American Title and Liberty Title said “There is a lot of stuff in limbo right now.” and having MERS in the chain of title “is a fatal defect.”
American Title said that if banks want title companies to insure home sales that have connections to MERS, they will have to find a way to show they have proper title. “Somebody’s going to pay for this … This isn’t just going to go away. Somebody’s going to pay money.”
Legal case delaying home sales in Jackson
Published: Saturday, July 02, 2011, 9:49 PM Updated: Saturday, July 02, 2011, 9:57 PM
By Chris Gautz | Jackson Citizen Patriot
A family was expecting to close on a house on a Friday. On Thursday night, the sale had to be scuttled.
Fifteen to 20 pending home sales fell apart that one Jackson title company was preparing to handle. Banks started pulling homes for sale off the market.
First, Jackson County’s real estate market suffered from the foreclosure crisis. Lately, it has been going through another convulsion due to a little-known company that has its name all over mortgage documents in Jackson and around the state.
Hundreds of foreclosures that involved the Mortgage Electronic Registration System, or MERS, now are holding up home sales in Jackson and around the state. A legal case over the company that originated in Jackson County may be headed to the state Supreme Court.
“I think it’s just going to be a stalemate for anyone who has MERS in their title,” said Laura Schlecte, broker and owner of Prudential Premier Properties, 761 W. Michigan Ave.
Illegal foreclosures?
MERS, based in Virginia, was created in 1993 by the lending and title insurance industries as a way for banks to quickly buy and sell mortgages without having to physically record the transfers with local register of deeds offices.
In the last decade banks commonly packaged mortages as securities and sold them back and forth. Handling the paperwork electronically sped up the process.
When Summit Township resident Corey Messner defaulted on the mortgage on his home on E. Walmont Road in 2008, MERS acted on behalf of the bank that held the mortgage and began foreclosure.
But when the eviction proceedings began, Messner filed his lawsuit, saying MERS did not have the authority to foreclose because it did not hold the note on his mortgage.
Michigan law states that whoever forecloses on a property must own the debt, and MERS did not. It was simply acting on behalf of the bank that did.
Efforts to reach Messner through his attorney, retired District Court Judge Lysle Hall, now with Jackson Legal, 300 W. Washington Ave., were unsuccessful. A representative at Jackson Legal said Messner did not want to speak publicly.
Jackson’s district and circuit courts ruled against Messner. The case in Jackson was combined with a similar one in Kent County and then taken up by the state Court of Appeals.
In April, the appeals court ruled for the homeowners, finding that MERS did not in fact have the authority under law to execute the foreclosure proceeding.
‘A screeching halt’
Almost immediately after the court’s ruling, nearly every home for sale that had been foreclosed on by MERS became toxic in the eyes of the title insurance industry.
“We’re not insuring any of those,” said Paul Anast, president of Midstate Title Co., 100 S. Jackson St. “We wouldn’t touch one of those with a 10-foot pole.”
In a statement after the appeals ruling, MERS wrote, “Title companies should not have any concerns about closing loans with MERS as the mortgagee.”
But no title company in this area sees it that way.
“I don’t think anyone is going to agree with them on that,” Anast said. “It’s really caused a lot of that stuff to come to a screeching halt. Everyone is taking the ultra-conservative road.”
Thomas Richardson, owner and general counsel of Liberty Title, 110 First St., said having MERS in the chain of title “is a fatal defect.”
He said his office saw 15 to 20 deals fall apart after the appeals ruling, and it will take time before those homes can be sold. “It’s going to gum up the real estate market,” he said.
In the weeks that followed, banks began pulling all of their properties off the market they were attempting to sell that had been foreclosed on by MERS.
“There’s a lot of stuff in limbo right now,” said Ron Ellison, president of American Title Co., 280 W. Cortland St.
Karmela Lejarde, spokeswoman for MERS, said most of the banks her company works with no longer have MERS foreclose for them, and they are in the midst of a rule change at the company to not allow the practice anymore.
While there likely won’t be any new MERS foreclosures, many potential homebuyers and homeowners looking to sell have had their deals stalled.
Jackson County Register of Deeds Mindy Reilly said MERS initiated 744 foreclosure proceedings in the past five years, including 91 last year.
