Missouri Wrongful Foreclosure: Trial Court Awards over $3 Million Including Punitive Damages and Quiet Title

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see Quiet title Wrongful foreclosure Punitive Damages Missouri judgment.1-26-15.pdf ocr

Missouri had been impenetrable. Things change. This case finds that neither the GSE nor anyone else in the chain had the power to enforce the paper because they did not really have ownership of the loan, that their title was false, that quiet title is granted to plaintiffs, that foreclosure was wrongful, that compensatory damages are awarded and that punitive damages would be awarded. Total Judgment $3 million +.

Important takeaways —

  1. The tide has turned. Courts are no longer looking the other way on intentionally sloppy foreclosures that cover up a larger fraud on investors. The courts are not clear on how that occurred, partially because nobody has been allowed to present  it, but they have enough of a feel of the situation to see that there is something fundamentally wrong with the mortgage origination and foreclosure practices.
  2. Quiet title can be awarded supported only by a finding that the mortgage is unenforceable. Whether this will stick on appeal is unknown. My view is that the mortgage stays although there is nobody (yet) claiming a genuine right to enforce it.
  3. At this point, if the foreclosing parties don’t have it right, it is viewed as an intentional or grossly negligent act, giving rise to compensatory damages, attorney fees, costs, and punitive damages.
  4. The value of a wrongful foreclosure case might be $3 million + which falls into line with other decisions.
  5. Judges are getting angry over the fact that they accepted false representations in the past.
  6. Judges are perceiving the difference between the debt and the paper that purports to describe the debt — i.e., the note and mortgage. While it is not expressed in so many words, this decision and others like it, sees the paper as largely fictitious even though there is a genuine debt out there. By implication, the courts are saying the debt has no paper that applies and that therefore nobody should be allowed to enforce the paper. It is close to declaring the mortgage void ab initio.

Missouri AG Sells Out to LPS

LPS has settled with Missouri for non-prosecution. The Missouri AG agreed to accept the assertion of LPS that it had no idea that all the criminal behavior was ever happening. They are soooooo sorry that they are paying $2 million to the state as a charitable contribution. Think I’m joking? read the article. This is an outrage and should be stopped and the AG should be kicked out of office.

Agreement Not to Prosecute Docx, LLC and Assurance of Voluntary Compliance

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

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Editor’s Comment:

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

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

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

Needy States Use Housing Aid Cash to Plug Budgets

By SHAILA DEWAN

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

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

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

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

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

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

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

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

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


FireDogLake: How the Corruption of the Land Title System is NOT Being Fixed

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“You’re talking about massive, massive fraud. And this is what the state Attorneys General and the federal regulators gave up, in exchange for their non-investigatory investigation.”

The Real Foreclosure Fraud Story: Corruption of the Land Title System

By: David Dayen

George Zornick carries a rebuttal from Eric Schneiderman’s team on yesterday’s damaging expose of the securitization fraud working group. Here’s what it has to say:

• There are 50 staffers “across the country” working on the RMBS working group (the official title).
• DoJ has asked for $55 million for additional staffing.
• The five co-chairs of the working group meet formally weekly, and talk daily.
• There are no headquarters for the working group, but that’s because it’s spread across the country.
• There is no executive director.
• Activists still think the staffing level is too low.

If any of this looks familiar, it’s because it’s EXACTLY what Reuters and I reported a week ago. In other words, it was unnecessary. And it doesn’t contradict what the New York Daily News op-ed said yesterday, either. Like that op-ed, this confirms that there is no executive director and no headquarters for the working group, which sounds more like a central processing space for investigations that could have happened independently, at least at this point.

Meanwhile, if you want actual news, you can go to this very good story at MSNBC, revealing the truth that nobody wants to talk about: the inconvenient detail that the land title and property rights system that has served this country well for over 300 years has been irreparably broken by this gang of thieves at the leading banks.

In a quiet office in downtown Charlotte, N.C., dozens of Wells Fargo’s foreclosure foot soldiers sit in cubicles cranking out documents the bank relies on to seize its share of the thousands of homes lost to foreclosure every week […]

The Wells Fargo worker, who first contacted msnbc.com via email in late January, told of a wide range of concerns about the foreclosure documents she processes. Some families apparently were denied loan modifications after only cursory interviews, she said. Other borrowers applying for help sent comprehensive personal financial documents to a fax machine that she discovered had been unattended for weeks. Others landed in foreclosure after owing interest payments of as little as $1.18 a day, according to documents she said she reviewed.

