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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In several recent threads, we have discussed alternative strategies relating to defending a foreclosure where the maker of the note or grantor of the mortgage is already dead.


In a decision handed down by the Court of Appeals for the Eighth Appellate District of Ohio, the Court mostly vindicates the thoughtful posts and analysis of Forum seniors:


BAC Home Loans Servicing, L.P. v. Komorowski, No. 96631, 2012-Ohio-1341 (Ohio App. 8th Dist. 2012)


You have to read between the lines a bit to see the borrower's mistakes.


First, we see this little gem:

"Ten days after Kenneth’s death [June 14, 2009], Terese sent a cashier’s check to BAC in the amount of $5,143, which was intended to cover past due mortgage payments for April, May, and June 2009, as well as an advance payment for the month of July 2009.  However, BAC returned the check with a form indicating it would not accept the funds because Terese Komorowski was not a party to the loan."


How would BAC possibly KNOW of Kenneth's death?  It seems most likely that Terese probably TOLD BAC that Kenneth was dead, thinking that the bank would be sympathetic!




If Terese had simply paid the outstanding amount never mentioning Kenneth's death, NO ONE AT BAC WOULD HAVE CARED AS TO THE SOURCE OF THE FUNDS.  But BAC saw an opportunity to precipitate a default and to soak the estate.


Next, we find that "BAC filed the complaint in foreclosure on July 20, 2009.  The complaint named Kenneth Komorowski as a defendant because he was the sole obligor on the note."


The left hand doesn't know what the right hand is doing.  Even though Terese told the bank that her husband was dead, the word didn't make it to the foreclosure mill attorneys at Lerner, Sampson & Rothfuss.  So Lerner filed suit naming a dead man.


The Ohio COA seems to be stating that it is OK to bring a suit against a dead man if the cause of action arose before the man's death.  This is probably an incorrect statement of the law, even in Ohio.


But once again, almost surely, it was Terese or the other heirs that insisted on taking the plaintiff to school and encouraging the plaintiff to amend its complaint


Then Terese makes the mistake of defaulting rather than timely answering the suit.


The bottom line is that the Komorowski case gives a nice example of how not to handle the matter!  If Terese had merely sent the funds without calling attention to Kenneth's death and kept her mouth shut early in the case as to Kenneth's death, then BAC Might have had a default against a dead man and a contested foreclosure case against the widow.


I know of a Florida case where the plaintiff got a default against a dead man and where the void judgment, now vacated, was in respect of a default almost five years ago!


The foreclosure mills WILL make a lot of mistakes if you let them!  But there still seem to be a lot of borrowers who feel that the deck isn't stacked sufficiently against them and feel impelled to quickly identify every defect in the plaintiff's case so that these errors can be timely corrected speeding the judgment in favor of the plaintiff.  It remains unclear to me WHY distressed borrowers believe that they should put the plaintiff's interests ahead of their ownBut it happens again, and again and again!

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If this was a Fannie Mae conforming loan, then as his wife, she could have assumed the loan without their "approval."
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This shows most of the provisions:

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If this was a Fannie Mae conforming loan, then as his wife, she could have assumed the loan without their "approval."


Yes.  But if the wife had simply cured the deficiency and made the monthly payments, the servicer would have accepted the monthly payments every month for the duration of the loan without ever learning of or wondering about the husband's death.


The time to make the arrangements for an assumption is when things are good, not when a corrupt servicer such as BAC sees that it can obtain some advantage through foreclosure. 


Also, with an assumption, the wife would have been required to sign a note and become personally obligated for the repayment of the loan.  By leaving the loan in the husband's name and simply paying without informing the lender of the husband's death (at least for a while) the wife essentially has a non-recourse loan where the subject property remains at risk, but in which she cannot be held personally liable for any default.


This is a better outcome for the wife, since if the property was underwater or to become and remain underwater, she could still always strategically default and walk away from the property with no hit on her own credit and no deficiency judgment.  Of course, this is precisely one of the reasons WHY a servicer prefers to proceed to foreclosure rather than to allow a survivor to simply keep paying the payments in respect of a decedent.  Of course, a corrupt criminal enterprise such as BAC is primarily interested in soaking the borrowers with various trash fees imposed during foreclosure (which the servicer rather than the mortgage investor keeps) and in cases where there is actual equity in the property stealing that equity.


It is most likely that there was positive equity in property in Komorowski because if there was negative equity it would have been very much in the investor's interests to simply accept the borrower's payments and avoid foreclosure.  Of course, a servicer such as BAC routinely ignores the interests of its principal (the mortgage investor) to enrich itself as servicer, even at the mortgage investor's expense.    

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Compare the holding from NY discussed within this thread:


NY Appellate Court - Suit Against a Dead Person Is a Nullity: Wendover Fin. Servs. v Ridgeway


See also ka's links to the discussion within these threads:


"How does executor defend house of estate in foreclosure?"

"Defendant not recognized as owner, borrower, or mortgagor?"

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