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New Homeowner Scam: Mortgage Securitization Audits

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Con artists who prey on people who are already in financial hot water deserve their own circle of hell. The latest sighting comes via April Charney: “mortgage securitization audits” which charge thousands of dollars for dumping public information into binders. From Brian Canupp’s website:

While millions of Americans are in the middle of the foreclosure storm a cottage industry of companies and individuals providing Mortgage Audits are now attempting to capitalize on the fear and desperation gripping many homeowners….

In the last 6 weeks I have met with three families that had paid up to $2,100.00 for an audit. All three of these “audits” were three ring binders filled with documents from the Securities and Exchange Commission Home page and articles from the newspaper detailing successful mortgage defense decisions. These products are problematic for a number of reasons:

The documents from the SEC are free and available to the public.
The newspaper stories, while informative, cannot be used as precedent to a judge.
The analysis does nothing to breakdown what has happened with your payments after they were received by the Mortgage Company.
The “expert” who is rendering the opinion would never be accepted by a court to testify in an expert capacity.
The analytical process supporting the audit conclusion is flawed and that leads to an impossible opinion.
None of the analysis brought to me by clients have included a review of the money paid by the homeowner.

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12 comments

  1. chris

    “While millions of Americans are in the middle of the foreclosure storm a cottage industry of companies and individuals providing Mortgage Audits are now attempting to capitalize on the fear and desperation gripping many homeowners….”

    You are so right!!!!!! happening all over —– This is such a shame and people in desperate situations are being preyed upon by lawyers claiming to be capable of getting loan modifications, audit companies and get rich quick scams selling the unsuspecting consumer on a internet marketing business that “will make 5000″ a month if they pay 14000 up front….

    unreal….

  2. Shankara

    To say I’m dismayed with this blanket statement from NC would be an understatement. This reads like a page straight out of an ASF white paper. In actuality, there are a few of us around the nation who are supplying smart attorneys the ammunition they need to bring down these bohemoth banks through SEC audits that show where the PSA’s have not only been violated, they’ve been totally ignored.

    When I conduct an audit, along with others in this rarified field, it’s not simply a three ring bundle of crap, as expressed above. My services detail exactly where the investment coalition defrauded the borrower, the best possible litigation routes through expert commentary, with the option for expert declaration and witnessing available.

    We also include the option for Questioned Document Examination and forensic handwriting analysis using state of the art hardware and top professionals in many varied areas of fraud detection. Every single person involved in this pursuit does so with the single shared goal of providing affordable services, knowing full well that many if not most of our clients have already had their shirts taken by the banksters, ahd are in line to have their shorts removed shortly, if in fact something isn’t done to help them. We work hard to provide that help.

    Please be advised that these so-called securities aren’t, 99% of the time. Showing that in a detailed analysis that is understandable to any attorney off the street much less a judge is no small task. But it’s one that we strive to achieve, most often by burning the candle late searching through mountains of legal docs written by ivory towered white shoes to purposely obfuscate the entire arena.

    Please adjust your thinking accordingly. Your view is hazy, and based upon herd mentality. Not all in this field are scammers. As a matter of fact, most doing the best work are here as a result of being pillaged by Wall Street themselves. My hand is in the air.

    1. Yves Smith Post author

      Shankara,

      Naked Capitalism is not a site that has much tolerance for vendors defending bad practices. As the post cited describes at much greater length, people like you have absolutely NO business offering services directly to consumers. and if you are doing so, it’s tantamount to a fraud.

      Any investigation of the validity of the transfers is useful ONLY in the context of developing an overall legal strategy. And the legal strategy comes first and drives any investigation of the chain of title issues.

      Moreover, you chose to ignore a key point that Canupp raises, that the work is useless in court because the prepares will not be admitted as expert witnesses. For instance, even if you find affidavits with questionable signatures, unless you are a handwriting/forgery expert (which I am certain you are not) that “finding” will not be admissible in court. So having the broke homeowner pay for it is a ripoff.

      1. LMS

        Yves, I love your site and you’ve done an excellent job reporting on the issue of foreclosure fraud. But I think you are a bit harsh with Shankara. I did not read her post as advocating direct marketing to consumers.

        I am an attorney in CA. I have more than one client that gotten taken for $$ paying for forensic loan audits before they came to me. So I understand the fact that this industry is rife with scam artists. But Shankara is right there is a need for qualified, ethical securitization experts to provide litigation support to attorneys.

        And while I agree that such work must be undertaken in the context of an overall legal strategy, I don’t agree with Brian Canupp’s statement that it can be put off until after written discovery. He should be careful about making such generalizations given the differences in various state laws regarding foreclosures. He is located in KY. I can tell you that in CA information on securitization is relevant at the outset of the case to insulate the complaint from challenge due to lack of specificity in the allegations. My clients also want to know these details before filing suit. They don’t want to spend many thousands of dollars on pleadings, motion practice and discovery, only to find out later that their claims are weaker than expected based on a detailed securitization analysis. For these reasons, if time permits my preference is to review the PSA for the trust that allegedly hold my clients’ loan before making a recommendation on whether to file suit.

        Regarding designation as an expert witness, I could see calling someone like Shankara (assuming she had the requisite qualifications) to testify on the securitization industry. For a handwriting expert I’d look elsewhere.

