Bank of America, MERS Lose Bid to Dismiss Texas Fee Suit

From: Charles Cox []
Sent: Friday, May 25, 2012 7:46 AM
To: Charles Cox
Subject: Bank of America, MERS Lose Bid to Dismiss Texas Fee Suit

Bloomberg News

Bank of America, MERS Lose Bid to Dismiss Texas Fee Suit

By Margaret Cronin Fisk and Tom Korosec on May 24, 2012

Bank of America Corp. (BAC) and Mortgage Electronic Registration Systems Inc. failed to persuade a judge to dismiss a lawsuit claiming they shortchanged Texas counties out of uncollected mortgage filing fees.

“The plaintiffs have brought sufficient evidence to allow the case to go forward,” U.S. District Judge Reed O’Connor in Dallas said. O’Connor threw out several claims in the lawsuit at the end of a court hearing yesterday.

O’Connor allowed the counties to seek damages and an injunction limiting future filings by MERS. He rejected county allegations that MERS was filing false liens, which would have allowed the counties to seek $10,000 for each contested filing.

“The $10,000 per is out,” Thomas Hefferon, attorney for Bank of America, said in an interview after the hearing.

Dallas County filed the initial complaint in September, alleging that Merscorp Inc.’s MERS was established by banks including Charlotte, North Carolina-based Bank of America to avoid paying filing fees, as well as to ease transfers of mortgages. Dallas revised the lawsuit in October, seeking to represent all other Texas counties in which a deed of trust has been filed identifying MERS as a beneficiary.

MERS, which runs an electronic registry of mortgages, said it followed Texas law and didn’t shortchange counties on fees.

‘Perfectly Legal’

“What MERS does and how it does it is perfectly appropriate, perfectly legal,” MERS lawyer Robert Brochin said at yesterday’s hearing. “The designation of MERS as a false lienholder should be categorically denied.”

Most of the case remains following Judge O’Connor’s decision, Stephen Malouf, an attorney for Dallas County, said in an interview after the hearing. The counties will be seeking to enjoin MERS from continuing to operate as it has in the state, he said. “We’d like to see it stopped.”

MERS tracks servicing rights and ownership interests in mortgage loans on its registry, allowing banks to buy and sell loans without recording transfers with counties. MERS acts as the lender’s nominee and remains the mortgagee of record as long as the note promising repayment is owned by a MERS member.

Dallas County claims this allows banks that own stakes in MERS to buy and sell loans without properly recording transfers with counties and paying the fee. Dallas County District Attorney Craig Watkins said last year his county may be owed as much as $100 million.

Other Counties

Counties in other states including Kentucky, Michigan, Ohio and Oklahoma also filed suits claiming the MERS system has cheated them out of filing fees. The Kentucky suit was dismissed in February. Delaware’s attorney general last year filed an unrelated suit, alleging MERS used deceptive practices that hide information from borrowers.

“The MERS system has created massive confusion as to the true owners of the beneficial interests in mortgage loans and mortgages throughout the United States, and the loss of revenues has harmed U.S. counties,” Dallas County lawyers said in court papers last year.

“As of today, the system they are so proud of is a complete and total failure,” Malouf said at the hearing before O’Connor. “It has made the property recording system in the U.S. spaghetti.”

Every County

The Dallas County class-action lawsuit would cover every county in Texas where MERS is identified as beneficiary or where “any record has been filed” that would cause MERS to be identified in deed files as a grantor of interest in a property, unless “MERS itself actually holds in the property the interest that MERS purports to be granting,” county lawyers said in court filings.

Under Texas law, “there is no duty to record assignments, or other documents,” lawyers for MERS and Bank of America said in court papers March 9.

“The Texas Property Code, which contains various statutes concerning recording interests in land, allows parties to record interests in land to protect their interests but does not require that any recording occur,” the defendants said in the filing. “The counties have suffered no injury — and thus lack standing — from nonpayment of recording fees for documents that were never recorded.”

MERS doesn’t create new documents when a deed of trust is assigned to a new lender, Hefferon, the Bank of America lawyer, said at yesterday’s hearing. “There is no obligation to send a document that doesn’t exist,” he said. “There is no injury if you haven’t collected a fee or don’t do the work.”

Jason Lobo, a MERS spokesman, didn’t immediately return a call for comment.

The lawsuit is Dallas County v. Merscorp Inc., 11-cv-02733, U.S. District Court, Northern District of Texas (Dallas).

Please Keep April Charney in your prayers…

From: Charles Cox []
Sent: Friday, May 25, 2012 6:56 AM
To: Charles Cox
Subject: Please Keep April Charney in your prayers…

April Charney’s Latest Battle

Most of you are familiar with Boot Camper April Charney and her tireless work on behalf of homeowners in Florida. Now, April is fighting another unexpected battle: she is hospitalized after complications during treatment for a kidney stone. She has been in critical condition for several days, on a respirator and undergoing dialysis. As of this writing, Max has just learned from April’s family that her condition has seemingly improved though still quite serious. Please send your prayers, good thoughts, positive energy or whatever suits your beliefs to April and her family. Read Matt Weidner’s tribute to April.

More Court Justification and Ratification of Forgery and Fraud

From: Charles Cox []
Sent: Friday, May 25, 2012 6:54 AM
To: Charles Cox
Subject: More Court Justification and Ratification of Forgery and Fraud

Get ready for more disgust with the “legal system”…


Borrower’s “show me the note” argument fails to halt foreclosure

From: Charles Cox []
Sent: Friday, May 25, 2012 6:38 AM
To: Charles Cox
Subject: Borrower’s "show me the note" argument fails to halt foreclosure

Borrower’s "show me the note" argument fails to halt foreclosure

· Sheppard Mullin Richter & Hampton LLP

· Alejandro E. Moreno and Shannon Petersen


· May 18 2012


In Debrunner v. Deutsche Bank Nat. Trust Co. (Cal.App. 6 Dist., 2012) — Cal.Rptr.3d —-, 2012 WL 883128, the California Court of Appeal affirmed the dismissal of a complaint for wrongful foreclosure with prejudice, holding that a beneficiary under a deed of trust need not possess the original promissory note to commence foreclosure and that a borrower cannot avoid foreclosure based on a technical deficiency without showing actual prejudice.

