From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, March 08, 2012 11:50 AM
To: Charles Cox
Subject: bac v awl ex parte Read this one.

Countrywide v. America’s Wholesale Lender, Inc.

Infringement lawsuit. Note, Steve Vondran is representing AWL, Inc.

This could get “interesting”…

Charles
Charles Wayne Cox – Oregon State Director for the National Homeowners Cooperative
Email: mailto:Charles
Websites: http://www.NHCwest.com; www.BayLiving.com; and www.ForensicLoanAnalyst.com
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240 direct
(541) 610-1931 eFax

Defending or Litigating Foreclosure?
Click Here For More Information

Paralegal; CA Licensed Real Estate Broker; Certified Forensic Loan Analyst. Litigation Support; Mortgage and Real Estate Expert Witness Services.

gov.uscourts.cacd.524165.11.0.pdf
gov.uscourts.cacd.524165.10.0.pdf
gov.uscourts.ctd.94549.32.0.pdf

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, March 08, 2012 11:50 AM
To: Charles Cox
Subject: Wells Fargo LOSES at Seventh Circuit Appellate …. Excoriating opinion regarding a HAMP Class Action. AND a Judicial Request for a Federal Amicus Curiae

<excerpts>

HAMILTON, Circuit Judge. We are asked in this appeal

to determine whether Lori Wigod has stated claims

under Illinois law against her home mortgage servicer

for refusing to modify her loan pursuant to the federal

Home Affordable Mortgage Program (HAMP).

—

She brought this putative class action alleging violations

of Illinois law under common-law contract and tort

theories and under the Illinois Consumer Fraud and

Deceptive Business Practices Act (ICFA). The district

court dismissed the complaint in its entirety under

Rule 12(b)(6) of the Federal Rules of Civil Procedure.

—

This appeal followed, and it presents two sets of issues.

The first set of issues concerns whether Wigod

has stated viable claims under Illinois common law and

the ICFA. We conclude that she has on four counts …

—

These allegations support garden-variety

claims for breach of contract or promissory estoppel.

She has also plausibly alleged that Wells Fargo com-

mitted fraud under Illinois common law and engaged in

unfair or deceptive business practices in violation of the

ICFA.

—

The second set of issues concerns whether these

state-law claims are preempted or otherwise barred by

federal law. We hold that they are not.

—

We accordingly reverse the judgment of

the district court on the contract, promissory estoppel,

fraudulent misrepresentation, and ICFA claims …

—

IV. Conclusion

The judgment of the district court is therefore

REVERSED as to Counts I, II, and VII, and the

fraudulent misrepresentation claim of Count V …

—

RIPPLE, Circuit Judge, concurring. I am very pleased

to join the excellent opinion of the court written by

Judge Hamilton. I write separately only to note that, in

my view, our task of adjudicating this matter would

have been assisted significantly if the United States had

entered this case as an amicus curiae.

—

In this case, this last consideration justifies the

decision to proceed without further delay. Prompt resolution

of this matter is necessary not only for the good

of the litigants but for the good of the Country.

CASE FILE Illinois Appellate CLASS ACTION REVERSAL LORI WIGOD, Plaintiff Appellant, v. WELLS FARGO BANK, N.A., Defendant-Appellee.pdf

From: Marc Tow [mailto:marctow2000@yahoo.com]
Sent: Friday, March 09, 2012 7:38 AM
To: Tim McCandless; tim mccandless
Subject: election news

http://finance.yahoo.com/news/bank-america-announces-agreements-principle-204700717.html

Marc R. Tow
Email: marctow2000
Skype: Marc.Tow
9393 W. 110th Street, Suite 500
Overland Park, Kansas 66210

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Friday, March 09, 2012 6:30 AM
To: Charles Cox
Subject: REMIC tax concerns surrounding foreclosures

REMIC tax concerns surrounding foreclosures

· Alston & Bird LLP

· John Baron and Robert J. Sullivan

· USA

·

· March 6 2012

A Real Estate Mortgage Investment Conduit (REMIC) is an entity employed to securitize loans secured by real property and that has been granted tax-favored status. In the current economic environment, due to the fact that they hold primarily commercial or residential mortgages, REMICs are commonly faced with workouts of troubled loans. The tax rules1 that apply to REMICs place restrictions on the activities of a REMIC and the assets a REMIC can hold without risking its tax-favored status. These rules apply to performing and nonperforming loans alike, and therefore restrict when, how and what a REMIC can hold when it forecloses on a loan. The tax rules relating to foreclosure property held by a REMIC are intended to prevent a REMIC from engaging in activities that are the equivalent of operating a business.

What Property Can a REMIC Hold upon Foreclosure?

In order to maintain its preferred tax status, a trust formed as a REMIC is permitted to hold only “qualified mortgages” and “permitted investments.” The tax rules define the term “permitted investments” to include “foreclosure property” as that concept is set forth in the rules applicable to Real Estate Investment Trusts. Generally speaking, foreclosure property is any real property (including interests in real property), as well as personal property incident to such real property, that is acquired by the REMIC via a foreclosure as a result of a default on the loan that such property secured. The REMIC can acquire the property through foreclosure or a similar process, such as the acceptance of a deed in lieu of foreclosure. Foreclosure property would include real property and personal property incident to such real property, but would not include equity interests in an entity that owns such real or personal property. A REMIC cannot, therefore, foreclose on a pledge of equity in an entity.

If a REMIC holds more than a de minimis amount of nonpermitted assets (such as property that does not qualify as foreclosure property), its tax-favored status as a REMIC is terminated. If the REMIC holds only a de minimis amount of nonpermitted assets (less than 1 percent of the aggregate tax basis of all of the REMIC’s assets), the REMIC will not lose its status as a REMIC, but will still be subject to a 100 percent tax on any net income attributable to such nonpermitted assets. If, when the loan was transferred to the REMIC, the REMIC or its agents knew the loan was troubled and would likely result in a foreclosure, it cannot foreclose on the collateral and hold the property without paying the 100 percent tax.

How Long Can a REMIC Hold Foreclosure Property?

Importantly, foreclosure property can only be held by the REMIC until the end of the third taxable year following the taxable year in which the trust acquired the property, unless an extension is granted by the IRS. An extension will only be available if the REMIC can prove to the IRS that it is necessary for the orderly liquidation of the REMIC’s interest in the foreclosure property.

What Limitations Are Placed on a REMIC in Owning Foreclosure Property?

A REMIC will be subject to a 100 percent tax if it engages in certain prohibited activities with respect to foreclosure property. These prohibited activities include:

• Leasing – the REMIC can’t enter into a lease under which it receives income other than “rents from real property” and other types of permitted income;
• Construction – the REMIC can’t engage in construction on the foreclosure property other than completing a building or improvements that were begun pre-foreclosure and only so long as more than 10 percent of the construction was begun pre-foreclosure; and
• Engaging in a Business – the REMIC can’t operate the property in a trade or business after an initial 90-day grace period other than through an independent contractor.

In order to avoid violating the prohibition against operating the property in a trade or business, the REMIC must employ the services of an independent contractor to manage the property after the initial 90-day grace period. Such manager must be truly independent and cannot exceed certain ownership levels in the REMIC.

If a REMIC engages in one of the prohibited activities with regard to the foreclosure property, it will be subject to a 100 percent tax on the income it receives from the foreclosure property, as well as any gain on the disposition of the property.

What Income from Foreclosure Property Is Taxable?

While the benefit of REMIC status is that it is not generally taxed on its income, there is an exception for “net income from foreclosure property.” To the extent a REMIC receives net income from foreclosure property, it will be taxed on such income at the highest corporate tax rates. Generally, the type of income on which a REMIC would be taxed is income from foreclosure property that does not qualify as “rents from real property.”

So long as income from foreclosure property qualifies as rents from real property, such income will not be taxed. Rental income does not qualify as rents from real property, and therefore will be subject to the tax on net income from foreclosure property, if (i) the amount of the rent is tied to the amount of income generated by such property, (ii) the rent is received from a party related to the REMIC, or (iii) the REMIC provides services to the lessee of the property that are not customary for the rental of real property. Services provided to tenants are considered customarily rendered in connection with the rental of real property based on comparisons to buildings of a similar class in the same geographic market. For example, providing utilities, general maintenance, parking facilities, swimming pool maintenance and security services will be considered customarily rendered if those services are provided to tenants of buildings of a similar class in the same geographic market. Further, such services must be provided by an independent contractor.

Assets such as shopping centers and office buildings typically generate income that qualifies as rents from real property because the services provided to tenants of such properties, such as utilities, general maintenance and janitorial services, are customarily provided in connection with the rental of real property. Such services, however, must be provided by an independent contractor.

Certain types of assets, such as a hotel or nursing home, typically produce income that is taxable. These types of assets commonly generate income that cannot be characterized as charges for services customarily rendered in connection with the rental of real property, such as a dry cleaning service offered by a hotel or a hair salon operated in a nursing home. Gross income from such assets is first reduced by any deductions or expenses directly connected to such gross income before the amount of tax is determined. The REMIC can, therefore, deduct from its gross taxable income items such as interest, depreciation and management fees associated with the property.

If an asset will generate taxable income, the REMIC may choose to enter into a master lease of the property. If a master lease structure is employed, the master tenant will operate the property and receive all income, and pay only a set amount of rent to the REMIC that is the landlord under the master lease, thereby preventing the REMIC from receiving any taxable income. In this situation, while the REMIC may escape the burden of paying tax on net income from foreclosure property, the master tenant will not likely be willing to pay as much rent as a tenant under a standard lease due to the increased responsibility and risk involved in operating the property itself.

Considerations for Servicers

The time periods in which property can be held, the type of collateral for a loan (real property vs. equity in an entity owning the real property) and the limited activities relating to the property in which the REMIC can engage while it holds the property are relevant factors to consider in its long-term approach to the workout of a troubled asset. A key decision for a servicer that has decided to foreclose is whether to operate the property through an independent contractor or to enter into a master lease of the property. If an independent contractor is engaged to operate the property and the property generates income other than rents from real property, such income will be taxable (less certain deductions as discussed above). While a master lease structure prevents the REMIC from receiving such taxable income, the REMIC will also receive less rent from a master tenant than it would a tenant under a standard lease.

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Friday, March 09, 2012 6:30 AM
To: Charles Cox
Subject: Nevada Supreme Court continues the trend of upholding the legitimacy of MERS

· Dykema Gossett PLLC

· Alexandra J. Wolfe , Thomas M. Schehr and Jeffrey E. Jamison

· USA

·

· March 2 2012

·

In two separate cases the Nevada Supreme Court has upheld the validity of a mortgage assignment from MERS and rejected borrowers arguments that use of MERS somehow invalidates a foreclosure. In both Davis v. US Bank, Nat. Ass’n, No. 56306, and Volkes v. BAC Home Loans Servicing, LP, No. 57304, the Court rejected the contention that a MERS-generated assignment is insufficient to establish the ownership of a loan. The appellants argued that the assignment was invalid solely because it was generated by MERS and that MERS is a sham or fraud entity. The Court specifically rejected this argument, citing numerous opinions from courts in Nevada and across that nation that have recognized MERS as having a legitimate business purpose.

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Friday, March 09, 2012 6:30 AM
To: Charles Cox
Subject: Circuit holds TILA bars rescission suits filed more than 3 years after consummation

Circuit holds TILA bars rescission suits filed more than 3 years after consummation

· Bryan Cave LLP

· James Goldberg and Leena Rege

· USA

·

· March 6 2012

·
In McOmie-Gray v. Bank of America (9th Cir. Feb. 8, 2012), the Ninth Circuit Court of Appeals held that under the Truth in Lending Act (“TILA”), 15 U.S.C. Section 1601 et seq., “rescission suits must be brought within three years from consummation of the loan, regardless whether notice of rescission is delivered within that three-year period”. It ruled that the three year period for rescission in Section 1635(f) is an absolute limitation on rescission actions and that the one year period for bringing claims under Section 1640(e) applies only to damages actions and does not extend the time to file a claim for rescission even where the borrower has sent the Bank a written notice of rescission within three years of loan signing or “consummation”. It also held that an agreement to toll the time to file a rescission action is ineffective, because Section 1635(f) is a statute of repose.

In McOmie-Gray, the borrower obtained a loan in April 2006. She sent a notice of rescission to the bank in January 2008, well within the three-year period provided in § 1635(f), claiming that the copies of the statutory Notice of Right to Cancel which she had received did not identify the exact date that her right to cancel would expire. The Bank denied her request because it had a completed copy of a Notice of Right to Cancel in its files, but at some point in time agreed to toll her time to file a lawsuit. The borrower filed suit in August 2009, outside the three-year period provided by § 1635(f). The district court granted the Bank’s motion to dismiss on the grounds that every TILA rescission claim is subject to the three-year period in 15 U.S.C. Section 1635(f) and that the period constitutes a statute of repose which cannot be tolled. The borrower opposed the motion on the grounds that sending a notice of intent to rescind the loan within the three years following loan signing satisfied § 1635(f) and automatically effectuated rescission, that the Bank then had twenty days to accept and comply with the demand under § 1635(b), and that under § 1640(e) the borrower had one year thereafter to file an action for rescission.

Prior decisions in the Ninth Circuit had left open the question of whether a rescission claim was barred if the borrower had given notice of rescission, but not filed suit, within the three-year period.

The Ninth Circuit’s decision affirms the district court’s dismissal. It relies in part on the Supreme Court’s decision in Beach v. Ocwen Fed. Bank, 523 U.S. 410 (1998). Beach addressed whether mortgagors, who never sent a notice of rescission to the lender, could nonetheless raise the right of rescission as “an affirmative defense in a collection action brought more than three years after the consummation of the transaction.” Id. at 411-12. Beach held that TILA “permits no federal right to rescind, defensively or otherwise, after the 3-year period of §1635(f) has run”. Id at 419.

The Ninth Circuit’s decision may be persuasive precedent in other Federal Circuits because of its reliance on Beach. It is authored by Judge Rebecca R. Pallmeyer of the Northern District of Illinois, sitting by designation, who had previously issued two opinions suggesting that if the borrower had mailed a rescission notice within three years, a rescission suit filed after three years would be timely.

<h1>

by Cora Currier ProPublica,   Feb. 24, 2012, 4:39 p.m.

A class-action lawsuit in Florida that moved forward this week highlights a little-appreciated aspect of the housing market 2014 the cozy relationship between banks and insurance companies that often results in overpriced home insurance for already struggling borrowers.

