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Bank of America Allegedly Foreclosing Fraudulently in Kentucky

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If you were to believe the banks, the concern over foreclosure “improprieties” is way overdone. They claim that the robo signers really weren’t doing anything seriously wrong, the banks just need to redo some paperwork, and everything else about foreclosures is just fine.

Yet Bank of America, having made the implausible claim that it had reviewed 102,000 cases in a few weeks and nothing was amiss, was forced to retreat and acknowledge that it’s review hadn’t been comprehensive, and it was finding errors at a rate that could exceed 5%..

The bank position so far has been that problems so far are mere mistakes and “sloppiness”. But as we’ve described repeatedly, the problems with securitzations run much deeper than that. It appears that the parties to the deal often failed to take the time consuming steps necessary to convey the note (the borrower IOU) to the trust as stipulated in the contract governing the deal, the pooling and servicing agreement. The PSA required that each note in the deal had to be signed by multiple intermediary parties before it got to its supposed final resting place, a trust. And that had to take place by closing or at most 90 days thereafter.

Many foreclosures show this process was not observed on a widespread basis: the notes were assigned (as in transferred) to the trust right before closing, a violation of the PSA, the New York trust statutes that govern virtually all mortgage securitization trusts, and IRS rules for these trusts (REMIC). When foreclosure defense attorneys started contesting these assignments, suddenly a new ruse started to show up: allonges, which are sheets of paper that contained the needed endorsements, would magically appear out of nowhere. The problem is that an allonge is supposed to be used only when there is no space left on the note for endorsements, including margins and the reverse side, and when it is used, it is supposed to be so firmly attached to the original as to be inseparable. But these “ta da” allonges were always somehow discovered at the custodian, quite separate from the note.

Bank of America appears to have improved the state of the art in the creative foreclosure procedures department. I started hearing a few months ago about a sudden and suspicious increase in the number of foreclosures Bank of America was making in its own name. BofA was in effect saying that it owned these loans and had never securitized them. That seemed questionable, since the bulk of Bank of America’s mortgages had been originated by Countrywide, and Countrywide has said in its SEC filings that it securitized 96% of them. Why would the courts see such an explosion in foreclosures in the relatively small proportion of mortgage that BofA had kept on its books? Lawyers suspected that BofA was falsely claiming that it owned the loan to circumvent questions about standing (if the note had not been conveyed to the trust properly, then the trust might not be able to foreclose).

We now have some evidence that these suspicions are correct. A bankruptcy attorney in Kentucky has been working with clients who have lost their homes in foreclosures in the name of Bank of America. After taking the house, the bank has been filing deficiency judgments for the remaining mortgage balance. The attorney files a Chapter 13 bankruptcy. In the example we have here, Bank of America next files an objection to the bankruptcy plan. The attorney for Bank of America makes a response to the objection. Before the confirmation hearing, the same attorney files a second objection to the plan in the name of a Countrywide trust.

The attorney for the borrower, needless to say, raises all kinds of hell in the hearing, and wants an explanation of how two creditors, each representing the same debt obligation, can each object to the plan, when neither has yet filed a Proof of Claim.

Here is the juicy part. A Proof of Claim is filed later that day. It shows a series of assignments that were executed after the judgment (meaning after the house was taken by BofA) and after the borrower’s attorney filed the bankruptcy petition. The assignment is from MERS to Bank of America executed on September 29. The second assignment is from Bank of America to trust CWABS 2003-B6. This assignment has not been recorded in the land office as of November 10. And even more fun, the allonges look odd.

SEC filings show the loan as asset of CWABS 2003-BC6.

So we have:

1. Either Countrywide lied in its 2003 SEC filings or the loan was never on Bank of America’s books. Which would you believe?

2. Even though Countrywide appears to have intended to convey the loan to its CWABS 2003-BC6 trust, it appears never to have completed the steps. The assignments are legally void by virtue of being out of time and by being inconsistent with conveyance chain stipulated in the PSA (which would have been from Countrywide through at least one intermediary entity to the trust. So the trust does not now own the note either.

This means the odds are awfully high that Bank of America committed multiple frauds on the court, first on the state court in the foreclosures process, and now on the Federal bankruptcy court.

Bank of Americ Proof of Claim– Suedkamp

This sort of abuse is far more serious than robo signing. As much as the likely misconduct here and robo signing would both be considered frauds on the court, the robo signing is arguably cost cutting gone mad and riding roughshod over proper legal procedures. By contrast, this practice has all the appearances of multiple coverups of the fact that Countrywide trust did not have standing to foreclose on the house. The steps undertaken here look to be a deliberate, concerted effort for the bank to get its way, the law be damned. And this clearly took more parties and more thought than the robo signing abuses.

At a minimum, the attorneys at the law firm and the parties at the servicer had to be aware of this device. And if our reading of this document is correct, this is fraud, pure and simple. It’s high time we see some attorneys disbarred and some law firms go out of business as a result of foreclosure chicanery, as well as serious investigations of the people involved in foreclosure litigation at the servicers and the banks’ general counsel’s office.

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66 comments

  1. R Foreman

    Thanks Yves, for all the work you do to get this stuff out into the open. I’m just surprised it is taking so long for the courts to start harshly judging this kind of activity. The banks get a free ride because they’re vital to our future right ?

    1. kravitz

      Too bad this case in Indiana can’t use this information…

      Bank of America Asks Court to Dismiss Homeowners’ Racketeering Lawsuit
      http://www.bloomberg.com/news/2010-11-11/bank-of-america-asks-court-to-dismiss-homeowners-racketeering-lawsuit.html
      “Bank of America Corp., the biggest U.S. lender, asked a federal judge to throw out a lawsuit brought by foreclosed homeowners who accuse it of racketeering.
      Dwayne Ransom Davis and Melisa Davis sued last month in Indianapolis, claiming Bank of America “routinely” submitted perjured affidavits to support foreclosures. They lost their Knightstown, Indiana, home last year.”

