- Assignment via MERS lacks standing to foreclose.
What the MERS agreements and terms and conditions provide, is that MERS may execute an assignment when instructed to do so by the lender or its servicer. This is nothing more than saying that if granted authority by the lender, or its agent, to assign a mortgage, MERs can assign the mortgage on behalf of the lender.
To read the MERS agreement as granting MERS authority to assign any of the mortgages of its thousands of members, on its own volition, without the instruction or consent of the member would lead to a nonsensical result.
The Court has raised the standing issue sua sponte because, in this case, it goes to the integrity of the entire proceeding. For the court to allow a purported assignee to foreclose, in the absence of some proof that the original lender authorized the assignment of the mortgage to them, would cast doubt upon the validity of the title of any subsequent purchasers, should the original lender or successor challenge the assignment at a future date.
WHEREFORE it is hereby Ordered that Plaintiff’s motion for an Order of Reference is denied and the action is dismissed. This constitutes the decision and order of the Court.
Max Keiser: Bank lost track of 100,000 Mortgage Documents.
New York Lawyers Required to Verify Foreclosure Papers
Plaintiff’s attorneys now must verify:
(a) they have personally reviewed plaintiff’s (banks) documents and records relating to this case;
(b) has reviewed the Summons and Complaint, and all other papers filed in this matter in support of foreclosure; and
(c) has confirmed both the factual accuracyof these court filings and the accuracy of the notarizations contained therein. This portion is an effort to combat “robo-signers.”
WASHINGTON—Paul Allen, the former chief executive officer (CEO) at Taylor, Bean & Whitaker (TBW), pleaded guilty today to making false statements and conspiring to commit bank and wire fraud for his role in a $1.5 billion fraud scheme that contributed to the failure of TBW.
The guilty plea was announced today by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; Acting Special Inspector General Christy Romero for the Troubled Asset Relief Program (SIGTARP); Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office; Michael P. Stephens, Inspector General of the Department of Housing and Urban Development (HUD-OIG); Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC-OIG); Steve A. Linick, Inspector General of the Federal Housing Finance Agency (FHFA-OIG); and Victor F.O. Song, Chief of the Internal Revenue Service (IRS) Criminal Investigation.
Allen, 55, of Oakton, Va., pleaded guilty to a two-count criminal information before U.S. District Judge Leonie M. Brinkema in the Eastern District of Virginia. Allen faces a maximum penalty of five years in prison for each count when he is sentenced on June 21, 2011.
According to a statement of facts submitted with his plea agreement, Allen joined TBW in 2003 as its CEO and reported directly to its chairman. He admitted in court that from 2005 through August 2009, he and other co-conspirators engaged in a scheme to defraud financial institutions that had invested in a wholly owned lending facility called Ocala Funding. Ocala Funding raised money by selling asset-backed commercial paper to financial institutions, including Deutsche Bank and BNP Paribas, and used the money to purchase TBW mortgages. The facility was managed by TBW and had no employees of its own.
According to court records, shortly after Ocala Funding was established, Allen learned there were inadequate assets backing its commercial paper, a deficiency referred to internally at TBW as a “hole” in Ocala Funding. Allen admitted that in an effort to cover up the hole and to mislead investors, he told a co-conspirator to produce reports that concealed the hole. He also admitted that he knew that these misleading reports were sent to Ocala Funding investors and other third parties.
Allen also admitted in court that he kept the chairman of TBW informed of the collateral shortfall, and that in the fall of 2008, Allen was told that the hole had been moved from Ocala Funding to Colonial Bank. At the time that TBW ceased operations, the hole was approximately $1.5 billion. According to court documents, as a result of the Ocala Funding fraud scheme, Freddie Mac, Colonial Bank, and Ocala Funding investors believed they had an undivided ownership interest in thousands of the same mortgage loans.
Taylor, Bean & Whitaker Mortgage Corp.’s former chairman, Lee Farkas, ordered data sent to Colonial Bank for nonexistent loans in an effort to cover up the company’s growing deficits, a company ex-president said.
Raymond Bowman, 45, testifying yesterday for the government in federal court in Alexandria, Virginia, said Farkas in 2003 explained that the sale of “dummy” loans, known as Plan B, were necessary to prevent Taylor Bean from going out of business.
