We need to have a law and registry that provides the home addresses, home and cell phone numbers of ALL affiants and robo-signers so we can locate and depose them!?
WPTV-5
WEST PALM BEACH, Fla. – A growing list of foreclosure filings and not enough to staff to handle the problem in Palm Beach County.
The bursting housing market bubble created that double whammy in Palm Beach County.
Now, county leaders have approved a new registry to smooth things out.
In hopes foreclosed homes won’t be abandoned, the new registry banks would inspect foreclosed properties and give property manager names to county code enforcement.
Action Date: August 11, 2011 Location: Tallahassee, FL
On July 11, 2011, BAC Home Loans Servicing, LP, filed a Notice of Cancellation with the Florida Department of State stating it was no longer transacting business in Florida.
From July 11, 2011 to August 11, 2011, this company initiated hundreds of foreclosure actions throughout Florida, filing 76 Lis Pendens in Palm Beach County; 61 Lis Pendens in Hillsborough County; 35 Lis Pendens in Lee County; and 107 in Broward County.
It will come as a real surprise, no doubt, to the hundreds of people in Florida who have been sued for foreclosure by BAC Home Loans Servicing, LP, in the past 30 days that they are “no longer conducting business in Florida.”
OMG! Just when you think you’ve seen it all, along comes a new horror story that makes the thought of doing short sales even more disgusting than before!!
Because of our intense hatred of all banks (BofA and Chase head the top of the list) we decided to stop doing short sales, and most conventional real estate transaction last summer and have been buying and flipping properties instead!
The last short sale we did was one we were referred to in October of 2009 (no good deed goes unpunished!!). The client (Tom) had recently lost his job due to downsizing and, to make matters worse, his mother had been diagnosed with a life threatening disease. There was no way we could turn this opportunity down to assist him so we took the listing on his one bedroom condo in southern California. He had purchase it in 2007 for $224K and we figured the current value was about $125K. We put it on the market and got an offer for $130K within a couple of weeks! Tom moved out of state to assist his mother in her remaining days on earth and we were happy to have an offer. After 5 months of negotiating with BofA (loan servicer) with 2 different negotiators, we finally got approval for a sale price of $123k!! (First negotiator said it was worth $180K!!!- Surprise)!
We closed the deal in April, 2010 and both the Seller and Buyer were ecstatic! All was right with the world!
Fast forward to July 2011! Last week, we received a document from our Seller that he had received. Are you sitting down? It was a LAW SUIT on behalf of MERS and Fannie Mae (Plaintiffs) against the Seller and Buyer (Defendants) and a possible 23 other defendants, (Does) who are at this point unnamed!
In re: Richard E. and Mary Shaw, Chapter 7, Debtor(s).
Eric W. Goering, Trustee, Plaintiff,
v.
Green Tree Financial Services Corp. et al., Defendants.
Case No. 09-10277, Adv No. 10-1020.
United States Bankruptcy Court, S.D. Ohio, Western Division.
May 2, 2011.
John A. Schuh, Esq., Adam M. Schwartz, Esq., David Demers, Esq., David H. Yunghans, Esq., for Debtors.
ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANT’S CROSS MOTION FOR SUMMARY JUDGMENT
BURTON PERLMAN, Bankruptcy Judge
In this adversary proceeding, arising in a chapter 7 bankruptcy case, Plaintiff Trustee seeks to avoid a first mortgage lien held by Green Tree Financial Services Corp. (“Green Tree”.)
Now before the Court is a Motion for Summary Judgment brought by Plaintiff, and a Cross Motion by Defendant Green Tree. Plaintiff’s Motion is supported by the Stipulation of Facts (Doc. 35), Plaintiff’s affidavit, and the claims register contained in Appendix No. 4. Green Tree’s cross motion also looks to the Stipulation of Facts and the Entry Confirming Sale and Ordering Deed and Distribution, entered by the Brown County Court of Common Pleas of Ohio with attachments, including a copy of the subject mortgage. The issues before the Court are 1) whether a certificate of acknowledgment which fails to recite the grantor’s name renders the mortgage avoidable; 2) whether the establishment of lis pendens within the 90-day preference period provides constructive notice of the mortgage to the Trustee; and 3) the effect of the sale of the property via the foreclosure process to Green Tree and Green Tree’s subsequent sale of the property to a third party.