      1. Alex

        That article gives no evidence for this remarkable claim, and is almost two years old. Has any further evidence for this remarkable claim come to light since?

  2. fiscalliberal

    Country Wide is going to cost BoA a lot of money operationaly and in writedowns.

    Lets see – was it not Ken Lewis that bought Country Wide. I wonder if they have any clawback provisions. Silly me: just dreaming.

    Thank you Yves for keeping us up to date and developing a understanding of the chickanery (ap?)

    I wonder if any of the regulators have any idea of the toxic debt on the banks books?

    1. Cedric Regula

      Clawbacks? Haha. That’s just not how it’s done. Mozilo, ex Countrywide CEO, whom was just fined $60M in his recent court settlement with the USG, had an employment contract now absorbed by BAC that covers any fines and legal fees leveed against management. So BAC ponies up the $60M+ !!!

    2. chris

      Ken Lewis — what a real piece of work that guy is. He should be swinging from a lamppost next to Blankfein and Dimon.

  3. Chris LaHaie

    Yves, this is a great piece of work by you!

    It certainly is more serious than robo signing. I agree that there needs to be consequences for BofA et al. The blatant disregard of the law is stunning. I hate to read too much into this but how could they continue to commit such egregious acts of fraud without some wink and nod from the federal government. Surely they could not be so ignorant of the law, nor could they be arrogant enough to think their PR document review stunt would gain favor with the public or the courts. It was clearly an effort to placate the state AG’s with hopes they would hear comments from the White House stating that a moratorium would be too harmful to the economy. Coincidental timing right before the election makes me again think some communication had to have occurred between BofA and the White House. I am starting to think the entire thing was set up to try and buy a few more votes.
    I have no data or evidence to support this but it is just the impression that came to mind when I read this article. The more the layers are peeled back I get the impression we have been supporting a criminal enterprise (disguised as banks) with tax payer money.

    1. Stupendous Man - Defender of Liberty - Foe of Tyranny

      There have been a number of cases in Federal BK courts that have involved false swearing and fabricated evidence, and those going back to at least late 2007. In other words Justice is aware of what is happening – and this spans the prior and the current administrations (Bush & Obama) as well as two AG’s (Mukasey and Holder).

      The PA BK case of In Re Hill was essentially the case that put Countrywide in BK, and its later acquisition by BofA. countrywide had fabricated letters in an effort to bilk a debtor out of more money, and this even AFTER the BK had been discharged. The BK judge wasn’t having any.

      The hearing took place on December 20, 2007 and the transcript of the hearing was made available on January 3, 2008. Within days Morgenson at NYT and Katie Porter at Credit slips covered the story, which boiled down to “Country forges and fabricates documents in BK case.” Shortly thereafter (within days) Countrywide stock began taking a nose dive.

      Lost in the shuffle of the Countrywide BK and BofA acquisition were the crimes committed. No criminal charges ensued. The effect was still significant though.

      Another case is that of In Re Fagen.

      Yet another is In Re Wilson. This case has the US Trustee filing a Motion for Sanctions against Fidelity/Lender processing Services. The hearing on this motion for sanctions is scheduled for December 1, 2010, or just a bit less than three weeks.

      Given that Fidelity/LPS is involved in 70% of foreclousres nationwide, as default servicer, the fact they are also fabricating and forging documents and evidence will hopefully have similar effect as it did on Countrywide. And personally I’m hoping for large monetary sanctions and criminal charges, including securities fraud (LPS failed to disclose the Wilson case to investors).

      A good source for some of the pleadings and motions in the Hill and Wilson cases can be found at:

      http://www.scribd.com/wjr__10

      So, if a legally untrained high school drop out can figure this out shouldn’t our US Attorney General be able to figure it out as well?

      It kind of gets down to this:

      If Holder DOESN’T know about these cases he needs to be fired.

      If Holder does know about these cases and he HASN’T informed President Obama he needs to be fired.

      If Holder does know about these cases and he HAS informed President Obama, and yet no action whatsoever is being taken by Justice or the US Attorney General, then he needs to be fired and Obama needs to be removed from office.

  4. Richard Kline

    Fraud, pure and simple, was my conclusion as well following your review, Yves. That is, a criminal action. And the foreclousure of the home could not have been valid, so we have a theft on top of that. In the nineteenths century, land fraud by speculative banks was endemic, exactly why such rigid procedures of assignment and filing were written pervasively into law. Now, robber baron trusts are operating as scarcely checked criminal enterprises, inflating, bundling, blowing up, then stealing the rubble of the country’s property base. Everything old is new again . . . . –And very few of these diamond-fobbed crooks will spend even an hour in jail.

    1. chris

      It really does seem that those who don’t learn the lessons of history are doomed to repeat them.

      Neoliberal economics was written and advocated to give greedy, rich criminals free reign to massively rip people off.

  5. Fog Horn Leg Horn

    I say, I say, It just don’t matter when we transfer, er, uh, the, you know, uh, the note…………..

    If all that is true, then why is BofA going into state court to foreclose in their own name, and then in the dark of night, trying to transfer a disqualified asset into a trust some six or seven years after the trust closed? Even a chicken with only three toes on each foot knows that is beyond the 90 day funding window!

    If it really was on BofA’s books all along, and this property was never part of a “securitized trust” and BofA legitimately foreclosed because this was a legacy asset of Countrwide, then WHY would they transfer that asset to a trust post foreclosure? I haven’t heard of any trust’s out shopping for REO properties. Probably because the REMIC section of the IRS code forbids such actions, but hey, we all know Treasury has put down the paddle and is opting for “time out” these days, in lieu of corpral punishment, and we also know that NY Trust law forbids it, but maybe they thought nobody was looking. Quite frankly, at this point, nothing BofA could say, would surprise me. Oh, except the truth!

