National Honesty Day? America’s Book of Lies

Today is National Honesty Day. While it should be a celebration of how honest we have been the other 364 days of the year, it is rather a day of reflection on how dishonest we have been. Perhaps today could be a day in which we say we will at least be honest today about everything we say or do. But that isn’t likely. Today I focus on the economy and the housing crisis. Yes despite the corruption of financial journalism in which we are told of improvements, our economy — led by the housing markets — is still sputtering. It will continue to do so until we confront the truth about housing, and in particular foreclosures. Tennessee, Virginia and other states continue to lead the way in a downward spiral leading to the lowest rate of home ownership since the 1990′s with no bottom in sight.

Here are a few of the many articles pointing out the reality of our situation contrasted with the absence of articles in financial journalism directed at outright corruption on Wall Street where the players continue to pursue illicit, fraudulent and harmful schemes against our society performing acts that can and do get jail time for anyone else who plays that game.

It isn’t just that they escaping jail time. The jailing of bankers would take a couple of thousand people off the street that would otherwise be doing harm to us.

The main point is that we know they are doing the wrong thing in foreclosing on property they don’t own using “balances” the borrower doesn’t owe; we know they effectively stole the money from the investors who thought they were buying mortgage bonds, we know they effectively stole the title protection and documents that should have been executed in favor of the real source of funds, we know they received multiple payments from third parties and we know they are getting twin benefits from foreclosures that (a) should not be legally allowed and (b) only compound the damages to investors and homeowners.

The bottom line: Until we address wrongful foreclosures, the housing market, which has always led the economy, will continue to sputter, flatline or crash again. Transferring wealth from the middle class to the banks is a recipe for disaster whether it is legal or illegal. In this case it plainly illegal in most cases.

And despite the planted articles paid for by the banks, we still have over 700,000 foreclosures to go in the next year and over 9,000,000 homeowners who are so deep underwater that their situation is a clear and present danger of “strategic default” on claims that are both untrue and unfair.

Here is a sampling of corroborative evidence for my conclusions:

Senator Elizabeth Warren’s Candid Take on the Foreclosure Crisis

There it was: The Treasury foreclosure program was intended to foam the runway to protect against a crash landing by the banks. Millions of people were getting tossed out on the street, but the secretary of the Treasury believed the government’s most important job was to provide a soft landing for the tender fannies of the banks.”

Lynn Symoniak is Thwarted by Government as She Pursues Other Banks for the Same Thing She Proved Before

Government prosecutors who relied on a Florida whistleblower’s evidence to win foreclosure fraud settlements with major banks two years ago are declining to help her pursue identical claims against a second set of large financial institutions.

Lynn Szymoniak first found proof that millions of American foreclosures were based on faulty and falsified documents while fighting her own foreclosure. Her three-year legal fight helped uncover the fact that banks were “robosigning” documents — hiring people to forge signatures and backdate legal paperwork the firms needed in order to foreclose on people’s homes — as a routine practice. Court papers that were unsealed last summer show that the fraudulent practices Szymoniak discovered affect trillions of dollars worth of mortgages.

More than 700,000 Foreclosures Expected Over Next Year

How Bank Watchdogs Killed Our Last Chance At Justice For Foreclosure Victims

The results are in. The award for the sorriest chapter of the great American foreclosure crisis goes to the Independent Foreclosure Review, a billion-dollar sinkhole that produced nothing but heartache for aggrieved homeowners, and a big black eye for regulators.

The foreclosure review was supposed to uncover abuses in how the mortgage industry coped with the epic wave of foreclosures that swept the U.S. in the aftermath of the housing crash. In a deal with the Office of the Comptroller of the Currency and the Federal Reserve, more than a dozen companies, including major banks, agreed to hire independent auditors to comb through loan files, identify errors and award just compensation to people who’d been abused in the foreclosure process.

But in January 2013, amid mounting evidence that the entire process was compromised by bank interference and government mismanagement, regulators abruptly shut the program down. They replaced it with a nearly $10 billion legal settlement that satisfied almost no one. Borrowers received paltry payouts, with sums determined by the very banks they accused of making their lives hell.

Investigation Stalled and Diverted as to Bank Fraud Against Investors and Homeowners

The Government Accountability Office released the results of its study of the Independent Foreclosure Review, conducted by the Office of the Comptroller of the Currency and the Federal Reserve in 2011 and 2012, and the results show that the foreclosure process is lacking in oversight and transparency.