Plaintiff Debrunner was a private investor who extended credit to two borrowers secured by a second deed of trust on real property. The borrowers had previously obtained a loan from Quick Loans Funding, Inc. Quick Loans assigned the deed of trust and promissory note to Option One Mortgage Corporation, which later assigned them to FV-1, Inc., which later assigned them to Deutsche Bank, which appointed Saxon Mortgage Services, Inc. to service the loan.

The borrowers defaulted. Deutsche Bank recorded a notice of default naming itself as the creditor but providing the contact information for Saxon Mortgage. The plaintiff filed suit to halt the foreclosure, claiming Deutsche Bank had no right to foreclose because it did not physically possess the original promissory note and had not provided the correct contact information.

The Court rejected both arguments. It held that "nothing in the applicable statutes . . . precludes foreclosure when the foreclosing party does not possess the original promissory note." The plaintiff’s attempted reliance on provisions of the California Commercial Code regarding negotiable instruments was misplaced because those provisions did not "displace the detailed, specific, and comprehensive set of legislative procedures … established for nonjudicial foreclosures." The Court also held that, even if the notice of default was defective because it did not provide contact information for Deutsche Bank, the plaintiff did not and could not show prejudice as required to halt the foreclosure.

Cal.App.6th-DeBrunner v. Deutsche Bank.docx

New Webinar: Making The Attorney General Settlement Work For You

From: Charles Cox []
Sent: Monday, May 07, 2012 11:37 AM
To: Charles Cox
Subject: New Webinar: Making The Attorney General Settlement Work For You

The Attorney General Settlement has now been approved by the court, and regardless of whether we like the terms, the process, or lack thereof, it is done. There have been many questions regarding the terms of the settlement, and how consumers can benefit from it. In order to answer the most common questions posed and give you guidance on how to submit a credible claim under the new rules, we are offering a comprehensive webinar to help you understand how to make the settlement work for you. We will review the settlement terms relating to foreclosures, loan modifications and shorts sales, discuss tactics and strategies that will help you accomplish your goal and finally, provide demand sample letters that you can submit to let the bank know that you are aware of your rights. The webinar will conclude with a round table discussion including a question and answer session. To accomodate all, the webinar will be offered on May 12, 2012 at 12:00 PDT and again on June 2, 2012 at 12:00 PDT. If you attend on May 12, 2012 and would like to repeat the seminar, you may do so on June 2, 2012 without any additional charge. Sign up now as spaces are limited!

Learn more at

Attorney General Kamala D. Harris Issues Statement on May Revision – Moonbeam at work…why am I not surprised!

From: Charles Cox []
Sent: Monday, May 14, 2012 4:24 PM
To: Charles Cox
Subject: Attorney General Kamala D. Harris Issues Statement on May Revision – Moonbeam at work…why am I not surprised!

News Release

May 14, 2012


Contact: (415) 703-5837

Attorney General Kamala D. Harris Issues Statement on May Revision

SACRAMENTO — Attorney General Kamala D. Harris today issued the following statement on the Governor’s May Revision:

"The state Department of Justice stood firm for over a year against the nation’s largest banks on behalf of California homeowners harmed by the foreclosure crisis. This effort resulted in an agreement that will provide billions in relief to California homeowners who are experiencing hardship. The agreement also required the banks to pay an additional $410 million to get homeowners the expert help they need to keep their homes.

The Governor’s May Revision, however, proposes to redirect this $410 million from the state’s homeowners to other budget purposes. While the state is undeniably facing a difficult budget gap, these funds should be used to help Californians stay in their homes. I plan to work with the Governor and Legislature toward a balanced budget that honors our obligations to California’s homeowners."

# # #

Max Gardner Personal Message to Bankruptcy Boot Camp Graduates

From: Charles Cox []
Sent: Wednesday, May 16, 2012 1:41 PM
To: Charles Cox
Subject: Max Gardner Personal Message to Bankruptcy Boot Camp Graduates

Special Announcement

Health and Boot Camp Schedule Update

Bob Godnik

As many of you already know, Max has for some time been undergoing treatment for malignant tumors in his lungs and bladder. Recent testing revealed new tumor growth in his liver. Surgical intervention offers uncertain results, and Max has concluded that his time is better spent with his family and furthering his mission to teach attorneys rather than undergoing and recovering from medical procedures which might do little to extend his remaining time.

There is, of course, still much work to be done. In the interests of accomplishing as much as possible and spreading information to as many consumer attorneys as possible without unduly straining Max’s health, we are making some changes.

First, Max has decided not to travel outside of North Carolina for live events. Second, live Boot Camps at the Farm will end this summer.

While Max loves the intensive, interactive nature of the Farm Boot Camps, attendance is necessarily limited and hosting the event is taxing for him and for his wife, Victoria.

The June Boot Camp at the Farm will go forward as scheduled, from June 7-11. We hope to offer one or two additional Boot Camps at the Farm in July and/or August. After that, all events will be scheduled in more metropolitan locations, at venues that will allow Max to reach a larger number of attorneys in a single session.

Max sincerely thanks each of you for your interest and support and wants you to know that he is as committed as ever to the war on predatory lenders, slippery servicers and dishonest debt collectors.

