JPMorgan Chase Bombshell: The Mortgage Liens were Released and then Foreclosed anyways

Transcript Reveals How JPM Chase “Got away with it” — selling loans that were already sold, releasing liens and then foreclosing on nonexistent liens

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Hat Tip to Brent Tantillo, Esq.

In our Thursday broadcast of the Neil Garfield Show Mr. Tantillo offered to send us the transcript of a deposition of the person who was in charge of monitoring the National mortgage Settlement and compliance with restrictions and rules concerning the execution of the settlements that were under the purview of the witness.  The transcript shows a continuation of the pattern of setting the illusion of a monitor when in fact the regulator (monitor in this case) was either forced or allowed to rely upon reports generated from Chase.

While somewhat daunting for those who can fall asleep easily while reading, this deposition is very important for those who really want and need more insight into how nearly everything JPM Chase did or said was a carefully constructed lie designed to defraud investors and homeowners who were subjected to foreclosures by parties affiliated with JPMorgan Chase, who had no interest in the loans, while the investors, and the “owners” of derivative hedge products were left holding virtually nothing.

As Mr. Tantillo described on last Thursday’s show, there was major hidden detail to this particular part of the overall fraudulent scheme in which claims were false predicated upon securitization: the mortgage liens were released. Thus while JPMorgan Chase was having lawyers sue in foreclosure on a mortgage lien, it was for “other purposes” releasing and satisfying the liens in order to escape regulations that would have cost money.   By lying on both ends of the stick they got the best of both worlds — until Brent Tantillo came along and filed suit on behalf of the investors who were defrauded.

Brent Tantillo’s contact information is as follows:
Tantillo Law
Attorney Brent Tantillo
Phone: 954-617-8188

Foreclosure Prevention is Paying Off claim the GSEs

The GSEs claim to have prevented more than 49,000 foreclosures in the first quarter, an increase of nearly 5,000 preventions compared to Q4, according to the Federal Housing Finance Agency’s Q1 Foreclosure Prevention Report.  Unfortunately, the majority of these loans that were prevented from being foreclosed upon were held by parties that had no evidence of standing or ownership, and therefore had no right to negotiate.

According to the data, delinquencies, foreclosure starts, and REO inventories were all down in Q1, compared to Q4. Early delinquency (30-59) dropped most sharply, from more than 402,000 in Q4 to just under 318,000 in Q1. Serious delinquencies (above 90 days) dropped from just below 318,000 to almost 293,000. The number of all 60-plus days delinquent loans declined 10 percent to 377,622 at the end of the first quarter, the lowest level since 2008.

The total number of delinquent loans fell 15 percent in the first quarter of 2017. In Ohio, the number of seriously delinquent loans decreased 9 percent during the quarter. Florida’s serious delinquency rates dropped 8 percent; Texas, New Jersey, and Georgia by 7 percent. Total delinquent loans in Ohio dropped by 18 percent. Texas and Pennsylvania saw total delinquencies drop 16 percent in Q1.

The GSEs’ serious delinquency rate in Q1 fell to a flat 1 percent, which also is the lowest level since 2008. This compared with 4.0 percent for Federal Housing Administration loans, 2.1 percent for Veterans Affairs loans, and 2.8 percent for all loans (industry average).

REO inventory nationally was down 8 percent in Q1, to 44,460.

By the end of March, there were about 44,000 home retention actions overseen by the GSEs this year.  In most cases, the GSE has no evidence they purchased these loans.  For all of 2016, there were roughly 164,000 home retention actions. These include actions like loan modifications and repayment plans. Home foreclosure actions (short sales and deeds-in-lieu) dropped 9 percent in the first quarter of 2017 compared with the fourth quarter of 2016. There were 4,936 completed short sales and deeds-in-lieu in Q1.

The FHFA issued a statement saying, “These foreclosure alternatives help to reduce the severity of losses resulting from a borrower’s default and minimize the impact of foreclosures on borrowers, communities, and neighborhoods.”  Nothing could be further from the truth.  These foreclosure alternatives to not reduce the severity of the losses because people end up negotiating unfavorable terms with entities that have no proof that the trust was ever funded. Banks and the GSEs are not in the business of assisting homeowners.

Most modifications require that people negotiate with a loan servicer who has no idea who the true creditor is.  Desperate homeowners end up accepting modifications where they must pay all arrears, the loan is extended beyond its original term and quite often requires a large balloon payment at the end of the modification.  At Livinglies we typically see loan modifications that are economically detrimental for the homeowner.  Most homeowners we counsel would be better off walking away, renting for a short amount of time, and then taking out a new government subsidized mortgage that requires a very low down payment.

There is no data to determine how many of these predatory loan modifications eventually result in default because the terms are unsustainable.  It is well known that the GSE Loans originated from 2001 to 2013 are usually defective and the trusts are empty.  The GSEs can pretend all they want that trillions of dollars of mortgage backed securities they sold to the Federal Reserve are collectiable and backed by real estate- but those of us who examine the documents, read the depositions and follow the money know that the entire GSE system is a facade.  The GSEs are weapons of Mass Destruction for the lower and middle classes.

 

Healers needed to treat foreclosure pain

 by Richard Mize NEWSOK Published: June 24, 2017

Mama, who was born in 1922, never quit saving margarine tubs.

My wife’s grandmother, Monnie, who was born in 1914, never quit saving scraps of foil.

Mama grew up, and Monnie came of age, during the Great Depression. It left indelible marks on them both.

