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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arkygirl
This is a great informational site http://www.bankruptcylawnetwork.com/category/mortgages/page/1/

This site is full of topics like this one and may be worth a look around for some. There are many topics concerning mortgage servicers written by lawyers who seem to "get it".

This case is interesting and is why I chose this particular example. Looks like servicers are going to be chewed up from both ends now...pretty rough allegations in this one and if proven to be true could lead to something for borrowers to use.

QUOTE from pleading P.14: "ORIX's sole purpose is to pad its own and certain of it's employees' pockets at the expense of unsuspecting and unfortunate Borrowers, Depositors and Certificateholders".

Whew...heady stuff

What Are Those Mortgage Servicers Doing?

Well, this is interesting. It seems that, instead of the usual borrower’s claims against the mortgage servicer, the claim in Super Future Equities, Inc. v. Wells Fargo, et al., is that the mortgage servicers are handling matters in such a way as to benefit themselves, rather than the underlying mortgage holders (and, incidentally, the borrowers). This is just one side of the dispute–though it is a 95 page complaint with a lot of detail in it.

I don’t know if the allegations of this complaint are true, but if they are, it may answer a question asked by virtually all of my clients who have pending foreclosures: Why won’t the mortgage company work with me? Many times the problem started with a default that wasn’t all that significant, that could have been resolved with just a little give on the part of the mortgage company. Many clients, upon learning how Chapter 13 allows a debtor to cure arrears over a fairly long period of time, see the irony: Why would a mortgage company, knowing what will happen in a Chapter 13, refuse better offers which would allow a borrower to avoid bankruptcy? And, in many cases, take that approach when the mortgage balance exceeds the value of the property. Why would a mortgage servicer want to essentially manufacture a default? Yet, that is one of the allegations in the Super Future complaint. If–and it’s a big if–those allegations prove to be true, the repercussions are going to be felt for a long time. And many people who have wondered why a mortgage servicer seemed to act against its own best interest will have an answer to that question.

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http://dowlinglawoffice.wordpress.com/2007/04/02/why-forecloure-numbers-matter/

Why Foreclosure Numbers Matter
Published April 2nd, 2007
Elaine M. Dowling
11032 Quail Creek Road Suite 204
Oklahoma City, Oklahoma 73120
 
Most of the news around New Century and the whole sub-prime loan mess center on the sub-prime loan mess, as if this is an isolated financial area — except that nothing is an isolated financial area anymore.

In December Super Future Equities, Inc. filed its Third Amended Complaint in Super Future Equities, Inc. v. Wells Fargo National Bank, et al. with the U.S. District Court fot the Northern District of Texas, Dallas Division. This Complaint is 95 pages long. The Defendants are Wells Fargo Bank, as Trustee of certain mortgage backed certificates and a number of related corporations and their principals. Those corporations provide mortgage servicing and default servicing for commercial mortgages.

Like all Complaints this one is just a set of unproven allegations. However, this particular 95-page Complaint includes quotes from Pooling and Servicing Agreements, flow charts, and other detailed information that makes it look like whoever wrote it knew what he was talking about.  It appears from info available on the web that the Plaintiffs are a pair of young adults who may — or may not– have an ax to grind.

I don’t know if any of the allegations in this Complaint are true.  Although it certainly appears to describe the extent to which it may be possible for mortgage servicers, default servicers, and in this case the trustee, to serve their own best interests and not the interests of the actual mortage holders or the borrowers. In fact, the gist of this Complaint is to allege that the Defendants have conspired to effectively steal millions of dollars from the investors in the mortgage pool. The complaint makes it clear that this is actually stealing from the mortgage borrowers as well as from the investors, but the borrowers aren’t parties to the litigation.

This strikes home for me, because I was trying to explain to a client last week why a mortgage servicer would want to essentially manufacture an event of default — which is happening with her consumer mortgage controlled by completely different parties than those in this lawsuit. However, intentionally manufacturing events of default is one of the allegations raised against the servicers in the Super Future Equities case, only it is being raised by the underlying investor, not the borrower.

The really scary part of this Complaint is that some part of it might be true.  If that turns out to be the case, the events involving New Century and its recent Bankruptcy filing may become as much a symbol of needed change as the failure of Penn Square Bank. The real question will then be what is the extent of the needed change, how great will the repurcussions be and who will wind up holding the bag. I am afraid that the answer to the first part of that question is going to require analysis of what the financial markets now consider to constitute basic business ethics.  (That does not mean to imply that New Century had anything to do with the loans involved in the Super Future Equities lawsuit. )

I have linked to the Complaint if anyone wants to read it. I am only about half way through it myself, but I will be back with more on this lawsuit later. Mortgage backed securities and their servicing is a many hundreds of $billions a year business. It warrants more attention than it has been getting, especially for those of us who deal with credit issues, mortgages and foreclosures — consumer or commercial.

