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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If a servicer, as servicer and holder, induces a party into a modification knowing of the fraud that took place in the origination of the loan, Can that be nullified?

(They might have bought the junk debt, because they could not demand re-purchase to originator due to originator going into bankruptcy.   And it was attempted to be securitized but was kicked out.

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William A. Roper, Jr.
The law evolves and is extended all of the time by novel by well conceived and articulated arguments in litigation, but the courts tend to be particularly deferential to the agreements of parties freely entered into and especially where supported by consideration.

There are both Federal and state Constitutional provisions protecting the sanctitiy of contracts.  And these protections are not lightly overlooked or set aside.

You would usually need to make out the elements of fraud rather clearly and convincingly and it is likely that you would bear the burden of proof on this issue.

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I would suggest to you at least one alternative avenue of investigation.

In many instances, loan modification agreements are actually never concluded, though the borrower thinks that they have been.

A very common scam in the collection business is to present the consumer with a modification agreement to execute and return.  The consumer signs.  The counterparty does NOT SIGN and return a copy, but instead puts a copy of the agreement in a file.

Then, if litigation later develops, the counterparty pulls out the agreement and decides WHETHER it is to their advantage to sign and seek to enforce the agreement or to REPUDIATE the agreement.

A contract is usually completed through offer and acceptance and through mutual manifestations of agreement.

IF you have a SIGNED COPY of the agreement signed by YOU and by the counterparty, then it is probably a complete contract.  If you have a copy of the agreement which YOU signed, but the counterparty didn't you might very well have a situation wherein you OFFERED to make a contract, but the counterparty did NOT YET ACCEPT.

Under the contract law of most places, an offer can be REVOKED or RESCINDED by the offerrer at any time up until it is ACCEPTED.

But you may face a PROOF PROBLEM.  The counterparty COULD pull the agreement out of the files, sign it and SAY that they accepted BEFORE you withdrew the offer.

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Moreover, if the parties ACTED AS IF the contract had been executed, as where there was a reduction in interest rates or payments, etc., it could be argued that there was some ratification of the agreement by means other than execution.  And you might have to tender to the counterparty any benefits you received under the modification, if you are now repudiating it.

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This is really a rather treacherous area.  YOU NEED TO GO AND TALK TO A REALLY CAPABLE ATTORNEY WELL FAMILIAR WITH CONSUMER DEBT LAW.  Trying to navigate these treacherous shoals on your own could prove to be very dangerous!

But you might be on a much firmer ground for simply WITHDRAWING the offer if the mofication was never really executed by the counterparty than in seaking to prove fraud in the inducement as to the modification. 

Best of luck!

NOTE:  I am NOT an ATTORNEY and THIS IS NOT LEGAL ADVICE!
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Florida Anon
I wanted to share with you a little story of my experience.  I entered into what I thought was a forbearance agreement with the servicer.  I then rescinded the loan and sued the servicer. 

During discovery, the servicer produced 2 different copies of the forbearance agreement - neither copy was countersigned.  One copy was only half of the signature page.

The other copy had my signature forged.  I did not notice the difference at first.  I think I went through their document production about 3 or 4 times before I noticed that my signature was forged on the second copy of the forbearance agreement.  I compared the 2nd copy with the copy I retained.  What tipped me off was the way one of the numbers on the date were made.  I never make my number that way. 
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If the modification was made and the owner of the note did not authorize and did not sign the modification (re-negotiation of note rate) since it was made by servicer, is that not void.

Another, through scheme and trickery, the servicer (bought the toxic junk note, un-secured) and tricked me into re-negotiating the terms just to make the un-secured note, secured. 

You see, the lender on note was under bankruptcy protection at that time and no sale, was made known to me, and since lender under court protection, shouldn't the court have authorized such since it was an asset of the lender??

Fraud in the inducement?

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Confused
So confused at this point on which way to turn!

 Floridagal I feel like I am facing being tricked right now.

My note was discharged in Bankruptcy two years  ago and then a year later after being forced into default  my loan was transferred to new servicer (debt buyer ) who admits they are servicing for an investor. My loan number was changed and MERS changed my Servicer and Investor. I am not in foreclosure yet and reopened my BK with  Adversary Proceeding to charge servicer with  ignoring a court order and reporting on my credit report and wrongful collection under a new loan number . The new servicer now is suggesting we apply for  modification it seems they prefer that to coming to court. I am pressing forward with the case at this point.