It is not clear how many of those homes have been or still are on the market. Some may have been redeemed by the owner.
What’s next
Ellison said that if banks want title companies to insure home sales that have connections to MERS, they will have to find a way to show they have proper title.
“We don’t want to buy lawsuits,” Ellison said.
The lender will have to either go back and do a new foreclosure, which can take about seven months, or track down the people who were evicted from their homes and get them to sign over their interest in the property.
The latter can be quite difficult because many of those people have left the area.
No one expects those who were evicted after a MERS-initiated foreclosure would get their home back, especially if a new family is living in it after buying it from the bank.
“You can’t undo all these foreclosure sales that went to qualified purchasers,” Ellison said.
Any resolution will be about financial damages, he said.
“Somebody’s going to pay for this,” Ellison said. “This isn’t just going to go away. Somebody’s going to pay money.”
Showing posts with label mortgage. Show all posts
Showing posts with label mortgage. Show all posts
Tuesday, July 5, 2011
Saturday, July 2, 2011
“I can assure you that this type of criminal fraud is rampant across the nation.” John O’Brien, Essex S. Dist. Registrar.
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.
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.
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.
Friday, July 1, 2011
Pimco’s Simon: There Was Never a Housing Recovery
Are You Ready For 6 to 7 Million More Foreclosures. Politicians criticize Fannie Mar & Freddie Mac out of one side of their mouths. (by Joe Vera)
Pimco’s Simon: There Was Never a Housing Recovery
By Dawn Wotapka
Bearish outlooks on housing aren’t hard to find these days, but one stands out even for this market.
Scott Simon, a managing director and head of global asset-giant Pimco’s mortgage- and asset-backed securities teams, is credited with foreseeing the housing crash and helping his firm dodge losses that plagued Wall Street.
In a lengthy Q&A posted on Pimco’s website today, Mr. Simon discusses everything from foreclosures to Fannie Mae and Freddie Mac. Calling his outlook “dour” would be generous—home prices could fall more and the pain could drag on for a decade or more.
Excerpts are below. (Both the questions and answers are from Pimco.)
Q: Could you begin by framing the current state of the housing market? Do you see a double dip market?
A: We are seeing signs of what we have long suspected: There never was a housing recovery. In fact, I argue the market is in a fragile state that is far easier to break than to fix. If policy makers alter the government’s current approach to housing and unwittingly break the market, they may not be able to repair the damage within the foreseeable future. … We anticipate an average decline from here of about 6% to 8% in prices across the country.
Q: Are more foreclosures expected to hit the market?
A: We see potential for a substantial number of foreclosures over the next three years – as many as 6 million to 7 million additional foreclosures, on top of the roughly 2 million we estimate have already occurred. Foreclosures may peak in about two years, but the numbers could still be high for a few years after that and then likely taper off.
Q: Let’s switch gears to discuss housing finance. Is the home-loan market still reliant on government support?
A: Yes, government is essentially considered the mortgage market today, but this needs to be put in context. Government has been involved in housing for some 70 years with pro-housing subsidies of all sorts, from homebuyer tax credits to guaranteeing loans to mortgage interest tax deductions. … If we ended government support in all forms, mortgage rates could rise significantly, because home loan investors would need to be compensated for greater credit risk, and loan availability could decline. Higher rates and less mortgage availability would put downward pressure on home values, with potentially negative consequences for the market and also for the economy as a result of wealth destruction and consumer confidence declining.
Q: What are politicians and policy makers proposing to do about Fannie Mae and Freddie Mac? Are there serious alternatives being discussed to provide liquidity to the market?
A: From what I have observed in visits to D.C., when the conversation comes around to Fannie and Freddie it is very easy for people to get irrational. Fannie and Freddie seem to draw negativity like giant lightning rods because they lost so much money. But what is often overlooked is that the majority of losses have not come from their core business: 20% down-payment, prime mortgages. They got in trouble because they expanded beyond their core business to maintain market share. …But politicians from both parties look at the losses of Fannie and Freddie and think, “I’d better say Fannie and Freddie stink and we should shut them down and that they are evil.” But the market still relies heavily on Fannie and Freddie. If policymakers err in tinkering with that support while the market is so fragile, the unintended consequences could be extreme.
