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 was just going over some documents and an interesting question popped into my head. You all know how these mortgage companies issue limited power of attorney to their servicers and each other pretty regularly.

What happens when a company that issued a limited power of attorney files chapter 11 bankruptcy? Is it considered the "death" of the company and any prior powers of attorney are void? Or do they survive?

I haven't been able to find anything as of yet. Thanks for any help ahead of time.
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Sara
Oh now this is an interesting question...

S
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They SURVIVE Tom.

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Thanks for the answer /
I kind of thought that would be the answer. Is there somewhere specific I can look at a law or case that would explain this? Because in the case of a personal limited power of attorney, the power of attorney does not survive if the person becomes incompacitated or unable to make decisions for themselves, or if they die.
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Moose
Tom wrote:
Thanks for the answer /
I kind of thought that would be the answer. Is there somewhere specific I can look at a law or case that would explain this? Because in the case of a personal limited power of attorney, the power of attorney does not survive if the person becomes incompacitated or unable to make decisions for themselves, or if they die.
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Chapter 11 is reorganization of a corporation. It is under the control of the courts until it emerges from the bankruptcy but it still exists and still operates and can enter into legal agreements. Unless the court dissolves the POA it remains in effect.

Corporations do not "die" unless they liquidate through Chapter 7.

Moose

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Thank you Moose! I totally agree. And that is exactly what happened, they began the liquidation process shortly after filing Chapter 11.

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Ok, one more interesting question about a limited power of attorney. If a Limited Power of Attorney says "Company A hereby appoints Company B as it's true and lawful attorney in fact to act in the name, place, and stead of Prior Servicer for the purposes set forth below..."

Doesn't that mean that Company B can only use the Limited Authority once the specific loan in questions servicing is transferred to them from Company A?

Thanks again to anyone who can answer.
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Well, since no one wanted to answer this, I found out myself. If a servicer uses a Limited Power of Attorney before the servicing is actually transferred then their acts are null and void.

The reason I asked this was personal for my case, but let me just offer that if your loan was with New Century Mortgage and was assigned right around when they claimed bankruptcy on April 2, 2007, check to see who signed it and who your servicer actually was at the time

Things that make ya go hmmm......
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Knows About POAs and PSAs
Tom:

You ARE asking some excellent questions and YOU ARE VERY MUCH ON THE RIGHT TRACK!

Generally, the servicer's rights to act on behalf of the mortgage investor -- most often a mortgage trust -- are set forth in the "pooling and servicing agreement" (the "PSA"), a special form of power of attorney ("POA").  The the PSA usually includes a schedule of loans to which that particular PSA applies.

So a particular loan is NOT usually subject to a general POA that has been executed in favor of the servicer, but rather this special POA in the form of a PSA.  The rights and obligations of the servicer to act under the PSA and the authority to do so are all transferred together as a part of the servicing assignment.  Servicing rights are very often assigned separately from the mortgages.

Accordingly, your conclusion that the POA doesn't come into effect before the acquisition of servicing is RIGHT.  And Moose is CORRECT in explaining that a POA typically survives a bankruptcy filing unless expressly set aside by the Court.

Servicing rights have value, separate from the value of the promissory note and mortgage.  So the servicing rights are typically shown as an asset of the bankrupt estate.

When a bankrupt concern is undergoing reorganization and/or liquidation, very often the Court supervises the SALE of various assets to pay the estate's creditors.  At some point within a bankruptcy case, the court MIGHT just order the SALE of the mortgage servicing rights for your mortgage loan.  When these rights are sold, the bankrupt concern is NO LONGER THE SERVICER and usually no longer has any authority to act on behalf of the mortgage investor.

So while your question seemed to pertain to whether the filing of the bankruptcy extinguished the servicer's power -- to which Moose correctly answers "No" -- a larger question to be explored is whether some other event or activity within the bankruptcy proceeding brought the bankrupt estate's servicing rights to a close.

You and others here at the MS Fraud Forum would be well counseled to carefully check news accounts, public records and public filings relating to the bankruptcy of your servicer to learn whether the authority to act has actually been extinguished.

I have seen a number of instances where this situation has arisen.  And it is particularly acute when the servicer contracts out the foreclosure to another foreclosure management entity, such as Fidelity / LPS.  Fidelity occasonally seems oblivious to what is happening with the servicer and continues to execute instruments purportedly by authority of entities which no longer exist or which no longer own or control the servicing.  This is particulary egregious when they sue in the name of a defunct entity (not just an entity in bankruptcy, but an entity which no longer exists under the name shown to be the plaintiff).