So, good luck to anyone who thinks a little education on financial literacy will cure the millions of people afflicted with the Housing Heebee Jeebees as a result of living through the subprime mortgage meltdown, housing crash and Great Recession.

They’d just as soon rent, thank you.

Maybe times are different. Maybe millennials are savvier than the Greatest Generation. Maybe there’s an app for that.

It’s hard to say much about the lingering effect of sudden and prolonged economic hardship — and the fear it engenders — especially when life dreams are dashed.

About all you can say is the effect is real, but few folks have been bold enough to say it out loud: A generation of people may have been spooked away from homeownership, some of them for good.

Fresh research commissioned by the National Association of Realtors comes close. It acknowledges “post-foreclosure stress disorder” as one of five main barriers to buying keeping the national homeownership rate at a near 50-year low.

“There are long-lasting psychological changes in financial decision-making, including housing tenure choice, for the 9 million homeowners who experienced foreclosure, the 8.7 million people who lost their jobs, and some young adults who witnessed the hardships of their family and friends,” according to the researchers.

Most Americans “still have positive feelings about homeownership,” according to the study by Rosen Consulting Group, or RCG, and jointly released by the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley, Haas School of Business.

But many don’t, they said, and “targeted programs and workshops about financial literacy and mortgage debt could help return-buyers and those who may have negative biases about owning.”

Well, if people are going to be healed of wounds — and that is exactly what has happened to those millions: They’ve been wounded — there better be some healers involved.

I don’t mean preachers and teachers, although sometimes they can help. I mean historians and sociologists and psychologists, people who “get” the kind of social and personal upheaval that such a huge bust, hitting so many people so deeply, can have.

The housing crash wasn’t just an economic bust. For millions, it was a crisis of the spirit. That has to be acknowledged and treated.

The other four barriers to homeownership identified in the study are matters to be worked out by policymakers and the market place:

Mortgage availability: “Credit standards have not normalized following the Great Recession. Borrowers with good-to-excellent credit scores are not getting approved at the rate they were in 2003, prior to the period of excessively lax lending standards. Safely restoring lending requirements to accessible standards is key to helping creditworthy households purchase homes.”

Maybe. Probably. Of course. But all I’ve seen offered is deregulation back to “excessively lax.”

Student loan debt: “Young households are repaying an increasing level of student loan debt that makes it extremely difficult to save for a down payment, qualify for a mortgage and afford a mortgage payment, especially in areas with high rents and home prices.

“As (the National Association of Realtors) found in a survey released last year, student loan debt is delaying purchases from millennials and over half expect to be delayed by at least five years. Policy changes need to be enacted that address soaring tuition costs and make repayment less burdensome.”

Student loan debt is this era’s polio. It should be treated like polio and eradicated for the sake of society.

Single-family housing affordability: “Lack of inventory, higher rents and home prices, difficulty saving for a down payment and investors weighing on supply levels by scooping up single-family homes have all lead to many markets experiencing decaying affordability conditions.

“Unless these challenges subside, RCG forecasts that affordability will fall by an average of nearly 9 percentage points across all 75 major markets between 2016 and 2019, with approximately 5 million fewer households able to afford the local median-priced home by 2019. Declining affordability needs to be addressed with policies enacted that ensure creditworthy young households and minority groups have the opportunity to own a home.”

Affordability is the 900-pound gorilla in the great room.

Single-family housing supply shortages: “Single-family home construction plummeted after the recession and is still failing to keep up with demand as cities see increased migration and population as the result of faster job growth. The insufficient level of homebuilding has created a cumulative deficit of nearly 3.7 million new homes over the last eight years.”

Maybe. I want to see how “demand” is defined here, because multifamily developers haven’t been building all these apartments purely on spec. Where’s their documented demand? How does it overlap with demand for houses? If it’s based on household formation or immigration, are they counting the same people?

Richard Mize

Richard Mize

Real estate editor Richard Mize has edited The Oklahoman’s weekly residential real estate section and covered housing, commercial real estate,… read more ›

Albert Edwards: “Citizens Will Soon Turn Their Rage Towards Central Bankers”

During the populist revolt of 2016, which first led to the “shocking outcomes” of Brexit and then Trump, we cautioned that these phenomena were merely the “silent majority” of the developed world’s middle class expressing their anger and frustration with a world that has left them – and their real disposable income – behind, while rewarding the Top 1% through policies that have led to a relentless and record ascent in global asset prices, largely the purview of the world’s wealthiest. More recently, we also noted that it was only a matter of time before this latest “revolt” fizzled, as the realization that changing one politician with another would achieve nothing, and anger shifted to the real catalyst behind growing global inequality (and anger): central banks.

In his latest note today, Albert Edwards picks up on this theme to write “Theft redux: the citizens will soon turn their rage towards Central Bankers.” The core of his argument is familiar:

While politics in the West reels from a decade of economic crisis and stagnation, asset prices continue to surge on the back of continued rapid growth in G3 QE. In an age of “radical uncertainty” how long will it be before angry citizens tire of blaming an impotent political system for their ills and turn on the main culprits for their poverty – unelected and virtually unaccountable central bankers? I expect central bank independence will be (and should be) the next casualty of the current political turmoil.

That’s just the beginning from Edwards, who appears to be getting increasingly angrier and more frustrated with a market that makes increasingly less sense: his fiery sermon continue with the following preview of the “inevitable catastrophe that lies ahead.”

