Thursday, February 13, 2014

Great article by Neil Garfield

Interesting Conversation With Prospective Client and Attorney

by Neil Garfield
I had an interesting conversation with the lawyer for a prospective client who was interested in either litigation support or using me for expert advice or expert testimony. The lawyer was an experienced litigator. What was good about the conversation is that he voiced up front the basic question that is in the mind of nearly all judges, litigators, homeowners, legislators and regulators. It comes from that presumption that arises in the mind of nearly everyone when they hear about a loan transaction. Their mind instantly focuses on whether the borrower made any payments and if so whether they stopped making payments. It doesn't occur to anyone to immediately focus on whether there was a loan or if there was any particular reason why payments stopped. And it certainly doesn't occur to anyone to immediately question whether or not the creditor had received payments ---  especially after the borrower admits that he had not made any payments. That is the quintessential case in loans where claims come from the alleged securitization of debt. The answers to these questions are completely counterintuitive. Those answers just don't make sense unless you know the whole story; even then, it is hard to comprehend why banks would have sacrificed brand names that date back 150 years or more.
And after speaking with him I have concluded that the basic error that is being made by all the people who are affected by this chaotic mortgage crisis is that foreclosure defense consists of finding some technical error by the banks thus defeating their rightful claim to be repaid money they had loaned to the borrower. My answer is that if you are starting from that position it is very hard for me to see anyway that any lawyer for any borrower could do anything more than delay the inevitable.
The lawyer had it right. There wasn't one case in the country in which a proper assignment had not been enforced. And there were no cases I could give him where the results were to the satisfaction of the client, because I promised the clients that I would not give out even their case number. The lawyer concluded that neither I nor my opinions had any credibility. And yet I continue to help people, and, as can be seen, from comments posted on this blog, many people thank me for helping them save their homes. So what is the problem here? It's one I have been wrestling with for 7 years.
The lawyer for the client prospect (as expert witness) asked all the right questions but, as most lawyers do, he preceded each question with a statement that could not be controverted. I am sure he is very good at cross examination. He presumes to know even the things he doesn't know because he was after a result. Despite countless publishing of favorable results in trial, in bankruptcy court and on appeal all reported here and on other media sources and blogs, any really good lawyer is going to have trouble with this. And the reason is that any good attorney wants to reduce the fact pattern down to issues which which there can be no argument. The problem here is that such lawyers do themselves and their clients a disservice, unless they slow down and stop skipping the steps.
The real problem was well stated by this and other lawyers and judges from the bench: how can you really defend any case in which the homeowner accepted the benefits of a loan and then did not pay according to its terms? Why should any court refuse to enforce a valid assignment? Why should the borrower be let off the hook of liability just because there are defects in the documentary trail?
If you drill down, it is very simple: for those who wish to stop inquiring after they see the note, mortgage and payment history of the borrower, there is not much you can do to dissuade them from their preconceived conclusion. It is a fact that the Wall Street banks introduced fraud and complexity on a level never seen before, and therefore spawned a lot of controversy over what to about it. The problem which this lawyer had was that he cannot conceive of a real defense where the borrower stopped paying on an apparently valid debt.
His view is shared by most judges. So the job of the lawyer in foreclosure defense is to address those issues head on, one piece at a time, and to reduce the factual and legal arguments to the simplest components with which nobody could disagree. For example, should the creditor in a loan transaction be allowed to collect more than the amount of the debt? Everyone would agree that should not be allowed. Does it matter who makes the payment on behalf of the borrower as long as it is clear that the payment is for the that particular debt? Everyone would agree that a payment counts against the debt even if someone other than the borrower made that payment.
Does it matter if the loan was granted by a party who used money obtained by defrauding a third party? Bing! That is where the honest discussion can begin because there are multiple potential answers. My answer is that fraud was an intervening factor by an intermediary (investment bank) with apparent authority who violated all the essential terms of their intermediation for the benefit of themselves (the broker dealers/investment banks) and to the detriment of the party whose money was used to fund loans that were not approved by the "lender" (the party who was defrauded --- i.e., now referred to as "investor" or "trust beneficiaries"). While there are other possible conclusions, these are actions in equity and the people trying to enforce the fraudulent documents have very dirty hands which is to say, the opposite of "clean hands."
My answer is that the broker dealers diverted the money and diverted the paperwork to make it look like they were the lenders and to get the proceeds of TARP, insurance, etc. and who are now foreclosing, taking the property too --- to the detriment of the investors who would benefit far more by a reasonable workout with the homeowners. There is also an obvious detriment to the homeowner who loses a home without any hope of even speaking with the party whose money was used to fund the origination or acquisition of his loan (and not getting credit for third party payments whose payments may have negated the alleged default or reduced the obligation to one that the borrower can afford).