Accidentally Released – and Incredibly Embarrassing – Documents Show How Goldman et al Engaged in ‘Naked Short Selling’

From: Charles Cox []
Sent: Thursday, May 17, 2012 5:19 AM
To: Charles Cox
Subject: Accidentally Released – and Incredibly Embarrassing – Documents Show How Goldman et al Engaged in ‘Naked Short Selling’

ally Released – and Irt Selling’

POSTED: May 15, 5:39 PM ET

It doesn’t happen often, but sometimes God smiles on us. Last week, he smiled on investigative reporters everywhere, when the lawyers for Goldman, Sachs slipped on one whopper of a legal banana peel, inadvertently delivering some of the bank’s darker secrets into the hands of the public.

The lawyers for Goldman and Bank of America/Merrill Lynch have been involved in a legal battle for some time – primarily with the retail giant, but also with Rolling Stone, the Economist, Bloomberg, and the New York Times. The banks have been fighting us to keep sealed certain documents that surfaced in the discovery process of an ultimately unsuccessful lawsuit filed by Overstock against the banks.

Last week, in response to an motion to unseal certain documents, the banks’ lawyers, apparently accidentally, filed an unredacted version of Overstock’s motion as an exhibit in their declaration of opposition to that motion. In doing so, they inadvertently entered into the public record a sort of greatest-hits selection of the very material they’ve been fighting for years to keep sealed.

I contacted Morgan Lewis, the firm that represents Goldman in this matter, earlier today, but they haven’t commented as of yet. I wonder if the poor lawyer who FUBARred this thing has already had his organs harvested; his panic is almost palpable in the air. It is both terrible and hilarious to contemplate. The bank has spent a fortune in legal fees trying to keep this material out of the public eye, and here one of their own lawyers goes and dumps it out on the street.

The lawsuit between Overstock and the banks concerned a phenomenon called naked short-selling, a kind of high-finance counterfeiting that, especially prior to the introduction of new regulations in 2008, short-sellers could use to artificially depress the value of the stocks they’ve bet against. The subject of naked short-selling is a) highly technical, and b) very controversial on Wall Street, with many pundits in the financial press for years treating the phenomenon as the stuff of myths and conspiracy theories.

Now, however, through the magic of this unredacted document, the public will be able to see for itself what the banks’ attitudes are not just toward the “mythical” practice of naked short selling (hint: they volubly confess to the activity, in writing), but toward regulations and laws in general.

“Fuck the compliance area – procedures, schmecedures,” chirps Peter Melz, former president of Merrill Lynch Professional Clearing Corp. (a.k.a. Merrill Pro), when a subordinate worries about the company failing to comply with the rules governing short sales.

We also find out here how Wall Street professionals manipulated public opinion by buying off and/or intimidating experts in their respective fields. In one email made public in this document, a lobbyist for SIFMA, the Securities Industry and Financial Markets Association, tells a Goldman executive how to engage an expert who otherwise would go work for “our more powerful enemies,” i.e. would work with Overstock on the company’s lawsuit.

“He should be someone we can work with, especially if he sees that cooperation results in resources, both data and funding,” the lobbyist writes, “while resistance results in isolation.”

There are even more troubling passages, some of which should raise a few eyebrows, in light of former Goldman executive Greg Smith’s recent public resignation, in which he complained that the firm routinely screwed its own clients and denigrated them (by calling them "Muppets," among other things).

Here, the plaintiff’s motion refers to an “exhibit 96,” which refers to “an email from [Goldman executive] John Masterson that sends nonpublic data concerning customer short positions in Overstock and four other hard-to-borrow stocks to Maverick Capital, a large hedge fund that sells stocks short.”

Was Goldman really disclosing “nonpublic data concerning customer short positions” to its big hedge fund clients? That would be something its smaller, “Muppet” customers would probably want to hear about.

When I contacted Goldman and asked if it was true that Masterson had shared nonpublic customer information with a big hedge fund client, their spokesperson Michael Duvally offered this explanation:

Among other services it provides, Securities Lending at Goldman provides market color information to clients regarding various activity in the securities lending marketplace on a security specific or sector specific basis. In accordance with the group’s guidelines concerning the provision of market color, Mr. Masterson provided a client with certain aggregate information regarding short balances in certain securities. The information did not contain reference to any particular clients’ short positions.

You can draw your own conclusions from that answer, but it’s safe to say we’d like to hear more about these practices.

Anyway, the document is full of other interesting disclosures. Among the more compelling is the specter of executives from numerous companies admitting openly to engaging in naked short selling, a practice that, again, was often dismissed as mythical or unimportant.

A quick primer on what naked short selling is. First of all, short selling, which is a completely legal and often beneficial activity, is when an investor bets that the value of a stock will decline. You do this by first borrowing and then selling the stock at its current price, then returning the stock to your original lender after the price has gone down. You then earn a profit on the difference between the original price and the new, lower price.

What matters here is the technical issue of how you borrow the stock. Typically, if you’re a hedge fund and you want to short a company, you go to some big-shot investment bank like Goldman or Morgan Stanley and place the order. They then go out into the world, find the shares of the stock you want to short, borrow them for you, then physically settle the trade later.

But sometimes it’s not easy to find those shares to borrow. Sometimes the shares are controlled by investors who might have no interest in lending them out. Sometimes there’s such scarcity of borrowable shares that banks/brokers like Goldman have to pay a fee just to borrow the stock.

These hard-to-borrow stocks, stocks that cost money to borrow, are called negative rebate stocks. In some cases, these negative rebate stocks cost so much just to borrow that a short-seller would need to see a real price drop of 35 percent in the stock just to break even. So how do you short a stock when you can’t find shares to borrow? Well, one solution is, you don’t even bother to borrow them. And then, when the trade is done, you don’t bother to deliver them. You just do the trade anyway without physically locating the stock.

Thus in this document we have another former Merrill Pro president, Thomas Tranfaglia, saying in a 2005 email: “We are NOT borrowing negatives… I have made that clear from the beginning. Why would we want to borrow them? We want to fail them.”

