BEWARE OF SCAMS

As though it isn’t bad enough, we are receiving increasing numbers of reports of scams, mistakes and just plain stupidity on the part of lenders, investors who own mortgage-backed securities etc.

Like the woman who just told she is in foreclosure by Wells Fargo on a house she never closed title on. Or the “mortgage workout” specialists who specialize in taking your money and running. Like the lawyers who tell clients they know all about the Truth in Lending Act, RESPA, RICO etc., and in fact either know nothing, or worse, know just enough to really screw the client from whom they squeezed a retainer out of.

And then you have stories like this in the Cincinnati area:

Warren County and state officials want to know how a Deerfield Township man sold a multimillion-dollar Homearama house he apparently never owned.

“It is being investigated by my office and the (Ohio Attorney General) for possible fraud,” Warren County Prosecutor Rachel Hutzel said Thursday.

Francisca Webster, a Westwood resident who makes $49,000 annually, said she was tricked by a friend, Eric Duke, into putting three Warren County homes - worth millions - in her name so he could later resell them at a profit. He promised her $70,000.

• See details of the deal in the settlement statement
• See the home’s listing in Warren County property records
• See previous story: “Homeowner in over her head”

She has sued him in Hamilton County.

Now, documents reveal Duke “sold” one of those houses - 8662 Hampton Bay Place - to Patricia Stevenson for $2.5 million in a March 15 transaction.

The sale was done even though Duke doesn’t own that property. It remains in Webster’s name.

“People just don’t get how devious and conniving he is,” Webster said. “I’m really stunned.”

Duke’s attorney, Steve Wenke, refused Thursday to make his client available for questions and refused to pass messages to him. “I don’t want him to talk to anybody,” he said. Duke’s phone number isn’t published.

In a March 15 transaction, Stevenson paid Rivendale Property Management Group $271,500 in cash to buy the house for $2.5 million. Rivendale is Duke’s company and lists its address at the Hampton Bay Place house where Duke lives, which is down the street from the house sold to Stevenson.

Webster wants to know how Duke can sell a house she legally owns - but never wanted and desperately wants out of her name.

“I don’t know where we go from here,” an exasperated Webster said Thursday.

ReMax Realtor Simon Moksin said he saw nothing crooked about the deal.

“We got an attorney who represented the title company,” said Moksin, who pocketed a $60,000 commission on the deal.

Not so, said John Brandt, owner of River Valley Title Agency.

Brandt was paid $150 to sign some of the financial documents involved in the deal and act as a signatory witness, not as a representative of his title insurance company. The deal was consummated in Brandt’s Sharonville office.

Even though the documents list Patricia Stevenson as the buyer, Brandt said her husband, Mitch Stevenson, was doing the transacting.

“(Stevenson) never requested a title examination. Duke told him I did (a title search). I did not,” Brandt said Thursday.

Brandt said Mitch Stevenson called him this week to complain Duke cheated him in the deal.

“Apparently, (Mitch Stevenson) took Mr. Duke at his word,” Brandt said. “I really feel sorry for Mr. Stevenson.”

The sale involved a land contract. That is a sale where the buyer pays a monthly mortgage directly to the seller but the seller keeps the deed until all of the payments are made. If they aren’t made, the seller keeps the property and the money already paid.

That’s why there was no loan involved in the deal as is usual in home sales and that’s why there was no change in ownership in county auditor records.

“It was what we commonly call in the industry a cash closing,” Brandt said.

The Stevensons shouldn’t have to travel far to complain to Duke - he lives a house or two away.

Both of the houses were featured in Homearama, the new construction showcase, in 2005.

Efforts to reach the Stevensons were unsuccessful Thursday.

Moksin, the Realtor, would only say that Mitch Stevenson was “a businessman” when asked about his occupation.

• More Mason news. Join the discussion.

In this study, the authors provide an exhaustive and invaluable aid, with plenty of charts and explanations of the mortgage meltdown, sub-prime and general credit crisis. This is MUST reading for anyone who is filing securities actions and foreclosure defense. With this paper, you can understand who the players are and what they were doing. This paper is thus far more inclusive than what we have written here which is designed to give you the information in bite-sized pieces.

harvard-paper-diagrams

Credit Crisis Over? — Not by a Long Shot

As you can imagine I get emails and comments from hundreds of people seeking help and whose houses are going into sale or foreclosure, most of whom are completely unaware that they have rights superior to the lender, if they can find someone to help them like www.repairyourloan.com. 

Lawyers won’t help you until you get the mortgage audit completed. It is then that you will know the extent of your claims and what you do to stop the foreclosure, the eviction or even extinguish the mortgage and release yourself from liability on the mortgage note. 

Here is an article which illustrates why you need to beware of both the government and the lenders. They are trying to give the impression that the credit crisis is (a) not as bad as people thought and (b) over. What they are really trying to do is pivot your attention away from the fact that the massive mortgage meltdown has caused a meltdown in all the credit markets. It has caused a massive meltdown in asset values for individuals, corporations and government entities. 

This is not the beginning of the end. It is, as Winston Churchill said in World War II “the end of the beginning.” We have years to go before this shakes out just in terms of education of the public. And we have decades to go to recover from this utter failure of government to do its job — to referee between those who know things and those who don’t. 

In the process the government, the corporations and the individuals owning houses or doing their jobs have all been smacked in the face, really hard and have snapped out of their wishful confidence in their government and in the “good faith” of a good faith estimate before closing on a loan.

Credit Crisis

Congress And The Credit Crisis

Joshua Zumbrun 05.14.08, 6:00 AM ET

Washington, D.C. - 

A congressional panel meets Tuesday morning looking to answer two big questions about the economy: Is the credit crisis over? And can anything be done to prevent another crisis in the future? 

To both questions, the answer is “No. And proceed with great caution.”

For the credit crisis, reasons for optimism are emerging. Monday morning, Federal Reserve Chairman Ben Bernanke outlined positive signs: confidence between banks has risen, the market for repurchase agreements of Treasury securities has improved, secondary markets even for troubled mortgage-backed securities have more liquidity than they did in May.

