The Neil Garfield Radio Show at 6pm Eastern: JPMorgan Chase operates a Racketeering Enterprise according to Plaintiffs

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

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

JPMorgan Chase has been accused of creating a “racketeering enterprise” whose purpose was to evade legal duties owed to borrowers, regulators and Plaintiffs, among others, to appropriately service federally regulated mortgage loans.  Basically, JPMorgan Chase cannot provide the necessary documentation to the Plaintiff’s regarding the loans they purchased, while borrowers whose loans were sold to JPMorgan Chase cannot obtain proof regarding the ownership of their loans (likely because all documentation was intentionally destroyed). The loans are void without the proper documentation (notes, reconveyances and assignments).   It is noteworthy, that when JPMorgan Chase went to foreclose on the “loans” with no legitimate documentation,  they would use entities like Nationwide Title Clearing to create false title and paperwork necessary to foreclose or to attach to a proof of claim in bankruptcy.

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

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

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

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

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

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

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

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

RCV1 Evades Regulatory Standards and Servicing Requirements

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Specifics of Defendants’ RICO Scheme and Conduct:

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

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

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

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

Bill Paatalo, Private Investigator:
BP Investigative Agency, LLC
P.O. Box 838
Absarokee, MT 59001
Office: (406) 328-4075
Attorney Charles Marshall, Esq.
Law Office of Charles T. Marshall
415 Laurel St., #405
San Diego, CA 92101

 

 

BOA, Urban Lending Sued for Rackateering on Fraudulent “Modification” Program

In a case that may have far-reaching consequences, a lawsuit was filed in federal court in Colorado accusing Bank of America of racketeering, which is what borrowers have been screaming about for years. It was a game to the bank. They intentionally lured people into what they thought was a good faith modification program, encouraged people to get deeper and deeper into “debt”, and then foreclosed when they were sure that the person could not reinstate nor exercise a right of redemption. A key player in this scheme was Urban Lending Solutions.

In a case that I am currently litigating, Bank of America at first denied any knowledge of Urban Lending Solutions. When confronted with correspondence issued from urban lending solutions under the letterhead of Bank of America, they finally conceded that they knew who who the company was.  In a Massachusetts case depositions were taken and it is quite clear that this affiliate of Bank of America had their employees working off of Scripts and that anyone who went off the reservation would be disciplined or fired. Going off the reservation merely meant that they actually tried to help a borrower achieve a modification.

There are at least six whistleblowers who have executed sworn affidavits stating that the modification program was a sham. I think we might be getting closer to the point where whistleblowers tell us that the origination of the loan was a sham and that the so-called sales of loans were also sham transactions. Those employees of Bank of America or their affiliates who were successful in throwing homeowners into foreclosure were rewarded with $500 gift certificates to Target and other stores.

The claims against Bank of America are using laws that were designed to target organized crime. For seven years experts and laymen have been claiming that the banks were engaged in organized crime in the  the sale of mortgage mines, origination of loans, the assignment of loans, the recording of unperfected mortgage liens, wrongful foreclosures, illegal foreclosure sales in which the property was sold without any cash being paid, interference  in the right of the borrower to reinstate, modify, or redeem.

We are just around the corner from the key question, to wit: why would the banks engage in organized crime to create foreclosures when it is painfully obvious to homeowners and local government officials across the country that the banks have no interest in acquiring the property but only causing the sale of the property at a foreclosure auction?  Why would the banks delay the prosecution of their cases for years? Why would the banks argue against expediting discovery against them and against the borrower? Why would the banks argue for less money in foreclosure rather than more money in modification?

The answer to all of those questions is simply that there is more money in this scheme than has been divulged.  In the coming weeks and months the revelations about the true nature of these transactions will shock the conscience of the country and cause voters and politicians to rethink their position regarding the ability of regulators and courts to clawback illegally obtained proceeds that started with the transactions originated with the money of investors and somehow ended up with the banks growing by 30% despite a failing economy and a diving housing market.

We are now at the point where filing RICO charges against the banks is likely to gain traction whereas in prior years it was considered overkill for what appeared to be negligence in paperwork caused by the volume of mortgages and foreclosures. Volume had nothing to do with it. The banks made a ton of money selling those mortgage bonds.  Out the money they made selling the mortgage bonds was dwarfed by the amount they made when they received insurance, credit default swap proceeds, and taxpayer money on investments owned by the investors and not by the banks. So far more than 5 million foreclosures have proceeded illegally which means that 5 million families have been disrupted in some cases beyond repair. Recent estimates suggest that another 5 million foreclosures will be added to the list unless the banks are required to conform with their regulations and the laws of the federal and state government.

