The way the media tells it, there are million of bargains out there that will be the house of your dreams and will make you rich. If it seems too good to be true, that would because it IS too good to be true. As a backdrop to this discussion remember that there are over 2 million homes that could be on the market but for the fact that the “owners” don’t want to flood the market. 2 million homes means there are too many homes for any foreseeable demand from buyers. That means that bargain prices are simply early predictors of where the market is heading. Those statistics, taken from over 500,000 homes reported and sampled, shows that the average “discount” is 15%-20%. In a normal market the discount would be real and relatively stable. In this market where we have 2 million homes already in the pipeline and around 3-4 million MORE homes coming it is not merely possible but rather likely that prices will continue to be depressed.

Add to that the credit crunch and the current environment where banks are reinstating underwriting standards where they verify the appraisal, verify your ability to pay, verify your history, verify other conditions affecting the value or future value of the home, and you have a seller’s glut with very little demand. Analysts from companies that maintain divisions employing economists now are estimating that it will take 6-12 years to clean up this mess. I think these estimates will change monthly until they give recognition to the fact that 10 years is about the best we could ever hope for, 30 years in about the worst case, and that the probable time will be something close to 20 years. That is 2 decades of confused downward price pressure, title errors, defects and defects, and figuring out how to undo the the chaos created by Wall Street.

That said, there are many reasons why you SHOULD buy a foreclosed home. First you SHOULD buy a home if you want to live in it — but beware that most people THINK they will live there a long time but frequently move within 3-5 years due to unforeseen circumstances. Financially, the likelihood that you will financially benefit from such circumstances is extremely low. Renting the same house or one just like it will probably cost no more than 60% of the monthly payment you would have even if you put 20% down payment. And you don’t get stuck trying to sell a house in a market that will basically be unchanged or worse than it is now.

Second you should buy a home on a short sale or otherwise, if you have capital and a good credit score and want to do something good. Let’s assume the house was originally bought for $450,000 and the buyer made a 20% down payment. So the buyer paid $90,000 PLUS all the improvements that are made, especially to a new developer tract house. So the sake of our example, the buyer now finds himself with a house that is currently “appraised” at $275,000. The “lender” refuses (actually lacks the authority because they are not really the lender) to modify the mortgage with a principal reduction, the terms are resetting so that the buyer’s payments are about to triple or have already done so. Assume they had no problem making the original teaser payments and could even pay more but not the absurd amounts called for under his current mortgage or deed of trust.

Let’s further assume the foreclosure has already taken place and the buyer is still in the home, awaiting eviction. With a little help from you and this post you get the homeowner to fight the eviction and start a confrontation where the homeowner is demanding discovery and is alleging a fraudulent foreclosure. Using average “discounts” you buy the house for $55,000 less than appraisal from the “bank” (actually a separate entity with dubious authority to have taken or retained title to the property since neither the forecloser nor the REO (Real Estate Owned) entity had one dime in funding the mortgage). So you have purchased the home for $220,000. Don’t get all excited. The original $450,000 price was false and even fraudulent. The next time that house sees $450,000 will be somewhere around the year 2040.

So now you make a down payment of 20% or $44,000. You have $44,000 into the deal plus whatever assistance you have the original buyer/homeowner. Your mortgage is $176,000. Using an amortization of 15 years fixed rate for 5%, your payments for principal, interest, taxes, utilities and insurance are probably going to be around $1250-$1350 per month. You give the original buyer/homeowner a lease requiring payments of $1600-$1700 per month plus a CPI (Consumer price index no less than 2% with no maximum) AND a pass through of increases in utilities, taxes etc. The lease is at least 5 years long. If you don’t have a homeowner willing to lease for 5 years, you are going to have trouble.

The lease is a net lease requiring the tenant to maintain the house. It renews automatically for additional terms of 5 years unless canceled with at no more than 9 months notice and no less than 6 months notice. Beginning with the end of the third year, the homeowners may have a two year option to buy the house at either the price you paid for the house, plus CPI or the current fair market value, whichever is higher. This option is good only in years 4 and 5.

You start negotiating with the “bank” or the REO with a demand for proof of title. See how-to-negotiate-a-modification

They will offer you indemnification, hold harmless and release. None of that means anything because most of them have either gone out of business or are about to go out of business. You ask “Who is the actual creditor here?” That will make them uncomfortable. You get rough and tough. And then you soften a little and use the procedure set forth below. Meanwhile the original buyer/homeowner starts threatening them because they obviously don’t have physical possession of the note or they have no rightful claim to ownership of it. The original buyer/homeowner makes demand and maybe even files suit demanding to know who the creditor is or was. This will soften up the game of the bank/REO.

Now let’s talk about how you are going to do this without being in the same mess that the banks, homeowners, title companies and others are in.

The attributes of a good solid purchase of a foreclosed home are:

1. Warranty Deed
2. Title Policy from large company without any exclusion relating to securitization of the prior owner’s loan. It would be best if the policy specifically mentioned securitization and stated affirmatively that there is no exception relating thereto.
3. Friendly Quiet Title Action, in which the REO, the forecloser and all other known parties, at their expense bring a quiet title action naming the former buyer/homeowner and you, and naming John Does 1-1000 being the holder of mortgage backed securities who could have or who could claim an interest in the mortgage being extinguished by this deal. As long as the relief sought is ratification of the above deal and ordering the clerk of the County to remove the old mortgage and accept the new filings without any encumbrance other than your new mortgage and without any owner other than you.
4. ONLY A FINAL JUDGMENT EXECUTED BY A JUDGE WILL GIVE YOU CLEAR TITLE. WAIT UNTIL THE TIME FOR APPEAL HAS RUN. INCLUDE A PROVISION WHEREIN YOU CAN RESCIND IF SOMEONE MAKES A CLAIM THAT THIS TRANSACTION WAS A FRAUD ON THE COURT WHETHER IT HAS MERIT OR NOT. IF SUCH A CLAIM IS MADE THEN AT YOUR OPTION YOU BECOME THE SUCCESSOR TO THE “BANK”  AND REO AND OTHER FORECLOSURE OR TRUSTEE SERVICES OR, AAT YOUR OPTION YOU CAN RESCIND THE TRANSACTION RECEIVING BACK ALL MONEY RECEIVED BY THE SELLING PARTIES TO THE TRANSACTION IN WHICH YOU PURCHASED THE PROPERTY.
   
5. Indemnification from the forecloser
6. Indemnification from the REO
7. Hold Harmless from the Forecloser
8. Hold Harmless from the REO
9. General release from original buyer/homeowner
10. Acknowledgment from your new lender that they were advised of the above and they agree that they will not make any claims against you for misrepresentation or misstatement based upon the securitization of the loan.

The Obama adminstration announced this morning an amazing program to assist in the processing of short sales. The article can be read here:

http://online.wsj.com/article/SB125963239592170665.html?mod=WSJ_hps_sections_news#articleTabs%3Dcomments

Short Sales occur when the proceeds of the sale of real estate to pay off the mortgage, accrued interest, penalties and customary closing costs including the Realtor® fees. I began working in short sales in 2004 and have assisted dozens of agents in the intervening years. Negotiating short sales vary in difficulty from lender to lender. Some provide open communication and allow preliminary documentation to be added to a seller’s file in advance of a contract to sell. Others will not allow the seller or Realtor® to broach the subject without a bona fide contract in hand. This is also a fluid market. Procedures and criteria that resulted in an approved short sale several months ago, may not meet the lender’s requirements today.

In a nutshell, the Obama administration is proposing to soften the blow to all parties involved in the short sale. Homeowners may receive up to $1500 if the sell their home with a short sale. Mortgage serving companies will receive $1000 from the government if they approve a short sale. Second lienholders, who are often problematic in the short sale process will receive up to $3000 if they approve a short sale. Investors who hold the first mortgage will receive $1000.

 All in all the feds are proposing to contribute $6500 per short sale to ease the situation. Is this a bad thing? The knee jerk reaction from many will be why compensate the seller $1500? In many cases, certainly those where the home was a primary residence, the home owner is in an awful predicament. If the traditional short sale is concluded, the seller walks from the closing table with nothing. Ideally the $1500 will go towards moving expenses so that personal property is not simply abandoned which would continue the downward spiral.Looking at the real estate market as a whole, this is good thing to stabilize the market. I can report from first hand experience, that short sales will net greater proceeds than homes that are foreclosed and then sold from the lienholder’s REO portfolios. In every case the differential was greater than $6500.  As long as this crisis continues, America is far better off absorbing short sale losses than the far greater damage caused to surrounding properties due to lowered values of foreclosed homes.

By Jeffrey Hauser

What is a trust deed, you ask? Well a regular deed is the document that transfers ownership of real estate. In contrast, trust deeds are private mortgage loans secured by real estate. So the property is held as collateral. Then basically you become a private lender when you choose to invest in trust deeds. In essence, you are the bank and are lending to a qualified borrower. Eventually, when the loan is paid off, the trust deed is satisfied and title is returned to the borrower. You make money off the interest charged on the loan or trust deed, but more about that later.

Therefore we are talking about the buying of land or property and allowing the lender to keep temporary ownership of the title to the real estate until the conditions of the mortgage or loan are met. It is an investment device employed by “hard money” lenders who are actually mortgage brokers, helping people to buy real estate, who can’t go to a traditional bank for “soft money.” This could be for a variety of reasons including the fact they have poor credit, a new job, other loans, a bad debt or any other factor the bank deems problematic. So they use one of these other lending businesses, but they will only typically lend up to 65% of the appraised value, (LTV or loan to value) and for a short term, say 1 to 3 years.

Let me paint a simple scenario. Fred wants to buy a piece of property in his town. It is worth $100,000. He only has a few weeks to close the deal and needs the money quickly. The local bank told him it could take a month to close and also, because of a recent divorce, his credit is questionable. Therefore he goes to ABC Funding who is a hard-money lender. They tell him they will do a fast appraisal, and background check. They next day they explain they can offer him $60,000 LTV for 18 months at 12% financing, plus 4% of the loan amount for points and closing costs. They also want a personal letter of guarantee to further secure the loan. In other words, if he fails to pay, they can sue him personally. In addition there are large fees for late payments and if he misses even one payment, they have the right to foreclose on the property and sell it at auction. Wow.

So why would Fred agree to these tough terms? Because he only needs the loan for a year before he can remodel the strip mall shopping center and then begin to make good money on the rents. Even paying back the $60,000 plus $2400 in fees (4%) and another $7200 for interest (12%) for the year, he’s way ahead once the mall pays rent. He knows no bank will touch him so he says yes right away. He signs the paperwork, a trust deed goes to the lender and Fred gets the funding. Now this is where the investing comes in. Where do you think that ABC Funding gets their money to lend to Fred? Well, it comes from private lenders.

That could be you, me, a local businessperson, or any other investor that wants to make 12%. That’s correct; the lender gets the whole interest payment from Fred, every month. ABC made its profit from the points or fees that are part of the 4% charged up front. So the private investor, say Harry, gets to hold the trust deed in exchange for the $60,000 they gave to ABC, which was passed on to Fred. It’s a pretty nice deal for everyone, right? But I see you shaking your head. What if Fred doesn’t make the payment, what then? Fine, let’s take a look at that possibility.

First, Fred gets a warning he’s 10 days late. Then he gets another warning at the 30 day mark. He is told that, if he doesn’t make the payment due within 24 hours, the property goes into foreclosure and will be sold at auction. In this worst-case situation and Fred fails to pay, the property is now owned by the lender. That would be Harry, the private investor, who is now holding the trust deed. Harry has a commercial broker sell the property at a substantial discount, say 20% for a quick sale. Even at that, because the loan was only for 60% of the appraised value, there is room to spare. The property goes for $80,000, less commissions and Harry gets $75,000. Yet he only lent $60,000 for a year and now receives a $15,000 profit or 25% return on his investment. That’s even better than the 12% Harry was getting to begin with.

While no one wants this to happen and it usually doesn’t, this explains what can happen in a bad case. In the worst case, the property never sells and Harry, the investor loses everything. That is almost impossible because of the greed factor. Someone will snatch up a property that is severely undervalued every time. Under normal circumstances, all the payments are made, the loan repaid and the trust deed returned to the borrower. Then Harry gets to loan out his money all over again. Do you think you understand all that now? If not, please reread the aforementioned. And yes, this is a simplified example, but the concept is solid regardless of the amounts and percentages involved.