“These are welcome signs, of course, but at this stage conditions in financial markets are still far from normal,” Bernanke cautioned. (See “Recovery: Are We There Yet?”)

Still, the battered housing market continues to drag. Data released Monday from the National Association of Realtors showed that home prices are still falling. In the first quarter of this year, the median home price dropped 7.7% from a year ago–the biggest decline in the 29 years NAR has compiled the prices.

The number of borrowers who owe more than their house is worth is still growing. Loan defaults and foreclosures are likely to continue, as will losses to the lenders. Foreclosures tend to drag down the prices of their entire neighborhoods. But even here, Lawrence Yun, chief economist of the National Association of Realtors, sees some signs of optimism: “Neighborhoods with little subprime exposure are holding on very well.” And at least banks are not originating new subprime loans.

Now for the second question: How to prevent risk in the future. That’s what makes Tuesday morning’s hearing significant. The early advice Congress receives could shape regulation of banks and the financial market for years or even decades. And, as Treasury Secretary Henry Paulson noted in proposing a series of regulatory reforms in March, “few, if any, will defend our current balkanized system as optimal.”

The March collapse of Bear Stearns exposed a weakness in the Gramm-Leach-Bliley Act, a 1999 law that removed the barriers between commercial banks, investment banks and insurance companies. The amount of systemic risk was not recognized until too late.

After Gramm-Leach-Bliley, banks and insurance companies were allowed to undertake the same activities, but they still answered to their old regulators. Five federal regulators oversee deposits, in addition to regulation from state governments. Futures and securities are regulated by separate agencies. Insurance regulation is spread across more than 50 regulators.

The result was a confused alphabet soup–SEC, CFTC, OCC, NCUA, FDIC–with muddled boundaries or, as SEC Chairman Christopher Cox described the result, “a statutory no-man’s land.”

But regulation presents pitfalls as well. It must be considered not in terms of more or less regulation but rather in terms of flexibility and efficiency. 

“In the wake of a bust, there is always a predictable series of political activities,” says Alex Pollock, former president of the Federal Home Loan Bank of Chicago, who will testify before the committee. “First, the search for the guilty; second, the fall of previously esteemed heroes; and third, legislation and increased regulation to ensure that ‘this will never happen again.’ But, with time, it always does happen again.”

The guilty have been identified as the twin bogeymen of the subprime underworld: “speculators” and “unscrupulous lenders,” enabled by banks unable to price risk and an irrational belief that home prices would always rise. The esteemed heroes have fallen: the collapse of Bear Stearns, disappointing results from Wall Street’s banks. Even Alan Greenspan has lost some of his luster.

The third act at the boom and bust theater is well under way. This week the Senate is ironing out its companion legislation to the House’s Foreclosure Prevention Act, which passed last week with a 266-154 margin. The president has indicated he would veto the bill’s current incarnation but could support a toned-down version. All that remains is the predictable regulatory overhaul and then a long wait for the inevitable cycle to begin in the future. 

Anytime you get an opportunity or can make an opportunity to demand the documentation is a good time to do it. However, like many others, you continue to look for short-cuts, when the system is geared for ONLY those willing to jump through the right hoops at the right time. There is no short-cut.

There are many options to defend your property, your credit, and your money and to go on the offensive as set forth on these pages. BUT you must realize that the lenders, mortgage brokers, payment servicing operations, investment bankers and purchasers of collateralized mortgage obligations have not opened their doors and their hearts to give you money. You must earn that by (a) figuring out what claims you have (b) stating those claims and (c) demanding refunds, damages etc. through the established procedures used in TILA and related claims.

There is no short-cut. But some ways are better than others, in my opinion. If there were a lot of lawyers around who understood these procedures, it would be wise to go directly to them. But the fact is, in my anecdotal experience, there are few of us who know the ropes and even amongst the the lawyers that do understand the process, people who have been making their living from doing bank audits, mortgage audits and related functions for most of their careers, can do more on the front end of things than any lawyer I know, including myself. 

As with all surges of opportunities, there are a lot of people out there on the Internet or otherwise advertising these services. Most of them do not have a clue what they are doing, how to do it and will end up taking actions that ignore or even waive essential rights you may have. While I continue my search for alternatives, thus far the only people I have found who truly know more than I do about the particular and sometimes peculiar procedures are at www.repairmyloan.com. 

I can’t guarantee you results and neither can the people at repairyourloan.com. But I have a high degree of confidence that those people know what they are doing, have the right moral compass, and have a long history over decades of dealing with these issues. I can’t claim that and neither can anyone else I have spoken with or who has solicited us for referrals. In fact, the people at repairyourloan did not contact me, I contacted them after they left a comment on the blog.

OBAMANOMICS VS NO ECONOMICS AT ALL

the government is charged with reporting on inflation when it has a vested interest in keep the reported inflation low both for political and financial reasons

The job of the Petitioner in bankruptcy to get a modification of the Chapter 13 plan is therefore double-whacked because of (1) a presumption against him which requires him to show a significant change in circumstances and (2) inaccurate government statistics which call you a liar when you say your basic expenses have shot up 25% just because of inflation.

Homeowners with ARM financing on their homes are triple whacked when the resets kick in. Those people in bankruptcy already should tell their lawyers to file an adversary proceeding based upon violations of TILA and RESPA. There are a number of steps you need to follow (see many posts and links on this blog) before you can file suit.

BKR attorneys are struggling with clients who are complaining that their payment plan is being negatively impacted by the surge in the cost of living. This surge has been understated by, for example, publication of the Consumer Price Index and other indices that are used to set increases in government and pension benefits like social security.

Thus the government is charged with reporting on inflation when it has a vested interest in keep the reported inflation low both for political and financial reasons. If they report it accurately, the government expenses will go up. Up until now, the fact that this was at the expense of the recipients of those benefits (which they paid into and are now being short-changed) has been felt, talked about but largely ignored. That too is coming up front and center. McCain’s statement “I’m not very good on economics” better change to “I just studied up on economics and it is very interesting, Here is what I learned.”

When inflation was comparatively low, even though understated. there wasn’t much conflict. Now, however, the basket of items used for the CPI is literaly out of touch with the real life experience of most Americans — something that Obama has started talking about and which McCain unfortunately doesn’t seem to know or care to know. 

