Investigator Bill Paatalo: “Who Is Private Investor ‘AO1?” JPMorgan Chase Refuses To Reveal The Identity Of This Investor.”

Evidence-Puzzle-via-TouroLawReview

http://bpinvestigativeagency.com/washington-mutual-bank-sold-these-67529-toxic-loans-and-not-one-single-foreclosure-by-the-investors/

In relation to my previous article, let me continue a bit further. More and more cases continue to come across my desk showing that WaMu loans claimed to be owned by JPMorgan Chase, through the “Purchase & Assumption Agreement” with the FDIC, were in fact sold by WaMu to “Private Investor – AO1” prior to the FDIC’s Receivership. Here is an excerpt from a recent affidavit I produced:

———————————————————————

“Private investors own the subject loans, and their identity is being concealed.

Attached as Exhibit 5, p.1 is a servicing system screenshot titled, “3270 Explorer” which was provided to me by Plaintiff through discovery efforts. This screenshot is dated 03/02/2009 and refers to “Loan Number [“REDACTED”] which is associated with the [“REDACTED”] mortgage. This document shows an investor code “AO1” directly beneath the top line. The same investor code “AO1” is shown on the servicing screenshot for this loan on 12/31/2005 (Exhibit 5, p. 2). Exhibit 5. P.3 is the servicer screenshot for the [“REDACTED” mortgage (“Loan Number [REDACTED]”) dated 12/31/2005 which also shows the same investor code “AO1.”

From experience, I have seen and reviewed JPMC’s servicing records for WMB originated loans within JPMC’s “3270 Explorer” servicing platform. This system / platform contains a specific screenshot which shows the “loan transfer history” (Screen: “Explorer 3270 – LNTH”) for these loans.

From experience, I have seen complete LNTH screenshots for these WaMu loans provided by JPMC, but usually they are produced with great reluctance and through motions to compel. When produced, these LNTH screens tell an entirely different story about the loans; specifically, all the sales and transfers conducted prior to the FDIC’s receivership.

Attached as Exhibit 6 is a “3270 Explorer: Loan Loan Transfer History (LNTH)” screenshot provided by JPMC in a very similar case which I have been involved captioned Kelley v. JPMorgan Chase Bank, N.A., U.S. BK CT, ND CA, Adv. Case No. 10-05245. Like the [REDACTED]loans, the Kelley loan was also originated by Washington Mutual Bank, F.A. Exhibit 6 shows the entire LNTH from origination through the FDIC receivership. The beginning “Investor Code” at the inception of the loan is “030” on 08/07/07. The loan is then sold and transferred to a “New/Inv” (new investor) on 09/01/07 with the “Investor Code – AO1”: the same code for both [REDACTED] loans on 12/31/2005. It can be logically deduced from this evidence that the same originator code of “030” should also exist on the [REDACTED] loans if WMBFA was the originator.

A deposition of JPMC employee “Crystal Davis” occurred in the Kelley case on August 13, 2014. A copy of the Davis Deposition Transcript was filed in the PACER System and a copy is attached to this affidavit as Exhibit 3. Exhibit 4 is a glossary of codes exhibit provided by JPMC in that deposition. Crystal Davis explains the investor codes on p.42 as follows:

(In reference to Exhibit 4).

Q. Now if you look to the right of that, it states that the claim – the investor IDs begin with an A through V; is that correct?

A. In the current MSP platform, yes, indicates private investor loans.

Q. And what would X,Y,Z indicate?

A. Those would indicate bank-owned assets.

It is very likely that the complete LNTH screenshots for both subject loans, if ever produced, will show similar sales transactions from WMB to “New/Inv – AO1.” The identity of investor “AO1” has not been disclosed and is being concealed from the Court and the Plaintiff. I believe this is intentional.”

————————————————–

What also appears to be intentional is the fact that when JPMC is now pressured to produce these “LNTH” screenshots per my findings and recommendations to counsel, JPMC or the servicer comes back with incomplete LNTH histories for the loans; the LNTH screens begin AFTER September 25, 2008. What this means is, not only was no schedule of assets ever produced in association with “Schedule 3.1” of the PAA, but now in some of my current cases, JPMC takes the added position that it owns these WaMu loans to which there is also no record of the sales and transfer histories of the loans within their servicing platform.  So, my opinion that WaMu sold and securitized the loan(s) prior to September 25, 2008 becomes a bit more difficult to rebut.  The question to ask any Chase representative in a deposition is this, “If no schedule or inventory of WaMu loans has ever been produced, and there are no servicing records in existence from WaMu showing whether or not the loan was ever sold or securitized, could it be possible the loan(s) were sold by WaMu prior to September 25, 2008?” (As a reminder, few if any Chase witnesses have any personal knowledge of WaMu’s business practices.)

