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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I'm having difficulty understanding this. Please help me "get" this!!!!

Ok.  I have some friends whose father died on 11/21/10. He owns a house in Florida and we are in Ohio.  On 11/22/10 a complaint for foreclosure was filed.

The property is a homestead and has a small mortgage with equity in it and its a prime location.

The complaint states that Fannie Mae is the owner of the note and that XYZ co. is the holder of the note and has permission from FNMA to foreclose in its name.  The original lender is ABC co.

About 6 months after closing the loan ABC co. did an assignment of mortgage to XYZ co and it was recorded years ago.  However, there are NO endorsements on the Note!!!!!  None...nada!!  There is however an alleged Allonge that doesn't even go with this Note (different borrower/lender-everything-its obvious).

Did I mention that MERS is not on the mortgage as in this is a nonMERS loan?

So does the assignment of the security instrument without endorsement of the note to the same entity equal bifurcation?  Is it fatal?  Can they fix this somehow to get standing?

Opinions are much appreciated!!!!!!

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Ok so I found this:

“But MERS takes the stand that you can separate the mortgage from the note and reunite therm, a position that was rejected in 1873 (no typo) US Supreme Court decision Carpenter vs. Longman, 83.US 271 21 Led 313 [1873].:
“The note and mortgage are inseparable; the former as essential, the latter as an incident.  An assignment of the note carries the mortgage with it.  While an assignment of the latter alone is a nullity. Caselaw in virtually every state follows Carpenter.”

So can it really be that easy?  ABC co assigned the mortgage but didn't endorse the note so the whole this is null?

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Before you go spending too much time on the standing issues (which of course ultimately SHOULD BE researched and argued at an appropriate time), your friend should probably carefully check the provisions of the Florida Probate Code OR the Ohio Probate Code, depending upon where the decedent lived and died.

You mention that the decedent died one day and that suit was filed the NEXT DAY.  One can hardly imagine that the incompetent foreclosure mills hopped right on the matter as a consequence of his death.

It seems far more likely that the suit named the decedant as a defendant.

It is axiomatic that in most places a suit cannot be maintained against a dead man.  In order to successfully sue, the plaintiff will need to not only FILE the suit, but also SERVE the summons or citation of the suit on the defendant.  This they cannot do.

Your friend can MAKE IT EASY FOR THE PLAINTIFF by contacting the plaintiff and inviting them to amend the pleadings.  It is not entirely clear WHY they would want to do that.  It might be somewhat more interesting and more amusing to let the plaintiff's foreclosure mill law firm use a "sewer service" process and let them SWEAR BY AFFIDAVIT that they personally served the decedent AFTER HIS DEATH.

I would think that this would be a nice way to get things under way!

There may be some nuances with the probate code in either Florida or Ohio that might inform your friends as to the best defensive strategy.  In fact, depending upon the nature of the the decendent's other assets, there may be some very important considerations as to a choice of probating a will which provides for an executor OR, alternatively, choosing to have the estate administered by a court supervised administrator.

In most places and in most cases, estates can be more efficiently administered by as administrator.  However, in some jurisdictions, the appointment of an independent executor will NOT stop a non-judicial foreclosure, while the appointment of a court supervised administrator forces creditors to come into court to present any claims.  And in those places, the existence of an open probate matter forces the foreclosure to be conducted in the probate court under a different set of rules.

I am NOT pretending to suggest precisely what strategy might be optimal, but rather am suggesting that a thorough reading of the probate code may be helpful and instructive and might even be the very most important research to inform strategic decisionmaking.

Bear in mind that the foreclosure mills will be generally UNFAMILIAR with probate law and there is a pretty good chance that they will succeed in screwing up their pleadings in one or more ways.  They probably already HAVE.

It seems plausible that if the probate is in Ohio, the alleged mortgage investor might have to present a formal claim to the estate in Ohio.

Your friends can either choose to instruct and coach the plaintiff to a successful foreclosure outcome or be a little coy and let them continue making various mistakes!

I have been down this road.  Have your friends drop me a note!
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Thank you so much for your reply.  I wasn't clear in that his father did reside in Florida and the residence was his only residence hence the homestead.  The only reason I mention the homestead  was because there were a few pages included with the complaint that allows for extra steps regarding a homestead property (mediation).