BOA and Urban Lending Sued on Racketeering Charges

Thank you for the inspiration

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Editor’s Comment:  

We get many letters thanking us for our efforts to set things straight. And as I embark on escalating those efforts I found this letter especially timely and uplifting. While many of our readers write in with their successes, the distinguishing feature of this thank you letter was despite losses, so far in the courts. I think the next major push should be with administrative agencies regulating the banks where there are procedures for review and the possibility of administrative hearings to consider the quest for truth.

I have followed your blog semi-religiously for several years now.  I started long before I filed a RICO suit against IndyMac/MERS in Federal District Court in Seattle (May 2011).  So for certain my complaint was laced as best I could with the very arguments which you have been espousing and refining over the years.  Of course my Complaint was dismissed (not unexpected since, after all, I am a pro se know-nothing in the eyes of the “justice system”).  I appealed to the Ninth Circuit case No. 11-358626, got evicted in the interim and now await a decision from the Appeals Court.  I am telling you this not as a plea for assistance or pity but as a thank you for your tenacity in trying to set things straight.

Until the bubble burst in 2008, I was a self-employed homebuilder for the previous 35 years. Prior to that, I had obtained a 2 year associates degree in Tampa (1975). Dealing with an unconscionable truth has different impacts on different people. For me (and I am only 3 years or so younger than yourself), the impact prompted me to return to college at the University of Washington at the branch campus in Bothell.  This town is nearby to my former home which I still own but from which I was exiled.  Soon after my exile I became intrigued by a new degree program offered by UWB called “Law, Economics and Public Policy”.  I wondered if it was what it appeared to be and if my college credits from 37 years ago would transfer, well, yes and yes.  I am midway through my second quarter now.  Doing great.  The class sizes are quite small, usually 25 or less, so in-class discussions are encouraged and frequent.   This quarter, the book “The Big Short” was a required reading for one class.  Having already read that book 2 years ago, I’m sure you can imagine what sort of flavor that a fellow of my background and attitude might bring to the table in a room full of clueless kids who could easily pass as my grandchildren.

I know you’ve had some recent health issue which I hope are behind you.  I don’t have the time (or patience, quite frankly) to engage in the blogging which follows your every post, including your most recent one regarding the familiar theme of corrupted titles and Canadian neophytes.  On this Friday evening, I just wanted to wish you well and thank you for your inspiration.  The next generation must not be denied the truth.  I’ll keep talking to the kids (and the professors, some half my age) at UWB.  In a classroom environment, none of them can hide from me.  So yes, thanks once again.  We hear you and by proxy, they hear you too.

Best regards,

Name redacted for privacy


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CORRUPTION OF TITLE CHAINS IS PANDEMIC

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Editor’s Notes:  

As we predicted more and more County recorder offices are suing to collect transfer fees on loans that have gone to foreclosure under the allegation that a valid loan and lien was transferred.  Expect other revenue collectors in the states to start doing the same for registration fees, taxes, interest, penalties and fines. This battle is just beginning. We are now about to enter the phase of finger pointing in which each type of defendant — bank, servicer, MERS, Fannie, Freddie etc. defends with varying exotic defenses that more or less point the finger at some other part of the securitization chain. 
The real story is that title chains have been irretrievably corrupted — which means that title cannot be established by using the documents alone. Parole evidence from witnesses and production of back-up documents must show the path of the loan and the proof that the transaction was real. Defenders of these lawsuits may be forced to admit that there was no actual financial transaction and that the assignments were assignments of “convenience” negating the reality of the transfer or of any transaction at all. 
Either way they are going to have a problem that can’t be fixed. They can’t prove up the documents because the documents are contrary to the path of monetary transactions and recite facts that are untrue —- in addition to the fact that the documents themselves were fabricated, forged, robo-signed and fraudulently presented. This is why I say that regardless of how hard anyone tries to do the wrong thing, the only right way to correct these problems is to negate the foreclosures that have already been concluded, stop the ones that are being conducted in the same way as the old way, and make them prove up their right to foreclose. They either must admit that there were not valid transactions — including the original note and mortgage — or they won’t be able to prove a valid transaction because the money came from sources other than those shown on the closing documents. 
The actual sources of the money loaned the money to borrowers without documentation believing they had the documentation. But the mere fact that borrowers signed documents is not an invitation for any stranger to imply that it was for their benefit. For these reasons the mortgage in most cases was never perfected into a valid lien and cannot be perfected without corrective instruments signed by the borrower or upon some order by a court. But the courts are going to be far more careful about the proof here. Most Judges are going to take the position that they could be fooled once when the foreclosure originally went through on the premise of valid documents and an actual financial transaction attached to THOSE documents, but that they won’t be fooled a a second time. They will demand proof. And proof according to the normal rules of evidence is completely lacking because the entire securitization chain was a lie from one end to the other.
The borrower will end up owing the money less offsets for payments received by the real creditor, once the identity of the real creditor is revealed, but the absence of a mortgage or deed of trust naming that actual creditor will void the mortgage and negate the credit bid at the auction.

