Mortgage Assignment & Affidavit Fraud

Posted on October 27, 2009. Filed under: Banking, Finance, Foreclosure Defense, Mortgage Audit, Mortgage Fraud, Mortgage Law, Predatory Lending | Tags: , , , , , , , , , , , , , |

In bankruptcy and government takeovers of financial institutions, missing collateral is a major obstacle for trustees and regulators to overcome. The missing assignment problem is an extension of not carelessness or sloppiness as many have claimed, but of overt acts of fraud.

Skilled attorneys and forensic accounting experts could expose this fraud and as such, the effects and implications are more far reaching than a borrower, simply having their debt extinguished. Debt extinguishment or dismissal of foreclosure actions could be obtained if it can be shown that the entity filing the foreclosure:

• Does not own the note;
• Made false representations to the court in pleadings;
• Does not have proper authority to foreclose;
• Does not have possession of the note; and/or
• All indispensable parties (the actual owners) are not before the
court or represented in the pending foreclosure action.

To circumvent these issues, mortgage servicers and the secondary market have created and maintained a number of practices and procedures. MERS was briefly discussed and will be the sole subject of a major fraud report in the future.

Another common trade practice is to create pre-dated, backdated, and fraudulent assignments of mortgages and endorsements before or after the fact to support the allegations being made by the foreclosing party. Foreclosing parties are most often the servicer or MERS acting on the servicer’s behalf, not the owners of the actual promissory note. Often, they assist in concealing known frauds and abuses by originators, prior servicers, and mortgage brokers from both the borrowers and investors by the utilization of concealing the true chain of ownership of a borrower’s loan.
Ocwen-Anderson-Report-Sue-First-Ask-Questions-Later

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Deutsche Bank v. Debra Abbate Etal.

Posted on October 23, 2009. Filed under: Case Law, Foreclosure Defense, Mortgage Audit, Mortgage Law | Tags: , , , , , , , , , , , , |

Deutsche Bank National Trust Company, AS TRUSTEE FOR THE CERTIFICATE HOLDERS OF CARRINGTON MORTGAGE LOAN TRUST 2005-OPT2, ASSET-BACKED CERTIFICATES, SERIES 2005-OPT2, Plaintiff

against

Debra Abbate, CARMELA ABBATE, KIM FIORENTINO, BOCCE COURT HOMEOWNERS ASSOCIATION, INC., NEW YORK CITY ENVIRONMENTAL CONTROL BOARD, NEW YORK CITY TRANSIT ADJUDICATION BUREAU, NEW YORK CITY PARKING VIOLATIONS BUREAU, and “JOHN DOE No. 1″ through “JOHN DOE #10,” the last ten names being fictitious and unknown to the plaintiff, the person or parties intended being the person or parties, if any, having or claiming an interest in or lien upon the Mortgaged premises described in the Complaint, Defendants.

100893/07

Plaintiff was represented by the law firm of Frenkel Lambert Weiss & Weisman.

Defendant was represented by Robert E. Brown, Esq.

Joseph J. Maltese, J.

The defendants Kim Fiorentino, Debra Abbate, and Carmella Abbate’s motion to dismiss the plaintiff’s complaint is granted in its entirety.

This is an action to foreclose a mortgage dated February 24, 2005, upon the property located at 25 Bocce Court, Staten Island, New York. The mortgage was originated by Suntrust Mortgage Inc. (”Suntrust”) and was recorded in the Office of the Clerk of Richmond County on April 26, 2005. The plaintiff filed the Summons, Complaint, and Notice of Pendency on March [*2]1, 2007.[FN1] However, Suntrust assigned the first mortgage on this property to Option One Mortgage Corporation, which was executed on July 6, 2007. Another assignment to plaintiff Deutsche Bank National Trust Company (”Deutsche Bank”) was executed on March 7, 2007. Both assignments, which were recorded on July 23, 2007, contained a clause expressing their intention to be retroactively effective: the first one to date back to February 24, 2005, and the second one to February 28, 2007.[FN2] On November 19, 2007, this court issued an order of foreclosure and sale on the subject property. This court also granted two orders to show cause to stay the foreclosure on January 9, 2008 and April 8, 2008.[FN3]

Discussion

The Appellate Division, Second Department ruled and reiterated in Kluge v. Kugazy the well established law that “foreclosure of a mortgage may not be brought by one who has no title to it . . . .”[FN4] The Appellate Division, Third Department has similarly ruled that an assignee of a mortgage does not have a right or standing to foreclose a mortgage unless the assignment is complete at the time of commencing the action.[FN5] An assignment takes the form of a writing or occurs through the physical delivery of the mortgage.[FN6] Absent such transfer, the assignment of the mortgage is a nullity.[FN7]

Retroactive Assignments of a Mortgage are Invalid
The first issue this court must resolve is whether the clauses in the July 6, 2007 and March 7, 2007 assignments setting the effective date of the assignment to February 24, 2005 and February 28, 2007 respectively are permissible. This court rules that, absent a physical or written transfer before the filing of a complaint, retroactive assignments are invalid.

