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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Hi All,

Can a legal agent for the Grantor buy the foreclosed property in the name of the Grantor?  In doing so, can the loan remain in the same trust that it was in before the foreclosure?

Standard PSA.

I'm fuzzy on this and would appreciate assistance from the scholars on site.
I have an opinion on this but unsure if its right. 


Ya'll know I had some health issues, so don't make fun if this is a dumb question.  My mental is still not all back yet.  Still out here. Still fighting.

Best to all,
Bob

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Sara
Bob, I don't understand the question...

Are you saying, can the agent for the mortgage company buy the property at the auction?  If so, I don't know if it's legal but it happens everday.  Then the mortgage company puts these homes on the market for a profit.

S
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Hey Sara,

Thanks for response. 

"purchase price bid and paid by Grantee, Grantor, as Trustee does hereby grant"

"Grantor has hereunto set Grantor's hand and seal"

Signed by the sub trustee

Grantee is Grantor, it would appear.

I agree with you that it happens everyday.

I'm working on my reply brief and reviewing docs and this popped up.  Like I said, I'm still a bit fuzzy.  Does this merit any further thought?

Best,
Bob

Interesting question.  Is it legal? 
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William A. Roper, Jr.
Bob:

I have NOT researched the particular question you pose, but frankly I cannot see a really clear problem or conflict associated with the foreclosing entity purchasing the property at auction per se.

I can easily see where circumstances might present some issues, but it isn't readily apparent how having a separate person affiliated with the mortgage investor bidding on the property would overcome these problems.

In thinking about and discussing this issue, it is probably important to distinguish between judicial and non-judicial foreclosures.

With a non-judicial foreclosure, the validity of the deed created through a private power of sale is wholly dependent upon the mortgage investor and trustee's strict complaince with the provisions of the deed of trust or other mortgage security instrument.  Deviations from these contractual provisions and/or from provisions of state law may render a trustee's deed void or voidable, though the execution of the deed is pretty clearly going to at least cloud title.  The verity of recitals is critical to the validity of the private sale and dishonesty and self-dealing, when proven might be a basis to set such a sale aside.

In a judicial foreclosure, in most places, the winning bid is presented to the court by a sheriff, commissioner, or other person designated to act on teh court's behalf to conduct the sale of the property, and the court must affirmatively confirm the sale.  This presents the defendant/alleged borrower an opportunity to object to any actual or perceived unfairness in the sales process and to present evidence to the court as to why the sale ought not be confirmed.

While the sheriff, commissioner or other person may be acting at the behest of the plaintiff mortgage investor under the court's supervision, in this case the process has already introduced a third party, the sheriff, commissioner, etc., to act, so the sale really isn't being conducted by the mortgage investor anyway.

With the non-judicial foreclosure, there is also a third party, albeit one that is under the direct control of the mortgage investor.  This is the trustee or substitute trustee under the deed of trust.  It is this trustee who typically conducts the sale and executes a trustee's deed in favor of the buyer at the private sale.

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The kinds of substantive issues which might be used to upset a sale would seem to me to be related to the regularity of the auction and particularly any deviations which might minimize participation or drive buyers away.

For example, failure to properly advertize the auction in accordance with law (or provisions of the deed of trust), conducting the auction before the scheduled time set forth in any announcement (and therefore before the arrival of alternative bidders), conduct of the auction well after the appointed time (after possible bidders have become discouraged and departed), conduct of the auction at a location other than as specified in the published notices, driving prospective bidders away, unreasonably refusing one or more bids or setting unreasonable and/or unannounced restrictions on bidder qualification or bidding would be the kinds of things that one could reasonably argue would depress the auction price of a property and might be a basis for upsetting a sale.

In some places, the inadequacy of the auction sales price is a basis for setting aside the sale without a showing of irregularity, though this would be more common in judicial foreclosure states.  Moreover, a defendant/alleged borrower also has a proof problem as to the value of the property.  Typically, a court is not going to simply accept the defendant's assertion that the price is inadequate.  Some expert testimony or report -- something like an appraisal -- is going to usually be necessary to show that the accepted bid price is grossly inadequate.

Also, bear in mind that with a deed of trust, the alleged borrower has contractually agreed to the private sale by a trustee identified by the mortgage investor.  I am a little unclear what the basis would be to object to a conduct of the sale in accordance with these contractually agreed upon terms.  Both the United States Constitution and the state Constitutions of most states expressly prohibit the adoption of laws which impairs the performance of private contracts. 

So I would focus on the specifics of the conduct of the sale, as opposed to seeking to find a way to allege that the trustee conducting the sale is ineligible. 

A defendant/borrower should always send a reliable, trustworthy, observant and astute person to witness the auction, whether in a judicial or non-judicial state.  The person selected needs to be someone who can be a credible witness.  If no representative of the borrower attends, how would you hope to learn of and identify irregularities?

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In thinking about the bidding and the purchase of a property at a sale, whether judicial or non-judicial, it is helpful to also realize that the mortgage investor and/or mortgage insurer may have a formal written policy as to bidding.  That is the servicer is following express guidance from FNMA/FHLMC and/or another investor OR following the express written guidance of the mortgage insurer in its bidding strategy.

Failure to adhere to an insurer's written guidance as to bidding may result in a denial of a mortgage insurance claim or at least a partial denial.  So you can usually rely on the fact that the servicer is following these instructions carefully!

Also, do not assume that your mortgage is without mortgage insurance, simply because you never applied.  There exists both borrower and lender paid mortgage insurance.  In many instances, subprime lenders obtained bulk mortgage insurance policies on their originated loans after closing in support of securitization.  Where a mortgage loan is subject to a bulk MI policy, the MI company is still going to dictate the bidding strategy in order for the mortgage inveestor to be eligible for a claim.

It is a good idea to expressly inquire about mortgage insurance, both primary borrower paid, primary lender paid (bulk) and pool within discovery served on the plaintiff in your judicial foreclosure suit.  If you learn of a mortgage insurance policy and the identity of the mortgage insurer, this can be helpful in knowing and understanding the bidding guidance imposed upon the plaintiff.
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Hey Bill,

Appreciate your response and I'm very familiar with judicial and non-judicial procedures.

I'm just looking at this issue in another direction, hopefully the thinkers on this site might, as you are, get another angle we can use to stop the mills.

This particular Trustees Deed was signed "Grantor to Grantor."

Glad to hear you're back in the states.

Best,
Bob 
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