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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From M. Stoppa Esq.

With the recent news about GMAC and Chase, I’ve been telling everyone who will listen that it’s only a matter of time before title insurance companies start to change their business models (if they can keep writing policies at all).  In fact, I blogged about this at length, below, just the other day. 

This morning, word broke that Old Republic has stopped issuing title insurance policies on GMAC properties until further notice:

I fear this is just the tip of the iceberg and that more fallout is coming.  The ramifications could not be more severe.  Property values are already depressed.  It’s only going to get worse if title insurance companies won’t issue title insurance on foreclosed properties.  After all, who wants to buy a property without assurances that title is clear? 

I sincerely hope that everyone, particularly the judiciary, realizes – before it’s too late – that continuing to push through foreclosure cases at the current pace is going to have far-reaching negative consequences for the entire economy. 

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What is NOT mentioned (and should be) is that there is title insurance on properties with blighted titles already. LOTS of it.

What happens when Old Republic and the others (the ones still in business) refuse to pay up on title defects over lender "mistakes"? Just about every loan touched by MERS has a blighted title.

No one knows who owns anything in this country anymore if it has been involved in a loan in the past ten years or so. Documents are "lost", a great many of the scammy title agencies that were associated with storefront lenders like Ameriquest and Countrywide are already defunct and nothing was being properly recorded in county courthouses.

The Big Banks are now inserting fine print into their new loan documents that basically shifts all responsibility for clouded titles away from themselves and onto the buyer. It is Caveat Emptor for anyone buying a foreclosed house from one of these fraud factories. The Banks know that there is a high possibility THAT THEY ARE SELLING SOMETHING THEY DON'T OWN AND HAVE NEVER OWNED!

Anyone else doing that would be prosecuted, but it seems the banks just have to put in the small print and they waltz away without liability.

Waiting for the counties and states to step in over tax issues. Wait, it is coming. The states will be able to issue new titles that will reset the chain of ownership and take precedence over all the BS in the past.

It would be the only way to go to buy a home and not have to worry about the chaos that property records have become in America.

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Just imagine, all RE sales stopped and all foreclosures reversed.  It could and should happen.

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The interesting thing is that these banks are stopping foreclosures in judicial foreclosure states ONLY. I guess those folks in the other 27 states with non-judicial process can continue being raped freely, hard and often. look for foreclosures to rise a LOT in those states.

Mwahaha! Even the dummies gambling on the stock market have woken up to realize that title insurance already exists on ??????'s of blighted titles connected to fraudulent foreclosures. EEK!

On Wall Street, the stocks of companies that insure titles for homes were down Friday on fears of the worst-case scenario: that flawed paperwork could be used in court cases by those who have been evicted to reclaim resold properties. At least one such company, Old Republic Title, has stopped insuring homes that were foreclosed on by Ally Financial or its GMAC mortgage unit.

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Interesting OLD REPUBLIC is one of the largestest stock holders of MGIC!   The question is why did MGIC AND RADIAN each invest nearly a BILLION DOLLARS into CBASS?  Gee I wonder what stockholders that lost millions in stock value were not well informed about CBASS?

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You guys have been "on the money" all along! It's amazing how far reaching these issues really are and how many people this will affect. I've been fighting foreclosures (including my own) based on the bank/servicers fraudulent paperwork for more than two years. I just want to thank all of you for staying on the case!
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My house was sold as an REO.  MERS on the assignment assigning to WF.  I have heard repeatedly that MERS cannot do assignments because they do not own the note so therefore all the assignments from that point on are fraud.  If that is the case, then how did my house get sold if the title is clouded.  Shouldn't that have showed up in a title search by these title insurers?  Or was it just ignored in order to sell the property?

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William A. Roper, Jr.
mkd said:
My house was sold as an REO.  MERS on the assignment assigning to WF.  I have heard repeatedly that MERS cannot do assignments because they do not own the note so therefore all the assignments from that point on are fraud.  If that is the case, then how did my house get sold if the title is clouded.  Shouldn't that have showed up in a title search by these title insurers?  Or was it just ignored in order to sell the property?

First and foremost, it is essential for you to understand that real esate law and the law respecting foreclosures varies considerably from state to state throughout the country.  So anyone who tells you that there is a single monolithically correct answer regarding the validity of MERS deeds is misleading you.  There ARE some fairly compelling arguments, but the law is not altogether well settled.

Secondly, I want to reinforce that I am NOT a lawyer and this is NOT legal advice.  You are encouraged to consult with a competent licensed lawyer in your jurisdiction, and preferably a lawyer with experience in real estate and foreclosure law.