“There was one file where they weren’t even past due and they were in foreclosure status,” the loan processor said. “They’re pushing these files and pushing these files….”

Five years into the worst housing collapse since the Great Depression, the foreclosure pipeline that is removing tens of thousands of families from their homes every month rests on a legal process that has been badly compromised by errors, misrepresentation and outright fraud, according to consumer attorneys, state attorneys general, federal investigators and state and federal judges.

I must confess that I don’t throw this in everyone’s face nearly enough. What is being described in this article is the product of a completely broken system. The low-level grunts are being forced to sign off on a quota of loan files every day, and push the paper through the pipeline. Veracity, or even knowledge of the underlying data in the files, is irrelevant. This is precisely what got us into this mess in the first place, and it’s still happening. And these grunts, making $30,000 a year, are given titles like “Vice President of Loan Documentation” to sign off on affidavits attesting to the loan files. That’s basically robo-signing. It’s still happening.

Check out this part about LPS:

Like many mortgage servicers, Wells Fargo relies on a company called Lender Processing Services to assemble some of the information used to foreclose on properties.

With each file they prepare, the bank’s document processors must swear “personal knowledge” the information in each affidavit was properly collected and is accurate and complete.

But they have no way of making good on that promise because they are not able to check whether LPS properly collected and processed the data, according to the document processor.

“We’re basically copying and pasting” information from the LPS system, she said. “It’s data entry. We just input (on the affidavit) what’s on that system. And that’s it. We don’t go back through system and look.”

You’re talking about massive, massive fraud. And this is what the state Attorneys General and the federal regulators gave up, in exchange for their non-investigatory investigation.

This story is familiar here, but not necessarily to the MSNBC.com audience. I applaud them for putting this long piece together that synthesizes a lot of the information that’s been out there for years. This is the real scandal here, a corrupted residential housing market that actually cannot be put back together.

 

Citi’s Parsons Blames Glass-Steagall Repeal for Crisis

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Editor’s Comment: So here we have one of the guys that was part of the team that overturned Glass-Steagal saying that their success led to the failure of our financial system. But then he says it is too late to change what we have done. It is not too late and if we are ever going to correct the financial system and hence the economy, we need to fix what we have done — separate the banks back into investment banks that take risks and commercial banks that are supposed to minimize risks. Instead we have a system where there is a virtually unlimited supply of other people’s money in the form of deposits and taxpayer bailouts that is the engine for leading what is left of the financial system into another ditch, this one deeper and worse.

Think about it. The banks are reporting record profits while the rest of us are experiencing record problems. That means that the banks are reporting gargantuan profits trading paper based upon economies that are in a nose-dive. How is that possible. We have less commerce (buying and selling) and more money being made by banks trading paper to each other. Or is this simply money laundering — bringing back and repatriating the money they stole in the mortgage meltdown and paying little or no tax?

Parsons Blames Glass-Steagall Repeal for Crisis

By Kim Chipman and Christine Harper 

Richard Parsons, speaking two days after ending his 16-year tenure on the board of Citigroup Inc. (C) and a predecessor, said the financial crisis was partly caused by a regulatory change that permitted the company’s creation.

The 1999 repeal of the Glass-Steagall law that separated banks from investment banks and insurers made the business more complicated, Parsons said yesterday at a Rockefeller Foundation event in Washington. He served as chairman of Citigroup, the third-biggest U.S. bank by assets, from 2009 until handing off the role to Michael O’Neill at the April 17 annual meeting.

A Citigroup Inc. Citibank. Photographer: Dado Galdieri/Bloomberg

April 20 (Bloomberg) — Bloomberg’s Erik Schatzker and Stephanie Ruhle report that Richard Parsons, speaking two days after ending his 16-year tenure on the board of Citigroup Inc. and a predecessor, said the financial crisis was partly caused by a regulatory change that permitted the company’s creation. They speak on Bloomberg Television’s “Inside Track.” (Source: Bloomberg)

“To some extent what we saw in the 2007, 2008 crash was the result of the throwing off of Glass-Steagall,” Parsons, 64, said during a question-and-answer session. “Have we gotten our arms around it yet? I don’t think so because the financial- services sector moves so fast.”