    Oops, hold the presses, we are now seeing evidence that other chicken hawks are taking the same approach. Their is whispering around the coop that maybe BB&T, you know, the guys that bought Colonial Bank’s dead carcass are attempting the same mop up strategy. Perhaps they may want to do a Google search before they start their “it was ours all along” mantra lessons, because the first thing that pops up is an Office of the Inspector General’s report that says the bank failed due to overexposure in MBS, and failure to recognize underwriting risks……………..

    Enjoy the weekend sports fans!!!

  6. sbrewer

    I have the original NOTE endorsed in Blank,” Pay To The Order of __________.”with out recourse, signed by the Senior VP of RBMG. I have a sworn affidavit that states a written assignment of the note was never prepared and the SELLER into the securities stated that they WARRANT AND REPRESENT IT HAS NEVER BEEN SOLD TO ANY OTHER ENTITY.EMC(seller) had to sell the note to Bear Stearns which was the depositor into the Bear Stearns Asset Backed Securities,inc. Asset Backed certificate series 2003-2. Bear Stearns was to sell/ assign the Note to JP MORGAN CHASE as trustee of the Trust. There has been a foreclosure started on the mortgage on March, 3 2009 by The Bank OF New York Mellon as successor trustee for JP MORGAN CHASE who claims to be the owner and holder of the note. By way Of an assignment which was recorded at the ROD on March 19, 2009, 16 days after the LIS-PENDENS , and the summons and complaint . I have a letter dated July 13 2002 from Mers that states the loan has been removed from the MERS system and the MIN# deactivated. Mers had no authority to do an assignment and the assignment was done by a known “robo-signor” and in the Corporate name of RBMG that not only deactivated the MIN # but also removed the loan from MERS. RBMG was also defunct and has been since 2005 when it was aquired by NETBANK and subsequently shut down by the FDIC in 2007. The BANK OF NEW YORK MELLON produced in discovery two allonges the first was from RBMG to EMC and the second was an allonge directly to JP MORGAN CHASE from EMC. First thing is the PSA ( pooling and service agreement) the governing document of the securities describes in detail the percise chain of title it also describes who is the seller ,the depositor ,the master servicer and the trust. Even though the sworn affidavit produced by the successor trustee stated no written assignment was ever prepared, so the allonges was a direct attempt to decieve the investors and knowingly a misrepresentation which is fraud. BEAR STEARNS was the depositor into the securities. First let start with the allonges both are undated and one is not even signed: according to the UCC an allonge is only used when there is NO ROOM ON THE ORIGINAL NOTE FOR ENDORSEMENT and must be firmly attached as to become a part of the note. AN ALLONGE cannot be used to transfer interest and is invalid if there is room on the note for endorsements and is invalid it not attached. A lost note was produced from EMC but not anywhere in the document is there a conveyance, it is not a valid assignment. Here is an excerpt from the Prospectus:

    Bear Stearns Asset Backed Securities Inc · 424B5 · Bear Stearns Asset Backed Certificates Series 2003-2 · On 6/30/03
    Document 1 of 1 · 424B5 · Prospectus:.