Q: And when do you expect action on this issue?
A: Despite the heated rhetoric, there appears to be no rush to kill Fannie and Freddie, from what I have observed. Initially, we heard talk of getting the government out of housing in two years, and lately the talk is five to seven years. I think in Washington-speak, five-to-seven years more likely means 10-to-15 years, which is actually a more realistic timeframe in my opinion – by then the housing market should hopefully be on firmer ground.
Pimco’s Simon: There Was Never a Housing Recovery
By Dawn Wotapka
Bearish outlooks on housing aren’t hard to find these days, but one stands out even for this market.
Scott Simon, a managing director and head of global asset-giant Pimco’s mortgage- and asset-backed securities teams, is credited with foreseeing the housing crash and helping his firm dodge losses that plagued Wall Street.
In a lengthy Q&A posted on Pimco’s website today, Mr. Simon discusses everything from foreclosures to Fannie Mae and Freddie Mac. Calling his outlook “dour” would be generous—home prices could fall more and the pain could drag on for a decade or more.
Excerpts are below. (Both the questions and answers are from Pimco.)
Q: Could you begin by framing the current state of the housing market? Do you see a double dip market?
A: We are seeing signs of what we have long suspected: There never was a housing recovery. In fact, I argue the market is in a fragile state that is far easier to break than to fix. If policy makers alter the government’s current approach to housing and unwittingly break the market, they may not be able to repair the damage within the foreseeable future. … We anticipate an average decline from here of about 6% to 8% in prices across the country.
Q: Are more foreclosures expected to hit the market?
A: We see potential for a substantial number of foreclosures over the next three years – as many as 6 million to 7 million additional foreclosures, on top of the roughly 2 million we estimate have already occurred. Foreclosures may peak in about two years, but the numbers could still be high for a few years after that and then likely taper off.
Q: Let’s switch gears to discuss housing finance. Is the home-loan market still reliant on government support?
A: Yes, government is essentially considered the mortgage market today, but this needs to be put in context. Government has been involved in housing for some 70 years with pro-housing subsidies of all sorts, from homebuyer tax credits to guaranteeing loans to mortgage interest tax deductions. … If we ended government support in all forms, mortgage rates could rise significantly, because home loan investors would need to be compensated for greater credit risk, and loan availability could decline. Higher rates and less mortgage availability would put downward pressure on home values, with potentially negative consequences for the market and also for the economy as a result of wealth destruction and consumer confidence declining.
Q: What are politicians and policy makers proposing to do about Fannie Mae and Freddie Mac? Are there serious alternatives being discussed to provide liquidity to the market?
A: From what I have observed in visits to D.C., when the conversation comes around to Fannie and Freddie it is very easy for people to get irrational. Fannie and Freddie seem to draw negativity like giant lightning rods because they lost so much money. But what is often overlooked is that the majority of losses have not come from their core business: 20% down-payment, prime mortgages. They got in trouble because they expanded beyond their core business to maintain market share. …But politicians from both parties look at the losses of Fannie and Freddie and think, “I’d better say Fannie and Freddie stink and we should shut them down and that they are evil.” But the market still relies heavily on Fannie and Freddie. If policymakers err in tinkering with that support while the market is so fragile, the unintended consequences could be extreme.
Q: And when do you expect action on this issue?
A: Despite the heated rhetoric, there appears to be no rush to kill Fannie and Freddie, from what I have observed. Initially, we heard talk of getting the government out of housing in two years, and lately the talk is five to seven years. I think in Washington-speak, five-to-seven years more likely means 10-to-15 years, which is actually a more realistic timeframe in my opinion – by then the housing market should hopefully be on firmer ground.
Oregon Judge Voids Foreclosure Sale, casting Doubt on Others
Judge Jenefer Grant, “I am concluding the recording never occurred, MERS does not become the beneficiary, irrespective of what is stated in the deed of trust.”
Oregon judge voids foreclosure sale, casting doubt on others
Published: Wednesday, June 29, 2011, 7:48 PM Updated: Thursday, June 30, 2011, 11:39 AM
By Brent Hunsberger, The Oregonian
Brian Feulner/The OregonianU.S. Bank says it will cease eviction action against Martha Flynn while it determines its next step. That could include demanding the loan’s previous servicer, a unit of Wells Fargo, take the mortgage back, legal experts say.
