Ally $52 Million settlement for “Deficient Securitization”

All of these adjectives describing securitization add up to one thing: the claims were false. For the most part none of the securitizations ever happened.

And that means that the REMIC trusts never purchased the debt, note or mortgage.

And THAT means the “servicer” claiming the right to administer a loan on behalf of the trust is false.

And THAT arguably means the business records of the servicer are not business records of the creditor.

And THAT my friends means what I have been saying for 10 years: virtually none of the foreclosures were legal, moral or justified. The real transaction was never revealed and never documented. The “closing” documents were fake, void and fraudulent. And THAT is grounds for cancellation of the note and mortgage.

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 http://www.nationalmortgagenews.com/news/compliance-regulation/ally-to-pay-52m-to-settle-subprime-rmbs-investigation-1091364-1.html

It is hard to imagine any scenario under which Government cannot know what I have been saying for years — that the claims of securitization are false and the documents for the loans were fraudulent. Government has decided to ignore the facts thus transforming a nation of laws into a nation of men.

In plain English the decision was made to let the chips fall on borrowers, who were victims of the double blind fraud, despite clear and irrefutable evidence that the banks malevolent behavior caused the 2008 meltdown. The choice was made: based upon information from the birthplace of securitization fraud, Government decided that it was better to artificially prop up the securities markets and TBTF banks than to preserve the purchasing power and household wealth of the ordinary man and woman. The economy — driven by consumer spending (70% of GDP) — had the rug pulled out from under it. And THAT is why the effects of rescission are still with us 8 years after the great meltdown.

The fact that there are 7,000 community banks, credit unions and savings banks using the exact same electronic payments platform as the TBTF banks was washed aside by the enormous influence exerted by a dozen banks who controlled Washington, DC, the state legislatures, and the executive branch in most of the states.

The American voter came to understand that they had been screwed by their representatives in Government. They voted for Sanders, they voted for Trump and they voted for anyone who was for busting up government. But they still face daunting challenges as they continue to crash into a rigged system that favors a handful of merciless bankers who have bought their way into the Federal and State Capitals.

Chipping away at the monolithic Government Financial complex individual homeowners are winning case after case in court without notice by the media. It isn’t noticed because in most instances the cases are settled, even after judgment, with a seal of confidentiality. Most people don’t fight it at all. They sweep up and leave the keys on the counter believing they have committed some wrong and now they must pay the price. THAT is because they have not received the necessary information to realize that they can and should fight back.

BAILOUT TO STATE BUDGETS: AZ Uses Housing Settlement Money for Prisons

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Editor’s Comment:

The general consensus is that the homeowner borrowers are simply at the bottom of the food chain, not worthy of dignity, respect or any assistance to recover from the harm caused by Wall Street. Now small as it is, the banks have partially settled the matter by an agreement that bars the states from pursuing certain types of claims conditioned on several terms, one of which was the payment of money from the banks that presumably would be used to fund programs for the beleaguered homeowners without whose purchasing power, the economy is simply not going to revive. Not only are many states taking the money and simply putting it into general funds, but Arizona, over the objection of its own Attorney General is taking the money and applying to pay for prison expenses.

Here is the sad punch line for Arizona. The prison system in that state and others is largely “privatized” which is to say that the state “hired” new private companies created for the sole purpose of earning a profit off the imprisonment of the state’s citizens. Rumors abound that the current governor has a financial interest in the largest private prison company.

The prison lobby has been hard at work ever since privatizing prisons became the new way to get rich using taxpayers dollars. Not only are we paying more to house more prisoners because the laws a restructured to make more behavior crimes, but now our part of the housing settlement is also going to the prisons. Another bailout that was never needed or wanted. Meanwhile the budget of  Arizona continues to rise from incarcerating its citizens and the profiteers (not entrepreneurs by any stretch of the imagination) are getting a gift of more money from the state out of the multistate settlement.

Needy States Use Housing Aid Cash to Plug Budgets

By SHAILA DEWAN

Only 27 states have devoted all their funds from the banks to housing programs, according to a report by Enterprise Community Partners, a national affordable housing group. So far about 15 states have said they will use all or most of the money for other purposes.

In Texas, $125 million went straight to the general fund. Missouri will use its $40 million to soften cuts to higher education. Indiana is spending more than half its allotment to pay energy bills for low-income families, while Virginia will use most of its $67 million to help revenue-starved local governments.

Like California, some other states with outsize problems from the housing bust are spending the money for something other than homeowner relief. Georgia, where home prices are still falling, will use its $99 million to lure companies to the state.

“The governor has decided to use the discretionary money for economic development,” said a spokesman for Nathan Deal, Georgia’s governor, a Republican. “He believes that the best way to prevent foreclosures amongst honest homeowners who have experienced hard times is to create jobs here in our state.”