Ohio lawsuit accuses Freddie Mac of fraud

by Tara Steele

The battle between Fannie Mae, Freddie Mac, and various government entities continues, each taking a different approach on the battlefield.

Freddie Mac sued by county in Ohio

Last year, Mortgage Electronic Registration Systems Inc. (MERS) became the subject of lawsuits from counties across the nation as District Attorneys allege the company never owned the loans they were facilitating foreclosures for, and in most cases, judges agree, and their authority to facilitate has been denied in several counties. Dallas County alleges the mortgage-tracking system violates Texas laws and shorted the county anywhere from $58 million to over $100 million in uncollected filing fees due to the MERS system, dating back to 1997.

Others sued MERS as well; in February, in the U.S. Court for the Western District of Kentucky, Chief Judge Joseph McKinley Jr. dismissed a lawsuit filed by the Christian County Clerk, denying relief to the County for the same relief sought by Dallas County and others.

Rampant mortgage fraud, continued robosigning

Studies have shown that MERS destroyed the chain of title in America, and other studies reveal that illegal robosigning is still in play, and that foreclosure fraud has occurred in themajority of loans.

As the courts have not yet rewarded cities, counties, or states pursuing action against MERS, other tactics are being taken by these entities, for example, Louisiana is using RICO laws to sue MERS.

Summit County, Ohio taking a different approach

Summit County, Ohio filed a lawsuit1 Tuesday against Freddie Mac, alleging a failure to pay fees on transfer taxes on over 3,500 real estate transactions over six years. Court documents show that the Federal Home Loan Mortgage Corporation is accused of committing fraud by claiming it was a government entity, thereby exempt from transfer taxes. The County has not released a final assessment of the amount they believe is due, but they will also be seeking interest and penalties.

This approach is far different than going after MERS (which coincidentally was established by Fannie Mae and Freddie Mac over 15 years ago), rather going directly after the still-functioning Freddie Mac.

“The reality is Freddie Mac is a federally chartered, private corporation and they should have been paying these fees and taxes,” Assistant Prosecutor Joe Fantozzi told the Akron Beacon Journal.

Freddie Mac and Fannie Mae began paying transfer taxes in 2009, so the lawsuit is only seeking transfer taxes due from 2002 through 2008, which in Summit County are $4 per $1,000 on all real estate transactions. Additionally, the county also charges a 50-cent lot fee and recording fees, which are $28 for the first two pages and $8 for each additional page.

Fannie Mae not named, FHFA already fighting back

Although Geauga County in Ohio sued MERS, Chase Bank, and CoreLogic, the Akron Beacon Journal reports that Summit County is believed to be the first county in the state to file legal action against Freddie Mac. Fannie Mae was not named in the suit due to the low volume of mortgages in the county it handled during the time period.

The Federal Housing Finance Agency (FHFA), the conservator of Fannie and Freddie, is fighting back on these same battle lines, suing in Illinois to validate the two mortgage giants’ tax-exempt status, the Chicago Tribune reported. This move is likely an effort to circumvent more lawsuits like the one currently being filed in Summit County.

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Discussion Started Between Livinglies and AZ Attorney General Tom Horne

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Editor’s Comment:

Dear Kathleen,

Thank you very much for taking my call this morning.

The question that Neil F. Garfield, Esq. had asked AZ Attorney General Tom Horne at Darrell Blomberg’s meeting was:

Why is the Arizona Attorney General not prosecuting the banks and servicers for corruption and racketeering by submitting false credit bids from non-creditors at foreclosure auctions?

Please feel free to browse Mr. Garfield’s web blog, www.LivingLies.wordpress.com as you may find much of the research and many of the articles to be relevant and of interest.

Mr. Garfield wishes the following comments and observations to be added, in order to clarify the question being asked.

