Matt Weidner – Fighting For The American People

Archive for July, 2010

We are all acutely aware by now that the entire subprime mortgage industry and the resulting collapse was a direct result of lies and fraud being committed by most of the players who are now throwing themselves into our local courts and demanding that our courts churn out foreclosures as fast as they can.  (Get ready for a very big case of, “be careful what you ask for” because once the courts get cranked up to start churning all these foreclosures out, the banks are not going to like the end product…they’re soon going to be screaming to stop all the rocket dockets, but that’s a whole ‘nother blog.)

For now, pay close attention to stories of all the outright fraud that was being committed on all the investors in the subprime catastrophe.  Keep in mind that the players who are admitting guilt in the fraud are benefiting from new federal largess in the HAMP modification scam, where the servicers and lenders are paid for each HAMP review, whether they actually provide a modification or not.

From Today’s Wall Street Journal, Citi Pays for Subprime Feint

The question presented by all this is..

SHOULD OUR JUDGES CONTINUE TO GRANT FORECLOSURES AND REWARD THE IMPROPER BEHAVIORS OF THOSE THAT CAUSED THE COLLAPSE?

The foreclosure crisis and the economic meltdown were not caused by unsophisticated homeowners who borrowed more than they can afford and who want to live in a home for free….this crisis was far to grand for that.

The crisis was a direct result of devious financial gamesmanship and outright fraud being committed by the highest levels of national and international finance. The Wall Street Fat Cats caused the collapse then they got bailed out with our money.  The lies continue as they accept payments to “review” loans for modifications that they rarely give (although they do get paid for reviewing them).

The lies continue as the same brokers of fraud and deceit pursue foreclosures that they have no right to prosecute, maybe or maybe not making payments to the certificate holders. The lies continue as the servicers conceal the identity of the real parties in interest, making it all the more likely that the lies and fraud will continue….and yet with all this lying going on, we’re still treated to phrases like this:

In connection with the Trustee’s preparation of this Statement to Certificateholders, the Trustee is conclusively relying upon, and has not independently verified, information provided to it by various third parties, including the Servicer, Master Servicer, Special Servicer and other parties to the transaction. The Trustee makes no representations as to the completeness, reliability, accuracy or suitability for any purpose of the information provided to it by such third parties.

Most of the times parties perpetrating lies go to some lengths to conceal the lies, but a statement like that ensures that the lying will be front and center.  The statement comes from the attached trustees distribution report. The analysis below comes from a reader who provided the report to me….read it carefully and consider the impact of the statements:

deutschebank

Please check out page 2. Here you can see the different tranches or pools of mortgages from the most senior class A-1 to the lowest mezzanine level M-10. Each of these classes were active in the original distribution report with an original or starting principal balance from Jan 06. As you can see (2) of the senior classes A-2a and A-2b have been paid off in full and (4) of the lower mezzanine classes M-7, M-8, M-9, M-10 have no principle or interest balance remaining and have been folded out of the trust. I am unaware if these failed classes have been sold off to a vulture fund and/or resecuritized. I would venture to guess that the classes that were folded out or collapsed triggered a default swap or other type of reimbursement. On page 3 you can see the classes with their cusip numbers. One thing that I find very interesting is that all of the classes have been defrauded and the payments have been applied to other than where they were supposed to go according to the terms of the original mortgage and note. Every class, no matter where in the trust’s hierarchy receives interest payments while that class is active in the trust. The entirety of all of the principal payments are always applied to the higher classes first until that class’s principal is reduced to zero then the principal payment waterfalls to the next underlying class and the process begins again.

Things just keep looking darker for the former king of Florida foreclosures, David J. Stern.  This comes from the wire at Wall Street Journal…poor David J. Stern…..the following is taken directly from the press release:

The Briscoe Law Firm, PLLC and Cash Powers Taylor, LLP Announce the Investigation of Possible Breaches of Fiduciary Duties Against the Officers and Directors of DJSP Enterprises, Inc.

