Wisconsin BKR Judge Orders Wells Fargo to Disgorge Payments It Received

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Hat tip to anonymous

The full case was 25 pages, I redacted to about 4 below, but very substantial topics and analysis on this similar to Rivera in full version.
– A win on recovery of mortgage payments made to Wells, $73,000.
– Loss on recovery of attorneys fee’s to Debtor, BUT, court stated these would be proper if circumstances met criteria, just not here, and
Very interesting analysis on return of note, which backs up your prior analysis; Note will not be returned to Debtor, as even though note is not enforceable by Wells or its servicers, real party in interest may show up at some point. Debtor also did not point to any prior case law that would require return of note.

I question whether the bankruptcy judge had the required jurisdiction to enter this order in all respects. But the analysis he presents is pretty much on target and once again Wells Fargo is shown to be making false statements and representations in court with virtual immunity even in this case.

Decision dated 10/21/14
http://stopforeclosurefraud.com/wp-content/uploads/2014/12/2014-10-21-In-Re-Thompson-.pdf

UNITED STATES BANKRUPTCY COURT

FOR THE EASTERN DISTRICT OF WISCONSIN

In re Chapter 13 Dennis E. Thompson and Pamela A. Thompson, Case No. 05-28262-svk Debtors.

MEMORANDUM DECISION ON DEBTORS’ MOTIONS FOR CERTAIN RELIEF AGAINST WELLS FARGO

Since this case’s inception in 2005, it has been fraught with litigation, failed mediations, discovery disputes, accusations of attorney misconduct and otherwise tumultuous actions. In 2013, these proceedings eventually culminated in this Court’s disallowance of the proof of claim filed on behalf of Wells Fargo Bank after it was established that Wells Fargo was not the holder of the mortgage note underlying the claim. As a result, the pro se debtors filed a flurry of motions to effectuate the claim disallowance decision. This memorandum decision will hopefully end the litigation concerning the mortgage note, at least in the bankruptcy court………………

……..“On January 12, 2006, the Court confirmed the Debtors’ Chapter 13 plan. Under the plan, the Debtors proposed to make direct current mortgage payments and cure their pre-petition mortgage arrearage via payments to the trustee. On June 27, 2011, the Debtors filed a motion to enter into the Court’s mortgage modification mediation program with Litton. (Docket No. 142.) In preparation for the mortgage mediation, the Debtors hired an attorney and conducted a title search on their property. (Hearing Recording, Docket No. 164, at 10:53:15.) The title search revealed that Wells Fargo did not hold the title to their mortgage. (Id.) Mediation attempts with both Litton and Ocwen Loan Servicing, LLC4 (“Ocwen”), the current servicer for Wells Fargo, failed. (Docket No. 168; Docket No. 213.) On March 19, 2012, the Debtors filed a motion that the Court construed as an objection to the Claim. (Docket No. 159.) On April 2, 2012, Ocwen responded to the objection. After several preliminary hearings, discovery disputes, and a final evidentiary hearing, the Court entered an order disallowing the Claim. (Docket No. 217, 5.) The Court determined that neither Wells Fargo nor its servicers had standing to file a claim in the Debtors’ bankruptcy case. (Id.) Wells Fargo appealed. U.S. District Judge J.P. Stadtmueller affirmed the Court’s decision to disallow Wells Fargo’s Claim, holding:

“[E]ven if each version of the note self-authenticates under FRE 902(9), without testimony or other evidence from Ocwen to “‘connect the dots’” between the disputed allonge and the note, the evidentiary record contained only equally probable “authentic” versions of the note countervailing one another. Against that evidentiary backdrop, the bankruptcy court committed no error in finding insufficient evidence to confer standing on Ocwen to prosecute the disputed proof of claim.

Ocwen Loan Servicing, LLC v. Thompson, No. 13-CV-487, 2014 U.S. Dist. LEXIS 2109, at *14- 15 (E.D. Wis. Jan. 7, 2014).

Prior to the district court decision, the Debtors filed motions for reimbursement of mortgage payments (Docket No. 222) and attorneys’ fees. (Docket No. 223.) The Court entered an order determining that no action would be taken on the Debtors’ motions until after the district court entered a final order in the appeal. (Docket No. 225.) After the district court decision, the Debtors filed a motion to require the return of the original note to them. (Docket No. 239.) The Court set a briefing schedule. The parties have filed briefs. The motions are now ripe for decision.

 

ANALYSIS

Reimbursement of Mortgage Payments made on Disallowed Claim

Based on the disallowance of the Claim, the Debtors request a refund of all mortgage payments and trustee payments made to Litton and Ocwen since their bankruptcy case was filed in 2005. (Docket No. 222, 1.) Arguing that they “have every legal right to believe that they were or should have been paying the proper party,” (Id.), the Debtors calculate that a total of $146,972.45 should be reimbursed to them. (Docket No. 257, 4.) This amount includes $21,587.64 for “lost mortgage payments,” $106,167.91 for mortgage payments made outside the plan from July 2005 to December 2011, $11,716.90 for disbursements made by the Chapter 13 trustee on the disallowed Claim, and $7,500.00 for “return of sanction.”5 (Id.)

Wells Fargo raises only two objections to the Debtors’ motion for a refund of mortgage payments. First, Wells Fargo contends that the Court previously denied this motion at the March 14, 2013 hearing on the Debtors’ objection to Wells Fargo’s Claim……………….”

Second, Wells Fargo argues that the Court must balance the equities under the circumstances.6 Wells Fargo notes that Ocwen and Litton both expended funds during the course of the bankruptcy to prevent the Debtors’ property from going into tax foreclosureWells Fargo also argues that the Court’s decision disallowing the Claim did not alter the fact that the “Debtors borrowed money on April 14, 2000, and have yet to repay their debt,” and “[u]nder the circumstances, it would be inequitable to require Ocwen to take yet another loss on this account.” (Id. at 5-6.)

“The Court rejects Wells Fargo’s attempt to characterize the Court’s comments at the March 13, 2013 hearing as a definitive ruling on whether Wells Fargo should have to refund the payments it received from the Debtors during the bankruptcy case…………..

