If a bank owns and holds a mortgage and has a right to foreclose, why then are so many banks deeding properties between themselves after the Certificate of Title has been issued? This is a question that everyone should have been asking, but it is particularly important given the OCC Settlement Agreements and the promises by some groups, including ProPublica to monitor cases where the banks did not have the right to foreclose. Forget about all the robo signer stuff, this issue is much easier to document (it’s all right there in the public records for all the world to see, and the magnitude dwarfs everthing else.
Best of all you don’t have to wait around until the (ahem) “independent consultants” hired by the banks discover and disclose those cases where they did not have the right to foreclose…you can start “independently consulting” right from your own computer. Here’s how it goes…..
Log onto any county, take Pinellas County for instance Now, pick a bank, any bank and search for deeds from that bank beginning in say 2009. What you will find is page after page of deeds transferring properties, for no consideration, between all the banks. If the foreclosing bank owned and held the note and had the right to foreclose, we wouldn’t see all these transfers.
I believe the huge numbers of intra-bank deeds is clear evidence that the banks did not have standing, ownership or holder status from the beginning. I believe that in perhaps tens of thousands of cases, the named plaintiff in the lawsuit was nothing more than a fiction, a place keeper, a straw party used to get title. Someone would figure out later who might actually have some right to that mortgage or they will just transfer properties and obligations around among the institutions. After all, no one was looking and no one cares, right?
Why isn’t anyone looking at this?
could you get a screen shot of an example I can’t find what your talking about. I was hoping to find the same in Massachusetts.
These transfers make up the last phase of the scheme employed by the banks/servicers to transfer wealth from homeowners to themselves. The transfers reflect an attempt to create a chain of title intended solely as a preemptive shield against future challenges to the foreclosure and to quiet title actions.
The scheme begins with the foreclosing plaintiff’s lack of standing in the foreclosure action. No news there. But then, the fraud activating the transfer of wealth occurs when the foreclosing plaintiff uses the judgment/credit bid to acquire the property at public sale. At this point the fraud is complete except that any real party in interest, if any, has not yet been paid. The strategy pursued by these mortgage servicers is to obtain title to the property and sort things out later. This sorting out later is quite deliberate. As an example, in many cases monthly payments on a mortgage loan are made by an insurance company during the period the homeowner is alleged to have defaulted on the loan. Then, that same insurance company may pay off the loan and acquired it under its subrogation rights. And, this occurs before there is a foreclosure. The real party in interest in the foreclosure is the insurance company. However, how many mortgage foreclosure actions bear the name of any certificate insurer, such as AMBAC or FSA? None. This is deliberate and a main source of fictitious plaintiffs in foreclosure actions. Nonetheless, when the dust settles from the foreclosure there is eventually a set of transfers that ultimately lead to recovery by the insurer or similar entity. The problem with this, beyond the lack of standing at the outset of the foreclosure action, is that the homeowner never knows about the insurance or that the insurance made it so there was never any default in the first place. Where there is no insurer involved the resulting transfer of the property is a complete windfall for the foreclosing plaintiff. They get the house for free.
The next part of the scheme is revealed by two fact patterns. The first involves assignments of the judgment, credit bid or of the Clerk-issued title to the property. At first glance this looks innocuous; suggesting perhaps that the foreclosing plaintiff sold its interest and the assignment merely completes the transaction. However, a closer examination raises serious questions. Why would a foreclosing plaintiff be assigning its right to Fannie Mae, a mortgage servicer, bank, trust or a debt collection agency? A thorough examination will ultimately show that these assignments are nothing more than a sham, deliberate concealment and extension of the fraud. By this point, however, the judicial process (at least in judicial foreclosure states like Florida) has failed to catch or expose the perpetrators.
The second pattern, which is raised in Matt’s post, is the conveyance of these properties to other entities/banks/servicers. This is a deliberate and calculated scheme to create equities favoring the last person/entity in line on these transfers and is aimed squarely at later influencing the judges when the challenge to property titles eventually make their way to center stage in this mortgage mess. The banks know that judges are reluctant to disturb titles to property, and the contracts that support the conveyances, because history shows that for over 200 years in U.S. jurisprudence the banks have enjoyed deference in these matters.
