Foreclosure Defense Florida

Foreclosure Fraud Fight- From Blogs to the Wall Street Journal!

For months now, blogs like my Foreclosure Fraud Fighters blog, Foreclosure Hamlet, 4ClosureFraud, Max Garndners Livinglies, DinSFLA and other consumer advocacy blogs have been SCREAMING about systemic fraud in the foreclosure process.   We’ve speculated that it wouldn’t be long before news of serious investigations of the players in foreclosure fraud would break.

Some reasonable people, including judges, legislators and other advocates have questioned our claims of rampant foreclosure fraud.   Now, straight from the front page of the Money section of today’s Wall Street Journal comes this headline:

U.S. Probes Foreclosure-Data Provider

Lender Processing Services Unit Draws Inquiry Over the Steps That Led to Faulty Bank Paperwork

The full article can be found here. and the full text of the article is found below.   The most interesting thing from my perspective and for readers of this blog to note is that I have been reporting on the allegations reported in the Wall Street Journal article for months.   Note also that the Sylvia Nuer case that I reported on last week is cited in the article.

WITH ALL THE CREDIBLE INFORMATION AVAILABLE ABOUT FORECLOSURE FRAUD, HOW CAN ANY JUDGE GRANT FORECLOSURE AND HAVE ANYCONFIDENCE IN THE VERACITY OF THAT JUDGMENT?

BASED ON THE THE WELL-DOCUMENTED EVIDENCE OF FORECLOSURE FRAUD AND THE VERY REAL POTENTIAL THAT FORECLOSURE JUDGMENTS GRANTED BASED ON FRAUD ARE SUBJECT TO CHALLENGE…

ISN’T IT TIME FOR A MORATORIUM ON FORECLOSURES?

WHILE LENDERS AND THEIR AGENTS OF FRAUD ARE LOSING IN COURT,

ISN’T IT TIME THAT LEGISLATORS NOT CONSIDER ANY LEGISLATION THAT WOULD TAKE FORECLOSURE OUTSIDE THE SUPERVISION OF JUDGES AND THE COURTS?

By AMIR EFRATI and CARRICK MOLLENKAMP

A subsidiary of a company that is a top provider of the documentation used by banks in the foreclosure process is under investigation by federal prosecutors.

The prosecutors are “reviewing the business processes” of the subsidiary of Lender Processing Services Inc., based in Jacksonville, Fla., according to the company’s annual securities filing released in February. People familiar with the matter say the probe is criminal in nature.

Michelle Kersch, an LPS spokeswoman, said the subsidiary being investigated is Docx LLC. Docx processes and sometimes produces documents needed by banks to prove they own the mortgages. LPS’s annual report said that the processes under review have been “terminated,” and that the company has expressed its willingness to cooperate. Ms. Kersch declined to comment further on the probe.

A spokesman for the U.S. attorney’s office for the middle district of Florida, which the annual report says is handling the matter, declined to comment.

The case follows on the dismissal of numerous foreclosure cases in which judges across the U.S. have found that the materials banks had submitted to support their claims were wrong. Faulty bank paperwork has been an issue in foreclosure proceedings since the housing crisis took hold a few years ago. It is often difficult to pin down who the real owner of a mortgage is, thanks to the complexity of the mortgage market.

During the housing boom, mortgages were originated by lenders, quickly sold to Wall Street firms that bundled them into debt pools and then sold to investors as securities. The loans were supposed to change hands but the documents and contracts between borrowers and lenders often weren’t altered to show changes in ownership, judges have ruled.

That has made it hard for banks, which act on behalf of mortgage-securities investors in most foreclosure cases, to prove they own the loans in some instances.

LPS has said its software is used by banks to track the majority of U.S. residential mortgages from the time they are originated until the debt is satisfied or a borrower defaults. When a borrower defaults and a bank needs to foreclose, LPS helps process paperwork the bank uses in court.

LPS was recently referenced in a bankruptcy case involving Sylvia Nuer, a Bronx, N.Y., homeowner who had filed for protection from creditors in 2008.

Diana Adams, a U.S. government lawyer who monitors bankruptcy courts, argued in a brief filed earlier this year in the Nuer case that an LPS employee signed a document that wrongly said J.P. Morgan Chase & Co. had owned Ms. Nuer’s loan.

Documents related to the loan were “patently false or misleading,” according to Ms. Adams’s court papers. J.P. Morgan Chase, which has withdrawn its request to foreclose, declined to comment.

Linda Tirelli, a lawyer for Ms. Nuer, declined to comment directly on the case.

Ms. Kersch said LPS didn’t actually create the document and that the company’s “sole connection to this case is that our technology and services were utilized by J.P. Morgan Chase and its counsel.”

While the majority of foreclosures go unchallenged, some homeowners have won the right to keep their homes by proving the bank couldn’t show, on paper, that it owned the mortgage.