    Assignment of the Mortgage Loans; Repurchase At the time of issuance of the certificates, the depositor will cause the mortgage loans, together with all principal and interest due with respect to such mortgage loans after the cut-off date to be sold to the trust. The mortgage loans in each of the mortgage loan groups will be identified in a schedule appearing as an exhibit to the pooling and servicing agreement with each mortgage loan group separately identified. Such schedule will include information as to the principal balance of each mortgage loan as of the cut-offdate, as well as information including, among other things, the mortgage rate,the borrower’s monthly payment and the maturity date of each mortgage note. In addition, the depositor will deposit with Wells Fargo Bank Minnesota, National Association, as custodian and agent for the trustee, the following documents with respect to each mortgage loan: (a) except with respect to a MOM loan, the original mortgage note, endorsed without recourse in the following form: “Pay to the order of JPMorgan Chase Bank, as S-40——————————————————————————–
    trustee for certificateholders of Bear Stearns Asset Backed Securities, Inc., Asset-Backed Certificates, Series 2003-2 without recourse,” with all intervening endorsements, to the extent available, showing a complete chain of endorsement from the originator to the seller or, if the original mortgage note is unavailable to the depositor, a photocopy thereof, if available, together with a lost note affidavit; (b) the original recorded mortgage or a photocopy thereof, and if the related mortgage loan is a MOM loan, noting the applicable mortgage identification number for that mortgage loan; (c) except with respect to a mortgage loan that is registered on the MERS(R) System, a duly executed assignment of the mortgage to “JPMorgan Chase Bank, as trustee for certificateholders of Bear Stearns Asset Backed Securities, Inc., Asset-Backed Certificates, Series 2003-2, without recourse;” in recordable form, as described in the pooling and servicing agreement; (d) originals or duplicates of all interim recorded assignments of such mortgage, if any and if available to the depositor; (e) the original or duplicate original lender’s title policy or, in the event such original title policy has not been received from the insurer, such original or duplicate original lender’s title policy shall be delivered within one year of the closing date or, in the event such original lender’s title policy is unavailable, a photocopy of such title policy or, in lieu thereof, a current lien search on the related property; and (f) the original or a copy of all available assumption, modification or substitution agreements, if any. In general, assignments of the mortgage loans provided to the custodian on behalf of the trustee will not be recorded in the appropriate public office for real property records, based upon an opinion of counsel to the effect that such recording is not required to protect the trustee’s interests in the mortgage loan against the claim of any subsequent transferee or any successor to or creditor of the depositor or the seller, or as to which the rating agencies advise that the omission to record therein will not affect their ratings of the offered certificates. In connection with the assignment of any mortgage loan that is registered on the MERS(R) System, the depositor will cause the MERS(R) System to indicate that those mortgage loans have been assigned by EMC to the depositor and by the depositor to the trustee by including (or deleting, in the case of repurchased mortgage loans) in the computer files (a) the code in the field which identifies the trustee and (b) the code in the field “Pool Field” which identifies the series of certificates issued. Neither the depositor nor the master servicer will alter these codes (except in the case of a repurchased mortgage loan). A “MOM loan” is any mortgage loan as to which, at origination, Mortgage Electronic Registration Systems, Inc. acts as mortgagee, solely as nominee for the originator of that mortgage loan and its successors and assigns. S-41——————————————————————————–
    The custodian on behalf of the trustee will perform a limited review of the mortgage loan documents on or prior to the closing date or in the case of any document permitted to be delivered after the closing date, promptly after the custodian’s receipt of such documents and will hold such documents in trust for the benefit of the holders of the certificates. In addition, the seller will make representations and warranties in the pooling and servicing agreement as of the cut-off date in respect of the mortgage loans. The depositor will file the pooling and servicing agreement containing such representations and warranties with the Securities and Exchange Commission in a report on Form 8-K following the closing date. After the closing date, if any document is found to be missing or defective in any material respect, or if a representation or warranty with respect to any mortgage loan is breached and such breach materially and adversely affects the interests of the holders of the certificates in such mortgage loan, the custodian, on behalf of the trustee, is required to notify the seller in writing. If the seller cannot or does not cure such omission,defect or breach within 90 days of its receipt of notice from the custodian, theseller is required to repurchase the related mortgage loan from the trust fund at a price equal to 100% of the stated principal balance thereof as of the date of repurchase plus accrued and unpaid interest thereon at the mortgage rate to the first day of the month following the month of repurchase. In addition, if the obligation to repurchase the related mortgage loan results from a breach of the seller’s representations regarding predatory lending, the seller will be obligated to pay any resulting costs and damages incurred by the trust. Rather than repurchase the mortgage loan as provided above, the seller may remove such mortgage loan from the trust fund and substitute in its place another mortgage loan of like characteristics; however, such substitution is only permitted within two years after the closing date. With respect to any repurchase or substitution of a mortgage loan that is not in default or as to which a default is not imminent, the trustee must have received a satisfactory opinion of counsel that such repurchase or substitution will not cause the trust fund to lose the status of its REMIC.

    I’m not a MOM loan the loan transferred off of MERS, Mers no longer tracked the assignments and let’s not forget I HAVE IN MY POSSESSION THE ORIGINAL NOTE ENDORSED IN BLANK NEGOTIATED TO ME FROM RBMG. The note is date stamped MARCH 18 2002 and has been in my possession since May of 2004 along with a letter from the RBMG stating the loan is fully paid and satisfied.

    the UCC is clear:U.C.C. – ARTICLE 3 – NEGOTIABLE INSTRUMENTS
    § 3-201. NEGOTIATION.
    (a) “Negotiation” means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder.
    (b) Except for negotiation by a remitter, if an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its indorsement by the holder. If an instrument is payable to bearer, it may be negotiated by transfer of possession alone.
    § 3-301. PERSON ENTITLED TO ENFORCE INSTRUMENT.
    “Person entitled to enforce” an instrument means (i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to Section 3-309 or 3-418(d). A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.
    § 3-302. HOLDER IN DUE COURSE.
    (a) Subject to subsection (c) and Section 3-106(d), “holder in due course” means the holder of an instrument if:
    (1) the instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and
    (2) the holder took the instrument (i) for value, (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument described in Section 3-306, and (vi) without notice that any party has a defense or claim in recoupment described in Section 3-305(a).
    (b) Notice of discharge of a party, other than discharge in an insolvency proceeding, is not notice of a defense under subsection (a), but discharge is effective against a person who became a holder in due course with notice of the discharge. Public filing or recording of a document does not of itself constitute notice of a defense, claim in recoupment, or claim to the instrument.
    (c) Except to the extent a transferor or predecessor in interest has rights as a holder in due course, a person does not acquire rights of a holder in due course of an instrument taken (i) by legal process or by purchase in an execution, bankruptcy, or creditor’s sale or similar proceeding, (ii) by purchase as part of a bulk transaction not in ordinary course of business of the transferor, or (iii) as the successor in interest to an estate or other organization

    (a) “Negotiation” means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder.
    (b) Except for negotiation by a remitter, if an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its indorsement by the holder. If an instrument is payable to bearer, it may be negotiated by transfer of possession alone.
    § 3-301. PERSON ENTITLED TO ENFORCE INSTRUMENT.
    “Person entitled to enforce” an instrument means (i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to Section 3-309 or 3-418(d). A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.
    § 3-302. HOLDER IN DUE COURSE.
    (a) Subject to subsection (c) and Section 3-106(d), “holder in due course” means the holder of an instrument if:
    (1) the instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and
    (2) the holder took the instrument (i) for value, (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument described in Section 3-306, and (vi) without notice that any party has a defense or claim in recoupment described in Section 3-305(a).
    (b) Notice of discharge of a party, other than discharge in an insolvency proceeding, is not notice of a defense under subsection (a), but discharge is effective against a person who became a holder in due course with notice of the discharge. Public filing or recording of a document does not of itself constitute notice of a defense, claim in recoupment, or claim to the instrument.
    (c) Except to the extent a transferor or predecessor in interest has rights as a holder in due course, a person does not acquire rights of a holder in due course of an instrument taken (i) by legal process or by purchase in an execution, bankruptcy, or creditor’s sale or similar proceeding, (ii) by purchase as part of a bulk transaction not in ordinary course of business of the transferor, or (iii) as the successor in interest to an estate or other organization

    1. dejavuagain

      To sbrewer:

      Would you provide a little color on this posting. Do you have a prior posting providing the background.

