Fraudulent Foreclosure Remedy: Return of the Home

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     “….employees and agents of a number of banks had used the system to “repeatedly” submit court documents on mortgage holders, “containing false and misleading information that made it appear that the foreclosing party had the authority to bring a case when in fact it may not have [had]”.

Editor’s Comment: 

If you read the release below carefully you’ll discover that Morgan Stanley has literally agreed to pay any fine requested by the Federal Reserve.  The Fed has again determined that the banks are using false, faulty, fraudulent and forged documents in connection with the processing of foreclosures, modification requests and anything else related to the bogus mortgages that have long since been paid. 

I strongly urge all readers of this blog to write letters to the Federal Reserve, the OCC, OTS, Fannie Mae and Freddie Mac to stop pretending that the acceptance of fines is an adequate substitute for the return of stolen property. 

It is astonishing to me that the apathy and confusion in the media and marketplace have allowed and even promoted the concept that the theft of these homes using fraudulent documents is somehow resolved by the payment of money based on the recurring assumption that the underlying obligation is still due, that the default actually exists, and that the enforcement through foreclosure is a foregone conclusion. 

In nearly all cases the enforcement of the note and mortgage is far from a foregone conclusion.  In fact, the reason why none of these cases have actually reached trial where evidence was required to be submitted, is that the original documents signed by the borrower are fatally defective.  These defects are not merely technical. These defects reveal the fact that at the option of the securitization participants, they shifted the risk of loss from the borrower to the investor and eventually to the US taxpayer.  The right to use collateral pledged to a complete stranger to the transaction was void from the beginning, waived several times, and unenforceable since the original debt was paid off completely.

Any lawyer that goes into court without understanding these facts is going to concede issues that will doom his client to failure and loss of the home.  Any lawyer that puts these facts in issue, especially if accompanied by third party reports and services provided by this blog and many other sources, will be forcing the judge to either allow litigation to proceed into the discovery stage (at which point the case will settle), or face an appeal where there were clearly issues of fact that the judge disallowed based upon bias and prejudice. 

Homeowners should understand by now that they are not deadbeats.  They are victims of a fraudulent scheme to sell bogus securities to pension funds which in turn are now limited in their ability to pay benefits to the same victims who were depending upon that income to pay for the house they acquired in transactions that did not comply with Federal or State lending laws.  This is not a matter where the identity of the creditor and compensation to various undisclosed parties were omitted.  In this case we now know with certainty that these disclosures required under law, were actively hidden from both the borrower and the investor even after many borrowers confronted the banks and servicers with clear evidence that there were two parts to each transaction, to wit: the closing with the borrower, and the closing with the investor.  None of the foreclosures reveal the terms of repayment to the investor as per that portion of the total documentation that set forth repayment to the investor/creditor (i.e. the so-called securitization documents with which the participants in the securitization chain were in constant non-compliance). 

Special message to the borrowers:  You are not a deadbeat if you refuse to make a payment that is not due.  The securitization method used by Wall Street merely employed your signature for the purpose of making profits that actually exceeded the total amount of your mortgage.  If you want to oversimplify the matter then think of it this way: who should get the “free house”, a bank that never loaned the money and was paid many times over or a homeowner who invested their last pennies into a deal that was fraudulently presented?  If you put it another way, had you known that the appraisal was inflated and that there were at least a half-dozen levels of fees, commissions and trading profits being earned on your transaction, would you still have entered into the transaction?  More specifically, if you knew that the fees and profits generated exceeded the principal due on your mortgage, would you have entered into the transaction?  I invite you to consider the possibility that you were not a borrower incurring a legitimate debt but rather a victim in a con game that was so well played that you still believe you owe money that your own tax and pension dollars have long since paid off.  Here’s another way of thinking about it; imagine that you have been paying your “debt” from your checking account while at the same time the bank was withdrawing the same amount or more from your savings account for the same debt.  Now they wish to declare you in default because you refuse to pay from your checking account.  Your answer should not be “you’re right, I’m a deadbeat.” Your answer should be, “You’re a thief and I’m reporting you to the police.”

So now you’ve gone to the police and they’ve verified the skullduggery of the banks.  The remedy that the police are asking you to accept is that the police will receive a fine or contribution of $100 and you’re still expected to pay out of your checking account or they’ll take the house, and guess what, they’re still going to continue taking money out of your savings account.