Finally, you may be wondering, why am I telling you all this? And no, I’m not a hard-money lender. Instead, I’m doing this as a public service because I realize that 12% with almost no risk is a better return than the stock market, bonds, and money market accounts. Many annuities promise only 6%. But if you have $50,000, their normal minimum, or more, you may want to consider trust deed investing. Remember it’s secured by the property and you get a monthly check. You can even use your IRA money from a self-directed LLC account. And yes, at that rate (12%), your money will double every six years. It sure beats worrying about the market from day to day like I used to do. I say that because I recently became a trust deed investor after losing tens of thousands in the market. Sound familiar? And that’s why this is the last thing your stockbroker will ever discuss.

Jeffrey Hauser was a sales consultant for the Bell System Yellow Pages for nearly 25 years.
He graduated from Pratt Institute with a BFA in Advertising and has a Master’s Degree in teaching. He had his own advertising agency in Scottsdale, Arizona and ran a consulting and design firm, ABC Advertising. He authored a book about his directory years, “Inside the Yellow Pages” which can be seen at his website, http://www.poweradbook.com and he is currently the Marketing Director for http://www.thenurseschoice.com, a Health Information site and [http://www.menuelephant.com] which posts restaurant menus on the “site you’ll never forget.”

Article Source: http://EzineArticles.com/?expert=Jeffrey_Hauser
http://EzineArticles.com/?Using-Trust-Deeds-to-Invest-for-High-Returns&id=710383

Seller carry back trust deeds are a financial instrument used when property owners provide financing to buyers. Trust deeds secure real estate until private mortgage financing is paid in full. Sellers can carry all or a portion of real estate financing. Seller carry back is a good alternative for buyers unable to obtain a conventional bank loan.

Three parties are involved with seller carry back trust deeds and include the Trustor, Trustee and Beneficiary. Trustor refers to the individual or entity selling the real estate. The Beneficiary is the individual who receives income from the mortgage note.

Beneficiaries can be a private seller or lending institution. The Trustee refers to the person who holds legal title to the property. Dependent upon circumstances, the Trustor can also be the Beneficiary and / or Trustee.

Carry back trust deeds are secured with promissory notes. The beneficiary manages the note to ensure borrowers adhere to payment obligations. If borrowers default on mortgage notes, beneficiaries can commence with foreclosure proceedings.

When seller carry back mortgages are secured through private financing, trust deeds must be filed through the court system to document property liens. With seller carry back financing, trust deeds are used in lieu of conventional home mortgage loans. Property is used as collateral to secure the deed. Upon fulfillment of the financial contract, the Trustor transfers legal title to the borrower.

In most cases, sellercarryback financing is utilized by sellers who own real estate outright. When property owners hold a mortgage they can place their property at risk for foreclosure if borrowers default on the agreement.

Sellers with sufficient accrued equity sometimes engage in private mortgage financing, as do those in pre foreclosure. Borrowers unable to afford mortgage payments might be able to locate a buyer willing to take over payments. Anyone considering this financing alternative should consult with a real estate attorney.

Seller carry back trust deeds can be sold to another real estate investor or private buyer. Selling deeds of trust does not alter agreement terms between the Trustor and borrower. Trustor’s must notify borrowers in writing when trust deeds are transferred to another party.

Buying and selling deed of trust can provide solutions to all parties involved. Sellers can attract buyers who are eager to purchase real estate but unable to obtain bank financing. Buyers can obtain tax benefits of home ownership while working to rebuild or establish credit.

We invite you to learn more about seller carry back trust deeds, along with other types of real estate financing techniques and investment opportunities in our investing and money management article library.

If you are seeking a buyer for seller carry back trust deeds, submit information via the “Real Estate Notes and Land Contracts” form via my website at www.SimonVolkov.com. As a real estate investor, I specialize in buying and selling cash flow and real estate notes, as well as distressed properties including foreclosure, short sale, bank owned and probate.

Real estate notes and trust deeds have long been a desirable investment vehicle for a small group of investors and hard money lenders that understand them.   Investing in real estate notes and trust deeds myself, I have seen, first hand, what a great investment vehicle they are to achieve a nice passive income.  Outside of trust deed investing, I have been selling commercial real estate for the past nine years and when I ask my investors if they have ever heard about or invested in trust deeds, 99% of them say no.  Their reason is because they heard they were too risky.  I can tell you that after investing in 20+ notes and trust deeds over the past six years, I have NEVER lost money and the main reason is because I pay attention to the most important ratio to look at (see below for an explanation) before purchasing a trust deed.  If you consider the following tip when evaluating trust deed or note investments, you will feel much more confident before buying:

The main thing you should be focusing on is the amount of built-up equity ($) the borrower has in the real estate.  This is achieved by ordering an appraisal from a certified appraiser to come to a current market value for the property.  The appraiser should use at least 3-5 market sales comparables that have closed within the past 3 months to further support their value assessment.  After you get your appraisal I recommend logging onto Zillow or Trulia where you can do your own research and further support the value you received from the appraiser.  If you don’t want to pay for a full appraisal, many investors are comfortable using an Automated Valuation Model (AVM) as found at Electronic Appraiser to get an instant value assessment, which includes recent sales.  Once you are comfortable with the current market value of the property, now it is time to calculate the most important ratio to look at when buying a real estate note, the Loan to Value (LTV) ratio.

Lets say that you receive the current appraisal on the property and it tells you that the property is worth $100,000.  Assuming you agree with this valuation, the next step is to make sure that their are no other liens encumbering the property by ordering a preliminary title report from a nationally recognizable title insurance company.  In this case, lets say that their is only one deed of trust for the property for $50,000, which is the loan you are looking to purchase.  The LTV for this trust deed =$50,000 (amount of the 1st deed of trust) divided by $100,000 (the current market value of the property), which is 50%.  The lower the LTV, the safer your investment is.  Why is that?   Because the lower the amount of the total loans against the property, the more equity (cushion for you) the borrower has in the property.  This concept is the most important one to grasp before buying a note or trust deed.

While the buyer’s credit is important to look at when buying a trust deed, you have to keep in mind that there is a reason this borrower has resorted to the secondary market to get a loan on their property.  Most of the borrowers you will be dealing with will have less than perfect credit scores, which makes the LTV concept above, that much more important.   Just remember that the lower the Loan to Value (LTV) on the investment opportunity, the more equity protection you have in case of borrower default, thus reducing your risk.  If it is your first note or trust deed purchase, I would highly advise you to purchase a 1st Trust Deed at 60% or less LTV.

My name is Eric Wohl and I am the founder of NoteFlo Inc. We are a new website set to launch in early 2010 that will revolutionize the way people buy, sell, and learn about notes and trust deeds.  Please visit www.NoteFlo.com for more information and to pre-register to receive blogs and launch updates.  Thank you!

While we are clearly seeing the trend of increased sales of new and existing homes in Western Carolina continue for the third consecutive month, foreclosure continues to cloud the outlook for a complete market recovery.  More than 1155 property owners in Buncombe County have found themselves facing foreclosure. This is a 32% increase over 2008. More than 373 property owners have lost their real estate to foreclosure year to date. This is a staggering 63% increase.

As the Associated Press reported last week, many homeowners with good credit are facing foreclosure due to job loss or job reduction. The article contrasts this with the early days of the economic crisis when sub-prime loans were the alledged root of the growing problem. The AP article points out that job growth is the only long term cure.

I agree with the writer that job growth is key element to a bonafide recovery. I disagree that the root of the problem is or was sub-prime loans. Yes, risky loans contributed to the problem. I am convinced, based on my work with distressed property owners, that the lack of healthcare played as big or bigger roll in the meltdown. Only job creation and affordable healthcare will solve the problem.

“These cases encourage debtors and other parties to defensively use the mortgage securitization servicing system to prohibit servicers and other non-lending parties from enforcing rights under a mortgage. This trend, if it continues, may have significant impacts for consumer-debtor lawyers, as well as law firms that enforce mortgages and participated in mortgage loan securitization.”

“A note and mortgage may go through multiple transfers. Documentation of these transfers is imperfect, and many assignments were not recorded at the local real estate filing offices.”

“The creation of Mortgage Electronic Registration Systems, Inc. (“MERS”) further complicated matters.”

“For instance, if a debtor raises these or similar defenses, it may only be necessary for the servicers and the mortgagees to complete and file the proper assignment documents.“

The fabricated fraudulant assignment.

4closureFraud
http://4closurefraud.wordpress.com/

Indymac Bank F.S.B. v Yano-Horoski

“Upon the Court’s own motion, it is

ORDERED that the Adjustable Rate Note in the amount of $ 292,500.00 dated August 4, 2004 made by Diana J. Yano-Horoski in favor of IndyMac Bank F.S.B. shall be and the same is hereby cancelled, voided, avoided, nullified, set aside and is of no further force and effect; and it is further

ORDERED that the Mortgage in the amount of $ 292,500.00 which secures said Adjustable Rate Note given by Diana J. Yano-Horoski to Mortgage Electronic Registration Systems Inc. As Nominee For IndyMac Bank F.S.B. dated August 4, 2004 and recorded with the Clerk of Suffolk County on August 16, 2004 in Liber 20826 of Mortgages as Page 285, as assigned to IndyMac Bank F.S.B. by Assignment recorded with the Clerk of Suffolk County in Liber 21273 of Mortgages at Page 808 shall be and the same is hereby vacated, cancelled, released and discharged of record; and it is further

ORDERED that the Plaintiff, its successors and assigns are hereby barred, prohibited and foreclosed from attempting, in any manner, directly or indirectly, to enforce any provision of the [*7]aforesaid Adjustable Rate Note and Mortgage or any portion thereof as against Defendant, her heirs or successors; and it is further

ORDERED that the Judgment of Foreclosure & Sale granted under this index number on January 12, 2009 and entered in the Office of the Clerk of Suffolk County on January 23, 2009 shall be and the same is hereby vacated and set aside; and it is further

ORDERED that the Notice of Pendency filed with the Clerk of Suffolk County on July 27, 2005 under sequence no. 172456, which was extended by Order dated September 2, 2008 shall be and the same is hereby cancelled, vacated and set aside; and it is further

ORDERED that the Notice of Pendency filed with the Clerk of Suffolk County on August 29, 2008 under sequence no. 199616, shall be and the same is hereby cancelled, vacated and set aside; and it is further

ORDERED that the Clerk of Suffolk County shall cause a copy of this Order & Judgment to be filed in the Land Records so as to effectuate of record each and every one of the provisions hereinabove set forth with respect to cancellation of the instruments and items of record; and it is further

ORDERED that Plaintiff shall pay to the Clerk of Suffolk County, within ten (10) days from the date of entry hereof, any and all fees and costs required to effect cancellation of record of the Mortgage, Notices of Pendency and any other fees so levied; and it is further

ORDERED that within ten (10) days of the date of entry hereof, Plaintiff’s counsel shall serve a copy of this Order upon the Clerk of Suffolk County and the Defendant.

This shall constitute the Decision, Judgment and Order of this Court.”

2009 NY Slip Op 52333(U)
Decided on November 19, 2009
Supreme Court, Suffolk County
Spinner, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on November 19, 2009

Supreme Court, Suffolk County

Indymac Bank F.S.B., Plaintiff

against

Diana Yano-Horoski, Wells Fargo Bank Minnesota National Association as Trustee for Soundview Home Equity Loan Trust 2001-1 and Kimberly Horoski, Defendants.

2005-17926

Steven J. Baum P.C.

Attorney for Plaintiff

P.O. Box 1291

Buffalo, New York 14240

Diana Yano-Horoski

Defendant Pro Se

8 Oakland Street

East Patchogue, New York 11772-5767

Jeffrey Arlen Spinner, J.

This is an action wherein the Plaintiff claims foreclosure of a mortgage dated August 4, 2004 in the original principal amount of $ 292,500.00 recorded with the Clerk of Suffolk County, New York in Liber 20826 of Mortgages at Page 285. The mortgage secures an adjustable rate note of the same amount with an initial interest rate of 10.375%. The mortgage encumbers real property commonly known as 8 Oakland Street, East Patchogue, Town of Brookhaven, New York and described as District 0200 Section 979.50 Block 05.00 Lot 001.000 on the Tax Map of Suffolk County. Plaintiff commenced this action by filing a Summons, Verified Complaint and Notice of Pendency on July 27, 2005. The Notice of Pendency was extended by Order dated April 28, 2008 and a Judgment of Foreclosure & Sale was granted on January 12, 2009.

