How can you commence an action if you don’t have the proof you’re entitled to to enforce the action in the first place?
Must Lender Have Current Ownership Interest in Promissory Note or Mortgage at the Time Foreclosure Action Is Filed?
Or May Lack of Standing Be ‘Cured’ Through Mortgage Assignment Before Judgment?
Federal Home Loan Mortgage Corp. v. Duane Schwartzwald et al., Case nos. 2011-1201 and 2011-1362 Second District Court of Appeals (Greene County)
ISSUE: If a party files a lawsuit to foreclose on a mortgage and it is later shown that party did not have a current ownership interest in the mortgage or the underlying promissory note on the date the foreclosure action was filed, is the court required to dismiss the suit based on the plaintiff’s lack of standing to bring it? Or may the plaintiff “cure” a defect in standing or in naming the actual party in interest under Civil Rule 17(A) by obtaining an assignment of the mortgage prior to the court’s entry of a judgment in the case?
On April 23, 2012, the plaintiff in State of Ohio ex rel. David P. Joyce, Prosecuting Attorney of Geauga County Ohio v. MERSCORP, Inc., et al., N.D. Ohio Case No. 1:11-cv-02474, filed its motion seeking an order certifying the action as a class action, appointing Geauga County as class representative, and appointing plaintiff’s counsel, the New York law firm of Bernstein Liebhard LLP, as class counsel. The plaintiff argues that the case, which the plaintiff is attempting to bring on behalf of all 88 Ohio counties for relief relating to the allegedly unlawful failure of MERS and its member institutions to record millions of mortgages and mortgage assignments throughout Ohio, meets all requirements of Rule 23(a) and that certification is proper under any one of the 3 subsections of Rule 23(b). The plaintiff hopes to persuade the court that the MERS/member institution policy concerning recordation of mortgages and assignments is a “common scheme or course of conduct” that has given rise to claims “ideally suited for class certification.”
My latest for FireDogLake. For even more confirmation that the Feds aren’t interested in bank accountability, regardless of the State half of the task force’s intentions, see Congressman Brad Miller on why he’s not the task force Executive Director and Richard Eskow on the obviousness of the problem.
As people increasingly realize that the mortgage settlement was an enforcement fraud, attention’s turned to the “new“ joint Federal/State task force that’s supposed to make the settlement into a “down payment,” by delivering much more. And so far people don’t like what they see, and are saying so. What’s striking about the resulting PR push back, however, is that it just highlights how banker-fraud-friendly our federal government is.
For example, Attorney General Eric Schneiderman penned a Daily News Op-Ed in which he pitches “More than 50 attorneys, investigators and analysts have already been deployed to support our investigations, with many more on the way” as somehow adequate to deliver on that “down payment” promise when the Savings and Loan crisis took over 1,000 and Enron alone took over 100. Not only hasn’t the federal government corroborated AG Schneiderman’s claim of “many more on the way”; “many more” than 50+ doesn’t sound like anywhere near the 1,000+ needed to approach the ballpark of accountability.
For the next couple of weeks, I’m one of the David Dayen subs at FireDogLake–no one person could fill his shoes–and this post ran there earlier today. This version is slightly updated but essentially the same.
One way to see the double standard at the heart of the foreclosure fraud—one set of laws for the bailed out banks, one for the rest of us—is to focus on the role of notaries public, and then consider that role in light of what our Supreme Court said about notaries in 1984, in a case called Bernal v. Fainter, Secretary of State of Texas.
First, let’s recap the role of notaries in the foreclosure fraud crisis: Notaries are the people who verify that someone actually is who they say they are when that person signs a document. Because banks and their agents industrialized “Document Execution” as part of their foreclosure business model, notaries did not do their jobs. Notaries’ failure to verify identities has been so complete that many people will sign as one person, say, “Linda Green.” Notaries have also been told to sign documents using one name, and then notarize their own “surrogate” signature. “Well, what’s the big deal?” bank defenders say. Beyond the fact that there’s no “business convenience” exception to following the rule of law, consider Bernal.
Bernal involved Texas’s requirement that all notaries be citizens; lawful permanent resident aliens need not apply. Bernal challenged the Constitutionality for the citizenship requirement. To rule on the question, the Court had to consider what notaries did, and whether or not what notaries did was so political, so central to representative democracy, that limiting being a notary to citizens was rational. In finding that notaries were important but not political officers of the state, the Court made some observations of note.