Wells Fargo’s second argument requests that the Court balance the equities under the circumstances. Wells Fargo cites one case to support its position, which notes that “[c]ourts exercising equitable powers must behave akin to doctors operating under the Hippocratic Oath: first, do no harm. We must do equity to all parties and not just the party seeking equitable assistance . . .” Briarwood Club, LLC v. Vespera, LLC, 2013 WI App 119, ¶ 1, 351 Wis. 2d 62, 839 N.W.2d 124. Wells Fargo suggests that if the Court grants the Debtors’ request, the Debtors will gain a free house. It notes that the Debtors borrowed money that they have not fully repaid, and as long as they are not required to repay it twice, the Debtors are obligated under the mortgage note. (Docket No. 246, 6.) Wells Fargo explains that while it may not have legal enforcement power under Wisconsin law, it does still hold physical possession of the note. (Id.)

And, according to Wells Fargo, since there have not been any competing claims for repayment on the loan, it would be inequitable for the Court to require Wells Fargo to take another loss on this delinquent account. (Id. at 7.)

A similar argument was made and rejected in Thomas v. Urban P’ship Bank, Residential Credit Solutions, Inc., 2013 U.S. Dist. LEXIS 59818 (N.D. Ill. April 26, 2013). In that case, Barbara Thomas filed suit against Urban Partnership Bank, alleging that Urban sought payments on a mortgage loan that it did not own. The central issue involved whether Thomas’s mortgage loan was included in an asset purchase agreement executed between Urban and Thomas’s original lender, ShoreBank. Urban moved to dismiss the complaint, arguing among other theories that there were no competing claims for payment on the note. But Thomas’s unjust enrichment claim survived the motion to dismiss. According to the district court:

Thomas clearly alleges that she owes someone money under the mortgage loan and that that someone is not Urban, and so it is irrelevant that no one else is currently making claims to her mortgage payments. If Thomas is correct that she owes money to someone other than Urban, then by paying Urban she has lost money without reducing the debt she owes to the loan’s true owner. . . . That amounts to the enrichment of Urban to Thomas’s detriment, since Thomas has lost and Urban has gained money for nothing . . . If, as Thomas adequately alleges, Urban had no right under the mortgage loan to the payments it received and Thomas made the payments on the mistaken premise that Urban was the loan’s owner, then fundamental principles of justice, equity, and good conscience require that Urban disgorge the payments . . . .

Id. at *27-29 (internal citations and quotations omitted).8

The district court in Thomas relied on Bank of Naperville v. Catalano, 86 Ill. App. 3d 1005, 408 N.E.2d 441, 444, 42 Ill. Dec. 63 (Ill. App. 1980), in which the court held,

“As a general rule, where money is paid under a mistake of fact, and payment would not have been made had the facts been known to the payor, such money may be recovered.”

The court also cited the Restatement (Third) of Restitution and Unjust Enrichment § 6 (2011) “Payment of Money Not Due” to the effect that payment by mistake gives the payor a claim in restitution against the recipient to the extent payment was not due, and a payor’s mistake as to liability may be a mistake about the identity of the creditor. The Restatement discusses two examples of payment by mistake that may be applicable here: mistake as to payee and mistake as to liability.9 Under mistake as to payee, the Restatement notes that “[a] mistaken payor has a claim in restitution when money is mistakenly transferred to someone other than the intended recipient.”…………..

Under mistake as to liability, the Restatement states that “[a] payor’s mistake as to liability may be a mistake about the identity of the creditor. In such a case, the payor believes that an obligation runs to the payee when in fact the obligation is to someone else.” The latter example applies here.10 The Debtors mistakenly believed that Wells Fargo was entitled to enforce the mortgage note. Wells Fargo’s servicers filed proofs of claim in the bankruptcy case, and they directed the Debtors to send their mortgage payments to Wells Fargo, in care of the servicers. The servicers accepted the Debtors’ mortgage payments on behalf of Wells Fargo, when in fact, Wells Fargo did not validly hold the mortgage note, and Wells Fargo was not entitled to the payments.

Although Wells Fargo has responded to the Debtors’ request for a refund with a plea for equity,11 in fact, the equities here favor the Debtors.

“A claim for unjust enrichment is based on the “universally recognized moral principle that one who received a benefit has the duty to make restitution when to retain such a benefit would be unjust.” Puttkammer v. Minth, 83 Wis. 2d at 689 (quoting Fullerton Lumber Co. v. Korth, 37 Wis. 2d 531, 536 (Wis. 1968))…..

 However, it is not enough to merely establish that a benefit was conferred and retained; the retention must also be inequitable. Id. This Court previously determined that Wells Fargo is not the holder of the Debtors’ mortgage note with legal authority to enforce it; that determination was affirmed on appeal. Without authority to enforce the note, Wells Fargo is not entitled to receive payments under the note. Only the party with a legally enforceable right to enforce the note is entitled to retain the benefit of the Debtors’ mortgage payments. Nevertheless, Wells Fargo, through its servicers, received voluntary payments from the Debtors and payments from the Trustee since the commencement of this bankruptcy case, subjecting the Debtors to the possibility of having to pay twice if the true owner of the note appears. Since Wells Fargo and its servicers have no legal right to the Debtors’ mortgage payments, retention of the Debtors’ mortgage payments would be inequitable.

 

Adding all of the entries for “payment” shows that the Debtors paid $97,979.68 from February 2006 to July 2011. (Docket No. 211, Ex. 11).12 Additionally, Wells Fargo should credit the Debtors with $7,500 for the sanctions awarded in the prior claim objection proceeding. (See Docket No. 103, at 10), for a total of $105,479.68. Wells Fargo points out that it made real estate tax payments on the Debtors’ behalf that should be deducted from any refund claim. The Court agrees. After subtracting $32,438.19 for the tax payments made on the Debtors’ behalf, the Debtors’ total claim for unjust enrichment is $73,041.49. Under the circumstances, Wells Fargo should be required to return this amount to the Debtors to avoid being unjustly enriched………….

Attorney Fee’s

“The Debtors also filed a motion for attorneys’ fees, arguing that Wells Fargo should pay approximately $12,500 in fees and costs the Debtors expended in connection with the failed mediations with Litton and Ocwen. According to the Debtors, “[u]nnecessary protracted negotiations have been ongoing since 2010. Starting with Litton Loan and ending with Ocwen. The plaintiff has misrepresented their standing, despite the efforts of the debtors to discuss this matter in the mediation process.” (Docket No. 223 at 1-2.) The Debtors also request punitive damages under 28 U.S.C. § 1927 for “vexatious litigation conduct” by Litton and Ocwen. (Id. At 2.) They note that Litton failed to attend several scheduled mediation sessions, and when Ocwen reinitiated mediation proceedings in 2012, there was a “delay to the debtors of 6 hours in the first and only scheduled mediation, with the debtors believing that progress was being established.”……………………… Although the Debtors have the right to be disappointed that the mediation did not succeed despite the attorneys’ fees that the Debtors expended, Wells Fargo’s attorneys acted under the impression that their client had proper standing. The Court finds that Wells Fargo’s attorneys did not unreasonably and vexatiously multiply the proceedings by their conduct in this case, and the Debtors’ request for attorneys’ fees is denied.