The job of the Petitioner in bankruptcy to get a modification of the Chapter 13 plan is therefore double-whacked because of (1) a presumption against him which requires him to show a significant change in circumstances and (2) inaccurate government statistics which call you a liar when you say your basic expenses have shot up 25% just because of inflation. 

Homeowners with ARM financing on their homes are triple whacked when the resets kick in. Those people in bankruptcy already should tell their lawyers to file an adversary proceeding based upon violations of TILA and RESPA. There are a number of steps you need to follow (see many posts and links on this blog) before you can file suit.

MOST BANKRUPTCY LAWYERS ARE LARGELY UNFAMILIAR WITH TILA, RESPA AND OTHER CONSUMER PROTECTIONS AND THUS MISSING THE LARGEST POTENTIAL BENEFITS TO THEIR CLIENTS. If YOUR lawyer does not know this field then get help elsewhere. For example: www.repairyourloan.com, where you can get help on all the steps before filing suit and even get a referral to someone who can assist your attorney in filing the adversary proceeding. 

From another site where the attorneys appear to be knowledgeable but I know nothing about them —-

Rising prices give rise to chapter 13 plan modifications

By Andy Miofsky, Illinois Bankruptcy Attorney on May 11, 2008 in Bankruptcy Practice and Procedure, Chapter 13 Bankruptcy, Illinois

Cash for keys is an offer from somebody that basically says that you are no longer the owner of the property, we can get an order of eviction, we can get the sheriff to throw you out, or you can accept $1,000 (or whatever the amount is in the offer) and get out on your own.

If you accept such a deal do not sign anything except a document that says you are acknowledging payment and that you will vacate the property. If the offer contains any language that looks like a release of other claims, do not sign it unless you have decided, after consulting local counsel, that you are willing to give up what might be very substantial claims against the lender which can always be brought after the sale. 

Cash for keys is a good option if you are giving up anyway. And nobody can blame you from walking away from a fight that you don’t understand, that you can’t match the resources or power of your adversary, and where you don’t know what to do and have no knowledge of the outcome of fighting this. Being out of money doesn’t help either.

So whatever decision you make is understandable and RIGHT FOR YOU because you made it. There is no right and wrong here except that what the lenders did here in conspiracy with Wall Street was clearly wrong.

ALL THAT SAID —- MY SUGGESTION IS THAT YOU FIGHT ON AND HAVE AN EMERGENCY PLAN B READY IF YOU NEED IT. AND CONSULT WITH COMPETENT COUNSEL BECAUSE THIS IS GENERAL INFORMATION AND NOT LEGAL ADVICE IN YOUR PARTICULAR CASE.

If you delay the eviction through bankruptcy (you can get one of those do it yourself kits) you should probably send a letter registered mail return receipt requested to the lender and file a Chapter 13, along with an adversary proceeding which says basically that the lender committed many violations of the Federal Truth in Lending Act (TILA), that you are entitled to an accounting for all interest paid, all points paid, and a refund of all out-of pocket expenses associated with finance charges or the costs of closing on the loan, and that you hereby rescind the transaction.

Under TILA (see my recent BLOG posts) this eliminates both the security interest and the debt.

You must allege that the lender procured title through trickery and fraud, that they have no security interest, that they have no entitlement to payment, and that they are NOT the owner of the actual security instrument nor the debt which has been sold as a collateralized mortgage obligation to a third party investor who has never been joined in the prior proceedings; thus they failed to join an indispensable party which means that the prior procedures which resulted in transfer of title were not only procured by trickery, fraud on the court, and overreaching, they did so without properly or legally invoking the jurisdiction of the local government that authorizes judicial and non-judicial sale.

Thus the taking of the title was an unconsitutional denial of due process, void ab initio (at inception) and therefore unenforceable by any court.

Hence when they (the lenders) move for relief from stay, you can point to their lack of standing because they did not legally or properly obtain title and you have rescinded (attach copy of your letter) so they don’t have the option of clearing it up.

Now here is the kicker.

Under TILA, when you are NOT REPRESENTED By COUNSEL the Judge, especially if it is in Federal Court (which is the case in all bankruptcies) MUST in essence act as your lawyer and review the facts, the allegations, the case law and the circumstances to determine if there is ANY basis to support the relief you are asking for or to deny the relief the lender is asking for.

In other words you are better off not having a lawyer than having one who barely knows what he or she is doing. The bankruptcy judges are almost universally well-schooled in the law and very sharp. You couldn’t have a better lawyer! Of course if you DO know a very competent attorney who is familiar with these concepts, then you are better off going with the lawyer than without one.

TILA RIGHT OF RESCISSION and CONSEQUENCES

TRUTH IN LENDING

FEDERAL CIVIL COURT, FEDERAL BANKRUPTCY, STATE COURT INFORMATION

I have been inundated with TILA questions. So I went out hunting to see if anyone had already written about it in terms that a lay person might be able to understand. What I found is shown below. I believe it to be generally correct and the citations are good citations of law. See this site for the entire write-up. It should give most lay people an idea on how to handle this and it will be valuable to your lawyer if he/she is not totally familiar with the TILA context. http://www.rcxloan.com/Civil_Action__BK__Motion_14.htm. As always, we are available to answer questions and direct you to the proper people to get expert help and advice.

