Foreclosures on Nonexistent Mortgages

I have frequently commented that one of the first things I learned on Wall Street was the maxim that the more complicated the “product” the more the buyer is forced to rely on the seller for information. Michael Lewis, in his new book, focuses on high frequency trading — a term that is not understood by most people, even if they work on Wall Street. The way it works is that the computers are able to sort out buy or sell orders, aggregate them and very accurately predict an uptick or down-tick in a stock or bond.

Then the same investment bank that is taking your order to buy or sell submits its own order ahead of yours. They are virtually guaranteed a profit, at your expense, although the impact on individual investors is small. Aggregating those profits amounts to a private tax on large and small investors amounting to billions of dollars, according to Lewis and I agree.

As Lewis points out, the trader knows nothing about what happens after they place an order. And it is the complexity of technology and practices that makes Wall Street behavior so opaque — clouded in a veil of secrecy that is virtually impenetrable to even the regulators. That opacity first showed up decades ago as Wall Street started promoting increasing complex investments. Eventually they evolved to collateralized debt obligations (CDO’s) and those evolved into what became known as the mortgage crisis.

in the case of mortgage CDO’s, once again the investors knew nothing about what happened after they placed their order and paid for it. Once again, the Wall Street firms were one step ahead of them, claiming ownership of (1) the money that investors paid, (2) the mortgage bonds the investors thought they were buying and (3) the loans the investors thought were being financed through REMIC trusts that issued the mortgage bonds.

Like high frequency trading, the investor receives a report that is devoid of any of the details of what the investment bank actually did with their money, when they bought or originated a mortgage, through what entity,  for how much and what terms. The blending of millions of mortgages enabled the investment banks to create reports that looked good but completely hid the vulnerability of the investors, who were continuing to buy mortgage bonds based upon those reports.

The truth is that in most cases the investment banks took the investors money and didn’t follow any of the rules set forth in the CDO documents — but used those documents when it suited them to make even more money, creating the illusion that loans had been securitized when in fact the securitization vehicle (REMIC Trust) had been completely ignored.

There were several scenarios under which property and homeowners were made vulnerable to foreclosure even if they had no mortgage on their property. A recent story about an elderly couple coming “home” to find their door padlocked, possessions removed and then the devastating news that their home had been sold at foreclosure auction is an example of the extreme risk of this system to ALL homeowners, whether they have or had a mortgage or not. This particular couple had paid off their mortgage 15 years ago. The bank who foreclosed on the nonexistent mortgage and the recovery company that invaded their home said it was a mistake. Their will be a confidential settlement where once again the veil of secrecy will be raised.

That type of “mistake” was a once in a million possibility before Wall Street directly entered the mortgage loan business. So why have we read so many stories about foreclosures where there was no mortgage, or was no default, or where the mortgage loan was with someone other than the party who foreclosed?

The answer lies in how these properties enter the system. When a bank sells its portfolio of loans into the system of aggregation of loans, they might accidentally or intentionally include loans for which they had already received full payment. Maybe they issued a satisfaction maybe they didn’t. It might also include loans where life insurance or PMI paid off the loan.

Or, as is frequently the case, the “loan” was sold after the homeowner was merely investigating the possibility of a mortgage or reverse mortgage. As soon as they made application, since approval was certain, the “originator” entered the data into a platform maintained by the aggregator, like Countrywide, where it was included in some “securitization package.

If the loan closed then it was frequently sold again with the new dates and data, so it would like like a different loan. Then the investment banks, posing as the lenders, obtained insurance, TARP, guarantee proceeds and other payments from “co-obligors” on each version of the loan that was sold, thus essentially creating the equivalent of new sales on loans that were guaranteed to be foreclosed either because there was no mortgage or because the terms were impossible for the borrower to satisfy.

The LPS roulette wheel in Jacksonville is the hub where it is decided WHO will be the foreclosing party and for HOW MUCH they will claim is owed, without any allowance for the multiple sales, proceeds of insurance, FDIC loss sharing, actual ownership of the loans or anything else. Despite numerous studies by those in charge of property records and academic studies, the beat goes on, foreclosing by entities who are “strangers to the transaction” (San Francisco study), on documents that were intentionally destroyed (Catherine Ann Porter study at University of Iowa), against homeowners who had no idea what was going on, using the money of investors who had no idea what was going on, and all based upon a triple tiered documentary system where the contractual meeting of the minds could never occur.

The first tier was the Prospectus and Pooling and Servicing Agreement that was used to obtain money from investors under false pretenses.

The second tier consisted of a whole subset of agreements, contracts, insurance, guarantees all payable to the investment banks instead of the investors.

And the third tier was the “closing documents” in which the borrower, contrary to Federal (TILA), state and common law was as clueless as the investors as to what was really happening, the compensation to intermediaries and the claims of ownership that would later be revealed despite the borrower’s receipt of “disclosure” of the identity of his lender and the terms of compensation by all people associated with the origination of the loan.

The beauty of this plan for Wall Street is that nobody from any of the tiers could make direct claims to the benefits of any of the contracts. It has also enabled then to foreclose more than once on the same home in the name of different creditors, making double claims for guarantee from Fannie Mae, Freddie Mac, FDIC loss sharing, insurance and credit default swaps.

The ugly side of the plan is still veiled, for the most part in secrecy. even when the homeowner gets close in court, there is a confidential settlement, sometimes for millions of dollars to keep the lawyer and the homeowner from disclosing the terms or the reasons why millions of dollars was paid to a homeowner to keep his mouth shut on a loan that was only $200,000 at origination.

This is exactly why I tell people that most of the time their case will be settled either in discovery where a Judge agrees you are entitled to peak behind the curtain, or at trial where it becomes apparent that the witness who is “familiar” with the corporate records really knows nothing and ahs nothing about the the real history of the loan transaction.

Quite a Stew: Wells Fargo Pressure Cooker for Sales and Fabricated Documents

Wells Fargo Investigated by 4 Agencies for Manual on Fabricating Foreclosure Documents

Wells Fargo is under investigation for a lot of things these days, just as we find in Bank of America and other major “institutions.” The bottom line is that they haven’t been acting very institutional and their culture is one that has led to fraud, identity theft and outright fabrication of accounts and documents.

There can be little doubt about it. Documents that a real bank acting like a bank would have in its possession appear to be completely absent in most if not all loans that are “performing” (i.e., the homeowner is paying, even if the party they are paying isn’t the right and even if the loan has already been paid off). But as soon as the file becomes subject to foreclosure proceedings, documents miraculously appear showing endorsements, allonges, powers of attorney and assignments. According to a report from The Real Deal (New York Real Estate News), these are frequently referred to as “ta-da endorsements” a reference from magic acts where rabbits are pulled from the hat.

Such endorsements and other fabricated documents have been taken at face value by many judges across the country, despite vigorous protests from homeowners who were complaining about everything from “they didn’t have the documents before, so where did they get them?” to luring homeowners into false modifications that were designed to trap homeowners into foreclosure.

After 7 years of my reporting on the fact that the documents do not exist, including a report from Katherine Anne Porter at what was then the University of Iowa that the documents were intentionally destroyed and “lost” it has finally dawned on regulators and law enforcement that something is wrong. They could have done the same thing that I did. I had inquiries from hundreds (back then, now thousands) of homeowners looking for help.

So the first thing I did was I  sent qualified written requests to the parties who were claiming to be the “lenders.” After sending out hundreds of these the conclusion was inescapable. Any loan where the homeowner was continuing to make their payments have no documentation. Any loan where the homeowner was in the process of foreclosure had documentation of appear piece by piece as it seemed to be needed in court. This pattern of fabrication of documents was pandemic by 2007 and 2008. They were making this stuff up as they went along.

It has taken seven years for mainstream media and regulators to ask the next obvious question, to wit: why would the participants in an industry based on trust and highly complex legal instruments created by them fall into patterns of conduct in which nobody trusted them and where the legal instruments were lost, destroyed and then fabricated? In my seminars I phrased the question differently. The question I posed is that if you had a $10 bill in your hand, why would you stick it in a shredder? The promissory note and the other documents from the alleged loan closings were the equivalent of cash, according to all legal and common sense standards. Why would you destroy it?

As I said in 2008 and continue saying in 2014, the only reason you would destroy the $10 bill is that you had told somebody you were holding something other than a $10 bill. Perhaps you told them it was a $100 bill. Now they want to see it. Better to “lose” the original bill then admit that you were lying in the first place. One is simple negligence (losing it) and the other is criminal fraud (lying about it). The banking industry practically invented all of the procedures and legal papers associated with virtually every type of loan. The processing of loans has been the backbone of the banking industry for hundreds of years. Did they forget how to do it?

The answers to these questions are both inconvenient and grotesque. I know from my past experience on Wall Street that bankers did not deserve the trust that everyone seemed to repose in them. But this conduct went far beyond anything I ever saw on Wall Street. The answer is simply that the bankers traded trust for money. They defrauded the investors, most of whom were stable managed funds guarding the pensions of millions of people. Then they defrauded homeowners creating a pressure cooker of sales culture in which banking evolved simply into marketing and sales. Risk analysis and risk control were lost in the chaos.

The very purpose for which banks came into existence was to have a place of safety in which you could deposit your money with the knowledge that it would still be there when you came back. Investors were lured into a scheme in which they thought their money was being used to fund trusts; those trusts issued mortgage bonds that in most cases were never certificated. In most cases the trust received no money, no assets and no income. The fund managers who were the investors  never had a chance.

The money from the investors was instead kept by the broker-dealers who then traded with it like drunken sailors. They pumped up real estate PRICES  far above real estate VALUES, based on any reasonable appraisal standards. The crash would come, and they knew it. So after lying to the investor lenders and lying to the homeowner borrowers they lied to the insurers, guarantors, co-obligors and counterparties to credit default swaps that had evolved from intelligent hedge products to high flying overly complicated contracts that spelled out “heads I win, tails you lose.”

In order to do all of that they needed to claim the loans and the bonds as though they were owned by the broker-dealers when in fact the broker-dealers were merely the investment banks that had taken the money from investors and instead of using it in the way that the investors were told, they created the illusion (by lying) of the scheme that was called securitization when in fact it was basically common fraud, identity theft of both the lenders and borrowers, in a Ponzi scheme. When Marc Dreier was convicted of similar behavior the amount was only $400 million but it was the larger scheme of its kind ever recorded.

When Bernard Madoff was convicted of similar behavior the amount was only $60 billion, but the general consensus was that this was the largest fraud in history and would maintain that status for generations. But when the Madoff scandal was revealed it was obvious that members of the banking industry had to be involved; what was not so obvious is that the banking industry itself had already committed a combination of identity theft, fraud and corruption that was probably 300 times the size of the Madoff scandal.

The assumption that these are just loans that were to be enforced just like any other loans is naïve. The lending process described in the paperwork at the closings of these loans was a complete lie. The actual lender did not know the closing had occurred, never received the note and mortgage, nor any other instrument that protected the investor lenders. The borrower did not know the actual lender existed. Closing agent was at best negligent and at worst part of the scheme. Closing agent applied money from the investors to the closing of the “loan” and gave the paperwork that should’ve gone to the investors to third parties who didn’t have a dime invested in the deal. Later the investment banks would claim that they were suffering losses, but it was a lie, this time to the taxpayers and the government.

The reason the investment banks need to fabricate documentation is simply because their scheme required multiple sales of the same loan to multiple parties. They had to wait until they couldn’t wait any longer in order to pick a plaintiff to file a foreclosure lawsuit or pick a beneficiary who would appear out of nowhere to start the nonjudicial sale of property in which they were a complete stranger to the transaction.

The reason that homeowners should win in any reasonable challenge to a foreclosure action is that neither the forecloser nor the balance has been correctly stated. In many cases the balance “owed” by the borrower is negative! Yes that means that money is owed back to the borrower even know they stopped making payments. This is so counter intuitive that it is virtually impossible for most people to wrap their brains around this concept and that is exactly what Wall Street banks have been counting on and using against us for years.

LA Times Report on Wells Fargo Sales Culture

More Lawsuits, Still No Real Progress and No Coverage by Media

Jon Stewart committed his entire show to the mortgage crisis last Wednesday night. Go watch it. It wasn’t funny although they added some comedic aspects. The bottom line is the question “why aren’t these people in jail?” And the media was scorched with the fact that despite a constant culture of continuing corruption and absurd “transactions” in which paper goes back and forth, and calling that economic activity with”profit,” and stories of the human tragedy of Foreclosures all based on what are now obviously fraudulent schemes, the media is silent. The number of stories on the illegal Foreclosures, the charges of FRAUD by everyone involved from lenders (investors) to insurers to guarantors to borrowers, the verdicts and judgments decided against the banks, and the analysis that the assets of the banks are fictional, the total is ZERO.

My question is why the displacement of more than 15 million people in a single scheme is not the main question in American discourse, media and politics — especially since the banks have admitted by conduct or expressly their wrongdoing? We already know it was a total fraudulent scheme. The banks are settling their ill gotten gains for pennies on the dollar while the victims absorb most of the loss. We already know that the requirements of Federal law were routinely ignored in disclosing the real terms and lenders to borrowers. And if they had made the disclosure, the deals would not have occurred, because if they were disclosed neither the lenders (investors) nor the borrowers (homeowners) would have done the deal.

One particular story was singled out by Jon Stewart to provide an example of what Gretchen Morgenson called “just another day on Wall Street” was the recent transaction between Blackrock and Corere. Blackrock loaned Corere $100 million. Blackrock purchased a credit default swap worth $15 million if there was any default for any reason. Blackrock made a deal with Corere for Corere to default. So Corere defaulted. Blackrock collected the $15 million on the credit default swap PLUS the full repayment from Corere of $100 million, plus interest. Somehow this is considered legal. I call it FRAUD.

When applied to the mortgage market you can easily see how the agent banks (investment banks or broker dealers) made a fortune by creating deals that failed on paper when in fact the loan was already covered in multiple ways. Only in the mortgage situation the lenders got screwed out of repayment and the borrowers got screwed on their deal by either losing their home or getting a deal where they would be underwater for the rest of their lives. As I have been detailing over the last week, I have a currently pending case in which the “successor” trustee with a new aggressive law firm is pursuing foreclosure and collection of rents on loans that they know have been paid, they admit have been paid, but they say it doesn’t matter. Using this theory, if the payment doesn’t come from the named Payor on the note to the now unnamed payee on exhibit note, anyone can collect multiple times on a single debt. This is crazy.

The bastion of our security — judiciary — is succumbing to expediency over truth and justice. Instead of applying the requirements of law and procedure strictly against the same entities that are repeatedly cited for FRAUD AND NON COMPLIANCE by government and lawsuits from investors, insurers and guarantors, the judiciary is ignoring the requirements or applying liberal standards to allow the foreclosure to proceed. What Judges don’t understand yet is that they can clear their docket more quickly if they demand proof of payment by the party seeking foreclosure and proof of authority to represent the real creditors, who must be identified.

If the party pursuing foreclosure has no skin in the game and doesn’t represent anyone who does, the foreclosure fails jurisdictionally. If we apply any other standard, then the courts are opening the door for uninjured people to sue for a slip and fall that happened to someone else.

These Foreclosures would disappear entirely if judges applied the law with or without a proper presentation by defense counsel. In the old days, Judges carefully reviewed the basic documents. If they found a gap, they refused to apply the most extreme remedy of foreclosure until the the creditor could comply. That is all I ask. Instead most lawyers are told to stop arguing because the Judge is uncomfortable with what he is hearing and most lawyers do not have the guts to say to the judge that the purpose of having a lawyer is to “argue” cases. Is the Judge throwing out the right to be heard altogether? That violation of undue process is something that should be taken to task.

