Many attorneys are doing well in court without the Steinberger decision

Mark Stopa, Esq., from the West side if Florida, points out that he and other lawyers are winning cases without the benefit of some recent trial and appellate decisions. Our own experience at Garfield, Kelley and White LLC, shows the same results. In that respect I did a disservice to myself and my partners. Many lawyers did not get their pleading dismissed and were able to proceed into discovery and trial. I think Mark is right that I might have created a misimpression that there was no progress but for the Arizona or other decisions.

The fact remains that in most cases the Bank cannot prove its case and Judges are turning that corner. The old bias is fading. When a lawyer aggressively pursues weaknesses in the foreclosure case, there are many gaps in the pleading and proof of the party seeking foreclosure. And before I leave this out, pay attention to the pleading of the party seeking foreclosure and their answers either in its answers to discovery or at trial. It is the complaint and answer that frame the issues to be presented at trial. When there is a conflict, a proper objection can stop the Forecloser dead in its tracks.

For example, BofA in one case filed a foreclosure complaint stating that they were the Servicer and that the owner of the loan was an unidentified third party. In response to discovery they assert that BofA was always the owner of the loan and denied any sale or securitization of the loan. This amounts to an admission that the allegations of the complaint are untrue, that the verification of that complaint was a sham, and that the factual basis and legal theory of their case had changed. Since they are on the eve of trial, and no motion to amend was filed, the case is at issue on facts the attorney knows in advance cannot be proven or even proffered as evidence in view of the sworn answers to interrogatories. We’ll see what happens in that case.

Please send transcripts of depositions or cross examination of bank witnesses to neilfgarfield@hotmail.com.

19 Responses

  1. FNMA, another party, who is not the lender has intervened in the contract between the borrower and the lender by contract with the lender. We’ve known about the g-fee for a while now, but what at least I didn’t know is that it’s a charge to the borrower – it’s built into the rate.
    (I had thought it was just a one time charge to the seller when selling to FNMA.)
    I’m wondering if this impacts the a.p.r. – it’s not interest, it’s another charge. What impacts an a.p.r. is what a borrower pays to get a loan at, say 6%, like points, doc fees, underwriting fees, and so on. The FHA mortgage insurance premium, for instance, is calculated into the a.p.r. , which is why the a.p.r. on an fha loan is generally higher than on a loan without it. It’s possible this guarantee fee should have been calculated in every a.p.r. where it was charged. If so, everyone who got a loan the lender(or bigger guy) intended to sell to FNMA has an a.p.r. which is entirely inaccurate. If so, this newly discovered information could be good for something. I think it is, but even if it doesn’t impact the a.p.r., it’s a load and a half that the borrower is paying for FNMA to guarantee payments to investors on MBS’s and then is not even credited with the payments made pursuant to that guarantee he paid for. Any NOD on a FNMA loan or proof of claim which doesn’t reflect these payments is wrong and imo fraudulent. The servicer, the guy providing the default figures, knows damm well about the guarantee payments because he’s the guy who pays them and then gets reimbursed by FNMA.

  2. The other day I mentioned a “spread” and how lenders / banks generally make money on them. What if the weighted average yield (think that’s the right terminology) of a bundle of loans is 6.5%, but the coupon rate paid to the investors has been agreed at 5.625%. One of two things could happen (one of them not legally imo): the seller of the bundle would tender less of the loans to arrive at a coupon rate / return of 5.625% to the investors (take out 50,000,000, say, in loans from 5 billion, leaving them with the seller who makes all the moolah on them – 50m!). This one is legal, unless those 50m in loans were on a schedule for delivery. But what if the seller forks over all 5 billion in loans and the master servicer diverts the spread (6.5% actual yield minus 5.625% coupon rate) to the seller? This wouldn’t be legal for securitization that I know of, but it wouldn’t surprise me. Plus, it may mean the seller had an insurable interest. Or I guess they could not deliver at all, retain ownership (subject to the investor’s security interests) and insure them, and then on the GSE loans, the GSE can eat the guarantee they are obligated for.
    FNMA says thing like “the loans were converted to MBS’s” (verbatim). Converted? Literally? If not literally, what else could such a sentence mean? So that’s a whole other school of thought – isn’t it? One thing in support is that these MBS’s don’t pay how and what the notes do. I’d be hard-pressed to believe they pay more, so I have to believe they pay less.

  3. From FNMA:

    Guaranty Fees – 101

    Understanding the G-Fee

    A guaranty fee, also referred to as a “g-fee,” is one of the costs reflected in the interest rate on a single-family mortgage loan. This fee represents the charge by government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac to guarantee that an investor in that loan will receive all scheduled principal and interest payments until the loan is repaid. The guaranty fee is compensation (to the GSE – sic) for assuming all credit losses and costs associated with loans that become delinquent and ultimately go to foreclosure.