Thereafter and in accordance with the Laws of 2008, Ch. 472, Sec. 3-a and in view of the fact that the loan at issue was deemed to be “sub-prime” or “high cost” in nature, Defendant seasonably requested that the Court convene a settlement conference. That request was granted and a conference was commenced on February 24, 2009 which was continued five times in a series of unsuccessful attempts by the Court to obtain meaningful cooperation from Plaintiff. In view of Plaintiff’s intransigence in its continuing failure and refusal to cooperate, both with the Court and with Defendant’s multiple and reasonable requests, the Court directed that Plaintiff produce an officer of the bank at the adjourned conference scheduled for September 22, 2009.

At the conference held on September 22, 2009, Karen Dickinson, Regional Manager of [*2]Loss Mitigation for IndyMac Mortgage Services, division of OneWest Bank F.S.B. (“IndyMac”) appeared on behalf of Plaintiff. IndyMac purports to be the servicer of the loan for the benefit of Deutsche Bank who, it is claimed, is the owner and holder of the note and mortgage (though the record holder is IndyMac Bank F.S.B., an entity which no longer is in existence). At that conference, it was celeritously made clear to the Court that Plaintiff had no good faith intention whatsoever of resolving this matter in any manner other than a complete and forcible devolution of title from Defendant. Although IndyMac had prepared a two page document entitled “Mediation Yano-Horoski” which contained what purported to be a financial analysis, Ms. Dickinson’s affirmative statements made it abundantly clear that no form of mediation, resolution or settlement would be acceptable to Plaintiff. IndyMac asserts the total amount due it to be in excess of $ 525,000.00 and freely concedes that the property securing the loan is worth no more than $ 275,000.00. Although Ms. Dickinson insisted that Ms. Yano-Horoski had been offered a “Forbearance Agreement” in the recent past upon which she quickly defaulted, it was only after substantial prodding by the Court that Ms. Dickinson conceded, with great reluctance, that it had not been sent to Defendant until after its stated first payment due date and hence, Defendant could not have consummated it under any circumstances (Defendant, through Plaintiff’s duplicity, found herself to be in the unique and uncomfortable position of being placed in default of the “agreement” even before she had received it). Plaintiff flatly rejected an offer by Plaintiff’s daughter to purchase the house for its fair market value (a so-called “short sale”) with third party financing. Plaintiff refused to consider a loan modification utilizing any more than 25% of the income of Plaintiff’s husband and daughter (both of whom reside in the premises with her), the excuse being that “We can’t control what non-obligors do with their money” (the logical follow up to this statement is how does the bank control what the obligor does with her money?). The Court found IndyMac’s position to be deeply troubling, especially since a plethora of sub-prime loans in this County’s Foreclosure Conference Part have been successfully modified with the lender’s reliance upon the income of non-obligors who reside in the premises under foreclosure. The Plaintiff also summarily rejected an offer by both Plaintiff’s husband and daughter to voluntarily obligate themselves for payment upon the full indebtedness, thus committing their individual incomes expressly to the purpose of a loan modification. It should be noted here that Defendant did not even request any waiver or “forgiveness” of the indebtedness aside from some tinkering with the interest rate, just a modification of terms so as to enable her to repay the same. It was evident from Ms. Dickinson’s opprobrious demeanor and condescending attitude that no proffer by Defendant (short of consent to foreclosure and ejectment of Defendant and her family) would be acceptable to Plaintiff. Even a final and desperate offer of a deed in lieu of foreclosure was met with bland equivocation. In short, each and every proposal by Defendant, no matter how reasonable, was soundly rebuffed by Plaintiff. Viewed objectively, it is apparent that Plaintiff’s conduct in this matter falls within the definitions set forth in 22 NYCRR § 130-1.1( c)(2), which might well warrant the imposition of monetary sanctions.

On the Court’s own motion, a hearing was held on November 18, 2009 in order to explore the issues herein. At the hearing, Ms. Dickinson appeared as well as Mr. Horoski. IndyMac claimed a balance due, as of September 22, 2009 of $ 527,437.73 which included an escrow overdraft of $ 46,627.88 for taxes advanced since the date of default but did not include attorney’s fees and costs.. Plaintiff was unable to tell the Court the amount of the principal [*3]balance owed. Mr. Horoski advised the Court that according to two letters received from Plaintiff, the principal balance was said to be $ 285,381.70 as of February 9, 2009 and $ 283,992.48 as of August 10, 2009. Plaintiff stated was that Defendant must have made payments though it was conceded that in fact no payment had been made.Plaintiff insisted that it had remained in regular contact with Defendant in an effort to reach an amicable resolution, that it had extended two modification offers to Defendant which she did not accept and further, that due to her financial status she was not qualified for any modification, even under the Federal HAMP guidelines. Plaintiff denied that it had “singled out” Defendants, simply stating that her status was such that she fell outside applicable guidelines. All of these assertions were disputed by Defendant.

That having been said, the Court is greatly disturbed by Plaintiff’s assertions of the amount claimed to be due from Defendant. The Referee’s Report dated June 30, 2008, which has its genesis in a sworn affidavit by a representative of Plaintiff (presumably one with knowledge of the account), reflects a total amount due and owing of $ 392,983.42. The principal balance is reported to be $ 290,687.85 with interest computed at the rates of 10.375% from November 1, 2005 through August 31, 2006 ($ 25,118.62), 12.50% from September 1, 2006 to February 28, 2007 ($ 18,018.66), 12.375% from March 1, 2007 to March 31, 2008 ($ 39,126.39) and 11.375% from April 1, 2008 to June 24, 2008 ($ 7,700.24) totalling $ 89,963.91. Plaintiff also claims $ 20.00 in non-sufficient funds charges, $ 295.00 in property inspection fees and $ 12,016.66 for tax and insurance advances. The Judgment of Foreclosure & Sale dated January 12, 2009 was granted in the amount of $ 392,983.42 with interest at the contract rate from June 24, 2008 through January 12, 2009 and at the statutory rate thereafter plus attorney’s fees of $ 2,300.00 and a bill of costs in the amount of $ 1,705.00. Even computing the accrual of pre-judgment interest of $ 18,299.18 (using Plaintiff’s per diem rate in the Referee’s Report) together with post-judgment interest at a statutory 9% through November 19, 2009 (an additional $ 31,740.90), the application of simple addition yields a total amount due of $ 447,028.50. This figure is $ 80,409.23 less than the $ 527,437.73 asserted by Plaintiff to be due and owing from Defendant. The Court is astounded that Plaintiff now claims to be owed an escrow advance amount of $ 46,627.88 when, under oath, its officer swore that as of June 24, 2008 that amount was actually $ 34,611.22 less. Moreover, it now appears that the elusive principal balance is either $ 290,687.85, $ 285,381.70 or $ 283,992.48.

It is the province and indeed the obligation of the trial court to assess and to determine issues regarding credibility, Morgan v. McCaffrey 14 AD3d 670 (2nd Dept. 2005). In the matter before the Court, the pendulum of credibility swings heavily in favor of Defendant. When the conduct of Plaintiff in this proceeding is viewed in its entirety, it compels the Court to invoke the ancient and venerable principle of “Falsus in uno, falsus in omni” (Latin; “false in one, false in all”) upon Defendant which, after review, is wholly appropriate in the context presented, Deering v. Metcalf 74 NY 501 (1878). Regrettably, the Court has been unable to find even so much as a scintilla of good faith on the part of Plaintiff. Plaintiff comes before this Court with unclean hands yet has the insufferable temerity to demand equitable relief against Defendant.

The Court, over the course of some six substantive appearances in seven months, has been afforded more than ample opportunity to assess the demeanor, credibility and general state [*4]of relevant affairs of Defendant and Plaintiff. Although not actually relevant to the disposition of this matter, the Court is constrained to note that Defendant is afflicted with multiple health problems which outwardly manifest in her experiencing great difficulty in ambulation, necessitating the use of mechanical supports. Moreover, Defendant’s husband, Mr. Gregory Horoski, suffers from a myriad of serious medical conditions which greatly impede most aspects of his daily existence. Nonetheless, both of these persons, together with their adult daughter who resides with them and who is substantially and gainfully employed, receive income which they are more than willing to commit, in good faith, toward repayment of the debt to Plaintiff and indeed, despite their physical challenges, they have appeared at each and every scheduled conference before this Court. At each appearance, they have assiduously attempted to resolve this controversy in an amicable fashion, only to be callously and arbitrarily turned away by Plaintiff. This has been so even in spite of the Court’s continuing albeit futile endeavors at brokering a settlement.

As a relevant aside, the scenario presented here raises the specter of a much greater social problem, that of housing those persons whose homes are foreclosed and who are thereafter dispossessed. It is certainly no secret that Suffolk County is in the yawning abyss of a deep mortgage and housing crisis with foreclosure filings at a record high rate and a corresponding paucity of emergency housing. While foreclosure and its attendant eviction are clearly the inevitable (and in some cases, proper) result in a number of these situations, the Court is persuaded that this need not be the case here. In this matter, Defendant is plainly willing to make arrangements for repayment and both her husband and daughter are likewise willing to allocate their respective incomes in order to reach the same end. Were Plaintiff amenable, she would presumably continue to maintain the property’s physical plant, pay taxes thereon and the property would retain or perhaps increase its market value. Plaintiff would receive a regular income stream, albeit with a reduced rate of interest and without sustaining a loss of several hundred thousand dollars. In addition, no neighborhood blight would occur from the boarding of the property after foreclosure which would, in turn, avert problems of litter, dumping, vagrancy and vandalism as well as a corresponding decline in the property values in the immediate area. In short, a loan modification would result in a proverbial “win-win” for all parties involved. To do otherwise would result in virtually certain undomiciled status for two physically unhealthy persons and their daughter, leading to an additional level of problems, both for them and for society.

Since an action claiming foreclosure of a mortgage is one sounding in equity, Jamaica Savings Bank v. M.S. Investing Co. 274 NY 215 (1937), the very commencement of the action by Plaintiff invokes the Court’s equity jurisdiction. While it must be noted that the formal distinctions between an action at law and a suit in equity have long since been abolished in New York (see CPLR 103, Field Code Of 1848 §§ 2, 3, 4, 69), the Supreme Court nevertheless has equity jurisdiction and distinct rules regarding equity are still extant, Carroll v. Bullock 207 NY 567, 101 NE 438 (1913). Speaking generally and broadly, it is settled law that “Stability of contract obligations must not be undermined by judicial sympathy…” Graf v. Hope Building Corporation 254 NY 1 (1930). However, it is true with equal force and effect that equity must not and cannot slavishly and blindly follow the law, Hedges v. Dixon County 150 US 182, 192 (1893). Moreover, as succinctly decreed by our Court of Appeals in the matter of Noyes v. [*5]Anderson 124 NY 175 (1890) “A party having a legal right shall not be permitted to avail himself of it for the purposes of injustice or oppression…” 124 NY at 179.

In the matter of Eastman Kodak Co. v. Schwartz 133 NYS2d 908 (Sup. Ct., New York County, 1954), Special Term stated that “The maxim of “clean hands” fundamentally was conceived in equity jurisprudence to refuse to lend its aid in any manner to one seeking its active interposition who has been guilty of unlawful, unconscionable or inequitable conduct in the matter with relation to which he seeks relief.” 133 NYS2d at 925, citing First Trust & Savings Bank v. Iowa-Wisconsin Bridge Co. 98 F 2d 416 (8th Cir. 1938), cert. denied 305 US 650, 59 S. Ct. 243, 83 L. Ed. 240 (1938), reh. denied 305 US 676, 59 S Ct. 356 83 L. Ed. 437 (1939); General Excavator Co. v. Keystone Driller Co. 65 F 2d 39 (6th Cir. 1933), cert. granted 289 US 721, 53 S. Ct. 791, 77 L. Ed. 1472 (1933), aff’d 290 US 240, 54 S. Ct. 146, 78 L. Ed. 793 (1934).