A Columbia County judge has blocked U.S. Bank from evicting a Vernonia woman whose home it purchased in foreclosure, concluding in a case with far-reaching implications that her lenders had not properly recorded mortgage documents.
Last week’s action appears to be the first in which an Oregon judge has halted an eviction and declared a foreclosure sale void after the fact. The ruling, if it stands, raises questions about the validity of other recent foreclosures in the state and could create serious problems for lenders and title companies, as well as for buyers of such properties.
“It’s a victory for a lot of people,” said Martha Flynn, 62, who challenged the eviction and whose ability to stay in her home remains in doubt. “I was fighting for the principle of the thing.”
A U.S. Bank spokeswoman said the bank would cease further eviction action and assess its “appropriate next steps.”
Nearly all foreclosures in the state occur without a judge’s involvement under so-called nonjudicial proceedings. But this ruling, legal observers say, could potentially divert more foreclosure actions into courtrooms, a more time-consuming and costly proposition that could exacerbate the state’s housing slump.
“This will certainly be problematic for lenders,” said David Ambrose, a Portland real-estate attorney.
It also casts doubt on the validity of already completed foreclosure sales in which lenders resold mortgages without recording the sales in county recorder offices. Many of those questionable transactions, including Flynn’s, involve the Mortgage Electronic Recording System.
MERS was created by the mortgage industry to rapidly securitize loans without recording them. Federal judges in Oregon have ruled that MERS-involved foreclosure actions violated state recording law. MERS also has been tied to so-called robo-signing scandals that prompted a 50-state investigation of the nation’s largest loan servicers and banks.
“Our hope is the banks will take a much more sincere effort at resolving matters directly with homeowners,” said Thomas H. Cutler, an attorney with Harris Berne Chirstensen in Lake Oswego, who represented Flynn.
A Wells Fargo & Co. unit foreclosed on Flynn after she fell behind in her payments. Wells Fargo sold the mortgage to U.S. Bank, the second lienholder, in December 2010, Cutler said.
Columbia County records show U.S. Bank paid $54,000 for the home, which had been valued at $134,000. Flynn hired Cutler a few months later to try to stop the foreclosure.
U.S. Bank tried to evict Flynn from her Vernonia home during a May 24 court hearing. But on June 23, Columbia County Circuit Judge Jenefer Grant ruled against the bank and awarded legal costs to Flynn.
Grant found that the original lender, Eagle Home Mortgage, held beneficial interest in the property. But while Eagle Home eventually sold the mortgage to other parties, the exchanges were never recorded, or assigned, in the county’s recorder office.
“I am concluding the recording never occurred,” she wrote in a two-page ruling. “MERS does not become the beneficiary, irrespective of what is stated in the deed of trust.”
Flynn discovered on Freddie Mac’s website that the quasi-government loan insurer owned her loan on the date of the foreclosure sale, Cutler said. But Freddie Mac’s ownership had not been recorded in county records, as required by state recording law, Grant ruled. Cutler obtained the services of an expert witness to track the ownership trail of her mortgage.
“We were able to show that Wells Fargo didn’t have the right to bring foreclosure because there were unrecorded assignments of the deed of trust,” said Tim Stephenson of MSA Associates, which audits mortgage loan histories for homeowners and attorneys.
A spokesman for Wells Fargo Home Loans said it was reviewing the judge’s decision to better understand it.
“We work hard to keep our customers in their homes when they encounter difficulties and view foreclosure as a measure of last resort,” spokesman Jim Hines said.
In an interview, Flynn said she’s owned her three-bedroom house for 20 years and had built up significant equity. She fell behind making payments after quitting her job answering customer service calls for credit card companies at her home.
Since then, she’s lived off unemployment, social security and a small business incubating and selling quail eggs. She sought a modification but could not get Wells Fargo to agree, despite repeatedly submitting documents.
“Even though I couldn’t afford an attorney, I thought, ‘What’s the harm?’” Flynn said. “Most people just give up.”
It’s unclear what this all means for Flynn. She says she’s prepared to move out despite the victory, given the uncertainty of who actually owns title to her home and what must be done to foreclose legally.