Bottom line – Chase’s own witness testified that “Ao1” is a private investor, and this code does not mean “bank owned.” With the LNTH screenshots now appearing with no pre-receivership sales and transfer activities entered by WaMu, it is almost too much to believe that one of the largest banking institutions in the world, would not have tracked the loans it originated and sold into the secondary market within its servicing systems.

C’mon Chase, who is “Private Investor AO1?”

 

Bill Paatalo – Private Investigator – OR PSID#49411

Bill.bpia@gmail.com

(406) 328-4075

http://bpinvestigativeagency.com/who-is-private-investor-ao1-jpmorgan-chase-refuses-to-reveal-the-identity-of-this-investor/

 

 

Casting Doubt on Validity of Servicer Affidavits in Foreclosure Litigation

Christopher A. Gorman, New York Law Journal

October 19, 2016

Most institutional lenders, trusts and large financial institutions that loan money to borrowers or acquire distressed loans use loan servicers to service their loans after the loans are originated or otherwise assigned to them. Loan servicing is the process by which a lender uses a third party to, among other things, collect principal, interest and escrow payments from the borrower in connection with a loan.

Following a default on a loan, a lender will often rely upon its loan servicer to oversee the process of foreclosing on the mortgage securing the loan. In such instances, the foreclosure lawsuit will often be brought in the name of the lender holding the promissory note and the mortgage, but affidavits that need to be submitted to the court in order to prove the lender’s standing or the borrower’s default, among other issues, are submitted by a representative of the loan servicer that is involved in servicing the loan.

Until recently, this process by which the loan servicer oversees and manages the foreclosure litigation on behalf of a lender holding the defaulted note and mortgage that is the named plaintiff was not the subject of much controversy. Indeed, there are literally thousands of cases currently pending in New York State where a loan servicer, acting on behalf of the lender that is the named plaintiff that commenced the foreclosure action, submits affidavits and documents to the court in order to prove that the lender should be awarded a judgment of foreclosure and sale.

A number of recent decisions of the Appellate Division, Second Department, however, may cause lenders to re-think the arrangement by which a loan servicer that is not a party to the foreclosure action acts on behalf of a lender in overseeing and managing mortgage foreclosure litigation. Indeed, the court has held that documents and information attached to an affidavit of a representative of a loan servicer are inadmissible unless the loan servicer’s representative can attest to being familiar with the record-keeping practices and procedures of the lender (i.e., the plaintiff in the foreclosure action).

The statutory foundation for the recent Second Department decisions, of course, is the business records exception to the hearsay rule, which is embodied in CPLR 4518(a). CPLR 4518(a) states that “[a]ny writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any act, transaction, occurrence or event, shall be admissible in evidence in proof of that act, transaction, occurrence or event, if the judge finds that it was made in the regular course of any business and that it was the regular course of such business to make it, at the time of the act, transaction, occurrence or event, or within a reasonable time thereafter.”

‘Royal’ and Other Cases

The Appellate Division, Second Department’s most recent pronouncement concerning the business records exception to the hearsay rule in the context of mortgage foreclosure litigation can be found in HSBC Mortgage Services v. Royal, — A.D.3d —-, 37 N.Y.S.3d 321 (2d Dept. Sept. 14, 2016). The facts of Royal are similar to the facts underlying literally thousands of foreclosure actions pending in New York State, thereby suggesting that the decision could have a wide-ranging impact on mortgage foreclosure litigation currently pending in New York State.

In Royal, the plaintiff-lender commenced a foreclosure action on the basis of an alleged default by the borrower under a promissory note and mortgage. In support of its motion for summary judgment, the lender submitted the affidavit of a representative of “the loan servicer for the plaintiff’s successor in interest.” The representative of the lender’s loan servicer averred in his affidavit “that his knowledge of the relevant facts was based on his ‘examination of the financial books and business records made in the ordinary course of business maintained by or on behalf of the successor in interest to the Plaintiff,’ and that he was ‘familiar with the record keeping systems that [the] successor in interest to the Plaintiff and/or its loan servicer use[d] to record and create information related to the residential mortgage loans that it services.’” On the basis of the information and documents submitted through the loan servicer’s affidavit, the Supreme Court granted the lender’s motion for summary judgment.

On appeal, the Second Department reversed. The court concluded in Royal that “[t]he plaintiff failed to demonstrate the admissibility of the records relied upon by” the representative of the loan servicer “under the business records exception to the hearsay rule…, and, thus, failed to establish the appellant’s default in payment under the note.” Specifically, the Second Department concluded that because the representative of the loan servicer “did not allege that he was personally familiar with the plaintiff’s record keeping practices and procedures,” he “failed to lay a proper foundation for the admission of records concerning the appellant’s payment history…and his assertions based on these records were inadmissible.”