DALLAS, Jul 28, 2010 (BUSINESS WIRE) — The Briscoe Law Firm, PLLC, founded by a former state prosecutor and enforcement attorney for the United States Securities and Exchange Commission, and the law firm of Cash Powers Taylor, LLP are investigating potential legal claims available to purchasers of DJSP Enterprises, Inc. (“DJSP” or “Company”) /quotes/comstock/15*!djsp/quotes/nls/djsp (DJSP 3.95, +0.07, +1.85%) during the period of March 16, 2010 and May 27, 2010.

DJSP and certain of its officers and directors allegedly violated the Securities Exchange Act of 1934 by issuing materially false and misleading statements and failing to disclose certain facts known to them regarding the Company’s business and financial results. Specifically, on March 11, 2010, the Company issued statements assuring investors that it would continue to profit and earn revenue as usual, despite the Obama Administration’s efforts to curb real estate foreclosures. Additionally, the Company stated that DJSP would continue to be profitable in subsequent years and that its business would not be affected by the government’s involvement in the mortgage markets. However, in April 2010, when the Company’s largest clients began real estate foreclosure conversion systems, DJSP revenue from mortgage foreclosure began to substantially decline. As a result of defendants’ false statements, DJSP’s stock traded at artificially inflated prices during the Class Period.

If you currently own or purchased DJSP shares and would like additional information regarding this investigation or if you have information regarding the allegations against the company, please contact Patrick Powers at Cash Powers Taylor, LLP, toll free (877) 728-9607, via e-mail at patrick@cptlawfirm.com, or The Briscoe Law Firm, PLLC toll free (877) 397-5991, or via email at WBriscoe@TheBriscoeLawFirm.com. There is no cost or fee to you.

The Briscoe Law Firm is a full service business litigation, commercial transaction, and public advocacy firm with more than 20 years of experience in complex litigation and transactional matters.

Cash Powers Taylor, LLP is a boutique litigation law firm that handles a variety of complex business litigation matters, including claims of investor and stockholder fraud, shareholder oppression, shareholder derivative suits, and security class actions.

SOURCE: Cash Powers Taylor, LL

WITH ALL THESE SERIOUS ALLEGATIONS, HOW CAN OUR CIRCUIT COURT JUDGES CONTINUE TO GRANT FORECLOSURE?

The vast majority of foreclosure cases are brought not by the real parties that have any interest in the outcome of the litigation, but by nominal, shell Plaintiffs that have been propped up by the investors or the real parties in interest to pursue the litigation.  Because the vast majority of foreclosures go undefended, this important point is missed in the vast majority of cases.  While it may be missed in cases, the consequences of this phenomena are profound and broad reaching.

The failure to identify what parties are really at risk in litigation prevents courts, policy makers, investors and the general public from knowing who stands to win or lose in litigation.  Concealing the identity of the real party in interest allows those who made bad decisions to shirk their responsibility in the litigation, a fact that is more important when their conduct could very well make them complicit in creating the situation that led to the litigation.  On a very practical level, litigation pursued by servicers probably prohibits effective settlement or mediation discussions because they lack the risk of loss that forces effective resolutions.  The consequences of this are played out hundreds of thousands of times a day as homeowners try futilely to negotiate a short sale or modification with the lender.  This is especially important now that circuits across the state are rolling out mediation programs.

FORECLOSURE MEDIATION IS NOT GOING TO WORK UNLESS THE REAL PARTIES IN INTEREST ARE IN THE COURTROOM

The fact that mediations are not going to work until we have real players at the table will be borne out in the months to come.  Certainly borrowers will share some of the blame for not actively participating in the mediation and settlement discussions, but at the end of the day, another bank owned property is a loss for all parties involved….there are too many of these properties already.

The key to addressing this problem is to first attack the Plaintiff’s capacity.  The first part of the attack is the fact that most Plaintiffs are never properly identified in the lawsuit.  Courts must begin to demand knowing just exactly where this company comes from that is bringing this action.  Courts must begin to ask, “Who am I about to grant this $250,000 judgment to?”  then not let the case proceed until they have a very clear answer to that question.

