Matt Weidner – Fighting With The American People

Posts Tagged ‘short sale’

One of the first issues I began fighting in the foreclosure fight was the failure of the Plaintiff to establish its capacity to sue the homeowner.  The text below is from a post I wrote months ago on this very subject.  In the months and weeks to come we’re all going to be learning and be far more concerned about the very real issue of Capacity.  As we all struggle to unravel this monstrous mess, breaking down capacity will be a key focus in the problem.   We’re all going to be searching around to determine who to sue and where to sue them, but because the courts failed to enforce the most basic pleading requirement….i.e. specifically identify who the parties to the lawsuit are, this is going to be most difficult.

Read the post below, understand it’s been up for more than six months and consider what I was saying then in the context of all these new revelations!

One of the persistent and most pervasive problems in the whole foreclosure crisis is the inability of any party to get reliable or credible information about what is owed on a mortgage, who that phantom amount is owed to and what negotiated amount a lender, servicer or other party involved in the transaction might accept to modify or short sale the underlying loan.

SOMEONE LET A BIG FAT STINKY CAT OUT OF THE BAG!

Another fascinating and very concerning issue that just developed this week is the publication on the MERS website of information that identifies who the servicer on a loan is and who the investor in that loan is.  I’ve reviewed many of the cases in my office it I’m very concerned and perplexed by the fact that neither the servicer or investor matches up to the information I’m seeing in my cases. (SEE BLOG POST EARLIER THIS WEEK TO TRACK YOUR MORTGAGE IN THE MERS SYSTEM.)

When you combine all this information with the depositions of Robo signers that are posted on this website and others, you’ll understand that in a large number of cases, the only connection between the plaintiff foreclosing and the mortgage being foreclosed is a sloppy and hastily executed Assignment and Affidavit signed by an officer that has no corporate authority and has no personal knowledge of the information contained on those documents.

ASSIGN THE BID HERE, SUBSTITUTE THAT PARTY PLAINTIFF HERE, TRANSFER THAT PROPERTY HERE

Going back months now, I’ve been asking the question…”Judge, do you have any idea who you’re granting summary judgment to?”  This is part of my “capacity” argument that I’ve made often….the issue I’m bringing to the forefront is foreclosure cases are filed in one party’s name, then in far too many cases, the name of the plaintiff changes somewhere in the course of the litigation.  The practices of ex parte orders substituting party plaintiff, clerks assigning the bids after the judgment is entered and other improper methods of transferring the interests in litigation cases that collectively total BILLIONS OF DOLLARS IS GROSSLY IMPROPER.

THIS WHOLE SYSTEM IS A FARCE.  A BROKEN DOWN, FRAUDULENT, SHAKY, DISHONEST AND TERRIFYINGLY CORRUPT SYSTEM.

The press and the general public is starting to pick up on these major systemic issues that judges, attorneys and other insiders have known about for some time…when the whole system collapses we’ve all got a real mess on our hands….stay tuned.

capacitymemo

The attached lawsuit provides important and valuable information about Indymac generally that can be useful in every Indymac case.  Now I didn’t read the entire 317 page lawsuit, but I poured through the first hundred or so pages.  It provides very detailed insight into the corporate culture that led to the collapse of Indymac.

Remember as you are engaged in foreclosure litigation on behalf of homeowners that the federal government, through the FDIC, concocted a sweetheart deal where yet another group of fat cat Wall Street types will undoubtedly make obscene profits while you and I (and the homeowner being sued for foreclosure) will absorb all the risk and loss.  It is with this in mind that Indymac/Onewest homeowner foreclosure cases sting me so badly.  In my equitable world, if you’ve got an Indymac foreclosure they would be forced to accept a most generous modification or short sale in order to set off the phenomenal deal that’s already been done…..but then that’s the fantasy world I live in…..

indymaclawsuit

The fact that major press continues to pick up stories of the abuses being visited on homeowners and our courtrooms courtesy of the foreclosure mills is a very important fact that we cannot miss.  The larger public does care about this and our judges and legislative leadership should be aware of this growing awareness.

From the Front Page of the Huffington Post:

RUSHING FORECLOSURE, IGNORING JUSTICE

and

Lyons: Overworked clerks of foreclosure mills

Realtors across the state are exposed to massive liability every time they have consummate a short sale transaction because the previous version Short Sale Addendum form prepared by the Florida Association of Realtors completely ignores the liability faced by homeowners for a deficiency judgment.