My answer is that sale of the property without including the investors in the mix is a continuation of the fraud that began when the investors were sold "bond" issued by a Trust that was and remains unfunded and which never had any hope or possibility of paying interest or principal to the investors. But the issue raised by the lawyer is a troublesome one and requires complex arguments as opposed to bullet points. The victim here is clearly the investors who bought bogus mortgage bonds. But he asked another question: how is the homeowner hurt?
My answer that being foreclosed upon by a complete stranger is very damaging didn't satisfy the homeowner's lawyer. And in a way, he was right. because in the end, it is still about a loan that the borrower didn't pay. That is where the complexity comes in. Because the money that was taken out of investor pockets has been restored in whole or in part by third party payments from co-obligors that were not disclosed as part of the borrower's transaction but now, after the cutoff dates of the Trust instrument, are considered to be part of the deal including the borrower homeowner in the deal the broker dealer made with the investor.
Thus the question becomes this: If you break it down what rights of enforcement exist on (1) the debt, (2) the note and (3) the mortgage or deed of trust? The answer in simple terms is that the likelihood of enforcement on each one of those diminishes the more you drill down.
Start with the debt. It arises simply because legally when you receive money it is either payment, a loan or a gift. Since we know that it is a loan, that means you owe it back to the party who loaned the money. You don't owe it to the depository bank at which they maintain a demand deposit account and from which they advanced the funds even though that bank is literally the source of the funds. The owner of the account from which the money was advanced to you is the one you owe. The owner of the account in our case is the broker dealer which itself was acting as a depository for investor funds that should have been paid to the trustee for a REMIC trust but was not and never was intended to be sued as such. We know the Pension fund that invested in the bogus mortgage bonds is the actual funding source and there is little disagreement about that. How many conduits or depository institutions were used to channel the money to your closing table is irrelevant. You owe the money to the party whose money ended up in your pocket.
Then the note. The note, as we lawyers were all taught in first year law school, is NOT the debt. It is evidence of the debt. And it is evidence of the agreed terms and the loan contract. And it should be evidence of the loan from the investor to the homeowner. So unless that note names the investor as the payee (or an authorized representative of the investor disclosed to the borrower), the note is evidence of nothing --- except the fact that you signed a document that recited facts that were at best wrong and at worst, lies. Lawyers often forget that table-funded loans are one of the main reasons why the Federal Truth in Lending Act was passed --- to make sure customers knew the identity of their lender and had choice in the marketplace. So it is no argument, under TILA and Reg Z, to say that it doesn't make any difference if they lied at the closing table, you lose upon signing the promissory note. And the legal reason for that is because if that were true there would be uncertainty surrounding every loan transaction if it was OK for the closing agent to put a strawman's name on the note and mortgage instead of the the investor --- particularly when the pooling and servicing agreement and prospectus assure the investor that the investor is the one who will be protected by owning the note and being the beneficiary on the deed of trust or mortgagee under the mortgage.
Then the Deed of Trust (non-judicial states): The pattern of conduct that is virtually 100% is that once a loan becomes delinquent and the decision is made that this loan has been chosen for forced sale (foreclosure) the first thing "they" do is change the Trustee on the Deed of trust. Why? Because a real trustee would not take orders from a beneficiary who appears out of nowhere and can produce no proof that they entered into any transaction in which they acquired the Deed of Trust, the note, or the debt. The San Fransisco study showed that 65% of all foreclosures involved "strangers to the transaction." This meant that a complete stranger named itself as the new beneficiary, named a controlled entity to be the new substitute trustee and then  sold property with the homeowner not being any wiser, because they knew they had not made some payments on their mortgage obligation. So it isn't enough to say you are the new beneficiary, you should be required to prove it. It is true that many courts are ignoring this requirement, but the number of courts that are allowing this inquiry is increasing every week. And as Judge Hollowell in Arizona pointed out in a CLE seminar, the effects of ignoring these issues is going to result in a mass of title litigation. Yes, it matters.
The test of a good expert witness is not just credentials we some of us have, but also the presentation of facts upon which his opinion rests. That presentation must lead inexorably toward the conclusion that the expert states such that the trier of fact (judge or jury) would have come to the same conclusion if they had all those facts. The opinion is incidental to the presentation of facts. The attempt to boil this down to one or two bullet points begs the question. Wall Street intentionally created more complexity than necessary and more layers than necessary in order to obscure the fact that they were committing fraud on the investors, the insurers, the government, and other third party co-obligors. The typical trial lawyer response is "how do I boil this down to something that is understandable." The answer, as any lawyer who does complex financial litigation will tell you, is step by step.