As American Banker reported, a federal judge in Miami on Tuesday opened the door to a class action against Wells Fargo. More than 20,000 Florida homeowners can now sue Wells Fargo and an insurance company, QBE, for allegedly overcharging for insurance. More than $50 million in insurance premiums are at issue, according to American Banker.

The suit itself, filed last year, is sealed, but the judge, Robert Scola, laid out the allegations against Wells Fargo. The judge didn’t rule on the case but allowed it to go forward as a class action. In his decision, the judge cited the plaintiffs’ claims that Wells Fargo and QBE “colluded in a scheme to artificially inflate the premiums charged to homeowners.”

The judge also said Wells Fargo has actually threatened to retaliate against homeowners who join the suit.

A spokesman for Wells Fargo said in an emailed statement that “the judge’s recent ruling only addresses the certification of the class in this case and not any of the underlying claims. We disagree with a number of the representations made by the plaintiffs’ attorneys.”

The bank also disputed the judge’s claim that it threatened retaliation for the suit, saying “we made our argument in a purely procedural context in connection with the class certification motion. Wells Fargo has no intention of taking the actions referenced with regard to our customers.”

QBE did not respond to our requests for comment.

The case sheds light on the world of force-placed insurance, an industry that has grown in the years since the housing crisis. Among all the suits and scandals related to the crisis, troubles with force-placed insurance have flown largely under the radar. Here’s some background on the lawsuit and why there might be more of suits to come.

What force-placed insurance is and why it’s controversial

Force-placed insurance is just what it sounds like 2014 insurance you are forced to buy.

This insurance is meant to protect mortgage lenders against damage to homes. If the homeowner doesn’t have insurance on a house, or has let it lapse, most mortgage contracts allow the lender to buy the insurance and pass on the cost to the borrower.

Some homeowners, though, have complained of sudden and excessive penalties, as well as policies that seem to be added unnecessarily 2014 and sometimes retroactively 2014 to their bills. What’s more, the cost of force-placed insurance can be 10 times that of a regular policy, adding to the homeowner’s burden and increasing the chance of default, which is bad for both homeowners and investors in the mortgage market.

Lenders, of course, need to make sure that the asset behind a loan is safe. Force-placed insurance is expensive, the industry argues, because it is high-risk 2014 if you’re the kind of homeowner who doesn’t have any insurance on your property, you’re probably also likelier to default. And because force-placed insurance often replaces lapsed insurance, insurers take on more risk because it has to happen quickly.

But as American Banker started reporting in 2010, problems can arise when banks also make big money off these insurance policies. Bank of America, until recently, owned the company that provided its force-placed insurance. Other banks, including Wells Fargo, contract with insurance companies and get a commission from the policies placed on homes underlying their mortgages.

In some cases, American Banker reported, an insurance company appears to be paying a bank to do nothing except pass along customers. The bank, in turn, has an incentive to force insurance onto its borrowers.

The charges against Wells Fargo

The suit alleges that Wells Fargo and insurer QBE inflated the costs of force-placed insurance policies and that QBE paid commissions to Wells Fargo 2014 commissions the plaintiffs say amounted to kickbacks.

In his approval of the class-action suit, the judge summarized the plaintiffs’ allegations:

American Banker reported that internal Wells Fargo email messages seem to show that some bank employees were uncomfortable with QBE’s high premiums. In court proceedings, Wells Fargo said the pricey policies were justified because of Florida’s vulnerability to hurricanes.

Wells Fargo also argued that borrowers could have avoided the need for force-placed insurance and thus shouldn’t be able to complain about the expensive premiums.

To that, U.S. District Court Judge Scola responded: “That’s like a defense for usury 2026 you are going to have a defense that they live a bad lifestyle which leads them to be more in a position to be taken advantage of …? That makes no sense.”

The case materials were originally public before Wells Fargo got them sealed, citing business confidentiality concerns. American Banker’s review of the case is based on materials that it reviewed before the case was sealed, while the rest is gleaned from Scola’s opinion on the class-action designation.

Fighting a class-action suit

Wells Fargo and QBE didn’t want a class-action designation because they said individual borrowers’ claims would vary too much, an argument that didn’t win over the court.

The judge also wrote that Wells Fargo actually threatened to escalate foreclosure proceedings against homeowners who joined the class-action suit. The bank’s arguments against the class action, he said, “unabashedly set out its threats to retaliate against any homeowner seeking to avoid the alleged excessive and inflated force-placed insurance premiums through this litigation.”

The judge based his conclusion on certain types of borrowers that Wells wanted excluded from a class action, including those who were in default. Scola claimed that for people in default on their mortgages:

Wells Fargo, as we mentioned above, denies that it planned to take these actions.

Not the only ones

It’s not just Wells Fargo that could face litigation. The plaintiffs’ attorneys have said they plan to file similar suits beyond Florida. The New York State Department of Financial Services subpoenaed 31 banks in October, including Wells Fargo, to look into what a spokesman called the “sometimes problematic overlap between banking and insurance.”

Last summer, a class-action suit in Minneapolis won more than $9 million from Chase Home Finance for 40,000 homeowners who claimed Chase forced them to buy unnecessary flood insurance.

There may be new regulations in the works clamping down on force-placed insurance, but so far nothing has been implemented.

In an op-ed published earlier this month, Richard Cordray, director of the new Consumer Financial Protection Bureau, promised “new consumer protections” that would require banks to allow borrowers to purchase their own insurance. This month’s big mortgage settlement, to which Wells Fargo is a party, also promises restrictions and regulations to reduce premiums and force banks to communicate more clearly with homeowners. But it is unclear exactly how the deal’s rules will be enforced or how they fit into the CFPB’s promised regulations. The CFPB did not immediately respond to our requests for comment.

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, March 01, 2012 1:30 PM
To: Charles Cox
Subject: Mortgage Settlement or Mortgage Shakedown?

WSJ article by David Skeel attached. Comments of note:

“The biggest loser is the rule of law.”

Government plaintiffs allege the “banks” “robo-signed” by executives who never checked document details; also “added unnecessary fees such as overpriced insurance.”

Realize, this is NOT related to litigation but rather amounts to LEGISLATION essentially ruling out the “chief objectives of the judicial process [which] are in fact finding and redress.”

As indicated in the article and I agree, the AGs have NOT done any meaningful investigations into these issues. Phil Ting in San Francisco; Jeff Thigpen in North Carolina and John O’Brien as “merely” registrars of deeds found out more on their own than 49 State Attorneys General did in 18 months of supposed investigation and still don’t seem to not know the difference between a servicer and real party in interest.

This whole settlement appears to be yet another entitlement and “stimulus” without having to go to Congress with little money going to homeowners and large sums potentially going to the States themselves. A question seldom asked…where is the money coming from?

I still contend it is a buy-your-way-out-of-jail-free card.

Charles
Charles Wayne Cox – Oregon State Director for the National Homeowners Cooperative
Email: mailto:Charles
Websites: http://www.NHCwest.com; www.BayLiving.com; and www.ForensicLoanAnalyst.com
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240 direct
(541) 610-1931 eFax

Defending or Litigating Foreclosure?
Click Here For More Information

Paralegal; CA Licensed Real Estate Broker; Certified Forensic Loan Analyst. Litigation Support; Mortgage and Real Estate Expert Witness Services.

WSJ 2-21-12 A.pdf

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Friday, March 02, 2012 4:35 PM
To: Charles Cox
Subject: Bank of America is a "raging hurricane of theft and fraud" – And The Countrywide Double Stamp Shows the Problem with Robo Endorsements

http://fthebanks.org/matt-taibbi-on-bank-of-america/ Bank of America is a “raging hurricane of theft and fraud” (yeah, so what else is new!)

Countrywide Double Stamp – Matt Weidner

BOMBSHELL, THE COUNTRYWIDE DOUBLE STAMP SHOWS THE PROBLEM WITH ROBO ENDORSEMENTS!

March 1st, 2012 | Author: Matthew D. Weidner, Esq.

Another in the continuing series on how a Thief Can Steal Your Home.

All across this country, the garbage Countrywide loans are being foreclosed on and Americans thrown into the street, many times based on nothing more than a simple endorsement. To be valid an endorsement must actually be authorized and valid. But far too often, the signatures and purported endorsements are not even challenged…

AND IMPORTANTLY, THE BANKS ARE ARGUING THAT THEY NO PARTY HAS A RIGHT TO CHALLENGE THE VALIDITY OF ENDORSEMENTS!

The argument presented by the banks is that the endorsements do not matter, and that no one can challenge these signatures. By extension, this argument suggests that not even judges could question signatures when presented with obvious forgeries.

The alleged endorsements were highlighted to me by my friend David at Case Clarity

Look closely, it looks like two endorsements, two signatures, correct? Well, no, they’re not actually signatures at all….the “signatures” are just ink stamps. But that’s not what’s most interesting.

At first blush it looks like two separate stamps, but when you compare this stamp to many of the other stamps, they “both” line up perfectly and exactly. Which suggests that the figure above is really made by one singular stamp made to look like two stamps. Now did Meder stamp this? Did Sjolander stamp this? And if neither stamped it, did either stamp it?

Oh, but right, we’re not even allowed to make such inquiry correct?

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Wednesday, February 29, 2012 2:43 PM
To: Charles Cox
Subject: FW: Attorney General Kamala D. Harris Joins Legislative Leaders to Unveil California Homeowner Bill of Rights

Isn’t there ANYONE that can educate these people before they draft this junk! They have no idea what a “CREDITOR” is and continue to cater to the whims of servicers! Speaking of “servicers”…a $25 fee to record a notice of default? Now THAT’S punitive!!!! [NOT!!!] AND since when was the statute of limitations for Fraud reduced from 4 to 1 years requiring an extension; let me see…new legislation giving 90 days’ notice before commencing eviction proceedings (whatever the hell that’s supposed to mean) when there’s already Federal legislation doing what they’re purporting to legislate; $10k CIVIL penalty for robosiging…I guess forgery and recording fraud (both felonies) aren’t worthy of prosecuting (and the fines involved) so they’ll make it a simple civil penalty now?…on and on…ignorance…massive, abject ignorance!!! Never ceases to amaze…

C

Foreclosure process is ‘utterly broken’

February 19th, 2012, 1:00 am ·  · posted by Jeff Collins

inShare7

ARCHIVE   Foreclosure process is ‘utterly broken’ 142 big OC buildings are ‘distressed’ Home closings: Are your experts well trained? Questions remain about Great Park funding No sign of recovery in for-sale sign business New rules would raise mortgage costs Electric cars can require home rewiring Facebook, iPads to change homebuying Does the ‘American Dream’ include renting? Realtors think 20% down is too high

A recent study of San Francisco home foreclosures found widespread irregularities in almost all the home seizures scrutinized. The report, commissioned by San Francisco Assessor-Recorder Phil Ting, was prepared by Aequitas Compliance Solutions Inc. of Newport Beach.

Company partner Lou Pizante conducted the study. He explained its findings …

Us: What did your report show?

Lou: We reviewed about 16% of all foreclosure sales that occurred in San Francisco from 2009 through 2011. The audit shows that 99% of the sampled foreclosures contain at least one irregularity and 84% appear to contain one or more clear violations of law.

Us: What were the key problems identified in your report?

Lou: We looked at six general subject areas, including assignments (which relate to chain of title), notices of default and trustee sale and suspicious activity (like robo-signing). The report, which you can download from the Aequitas website, explains these things in laymen terms. Within each subject area, we looked at a variety of issues.

Two-thirds of the loans had four or more exceptions and more three-quarters of the loans had violations across three or more of the six subject areas. In other words, this was not a case of most of the loans having one irregularity. Most of the loans had many irregularities across different stages of the foreclosure process.

We also compared the MERS database to public records. MERS was created by the mortgage industry as, essentially, an alternative to the public land records system. It is an electronic registry for tracking ownership interests and servicing of mortgage loans. We found that in 58% of the cases the beneficial owner of loan as entered on the trustee’s deed upon sale conflicted with the owner of the loan according to the MERS database.

Us: Weren’t most of these homeowners likely to lose their homes to foreclosure anyway? Why does this matter?

 

From the San Francisco study/Click to enlarge

Lou: That’s a very good point. Many of these homeowners simply overextended themselves and the resulting foreclosure sales were inevitable. So, what’s there to really care about?

What’s at issue here is compliance with California’s laws relating to non-judicial foreclosure. These are statutory requirements that, in many respects, are rather technical.  Why, then, should inadvertent violations provide windfall remedies to reckless borrowers?

First, its important to understand foreclosure in California. Lenders in California rely almost exclusively on the non-judicial foreclosure process, also called statutory foreclosure. This is an expedited process where homes are sold without court approval. Therefore, there is frequently little, if any oversight. Because of this, courts have generally required strict compliance with statutory requirements affording borrower’s due process.

Now, there is plenty of public evidence showing that not all distressed borrowers are reckless deadbeats. We know that some borrowers did not receive fair and accurate disclosures, as required by federal law, explaining the payment and other material terms of their mortgage. Furthermore, the report reveals that a lot of lender’s foreclosing on homeowners don’t appear to own the underlying loans. The fact that homeowners borrowed something, on some terms, from someone should not be enough to rob them of their due process right.

To say most of these borrowers are deadbeats and can be denied their due process rights seems pretty lousy to me. It’s like saying that there might be a falsely accused guy on death row, but—hey—he probably killed someone.

But look, the purpose of this report is not to indict the mortgage industry or bailout borrowers. What’s at stake here is more than merely fairness and homeowner’s due process. Foreclosures impact not only homeowners but also entire communities, housing markets and mortgage-backed securities holders like pension plans. The integrity of California’s record title system is also at stake because the validity of title for subsequent purchasers is dependent on those that precede it.

So addressing this problem is critical to the recovery of the housing market and national economy, and that’s something that everyone has an interest in no matter their political leanings.

Us: Are these problems confined to San Francisco, or do you think the same problems are occurred throughout California?

Lou: The study focused exclusively on San Francisco. However, we are now working with other counties in California requesting similar studies.

My understanding is that lender and servicers practices are essentially the same in San Francisco as elsewhere in the state. And, of course, the same laws apply. So, we’d except to see similar irregularities in other counties, including those hit harder by foreclosures.

Us: How widespread do you think the foreclosure irregularities are in Orange County?

Lou: I cannot speculate as to whether the problems are the same or different. The foreclosing parties are generally the same cast of players and the laws the same, so you’d expect a strong correlation.

Us: What led to such a high rate of irregularities and illegalities in foreclosures?

