Keep It Simple, Stupid!

My attorney and I are preparing for an Opposition to the Motion for Relief from Stay for my wife’s Bankrupt.  Attorney was asking me questions about my defense, and I was giving complicated answers, some of which I have included in this blog.

I spoke about the fact that the Pretender Lender [Fraud R Us] is on the Note, we have wire transfer information that shows that Indymac paid for the loan.  I also explained that the Assignment of Deed was fraudulent (Robo-signed), and the transfer date was after the deadline for closure of the trust.  Given the quick and cursory atmosphere in the hearing where the judge would decide the Motion for Relief from Stay, my attorney felt that this was too deep and complicated.  The opposing side would have a deed saying that they owned the property, and they also had an assignment.

After some back-and-forth, my attorney looked at the Motion for Relief and looked for ways to attack it.  We began to realize that I was saying in a very complicated way, something that could be said simply. Here’s how it goes:

My loan originated with [Fraud R Us].   [Fraud R Us] is on the Note and the Deed.  It even says that I’m supposed to pay [Fraud R Us]!  But there is the ABSENCE of an Assignment from [Fraud R Us] to Indymac Bank.  The LACK of it.  That means that there is no legal authority for Indymac Bank to pursue the foreclosure, and there is no legal authority for Deutsche Bank to pursue the foreclosure.  That’s all that you need to say.

Now I’m not sure if this simple way will be enough for the full Adversarial Proceeding, but it will be enough for the Judge in the Motion for Relief from Stay.

I was looking for a good quote about Simplicity, besides for Keep It Simple, Stupid (James Carville, Clinton’s political consultant).  Here’s one, though it might be a bit pompous:

Leonardo Da Vinci said: “Simplicity is the ultimate sophistication.”

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Key Ruling Made Regarding Standing and Foreclosure: 9th Circuit

Things are looking up in the Adversarial Proceeding.  A key decision, Veal v. American Home Mortgage Servicing Inc. (AHMSI) has resulted in a decision which upholds the requirement of the mortgage servicer to show that they have standing in order to get the Automatic Stay from a bankruptcy.

This is a very important ruling for me, personally.  My bankruptcy is within the 9th Circuit, and it is helpful, if not critical, that the legal precedent being used comes from the same Circuit court.

The important issue here is that the Court has ruled on the centrality of Assignments of the Note, and how that that relates to standing of the foreclosing party (AHMSI) to get the Automatic Stay.  The takeaway message here is the the 9th Circuit has ruled on the importance of standing, and my lawsuit depends on that.  It’s possible that I will be the first suit in the 9th Circuit regarding standing to foreclose itself.

The Veal case is complicated and I will review carefully and continue in my next post.

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Helpful Tool for Lawsuits in MERS-related foreclosures

A potentially significant piece of usable evidence for lawsuits has come in the form of consent orders agreed between the Federal Reserve and ten banks.  According to the Federal Reserve press release:

The banks are: Bank of America Corporation; Citigroup Inc.; Ally Financial Inc.; HSBC North America Holdings, Inc.; JPMorgan Chase & Co.; MetLife, Inc.; The PNC Financial Services Group, Inc.; SunTrust Banks, Inc.; U.S. Bancorp; and Wells Fargo & Company.

Additionally, the Federal Reserve on Wednesday announced formal enforcement actions against Lender Processing Services, Inc. (LPS), a domestic provider of default-management services and other services related to foreclosures, and against MERSCORP, Inc. (MERS), which provides services related to tracking and registering residential mortgage ownership and servicing, acts as mortgagee of record on behalf of lenders and servicers, and initiates foreclosure actions. These actions address significant compliance failures and unsafe and unsound practices at LPS and its subsidiaries, and at MERS and its subsidiary. 

The consent orders are agreements between the Federal Reserve, the banks, the “fraud-mill” default management services companies Lender Processing Services (LPS) and MERSCORP.  These consent decrees are potentially legally actionable (useful as exhibits in lawsuits), because they are an implicit admission to fraud.