It should probably be noted that in my own research and from the research from at least two dozen other lawyers whose practice concentrates in real property and foreclosures have all reached the same conclusion.  The submission of a credit bid by a stranger to the transaction is a fraudulent act.  A credit bid is only permissible in the event that the party seeking to offer the bid meets the following criteria:

1.  The homeowner borrower owes money to the alleged creditor

2.  The money that is owed to the alleged creditor arises out of a transaction in which the homeowner borrower agreed to the power of sale regarding that debt

3.  Any other creditor would be as much a stranger to the transaction as a non-creditor

Our group is also in agreement that:

4.  Acceptance of the credit bid is an ultra vires act.

5.  The deed issued in foreclosure under such circumstances is a wild deed requiring the title registrar to attach a statement from the office of the title registrar (for example Helen Purcell) stating that the deed does not meet the requirements of statute and therefore does not meet the requirements for recording.

6.  In the event that nobody else is permitted to bid, the auction violates Arizona statutes.

And we arrived at the following conclusions:

7.  In the event that there is no cash bid and the only “bid” was accepted as a cash bid from either a non-creditor or a creditor whose debt is not secured by the power of sale, no sale has legally occurred.

8.  The applicable statutes preventing the corruption of the title chain by such illegal means include the filing of false documents, grand theft, and evasion of the payment of required fees.

9.  This phenomenon is extremely wide spread and based upon surveys conducted by our office and dozens of other offices (including an independent audit of the title registry of San Francisco county) strongly suggest that the vast majority of foreclosures in Arizona resulted in illegal auctions, illegal acceptance of a bid, and illegal issuance of a deed on foreclosure-which resulted in many cases in illegal evictions.

10.  Federal and State-equivalent RICO may also apply, as well as Federal mail fraud which should be referred to the US Attorney.

CONSTITUTIONAL CHALLENGE TO THE NON-JUDICIAL SALE STATUTE AS APPLIED.

It should also be noted that all the same attorneys agreed that the use of an instrument called “Substitution of Trustee” was improper in most cases in that it removed a trustee owing a duty to both the debtor and the creditor and replaced the old trustee with an entity owned or controlled by the creditor.

This is the equivalent of allowing the creditor to appoint itself as Trustee.

In virtually all cases in which a securitization claim was involved in the attempted foreclosure the Substitution of Trustee was used exactly in the manner described in this paragraph.  This method of applying the powers set forth in the Deed of Trust is obviously unconstitutional as applied.

Constitutional scholars agree that the legislature has wide discretion in substituting one form of due process for another.  In this case, non-judicial sale was permitted on the premise that an independent trustee would exercise the ministerial duties of what had previously been a burden on the judiciary.

However, the ability of any creditor or non-creditor to claim the status of being the successor payee on a promissory note, being the secured party on the Deed of Trust, and having the right to substitute trustees does not confer on such a party the right to appoint itself as the trustee, auctioneer, and signatory on the Deed upon foreclosure nor to have submitted a credit bid.

We are very interested in your reply.  If your office has any cogent reasons for disagreement with the above analysis, we would like to “hear back from you” as you promised at Mr. Blomberg’s meeting 22 days ago.  We would encourage you to stay in touch with Mr. Blomberg or myself with regard to your progress in this matter in as much as we are considering a constitutional challenge not to the statute, but to the application of the statute on the above stated grounds.

Thank you for your time and consideration,

Sincerely

Neil F Garfield esq

licensed in Florida #229318

www.LivingLies.wordpress.com

Michigan Court Relies on New York Trust Theory, Rules Loan Never Made it to Trust

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EDITOR’S NOTE: In plain language the “securitization” of loans at least with respect to residential mortgage loans is a myth, an illusion, A LIE. It is one of many lies about these mortgages and we are living it as though it was real, which is why this blog is entitled LIVINGLIES. If the loans never made it to the trust, there was no transfer and thus there was no securitization, which means that the investors bought empty mortgage bonds with no value and no prospects for value.

This fact does NOT invalidate the obligation, however. But the fact that securitization was faked doesn’t validate the obligation either. Nor does it create a valid perfected lien against a home. That is a lie too, but for different reasons. In most instances there is no money due to anyone (except to the investors from the investment bankers) because the obligation that would been created was contemporaneously transferred to third parties who paid it. The fact that it was paid to the agents of the investors rather than the trusts or the investors themselves does not remove the fact that the obligation is paid in full and therefore not due, much less capable of being in default.

Where the article misses a key point is in its knee-jerk reaction to the accusation of free house to the borrower. If that is the collateral benefit arising out of Wall Street misconduct, so be it.