“Even though this is a great legal win for her, it still leaves her in limbo,” Cutler said. “There’s no clear choice for her. And there’s no big money at the end of this rainbow, either.”
Meanwhile U.S. Bank, which spokesperson Teri Charest noted “played no role in the title documentation process” is currently trying to ascertain its next steps.
That could include demanding her previous loan servicer, a Wells Fargo Bank unit, take the mortgage back, legal experts say.
The path will remain muddled for the mortgage industry until a definitive case reaches the Oregon Supreme Court or lenders decide to take a different strategy and negotiate settlements with distressed homeowners, real estate attorneys say.
“This is significant,” Ambrose said.
Countrywide Must Still Face MBIA Fraud Claim, New York Appeals Court Rules
Another Fraud claim against BoA. This time by “ … a sophisticated counter- party that cannot sustain a fraud claim.” according to BoA. Why, just why not? (by Joe Vera)
Countrywide Must Still Face MBIA Fraud Claim, New York Appeals Court Rules
By Karen Freifeld – Jun 30, 2011
11:42 AM PT
Bank of America Corp. (BAC) and its Countrywide Financial Corp. unit must face a fraud claim brought by bond insurer MBIA Insurance Corp., an appeals court ruled.
The New York court today upheld an April 2010 trial-court denial of Countrywide’s motion to dismiss the claim against it in the 2008 suit. MBIA alleges that Countrywide fraudulently obtained insurance on billions of dollars of mortgage-backed securities.
MBIA claims the lender falsely represented loan-to-value ratios, debt-to-income ratios and borrowers’ FICO scores; provided prospectuses that falsely represented loans were made in compliance with Countrywide’s underwriting standards; and offered false, misleading or inflated ratings for the loans, according to the decision.
“Because MBIA alleges misrepresentations of present fact, and not future intent, made with the intent to induce MBIA to insure the securitizations, the fraud claim survives,” Associate Justice Rosalyn H. Richter wrote.
MBIA contends that if it had known the representations were false, it would never have guaranteed the notes and suffered losses. As a result of defaults, MBIA alleges, it has been forced to make billions of dollars in claims payments on the insurance agreements, according to the decision.
The appeals court also upheld the dismissal of a negligent- misrepresentation claim in the case. It dismissed entirely a claim for breach of implied duty of good faith and fair dealing, which the lower court narrowed.
Bank Statement
“We continue to believe MBIA is a sophisticated counter- party that cannot sustain a fraud claim, and we continue to have the ability to raise that point with the court at the summary- judgment phase,” Shirley Norton, a spokeswoman for Bank of America, said in an e-mailed statement.
Norton added the bank is pleased the appeals court confirmed the dismissal of the negligent-misrepresentation claim and dismissed the good-faith and fair-dealing claim.
MBIA spokesman Kevin Brown said in an e-mailed statement that the insurer was pleased the appeals court “upheld MBIA’s right to pursue fraud claims against Countrywide, particularly in light of the growing public recognition of fraud and misrepresentations perpetrated by Countrywide and other industry participants.”
The MBIA-Countrywide case isn’t part of the $8.5 billion proposed settlement by Charlotte, North Carolina-based Bank of America with investors in Countrywide Financial mortgage debt, according to Kevin Heine, a spokesman for Bank of New York Mellon, the trustee for securities in the proposed deal.
The appeal is MBIA Insurance Corp. v. Countrywide Home Loans Inc., New York State Supreme Court, Appellate Division, First Department (Manhattan). The lower-court case is MBIA Insurance v. Countrywide, 6028245/2008, New York state Supreme Court (Manhattan).
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.”
After ruling halted N.J. foreclosures, experts fear deluge of filings
We just have to remember that behind the Banks’ crimes, numbers, and paperwork are humans who are at risk of unjustly losing their homes. (by Joe Vera)
After ruling halted N.J. foreclosures, experts fear deluge of filings
Published: Monday, June 27, 2011, 7:30 AM
By Sarah Portlock / The Star-Ledger
Experts are concerned that a current logjam of foreclosures in New Jersey could forecast a storm when major mortgage lenders are able to resume filing notices.
