Wrongful Foreclosure Training & Resources
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Table of Contents for this Page
1. Explanation about why the system is broken (securitization) and why it is likely one cannot obtain an original promissory note or clear chain of title. Print flow chart.
2. Explanation about Mortgage Electronic Registration Systems and why they lack standing in foreclosure cases.
3. What documents foreclosing attorneys are legally required to possess in order to process a legally proper foreclosure.
4. Assignments of Beneficial Interest in the deed to secure debt and why they are being fraudulently manufactured.
5. Examples of Manufactured or Fraudulent Assignments.
6. Examples of Wrongful Practices
7. How to research your documents to determine if you are a victim of fraud.
8. Tools for your Arsenal. What do you do if you believe to have fraudulent documents or you have been wrongfully foreclosed.
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Click here and print the flow chart It illustrates an actual transaction from real estate purchase to wrongful foreclosure. At closing, a borrower signs a promissory note and a deed that secures the debt (security deed or deed of trust). When the Note is sold to another entity, the security deed must travel with it because its role is to "secure the debt".
A promissory note is a promise to pay the debt. A Security Deed (or Deed of Trust, used in states such as California) is an instrument that has to travel "with the promissory note". See paragraph 20, 1st sentence, of the Security Deed: Sale of Note; Change of Loan Servicer; Notice of Grievance. "The Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without the prior notice to Borrower." (Do you see the requirement that the note has to be with the security instrument?) This deed is used to give a lender a security interest in the property until the debt is paid off.
Notice in the Promissory Note paragraph 1: BORROWER'S PROMISE TO PAY: "In return for a loan that I have received, I promise to pay U.S. $xxxxx.00... The Lender is XYZ Company.... I understand that the Lender may transfer this Note. The Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the "Note Holder"." You see that the Borrower promises to pay the Note Holder. There can only be one (1) Note Holder entitled to receive payments.
The Lender did not actually have the funds sitting in reserves when the Borrower signed the promissory note, promising to pay the debt owed. Notice that the promissory note is/was only signed by one party, the borrower. This "negotiable instrument" was then presented in the market place where the lender is given the right to lend 10 times the amount of the note where they make the money charging interest. See article from expert witness explaining how bank creates money from the promissory note.
Understanding Securitization: Why Foreclosures are happening illegally, without correct documentation Over the past ten years, hundreds of thousands of residential mortgages (promissory notes) were bundled together (often in groups of about 5,000 mortgages/notes) and each bundle was called a Trust. (See above flow chart: Mortgage Backed Securities [MBS]. This borrower's note was bundled with 5,000 other notes and investors bought shares of each bundle/Trust).
Each bundle is given a name, such as "Soundview Home Loan Trust 2006 OPT-2." The name indicates information about the particular trust such as the year it was created (2006) and its contents (with OPT indicating that the loans in that particular trust were originally made by Option One Mortgage).
Meatloaf analogy: Like "meatloaf" which is made with several ingredients mashed together, pieces (investments) were sliced and sold.off (to someone, for example, in China, Bolivia, hedge fund manager in California, pension fund manager in New York City. etc.) even though the notes may not be anywhere in these locations.
Collateralized Mortgage Obligations (flow chart): Bundles of notes were further packaged in larger investment models and wholesaled to large investors or investment houses such as Goldman Sachs. When borrowers defaulted on their loans, the investors screamed to the U.S. Government to "bail them out".
See Mortgage Electronic Registration Systems (or MERS) on the flow chart. MERS was created in the mid to late 1990's by the mortgage banker's association along with companies like Bank of America, Wachovia, J P Morgan Chase, Fannie Mae, and Freddie Mac because the bankers did not want to pay recording fees on every transaction where they bought and sold mortgages by and between themselves. Therefore, they invented a corporate model (which never received Congressional approval or any kind of legislative approval) to circumvent (go around) the public registry that has been in place since the U.S. first started keeping record of property transactions. The whole goal of MERS was to avoid the fees that would have been assessed at the county courthouse for recording documents.
It was long established by the U.S. that information (transactions) should be available to everyone in order to see what a clear chain of title is on a property. That is important to a buyer because when he/she intends to buy a property, he/she can be confident that the property will be theirs, not property that has been fraudulently sold to the buyer. This would be like stealing a car and selling it to someone else.