Trafaglia, in other words, didn’t want to bother paying the high cost of borrowing “negative rebate” stocks. Instead, he preferred to just sell stock he didn’t actually possess. That is what is meant by, “We want to fail them.” Trafaglia was talking about creating “fails” or “failed trades,” which is what happens when you don’t actually locate and borrow the stock within the time the law allows for trades to be settled.

If this sounds complicated, just focus on this: naked short selling, in essence, is selling stock you do not have. If you don’t have to actually locate and borrow stock before you short it, you’re creating an artificial supply of stock shares.

In this case, that resulted in absurdities like the following disclosure in this document, in which a Goldman executive admits in a 2006 email that just a little bit too much trading in Overstock was going on: “Two months ago 107% of the floating was short!”

In other words, 107% of all Overstock shares available for trade were short – a physical impossibility, unless someone was somehow creating artificial supply in the stock.

Goldman clearly knew there was a discrepancy between what it was telling regulators, and what it was actually doing. “We have to be careful not to link locates to fails [because] we have told the regulators we can’t,” one executive is quoted as saying, in the document.

One of the companies Goldman used to facilitate these trades was called SBA Trading, whose chief, Scott Arenstein, was fined $3.6 million in 2007 by the former American Stock Exchange for naked short selling.

The process of how banks circumvented federal clearing regulations is highly technical and incredibly difficult to follow. These companies were using obscure loopholes in regulations that allowed them to short companies by trading in shadows, or echoes, of real shares in their stock. They manipulated rules to avoid having to disclose these “failed” trades to regulators.

The import of this is that it made it cheaper and easier to bet down the value of a stock, while simultaneously devaluing the same stock by adding fake supply. This makes it easier to make money by destroying value, and is another example of how the over-financialization of the economy makes real, job-creating growth more difficult.

In any case, this document all by itself shows numerous executives from companies like Goldman Sachs Execution and Clearing (GSEC) and Merrill Pro talking about a conscious strategy of “failing” trades – in other words, not bothering to locate, borrow, and deliver stock within the time alotted for legal settlement. For instance, in one email, GSEC tells a client, Wolverine Trading, “We will let you fail.”

More damning is an email from a Goldman, Sachs hedge fund client, who remarked that when wanting to “short an impossible name and fully expecting not to receive it” he would then be “shocked to learn that [Goldman’s representative] could get it for us.”

Meaning: when an experienced hedge funder wanted to trade a very hard-to-find stock, he was continually surprised to find that Goldman, magically, could locate the stock. Obviously, it is not hard to locate a stock if you’re just saying you located it, without really doing it.

As a hilarious side-note: when I contacted Goldman about this story, they couldn’t resist using their usual P.R. playbook. In this case, Goldman hastened to point out that Overstock lost this lawsuit (it was dismissed because of a jurisdictional issue), and then had this to say about Overstock:

Overstock pursued the lawsuit as part of its longstanding self-described "Jihad" designed to distract attention from its own failure to meet its projected growth and profitability goals and the resulting sharp drop in its stock price during the 2005-2006 period.

Good old Goldman — they can’t answer any criticism without describing their critics as losers, conspiracy theorists, or, most frequently, both. Incidentally, Overstock rebounded from the 2005-2006 short attack to become a profitable company again, during the same period when Goldman was needing hundreds of billions of dollars in emergency Fed lending and federal bailouts to stave off extinction.

Anyway, this galactic screwup by usually-slick banker lawyers gives us a rare peek into the internal mindset of these companies, and their attitude toward regulations, the markets, even their own clients. The fact that they wanted to keep all of this information sealed is not surprising, since it’s incredibly embarrassing stuff, if you understand the context.

More to come: until then, here’s the motion, and pay particular attention to pages 14-19.

UPDATE: Well, I guess I shouldn’t feel too badly for the lawyer who stepped on this land mine. For Morgan Lewis counsel Joe Floren, karma, it seems, really is a bitch.

FTC affirms consumers’ rights under holder in due course rule

From: Charles Cox []
Sent: Thursday, May 17, 2012 7:54 AM
To: Charles Cox
Subject: FTC affirms consumers’ rights under holder in due course rule

FTC affirms consumers’ rights under holder in due course rule

· Goodwin Procter LLP

· Crystal N. Kaldjob

The FTC issued an advisory opinion affirming its interpretation of the holder in due course rule. The rule permits consumers who enter into credit contracts with a seller of goods to assert the same legal claims and defenses against a third party who purchases the credit contract as they would have against the original seller. The advisory opinion, issued in response to a request from the National Consumer Law Center and other consumer protection advocacy groups, clarifies that courts should not limit consumers’ ability to seek affirmative relief only to instances where a rescission right under state law exists. The NCLC requested the opinion after a number of courts denied relief absent a state law rescission claim.

Press release from FTC:

Advisory Opinion is attached.

Charles Wayne Cox
Email: mailto:Charles
Websites:;; and
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240 direct
(541) 610-1931 eFax

Paralegal; CA Licensed Real Estate Broker; Forensic Loan Analyst. Litigation Support and Expert Witness Services.



From: Charles Cox []
Sent: Friday, May 18, 2012 8:16 AM
To: Charles Cox

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

Hat tip to Nye Lavalle and Jackie Mack!

In my mind, JPMorgan ranks among the very top of the most aggressive and abusive litigators in the whole fraudclosure arena. They surround themselves with monster paid lawyers then attack the whistleblowers and those who dare to challenge with the ferocity of an out of control criminal street gang.

And so I love seeing them get a few shots thrown back their direction.

Understand, the position we are in around this nation is the banks do whatever they want. They engage in whatever abusive and violent and bullying conduct they care to, then they just cloak themselves behind the highest priced lawyers and navigate their way through whatever court system they need to in order to walk away with no consequence.

