Goldman Sachs Fined $5 Billion for Violations Dating Back to 2008

…should anyone who owns a home that is subject to claims of securitization of their mortgage be at risk of losing their property?

…the government should stop the arrogant policy of letting most of the burden fall onto middle class property owners.

For a description of our services  click here: https://wordpress.com/post/livinglies.wordpress.com/32498

So we have another “settlement” with one of the major players in the greatest economic crime in human history. But the cover-up of the actual transgressions  emanating from corruption on Wall Street continues. Government investigators should have had a press conference in which they clearly stated the nature of the violations — all of them. People deserve to hear the truth; and the government should stop the arrogant policy of letting most of the burden fall onto the middle class property owners.

The defects in government intervention give rise the illusion that these settlements only have effect on the investors and other financial institutions who were defrauded. Both the charges and the settlements seem far away from the ground level loans and foreclosures. But that is only because of deals in which the government’s continued complicity in “protecting the banking system — a policy that has rewarded trillion dollar banks and given them unfair advantage over the 7,000 other banks and credit unions.

Government now knows the truth about what Wall Street did. But they are restricting their comments in the fear that maybe notes and mortgages would be obviously void, making the MBS bonds worthless causing some world-wide panic and even aggression against the United States for allowing these enormous crimes to occur and continue.

For example, if the government investigators actually said that the REMIC Trusts were never funded, then the cases pending in which the REMIC Trust is named as the initiator of the foreclosure would dissolve into nothing. There would be no Plaintiff in judicial states and there would be no beneficiary in non-judicial states. Thus the filing of a substitution of trustee on a deed of trust would be void. It would raise jurisdictional issues in addition to the absence of any foundation for the assertion of the right to foreclose.

If government investigators identified patterns of conduct in the fabrication, forgery and utterance of false instruments, recording false instruments, then presumptions of validity might not apply to documents presented in court as evidence. Instead of the note being all the evidence needed from a “holder”, the actual underlying transactions would need to be proven by parties seeking foreclosure. If those transactions don’t actually exist, then it follows that the note, mortgage and claim are worthless.

And a borrower could point to the finding by administrative agencies and law enforcement agencies that these practices constitute customary and usual practices in the industry — a statement that would go a long way to convincing a judge that he or she should not assume or presume anything without proof of payment (consideration) in the origination of the loan with whoever ended up as Payee on the note. The same analysis would apply for the alleged acquisition of the “loan.”

If the party on the note or the party claiming they acquired the loan was NOT a party to an actual transaction in which they made the loan or paid to acquire it, then the note is evidence of a transaction that does not exist. Instead government is continuing to cover-up the fact that a policy decision has been made in which borrowers can fend for themselves against perpetrators of financial violence.

The view from the bench still presumes that they would not have a case to decide if there wasn’t a valid loan transaction and a valid acquisition of the loan. They see defects in documentation as splitting hairs. And to make matters worse I have personally seen judges strike virtually all discovery requests that address the issue of whether real transactions took place. And I have seen lawyers retreat over the one issue that would mean success or failure for their client. The task of defending illegal foreclosures would be far easier if the consensus view from the bench was that all the loans are suspect and need to be proven as to ownership, balance and authority.

These issues are almost impossible to prove at trial because the parties with the actual information and proof are not even at the trial. But they can be reached in discovery where on a motion to compel answers and a hearing on the objections from the “bank” or “servicer” the homeowner presses his demand for data and documents that show the actual existence or nonexistence of these transactions.

It would seem that the U.S. Department of Justice is coming out of the shadows on this. They are looking back to 10 years ago when the violations were at their most extreme. We may yet see criminal prosecutions. But putting people in jail does not address the essential issue, to wit: should anyone who owns a home that is subject to claims of securitization of their mortgage be at risk of losing their property?

 

Getting Your Goals Set on the Right Conclusions

For further information please call 954-495-9867 or 520-405-1688.

