Foreclosure Defense Florida

A Detailed Treatment of The Cast of Criminals in a Mortgage Foreclosure/Mortgage Backed Securities Case

The lawsuit that appears immediately below is a fantastic read for any party involved in the foreclosure process.   For the last several days I’ve been talking about capacity and both the latent and outright fraud and questionable practices that permeated the whole subprime originating process and which is now part of the foreclosure process.   The lawsuit spells out in plain language how the different players in a mortgage security agreement interact with one another. (If you think they’re screwing homeowner’s over, you should read what they do to one another, according to the lawsuit.)

While the improper conduct alleged in the complaint are just that, allegations, similar allegations could probably be made in the vast majority of similar transactions.   The bottom line is the complaint alleges that the Fat Cats and The Wall Street Wizards were all lying to one another when they concocted this deal and sold it off to one another.   In this complaint, they allege that:

  • 85% of all loans reviewed breached the warranties and representations
  • 51% were charged off within two years of the transaction closing

And importantly, something that I’ve said all along is now being stated by one of the parties to one of these complex mortgage deals:

The number and nature of the defects identified indicate clearly that the loans included in the transaction were systematicaly originated with virtually no regard or the borrower’s ability or willingness to repay their obligations, the fundamental precept of mortgage lending.   Rather, the review cleraly indicates that borrowers were permitted or encouraged to take out loans they obviously could not afford to repay.

And when things went bad, the servicer, Select Portolio Servicing did “almost nothing” to contact borrowers or work on mortgage modifications.

servicerfraud

servicer fraud

To understand how all the pieces fit together, I’ve attached below a Pooling and Servicing Agreement I’m reviewing in preparation for a case that I’m getting ready for this week.   Give it a read through and get familiar with the language and terms.   Later in the week, I will annotate it to include important comments and point out areas of special concern and interest.

Pooling and Servicing Agreement

pooling agreement

Finally, here is the prospectus that was pimped out to investors.   Reading it now, it just shocks me that any relatively sophisticated party would invest in vehicles that were so obviously deficient.   It was questionable then and based on what we know now, just flat out insane…..

prospectusperry

prospectus perry

4 Comments

  • J in CO says:

    The part that isn’t so shocking is the blatant fraud and unsupportable loans were created(on purpose)to default with the notion that they could make more money when the borrowers defaulted by using the profit(tax free) to buy Credit Default Swaps in excessing quantities thus betting against the loans.

    The analogy of buying insurance for your neighbors house and then lighting it on fire applies.

    In fact they had to make the loans as bad as they could with trigger points such as neg ams that reamortized once the loan balance exceeded 110% or high rate adjustments.

    Not only did they know the loans were bad they specifically made them that way with a purpose. This part is the major factor for a defective product lawsuit in the making. It’s the stuff legends are made of.

    I will send you a copy of a NY Fed report on CDS structure. This economy collapse was not a coincidence but rather it was done very calculated and on purpose.

  • TheProtester says:

    Florida Default now argues the new rule regarding verification of complaints does not apply to them…yet detailed at https://www.woodwardlaw.com/foreclosure-news

  • indio007 says:

    Calculated collapse? Or maybe a calculated unjust enrichment that ended up falling on it’s face?
    They were betting that people would sleep on their rights.
    The battle continues.

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