      As I follow this, you paid of your loan and then they still came after you?

      What state are you in and have you posted the original documents somewhere?

      Thanks

  7. monday1929

    I was a lonely voice calling for RICO 3 years ago, glad that the banks are making it impossible to proceed in any other way. Can a judge require the CEO’s to sign off on these documents? Can the C suite continue to claim ignorance? Can POTUS?

    Either BAC is a zero within 12 months or fascism reigns.
    Disclosure- lots of BAC $5 puts, which are basically free ie. the big money is betting (knows) fascism prevailed.

  8. monday1929

    Blatant criminality, performed boldly out in the open- the very definition of Fascism, and Banana Republics.

  9. Chris D

    Yves, are you in touch with any attorneys general either as an expert or just to prod them to do something, you have a better understanding of this than they do.

    Perhaps you could help us craft a letter we could sign and send to attorneys general, or provide some key points we need to put in there. I am hesitant to send a letter as I am not sure what key points need to be in there. Any help from Yves or others is appreciated. I am happy to explore ways to post on social networks and petition sites to help spread the word.

    1. Bill White

      It’s essentially impossible to emigrate to Norway. You have to marry an Norwegian. It’s somewhat easier to emigrate to New Zealand, but you need some kind of skill that’s in demand. Computer programmers are probably ok, but not 57 year old SW engineers (like me). Australia is similar to New Zealand, as I recall.

      1. chris

        France? Netherlands? Iceland?

        We’re at a real turning point in history. There is so much on line right now it’s truly scary.

        With a fascist SCOTUS, I don’t hold out much hope unless Congress wakes the fuck up.

    1. Anonymous Jones

      If you think the zeal and greed of these people is going to stop outside the borders of New Zealand and Norway, you don’t understand drive, determination, leverage, military might, and natural human stupidity. What makes you think these individuals will be content with billions when they could have tens or hundreds of billions? Once they’ve destroyed the US middle class, you realize the only place the money is going to be is in the middle classes of places like NZ and Norway.

  10. AR

    Chris D:

    Lisa Epstein of Foreclosure Hamlet posted this at LivingLies, Neil Garfield’s foreclosure defense website:

    FW: ACTION ALERT: A few moments of your time to help educate the Multi state AG panel of 50 AGs investigating foreclosure “practices”.

    http://livinglies.wordpress.com/2010/11/09/50-state-ags-and-asst-ags-lack-adequate-knowledge-to-prosecute/

    It is a plea, with contact information, to encourage emailing the 50 state AG foreclosure task force to offer the expertise of the foreclosure defense attorneys, and presumably people like Yves, who have already been amassing details that the AGs should be including in their investigation, so they don’t have to ‘reinvent the wheel.’

    1. R Foreman

      Just love this comment from the livinglies blog.. from the woman in Colorado after she had contacted her AG’s office.

      “I also learned that the regulator for HSBC heads up the office of Comptroller of the Currency! Gees, nothing going on there!”

  11. Siggy

    The hubris that is reflected in this piece is stunning. The fraud itself is even more stunning.

    Will the requisite disbarments and imprisonments occur? One can only hope, but I will not hold my breath.

    If the trustee for the RMBS has not achieved appropriately conveyed standing, then the whole of the RMBS is a fraud.
    That leaves the loan originator, the intermediary, the sponsor, the servicer and the trustee on the hook for the face amount of RMBS, performing or not. Now who regulates these people? Lo, it is the Fed, the FDIC and the SEC.

    Curiously we are seeing State Attorneys General who are bringing subpoenas and cases, all the while the Federal boys are sucking their thumbs.

    Could it be that everyone is waiting for helicopter Ben to making his rounds, after all $600 billion could ballon to $6 trillion and that amount might cover the amount necessary to write off the remaining worthless paper. If that, what about the people who have defaulted?

    I am curious, could it be that BofA is absolutely insolvent? I think there is a very high probability that that may be the case.

    How much money was stolen in the Teapot Dome event? I think this time, even allowing for inflation, the current amount is several magnitudes larger.

    Yves,

    Thanks for this most informative piece. Tells me what I have suspected since 2004. Namely, that you can’t easily bundle 5 or 6 thousand mortages in a cost effective way. It really isn’t the recording costs, it’s the time it takes to appropriately assign each and every note at each of the stations along the minimum four stage process.

    As this whole mess proceeds there will be much propaganda about the moral obligation of debtors. Apart from here and a very few other places, there is no informed campaign to prosecute the abrogated moral obligation of creditors who made loans that could not be serviced and who failed to observe due process and who committed rampant frauds upon the public and the courts. The appelation ‘banksters’ is far too polite.

  12. kravitz

    Is MERS about to be made retroactively legal?

    Is congress about to make Fraud actually a legal activity?

    A commenter at Business Insider pointed to a post at FedUpUsa that suggests Congress will legalize MERS in the lame duck session, and Obama will sign it.

    http://www.businessinsider.com/states-with-most-foreclosures-2010-11

    http://fedupusa.org/2010/11/11/alert-congress-considering-retroactively-making-mers-legal/

    http://livinglies.wordpress.com/2010/11/11/pardon-livinglies-obtains-wall-street-playbook-mers-to-be-legitimized-by-act-of-congress/

    1. Yves Smith Post author

      I don’t see how this works. It will be subject to Constitutional challenge, since real estate is state law. And in 45 states the note is the primary consideration anyhow, there are OLD Supreme court ruling to that effect too. Old and unchallenged means messing with it would be seen to be a very bad idea.

