Reader MBSGuy wrote to express his disgust with the mortgage industry’s efforts to pretend that nothing is rotten in Denmark. His object of contempt was an article in Bloomberg which dutifully recited the current talking points. The flacks have clearly been working full time: the headline, “Mortgage Industry Bristles at ‘Robin Hood’ Foreclosure Theories,” is yet another example of creative phrase-mongering to try to discredit critics. And get a load of the assertions:
The “number of attorneys that signed off on” the policies used when Wall Street firms packaged mortgages into bonds means it’s likely that the trusts used to hold the debt will be able to prove they own the loans in almost all cases, said Philip Seares, a managing director at Citigroup Inc. who run its trading of whole loans.
The industry also has faith that loan assignments handled by the Mortgage Electronic Registration System, or MERS, can’t be broadly contested, Seares and Mortgage Bankers Association President John Courson said at the group’s annual conference.
As we indicated in a post earlier tonight, judges ARE contesting the use of MERS, and in particular, the casual assignments made by parties who were not employees of the company that owned the note. In addition, all state supreme courts that have ruled on foreclosures in the name of MERS (admittedly a different issue than MERS assignments per se), save Minnesota, which passed MERS-friendly statutes, have ruled against it. . These decisions have often objected to the multiple and inconsistent roles MERS typically plays, which lays the foundation for other challenges.
As MBSGuy noted:
When confronted with countless examples of why there are problems, industry insiders say it can’t be a problem because scores of attorneys signed off on the legal documents. It is almost embarrassing to see how feeble the industry sounds when confronted with evidence.
The part that the industry boosters are missing is the fact that the legal opinions for mortgage securitizations were qualified (in general, lawyers craft opinion so as to provide the minimum degree of comfort necessary to get the deal done). They took an “if-then” form: “if you did everything you said you would do, then all is fine.” And as we’ve indicated repeatedly on this blog, the industry did NOT do what it promised in the pooling and servicing agreement. It appears in many cases starting roughly in 2004, the parties to the securitization failed to convey the notes as described in their own contracts, basically because it was too costly and time-consuming.
The media has finally woken up and is reporting on a wide range and variety of bogus foreclosure actions, vitiating the industry claims that all foreclosure actions are correct. And before some readers try the argument that a few errors here and there are no big deal, try telling that to someone threatened with the loss of their home. This sort of thing was impossible in the pre-securitization era, and for good reason: the process of dealing with real property was cumbersome by design. It was fault intolerant because the consequences of error can be catastrophic to the participants. Any process that has a lot of safety features and checks is going to be inefficient. It was inevitable that a drive for efficiency at all costs would compromise the integrity of the system.
The New York Times, in “Homeowners Facing Foreclosure Demand Recourse,” provides examples of erroneous foreclosure actions:
Ricky Rought paid cash to the Deutsche Bank National Trust Company for a four-room cabin in Michigan with the intention of fixing it up for his daughter. Instead, the bank tried to foreclose on the property and the locks were changed, court records show.
Sonya Robison is facing a foreclosure suit in Colorado after the company handling her mortgage encouraged her to skip a payment, she says, to square up for mistakenly changing the locks on her home, too.
Thomas and Charlotte Sexton, of Kentucky, were successfully foreclosed upon by a mortgage trust that, according to court records, does not exist.
The price is worth reading in full, because it gives the gory details of these cases, but it has some technical errors (its discussion of allonges is all wrong, and it also fails to note that the use of allonges in foreclosures is suspect; the ones that magically materialize in foreclosures are almost without exception in violation of the requirements of the Uniform Commercial Code).
Even though more and more accounts like these are being reported daily, the denial in the industry remains high. I spoke to one expert who believes that the big white shoe law firms themselves do not understand how badly their clients failed to perform their contractual obligations. Thus lawyers may be offering their confident defenses based on ignorance of the relevant facts. (Before legally sophisticated readers point out that banks ought to tell their attorneys first about any legal problems, since the communication is confidential, remember, only a very few senior executives, plus members of the legal department, deal with outside counsel. An individual employee who was in a position to know what was really going on would be at a lower level. A general rule of corporate life is bearing news of serious problems is a career-limiting move).
But even allowing for the possibility of remarkable ignorance, the industry defenses are remarkably weak. Back to the Bloomberg story:
The American Securitization Forum trade group, JPMorgan Chase & Co. bond analysts and law firm SNR Denton have also dismissed such talk. In a commentary posted on its website, SNR Denton says that most attempts to question the validity of practices can be trumped by items such as the fact that all parties involved “clearly intended” for the trusts to take ownership.
We dismembered the SNR Denton article earlier this week, and the “intent” argument is laughable, particularly given the detailed, specific requirements of the pooling and servicing agreement. Consider: if you paid your estimated income taxes on time and filed for an extension, but then failed to send in your tax return, how sympathetic do you think the IRS would be if you argued you clearly intended to submit your return by the deadline?
A vastly more compelling analysis comes from law professor Katherine Porter, whose testimony to the Congressional Oversight Panel today is must reading. She is quite clear that current practices are not kosher:
I describe the legal and economic issues involved in impermissible or flawed foreclosures and then set out the possible responses to such wrongdoing. Specifically, I consider the ways in which systemic foreclosure problems may set off extensive and complex litigation, destabilize the housing market, and result in regulatory interventions. I believe that the foreclosure process lacks integrity in an unacceptable number of ways and instances and that these problems undermine foreclosure mitigation efforts.
She stresses that the problems with foreclosures are far more extensive than robo signers:
Robo-signing is only one of a number of alleged deficiencies in foreclosure practices. Several courts have determined that there were serious deficiencies in the foreclosure process. At a website that I maintain with Tara Twomey, my co-investigator in the Mortgage Study, we make available a list of judicial decisions in which the court finds inappropriate foreclosure practices or misbehavior by mortgage servicers or their agents. Although we stopped updating the document over a year ago, at that time there were already more than fifty such cases. The problems in such cases range from the imposition and collection of improper fees, a lack of standing to foreclose in judicial foreclosure states, the pursuit of foreclosure without rights in the note and mortgage, mortgage origination fraud, or liability to investors for poor underwriting or improper servicing. The key point is that the vast majority of the alleged problems cannot accurately be described as “technicalities.” The flaws in the foreclosure systems go well beyond improper affidavits
Twomey and Porter stopped updating their Mortgage Study document in 2009 because they were being flooded with the number of cases showing violations of servicing requirements and foreclosure standards.
She also confirms our view that the failure to convey the borrower promissory note as described in the pooling and servicing agreement is a serious problem:
The largest and most complex harm that may exist with the loans in default or foreclosure today is that the paperwork for the loans was not transferred correctly…..The concern being raised is that during the securitization process that the transfers from originator to sponsor to depositor to trust (to generalize the parties in a typical process) were not performed or were not performed correctly. A related issue is whether the physical paperwork or electronic records can be located and are accurate. These records are needed to sort out whether the transfers were completed and valid.
I believe the law is somewhat unsettled on what actually must be done via a securitization to complete the transfers correctly….
The implications of problems with transfer are serious. If the trust does not have the loan, homeowners may have been making payments to the wrong party. If the trust does not have the note or mortgage, it may not have standing to foreclose or legal authority to negotiate a loan modification. To the extent that these transfers are being completed retroactively, it raises issues about honesty in creating and dating the assignments/transfers and about what parties can do, if anything, if an entity in the securitization chain, such as Lehman Brothers or New Century, is no longer in existence. Moreover, retroactive transfers may violate the terms of the trust, which often prohibit the addition of new assets, or may cause the trust to lose its REMIC status, a favorable treatment under the Internal Revenue Code. Chain of title problems have the potential to expose the banks to investor lawsuits and to hinder their legal authority to foreclose or even to do loss mitigation.