This for general information only and NOT an opinion on your case.
================================

I was responding to a client about the goals in opposing the wrongful foreclosures. These are hard to write or say. It might seem to be a contradiction in terms to walk away with a waiver of deficiency or some other “Settlement” or “Modification” with a party whom you know (but may not be able to prove) is false party with fake papers.

You might believe there might be as much as $50,000 in equity if and when repairs are made. My concern is that we don’t get pulled into reverse logic here. If the house is barely break-even without the repairs, then it could be wise to pursue short-sale or modification.  The real question is how much will it really cost to make the required repairs and where would you get the money from?

This is where most lay people put the cart before the horse. Equity in the home is not a matter for speculation, nor should it be calculated from a starting point of “after repairs.”

If you are looking for the pretenders to pay you damages sufficient to pay for the repairs and for them to give up on the foreclosure, it would be a mistake to assume that is going to happen without full scale litigation for wrongful foreclosure seeking money damages. That would require a lot of money in fees, costs and other expenses. You should determine whether  you have any appetite for that.

If you did have the money for repairs, then it would seem that you would have made the repairs and then sold the house, taking your equity and paying off whoever is claiming to own the loan, even if they don’t. If you don’t have the repair money, that leaves the only source of money to fix the house as the parties who wish to foreclose on it.

I have never seen them  agree to anything like that for one simple reason: They are not interested in either the house or the money. They want a foreclosure judgment and sale — that is the only path that will give them some protection against accusations of stolen money and stolen homes.

 

Since the goal of your opposition is NOT to break-even or minimize damages on the loan itself, and since their real goal is more closely related to off-record transactions in which your loan was sold multiple times, they obviously are not going to make it easier for you to save the home, save the equity, and especially [not] save the loan. They want the loan to fail not succeed. They want the foreclosure sale.

 

Now the anger and frustration nationwide with all forms of institutions flows in large part from the simple fact that we all know that the banks committed serious fraud and other illegal acts in creating these loans. We all know that there was nothing but pretense and presumption in transferring these loans and steering loans to foreclosure — rather than a workout where the original loan investments were protected, and of course foreclosure with fabricated, forged, back-dated documentation that included notes and sometimes mortgages — even if they were rescinded.

“We all know” is insufficient to prove a case or a defense. The courts have added to the problem by restricting discovery, restricting evidence on the basis that the off-record transactions (even in discovery) are irrelevant, that the money trail for the subject loan is irrelevant, and then entering orders and judgments consistent with the conclusion that might be stated as follows: “Judgment is entered in favor of the one with the most paper even if the paper does not speak the truth.”

 

My tentative conclusion, if all of my presumptions are correct, is that in situations where this analysis is relevant, on an individual basis, as a life decision, the only real goal might be to walk away without a deficiency judgment and leave it at that. Any other course of action in litigation will lead to a judgment in the trial court that statistically speaking is going to be against the homeowner, leaving the issues to be decided on appeal. That is process that will likely take at least one year and probably 2 years to complete.
From my perch of course I want all notes and mortgages to be contested if there are any claims of securitization or sale. And the proof of concept is already established — those who truly litigate all the way down to trial, have a much better chance to see a much better result than those who simply walk away. But that costs money, time and energy. And that is why I often tell lawyers and homeowners that the only right decision is what the homeowner decides to do and is willing to pay for.

It is FACT not THEORY: Money Trail is a Trail of Facts; Paper Trail is a Trail of Lies

Neil F Garfield, July 1, 2013: Modification “experts” are criticizing what they see on this site. It gives them the willies to think that they are participating in a fraud or enabling a fraud when they modify a loan with someone who doesn’t own it. So lately they are saying that the articles here have been discredited in court decisions (not true) and that the “theories” described here lack credibility.