Lou: It goes back to the origination boom, which was fueled by low interest rates and lubricated by an insatiable securitization market. Lenders’ operational infrastructure couldn’t keep pace with record fundings, and so you had lots of missing and incomplete documentation.

These loans were sold and resold and ultimately packaged into securities. Along the way, the necessary paperwork documenting these loan sales fell through the cracks and, once the market turned, a lot of the sellers of these loans disappeared.

Servicing is a business of razor-thin margins, and these folks had a tough time dealing with record volumes of new and exotic products that didn’t play nice with their systems.

When the party got broken up, the servicers were left to clean up a big mess. Ultimately, all this stuff above made it infeasible to carry out large-scale foreclosures.

That’s why you hear all this stuff about forged or back-dated documents and robo-signing. There are gaps in title that need to be filled. This is also why this is such a big mess to fix. You might have bought a loan but you never got a receipt and now the seller is dead and buried. Its difficult to imagine how the industry can cost-effectively solve these problems ex post facto.

Us:  What’s the key lesson? Are the foreclosure laws antiquated?

Lou: Yeah, that’s it. If there is one lesson to take away from this report it is that, with so many homes being foreclosed and with so little oversight, California’s foreclosure process appears utterly broken.

Remember, these laws are more than 100 years old. The non-judicial foreclosure process was created long before things such as the secondary market and mortgage brokers existed. Back then, you rode your horse to meet with the banker, who you knew on a first name basis… sort of like It’s a Wonderful Life.

Surely the mortgage industry has much work to do in order to correct the weaknesses and deficiencies in its foreclosure practices. But to prevent this from happening again, change needs to come from the legislature. The mortgage industry has since seen remarkable innovation over the past few decades. Considering the extent and consequence of the issues, perhaps it is time for the legislature to be similarly innovative.

Us: How do you think the laws should be changed to catch up with the complex world of mortgage securitization?

Lou: As is often the case, it’s much easier to identify the problem than the solution. I have a lot of thought on this but, quite frankly, they require much explaining and go into some pretty arcane and mundane stuff.

Basically, ensuring clear chains of title and the integrity of California’s record title system are essential to the recovery and stabilization of the state’s housing market. So we need laws and systems in place that achieve these objectives without increasing overall costs to mortgage lenders and society generally.

Smart people will disagree on the best approach. But we should all agree that the status quo is unacceptable.

Learn more about Aequitas HERE!

Read more …

• San Francisco study: Most foreclosures faulty — OCRegister.com
• Study: 84% of foreclosures violated law  – OCRegister.com
• San Francisco study: Most foreclosures faulty — NY Times
• Errors found in 84% of SF mortgages in foreclosure — San Francisco Chronicle

Posted in: Insider Q&A • Aequitas Compliance Solutions Inc. • Lou Pizante • Phil Ting • San Francisco Assessor-Recorder

Related articles

• The San Fransico “Smoking Gun Report” (timothymccandless.wordpress.com)
• Audit Uncovers Extensive Flaws in Foreclosures (copy attached) (timothymccandless.wordpress.com)
• Foreclosure process is ‘utterly broken’ (lansner.ocregister.com)
• Audit Uncovers Extensive Flaws in Foreclosures. (isellerfinance.wordpress.com)
• California Audit Finds Broad Irregularities in Foreclosures – NYTimes.com (fourbluehills.com)
• California Audit Finds Broad Irregularities in Foreclosures – NYTimes.com (lennyesq.wordpress.com)
• California Audit Finds Broad Irregularities in Foreclosures (mercurynews.com)
• California Audit Finds Broad Irregularities in Foreclosures (mercurynews.com)
• NYT: SF audit finds foreclosures full of errors (msnbc.msn.com)
• Errors found in 84% of SF mortgages in foreclosure (sfgate.com)

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Saturday, February 18, 2012 6:55 AM
To: Charles Cox
Subject: The Banking Crisis Represents Systematic Destruction of "Our" Legal System

The Banking Crisis Represents The Destruction of “Our” Legal System

February 18th, 2012 | Author: Matthew D. Weidner, Esq.

From New Deal 2.0, an essay by Bruce Johnson (see below):

Banks are demonstrating that if you have enough money and influence, you’re not expected to follow the same laws as everyone else.

For several years, I have been writing that extreme economic inequality is among the most destructive forces in a society. As inequality grows, it undermines the effective functioning of the economy, the basic tenets of capitalism, and the foundations of democracy.

Unfortunately, the housing crisis and now the housing settlement increasingly look like an example of how these mechanisms work.

One of the central characteristics of highly unequal societies is that two sets of laws develop: One set for the rich and powerful and one set for everyone else. The more unequal societies become, the more easily they accept the unacceptable, and with each unrebuked violation, the powerful actors at the top of the society gain an ever greater sense of entitlement and an ever greater sense that the laws that govern everyone else don’t apply to them. As a result, their behavior becomes increasingly egregious.

I would suggest that the robo-mortgage scandal is a strong indicator that this type of unequal justice is now becoming ever more commonplace in America. Past bank abuses are typically discussed without a sense of outrage. They have, in effect, become a recognized practice of deception with no consequences. Here are three prominent examples from the past few years:

First, the robo-mortgage scandal was discovered. As powerful members of society, the banks effectively decided what laws they wanted to follow and disregarded others. The banks claimed that their violations were technical and harmed no one. Nonetheless, the activities of the banks constituted massive fraud, perjury, and conspiracy. Bank officials have testified in court that they filed as many as 10,000 false affidavits a month. These are effectively undeniable admissions of law-breaking on a massive scale.

It’s a federal crime, punishable by up of five years of imprisonment, to knowingly file a false affidavit with the court. From the perspective of the law, you are guilty of the same perjury when you falsely testify in court or when you submit a false affidavit. In most states, filing false affidavits with the court similarly constitutes a felony offense of perjury.

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, February 16, 2012 5:59 AM
To: Charles Cox
Subject: Audit Uncovers Extensive Flaws in Foreclosures (copy attached)

Audit Uncovers Extensive Flaws in Foreclosures

By GRETCHEN MORGENSON

Published: February 15, 2012

An audit by San Francisco county officials of about 400 recent foreclosures there determined that almost all involved either legal violations or suspicious documentation, according to a report released Wednesday.

Phil Ting, the San Francisco assessor-recorder, found widespread violations or irregularities in files of properties subject to foreclosure sales.

Anecdotal evidence indicating foreclosure abuse has been plentiful since the mortgage boom turned to bust in 2008. But the detailed and comprehensive nature of the San Francisco findings suggest how pervasive foreclosure irregularities may be across the nation.

The improprieties range from the basic — a failure to warn borrowers that they were in default on their loans as required by law — to the arcane. For example, transfers of many loans in the foreclosure files were made by entities that had no right to assign them and institutions took back properties in auctions even though they had not proved ownership.

Commissioned by Phil Ting, the San Francisco assessor-recorder, the report examined files of properties subject to foreclosure sales in the county from January 2009 to November 2011. About 84 percent of the files contained what appear to be clear violations of law, it said, and fully two-thirds had at least four violations or irregularities.

Kathleen Engel, a professor at Suffolk University Law School in Boston said: “If there were any lingering doubts about whether the problems with loan documents in foreclosures were isolated, this study puts the question to rest.”

The report comes just days after the $26 billion settlement over foreclosure improprieties between five major banks and 49 state attorneys general, including California’s. Among other things, that settlement requires participating banks to reduce mortgage amounts outstanding on a wide array of loans and provide $1.5 billion in reparations for borrowers who were improperly removed from their homes.

But the precise terms of the states’ deal have not yet been disclosed. As the San Francisco analysis points out, “the settlement does not resolve most of the issues this report identifies nor immunizes lenders and servicers from a host of potential liabilities.” For example, it is a felony to knowingly file false documents with any public office in California.

In an interview late Tuesday, Mr. Ting said he would forward his findings and foreclosure files to the attorney general’s office and to local law enforcement officials. Kamala D. Harris, the California attorney general, announced a joint investigation into foreclosure abuses last December with the Nevada attorney general, Catherine Cortez Masto. The joint investigation spans both civil and criminal matters.

The depth of the problem raises questions about whether at least some foreclosures should be considered void, Mr. Ting said. “We’re not saying that every consumer should not have been foreclosed on or every lender is a bad actor, but there are significant and troubling issues,” he said.

California has been among the states hurt the most by the mortgage crisis. Because its laws, like those of 29 other states, do not require a judge to oversee foreclosures, the conduct of banks in the process is rarely scrutinized. Mr. Ting said his report was the first rigorous analysis of foreclosure improprieties in California and that it cast doubt on the validity of almost every foreclosure it examined.

“Clearly, we need to set up a process where lenders are following every part of the law,” Mr. Ting said in the interview. “It is very apparent that the system is broken from many different vantage points.”

The report, which was compiled by Aequitas Compliance Solutions, a mortgage regulatory compliance firm, did not identify specific banks involved in the irregularities. But among the legal violations uncovered in the analysis were cases where the loan servicer did not provide borrowers with a notice of default before beginning the eviction process; 8 percent of the audited foreclosures had that basic defect.

In a significant number of cases — 85 percent — documents recording the transfer of a defaulted property to a new trustee were not filed properly or on time, the report found. And in 45 percent of the foreclosures, properties were sold at auction to entities improperly claiming to be the beneficiary of the deeds of trust. In other words, the report said, “a ‘stranger’ to the deed of trust,” gained ownership of the property; as a result, the sale may be invalid, it said.

In 6 percent of cases, the same deed of trust to a property was assigned to two or more different entities, raising questions about which of them actually had the right to foreclose. Many of the foreclosures that were scrutinized showed gaps in the chain of title, the report said, indicating that written transfers from the original owner to the entity currently claiming to own the deed of trust have disappeared.

Banks involved in buying and selling foreclosed properties appear to be aware of potential problems if gaps in the chain of title cloud a subsequent buyer’s ownership of the home. Lou Pizante, a partner at Aequitas who worked on the audit, pointed to documents that banks now require buyers to sign holding the institution harmless if questions arise about the validity of the foreclosure sale.

The audit also raises serious questions about the accuracy of information recorded in the Mortgage Electronic Registry System, or MERS, which was set up in 1995 by Fannie Mae and Freddie Mac and major lenders. The report found that 58 percent of loans listed in the MERS database showed different owners than were reflected in other public documents like those filed with the county recorder’s office.

The report contradicted the contentions of many banks that foreclosure improprieties did little harm because the borrowers were behind on their mortgages and should have been evicted anyway. “We can deduce from the public evidence,” the report noted, “that there are indeed legitimate victims in the mortgage crisis. Whether these homeowners are systematically being deprived of legal safeguards and due process rights is an important question.”

aequitas_sf_report.pdf

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, February 16, 2012 5:59 AM
To: Charles Cox
Subject: Foreclosure Fraud by Robo-Signing Lawyers – Our Leaders Wish You’d Just Forget About It

Foreclosure Fraud by Robo-Signing Lawyers – Our Leaders Wish You’d Just Forget About It

by Chip Parker, Jacksonville Bankruptcy Attorney

Obama Cares This Much About Homeowners

Much has been written over the last week about what President Obama calls a “landmark” foreclosure fraud settlement between 49 Attorneys General and the five largest banks. With the lone exception of the National Association of Consumer Advocates, champions for Middle Class consumers have roundly criticized the agreement as a sweetheart deal for the banks. In response, supporters of the settlement are quick to point out that it settles the “narrow” issue of “robo-signing.”

What is robo-signing? After all, it doesn’t sound as bad as “fraud and corruption.”

Robo-signing and it’s sibling, “surrogate signing,” is the systematic, intentional misrepresentation or fabrication of evidence in every court of every county in every state of the United States. It is the filing of forged documents critical to a bank’s case in nearly every foreclosure in our country. It’s bad enough that the banks are perpetrating fraud, but what’s worse is that their lawyers are knowing accomplices to the fraud.

Lawyers are commonly referred to as “Officers of the Court.” That’s because lawyers take an oath upon admission to the profession to uphold the law and the integrity of the judicial process. We are the gatekeepers of justice. When we lie to judges, the integrity of our judicial system suffers irreparable harm.

Here is but one example of the criminal conduct that is being forgiven by the AG settlement:

In Florida, only the owner of the mortgage note and mortgage can file a foreclosure against a homeowner. Usually, the plaintiff in a foreclosure case is someone other than the originator of the loan because the original note holder usually sells the loan. The document evidencing that transfer of ownership is known as the Assignment of Mortgage, which is recorded in the official records of the county where the home is located. The Assignment of Mortgage is a critical piece of evidence in a foreclosure because it establishes the plaintiff’s “standing” to foreclose.

Example of a robo-signing lawyer

Here is a screenshot of four signatures of one “Assistant Secretary” of Mortgage Electronic Registration Systems as “nominee” for various mortgage originators. Clearly, all four signatures do not look alike, even though this is allegedly the signature of the same person. But this person isn’t just a person – she’s a lawyer. And she’s not just any lawyer. She’s the litigation managing attorney at The Law Offices of Marshall C. Watson, P.A., one of the largest foreclosure law firms in the State of Florida, and I spoke with her just two days ago!

The fraud being perpetrated goes like this: The plaintiff needs the Assignment of Mortgage from the originator of the loan to the plaintiff to create “standing.” So, the plaintiff’s own lawyer creates the assignment, allegedly transferring an interest in land, and signs it herself. The lawyer then actually records this fabricated document in the county official records and also files it in the actual foreclosure case.

As the litigation managing attorney for Marshall Watson, this lawyer appears regularly before judges throughout the state, and these judges rely upon her honesty in all her dealings with the court. When a lawyer lies in court, it is worse than when a non-lawyer lies because we are not just sworn to tell the truth but to uphold the integrity of the court.

But what about a chief judge who is in cahoots with this foreclosure firm? Well, one of Marshall Watson’s newer lawyers is the former Chief Judge of Broward County, Victor Tobin, who, just before joining the firm, designed Broward’s notorious “Rocket Docket” foreclosure court that radically tilts the judicial process in Marshall Watson’s favor.

Someone really should tell Florida Attorney General Pam Bondi about this lawyer. Oh wait. She already knows. Florida’s Attorney General has had an ongoing investigation of Marshall Watson for years. The investigation was started by Bondi’s predecessor, Bill McCollum, but the moment she took office, she was more focused on shutting down such investigations, starting with her firing of the bulldog attorneys assigned to foreclosure fraud. In Marshall Watson’s case, they settled for $2M, but nobody was prosecuted for any crimes.