I told him I didn’t think it was a good idea, said Bowman, who pleaded guilty last month to conspiracy and to making false statements. Bowman said he thought the plan was unethical and possibly illegal.
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By December 2003, Taylor Bean was overdrawing its account by about $150 million a day, the SEC said.
Bowman said “Plan B” was put into place by Farkas and Catherine Kissick, head of Colonial Bank’s Mortgage Warehouse Lending Division.
“Lee said we had two options,” Bowman testified. “Not do it and shut the company down. Cathy would lose her job and probably go to jail. Or, borrow money through Plan B, pay her back, and move forward.”
Desiree Brown, former treasurer of Taylor, Bean & Whitaker, the mortgage lender allegedly behind the August 2009 collapse of Colonial Bank, pleaded guilty in March to conspiring to commit bank, wire and securities fraud. Federal investigators linked TBW to a $1.9 billion scheme that defrauded the Federal Housing Administration, private investors and the Troubled Asset Relief Program. Montgomery, Ala.-based Colonial Bank ($25 billion in assets) was TBW’s biggest lender.
Brown, 45, of Hernando, Fla., could face up to 30 years in prison when she is sentenced June 10 by a U.S. District Court in Virginia. And more charges are expected from a separate enforcement action filed by the U.S. Securities and Exchange Commission against Brown.
The fate of Lee Farkas, once at the helm of TBW, remains to be determined. Farkas’ criminal trial began April 4 in Virginia. Farkas has pleaded not guilty to the 14 counts of conspiracy, bank fraud, wire fraud and securities fraud brought against him last year for his connection to TBW scheme.
April 11, 2011
Ex-CEO Describes His Role
As the former senior executive officer with Freddie Mac, Paul R. Allen joined the Ocala-based company initially as a consultant, eventually migrating over as the full-time CEO in charge of all company operations in August 2003.
As prosecutors began laying out his direct examination testimony for the jury Monday afternoon, Allen, 55, touched on the often grand promises extended by Lee Farkas, the company’s chairman, during his six-year run with the residential mortgage lender until it ceased all lending operations in August 2009 and eventually filed for bankruptcy.
For instance, when Farkas was leading a $300 million capital raise for Colonial BancGroup Inc. in 2009 so the bank could meet conditional approval for $550 million in TARP bailout funds, Allen said Farkas offered him a $5 million equity bonus that he could use to buy Colonial stock.
That figure stood out because in an average year, a typical bonus for him was about $100,000, said the former CEO. The TARP deal never went through and Allen never received that promised $5 million bonus.
On his part, Allen said he concealed the existence of this collateral shortfall on the monthly reports sent to credit rating agencies like Moody’s Investors. Established in April 2005, Ocala Funding sold commercial paper to investors to generate additional funding for Taylor Bean to originate and service residential mortgage loans.
By 2007, Ocala Funding restructured and brought in two new investors, Deutsche Bank and BNP Paribas. This helped funnel in $1.75 billion to the entity and pay off the old investors.
“Is that how you were supposed to use the money?” Assistant U.S. Attorney Charles Connolly asked Allen.
“No, sir,” the witness replied.
A former senior executive at Freddie Mac, Allen described Farkas as “a micromanager” who reached “far down the organizational level to have one-on-one conversations with people.”
Following one such unapproved discussion with a Colonial official, Allen said Farkas fired off a single-line missive to his email inbox, which read, “I am going to KILL you,“ an exhibit that was published for the jury.
Later on Tuesday afternoon, Taylor Bean’s former treasurer, Desiree Brown, took the witness stand, telling the court that Farkas, with her assistance, was “taking advantage” of Colonial bank officials such as Cathie Kissick and Teresa Kelly who helped implement the alleged scheme.
“There was that hole and if we were caught between a rock and a hard place, we would go to them and say, we need Plan B [loans],” Brown testified.
“We were stealing money,” she added.
Speaking in a deep, almost flat tone, the 45-year-old Hernando resident told the jury that Farkas’ residence, complete with a cabana and swimming pool, was “beautiful” — “kind of like walking through Silver Springs attraction,” she said, which she described for the courtroom, as “like a garden.”
“I used to say, if he wanted to drive a different car to work each day, he could — for a month at least,” the witness said, adding that her boss did use company funds to pay housekeeping staff.
