Archive | February, 2012

Attorney General Kamala D. Harris Joins Legislative Leaders to Unveil California Homeowner Bill of Rights

29 Feb

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Wednesday, February 29, 2012 2:43 PM
To: Charles Cox
Subject: FW: Attorney General Kamala D. Harris Joins Legislative Leaders to Unveil California Homeowner Bill of Rights

Isn’t there ANYONE that can educate these people before they draft this junk! They have no idea what a “CREDITOR” is and continue to cater to the whims of servicers! Speaking of “servicers”…a $25 fee to record a notice of default? Now THAT’S punitive!!!! [NOT!!!] AND since when was the statute of limitations for Fraud reduced from 4 to 1 years requiring an extension; let me see…new legislation giving 90 days’ notice before commencing eviction proceedings (whatever the hell that’s supposed to mean) when there’s already Federal legislation doing what they’re purporting to legislate; $10k CIVIL penalty for robosiging…I guess forgery and recording fraud (both felonies) aren’t worthy of prosecuting (and the fines involved) so they’ll make it a simple civil penalty now?…on and on…ignorance…massive, abject ignorance!!! Never ceases to amaze…

C

Foreclosure process is ‘utterly broken’

20 Feb

Foreclosure process is ‘utterly broken’

February 19th, 2012, 1:00 am ·  · posted by

ARCHIVE

 

 

A recent study of San Francisco home foreclosures found widespread irregularities in almost all the home seizures scrutinized. The report, commissioned by San Francisco Assessor-Recorder Phil Ting, was prepared by Aequitas Compliance Solutions Inc. of Newport Beach.

Company partner Lou Pizante conducted the study. He explained its findings …

Us: What did your report show?

Lou: We reviewed about 16% of all foreclosure sales that occurred in San Francisco from 2009 through 2011. The audit shows that 99% of the sampled foreclosures contain at least one irregularity and 84% appear to contain one or more clear violations of law.

Us: What were the key problems identified in your report?

Lou: We looked at six general subject areas, including assignments (which relate to chain of title), notices of default and trustee sale and suspicious activity (like robo-signing). The report, which you can download from the Aequitas website, explains these things in laymen terms. Within each subject area, we looked at a variety of issues.

Two-thirds of the loans had four or more exceptions and more three-quarters of the loans had violations across three or more of the six subject areas. In other words, this was not a case of most of the loans having one irregularity. Most of the loans had many irregularities across different stages of the foreclosure process.

We also compared the MERS database to public records. MERS was created by the mortgage industry as, essentially, an alternative to the public land records system. It is an electronic registry for tracking ownership interests and servicing of mortgage loans. We found that in 58% of the cases the beneficial owner of loan as entered on the trustee’s deed upon sale conflicted with the owner of the loan according to the MERS database.

Us: Weren’t most of these homeowners likely to lose their homes to foreclosure anyway? Why does this matter?

 

From the San Francisco study/Click to enlarge

Lou: That’s a very good point. Many of these homeowners simply overextended themselves and the resulting foreclosure sales were inevitable. So, what’s there to really care about?

What’s at issue here is compliance with California’s laws relating to non-judicial foreclosure. These are statutory requirements that, in many respects, are rather technical.  Why, then, should inadvertent violations provide windfall remedies to reckless borrowers?

First, its important to understand foreclosure in California. Lenders in California rely almost exclusively on the non-judicial foreclosure process, also called statutory foreclosure. This is an expedited process where homes are sold without court approval. Therefore, there is frequently little, if any oversight. Because of this, courts have generally required strict compliance with statutory requirements affording borrower’s due process.

Now, there is plenty of public evidence showing that not all distressed borrowers are reckless deadbeats. We know that some borrowers did not receive fair and accurate disclosures, as required by federal law, explaining the payment and other material terms of their mortgage. Furthermore, the report reveals that a lot of lender’s foreclosing on homeowners don’t appear to own the underlying loans. The fact that homeowners borrowed something, on some terms, from someone should not be enough to rob them of their due process right.

To say most of these borrowers are deadbeats and can be denied their due process rights seems pretty lousy to me. It’s like saying that there might be a falsely accused guy on death row, but—hey—he probably killed someone.

But look, the purpose of this report is not to indict the mortgage industry or bailout borrowers. What’s at stake here is more than merely fairness and homeowner’s due process. Foreclosures impact not only homeowners but also entire communities, housing markets and mortgage-backed securities holders like pension plans. The integrity of California’s record title system is also at stake because the validity of title for subsequent purchasers is dependent on those that precede it.

So addressing this problem is critical to the recovery of the housing market and national economy, and that’s something that everyone has an interest in no matter their political leanings.

Us: Are these problems confined to San Francisco, or do you think the same problems are occurred throughout California?

Lou: The study focused exclusively on San Francisco. However, we are now working with other counties in California requesting similar studies.

My understanding is that lender and servicers practices are essentially the same in San Francisco as elsewhere in the state. And, of course, the same laws apply. So, we’d except to see similar irregularities in other counties, including those hit harder by foreclosures.

Us: How widespread do you think the foreclosure irregularities are in Orange County?

Lou: I cannot speculate as to whether the problems are the same or different. The foreclosing parties are generally the same cast of players and the laws the same, so you’d expect a strong correlation.

Us: What led to such a high rate of irregularities and illegalities in foreclosures?

Lou: It goes back to the origination boom, which was fueled by low interest rates and lubricated by an insatiable securitization market. Lenders’ operational infrastructure couldn’t keep pace with record fundings, and so you had lots of missing and incomplete documentation.

These loans were sold and resold and ultimately packaged into securities. Along the way, the necessary paperwork documenting these loan sales fell through the cracks and, once the market turned, a lot of the sellers of these loans disappeared.

Servicing is a business of razor-thin margins, and these folks had a tough time dealing with record volumes of new and exotic products that didn’t play nice with their systems.

When the party got broken up, the servicers were left to clean up a big mess. Ultimately, all this stuff above made it infeasible to carry out large-scale foreclosures.

That’s why you hear all this stuff about forged or back-dated documents and robo-signing. There are gaps in title that need to be filled. This is also why this is such a big mess to fix. You might have bought a loan but you never got a receipt and now the seller is dead and buried. Its difficult to imagine how the industry can cost-effectively solve these problems ex post facto.

Us:  What’s the key lesson? Are the foreclosure laws antiquated?

Lou: Yeah, that’s it. If there is one lesson to take away from this report it is that, with so many homes being foreclosed and with so little oversight, California’s foreclosure process appears utterly broken.

Remember, these laws are more than 100 years old. The non-judicial foreclosure process was created long before things such as the secondary market and mortgage brokers existed. Back then, you rode your horse to meet with the banker, who you knew on a first name basis… sort of like It’s a Wonderful Life.

Surely the mortgage industry has much work to do in order to correct the weaknesses and deficiencies in its foreclosure practices. But to prevent this from happening again, change needs to come from the legislature. The mortgage industry has since seen remarkable innovation over the past few decades. Considering the extent and consequence of the issues, perhaps it is time for the legislature to be similarly innovative.

Us: How do you think the laws should be changed to catch up with the complex world of mortgage securitization?

Lou: As is often the case, it’s much easier to identify the problem than the solution. I have a lot of thought on this but, quite frankly, they require much explaining and go into some pretty arcane and mundane stuff.

Basically, ensuring clear chains of title and the integrity of California’s record title system are essential to the recovery and stabilization of the state’s housing market. So we need laws and systems in place that achieve these objectives without increasing overall costs to mortgage lenders and society generally.

Smart people will disagree on the best approach. But we should all agree that the status quo is unacceptable.

Learn more about Aequitas HERE!

Read more …

WRONGFUL FORECLOSURE IN BANKRUPTCY (most bankruptcy judges won’t hear it the send you to state court)

19 Feb

in RE: Macklin: Deutsche Must Answer Wrongful Foreclosure and Quiet Title

By Daniel Edstrom
DTC Systems, Inc.

Excerpts on Wrongful Foreclosure (changed by the Judge Sargis to Breach of Contract)

… a record has been created that someone not of record title purported to take action on a Deed of Trust prior to compliance with Civil Code 2932.5.

The court will not sanction conduct by this Defendant which puts into question the validity of the nonjudicial foreclosure process and California real property records.  Though this issue could have been simply addressed by the recording of a new notice of default months ago, the ninety days under the new notice of default allowed to run and this creditor be on the door step of conducting a nonjudicial foreclosure sale consistent with the California statutes, it has elected to continue with the existing notice of default, subsequent substitution of trustee, and sale.

The contract between the parties is the Note and Deed of Trust.

Excerpt on Quiet Title

Though not artfully done, Macklin sufficiently explains that he asserts superior title to the Property over the Trustee’s Deed through which DBNTC asserts its interest in the Property.  Given that Macklin has asserted that DBNTC cannot show that it complied with the minimal requirements for properly conducting a nonjudicial foreclosure sale, the motion to dismiss the Tenth Cause of Action is denied.

Download order here:  http://dtc-systems.net/wp-content/uploads/2012/02/Macklin-222-Order.pdf

Download memorandum opinion and decision (part 1) here:  http://dtc-systems.net/wp-content/uploads/2012/02/Macklin-221-Memorandum_Opinion_and_Decision_Part1.pdf

Download memorandum opinion and decision (part 2) here:  http://dtc-systems.net/wp-content/uploads/2012/02/Macklin-221-Memorandum_Opinion_and_Decision_Part2.pdf

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The Banking Crisis Represents Systematic Destruction of “Our” Legal System

19 Feb

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Saturday, February 18, 2012 6:55 AM
To: Charles Cox
Subject: The Banking Crisis Represents Systematic Destruction of "Our" Legal System

The Banking Crisis Represents The Destruction of “Our” Legal System

February 18th, 2012 | Author: Matthew D. Weidner, Esq.

From New Deal 2.0, an essay by Bruce Johnson (see below):

Banks are demonstrating that if you have enough money and influence, you’re not expected to follow the same laws as everyone else.

For several years, I have been writing that extreme economic inequality is among the most destructive forces in a society. As inequality grows, it undermines the effective functioning of the economy, the basic tenets of capitalism, and the foundations of democracy.

Unfortunately, the housing crisis and now the housing settlement increasingly look like an example of how these mechanisms work.

One of the central characteristics of highly unequal societies is that two sets of laws develop: One set for the rich and powerful and one set for everyone else. The more unequal societies become, the more easily they accept the unacceptable, and with each unrebuked violation, the powerful actors at the top of the society gain an ever greater sense of entitlement and an ever greater sense that the laws that govern everyone else don’t apply to them. As a result, their behavior becomes increasingly egregious.

I would suggest that the robo-mortgage scandal is a strong indicator that this type of unequal justice is now becoming ever more commonplace in America. Past bank abuses are typically discussed without a sense of outrage. They have, in effect, become a recognized practice of deception with no consequences. Here are three prominent examples from the past few years:

First, the robo-mortgage scandal was discovered. As powerful members of society, the banks effectively decided what laws they wanted to follow and disregarded others. The banks claimed that their violations were technical and harmed no one. Nonetheless, the activities of the banks constituted massive fraud, perjury, and conspiracy. Bank officials have testified in court that they filed as many as 10,000 false affidavits a month. These are effectively undeniable admissions of law-breaking on a massive scale.

