Archive for June, 2012

Fannie and Freddie: Hear no evil, speak no evil, see no evil.

June 30, 2012 Leave a comment

Reportedly, new housing finance has been under a strange shadow.  The typical news is that those self-employed have to show two years of tax returns in order to get financed.  But what those tax returns must show is not.    If a self-employed person makes $30,000 a year, but has a bunch of tax write-offs and reports income of only $15,000 a year, then the bank goes by the income that is reported to the IRS.  That’s right.  Better watch your Schedule K.  It won’t matter what your bank statements say, it’s all what you told the IRS.  The government can control tax write offs based on what you are financed for.  In an age where there are two government bailed out mortgage entities, Fannie Mae and Freddie Mac, that is scary news. Government is getting more involved by the day buying up loans.  Why the secrecy? Fannie is “under a lot of political pressure, and wants to keep everything” quiet, says Paul Miller, managing director of FBR Capital Markets.

What most people working with lenders don’t understand is that when Bank of America tells someone they are being considered for a loan modification and then declines that modification that one of these entities is the reason.  When you ask “why” you were declined, Bank of America won’t hesitate to point to Freddie Mac’s guidelines.  If you ask who owns your note through a legal letter, Bank of America will often tell you it is Freddie Mac or Fannie Mae.  However, when Bank of America sues you for foreclosure, don’t be surprised when they put in the Complaint that they actually own the Note.

One would think the time for secrecy should be over in order to fix the problem. From Robo-signing to break ins, the foreclosure crisis has pretty much run the gamut.   In New York they are trying to make this fraud punishable by criminal penalty.  Why isn’t that happening everywhere?  It has been reported that such entities are drilling through locks and breaking into properties in foreclosure.  Their reasoning?  They can because when you signed your mortgage you agreed to it.  But unless you remember being told at closing that by signing your mortgage you were waiving your Fourth Amendment right to be free from unreasonable searches and seizures, then someone is running against the law.

Our government is claiming that they can mandate healthcare for the general welfare of the public.  At the same time, in courtrooms, congressional hearings, and executive meetings the subject of foreclosure practices is going by the wayside.  Sure they  have offered to have banks rent the homes back to the homeowners.  The same entities that you can’t write off taxes for and get approved if you are self-employed?  The same entities that wrongfully foreclosed because they didn’t have the note and got away with it?  The same entities that broke into homes when there was no final judgment of foreclosure?  I’m sure we would all love to rent from them.

Just know that the private servicers loans are being bought up by government bailed out entities.  And if it isn’t happening through the government here, then it happens overseas.  Recently, one mortgage company sold off to another in the European market that helped make them quite a bundle over there.  Of course that doesn’t benefit us much.

Speech is being silenced if it is against banks by those speaking out, and everything that is being sold is some big secret.  Hear no evil, speak no evil, see no evil, right?  If we want to fund huge programs, then the economy has to be able to.  You cannot run a car without gas or unless you charged it up.  Fixing the real estate crisis is key to doing just that.  The question is how many of our rights do we have to give up to get there.  The Fourth Amendment?  The First?

These are not merely just people who stopped paying a mortgage.  Many of them were told to in order to get a loan modification by the very lender who claims they own the note.  The information that is being put out is pure propaganda, and the secrets being held the truth.  No viable solution has been offered to fix this problem, and everywhere people would rather turn their heads than deal with it.  That is until you start to hear the drill at your own door.


Using Fraud to Rewrite History

June 13, 2012 Leave a comment

In the midst of an ever-growing foreclosure crisis, a solution is being sought after.  Politicians claim they may have it, lawyers are litigating it, and homeowners are left in the middle with no awareness of what rights they have.  Those rights are steadily changing.

The basic principles of the judicial system are being challenged before our very eyes.  Centuries of legal precedent, words that lawyers learn first in law school such as “Standing” and “Res Judicata” are being twisted and turned into meanings that defy any explanation of legal jurisprudence.

The most basic issues remain the same:  Who can sue to foreclose a home?  (Standing); and if a person sues for foreclosure and uses fraudulent documents to do so, and the Judge throws the case out can they come back and refile for foreclosure later? (Res Judicata).  Cases being decided and considered today affect both in major ways that many simply cannot understand.

Take Standing for example.   Who can sue to foreclose a home?  Homeowners who have been dealing with a servicer for years sending in documents for a loan modification or short sale believe that they are the only one who has the power to foreclose.  Unfortunately, that is not the case.  It’s legal sounding but in Florida, the only one who can foreclose is based on statutory language which is now being interpreted by the judiciary in ways that are unimaginable.

