MBS TRUSTEES HAVE NO RIGHT TO BRING FORECLOSURE ACTIONS

MBS TRUSTEES HAVE NO RIGHT TO BRING FORECLOSURE ACTIONS

SEE QUOTES FROM US BANK WEBSITE

Upon analysis, research and reflection it appears as though the game could be over in the US Bank cases, the Bank of America cases, and any case in which the foreclosing party is identified as the Trustee. US Bank clearly has no right or even access to the foreclosure process. How do we know? Because US Bank says so on its own website. SEE  https://www.usbank.com/pdf/community/Role-of-Trustee-Sept2013.pdf.

Here are some notable quotes from the US Bank websites which references materials to make their own assertions apply to all trustees over MBS trusts:

“Parties involved in a MBS transaction include the borrower, the originator, the servicer and the trustee, each with their own distinct roles, responsibilities and limitations.”

“ U.S. Bank as Trustee:

“As Trustee, U. S. Bank Global Trust Services performs the following responsibilities:

Holds an interest in the mortgage loans for the Benefit of investors
Maintains investors/securities holder records
Collects payments from the Servicer
Distributes payments to the investors/securities holder
Does not initiate, nor has any discretion or authority in the foreclosure process (e.s.)
Does not have responsibility for overseeing mortgage servicers (e.s.)
Does not mediate between the servicers and investors in securitization deals (e.s.)
Does not manage or maintain properties in foreclosure (e.s.)
Is not responsible for the approval of any loan modifications (e.s.)

“All trustees for MBS transactions, including US Bank have no advanced knowledge of when a mortgage loan has defaulted.

“ Trustees on MBS transactions, while named on the mortgage and on the legal foreclosure documents, are not involved in the foreclosure process.”

“ While trustees are listed on mortgages, and therefore in legal documents as well, as the owner of record, its interest is solely for the benefit of investors. The trustee does not have an economic or beneficial interest in the loans and has no authority to manage or otherwise take action on the loans which is reserved for the servicer.” (e.s.)

“Additional sources of information:
-- American Bankers Association White Paper, The Trustee’s Role in Asset-backed securities, dated November 9, 2010, http://www.aba.com/Press+Room/110910Roleofatrustee.htm "

-- The Trust Indenture Act of 1939

In several cases I am litigating, the servicer seems to be saying that they approve the foreclosure but do not want the turnover of rents. This brings up the question of whether the notice of default was sent by the Trustee, who according to the attached information would not even know if the default is being "called," in which case the notice would be fatally defective. The fatal defect would be that it is not a function of the Trustee if the PSA has the usual language. That function is exclusively reserved for the Servicer. Since the PSA probably has language in it that restricts the knowledge of the Trustee to virtually zero, and certainly restricts the knowledge of the Trustee as to all receipts and disbursements processed by the sub-Servicer, the broker dealer (investment bank), and the Master Servicer. Thus the Trustee of the MBS trust is the last party on whom one could depend for information about a default --- except that if "Servicer advances" (quotations used because the money is coming from the investment bank) then the Trustee would presumably know that from the creditor's point of view, there is no default.

A NOTICE OF FILING could be sent to the Court with the full pdf file from the US Bank website while the smaller pdf file containing excerpts from the full pdf file could be attached as an exhibit to the Motion. THIS WILL HAVE BROAD RAMIFICATIONS FOR THOUSANDS OF FORECLOSURE CASES ACROSS THE COUNTRY. IF THE TRUSTEE INITIATED THE FORECLOSURE, EVERYTHING IS VOID, NOT VOIDABLE ACCORDING TO NEW YORK AND DELAWARE LAW. ACTIONS COULD BE BROUGHT BASED UPON JURISDICTIONAL GROUNDS FOR WRONGFUL FORECLOSURE THUS TURNING EACH FORECLOSURE CASE INTO AN ACTION FOR DAMAGES OR TO REGAIN TITLE SINCE THE SALE WAS BOGUS.

But the complexity gets worse. If the action should have been brought by the servicer, but the creditor was really a funded trust who was legally represented by a properly authorized servicer, then the bid by the Trustee at the auction might have been valid. Hence the attack should be on the foreclosure process itself rather than the credit bid.

Not to worry. I don't think any of the Trusts were funded --- or to put it more precisely, I have found no evidence in the public domain that any of the MBS trusts were in fact funded the way it was set forth in the prospectus and pooling and servicing agreement. There does not appear to be any actual trust account over which the Trustee has control. Hence both the existence and capacity of the Trust and the Trustee are issues of fact that must be decided by the Court.

