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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I'm at the point now where our attorney has postponed our trustee sale date
with our servicer to do a loan modification here in CA a non-judicial state.

However, I now feel after alot of research that there is a distinct possibility that the 3rd party debt collecting servicer who initiated the foreclosure does not have the original note. 

If the servicer denies the modification and decides to go ahead with the sale, we will stop them and be going to court.
 
I've read a good approach should be that you are not seeking to eliminate the obligation by some slight of hand trick but rather that the obligations exists, it might be enforceable if it was not paid by federal bailout or insurance, but that the people and entities that initiated the foreclosure process are imposters.

The argument is not that your avoiding ALL possibility of liability, but that you are fighting for your right to avoid multiple liability on the same debt — because when the REAL holder in due course walks into court holding the note and an assignment and says you owe the money, the house or both, you will have already lost the money and house to the imposters who said they were foreclosing as the “lender” or on behalf of the “lender.” when they had no documentation or actual authority to do so.

Any thoughts?
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   I've got a thought on everything, even though I don't live in a trust deed
state. MY first thought is that most mortgages obtained in the last ten years
, were obtained by fraud in one way or another. The key for the owner is to figure out "how one was scammed". Surprisingly, many of the scamsters were not licensed to originate "mortgage" loans. This is your first line ofdefense.     The second thing is the appraisal. As in the Savings & Loan
Crisis of the early 90's, many of the appraisals were phony and inflated. The
government tightened up on appraisers for a couple of years after that fiasco
but then totally forgot about it. By the early 2000's, appraisers were taking
bribes under the table from the brokers to give them any value they wanted.
   The real con men were on Wall St. They set up these phony "fly by night"
lenders (who were really stand ins for the Wall Street Banks who backed them). Since the Wall Street Banks like Bear Sterns and Lehman Brothers
had an in with the NY Fed., they could create money out of thin air and loan
it for mortgages. They would then package these loans and sell them as CDO's to foreigners. They were "counterfeiters" making loans and selling them! Can you see the fraud? Sue the lender for fraud and go before a Judge!
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Moose
Don wrote:
I'm at the point now where our attorney has postponed our trustee sale date with our servicer to do a loan modification here in CA a non-judicial state.

However, I now feel after alot of research that there is a distinct possibility that the 3rd party debt collecting servicer who initiated the foreclosure does not have the original note.


They either don't have it or the trustee they're acting on behalf of can't find it.

Don wrote:
If the servicer denies the modification and decides to go ahead with the sale, we will stop them and be going to court.
 
I've read a good approach should be that you are not seeking to eliminate the obligation by some slight of hand trick but rather that the obligations exists, it might be enforceable if it was not paid by federal bailout or insurance, but that the people and entities that initiated the foreclosure process are imposters.

The argument is not that your avoiding ALL possibility of liability, but that you are fighting for your right to avoid multiple liability on the same debt — because when the REAL holder in due course walks into court holding the note and an assignment and says you owe the money, the house or both, you will have already lost the money and house to the imposters who said they were foreclosing as the “lender” or on behalf of the “lender.” when they had no documentation or actual authority to do so.

Any thoughts?


Keeping in mind nothing in this is legal advice, the chances of another party coming into possession of and actually doing something with an already foreclosed note and mortgage at some point in the future are really, really remote.  Even less likely is that this new party could find an attorney who would be willing to waste their time trying to enforce a note and mortgage on a property where a writ of possession has been issued and recorded as a result of a foreclosure. Whomever they acquired it from defrauded them and their recourse is solely with that seller.

The real argument remains the servicer/trustee's standing to sue you for relief if they can't produce the proper documents. They have to be forced to follow the rules. A motion to dismiss on the grounds that they have not provided proof of their standing should suffice. Silence might be your most powerful weapon. Remember, you don't have to prove a negative; the party making the allegation must prove their standing to make such a claim and if it's weak, it won't survive a rule challenge.

Now - having said all that, there will be clever maneuvers to leapfrog the standing issue and throw circumstantial "evidence" about your ability or willingness to pay into the mix - but unless and until the standing issue is resolved, technically those can't be considered. 