    The g-fee is generally stated in basis points (bps); each basis point represents 1/100th of one percent of the loan amount. For example, a Fannie Mae guaranty fee of 29 basis points to guarantee a newly acquired single-family loan would represent 0.29 percentage points (0.29%)** annually of the loan amount paid to Fannie Mae on a monthly basis. We set guaranty fees based on a variety of business and market factors. Since the guaranty fee is typically built into the interest rate charged to the borrower, an increase in g-fees may translate to an increase in interest rates.

    Fannie Mae’s public mission is to help keep liquidity flowing to the mortgage market. Our activities include securitizing mortgage loans originated by lenders into Fannie Mae mortgage-backed securities (MBS) and then serving as trustee and guarantor of the MBS. These securities are generally considered to be very liquid; lenders can either hold MBS as an investment or sell the securities to investors in the secondary market to replenish their funds available to lend. Fannie Mae also retains some of the MBS it issues.

    jg: dang. I didn’t know they charged this annually. I thought it was a one time charge to the loan-seller, so the BORROWER pays more than even I thought. And yet these rat-b’s turn in proofs of claims and lay figures on borrowers which do NOT include the dollar-for-dollar retirement of their notes by these guarantee payments (the borrower doesn’t even know he’s paying for). Imo, not crediting the borrower with the guarantee payments is theft, plain and simple. Beyond that, also imo, it’s solid grounds for discovery because a court cannot, just cannot, know the facts necessary for adjudication without it.
    lay opinions, as always

  4. Definition of ‘Guarantee Fees’ (Investopedia)

    Fees charged by mortgage-backed securities (MBS) providers, such as Freddie Mac and Fannie Mae, to lenders for bundling, servicing, selling and reporting MBS to investors. The main component of the guarantee fee is charged to protect against credit-related losses in the mortgage portfolio (think of it like MBS insurance), but small sub-fees are also deducted to cover internal expenses for such services as:

    -Managing and administering the securitized mortgage pools
    -Selling the MBS to investors
    -Reporting to investors and the SEC
    -Maintaining the MBS on the open market, and selling, general and administrative expense

    Commonly known in the industry as “g-fees”, this small deduction (the average is 15-25 basis points in relation to the stated coupon rate) allows the corporations selling the MBS to make a profit, while benefiting both mortgage lenders and borrowers by making groups of mortgages more marketable and liquid. This helps bring investor capital into the business, allowing all participants to lower their risk exposure and enabling them to offer mortgages to borrowers of lower credit quality.

    The coupon rate on an MBS (also known as the pass-through rate) is the average rate on the underlying mortgages minus the guarantee fees. ”

    Okay, so it’s called the “g-fee” and the dollar amt is determined by the “g-rate”.

  5. Remarks Of Counselor To The Secretary For Housing Finance Policy Dr. Michael Stegman Before The ABS 2014 Conference:

    “It is also critical that we pursue comprehensive housing finance reform. Many of the structural flaws of the legacy GSE-centric mortgage finance system have not been fixed. After more than 5 years, Fannie Mae and Freddie Mac are still in conservatorship; a duopoly with a combined current market share by dollar volume of more than 61 percent of mortgage originations for which the American taxpayer is directly at risk. Indefinitely continuing a taxpayer-backed duopoly is neither sustainable nor sensible public policy.”

    (also from 83jjmack at scribd)

    Wait a minute. The tax payers are directly at risk for 61% of mtg originations (or any percentage)? Why is that if the loans were sold to someone else by the GSE’s? Oh, yeah. It must be those guarantees (and who was in charge of that decision – and why did the GSE’s think they needed to guarantee them?) If tax payers are at risk on even one loan which went thru F or F en route to its alleged securitization, no one other than F or F is going to suffer a loss by the borrower’s non-payment, and that loss is (merely) the consequence of a voluntary guarantee, which as it turns out, is paid for by the “G-RATE”. ** The money realized by charging the g-rate is tantamount to a private insurance fund nka as a GSE guarantee fund. The agencies charge so many basis points of a loan amt when they buy loans. Those funds are used to meet their voluntary guarantee. F & F are still in receivership and that, the truth, the whole truth, and nothing but the truth, is a result of their choice to abandon prudent lending guidelines in favor of production / production bonuses. (WHO’S the HACK?) The point I’m trying to make is, first of, all those loans are guaranteed, but it also torks me that it’s on the back of the American polity for one reason and one reason only – so some mucks could make more money. The loans which will (and have) require(d) the use of the g-rate funds will most likely be those the lender had no business making in the first stinking place (predatory lending). These facts imo are judicially noticeable and what we care about is the guarantee = no legally cognizable injury to anyone. Volunteers, a legal determination, cannot claim an injury of any kind. The fact that they charged the seller for their guarantee
    doesn’t give them recourse against the homeowner. imo. “This is just not your father’s car” and judges have to stop acting like it is. We seriously need to help them by putting this stuff in their faces.

    **I just want to make sure everyone gets it that F & F, allegedly in existence to create liquidity for the housing market, which is supposed to benefit homeowners, charged money to cover their guarantee when they purchased the loans.