The Second Department concluded in Royal, therefore, that “[i]nasmuch as the plaintiff’s motion was based on evidence that was not in admissible form, the plaintiff failed to establish its prima facie entitlement to judgment as a matter of law” and held that the lender’s motion “should have been denied…regardless of the sufficiency of the appellant’s opposition papers.”

Of course, Royal—standing alone—would be a significant decision for mortgage foreclosure practitioners. However, Royal is not a stand-alone decision, and the Second Department has articulated principles very similar to those underlying the Royal decision in a number of other recent mortgage foreclosure cases.

For instance, in Deutsche Bank National Trust Company v. Brewton, 142 A.D.3d 683, 37 N.Y.S.3d 25(2d Dept. 2016), the Second Department held that the lender “failed to demonstrate that the records relied upon by” the representative of the lender’s loan servicer “were admissible under the business records exception to the hearsay rule (see CPLR 4518(a)) because” the representative of the lender’s loan servicer “did not attest that she was personally familiar with the plaintiff’s record-keeping practices and procedures.” Similarly, in U.S. Bank National Association v. Handler, 140 A.D.3d 948, 34 N.Y.S.3d 463 (2d Dept. 2016), the Appellate Division, Second Department held that an affidavit from the vice-president of the lender’s servicing agent “who did not attest that he was personally familiar with the plaintiff’s record keeping practices with respect to the note…failed to establish, prima facie, that the plaintiff had physical possession of the note prior to the commencement of the action.”

Finally, in Citibank v. Cabrera, 130 A.D.3d 861, 14 N.Y.S.3d 420 (2d Dept. 2015), the Second Department expressly held that where the lender’s affiant “who was employed by the plaintiff’s loan servicer, did not allege that she was personally familiar with the plaintiff’s record keeping practices and procedures,” the representative of the lender’s loan servicer “did not lay a proper foundation for the admission of the defendant’s payment history.” As the Cabrera court stated: “[a] proper foundation for the admission of a business record must be provided by someone with personal knowledge of the maker’s business practices and procedures.”

Thus, decisions such as Royal, Brewton, Handler and Cabrera, stand for the proposition that where the lender is the named plaintiff in a mortgage foreclosure action, the lender can rely on the affidavit of its loan servicer to get documents admitted into evidence under the business records exception to the hearsay rule only if the loan servicer’s representative can attest that it is familiar with the lender’s (and not the loan servicer’s) record-keeping practices and procedures. This would seem to be a somewhat difficult burden to satisfy for loan servicers, since loan servicers are often third-party entities that are separate and distinct from the lenders that are the named plaintiffs in mortgage foreclosure cases.

Meeting New Requirements

Lenders will need to find ways in which to meet the new requirements imposed in order to satisfy the business records exception to the hearsay rule announced in decisions such as Royal. For instance, lenders may seek to avoid altogether obtaining affidavits from third-party loan servicers, and instead use representatives of the lender, who can attest to their familiarity with the lender’s record-keeping practices and procedures, in order to submit affidavits and documents to the court.

Alternatively, if lenders continue to insist, even after Royal and the other decisions of the Second Department discussed above, to use affidavits from third-party loan servicers in mortgage foreclosure litigation, then the best practice will be to have loan servicers (as opposed to lenders) be the party to act as the plaintiff in the foreclosure litigation. So long as the loan servicer is authorized to do so by the lender, courts have found that loan servicers have standing to present claims for foreclosure and sale on behalf of the lender that owns and holds the note and mortgage at the time of the commencement of the action. See, e.g., Flushing Preferred Funding Corp. v. Patricola Realty Corp., 964 N.Y.S.2d 58 (Sup. Ct. Suffolk Co. 2012).

Regardless of what steps lenders and loan servicers take going forward to respond to Royal and similar Appellate Division, Second Department, decisions discussed above, it is likely that Royal is going to be cited by borrowers in already pending foreclosure cases where the requirements imposed by Royal may not otherwise be satisfied. It remains to be seen whether Royal and other Second Department authority discussed above will cause further delay in processing the already substantial backlog of mortgage foreclosure cases pending in New York State.

Casting Doubt on Validity of Servicer Affidavits in Foreclosure Litigation

Flashback: A Foreclosure Mill Halloween Party

 cwchqfkweaaanht

2011 Halloween Flash Back from the New York Times.

The party is the firm’s big annual bash. Employees wear Halloween costumes to the office, where they party until around noon, and then return to work, still in costume. I can’t tell you how people dressed for this year’s party, but I can tell you about last year’s.

That’s because a former employee of Steven J. Baum recently sent me snapshots of last year’s party. In an e-mail, she said that she wanted me to see them because they showed an appalling lack of compassion toward the homeowners — invariably poor and down on their luck — that the Baum firm had brought foreclosure proceedings against.