[sic: I intend to cover the roles of Pillar Processing and the Baum firm with respect to the foreclosure mess in future episodes]
The New York investigation appears to center on two of the state’s foreclosure industry giants: the Steven J. Baum firm, headquartered in Amherst, N.Y., and Pillar Processing, a default servicing firm set up by Mr. Baum that was spun off in 2007.
Representing JPMorgan Chase,Wells Fargo and other large banks, the Baum firm has handled an estimated 40 percent of foreclosure cases in the state. Pillar Processing provides extensive services to the firm.
“The Baum firm has drawn rebukes on its legal practices from judges in several New York jurisdictions. Judges in courts across the state have rejected scores of cases filed by the Baum firm, saying it has failed to provide the documentation necessary to commence foreclosure.
Last November, Judge Scott Fairgrieve in Nassau County district court imposed sanctions of $5,000 on the Baum firm in a foreclosure case and required it to pay more than $14,000 in fees to the borrower’s lawyers. When awarding the sanctions, the judge wrote: “Bringing legal proceedings when there is no legal right to do so, due to lack of standing, stalls the efficient administration of justice in the system.”
Paul D. Stone, a lawyer in Tarrytown, N.Y., has been defending a foreclosure case against the Baum firm since 2009. “I’ve never seen any firm file such ill-conceived, ill-researched, nonfactual materials with a court,” Mr. Stone said. The judge overseeing his case recently ordered Mr. Baum’s firm to pay some of the borrower’s legal costs.”
His affidavit affirms having personal knowledge of facts for the NODs – Notices of Default – he personally signs.
“For uncontested matters in New Jersey, Chase submits a Certification of Proof of Amount Due in accordance with Rules 4:64-2 and 1:4-4(b). The Certifications are not notarized.”
… Interesting, as Freddie Mac, and almost certainly Fannie Mae, policy requires notarization of documents .. in all states; whether or not required by state law.
Many of the notices he certifies are for EMC – inherited by JPM from Bear Stearns! The facts and underwriting for EMC have, beyond any dispute, already been proven unreliable.
If not for the above facts, a deposition by Bethany Hood, and suspect claims of using custom designed in-house packages used by Chase – that perhaps are simply named similarly to LPS / Lender Processing Services products his affidavit would be credible. However, despite his testimony, I find it unlikely Chase custom designed their “MSP” and LPS” desktop software packages – which he claims 75% of the mortgage industry uses! Giving false testimony on that aspect alone makes the remainder of his testimony suspect.
At least, if his testimony is believed, he examines his MSP and LPS desktops. Something Mr. Silva testified to not doing.
If the original data source is already unreliable, then so must the verification from the same source be unreliable. Garbage in, garbage out.
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Class Action Alleges LPS: Lender Processing Services:
“failed to disclose that the Company had been engaging in deceptive and improper document execution and preparation related to foreclosure proceedings.”
They had quotas to meet to foreclose upon properties (worth repeating):
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A mortgage was a great way for the average American to Own a Home (Dateline)
………………… It is a Dream Come True
Road to Ruin:
If it meant manipulating documents …. That’s what you did ………… Every deal we made was a bait and switch .. because you could never get them to the table if you were honest!
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Road to Ruin: I think they should be prosecuted
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Produce the Note! The bank refused to accept payments … and the bank lost her note!
………………. They want her to pay excessive and abusive fees. “Other” Fees. “Misc Fees”.
In March of 2011 a jury in a Florida case awarded a US Solder $20 million dollars in punitive damages for errors made in his mortgage by his mortgage company.
LPS DENIED having Robo Signers in this CNBC segment!
……………… More on this in future episodes VI and VII.
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The Mortgage Mess – Bill Moyers Journal. Where’s the money going to come from?
……………… Banks are robbing the people! (Echoed by same person in next set of videos).
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Banks use the courts to evict people – then deny ownership in an attempt to ignore code violations
Cleveland: ………. Lenders fail to come to court … when given summons for code violations!
Judge Ray Pianka (2008)
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Cleveland, Ohio Treasurer Jim Rokakis (2008):
The System has made an absolute and total mockery of sound banking principles. Loans made to people with little or no income. Phony appraisals. Suspect Mortgage Brokers.