Request for Return of Note

The Debtors’ final motion asks the Court to order Wells Fargo to turn over the original mortgage note to them. Despite the Court’s ruling that Wells Fargo cannot enforce the note, the Debtors are concerned that Wells Fargo will somehow sell, transfer or trade the note, subjecting the Debtors to further litigation, emotional distress and financial hardship. Wells Fargo responds by attempting to discern the legal theories under which the Debtors are attempting to proceed, and then casting aspersions on those theories. The Court generally agrees with Wells Fargo that the Debtors could not succeed on a replevin claim or turnover action based on the note as property of the bankruptcy estate. However, the theory that the surrender of the original note consequently follows from the disallowance of Wells Fargo’s Claim warrants further analysis. The Court also takes this opportunity to clarify that, while not “undoing” any part of the Foreclosure Court’s judgment, Wells Fargo’s ability to enforce that judgment was never finally determined by the Foreclosure Court, and the disallowance of Wells Fargo’s Claim on standing grounds strongly suggests that Wells Fargo has no such ability………………..

Neither the Debtors nor Wells Fargo cited any case law supporting their position on whether the note should be returned to the Debtors after disallowance of the Claim, and the Court’s independent research uncovered no case directly on point…………………..Here, while the validity of the note and mortgage in favor of Provident was actually litigated and determined in the Foreclosure Case, Wells Fargo’s substitution as the plaintiff was summarily ordered without notice to the Debtors or any hearing on the issue. The Debtors were not afforded a reasonable opportunity to obtain review of the substitution order before the automatic stay intervened. That the party sought to be precluded had a reasonable opportunity to obtain review of the prior court’s order is a basic premise of the fundamental fairness prong of the issue preclusion analysis. Id. This Court previously denied Wells Fargo’s attempt to establish its standing to file the Claim based on the judgment and order of substitution in the Foreclosure Case. For the same reasons, issue preclusion does not act to bar the Debtors’ claim for return of the note……………..

“The court agreed with other courts that simply because a creditor lacks standing to enforce a note, the debtor is not discharged of her obligations under the note. Id. This Court has concluded (and the district court on appeal agreed) that Wells Fargo is neither the holder of the note nor a nonholder in possession of the instrument with the rights to enforce it. (Docket No. 233, 11.) Therefore, Wells Fargo (and its affiliates, servicers, successors and assigns) cannot enforce the note, but that fact does not cancel the note nor discharge the Debtors’ obligations to the true owner. In the absence of any authority for their request for turnover of the original note and analogizing to the cases requesting dismissal with prejudice, the Debtors’ motion to require Wells Fargo to surrender the original note is denied….

CONCLUSION

The Debtors’ motion for reimbursement of the payments made on Wells Fargo’s disallowed Claim is granted, subject to offset for real estate taxes paid by Wells Fargo. Within 30 days of the date of this Order, Wells Fargo must pay $73,041.49 to the Debtors and $11,716.90 to the Chapter 13 trustee. The Debtors’ motions for reimbursement of attorneys’ fees and turnover of the original note are denied. The foregoing constitutes the Court’s findings of fact and conclusions of law. The Court will enter separate orders on each motion.

Dated: October 21, 2014

Business Records Exception — The Loophole That Needs Closing

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see AppellateOpinion Holt v Calchas 4th DCA decision

The clear assumption in this case is that Wells Fargo had stepped into the shoes of the lender and that if Wells Fargo did not win or if its surrogate did not win, it was assumed that the homeowner would be getting a free house, a free ride and a windfall at the expense of Wells Fargo Bank. Despite years of articles and treatises written on the subject, the courts have still not caught up with the basic fact that both the lenders and borrowers were victims of an illegal and fraudulent scheme. At the very least, the court owes it to our society and to all parties involved in foreclosure litigation, to enforce the laws that already exist —  especially the rules concerning the burden of proof in a foreclosure action.

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The Holt decision is a curious case. There are a number of unique factors that occurred in the trial court and again in the appellate court. The first judge recused herself shortly into the trial and was replaced by a senior judge. There is no transcript of the proceedings prior to the point where the senior judge took over. At the same time the homeowners attorney was also replaced. So my first question is how anyone could have reached any decision. In the absence of the transcript of the proceedings leading up to the recusal of the original judge I find it troublesome that either the judge or the attorney for the homeowner could come to a decision or develop any trial strategy or theory of the case for the defense of this foreclosure case.

The second thing that I have trouble with is that the homeowner filed the appeal based on three different theories, to wit:

(1) the proffered promissory note, mortgage, and assignment of mortgage should not have been admitted into evidence—  an argument that the appellate court rejects;

(2)  the homeowner’s motion to dismiss should have been granted for failure to prove compliance with paragraph 22 [default, reinstatement and acceleration] of the mortgage —  with which the appellate court agreed. Since the appellate court agreed with this point and reversed the trial court it would seem that the case should have been dismissed, but instead the 4th District Court of Appeal chose to remand the case for further proceedings thus giving a second bite of the apple to the party who was claiming the right to foreclose —  despite the finding that the trial was over and on appeal and the foreclosing party had failed to make its case. If the homeowner had failed to prove its defenses, would the appellate court have issued legal advice to the homeowner and remanded for another bite at the apple?

(3)  the payment history should not have been admitted into evidence over the hearsay objection raised by the homeowner. The court goes into great lengths essentially tying itself into knots over this one, but eventually sides with the homeowner. Instead of ordering the entry of judgment for the homeowner, the court remanded the action for further proceedings in which the foreclosing party, having received legal advice from the District Court of Appeal, is now permitted to retry the case to fill in the blanks that the appellate court had pointed out with great specificity and particularity.