Recently, trial courts have been faced with the situation where the plaintiff commenced a [*3]foreclosure action before the assignment of the mortgage.[FN8] In those cases the trial courts have held,

. . . where there is no evidence that plaintiff, prior to commencing the foreclosure action, was the holder of the mortgage and note, took physical delivery of the mortgage and note, or was conveyed the mortgage and note by written assignment, an assignment’s language purporting to give it retroactive effect prior to the date of the commencement of the action is insufficient to establish the plaintiff’s requisite standing. . .[FN9]

In this case, the plaintiff failed to offer any admissible evidence demonstrating that they became assignees to the mortgage on or before March 1, 2007; as such, this court agrees with its sister courts and finds that the retroactive language contained in the July 26, 2007 and March 7, 2007 assignments are ineffective. This court therefore rules that it lacks jurisdiction over the subject matter when the plaintiff has no title to the mortgage at the time that it commenced the action.

The next issue this court must resolve is whether the defendants waived subject matter jurisdiction because they did not raise that issue in their prior applications to this court.

Affirmative Defense of Standing

At the outset of any litigation, the court must ascertain that the proper party requests an adjudication of a dispute.[FN10] As the first step of justiciability, “standing to sue is critical to the proper functioning of the judicial system.”[FN11] Standing is a threshold issue; if it is denied, “the pathway to the courthouse is blocked.” [FN12]

The doctrine of standing is designed to “ensure that a party seeking relief has a sufficiently cognizable stake in the outcome so as to present a court with a dispute that is capable [*4]of judicial resolution.”[FN13] “Standing to sue requires an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant’s request.”[FN14] Where the plaintiff has no legal or equitable interest in a mortgage, the plaintiff has no foundation in law or in fact.[FN15]

A plaintiff who has no standing in an action is subject to a jurisdictional dismissal since (1) courts have jurisdiction only over controversies that involve the plaintiff, (2) a plaintiff found to lack “standing is not involved in a controversy, and (3) the courts therefore have no jurisdiction of the case when such plaintiff purports to bring it.”[FN16]

On November 7, 2005, in the case of Wells Fargo Bank Minn. N.A. v. Mastropaolo [“Mastropaolo”], this court found that “Insofar as the plaintiff was not the legal titleholder to the mortgage at the time the action was commenced, [the Bank] had no standing to bring the action and it must be dismissed.”[FN17] Erroneously, this court “[o]rdered, that the plaintiff’s summary judgment motion is denied in its entirety and that this action is dismissed with prejudice.”[FN18]

This Court should have ordered that this matter was dismissed without prejudice, which would have given the plaintiff the right to start the action again after it had acquired title to the note and mortgage. Unfortunately, the plaintiff, did not seek a motion to reargue that error, which would have been corrected promptly. Instead, the plaintiff appealed the decision to the Appellate Division, Second Department, which rightfully reversed the decision 18 months later on May 29, 2007 based upon the dismissal with prejudice as opposed to a dismissal without prejudice to refile the action. However, in what appears to be dicta, the court went on to discuss whether lack of standing is tantamount to lack of subject matter jurisdiction. The court further stated that the failure of the initial pro se defendant to make a pre-answer motion or a motion to dismiss, the defense of lack of standing would be waived. But the Appellate Division did not address the issue of subject matter jurisdiction, which may not be waived. [*5]

In the instant case, this court is again faced with similar facts, which raise the issue that the Bank must have title to the mortgage before it can sue the defendant. Clearly, having title to the subject matter (the mortgage) is a condition precedent to the right to sue on that mortgage. This has always been the case, but since the Appellate Division, Second Department’s comments in Mastropaolo, that issue has been clouded.