This is a pretty damning list, needless to say. And there is another layer of problems this may create, that consumers may be able to sue the securitization trust (or whatever entity actually has the note now) for origination fraud:
For over 10 years, there have been allegations about violations of consumer protection laws and poor/nonexistent underwriting at loan origination. While the law gives great finality to completed foreclosure sales, loans that are currently in default (which some estimate to be as many as 20 percent of mortgages underlying privately-backed securities) are at risk of being challenged for origination violations. These challenges could come in the form of investor suits trying to force banks to buy back loans that did not meet the representations of the securitization documents, e.g., they were not underwritten to the reported standard. Another type of lawsuit risk is that consumers are able to sue the current holder of their note for violations that occurred at origination. Normally, these complaints fail because the holder of the note is thought to be a “holder in due course,” a person that receives protection from most of the claims that someone could bring against the originator of the note. However, if the notes do not meet the requirements of negotiable instruments, there cannot be a holder in due course. The person with the note merely is the possessor “bearer paper,” and can be sued for all wrongs associated with that note contract.
She also dismisses bank claims that their processes are fine:
The banks have repeatedly tried to minimize perceptions about the materiality of their foreclosure deficiencies…The general thrust of the banks’ defense has been that because the homeowners did take on a mortgage obligation, and have in fact missed payments, then the foreclosure is proper. As I have explained recently:
“Just because the homeowner hasn’t paid his mortgage doesn’t mean anybody in the world can kick him out,” …She added that the bank’s argument was a little like saying that someone who committed a crime shouldn’t receive a trial because he’s so obviously guilty.
Due process does not disappear merely upon the assertion by one party that the other is clearly liable. The allegations of problems in mortgage servicing should, if anything, only heighten the due process requirements on consumers. For example, in light of the lack of verification procedures for affidavits to support requests for judgments in judicial foreclosures, it may be reasonable to be concerned that there is absolutely no verification of the facts in the non-judicial foreclosure context. Thus, we might argue that states or the federal government ought to increase the legal requirements for foreclosures across the board, at least for loans initiated in the last five to ten years when widespread allegations of paperwork and procedural problems have existed. The banks’ arguments that we can ignore possible systemic wrongdoing by the banks because as a systemic matter, homeowners are in default on their loans, is unpersuasive. Indeed, it seems to reflect a fundamental misunderstanding of the obligations of any party wishing to invoke the aid of the law in enforcing its rights….
he lawyers that I have met over years of my research on mortgage servicing—both creditor lawyers and debtor lawyers—have nearly universally expressed that they believe a very large number (perhaps virtually all) securitized loans made in the boom period in the mid-2000s contain serious paperwork flaws, did not meet underwriting or other requirements of the trust, and have not been serviced properly as to default and foreclosure.
There is a great deal more in her testimony that is very much worth reading.
Damon Slivers, a member of the COP, succinctly highlighted the key issue:
The risks to bank balance sheets is real as they reap the whirlwind they have sown. From the New York Times article cited earlier:
Some consumer lawyers say they are now swamped with homeowners saying they have been wronged by slipshod bank practices and want to fight to keep their homes.
And the more consumers fight, which increases costs to banks and investors, the more investors will push for a resolution (indeed, they’ve already started), and will go to court if need be. It’s going to be hard for banks to maintain their “no real problems here” party line as litigation against them continues to snowball.
14 Responses to “The Foreclosure Zoo”
Leave a Reply
You must be logged in to post a comment.
eric seiger
Probably Bad <b>News</b>: Police FAIL - Epic Fail Funny Videos and Funny <b>...</b>
epic fail photos - Probably Bad News: Police FAIL.
Small Business <b>News</b>: New Business Rules
The rules for business keep changing but a few things stay the same. First impressions matter, technology keeps changing the game and costs keep rising as.
Google <b>News</b> Blog: Credit where credit is due
News publishers and readers both benefit when journalists get proper credit for their work. That can be difficult, with news spreading so quickly and many websites syndicating articles to others. That's why we're experimenting with two ...
eric seiger
Reader MBSGuy wrote to express his disgust with the mortgage industry’s efforts to pretend that nothing is rotten in Denmark. His object of contempt was an article in Bloomberg which dutifully recited the current talking points. The flacks have clearly been working full time: the headline, “Mortgage Industry Bristles at ‘Robin Hood’ Foreclosure Theories,” is yet another example of creative phrase-mongering to try to discredit critics. And get a load of the assertions:
The “number of attorneys that signed off on” the policies used when Wall Street firms packaged mortgages into bonds means it’s likely that the trusts used to hold the debt will be able to prove they own the loans in almost all cases, said Philip Seares, a managing director at Citigroup Inc. who run its trading of whole loans.
The industry also has faith that loan assignments handled by the Mortgage Electronic Registration System, or MERS, can’t be broadly contested, Seares and Mortgage Bankers Association President John Courson said at the group’s annual conference.
As we indicated in a post earlier tonight, judges ARE contesting the use of MERS, and in particular, the casual assignments made by parties who were not employees of the company that owned the note. In addition, all state supreme courts that have ruled on foreclosures in the name of MERS (admittedly a different issue than MERS assignments per se), save Minnesota, which passed MERS-friendly statutes, have ruled against it. . These decisions have often objected to the multiple and inconsistent roles MERS typically plays, which lays the foundation for other challenges.
As MBSGuy noted:
When confronted with countless examples of why there are problems, industry insiders say it can’t be a problem because scores of attorneys signed off on the legal documents. It is almost embarrassing to see how feeble the industry sounds when confronted with evidence.
The part that the industry boosters are missing is the fact that the legal opinions for mortgage securitizations were qualified (in general, lawyers craft opinion so as to provide the minimum degree of comfort necessary to get the deal done). They took an “if-then” form: “if you did everything you said you would do, then all is fine.” And as we’ve indicated repeatedly on this blog, the industry did NOT do what it promised in the pooling and servicing agreement. It appears in many cases starting roughly in 2004, the parties to the securitization failed to convey the notes as described in their own contracts, basically because it was too costly and time-consuming.
The media has finally woken up and is reporting on a wide range and variety of bogus foreclosure actions, vitiating the industry claims that all foreclosure actions are correct. And before some readers try the argument that a few errors here and there are no big deal, try telling that to someone threatened with the loss of their home. This sort of thing was impossible in the pre-securitization era, and for good reason: the process of dealing with real property was cumbersome by design. It was fault intolerant because the consequences of error can be catastrophic to the participants. Any process that has a lot of safety features and checks is going to be inefficient. It was inevitable that a drive for efficiency at all costs would compromise the integrity of the system.
The New York Times, in “Homeowners Facing Foreclosure Demand Recourse,” provides examples of erroneous foreclosure actions:
Ricky Rought paid cash to the Deutsche Bank National Trust Company for a four-room cabin in Michigan with the intention of fixing it up for his daughter. Instead, the bank tried to foreclose on the property and the locks were changed, court records show.
Sonya Robison is facing a foreclosure suit in Colorado after the company handling her mortgage encouraged her to skip a payment, she says, to square up for mistakenly changing the locks on her home, too.
Thomas and Charlotte Sexton, of Kentucky, were successfully foreclosed upon by a mortgage trust that, according to court records, does not exist.
The price is worth reading in full, because it gives the gory details of these cases, but it has some technical errors (its discussion of allonges is all wrong, and it also fails to note that the use of allonges in foreclosures is suspect; the ones that magically materialize in foreclosures are almost without exception in violation of the requirements of the Uniform Commercial Code).
Even though more and more accounts like these are being reported daily, the denial in the industry remains high. I spoke to one expert who believes that the big white shoe law firms themselves do not understand how badly their clients failed to perform their contractual obligations. Thus lawyers may be offering their confident defenses based on ignorance of the relevant facts. (Before legally sophisticated readers point out that banks ought to tell their attorneys first about any legal problems, since the communication is confidential, remember, only a very few senior executives, plus members of the legal department, deal with outside counsel. An individual employee who was in a position to know what was really going on would be at a lower level. A general rule of corporate life is bearing news of serious problems is a career-limiting move).
