Chicago Title’s attorney said if MERS is involved, lenders must ensure mortgage’s chain of ownership is properly recorded before a non-judicial foreclosure. (by Joe Vera)
July 1, 2011
http://www.oregonlive.com/finance/index.ssf/2011/07/what_oregons_foreclosure_mess_means_and_when_itll.html
“I can assure you that this type of criminal fraud is rampant across the nation.” John O’Brien, Essex S. Dist. Registrar.
Martha Flynn, the Vernonia woman who persuaded a judge to block her eviction and void a bank’s foreclosure sale, looms a hero in many distressed homeowners’ minds today.
This even as she’s not sure where she’ll be living next month.
The same uncertainty also applies to Oregon’s housing market. With the status of potentially thousands of foreclosures and past sales up in the air, it’s unclear how long the housing crisis will drag on the broader market.
And there’s not much immediately we can do about it.
“It’s hard to predict where things are going to go,” said Cleve Abbe, state underwriting counsel for Fidelity National Title Group in Portland.
Since 2007, lenders have launched about 100,000 foreclosure actions in Oregon, according to RealtyTrac, one foreclosure data service. That’s resulted in just fewer than 35,000 sales. But sales have slowed this year. Through May, they’re on pace to total just more than 9,000 in 2011, down from 15,500 foreclosure sales last year, RealtyTrac data show.
Signs of life in the broader housing market are sporadic. Portland-area prices were down 9 percent over the past year through May, hovering at levels last seen in the winter of 2004, according to last week’s S&P/Case-Shiller Home Price Index report.
Yet backlogs are dropping. Lane County’s 12-month inventory in January has fallen to a 5.2-month inventory in June, said Cory T. Neu, a broker with Neu Real Estate in Marcola.
Realtors in Portland report hot micromarkets, with homes going in one day in inner Southeast Portland neighborhoods.
But sales activity around the larger metropolitan Portland has fallen in the first five months of the year, compared with the same period a year ago. New listings, in fact, have fallen 26 percent.
“I always caution people when they ask about ‘What’s the market doing?’” Neu said “Well, which market are we talking about?”
The foreclosure problem in Oregon
For now, we’re focusing on the foreclosure market — and the heart of its legal turmoil in Oregon.
Brian Feulner/ The OregonianA Columbia County judge blocked U.S. Bank from evicting Martha Flynn from her Vernonia home after it was bought by the bank in foreclosure.
For years, lenders have sold and resold mortgages to investors to broaden the market for home loans and make a boatload of money upfront on fees.
Along the way, they tried to avoid the traditional process of recording those transactions in local county recorders offices. But as the housing market collapsed and servicers had to foreclose on delinquent borrowers, the mortgage industry discovered a certain inconvenient truth.
The Mortgage Electronic Registration System — set up to avoid the cost and logistics of recording all of these sales — didn’t jibe with Oregon law.
For a foreclosure to proceed quickly and outside the auspices of a judge, the state requires that the loan’s ownership be properly and clearly documented. But the electronic recording system set up by banks, servicers and title companies took enough shortcuts to compel a number of federal judges to halt foreclosures. Oregon law, they ruled, demanded that all loan sales be recorded to ensure the appropriate party was actually foreclosing.
It’s gotten to the point, in Flynn’s case, that a judge has blocked an eviction and nullified a sale after the fact.
It’s not hard to imagine other homeowners trying the same tack. It’s also not hard to imagine ousted homeowners, unhappy with how their servicer handled their modification request, asking a court to rescind the foreclosure sale of a home where a new family already is living.
You can see where this is going, and it’s not good. Title insurance companies are warning lenders they might not be able to guarantee clean title to a property if a sale is nullified because of missing recordings. Chicago Title Insurance Co. attorney Greg Nelson said it’s telling lenders that if MERS is involved in a mortgage, the lender must ensure the mortgage’s chain of ownership is properly recorded before it can launch a foreclosure outside a courtroom.
“Hopefully the lenders will be as motivated to do things right as we are,” Nelson said.
In court
The one clear route around this mess is one nobody wants to take: judicial foreclosure.
Lenders have the option of getting a judge’s ruling on a foreclosure.
Few do so because it normally takes much longer and costs more, too. Loan servicers or trustees undoubtedly will have to defend the ownership history. It’s not always clear they can.
Even after a judgment and sheriff’s sale, state law gives borrowers six months to come up with enough cash to reclaim the property. This is called the borrower’s right of redemption. So, in reality, lenders are looking at a year or more before a foreclosure process actually finishes cleanly.
Borrowers, on the other hand, can be pursued by lenders for deficiency if they leave the house before the foreclosure sale is completed, Abbe notes. The deficiency is the difference between the amount owed on a mortgage and the amount it was sold for in foreclosure. In nonjudicial foreclosure, the lender eats that difference.
“It’s potentially immobilizing for borrowers who may want to move out and move to some other state and try to find a job somewhere else,” Abbe said.
What else could happen next to resolve all this?
High court ruling: A couple judges have gone against the majority of opinions on the legal standing of MERS. Attorneys and judges alike are trying to agree on a case that can be sent to the Oregon Supreme Court so the matter can be resolved once and for all. Best-case scenario, we’re probably talking a decision that’s six months away. More likely it’ll take at least a year.
New law: An end-run effort by the mortgage industry to get the Legislature to change the law fell flat amid public outcry against the broad-scale move. Now it’ll probably be February before a fix can be obtained this way.
Rerecording: Lenders could go back and try to rerecord mortgage documents. But many lenders have gone out of business, so it’s unlikely trustees could get the appropriate signatures in all cases.
Good faith negotiations: An even cleaner way out would be for banks to negotiate settlements with homeowners. The banks could pay them to give them clean title to the home. They could reduce principal, something servicers and investors have so far been reluctant to do.
“There are common-sense ways of resolving this, and the banks are deer in the headlights right now,” said Phil Querin, a real estate attorney in Portland.
Lawyers will tell you the Columbia County judge’s decision sets no legal precedent. It’s just one judge sitting in St. Helens and her interpretation of events.
But to homeowners asked time and again to resubmit their paperwork for modifications they never receive, or those being foreclosed upon while they await modification, it’s sweet justice.
“Most of these homeowners aren’t looking for a free handout,” said Nancie Koerber, co-founder of Good Grief America, a nonprofit near Central Point that helps homeowners fight foreclosure. “They’re just looking for someone to work with them. Most of the banks are not, unless you hold their feet to the fire.”
For the rest of us, it’s affirmation that Oregon’s housing market is nowhere near recovery.
Might as well find a good seat around the house and get used to it.
Showing posts with label fraud. Show all posts
Showing posts with label fraud. Show all posts
Saturday, July 2, 2011
Are You Ready? 6 – 7 Million More Foreclosures. Politicians criticize Fannie Mae & Freddie Mac out of one side of their mouths. Read: Who got the most money from FNMA.
Are You Ready? 6 – 7 Million More Foreclosures. Politicians criticize Fannie Mae & Freddie Mac out of one side of their mouths. Read: Who got the most money from FNMA. (by Joe /vera)
Scott Simon, a managing director and head of global asset-giant Pimco’s mortgage- and asset-backed securities teams, helped his firm avoid losses that hit Wall Street. is credited with foreseeing the housing crash and helping his firm dodge losses that plagued Wall Street.
He was recently asked if more foreclosures are expected to hit the market? He responded that over the next three years it could be as many as 6 -7 million more foreclosures.
Pulled the following from an old report. It was called shot in the Fannie Mae.
1997
Fannie Mae is a GSE (Govt. Sponsored Entity) regulated by Congress.
Fannie Mae buys mortgages from other companies.
It is backed by the taxpayers for all losses, but keeps all profits.
1998
Banks begin making thousands of bad loans,0 down, no documentation, for 120%! (1998 – 2008).
Executives at Fannie receive huge bonuses if loan targets are met.
Franklin Raines and Jamie Garelick from the Clinton Administration are appointed to run Fannie Mae.
2003
President Bush proposes a new oversight committee to clean up Fannie Mae, but Democrats derail the effort.
1999-2004
Raines earns $100 million in bonuses.
Garelick earns $75 million in bonuses.
In 2004, Enron collapses, congress investigates, Executives Skilling & Lay go to jail, for fraudulent bookkeeping.
Congress responds with the Sorbanes-Oxley Act, more heavy regulation of corporations.
2004
An OMB investigation finds massive fraudulent bookkeeping at Fannie Mae.
False numbers triggered executive bonuses every year.
Congress holds no hearings, no one goes to jail, or is punished.
WHY NOT?
1999-2005
Fannie Mae gives millions to Democratic causes, examples: Jesse Jackson & ACORN.
Fannie Mae pays millions to 354 congressmen and senators, from both parties.
Who got the most money?