At the time that the plaintiff improperly commenced the action, the pathway to the Courthouse should have been blocked. Deutsche Bank had no legal foundation to foreclose a mortgage in which it had no interest at the time of filing the summons and complaint. Lack of a plaintiff’s interest at the beginning of the action strips the court’s power to adjudicate over the action.[FN19] Lack of interest and controversy is protected by the umbrella of subject matter jurisdiction. Whenever a court lacks jurisdiction, a defense can be raised at any time and is not waivable.[FN20] In other words, for there to be a cause of action, there needs to be an injury. At the time that the action was commenced, the instant plaintiff suffered no injury and had no interest in the controversy. Since the plaintiff filed this action to foreclose the mortgage before it had title to it, there was no controversy between the existing parties when the action commenced. Therefore, the court lacked subject matter jurisdiction to adjudicate the present case. The defendants are consequently entitled to a dismissal without prejudice because the court lacked jurisdiction over a non-existent controversy.

Accordingly, it is hereby:

ORDERED, that the defendants Kim Fiorentino, Debra Abbate, and Carmella Abbate’s motion to dismiss the plaintiff’s complaint is granted, without prejudice to the plaintiff having the right to refile within the time provided by the Statute of Limitations; and it is further

ORDERED, that the parties and counsel shall appear before this court to further conference this matter on November 20, 2009 at 11:00AM.

ENTER,

DATED: October 6, 2009

Joseph J. Maltese

Justice of the Supreme Court

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FTC halts mortgage operation for misrepresentation of loss mitigation

Posted on June 29, 2009. Filed under: Foreclosure Defense, Fraud, Legislation, Loan Modification, Mortgage Audit, Mortgage Fraud, Mortgage Law | Tags: , , , , , , , , , , , , , , |

At the request of the Federal Trade Commission, a federal court has halted a bogus mortgage foreclosure prevention operation that misrepresented both the “loss mitigation” services it offered and the earnings potential of the business opportunity it sold. The FTC seeks to end this deceptive scheme and make the defendants give up their ill-gotten gains.

According to the FTC’s complaint, the defendants sold “loss mitigation” services to homeowners at risk of foreclosure, falsely claiming they could prevent foreclosure in 97 percent of cases and misrepresenting that they would make a full refund if they failed. Before performing any loss mitigation services, the defendants required homeowners to pay the equivalent of one month’s mortgage payment. Their contracts instructed homeowners not to contact lenders or their contract and its money-back guarantee would be voided. In some cases the defendants’ consultants told homeowners to stop making their mortgage payments while the defendants were working on their cases.

The FTC alleged that, contrary to the defendants’ claims, they completed loan modification in only about 6 percent of cases and routinely failed to return consumers’ repeated telephone calls. In numerous instances, the defendants had not contacted the consumers’ lenders or had made only non-substantive contacts with them, resulting in late fees, penalties, and other costs for the homeowners. After failing to secure loan modifications, the defendants also failed to honor their refund policies.

The FTC’s complaint also alleges that the defendants sold a “loss mitigation consultant” business opportunity for up to $1,500, falsely claiming that purchasers (consultants) could earn various amounts, including up to $6,000 per week, by referring homeowners to them and by recruiting new consultants. In fact, throughout the defendants’ entire operation, no consultant has earned that much money.

via FTC halts mortgage operation for misrepresentation of loss mitigation | NationalMortgageProfessional.com.

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Melfi v. WMC Mortg. Corp

Posted on June 28, 2009. Filed under: Case Law, Mortgage Audit, Refinance, right to rescind, Truth in Lending Act | Tags: , , , , , , , , , , , , , , , , , , |

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND. Hon. Mary M. Lisi, U.S. District Judge.
Melfi v. WMC Mortg. Corp., 2009 U.S. Dist. LEXIS 1454 (D.R.I., Jan. 9, 2009)

DISPOSITION:

Affirmed.

COUNSEL: Christopher M. Lefebvre with whom Claude F. Lefebvre and Christopher M. Lefebvre, P.C. were on brief for appellant.

Jeffrey S. Patterson with whom David E. Fialkow and Nelson Mullins Riley & Scarborough, LLP were on brief for appellees, Deutsche Bank National Trust Company, N.A. and Wells Fargo Bank, N.A.

JUDGES: Before Boudin, Hansen, * and Lipez, Circuit Judges.
*

Of the Eighth Circuit, sitting by designation.

OPINION BY: BOUDIN

OPINION

BOUDIN, Circuit Judge. In April 2006, Joseph Melfi refinanced his home mortgage with WMC Mortgage Corporation (“WMC”). At the closing, Melfi received from WMC a notice of his right to rescind the transaction. The notice is required for such a transaction by the Truth in Lending Act (“TILA”), 15 U.S.C. § 1635(a) (2006). Assuming that the notice complies with TILA, a borrower is given three “business days” to rescind the transaction; otherwise, the period is much longer. Id. The question in this case is whether the notice given Melfi adequately complied.

