The Duval County Clerk’s Office has offered online bidding for foreclosed properties for some time, and now Jacksonville-based Lender Processing Services is bringing bank-foreclosures all over the U.S. online.
Through its LPSAuctions.com Web site, LPS is to open bidding on single-family homes, condominiums and town homes from Coral Springs to Tacoma, Wash. The bid deadline for the homes listed in the “Spring Clearance” auction on the site is May 10.
So now it’s official they have they’re hands in all Real Estate! My question is how…why would any state permit them to sell anything if they are under the scope of the FEDS?? Take a look below.
SAME RESPONSES OBJECTIONS AND NO DOCUMENTS. IT IS THE GAME. HOPEFULLY WE CAN BREAK THIS GAME. WE ALL HAVE ERICA JOHNSON-SECKS DEPOSITION. JUST FOLLOW THE YELLOW BRICK ROAD.
Here Mr. Davies points out some VERY IMPORTANT issues. This is NOT limited to OneWest/ IndyMac as we come to find out many of these “Non-Creditors” use almost the same verbiage over and over and over.
Take time to read this over because what you sign TODAY may not help you Tomorrow if you sign your rights away! Do NOT sign anything you do not understand and consult with an attorney ASAP. Mr. Davies is one highly intelligent man! Thank you for your fine work!
This in combination with A.K. Barnett-Hart’s Thesis make’s one hell of a Discovery.
LEGAL AND ECONOMIC ISSUES IN
SUBPRIME LITIGATION
Jennifer E. Bethel*
Allen Ferrell**
Gang Hu***
Discussion Paper No. 612
03/2008
Harvard Law School Cambridge, MA 02138
ABSTRACT
This paper explores the economic and legal causes and consequences of recent difficulties in the subprime mortgage market. We provide basic descriptive statistics and institutional details on the mortgage origination process, mortgage-backed securities (MBS), and collateralized debt obligations (CDOs). We examine a number of aspects of these markets, including the identity of MBS and CDO sponsors, CDO trustees, CDO liquidations, MBS insured and registered amounts, the evolution of MBS tranche structure over time, mortgage originations, underwriting quality of mortgage originations, and write-downs of investment banks. In light of this discussion, the paper then addresses questions as to how these difficulties might have not been foreseen, and some of the main legal issues that will play an important role in the extensive subprime litigation (summarized in the paper) that is underway, including the Rule 10b-5 class actions that have already been filed against the investment banks, pending ERISA litigation, the causes-of-action available to MBS and CDO purchasers, and litigation against the rating agencies. In the course of this discussion, the paper highlights three distinctions that will likely prove central in the resolution of this litigation: The distinction between reasonable ex ante expectations and the occurrence of ex post losses; the distinction between the transparency of the quality of the underlying assets being securitized and the transparency as to which market participants are exposed to subprime losses; and, finally, the distinction between what investors and market participants knew versus what individual entities in the structured finance process knew, particularly as to macroeconomic issues such as the state of the national housing market. ex ante expectations and the occurrence of ex post losses; the distinction between the transparency of the quality of the underlying assets being securitized and the transparency as to which market participants are exposed to subprime losses; and, finally, the distinction between what investors and market participants knew versus what individual entities in the structured finance process knew, particularly as to macroeconomic issues such as the state of the national housing market.
Deal Journal has yet to read “The Big Short,” Michael Lewis’s yarn on the financial crisis that hit stores today. We did, however, read his acknowledgments, where Lewis praises “A.K. Barnett-Hart, a Harvard undergraduate who had just written a thesis about the market for subprime mortgage-backed CDOs that remains more interesting than any single piece of Wall Street research on the subject.”
A.K. Barnett-Hart
While unsure if we can stomach yet another book on the crisis, a killer thesis on the topic? Now that piqued our curiosity. We tracked down Barnett-Hart, a 24-year-old financial analyst at a large New York investment bank. She met us for coffee last week to discuss her thesis, “The Story of the CDO Market Meltdown: An Empirical Analysis.” Handed in a year ago this week at the depths of the market collapse, the paper was awarded summa cum laude and won virtually every thesis honor, including the Harvard Hoopes Prize for outstanding scholarly work.