I first altered the Realtors I work with and the Florida Association of Realtors to this problem shortly after I started seeing the prior addendum over a year ago, and it appears that they have finally accepted this message.  The attached Short Sale Addendum, revised in June 2010 includes the exactly language that I have been directing my Realtor clients to use.  For every Realtor and seller under contract, this addendum should be replace the prior contract that is part of the transaction

short sale addendum

Short sales still present massive liability for all parties and it is absolutely critical that sellers and all agents involved in these transactions obtain the advice of an experienced foreclosure defense attorney.  Review my blog and contact me directly for more information about this important issue.

PR: wait… I: wait… L: wait… LD: wait… I: wait… wait… Rank: wait… Traffic: wait… Price: wait… CY: wait… I: wait… YCat: wait… C: wait…

That’s a vexing question asked by realtors, homeowners, attorneys and increasingly judges.

There is no one, certain answer, but there are a wide range of factors that play into the unwillingness of banks to make reasonable business decisions.

Top on that list are government incentives and bailouts that subsidize otherwise irrational business decision-making, oh and then there are the complex financial products that have twisted up title and real estate so tightly that no decisions can be made.

The attached article delves into the question and helps answer the question…..

Since the foreclosure crisis began, myself and a chorus of responsible, ethical attorneys have been screaming at the top of our lungs to judges and anyone else that might listen…

HOW IN THE WORLD CAN YOU CONTINUE TO LET ALL THIS FRAUD CONTINUE TO BE COMMITTED?

DON’T YOU UNDERSTAND THAT FRAUD IN THE FORECLOSURE PROCESS IS GOING TO WREAK HAVOC ON THE REAL ESTATE MARKETS AND COURTS FOR DECADES TO COME?

EVEN IF YOU PUSH FORECLOSURES THROUGH NOW, THE TITLE TO PROPERTIES FROM FORECLOSURES GRANTED IN THIS PERIOD WILL HAVE LITTLE OR NO VALUE!

and finally

THE TITLE INSURORS WHO ARE UNDERWRITING TITLE POLICIES WILL GO BANKRUPT AND TITLE INSURANCE WILL BE WORTHLESS!

Our realtor friends are starting to catch on…read the following article which is quite chilling…

-by George Mantor

Agents involved in foreclosures and short sales may need to begin to disclose the possibility of serious defects in title associated with these types of lender controlled sales.

If recent court decisions are any indication, we are headed for an explosion of litigation in this area. And now, Massachusetts Courts have revealed the possibility that unlawful foreclosures, dating back to 1989, might be invalidated and that buyers of foreclosed properties and short sales may have clouded titles. The implications are enormous for title companies, bankruptcy attorneys, real estate agents, those facing foreclosure, and those who have lost their homes. The problem stems from the collision of two worlds.  It illustrates what can happen when the new world fails to acknowledge or understand the old.  It is change that takes place without the cooperation of all affected parties. Real property law has an ancient tradition.  But, its laws and their purpose are not always apparent to those who want to change those traditions to benefit themselves. In the case of maintaining a public chain of title to real property, it was thought to be essential and generally required by the law. For hundreds of years, no one ever thought of any reason to change it.  It was thought to be part of the public good. That is, until Wall Street saw the money making potential in Credit Derivatives.

Credit Derivatives are packages of debts such as car loans, student loans, credit card debts, and mortgage loans to name a few.  These are collected, rated according to their risk, and sold to investors around the world. One small problem; if you are going to bundle mortgages from every county in the country, you would have to physically send someone to every county recorder’s office on multiple occasions and pay multiple recording fees.  It was costly and cumbersome to those responsible for affecting the recordings. Their solution?  Stop recording the assignments in public and track them instead in an electronic data base that the major lenders would operate through a cooperative entity.  Say hello to Mortgage Electronic Registration Systems, affectionately known as MERS.  Not only did it save them a fortune in county fees and manpower, it turned out to be a cash cow.

Well, good for them, right?  They figured out how to bring technology to the process and were handsomely rewarded.  Never mind that the cost of maintaining a county recording system is paid, in part, by the recording revenue. They still have to maintain the apparatus, but now they aren’t receiving the revenue intended to maintain the system.  Of course, this comes at a time when many counties are struggling to provide necessary services to their residents.

But, as with many new ideas, there are unintended consequences that are now coming to light as state after state are enforcing basic property rights.