    2. Stupendous Man - Defender of Liberty - Foe of Tyranny

      Article I, Section 9 of the US Constitution states:

      “No Bill of Attainder or ex post facto Law shall be passed.”

      They likely are TRYING do something of this nature but I suspect they will fail.

  13. steak

    I am going to be talking to Senate staffers all day on Friday about QE2, and I tried to get a meeting with Mitch McConnell’s office. They wouldn’t see me because I am not from Kentucky. Well I’ll be bringing this article by and see if they feel it is relevant that their constituents and courts are being subjected to this kind of fraud.

    1. karen1p

      @steak,
      I have a meeting with Cantwell’s office on the subject of foreclosure fraud. But, if you are seeing more on the Hill, please report what is occuring.

      In my case, I have evidence that they transferred my note to the MBS only after the note was in default. This is CLEAR evidence of securities fraud, but I can’t seem to get attention of my AG with this.

      Please let me know if you need this evidence. Write me at pooleykaren at yahoo dot com.

    2. Dikaios Logos

      Did you talk with the leadership office or the Kentucky office? You might want to try the former.

  14. Hugh

    Fraud on fraud on fraud, and why not? Until, as you say, attorneys are disbarred, bank officials are doing perp walks, and the corporations themselves are facing multiple felony charges, what’s the downside for them? For every fraudulent foreclosure they get called on, how many go through? That states and the federal government aren’t stomping these people in the ground shows what a banana republic we have become.

  15. ebmafm

    I work for a large institutional investor whose external counsel is a big name Washington law firm. That firm’s view is that all of mortgage documentation problems will cause delays but impose no significant costs on servicers or originators…It admits that, yes, maybe servicers and securitizers are guilty of perjury and negligence but state courts do not want to hold anybody in contempt of court when they are already saddled with so many foreclosure cases (sort of a circular argument that only a high powered law firm could make).

    Our equity PMs believe bank losses from put backs and legal costs will be small and occur over many years and so don’t pose any systemic risk. In fact, their view is that documentation problems in the mortgage market is much ado about nothing (even though we hold a boatload of distressed CDOs and non-agency MBS that were bought at par in 2006-2008 and have since lost us billions.)

    My own sense is that political considerations will save servicers and banks from any substantial liability…Obama cannot claim, on the one hand, that saving the TBTF banks was necessary to save the economy as recently as a few weeks ago and then turn around and support efforts to expose these supposed saviors of the US economy as criminal enterprises guilty of masssive fraud, perjury, and negligence. The Republicans, who rode to victory over popular anger over bank “bailouts”, want to weaken Dodd-Frank. We have a deeply corrupt political system in this country and I don’t see it changing.

    1. dejavuagain

      “I work for a large institutional investor whose external counsel is a big name Washington law firm. That firm’s view is that all of mortgage documentation problems will cause delays but impose no significant costs on servicers or originators…”

      Is this a lobbying firm primarily? I wonder what the depth of the firm’s actual experience is as to: NY Trust law, REMIC Tax Law, Pooling and Servicing Agreements for GSE and private label deals, foreclosure in any actual local court, title searches, bankruptcy involving residential mortgage loans etc.

      Anyway, I think that screwed investors and screwed homeowners may have a different view of the world!

  16. MinnItMan

    I tried my best to figure this case out, but I can’t. It looks to me that the Chap 13 was filed to stay the foreclosure sale scheduled the same day, not as a means for heading off a deficiency judgment (otherwise, a Chap 7 discharge would make more sense, but as I said, I can’t figure this one out if the foreclosure has already happened). The purported secured creditor (BOA or CW, whatever) appears to be trying to get the borrower’s arrearages made part of the Chap 13 plan (note: after foreclosure, the mortgagee is no longer secured for the deficiency portion). The latest action on this case was yesterday. The debtor’s attorney, the trustee and the court can deal with the above allegations, so I will limit my comments to one glaring aspect of this case.

    The lender is claiming this loan is 62 months (5 years-plus) behind.

    I don’t know how lenders figure out their losses in detail – or even if there is single standard “bottom-line” measure – but however you slice it, it’s 5 years and counting of lost income until there is a re-sale), forwarded attorney’s fees, property tax, and other 3rd party payments, and then whatever loss against the principal balance on the re-sale.

    Whatever else may spring to mind here, this is a lender who is not doing a good job preserving an asset or generating income, who ran into problems on this loan long before (or at least at the leading edge) of the real estate meltdown, and who ought to have figured out how to stop losing money on this loan long ago. If BOA thinks it will make this up with deficiency judgments, it is even worse at its job than the above suggests.

    1. Cedric Regula

      My first thought too was how can a loan be delinquent for 5 years. Second thought was how does BAC handle balance sheet accounting for this and how many like that are there?

  17. karen1p

    @Yves,
    I am a homeowner in foreclosure. I also have evidence of fraud with BoA. They are allegedly the trustee to the pool of loans where my note allegedly lies.

    The kicker? My note is not encumbered by MERS, and the note was transferred into the MBS only AFTER the note was in default. That’s right……they transferred the note to the pool after the note was in default.

    Isn’t this securities fraud? And yet, I can’t get my AG to pay attention to this?

  18. tom bokuniewicz

    Yves: I don’t know if you had a look at the stuff from the FDIC I posted yesterday about notice requirements when mortgages are transferred, but in that section the FDIC states: . Section 226.39 does not apply to persons who acquire only a beneficial interest in the loan or a security interest in the loan. Section 226.39 also does not apply to a party that assumes the credit risk without acquiring legal title to the loan. Thus, an investor that acquires mortgage-backed securities, pass-through certificates, or participation interests and does not directly acquire legal title in the underlying mortgage loans is not covered by this section.

