Posted on August 22, 2012 by Neil Garfield
Has Obama Awakened?
Appraisal Fraud Alleged by this Blog
is found to be Centerpiece of this Action
Editor’s Note: The FDIC claims it studied a rough sampling of the securitized loans and alleges more than 60% of the loans packed into each deal contain material untrue or misleading statements.
In a resounding acceptance of the principles enunciated first on this blog, the FDIC, being the best regulator to file the charges, has moved against the big banks and servicers in the false scheme of securitization resulting in trillions in losses to the government, investors and homeowners.
Central to the allegations are that “defendants made untrue statements or omitted important information about such material facts as the loan-to-value ratios of the mortgage loans, the extent to which appraisals of the properties that secured the loans were performed in compliance with professional appraisal standards, the number of borrowers who did not live in the houses that secured their loans (that is, the number of properties that were not primary residences), and the extent to which the entities that made the loans disregarded their own standards in doing so.”
The allegations are so serious that it is unlikely that there will be any slap on the wrist coming out of this. The result of this lawsuit will have a profound impact on the housing market, the financial community and best of all, homeowners who have been using these allegations as defenses for years. It is apparent that the false premises upon which the bogus mortgage bonds were sold, combined with the complete avoidance of the supposed securitization scheme that was “in place,” has prompted this huge lawsuit. It is the tip of an iceberg where the administration is finally bringing the war to the door of the banks and will most likely lead to criminal charges as the cases progress.
The Federal Deposit Insurance Corp. filed three lawsuits against big banks, alleging the lenders misrepresented the quality of securitized loans sold to the now defunct Texas firm, Guaranty Bank.
The FDIC took Austin, Texas-based Guaranty Bank into receivership back in Aug. 2009.
This week, the regulator filed multiple lawsuits in Austin, Texas, suggesting Guaranty suffered major losses from toxic RMBS loans sold and packaged by mega banks and other financial institutions.
Defendants named in the multibillion-dollar lawsuits include Countrywide, JPMorgan Chase ($38.04 0%), Ally Financial, Deutsche Bank Securities ($34.07 0%), Bank of America ($8.190%) and Goldman Sachs ($105.32 0%) among others.
FDIC, on behalf of Guaranty, claims the banks misrepresented loan-to-value ratios, underwriting criteria and appraisal amounts when selling, packaging and underwriting home loans that became collateral for mortgage securities sold to Guaranty.
Specifically, the FDIC alleges the financial firms violated federal and Texas securities laws by failing to fully disclose or truthfully represent the quality of mortgages backing the security certificates.
In the first case, the FDIC accuses Countrywide Securities, Bank of America, Deutsche Bank and Goldman Sachs of playing a role in the packaging, selling or securitization of mortgages sold off to Guaranty Bank for $1.5 billion. The suit says Guaranty Bank acquired 8 certificates in the transaction.
The FDIC claims it studied a rough sampling of the securitized loans and alleges more than 60% of the loans packed into each deal contain material untrue or misleading statements.
The FDIC is suing for an undetermined amount that is no less than $559.7 million in damages.
The bank regulator also sued Ally Securities, Goldman Sachs, Deutsche Bank Securities and JPMorgan Securities among others. In that suit, the regulator claims, the firms were involved in the packaging, underwriting and sale of eight RMBS certificates valued at $1.8 billion.
The FDIC alleged in court records that the “defendants made untrue statements or omitted important information about such material facts as the loan-to-value ratios of the mortgage loans, the extent to which appraisals of the properties that secured the loans were performed in compliance with professional appraisal standards, the number of borrowers who did not live in the houses that secured their loans (that is, the number of properties that were not primary residences), and the extent to which the entities that made the loans disregarded their own standards in doing so.”
In that complaint, the FDIC is asking for at least $900.6 million in damages.
The regulator also sued JPMorgan Securities, Merrill Lynch, RBS Securities and WaMu Asset Acceptance Corp., making similar claims about 20 RMBS certificates that Guaranty paid $2.1 billion to acquire. The FDIC is requesting at least $677.4 billion in damages.