Last October, Barnett-Hart, already pulling all-nighters at the bank (we agreed to not name her employer), received a call from Lewis, who had heard about her thesis from a Harvard doctoral student. Lewis was blown away.
“It was a classic example of the innocent going to Wall Street and asking the right questions,” said Mr. Lewis, who in his 20s wrote “Liar’s Poker,” considered a defining book on Wall Street culture. “Her thesis shows there were ways to discover things that everyone should have wanted to know. That it took a 22-year-old Harvard student to find them out is just outrageous.”
Barnett-Hart says she wasn’t the most obvious candidate to produce such scholarship. She grew up in Boulder, Colo., the daughter of a physics professor and full-time homemaker. A gifted violinist, Barnett-Hart deferred admission at Harvard to attend Juilliard, where she was accepted into a program studying the violin under Itzhak Perlman. After a year, she headed to Cambridge, Mass., for a broader education. There, with vague designs on being pre-Med, she randomly took “Ec 10,” the legendary introductory economics course taught by Martin Feldstein.
“I thought maybe this would help me, like, learn to manage my money or something,” said Barnett-Hart, digging into a granola parfait at Le Pain Quotidien. She enjoyed how the subject mixed current events with history, got an A (natch) and declared economics her concentration.
Barnett-Hart’s interest in CDOs stemmed from a summer job at an investment bank in the summer of 2008 between junior and senior years. During a rotation on the mortgage securitization desk, she noticed everyone was in a complete panic. “These CDOs had contaminated everything,” she said. “The stock market was collapsing and these securities were affecting the broader economy. At that moment I became obsessed and decided I wanted to write about the financial crisis.”
Back at Harvard, against the backdrop of the financial system’s near-total collapse, Barnett-Hart approached professors with an idea of writing a thesis about CDOs and their role in the crisis. “Everyone discouraged me because they said I’d never be able to find the data,” she said. “I was urged to do something more narrow, more focused, more knowable. That made me more determined.”
She emailed scores of Harvard alumni. One pointed her toward LehmanLive, a comprehensive database on CDOs. She received scores of other data leads. She began putting together charts and visuals, holding off on analysis until she began to see patterns–how Merrill Lynch and Citigroup were the top originators, how collateral became heavily concentrated in subprime mortgages and other CDOs, how the credit ratings procedures were flawed, etc.
“If you just randomly start regressing everything, you can end up doing an unlimited amount of regressions,” she said, rolling her eyes. She says nearly all the work was in the research; once completed, she jammed out the paper in a couple of weeks.
“It’s an incredibly impressive piece of work,” said Jeremy Stein, a Harvard economics professor who included the thesis on a reading list for a course he’s teaching this semester on the financial crisis. “She pulled together an enormous amount of information in a way that’s both intelligent and accessible.”
Barnett-Hart’s thesis is highly critical of Wall Street and “their irresponsible underwriting practices.” So how is it that she can work for the very institutions that helped create the notorious CDOs she wrote about?
“After writing my thesis, it became clear to me that the culture at these investment banks needed to change and that incentives needed to be realigned to reward more than just short-term profit seeking,” she wrote in an email. “And how would Wall Street ever change, I thought, if the people that work there do not change? What these banks needed is for outsiders to come in with a fresh perspective, question the way business was done, and bring a new appreciation for the true purpose of an investment bank – providing necessary financial services, not creating unnecessary products to bolster their own profits.”
In the past ten years, hundreds of thousands of residential mortgages were bundled together (often in groups of about 5,000 mortgages), and investors were offered the opportunity to buy shares of each bundle. This process is called securitization.