The real issue here is not whether there is going to be a free house awarded, but to whom it will be awarded. There is no reason that interlopers (pretenders) should be allowed to get the collateral benefit of a free house, having defrauded all the real parties in interest. It stands to reason that the victims of the fraud should get the collateral benefit. If that means they get a little more than they are entitled to spending upon how you look at it, this seems far more preferable than proceeding in the business as usual manner of only letting collateral benefits flow toward big business and big banks. Every once in a while, if the banks screw up enough and step on enough rakes, the little guy should get the benefits if that is the way the cards fall.

The article below from Naked Capitalism attributes the original idea that securitization was always a myth to others. It happened here first and for a long time was ignored. Now everyone is adopting it as their own idea. That is good news for homeowners. Yet it is only fair that after nearly 4 years of work to get the message out, that credit be given here that the new decisions in the last week are the result of, and in some instances quotes from the expert declarations written and signed by me. 

Michigan Court Relies on New York Trust Theory, Rules Loan Never Made it to Trust

A June 6 trial court decision in Michigan, Hendricks v. US Bank, has not gotten the attention it warrants because to the extent it has been noticed, it has been depicted as invalidating an effort to effect a note (the borrower IOU) transfer via MERS. While that was one of the grounds for a ruling favorable to the borrower, the court also considered and gave a thumbs’ up to what we call the New York trust theory. That has far more significance, as readers will see shortly (hat tip to Foreclosure Fraud for this sighting).

This legal argument, which so far has been tested in a very few cases (primarily in Alabama, since it was perfected by Alabama attorney Nick Wooten) was the basis of a favorable ruling in Alabama trial court. The reason it bears watching is that if the New York trust theory continues to be validated in court, it has devastating consequences for most post 2004 vintage residential mortgage backed securities. it has been the subject of a long-running argument among legal experts, with the Congressional Oversight Panel, Adam Levitin, as well as consumer lawyers like respected bankruptcy attorney Max Gardner on one side, and securitization industry incumbents like the American Securitization Forum and SNR Denton.

The bare bones outline of the argument is that the trusts, the legal vehicle that holds the mortgage loan, in virtually all securitizations, elected New York law as the governing law for the trust. New York law is well established and very rigid. A trust can act ONLY as stipulated; any deviation is a “void act” and has no legal force.

But the problem is that the notes appeared not to have gotten to the trust. As we wrote earlier:

…. there is substantial evidence that in many cases, the notes were not conveyed to the trust as stipulated. As we have discussed, the pooling and servicing agreement, which governs who does what when in a mortgage securitization, requires the note (the borrower IOU) to be endorsed (just like a check, signed by one party over to the next), showing the full chain of title. The minimum conveyance chain in recent vintage transactions is A (originator) => B (sponsor) => C (depositor) => D (trust).

The proper conveyance of the note is crucial, since the mortgage, which is the lien, is a mere accessory to the note and can be enforced only by the proper note holder (the legalese is “real party of interest”). The investors in the mortgage securitization relied upon certifications by the trustee for the trust at and post closing that the trust did indeed have the assets that the investors were told it possessed.

The pooling and servicing agreement also provided that the transfers had to take place by a particular cutoff date, which was typically no later than 90 days after the closing of the deal. That means notes cannot be transferred in at a later date.

The ruling is very clear that the note never made it to the trust:

Note that the judge rules that someone can foreclose, but it’s not the trust, it’s the original lender. But that is unacceptable to the mortgage industrial complex. They cannot afford to admit they defrauded investors, which is what a foreclosure in the name of the original lender amounts to.

So when people complain about borrowers getting free houses, they act as if it’s the borrower’s fault. That’s the wrong place to assign blame. No one is saying the borrower does not owe somebody money. And the borrowers aren’t seeking a free house; they usually came to this juncture because they thought their records had overcharges in them or they thought they were a good candidate for a mod but could not get the servicer to consider their case. It’s the originators and packagers who put themselves in the situation of not being able to enforce the debt, not the borrower.

The apparent widespread abandonment of the practice of crossing the ts and dotting the is potentially devastating. If the failure to convey notes properly is as widespread as we have been told by various observers (and Abigail Field’s sample confirms), the mortgage industry has a monstrous problem on its hands. As the Michigan ruling suggests, at a minimum, notes not transferred properly are actually owned by someone earlier in the securitization chain. But no one wants to admit that; it means the investors were lied to and hold paper that does not have clear legal rights to foreclose and that originatorrs, servicers and trustees have committed massive securities fraud. And in a worse case scenario, if no notes were transferred to the trust by closing, there is a contract formation failure.