With Banks and servicers playing fast and loose with the rules of procedure, the rules of evidence and black letter law it well to remember BASIC BLACK LETTER LAW. An assignment without delivery is probably a nullity. An assignment that isn’t even in writing is (a) not proper under most existing laws and (b) requires the allegation of an oral “assignment” to be explained as to why it wasn’t in writing before, just like a lost or destroyed note.
The assignment can only be valid and used if the assignee is capable of accepting it, paying for it and either acceptance is for the assignee or as an authorized agent. The Notice Default does not give the Trustee or even the original mortgagee where there has been an assignment, the right to declare default. Then it becomes the representation of the trustee, who is supposed to be objective and disinterested in the result.
For the Trustee to issue a notice of sale and notice of default on behalf of the supposed beneficiary, means that the trustee is no longer accepting the responsibilities of the trustee to act with due diligence and good faith toward both the trustor and the beneficiary.
Hence the substitution of trustee is an offer which has not and cannot be accepted. Any actions taken by the trustee in a notice of default or any other notice or collection letter is out of bounds. The only reason the banks do this is to hide behind yet another layer of people and entities so when the arrest warrants are issued, they can claim plausible deniability that the wrong procedure was being followed. This is poppycock. The beneficiary supposedly knows whether or not he is the creditor entitled to submit a credit bid at auction based upon the the existence of a properly kept loan receivable account reflected on the CREDITOR’s books.
This is just another example where the banks and servicers have borrowed the identity of the creditor, claimed that said identity is private and privileged, and then used it for their own advantage to the detriment of both the lender-investor and the borrower.
A conversation with a friend…
I know what you mean about the clerks in your county throwing things out for a small sum…we have, (well one old bird that is left-the other one died), she is no joke, in her 80’s. She will do “favors” for certain people, but they have to be people that are from certain firms, or that have the approval from either the court or the court clerk and master.
Everyone (that is not in the court system) refers to these old ladies as the “old crows”, and funny enough the way that the building is designed- the chancery court clerks set off to themselves and it kind of looks like a birds nest, this is referred to as “the crows’ nest”. My mother refers to this old hateful old thing as the gate keeper.
Anyway, my mother worked for the city for over 23 years before she took early retirement, and would walk on her lunch breaks. Well, this old crow (the one that is still alive) was also walking and came in behind my mother (I think that she thought that my mom was someone else), but she stated that the chemical that she has to use to “take signatures off of documents” has eaten the skin off of her fingers, and her fingers were so sore that she couldn’t even hold a pen (which explains to me why the chancery courts require the original document and only the original document). Mom stated after she said that, that the old crow looked up and realized that it was my mom and not who she thought. My mom said that the old crow then darted off and that woman never spoke to my mom again. This happened after mom had been there either 12 or 13 years. This old crow avoided my mom like the plague for the next 10-11 years!
Foreclosure Defense Nationwide – Mortgage Foreclosure Help – Free Advice
July 30, 2012
A Hillsborough County (Tampa) Florida Circuit Judge has entered a Final Judgment in favor of a borrower, ordering that the loan and all loan documents be reinstated effective back to June 30, 2009 (pre-”default”); that the terms of the loan remain in effect as they would have been as of that date; and that BB&T credit the principal of the Note with all payments received by BB&T from the FDIC and with no payments due from the borrower until BB&T credits all such payments it has received against principal and the parties agree on a new payment schedule.
The May 18, 2012 Final Judgment found that the original lender (Colonial Bank) improperly demanded that the borrower make “curtailment” payments on the loan, basing its demand on the status of other, unrelated loans. Colonial was shut down by the Alabama State Banking Department and the FDIC was appointed as its receiver. The evidence at trial demonstrated that BB&T breached its duties of good faith and fair dealing with the borrowers, and that BB&T was motivated to behave as such due to the terms of a Purchase and Assumption Agreement with the FDIC where BB&T stood to profit by declaring a fraudulent default under the loan, collecting from the FDIC under the Agreement for such default, and then enforcing the loan against the borrowers and retaining the property until a turn around in the real estate market.