When we spoke later, she added that the snapshots are an accurate representation of the firm’s mind-set. “There is this really cavalier attitude,” she said. “It doesn’t matter that people are going to lose their homes.” Nor does the firm try to help people get mortgage modifications; the pressure, always, is to foreclose. I told her I wanted to post the photos on The Times’s Web site so that readers could see them. She agreed, but asked to remain anonymous because she said she fears retaliation.

Let me describe a few of the photos. In one, two Baum employees are dressed like homeless people. One is holding a bottle of liquor. The other has a sign around her neck that reads: “3rd party squatter. I lost my home and I was never served.” My source said that “I was never served” is meant to mock “the typical excuse” of the homeowner trying to evade a foreclosure proceeding.

A second picture shows a coffin with a picture of a woman whose eyes have been cut out. A sign on the coffin reads: “Rest in Peace. Crazy Susie.” The reference is to Susan Chana Lask, a lawyer who had filed a class-action suit against Steven J. Baum — and had posted a YouTube video denouncing the firm’s foreclosure practices. “She was a thorn in their side,” said my source.

A third photograph shows a corner of Baum’s office decorated to look like a row of foreclosed homes. Another shows a sign that reads, “Baum Estates” — needless to say, it’s also full of foreclosed houses. Most of the other pictures show either mock homeless camps or mock foreclosure signs — or both. My source told me that not every Baum department used the party to make fun of the troubled homeowners they made their living suing. But some clearly did. The adjective she’d used when she sent them to me — “appalling” — struck me as exactly right.

These pictures are hardly the first piece of evidence that the Baum firm treats homeowners shabbily — or that it uses dubious legal practices to do so. It is under investigation by the New York attorney general, Eric Schneiderman. It recently agreed to pay $2 million to resolve an investigation by the Department of Justice into whether the firm had “filed misleading pleadings, affidavits, and mortgage assignments in the state and federal courts in New York.” (In the press release announcing the settlement, Baum acknowledged only that “it occasionally made inadvertent errors.”)

MFY Legal Services, which defends homeowners, and Harwood Feffer, a large class-action firm, have filed a class-action suit claiming that Steven J. Baum has consistently failed to file certain papers that are necessary to allow for a state-mandated settlement conference that can lead to a modification. Judge Arthur Schack of the State Supreme Court in Brooklyn once described Baum’s foreclosure filings as “operating in a parallel mortgage universe, unrelated to the real universe.” (My source told me that one Baum employee dressed up as Judge Schack at a previous Halloween party.)

I saw the firm operate up close when I wrote several columns about Lilla Roberts, a 73-year-old homeowner who had spent three years in foreclosure hell. Although she had a steady income and was a good candidate for a modification, the Baum firm treated her mercilessly.

When I called a press spokesman for Steven J. Baum to ask about the photographs, he sent me a statement a few hours later. “It has been suggested that some employees dress in … attire that mocks or attempts to belittle the plight of those who have lost their homes,” the statement read. “Nothing could be further from the truth.” It described this column as “another attempt by The New York Times to attack our firm and our work.”

I encourage you to look at the photographs with this column on the Web. Then judge for yourself the veracity of Steven J. Baum’s denial.

The First Step in Foreclosure Defense: Title Issues

The same judges that consistently ignore defenses with respect to the endorsements, assignments, or other issues instantly recognize that where there is an error or break in the chain of title, the “bank” must step back, dismiss the foreclosure and start over again.

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-

Last Thursday night I had North Carolina Attorney James Surane as a guest on my radio show. As I suspected it was technical but VERY interesting. He gave many examples where title issues had either resulted in an outright win or much greater leverage over the party claiming to be authorized to foreclose on property. In his state of North Carolina, the judicial climate is very frosty when it comes to a homeowner challenging foreclosures. But the same judges that consistently ignore defenses with respect to the endorsements, assignments, or other issues instantly recognize that where there is an error or break in the chain of title, the “bank” must step back, dismiss the foreclosure and start over again.

Although most people have stopped ordering title searches and title analysis by a lawyer, they are throwing out the baby with the bathwater. As I have previously discussed on this blog, the problem with the title reports is not that they are useless, it is that they don’t go back far enough. In the run-up to the mortgage meltdown some closing agents were processing loan closings at the rate of 100 per day. These agents and lawyers were overwhelmed by the volume. They made mistakes.