According to the GAO review, which can be read in full here, the OCC and Fed signed consent orders with 16 mortgage servicers in 2011 and 2012 that required the servicers to hire consultants to review foreclosure files for efforts and remediate harm to borrowers.

In 2013, regulators amended the consent orders for all but one servicer, ending the file reviews and requiring servicers to provide $3.9 billion in cash payments to about 4.4 million borrowers and $6 billion in foreclosure prevention actions, such as loan modifications. The list of impacted mortgage servicers can be found here, as well as any updates. It should be noted that the entire process faced controversy before, as critics called the IFR cumbersome and costly.

Banks Profit from Suicides of Their Officers and Employees

After a recent rash of mysterious apparent suicides shook the financial world, researchers are scrambling to find answers about what really is the reason behind these multiple deaths. Some observers have now come to a rather shocking conclusion.

Wall Street on Parade bloggers Pam and Russ Martens wrote this week that something seems awry regarding the bank-owned life insurance (BOLI) policies held by JPMorgan Chase.

Four of the biggest banks on Wall Street combined hold over $680 billion in BOLI policies, the bloggers reported, but JPMorgan held around $17.9 billion in BOLI assets at the end of last year to Citigroup’s comparably meager $8.8 billion.

Government Cover-Up to Protect the Banks and Screw Homeowners and Investors

A new government report suggests that errors made by banks and their agents during foreclosures might have been significantly higher than was previously believed when regulators halted a national review of the banks’ mortgage servicing operations.

When banking regulators decided to end the independent foreclosure review last year, most banks had not completed the examinations of their mortgage modification and foreclosure practices.

At the time, the regulators — the Office of the Comptroller of the Currency and the Federal Reserve — found that lengthy reviews by bank-hired consultants were delaying compensation getting to borrowers who had suffered through improper modifications and other problems.

But the decision to cut short the review left regulators with limited information about actual harm to borrowers when they negotiated a $10 billion settlement as part of agreements with 15 banks, according to a draft of a report by the Government Accountability Office reviewed by The New York Times.

The report shows, for example, that an unidentified bank had an error rate of about 24 percent. This bank had completed far more reviews of borrowers’ files than a group of 11 banks involved the deal, suggesting that if other banks had looked over more of their records, additional errors might have been discovered.

Wrongful Foreclosure Rate at least 24%: Wrongful or Fraudulent?

The report shows, for example, that an unidentified bank had an error rate of about 24 percent. This bank had completed far more reviews of borrowers’ files than a group of 11 banks involved the deal, suggesting that if other banks had looked over more of their records, additional errors might have been discovered.

http://www.marketpulse.com/20140430/u-s-housing-recovery-struggles/

http://www.csmonitor.com/Business/Latest-News-Wires/2014/0429/Home-buying-loses-allure-ownership-rate-lowest-since-1995

http://www.opednews.com/articles/It-s-Good–no–Great-to-by-William-K-Black–Bank-Failure_Bank-Failures_Bankers_Banking-140430-322.html

[DISHONEST EUPHEMISMS: The context of this WSJ story is the broader series of betrayals of homeowners by the regulators and prosecutors led initially by Treasury Secretary Timothy Geithner and his infamous “foam the runways” comment in which he admitted and urged that programs “sold” as benefitting distressed homeowners be used instead to aid the banks (more precisely, the bank CEOs) whose frauds caused the crisis.  The WSJ article deals with one of the several settlements with the banks that “service” home mortgages and foreclose on them.  Private attorneys first obtained the evidence that the servicers were engaged in massive foreclosure fraud involving knowingly filing hundreds of thousands of false affidavits under (non) penalty of perjury.  As a senior former AUSA said publicly at the INET conference a few weeks ago about these cases — they were slam dunk prosecutions.  But you know what happened; no senior banker or bank was prosecuted.  No banker was sued civilly by the government.  No banker had to pay back his bonus that he “earned” through fraud.

 

 

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Editor’s Comment:

As I have reported on past occasions I have sources from the securities and more specifically the securitization industry that provide comments and information on the promise that I will keep their identities anonymous. This one in particular caught my attention. The source is from a Southeastern state who packaged and sold pools of loans of all types and qualities.