That leaves the MBS trusts with no money to originate or acquire mortgages. So who really owns the loans? This is why in Court on appeal, the attorneys agree that they don't know who owns the loans. But what they really mean, whether they realize it or not, is that they don't know if any of the loans are secured by a perfected mortgage. If none of the parties in their "chain" actually came up with money or value, then the lien is not perfected or valid. The mortgage would be subject to nullification of the instrument.

If the question was really who owns the loans, the answer is simple --- the investors who put up the money. We all know that. What they are dancing around is the real nub of the confrontation here:  Since we know who put up the money and therefore who owns the loan, was there any document or event that caused the loan as owned by the investors to be secured? The answer appears to be no, which is why the investment banks are all being sued every other day for FRAUD. First they diverted the investor money from the trust and then they diverted the title from the trust beneficiaries to one of their own entities. The actions of the investment banks constitutes, in my opinion, an intervening tortious or criminal act that frustrated the intent of both the borrowers (homeowners) and the lenders (investors).

So the real question is whether the Court can be used to reform the closing and create a loan agreement that is properly enforceable against lender and borrower. That appears to require the creation of an equitable mortgage, which is held in extremely low regard by courts across the country. And then you have questions like when does the mortgage begin and what happens to title with respect to intervening events?

The simple answer, as I said in 2007, is do some sort of amnesty and reframe the deals to reflect economic reality allowing everyone to bite a bullet and everyone to cover their losses but avoid, at this point another 6 million families being displaced. My experience with borrowers is that the overwhelming majority would sign a new mortgage document that is enforceable together with a new note that is enforceable and leaves all issues behind even though they know they could push the issue further. The borrower s are a lot more honest and straightforward than their banker counterparts. The deal should essentially be between the investors and the homeowners.

The question is whether the case is dismissed, possibly with prejudice, or if they can try to substitute the servicer as the Plaintiff in a style that would or might read "SPS, as servicer, on behalf of ????, Trustee for the asset backed trust" or "on behalf of the trust beneficiaries."

The further question is whether the complaint could be amended. But if the servicer didn't send the NOTICE OF DEFAULT, there is nothing to amend since on its face, the Notice of Default was sent by a party who not only was not authorized to start the process but who was expressly precluded from having any knowledge of the default.

This in turn leads to the further question of whether the verification was valid if signed on behalf of US Bank or any other party "as trustee" on the complaints to foreclose.

The smaller file tells the whole story we have been arguing and it should be attached. I would attach the smaller one page synopsis of quotations from their website. It leaves no room for interpretation --- trustees do not, and cannot initiate foreclosures or anything else relating to enforcement. They may not meddle in the foreclosure and they may not meddle or mediate in settlement or mediation. Here is the smaller file: US BANK ROLE OF TRUSTEE

As to Bank of America, the situation is even more dire ----

http://www.federalreserve.gov/newsevents/press/orders/20070914a1.pdf

contains the Federal reserve Order approving the Bank of America - LaSalle merger. I can find no such order for the CitiMortgage-ABN Amro mortgage. It is also true that I can find no evidence that the BOA merger was completed whereas there is plenty of evidence that the Citi-ABN merger was in fact completed. This means that CitiMortgage became the parent company of LaSalle Bank.

While it is theoretically possible for an ACQUISITION of LaSalle to have taken place in which BOA acquired LaSalle Bank, no evidence exists that any such transaction exists between BofA and Citi. It is clear that Citi completed its deal in September of 2007 at around the same time that BOA was getting the approval order shown above on the federal reserve website.  But most curiously the Fed does not mention the Citi-ABN Amro deal. What we know for sure is that there was no MERGER between BofA and Citi.

In my opinion based upon review of this order from the Federal Reserve and other pronouncements from the FED, this order was either never officially issued in actuality or it never was used. In the absence of further contrary information which I have not been able to uncover, thus far, the irrefutable conclusion is that BOA never became the successor by merger to LASalle Bank. Therefore BOA was never the trustee for the asset backed REMIC trust. Therefore, the transaction to which US Bank refers granted US Bank nothing even if the position of trustee is determined to be a commodity --- an idea that would create havoc in the marketplace.

As for whether US Bank as trustee for MBS trusts has standing, the answer is no and they have absolutely no right, obligation or even access to the foreclosure or settlement process. In the same REMIC out in California, I am the expert witness on a case in which the same trust is represented by Chase as servicer. The case has not caught up with the fact that Chase has sold or transferred servicing rights to SPS (Select Portfolio Services) or at least that is what they say.