It’s a federal crime, punishable by up of five years of imprisonment, to knowingly file a false affidavit with the court. From the perspective of the law, you are guilty of the same perjury when you falsely testify in court or when you submit a false affidavit. In most states, filing false affidavits with the court similarly constitutes a felony offense of perjury.

THE SAN FRANSICO “SMOKING GUN REPORT”

19 Feb

Audit Uncovers Extensive Flaws in Foreclosures

By
Published: February 15, 2012

An audit by San Francisco county officials of about 400 recent foreclosures there determined that almost all involved either legal violations or suspicious documentation, according to a report released Wednesday.

Annie Tritt for The New York Times

Phil Ting, the San Francisco assessor-recorder, found widespread violations or irregularities in files of properties subject to foreclosure sales.

Readers’ Comments

Readers shared their thoughts on this article.

Anecdotal evidence indicating foreclosure abuse has been plentiful since the mortgage boom turned to bust in 2008. But the detailed and comprehensive nature of the San Francisco findings suggest how pervasive foreclosure irregularities may be across the nation.

The improprieties range from the basic — a failure to warn borrowers that they were in default on their loans as required by law — to the arcane. For example, transfers of many loans in the foreclosure files were made by entities that had no right to assign them and institutions took back properties in auctions even though they had not proved ownership.

Commissioned by Phil Ting, the San Francisco assessor-recorder, the report examined files of properties subject to foreclosure sales in the county from January 2009 to November 2011. About 84 percent of the files contained what appear to be clear violations of law, it said, and fully two-thirds had at least four violations or irregularities.

Kathleen Engel, a professor at Suffolk University Law School in Boston said: “If there were any lingering doubts about whether the problems with loan documents in foreclosures were isolated, this study puts the question to rest.”

The report comes just days after the $26 billion settlement over foreclosure improprieties between five major banks and 49 state attorneys general, including California’s. Among other things, that settlement requires participating banks to reduce mortgage amounts outstanding on a wide array of loans and provide $1.5 billion in reparations for borrowers who were improperly removed from their homes.

But the precise terms of the states’ deal have not yet been disclosed. As the San Francisco analysis points out, “the settlement does not resolve most of the issues this report identifies nor immunizes lenders and servicers from a host of potential liabilities.” For example, it is a felony to knowingly file false documents with any public office in California.

In an interview late Tuesday, Mr. Ting said he would forward his findings and foreclosure files to the attorney general’s office and to local law enforcement officials. Kamala D. Harris, the California attorney general, announced a joint investigation into foreclosure abuses last December with the Nevada attorney general, Catherine Cortez Masto. The joint investigation spans both civil and criminal matters.

The depth of the problem raises questions about whether at least some foreclosures should be considered void, Mr. Ting said. “We’re not saying that every consumer should not have been foreclosed on or every lender is a bad actor, but there are significant and troubling issues,” he said.

California has been among the states hurt the most by the mortgage crisis. Because its laws, like those of 29 other states, do not require a judge to oversee foreclosures, the conduct of banks in the process is rarely scrutinized. Mr. Ting said his report was the first rigorous analysis of foreclosure improprieties in California and that it cast doubt on the validity of almost every foreclosure it examined.

“Clearly, we need to set up a process where lenders are following every part of the law,” Mr. Ting said in the interview. “It is very apparent that the system is broken from many different vantage points.”

The report, which was compiled by Aequitas Compliance Solutions, a mortgage regulatory compliance firm, did not identify specific banks involved in the irregularities. But among the legal violations uncovered in the analysis were cases where the loan servicer did not provide borrowers with a notice of default before beginning the eviction process; 8 percent of the audited foreclosures had that basic defect.

In a significant number of cases — 85 percent — documents recording the transfer of a defaulted property to a new trustee were not filed properly or on time, the report found. And in 45 percent of the foreclosures, properties were sold at auction to entities improperly claiming to be the beneficiary of the deeds of trust. In other words, the report said, “a ‘stranger’ to the deed of trust,” gained ownership of the property; as a result, the sale may be invalid, it said.

In 6 percent of cases, the same deed of trust to a property was assigned to two or more different entities, raising questions about which of them actually had the right to foreclose. Many of the foreclosures that were scrutinized showed gaps in the chain of title, the report said, indicating that written transfers from the original owner to the entity currently claiming to own the deed of trust have disappeared.

Banks involved in buying and selling foreclosed properties appear to be aware of potential problems if gaps in the chain of title cloud a subsequent buyer’s ownership of the home. Lou Pizante, a partner at Aequitas who worked on the audit, pointed to documents that banks now require buyers to sign holding the institution harmless if questions arise about the validity of the foreclosure sale.

The audit also raises serious questions about the accuracy of information recorded in the Mortgage Electronic Registry System, or MERS, which was set up in 1995 by Fannie Mae and Freddie Mac and major lenders. The report found that 58 percent of loans listed in the MERS database showed different owners than were reflected in other public documents like those filed with the county recorder’s office.

The report contradicted the contentions of many banks that foreclosure improprieties did little harm because the borrowers were behind on their mortgages and should have been evicted anyway. “We can deduce from the public evidence,” the report noted, “that there are indeed legitimate victims in the mortgage crisis. Whether these homeowners are systematically being deprived of legal safeguards and due process rights is an important question.”

A version of this article appeared in print on February 16, 2012, on page A1 of the New York edition with the headline: Audit Uncovers Extensive Flaws in Foreclosures.

Audit Uncovers Extensive Flaws in Foreclosures (copy attached)

16 Feb

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, February 16, 2012 5:59 AM
To: Charles Cox
Subject: Audit Uncovers Extensive Flaws in Foreclosures (copy attached)

Audit Uncovers Extensive Flaws in Foreclosures

By GRETCHEN MORGENSON

Published: February 15, 2012

An audit by San Francisco county officials of about 400 recent foreclosures there determined that almost all involved either legal violations or suspicious documentation, according to a report released Wednesday.

Phil Ting, the San Francisco assessor-recorder, found widespread violations or irregularities in files of properties subject to foreclosure sales.

Anecdotal evidence indicating foreclosure abuse has been plentiful since the mortgage boom turned to bust in 2008. But the detailed and comprehensive nature of the San Francisco findings suggest how pervasive foreclosure irregularities may be across the nation.

The improprieties range from the basic — a failure to warn borrowers that they were in default on their loans as required by law — to the arcane. For example, transfers of many loans in the foreclosure files were made by entities that had no right to assign them and institutions took back properties in auctions even though they had not proved ownership.

Commissioned by Phil Ting, the San Francisco assessor-recorder, the report examined files of properties subject to foreclosure sales in the county from January 2009 to November 2011. About 84 percent of the files contained what appear to be clear violations of law, it said, and fully two-thirds had at least four violations or irregularities.

Kathleen Engel, a professor at Suffolk University Law School in Boston said: “If there were any lingering doubts about whether the problems with loan documents in foreclosures were isolated, this study puts the question to rest.”

The report comes just days after the $26 billion settlement over foreclosure improprieties between five major banks and 49 state attorneys general, including California’s. Among other things, that settlement requires participating banks to reduce mortgage amounts outstanding on a wide array of loans and provide $1.5 billion in reparations for borrowers who were improperly removed from their homes.

But the precise terms of the states’ deal have not yet been disclosed. As the San Francisco analysis points out, “the settlement does not resolve most of the issues this report identifies nor immunizes lenders and servicers from a host of potential liabilities.” For example, it is a felony to knowingly file false documents with any public office in California.

In an interview late Tuesday, Mr. Ting said he would forward his findings and foreclosure files to the attorney general’s office and to local law enforcement officials. Kamala D. Harris, the California attorney general, announced a joint investigation into foreclosure abuses last December with the Nevada attorney general, Catherine Cortez Masto. The joint investigation spans both civil and criminal matters.

The depth of the problem raises questions about whether at least some foreclosures should be considered void, Mr. Ting said. “We’re not saying that every consumer should not have been foreclosed on or every lender is a bad actor, but there are significant and troubling issues,” he said.

California has been among the states hurt the most by the mortgage crisis. Because its laws, like those of 29 other states, do not require a judge to oversee foreclosures, the conduct of banks in the process is rarely scrutinized. Mr. Ting said his report was the first rigorous analysis of foreclosure improprieties in California and that it cast doubt on the validity of almost every foreclosure it examined.

“Clearly, we need to set up a process where lenders are following every part of the law,” Mr. Ting said in the interview. “It is very apparent that the system is broken from many different vantage points.”

The report, which was compiled by Aequitas Compliance Solutions, a mortgage regulatory compliance firm, did not identify specific banks involved in the irregularities. But among the legal violations uncovered in the analysis were cases where the loan servicer did not provide borrowers with a notice of default before beginning the eviction process; 8 percent of the audited foreclosures had that basic defect.

In a significant number of cases — 85 percent — documents recording the transfer of a defaulted property to a new trustee were not filed properly or on time, the report found. And in 45 percent of the foreclosures, properties were sold at auction to entities improperly claiming to be the beneficiary of the deeds of trust. In other words, the report said, “a ‘stranger’ to the deed of trust,” gained ownership of the property; as a result, the sale may be invalid, it said.

In 6 percent of cases, the same deed of trust to a property was assigned to two or more different entities, raising questions about which of them actually had the right to foreclose. Many of the foreclosures that were scrutinized showed gaps in the chain of title, the report said, indicating that written transfers from the original owner to the entity currently claiming to own the deed of trust have disappeared.

Banks involved in buying and selling foreclosed properties appear to be aware of potential problems if gaps in the chain of title cloud a subsequent buyer’s ownership of the home. Lou Pizante, a partner at Aequitas who worked on the audit, pointed to documents that banks now require buyers to sign holding the institution harmless if questions arise about the validity of the foreclosure sale.

The audit also raises serious questions about the accuracy of information recorded in the Mortgage Electronic Registry System, or MERS, which was set up in 1995 by Fannie Mae and Freddie Mac and major lenders. The report found that 58 percent of loans listed in the MERS database showed different owners than were reflected in other public documents like those filed with the county recorder’s office.

The report contradicted the contentions of many banks that foreclosure improprieties did little harm because the borrowers were behind on their mortgages and should have been evicted anyway. “We can deduce from the public evidence,” the report noted, “that there are indeed legitimate victims in the mortgage crisis. Whether these homeowners are systematically being deprived of legal safeguards and due process rights is an important question.”

aequitas_sf_report.pdf

Foreclosure Fraud by Robo-Signing Lawyers – Our Leaders Wish You’d Just Forget About It

16 Feb

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, February 16, 2012 5:59 AM
To: Charles Cox
Subject: Foreclosure Fraud by Robo-Signing Lawyers – Our Leaders Wish You’d Just Forget About It

Foreclosure Fraud by Robo-Signing Lawyers – Our Leaders Wish You’d Just Forget About It

by Chip Parker, Jacksonville Bankruptcy Attorney

Obama Cares This Much About Homeowners

Much has been written over the last week about what President Obama calls a “landmark” foreclosure fraud settlement between 49 Attorneys General and the five largest banks. With the lone exception of the National Association of Consumer Advocates, champions for Middle Class consumers have roundly criticized the agreement as a sweetheart deal for the banks. In response, supporters of the settlement are quick to point out that it settles the “narrow” issue of “robo-signing.”

What is robo-signing? After all, it doesn’t sound as bad as “fraud and corruption.”

Robo-signing and it’s sibling, “surrogate signing,” is the systematic, intentional misrepresentation or fabrication of evidence in every court of every county in every state of the United States. It is the filing of forged documents critical to a bank’s case in nearly every foreclosure in our country. It’s bad enough that the banks are perpetrating fraud, but what’s worse is that their lawyers are knowing accomplices to the fraud.