I believe regardless of whether the note and mortgage / deed of trust was assigned or not, it can be demonstrated they did not move as a unit, unless the price paid was the payoff value of the loan and/or value of property. [Editor's Note: The importance of this fellow's statement cannot be overstated. And his method for determining the true nature of an assignment, allonge or indorsement transaction is extremely helpful. While there are contrary arguments to his contention, they are a stretch to accept]

A different price (which I have hitting on this theme) would indicate the two are not a unit, because the value of the promissory note is not related to the actual security value.  Also how the transaction was booked and valued on the bank’s accounts would reveal the same.  I am guessing that they were valuing notes at a price much higher than the market value of the home. [Editor's Note: Yes and as I have already been seen informed with documentation, the transactions were never booked as accounting transactions because from the standpoint of the assignor or assignee no transaction took place. These were assignments of convenience. They do not show on the balance sheet of the either the assignor or the assignee as a loan receivable. If they come to court claiming ownership or that someone else acquired ownership through them, they are doing so contrary to their own admissions in the own bookkeeping. THIS is where confidence and knowledge in motion practice and confidence and knowledge in discovery will put the homeowner in either extreme jeopardy or in a winning position --- because the loan was never owned by ANY of the intermediaries who acted as conduits]

I believe the key is to assert the note as a ‘financial asset.’  That there is a market or exchange in which it trades.  In fact on many of the bank’s annual reports, they speak that the primary business is originating loans for sale/securitization, i.e. a market exists.  Along with pricing, this will be an easy case to make. [Editor's Note: Read this carefully --- it proves the point by reference to information in the public domain --- and it is not subject to attack as being opinion or questionable fact or standing to raise the issue. What I believe he is telling me here is that even if there was ($10.00, or other valuable consideration), there are only three values that conceivably be used --- the principal due on the note, the value of the collateral or the fair market value of the loan as determined by the freely traded secondary market. In nearly all cases the "traders" never even pretended that this was a real transaction and so there was no exchange of money at all. But if there was an exchange of money, this index could be used to prove that the transaction was a sham because it never met the elements of a reasonable business transaction. Judge Shack in New York asked the question himself --- why and under what terms would anyone buy a loan that is in default? How could a loan declared in default be assigned into an investor pool where the investors were promised that they would at least initially receive performing loans. And how could they receive any loan after the 90 day cutoff period included in the PSA and the REMIC statute? The collateral  question that Judge Shack might have asked is why anyone would pay a price different than the price set on the secondary market regardless of the principal stated on the note or the current fair market value?]

Here is the kicker:  SECTION 36‑8‑406. Obligation to notify issuer of lost, destroyed, or wrongfully taken security certificate.

     If a security certificate has been lost, apparently destroyed, or wrongfully taken, and the owner fails to notify the issuer of that fact within a reasonable time after the owner has notice of it and the issuer registers a transfer of the security before receiving notification, the owner may not assert against the issuer a claim for registering the transfer under Section 36‑8‑404 (wrongful registration) or a claim to a new security certificate under Section 36‑8‑405 (replacement of a lost, destroyed or wrongfully taken security certificate).

I wonder out loud why I should not reregister my note.   Imagine the bank now arguing all the points of having to present an actual note, etc in order to change ownership.

The next big thing I am digging into is whether an owner/purchaser of a security has any authority to electronically register and transfer ownership.  I believe, but cannot find exact wording, that such is only limited to the issuer.  On the entire face, MERs may not even be allowed because the issuer of the note, the homeowner, never authorized them to keep track.

Think of why there are laws that require lenders to notify borrowers when their mortgage is sold, it is because the issuer needs a record.  Worse case is that the bank argues the issuer under Chapter 8 is the one who ‘becomes responsible for, or in place of, another person described as an issuer in this section.’   That is still not the bank, but the county registrar.

People Have Answers, Will Anyone Listen?

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Editor’s Comment: 

Thanks to Home Preservation Network for alerting us to John Griffith’s Statement before the Congressional Progressive Caucus U.S. House of Representatives.  See his statement below.  

People who know the systemic flaws caused by Wall Street are getting closer to the microphone. The Banks are hoping it is too late — but I don’t think we are even close to the point where the blame shifts solidly to their illegal activities. The testimony is clear, well-balanced, and based on facts. 

On the high costs of foreclosure John Griffith proves the point that there is an “invisible hand” pushing homes into foreclosure when they should be settled modified under HAMP. There can be no doubt nor any need for interpretation — even the smiliest analysis shows that investors would be better off accepting modification proposals to a huge degree. Yet most people, especially those that fail to add tacit procuration language in their proposal and who fail to include an economic analysis, submit proposals that provide proceeds to investors that are at least 50% higher than the projected return from foreclosure. And that is the most liberal estimate. Think about all those tens of thousands of homes being bull-dozed. What return did the investor get on those?