But even allowing for the possibility of remarkable ignorance, the industry defenses are remarkably weak. Back to the Bloomberg story:
The American Securitization Forum trade group, JPMorgan Chase & Co. bond analysts and law firm SNR Denton have also dismissed such talk. In a commentary posted on its website, SNR Denton says that most attempts to question the validity of practices can be trumped by items such as the fact that all parties involved “clearly intended” for the trusts to take ownership.
We dismembered the SNR Denton article earlier this week, and the “intent” argument is laughable, particularly given the detailed, specific requirements of the pooling and servicing agreement. Consider: if you paid your estimated income taxes on time and filed for an extension, but then failed to send in your tax return, how sympathetic do you think the IRS would be if you argued you clearly intended to submit your return by the deadline?
A vastly more compelling analysis comes from law professor Katherine Porter, whose testimony to the Congressional Oversight Panel today is must reading. She is quite clear that current practices are not kosher:
I describe the legal and economic issues involved in impermissible or flawed foreclosures and then set out the possible responses to such wrongdoing. Specifically, I consider the ways in which systemic foreclosure problems may set off extensive and complex litigation, destabilize the housing market, and result in regulatory interventions. I believe that the foreclosure process lacks integrity in an unacceptable number of ways and instances and that these problems undermine foreclosure mitigation efforts.
She stresses that the problems with foreclosures are far more extensive than robo signers:
Robo-signing is only one of a number of alleged deficiencies in foreclosure practices. Several courts have determined that there were serious deficiencies in the foreclosure process. At a website that I maintain with Tara Twomey, my co-investigator in the Mortgage Study, we make available a list of judicial decisions in which the court finds inappropriate foreclosure practices or misbehavior by mortgage servicers or their agents. Although we stopped updating the document over a year ago, at that time there were already more than fifty such cases. The problems in such cases range from the imposition and collection of improper fees, a lack of standing to foreclose in judicial foreclosure states, the pursuit of foreclosure without rights in the note and mortgage, mortgage origination fraud, or liability to investors for poor underwriting or improper servicing. The key point is that the vast majority of the alleged problems cannot accurately be described as “technicalities.” The flaws in the foreclosure systems go well beyond improper affidavits
Twomey and Porter stopped updating their Mortgage Study document in 2009 because they were being flooded with the number of cases showing violations of servicing requirements and foreclosure standards.
She also confirms our view that the failure to convey the borrower promissory note as described in the pooling and servicing agreement is a serious problem:
The largest and most complex harm that may exist with the loans in default or foreclosure today is that the paperwork for the loans was not transferred correctly…..The concern being raised is that during the securitization process that the transfers from originator to sponsor to depositor to trust (to generalize the parties in a typical process) were not performed or were not performed correctly. A related issue is whether the physical paperwork or electronic records can be located and are accurate. These records are needed to sort out whether the transfers were completed and valid.
I believe the law is somewhat unsettled on what actually must be done via a securitization to complete the transfers correctly….
The implications of problems with transfer are serious. If the trust does not have the loan, homeowners may have been making payments to the wrong party. If the trust does not have the note or mortgage, it may not have standing to foreclose or legal authority to negotiate a loan modification. To the extent that these transfers are being completed retroactively, it raises issues about honesty in creating and dating the assignments/transfers and about what parties can do, if anything, if an entity in the securitization chain, such as Lehman Brothers or New Century, is no longer in existence. Moreover, retroactive transfers may violate the terms of the trust, which often prohibit the addition of new assets, or may cause the trust to lose its REMIC status, a favorable treatment under the Internal Revenue Code. Chain of title problems have the potential to expose the banks to investor lawsuits and to hinder their legal authority to foreclose or even to do loss mitigation.
This is a pretty damning list, needless to say. And there is another layer of problems this may create, that consumers may be able to sue the securitization trust (or whatever entity actually has the note now) for origination fraud:
For over 10 years, there have been allegations about violations of consumer protection laws and poor/nonexistent underwriting at loan origination. While the law gives great finality to completed foreclosure sales, loans that are currently in default (which some estimate to be as many as 20 percent of mortgages underlying privately-backed securities) are at risk of being challenged for origination violations. These challenges could come in the form of investor suits trying to force banks to buy back loans that did not meet the representations of the securitization documents, e.g., they were not underwritten to the reported standard. Another type of lawsuit risk is that consumers are able to sue the current holder of their note for violations that occurred at origination. Normally, these complaints fail because the holder of the note is thought to be a “holder in due course,” a person that receives protection from most of the claims that someone could bring against the originator of the note. However, if the notes do not meet the requirements of negotiable instruments, there cannot be a holder in due course. The person with the note merely is the possessor “bearer paper,” and can be sued for all wrongs associated with that note contract.
She also dismisses bank claims that their processes are fine:
The banks have repeatedly tried to minimize perceptions about the materiality of their foreclosure deficiencies…The general thrust of the banks’ defense has been that because the homeowners did take on a mortgage obligation, and have in fact missed payments, then the foreclosure is proper. As I have explained recently:
“Just because the homeowner hasn’t paid his mortgage doesn’t mean anybody in the world can kick him out,” …She added that the bank’s argument was a little like saying that someone who committed a crime shouldn’t receive a trial because he’s so obviously guilty.
Due process does not disappear merely upon the assertion by one party that the other is clearly liable. The allegations of problems in mortgage servicing should, if anything, only heighten the due process requirements on consumers. For example, in light of the lack of verification procedures for affidavits to support requests for judgments in judicial foreclosures, it may be reasonable to be concerned that there is absolutely no verification of the facts in the non-judicial foreclosure context. Thus, we might argue that states or the federal government ought to increase the legal requirements for foreclosures across the board, at least for loans initiated in the last five to ten years when widespread allegations of paperwork and procedural problems have existed. The banks’ arguments that we can ignore possible systemic wrongdoing by the banks because as a systemic matter, homeowners are in default on their loans, is unpersuasive. Indeed, it seems to reflect a fundamental misunderstanding of the obligations of any party wishing to invoke the aid of the law in enforcing its rights….
he lawyers that I have met over years of my research on mortgage servicing—both creditor lawyers and debtor lawyers—have nearly universally expressed that they believe a very large number (perhaps virtually all) securitized loans made in the boom period in the mid-2000s contain serious paperwork flaws, did not meet underwriting or other requirements of the trust, and have not been serviced properly as to default and foreclosure.
There is a great deal more in her testimony that is very much worth reading.
Damon Slivers, a member of the COP, succinctly highlighted the key issue:
The risks to bank balance sheets is real as they reap the whirlwind they have sown. From the New York Times article cited earlier:
Some consumer lawyers say they are now swamped with homeowners saying they have been wronged by slipshod bank practices and want to fight to keep their homes.
And the more consumers fight, which increases costs to banks and investors, the more investors will push for a resolution (indeed, they’ve already started), and will go to court if need be. It’s going to be hard for banks to maintain their “no real problems here” party line as litigation against them continues to snowball.
14 Responses to “The Foreclosure Zoo”
-
Basilisc Says:
November 5th, 2010 at 6:32 am
How about this: if a partner (or associate) at a law firm is found to have represented a plaintiff in a foreclosure case in which a fraudulent affidavit has been filed (about the service, or any other aspect), then EVERY PARTNER in that firm is disbarred from practicing in the state. Regardless of who’s at fault.
I’m not a lawyer, but I think that should end the problem.
-
Winston Says:
November 5th, 2010 at 6:42 am
Would not this practice render the case null-and-void? Or could the plaintiff re-file for foreclosure?
-
Petey Wheatstraw Says:
November 5th, 2010 at 7:38 am
In light of all of the evidence of the industrial nature and mind boggling level of criminality in the foreclosure/securitization processes, along with little or no action by those charged with upholding the laws pertaining to such criminality (but apparently having plenty of time and resources to go after less serious crimes committed by individuals outside this industry), it would seem that selective enforcement of our laws is a matter of official policy.
There are many ways to skin this cat, but TPTB do not want the cat skinned. The contract between the people and the government has no requirement for specific performance, and, lacking that, there is no way to compel the authorities to uphold the law.