Evidence of the impact of monetary madness on assets prices is all around if we care to look. I read that a parking spot in Hong Kong was just sold for record HK$5.18 million ($664,200). What about the 3.5x oversubscribed 100 year Argentine government bond? Sure, everything has a market clearing price, even one of the most regular defaulters in history. But what concerned me most about the story was it was demand from investors (“reverse enquires”) that prompted the issue. Is it just me or can I hear echoes of the mechanics of the CDO crisis? But no one cares when the party is still raging and investors, drunk with the liquor of loose money, are blind to the inevitable catastrophe that lies ahead. 

There is a lot of anger out on the streets, as demonstrated most visibly in recent elections. Even in France where investors feel comforted that a “moderate” has gained (absolute?) power, it is salutary to remember that the two establishment parties have just been decimated by a man who had never before stood for public office! This is perhaps even more radical than Trump’s anti-establishment victory under the Republican umbrella. The global political situation is incredibly fluid and unpredictable. While a furious electorate has turned its pent up anger on the establishment political parties, the target for their rage is misguided. I am not completely alone in thinking it is the unelected and virtually unaccountable central bankers who are primarily responsible for the poverty of working people and who will be ultimately held to account in the next crisis.

In the immediate aftermath of the 2008 financial crisis, politicians skilfully diverted the publics’ anger away from themselves by scapegoating “the bankers”. After another eight years of economic stagnation that excuse no longer is tenable and politicians themselves are now taking the flak. But citizen revolutionaries will, I think, soon turn their fire on those who I believe are truly responsible for their plight. We explained back in January 2010 in a note entitled Theft! Were the US & UK central banks complicit in robbing the middle classes? how central banks in the US and UK had deliberately stocked up massive housing bubbles prior to the Global Financial Crisis (GFC) to disguise the rapid rise in income inequality in both countries. Rapidly rising house prices allowed the middle classes to maintain the illusion they were getting richer so that despite stagnant real incomes they could continue to consume by extracting housing equity. We know how that party ended!


After the GFC central bankers have collectively spent the last decade stepping up the pace of money printing to new extremes in an attempt to drown the global economy in liquidity, while couching their actions in plausible theories such as “secular stagnation”. There is no recognition at all by central bankers that it may well be their own easy money and zero interest rate policies that are actually causing the stagnation in growth while at the same time wealth inequality surges to intolerable heights. Yellen et al will inevitably be sacrificed at the altar of political expediency as citizen rage explodes.

Edwards continues, justifying why it has taken his 2010 prediction so long to play out, and predicting that the end result is nothing short of a full systemic break down:

My dire prognostications back in January 2010 proved premature (as usual). It has taken another seven years of economic stagnation and falling living standards of working people, together with the sight of the rich getting richer as a result of central bank QE polices, for the patience of ordinary working people to snap – most visibly in the US and UK elections. That rage has not diminished and, as Bill Gross predicted, the system is in the process of breaking down.

Amidst the current turmoil in the US and UK there is a huge sigh of establishment relief in the eurozone in the wake of the defeat of the far right in recent French and Dutch elections. The establishment hope the tide towards radicalism has turned – at least in continental Europe. That belief is wrong in my view and the current revolution will devour more political and establishment victims before it’s over, most notably the central bankers themselves.

Ultimately, it’s all about wealth inequality however, and here it is central bankers again who are at fault:

Anecdotally we all know wealth inequality has risen due to central bank QE and free money. Although we can see and feel it, it is reassuring to see firm evidence. This week the UK Resolution Foundation published a damning report into rising wealth inequality in the UK (this UK think tank is led by David Willetts, who during his political career was known as one of the most intellectual of MPs – his nickname being “two brains”). The report found the key driver for rising inequality was the collapse in UK home ownership since the 2008 financial crisis to a 30 year low: link and link.

Like so many economic commentators and think tanks, the Resolution Foundation doesn’t seem to want to pin the proverbial tail on the donkey – for it is not the lower homeownership that is the real problem per se but the fact that QE is driving up asset prices that households no longer own! (In addition, zero interest rates have driven up buyto- let investment demand for housing hence reducing the supply of housing for owner occupation). While UK home ownership is now at a 30-year low (link), the US too has seen a similar shocking plunge in home ownership (see chart below).

At least in the run-up to the 2008 GFC, owner occupation in the UK and US surged along with house prices and so working people had the illusion they were getting richer along with the rest of the population. Now there is no such illusion for what has been dubbed “generation rent”. In the US, to add insult to injury, rent inflation has rapidly outstripped CPI since the GFC.

If things are bad in the UK, ?generation rent? has been squeezed far more badly by soaring rents in the US (see chart below). No wonder the JAMs (just about managing) are in revolt.

A rare one-time event has created the final big buying opportunity at such a low price.

There is much more, bust the gist is clear: it is only a matter of time before the general population realizes that it is not politics, but monetary policy. But how long? The simple answer: as long as stocks keep rising, all shalle be well: “no one cares when the party is still raging and investors, drunk with the liquor of loose money, are blind to the inevitable catastrophe that lies ahead.” Which is also why the Fed will do everything in its power to keep the market ascent – and its existence – continue for as long as possible. And then, as a last diversion, they will blame Trump.