Massachusetts

On October 14, 2009, Judge Keith Long of the Massachusetts Land Court said in his ruling, “The issues in this case are not merely problems with paperwork or a matter of dotting i’s and crossing t’s. Instead they lie at the heart of the protections given to homeowners and borrowers by the Massachusetts legislature.”

He was referring to the industry practice of trading notes endorsed in blank, in direct violation of securities law.  Here is what he said on that point; “The blank mortgage assignments they possessed transferred nothing…in Massachusetts, a mortgage is a conveyance of land. Nothing is conveyed unless and until it is validly conveyed.  The various agreements between the securitization entities stating that each had a right to an assignment of the mortgage are not themselves an assignment and they are certainly not in recordable form.”

Two years earlier, Judge Rosenthal in re Schwartz, found that there was no evidence that the note itself was assigned and no evidence as to who the current holder might be.

Kansas

On August 28, 2009, Judge Eric S. Rosen of the Kansas Supreme Court likened MERS to a “straw man” and not a party of interest with the right to foreclose.

“Indeed, in the event that a mortgage loan somehow separates interests of the note and the deed of trust, with the deed of trust lying with some independent entity, the mortgage may become unenforceable.  The practical effect of splitting the deed of trust from the promissory note is to make it impossible for the holder of the note to foreclose, unless the holder of the deed of trust is the agent of the holder of the note.  Without the agency relationship, the person holding only the note lacks the power to foreclose in the event of a default. The person holding only the deed of trust will never experience a default because only the holder of the note is entitled to payment of the underlying obligation. The mortgage loan becomes ineffectual when the note holder did not hold the deed of trust.”

California

On October 21, 2008, Judge Samuel L. Bufford noted in his ruling that California codified the principal in 1872 in Carpenter v. Longan: “Given that ‘the debt is the principal thing and the mortgage an accessory,’ the Supreme Court reasoned that as a corollary, ‘the mortgage can have no separate existence.  An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity.”

Nevada

On August 19^th, 2008, Judge Linda B. Riegle concluded, “There is no evidence that the named nominee is entitled to enforce the note or that MERS is the agent of the note’s holder.  Indeed, the evidence is to the contrary, the note has been sold, and the named nominee no longer has any interest in the note.”

Arkansas

On March 19, 2009 the Supreme Court of Arkansas found that MERS was not the beneficiary under the deed of trust, although so designated in the deed of trust, because it did not receive the payments on the underlying debt.

Ohio

On October 31, 2007, U.S. District Judge Christopher Boyko dismissed 14 foreclosure actions and delivered a strong admonishment in a footnote:

“Plaintiff’s ‘Judge, you just don’t understand how things work,’ argument reveals a condescending mindset and quasi-monopolistic system where financial institutions have traditionally controlled, and still control, the foreclosure process…There is no doubt that every decision made by a financial institution in the foreclosure is driven by money.”

When you consider the origin of this problem, it is hard to disagree.  If the foreclosing entity didn’t loan the money, the original note was sold, the location of the note is unknown, and it isn’t even clear what would happen to the proceeds of the eventual sale of the property to a new owner.

Until recently, MERS had succeeded in most foreclosure actions.  In non judicial foreclosure states like California, there is no judicial review of the elements of a foreclosure.  Unless the borrower files for Bankruptcy or brings a law suit against MERS alleging RESPA or TILA violations, there is no opportunity for the borrower to challenge the foreclosure.

In judicial foreclosure states, there is a law suit brought by the party entitled to payment on the defaulted loan.  Not the trust, but the actual possessor in due course of the original note.  Its part judicial procedure, part uniform commercial code and part ancient property law.

But, the securitization business is so complicated, intentionally so, that defendants, most of their legal representation, and the judges rarely considered the consequences to the real parties in interest.  This will continue until enough people understand the importance of the actual note and its relationship to the property.

Many homes have been unlawfully foreclosed by entities not entitled to anything. The former owners of these homes have rights that will need to be addressed.

People who applied for mortgage modifications and received them may have gotten approval from a bank employee with no authority to change the underlying terms of the securities in the pools.

Many people bought these homes and have potential future claims.  If there is a cloud on title, the new owner is at risk of being unable to sell or encumber the property.  If the foreclosure were unlawful, the borrower is entitled to their property.  And, there is a very real possibility that the true holder of the actual note, once and if ever this mess is sorted out, could come forward with the actual note.

It isn’t important to only those in foreclosure. For those seeking loan modifications, potential buyers of short sales and foreclosures and those acting in a fiduciary capacity on their behalf, you may soon be demanding, “Show me the note.”