Andy Schneggenburger, the executive director of the Atlanta Housing Association of Neighborhood-Based Developers, said the decision showed “a real lack of comprehension of the depths of the foreclosure problem.”

The $2.5 billion was intended to be under the control of the state attorneys general, who negotiated the settlement with the five banks — Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally. But there is enough wiggle room in the agreement, as well as in separate terms agreed to by each state, to give legislatures and governors wide latitude. The money can, for example, be counted as a “civil penalty” won by the state, and some leaders have argued that states are entitled to the money because the housing crash decimated tax collections.

Shaun Donovan, the federal housing secretary, has been privately urging state officials to spend the money as intended. “Other uses fail to capitalize on the opportunities presented by the settlement to bring real, concerted relief to homeowners and the communities in which they live,” he said Tuesday.

Some attorneys general have complied quietly with requests to repurpose the money, while others have protested. Lisa Madigan, the Democratic attorney general of Illinois, said she would oppose any effort to divert the funds. Tom Horne, the Republican attorney general of Arizona, said he disagreed with the state’s move to take about half its $97 million, which officials initially said was needed for prisons.

But Mr. Horne said he would not oppose the shift because the governor and the Legislature had authority over budgetary matters. The Arizona Center for Law in the Public Interest has said it will sue to stop Mr. Horne from transferring the money.


Like I said, the loans never made into the “pools”

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Editor’s Comment:

When I first suggested that securitization itself was a lie, my comments were greeted with disbelief and derision. No matter. When I see something I call it the way it is. The loans never left the launch pad, much less flew into a waiting pool of investor money. The whole thing was a scam and AG Biden of Đelaware and Schniedermann of New York are on to it.

The tip of the iceberg is that the note was not delivered to the investors. The gravitas of the situation is that the investors were never intended to get the note, the mortgage or any documentation except a check and a distribution report. The game was on.

First they (the investment banks) took money from the investors on the false pretenses that the bonds were real when anyone with 6 months experience on Wall street could tell you this was not a bond for lots of reasons, the most basic of which was that there was no borrower. The prospectus had no loans because there were no loans made yet. The banks certainly wouldn’ t take the risks posed by this toxic heap of loans, so they were waiting for the investors to get conned. Once they had the money then they figured out how to keep as much of it as possible before even looking for residential home borrowers. 

None of the requirements of the Internal Revenue Code on REMICS were followed, nor were the requirements of the pooling and servicing agreement. The facts are simple: the document trail as written never followed the actual trail of actual transactions in which money exchanged hands. And this was simply because the loan money came from the investors apart from the document trail. The actual transaction between homeowner borrower and investor lender was UNDOCUMENTED. And the actual trail of documents used in foreclosures all contain declarations of fact concerning transactions that never happened. 

The note is “evidence” of the debt, not the debt itself. If the investor lender loaned money to the homeowner borrower and neither one of them signed a single document acknowledging that transaction, there is still an obligation. The money from the investor lender is still a loan and even without documentation it is a loan that must be repaid. That bit of legal conclusion comes from common law. 

So if the note itself refers to a transaction in which ABC Lending loaned the money to the homeowner borrower it is referring to a transaction that does not now nor did it ever exist. That note is evidence of an obligation that does not exist. That note refers to a transaction that never happened. ABC Lending never loaned the homeowner borrower any money. And the terms of repayment intended by the securitization documents were never revealed to the homeowner buyer. Therefore the note with ABC Lending is evidence of a non-existent transaction that mistates the terms of repayment by leaving out the terms by which the investor lender would be repaid.

Thus the note is evidence of nothing and the mortgage securing the terms of the note is equally invalid. So the investors are suing the banks for leaving the lenders in the position of having an unsecured debt wherein even if they had collateral it would be declining in value like a stone dropping to the earth.

And as for why banks who knew better did it this way — follow the money. First they took an undisclosed yield spread premium out of the investor lender money. They squirreled most of that money through Bermuda which ” asserted” jurisdiction of the transaction for tax purposes and then waived the taxes. Then the bankers created false entities and “pools” that had nothing in them. Then the bankers took what was left of the investor lender money and funded loans upon request without any underwriting.

Then the bankers claimed they were losing money on defaults when the loss was that of the investor lenders. To add insult to injury the bankers had used some of the investor lender money to buy insurance, credit default swaps and create other credit enhancements where they — not the investor lender —- were the beneficiary of a payoff based on the default of mortgages or an “event” in which the nonexistent pool had to be marked down in value. When did that markdown occur? Only when the wholly owned wholly controlled subsidiary of the investment banker said so, speaking as the ” master servicer.”