His son, my friend, is the executor of the will.  His mother, the defendent's exwife of 20+ years was served up here in Ohio.  That is the only way we knew any of this was going on.  His father's current....widow?....was served but not successfully.  The current...widow?..... stopped paying the mortgage back in June 2010 (the deceased was in a nursing home at the time and she had access to his finances although there was a prenumpt in place). 

The only successful service so far was on the ex wife.  The attorney who holds the will and prenumpt is seriously dragging his feet which makes me believe that everything is sooooooooooooooooooo not on the up and up.  Well even more so than the average foreclosure, ya know?

I so appreciate your response, your opinions, your input, advice, etc.  I will have them drop you a line, although they may have ME do it because this is TOTALLY foreign to them........and I know everything that they know.  This whole thing is just CRAZY!!!!!!

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Dear Sirowan,
   In Florida, on Homesteaded property, the personal representative of the
estate must be served with process AND the heirs or beneficiaries must also
be served.
   Homesteaded property does not have to be probated but it would be a
good idea so that the proper heirs or beneficiaries could be determined and
then properly served with the foreclosure papers. Since there is equity in
the property, probate court is the way to go so it will be sold at full value
and the heirs or beneficiaries get what is due them.
   Also, the personal rep should inform the plaintiff that he is the personal
representative and qualified to negotiate for the estate.
    if nothing is done, a guardian ad litem will be appointed, put up no defense
and the plaintiff will steal the equity owed to the heirs or beneficiaries. This
happens alot with reverse mortgages when the borrower dies.
    What you are dealing with here is the so called "death gamble" concept
in the mortgage where the balance owed is due on death and if not received
the mortgagee takes the property. The Homestead exemption could prevent
this from happening if the personal rep probates the estate. In that case the
mortgagee will only get the balance owed and not the entire estate. This is
how you save the equity in the property.
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William A. Roper, Jr.

Where your friends are already represented by an attorney, I think that they need to look to their attorney for counsel and guidance.  THEY SHOULD READ THE FLORIDA PROBATE CODE PROVISIONS.

In my view, the attorney "dragging his feet" with the probate may be a good strategic approach.

Unless someone has expressly ALERTED the plaintiff to the death, there is still more than a small chance that the plaintiff will have some sewer service process server swear that they have served the decedent.

My intuition is that the plaintiff could NEVER have an ad litem appointed without first repleading -- amending their pleading -- to reflect the fact of the decedent's death or at least showing some ongoing impossibility in effecting service.  I suppose that Florida may have some provision for the appointment of an ad litem where the defendant cannot be found, but one would expect that this would take place only after some concerted attempts to effect service by ordinary means. 

I believe that Mike H. is mistaken in his assertion that a guardian ad litem could be appointed.  While there are usually provisions in the probate code allowing a creditor to request an administration where no relative comes forward to make a request to open probate, the very idea of appointing a guardian for a dead person SOUNDS WRONG.  He could be right that the court could make an appointment if the court is led to believe that the defendant is missing.

But there is no reason to GUESS or speculate.  Your friends should READ THE PROVISIONS of the Florida Probate Code and the foreclosure laws which apply to this precise situation.

If your friends have chosen an attorney well, then they should follow his guidance and direction.  If they lack confidence in their attorney, they should get a new attorney!

I do NOT desire to get involved in a whisper down the lane strategizing where I make suggestions to your to give to your friends to present to their attorney.  Since I have litigated a foreclosure in a probate setting in another state, I would be happy to talk directly to their attorney if he would like to speak to me.  I suspect that he is unlikely to contact me, though, because I have been assured by many attorneys that they are all smarter and better informed than I am.  So the only attorneys who usually call me for advice are the ones who I have known for many years and who readily understand and appreciate that I know more about mortgage banking than they do.
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I appreciate everyone's input!

The attorney who is at this point "handling" it if you'll call it that hasn't even told my friend that the house is IN foreclosure, although I'm confident that he knows.

They will definitely have to get another attorney because they have NO confidence in this guy and don't trust him.  He is the one who initially drew up the will, and that's why they contacted him. 

No whisper down the line thing.  They wanted to possibly keep the house, but if its that complex, then that's probably not gonna happen.

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What are the chances that someone knows more than an attorney?  What are the chances that you shouldn't trust an attorney?