The three-day period aims “to give the consumer the opportunity to reconsider any transaction which would  [*2]  have the serious consequence of encumbering the title to his [or her] home.” S. Rep. No. 96-368, at 28 (1979), reprinted in 1980 U.S.C.C.A.N. 236, 264. Under TILA, the requirements for the notice are established by the Federal Reserve Board (“the Board”) in its Regulation Z. 12 C.F.R. § 226.23 (2007). Failure to provide proper notice extends to three years the borrower’s deadline to rescind. Id. § 226.23 (a)(3).

About 20 months after the closing, Melfi attempted to rescind the transaction. The incentives for a borrower to do so may be substantial where a new loan is available, especially if rates have fallen or substantial interest has been paid during the period of the original loan. “When a consumer rescinds a transaction . . . the consumer shall not be liable for any amount, including any finance charge” and “the creditor shall return any money or property that has been given to anyone in connection with the transaction . . . .” 12 C.F.R. 226.23(d)(1), (2).

Melfi argued that the notice of his right to cancel was deficient because it left blank the spaces for the date of the transaction (although the date was stamped on the top right corner of the notice) and the actual deadline to  [*3]  rescind. WMC and co-defendants Deutsche Bank and Wells Fargo (the loan’s trustee and servicer, respectively) refused to allow the rescission, and Melfi then brought this action in the federal district court in Rhode Island.

The district court, following our decision in Palmer v. Champion Mortgage, 465 F.3d 24 (1st Cir. 2006), asked whether a borrower of average intelligence would be confused by the Notice. Melfi v. WMC Mortgage Corp., No. 08-024ML, 2009 U.S. Dist. LEXIS 1454, 2009 WL 64338, at *1 (D.R.I. Jan. 9, 2009). The court ruled that even if the omissions in the notice were violations, they were at most technical violations that did not give rise to an extended rescission period because the notice was clear and conspicuous despite the omissions, and it dismissed Melfi’s complaint. 2009 U.S. Dist. LEXIS 1454, [WL] at *3.

Melfi now appeals. Our review is de novo, accepting all of the well-pleaded facts in the complaint as true and drawing reasonable inferences in favor of Melfi. Andrew Robinson Int’l, Inc. v. Hartford Fire Ins. Co., 547 F.3d 48, 51 (1st Cir. 2008). We may consider materials incorporated in the complaint (here, the notice Melfi received) and also facts subject to judicial notice. In re Colonial Mortgage Bankers Corp., 324 F.3d 12, 14 (1st Cir. 2003).

TILA  [*4]  provides that “[t]he creditor shall clearly and conspicuously disclose, in accordance with regulations of the Board, to any obligor [here, Melfi] in a transaction subject to this section the rights of the obligor under this section.” 15 U.S.C. § 1635(a). Regulation Z says what the notice of the right to cancel must clearly and conspicuously disclose; pertinently, the regulation requires that the notice include “[t]he date the rescission period expires.” 12 C.F.R. § 226.23(b)(1)(v). The Board has created a model form; a creditor must provide either the model form or a “substantially similar notice.” 12 C.F.R. § 226.23(b)(2). The use of the model form insulates the creditor from most insufficient disclosure claims. 15 U.S.C. § 1604(b). WMC gave Melfi the model form, but the spaces left for the date of the transaction and the date of the rescission deadline were not filled in. The form Melfi received had the date of the transaction stamped at its top (but it was not so designated) and then read in part:

You are entering into a transaction that will result in a mortgage/lien/security interest on your home. You have a legal right under federal law to cancel this transaction, without cost,  [*5]  within THREE BUSINESS DAYS from whichever of the following events occurs LAST:

(1) The date of the transaction, which is ; or

(2) The date you receive your Truth in Lending disclosures; or

(3) The date you received this notice of your right to cancel.

. . . .

HOW TO CANCEL

If you decide to cancel this transaction, you may do so by notifying us in writing. . . .

You may use any written statement that is signed and dated by you and states your intention to cancel and/or you may use this notice by dating and signing below. Keep one copy of this notice because it contains important information about your rights.

If you cancel by mail or telegram, you must send the notice no later than MIDNIGHT of (or MIDNIGHT of the THIRD BUSINESS DAY following the latest of the three events listed above). If you send or deliver your written notice to cancel some other way, it must be delivered to the above address no later than that time.