In other words, by the time all of this happens, the angry natives may have no choice but to rent their pitchforks…

http://www.zerohedge.com/news/2017-06-22/albert-edwards-citizens-will-soon-turn-their-rage-towards-central-bankers

The Neil Garfield Show featuring Attorney Brent Tantillo: JPMorgan Chase operated a Rackeetering Enterprise to evade Legal Duties to Foreclose

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This evening Washington DC attorney Brent Tantillo will be joining Neil Garfield to discuss the intricacies of Mortgage Resolution Servicing, et. al. v JP Morgan Chase. He will also discuss a related False Claims Act case that is currently before the DC Circuit, where his firm is representing Laurence Schneider, the principal owner of Mortgage Resolution Servicing and its associated companies.

This case was also discussed last week on the Neil Garfield Radio Show (link).

For a copy of the LIST OF LOANS involved in the RICO lawsuit Click the following link: First Fidelity loans purchased from Chase

For a copy of this case click here: RICO Complaint – Chase

JPMorgan Chase was accused of creating a “racketeering enterprise” whose purpose was to evade legal duties owed to borrowers, regulators and Plaintiffs, among others, and failed to properly service federally regulated mortgage loans.  JPMorgan Chase was unable to provide legal documentation to Mortgage Resolution Servicing (MRS) establishing they were the legal owners, while borrowers whose loans were sold to JPMorgan Chase could not obtain proof regarding the ownership of their loans (likely because all documentation was intentionally destroyed).

The loans were void, not voidable,  without the proper documentation (notes, reconveyances and assignments).   When JPMorgan Chase went to foreclose on the “loans” with no legitimate documentation,  they would instead use third-parties like Nationwide Title Clearing to create false title and paperwork necessary to foreclose or to attach to a proof of claim in bankruptcy. Nationwide Title Clearing had no evidence that JPMorgan Chase was the rightful owner, but fabricated the documents on request.

This blockbuster lawsuit illuminates the fact that JPMorgan Chase was selling thousands of loans it didn’t own including loans it had previously sold to other MBS trusts!  It is alleged that Chase transferred these defective “loans” in order to avoid non-reimbursable advances and expenses.

S&A Capital Mortgage Partners, Mortgage Resolution Servicing and 1st Fidelity Loan Servicing are suing JPMorgan Chase in the Southern District of New York District court for failure to service loans in a manner consistent with its legal obligations under: RESPA, TILA, FTC violations, the FDCPA, The Dodd Frank Wall Street Reform act, the Equal Credit Opportunity Act, the Fair Housing Act; and other applicable state and federal usury, consumer credit protection and privacy, predatory and abusive lending laws (collectively “the Acts”).  It is likely that this is not an isolated incident, but JPMorgan Chase’s normal operational standard.

The Plaintiffs complain that JPMC, rather than comply with the costly and time consuming legal obligations it faced under the Acts, the Defendants warehoused loans in a database of charged-off loans known as RCV1 and intentionally and recklessly sold these liabilities to unaware buyers such as the Plaintiffs.

To accomplish the transfer of these obligations Defendants prevented Plaintiff’s from conducting normal due diligence, failure to provide information, and changing terms of transactions after consummation; as well as failure to transfer mortgages to them. Because the Plaintiff’s did not receive the information about the loans purchased, the Defendants tortuously interfered with the Plantiff’s relationships with the borrowers including illegally sending borrowers debt forgiveness letters and releasing liens.   These actions not only resulted in specific damage to said lien’s value, but caused Plaintiffs reputational harm with borrowers, loan sellers, investors, lenders and regulators.

In reality both investors and borrowers should unite and sue JPMorgan Chase for Fraud and Fraudulent Inducement, Tortious Interference with Business Relations, conversion, breach of contract, and promissory estoppel and additional relief.

Highlights from the case include these bombshells accusing JPMorgan Chase of:

(iv) Knowingly breached every representation they made in the MLPA, including failing to legally transfer 3,529 closed-end 1st lien mortgages worth $156,324,399.24 to the Plaintiffs, and to provide Plaintiffs with the information required by both RESPA and the MMLSA so that Plaintiffs could legally service said loans.

(v) Took numerous actions post-facto that tortiously interfered with Plaintiffs’ relationships with borrowers including illegally sending borrowers debt forgiveness letters and releasing liens.

RCV1 Evades Regulatory Standards and Servicing Requirements

  1. Defendants routinely and illicitly sought to avoid costly and time-consuming servicing of federally related mortgage loans. Since 2000, Defendants maintained loans on various mortgage servicing Systems of Records (“SOR”) which are required to meet servicing standards and regulatory mandates. However, Defendants installed RCV1, an off-the-books system of records to conduct illicit practices outside the realm of regulation or auditing. Defendants’ scheme involves flagging defaulted and problem federally related loans on the legitimate SOR and installing a subsequent process to then identify and transfer the loan records from the legitimate SOR to RCV1. The process could be disguised as a reporting process within the legitimate SOR and the data then loaded to the RCV1 repository on an ongoing basis undetected by federal regulators.
  2. Defendants inactivated federally related mortgage loans from their various SORs such as from the Mortgage Servicing Platform (“MSP”) and Vendor Lending System (“VLS”).

 

  1. RCV1’s design and functionality does not meet any servicing standards or requirements under applicable federal, state, and local laws pertaining to mortgage servicing or consumer protection. Instead, the practices implemented by Defendants on the RCV1 population are focused on debt collection.