That is why we now include a HAMP analysis in support of proposals as part of our forensic analysis. We were given the idea by Martin Andelman (Mandelman Matters). When we performed the analysis the results were startling and clearly showed, as some judges around the country have pointed out, that the HAMP loan modification proposals were NOT considered. In those cases where the burden if proof was placed on the pretender lender, it was clear that they never had any intention other than foreclosure. Upon findings like that, the cases settled just like every case where the pretender loses the battle on discovery.

Despite clear predictions of increased strategic defaults based upon data that shows that strategic defaults are increasing at an exponential level, the Bank narrative is that if they let homeowners modify mortgages, it will hurt the Market and encourage more deadbeats to do the same. The risk of strategic defaults comes not from people delinquent in their payments but from businesspeople who look at the principal due, see no hope that the value of the home will rise substantially for decades, and see that the home is worth less than half the mortgage claimed. No reasonable business person would maintain the status quo. 

The case for principal reductions (corrections) is made clear by the one simple fact that the homes are not worth and never were worth the value of the used in true loans. The failure of the financial industry to perform simple, long-standing underwriting duties — like verifying the value of the collateral created a risk for the “lenders” (whoever they are) that did not exist and was present without any input from the borrower who was relying on the same appraisals that the Banks intentionally cooked up so they could move the money and earn their fees.

Many people are suggesting paths forward. Those that are serious and not just positioning in an election year, recognize that the station becomes more muddled each day, the false foreclosures on fatally defective documents must stop, but that the buying and selling and refinancing of properties presents still more problems and risks. In the end the solution must hold the perpetrators to account and deliver relief to homeowners who have an opportunity to maintain possession and ownership of their homes and who may have the right to recapture fraudulently foreclosed homes with illegal evictions. The homes have been stolen. It is time to catch the thief, return the purse and seize the property of the thief to recapture ill-gotten gains.

Statement of John Griffith Policy Analyst Center for American Progress Action Fund

Before

The Congressional Progressive Caucus U.S. House of Representatives

Hearing On

Turning the Tide: Preventing More Foreclosures and Holding Wrong-Doers Accountable

Good afternoon Co-Chairman Grijalva, Co-Chairman Ellison, and members of the caucus. I am John Griffith, an Economic Policy Analyst at the Center for American Progress Action Fund, where my work focuses on housing policy.

It is an honor to be here today to discuss ways to soften the blow of the ongoing foreclosure crisis. It’s clear that lenders, investors, and policymakers—particularly the government-controlled mortgage giants Fannie Mae and Freddie Mac—must do all they can to avoid another wave of costly and economy-crushing foreclosures. Today I will discuss why principal reduction—lowering the amount the borrower actually owes on a loan in exchange for a higher likelihood of repayment—is a critical tool in that effort.

Specifically, I will discuss the following:

1      First, the high cost of foreclosure. Foreclosure is typically the worst outcome for every party involved, since it results in extraordinarily high costs to borrowers, lenders, and investors, not to mention the carry-on effects for the surrounding community.

2      Second, the economic case for principal reduction. Research shows that equity is an important predictor of default. Since principal reduction is the only way to permanently improve a struggling borrower’s equity position, it is often the most effective way to help a deeply underwater borrower avoid foreclosure.

3      Third, the business case for Fannie and Freddie to embrace principal reduction. By refusing to offer write-downs on the loans they own or guarantee, Fannie, Freddie, and their regulator, the Federal Housing Finance Agency, or FHFA, are significantly lagging behind the private sector. And FHFA’s own analysis shows that it can be a money-saver: Principal reductions would save the enterprises about $10 billion compared to doing nothing, and $1.7 billion compared to alternative foreclosure mitigation tools, according to data released earlier this month.

4      Fourth, a possible path forward. In a recent report my former colleague Jordan Eizenga and I propose a principal-reduction pilot at Fannie and Freddie that focuses on deeply underwater borrowers facing long-term economic hardships. The pilot would include special rules to maximize returns to Fannie, Freddie, and the taxpayers supporting them without creating skewed incentives for borrowers.