Each such bundle of residential mortgages was given a name, such as “Soundview Home Loan Trust 2006 OPT-2.” The name indicates information about the particular trust such as the year it was created (2006) and its contents (with OPT indicating that the loans in that particular trust were originally made by Option One Mortgage). Each such bundle/trust has a Cut Off Date identified in the trust documents (specifically, in the Pooling and Servicing Agreement). The Cut Off Date is the date on which all mortgage loans in the trust must be identified. In short, a final list of all of the mortgages in the bundle is set out. Each trust also has a Closing Date which is the date that the individual mortgages are transferred to the Trust Custodian, who must certify that for each mortgage, the custodian has a mortgage note endorsed in blank and proof that the ownership of the note has been transferred. This proof is most often an Assignment of Mortgage. Most trusts included the following or equivalent language regarding the Assignments: “Assignments of the Mortgage Loans to the Trustee (or its nominee) will not be recorded in any jurisdiction, but will be delivered to the Trustee in recordable form, so that they can be recorded in the event recordation is necessary in connection with the servicing of a Mortgage Loan.”
Title insurance companies issued policies guaranteeing that the trust had clear title to the mortgages.
When widespread defaults occurred, Trustees discovered that the laws regarding Mortgage Assignments varied significantly from state to state. Many issues regarding such Assignments were simply unresolved. One of the most significant issues was whether Mortgage Assignments could be back-dated or have retroactive effective dates. This issue arose because Trustees and their lawyers discovered in the foreclosure process that the Assignments could not actually be located, or that certain states did not allow blank Assignments.
To solve the problem of the missing Assignments, new Assignments were made and recorded. Because the question of retroactive Assignments had not been 2 resolved, most of these Assignments did not set forth the actual date that the Assignment took place. The Assignments were signed and notarized as if the transfer took place many years after the actual transfer date.
The Assignments were prepared by specially selected law firms and companies that specialized in providing “mortgage default services” to banks and mortgage companies. In jurisdictions with a high rate of mortgage defaults, over 80% of the filed Mortgage Assignments in the last three years were prepared and filed by the same five or six law firms and default processing companies.
In many states, two such Assignments were prepared and filed. The first was prepared in the name of Mortgage Electronic Registration Systems as “nominee” for the particular bank or mortgage company. When MERS authority to file foreclosures and Assignments was challenged in most jurisdictions, with varying results, a non-MERS Assignment was prepared as well.
In all of these cases, the Assignment was prepared to conceal the actual date that the property was acquired by the Trust. An examination of the Assignments filed showing the grantee as the Trust – such as “Soundview Home Loan Trust 2006 – OPT 2” – shows that most of these Assignments were prepared and filed in 2008 and 2009, when, in reality, the mortgages and notes were actually assigned – albeit defectively – prior to the closing date of the Trust. While the exact closing date can only be determined by looking at the trust documents, any Trust that includes the year in 2006 in its title most likely closed in 2006.
If a Mortgage Assignment is dated, notarized and filed in a year after the year set forth in the name of the grantee trust on the Assignment, it is actually an Assignment specially, and in many cases, fraudulently, made to facilitate foreclosures.
These Specially-Made Assignments have created havoc in the courts. In many cases, the Specially-made Assignments are dated After the foreclosure action has been initiated, making it appear that the Trust somehow magically knew prior to the assignment that it would acquire the defaulting property several months after the foreclosure action was initiated.
Repeatedly, courts have asked Trustees to explain why they were acquiring nonperforming loans and whether such acquisition was a violation of the trustee’s fiduciary duty to the Trust. No Trustee has ever come forth and explained that the Trust actually acquired the loan years before the Assignment. As a result, there are many decisions with observations similar to this observation made by Judge Arthur M. Schack of Kings County, New York, in HSBC Bank v. Valentin, 21Misc. 3d 1124 [A]:
Further, according to plaintiff’s application, the default of defendants Valentin and Ruiz began with the nonpayment of principal and interest due on January 1, 2007. Yet, four months later, plaintiff HSBC was willing to take an assignment of the instant nonperforming loan. The Court wonders why HSBC would purchase a nonperforming loan, four months in arrears?