 

  1. Defendants seek to maximize revenue through a scheme of flagging, inactivating, and then illicitly housing charged-off problematic residential mortgage loans in the vacuum of RCV1, improperly converting these problematic residential mortgage loans into purely debt collection cases that are akin to bad credit card debt, and recklessly disregarding virtually all servicing obligations in the process. In order to maximize revenue, Defendants used unscrupulous collection methods on homeowners utilizing third-party collection agencies and deceptive sales tactics on unsuspecting note sale investors, all the while applying for governmental credits and feigning compliance with regulatory standards.

 

  1. In short, the RCV1 is where mortgage loans and associated borrowers are intentionally mishandled in such a manner that compliance with any regulatory requirements is impossible. In derogation of the RESPA, which requires mortgage servicers to correct account errors and disclose account information when a borrower sends a written request for information, the information for loans in RCV1 remains uncorrected and is sent as an inventory list from one collection agency to another, progressively resulting in further degradation of the loan information. In dereliction of various regulations related to loan servicing, loans once in RCV1 are not verified individually and the identity of the true owner of the note per the Truth in Lending Act (TILA) is often concealed. Regulatory controls regarding grace periods, crediting funds properly, charging correct amounts are not followed.

 

  1. More specifically, a borrower sending a qualified written request under Section 6 of RESPA concerning the servicing of his/her loan or request for correction under 12 U.S.C. §2605(e), 12 CFR §1024.35 could not obtain resolution because RCV1 is a repository for housing debt rather than a platform for housing and servicing federally related loans. RCV1 contains no functionalities for accounting nor escrow management in contravention of §10 of RESPA, Regulation X, 12 CFR §1024.34.

 

In contravention of 12 CFR §1024.39, Chase failed to inform Borrowers whose loans were flagged, inactivated, and housed in RCV1, about the availability of loss mitigation options, and in contravention of 12 CFR §1024.40. Chase also failed to make available to each Borrower personnel assigned to him/her to apprise the Borrower of the actions the Borrower must take, status of any loss mitigation application, circumstances under which property would be referred to foreclosure, or applicable loss mitigation deadlines in careless disregard of any of the loss mitigation procedures under Reg X 12 CFR § 1024.41.

 

  1. Unbeknownst to Plaintiffs and regulatory agencies, Chase has systematically used RCV1 to park flagged loans inactivated in the MSP, VLS, and other customary SORs to (1) eschew Regulatory requirements while publicly assuring compliance, (2) request credits and insurance on the charge-offs., (3) continue collection, and (4) sell-off these problematic loans to unsuspecting investors to maximize profit/side-step liability, all with the end of maximizing profit.

 

Specifics of Defendants’ RICO Scheme and Conduct:

  1. Since at least 2000, Defendants evaded their legal obligations and liabilities with respect to the proper servicing of federally related mortgages, causing Plaintiffs damage through Defendants’ misconduct from their scheme to violate:
  • The Real Estate Settlement Procedures Act (RESPA);
  • The Truth in Lending Act (TILA);
  • The Federal Trade Commission Act (FTC);
  • The Fair Debt Collection Practices Act (FDCPA);
  • The Dodd Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank);
  • The Equal Credit Opportunity Act; and
  • The Fair Housing Act.
  1. After Plaintiffs acquired mortgage loans from Defendants, during the period 2011 through at least 2016, Defendants released thousands of liens related to RCV1 loans, including RCV1 loans Defendants no longer owned, to avoid detection of non-compliance with the Lender Settlements. These lien releases caused harm to the Plaintiffs and to numerous other note sale investors.

 

  1. Similarly, in September 2008, Chase Bank entered into an agreement with the FDIC as receiver for WAMU-Henderson. Chase Bank made a number of representations in its agreement with the FDIC, including that Chase Bank and its subsidiaries were in compliance with all applicable federal, state and local laws. However, at the time of execution and delivery of the agreement, Chase owned thousands of loans with respect to which, through its improper servicing and other misconduct relating to the RCV1, it was in violation of many federal and state laws. These circumstances created a further motive for Chase Bank to participate in the scheme to transfer thousands of noncompliant loans to Plaintiffs and others.

 

  1. Plaintiff MRS purchased loans from Chase pursuant to the MLPA that were actually Chase’s most problematic loans and mostly housed in the RCV1 repository. In March, 2009, bare notes and deeds, without the promised required loan files documenting servicing and borrower information, were simply shipped to Plaintiffs as the “loan files”. Plaintiffs also received loans for which no notes, deeds or loan files were provided at all. Nevertheless, Defendants kept promising that the complete loan files were forthcoming, with no intent of ever providing them. Without the necessary documentation, it was difficult or impossible for Plaintiffs to service and collect on the loans. And despite herculean efforts, most often Plaintiffs could not locate the necessary information to service and collect on the loans.

 

  1. Defendants’ plan to entice an existing and approved, but unsuspecting note sale buyer to purchase these toxic loans is in plain view in various recently produced email exchanges discussing Defendant’s fraudulent scheme to dump non-serviced loans with inadequate documentation on Plaintiffs from October 2008 through February 2009.

 

  1. As early as 2008, Defendants’ knew the public was becoming more aware of its the scope of its improper actions. Ultimately, in 2012, public pressure prompted the federal government and many states to bring a complaint against JPMorgan and Chase Bank, as well as other banks responsible for fraudulent and unfair mortgage practices that cost consumers, the federal government, and the states tens of billions of dollars. The complaint alleged that JPMorgan and Chase Bank, as well as other financial institutions, engaged in improper practices related to mortgage origination, mortgage servicing, and foreclosures, including, but not limited to, irresponsible and inadequate oversight of the banks’ quality control standards. Unfortunately, the complaint failed to note, and the government appeared unaware of, the Defendants’ deeper institutional directives designed to hide their improprieties (such as the establishment of the RCV1 and its true purpose).