Wednesday, February 12, 2014

Just ask JP Morgan/Chase.. there good at this game.

Lost paperwork..PLEASE.. the banks who have it hidden are giving them to them and than saying they never had it, just ask JP Morgan/Chase.. there good at this game. 

New York's banking regulator Benjamin Lawsky unleashed a verbal assault on nonbank servicer Ocwen Financial Wednesday, saying the company's explosive growth "raises red flags," and that its use of technology to better handle distressed loans is "too good to be true."

Speaking at the annual meeting of the New York Bankers Association, Lawsky said Ocwen's public documents make "for startling reading." He sees "corners being cut," by nonbank servicers that have touted their ability to help distressed borrowers.

"We have serious concerns that some of these nonbank mortgage servicers are getting too big, too fast," Lawsky told New York bankers who were meeting at the Waldorf Astoria. "We see far too many struggling homeowners getting caught in a vortex of lost paperwork, unexplained feed and avoidable foreclosures."

Last week, Ocwen put an indefinite hold on its $2.7 billion purchase of servicing rights from Wells Fargo after Lawsky raised concerns about the Atlanta-based servicers' growth.

Yet Lawsky refused to cite Ocwen by name. Instead, he referred to a public document filed with the Securities and Exchange Commission by "a nonbank servicer" that boasted to investors that it was still "in the middle innings of cleaning up the human wreckage left by the mortgage meltdown."

Ocwen has used the "middle innings" reference in presentations in January and in December to analysts and investors.

Lawsky also cited Ocwen's comments to investors that it has identified $400 billion in servicing rights that it plans to acquire in the next 12 to 18 months, and that up to $1 trillion in servicing will change hands in the next few years.

But he took particular umbrage by Ocwen's assertions that it can service delinquent loans at a cost that is 70% lower than the rest of the industry, calling into question its entire servicing model.

"Those kinds of cost-saving claims bear special scrutiny," Lawsky said. "Regulators have to ask whether the purported efficiencies at nonbank mortgage servicers are too good to be true."

As superintendent of New York's Department of Financial Services, Lawsky has jurisdiction over Ocwen as a licensed mortgage banker in New York. He also has additional insight into Ocwen's operations because in Dec. 2012, Ocwen agreed to an independent monitor as part of a consent order that cleared the path for its 2011 acquisition of Litton Loan Servicing from Goldman Sachs.

Lawsky made specific references to servicers' difficulty in handling the transfer of documents and dealing with distressed borrowers.

"We see electronic loan files strewn around the globe with no one who knows how to pull them together," Lawsky said. "We see a virtual potpourri of computer systems containing critical borrower information, but no one who knows how to extract that information at the right time and for the right purpose."

Kevin Barker, an analyst at Compass Point, says it is uncertain whether Lawsky is primarily concerned about Ocwen's ability to take on more distressed loans or if it the concerns relate to past servicing practices — or both.

"It's not easy to transfer the servicing and boarding of all these loans because you have to think about what kind of shape the files are in when they get them," Barker says.

Lawsky has previously used his authority to hold up past transfers of mortgage servicing to Ocwen and to demand concessions such as the independent monitor. Still, servicers are concerned whether his actions will set a precedent that upends other servicing transfers involving New York loans.

"Regulators should not just be rubber stamps," Lawsky told bankers.

Monday, February 10, 2014

JPMorgan Chase & Co. is offering $390 million of nonperforming loans

 I will bet money Wamu loans they have been trying to hide are gonna show up here .

JPMorgan Chase & Co. is offering $390 million of nonperforming loans as banks including HSBC Holdings Plc and Regions Financial Corp. increasingly look to sell troubled mortgage debt.

