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.


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:


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 to schedule CONSULT, leave message or make payments.




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?


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


By the Lending Lies Team

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


“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?

“Prejudice” Element of Wrongful Foreclosure

By Kevin Brodehl

If a property owner loses their property through a foreclosure sale initiated by someone who did not validly own the debt, has the property owner automatically suffered enough “prejudice” to pursue a claim for wrongful foreclosure?  Or does the property owner also need to show that it would have been able to avoid foreclosure by paying the debt to the true lender?

The California Supreme Court’s recent Yvanova decision (reviewed on Money and Dirt here: California Supreme Court:  Borrowers Have Standing to Allege Wrongful Foreclosure Based on Void Assignment of Note) only partially addressed the “prejudice” issue.  In Yvanova, the Supreme Court discussed prejudice, but only “in the sense of an injury sufficiently concrete and personal to provide standing,” not “as a possible element of the wrongful foreclosure tort.”  The Court held that the plaintiff in that case demonstrated sufficient prejudice — lost ownership of property in an allegedly illegal foreclosure sale — to confer standing to pursue a wrongful foreclosure claim.

A recent opinion by the California Court of Appeal (Fourth District, Division One, in San Diego) — Sciarratta v. U.S. Bank National Association — picks up the “prejudice” analysis where Yvanova left off, and addresses prejudice as an element of a wrongful foreclosure claim.

The facts: a twisted tale of note assignments

In 2005, the property owner obtained a $620,000 loan secured by real property in Riverside County.  The note and deed of trust identified the lender as Washington Mutual (WaMu).

In April 2009, JPMorgan Chase Bank (Chase), as successor in interest to WaMu, assigned the note and deed of trust to Deutsche Bank.  The trustee promptly recorded a Notice of Default, followed by a Notice of Sale.

In November 2009, Chase recorded a document assigning the note and deed of trust to Bank of America (even thought just months earlier, Chase had already assigned the note and deed of trust to Deutsche Bank — oops!).  On the same date as the assignment, Bank of America recorded a Trustee’s Deed, reflecting that Bank of America had acquired the property at a trustee’s sale in exchange for a credit bid.

In December 2009, Chase recorded a “corrective” assignment of the note and deed of trust, suggesting that the April 2009 assignment to Deutsche Bank was a mistake, and was really intended to be an assignment to Bank of America.

The property owner sued the banks and the trustee for wrongful foreclosure.

The trial court’s ruling: no prejudice; case dismissed

The banks filed a demurrer, arguing that the property owner could not allege “prejudice,” which is an essential element of a wrongful foreclosure claim.

The trial court sustained the banks’ demurrer and dismissed the case.

The property owner appealed.

The court of appeal’s opinion

The Court of Appeal reversed, holding that a property owner who loses property to a foreclosure sale initiated by someone purporting to exercise rights under a void assignment suffers enough prejudice to state a claim for wrongful foreclosure.

The court first relied on the Supreme Court’s holding in Yvanova that “only the entity currently entitled to enforce a debt may foreclose on the mortgage or deed of trust securing that debt.”  In this case, based on the clear paper trail of assignments, the entity entitled to enforce the debt was Deutsche Bank, but the entity that foreclosed was Bank of America.

Based on the complaint’s allegations, the court noted, the assignment was not merely voidable but void.  The court observed, “Chase, having assigned ‘all beneficial interest’ in [the property owner’s] notes and deed of trust to Deutsche Bank in April 2009, could not assign again the same interests to Bank of America in November 2009.”

The court concluded that a property owner “who has been foreclosed on by one with no right to do so — by those facts alone — sustains prejudice or harm sufficient to constitute a cause of action for wrongful foreclosure.”  The court added:

The critical issue is not the plaintiff’s ability to pay, but rather whether defendant’s conduct resulted in the plaintiff’s harm; i.e., a foreclosure that was wrongful because it was initiated by a person or entity having no legal right to do so; i.e. holding void title.