Our State Division of Corporations or Department of Financial Services must begin to demand registration of all these nominal and real plaintiffs.  Specific laws are already on the books that demand registration of foreign corporations and of all trusts, but these registration requirements are being totally ignored.

OUR STATE IS IGNORING MILLIONS OF DOLLARS IN TAX REVENUE AND FAILING TO PROVIDE APPROPRIATE REGULATORY OVERSIGHT BY IGNORING THESE LAWS.

Once the nominal plaintiff is properly identified, it’s time to demand proof that they have the authority to maintain the litigation on behalf of the real party in interest.  This too is addressed by the capacity argument, but you must also be thinking about this in the context of preparing discovery, because the proof demanded will come in the form of the Plaintiffs responses to the discovery requests.

I have previously attached my capacity Motion to Dismiss and I can tell you that when the facts support this Motion, it is nearly impossible for the Plaintiffs to wiggle their way around.  Even the most bank-friendly judge will have problems denying this Motion and if the motion is denied, it sets up a very significant summary judgment or appeal issue. I’m going to work on this motion again to put some more recent circuit court cases into it, but as I’ve stated before…

CAPACITY IS A CASE KILLER!

Keep up the good fight!

First reported by 4closurefraud, I post below a stunning and mind-blowing class action lawsuit that was just filed against the Law Offices of David J. Stern, David J. Stern individually and MERSCorp. The lawsuit is stunning both in the allegations made and the detail that describes the collapse of the entire American financial markets and widespread the destruction of property rights across this country.

More will be detailed about this lawsuit in months to come.   For now, I encourage everyone to read this lawsuit carefully and share this lawsuit with judges, reporters and policy makers.  The lawsuit articulates many of the suspicions and the greatest fears held by many but who are unable to put those fears into words.  I give real credit to the courageous attorney who took on this effort and encourage all those who are in the fight to protect and defend our courts to support this effort.

sternclassaction

The reports from the federal government regarding the number of homeowners that have obtained permanent mortgage modifications under the HAMP program show once again how hopeless it is to rely upon government programs to resolve the mortgage crisis.  Clients and advocates continue to ask me, “Why won’t the lender work with me on a modification?” I believe the answer is both simple and complex.

The simple answer is money….I believe the lenders have been incentivized not to approve modifications from their own financial perspective because they are getting both tax and subsidy benefits from their non-performing portfolio.  The complex answer is I believe the program requirements are so complex and difficult to comply with that in order for the lender to obtain the subsidy benefits described above, they must obtain so many records and comply with strict documentary requirements.

The result is a maddening clash between servicers and homeowners who are working hard to obtain mortgage modifications.  I attach below a recent exchange between a homeowner who is working hard to resolve an outstanding mortgage claim….reading this will make you want to pull your hair out….

This letter is a demand for additional review of Bank of America’s recent denial of my home loan modification.  I have sent copies of this to various officials, agencies, and others via email or first class mail, which you can find listed below.

After careful review of your denial letter, I find your denial to contain fallacious reasoning—one which is nothing but a red herring,

Further, I have reviewed the PSA of CWALT 2005- 66 (which includes my loan) and the Guide referenced within this PSA, also known as Freddie Mac’s Single  Family Seller / Servicer Guide, which will be referred herein as the Guide.

Your letter states:

“The investor has declined request for modification. Since the loan is not delinquent, for both a traditional modification and to qualify for HAMP, you needed to demonstrate imminent default hardship. One of the imminent default is defined as a long term disability status after the origination of the subject loan. Based on the documentation provided by you, including your statement regarding receipt of Medicare since 2001, you were receiving assistance prior to the origination date of (2005). As such, you are not a borrower and further the loan is not in imminent default as the assistance you received existed prior to the subject loan origination.”