JPMorgan put the pool of debt, a portion of which is tied to residential properties in New York, on the market this week, said two people with knowledge of the offering, who asked not to be named because the sale is private. HSBC hired BlackRock Inc. to manage the potential sale of as much as $1 billion in delinquent loans and Goldman Sachs Group Inc. is handling an auction of about $700 million of modified loans for Regions, according to two separate people.

Sales of the debt are accelerating amid financial regulations that force banks to pledge more capital for some assets they hold, including nonperforming loans, or NPLs. The government also is adding to the supply as it auctions the debt to help prevent foreclosures and stem losses at the Federal Housing Administration.

“Banks have made a decision internally that a delinquent borrower is not a core customer,” Ashish Pandey, chief executive officer of Altisource Residential Corp., said at a conference in Las Vegas last month. Pandey, whose firm had 6,300 delinquent loans as of the third quarter of 2013, said he expects as many as 500,000 nonperforming loans to sell in 2014.

Potential buyers of nonperforming loans, tied to delinquent borrowers who haven’t yet lost their homes to foreclosure, include hedge-fund firms such as Ellington Management Group LLC and One William Street Capital Management LP. The firms are seeking alternative housing bets after subprime-mortgage bond prices jumped about 17% last year and property prices surged 24% from their 2012 low.

Values increased as the economy strengthened and firms led by Blackstone Group LP bought more than 366,200 single-family homes in cities such as Phoenix and Atlanta since January 2011 to turn into rentals, according to Port Street Realty and RealtyTrac data. That’s made delinquent loans a relatively cheaper way to acquire real estate or profit by working with borrowers who are behind on mortgage payments.

There are about 1.3 million properties in the U.S. tied to loans at least 90 days late and not yet in foreclosure, according to Black Knight Financial Services. Another 4.5 million borrowers are at least 30 days delinquent or in the repossession process, a Black Knight report showed last week.

Regions transferred $686 million of loans classified as troubled debt restructurings to held-for-sale in the fourth quarter, the bank said on a Jan. 21 call with investors. The majority of the loans were originated prior to 2007 and about 40% are located in Florida.

Amy Bonitatibus, a spokeswoman for New York-based JPMorgan, declined to comment on the bank’s offering. Rob Sherman, an HSBC spokesman, and BlackRock’s Brian Beades, declined to comment on the potential loan sale. Michael DuVally, a spokesman for Goldman Sachs and Evelyn Mitchell, a spokeswoman for Birmingham, Ala.-based Regions, declined to comment on Goldman Sachs’s role in the offering.