#1 Sen. Christopher Dodd , (D-CT) Chairman of the Banking, Housing, & Urban Affairs Committee
#2 Sen. Barack Obama , (D-IL) Federal Financial Management Committee
#3 Sen. Chuck Schumer, (D-NY) Chairman of the Finance Committee
#4 Rep. Barney Frank, (D-MA) Chairman of the House Financial Services Committe
2005
Franklin Raines & top execs are forced to resign from Fannie Mae.
They do not go to jail.
There is no media “perp. walk.”
They keeps all of their bonuses
They finally pay $31.4 million in civil fines.
2005
The Federal Housing Enterprise Regulatory Reform Act is sponsored by: Sen. John McCain, (R-AZ) Armed Services, & Commerce, Science, & Transportation, “If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.”
None of the top 4 recipients support the legislation.
The reform act is blocked by Democrats, never even making it out of committee.
None of the politicians return any of the money, tainted by fraud.
2008
Fannie Mae & Freddie Mac go bankrupt and the govt. takes them over completely.
Lehman Brothers, goes bankrupt from investing in bad mortgages.
AIG get $85 million in loan guarantees, after insuring bad loans & projects.
Taxpayers will ultimately pay BILLIONS.
2008
Franklin Raines is now an advisor to the Obama Campaign which wants the govt. to take over more of the economy.
Did government involvement in the mortgage market work out?
How will even MORE government involvement make it better? Do you want to be Sweden?
McCain favors revising regulations & loan standards, selling off Fannie & Freddie.
Sources
Congressional Record, 5/25/06
“Hannity & Colmes,” Fox News, 9/16-9/17/08
Herald Tribune, 4/18/08
New York Times, 9/13/03
www. govtrack.com, 9/17/08
This was produced as a Power Point presentation by an Adjunct Instructor a Dennis Jantz in 2008.
Scott Simon, a managing director and head of global asset-giant Pimco’s mortgage- and asset-backed securities teams, helped his firm avoid losses that hit Wall Street. is credited with foreseeing the housing crash and helping his firm dodge losses that plagued Wall Street.
He was recently asked if more foreclosures are expected to hit the market? He responded that over the next three years it could be as many as 6 -7 million more foreclosures.
Pulled the following from an old report. It was called shot in the Fannie Mae.
1997
Fannie Mae is a GSE (Govt. Sponsored Entity) regulated by Congress.
Fannie Mae buys mortgages from other companies.
It is backed by the taxpayers for all losses, but keeps all profits.
1998
Banks begin making thousands of bad loans,0 down, no documentation, for 120%! (1998 – 2008).
Executives at Fannie receive huge bonuses if loan targets are met.
Franklin Raines and Jamie Garelick from the Clinton Administration are appointed to run Fannie Mae.
2003
President Bush proposes a new oversight committee to clean up Fannie Mae, but Democrats derail the effort.
1999-2004
Raines earns $100 million in bonuses.
Garelick earns $75 million in bonuses.
In 2004, Enron collapses, congress investigates, Executives Skilling & Lay go to jail, for fraudulent bookkeeping.
Congress responds with the Sorbanes-Oxley Act, more heavy regulation of corporations.
2004
An OMB investigation finds massive fraudulent bookkeeping at Fannie Mae.
False numbers triggered executive bonuses every year.
Congress holds no hearings, no one goes to jail, or is punished.
WHY NOT?
1999-2005
Fannie Mae gives millions to Democratic causes, examples: Jesse Jackson & ACORN.
Fannie Mae pays millions to 354 congressmen and senators, from both parties.
Who got the most money?
#1 Sen. Christopher Dodd , (D-CT) Chairman of the Banking, Housing, & Urban Affairs Committee
#2 Sen. Barack Obama , (D-IL) Federal Financial Management Committee
#3 Sen. Chuck Schumer, (D-NY) Chairman of the Finance Committee
#4 Rep. Barney Frank, (D-MA) Chairman of the House Financial Services Committe
2005
Franklin Raines & top execs are forced to resign from Fannie Mae.
They do not go to jail.
There is no media “perp. walk.”
They keeps all of their bonuses
They finally pay $31.4 million in civil fines.
2005
The Federal Housing Enterprise Regulatory Reform Act is sponsored by: Sen. John McCain, (R-AZ) Armed Services, & Commerce, Science, & Transportation, “If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.”
None of the top 4 recipients support the legislation.
The reform act is blocked by Democrats, never even making it out of committee.
None of the politicians return any of the money, tainted by fraud.
2008
Fannie Mae & Freddie Mac go bankrupt and the govt. takes them over completely.
Lehman Brothers, goes bankrupt from investing in bad mortgages.
AIG get $85 million in loan guarantees, after insuring bad loans & projects.
Taxpayers will ultimately pay BILLIONS.
2008
Franklin Raines is now an advisor to the Obama Campaign which wants the govt. to take over more of the economy.
Did government involvement in the mortgage market work out?
How will even MORE government involvement make it better? Do you want to be Sweden?
McCain favors revising regulations & loan standards, selling off Fannie & Freddie.
Sources
Congressional Record, 5/25/06
“Hannity & Colmes,” Fox News, 9/16-9/17/08
Herald Tribune, 4/18/08
New York Times, 9/13/03
www. govtrack.com, 9/17/08
This was produced as a Power Point presentation by an Adjunct Instructor a Dennis Jantz in 2008.
Wednesday, June 29, 2011
Ally gets Subpoenas from U.S. Investigators on Mortgage Loans
Ally, previously GMAC, got $17.2 Billion in bailouts. They packaged loans sold to pools/trusts that posted a 2Nd quarter loss of $100 million. (by Joe Vera)
Ally gets subpoenas from U.S. investigators on mortgage loansBradley Keoun and Donal Griffin/ Bloomberg News
Ally Financial Inc., the auto and home lender that got a $17.2 billion bailout, said it received subpoenas from the U.S. Department of Justice and the Securities and Exchange Commission relating to how it handled home loans.
——————————————————————————–
The Justice Department is seeking information for an investigation of potential fraud related to “the origination and/or underwriting of mortgage loans,” Ally said today in a filing. The SEC subpoena is in connection with mortgages placed in securitization trusts, the Detroit-based lender said. The subpoenas were received this month, the company said.
Ally, 74 percent owned by the U.S. Treasury Department also said it will record a second-quarter cost of about $100 million to cover losses suffered by trusts that bought its mortgages. A separate April settlement with federal regulators investigating shoddy mortgage practices will also cost between $30 million and $40 million each year through 2013, according to the filing.
Ally, run by former Citigroup Inc. executive Michael Carpenter, is among the five largest U.S. mortgage originators and servicers.
“We are working closely with the Department of Justice and the SEC to deliver the requested information within the required timeframes,” Gina Proia, a spokeswoman for Ally, said in an e- mailed statement.
The disclosures were in an update to the prospectus, initially filed in March, for the company’s planned public share offering. The share sale has been delayed until equity markets improve, a person familiar with the plans said earlier this month.
——————————————————————————–
The $100 million cost will help cover losses on insured mortgages where guarantors later canceled the policies because “they believe certain loan underwriting requirements have not been met,” according to the filing. The mortgages had been sold to trusts, which packaged them into securities to sell to bond investors.
——————————————————————————–
“These payments resulted from a review of securitized mortgages as to which mortgage insurance was rescinded, although no claims have been made against us to date with respect to these mortgages,” Ally said in the filing. Proia said the firm doesn’t expect further charges related to the matter.
The majority of costs linked to Ally’s settlement with federal regulators in April are for “additional servicing, vendor management, legal, compliance, and internal audit personnel,” the firm said in the filing.
State attorneys-general are conducting a nationwide probe into allegations that the largest U.S. loan servicers used sloppy documentation during home seizures.
“We continue to cooperate with the ongoing investigations of various regulators,” Ally said. “Any additional results of these investigations are uncertain, but we expect that Ally or its subsidiaries will become subject to additional penalties, sanctions, or other adverse actions, including monetary fines, that could be substantial and have a material adverse impact on us.”
From The Detroit News: http://detnews.com/article/20110629/BIZ/106290392/Ally-gets-subpoenas-from-U.S.-investigators-on-mortgage-loans#ixzz1QgQzRDWZ
Ally gets subpoenas from U.S. investigators on mortgage loansBradley Keoun and Donal Griffin/ Bloomberg News
Ally Financial Inc., the auto and home lender that got a $17.2 billion bailout, said it received subpoenas from the U.S. Department of Justice and the Securities and Exchange Commission relating to how it handled home loans.
——————————————————————————–
The Justice Department is seeking information for an investigation of potential fraud related to “the origination and/or underwriting of mortgage loans,” Ally said today in a filing. The SEC subpoena is in connection with mortgages placed in securitization trusts, the Detroit-based lender said. The subpoenas were received this month, the company said.