MERS does not share their registry with anyone and therefore, it has created a shadow or false registry. Because they refuse to share the information, they can create any document they want.
Example of fraud: Let's say the "lender" with whom the borrower started is now out of business. The Borrower goes into default. MERS creates an assignment from a lender (that is now defunct) to another entity. (The original "lender" never transferred anything to any entity on the county records.) MERS will maintain that it "has the authority" to do an assignment based on a relationship that may or may not stilll be active. In most cases where the original "lender" is defunct (is not active) -- you cannot continue contractual relationship with a defunct party.
Additionally MERS has foreclosed on 1,000's of homeowners, and with many others, MERS has assigned interest in the deed to secure debt to another entity (for the purpose of foreclosure) BUT it never owns the underlying note. It has also stated that it holds the deed to secure debt while the note is traded between entities which presents another error -- the NOTE and the DEED TO SECURE DEBT have been separated. That had to travel together to be valid, as mentioned above!
Judges in California, Kansas, Ohio, NY have ruled that MERS has no standing to foreclose or convey interest because it does not hold the underlying note.
Case precedents supporting MERS lack of standing.
California May 20, 2010, in a bankruptcy case called In re Walker, Case no. 10-21656-E–11, (Google to get case), the court held that MERS could not foreclose because it was a mere nominee; and that as a result, plaintiff Citibank could not collect on its claim. The judge stated:
Since no evidence of MERS’ ownership of the underlying note has been offered, and other courts have concluded that MERS does not own the underlying notes, this court is convinced that MERS had no interest it could transfer to Citibank. Since MERS did not own the underlying note, it could not transfer the beneficial interest of the Deed of Trust to another. Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is void under California law.
California Re Vargas (California Bankruptcy Court) }
Kansas Landmark v. Kesler (Kansas Supreme Court) } Example cases
Ohio (Judge Boyko) }
Ohio (Judge Rose Re Foreclosure Cases..) }
Click here for Large List of CASE DISMISSALS for lack of standing to foreclose. (Source: www.msfraud.org)
So why is it important to know where the original note is? Remember... The promissory note, paragraph 1, states: Borrower promises to pay the Lender or anyone who takes the Note by transfer. This entity is referred to as the "Note Holder".
Many times the original "wet ink" promissory note is destroyed or copied.
In order to foreclose, the foreclosing entity (attorney) must have the following documents:
1. Original "wet ink" promissory note (not a copy) that the borrower signed at closing (or proof of loss of note per UCC Section 3-309). Most states have adopted the Uniform Commercial Code code pertaining to this subject. Click here for details and scroll down to Article 3.) If the note has been transferred from the Lender to another entity, it must be signed and notarized in sequence from the Lender to the party who owns the Note. This has to be ON THE NOTE or on an attachment, called an allonge, which makes specific reference to the NOTE.
Important: Judges who accept a copy of a promissory note from the foreclosing entity (foreclosure attorney) leave borrowers at risk because the entity owning the original promissory note may appear later requesting the borrower to pay what is owed.
Example of forged endorsement on promissory note (on page 3): Page 1 of Note, Page 3 of Note.
2. Original deed to secure debt that the borrower signed at closing.
(Remember the deed to secure debt acts as the insurance policy for the promissory note; therefore the note and the deed to secure debt cannot be separated.)
3. Assignments of Beneficial Interest in the deed to secure debt signed and notarized and recorded in historical sequence from Lender to current Note Holder. Remember...A Security Deed, see #2 above, (or Deed of Trust, used in California for instance) is an instrument that has to travel "with the original promissory note". This deed is used to give a lender a security interest in the property until the debt is paid off. Assignments of interest in the debt (click on link next to #3) should be recorded every time a note is transferred(sold) from one entity to another entity. See Georgia code here which addresses this requirement. Remember in the explanation about MERS above, MERS unlawfully circumvented this requirement.
Important: The requirement for transactions to be recorded and available to the public is very important because one must be able to see a clear chain of title on a property. Otherwise the title could be "clouded" putting the purchaser at risk that he/she bought a property that had been fraudulently sold to him/her. That would be like buying a car that was previously stolen. It didn't have a clear title and still belongs to someone else.