The People should acknowledge the fact that criminality in high places is systemic, and without a coordinated effort to force the issue, these violations of the law and the processes for bringing those responsible to justice, justice will not be served — regardless of how easy and beneficial doing so would be.
We are just becoming aware that we must fight back. Unfortunately we come to this realization as we pick ourselves up off the ground after having been knocked unconscious and robbed. We are trying to defend ourselves after the fact.
-
Petey Wheatstraw Says:
November 5th, 2010 at 7:48 am
Basilisc:
Only the Bar Associations (the corporation(s) that has (have) captured the Judiciary branch of our government) can disbar an attorney. If you think that might happen on a scale that would have a measurable effect on attorneys engaging in these violations of law and/or procedural rules of the courts, you might not understand the true level or nature of the corruption in and of our system.
-
Julia Chestnut Says:
November 5th, 2010 at 9:18 am
Guys, what it does is deprive the court of jurisdiction over the defendant. If they were never properly served, the whole case is thrown out and starts over again. Sometimes, if there was no prejudice to the defendant (I’m having a hard time figuring out how there would be no prejudice here, because lots of timelines are involved that trigger off of every move in a default and foreclosure), sometimes the case can proceed. Often if the defendant has actual knowledge of the suit, even if they weren’t properly served, the court will take that into account.
I am interested to see how Florida law treats the question of the holder in due course: this might be one of the few things that would wrest a house back from a buyer who purchased it at the courthouse steps. If the court never acquired jurisdiction of the defendant, the order permitting sale was improper. The bank in effect stole the house, and sold it. Normally, a holder in due course of collateral has huge rights. This just might be a fly in the ointment of how these things normally work. My bet is that the case law dates from the depression era, back before the rise of the vampires. This could get very interesting.
But there are two things that make courts really, really pissy: one is being openly lied to under oath – perjury – and that is what filing a patently false affidavit is. The second is having their jurisdiction invoked improperly and having things drag on or have to get redone because of it. Well there is a third that is probably not involved here, and that is being reversed. Believe me, if anything will stir an honest, but lazy or indifferent, judge to action, it is having the court played for a fool. This could be very, very interesting to watch.
As to the comments about the physical appearance of the defendant, I can’t believe the servers were too lazy to get up on facebook and find out what the defendant looks like. Sheesh.
-
beaufou Says:
November 5th, 2010 at 9:31 am
What Petey said.
-
TakBak04 Says:
November 5th, 2010 at 9:53 am
50-State Foreclosure Probe Loses Several Influential Voices after Midterm Elections/ HT Rob
Iowa Attorney General Thomas Miller, the point man on the 50-state investigation into the foreclosure mess, won reelection this week. But a number of the other 13 attorneys generals on the inquiry’s executive committee will leave in the coming months.
In Ohio, Attorney General Richard Cordray — a Democrat who was the first to sue a major lender over the foreclosure problems — lost to Republican Mike DeWine. “A campaign website for Mr. DeWine lists job creation and opposing the health-care plan as his top priorities and makes no obvious mention of the foreclosure scandal, the multistate investigation or Mr. Cordray’s lawsuit against GMAC,” noted the Wall Street Journal. On Wednesday, DeWine declined to comment on the foreclosure issue, saying that the office will “evaluate each piece of existing litigation.”
Another key official with experience dealing with mortgage companies — Arizona Attorney General Terry Goddard (D) — lost the race for governor. Goddard took the lead in negotiating a settlement, announced in October, with Wells Fargo. The lender, which was facing allegations of deceptive marketing, agreed to spend an estimated $772 million modifying loans for borrowers across the country.
Republican Tom Horne beat Democrat Felecia Rotellini to win Goddard’s former job late Wednesday, ending the Democrats’ 12-year-hold on the office.
Florida’s Bill McCollum, also influential in the investigation, will be leaving at the end of this year, having lost in the GOP’s gubernatorial primary. McCollum has been spearheading a probe into four “foreclosure mill” law firms. Republican Pam Bondi, a former state prosecutor, will take over as the new AG.
http://voices.washingtonpost.com/political-economy/2010...
The loss of Ohio’s AG Cordray is a big hit to stopping fraud by banksters. Florida’s McCollum is devastating also.
-
Mannwich Says:
November 5th, 2010 at 9:59 am
But this was all just a big mistake, BR. In fact, the whole crisis was. Now it’s over, so let’s move on, but get those deadbeats out of their homes first.
-
Lugnut Says:
November 5th, 2010 at 10:05 am
“My personal favorite are the people served in Florida whose passports prove they were in Europe at the time. ”
Also amusing from the standpoint that folks being served a foreclosure notice can afford a trip to Europe. Irony abounds.
-
Petey Wheatstraw Says:
November 5th, 2010 at 10:17 am
Years ago. a friend who had recently been admitted to the Bar would occasionally ask me to act as a process server for him (he would accompany me, but stay in the car, down the street. He didn’t like confrontation, and thought it unlikely that the person being served would get cocky with me). In Virginia, if I remember correctly, here’s what was required for proper service:
1. Knock on the door — repeatedly and loudly (as a cop would) — giving a reasonable amount of time for the knock to be answered.
2. If the knock was answered, I was to ask: Are you James Doe? If the answer was yes, I’d serve the docs. If the answer was no, I was to ask, “do you live here, and are you over 18 years old?” If the answer was yes, I was to hand that person the docs, and ask that they be given to the person being served. if the answer was no, or if no one had answered the door, i was to tape the docs to the door (on all four sides, and with removable tape).
3. I would then sign and date the affidavit of service.
That’s how it’s done in VA.
-
Petey Wheatstraw Says:
November 5th, 2010 at 10:20 am
Jeez. I should really start proofing my comments before hitting the submit button.
-
Marc P Says:
November 5th, 2010 at 3:23 pm
@Julia Chestnut:
This is a great point. I clerked for a trial court judge. I tell people the judges are like sleeping bears. Under the weight of their crushing workloads, often they appear to be distracted, board, asleep, or all three. But generally, judges are quite bright and have been put on the bench for good reasons. Once awakened from slumber, watch out.
Judges have to rely on the attorneys to provide accurate information. Judges are well aware that attorneys represent their clients and are not likely to present evidence that is not in their client’s best interest. That is why the system is designed to have both parties represented. Law is the only profession where there is a highly paid professional whose sole job is to point out all your lapses.
In many states the foreclosure process is designed to have minimal court intervention. The lenders are expected to follow a rigid set of rules regarding notice and timelines but often judges never have to get involved. The statutes are set up so that the borrower can object at any time and bring the matter in front of the judge for correction. However, judges are well aware that lenders have money and borrowers do not. Due to this, the judges are more reliant than usual on the veracity and completeness of the information provided by the lender’s attorney. A lender’s attorney who abuses that trust is asking for trouble.
My suggestion is to get some popcorn, crack open a beer, and sit back. This is going to be a good show.
-
Marc P Says:
November 5th, 2010 at 3:25 pm
Judges are board? Duh. Bored. Sorry.
-
Florida’s “Too Big for Fraud” Court System | The Big Picture Says:
November 11th, 2010 at 7:21 am
The Foreclosure Zoo (November 5th,
Leave a Reply
You must be logged in to post a comment.
eric seiger
Probably Bad <b>News</b>: Police FAIL - Epic Fail Funny Videos and Funny <b>...</b>
epic fail photos - Probably Bad News: Police FAIL.
Small Business <b>News</b>: New Business Rules
The rules for business keep changing but a few things stay the same. First impressions matter, technology keeps changing the game and costs keep rising as.
Google <b>News</b> Blog: Credit where credit is due
News publishers and readers both benefit when journalists get proper credit for their work. That can be difficult, with news spreading so quickly and many websites syndicating articles to others. That's why we're experimenting with two ...
eric seiger
eric seiger
eric seiger
Probably Bad <b>News</b>: Police FAIL - Epic Fail Funny Videos and Funny <b>...</b>
epic fail photos - Probably Bad News: Police FAIL.