Lawyers are commonly referred to as “Officers of the Court.” That’s because lawyers take an oath upon admission to the profession to uphold the law and the integrity of the judicial process. We are the gatekeepers of justice. When we lie to judges, the integrity of our judicial system suffers irreparable harm.

Here is but one example of the criminal conduct that is being forgiven by the AG settlement:

In Florida, only the owner of the mortgage note and mortgage can file a foreclosure against a homeowner. Usually, the plaintiff in a foreclosure case is someone other than the originator of the loan because the original note holder usually sells the loan. The document evidencing that transfer of ownership is known as the Assignment of Mortgage, which is recorded in the official records of the county where the home is located. The Assignment of Mortgage is a critical piece of evidence in a foreclosure because it establishes the plaintiff’s “standing” to foreclose.

Example of a robo-signing lawyer

Here is a screenshot of four signatures of one “Assistant Secretary” of Mortgage Electronic Registration Systems as “nominee” for various mortgage originators. Clearly, all four signatures do not look alike, even though this is allegedly the signature of the same person. But this person isn’t just a person – she’s a lawyer. And she’s not just any lawyer. She’s the litigation managing attorney at The Law Offices of Marshall C. Watson, P.A., one of the largest foreclosure law firms in the State of Florida, and I spoke with her just two days ago!

The fraud being perpetrated goes like this: The plaintiff needs the Assignment of Mortgage from the originator of the loan to the plaintiff to create “standing.” So, the plaintiff’s own lawyer creates the assignment, allegedly transferring an interest in land, and signs it herself. The lawyer then actually records this fabricated document in the county official records and also files it in the actual foreclosure case.

As the litigation managing attorney for Marshall Watson, this lawyer appears regularly before judges throughout the state, and these judges rely upon her honesty in all her dealings with the court. When a lawyer lies in court, it is worse than when a non-lawyer lies because we are not just sworn to tell the truth but to uphold the integrity of the court.

But what about a chief judge who is in cahoots with this foreclosure firm? Well, one of Marshall Watson’s newer lawyers is the former Chief Judge of Broward County, Victor Tobin, who, just before joining the firm, designed Broward’s notorious “Rocket Docket” foreclosure court that radically tilts the judicial process in Marshall Watson’s favor.

Someone really should tell Florida Attorney General Pam Bondi about this lawyer. Oh wait. She already knows. Florida’s Attorney General has had an ongoing investigation of Marshall Watson for years. The investigation was started by Bondi’s predecessor, Bill McCollum, but the moment she took office, she was more focused on shutting down such investigations, starting with her firing of the bulldog attorneys assigned to foreclosure fraud. In Marshall Watson’s case, they settled for $2M, but nobody was prosecuted for any crimes.

Well, even if Attorney General Pam Bondi ignores fraud on the court, surely The Florida Bar is investigating this lawyer because The Florida Bar HAS TO take robo-signing by lawyers seriously. But the Florida Bar doesn’t investigate robo-signers. To the contrary, The Florida Bar HIRES THEM to oversee attorney ethics investigations (The Florida Bar has in the past and will probably again investigate ME for speaking the truth). I AM NOT MAKING THIS UP!

Well, at least Floridians have our elected state representatives to protect homeowner rights in the wake of this massive fraud. Don’t look now, but a new Florida House of Representatives Bill HB213 is an “expedited foreclosure” bill that actually MAKES FRAUD EASIER for the banks by accelerating the foreclosure process. This bill has already made it out of committee with a 12 – 4 passing vote. Stay tuned for more on this selling out by our elected legislators.

If you are a homeowner, who is on your side? The President of the United States? The United States Congress? Your Attorney General? Your State Legislator? Your local Bar?

It’s getting harder to tell, but the signs aren’t good.

What Goes to the Banks Stays With the Banks

14 Feb

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Monday, February 13, 2012 10:20 AM
To: Charles Cox
Subject: What Goes to the Banks Stays With the Banks

Borrowers Don’t Count — But False Claims of Losses Count Multiple Times

by Neil Garfield

What Goes to the Banks Stays With the Banks

Even if the Payment was on the Debt owned by Another

There have been dozens of deals with law enforcement and regulatory agencies. There have been thousands of settlements with individual homeowners sealed under confidentiality. Why do they not work for everyone?

The answer is obvious — borrowers don’t count. And the reason they don’t count is the uninformed view that borrowers took the loans and should repay them — even if the loans are NOT in default, are paid off in full to creditors, and the claimants who keep getting money from all sides and from all directions without any demand for accounting.

It is the policy of this country that the full brunt of the cost of the mortgage crisis should be borne by borrowers. We are imposing an ideology over the facts, ignoring the absurdity of the consequences, and compounding both past evil and greasing the tracks for the banks to serve as the collection point for payments covering losses that never occurred (to the banks).

These payments include taxpayer direct bailouts (Bush’s TARP), indirect bailouts (Bush-Obama public-private Maiden Lane deals), direct private payments from servicers (while declaring non-payment from the borrower), direct private payments from insurers who were bailed out using taxpayer dollars, direct private payments from credit default swap counter parties who were funded by Taxpayer bailouts from the U.S. treasury and foreign treasuries, and indirect credits from other exotic credit enhancements.

THAT MAKES 6 distinct sources of payment received by the banks IN ADDITION TO THE DIRECT PAYMENTS FROM BORROWERS AND INDIRECT PAYMENTS FROM BORROWERS WHO GAVE UP TITLE AND POSSESSION TO HOMES ON WHICH THE CREDITOR WAS PAID IN FULL AND THERE WAS NO DEFAULT.

Even Borrowers can’t get their brains around the possibility that they accepted a loan that was paid off using their tax dollars and financial relationships enabled by the ignorance of both the creditor investor who actually loaned the money and the ignorance of the Buyer.

In all cases the investors are sitting with the alleged loss due to so-called defaulted mortgages. In no case have the banks loaned money in any securitized loan. In no case have the banks paid any money to buy the loans. In all cases the risk of loss was left with the creditor investor. In all cases, the Banks collected the payments, the bailouts, the insurance proceeds, the CDS proceeds etc. In no case have the banks even admitted the receipt of more than $17 trillion on defaults that at most were valued under $3 trillion. In no case have the banks been required to provide a full and fair accounting.

Instead, the banks and servicers have completely controlled the narrative portraying borrowers as deadbeats wanting to get out of a valid debt when what these brewers want is a modification based upon realistic numbers in a fair Market on a fair playing field — one which recognizes that the inflated appraisals of yesteryear were the responsibility of the banks that ordered those appraisals with express instructions as to what value must be attached to the property if the apprised ever wanted to work again as an appraiser.

What goes to the banks, stays with the banks.

There are rarely payments of more than a pittance paid to the creditors from their agent bankers.

The banks withhold money received because (a) they mean to keep it and (b) they mean to declare a non-existent default in order to create the appearance on an economic reality in which foreclosure is proper.

Add to that the "credit bid" the banks submit in lieu of cash payment at the bogus foreclosure sales, and you end up with the banks taking all of the money from investors and homeowners and all of the property from the homeowners whose debt has long since been paid.

This validation of economic crimes worthy of life sentences on Wall Street. Instead, we continue the attack on the middle class and poor thus defiling our own reputation and undermining the nation’s ability to recover from what could have been a temporary debasement of our currency and prospects.

It is axiomatically true that no nation has survived severe income inequality — because for wealth inequality to get that extreme the freedoms in the marketplace must be replaced by bullies. The nation of laws that keep a society intact is replaced by the law of men. Thus is born both the new Aristocracy and the new seeds of social revolution.

Judicial council meeting.You wonder about the attitude in California in particular, with regard to the problems w e’re facing…this should give you an idea.

14 Feb
Complaint Department Grenade

Image via Wikipedia

You wonder about the attitude in California in particular, with regard to the problems we’re facing…this should give you an idea.

To: Charles Cox
Subject: Judicial council meeting.

>> Mr. Stewart: Thank you. Good morning, lady chairperson and California Judicial Council members. It’s an honor to address you. And I thank you for allowing me to speak. As you may know, in 2009, there were over 500,000 foreclosures in California. My talk coincides with a power point slide presentation that I submitted for this talk, that all of you I understand have a copy of.

It’s regarding Judicial Council Ud-100 form, intent versus use. And for all these talks, usually you give an outline of what you’re going to say, then you say it and then you give a conclusion and recap what you said. So, I would open with a joke but the one that I had is kind of corny, so I’ll proceed to the outline.

The — I’m going to contrast the unlimited jurisdiction complaint versus the unlawful detainer complaint, then go to the legislative report concerning the code passed by the legislature regarding unlawful detainer actions, the Judicial Council intent as inferred by the comments on the Jd-100 form. The current use by attorneys for banks of the Ud-100 form. And then overview how judges implement the U D complaint versus the intent of the complaint and the civil rights and due process issues for homeowners who are confronted with UD complaint.

First of all the ordinary unlawful or unlimited jurisdiction complaint is to be used only after administrative remedies have been exhausted. For a party whose rights have been violated. The unlimited jurisdiction complaints have three realms of discovery prior to trial setting another full round of discovery after trial setting, but before trial. The unlimited jurisdiction complaint allows for cross complaint that must be heard prior to the hearing of the complaint and cannot be dismissed unlike the complaint. pursuant to maxums of law. The unlawful detainer does not allow for cross complaint. It does not allow for full discovery, it operates under the presumption that the plaintiff, who is filing the unlawful detainer, has standing to file the unlawful detainer, does not allow a challenge to the ownership claim of the plaintiff or the standing of the plaintiff to file and make the claim for unlawful detainer.

The legislative report for the unlawful detainer legislation makes it clear that it is intended for non-payment of rent. That indicates that it’s to be applied to renters, not homeowners, who have been foreclosed upon. The Judicial Council on the UD-100 Judicial Council form states clearly on page 1, note, do not use this form for evictions after sale, and then it cites code of civil procedure section 1161-A.

Now the current use of the unlawful detainer complaint by the banks involves their deliberate misrepresentation of the owner who of this foreclosed upon as renters. And of course there is no opportunity in the unlawful detainer complaint to challenge this. 99% of foreclosures are currently done in California in fraud. So we’ve got a situation where you’ve got a fraudulent complaint filed, home owners are confronted with this on a fast track, and generally they are confused and baffled and when they ask to change the jurisdiction from the limbed jurisdiction unlawful detainer to an unlimited complaint with cross complaint as is provided generally by local rules, the judges generally refuse and further the judges do not do a SuA Sponte dismissal of the unlawful detainer for lack of standing

>> Mr. Stewart you’re up to your five minutes.

>> I can conclude.

>> Within 30 seconds, please, sir.

>> Mr. Stewart: The banks have no standing to foreclose because all the notes for the mortgages are securitized, sealed in a 30 years real estate management conduit that the banks do not open because then they will have to pay the taxes and penalties on 3.6 billion dollars of Remic notes, not just the note they are trying to get. They never become an assign on the note, they never are recorded in the public record as an assign on the note, they’ve separated the note from the deed of trust, so they have violated UCC 3-305-B and made the note unenforceable but the standing is never allowed to be challenged and further more the trustee fraudulently certifies under penalty of perjury that civil code 2934 and all its requirements have been satisfied when in fact the California civil code 2932.5 has been violated because the banks never have the note.