The court also offered policy grounds supporting its decision.  The court’s ruling would encourage “lending institutions to employ due diligence to properly document assignments and confirm who currently holds a loan.”  A contrary ruling, on the other hand, would subject property owners to unfairly losing their property in foreclosure to someone who does not even own the underlying debt, with no court oversight.


The Sciarratta decision will make it easier for property owners to assert wrongful foreclosure claims…….

To read more please visit:

The Psychological Warfare of Loan Servicing



Trust your Loan Servicer at your own Peril.


By William Hudson


“Emotional violence is another kind of abuse … it’s not about words because an emotionally abusive person doesn’t always resort to using the verbal club, but rather the verbal untraceable poison.”   ~Augusten Burroughs

The banks commit felonious financial crimes against homeowners with impunity. But even more egregious and unconscionable than the theft of assets, is the theft of solitude, hope, and life quality. The banks decimate families and often eradicate a person’s belief in what is “just” and lawful.

Millions of American homeowners have arrived at the harsh reality that government, the judiciary and law enforcement are not to be trusted. The reality is that the banks are engaging in psychological warfare against the American homeowner- and no one is doing a thing to stop the bullying or psychological abuse.

Banks utilize the planned use of propaganda and other psychological operations to influence the opinions, emotions, attitudes, and behavior of homeowners, attorneys, the courts and policy makers. This practice is actually a breach of Article 10 of the European Convention on Human Rights, which reads, “Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers.”

The Foreclosure Machine is engaging in a deliberate strategy of emotional abuse towards desperate homeowners who are looking for an equitable solution (when most simply want an opportunity to meet the terms of their mortgage). The bank representatives may speak professionally, and even appear to be concerned, but their words are meant to deceive and may even kill. The stress created from corporate psychological abuse often culminates in health problems that may result in a silent death or even suicide. The banks do not play fair, and they will do whatever is necessary to take a home- including the destruction of a life if necessary.

The covert abuse used by banks is administered in barely detectable and cunning strategies that can, over time, cause a homeowner to doubt their own sanity. Called ‘gaslighting’ by psychologists, this process is implemented to cause the homeowner to doubt their own decisions and thoughts- and to keep them off-center. Because of the uniformity of this practice among servicers, there can be no doubt that employees were trained in this process.

The Gaslight Effect allows the loan servicer to define the reality and the rules, while the less powerful party is left vulnerable by relying on the abuser for information or validation. Many homes have been lost to a servicer who used this technique to exploit the vulnerabilities of a homeowner who has had financial problems, emotional upheaval, divorce, illness or job loss that resulted in the homeowner falling behind on their mortgage payments. The process is systematic, confuses the victim and by providing erroneous information ultimately results in the loss of a home. It is not a random practice but executed to target society’s most vulnerable.

For instance, back when banks were pushing loan modifications, the banks deliberately lost paperwork and provided contradictory information to ensure the customer would fall further behind on their mortgage. It was a uniform practice among all large servicers. The homeowner, despite having fax and mail receipts, would be told the information was never received- and often questioned their own memory of events. In our society, for hundreds of years, banking was built on the concept of “trust” and this in itself provided a false confidence that the banks would not engage in illegal acts.

There were other games the banks played to ensure they would get the foreclosure they so desperately wanted. One game was the game of “musical-chairs customer representative agent” where the homeowner was forced to start from the beginning and explain their complex situation to a new agent every time they called the bank. This was done so there was no solution continuity. Homeowners would speak to agents who provided conflicting information from each representative. Just when the homeowner thought a solution was at hand after hours on the phone, the phone call would be “accidentally” disconnected. This psychological tactic was well rehearsed, until when after years of this abuse, new rules assigned a homeowner a single point of contact.



A majority of homeowners we have spoken with at LivingLies, have reported methods of intimidation that often result in the homeowner wanting to walk away from the home.  These tactics include having people sit outside their homes in cars watching the house, bank employees peering inside their windows (many owners claim they have resorted to covering all windows), and even having realtors list the home while they are still in possession and living in the home.