While I agree with much of the reasoning that is stated in this appellate decision, I still find it very troublesome that there remains an assumption and perhaps even a bias in favor of the foreclosing party. This is directly contrary to the rules of court, common law, and statutory law. The party bringing a claim for affirmative relief (like foreclosure) must bear the burden of proving every element required in their cause of action. This is not a motion to dismiss where every allegation is taken as true. At trial, it is the opposite — there is no case for the homeowner to defend unless the foreclosing party establishes all elements of its right to foreclose. If they fail to do so, the other side wins. In the interest of justice as well as finality courts do not easily allow either side to have another trial unless there are exceptional circumstances.

(In non-judicial states, this is particularly perplexing — the homeowner is required to sue for a TRO (temporary restraining order). In actuality the homeowner probably should have sued immediately upon the notice of the purported “substitution of trustee.” But the point is that the homeowner is required to prove a negative as the non-judicial statutes are construed. What SHOULD happen is that if the homeowner sues for the TRO and objects to the notices filed, challenges the standing of the “new” beneficiary on the deed of trust, and otherwise denies the elements of a foreclosure action, then the parties should be realigned with the new beneficiary required to plead and prove its standing, ownership and ability to prove the default and the balance owed.)

The next thing I find potentially troublesome is that the tactic of inserting a new entity as plaintiff or as servicer in order to shield the actual perpetrator was clearly employed in this case, although it seems not to have been mentioned in the trial court or on appeal. In this case an entity called Consumer Solutions 3 LLC was substituted for Wells Fargo. Then Wells Fargo was substituted for Consumer Solutions. This is a game of three card monte in which everyone loses except for the dealer — Wells Fargo.

As long as they are going back to trial, it would seem that the homeowner would be well served to do some investigations into the parties, and to determine what transactions if any had actually occurred. If there were no transactions, which I think is the case, then any paperwork generated from those fictitious transactions would be completely worthless, lacking in any foundation and could never be enforced against anybody —  with the possible exception of a holder in due course.

 BUSINESS  RECORDS EXCEPTION:

I am continually frustrated by the fact that most people simply do not consider the elements of the business records exception to the hearsay rule within the context of why the hearsay rule exists. By its very nature hearsay tends to be untrustworthy, untested and usually self-serving. That is why the rule exists. It bars any document or testimony offered to prove the truth of the matter asserted unless the person who spoke or wrote the words is present in court to be cross examined as to their personal knowledge, whether they had an interest in creating one appearance or another,  or whether the entire statement could be impeached.

Instead most people on all sides of foreclosure litigation seem to think that the business record should be admitted into evidence unless there is a compelling reason to the contrary. This is incorrect. And if you just scratched the surface of any of these claims you will find that the party who is seeking to introduce these hearsay statements into evidence has a vested interest in the outcome of the case and absolutely no direct knowledge of any of the facts of the case.

Like Chase Bank does with SPS, Wells Fargo has inserted this entity that is essentially run by a hedge fund (Cargill) to prevent any employee or contract party from testifying on behalf of Wells Fargo, because Wells Fargo knows that it has already been sanctioned millions of dollars for telling lies in court.

So instead they have somebody else come in to tell the lies, and that witness is trying to say that they are familiar with the record-keeping of their own company which includes the record-keeping of the previous company, Wells Fargo. Consumer Solutions is a shame shell that never did anything but rent its name for foreclosures while its parent, Cargill, received compensation  (a piece of the pie) for doing nothing.

This obvious ploy has worked for nearly a decade but is coming under increasing scrutiny — with Judges musing out loud about the shuffling of “servicers” and “lenders” and creditors. In an effort to stifle any real challenge to foreclosures courts have often held that the securitization documents are “irrelevant.”

So the courts take jurisdiction over the action and the parties by virtue of claims of securitization, authority allegedly granted by a pooling and servicing agreement, and ownership “proven” merely by claiming it on the basis of self-serving fabricated documents not subject to scrutiny, and a default and balance that excludes the payments received by the creditors from servicer advances and other third party payments paid without right of subrogation.

Then the courts limit discovery, overrule objections and allow the party initiating foreclosure to “prove” its case by using dubious legal “presumptions” instead of facts, most of which were denied by the homeowner.

And now that the Wall Street banks perceive a risk in having real people with real knowledge testify, because they might admit or testify to things that might hurt them, they insert a complete stranger to the process and double down on “business record exception” to get paperwork into evidence, much of which is completely fabricated and nearly all of which contains errors in computation by exclusion of (a) the fact that the creditors were paid every payment despite the declaration of default by the “servicer” and (b) deducting those payments from the original debt owed to those investors who advanced funds for the origination or acquisition of “loans.”

In the Holt decision the 4th DCA declares that the assignment was properly allowed into evidence because it was a “verbal act” and not offered to prove the truth of the matter asserted. Once in evidence however, the contents were taken as true shifting the burden of proof to the homeowner who was stone walled in discovery. The homeowner in many cases is not allowed to compel the production of evidence of payment or consideration for the assignment — without which the assignment is merely an empty document conferring no rights greater than the assignor had at the time of the alleged “assignment”. Most often the assignor did not require payment for the simple reason that they too had no money in the deal.

PAYMENT  HISTORY HEARSAY OBJECTION

The court inserts Florida Statute 90.803(6)(a), which is part of the evidence code, providing for exceptions to the hearsay rule for business records. In that statute is the general wording for the types of records that might qualify for the exception. But the court completely ignores the last words of that statute — “unless the sources of information or other circumstances show lack of trustworthiness.” (e.s.)

The question is why should we trust a servicer or its “professional witness”? The witness is there and was often hired for the sole purpose of testifying in foreclosure trials. If they lose, they risk their jobs. The “servicer” whether they are designated in the PSA or have been slipped in as another layer of obfuscation, has an interest that is in conflict with the the actual creditors — recovery of “servicer advances” (which were paid from funds provided by the Master Servicer — often the underwriter and seller of mortgage bonds to investors) and to make more money because they are allowed to collect a vast amount of “fees” for enforcement of a “non-performing” loan.

The fact is that the servicer advances negates the default and might give rise to a new cause of action for unjust enrichment against the homeowner but that claim would not be secured. This in turn leads to the unnatural conclusion of aggravating the the alleged damages by forced sale of the property as opposed to modification and reformation of the loan documents to (a) name the true creditor and (b) use the true balance owed to the creditors.

Thus both the specific witness and the company he or she represents have a vested interest in seeing to it that the foreclosure results in a forced sale for their own benefit and contrary to creditors who have no notice of the pending action. At the very least, this certainly raises the question of trustworthiness. Add to that the fraudulent servicing practices, the lies told during the “modification” process, and I would argue that the source and circumstances raise a presumption that the testimony and business records not trustworthy.