Ally, 74 percent owned by the U.S. Treasury Department also said it will record a second-quarter cost of about $100 million to cover losses suffered by trusts that bought its mortgages. A separate April settlement with federal regulators investigating shoddy mortgage practices will also cost between $30 million and $40 million each year through 2013, according to the filing.
Ally, run by former Citigroup Inc. executive Michael Carpenter, is among the five largest U.S. mortgage originators and servicers.
“We are working closely with the Department of Justice and the SEC to deliver the requested information within the required timeframes,” Gina Proia, a spokeswoman for Ally, said in an e- mailed statement.
The disclosures were in an update to the prospectus, initially filed in March, for the company’s planned public share offering. The share sale has been delayed until equity markets improve, a person familiar with the plans said earlier this month.
——————————————————————————–
The $100 million cost will help cover losses on insured mortgages where guarantors later canceled the policies because “they believe certain loan underwriting requirements have not been met,” according to the filing. The mortgages had been sold to trusts, which packaged them into securities to sell to bond investors.
——————————————————————————–
“These payments resulted from a review of securitized mortgages as to which mortgage insurance was rescinded, although no claims have been made against us to date with respect to these mortgages,” Ally said in the filing. Proia said the firm doesn’t expect further charges related to the matter.
The majority of costs linked to Ally’s settlement with federal regulators in April are for “additional servicing, vendor management, legal, compliance, and internal audit personnel,” the firm said in the filing.
State attorneys-general are conducting a nationwide probe into allegations that the largest U.S. loan servicers used sloppy documentation during home seizures.
“We continue to cooperate with the ongoing investigations of various regulators,” Ally said. “Any additional results of these investigations are uncertain, but we expect that Ally or its subsidiaries will become subject to additional penalties, sanctions, or other adverse actions, including monetary fines, that could be substantial and have a material adverse impact on us.”
From The Detroit News: http://detnews.com/article/20110629/BIZ/106290392/Ally-gets-subpoenas-from-U.S.-investigators-on-mortgage-loans#ixzz1QgQzRDWZ
Tuesday, June 28, 2011
High School kids were Hired at $10/hr to sign Fraudulent Foreclosure Documents
One company, DocX, alone created at least 2 million mortgage documents nationwide. High School kids were hired at $10/hr to sign fraudulent foreclosure documents.
Sunday, Jun. 19, 2011
Mortgage papers raise Myrtle Beach real estate fraud claims
Signatures on documents used in foreclosure cases under review
By David Wren – dwren@thesunnews.com
Anthony Wise has been selling real estate in the Myrtle Beach area for nearly three decades, but he had never heard of Linda Green until after his home went into foreclosure.
Now, just like hundreds of thousands of people nationwide, Wise is finding that the biggest investment he will ever make – his home – is closely tied to Green … or someone pretending to be her.
Green was a shipping clerk for an automobile parts company before taking a job in the signature room at a mortgage document company called DocX in Alpharetta, Ga., according to news reports.
Myrtle Beach real estate agent Anthony Wise hopes to cancel his home loan based on what he considers a fraudulent document and improper securitization of his mortgage. His home on Haskell Circle in Myrtle Beach is in danger of foreclosure.
DocX helped banks create documents – such as mortgage assignments, which transfer ownership of a home loan from one entity to another – in cases where the documents were missing from the original loan file or never existed in the first place. Those documents then were used in foreclosure proceedings all across the country.
In Horry County, DocX documents have been used in at least 46 foreclosures since 2008.
There are nearly 100 DocX mortgage assignments filed at Horry County’s register of deeds office for homes with loans totaling more than $17 million.
Green’s purported signature is on many of those documents.
And many of those documents are suspected of being fraudulent, according to government regulators.
Questionable signatures
The Federal Reserve Board and a trio of banking oversight groups issued a consent order in April against DocX and its parent company, Lender Processing Services Inc. of Jacksonville, Fla.
Although no fine was issued and the regulators said more study is needed to determine what wrongdoing – if any – occurred, the order has sparked investigations of DocX, which shut down last year, in at least four states and more attorneys general are expected to join the probe.
The regulators’ action took place after a “60 Minutes” television news broadcast on April 3 that showed DocX hired high school students and others for $10 an hour to sit in a sweatshop-like setting and sign thousands of mortgage documents every day, without checking to see if the documents were accurate.
DocX workers signed the documents as if they were vice presidents of national banks. Green, for example, claimed to be the vice president of 20 banks at the same time.
And when the real Linda Green wasn’t signing the mortgage documents, other DocX workers were signing them in her name, according to the report. DocX documents, including those filed in Horry County, show numerous variations of Green’s purported signature.
DocX workers told “60 Minutes” that Linda Green’s name was chosen as the one they all would sign because it is short and easy to spell.
DocX also had public notaries sign the documents, attesting that Linda Green was the vice president of various banks and that they saw her sign the paperwork. Jasmin Bennett, the notary who signed Wise’s document, did not return a telephone call seeking comment.
Green, however, was not the vice president of 20 banks and the documents she and other DocX workers signed as if they were bank executives are coming under fire in legal proceedings – including Wise’s foreclosure.
Linda Green could not be reached for comment. A spokeswoman for Lender Processing Services did not respond to a request for comments.
“From what I can tell, everything DocX did was fraudulent,” Wise, the owner of Exit Elite Realty in Myrtle Beach, told The Sun News last week. “They were just robo-signing these documents, in my opinion, and Linda Green was the one who did that.”
Wise has hired a Myrtle Beach company called New South Financial to help him fight the foreclosure. He says the allegedly fraudulent mortgage assignment Green signed – in this case, pretending to be the vice president of American Home Mortgage Servicing Inc., the successor to Option One Mortgage – means the lender that is trying to take his home doesn’t really have clear title or rights to the property.
“At this point, with what we’ve discovered so far, I want my loan negated,” Wise said. “That’s what I’m going for.”
Game of cat and mouse
The allegations aren’t limited to DocX.
“If you look through your local land documents, they’re full of trash,” said Lynn Szymoniak, a Palm Beach Gardens, Fla., lawyer who made it her mission to raise courts’ awareness of fraudulent mortgage documents after her own home went into foreclosure. “It is incredibly widespread.”
Bob and Christine Dorrie moved to Myrtle Beach from the Bronx in New York in 1998. Like many people during the economic boom, the Dorries used their credit cards to finance a lifestyle beyond their means. So, in September 2007, they decided to refinance their home in the Island Green East neighborhood to pay off some of their bills.
“When we went to closing, the woman handling it said, ‘Well, we couldn’t get as much money as we thought’,” Bob Dorrie said, adding that none of the credit card bills wound up getting paid in full. “We ended up with all the charge cards still open with money still on them and a new home loan at a much higher price.”
The Dorries’ mortgage payment, which had been $987 a month, soared to $1,340 a month after the refinance.
As the economy grew worse, the Dorries quickly fell behind on their house payment.
Wells Fargo Bank, the new owner of the Dorries’ loan, filed a foreclosure lawsuit against the couple on Sept. 2, 2009. Bob Dorrie’s emergency bankruptcy filing three days before the house was to be sold at auction has put everything in limbo.
The Dorries now are questioning how Wells Fargo came to own their loan.
Ace Funding – the company that gave the Dorries their loan in 2007 – filed for bankruptcy protection and went out of business the following year, never officially assigning the Dorries’ loan over to Wells Fargo.
Wells Fargo didn’t file the assignment on behalf of the defunct Ace Funding until more than three weeks after the foreclosure lawsuit was filed. A lawyer representing Wells Fargo in the foreclosure lawsuit signed the document for Ace Funding, even though he “really has no authority to assign this mortgage,” according to Terry Walden, an audit originator and attorney liaison for New South Financial.
When Dorrie pushed Wells Fargo for more information about the ownership of his mortgage, the bank told him in November that Fannie Mae owned the mortgage and that Wells Fargo was only the loan servicer.
Then, in April, Wells Fargo told Dorrie that the real owner of his mortgage is Freddie Mac.
“Given this information, only Freddie Mac has the authority to enforce this note and foreclose on this property,” Walden said.
Wells Fargo spokesman Jim Hines disagrees, saying the Dorries’ loan documents were handled appropriately and that the bank’s contract as a loan servicer gives it “the authority to take action on the loan to protect the investor’s interests, including foreclosure.”
Hines said Wells Fargo is working with the Dorries and hopes to “reach a solution that would help them keep their home.”
Linda Green’s signature appears on DocX paperwork used with thousands of Wells Fargo mortgages – although not in the Dorries’ case – since the real estate boom.
Even so, Hines said Wells Fargo has reviewed mortgage documentation for all of its loans and “has not found any foreclosure that should not have taken place.”