At the end of the day, it will be accepted fact that the mortgages were fraudulent unenforceable devices that never should have been recorded, much less used for foreclosure or collection of rents, the note is a fraudulent unenforceable paper designed to mislead the borrower, the lenders, the insurers, the government guarantors, credit default counterparties, and the courts as to the lender’s identity, and the debt was always between the investors who received no documentation for their investment that was real, and the homeowners who were duped into signing papers that made them unwitting participants in a fraudulent scheme.

In the end the intermediary agent banks got paid but the lenders only get their money if they sue the investment banker because the lenders were denied the right to appear on closing paperwork as the lender or on assignments. In other words, the parties who loaned the money got pennies on the dollar. The Banks got paid multiple times on the same debt by selling it multiple times, insuring it multiple times and getting it guaranteed multiple times, and then foreclosing as if they were the lender.

My final question is this: “if we know the mortgage mess was a fraudulent scheme, why are we allowing its continuation in the courts?”

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DOJ plans more MBS fraud cases in New Year

The Department of Justice intends to bring cases against several financial institutions next year for what it says is mortgage-bond fraud, Attorney General Eric Holder told Reuters yesterday.
While Holder said that the DOJ would use JPMorgan’s $13B agreement as a template, he didn’t provide details about which banks are in his crosshairs.
Firms that have acknowledged that they are under investigation include Bank of America (BAC), Citigroup (C) and Goldman Sachs (GS).

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Countrywide Found Guilty of Fraud, JPM Criminal Responsibility for Madoff PONZI Scheme

“The words PONZI SCHEME and FRAUD applied to the mortgage meltdown has been largely dismissed by policy makers, law enforcement and regulators. Instead we heard the terms RISKY BEHAVIOR and RECKLESSNESS. Now law enforcement has finally completed its investigation and determined that those who set the tone and culture of Wall Street were deeply involved in the Madoff PONZI scheme and were regularly committing FRAUD in the creation and sale of mortgage bonds and the underlying “DEFECTIVE” loans. The finding shows that these plans were not risky nor reckless. They were intentional and designed to deceive and cause damage to everyone relying upon their false representations. The complex plan of false claims of securitization is now being pierced making claims of “plausible deniability” RISKY and RECKLESS.

And if the loans were defective there is no reason to believe that this applies only to the loans claimed to be in default. It applies to all loans subject to false claims of securitization, false documentation for non existent transactions, and fraudulent collection practices by reporting and collecting on balances that were fraudulently stated in the first instance. At this point all loans are suspect, all loan balances stated are suspect, and all Foreclosures based on these loans were frauds upon the court, should be vacated and the homeowner reinstated to ownership of the property and possession of the property. All such loans should have the loan balance adjusted by the courts for appropriate set off in denying the borrowers the benefit of the bargain that was presented to them.

“It is now difficult to imagine a scenario where the finding of the intentional use and creation of defective mortgages will not trickle down to all mortgage litigation. The Countrywide decision is the first that expressly finds them guilty of creating defective loans. It is impossible to believe that Countrywide’s intentional acts of malfeasance won’t spread to the investment banks that used Countrywide as the aggregator of defective loans (using the proprietary desk top underwriting software for originators to get approval). The reality is coming up, front and center. And Judges who ignore the defenses of homeowners who were of course defrauded by the same defective mortgages are now on notice that bias towards the banks simply doesn’t work in the real world.” — Neil F Garfield,www.livinglies.me October 24, 2013

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By Neil F Garfield, Esq. Tallahassee, Florida October 24, 2013. If the mortgages were defective and were used fraudulently to gain illicit profits it is not possible to avoid the conclusions that homeowners are among the victims. By using false appraisals the huge banks created the illusion of rising prices. This was manipulation of market prices just as the banks were found guilty of manipulating stated market rates for interbank lending “LIBOR” and use of the manipulated pricing to trade for further benefit knowing that the reality was different. The banks have continued this pattern behavior and are still doing it, and laying fines as a cost of doing business in the manipulation and ownership of natural resources. They are a menace to all societies on the planet. The threat of that menace must be removed In the face of a clear and present danger posed by the real world knowledge that where an opportunity arises for “moral hazard” the banks will immediately use it causing further damage to government, taxpayers, consumers and investors.

None of it was disclosed or even referenced at the alleged loan closing with borrowers despite federal and state laws that require all such undisclosed profits and compensation to be disclosed or suffer the consequence of required payment to the borrower of all such undisclosed compensation. The borrowers are obviously entitled to offset for the false appraisals used by lenders to induce borrowers to accept defective loan products.

Further, borrowers have a clear right of action for treble damages for the pattern of conduct that constituted fraud as a way of doing business. In addition, borrowers can now be scene through a clear lens — that they are entitled to the benefit of the bargain that they reasonably thought they were getting. That they were deceived and coerced into accepting defective loans with undisclosed players and undisclosed compensation and undisclosed repayment terms raises the probability now that borrowers who present their case well, could well start getting punitive damages awards with regularity. It’s easy to imagine the closing argument for exemplary or punitive damages — “$10 billion wasn’t enough to stop them, $25 billion wasn’t enough to stop of them, so you, members of the jury, must decide what will get their attention without putting them out of business. You have heard evidence of the tens of billions of dollars in profits they have reported. It’s up to you to decide what will stop the banks from manipulating the marketplace, fraudulently selling defective loans to borrowers and pension funds alike with the intention of deceiving them and knowing that they would reasonably rely on their misrepresentations. You decide.”

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U.S. prepares to take action against JPMorgan over Madoff
In what would be an almost unheard of move when it comes to U.S. banks, the FBI and the U.S. attorney’s office are in talks with JPMorgan (JPM) about imposing a deferred prosecution agreement over allegations that the bank turned a blind eye to Bernie Madoff’s Ponzi scheme, the NYT reports.
Authorities would suspend criminal charges against JPMorgan but impose a fine and other concessions, and warn the bank that it will face indictments over any future misconduct.
However, the government has not decided to charge any current or former JPMorgan employees.
The report comes as the bank holds talks with various regulators over a $13B deal to settle claims about its mortgage practices.

Countrywide found guilty in U.S. mortgage suit
A federal jury has found Bank of America’s (BAC -2.1%) Countrywide unit liable for defrauding Fannie Mae (FNMA +22%) and Freddie Mac (FMCC +19.4%) by selling them thousands of defective mortgages.
The judge will determine the amount of the penalty – the U.S. has requested $848M, the gross loss to the GSEs as calculated by its expert witness.
The suit centered on Countrywide’s HSSL – High Speed Swim Lane – program instituted in August 2007, says the government, to keep the music playing as the property market was falling apart.

DOJ probes nine leading banks over sale of mortgage debt
The Department of Justice is reportedly investigating nine major banks over the sale of problematic mortgage bonds, although the probes are for civil infractions rather than criminal ones.
The banks are Bank of America (BAC), Citigroup (C), Credit Suisse (CS), Deutsche Bank (DB), Goldman Sachs (GS), Morgan Stanley (MS), RBS (RBS), UBS (UBS) and Wells Fargo (WFC).
The inquiries span U.S. attorney’s offices from California to Massachusetts, and come as JPMorgan tries to reach a multi-billion dollar settlement over the issue.

JPMorgan hit by U.S. bribery probe into Chinese hiring

How did the banks get away with it? Bribery takes many forms. It doesn’t need to be a direct payment, but merely something of value to the regulator or law enforcement officer. In this case it is the hiring of children of banking regulators in China. There is no reason why we should think that couldn’t happen here. It did. The revolving door of regulators, law enforcement and the banks has long been known.

Even if it isn’t a bribe, the bank is hiring people and then designating them for important positions in government regulation. Jamie Dimon sits on the Board at the New York Federal Reserve. Being immersed in the bank culture, the people involved come to believe the myths repeated every day. It becomes part of their culture.

The reason why the decisions on banking have been so chaotic is that there is a direct conflict between the real world and the illusions created by the banks. Put another way, the difference is between truth and fiction.

The fact remains that practically no mortgage can be satisfied or released because the ownership is completely deranged. The correction can only come from the courts when they realize and learn that the origination of the loan was a sham transaction, not just a table funded loan, and that the intent was fraud on the investors and homeowners (who were also “investors”). The scheme unraveled precisely in concert with investors ceasing to buy the “mortgage bonds” issued by entities in “street name.” That is the red flag that alerts authorities that the securitization chain was in fact a fraudulent PONZI scheme. The issuers were designated asset pools that had nothing in them, and in most cases were not funded, directly or indirectly. So the mortgage bonds were worthless.

And now that the facts are being slowly revealed, the depth of malfeasance by the banks is being recognized for what it is — but the government is sticking with its policy of “no prosecution.” Until the government steps up to the mike and says outright that the scheme was a fraudulent scheme in which the borrowers were used as pawn to steal money from investors, most people are not going to believe it. Until respectable economists and legal scholars step up and say that the loan transaction described in the note never existed and was a strawman transaction that should have been revealed to the borrower, this tragedy will stop.

Study the Assignment and Assumption Agreements executed before the first loan application was ever accepted for review. Track the money from strangers showing up at closing as though it was the money of the designated payee on the note and mortgage. The rest will be easy. But until regulators see the public as their boss instead of the banks, don’t expect any help from outside the courtroom.

JPMorgan hit by U.S. bribery probe into Chinese hiring

LAST CHANCE FOR JUSTICE

“We are still in the death grip of the banks as they attempt to portray themselves as the bulwarks of society even as they continue to rob us of homes, lives, jobs and vitally needed capital which is being channeled into natural resources so that when we commence the gargantuan task of repairing our infrastructure we can no longer afford it and must borrow the money from the thieves who created the gaping hole in our economy threatening the soul of our democracy.” Neil Garfield, livinglies.me

We all know that dozens of people rose to power in Europe and Asia in the 1930′s and 1940′s who turned the world on its head and were responsible for the extermination of tens of millions of people. World War II still haunts us as it projected us into an arms race in which we were the first and only country to kill all the people who lived in two cities in Japan. The losses on both sides of the war were horrendous.
Some of us remember the revelations in 1982 that the United States actively recruited unrepentant Nazi officers and scientists for intelligence and technological advantages in the coming showdown with what was known as the Soviet Union. Amongst the things done for the worst war criminals was safe passage (no prosecution for war crimes) and even new identities created by the United States Department of Justice. Policy was created that diverted richly deserved consequences into rich rewards for knowledge. With WWII in the rear view mirror policy-makers decided to look ahead and prepare for new challenges.

Some of us remember the savings and loans scandals where banks nearly destroyed everything in the U.S. marketplace in the 1970′s and 1980′s. Law enforcement went into high gear, investigated, and pieced together the methods and complex transactions meant to hide the guilt of the main perpetrators in and out of government and the business world. More than 800 people went to jail. Of course, none of the banks had achieved the size that now exists in our financial marketplace.

Increasing the mass of individual financial institutions produced a corresponding capacity for destruction that eclipsed anything imagined by anyone outside of Wall Street. The exponentially increasing threat was ignored as the knowledge of Einstein’s famous equation faded into obscurity. The possibilities for mass destruction of our societies was increasing exponentially as the mass of giant financial service companies grew and the accountability dropped off when they were allowed to incorporate and even sell their shares publicly, replacing a system, hundreds of years old in which partners were ultimately liable for losses they created.

The next generation of world dominators would be able to bring the world to its knees without firing a shot or gassing anyone. Institutions grew as malignancies on steroids and created the illusion of contributing half our gross domestic product while real work, real production and real inventions were constrained to function in a marketplace that had been reduced by 1/3 of its capacity — leaving the banks in control of  $7 trillion per year in what was counted as gross domestic product. Our primary output by far was trading paper based upon dubious and fictitious underlying transactions; if those transactions had existed, the share of GDP attributed to financial services would have remained at a constant 16%. Instead it grew to half of GDP.  The “paradox” of financial services becoming increasingly powerful and generating more revenues than any other sector while the rest of the economy was stagnating was noted by many, but nothing was done. The truth of this “paradox” is that it was a lie — a grand illusion created by the greatest salesmen on Wall Street.

So even minimum wage lost 1/3 of its value adjusted for inflation while salaries, profits and bonuses were conferred upon people deemed as financial geniuses as a natural consequence of believing the myths promulgated by Wall Street with its control over all forms of information, including information from the government.

But calling out Wall Street would mean admitting that the United States had made a wrong turn with horrendous results. No longer the supreme leader in education, medical care, crime, safety, happiness and most of all prospects for social and economic mobility, the United States had become supreme only through its military strength and the appearance of strength in the world of high finance, its currency being the world’s reserve despite the reality of the ailing economy and widening inequality of wealth and opportunity — the attributes of a banana republic.

All of us remember the great crash of 2008-2009. It was as close as could be imagined to a world wide nuclear attack, resulting in the apparent collapse of economies, tens of millions of people being reduced to poverty, tossed out of their homes, sleeping in cars, divorces, murder, riots, suicide and the loss of millions of jobs on a rising scale (over 700,000 per month when Obama took office) that did not stop rising until 2010 and which has yet to be corrected to figures that economists say would mean that our economy is functioning at proper levels. Month after month more than 700,000 people lost their jobs instead of a net gain of 300,000 jobs. It was a reversal of 1 million jobs per month that could clean out the country and every myth about us in less than a year.

The cause lay with misbehavior of the banks — again. This time the destruction was so wide and so deep that all conditions necessary for the collapse of our society and our government were present. Policy makers, law enforcement and regulators decided that it was better to maintain the illusion of business as usual in a last ditch effort to maintain the fabric of our society even if it meant that guilty people would go free and even be rewarded. It was a decision that was probably correct at the time given the available information, but it was a policy based upon an inaccurate description of the disaster written and produced by the banks themselves. Once the true information was discovered the government made another wrong turn — staying the course when the threat of collapse was over. In a sense it was worse than giving Nazi war criminals asylum because at the time they were protected by the Department of Justice their crimes were complete and there existed little opportunity for them to repeat those crimes. It could be fairly stated that they posed no existing threat to safety of the country. Not so for the banks.

Now as all the theft, deceit and arrogance are revealed, the original premise of the DOJ in granting the immunity from prosecution was based upon fraudulent information from the very people to whom they were granting safe passage. We have lost 5 million homes in foreclosure from their past crimes, but we remain in the midst of the commission of crimes — another 5 million illegal, wrongful foreclosures is continuing to wind its way through the courts.

Not one person has been prosecuted, not one statement has been made acknowledging the crimes, the continuing deceit in sworn filings with regulators, and the continuing drain on the economy and our ability to finance and capitalize on innovation to replace the lost productivity in real goods and services.

We are still in the death grip of the banks as they attempt to portray themselves as the bulwarks of society even as they continue to rob us of homes, lives, jobs and vitally needed capital which is being channeled into natural resources so that when we commence the gargantuan task of repairing our infrastructure we can no longer afford it and must borrow the money from the thieves who created the gaping hole in our economy threatening the soul of our democracy. If the crimes were in the rear view mirror one could argue that the policy makers could make decisions to protect our future. But the crimes are not just in the rear view mirror. More crimes lie ahead with the theft of an equal number of millions of homes based on false and wrongful foreclosures deriving their legitimacy from an illusion of debt — an illusion so artfully created that most people still believe the debts exist. Without a very sophisticated knowledge of exotic finance it seems inconceivable that a homeowner could receive the benefits of a loan and at the same time or shortly thereafter have the debt extinguished by third parties who were paid richly for doing so.