Your foreclosure depends on an instrument called your Note.  Simply put, it’s a check.  If I told you to deposit a check for me, you’d ask me to sign the back.  That’s an endorsement.  Likewise, banks have to follow the rules on proper endorsements.  The person properly endorsed may have the right to sue.   The question of who has the note is one that most people in the midst of the depths of a loan modification nightmare aren’t being told about, but it’s significance cannot be undervalued.  For example, if you are working with Chase to modify your loan and you receive a Foreclosure Complaint, Chase will only tell you then that it is because Freddie Mac owns your note and moved to foreclose the property.  Meanwhile, you were left thinking that Chase was somehow going to help you.  Here is the kicker.  The Complaint says “Chase” is the Plaintiff.  Watch for language in the Complaint says “Plaintiff is entitled to enforce the note and mortgage”.  That is not good enough.  They have to “own the note and mortgage” or truly be entitled to enforce it.  Fraud is not one of those routes.

Not to mention the subject of trusts, securitization, Pooling and Servicing Agreements (PSA’s), and the like.  Years ago mortgages were bundled and sold off to investors. Does the investor sue or the servicer of the mortgage? Simply put, these PSA’s dictate the terms of who can do what.  What does the PSA say about when a suit can be brought and by whom?  Often a homeowner asks for the PSA only to be stonewalled by the Plaintiff in a foreclosure suit.  That is because the PSA is sitting at the Securities and Exchange Commission (SEC) amidst billions of documents filed when mortgages were transferred without actually transferring the paperwork that goes along with them. In essence, banks took a shortcut to avoid fees and extra work.  I say make them produce it anyway.  They are relying on it for suit.  It is a material document.

The price?  Our legal precedent that we have relied on.  Standing is a protection to the American public.  It says that someone who sues you must have the right to, they must be injured by you and not in speculative ways.  That protects us more than you know.

Now, the issue of whether a bank can file for foreclosure a second time after they tried to foreclose on a home using a fraudulent document is before our Supreme Court in Roman Pino v. Bank of New York Mellon.  In law school, we were taught that we get “one bite at the apple”.  If you don’t get it right the first time, you’re out.  Think of Double Jeopardy, and if you were tried for a murder you didn’t commit.  The jury says you aren’t guilty and ten years later the State retries you because the cops came up with new evidence.  How long do you have to run from fraud?

The irony is apparent.  The latest article from DS News reads, “If the court does rule in favor of Pino, this would mean servicers could no longer fix documents and later refile foreclosures, which would stall or lead to the dismissal of foreclosures and make it even more difficult for the judicial state to proceed with foreclosures.”

This would mean servicers could not “fix” documents?  And how would they “fix” them?  The same way that they have already been proven to do so and had to settle with the states over?  By hiring a company that in turn hired high school students and other people at $10 an hour to sign documents as corporate officials for major servicers?  Allow the bank a second chance to do that?  Please.

Our system is not that complex.  Actually it is rooted in judicial precedent.  If you bring a case using fraud to do so, you’re out, and no you cannot come back.  It’s  just that simple.

The danger is apparent.  If we rewrite a body of case law in order to help recover the market and stop the backlog of foreclosures, those protections mentioned earlier are damaged.  Lawyers will use them in other non-foreclosure suits, and we will have dismantled the very judicial barrier of protection we rely on.  We don’t destroy rights to take shortcuts.  That’s not the body of American law I learned.

There are three branches of government for this reason.  The scales are equal between the homeowner and the bank in the Judicial system, and the bank should carry no favor as they do with politicians by contributing to campaigns, etc.  Lady Justice wears a blindfold, and no political desire or agenda should remove it.

We cannot ignore the truth of what has taken place by blaming the homeowner, not in the political arena and not in the courtroom.  Perhaps Scott Pelly from CBS 60 Minutes said it best in his piece last year titled “Whistleblower Wins $18 Million”:  “One thing weighing on the economy is the huge number of foreclosed houses. Many are stuck on the market for a reason that you wouldn’t expect. Banks can’t find the ownership documents. It’s bizarre, but it turns out that 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 1930’s we had breadlines. Venture out before dawn in America today and you’ll find mortgage lines.”

And whose fault is that?