So the truth is that the insurers and counterparties on CDS paid the bankers instead of the investor lenders. The same thing happened with the taxpayer bailout. The claims of bank losses were fake. Everyone lost money except, of course, the bankers.

So who owns the loan? The investor lenders. Who owns the note? Who cares, it was worth less when they started; but if anyone owns it it is most probably the originating “lender” ABC Lending. Who owns the mortgage? There is no mortgage. The mortgage agreement was written and executed by the borrower securing terms of payment that were neither disclosed nor real.

Bank Loan Bundling Investigated by Biden-Schneiderman: Mortgages

By David McLaughlin

New York Attorney General Eric Schneiderman and Delaware’s Beau Biden are investigating banks for failing to package mortgages into bonds as advertised to investors, three months after a group of lenders struck a nationwide $25 billion settlement over foreclosure practices.

The states are pursuing allegations that some home loans weren’t correctly transferred into securitizations, undermining investors’ stakes in the mortgages, according to two people with knowledge of the probes. They’re also concerned about improper foreclosures on homeowners as result, said the people, who declined to be identified because they weren’t authorized to speak publicly. The probes prolong the fallout from the six-year housing bust that’s cost Bank of America Corp., JPMorgan Chase & Co. (JPM) and other lenders more than $72 billion because of poor underwriting and shoddy foreclosures. It may also give ammunition to bondholders suing banks, said Isaac Gradman, an attorney and managing member of IMG Enterprises LLC, a mortgage-backed securities consulting firm.

“The attorneys general could create a lot of problems for the banks and for the trustees and for bondholders,” Gradman said. “I can’t imagine a better securities law claim than to say that you represented that these were mortgage-backed securities when in fact they were backed by nothing.”

Countrywide Faulted

Schneiderman said Bank of America Corp. (BAC)’s Countrywide Financial unit last year made errors in the way it packaged home loans into bonds, while investors have sued trustee banks, saying documentation lapses during mortgage securitizations can impair their ability to recover losses when homeowners default. Schneiderman didn’t sue Bank of America in connection with that criticism.

The Justice Department in January said it formed a group of federal officials and state attorneys general to investigate misconduct in the bundling of mortgage loans into securities. Schneiderman is co-chairman with officials from the Justice Department and the Securities and Exchange Commission.

The next month, five mortgage servicers — Bank of America Corp., Wells Fargo & Co. (WFC), Citigroup Inc. (C), JPMorgan Chase & Co. and Ally Financial Inc. (ALLY) — reached a $25 billion settlement with federal officials and 49 states. The deal pays for mortgage relief for homeowners while settling claims against the servicers over foreclosure abuses. It didn’t resolve all claims, leaving the lenders exposed to further investigations into their mortgage operations by state and federal officials.

Top Issuers

The New York and Delaware probes involve banks that assembled the securities and firms that act as trustees on behalf of investors in the debt, said one of the people and a third person familiar with the matter.

The top issuers of mortgage securities without government backing in 2005 included Bank of America’s Countrywide Financial unit, GMAC, Bear Stearns Cos. and Washington Mutual, according to trade publication Inside MBS & ABS. Total volume for the top 10 issuers was $672 billion. JPMorgan acquired Bear Stearns and Washington Mutual in 2008.

The sale of mortgages into the trusts that pool loans may be void if banks didn’t follow strict requirements for such transfers, Biden said in a lawsuit filed last year over a national mortgage database used by banks. The requirements for transferring documents were “frequently not complied with” and likely led to the failure to properly transfer loans “on a large scale,” Biden said in the complaint.

“Most of this was done under the cover of darkness and anything that shines a light on these practices is going to be good for investors,” Talcott Franklin, an attorney whose firm represents mortgage-bond investors, said about the state probes.

Critical to Investors

Proper document transfers are critical to investors because if there are defects, the trusts, which act on behalf of investors, can’t foreclose on borrowers when they default, leading to losses, said Beth Kaswan, an attorney whose firm, Scott + Scott LLP, represents pension funds that have sued Bank of New York Mellon Corp. (BK) and US Bancorp as bond trustees. The banks are accused of failing in their job to review loan files for missing and incomplete documents and ensure any problems were corrected, according to court filings.

“You have very significant losses in the trusts and very high delinquencies and foreclosures, and when you attempt to foreclose you can’t collect,” Kaswan said.

Laurence Platt, an attorney at K&L Gates LLP in Washington, disagreed that widespread problems exist with document transfers in securitization transactions that have impaired investors’ interests in mortgages.

“There may be loan-level issues but there aren’t massive pattern and practice problems,” he said. “And even when there are potential loan-level issues, you have to look at state law because not all states require the same documents.”

