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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This could be important, because as said in an earlier thread, your mortgage could have been paid off in an insurance claim, and PAID is PAID. no matter who paid it.

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Schneiderman wants additional information regarding claims the bond insurers paid to investors, as well as details about the settlements the companies signed with the banks ...

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Bill
tomw SRQ wrote:
This could be important, because as said in an earlier thread, your mortgage could have been paid off in an insurance claim, and PAID is PAID. no matter who paid it.

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Schneiderman wants additional information regarding claims the bond insurers paid to investors, as well as details about the settlements the companies signed with the banks ...

This is always a common theme on Living Lies.  It is quite possible that this has happened.  It would make sense for these banks to hedge their trusts with insurance.  I just don't see any possible way, at the moment, to obtain this proof.  

If this was a strong defense, I'm sure some of the super sharp foreclosure attorneys would have been investigating it for some time.  Their failure to obtain PROOF of this and failure to argue this in court would be a clear SIGN this is not RIPE for foreclosure defense.   

If the AG does get insurance information showing trusts being paid by insurance, I'm sure the premier defense attorneys will jump all over it and pave the way for the rest of us. 
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William A. Roper, Jr.
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tomw SRQ said:
This could be important, because as said in an earlier thread, your mortgage could have been paid off in an insurance claim, and PAID is PAID. no matter who paid it.

 
This is a complete wingnut theory that has NO SUPPORT whatsoever in the law in ANY state in the United States.
 
Nor is it some emerging area of the law.  Rather it is a completely incoherent and intellectually bankrupt argument that will completely dissipate any credibility of the person who stands in front of the court and utters this gibberish.  This is a shortcut to DEFEAT!
 
The fact that this nonsense is propagated at the LivingLies site reflects the extent to which Mr. Neil Garfield has no real credibility whatsoever.
 
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Texas
Again, I agree with Mr. Roper, the hedge is a contract on its on face and is not relevant to the Mortgage Note.


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William A. Roper, Jr.
For those unfamiliar with the law of suretyship, guaranty or insurance, it is probably appropriate to add a bit of additional elaboration.

The idea of suretyship or guaranty is at least half a millenia old as to English Law and, though I haven't made a study or inquiry, I am inclined to speculate that it might date from Roman times.  The central idea is that one or more persons voluntarily out of love, affection, goodwill, accomodation or even compensation agree to bind themselves to the repayment of the debt of another.

The guarantor acts as a credit backstop to a debt transaction.  In ordinary usage, we speak of someone "co-signing" a loan.  The co-signor or co-maker is, in effect guaranteeing payment, though a co-maker is legally distinct in being a primary obligor rather than merely a backstop surety.

When the person adding credit support is named in the negotiable instrument as co-maker, the person is a joint obligor.  When the person adding the credit support does so by either appending words of guaranty to the instrument already completed OR makes a written guaranty by separate instrument, then the person is a guarantor.

When the promissor defaults on his promise the payee or holder of the note can seek recourse not only of the maker but of one or more guarantors to the instrument.

Since the guarantor is legally obligated to honor his or her guaranty, the guarantor's payment cannot be viewed as a coluntary payoff of the maker's indebtedness.  To the contrary, the guarantor is usually acting under the duty of the guaranty.

But the guarantor is NOT simply making a GIFT of the principal balance to the maker.  To the contrary, when the guarantor or surety pays the outstanding indebtedness on the maker's behalf, the maker is usually subrogated to the claims of the guarantor or surety.  In effect, when the guarantor pays off the loan, the maker is obligated to the guarantor.

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Mortgage loan transactions have long been the subject of both primary mortgage guaranty insurance as well as mortgage guaranty pool insurance.

In the former case, the borrower typically pays the mortgage insurance premium and a policy is issued in respect of an individual loan.  In the latter case, a mortgage insurer or credit guaranty insurer insures a pool of loans and the premium is paid from the pool cash flows.

In either case, the mortgage insurance does NOT typically cover 100% of insured losses.  Instead there is some maximum percentage loss coverage which is rarely more than 30%.  (The application of the coverage percentage differs markedly between primary and pool insurance policies.)

In addition to primary and pool mortgage insurance, there are a variety of other credit enhancement techniques which can be used to hedge risk exposure.  These rarely would hedge the loss of an individual mortgage and would almost certainly never involve the payoff of a loan on a borrower's behalf.

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There are two other critical details to understand about the mortgage insurance.  First, claims are NOT typically paid until the amount of the claim is readily ascertainable and actually REALIZED.  That means that the mortgage servicer does NOT present a claim for primary mortgage insurance until the forclosure is completed. 

Accordingly, the central premise underlying the myth that someone is paying off the borrower's loan is erroneous.  This CANNOT be a defense for the borrower, because the servicer cannot make a claim until the foreclosure is completed!

Moreover, the terms of the mortgage insurance policy provide that the mortgage insurer has certain rights to control the foreclosure litigation as well as certain claims settlement alternatives.  Basically, the insurer can pay a money claim OR the insurer can purchase the insured property and attempt to mitigate the loss by direct management of the final disposition of the REO.

But however the insurer proceeds, the mortgage investor must assign any rights to a deficiency judgment to the insurer.  The insurer is subrogated to the rights of the mortgage investor as against the borrower.  But after recourse to the property, this is typically limited to the rights to deficiency judgment proceeds, if any.

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So a guarantor or surety pays on the borrower's behalf and is subrogated as to the holders' rights against the borrower, including subrogation of the mortgage.  By contrast, the insurer doesn't even usually settle the claim until AFTER the foreclosure is completed and then is subrogated as to any remaining rights against the borrower.

There is no free lunch for the borrower!

NOTE:  This was written extemporaneously and without reference to any primary materials relating to law.  Those with a thorough understanding of suretyship or guaranty or the interest in researching the same are invited to contribute to this thread to supplement, correct or elaborate, particularly through citation to leading cases.  Also, I AM NOT AN ATTORNEY AND THIS IS NOT LEGAL ADVICE!
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