Robo-Signing: Checking for Differences and “Tracers”

Robo-Signing:  Checking for Differences and “Tracers”

One way to keep the banks honest is not to pretend now that the settlement is over that the robo-signing has stopped.  One of the most frequent challenges lawyers bring to foreclosure complaints is when a Plaintiff fails to attach an “Assignment” of the mortgage.  If you find that your mortgage was sold to another company after you closed on your home, then there is supposed to be an “Assignment” somewhere.  The problem is that in order to cut corners during the high times, many of the lenders don’t have these “Assignments” or the Promissory Notes or anything else anymore, so they have to “recreate” them now.  That is fraud, plain and simple.

Many laws in different states require that all material documents should be attached to the Complaint, including these Assignments.  If you get your Assignment with the Complaint then make sure to study it closely.  Look for a signature by a President, Vice President, or CEO.  Also, look for a corporate seal.  Chances are you will get an Assistant Secretary and no seal which is contrary to Florida Statutes.

Look closely at the signatures on the Assignment and the dates.  Make sure it was notarized at the same time of the signature.  Then look at who is assigning what to whom.  Once you figure that out, look online for your clerk of court’s website.  There you can search public records.  In the search see if there is some way to limit your search to Assignments.  Then start looking for Assignments similar to yours.  For example, if your loan was assigned to Bank of America, look for Assignments that are to them from the same person that assigned yours.  Often it will be Mortgage Electronic Registration Systems (MERS).  Try to stick around the same date that your Assignment was recorded.  The truth is whoever signed your paperwork may have quit shortly after.  These people don’t stick around too long.

Start looking at the signatures.  It may take a while and is tedious work, but keep looking as far back or forward as you have to.  Eventually you will find one with the same signature that is on your Assignment.  See if they match up.  There are many companies who will prepare these in groups and file them so look for groups of Assignments filed on a certain date or month by the same person that yours was assigned to.   For example, one company that is now frequently recording Assignments is CoreLogic (you will see their name at the top as the preparer).  Even if those don’t match up keep looking.

If you don’t find signatures by the people that are on your Assignment, don’t give up.  Go to another county in the same state, and stick around the same date that your Assignment was recorded.  When you find a signature that is the same person as your Assignment, save it even if it looks the same.  A lot of tracing is taking place now that the robo-signing has been brought to the forefront.  Then keep looking.  Eventually you may find a “tracer” who does not trace so well.

If there is any hope of holding the banks accountable and countersuing back for the false and fraudulent documents they have filed, we have to learn to prove those documents are indeed fraudulent.

Robo-Signing and the Aftermath

Robo-Signing and the Aftermath

Upon watching the following video posted below, I became ill at what has taken place in America in our current foreclosure crisis. Although the Attorney Generals have settled their case since (with the exception of Massachusetts who is suing on their own), estimates have stated that the settlement equates to about $2,000 per homeowner.

Is that enough?  In a time when the subprime market was on fire and loans were given out so freely to people the lenders had to know could not pay, does it justify what they have done now?  Chances are at closing you were told that your loan could be sold to another lender.  Most often, it is.  At a time when the market was sky-high, those same lenders had to cut corners.  Instead of transferring the actual paperwork they clicked a button on a computer keyboard.

The problem?  They did so with statutes in many states sitting which read that a bank cannot foreclose without the original promissory note.  So where did the documents go?  And how are they showing up all of a sudden?

In many cases, a foreclosure complaint will seek “reestablishment of a lost note” in a separate count.  Then months later the lender will run into court and file an original note and mortgage.  When this happens be very suspicious.

Other situations where homeowners should be extremely suspicious is when an assignment is attached to the Complaint that shows the mortgage and note were transferred to another lender.  Always look at who prepared that assignment.  Quite often it is the law firm that has filed the Complaint against you.

There are multitudes of other situations where homeowners should be weary of the documents that are being filed.  Always look for discrepancies.

Lenders often stand on these fraudulent documents and their pooling and servicing agreements to foreclose.  However, they somehow never produce those very pooling and servicing agreements they are using as standing to sue.  That is because they are buried beneath millions of documents somewhere unknown, and they have no clue where they are.

The Attorney General settlement did not take away the right of a homeowner to sue the lender, and perhaps the time has come to move past mere Motions to Dismiss, Answers and Affirmative Defenses, and start suing back.

The problem is that this needs to be done in the actual foreclosure case to avoid the lenders argument that you should have sued when you had the chance.  It’s the one bite at the apple rule in law.

Many want to run from the issue of being in foreclosure, but know you are not alone.  It is affecting every socioeconomic status and if you are holding a foreclosure complaint in your hand, you have more power than you may realize.  More than a countrywide problem, it is a calling to hold the giants accountable for the fraud and problems they created.