Job creation would be unleashed if we had the courage to stop the continuing fraud. It is time for the government to step forward and call them out, stop the virtual genocide and let the chips fall where they might when the paper giants collapse. It’s complicated, but that is your job. Few people lack the understanding that the bankers behind this mess belong in jail. This includes regulators, law enforcement and even judges. but the “secret” tacit message is not to mess with the status quo until we are sure it won’t topple our whole society and economy.

The time is now. If we leave the bankers alone they are highly likely to cause another crash in both financial instruments and economically by hoarding natural resources until the prices are intolerably high and we all end up pleading for payment terms on basic raw materials for the rebuilding of infrastructure. If we leave them alone another 20 million people will be displaced as more than 5 million foreclosures get processed in the next 3-4 years. If we leave them alone, we are allowing a clear and present danger to the future of our society and the prospects for safety and world peace. Don’t blame Wall Street — they are just doing what they were sent to do — make money. You don’t hold the soldier responsible for firing a bullet when he was ordered to do so. But you do blame the policy makers that him or her there. And you stop them when the policy is threatening another crash.

Stop them now, jail the ones who can be prosecuted, and take apart the large banks. IMF economists and central bankers around the world are looking on in horror at the new order of things hoping that when the United States has exhausted all other options, they will finally do the right thing. (see Winston Churchill quote to that effect).

But forget not that the ultimate power of government is in the hands of the people at large and that the regulators and law enforcement and judges are working for us, on our nickle. Action like Occupy Wall Street is required and you can see the growing nature of that movement in a sweep that is entirely missed by those who arrogantly pull the levers of power now. OWS despite criticism is proving the point — it isn’t new leaders that will get us out of this — it is the withdrawal of consent of the governed one by one without political affiliation or worshiping sound sound biting, hate mongering politicians.

People have asked me why I have not until now endorsed the OWS movement. The reason was that I wanted to give them time to see if they could actually accomplish the counter-intuitive result of exercising power without direct involvement in a corrupt political process. They have proven the point and they are likely to be a major force undermining the demagogues and greedy bankers and businesses who care more about their bottom line than their society that gives them the opportunity to earn that bottom line.

New Fraud Evidence Shows Trillions Of Dollars In Mortgages Have No Owner
http://thinkprogress.org/economy/2013/08/13/2460891/new-fraud-evidence-shows-trillions-of-dollars-in-mortgages-have-no-owner/

Identity Theft: The Nuclear Option

The purpose of this article is to support the prior conclusions expressed in my articles and appearances that in addition to being a Ponzi scheme, a necessary component of the illusion of a securitization plan was identity theft in which the identity of a person or entity is used for fraudulent purposes. The latest round of lawsuits and investigations center in on allegations by the Department of Justice and the Securities and Exchange Commission that the sale of mortgage bonds was fraudulent. We agree, and for more reasons than those reported to be in those lawsuits. Under Federal and State law identity theft occurs when the information is obtained for use in a fraudulent scheme, just as alleged by the department of justice.

I remind the reader that I have repeatedly made the statement that the money from the investor was diverted and misapplied just as the money from the insurance, credit default swaps, taxpayer and federal reserve was misapplied. Research below indicates that such behavior can be and in this case I would argue is criminal conduct with a right of private action for damages.  Thus I would argue that embezzlement and related crimes apply to the securitization scam.

There are many ways in which the damages to the homeowner can be recouped. this article suggests that one of them is through allegations of identity theft. The thief is the bank that set up the false securitization scheme. The victim is the homeowner who gave their name, SSN and other identifying characteristics so that the thief could use it in a variety of ways for trading and profit without the knowledge or consent of the victim. The information was obtained by falsely representing the nature of the transaction in which the alleged loan was closed. The damages are the value of the home, and any other out of pocket expenses or consequential damages to credit reputation etc. plus punitive, treble or exemplary damages.  The defendants are all of the people who knew or should have known or must known the details of the fraudulent scheme.

The interesting legal question that is not answered in the research document below is whether identity theft can be used defensively as part of affirmative defenses or whether it must be used offensively in a counterclaim or separate lawsuit. I would argue that it can be used defensively and that as such the statute of limitations would never apply. The purpose of the transaction was to obtain the homeowners personal financial information in a manner that was not disclosed to the homeowner at the time the information was obtained nor was it disclosed at the time of the alleged loan “closing”, and then the financial information was used for the purpose of selling fraudulent mortgage bonds to investors who now concede that they have no right of action against the homeowner.

The banks will  attack this defense on the same basis as the head of any other organized crime syndicate, to wit: that they had no idea that crimes were being committed in the securitization chain. This claim will not hold much water when it is disclosed that securitization chain is described in documents but was never used and that the banks directly control the movement of money and the fabrication of documents to give a false impression of the movement of money and transacting business.

If the United States Department of Justice wishes to press criminal charges it might find an easy path in identity theft.

I wish to acknowledge that the research presented below was done entirely by a legal intern from the law school at Florida State University. While the initial instructions came from me she performed the research without direct guidance required from me. While I don’t think I am permitted to use her name I would like to say for purposes of disclosure, I am thankful for the work that she performed in producing the information and commentary contained below.

Table of Contents

 

QUESTION 1: What is the definition of ID theft?2

 

a. ON THE STATE LEVEL2

 

b. ON THE FEDERAL LEVEL4

 

§ 1028A. Aggravated identity theft4

 

§ 656. Theft, embezzlement, or misapplication by bank officer or employee4

 

18 U.S.C.A. § 1028(a)(7)5

 

§ 6823. Criminal penalty5

 

§ 6821. Privacy protection for customer information of financial institutions5

 

QUESTION 2:  What can you sue for and/or what damages are you entitled to?7

 

DOCUMENT A8

 

DOCUMENT B13

 

772.11. Civil remedy for theft or exploitation13

 

DOCUMENT C14

 

812.012. Definitions14

 

812.014. Theft15

 

812.019. Dealing in stolen property15

 

 =====================================

QUESTION 1: What is the definition of ID theft?

 

 

 

a. ON THE STATE LEVEL

 

 

Identity theft is covered by FL Stat. §817.02 and §817.568.  §817.02 states that “Whoever falsely personates or represents another, and in such assumed character receives any property intended to be delivered to the party so personated, with intent to convert the same to his or her own use, shall be punished as if he or she had been convicted of larceny.”

 

 

 

§817.568 defines the “Criminal Use of Personal Identification Information.”  I will summarize, but at the end I will include the full text of the statute (see “Document A”).  In the summary below, any irrelevant sections have been omitted, and the particularly important paragraphs have been put in bold font. §817.568 does also specify that the definition of “person” can be found in FL Stat. §1.01(3), which says that, “The word ‘person’ includes individuals, children, firms, associations, joint adventures, partnerships, estates, trusts, business trusts, syndicates, fiduciaries, corporations, and all other groups or combinations.”  Which would reasonably include a bank.  With that in mind, here is the summary:

 

 

 

Subsection (1)(f) says that “personal identification information” is any name or number used to identify a specific individual.  This includes names, postal/email addresses, phone number, SS number, bank account number, credit/debit card number, unique electronic ID number, and “other number or information that can be used to access a person’s financial resources”, among other things.

 

 

 

 Subsection (2)(a-c) specifies the felonies that a person can be charged with if they commit “fraudulent use of personal identification information” by “willfully and without authorization fraudulently uses, or possesses with intent to fraudulently use, personal identification information concerning an individual without first obtaining that individual’s consent”.  Depending on the amount of the injury/fraud, and the number of individuals’ personal ID info that is fraudulently used, a person can be charged with first, second, or third degree felony. 

 

 

 

Subsection (4) says that if you use personal ID info without consent for the purposes of harassing that individual, then they’ve committed the offense of “harassment by use of personal identification information.”

 

 

Subsection (5) says that if the offense was “facilitated or furthered by the use of a public record…the offense is reclassified to the next higher degree.”

 

 

Subsection (9) describes the penalties and definitions for creating, using, or possessing with intent to fraudulently use, counterfeit or fictitious personal identification information.

 

 

Subsection (10) says that “Any person who commits an offense described in this section and for the purpose of obtaining or using personal identification information misrepresents himself or herself to be…an employee or representative of a bank, credit card company, credit counseling company, or credit reporting agency; or any person who wrongfully represents that he or she is seeking to assist the victim with a problem with the victim’s credit history shall have the offense reclassified.”  It then goes on to reclassify the offenses in subsections (a) through (d).

 

 

Subsection (13) describes the restitution the court may order.  It specifies that, “In addition to the victim’s out-of-pocket costs, restitution may include payment of any other costs, including attorney’s fees incurred by the victim in clearing the victim’s credit history or credit rating, or any costs incurred in connection with any civil or administrative proceeding to satisfy any debt, lien, or other obligation of the victim arising as the result of the actions of the defendant.”  The court may also issue orders necessary to correct the public record if need be.

 

 

 

Subsection (14) specifies who may bring the action to the court (any state attorney or the statewide prosecutor).

 

 

Subsections (15) and (16) describe the requirements for jurisdiction and venue.

 

 

 

Subsection (17) describes the statute of limitations. (3 years after offense occurred for subsections (2), (6), & (7).  1 year after discovery of offense by aggrieved party/person who has a legal duty to represent the aggrieved party IF the prosecution is commenced within 5 years after the violation occurred)

 

 

 

 

 


 

 

b. ON THE FEDERAL LEVEL

 

 

18 U.S.C.A. §1028A would probably be the most applicable.  The section on aggravated identity theft is in normal font, and the sections it references are indented and italicized. Andininand willweight of the dealgot a goalshouldI know I just can’t get a matter the house I think he’s out and mixing I know is onin better

 

§ 1028A. Aggravated identity theft

 

 

 

(a) Offenses.

 

(1) In general.–Whoever, during and in relation to any felony violation enumerated in subsection (c), knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person shall, in addition to the punishment provided for such felony, be sentenced to a term of imprisonment of 2 years.

 

 

(c) Definition.–For purposes of this section, the term “felony violation enumerated in subsection (c)” means any offense that is a felony violation of–

 

(1) …section 656 (relating to theft, embezzlement, or misapplication by bank officer or employee)…;

 

§ 656. Theft, embezzlement, or misapplication by bank officer or employee

 

Whoever, being an officer, director, agent or employee of, or connected in any capacity with any Federal Reserve bank, member bank, depository institution holding company, national bank, insured bank, branch or agency of a foreign bank, or organization operating under section 25 or section 25(a) of the Federal Reserve Act, or a receiver of a national bank, insured bank, branch, agency, or organization or any agent or employee of the receiver, or a Federal Reserve Agent, or an agent or employee of a Federal Reserve Agent or of the Board of Governors of the Federal Reserve System, embezzles, abstracts, purloins or willfully misapplies any of the moneys, funds or credits of such bank, branch, agency, or organization or holding company or any moneys, funds, assets or securities intrusted to the custody or care of such bank, branch, agency, or organization, or holding company or to the custody or care of any such agent, officer, director, employee or receiver, shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both; but if the amount embezzled, abstracted, purloined or misapplied does not exceed $1,000, he shall be fined under this title or imprisoned not more than one year, or both.

 

 

 

As used in this section, the term “national bank” is synonymous with “national banking association”; “member bank” means and includes any national bank, state bank, or bank and trust company which has become a member of one of the Federal Reserve banks; “insured bank” includes any bank, banking association, trust company, savings bank, or other banking institution, the deposits of which are insured by the Federal Deposit Insurance Corporation; and the term “branch or agency of a foreign bank” means a branch or agency described in section 20(9) of this title. For purposes of this section, the term “depository institution holding company” has the meaning given such term in section 3 of the Federal Deposit Insurance Act.

 

18 U.S.C.A. § 656 (West)

 

 

 

(4) any provision contained in this chapter (relating to fraud and false statements), other than this section or section 1028(a)(7);

 

18 U.S.C.A. § 1028(a)(7)

 

“…knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person with the intent to commit, or to aid or abet, or in connection with, any unlawful activity that constitutes a violation of Federal law, or that constitutes a felony under any applicable State or local law…”

 

18 U.S.C.A. § 1028 (West)

 

 

 

(8) section 523 of the Gramm-Leach-Bliley Act (15 U.S.C. 6823) (relating to obtaining customer information by false pretenses);

 

§ 6823. Criminal penalty

 

(a) In general

 

Whoever knowingly and intentionally violates, or knowingly and intentionally attempts to violate, section 6821 of this title shall be fined in accordance with Title 18 or imprisoned for not more than 5 years, or both.

 

15 U.S.C.A. § 6823 (West)

 

 

 

§ 6821. Privacy protection for customer information of financial institutions

 

 (a) Prohibition on obtaining customer information by false pretenses

 

It shall be a violation of this subchapter for any person to obtain or attempt to obtain, or cause to be disclosed or attempt to cause to be disclosed to any person, customer information of a financial institution relating to another person–

 

(1) by making a false, fictitious, or fraudulent statement or representation to an officer, employee, or agent of a financial institution;

 

(2) by making a false, fictitious, or fraudulent statement or representation to a customer of a financial institution; or

 

(3) by providing any document to an officer, employee, or agent of a financial institution, knowing that the document is forged, counterfeit, lost, or stolen, was fraudulently obtained, or contains a false, fictitious, or fraudulent statement or representation.

 

(b) Prohibition on solicitation of a person to obtain customer information from financial institution under false pretenses

 

It shall be a violation of this subchapter to request a person to obtain customer information of a financial institution, knowing that the person will obtain, or attempt to obtain, the information from the institution in any manner described in subsection (a) of this section.

 

15 U.S.C.A. § 6821 (West)

 

 

 

18 U.S.C.A. § 1028A (West)

 

 

 

 

 

 

 

 


 

 

QUESTION 2:  What can you sue for and/or what damages are you entitled to?

 

 

Under Florida law, §817.568(13)(a-b) specifies the restitution an aggrieved party is allowed to recover.  It states,

 

(a) In sentencing a defendant convicted of an offense under this section, the court may order that the defendant make restitution under s. 775.089 to any victim of the offense. In addition to the victim’s out-of-pocket costs, restitution may include payment of any other costs, including attorney’s fees incurred by the victim in clearing the victim’s credit history or credit rating, or any costs incurred in connection with any civil or administrative proceeding to satisfy any debt, lien, or other obligation of the victim arising as the result of the actions of the defendant.

 

(b) The sentencing court may issue such orders as are necessary to correct any public record that contains false information given in violation of this section.

 

 

The statute does not specify that you can sue the convicted defendant and recover the benefits they received from stealing your identity. 

 

 

Most the cases I am finding about recovering damages from a bank because of identity theft result from the bank losing the personal information or somehow making it accessible (often through a bank employee), and then the bank being sued under the doctrines of agency/respondeat superior.  Because they were the custodian of the information and they didn’t employ reasonable standards to safeguard the personal information, they are then the proximate cause of the plaintiff’s suffering and liable for damages.  Which is probably not quite the right situation here.