To see all of the consent orders, please see the Federal Reserve press release above, though I will include three of them here:

Additionally, the Federal Reserve, together with Office of Thrift Supervision and Office of the Comptroller of the Currency, produced a report which details structural legal violations of the mortgage processing activities of a number of the mortgage servicers.  In a footnote to the report, the Federal Reserve stated:

In light of the formal enforcement actions entered into by these 14 servicers, which are being made public, the agencies have determined that it is appropriate to identify the servicers (whether a bank or a bank affiliate) that were reviewed. The bank and thrift holding company parents of Ally Bank/GMAC, Bank of America, Citibank, Everbank, HSBC, JPMorgan, Chase, MetLife, OneWest, PNC, SunTrust, U.S. Bank, and Wells Fargo also entered into formal enforcement actions.

This is all potentially legally usable material to explain to a judge the Federal Government’s view of structural illegality and fraud for the majority of banks and loan servicers in the 2000’s.

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Fixing our little Automatic Stay Problem

In the last positing, I spoke about the legal problem that my family is facing. We have an active Unlawful Detainer suit against us, and worse is that they have a Default Judgment against me. It’s a dangerous situation because the only party blocking eviction is my wife.

We are attempting to fix this issue by filing a Request for Continuation of Stay with the Bankruptcy Court. Recall: my Bankruptcy produced an Automatic Stay which only lasted 30 days under a new law, because I had filed two previous bankruptcies. However, the bankruptcies were dismissed for reasons that were initiated by the court! The court makes procedural errors from time to time which result in the dismissal of the case for no fault of the debtor. That’s what happened here.

I produced a Motion which explained exactly what happened with the dismissal of the previous bankruptcy, and as a result I could show that I am not abusing the bankruptcy system. The Motion is filed, and the result should come up in a week or two. This will protect us from eviction for a few months, or until the opposing side files a Motion for Relief from Stay. We have another Motion asking the Judge to stay the Unlawful Detainer until the Adversarial Procedure is complete, which may take a few months. I’ll let you know how it goes!

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Watch Those Changing Laws

As the date of my Unlawful Detainer (eviction) trial drew closer, my attorney was getting increasingly puzzled. The Plaintiffs (opposing side) were making no effort to overturn the Automatic Stay on the bankruptcy. When a Bankruptcy is filed, the most significant immediate consequence is they Automatic Stay, which freezes action on the unlawful detainer (eviction) until the stay is lifted. The stay can be lifted by the Motion for Release of the Automatic Stay.

Why had the opposing side not filed a Motion for Release? My attorney spoke with the opposing attorney and found that the laws had recently changed whereby having more than one bankruptcy in the past year means that the Automatic Stay only lasts 30 days.  The opposing side was so confident in their understanding of this new law that they didn’t file a Motion for Relief from Stay at all.  This led my attorney and me into a false sense of confidence that we were OK.

Ultimately, we rescued the situation by filing a bankruptcy for my wife, which then created a new and separate Automatic Stay, which stopped the Unlawful Detainer action.  The whole thing is very nerve-racking, and requires an ongoing understanding of the evolving legal situation.

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The Final Blow: Securitization Fraud

There are many fatal problems with my loan documents.  The final, deadly one is the undeniable missing of a deadline.

My loan was securitized, that is, packaged into a trust, in New York State, with Deutsche Bank National Trust Company as a trustee.  The trust has the catchy name of Indymac 2007-FLX1.  But, and here’s the kicker, 2007-FLX1 has a deadline for inclusion of January 31, 2007.  (I got the loan on Nov. 17, 2006, so this makes sense.)

But the records clearly show that the house was transferred to the trust in September, 2009.  Now New York State trust law is very particular about the accuracy and verification of all aspects of the trust.  This is a violation that anyone can understand.

The reason for this, of course, is that they didn’t even think about the issue until I stopped paying the mortgage in 2009, and then, presumably, it was a mad scramble.

 

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How could they? Wire evidence shows that the Note is mis-assigned.

Fascinating information is being gathered in my Adversarial Proceeding case against OneWest Bank (formerly Indymac), Deutsche Bank National Trust Corporation, and the Trust that securitized my house.  If you are in danger of foreclosure, you will find this information very, very interesting, and possibly very useful.

