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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A story in the Newark Star Ledger on Wednesday, June 25, 2008, reveals that courts in four New Jersey counties are now embracing the standing rationale articulated in the Ohio Federal Court decisions (DOWD, BOYKO, O'MALLEY, ROSE, et al):

Lawyers' tactic slows rate of forfeited houses in New Jersey

by Brad Parks/The Star-Ledger
Wednesday June 25, 2008, 12:05 AM

Most home foreclosures being processed in New Jersey are illegal, a growing group of attorneys contends, because lending institutions cannot prove they own the debt they are trying to collect.

Judges in at least four New Jersey counties already have halted foreclosures, using a federal court ruling in Ohio as precedent. And with 48,000 foreclosures expected to be filed this year -- twice the number filed in 2006 -- some attorneys believe challenging foreclosures can become a large and potentially lucrative area of practice.

"This is starting to creep up all over the state and all over the country as people start to realize these banks don't really know who owns the (promissory) note," said Peggy Jurow, a senior attorney at Legal Services of New Jersey, which is teaching lawyers how to represent pro bono clients in these cases. "It's scary to think how many people are losing their homes who shouldn't be."

Attorneys for the lending institutions say this wave of challenges is built on nothing more than legal technicalities and banks quickly will regain their footing.

"These lawyers are trying to grasp on the smallest legal issue, and they're losing sight of the justice involved," said Ralph Casale, a Denville-based attorney who has represented lenders in foreclosure for more than 30 years. "It comes down to this: Were you given the loan? Have you paid it? If you haven't paid it, doesn't the person who loaned you the money have the right to collect?"

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The New Jersey Law Journal article cited within the Star-Ledger article seems to be:

"Courts Putting the Brakes on Defective Foreclosure Actions", by Mary Pat Gallagher, New Jersey Law Journal, 23 May 2008.

I do NOT have ready access to LEXIS at my location and this is a subscription access only article.  Perhaps someone with access to this underlying article will post the case citations so that we can obtain the orders and decisions for posting and sharing on this site!

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A Buckeye
"These lawyers are trying to grasp on the smallest legal issue, and they're losing sight of the justice involved," said Ralph Casale, a Denville-based attorney who has represented lenders in foreclosure for more than 30 years. "It comes down to this: Were you given the loan? Have you paid it? If you haven't paid it, doesn't the person who loaned you the money have the right to collect?"

This is SO MUCH FUN!!!!!

Read the last sentence above again.

Isn't this the issue at hand?

Hey Ralphie, if a legal issue such as this is so small, why does it bother you so?

Also Ralphie, your last sentence speaks VOLUMES.

Yes, the person, i.e., bank, MUST PRODUCE DOCUMENTATION  to prove that they are the true OWNER of the debt that is to be collected.

Oh, I am SO PROUD to be a BUCKEYE right about now

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H. Gosh
"It comes down to this: Were you given the loan? Have you paid it? If you haven't paid it, doesn't the person who loaned you the money have the right to collect?"
Well, that's the problem.  Yes, the person who loaned the money has the right to collect.  However, many of the entities who are attempting to foreclose do not have the right to bring such an action (MERS, as an example).   In addition, how do you handle a foreclosure action, litigated, and settled (supposedly) with releases given, and 5 years later another entity comes in and says "they never owned the note, we did, and we haven't received your mortgage payments, so we are foreclosing".  You cannot go after the other entity because you gave them a release, so you wind up back in foreclosure h_ll again!! This time, 5 times as worse, and you are subjected to double jeopardy.

Or, how about a state that allows foreclosure on the mortgage by one party and a separate foreclosure action on the note by a second party becaue the note and mortgage have been split and securatized separately?  Once again, double jeopardy.

Then we get to the mortgage servicing fraud issue.  The illegal and bogus fees - how do we handle that, and what bearing does it have on the lender recouping his money and profit?

See, it is more than a simple statement - there is much to be worked out, and the consumer is entitled to as much protection as the corporations, even though this thought seems to be fading from the collective American mind.
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A few years ago, I was having lunch with the chief counsel for a large servicer.  Our conversation was interrupted when his Blackberry rang.  The conversation seemed to center around the negotiations with a borrower’s counsel regarding a settlement.


When he hung up he said these people just don’t seem to understand that if a deal has 45 terms and the other side only agrees to 44 of them, then you don’t have an agreement.