Great article for lawyers to pay attention to by Neil Garfield

Casablanca Deja Vu: Shocked and Total Disbelief

by Neil Garfield
Maybe it is true that some of the earlier attorneys for the banks were caught by surprise when they learned of fabrication of documents, unauthorized signatures and of course Robo signing. In this case lawyers from the state of Maine face possible discipline for their failure to take appropriate action in over 100 cases. This stems from the revelation that GMAC mortgage have an employee named Jeffrey Stephan, who was signing between 6000 and 8000 legal foreclosure documents per month without knowing anything. His job apparently was simply to sign his name. He wasn't told anything, he didn't see anything, and he never asked anything.  See no evil, hear no evil, speak no evil.
The law firm is Drummond and Drummond.  One of the attorneys for that firm, Paul Peck, testified at a hearing last Thursday that he was completely surprised that Stephan never read the affidavit. The problem for the firm is that they had 100 other cases in which the same employee had executed an affidavit that was being used in litigation. The firm did nothing to inform the court of the potential problem. The Bar Association is accusing the firm of violating its ethics and failing to notify the court in the other cases. There does not appear to be any allegation that the firm was complicit in the filing of a false affidavit. Most people on the foreclosure defense side of these issues believe that lawyers should be disbarred for not only failing to notify the court of the potential problem, but also failing to perform due diligence intentionally to avoid knowing that they were submitting false testimony.
While I agree that the lawyers probably had more than an inkling as to what was going on, it is my opinion that the firm should be put under supervision and probation. We are walking a fine line here and we must be careful what we wish for. Lawyer is obligated to advocate every possible position that might be beneficial to his client. If the lawyer does not absolutely know for sure that his client is lying, I think most people who are engaged in the enforcement of ethics and discipline of lawyers would agree that there is no foul. Those of you who have been represented by counsel in connection with some matter in litigation probably know that there are always more than one interpretation of the facts and always more than one opinion as to which facts are important and which are not. You expect your lawyer to use the things that are most beneficial to your position.
However, that said, I think the attorneys who used those affidavits after hearing the revelation about GMAC mortgage and subsequent revelations are in a different position. For self-preservation alone they had an obligation to inquire. They might face liability for their part in submitting false testimony to the courts of various states. Their insurance company will probably take the position that they were committing an intentional act for the benefit of preserving an extraordinarily large channel of fee revenue.  I think the insurance company would be right. And I think that those attorneys should face harsh discipline.
With all that we know about fraudulent conduct of all of our major financial institutions, which so far has resulted in perhaps $200 billion in settlements, it is hard to imagine why any attorney would not closely scrutinize documents submitted for support of a foreclosure action unless they were intentionally avoiding information that they knew or should have known existed. Of course each such case should be examined separately on its own fact pattern. Not all lawyers work for a foreclosure mill should be subject to major discipline or even investigation. The layering that  occurred on Wall Street was also happening in the foreclosure mills. They were creating imaginary lines so that they could throw the junior associates under the bus if the truth was exposed. I would advocate that the junior associates should be given immunity from prosecution and that the  discipline should be directed at the managing partners who were aware of the issues.
 Of course all of this is just a distraction from the main question, to wit: why was it necessary to fabricate documents, commit perjury, and create all of this layering if the loans were actually enforceable?
My answer is the same as the allegations made by the investors who thought they were buying mortgage bonds, the insurers who thought that they were paying broker-dealers who had a loss, and the guarantors who thought that they were paying broker-dealers who had a loss. They are all claiming (in an out-of-court) that the broker-dealers committed fraud and mismanagement of money.
In plain language they are alleging that the investment banks (broker-dealers) stole the money that was intended to be invested in the trusts. They are alleging that the investment banks created a web of controlled companies that served as sham originators  on loans that were made using the money that investors advanced for the purchase of mortgage bonds issued by a REMIC trust that turned out to be unfunded and without any assets or income.  They are alleging that the mortgage documents are unenforceable.  Don't take my word for it ---  you can Google up the complaints and read it for yourself.
It must be fair to assume that the investment banks would not pay $200 billion unless they were saving themselves from liability for much more than that. It is also fair to assume that the settlements with the investors reduced the loss of the investors.  Therefore is also fair to assume that any demand for payment that does not reflect a reduction in principal (and therefore a reduction in interest) is wrong. Any notice of default would similarly be defective and so would the notice of acceleration. Any lawsuit were nonjudicial foreclosure  would also be defective. The parties involved have actual knowledge of both the documentary problems outlined in the case above in Maine and the money problems that have been announced with great fanfare.
So the question is why isn't the borrower getting credit on the loan account when these settlements occur and can be allocated to the loan account?  If the actual creditor has experienced a reduction in the account receivable, what is the basis for allowing anyone to claim that the full amount is still due?
And that leads to my final question of the day, to wit: why would anyone try to claim that the full amount is due and enter into needless litigation?  I can think of no answer other than pure greed and the failure to present this question properly  in a court of law.

Something fishy is happening

This story blew me away. Do I think they were suicides, NO. I do know however that  bank employees  being brought into depositions are suddenly  fired, so they cannot  be used against the banks and that they are given off the wall reasons as to why.
These three knew something bigger. Its time the Feds  digg deeper , to find out what is being hidden and  not wanting to be found.

Third prominent banker found dead in six days

Bloomberg is reporting this morning that former Federal Reserve economist Mike Dueker was found dead in an apparent suicide near Tacoma, Washington.
Dueker, 50, a chief economist at Russell Investments, had been missing since Jan. 29 and was reportedly having troubles at work.
Normally HousingWire wouldn’t cover deaths in the industry, but what’s strange is that Dueker is the third prominent banker found dead since Sunday.
On Sunday, William Broeksmit, 58, former senior manager for Deutsche Bank, was found hanging in his home, also an apparent suicide.
On Tuesday, Gabriel Magee, 39, vice president at JPMorgan Chase & Co’s (JPM) London headquarters, apparently jumped to his death from a building in the Canary Wharf area.