The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and the general order of reference entered in this district. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(K), (F) and (O).
Motions for summary judgment are governed by F.R.Civ.P. 56 which is incorporated into bankruptcy practice by F.R.B.P. 7056. That rule provides in part that a motion for summary judgment is to be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” The moving party bears the initial burden of showing that there is no issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-324 (1986). The nonmoving party, however, bears the ultimate burden of showing that a genuine issue of material fact exists. In doing so, the nonmoving party cannot rest on its pleadings, but must, in response, offer some evidence which demonstrates a genuine issue of material fact for trial. Id.
FACTS
The material facts are not in dispute. On January 13, 1999, Debtor Richard E. Shaw granted a mortgage on the subject property, 1719 Kress Road, Mt. Orab, Ohio, in favor of Green Tree. The certificate of acknowledgment on the mortgage is blank as to the grantor’s name. On December 9, 2008, Green Tree initiated a foreclosure action in state court on the property.
On January 21, 2009, the Debtor filed his bankruptcy petition. Green Tree then filed its Motion for Relief From Stay. On February 27, 2009, the clerk entered a default order granting Green Tree’s Motion for Relief From Stay. Green Tree did not seek an abandonment from the Trustee and the Trustee did not abandon the property[1] The Trustee was never added as a party to the state court foreclosure action.
On April 17, 2009, a judgment entry and decree in foreclosure was entered in the state court action. The property was appraised by the sheriff for $85,000.00. At the July 13, 2009 sheriff’s sale, Green Tree was the highest bidder, with a credit bid of $56,667.00. The foreclosure sale was confirmed on August 25, 2009. Soon thereafter, Green Tree sold the property to Jared Smith for $79,900.00. Green Tree received net proceeds of $71,539.46 from the subsequent sale of the property.
DISCUSSION
A. Mortgage Validity.
Included in the record before the Court is a copy of the mortgage document. The mortgage concludes with a signature by Debtor Richard E. Shaw and the names of two witnesses. Following this is an Acknowledgment, the printed form stating: “This instrument was acknowledged before me this”, followed by the date. The second line contains the word “by” followed by a blank. In the blank, the notary has stamped his name. The Acknowledgment concludes with the signature of the notary. Nowhere in the Acknowledgment does the name of either debtor appear.
The law is well-settled in this district that the failure to identify the grantor as an acknowledging party in the acknowledgment clause renders the mortgage defective and, therefore, avoidable under 11 U.S.C. § 544(a)(3). In re Nolan, 383 B.R. 391 (B.A.P. 6th Cir. 2008); Countrywide Home Loans, Inc. v. Spaeth, Case No. 3-10-CV-120 (S.D. Ohio entered July 8, 2010)(Rose, J.)(affirming In re Highland, Adv. No. 09-3006)(Bankr. S.D. Ohio entered January 27, 2010)(Walter, J.)); In re Burns, 2010 WL 3081338 (Bankr. S.D. Ohio 2010)(Humphrey, J.); In re Sauer, 417 B.R. 523 (Bankr. S.D. Ohio 2009)(Hoffman, J.). Therefore, the mortgage here in question is fatally defective, and is avoidable under 11 U.S.C. § 544(a)(3).
B. Lis Pendens.
Normally, the establishment of lis pendens prior to the petition filing date imparts constructive knowledge of a defective mortgage to the Trustee, therefore protecting a mortgage from avoidance under 11 U.S.C. § 544(a)(3). In re Periandri, 266 B.R. 651 (B.A.P. 6th Cir. 2001). However, if the establishment of lis pendens occurs within the 90-day preference period, then the mortgage may be avoided as a preferential transfer, provided the Trustee satisfies his burden of proof as to all elements of 11 U.S.C. § 547(b). In re Gruseck & Son, Inc., 385 B.R. 799 at *9 (B.A.P. 6th Cir. 2008). In the present case, the Plaintiff has established all six elements of a preferential transfer under § 547(b). Green Tree does not contest this position. Therefore, lis pendens is avoided and the defense fails.