        1. French Fry


          attorney in CA. I have more than one client that gotten taken

          Breathing deep within detail
          the devil you don’t alive and well

          Should we be sending our children to law school to learn the fine points of the law? To pick at these tedious arguments for the remainder of their short lives? Or should we be teaching our teens the fine art of building their own homes from commercially available kits containing pre-cut 2×4-s etc.? Should our teens be getting exercise and helping volunteers to build affordable small homes that the sleaze-balls, lawyer, bankers, and reformers will be picking at for the rest of their noble lives? Should you be teaching your kids how to take a used car apart and put it back together? Or teaching them how to sue used car lot crooks and IMF-sex-perverts?

          Each to his own
          !

  3. Crumbling Foundation

    There are many parasites out there: don’t pay up front, ignore wildly optimistic gurantees, check the sanctioned lawyers list with your State Bar (and take a very cynical look at what the attorney got in “trouble” for), don’t “give” your house away to some rat. What you should do is look for other homeowners in your community who have been, or are being f$%ked by a Bank and join up. This terrifies the hell out of the enemy. Continue to hammer away pro-se, even after retaining an ambulance chaser. 2 or more outraged ne’er-do-wells who are going to be thrown on the street can get a reasonable deal that the profit seeking sons-of-b@#^hes must accept.

    “The newspaper stories, while informative, cannot be used as precedent to a judge.”
    Newspaper stories are frequently used, not necessarily as “precedent”. But they will point out where precedent can be used.

  4. Larry Signor

    These people do deserve a special circle in hell. They are wannabe wall street mercenaries stripping the last of the meat from the carcass. Just more of the type of behavior that brought US to this point. When will we see the perp-walk?

  5. Elpa

    So they delivered three binds of gobbledygook paper: all my Rating agencis gave me where three lousy AAA letters.

    Yet they are the same, aren’t they? That is, Opinions.

    Perileous parallels? Honestly, I don’t think so. I was used to believing that one could parse most of the nonsense and capture the jest of any basically any paper; experience has taught me that in any real business context time for analysis is often nihil, no matter how well structured the company is or how many well prepared humans can be thrown at the problem.

    And all I can see around so far is unecessary complication of subjects that are often complex by nature; layers and layers of complication.

  6. Open Gubbmint

    Don’t worry! The AGs will protect consumers from flagrant theft. (hahahah)

  7. strega

    Yves is absolutely correct. Both with regard to her condemnation of yet another ‘industry’ draining the exhausted borrowers of what is left of their funds and with regard to her statements asserting that this ‘proof’ is essentially useless without the structure of a well-planned litigation to present the evidence.

    The audits are used by groups of parasitic salespeople and low-end attorneys, paralegals and various and sundry pretenders as ‘bait’ to get the terrified and confused homeowner to sign on with the ‘the firm’.

    In most instances there’s an attorney who, for additional fees, will consult and then perhaps agree to take the case (what case? there isn’t one yet) and go for either a declaratory judgment in preparation for Quiet Title or, if the juggernaut has already begun, will promise that once the audit is completed (and paid for) they will defend against foreclosure.

    The few, and there are only a few, attorneys who are both conversant with the current egregious dealings of the banks and servicers and are competent at reviewing each individual situation will possibly suggest/require an audit but to pay for one and then shop for a lawyer who will use it or sign on with the attorney involved in the audit company is not a recommended approach.

    Attorneys, sharp ones and not so sharp are usually very specific in their requirements from a potential client and most times prefer to use their own contacts, experts, forensics people for their preparations.

    Add to that the fact that the audits produced are voluminous but mainly include multiple pages of boilerplate with the name and mortgage loan number plugged in at appropriate spaces. These phony docs are selling for $1200 or more and they’re essentially useless.

    You will note that the majority of these ‘services’ are multi-level. There’s a ‘title search’, securitization search, forensic mortgage audit with each carrying a heavy fee and then, if you wish to have someone back up the research you are told to pay anywhere from $3K to $5K or more for an ‘expert witness’ to appear and testify to the validity of the forensic findings.

    One is better served by reading everything, calling the Bar Association or other groups who are willing to help find an able attorney and hold onto what little discretionary dough you have left. Believe me, you’ll need it.

    Caveat emptor.

    1. LMS

      Agree completely. I’ve seen firsthand in CA many individuals stop paying on their mortgage in order to pay for a loan audit. They were then referred to an attorney hired by the audit company. These attorneys are limited in what they can charge per client per month (because they are compensated through the audit company) and therefore have little incentive to file anything other than cookie-cutter complaints. Judges hate this. And the clients usually have unrealistic expectations regarding the likelihood of success on the merits.

      The first decision should be to hire an attorney, not an audit company. But please keep in mind, there are ethical restrictions on attorney advertising and most law firms don’t do it. So is it any surprise these aggressive hustlers are swooping in and snatching up clients who don’t know how to find an attorney?

  8. Christine Springer

    I work with at least a dozen lawyers who use my audits to determine their legal strategy on behalf of borrowers.

    Admittedly, the audits have evolved into investigations that take about ten hours per loan to investigate plus preparation of a report.

    They are a powerful tool for legal strategy. Additionally, since the lawyers who are showing up to help borrowers don’t understand securitization, they do need assistance figuring it out and determining how it fits into a legal strategy.

    I can see how a lot of people are angry about loan audits, and there were a lot of scammers, but loan audits are still a good tool under the right circumstances.

    Christine

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