Fourth suicide for finance executive under investigation

Police say victim shot himself seven or eight times with a nail gun


A fourth financial services executive under or close to an investigation in less than two weeks was found dead in Colorado, where police said he committed suicide using a nail gun in his Centennial, Colo., home.
American Title Services founder and CEO Richard Talley, 57, was under investigation by state insurance regulators at the time of his death.
The death was reported by the Denver Post late Thursday.
This comes on the heels of three prominent bankers whose deaths have been ruled suicides since late January, and the disappearance of a Wall Street Journal oil markets reporter, as first reported by HousingWire.
From the Denver Post:
A coroner's spokeswoman Thursday said Talley was found in his garage by a family member who called authorities. They said Talley died from seven or eight self-inflicted wounds from a nail gun fired into his torso and head.

More details emerge about three bankers who died in six days

Some speculate missing WSJ reporter case shares circumstances

hen, details emerged about the work of the three that suggests at least a passing commonality – that is, the institutions they worked for were all connected to investigations in the United States or the United Kingdom for various types of fraud or misconduct.
Former Federal Reserve economist Mike Dueker, 50, was found dead in an apparent suicide near Tacoma, Washington on Jan. 31. Dueker was chief economist at Russell Investments.
On Jan. 26, William Broeksmit, 58, a former senior manager for Deutsche Bank, was found hanging in his home, also an apparent suicide.
On Jan. 28, Gabriel Magee, 39, vice president at JPMorgan Chase (JPM) London headquarters, apparently jumped to his death from a building in the Canary Wharf area.
New York state Department of Financial Services subpoenaed Russell Investment as well as other major firms in November 2013 as part of an investigation by Superintendent Benjamin Lawsky into how the firm’s handle investment proposals, compensation practices, relationships with money managers and investment tracking practices.
Lawsky is the same regulator who on Thursday put an indefinite hold on a $2.7 billion MSR deal between Ocwen Financial Corp. (OCN) and Wells Fargo (WFC). Lawsky has been described in press reports as "an enforcer with zeal."
The New York Times wrote on Nov. 5 that “regulators appeared to be trying to learn whether any consultants were being paid by the firms they recommended, including in-kind payments or job offers.”
Broeksmit, a top executive at Deutsche Bank who had retired in 2013, had been found hanged in his home in the South Kensington section of London, according to London newspapers.
Global regulators are currently investigating Deutsche Bank for allegedly rigging foreign exchange markets. It settled similar charges in 2013 over involvement in the manipulation of the Libor interest rate benchmark.
Two days after Broeksmit’s death, former Deutsche Bank risk analyst Eric Ben-Artzi spoke at Auburn University in Alabama, alleging that Deutsche hid $10 billion in losses during the financial crisis.  Other whistleblowers have come forward with similar allegations.
Magee’s employer, JPMorgan, is under investigation by U.S. legislators for misconduct in physical commodities markets in both the U.S. and U.K. JPMorgan is currently under investigation for the same kind of alleged involvement in manipulating foreign exchange rates as Deutsche Bank.
Magee’s parents have told the London Evening Standard that they don’t believe their son would commit suicide, and they have raised troubling questions about how their son was able to access the roof from which he is said to have jumped to his death.
Meanwhile, among those following developments in these deaths, there is chatter about the disappearance of another Wall Street regular, veteran Wall Street Journal oil commodities markets reporter David Bird.
The markets Bird covers are currently under investigation by the U.S. Senate Permanent Subcommittee on Investigations for physical commodities manipulation. His family tells the New York Daily News that they are concerned his disappearance may be connected to his investigative coverage of OPEC.
Bird has been missing since Jan. 11. Bird told family he was going for a hike and left his New Jersey home without critical daily medication he takes. Five days after he disappeared, a credit card in his name was used in Mexico.

Thursday, February 6, 2014

Banks, Mortgage Companies Defrauded HUD, Veteran Whistleblower Says

A whistleblower with a track record of wresting large settlements from banks is suing 22 companies for allegedly filing fraudulent mortgage documents with the Department of Housing and Urban Development.

Lynn E. Szymoniak, famous for her 2011 “60 Minutes” interview on the robo-signing scandal, filed a lawsuit late Monday against the companies, including Deutsche Bank, Wells Fargo, JPMorgan Chase and Bank of America. The Palm Beach, Fla., plaintiff’s lawyer alleges the 22 banks, mortgage servicers, trustees, custodians and default management companies created fraudulent mortgage assignments and submitted tens of thousands of false claims to HUD.