Well, even if Attorney General Pam Bondi ignores fraud on the court, surely The Florida Bar is investigating this lawyer because The Florida Bar HAS TO take robo-signing by lawyers seriously. But the Florida Bar doesn’t investigate robo-signers. To the contrary, The Florida Bar HIRES THEM to oversee attorney ethics investigations (The Florida Bar has in the past and will probably again investigate ME for speaking the truth). I AM NOT MAKING THIS UP!

Well, at least Floridians have our elected state representatives to protect homeowner rights in the wake of this massive fraud. Don’t look now, but a new Florida House of Representatives Bill HB213 is an “expedited foreclosure” bill that actually MAKES FRAUD EASIER for the banks by accelerating the foreclosure process. This bill has already made it out of committee with a 12 – 4 passing vote. Stay tuned for more on this selling out by our elected legislators.

If you are a homeowner, who is on your side? The President of the United States? The United States Congress? Your Attorney General? Your State Legislator? Your local Bar?

It’s getting harder to tell, but the signs aren’t good.

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Monday, February 13, 2012 10:20 AM
To: Charles Cox
Subject: What Goes to the Banks Stays With the Banks

What Goes to the Banks Stays With the Banks

Even if the Payment was on the Debt owned by Another

There have been dozens of deals with law enforcement and regulatory agencies. There have been thousands of settlements with individual homeowners sealed under confidentiality. Why do they not work for everyone?

The answer is obvious — borrowers don’t count. And the reason they don’t count is the uninformed view that borrowers took the loans and should repay them — even if the loans are NOT in default, are paid off in full to creditors, and the claimants who keep getting money from all sides and from all directions without any demand for accounting.

It is the policy of this country that the full brunt of the cost of the mortgage crisis should be borne by borrowers. We are imposing an ideology over the facts, ignoring the absurdity of the consequences, and compounding both past evil and greasing the tracks for the banks to serve as the collection point for payments covering losses that never occurred (to the banks).

These payments include taxpayer direct bailouts (Bush’s TARP), indirect bailouts (Bush-Obama public-private Maiden Lane deals), direct private payments from servicers (while declaring non-payment from the borrower), direct private payments from insurers who were bailed out using taxpayer dollars, direct private payments from credit default swap counter parties who were funded by Taxpayer bailouts from the U.S. treasury and foreign treasuries, and indirect credits from other exotic credit enhancements.

THAT MAKES 6 distinct sources of payment received by the banks IN ADDITION TO THE DIRECT PAYMENTS FROM BORROWERS AND INDIRECT PAYMENTS FROM BORROWERS WHO GAVE UP TITLE AND POSSESSION TO HOMES ON WHICH THE CREDITOR WAS PAID IN FULL AND THERE WAS NO DEFAULT.

Even Borrowers can’t get their brains around the possibility that they accepted a loan that was paid off using their tax dollars and financial relationships enabled by the ignorance of both the creditor investor who actually loaned the money and the ignorance of the Buyer.

In all cases the investors are sitting with the alleged loss due to so-called defaulted mortgages. In no case have the banks loaned money in any securitized loan. In no case have the banks paid any money to buy the loans. In all cases the risk of loss was left with the creditor investor. In all cases, the Banks collected the payments, the bailouts, the insurance proceeds, the CDS proceeds etc. In no case have the banks even admitted the receipt of more than $17 trillion on defaults that at most were valued under $3 trillion. In no case have the banks been required to provide a full and fair accounting.

Instead, the banks and servicers have completely controlled the narrative portraying borrowers as deadbeats wanting to get out of a valid debt when what these brewers want is a modification based upon realistic numbers in a fair Market on a fair playing field — one which recognizes that the inflated appraisals of yesteryear were the responsibility of the banks that ordered those appraisals with express instructions as to what value must be attached to the property if the apprised ever wanted to work again as an appraiser.

What goes to the banks, stays with the banks.

There are rarely payments of more than a pittance paid to the creditors from their agent bankers.

The banks withhold money received because (a) they mean to keep it and (b) they mean to declare a non-existent default in order to create the appearance on an economic reality in which foreclosure is proper.

Add to that the "credit bid" the banks submit in lieu of cash payment at the bogus foreclosure sales, and you end up with the banks taking all of the money from investors and homeowners and all of the property from the homeowners whose debt has long since been paid.

This validation of economic crimes worthy of life sentences on Wall Street. Instead, we continue the attack on the middle class and poor thus defiling our own reputation and undermining the nation’s ability to recover from what could have been a temporary debasement of our currency and prospects.

It is axiomatically true that no nation has survived severe income inequality — because for wealth inequality to get that extreme the freedoms in the marketplace must be replaced by bullies. The nation of laws that keep a society intact is replaced by the law of men. Thus is born both the new Aristocracy and the new seeds of social revolution.

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Friday, February 10, 2012 1:39 PM
To: Charles Cox
Subject: American Banker | Other sources who spoke with American Banker raised doubts that everything is yet in place. A person familiar with the mortgage servicing pact says that a settlement term sheet does not yet exist.

Missing Settlement Document Raises Doubts on $25B Deal

By Jeff Horwitz and Kate Davidson

FEB 10, 2012 1:07pm ET

More than a day after the announcement of a mammoth national mortgage servicing settlement, the actual terms of the deal still aren’t public. The website created for the national settlement lists the document as "coming soon."

That’s because a fully authorized, legally binding deal has not been inked yet.

The implication of this is hard to say. Spokespersons for both the Iowa attorney general’s office and the Department of Justice both told American Banker that the actual settlement will not be made public until it is submitted to a court. A representative for the North Carolina attorney general downplayed the significance of the document’s non-final status, saying that the terms were already fixed.

"Once the documents are finalized, they’ll be posted to nationalmortgagesettlement.com," the representative said in an email to American Banker.

Other sources who spoke with American Banker raised doubts that everything is yet in place. A person familiar with the mortgage servicing pact says that a settlement term sheet does not yet exist. Instead, there are a series of nearly-complete documents that will be attached to a consent judgment eventually filed with the court. That truly final version will include things such as servicing standards, consumer relief options, legal releases, and enforcement terms. There will likely be separate state and a federal versions of the release.

Some who talked to American Banker said that the political pressure to announce the settlement drove the timing, in effect putting the press release cart in front of the settlement horse.

Whatever the reason for the document’s continued non-appearance, the lack of a public final settlement is already the cause for disgruntlement among those who closely follow the banking industry. Quite simply, the actual terms of a settlement matter.

"The devil’s in the details," says Ron Glancz, chairman of law firm Venable LLP’s Financial Services Group. "Until you see the document you’re never quite sure what your rights are."

"It’s frustrating," agrees Stern Agee analyst John Nadel. "But it’s not unlike anything else that’s been going on in financial reform generally, is it?"

Should the settlement still have loose strings, yesterday’s frenzy over the completion of the settlement may have been premature. The announced deal launched a countless press releases and wall to wall news coverage. But few news outlets asked for the document, and those that did (including American Banker) have been unsuccessful.

"It is hard for me to believe that they would have gone public in the way that they did if they didn’t have it all worked out. But it is unusual that we don’t have a copy of the settlement yet," says Diane Thompson, an attorney for the National Consumer Law Center.

American Banker asked The Department of Justice, the Department of Housing and Urban Development, and the offices of Attorneys General in Iowa, North Carolina and Colorado for a copy of the settlement last night. Only Iowa, North Carolina and the Department of Justice have responded, saying that the document would not be available until it is filed with the court on a yet-undetermined date.

And there is plenty more still to be worked out under all circumstances.

"Even once we get to the final terms, the servicers we’re told are going to be allowed to develop their own plans," says NCLC’s Thompson. "They’re going to have three months to develop those from when the settlement is approved by the court. We are a long way in lots of ways from being able to kick the tires."

© 2012 American Banker and SourceMedia, Inc. All Rights Reserved. SourceMedia is an Investcorp company. Use, duplication, or sale of this service, or data contained herein, except as described in the Subscription Agreement, is strictly prohibited.

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, February 09, 2012 6:44 AM
To: Charles Cox
Subject: Attorney General Kamala D. Harris Secures $18 Billion California Commitment for Struggling Homeowners – Another sell out!

Sold out again!!! I knew it. She’s right in there with Governor Moonbeam and his $8.4 billion settlement with Countrywide that helped him get elected that no one collected on…disgusting but typical and not unexpected. She’s obviously been to the “talk out of both sides of your mouth” school of politics.

Related articles

• Winners, Losers: $25B Foreclosure Settlement (abcnews.go.com)
• The Harris Claim: Side Deals and Numbers (news.firedoglake.com)
• California To See Bulk Of Landmark Foreclosure Settlement (sanfrancisco.cbslocal.com)
• Kamala Harris, black homeowners could benefit from foreclosure deal (thegrio.com)
• California joins robo-signing settlement (lansner.ocregister.com)
• Feds and Banks Reached $25B Foreclosure Abuse Deal (lilynyland.wordpress.com)

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, February 09, 2012 6:48 AM
To: Charles Cox
Subject: The 50 State AG Sellout- The American People Sold Out To The Banks – I agree with Matt!

The 50 State AG Sellout- The American People Sold Out To The Banks

February 9th, 2012 | Author: Matthew D. Weidner, Esq.

Is Canada accepting applications? How Bout Mexico? China? This place is toast. A white collar criminal corprotacracy that makes us all slaves to a corporate machine that will not be slowed down and certainly will not stop.

I find the news that attorneys general from 49 states will sign a settlement with the banks most offensive. I’m sorry, I thought this was a government Of The People. I thought we had a say in things….I’m certain I read that somewhere. But that’s an old dream. Today, the criminals negotiate directly with the prosecutors…such as they are and we just sit back and wait for their pronouncement, like some oracles on high.

It’s a sick and despicable state of affairs, our national descent into hell is only hastened. Not much you can do now…the fix is in. They all own us. There are no leaders, only minions of the evil machine….

Keep in mind, it’s not just everyday Americans that are hosed by this deal, it’s investors who are being hosed to pay for this garbage. It sets up a good old fashioned taking of private property….scary huh?

Well, hopefully the big, well-funded investors will stand up and fight this insanity…because the little guy has no seat at the table and won’t stand a chance of fighting back…..

Top 12 reasons to hate this deal: http://www.nakedcapitalism.com/2012/02/the-top-twelve-reasons-why-you-should-hate-the-mortgage-settlement.html

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, February 09, 2012 9:11 AM
To: Charles Cox
Subject: Robo-Deal: The Price of Crime – Neil Garfield Weighs in…

Robo-Deal: The Price of Crime

Posted on February 9, 2012 by Neil Garfield

” The biggest mistake being made in the settlement is that investors are being insulted. They won’t return to the same marketplace and invest in similar offerings in the future. This puts a permanent damper on credit markets and liquidity. Investors have no reason to trust a society that ratifies criminal fraud. Investors have a high tolerance for risk, but zero tolerance for corruption. The net effect will be investments going anywhere but the credit markets based on Wall Street, which means that fund managers are going to perceive that their only safe move is to go to a more stable environment in which crime is punished and fraud isn’t tolerated.” — Neil F Garfield, livinglies.me

EDITOR’S COMMENT AND ANALYSIS: If you steal a little money you go to jail. If you steal a lot you get to keep it. That seems to be the net impact of the multi-state settlement. Yves Smith (see below) and Adam Levitin are among many who decry this settlement and I agree with their reasons, but I don’t agree that this is the end of this “theater.”

It is probable that world class criminals will escape prosecution and it is certainly a bad precedent to put a price — $2,000 — on committing forgery, where the loss is in the hundreds of thousands of dollars. The driving theme behind the settlement is to get this episode behind us and so, like the tobacco settlement, this new deal is intended to start us on the path of clearing out the foreclosure problem — but unlike the tobacco settlement in which people were successfully encouraged to stop smoking, this settlement is based solidly on continuing false and fraudulent foreclosures on debts that have been paid if you apply the third party payments.

Those foreclosures cannot continue without continuing the fraud. This isn’t a paperwork problem — it is an economic one in which the real parties in interest have been left out.

Yet the theater is far from over because the title issues and the individual causes of action — for those homeowners who want to pursue them — still exist, and criminal prosecutions — for those prosecutors who won’t be stopped will also continue. There is no avoiding the realization that the very banks who are parties to this settlement are not and never were parties to the loans. They never owned them and they never bought them.

Thus any document signed by these strangers to the transaction is no more than a wild deed that cannot support a chain of title. If this issue is not addressed head-on, who is going to buy anything or lend anything in a market where a growing number of supposedly ex-homeowners successfully overturn foreclosures and regain title and possession of their properties? It isn’t the number of people who succeed in this endeavor that matters — it is that the risk exists that it could happen on any property.

WHY ROBO? Take a step back and look at this picture. The Banks are settling claims for wrongful foreclosure but the wrongful foreclosure is being left intact. The obvious title problems are left intact like a disease on a rotting corpse. The question of why false declarations in false documents were used is being glossed over as though it doesn’t really matter why they did it. Isn’t anyone curious why banks would resort to widespread use of forged documents with false declarations contained in them?

This issue won’t go away. If there was a cover-up, what were they attempting to cover up? For me the answer is clear — (a) the loans contain numerous fatal defects that eviscerate the debt mortgage securing the debt and (b) that there was no right or reason to foreclose except that the banks and servicers saw an opportunity to make even more money by taking the homes after they had already taken the investors and the homeowners to the cleaners.

The bottom line is (a) that there were fatal defects in both the documentation for the origination of the loan and the documentation for the origination of the sale of mortgage bonds to investors. This was intentional, so that the banks could do exactly what they are now doing, pretending on a grand scale to be the creditors when in fact the real creditors are being left out in the cold. And (b) there remain fatal defects in both the so-called mortgages and the foreclosure process as it has progressed thus far. The only settlement that counts, therefore, is one that stops the false foreclosures by strangers to the deal on loans that are not in default and that are not secured by a perfected mortgage lien.

In the end run, how much more the banks will be required to fork over will depend upon you and others who read this blog. If you call it quits, then the most you will see if in fact anyone sees it, is $2,000 for losing a home you should not have lost and being tricked into a loan that should have been far different in both amount and terms. Those who have not yet been foreclosed are not directly affected by the settlement. So assuming that the banks and servicers persist in pursuing foreclosures in which they have no interest other than greed, nothing we have so far will change anything.

Those who press on will see a benefit from their efforts although I concede that the turmoil of litigation is daunting at the very least. The prospect of overturning foreclosures and evictions that were based upon false declarations in false documents by banks and servicers who had no privity with the homeowner remains a viable and even an enhanced option. How Judges will react to the news of indictment for criminal activity and settlement with law enforcement officials is anyone’s guess. The added factor that has not been addressed is that most of the foreclosed loans were not in actual default.