Wells Fargo sees foreclosure as a last resort, Hines said, and has worked with 673,000 borrowers to modify their loans since January 2009.
Bob Dorrie said Wells Fargo has repeatedly thrown up road blocks while he has tried to modify his loan. He hopes the perceived chain of title issues will give him some additional leverage in court proceedings and force his lender to modify his loan on terms he and his wife can live with.
“This is supposed to help force the bank’s hand, instead of them playing this game of cat and mouse with me,” Bob Dorrie said. “I’m still in the home, and I’d like to keep it.”
Who is at fault?
Ballery Skipper, the director of Horry County’s Register of Deeds office, said her staff is not responsible for investigating whether or not a document is legitimate. As long as fraud is not suspected, Skipper said, she is legally required to file the documents.
In the few cases where Skipper or her staff suspects fraud, the case is referred to the state attorney general’s office. Skipper said she has not referred any of the DocX filings to law enforcement.
Register of Deeds offices in other states, however, are starting to do their own investigations. A review of filings in Guilford County, N.C., for example, found 1,920 DocX loan documents for property worth $255 million and 15 variations of Linda Green’s signature.
Some mortgage executives say the documentation problems are overblown, and that homeowners are looking for any reason to stop a foreclosure.
“The homeowners have defaulted on their loans, and a flaw in the documentation does not mean the foreclosure was a wrongful foreclosure,” said Janis Smith, vice president of Mortgage Electronic Registration Systems, or MERS, the nation’s largest mortgage loan registration service.
“Foreclosure is a very emotional situation, and people will try all angles in an attempt to stop the process,” Smith said. “At the end of the day, though, you still have a situation where the borrower didn’t make their payments.”
Walden, however, says that kind of response is disingenuous. While the courts are set up to determine whether a homeowner has defaulted on a loan, he said, they are also responsible for ensuring the banks’ paperwork is legitimate and that due process is followed.
“The banks just made up the paperwork they needed to get the deal done,” Walden said. “We want to hold the banks accountable for that.”
Where it all began
To better understand how this mortgage mess occurred, one has to look back to the home-buying frenzy that took place between 2005 and 2007.
During the real estate boom, some of the nation’s largest banks bought home loans from all over the country and packaged them together in mortgage-backed securities that were sold to investors – including many 401(k) programs and pension funds.
Each security that was issued included thousands of mortgage loans worth a combined $1 billion to $1.5 billion – and the Wall Street banks sold hundreds of those securities to investors who believed the rise in home values would never end.
As the hunger for mortgage-backed investments grew, banks had to find more and more people to take on new loans that could be packaged into new securities. Before long, home loans were being given to nearly everyone that applied – regardless of income or credit score.
Many banks didn’t even require documentation of a person’s income or employment before giving them a loan. And some bankers looked the other way when an obviously fraudulent application crossed their desks, recent investigations show.
“If you had a heartbeat, you could get a loan,” said Walden, a former mortgage broker.
When the millions of people who never should have been given credit in the first place started to default on their home loans, the mortgage-backed securities house of cards imploded and the real estate bust began.
Those securities also are at the root of today’s mortgage documentation debacle.
The trust companies that issued those securities – usually a large bank such as Bank of New York or Deutsche Bank – were required by law to have a copy of the mortgage note and every mortgage assignment showing a clear chain of title for each of the thousands of loans included in each investment offering.
The trust companies were required to obtain those documents no later than 90 days after the security was issued.
There were so many securities being issued so quickly, however, that the trust companies were not able – or didn’t bother – to collect all the required documents.
That didn’t cause problems as long as the mortgages were being paid. But when a homeowner stopped paying and a bank decided to foreclose, the needed documentation wasn’t there.
That is why many banks turned to “document mills,” which charged a small fee to create the documentation banks needed to proceed with foreclosure. It is estimated DocX alone created at least 2 million mortgage documents nationwide, many of them allegedly forged and fraudulent, over a two-year period.
“Instead of doing things the right way, the banks chose to go into court and lie,” Szymoniak said.
Foreclosure lawsuit
Anthony Wise refinanced his Myrtle Beach home in February 2006 and he thinks his lender started to recreate his mortgage paperwork after he missed a payment in late 2008.
For example, a mortgage assignment transferring the loan from Option One to Deutsche Bank National Trust – the company that oversaw the mortgage-backed security that purportedly includes Wise’s loan – was recorded Jan. 23, 2009, in Horry County. That document was prepared by DocX and includes Green’s signature.
“They were trying to get all of their paperwork in a row just in case,” Wise said.
A Deutsche Bank spokesman did not respond to a request for comments.
Deutsche Bank filed a foreclosure lawsuit against Wise in April 2010, and that case is still pending.
In addition to allegations that the DocX mortgage assignment is fraudulent, Wise says Deutsche Bank missed the deadline for documenting his loan and has no right to foreclose on his home.
Wise’s mortgage was placed into a security called Soundview Home Loan Trust 2006-OPT2, which had a closing date of April 7, 2006. That means all of the documents for all of the loans in that security had to be obtained by Deutsche Bank within 90 days of that closing or, by law, they could not be included.
Wise’s mortgage assignments – including the one giving the loan to Deutsche Bank – weren’t filed until more than two years after the Soundview security closed, according to county property records.
Help for homeowners
There are dozens of instances in Horry County where DocX hastily created mortgage assignments to help banks foreclose on residents’ homes. In most cases, those documents were not created until after a foreclosure lawsuit had been filed. And in some cases, DocX back-dated the documents to make it appear as if they took effect just days before the foreclosure filing.
Most of the DocX paperwork filed in Horry County bears the signature of Linda Green.
Richard Lovelace, a Conway lawyer who specializes in real estate and banking law, said the banks who used DocX – or similar document mills – have put themselves at risk if homeowners can prove the paperwork is fraudulent.
That is true even if a home has already been lost to foreclosure.
“Any flaw that is discovered post-hearing, if it’s brought to the court’s attention in a timely manner, the judge will set aside the judgment and reopen the hearing,” said Lovelace, who is not involved in any of the foreclosure cases where DocX documents were used.
If the court proceedings – and the paperwork those proceedings were based on – are proven to be defective, Lovelace said, the bank can’t take the property.
“The court would declare the loan void,” he said. “The judgment would have to be set aside and the homeowner would be restored as the owner of the property. That’s the only remedy in such a case.”
Szymoniak, the Florida lawyer, envisions another solution.
“A fund should be set up, kind of like the BP oil spill fund, that will reimburse people who’ve lost their homes because of these fraudulent loan documents,” she said.
The banks who contributed to the problem would contribute money to the fund, and an independent third party would determine which homeowners qualify for reimbursement.
That is an idea that is being discussed by federal regulators and the attorneys general in all 50 states, who have initiated a widespread investigation into shoddy mortgage documentation by banks and document mills.
Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., has estimated that such a fund would need billions of dollars.
Mark Plowden, a spokesman for S.C. Attorney General Alan Wilson, said his office is active in the national investigation but is not targeting any specific company, such as DocX.
He said the multi-state group is “reviewing the larger issue, which includes these entities and their actions.”
Owners fight back
Some homeowners aren’t waiting for a federal investigation to be completed – they are fighting back by taking the banks to court. And in some recent cases, the homeowners are winning.
In Russell County, Ala., for example, Phyllis Horace obtained a summary judgment in March against LaSalle Bank National Association after alleging the bank did not have the proper paperwork needed to foreclose on her home.
Judge Albert Johnson, in ordering LaSalle to stop foreclosure proceedings against Horace, said he was “surprised to the point of astonishment” that the bank did not comply with its own regulations regarding documentation of loans.
The Dorries say they also plan to file a counterclaim in their foreclosure lawsuit based on information they have discovered in recent months.
New South Financial is helping Myrtle Beach area residents review mortgage documents to determine whether flaws or fraud exist that could help force banks into negotiating new loan terms.
The company also has agreements with area lawyers who will file complaints on behalf of New South clients. The service isn’t cheap – an audit of documents costs $3,000 and lawyer fees total $500 a month – but Walden said it is less expensive than hiring a law firm to defend a foreclosure action.
Experts say such services can be useful, but homeowners can do much of the needed investigation on their own for free by visiting the local register of deeds office or searching securities filings on the Internet.
Homeowners also can take advantage of an S.C. Supreme Court order that halted all foreclosures as of May 9 until after banks and borrowers have a chance to try and negotiate a modified loan. That order was not directly related to mortgage documentation issues, and if negotiations fail the banks can proceed with foreclosure.
Szymoniak, whose foreclosure is based in part on DocX paperwork signed by Linda Green, said she understands the resentment some people feel against those who haven’t been able to pay their mortgages yet are fighting foreclosure based on what some might consider a technicality.