As stated above, MERS does not share their registry with anyone and therefore, it has created a shadow or false registry. Because they refuse to share the information, they can create any document they want.
4. Copy of modifications of the Note (with recording information).
5. Full and accurate accounting of payments and charges.
6. Security Deed or Deed of Trust has to have a Power of Sale provision, meaning they have power to sell upon borrower's defaulting on the debt obligation.
ASSIGNMENTS OF INTEREST IN THE SECURITY DEED (or DEED OF TRUST, used in states like California). See #3 above.
See article about Docx being closed in Alpharetta, GA, for manufacturing assignments.
IMPORTANT! Assignments are often recorded just days prior to a foreclosure date for the specific purpose to facilitate foreclosure. Research 2 weeks up to the day prior to foreclosure.
Why would assignments have to be illegally manufactured?
1. Assignments were not properly created and recorded each time the Note was transferred from one entity to the other.
2. Trusts (remember the bundles of 5,000 notes explained in the beginning?) are missing the mortgage assignments that were supposed to have been delivered to the trusts at the creation (inception) of the trust. When each of the trusts was made, the securities company responsible for the securitization was to supposed to have obtained mortgage assignments showing that the trust had acquired: for each property -- each deed securing the note and promissory note from the previous owner (most often the original lender). Most mortgage-backed trusts include this language regarding Assignments: "Assignments... will be delivered to the Trustee in recordable form (note, deed securing debt and assignments), so that they can be recorded in the event recordation is necessary in connection with the servicing of a Mortgage Loan." That is, to allow the Trustee to foreclose in the event of default.
Trusts paid substantial fees to the Trustees for "Document Custodial Services" including fees for obtaining and retaining a Mortgage Assignment (in "recordable form") for each of the properties in the trust. These services were never provided. Many if not all of the Mortgage Assignments were never obtained, or were obtained and then lost. In these cases, the Trust could not successfully foreclose when loans in the Trust defaulted. Also, in the cases where the Trust has successfully foreclosed, it had no legal right to do so, and the Trust has been (or will be) exposed to: claims for wrongful foreclosure by former homeowners and claims of fraud by subsequent purchasers. Read Lynn Szymoniak's Trust Assignment Fraud Letter to SEC here.
TRUSTS (bundles of notes, securitized - see flow chart MBS - Mortgage Backed Securities)
The bank acting as a Trustee for the mortgage-backed trust typically hires a
Mortgage Servicing Company (see flow chart mentioned at the beginning - look at left side for Servicing entities) to deal with issues involving the individual mortgages in the trust, then the Mortgage Servicing Company hires a Default Management Company (such as Lender Processing Services) to foreclose when a homeowner defaults on payments on a loan that is part of the trust. Lender Processing Services (LPS) has been responsible for manufacturing 1000's of Assignments.
What is a Trustee? An individual or company who administers the trust and is responsible for protecting the trusts assets from unreasonable loss for the trust's beneficiaries.
Important: Where the loan originator is no longer in business, it is likely impossible to ever obtain a valid Assignment to the Trust. (The Trustees and Servicers have failed to disclose this information to the Certificate Holders and to the SEC).
Certain mortgage-backed trusts have been using forged and fraudulent mortgage assignments in foreclosure actions throughout the United States.
These assignments are most often produced by employees of Lender Processing Services, Inc., (“LPS”), a mortgage default management company located in Jacksonville and other parts of the U.S (subsidiary Docx, LLC in Alpharetta, GA was closed down). LPS produced several million Mortgage Assignments, using its own employees to sign as if they were officers of the original lenders. The fraud includes:
• Mortgage assignments with forged signatures of the individuals signing on behalf of the grantors, and forged signatures of the witnesses and the notaries;
• Mortgage assignments with signatures of individuals signing as corporate officers for corporations that never employed them in any such capacity;
• Mortgage assignments prepared and signed by individuals as corporate officers of mortgage companies that had been dissolved by bankruptcy years prior to the Assignment;
• Mortgage assignments prepared with purported effective dates unrelated to the date of any actual or attempted transfer (and in the case of trusts, years after the closing date of the trusts);
• Mortgage assignments prepared on behalf of grantors who had never themselves acquired ownership of the mortgages and notes by a valid transfer, including numerous such assignments where the grantor was identified as “Bogus Assignee for Intervening Assignments;” and
• Mortgage assignments notarized by notaries who never witnessed the signatures that they notarized.