C. Damages.
Pursuant to 11 U.S.C. § 550, to the extent that a transfer is avoided under either § 544 or § 547, the trustee may recover, for the benefit of the estate, either the property transferred or the value of the property from the initial transferee. In the present case, because the property was subsequently conveyed by the initial transferee, Green Tree, to a third party, Plaintiff is seeking to recover the value of the transferred property from Green Tree rather than the property itself. Plaintiff contends that the best measure of the value of the property is the sale price of the property from Green Tree to the third party purchaser. We agree. That value here is $71,539.46.
D. Remaining Defenses.
Green Tree contends that it no longer has any interest in the subject property. This may be true, but it is not a defense to an avoidance action. See 11 U.S.C. § 550 (trustee may recover the property or the value of the property). Citing In re Spaude, 112 B.R. 304 (Bankr. D. Minn. 1990), Green Tree contends that as a part of the state court foreclosure process, the state court “ordered” Green Tree to release its mortgage, and therefore, that there is no mortgage for Plaintiff to avoid. In re Spaude is distinguishable. In Spaude, the debtor wished to strip down a wholly unsecured second mortgage. The court held that because the property had been purchased by the second mortgage holder at the sheriff’s sale and the second mortgage holder was now the owner of the property, the debtor had lost his right to strip the mortgage under 11 U.S.C. § 506(d). In contrast to the instant action, Spaude did not involve an avoidance action by Trustee.
Green Tree also contends that the estate has no interest in the property. Specifically, Green Tree contends that since there were no proceeds to be distributed from the foreclosure sale, the property was effectively abandoned by the Plaintiff. Green Tree cites numerous cases for the proposition that if a foreclosure sale results in excess proceeds, the excess proceeds normally belong to the estate. While Green Tree has correctly cited the law, the cases cited do not support Green Tree’s position that a lack of proceeds from a foreclosure sale equates to an abandonment. Green Tree also asserts that because it obtained relief from the automatic stay, it was free to exercise its rights in the property free from any restrictions under 11 U.S.C. § 362(g). Again, Green Tree has correctly cited the law, but the cases cited do not support its position. The lifting of the stay under 11 U.S.C. § 362 does not equate to an abandonment of the property by Plaintiff under 11 U.S.C. § 544.
Lastly, Green Tree contends that its mortgage is insulated from avoidance because a defective mortgage is valid and enforceable between the bank and its borrower, absent fraud. That proposition may be valid in actions by a debtor, as demonstrated by the cases relied upon by Green Tree. The proposition does not hold true, however, where it is a trustee who raises the question in a § 547 action.
* * *
Accordingly, Plaintiff’s Motion for Summary Judgment is GRANTED. Green Tree’s Cross Motion for Summary Judgment is denied. Plaintiff is awarded a money judgment in the amount of $71, 539.46 against Green Tree.
IT IS SO ORDERED.
[1] This district has a streamlined procedure for obtaining an abandonment from a trustee. See Local Bankruptcy Rule 6007-1.
After the 60 Minutes Segment on Foreclosure Fraud on April 3, 2011, I was contacted by over 2,000 individuals, seeking help or wanting to help.
FOR ALL THOSE WHO WANT TO HELP RESEARCH THE DOCX FORGERY SCHEME:
1. Search the official records of your county and find all the Mortgage Assignments filed by Docx in 2009. Search by bank: Deutsche Bank, Bank of NY Mellon, U.S. Bank, HSBC, Wells Fargo, etc.
These are very recognizable. On each form, in the left hand corner, there is a statement that the Assignment was prepared by Docx in Alpharetta, GA.
For examples, click on the word PLEADINGS on the Home Page of www.frauddigest.com (my online magazine) – then click on the second entry – 10 Versions of Linda Green signatures on mortgage documents.
Print each example you find in your county Official Records. Identify and circle the name of the borrorwer/homeowner on each record.