Again, this isn't legal advice; your mileage may vary; objects may be closer than they appear; close cover before striking.

Get local counsel who has a killer instinct.

Moose


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hgosh
Moose, you are assuming that all people will appear before a knowledgeable and honest Judge.  Unfortunately, in today's world, this is the exception, not the norm.  We also have the issue of "manufactured" documents.  The ability to come back and sue on the Note, after a foreclosure of a Mortgage is large and real as life.  Pennsylvania allows it.  This has become quite useful as it becomes more apparent that many notes and mortgages have been bifurcated and sold separately, and we now have the chickens coming home to roost.  We have many people who have lost their homes due to a foreclosure of the "mortgage" and now are back in court, often in Bankruptcy, because the "note" holder wants their money promised by the execution of the note. and the "note" holders are looking to garnish salaries, retirement, 401K's, and any and all other assets, real and personal.
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Knows About Deeds ofTrust
A key consideration in a deed of trust state is that the existence of the trust deed changes the balance as to who is seeking redress in court.  In a judicial foreclosure state the foreclosing servicer is typically the plaintiff and the standing issue is the threashold question (see discussions relating to standing, generally in this Forum -- USE SEARCH FEATURE).

By contrast, in a deed of trust state, the foreclosure is usually by private power of sale.  The VALIDITY of the sale is thengenerally dependent upon the regularity and conformity of the private sales process to the law and to the contractual provisions appearing in the deed of trust.  The mortgage servicer need NOT be the plaintiff, EXCEPT possibly in an ejectment action for actual possession of the property following the private sale.

The homeowner / borrowe is then put in the position of being the party seeking court intervention through a temporary restraining order OR an action to quiet title and declaratory action following the execution of the deed at the private sale.  The standing argument CANNOT WORK HERE as it is the homeowner seeking the court's authority in a defensive action.

A BETTER approach in 2009 for many borrowers would appear to be a Federal bankruptcy filing.  The recent Federal Bankruptcy Court decision in Nevada is going to seriously put MERS on the defensive.  And the produce the note strategy and questions pertaining to the validity of the claim can be challenged in Bankruptcy court in a proof of claim setting or when the claimant seeks a relief of stay.

This is FAR FROM A SURE THING.  But there ARE some good bankruptcy lawyers out there and a well prepared and presented case may either win a substantial delay or furnish an opportunity to negotiate somesort of loan modification.

As Moose suggests, GET COUNSEL.   
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1. Competent council with a killer instinct
2. QWR > Forensic Loan Review (at the minimum a TILA AUDIT)
3. If Loan Modification fails, use violations found in audit = litigation
4. Settlement acceptable to homeowner or quiet title action

It looks like at least 1 BK judge in California, Bankruptcy judge Samuel L. Bufford gets it. (Denied MERS relief from Stay Motion in Oct 08. (Vargas vs. MERS case LA08-17036SB)  So maybe there's some hope.

Here's a great one from the livinglies blog:

 

Virtually all mortgages between 2001-2008 were between an undisclosed investor or group of investors and the borrower who was funded from proceeds of sales of unregulated securities. Everyone in between was merely an undisclosed conduit or middleman collecting an undisclosed fee as the money from the investor was parsed out for fees, profits, insurance premiums, rebates, kickbacks and of course funding of the alleged loan transaction. None of these middlemen have any loss, claim, or right to foreclose property and all of them have been superceded by the authority of the holders of mortgage backed securities. Even the Trustee on the Deed of Trust has been superceded by at least two other Trustees. They don’t have the note, they don’t have the full record of all the parties who collected fees or paid the principal or interest on the note and mortgage, and they don’t really have any stake in the outcome of the foreclosure — because they didn’t fund the loan or lose any money.

 

A forensic review that includes the full review of all aspects of securitization, payment, co-obligors, insurance, cross collateralization, over-collateralization, reserves, federal bailouts, and appraisal fraud, to name a few, is what will get you offers of deep discounts off the principal of the note, deep discounts on the interest rate, converting an arm to fixed and maybe (in many cases) getting the house free and clear of all encumbrances.
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