 

 

HOWEVER, I did find a (what I believe to be) legitimate way to recover damages from the banks.  Florida law allows for recovery of damages. If you read FL Stat. Ann. §772.11, “Civil Remedy for Theft or Exploitation” (see “Document B”), it states that, if you can prove a violation of §§812.012-812.037, you can recover treble damages as well as reasonable attorney’s fees and court costs.  You cannot recover punitive damages.  It also lays out special procedures you must follow before you may file an action for damages.  The sections that I believe are actually applicable are §§812.012 (“Definitions”), 812.014 (“Theft”), and 812.019 (“Dealing in Stolen Property”).  The best way for you to understand what I’m talking about would be to read the relevant sections (see “Document C”).  Essentially, my thought process is that if you can show the bank obtained the property by fraud in order to temporarily or permanently benefit from the property, or that the bank coordinated the theft of the property where the value of the property exceeds $3,000, you’ll have them for theft under 812.014.  Which would then allow you to recover damages under §772.11.  OR, if you show that the bank “initiates, organizes, plans, finances, directs, manages, or supervises the theft of property” and “traffics in such stolen property” AKA they “buy, receive, possess, obtain control of, or use property with the intent to sell, transfer, distribute, dispense, or otherwise dispose of such property”, then you would again be able to recover damages.  Just to be clear, “‘property’ means anything of value”, examples being “real property” as well as “tangible or intangible personal property, including…interests and claims”. 

 

DOCUMENT A

 

 

 

817.568. Criminal use of personal identification information

 

(1) As used in this section, the term:

 

(a) “Access device” means any card, plate, code, account number, electronic serial number, mobile identification number, personal identification number, or other telecommunications service, equipment, or instrument identifier, or other means of account access that can be used, alone or in conjunction with another access device, to obtain money, goods, services, or any other thing of value, or that can be used to initiate a transfer of funds, other than a transfer originated solely by paper instrument.

 

(b) “Authorization” means empowerment, permission, or competence to act.

 

(c) “Harass” means to engage in conduct directed at a specific person that is intended to cause substantial emotional distress to such person and serves no legitimate purpose. “Harass” does not mean to use personal identification information for accepted commercial purposes. The term does not include constitutionally protected conduct such as organized protests or the use of personal identification information for accepted commercial purposes.

 

(d) “Individual” means a single human being and does not mean a firm, association of individuals, corporation, partnership, joint venture, sole proprietorship, or any other entity.

 

(e) “Person” means a “person” as defined in s. 1.01(3).

 

(f) “Personal identification information” means any name or number that may be used, alone or in conjunction with any other information, to identify a specific individual, including any:

 

1. Name, postal or electronic mail address, telephone number, social security number, date of birth, mother’s maiden name, official state-issued or United States-issued driver’s license or identification number, alien registration number, government passport number, employer or taxpayer identification number, Medicaid or food assistance account number, bank account number, credit or debit card number, or personal identification number or code assigned to the holder of a debit card by the issuer to permit authorized electronic use of such card;

 

2. Unique biometric data, such as fingerprint, voice print, retina or iris image, or other unique physical representation;

 

3. Unique electronic identification number, address, or routing code;

 

4. Medical records;

 

5. Telecommunication identifying information or access device; or

 

6. Other number or information that can be used to access a person’s financial resources.

 

(g) “Counterfeit or fictitious personal identification information” means any counterfeit, fictitious, or fabricated information in the similitude of the data outlined in paragraph (f) that, although not truthful or accurate, would in context lead a reasonably prudent person to credit its truthfulness and accuracy.

 

 

 

(2)(a) Any person who willfully and without authorization fraudulently uses, or possesses with intent to fraudulently use, personal identification information concerning an individual without first obtaining that individual’s consent, commits the offense of fraudulent use of personal identification information, which is a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

 

(b) Any person who willfully and without authorization fraudulently uses personal identification information concerning an individual without first obtaining that individual’s consent commits a felony of the second degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084, if the pecuniary benefit, the value of the services received, the payment sought to be avoided, or the amount of the injury or fraud perpetrated is $5,000 or more or if the person fraudulently uses the personal identification information of 10 or more individuals, but fewer than 20 individuals, without their consent. Notwithstanding any other provision of law, the court shall sentence any person convicted of committing the offense described in this paragraph to a mandatory minimum sentence of 3 years’ imprisonment.

 

(c) Any person who willfully and without authorization fraudulently uses personal identification information concerning an individual without first obtaining that individual’s consent commits a felony of the first degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084, if the pecuniary benefit, the value of the services received, the payment sought to be avoided, or the amount of the injury or fraud perpetrated is $50,000 or more or if the person fraudulently uses the personal identification information of 20 or more individuals, but fewer than 30 individuals, without their consent. Notwithstanding any other provision of law, the court shall sentence any person convicted of committing the offense described in this paragraph to a mandatory minimum sentence of 5 years’ imprisonment. If the pecuniary benefit, the value of the services received, the payment sought to be avoided, or the amount of the injury or fraud perpetrated is $100,000 or more, or if the person fraudulently uses the personal identification information of 30 or more individuals without their consent, notwithstanding any other provision of law, the court shall sentence any person convicted of committing the offense described in this paragraph to a mandatory minimum sentence of 10 years’ imprisonment.

 

 

 

(3) Neither paragraph (2)(b) nor paragraph (2)(c) prevents a court from imposing a greater sentence of incarceration as authorized by law. If the minimum mandatory terms of imprisonment imposed under paragraph (2)(b) or paragraph (2)(c) exceed the maximum sentences authorized under s. 775.082, s. 775.084, or the Criminal Punishment Code under chapter 921, the mandatory minimum sentence must be imposed. If the mandatory minimum terms of imprisonment under paragraph (2)(b) or paragraph (2)(c) are less than the sentence that could be imposed under s. 775.082, s. 775.084, or the Criminal Punishment Code under chapter 921, the sentence imposed by the court must include the mandatory minimum term of imprisonment as required by paragraph (2)(b) or paragraph (2)(c).

 

 

 

(4) Any person who willfully and without authorization possesses, uses, or attempts to use personal identification information concerning an individual without first obtaining that individual’s consent, and who does so for the purpose of harassing that individual, commits the offense of harassment by use of personal identification information, which is a misdemeanor of the first degree, punishable as provided in s. 775.082 or s. 775.083.

 

 

 

(5) If an offense prohibited under this section was facilitated or furthered by the use of a public record, as defined in s. 119.011, the offense is reclassified to the next higher degree as follows:

 

(a) A misdemeanor of the first degree is reclassified as a felony of the third degree.

 

(b) A felony of the third degree is reclassified as a felony of the second degree.

 

(c) A felony of the second degree is reclassified as a felony of the first degree.

 

For purposes of sentencing under chapter 921 and incentive gain-time eligibility under chapter 944, a felony offense that is reclassified under this subsection is ranked one level above the ranking under s. 921.0022 of the felony offense committed, and a misdemeanor offense that is reclassified under this subsection is ranked in level 2 of the offense severity ranking chart in s. 921.0022.

 

 

 

(6) Any person who willfully and without authorization fraudulently uses personal identification information concerning an individual who is less than 18 years of age without first obtaining the consent of that individual or of his or her legal guardian commits a felony of the second degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

 

 

 

(7) Any person who is in the relationship of parent or legal guardian, or who otherwise exercises custodial authority over an individual who is less than 18 years of age, who willfully and fraudulently uses personal identification information of that individual commits a felony of the second degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

 

 

 

(8)(a) Any person who willfully and fraudulently uses, or possesses with intent to fraudulently use, personal identification information concerning a deceased individual commits the offense of fraudulent use or possession with intent to use personal identification information of a deceased individual, a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

 

(b) Any person who willfully and fraudulently uses personal identification information concerning a deceased individual commits a felony of the second degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084, if the pecuniary benefit, the value of the services received, the payment sought to be avoided, or the amount of injury or fraud perpetrated is $5,000 or more, or if the person fraudulently uses the personal identification information of 10 or more but fewer than 20 deceased individuals. Notwithstanding any other provision of law, the court shall sentence any person convicted of committing the offense described in this paragraph to a mandatory minimum sentence of 3 years’ imprisonment.

 

(c) Any person who willfully and fraudulently uses personal identification information concerning a deceased individual commits the offense of aggravated fraudulent use of the personal identification information of multiple deceased individuals, a felony of the first degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084, if the pecuniary benefit, the value of the services received, the payment sought to be avoided, or the amount of injury or fraud perpetrated is $50,000 or more, or if the person fraudulently uses the personal identification information of 20 or more but fewer than 30 deceased individuals. Notwithstanding any other provision of law, the court shall sentence any person convicted of the offense described in this paragraph to a minimum mandatory sentence of 5 years’ imprisonment. If the pecuniary benefit, the value of the services received, the payment sought to be avoided, or the amount of the injury or fraud perpetrated is $100,000 or more, or if the person fraudulently uses the personal identification information of 30 or more deceased individuals, notwithstanding any other provision of law, the court shall sentence any person convicted of an offense described in this paragraph to a mandatory minimum sentence of 10 years’ imprisonment.

 

 

 

(9) Any person who willfully and fraudulently creates or uses, or possesses with intent to fraudulently use, counterfeit or fictitious personal identification information concerning a fictitious individual, or concerning a real individual without first obtaining that real individual’s consent, with intent to use such counterfeit or fictitious personal identification information for the purpose of committing or facilitating the commission of a fraud on another person, commits the offense of fraudulent creation or use, or possession with intent to fraudulently use, counterfeit or fictitious personal identification information, a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

 

 

 

(10) Any person who commits an offense described in this section and for the purpose of obtaining or using personal identification information misrepresents himself or herself to be a law enforcement officer; an employee or representative of a bank, credit card company, credit counseling company, or credit reporting agency; or any person who wrongfully represents that he or she is seeking to assist the victim with a problem with the victim’s credit history shall have the offense reclassified as follows:

 

(a) In the case of a misdemeanor, the offense is reclassified as a felony of the third degree.

 

(b) In the case of a felony of the third degree, the offense is reclassified as a felony of the second degree.

 

(c) In the case of a felony of the second degree, the offense is reclassified as a felony of the first degree.

 

(d) In the case of a felony of the first degree or a felony of the first degree punishable by a term of imprisonment not exceeding life, the offense is reclassified as a life felony.

 

For purposes of sentencing under chapter 921, a felony offense that is reclassified under this subsection is ranked one level above the ranking under s. 921.0022 or s. 921.0023 of the felony offense committed, and a misdemeanor offense that is reclassified under this subsection is ranked in level 2 of the offense severity ranking chart.

 

 

 

(11) The prosecutor may move the sentencing court to reduce or suspend the sentence of any person who is convicted of a violation of this section and who provides substantial assistance in the identification, arrest, or conviction of any of that person’s accomplices, accessories, coconspirators, or principals or of any other person engaged in fraudulent possession or use of personal identification information. The arresting agency shall be given an opportunity to be heard in aggravation or mitigation in reference to any such motion. Upon good cause shown, the motion may be filed and heard in camera. The judge hearing the motion may reduce or suspend the sentence if the judge finds that the defendant rendered such substantial assistance.

 

 

 

(12) This section does not prohibit any lawfully authorized investigative, protective, or intelligence activity of a law enforcement agency of this state or any of its political subdivisions, of any other state or its political subdivisions, or of the Federal Government or its political subdivisions.

 

 

 

(13)

 

(a) In sentencing a defendant convicted of an offense under this section, the court may order that the defendant make restitution under s. 775.089 to any victim of the offense. In addition to the victim’s out-of-pocket costs, restitution may include payment of any other costs, including attorney’s fees incurred by the victim in clearing the victim’s credit history or credit rating, or any costs incurred in connection with any civil or administrative proceeding to satisfy any debt, lien, or other obligation of the victim arising as the result of the actions of the defendant.

 

(b) The sentencing court may issue such orders as are necessary to correct any public record that contains false information given in violation of this section.

 

 

 

(14) Prosecutions for violations of this section may be brought on behalf of the state by any state attorney or by the statewide prosecutor.

 

 

 

(15) The Legislature finds that, in the absence of evidence to the contrary, the location where a victim gives or fails to give consent to the use of personal identification information is the county where the victim generally resides.

 

 

 

(16) Notwithstanding any other provision of law, venue for the prosecution and trial of violations of this section may be commenced and maintained in any county in which an element of the offense occurred, including the county where the victim generally resides.

 

 

 

(17) A prosecution of an offense prohibited under subsection (2), subsection (6), or subsection (7) must be commenced within 3 years after the offense occurred. However, a prosecution may be commenced within 1 year after discovery of the offense by an aggrieved party, or by a person who has a legal duty to represent the aggrieved party and who is not a party to the offense, if such prosecution is commenced within 5 years after the violation occurred.

 

 

 

Fla. Stat. Ann. § 817.568 (West)


 

DOCUMENT B

 

 

772.11. Civil remedy for theft or exploitation

 

 

 

(1) Any person who proves by clear and convincing evidence that he or she has been injured in any fashion by reason of any violation of ss. 812.012-812.037…has a cause of action for threefold the actual damages sustained and, in any such action, is entitled to minimum damages in the amount of $200, and reasonable attorney’s fees and court costs in the trial and appellate courts. Before filing an action for damages under this section, the person claiming injury must make a written demand for $200 or the treble damage amount of the person liable for damages under this section. If the person to whom a written demand is made complies with such demand within 30 days after receipt of the demand, that person shall be given a written release from further civil liability for the specific act of theft or exploitation by the person making the written demand. Any person who has a cause of action under this section may recover the damages allowed under this section from the parents or legal guardian of any unemancipated minor who lives with his or her parents or legal guardian and who is liable for damages under this section. Punitive damages may not be awarded under this section. The defendant is entitled to recover reasonable attorney’s fees and court costs in the trial and appellate courts upon a finding that the claimant raised a claim that was without substantial fact or legal support.  In awarding attorney’s fees and costs under this section, the court may not consider the ability of the opposing party to pay such fees and costs. This section does not limit any right to recover attorney’s fees or costs provided under any other law.

 

 

 

Fla. Stat. Ann. § 772.11 (West)


 

DOCUMENT C

 

 

 

812.012. Definitions

 

 

 

As used in ss. 812.012-812.037:

 

 

(3) “Obtains or uses” means any manner of:

 

(a) Taking or exercising control over property.

 

(b) Making any unauthorized use, disposition, or transfer of property.

 

(c) Obtaining property by fraud, willful misrepresentation of a future act, or false promise.

 

(d)1. Conduct previously known as stealing; larceny; purloining; abstracting; embezzlement; misapplication; misappropriation; conversion; or obtaining money or property by false pretenses, fraud, or deception; or

 

2. Other conduct similar in nature.

 

(4) “Property” means anything of value, and includes:

 

(a) Real property, including things growing on, affixed to, and found in land.

 

(b) Tangible or intangible personal property, including rights, privileges, interests, and claims.

 

(c) Services.

 

(5) “Property of another” means property in which a person has an interest upon which another person is not privileged to infringe without consent, whether or not the other person also has an interest in the property.

 

 

(7) “Stolen property” means property that has been the subject of any criminally wrongful taking.

 

(8) “Traffic” means:

 

(a) To sell, transfer, distribute, dispense, or otherwise dispose of property.

 

(b) To buy, receive, possess, obtain control of, or use property with the intent to sell, transfer, distribute, dispense, or otherwise dispose of such property.

 

(9) “Enterprise” means any individual, sole proprietorship, partnership, corporation, business trust, union chartered under the laws of this state, or other legal entity, or any unchartered union, association, or group of individuals associated in fact although not a legal entity.

 

(10) “Value” means value determined according to any of the following:

 

(a)1. Value means the market value of the property at the time and place of the offense or, if such cannot be satisfactorily ascertained, the cost of replacement of the property within a reasonable time after the offense.

 

2. The value of a written instrument that does not have a readily ascertainable market value, in the case of an instrument such as a check, draft, or promissory note, is the amount due or collectible or is, in the case of any other instrument which creates, releases, discharges, or otherwise affects any valuable legal right, privilege, or obligation, the greatest amount of economic loss that the owner of the instrument might reasonably suffer by virtue of the loss of the instrument.