EXAMPLES OF MANUFACTURED OR FORGED ASSIGNMENTS:
> See example Assignment with forged signatures. Names signing for Mortgage Electronic Registration Systems have been erased temporarily for confidential reasons. These are actually attorneys of the foreclosing entity! Also the notary did not witness the signatures - notaries have 4 year terms. Document was signed April 4, 2009 and Notary (see stamp) did not begin her notary term until May 15, 2009.
> See example Assignment page 1 and page 2 with forged signatures. The signature of the supposed MERS officer was actually an employee of Citimortgage. Here is her verified signature from her security deed of her personal residence. Also the notary did not witness the signatures. See actual notary signature from Secretary of State.
> See example Assignment with forged signatures. Also notary did not witness the signatures. See actual notary signature from county clerk's office.
ROBO-SIGNING. MERS has less than 30 employees. That is how we know that all the people who are signing as officers of MERS cannot possibly be officers of MERS. There have been multiple depositions (statements) taken from "robo-signers" in multiple cases where the robo-signers admitted that they were not officers of MERS. They were actually employees of, for example, Ally/GMAC, J.P. Morgan Chase, One West (former Indymac), BAC Home Loans, Litton Loan Servicing (servicing arm of Goldman Sachs), and PNC.
> See deposition of William Hultman, VP MERS (significant material located on pages 94-170). He states that "through corporate resolution" that 1,000's of mortgage servicers' employees can give themselves permission as corporate signing offers for MERS. He admitted that the employees do this themselves and this is not endorsed or policed by MERS. Therefore, the so-called "corporate resolution" and corporate signing officers are fraudulent. They are not employees, or paid by MERS.
> See deposition of Cheryl Sammons, employee at the David Stern law firm, who admits signing thousands of documents (without checking accuracy) for David J. Stern alleged foreclosure "mill" in Florida, which is under investigation by the Florida Attorney General.
> See depositions of Jeffrey Stephan: Deposition 1 Deposition 2 See 3-page summary of depositions here. Jeffrey Stephan says his current title is team leader of the document execution team for GMAC. He estimates that he signs between 8,000 and 12,000 documents monthly. He supervises a team of 14 employees. Mortgage Assignments and Affidavits signed by Stephan in support of foreclosure have been used by GMAC, FANNIE & FREDDIE in over 100,000 foreclosure cases. In a previous deposition, Stephan stated that the notaries who notarize his signature are often not actually present in the room with him when he signs documents. Despite all of the mounting evidence and admissions, Jeffrey Stephan, Scott Anderson, Bryan Bly, Linda Green, Erica Johnson-Seck, Christina Trowbridge and the other “bank officers” employed by the companies serving the securitized mortgage-backed trust industry will be back at their desks, pens (or rubber stamps) in hand.
> Compare signatures on Assignments collected from a Florida attorney Lynn Szymoniak. For example Linda Green's signature is different, with different titles.
> See Robo-signers' various jobs. On one document someone will be shown as a Vice President whereas on another document, that same person while be shown as an Assistant Vice President or Assistant Secretary.
FIRST LOOK INTO FRAUDULENT PRACTICES: Did your original "lender" go out of business, go into bankruptcy, or was it purchased by an existing lender. If you can determine that your existing or original lender (mortgage broker, an origination company, an internet company, etc) is out of business, then in all likelihood -- from the time it went out of business forward -- your documents have been manufactured.
Note: Look to see if MERS is involved in the chain of transactions.
SECOND LOOK INTO FRAUDULENT PRACTICES: Assignment manufacturing. Example: Borrower defaults. BAC (Bank of America) comes up with an assignment showing a transfer of interest from a company in New Jersey. Yet it is notarized in California. Why notarize in California when the assignment should have been initiated in New Jersey and it was "supposed" signed by an officer of the New Jersey company? Did New Jersey run out of notaries? No. This assignment was most likely fraudulently manufactured. This does not involve MERS, of course.