Fixing Defects

Missing documents don’t have to prevent trusts from foreclosing on homes because the paperwork may not be necessary, according to Platt. Defects in the required documents can be fixed in some circumstances, he said. For example, a missing promissory note, in which a borrower commits to repay a loan, may not derail the process because there are laws governing lost notes that allow a lender to proceed with a foreclosure, he said.

A review by federal bank regulators last year found that mortgage servicers “generally had sufficient documentation” to demonstrate authority to foreclose on homes.

Schneiderman said in court papers last year that Countrywide failed to transfer complete loan documentation to trusts. BNY Mellon, the trustee for bondholders, misled investors to believe Countrywide had delivered complete files, the attorney general said.

Hindered Foreclosures

Errors in the transfer of documents “hampered” the ability of the trusts to foreclose and impaired the value of the securities backed by the loans, Schneiderman said.

“The failure to properly transfer possession of complete mortgage files has hindered numerous foreclosure proceedings and resulted in fraudulent activities,” the attorney general said in court documents.

Bank of America faced similar claims from Nevada Attorney General Catherine Cortez Masto, who accused the Charlotte, North Carolina-based lender of conducting foreclosures without authority in its role as mortgage servicer due improper document transfers. In an amended complaint last year, Masto said Countrywide failed to deliver original mortgage notes to the trusts or provided notes with defects.

The lawsuit was settled as part of the national foreclosure settlement, Masto spokeswoman Jennifer Lopez said.

Bank of America spokesman Rick Simon declined to comment about the claims made by states and investors. BNY Mellon performed its duties as defined in the agreements governing the securitizations, spokesman Kevin Heine said.

“We believe that claims against the trustee are based on a misunderstanding of the limited role of the trustee in mortgage securitizations,” he said.

Biden, in his complaint over mortgage database MERS, cites a foreclosure by Deutsche Bank AG (DBK) as trustee in which the promissory note wasn’t delivered to the bank as required under an agreement governing the securitization. The office is concerned that such errors led to foreclosures by banks that lacked authority to seize homes, one of the people said.

Renee Calabro, spokeswoman for Frankfurt-based Deutsche Bank, declined to comment.

Investors have raised similar claims against banks. The Oklahoma Police Pension and Retirement System last year sued U.S. Bancorp as trustee for mortgage bonds sold by Bear Stearns. The bank “regularly disregarded” its duty as trustee to review loan files to ensure there were no missing or defective documents transferred to the trusts. The bank’s actions caused millions of dollars in losses on securities “that were not, in fact, legally collateralized by mortgage loans,” according to an amended complaint.

“Bondholders could have serious claims on their hands,” said Gradman. “You’re going to suffer a loss as bondholder if you can’t foreclose, if you can’t liquidate that property and recoup.”

Teri Charest, a spokeswoman for Minneapolis-based U.S. Bancorp (USB), said the bank isn’t liable and doesn’t know if any party is at fault in the structuring or administration of the transactions.

“If there was fault, this unhappy investor is seeking recompense from the wrong party,” she said. “We were not the sponsor, underwriter, custodian, servicer or administrator of this transaction.”

Fed Orders Ally, BOA, Citi, JPM, Wells Fargo to Pay $766.5 Million in Sanctions

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Unsound and Unsafe Processes and Practices in Residential Loans

Editor’s note: Once again we have an administrative finding and an admission by the BIG 5 that their servicing and practices are both unsafe and unsound. These are fines, not restitution. The Banks regard this as the price of doing business and the Federal Reserve System, led by the NY Fed, on which the likes of Jamie Dimon are Board members,  makes it look like they are doing something. But it is a long way to stretch these findings into conclusive proof that these unsafe and unsound practices apply to any particular loan.

On the other hand, it lends considerable support to the argument that the accounting is not complete, the documentation is neither complete nor does it conform to the full story — the reconciliation of money and practice with the requirements of the closing documents with the lender (investors), the requirements of the closing documents with the borrower (homeowner), the truth of the representations made in court by those seeking to foreclose, and the truth of how the money was funded and distributed, contrary to the chain of documents and the proffers made in Court by entities seeking to foreclose.

From the information we have at hand, if properly presented, the would-be forecloser should be forced in discovery to prove up the transactions that are described in assignments, substitutions of trustees and other documents. And in failing to prove the boiler plate recital “for value received” their case should collapse. The reference to transactions in which the loan was allegedly bought and sold are false in most cases, which means that there was no sale because nobody paid anything. It is the same with the auction wherein a credit bid is submitted by a non-creditor who cannot prove that they bear a risk of loss for non-payment of the loan.

Further, it probably is true that the forged, fabricated false documentation referred to in the Missouri indictment, are a cover-up for a more essential defect — that the loan origination documents lack full disclosure of the the identity of the real creditor, the fees and other compensation earned, and the actual terms of repayment to the creditor which are contained in the securitization documents, not the documents at the closing of escrow with the borrower.