In the final analysis, the crisis in title chains is not being addressed at all and there is a lot of work to do to clear it up one way or another. But one thing is certain: continued false foreclosures is not the path of recovery.

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Thursday, February 09, 2012 2:09 PM
To: Charles Cox
Subject: Attacking Standing in Federal / Bankruptcy Court – Max Gardner Newsletter Posting

Attacking Standing in Federal / Bankruptcy Court

By Tiffany Sanders on February 9, 2012

It is apodictic there can be no cause of action to foreclose a mortgage unless we know where the paper is and that it actually represents something. There is much “sand in the gears” of our property transfer system in these times. However, we cannot bend the rules. A person seeking to enforce an instrument conveying an interest in real property must demonstrate he has directly or indirectly acquired ownership of the instrument. – Max Gardner

Robin Miller has compiled an extensive bibliography on standing issues for us, and we’ll be sharing the case citations she has aggregated in a series of articles over the next several newsletters. Today, we’ll start with the basics: standing in federal court generally and bankruptcy court specifically. Later in the series, we’ll look at state court standing decisions, cases relating to MERS, right to enforce the note and more.

Standing in Federal Court – the Basics

Standing is a threshold issue in every federal case and cannot be waived; if the litigant does not have standing, the court has no power to hear the case, even if no objection has been raised. Unfortunately, not all courts exercise that affirmative duty, so it’s up to us as attorneys for the debtor/defendant to ensure that claimants without standing don’t slip through. The cases below establish those basic principles.

Sprint Communications Co. v. APCC Services, Inc., 554 U.S. 269 (2008): Assignee to claim must hold legal title at the time that it is asserted in action.

Elk Grove Unified School District v. Newdow, 542 U.S. 1 (2004): Federal court can only exercise jurisdiction when litigant meets both constitutional and prudential standing requirements.

Warth v. Seldin, 422 U.S. 490 (1975): Standing is a threshold question in every federal case determining the power of the court to entertain the suit.

St. Paul Fire and Marine Insurance Co. v. PepsiCo, Inc., 884 F. 2d 688 (2nd Cir. 1989): Court has independent duty to examine standing.

Barhold v. Rodriguez, 863 F.2d 233 (2nd Cir. 1988): Parties cannot consent to waive standing.

Constitutional and Prudential Standing in Bankruptcy Courts

Numerous U.S. Bankruptcy Court rulings have reaffirmed the general rule that federal court jurisdiction requires that the litigant have both Constitutional and prudential standing. That requirement and what exactly is required to satisfy the standard is elaborated upon in:

In re Jackson, 451 B.R. 24 (Bankr. E.D. Cal., June 6, 2011): For a federal court to have jurisdiction, the proponent of a matter must have both constitutional standing, which requires an injury fairly traceable to the defendant’s allegedly unlawful conduct and likely to be redressed by the requested relief, and prudential standing.

In re Veal, 450 B.R. 897 (9th Cir. B.A.P., June 10, 2011): A federal court may exercise jurisdiction over a litigant only when that litigant meets constitutional and prudential standing requirements; constitutional standing requires an injury in fact, which is caused by or fairly traceable to some conduct or some statutory prohibition, and which the requested relief will likely redress; prudential standing embodies judicially self-imposed limits on the exercise of federal jurisdiction; here, Wells Fargo did not establish standing to seek relief from stay, as it did not show that it or its agent had actual possession of the note, so that it could not establish that it was a “person entitled to enforce” the note under UCC § 3-301.

In re Burnett, 450 B.R. 589 (Bankr. W.D. Va., April 28, 2011): In order to establish a colorable claim, a movant for relief from stay must satisfy the constitutional limitations on federal court jurisdiction and prudential limitations on its exercise.

In re Hill, 2009 WL 1956174 (Bankr. D.Ariz., July 6, 2009): In addition to the procedural “real party in interest” requirements of Rule 17, a litigant must also have standing to bring a motion; a litigant must have both constitutional standing and prudential standing for a federal court to have jurisdiction to hear the case.

Party in Interest Issues in Bankruptcy Courts

In re Wilhelm, 407 B.R. 392 (Bankr. D. Idaho, July 7, 2009): To obtain stay relief, a movant must have standing and be the real party in interest under Federal Rule of Civil Procedure 17.

Standing of a Servicer

In re Alcide, 450 B.R. 526 (Bankr. E.D. Pa., May 27, 2011): To establish its status as a party in interest entitled to seek relief from the automatic stay, a mortgage servicer must demonstrate that (1) the initiation of a stay relief motion is within the scope of authority delegated to the servicer by its principal and; and (2) the principal itself is a party in interest (i.e., the principal is a party with the right to enforce the mortgage).

In re Gulley, 436 B.R. 878 (Bankr. N.D.Tex., August 23, 2010): A mortgage loan servicer is considered a creditor with standing to file a proof of claim by virtue of its pecuniary interest in collecting payments under the terms of the note.

In re Jacobson, 402 B.R. 359 (Bankr. W.D. Wash., March 6, 2009): Even if a servicer or agent has authority to bring a motion for relief from stay on behalf of the holder, it is the holder, rather than the servicer, that must be the moving party, and so identified in the papers and in the electronic docketing done by the moving party’s counsel.

Possession of the Note

In re Escobar, 457 B.R. 229 (Bankr. E.D. N.Y., August 22, 2011): Where the stay relief movant claims rights as a secured creditor by virtue of an assignment of rights to a promissory note secured by a lien against real property, it must provide satisfactory proof of its status as the owner or holder of the note; here, the movants had met this burden of proof through their uncontroverted affidavit testimony that they were holders of the notes by virtue of possession of the original notes executed with endorsements in blank.

In re Veal, 450 B.R. 897 (9th Cir. B.A.P., June 10, 2011): (See Constitutional and Prudential Standing in Bankruptcy Courts)

In re Banks, 457 B.R. 9 (8th Cir. B.A.P., Oct. 11, 2011): The bankruptcy court erred in holding that a creditor possessed the right to enforce a note endorsed in blank where the creditor did not establish that it was in possession of the note.

Date of Possession

In re Ruest, Case No. 08-10512, Adv. Proc. No. 09-1035 (Bankr. D. Vt., August 23, 2011): Even though it was undisputed that loan servicer was in possession of the note and the note was endorsed in blank, the date that the bank came into possession of the note was a genuine issue of material fact sufficient to deny motion for summary judgment.

In re Parker, 445 B.R. 301 (Bankr. D.Vt., March 18, 2011): The creditor needed to show that it was the holder of the note on the date of the debtor’s bankruptcy petition, and, since the endorsement was not dated, the court would hold a hearing to receive evidence on the issue.

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Tuesday, February 07, 2012 8:56 AM
To: Charles Cox
Subject: Your AG Needs Your Opinion on the No-Investigation-Slap-on-the-Wrist “Settlement” – Posted by Beth Findsen

Your AG Needs Your Opinion on the No-Investigation-Slap-on-the-Wrist “Settlement”

February 6, 2012

So the persistent buzz is that the AGs are close to a deal, despite the resistance of various AGs of the braver ilk, California and Nevada come to mind. I vote that we all write to Arizona AG Tom Horne and urge him to show the courage of Nevada and hold out until investigations are complete (or even begun) and to insist that there be no waivers of criminal liability or other blatant pandering.

For Abigail Field on the “settlement,” read No, the Latest Bailed-Out-Bank Giveaway Won’t Help Housing

On another note, there was this article in the Awl, critiquing a recent New York magazine article:

Oh dear, here we go again: “Wall Street is a meritocracy, for the most part,” an irate but of course unnamed onetime Citigroup executive confides to junior father confessor Gabriel Sherman in this week’s hallucinatory New York magazine cover story, “The Emasculation of Wall Street.” “If someone has a bonus, it’s because they’ve created value for their institution.”

In the jumpy, suggestible universe of Gabe Sherman, Wall Street sleuth, things really are that simple: The beleaguered financial overclass creates value, in a rationally ordered system of maximally awarded talent. And the clueless public sector, intoxicated on post-meltdown regulatory prerogative, meddles with the primal forces of nature, skews executive compensation downward, panders to the blurry “populist” agenda of the Occupy Wall Street Crowd, generally foments market uncertainty and other forms of intolerable chaos so that presto, before you know it, we have “The End of Wall Street As They Knew It.”

In other words: To your crying towels, bankers! Correspondent Sherman is on the scene, and no howling distortion of recent financial history you care to offer is too outlandish for him to faithfully record! After duly huddling with a couple of dozen financial titans, our reporter has arrived at a chilling verdict: “what emerged is a picture of an industry afflicted by a crisis it would not be flip to call existential.”

Perhaps not—but what is exceedingly flip is brother Sherman’s account of the origins of the crisis.

Sure, there was that awkward business that sent the global finance sector to the brink of ruin, plus a devastating tsunami in Japan and whatnot—but the true culprit sending Wall Street titans back into their bedrooms to listen to Interpol on auto-repeat and cut themselves is of course the specter of government regulation. The Dodd-Frank financial reform act, a largely toothless measure lousy with loopholes and lobbying dosh, becomes in the alternate universe of Adam Moss’s New York magazine a rash bid to expropriate the expropriators. Even though the full provisions of the already anemic bill don’t go into effect until 2016, the very thought of a somewhat straitened financial playing field so terrifies Wall Street’s stout corridor of wealth creators that, well, they’re bidding farewell to the most valuable commodity of all—their big swinging dicks. “The government has strangled the financial system,” Dick Bove, an especially excitable and frequently mistaken bank analyst, tells Sherman. “We’ve basically castrated these companies. They can’t borrow as much as they used to borrow.”

You see, by force of the Volcker rule—a watered-down version of the central Glass-Steagall protections separating out commercial and investment banking that were disastrously repealed in 1999—Wall Street is re-thinking everything, from the scale of its year-end bonuses to its “core value to the economy.” And Bove, for one, preaches that all this doom-and-gloom thinking can’t help but be self-fulfilling: “These are sweeping secular changes taking place that won’t just impact the guys who won’t get their bonuses this year. We’ve made a decision as a nation to shrink the growth of the financial system under the theory that it won’t impact the growth of the nation’s economy.” Another unnamed informant tells Sherman that the financial industry is gearing up for a state of near permanent pay-austerity at the mere thought of the Volcker rule, which doesn’t kick in officially until July: “If you landed on Earth from Mars and looked at the banks, you’d see that these are institutions that need to build up capital and they’re becoming lower-margin businesses. So that means it will be hard, nearly impossible, to sustain their size and compensation structure.”

Never mind that this diagnosis is diametrically opposed to the Bove-ian school of market alarmism, which holds that banks are being starved of desperately needed leverage and credit; this unnamed fearmonger sees them in a frenzy to raise capital, and one thing the Volcker rule undeniably seeks to achieve is minimal capital requirements to prevent speculative lending from veering once more into toxic chaos.

No, for Sherman, all that’s needed to stoke the proper mood of Misean panic is to rouse the specter of frightened bankers, and a few quick-and-dirty quarterly profit reports.

From the moment Dodd-Frank passed, the banks’ financial results have tended to slide downward, in significant part because of measures taken in anticipation of its future effect. Since July 2010, Bank of America nosed down 42 percent, Morgan Stanley fell 25 percent, Goldman fell 21 percent, and Citigroup fell 16—in a period when the Dow rose 25 percent.

Other economic journalists might conclude that this downturn was a set of long-overdue market corrections, and given the broader turn around in the actual manufacturing economy, by no means an indication of worsening conditions—for investors and workers alike. Some radical others might even suggest that the shredded headcounts at the financial firms played a part in their own downturn in revenue. But while from his evidently privileged vantage in the driver’s seat of the Doc’s Time Machine, Sherman can divine all sorts of mischief arising from the yet-to-be-implemented provisions of Dodd-Frank, it does bear reminding that since 2010, BofA has been forced to eat a sizable portion of the toxic mortgage debt it acquired amid its spectacularly ill-advised purchase of Countrywide; Morgan has suffered tremendous losses in its Japanese operations and has, like most banks, been spooked by its exposure to the Euro-debt crisis (funnily enough, the firm’s US-based investment-banking operations—ie, the shop most directly affected by the dread Volcker rule, has booked profits amid all the tumult abroad); much the same general picture holds at Goldman, which as you may recall, has had more than its share of legal contretemps thrown into the bargain . As for Citigroup—the company whose very grotesque merged existence was the deregulatory excuse for repealing Glass Steagall—it’s been a basket case for so very long that a 16 percent loss in profits over the past two years seems cause for celebration, Volcker Rule or no Volcker Rule.

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Tuesday, February 07, 2012 10:43 AM
To: Charles Cox
Subject: Price of Signature of Homeowners Rises to Avoid "Title Crash"

Price of Signature of Homeowners Rises to Avoid “Title Crash”

Posted on February 7, 2012 by Neil Garfield

EDITOR’S ANALYSIS: The race is on. Homeowners are sitting on an asset — their signature — that has gone up in value 35X thus far from $1,000 to $35,000. The REAL STORY is that the Banks and servicers need to find a way to get the signatures of homeowners through any means possible, including payment. The amount of the payment is rising and will continue to rise like the last holdout of a property owner on a parcel where some big developer wants to build a giant stadium. People are starting to realize that the longer you hold out the higher will be the payment.

The reason is simple. With the current Missouri indictment clarifying that this was no accidental paperwork problem, the realization is dawning on almost everyone that plain old property law is going to be the basis of the solution to the title crisis enveloping this nation. Without solving it, title insurers, banks, servicers, and other parties could be liable or indicted for stealing millions of homes.

The logic is both simple and compelling. The Banks and services employed “outside servicers” to fabricate documents containing false declarations about the chain of title, their authority to execute documents. Those documents “established” that the forecloser “pretender” was the creditor and that the original loan documents were perfectly fine — and now transferred to a stranger to the transaction — something we call a break in the chain of title if it shows up in the title records.

If the documents consisted of false declarations (and forged too), and that point is accepted as a fact proven in court, there remains no discretion for the Judge but to invalidate the title chain from the time that the break occurred forward. This means title reverts back to the way title appeared in the title chain before the fabrication of documents. That means the homeowner is still the record title owner, entitled to both the title and possession of the property.