Here is a summary of what Jim said last Thursday night:

FIRST STEP IN FORECLOSURE DEFENSE CASE:

A thorough title search of the property being subject to foreclosure is an absolute necessity. This includes researching back to the plat in the case of a home in a subdivision, and back 30 years in a case in which the property is not in a subdivision. We have won many cases based upon errors in the chain of title. It must be remembered that a large majority of the mortgages that we deal with today were closed between the years of 1992 – 2007. During these years, closing attorneys and lenders were overwhelmed with business, and as a result many errors in preparing documents that compromised the lenders lien rights. In our title search, we are looking for:

  • Plat was recorded prior to conveyance of lot
  • Errors in the legal descriptions
  • The legal description was attached at the time the deed of trust was signed
  • Errors in the timing of the recordation of documents in the chain of title
  • Errors in the spelling of the grantor or grantee names
  • Both Grantors names in the body of the Deed of Trust and not just signed
  • Failure to include all necessary signatures on deeds
  • Recordings in the wrong county
  • The grantor owned the property at the time of the conveyance
  • The date on the note matches the date of the deed of trust
  • The names on the note match the names on the deed of trust
  • The grantors signed the Deed of Trust in the proper place (not under notary)
  • Check the Secretary of State on all corporate grantors
  • The date the substitute trustee was appointed relative to the Notice of Hearing
  • The proper substitute trustee filed the Notice of Hearing

Surane has won at least one case for each and every issue listed above. Some of the issues listed above have resulted in our winning several cases. Clerks and Judges are not reserved about recognizing errors in the chain of title, and will readily dismiss a case if the errors are properly presented to the Court. It is very important to thoroughly examine the chain of title before proceeding to identity errors with the lenders standing and endorsements to the promissory note.  As many people are aware, the standing and endorsement issues often lead to fertile ground for many additional defenses to a foreclosure action.

North Carolina is more or less a non-judicial state. But instead of the “trustee” recording a notice of default and notice of sale, the trustee in North Carolina files a Notice of Hearing. The Clerk actually has some power to either dismiss or require the filer to dismiss if the chain of title is clearly wrong. This makes North Carolina a somewhat safer place for homeowners than other non-judicial states because there is at least some minimum oversight over the process.

Not all errors in title result in an outright win in Court. But they do create a time interval that could be as long as years in which the homeowner can properly address other issues and seek modification.

At livinglies we provide a title report and an analysis, but most people don’t want to pay the extra cost of going back 3-4 owners. And they don’t want to spend time on a lawyer analyzing title issues. It’s boring stuff to most people. Most vendors providing title information CAN produce a report going back 30 years but they don’t because they have not been paid the extra money to do so — often requiring an actual trip to the building where the public records are kept in the county in which the property is located.

Some vendors, like TitleTracs, will point out potential areas of inquiry that assist a lawyer in analyzing title, but most lawyers don’t want to do the work even if they could get paid for it. It is a laborious task but people are missing “low hanging fruit” when they fail to raise a proper challenge to the substitution of trustee and other defenses.

The bad news is that Surane agrees with my current opinion — it is highly unlikely that any judge anywhere will enter an order quieting title where the mortgage or deed of trust is removed as an encumbrance to the property. Unless the mortgage or deed of trust is void, in our opinion it is not proper to bring the quiet title action. BUT, that said, as Surane pointed out on the show, he has made extensive use of declaratory actions that undermine the enforceability of the mortgage or deed of trust and potentially undermine the note as well. The catch is that courts don’t issue advisory opinions so you need a present controversy in order to get the court to rule.

If this article prompts you to order our COMBO Title and Securitization Report and you want the kind of in-depth title report that is described above the cost of the report is $1995.

Get a consult or order services! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.

 

 

 

Five Questions with David Dayen about Foreclosure Fraud, Activism and Hope

dayencot

 

http://www.dailykos.com/story/2016/9/24/1572040/-Five-questions-with-David-Dayen-about-foreclosure-fraud-activism-and-hope

David Dayen (dday to old-timers at Daily Kos) has been the most single most dogged journalist digging into the massive fraud perpetuated on American homeowners in the last decade, the fraud that almost brought down the global economy. In fact, he wrote the book on it—Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud, winner of the Studs and Ida Terkel Prize (reviewed here). He is a contributing writer to The Intercept, and a weekly columnist for The Fiscal Times and The New Republic. He also writes for The American Prospect, Vice, The Huffington Post, and more. He lives in Los Angeles. Here I followed up with him about his reporting on the foreclosure fraud and the book for our five questions feature.


1. You wrote about it in the book, but can you tell us how you connected with Lisa, Michael, and Lynn, the people at the heart of your story?

So there’s a scene in the second half of the book where Lisa, Michael, and Lynn are invited to Washington to discuss the foreclosure fraud scandal (that’s the mass delivery of false documents in foreclosure cases by financial institutions who do not have the legal right to foreclose) with a bunch of activists, lawyers, writers, some political staffers. I think someone from the Financial Crisis Inquiry Commission was there. And I was asked to be there. At the time I was writing for Firedoglake and was just starting to wrap my head around this particular scandal.