In many cases, though, that’s the only way to get banks to work with borrowers, she said.
“We have a wholesale deterioration of neighborhoods across the country because of these foreclosures,” she said. “And that’s doing nothing but making the housing crisis even worse.”
Sunday, Jun. 19, 2011
Mortgage papers raise Myrtle Beach real estate fraud claims
Signatures on documents used in foreclosure cases under review
By David Wren – dwren@thesunnews.com
Anthony Wise has been selling real estate in the Myrtle Beach area for nearly three decades, but he had never heard of Linda Green until after his home went into foreclosure.
Now, just like hundreds of thousands of people nationwide, Wise is finding that the biggest investment he will ever make – his home – is closely tied to Green … or someone pretending to be her.
Green was a shipping clerk for an automobile parts company before taking a job in the signature room at a mortgage document company called DocX in Alpharetta, Ga., according to news reports.
Myrtle Beach real estate agent Anthony Wise hopes to cancel his home loan based on what he considers a fraudulent document and improper securitization of his mortgage. His home on Haskell Circle in Myrtle Beach is in danger of foreclosure.
DocX helped banks create documents – such as mortgage assignments, which transfer ownership of a home loan from one entity to another – in cases where the documents were missing from the original loan file or never existed in the first place. Those documents then were used in foreclosure proceedings all across the country.
In Horry County, DocX documents have been used in at least 46 foreclosures since 2008.
There are nearly 100 DocX mortgage assignments filed at Horry County’s register of deeds office for homes with loans totaling more than $17 million.
Green’s purported signature is on many of those documents.
And many of those documents are suspected of being fraudulent, according to government regulators.
Questionable signatures
The Federal Reserve Board and a trio of banking oversight groups issued a consent order in April against DocX and its parent company, Lender Processing Services Inc. of Jacksonville, Fla.
Although no fine was issued and the regulators said more study is needed to determine what wrongdoing – if any – occurred, the order has sparked investigations of DocX, which shut down last year, in at least four states and more attorneys general are expected to join the probe.
The regulators’ action took place after a “60 Minutes” television news broadcast on April 3 that showed DocX hired high school students and others for $10 an hour to sit in a sweatshop-like setting and sign thousands of mortgage documents every day, without checking to see if the documents were accurate.
DocX workers signed the documents as if they were vice presidents of national banks. Green, for example, claimed to be the vice president of 20 banks at the same time.
And when the real Linda Green wasn’t signing the mortgage documents, other DocX workers were signing them in her name, according to the report. DocX documents, including those filed in Horry County, show numerous variations of Green’s purported signature.
DocX workers told “60 Minutes” that Linda Green’s name was chosen as the one they all would sign because it is short and easy to spell.
DocX also had public notaries sign the documents, attesting that Linda Green was the vice president of various banks and that they saw her sign the paperwork. Jasmin Bennett, the notary who signed Wise’s document, did not return a telephone call seeking comment.
Green, however, was not the vice president of 20 banks and the documents she and other DocX workers signed as if they were bank executives are coming under fire in legal proceedings – including Wise’s foreclosure.
Linda Green could not be reached for comment. A spokeswoman for Lender Processing Services did not respond to a request for comments.
“From what I can tell, everything DocX did was fraudulent,” Wise, the owner of Exit Elite Realty in Myrtle Beach, told The Sun News last week. “They were just robo-signing these documents, in my opinion, and Linda Green was the one who did that.”
Wise has hired a Myrtle Beach company called New South Financial to help him fight the foreclosure. He says the allegedly fraudulent mortgage assignment Green signed – in this case, pretending to be the vice president of American Home Mortgage Servicing Inc., the successor to Option One Mortgage – means the lender that is trying to take his home doesn’t really have clear title or rights to the property.
“At this point, with what we’ve discovered so far, I want my loan negated,” Wise said. “That’s what I’m going for.”
Game of cat and mouse
The allegations aren’t limited to DocX.
“If you look through your local land documents, they’re full of trash,” said Lynn Szymoniak, a Palm Beach Gardens, Fla., lawyer who made it her mission to raise courts’ awareness of fraudulent mortgage documents after her own home went into foreclosure. “It is incredibly widespread.”
Bob and Christine Dorrie moved to Myrtle Beach from the Bronx in New York in 1998. Like many people during the economic boom, the Dorries used their credit cards to finance a lifestyle beyond their means. So, in September 2007, they decided to refinance their home in the Island Green East neighborhood to pay off some of their bills.
“When we went to closing, the woman handling it said, ‘Well, we couldn’t get as much money as we thought’,” Bob Dorrie said, adding that none of the credit card bills wound up getting paid in full. “We ended up with all the charge cards still open with money still on them and a new home loan at a much higher price.”
The Dorries’ mortgage payment, which had been $987 a month, soared to $1,340 a month after the refinance.
As the economy grew worse, the Dorries quickly fell behind on their house payment.
Wells Fargo Bank, the new owner of the Dorries’ loan, filed a foreclosure lawsuit against the couple on Sept. 2, 2009. Bob Dorrie’s emergency bankruptcy filing three days before the house was to be sold at auction has put everything in limbo.
The Dorries now are questioning how Wells Fargo came to own their loan.
Ace Funding – the company that gave the Dorries their loan in 2007 – filed for bankruptcy protection and went out of business the following year, never officially assigning the Dorries’ loan over to Wells Fargo.
Wells Fargo didn’t file the assignment on behalf of the defunct Ace Funding until more than three weeks after the foreclosure lawsuit was filed. A lawyer representing Wells Fargo in the foreclosure lawsuit signed the document for Ace Funding, even though he “really has no authority to assign this mortgage,” according to Terry Walden, an audit originator and attorney liaison for New South Financial.
When Dorrie pushed Wells Fargo for more information about the ownership of his mortgage, the bank told him in November that Fannie Mae owned the mortgage and that Wells Fargo was only the loan servicer.
Then, in April, Wells Fargo told Dorrie that the real owner of his mortgage is Freddie Mac.
“Given this information, only Freddie Mac has the authority to enforce this note and foreclose on this property,” Walden said.
Wells Fargo spokesman Jim Hines disagrees, saying the Dorries’ loan documents were handled appropriately and that the bank’s contract as a loan servicer gives it “the authority to take action on the loan to protect the investor’s interests, including foreclosure.”
Hines said Wells Fargo is working with the Dorries and hopes to “reach a solution that would help them keep their home.”
Linda Green’s signature appears on DocX paperwork used with thousands of Wells Fargo mortgages – although not in the Dorries’ case – since the real estate boom.
Even so, Hines said Wells Fargo has reviewed mortgage documentation for all of its loans and “has not found any foreclosure that should not have taken place.”
Wells Fargo sees foreclosure as a last resort, Hines said, and has worked with 673,000 borrowers to modify their loans since January 2009.
Bob Dorrie said Wells Fargo has repeatedly thrown up road blocks while he has tried to modify his loan. He hopes the perceived chain of title issues will give him some additional leverage in court proceedings and force his lender to modify his loan on terms he and his wife can live with.
“This is supposed to help force the bank’s hand, instead of them playing this game of cat and mouse with me,” Bob Dorrie said. “I’m still in the home, and I’d like to keep it.”
Who is at fault?
Ballery Skipper, the director of Horry County’s Register of Deeds office, said her staff is not responsible for investigating whether or not a document is legitimate. As long as fraud is not suspected, Skipper said, she is legally required to file the documents.
In the few cases where Skipper or her staff suspects fraud, the case is referred to the state attorney general’s office. Skipper said she has not referred any of the DocX filings to law enforcement.
Register of Deeds offices in other states, however, are starting to do their own investigations. A review of filings in Guilford County, N.C., for example, found 1,920 DocX loan documents for property worth $255 million and 15 variations of Linda Green’s signature.
Some mortgage executives say the documentation problems are overblown, and that homeowners are looking for any reason to stop a foreclosure.
“The homeowners have defaulted on their loans, and a flaw in the documentation does not mean the foreclosure was a wrongful foreclosure,” said Janis Smith, vice president of Mortgage Electronic Registration Systems, or MERS, the nation’s largest mortgage loan registration service.
“Foreclosure is a very emotional situation, and people will try all angles in an attempt to stop the process,” Smith said. “At the end of the day, though, you still have a situation where the borrower didn’t make their payments.”
Walden, however, says that kind of response is disingenuous. While the courts are set up to determine whether a homeowner has defaulted on a loan, he said, they are also responsible for ensuring the banks’ paperwork is legitimate and that due process is followed.
“The banks just made up the paperwork they needed to get the deal done,” Walden said. “We want to hold the banks accountable for that.”
Where it all began
To better understand how this mortgage mess occurred, one has to look back to the home-buying frenzy that took place between 2005 and 2007.