To be brief:  my legal team and I have found that the Note on my property which was initially assigned to a certain local mortgage broker, whom we’ll call FRU (Fraud R Us, I won’t reveal it for the moment) was not actually paid for FRU.  I obtained the Incoming Wire from Chicago Title, the title company that handled the transaction.  It shows that Indymac Bank, NOT FRU, supplied the funds for the transaction and it went into FRU’s sub-escrow account at Chicago Title.

Why is this important?

Let’s go back to a post I made last week.  The Note says:

1.   BORROWER’S PROMISE TO PAY

In return for a loan that I have received, I have promised to pay $ U.S. _______ (this amount is called “Principal”), plus interest, to the order of the Lender.  The Lender is [FRU] A California Corporation…..

I understand that the Lender may transfer this Note.  The Lender or anyone who takes this Note by transfer and is entitled to receive payments under this Note is called the “Note Holder”.

Very clearly, the document says “The Lender is [FRU] A California Corporation“.   Oh, no it isn’t.  OH, NO IT ISN’T !  The lender is Indymac Bank, not [FRU].  The incoming wire, which was pretty easy to obtain, clearly shows this!

This means that the Note, which is the central document that allows foreclosure, is voidable because it says something that is provably false.  Furthermore, once it is shown to be false, every Assignment of the Note that comes afterward is also voidable, because an entity that has no title to the property does not have the right to assign it to anyone else.

That means that the entity that foreclosed on the property had no right to do so.  Now, I understand that these arguments, being made in state court (California Superior Court for me), have run up against pro-business judges that have found in favor of the banks.

A US Bankruptcy Court, however, is overseen by a judge whose job it is to discharge debt. In the Adversarial Proceeding, it is the creditors responsibility to validate the debt.  That is, to prove that they are the party to which the payment is owed.  That is proven by producing the Note.  But the Note has [FRU] listed as the Note Holder, and not the bank that paid for it!  So they can’t prove it.  But additionally, all assignments of the debt that are downstream are legally faulty and voidable as well.

The wire was obtained by noting the Wire Number on the Deed of Trust, and calling the local office of Chicago Title.  I spoke with the lady in charge of the Payoff Department, and gave her the number. She asked if I was the lender and I just said yes.  I don’t know if it wouldn’t have happened if I hadn’t said yes. She had to contact the bank, and it took three days or so.  But I received a fax with smoking gun information.

There is one final legal bomb in this story, which I will discuss in my next post.

— Your Host

 

 

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Gotcha! The hunting of a Robosigner.

The development of my Adversarial Proceeding lawsuit is continuing, and some very interesting things to come out last week.   Most important was the discovery that the Authorized Signatory for the bank (Indymac Bank) was a “robosigner”.  That ahs been getting a lot of attention in the press recently.  A robosigner is a person assigned to sign loans at a very high rate of speed, with no knowledge whatsoever of the content of the loan.

Here is an example of a robosigner who was a hairstylist, for example.  My loan showed the same Authorized Signatory for the Mortgage Electronic Recording Service (MERS) as for OneWest Bank (which took over Indymac), and also for DeutscheBank National Trust Company.  The same person!

The more we found out about the person, the more interesting it became.  This guy is JC San Pedro, a 32 year old realtor from Austin, TX.  Keep in mind that the banks that he is foreclosing for are in the greater Los Angeles area.  Nevertheless, these august institutions (OneWest and Indymac) apparently sought out a 30 year old realtor from Austin, TX as the authority to review their loans.

We found that he signed as signatory for MERS as well as Deutsche Bank National Trust Company.  His Facebook page shows that he lives in Austin, and is a realtor interested in investing.  Think we got the right guy?

 

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Saving my house permanently, using bankruptcy

I am in the middle of a legal fight to save my house using a method called the Adversarial Proceeding, which is a lawsuit that is filed in Bankruptcy Court.  This is taking place in California, in the Los Angeles area.  The house has already been foreclosed upon, and I used a filing of Bankruptcy, together with the Automatic Stay that comes with it, to hold off the Unlawful Detainer lawsuit (which leads to eviction) until now.  Now comes the crunch time.