In the past six months, an eerie feeling has settled in the offices of housing counselors and attorneys who confront the foreclosure crisis head-on and help distressed homeowners in New Jersey. The phone hasn’t been ringing any less than it did at the height of the storm, but what is about to hit may be greater than anything the group has seen so far.
Foreclosure filings are down 86 percent so far this year from last, owing in part to a December crackdown by the state’s chief justice that effectively halted proceedings by the country’s biggest mortgage lenders and service companies, according to court data. But lenders are waiting to file an estimated 28,500 foreclosures, and another 55,000 mortgage loans are currently more than 90 days delinquent, according to LPS Applied Analytics, a real estate data firm that tracks mortgage performance. At the current rate, it would take 49 years for banks to clear the logjam of mortgage loans that are currently in the foreclosure process or are more than 90 days delinquent, LPS found.
Those figures are a sign of what is to come when lenders are able to begin filing again, and the pipeline speeds up.
“It’s what keeps me awake at night,” said Peggy Jurow, who leads Legal Service of New Jersey’s Foreclosure Defense Initiative. “It’s what keeps my colleagues and me strategizing all the time.”
“What are we going to do,” she asked, when these cases get filed?
The work is taking its toll on those trying to help homeowners. Last week, housing counselors, attorneys, community leaders and county officials gathered at the Bloustein School of Planning and Public Policy at Rutgers University to share what they have learned battling the foreclosure crisis. The goal was to let the stakeholders discuss what has worked and what hasn’t, said Kathe Newman, an urban planning professor who studies the foreclosure issue and hosted the conference.
During one of the discussions, the question posed to the group was straight and to the point. What do you do to stay motivated in the face of this daunting and challenging problem? The consensus came quickly: We just have to remember that behind the numbers and paperwork are humans who are at risk of losing their homes.
A SUDDEN HALT
The foreclosure process came to a halt on Dec. 20, when Chief Justice Stuart Rabner announced an initiative to address fears homeowners were unnecessarily put into foreclosure and judges had inadvertently “rubber-stamped” files that had inaccurate or inadequate paperwork.
In March, six of the country’s biggest financial institutions — Bank of America, JP Morgan Chase, GMAC Mortgage, Citibank, OneWest Bank and Wells Fargo — agreed to submit extensive documentation of their foreclosure processes and outline any revisions they have made. A court-appointed special master, retired Superior Court Judge Richard Williams, is reviewing the material and will report on whether the banks have satisfied a number of changes.
Rabner’s order also addressed the concern that employees of the lender or servicer had signed thousands of foreclosure claims without any personal knowledge of their contents, a process known as “robo-signing.” As of June 9, foreclosure paperwork for pending and future cases is required to include an affidavit certifying that either an employee of the lender or an employee of the lender’s servicer has personally reviewed the case and confirmed its accuracy.
The court’s actions have slowed foreclosures in the state. And because there is no deadline for Williams to submit his findings, the storm can start at any point, advocates fear. There is one heartening fact, they said. Williams will issue his report regarding each bank as he finishes it rather than waiting, said court spokeswoman Winnie Comfort.
Bankers in New Jersey have told John McWeeney Jr., president and CEO of the New Jersey Bankers Association, that the time it now takes to complete a foreclosure has stretched to nearly three years.
“The reaction of the Supreme Court certainly delayed a large volume of foreclosures that otherwise would have been put in process, so I would expect that that will eventually hit and increase the number of foreclosure filings,” McWeeney said.
BRACING FOR ONSLAUGHT
When the foreclosure filings start winding their way through courts again, the influx will affect everyone in the industry.
“There are going to be very substantial numbers of foreclosures that are going to hit the market, all of which is problematic and obviously has a negative impact on housing values,” said Robert Levy, executive director of the Mortgage Bankers Association of New Jersey.
Asked what the financial institutions are doing now, representatives of Wells Fargo and GMAC said their attorneys are working closely with the court and documenting their improved and enhanced foreclosure procedures. The other financial institutions declined to comment.
In the interim, there is no shortage of homeowners seeking mortgage assistance. There is a three-month waiting list at some of the offices of New Jersey Citizen Action, said Executive Director Phyllis Salowe-Kaye. Some clients are coming in later in the foreclosure process, claiming they had not received earlier notification from their lenders. Others are borrowers who can’t afford to pay their mortgages because someone lost a job or as a result of another financial change. Activity could also pick up in mid-2012, Salowe-Kaye said, when homeowners with predatory loans begin facing ballooning payments.