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     The word "probate" in Latin means "prove" and the standards of proof
in "probate" are higher than in Circuit Civil Equity court where foreclosures
normally take place.
     Once the personal rep files the Will in probate, opens the case, and sends
the mortgagee a certified letter informing it/he/she of this fact, the mortgagee will have to file their claim in probate and prove it.
      If the heirs or beneficiaries want the property instead of the cash, they
can negotiate with the mortgagee and pay it off.
      One purpose of the "homestead" exemption is to give the heirs or bene's
a fighting chance to keep the property and frustrate the attempts of the "loan to own" scam artists who prey on the elderly by loaning them a small
amount against their homesteaded property with a view towards foreclosing
on the property after they die and making a windfall profit.
      The word "mort-gage" means "death-gamble" in French, so when a senior
takes out a small loan against a large amount of equity, that is a bet they
usually lose!
       That's why the US government invented "reverse mortgages' for seniors
so that the senior gets about 50% of equity while alive, and the other 50%
goes to Uncle Sam when they die. The idea is to recapture some of the cash
"Uncle" paid out for the elderly while they were alive instead of leaving it to
"loan to own scam artists" and those lazy, no account heirs, who never paid
attention to mom or dad when they were alive. It helps pay off the national
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So my most important point assigning the mortgage without the that a fatal flaw???????

From what I is.

So the burden of proof on the plaintiff is more difficult under the probate rules???

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   Sorry to get off point. Yes probate is stricter as far as proof concerning the Note.
    In Florida, from what I have seen, the Judges are not that concerned about the mortgage but the Note must be properly transferred ie endorsed.
The plaintiff can win with a blank endorsement if they can prove how they
got the Note, ie with a receipt to show purchase or a lawful, recorded assignment.
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Should you employ an attorney to represent you, you may want to challenge standing by bringing a Motion to Dismiss.

All 50 states have adopted the UCC into their body of law which governs the criteria upon which a court may exercise subject matter jurisdiction over the controversy surrounding the claim of non-payment.

Under the UCC a holder is synonymous with ownership. The UCC allows a "non-holder" to bring an action to foreclose (even though they are not an owner) if the "non-holder" can show proof of the "holder's" intent to employ the "non-holder" as an agent of the owner to bring the action.

One in foreclosure can challenge the subject matter jurisdiction of the court by demanding strict proof of the agency relationship between the "non-holder" and the owner (holder) with the nature of the agency being that the owner has employed the "non-holder" to foreclose on the note.

One of the proofs a court may require is that the note (which must be an original signed in ink by the debtor or mortgagor) is a legitimate writing (not a fraud or mere copy of the original) and is in the possession of the "non-holder" legitimately for the purpose of undertaking a foreclosure.  

Without proof of the agency relationship, the non-holder of the note (which may be a fraud) must be construed by the court to have failed the litmus test of a legitimate agency for the proceedings to be undertaken. Thus, without the proof under the U.C.C. of the agency relationship, the court has no subject matter jurisdiction and the matter must be dismissed.

Many times a "servicer" undertakes a fraudulent foreclosure for the purpose of making money on the foreclosure. This can be accomplished many ways but, historically, by the servicer or his co-horts having taken out an insurance policy from an AIG or some similar insurer insuring a payment of the note's principal in full should a "default" on the note be claimed. Moreover, the so-called owner of the note (which may, in-fact, not be a owner at all) (which could be the so-called "holder" of the note) may be the holder of the insurance policy that will pay them the proceeds from the payout on the insurance policy (that insured them against loss of principal in the event of default). Thus, the so-called "holder" (which is not a holder of anything other than an insurance policy insuring them against loss of principal) is nothing other than a bogus attempt to steal the equity of the home, title to the home as well as being paid for it to boot.

The schemes could be endlessly complicated with multiple parties colluding to attain being paid and holding title.


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They will definitely have toget an attorney especially since probate will become involved.

There is nothing wrong with trying to find out as much information on one's own to see what kind of defenses can be used and to potentially understand what is going to happen.

I ask about the bifurcation because the Note isn't even endorsed to anyone, not in blank etc.  It is simply NOT endorsed at all!!

SO even if there existed an agency relationship between the entity claiming to be the holder (on behalf of the owner), the owner that they claim is not the owner.  It is the original lender.

That is why I am asking about bifurcation.  There is an assignment of the mortgage, but no endorsement of the note.  The mortgage follows the note, not the other way around, correct?

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Sirrowan, please PM me with the location in FL.  I went through a probate case down there and I may be able to help your friend with a few names of attorneys.

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