The 1998 merger of Citicorp and Sanford I. Weill’s Travelers Group Inc. depended on the U.S. government overturning the portion of the Depression-era act that required banks to be separate from capital-markets businesses like Travelers’ Salomon Smith Barney Holdings Inc. Parsons, who was president of Time Warner Inc. (TWX) at the time, had been a member of the Citicorp board before joining the board of the newly created Citigroup.

“Why didn’t he do something about it when he had a chance to?” Mike Mayo, an analyst at CLSA in New York who rates Citigroup shares “underperform,” said in a phone interview. “He’s a couple days out the door and he’s publicly criticizing the ability to manage the company.”

‘Dynamic World’

Unlike John S. Reed, the former Citicorp CEO who said in 2009 that he regretted working to overturn Glass-Steagall, Parsons said he didn’t think that the barriers can be rebuilt.

“We are going to have to figure out how to manage in this new and dynamic world because there are good and sufficient business reasons for putting these things together,” Parsons said. “It’s just that the ability to manage what we have built isn’t up to our capacity to do it yet.”

Parsons didn’t refer to Citigroup specifically during his comments and Shannon Bell, a spokeswoman for the bank in New York, declined to comment. Mayo said Parsons’ comments show he views the New York-based bank as “too big to manage.”

“This gives more support to the new chairman to take more radical action,” said Mayo, whose book “Exile on Wall Street” was critical of Parsons and the management of banks including Citigroup. “Citigroup needs to be reduced in size whether that’s breaking up or additional asset sales or whatever it takes.”

‘Separate Houses’

Parsons said in a phone interview after the event that it was difficult to find executives who could run retail banks and investment banks in the U.S. because the two businesses had been separated by Glass-Steagall for about 60 years.

“One of the things we faced when we tried to find new leadership for Citi, there wasn’t anybody who had deep employment experience in both sides of what theretofore had been separate houses,” he said. Chief Executive Officer Vikram Pandit is trying to change that, Parsons said. “I think if you ask Vikram he’d say probably his biggest challenge long-term is developing the management.”

Banks are growing because corporations and other clients want them to, and management must meet the challenge, he said.

U.S. Bailout

“People have a sort of a notion that ‘well, we can decide that’s too big to manage,’” he said. “But it got that way because there was a market need and institutions find and follow the needs of the marketplace. So what we have to do is we have to learn how to improve our ability to manage it and manage it more effectively.”

Citigroup, which took the most government aid of any U.S. bank during the financial crisis, has lost 86 percent of its value in the past four years, twice as much as the 24-company KBW Bank Index. (BKX) Most shareholders voted this week against the bank’s compensation plan, which awarded Pandit about $15 million in total pay for 2011, when the shares fell 44 percent.

Shareholders’ views shouldn’t be “given the same level of weight” as those of the board and management, Parsons said. Companies “shouldn’t make the mistake of putting them in the driver’s seat.”

To contact the reporters on this story: Kim Chipman in Washington at kchipman@bloomberg.net; Christine Harper in New York at charper@bloomberg.net.

To contact the editors responsible for this story: Colleen McElroy at cmcelroy@bloomberg.net; David Scheer at dscheer@bloomberg.net.

 

OCC Review Getting Few Takers

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Demand an Administrative Hearing

Very few people have asked for a review of their wrongful foreclosures. Maybe it is because we are all war-weary from this constant barrage of illegal activity from the banks. But there are avenues to travel, whether your foreclosure is past, present or even future. While the OCC review process has some restrictions announced, it nonetheless allies to all foreclosures whether they like it or not. They are the regulatory agency for certain types of banks and servicers, just like OTS, and the Federal Reserve. If one of their chartered and regulated members commits an atrocity, the agency is required by law to do something about it.

And one more thing. The OCC should be setting up review panels and administrative hearing processes because you can be sure that homeowners are not going to agree with the “review” that is conducted by the bank that is accused of committing the error, which is what the “review process” is all about. Why not ask a rapist to investigate whether he did it or if she was just asking for it?

This stuff is not just made up out of my head. It comes from the Administrative Procedures Act and its likeness in the federal, state and even local systems where any government agency is involved.