The delays have done nothing to relieve homeowners’ stress. The process of finding a workable resolution can take longer, and it is difficult to try to sell or refinance a home that is worth less than its mortgage, said Jurow, the Legal Services foreclosure point person.
What homeowners who are either in foreclosure or late on payments should be doing now is organizing their finances and preparing for when activity picks back up again, Salowe-Kaye advised. That goes for homeowners who may have just lost their job and could face problems with their mortgage down the road.
When the wave hits, advocates said, they will have a plan. For its part, attorneys at Legal Services are studying defenses they can use to promote their clients’ abilities to get a loan modification, and, Jurow said, plan to reach out within the legal community for help.
“We’re happy that the court took the action that it took,” she said. “But, coupled with what we know is coming, it’s like bus-bunching — there hasn’t been a bus for an hour, but now five are going to come at once.”
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.
Friday, June 24, 2011
Get Ready for the Great MERS Whitewash Bill
Congress may pardon MERS retroactively. Don’t say it won’t happen. Doesn’t any politician care about the rule of law. (by Joe Vera)
Get Ready for the Great MERS Whitewash Bill
By: John Carney Senior Editor, CNBC.com
Congress comes back into session next week, it may consider measures intended to bolster the legal status of a controversial bank owned electronic mortgage registration system that contains three out of every five mortgages in the country.
The system is known as MERS, the acronym for a private company called Mortgage Electronic Registry Systems. Set up by banks in the 1997, MERS is a system for tracking ownership of home loans as they move from mortgage originator through the financial pipeline to the trusts set up when mortgage securities are sold.
The system has come under scrutiny by critics who charge MERS with facilitating slipshod practices. Recently, lawyers have filed lawsuits claiming that banks owe states billions of dollars for mortgage recording fees they avoided by using MERS.
If courts rule against MERS, the damage could be catastrophic. Here’s how the AP tallies up the potential damage:
Assuming each mortgage it tracks had been resold, and re-recorded, just once, MERS would have saved the industry $2.4 billion in recording costs, R.K. Arnold, the firm’s chief executive officer, testified in 2009. It’s not unusual for a mortgage to be resold a dozen times or more.
The California suit alone could cost MERS $60 billion to $120 billion in damages and penalties from unpaid recording fees.
The liabilities are astronomical because, according to laws in California and many other states, penalties between $5,000 and $10,000 can be imposed each time a recording fee went unpaid. Because the suits are filed as false claims, the law stipulates that the penalties can then be tripled.
Perhaps even more devastatingly, some critics say that sloppiness at MERS—which has just 40 full-time employees—may have botched chain of title for many mortgages. They say that MERS lacks standing to bring foreclosure actions, and the botched chain of title may cast doubts on whether anyone has clear enough ownership of some mortgages to foreclose on a defaulting borrower. The problems with MERS system led JPMorgan Chase CEO Jamie Dimon to stop using MERS for foreclosures in 2008.
Now it appears that Congress may attempt to prevent any MERS meltdown from occurring. MERS is owned by all the biggest banks, and th the value of their bonds sink because of doubts about the ownership of the underlying mortgages.
So it looks like the stage may be set for Congress to pass a bill that would limit MERS exposure on the recording fee issue and perhaps retroactively legitimate mortgage transfers conducted through MERS private database.
Self-styled consumer advocate Neil Garfield says the legislation is already being drafted:
After years of negative judicial decisions about the use of a straw-man on mortgages, MERS was about to lose its existence as well as its credibility. But now all of that is set to change as Wall Street money is pouring into the coffers of those who are receptive (i.e., almost everyone in Congress). The legislation is already being drafted under the interstate commerce clause to ratify MERS and everything it did retroactively. It appears that the Obama administration is ready to pardon all the securitization deviants by signing this bill into law. This information is corroborated by several people who are in sensitive positions — persons who would be the first to know such proposals. Fortunately, there are some people in Washington who have a conscience and do not want to see this happen.