. . . .

Melfi’s argument is straightforward. Regulation Z requires in substance the deadline for rescission be provided; one of the three measuring dates–the date of the transaction–was left blank (the other two are described but have no blanks); and therefore the notice  [*6]  was deficient and Melfi has three years to rescind. A number of district court cases, along with two circuit court opinions, support Melfi’s position, n1 although one of the circuit cases also involved more serious substantive flaws.

– – – – – – – – – – – – – – Footnotes – – – – – – – – – – – – – – -1

E.g., Semar v. Platte Valley Fed. Sav. & Loan Ass’n, 791 F.2d 699, 702-03 (9th Cir. 1986); Williamson v. Lafferty, 698 F.2d 767, 768-69 (5th Cir. 1983); Johnson v. Chase Manhattan Bank, USA N.A., No. 07-526, 2007 U.S. Dist. LEXIS 50569, 2007 WL 2033833, at *3 (E.D. Pa. July 11, 2007); Reynolds v. D & N Bank, 792 F. Supp. 1035, 1038 (E.D. Mich. 1992).
– – – – – – – – – – – – End Footnotes- – – – – – – – – – – – – –

The circuit cases are now elderly and may be in tension with later TILA amendments, but the statements that “technical” violations of TILA are fatal has been echoed in other cases. This circuit took a notably different approach in Palmer to determining whether arguable flaws compromised effective disclosure process. See also Santos-Rodriguez v. Doral Mortgage Corp., 485 F.3d 12, 17 (1st Cir. 2007). Following Palmer, district court decisions in this circuit concluded that failing to fill in a blank did not automatically trigger a right to rescind. n2

– – – – – – – – – – – – – – Footnotes – – – – – – – – – – – – – – -2

Bonney v. Wash. Mut. Bank, 596 F. Supp. 2d 173 (D. Mass. 2009); Megitt v. Indymac Bank, F.S.B., 547 F. Supp. 2d 56 (D. Mass. 2008);  [*7]  Carye v. Long Beach Mortgage Co., 470 F. Supp. 2d 3 (D. Mass. 2007).
– – – – – – – – – – – – End Footnotes- – – – – – – – – – – – – –

In Palmer, the plaintiff received a notice of her right to cancel that followed the Federal Reserve’s model form but the form was not received until after the rescission deadline listed on the notice. 465 F.3d at 27. Nonetheless, Palmer held that the notice “was crystal clear” because it included (as in the Federal Reserve’s model form) the alternative deadline (not given as a date but solely in descriptive form) of three business days following the date the notice was received, so the plaintiff still knew that she had three days to act. Id. at 29.

Palmer did not involve the blank date problem. Palmer, 465 F.3d at 29. But the principle on which Palmer rests is broader than the precise facts: technical deficiencies do not matter if the borrower receives a notice that effectively gives him notice as to the final date for rescission and has the three full days to act. Our test is whether any reasonable person, in reading the form provided in this case, would so understand it. Here, the omitted dates made no difference.

The date that Melfi closed on the loan can hardly have been unknown to him and was in fact hand stamped  [*8]  or typed on the form given to him. From that date, it is easy enough to count three days; completing the blank avoids only the risk created by the fact that Saturday counts as a business day under Board regulations, 12 C.F.R. § 226.2(a)(6), and the borrower might think otherwise. Lafferty, 698 F.2d at 769 n.3 (“[T]he precise purpose of requiring the creditor to fill in the date [of the rescission deadline] is to prevent the customer from having to calculate three business days”).

Nor does completing the blank necessarily tell the borrower how long he has to rescind. Where after the closing the borrower is mailed either the notice or certain other required information, the three days runs not from the transaction date but from the last date when the borrower receives the notice and other required documents. Melfi himself says he was given the form on the date of the closing and does not claim that there was any pertinent delay in giving him the other required disclosures. So the blanks in no way misled Melfi in this case.

So the argument for allowing Melfi to extend his deadline from three days to three years depends on this premise: that any flaw or deviation should be penalized automatically  [*9]  in order to deter such errors in the future. If Congress had made such a determination as a matter of policy, a court would respect that determination; possibly, this would also be so if the Board had made the same determination. See Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 844, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984). Melfi argues at length that we owe such deference to the Board.