The fact is that all the foreclosed homeowners who were the victims of wrongful foreclosures are most probably still the legal owner of the property that was “foreclosed” and “sold” to “creditors” at a false “auction” claiming false credentials. There is only one way to be sure that the title chain can be fixed — get the signature of the homeowner(s) who were involved in the title chain. But the banks and Servicers know that if they simply come right out and ask for the signature they will be met with a negative answer and a barrage of lawsuits which now bear substantial likelihood of success.

So they are concocting various excuses for why homeowners should sign documents that contain releases and ratifications of title. THAT is why they are getting more lenient on modifications short-sales, and now bonuses that raise the standard amount of “cash for keys” from what was $1,000 to over $35,000 so far. See an attorney who is knowledgeable in real estate transactions before you agree to sign anything and bargain hard for your rights and compensation.

They made a fortune deceiving you into signing onto loans that were unworkable based upon prices that were just plain false. You might as well get your piece of the pie — or up the ante and file a quiet title lawsuit. Lawyers should be careful when advising their clients or prospective clients. Many lawyers are still saying the old “you owe the money, you have no rights” mantra. This could be the basis for a malpractice suit later when the client realizes that he did have rights and he lost them as a result of the attorney’s bad advice.

BLOOMBERG

by Prashant Gopal, banks-paying-homeowners-a-bonus-to-avoid-foreclosures-mortgages.html

Banks, accelerating efforts to move troubled mortgages off their books, are offering as much as $35,000 or more in cash to delinquent homeowners to sell their properties for less than they owe.

Lenders have routinely delayed or blocked such transactions, known as short sales, in which they accept less from a buyer than the seller’s outstanding loan. Now banks have decided the deals are faster and less costly than foreclosures, which have slowed in response to regulatory probes of abusive practices. Banks are nudging potential sellers by pre-approving deals, streamlining the closing process, forgoing their right to pursue unpaid debt and in some cases providing large cash incentives, said Bill Fricke, senior credit officer for Moody’s Investors Service in New York.

Losses for lenders are about 15 percent lower on the sales than on foreclosures, which can take years to complete while taxes and legal, maintenance and other costs accumulate, according to Moody’s. The deals accounted for 33 percent of financially distressed transactions in November, up from 24 percent a year earlier, said CoreLogic Inc., a Santa Ana, California-based real estate information company.

Karen Farley hadn’t made a mortgage payment in a year when she got what looked like a form letter from her lender.

“You could sell your home, owe nothing more on your mortgage and get $30,000,” JPMorgan Chase & Co. (JPM) said in the Aug. 17 letter obtained by Bloomberg News.

$200,000 Short

Farley, whose home construction lending business dried up after the housing crash, said the New York-based bank agreed to let her sell her San Marcos, California, home for $592,000 — about $200,000 less than what she owes. The $30,000 will cover moving costs and the rental deposit for her next home. Farley, who is also approved for an additional $3,000 through a federal incentive program, is scheduled to close the deal Feb. 10.

“I wondered, why would they offer me something, and why wouldn’t they just give me the boot?” Farley, 65, said in a telephone interview. “Instead, I’m getting money.”

Tom Kelly, a JPMorgan spokesman, declined to comment on the company’s incentives.

“When a modification is not possible, a short sale produces a better and faster result for the homeowner, the investor and the community than a foreclosure,” he said in an e-mail.

A mountain of pending repossessions is holding back a recovery in the housing market, where prices have fallen for six straight years, and damping economic growth. Owners of more than 14 million homes are in foreclosure, behind on their mortgages or owe more than their properties are worth, said RealtyTrac Inc., a property-data company in Irvine, California.

Foreclosure Holdouts

Short sales represented 9 percent of all U.S. residential transactions in November, the most recent month for which data is available, up from 2 percent in January 2008, according to Corelogic. Bank-owned foreclosures and short sales sold at a discount of 34 percent to non-distressed properties in the third quarter, according to RealtyTrac.

As lenders shift their focus to sales, they are finding that some borrowers would rather risk repossession while they wait for a loan modification, according to Guy Cecala, publisher of Inside Mortgage Finance, a trade journal. In a loan modification, the monthly payment, and sometimes principal, is reduced to help prevent seizure. Homeowners facing foreclosure may live rent-free for years before they are forced out.

“That’s why the banks have got to pay the big bucks,” Cecala said. “The real question is why is the bribe so big? Is that what it takes to get somebody out of their home?”

Multiple Banks

Banks also pay a few thousand dollars to the owners of second liens, whose loans can be wiped out by a short sale, to encourage them not to block the deals.

While JPMorgan is giving the largest incentive payments, other banks and mortgage investors are also offering them, according to interviews with 12 real estate agents in Arizona, California, Florida, New York and Washington. Lenders also provide incentives on loans they service and don’t own when the mortgage investor, such as a hedge fund, requests it.

JPMorgan, the biggest U.S. bank, approves about 5,000 short sales a month. It generally offers $10,000 to $35,000 in cash payments at settlement, real estate agents said. Not all of the sales include incentives.

Borrowers also can receive payments from the federal government’s Home Affordable Foreclosure Alternatives program, which in 2010 began offering as much as $1,500 to servicers, $2,000 to investors and $3,000 to homeowners who complete short sales.

Quicker Resolution

For banks, approving a sale for less than is owed on the home can cut a year or more off the time it takes to unload a property. From listing to sale, the transactions took about 123 days on average at the end of last year, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.

Lenders spend an average of 348 days to foreclose in the U.S. and an additional 175 days to sell the property, according to RealtyTrac. In New York, a state that requires court approval for repossessions, it takes about four years to foreclose on a home and then resell it, the company said.

Lenders can often afford to forgive debt, offer the incentive and still make a profit because they purchased the loan from another bank at a discount, said Trent Chapman, a Realtor who trains brokers and attorneys to negotiate with banks for short sales.

Chapman, who also writes a blog on TheShortSaleGenius.com, said he’s heard about 50 homeowners who have received incentives from lenders including JPMorgan, Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc.

Wells Fargo

“My guess is they want to get rid of bad loans,” Chapman said. “If they short sale these types of loans, they have less of a headache and have some goodwill with the homeowner.”

Wells Fargo, based in San Francisco, offers relocation assistance of as much as $20,000 for borrowers who complete short sales or agree to transfer title through a deed in lieu of foreclosure “in certain states with extended foreclosure timelines, including Florida,” Veronica Clemons, a spokeswoman, said in an e-mail.

Bank of America Corp. sent letters to 20,000 Florida homeowners as part of a pilot program, offering incentives of as much as $20,000, or 5 percent of the unpaid loan balance, Jumana Bauwens, a spokeswoman, said in an e-mail. The program expired in December and the Charlotte, North Carolina-based bank hasn’t decided whether to introduce it in other states, she said. About 15 percent of the homeowners agreed to participate in the program, she said.

Citigroup Offers

“The bank is pleased with the response,” Bauwens wrote. “The state is experiencing higher foreclosure rates than other parts of the country and is therefore seen as a viable market to gauge incremental short-sale response and completion rates when presenting homeowners with relocation assistance at closing.”

Citigroup offers $3,000 to most borrowers who qualify for its program, but the “amount may increase based on the circumstances of each individual case,” Mark Rodgers, a spokesman for the New York-based bank, said in an e-mail. “Investor programs have different guidelines for relocation incentives, which we honor.”

Susan Fitzpatrick, a spokeswoman for Detroit-based Ally, didn’t comment specifically on incentives when asked about them.

Borrowers typically can’t negotiate the incentives, which arrive by mail, Chapman, the Realtor, said.

Tap on Shoulder

“It’s not really easy to identify the guidelines because Chase doesn’t tell you, they kind of tap you on the shoulder,” he said. “When I first saw it in January 2011, I thought it was a joke or a typo. I was convinced it must say $3,000, not $30,000.”

Offering enough for the homeowner to put down a deposit on a rental apartment is reasonable, said Sean O’Toole, chief executive officer of ForeclosureRadar.com, which tracks sales of foreclosed properties. Giving tens of thousands of dollars to delinquent homeowners sends the wrong message, particularly if they got into trouble by running up home-equity loans during the housing boom, he said.

“It may make sense for people to walk away, it doesn’t make sense for them to get rewarded for doing it,” O’Toole said. “It’s not the homeowner’s fault that house prices dropped so dramatically, but they have already received months of free rent, if not cash out.”

Cecala of Inside Mortgage Finance said he wonders whether lenders are making big payments on properties with underlying title problems. Evan Berlin, managing partner of Berlin Patten, a real estate law firm in Sarasota, Florida, said representatives of a large bank told him the incentives are primarily given to borrowers when it doesn’t have the proper paperwork needed to win its foreclosure case. He declined to name the bank for publication.

Incentive Disconnect

State attorneys general across the U.S. began investigating foreclosure practices in October 2010 following allegations that the nation’s top mortgage servicers were using faulty documents to repossess homes.

Berlin said his office negotiated about 400 short sales in the past year and about a quarter included an incentive, ranging from $3,000 to $48,000. In some cases, the payments aren’t incentives at all because they’re offered after the borrower has almost completed the short sale, he said.

“The idea is that this is relocation assistance,” Berlin said. “But when you’re offering $48,000, obviously it doesn’t cost $48,000 to relocate.”

Cooperation Sought

The size of the payment may have little to do with sales price. JPMorgan gave one Phoenix homeowner $20,000 after she sold her property in June for $32,000, according to Royce Hauger, the real estate agent who represented the seller and shared a copy of the settlement sheet with Bloomberg News. The bank also agreed to forgive more than $70,000 in debt, she said.

Kelly, the JPMorgan spokesman, declined to comment on the payment.

The homeowners are getting the money in exchange for their cooperation, said Kris Pilles, a Riverhead, New York-based real estate broker who represents banks, servicers and hedge funds that own distressed housing debt.

Pilles is frequently dispatched to the homes of delinquent borrowers to explain the benefits of avoiding foreclosure, he said. His clients have paid as much as $92,500. In return, the lenders expect the seller to clean the house before showings, and trim the grass.

“Money talks,” Pilles said. “From the bank side, it’s anything to initiate a conversation with someone who may not be listening to them.”

To contact the reporter on this story: Prashant Gopal in New York at pgopal2

To contact the editors responsible for this story: Daniel Taub at dtaub; Rob Urban at robprag.

California not among states that OK bank settlement

——————–

More than 40 states signed onto a proposed $25-billion deal with major mortgage servicers over faulty foreclosure practices. New York, Nevada and Delaware joined California in holding out for better terms.

By Alejandro Lazo and Jim Puzzanghera, Los Angeles Times

February 7 2012

Reporting from Los Angeles and Washington — More than 40 states signed onto a proposed $25-billion settlement with major mortgage servicers over faulty foreclosure procedures, but California, New York and other key states were still not among them.

The complete article can be viewed at:

http://www.latimes.com/business/realestate/la-fi-foreclosure-settlement-20120207,0,5999524.story

Related articles

• California Returns to the Negotiation Table (avidlawblog.wordpress.com)
• California not among states that OK bank settlement (timothymccandless.wordpress.com)
• Justice Democrats Still Angling for Changes in Foreclosure Fraud Settlement Deal (news.firedoglake.com)
• States Get Settlements Over Forclosures (myfoxphoenix.com)
• Foreclosure Settlement’s Deadline Passes (huffingtonpost.com)
• More than 40 states agree to settlement over foreclosure abuses (foxnews.com)
• Most states agree to bank settlement: Iowa AG (marketwatch.com)
• States Get Settlements Over Forclosures (myfoxny.com)
• Foreclosure deal close in several key states (csmonitor.com)

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Friday, January 20, 2012 8:25 AM
To: Charles Cox
Subject: My Dear Fellow Attorneys from Matt Weidner

My Dear Fellow Attorneys:

January 20th, 2012 | Author: Matthew D. Weidner, Esq.

I have spent this week, the week we celebrate Martin Luther King Jr and his accomplishments during the civil rights movement, thinking about the very real parallels between that tumultuous time and where we are today in this country. Especially today, when I am in a jail of sorts, I have been considering how King and his followers were constantly attacked. The attacks King and his followers suffered are not unlike the attacks that are visited upon those few who are standing up to defend consumers, fight for basic rights and the Rule of Law. It is rumored that the banks will announce a deal soon with the attorney generals from all across the country that have been investigating them. If any deal is indeed inked it will be a most dark day in this nation’s history. A deal between the banks and the attorney generals will indeed be the last nail in the coffin of the fiction that we are still a nation ruled by laws. So as you think about that, close your eyes for a moment and picture Martin Luther King sitting in a Birmingham jail and responding to a letter of complaint that he had recently received:

My Dear Fellow Attorneys:

While confined here in a foreclosure courtroom, I came across your recent statement calling my present activities “unwise and untimely.” Seldom do I pause to answer criticism of myself and the other foreclosure and consumer defense attorneys by those who do not understand that the work of defending the helpless is the highest calling of the legal profession. If I sought to answer all the criticisms that cross my desk, my secretaries would have little time for anything other than such correspondence in the course of the day, and I would have no time for constructive work. But since I feel that you are men of genuine good will and that your criticisms are sincerely set forth, I want to try to answer your statement in what I hope will be patient and reasonable terms.

I think I should indicate why I am here in foreclosure courtrooms, since you have been influenced by the view which argues against defending consumers in court, fearful that all these defendants want is a “Free House”. I have the honor of serving and defending families and good people who find themselves down on their luck and facing foreclosure. Despite some of the unfair, unfortunate and misinformed characterizations of my clients perpetuated by some small segment of the population, my clients are not in foreclosure because they want to be in foreclosure. They are not unemployed because they do not want to work. They are not down on their luck because they sought out a tortured existence in this world. They are in foreclosure because they have no money. They have no money because there are no jobs. There are no jobs because their government has failed them. The industries and institutions that should be providing jobs and providing the money that would permit them to pay their bills and fulfill their obligations have closed down here at home and sent all the jobs offshore. For many of my clients, foreclosure courtroom is their last stop before they disappear into oblivion. They stand in courtrooms gripping onto their homes with white, bleeding knuckles, hoping against all hope that what they have heard about justice and fairness and equity and our nation’s court system really is true.

But more basically, I defend homeowners in court because injustice is here. Just as the prophets of the eighth century B.C. left their villages and carried their “thus saith the Lord” far beyond the boundaries of their home towns, and just as the Apostle Paul left his village of Tarsus and carried the gospel of Jesus Christ to the far corners of the Greco Roman world, so am I compelled to carry the fight for the Rule of Law beyond my own cases and clients. Like Paul, I must constantly respond to the Macedonian call for aid. Moreover, I am cognizant of the interrelatedness of all communities and states. I cannot sit idly by in Saint Petersburg and not be concerned about what happens in Birmingham. Injustice anywhere is a threat to justice everywhere. We are caught in an inescapable network of mutuality, tied in a single garment of destiny. Whatever affects one directly, affects all indirectly. Never again can we afford to live with the narrow, provincial “outside agitator” idea. Anyone who lives inside the United States can never be considered an outsider anywhere within its bounds.