In this case and so many others, you see them slithering and bashing and beating a homeowner in a federal case. I’ve read pleadings after pleadings and the legal position they assert is,


(and then just as a kicker they throw in)


But one judge dared to keep the scales of justice balanced equally, a quite extraordinary fact, frankly. Read the opinion: (order is attached)

Defendants, JP Morgan Chase & Co., a foreign corporation, JPMorgan Chase

Bank, N.A., individually and as successor to (collectively “Chase”), Washington Mutual

Bank, a dissolved federal bank (“WaMu”), and Federal National Mortgage Corporation, a

federally-chartered corporation (“FNMA”), (collectively, the “Defendants”), pursuant to

Rule 12(b)(6), Federal Rule of Civil Procedure, move to dismiss Plaintiff’s First

Amended Complaint. Defendants seek dismissal on grounds that (1) Plaintiff waived her

claims by failing to assert them in a 2006 mortgage foreclosure case; (2) Plaintiff fails to

state any causes of action in the various counts of the First Amended Complaint inasmuch

as she fails to differentiate among Defendants in her allegations; (3) Count I fails to state

a cause of action because the Florida Deceptive and Unfair Trade Practices Act

(“FDUTPA”), section 501.201, et seq., Florida Statutes, does not apply to Defendants; (4)

Count II fails to state a cause of action because Defendants are not debt collectors as

defined by the Fair Debt Collection Practices Act (“FDCPA”) and initiating a mortgage

foreclosure action does not constitute a debt collection; (5) Plaintiff fails to state a claim

under the Florida Consumer Collection Practices Act (“FCCPA”), section 559.72, Florida

Statutes, in Count II; (6) Plaintiff fails to state a cause of action for civil conspiracy in

Count III; (7) Plaintiff failed to state a cause of action for abuse of legal process in Count

IV; and (8) Count V, alleging violations of the RICO statute,18 U.S.C. § 1962, fails to

state a cause of action.

With respect to the asserted waiver of Plaintiff’s claims for her failure to assert

them in the 2006 foreclosure case, the Court is not convinced, at this stage of the

proceedings, that Plaintiff waived her claims because the complaint includes allegations

based on conduct that occurred after her alleged breach of the mortgage loan agreement.

She asserts that the facts supporting her claims were not brought to light until revelations

of fraud in the mortgage industry began to unfold in the fall of 2010. Additionally, the

Court cannot base a dismissal on matters outside the four corners of the complaint. See

Milburn v. United States, 734 F.2d 762, 765 (11th Cir. 1984). While JPMC claims it is

not liable for any conduct of WaMu that occurred prior to September 25, 2008, the date

on which the Purchase and Assumption Agreement (“PAA”) was executed between

JPMC and WaMu, the PAA has not even been filed with the Court. Furthermore,

Plaintiff asserts that her claims against Defendant JPMC are predicated on its alleged

servicing of the loan, conduct that occurred after September 25, 2008.

Defendants claim exemption from FDUTPA as banking corporations regulated by

a federal agency; however, application of the exemption cannot be determined with

certainty from the four corners of the First Amended Complaint. The Court is not

convinced that the exemption would apply to Defendants who, as Plaintiff alleges, acted

as loan servicers, and the exemption clearly would not apply to non-banks such as

JPMCC and FNMA. Also, although Defendants assert that they are not “debt collectors”

within the meaning of the FDCPA because they were not attempting to collect a debt due

another, there remains a question of fact as to whether 15 U.S.C. § 1692(f) applies to

activities by JPMCC, JPMC, WaMu, and FNMA, as alleged by Plaintiff, to enforce a

security interest via mortgage foreclosure. See 15 U.S.C. § 1692a(6).

Questions of fact preclude dismissal of Plaintiff’s FCCPA claim as well, because

she plainly alleges that Defendants knew they did not have the legal right to collect the

alleged debt and knew that Plaintiff was not in default. See Fla. Stat § 559.72(9).

Likewise, Plaintiff is able to overcome dismissal of her common law claims for civil

conspiracy and abuse of process through her factual allegations that Defendants acted

unlawfully, and in agreement, with the intent to defraud her through the use of sham

documents and fabricated evidence, and that their actions caused her damages. Finally,

her civil RICO claims under 18 U.S.C. § 1962 adequately allege facts, at least for this

stage of the proceedings, to support each of the statutory elements for the predicate acts

that allegedly divested her of her homestead. Plaintiff is able to avoid the time-bar of her

civil RICO claim inasmuch as she alleges she was prevented from discovering that she

was the victim of fraud by Defendants’ concealment of the alleged fraud.


FDCPA claims are reinstated – Debt Collector Status Depends on if Entity Originated the Debt and When “Default” Occurred

From: Charles Cox []
Sent: Friday, May 18, 2012 9:26 AM
To: Charles Cox
Subject: FDCPA claims are reinstated – Debt Collector Status Depends on if Entity Originated the Debt and When "Default" Occurred

FDCPA claims are reinstated

· Winston & Strawn LLP



On April 30th, the Sixth Circuit addressed liability under the Fair Debt Collection Practices Act. It held that an entity that did not originate the debt in question (a mortgage) but acquired it and attempts to collect on it, is either a creditor or a debt collector depending on the default status of the debt at the time it was acquired. The same is true of a loan servicer, which can either stand in the shoes of a creditor or become a debt collector, depending on whether the debt was assigned for servicing before the default or alleged default occurred.


Robo-signing lawsuit reinstated/4th says TILA 3 year SOL doesn’t require borrowers to file rescission but just notify creditor

From: Charles Cox []
Sent: Friday, May 18, 2012 9:26 AM
To: Charles Cox
Subject: Robo-signing lawsuit reinstated/4th says TILA 3 year SOL doesn’t require borrowers to file rescission but just notify creditor

Robo-signing lawsuit reinstated

· Winston & Strawn LLP

· May 7 2012


On May 3rd, the Fourth Circuit reinstated the homeowners’ Truth in Lending Act ("TILA") and state consumer law claims asserted against the bank holding plaintiffs’ mortgage. The Court holds that TILA’s three-year statute of limitation does not require borrowers to file a claim for rescission to invoke that right. TILA rescission claims are timely if the consumer notifies the creditor within three years.