The answer is that there is no evidence in TILA or any Board regulation that either Congress or the Board intended to render the form a nullity because of an uncompleted blank in the form or similar flaw where, as here, it could not possibly have caused Melfi to think that he had months in order to rescind. The central purpose of the disclosure–the short notice period for rescission at will–was plain despite the blanks. Melfi’s argument assumes, rather than establishes, that a penalty was intended.

Some cases finding a blank notice form to be grounds for rescission even though harmless were decided under an earlier version of TILA. In 1995, Congress added a new subsection to TILA, titled “Limitation on Rescission Liability.” It provided that a borrower could not rescind “solely from the form of written notice  [*10]  used by the creditor . . . if the creditor provided the [borrower] the appropriate form of written notice published and adopted by the Board . . . .” Truth in Lending Act Amendments of 1995, Pub L. No. 104-29, § 5, 109 Stat. 271, 274 (1995) (codified at 15 U.S.C. § 1635(h)).

Read literally, this safe harbor may not be available to WMC because, while it used the Board’s form of notice, it did not properly fill in the blanks. But the TILA amendments were aimed in general to guard against widespread rescissions for minor violations. McKenna v. First Horizon Loan Corp., 475 F.3d 418, 424 (1st Cir. 2007). To this extent, Congress has now leaned against a penalty approach and, perhaps, weakened the present force of the older case law favoring extension of the rescission deadline.

In any event, in the absence of some direction from Congress or the Board to impose a penalty, we see no policy basis for such a result. Where, as here, the Board’s form was used and a reasonable borrower cannot have been misled, allowing a windfall and imposing a penalty serves no purpose and, further, is at odds with the general approach already taken by this court in Palmer.

Affirmed.

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Mortgage Wars

Posted on June 26, 2009. Filed under: Foreclosure Defense, Fraud, Loan Modification, Mortgage Audit, Mortgage Fraud, Mortgage Law, Predatory Lending, right to rescind, Truth in Lending Act | Tags: , , , , , , , , , , , , , , , , , , , , , , |

Iris Martin

My new book, Mortgage Wars, will guide you, step by step, through a war plan of engagement that has been followed by many homeowners who have won their mortgage wars. You will meet them and their attorneys throughout the book. You will learn about how you were defrauded and why; why the government cannot help you; and why and how you can win your war. The law is squarely on your side. Even if you have received a sales date; even if your foreclosure has occurred and you are awaiting eviction, there is plenty you can do to stay in your home and keep it from the predators!

Now, if you do nothing, you will lose your home. You do not have the option of doing nothing. You must study your loan and your lender, or have a mortgage auditor do so for you. You can get referrals to qualified auditors at www.yourmortgagewar.com. Once your loan is audited, you will learn what fraudulent acts were committed by your broker and lender. Fraud is the intentional inducement into a contract without all the material facts. There are laws against fraud and the penalties are severe. You will have a clear picture of how you were defrauded and how your lender established a pattern of conduct in which it abandoned it’s fiduciary right to advise you. You may have been defrauded at any stage of the process: during the solicitation, origination, processing, closing and servicing of your loan. Fraud must be argued with specificity in the courtroom, and the audit is your weapon.

You will also learn if your loan was securitized, i.e. sold on the secondary market. If it was, your lender has no legal right to foreclose, as it is not a current holder of your note. This is extremely good news, and the legal approach involves filing a “quiet title action” as well as a claim for fraud and other violations. This will get your lender off your title and get you your house free and clear, if your lender cannot produce the current holders of your note. Most likely, it cannot do so at the level that will satisfy a judge in a court of law. And judges are not lenient in this matter. They are livid at the way homeowners have been defrauded. They understand completely, that this is not some chair you bought at a garage sale, this is your home! The roof over your head! The shelter that provides you with safety and security and protects your family!

More….

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Indiana reaches $2.8M settlement with Countrywide

Posted on May 16, 2009. Filed under: Mortgage Fraud, Mortgage Law, Predatory Lending | Tags: , , , , , , , |

Indianapolis – Some relief is on the way for a small number of Hoosiers who were cheated out of their money. As much as $2.8 million will be returned to Indiana homeowners because of one company’s predatory practices.

Indiana State Attorney General Greg Zoeller announced a $2.8 million predatory lending settlement against Countrywide on Tuesday. About 1,700 Hoosiers will split the settlement.

Zoeller said individual payouts “will be based on the number of people who respond.”

The biggest immediate problem will be finding those Hoosiers who already lost their homes. An independent consultant will be hired to find those Hoosiers who qualify.

“We are going to aggressively try to find people who are eligible…every effort will be made to find as many of the 1,700 as possible,” Zoeller said.