You deplore the defense of foreclosure cases and the Occupy protests that are taking place all across this country. But your statements, I am sorry to say, fail to express a similar concern for the conditions that brought about the demonstrations and the defense. I am sure that none of you would want to rest content with the superficial kind of social and legal analysis that deals merely with effects and does not grapple with underlying causes. It is unfortunate that demonstrations are taking place all across this country, but it is even more unfortunate that this nation’s power structure left the 99% with no alternative. It is terribly unfortunate that attorneys general from states all across this nation are meeting in secret with the banks and their henchmen and that they appear to close to finalizing some sort of deal. If the attorneys general that are supposed to be representing the interests of The People do indeed finalize a deal, it will truly be a deal with the devil. Such a deal will hasten our nation’s descent into a dark pit of white collar criminal lawlessness from which we will never recover.

In any nonviolent campaign there are four basic steps: collection of the facts to determine whether injustices exist; negotiation; self purification; and direct action. We have gone through all these steps in foreclosure courtrooms. There can be no gainsaying the fact that injustice engulfs our entire nation. Foreclosure courtrooms are probably the most clear expression of this injustice in the United States. The ugly record of injustice in foreclosure is widely known. Defendants in foreclosure have experienced grossly unjust treatment in the courts. There have been more violations of the fundamental principles of justice and equity in foreclosures than in any other aspect of our national existence. These are the hard, brutal facts of the case. On the basis of these conditions, homeowners and activists have sought to negotiate with the banks and institutions.

But the latter consistently refused to engage in good faith negotiation. Then, last September, came the opportunity to talk with leaders of banking community. In the course of the negotiations, certain promises were made by them–for example, they would review homeowners for loan modifications. On the basis of these promises, homeowners, attorneys and courts agreed to suspend most pending foreclosure cases. As the weeks and months went by however, we realized that we were the victims of a broken promise. A few temporary modifications were offered then just as quickly removed. As in so many past experiences, our hopes had been blasted, and the shadow of deep disappointment settled upon us. We had no alternative except to prepare for direct action like foreclosure trials, whereby we would continue the defense of homeowners and speaking out against the banks and the corporate elite as a means of laying our case before the conscience of the local and the national community.

You may well ask: “Why direct action? Why motions and discovery, foreclosure trials and so forth? Isn’t mediation a better path? You are quite right in calling for mediation. Indeed, this is the very purpose of direct action. Nonviolent direct action seeks to create such a crisis and foster such a tension that an industry which has constantly refused to negotiate is forced to confront the issues. It seeks so to dramatize the issue that it can no longer be ignored. My citing the creation of tension as part of the work of the nonviolent resister may sound rather shocking. But I must confess that I am not afraid of the word “tension.” I have earnestly opposed violent tension, but there is a type of constructive, nonviolent tension which is necessary for growth. Just as Socrates felt that it was necessary to create a tension in the mind so that individuals could rise from the bondage of myths and half truths to the unfettered realm of creative analysis and objective appraisal, so must we see the need for nonviolent gadflies to create the kind of tension in society that will help men rise from the dark depths of prejudice and racism to the majestic heights of understanding and brotherhood.

The purpose of our direct action program is to create a situation so crisis packed that it will inevitably open the door to successful mediations. I therefore concur with you in your call for mediations. Too long has our beloved court system been bogged down in a tragic effort to live in monologue rather than dialogue. One of the basic points in your statement is that the action that I and my associates have taken in foreclosure courtrooms is untimely. Some have asked: “Why didn’t you give the new mediation programs time to act?” The only answer that I can give to this query is that the programs and the plaintiffs must be prodded about as much as before. We are all sadly mistaken if we feel that these new mediation programs will bring any real changes without pressure on the banks to deal fairly and in good faith. While the new banks and servicers may be different, they are both corporate creatures, dedicated to maintenance of the status quo. I have hope that the banks will be reasonable enough to see the futility of massive resistance to mortgage modifications and solutions. But they will not see this without pressure from devotees of consumer rights.

My friends, I must say to you that we have not made a single gain in consumer rights without determined legal and nonviolent pressure. Lamentably, it is an historical fact that privileged groups seldom give up their privileges voluntarily. Individuals may see the moral light and voluntarily give up their unjust posture; but, as Reinhold Niebuhr has reminded us, groups tend to be more immoral than individuals. We know through painful experience that fair dealings are never voluntarily given by the banks; it must be demanded by the consumers that bailed them out. Some say, “Be patient, pushing these issues is not well-timed.”

Frankly, I have yet to engage in a direct action campaign that was “well timed” in the view of those who have suffered unduly from the tortures of this obscene and unfair economy and its parasitic legal and political system. For years now I have heard the words, “Wait, a solution is coming!” It rings in the ear of every American citizen with piercing familiarity. This “Wait” has almost always meant “Never.” We must come to see, with one of our distinguished jurists, that “justice too long delayed is justice denied.” We have waited for since 2008 for the banks and Wall Street to start treating Americans fairly. The banks and Wall Street are moving with jetlike speed toward gaining extraordinary profitablity, but we still creep at horse and buggy pace toward gaining principle reductions or short sale approvals.

Perhaps it is easy for those who have never felt the stinging darts foreclosure to say, “Wait.” But when you have seen good families thrown into the street, when you have seen the banks kick down doors and change the locks with no court order, when you have seen law enforcement standing idly by and saying, “it is a civil matter”, when you have seen court rulings that are repugnant to fundamental laws, when you have seen the bank and corporate executives reap unconscionable profits, when you have seen clients become sick and die due to the stress and pain of foreclosure and their economic situation, when you have seen single women who live in mortal fear that her front door may be kicked down for the third time, when you see children who have only known their parents suffering–then you will understand why we find it difficult to wait.There comes a time when the cup of endurance runs over, and men are no longer willing to be plunged into the abyss of despair. I hope, sirs, you can understand our legitimate and unavoidable impatience.

You express a great deal of anxiety over our willingness to aggressively pursue foreclosure cases, to stand up for basic laws and argue that certain foreclosure case law should not be followed. You express concern that we some of the recent case law should not be followed. This is certainly a legitimate concern. Since we so diligently urge people to obey the laws. One may well ask: “How can you advocate breaking some laws and obeying others?” The answer lies in the fact that there are two types of laws: just and unjust. I would be the first to advocate obeying just laws. One has not only a legal but a moral responsibility to obey just laws. Conversely, one has a moral responsibility to disobey unjust laws. I would agree with St. Augustine that “an unjust law is no law at all.” Now, what is the difference between the two? How does one determine whether a law is just or unjust? A just law is a man made code that squares with the moral law or the law of God. An unjust law or appellate case is a code that is out of harmony with the moral law and economic reality. A just law and a just outcome in foreclosure recognizes that the homeowners that the banks are using the court process to throw into the street have already paid the banks and institutions through trillions of dollars in tax benefits and direct profits. To put it in the terms of St. Thomas Aquinas: An unjust law is a human law that is not rooted in eternal law and natural law. Any law that uplifts human personality is just. Any law that degrades human personality is unjust.

All homestead foreclosures, when the case is defended because the homeowner has already paid the bank his fair share through bailouts, handouts and direct political corruption. Let us consider a more concrete example of just and unjust laws. An unjust law is a code that a numerical or power majority group compels a minority group to obey but does not make binding on itself. This is difference made legal. By the same token, a just law is a code that a majority compels a minority to follow and that it is willing to follow itself. This is sameness made legal. Let me give another explanation. A law is unjust if it is inflicted on a minority that, as a result of being denied the right to vote, had no part in enacting or devising the law. Who can say that the banks, which have obscenely unequal bargaining power have passed laws that benefit themselves while forcing trauma and the expenses of their ill-conceived laws on the unrepresented taxpayer and consumer who is victimized by their laws?

Throughout this nation all sorts of devious methods are used to prevent the voice of The People from being heard and to silencing advocates and critics. Can any law enacted under such circumstances be considered democratically structured? Sometimes a law is just on its face and unjust in its application. For instance, I have been charged with abusing my First Amendment rights. Now, there is nothing wrong in having an ordinance which restricts speech. But such an ordinance becomes unjust when it is used to punish well-intentioned criticism of our court system and to deny citizens the First-Amendment privilege of peaceful assembly and protest. I hope you are able to see the distinction I am trying to point out. In no sense do I advocate “free homes” as some do. That would lead to anarchy. One who seeks to defend a homeowner must be willing to counsel that homeowner to begin making what payments he can. I submit that an individual who correctly and aggressively defends the correct foreclosure case is in reality expressing the highest respect for law. Of course, there is nothing new about this kind of civil disobedience.

It was evidenced sublimely in the refusal of Shadrach, Meshach and Abednego to obey the laws of Nebuchadnezzar, on the ground that a higher moral law was at stake. It was practiced superbly by the early Christians, who were willing to face hungry lions and the excruciating pain of chopping blocks rather than submit to certain unjust laws of the Roman Empire. To a degree, academic freedom is a reality today because Socrates practiced civil disobedience. In our own nation, the Boston Tea Party represented a massive act of civil disobedience.

We should never forget that everything Adolf Hitler did in Germany was “legal” and everything the Hungarian freedom fighters did in Hungary was “illegal.” It was “illegal” to aid and comfort a Jew in Hitler’s Germany. Even so, I am sure that, had I lived in Germany at the time, I would have aided and comforted my Jewish brothers. If today I lived in a Communist country where certain principles dear to the Christian faith are suppressed, I would openly advocate disobeying that country’s antireligious laws. I must make two honest confessions to you, my fellow attorneys.

First, I must confess that over the past few years I have been gravely disappointed with other attorneys. I have almost reached the regrettable conclusion that the consumer’s great stumbling block in his stride toward fairness is not the banks or the servicers, but the attorneys who are more devoted to “order” than to justice; who prefer a negative peace which is the absence of tension to a positive peace which is the presence of justice; who constantly says: “I agree with you in the goal you seek, but I cannot agree with your methods of direct action”; who paternalistically believes he can set the timetable for demanding economic justice and the return to the Rule of Law in courtrooms; who live by a mythical concept of time and who constantly advises those who are suffering to wait for a “more convenient season.”

Shallow understanding from people of good will is more frustrating than absolute misunderstanding from people of ill will. Lukewarm acceptance is much more bewildering than outright rejection. I had hoped that the other attorneys would understand that law and order exist for the purpose of establishing justice and that when they fail in this purpose they become the dangerously structured dams that block the flow of social and economic progress. I had hoped that the other attorneys would understand that the present tension in the our courts is a necessary phase of the transition from an obnoxious negative peace, in which the consumer accepted his unjust plight, to a substantive and positive peace, in which all consumers wake up and start fighting back.

Actually, we who engage in the defense of consumers are not the creators of tension. We merely bring to the surface the hidden tension that is already alive. We bring it out in the open, where it can be seen and dealt with. Like a boil that can never be cured so long as it is covered up but must be opened with all its ugliness to the natural medicines of air and light, injustice must be exposed, with all the tension its exposure creates, to the light of human conscience and the air of national opinion before it can be cured. In your attacks on consumer attorneys and activists you assert that our actions, even though professionally and ethically appropriate, must be condemned because they slow down the court process.

I have even heard many good judges cry aloud, “The Supreme Court and Legislature demand we conclude foreclosure trials in 18 months!” But is this a logical assertion? What if the legislature demanded that all criminal cases be concluded in some arbitrary period, but the prosecutors did not want to proceed with false evidence? What if family courts were underfunded yet the legislature demanded swift closure…and yet the couple that stands before you did not yet want their divorce….would you still demand they conclude their divorce…or else? You speak of foreclosure defense as extreme. At first I was rather disappointed that fellow attorneys would see my efforts as those of an extremist.

I began thinking about the fact that I stand in the middle of two opposing forces in the economically depressed community. One is a force of complacency, made up in part of those who, as a result of long years of oppression, are so drained of self respect and a sense of “somebodiness” that they have adjusted to their condition; and in part of a few middle-class Americans who, because of a degree of academic and economic security and because in some ways they profit by segregation, have become insensitive to the problems of the masses. The other force is one of bitterness and hatred, and it comes perilously close to advocating violence.

It is expressed in the various Occupy groups that are springing up across the nation, the largest and best known being Occupy Wall Street. Nourished by the frustration over the continued existence of economic and social discrimination, this movement is made up of people who have lost faith in America, who have absolutely repudiated our corrupt form of government, and who have concluded that corporations are an incorrigible “devil.” Oppressed people cannot remain oppressed forever. The yearning for freedom and fairness eventually manifests itself, and that is what has happened to the American people. Something within has reminded him of his birthright of freedom and economic equality and something without has reminded him that it can be gained. I had hoped that the banks and institutions would see this need. Perhaps I was too optimistic; perhaps I expected too much. I suppose I should have realized that few members of the oppressor class can understand the deep groans and passionate yearnings of the oppressed people, and still fewer have the vision to see that injustice must be rooted out by strong, persistent and determined action.

But despite notable exceptions, I must honestly reiterate that I have been disappointed with the church. I do not say this as one of those negative critics who can always find something wrong with the church. I say this as a minister of the gospel, who loves the church; who was nurtured in its bosom; who has been sustained by its spiritual blessings and who will remain true to it as long as the cord of life shall lengthen. When myself and others started defending homeowners in foreclosure a few years ago, I felt we would be supported by other attorneys. Instead, some have been outright opponents, refusing to understand the foreclosure defense movement and misrepresenting its leaders; all too many others have been more cautious than courageous and have remained silent behind the anesthetizing security of their own offices.

In spite of my shattered dreams, I come to court everyday with the hope that other attorneys would see the justice of our cause and, with deep moral concern, would serve as the channel through which our just grievances could reach the power structure. I had hoped that each of you would understand. But again I have been disappointed. Yes, these questions are still in my mind. In deep disappointment I have wept over the laxity of the attorney class. But be assured that my tears have been tears of love. There can be no deep disappointment where there is not deep love. Yes, I love the attorney class. How could I do otherwise? There was a time when the attorney class was very powerful. In those days the attorney class was not merely a thermometer that recorded the ideas and principles of popular opinion; it was a thermostat that transformed the mores of society.

