic increase in mortgage fraud starting in 2003, when reports of mortgage fraud nearly doubled within a year from 5,400 to 9,500. By 2007, the number had exploded to 53,000. During those same years, many mortgage lenders dramatically lowered their lending standards. Banks often required no proof of income. Borrowers could even get loans without be able to repay them.

Yet in their reports, banks overwhelmingly have blamed others for fraud. Whenever a borrower’s income was wrong on a loan application, the banks fingered borrowers 87 percent of the time and independent mortgage brokers 64 percent of the time, according to a 2006 Treasury analysis of the SARs. But the bank’s own employees were almost never blamed — only about four times in every 1,000 reports.

That might explain why so few prosecutions have targeted bank insiders.

Another reason for fewer prosecutions against bank employees is that the Federal Bureau of Investigation has far fewer agents working on the current crisis. Deputy Director John Pistole testified before Congress last year that the bureau had 1,000 people working on the S&L crisis at its height. That compares to about 240 agents working on mortgage fraud cases last year.

The FBI dramatically shifted its resources away from white-collar crime and to terrorism after the Sept. 11 attacks.

“We just didn’t have the cops on the beat” during the recent crisis, said Sen. Ted Kaufman, the Delaware Democrat who conducted a hearing on the lack of criminal prosecutions. “I was around during the savings and loan crisis [as a Congressional aide] and we had a lot more folks working it when it went down.”

Even with additional funding from Congress, which Kaufman helped push through, the FBI is budgeted to have 377 people working mortgage fraud cases this year, about a third as many as during the S&L investigations.

Charges Harder to Prove?

Charges in the recent banking crisis may be harder to prove, said Robert H. Tillman, who teaches at St. John’s University and who analyzed data about S&L prosecutions. Savings and loan executives who were convicted often personally approved large commercial loans for projects doomed to fail. Some would use federally insured deposits to pay themselves excessive salaries or to lend money to their own real estate projects. A few even took kickbacks.

This time, lending executives may have encouraged the making of bad loans, but they generally did not personally approve the loans, Tillman said. They didn’t send emails telling the troops to make fraudulent loans but paid big commissions to loan offers who made risky loans. Then the executives were able to reap huge bonuses for making the company look so profitable.

So far, the biggest cases have been civil lawsuits brought by the Securities and Exchange Commission, including most recently a highly publicized securities fraud case against Goldman Sachs and one of its vice presidents, Fabrice P. Tourre. News reports suggest that a referral from the SEC’s enforcement division to the Justice Department has led to a criminal inquiry.

Typically, federal authorities deal with massive financial scandals by picking a few cases they are confident they can win, said Henry Pontell, an expert on fraud at the University of California — Irvine.

This time, the administration may have been more focused on saving failing banks — and an entire financial system — than in prosecuting bank executives, Pontell said. Giving billions in bailout dollars to executives who encouraged fraudulent practices not only could complicate a case, it could prove embarrasing, he added.

By Laura Rice TOLEDO24
Monday, May 03, 2010 at 8:23 p.m.

WOOD COUNTY, OH — A Wood County man facing foreclosure has boarded himself up in his home along with five others.

They are refusing to leave, despite a court order, and they say they will be there until Wood County Sheriff’s Officers drag them out.

Protestors are gathered outside Keith Sadler’s home of 20 years in rural Wood County trying to bring public attention to what they say is unfair action by banks and trying to keep the sheriff’s department from kicking him out.

“So far they have not come. Probably because of the strong public presence that has been so basically we can call this a victory for the day and hopefully we can carry that through tomorrow and the rest of the foreclosure,” said Lance Crandall, Toledo Foreclosure Defense League.

But the real action is going on inside, where Sadler and five others are locked up with supplies with no plans to leave.

NBC24 spoke with Sadler over an internet connection.

“They’re going to have to drag us out. We’re not going to willingly walk out,” said Sadler.

Sadler emphasizes that this is a peaceful protest and that they do not have any weapons.

He says he is doing this for himself.

“Because it’s my home,” said Sadler.

But also for all the others that could not keep up with house payments. Sadler was off work after a hand injury.

“I cut all the avenues that I could before that to try to make payments, to try to keep as close to on time as I could and of course it was getting impossible,” said Sadler.

What Sadler wants now is a moratorium on foreclosures. But, in talks with Wood County Sheriff Mark Wasylyshyn, that is not happening.

“(The Sheriff is) basically refusing to do that, saying it’s his duty to uphold the law of the courts even though the laws are immoral and unjust,” said Sadler.