 

 

(c) Amounts of value of separate properties involved in thefts committed pursuant to one scheme or course of conduct, whether the thefts are from the same person or from several persons, may be aggregated in determining the grade of the offense.

 

 

 

Fla. Stat. Ann. § 812.012 (West)

 

 

 

 

 

812.014. Theft

 

 

 

(1) A person commits theft if he or she knowingly obtains or uses, or endeavors to obtain or to use, the property of another with intent to, either temporarily or permanently:

 

(a) Deprive the other person of a right to the property or a benefit from the property.

 

(b) Appropriate the property to his or her own use or to the use of any person not entitled to the use of the property.

 

(2) (a) 1. If the property stolen is valued at $100,000 or more…

 

 

(b) 1. If the property stolen is valued at $20,000 or more, but less than $100,000;

 

 

(6) A person who individually, or in concert with one or more other persons, coordinates the activities of one or more persons in committing theft … where the stolen property has a value in excess of $3,000 commits a felony of the second degree…

 

 

 

Fla. Stat. Ann. § 812.014 (West)

 

 

 

 

812.019. Dealing in stolen property

 

 

(1) Any person who traffics in, or endeavors to traffic in, property that he or she knows or should know was stolen shall be guilty of a felony of the second degree…

 

(2) Any person who initiates, organizes, plans, finances, directs, manages, or supervises the theft of property and traffics in such stolen property shall be guilty of a felony of the first degree…

 

 

Fla. Stat. Ann. § 812.019 (West)

 

 

 

 

 

STRATEGY: FORECLOSURE BY PRETENDER LENDER FOLLOWED BY BORROWER’S ACTION FOR DAMAGES

OCC: 13 Questions to Answer Before Foreclosure and Eviction

13 Questions Before You Can Foreclose

foreclosure_standards_42013 — this one works for sure

If you are seeking legal representation or other services call our South Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. In Northern Florida and the Panhandle call 850-765-1236. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services.

SEE ALSO: http://WWW.LIVINGLIES-STORE.COM

The selection of an attorney is an important decision  and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available TO PROVIDE ACTIVE LITIGATION SUPPORT to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field.

EDITOR’S ANALYSIS AND PRACTICE TIPS FOR LAWYERS: One of the things that I noticed about the cases which I have followed or which have been reported to me anecdotally is that the borrower or borrower’s attorney invokes defenses and counterclaims that makes the case far more complex than the judge is willing to hear.

If you really want to win on the trial court level or make a good record for a successful appeal, the legal and factual argument needs to be simplified. I have previously made a big point about how a judge has very little choice but to allow the foreclosure to proceed once the elements of a foreclosure have been admitted by the borrower or borrower’s attorney. All the other issues are really the basis of a lawsuit in which the causes of action seek the remedy of monetary damages.

Foreclosure is an equitable remedy which calls for less judgment on the part of the judge that it does for him or her to perform a ministerial act. The mistake that is being made by most attorneys (and perhaps I added to the confusion unintentionally) is that  they have failed to distinguish between the equitable and legal remedies. This calls for some careful action by the lawyer or else he or she will be open to a later argument of collateral estoppel or res judicata.

In the nonjudicial states the equitable remedy of foreclosure is made even more ministerial and less subject to challenge based upon the merits of the claim of the pretender lender to collect payments from the borrower and to foreclose when the borrower ceases to make payments. The fact that the system was not set up by the legislature to accommodate or regulate wrongful foreclosures by non-creditors is not a basis for asking a judge to rewrite the law.

In Massachusetts this issue was highlighted in the Eaton case. Before that case Massachusetts specifically allowed the equitable remedy of foreclosure merely upon allegation and proof that the foreclosing party possessed the mortgage document under circumstances where there was at least probable cause to believe that the foreclosing party had the right to enforce it and use it.

In the Eaton case the court was careful to state that the ruling applied only prospectively and not retroactively. In that case they attempted to deal with the issue of whether an actual debt existed,  whether a creditor debtor relationship existed between the foreclosing party and the homeowner, whether the note and mortgage were valid, and whether a foreclosure could go forward without any showing that the foreclosing party was a creditor or even had possession of the note. The court decided that ownership of the note was essential to allowing the foreclosure to proceed.

Based upon the huge volume of statistical and anecdotal evidence there can be little doubt that most of the foreclosures and foreclosure sales have been illegally conducted and wrongful. That doesn’t mean they are void. The purpose of the statutes as they are written is to enhance  liquidity and certainty in the marketplace; thus they allow almost every type of foreclosure to proceed through the conclusion of those proceedings as set forth in the statutes, with the added presumption that if malfeasance lay at the core of the foreclosure proceeding, the borrower would have an adequate remedy at law, to wit: a lawsuit for compensatory damages, punitive damages and exemplary damages.

Of course we all know that an action for damages is not an adequate remedy for somebody who has been evicted from their own home. But the problem is that before the securitization scam, the idea that anyone would attempt to foreclose on a mortgage without being a creditor and having no relationship to a creditor and without having a single cent invested in either the origination or acquisition of the loan would have been regarded as pure fantasy. From that standpoint the legislation makes sense. If you feel you are fighting an uphill battle, look at it from the point of view of the legislature and the banks that were making conventional loans and you can easily see why the law facilitated the mortgage foreclosure process.

When I was first interviewing law professors and judges back in 2007 and 2008 the unanimous opinion was that it would be very difficult to stop the foreclosures from proceeding but very easy to win an action after the foreclosure seeking monetary damages. The interesting thing here is that these people instantly understood that the lawsuit would have alternative counts. Either the pretender lender had an actual interest in the loan as evidenced by the note and mortgage or they didn’t.

If they did have an interest in the loan then the causes of action would be based on breach of contract and perhaps unjust enrichment along with statutory violations taken from federal and state law. There could also be an action for wrongful foreclosure that is recognized to exist in the common law and appears to be more of an action in tort than contract.

If they didn’t have an interest in the loan then there would be no action in contract since you would be alleging a lack of privity and defects in the disclosure documents, and closing documents including but not limited to the note and mortgage. It appears to me that this action would be based mostly on intentional interference in the contractual relations of another and both statutory and common law fraud in the inducement and fraud in the execution. Statutory actions brought under the truth in lending act might be sufficient to state a cause of action for treble damages, interest, costs of the action and recovery of attorney’s fees.

The point raised by the law professors and other experts with whom I consulted was that the goalpost would constantly be moved as the borrower attempted to stop the foreclosure and sale from going forward. Once completed, however, the actions of the pretender lender are essentially engraved in stone.

The action for damages should of course be accompanied by a demand for jury trial. The liability portion of the trial should be relatively simple involving simple arithmetic and a logical progression of claimed ownership of the loan. The last defensive strategy of the banks is going to be based on circular logic, to wit: that there is no damage because the foreclosure sale was valid and that the sale must be considered valid because it is already done; and if it is already done the deed issued upon foreclosure sale at the alleged auction is presumptively valid. In other words “what we did was valid because we did it.”

In my opinion there is big money in these lawsuits for damages and lawyers are encouraged to do the research and analysis. My firm is taking these cases on contingency where the right elements are present. So far everyone who has done their own research and analysis has arrived at the same conclusion expressed in this article. But there is a huge trapdoor that litigators must avoid.

Just like a petition for bankruptcy creates an administrative proceeding before a bankruptcy judge which is not the same as a civil litigation proceeding which would be filed in front of the federal district judge, a litigator in a foreclosure action must be careful to narrow the issues such that the foreclosure proceedings do not include allegations and proof directed against the pretender lender for not being the creditor and not having any authority to represent a creditor.

In judicial states this would mean a motion to dismiss or motion to strike any allegation that might lead to a final judgment in which the court finds a debt owed  to the pretender lender from the homeowner.

The point must be made that the preoccupation of the judge with the payments from the borrower should mean that “payments” are at issue. If payments are at issue than the payments made and received by the pretender lender and its predecessors or successors must be given equal time in a court of law — not just payments made and received by the alleged borrower.

Strategically the litigator should point out that the foreclosure process is essentially an administrative process involving ministerial duties by the judge. It should be argued that if the judge wants to allow the foreclosure to proceed and to allow the sale at auction to proceed, that is one issue.

But if the judge wants to enter a judgment based upon a debt, and a note and mortgage which supposedly describe the debt and the repayment terms, and based upon alleged ownership of the debt —  then the party intending to foreclose must allege injury which means that they too are required to produce evidence of payment and evidence of loss. The only acceptable evidence for that would be a canceled check, wire transfer receipt or other actual document generated by a third-party showing the actual movement of money.

Thus the judge should be guided towards a judgment that he or she already wants to enter, to wit: allow the foreclosure to proceed. In the lawsuit filed by the borrower after the foreclosure sale a different judge will probably hear the case. If presented skillfully, the judge may react warmly to the opportunity of getting another case off of their docket.

Critics say Michigan foreclosure bills seek to ‘get people out of their homes quicker’
http://www.mlive.com/politics/index.ssf/2013/05/critics_say_michigan_foreclosu.html

Keeping The ‘Recovery’ Dream Alive; 3 Big Banks Halt Foreclosures In May
http://www.zerohedge.com/news/2013-05-28/keeping-recovery-dream-alive-3-big-banks-halt-foreclosures-may

Banks Snap Up Foreclosure Aid Meant for Borrowers
http://www.hispanicbusiness.com/2013/5/28/banks_snap_up_foreclosure_aid_meant.htm

Activist homeowners take foreclosure fight to the DOJ
http://www.housingwire.com/fastnews/2013/05/28/activist-homeowners-take-foreclosure-fight-doj

Regulators probing banks for faulty debt collection practices
http://www.washingtonpost.com/business/economy/regulators-probing-banks-for-faulty-debt-collection-practices/2013/05/28/9f40bca2-bbd0-11e2-89c9-3be8095fe767_story.html

 

Estoppel: When the Bank Tells You to Stop Making Payments

IMPORTANT PRACTICE NOTE: The use of the doctrine of estoppel on the facts presented in this article is only a temporary solution. If a representative of the bank told you to stop paying and then declared you in default and foreclose  it is unfair and that is exactly why we have the doctrine of estoppel. However, on these facts, the doctrine can only be applied for as long as the issue of modification or settlement is on the table. Whether it can be bootstrapped into an action for slander of title or breach of contract is an issue that will be decided by the courts.

My opinion is that on these facts the doctrine of estoppel will not serve as the foundation for an action for slander of title or breach of contract.

However, my opinion is that a lawsuit for intentional interference in the contractual rights of another could be brought if an intermediary between you and the servicer or between you and the creditor instructed you to stop making payments if you wish to seek a modification or settlement. 

If you are making that allegation you obviously want to say that the party who made that representation fraudulently induced you to believe that they have the authority to do it, but in fact lacked that authority inasmuch as  the sub servicer is almost certainly going to deny that they had the authority to make such representations.  In discovery the truth will come out —  the representative had been instructed to make those representations to homeowners by a sub servicer who lacked actual authority to make collections or decisions concerning the disposition of the loan because the entire paper trail of the securitization chain was false. This will enable you to sue both the representative and the sub servicer who gave the instruction. (Make sure you seek the advice of an attorney who is licensed in the jurisdiction in which a property is located and is familiar with these issues and does research to corroborate and fortify the arguments).

If you then received a declaration of default, notice of sale or a foreclosure lawsuit it could be argued that the intermediary was not a party with whom the homeowner was in privity. This argument would be fortified by a denial from the sub servicer that the intermediary had any authority make that statement.

If you are seeking legal representation or other services call our South Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. In Northern Florida and the Panhandle call 850-765-1236. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services.

SEE ALSO: http://WWW.LIVINGLIES-STORE.COM

The selection of an attorney is an important decision  and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field.

EDITOR’S ANALYSIS AND COMMENT:  Judges seem to find it hard to believe that a creditor would tell the borrower to stop making payments. It sounds ridiculous. But the fact remains that the majority of the homeowners who have been declared in default were told exactly that by a representative with apparent authority to speak for the sub servicer and apparent authority to speak for the creditor.

I would suggest that anyone reading this article who has received that instruction from a person, party or institution draft an affidavit that is notarized that can be used by other parties to show the judge that this is a pattern of conduct that permeates the entire foreclosure industry. You can send those affidavits to me at NeilFGarfield@Hotmail.com  and without charge we will make those available to any lawyer or pro se litigant in need of those affidavits.  And by the way, let your lawyer draft the affidavit and retain an original copy which means you should be signing two of them each of which is notarized separately.

Those affidavits should include any information regarding subsequent correspondence, telephone calls or instructions from the same or different representative of the alleged sub servicer or creditor. And it should include any events in which the  sub servicer claim to have lost your submission of documents that were requested. As a practice hand, it is my opinion that no such submission should be made without a specific offer from the homeowner certified by a real estate professional.

This can subsequently be used as corroboration of the allegation that sub servicer neither considered the modification request or the modification proposal.  In addition it will fortify the allegation that the creditor was never informed of the offer and that therefore the sub servicer or representative is in violation of the laws of the nation and potentially of the state in which the property is located.

The Wall Street banks have created the illusion that they don’t want to foreclose but they have no other choice. In fact they have engaged in a pattern of conduct that made foreclosure an inevitable conclusion. Most people believe that the banks don’t want the property and therefore they would not foreclose if there was a real opportunity to settle or modified below with the assistance of the federal government under HAMP and HARP. Of course when you are dealing with Wall Street strategies the situation is  always more complex than the simplistic arguments used by attorneys seeking foreclosure or defending claims from borrowers.

It is hard to argue that the banks don’t want property when they have walked away from hundreds of thousands of homes that were emptied as a result of the wrongful foreclosure and eviction of the homeowner. In places like Cleveland and Detroit tens of thousands of homes were literally bulldozed because entire neighborhoods lost all of their residents and the homes became headquarters for drug deals and other illicit activities.

The simple truth is that the banks are not nearly as interested in the property as they are in the foreclosure. It is the foreclosure sale that creates the illusion of a stamp of approval from the state government that the entire securitization scheme was valid and it creates the reality of a presumption of the validity of the deed issued at the so-called auction of the property upon submission of  false credit bid from a non-creditor who is a stranger (not in privity) to the transaction alleged.

Their motivation is also quite simple, to wit: they have already received insurance proceeds and the proceeds of credit default swaps far in excess of the principal supposedly due on the note. If the loan were converted from “nonperforming” to “performing” it is highly likely that the Wall Street banks and their affiliates would be responsible for refunding the insurance money and proceeds of credit default swaps, all of which frequently amounted to multiples as high as 42 times the amount of the note.

The Dodd-Frank Law  makes it illegal for any servicer or representative of a creditor to engage in the consideration of a modification or settlement regarding the loan and at the same time pursue foreclosure. But even without that law, the doctrine of promissory estoppel accomplishes the same result.

I would point out that the reason that provision was made part of the Dodd-Frank  law was that there was no dispute as to the fact that servicers were encouraging people to stop making payments if they wanted to see an approval on a modification of their loan, a short sale of the property, or any type of settlement whatsoever.

The doctrine of promissory estoppel can be used both offensively in the nonjudicial states and defensively in the judicial states. It is important for a lawyer who is licensed in the jurisdiction in which the property is located to do the research on the statutes and case law dealing with promissory estoppel. The state and federal system do have differences.

In general, the elements of promissory estoppel consists of a promise or representation from one party that leads another party to reasonably rely on that promise or representation and act to their own detriment.  Generally it is not important that the benefits of the statement or action by the first party result in a benefit to that party. It is generally understood that the detriment to the homeowner as a result of the promise or representation may be all that is required in order to establish promissory estoppel, which of course must be properly alleged in a lawsuit or affirmative defenses depending upon whether the case is in a nonjudicial jurisdiction or a judicial jurisdiction.