The biggest cover-up is the amount due on the debt and the very existence of the declared default. With the servicer paying the creditor, the creditor is not in any position to declare a default regardless of whether the borrower made payments or not. The servicer, not being party to the mortgage has no rights to foreclose although they could allege that they have some right of restitution from the borrower, but since the servicer has no contract with the borrower, there is no basis for foreclosure.

Other payments to the creditor, or the agents of the creditor in the securitization chain by insurers, counterparties in credit default swap contracts and intermingling receipts and liabilities by cross collateralization within the pool are made with the express waiver of subrogation, which means they are making the payments but they waive any right to collect from the homeowner. Crediting these payments to the investors and the corresponding loan accounts would greatly reduce the debt due without any resort to “principal reduction” or “principal correction.” The legal principles are that the creditor is only entitled to be paid once and it is only the creditor who has the right to foreclose and submit a credit bid at auction.

A creditor who has already received a payment cannot demand the same payment again from the borrower. The strategy of the Banks is to claim ownership of the loan, auction the property and submit their own credit bid which is false. The strategy of the homeowners is to penetrate the veils of secrecy and obfuscation of the banks and show through the records or absence of records that the transactions claimed by the conduits in the securitization chain never were completed because no value was exchanged and to show that they are entitled to a full accounting of all money received by or on behalf of the creditor.

This information is especially important in exercising rights under HAMP and other debt relief and modification programs. Without a starting point in which the borrower knows the true balance of the debt, the borrower is left to guess or estimate or waive the amount of payments received by or on behalf of the creditor.

Unless and until the Court, or any of the regulatory authorities forces the creditors and the bank conduits to show all money received and all money paid out, with dates, payees and the purpose of the transaction, there is no right to pursue foreclosure. Trustees are breaching their statutory and common law duties by failing to exercise due diligence on this point especially since the information, like these sanctions and the prior Cease and Desist orders are already in the public domain.

Once the Court orders the bank or servicer to comply with the ordinary requirement to provide a FULL accounting, experience indicates that the cases will inevitably settle on favorable terms to the borrower. Failure of the Judge to grant such an order is an appealable order, that probably entitles the homeowner to obtain a review through interlocutory appeal.

Federal Reserve Board releases orders related to the previously announced monetary sanctions against five banking organizations

Release Date: February 13, 2012

For immediate release

The Federal Reserve Board on Monday released the orders related to the previously announced monetary sanctions against five banking organizations for unsafe and unsound processes and practices in residential mortgage loan servicing and processing. The Board reached an agreement in principle with these organizations for monetary sanctions totaling $766.5 million on February 9, 2012.

Attachments:

Ally Financial Inc. (PDF)
Bank of America Corporation (PDF)
Citigroup Inc. (PDF)
JPMorgan Chase & Co. (PDF)
Wells Fargo & Company (PDF)

For media inquiries, call 202-452-2955

SOURCE: http://www.federalreserve.gov

BLOOMBERG: GMAC CASE MAY ESTABLISH ANTI-BANK PRECEDENT

GMAC foreclosure case may set anti-bank precedent

Michael Riley, Bloomberg News

Tuesday, November 9, 2010

When James Renfro had to stop making payments on his two-story fixer-upper in Parma, Ohio, a suburb of Cleveland, he triggered events that were supposed to result in the forced sale of his home.

That Nov. 15 auction has been canceled because of defects in documents submitted by his loan servicer, Ally Financial Inc.’s GMAC Mortgage unit. Two affidavits about Renfro’s home were signed by Jeffrey Stephan, a GMAC employee who said in sworn depositions in Florida and Maine that he hadn’t read thousands of affidavits he’d signed.

Renfro’s case has created a showdown between GMAC and Ohio’s Attorney General Richard Cordray. Cordray has asked Cuyahoga County Court of Common Pleas Judge Nancy Russo not to let GMAC simply submit new documents to cure defects without consequences. He’s taken the same stand against Wells Fargo & Co., which has said it found defects in 55,000 foreclosures.

“This is just the first,” said Cordray, who filed an amicus, or friend-of-the-court, brief in the Renfro case. He argued that Russo should punish GMAC for its conduct.

The judge in Cleveland set an accelerated schedule on Monday for evidence-gathering in the case, leading up to a Feb. 17 hearing on the integrity of the loan documents. Cordray’s office plans to file a motion today asking to take part in the case and participate in so-called discovery.

May speed cases

The precedent set by the case might hasten a settlement between home lenders and the attorneys general of the 50 U.S. states, who are investigating allegations of fraud in foreclosure filings. Those being probed include Wells Fargo, based in San Francisco, which has said it will refile foreclosure affidavits involving statements that “did not strictly adhere to the required procedures.”