In attempting to arrive at a determination as to whether or not equity should properly intervene in this matter so as to permit foreclosure of the mortgage, the Court is required to look at the situattion in toto, giving due and careful consideration as to whether the remedy sought by Plaintiff would be repugnant to the public interest when seen from the point of view of public morality, see, for example, 55 NY Jur. Equity § 113, Molinas v. Podloff 133 NYS2d 743 (Sup. Ct., New York County, 1954). Equitable relief will not lie in favor of one who acts in a manner which is shocking to the conscience, Duggan v. Platz 238 AD 197, 264 NYS 403 (3rd Dept. 1933), mod. on other grounds 263 NY 505, 189 NE 566 (1934), neither will equity be available to one who acts in a manner that is oppressive or unjust or whose conduct is sufficiently egregious so as to prohibit the party from asserting its legal rights against a defaulting adversary, In Re Foreclosure Of Tax Liens 117 NYS2d 725 (Sup. Ct. Kings County, 1952), aff’d on other grounds 286 AD 1027, 145 NYS2d 97 (2nd Dept. 1955), mod. on other grounds on reargument 1 AD2d 95, 148 NYS2d 173 (2nd Dept. 1955), appeal granted 7 AD2d 784, 149 NYS2d 227 (2nd Dept. 1956). The compass by which the questioned conduct must be measured is a moral one and the acts complained of (those that are sufficient so as to prevent equity’s intervention) need not be criminal nor actionable at law but must merely be willful and unconscionable or be of such a nature that honest and fair minded folk would roundly denounce such actions as being morally and ethically wrong, Pecorella v. Greater Buffalo Press Inc. 107 AD2d 1064, 468 NYS2d 562 (4th Dept. 1985). Thus, where a party acts in a manner that is offensive to good conscience and justice, he will be completely without recourse in a court of equity, regardless of what his legal rights may be, Eastman Kodak Co. v. Schwartz 133 NYS2d 908 (Sup. Ct., New York County, 1954), York v. Searles 97 AD 331, 90 NYS 37 (2nd Dept. 1904), aff’d 189 NY 573, 82 NE 1134 (1907).

An objective and painstaking examination of the totality of the facts and circumstances herein leads this Court to the inescapable conclusion that the affirmative conduct exhibited by Plaintiff at least since since February 24, 2009 (and perhaps earlier) has been and is inequitable, unconscionable, vexatious and opprobrious. The Court is constrained, solely as a result of Plaintiff’s affirmative acts, to conclude that Plaintiff’s conduct is wholly unsupportable at law or in equity, greatly egregious and so completely devoid of good faith that equity cannot be permitted to intervene on its behalf. Indeed, Plaintiff’s actions toward Defendant in this matter have been harsh, repugnant, shocking and repulsive to the extent that it must be appropriately [*6]sanctioned so as to deter it from imposing further mortifying abuse against Defendant. The Court cannot be assured that Plaintiff will not repeat this course of conduct if this action is merely dismissed and hence, dismissal standing alone is not a reasonable option. Likewise, the imposition of monetary sanctions under 22 NYCRR § 130-1.1 et. seq. is not likely to have a salubrious or remedial effect on these proceedings and certainly would not inure to Defendant’s benefit. This Court is of the opinion that cancellation of the indebtedness and discharge of the mortgage, when taken together, constitute the appropriate equitable disposition under the unique facts and circumstances presented herein.

After careful consideration, it is the determination of this Court that the indebtedness evidenced by the Adjustable Rate Note dated August 4, 2004 in the original principal amount of $ 292,500.00 made by Diana J. Yano-Horoski in favor of IndyMac Bank F.S.B. should be cancelled, voided and set aside. In addition, the Mortgage which secures the Adjustable Rate Note, given to Mortgage Electronic Registration Systems Inc. As Nominee For IndyMac Bank F.S.B. dated August 4, 2004 and recorded with the Clerk of Suffolk County on August 16, 2004 in Liber 20826 of Mortgages at Page 285, as assigned by Assignment recorded with the Clerk of Suffolk County in Liber 21273 of Mortgages at Page 808 should be cancelled and discharged of record. Further, Plaintiff, its successors and assigns should be forever barred and prohibited from any action to collect upon the Adjustable Rate Note. In addition, the Judgment of Foreclosure & Sale granted on January 12, 2009 and entered on January 23, 2009 should be vacated and set aside and the Notice of Pendency should be cancelled and discharged of record. For this Court to decree anything less than the foregoing would be for the Court to be wholly derelict in the performance of its obligations.

Upon the Court’s own motion, it is

ORDERED that the Adjustable Rate Note in the amount of $ 292,500.00 dated August 4, 2004 made by Diana J. Yano-Horoski in favor of IndyMac Bank F.S.B. shall be and the same is hereby cancelled, voided, avoided, nullified, set aside and is of no further force and effect; and it is further

ORDERED that the Mortgage in the amount of $ 292,500.00 which secures said Adjustable Rate Note given by Diana J. Yano-Horoski to Mortgage Electronic Registration Systems Inc. As Nominee For IndyMac Bank F.S.B. dated August 4, 2004 and recorded with the Clerk of Suffolk County on August 16, 2004 in Liber 20826 of Mortgages as Page 285, as assigned to IndyMac Bank F.S.B. by Assignment recorded with the Clerk of Suffolk County in Liber 21273 of Mortgages at Page 808 shall be and the same is hereby vacated, cancelled, released and discharged of record; and it is further

ORDERED that the Plaintiff, its successors and assigns are hereby barred, prohibited and foreclosed from attempting, in any manner, directly or indirectly, to enforce any provision of the [*7]aforesaid Adjustable Rate Note and Mortgage or any portion thereof as against Defendant, her heirs or successors; and it is further

ORDERED that the Judgment of Foreclosure & Sale granted under this index number on January 12, 2009 and entered in the Office of the Clerk of Suffolk County on January 23, 2009 shall be and the same is hereby vacated and set aside; and it is further

ORDERED that the Notice of Pendency filed with the Clerk of Suffolk County on July 27, 2005 under sequence no. 172456, which was extended by Order dated September 2, 2008 shall be and the same is hereby cancelled, vacated and set aside; and it is further

ORDERED that the Notice of Pendency filed with the Clerk of Suffolk County on August 29, 2008 under sequence no. 199616, shall be and the same is hereby cancelled, vacated and set aside; and it is further

ORDERED that the Clerk of Suffolk County shall cause a copy of this Order & Judgment to be filed in the Land Records so as to effectuate of record each and every one of the provisions hereinabove set forth with respect to cancellation of the instruments and items of record; and it is further

ORDERED that Plaintiff shall pay to the Clerk of Suffolk County, within ten (10) days from the date of entry hereof, any and all fees and costs required to effect cancellation of record of the Mortgage, Notices of Pendency and any other fees so levied; and it is further

ORDERED that within ten (10) days of the date of entry hereof, Plaintiff’s counsel shall serve a copy of this Order upon the Clerk of Suffolk County and the Defendant.

This shall constitute the Decision, Judgment and Order of this Court.

Dated: November 19, 2009

Riverhead, New York

E N T E R:

______________________________________

JEFFREY ARLEN SPINNER, J.S.C.

4closureFraud
http://4closurefraud.wordpress.com/

MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC. and
COUNTRYWIDE HOME LOANS, INC.,

v

WARREN E. AGIN, TRUSTEE,

A Massachusetts federal judge has upheld a bankruptcy court ruling allowing a trustee to treat a mortgage as an unsecured claim, which strips the mortgage holder of foreclosure rights, because of defective mortgage paperwork.

4closureFraud
http://4closurefraud.wordpress.com/

EXECUTIVE ORDER 13519

- – - – - – -

ESTABLISHMENT OF THE FINANCIAL FRAUD ENFORCEMENT TASK FORCE

By the authority vested in me as President by the Constitution and the laws of the United States of America, and in order to strengthen the efforts of the Department of Justice, in conjunction with Federal, State, tribal, territorial, and local agencies, to investigate and prosecute significant financial crimes and other violations relating to the current financial crisis and economic recovery efforts, recover the proceeds of such crimes and violations, and ensure just and effective punishment of those who perpetrate financial crimes and violations, it is hereby ordered as follows:

Section 1. Establishment. There is hereby established an interagency Financial Fraud Enforcement Task Force (Task Force) led by the Department of Justice.

Sec. 2. Membership and Operation. The Task Force shall be chaired by the Attorney General and consist of senior-level officials from the following departments, agencies, and offices, selected by the heads of the respective departments, agencies, and offices in consultation with the Attorney General:

(a) the Department of Justice;

(b) the Department of the Treasury;

(c) the Department of Commerce;

(d) the Department of Labor;

(e) the Department of Housing and Urban Development;

(f) the Department of Education;

(g) the Department of Homeland Security;

(h) the Securities and Exchange Commission;

(i) the Commodity Futures Trading Commission;

(j) the Federal Trade Commission;

(k) the Federal Deposit Insurance Corporation;

(l) the Board of Governors of the Federal Reserve System;

(m) the Federal Housing Finance Agency;

(n) the Office of Thrift Supervision;

(o) the Office of the Comptroller of the Currency;

(p) the Small Business Administration;

(q) the Federal Bureau of Investigation;

(r) the Social Security Administration;

(s) the Internal Revenue Service, Criminal Investigations;

(t) the Financial Crimes Enforcement Network;

(u) the United States Postal Inspection Service;

(v) the United States Secret Service;

(w) the United States Immigration and Customs Enforcement;

(x) relevant Offices of Inspectors General and related Federal entities, including without limitation the Office of the Inspector General for the Department of Housing and Urban Development, the Recovery Accountability and Transparency Board, and the Office of the Special Inspector General for the Troubled Asset Relief Program; and

(y) such other executive branch departments, agencies, or offices as the President may, from time to time, designate or that the Attorney General may invite.

The Attorney General shall convene and, through the Deputy Attorney General, direct the work of the Task Force in fulfilling all its functions under this order. The Attorney General shall convene the first meeting of the Task Force within 30 days of the date of this order and shall thereafter convene the Task Force at such times as he deems appropriate. At the direction of the Attorney General, the Task Force may establish subgroups consisting exclusively of Task Force members or their designees under this section, including but not limited to a Steering Committee chaired by the Deputy Attorney General, and subcommittees addressing enforcement efforts, training and information sharing, and victims’ rights, as the Attorney General deems appropriate.

Sec. 3. Mission and Functions. Consistent with the authorities assigned to the Attorney General by law, and other applicable law, the Task Force shall:

(a) provide advice to the Attorney General for the investigation and prosecution of cases of bank, mortgage, loan, and lending fraud; securities and commodities fraud; retirement plan fraud; mail and wire fraud; tax crimes; money laundering; False Claims Act violations; unfair competition; discrimination; and other financial crimes and violations (hereinafter financial crimes and violations), when such cases are determined by the Attorney General, for purposes of this order, to be significant;

(b) make recommendations to the Attorney General, from time to time, for action to enhance cooperation among Federal, State, local, tribal, and territorial authorities responsible for the investigation and prosecution of significant financial crimes and violations; and

(c) coordinate law enforcement operations with representatives of State, local, tribal, and territorial law enforcement.

Sec. 4. Coordination with State, Local, Tribal, and Territorial Law Enforcement. Consistent with the objectives set out in this order, and to the extent permitted by law, the Attorney General is encouraged to invite the following representatives of State, local, tribal, and territorial law enforcement to participate in the Task Force’s subcommittee addressing enforcement efforts in the subcommittee’s performance of the functions set forth in section 3(c) of this order relating to the coordination of Federal, State, local, tribal, and territorial law enforcement operations involving financial crimes and violations:

(a) the National Association of Attorneys General;

(b) the National District Attorneys Association; and

(c) such other representatives of State, local, tribal, and territorial law enforcement as the Attorney General deems appropriate.

Sec. 5. Outreach. Consistent with the law enforcement objectives set out in this order, the Task Force, in accordance with applicable law, in addition to regular meetings, shall conduct outreach with representatives of financial institutions, corporate entities, nonprofit organizations, State, local, tribal, and territorial governments and agencies, and other interested persons to foster greater coordination and participation in the detection and prosecution of financial fraud and financial crimes, and in the enforcement of antitrust and antidiscrimination laws.

Sec. 6. Administration. The Department of Justice, to the extent permitted by law and subject to the availability of appropriations, shall provide administrative support and funding for the Task Force.

Sec. 7. General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect:

(i) authority granted by law to an executive department, agency, or the head thereof, or the status of that department or agency within the Federal Government; or

(ii) functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b) This Task Force shall replace, and continue the work of, the Corporate Fraud Task Force created by Executive Order 13271 of July 9, 2002. Executive Order 13271 is hereby terminated pursuant to section 6 of that order.

(c) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(d) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

Sec. 8. Termination. The Task Force shall terminate when directed by the President or, with the approval of the President, by the Attorney General.

THE WHITE HOUSE,

November 17, 2009.

4closureFraud

http://4closurefraud.wordpress.com/

“Well, in short, in the words of the Rapper Puff Daddy, “It’s all about the benjamins, Baby.”

By O. Max Gardner III

Wayne Gretzky once said that his success was due to the fact that he focused on where the puck was going to be, not where it was. For most consumer debtors who have home mortgage loans and are involved in Chapter 13 bankruptcy cases, this Gretzkyism is somewhat of a double entendre. The fact of the matter is that most of these debtors have no idea who really owns their home mortgage loan and they most assuredly do not know why the balance owed keeps going up. Or, as Yogi Berra might say, these “guys have been double-pucked!”