There have been hundreds of reports of banks breaking into occupied homes, and when the homeowner reports the break-in to law enforcement, the homeowner is told the trespass is a civil matter.  The homeowner literally has no relief or protection from their loan servicer, except to sue.

The negative impact of foreclosure on emotional and physical health, as well as overall mental functioning is gradual and insidious. When the trauma of endless delays in resolution, unjust court tactics, financial burden and the feeling of having impending doom hanging over your head (sometimes for over a decade) becomes overwhelming- something has to give and it is typically either mental or physical functioning. Careers are impacted, the raising of children neglected, and other opportunities forsaken because the homeowner- armed with evidence the bank has no standing- still clings to the belief that the system is fair.



The homeowner has so much invested emotionally, financially, and in life sacrifices- there becomes a point of no return where the homeowner feels they must take the case the entire distance. To quit would be to admit yet another life failure. Therefore, many homeowners will hang on until they can no longer afford the costs (financially or emotionally).   The bank has the resources to outlast, outspend and often outmaneuver but it doesn’t mean a homeowner can’t prevail.  The key is to document every interaction or event that occurs over the course of negotiations, and to examine the Note, assignments, signature and balances that inevitably tell the truth about the lack of standing.

Back to the methodology employed by banks. The banks use the guise of customer service to create the appearance of assistance. Under this act the emotional abuse is passive, subtle, and covert. This strategy makes assigning blame to the bank more difficult because the bank is creating the illusion of service. “Oh go ahead and miss a few payments- we will add it back in when your modification papers are done, “ or they will say, “We can find a solution and you are a good candidate for our program.” Meanwhile, the bank has already filed to foreclose. “You can just ignore the foreclosure letters you are receiving- my notes say that your modification is waiting for final approval.” The unsuspecting homeowner is the wounded impala and the banking lion is simply toying with its prey while creating arrearages and servicing fees.

The homeowner senses that something isn’t right, but saddled with financial worries and the fear that foreclosure brings- they attempt to grasp onto anything that seems like hope. That is where homeowners can get into trouble. Desperate for a list of options or some type of solution- the homeowner, terrified and confronting a ticking clock, begin pursuing any type of remedy- instead of focusing on one that might actually work. The homeowner’s strategy becomes fragmented from the lies their servicer is telling them, the facts they see on paper, an inaccessible justice system, and a shady attorney looking for a high retainer.

Often an attorney, sensing the homeowner’s desperation, will agree to represent the homeowner when they have no knowledge of foreclosure or securitization. These attorneys are known to purchase pre-fabricated legal Motions off the internet to defend a case. The unsuspecting and naïve homeowner has no idea that their attorney is failing to properly defend their case since everything “looks” fine to a homeowner who is not familiar with law. The homeowner will lose their retainer, all payments made to date, and often the home and any equity in the property (down payment, improvements). In reality the homeowner is surrounded by vipers, opportunists, conmen and predators who will do anything to receive payment or the home.



Emotional abuse has an aim, and that is to control, belittle, isolate and shame people into subservience. It doesn’t take much skill when dealing with a vulnerable homeowner. This occurs gradually until the victim’s sense of self-worth, self-confidence, and own ideas and perceptions erode.

The banks or servicers are emotional abusers and operate under the guise that they are “helping”, “advising”, or “assisting”, and therefore fly under the radar when they are deliberately sabotaging any opportunity the homeowner has to save the home.

The bank will now attempt to extort information from the homeowner so that they know where to strike where you are vulnerable. Under the appearance of a loan modification or short sale, they will have you provide extensive personal financial information. Although they have no intention of providing assistance, this form provides your income, finances, assets, accounts and other information you might not share if you had any idea that is was being collected for nefarious purposes. Once this information is front of an agent, they can determine just how many payments at what amount you will be able to afford before you are forced into insolvency.

Because people are human and do not hide their emotions or vulnerability well, bank serving agents are able to detect blood in the water. My dealings over the years with service agents is that they treat homeowners like you are expendable, inferior, inadequate, or ignorant. Imbued with the power to engineer a default, some of them have God syndromes.