This having been said, I would point out that the single biggest differentiating factor between various states in their foreclosure approaches involves the difference between judicial foreclosure and non-judicial foreclosure states.

I mention this because your post seems to indicate that you have already lost possession of and possibly title to the property.  And the means by which you were dispossessed are therefore critically important.

Generally, almost all states have laws and court rules which limit a party's ability to relitigate a matter.  That is, we all, as a society, have a legitimate interest in the finality of judgments.  And similarly, we have an interest in putting unlitigated matters to rest after a significant amount of time passes.

In respect of the former concept, our laws embrace a concept called res judicata.  And courts are reluctant to disturb final judgments except through timely appeals and, in certain cases, motions to set aside rulings where fraud or severe injustice has occured.

This usually does not include simply relitigating a matter because you are unsatisfied with the outcome or thought of a much better argument that you overlooked when the matter first came to hearing or trial.  You cannot ask the umpire to erase the runs scored by a home run when after the outide fast ball is pitched you realize that you should have thrown the inside curve.

So if you live in a judicial foreclosure state and were properly served and given the opportunity to oppose a foreclosure and be heard, if the matter was tried and decided, the matter might very well already be final, particularly if much time has passed and you waived your opportunity to appeal.  This might be so even if the assignment was a forgery, because you were given the opportunity to engage in discovery, present opposing facts and confront and impeach the evidence.  In some jurisdictions, you have a longer period to set aside a judgment where forgery, perjury or fraud can be proven, but bear in mind that even when such occurs, it can be difficult to prove without discovery and without a trial.  A motion to set aside a judgment very often needs to include the conclusive proof.


Now contrast this dismal circumstance with the situation wherein a borrower face a non-judicial foreclosure.  The non-judicial foreclosure was much swifter.  The borrower had far fewer defenses and very often never had his day in court.  In such an instance, res judicata probably does not apply.  There is no prior judgment which would bar relitigation.  A limitations period may still apply.  That is, if you wait too long, you might find yourself precluded from recovery.  But in many states the limitations period involving actions to try title for real property are excepionally long.


I have skirted your central question relating to the validity of an MERS assignment.  In my view, many MERS assignments may very well be fatally defective because these recite that MERS is conveying its interest not only in the mortgage, but also in the promissory note, bond and mortgage indebtedness.  But MERS has no interest whatsoever in these.  But you still have a proof problem.  You need to PROVE that MERS lacked an interest.

If the matter already went to trial and you didn't raise this argument and put in some evidence, you may have waived this issue.

For those facing such a situation prospectively, ALL are encouraged to take a very close look at the MERS Appellant's Brief in the MERS v Nebraska Department of Banking case.

Yet another question relating to MERS is whether MERS EVER has any authority to grant an interest in the mortgage or deed of trust independent of the actual Lender and beneficial owner of the mortgage instrument.

And there is the question as to whether the particular robo-signer who executed the instrument had the authority to do so.

If one is involved in litigation, these might be good issues to raise and would probably be good issues to further explore through discovery.  Trying to get traction after losing a case is far more speculative.

In a non-judicial foreclosure state, you may very well have some time to raise a title question, but this is something you should probably ask a lawyer about right away.  MERS continues to be an emerging area of the law.  The recent decision of the Maine Supreme Court significantly changed the landscape for MERS in that state.  Adverse decisions less central to the ownership issue have also been rendered in Kansas and Arkansas.
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mkd asked:
Shouldn't that have showed up in a title search by these title insurers?  Or was it just ignored in order to sell the property?

Yes it was ignored. WF does not care a bit if title is clouded. It now has a fine print addendumn to its mortgages shifting all liability for title defects back to the buyer. It uses its own network of title preparers and lawyers. I don't think they bother with title searches.

WF is a dirty company, period. WF is now foreclosing on junior liens, selling the property cheap, letting a family move in and fix up, then springing the first mortgage trap and foreclosing.

As for MERS, it admitted in deposition with Ice Legal that it owns nothing and therefore cannot give anything away. If you don't own it, you cannot assign it or foreclose on it.





MERS is nothing but an electronic record depository with about 15 employees. The banks/servicers all have logins to the system and they fill out the information themselves. That is why MERS has hundreds of "Vice Presidents".

Any bank or servicer with a login can go into MERS and enter an "ownership claim" on any property they desire. Scary, huh?

MERS is bring found to be an uninvolved party in case after case and state after state. If MERS assigned something in your case I feel that you may have cause for action even after the fact. You can probably sue WF and MERS collectively for damages.