Quoting Florida Statute 90.803(6)(a) the court goes not to set forth the elements of the business records exception — the issue being that ALL elements must be met, not just some or even most of them:

  1. The record was made at or near the time of the event [so in many cases where SPS was inserted as the “servicer” when in fact it was merely an enforcer without knowledge of prior events, it is impossible for the records of SPS  to contain entries that were made at or near the time of any relevant event].
  2.  the record was made by or from information transmitted by a person with knowledge [ if the court permitted proper discovery, voir dire, and cross examination is doubtful that any witness would be able to testify that the record was made by a particular person who had actual knowledge]
  3.  the record was kept in the ordinary course of a regularly conducted business activity [ while it might be true that the actual servicer could claim that it’s records were in the ordinary course of a regularly conducted business activity, it is not true where the witness is a representative of a “new” servicer for plaintiff —  neither of whom were processing any data concerning the loan from the moment of origination through the date that the foreclosure was filed]
  4.  that the record was a regular practice of that business to make such a record [ here is where the courts are in my opinion making a singular error —  by accepting proof of only the fourth element required for the business records exception, trial court and appellate courts are ignoring the other elements and therefore allowing untrustworthy documents into evidence.  “While it is not necessary to call the individual who prepared a document, the witness to open a document is being offered must be able to show each of the requirements for establishing a proper foundation.” Hunter v  or Aurora loan services LLC, 137 S 3d 570 (Fla 1st DCA 2014).

The Holt Court then goes on to analyze several cases:

  1. Yisrael v State 993 So 2d 952, 956 (FLA 2008) — a Florida Supreme Court decision quoting the elements of the business records exception. see sc07-1030
  2. Glarum v LaSalle Bank, N.A. 83 So 3d (Fla 4th DCA 2011) — where the witness was unable to lay the proper foundation for the business records exception  because the witness testified that he “did not know who, how, or when the data entries were made into [ the previous mortgage holders’] system and he could not stated the records were made in the regular course of business.” ( My only objection to this is the wording that was used. The predecessors in the document chain are referred to as “mortgage holders” —  indicating an assumption which is probably not true). see Glarum v. LaSalle
  3. Weisenberg v Deutsch Bank N.A. 89 So 3d 1111 (FLA 4th DCA 2012) — Where the court held that “the deposition excerpts show that [the witness] knew how the data was produced and her testimony demonstrated that she was familiar with the bank’s record-keeping system and had knowledge about data is uploaded into the system.” (My problem with the Weisenberg decision is that the word “familiar” is used generically so that the witness is allowed to testify about the business records — without any personal knowledge about the trustworthiness of the data in those records — again with the apparent assumption that the foreclosing party SHOULD win and the second assumption being that the homeowner should not be allowed to take advantage of hairsplitting technicalities to get a free house.  In fact it is the servicer that is taking advantage of such technicalities by getting business records into evidence without verification that those are all the business records. For example, the question I often ask is who did the servicer pay after receiving payment from the borrower or anyone else? The records don’t show that — thus how can the court determine the balance on the creditor’s books and records? The underlying false assumption here is that the servicer records ARE the creditor’s records even though the creditors have not even been identified.)
  4. WAMCO v Integrated Electronic Environments 903 So 2d 230 (Fla 2d DCA 2005) —  Where another appellate court held that “a document which contains the amount of money owed on the loan was admissible under the business records exception even where the testimony as to the amount owed was based on information from a bank that previously held the loan.” (I think this decision was at least partially wrong. The witness testified that it was part of his duties to oversee the collection of loans that the bank urges and the initial members he used his calculations were provided by the previous bank.  In my opinion the court properly concluded that the witness to testify —  that he should have been limited to the business records of the company that employed him. Witness knew nothing about the previous bank practices and did not employ any verification processes. see 2D04-2717
  5. Hunter v Aurora Loan Services 137 So 3d 570 (Fla 1st DCA 2014) — where the witness was incompetent to testify and could not lay a proper foundation for the business records exception and in which the HOLT Court quotes from the Hunter decision with obvious approval:  “At trial, a witness who works for the current note holder, but never worked for the initial note holder, attempted to lay the foundation for the introduction of records pertaining to prior ownership and transfer of the note and mortgage as business records. The witness testified that based on his dealings with the original note holder, the original note holders business practice regarding the transfer of ownership of loans was standard across the industry. He could not testify, based on personal knowledge, who generated the information. He also testified, in general fashion and without any specifics, that some of the documents sought to be introduced were generated by a computer program used across the industry  and that records custodian for the loan servicer was the person who usually it puts the information obtained in the documents. The trial court admitted the documents into evidence.” see hunter-v-aurora-loan-servs-llc

The most interesting quote from the Hunter decision is “absent such personal knowledge, the witness was unable to substantiate when the records were made, whether the information they contain derived from a person with knowledge, whether the original note holder regularly make such records, or indeed, whether the records belong to the original note holder in the first place. The testimony about standard mortgage industry practice only arguably established that such records are generated and kept in the ordinary course of mortgage loan servicing.” 

Now that you have won your “free “house, what happens next?

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On an upbeat note, we are getting more and more communication from homeowners who have won their cases outright and not subject to confidentiality agreements. Fortunately these happy homeowners have realized that the fight is not yet over but that they are obviously in control of the narrative. A word of caution about the case cited in yesterday’s article where the Judge granted a “free house” to a homeowner. The New Jersey bankruptcy case is potentially persuasive but legal authority that the Judge in your case must obey.

Banks have gone to great lengths in framing the narrative on these mortgages and these foreclosures. Almost everywhere you hear the phrase “free house.” Of course nobody really knows what anyone means by that phrase. “free houses” are a myth, just like the trusts, the assignments and the “holders” of the note and mortgage. Preventing the mortgagee from enforcement does NOT give a free house to anyone, regardless of the circumstances. It is a rare circumstance that the buyer of the new house does not expend thousands of dollars or tens of thousands of dollars or even hundreds of thousands of dollars on the house that they think they now own.

I know thousands perhaps millions put a down payment into a house thinking that their payment was equity they would retrieve when the house was sold or refinanced. A typical case I have witnessed is a home purchased for $500,000 with $100,000 down payment —- 20% of the purchase price based upon appraisals that wildly speculative and untrue.