>>Mr. Stewart, I’ll stop you here because I want you to know we have an idea of the substance of your complaint about the use of this form. And we appreciate you are bringing this to the attention of the judicial counsel. Thank you, Mr. Stewart.

>> Thank you commissioner, chairperson.

American Banker | Other sources who spoke with American Banker raised doubts that everything is yet in place. A person familiar with the mortgage servicing pact says that a settlement term sheet does not yet exist.

10 Feb

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Friday, February 10, 2012 1:39 PM
To: Charles Cox
Subject: American Banker | Other sources who spoke with American Banker raised doubts that everything is yet in place. A person familiar with the mortgage servicing pact says that a settlement term sheet does not yet exist.

American Banker

Missing Settlement Document Raises Doubts on $25B Deal

By Jeff Horwitz and Kate Davidson

FEB 10, 2012 1:07pm ET

More than a day after the announcement of a mammoth national mortgage servicing settlement, the actual terms of the deal still aren’t public. The website created for the national settlement lists the document as "coming soon."

That’s because a fully authorized, legally binding deal has not been inked yet.

The implication of this is hard to say. Spokespersons for both the Iowa attorney general’s office and the Department of Justice both told American Banker that the actual settlement will not be made public until it is submitted to a court. A representative for the North Carolina attorney general downplayed the significance of the document’s non-final status, saying that the terms were already fixed.

"Once the documents are finalized, they’ll be posted to nationalmortgagesettlement.com," the representative said in an email to American Banker.

Other sources who spoke with American Banker raised doubts that everything is yet in place. A person familiar with the mortgage servicing pact says that a settlement term sheet does not yet exist. Instead, there are a series of nearly-complete documents that will be attached to a consent judgment eventually filed with the court. That truly final version will include things such as servicing standards, consumer relief options, legal releases, and enforcement terms. There will likely be separate state and a federal versions of the release.

Some who talked to American Banker said that the political pressure to announce the settlement drove the timing, in effect putting the press release cart in front of the settlement horse.

Whatever the reason for the document’s continued non-appearance, the lack of a public final settlement is already the cause for disgruntlement among those who closely follow the banking industry. Quite simply, the actual terms of a settlement matter.

"The devil’s in the details," says Ron Glancz, chairman of law firm Venable LLP’s Financial Services Group. "Until you see the document you’re never quite sure what your rights are."

"It’s frustrating," agrees Stern Agee analyst John Nadel. "But it’s not unlike anything else that’s been going on in financial reform generally, is it?"

Should the settlement still have loose strings, yesterday’s frenzy over the completion of the settlement may have been premature. The announced deal launched a countless press releases and wall to wall news coverage. But few news outlets asked for the document, and those that did (including American Banker) have been unsuccessful.

"It is hard for me to believe that they would have gone public in the way that they did if they didn’t have it all worked out. But it is unusual that we don’t have a copy of the settlement yet," says Diane Thompson, an attorney for the National Consumer Law Center.

American Banker asked The Department of Justice, the Department of Housing and Urban Development, and the offices of Attorneys General in Iowa, North Carolina and Colorado for a copy of the settlement last night. Only Iowa, North Carolina and the Department of Justice have responded, saying that the document would not be available until it is filed with the court on a yet-undetermined date.

And there is plenty more still to be worked out under all circumstances.

"Even once we get to the final terms, the servicers we’re told are going to be allowed to develop their own plans," says NCLC’s Thompson. "They’re going to have three months to develop those from when the settlement is approved by the court. We are a long way in lots of ways from being able to kick the tires."

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Mrs Harris 13,000.00 settlement we are under water an average of 128,000.00 how does this punish Fraud? The California Lack of Commitment!!

10 Feb

Mrs Harris our Attorney General says we foreclosure victims will get real relief but if you divide 26 Billion into the 2 million victims that’s 13,000 how is that going to help anybody but the Banks. Short sale relief is no relief at all. California is an Anti- deficiency state. The victim only gets to move.

Attorney General Kamala D. Harris Secures $18 Billion California Commitment for Struggling Homeowners – Another sell out!

9 Feb

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, February 09, 2012 6:44 AM
To: Charles Cox
Subject: Attorney General Kamala D. Harris Secures $18 Billion California Commitment for Struggling Homeowners – Another sell out!

Sold out again!!! I knew it. She’s right in there with Governor Moonbeam and his $8.4 billion settlement with Countrywide that helped him get elected that no one collected on…disgusting but typical and not unexpected. She’s obviously been to the “talk out of both sides of your mouth” school of politics.

The Top Twelve Reasons Why You Should Hate the Mortgage Settlement

9 Feb

As readers may know by now, 49 of 50 states have agreed to join the so-called mortgage settlement, with Oklahoma the lone refusenik. Although the fine points are still being hammered out, various news outlets (New York Times, Financial Times, Wall Street Journal) have details, with Dave Dayen’s overview at Firedoglake the best thus far.

The Wall Street Journal is also reporting that the SEC is about to launch some securities litigation against major banks. Since the statue of limitations has already run out on securities filings more than five years old, this means they’ll clip the banks for some of the very last (and dreckiest) deals they shoved out the door before the subprime market gave up the ghost.

The various news services are touting this pact at the biggest multi-state settlement since the tobacco deal in 1998. While narrowly accurate, this deal is bush league by comparison even though the underlying abuses in both cases have had devastating consequences.

The tobacco agreement was pegged as being worth nearly $250 billion over the first 25 years. Adjust that for inflation, and the disparity is even bigger. That shows you the difference in outcomes between a case where the prosecutors have solid evidence backing their charges, versus one where everyone know a lot of bad stuff happened, but no one has come close to marshaling the evidence.

The mortgage settlement terms have not been released, but more of the details have been leaked:

1. The total for the top five servicers is now touted as $26 billion (annoyingly, the FT is calling it “nearly $40 billion”), but of that, roughly $17 billion is credits for principal modifications, which as we pointed out earlier, can and almost assuredly will come largely from mortgages owned by investors. $3 billion is for refis, and only $5 billion will be in the form of hard cash payments, including $1500 to $2000 per borrower foreclosed on between September 2008 and December 2011.

Banks will be required to modify second liens that sit behind firsts “at least” pari passu, which in practice will mean at most pari passu. So this guarantees banks will also focus on borrowers where they do not have second lien exposure, and this also makes the settlement less helpful to struggling homeowners, since borrowers with both second and first liens default at much higher rates than those without second mortgages. Per the Journal:

“It’s not new money. It’s all soft dollars to the banks,” said Paul Miller, a bank analyst at FBR Capital Markets.

The Times is also subdued:

Despite the billions earmarked in the accord, the aid will help a relatively small portion of the millions of borrowers who are delinquent and facing foreclosure. The success could depend in part on how effectively the program is carried out because earlier efforts by Washington aimed at troubled borrowers helped far fewer than had been expected.

2. Schneiderman’s MERS suit survives, and he can add more banks as defendants. It isn’t clear what became of the Biden and Coakley MERS suits, but Biden sounded pretty adamant in past media presentations on preserving that.

3. Nevada’s and Arizona’s suits against Countrywide for violating its past consent decree on mortgage servicing has, in a new Orwellianism, been “folded into” the settlement.

4. The five big players in the settlement have already set aside reserves sufficient for this deal.

Here are the top twelve reasons why this deal stinks:

1. We’ve now set a price for forgeries and fabricating documents. It’s $2000 per loan. This is a rounding error compared to the chain of title problem these systematic practices were designed to circumvent. The cost is also trivial in comparison to the average loan, which is roughly $180k, so the settlement represents about 1% of loan balances. It is less than the price of the title insurance that banks failed to get when they transferred the loans to the trust. It is a fraction of the cost of the legal expenses when foreclosures are challenged. It’s a great deal for the banks because no one is at any of the servicers going to jail for forgery and the banks have set the upper bound of the cost of riding roughshod over 300 years of real estate law.

2. That $26 billion is actually $5 billion of bank money and the rest is your money. The mortgage principal writedowns are guaranteed to come almost entirely from securitized loans, which means from investors, which in turn means taxpayers via Fannie and Freddie, pension funds, insurers, and 401 (k)s. Refis of performing loans also reduce income to those very same investors.

3. That $5 billion divided among the big banks wouldn’t even represent a significant quarterly hit. Freddie and Fannie putbacks to the major banks have been running at that level each quarter.

4. That $20 billion actually makes bank second liens sounder, so this deal is a stealth bailout that strengthens bank balance sheets at the expense of the broader public.

5. The enforcement is a joke. The first layer of supervision is the banks reporting on themselves. The framework is similar to that of the OCC consent decrees implemented last year, which Adam Levitin and yours truly, among others, decried as regulatory theater.

6. The past history of servicer consent decrees shows the servicers all fail to comply. Why? Servicer records and systems are terrible in the best of times, and their systems and fee structures aren’t set up to handle much in the way of delinquencies. As Tom Adams has pointed out in earlier posts, servicer behavior is predictable when their portfolios are hit with a high level of delinquencies and defaults: they cheat in all sorts of ways to reduce their losses.

7. The cave-in Nevada and Arizona on the Countrywide settlement suit is a special gift for Bank of America, who is by far the worst offender in the chain of title disaster (since, according to sworn testimony of its own employee in Kemp v. Countrywide, Countrywide failed to comply with trust delivery requirements). This move proves that failing to comply with a consent degree has no consequences but will merely be rolled into a new consent degree which will also fail to be enforced. These cases also alleged HAMP violations as consumer fraud violations and could have gotten costly and emboldened other states to file similar suits not just against Countrywide but other servicers, so it was useful to the other banks as well.

8. If the new Federal task force were intended to be serious, this deal would have not have been settled. You never settle before investigating. It’s a bad idea to settle obvious, widespread wrongdoing on the cheap. You use the stuff that is easy to prove to gather information and secure cooperation on the stuff that is harder to prove. In Missouri and Nevada, the robosigning investigation led to criminal charges against agents of the servicers. But even though these companies were acting at the express direction and approval of the services, no individuals or entities higher up the food chain will face any sort of meaningful charges.

9. There is plenty of evidence of widespread abuses that appear not to be on the attorney generals’ or media’s radar, such as servicer driven foreclosures and looting of investors’ funds via impermissible and inflated charges. While no serious probe was undertaken, even the limited or peripheral investigations show massive failures (60% of documents had errors in AGs/Fed’s pathetically small sample). Similarly, the US Trustee’s office found widespread evidence of significant servicer errors in bankruptcy-related filings, such as inflated and bogus fees, and even substantial, completely made up charges. Yet the services and banks will suffer no real consequences for these abuses.

10. A deal on robosiginging serves to cover up the much deeper chain of title problem. And don’t get too excited about the New York, Massachusetts, and Delaware MERS suits. They put pressure on banks to clean up this monstrous mess only if the AGs go through to trial and get tough penalties. The banks will want to settle their way out of that too. And even if these cases do go to trial and produce significant victories for the AGs, they still do not address the problem of failures to transfer notes correctly.

11. Don’t bet on a deus ex machina in terms of the new Federal foreclosure task force to improve this picture much. If you think Schneiderman, as a co-chairman who already has a full time day job in New York, is going to outfox a bunch of DC insiders who are part of the problem, I have a bridge I’d like to sell to you.