The lawsuit is a stark reminder that banks still face massive litigation and potential settlements for wrongdoing from the mortgage boom and financial crisis. On Wednesday, JPMorgan Chase acknowledged that it violated the False Claims Act and agreed to pay $614 million to settle claims that it improperly approved Federal Housing Administration and Veterans Affairs loans that did not meet underwriting standards.

HUD oversees the FHA, which reimburses servicers for losses and fees when government-guaranteed loans go into foreclosure.

Banks can be held liable for treble damages under the False Claims Act if they are found to have "falsely certified" that mortgages met all FHA requirements. The act also gives whistleblowers the right to file suit on behalf of the government.

“It’s been very difficult to uncover how fraudulent documents were created and spread through the system,” says Reuben Guttman, Szymoniak’s attorney at the firm of Grant & Eisenhofer. “Lynn Szymoniak did the original analysis, looked at documents and put the pieces together in a way that nobody else did.”

The new lawsuit was filed in the U.S. District Court in South Carolina. Several of the defendants, including Deutsche Bank and Wells Fargo, said they are reviewing the lawsuit and could not immediately comment.

In 2012, Szymoniak helped the government recover $95 million from the top five mortgage servicers, as part of the $25 billion national mortgage settlement. She personally received $18 million for providing information on the filing of false claims on FHA loans.

The suit also seeks to recover damages and penalties on behalf of the federal government, 16 states, the District of Columbia and the cities of Chicago and New York for the financial harm incurred in the purchase of private-label mortgage-backed securities that allegedly used fraudulent documents in foreclosure filings since 2008.

As investors in mortgage bonds, the government and others paid fees and expenses for services such as reviewing all mortgage documents put into trusts that were supposed to be performed by trustees. The federal government bought mortgage-backed securities with missing or forged documents through several avenues, including the Federal Reserve's direct purchases and Maiden Lane vehicles, and the Treasury Department's purchases through public-private partnership investment funds, the suit states.

The complaint does not specify damages but Szymoniak says she expects them to total around $10 billion.

The fraudulent mortgage documents were created because the original loans documents either were never delivered to the securitization trusts, or they were lost or destroyed, the lawsuit states. Many of the documents were created years after the trusts’ closing dates and showed the trusts acquired the loans only after they were in default.

Servicers “devised and operated a scheme to replace the missing documents,” the lawsuit states, and to conceal the fact that the trusts and servicers never actually held the mortgage notes and assignments, which are needed to initiate a foreclosure.

Szymoniak was also instrumental in uncovering fraud and forged documents at DocX, a now-defunct subsidiary of Lender Processing Services. She worked with the Federal Bureau of Investigations and U.S. Attorney's office in Jacksonville, Fla., that ultimately led to the conviction of an LPS executive, the closure of DocX, firm, and various settlements by LPS, which is now owned by Black Knight Financial Services.
Risk Management

Tuesday, February 4, 2014

Foreclosure Activity Drops to Seven-Year Low, with another scam

This is a bunch of bullshit! The reason why foreclosures are down , is because banks are keeping the ones they can't unload due to fraud , lost paperwork, robo signed,  no notes, and titles that are junk. They scammed the courts , and people who walked away or just gave up, which gave the banks  a new idea to scam the American people. We'll keep these homes, and condos and rent them and sell rentals on the stock market. So welcome to  bank owned rentals , with slum landlords.  I have gotta give our elected officials a hand here, not only did you, who were suppose to protect and serve the people screw them , but now, were being screwed again! Rents are high for the economy, and people  are living under slum conditions and the Banks are not fixing the problems, but they are sure filling there pockets. The hedge funds they created , to hide behind is now showing its ugly colors. These scumbags were allowed to steal and profit off  illegal foreclosures and now they are profiting off the homes again. When does it end? When will our elected officials start working with the people? This is a true travesty in this country and foreign banks are making a killing off us again, and our elected officials are allowing it. When do you start looking into this fraud?  May God have mercy on us.