Then the house gets sold in a short sale for $300,000. If that homeowner had fought the bank and the bank was found not to be the owner of the mortgage or note or debt and the mortgage was found to be unenforceable or even void, did that homeowner get the house for free. $100k down, plus $50k in improvements, furnishings etc. The homeowner is out $150,000 no matter what happens and that is not free. There is no such thing as a free house and there never was. But mortgages and notes are sometimes ab initio (from the start), unenforceable or void and in today’s market most of them fall somewhere in that category.

And there is an area of confusion between property law, bankruptcy law and contract law. Which brings us to the case decided in New Jersey by a bankruptcy court judge. It is the case of Washington versus specialized loan servicing and the Bank of New York Mellon as trustee for the certificate holders of an allegedly asset-backed trust.

This case is far from a cure all that will fix all other foreclosures. I doubt the Judge had jurisdiction to declare the mortgage void. And therein lies a potential problem for the homeowner that won here. The homeowner might lose on appeal or still have a problem even if the bank’s appeal is turned down.

I will point out again that Bank of New York Mellon represents itself as trustee for the certificate holders and old minutes any representation for the trust itself. One might conclude that the trust does not exist and that the certificate holders who obviously are the investors are the real parties in interest as I have repeatedly stated for more than seven years.
And by the way, NJ does not have a homestead exemption, so the debt, which is real and if it can be computed after giving credit for all payments to the creditors from all sources, is still owed and the homestead can still be foreclosed based upon a money judgment. So a free house is just not the right term to describe any of this.

I don’t think the judge realized that the investors were being directly represented by Bank of New York Mellon and that the reference to the bank as a trustee was merely a self-serving statement by the bank in order to block any inquiry into the identity of the certificate holders who were the obvious real parties in interest. In the months and years to come the distinction which I am drawing here will become increasingly important in court rooms across the country.

The bankruptcy judge carefully analyzed the statute of limitations and concluded that there was no way that the loan could be enforced and that therefore the claim in bankruptcy was void. The judge that he didn’t like to give anyone a free house but that was what he had to do in this case in New Jersey.

The foreclosure case in the state court was dismissed for lack of prosecution without prejudice. The effect of that dismissal was one of the things that was in dispute that the bankruptcy judge decided. The bad news is that I am not so sure this decision will be upheld if it is appealed. But even if it is upheld I’m not so sure that the homeowner actually received the free house that the judge expressly said was being given to him by the judges decision. Bankruptcy Judges are known to have an inflated view of their jurisdictional authority. The District Court Judge above him in the same courthouse might have been able to declare the mortgage void, but I doubt if a bankruptcy judge has that authority. But the decision to prevent enforcement of the mortgage in the bankruptcy proceeding and the decision to cause the alleged creditor to be unsecured instead of secured (which is what I have been advocating for 7 years) is probably valid.

The judge decided that both the note and mortgage were unenforceable. He also decided that because they were unenforceable that Bank of New York Mellon did not have a secured claim for purposes of the bankruptcy proceeding. The judge went further than that by stating that the underlying lien is deemed void pursuant to 11 USC 506(a)(1) and (d). So for purposes of that bankruptcy proceeding court made a determination that Bank of New York Mellon did not have secured status. The Court also seemed to accept the agreement of both size that Bank of New York Mellon or a specialized loan servicing had the original note and mortgage.

The Question I have is the same question that Is being asked in many circles today. When all is said and done the mortgage still is present in the county records — it was recorded so it still exists in the county records of the County recorder in the jurisdiction in which the property is located. My question is whether in the absence of a court order stating that the mortgage is void or nullified, and in the absence of the recording of such an order at the county recorders office, will this homeowner be legally correct in assuming that the mortgage will not affect his title and that no payment will be required at the time the homeowner seeks to sell or refinance the property.

It may seem like splitting hairs and maybe It is. But I think there’s a difference between a lien that is in the county records and therefore encumbers the title answer the question of the enforceability of the lean. When you pull up the title chain by hand or by computer, the mortgage will be there. Would you buy that property without getting rid of that mortgage? Would you lend money on that property? In this case the Bankruptcy judge has decided for purposes of the bankruptcy proceeding that the secured status of Bank of New York Mellon did not exist.

I question whether that decision automatically means that the mortgage was in fact nullified or void unless the County recorder accepts the court order for recording and the recorded order is interpreted as nullification unemployed mortgage document. And THAT basically means you need to file a quiet title action, which bring you back to attacking the initial loan transaction ab initio (from the beginning). Unless you can say that the note and mortgage should never have been released from the closing table, much less recorded, I think there is a potential problem lurking in the shadows. The homeowner might be prevented from selling or refinancing the home without the AMGAR program or something like it.

Otherwise what it comes time to sell or refinance the property, the homeowner may find that he still must deal with either paying off somebody claiming to own the mortgage or the homeowner is required to file a quiet title action to resolve the question. Of course the longer the homeowner waits before taking any action to sell or refinance the property, more likely it is that the homeowner will in fact end up with the property unencumbered by the mortgage. My point is that I don’t think that question has been answered and I don’t think that the answer will be consistent across the country.

It is my opinion that nullification of the mortgage as a void instrument that never should’ve been released much less recorded is first required for the Court can consider of cause of action to quiet title in favor of the homeowner and specifically against the encumbrance filed in the county records as a mortgage. I would also Council caution on applying this bankruptcy case to other cases in the State judicial system even in New Jersey.

But I would also say that the distaste of people sitting on the bench for hey results that benefits the homeowner signals bias for which there is no proper foundation. There is no question that these loans, debts, notes, mortgages, assignments and transfers. collection modification and foreclosures are all clouded in obscure schemes created by the banks and not the borrowers. 50 million borrowers did not wake up one morning and meet in some stadium with the idea of defrauding the banks and the federal government and insurers, guarantors and investors. But a handful of Wall Street titans who had become accustomed to their power, did in fact arrogantly pursue a scheme that did defraud borrowers, investors, insurance companies and the U.S. government.

To say that nobody can file a foreclosure is not to say that the debt cannot be enforced. There are causes of action based solely on common law or the note. If a real creditor could step forward showing a real advance of funds, they would probably prevail in at least establishing that the debt is owed from the homeowner and possibly get a money judgment. In states that have little or no homestead exemption the lien can be recorded, attaches the chain of title for the house and can be foreclosed as a judgment lien. But of course that would require the party seeking to enforce the debt to show that they actually advanced the money as a creditor. And THAT is the problem for the banks. If they had that evidence there would be no argument over the enforceability of the alleged loan documents that I call worthless.