There is no legal or business reason to tell a homeowner to stop paying if they want their loan modified, or if they want their property approved for short sale, or they want to settle with the creditor or creditors, the identity of which is closely guarded by the Wall Street banks and all of the parties in the securitization chain that turns out to be more of a paper chain of sham transactions than anything else.

The reason why homeowners are being told to stop making payments and why they are given trial modifications that are subsequently denied status as permanent modification is that the goal is foreclosure in order to keep the illicit proceeds of insurance and credit default swaps. As soon as the homeowners are told to stop making payments, and subsequent payments are often returned, the securitization parties are slowly edging the borrower into a position where it is impossible for them to make up the payments and therefore inevitable that the foreclosure will proceed. And the reason why becomes impossible for them to make up the payments is that they are told  that the back payments at worst will be added to the end of the loan. They are told this to make sure that the borrower spends the money and no longer has the money to bring the loan current.  It is a perfect storm for the Wall Street banks.

If the borrower is taken the trouble to send a qualified written request or a debt validation letter and will fortify the claim because the sub servicer or other representative will have failed to  provide proof of payment or funding for the acquisition or the origination of the loan and will have failed to provide proof of authority to represent the creditor and further failed to identify the creditor so that the authority to represent could be confirmed.

Sitting on the desk of the governor of the state of Florida is a crazy bill that would make it impossible for most homeowners to defend wrongful foreclosures. If he signs the bill into law the banks will be cheering, but not for long. Using the doctrine of estoppel the foreclosure will be stopped dead in most cases assuming the homeowner was in fact instructed to  cease making  payments and was promised that if they follow the rules their request for modification would be considered —  which is something which is required under existing federal law dating back to the time of TARP.

If the homeowner takes the position in litigation that all payments that were due were in fact paid, and that in fact the homeowner believes he has overpaid, a question of fact emerges that probably cannot be handled in the summary proceedings under what might be the new Florida law and similar laws passed in other jurisdictions.  If the homeowner also takes the position that he is neither in privity with nor does he owe any money to either the party bringing the foreclosure proceedings, this raises additional questions of fact that must be dealt with under the rules of evidence in a properly noticed hearing.

PRACTICE NOTE: Procedurally I have come to the opinion that in order to take control of the narrative away from parties who are essentially strangers to the transaction, lawyers should issue subpoenas rather than notices under the Rules of Civil Procedure. Those subpoenas should go out immediately upon receipt of any notice of foreclosure or any lawsuit seeking foreclosure. The subpoenas should ask for a competent witness to testify at deposition and require the witness produce proof of payment or consideration in the acquisition or origination of the loan. The subpoena should specify the type of information you are seeking, to wit: a canceled check, wire transfer receipt, and ACH confirmation, or check 21 confirmation. The failure of the opposing party to respond even if they file timely objections are motions to quash will raise issues as to the amount of any payment alleged to have been missed in the amount of any principal alleged to be unpaid. If I am right, the Florida law may well turn out to be a landmine for the banks from which they cannot recover.

Don’t Take Advice from Banks! It’s All Scripted to Get You in Foreclosure and then Default

Shocking Bubble in Student Loans Adds to Economic Woes

If you are seeking legal representation or other services call our Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services.
The selection of an attorney is an important decision  and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field.

Editor’s Comments: First let me say in the interest of transparency that I favor all education to be paid by the government from pre-k through graduate school. My reason is simple — a well informed well educated populace will be more productive, more competitive and less easily fooled by politicians issuing sound bites instead of facts. Information is king. If you want to progress toward the American dream it is no longer evident that working with your hands will get you there. You have to know things that employers need you to know and you have to process things cognitively that only a good education can instill.

Back to reality. The game has been on for at least three decades, perhaps four depending upon how you look at it. Unions were busted  wages declined or stagnated, while corporate profits and bonuses went to dizzying heights, leaving the rest of the country at or near the poverty level.

In lieu of wages, we made credit available that was spent like wages except that you had to spend it twice to be out of debt — once at the point of purchase with your credit card and again in installments at usurious rates when the bill came in. Homeowners were using the homes as ATM machines taking out equity loans just to maintain their standard of living. It doesn’t take an economist to know that one day that bubble had to break when the low wages paid to consumers would be insufficient to cover basic living expenses and certainly insufficient to pay the interest and principal on loans.

Conservatives can blame consumers all they want, but the fact remains that in order to create the illusion of a healthy economy, credit and debt was forced onto 99% of the population while wealth was transferred to the top 1%. To live within your means during this period meant you would live with in the most dangerous run-down neighborhoods with the worst schools. The peer pressure and pressure from life virtually forced the vast majority of Americans to accept debt in lieu of the wages they should have been paid.

Now we have the start of suicide and murders that have littered the landscape during the mortgage meltdown and which continue to this day. I know because I get calls from people who threaten suicide and then do it. It’s like the war in Afghanistan: how many people are aware that there were more suicides than those killed in action in 2012? We are numb to the results and our belief in our institutions is at an all-time low for good reason. This was a gradual process with plenty of people who know a lot about finance and economics screaming “STOP!” but were ignored.

In both the mortgage crisis and the student loan crisis, where defaults are skyrocketing, there is an opportunity for a fiscal stimulus to the country that won’t cost the government a dime. Trillions of dollars of stimulus money is locked up in the banks who have sequestered the money overseas along with Corporate America’s $3 trillion that they are holding and afraid to invest because they see what I see — at best an uncertain future for America and a profound distrust of American institutions to cope with the issues because the government is controlled by big business and big banks. It’s called an oligopoly when a group of companies control the marketplace.

Simple logic: why is it that while unemployment remains high and wages remain too low to survive, that Wall Street and the Dow Jones Industrial Average are reaching historic highs? Somebody is paying for those results. Since we cannot support those results through spending discretionary income because we don’t have any, and since we can’t spend our way out using credit because there isn’t any, Big Banks and Big Business are now burying their heads in the public trough taking corporate welfare and dodging liabilities with the full support of all three branches of government.

Doesn’t it bother anyone that during the last three decades the amount of GDP measured by standard means includes financial services which went from 16% of GDP to nearly 50% of GDP. That means that the loss of real productive businesses has been replaced by trading paper on the same deals over and over again so we maintain the illusion that the United States is an economic superpower. And eventually the euphoria in the stock market will be replaced with something less than that when the correction turns into a crash.

If we really want to save our economy, our world status (aside from military power) and the prospects for future generations we need real jobs with real services and real products to be produced here and to stop treating trading paper as somehow adding to GDP.

The solution is right in front of us. In the mortgage markets, the appraisals were untrue and unsustainable and the responsible party, according to existing law, is the lending entity. The loans were unworkable and bound to fail in both the real estate loans and student loans. And the risk was transferred from the loan originator, which is supposed to be the gatekeeper to undisclosed third parties who funded the loan without any disclosure or documentation provided to the borrower.

In short, predatory loan practices and outright fraud, proven by the robo-signing scandal in which fabrication of entire loan files cost only $95 according to its price sheet, convinced millions of people to borrow sums of money they could never repay on terms that were guaranteed to fail at he borrower level. In the meanwhile, the lenders (investors) were sold a different set of terms. The intermediaries tricked the lender, tricked the borrower and then set out to claim the loans as their own, getting the insurance proceeds and proceeds from credit default swaps and federal bailout.

Look under any rock in the private student loan landscape and you’ll find lost documents, robo-signed documents, fabrications, forgery and perjury. It’s the same tune as the mortgage mess.

In any normal situation where bankers go wild, hundreds of people go to jail and receivers are appointed with the express purpose of clawing back as much as possible to provide restitution and reparation to the victims. Following the existing rule of law, that is exactly what should happen here with real estate loans and student loans. It won’t fix everything, but it will fix a lot more than current policy and give a boost to an ailing economy whose foundation is rotting and cracking under the weight of  shadow banking.

Lawyer’s Student Loans May Driven Him To Murder, Police Say
http://www.businessinsider.com/john-conrad-wagner-murder-motive-2013-3

http://gawker.com/5988302/its-eerie-how-perfectly-student-debt-is-following-the-financial-meltdown-script

http://www.businessinsider.com/one-law-school-finally-lets-students-know-how-poor-theyll-be-after-graduation-2013-3

Look Who Got thrown Under the Bus for Criminal Prosecution on Banking Crisis

“Furthermore, evidence of the DocX forgery and fabrication process could be used to reach even higher. Who directly solicited the company for fake documents? The foreclosure mill law firms, which then knowingly submitted them into courts. Who directed the foreclosure mills to do that? The mortgage servicers, which are typically units of the biggest banks. Furthermore, there’s no reason to ever request the “entire collateral file” unless you have no other way to generate evidence to prove underlying ownership of the loan. This speaks to a faulty mortgage transfer process, improper securitizations, and generally fraudulent practices at the heart of Wall Street.”

CHECK OUT OUR EXTENDED DECEMBER SPECIAL!

What’s the Next Step? Consult with Neil Garfield

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, Tennessee, Georgia, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editor’s Comment: In a very good piece written by David Dayen for Salon.com (see link below), he takes the government and the bankers to task for masquerading under the “rule of law” while actually undermining it — something that consumers and homeowners have instinctively known for decades.

The general consensus of those in government and on the bench is that they are so deathly afraid of giving a free house to a homeowner that they are willing to overlook criminal and civil misbehavior — leading to granting a free pass to those pretending to be lenders to get the free house.

Worse than that, we have established a climate that allows for the possibility of taking a crime to some indescribable level where it becomes somehow necessary to allow the crime to stand because of the “risk” posed to the rest of society. That Too Big To Fail thing came directly out of the proposition that if the big banks were allowed or forced to fold,  the credit markets would freeze up. So our government gave them even more money than the ill-gotten and well secreted money they made during the mortgage boom, under the supposition that those banks would start lending.

The reverse happened. People received notices in the mail informing them of decreases in their credit limit on credit cards, HELOCs, and cancellation of loan commitments on small businesses and real estate purchases. The outcome predicted by those on Wall Street as well as Hank Paulson, then Treasury Secretary to President Bush, was a massive recession with millions of jobs lost and a huge demographic of people who are working at jobs for less money requiring less of their their talents. Armageddon arrived and we managed to steer our way of of the roughest waters for the time being, but we also proved that the Too Big To Fail hypothesis was dead wrong.

So they have a scapegoat that they are going to send to prison without involving any of her superiors, affiliates or the actual conspirators who created LPS and DOCX. The case proves, however, that people CAN go to jail for these crimes and that the line we were fed about it not being illegal was incorrect or an outright lie. The truth, as we now know it, is that the actions of the banks were a total fraud and that many entities and companies and institutions aided and abetted the the most massive fraud in human history.

Thus the issue is no longer whether there is a case that can be made, proven and thus sending people to jail and ordering restitution to all the injured stakeholders. Instead the issue of who will get thrown under the bus so that nobody really “important” gets the adjoining prison cells.

The recession was her fault. Meet Wall Street’s scapegoat, the one person to get jail time for the most massive mortgage fraud in history. By David Dayen

“This scheme was part of the giant bundle of illegal conduct known as foreclosure fraud. According to statements of fact from the Justice Department, from 2003 to 2009 DocX recorded over one million fake documents. That’s probably a low number. DocX wasn’t just forging signatures, they were fabricating entire loan files. During the bubble years, they created a now-infamous mortgage fabrication price sheet, where mortgage servicers, who had trouble proving in court that they owned the homes they wanted to put into foreclosure, could purchase, at low prices, whatever documents they needed. To “Recreate Entire Collateral File,” basically the whole set of documents including the promissory note? That would set a servicer back $95.00.”

Prosecutors Getting Tough? Small Banks ONLY!!

CHECK OUT OUR EXTENDED DECEMBER SPECIAL!

What’s the Next Step? Consult with Neil Garfield

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, Tennessee, Georgia, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editor’s Comment and Analysis: Abacus Bank has only $272 million in deposits. In rank, it is near the very bottom of the ladder. And apparently justifiably, federal prosecutors have seen fit to prosecute the bank for fraud. The quandary here is why the prosecutors are putting their muscle behind just the low-hanging fruit and why they are settling with the mega banks for the same acts — without threat of prosecution. If we could offer $17 trillion in various forms of “relief” for the banks, they certainly could pony up $1 billion and investigate the truth behind the securitization claims. The only conclusion I can reach is that the administration, so far, doesn’t want proof of the truth.

One of the things that Yves gets right here is that when Fannie and Freddie get involved, it isn’t the end of the line and it certainly does not mean that the loan was not “securitized” using the same fake documents at origination and the same fake mortgage bonds, albeit guaranteed by Fannie and Freddie who serve as “Master Trustee” of the investment pools that presumably “bought the loans with actual money. Like their cousins in the non government guaranteed loans, the money largely comes from fat accounts where the investors’ money was commingled beyond recognition and the investment bank who created and sold the bogus mortgage bonds was the “buyer” on paper so that they could bet against the same loans and bonds they were selling to investors.

Yves still refers to the scheme as reckless as though a judgment was made without knowing the consequences of the banks’ actions. Nothing could be further from the truth. This wasn’t reckless.

It was intentional because that was where the big money came from. The scheme was to take as much as possible from money advanced by pension funds and keep it, while giving the illusion of a securitization scheme for funding mortgages and reducing risk.

The mega banks even bet on their success and the investors’ loss, the borrowers’ loss and the loss shouldered by taxpayers, increasing their leverage positions up  to 42 times (Bear Stearns). As we all know, the risk was magnified not reduced and the only experts that really knew were in the departments where collateralized debt obligations were packaged on paper, sold to investors and never transferred to any trust, REMIC of SPV.

With Abacus, the punch line is that their default rate was 1/10th that of the national average indicating that contrary to the practices of the mega banks, some underwriting was involved and some verification and oversight was employed.

What is avoided is that $13 trillion in loans were originated using the false securitization scheme in which the borrower was kept in the dark about who his lender was, and where upon inquiry the borrower was told that the identity of the lender was confidential and private, nearly all of which loans were classic cases of fraud in the execution, fraud in the inducement, breach of contract, slander of title, and recording false documents in the county records. The perpetrators of these schemes are settling for fractions of a penny on the dollar with full agreement that their conduct will not be reviewed.

So here is the question: If Abacus is guilty of fraud and caused minimal damage to the economy or the borrowers, isn’t the bar set higher for the mega banks. Why are they allowed to slip through without getting the same treatment as a bank whose deposits equal less than 1/10 of 1% of the size of the megabanks who caused mayhem here and around the world?

Quelle Surprise! Prosecutors Get Tough on Mortgage Fraud….At an Itty Bitty Bank
http://www.nakedcapitalism.com/2013/02/quelle-surprise-prosecutors-get-tough-on-mortgage-fraud-at-an-itty-bitty-bank.html

F-Bomb on Display on PBS Piece on Fraud by the Banks

http://www.pbs.org/wgbh/pages/frontline/untouchables/

“To hear some on Wall Street tell it, no one saw the financial crisis coming. As Jamie Dimon, the chairman and CEO of JPMorgan Chase, explained to the Financial Crisis Inquiry Commission, “In mortgage underwriting, somehow we just missed … that home prices don’t go up forever.”

Others were less confident. In fact, well before the housing bubble burst, alarm bells were starting  to sound among key players in the mortgage industry: due diligence underwriters.

Due diligence underwriters are paid by banks to assess the risk of buying mortgage portfolios. In the run-up to the crisis, they were among the first to suspect that loosening loan standards could pose a potentially catastrophic threat to the economy.