THIRD LOOK INTO FRAUDULENT PRACTICES: This document shows that the borrower was not given a 30 day notification prior to foreclosure. The date of the letter is August 18, 2010 and it is announcing a September 7, 2010 foreclosure. By Georgia law, for example, a notice of foreclosure sale has to be announced in the county legal newspaper 4 consecutive weeks prior to foreclosure, and a letter with a copy of the announcement has to be sent to the borrrower by certified mail. In Georgia, foreclosures take place the first Tuesday of each month. If you are in another state, check your state procedures. Also see foreclosure procedures by state here.
INCENTIVE FOR ATTORNEY'S TO FORECLOSE? This same document shows the Georgia code O.C.G.A. 13-1-11 which gives attorneys the right to charge 10% of principal and interest owed. Do they have any reason not to want foreclosure? This law needs to be changed!
What to Do To Research Your Own Records (being written)
See How to search the SEC website for the name of the mortgage pool containing your loan.
See How to find your Pooling and Service Agreement. Example of Pooling and Service Agreement (see Section 2 only). This gives the rules about your note and how it should be treated. How to get it certified: Instructions. What a certified copy looks like
TOOLS FOR THE ARSENAL
See the new page Foreclosure Defense for more tools.
1. Qualified Written Request (QWR): This is a letter that should be tweaked according to your situation. See a concise version here (used by attorneys). Most often it is used to question the amount that they allege the borrower to owe. With the epidemic of false or inflated fees, it is recommended that the borrower exercise the right to question the amount owed. THIS IS IMPORTANT and the borrower has the right according to the RESPA Disclosure the borrower signed at closing. See example RESPA Disclosure. See Complaint Resolution paragraph. "Section 6 of RESPA (U.S.C. Section 2605) gives you certain consumer rights, whether or not your loan servicing is transferred. If you send a "qualified written request' to your servicer, your servicer must provide you with a written acknowledgment within 20 Business Days of receipt of your request. A "qualified written request" is a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, which includes your name and account number, and the informaton regarding your request. Not later than 60 Business Days after receiving your request, your servicer must make any appropriate corrections to your account, or must provide you with a written clarification regarding any dispute. During this 60 Business Day period, your servicer may not provide information to a consumer reporting agency concerning any overdue payment related to such period or qualified written request.
Important: If you have a foreclosure date, do not assume the foreclosure will be stopped. Plan to take additional action.
2. Research your documents and file a complaint in superior court (of your county). Attach the fraudulent documents and insist that they be place in public record. Seek legal advice.
3. Report to FBI, Attorney General, and Governor Office of Consumer Affairs, as well as OCC and Federal Trade Commission.
3 levels of battle:
Procedural (wrong assignments, etc)
Fair Debt Collection Practices Act
Questions and Answers from Federal Trade Commission
Full law from FDIC
Truth in Lending
RESPA (Real Estate Settlement
www.4closurefraud.org is a trusted site for information on this subject. It is developed by a blogger who works with a Florida attorney Carol C. Asbury who is committed to the battle against fraud and undue process.
www.frauddigest.com Lynn Szyzmoniak, Florida attorney
CHANGES NEEDED IN GEORGIA
> Petition to become a judicial state. See Judicial versus Non-Judicial. In order to foreclose in judicial states, a law suit has to be initiated against the borrower before foreclosure can occur. In non-judicial states such as Georgia and California, the borrower has waived their rights and the foreclosure can take place without a law suit. In order to stop a foreclosure or demand the right to due process, the borrower must initiate a law suit which is often times ignored by the court system/judges. At closing, borrowers in Non-Judical states (Georgia) have signed a Waiver of Borrower Rights which is unconstitutional.
> Petition for Attorney General and candidates running for Attorney General to order an investigation into the fraudulent documents. Currently there is no action being taken by this office. In August, 2010, they reported that they had "no jurisdiction" over the fraud.
> Petition for protection of pro se litigants representing themselves in court. Currently the system is not in favor of pro se litigants and many judges do not take cases seriously if a borrower does not have a lawyer.
> Petition to institute a strict enforcement of producing correct documents in order to foreclose and administer severe penalities if guidelines are violated.
> Petition to prosecute entities shown to be manufacturing fraudent documents with the intent to foreclose.
Some interesting videos:
Why do they want to foreclose? Here is why!