What we are talking about here is facts, not theory. Either the foreclosing party, modifying party, or party accepting the short sale owns the note or not — and the FACTS lead wherever they bring us, namely, that if they didn’t pay for the funding of the origination of the loan, they didn’t pay for the acquisition of the loan, and that they didn’t acquire servicing rights to the loan, the lack of standing (legal doctrine, not theory) is complete. The non-ability to submit a credit bid at auction is complete (state statutes, not theory). The liability for slander of title, abuse of process, fraud, forgery, and fabrication of documents describing non-existent transactions needs to be proven, and the damages must also be proven. But with a dismissal or judgment for borrower, the liability part of the case is fairly easy.

Whether you are buying, selling, refinancing, short-selling, modifying or in any way settling or resolving issues with a mortgage loan you do so at your own risk. Banks that offer refinancing are either part of the securitization scheme and are kicking the liability can down the road or they are ignorant of the risk elements of title and liability for a loan that is subject to securitization claims.

If you want to criticize, go ahead and do it. But all people need to know is they can ask the questions in litigation and get the answers and the facts are whatever they are — there is either a cancelled check or wire transfer receipt or there is nothing. If you want to know if it is hot outside, just stick your head out a window, if reading the thermometer is too theoretical for you.

It is often true that the borrower admitted the debt, the note, the mortgage and the default. The trial judge had no choice and neither did the appellate court. These cases come from the inexperience of the pro se litigant or the lawyer who has not researched all of the material.

Don’t get caught in a spitting match about my “theories” versus the rulings of some courts. This is all a work in progress and there are going to be conflict in rulings. One state may appear to give one set of rulings another state may seem just the opposite. the point is that if you are doing good lawyering you are following the facts wherever they take you. And what we are saying is that the money trail does not support the paper trail that the banks have fabricated forged or proffered.

For example: Go to eFANNIE site. They are boasting about funding even before allocating your whole loan commitment or MBS pool, so you can maximize your execution. TRANSLATION: we’ll give you the money before you have to come up with it in real time. The investors put up the money,then the loan applications are solicited, then the money is funded with investor money, then the originator reports the loan closing and assigns it without a paper assignment to the next party in the paper train (securitization) usually the aggregator who assigns them without an actual assignment to the CDO manager at the investment bank that created the mortgage bonds and sold them through a “third party” which was owned or controlled by the investment bank. The paper trail neither reflects nor follows the money trail.

Full Deposition of Angela Edwards “Robo-Verifier” as Servicer for the Plaintiff for Verification of Foreclosure Complaint
http://www.zerohedge.com/contributed/2013-06-28/full-deposition-angela-edwards-“robo-verifier”-servicer-plaintiff-verificatio

 

 

Sales by Insiders AT BOA — RATS JUMPING SHIP? THE MARKET TRADERS ARE TAKING POSITIONS FOR A DEATH SPIRAL BY BOA: Somebody knows something… Rats are jumping ship  http://wallstcheatsheet.com/stocks/bank-of-american-corp-director-sells-580k-shares-and-4-insider-sales-to-note.html/?a=viewall

COURTS CAN RETURN PARTIES TO THEIR ORIGINAL POSITION: this would apply to cases where there is no default – through the “stop payment” script and through those who were actually paying. The Court can return the parties to the original position and wipe out arrears and fees.

INVESTIGATION: BOA TRIES SELLING OFF SERVICING RIGHTS TO AVOID LIABILITY (Remember just because they SAY they sold it doesn’t mean they did. We have seen several instances where BOA announced the loan or servicing rights or both were sold off but they were not and BOA ended up being the one “approving” the short-sale or modification).: GREEN TREE SERVICING AND BANK OF AMERICA

“Settlement” Checks Are Bouncing

WHY YOU SHOULD SIGN UP FOR MEMBERSHIP AND SEND A DONATION. GO TO THE HOME PAGE AND SIGN UP FOR BOTH: Every morning I read the recent cases, news articles and other blogs with an eye toward developing strategies and tactics that will get at the truth of the mortgage disaster. It takes hours and the staff that was required to be hired had to be paid. The free information and forms (see left side column of this blog) are supported by membership dues voluntarily paid by people supporting our efforts and who participate and ask questions of me and other experts twice per month. We need your support to broaden our investigation and efforts and to maintain the ability to provide you with analysis required to understand how the banks operated during this era of “securitization.” Please take a moment and sign up as a member and make a donation: MEMBERSHIP AND DONATION
If you are seeking legal representation or other services call our Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services.
The selection of an attorney is an important decision  and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field.