I have always wanted my home and it is not about being underwater which I am. I got behind due to income and job loss and the first servicer would not modify or work with me. So I claimed Bankruptcy and now income has returned and I am recovering so my choice is to walk away, fight foreclosure or try to modify with a debt buyer. I am in non-judicial state and have not received a notice of default but do have Lost Note letter from foreclosure mill attorney from almost  1.5 years ago and there is an Substitution  of Trustee from MERS to US BANK NA at the court house dated a year ago before new loan number and servicer came in to the picture.

 At this point I am tired and so over this but I am mad as hell! I do  not want to live like this but I also do not want to reaffirm a discharged note  since it would put me in a position of reaffirming a huge underwater debt, under a new loan number. 

How can I modify with a party who I never signed a note with and who admits they are the servicer only and in a QWR says they do not need to tell me who the Investor is. Their  loan number  was never mine and has no paperwork to support that loan number?

Why did the last two servicing parties not foreclose and just pass this down the road?

Am I missing something?

I would be willing to do a new loan with this party as long as I could quiet title to assure me no one else can come in and make a claim in the future? But I see no way to do that without putting myself at risk of reaffirming.

I am inclined to say pass on modification and make them come to court and deal with wrongful collection issue and then let them try to foreclose and then fight with everything I've got in me. If I loose the house so be it I will have still won with FREE rent for all this time for my trouble

I prefer to be a paying home owner but I refuse to pay any more money to the wrong party. 

It is such a simple question who is the investor and what is really owed at this point lets work this out. Sadly no one seems to be able  or  willing to give us an answer or an accounting of what is owed.

The good news I have collected so much to fight with since I keep excellent records of all documents, letters and conversations.

Uggh!


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William A. Roper, Jr.
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Floridagal said:
If the modification was made and the owner of the note did not authorize and did not sign the modification (re-negotiation of note rate) since it was made by servicer, is that not void.

 
Servicers typically act as agents for the principal in an agency relationship typically created through a Pooling and Servicing Agreement (PSA).  A servicer acting under actual authority from the mortgage investor would typically be authorized to enter into loan modification agreements on the principal's behalf.
 
In fact, the mortgage investor almost NEVER enters into agreements directly with mortgage borrowers.  Almost ALL of the customer interaction is by and through the servicer.
 
If you entered into a modification agreement with a servicer purporting to act on behalf of the mortgage investor it seems UNLIKELY that the mortgage investor could deny that the servicer had authority.  Even if the servicer LACKED authority, such an agreement would usually be deemed to be valid where expressly or implicitly ratified by the mortgage investor.
 
But note my comments above about deliberate FAILURE or REFUSAL to execute the agreement and return a copy to the borrower.

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Floridagal said:
Another, through scheme and trickery, the servicer (bought the toxic junk note, un-secured) and tricked me into re-negotiating the terms just to make the un-secured note, secured.


Servicers very rarely purchase mortgage debt from mortgage investors EXCEPT when they are required to do so by a repurchase agreement pursuant to breach of sellers' warranties.

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Floridagal said:
You see, the lender on note was under bankruptcy protection at that time and no sale, was made known to me, and since lender under court protection, shouldn't the court have authorized such since it was an asset of the lender??

Better stated, the originating lender shown as the Lender on the note may have been in bankruptcy.  But the note itself may have been and probably was sold, usually within sixty to ninety days of origination.

When a loan is sold, this is done by indorsement and delivery of the promissory note.  A formal written assignment of mortgage is also required in some states (Massachusetts) and a good idea in others to put other possible purchasers of the loan and other lienholders on notice of its interest in the debt.

The mortgage investor is NOT generally obligated under the law in most places to advise the borrower of changes in ownership of the note.  By contrast, the servicer IS required to advise the borrower of changes in the identity of the servicer through sale of mortgage servicing rights.

In all likelihood, the originating lender SOLD your loan well before bankruptcy, but by failing to contemporaneously execute an assignment, the proof of this transfer is shakey. 