Morgan Stanley to be fined in electronic mortgage system and foreclosure scandal

Bank criticized over Saxon unit’s automatic robo signing of foreclosures

By Leo King

The US Federal Reserve has issued a punishing court order to Morgan Stanley, as it prepares to fine the bank over the use of automated ‘robo signing’ of documents relating to foreclosures for struggling US mortgage payers. It ordered the bank to make significant process, data and systems improvements.

The issue relates to a troubled electronic mortgage registry created by a range of the largest banks, which is allegedly plagued with errors. Those that have brought claims against the banks have said access to the database was deliberately restricted by the banks, and that mortgage foreclosures were often based on incorrect data entered by the banks as they rushed to offload the loans.

The court order issued this week concerns the Saxon business, which Morgan Stanley has sold to mortgage servicing group Ocwen Financial. The Fed said Morgan Stanley retained responsibility for the impact of Saxon’s actions. Saxon had issued over 225,000 residential mortgage loans.

Robo-signing typically involves employees of mortgage servicing companies automatically signing off foreclosure papers without checking them, in the interests of fast processing the papers.

The practice was allegedly supported by the Mortgage Electronic Registration Systems (MERS), which opponents claim may have resulted in unfair foreclosures for many home buyers. The database was created in 1995 to simplify the recording of mortgage sales and to allow banks to more easily sell on loans.

According to recent complaints by New York State against a number of banks, as well as being used fraudulently, the database was also “plagued with inaccuracies and errors”. New York State Attorney General Eric Schneidermann said that employees and agents of a number of banks had used the system to “repeatedly” submit court documents on mortgage holders, “containing false and misleading information that made it appear that the foreclosing party had the authority to bring a case when in fact it may not have [had]”.

“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages,” said Schneiderman in February.

“Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law.”

This week, the Federal Reserve issued its court order, known as a consent order, against Morgan Stanley. The order demands that the bank hire an independent consultant to review its foreclosures, and said the bank was required to “provide remediation to borrowers who suffered financial injury as a result of wrongful foreclosures or other deficiencies identified in a review of the foreclosure process”.

Should Morgan Stanley decide to re-enter the mortgage servicing business while the consent order is in effect, it will be “required to implement enhanced corporate governance, risk-management, compliance, borrower communication, servicing, and foreclosure practices” that were “comparable” to enforcement actions against other banks over the same issue.

The consent order against Morgan Stanley orders the bank to create a proper plan around acceptable usage of MERS, including strict processes around proper data entry on MERS and around the appointment of officers authorized by MERS.

Additionally, Morgan Stanley and Saxon were ordered to create a proper plan for the use of strong management information systems to inform correct decision-making around mortgages and foreclosures. The systems also needed to monitor compliance with legal requirements, ensure the accuracy of records around money owed and any foreclosure proceedings, and provide all information officers need from borrowers.

High-risk residential mortgages have remained a key focus of attention since the financial crisis, because many troubled and complex financial products were based on them.

Last year, the Federal Reserve issued a similar consent order against Goldman Sachs. The robo signing scandal has engulfed a swathe of the largest US banks, with others including Bank of America, Citi, JP Morgan and Wells Fargo also being investigated.

In the Morgan Stanley case, the Federal Reserve said that in 2009 and 2010 Saxon had begun 60,313 foreclosures on home buyers judged to be struggling to pay their mortgages. It accused the company of engaging in “a pattern of misconduct and negligence in residential mortgage loan servicing and foreclosure”.

Morgan Stanley had not commented at the time of writing, but has agreed to pay whatever fine the Fed sets.

Tags: affidavits • attesting • Daniel Edstrom • DTC-Systems • fabricating • false information • false sworn documents • foreclose • illicit business practices • improper statements • imp, appraisal fraud, attorney general, auction fraud, credit bids, DocX Indictment, foreclosure fraud, FORECLOSURE SETTLEMENT, foreclosures, forgery, housing market, housing prices, investors, LPS, Missouri, Morgan Stanley, mortgage fruad, mortgages, Remedy, Robo-Signing, settlement, strategic default, Wells Fargo
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