This is the sword of Damocles hanging over the bond markets. The incumbents, bizarrely, seem intent on pretending it does not exist rather than trying to do something to alleviate the damage.

I’m including the full ruling below since it’s short and readable and I know some readers enjoy court filings.

Hendricks v. US Bank, June 6, 2011

CA BKR DENIES STAY, ORDERS SANCTIONS AGAINST ONEWEST, INDYMAC

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“the Court will not participate in a process where OneWest increases its profits by disobeying the rules of this Court and by providing the Court with erroneous information

NEW NOTE GAMBIT ANGERS JUDGE

EDITOR’S COMMENT: We’ve been watching this for years. If one document doesn’t work, the pretender comes up with another “original” document. They are all fake, fabricated and forged. People have been asking us since 2007, “If what you are saying why are the Judges going along with it? Why are they not levying sanctions, referring the lawyers to the Bar for discipline and referring the banks to the justice system for criminal prosecution?” The simple answer is that the Judges didn’t believe it. They were stuck in the mental trap of believing that the banks would never intentionally do something in court that amounted to perjury, subornation of perjury and fraud. The Judges could not get their heads wrapped around the idea that the banks were in the process of a fraudulent land grab. It just didn’t make sense to them. It seemed far more likely to them, from their prior experience with foreclosures, that the process was largely clerical, that no bank would foreclose if there wasn’t a good reason and it couldn’t be worked out.

In California this attitude was particularly evident but in other states, Neil Garfield and Living lies was cited as the problem because we were filling the media with false statements of law and fact. Fast forward to the present and you see an increasing number of judges getting increasingly bold in switching their position on the banks and allowing for the possibility, even the probability that the homeowners win and the pretenders lose because they are pretenders, interlopers in a process meant to satisfy the requirements of judicial economy but which was being used (nonjudicial) to get around the basic requirements of black letter law and due process requirements contained in every state constitution and the United States Constitution.

Lawyers saw the references to me and my blog and the derisive wording about me, and they got scared that if they argued the same points they too would be the subject of derision, lose credibility with the court, and lose cases. And in fact, they were losing more cases than they were winning because even if they used the material on this blog, even if they got the COMBO title and securitization search, report and analysis that lays out everything chapter and verse, they were still losing — as a direct consequence of (a) Judges prejudging the cases and (b) the lawyers and litigants failing to object immediately as the first words were coming out of the mouths of the lawyers for the pretenders and failing to object to the first documents proffered. Most of all they were losing because they failed to deny the default, deny the right right of the forecloser to be initiating any collection or foreclosure proceeding, and deny that the originating papers were representative of the actual cash transaction that took place.

If you don’t object to an allegation, you are admitting it. If you don’t object to a document, it comes in as “evidence.” And the reason the lawyers were not objecting was that they had the same mindset as the Judges. How could they deny a default when they knew that the homeowner had not made payments on the note and mortgage that was attached as copies to the pleadings of the pretenders? If you don’t make the payments, you’re in default, right? WRONG! A default occurs only if the creditor fails to receive payment, not when the borrower decides to not make the payment. A default exists only if there is a gap in payments that are due, not payments that are shown on a piece of paper. If the payments were made anyway by a third party, there is no default and none can be declared.

And the declarer of the default must be someone who has an interest in the obligation. And the default must reference the obligation which normally is on the loan documents signed at closing but in the case of table funded loans that are enmeshed in a false securitization scheme, those documents do NOT set forth the terms or the parties involved in the transaction — so they can’t be used. If the loan documents at the so-called “closing” can’t be used we are left with an undocumented transaction between the homeowner, who is not known to the investor-lender, and the investors lender who is not known to the homeowner-borrower. They each got a separate set of documents including terms, conditions guarantees, cross collateralization, insurance and other third party payments (from servicers who keep paying in order to collect higher fees for “non-performing” loans. So in terms of documents there was no deal, and if the truth was told to both real parties in interest there wouldn’t have been a deal.

Nonetheless an obligation arose between the homeowner-borrower and the investor lender because the homeowner-borrower received the benefit of funding from the investor-lender, albeit under false pretenses including appraisal fraud at the loan level and ratings fraud at the investment level. The transaction is both undocumented and unsecured. And the obligation is subject to offset from a menu of affirmative defenses, rescission remedies, and counterclaims from the homeowners borrower. The property is now worth a small fraction of what was represented at the loan level closing and the investment level closing. So the investors are ignoring any remedies against homeowners because they don’t want to get tied up in litigation in which their net recovery is negative — i.e., they owe more to the homeowner than the homeowner owes on the obligation.