Charles Wayne Cox
Email: mailto:Charles
Websites:;; and
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240 direct
(541) 610-1931 eFax

Paralegal; CA Licensed Real Estate Broker; Forensic Loan Analyst. Litigation Support and Expert Witness Services.


Hogan Highlights

From: Charles Cox []
Sent: Friday, May 18, 2012 11:54 AM
To: Charles Cox
Subject: Hogan Highlights

Hogan Highlights

by Beth Findsen at Findsenlaw

Here is the AZ Supreme Court decision in Hogan v WaMu

Hogan v WaMu AZ SC 2012

In my opinion, the best parts (even though some should be entirely obvious, in Arizona, they aren’t always) are:

Hogan argues that a deed of trust, like a mortgage,“may be enforced only by, or in behalf of, a person who is entitled to enforce the obligation the mortgage secures.”Restatement (Third) of Prop.: Mortgages § 5.4(c) (1997); see Hill v. Favour, 52 Ariz. 561, 568-69, 84 P.2d 575, 578 (1938). We agree.

The trust deed transfers an interest in real property, securing the repayment of the money owed under the note. See A.R.S. §§ 33-801(4), -801(8), -801(9), -805, -807(A).

Arizona’s anti-deficiency statutes protect against such occurrences by precluding deficiency judgments against debtors whose foreclosed residential property consists of 2.5 acres or less, as is the case here. See A.R.S. § 33-814(G); Mid Kansas Fed. Sav. & Loan Ass’n of Wichita v. Dynamic Dev. Corp., 167 Ariz. 122, 126, 804 P.2d 1310, 1314 (1991); Emily Gildar, Arizona’s Anti-Deficiency Statutes: Ensuring Consumer Protection in a Foreclosure Crisis, 42 Ariz. St. L.J. 1019, 1020 (2010). Moreover, the trustee owes the trustor a fiduciary duty, and may be held liable for conducting a trustee’s sale when the trustor is not in default. See Patton v. First Fed. Sav. & Loan Ass’n of Phoenix, 118 Ariz. 473, 476, 578 P.2d 152, 155 (1978).

And these selections show what needs to be pled in Arizona, if feasible:

But Hogan has not alleged that WaMu and Deutsche Bank are not entitled to enforce the underlying note; rather, he alleges that they have the burden of demonstrating their rights before a non-judicial foreclosure may proceed.

Hogan’s complaints do not affirmatively allege that WaMu and Deutsche Bank are not the holders of the notes in question or that they otherwise lack authority to enforce the notes.

The dispositive question here is whether the trustee, acting pursuant to its own power of sale or on behalf of the beneficiary, had the statutory right to foreclose on the deeds of trust. See Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1043-44 (9th Cir. 2011).

Hogan does not dispute that he is in default under the deeds of trust and has alleged no reason to dispute the trustee’s right.


Class Action Certified in ND of California USDC for Mortgage Loan Appraisal Suit

From: Charles Cox []
Sent: Saturday, May 19, 2012 6:13 AM
To: Charles Cox
Subject: Class Action Certified in ND of California USDC for Mortgage Loan Appraisal Suit

Conspiracy to inflate appraisals…imagine that.

Charles Wayne Cox
Email: mailto:Charles
Websites:;; and
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240 direct
(541) 610-1931 eFax

Paralegal; CA Licensed Real Estate Broker; Forensic Loan Analyst. Litigation Support and Expert Witness Services.


CAMFFG PB County investment fund overwhelmingly infested with nothing-backed securities…Is your county/state infested?

On Sat, Apr 21, 2012 at 7:21 AM, April Charney <april.charney> wrote:

And don’t for a minute think that your investment/pension fund or that of any judge is any different or has any immunity or resistance to this economic wasting disease. We all share this disease, rich and poor and it is destabilizing all of our economic, social, judicial and political systems and all that we hold dear. Now, what are we going to do about it?

Palm Beach County, Florida’s Reliance on Mortgage Investments Corrupts Foreclosure Process
April 21st, 2012 | Author: Matthew D. Weidner, Esq.

As most of you know, Lisa Epstein is running for Palm Beach County Clerk of Court. Let me share with you a staggering fact that she found buried deep in public reports

My own county, Palm Beach, Florida has a 1.45 billion dollar investment fund (as of end of FY ’10-’11 on Sept 30, 2011). Of that, 45.5% is invested in Fannie and securities and 15.1% is in Freddie securities. That’s 55.6% of our county’s entire investment portfolio. See page 92 & 93 here (my county’s financial reports)

I encourage everyone to think about the implications of the trustee of the government’s purse being wrapped up so tightly with what’s happening in foreclosure courtrooms. (And think about this for your own counties.)

We all know that our public records and our courtrooms are cesspools of fraud, forgery, lies and deceit. The “leaders” have long been hell bent on grinding through foreclosures like they were sending wood into a woodchipper. Due process and the facts be dammed, “GET OUT OF THAT HOUSE AND GET OUT OF MY COURTROOM!” We hear repeatedly that “we have a duty to taxpayers”, but that misses the critical point…..the duty is to THE LAW. Not the fund managers. Now I’m certain some judges and players think that ignoring facts and law and throwing foreclosures into the woodchipper is the quickest way to grind through the crisis, but this philosophy ignores the long term (catastrophic consequences). The wood they’re throwing into the wood chipper results in unmarketable title. Consider Michael Olenick’s analysis that found more than 10,000 foreclosure final judgments that have not resulted in sales. What’s the hold up? Part of the hold up is trying to glue back together all the pieces after they’ve come shooting out of the wood chipper.