And in Deautsche Bank National Trust Co. V. Harris, Judge ARTHUR M. SCHACK Kings, New York, Index No. 39192/2007 (05 FEB 2008):
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 non-performing loan from INDYMAC…
In Massachusetts in October, 2009, Land Court Judge Keith Long reaffirmed a March, 2009, ruling that a lender cannot begin foreclosure proceedings before the lender has filed and recorded the Assignment, stating:
The blank mortgage assignments they possessed transferred nothing…in Massachusetts, a mortgage is a conveyance of land. Nothing is conveyed unless and until it is various agreements between the securitization entities stating that each had a right to an an assignment and they are certainly not in recordable form. U.S. Bank National Association v. Ibanez, Massachusetts Land Court Misc. Case No. 384283, consolidated with two other cases.
Many authors expect the Massachusetts Supreme Court to reverse the Ibanez decision, but the uncertainty itself, as in the case of the MERS challenges, caused lenders to flood recording offices with new Assignments.
In cases where the Trust failed to get a valid Assignment, the problem is complicated by the bankruptcy of the major loan originators, including American Home Mortgage, Option One Mortgage, and Countrywide Home Loans.
When these big mortgage companies filed for bankruptcy, they did not disclose the mortgages already sold to the trusts as assets, because the transfers occurred months and years prior to the bankruptcy filing. Years later, when the Assignments were required for foreclosures, a bankruptcy court’s permission was needed to Assign billions of dollars in mortgages. Most likely in fear that a Bankruptcy Judge would not rubber stamp such a request, no such permission has ever been sought.
In lieu of valid Assignments, Trusts continue to rely on Assignments specially made by their own law firms and mortgage default service companies. Eventually, these fraudulent Assignments are being discovered by Courts, and the foreclosing trusts required to prove that they own the Mortgage and Note in the foreclosure action without reliance on Assignments that misrepresent the date of the actual transfer to the Trust the authority of the signers of the bankrupt original lenders. For thousands of homeowners, this realization has come too late.
Attached here is the latest example of a Pinellas County Circuit Court judge applying the law and sticking up for the rights of homeowners and consumers. The pattern in Pinellas County, Florida is becoming clear…..the judges here “get it” and are not afraid to issue correct legal decisions–despite the fact that the consequences for banks and their bad behavior is going to be significant.
Read the decision and contact me with questions….these favorable decisions should be cited early and often!
Whenever I get any mail from anyone I make it a point to save the envelope! Since all outgoing mail postage stamps are “created” by Pitney Bowes machines in-house (foreclosing law firms)…dates can simply be omitted, NO DATE and might have gone “Lost in the Mail” or take a long…long…long…long…time to arrive to you. Oh NO! WE JUST GOT FORECLOSED without any warning! I know when this is coming because I check my file but those of you who don’t …Take a look at what I mean before you end up in the streets. I am not certain what Pitney Bowes guidelines are but this might be wrong for anyone to do.
Not only are they post dating the assignments but the material inside the envelopes might be dated months before you get it …thanks to this new tactic!
Another “BOGUS” scenario of todays reality. Watch this video and listen with disgust how they describe how one tries… yes tries to survive in todays world! Heartless souls you are to make this ridiculous video. They speak of people living in tents, make use of abandoned homes etc…Obviously Senator Mike Bennett needs to stop by this blog to witness what really is happening to the “proud happy family” who once did live there to begin with!
QUIT TREATING US LIKE GARBAGE!
How about making good use of these homes and put homeless people in there! It’s obvious the mighty $$$$ are behind this scam, They fraudulantly sell these homes for half after they foreclose…So why not just cut the priciple in HALF??? Yup Something sure is not RIGHT.
IT SURE DIDN’T STOP YOU FROM
TRESPASSING EITHER!
By ROBERT NAPPER – rnapper@bradenton.com Buzz up!
MANATEE — A mounting crisis created by the record number of foreclosures in Manatee County has hit Jeannette Traylor right where she lives: An abandoned foreclosed home has brought blight, crime and fear into her neighborhood.