In potentially thousands of cases across the United States, judges have the power to impose “sanctions, penalties, fines and even default,” as the banks try to submit substitute paperwork to proceed with flawed foreclosures, Cordray said.

“The banks want to wish this away and pretend like it doesn’t exist,” he said.

In September, Ally briefly suspended foreclosures in 23 states where there is judicial review and later announced an independent survey of foreclosure proceedings that would extend nationwide. After a review, the company began reinstating proceedings in cases it said didn’t involve errors.

Tom Goyda, a spokesman for Wells Fargo, said the lender would go ahead with plans to resubmit thousands of affidavits in cases nationwide, including Ohio. When judges seek information on documents already filed, “we will work with them to meet their concerns,” Goyda said.

Scope of robo signing

The 50-state investigation is focused on uncovering the scope of tainted foreclosures, including how what are being called robo signers processed documents they didn’t review, Cordray said. So far, investigators have identified “double figures of robo signers” working on behalf of lenders such as JPMorgan Chase & Co. and Bank of America Corp., he said.

Such banks are conducting their own reviews to spot errors and determine how many cases with defects are involved. GMAC’s Stephan testified to signing as many as 10,000 documents a month. JPMorgan initially suspended foreclosures in 23 states affecting 56,000 cases to review potentially faulty documents.

Among the least appealing scenarios for the lenders is that affected cases will have to be examined, like the Renfro case, in individual courtrooms across the country, with the possibility of thousands of judges questioning robo signers and other loan processing officials.

Judge Russo said in an interview that until hearing the evidence, she has no way of telling whether the documents represent an error, negligence, or fraud, and that other judges will have to make the same time-consuming inquiries.

“If Ohio has 10,000 of these cases, there should be 10,000 hearings,” Russo said. “I’m sympathetic to the fact that it’s onerous for the lenders, but I still have to do my job.”

Market Data Provided by Bloomberg News

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/11/08/BUKL1G8UH4.DTL#ixzz14oAobg4Z

GMAC HALTS FORECLOSURES ADMITTING FALSE AFFIDAVITS

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From testimony in a Chase case, same as dozens of others I have seen —-

Q. So if you didn’t review any books, records, and documents or computerized records, how is it that you had personal knowledge of all the matters contained therein?

A. Well, I have personal knowledge that my staff has personal knowledge. That is our process.

KEEP IN MIND that these admitted facts now are the same facts treated with incredulity and derision from the bench and opposing counsel. The Judges were wrong. The foreclosures were wrong. Now what? How will homeowners and counsel be treated in court now? Will the Judge still think the homeowner is trying to get out of a legitimate debt or will the Courts start to allow these cases to heard on their MERITS instead of improper PRESUMPTIONS? Will the courts start following rules of evidence or will they continue to give the “benefit of the doubt” (i.e., and improper presumption) to the foreclosure mill that fabricated documents with false affidavits?

The tide is turning from defending borrowers to prosecuting damage claims for slander of title, fraud, appraisal fraud, and criminal prosecutions by state, local and federal law enforcement. GMAC is only the first of the pretender lenders to admit the false representations contained in pleadings and affidavits. The methods used to to obtain foreclosure sales were common throughout the industry. The law firms and fabrication mills will provide precious little cover for the culprits whose interests they served. AND now that millions of homes were foreclosed, their position is set and fixed — they can no longer “fix” the problem by manipulating the documents.

The bottom line is that GMAC mortgagors who “lost” their homes still own them, as I have repeatedly opined on these pages. The damages are obvious and the punitive damages available are virtually inevitable. Maybe Judges will change their minds about applying TILA and RESPA, both of which amply cover this situation. Maybe those teeth in those statutes do NOT lead to windfall gains for homeowners but only set things right.

These people can move back into their homes in my opinion and even taken possession from those who allegedly purchased them, since the title was based upon a fatal defect in the chain. Whether these people will end up owing any money and whether they might still be subject to foreclosure from SOMEBODY is not yet known, but we know that GMAC-sponsored foreclosures are now admitted to be defective. There is no reason to suppose that GMAC was any different from any of the other pretender lenders who initiated foreclosure sales either on false pleading or false instructions using the power of sale in non-judicial states.

Those hundreds of millions of dollars earned by the foreclosure mills, those tens of billions of wealth stolen from homeowner are all up for grabs as lawyers start to circle the kill, having discovered that there is more money here than any personal injury or malpractice suit and that anyone can do it with the right information on title and securitization.