Whenever the good attorneys entered a town, the people in power became disturbed and immediately sought to convict them for being “disturbers of the peace” and “outside agitators.”‘ But the attorneys pressed on, in the conviction that they were “a colony of heaven,” called to obey the Rule of Law rather than man. Small in number, they were big in commitment. Things are different now. So often the attorney class is a weak, ineffectual voice with an uncertain sound. So often it is an archdefender of the status quo. Far from being disturbed by the presence of attorneys, the power structure of the average community is consoled by the attorney class’s silent–and often even vocal–sanction of things as they are.

But the judgment of The People is upon our court system as never before. If today’s court system does not recapture the spirit and integrity of the early courts, it will lose its authenticity, forfeit the loyalty of millions, and be dismissed as an institution with no meaning for the twentieth century. Every day I meet young people whose disappointment with the church has turned into outright disgust. Perhaps I have once again been too optimistic. Are attorneys too inextricably bound to the status quo to save our nation and the world? Perhaps I must turn my faith to the highest called among the ranks, the attorneys above the other attorneys, as the true ekklesia and the hope of the world. But again I am thankful to God that some noble souls from the ranks of attorneys have broken loose from the paralyzing chains of conformity and joined us as active partners in the struggle for foreclosure justice and basic rights.

It is true that the courts have exercised a degree of discipline in handling the foreclosure crisis. In this sense they have conducted themselves rather mechanically. But for what purpose? To preserve the system of foreclosure. Over the past few years I have consistently asserted that the vast magnitude of problems in the pending foreclosure files currently filed demands that most be dismissed in order not to soil the entire court system’s integrity. Never before have I written so long a letter. I’m afraid it is much too long to take your precious time. I can assure you that it would have been much shorter if I had been writing from a comfortable desk, but what else can one do when he is sitting here in a foreclosure courtroom, other than write long letters, think long thoughts and pray long prayers?

If I have said anything in this letter that overstates the truth and indicates an unreasonable impatience, I beg you to forgive me. If I have said anything that understates the truth and indicates my having a patience that allows me to settle for anything less than brotherhood, I beg God to forgive me. I hope this letter finds you strong in the faith. I also hope that circumstances will soon make it possible for me to meet each of you, not as an antagonist on one side of this profound economic and social rights battle but as a fellow attorney all on the side of justice and the Rule of Law.

Let us all hope that the dark clouds of injustice will soon pass away and the deep fog of misunderstanding will be lifted from our fear drenched communities, and in some not too distant tomorrow the radiant stars of love and brotherhood will shine over our great nation with all their scintillating beauty.

Yours for the cause of Peace and Brotherhood, Matthew Weidner

And I especially encourage you to read Luther’s Letter From A Birmingham Jail

Top Justice officials connected to mortgage banks

(Reuters) – U.S. Attorney General Eric Holder and Lanny Breuer, head of the Justice Department’s criminal division, were partners for years at a Washington law firm that represented a Who’s Who of big banks and other companies at the center of alleged foreclosure fraud, a Reuters inquiry shows.

The firm, Covington & Burling, is one of Washington’s biggest white shoe law firms. Law professors and other federal ethics experts said that federal conflict of interest rules required Holder and Breuer to recuse themselves from any Justice Department decisions relating to law firm clients they personally had done work for.

Both the Justice Department and Covington declined to say if either official had personally worked on matters for the big mortgage industry clients. Justice Department spokeswoman Tracy Schmaler said Holder and Breuer had complied fully with conflict of interest regulations, but she declined to say if they had recused themselves from any matters related to the former clients.

Reuters reported in December that under Holder and Breuer, the Justice Department hasn’t brought any criminal cases against big banks or other companies involved in mortgage servicing, even though copious evidence has surfaced of apparent criminal violations in foreclosure cases.

The evidence, including records from federal and state courts and local clerks’ offices around the country, shows widespread forgery, perjury, obstruction of justice, and illegal foreclosures on the homes of thousands of active-duty military personnel.

In recent weeks the Justice Department has come under renewed pressure from members of Congress, state and local officials and homeowners’ lawyers to open a wide-ranging criminal investigation of mortgage servicers, the biggest of which have been Covington clients. So far Justice officials haven’t responded publicly to any of the requests.

While Holder and Breuer were partners at Covington, the firm’s clients included the four largest U.S. banks – Bank of America, Citigroup, JP Morgan Chase and Wells Fargo & Co – as well as at least one other bank that is among the 10 largest mortgage servicers.

DEFENDER OF FREDDIE

Servicers perform routine mortgage maintenance tasks, including filing foreclosures, on behalf of mortgage owners, usually groups of investors who bought mortgage-backed securities.

Covington represented Freddie Mac, one of the nation’s biggest issuers of mortgage backed securities, in enforcement investigations by federal financial regulators.

A particular concern by those pressing for an investigation is Covington’s involvement with Virginia-based MERS Corp, which runs a vast computerized registry of mortgages. Little known before the mortgage crisis hit, MERS, which stands for Mortgage Electronic Registration Systems, has been at the center of complaints about false or erroneous mortgage documents.

Court records show that Covington, in the late 1990s, provided legal opinion letters needed to create MERS on behalf of Fannie Mae, Freddie Mac, Bank of America, JP Morgan Chase and several other large banks. It was meant to speed up registration and transfers of mortgages. By 2010, MERS claimed to own about half of all mortgages in the U.S. — roughly 60 million loans.

But evidence in numerous state and federal court cases around the country has shown that MERS authorized thousands of bank employees to sign their names as MERS officials. The banks allegedly drew up fake mortgage assignments, making it appear falsely that they had standing to file foreclosures, and then had their own employees sign the documents as MERS “vice presidents” or “assistant secretaries.”

Covington in 2004 also wrote a crucial opinion letter commissioned by MERS, providing legal justification for its electronic registry. MERS spokeswoman Karmela Lejarde declined to comment on Covington legal work done for MERS.

It isn’t known to what extent if any Covington has continued to represent the banks and other mortgage firms since Holder and Breuer left. Covington declined to respond to questions from Reuters. A Covington spokeswoman said the firm had no comment.

Several lawyers for homeowners have said that even if Holder and Breuer haven’t violated any ethics rules, their ties to Covington create an impression of bias toward the firms’ clients, especially in the absence of any prosecutions by the Justice Department.

O. Max Gardner III, a lawyer who trains other attorneys to represent homeowners in bankruptcy court foreclosure actions, said he attributes the Justice Department’s reluctance to prosecute the banks or their executives to the Obama White House’s view that it might harm the economy.

But he said that the background of Holder and Breuer at Covington — and their failure to act on foreclosure fraud or publicly recuse themselves — “doesn’t pass the smell test.”

Federal ethics regulations generally require new government officials to recuse themselves for one year from involvement in matters involving clients they personally had represented at their former law firms.

President Obama imposed additional restrictions on appointees that essentially extended the ban to two years. For Holder, that ban would have expired in February 2011, and in April for Breuer. Rules also require officials to avoid creating the appearance of a conflict.

Schmaler, the Justice Department spokeswoman, said in an e-mail that “The Attorney General and Assistant Attorney General Breuer have conformed with all financial, legal and ethical obligations under law as well as additional ethical standards set by the Obama Administration.”

She said they “routinely consult” the department’s ethics officials for guidance. Without offering specifics, Schmaler said they “have recused themselves from matters as required by the law.”

Senior government officials often move to big Washington law firms, and lawyers from those firms often move into government posts. But records show that in recent years the traffic between the Justice Department and Covington & Burling has been particularly heavy. In 2010, Holder’s deputy chief of staff, John Garland, returned to Covington, as did Steven Fagell, who was Breuer’s deputy chief of staff in the criminal division.

The firm has on its web site a page listing its attorneys who are former federal government officials. Covington lists 22 from the Justice Department, and 12 from U.S. Attorneys offices, the Justice Department’s local federal prosecutors’ offices around the country.

As Reuters reported in 2011, public records show large numbers of mortgage promissory notes with apparently forged endorsements that were submitted as evidence to courts.

There also is evidence of almost routine manufacturing of false mortgage assignments, documents that transfer ownership of mortgages between banks or to groups of investors. In foreclosure actions in courts mortgage assignments are required to show that a bank has the legal right to foreclose.

In an interview in late 2011, Raymond Brescia, a visiting professor at Yale Law School who has written about foreclosure practices said, “I think it’s difficult to find a fraud of this size on the U.S. court system in U.S. history.”

Holder has resisted calls for a criminal investigation since October 2010, when evidence of widespread “robo-signing” first surfaced. That involved mortgage servicer employees falsely signing and swearing to massive numbers of affidavits and other foreclosure documents that they had never read or checked for accuracy.

Recent calls for a wide-ranging criminal investigation of the mortgage servicing industry have come from members of Congress, including Senator Maria Cantwell, D-Wash., state officials, and county clerks. In recent months clerks from around the country have examined mortgage and foreclosure records filed with them and reported finding high percentages of apparently fraudulent documents.

On Wednesday, John O’Brien Jr., register of deeds in Salem, Mass., announced that he had sent 31,897 allegedly fraudulent foreclosure-related documents to Holder. O’Brien said he asked for a criminal investigation of servicers and their law firms that had filed the documents because they “show a pattern of fraud,” forgery and false notarizations.

(Reporting By Scot J. Paltrow, editing by Blake Morrison)

Related articles

• U.S. AG Eric Holder, DoJ Head Lanny Breuer Allegedly Linked to Banks Accused Of Foreclosure Fraud (the2012scenario.com)
• Analysis: Holder, top DOJ lawyers were partners with big banks (elmsprogressivemedia.wordpress.com)
• Three theories on why the US Justice Department has not prosecuted any crime on Wall Street since the Great Bailout of 2008. (pilogic.net)

From: Charles Cox [mailto:charles@bayliving.com]
Sent: Monday, January 23, 2012 10:56 AM
To: Charles Cox
Subject: Pulling Back the Curtain Report

See the attached.The-Curtain-Report.pdf

Charles
Charles Wayne Cox – Oregon State Director for the National Homeowners Cooperative
Email: mailto:Charles
Websites: http://www.NHCwest.com; www.BayLiving.com; and www.ForensicLoanAnalyst.com
1969 Camellia Ave.
Medford, OR 97504-5403
(541) 727-2240 direct
(541) 610-1931 eFax

JOIN NHC, IT’S FREE

Paralegal; CA Licensed Real Estate Broker; Certified Forensic Loan Analyst. Litigation Support; Mortgage and Real Estate Expert Witness Services.

The-Curtain-Report.pdf

In addition to discussing remedial measures for predatory lending, it is important to also discuss ways in which individuals can avoid receiving a predatory loan.

The first way to avoid predatory lending is to comparison shop different lenders to find the best deal. As predatory lenders would have them believe, borrowers with credit problems think that only by paying exorbitant interest rates can they qualify for a loan. However, the truth is that up to 50% of those people who receive predatory loans would actually qualify for a prime loan. The most practical way to remedy this problem is for a borrower to obtain a credit history report and have it analyzed by a disinterested third party. By doing this, the borrower will know when a predatory lender is being untruthful about the type of loan for which he or she will qualify due to credit problems.

Second, when applying for a loan, keep an eye out for common misrepresentations that are indicative of predatory loans. For example, the lender states that the loan has the flexibility of an open line of credit, or the lender requires credit insurance, claiming it is the only way the borrower will qualify for the loan. Next, the consumer should ask to see the lender’s published rates on fees and points.

Finally, the consumer should look for terms and conditions that will trap him or her into the loan. As discussed above, prepayment clauses are indicative of a predatory loan. The reasoning behind prepayment clauses is to keep borrowers from refinancing into a prime loan once they learn the financial reality of their current loan. Furthermore, when a borrower is offered a loan that is “asset based”⁽¹⁰⁾, he or she should demand to be told what affect such a loan could have on the asset’s equity.

CONCLUSION

It is important for attorneys to utilize all available tools at their discretion to curb harm resulting from predatory lending. California Finance Code § 4970 is a powerful new tool for litigators. Equipped with this new tool and California Business & Professions Code 17200, California attorneys should be eager to assist the victims of predatory lending.

In addition, it is important for the consumer to learn ways to spot predatory lending terms and conditions. By seeking the advice of counsel when applying for a loan, one may be able to avoid financial pitfalls down the road.

Related articles

• Are you a Victim of Predatory Lending Practices? (choiceofhomes.com)
• US Loan Auditors Opens New Office in Santa Clara to Help South Bay Victims of Predatory Lending (prweb.com)
• Avoid Predatory Mortgage Lending (idahostwocenttips.com)
• Discrimination settlement holds subprime lenders accountable (thegrio.com)

California Financial Code § 4970 et seq. became effective on July 1, 2002. This law recognizes the need for more stringent regulations on consumer loans secured by specified real property, defined as “covered loans.” The effect of the bill was best summed up by the Legislative Counsel’s digest, which states:

The law prohibits various acts in making covered loans, including the following:

• Failing to consider the financial ability of a borrower to repay the loan
• Financing specified types of credit insurance into a consumer loan transaction
• Recommending or encouraging a consumer to default on an existing consumer loan in order to solicit or make a covered loan that refinances the consumer loan
• Making a covered loan without providing the consumer specified disclosure

Moreover, this law expressly defines the relationship between the broker and the borrower as a fiduciary relationship, thereby placing a legal duty on the broker to act in the borrower’s best interest.Furthermore, the newly enacted provisions clearly lay out strong incentives for attorneys to vigorously prosecute predatory lending. Under California Financial Code § 4978, these incentives include mandatory attorney fees, the award of punitive damages, and the greater of either actual damages or statutorily prescribed damages when the violation is “willful and knowing.”

(a) A person who fails to comply with the provisions of this division is civilly liable to the consumer in an amount equal to actual damages suffered by the consumer, plus attorney’s fees and costs. For a willful and knowing violation of this division, the person shall be liable to the consumer in the amount of $15,000.00 or the consumer’s actual damages, whichever is greater, plus attorneys’ fees and costs…..

(b)(2). A court may, in addition to any other remedy, award punitive damages to the consumer upon a finding that such damages are warranted pursuant to Section 3294 of the Civil Code.

Accordingly, if either an express violation of this section or abuse of the fiduciary relationship between broker and borrower is established, private attorneys and their clients are now equipped with statutory power to obtain redress.

Although California Financial Code § 4970 paints with a broad stroke, with its specificity, predatory lenders will undoubtedly find loopholes in the regulations. Fortunately for California consumers, actions for predatory lending can also be brought under the very expansive state consumer protection statutes, such as Business and Professions Code §17200.

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