 

  1. 48. At all applicable times, Defendants had been continuing to utilize its RCV1 database.

 

  1. However, as in 2008, the loans housed in the RCV1 repository presented a huge reputational risk and legal liability as the loans housed in RCV1 were not being treated as federally related mortgage loans, were not in compliance, were no longer being serviced as such, but were being collected upon.

 

  1. By 2012, the RCV1 database contained hundreds of thousands of federally related mortgage loans, which had been inactivated in regular systems of records and whose accounts were no longer tracked pursuant to regulatory requirements, including escrow accounting.

 

  1. Other knowing participants in the conspiracy include third party title clearing agencies, such as Nationwide Title Clearing Company (NTC), Pierson Patterson, and LCS Financial Services, who were directed by Defendants to prepare and then file fraudulent lien releases and other documents affecting interests in property. Either these entities were hired to verify liens and successively failed to properly validate the liens before creating documents and lien releases containing false information, or these entities were directed by Chase to create the documents with the information provided by Defendants. In either case, these title clearing agencies which recorded fraudulent releases of liens and related documents in the public record, had independent and separate duty from Defendants to file, under various state laws, all relevant documents only after a good faith proper validation of the liens. Instead these entities deliberately violated their duty of care by knowingly or recklessly filing false lien releases and false documents on properties not owned by Defendants.

 

  1. In many states, the act of creating these documents is considered the unauthorized practice of law. In Florida, where NTC is organized, there is a small exception for title companies who are only permitted to prepare documents and perform other necessary acts affecting the legal title of property where the property in question is to be insured, to fulfill a condition for issuance of a title policy or title insurance commitment by the Insurer or if a separate charge was made for such services apart from the insurance premium of the Insurer. Plaintiffs have not ascertained whether Nationwide Title or any other agencies created documents for Chase as a necessary incident to Chase’s purchase of title insurance in Florida.

 

  1. Chase used Real Time Resolutions, GC Services, and Five Lakes Agency, among other collection agencies, to maximize its own back door revenues on loans that were problematic and had been inactivated/“charged off” and thereby were invisible to regulatory agencies.

 

  1. At all times, Defendants directed the collection of revenue on problematic federal mortgage loans, placing them in succession at third party collection agencies. Those third party collection agencies included:

 

  1. The third-party collection agencies had a duty to verify whether the debts were owned by Chase, offer pre-foreclosure loss mitigation, offer Borrowers foreclosure alternatives, and comply with any of HUD’s quality control directives and knowingly or recklessly failed to do so. The third-party collectors knew that the debts they were collecting at Defendants’ directions were mortgage loans. They also knew they did not have the mechanisms to provide any regulatory servicing. Nonetheless, the third-party collection agencies continued collection on behalf of Chase for RCV1 loans. The collection agencies continued to collect without oversight or verification and did in fact continue collecting on debt on behalf of Defendants, despite the mortgage loans being owned by the Schneider entities. The ongoing collection gave Chase continued windfalls.

 

  1. A September 30, 2014 document shows that as late as September 30, 2014, Defendants had charged-off and ported 699,541 loans into RCV1.

 

  1. Unbeknownst to Plaintiffs, Chase was selling non-compliant and thus no longer “federally related mortgage loans” to Plaintiff which Chase had ported and inactivated within their regulated systems of records but had copied over to a separate data repository solely for the purpose of collecting without servicing.

 

 

  1. Plaintiff MRS was not privy to Defendants’ internal communications of October 30, 2008, which clarify that Chase knew that the loans it was intending to off load onto the Plaintiff were not on the primary system of record and were being provided from the un-serviced repository called RCV1. The information in RCV1 was not complete because it was not a regulated system of record. As indicated by Chase’s communications, Chase purposefully cut and pasted select information where it could from other systems of records to the information in RCV1. Defendants’ emails discuss data from the FORTRACS application, the acronym for Foreclosure Tracking System, which is an automated, loan default tracking application that also handles the loss mitigation, foreclosure processing, bankruptcy monitoring, and whose data would have originally come from a primary system of record. Rather than a normal and customary data tape, Chase was providing a Frankenstein of a data tape, stitched together from a patchwork of questionable information.

 

  1. Despite its representation and warranty that Chase “is the owner of the Mortgage Loans and has full right to transfer the Mortgage Loans,” a significant portion of the loans listed on Exhibit A were not directly owned by Chase.

 

  1. Upon information and belief, some of the loans sold to MRS were RMBS trust loans which Chase was servicing. Chase had transferred these to MRS in order to avoid non-reimbursable advances and expenses. The unlawful transfer of these loans to MRS as part of the portfolio of loans sold under the MLPA aided the Defendants in concealing Regulatory non-compliance and fraud while increasing the liabilities of MRS.

 

  1. Chase committed, inter alia, the following violations of law with respect to the loans sold to MRS: a. Chase transferred the servicing of the mortgage loans to and from multiple unlicensed and unregulated debt collection agencies which lacked the mortgage servicing platforms to account for or service the borrowers’ loan with any accuracy or integrity.