2. Go Back to the Official Records. Search the name of each homeowner on the Docx Assignments for Lis Pendens.
Print the Lis Pendens that corresponds to the Assignment and staple these together.
Note that there will not be a Lis Pendens for every Assignment – many homeowners will have already handed over the keys or agreed to a short sale to avoid litigation.
3. Sort by Law Firm Preparing the Lis Pendens.
In Florida, for example, the firms using these Assignments will include Law Offices of David Stern, Law Offices of Marshall Watson, Shapiro & Fishman, Florida Default Law Group, Law Offices of Daniel Consuegra, Akerman & Senterfitt, Gladstone Law Group and many others.
These are the firms that continued to use the forged documents, never “noticing” that:
(1) the signatures varied so significantly that forgeries were likely;
(2) the same individuals used so many different job titles that the validity was unlikely;
(3) the dates of the Assignments indicated a fraudulent document because the Assignments came after the Lis Pendens.
4. Compile a report of these findings – LAW FIRMS USING FORGED AND FABRICATED DOCUMENTS TO FORECLOSE.
State plainly which law firms used these documents and attach the documents supporting your conclusions.
5. Send your reports to the following:
(1) your local State Attorney;
(2) the Disciplinary Committee of the Bar Association in your state;
(3) the FBI/attention: Mortgage Fraud Taskforce;
(4) the U.S. Attorney for your district;
(5) the Attorney General for your state;
(6) your country recorder;
(7) your area newspaper/television investigative reporter.
6. You may also sort by the BANK that used these fraudulent documents to take homes, and include that information in your reports.
Please send a .pdf file of your letter (without attachments) to szymoniak@mac.com.
If you are very ambitious, you may also add the face value of all of the Docx Assignments you locate so that you can report the total amount that banks took or tried to take using these forged and fabricated documents in 2009.
WHEN WE ALL COMPLETE THIS PROJECT, WE WILL MOVE ON TO FORGED AND FABRICATED ASSIGNMENTS PREPARED BY LAW FIRMS (such as David Stern in Florida and Baum in NY) AND OTHER SERVICERS.
SOUTH BAY LAKES HOMEOWNERS ASSOCIATION, INC., Appellant,
v.
WELLS FARGO BANK, N.A., Appellee.
Case No. 2D10-148.
District Court of Appeal of Florida, Second District.
Opinion filed February 18, 2011. Leslie M. Conklin, Clearwater, for Appellant.
Forrest G. McSurdy of Law Office of David J. Stern, P.A., Plantation, for Appellee.
ALTENBERND, Judge.
South Bay Lakes Homeowners Association, Inc., appeals an order denying its motion for attorney’s fees pursuant to section 57.105(1), Florida Statutes (2008). We conclude that the trial court abused its discretion in denying fees under the unusual circumstances of this case. Accordingly, we reverse and remand for an award of fees to be paid in equal amounts by Wells Fargo Bank, N.A., and its attorneys.
Kosta and Ljubica Jankovski obtained a loan, secured by a mortgage, to purchase a home in Hillsborough County in 2005. The documents in our record show the lender as Beazer Mortgage Corporation. Allegedly, the Jankovskis defaulted on the loan.
In March 2009, the Law Offices of David J. Stern, P.A., filed a mortgage foreclosure action on behalf of Wells Fargo, naming the Jankovskis and South Bay Lakes Homeowners Association as parties. The complaint alleged that Wells Fargo filed the action “by virtue of an assignment to be recorded.” As is common in recent foreclosure actions, the complaint contained a second count to enforce a lost, destroyed, or stolen promissory note.
The complaint itself does not contain a legal description of the property on which Wells Fargo sought to foreclose. It alleges a recorded mortgage on January 18, 2006, and a modification on July 13, 2006. The mortgage identified the relevant property as Lot 6, Block 7, Valhalla Phase 3-4. The modification changed the description to Lot 60, Block 2, South Bay Lakes, Unit #2. The notice of lis pendens that Wells Fargo recorded when it commenced this action identified the property it sought to foreclose as the original description and not the modified description. The property described in the modification is within South Bay Lakes Homeowners Association. However, the property described in the lis pendens and the original mortgage is not within the association.