Enter the pretenders who figure that if the investors don’t want to go after the homes, then the banks will and who will challenge the banks since they appear to be the lenders in these transactions, even if they are not. Their defects in documentation and the facts (they were not included in the money trail of the loan transaction) were glossed over by lawyers and judges and even the media. Now, the Judges are taking a closer look and finding that not only do these pretenders lack standing, not only are they not the real parties in interest, but that that they and their lawyers are probably guilty of intentional fraud on the court and in this case, as well as others across the country, the Judge is ordering sanctions and fines.

FROM STOPFORECLOSURENOW.COM

IN RE ARIZMENDI | CA Bank. Court Denies Stay, Order to Show Cause “Contempt, Sanctions, (2) ONEWEST Notes; 1 Endorsed, 1 Unendorsed” “MERS Assignment”

In re: Jessie M. Arizmendi, Debtor.
OneWest Bank FSB, its assignees and/or successors, Moving Party,
v.
Jessie M. Arizmendi, Debtor; Thomas H. Billingslea, Chapter 13 Trustee; and Indymac Mortgage Services, Junior Lien, Respondents.

Bk. No. 09-19263-PB13, RS No. CNR-2.

United States Bankruptcy Court, S.D. California.

May 26, 2011.

Not for Publication

MEMORANDUM DECISION

LAURA S. TAYLOR, Bankruptcy Judge

EXCERPTS:

Additional Briefing.

At the trial, the Court carefully considered the demeanor of the various witnesses and the testimony provided. In connection with the trial, the Court also reviewed all other evidence and argument appropriately before the Court. Notwithstanding, however, significant questions continued, and the Court required additional briefing in connection with several issues as outlined in the Order Setting Briefing Schedule, Outlining Preliminary Determinations, and Establishing Procedures for Final Resolution of Issues (Dkt. No. 56) (the “Briefing Order”).

OneWest’s post-trial documents provided the analysis and argument required by the Briefing Order. But, these documents also contained factual assertions inconsistent with the OneWest Declaration and the Claim. OneWest now provided a standing argument based on a new version of the Note (the “Endorsed Note”).[3] The Endorsed Note attached an allonge dated July 24, 2007 evidencing a transfer from Original Lender to “IndyMac Bank, FSB” and bore an endorsement in blank from IndyMac Bank F.S.B. OneWest argued in connection therewith that it had enforcement rights under the Endorsed Note as a holder notwithstanding the admittedly accurate testimony at trial indicating that OneWest is a servicer for Freddie Mac and not the secured creditor. The OneWest post-trial memorandum also references a separate agreement with Freddie Mac, but fails to further evidence or discuss this agreement. The OneWest post-trial memorandum, finally, bases a standing argument on physical possession of the Endorsed Note and OneWest’s alleged status as a trust deed beneficiary based on the Assignment.

[…]

But, there are key assumptions that the Court must make in order for this set of facts to withstand scrutiny. And they are that OneWest, in fact, holds the Endorsed Note and held the Endorsed Note at all appropriate points in time. Frankly, the Court is not willing to make such assumptions at this time. OneWest attached the Unendorsed Note to both its Proof of Claim and the Declaration. The Declaration stated under penalty of perjury, that the Unendorsed Note was a true and accurate copy of the Note held by OneWest. The Proof of Claim implicitly stated the same and OneWest, of course, is obligated to provide only accurate information in connection with its Proof of Claim. The problem is that the Unendorsed Note does not bear the endorsement or attach the allonge found on the Endorsed Note, a document produced only after trial and the close of evidence. One West, thus, leaves the Court with the quandary of guessing which promissory note OneWest holds, whether and when One West held the Endorsed Note, and what the explanation is for the failure to provide the Endorsed Note prior to the close of evidence.[10]

A further evidentiary anomaly arises on account of the Assignment; MERS executed this document as a nominee for the Original Lender. But the allonge to the Endorsed Note makes clear that the Original Lender assigned its interests in the Note more than three years prior to execution of the Assignment. And rights under the Trust Deed follow the Note. Polhemas v. Trainer, 30 Cal. 686, 688 (1866). Thus, MERS’ purported assignment of the Trust Deed and the related note as nominee for the Original Lender and without a reference to either IndyMac Bank, FSB or Freddie Mac appears designed to disguise rather than to illuminate the facts.