Editor’s Note: Adding insult to injury the checks being sent out for the so-called settlement that replaces the foreclosure review required by the federal reserve and the OCC are bouncing causing homeowners to be charged for the bounced check. The banks of course say it is all a big mistake that they forgot to transfer funds. That is probably true.

But it is equally true that these paltry settlement checks are in no way equal to the damage that was caused by the illegal foreclosures which were surfacing during the time that the review process was taking place. The OCC says that we are not allowed to look at that review process or the results because of privacy issues. I say that under the freedom of information act we are entitled to see everything and I’m betting on Elizabeth Warren to get that material and make it public.

It appears that the general context and status of these illegal foreclosures is that they are left standing as though they were legal and that the perpetrators are being let off the hook for a mere payment of $1000 on an average mortgage of $200,000.

It is important to remember that the settlement does not preclude homeowners from filing whatever claims they have even if they have accepted the check. It is also quite clear that the OCC is walking in lockstep with the banking lobby in an effort to protect the megabanks from extinction.

Several practitioners have asked me how to get past the judge who thinks the case is quite simple, to wit: the borrower accepted a loan  and failed to pay it back in the manner specified by the promissory note and therefore borrower’s  contractual  consent to the sale of the home should be enforced. My answer is that there is an issue that needs to be introduced early, repeatedly and emphatically. The issue boils down to whether or not the court is going to decide the case on the actual facts or on faulty presumptions.

The faulty presumption is that the possessor of the note is deemed to be the holder of the note and therefore the holder in due course. That is not what the Uniform Commercial Code says. If it said that than any Courier carrying promissory notes endorsed in blank could collect on those notes to the detriment of both the borrower and the lender. The difference between a possessor of the note and a holder of the note is that the holder of the note acquired the note by virtue of a monetary transaction in which the new entity in the chain paid a sum of money to the last holder of the note. The Uniform Commercial Code specifically requires that in order for an instrument to be construed as a negotiable instrument the transaction requires consideration and consideration consists of payment. Payment means that money actually changed hands. Thus you have a party in possession of the note with proof that they paid for ownership of the note.

The Uniform Commercial Code is quite clear that the transaction must take place in the context of value received by the assignor from the assignee.

The other question  that I have heard from both judges and attorneys relates to the so-called open endorsements. First, there is no transfer of ownership without consideration as I have detailed above. Second, open endorsements are specifically prohibited in the body of the pooling and servicing agreement upon which the forecloser  relies for authority to proceed with the notice of default and the notice of sale or the filing of a judicial action seeking foreclosure.

I have heard a judge say that it doesn’t make any difference to him what details were involved in the transaction as long as the original note shows that it was endorsed in blank or otherwise constituted an open endorsement. Those judges are ignoring the requirements for consideration or value in order to treat the note as a negotiable instrument and thus apply the presumptions set forth in the Uniform Commercial Code.

They are also ignoring the fact that the pooling and servicing agreement specifically prohibits the open endorsement, which is no surprise since an open endorsement would not protect the investors whose money was used to fund the alleged mortgage loan. In fact it could fairly be said that the open endorsement or endorsement in blank produces a unique result, to wit: the only party who could not accept the note and claim ownership of the loan is the party that is doing exactly that. They can’t say that their authority comes from the pooling and servicing agreement but that the prohibition against open endorsements does not apply. Either the pooling and servicing agreement means something or it doesn’t.