    If the investor never has legal title, I will ask again, who does? Furthermore, “…a party that assumes the credit risk without acquiring legal title to the loan.” would indicate that the FDIC expects that the mortgage (legal title) and the mortgage note (debt) can be, actually must be, split for the investor to not be forced to meet the notice requirements of the section.

    So, at this point, the investor cannot foreclose on the debt because s/he never had ownership of the debt. The mortgage still exists but it is unenforceable as there is no debt to be owed. The note is out there, but who owns that? And each failure to send notice of transfer of ownership of the note is a violation per se of the Fair Debt Collection Act and allows for damages; which in some cases might be formidable. Example:

    Suppose I never get notice of who owns my note and I am having trouble making the payments. The servicer refuses to act and to help me by accepting less money until I get back on my feet and/or sell the property. All the servicer tells me is that it is an ‘investor’ but if I look at the FDIC rules I am not entitled to notice from an ‘investor’. So, how do I try to make a deal with the owner of my note, the one who stands to lose in foreclosure?

    The house goes into foreclosure and my credit is ruined. The failure of the note holder to notify me of how to contact it has precluded me from one, keeping my credit intact and two, any attempt at mitigating damages by making a deal; thus forbidding the note holder from going after me for any deficiency.

    It seems to em that the whole system is DESIGNED to obscure who holds the note and to discourage any negotiations between the mortgagor and the mortgagee; which is counter to how mortgages had been done for most of recorded history (pun intended). That is, when you knew who owned your note (usually someone local) you could try to make things work. Here the note holder became irrelevant until it was dredged up for foreclosure.

    The system was meant to fail.

    1. Cedric Regula

      i’ll try and answer and yves can correct me if I’m wrong. a MBS investor is buying into a share of a pool of mortgages. this explains why you don’t get a house if your MBS share stops paying interest.

    2. Mindrayge

      Investors in MBS have no interest whatsoever in the mortgages themselves. The investors have no claim nor can they assert any rights in regard to any mortgage or note.

      If you read any pooling and service agreement you will see that it states that the certificate holders are buying an interest in what is known as the Distribution Account and that is the sole source of payments to certificate holders.

      1. tom bokuniewicz

        So, they are more akin to a third party beneficiary; thus they would have a claim against the note holder for failure to provide income but not the mortgagor. As such the note holder would be suing the mortgagor, arguably, on behalf of the trust since the note holder, I presume, is not getting valuable consideration as the trust is the entity getting paid and not the note holder. And from the FDIC rule above, it is presumed the MBS trust is not legal title holder.

  19. Christine Springer

    I am not surprised, and frankly I don’t know why anyone else is either. This happens all the time. I have reviewed more than one hundred loans in the last two years and this does not surprise me. Everyone should be looking at their loan documents, especially the documents that are recorded against their property. The reason they are relying on MERS assignments and other similar documents is because these loans were never transferred into the pools. So if you’re wondering why the documents are all recent, it’s because they have to manufacture a chain of ownership and most people have no idea what to look for. On their face,the documents look kosher unless you know what to look for.

    The banks are trying to find any way they can to avoid demonstrating actual ownership of the loan, including the sleight of hand discussed in your post. The problem is that how this all works is so complicated that many lawyers and judges don’t understand what they’re doing. So we all have to be quick on our feet to understand how the pieces of this puzzle fit together. This makes perfect sense to me; but until more people like you start asking these questions and noticing these patterns, it will continue.

    1. chad

      could you write a how-to or some documentation to help educate homeowners? My mortgage was originally with Country Wide which was then bought by BOFA. I’m not in default or behind in payments but I’m really curious to know the current state of things with regard to my loan.

    2. phemfrog

      i too would love to see what to do. as a homeowner, i am just unsure about the payments i am making and whether or not the title will be clear for when i want to sell.

  20. Lyle

    As hinted the sovereign will use principles of Equity to trump law (as the process was designed in the middle ages in England). The sovereign will decide what in its view is equitable and modify the law to fit this. Check english legal history for more details, but in essence the common law courts produced decisions that the Chancellor felt were unjust, so he overruled the common law courts. This lead to the development of the Equity side of the law (no juries even in the US as the 6th amendment in all suits at law a jury trial is required).
    As in the middle ages one side will feel relieved that it got justice and the other will feel that it got the shaft. We know which side the sovereign will come down on.. It will take acts in the state legislatures to fix a lot of this but they have always been for sale so …

  21. chef

    Did anybody notice what a terrible loan this was?
    I assume the borrowers were sub-prime and unable to secure better terms, or not knowledgeable enough to make a better deal.

    2 year arm.
    libor + 5.7%
    rate floor
    6% pre-pay penalty

  22. viking

    In my continuing quest to find who owns my mortgage note, I tracked down the architect of Wells Fargo’s securitization program. He has been fired. He’s forty five and retired and lived in the midwest.

    This person instigated and oversaw ALL ABS for WF for the better part of a decade. HUGE PLAYER. I found his home number online and called him and he picked up.

    I told him how I couldn’t get anywhere with WF. After it was securitized, it went into a black hole. He laughed. He said, “if you can find a single person who understands how to track stuff, it will be the first.” He told me about the huge paperwork vaults in Denver and Salt Lake City where original mortgage notes were stored. I asked them if they were every modified to reflect changes in ownership.

    He said no. Never. They didn’t modify anything. They just stored them. He offered to help me get into one of the vaults, then remembered, after he was canned, that the storage facilities were ‘consolidated’.

    Yves, I believe this person would be willing to talk if his anonymity was assured. If you are interested in pursuing email me.

    1. Skippy

      “He told me about the huge paperwork vaults in Denver and Salt Lake City where original mortgage notes were stored.”