This being the case, several questions arise:

Since this information from the public domain is on the U.S. Bank website without any disclaimers, are we sure they authorized the foreclosure and the action for turnover of rents? Or are they going to say it was an error by the law firm? Who is actually the client of the opposing law firm --- the trust beneficiaries, the trust,, the trustee or US Bank who doesn't really appear to be the trustee?

The same question could be asked of Bank of America who says they are or were a trustee based upon a dubious series of announcements that seem to lack the same underlying transactions as all securitized loans that report a transaction has taken place (i.e.., on the note the contract is implied because the borrower agrees to repay a loan to a lender that never gave them the money).

Not Just a Bank issue

 These companies also work for private hedge funds and servicers who bought the NPLS from banks.. this is NOT just a bank issue.

 

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Foreclosure Crisis, Safeguard Properties, Wells Fargo, Bank Break-Ins, Bank Contractor Break-Ins, Bank Contractors, Bank Foreclosures, Field Services, Five Brothers, Property Preservation, Safeguard, Wells Fargo Contractors, Business News

Every day in neighborhoods across the country, low-paid workers with little oversight or training decide whether to break into someone else's home.
They are independent contractors working indirectly for banks, including Wells Fargo, JPMorgan Chase and Bank of America.
Mortgage agreements give these banks the right to enter abandoned properties, even those that are locked up, to secure them against the ravages of weather and to perform other simple repairs. But the contractors they hire to do this work sometimes force their way into houses and condominiums that are still occupied by their owners, changing out locks and removing what they find inside, including family heirlooms and other valuables.
"These companies don't ask the homeowner, don't go to a court to get permission to go inside," said Matthew Weidner, a consumer lawyer in St. Petersburg, Fla., who has handled several such cases. "They just send unlicensed, unregulated people who break down doors and do whatever they want."
Fed up with what they claim is a serious violation of their property rights -- and sometimes outright theft -- homeowners are fighting back.
In the past five years, people in 31 states have filed more than 250 lawsuits against the six largest national companies that contract directly with banks to inspect and repair homes in some stage of default or foreclosure, a Huffington Post review of court records found. The majority of these cases have come in the past 18 months.
The most-sued contractor is Safeguard Properties, based in Valley View, Ohio. The company, the subject of a previous HuffPost investigation and a new NBC News report, has been named in at least 135 lawsuits filed by homeowners alleging unwarranted break-ins.
Lawyers and other industry experts say growing awareness of the national scope of the problem has pushed more consumer complaints into courts. On Facebook and in online forums, homeowners swap tales of unauthorized break-ins and theft and solicit advice for how best to respond. Some attorneys who brought early cases against the industry are now sought for their expertise.
"I get these calls all the time," Weidner said.
One of his clients, Deanna Tedone, returned to her Tampa, Fla., home last year to discover that a contractor working for U.S. Bank had ripped huge holes in her walls, purportedly on a search for hazardous Chinese-made drywall.
The bank claims it was simply trying to protect its investment in the property, where Tedone and her husband had quit making monthly mortgage payments. But neither the bank nor the contractor, who worked for Five Brothers, based in Warren, Mich., had bothered to inform Tedone, who still owned the house, that such a radical procedure was in store, she claims in a lawsuit. Moreover, the contractor made a mess of it -- ripping out walls, leaving huge piles of possibly contaminated rubble strewn about, all without obtaining the proper permits from the city, she said.
The bank's action essentially killed any chance that she could sell her home at a short sale, and thus avoid the huge hit to her credit that a foreclosure deals, Tedone said.
"When you sell you have to disclose everything," she said. "And I don't know what was done."
Conflicts between contractors and homeowners are an outgrowth of a housing crisis that fueled rapid expansion in a previously little-noticed corner of the mortgage industry. In the past decade, the largest banks have increasingly outsourced their responsibilities to look after distressed real estate to a growing cadre of companies that do what is called property preservation, or field-services work.
Even now, with the housing market booming again in some areas, more than 3 million homes in some stage of default or foreclosure are subject to a monthly bank inspection, according to RealtyTrac, an online real estate company.
Disputes most often arise in instances where a borrower has missed a few payments, or is in the early stages of the foreclosure process. Sometimes owners just walk away from their homes, leaving it to the bank to mow lawns, fix broken windows or patch roofs.
