A LITTLE LARCENY NOW AND THEN

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

PHANTOM LOAN CLOSINGS CONTINUE TO SURFACE

PROBABLY USED TO FAKE “OVER-COLLATERALIZATION” TO INVESTORS

OK, this is an unusual but not unique situation that ought to be thought through in any loan analysis. It includes the possibility that there could be defects in prior or unknown closings might have a significant impact on the results or report that comes out of a COMBO Analysis, forensic analysis or even a review.  First let me remind you that loan originators did some loans with dogs (real dogs, the ones that bark, and some of which were even dead) so this story is by no means the most extreme you’ll hear.CASE IN POINT:

There were TWO closings — one which was real and one that never happened.

The one that was real was a first and second mortgage in December of 2006. He signed the papers and those were securitized (I assume) with the usual progress of events. We EXCLUDED THAT CLOSING BECAUSE OF THE ASSUMPTION THAT THOSE MORTGAGES WERE SATISFIED OR RECONVEYED. THEY WERE NOT. So we need to be careful about the assumptions we make and what is in the actual title record and whether a supposed satisfaction is real.

The one that never happened and where he signed no papers was in July, 2007. THAT was also securitized. And THAT is the one being used for foreclosure. The customer is saying that the paperwork they have that purportedly has his signature on it does not contain a signature that was put there by him. He is saying that is a forgery and fabrication and that the closing was a sham that he knows nothing about.

Two things are possible: he is telling the truth or he is lying and trying to develop a storyline that might work. Or I guess he could be confused but he sure didn’t sound confused to me. Since he wanted to get a document examiner I would assume he wasn’t lying either. That leaves our good friends in the banking industry who literally used robotic signatures that were created from real signatures of his or they did it the old fashioned way of simply cut and paste of the signature with a color printer.  So we want to be especially alert to anything on the copies we get that indicates that there was a cut and paste or any other evidence of fabrication and forgery. The client knows we are not certified document examiners, but if there is anything that jumps out at you, then mention it and he will take it from there.

Nobody knows the number of completely non-existent loan closings that were used in securitization reports to investors, but I have heard estimates as low as 3% and as high as 15%. Certainly the story I reported last week about the appellate Judges reporting on their own during oral argument on appeal that they have now seen many cases of more than one “bank” on the same docket claiming to have the original note from the same borrower on the same house on the same “closing,.” each claiming to have a record of the homeowner’s payments and when the homeowner went into default.

Clearly at least one of them had no closing and no payment history with the borrower. There are also cases (especially with Wells Fargo) where there never was any closing, the house was owned free and clear, there was no application for loan, no loan closing and nothing signed by the homeowner nor any knowledge by the homeowner that Wells Fargo had recorded a Deed of Trust WITH HIS SIGNATURE ON IT and then foreclosed on the property and even sold it. Thus it behooves us to be on the look out for these situations even though we do not and cannot sell our services as forensic document examination.

Posted in bubble, Corruption, Eviction, securities fraud |