      “then remembered, after he was canned, that the storage facilities were ‘consolidated’.”

      ———

      Well, well, now that could make things very interesting and on mamy levels…IF it holds true.

      Skippy…Vegas M/banking conection…please say NO…

    2. razzz

      Good job viking. I don’t know what it will lead to but good job anyway.

      These banksters are really running out of wiggle room.

      Lame duck Congress will be most interesting this time around.

      Clear title will be deemed antiquated.

  23. sbrewer

    I have sent this to my state AG , he sent me to consumer affairs, I sent this info to my Senator who is a ranking member of the banking and commerce commitee and he sent me to Family services, I have also sent this info to the following:FDIC,FBI,SEC,OAG,OCC,Ombudmans,Obama,Federal Reserve Board , the federal trade commission, the banking and commerce commitee, all 23 ranking members and the chairman mr. christopher Dodd, the oversite commitee, the vice president, You name it I sent the PROOF, to each and everyone!!!

  24. Stupendous Man - Defender of Liberty - Foe of Tyranny

    The use of an allonge is a bit more nuanced than expressed.

    The UCC, in original form, had a “no space test” for the use of an allonge. However, the UCC was revised in the early 90′s (I think). This revised UCC DOES NOT have a “no space test” in regard to an allonge. 48 of the 50 states have adopted the revised UCC. The two states that have not are New York and North Carolina.

    Fortunately language in the majority of PSA’s (at least the majority I’ve looked at) bind the parties to New York Law, typically in a section (commonly 11.04) titled “Governing Law; Jurisdiction.”

    Thus while a no space test is rather antiquated and is not common New York still has a no space test.

  25. 60sradical

    A great thread!! MY sense is that all loan paying homeowers-especially those that are not in foreclosure(yet)-need to research their chain of title, since it is now becoming highly apparent that fraud haunts their current note payment. Fraudeult securitization lingers in a psuedo-legalized shadowy system which is connected to a huge percentage of one’s most cherised property. Homeowners Unite! Thanks again Yves for your amazing work and thanks to the regulars on this site who are seriously raising questions. Of course, this analysis must continue and maybe, just maybe, RICO charges will have their affect. A movement is underway now, and those with keen insights are obviously leading the charge.

  26. Sandy

    Has anyone else had BAC/CW to include MERS as a defendant in the foreclosure suit? I have, and it is really confusing me. Just seems strange that MERS would assign the mortgage to BAC/CW, then it becomes a defendant.

  27. Concerned

    Oh, well, my tale is just a slight variation on what you’ve already seen.

    After the loan was in supposed default, the servicing moved from CW to Litton. Litton, using MERS, generated a substitution of Trustee.

    Attorney statements filed with courts in 2009 indicated the ‘investors’ as a particular CWABS pool with BoNY-Mellon as trustee. The county recorder still showed the loan only to the originally named ‘lender’, “America’s Wholesale Lender”. That AWL is a trade-name that was used by CountryWide. Much has been written about problems with loans that show AWL as the lender, as far as new assignments being created for them.

    SEC filings do show a mortgage matching my details as being in the specified pool.

    In 2010, during a BK, Litton used MERS to sign an assignment of the DOT for “America’s Wholesale Lender”, assigning the supposedly defaulted loan into the CLOSED 2005-vintage CWABS pool with BoNY-Mellon as Trustee. Just the bare, direct assignment was done, not the assignment CHAIN, ie, I have ‘A->D’ when there should have been a minimum of ‘A->B->C->D’ as the chain.

    Meanwhile, before they filed that asignment with the recorder’s office, the proof of claim was entered with the BK court claiming the debt is owed to the CWABS pool with BoNY-Mellon as Trustee.

    Oh, and back-tracking to last year when the NOD was generated by that Substituted Trustee: in CA those are delivered with a ‘Debt Validation’ letter that states WHO the debt is supposedly owed to. I got two flurries of those, each flurry claimed the debt as of the same date, but owed to two DIFFERENT entities. One set said Litton Loan Service while the other said MERS (of course all spelled out).

    So, I have three different claims of the debt-owner ‘entity’ and I have the impossible assignment. The chain of capacity should be an interesting design, one with a knot in it.

    Anybody here familiar with Escher prints? He is the artist who’s drawings had ‘twists’ on perspective. That is what comes to mind with this mire.

  28. Rick Halsen

    If this foreclosure business continues under fraudulent pretenses I can see the day when some people in certain states will stop hiring private attorneys to represent them and instead will simply hire the tried and truly venerable, historically highly-communicative law firm, Smith & Wesson.

    I sincerely hope things don’t go that ugly way but I am always conscious of how wolverines react when cornered – much less corn-holed.

    In the future at least one party in that experience will think twice about employing such angle of attack in solving their immediate problems. Such as it ever was.

  29. Officer of the Law

    I wonder why the prosecutors refuse to hold the bankers and their attorneys accountable for their multitude of crimes, don’t you?

    Are the prosecutors too busy? They seem to have plenty of time to hassle pot smokers and protestors. We all know how dangerous they are to our way of life.

    Do the prosecutors not understand that fraud and perjury are crimes? They seem to be able to read although having dealt with a lot of them, I realize that most are more corrupt than the criminals that they prosecute and not much brighter even though they are more well educated.

    Many prosecutors claim to be investigating the bankers and their attorneys. I wonder when they will bother to take action to indict some of them, don’t you? Do they really need more time to investigate or are they really after something else?

    Unfortunately, the prosecutors have done nothing to stop the bankers’ crime wave because prosecutors all across America take cash to look the other way when the rich and powerful commit crimes.

    It is time to arrest and prosecute the prosecutors. After all, if we let them continue to cover up for the bankers’ crimes, they will help them steal everything and impoverish everyone.

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