The settlement was made somewhat easier by negotiating with Bank of America which now owns Countrywide. The overall amount of the settlement is more punishment for truth in lending infractions than actual rescue for those who lost their homes.

“They had a low rate to attract people in. They were not fully explained to the consumer so when it reset in the second year they were completely under water, unable to manage the mortgage payments,” said Zoeller.

A portion of that settlement, $50,000, will go to the Indiana Foreclosure Network. Lt. Governor Becky Skillman accepted the donation.

via Indiana reaches $2.8M settlement with Countrywide – WTHR | Indianapolis.

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Fraud fears cloud FHA’s success in stabilizing housing market – National Business – MiamiHerald.com

Posted on April 6, 2009. Filed under: Banking, FHA, Finance | Tags: , , , |

WASHINGTON — As the Federal Housing Administration has stepped in to help stabilize the housing market by underwriting more mortgages, the Depression-era agency is seeing growing default rates that could undermine its health, the Department of Housing and Urban Development inspector general testified Thursday.

Kenneth Donohue also told the Senate Appropriations housing subcommittee that unscrupulous lenders who helped precipitate the housing crisis with subprime loans are moving into the FHA loan system, and the number of fraud cases is a growing concern.

Sen. Patty Murray, D-Wash., who chairs the subcommittee, said that if the FHA can’t pay its debts, Congress may have to cover the shortfall.

“And we don’t have the dollars to do it,” Murray said.

While some see the FHA as the “savior of the market,” Murray said, she’s concerned the agency suffers from outdated technology, personnel shortages and inadequate underwriting.

“Just because FHA has become a major player in saving the housing market doesn’t mean these challenges have disappeared,” she said.

In addition to the resurgence of FHA-guaranteed mortgage loans and the stimulus bill, lower interest rates and an $8,000 first-time homebuyer tax credit are helping to stabilize the market, J. Lennox Scott, the chief executive of John L. Scott Real Estate in Washington state, told the committee.

Two years ago, FHA-backed loans made up only a small percentage of the housing market. The agency didn’t underwrite subprime or adjustable rate loans. As prices rose, the FHA was barred from writing loans on mortgages above $362,500.

The maximum was raised in the stimulus bill to nearly $730,000. As subprime loans and adjustable rate loans disappeared, the FHA now guarantees nearly 30 percent of mortgages. At the same time, the number of lenders doing business with the FHA has grown more than 500 percent.

“As is the case with other mortgage market participants, currently FHA is experiencing elevated default rates and foreclosures and with it, losses that exceed prior estimates,” HUD Secretary Shaun Donovan said.

Donovan said the primary reasons for the defaults were growing unemployment and other economic factors. Donovan said FHA-guaranteed loans didn’t include “unsafe features” and poor underwriting that made subprime and other loans risky.

via Fraud fears cloud FHA’s success in stabilizing housing market – National Business – MiamiHerald.com.

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Bill Moyers Journal . Transcripts | PBS

Posted on April 5, 2009. Filed under: Banking, Finance, Fraud, Housing, Mortgage Law, Predatory Lending | Tags: , , , , , , , , |

BILL MOYERS: Welcome to the Journal.

For months now, revelations of the wholesale greed and blatant transgressions of Wall Street have reminded us that “The Best Way to Rob a Bank Is to Own One.” In fact, the man you’re about to meet wrote a book with just that title. It was based upon his experience as a tough regulator during one of the darkest chapters in our financial history: the savings and loan scandal in the late 1980s.

WILLIAM K. BLACK: These numbers as large as they are, vastly understate the problem of fraud.

BILL MOYERS: Bill Black was in New York this week for a conference at the John Jay College of Criminal Justice where scholars and journalists gathered to ask the question, “How do they get away with it?” Well, no one has asked that question more often than Bill Black.

The former Director of the Institute for Fraud Prevention now teaches Economics and Law at the University of Missouri, Kansas City. During the savings and loan crisis, it was Black who accused then-house speaker Jim Wright and five US Senators, including John Glenn and John McCain, of doing favors for the S&L’s in exchange for contributions and other perks. The senators got off with a slap on the wrist, but so enraged was one of those bankers, Charles Keating — after whom the senate’s so-called “Keating Five” were named — he sent a memo that read, in part, “get Black — kill him dead.” Metaphorically, of course. Of course.