I knew of Michael’s website but didn’t know him. And I don’t think I knew Lisa and Lynn at all at that time. But their stories stood out, because they were the only foreclosure victims in the room. They had something to bring to the crisis that none of us shared. So they became sources of mine. I’d read their websites and ask them questions. Years later, one of them, I think Lisa, told me that they were surprised I was interested in this and even though I was not in foreclosure. In their experience everybody fighting foreclosure fraud was personally affected. So their world was foreign to me and my world was foreign to them.

2. What led to your interest in the issue?

I was blogging at FDL, I was editing the news desk. And the portfolio of what I was to write about was “the news.” So, be it The Huffington Post or Talking Points Memo while sitting in your living room 3,000 miles away from Washington, or sitting in an office, I was still working my day job off and on at that time. (I edited television shows for many years.)

So I was always looking for those stories where I could add value, something to set me apart from other writers, something I could cover that wasn’t being covered. It still kind of amazes me that foreclosures could fall into that bucket. Over 9.3 million people were evicted in foreclosures or some other transaction that forced them to give up their homes from 2006 to 2014. This is the largest financial purchase that most people will ever make, the source of a large portion of their wealth, and the human drama associated with it is really incalculable. And yet the foreclosure crisis still remains on the fringes, on the business pages if anywhere.

What brought it home for me was a personal interaction. My wife and I have a friend who was very involved with the Obama campaign in 2008, he traveled to Nevada to knock on doors for him, was a major supporter. And one day, in the middle of an email conversation, he just came out with, “What I want to know is, why was President Obama’s plan to help those struggling with their mortgage written to favor the banks instead of the people?” At the time none of us knew that he was even having a problem with his mortgage. But I asked him to tell me his story, and it turns out it was a very familiar situation, he was trying to get a loan modification from his mortgage company (Citi Mortgage), and they approved him for a trial payment that was several hundred dollars a month lower. The trial payments were supposed to convert to permanent within three months, but Citi dithered and stalled for half a year, and then told him he was denied a permanent modification, and that he owed the difference between his trial payment and his original payment within 30 days or they would kick him out of his house.

This was very common, it turned out, a way for the banks to weaponize Obama’s modification program (called HAMP) and turn it into a predatory lending scheme. And I wrote that up and posted it at FDL (using an assumed name for my friend because he was still negotiating with Citi Mortgage). And I put out the call for more stories. Dozens of them came in, and the rest is history.

3) The book has been extremely well-received and well-reviewed. In fact, Sen. Elizabeth Warren raved about it: “If you’re looking for a book to read over Labor Day weekend—one that will that will get your heart pumping and your blood boiling and that will remind you why we’re in these fights—add this one to your list.” You’ve had numerous appearances talking about it around the country. What have you learned from that experience?

First of all, this is an ongoing nightmare. I wrote this book as sort of a work of history, to rescue something that had verged on going down the memory hole—that for all the excuses about how no high-ranking executives went to jail for the sins of the financial crisis because there were no good cases or what they did wasn’t illegal, there was an alternate history to be written, led by these three remarkable people who took it upon themselves to expose the greatest consumer fraud in American history while fighting their own punishing foreclosure cases. But in talking to people and getting feedback through email and social media, it reinforced what I already knew, that this is a living history. Every day in America, someone is thrown out of their home based on false documents, and both the political system and the justice system is thoroughly disinterested in changing that fact to arrive at a different outcome.

In St. Louis, I had a guy drive four hours from Chicago to tell me his story about experiencing fraud on his home and starting to work with a half-dozen lawyers to fight foreclosures in his city. In Philadelphia a woman told me she was about to be evicted in a week; the bank just got awarded summary judgment in her case. In Los Angeles a man told me he’d been in court over his home for almost a decade. And I’m pen pals with at least two dozen other homeowners keeping up the fight. It’s remarkable that these cases go on, that these people summon the inner courage to persevere against incredible odds. But Americans have this emotional connection to their homes and a resistance to injustice. They care enough to see things through, to not extinguish the fire burning inside them. Though the stories are horrible, they’re oddly life-affirming at the same time.

4. The book leaves us with kind of a frustrating ending—as admirable and important as the work these activists have done is, it’s still happening. What would it take to fix it, and do you think your book can help kick-start a reaction?

No.

I try to be very clear with the people who ask me for advice. I’m not a lawyer and I cannot counsel them. But it’s very, very hard to win these cases. I didn’t set out to write a book that someone at the Justice Department would read and say “He’s right, we screwed up, let’s round up everyone on Wall Street.” It’s not going to happen.