Small Business <b>News</b>: New Business Rules
The rules for business keep changing but a few things stay the same. First impressions matter, technology keeps changing the game and costs keep rising as.
Google <b>News</b> Blog: Credit where credit is due
News publishers and readers both benefit when journalists get proper credit for their work. That can be difficult, with news spreading so quickly and many websites syndicating articles to others. That's why we're experimenting with two ...
eric seiger
Reader MBSGuy wrote to express his disgust with the mortgage industry’s efforts to pretend that nothing is rotten in Denmark. His object of contempt was an article in Bloomberg which dutifully recited the current talking points. The flacks have clearly been working full time: the headline, “Mortgage Industry Bristles at ‘Robin Hood’ Foreclosure Theories,” is yet another example of creative phrase-mongering to try to discredit critics. And get a load of the assertions:
The “number of attorneys that signed off on” the policies used when Wall Street firms packaged mortgages into bonds means it’s likely that the trusts used to hold the debt will be able to prove they own the loans in almost all cases, said Philip Seares, a managing director at Citigroup Inc. who run its trading of whole loans.
The industry also has faith that loan assignments handled by the Mortgage Electronic Registration System, or MERS, can’t be broadly contested, Seares and Mortgage Bankers Association President John Courson said at the group’s annual conference.
As we indicated in a post earlier tonight, judges ARE contesting the use of MERS, and in particular, the casual assignments made by parties who were not employees of the company that owned the note. In addition, all state supreme courts that have ruled on foreclosures in the name of MERS (admittedly a different issue than MERS assignments per se), save Minnesota, which passed MERS-friendly statutes, have ruled against it. . These decisions have often objected to the multiple and inconsistent roles MERS typically plays, which lays the foundation for other challenges.
As MBSGuy noted:
When confronted with countless examples of why there are problems, industry insiders say it can’t be a problem because scores of attorneys signed off on the legal documents. It is almost embarrassing to see how feeble the industry sounds when confronted with evidence.
The part that the industry boosters are missing is the fact that the legal opinions for mortgage securitizations were qualified (in general, lawyers craft opinion so as to provide the minimum degree of comfort necessary to get the deal done). They took an “if-then” form: “if you did everything you said you would do, then all is fine.” And as we’ve indicated repeatedly on this blog, the industry did NOT do what it promised in the pooling and servicing agreement. It appears in many cases starting roughly in 2004, the parties to the securitization failed to convey the notes as described in their own contracts, basically because it was too costly and time-consuming.
The media has finally woken up and is reporting on a wide range and variety of bogus foreclosure actions, vitiating the industry claims that all foreclosure actions are correct. And before some readers try the argument that a few errors here and there are no big deal, try telling that to someone threatened with the loss of their home. This sort of thing was impossible in the pre-securitization era, and for good reason: the process of dealing with real property was cumbersome by design. It was fault intolerant because the consequences of error can be catastrophic to the participants. Any process that has a lot of safety features and checks is going to be inefficient. It was inevitable that a drive for efficiency at all costs would compromise the integrity of the system.
The New York Times, in “Homeowners Facing Foreclosure Demand Recourse,” provides examples of erroneous foreclosure actions:
Ricky Rought paid cash to the Deutsche Bank National Trust Company for a four-room cabin in Michigan with the intention of fixing it up for his daughter. Instead, the bank tried to foreclose on the property and the locks were changed, court records show.
Sonya Robison is facing a foreclosure suit in Colorado after the company handling her mortgage encouraged her to skip a payment, she says, to square up for mistakenly changing the locks on her home, too.
Thomas and Charlotte Sexton, of Kentucky, were successfully foreclosed upon by a mortgage trust that, according to court records, does not exist.
The price is worth reading in full, because it gives the gory details of these cases, but it has some technical errors (its discussion of allonges is all wrong, and it also fails to note that the use of allonges in foreclosures is suspect; the ones that magically materialize in foreclosures are almost without exception in violation of the requirements of the Uniform Commercial Code).
Even though more and more accounts like these are being reported daily, the denial in the industry remains high. I spoke to one expert who believes that the big white shoe law firms themselves do not understand how badly their clients failed to perform their contractual obligations. Thus lawyers may be offering their confident defenses based on ignorance of the relevant facts. (Before legally sophisticated readers point out that banks ought to tell their attorneys first about any legal problems, since the communication is confidential, remember, only a very few senior executives, plus members of the legal department, deal with outside counsel. An individual employee who was in a position to know what was really going on would be at a lower level. A general rule of corporate life is bearing news of serious problems is a career-limiting move).
But even allowing for the possibility of remarkable ignorance, the industry defenses are remarkably weak. Back to the Bloomberg story:
The American Securitization Forum trade group, JPMorgan Chase & Co. bond analysts and law firm SNR Denton have also dismissed such talk. In a commentary posted on its website, SNR Denton says that most attempts to question the validity of practices can be trumped by items such as the fact that all parties involved “clearly intended” for the trusts to take ownership.
We dismembered the SNR Denton article earlier this week, and the “intent” argument is laughable, particularly given the detailed, specific requirements of the pooling and servicing agreement. Consider: if you paid your estimated income taxes on time and filed for an extension, but then failed to send in your tax return, how sympathetic do you think the IRS would be if you argued you clearly intended to submit your return by the deadline?
A vastly more compelling analysis comes from law professor Katherine Porter, whose testimony to the Congressional Oversight Panel today is must reading. She is quite clear that current practices are not kosher:
I describe the legal and economic issues involved in impermissible or flawed foreclosures and then set out the possible responses to such wrongdoing. Specifically, I consider the ways in which systemic foreclosure problems may set off extensive and complex litigation, destabilize the housing market, and result in regulatory interventions. I believe that the foreclosure process lacks integrity in an unacceptable number of ways and instances and that these problems undermine foreclosure mitigation efforts.
She stresses that the problems with foreclosures are far more extensive than robo signers:
Robo-signing is only one of a number of alleged deficiencies in foreclosure practices. Several courts have determined that there were serious deficiencies in the foreclosure process. At a website that I maintain with Tara Twomey, my co-investigator in the Mortgage Study, we make available a list of judicial decisions in which the court finds inappropriate foreclosure practices or misbehavior by mortgage servicers or their agents. Although we stopped updating the document over a year ago, at that time there were already more than fifty such cases. The problems in such cases range from the imposition and collection of improper fees, a lack of standing to foreclose in judicial foreclosure states, the pursuit of foreclosure without rights in the note and mortgage, mortgage origination fraud, or liability to investors for poor underwriting or improper servicing. The key point is that the vast majority of the alleged problems cannot accurately be described as “technicalities.” The flaws in the foreclosure systems go well beyond improper affidavits
Twomey and Porter stopped updating their Mortgage Study document in 2009 because they were being flooded with the number of cases showing violations of servicing requirements and foreclosure standards.
She also confirms our view that the failure to convey the borrower promissory note as described in the pooling and servicing agreement is a serious problem:
The largest and most complex harm that may exist with the loans in default or foreclosure today is that the paperwork for the loans was not transferred correctly…..The concern being raised is that during the securitization process that the transfers from originator to sponsor to depositor to trust (to generalize the parties in a typical process) were not performed or were not performed correctly. A related issue is whether the physical paperwork or electronic records can be located and are accurate. These records are needed to sort out whether the transfers were completed and valid.
I believe the law is somewhat unsettled on what actually must be done via a securitization to complete the transfers correctly….
The implications of problems with transfer are serious. If the trust does not have the loan, homeowners may have been making payments to the wrong party. If the trust does not have the note or mortgage, it may not have standing to foreclose or legal authority to negotiate a loan modification. To the extent that these transfers are being completed retroactively, it raises issues about honesty in creating and dating the assignments/transfers and about what parties can do, if anything, if an entity in the securitization chain, such as Lehman Brothers or New Century, is no longer in existence. Moreover, retroactive transfers may violate the terms of the trust, which often prohibit the addition of new assets, or may cause the trust to lose its REMIC status, a favorable treatment under the Internal Revenue Code. Chain of title problems have the potential to expose the banks to investor lawsuits and to hinder their legal authority to foreclose or even to do loss mitigation.