The losses at the GSEs that are already realized (but concealed of course from the dopes that read financial statements) are exponentially understated. Extrapolate those institutional losses down to the county’s portfolio and I say slash the alleged value of the investment by a massive percentage. And when you slash that holding, you slash important things like police and fireman salaries and health care and other vital services.

Bernie Madoff was a kid playing with glue and scissors in his parent’s basement compared to what’s occurring here. Then compare all of this reporting to, (as just one example) the absurd reporting from Florida’s Retirement Fund that I’ve written about frequently. (See Here) It’s all just fantasy and delusion. Dangerous fantasy and delusion.

Have a look at the report….this kind of analysis is why Lisa is far better qualified to serve in a position of public trust……

Concentration of credit risk is the risk of loss attributed to the magnitude of an investment in a
single issuer.

Federal National Mortgage Association (Fannie Mae) $ 601,821,169 41.5%
Small Business Administration 237,942,298 16.4%
Federal Home Loan Mortgage Company (Freddie Mac) 219,667,909 15.1%
Government National Mortgage Association (Ginnie Mae) 173,558,490 11.9%
Invesco AIM Institutional Money Market Fund 77,241,447 5.3%
Federal Home Loan Bank 45,781,641 3.1%
General Electric 37,572,760 2.6%



Deadly Clear

One of the most important decisions for Borrowers Rights in the history of Hawaii has been made with this decision.  Honorable Judge J. Michael Seabright of the Hawaii United States District Court, today GRANTED the homeowners’ Motion to Dismiss the case filed against them in federal district court by Plaintiff Deutsche Bank National Trust Company, as Trustee Morgan Stanley ABS Capital I Inc. Trust 2007-NC1 Mortgage Pass-Through Certificates, Series 2007-NC1. 

View original post 1,104 more words

Mortgage paperwork mess: Next housing shock?

Scott Pelley reports how problems with mortgage documents are prompting lawsuits and could slow down the weak housing market

  • Play CBS Video Video The next housing shockAs more and more Americans face mortgage foreclosure, banks’ crucial ownership documents for the properties are often unclear and are sometimes even bogus, a condition that’s causing lawsuits and hampering an already weak housing market. Scott Pelley reports.
  • Video Extra: Eviction reprieveFlorida residents AJ and Brenda Boyd spent more than a year trying to renegotiate their mortgage and save their home. At the last moment, questions about who owns their mortgage saved them from eviction.
  • Video Extra: “Save the Dream” eventsBruce Marks, founder and CEO of the nonprofit Neighborhood Assistance Corporation of America talks to Scott Pelley about his “Save the Dream” events and how foreclosures are causing a crisis in America.
(CBS News)If there was a question about whether we’re headed for a second housing shock, that was settled last week with news that home prices have fallen a sixth consecutive month. Values are nearly back to levels of the Great Recession. One thing weighing on the economy is the huge number of foreclosed houses.Many are stuck on the market for a reason you wouldn’t expect: banks can’t find the ownership documents.Who really owns your mortgage?
Scott Pelley explains a bizarre aftershock of the U.S. financial collapse: An epidemic of forged and missing mortgage documents.

It’s bizarre but, it turns out, Wall Street cut corners when it created those mortgage-backed investments that triggered the financial collapse. Now that banks want to evict people, they’re unwinding these exotic investments to find, that often, the legal documents behind the mortgages aren’t there. Caught in a jam of their own making, some companies appear to be resorting to forgery and phony paperwork to throw people – down on their luck – out of their homes.

In the 1930s we had breadlines; venture out before dawn in America today and you’ll find mortgage lines. This past January in Los Angeles, 37,000 homeowners facing foreclosure showed up to an event to beg their bank for lower payments on their mortgage. Some people even slept on the sidewalk to get in line.

So many in the country are desperate now that they have to meet in convention centers coast to coast.

In February in Miami, 12,000 people showed up to a similar event. The line went down the block and doubled back twice.

Video: The next housing shock
Extra: Eviction reprieve
Extra: “Save the Dream” events

Dale DeFreitas lost her job and now fears her home is next. “It’s very emotional because I just think about it. I don’t wanna lose my home. I really don’t,” she told “60 Minutes” correspondent Scott Pelley.

“It’s your American dream,” he remarked.

“It was. And still is,” she replied.

These convention center events are put on by the non-profit Neighborhood Assistance Corporation of America, which helps people figure what they can afford, and then walks them across the hall to bank representatives to ask for lower payments. More than half will get their mortgages adjusted, but the rest discover that they just can’t keep their home.

For many that’s when the real surprise comes in: these same banks have fouled up all of their own paperwork to a historic degree.

“In my mind this is an absolute, intentional fraud,” Lynn Szymoniak, who is fighting foreclosure, told Pelley.

While trying to save her house, she discovered something we did not know: back when Wall Street was using algorithms and computers to engineer those disastrous mortgage-backed securities, it appears they didn’t want old fashioned paperwork slowing down the profits.

“This was back when it was a white hot fevered pitch to move as many of these as possible,” Pelley remarked.

“Exactly. When you could make a whole lotta money through securitization. And every other aspect of it could be done electronically, you know, key strokes. This was the only piece where somebody was supposed to actually go get documents, transfer the documents from one entity to the other. And it looks very much like they just eliminated that stuff all together,” Szymoniak said.

Szymoniak’s mortgage had been bundled with thousands of others into one of those Wall Street securities traded from investor to investor. When the bank took her to court, it first said it had lost her documents, including the critical assignment of mortgage which transfers ownership. But then, there was a courthouse surprise.

“They found all of your paperwork more than a year after they initially said that they had lost it?” Pelley asked.

“Yes,” she replied.

Asked if that seemed suspicious to her, Szymoniak said, “Yes, absolutely. What do you imagine? It fell behind the file cabinet? Where was all of this? ‘We had it, we own it, we lost it.’ And then more recently, everyone is coming in saying, ‘Hey we found it. Isn’t that wonderful?’”