Elaine

 
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:)
Who you think sent that complaint and documents to the lawyers list serve? One of your own!
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http://www.predatorix.com/

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arkygirl
, that is great. Was the info shared here for everybody to see, too? If so, I must have missed it. If it is a reposting, I apologize.

This suit was filed on 12/07/2006...may take years to be heard. I am really interested in the outcome because it shows a pattern of conspiracy to destroy borrowers as well as defraud certificateholders. Sort of like that YouTube video where it was said that "We screwed both sides" or something to that effect. Looks like there may be something to that.....
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Ellington Credit Fund v. SPS et al.

Just to make sure that you've seen this one as well, AG.
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PaybackTime

The Best of Predatorix!

"All that is necessary for the triumph of evil is for good men to do nothing."
Edmund Burke

        This website is dedicated to all the victims of Wells Fargo & ORIX's predatory lending and discriminatory practices including;

1) All borrowers and guarantors who lost assets, were stripped of equity, incurred physical and emotional injuries, or lost their lives upon loss of their life-time earnings.

2) All investors who have lost their pension funds and retirement investments in CMBS bonds (certificateholders).

3) All tenants of the seized commercial and residential properties who suffered neglect and mismanagement at the hands of Receiver/Keepers of the seized properties due to health and safety violations, fires, shootings, theft or drowning.

       Especially the owner of of Empire Center Dallas, who died of a heart attack after his property was seized as reported in ORIX' servicing report. Also, Justin & Daren Ruffin, twin brothers that drowned in a seized apartment's pool.

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arkygirl
I had seen the Ellington case on your site, Mike. I suppose we will see many more of these in the future. While they grind through the courts like a herd of wounded turtles, the fraud will continue and people's lives will continue to be destroyed. Sad. The collateral damage is awful and it makes me angry that it is not even being considered.

I am afraid that there will be so much fraud uncovered that restitution will never be possible. If our lame duck Congress wants to do something about the rising rates of homelessness due to these fraudulent actions it should declare a nationwide moratorium on foreclosures until all these cases are tried, with that benefit covering only those who continue to make payments into an escrow set up and run honestly by people who do not have a vested interest in manufacturing foreclosures...In fact, payments to these servicers would be predicated by how many people were kept IN their homes. Only then might the investor garner a true return on their investment, only then will homeowners be able to sleep at night without wondering when the sheriff will come knocking on the door.

As for the architects of the scheme...they should be thrown under the bus to be run over. And then some little old lady might realize she forgot her purse, requiring the bus to be backed up.....

I had zero luck in finding your specific case at Justia, Mike. No matter the search term used, it simply would not disgorge (lol) anything. Have a link??

And Predatorix
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ARKY GIRL, RIGHT YOU ARE AGAIN....OUR DO NOTHING CONGRESS SHOULD ESTABLISH AN AD HOC COURT SYSTEM SOLELY TO FUND THE REPRESENTATION OF MORTGAGORS (THE HOMEOWNER) AND THE INVESTORS WHO ARE BEING DEFRAUDED BY THESE CRIMINALS.

THE COURT SYSTEM WOULD CONSIST OF JUDGES AND STAFF ESTABLISHED IN EXISTING FEDERAL COURT HOUSES THAT CONVENCE SOLELY TO HEAR THESE FORMS OF CASES.