  6. Monster thanks to 83jjmack for posting this. You solved a big problem for me.

  7. Bob and So Cal 7, maybe the two of you could and would tell the rest of us how it’s supposed to work. I can only begin and barely that: 1) The investors give someone some money. 2) Over somewhere else, loans have been made and continue to be made.

  8. I know Sol Cal, Trust Me .. My point to Aman was that making a claim is not sufficient, you have to support your position with documentation, such as where the break is in the chain of title. what harm has or likely to have on you? Have you been or are you likely to be subjected to multiple claims? The Elements ….

    That’s why I keep telling him/her they need an Attorney in their jurisdictional state.

    What we use to stop them … they use to stop others. Proof of Claim

  9. and to listen to it, you may have to d/l (free) something like “The Record Player”.

  10. Cynthia – you might want to get the audio of that hearing, transcribe it, and post here or somewhere. Your own transcription won’t be good for court, but it sure will be interesting (or pop for just the transcription of just that portion of the hearing). Call the court clerk or better yet, go to your court’s website and find forms and then find one that is an order for the cd rom of a hearing. Or find the order form for the transcript (you’ll need the exact time of the part you want by listening to the audio) once you get it.

  11. And by the way KC….my previous post is exactly why you have Article III (or State) standing to challenge the break in the chain of title, as multiple parties (sponsor, depositor, trust, others???) can claim title. The evidence of the break is the Trust agreements.

  12. Bob G:

    If the Trust acquired the mortgage/DOT prior to the trust closing (which most did not), then you would certainly have an uphill “fact” battle. But if the mtg/dot was purported transferred after the closing, then there area ton of facts as evidence to show the Trust was incapable of “acquiring” the mtg/dot. Just a couple:
    – All “certificates” representing an interest in the mtg/dot’s were “issued” at trust closing. No more can be created.
    – Only the “depositor” and “sponsor” transfer funds within the Trust. The “Trust” is incapable and forbidden to “transact”.

    In most cases, Neil is right, because the “certificates” didn’t flow from the Trust to the Investor. The Investor “money” went to the “sponsor” (Lehman, Bear, et al.) and the sponsor held on to both the certs and mtg/dot’s, or, the mtg/dots were never properly transferred to either the sponsor, depositor or the trust. Often, the mtg/dots were pledged to multiple investors, too.

    I agree, getting that fact pattern in place is tough, but if the supposed transfer occurred after the closing date, that is where to present tons of facts….and I mean tons. Evidence of a lack of perfected interest by the certificate holders is where to focus.

  13. How does a broken chain of title cause you harm
    How and When .. specifically? How does show me the Note cause you harm? Those pesky elements to bring a claim are tricky …
    Let us know how …… “Judge” make them show me the note and I have a broken chain of title ” …works out.

    I’m not a gambler, but I am predicting that they will fail as an affirmative defense , and fail to state a claim as a plaintiff.

  14. Broken chain of title.
    NEVER AGAIN.

  15. Why do we keep going off track when we know the loans in many cases were done so without the exchange of monies. So we got a situation where someone is claiming the rights of a trust for a party that not purchase the debt. The payment are not paid to any trust as a trust is not a servicer, but the key is where is the proof of ownership by a body that under law can originate or purchase a home mortgage loan?

    The are not trust that are home loan originators!

  16. Neil…I sent the following to you via email, but apparently you are too busy posting new items to respond. So I’ll repost it here.

    You said—

    “The unfunded trusts could not originate or acquire the loans because they never had the money. In fact, they never had a trust account.”

    Absent any hard evidence, the above statement is merely conclusory and speculative. Where is the hard evidence to back up this allegation? If the allegation were true, why hasn’t it come out in discovery, at least at the institutional litigation level? I cannot believe that the institutional plaintiffs’ attorneys would not have established this allegation as true by now, if indeed it were true.

    Please help us out with this one. It really is a credibility issue that goes to the heart of your sales pitches.

    Thanx.

    Bob G.

  17. Here the problem is that the homeowners have said for 4yrs now that these parties are not the owner of the loans, yet only now are the attorneys seeing the light, but now the banks are buying back those securities to rescind these agreements.

    Time is running out and will bring another set of problems, while the attorneys are dealt a new set of problems. To watch Neil think out loud is like watching paint dry. These guys are conflicted because they think that the properties would go to the homeowners for free and not think of the situation as who got the equity interest in the properties, when dealing with a party that got “No Standing”!

    MERS v. Robinson (CA) is what up, as the judge dismissed MERS case because they were not the owner of the debt!

  18. I just had a judge in Santa Barbara deny a TRO with evidence:

    Trustee conducting my sale Wed NEVER filed a NOD

    Wells has NEVER Reported me late in 87 months Past Due= 0

    Attorney there for Wells could not “for the record” state who he represented.

    Judge laughed when attorney said who cares!! Shrugged his shoulders and judge shook her head and said exactly!!

    Justice at it’s finest.

    Homeless in 2 days.

    Cynthia 805-689-7384

    Sent from my iPhone

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