But what the bank may not have known is that Szymoniak is a lawyer and fraud investigator with a specialty in forged documents. She has trained FBI agents.

She told Pelley she asked for copies of those documents.

Asked what she found, Szymoniak told Pelley, “When I looked at the assignment of my mortgage, and this is the assignment: it looked that even the date they put in, which was 10/17/08, was several months after they sued me for foreclosure. So, what they were saying to the court was, ‘We sued her in July of 2008 and we acquired this mortgage in October of 2008.’ It made absolutely no sense.”

Produced by Robert Anderson and Daniel Ruetenik

Now for the pleading

Timothy L. McCandless, Esq. SBN 147715


1881 Business Center Drive, Ste. 9A

San Bernardino, CA 92392

Tel:  909/890-9192

Fax: 909/382-9956

Attorney for Plaintiffs




COUNTY OF ____________

___________________________________,And ROES 1 through 5,000,



SAND CANYON CORPORATION f/k/a OPTION ONE MORTGAGE CORPORATION; AMERICAN HOME MORTGAGE SERVICES, INC.; WELLS FARGO BANK, N.A., as Trustee for SOUNDVIEW HOME LOAN TRUST 2007-OPT2; DOCX, LLC; and PREMIER TRUST DEED SERVICES and all persons unknown claiming any legal or  equitable right, title, estate, lien, or interest  in the property described in the complaint adverse to Plaintiff’s title, or any cloud on Plaintiff’s  title thereto, Does 1 through 10, Inclusive,






Code § 470(b) – (d); NOTARY FRAUD;





Plaintiffs ___________________________ allege herein as follows:


            1.         Plaintiffs ___________ (hereinafter individually and collectively referred to as “___________”), were and at all times herein mentioned are,  residents of the County of _________, State of California and the lawful owner of a parcel of real property commonly known as: _________________, California _______ and the legal description is:

Parcel No. 1:

A.P.N. No. _________ (hereinafter “Subject Property”).

2.         At all times herein mentioned, SAND CANYON CORPORATION f/k/a OPTION ONE MORTGAGE CORPORATION (hereinafter SAND CANYON”), is and was, a corporation existing by virtue of the laws of the State of California and claims an interest adverse to the right, title and interests of Plaintiff in the Subject Property.

3.         At all times herein mentioned, Defendant AMERICAN HOME MORTGAGE SERVICES, INC. (hereinafter “AMERICAN”), is and was, a corporation existing by virtue of the laws of the State of Delaware, and at all times herein mentioned was conducting ongoing business in the State of California.

4.         At all times herein mentioned, Defendant WELLS FARGO BANK, N.A., as Trustee for SOUNDVIEW HOME LOAN TRUST 2007-OPT2 (hereinafter referred to as “WELLS FARGO”), is and was, a member of the National Banking Association and makes an adverse claim to the Plaintiff MADRIDS’ right, title and interest in the Subject Property.

5.         At all times herein mentioned, Defendant DOCX, L.L.C. (hereinafter “DOCX”), is and was, a limited liability company existing by virtue of the laws of the State of Georgia, and a subsidiary of Lender Processing Services, Inc., a Delaware corporation.

6.         At all times herein mentioned, __________________, was a company existing by virtue of its relationship as a subsidiary of __________________.

7.         Plaintiffs are ignorant of the true names and capacities of Defendants sued herein as DOES I through 10, inclusive, and therefore sues these Defendants by such fictitious names and all persons unknown claiming any legal or equitable right, title, estate, lien, or interest in the property described in the complaint adverse to Plaintiffs’ title, or any cloud on Plaintiffs’ title thereto. Plaintiffs will amend this complaint as required to allege said Doe Defendants’ true names and capacities when such have been fully ascertained. Plaintiffs further allege that Plaintiffs designated as ROES 1 through 5,000, are Plaintiffs who share a commonality with the same Defendants, and as the Plaintiffs listed herein.

8.         Plaintiffs are informed and believe and thereon allege that at all times herein mentioned, Defendants, and each of them, were the agent and employee of each of the remaining Defendants.

9.         Plaintiffs allege that each and every defendants, and each of them, allege herein ratified the conduct of each and every other Defendant.

10.       Plaintiffs allege that at all times said Defendants, and each of them, were acting within the purpose and scope of such agency and employment.

11.       Plaintiffs are informed and believe and thereupon allege that circa July 2004, DOCX was formed with the specific intent of manufacturing fraudulent documents in order create the false impression that various entities obtained valid, recordable interests in real

properties, when in fact they actually maintained no lawful interest in said properties.

12.       Plaintiffs are informed and believe and thereupon allege that as a regular and ongoing part of the business of Defendant DOCX was to have persons sitting around a table signing names as quickly as possible, so that each person executing documents would sign approximately 2,500 documents per day. Although the persons signing the documents claimed to be a vice president of a particular bank of that document, in fact, the party signing the name was not the person named on the document, as such the signature was a forgery, that the name of the person claiming to be a vice president of a particular financial institution was not a “vice president”, did not have any prior training in finance, never worked for the company they allegedly purported to be a vice president of, and were alleged to be a vice president simultaneously with as many as twenty different banks and/or lending institutions.

13.       Plaintiffs are informed and believe and thereupon allege that the actual signatories of the instruments set forth in Paragraph 12 herein, were intended to and were fraudulently notarized by a variety of notaries in the offices of DOCX in Alpharetta, GA.

14.       Plaintiffs are informed and believe and thereupon allege that for all purposes the intent of Defendant DOCX was to intentionally create fraudulent documents, with forged signatures, so that said documents could be recorded in the Offices of County Recorders through the United States of America, knowing that such documents would forgeries, contained false information, and that the recordation of such documents would affect an interest in real property in violation of law.

15.       Plaintiffs allege that on or about, ____________, that they conveyed a first deed of  trust (hereinafter “DEED”) in favor of Option One Mortgage, Inc. with an interest of

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