TOO OFTEN WE VICTIMS OF SERVICING FRAUD ARE CONFRONTED WITH THE EXPENSE OF LITIGATION AND PROOF OF OUR COUNTER-CLAIMS BEFORE JUDGES WHO ARE NOT FOCUSED ON THE UNIFORM COMMERCIAL CODE THAT REGULATES THE STATUTORY SCHEME THAT PREVENTS A SERVICER FROM FORECLOSING ON A HOME WITHOUT ANY PROOF THAT THEY HAVE AUTHORITY FROM THE OWNER/HOLDER OF THE MORTGAGE NOTE TO HAVE INSTITUTED FORECLOSURE PROCEEDINGS. WHEN A COURT IS CONFRONTED WITH A FRAUDULENT FORECLOSURE IN WHICH IT IS CLEAR THAT THE SERVICER HAS NO AUTHORITY TO HAVE COMMENCED THE FORECLOSURE ACTION, THE SUIT MUST BE DISMISSED UNDER THE LIMITS OF PROOF ESTABLISHED BY THE U.C.C. AND A VERDICT IN FAVOR OF THE HOMEOWNER WOULD BE ENTERED ON A COUNTER-CLAIM FOR NEGLIGENCE ON THE PART OF THE SERVICER FOR HAVING FAILED TO OBTAIN THE ACTUAL AUTHORITY FROM THE OWNER OF THE NOTE TO HAVE COMMENCED THE FORECLOSURE ACTION. BECAUSE FANNIE MAE OR FREDDIE MAC ARE THE OWNERS OF 70% OF THE MORTGAGES THERE WOULD BE BROAD BASED PROTECTION IMMEDIATELY ESTABLISHED BY UNIFORM REGULATIONS ESTABLISHED BY THOSE GSE's. IN ESTABLISHING THIS SYSTEM, BANKRUPTCIES WOULD BE MINIMIZED AND JUSTICE WELL SERVED. THE NEWLY ESTABLISHED FEDERAL COURT WOULD REQUIRE PROOF OF ACTUAL AUTHORITY OBTAINED BY THE SERVICER FROM FNMA BEFORE PERMITTING A FORECLOSURE ACTION TO PROCEED IN THE COURTS. BY ESTABLISHING SUCH A COURT SYSTEM, THE OVERSIGHT BY THE GSE OR OWNER OF THE NOTE WOULD ACT AS A STOP GAP MEASURE TO FURTHER LIMIT THE NUMBER OF FRAUDULENT FORECLOSURES BEING MANUFACTURED BY THESE CRIMINALS.

THE PROPOSED COURT SYSTEM DOES NOT REQUIRE ANY ADDITIONAL LEGISLATION AS THE U.C.C. HAS BEEN ADOPTED IN SOME FORM BY ALL OF THE STATES IN THE UNION. THE ONLY THING WE NEED IS FOR THE JUDGES THAT NOW SIT ON THE FEDERAL BENCH AS STATE COURT BENCHES DO NOT KNOW THE U.C.C. WITH ANY LEVEL OF MINIMUM COMPETENCE AND THEREFORE, TIME AND AGAIN, ARE FAILING TO APPLY THE LIMITATIONS IMPOSED BY THE U.C.C. ON THE PLAINTIFF (THE SERVICER OR SOME OTHER SHELL COMPANY)

CONGRESS HAS AUTHORITY TO ESTABLISH AD HOC COURTS FOR ANY SPECIAL PURPOSE. HEAVENS KNOWS THAT WE DO NOT HAVE A SHORTAGE OF QUALIFIED ATTORNEYS CAPABLE OF BEING APPOINTED BY THE CONGRESS FOR THE EXPRESS PURPOSE OF HOLDING COURT IN ESTABLISHED DISTRICT COURTS ACROSS THE NATION. THE EXPENSE OF ESTABLISHING THESE COURTS ARE NEGLIGABLE. ESPECIALLY SINCE THEY TAKE THE PLACE OF A SUBSTANTIAL NUMBER OF BANKRUPTCIES THAT WILL BE FILED AS A RESULT OF THE FRAUDULENT FORECLOSURE.

IN THE LONG TERM, THE OUTLAY OF FUNDS WOULD BE SO INSIGNIFICANT AS TO NOT EVEN MERIT DEBATE IN CONGRESS. WE JUST NEED SOME LEGITIMATE CONSUMER LAW FIRM TO WORK WITH HONEST STAFFERS BY SOME ABOVE BOARD CONGRESSMAN TO DRAFT THE LEGISLATION AND THEN PASS THE LEGISLATION.

SO ALL YOU ATTORNEYS WITH SOME EXTRA TIME ON THEIR HANDS....WHY NOT DROP A DIME IN THE PHONE AND GET A NAME FOR YOURSELVES BY DRAFTING THE LEGISLATION ESTABLISHING THE HOME MORTGAGE DEBTORS COURT SYSTEM.

MOST IMPORTANTLY, BY ESTABLISHING SUCH A COURT SYSTEM, A LARGE MEASURE OF CONFIDENCE IN OUR JUSTICE SYSTEM WOULD BE ESTABLISHED AND FOREIGN BANKS AND INVESTORS MAY FIND OUR REAL ESTATE LOANS WORTHY OF THEIR INVESTMENT DOLLARS ONCE AGAIN.
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