Some lawyers representing homeowners have claimed that banks routinely file erroneous paperwork showing they have a right to foreclose when they don’t.

Firms that process the paperwork are either “producing so many documents per day that nobody is reviewing anything, even to make sure they have the names right, or you’ve got some massive software problem,” said O. Max Gardner, a consumer-bankruptcy attorney in Shelby N.C., who has defended clients against foreclosure actions.

The wave of foreclosures and housing crisis appears to have helped LPS. According to the annual securities filing, foreclosure-related revenue was $1.1 billion last year compared with $473 million in 2007.

LPS has acknowledged problems in its paperwork. In its annual securities filing, in which it disclosed the federal probe, the company said it had found “an error” in how Docx handled notarization of some documents. Docx also has processed documents used in courts that incorrectly claimed an entity called “Bogus Assignee” was the owner of the loan, according to documents reviewed by The Wall Street Journal.

Ms. Kersch said the “bogus” phrase was used as a placeholder. “Unfortunately, on a few occasions, the document was inadvertently recorded before the field was updated,” she said.

4 Comments

  • Rose says:

    You do Niel Garfield a disservice in this post, “Livinglies” is HIS blog. As far as I know, Max Gardner runs and excellent bankruptcy seminar but does not maintain a blog of any sort. Mr. Garfield has put a lot of work into his site and deserves rightful credit (and many thanks) for his dedication, passionate fight against predatory “lenders” and bankers, as well as his service to the American people.

    Likewise, thanks are due to you for your efforts on your blog here. You’ve posted many informative and useful pleadings as well as a lot of other information. Thank you!

  • Unaccustomed to such indulgence, I’ve saturated my sweet tooth with this delightful morsel.

    Thank you Mr. Weidner!

    ForeclosureHamlet.org

  • Earl Koskella says:

    This is all very interesting, However it goes even deeper than that. If one was to investigate non-judicial foreclosure states like AZ, CA. NV., etc, and read the Promissory Note that the borrower is required to sign prior to getting the loan, under the area of Waivers in the Note. It is stated there that the Bank does not have to make presentment of the Note to foreclose on the mortgage. I used to work for a large S&L based in Oakland in the 80’s and 90’s. I held the position of Assistant Secretary and was the National Foreclosure Manager. I had also set up and staffed the appraisal, Loan Origination and Underwriting department of 14 offices from Conn. to Florida. I discovered all mortgages are fraud as in 12 USC Section 24, Paragraph seventh, Banks cannot lend their capital or their credit, and they cannot lend their depositor’s assets as they are all demand deposit accounts.
    If one were to look at the financing statement that one is given to show the costs of the “loan” one would see in the first block the words “The amount of YOUR CREDIT that is extended to you.” Right there they are talking about YOUR CREDIT! Not the Bank’s Money, Not the Bank’s Credit, Not their Depositor’s Money. The next block states “the amount in interest the Credit is going to Cost You” There are charging you interest on your credit that they have extended you. That is usuary since no interest can be charged on credit. Next Block tell how much the “loan” is going to cost You. What are they lending you, Your Credit! The bank now uses your promissory Note as currency of the nation, as stated is said 12 USC Section 24 Paragraph seventh. Banks circulate Promissory Notes and Bills of Exchange as currency of the nation. Bills of exchange are the Federal Reserve Notes and the Promissory Notes are the what secures the Deed of Trust or Mortgage. The seperate them and that is why banks say that the Promissory Note has been Lost or destroyed. If one looks at a copy of the Promissory Not, it will have an allonge affixed to it. That shaow that it has been deposited and therefore the Note has become currancy and the Mortgage is now executed or otherwise known as PAID. Each Statement of account sent to the Home owner is a new contract and they are asking you if the stated information is true. When you send in your check, you have agreed that you owe what they have indicated on the Statement of Account. They have to do that every month. If you send them a DISPUTE OF DEBT LETTER, pursuant to the F.D.C.P.A., They have to cease all collection activity untill they prope they are the holder in due course. The federal Trade Comission, in a resent ruling, 5-0 says that all Bannks & attorneys ar Debt Collectors and Not the Real Party in Interes. They only Service the Loan. The following shows that what I have been saying is true. No ENTITY can be a CREDITOR if they don’t hold the asset in question, [i.e.: the NOTE and/or the property]; and Mortgage Pass-through Trusts, [i.e. R.E.M.I.C., as defined in TITLE 26, Subtitle A, CHAPTER 1, Subchapter M, PART II, § § 850-862] cannot hold assets; for if they do, their tax exempt status is violated and the Trust itself is void ab initio.
    These parties (Banks) MUST NOW inform any court ifthey are in court, the I.R.S. and the S.E.C. of their status of either being a Creditor or a Debtor.

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