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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Taylor Bean & Whitaker – Proof of a Legitimate Transfer?

Those of you who have followed my blog from the beginning will recall the Motions to Disqualify Counsel that I had been filing on a somewhat regular basis, where appropriate. I blogged about one such motion here. My argument, essentially, was that the bank’s lawyers had a conflict of interest where they had drafted an Assignment of Mortgage with the intent that their own client execute that AOM so as to convey standing.

The bank’s argument in opposition was, essentially, two-fold. First, they argued that the assignment of mortgage was irrelevant because the bank’s standing was predicated on an indorsement on the Note, not an AOM. Second, they argued that the AOM was executed properly because MERS authorized that bank representative to sign it, even though that person was also an agent/employee of the bank which was receiving the Note/Mortgage.

Personally, I’ve always disagreed with the bank’s arguments. After all, how can self-dealing of this nature be blessed by our courts? “I’m representing MERS for purposes of this AOM, even though I work for Citimortgage, the assignee of this AOM” Seriously? Unfortunately, various judges disagreed with me on this issue, so I largely stopped pushing these motions. That said, where the facts really bothered me, I’ve kept pursuing them. In one case, for instance, MERS purportedly assigned a mortgage as nominee for Taylor Bean & Whitaker purported assigned a mortgage to a securitized trust in March of 2010. However, TBW had filed bankruptcy in August, 2009, so, absent some sort of explicit consent from a bankruptcy trustee, it seemed clear to me that, under federal law, TBW could not assign the mortgage to anyone because, once it filed bankruptcy, it did not even own the Note/Mortgage. In other words, TBW may have executed an AOM, but the Note/Mortgage wasn’t its to assign! As a result, and because the lawyers participated in this AOM, I filed this Motion to Disqualify Counsel.

I had a hearing on this motion a few months ago in Tampa, and the judge agreed with my concern about how TBW could have assigned a mortgage when it was in bankruptcy. The judge also seemed to agree with my belief that this issue was not mooted by any indorsement, particularly since the plaintiff had attached the AOM to its Complaint and was expressly relying upon it for standing. As such, the judge ordered the opposing side to produce evidence showing the authority of TBW to convey this Note/Mortgage to the securitized trust as of the date in question.

Despite many weeks to do so, the bank produced nothing. As a result, the judge just issued an Order granting my Motion to Disqualify Counsel. As such, the case is still pending, but the bank must hire a new lawyer.

Whether that particular law firm or some other firm represents the bank may not seem like that big of a deal. In my view, the issue is much bigger. If the securitized trust or its attorneys were not able to produce evidence showing TBW was authorized to convey the Note/Mortgage, even when ordered to do so, then that’s a HUGE deal. After all, in how many other cases might the plaintiff be unable to show that an assignor like TBW lacked the authority to convey a Note/Mortgage due to a pending bankruptcy?

Remember, just because an Assignment of Mortgage shows up in a court file doesn’t mean the assignment was authorized. After all, the bank executing the assignment may not have the authority to do so, as, e.g. with a bankruptcy, it may not even own what it’s trying to assign.

Similarly, just because a Note has an indorsement doesn’t mean the indorsement was furnished by an entity with authority to indorse the Note. If, for example, the entity was in bankruptcy, then it may not have the authority to indorse the Note even if it wanted to do so.

Establishing that the prior owner/holder of a Note/Mortgage actually had the authority to assign or convey those documents is a significant, bona-fide defense in a fair number of foreclosure cases. Make sure you’re not overlooking it!

Mark Stopa

 http://www.stayinmyhome.com

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