And, the so-called “double-pucking” all starts with mortgage securitization. Securitization is a complex series of financial transactions designed to maximize the cash flow and cash out options for loan originators. The securitization and sale of assets is what gets the “off the balance sheet” boost in reported income for the originator. The originators secure immediate liquidity from assets that, in some circumstances, could not be readily traded in the capital markets. On paper, it sounds simple, in the real world it involves the creation of numerous Special Purpose Vehicle Corporations (SPV) designed to create the legal impression of an actual BPF sales transaction. However, the residuals, credit enhancements, and other derivative rights retained by the originators in the transferred assets create a Pandora’s Box of problems. A good example is Enron. Enron had enhanced the credit worthiness of thousands of asset-backed securitizations with Enron stock. When the Enron stock tanked so did the securitizations and Enron had to “recognize” all of these “off the books” transactions as liabilities. We know the rest of the story.

To securitize an asset, the loan originator creates a pool of financial assets such as mortgage loans. It then uses one or more SPV corporations to convert the large pools of these mortgages into complex investment certificates, backed or securitized by valid liens on the transferred collateral. These certificates are then rated and offered for sale to asset capital investors, foreign investors and life insurance companies to name a few. The certificates are normally split into various types or tranches, each of which has pre-determined cash flow or equity positions in the underlying collateral.

Unlike conventional bonds, payments of principal and interest from these mortgage backed securities (MBS) are based on the cash generated by the pooled assets. Cash can be generated by monthly mortgage payments and the pre-payment of the mortgage instruments by refinancing or early payment. The collateral for all of these bonds is always a pooled trust of the underlying assets, administered by a designated Trustee. The Trustee then enters into an agreement with a third-party to actually service the collection of the income from the pooled assets. These servicing agreements are normally consummated prior to the initial funding or transfer of the assets to the trust and are normally referred to as a Pooling and Servicing Agreement (PSA).

In many cases, the entity that originates or aggregates the assets for securitization will retain the rights to service the pool of mortgage loans for the trustee. These rights are referred to in the mortgage context as retained mortgage servicing rights (MSR). The entity holding the MSR rights is normally referred to as the Master Mortgage Servicer. The PSA may give the Master Mortgage Servicer the right to “farm-out” the actual servicing and collection of the mortgage loans to a primary servicer, a secondary or subservicer, or a default servicer. In the vast majority of cases, the consumer-mortgagor is making his or her monthly payments to one of these servicers, whom they erroneously believe is the entity that actually “owns their mortgage.”

The rights to service a mortgage loan are considered to be assets with recognized value. In fact, Mortgage Servicing Assets (MSA) are sold, assigned, and securitized just like the mortgage loans they service. Suffice it to say, the buying and selling of servicing rights accounts for much of the consumer confusion that leads to the common misstatement that “my mortgage has been sold 4 times in the past five years.” The mortgage has not been sold, just the rights to service the mortgage, the mortgage is still swimming in a pool with other similar debt instruments. And, since a Master Mortgage Servicer receives a service release premium (SRP) when it sells the servicing rights, the market is certainly active.

The final element in understanding this financial model is that you have public and private label placements of mortgage securitizations. All of the public placements are originated by the Government Sponsored Entities (FannieMae, FreddieMac, and GinnieMae commonly referred to as the GSE’s) and normally involve a single form of an investment bond or certificate called Pass-Through Certificates. All of these placements are the subject of detailed SEC filings and other public reports. The private-label placements, on the other hand, represent mortgages that have been aggregated on the secondary market by private investors and the pooled trusts of these assets are normally not subject to any SEC reporting or filing requirements. The private placement MBS’s also normally offer multiple forms of investments and create these instruments by splitting the income and principal aspects of the MBS trust into many different segments or tranches. The GSE’s have historically purchased for securitization only traditional mortgage products but in recent years have expanded into a variety of areas such as loan size, higher loan-to-value loans, alternative mortgages (ARMS, Hybrid ARMS, Interest Only ARMS, etc.). The private label aggregators, on the other hand, have purchased all of the others including Alt-A, sub-prime, etc.

At his point, you might ask what does any of this have to do with consumer mortgages and Chapter 13 bankruptcy cases. Well, in short, in the words of the Rapper Puff Daddy1, “It’s all about the benjamins, Baby.”* The problem arises out of the fact that in most cases the “income” for servicing a mortgage is “fixed” at the time of securitization. The “fixing” of this compensation is based on historical financial models of the pooled mortgages that make certain assumptions on default rates, foreclosure rates, the ability to market REO (real estate owned) properties, and the like. If these projections are not accurate, then the costs of servicing an above average pool of defaulted mortgage loans may be a money losing proposition for the servicers. And there is a fine margin in the mortgage servicing business between operating in the black or in the red.

One of the most startling statements about these revenue reduction problems that this writer has seen was one reported in the August 2005 edition of Mortgage Banking. Mortgage Banking is published monthly by the Mortgage Bankers Association of America and touts itself as “the magazine of real estate finance.” In an Article by Thomas J. Healy, a Certified Mortgage Banker employed by HanoverTrade Inc., the following statement is made:

“Because servicers average approximately $60 per loan per year in net profit, it does not take much in the way of additional non reimbursable inspections/collections/foreclosure costs to wipe out the profits on a lot of loans.”

This statement is supported by a “cost of servicing” survey that is being conducted by the Research Department of the Mortgage Bankers Association of America. Marina Walsh, the Director of this Department, was recently quoted as saying that “in general, servicing costs [for subprime mortgages] were about three times that of the prime side.” Ms. Walsh went on to state that when subprime loans go into default, the servicing costs are 4.5 times higher than for defaulted prime loans.

These quotes and these statistics remind me of some advice I received about 30 years ago from a veteran personal injury attorney. We were about to settle a very large medical malpractice case and our fee was based on a percentage of the total recovery. I remember asking the veteran, “How much is 33% of that settlement?” He responded as follows: “I don’t know for sure but 33% of a lot is a lot!” Well, in order to enhance their default servicing revenues, mortgage servicers “involved in” consumer bankruptcy cases have created all sorts of new fees and charges that are not assessed against the investors (the holders of the certificates in the pooled trusts, who will not pay these fees) but against the poor Chapter 13 debtors.

What type of fees are we talking about? Well in Mr. Healy’s article, he writes about inspections. What type of inspections is he referring to? I guess the best place to start would be with Gerald Stark, a civil engineer for whom I filed a Chapter 13 case about 10 years ago. Gerald had a mortgage loan that had been securitized by FannieMae and was being serviced by Crestar Mortgage Corporation. The mortgage was current on the petition date and remained current during the course of the plan. Notwithstanding the Chapter 13 filing, Crestar continued to send monthly billing statements to the debtor. It was not the billing statements that concerned Gerald but the $9.00 additional fee added to his statement each month designated as “other charges.” Mr. Stark called Crestar numerous times about these charges and was told everything from “we have no idea” to they are just “bankruptcy fees.” Mr. Stark took the matter up with me when the total amount of the monthly property inspection charges reached $135.00.

Mr. Stark subsequently filed a motion for sanctions against Crestar for violations of the automatic stay. Crestar admitted that it had caused the home to be inspected once per month so as to make sure it had not been vacated, which was curious in itself since the debtor at all times remained current on his mortgage payments. If Gerald had abandoned his home, you would assume he would have stopped making the mortgage payments.

The property inspection fees in Stark’s case were allegedly paid to third parties who would simply ride by the house and file a written report indicating such things as the grass was mowed. Crestar’s defense to Gerald’s motion was that, as servicer, it was only acting in compliance with the Mortgage Servicing Guidelines issued by FannieMae. In rejecting this defense, and holding in favor of the debtor, the Bankruptcy Court stated: “The $9.00 monthly inspection fee that Crestar imposed on the debtors in this case was in effect a monthly bankruptcy ‘monitoring fee’”. Stark v. Crestar Mortgage Corp., 242 B.R. 866, 871 (Bankr. W.D.N.C. 199). The Court went on to hold that “since Crestar attempted to collect these ‘inspection or bankruptcy monitoring fees’ from the debtors while the stay was in effect, by adding fees to the debtor’s monthly statements, Crestar violated Section 362(a)(3).” Id. at 873.

Gerald Stark’s case turned out to be the tip of a very large ice-berg of unlawful and illegal mortgage servicer fees in consumer bankruptcy cases. The next case that came to light involved the practice of advancing various sums of money against the mortgage for the costs of alleged legal fees related to the filing of a proof of claim in a Chapter 13 case. Samuel and Melinda Smith filed a Chapter 13 case in 2000 (W.D.N.C., 00-31220) and scheduled a secured debt to TMS Mortgage, Inc (now HomEq). TMS filed a proof of claim that included the sum of $125.00 for “legal fees related to the preparation and filing of the claim.” TMS admitted that it had never filed a motion under Code Section 506(b) or Bankruptcy Rule 2016 for approval of this fee. About the same time, Jason and Sherri Tate, who had filed a Chapter 13 case in 1997 (W.D.N.C. 97-32126), noticed that the proof of claim on their home mortgage filed by Nationsbanc Mortgage Corporation (now Bank of America) included the sum of $125.00 for “bankruptcy fees”. Tate v. Nationsbanc Mortgage, 253 B.R. 653,660 (Bankr. W.D.N.C 2000). Nationsbanc’s defense was that it had outsourced the proof of claim process to a law firm in Texas and the $125.00 was a reasonable fee for their services. The charge was a flat fee that the lawyers charged per case, per claim.

In rejecting these arguments, the Court in Smith and Tate found these attorney fees to be procedurally “per se unreasonable.” Id. at 665. Specifically, the Court noted that Rule 2016 sets forth “a straight forward methodology for requesting payment of attorney fees. The rule applies to any person or entity seeking compensation for services or reimbursements of expenses from estate assets.” Id. To the Court, it seemed pretty simple: 11 U.S.C. Section 506(b) authorizes the payment of legal fees to secured creditors who seek such fees upon the filing of a proper application with adequate notice; and, the Court has authority under 11 U.S.C. 105 to enforce a failure or refusal of a creditor to so comply. Id. at 668. In concluding the decision in Tate, the Court stated: “In summary, Section 105 authorizes this Court to take whatever action is necessary to enforce the Code’s provisions. The bankruptcy court is entitled to exercise its powers under the Code to restrain a creditor from overreaching. To do otherwise would allow Nationsbanc to perpetuate a fraud on the Court and other parties in interest.” Id. at 669.

Unfortunately, the only thing the Mortgage Servicers appear to have learned from any of their cases is that the vast majority of Chapter 13 debtors and their attorneys do little or nothing about these illegal fees and charges. As a result, it is actually profitable to “perpetrate a fraud” on the Bankruptcy Courts, the Bankruptcy Trustees, the attorney for the debtors, and of course the debtors. A good example of these practices can be found in a trilogy of cases presented to the Bankruptcy Court in New York in November of 2002. In Re Gorshtein, 285 B.R. 118, 120 (Bankr. S.D.N.Y. 2002).

One of the Gorshtein cases was a Chapter 13 case, which had been filed by Mandy Abrue in July of 2000. On February 7. 2001, Fairbanks Capital Corp. (now Select Portfolio Servicing) filed a motion for relief from stay in which it alleged that “no post-petition payments have been received from the Debtors.” Id. The debtor objected and provided proof that all these payments had been made. The motion was thereafter withdrawn. Exactly one year later Fairbanks filed a second motion for relief from stay in which it made the same allegations as the first motion (no payments had been made on the mortgage since filing). This second motion was filed by the same attorney who filed the first motion. Once again the debtors objected and provided proof of all post-petition payments. Fairbanks explained that due to some type of internal accounting function the motions had been filed because the payments had been placed “into a debtor’s suspense account” and therefore they had never been applied to the mortgage loan. Id. at 123. (FN2). The use of various forms of “suspense accounts” by the mortgage servicers deserves a separate Chapter. The accounts, in short, allow the servicers to “hide payments” and then raid the accounts to pay themselves bogus fees and charges.

The Gorshtein court imposed sanctions on its own motion pursuant to Bankruptcy Rule 9011 in all three of the consolidated cases including the one involving Fairbanks. The Court noted that whether “the cause of the false certification [of a serious payment default in each case] should be labeled intent to deceive, gross negligence, incompetence or mere inadvertence is indeterminable and, in any event, it really does not matter. It does not matter because the result is the same for the debtor and the judicial process, which will be victimized by the misstatement if for any reason the debtor fails to respond timely to a baseless motion.” Id. at 126.