MY ANSWER TO OUR READER’S QUESTIONS:

1. TILA Rescission is self enforcing. It automatically extinguishes the lien and the liability. The time for rescission does not run until you actually knew the full scope of the violation. That is tantamount to it never running out. 
2. YOU CAN ASSERT AND SHOULD ASSERT TILA VIOLATIONS IF YOU CAN BEFORE YOU ARE IN FORECLOSURE OR EVEN IF YOU ARE CURRENT IN YOUR PAYMENTS. 
3. Judge is required to look for authority himself if you are representing yourself without a lawyer (pro se). This provision in effect makes the Judge your lawyer and your Judge. Pretty good combination for you. 
4. Judge has no discretion to deny damages, refunds etc to Borrower once a violation of TILA, no matter how small, is discovered.
5. TILA Rescission is NOT barred before during or after other proceedings unless those other proceedings specifically mention rescission as an issue to be tried.
6. Federal Action for injunction against the players to require them to file documents canceling the documents of record and providing judgment for damages and refunds is probably the best action since that is what is contemplated.
7. If in bankruptcy, it should be pled in an adversary proceeding. But if the bankruptcy is  primarily related to the foreclosure the better practice would be to file in the same Federal Court, Civil Division, a complaint for violation of TILA rescission.
8. A Quiet TItle Action in State Court would probably also be a good idea before, during or after the Federal action. It clears up any doubt whatsoever about the status of title or the lender’s lien or encumbrances. 
9. THIS IS INFORMATION YOU NEED BECAUSE THE LATEST LENDER STRATEGY SEEMS TO BE FOR THE LENDER TO IGNORE THE RESCISSION NOTICE. THE LENDER IS BETTING YOU WON’T KNOW WHAT TO DO. 
10. Suggestion: If you are in Court and you have opted or are ordered to settlement, try to get a paragraph in the mediation order that requires all decision-makers to be present, whether they are parties or not. This would include the holders of securities who are the ultimate owners of the mortgage. (You may get a pleasant surprise. We have reports that the lenders sometimes can’t trace them down, in which case, the foreclosure action or sale is dismissed and you have no mortgage).

TILA & Res Judicata

(Analogous to Mr. Pierre R. Augustin, Pro Se’s situation since he had never litigated fully or raised any TILA claims affirmatively or defensively) – 

A rescission action may not be barred by prior or subsequent TIL litigation which did not involve rescission (Smith v. Wells Fargo Credit Corp., 713 F. Supp.  354 (D. Ariz. 1989) (state court action involving, inter alia TIL disclosure violations did not bar a subsequent action based on rescission notice violations in conjunction with same transaction which were not alleged or litigated in prior action) (See also In re Laubach, 77 B.R. 483 (Bankr. E.D. Pa. 1987) (doctrine of merger bars raising state and federal law claims arising from a transaction on which a previous successful federal TILA action was based; merger does not bar, however, rescission-based on the same transaction)).

IX.  Timely Notified Lenders/Attorneys of TILA Right of Rescission

Mr. Pierre R. Augustin, Pro Se filed a copy of the notice of rescission letter (See Exhibit 5) in the bankruptcy court notifying the attorneys representing DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance as well as having certified receipt return of proof of delivery to the Lawyers including are proof of notification according to the Official Staff Commentary, 226.2(a)(22)-2 as authorizing service on attorney.  

The Truth-in-Lending law empower Mr. Pierre R. Augustin, Pro Se to exercise his right in writing by notifying creditors of his cancellation by mail to rescind the mortgage loan transactions per (Reg. Z §§ 226.15(a)(2), 226.23(a)(2), Official Staff Commentary § 226.23(a)(2)-1) and 15 U.S.C. § 1635(b).

 Equitable Tolling
The filing of Bankruptcy tolls or extends the rescission time as Mr. Pierre R. Augustin, Pro Se had filed for bankruptcy on September 26, 2005 and obtained a discharge on September 26, 2006. 

Also, the principle of equitable tolling does apply to TILA 3 years period of rescission since despite due diligence, Mr. Pierre R. Augustin, Pro Se could not have reasonably discovered the concealed fact of TILA violations in-depth and explicitly until September 17, 2006 at about 5 a.m. in reading the Truth-in-Lending book by the National Consumer Law Center.

The equitable tolling principles are to be read into every federal statute of limitations unless Congress expressly provides to the contrary in clear and ambiguous language, (See Rotella v. Wood, 528 U.S. 549, 560-61, 120 S. Ct. 1075, 145 L. Ed. 2d 1047 (2000)). Since TILA does not evidence a contrary Congressional intent, its statute of limitations must be read to be subject to equitable tolling, particularly since the act is to be construed liberally in favor of consumers.

 Security Interest is Void
The statute and regulation specify that the security interest, promissory note or lien arising by operation of law on the property becomes automatically void. (15 U.S.C. § 1635(b); Reg. Z §§ 226.15(d)(1), 226.23(d)(1). 

As noted by the Official Staff Commentary, the creditor’s interest in the property is “automatically negated regardless of its status and whether or not it was recorded or perfected.” (Official Staff Commentary §§ 226.15(d)(1)-1, 226.23(d)(1)-1.).  

Also, the security interest is void and of no legal effect irrespective of whether the creditor makes any affirmative response to the notice. Also, strict construction of Regulation Z would dictate that the voiding be considered absolute and not subject to judicial modification. 

This requires DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance to submit canceling documents creating the security interest and filing release or termination statements in the public record. (Official Staff Commentary §§ 226.15(d)(2)-3, 226.23(d)(2)-3.)

 Extended Right of Rescission
The statute and Regulation Z make it clear that, if Mr. Pierre R. Augustin, Pro Se has the extended right and chooses to exercise it, the security interest and obligation to pay charges are automatically voided. (Cf. Semar v. Platte Valley Fed. Sav. & Loan Ass’n, 791 F.2d 699, 704-05 (9th Cir. 1986) (courts do not have equitable discretion to alter substantive provisions of TILA, so cases on equitable modification are irrelevant). 

The statute, section 1635(b) states: “When an obligor exercises his right to cancel…, any security interest given by the obligor… becomes void upon such rescission”. Also, it is clear from the statutory language that the court’s modification authority extends only to the procedures specified by section 1625(b).

The voiding of the security interest is not a procedure, in the sense of a step to be followed or an action to be taken. 

The statute makes no distinction between the right to rescind in three day or extended in three years for federal and four years under Mass. TILA, as neither cases nor statute give courts equitable discretion to alter TILA’s substantive provisions. 

Since the rescission process was intended to be self-enforcing, failure to comply with the rescission obligations subjects DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance to potential liability.

XIII.  Non-Compliance

Non-compliance is a violation of the act which gives rise to a claim for actual and statutory damages under 15 USC 1640. TIL rescission does not only cancel a security interest in the property but it also cancels any liability for the Mr. Pierre R. Augustin, Pro Se to pay finance and other charges, including accrued interest, points, broker fees, closing costs and that the lender must refund to Mr. Pierre R. Augustin, Pro Se all finance charges and fees paid.

