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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Ginger
A friend just got a notice that his second mortgage (part of a 80/20 loan) with Bank of America has been transferred to Bank of New York Mellon. He is in foreclosure on the first mortgage (for almost a year). Can anyone venture a guess as to why BAC servicing transferred the second mortgage at this point? I'm suspicious of anything the servicers do, but how would this help the banksters? I thought the banks had a deep-seated aversion to having bad loans show on their books. Why would BNY Mellon want a loan that is already in foreclosure?

Should my friend be aware of anything about this in defending his home in foreclosure pro se?

If this begins to be a pattern, maybe we all need to understand what is going on. Has anyone reading this had a second mortgage suddenly transferred to Bank of New York Mellon?

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William A. Roper, Jr.
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Ginger said:
Why would BNY Mellon want a loan that is already in foreclosure?

Should my friend be aware of anything about this in defending his home in foreclosure pro se?

If this begins to be a pattern, maybe we all need to understand what is going on. Has anyone reading this had a second mortgage suddenly transferred to Bank of New York Mellon?


Ginger:

Did the notice reflect the transfer of the ownership of the alleged indebtedness or of the servicing rights to that indebtedness?  And are you indicating that both the first mortgage and the second mortgage loan were originated and/or serviced by BOA?  Where these loans actually originated by BOA or by Countrywide?

It is UNCLEAR to me what advantages might inure to BOA in selling the servicing rights of the second mortgage.

Generally, in the places where real estate prices have been hit with the most serious corrections, the second liens are being totally extinguished in a first mortgage foreclosure.

A couple of thoughts occur to me to share.  First, while mortgage purported mortgage investors would ordinarily be entitled to claim a holder in due course immunity against assertions of fraud in the origination, a holder cannot be a holder in due course if the negotiation took place after the loan was already in default.  This cuts two ways.  First, if the second mortgage was not already in default and it was originated by BOA, negotiating the loan to another entity such as BOA prior to default creates a bar to assertion of certain defenses against BNY.  This might be a partial explanation for the transfer.

Another consequnce of the holder in due course rules is that there is no holder in due course immunity as to BNY if the loan was already in default at negotiation.  So IF there are any valid fraud or other defenses that might be interposed, be sure to investigate and possibly interpose these if useful.

*

Second, the transfer of a the servicing of a loan already in default presents some proof problems for a plaintiff.  The discussions within other threads about hearsay, personal knowlege and conclusory averments appearing within affidavits.  Realize that it is problematic for the personnel at the new servicer to prove up the business records of the prior servicer.

Look very carefully at the allegations, the averments appearing within affidavits and reasonably ask whether the person purporting to testify within an affidavit of merit in support of summary judgment could possibly have personal knowledge of facts of the accounting of a loan when the accounting and other allegations pertain to events which occured before the transfer and the involvement of the new servicer.   

If you properly object, showing the lack of personal knowledge, the affidavit should be excluded and it will be difficult for the second mortgage servicer to establish its allegation of indebtedness or the amount of indebtedness.  But this may be academic where the indebtedness is extinguished in respect of the first mortgage foreclosure.

  

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William A. Roper, Jr.

Your friend might want to consider sending a very carefully worded Qualified Written Request (QWR) to the alleged servicer of the second mortgage to inquire into details of the transfer.  See discussions in other threads about Qualified Written Requests.

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Angelo
I have another take on it, maybe the 1st. mortgage has some major proof problems with their case and the second lien was perfected properly. The 1st then might have sold the loan to the second at a discount, which would be a win win for both parties.  The second isn't wiped out and the 1st also get some money for the debt which they might otherwise not be able to collect because of the proof problems.

The 1st then might file a motion to discontinue.  The second now comes into court with all the proper paper work, no mers involved and files for foreclosure. 

Not sure if its at all possible but makes sense, if all the numbers work out right.
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Ginger
He received a Mortgage Loan Transfer Notice on BNY Mellon letterhead, but with a return address on the envelope to RETURNS PROCESSING located in California.

A year ago, my friend sent a QWR for the first and second mortgage and BofA stated that Bank of New York Mellon owned the second mortgage. CW then BofA serviced both loans before foreclosure began. 

The BNY of Mellon notice says BAC is still the servicer of his loan, and it adds Countrywide's Web address for contact info.

His loan was closed by an entity described as ABC Mortgage Corp, DBA a different entity. The DBA is registered in his state, but the original lender is not. Just after the 2006 closing, the loan was transferred to CW for servicing then to BoA in the 2008 merger. To make matters worse, a mortgage broker was involved with the loan application before it went to the DBA and somewhere in all of this the loan connects with Fannie Mae too. Maybe that was the first mortgage.

1. Mortgage Broker
2. Closing lender, dba another lender
3. CW servicing
4. BofA
5. BAC
6. BNY Mellon
7. BAC


I have no idea how anyone could be expected to keep up with all these so-called lenders.

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Ginger
One more thing: BAC claimed the second mortgage has been in default for a year.
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FnDoomed
I was just reading elsewhere that transfer of the servicing of a loan AFTER default turns the bank into a vanilla debt collector and that gives rise to some interesting approaches under the FDCPA...



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William A. Roper, Jr.
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FnDoomed said:
I was just reading elsewhere that transfer of the servicing of a loan AFTER default turns the bank into a vanilla debt collector and that gives rise to some interesting approaches under the FDCPA... 