I thought for a second and said – you know, if you have to do 45 things to effectuate a legal foreclosure and you only do 44 of them, then you have an illegal foreclosure.  The lawyer thought for a moment and said – I see your point.


A foreclosure is technically a lawsuit.  In addition, the way our system works is the party suing must prove their allegations.   Is it a technicality that they can’t produce the original note?  Yes.  Should the technicality prevent them from getting a judgment? Yes.


Mortgage notes are the same as bearer bonds; they are negotiable instruments or almost the same as cash.  If you loose a $100 bill can you walk into a bank and sign a Lost $100 Bill Affidavit and get a crisp new $100 bill?  No.  If you loose a $10,000 bearer bond, can you walk into your broker’s office, sign a piece of paper, and get a new bond?  No.  This is why banks have safe deposit boxes.


The mortgage industry is the only business that can get way with loosing notes and not have to pay any consequences for being sloppy.  The Lost Note Affidavit privilege should be eliminated.

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Nye Lavalle
It's far more simple than that!!! Show the judge and opposing counsel that we don't know who owns the note and we need to find out. it could be your pension or mutual fund your honor that's being deprived of its rights to payments and being scammed by these scam artists. it could be my pension or insurance fund or it could be an insurer that opposing counsel bought stock in. It could be Uncle Sam too. So, in order for us to find out who does own this, we don't only need the note and assignments since they forge many of those, we need to examine the entire DNA trail of this loan so we know not only who owns what, what when they owned it, for how long they owned and and that the lawfully owned it and still do.

Until then, we can ALL be left out to pasture....
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I'm afraid the ultimate answer to all of these challenges is going to be the industry's effort (as in, spend money in state legislatures) to further spread non-judicial foreclosure statutes.

Keep an eye on your local legislator.

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I did a little research after I read what Way to Go put above about the mortgage notes being bearer bonds. This info below comes from WF Corporate page. Interestingly enough notice in foreclosure cases they only show evidence of the creation of our debts? Not the actual bond in possession? Why because they have NO CLUE who really owns!

Lost or stolen bearer bonds

Back to Questions

Because bearer bonds are not registered or tracked in the name of any individual, it is impossible to replace them should they become lost or stolen. In that respect, bearer bonds are similar to cash and can be redeemed by anyone who has physical possession of the bond.

Bearer coupon payment

Back to QuestionsBearer bond coupons can be presented to Wells Fargo Corporate Trust Operations up to thirty (30) days prior to the coupon payment date. Wells Fargo will process the coupons and present payment in the form requested to the coupon presenter on the coupon payment date. There is no need to sign the coupons as there is no registered owner of bond coupons. The payment will be made to the presenter unless he/she gives written instructions to pay another party.

Bearer vs. registered bonds

Back to Questions

What is the Difference Between a Bearer Bond and a Registered Bond?
Bearer bonds have no registered owner(s). Therefore, the paying agent is unable to know who owns a bearer bond at any given time. The paying agent is able to identify the party who received the last interest payment, but since ownership can change daily with no notification to the paying agent, the paying agent is unable to determine who to pay the interest/redemption payment to until the coupon/bond is presented for payment. The lack of registered ownership also prevents the paying agent from notifying bearer bondholders of a call notice other than through certain financial publications as specified by the bond indenture. Registered bonds have registered holders so the paying agent is always able to know the owner of registered bonds. This allows the paying agent to automatically send interest payments to the registered owner on interest payment dates.The paying agent is also able to send call notices to the registered owners notifying them of any calls.

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Identification of NJ dismissals based upon standing

I have not yet located a copy of the full text of the cited New Jersey Law Journal article discussing dismissals based upon lack of standing.  But the Star-Ledger article said:

"According to the New Jersey Law Journal, which wrote about the issue last month, the first foreclosure overturned in Jersey on these grounds came in Passaic County. In subsequent months, judges in Essex, Monmouth and Ocean dismissed cases or reversed orders in existing cases." 

So we need to be scouring court records in Passaic, Essex, Monmouth and Ocean counties for trial court decisions and orders dismissing foreclosure actions.

I would appreciate hearing from anyone who is able to identify one or more of the NJ dismissals!  We ought to FIND these decissions and POST them in the Legal Lounge!
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