Mortgage servicers and the corrupt foreclosure mill law firms they employ usually forge an assignment of mortgage which purports to memorialize a transfer of the mortgage.  This forged assignment is then used as false evidence in foreclosure cases.  Because many originators went bankrupt, this creates the issue/impression that the sale took place after the bankruptcy.

The criminal enterprises engaged in servicing have been very careless in their execution of these forgeries.

Be very careful how you plead and defend your case.  The REAL issue is the forgery, perjury and fabrication of evidence.  But sometimes the forgeries create opportunities to defeat the plaintiff with reference to its own false evidence!  But be careful not to confuse the false averments with the realities.  This can lead you down the wrong path and you can get caught in a hopeless dead end.
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William A. Roper, Jr.
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Confused said: 
My note was discharged in Bankruptcy two years  ago and then a year later after being forced into default  my loan was transferred to new servicer (debt buyer ) who admits they are servicing for an investor. My loan number was changed and MERS changed my Servicer and Investor. I am not in foreclosure yet and reopened my BK with  Adversary Proceeding to charge servicer with  ignoring a court order and reporting on my credit report and wrongful collection under a new loan number . The new servicer now is suggesting we apply for  modification it seems they prefer that to coming to court. I am pressing forward with the case at this point.
 
Confused:
 
While I am unfamiliar with the facts of your case, which are best known to yourself, your assertion that your note was discharged in bankruptcy doesn't make a lot of sense.
 
Generally, mortgage debt is treated as secured debt, absent some finding by a Bankruptcy Court that the debt is NOT properly secured.  Secured debt is NOT going to typically be "discharged" in bankruptcy, though unsecured debt often is.
 
It appears to me that you are confusing a bankruptcy discharge ending the bankruptcy case with a discharge of the debt, which would typically be incorporated into that final discharge order.
 
When your Bankruptcy case ended, it could be said that the case was discharged.  The discharge order ought to have specified the status of the various debt subject to the court's supervision.
 
A debtor is usually afforded some protection against secured creditors during the pendency of the bankrutpcy case, as long as the borrower makes all current payments required under the debt instruments.  So a borrower in bankruptcy able to make current mortgage payments throughout the bankruptcy proceeding can usually avoid a relief of stay and a foreclosure.
 
The pre-filing indebtedness is usually treated differently than the debt arising during the pendency of the bankruptcy proceeding.
 
Very often, corrupt servicers seek to come after borrowers for pre-petition arrearages and/or amounts that they belatedly assert were owed during the pendency of a bankruptcy action.  But the servicer is usually bound by the provisions of a final bankruptcy discharge order.
 
This does NOT usually discharge the debt in full, but rather circumscribes what the creditor might claim.
 
You need to consult a capable bankruptcy attorney who can help you navigate these treacherous shoals.  Go back and read the documents, transcripts and decision in the In Re Hill case.  It was the false pleading of fabricated evidence by Countrywide to seek to charge the borrower for amounts expressly precluded by the discharge order that brought about the collapse of Countrywide.
 
Ms. HILL also got a FREE HOUSE at the end of the case.
 
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Search the Forum for keywords Hill AND Countrywide to read additional information about this important case.  Similarly, search Google using these same search terms.
 
Make sure that your attorney has read the In Re Hill decisions!
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floridagal
Mr. Roper: Thank you for your input. If the note sold but there was no evidence of transfer, (assignment) in county records and lender/originator on note and mortgage went into bankruptcy 3 months after loan closed. I know there were stipulations in agreements for re-purchase for several reasons.

In any event, my true question is if in fact this note was in limbo and the servicer re-negotiates the original terms of rate, and does not seek any form of authority of bankruptcy court in doing so, is it valid?

The only alleged transfer in county records was allegedly made just recently (1 1/2 years after mod).

So what you are saying that if the servicer was under contract with originator/lender whom is under bankruptcy protection, during that time frame, the servicer has the right to do what it wants, just to continue to collect payments? How can they do anything without written consent of bankruptcy court or liquidating trustee?? And shouldn't have I been made aware of any of it, legally?
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William A. Roper, Jr.
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floridagal said:
So what you are saying that if the servicer was under contract with originator/lender whom is under bankruptcy protection, during that time frame, the servicer has the right to do what it wants, just to continue to collect payments?  How can they do anything without written consent of bankruptcy court or liquidating trustee??  And shouldn't have I been made aware of any of it, legally?


floridagal:

I would encourage you to scroll back through and read my many previous posts on this and related topics.