But the key issue is actually the money and the money trail. Neither the trust nor any other party is entitled to a presumption of the status of a holder without alleging and proving that they paid for the note and attaching the relevant documents showing the sale of the note from the former holder of the note (if in fact they were actually a former holder of the note), giving the date, identifying the parties and showing the amount paid.  Alleging that they are the holder of the note is a legal conclusion and not a short and plain statement of ultimate facts upon which relief could be granted. The short and plain statement of ultimate facts should be that on a certain date they paid a certain amount of money to a certain party who all owned the loan and that therefore they are a holder entitled to enforce the note and mortgage.

A failure to state that they were in fact damaged or to allege facts from which the trier of fact could conclude that they were damaged is a fatal defect in pleading and is a jurisdictional issue that can be raised at any time including on appeal —  unless of course in the trial court the borrower admitted that the party seeking foreclosure was in fact the holder of the note.

If you follow these simple steps,  the attorneys for the bank will fight tooth and nail for presumptions rather than facts.  The reason is simple. They have no evidence of payment for the origination or transfer of the loan and therefore the presumption they wish to raise as a holder of the note is rebutted.
So you might want to ask the judge a question that goes something like this: “Judge, do you want to decide this case on the actual facts or do you want to decide this case on the basis of faulty presumptions that are contrary to the facts.

Foreclosure Review Report Shows That the OCC Continues to Bury Wall Street’s Bodies
http://truth-out.org/news/item/15767-foreclosure-review-report-shows-that-the-occ-continues-to-bury-wall-streets-bodies

Foreclosure-abuse settlement checks bounce
http://www.latimes.com/business/money/la-fi-mo-foreclosure-settlement-checks-bounce-20130418,0,5585306.story

Independent Foreclosure Review Fiasco: OCC and Fed Decided Not to Find Harm
http://www.nakedcapitalism.com/2013/04/independent-foreclosure-review-fiasco-occ-and-fed-decided-not-to-find-harm.html

Jeffrey Sachs Calls Out Wall Street Criminality and Pathological Greed
http://www.nakedcapitalism.com/2013/04/jeffrey-sachs-calls-out-wall-street-criminality-and-pathological-greed.html

Banks Throw $20 Billion at Securitized Debt Market to Avoid Markdowns

Bloomberg Reports that the big banks are borrowing big time money using money market funds as source money for financing repurchase agreements. This stirs the obvious conclusion that the mortgage bonds — and hence the claim on underlying loans — are in constant movement making the proof problems in foreclosure proceedings difficult at best.

The underlying theme is that there is tremendous pressure to make good on the mortgage bonds that never actually existed issued by REMIC trusts that were never actually funded who made claims on loans that never actually existed. All that is why I say you should argue away from the presumption and keep the burden of persuasion or burden of proof on the party who has exclusive access to the actual proof of payment and proof of loss.

The banks are still claiming assets on their balance sheet that are either without value of any kind or something close to zero. If I was wrong about this, the banks would be flooding all the courts with proof of payment (canceled check, wire transfer receipt etc) and the contest with borrowers would be over.

Instead they argue for the presumption that attaches to the “holder” and mislead the court into thinking that possession is the same as being the holder. It isn’t. The holder is someone who acquired the instrument “for value.” By denying the holder status and contesting whether there was any consideration for the endorsement or assignment of the loan, you are putting them in position to force them to come clean and show that there was NO consideration, NO money paid, and hence they are not holders in any sense of the word.

If you research the law in your state you will find that the prima facie case required from the would-be forecloser depends factually upon whether they are an injured party. If they didn’t pay anything for the origination or transfer of the loan, they can’t be an injured party. They must also show that their injury stems from the breach of the borrower and the breach of some intermediary. That is where the repurchase agreements and financing for all those purchases comes into the picture.