This is a pretty damning list, needless to say. And there is another layer of problems this may create, that consumers may be able to sue the securitization trust (or whatever entity actually has the note now) for origination fraud:
For over 10 years, there have been allegations about violations of consumer protection laws and poor/nonexistent underwriting at loan origination. While the law gives great finality to completed foreclosure sales, loans that are currently in default (which some estimate to be as many as 20 percent of mortgages underlying privately-backed securities) are at risk of being challenged for origination violations. These challenges could come in the form of investor suits trying to force banks to buy back loans that did not meet the representations of the securitization documents, e.g., they were not underwritten to the reported standard. Another type of lawsuit risk is that consumers are able to sue the current holder of their note for violations that occurred at origination. Normally, these complaints fail because the holder of the note is thought to be a “holder in due course,” a person that receives protection from most of the claims that someone could bring against the originator of the note. However, if the notes do not meet the requirements of negotiable instruments, there cannot be a holder in due course. The person with the note merely is the possessor “bearer paper,” and can be sued for all wrongs associated with that note contract.
She also dismisses bank claims that their processes are fine:
The banks have repeatedly tried to minimize perceptions about the materiality of their foreclosure deficiencies…The general thrust of the banks’ defense has been that because the homeowners did take on a mortgage obligation, and have in fact missed payments, then the foreclosure is proper. As I have explained recently:
“Just because the homeowner hasn’t paid his mortgage doesn’t mean anybody in the world can kick him out,” …She added that the bank’s argument was a little like saying that someone who committed a crime shouldn’t receive a trial because he’s so obviously guilty.
Due process does not disappear merely upon the assertion by one party that the other is clearly liable. The allegations of problems in mortgage servicing should, if anything, only heighten the due process requirements on consumers. For example, in light of the lack of verification procedures for affidavits to support requests for judgments in judicial foreclosures, it may be reasonable to be concerned that there is absolutely no verification of the facts in the non-judicial foreclosure context. Thus, we might argue that states or the federal government ought to increase the legal requirements for foreclosures across the board, at least for loans initiated in the last five to ten years when widespread allegations of paperwork and procedural problems have existed. The banks’ arguments that we can ignore possible systemic wrongdoing by the banks because as a systemic matter, homeowners are in default on their loans, is unpersuasive. Indeed, it seems to reflect a fundamental misunderstanding of the obligations of any party wishing to invoke the aid of the law in enforcing its rights….
he lawyers that I have met over years of my research on mortgage servicing—both creditor lawyers and debtor lawyers—have nearly universally expressed that they believe a very large number (perhaps virtually all) securitized loans made in the boom period in the mid-2000s contain serious paperwork flaws, did not meet underwriting or other requirements of the trust, and have not been serviced properly as to default and foreclosure.
There is a great deal more in her testimony that is very much worth reading.
Damon Slivers, a member of the COP, succinctly highlighted the key issue:
The risks to bank balance sheets is real as they reap the whirlwind they have sown. From the New York Times article cited earlier:
Some consumer lawyers say they are now swamped with homeowners saying they have been wronged by slipshod bank practices and want to fight to keep their homes.
And the more consumers fight, which increases costs to banks and investors, the more investors will push for a resolution (indeed, they’ve already started), and will go to court if need be. It’s going to be hard for banks to maintain their “no real problems here” party line as litigation against them continues to snowball.
14 Responses to “The Foreclosure Zoo”
-
Basilisc Says:
November 5th, 2010 at 6:32 am
How about this: if a partner (or associate) at a law firm is found to have represented a plaintiff in a foreclosure case in which a fraudulent affidavit has been filed (about the service, or any other aspect), then EVERY PARTNER in that firm is disbarred from practicing in the state. Regardless of who’s at fault.
I’m not a lawyer, but I think that should end the problem.
-
Winston Says:
November 5th, 2010 at 6:42 am
Would not this practice render the case null-and-void? Or could the plaintiff re-file for foreclosure?
-
Petey Wheatstraw Says:
November 5th, 2010 at 7:38 am
In light of all of the evidence of the industrial nature and mind boggling level of criminality in the foreclosure/securitization processes, along with little or no action by those charged with upholding the laws pertaining to such criminality (but apparently having plenty of time and resources to go after less serious crimes committed by individuals outside this industry), it would seem that selective enforcement of our laws is a matter of official policy.
There are many ways to skin this cat, but TPTB do not want the cat skinned. The contract between the people and the government has no requirement for specific performance, and, lacking that, there is no way to compel the authorities to uphold the law.
The People should acknowledge the fact that criminality in high places is systemic, and without a coordinated effort to force the issue, these violations of the law and the processes for bringing those responsible to justice, justice will not be served — regardless of how easy and beneficial doing so would be.
We are just becoming aware that we must fight back. Unfortunately we come to this realization as we pick ourselves up off the ground after having been knocked unconscious and robbed. We are trying to defend ourselves after the fact.
-
Petey Wheatstraw Says:
November 5th, 2010 at 7:48 am
Basilisc:
Only the Bar Associations (the corporation(s) that has (have) captured the Judiciary branch of our government) can disbar an attorney. If you think that might happen on a scale that would have a measurable effect on attorneys engaging in these violations of law and/or procedural rules of the courts, you might not understand the true level or nature of the corruption in and of our system.
-
Julia Chestnut Says:
November 5th, 2010 at 9:18 am
Guys, what it does is deprive the court of jurisdiction over the defendant. If they were never properly served, the whole case is thrown out and starts over again. Sometimes, if there was no prejudice to the defendant (I’m having a hard time figuring out how there would be no prejudice here, because lots of timelines are involved that trigger off of every move in a default and foreclosure), sometimes the case can proceed. Often if the defendant has actual knowledge of the suit, even if they weren’t properly served, the court will take that into account.
I am interested to see how Florida law treats the question of the holder in due course: this might be one of the few things that would wrest a house back from a buyer who purchased it at the courthouse steps. If the court never acquired jurisdiction of the defendant, the order permitting sale was improper. The bank in effect stole the house, and sold it. Normally, a holder in due course of collateral has huge rights. This just might be a fly in the ointment of how these things normally work. My bet is that the case law dates from the depression era, back before the rise of the vampires. This could get very interesting.
But there are two things that make courts really, really pissy: one is being openly lied to under oath – perjury – and that is what filing a patently false affidavit is. The second is having their jurisdiction invoked improperly and having things drag on or have to get redone because of it. Well there is a third that is probably not involved here, and that is being reversed. Believe me, if anything will stir an honest, but lazy or indifferent, judge to action, it is having the court played for a fool. This could be very, very interesting to watch.
As to the comments about the physical appearance of the defendant, I can’t believe the servers were too lazy to get up on facebook and find out what the defendant looks like. Sheesh.
-
beaufou Says:
November 5th, 2010 at 9:31 am
What Petey said.
-
TakBak04 Says:
November 5th, 2010 at 9:53 am
50-State Foreclosure Probe Loses Several Influential Voices after Midterm Elections/ HT Rob
Iowa Attorney General Thomas Miller, the point man on the 50-state investigation into the foreclosure mess, won reelection this week. But a number of the other 13 attorneys generals on the inquiry’s executive committee will leave in the coming months.
In Ohio, Attorney General Richard Cordray — a Democrat who was the first to sue a major lender over the foreclosure problems — lost to Republican Mike DeWine. “A campaign website for Mr. DeWine lists job creation and opposing the health-care plan as his top priorities and makes no obvious mention of the foreclosure scandal, the multistate investigation or Mr. Cordray’s lawsuit against GMAC,” noted the Wall Street Journal. On Wednesday, DeWine declined to comment on the foreclosure issue, saying that the office will “evaluate each piece of existing litigation.”
Another key official with experience dealing with mortgage companies — Arizona Attorney General Terry Goddard (D) — lost the race for governor. Goddard took the lead in negotiating a settlement, announced in October, with Wells Fargo. The lender, which was facing allegations of deceptive marketing, agreed to spend an estimated $772 million modifying loans for borrowers across the country.