Fairbanks learned little if nothing from the Court in Gorshtein. On July 16, 2002 the Bankruptcy Court for the District of Massachusetts entered a judgment for sanctions against Fairbanks (including rescinding the mortgage) in the case of Pearl Maxwell, an 83 year old woman with minimal schooling and limited financial recourses. This case provides a textbook illustration of the extent to which the mortgage servicing industry is out of control.

During the Maxwell case, Vince Brando, who identified himself as a Special Default Technician, testified that “ Fairbanks buys loans in bulk without checking to ascertain whether each loan is accompanied by proper documentation.” Maxwell v. Fairbanks, 2002 W.L. 1586325 (Bankr. D. Mass. 2002). Mr. Brando testified at one time Fairbanks paid $129,344.00 for the Maxwell loan but admitted that Fairbanks at another point claimed to have paid $175,955.00. In trying to explain this and other inconsistencies in the amount of the default, the principal balance owed, the corporate advances and the use of suspense accounts, Mr. Brando indicated that “Fairbanks has no documents in its possession to substantiate payments of that amount, and Fairbanks cannot identify any account, fund or other source of monies from which that amount was paid.”

Brando later testified that rather than purchase the mortgage Fairbanks actually only acquired the servicing rights. When questioned about the payment history, he said that Fairbanks, “never had the prior payment history from the prior servicer.” He added that “he could not say what happened when the prior lender owned the loan.” And, when pressed how Fairbanks could determine the amount owed, the amount of arrears, or the current payment status without a payment history, he said: “I go off of whatever the computer has for me and what it offers me, because that’s all the information we would have. No one would have any more than that.” Id. Fairbanks, of course, was later involved in a consumer class action and was named in a Fair Debt Collection Act enforcement proceeding filed by the FTC. In addition to agreeing to pay more than $56,000,000.00 in the class action, Fairbanks also agreed to terminate the CEO and president, and to terminate many officers, attorneys, agents, and employees.

The abuses of the mortgage servicers have been described by many knowledgeable commentators as “predatory mortgage servicing.” This term does not do justice to the current practices of these parties. These practices are beyond predatory in that they constitute more of a premeditated plan to ignore the entire bankruptcy process. The actions of these mortgage servicers in consumer bankruptcy cases are nothing more or less than an intentional abuse of the judicial process and the rule of law. It is also part of a pervasive pattern of chicanery, fraud, trickery, deceit, double-dealing and just plain old-fashioned illegal conduct.

During the past 7 years I have compiled a list of my own Top 10 Mortgage Servicer Abuses. The list is reprinted below along with representative cases if applicable:

1. The systematic and universal creation of junk fees such as monthly property inspections, monthly property preservation fees, broker price opinion fees, proof of claim preparation fees, review of Chapter 13 plan fees, and other similar and related charges. Case Examples: In Re Coates, 292 B.R. 894 (Bankr. D. Ill 2003) and Dawkins v. Chase Manhattan, unpublished Slip Opinion, Case No. 99-40552. (Chase was actually seeking over $11,000 in attorney fees for simply a motion for relief from stay that Chase lost).

2. The systematic failure to disclose any of the junk fees during the pendency of the Chapter 13 case by way of the filing of a proper Rule 2016 Fee Application with adequate due process notice and the right to object. Case Example: Tate v. NationsBanc Mortg. Corp. (In Re Tate), 253 B.R. 653 (Bankr. W.D.N.C. 2000); Harris v. First Union Mortg. Corp. (In re Harris), 2002 Bankr. LEXIS 771 (Bankr. D. Ala. 2002) (awarding $2,000,000 in damages).

3. The sinister collection of these fees post-discharge in Chapter 13 cases when the debtor no longer has the benefit of a bankruptcy attorney or any other party who can review a payoff statement for accuracy. Since many Chapter 13 debtors are eligible to refinance their mortgage loans after a Chapter 13 discharge, many of these charges are secretly collected at closing. And, most of the software systems used by the servicers are programmed to automatically download all of the fees and charges held in “suspense” into a payoff quote.

4. The use of these fees to create negative payment histories that result in motions for relief from stay. The system developed by the servicers is both complex and simple. The servicer establishes a software program that automatically adds a late charge to any post-petition payment based solely on the pre-petition default. The system is also designed to transfer any post-petition payment that does not include the “secret late fee” into a suspense or forbearance account. The funds in these accounts are obviously not applied to the post-petition mortgage payments. The debtor receives no interest on these funds and the suspense account is not a trust account. In many instances, the servicers will raid the suspense accounts to pay the unlawful corporate advances and other undisclosed fees and charges.

5. As the court noted in Gorshtein, the attorneys for the mortgage servicers are guilty of the repeated and systemic filing of false representations of defaults in motions for relief from stay. The attorneys know or should know that the data they are receiving from the servicers is not accurate or otherwise reliable; yet, in order to keep a “good client” they continue to accept the cases and file the motions.

6. The attorneys for the servicers who do ask for court approval of their legal fees in connection with a motion for relief from stay are also guilty of making false representations to the Court, the Trustee, the debtor, and the attorney for the debtor. These false representations relate to the nature and extent of their attorney fee agreements with the servicers. For example, many courts have a presumed no-look fee of $450.00 for a motion for relief from stay plus the filing fee of $150.00. Many attorneys for the servicers agree to these fees with full knowledge that their firm has been paid $850.00 plus the $150.00 filing fee by the servicer and that these “actual” fees and not the court approved fees will be charged back to the debtor’s account.

7. The creation of bogus “escrow” accounts to fund unlawful corporate advances. The obvious intent is to use these “escrow accounts” to hide the improper application and disbursement of funds from the debtor’s contractual payments and from the Trustee arrearage payments.

8. The practice of including undisclosed legal fees in attachments to proofs of claim and then inserting language in a hidden addendum that the failure of the debtor to object to these fees constitutes a waiver, estoppel, or res judicatta defense. See Slick v. Norwest Mortg. Inc. (In re Slick), 2002 Bankr. LEXIS 772 (Bankr. D. Ala. 2002 ).

9. The placement of forced-place insurance with a captive company (i.e., a wholly owned or related subsidiary) when debtors have such insurance. This triggers an escrow review, an enhanced payment, and more money for the suspense accounts.

10. The advancement of funds against the debtor’s mortgage loan for monetary damages actually paid to the same debtor for violations of the bankruptcy law. The servicer will also charge the debtor for the attorney fees incurred in defending such action. Case Example: In Re Riser, 289 B.R. 201 (Bankr. D. Fla. 2003).

*The writer is fully aware that Puff Daddy is currently known as “Diddy” per his request, but thought Puff Daddy to be the more accurate name for such an old school song reference.

Mr. Gardner received his undergraduate degree from the University of North Carolina at Chapel Hill in 1969 and graduated with high honors from the UNC School of Law in 1974. Among others, he was a member of the Law Review, President of the Student Bar Foundation and elected to the Order of the Coif. Following graduation, he served as law clerk to the Hon. William H. Bobbitt, the late Chief Justice of the North Carolina Supreme Court, and to the Hon. William Copeland, an Associate Justice.

He opened a law practice in Shelby, NC in 1977 and currently limits his practice to consumer bankruptcy issues and related law.

Gardner was named the Outstanding Consumer Lawyer of 2004 by the National Association of Consumer Bankruptcy Lawyers and was elected a Member of the North Carolina Legal Elite by Business North Carolina in December of 2004. He is a long-time member of NACBA and NACA and a frequent national speaker on bankruptcy law and consumer representation.

4closureFraud

“It’s actually been happening for a year or more in large numbers. Why the media hasn’t picked up on this story is a good question to ask…

I don’t think anyone realizes how big this area of fraud actually is or could believe that it’s truly happening. The biggest reason is probably because the judicial system is a player in this area of fraud. Not as an active participant but more as a guilty bystander. In about half of the states in the Union, foreclosures must be brought in a lawsuit in court, otherwise called judicial states. One would think that in non-judicial states, it would be much easier to get away with the fraud because the courts are not involved usually. Sorry to say but it might even be easier to commit Foreclosure Fraud in judicial states because no one’s really asking any questions in these foreclosure cases as I think that just about anyone would automatically assume that the Judicial System would exert much more quality control to prevent such massive fraud to work its way through the system. Guess again…

Statistically speaking, 98% of all foreclosure cases, judicial or non-judicial, go uncontested by the borrower. In other words, the borrower does nothing whatsoever to defend themselves in the foreclosure process. In a judicial state, an uncontested foreclosure complaint results in a Default Judgment against the borrower/defendant. Essentially, any and all claims made by the Plaintiff is accepted as true and legitimate at face value. The presiding judges, at least here in Florida, are doing practically nothing to inspect the merits of the case based on the documents produced – which, by the way, is very little – or the actual authenticity of the documents that are produced. Yes, they are slammed and overrun with foreclosure cases. No, it’s no excuse to deny citizens due process.

Here in Florida, 80-90% of the cases are being filed without any evidence of the debt, which is the original Promissory Note, not some early copy of it. Take a sampling of any 10 or 100 cases filed in court and you’ll find this to be true. In other words, a company/institution is coming into court, suing a borrower and alleging that the borrower owes them $_______. Yes, really fill in the blank… and they are producing NO DOCUMENTARY EVIDENCE that this allegation has any truth to it.

Oh, but it gets better. They are alleging that they lost the Note (or it was destroyed). Hmmm… if I gave you a $1000 check, would you lose it? How about if I gave you a $50,000 check? How would you treat that little piece of paper? But lo and behold, these institutions are saying that in 80-90% of the cases they have Lost the Notes! Now, let’s put this in perspective… in January 2009, Lee County, FL alone had about 2200 foreclosure cases filed. So let’s do the math together, shall we? That would put us at over 1700 cases where the Notes were mysteriously LOST! And that’s just one month’s worth folks. Now anyone with just a bit of common sense would say, something’s fishy with this. No? But most judges seem to have taken no issue with this. I mean, doesn’t this very fact make you, the reader, say to yourself, “this is not right, something’s up here, there should be an investigation into this.” But no, our judicial system seems to have no problem with this or even ask the deeper question as to “why?”

But it gets better… not only have they “lost” the notes, but the mortgages that were “recorded” in public records after closing (to declare to the public of who has a lawful lien on this property) are in someone else’s name. Let’s call them “ABC Lender.” So ABC Lender is the “mortgagee” of record in the public records. But ABC Lender is not the Plaintiff suing for Foreclosure! No, it’s XYZ Lender who is the Plaintiff; and in XYZ Lender’s Foreclosure Complaint, they allege that they are the owner and holder of the Note (that was lost) and the mortgage was assigned to them. Problem is (besides no note of course) is that there’s no Assignment of Mortgage recorded in Public Records; oh and no Lost Note Affidavit either, which by the way is supposed to be required.

Public records still show ABC Lender as the mortgagee. More than that, XYZ Lender/Plaintiff produces that very mortgage (which they can print online from the Clerk of Court’s website) in their Foreclosure Complaint and then simply states, for the record, that the Mortgage (in ABC Lender’s name) was assigned to them. But no assignment is recorded NOR is an assignment even produced in the foreclosure case in at least 50% of the cases. And when we do see an Assignment produced, lo and behold, you know who drafted that Assignment of Mortgage? Allow me to answer that… it’s the law firm that filed the foreclosure complaint for the Plaintiff. How about that, so you’re telling me that now foreclosure law firms are also in the business of transferring mortgages and notes? I think not. But this is exactly what is happening folks. Sure as my fingers are typing this post.

Oh, but I’ll do you one better… but before I do, all of what I just stated above is enough for XYZ Lender to be granted foreclosure in 98% of the cases because these ALLEGATIONS by XYZ Lender are never even challenged by the borrower/defendant. So the court places the proverbial RUBBER STAMP on this fraud and away you go… “NEXT” as most Florida Judges would say… all in about 15 seconds in their self-proclaimed ROCKET DOCKETS. Nice.