So far the banks have been largely successful in using bootstrap reasoning that a possessor is a holder and a holder is therefore a holder in due course by operation of the presumptions arising from the Uniform Commercial Code. And since normally a presumption shifts the burden to the other side (the borrower in this case) to come up with legally admissible evidence that the facts do not support the presumption, the borrower or borrower’s counsel sits there in the courtroom stumped.

Further research, however, will show that if the facts needed to prove the presumption to be unsupported by facts are in the sole care, custody and control of the claiming party, you are entitled to conduct discovery and that means they must come up with the actual cancelled check, wire transfer receipt, wire transfer instructions etc. The would-be forecloser cannot block discovery by asserting the presumption arising from their own self-serving allegation of holder status.

In this case the presumption arising from the allegation that the would-be forecloser is a “holder” is defeated by mere denial because it is ONLY the would-be forecloser that has access to the the actual proof of payment and proof of loss. I remind you again that the debt is not the note and the note is not the mortgage. They are all separate issues.

This is becoming painfully obvious as reports are coming in from across the country indicating that courts at all levels and legislatures are under intense pressure to find a loophole through which the mega banks can escape the truth, to wit: that they are holding worthless paper and that the only transaction that ever actually occurred was the one between the investors and the borrowers without either  of those parties in interest being aware of the slight of hand pulled by the banks. The banks diverted the money invested by pension funds from the REMIC trusts into their own pockets. The banks diverted the documents that would have solidified the interest of the investors in those loans to themselves.

And let there be no mistake that the banks planned the whole thing out ahead of time. The only reason why MERS and other private label title databases were necessary was to hide the fact that the banks were trading the investments made by pension funds as if they were their own. Otherwise there would have been no reason to have anyone’s name on the note or mortgage other than the asset pool designated as a REMIC trust.

These exotic instruments are being tested by the marketplace and they are failing miserably. So the banks are throwing tens of billions of dollars to refinance the repurchase of the derivatives that were worthless in the first place. It’s worth it to them to retain the trillions of dollars they are claiming as assets that are unsupported by any actual monetary transactions. AND THAT is why in the final analysis, after they have beaten you to a pulp in court, if you are still standing, you get some amazing offers of settlement that actually are still fractions of a cent on the dollar.

Banking giants lead repo funding of securitized debt
http://www.housingwire.com/fastnews/2013/04/16/banking-giants-lead-repo-funding-securitized-debt

Banks Get Amnesty in Pieces: Reviews to Be Halted

CHECK OUT OUR DECEMBER SPECIAL!

What’s the Next Step? Consult with Neil Garfield

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editor’s Comment: Hat tip to Brent Bertrim. The banks  have sought amnesty in dozens of attempts in legislation, judicial decisions, and with law enforcement. The multistate settlement effectively stopped the criminal investigation. The other “settlements” have effectively stopped other administrative actions that should have revoked bank charters and dismembered the mega banks.

Now even the review process intended to reveal the monetary damage and theft by the banks is about to be stopped by yet another “settlement” for $10 Billion — an amount that is less than the interest earned in one month by the major bank players under current “bailout” deals with the Federal Reserve. This money will do nothing for most people but because it sounds like a lot of money, some are expressing happiness over it. The government just didn’t do its job on the most pressing problem in American economic history caused by criminal conduct.

The loss of income and wealth by the majority of homeowners is and will continue to be devastating to the families of this flagrant abuse of power and trust by the nation’s largest banks. Correcting the corruption of title records will take decades alone. And income and wealth disparity caused by bank theft will take the same amount of time except for those who fight and win, one case at a time.

This effectively leaves the homeowner out in the cold and it does damage to the investors who put up the money for bogus mortgage bonds. Bottom Line: It’s all on a case by case basis one battle at a time for homeowners who in many cases lack resources or have just moved on —- with the knowledge the viewpoint that that the system is rigged. So much for the shining city on the hill.