Fifth, a bit of perspective. To adequately meet the challenge before us, any principal-reduction initiative must be part of a multipronged

To read John Griffith’s entire testimony go to: http://www.americanprogressaction.org/issues/2012/04/pdf/griffith_testimony.pdf


HOAs Retaliate Against Banks Skipping Out on Paying Maintenance Expenses

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Editor’s Comment: 

Having had the experience of representing Condominium Associations, Cooperatives and Homeowners Associations in Florida on a large scale, I am acutely aware of the pain they feel when “neighbors” don’t pay their monthly fees. The rest of the homeowners must pick up the slack and in many cases there were special assessments against the owners to pay for the shortfall.

The Banks, always playing the game, would get their Judgement of Foreclosure and then postpone the actual sale indefinitely because they could and because they didn’t want the liability of association dues, association compliance etc. So Florida actually had to pass a law that required the bank to start paying maintenance after they received a Final Judgment of foreclosure. Apparently, judging from the article below, that law has been rescinded or eviscerated by the intensive bank lobbying going on in all 50 state legislatures and in Congress.

With the foreclosure crisis desiccating entire neighborhoods, it sometimes comes down to a handful of homeowners who are paying the tab for the maintenance of the entire complex. So those homeowners, who were now on the Board of directors of the association jumped in and are now getting the benefits of self-help through renting abandoned homes and condos as though they owned it. In some cases they are turning a profit, attracting new buyers in and getting a pretty good bang for their buck — if they do it right.

You might remember the uproar that occurred when I reported that a number of people were making this situation  into a business model: by renting out at lower rates homes that were abandoned by both the homeowner and the “bank” or other pretender lender that put the home into default and foreclosure, these “entrepreneurs” are making money on assets that don’t belong to them.

That is a bad thing, right? Only if you are not a bank or pretender lender who are doing exactly the same thing. If a non-creditor took title to property by submitting a credit bid, then they don’t have real title. Whether they sell it or rent it out, they are making money off of an asset that was never owned by them and in which they never had any financial interest, risk or loss.

That of course is the problem with the corruption of our title system, and the failure of due process, especially in the non-judicial states where foreclosures are routinely processed on behalf of non-creditors who submit “credit bids” at auction. My answer as previously posted, is that the HOA and the homeowner should collude with each other the same way that the substituted trustees collude with the pretender lender. The  homeowner falls behind in payments causing the association to sue for those payments and to foreclose on the lien. The lawsuit names the homeowner and all other lenders on record reciting in the pleading that the existing mortgage on record has been satisfied or abandoned.

We all know that in many cases the lender of record is a sham corporation that was created to front as straw-man for the real lenders (investors). So the court enters a default against the lender of record, and then awards judgment to the association along with a sale date during which period the homeowner redeems the property with a settlement agreement in which the court quiets title to the homeowner.

At that point, if any party wishes to foreclose, whether they are in a judicial state or otherwise, they must proceed judicially by pleading and proving that they were a real party in interest and that they should have received notice of the foreclosure by the Association. In many cases, where it is institution versus association or another institution the same arguments advanced by homeowners are advanced by the association or institution.

The difference is that the argument coming from a creditor is taken far more seriously by the courts —- all the way up to the Supreme Court of the state (like the Landmark case in Kansas). In all such cases I have reviewed, the court found and was affirmed in its finding that the foreclosure by the first creditor to get to the mat won the case. This is one of several reasons why I have given my permission to start a national law firm rolling out into all 50 states. In a word, “if you want something done right, you have to do it yourself.”

Canceled foreclosure sales saddle neighbors, HOAs with expenses

By Mark Puente

Kathy Lane envisioned a picturesque neighborhood with tree-lined streets when she moved to FishHawk Ranch in 2004.

These days, she stares at an eyesore.

Two doors away, the back yard of an abandoned home overflows with trash; rain pours in open windows; weeds have overgrown the lawn. The pool, filled with black muck, draws swarms of bugs.

“I was expecting well-kept yards,” Lane said. “I live two doors from a dump. If it goes up in flames and catches our house on fire, who is responsible?”

The foreclosure crisis has littered the region with thousands of abandoned homes. The houses sit idle as banks have been slow to seize them in the final stage of the foreclosure process, the public auction.

Although recent headlines proclaim the worst of the housing crisis is over, the decrepit homes are a constant reminder that cleaning up the foreclosure mess remains a work in progress.

The house on Lane’s street in Lithia went into foreclosure in 2008 and has been vacant for more than a year. Aurora Loan Services had set an auction for February but canceled it.