With subpoenas coming in from law enforcement agencies around the country, GMAC is the first to crumble, aware that the choice was to either take a massive commercial hit for damages or face criminal charges. Finger pointing will start in earnest as the big boys claim plausible deniability in a scheme they hatched and directed. The little guys will flip on them like pancakes as they testify under oath about the instructions they received which they knew were contrary to law and the rules governing their licenses and charters. Real Estate Brokers, licensed appraisers, licensed mortgage mortgage brokers, notaries, witnesses, title agents and their collective title and liability insurance carriers will soon discover that their licenses, livelihood and reputations are not only at risk but almost certainly headed for a major hit.

There can be no doubt that all GMAC cases will be affected by this action although GMAC has thus far limited the instruction to judicial states. In non-judicial states, most of the foreclosures were done without affidavits because they were uncontested. GMAC will now find small comfort that they didn’t use affidavits but merely false instructions to “Trustees” whose status was acquired through the filing of “Substitution of Trustee” documents executed by the same folks who falsified the affidavits in the judicial states. But the fact is that GMAC was not the creditor and obtained title through a “credit bid.” THEY CAN’T FIX THIS! Thus the transfer of title was void, in my opinion, or certainly voidable.

The denial that the affidavit contained false information is patently false — and, as usual, not under oath (see below). GMAC takes the position that the affidavits were “inadvertently” signed (tens of thousands of them) by persons without knowledge of their truth or falsity and that the action is taken only to assure that the mortgage holder is actually known. So the fight isn’t over and don’t kid yourself. They are not all going to roll over and play dead. Just take this as another large step toward the ultimate remedy — reinstatement of people in their homes, damage awards to people who were defrauded, and thus restoration of hundreds of billions of dollars of wealth back into the economic sector where money is spent and the economy actually works for people who don’t trade false papers at the expense of pensioners and homeowners around the world.

September 20, 2010

GMAC Halts Foreclosures in 23 States for Review

By DAVID STREITFELD

GMAC Mortgage, one of the country’s largest and most troubled home lenders, said on Monday that it was imposing a moratorium on many of its foreclosures as it tried to ensure they were done correctly.

The lender, which specialized in subprime loans during the boom, when it was owned by General Motors, declined in an e-mail to specify how many loans would be affected or the “potential issue” it had identified with them.

GMAC said the suspension might be a few weeks or might last until the end of the year.

States where the moratorium is being carried out include New York, Connecticut, New Jersey, Illinois, Florida and 18 others, mostly on the East Coast and in the Midwest. All of the affected states are so-called judicial foreclosure states, where courts control the interactions of defaulting homeowners and their lenders.

Since the real estate collapse began, lawyers for homeowners have sparred with lenders in those states. The lawyers say that in many cases, the lenders are not in possession of the original promissory note, which is necessary for a foreclosure.

GMAC, which has been the recipient of billions of dollars of government aid, declined to provide any details or answer questions, but its actions suggest that it is concerned about potential liability in evicting families and selling houses to which it does not have clear title.

The lender said it was also reviewing completed foreclosures where the same unnamed procedure might have been used.

Matthew Weidner, a real estate lawyer in St. Petersburg, Fla., said he interpreted the lender’s actions as saying, “We have real liability here.”

Mr. Weidner said he recently received notices from the opposing counsel in two GMAC foreclosure cases that it was withdrawing an affidavit. In both cases, the document was signed by a GMAC executive who said in a deposition last year that he had routinely signed thousands of affidavits without verifying the mortgage holder.

“The Florida rules of civil procedure are explicit,” Mr. Weidner said. “If you enter an affidavit, it must be based on personal knowledge.”

The law firm seeking to withdraw the affidavits is Florida Default Law Group, which is based in Tampa. Ronald R. Wolfe, a vice president at the firm, did not return calls. The firm is under investigation by the State of Florida, according to the attorney general’s Web site.

Real estate agents who work with GMAC to sell foreclosed properties were told to halt their activities late last week. The moratorium was first reported by Bloomberg News on Monday. Bloomberg said it had obtained a company memorandum dated Friday in which GMAC Mortgage instructed brokers to immediately stop evictions, cash-for-key transactions and sales.

Nerissa Spannos, a Fort Lauderdale agent, said GMAC represents about half of her business — 15 houses at the moment in various stages of foreclosure.

“It’s all coming to a halt,” she said. “I have so many nice listings and now I can’t sell them.”

The lender’s action, she said, was unprecedented in her experience. “Every once in a while you get a message saying, ‘Take this house off the market. We have to re-foreclose.’ But this is so much bigger,” she said.

Ally Says GMAC Mortgage Mishandled Affidavits on Foreclosures

By Dakin Campbell and Lorraine Woellert – Sep 21, 2010

Ally Financial Inc., whose GMAC Mortgage unit halted evictions in 23 states amid allegations of mishandled affidavits, said its filings contained no false claims about home loans.