The Jankovskis did not file a formal answer. Instead, they submitted a letter claiming that they disputed the amount owed and were trying to resolve the matter with America’s Servicing Company.
South Bay Lakes Homeowners Association filed an answer disputing that Wells Fargo had standing to bring the action, raising other defenses, and pointing out the confusion associated with the legal description. It also served the attorneys for Wells Fargo with requests for admission, asking the bank to admit that it did not have an assignment of the mortgage in its possession or recorded in Hillsborough County. One of the requests for an admission asked Wells Fargo to admit that it had no documentary evidence to show that it was an equitable owner of the note and mortgage. Wells Fargo did not respond to the requests for admission.
In May 2009, South Bay Lakes Homeowners Association filed a motion for summary judgment based on the admissions. At the same time, the attorney for the association filed an affidavit explaining that he had searched the public records and had not found an assignment of the mortgage. He also explained that the description on the lis pendens was not the encumbered property. Finally, the association served, but did not file, a motion for attorney’s fees pursuant to section 57.105 in order to give the bank an opportunity to resolve the matter within the statutory twenty-one-day period. The bank took no action.
On July 29, 2009, the attorney for the association attended the hearing on its motion for summary judgment. Wells Fargo made no appearance. Based on the admissions and the affidavit, the trial court entered a final judgment dismissing the entire action without leave to amend.
Thereafter, the association filed its motion for attorney’s fees and scheduled a hearing for November 2009. Wells Fargo sent a local attorney, who had not reviewed the file, to the hearing. He had “no idea” whether the legal description in the complaint had been inaccurate. The trial court denied the motion for fees, reasoning that some lender was entitled to file an action to foreclose on the parcel described in the modification and owned by the Jankovskis and that the action was, therefore, not one entitling the association to attorney’s fees. The association has appealed that order.
The issue in this case is not whether the owners would have been entitled to attorney’s fees. Instead, the issue is the association’s entitlement to fees. It is noteworthy, however, that the owners were the prevailing party in this action by virtue of the efforts of the association’s attorney. By contract, the owners would have been entitled to recover fees in this case if the prevailing attorney had been their attorney.
In this case, it is undisputed that Wells Fargo filed a foreclosure action without an assignment or other legal basis to file the action. Nothing in the record suggests that it or its attorneys took any steps to confirm that Wells Fargo had the legal right to file this action. It has relied on the association’s attorney to perform the legal research and public records examination that its own attorney should have performed before it filed the action.
We emphasize that a failure to respond to a request for admissions is not automatically grounds for attorney’s fees. In this case, however, the bank never attempted to explain why it admitted that it lacked standing, and there is no reason to believe that it had standing to bring the lawsuit. The bank also never sought to be relieved from its admissions and did not seek rehearing of the judgment that the trial court entered at a hearing it declined to attend.
At oral argument, the bank’s attorney tried to justify this improper filing due to the vast volume of foreclosure cases in the judicial system. While this court is well aware of the volume of these cases, that circumstance is not a matter that relieves the bank and its attorneys of their obligation to file pleadings that are adequately supported by a reasonable investigation prior to suit. If anything, the volume of these cases and the obvious detrimental effect that such volume has upon the legal system should be a factor requiring attorneys who file the actions to engage in a higher degree of professionalism.[1]
Section 57.105 entitles a party to attorney’s fees if the losing party, or the losing party’s attorney, knew or should have known that a claim was not supported by the material facts necessary to establish the claim when the party initially presented the claim to the court or at any time before trial. At a minimum, the association established a prima facie case that the bank or its attorneys knew or should have known that the bank had no standing to bring this lawsuit before the association served its motion for attorney’s fees. See, e.g., Lizio v. McCullom, 36 So. 3d 927, 929 (Fla. 4th DCA 2010) (“The party seeking foreclosure must present evidence that it owns and holds the note and mortgage in question in order to proceed with a foreclosure action.”); Bank of New York v. Williams, 979 So. 2d 347, 348 (Fla. 1st DCA 2008) (awarding the defendant attorney’s fees after dismissing a residential foreclosure complaint because the mortgagor failed to prove it owned the note and mortgage). If the bank or its attorneys had any evidence to refute this claim, they did not present that evidence at the hearing on the motion for attorney’s fees. The undisputed facts at the hearing established that Wells Fargo was required to take a voluntary dismissal of this action or some other appropriate action during the allotted twenty-one days and that it had no right to compel the association to proceed to judgment on the motion for summary judgment.