Garfield is overstating things a bit. In truth, the results of the legal challenges to MERS have been mixed. But it is very plausible that the banks might want to put to rest any ongoing uncertainty about the legality of MERS. I wouldn’t be at all surprised if Congress manages to pass a bill that bails MERS out of its legal issues.
Get Ready for the Great MERS Whitewash Bill
By: John Carney Senior Editor, CNBC.com
Congress comes back into session next week, it may consider measures intended to bolster the legal status of a controversial bank owned electronic mortgage registration system that contains three out of every five mortgages in the country.
The system is known as MERS, the acronym for a private company called Mortgage Electronic Registry Systems. Set up by banks in the 1997, MERS is a system for tracking ownership of home loans as they move from mortgage originator through the financial pipeline to the trusts set up when mortgage securities are sold.
The system has come under scrutiny by critics who charge MERS with facilitating slipshod practices. Recently, lawyers have filed lawsuits claiming that banks owe states billions of dollars for mortgage recording fees they avoided by using MERS.
If courts rule against MERS, the damage could be catastrophic. Here’s how the AP tallies up the potential damage:
Assuming each mortgage it tracks had been resold, and re-recorded, just once, MERS would have saved the industry $2.4 billion in recording costs, R.K. Arnold, the firm’s chief executive officer, testified in 2009. It’s not unusual for a mortgage to be resold a dozen times or more.
The California suit alone could cost MERS $60 billion to $120 billion in damages and penalties from unpaid recording fees.
The liabilities are astronomical because, according to laws in California and many other states, penalties between $5,000 and $10,000 can be imposed each time a recording fee went unpaid. Because the suits are filed as false claims, the law stipulates that the penalties can then be tripled.
Perhaps even more devastatingly, some critics say that sloppiness at MERS—which has just 40 full-time employees—may have botched chain of title for many mortgages. They say that MERS lacks standing to bring foreclosure actions, and the botched chain of title may cast doubts on whether anyone has clear enough ownership of some mortgages to foreclose on a defaulting borrower. The problems with MERS system led JPMorgan Chase CEO Jamie Dimon to stop using MERS for foreclosures in 2008.
Now it appears that Congress may attempt to prevent any MERS meltdown from occurring. MERS is owned by all the biggest banks, and th the value of their bonds sink because of doubts about the ownership of the underlying mortgages.
So it looks like the stage may be set for Congress to pass a bill that would limit MERS exposure on the recording fee issue and perhaps retroactively legitimate mortgage transfers conducted through MERS private database.
Self-styled consumer advocate Neil Garfield says the legislation is already being drafted:
After years of negative judicial decisions about the use of a straw-man on mortgages, MERS was about to lose its existence as well as its credibility. But now all of that is set to change as Wall Street money is pouring into the coffers of those who are receptive (i.e., almost everyone in Congress). The legislation is already being drafted under the interstate commerce clause to ratify MERS and everything it did retroactively. It appears that the Obama administration is ready to pardon all the securitization deviants by signing this bill into law. This information is corroborated by several people who are in sensitive positions — persons who would be the first to know such proposals. Fortunately, there are some people in Washington who have a conscience and do not want to see this happen.
Garfield is overstating things a bit. In truth, the results of the legal challenges to MERS have been mixed. But it is very plausible that the banks might want to put to rest any ongoing uncertainty about the legality of MERS. I wouldn’t be at all surprised if Congress manages to pass a bill that bails MERS out of its legal issues.
Friday, May 6, 2011
Illegal Lock Changing
Lock-Changing Some banks send representatives to change the locks on properties that have not yet been foreclosure. In California, deeds of trusts provide that banks can protect collateral if it being wasted or if it is abandoned. They also have changed locks when property owners are delinquent and still occupying the property. In some instances, lock-changing has taken place against property owners who were not delinquent nor in foreclosure.
Such property owners are being exposed to theft of property and personal harm. At what point does such activity cross the line from civil to criminal? If you know of and can document a lock-changing event before a foreclosure or when there was no foreclosure, please let us know. We would like to speak with some of these property owners.
Such property owners are being exposed to theft of property and personal harm. At what point does such activity cross the line from civil to criminal? If you know of and can document a lock-changing event before a foreclosure or when there was no foreclosure, please let us know. We would like to speak with some of these property owners.
Thursday, May 5, 2011
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