During the real estate boom, some of the nation’s largest banks bought home loans from all over the country and packaged them together in mortgage-backed securities that were sold to investors – including many 401(k) programs and pension funds.
Each security that was issued included thousands of mortgage loans worth a combined $1 billion to $1.5 billion – and the Wall Street banks sold hundreds of those securities to investors who believed the rise in home values would never end.
As the hunger for mortgage-backed investments grew, banks had to find more and more people to take on new loans that could be packaged into new securities. Before long, home loans were being given to nearly everyone that applied – regardless of income or credit score.
Many banks didn’t even require documentation of a person’s income or employment before giving them a loan. And some bankers looked the other way when an obviously fraudulent application crossed their desks, recent investigations show.
“If you had a heartbeat, you could get a loan,” said Walden, a former mortgage broker.
When the millions of people who never should have been given credit in the first place started to default on their home loans, the mortgage-backed securities house of cards imploded and the real estate bust began.
Those securities also are at the root of today’s mortgage documentation debacle.
The trust companies that issued those securities – usually a large bank such as Bank of New York or Deutsche Bank – were required by law to have a copy of the mortgage note and every mortgage assignment showing a clear chain of title for each of the thousands of loans included in each investment offering.
The trust companies were required to obtain those documents no later than 90 days after the security was issued.
There were so many securities being issued so quickly, however, that the trust companies were not able – or didn’t bother – to collect all the required documents.
That didn’t cause problems as long as the mortgages were being paid. But when a homeowner stopped paying and a bank decided to foreclose, the needed documentation wasn’t there.
That is why many banks turned to “document mills,” which charged a small fee to create the documentation banks needed to proceed with foreclosure. It is estimated DocX alone created at least 2 million mortgage documents nationwide, many of them allegedly forged and fraudulent, over a two-year period.
“Instead of doing things the right way, the banks chose to go into court and lie,” Szymoniak said.
Foreclosure lawsuit
Anthony Wise refinanced his Myrtle Beach home in February 2006 and he thinks his lender started to recreate his mortgage paperwork after he missed a payment in late 2008.
For example, a mortgage assignment transferring the loan from Option One to Deutsche Bank National Trust – the company that oversaw the mortgage-backed security that purportedly includes Wise’s loan – was recorded Jan. 23, 2009, in Horry County. That document was prepared by DocX and includes Green’s signature.
“They were trying to get all of their paperwork in a row just in case,” Wise said.
A Deutsche Bank spokesman did not respond to a request for comments.
Deutsche Bank filed a foreclosure lawsuit against Wise in April 2010, and that case is still pending.
In addition to allegations that the DocX mortgage assignment is fraudulent, Wise says Deutsche Bank missed the deadline for documenting his loan and has no right to foreclose on his home.
Wise’s mortgage was placed into a security called Soundview Home Loan Trust 2006-OPT2, which had a closing date of April 7, 2006. That means all of the documents for all of the loans in that security had to be obtained by Deutsche Bank within 90 days of that closing or, by law, they could not be included.
Wise’s mortgage assignments – including the one giving the loan to Deutsche Bank – weren’t filed until more than two years after the Soundview security closed, according to county property records.
Help for homeowners
There are dozens of instances in Horry County where DocX hastily created mortgage assignments to help banks foreclose on residents’ homes. In most cases, those documents were not created until after a foreclosure lawsuit had been filed. And in some cases, DocX back-dated the documents to make it appear as if they took effect just days before the foreclosure filing.
Most of the DocX paperwork filed in Horry County bears the signature of Linda Green.
Richard Lovelace, a Conway lawyer who specializes in real estate and banking law, said the banks who used DocX – or similar document mills – have put themselves at risk if homeowners can prove the paperwork is fraudulent.
That is true even if a home has already been lost to foreclosure.
“Any flaw that is discovered post-hearing, if it’s brought to the court’s attention in a timely manner, the judge will set aside the judgment and reopen the hearing,” said Lovelace, who is not involved in any of the foreclosure cases where DocX documents were used.
If the court proceedings – and the paperwork those proceedings were based on – are proven to be defective, Lovelace said, the bank can’t take the property.
“The court would declare the loan void,” he said. “The judgment would have to be set aside and the homeowner would be restored as the owner of the property. That’s the only remedy in such a case.”
Szymoniak, the Florida lawyer, envisions another solution.
“A fund should be set up, kind of like the BP oil spill fund, that will reimburse people who’ve lost their homes because of these fraudulent loan documents,” she said.
The banks who contributed to the problem would contribute money to the fund, and an independent third party would determine which homeowners qualify for reimbursement.
That is an idea that is being discussed by federal regulators and the attorneys general in all 50 states, who have initiated a widespread investigation into shoddy mortgage documentation by banks and document mills.
Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., has estimated that such a fund would need billions of dollars.
Mark Plowden, a spokesman for S.C. Attorney General Alan Wilson, said his office is active in the national investigation but is not targeting any specific company, such as DocX.
He said the multi-state group is “reviewing the larger issue, which includes these entities and their actions.”
Owners fight back
Some homeowners aren’t waiting for a federal investigation to be completed – they are fighting back by taking the banks to court. And in some recent cases, the homeowners are winning.
In Russell County, Ala., for example, Phyllis Horace obtained a summary judgment in March against LaSalle Bank National Association after alleging the bank did not have the proper paperwork needed to foreclose on her home.
Judge Albert Johnson, in ordering LaSalle to stop foreclosure proceedings against Horace, said he was “surprised to the point of astonishment” that the bank did not comply with its own regulations regarding documentation of loans.
The Dorries say they also plan to file a counterclaim in their foreclosure lawsuit based on information they have discovered in recent months.
New South Financial is helping Myrtle Beach area residents review mortgage documents to determine whether flaws or fraud exist that could help force banks into negotiating new loan terms.
The company also has agreements with area lawyers who will file complaints on behalf of New South clients. The service isn’t cheap – an audit of documents costs $3,000 and lawyer fees total $500 a month – but Walden said it is less expensive than hiring a law firm to defend a foreclosure action.
Experts say such services can be useful, but homeowners can do much of the needed investigation on their own for free by visiting the local register of deeds office or searching securities filings on the Internet.
Homeowners also can take advantage of an S.C. Supreme Court order that halted all foreclosures as of May 9 until after banks and borrowers have a chance to try and negotiate a modified loan. That order was not directly related to mortgage documentation issues, and if negotiations fail the banks can proceed with foreclosure.
Szymoniak, whose foreclosure is based in part on DocX paperwork signed by Linda Green, said she understands the resentment some people feel against those who haven’t been able to pay their mortgages yet are fighting foreclosure based on what some might consider a technicality.
In many cases, though, that’s the only way to get banks to work with borrowers, she said.
“We have a wholesale deterioration of neighborhoods across the country because of these foreclosures,” she said. “And that’s doing nothing but making the housing crisis even worse.”
Saturday, June 25, 2011
New York Courts Still At It
Justice John M. Leventhal, “the law must not yield to expediency and the convenience of lending institutions.” “Proper procedures … ensure … chain of ownership.” (by Joe Vera)
More on MERS: New York Courts Still At It
Posted by Carole VanSickle on Wednesday, June 22nd 2011
A New York appeals court has thrown out another MERS foreclosure proceeding, this one on a delinquent $479,000 mortgage with no note in evidence not just in MERS, but anywhere. “They’ve had three years to find it [the note],” said the homeowner’s lawyer, “and they haven’t.” The trustee for the trust allegedly containing the mortgage, the Bank of New York (BONY), could not produce the note and, according to the courts, since MERS “couldn’t give BONY the authority to foreclose because it didn’t possess the underlying note,” the homeowners will not face foreclosure. “A transfer of the mortgage without the debt is a nullity, and no interest is acquired by it,” the court ruled[1].
While this might appear at first to be a big deal, even the homeowners’ lawyer believes that the situation may be unusual enough that it will not impact most homeowners because BONY actually admitted that it did not have the note. However, other analysts are not willing to say that the judges making rulings like this one are not opening up the door to potentially massive lawsuits if the MERS model is ultimately deemed invalid. “We know that MERS is a problem; we don’t know exactly what that’s going to mean,” explained Adam Levitin, a professor of law at Georgetown University[2]. However, judges ruling against MERS are standing firm, saying that “the law must not yield to expediency and the convenience of lending institutions,” in the words of Justice John M. Leventhal. “Proper procedures must be followed to ensure the reliability of the chain of ownership,” he added.