Republican Tom Horne beat Democrat Felecia Rotellini to win Goddard’s former job late Wednesday, ending the Democrats’ 12-year-hold on the office.
Florida’s Bill McCollum, also influential in the investigation, will be leaving at the end of this year, having lost in the GOP’s gubernatorial primary. McCollum has been spearheading a probe into four “foreclosure mill” law firms. Republican Pam Bondi, a former state prosecutor, will take over as the new AG.
http://voices.washingtonpost.com/political-economy/2010...
The loss of Ohio’s AG Cordray is a big hit to stopping fraud by banksters. Florida’s McCollum is devastating also.
-
Mannwich Says:
November 5th, 2010 at 9:59 am
But this was all just a big mistake, BR. In fact, the whole crisis was. Now it’s over, so let’s move on, but get those deadbeats out of their homes first.
-
Lugnut Says:
November 5th, 2010 at 10:05 am
“My personal favorite are the people served in Florida whose passports prove they were in Europe at the time. ”
Also amusing from the standpoint that folks being served a foreclosure notice can afford a trip to Europe. Irony abounds.
-
Petey Wheatstraw Says:
November 5th, 2010 at 10:17 am
Years ago. a friend who had recently been admitted to the Bar would occasionally ask me to act as a process server for him (he would accompany me, but stay in the car, down the street. He didn’t like confrontation, and thought it unlikely that the person being served would get cocky with me). In Virginia, if I remember correctly, here’s what was required for proper service:
1. Knock on the door — repeatedly and loudly (as a cop would) — giving a reasonable amount of time for the knock to be answered.
2. If the knock was answered, I was to ask: Are you James Doe? If the answer was yes, I’d serve the docs. If the answer was no, I was to ask, “do you live here, and are you over 18 years old?” If the answer was yes, I was to hand that person the docs, and ask that they be given to the person being served. if the answer was no, or if no one had answered the door, i was to tape the docs to the door (on all four sides, and with removable tape).
3. I would then sign and date the affidavit of service.
That’s how it’s done in VA.
-
Petey Wheatstraw Says:
November 5th, 2010 at 10:20 am
Jeez. I should really start proofing my comments before hitting the submit button.
-
Marc P Says:
November 5th, 2010 at 3:23 pm
@Julia Chestnut:
This is a great point. I clerked for a trial court judge. I tell people the judges are like sleeping bears. Under the weight of their crushing workloads, often they appear to be distracted, board, asleep, or all three. But generally, judges are quite bright and have been put on the bench for good reasons. Once awakened from slumber, watch out.
Judges have to rely on the attorneys to provide accurate information. Judges are well aware that attorneys represent their clients and are not likely to present evidence that is not in their client’s best interest. That is why the system is designed to have both parties represented. Law is the only profession where there is a highly paid professional whose sole job is to point out all your lapses.
In many states the foreclosure process is designed to have minimal court intervention. The lenders are expected to follow a rigid set of rules regarding notice and timelines but often judges never have to get involved. The statutes are set up so that the borrower can object at any time and bring the matter in front of the judge for correction. However, judges are well aware that lenders have money and borrowers do not. Due to this, the judges are more reliant than usual on the veracity and completeness of the information provided by the lender’s attorney. A lender’s attorney who abuses that trust is asking for trouble.
My suggestion is to get some popcorn, crack open a beer, and sit back. This is going to be a good show.
-
Marc P Says:
November 5th, 2010 at 3:25 pm
Judges are board? Duh. Bored. Sorry.
-
Florida’s “Too Big for Fraud” Court System | The Big Picture Says:
November 11th, 2010 at 7:21 am
The Foreclosure Zoo (November 5th,
Leave a Reply
You must be logged in to post a comment.
eric seiger
eric seiger
Probably Bad <b>News</b>: Police FAIL - Epic Fail Funny Videos and Funny <b>...</b>
epic fail photos - Probably Bad News: Police FAIL.
Small Business <b>News</b>: New Business Rules
The rules for business keep changing but a few things stay the same. First impressions matter, technology keeps changing the game and costs keep rising as.
Google <b>News</b> Blog: Credit where credit is due
News publishers and readers both benefit when journalists get proper credit for their work. That can be difficult, with news spreading so quickly and many websites syndicating articles to others. That's why we're experimenting with two ...
eric seiger
eric seiger
Probably Bad <b>News</b>: Police FAIL - Epic Fail Funny Videos and Funny <b>...</b>
epic fail photos - Probably Bad News: Police FAIL.
Small Business <b>News</b>: New Business Rules
The rules for business keep changing but a few things stay the same. First impressions matter, technology keeps changing the game and costs keep rising as.
Google <b>News</b> Blog: Credit where credit is due
News publishers and readers both benefit when journalists get proper credit for their work. That can be difficult, with news spreading so quickly and many websites syndicating articles to others. That's why we're experimenting with two ...
eric seiger
Probably Bad <b>News</b>: Police FAIL - Epic Fail Funny Videos and Funny <b>...</b>
epic fail photos - Probably Bad News: Police FAIL.
Small Business <b>News</b>: New Business Rules
The rules for business keep changing but a few things stay the same. First impressions matter, technology keeps changing the game and costs keep rising as.
Google <b>News</b> Blog: Credit where credit is due
News publishers and readers both benefit when journalists get proper credit for their work. That can be difficult, with news spreading so quickly and many websites syndicating articles to others. That's why we're experimenting with two ...
eric seiger
Probably Bad <b>News</b>: Police FAIL - Epic Fail Funny Videos and Funny <b>...</b>
epic fail photos - Probably Bad News: Police FAIL.
Small Business <b>News</b>: New Business Rules
The rules for business keep changing but a few things stay the same. First impressions matter, technology keeps changing the game and costs keep rising as.
Google <b>News</b> Blog: Credit where credit is due
News publishers and readers both benefit when journalists get proper credit for their work. That can be difficult, with news spreading so quickly and many websites syndicating articles to others. That's why we're experimenting with two ...
eric seiger eric seiger
eric seiger
eric seiger
eric seiger
Probably Bad <b>News</b>: Police FAIL - Epic Fail Funny Videos and Funny <b>...</b>
epic fail photos - Probably Bad News: Police FAIL.
Small Business <b>News</b>: New Business Rules
The rules for business keep changing but a few things stay the same. First impressions matter, technology keeps changing the game and costs keep rising as.
Google <b>News</b> Blog: Credit where credit is due
News publishers and readers both benefit when journalists get proper credit for their work. That can be difficult, with news spreading so quickly and many websites syndicating articles to others. That's why we're experimenting with two ...
eric seiger
Probably Bad <b>News</b>: Police FAIL - Epic Fail Funny Videos and Funny <b>...</b>
epic fail photos - Probably Bad News: Police FAIL.
Small Business <b>News</b>: New Business Rules
The rules for business keep changing but a few things stay the same. First impressions matter, technology keeps changing the game and costs keep rising as.
Google <b>News</b> Blog: Credit where credit is due
News publishers and readers both benefit when journalists get proper credit for their work. That can be difficult, with news spreading so quickly and many websites syndicating articles to others. That's why we're experimenting with two ...
eric seiger
Probably Bad <b>News</b>: Police FAIL - Epic Fail Funny Videos and Funny <b>...</b>
epic fail photos - Probably Bad News: Police FAIL.
Small Business <b>News</b>: New Business Rules
The rules for business keep changing but a few things stay the same. First impressions matter, technology keeps changing the game and costs keep rising as.
Google <b>News</b> Blog: Credit where credit is due
News publishers and readers both benefit when journalists get proper credit for their work. That can be difficult, with news spreading so quickly and many websites syndicating articles to others. That's why we're experimenting with two ...
eric seiger
Basilisc Says:
November 5th, 2010 at 6:32 am
How about this: if a partner (or associate) at a law firm is found to have represented a plaintiff in a foreclosure case in which a fraudulent affidavit has been filed (about the service, or any other aspect), then EVERY PARTNER in that firm is disbarred from practicing in the state. Regardless of who’s at fault.