It would be up to you whether you want to enter that suit.
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I think the major problem is that, yes MERS doesn't own the note, so any assignments that claim transfer of the mortgage/deed of trust AND Note is fraudlent.  But MERS is getting smart and only now assigning the mortgage.  Since they have authority in the Mortgage that the BORROWER acknowledges MERS as the "nominee" and "mortgagee of record".  If we can get through that part of the claim in court, MERS will fall big time, ball game over.

I know in NY Judge Schack has stated that even though the borrower gave consent to MERS, there is know admissable proof that the original lender gave MERS the authority to release the lien, therefore the assignment of the mortgage is invalid.
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Sorry, it wasn't Judge Schack that gave the ruling that I was talking about, It was Judge Saitta out of Kings County(Brooklyn).  Here is the link to the case, it might help some.
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Angelo, the question is did the borrower really "acknowledge" MERS? Did the borrower really even know what MERS is? No one named MERS was at the closing table.

In most mortgages MERS is only mentioned on the HUD-1...a MERS "recording fee". It is usually a small sum-under ten dollars- and the average person wouldn't even question it thinking it was some internal lender fee. There are so many of those fees.

It's not like the loan closers were telling borrowers that they were going to abdicate all control over the mortgage ASAP to faceless Wall Streeters and a computer database somewhere in the Midwest. They weren't telling people up front that if there was a problem not to contact them. And good luck trying to find out just whom to contact because MERS was going to hide all assignments from now on.

MERS was the lending industry's dirty little secret that they felt would help get them off the hook when the stuff hit the fan and allow them to foreclose with impunity.

There are probably judges in this country who have a "MERS recording fee" on their own HUD-1....wonder if MERS got openly explained to them? Wonder if they knew what MERS is? Its time they found out.

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I agree with you that MERS wasnt at the table at closing, but in my mortgage it clearly states that section about MERS, and mine was done in 2002 way before all of this mess started. 

Thats why in NY we have our own lawyers at closing looking over the documents before we close, They(big banks) just knew that all of these loans were going to go bad, and the lawyers(ours) didnt realize that section was a major problem.  I just hope the judges can see that this was a major fraud, and not just say, It was in the contract and you signed it to bad. 

I think judge saitta hit it right on the head, just because we gave MERS the right to foreclose, release lien, etc., that its not what we, as the borrowers gave MERS thats important, it should be what the Original Lender gave MERS that counts, and most of the original lenders are long gone.  So if they cannot come up with a POA dated back to when the loan was originated it is going to be a major flaw that cant be fixed!
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Title Searcher
As to the question of whether these issues should have been caught on earlier title searches.  I do title searches for a living.  While plenty of us have had questions about these things for ten years, we are required  by law to follow the title standards and statutes that are on the books at any given time.  There was, and still is, no title standard telling us that we needed to be able to demonstrate that the note moves with the mortgage, in fact, there's no way to do that, because unlike the mortgage there is no public record of assignments of the note.  While some of us have had these concerns for years, to have raised objection in contravention of the existing standards and statutes would in fact be illegal, a "slander of title", exposing us to lawsuits.  Setting the rules is not our job, so please don't point the finger at us, put it where it belongs, on legislators that deregulated the financial sector, and judges that issued judgments authorizing foreclosures without themselves making sure that the legal requirement for proper holding of the note had been fulfilled.  (I suspect the reason judges are coming down so hard now is because so many of them gave the banks' white-shoe lawyers the benefit repeatedly in these proceedings, and are being made to look really bad now as a result of their previous lackadaisical and establishment-favoring actions.)
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I would have to agree with Arkygirl. When I signed my mortgage paperwork a notary came to my home. No one ever mentioned all. The paperwork they sent me before hand never mentioned MERS either...I was under the assumption IndyMac was the only one involved.

Honestly, I will say, I did not look over the paperwork thoroughly. My husband handled pretty much the entire process. I was told one thing and when the paperwork was done several things were not correct. One which I questioned at the time, but the notary could not answer the question, and my husband assured me it was only if this was to happen....yeah well that was wrong.

MERS is listed as nominee & mortagee...pretty suspect considering MERS was never mentioned. I also had a high enough credit score at the time to secure a FHA or fixed rate mortgage, but the mortgage broker pushed us into this mortgage since we were not planning on staying in the home long term.

Come to find out the pre-payment penalty they told me was not going to be in the paperwork was and when I questioned it I was assured it only applied if we were to refinance. If we wanted to sell, it would not apply.

Yeah right....the rest of the story is too long to tell, but it was a very shady process that should have thrown up red flag, after red flag had I known what I know now.
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