Although the trial court has discretion in awarding fees under section 57.105, we conclude that the trial court abused its discretion when it declined to award fees in these circumstances.
Reversed and remanded.
DAVIS and VILLANTI, JJ., Concur.
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED.
[1] At oral argument, the bank’s attorney claimed for the first time that the association’s attorney had not served the requests for admissions on the bank’s law firm and that the trial court had not properly served the judgment on the law firm. These unsworn allegations more than a year after the entry of the final judgment are outside the record and otherwise entirely improper.
why an Order should not be granted directing plaintiff:
(a) to comply with this Court’s Order dated September 8, 2010;
(b) to immediately file a Stipulation of Discontinuance;
(c) to immediately file a consent to vacate the lis pendens lien
filed against 8024 13‘h Avenue, Brooklyn, New York and
defendants Carlo Scissura a/k/a Carlo A. Scissura and/or
Sinagra Management, Inc.;
(d) to issue the final loan modification documents;
(e) imposing sanctions against the plaintiff, pursuant to 22
NYCRR 130-1.1; and
(9 whatever and further relief the Court may deem just and
proper.
Aaron G. Sokolow, with whom Morris R. Battino was on the brief, for appellant.
Stephen O. Hessler for appellee.
Before WASHINGTON, Chief Judge, GLICKMAN, Associate Judge, and NEWMAN, Senior Judge.
Excerpt:
We recognize the “hypertechnical” nature of this regulation and understand that no administrative action was instituted against ESB for its late notification. Nevertheless, we are persuaded that our strict adherence to statutory notice procedures compels a similar result when applying RHC regulations that affect eviction proceedings. See Ayers, 666 A.2d at 52 (strictly construing “hypertechnical” service of process statutory provisions). Therefore, because ESB’s Notice to Quit or Vacate was defective, we reverse the judgment for possession.
[…]
The trial court erred when it ordered the removal of Banks’ lis pendens notice. We therefore reverse its order.
Please submit documents that have been signed by any attorney from The Law Offices of David J. Stern located in Florida. I am collecting the signatures.
By Lynn E. Szymoniak, Esq., Ed., Fraud Digest, August 23, 2010
In 2009, Bank of America filed 3,200 foreclosure actions in Palm Beach County; Deutsche Bank National Trust Company filed 2,375 foreclosure actions. Most of these foreclosure actions were filed on behalf of mortgage-backed trusts. The county records show that at the same time these bank/trustees were filing foreclosure actions, they were also acquiring thousands of other “non-performing” mortgages for trusts.
These statistics are similar in counties across the country. Judges rarely question these foreclosures and acquisitions, but in Brooklyn, a few judges have been curious about these patterns and have asked the trustee/banks to explain why they were acquiring nonperforming loans for the trusts and whether such acquisition was a violation of the trustee’s fiduciary duty to the trust.
“The Court wonders why HSBC would purchase a on-performing loan, four months in arrears?”
– Judge Arthur M. Schack of Kings County, New York, in HSBC Bank v. Valentin, 2008, NY Slip Op 52167(U), 21 Misc. 3d 1124 [A]
“Further, the Court requires an explanation from an officer of plaintiff DEUTSCHE BANK as to why, in the middle of our national sub-prime mortgage financial crisis, DEUTSCHE BANK would purchase a nonperforming loan from INDYMAC…”
– Judge Arthur M. Schack of Kings County, New York, in Deutsche Bank National Trust Co. v. Harris, Kings, New York, Index No. 39192/2007 (05 FEB 2008)
This pattern of acquiring non-performing mortgages, then immediately pursuing foreclosures, was very evident in 2009 in Palm Beach County, a county particularly hard-hit by the mortgage crisis.