The “troubled assets” manager of BB&T (who had been a former Colonial Bank manager) testified that BB&T may have already applied to the FDIC for a loss share payment, and the borrowers’ expert testified that BB&T may have already applied for and received a payment from the FDIC as high as $1,800,000.00. The Court found that BB&T totally failed to credit this potential payment from the FDIC against amounts sought in the litigation, thereby giving the impression that BB&T might be “double dipping” and possibly “triple dipping” if market conditions favorably changed and the property increased in value. The Court concluded that BB&T “committed significant wrongdoing and breached the implied duty of good faith and fair dealing of a financial institution, such that the instant cause of action should be denied in its entirety.”
This Final Judgment supports what we have been requesting in discovery for the past five years: documents related to third party sources of payment against the Note, which evidence goes directly to the amount claimed to be in default. Significant in this decision is the fact that the Court entered judgment for the borrower on the premise that there COULD HAVE BEEN a payment made to BB&T through the Agreement; it was not necessary that a payment actually have been made for the credit to apply.
In securitizations, the documents expressly provide for insurances and credit enhancements (including credit default swaps) to protect against and provide payment on mortgage loans which default. Discovery of these potential sources of payment and amounts is thus more than relevant, as this evidence goes directly to not only the veracity of the amount claimed to be in default, but to claims of breach of duty of good faith and fair dealing as well.
The case is Branch Banking and Trust v. Kraz LLC, Hillsborough County, Florida Circuit Couert Case No. 10-CA-000304-K. We thank one of our dedicated followers for providing this decision to us.
Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com
CALIFORNIA FEDERAL COURT DENIES MOTION TO DISMISS HOMEOWNER’S COMPLAINT, HOLDING THAT ALLEGATIONS THAT ASSIGNMENTS TO A SECURITIZED TRUST WERE NOT DONE PROPERLY OR TIMELY GIVES RISE TO INFERENCE THAT ASSIGNMENT, SUBSTITUTION OF TRUSTEE, AND NOTICE OF DEFAULT AND ELECTION TO SELL MAY HAVE BEEN IMPROPER |
August 3, 2012
In what we consider to be a very significfant decision, a California Federal court has issued an Order denying a Motion to Dismiss the homeowner’s Complaint against JPMorgan Chase, U.S. Bank, N.A., and SBMC Mortgage where the homeowner challenged the nonjudicial foreclosure on the basis of an improper transfer of the loan to the securitized mortgage loan trust. The homeowner alleged that the Defendants and others were involved in an attempt to securitize her loan to a WaMu securitization trust.
The homeowner alleged that the May, 2010 MERS assignment of the DOT to US Bank as Trustee for the WaMu securitization trust, which assignment was signed by known robo-signor Colleen Irby, was improper because it was not done before the closing date of the trust. The court specifically found that:
“The vital allegation in this case is the assignment of the loan into the WaMu Trust was not completed by May 30, 2006 as required by the Trust Agreement. This allegation gives rise to a plausible inference that the subsequent assignment, substitution, and notice of default and election to sell may also be improper.”
This is beyond important, as the finding shows that a challenge can be made to an entire nonjudicial foreclosure procedure (including assignment, substitution of trustee, and foreclosure sale) by alleging that the purported assignment did not comply with the timing requirements of the trust documents, and that a homeowner who sues to challenge a foreclosure has standing to raise the challenge onthe basis of attacking the assignment as not complying with the trust documents.
The Court distinguished the Gomes case upon which the Defendants relied, holding that the Plaintiff alleged that the transfer of rights to the WaMu Trust was improper and thus the Defendants consequently lack the legal right to either collect on the debt or enforce the underlying security interest.
The upshot of this case is not only that a claim of improper foreclosure due to noncompliance with the trust documents (in attempting to assign the loan to the trust well after the Closing Date of the Trust) can be made, but that there will now have to be discovery on the issues, as the Court has denied the Motion to Dismiss and thus an Answer to the homeowner’s Complaint will have to be served, which then permits the case to proceed to the discovery phase on the relevant issues.
The case is Naranjo v. SBMC Mortgtage et al., No. 11-cv-2229-L(WVG), U.S. District Court for the Southern District of California, decision issued July 24, 2012.
We thank one of our dedicated followers for providing this significant decision to us.
Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com