The Obama Administration worked for months on a deal that would have let America’s biggest banks off the hook for a crime wave of runaway mortgage fraud. All they had to do in return was pledge a negligible sum of money, to be paid by their shareholders and not themselves, and which they would dispense themselves. In return, crooked bankers received immunity from prosecution – and even from investigation.
After the deal came under attack from a number of its allies, the Administration settled with the banks anyway. But it promised millions of wronged homeowners – and the nation as a whole – that it would move “aggressively” to investigate criminal misdeeds and prosecute bankers and anyone else who broke the law.
That was then, this is now. Two and half months later the Administration hasn’t even started to take the inadequate steps it promised it would take. The clock is running out on the statute of limitations and there’s no sign that the Administration has lifted a finger to investigate criminal bankers.
What we have learned so far: Whenever dealing with the banks and or with the government, they are from the same mold. We cannot tell any difference.
This “mortgage task force group” thing is also NO Different than that MERS system…There are no employees!
NY Daily News-
On March 9 — 45 days after the speech and 30 days after the announcement — we met with Schneiderman in New York City and asked him for an update. He had just returned from Washington, where he had been personally looking for office space. As of that date, he had no office, no phones, no staff and no executive director. None of the 55 staff members promised by Holder had materialized. On April 2, we bumped into Schneiderman on a train leaving Washington for New York and learned that the situation was the same.
Tuesday, calls to the Justice Department’s switchboard requesting to be connected with the working group produced the answer, “I really don’t know where to send you.” After being transferred to the attorney general’s office and asking for a phone number for the working group, the answer was, “I’m not aware of one.”
The promises of the President have led to little or no concrete action.
On Thursday, April 5th U.S. District Court Judge Rosemary M. Collyer announced she had decided to sign off on the ”$25 billion” Mortgage Settlement. By “announced”, I mean she signed the consent orders all our major law enforcers and the biggest bankers had agreed to, and entered them into the record. Judge Collyer didn’t actually say anything about the deal. She didn’t let anyone else say anything, either: she didn’t hold a public hearing on the deal.
In acting silently, Judge Collyer not only okayed the deal’s lousy terms, which institutionalize servicer theft and foreclosure fraud, she reinforced the incredibly poor public process that’s kept the enforcement fraud at the heart of the deal hidden. Deliberately hidden.
Magical Misdirection
To understand just how deceptive “our” government and “our” law enforcers have been with us…
Nothing from the consent judgment entered into court in the $25B foreclosure settlement may constitute “evidence against Defendant.”
WSJ-
The settlement was announced in February and filed in court as a consent judgment last month. Judge Rosemary Collyer approved the landmark settlement on Wednesday. The signed order was filed in U.S. District Court for the District of Columbia.
The pact will offer reductions in loan principal and other assistance to qualifying homeowners. The largest portion of the aid, valued at $17 billion, goes to borrowers at risk of foreclosure. Banks will pay $5 billion in fines, including nearly $1 billion to the Federal Housing Administration.
Just like everything fraud involving the Banks, Fannie and Freddie…wait until they get their hands on the rentals!
WSJ-
New York’s top financial regulator is expanding an investigation of insurers that force homeowners policies on borrowers after turning up evidence that consumers were charged too much, according to people familiar with the situation.
Benjamin M. Lawsky, superintendent of the New York Department of Financial Services, is issuing new subpoenas and formal document requests to several insurers, demanding justification for how their rates and loss ratios were calculated, these people said.
The loss ratio is the percentage of premiums collected by an insurer that is paid out to policyholders. Based on information gathered in initial inquiries since the probe was launched in October, Mr. Lawsky…
Not this word again “Flaw”…it’s FULL B L O W N FRAUD!
Why wasn’t this review done prior to any settlement? Because they never began any investigation.
DealBook-
The nation’s biggest banks may have put the huge $25 billion settlement over bad foreclosure practices behind them, but that doesn’t mean their mortgage troubles are over.
A separate review — this time by independent consultants on behalf of the Office of the Comptroller of the Currency — flagged more than 138,000 cases for possible flaws in the foreclosure process at the nation’s largest mortgage servicers. Those include foreclosures involved with the so-called robo-signing scandal, in which bank representatives churned through hundreds of documents a day in foreclosure proceedings without reviewing them for accuracy.
Ingham County officials expect to see tens of thousands of dollars in new revenue as they begin collecting taxes from two of the nation’s largest mortgage lenders.
Ingham County Register of Deeds Cutris Hertel Jr. said he will begin requiring Fannie Mae and Freddie Mac to pay full transfer taxes on all property transfers in which they are the seller.
The two companies had claimed to be exempt from paying taxes upon filing new deeds, saying they were government entities.