They would have produced it long ago if the notes and mortgages were valid documents. They didn’t, they can’t, and that is why Elizabeth Warren is absolutely right in demanding that the principal balance of the debt be corrected downward. And it is stink and no crime for a Judge to apply the law evenly and allow the chips to fall where they may. If that means nobody gets to enforce the mortgage it doesn’t mean the homeowner received a free house.

The debt is due, after all adjustments, and it could be enforced by other means — unless the truth is that the borrowers ARE off the hook because the original debt, upon which all other debts deals rely as their foundation, has already been paid off. Then the homeowner doesn’t owe the money on the original debt and if somebody wants to make a case against the homeowner for recovery of what they actually lost then let them bring that action. Otherwise too bad. If the original debt is paid off through any third party payment (i.e., if the certificate holders have received payment in full directly or indirectly on their investment), then there should be no possibility of a mortgage foreclosure because that is the only debt that is allegedly secured by a mortgage. Other parties who have been lurking in the shadows would have to come into the limelight and allege and prove their case including the allegation that they are losing money as a result of these complex and obscure transactions.

The banks started this and they should suffer the consequences. There is plenty of blame to go around. To have homeowners pay the full price for the bank’s misbehavior, for the servicer’s fraud, and the Wall Street bank’s greedy method of siphoning the life out of our economy is just plain wrong. Even if we want to treat the loan documents as real, the consequences should be spread around and not on banks who are reporting higher and higher profits from aggressive release of reserves that comes from money they stole from investors —- a fact that is now dawning upon securities analysts as they downgraded Wells Fargo and other banks.

Banks Use Trial Modifications as a Pathway to Foreclosure — Neil Garfield Show 6 P.M. EDT Thursdays

Banks Use Modifications Against Homeowners

Click in or phone in at The Neil Garfield Show

Or call in at (347) 850-1260, 6pm EDT Thursdays

It is bad enough that they outright lie to homeowners and tell them they MUST be 90 days behind in payments to get a modification. That isn’t true and it is a ruse to get the homeowner to stop paying and get into a default situation. But the reports from across the country show that the banks are using a variety of tricks and scams to dishonor modification agreements. First they say that just because they did the underwriting and approved the trial modification doesn’t mean that they are bound to make the modification permanent. Most courts disagree. If you make a deal with offer, acceptance and consideration, and one side performs (the homeowner made the trial payments) then the other side must perform (the Bank).

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What is really happening is that the bank is converting the loan from a loan funded by investors to a loan NOT funded by the bank. They are steering people into “in house” loans. The hubris of these people is incredible. Why are the investors sitting on their hands? Do they STILL not get it?
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Regardless of whether the modification is enforced or forced into foreclosure or converted to an in house loan, the investor loses with the stamp of approval from the court. And the borrower is now paying a party that already collected his loan principal several times over while the real lender is getting birdseed. The investors lose no matter how the case is decided. And the Courts are failing to realize that the fate of the money from a Pension Fund is being decided without any opportunity for the investors to have notice, much less be heard.
Why is this important? Because the banks converted one debt from the borrower into many debts — all secured by the same mortgage. It doesn’t work that way in real life — except now, when courts still refuse to educate themselves on the theory and reality of securitization of debt.
http://www.occupy.com/article/when-fighting-your-home-becomes-biggest-fight-your-life
——————————-FROM RECENTSHOWHOW DO YOU KNOW THAT? — Introducing two upcomingCLE Seminars from the Garfield Continuum onVoir Dire of corporate representatives in foreclosure litigation. The first is atwo hour telephone conference devoted exclusively tovoir dire examination and the second is a full day on onlyvoir dire pluscross examination. The show is free. Topreregister for the mini seminar onvoir dire or the full seminar onvoir dire andcross examination (at a discount) call 954-495-9867.

  • Overview of Foreclosure Litigation in Florida and Other States
  • The need for copies of actual case law and even memoranda supporting your line of questioning
  • The Three Rules for Questioning
  • —– (1) Know why you want to inquire
  • —– (2) Listen to the Answer
  • —– (3) Follow up and comment
  • What to ask, and when to ask it
  • The difference between voir dire and cross examination
  • Getting traction with the presiding Judge
  • Developing your goals and strategies
  • Developing a narrative
  • Impeaching the witness before he or she gets started
  • Preparing your own witnesses for voir dire questions

 

IF YOU MISSED IT: Go to blog radio link and click on the Neil Garfield Show — past shows include—-

News abounds as we hear of purchases of loans and bonds. Some of these are repurchases. Some are in litigation, like $1.1 Billion worth in suit brought by Trustees against the broker dealer Merrill Lynch, which was purchased by Bank of America. What do these purchases mean for people in litigation. If the loan was repurchased or all the loan claims were settled, does the trust still exist? Did it ever exist? Was it ever funded? Did it ever own the loans? Why are lawyers unwilling to make representations that the Trust is a holder in due course? Wouldn’t that settle everything? And what is the significance of the $3 trillion in bonds purchased by the Federal Reserve, mostly mortgage backed bonds? This and more tonight with questions and answers:

Adding the list of questions I posted last week (see below), I put these questions ahead of all others:

  1. If the party on the note and mortgage is NOT REALLY the lender, why should they be allowed to have their name on the note or mortgage, why are those documents distributed instead of returned to the borrower because he signed in anticipation of receiving a loan from the party disclosed, as per Federal and state law. Hint: think of your loan as a used car. Where is the contract (offer, acceptance and consideration).
  2. If the party receiving an assignment from the false payee on the note does NOT pay for it, why are we treating the assignment as a cure for documents that were worthless in the first place. Hint: Paper Chase — the more paper you throw at a worthless transaction the more real it appears in the eyes of others.
  3. If the party receiving the assignment from the false payee has no relationship with the real lender, and neither does the false payee on the note, why are we allowing their successors to force people out of their homes on a debt the “bank” never owned? Hint: POLITICS: What is the position of the Federal reserve that has now purchased trillions of dollars of the “mortgage bonds” from banks who never owned the bonds that were issued by REMIC trusts that never received the proceeds of sale of the bonds.
  4. If the lenders (investors) are receiving payments from settlements with the institutions that created this mess, why is the balance owed by the borrower the same after the settlement, when the lender’s balance has been reduced? Hint: Arithmetic. John owes Sally 5 bananas. Hank gives Sally 3 bananas and says this is for John. How many bananas does John owe Sally now?
  5. And for extra credit: are the broker dealers who said they were brokering and underwriting the issuance of mortgage bonds from REMIC trusts guilty of anything when they don’t give the proceeds from the sale of the bonds to the Trusts that issued those bonds? What is the effect on the contractual relationship between the lenders and the borrowers? Hint: VANISHING MONEY replaced by volumes of paper — the same at both ends of the transaction, to wit: the borrower and the investor/lender.