Bank inspectors are sent each month to look for evidence of abandonment, but too often, say homeowners and even some of the contract workers themselves, they don't even get out of the car.
This is a result of lax supervision and regulation, critics say. Inspectors have little financial incentive to be cautious, often earning just a few dollars to inspect a property, after various other subcontractors have taken a cut of what the bank pays for inspections. On Craigslist, contractors solicit workers to inspect homes for as little as $1 or $2 each.
Bad inspections lead to work orders issued to clean out or lock up homes that are still inhabited by their rightful owners. Dozens of complaints allege that a resident was at work or on vacation when a contractor break-in occurred.
Adam Reynolds, a Naples, Fla., contractor who owned his own preservation company until last year, said he was routinely dispatched on such missions. "Countless times," he said, he would punch out a door lock and go inside a residence only to discover personal photos on the shelves and fresh food in the refrigerator.
Reynolds said he would immediately leave the property in such situations, as the contracting companies require in written guidelines. But others go ahead with these work orders, regardless of what they discover inside, homeowners and other contractors maintain. Indeed, some appear to see a fully stocked home as an opportunity to loot valuables.
In Chicago, Majorie Principe claims she returned home to find that a Safeguard contractor had taken her furniture, books, savings bonds and electronics.
In Cleveland, Bruce Brown claims a Safeguard contractor stole all of his clothes.
In Atlanta, Woldeab Medhin was arrested after he forced his way back into his home after a Safeguard contractor locked him out. The worker, as it turned out, had the address mixed up and was at the wrong house.
All have sued, seeking unspecified monetary compensation.
Safeguard is also the target of a fraud lawsuit filed earlier this month by Illinois Attorney General Lisa Madigan. Her office has received more than 300 complaints against the company in Illinois alone, she says.
More state actions could be coming. A spokeswoman for the Florida attorney general said her office was "reviewing" complaints regarding Safeguard.
In addition, plaintiffs' lawyers have named Safeguard in two class-action lawsuits: one filed in Chicago federal district court and another in Ohio, in Cuyahoga County state court.
In at least two instances, homeowners have alleged that the worker Safeguard hired to fix up or clean out a property had a lengthy criminal background.
For its part, Safeguard maintains that it strictly oversees and screens its subcontractors, performing background checks, auditing their work and requiring that they carry insurance. The company says the number of complaints against it is partly a function of its size: Safeguard completed 1.5 million work orders last year, the company said, making it far and away the biggest player in the industry.
A Safeguard spokeswoman declined to comment further on the Illinois investigation, or the homeowner lawsuits.
So far, there isn't much case history to suggest how this litigation will turn out. Some previous lawsuits have been dismissed, others have settled for undisclosed sums.
But Safeguard has shown it's willing to fight back. The company recently sued Kevin Kubovcik, a former employee who ran its complaint department until 2010. In April, Kubovcik provided HuffPost with records that showed he was logging about 85 incidents a month involving an alleged theft or break-in. The company claims that disclosure violated a confidentiality agreement and is seeking "in excess" of $25,000 from Kubovic.
It's also unclear how much legal liability the banks that hire companies like Safeguard have for such alleged abuses. In the past, banks have tried to shunt liability onto the contracting companies. But the $25 billion settlement struck with state attorney generals last year requires that five of the largest banks "perform appropriate due diligence" in examining any third-party contractors' "expertise, complaints and qualifications." Failure to do so could hypothetically lead to fines or other penalties. No public actions have been taken yet.
Sonia Wisniewska, a California homeowner, said she hopes heightened scrutiny of the property preservation industry will help yield a favorable result in her lawsuit against Wells Fargo and another large contracting company, Lender Processing Services, which she filed last month.
Wisniewska's case is one of the most unusual of those reviewed by HuffPost. She lives alone in a remote corner of Santa Barbara County, on a ranch miles from the nearest neighbor. One afternoon last year, Wisniewska angrily confronted a contract worker who snuck through the security gate guarding her long driveway.
When the contractor refused to leave, Wisniewska retrieved her shotgun and fired a warning shot into the sky. She was arrested on grounds that she had recklessly discharged a firearm.
Although the charges were eventually dismissed, Wisniewska claims the turmoil scared off a friend who was prepared to assume the ranch's deed and thus allow her to avoid foreclosure on a property she could no longer afford to keep.
The experience, Wisniewska said, was devastating. "I couldn’t get a job with the felony hanging over me. I lost weight. I had insomnia and depression," she said. "I don't want anyone else to have to go through this."