It’s an oft-repeated pattern.

In the last 12 months, lenders have canceled auctions on 4,204 properties in Pinellas and Hillsborough counties. Sales have been canceled two, three, even nine times on some homes.

In many cases, banks delay seizures to avoid having to pay maintenance bills or homeowner association fees. Meanwhile, neighbors fend off vandals and thieves and worry about property values falling because of the deteriorating houses.

The repeated cancellations burden the court system.

“These never seem to go away,” said Thomas McGrady, chief judge of the Pinellas-Pasco County Circuit. “It’s a nuisance.”

Taxpayers also pay for the delays.

Hillsborough Circuit Judge Herbert Baumann Jr. said the Clerk of Courts’ workers spend hours filing paperwork when banks repeatedly cancel auctions.

“It does create more work,” he said. “Clerks do expend a lot of resources on this.”

• • •

No neighborhood is immune.

Even the tony streets in Tampa’s Avila and St. Petersburg’s Snell Isle have “lost houses.”

While the homes sit in limbo, homeowners associations lose money when lenders delay taking titles. The associations may mow lawns and make minor repairs, but that forces other residents to shoulder higher assessments.

Associations have few options to force lenders to sell the homes.

HOAs can seize properties through foreclosure when owners stop paying monthly assessments. Some go a step further by renting out the seized properties to recoup lost dues. Still, those actions cost the associations thousands in legal fees.

Lane, the FishHawk Ranch resident, is baffled by the banks’ inaction.

“Every day you expect a poltergeist,” she said. “We have to live here.”

She isn’t alone.

Tampa-based Rizzetta & Co. manages more than 100 community associations with 32,000 homes in Florida, including most associations in FishHawk Ranch. The firm has been deluged in recent years with calls about the abandoned homes and delinquent assessments.

Pete Williams, a Rizzetta manager, attributes the canceled auctions to money.

“The banks never want to take ownership,” he said. “They have to pay the fees going forward. The costs are considerable.”

Even McGrady, the Pinellas-Pasco judge, believes money is behind the canceled sales.

“After a while, you begin to question their motives,” the judge said.

• • •

On the flip side, some experts contend that the banks’ slowness helps stabilize the real estate market. Putting thousands of homes for sale at once could depress prices. Letting them trickle to the market brings higher prices.

And some cancellations occur because lenders and homeowners agree to loan modifications or because homeowners and defense attorneys find errors in bank documents.

The cancellations are currently down in Hillsborough and Pinellas. But that’s because lenders halted foreclosures in late 2010 amid allegations they used robo-signers and false documentation to speed up the foreclosure process.

Still, the delays have allowed some owners to live free for years and dodge assessments.

In June 2009, a Pasco judge granted U.S. Bank a final judgment to seize a home in the Valencia Gardens subdivision in Land O’Lakes. U.S. Bank scheduled the auction for September 2009 but has canceled it eight times. The most recent cancellation occurred last month.

The homeowners have lived in the home but have not paid dues to the Valencia Gardens Homeowners Association. The association is objecting to the cancellations and has asked a judge to order the bank to sell the home. Thirty-eight delinquent homeowners owe the association $56,000.

The shortfall has forced the HOA to convert water fountains into flower beds and to scale back on other projects, said Gail Spector, the president.

The group began cracking down on delinquent residents last year by threatening foreclosure lawsuits against them. Spector knows residents have lost jobs but said other homeowners shouldn’t be burdened with the unpaid dues.

“You have to treat everybody the same,” Spector said. “We are fixing and paying for everything. That’s not fair.”

Leonard J. Mankin, a Clearwater-based law firm, represents hundreds of associations across Florida. Attorney Brandon Mullis has asked a judge to sanction U.S. Bank and to force the sale of the home in Valencia Gardens.

It is now common, he said, for banks to cancel auctions seven or eight times in many foreclosure cases.

Mullis questions why lenders file court documents saying they are “negotiating or reviewing for possible loss mitigation options” when the houses have been vacant a year or longer.

He is fighting another case in Palm Harbor. The Bank of New York Mellon has canceled seven auctions — even though the homeowner defaulted on the mortgage in 2008. The bank canceled the seventh auction in February because it wanted to exhaust options to prevent the foreclosure.

Mullis scoffed.

“This action leaves the burden to fall on those neighboring residents who are forced to pay higher assessments while the property next door further deteriorates,” he said.