So back to doing one better… in these 2% of cases where the borrower does even a little something to defend themselves or better, has a competent attorney represent them against this FRAUD, we would ask the Plaintiff to actually prove their case. You know, “excuse me but I don’t think your claims are true Mr. XYZ Lender. Yes, I borrowed and owe the money to someone, but I have no idea at all who YOU are and I don’t think I owe the money to you and I don’t think that you have any right whatsoever to be here in this court suing me and trying to take my home away from me.” That’s how I would say it at least but attorneys are little more verbose than me…

So guess what these Plaintiff/XYZ Lender’s come back with to that request… you’re going to love this… “If it will please the court, your honor, these requests are out of line and merely meant to ’stall’ the process. The defendant hasn’t paid their mortgage in ____ months your honor; and this request for us to disclose who the real owner of the mortgage and note is proprietary information and we are not required to disclose that information.” Oh, I’m sorry, I thought you alleged in your original complaint that YOU were the owner and holder… now someone else is but you can’t tell us? Hmmm. By the way, 15 U.S.C. 1641(f)(2) says that the Servicers are under federal obligation to disclose the true owner of the obligation. Read the federal law here! Scroll down to paragraph “F” part 2.

Yep, you’re tracking with me now…. it gets even better. Somehow, by some miracle of St. Mary, mother of Jesus, in some of these cases, the Note magically appears! Oh, thank heaven, the Note has appeared. So XYZ Lender puts the court and everyone else on notice with a “Notice of Filing Original Documents” in the court record. To the unsuspecting citizen, this Note, purportedly a copy of the Original Note, sure does look the part. Never mind that one of these Notes can be re-created out of thin air. Have we Alzheimer’s this bad folks? I mean, what gives? Have we not been talking and ranting and raving as a country about all the FRAUD that occurred in the mortgage industry and WALL STREET these past 7-8 years? Does no one think that these Notes aren’t really being re-created. I mean, XYZ Lender did swear before the court that the Note was Lost. Was that a lie or is the Note they are now producing a fraud? I mean, which one is it? Or is our judicial system going to let them do both… Lie and commit Fraud that is.

But you see, I have a little more knowledge about this whole “SECURITIZATION THING” than the unsuspecting homeowner and probably even these foreclosure attorneys representing these financial institutions. You see, since the mid-80’s when the Secondary Mortgage Market Enhancement Reform Act of 1984 was enacted, 99% of all residential mortgages have been securitized. The opposite of a Securitized Loan is what we call a Portfolio Loan. These are our 2 options folks… it’s either a Portfolio Loan or it was a Securitized Loan. Your honor, it’s either Option A or Option B. Not BOTH.

So let me break this down into byte sized pieces. A Portfolio loan is a loan where ABC Lender makes the loan (ie. lends the money) and keeps that loan in their “portfolio” for the life of the loan. ABC Lender is going to keep the loan, service the loan and manage it until it is paid off. This “portfolio lending” thing is a DINOSAUR folks. This is a bona fide fact.

So, Option B, your honor, is this thing we call “Securitization.” And yes, your honor, I expect that we all take the time to UNDERSTAND IT because these thousands of CASES before your court involve PEOPLE, human beings (the same people who elected you by the way) and their lives, and their credit and their liability if this ‘aint done right.

Sorry about that, as you might guess, I am perturbed with the “pleading ignorance” of the courts or worse “I just don’t care” judges who’s pat answer is that “the borrower/defendant hasn’t paid their mortgage in 6 months so throw justice and matters of law aside because they’re all a bunch of deadbeats. I read the Wall Street Journal article on Feb. 18, 2009. We can all read between the lines your honor… Now let me say this real quick before I give a quick overview of securitization and the applicability of it to foreclosure cases… Not all judges are created equal. There are some very good one’s out there who care about the law and due process and making sure that the law is actually followed. For those judges out there who aren’t letting these issues just get swept under the rug because it’s so damn “inconvenient” – all these foreclosure cases, -we thank you and we hope you’ll see to it that more of your peers adopt the same position.

By the way, the question that the judges referred to in the Wall Street Journal story asked, “Are you paying your mortgage and are you living in your home?” – these 2 questions are completely inappropriate and immaterial to the case and matters of law. If I’m a homeowner and I don’t know who the heck owns my mortgage and my inquiries into this fact go unanswered, then I’m not paying ANYONE until I figure this out already! So if I”m before that judge my answer is very clear, “Excuse me your honor but that question is completely immaterial to my case before you. I owe the money to someone but I dispute the assertion by the Plaintiff that I owe the money to them.

I have asked them to provide valid and authentic documentation that I in fact owe them the money and they have failed to provide that documentation. The documentation that they have provided appears to be a complete fraud on this court and therefore I would humbly request your honor look into the material facts in this case, not whether or not I’m paying someone I don’t know even exists or if I’m living in a home that I have valid title to.” – and Judge G. Keith Cary, the Chief Judge in Lee County said, “A guy hasn’t paid his mortgage in a year, what’s there to talk about?” – well your honor, I believe I’ve presented plenty to talk about. If not, let me continue…

Ok, securitization and how it applies to a judicial foreclosure case. In securitization there are specific entities who are the “players” in this process. Not all entities are created the same because they have different ROLES in the securitization process. Roles: Originator, Sponsor, Master Servicer, Depositor, Issuer, Trustee and Custodian are the main ones. We also might see a “Special Servicer” in the mix here and there. The Originator is ABC Lender in the above fictitious case I mentioned. XYZ Lender from above is the Sponsor who usually serves as the Servicer as well.

Folks in 99.9% of these loans, the Trust owns the loan. The Trust is comprised of several to several hundred investors who own a “piece” of the loan. But more than that… EVERY loan including the specific loan in our fictitious case above has been bought and sold NO LESS THAN 3-4 times. When a Note is sold/transferred (and it is a true sale by the way), the Note MUST be endorsed, just like a check. From one payee to the next. IF the loan was securitized and it is very safe to assume that every loan is/was, there will be NO LESS THAN 3 endorsements on the actual, ORIGINAL note which has the borrower/defendant’s wet signature on it.

So when XYZ Lender produces the “Original” Note for the court and it has NO endorsements on it, it’s what we call a FRAUD folks – one way or another, it is NOT the original nor is it a copy of the original note OR, in the alternative, XYZ Lender lied to the SEC, the Securities and Exchange Commission AND the IRS. You see, in securitization, all of this activity MUST be disclosed. No, it’s not proprietary or confidential, it’s PUBLIC DISCLOSURE. These documents filed with the SEC are very specific. The players involved are all disclosed. Their ROLES are disclosed, the CHAIN OF OWNERSHIP of the loans in the Asset Pool is disclosed. The governing or operative document for this loan pool is the Pooling and Servicing Agreement, and it is disclosed. These Trusts are electing to be treated as a REMIC (short for Real Estate Mortgage Investment Conduit), which provides Pass-Through Taxation on the pool cash-flow, so that the Trust avoids double-taxation. That’s disclosed and strict guidelines of the chain of ownership AND timelines of ownership must be adhered to OR the REMIC status will be/can be revoked by the IRS.

So when XYZ Lender comes into a court of law and throws all these allegations of ownership, produces nothing to speak of, and expects to take Mrs. Smith’s home from her, I suggest that our judicial system do something more than turn a blind eye and claim that is their job to “efficiently dispose” of the case – all in about 15 seconds – or worse, ask completely inappropriate questions of that homeowner. I also suggest that Mrs. Smith defend herself and I highly suggest our local and national media do more to expose what you can now call “FORECLOSURE FRAUD” because it’s happening ladies and gentleman. The SAME INSTITUTIONS that created this global meltdown through greed and fraud, who have received hundreds of BILLIONS of taxpayer dollars to bail them out of their gross (and greedy) mismanagement are NOW stealing citizen’s homes from them like a thief in the night to boot. The FBI should be investigating, prosecuting and sending these fraudsters to jail – both the bank reps/employees AND their law firms colluding with them on this massive fraud!”
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Author Info: Lane Houk has 8 years of mortgage banking and finance experience and also maintains an active real estate license in Florida. Lane has done well over 400 hours of research on Foreclosure Defense and Consumer Rights Issues in the areas of Fair Credit Reporting Act, Fair Debt Collection Practices Act, Truth in Lending Act, RESPA and more. He has combined his research, reading and experience in the real estate and finance industries to develop resources to help others who find themselves in a tough situation. You care read more on Lane’s Educational Blog at http://www.thePatriotsWar.com

4closureFraud

“Regarding MERS and why they have a big problem with no quick solution. This is because MERS is the Beneficiary of the Security only and they nothing to do with the Note and are not a party to the Note.

The problem is that an Assignment is worthless if it only transfers the Deed of Trust without the Note. So to get around this major problem, MERS simply ignores it which has worked up until now because no one really understood the role of MERS.

Now that the cat is out of the bag, every Assignment they record is fraudulent and in fact separates the Note from the Security.”

SAXON MORTGAGE SERVICES, INC., et al., Plaintiffs, v. RUTHIE B. HILLERY, et al., Defendants.

No. C-08-4357 EMC,(Docket No. 7)

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA

Almost a year later, on or about June 20, 2008, MERS, acting as nominee for New Century, assigned the deed of trust to Consumer. In the assignment, MERS claimed to assign not only the deed of trust but also the promissory note itself (i.e., the debt owed by Ms. Hillery to New Century for the loan that was extended to her). See Compl., Ex. D (assignment, recorded on 7/21/08). However, there is no evidence of record that New Century ever assigned MERS the promissory note or otherwise gave MERS the authority to assign the note.

THE COURT

There is evidence that the deed of trust was transferred to Consumer. As noted above, New Century designated MERS the beneficiary of the deed and gave MERS broad authority to act with respect to the property. See Compl., Ex. A (Deed at 3) (stating that MERS “has the right to exercise any or all of those interests [granted by Ms. Hillery] in this Security Instrument”). The Court thus assumes MERS had the power to assign the deed to Consumer, which it apparently [*15] did on or about June 20, 2008. See Compl., Ex. D (assignment, recorded on 7/21/08).

However, for there to be a valid assignment, there must be more than just assignment of the deed alone; the note must also be assigned. See Carpenter v. Longan, 83 U.S. 271, 274, 21 L. Ed. 313 (1872)(stating that “[t]he note and mortgage are inseparable; the former as essential, the latter as an incident”; adding that “[a]n assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity”); In re Leisure Time Sports, Inc. 194 B.R. 859, 861 (9th Cir. 1996) (stating that “[a] security interest cannot exist, much less be transferred, independent from the obligation which it secures” and that, “[i]f the debt is not transferred, neither is the security interest”); Kelley v. Upshaw, 39 Cal. 2d 179, 192, 246 P.2d 23 (1952) (stating that assigning only the deed without a transfer of the promissory note is completely ineffective); see also Restatement (3d) of Property (Mortgages) § 5.4 (stating that “[a] mortgage may be enforced only by, or in behalf of, a person who is entitled to enforce the obligation that the mortgage secures”) (emphasis added). As Kelley establishes, this is true under California [*16] law which presumably applies here.

As noted above, MERS purportedly assigned both the deed of trust and the promissory note to Consumer. See Compl., Ex. D (assignment, recorded on 7/21/08). However, there is no evidence of record that establishes that MERS either held the promissory note or was given the authority by New Century to assign the note. Indeed, Consumer’s own complaint contains only an allegation about assignment of the deed of trust — and not the note. See Compl. P 17 (alleging that “New Century assigned its beneficial interest of the Deed of Trust to Plaintiff Consumer Solutions”).

4closureFraud

http://4closurefraud.wordpress.com/

I compile Absorption Rates on a monthly basis and just completed my October’s statistics. By comparing the last two months with the same period for 2008, even the most pessimistic skeptic will admit that the market is improving.

Starting with Lots up to ten acres, inventory is down a bit from September. Overall in WNC, we see the Absorption Rate (aka: months of inventory; current inventory divided by recent month’s sales) dramatically drop from more than ten years to just over eight years. Keep in mind that even during good times there was a huge inventory of unsold lots. This improvement is encouraging. It is interesting to look at the sales price to list ratio. Lots are CLOSING for just under 80% of list price overall for WNC and just over 85% for Buncombe County. Henderson County’s results are way off at 67%. We will have to see if this is a one time fluke.

Resales of existing homes inventory is holding steady in Buncombe County with reductions in Henderson County and WNC overall.

What is exciting is the dramatic drop in inventory of New Home Sales. In Buncombe County we have less than eleven months inventory of new homes. This is the lowest level in more than two years! Henderson County’s inventory is steady and WNC Overall has dropped.

If you would like a copy of this report, which is not available anywhere else, call our Coldwell Banker Kasey Real Estate duty agent at (828) 684-4339 and ask for a copy of Bill McMannis’ Absorption Rate Report for October.