12. We’ll now have to listen to banks and their sycophant defenders declaring victory despite being wrong on the law and the facts. They will proceed to marginalize and write off criticisms of the servicing practices that hurt homeowners and investors and are devastating communities. But the problems will fester and the housing market will continue to suffer. Investors in mortgage-backed securities, who know that services have been screwing them for years, will be hung out to dry and will likely never return to a private MBS market, since the problems won’t ever be fixed. This settlement has not only revealed the residential mortgage market to be too big to fail, but puts it on long term, perhaps permanent, government life support.

As we’ve said before, this settlement is yet another raw demonstration of who wields power in America, and it isn’t you and me. It’s bad enough to see these negotiations come to their predictable, sorry outcome. It adds insult to injury to see some try to depict it as a win for long suffering, still abused homeowners.

The 50 State AG Sellout- The American People Sold Out To The Banks – I agree with Matt!

9 Feb

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, February 09, 2012 6:48 AM
To: Charles Cox
Subject: The 50 State AG Sellout- The American People Sold Out To The Banks – I agree with Matt!

The 50 State AG Sellout- The American People Sold Out To The Banks

February 9th, 2012 | Author: Matthew D. Weidner, Esq.

Is Canada accepting applications? How Bout Mexico? China? This place is toast. A white collar criminal corprotacracy that makes us all slaves to a corporate machine that will not be slowed down and certainly will not stop.

I find the news that attorneys general from 49 states will sign a settlement with the banks most offensive. I’m sorry, I thought this was a government Of The People. I thought we had a say in things….I’m certain I read that somewhere. But that’s an old dream. Today, the criminals negotiate directly with the prosecutors…such as they are and we just sit back and wait for their pronouncement, like some oracles on high.

It’s a sick and despicable state of affairs, our national descent into hell is only hastened. Not much you can do now…the fix is in. They all own us. There are no leaders, only minions of the evil machine….

Keep in mind, it’s not just everyday Americans that are hosed by this deal, it’s investors who are being hosed to pay for this garbage. It sets up a good old fashioned taking of private property….scary huh?

Well, hopefully the big, well-funded investors will stand up and fight this insanity…because the little guy has no seat at the table and won’t stand a chance of fighting back…..

Top 12 reasons to hate this deal: http://www.nakedcapitalism.com/2012/02/the-top-twelve-reasons-why-you-should-hate-the-mortgage-settlement.html

Robo-Deal: The Price of Crime – Neil Garfield Weighs in…

9 Feb

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, February 09, 2012 9:11 AM
To: Charles Cox
Subject: Robo-Deal: The Price of Crime – Neil Garfield Weighs in…

Robo-Deal: The Price of Crime

Posted on February 9, 2012 by Neil Garfield

” The biggest mistake being made in the settlement is that investors are being insulted. They won’t return to the same marketplace and invest in similar offerings in the future. This puts a permanent damper on credit markets and liquidity. Investors have no reason to trust a society that ratifies criminal fraud. Investors have a high tolerance for risk, but zero tolerance for corruption. The net effect will be investments going anywhere but the credit markets based on Wall Street, which means that fund managers are going to perceive that their only safe move is to go to a more stable environment in which crime is punished and fraud isn’t tolerated.” — Neil F Garfield, livinglies.me

EDITOR’S COMMENT AND ANALYSIS: If you steal a little money you go to jail. If you steal a lot you get to keep it. That seems to be the net impact of the multi-state settlement. Yves Smith (see below) and Adam Levitin are among many who decry this settlement and I agree with their reasons, but I don’t agree that this is the end of this “theater.”

It is probable that world class criminals will escape prosecution and it is certainly a bad precedent to put a price — $2,000 — on committing forgery, where the loss is in the hundreds of thousands of dollars. The driving theme behind the settlement is to get this episode behind us and so, like the tobacco settlement, this new deal is intended to start us on the path of clearing out the foreclosure problem — but unlike the tobacco settlement in which people were successfully encouraged to stop smoking, this settlement is based solidly on continuing false and fraudulent foreclosures on debts that have been paid if you apply the third party payments.

Those foreclosures cannot continue without continuing the fraud. This isn’t a paperwork problem — it is an economic one in which the real parties in interest have been left out.

Yet the theater is far from over because the title issues and the individual causes of action — for those homeowners who want to pursue them — still exist, and criminal prosecutions — for those prosecutors who won’t be stopped will also continue. There is no avoiding the realization that the very banks who are parties to this settlement are not and never were parties to the loans. They never owned them and they never bought them.

Thus any document signed by these strangers to the transaction is no more than a wild deed that cannot support a chain of title. If this issue is not addressed head-on, who is going to buy anything or lend anything in a market where a growing number of supposedly ex-homeowners successfully overturn foreclosures and regain title and possession of their properties? It isn’t the number of people who succeed in this endeavor that matters — it is that the risk exists that it could happen on any property.

WHY ROBO? Take a step back and look at this picture. The Banks are settling claims for wrongful foreclosure but the wrongful foreclosure is being left intact. The obvious title problems are left intact like a disease on a rotting corpse. The question of why false declarations in false documents were used is being glossed over as though it doesn’t really matter why they did it. Isn’t anyone curious why banks would resort to widespread use of forged documents with false declarations contained in them?

This issue won’t go away. If there was a cover-up, what were they attempting to cover up? For me the answer is clear — (a) the loans contain numerous fatal defects that eviscerate the debt mortgage securing the debt and (b) that there was no right or reason to foreclose except that the banks and servicers saw an opportunity to make even more money by taking the homes after they had already taken the investors and the homeowners to the cleaners.

The bottom line is (a) that there were fatal defects in both the documentation for the origination of the loan and the documentation for the origination of the sale of mortgage bonds to investors. This was intentional, so that the banks could do exactly what they are now doing, pretending on a grand scale to be the creditors when in fact the real creditors are being left out in the cold. And (b) there remain fatal defects in both the so-called mortgages and the foreclosure process as it has progressed thus far. The only settlement that counts, therefore, is one that stops the false foreclosures by strangers to the deal on loans that are not in default and that are not secured by a perfected mortgage lien.

In the end run, how much more the banks will be required to fork over will depend upon you and others who read this blog. If you call it quits, then the most you will see if in fact anyone sees it, is $2,000 for losing a home you should not have lost and being tricked into a loan that should have been far different in both amount and terms. Those who have not yet been foreclosed are not directly affected by the settlement. So assuming that the banks and servicers persist in pursuing foreclosures in which they have no interest other than greed, nothing we have so far will change anything.

Those who press on will see a benefit from their efforts although I concede that the turmoil of litigation is daunting at the very least. The prospect of overturning foreclosures and evictions that were based upon false declarations in false documents by banks and servicers who had no privity with the homeowner remains a viable and even an enhanced option. How Judges will react to the news of indictment for criminal activity and settlement with law enforcement officials is anyone’s guess. The added factor that has not been addressed is that most of the foreclosed loans were not in actual default.

In the final analysis, the crisis in title chains is not being addressed at all and there is a lot of work to do to clear it up one way or another. But one thing is certain: continued false foreclosures is not the path of recovery.

Attacking Standing in Federal / Bankruptcy Court – Max Gardner Newsletter Posting

9 Feb

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, February 09, 2012 2:09 PM
To: Charles Cox
Subject: Attacking Standing in Federal / Bankruptcy Court – Max Gardner Newsletter Posting

Attacking Standing in Federal / Bankruptcy Court

By Tiffany Sanders on February 9, 2012

It is apodictic there can be no cause of action to foreclose a mortgage unless we know where the paper is and that it actually represents something. There is much “sand in the gears” of our property transfer system in these times. However, we cannot bend the rules. A person seeking to enforce an instrument conveying an interest in real property must demonstrate he has directly or indirectly acquired ownership of the instrument. – Max Gardner

Robin Miller has compiled an extensive bibliography on standing issues for us, and we’ll be sharing the case citations she has aggregated in a series of articles over the next several newsletters. Today, we’ll start with the basics: standing in federal court generally and bankruptcy court specifically. Later in the series, we’ll look at state court standing decisions, cases relating to MERS, right to enforce the note and more.

Standing in Federal Court – the Basics

Standing is a threshold issue in every federal case and cannot be waived; if the litigant does not have standing, the court has no power to hear the case, even if no objection has been raised. Unfortunately, not all courts exercise that affirmative duty, so it’s up to us as attorneys for the debtor/defendant to ensure that claimants without standing don’t slip through. The cases below establish those basic principles.

Sprint Communications Co. v. APCC Services, Inc., 554 U.S. 269 (2008): Assignee to claim must hold legal title at the time that it is asserted in action.

Elk Grove Unified School District v. Newdow, 542 U.S. 1 (2004): Federal court can only exercise jurisdiction when litigant meets both constitutional and prudential standing requirements.

Warth v. Seldin, 422 U.S. 490 (1975): Standing is a threshold question in every federal case determining the power of the court to entertain the suit.

St. Paul Fire and Marine Insurance Co. v. PepsiCo, Inc., 884 F. 2d 688 (2nd Cir. 1989): Court has independent duty to examine standing.

Barhold v. Rodriguez, 863 F.2d 233 (2nd Cir. 1988): Parties cannot consent to waive standing.

Constitutional and Prudential Standing in Bankruptcy Courts

Numerous U.S. Bankruptcy Court rulings have reaffirmed the general rule that federal court jurisdiction requires that the litigant have both Constitutional and prudential standing. That requirement and what exactly is required to satisfy the standard is elaborated upon in:

In re Jackson, 451 B.R. 24 (Bankr. E.D. Cal., June 6, 2011): For a federal court to have jurisdiction, the proponent of a matter must have both constitutional standing, which requires an injury fairly traceable to the defendant’s allegedly unlawful conduct and likely to be redressed by the requested relief, and prudential standing.

In re Veal, 450 B.R. 897 (9th Cir. B.A.P., June 10, 2011): A federal court may exercise jurisdiction over a litigant only when that litigant meets constitutional and prudential standing requirements; constitutional standing requires an injury in fact, which is caused by or fairly traceable to some conduct or some statutory prohibition, and which the requested relief will likely redress; prudential standing embodies judicially self-imposed limits on the exercise of federal jurisdiction; here, Wells Fargo did not establish standing to seek relief from stay, as it did not show that it or its agent had actual possession of the note, so that it could not establish that it was a “person entitled to enforce” the note under UCC § 3-301.

In re Burnett, 450 B.R. 589 (Bankr. W.D. Va., April 28, 2011): In order to establish a colorable claim, a movant for relief from stay must satisfy the constitutional limitations on federal court jurisdiction and prudential limitations on its exercise.

In re Hill, 2009 WL 1956174 (Bankr. D.Ariz., July 6, 2009): In addition to the procedural “real party in interest” requirements of Rule 17, a litigant must also have standing to bring a motion; a litigant must have both constitutional standing and prudential standing for a federal court to have jurisdiction to hear the case.

Party in Interest Issues in Bankruptcy Courts

In re Wilhelm, 407 B.R. 392 (Bankr. D. Idaho, July 7, 2009): To obtain stay relief, a movant must have standing and be the real party in interest under Federal Rule of Civil Procedure 17.

Standing of a Servicer

In re Alcide, 450 B.R. 526 (Bankr. E.D. Pa., May 27, 2011): To establish its status as a party in interest entitled to seek relief from the automatic stay, a mortgage servicer must demonstrate that (1) the initiation of a stay relief motion is within the scope of authority delegated to the servicer by its principal and; and (2) the principal itself is a party in interest (i.e., the principal is a party with the right to enforce the mortgage).