You have done the Forum a service by raising this issue and this timely question.  I expect that you will be seeing much more in the news about such instances in the near future.
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Thank you for the in-depth answer Knows. I stumbled across this on my thousandth time going through all of my case documents. We are all in this together and that is the kind of help we can all use.

While it may be very uncommon, in this day and age it may be all too common, and maybe others will benefit from the finding of these types of mistakes.

Thanks again.
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Knows About Assignments
Tom:

Essentially ALL assignments being plead into evidence by mortgage foreclosure plaintiffs are bald forgeries.  They can be PROVEN to be bad forgeries.  Usually, it is necessary to use discovery to obtain the facts of the case to prove the forgery.

Most foreclosure defendants never get their S*** together to conduct discovery.  Even when they DO, teh plainitffs stonewall the discovery and OBJECT or otherwise refuse to answer.  They RESIST all discovery.  And most defendants do not persevere.

In a few exceptional cases, the assignment can be proven to be a fabrication -- a forgery -- without reference to discovery.  And you are VERY MUCH ON TRACK as to the kinds of instances where such evidence may be readily found, proving the forgery.

I have dozens of such documents for a variety of mortgage servicers. 
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So very true knows...
I'm not your ordinary pro se. I've been into my county recorders site and downloaded dozens of documents showing at least 7 different signatures for each of the 4 signatures on my assignment including the notary. Then I went a step further and went to the West Palm Recorders website and downloaded these peoples personal mortgages and other filings. It's amazing how different their actual signatures are

Reading the LPOA was the icing on the cake but I knew it would pertain to others, so I had to share.
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Knows About Signatures
Tom:

Relying largely or solely upon differences in signatures may not get you as much traction as you suspect.  It is most persuasive in the case of authenticated -- notarized -- documents.  The notary is obviously REQUIRED to be personally present and to verify that the person signing is who he says he is.

In most other instances, it is actually permissible in many places to authorize someone to sign for you.  And even if the signature proved to be defective, if the entity being bound RATIFIES the document, it is usually effective.

A key thing to look at in assignments is the AUTHORITY of the entity seeking to execute the instrument.  With an assignment, there is a grantor and a grantee.  The assignment grantor would typically be the original Lender and grantee of the original mortgage.  The grantee would usually be the mortgage trust bringing the foreclosure suit as plaintiff.

What you will very often find is the servicer -- the agent of the supposed GRANTEE -- signing AS IF IT IS THE AGENT OF THE GRANTOR.

The Kings County NY bench has caught plaintiffs doing this repeatedly!  Courts and defendants everywhere else are asleep at the wheel!

If the forged assignment is executed by an employee of the servicer OR if it is excecuted by an employee of Fidelity / FIS / LPS, it is almost always a forgery.  The servicer is the agent of the assignee of the forged assignment, NOT the agent of the assignor.  And Fidelity / FIS / LPS is the agent of the servicer -- the agent of the agent -- of the grantee of the forged assignment.  WHERE would they derive the authority to execute an assignment on behalf of the ASSIGNOR?

Think of the assignment like you think of the grant in a deed.  If YOU were deeding Blackacre to ME, could I appoint someone by power of attorney and then have MY attorneyin fact sign the deed for YOU?  Would THIS be a valid grant of Blackacre to ME?

Sadly, this is what is happening with millions of mortgage assignments and courts everywhere are granting foreclosures based upon these bald forgeries.

Read the assignment carefully!  Or show it to someone who KNOWS!  The latter will be challenging.

Other than the criminal conspirators working on behalf of foreclosure plaintiffs and the Kings County NY there are probably less than a hundred people in the United States who actually understand this SCAM!  Several of these are MS Fraud Forum participants. 

*

Focus on the authority and the sustance of the underlying transaction that is supposedly memorialized by the forgery.  IF you still have an opportunity for discovery, USE discovery to obtain the true facts and to PROVE the forgery.  Good luck and God bless you!
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Well Knows, that's kinda what I meant. I thought it was awesome finding the problems with the signatures, and it may be a help, but discovering the lack of authority was the icing on the cake.

I guess I just said it wrong. But thanks again for the information, it is a great deal of help.
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