Investigator Bill Paatalo of the BP Investigative Agency points out that allegations in this case support accusations in other lawsuits against JPMorgan Chase including that:

  1. Chase knowingly provided collection agencies with false and misleading information about the borrowers.
  2. Chase failed to provide proper record keeping for escrow accounts.
  3. Chase stripped loan files of most origination documentation, including federal disclosures and good faith estimates, thus putting MRS in a positionwhere it was unable to respond to borrower or regulatory inquiries.
  4. Chase failed to provide any accurate borrower payment histories for any of the loans in theMLPA.
  5. Chase knowingly executed assignments of mortgage to MRS for mortgage loans that Defendants knew had been foreclosed and sold to third parties.
  6. Chase circumvented its own operating procedures and written policies in connection with servicing federally-related mortgage loans by removing the loans from its primary record-keeping platform and creating an entry in its RCV1 repository. This had the effect of denying the borrowers their rights concerning federally related mortgages yet allowed Chase to retain the lien and the benefit of the security interest,
  7. Chase included on Exhibit A loans that it had previously sold to third parties and loans that it had never owned.
  8. Chase knowingly and deliberately changed the loan numbers of numerous valuable loans sold to MRS after the MLPA had been fully executed and in force. This allowed Chase to accept payments from borrowers whose loans had been sold to MRS without its own records disclosing the wrongful acceptance of such payments.
  9. Chase’s failure to provide the assignments of the notes and mortgages was not an act of negligence. As events unfolded, it became clear that Chase failed to provide the assignments of the notes and mortgages because it wanted, in selective instances, to continue to treat the sold loans as its own property.
  10. Chase converted payments from borrowers whose loans it had sold

At what point does the Federal Government take action against these fraudulent practices?  It is likely that ALL major banks are participating in the exact same racketeering enterprises so obvious at JPMorgan Chase.

Contact information for Brent:

Attorney Brent Tantillo

Tantillo Law PLLC

(786) 506-2991

btantillo@tantillolaw.com

http://tantillolaw.com/staff/brent-tantillo

Brent Tantillo Bio:

Brent S. Tantillo is the Managing Shareholder of Tantillo Law, PLLC. Brent guides his clients through high-stakes lawsuits, often involving government and internal investigations, whistleblower actions, and other federal regulatory matters.

Brent has extensive experience handling disputes relating to health care fraud, money laundering, the Bank Secrecy Act, RICO, and the False Claims Act. He also provides clients with risk management and compliance advice.

Brent worked for ten years for the United States Department of Justice, serving as an Assistant United States Attorney in the Southern District of Florida from 2006 to 2016. Brent led the Southern District of Florida’s Human Trafficking Task Force from 2006-2010, where he coordinated the efforts of over forty non-governmental organizations and law enforcement agencies in rooting out human slavery. Brent also prosecuted cases involving public corruption, organized crime, and drug and sex trafficking. He also served as Counsel & Legislative Assistant in the United States House of Representatives in 2005-2006, where Brent drafted legislation on tax, banking, energy, environmental, and judiciary issues.

From 2003-2005, Brent served as Deputy Director of the Projects for Civil Justice Reform and International Religious Liberty at Hudson Institute. As Deputy Director of the Projects for Civil Justice Reform and International Religious Liberty, Brent directed a national effort to revise rules of professional conduct in order to prevent attorneys from overcharging their clients and to ensure the enforcement of existing fiduciary standards. He also has played a key role in the drafting of three landmark pieces of legislation of international import: The North Korean Freedom Act, ADVANCE Democracy Act, and the Trafficking Victims Protection Reauthorization Act.

Brent and his work have been featured in Washington Times, Newsmax, Insight Magazine, National Law Journal, Energy Law Journal, New Jersey Law Journal, Los Angeles Law Journal, among others.

Education

  • University of Houston, 2014Certification, Professional Land Management
  • University of Houston Law Center, 2003JD
  • University of Texas at Austin, 1998BBA, Finance

Bar Admissions

  • District of Columbia

Court Admissions

United States District Court for the District of Columbia
District of Columbia Court of Appeals

Honors and Awards

In 2009, Brent received the Internet Crimes Against Children Award from Attorney General, Eric Holder. He was also the recipient of the U.S. Attorney’s Office Team Award for Exceptional Performance.

Languages

  • English
  • Spanish

 

 

California Attorney Charles Marshall, Esq.
Bill Paatalo
BP Investigative Agency, LLC

 

Puerto Rico Foreclosures hit all time High

by the LendingLies team

An average of 14 families lose homes every day to foreclosure in Puerto Rico, more than double the rate a decade ago as the island faces a real-estate crash worse than the one that sparked the Great Recession on the U.S. mainland. Families across Puerto Rico are moving in with relatives, becoming homeless or simply fleeing to the U.S. mainland with destroyed credit records as the island’s government struggles to restructure a portion of its $73 billion public debt and help the economy emerge from a decade-long recession.

Puerto Rico is a U.S. territory of 3.4 million people and local courts oversaw foreclosures on nearly 33,000 homes from 2009 to 2016, according to government statistics. A record 5,424 homes were foreclosed last year, up 130 percent from nearly a decade ago, when the government first began tracking those numbers.

However, the actual number of foreclosures is much higher because the statistics do not include an estimated 20,000 loans in default or close to default that local banks have sold to companies outside Puerto Rico since 2009. Those cases are largely handled in federal court and no one compiles statistics.

There are now 17,000 homes that are now in the process of foreclosure.  Nonprofit organizations struggling with dwindling budgets amid the island’s economic slump say the jump in foreclosures has led to a surge of Puerto Ricans seeking help amid a deep economic crisis.