The “defect” in affidavits used to support evictions was “technical” and was discovered by the company, Gina Proia, an Ally spokeswoman, said in an e-mailed statement. Employees submitted affidavits containing information they didn’t personally know was true and sometimes signed without a notary present, according to the statement. Most cases will be resolved in the next few weeks and those that can’t be fixed will “require court intervention,” Proia said.

“The entire situation is unfortunate and regrettable and GMAC Mortgage is diligently working to resolve the situation,” Proia said. “There was never any intent on the part of GMAC Mortgage to bypass court rules or procedures. Nor do these failures reflect any disrespect for our courts or the judicial processes.”

State officials are investigating allegations of fraudulent foreclosures at the nation’s largest home lenders and loan servicers. Lawyers defending mortgage borrowers have accused GMAC and other lenders of foreclosing on homeowners without verifying that they own the loans. In foreclosure cases, companies commonly file affidavits to start court proceedings.

“All the banks are the same, GMAC is the only one who’s gotten caught,” said Patricia Parker, an attorney at Jacksonville, Florida-based law firm, Parker & DuFresne. “This could be huge.”

No Misstatements

Aside from signing the affidavits without knowledge or a notary, “the sum and substance of the affidavits and all content were factually accurate,” Proia wrote in the e-mail. “Our internal review has revealed no evidence of any factual misstatements or inaccuracies concerning the details typically contained in these affidavits such as the loan balance, its delinquency, and the accuracy of the note and mortgage on the underlying transaction.”

Affidavits are statements written and sworn to in the presence of someone authorized to administer an oath, such as a notary public.

GMAC told brokers and agents to halt evictions tied to foreclosures on homeowners in 23 states including Florida, Connecticut and New York and said it may have to take “corrective action” on other foreclosures, according to a Sept. 17 memo. Foreclosures won’t be suspended and will continue with “no interruption,” Proia said in a statement yesterday.

10,000 a Week

In December 2009, a GMAC Mortgage employee said in a deposition that his team of 13 people signed “a round number of 10,000” affidavits and other foreclosure documents a month without verifying their accuracy. The employee said he relied on law firms sending him the affidavits to verify their accuracy instead of checking them with GMAC’s records as required. The affidavits were then used to complete the process of repossessing homes and evicting residents.

Florida Attorney General William McCollum is investigating three law firms that represent loan servicers in foreclosures, and are alleged to have submitted fraudulent documents to the courts, according to an Aug. 10 statement. The firms handled about 80 percent of foreclosure cases in the state, according to a letter from Representative Alan Grayson, a Florida Democrat.

“It appears that the actions we have taken and the attention we’ve paid to this issue could have had some impact on the actions that GMAC took today, but we can’t take full credit,” Ryan Wiggins, a spokeswoman for McCollum, said yesterday in a telephone interview.

‘Committed Fraud’

In August, Florida Circuit Court Judge Jean Johnson blocked a Jacksonville foreclosure brought by Washington Mutual Bank N.A. and JPMorgan Chase Bank, which had purchased the failed bank’s assets, and Shapiro & Fishman, the companies’ law firm. Documents eventually showed that the mortgage on the house was in fact owned by Washington-based Fannie Mae.

WaMu and the law firm “committed fraud on this court,” Johnson wrote. JPMorgan had presented a document prepared by Shapiro showing the mortgage was sold directly to WaMu in April 2008.

Tom Ice, founding partner of Ice Legal PA in Royal Palm Beach, Florida, said a fourth law firm representing GMAC in recent weeks has begun withdrawing affidavits signed by the GMAC employee.

“The banks are sitting up and taking notice that they can’t use falsified documents in the courtroom,” Ice said. “There may be others doing the same thing. They’re going to come back and say, ‘We’d better withdraw these,’” Ice said in a telephone interview.

Alejandra Arroyave, a lawyer with Lapin & Leichtling, a law firm in Coral Gables, Florida, who represented the employee at his December 2009 deposition, didn’t respond to a request for comment. A phone call to the employee wasn’t returned.

Mortgage Market

GMAC ranked fourth among U.S. home-loan originators in the first six months of this year, with $26 billion of mortgages, according to Inside Mortgage Finance, an industry newsletter. Wells Fargo & Co. ranked first, with $160 billion, and Citigroup Inc. was fifth, with $25 billion.

Iowa Assistant Attorney General Patrick Madigan said the implications of Ally’s internal review and the GMAC employee’s deposition could be “enormous.”

“It would call into question whether other servicers have engaged in similar practices,” Madigan said in a telephone interview. “It would be a major disruption to the foreclosure pipeline.”

To contact the reporters on this story: Dakin Campbell in San Francisco at dcampbell27@bloomberg.net; Lorraine Woellert in Washington at lwoellert@bloomberg.net.

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