Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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A new decision of the 7th District Court of Appeals out of Texarkana on Tuesday exemplifies the tenuous nature of a default judgment obtained against a well financed and well represented lender. The case is:

[i]Deutsche Bank National Trust Company, N.A. v. Kenneth and Roberta Hall, No. 06-13-00003-CV (Tex. App. -- Texarkana May 7, 2013)[/b]

The HALLs brought suit against Deutsche Bank National Trust Company, N.A., as successor to originator Aames Funding Corporation. Deutsche Bank was supposedly served via certified mail through its registered agent for service of citation in Texas. When Deutsche Bank failed to answer, the HALLs moved for and received a default judgment.

In its restricted appeal, Deutsche Bank denied having ever been served with citation and identified defects in the return of service filed in support of the default judgment.

The Court of Appeals agreed and vacated the default.


A couple of observations are in order. First, one of the common debt elimination scams peddled by swindlers encourages borrowers to bring exactly the sort of suit filed by the HALLs. The borrower is very often swindled out of thousands or even tens of thousands of dollars by the scam artists who give the borrower some poorly conceived and legally specious pleadings and arguments to file. These suits are essentially NEVER successful EXCEPT when the lender fails to timely answer, in which case a borrower can sometimes obtain a default judgment based upon the specious claims.

Whenever a borrower actually succeeds in getting a default, the swindlers immediately trumpet this "success" and use the default judgment as a vehicle to draw in new victims to the swindle. Friends, neighbors and unrelated persons are promised that they, too, can have a free house if only they purchase the various reports, scam products and services from the swindlers.

Of course, one of the consequences of all of the new found publicity as the swindler promote this stunning "victory" is that the bank learns that a judgment has been entered against it and seeks to have the judgment vacated. Often, there are two or more avenues to get the judgment vacated. This can sometimes be done by timely filed motion in the trial court. This can also usually be done using a regular appeal if the notice of appeal is filed in time. In Texas, a third avenue is by bringing a so-called "restricted appeal", an alternative available for six months after the judgment is enterred. A fourth avenue in Texas is using a bill of review, which can be brought for up to four years after the date of the judgment.

In other jurisdictions mechanisms to vacate a judgment vary, but many follow Federal Rule 60.


There are several lessons and takeaways from the HALL judgment reversal.

First, if there is any doubt whatsoever about the efficacy of service, it may be better to effect service by more than one means. This is a "belt and suspenders" approach. The HALLs might have arranged for service of Deutsche Bank not only using certified mail to the Texas registered agent, but also by service to the registered agent in another state, such as Deutsche's home state OR obtained personal service of an officer of Deutsche at its headquarters or even at a branch office. When one has a valid claim, one takes great pains to obtain valid service. When one is hoping to get a quick default by ambush (a tactic often encouraged by the scam artists) one sometimes requests service by the means LEAST LIKELY to inform the defendant of a suit, but any default is usually quickly vacated.

Second, if a borrower can succeed in getting a default, the very LAST thing you want to do is to let the scam artists who coached you learn of it. These scam artists will ALWAYS begin to use this unexpected success as a promotional vehicle to draw in additional victims. When the scam artists begin promoting the result, the bank quickly learns about the judgment and is able to get it reversed. In fact, the very LAST thing that a borrower wants to do is to make the defendant aware of the judgment.

In Texas, one the prevailing party gets past 30 days without a motion to vacate or a notice of appeal, these avenues evaporate. Getting past six months will deny the defendant an oportunity to file a restricted appeal. Even so, the defendant can still seek to have the judgment vacated for an additional four years using a bill of review.

So the very best strategy would be to take the judgment and put it in a very safe place and to avoid doing anything that would call the attention of the sleeping giants to this unexpected windfall.

Of course, the story line of all of the debt elimination scams is that the borrower is entitled to a free house and that simply by paying the scam artists money for the specious pleadings tht every borrower can prevail. Thus, this myth and meme encourages the borrower to rush forward to announce the borrower's victory. But the reason that we are not seeing hundreds of thousands or millions of such victories is that even success in getting a default is quite rare and almost NONE of the defaults ever survives when the defendant seeks to have the judgment vacated.

If you get swindled out of thousands or tens of thousands of dollars and are the 1 in 1,000 who succeeds in getting a default judgment, KEEP YOUR MOUTH SHUT and DO NOTHING WHICH MIGHT ALERT EITHER THE SCAM ARTISTS OR THE LENDER TO YOUR FREAK SUCCESS! (Of course, if you use the crooked lawyer suggested by the scam artists he will surely tell the scam artists about the outcome because this will help to generate new leads as to gullible marks defraud in the next round of the con.)

Third, it is very important to understand that when you buy into the debt elimination scam swindle, you are not simply going to lose the money you paid to the scam artists. You will also be out of pocket for any money you paid to your attorneys (and all the more when you think you are going to succeed in defending a specious default judgment on appeal). (When the swindlers include an attorney, very often that attorney will be paid a referral fee by the crooked local attorney they identify for you to use in bringing the frivolous case.) But the costs do not even stop there. You will also likely to find yourself fully responsible under Paragraph 9 of the mortgage, deed of trust, security deed or other security instrument for the full amount of the lender's legal fees, no matter how much they spend.

Nor will the lender have to get a court judgment to collect their fees. Under Paragraph 9, the Lender simply ADDS THESE COSTS, very often $25,000 to $35,000, to your monthly mortgage payment and then declares default when you fail to pay. In non-judicial foreclosure states like Texas, the lender will then conduct a non-judicial foreclosure and you will be put out of your house with little legal recourse.

So very often the total cost of the debt elimination scam runs upwards of $50,000 to the borrower, plus the borrower also loses their house!

When someone introduces you to a debt elimination scam artist, the very first thing you should do is get as much information as possible, including photographs of those involved, and report these criminals to law enforcement authorities immediately.
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