NBC24 spoke with Sheriff Wasylyshyn who said it is Sadler who has broken his word.

Wasylyshyn met with him weeks ago to discuss an eviction plan and he says Sadler agreed to leave peacefully.

Wasylyshyn says sheriff’s deputies will remove the protestors from the property but he would not say when. He says his top priority is keeping his officers safe.

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.

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Very simple.

Gov’t to rate how lenders treat borrowers

By Alan Zibel

AP Real Estate Writer

WASHINGTON (AP) – The Treasury Department is planning to rate mortgage companies on how they treat customers as part of the Obama administration’s $75 billion foreclosure relief effort.

The new report will include measurements of how each company is handling borrowers and is expected by July, Treasury Secretary Timothy Geithner told Senate lawmakers on Thursday.

More than 100 companies participate in the program, which is designed to help up to 4 million borrowers avoid foreclosure.

Speaking in unusually strong language, Geithner said many companies “are not responding to the needs of responsible and increasingly desperate homeowners.”

If they don’t comply with the program’s rules, he said, “we will withhold incentives or demand their repayment.”

The program is designed to lower borrowers’ monthly payments by reducing mortgage rates to as low as 2 percent for five years and extending loan terms to as long as 40 years. Mortgage companies get taxpayer incentives to reduce borrowers’ monthly payments. Homeowners have to complete at least three months of payments to qualify for permanent loan modifications.

About 231,000 homeowners have completed this process so far. That’s about 20 percent of the 1.2 million borrowers who started the program over the past year.

Many experts say that’s inadequate. “Families are tragically being foreclosed on when foreclosure was preventable,” said Richard Neiman, New York’s top banking regulator and a member of the independent Congressional Oversight Panel. The panel was set up to oversee the government’s financial bailout programs.

And the number of dropouts is rising. About 155,000 homeowners didn’t complete the initial trial phase. Another 2,900 fell out even after their loans were modified. Many more are still in limbo.

New Center for Court Innovation paper reviews responses to mortgage fraud, foreclosure and abandoned property.

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 TITLE 18 > PART I > CHAPTER 9 > § 152
Prev | Next
http://www.law.cornell.edu/uscode/html/uscode18/usc_sec_18_00000152—-000-.html
 

§ 152. Concealment of assets; false oaths and claims; bribery

How Current is This?
A person who­
(1) knowingly and fraudulently conceals from a custodian, trustee, marshal, or other officer of the court charged with the control or custody of property, or, in connection with a case under title 11, from creditors or the United States Trustee, any property belonging to the estate of a debtor;
(2) knowingly and fraudulently makes a false oath or account in or in relation to any case under title 11;
(3) knowingly and fraudulently makes a false declaration, certificate, verification, or statement under penalty of perjury as permitted under section 1746 of title 28, in or in relation to any case under title 11;
(4) knowingly and fraudulently presents any false claim for proof against the estate of a debtor, or uses any such claim in any case under title 11, in a personal capacity or as or through an agent, proxy, or attorney;
(5) knowingly and fraudulently receives any material amount of property from a debtor after the filing of a case under title 11, with intent to defeat the provisions of title 11;
(6) knowingly and fraudulently gives, offers, receives, or attempts to obtain any money or property, remuneration, compensation, reward, advantage, or promise thereof for acting or forbearing to act in any case under title 11;
(7) in a personal capacity or as an agent or officer of any person or corporation, in contemplation of a case under title 11 by or against the person or any other person or corporation, or with intent to defeat the provisions of title 11, knowingly and fraudulently transfers or conceals any of his property or the property of such other person or corporation;
(8) after the filing of a case under title 11 or in contemplation thereof, knowingly and fraudulently conceals, destroys, mutilates, falsifies, or makes a false entry in any recorded information (including books, documents, records, and papers) relating to the property or financial affairs of a debtor; or
(9) after the filing of a case under title 11, knowingly and fraudulently withholds from a custodian, trustee, marshal, or other officer of the court or a United States Trustee entitled to its possession, any recorded information (including books, documents, records, and papers) relating to the property or financial affairs of a debtor,

shall be fined under this title, imprisoned not more than 5 years, or both.

Via: b.daviesmd6605

Included here is a short excerpt that discusses the way MERS allows nearly any member have MERS authority to sign documents. The article says that some states require the signor to be a VP of the actual member. Eventually some states allow them to be an authorized signatory despite not being an employee. If any late assignments apply to you this is then a must read.

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