You are beginning from a false paradigm, albeit one that both the foreclosure mills and the foreclosure defense bar is propagating.

This is the paradigm that the forged mortgage assignment actually reflects ANY economic reality AT ALL.

These forgeries are NOT being perpetrated to actually transfer the mortgage indebtedness from the originator to the foreclosing entity holding itself out as the mortgage investor.  To the contrary, they are TOTAL FABRICATIONS which have been created SOLELY for use as false evidence in the case.

But this does NOT mean that the loans were not actually sold.  Rather, it means that while the loans were usually sold, most often within sixty days of closing, that it has been more convenient for the plaintiffs to fabricate evidence than to seek and use actual REAL documents which might memorialize the foreclosure!

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You are FIXATED on trying to show that the loan remained under ownership of the originating lender.  That is going to prove to be a Quixotic battle for two reasons.  First it is UNTRUE.  Second, YOU are assuming a burden of proof.

Try as you may, as an honest and upright person, you will NEVER succeed in proving something that is UNTRUE with reference to actual admissible evidence, most of which is under the control of others.

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In a judicial foreclosure setting, the plaintiff bears the burden of proving essential elements of its case, including its standing to sue.  To succeed defensively, you need to do two three things. 

First, you need to answer the lawsuit (if and when properly served with citation of other official process) and to interpose well thought out defensive arguements.

Second, you need to conduct thoughtful, effective discovery.

Third, you need to hold the plaintiff to its proof requiring it to fully assume its burden of proof.  If the plaintiff proves its case, it wins.  If the plaintiff FAILS TO PROVE ITS CASE, IT LOSES.

In a summary judgment setting, the plaintiff needs not only to prove its case, but, more importantly, it needs to prove that there are NO DISPUTES as to the material facts in the case.  If the defendant shows that material facts are disputed, then the plaintiff is NOT entitled to summary judgment and the matter must go to a full trial.

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Your queries about the authority of the servicer to enter into the loan modification are interesting.  But as you set out to try to set aside a modification agreement YOU are assuming a burden of proof of demonstrating that the loan modification was invalid or that the servicer lacked authority to enter into the agreement.

And you are ASSUMING that the servicer's assertion of authority is based upon the continued ownership of the mortgage debt.  I am telling you that you will find that this is a COMPLETE WASTE OF TIME.

While the foreclosing mortgage investor is holding out the assignment as evidence of the transfer, it will IMMEDIATELY ABANDON that assignment the INSTANT that you show any understanding and sophistication that the assignment is a forgery.  Instead, they will claim that they are entitled to foreclose because they are in possession of the promissory note.  And they will also tell the court that they have owned the debt all along (which is probably actually TRUE).

To defeat the plaintiff, you need to conduct effective discovery to get the plaintiff to EMBRACE its perjured, forged and fabricated evidence and to swear to this evidence under oath.  Going at them head on by exposing the rather obvious defects associated with the belated assignment only telegraphs your intentions and makes it easy for the plaintiff to duck, bob and weave.

Once you show some understanding of the deceit, but also begin to embrace a strategy which is based upon quicksand, the plaintiff will let you walk out onto the quicksand and then watch you sink!

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I said NOTHING about the servicer working for the originating lender.  The servicer works for the foreclosing mortgage investor.  You have ASSUMED that the servicer was working for the originating lender because you have RELIED UPON the forged assignment in assessing the facts of the case.

Your questions about getting permission from the bankruptcy court PRESUPPOSE that the originating lender still had ANY INTEREST in the loan, which is quite UNLIKELY.
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floridagal
Thanks for that.

I have been for many many months, bringing to the courts attention the right to enforce the alleged note, (which hasn't been proven if original or not yet) due to the fact that it is a bearer paper and the originating lender is under bankruptcy protection. There has been no proof filed, (asked for) regarding the sale/transfer.

As per Judge Tepper in Florida in a case I read. If a party finds a check endorsed (bearer) that does not give that person ownership. That is the point I am trying to get at.

If they only have lets say for argument, an original note, and nothing else, they did not plead how they got it, when they got it, so on, but produce a bogus assignment to make it look legit. This Plaintiff must prove up the right to enforce and to foreclose.
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