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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Judge Rescues Struggling Couple From Foreclosure

New York Judge Cancels Mortgage in Thanksgiving Surprise; Bank Will Appeal

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If you think American homeowners have nothing to be grateful for this year, think again.
N.Y. family wins a case against a bank for unreasonable mortgage rate increases.

The $527,437 mortgage of a couple in Long Island, N.Y., has been canceled by a judge who criticized their lender's "unconscionable" lack of good will in refusing to help them avoid foreclosure.

Thanks to the judge, the couple now owes nothing, at least until their bank appeals.

Diana Yano-Horoski and her husband Greg Horoski, struggling to make their monthly payments, had tried to get their loan with California-based OneWest Bank -- formerly IndyMac -- modified since February, but according to the judge, OneWest, instead, kept insisting that they foreclose.

The couple has "assiduously attempted to resolve this controversy in an amicable fashion, only to be callously and arbitrarily turned away" by OneWest, Judge Jeffery Spinner wrote in his ruling. "This has been so, even in spite of the court's continuing, albeit futile, endeavors at brokering a settlement."

The couple's daughter, Kimberly Horoski, told reporters outside her parents' home this afternoon that she was proud of them.


"My parents are good people. They're smart people, and I feel bad that they had poor luck and I'm happy that it's been changed," she said.

"We just wanted to modify the loan, that's all," she added. "I don't think that was asking too much."

The couple lives in a 3,400-square-foot ranch-style house in East Patchogue, Long Island, according to the New York Post.

"The bank was so intransigent that he (the judge) decided to punish them," Greg Horoski, who sells collectible dolls online, told the paper.

The couple originally obtained a $292,500 loan in 2004 with an adjustable-rate mortgage that jumped from 10.375 percent to 11.375 percent in the four years that followed, public records show.

Their loan was originally made through Deutsche Bank and serviced by IndyMac, which collapsed with the mortgage crisis and was taken over by a group of billionaire investors who renamed it OneWest Bank.

When the Horoskis began falling behind on their payments, the bank sent them a foreclosure notice, and they requested a court settlement, public records show. The court recommended a series of mediation sessions. The couple's daughter even offered to buy back the house at fair market value or help finance a modification with income from her job, according to court documents.

OneWest sent loss mitigation manager Karen Dickinson to represent its interests at the hearings, but Dickinson refused to cooperate, said Spinner. She made it clear that the bank "had no good faith intention whatsoever of resolving this matter" in any way other than forcing foreclosure, he said.

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     What the Judge did here is perfectly lawful because Indymac Bank overextended itself by leveraging its capital at least 100 to 1, making
loans that it knew would never be paid back. It sold those loans on
Wall Street, sometimes, 10 times over. It also took out multiple credit
default policies on the same loans, so it was paid off multiple times by
that alone. Indymac was a creature of Angelo Mozillo, (aka Mr. Ponzi).
     The Ponzi scheme fell apart when old investors realized that they were
being paid back by the money of new investors and stopped putting new
money into the Ponzi scheme. Then the pyramid collapsed and the government came to the rescue by selling off the assets of the defunct
bank to One West.
      The government had no standing to do this because all the borrowers
who had not yet been foreclosed on, had won the "death gamble", ie the
lender died BEFORE assigning the Notes and Mortgages it held. Once Indymac
died, none of those Notes and Mortgages could be lawfully assigned. "Mort" "GAGE" means "death" "gamble", if the borrower dies first, the debt is due on death, if the lender dies (gets dissolved) first, before having assigned the
mortgages and Notes, the borrowers win the "equity" of the dead lender!
What's fair for the one, is fair for the other. Not "Heads we win, tails you
lose.", which is what these bailouts are causing to happen!
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Mike that makes perfect sense to me.

How come the judges don't get this though? It seems they don't seem to understand things as well as you do.

We should be protesting on the courthouse steps for Justice!!!

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Margaret: I can answer your question with one word

It's the thing that makes the need and greed!