Bank of America (“BOA”) and Deutsche Bank National Trust Company (“DBNTC”) acquired thousands of mortgages in 2009. Most often, BOA and DBNTC acquired these “foreclosure imminent mortgages” while acting as Trustees for residential mortgage-backed securitized “RMBS” trusts. In almost every case, these acquisitions were made for trusts that closed several years prior to the 2009 acquisitions.
• How often are RMBS trusts acquiring mortgages where the foreclosure is imminent?
• What trusts are acquiring these “foreclosure imminent” mortgages?
• Have the Trustees disclosed to the investors that the trusts have embarked on this path that will cause the trusts to incur significant costs and attorney’s fees to pursue these foreclosures?
• Are the trusts following local court rules making to resolve these cases through mediation and possibly modification?
• Have the Trustees disclosed to investors that, even where the foreclosure is “successful,” the trusts in many cases have acquired properties worth far less than the mortgage amount, with the obligation to pay taxes, purchase insurance and maintain the properties?
• Have the Trustees disclosed that the mortgages being acquired have chain-of-title problems that will make resales difficult and costly?
• Have the Trustees disclosed to the Securities & Exchange Commission that they have embarked on this new, risky, costly activity of acquiring “foreclosure imminent” mortgages, often in violation of the terms of the trust’s obligations as set forth in the Pooling & Servicing Agreement of the trust; specifically, have the Trustees disclosed that they are acquiring many mortgages long after the closing date of the trust?
• Have the Trustees disclosed to the Internal Revenue Service that the trusts have embarked on this new activity of acquiring “foreclosure imminent” mortgages, in violation of the terms of the trust’s Pooling & Servicing Agreement; specifically, have the Trustees disclosed that they are acquiring many mortgages long after the closing date of the trust; and specifically, have the trusts disclosed that these transactions do not qualify as tax-exempt REMIC transactions?
• Have the Trustees disclosed to the investors the tax consequences of these acquisitions?
An examination of mortgage assignments and foreclosures in Palm Beach County, Florida, by Trustees of Goldman Sachs Alternative Mortgage Product Trusts (“GSAMP”), Morgan Stanley ABS Capital I, Inc. (“MSABS”) trusts and Soundview Home Loan Trusts answers some of these questions.
MORTGAGE ASSIGNMENTS
In total, LaSalle Bank acquired 664 mortgages in Palm Beach County in 2009, and Bank of America acquired 736 mortgages. Because Bank of America is the successor in interest to LaSalle Bank, the total acquisitions in Palm Beach County in 2009 for Bank of America was 1,400. Deutsche Bank National Trust Company acquired 3,039 mortgages.
An examination of acquisitions for particular trusts shows that the majority of these acquisitions were made as Trustees for mortgagebacked trusts and the majority of mortgages acquired were “foreclosure imminent” mortgages. In hundreds of cases, BOA and DBNTC filed foreclosure actions within days of acquiring the mortgages.
According to recorded documents, GSAMP (Goldman Sachs Alternative Mortgage Products) Trusts acquired 100 mortgages in Palm Beach County in 2009, Soundview Home Loan Trusts acquired 101 mortgages and Morgan Stanley ABS Capital 1 Trusts acquired 117 mortgages.
LIS PENDENS
The filing of a Lis Pendens is the first step in the foreclosure process in Florida (a judicial foreclosure state). The filing of a Lis Pendens alerts all interested persons that a court has acquired jurisdiction over the property described in the Lis Pendens.
In 2009, the Trustees of GSAMP Trusts filed 119 Lis Pendens; the trustees of Soundview Trusts filed 91 Lis Pendens; and the trustees of Morgan Stanley ABS Capital 1 Trusts filed 136 Lis Pendens.
Almost half of the GSAMP foreclosures were filed by Bank of America as successor to LaSalle Bank, or by LaSalle Bank, as Trustee for a GSAMP Trust; most of the other GSAMP foreclosures were filed by Deutsche Bank National Trust Company, as Trustee.
Assignments of Mortgages were recorded less than half of these cases. No document filed in the official records of Palm Beach County established the right of the Trustees to file these foreclosure actions.