Several due diligence underwriters — most speaking publicly for the first time — told FRONTLINE correspondent Martin Smith that it wasn’t uncommon to see school teachers claiming salaries of $12,000 a month on their mortgage applications, or electricians moving from $500 a month in rent to homes worth $650,000. The only problem — their supervisors didn’t seem to want to hear about it.

“Fraud in the due diligence world, fraud was the F-word or the F-bomb,” said Tom Leonard. “You didn’t use that word,” — Jason Breslow, PBS

VIDEO: Fraud Was the F-Word as Contract Hourly Workers Toiled into the Night

Editor’s Comment: Most of the questions and answers are over and they lead straight to the top of the mega banks. If there was any actual risk of loss as opposed to the illusion of a risk of loss, most of the loans would not have been approved.

Since the banks were playing with investor money and essentially stealing it they had created a labyrinth of paperwork that was vague enough to enable them to claim plausible deniability and even the outright lie that Jamie Dimon told when he said that they never saw the meltdown coming because they too thought the market would always go up.

They stacked and compounded the risk elements such that the banks would be paid, the investors would lose their entire investment and the homeowners would be lured into deals that could not possibly work — especially when you factor in the known fact that the prices were spiked higher than anytime in the history of record keeping relative to actual value and the median income required to pay the mortgages. At the heart was fraud: fraud in the appraisal, fraud in the “underwriting,” fraud in the ratings, and fraud in the way the money chain and document chains were handled.

What has escaped most media analysts is that the higher the risk, the more money the banks made. By increasing the risk elements as high as they could go, the nominal interest rate on the loan was as high as it could go. By increasing the interest rate, less money was funded for loans than what was expected by the investors.

In order to achieve the expected return of $50,000 per year, the loan could have been a 5% loan, which is what the investors expected, and the Principal funded would be $1 million. If the interest rate was 10%, meaning the probability of repayment was low at best, then the funding goes down to $500,000 creating the illusion of satisfying the goal of $50,000 per year. If the interest rate was 15%, meaning there was no likelihood at all that the loan would survive, then the funding would have been $333,000.

But in both the 10% loan and the 15% loan, the investor advanced $1 million expecting the loan to be a safe loan to a credit worthy person on a piece of property that was truly worth more than the loan.  Thus a yield spread was created and the premium on that yield spread would have been $500,000 for the 10% loan, and $667,000 for the 15% loan. Where did the money go? Into the profits of the banks as proprietary trading activity that were all fictitious transactions.

The banks were supposed to provide triple-A rated bonds backed by good performing loans in which the viability of the deal had been underwritten, verified and confirmed as to income, value of the property etc. — and not just on the first day of the loan where the borrower paid a teaser rate.

Ask any banker doing conventional loans whether he or she would have approved any of the loans taken at random from the piles at Countrywide or WAMU. The answer is NO. I know because I did ask. Real loans have real risk. These were neither real loans nor did they carry any risk of loss to the purported players who were mere intermediaries violating the blueprint set forth in the prospectus and pooling and servicing agreement.

The mega banks, knowing that the loans were completely void for a variety of reasons, and knowing that the banks would some day need to create the illusion of an accounting, needed a state document (deed on foreclosure) to close the book or else the investors and borrowers would end up owning the bank.

But they went further. Having tasted the red meat of astonishing profit  margins they sought to increase their gains to astrophysical levels. They bought insurance and credit default swaps betting against the the very same loans they had underwritten and the very same bogus mortgage bonds they had underwritten and sold.

The results are well known. Banks collected 100% on the dollar repeatedly on the same loans and bonds even though none of the loans or bonds confirmed to the requirements of the disclosures to both the investors and the borrowers.

From http://www.pbs.org—–by Jason M. Breslow

One of Leonard’s peers, Eileen Loiacono, saw much of the same.

“You couldn’t say the word ‘fraud’ because we couldn’t prove that it was fraud. … Even if we suspected, we had to say, ‘This appears to be incorrect.’ You would never say, ‘This looks fraudulent.’”

In The Untouchables, premiering tonight, FRONTLINE examines why not one Wall Street executive has been prosecuted for fraud tied to the sale of bad mortgages. Through interviews with prosecutors, government officials and industry whistleblowers, the film raises new questions over whether senior bankers either ignored or contributed to fraud while inflating the bubble through the purchase and securitization of shoddy loans.

The Untouchables airs tonight on most PBS stations, (check your local listings here) or you can watch it online, starting at 10 pm EST.

U.S. Attorney Continues to Prosecute Despite Settlements

CHECK OUT OUR DECEMBER SPECIAL!

What’s the Next Step? Consult with Neil Garfield

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editor’s Note: Preet Bharara, the U.S. Attorney for the Southern District of New York. He is unfazed by the tangle of “settlements” and will not let up on prosecuting Bank of America for fraud. He gets it and is methodically working his way through the maze set up by the mega banks.

BofA settled a civil claim that it had lied when they “sold” mortgages advertised as meeting government standards. We all know by now that the loans “lacked documentation and underwriting.” But what is still to come out is WHY they lacked documentation and WHY the loans lacked underwriting.

The documentation was absent simply to hide the fact that the bank was pretending to have ownership or an insurable interest in the loans and mortgage bonds. The true transaction was between the investor/lenders and the homeowner/borrowers. BofA stole or misused the identities of both the lender and the borrowers so that it could sell the loans many times under guise of exotic derivative instruments called mortgage backed bonds.

If fully documented, the lender would have shown up as the investors, which is as it should have been. BofA never put up a dime for the funding or acquisition of any of the loans. Its claim of ownership and an insurable interest was a blatant lie, inasmuch as they actually had no risk of loss, which is why there was no underwriting standards applied either.

I would suggest you track the pleadings of this U.S. Attorney and pick up some pointers along the way. He is definitely on the right track. As for now, the focus is on the bad mortgage bonds, bad loans, and lack of documentation up at the lender level.

Once that veil is penetrated it will be revealed that the borrower was defrauded using the same misdirected documentation using appraisal fraud as the principal leverage point.

But the real stuff is going to hit the fan as more and more people realize that this standard practice in the industry allegedly to “protect” the investors, invalidated the chain of title and there has been no effort to correct the problem. When it is revealed that the investors were cheated out of their money by a use of proceeds that crosses the borders of fraud, and that the terms of the bonds were never intended to be satisfied, just as the terms of the loan were never meant to be satisfied or secured, then we will have justice peeking its head out over the mess.

In the end, legally, there will be privity or a relationship only between the investor/lenders and the borrowers and that there transaction was supposed to be documented and recorded. Instead the banks documented and recorded a different transaction in which the intermediaries looked like the principals and were therefore able to do “proprietary trading” in which they took investor money from one pocket and put it into another.

That is what opened the door to huge “profits” (actually theft proceeds) on the way up and on the way down. These banks are now buying the same houses from themselves (using another affiliate entity) and then reporting the results to the investors so they can write off the loss. They are going to be the largest landowners in history as a result of this PONZI scheme.

The investors were duped into thinking that all the intermediary entities were being used to protect them from liability from claims of deceptive and predatory lending practices. In actuality the investors were already protected because their agents committed intentional acts of malfeasance and crimes that were specifically prohibited in the documents and other representations the investors received.

Just like the Too Big to Fail Myth, the investors are operating under the myth that if they assert themselves as lenders, they are going to get sued. That too is untrue. If they assert themselves as lenders, then they are going to show proof of payment, something the megabanks can’t do because they used investor money instead of their own.

If the investors assert themselves as lenders they will see that money is missing from the investment pools and that in fact the investment pools were never funded at all. They will realize that they have a legitimate claim for repayment of loans, and a legitimate claim for civil or criminal theft against the banks who intentionally diverted the documentation and the money from the investors and from the borrowers.

That will leave the investors and borrowers with (1) an obligation that is mostly undocumented and (2) unsecured. But the borrowers are more than happy to allow a mortgage if it reflects fair market value. This is what will give the investors far more than the current process in which the banks have a stranglehold on the mortgage modification process (for mortgages that are invalid from the start).

If you pierce through the veil of PR and utter nonsense flowing out of the banks and their planted articles in every periodical around the country, you will find your lender and you will find out the balance due because both of you (homeowner and investor) are going to want to know what happened to all the insurance money, credit default swaps and Federal bailouts that were promised, paid, but not delivered.

Because the mega banks were mere intermediaries pretending to be lenders the entire current scenario is going to turn upside down. Ultimately, the insurance, CDS and bailouts were in fact bailouts of the homeowners and investors. When they are applied correctly according to common sense and the contracts that were executed, practically none of the mortgages will have the balance demanded by the intermediary banks who claim but do not own the mortgages or rights to foreclose. Thus practically no foreclosure was correct by any standard, no credit bid was valid at auction, and no eviction was legal.

As these facts are revealed and accepted by a critical mass of people, the Too Big to Fail Myth will be put to the test. The nonexistent assets on their balance sheets will be reduced to zero. What will really happen is simply that the mega banks will collapse inward and the thousands of other banks that are unfairly under the thumb of the bank oligarchy will be able to pick up the pieces that are left and return to normal banking, with normal profits and normal bonuses.

Allowing the mega bank to retain the money they stole is like throwing a steak to a dog. Now that they have a taste of unlawful profits driving their profitability upward, they will only want more. Our job is to make sure they don’t get it. The Obama administration was surprised by the quick recovery by the banks. The truth, as it will be revealed in the coming months and years, is that there was no bank recovery because there were no bank losses. THAT is why the banks grew while the rest of the economy tanked.

Theoretically it is impossible for the bank profits to go up while the stock market and the economy is going down the drain. Their profits are supposed to come from being intermediaries in commerce, not principals.

Thus the higher the commercial activity, the better it is for the banks. But here, the relationship was twisted. The banks sucked the money out of the economy in “off balance sheet” transactions, secreted the money around the world, and are now able to report higher and higher profits every year simply because that is the way that they can repatriate their ill-gotten gains. By doing that they drive up the apparent value of their stocks and their stockholders are happy. What the stockholders do not realize is that this is a powder keg that will, at some point, implode. Yes, Warren Buffet is wrong.

See the story and Links Here

Despite a settlement with an alleged victim, U.S. District Attorney Preet Bharara will continue to prosecute Bank of America for selling allegedly fraudulent loans to Fannie Mae and other government-sponsored enterprises, his office told the Charlotte Business Journal.

Bharara, U.S. attorney in the Southern District of New York, charged BofA with fraud in a $1 billion federal lawsuit in October. He alleged in court documents that BofA had sold government agencies such as Fannie Mae billions of dollars in mortgages that were advertised as meeting government standards. However, the suit contends the loans actually lacked proper documentation and underwriting.

Banks Controlled Independent Reviews

“TARP was supposed to cover losses from defaulting loans. But then it was switched to make direct capital infusions into the mega banks. Why the switch? Because everyone realized very early on that the banks had no losses from defaulting loans. It was the investors who made the loans and would take those losses. But even though the government recognized this fact, it did so in secret allowing the confusing notion of bank losses to permeate the judicial cases. All they had to do to stop foreclosures was to tell the truth and Judges would have correctly assumed that the Banks were mere intermediaries. PRACTICE HINT: Is Champerty and maintenance a cause of action for damages, a defense to a lawsuit or both?” — Neil F Garfield, livinglies.me

CHECK OUT OUR DECEMBER SPECIAL!

What’s the Next Step? Consult with Neil Garfield

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

If you are having trouble believing that the recession, the mortgages, the foreclosures, the auctions, and the health of the banks are all a big lie click here for Matt Taibbi’s Article in Rolling Stone

Editor’s Comment: The so-called independent reviews were neither independent nor reviewed. They were processed. Which is to say they went in one end and came out the other. The so-called reviews relied completely on the banks themselves to review their own criminality in the foreclosure process that was only one step in a multifaceted plan to take down the wealth of America and concentrate in the hands of people who could claim it as their own.

The reviews were not independent because all the information offered was the information that the banks wanted to reveal and half of that was completely fictitious. The lack of an administrative hearing process made it impossible for the independent review conclusions to be challenged. Talk about stacking the deck.

A random survey of foreclosures would show that the forecloser was a complete stranger to the transaction, never invested a penny in the origination or purchase of the loan, and never accounted properly for its actions to the actual lender/investors. How do we know this with certainty? Because real independent reviews like the ones conducted in counties all over the country came to exactly that conclusion after reviewing foreclosures that were “completed.”

There is no ambiguity except whether the credit bid and ensuing deed upon foreclosure is void or voidable. I maintain it is void and not voidable. Voidable means that the victim must do something to replace the job of the county recorder. Voidable means that the transaction stands and the deed is valid even though we know it is a wild deed with no place for it in the chain of title. Voidable means that in a later refi or sale if some title lawyer is actually doing his work the way it was done since the dawn of title records, he or she is going to discover the wild deed and declare the title to be clouded defective or fatally defective. And that would be because of all the documents submitted by a series of entities that had no function except layering over the festering corruption of title created in the first place.

Actual findings that somehow leaked through the controlled review process were suppressed. It all comes down to the same thing in administrative action, law enforcement action, executive action and legislative action: homeowners are deadbeats who don’t count or can be managed through the miracle of telling big lies through the media. The conclusion reached in virtually all cases was the same: while the forgeries, fabrications and perjury were bad things and the ensuing theft of the homes was allowed to proceed anyway, the net result is that these people borrowed the money, defaulted on the payments and lost the house they were supposed to lose anyway.

It is a compelling argument if it was true. In fact, the posturing and lying of the banks enhanced the lender/investor losses and stopped the homeowners from connecting up with real lenders to settle the loans and then go after the banks together for lying to everyone about appraisals, underwriting, and loan quality.

As I see it, the only way this is going to wind up is that those people who fight back with Deny and Discover will be rewarded for their efforts if they persist. But on the whole, most people will not fight back leaving the Banks with windfall several times over. Government won’t help them. If the Banks lose every case that is contested it will be less than the amount they would reserve for loan losses if their loans were real.

We all know that the Banks were using investor money 96% of the time, and yet we allowed them to get insurance, credit default swaps, and federal bailouts on investments they never made. We allow them to pretend that they own what the investors own, thus corrupting their balance sheets with fictitious assets. We allowed them to book fictitious sales of bogus mortgage bonds to investors using the investors own money to create the infrastructure that was never used to sell, assign or securitize the loans. The Bankers who control the banks also control all the profits from these false “proprietary trades”, book them as they wish partly to keep the value of the stock higher and higher, and then keep the rest in off balance sheet off-shore transactions spread around the world.

In an economy that is still driven 70% by consumer spending these policies are arrogant and stupid. The investors who were the real lenders should be paid. The balance on the books owed to those investors should be reduced. And the process of separating the false tier 2 premiums on proprietary trades and the REAL balance owed by borrowers should proceed. This can only happen, given current circumstances by denial of all elements of the cause of action for foreclosure, and pressing on through discovery against the Master Servicer, subservicer (who did they pay? how long did they day after the declaration of default?), the Trustee of the REMIC trust (where are the trust accounts?), the aggregators and other parties that were engaged in the PONZI scheme that was covered over by a false infrastructure of assignments and securitization which never took place.

Our economy is projected to grow at a mere 2% this year if we are lucky, because the banks are holding all the fuel for the engine. If we were to apply simple precepts of law on fraud and contracts, the amount clawed back to investors and homeowners would end the crisis for the economy and yes, possibly threaten the existence of the large banks, but greatly enhance the prospects for the 7,000 other banks in the U.S. alone. But that of course would only happen if we were doing things right.

