NJ Foreclosure Mill Goes Bankrupt

see 30,000 Cases to be Transferred from Bankruupt NJ Lawfirm

It’s a growing trend. More law firms are backing out the foreclosure mill business. The reasons are pure economics. The number of contested foreclosures is rising exponentially. The foreclosure firms get a small flat fee for each foreclosure case. The numbers don’t add up.

In addition, these firms are finding themselves in the cross hairs of bar associations who are starting to look at the use of fabricated documents and fabricated testimony from robo-witnesses and robo-signers.

These firms made tens of millions of dollars in profits simply because nearly all homeowners were allowing the foreclosure by default. As the news reveals that homeowners are being foreclosed by entities that have no right to collect, enforce or foreclose on the original mortgage loan, attorneys are all coming to the same conclusions: (1) these cases are winnable and (2) the actual claim is being filed on behalf of the servicer to recover servicer advances which are themselves being “securitized.”

First they said there were no trusts, the  they said there were trusts but the servicer had the right to represent the trusts, then came the time that trustees issued statements prohibiting (pursuant to PSA) the “servicer” from using the name of the Trustee,  then US Bank and others began replacing the Trustees of the empty, penniless trusts and allowing the foreclosures to be filed in its name.

AND now they are returning to the first strategy where they deny the existence of a trust when it is obvious that the only reason why Citi and others would call themselves “servicers” is to avoid liability for the origination of the loan and to make it more difficult for the borrower to show that there is a REMIC Trust out there that claims ownership or that did claim ownership of the loans.

That makes it difficult to show that there is no known creditor on the original MORTGAGE LOAN. There are claims, but not by any creditor or successor on the MORTGAGE LOAN. But without foreclosures, if the loans are modified, the real claims of servicers and investment banks serving as Master Servicers completely vanish. THAT IS WHY THEY FORECLOSE INSTEAD OF MODIFY OR SETTLE.

But the overall strategy is the same: make it as confusing as possible and play into the prejudice of the judges to pull the wool over their eyes. These claims are mostly unsecured because the real claim is to recover the money paid by the Master servicer and then ignored by the sub-servicer when they send out notice of default (no default if the creditor was paid), and ignored when the final accounting of what is due from borrower to the owner of the MORTGAGE LOAN is used as the basis for foreclosure.

The law firms are now on notice that they are representing parties with conflicts of interest. Foreclosure means the servicer gets money paid by the Master servicer from the reserve fund created when the original MBS were sold. Modification would mean revealing that the actual creditors on the MORTGAGE LOAN are (a) not showing a default on their books and (b) not being allowed to mitigate d damages because they don’t learn of the misguided “processing” (i.e., loss of documents and putting up numerous hurdles and obstacles and false reports that the investor rejected the modification or settlement).

So where the economics are turning sour, the liability for civil, criminal and regulatory liability is driving the big foreclosures mills out of the marketplace. They are doing it through bankruptcy so that claims from borrowers for wrongful foreclosure won’t be effective to recover from partners in the law firms.

Tags: foreclosure mills
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