The failure to record the mortgage makes proof of chain-of-title more difficult to establish, and is likely to impair the resale of the foreclosed property. Local governments are also deprived of filing fees at a time when every source of revenue to local government is important.
In the cases with recorded Mortgage Assignments, over 90% of the Assignments were dated AFTER the foreclosure action was filed. In these cases, from the records, BANK OF AMERICA and DEUTSCHE BANK filed for foreclosure several days, weeks, or months BEFORE they even acquired the mortgages for the Trusts.
The majority of the Assignments to GSAMP Trusts were signed by an employee of Litton Loan Servicing, a mortgage servicing company bought by Goldman Sachs in 2007. Employees of the foreclosing law firms also signed many of the Assignments. The law firm employees did not disclose that they were law firm employees. Instead, they used titles as officers of Mortgage Electronic Registration Systems, Inc. (“MERS”). The Litton Loan employees also used MERS titles so it is not readily apparent that a Goldman subsidiary – not the original lender – was assigning these mortgages to a Goldman trust.
The vast majority of the Soundview foreclosures were filed by Deutsche Bank National Trust Company, as Trustee. Again, in the cases with recorded Mortgage Assignments, the records show that in the majority of cases, DEUTSCHE BANK filed for foreclosure several days, weeks, or months BEFORE they even acquired the mortgages for the Trusts.
The majority of the Assignments to Soundview Trusts were signed by an employee of Lender Processing Services (“LPS”), a publiclytraded company that specializes in “facilitating” foreclosures for banks.
Employees of the foreclosing law firms also signed many of the Soundview Assignments. The law firm employees did not disclose that they were law firm employees. Instead, they used titles as officers of MERS. The LPS employees also used MERS titles so it is not readily apparent that a company working for the Trustees – not the original lender – was assigning these mortgages to the Soundview trusts.
The vast majority of the Morgan Stanley ABS Capital 1, Inc. foreclosures were filed by Deutsche Bank National Trust
Company, as Trustee. Again, in the cases with recorded Mortgage Assignments, the records show that in the majority
of cases, DEUTSCHE BANK filed for foreclosure several days, weeks, or months BEFORE they even acquired the mortgages for the Trusts.
The majority of the Assignments to Morgan Stanley ABS Capital 1, Inc. Trusts were also signed by an employee of LPS. Employees of the foreclosing law firms also signed many of the Morgan Stanley ABS Capital Assignments. Again, the law firm employees did not disclose that they were law firm employees. Instead, they used titles as officers of MERS. The LPS employees also used MERS titles so it is not readily apparent that a company working for the Trustees – not the original lender – was assigning these mortgages to the Morgan Stanley ABS Capital 1 Trusts.
WHY PURSUE NON-PERFORMING LOANS?
Fees from the government-funded loan modification program funds (“HAMP Funds”) may be an incentive for RMBS Trusts and their mortgage servicing companies to acquire non-performing loans.
Another incentive may be the opportunity to sell distressed loans to securities companies that are busily putting together new funds made up primarily of non-performing mortgages. Some authorities believe trusts may be acquiring non-performing loans so that the trust may reach the level of defaults necessary to make a claim on the financial guaranty insurance policies of the trust.
THE ACQUISITIONS THAT NEVER HAPPENED
Another explanation is that in the vast majority of cases, these mortgage assignments NEVER HAPPENED as represented in the documents. The trusts did not acquire the mortgages in 2009. Banks, trusts and/or their mortgage servicing companies and law firms may have created and filed hundreds of thousands of mortgage assignments so that they could use these very documents to “prove” that they had the legal right to foreclose – and conceal this simple truth: many trusts failed to ever acquire the mortgages they promised investors and regulators they had acquired.
![[NYSC] Judge Orders JPMorgan Chase “TO SHOW CAUSE”: JPMORGAN CHASE v. SCISSURA](https://stopforeclosurefraud.com/wp-content/themes/gazette/thumb.php?src=wp-content/uploads/2010/12/showcause.jpg&w=100&h=57&zc=1&q=90)
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