The Florida Bankers Association disagrees.

Anthony DiMarco, executive vice president, said lenders are overwhelmed with thousands of foreclosures and aren’t cancelling sales to skirt maintenance and assessments.

“They are trying to move cases forward,” he said. “We’d rather keep people in homes.”

ANOTHER VICTORY IN OKLAHOMA

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Editor’s Comment: 

There is no doubt that the tide is turning and that Judges are increasingly uncomfortable with the presence of forged, fabricated documents containing fraudulent statements of fact on transactions that never actually occurred. As this article explains, in Oklahoma — a very conservative red state — they are beginning to realize that it isn’t the borrower seeking the free house it is the foreclosing party who has no financial stake in the outcome except a windfall if they get the house on a “credit bid.”

by Brian Mahany

We have been saying for several months that the tide is beginning to turn against big banks and mortgage lenders. Many courts are beginning to get fed up with the abusive practices of lenders. Recently several state supreme courts have been weighing in on a wide variety issues including missing paperwork, forged affidavits, questionable title and abusive foreclosure or loan modification practices.

When a state supreme court decides a case, the decision takes on considerable weight. As the highest court in the land, a state supreme court decision is generally binding on all trial courts in that state. We were happy to learn that the Oklahoma Supreme Court decided 7 cases this month in favor of homeowners.

The facts in each of the cases were similar. In each case, the court ruled that in order to bring a foreclosure action, the plaintiff must prove that it has the right to enforce the promissory note. No note means no standing to bring the complaint.

It’s in the details that the Oklahoma cases become important.

Many lenders have problems producing the note and mortgage. In recent years, most lenders sell the mortgage shortly after the closing. Banks rarely hold their own paper any more. The mortgages are often packaged, securitized and sold several times. In that process, paperworks frequently is lost. The lost or incomplete paperwork issue was addressed by the court.

The Oklahoma Supreme Court opinion is helpful to homeowners in several ways.

First, the court reaffirmed that the plaintiff must prove it has the right to enforce the note. Courts shouldn’t simply rely on an affidavit from a lawyer saying the bank or servicer has the right to enforce the note. They must prove it.

Next, the court said that the foreclosing party needs to have the note. Just having an assignment of mortgage is not enough. (Often the servicing bank will draft an assignment of mortgage. That requires the lender’s signature. The note, obviously, contains the borrowers signature. If documents are missing it is much easier for a lender to forge a mortgage assignment than to forge a homeowners signature.)

FInally, the court said that the lack of standing (missing note) can be raised at any time. That can be extremely important in foreclosure cases. Often borrowers seek legal counsel after a judgment of foreclosure has issued. Many folks don’t seek legal help until well into the foreclosure process. By the time a lawyer gets the case, discovery periods have elapsed and often there is already a judgment of foreclosure. The Oklahoma court said as long as the case isn’t closed, its not too late to challenge jurisdiction.

Postscript- There are tens of millions of homeowners under water. Many are facing foreclosure. Unfortunately, there are few lawyers that truly understand how to fight big lenders and even fewer actually willing to do so. If you are facing foreclosure, seek professional assistance as soon as possible. Don’t settle for a bankruptcy lawyer or a fly by night foreclosure “rescue” consultant. Foreclosures can be won but it’s not easy.

The average cost for a lawyer to file an answer and defend a foreclosure action is between $2500 and $5000. While there are some highly qualified lawyers that do this work, we think the only thing big banks understand is a counterclaim and aggressive lawyer.

Everyday we receive calls from homeowners across the U.S. Although we write about foreclosure defense, we rarely take such cases. Our primary purpose in writing is to provide general information and offer hope. The cases we do take are lawsuits against banks and lenders for illegal lending, loan modification and foreclosure practices. If you sufered a particularly bad experience, we certainly want to listen.

Our mortgage fraud team is currently co-counsel in the largest federal false claims act case in the nation, the $2.4 billion action on behalf of HUD against Allied Home Mortgage. Large or small, suing banks and getting justice for victims of predatory lending and foreclosure practices is what we enjoy.

Mahany & Ertl, America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & Minneapolis, Minnesota. Services available in many jurisdictions.