And finally, even if OneWest’s second post-trial discussion of standing and submission of evidence were accurate, one thing remains clear: OneWest failed to tell the true and complete story in the OneWest Declaration and in the Claim.

The Court is concerned, as a result, that OneWest does not hold the Endorsed Note. But, perhaps more significantly, the Court is concerned that OneWest has determined that business expediency and cost containment are more important than complete candor with the courts. On these points, Ms. Arizmendi has a right to be heard, and the Court has a right to explanation.

Further, this is not the first time that OneWest has provided less than complete information in the Southern District of California. See “Memorandum Decision Re Motion to Vacate Clerk’s Entry of Default and Motion to Dismiss Complaint; Order to Show Cause for Contempt of Court”, docket no. 39, Adv. Pro. 10-90308-MM (In re Doble; Bk. Case No. 10-11296) (Defendants, including OneWest, were neither candid nor credible in explaining failure to respond timely to complaint and submitted multiple and different notes as “true and correct”); “Order to Show Cause Why OneWest Bank, FSB and Its Attorneys Law Offices of Randall Miller and Christopher Hoo Should Not Appear Before the Court to Explain Why They Should Not Be Held in Contempt or Sanctioned”, docket no. 47, In re Carter, Bk. Case No. 10-10257-MM13 (among other things OneWest provides inconsistent evidence as to its servicer status); and “Order After Hearing to Show Cause Why Indymac Mortgage Services; OneWest Bank, FSB; Randall S. Miller & Associates, P.C.; Christopher J. Hoo; Barrett Daffin Frappier Treder & Weiss, LLP; and Darlene C. Vigil Should Not Appear Before the Court to Explain Why They Should Not Be Held in Contempt or Sanctioned”, docket no. 47, In re Telebrico, Bk. No. 10-07643-LA13 (Court concerned that OneWest provided evidence that was either intentionally or recklessly false).

The curious thing about these cases is that OneWest likely would prevail in each of them if it completely and candidly explained the basis for its motion and its standing in connection therewith. Undoubtedly, however, doing so is more costly than using a form declaration that is not customized as to the facts on a case by case basis and that is signed by an uninformed declarant. OneWest perhaps assumes that it really does not matter if the Court provides relief based on erroneous information. But, OneWest should remember an earlier theme in this decision and that is that the law is the law, rules are rules, and both must be obeyed. And, when it becomes clear that OneWest did not obey the rules, the Court can and, indeed, must act.

In short, the Court will not participate in a process where OneWest increases its profits by disobeying the rules of this Court and by providing the Court with erroneous information. The Court, thus, will take two steps. First, the Court will deny the Stay Motion without prejudice based first on the evidentiary problems that make it impossible for the Court to determine that OneWest is properly before the Court and that render evidence critical to OneWest’s prima facie case unreliable and second based on the Court’s inherent authority to regulate and control proceedings. Next, the Court hereafter will issue an order to show cause why One West should not be held in contempt and/or otherwise sanctioned. In connection therewith, the Court will consider a compensatory sanction to include a recovery of any costs Ms. Arizmendi would not have incurred but for OneWest’s improper actions. The compensatory sanction, frankly, could be quite limited. But, the Court also believes that a coercive sanction may well be appropriate. Given the orders to show cause that pre-date the one this Court will issue, it appears that the Court must create an economic disincentive for OneWest that will counter balance the economic benefit of a lack of complete candor. Further detail on the Court’s sanctions considerations will be set forth in the order to show cause and will not be further discussed here.

The Court finally notes that the order to show cause will issue only as to OneWest and possibly as to MERS. OneWest uses a variety of law firms. The Court was in a position to observe the demeanor of the lawyers handling this matter when the witness stated that OneWest was a mere servicer. The Court concludes based on this observation that they were unaware of this fact and unaware that OneWest supplied questionable documentary evidence. And frankly, there is nothing to be gained in pursuing the individual attorneys who must regularly appear in front of this Court. OneWest can simply change counsel and then be less than candid with a new set of attorneys.[11] The Court is interested in modifying OneWest’s behavior at an entity level, and any coercive sanction will be designed to achieve the same.

CONCLUSION

Based on the foregoing, the Stay Motion is denied without prejudice to the right of OneWest to refile a stay relief motion. In so doing, OneWest must provide declaratory evidence that explains when and how it obtained physical possession of the Endorsed Note and/or Unendorsed Note and that otherwise provides case specific evidence of standing given its servicer status.

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