OCC Foreclosure Reviewer: “Independent” Reviews Were Controlled by Banks, Which Suppressed Any Findings of Harm to Foreclosed Homeowners
http://www.nakedcapitalism.com/2013/01/occ-foreclosure-file-reviewer-independent-reviews-were-controlled-by-banks-which-suppressed-any-findings-of-harm-to-foreclosed-homeowner.html

Media Still Taking Their Queues from Wall Street

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What’s the Next Step? Consult with Neil Garfield

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editor’s Comment: If you read the mainstream media instead of the actual complaints being filed by agencies and consumers, you get the message that it is foreclosures that are dragging the economy down because of how slow they are in judicial states. They present a compelling case consisting of half truths about diminishing property values, lower lending, overwhelming servicer capacity, resistance to modifications, and delays in the “inevitable” foreclosure caused by judicial backlog.

The message is clear — let’s get this over with and move on with our economic recovery. With consumer purchasing weakening and the threat of huge lawsuits against the banks that caused this mess, the spin is that if we just forget about the whole mess, everyone would be better off.

My message is that the foreclosure mess is the result of compounded fraud, Ponzi schemes and unethical behavior by the Wall Street banks — and that the victims of that fraud deserve restitution just like any other fraud case.

Those victims include almost every part of the economy but the focus is on investors (pension funds providing lifeblood to people on fixed incomes) and homeowners who were coerced, enticed and deceived by the values used at their loan closing certified by appraisers who under threat of coercion (never working again) gave the banks the values as instructed.

Both sides of the transactions — the investors who loaned their money and the homeowners who borrowed money were deceived and economically devastated by the same lies and false documentation created to give the appearance of a proper mortgage-backed bond, a proper mortgage and then a proper foreclosure.

None of it was true. The bets were made against those mortgages because the banks knew the loans were bad and that even if they were not bad, they had unconditional power (through the Master Servicer) to declare that the “pool” was impaired. The fact that the pool was never funded and never received any of the loans escaped the attention of most people.

Neither the investors nor the homeowners ever had a chance. And the “burden” now placed on the banks of coughing up hundreds of billions (trillions) of dollars for their fraudulent behavior is said to endanger our economy. My message is that the economy, the dollar and our standing in the world is far more endangered by letting it be known that if your fraud is big enough you will never be prosecuted. It creates an uncertainty in the marketplace where trust and reliance on such checks and balances as appraisers and rating agencies is used as a principal measure as to whether to get involved in a deal.

If the banks were using the investor (pension) money, why did the banks get the bailout and other  forms of relief totaling more than all the mortgage loans put together, whether “in default” or or completely current in payments? Why didn’t that money go to the investors and the resulting credit inure to the borrowers whose loans were improperly priced by fraudulent and deceptive means?

My message is that the economy will recover far more quickly when people recognize that the government and the judicial system requires that everyone play by the same rules. If you have a case, then prove it. That is why I keep harping on Deny and Discover as the principal strategy for foreclosure and mortgage litigation.

The facts are that most of the loans were bad — defective as to who they named as payee on a loan the borrower never received, and defective as to the principal due based upon fraudulent appraisals. The borrowers received loans from third parties in table funded loans that were not only not disclosed, they were hidden from the borrower and the source of the loan money, the investors (pension funds).

The loans that were funded were undocumented intentionally because the banks wanted a window of time within which they could claim the loans were the asset of the bank instead of the investors. The documentation enabled the banks to pretend to be the lender and therefore reap the benefits of large bets against loans that increasingly were doomed from the start. After they made their money they pitched the loans, contrary to the express terms of the Pooling and Servicing Agreement, over the fence and told the investors that THEY had lost money while the banks had made trillions of dollars.

The reason why foreclosures proceed more slowly through those states requiring a judicial process is that the banks don’t have the goods. Most of the loans were never funded by the party whose name was placed on the note and mortgage. And it is no different but easier to circumvent in the non-judicial states.

The borrowers, completely ignorant of what was done to them at closing and completely ignorant of the trillions paid on the loan liability and received by the banks assume that they owe the amount demanded by the bank — when in fact the overpayment received by the banks as agent for the investors might well be an overpayment that is due back to the borrower after the investor is paid.

The only reason things that gone so far astray is that the bank strategy is working — blame the borrower and admit to some negligence and some paperwork problems. But forgery, robo-signing, powers of attorney, false endorsements, false beneficiaries, false substitutions of trustees and false affidavits are not “paperwork problems.”

False documents would not be necessary if the loans were real secured loans in a real fair and free market. If the investors and borrowers knew what was really being done with the documents and the money, they never would have entered the deal in the first place.

These are crimes that should be prosecuted. THEN the economy will recover when restitution is given to investors and homeowners, the banks assets are written down to true market value (excluding loans they never funded or purchased).

PRACTICE TIP: Attack the lien first without regard to the outstanding obligation to avoid appearing that you are seeking a “free house.”

Don’t limit your Discovery to the Subservicer. You are only getting a small slice of the pie of the information that way. Demand the same discovery from the Master Servicer and the “Trustee” of the “trust.”

Only the Master Servicer has access to information regarding third party payments. And only the Investment Banker (the brokerage that sold the bogus mortgage bonds) can account for the bets they made using insurance and credit default swaps.

And don’t forget to ask the Trustee why the “trust” was not administered through their trust division or trust subsidiary. You might well find that that no trust account was ever created for the trust and that the “trustee” did not administer the affairs of the trust because there was nothing to administer and the trustee’s powers are claimed by Deutsch, Mellon, and U.S. Bank to actually be that of agent rather than trustee with fiduciary responsibility — when it comes time to assess damages against the losing pretender lender.

Upshot of the Foreclosure Backlog

1.5 Million Seniors Foreclosed — Most Illegally

What’s the Next Step? Consult with Neil Garfield

CHECK OUT OUR NOVEMBER SPECIAL

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editor’s Comment and Analysis: As I predicted (along with many others), the foreclosure scam is reaching further and further to all segments of the population. With more than half of all homeowners under 40 being “underwater” and the release of information showing that widows are being hit hardest, the statistics showing 1.5 million foreclosures on people over 50 are hardly surprising. But they don’t tell the whole human story of grief, confusion and disbelief that the banks would engage in large-scale fraud.

It is ironic that many of the millions who were hit with foreclosure were the same people who joined the public outcry against mortgage relief because they were playing by the rules, making their payments, and also losing money. They failed to educate themselves and their naive belief that the debts were legitimate and the borrowers were deadbeats led the public, the media, and those who pull the levers of power in Federal and State government to conclude that the debts were legitimate and the market simply went sour.

To call these debts legitimate in the face of absolutely incontrovertible facts regarding appraisal fraud, forgery, robo-signing, and lies told in in court is akin to drawing the distinction between rape and legitimate rape. You can argue all you want about what a woman should look for to “detect” a possible criminal and and argue circumstances when she “asked for it” but rape is rape.

And you can argue all you want about how homeowners should have read a pile of papers 6 inches thick to determine what was really going to happen to their lives if they signed those papers and that they should have investigated who was behind the easy money, but in the end they were the victims, just like many investors were the victims.

And until we agree that the money the banks received should have been allocated to the investors on whose behalf they received the money we won’t know the amount of the debt of the homeowner, if any, that is remaining. Allowing foreclosures to start, foreclosure “sales” to be conducted, foreclosure deeds to be issued “for cash received” when they accepted a credit bid from a non-creditor, and then allowing evictions was and remains wrong.

In fact, while I have not seen a study analyzing this, I’ll bet you will find that the same people who were foreclosed were on pensions paid by managed funds that bought the bogus mortgage bonds that enabled the mortgage meltdown in the first place.

So the same people were both losers in investing in mortgages and then losers when their own money was used against them in deals that were impossible to be viable.

The tragic irony here is that most borrowers still don’t get it. They also think the debts are legitimate and that any claims of fraud or predatory loan practices are just ways of delaying the inevitable foreclosure and eviction.

Precious few homeowners have any idea that they have legitimate defenses and remedies that would lead to a mortgage-free house or a modification that uses fair market value as a basis for the loan balance and applies the payments received by creditors from insurance, credit default swaps and federal bailouts.

In what I have called Deny and Discover, lawyers following this blog or who have arrived at the same conclusions on their own are winning case after case. Mark Stopa published an article about 14 cases in Florida in which 14 different judges entered summary final judgment FOR THE BORROWER!

As the banks plant articles warning against strategic defaults, ultimately, there is no debtor’s prison in this country and they can’t do a thing about it. And widows, pensioners and others who are on fixed incomes and facing rising medical and living expenses are forced into default. This mess will take decades to clear up unless government does its job of governing and applying the same set of rules to everyone. If you commit fraud, you owe restitution and you are punished either civilly or criminally.

Deutsch and Goldman Lose Bid to Dismiss FHFA Lawsuit for Fraud

What’s the Next Step? Consult with Neil Garfield

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

CHECK OUT OUR NOVEMBER SPECIAL

Administrative Process May Provide a Lift to Borrowers

Editor’s Comment: Following on the heals of a similar ruling against JPMorgan Chase, Judge Denise Cote, denied the motion to dismiss the lawsuit of the Federal Housing Finance Agency that overseas Fannie and Freddie.

Simply put the agency is charging the investment banks with intentionally misrepresenting the underwriting standards that were in use during the mortgage meltdown. To put it more simply, the fraud we know that occurred at ground zero (the “closing” table) is being traced up the line to the banks that were pulling the strings and causing the fraud.

The allegations of course are insufficient in and of themselves to use as proof of anything. They are unproven allegations in a civil court suit in Federal Court in Manhattan. BUT there is an interesting argument to be made here that should not be ignored. I did a lot of work in administrative law when I was practicing full-time.

The procedure that any agency follows in filing such a lawsuit is something that should be pointed out when you are making arguments about fraud in the origination or assignments of loans.

In order for an agency to file suit, there must be a “finding” that the facts alleged in the complaint are true. In order for that to happen there must be an investigation and it must be brought before a committee or board for a finding of probable cause.

Normally the finding of probable cause would result in an administrative action brought before a hearing officer that would result in either acquittal of the offending suspect (respondent) or fines, penalties or even revocation of their right to do business with the agency or under the auspices of the agency.

Here the action is brought in civil court which must mean that the findings were strong enough to go beyond probable cause to establish in the findings of the agency that these violations did occur beyond a reasonable doubt. Hence, it could be argued, given the structure and process of administrative actions, that the investment banks have already been found by administrative agencies to be fraudulent.

Then you go to the facts alleged and see what those facts were (see article on JPMorgan denial of dismissal for copy of the complaint). Where there are similarities, you can allege the same thing and apply it to the origination of the loan and the so-called assignments and claims of securitization. AND you can say that there has already been an administrative finding that the fraud occurred, which is persuasive authority at a minimum.

In these cases the investment banks are accused of intentionally lying about the underwriting standards used in origination of the loans — something we have been saying here for  years.

That means it was no mistake that they failed to put the name of the real payee on the note and mortgage and it was no mistake that they failed to reference the REMIC or the pooling and servicing agreement which set the terms of repayment, sometimes in direct contradiction to the terms expressed in the note that they induced the borrower to sign. The information was intentionally withheld from the borrower and promptly used with Fannie and Freddie knowing ti was false, as to verifications of value, income viability etc. (see previous post).

In essence the FHFA is saying the same thing that the investors are saying, which is the same thing that the borrowers are saying — these origination documents are worthless scraps of paper replete with deficiencies, lies and misrepresentations, unsupported by consideration and unenforceable.

The defense of the investment banks is that they HAVE been enforcing the notes and mortgages (Deeds of trust). They are saying that since the courts have let most of the cases go to foreclosure, the documents must be valid and enforceable. If improper underwriting standards had been used, or more properly stated, if underwriting standards were ignored, then the borrower would have had a right to rescission, which the courts have largely rejected. It is circular reasoning but it works, for the most part when it is a single homeowner against a big bank.

But when it is institution against institution its not so easy to pull the wool over the judge’s eyes. AND unlike the borrowers, the FHFA is not plagued with guilt over whether they were stupid to begin with and therefore deserve the punishment of taking the largest loss of their lives.

The answer to that is that the banks were only able to “enforce” as a result of the ignorance of the judges, lawyers and borrowers as to the truth behind the facts of each loan origination, assignment etc.

By Jonathan Stempel, Reuters

A U.S. judge rejected bids by Goldman Sachs Group Inc (GS.N) and Deutsche Bank AG (DBKGn.DE) to dismiss a federal regulator’s lawsuits accusing them of misleading Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) into buying billions of dollars of risky mortgage debt.

In separate decisions on Monday, U.S. District Judge Denise Cote in Manhattan said the Federal Housing Finance Agency may pursue fraud claims over some of the banks’ representations in offering materials regarding mortgage underwriting standards.

The FHFA had sued over certificates that Fannie Mae and Freddie Mac, known as government-sponsored enterprises, had bought between September 2005 and October 2007.

Goldman underwrote about $11.1 billion of the certificates, and Deutsche Bank roughly $14.2 billion, the regulator has said.

Michael DuVally, a Goldman spokesman, declined to comment, as did Deutsche Bank spokeswoman Renee Calabro. Trials in both cases are scheduled to begin in September 2014.

Last year, the FHFA filed 18 lawsuits against banks and finance companies over mortgage losses suffered by Fannie Mae and Freddie Mac on roughly $200 billion of securities.

Cote handles 16 of the lawsuits, and previously refused to dismiss its cases against Bank of America Corp’s (BAC.N) Merrill Lynch unit, JPMorgan Chase & Co (JPM.N) and UBS AG (UBSN.VX).

In her Deutsche Bank ruling, the judge said that while the offering materials said representations were “preliminary” and “subject to change,” their use suggested that the German bank “fully intended the GSEs to rely on” them.

Meanwhile, Cote rejected what she called Goldman’s “legally dubious” claim not to be liable over prospectus supplements it did not write, saying “it is difficult to square with the fact that the bank’s name is prominently displayed on each.”

She dismissed some claims over representations concerning owner-occupied homes and loan values.

The FHFA became the conservator of Fannie Mae and Freddie Mac after federal regulators seized the mortgage financiers on September 7, 2008.

In May, Deutsche Bank agreed to pay $202.3 million in a separate federal probe, in which its MortgageIT unit admitted it had lied to the U.S. government over whether its loans were eligible for federal mortgage insurance.

Cote said it is too soon to decide liability over MortgageIT activity that predated its 2007 takeover by Deutsche Bank.

The cases are Federal Housing Finance Agency v. Deutsche Bank AG et al, U.S. District Court, Southern District of New York, No. 11-06192; and Federal Housing Finance Agency v. Goldman Sachs & Co et al in the same court, No. 11-06198.

(Reporting By Jonathan Stempel in New York; Editing by John Wallace, Tim Dobbyn and M.D. Golan)

BOA Facing Fraud Suit from FHFA

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Consult with Neil F Garfield, MBA. JD

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BOA lost in a bid to dismiss a lawsuit based upon the lies it told the Fannie and Freddie about the loans it was seeking guarantees for sale into the secondary securitization market. This follows closely my prior post about why the obligations, notes and mortgages should all be considered a nullity — worthless.

Unfortunately, Judge Cote said that the FHFA (Federal Housing Finance Agency) failed to state a strong enough case about loan to value ratios. Perhaps the agency will take another crack at that because appraisal fraud was an essential ingredient in this PONZI scheme.

If you read the complaint, it will give you a few ideas on how to frame your own complaints. Obviously it would be wise to beef up the allegations regarding loan to value ratios and the relationship of those to appraisal fraud. FHFA_v_BoA_Other

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