In case DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance do not respond to this default letter, Mr. Pierre R. Augustin, Pro Se has the option of enforcing the rescission right in the federal, bankruptcy or state court (See S. Rep. No. 368, 96th Cong. 2 Sess. 28 at 32 reprinted in 1980 U.S.C.A.N. 236, 268 (“The bill also makes explicit that a consumer may institute suit under section 130 [15 U.S.C., 1640] to enforce the right of rescission and recover costs and attorney fees”).  

TIL rescission does not only cancel a security interest in the property but it also cancels any liability for Mr. Pierre R. Augustin, Pro Se to pay finance and other charges, including accrued interest, points, broker fees, closing costs and the lender must refund to Mr. Pierre R. Augustin, Pro Se all finance charges and fees paid.  

Thus, DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance are obligated to return those charges to Mr. Pierre R. Augustin, Pro Se (Pulphus v. Sullivan, 2003 WL 1964333, at *17 (N.D. Apr. 28, 2003) (citing lender’s duty to return consumer’s money as reason for allowing rescission of refinanced loan); McIntosh v. Irwing Union Bank & Trust Co., 215 F.R.D. 26 (D. Mass. 2003) (citing borrower’s right to be reimbursed for prepayment penalty as reason for allowing rescission of paid-off loan).

XIV.  Sources of Law in Truth in Lending Cases

“These include TILA itself, the Federal Reserve Board’s Regulation Z which implements the Act, the Official Staff Commentary on Regulation Z, and case law.  Except where Congress has explicitly relieved lenders of liability for noncompliance, it is a strict liability statute.  (Truth-In-Lending, 5^th Edition, National Consumer Law Center, 1.4.2.3.2, page 11)

XV.  Synopsis of How Rescission Works

The process starts with the consumer’s notice to the creditor that he or she is rescinding the transaction.  As the bare bones nature of the FRB model notice demonstrates, it is not necessary to explain why the consumer is canceling.  The FRB Model Notice simply says: “I WISH TO CANCEL,” followed by a signature and date line (Arnold v. W.D.L. Invs., Inc., 703 F.2d 848, 850 (5^th cir. 1983) (clear intention of TILA and Reg. Z is to make sure that the creditor gets notice of the consumer’s intention to rescind)). 

The statute and Regulation Z states that if creditor disputes the consumer’s right to rescind, it should file a declaratory judgment action within the twenty days after receiving the rescission notice, before its deadline to return the consumer’s money or property and record the termination of its security interest (15 USC 1625(b)).  Once the lender receives the notice, the statute and Regulation Z mandate 3 steps to be followed. 

XVI. Step One of Rescission

First, by operation of law, the security interest and promissory note automatically becomes void and the consumer is relieved of any obligation to pay any finance or other charges (15 USC 1635(b); Reg. Z-226.15(d)(1),226.23(d)(1).  .  See Official Staff Commentary § 226.23(d)(2)-1. (See Willis v. Friedman, Clearinghouse No. 54,564 (Md. Ct. Spec. App. May 2, 2002) (Once the right to rescind is exercised, the security interest in the Mr. Pierre R. Augustin’s property becomes void ab initio).  

Thus, the security interest is void and of no legal effect irrespective of whether the creditor makes any affirmative response to the notice. (See Family Financial Services v. Spencer, 677 A.2d 479 (Conn. App. 1996) (all that is required is notification of the intent to rescind, and the agreement is automatically rescinded).

It is clear from the statutory language that the court’s modification authority extends only to the procedures specified by section 1635(b).  The voiding of the security interest is not a procedure, in the sense of a step to be followed or an action to be taken.  

The statute makes no distinction between the right to rescind in 3-day or extended as neither cases nor statute give courts equitable discretion to alter TILA’s substantive provisions.  Also, after the security interest is voided, secured creditor becomes unsecured. (See Exhibit #6)

XVII. Step Two of Rescission

Second, since Mr. Pierre R. Augustin has legally rescinded the loans transaction, the mortgage holders (DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance) must return any money, including that which may have been passed on to a third party, such as a broker or an appraiser and to take any action necessary to reflect the termination of the security interest within 20 calendar days of receiving the rescission notice which has expired.  

The creditor’s other task is to take any necessary or appropriate action to reflect the fact that the security interest was automatically terminated by the rescission within 20 days of the creditor’s receipt of the rescission notice (15 USC 1635(b); Reg. Z-226.15(d)(2),226.23(d)(2).

XIII. Step Three of Rescission 

Mr. Pierre R. Augustin is prepared to discuss a tender obligation, should it arise, and satisfactory ways in which to meet this obligation.  The termination of the security interest is required before tendering and step 1 and 2 have to be respected by DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance

XIV. Conclusion

I am requesting an itemized statement of my payment record to DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance.    When Mr. Pierre R. Augustin rescinds within the context of a bankruptcy, courts have held that the rescission effectively voids the security interest, rendering the debt, if any, unsecured (See Exhibit #6).  (See in re Perkins, 106 B.R. 863, 874 (Bankr. E.D.Pa. 1989); In re Brown, 134 B.R. 134 (Bankr. E.D.Pa. 1991); In re Moore, 117 B.R. 135 (Bankr.E.D. Pa. 1990)). 

Once the court finds a violation such as not responding to the TILA rescission letter, no matter how technical, it has no discretion with respect to liability (in re Wright, supra. At 708; In re Porter v. Mid-Penn Consumer Discount Co., 961 F,2d 1066, 1078 (3d. Cir. 1992); Smith v. Fidelity Consumer Discount Co., Supra. At 898.  Any misgivings creditors may have about the technical nature of the requirements should be addressed to Congress or the Federal Reserve Board, not the courts. 

Since DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance have not cancelled the security interest and return all monies paid by Mr. Pierre R. Augustin within the 20 days of receipt of the letter of rescission of September 21, 2006, the lenders named above are responsible for actual and statutory damages pursuant to 15 U.S.C. § 1640(a).