I remember a client who had less than three days before she lost her home to foreclosure. After hours on the phone she was able to speak to a senior manager who promised the homeowner she could reinstate her mortgage if she agreed to pay all late fees and arrearages. The homeowner readily agreed to accept over 50k in fees and arrearages (even if she felt they were erroneous). The manager promised to overnight the papers and they would arrive by noon the next day. The manager never had any intention of sending the documents, but it allowed the bank to consume two days where the home owner should have been pursuing other options. The empty promise was given to maximize the chance of foreclosure.
Another game the banks play is to act like they are right, while the homeowner has no valid objections or complaints. Homeowners report that they feel like they must “get permission” and beg and plead for information they have an absolute right to obtain. Bank servicers are predators and it is time that some type of legislation is passed to stop their abusive tactics. The State of California has had to intervene with legislation to protect widows and widowers who are falling prey to servicers who use a spouse’s death to engineer a default.
Although loan servicers typically will accept loan payments, if a homeowner is not on both the loan, the bank will utilize this legal gray area to refuse payment, thus causing fees and an arrearage to occur. When the surviving spouse attempts to make good on the payment they may still be prevented from doing so. The banks also has the power to deny any accommodation to assist the surviving spouse- especially if the see an area to exploit that might result in default. For example, often the widowed spouse who has temporarily lost their spouse’s income, or is waiting on life insurance proceeds will be denied a loan modification.
The problem is growing, advocates say, and the issue has caught the attention of federal regulators and state lawmakers. In just the first three months of this year, the Housing and Economic Rights Advocates, a statewide advocacy group in California, had handled 16 such cases. The California Reinvestment Coalition discovered that 44% of housing counselors said that servicers “always” or “almost always” declined to discuss loan modifications with widowed clients when they weren’t on the loan.


Last year the National Housing Resource Center gave servicers a poor rating for communication with widows, widowers and others in similar circumstances. The banks, again, have found a vulnerable client population in which to exploit by failing to provide accurate information or assistance to increase the possibility of default.
Widows and even the elderly are especially vulnerable to the predatory practices and emotional abuse by banks. With the rise of risky first and second mortgages — including many taken out by older Americans who previously avoided getting into new debt, reverse mortgages, and complex securitization schemes, servicers have created a new business model that is intent on foreclosure at all costs. In fact loan servicers no longer service- instead they provide a predatory disservice, provide pseudo-assistance, and target the most vulnerable homeowners.
Servicing companies often refuse a modification until the surviving spouse assumes the loan, which can’t happen until the owner is current on the mortgage — resulting in a catch-22. The spouse may then end up losing their life investment simply because the bank ensured there was no way to cure the default. Misinformation serves to compound the late fees and charges creating a dire situation for those who don’t have the resources (emotional or financial) to force the bank to comply with law.
The bank servicing industry is rotten to the core. It isn’t enough that they are taking a home they have no standing to foreclose upon- but to get the job done they resort to psychological warfare, target the nation’s most vulnerable homeowners, and play dirty tricks that should undermine all credibility within the financial industry. Homeowner beware- document EVERY conversation with the servicer, retain EVERY document they send you, and NEVER believe a word your servicer says. The Bank will do whatever is necessary, legal or illegal, to foreclose on your home-even if it requires resorting to mentally abusive tactics. Be prepared.  The power to service- is the power to destroy.


Santa Cruz County Boycotts Big Banks that do Bad Things


SantaCruzCountyBy William Hudson

The progressives in Santa Cruz, California- a sleepy surfer community off of California’s stunning Route 1 highway have decided to take action against the big banks and their Wall Street Tactics- and hope their tactics will spread nationwide. Santa Cruz- located about 45 minutes south of San Jose and about 50 minutes north of the luxury enclave of Carmel, is unlike either capitalist-centric communities to their north and south.


Santa Cruzians aren’t obsessed with the tech wealth of Silicon Valley north of them, and nor are they impressed with the fortunes of the Carmel/Monterey/Big Sur crowd who have profited from their big bank holdings. Santa Cruz is where people reside who value lifestyle, the natural beauty of its coastline, redwood forests, and hold liberal leanings against corrupt banks. Santa Cruz is demonstrating that social responsibility matters and this concept may take hold in other similarly-minded communities nationwide.