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     The problem is that very few people have raised the "death gamble" defense. However it makes sense that if the lending institution was not
liquidated in an orderly fashion, ie through bankruptcy, there is no way to
lawfully assign mortgages which the "dead" lender never assigned before
precipitously going out of business and being seized by the US Govt.
     The US Govt did not own the mortgages and therefore had no standing
to assign them. The FDIC is mainly concerned with paying off the depositors,
and it could sell the REO's which were on the lenders books, but the in-force
mortgage contracts (death gamble contracts) could not be sold because of
the very nature of the contract which is terminated by the death of one the parties, in this case the lender, so the lenders equity should automatically revert to the borrower since there no longer exists a lawful mortgagee to whom any debt is owed.
      If the Note got separated from the mortgage and transferred before the death of the original lender, the Note might be good, but it would be an unsecured debt and could be modified or wiped out in bankruptcy.
      Of course, I'm not a lawyer. If there are gaps in my logic, I'd like to
hear what they might be.
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I Need Help
You really should become a lawyer, because you have learned so much more than any of the attorneys I have talked to. This deal with the Judge seeing the abuse by the lender is amazing to me, because I'm going through the same type of ordeal that these people went through. Thank you Mike for posting this information!
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H Gosh
I will post this caution once again for the residents of the Commonwealth of Pennsylvania:  A mortgage can be foreclosed on absent the presence of a Note; and a Note that remains "unsatisfied" on the record can also be "called".  This subjects the debtor to double jeopardy.  Another fine gift from our Legislature crafted in a midnight session while pushing their pay raises through!
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This is free, non-legal advice so you may only be getting what you're paying for it.

There is no such thing as a "death gamble" mortgage in a legal sense. When a corporation is sold/acquired, liquidated through bankruptcy (put in receivership) or is taken over by regulators as in the case of a failed bank, the assets are sold (sometimes auctioned) including notes (loans) that were still on their books at the time along with the mortgages that secure them.  Whatever entities acquire the assets become the new owners and holders in due course of the notes and mortgages.


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Dear Moose,
    There is a big difference between a "mortgage" and a "Note".

    A note can be endorsed on the back and assigned to a third party
without being notarized and recorded.
    A mortgage on the other hand, to be lawfully transferred, must be
endorsed and assigned in front of a notary public and two witnesses.
Then it must be properly recorded with the County Clerk. If this is not
done correctly by the second party owner of the mortgage, no third party
has standing to do it. The mortgage "dies" and becomes null and void.
The borrower has won the "death gamble" ie mortgage ( a lien, not a loan)
    You are correct that the Note could be transferred to a third party
by the legal process. In this case, it would be "unsecured" and could be
modified or wiped out in bankruptcy. Also, for homesteaded property,
a judgement on the Note alone, without the mortgage, would prevent a
forced sale. The creditor would have to wait for a voluntary sale to get
     Many of the Notes got separated from the mortgages during securitization as proved by the fact that the endorsements and assignments of the Note,
do not match the endorsements and assignments of the mortgages in time,in place, nor in names of the people who endorsed and assigned them.
      When this happens, it means the Note is no longer secured and the
mortgage is void. The borrower no longer has a lien against his/her property.
In bankruptcy, the borrower would list the asset (house) as unencombered,
and the debt as unsecured. It would be up to the Note holder to prove he/she/it has a valid lien against the property. This would be impossible in
the above scenario and the Note would get modified in Ch 13 bankruptcy.
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     Another important point is whether or not a "true sale" occured from
the original lender to the trust which is trying to foreclose. A "true sale"
can only occur if the Note is properly endorsed AND ASSIGNED TO THE
TRUST, otherwise no true sale occurred, and the Trust does not own the
NOTE, and has no standing to file an action in equity or at law.
     Very often, what one sees is a "blank endorsement", ie the Note was
never lawfully assigned to the Trust which is claiming it owns the NOTE.
This is also a violation of Section 860 of the Internal Revenue Code, and if
detected by the IRS, could cause the REMIC (trust) to lose its tax exempt
status. What this means is that the income from the Note would be taxed
twice, not once as would happen if a true sale occured. If a "true sale"
occured, ie a proper assignment (and not just a blank endorsement), then
the REMIC Trust would not be taxed on the income, only the investors
in the certificates would be taxed on the income. The REMIC Trust would
be a true "pass through" trust.
      If the NOTE was merely endorsed but not assigned, it becomes bearer
paper and the income from the Note would be taxed to the REMIC and the
certificate holders. In this case the Note was never assigned, only the
INCOME FROM THE NOTE. The Note itself would remain the property of the
original lender, and if the original lender no longer existed, then there is
no one to legally enforse the Note! The borrower has won the "death gamble"
and owns their property "free and clear". SO, LOOK AT THE NOTE AND SEE
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