Once again, please send me a copy of my payment history and other document showing the loan disbursements, loan charges and payment made.  Also, DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance are to take any necessary or appropriate action to reflect the fact that the security interest was automatically terminated by the rescission (15 USC 1635(b); Reg. Z-226.15(d)(2),226.23(d)(2).  This requires canceling documents creating the security interest and filing release or termination statements in the public record of FREE and CLEAR TITLE to Mr. Pierre R. Augustin.  Thank you (TTTLMG).

May GOD Bless America, 

Pierre Richard Augustin, Pro Se, MPA, MBA

28 Cedar Street, Lowell, MA 01852

Tel: 617-202-8069

TILA Pleading 

Under the Federal Rules of Civil Procedures, it may be sufficient to plead that the TILA has been violated. (Fed.R. Civ. P. 8(a)).  

Specific violations do not necessarily have to be alleged with particularity (Brown v. Mortgagestar, 194 F. Supp. 2d 473 (S.D. W. Va. 2002) (notice pleading is all that is required in TILA case);

Herrara v. North & Kimball Group, Inc., 2002 WL 253019 (N.D. Ill. Feb.. 20, 2002) (notice pleading sufficient; response to motion to dismiss can supplement complaint by alleging facts re specific documents assigned); 

Staley v. Americorp. Credit Corp., 164 F. Supp. 2d 578 (D. Md. 2001) (Mr. Pierre R. Augustin, 

Pro Se need not specify specific statute or regulations that entitle him to relief; court will examine complaint for relief on any possible legal theory); 

Hill v. GFC Loan Co., 2000 U.S. Dist. Lexis 4345 (N.D. Ill. Feb. 15, 2000).  

The consumer’s complaint need not plead an error exceeded the applicable tolerance, since this is an affirmative defense (Inge v. Rock Fin. Corp., 281 F.3d 613 (6th cir. 2002)).  

In page 2 (See Exhibit 1) of Mr. Pierre R. Augustin, Pro Se’s civil complaint, he stated that TILA was in of the Jurisdiction of all the claims against the creditors or defendants in that civil action.  

At #6 of page 14 (See Exhibit 2) of civil complaint, Mr. Pierre R. Augustin, Pro Se explicitly stated that the New Century Mortgage Note which is now assigned to Chase is in violation of TILA and Regulation Z claims.  

In page 17 of the civil complaint, Mr. Pierre R. Augustin, Pro Se did mention rescission and statutory damages (See Exhibit 3). 

SUING THE LENDER, MORTGAGE BROKER ET AL AFTER FORECLOSURE AND SALE

When it is all over and you have been evicted from your dream home, most people drop the matter and move on, being too distracted by their monetary problems to look back at the painful disaster.

What you should know, however, is that violations of Truth in Lending, fraud and other claims can be brought long AFTER the sale and judgment. 

The first step is to get a TILA audit and that is why we have a link to www.repairyourloan.com. So far in our search for competent people who are not out to steal even more of your money, they seem to be the ONLY people who truly understand the process, who have long track records of performing audits for all kinds of clients — government, financial institutions and individuals.

When you are done with your audit you go to a competent, experienced lawyer. If you can’t find one, we can help you.

You should consult with legal counsel if at all possible. Local rules and state laws differ, as do the application of bankruptcy laws in each state.

That said, based upon the emails I am receiving, many people don’t have the money to hire a lawyer. Obviously this makes perfect sense since most of the people reading this blog are people who have not made their mortgage payment.  

So the first order of business is to realize that the judicial systems of each state govern foreclosure procedures, and that none of them were designed to handle a situation like the Mortgage Meltdown. The clerks in the courthouses, the Judges, the lawyers, the banks, and others are all in the same boat as you are. They are confused, upset, and they don’t have a plan.

We have published a lot of do’s and don’t here and you can research through our 100+ posts that will give you much of the information you need. But I want to summarize and expand some issues.

1. Fight back and don’t take anything for granted. A piece of paper, whether it is posted on your door, signed by a Judge or a letter from a lawyer does not mean you have to do what they are asking. But you DO need to plan your response.

2. Don’t assume that you will lose. There is growing sentiment out there that you got screwed and that your city, homeowner association and neighborhood is suffering from this massive fraud on the American Public.

3. Don’t assume the lender wants to the property back. They already have more than they can handle. Offer to maintain the property and pay the utility bills. Hold firm on your offers and ask to speak to managers and continue going up the authority ladder until you get to someone who (a) has a brain and (b) has the power to make a decision that would alter “policy.”

4. Don’t assume the Sheriff has nothing to do except evict you. even after the order is signed to evict you, you have options including just staying there. But you should have a plan B. Sheriff’s resources are declining due to declining tax revenues. Performing unpopular evictions that nobody really wants to see happen is not at the top of their list. 

5. Make sure everyone in your family knows about your problem and is at least sympathetic. You might get more help than you expect — and this is no time to stand on ceremony or pride.

6. Make sure that your immediate family continues to receive your attention, your love and nurturing from you. The last thing you need on top of the foreclosure is a divorce and custody battle. 

7. If you are in a committed relationship do some brainstorming about how you can make more money, start some small business, earn money off the net or whatever suits you. Think about education too, since the job market is going to require increasingly sophisticated knowledge if you want employment security.

8. Don’t get mad, get even. Game the system. Get to know people who are in it and charm them, cajole them, and do whatever you have to for information, advice and guidance. Assume you CAN keep your house, that the mortgage can be modified in principal, interest and payments so that you can stay in it. Because it can and the lenders are increasingly looking at that option because it at least freezes the downward spiral of housing prices and therefore the downward prices of securities they sold to investors based upon YOUR mortgage.

9. Do NOT hire a consultant that asks for money up front. By all means listen to anyone who is willing to work and get paid IF he/she is successful. The only exception to this is someone with a proven track record of doing TILA (Truth in Lending Act) audits. These audits are worth their weight in Gold. Even if you have to borrow the money to get the audit done, it will most likely give you some strong ammunition with which to fight your foreclosure and sale. 