So if you are alleging wrongdoing in ANY foreclosure — past, present or future — you should be making your allegations. What do you allege? That is where the COMBO product linked next to my picture comes in and there are other people who do similar work although it is true that the title companies are trying their best to obscure the searches for title information. Getting a loan specific title analysis and a loan specific securitization analysis should provide you with enough information to allege wrongful foreclosure. Getting a Forensic Analysis and loan level analysis might also be helpful in rounding out the allegations.

Here are just a few items to get you going:

  • The debt wasn’t due
  • The debt wasn’t due to the party who  foreclosed
  • The party who foreclosed misrepresented itself as the owner of the debt
  • The debt was paid in full by insurance, credit default swaps or federal bailouts
  • The monthly payment was paid by the servicer to the creditor (or the party they claim is the creditor) at the same time that the servicer was declaring a default to the borrower. If the creditor was getting paid, where is the default?
  • The credit bid was submitted by a party who was not a creditor and therefore should have paid cash at the auction
  • The auction was conducted by an employee or agent of the party seeking to foreclose
  • Payments were improperly applied or were not applied
  • Charges were illegal and unfair and were the reason for the foreclosure
  • You were tricked into foreclosure by the pretender lender’s agent telling you had to skip payments before you could be considered for modification. (known in the industry as dual tracking)
  • The “lender” failed to comply with Reg Z on rescission
  • The loan violated TILA, RESPA
  • The “lender” failed to comply with RESPA

 

Hoping Canadians are Stupid, Stewart Title Skips Warranties of Title

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I’ve been telling Canadians that there is considerable doubt as to whether the investment properties they are buying in the context of foreclosure are going to work out for them because of title defects. Some of them are listening and most see the deals as too good to be true. They are right — it is too good to be true, which means it isn’t true that the prices and title are just find, eh?

Here is the new disclaimer (see below). If you can find anything that protects anyone other than the title company then you are able to drill down further than we can. This disclaimer shows what we have been saying — the very use of the term “virtual” title tells us that there is no basis upon which the title agent or carrier will be held accountable or will pay anything if you buy property and take a policy from any of the major carriers.

Up until now it was standard practice in the industry that lawyers and lay people would rely upon the title report issued by the title company. Now they say it is for general information and you can’t rely on it. This means that virtually every buyer should have an attorney who is competent and has the resources to obtain and independent title report and is able to advise people holding or intending to hold title, mortgage or anything else. This gives them a license to insert or delete almost anything. The only way you can really know your chain of title is to go down to the county recorder’s office and examine the chain, one instrument at a time and to check for cross references where a parcel number or name might have been transposed.

What this also means is that anyone seeking to foreclose now must go through the same process and prove to the judge with a certified copy of the title registry that the mortgage is on there and that no satisfaction or other impediments to foreclosure are present. This is a new development and it therefore calls for new tactics and strategies.

Virtual Underwriter® is an underwriting tool. Stewart Title Guaranty Company and its affiliated underwriters (collectively “Stewart”) does not guarantee the accuracy, adequacy, or completeness of any content of Virtual Underwriter®, and you may not rely upon any such content. Only Stewart Issuing Offices may rely on Virtual Underwriter and only to issue Stewart insurance forms. Stewart makes no express or implied warranties with regard to Virtual Underwriter® and shall have no liability for any errors or omissions or for the results of the use of such material. You should not assume that Virtual Underwriter® is error-free or that it will be suitable for the particular purpose that you have in mind. Any material, forms, documents, policies, endorsements, annotations, notations, interpretations, or constructions included in Virtual Underwriter® are made available as a convenience only and should not be considered as altering or modifying the text of any matter to which they relate. Virtual Underwriter® should not be relied upon as a basis for interpreting the forms contained herein. Virtual Underwriter® is made available with the understanding that Stewart is not engaged in rendering legal, accounting, or other professional advice or services. If legal advice or services or other expert assistance is required, the services of a competent professional person should be sought. The material contained in Virtual Underwriter® is not a substitute for the advice of an attorney or other professional person. Preparation/facilitation of documents other than by an attorney may constitute the unauthorized practice of law.

see vubulletins.jsp?displaykey=BL133368894600000002

 

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