They approached the Federal Reserve as early as October of 2000 (!) and asked them to do something on behalf of the citizens of Cleveland about predatory lending. That is when they learned “the Fed was not there to protect people; they were there to protect their banks.”
In the “old west” bad guys robbed the banks. There’s a new twist. Banks rob the people.
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Liar Loans Were a Big Mistake
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What is an affidavit?
A short time after this video was released on the Internet, in October of 2010 a formal investigation was commenced regarding practices by Harmon Law Offices. … Would the investigation have commenced had the video not been made public?
The investigation came to light on Monday, when Harmon Law Offices in Newton, Mass. responded in state court to a demand by investigators in Martha Coakley’s office to produce documents related to several foreclosures.
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In December 2008, the Harmon firm was named along with a class action lawsuit handful of financial institutions, including Deutsche Bank, for foreclosing on hundreds of properties where it was unclear whether the banks actually held the title. Allegations like these have recently threatened to engulf the housing industry in a wave of lawsuits. Sheila Bair, the chairman of the Federal Deposit Insurance Corp., said this week that litigation by the owners of foreclosed houses could “ultimately be very damaging to our housing markets.”
Subsequent to the investigation Mark P. Harmon stepped down as a director to David J Stearn enterprises. The investigation is believed to be ongoing.
Fox News: If you are foreclosed upon, then someone else shows up with a legitimate claim, you will still owe on your mortgage!
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So.. you ‘ve paid off the mortgage. You are being foreclosed upon. You have proof it was paid off and show it to your bank. Why isn’t that enough? [sic: Could it be that a mortgage fully paid off has a lot of equity?]
I encourage you to visit their site, and all other links posted. They deserve your patronage.
…. In particular this page, which includes some coverage of the Ibanez ruling, it’s impact, … and a video clip that briefly discusses Mr. Silva’s deposition.
Undercover Investigation Finds Fraud Common Among Mortgage Loan Modification Companies
An analysis of the 84 loan modification companies uncovered common tactics used by scammers to entice homeowners to use their services:
55% required an upfront fee to start work or required a low initial fee to conduct minimal work on behalf of distressed homeowners, such as reviewing loan documents;
43% guaranteed or promised they could secure a loan modification even before learning about the homeowners’ financial limitations;
24% advised or encouraged homeowners to stop making their mortgage payments or to stop contacting their lenders;
16% guaranteed a new, much lower interest rate ranging between two and 6 percent on modified loans;
12% discouraged homeowners from seeking free help from government-approved housing counseling agencies;
8% encouraged homeowners to provide fraudulent information to their lenders.
“This is shameful abuse by loan modification scammers to take advantage of desperate homeowners,” said Shanna L. Smith, NFHA President and CEO. “We and our partner organizations will work to see to it that these companies are prosecuted by the Federal Trade Commission and other federal and state enforcement agencies.”
“Although the foreclosure crisis began in urban core neighborhoods and communities of color, precipitated by reckless mortgage lending, the devastation has spread to suburban and rural communities throughout the United States, destroying the foundation of the American Dream and worsening an already precarious economic situation. Along with unemployment and underemployment, the massive devaluation caused by the housing crisis, including properties suddenly worth twenty to forty percent less than they were just a few years ago, has made mortgage debt unsustainable for many homeowners. Now, families, homeowners, neighborhoods, municipal governments and states are struggling to rebuild.
As the housing crisis continues, housing counseling agencies across the country have been inundated by wave after wave of delinquent homeowners facing foreclosure. Unfortunately, counselors discovered that many of these homeowners—duped into paying fees for services that are readily available free of charge—are now less able to qualify for legitimate loan modifications. Thus, counselors can only refer these homeowners to federal, state and local law enforcement for possible assistance.”
On April 13, 2011 Major Land breaking settlements, but settlements lacking indictments or any admissions of fraud, have been announced by a joint multiple agency investigation as presented below. Multiple Orders of Consent were issued against several major servicers, LPS: Lender Processing Services, and MERSCORP (“MERS”).
Consent Order by the Federal Reserver Board, FDIC, Office of the Currency Comptroller, the Office of Thrift Supervision, and the FHFA: Federal Housing Finance Agency against Lender Processing Services, DocX, and LPS Default Solutions
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