10. Don’t be a stranger. My email is listed on the “About” page. If you something to share or ask, go ahead. 

IN THE SUPERIOR/CIRCUIT COURT OF THE CITY OF xxxxxxxxx LOCATED AT xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx OF THE COUNTY OF xxxxxxxxxxxxx OF THE STATE OF xxxxxxxxxxxxxxxxxxxx.

Your Name  

VS

Trustee Name

1st Mortgage Name

2d Mortgage Name

VERIFIED EMERGENCY MOTION TO SET ASIDE JUDGMENT, CANCEL SALE AND DISMISS ACTION FOR FAILURE OF JURISDICTION AND LACK OF STANDING.

Comes now the defendant, YOUR NAME, Defendant in the above-styled action and move this Court to vacate and set aside the Judgment entered on the xxxx day of MONTH  2008, vacate and set aside the order dated xxxxx day of MONTH 2008 setting the sale date, and canceling the sale of the subject property and as grounds therefore says that the LENDERS/TRUSTEE committed a fraud upon the Court in that the LENDERS/TRUSTEE does not now and did not, at the time of the foreclosure, own the mortgage, the mortgage note, any security agreements, nor have the requisite power to represent the real party in interest, nor did the LENDERS/TRUSTEE allege facts in support thereof. This Emergency motion is not filed for the purposes of delay. The true facts (and consequent fraud perpetrated upon this Court by LENDERS/TRUSTEE) regarding the prior sale of the risk, servicing and ownership of the mortgage and note regarding the subject real property and alleged liability did not come to the attention of the undersigned defendant until the last few days. 

The Trustee does not have the current authority to proceed with the sale or foreclosure, nor to defend the claims of the undersigned Petitioners because of events subsequent to closing that changed both the ownership and authority of the subject note and mortgage, the authority of the Trustee to represent the interests of the real parties in interest and the lack of documentation showing that the real party in interest can be established. Trustee, the lenders, the underwriters and the presence of third party investors.”

The unique context in which this and other mortgages are being foreclosed on primary residential properties has left all affected parties in untenable positions resulting from rules which never contemplated these circumstances. None of the affected parties wish to see the subject property foreclosed, sold or the the property abandoned. All of the parties affected have it in their interest to preserve and maintain the security of the asset which is the subject of the instant action. It therefore falls within the equitable powers of the Court to order mediation, and to require people with decision-making authority to appear at said mediation prior to the consideration of the current motion or any subsequent motion.

WHEREFORE, Petitioner’s pray that this Honorable Curt will vacate the sale and/or judgment, deny any motion or petition for eviction on the grounds of lack of jurisdiction over the parties or the subject property, order mediation, refer this matter for changes in the rules of civil procedure, and grant such other and further relief as the court may deem just and proper. 

[Serve them with summons. You might have to serve the Secretary of state on Mortgage Lenders because they are foreign corporations. The court clerk will tell you the answer to that, I hope. Put the name and address of Lenders in your certification clause at the end.]

I HEREBY CERTIFY that a true and correct copy was sent by FAX and U.S. Mail to the following names, addresses and fax numbers this xxx day of xxxx(MONTH) 2008.to opposing counsel at the following number Attn: Name of Person Trustee Sale Officer. 

YOUR SIGNATURE: 

Notarize your signature

Then add a separate piece of paper that uses the same style, with no certification clause that says:

Proposed Order

This cause having come on to be heard upon emergency motion of the Petitioner and the court having reviewed the documents regarding the subject property, heard arguments regarding the motion, heard and received evidence regarding the motion, and taken judicial notice of the context of the great number of foreclosures of primary residences in the State of xxxxxxxxxxxxx, and the Court being otherwise fully advised in the premises, it is accordingly

ORDERED AND ADJUDGED:

1. This Court reserves ruling and reserves jursidiction to enter such orders on Petitioner’s motion and matters attendant to the Motion and other issues presented in this Order.

2. The sale of the subject property is stayed under further order of this Court. The sale date is hereby cancelled.

3. Petitioner is ordered to maintain the property, pay the utilities and taxes, and to provide proof of same to the Trustee every month.

4. Upon motion of the Trustee, in compliance with the legal requirements of standing, competence, and proof of facts, the Trustee may apply for hearing on motion to lift the Stay herein and reset the the sale date if the Petitioner can be shown to have failed to adequately maintain the property, reasonable wear and tear excepted, pay the utilities and taxes, or upon entry of an order by this or an appellate court vacating this Order and remanding the case for further consideration. 

5. The Trustee shall produce original documentation to the Court proving standing and authority to proceed under California statutes within ten (10) days from the date of entry of this court in the Court records. Time is of the essence. Failure of the trustee to file said documentation, including all original assignments or sales of the risk, security or debt specifically and expressly connected with this Petitioner and this Subject Property shall automatically constitute a dismissal with prejudice of the foreclosure, the sale, the eviction and any claim for past due payments from this Petitioner and shall relieve the Petitioenr from the accrual or payments for principal or interest to any party until such original documentation is produced.

6. The parties are ordered into mediation within 180 days at which the Trustee shall provide proof which maybe used in these proceedings showing the compliance or lack thereof with the applicable laws and rules of the State of California, the Federal government or any agency in connection with disclosures concerning, risk, fair market value, true cost of the loan, the true ultimate source of capital to fund the loan, and any changes in underwriting standards that were not disclosed to the Petitioner/Buyer and such documents shall also be filed with the Court at least ten (10) days prior to actual mediation. Failure of any affected party to appear at said medication shall constitute a waiver of any claim for payment, and claim for security or any other rights under the original transactions by which the loan documents were produced. The failure of any affected party to produce a person at the time and place of the mediation (which shall be set by order of the mediator) who is authorized to make a final decision regarding settlement shall constitute a non-appearance under this paragraph.

7. The mediator shall submit a written report of the agreement(s) of the parties which shall be approved and made binding by order of this Court upon proper notice and hearing of the parties. 