Current Bank Plan Is Same as $10 million Interest Free Loan for Every American

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“I wonder how many audience members know that Bair’s plan is more or less exactly the revenue model for all of America’s biggest banks. You go to the Fed, get a buttload of free money, lend it out at interest (perversely enough, including loans right back to the U.S. government), then pocket the profit.” Matt Taibbi

From Rolling Stone’s Matt Taibbi on Sheila Bair’s Sarcastic Piece

I hope everyone saw ex-Federal Deposit Insurance Corporation chief Sheila Bair’s editorial in the Washington Post, entitled, “Fix Income Inequality with $10 million Loans for Everyone!” The piece might have set a world record for public bitter sarcasm by a former top regulatory official.

In it, Bair points out that since we’ve been giving zero-interest loans to all of the big banks, why don’t we do the same thing for actual people, to solve the income inequality program? If the Fed handed out $10 million to every person, and then got each of those people to invest, say, in foreign debt, we could all be back on our feet in no time:

Under my plan, each American household could borrow $10 million from the Fed at zero interest. The more conservative among us can take that money and buy 10-year Treasury bonds. At the current 2 percent annual interest rate, we can pocket a nice $200,000 a year to live on. The more adventuresome can buy 10-year Greek debt at 21 percent, for an annual income of $2.1 million. Or if Greece is a little too risky for you, go with Portugal, at about 12 percent, or $1.2 million dollars a year. (No sense in getting greedy.)

Every time I watch a Republican debate, and hear these supposedly anti-welfare crowds booing the idea of stiffer regulation of Wall Street, I wonder how many audience members know that Bair’s plan is more or less exactly the revenue model for all of America’s biggest banks. You go to the Fed, get a buttload of free money, lend it out at interest (perversely enough, including loans right back to the U.S. government), then pocket the profit.

Considering that we now know that the Fed gave out something like $16 trillion in secret emergency loans to big banks on top of the bailouts we actually knew about, you might ask yourself: How are these guys in financial trouble? How can they not be making mountains of money, risk-free? But they are in financial trouble:

• We’re about to see yet another big blow to all of the usual suspects – Goldman, Citi, Bank of America, and especially Morgan Stanley, all of whom face potential downgrades by Moody’s in the near future.

We’ve known this was coming for some time, but the news this week is that the giant money-managing firm BlackRock is talking about moving its business elsewhere. Laurence Fink, BlackRock’s CEO, told the New York Times: “If Moody’s does indeed downgrade these institutions, we may have a need to move some business around to higher-rated institutions.”

It’s one thing when Zero Hedge, William Black, myself, or some rogue Fed officers in Dallas decide to point fingers at the big banks. But when big money players stop trading with those firms, that’s when the death spirals begin.

Morgan Stanley in particular should be sweating. They’re apparently going to be downgraded three notches, where they’ll be joining Citi and Bank of America at a level just above junk. But no worries: Bank CFO Ruth Porat announced that a three-level downgrade was “manageable” and that only losers rely totally on agencies like Moody’s to judge creditworthiness. “A lot of clients are doing their own credit work,” she said.

• Meanwhile, Bank of America reported its first-quarter results yesterday. Despite that massive ongoing support from the Fed, it earned just $653 million in the first quarter, but astonishingly the results were hailed by most of the financial media as good news. Its home-turf paper, the San Francisco Chronicle, crowed that BOA “Posts Higher Profits As Trading Results Rebound.” Bloomberg, meanwhile, summed up results this way: “Bank of America Beats Analyst Estimates As Trading Jumps.”

But the New York Times noted that BOA’s first-quarter profit of $653 million was down from $2 billion a year ago, and paled compared to results of more successful banks like Chase and Wells Fargo.

Zero Hedge, meanwhile, posted an amusing commentary on BOA’s results, pointing out that the bank quietly reclassified nearly two billion dollars’ worth of real estate loans. This is from BOA’s report:

During 1Q12, the bank regulatory agencies jointly issued interagency supervisory guidance on nonaccrual policies for junior-lien consumer real estate loans. In accordance with this new guidance, beginning in 1Q12, we classify junior-lien home equity loans as nonperforming when the first-lien loan becomes 90 days past due even if the junior-lien loan is performing. As a result of this change, we reclassified $1.85B of performing home equity loans to nonperforming.

In other words, Bank of America described nearly two billion dollars of crap on their books as performing loans, until the government this year forced them to admit it was crap.

ZH and others also noted that BOA wildly underestimated its exposure to litigation, but that’s nothing new. Anyway, despite the inconsistencies in its report, and despite the fact that it’s about to be downgraded – again – Bank of America’s shares are up again, pushing $9 today.

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