The visionaries elected as Santa Cruz County Supervisors decided they would not invest the County’s holdings with the five banks who have participated in criminal felony activity. “Doing business with institutions that are committing federal crimes is not consistent with the obligation that we have to protect public dollars,” said Supervisor Ryan Coonerty, who originated the original proposal to the board. Coonerty recognized, “There’s been so much bad behavior and so few consequences.”


Citicorp, JPMorganChase, Barclays, The Royal Bank of Scotland and UBS AG were boycotted by Santa Cruz County after they were fined a scant $5.6 billion dollar penalty for manipulating the foreign-currency market. A measly fine of 5.6 billion dollars when hundreds of billions of dollars were made will never stop the banks from their criminal enterprises. However, if enough communities nationwide begin investing their funds in companies that offer altruistic social policies and sound economic principles- perhaps the impact on the banks will be enough to alter their illegal conduct.   Wall Street won’t mourn the loss of Santa Cruz County’s portfolio, valued at about $650 million- but collectively, if other communities join in- the resulting impact could be enormous.


In the case of Citicorp, JPMorganChase, Barclays, The Royal Bank of Scotland and UBS AG- the banks and traders designed the fraudulent scheme in online chat rooms referred to as “the mafia” and “the cartel.” United States Attorney General Loretta Lynch predictably failed to prosecute this criminal enterprise but did admit that the heist was a “brazen display of collusion” that affected “countless consumers, investors and institutions around the globe — from pension funds to major corporations and including the banks’ own customers.”


This concept may prove revolutionary. What would happen if, at the local and county level, citizens and their representatives took regional action against the felonious conduct of the big banks? Instead of looking at a Macro solution that has failed to materialize, perhaps people should use Santa Cruz as an example and boycott by micro-means. Civil protest has always started at the grassroot level until it becomes such a force that the states and federal government have no choice but to accept the inevitable.

To date, Santa Cruz Supervisors have contacted about 50 “progressive” cities nationwide to join them in their boycott, including about a dozen cities and counties in California’s uber-liberal and wealthy Bay Area- but have not disclosed the counties that have been contacted. These supervisors should be commended for being the first county supervisors nationwide to take action against banks that engage in policies detrimental to public policy and that are in fact illegal and criminal enterprises.


“It’s a bold step by the supervisors to do this. They’re taking a creative and direct response to the criminal practices of the big banks,” commented Walt McRee, an outspoken chairman of the Public Banking Institute, a nonprofit working to create publicly owned banks. “Whether or not other counties or cities will have the ability or the courage to do it remains to be seen.”


Apparently Santa Cruz County is now on Wall Street’s radar. In addition to inquiries from counties worldwide (countries like Australia and Ireland among others) – the supervisors have received emails from Wall Street finance workers who are fed up with the systemic culture of deception and fraud. Wall Street workers are looking for a venue to express their disapproval and the need for financial reform that will finally address the past decade’s Wall Street economic free-for-all at the expense of the middle and lower classes. The county claims that they will invest with other financial institutions including the Bank of the West and other sound financial institutions. However, the county may wish to “peak inside the hood” and conduct their due diligence before taking on smaller banks who may engage in similar practices.

The supervisors of Santa Cruz County should also be advised that their county records are in complete disarray, contain thousands of fabricated documents and go after the banks that circumvented the county’s recording laws. If the supervisors really want to take a stand- look at their country recording system and stop the banks from recording fabricated documents. Back in 2011 and 2012, Santa Cruz county cut ties with Barclays, JPMorganChase and Bank of America for deliberately rigging interest rates and other sketchy practices. If anyone can take a stand against banking practices that undermine the financial stability of a county’s financial holdings- it is Santa Cruz’s progressive thinking officials.

A revolution may be brewing by simply refusing to engage with banks that destroy the lives of ordinary Americans. Break the Banks!

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