For Traylor, it is becoming harder and harder each day to remember what the home used to be: a quaint three-bedroom, two-bath house nestled in a Northwest Bradenton neighborhood filled with similar homes and families living the quiet life. But the home at 5504 Fourth Ave. NW now stands out.
“A ex-employee of the Law Offices of David J. Stern of Plantation has contacted me, Bill Warner, in response to the article I posted on Monday, May 18, 2009, that followed up on the Tampa Tribune article of April 2008, (see above), it appears that what I had claimed about “sewer service” by ProVest LLC in Tampa Fl (working for the Stern law office) is just the tip of the iceberg.
It appears from this ex-employee of the Law Offices of David J. Stern of Plantation that ProVest, the process service company in Tampa, also had an office in the same building as the Law Offices of David J. Stern in Plantation and that “sewer service’ was done all the time and if needed Provest would pre-date the service of summons to make it appear that you had already been served and allow Stern to put your foreclosure case on a “rocket docket’ to get the house up for sale on the Court House steps (David J. Stern Law Office appears to have severed ties to Pro Vest).
Then the sales girls in the Stern office (a lot of the associate attorneys at the Stern Law firm have real estate licenses) would contact outside buyers and inform them of the exact time and date of the “court house steps sale” and tell the outside buyers what the correct amount to bid that would be approved by the bank and the court,(this is ”bid rigging”).
A recent hire by the Law office of David J. Stern is Attorney Vivien Leora Lurlene who also has a Real Estate Sales License in the State of Florida, I have no knowledge of her involvement in the ”bid rigging”or any other illegal activity at the Law Office of David J. Stern. These outside buyers contacted by the sales girls at the Stern Law office would resell these super low bargain houses purchaed on the Court House Steps for a profit and pay off the sales girls in the Stern Law office for the tip. “
It appears from this ex-employee of the Law Offices of David J. Stern of Plantation that she was told to make up false documents for Freddie Mac and Fannie Mae when they came around to check their Foreclosure files, she was also instructed to lie to the banks when they requested a chronology report which is the foreclosure time-line on a file, there appears to be Federal violations that would necessitate an FBI investigation, the ex-employee is afraid to talk.
Many recall the BOGUS ASSIGNMENTS, FRAUDULENT MORTGAGE ASSIGNMENT TRANSFER VIDEOS I put out with the help from LYNN SZYMONIAK ESQ. of FraudDigest.com.
Lender Processing Inc. is the TIP of The Pyramid!! Please click the link to see their admission to this whole scheme of fraud in question. Big Brother has been watching!!! Anyone want shares NOW?? Goldman you just met with them 2/23…Heck your even worst! TOUCHÉ.
Regulatory Matters: Due to the heavily regulated nature of the mortgage industry, from time to time we receive inquiries and requests for information from various state and federal regulatory agencies, including state insurance departments, attorneys general and other agencies, about various matters relating to our business. These inquiries take various forms, including informal or formal requests, reviews, investigations and subpoenas. We attempt to cooperate with all such inquiries. Recently, during an internal review of the business processes used by our document solutions subsidiary, we identified a business process that caused an error in the notarization of certain documents, some of which were used in foreclosure proceedings in various jurisdictions around the country. The services performed by this subsidiary were offered to a limited number of customers, were unrelated to our core default management services and were immaterial to our financial results. We immediately corrected the business process and began to take remedial actions necessary to cure the defect in an effort to minimize the impact of the error. We subsequently received an inquiry relating to this matter from the Clerk of Court of Fulton County, Georgia, which is the regulatory body responsible for licensing the notaries used by our document solutions subsidiary. In response, we met with the Clerk of Court, along with members of her staff, and reported on our identification of the error and the status of the corrective actions that were underway. We have since completed our remediation efforts with respect to the affected documents. Most recently, we have learned that the U.S. Attorneys office for the Middle District of Florida is reviewing the business processes of this subsidiary. We have expressed our willingness to fully cooperate with the U.S. Attorney. We continue to believe that we have taken necessary remedial action with respect to this matter. continue reading …
“They messed up Title to Millions of Homes all over The US”
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