I’m not a lawyer, but I think that should end the problem.
Winston Says:
November 5th, 2010 at 6:42 am
Would not this practice render the case null-and-void? Or could the plaintiff re-file for foreclosure?
Petey Wheatstraw Says:
November 5th, 2010 at 7:38 am
In light of all of the evidence of the industrial nature and mind boggling level of criminality in the foreclosure/securitization processes, along with little or no action by those charged with upholding the laws pertaining to such criminality (but apparently having plenty of time and resources to go after less serious crimes committed by individuals outside this industry), it would seem that selective enforcement of our laws is a matter of official policy.
There are many ways to skin this cat, but TPTB do not want the cat skinned. The contract between the people and the government has no requirement for specific performance, and, lacking that, there is no way to compel the authorities to uphold the law.
The People should acknowledge the fact that criminality in high places is systemic, and without a coordinated effort to force the issue, these violations of the law and the processes for bringing those responsible to justice, justice will not be served — regardless of how easy and beneficial doing so would be.
We are just becoming aware that we must fight back. Unfortunately we come to this realization as we pick ourselves up off the ground after having been knocked unconscious and robbed. We are trying to defend ourselves after the fact.
Petey Wheatstraw Says:
November 5th, 2010 at 7:48 am
Basilisc:
Only the Bar Associations (the corporation(s) that has (have) captured the Judiciary branch of our government) can disbar an attorney. If you think that might happen on a scale that would have a measurable effect on attorneys engaging in these violations of law and/or procedural rules of the courts, you might not understand the true level or nature of the corruption in and of our system.
Julia Chestnut Says:
November 5th, 2010 at 9:18 am
Guys, what it does is deprive the court of jurisdiction over the defendant. If they were never properly served, the whole case is thrown out and starts over again. Sometimes, if there was no prejudice to the defendant (I’m having a hard time figuring out how there would be no prejudice here, because lots of timelines are involved that trigger off of every move in a default and foreclosure), sometimes the case can proceed. Often if the defendant has actual knowledge of the suit, even if they weren’t properly served, the court will take that into account.
I am interested to see how Florida law treats the question of the holder in due course: this might be one of the few things that would wrest a house back from a buyer who purchased it at the courthouse steps. If the court never acquired jurisdiction of the defendant, the order permitting sale was improper. The bank in effect stole the house, and sold it. Normally, a holder in due course of collateral has huge rights. This just might be a fly in the ointment of how these things normally work. My bet is that the case law dates from the depression era, back before the rise of the vampires. This could get very interesting.
But there are two things that make courts really, really pissy: one is being openly lied to under oath – perjury – and that is what filing a patently false affidavit is. The second is having their jurisdiction invoked improperly and having things drag on or have to get redone because of it. Well there is a third that is probably not involved here, and that is being reversed. Believe me, if anything will stir an honest, but lazy or indifferent, judge to action, it is having the court played for a fool. This could be very, very interesting to watch.
As to the comments about the physical appearance of the defendant, I can’t believe the servers were too lazy to get up on facebook and find out what the defendant looks like. Sheesh.
beaufou Says:
November 5th, 2010 at 9:31 am
What Petey said.
TakBak04 Says:
November 5th, 2010 at 9:53 am
50-State Foreclosure Probe Loses Several Influential Voices after Midterm Elections/ HT Rob
Iowa Attorney General Thomas Miller, the point man on the 50-state investigation into the foreclosure mess, won reelection this week. But a number of the other 13 attorneys generals on the inquiry’s executive committee will leave in the coming months.
In Ohio, Attorney General Richard Cordray — a Democrat who was the first to sue a major lender over the foreclosure problems — lost to Republican Mike DeWine. “A campaign website for Mr. DeWine lists job creation and opposing the health-care plan as his top priorities and makes no obvious mention of the foreclosure scandal, the multistate investigation or Mr. Cordray’s lawsuit against GMAC,” noted the Wall Street Journal. On Wednesday, DeWine declined to comment on the foreclosure issue, saying that the office will “evaluate each piece of existing litigation.”
Another key official with experience dealing with mortgage companies — Arizona Attorney General Terry Goddard (D) — lost the race for governor. Goddard took the lead in negotiating a settlement, announced in October, with Wells Fargo. The lender, which was facing allegations of deceptive marketing, agreed to spend an estimated $772 million modifying loans for borrowers across the country.
Republican Tom Horne beat Democrat Felecia Rotellini to win Goddard’s former job late Wednesday, ending the Democrats’ 12-year-hold on the office.
Florida’s Bill McCollum, also influential in the investigation, will be leaving at the end of this year, having lost in the GOP’s gubernatorial primary. McCollum has been spearheading a probe into four “foreclosure mill” law firms. Republican Pam Bondi, a former state prosecutor, will take over as the new AG.
http://voices.washingtonpost.com/political-economy/2010...
The loss of Ohio’s AG Cordray is a big hit to stopping fraud by banksters. Florida’s McCollum is devastating also.
Mannwich Says:
November 5th, 2010 at 9:59 am
But this was all just a big mistake, BR. In fact, the whole crisis was. Now it’s over, so let’s move on, but get those deadbeats out of their homes first.
Lugnut Says:
November 5th, 2010 at 10:05 am
“My personal favorite are the people served in Florida whose passports prove they were in Europe at the time. ”
Also amusing from the standpoint that folks being served a foreclosure notice can afford a trip to Europe. Irony abounds.
Petey Wheatstraw Says:
November 5th, 2010 at 10:17 am
Years ago. a friend who had recently been admitted to the Bar would occasionally ask me to act as a process server for him (he would accompany me, but stay in the car, down the street. He didn’t like confrontation, and thought it unlikely that the person being served would get cocky with me). In Virginia, if I remember correctly, here’s what was required for proper service:
1. Knock on the door — repeatedly and loudly (as a cop would) — giving a reasonable amount of time for the knock to be answered.
2. If the knock was answered, I was to ask: Are you James Doe? If the answer was yes, I’d serve the docs. If the answer was no, I was to ask, “do you live here, and are you over 18 years old?” If the answer was yes, I was to hand that person the docs, and ask that they be given to the person being served. if the answer was no, or if no one had answered the door, i was to tape the docs to the door (on all four sides, and with removable tape).
3. I would then sign and date the affidavit of service.
That’s how it’s done in VA.
Petey Wheatstraw Says:
November 5th, 2010 at 10:20 am
Jeez. I should really start proofing my comments before hitting the submit button.
Marc P Says:
November 5th, 2010 at 3:23 pm
@Julia Chestnut:
This is a great point. I clerked for a trial court judge. I tell people the judges are like sleeping bears. Under the weight of their crushing workloads, often they appear to be distracted, board, asleep, or all three. But generally, judges are quite bright and have been put on the bench for good reasons. Once awakened from slumber, watch out.
Judges have to rely on the attorneys to provide accurate information. Judges are well aware that attorneys represent their clients and are not likely to present evidence that is not in their client’s best interest. That is why the system is designed to have both parties represented. Law is the only profession where there is a highly paid professional whose sole job is to point out all your lapses.
In many states the foreclosure process is designed to have minimal court intervention. The lenders are expected to follow a rigid set of rules regarding notice and timelines but often judges never have to get involved. The statutes are set up so that the borrower can object at any time and bring the matter in front of the judge for correction. However, judges are well aware that lenders have money and borrowers do not. Due to this, the judges are more reliant than usual on the veracity and completeness of the information provided by the lender’s attorney. A lender’s attorney who abuses that trust is asking for trouble.
My suggestion is to get some popcorn, crack open a beer, and sit back. This is going to be a good show.
Marc P Says:
November 5th, 2010 at 3:25 pm
Judges are board? Duh. Bored. Sorry.
Florida’s “Too Big for Fraud” Court System | The Big Picture Says:
November 11th, 2010 at 7:21 am
The Foreclosure Zoo (November 5th,