More on MERS: New York Courts Still At It
Posted by Carole VanSickle on Wednesday, June 22nd 2011
A New York appeals court has thrown out another MERS foreclosure proceeding, this one on a delinquent $479,000 mortgage with no note in evidence not just in MERS, but anywhere. “They’ve had three years to find it [the note],” said the homeowner’s lawyer, “and they haven’t.” The trustee for the trust allegedly containing the mortgage, the Bank of New York (BONY), could not produce the note and, according to the courts, since MERS “couldn’t give BONY the authority to foreclose because it didn’t possess the underlying note,” the homeowners will not face foreclosure. “A transfer of the mortgage without the debt is a nullity, and no interest is acquired by it,” the court ruled[1].
While this might appear at first to be a big deal, even the homeowners’ lawyer believes that the situation may be unusual enough that it will not impact most homeowners because BONY actually admitted that it did not have the note. However, other analysts are not willing to say that the judges making rulings like this one are not opening up the door to potentially massive lawsuits if the MERS model is ultimately deemed invalid. “We know that MERS is a problem; we don’t know exactly what that’s going to mean,” explained Adam Levitin, a professor of law at Georgetown University[2]. However, judges ruling against MERS are standing firm, saying that “the law must not yield to expediency and the convenience of lending institutions,” in the words of Justice John M. Leventhal. “Proper procedures must be followed to ensure the reliability of the chain of ownership,” he added.
Wednesday, June 15, 2011
Viewpoint: Five Key Tasks to Make FDIC Loss-Sharing Work
Why? Every day a court in the USA stops a bank from wrongfully foreclosing. Failed Bank executives walk away keeping bonuses based on bad loans. Then …
Why? Every day a court in the USA stops a bank from wrongfully foreclosing. Failed Bank executives walk away keeping bonuses based on bad loans. “After all, there is a reason why these banks failed. Oftentimes, financial statements are old,
appraisals are out of date, and file memos chronicling the loan’s current status are missing.” Then the government insures the buyer of a failed Bank against losses. The thinking seems to be if the government keeps hiding theft and charging it to our children and their children, maybe they (the bankers and the politicians that received “contributions) can continue to get away with skimming.
This article is written by an expert recommending that expert investors who intend to acquire a failed bank with an guarantee against loss should get more experts to counsel on the loss sharing agreement.
So, if the experts have to get experts, how are decent Americans, whether a cook, fireman, truck driver, doctor, or Ph.D. going to understand what is taking place behind closed doors. Yes, closed doors.
A county recorder in Utah said of MERS, “… if looked like a scam from hell.” You will be hearing more about Loss Sharing Agreements. What you won’t hear or read is how by starting a new bank, it might be possible to actually end up with profit by foreclosure on a American. This looks like another “scam from hell” to me.
Viewpoint: Five Key Tasks to Make FDIC Loss-Sharing Work
American Banker | Tuesday, January 12, 2010
By Charles B. Wendel
Entering into shared-loss transactions appears to be the Federal Deposit Insurance Corp.’s preferred approach for
dealing with failed banks. More than 60% of last year’s 140 bank failures were resolved using this approach.
Shared-loss transactions let banks build market share or move into new markets with minimal risk. They also let
private-equity players (led by a team of bankers) take advantage of current industry discontinuities.
Much of the attractiveness of these transactions centers on the “guarantee” the FDIC offers buyers. Typically, the
agency remits 80% of “dollar one” loan losses to buyers and increases its payments to 95% for losses beyond an
agreed upon threshold. In turn, the FDIC benefits from recoveries during the 10-year life of these deals.
Though these deals are attractive strategically and economically, they are also complex.
My company’s work with banks and private-equity players points to five key elements that should be addressed in
order to structure and manage a transaction appropriately.
Conducting a focused due diligence process and negotiating the FDIC shared-loss deal. Though many players
are experienced in due diligence, the FDIC window is short, with no more than two weeks between reviewing an offer
package to bidding. Time with the target is also limited (two to three days), requiring a focused approach. Buyers
should assemble a team of internal and external resources and set clear priorities for their review process.
As for negotiating an agreement, the FDIC has standardized the general structure of its purchase-and-assumption
and shared-loss agreements. However, no two agreements are alike, given evolving requirements by the FDIC (for
example, a “true-up” provision added in the fourth quarter) and buyer-negotiated amendments. Management should
view these agreements as a bible that will be revisited many times. Bank buyers should consult the handful of legal,
valuation and related advisers with expertise in the shared-loss world, leveraging their knowledge rather than relying
solely on internal controllers, general counsels or other internal resources.
Addressing key accounting-related priorities. Accounting regulations to be addressed include FAS 141R, SOP
03-3 and IRC Section 593. Many tax and accounting issues stem from the need to determine the tax basis of assets
subject to the shared-loss agreement and the rules related to deferred tax gains. A bank’s auditor is conflicted out
from offering these services, since it would be reviewing and passing judgment on its own work. This requires bank
buyers to obtain the services of an independent firm with appropriate accounting and valuation capabilities.
Ensuring strong portfolio support. The FDIC expects buyers to make regular claim submissions related to loan
losses, usually monthly for residential loans and quarterly for commercial and consumer loans.
Residential submissions are relatively straightforward because of the objective loss criteria outlined by the FDIC,
namely, “actual losses incurred due to modifications, foreclosures, short sales, deeds-in-lieu or bulk sales.” However,
commercial submissions are more subjective and require greater evaluation.
The state of commercial loan files in failed banks is often inadequate for portfolio management or for making “audit-
proof” submissions. (After all, there is a reason why these banks failed.) Oftentimes, financial statements are old,
appraisals are out of date, and file memos chronicling the loan’s current status are missing.
Owners should select a team of internal and/or external resources to triage, in effect, the portfolio, uncovering the
low-hanging fruit that can be submitted earliest while establishing a process to assess the entire portfolio. Every loan
in the portfolio must be reviewed against the acquirer’s risk rating system and managed within policy guidelines.
Commercial bankers at the acquired bank should undergo a sea change in how they look at their loans. Before
failure, many banks avoided taking losses because their reserves could not support a realistic view of a borrower’s
position. Under shared-loss agreements, management wants bankers to accurately assess transaction risk as quickly
as possible in order to identify loans subject to FDIC claims.
Making accurate and complete certificate submissions. The FDIC has developed a three-page certificate that
requires buyers to tap multiple internal databases and in some cases provide manual inputs as well. Systematizing
this process is crucial to increased accuracy and productivity.
Using technology to track and monitor loan submissions and recoveries during the life of the FDIC agreement.
While residential mortgage loans usually involve one submission, both CRE and C&I loans may require multiple
submissions based upon declining values and continuing expenses related to asset preservation, legal and appraisal
costs.
In addition, recoveries occur across the portfolio. Buyers need to develop an inclusive information management
system or “portal” to track these ins-and-outs. Tying the portal to the bank’s core systems allows for the “automatic”
generation of certificates, eliminating much of the manual activity that dominates bank staffers’ time in the early
stages of integrating an acquisition.
Shared-loss transactions can be very attractive and beneficial to all stakeholders, including the customer and the
FDIC. However, making them work requires senior management focus, clear priorities, and a bankwide
understanding of the unique opportunity these transactions offer.
Charles B. Wendel is the president of Financial Institutions Consulting Inc.
Why? Every day a court in the USA stops a bank from wrongfully foreclosing. Failed Bank executives walk away keeping bonuses based on bad loans. “After all, there is a reason why these banks failed. Oftentimes, financial statements are old,
appraisals are out of date, and file memos chronicling the loan’s current status are missing.” Then the government insures the buyer of a failed Bank against losses. The thinking seems to be if the government keeps hiding theft and charging it to our children and their children, maybe they (the bankers and the politicians that received “contributions) can continue to get away with skimming.
This article is written by an expert recommending that expert investors who intend to acquire a failed bank with an guarantee against loss should get more experts to counsel on the loss sharing agreement.
So, if the experts have to get experts, how are decent Americans, whether a cook, fireman, truck driver, doctor, or Ph.D. going to understand what is taking place behind closed doors. Yes, closed doors.
A county recorder in Utah said of MERS, “… if looked like a scam from hell.” You will be hearing more about Loss Sharing Agreements. What you won’t hear or read is how by starting a new bank, it might be possible to actually end up with profit by foreclosure on a American. This looks like another “scam from hell” to me.
Viewpoint: Five Key Tasks to Make FDIC Loss-Sharing Work
American Banker | Tuesday, January 12, 2010
By Charles B. Wendel
Entering into shared-loss transactions appears to be the Federal Deposit Insurance Corp.’s preferred approach for
dealing with failed banks. More than 60% of last year’s 140 bank failures were resolved using this approach.
Shared-loss transactions let banks build market share or move into new markets with minimal risk. They also let
private-equity players (led by a team of bankers) take advantage of current industry discontinuities.
Much of the attractiveness of these transactions centers on the “guarantee” the FDIC offers buyers. Typically, the
agency remits 80% of “dollar one” loan losses to buyers and increases its payments to 95% for losses beyond an
agreed upon threshold. In turn, the FDIC benefits from recoveries during the 10-year life of these deals.