 
FnDoomed:
 
I recall running across the same thing!  I think that the FDCPA contains an express exemption for servicers which are already servicing the debt in advance of default.  When the transfer of servicing happens AFTER default, this FDCPA exemption doesn't apply.
 
I will look for the precise section and try to post it.  This topic may deserve its own thread, as it comes up from time to time.
 
I recall one Forum participant whose servicing was transferred from Saxon to OCWEN not only after the alleged default, but after the foreclosure was already under way.
 
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William A. Roper, Jr.
The definition of "debt collector" as used within the Fair Debt Collection Practices Act (FDCPA) seems to be set forth within 15 U.S. Code § 1692a(6) [TITLE 15 > CHAPTER 41 > SUBCHAPTER V]:

15 U.S. Code § 1692a. Definitions
As used in this subchapter—
. . .

(6) The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Notwithstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. For the purpose of section 1692f (6) of this title, such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests. The term does not include—

(A) any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor;
 
(B) any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts;
 
(C) any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties;
 
(D) any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt;
 
(E) any nonprofit organization which, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in the liquidation of their debts by receiving payments from such consumers and distributing such amounts to creditors; and
 
(F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity


(i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement;
(ii) concerns a debt which was originated by such person;

(iii) concerns a debt which was not in default at the time it was obtained by such person; or

(iv) concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor.

 

. . .

*

This should assist in the location of some case mentions!

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Ginger
Angelo, MERS is involved with the second mortgage. But if I am understanding your point about this, the numbers would definitely work if the second mortgage were to foreclose after the first mortgage foreclosure discontinued. The home is underwater about 15-20 percent, but if the house sold discounted as much as 20% below current value, the second mortgage would be covered easily with almost the same amount remaining for the first mortgage and legal fees.

Could this be the plan for handling the bad bank (CW) part of the bad bank/good bank loans BofA recently separated?

Thank you for the good food for thought...and motivation for planning a counter attack, just in case.








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My second was also transferred to Bank of New York, Mellon.  What is interesting to me is that my first was in the process of a modification at that time, almost through the process, in fact.  I had been told all throughout the process that once my first was modified, I would be automatically placed into the process of modification for my second.  All this was through the HAMP guidelines.  So once my modification on my first was completed, I called B of A to ask about the modification on my second...and was told that Bank of New York Mellon did not participate in this program and thus, my second was not eligible for modification.  I was told that perhaps I might be eligible through one of B of A's mod programs, but after they asked me a few questions regarding current debt, etc. was told to try back later, I didn't qualify at present.  Both my first and second were originally Countrywide loans.

What I am suspicious of is that Bank of America sold my second immediately prior to the completion of my first loan modification going through so they would not have to modify it.  How convenient that Bank of NY Mellon does not participate in the HAMP program.  I would suspect there may be others who have experienced the same situation.  If we could all connect, perhaps we could take action?
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Rebekah Marine: My parents are experiencing the exact ordeal, what have you done in regards to this matter? My parents need advice.

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I haven't done anything else at this point.  I did talk to an attorney at one point, who simply said that the banks are doing all sorts of nefarious things these days.  I still believe it was done with fraudulent intent, however.  On the other hand, I'm grateful to have gotten the first loan modified. 
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Bank of NY Mellon wasn't even made until 2007 by joining of two banks. They are all crooks. BOA, CW, MERS all made loans for people who didn't qualify or for people that they knew would later defaut and they would foreclose. The problem was they couldn't see into the future and see the mortgage/credit collapse of 2007. If they foreclosed before it was a win win for them. The housing prices were going up up and away. Now all these houses are worth about half of what people owe. It was unsustainable. I mean for God's sake the minimum wage is still $7.50??? an hour. How can anyone buy homes that cost so much? Only the top 1% that the tea party people and the rest of us are so mad about. My home is in foreclosure also in New Jersey (Thank God) because they have ground to a halt due to Judges not going for improper transfers from BOA to Bank of NY Mellon etc. Bany of NY Mellon made 3 Trillion dollars in 2010 pre tax and didn't pay a dime in taxes. In fact they got $675 million in a Federal Tax Return off of our backs (the 99%). The CEO last name Kelly ( I think) paid himself something like $20 million the same year. He has since stepped down because of the outrage from the tea party and other middle class groups. Bank of New York Mellon TRUST, that word should give you a clue has more than 14 tax shelters and gives millions of donations to people running for office. Everyone should educate themselves on what's going on in this country. Obama is the worst president EVER. He is worse than Nixon. Bush gave Wall Street billions of TARP money to the banks but there was oversight of it. Recently, after fighting in court for two years to get public information that the Obama people didn't want published we find out that under Obama  they gave all the banks (including BOA, Bank of NY Mellon Trillions and Trillions more that even the Congress didn't know exchanged hands with NO strings attached. Free money from the taxpayers. So in essence, we are paying a bank to sue us for a home we live in that they got from our taxes to stay in business. WAKE UP PEOPLE. DON"T give up your houses. Fight them tooth and nail. Go out and vote in November. The United States is so deep in corruption on so many levels. I think anyone in office should have to take a lie detector first before getting voted in. The whole thing is disgusting.
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