8. This case is hereby referred to applicable rule-making committees and agencies that are empowered to make temporary or permanent changes in the rules of civil procedure to accomodate the overload of forecloosure cases pending before the California Court system. Toward that end this Court suggests the following for consideration by said entities for temporary changes to the rules of civil procedure until the current mortgage meltdown crisis has passed:

Emergency Provisional Rules

Mortgage Foreclosures

These emergency rules of civil procedure apply to all foreclosures on all property, real or personal, initiated on or before January 1, 2007. No Judgment shall be executed, or if already executed, enforced, and no order of removal or eviction or seizure related to foreclosure shall be executed, or if already executed, enforced unless a Court of competent jurisdiction shall have executed an order finding as a matter of law and fact that the foreclosing party(ies) have complied with each and every provision contained herein.

1. Every Petition for Foreclosure and/or every action undertaken by a foreclosing party prior to seeking recovery or seizure, or occupancy of property, shall require the foreclosing party(ies) to file a verified complaint or affidavit alleging the facts supporting the claim for relief, executed by a person with actual knowledge of all facts alleged. The executing party on said verified Petition or affidavit shall affirmatively allege and actually be available for the taking of testimony by deposition or at an evidentiary hearing in the jurisdiction in which the property is located.

2. Each such Petition or Affidavit shall state the names and addresses of all parties involved in the loan transaction and shall be served under the rules governing service of process upon each of said parties as third party non-party litigants, if such parties were not the lender or borrower.

3. Each such Petition or Affidavit shall account for all funds that were passed through or to each party named in the action, the disposition thereof, and the manner and time in which the passage of said funds were dispersed, together with a citation to the mortgage documentation, including a quote of the relevant passages in the body of the Petition or Affidavit wherein said funds are disclosed and wherein said funds are authorized. 

4. Each such Petition or Affidavit shall state with particularity whether any changes occurred after the closing of the subject loan transaction in which parties or persons were changed including the names and addresses of all parties and persons related to the transactions subject to the mortgage.

5. With respect to sale or assignment or any joint or sharing arrangements concerning ownership, distribution of risk, or securitization in which the subject loan was referenced as collateral or otherwise, each such Petition shall state with particularity the details of each such transaction, the distribution or re-distribution of funds, and the documents employed by said parties after said closing.

6. Each and every such Petition or Affidavit shall affirmatively state that the foreclosing party(ies) have standing and authority to bring the action, defend counterclaims and answer affirmative defenses. The signature of the attorney on said pleading shall be mandatory and shall constitute a representation to the COURT that the filing attorney has performed proper due diligence to ascertain the truth of the allegations of legal standing and all other allegations.

7. Each such Petitioner or Affidavit shall be accompanied by attachments of the referenced documents to be included with the first service of such Petition or Affidavit.

8. Each such Petition or Affidavit shall state with particularity and specificity each disclosure made to the borrower and any third parties involved in the transaction under the Truth in Lending Act and the corresponding provision of the mortgage documents executed by the borrower which supports said disclosure.

9. Each such Petition or Affidavit shall state with particularity and specificity each disclosure made to the borrower and any third parties involved in the transaction under the Truth in Lending Act and the corresponding provision of the mortgage documents executed by the borrower which does not support said disclosure. If any allegation other than “none” is made under this paragraph, the foreclosing party(ies) shall state with specificity the law or fact upon which they should be excused from compliance.

10. Each such Petition or Affidavit shall attach a full and complete accounting of all money, value or funds transmitted, paid or or promised between all parties involved in the loan transaction before or after the loan transaction. In the event the borrower has been overcharged, undercharged, or charged correctly, the Petition or Affidavit shall so state affirmatively, providing a full accounting of said funds. 

11. No answer or response from the borrower shall be due unless and until the foreclosing party(ies) are in complete and full compliance with the provisions of these rules. Any prior answer or response may be amended by the borrower after a determination is made that the foreclosing party(ies) are in full compliance. No prior Judgement, order or other document or rule shall prevent the borrower from filing a response or answer after the foreclosing party(ies) are found to be in compliance with these rules.

12. In the event that the foreclosing party(ies) fails or refuses to comply with these rules, the foreclosure shall be barred with prejudice and until the terms of the mortgage are determined with certainty by the Court by clear and convincing evidence, no payments to the mortgagee shall be due. This provision that not apply to payment to taxing authorities. In such event of delay caused by the the foreclosing party(ies) the court may fashion such equitable remedies as the Court deems fit in its discretion. for example, the Court could apply delinquent payments to the end of the mortgage, thus extending the terms. 

13. In the event of non-compliance with these rules wherein the foreclosing party(ies) demonstrate to the Court the probability that they could amend their filing to conform to the requirements herein, the foreclosing party(ies) shall file an amended Petition or Affidavit on or before thirty (30) days from the date of the order of the Court allowing the amendment. Failure to file within said thirty period shall be grounds for a mandatory immediate dismissal with prejudice. 

14. In the event of the filing of a verified amended Petition or Affidavit, Borrower shall have ninety (90) days in which to answer or respond. Failure to answer or respond shall not relieve the burden of proof of the foreclosing party(ies) in compliance with state, local and Federal law, and in compliance with these rules.

15. The Court may grant attorney fees and costs to the prevailing party in each case where a motion or other filing occurs, wherein a determination is made in an adversary proceeding that the filing is in or out of compliance. 

16. In the event a foreclosure has already been completed and all subsequent and customary actions have occurred and no bona fide third party has taken control or occupancy of the property, these rules may applied retroactively. 

17. Once compliance has been established and the issues are joined, the Court shall enter an order requiring the parties to enter into a process of mediation. The purpose of the mediation shall be to fashion a settlement which provides relief and incentives to all affected parties, including non-party litigants. Mediation shall take place no earlier than thirty (30) days after the entry of the mediation order, and not later than is reasonably possibly given the volume of cases and the availability of competent mediators.

These rules are subject to review by the Court but are effective immediately. Comments and applications to be heard shall be available in keeping with the usual and customary methods of proposed rule changes. Said rules shall be effective unless and until stated otherwise by the Court.

DONE AND ORDERED THIS XX DAY OF XXXMONTH, 2008, IN THE CITY OF XXXX, STATE OF XXXXXXXXXXX.

________________________________

CIRCUIT/DISTRICT JUDGE

Provide self addressed stamped envelopes for the Court to use for mailing out the order to the Trustee, and the Lenders.