Though these deals are attractive strategically and economically, they are also complex.
My company’s work with banks and private-equity players points to five key elements that should be addressed in
order to structure and manage a transaction appropriately.
Conducting a focused due diligence process and negotiating the FDIC shared-loss deal. Though many players
are experienced in due diligence, the FDIC window is short, with no more than two weeks between reviewing an offer
package to bidding. Time with the target is also limited (two to three days), requiring a focused approach. Buyers
should assemble a team of internal and external resources and set clear priorities for their review process.
As for negotiating an agreement, the FDIC has standardized the general structure of its purchase-and-assumption
and shared-loss agreements. However, no two agreements are alike, given evolving requirements by the FDIC (for
example, a “true-up” provision added in the fourth quarter) and buyer-negotiated amendments. Management should
view these agreements as a bible that will be revisited many times. Bank buyers should consult the handful of legal,
valuation and related advisers with expertise in the shared-loss world, leveraging their knowledge rather than relying
solely on internal controllers, general counsels or other internal resources.
Addressing key accounting-related priorities. Accounting regulations to be addressed include FAS 141R, SOP
03-3 and IRC Section 593. Many tax and accounting issues stem from the need to determine the tax basis of assets
subject to the shared-loss agreement and the rules related to deferred tax gains. A bank’s auditor is conflicted out
from offering these services, since it would be reviewing and passing judgment on its own work. This requires bank
buyers to obtain the services of an independent firm with appropriate accounting and valuation capabilities.
Ensuring strong portfolio support. The FDIC expects buyers to make regular claim submissions related to loan
losses, usually monthly for residential loans and quarterly for commercial and consumer loans.
Residential submissions are relatively straightforward because of the objective loss criteria outlined by the FDIC,
namely, “actual losses incurred due to modifications, foreclosures, short sales, deeds-in-lieu or bulk sales.” However,
commercial submissions are more subjective and require greater evaluation.
The state of commercial loan files in failed banks is often inadequate for portfolio management or for making “audit-
proof” submissions. (After all, there is a reason why these banks failed.) Oftentimes, financial statements are old,
appraisals are out of date, and file memos chronicling the loan’s current status are missing.
Owners should select a team of internal and/or external resources to triage, in effect, the portfolio, uncovering the
low-hanging fruit that can be submitted earliest while establishing a process to assess the entire portfolio. Every loan
in the portfolio must be reviewed against the acquirer’s risk rating system and managed within policy guidelines.
Commercial bankers at the acquired bank should undergo a sea change in how they look at their loans. Before
failure, many banks avoided taking losses because their reserves could not support a realistic view of a borrower’s
position. Under shared-loss agreements, management wants bankers to accurately assess transaction risk as quickly
as possible in order to identify loans subject to FDIC claims.
Making accurate and complete certificate submissions. The FDIC has developed a three-page certificate that
requires buyers to tap multiple internal databases and in some cases provide manual inputs as well. Systematizing
this process is crucial to increased accuracy and productivity.
Using technology to track and monitor loan submissions and recoveries during the life of the FDIC agreement.
While residential mortgage loans usually involve one submission, both CRE and C&I loans may require multiple
submissions based upon declining values and continuing expenses related to asset preservation, legal and appraisal
costs.
In addition, recoveries occur across the portfolio. Buyers need to develop an inclusive information management
system or “portal” to track these ins-and-outs. Tying the portal to the bank’s core systems allows for the “automatic”
generation of certificates, eliminating much of the manual activity that dominates bank staffers’ time in the early
stages of integrating an acquisition.
Shared-loss transactions can be very attractive and beneficial to all stakeholders, including the customer and the
FDIC. However, making them work requires senior management focus, clear priorities, and a bankwide
understanding of the unique opportunity these transactions offer.
Charles B. Wendel is the president of Financial Institutions Consulting Inc.
Tuesday, June 14, 2011
Michigan County approves Funding to Help Homeowners fight MERS, DocX cases
Michigan county approves funding to help homeowners fight MERS, DocX cases
by JON PRIOR
Wednesday, June 8th, 2011, 5:42 pm
A committee for the Ingham County Board of Commissioners in Michigan approved up to $60,000 in Legal Aid funding to represent borrowers affected by allegedly improper foreclosures and possible documentation fraud.
The full board is scheduled to approve the resolution June 14.
The county’s Register of Deeds Curtis Hertel Jr. uncovered potential fraudulent documents in his office calling into question hundreds of foreclosures. Hertel told HousingWire Wednesday he found 400 cases with possible fraudulent documentation involving Mortgage Electronic Registration Systems and another 100 involving DocX, a division of Lender Processing Services (LPS: 24.54 +0.41%).
According to the resolution adopted by Ingham County, the alleged wrongful foreclosures by MERS resulted in more than 400 people losing their homes over the last two years.
The legal assistance provided to affected homeowners will be made available between July 1, 2011, and June 30, 2012.
Both MERS and LPS signed consent orders with federal regulators in April as a result of a robo-signing scandal that engulfed multiple mortgage industry firms. Regulators required the two companies to “address significant weaknesses in, among other things, oversight, management supervision and corporate governance.”
MERS declined to comment on the Michigan subsidies. LPS did not immediately reply to requests for comment.
The Michigan Attorney General launched his own investigation into legacy DocX affidavits after Bill Bullard, the Register of Deeds in Oakland County uncovered questionable signatures and improper documentation as well.
The Michigan Court of Appeals required MERS in April to pursue foreclosures through the courts, even when the state normally uses a nonjudicial process.
Consumer advocates lobbied Washington for a federal funding program to help homeowners in these cases. Thad Bartholow, a foreclosure defense attorney for Armstrong Kellett Bartholow in Dallas, said such a program sounds like a good idea but could cause more harm in the long run.
“In particular, I would have concerns about creating a parallel to the already horrible problem with ‘foreclosure rescue’ scams by incentivizing shoddy or unscrupulous attorneys with little experience in this highly technical area of the law to take these cases, perhaps even on a volume basis, and absorbing the settlement funds without adequately serving their clients,” Bartholow said.
Hertel said other patterns cropped up in his investigation, which the courts are looking into. Bartholow said the issues arising out of these and federal probes seems unending in scope.
“Calling the problem of robosigning ‘epidemic” is a gross understatement,” Bartholow said. “Virtually industry-wide, it was the norm, with very few exceptions.”
by JON PRIOR
Wednesday, June 8th, 2011, 5:42 pm
A committee for the Ingham County Board of Commissioners in Michigan approved up to $60,000 in Legal Aid funding to represent borrowers affected by allegedly improper foreclosures and possible documentation fraud.
The full board is scheduled to approve the resolution June 14.
The county’s Register of Deeds Curtis Hertel Jr. uncovered potential fraudulent documents in his office calling into question hundreds of foreclosures. Hertel told HousingWire Wednesday he found 400 cases with possible fraudulent documentation involving Mortgage Electronic Registration Systems and another 100 involving DocX, a division of Lender Processing Services (LPS: 24.54 +0.41%).
According to the resolution adopted by Ingham County, the alleged wrongful foreclosures by MERS resulted in more than 400 people losing their homes over the last two years.
The legal assistance provided to affected homeowners will be made available between July 1, 2011, and June 30, 2012.
Both MERS and LPS signed consent orders with federal regulators in April as a result of a robo-signing scandal that engulfed multiple mortgage industry firms. Regulators required the two companies to “address significant weaknesses in, among other things, oversight, management supervision and corporate governance.”
MERS declined to comment on the Michigan subsidies. LPS did not immediately reply to requests for comment.
The Michigan Attorney General launched his own investigation into legacy DocX affidavits after Bill Bullard, the Register of Deeds in Oakland County uncovered questionable signatures and improper documentation as well.
The Michigan Court of Appeals required MERS in April to pursue foreclosures through the courts, even when the state normally uses a nonjudicial process.
Consumer advocates lobbied Washington for a federal funding program to help homeowners in these cases. Thad Bartholow, a foreclosure defense attorney for Armstrong Kellett Bartholow in Dallas, said such a program sounds like a good idea but could cause more harm in the long run.
“In particular, I would have concerns about creating a parallel to the already horrible problem with ‘foreclosure rescue’ scams by incentivizing shoddy or unscrupulous attorneys with little experience in this highly technical area of the law to take these cases, perhaps even on a volume basis, and absorbing the settlement funds without adequately serving their clients,” Bartholow said.
Hertel said other patterns cropped up in his investigation, which the courts are looking into. Bartholow said the issues arising out of these and federal probes seems unending in scope.
“Calling the problem of robosigning ‘epidemic” is a gross understatement,” Bartholow said. “Virtually industry-wide, it was the norm, with very few exceptions.”
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