In re Gulley, 436 B.R. 878 (Bankr. N.D.Tex., August 23, 2010): A mortgage loan servicer is considered a creditor with standing to file a proof of claim by virtue of its pecuniary interest in collecting payments under the terms of the note.

In re Jacobson, 402 B.R. 359 (Bankr. W.D. Wash., March 6, 2009): Even if a servicer or agent has authority to bring a motion for relief from stay on behalf of the holder, it is the holder, rather than the servicer, that must be the moving party, and so identified in the papers and in the electronic docketing done by the moving party’s counsel.

Possession of the Note

In re Escobar, 457 B.R. 229 (Bankr. E.D. N.Y., August 22, 2011): Where the stay relief movant claims rights as a secured creditor by virtue of an assignment of rights to a promissory note secured by a lien against real property, it must provide satisfactory proof of its status as the owner or holder of the note; here, the movants had met this burden of proof through their uncontroverted affidavit testimony that they were holders of the notes by virtue of possession of the original notes executed with endorsements in blank.

In re Veal, 450 B.R. 897 (9th Cir. B.A.P., June 10, 2011): (See Constitutional and Prudential Standing in Bankruptcy Courts)

In re Banks, 457 B.R. 9 (8th Cir. B.A.P., Oct. 11, 2011): The bankruptcy court erred in holding that a creditor possessed the right to enforce a note endorsed in blank where the creditor did not establish that it was in possession of the note.

Date of Possession

In re Ruest, Case No. 08-10512, Adv. Proc. No. 09-1035 (Bankr. D. Vt., August 23, 2011): Even though it was undisputed that loan servicer was in possession of the note and the note was endorsed in blank, the date that the bank came into possession of the note was a genuine issue of material fact sufficient to deny motion for summary judgment.

In re Parker, 445 B.R. 301 (Bankr. D.Vt., March 18, 2011): The creditor needed to show that it was the holder of the note on the date of the debtor’s bankruptcy petition, and, since the endorsement was not dated, the court would hold a hearing to receive evidence on the issue.

Freddie Mac Bets Against American Homeowners

7 Feb
Freddie Mac

Image via Wikipedia


Freddie Mac, the taxpayer-owned mortgage giant, has placed multibillion-dollar bets that pay off if homeowners stay trapped in expensive mortgages with interest rates well above current rates.

Freddie began increasing these bets dramatically in late 2010, the same time that the company was making it harder for homeowners to get out of such high-interest mortgages.

No evidence has emerged that these decisions were coordinated. The company is a key gatekeeper for home loans but says its traders are “walled off” from the officials who have restricted homeowners from taking advantage of historically low interest rates by imposing higher fees and new rules.

Freddie’s charter calls for the company to make home loans more accessible. Its chief executive, Charles Haldeman Jr., recently told Congress that his company is “helping financially strapped families reduce their mortgage costs through refinancing their mortgages.”

But the trades, uncovered for the first time in an investigation by ProPublica and NPR, give Freddie a powerful incentive to do the opposite, highlighting a conflict of interest at the heart of the company. In addition to being an instrument of government policy dedicated to making home loans more accessible, Freddie also has giant investment portfolios and could lose substantial amounts of money if too many borrowers refinance.

“We were actually shocked they did this,” says Scott Simon, who as the head of the giant bond fund PIMCO’s mortgage-backed securities team is one of the world’s biggest mortgage bond traders. “It seemed so out of line with their mission.”

The trades “put them squarely against the homeowner,” he says.

Those homeowners have a lot at stake, too. Many of them could cut their interest payments by thousands of dollars a year.

Freddie Mac, along with its cousin Fannie Mae, was bailed out in 2008 and is now owned by taxpayers. The companies play a pivotal role in the mortgage business because they insure most home loans in the United States, making banks likelier to lend. The companies’ rules determine whether homeowners can get loans and on what terms.

The Federal Housing Finance Agency effectively serves as Freddie’s board of directors and is ultimately responsible for Freddie’s decisions. It is run by acting director Edward DeMarco, who cannot be fired by the president except in extraordinary circumstances.

Freddie and the FHFA repeatedly declined to comment on the specific transactions.

Freddie’s moves to limit refinancing affect not only individual homeowners but the entire economy. An expansive refinancing program could help millions of homeowners, some economists say. Such an effort would “help the economy and put tens of billions of dollars back in consumers’ pockets, the equivalent of a very long-term tax cut,” says real-estate economist Christopher Mayer of the Columbia Business School. “It also is likely to reduce foreclosures and benefit the U.S. government” because Freddie and Fannie, which guarantee most mortgages in the country, would have lower losses over the long run.

Freddie Mac’s trades, while perfectly legal, came during a period when the company was supposed to be reducing its investment portfolio, according to the terms of its government takeover agreement. But these trades escalate the risk of its portfolio, because the securities Freddie has purchased are volatile and hard to sell, mortgage securities experts say.

The financial crisis in 2008 was made worse when Wall Street traders made bets against their customers and the American public. Now, some see similar behavior, only this time by traders at a government-owned company who are using leverage, which increases the potential profits but also the risk of big losses, and other Wall Street stratagems. “More than three years into the government takeover, we have Freddie Mac pursuing highly levered, complicated transactions seemingly with the purpose of trading against homeowners,” says Mayer. “These are the kinds of things that got us into trouble in the first place.”

Freddie Mac is betting against, among others, Jay and Bonnie Silverstein. The Silversteins live in an unfinished development of cul-de-sacs and yellow stucco houses about 20 miles north of Philadelphia, in a house decorated with Bonnie’s orchids and their Rose Bowl parade pin collection. The developer went bankrupt, leaving orange plastic construction fencing around some empty lots. The community clubhouse isn’t complete.

“We’re in financial Jail”

The Silversteins have a 30-year fixed mortgage with an interest rate of 6.875 percent, much higher than the going rate of less than 4 percent.  They have borrowed from family members and are living paycheck to paycheck. If they could refinance, they would save about $500 a month. He says the extra money would help them pay back some of their family members and visit their grandchildren more often.

But brokers have told the Silversteins that they cannot refinance, thanks to a Freddie Mac rule.

The Silversteins used to live in a larger house 15 minutes from their current place, in a more upscale development. They had always planned to downsize as they approached retirement. In 2005, they made the mistake of buying their new house before selling the larger one. As the housing market plummeted, they couldn’t sell their old house, so they carried two mortgages for 2½ years, wiping out their savings and 401(k). “It just drained us,” Jay Silverstein says.

Finally, they were advised to try a short sale, in which the house is sold for less than the value of the underlying mortgage. They stopped making payments on the big house for it to go through. The sale was finally completed in 2009.

Such debacles hurt a borrower’s credit rating. But Bonnie has a solid job at a doctor’s office, and Jay has a pension from working for more than two decades for Johnson & Johnson. They say they haven’t missed a payment on their current mortgage.

But the Silversteins haven’t been able to get their refi. Freddie Mac won’t insure a new loan for people who had a short sale in the last two to four years, depending on their financial condition. While the company’s previous rules prohibited some short sales, in October 2010 the company changed its criteria to include all short sales. It is unclear whether the Silverstein mortgage would have been barred from a short sale under the previous Freddie rules.

Short-term, Freddie’s trades benefit from the high-interest mortgage in which the Silversteins are trapped. But in the long run, Freddie could benefit if the Silversteins refinanced to a more affordable loan. Freddie guarantees the Silversteins’ mortgage, so if the couple defaults, Freddie — and the taxpayers who own the company — are on the hook. Getting the Silversteins into a more affordable mortgage would make a default less likely.

If millions of homeowners like the Silversteins default, the economy would be harmed. But if they switch to loans with lower interest rates, they would have more money to spend, which could boost the economy.

“We’re in financial jail,” says Jay, “and we’ve never been there before.”

How Freddie’s investments work

Here’s how Freddie Mac’s trades profit from the Silversteins staying in “financial jail.” The couple’s mortgage is sitting in a big pile of other mortgages, most of which are also guaranteed by Freddie and have high interest rates. Those mortgages underpin securities that get divided into two basic categories.

Anatomy of a Deal

How Freddie Mac structured a deal in which it profited if homeowners stayed trapped in high-interest mortgages.

One portion is backed mainly by principal, pays a low return, and was sold to investors who wanted a safe place to park their money. The other part, the inverse floater, is backed mainly by the interest payments on the mortgages, such as the high rate that the Silversteins pay. So this portion of the security can pay a much higher return, and this is what Freddie retained.

In 2010 and ’11, Freddie purchased $3.4 billion worth of inverse floater portions — their value based mostly on interest payments on $19.5 billion in mortgage-backed securities, according to prospectuses for the deals. They covered tens of thousands of homeowners. Most of the mortgages backing these transactions have high rates of about 6.5 percent to 7 percent, according to the deal documents.

Between late 2010 and early 2011, Freddie Mac’s purchases of inverse floater securities rose dramatically. Freddie purchased inverse floater portions of 29 deals in 2010 and 2011, with 26 bought between October 2010 and April 2011. That compares with seven for all of 2009 and five in 2008.

In these transactions, Freddie has sold off most of the principal, but it hasn’t reduced its risk.

First, if borrowers default, Freddie pays the entire value of the mortgages underpinning the securities, because it insures the loans.

It’s also a big problem if people like the Silversteins refinance their mortgages. That’s because a refi is a new loan; the borrower pays off the first loan early, stopping the interest payments. Since the security Freddie owns is backed mainly by those interest payments, Freddie loses.

And these inverse floaters burden Freddie with entirely new risks. With these deals, Freddie has taken mortgage-backed securities that are easy to sell and traded them for ones that are harder and possibly more expensive to offload, according to mortgage market experts.

The inverse floaters carry another risk. Freddie gets paid the difference between the high mortgages rates, such as the Silversteins are paying, and a key global interest rate that right now is very low. If that rate rises, Freddie’s profits will fall.

It is unclear what kinds of hedging, if any, Freddie has done to offset its risks.

At the end of 2011, Freddie’s portfolio of mortgages was just over $663 billion, down more than 6 percent from the previous year. But that $43 billion drop in the portfolio overstates the risk reduction, because the company retained risk through the inverse floaters. The company is well below the cap of $729 billion required by its government takeover agreement.

How Freddie tightened credit

Restricting credit for people who have done short sales isn’t the only way that Freddie Mac and Fannie Mae have tightened their lending criteria in the wake of the financial crisis, making it harder for borrowers to get housing loans.

Some tightening is justified because, in the years leading up to the financial crisis, Freddie and Fannie were too willing to insure mortgages taken out by people who couldn’t afford them.

In a statement, Freddie contends it is “actively supporting efforts for borrowers to realize the benefits of refinancing their mortgages to lower rates.”

The company said in a statement: “During the first three quarters of 2011, we refinanced more than $170 billion in mortgages, helping nearly 835,000 borrowers save an average of $2,500 in interest payments during the next year.” As part of that effort, the company is participating in an Obama administration plan, called the Home Affordable Refinance Program, or HARP. But critics say HARP could be reaching millions more people if Fannie and Freddie implemented the program more effectively.

Indeed, just as it was escalating its inverse floater deals, it was also introducing new fees on borrowers, including those wanting to refinance. During Thanksgiving week in 2010, Freddie quietly announced that it was raising charges, called post-settlement delivery fees.