1. What is a holder in due course? When can an HDC enforce a note even when there are problems with the original loan? What does it mean to be a purchaser for value, in good faith, without notice of borrower’s defenses?

2. What is a holder and how is that different from a holder with rights to enforce? What does it mean to be a holder subject to all the maker’s defenses including lack of consideration (i.e. no loan from the Payee).

3. What is a possessor of a note?

4. What is a bailee of a note?

5. If the note cannot be enforced, can the mortgage still be foreclosed? It seems that many people don’t know the answer to this question.

6. The question confronting us is FORECLOSURE (ENFORCEMENT) OF A MORTGAGE. If the status of a holder of a note is in Article III of the UCC, why are we even discussing “holder” when enforcement of mortgages is governed by Article IV of the UCC?

7. Does the question of “holder” or holder in due course or any of that even apply in the original loan transaction? Hint: NO.

8. Homework assignment: Google “Infinite rehypothecation”

For more information call 954-495-9867 or 520-405-1688.

 

Giunta Prevails on Wells Fargo Motion to Dismiss — Federal Court

For more information on foreclosure offense, expert witness consultations and foreclosure defense please call 954-495-9867 or 520-405-1688. We offer litigation support in all 50 states to attorneys. We refer new clients without a referral fee or co-counsel fee unless we are retained for litigation support. Bankruptcy lawyers take note: Don’t be too quick admit the loan exists nor that a default occurred and especially don’t admit the loan is secured. FREE INFORMATION, ARTICLES AND FORMS CAN BE FOUND ON LEFT SIDE OF THE BLOG. Consultations available by appointment in person, by Skype and by phone.

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Patrick Giunta, Esq. the lead litigator for the livinglies team has done it again. He filed a lawsuit against Wells Fargo while the trial on a foreclosure was underway. Wells Fargo now faces a loss in the foreclosure where their witness admitted to being unable to explain the chain of ownership, the balance and the reason why Wells Fargo refused to cooperate in the sale of the property that would have paid them in full.

This corroborates my strategy that presumes that the foreclosers don’t want the house or the money. What the banks want is a foreclosure judgment that forces the loan onto an investor who does not even know of the existence of the proceedings. besides it being illegal and unfair, it raises questions of jurisdiction and standing, because the actual source of funds — the investors who in reality own the debt directly — receive no notice of the proceeding — and they think they barred by the terms of the Prospectus and Pooling and Servicing Agreement from even inquiring about the status of the “pool” (which is most likely non-existent except where foreclosure judgments have been entered).

Here Judge Dimitroleas, Federal Judge in the Southern District of Florida, ruled that the Homeowner has rights of action for money damages against dubious claims from “holders”, “servicers” and even “trustees.” Along with other claims, Giunta survived a motion to dismiss the homeowner’s claim for fraudulent misrepresentation — as to the status of the loan, the ownership and the balance.

The fact pattern of this case clearly corroborates the fact that “servicers” are claiming ownership or rights to enforce debts that they don’t own and don’t have any authority to represent the creditor because they are making false claims of securitization. Thus the banks cannot say they actually represent the investors who THOUGHT they were buying mortgage backed securities from a funded trust that was originating and acquiring loans. If they admit the facts in reality they are admitting to committing fraud on the investors, the insurers, the guarantors, and of course the borrowers. The presumption regarding ownership or rights to enforce is directly contrary to the actual facts. And the threshold for rebutting those presumptions is fast falling in Federal and State courts.

Patrick Giunta is located in Broward County Florida.

see Grave – (DE28) – Order on Motion to Dismiss

National Honesty Day? America’s Book of Lies

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

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

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

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

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

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

Here is a sampling of corroborative evidence for my conclusions:

Senator Elizabeth Warren’s Candid Take on the Foreclosure Crisis

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

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

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

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

More than 700,000 Foreclosures Expected Over Next Year

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

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

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

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

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

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

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

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

Banks Profit from Suicides of Their Officers and Employees

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

 

Judge Zloch Deals Blow to Wells Fargo and Ocwen on Trial by Jury

In a short written opinion Judge William J Zloch, formerly of Notre Dame football fame (quarterback and wide receiver) dealt a huge blow to bankers pretending to be lenders and servicers pretending to be bankers. For him the issue was simple. And he is right. His opinion contains irrefutable logic. Ocwen wanted to escape trial by jury because the mortgage documents contained a waiver. Wells Fargo also wanted to escape trial by jury, but they were being sued vicariously through the actions of Ocwen.

Zloch said no to Ocwen and seems to be saying the same thing to Wells Fargo. His reasoning is simple and bulletproof — the borrower sued Ocwen stating that it had committed various wrongdoing. Ocwen by all accounts is only a servicer and never has been a lender notwithstanding its prior assertions in court, which many judges have rubber stamped and now wish they didn’t.

This decision appears to be important for at least three reasons:

1. The Judge accepts the notion that Ocwen is a controlled entity of Wells Fargo.

2. The Judge rejects the idea that a party other than the owner of the mortgage can rely on the mortgage terms for any reason (except to show that they were servicing and processing in compliance with the terms of the note and potentially the mortgage). Thus the Judge underscores a central point on this blog — that the servicers, aggregators and broker dealers and trusts and trust beneficiaries are all independent entities and the servicers, among others, have inescapable conflicts of interests that results in action contrary to the expectations of both real parties in interest — i.e., the investors as lenders and the homeowners as borrowers.

3. Trial by jury is available as to all damage claims against any party who is not party to the mortgage contract; and for those banks that are using the servicers as a shield, they may be subject to claims that will be heard by a jury as well.

So in the end he says that the jury will render a verdict as to the claims against Ocwen and render an advisory verdict as to the claims against Wells Fargo. This is a potential nightmare for the banks. It is about time. And now it is time to get your claims heard by a jury.

201403241440

 

 

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