Recommendation regarding verification of “ownership” of the mortgage

“The Task Force has recommended a requirement for a plaintiff in a foreclosure action to verify that it owns and holds the note. Typically, the plaintiff in a foreclosure action does not own the underlying note or loan that is secured by the property subject to the foreclosure proceeding. Freddie Mac’s servicers initiate foreclosure actions in their names, even though they are not the owners of the notes or loans in question, because they are the mortgagees as shown on the land records (by fraudulent, fabricated assignments) and they are the holders (not in due course) or otherwise in possession of the (fabricated) notes. During foreclosure proceedings, our servicers and foreclosure counsel have authority to negotiate and execute loan restructurings (against what the pooling and servicing agreements state) and other foreclosure alternatives (trial modifications that are ultimately denied) with borrowers as well as attend (pointless) mediation. To require investors who do not service the loan to be a party in the foreclosure action and attend mediation would be costly and unduly burdensome, which may result in additional costs being passed on to the borrower. The intended purpose of the mediation program could be achieved effectively without this verification requirement.”

Robert E. Bostrom
Freddie Mac
Executive Vice President
General Counsel & Corporate Secretary
____________________________________________________________

“TYPICALLY……….The Plaintiff in a foreclosure action does not own the underlying note or loan………”

OH THEY SLAY ME!

It IS Typical today!

You know what’s the biggest crack up?

Here we are struggling mightily to PROVE that the Plaintiff doesn’t own the mortgage or note in cases where the Plaintiff is forging documents to PROVE that they DO own the mortgage and note………………and la-de-da in waltzes Freddie Mac’s VP and bumbles his way into the most inane (and shockingly honest) comment in the world!

4closureFraud
http://4closurefraud.wordpress.com/
____________________________________________________________

I just updated the spreadsheet I maintain to track foreclosure activity in Buncombe County North Carolina. While there are many indications that the real estate market is in recovery, the foreclosure statistics are a lagging indicator and as of today, is not a rosy picture.

 I track the recording of two documents at the Buncombe County Register of Deeds. These are Notice of Appointment of Substitute Trustee and Foreclosure Notice. The Notice of Appointment of Substitute Trustee, or simply Substitute Trustee, is the first public notice that a property owner is facing the foreclosure process. The Foreclosure Notice is recorded to give public notice that the foreclosure process concluded with the property owner losing title to the real estate.

Year to date, 1107 property owners have found themselves in the foreclosure process in Buncombe County. This is a 30% increase compared to the same period in 2008. We see that 354 properties have been lost to foreclosure. This is a stunning 59% increase compared to losses in 2008. Earlier in the year properties lost to foreclosure were up 71%. The little bit of good news is that we are seeing moderation.

Of those who entered the foreclosure process, 32% ultimately lost the property. For the same period in 2008 we witnessed 25% of those in foreclosure saw the conclusion with loss of property.

Simply put we have more people in foreclosure and more of those are losing their real estate.

In preparing for my sales meeting scheduled for tomorrow, I made a quick analysis of lot and homes sales comparing October 2009’s preliminary results to October 2008. The results are exciting.

Lot sales in Buncombe County are up 41%.

Resales of existing homes are 23% overall. Single Family is up 14.6%, Condos are up an astounding 92% and townhomes are up 75%.

New construction sales were flat, but I attribute this to foreclosed new construction being sold from banks’ REO portfolios and then classified as resales.

Overall homes sales in Buncombe County are up 17.3%. My more indepth analysis will follow later in the week, but this is certainly good news.

I am surprised and delighted as I read the details of the revised first-time homebuyer tax credit bill. The revised bill, that is awaiting President Obama’s signature, not only extends the existing $8000 first-time homebuyer tax credit, but expands the program for other buyers as well.

The biggest thing that impresses me with the current bill is that is appears to have been thought out! Do not laugh. Having personally lobbied on the state level for a bill to alleviate a tax imposed by a treasury ruling, it can be amusing and frightening the things that can get lost in the rush to push through a bill. What immediately jumps out is a reasonable timetable. For buyers to take advantage of the tax credit, they must have the home “under contract” by April 30 and close by July 1. This should minimize rushing a closing after a home is put under contract. I personally would hate to see buyers waiving inspections or surveys because they did not have an adequate due diligence period between effective contract date and the deadline for the tax credit.

The expansion to buyers who have owned homes is well thought out. If a buyer has owned a home for five consecutive years of the past eight years, they qualify for a $6500 tax credit. This means if someone purchased a home in 2001, sold it in 2007 and rented the past two years they would qualify for the $6500 tax credit.

There are income limits and the credits do NOT apply for homes costing more than $800,000. Details for limitations will appear in a post next week.

In the meantime, buyers should rejoice that the opportunity has been extended and equitably expanded. Sellers should plan to see increased demand.

“When your paperwork is woefully incomplete in a foreclosure case, you can ask for a delay or you can drop the case or have it dismissed, and you usually get another chance. Bankruptcy, by contrast, is kind of a one-shot deal by nature. The judge will add up all the debts, add up all the money available, approve a plan, and that’s it. Very limited do-overs.

Olga’s motion listed a number of problems:

# PHH didn’t own the note.
# The owner of the note was not joined in the proceeding.
# PHH did not file all the documents necessary to show that it was authorized to bring the claim by the holder of the note.
# PHH therefore is not the real party in interest and had no standing.
# The documentation for the securitization trust that probably owns the note probably severely limits the way notes and mortgages can be handled, but
# The mortgage documentation was not provided, so there is no way to know if it was assigned properly.
# The note was provided, but it had an endorsement dated after the bankruptcy filing.

These items are explained a little bit more in Olga’s Response to the lender’s objection to her motion to expunge the proof of claim, which is a pretty good summary of things borrowers might want to think about when they are considering whether to contest foreclosures. MERS was a nominee at some point, but was not directly involved in the case.”

Calculated Risk guest post from albrt.

Full Response to the Lenders Objections PHH Mortgage Here

4closureFraud

In re Washington Mutual, Inc., Securities Litigation
Court: United States District Court, Western District of Washington
Case Number: 07-cv-1809
Judge: Hon. Marsha J. Pechman
Case Contacts: Chad Johnson, Hannah Greenwald Ross, Jerald Bien-Willner, Katherine McCracken Sinderson

“Securities class action filed on behalf of investors in Washington Mutual, Inc. (“Washington Mutual” or the “Company”) against the Company, certain of its directors and executive officers, its auditor Deloitte & Touche LLP (“Deloitte”), and several major financial institutions (the “Underwriters”) that underwrote the Company’s securities offerings during the Class Period.

Until it was forced to declare bankruptcy on September 26, 2008 after its banking subsidiary was seized by federal regulators, Washington Mutual was one of the nation’s largest originators and servicers of residential mortgages. The Company had long represented itself to be a traditional low-risk depository institution and mortgage lender. In reality, in recent times and particularly in 2006 and 2007, it is alleged that Washington Mutual increasingly focused on high-risk and experimental mortgage products, while secretly abandoning proper standards of managing, conducting and accounting for its business. For example, as alleged in a recent complaint filed by the Attorney General of the State of New York concerning First American Corporation’s eAppraiseIT subsidiary, Washington Mutual elicited fraudulent appraisals from eAppraiseIT in order to increase its loan volume and further grow its mortgage lending business. As alleged, this wrongful practice, among others, including the improper accounting for the Company’s mortgage loans and deficient internal controls, caused the Company to defraud the investing public by issuing false and misleading financial statements and misrepresenting the nature of the Company’s lending business.

In 2006 and 2007, with the direct participation of the Underwriters and Deloitte, the Company was able to raise nearly $5 billion through four securities offerings. Each participant in Washington Mutual’s securities offerings, including the Underwriters and Deloitte, were obligated by law to ensure that the statements made to investors in the offering materials were not false. However, in offering these securities, neither the Company, its officers, its Board of Directors, Deloitte, nor the Underwriters disclosed the hidden weaknesses in the Company’s lending practices and accounting policies. Rather, as alleged in the Amended Consolidated Class Action Complaint, each of those securities offerings incorporated materially untrue information about the Company.

Ultimately, the Company’s misconduct began to come to light in late 2007, when in a series of disclosures Washington Mutual announced a shocking 72% decline in the Company’s earnings and the need to set aside more than $2 billion additional funds to cover expected loan losses. Upon the disclosure of this news and other revelations about Washington Mutual’s improper lending practices, the Company’s stock price and the value of the securities made pursuant to the Company’s offerings plummeted, and Washington Mutual’s investors suffered billions of dollars of losses.

On May 7, 2008, the Honorable Marsha J. Pechman of the United States District Court for the Western District of Washington appointed Ontario Teachers’ Pension Plan board (“Ontario Teachers”) Lead Plaintiff and BLB&G Lead Counsel for the Class.

On August 5, 2008, BLB&G filed on behalf of Ontario Teachers and other investors a class action complaint detailing allegations of fraud in Washington Mutual’s home loan business. The complaint includes a discussion of just under ninety (90) statements from former Washington Mutual insiders and others obtained in the course of BLB&G’s investigation, as well as previously undisclosed Washington Mutual documents, and expert analysis all supporting the allegations of wrongdoing in the complaint, including the misconduct of the Underwriters and Deloitte. On May 15, 2009, Judge Pechman sustained certain of the claims in the complaint while asking plaintiffs to replead the remaining claims. On June 15, 2009, BLB&G filed an Amended Consolidated Class Action Complaint incorporating additional evidence obtained in the wake of WaMu’s bankruptcy.

BLB&G continues to investigate the misconduct at Washington Mutual, including the activities of the Underwriters and Deloitte. If you wish to discuss the investigation, please contact us at: 212-554-1400.”

4closureFraud

Idaho Takes the Lead: In re Sheridan — Real Party Must Have Actual Pecuniary Interest.

“The real party in interest in relief from stay is whoever is entitled to enforce the obligation sought to be enforced. Even if a servicer or agent has authority to bring the motion on behalf of the holder, it is the holder, rather than the servicer, which must be the moving party, and so identified in the papers and in the electronic docketing done by the moving party’s counsel.”

“I am an attorney who has taken “produce the note” one step further.

I am current on my mortgage, and actually what prompted me to take the action I am taking is that I had paid off my second mortgage but my lender refused to surrender my paid off second mortgage note. My lender also refused to prove to me that it had my first mortgage note or that it had the authority to make payment demands.

So I decided to sue my lender.

I decided that if the “produce the note” strategy was working for people who were in default, it would work for those who are not in default. If the bank doesn’t have the right to foreclose, it doesn’t have the right to demand payment either.

The Uniform Commercial Code is the homeowner’s best friend.

UCC 3-501 requires a lender to “exhibit the note” when the lender makes demand for payment, and the borrower demands to see the note. Technically a demand for payment occurs every month, and it also occurs when a bank begins foreclosure proceedings.

UCC 3-501 also requires a servicer to show authority to make a demand for payment, if it does not own the note, but is merely servicing it. In the event a noteholder or servicer or will not exhibit the note or perform other legal requirements when requested to do so by the borrower, this UCC section allows the borrower to discontinue payments WITHOUT DISHONOR until such time as the noteholder or servicer complies with all laws or contract provisions.

Also helpful is UCC 3-309. UCC 3-309 requires the lender go through certain steps to prove up a note (make it enforceable) that is lost or destroyed. This is not easy for the lender to do, if one is willing to contest everything the lender does to try to prove up the note. This proof takes witnesses, who may not be able to say what the law requires, if the witnesses are thoroughly cross-examined. (Tip: Don’t let the lender get by with self-serving affidavits; take their witnesses’ depositions). Moreover, this section requires the lender to give adequate protection in the event the lender can make the lost note enforceable. That may be difficult for a lender that is under FDIC scrutiny and whose stock is in the tank.

I filed suit in March and so far my lender has vigorously put off answering my suit with what I believe was a meritless motion to dismiss, but has not yet produced either note, and has confirmed my unpaid note was sold to Fannie Mae. This is clearly a justiciable controversy as will be clear when I ask the court to allow me to put my future payments into the registry of the court until the note is proven up and authority to make demand is proven.

If the bank really believed it had the evidence to compel me to pay, it would have gladly produced the note by now with proof of authority to demand payment. They have steadfastly avoided having to do this. Chances are the note is lost or destroyed.

It gets even better. MERS is the sole beneficiary of my Deed of Trust (quite often the case for homeowners on Deeds of Trust since 2000). The Arkansas Supreme Court has just ruled in March of this year that MERS was not the beneficiary of a Deed of Trust (with language verbatim to mine) despite what the Deed of Trust said, because MERS has no interest in the note payments or in the corpus of the trust (homeowner’s obligation to pay). No beneficiary means the Deed of Trust is fatally flawed.

More and more it is looking like I will have the lien on my home removed and I may well never have a noteholder to pay. I could even get some of my money back.”