I’d say two things—one looking backward, and one looking forward. One, I do think that people in high-ranking positions were shaken by the work they did, or rather didn’t do, in the face of this crisis. I have been told by people that the work of the activists, for which I was mostly a conduit, made a real difference. Someone who didn’t give me his name, but who told me he worked at a very high level on this issue, came up to me at an event and said that the $25 billion settlement we got over these practices, which was woefully inadequate, would have been much worse without my efforts. It’s not the first time I’ve heard that.

The other point is that this is a book that tells the story of a movement. And movements don’t always succeed. We hear about the great successful movements in history in our textbook, the civil rights movement and the gay rights movement, but lots and lots of smaller groups failed leading up to those victories. I say in the book that movements crash on the shore like waves, and each one gets a little bit closer to its destination. These three people didn’t have anything—no resources, no institutional knowledge, no history of activism. But they got on the Internet and built websites and collected knowledge and pushed this huge scandal into the public consciousness, if only for a brief moment. And without them, you don’t have Occupy Wall Street, and you don’t have the Elizabeth Warren wing of the party, and you don’t have the Bernie Sanders campaign. There’s a level of awareness about the financial industry now that didn’t exist in 2008, one that’s not going away. And Lisa, Michael, and Lynn helped to forge that.

5. What do Daily Kos readers need to know and do to help fight this ongoing battle?

Stay educated and involved! And recognize that the financialization of our economy, the power and hold that the banks retain, is about more than just foreclosures. Just after Labor Day we saw Wells Fargo fined for creating high sales targets that led its workers to forge documents and create millions of phony customer accounts. That’s not exactly what happened in the foreclosure fraud scandal but it’s a close cousin. And the real scandal there is not about consumer fraud actually—most of these accounts sat dormant, and only a few generated fees. It was securities fraud; Wells Fargo demanded high sales targets because they wanted to show robust growth to their shareholders and boost the stock. Incidentally, Wells Fargo’s CEO took $155 million in stock options from 2012 to 2015, giving him a real incentive to kick up the stock in whatever phantom way possible. That drive for short-term profits remains the biggest single source of recklessness among major banks, with consequences for consumers and investors and the broader economy. Dodd-Frank has not come close to wiping that away. And we need to be speaking out about how we can.

 

Mortgages: Weapons of Middle-Class Mass Destruction

PITCHFORK AND HOUSE

By the Lending Lies Team

http://www.zillow.com/research/foreclosures-and-wealth-inequality-12523/

Losing your home by foreclosure to a bank that used fabricated documents to foreclose is a tragedy that has tainted the American dream for millions of Americans. The process is unjust, unlawful and dehumanizing. But even years after the former homeowner has moved forward with their lives they sustain another injury they are probably not even aware of- and that is the loss of rebound gains in the market.

Oddly, homes that are foreclosed on tend to gain value back at a higher rate than properties that have not been previously foreclosed according to real estate website Zillow who conducted research on the matter.  Former owners missed out on potential profits generated by the “recovery” and therefore sustained even more financial harm. Instead, the profits went to governmental agencies, GSEs (Fannie/Freddie), hedge funds, investors and flippers who bought these properties for pennies on the dollar.

In the Miami-Dade, Broward and Palm Beach, homes that were foreclosed had a 79 percent increase in price from the market’s lowest point. The research also shows that the homes that were foreclosed upon were the homes of lower-income people and young families.

These families who were illegally foreclosed upon were thrust into an inflated renters market where they likely secured accommodations that were inferior to the living conditions of the home they lost and even less affordable. The prior owner lost their down payment, any equity and any appreciation in home value. Many of these families may never recover from the financial slaughter they suffered.

“You had a ton of appreciation for these foreclosed homes, but the [prior] homeowners weren’t getting the benefits,” said Svenja Gudell, Zillow’s chief economist. “Lower-end and foreclosed homes were bought up by investors who would transform those homes into rental properties. … Had they held onto their home in many markets, homeowners would’ve made back their original investment plus much more.” The foreclosure crisis has contributed to the massive wealth gap that has evolved since the 2008 market crash.

Even more concerning are the actions of the Veteran’s Association that guarantees the loans of United States service members who obtain VA-guaranteed mortgages. The VA is not assisting veterans who served their country to retain their homes when default threatens. In fact, the VA is known to foreclose on the homes of veterans for pennies on the dollar, evict the veteran, hold the property and then sell the property at a large profit.

Recently the Lending Lies team learned of a veteran with health issues caused by Agent Orange exposure. The VA foreclosed on his home that had a remaining balance of 7k. The VA held the property for a year and then sold the home for over 100k. The displaced veteran who had paid on his home for decades did not share in the profits the VA made from the sale of his home.