In a recent white paper on remedies for the stalled housing market, the Federal Reserve criticized Fannie and Freddie for the fees they have charged for refinancing. Such fees are “another possible reason for low rates of refinancing” and are “difficult to justify,” the Fed wrote.

A former Freddie employee, who spoke on condition he not be named, was even blunter: “Generally, it makes no sense whatsoever” for Freddie “to restrict refinancing” from expensive loans to ones borrowers can more easily pay, since the company remains on the hook if homeowners default.

In November, the FHFA announced that Fannie and Freddie were eliminating or reducing some fees. The Fed, however, said that “more might be done.”

The regulator as owner

The trades raise questions about the FHFA’s oversight of Fannie and Freddie. But the FHFA is not just a regulator. With the two companies in government conservatorship, the FHFA now plays the role of their board of directors and shareholders, responsible for the companies’ major decisions.

Under acting director DeMarco, the FHFA has emphasized that its main goal is to limit taxpayer losses by managing the two companies’ giant investment portfolios to make profits. To cover their previous losses and ongoing operations, Fannie and Freddie already had received $169 billion from taxpayers through the third quarter of last year.

The FHFA has frustrated the administration because the agency has made preserving the value of the companies’ investment portfolios a priority over helping homeowners in expensive mortgages. In 2010, President Barack Obama nominated a permanent replacement for acting director DeMarco, but Republicans in Congress blocked him. Obama has not nominated anyone else to replace DeMarco.

Even though Freddie is a ward of the state, top executives are highly compensated. Peter Federico, who’s in charge of the company’s investment portfolio, made $2.5 million in 2010, and he had target compensation of $2.6 million for last year, when most of these leveraged investments were made.

One of Federico’s responsibilities — tied to his bonuses —  is to “support and provide liquidity and stability in the mortgage market,” according to Freddie’s annual filing with the Securities and Exchange Commission. Mortgage experts contend that the inverse floater trades don’t further that goal.

ProPublica and NPR made numerous attempts to reach Federico. A woman who answered his home phone said he declined to comment.

The FHFA knew about the trades before ProPublica and NPR approached the regulatory agency about them, according to an FHFA official. The FHFA has the power to approve and disapprove trades, though it doesn’t involve itself in day-to-day decisions. The official declined to comment on whether the FHFA knew about them as Freddie was conducting them or whether the FHFA had explicitly approved them.

Liz Day of ProPublica contributed to this story.

Your AG Needs Your Opinion on the No-Investigation-Slap-on-the-Wrist “Settlement” – Posted by Beth Findsen

7 Feb

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Tuesday, February 07, 2012 8:56 AM
To: Charles Cox
Subject: Your AG Needs Your Opinion on the No-Investigation-Slap-on-the-Wrist “Settlement” – Posted by Beth Findsen

Your AG Needs Your Opinion on the No-Investigation-Slap-on-the-Wrist “Settlement”

February 6, 2012

So the persistent buzz is that the AGs are close to a deal, despite the resistance of various AGs of the braver ilk, California and Nevada come to mind. I vote that we all write to Arizona AG Tom Horne and urge him to show the courage of Nevada and hold out until investigations are complete (or even begun) and to insist that there be no waivers of criminal liability or other blatant pandering.

For Abigail Field on the “settlement,” read No, the Latest Bailed-Out-Bank Giveaway Won’t Help Housing

On another note, there was this article in the Awl, critiquing a recent New York magazine article:

Oh dear, here we go again: “Wall Street is a meritocracy, for the most part,” an irate but of course unnamed onetime Citigroup executive confides to junior father confessor Gabriel Sherman in this week’s hallucinatory New York magazine cover story, “The Emasculation of Wall Street.” “If someone has a bonus, it’s because they’ve created value for their institution.”

In the jumpy, suggestible universe of Gabe Sherman, Wall Street sleuth, things really are that simple: The beleaguered financial overclass creates value, in a rationally ordered system of maximally awarded talent. And the clueless public sector, intoxicated on post-meltdown regulatory prerogative, meddles with the primal forces of nature, skews executive compensation downward, panders to the blurry “populist” agenda of the Occupy Wall Street Crowd, generally foments market uncertainty and other forms of intolerable chaos so that presto, before you know it, we have “The End of Wall Street As They Knew It.”

In other words: To your crying towels, bankers! Correspondent Sherman is on the scene, and no howling distortion of recent financial history you care to offer is too outlandish for him to faithfully record! After duly huddling with a couple of dozen financial titans, our reporter has arrived at a chilling verdict: “what emerged is a picture of an industry afflicted by a crisis it would not be flip to call existential.”

Perhaps not—but what is exceedingly flip is brother Sherman’s account of the origins of the crisis.

Sure, there was that awkward business that sent the global finance sector to the brink of ruin, plus a devastating tsunami in Japan and whatnot—but the true culprit sending Wall Street titans back into their bedrooms to listen to Interpol on auto-repeat and cut themselves is of course the specter of government regulation. The Dodd-Frank financial reform act, a largely toothless measure lousy with loopholes and lobbying dosh, becomes in the alternate universe of Adam Moss’s New York magazine a rash bid to expropriate the expropriators. Even though the full provisions of the already anemic bill don’t go into effect until 2016, the very thought of a somewhat straitened financial playing field so terrifies Wall Street’s stout corridor of wealth creators that, well, they’re bidding farewell to the most valuable commodity of all—their big swinging dicks. “The government has strangled the financial system,” Dick Bove, an especially excitable and frequently mistaken bank analyst, tells Sherman. “We’ve basically castrated these companies. They can’t borrow as much as they used to borrow.”

You see, by force of the Volcker rule—a watered-down version of the central Glass-Steagall protections separating out commercial and investment banking that were disastrously repealed in 1999—Wall Street is re-thinking everything, from the scale of its year-end bonuses to its “core value to the economy.” And Bove, for one, preaches that all this doom-and-gloom thinking can’t help but be self-fulfilling: “These are sweeping secular changes taking place that won’t just impact the guys who won’t get their bonuses this year. We’ve made a decision as a nation to shrink the growth of the financial system under the theory that it won’t impact the growth of the nation’s economy.” Another unnamed informant tells Sherman that the financial industry is gearing up for a state of near permanent pay-austerity at the mere thought of the Volcker rule, which doesn’t kick in officially until July: “If you landed on Earth from Mars and looked at the banks, you’d see that these are institutions that need to build up capital and they’re becoming lower-margin businesses. So that means it will be hard, nearly impossible, to sustain their size and compensation structure.”

Never mind that this diagnosis is diametrically opposed to the Bove-ian school of market alarmism, which holds that banks are being starved of desperately needed leverage and credit; this unnamed fearmonger sees them in a frenzy to raise capital, and one thing the Volcker rule undeniably seeks to achieve is minimal capital requirements to prevent speculative lending from veering once more into toxic chaos.

No, for Sherman, all that’s needed to stoke the proper mood of Misean panic is to rouse the specter of frightened bankers, and a few quick-and-dirty quarterly profit reports.

From the moment Dodd-Frank passed, the banks’ financial results have tended to slide downward, in significant part because of measures taken in anticipation of its future effect. Since July 2010, Bank of America nosed down 42 percent, Morgan Stanley fell 25 percent, Goldman fell 21 percent, and Citigroup fell 16—in a period when the Dow rose 25 percent.

Other economic journalists might conclude that this downturn was a set of long-overdue market corrections, and given the broader turn around in the actual manufacturing economy, by no means an indication of worsening conditions—for investors and workers alike. Some radical others might even suggest that the shredded headcounts at the financial firms played a part in their own downturn in revenue. But while from his evidently privileged vantage in the driver’s seat of the Doc’s Time Machine, Sherman can divine all sorts of mischief arising from the yet-to-be-implemented provisions of Dodd-Frank, it does bear reminding that since 2010, BofA has been forced to eat a sizable portion of the toxic mortgage debt it acquired amid its spectacularly ill-advised purchase of Countrywide; Morgan has suffered tremendous losses in its Japanese operations and has, like most banks, been spooked by its exposure to the Euro-debt crisis (funnily enough, the firm’s US-based investment-banking operations—ie, the shop most directly affected by the dread Volcker rule, has booked profits amid all the tumult abroad); much the same general picture holds at Goldman, which as you may recall, has had more than its share of legal contretemps thrown into the bargain . As for Citigroup—the company whose very grotesque merged existence was the deregulatory excuse for repealing Glass Steagall—it’s been a basket case for so very long that a 16 percent loss in profits over the past two years seems cause for celebration, Volcker Rule or no Volcker Rule.

Price of Signature of Homeowners Rises to Avoid “Title Crash”

7 Feb

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Tuesday, February 07, 2012 10:43 AM
To: Charles Cox
Subject: Price of Signature of Homeowners Rises to Avoid "Title Crash"

Price of Signature of Homeowners Rises to Avoid “Title Crash”

Posted on February 7, 2012 by Neil Garfield

EDITOR’S ANALYSIS: The race is on. Homeowners are sitting on an asset — their signature — that has gone up in value 35X thus far from $1,000 to $35,000. The REAL STORY is that the Banks and servicers need to find a way to get the signatures of homeowners through any means possible, including payment. The amount of the payment is rising and will continue to rise like the last holdout of a property owner on a parcel where some big developer wants to build a giant stadium. People are starting to realize that the longer you hold out the higher will be the payment.

The reason is simple. With the current Missouri indictment clarifying that this was no accidental paperwork problem, the realization is dawning on almost everyone that plain old property law is going to be the basis of the solution to the title crisis enveloping this nation. Without solving it, title insurers, banks, servicers, and other parties could be liable or indicted for stealing millions of homes.

The logic is both simple and compelling. The Banks and services employed “outside servicers” to fabricate documents containing false declarations about the chain of title, their authority to execute documents. Those documents “established” that the forecloser “pretender” was the creditor and that the original loan documents were perfectly fine — and now transferred to a stranger to the transaction — something we call a break in the chain of title if it shows up in the title records.

If the documents consisted of false declarations (and forged too), and that point is accepted as a fact proven in court, there remains no discretion for the Judge but to invalidate the title chain from the time that the break occurred forward. This means title reverts back to the way title appeared in the title chain before the fabrication of documents. That means the homeowner is still the record title owner, entitled to both the title and possession of the property.

The fact is that all the foreclosed homeowners who were the victims of wrongful foreclosures are most probably still the legal owner of the property that was “foreclosed” and “sold” to “creditors” at a false “auction” claiming false credentials. There is only one way to be sure that the title chain can be fixed — get the signature of the homeowner(s) who were involved in the title chain. But the banks and Servicers know that if they simply come right out and ask for the signature they will be met with a negative answer and a barrage of lawsuits which now bear substantial likelihood of success.

So they are concocting various excuses for why homeowners should sign documents that contain releases and ratifications of title. THAT is why they are getting more lenient on modifications short-sales, and now bonuses that raise the standard amount of “cash for keys” from what was $1,000 to over $35,000 so far. See an attorney who is knowledgeable in real estate transactions before you agree to sign anything and bargain hard for your rights and compensation.

They made a fortune deceiving you into signing onto loans that were unworkable based upon prices that were just plain false. You might as well get your piece of the pie — or up the ante and file a quiet title lawsuit. Lawyers should be careful when advising their clients or prospective clients. Many lawyers are still saying the old “you owe the money, you have no rights” mantra. This could be the basis for a malpractice suit later when the client realizes that he did have rights and he lost them as a result of the attorney’s bad advice.