Now Black is focused on an even greater scandal, and he spares no one — not even the President he worked hard to elect, Barack Obama. But his main targets are the Wall Street barons, heirs of an earlier generation whose scandalous rip-offs of wealth back in the 1930s earned them comparison to Al Capone and the mob, and the nickname “banksters.”

Bill Black, welcome to the Journal.

via Bill Moyers Journal . Transcripts | PBS.

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AIG unit sues Countrywide over loan losses

Posted on March 23, 2009. Filed under: Banking, Finance, Fraud, Mortgage Fraud, Mortgage Law | Tags: , , , , |

LOS ANGELES (AP) — A unit of embattled insurer American International Group Inc. filed suit against mortgage lender Countrywide Financial Corp. in California federal court Thursday, alleging Countrywide misrepresented the health of loans that the company insured, resulting in massive losses.

United Guaranty Mortgage Indemnity Co. filed suit in U.S. District Court, accusing Countrywide of breach of contract, fraud, negligence, and unfair competition and business practices.

United Guaranty alleges Countrywide “abandoned its own underwriting guidelines to boost its market share and then misrepresented the quality of its loans so that United Guaranty would provide insurance coverage for them.”

The AIG unit is seeking unspecified punitive damages, and wants the insurance policies on the loans and its payments on the policies to be canceled.

Charlotte, N.C.-based Bank of America bought Countrywide in July 2008 for about $2.5 billion in an all-stock deal. Countrywide was the nation’s largest mortgage lender at the time of the acquisition. But like most lenders, the company was hit hard by sharply rising defaults over the past 18 months. Bank of America received billions in federal aid so it could absorb mortgage-related losses from Countrywide and its later acquisition, Merrill Lynch.

AIG, once the world’s largest insurer, recently reported a 2008 fourth-quarter loss of $61.7 billion — the biggest quarterly loss in U.S. corporate history — linked to subprime loan defaults and continued market turmoil. The company, which has received over $170 million in government aid, outraged lawmakers by recently paying out $165 million in bonuses, including to traders in the Financial Products unit that nearly brought about AIG’s collapse.

For its part, Countrywide is the target of multiple lawsuits linked to the subprime mortgage meltdown.

Calls and emails to AIG’s attorney and Countrywide representatives seeking comment weren’t immediately returned late Thursday.

via AIG unit sues Countrywide over loan losses | Lawinfo Weblog.

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Leahy, Grassley Introduce Anti-Fraud Legislation

Posted on February 14, 2009. Filed under: Fraud, Legislation, Mortgage Audit, Mortgage Fraud, Mortgage Law | Tags: , , , , |

WASHINGTON (Thursday, Feb. 5, 2009) – Senator Patrick Leahy (D-Vt.) and Senator Chuck Grassley (R-Iowa) introduced legislation Thursday to provide the federal government with more tools to investigate and prosecute financial fraud. The Fraud Enforcement and Recovery Act makes necessary changes to federal criminal laws, including criminal fraud, securities law, and money laundering laws, increases the funding available to the federal law enforcement agencies to combat mortgage fraud and predatory lending, and also revises the False Claims Act to ensure that the government can recover taxpayer dollars lost to fraud and abuse.

The Federal Bureau of Investigation has seen a 100 percent increase in the number of fraud investigations opened since 2005. The Treasury Department has also reported that more than 60,000 cases alleging mortgage fraud were filed in 2008, 10 times as many as were reported in 2002. The legislation introduced Thursday by Leahy and Grassley aims to provide federal investigators and prosecutors the tools and resources needed to unravel complex criminal frauds and bring criminals to justice.

Leahy said, “The federal government has spent hundreds of billions of dollars to stabilize our banking system, and Congress will soon spend even more to restart our economic recovery. But to date, we have paid far too little attention to investigating and prosecuting the mortgage and corporate frauds that has so dramatically contributed to this economic collapse. Congress should move quickly to pass this legislation so the American taxpayers can be confident that those who are criminally responsible for contributing to this economic disaster are caught and held fully accountable and to ensure that the money we are now spending to restore America is protected from fraud in the future.”

Grassley said, “Unfortunately, throughout the housing crisis we’ve seen innocent homeowners who have been victims of shady mortgage lenders and unscrupulous individuals who have used a down market to line their own pockets at the expense of others. This bill is designed to send a message by revising our laws to ensure criminals are brought to justice and that law enforcement has the tools to uncover these fraudulent schemes and go after the bad actors. Criminals should be put on notice that ripping off homeowners and taxpayers won’t be tolerated.”

via Leahy, Grassley Introduce Anti-Fraud Legislation.

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