“We’ve been telling them along the way they need to pay on these, but we haven’t had the legal backing until the Oakland County case was decided,” Hertel said.
The mortgage settlement signed by 49 states and every Federal law enforcer allows the rampant foreclosure fraud currently choking our courts to continue unabated. Yes, I realize the pretty language of Exhibit A promises the banks will completely overhaul their standard operating procedures and totally clean up their acts. Promises are empty if they’re not honored, and worthless if not enforceable.
We know Bailed-Out Bankers’ promises are empty, so what matters is if the agreement is enforceable. And when it comes to all things foreclosure fraud, the enforcement provisions are laughable. But before I detail why, let’s be clear: I’m not being hyperbolic. The bankers running and profiting most from our bailed-out banks are totally dishonest when dealing with the public, and their promises are meaningless.
To see their dishonesty in the mortgage context, read the complaint filed in the mortgage deal, or my take on it here. But the bankers don’t limit their lying, cheating and stealing to homeowners. They abuse their clients the same way. Most broadly damaging, the bankers steal from taxpayers on a federal, state and local level and practically everybody else too. Fraud is just how they do business. When dealing with bankers, you can’t do business on a handshake.
Southern Essex District Register of Deeds John O’Brien today is asking the Massachusetts Department of Revenue to file legal action against mortgage giants Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddy Mac”) for their failure to pay deeds excise tax, on property transfers in Register O’Brien’s District. According to O’Brien his district alone is owed approximately $4.2 Million. O’Brien was notified late Friday that a United States District Judge in Michigan concluded that Fannie Mae and Freddy Mac were not entitled to an exemption from excise taxes in Michigan. The Michigan Court cited numerous cases; two of significant interests were a 2011 Nevada case involving Countrywide Home Loans and 1988 United States Supreme Court case involving Wells Fargo Bank. In Nevada, the Court concluded that Fannie Mae was essentially a privately owned mortgage banker and not a federal instrumentality for tax purposes. In the Wells Fargo Case, the United States Supreme Court concluded that a transfer tax is a form of excise tax and are not direct taxes. The Supreme Court decided that direct taxes were exempt, however transfer taxes were not.
According to O’Brien, since 1991 Fannie Mae and Freddy Mac have been involved in property transfers with total sales values of over $920 Million Dollars in his district. These transactions would have generated close to $4.2 Million Dollars in tax revenue to the Commonwealth for his district alone had Freddy Mac and Fannie Mae paid the excise tax rather then claiming exemptions. If a private citizen or corporation sells a piece of Massachusetts real estate, they are required to pay a deeds excise tax of $4.56 per thousand dollars of the purchase price, however Fannie Mae and Freddy Mac pay nothing. Certain tax exemptions are given to governmental entities, however O’Brien points out that Fannie Mae and Freddy Mac although originally created as government entities are now publicly traded companies owned by investors. O’Brien notes that these private corporate entities that have shareholders and are paying their top executives millions of dollars in salaries and bonuses are wrongfully claiming the excise tax exemptions. “This lost revenue goes a long way in providing key services for the people of Massachusetts. The message in our Commonwealth to all those that think that they can circumvent the system should be loud and clear; pay like everyone else, or deal with the consequences.”
The county could be in line for a half-million-dollar payout from mortgage giants Fannie Mae and Freddie Mac if a U.S. District Court decision Friday stands up to a likely appeal.
County Treasurer Deb Cherry said today that Friday’s decision by Judge Victoria A. Roberts could provide an unexpected revenue boost to the county and immediately urged that the payout be used to help fix problems that have been created by mortgage and tax foreclosures.
Lets not confuse the word “Flaw” with “Fraud”…There is a major difference!
HW-
John Walsh, acting Comptroller of the Currency, said the recent $25 billion mortgage servicing settlement reached between the big banks and state attorneys general does not conflict or double-up on requirements servicers have to follow in consent agreements banks signed with the OCC and other regulators last year.
In 2010, regulators, including the OCC, examined 14 large federally regulated mortgage servicers and thrifts.
Last year, the agencies issued enforcement orders against all 14 institutions forcing them to take steps to review their foreclosure review processes and to offer aid to borrowers who suffered from flawed foreclosure practices.
The acting director of the Federal Housing Finance Agency and overseer of Fannie Mae and Freddie Mac, Mr. DeMarco is a soft-spoken, career public servant — and under fire. In the thankless job of conservator for the loss-ridden mortgage finance giants, he has a duty to ensure that the companies operate in the best interests of the taxpayers who own them. That means working to keep a lid on the companies’ losses, which now total $183 billion.