Settlement Expected on Past Abuses in Home Loans

Published:31-Dec’12 01:39 ET

By:Jessica Silver-Greenberg

Banking regulators are close to a $10 billion settlement with 14 banks that would end the government’s efforts to hold lenders responsible for foreclosure abuses like faulty paperwork and excessive fees that may have led to evictions, according to people with knowledge of the discussions.

Under the settlement, a significant amount of the money, $3.75 billion, would go to people who have already lost their homes, making it potentially more generous to former homeowners than a broad-reaching pact in February between state attorneys general and five large banks. That set aside $1.5 billion in cash relief for Americans.

Most of the relief in both agreements is meant for people who are struggling to stay in their homes and need the banks to reduce their payments or lower the amount of principal they owe.

The $10 billion pact would be the latest in a series of settlements that regulators and law enforcement officials have reached with banks to hold them accountable for their role in the 2008 financial crisis that sent the housing market into the deepest slump since the Great Depression . As of early 2012, four million Americans had been foreclosed upon since the beginning of 2007, and a huge amount of abandoned homes swamped many states, including California, Florida and Arizona.

Federal agencies like the Securities and Exchange Commission and the Justice Department are continuing to pursue the banks for their packaging and sale of troubled mortgage securities that imploded during the financial crisis.

Housing advocates were largely unaware of the latest rounds of secret talks, which have been occurring for roughly a month. But some have criticized the government for not dealing more harshly with bankers in light of their lax standards for making loans and packaging them as investments, as well as their problems with modifying troubled loans and processing foreclosures.

A deal could be reached by the end of the week between the 14 banks and the nation’s top banking regulators, led by the Office of the Comptroller of the Currency, four people with knowledge of the negotiations said. It was unclear how many current and former homeowners would receive money or when it would be distributed.

Told on Sunday night of the imminent settlement, Lynn Drysdale, a lawyer at Jacksonville Area Legal Aid and a former co-chairwoman of the National Association of Consumer Advocates, said: “It’s certainly a victory for consumers and could help entire neighborhoods. But the devil, as they say, is in the details, and for those people who have had to totally uproot their lives because of eviction it may still not be enough.”

In recent weeks within the upper echelons of the comptroller’s office, pressure was mounting to negotiate a banner settlement with the banks, according to people with knowledge of the matter. The reason was that some within the agency had started to realize that a mandatory review of millions of bank loans was not yielding meaningful examples of the banks’ wrongfully evicting homeowners who were current on their payments or making partial payments, according to the people.

Representative of banking regulators did not return calls for comment on Sunday.

The biggest action against the banks for foreclosure-related abuses has been the $26 billion settlement between the five largest mortgage servicers and the state attorneys general, Justice Department and the Department of Housing and Urban Development after allegations arose in 2010 that bank employees were churning daily through hundreds of documents used in foreclosure proceedings without properly reviewing them for accuracy.

The same banks in that settlement — JPMorgan Chase , Bank of America , Wells Fargo , Citigroup and Ally Financial — are included in the current negotiations.

Under the terms of the settlement being negotiated, $6 billion would come from banks to be used for relief for homeowners, including reducing their principal, helping them refinance and donating abandoned homes, the people said.

The proposed settlement would also halt a separate sweeping review of more than four million loan files that the comptroller’s office and the Federal Reserve required the banks undertake as part of a consent order in April 2011.

Under the terms of the order, the 14 banks had to hire independent consultants to pore through the loan records to determine whether the banks illegally charged fees, forced homeowners to take out costly insurance or miscalculated loan payment amounts. Consultants initially estimated that each loan would take about eight hours, at a cost of up to $250 an hour, to go through.

The costs of the reviews have ballooned, though, according to people with knowledge of the reviews, in part because each loan file is taking up to 20 hours to review. Since its inception, the reviews have cost the banks about $1.5 billion, according to those people.