There are serious and potentially litigious issues brought up in the above statements:

1. You state: The investor has declined request for modification.

My response: Why is this up to the investor? The PSA clearly states “…the Master Servicer may waive, modify or vary any term of any Mortgage Loan ….”. See Section 3.11 (b) pp.49-50 (CWALT 2005-66)

2. You state: Since the loan is not delinquent, for both a traditional modification and to qualify for HAMP….

My response: One does NOT need to be late for HAMP; one needs to show a hardship where imminent default is likely. You (the servicer) are supposed to abide by the PSA.

Section 3.01 (b) of the PSA states that you SHALL follow certain rules/regulation such as Freddie Mac’s Single Family Seller / Servicer Guide which, states in part that:

“In pursuing loss mitigation, Servicers must first consider Borrowers in accordance with the requirements of Chapter C65, Home Affordable Modification Program.”

So, we turn to Chapter C65, which states in part:

Borrowers who are current ,…….. but who, due to hardship, may be in imminent default, are also eligible for modification under HAMP. See: C65. 4

See also: http://www.makinghomeaffordable.gov/borrower-faqs.html

See question #22 from the above link. Do I need to be behind on my mortgage payments to be eligible for a modification under HAMP?

No. Responsible homeowners who are struggling to remain current on their mortgage payments are eligible if they reasonably believe they are very likely to default on their mortgage soon (often referred to by loan servicers as “imminent default”). This might be because a homeowner has had (or will have) a significant increase in the mortgage payment (due to a payment adjustment or rate adjustment upwards); …. or some other significant reduction in income; or some other financial hardship that will make the mortgage unaffordable.

3. You state: ….you needed to demonstrate imminent default hardship.

My Response; I did demonstrate imminent default— Loss of household income, change in household circumstances, significant increase in the mortgage payment if the Truth in Lending statement is correct. This was all documented at length in my hardship letter.

4. You state: One of the imminent default is defined as a long term disability status after the origination of the subject loan.

My response. I understand that, but it doesn’t pertain to my case. This is the red herring.

Disability is NOT the main issue. The main issues for imminent default as detailed in my hardship are 1) Upcoming increase in the monthly mortgage payment in 2010, 2) Loss of household income & 3) change in household financial circumstances, 4) Rising costs of living expenses, and 5) I briefly mentioned disability. I only mentioned disability in the hardship letter to let you know that my chances of returning to work do not look good and because I receive disability payments.

5. You state:  Based on the documentation provided by you,

My response: Did you read my hardship letter?

6. You state: ….including your statement regarding receipt of Medicare since 2001, you were receiving assistance prior to the origination date of (2005).

My response: You asked me for this information and I provided it to you. I wasn’t sure why you wanted this information, but it now appears you are trying to divert the main issues and doing everything you can to block my attempts for an affordable loan mod.

Let me ask you—do you routinely ask others how long they have worked at a job and get such proof from the employer? If not, this act certainly appears to be discriminatory.

7. You state: As such, you are not a borrower

My response: This is a legal issue and you know that, especially due to the conflicting documents you sent to me. But if you insist that I am not a borrower– please file for a Satisfaction of the Mortgage since I signed the Adjustable Rate Rider promising to pay you every single month, among other things. Please review the Adjustable Rate Rider and the Rider to the Note for this predatory Pay Option Arm loan.

8. You state: …….and further the loan is not in imminent default

My response: You appear to be ignoring the facts that there will be a “significant increase” in the mortgage payments later this year, which is one of several reasons for my request for a loan modification now. Also, what about Loss of Household Income? What about the Change in Household Financial Circumstances and Rising Costs of Living Expenses?

9. You state: …as the assistance you received existed prior to the subject loan origination.

Like I said, this is a red herring. Please read my hardship letter.

I request an immediate review of my file and an immediate re-evaluation of my request for a modification. Your reasoning is faulty, and may be discriminatory. Please be assured I will do all I can to save my home, and I hope to be able to come to an agreement about an affordable loan modification in the very near future.

Thank you for your time into these serious matters.