But in recent weeks, Mr. DeMarco has come under increasing pressure to chuck his obligation to taxpayers and make Fannie and Freddie write down principal on mortgages held by troubled borrowers. He says, with reason, that such a program would run counter to his legal obligation to pursue only those activities that pose the least cost to taxpayers.
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION
OAKLAND COUNTY, ET AL., Plaintiffs,
vs
FEDERAL HOUSING FINANCE AGENCY AS CONSERVATOR FOR FEDERAL NATIONAL MORTGAGE ASSOCIATION AND FEDERAL HOME LOAN MORTGAGE COMPANY; FEDERAL NATIONAL MORTGAGE ASSOCIATION; AND FEDERAL HOME LOAN MORTGAGE COMPANY, Defendants. ________________________________/
ORDER GRANTING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT
EXCERPT:
IV. CONCLUSION
In the end, this case turns on a single question: whether a statutory exemption from “all taxation” includes excise taxes such as the Michigan Transfer Taxes. Wells Fargo dictates that it does not. Accordingly, the Enterprises are liable for the Transfer Taxes.
Plaintiffs’ and State Plaintiff’s motion for summary judgment is GRANTED. Defendants’ motion is DENIED. The issue of damages remains.
IT IS ORDERED.
S/Victoria A. Roberts Victoria A. Roberts United States District Judge Dated: March 23, 2012
Just breaking and will report when the ruling is released…
The lawsuit, filed in U.S. District Court for the Eastern District of Michigan on 6/20/2011, alleged that Fannie Mae and Freddie Mac failed to pay the real estate transfer tax.
Oakland County Treasurer Andy Meisner stated in twitterverse “Just got word Oakland County has won our lawsuit against Fannie Mae and Freddie Mac, one step in fighting to make our taxpayers whole!”
Via Josh Rosner – “Zandi had ZERO evidence and I do not believe FNM/FRE have conclusively found what this story states they have found“
NPR-
The two most powerful entities in the housing market — Fannie Mae and Freddie Mac — could be on the verge of a significant change regarding foreclosures. NPR and ProPublica have learned that both firms have concluded that giving homeowners a big break on their mortgages would make good financial sense in many cases.
In these so-called principal write-downs, a portion of the loan is forgiven for someone who’s having trouble paying. Many Democrats are pushing for this change. Most Republicans are against it. So far, a key federal regulator is blocking Fannie and Freddie from adopting the approach.
In recent days, financial executives at Fannie and Freddie have made presentations to their regulator saying that principal reduction for many homeowners would prevent larger losses and keep people in their homes.
This is a big development in a charged political issue. Some economists and many Democratic lawmakers see principal reduction as a powerful tool for helping the housing market.
If the top five mortgage servicers begin to abuse bond investors under the foreclosure settlement write-downs, the attorneys general would consider some protections, according to Iowa AG Tom Miller.
Miller faced down banking executives and analysts during a panel at the REthink Symposium Thursday. The $25 billion settlement signed in March forces servicers to meet roughly $10 billion in principal reductions, which could swell higher because in some instances the full dollar written down will not be credited.
Servicers will get full credit for reducing principal on loans they hold on their own portfolio but receive 45 cents for every dollar written down on mortgages held in private securities.
“To try principal reduction in a targeted way and find out if it works is good for the housing market,” Miller said. “We know what (the banks’) plans are. Two have said they wouldn’t do write-downs on private securities. But we could have some discussions about something to reassure investors.”
Let’s be clear why there’s a mortgage deal: the banks broke the law. Several laws in fact, in ways that appear criminal as well as civil. Limiting their liability is the only reason the banks did a deal.
In this post I’m going to look at what the banks could be held liable for; how much liability “their” money persuaded law enforcers to ignore will be the next post. But one important kind of peace has not been bought: criminal. So as I detail the wrong doing exposed by the deal, I highlight the crimes our law enforcers seem to allege the bankers committed. After all, a liability release isn’t simply what it says, it’s what law enforcers do with their remaining freedom to act. If crimes were committed, and indictments don’t follow, the release is much broader than its text.
A close read of the complaint and the related language that precedes the releases (see Exhibits F and G) reveals:
![[VIDEO] Shaun Donovan on the Foreclosure Fraud Settlement & Wish Wash](https://stopforeclosurefraud.com/wp-content/themes/gazette/thumb.php?src=wp-content/uploads/2012/04/trustlies1.jpg&w=100&h=57&zc=1&q=90)
Nick Timiraos
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