Pressure to reach a settlement with the banks has been building, particularly within the Office of the Comptroller of the Currency, amid widespread frustration that the banks’ mandatory review of loan files was arduous and expensive, and would not yield promised relief to homeowners, according to five former and current banking regulators.

In private meetings with top bank executives, these people said, regulators have admitted that the reviews had gone awry. At one point this month, an official from the comptroller’s office said the agency had “miscalculated” the scope and requirements of the reviews, according to the people with knowledge of the negotiations.

When the settlement discussions heated up this month, some banking executives said they felt they would be vindicated by the regulators. These executives said that they had raised objections to the reviews early on, but those concerns were largely dismissed by regulatory officials, according to the people with knowledge of the negotiations.

Instead, officials from the comptroller’s office, these people said, have used the loan reviews as a negotiating tool, telling banks that they can either sign on to a large settlement or be forced to pay billions over several more years until the consultants finish the reviews.

When regulators approached the banks to broach a settlement this month, they met first with Wells Fargo and proposed that the banks pay $15 billion, according to the people familiar with the discussions. After negotiations, though, the regulators agreed to $10 billion.

All of the 14 banks are expected to sign on.

Monday is Last Day to File for Review and Damages Under Settlement Agreement

CHECK OUT OUR DECEMBER SPECIAL!

What’s the Next Step? Consult with Neil Garfield

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

I have written extensively about the OCC review process, the consent decrees and the settlement wherein you can file for a review of a wrongful foreclosure. Whether this includes foreclosures that are in litigation is doubtful. But if you have already been foreclosed and the “lender” used improper means to do it, the review process is something supposedly designed to give you monetary damages up to $125,000.

I stopped writing about it because the results have been largely unproductive. The good news is that the agreement does NOT preclude you from filing a common law or statutory wrongful foreclosure claim and associated claims like slander of title and quiet title.

The review process, like the judges sitting on the bench basically looks at the claim with a view that the foreclosure would have and should have been completed anyway, even if papers were forged, fabricated and so forth. THAT is because the assumption is still out there that the debt is real, the default is real, the note is valid and the mortgage was valid. Our strategy of Deny and Discover addresses exactly that point.

If you want to preserve your rights under the review process then you need to file by Monday. My suggestion is that lawyers assist clients with preparing the demand for review and specify that the client was not and never was in a financial transaction with the foreclosing entity nor any parties from whom they allege to have received an assignment. Thus the debt. default, note and mortgage were all faked.

It probably ought to be framed pretty much as an objection to claim, in which you make no affirmative allegations but simply deny that the homeowner ever received money from any of those entities. If you make the allegation that you DID receive money from someone else you are creating a burden of proof for the homeowner that cannot be easily met without discovery. The demand in the review should be to produce the wire transfer receipt, wire transfer instructions, cancelled check or any other actual proof of the movement of money in the name of the supposed “lender” or “assignor” or endorser.

The foreclosing entity is going to respond with some version of the property would have been foreclosed anyway, they did act improperly and they offer a couple of thousand dollars for their “error.” If you don’t intend to take them on, then you certainly should file for review because there is a relatively high probability of getting a few thousand dollars — but nothing like $125,000 unless you are successful at showing that there was no right to foreclose because of standing or lack of perfecting the mortgage lien.

Accepting the money doesn’t waive your rights and could pay for a retainer of a lawyer to start wrongful foreclosure proceedings seeking either monetary damages, getting title back in the name of the homeowner or other remedies. But people are getting tired of this entire mess and I don’t blame them for just walking away. At some point it is a personal more than a financial decision.

Yet it irks me that that these bankers sucked something like 1/3 of the world’s wealth out of the system and brought about calamitous results both here and abroad. It bothers me that there is no prosecution, receivership and restitution. So I would like to see more people pursue their rights judicially and administratively.

Follow

Get every new post delivered to your Inbox.

Join 4,514 other followers

%d bloggers like this: