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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 Does the creation of documents matter in Foreclosure when the loan is truly in Default? vote

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The following article (with active links) appeared in American Banker on September 6, 2011, and asks a question that warrants the views and opinions of visitors to the MSFraud Forum.

Is it "just" a technicality if a mortgage servicer, foreclosing on a borrower who in all likelihood has defaulted, creates documents to prove the servicer’s client acquired the loan years ago?

Consider this (admittedly imperfect) analogy: is it just a technicality if a criminal wasn’t read his rights before being arrested? If we know such a person is guilty, it fair to say that such a person was "not harmed" by the police officer’s procedural misstep? Is it worse to violate his constitutional rights or let him back out on the street?

You can hear echoes of that age-old friction between due process and the messy, often infuriating results of honoring it, in reader reactions to American Banker’s recent story about servicers backdating paperwork to support foreclosures. 

One reader, for example, took umbrage with a Bank of America spokeswoman’s comment that retroactive mortgage assignments are simply "procedural steps" to prove to a court that a trust has the right to foreclose on a borrower.

This commenter noted that Bank of America has, in at least one highly publicized instance, tried to foreclose on a home that had no mortgage at all, let alone one with B of A. 

"Why should we assume that that they are correct when they allege that New Century wanted to assign a particular mortgage to Deutsche Bank as part of complex securitization deal executed 5 years ago?" this reader asked. "This is the danger of skipping those pesky 'procedural steps' long ago. I am sure they saved money by not carefully making and recording assignments at the time they were meant to occur. Unfortunately, it is not only the banks who are now paying for this. Homeowners with clouded titles are paying too. Procedures matter."

Other commenters cited our country’s foundational legal principles of rule of law and equal protection under it: "Nobody is above the law and banks certainly can't be an exception to this basic constitutional principle. You can’t go to court with forged and fabricated evidence to support your claim," wrote one reader. Another said: "Private property and the right to it are core to our economic system. The burden to take it SHOULD be high and the standards of evidence should be strict."

On the other hand, some readers pointed out that delaying or invalidating foreclosures because the lender didn’t take all the correct steps when they were supposed to can result in another type of injustice: Namely, people living for free, for months or years, in homes they never could have afforded, arguably an affront to families who scrimp and save to pay their mortgages. 

"I think a good article in the future would be to highlight, and personally name, those attorneys who clog up the court system with erroneous technicalities knowing their client is responsible for the repayment of the money they freely borrowed using their home as collateral," wrote one reader.

Another commenter on this end of the spectrum, while acknowledging that "people who get wrongfully foreclosed are deserving of the full protection of the law," immediately added: "People who continue to pay their loans even though they are underwater with no hope of getting any equity back deserve something too, just for being great citizens. But if your biggest problem is that your lender signed an assignment of your loan from the seller pursuant to a power of attorney confirming that sale after the fact...., you have no legal or moral claim to anything."

Readers in this second group took issue with the story’s use of the verb "fabricate" to describe the act of creating a paper trail in 2011 to document loan sales that took place in 2005 or 2006.

"Most sophisticated mortgage loan sale agreements have a power of attorney provision that expressly permits the buyer to sign assignments and other instruments of transfer on behalf of the seller to effectuate the agreement's intent post closing," one reader in this camp wrote. "The purpose of such powers of attorney is to address the kind of issues that can be problematic in the future; i.e., something was missed back at the time of closing and now the seller has been sold, gone out of business, is tough to work with or no longer has good records etc."

But another reader countered that even with a power of attorney, "fabrication" is an appropriate term in certain instances – "if documents are backdated, include descriptions of events and actions that did not take place, are executed by individuals under titles they do not hold, etc." 

As our story showed, that last scenario is actually going on; for example, this mortgage assignment was signed by an employee of American Home Mortgage Servicing, but she signed the documents as an officer of the defunct Sand Canyon Mortgage.

The story won kudos throughout the blogosphere. Reuters’ Felix Salmon called it "a fantastic piece of reporting" and Columbia Journalism Review’s Ryan Chittum lauded the writing as "straightforward and tough."

What do you think about the questions the piece raised? Is it worth delaying a bottoming-out of the housing market, and allowing some delinquent borrowers to freeload for a time, in order to prevent the rare but documented instances of someone being wrongly foreclosed on? Procedure matters, but does procedure in this case trump outcome? Share your thoughts by leaving a comment below. 

Some interesting comments to the American Banker article appear here.

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MSF Admin
Two comments from the American Banker page:
To whomever said that those underwater on their houses should get something too is ridiculous. Buying a home, especially buying a home on credit, it an investment. With any investment comes risk. Unfortunately, that's the risk you take? You don't get a gold star for simply fulfilling contractual obligations.

As much as it pains me to say, I think we do need a high standard when seizing property. Property rights are the underpinning of an economically viable society. For reference, see the Israeli/Palestinian conflict. I very much agree with the person who pointed out the unfairness of these delays allowing people to live rent free for months and months, but I do believe in due process. It's too bad there's not a way for troubled homeowners to sit down with the banks, look at the dilemma, and simply turn over their keys instead of gaming the system for free rent on the backs of others.

More unfair than this, however, were HAMP and similar programs. I tried to buy a short sale, but the guy couldn't untangle it because he had three loans on the house - a mortgage, 2nd mortgage and a commercial loan. The guy ended up pulling it off the market because he got a mortgage mod, bringing his interest rate down to 2% or so. I've used credit responsibly and scrimped and saved for my house and my interest rate is 4 or 5%. Now, that sucks.

Posted by Michelle L | Wednesday, September 07 2011 at 2:20PM ET
Whether people get to stay in their homes or not isn't the relevant issue here, it is a consequence. We have a long-standing tried and true system in place for foreclosure of properties of borrowers who default on their mortgages. If lenders had followed state statutory guidelines throughout the mortgage loan process and retained documentation, we would not be having this discussion.

The issue is whether we enforce the rule of law, requiring parties to abide by terms of their contracts, prove they have standing to enforce the terms of those contracts, and apply the law fairly to all parties. It isn't just changing a date on what would otherwise be a binding agreement, it is "fabricating" documents after the fact. If, as alleged in the article above, the lender/servicer, had POW to amend agreements after the fact, they are free to produce those POW agreements at trial. However, does anybody believe that if the borrower appeared in court with documents they had "fabricated" with signatures of people who nothing of the facts representing parties to the agreement, and not witnessed by the notary who has provided his/her stamp would be equally tolerated by our judicial system?

Each state spells out the steps required to foreclose on a property. These steps are NOT burdensome ones for the lender to meet. If the lender is the holder of the debt or an agent of that holder, it's a no-brainer. If lenders are unable to obtain copies of promissory notes or mortgage assignments demonstrating ownership, or transfers of legal title to themselves, should we allow them to bypass existing remedies available, ones that provide protection to BOTH parties, in order to collect on debt because of their failures? Describing some of these documents as "fabrication" isn't hyperbole, in fact, I'd go so far as describing it as felony "forgery" and "perjury" and those behind them should count themselves lucky there have been no criminal indictments. I am not convinced criminal indictments may be necessary to end the practice as they continue, despite reassurances by the lenders otherwise. It may be the only way to change the pervasive, albeit delusional (would lenders, or judges, ever tolerate similar complaints of paperwork and technicality issues from borrowers, e.g. oh say, filing a "fabricated" satisfaction of lien?), mentality in the industry that this isn't paperwork issues and merely technicalities, this is about not allowing one party to operate outside of the law. Taken in context with other news within the mortgage loan industry, the public has become increasingly less tolerant of what has become the financial industries apparent widespread fraudulent practices and utter arrogance across the spectrum of the mortgage loan industry. They seem to believe that laws should not apply to them, and in a fair and just society, our captive regulatory, captive legislative, and judicial system would have already acted to enforce lenders to remain within the system, behave ethically, and comply with existing statutes and policies, thus dissuading them of those beliefs. Thus the burden has fallen on the people to perform the services they have failed to provide, by seeking the only remedy available to homeowners, "free houses".

I don't believe "free houses", forced modifications and writedowns, fines, or monetary penalties will lead to a solution. I believe we need to seek indictments for criminal acts, including remedies available under RICO. The financial industry has demonstrated that they will not "self-regulate" and clean up their own industry despite repeated promises, therefore outside intervention is required. It is unfortunate that it must come down to such dramatic measures, but public confidence in the banking industry must be restored before our housing industry and economy can recover.

Posted by Laura C | Wednesday, September 07 2011 at 5:30PM ET
Quote 0 0
Bill
Quote:
"I think a good article in the future would be to highlight, and personally name, those attorneys who clog up the court system with erroneous technicalities knowing their client is responsible for the repayment of the money they freely borrowed using their home as collateral," wrote one reader
.

I agree with this individual.  We need an article that would highlight and personally name these attorneys clogging up the court system.  It would make it MUCH easier to find a good attorney to represent homeowners.
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     At a casino, does it really matter if a gambler at roulette wins and the croupier moves his chip onto a non winning number while he's not looking?
And then pockets the winners winnings?
     That is analogous to the question being posed about the "servicers". They are nothing more than "croupiers" handling the "bets" ie "gages" of
the "mort gageurs", ie mortgagors.
     On a 30 year mortgage, what are the possibilities for the "mort gagor"?
Let's say he puts down 10% and leverages the rest, 90%. If the market
moves up 10%, he just doubled his "gage" ie bet. However, if the market
drops 50%, he not only lost his 10% "gage", he also lost another 4 times
the bet he put down.
     However, if the "pretender lender" goes out of business without lawfully
assigning the "mortgage", then it's like winning at roulette because the
opposing player "died" so the bettor wins because he placed his deed on
let's say number 11 (which is the death of lender number) so he gets back
his initial "gage" "deed", plus in roulette, 36 times the "gage". Is that unfair?
     If he bet the deed on 2 (snake eyes) the bettor death number and the
7 came up (death of the borrower) than the lender gets the property in
foreclosure, even if the borrower made payments for 20 years and had 90%
equity at time of death.
     Of course, I'm only trying to show that a "mort gage" is a "gamble" where
either party could win or lose or break even. As long as the "game"(gage) is honest, gamblers(gageurs) can't complain, but if the game(gage) is "rigged", as it is now, that's a problem!
     It's the "servicers" who are "rigging" the game by "stealing" the winnings
of the "winners" of the "mort gage", (death gamble)! Ga, ga, ga! Lady Ga Ga
means "Lady Luck", in case you didn't know.
Quote 0 0
Floridapathy
The Miranda rights, a right to a fair and expedient trial, a right to legal council, are a moot point considering the The Patriot Act has suspended those rights, with reasonable suspicision, a person may be found guilty until proven innocent without due process. Take PFC Bradley Manning, Muammar Gaddafi, or the millions of homeowners dispossessed in non-judicial states.

Forgery and counterfeiting are criminal acts, except in the case of bank associates or Ben Bernake, in which case it's termed "quantitative easing" or "bonified error."

I read somewhere, "the constitution was valid until they moved into a museum." But I think it more realistic to say the Constitution ceased to be the law of the land when the Federal Reserve Act passed in 1913.










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    Another way of looking at this "servicer cheating" problem is the Neil
Garfield defense. Namely, the fact that in many of these loans, the security
interest in the property was never perfected because the entity named on
the security instrument, (mortgage/deed of trust) was not the "real lender",
thus violating the Truth in Lending laws.
    Thus in his view, it does not really matter whether the originator is "dead"
or "alive" because either way, it never lent the money in the first place so
the security agreement was defective from the "get go" and therefore all
the "assignments" are also a nullity because the "originator" never had a valid
lien which it could assign to any other entity. This would leave the "obligation" unsecured.
    This viewpoint could be used as the basis of a "quiet title" action, ie
expunging the mortgage/deed of trust from the public records.
    Of course, the Note would still be there, but it also does not name the
true lender, but only a "straw man" ,who only lent its name for a fee. This was done so that the Note could be sold multiple times to different investors
in the "alleged note pools" backing the CDO's.
     The servicers bought the "servicing rights" to these "phony Notes" for 2 to 3% of the face value of the Note. Servicing rights really means "foreclosure rights" and they get to keep the proceeds of the sale, not the
true investors who put up the money in the first place.
     Nomi Prins in her book, "It takes a Pillage" points out that 1.4 trillion in
subprime loans were made from 2001 to 2008, but ten times that amount, 14 trillion,is missing from the pension, insurance and 401k plans which  invested
in that 1.4 trillion of subprime loans. So clearly, what we have here is a massive "Ponzi scheme" where the same Notes were sold over and over again. This is why so many of the Notes presented in foreclosure cases are
counterfeit color photcopies or outright forgeries made up by the servicers
to try and fool the Judge into ruling in their favor. Up to now, they win 95%
of the time, but that may be changing as more pro se's start to wake up to
the servicer fraud which is being perpetrated against them.
     Bottom line, inspect that Note carefully if you are in foreclosure and if
you're not, investigate the possibility of a Quiet title action if the "originator"
on the loan documents was not the "true lender".
Quote 0 0
Bill

Mike H wrote:
    Another way of looking at this "servicer cheating" problem is the Neil
Garfield defense. Namely, the fact that in many of these loans, the security
interest in the property was never perfected because the entity named on
the security instrument, (mortgage/deed of trust) was not the "real lender",
thus violating the Truth in Lending laws.
    Thus in his view, it does not really matter whether the originator is "dead"
or "alive" because either way, it never lent the money in the first place so
the security agreement was defective from the "get go" and therefore all
the "assignments" are also a nullity because the "originator" never had a valid
lien which it could assign to any other entity. This would leave the "obligation" unsecured.
    This viewpoint could be used as the basis of a "quiet title" action, ie
expunging the mortgage/deed of trust from the public records.
    Of course, the Note would still be there, but it also does not name the
true lender, but only a "straw man" ,who only lent its name for a fee. This was done so that the Note could be sold multiple times to different investors
in the "alleged note pools" backing the CDO's.
     The servicers bought the "servicing rights" to these "phony Notes" for 2 to 3% of the face value of the Note. Servicing rights really means "foreclosure rights" and they get to keep the proceeds of the sale, not the
true investors who put up the money in the first place.
     Nomi Prins in her book, "It takes a Pillage" points out that 1.4 trillion in
subprime loans were made from 2001 to 2008, but ten times that amount, 14 trillion,is missing from the pension, insurance and 401k plans which  invested
in that 1.4 trillion of subprime loans. So clearly, what we have here is a massive "Ponzi scheme" where the same Notes were sold over and over again. This is why so many of the Notes presented in foreclosure cases are
counterfeit color photcopies or outright forgeries made up by the servicers
to try and fool the Judge into ruling in their favor. Up to now, they win 95%
of the time, but that may be changing as more pro se's start to wake up to
the servicer fraud which is being perpetrated against them.
     Bottom line, inspect that Note carefully if you are in foreclosure and if
you're not, investigate the possibility of a Quiet title action if the "originator"
on the loan documents was not the "true lender".


How many foreclosure cases has Neil Garfield handled?  How many foreclosure trials did Mr. Garfield litigate?  What if anything has Mr. Garfield done in the courts in regards to foreclosure in any jurisdiction? 

I'm just curious how he is an expert on ANYTHING when he has NEVER litigated a foreclosure case. 

Can you post one case where the "Neil Garfield" defense was used and wasn't laughed out of court?

Just like Mike H.,  Mr. Garfield has all these wild theories on how to defend against foreclosure but none of them have been used successfully.  I guess
dodo birds do flock together. 

Mike H., feel free to post ANY case that supports ANY of your or Mr. Garfield's garbage theories.
Quote 0 0
Flip
I feel it matters very much if fraud was committed. To any degree.
I feel the legal system is far from perfect.
People have been buying and selling real estate for ages.
Mortgages and credit  are not even close to new.
The only new thing here is MERS and a completely corrupted government and legal system.
Everything  depends upon a legal system based upon law.
This whole thing is not going away because of the scale.



Quote 0 0
Flip
This is said to Bill:
All law is theory until proven otherwise.
It is dynamic.
You should prove your garbage statement rather than simply slinging mud.
I do not feel this Garfield guy is a crook but I do not know for sure but his theories are as valid a theory as any other.
I admit to wondering if he is an ambulance chaser and decided so what he makes valid points that people like me would not have thought of concerning the law.
I have learned a tremendous amount from his site as well as his insight.
Just because it has not gotten into a courtroom doesn't come close to making it  garbage.
This site along with the Garfield site are a tremendous public benefit whether or not it ever helps win a single case.


Quote 0 0
TheEquitableOne
I tried to post a response on the American Banker site but was unable to do so. When making lengthy posts I typically draft them in a word document and then cut and paste. this helps if there are difficulties in posting, or if there is an odd power outage during the authoring, etc. So I have a copy of this post that I was unable to put on the site.

In briefly reviewing the sample assignment of mortgage linked in the article I see a number of problems.

1. Sand Canyon Corporation is not defunct. Option One Mortgage Co. IS defunct. OOMC shut down its mortgage lending division January 31, 2008. It sold its loan servicing division to Wilbur Ross/AHMSI on April 30, 2008. OOMC never kept any of the mortgages it originated in house. They were all sold on the secondary market.

2. Sand Canyon does not own any notes or mortgages. See the affidavit of Sand Canyon president Dale Sugimoto from the Louisiana bankruptcy case In Re Wilson here: http://www.scribd.com/doc/46562142/In-Re-Wilson-Affidavit-of-Dale-M-SUGIMOTO-Pres-of-Sand-Canyon-19-Mar-2009

3. Given that Sand Canyon does not own any notes or mortgages, and that OOMC sold all of its the mortgages it originated on the secondary market and had none to pass on to Sand Canyon, it cannot assign any notes or mortgages to anyone.

4. Language on the assignment purports to also assign the "...Note or other debt obligation..." This is not possible. Negotiation of promissory notes is covered in UCC 3-201 and requires both endorsement and delivery of the promissory note. It cannot be done by merely inserting language into an assignment of mortgage.

5. The execution date of the assignment is August 3, 2011. The assignment purports to convey the subject property into a trust dated 2005. Pursuant to New York trust laws this conveyance is not possible (or is possible only in such limited circumstances as to be almost impossible - given that I have reviewed several thousand similar assignments of mortgage but have not found a single one to comply with said limited circumstances I have a high degree of confidence this doesn't comply either). Pursuant to those laws assets MUST be deposited into the trust by the closing date. A trust dated in 2005 would also have had a closing date in the same year, thus any alleged conveyance into the trust SIX YEARS LATER is not possible. This trust does not own or hold the note and mortgage associated with the subject property.

6. The assignment was notarized in Duval County Florida. This is the home of Lender Processing Services (actually LPS has two homes, with the other being in Mendota Heights, MN). The robosigning activities of DOCX, as reported widely in the news in fall of 2010, were actually modeled on the Fidelity National Information Services practices. Fidelity was a prior owner of DOCX. LPS was spun off of Fidelity July 8, 2008. LPS then contracted with DOCX to provide the same perjury, fabrication and forgery services that had previously been handled in house by Fidelity. Given the place of execution, and the closing of DOCX in Alpharetta, GA., there is the greatest likelihood this assignment is a product of LPS, which has had to begin carrying its own water again since that closing. I have no doubt a little research would reveal that notary Tammy M. Hansen is employed by LPS.

The assignment is a bald fabrication and forgery. It has been created solely for use as false evidence in a court proceeding. It attempts to memorialize a transaction that never actually took place. As such it has no legal effect and is void. It should be accorded no legitimacy or respect whatsoever.

It took me much longer to write this response than it did to find these flaws. Flaws which are obvious to me from my review of many of these forged and fabricated assignments of mortgage AND also my review of legitimate assignments of mortgage. Once you've seen the legitimate assignments and know the difference it isn't hard to spot the forgeries.

I am in the greatest agreement with Laura C above that the bigger issue involved here is whether we remain a country with a rule of law, or not. If not then this will be the demise of our country. Though there are numerous other issues involved (a sick economy, millions of people being made homeless, etc.) none of them have the same potential to literally destroy the foundations of our country. Without rule of law, and equal protection of the law, we become nothing but another banana republic.



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Wow good reading to the posters here. Having tried using plain English and legal terms understandable to the thieves what isn't a vapor money theory?

Homeowners and American's are left with Liars to deal with. I caught them in the biggest heist and truth be told they still stole my home. But not without trying to be fair and reasonable. By being fair and honest and trying to stop such a crisis. But nothing means anything to them. There are so many things that don't hit the media. Its banker protectionism at its best.

I LOVE THE COMMENTS GLENN! You may want to become a foreclosure fighter besides your own fighter. You have this stuff down good. Plus you got them to listen to you. I heard about your hard work. I know things will get better you've faced a bad monster in all of this.

Hope you finally get to keep your home soon. Your one of the few people that should be listened to in such defenses. Your pleadings are awesome! 

Waiting for more of the pleadings. Be safe and blessed!

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BobbieF
I am not a lawyer.  I read frequently at livinglies.com, I do not
subscribe nor post there. I also read at Matt Wiedners', and at
4closuregate. Again I don't subscribe to either site. I do learn though
through reading their articles. What this leads to is education of
the banking, mortgage, and real estate industries.  For generations
they have been viewed as upright, honest, and a good way of
making a living.
This site as well has been educational.  I suspect though the leanings
here are towards to industries listed above, and all the blame is to
laid upon the borrowers.  The borrowers are not the ones who have
lost trillions in investments, the listed above are.  And as to 'free
houses', the servicers who are the ones who end up with the 'free
houses' after foreclosure, when in many cases they have no skin in
that house, only the borrower and the investor do. While the borrower
stayed out of default by making payments on time, doing maintenance
and paying the taxes, that's skin in that house. There's nothing been
discussed here about the fraud acted against the investors where these
mortgages are securitized, or going through the motions of doing so. Now
many of the trusts are being discovered to be non existent, empty,
non active, not within the contractual agreement as to what is being
held by law, or outside the lower limit of how many investors (300)
are listed in that trust.  This not only defrauds the investor, it also destroys
the tax exemptions, therefore bringing in the IRS.
All this goes right back to the origination of each mortgage that is supposed
to protected by the custodians of the trust. It's all connected, and the
common denominator is fraud throughout.  Also there's nothing been
discussed about how the borrower when having satisfied the mortgage
and note discovers the guarantee of a clear title at the end of the contract
is not possible as somewhere along the line between the closing and the
satisfaction the title has been broken through loss of recordings, clouded
through misdeeds, or in general smeared to the point of not being fixable.
The only point of all of this is the borrower has control of only one thing,
making the payments as contracted, and nothing else. The rest lays
squarely with the bankers, mortgage companies, title companies, the
federal government, and wall street.

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John Lewis

WAR where ru? jeezzz

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Hi All

Fraud is just so very hard to prove. When more mortgage orginators, and bankers, and trustee's and yes some homeowners get arrested and convicted of mortgage fraud. Then we all will have a much clearer picture of what is happening behind the sceens.

Also all the so called goverment foreclosure programs Hamp, HHP, etc are a steeping stone to fraud. Where did all that money go? Fraud Yes, but prove it.

Best regards

Acesfull
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Read these complaints. You will find find many fraud committed by the 17 banks and their fraudulent
methods of establishing Trusts. Many foreclosure defense lawyers refer to these complaints for defense strategy.
More details of the complaints of US GOVT. v. 17 BANKS at
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