So, a bank that lacked standing to foreclose, got a judgment and house for free, then got paid by someone for doing all of this, needs to do something to make it impossible to unwind the transaction and reveal the fraud. Since the mortgage servicer banks are all doing the same thing they use each other to create a fictitious chain of title to mask the fraud and then to be in a position to say ” but judge, there have been ” x” number of transfers on this property, are you going to declare all of those as invalid?” Judges lacking the will, fortitude, interest or requisite knowledge to see this for what it really is will fall for the scheme and once again, consistent with longstanding deference, will rule in favor of the banks. No doubt this will play out in quiet title and related real property actions.
However, one factor that remains a wildcard in the mortgage industry’s scheme is the role of the title insurers. These title insurers are not interested in being the ones without a seat when the music stops and find themselves spending millions of dollars defending titles that were subject of the bank’s original fraud and fake chains of title. Title insurers are becoming keen to these tactics and know they will suffer greatly, perhaps to the point of collapse, if they agree to go along with this charade and offer policies on properties that have title defects. When skilled attorneys representing displaced homeowners eventually cut through the illusion they will be facing off not with the attorneys representing the bank or mortgage servicer but with attorneys representing the title insurers. The expense of this kind of litigation, against the low likelihood of success against attorneys fast becoming experts in uncovering this type of fraud, will make it financially unappealing for title insurers to take on that kind of risk. The risk/reward is just not going to be worth it. Now that this is happening no one should be surprised to see mortgage servicers engaged in of jumping into the title insurance business.
Those involved in foreclosure defense, and paying attention, must see this as part of the opportunities in post-judgment advocacy. This is consistent with the latter stages in my model on the ten stages of foreclosure homeowner distress. The bottom line is that in foreclosure defense it isn’t with entry of summary judgment of foreclosure. The defects outlined in this post point to more reasons why the fight must continue. Especially after judgment.
Keep up the great work, Matt. I’m cheering for you and for your fellow warriors.
Great post David!!
Another hypothesis, but I’ve no way to verify it:
Many loans have been “daisy chained”, as the “ABACUS” and “Magnetar” scheme showed. That means that many CDO were created from other CDOs and not from actual loans.
So the “2nd pressure” CDOs were, in fact, no “C”, no collateralized.
Ans, as the WSJ wrote, such “fractions” of loans pools could be found in more than 20 MBS.
So I guess that if, to take an example, 10 MBS have fractionned loans for 10 foreclosed homes, they have to transfer the homes just to “make up” the fictious claim, “1 home, 1MBS”.
Does this hypothesis sounds like an actual possibility to you ?
(From France, Vincent)
I see it when the property is offered for sale as a REO and a purchaser makes an offer that is answered with bank addendums that identify the seller as a different bank, other than the one in record. The deeds are then all filed in the intended sequence after the closing with the new end buyer. I have found those shenanigans interesting.
David’s explanation is clear to me in this context. Especially when the title is handled by the foreclosure mill’s title company. The servicers don’t need their own title company, they have the forelclosure mill’s title company already.
On the rare occasion when a buyer of a bank owned property does any due diligence, it may seem like the incorrect party foreclosed and is now trying to sell the property. According to David’s explanation, being at least once removed from that title transfer is protecting the new end buyer???
IMHO, the closing with the new end buyer is completely “flawed” as it is based on ownership transfers that have not taken place yet. The time travel expertise of the foreclosure mills in dating and recording their documents is critical in completing these trasactions.
Their title company might be “fixing” everything afterwards but I wonder what the title underwriters know when they are issuing the policy.
I’ve requested parallel title searches to compare to those provided and they do not match. At least not until after closing with the new end buyer.
What I’m understanding from David is that this is done to minimize the chance of a judge unraveling sales if there are multiple transfers after the “flawed” foreclosure. Doesn’t that have to be based on the purchasers not knowing about the inconsistencies? Everything is in public record. It’s hard to not know.