The number of people in Puerto Rico who have become homeless because of job loss or eviction has increased in recent years, with a total of more than 4,400 homeless people reported last year, a nearly 10 percent increase from 2009, according to U.S. Housing and Urban Development. More than half the homeless people interviewed for a 2015 Puerto Rico government survey held every two years said they were homeless for the first time.  In fact, the crisis in Puerto Rico may be worse than on the Mainland during the height of the foreclosure crisis according to Attam Data Solutions who analyzes U.S. housing data.

The problem in Puerto Rico also has been more persistent, with foreclosure rates above the 1 percent benchmark level for nearly seven years. In comparison, hard-hit U.S. states like Nevada were above that level for only five years.

And unlike the U.S. mainland, where the housing crisis was set off by the collapse of a price bubble, experts say the high level of foreclosures in Puerto Rico comes mostly from the island’s long economic slump, which has produced an unemployment rate of 12 percent but may be at 20 percent or higher.  Thus, it is not only risky loans that were issued but an underlying weak economy.  The states are starting to see a weakening economy that could also hasten an upsurge of new foreclosures.

About 60 percent of foreclosed homes in Puerto Rico have been abandoned, and by comparison, only 30 percent of foreclosed homes were abandoned in the U.S., mostly in areas hardest hit by the recession.

Banks in Puerto Rico have sold more than 70 percent of their mortgage portfolio on the secondary market according to Puerto Rico’s Association of Banks.  With banks unwilling to carry the risk, Puerto Ricans have few options to finance homes.

As of last year, Puerto Rico’s six commercial banks still had more than 3,800 repossessed homes on their books worth $338 million. To avoid even more foreclosures, local banks since 2009 have implemented more than 176,000 alternatives to foreclosure worth $19 billion, including modifications, restructurings and refinancing.

If you live in Puerto Rico and are facing foreclosure please contact us at info@lendinglies.com or

Get a consult! 202-838-6345
https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.

9th Circuit: Assignment in Breach of PSA is Voidable not Void. Here is why they are wrong

The thousands of trial court and appellate decisions that have hung their hat on illegal assignments being “voidable” demonstrates either a lack of understanding of common law business trusts or an adherence to a faulty doctrine in which homeowners pay the price for fraudulent bank activities.

Get a consult! 202-838-6345
https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-

see Turner v Wells Fargo

Some of the problems might be in the presentation of evidence, failures to object and failure to move to strike evidence or testimony. But most of it deals with the inability of lawyers and the Courts to pierce the veil of uncertainty and complexity with which the banks have covered their fraudulent tracks.

Here are the reasons the assignment might be void. No self-serving newly invented doctrine can overcome the failure of an illegal assignment.

  1. Common Law Trusts are almost always formed under New York State law that allows unregistered trusts to be created for business purposes. Any act in contravention of the express provisions of the trust instrument (usually the Pooling and Servicing Agreement) is void, not voidable. It cannot be revived through ratification — especially when there is nobody around to change the trust instrument, thus ratifying the void act.
  2. Many if not most assignments are fabricated for foreclosure and either nonexistent or backdated to avoid the fact that the assignment is void when it is fabricated — years after the so-called trust was described in a trust instrument that is rarely complete because no mortgage loan schedule at the time of the drafting of what is in most cases an incomplete trust instrument.
  3. Assignments are clearly void and not entitled to any presumptions under the UCC if they are dated after the loan was declared in default (albeit by a party who had no right to declare a default much less enforce the debt or obtain a forced sale of homestead and other residential properties) schedule existed at the time of the drafting of the trust instrument. The application of UCC presumptions after the alleged date of default is simply wrong.
  4. The fact that an instrument COULD be ratified does not mean that it WAS ratified. What is before the court is an illegal act that has not been ratified. The possibility that the parties to the trust instrument (trustor, trustee, beneficiaries) could change the instrument to allow the illegal act AND apply it retroactively is merely speculative — and against all legal doctrine and common sense. These courts are ruling on the possibility of a nonexistent act that without analysis of the trust instrument, is declared to be possibly subject to “ratification.”
  5. Assuming the trust even exists on paper does not mean that it ever entered into an actual transaction in which it acquired the “loan” which means the debt, note and mortgage.
  6. Any “waiver” or “ratification” would result in the loss of REMIC status under the terms of the Internal Revenue Code. No rational beneficiary would ratify the act of accepting even a performing loan after the cutoff period. To do so would change the nature of the trust from a REMIC vehicle entitled to pass through tax treatment. Hence even if the beneficiaries were entitled to change, alter, amend or modify the trust instrument they would be firing a tax bullet into their own heads.  Every penny received by a beneficiary would be then be taxed as ordinary income including return of principal.
  7. No rational beneficiary would be willing to change the trust instrument from accepting only properly underwritten performing loans to loans already declared in default.
  8. No Trustee, or beneficiary has the power to change the terms of the trust or to ratify an illegal act.
  9. In fact the trust instrument specifically prohibits the trustee and beneficiaries from knowing or even asking about the status of loans in the trust. Under what reasonable scenario could anyone even know that they were getting a non-performing loan outside the 90 day cutoff period.
  10. The very act of introducing the possibility of ratification where none exists under the trust instrument is the adjudication of rights of senior investors who are not present in court nor given notice of its proceeding. Such decisions are precedent for other defenses and claims in which the trust instrument could be changed to the detriment of the beneficiaries.
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