RealtyTrac: Foreclosure Activity Drops to Seven-Year Low in 2013

Foreclosure/B&W Definition
RealtyTrac has released its December and Year-End 2013 U.S. Residential & Foreclosure Sales Report, which shows that U.S. residential properties, including single family homes, condominiums and townhomes, sold at an estimated annual pace of 5,167,255 in December, a less than one percent increase from the previous month and a 10 percent increase from December 2012. Counter to the national trend, annualized sales volume declined from a year ago in 18 of the nation’s 50 largest metropolitan statistical areas and was down in five states: California, Arizona, Nevada, Rhode Island and Oregon.
The national median sales price of U.S. residential properties—including both distressed and non-distressed sales—was $168,391 in December, virtually unchanged from November and up two percent from December 2012.
The median price of a distressed residential property was $108,494 in December, 38 percent below the median price of $174,401 for a non-distressed residential property.
The report also shows that short sales and foreclosure-related sales accounted for a combined 16.2 percent of all U.S. residential sales in 2013, up from 14.5 percent of all sales in 2012 and up from 15.2 percent of all sales in 2011.
“It may surprise some to see distressed sales rising in 2013 given that new foreclosure activity dropped to a seven-year low for the year,” said Daren Blomquist, vice president at RealtyTrac. “And while short sales did trend lower in the second half of the year, there are still more than 1.2 million properties in the foreclosure process or bank-owned, providing a sizable pool of inventory that the housing market is in the process of absorbing. Meanwhile, non-distressed sellers have not listed their homes for sale in droves, helping to keep the distressed share of sales at a stubbornly high level.”
Other high-level findings from the report:
►Sales of bank-owned properties (REO) accounted for 9.3 percent of all U.S. residential sales in December, up from 8.7 percent in the previous month and 9.2 percent in December 2012.
►States with the highest percentage of REO sales in December were Nevada (18.9 percent), Michigan (18.4 percent), Ohio (17.8 percent), Arizona (15.7 percent), and Illinois (14.7 percent).
►More than 436,000 REO properties sold in 2013, accounting for 9.3 percent of all U.S. residential sales, up from 9.1 percent in 2012 and up from 8.7 percent in 2011.
►Short sales (where the sale price is below the total amount of outstanding loans secured by the property) accounted for 5.7 percent of all U.S. residential sales in December, up from 5.1 percent in November but down from 6.7 percent in December 2012.
►States with the highest percentage of short sales in December were Nevada (15.3 percent), Florida (14.4 percent), Illinois (9.0 percent), Maryland (8.2 percent), New Jersey (7.9 percent), and Michigan (7.2 percent).
►More than 256,000 short sales occurred in 2013, accounting for 5.8 percent of all U.S. residential sales, up from 4.9 percent of all sales in 2012 but down from 6.0 percent of all sales in 2011.
►Sales to third-party investors at the foreclosure auction accounted for 1.2 percent of all U.S. residential sales in December, up from 1.1 percent in November and up from 0.8 percent in December 2012.
►Major metros where third party foreclosure auction sales accounted for at least 2.5 percent of all residential sales included Atlanta (4.7 percent), Orlando (3.9 percent), Miami (3.9 percent), Tampa (3.4 percent), Columbia, S.C. (2.8 percent), Las Vegas (2.8  percent), and Charleston, S.C. (2.8 percent).
►More than 48,000 U.S. properties sold to third parties at foreclosure auction in 2013, accounting for 1.0 percent of all U.S. residential sales, up from 0.5 percent of sales in 2012 and 0.5 percent of sales in 2011.
►All-cash purchases accounted for 42.1 percent of all U.S. residential sales in December, up from a revised 38.1 percent in November, and up from 18.0 percent in December 2012.
►States where all-cash sales accounted for more than 50 percent of all residential sales in December included Florida (62.5 percent), Wisconsin (59.8 percent), Alabama (55.7 percent), South Carolina (51.3 percent), and Georgia (51.3 percent).
►For all of 2013, 29.1 percent of U.S. residential sales were all-cash purchases, but the percentage trended substantially higher in the second half of the year. The 29.1 percent in 2013 was up from 19.4 percent in 2012 and 20.6 percent in 2011.
►Institutional investor purchases (comprised of entities that purchased at least 10 properties in a year) accounted for 7.9 percent of all U.S. residential sales in December, up from 7.2 percent the previous month and up from 7.8 percent in December 2012.
►Metro areas with the highest percentages of institutional investor purchases in December included Jacksonville, Fla., (38.7 percent), Knoxville, Tenn., (31.9 percent), Atlanta (25.2 percent), Cape Coral-Fort Myers, Fla. (24.9 percent), Cincinnati (19.3 percent), and Las Vegas (18.2 percent).
►For all of 2013, institutional investor purchases accounted for 7.3 percent of all U.S. residential property purchases, up from 5.8 percent in 2012 and 5.1 percent in 2011.