BLOOMBERG

by Prashant Gopal, banks-paying-homeowners-a-bonus-to-avoid-foreclosures-mortgages.html

Banks, accelerating efforts to move troubled mortgages off their books, are offering as much as $35,000 or more in cash to delinquent homeowners to sell their properties for less than they owe.

Lenders have routinely delayed or blocked such transactions, known as short sales, in which they accept less from a buyer than the seller’s outstanding loan. Now banks have decided the deals are faster and less costly than foreclosures, which have slowed in response to regulatory probes of abusive practices. Banks are nudging potential sellers by pre-approving deals, streamlining the closing process, forgoing their right to pursue unpaid debt and in some cases providing large cash incentives, said Bill Fricke, senior credit officer for Moody’s Investors Service in New York.

Losses for lenders are about 15 percent lower on the sales than on foreclosures, which can take years to complete while taxes and legal, maintenance and other costs accumulate, according to Moody’s. The deals accounted for 33 percent of financially distressed transactions in November, up from 24 percent a year earlier, said CoreLogic Inc., a Santa Ana, California-based real estate information company.

Karen Farley hadn’t made a mortgage payment in a year when she got what looked like a form letter from her lender.

“You could sell your home, owe nothing more on your mortgage and get $30,000,” JPMorgan Chase & Co. (JPM) said in the Aug. 17 letter obtained by Bloomberg News.

$200,000 Short

Farley, whose home construction lending business dried up after the housing crash, said the New York-based bank agreed to let her sell her San Marcos, California, home for $592,000 — about $200,000 less than what she owes. The $30,000 will cover moving costs and the rental deposit for her next home. Farley, who is also approved for an additional $3,000 through a federal incentive program, is scheduled to close the deal Feb. 10.

“I wondered, why would they offer me something, and why wouldn’t they just give me the boot?” Farley, 65, said in a telephone interview. “Instead, I’m getting money.”

Tom Kelly, a JPMorgan spokesman, declined to comment on the company’s incentives.

“When a modification is not possible, a short sale produces a better and faster result for the homeowner, the investor and the community than a foreclosure,” he said in an e-mail.

A mountain of pending repossessions is holding back a recovery in the housing market, where prices have fallen for six straight years, and damping economic growth. Owners of more than 14 million homes are in foreclosure, behind on their mortgages or owe more than their properties are worth, said RealtyTrac Inc., a property-data company in Irvine, California.

Foreclosure Holdouts

Short sales represented 9 percent of all U.S. residential transactions in November, the most recent month for which data is available, up from 2 percent in January 2008, according to Corelogic. Bank-owned foreclosures and short sales sold at a discount of 34 percent to non-distressed properties in the third quarter, according to RealtyTrac.

As lenders shift their focus to sales, they are finding that some borrowers would rather risk repossession while they wait for a loan modification, according to Guy Cecala, publisher of Inside Mortgage Finance, a trade journal. In a loan modification, the monthly payment, and sometimes principal, is reduced to help prevent seizure. Homeowners facing foreclosure may live rent-free for years before they are forced out.

“That’s why the banks have got to pay the big bucks,” Cecala said. “The real question is why is the bribe so big? Is that what it takes to get somebody out of their home?”

Multiple Banks

Banks also pay a few thousand dollars to the owners of second liens, whose loans can be wiped out by a short sale, to encourage them not to block the deals.

While JPMorgan is giving the largest incentive payments, other banks and mortgage investors are also offering them, according to interviews with 12 real estate agents in Arizona, California, Florida, New York and Washington. Lenders also provide incentives on loans they service and don’t own when the mortgage investor, such as a hedge fund, requests it.

JPMorgan, the biggest U.S. bank, approves about 5,000 short sales a month. It generally offers $10,000 to $35,000 in cash payments at settlement, real estate agents said. Not all of the sales include incentives.

Borrowers also can receive payments from the federal government’s Home Affordable Foreclosure Alternatives program, which in 2010 began offering as much as $1,500 to servicers, $2,000 to investors and $3,000 to homeowners who complete short sales.

Quicker Resolution

For banks, approving a sale for less than is owed on the home can cut a year or more off the time it takes to unload a property. From listing to sale, the transactions took about 123 days on average at the end of last year, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.

Lenders spend an average of 348 days to foreclose in the U.S. and an additional 175 days to sell the property, according to RealtyTrac. In New York, a state that requires court approval for repossessions, it takes about four years to foreclose on a home and then resell it, the company said.

Lenders can often afford to forgive debt, offer the incentive and still make a profit because they purchased the loan from another bank at a discount, said Trent Chapman, a Realtor who trains brokers and attorneys to negotiate with banks for short sales.

Chapman, who also writes a blog on TheShortSaleGenius.com, said he’s heard about 50 homeowners who have received incentives from lenders including JPMorgan, Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc.

Wells Fargo

“My guess is they want to get rid of bad loans,” Chapman said. “If they short sale these types of loans, they have less of a headache and have some goodwill with the homeowner.”

Wells Fargo, based in San Francisco, offers relocation assistance of as much as $20,000 for borrowers who complete short sales or agree to transfer title through a deed in lieu of foreclosure “in certain states with extended foreclosure timelines, including Florida,” Veronica Clemons, a spokeswoman, said in an e-mail.

Bank of America Corp. sent letters to 20,000 Florida homeowners as part of a pilot program, offering incentives of as much as $20,000, or 5 percent of the unpaid loan balance, Jumana Bauwens, a spokeswoman, said in an e-mail. The program expired in December and the Charlotte, North Carolina-based bank hasn’t decided whether to introduce it in other states, she said. About 15 percent of the homeowners agreed to participate in the program, she said.

Citigroup Offers

“The bank is pleased with the response,” Bauwens wrote. “The state is experiencing higher foreclosure rates than other parts of the country and is therefore seen as a viable market to gauge incremental short-sale response and completion rates when presenting homeowners with relocation assistance at closing.”

Citigroup offers $3,000 to most borrowers who qualify for its program, but the “amount may increase based on the circumstances of each individual case,” Mark Rodgers, a spokesman for the New York-based bank, said in an e-mail. “Investor programs have different guidelines for relocation incentives, which we honor.”

Susan Fitzpatrick, a spokeswoman for Detroit-based Ally, didn’t comment specifically on incentives when asked about them.

Borrowers typically can’t negotiate the incentives, which arrive by mail, Chapman, the Realtor, said.

Tap on Shoulder

“It’s not really easy to identify the guidelines because Chase doesn’t tell you, they kind of tap you on the shoulder,” he said. “When I first saw it in January 2011, I thought it was a joke or a typo. I was convinced it must say $3,000, not $30,000.”

Offering enough for the homeowner to put down a deposit on a rental apartment is reasonable, said Sean O’Toole, chief executive officer of ForeclosureRadar.com, which tracks sales of foreclosed properties. Giving tens of thousands of dollars to delinquent homeowners sends the wrong message, particularly if they got into trouble by running up home-equity loans during the housing boom, he said.

“It may make sense for people to walk away, it doesn’t make sense for them to get rewarded for doing it,” O’Toole said. “It’s not the homeowner’s fault that house prices dropped so dramatically, but they have already received months of free rent, if not cash out.”

Cecala of Inside Mortgage Finance said he wonders whether lenders are making big payments on properties with underlying title problems. Evan Berlin, managing partner of Berlin Patten, a real estate law firm in Sarasota, Florida, said representatives of a large bank told him the incentives are primarily given to borrowers when it doesn’t have the proper paperwork needed to win its foreclosure case. He declined to name the bank for publication.

Incentive Disconnect

State attorneys general across the U.S. began investigating foreclosure practices in October 2010 following allegations that the nation’s top mortgage servicers were using faulty documents to repossess homes.

Berlin said his office negotiated about 400 short sales in the past year and about a quarter included an incentive, ranging from $3,000 to $48,000. In some cases, the payments aren’t incentives at all because they’re offered after the borrower has almost completed the short sale, he said.

“The idea is that this is relocation assistance,” Berlin said. “But when you’re offering $48,000, obviously it doesn’t cost $48,000 to relocate.”

Cooperation Sought

The size of the payment may have little to do with sales price. JPMorgan gave one Phoenix homeowner $20,000 after she sold her property in June for $32,000, according to Royce Hauger, the real estate agent who represented the seller and shared a copy of the settlement sheet with Bloomberg News. The bank also agreed to forgive more than $70,000 in debt, she said.

Kelly, the JPMorgan spokesman, declined to comment on the payment.

The homeowners are getting the money in exchange for their cooperation, said Kris Pilles, a Riverhead, New York-based real estate broker who represents banks, servicers and hedge funds that own distressed housing debt.

Pilles is frequently dispatched to the homes of delinquent borrowers to explain the benefits of avoiding foreclosure, he said. His clients have paid as much as $92,500. In return, the lenders expect the seller to clean the house before showings, and trim the grass.

“Money talks,” Pilles said. “From the bank side, it’s anything to initiate a conversation with someone who may not be listening to them.”

To contact the reporter on this story: Prashant Gopal in New York at pgopal2

To contact the editors responsible for this story: Daniel Taub at dtaub; Rob Urban at robprag.

California not among states that OK bank settlement

7 Feb
25 Billion Dollars

25 Billion Dollars (Photo credit: Andrew Turner)

California not among states that OK bank settlement

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More than 40 states signed onto a proposed $25-billion deal with major mortgage servicers over faulty foreclosure practices. New York, Nevada and Delaware joined California in holding out for better terms.

By Alejandro Lazo and Jim Puzzanghera, Los Angeles Times

February 7 2012

Reporting from Los Angeles and Washington — More than 40 states signed onto a proposed $25-billion settlement with major mortgage servicers over faulty foreclosure procedures, but California, New York and other key states were still not among them.

The complete article can be viewed at:

http://www.latimes.com/business/realestate/la-fi-foreclosure-settlement-20120207,0,5999524.story

Publishing Paper not of general Circulation Trustee sale not valid Government code 6000

4 Feb

We have uncovered a number of the Newspapers that “publish” for 21 days the notice of Trustee sale are not legally qualified to do so.
A “newspaper of general circulation” is a newspaper published for the dissemination of local or telegraphic news and intelligence of a general character, which has a bona fide subscription list of paying subscribers, and has been established, printed and published at regular intervals in the State, county, or city where publication, notice by publication, or official advertising is to be given or made for at least one year preceding the date of the publication, notice or advertisement.
The Paso Robles Press in Paso Robles California are not Judicially adjudicated and they are printed outside the county, We are currently litigating cases and having the Trustee Sales set aside. This paper is printed hundreds of miles ouside the San Luis Obispo county in Watsonville, California and they have published hundreds of Legal notices.

Generally speaking, the statutory, nonjudicial foreclosure procedure begins with the recording of a notice of default by the trustee. (§ 2924, subd. (a)(1).) 8  After the expiration of not less than three months, the trustee must publish, post, and mail a notice of sale at least 20 days before the sale, and must also record the notice of sale at least 14 days before the sale (§§ 2924, subds. (a)(1), (a)(2) & (a)(3), 2924f, subd. (b)(1);  see Moeller v. Lien (1994) 25 Cal.App.4th 822, 830, 30 Cal.Rptr.2d 777 (Moeller );  see also 4 Miller & Starr, supra, § 10:199, p. 623.)   The sale and any postponement are governed by section 2924g.  (Moeller, supra, 25 Cal.App.4th at p. 830, 30 Cal.Rptr.2d 777;  Miller & Starr, supra, § 10:201, p. 637.)

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