Homeowners have the potential to be damaged at three different junctions during  their loan: at closing, during default, and post-default. The homeowner is damaged at closing when they receive a table funded loan, there is no disclosure regarding WHO the true creditor is, and they are not told that they are signing a Note that is actually a security and not a mortgage. The homeowner does not receive disclosure that investors will make millions of dollars from the homeowner’s signature and is not told that he/she will carry all of the risk when the game of securitization is put into play.

A homeowner may be damaged during the term of their loan by the loan servicer who is looking for an opportunity to create a default so they can foreclose on the home. The homeowner may be given erroneous information by the servicer or may not receive service to resolve an issue that may occur during the life of the loan. The servicer may create a default by misapplying payments, inflating the balance by applying illegal fees, and other tactics to engineer a default. When a homeowner facing default contacts their loan servicer looking for assistance, the homeowner is not engaging with a servicer who is looking to find a solution.  Instead, the homeowner is dealing with an agent who is trained to find the homeowner’s Achilles heel in which to exploit and create a default.

At this point the homeowner in default will experience the Foreclosure Machine where documents disappear into ether or magically transform, bank presidents have G.E.D’s, and due process means you had your three minutes in front of a judge. The majority of homeowners caught up in this stage of foreclosure will gladly do anything to end their misery. Despite their knowledge that the servicer foreclosing has no standing- the wounded homeowner may prefer to chew off their own arm to escape the clutches of attorneys, motions, and bank intimidation.  This is the stage where the homeowner should refuse to back down and dig in their heels, but the majority flee.

After the homeowner has lost their home to an entity who had no standing to foreclose, the homeowner will suffer further economic decimation. The vultures who made millions off of the economic destruction of the American middle and lower-middle class will become their landlord. While the tenant works to make his monthly rental payment and is not building any equity, the landlord will sit back and collect the passive income while the foreclosed property appreciates at 18% plus a year.

Can there be any doubt that taking out a home mortgage from a mega-bank is not a method of middle-class mass destruction?  Caveat Emptor.

 

A Double Standard: Only Mega-Bank’s can Fabricate Mortgage Documents without Consequence

see http://www.pe.com/articles/san-808058-defendants-homeowners.html

“The defendants filed bogus petitions and court pleadings and recorded false deeds in county recorders’ offices.”

So here is my issue. That description of what they did sounds really bad. And maybe it IS bad and should be punished. BUT has the judiciary now opened the door to calling this behavior “not so bad?”

The banks are filing bogus pleadings to support foreclosures in which they have no interest except to complete the project of stealing investors money with homeowners being collateral damage. The banks and their servicers are sending bogus notices of substitution of trustee in non judicial states and filing bogus notices of default on behalf of a “beneficiary” or “mortgagee” that is not a creditor, not a holder, not a possessor of any written instrument that is true. The banks and their servicers are creating and recording false instruments attendant to nearly every fraudulent foreclosure. Among the most egregious examples are the void assignment of mortgage and the conjured endorsement on the note.

If an assignment can suddenly create rights rather than merely transfer them, then maybe these defendants being prosecuted created false documents that now have meaning in the fight against the banks. And if that is true then maybe no crime was committed at all — as long as we follow the current legal doctrine of “protect the banks.” Once upon a time in California it was said that homeowners have no standing to challenge standing based upon a void assignment. Yvanova v Countrywide changed all that. Maybe these defendants did not have pure motives and maybe they should be punished; but if they deserve to be brought to justice then so do thousands of bankers, robo-signers, robo-witnesses and fabricators of “original” documentation.

The courts meanwhile have been open to all kinds of excuses for that behavior. Have they now opened the door for scams on the other side — in which homeowners are the direct victims — can be called “irrelevant? Can we say that the government has no standing to prosecute claims against scam artists? Is this a case of unequal protection under the law? Is this case really a scam — or just fighting fire with fire?

Those of us who have been heavily engaged in the defense of homeowners know that the banks are given so much credibility that their fabrication, forgery and robosigning of documents that are created out of thin air and then recorded is then given the benefit of a legal presumption of truth and proof of facts that we all know are in fact nonexistent and therefore making the assertion untrue.  When the documents are untrue and false the Court’s rubber stamp means that false representations and false documents will be considered as true when, without the legal presumption, that can never be proven.

So in defense of fraudulent foreclosures is it possible that a new doctrine has been born: you can create and record fake documents and wait to see if anyone takes them seriously in which case they can be enforced. That is clearly the case with the banks and servicers in millions of foreclosures. And if that is the case then it follows logically that the targets of such fraud should respond in kind.

I’d like to see an explanation from prosecutors for why they don’t prosecute the banks, their “witnesses” and their robosigners for filing false documents and recording them when that is exactly their complaint on the other side of the fence. Could the State be estopped from enforcing such laws when they are giving a free pass to the main culprits?

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