There are a growing number of foreclosure blogs that are blooming across the Web, and they have proved useful.

Stopforeclosurefraud.com has proven helpful, especially items about Indymac/OneWest Bank and its relationship with Deutsche Bank National Trust Company.

Let’s take a look at this post and how it relates to my own case.

1.   BORROWER’S PROMISE TO PAY

In return for a loan that I have received, I have promised to pay $ U.S. _______ (this amount is called “Principal”), plus interest, to the order of the Lender.  The Lender is Loan America. Inc. A Corporation…..

I understand that the Lender may transfer this Note.  The Lender or anyone who takes this Note by transfer and is entitled to receive payments under this Note is called the “Note Holder”.

And as you can see, there is a handwritten “There is NO Assignment of Transfer from Loan America to Anyone!”

This is deadly stuff, from the bank’s perspective, because it means that when the loan was bought by Indymac/OneWest from Loan America, the Note, which is the critical documentation involved here, was never transferred.

This is not only critical to stopping a foreclosure, it can be used, in the context of a Bankruptcy court, to discharge the debt free and clear!  A Bankruptcy judge’s role is to discharge debt.  In this case, it is clear that there is NO RECORD AT ALL of the Note being assigned to the entity that foreclosed on the homeowner.

After the homeowner files bankruptcy, the Adversary Proceeding is filed against all parties relevant to the loan.  The creditors are demanded to validate the debt, that is, prove that the debtor owes the creditor the funds.  In the case shown above, there is NO ASSIGNMENT of the Note from the originating party to the lender to the foreclosing party.  This means that the foreclosing party had no right to foreclose, and furthermore, that the loan is VOIDED!

My situation, alas, is not as clear-cut as this, but I will use a similar line of reasoning.  In my case, the Note was assigned to Indymac Bank and to the foreclosing party, but it was done using a Robo-signer, an automated signer that was not reviewed by a human, and therefore does not hold up in court.

Additionally, the loan was sold to a Trust that is managed by Deutsche Bank National Trust Company, but when it was sold there were a number of New York State laws that were violated.  Mike Konczal, in the blog Rortybomb, points this out in a wonderful post called Foreclosure Fraud for Dummies.

Well many of these mortgage originators were fly-by-night shops, shady enterprises that collapsed the moment they hit trouble. And many of them cut corners and one of the corners they may have cut would have been to send the note to the trust. Specifically, there is worry that many mortgage originators never sent the notes to the depositors. Originators wanted volume to get fees and may not have done all the paperwork correctly. There are a lot of things that have to end up in the trust when I take out a mortgage, things like the note, title insurance, supporting documents. But the note is the most important.

Why is this important? Well the trustees usually sign several certificates saying that they have verified all the documentation in these trusts. Many of these trusts are under New York trust law which is particularly clear and strict when it comes to these matters. With this in mind, tackle these three posts by Yves Smith (one two three).

 

I like the part about fly-by-night shops, shady enterprises that collapsed the moment they hit trouble.   That describes my mortgage originator exactly!

I will continue to post as new information comes, which is all the time.

 

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Bankruptcy and Foreclosure: Welcome

Welcome to Bankruptcy and Foreclosure:

I’m a Real Estate investor who purchased property in 2006 and 2007, which was the beginning of a great adventure in Unintended Consequences.    I’m going to write about some of these consequences, including Bankruptcy and how it relates to Foreclosure.  In addition, I will link to news clippings regarding the foreclosure situation in the United States and what it means.

In Bankruptcy and Foreclosure I hope to explore Bankruptcy as a tool for navigating financially in difficult times, and share ideas and experiences.  For the time being, I will remain anonymous, and commenters can of course reveal their identity or stay anonymous as they wish.

One idea that I wish to promote is to view Bankruptcy as nothing to be ashamed of.  The past three years have seen violent shifts in the economy that were absolutely outside of the control or responsibility of individuals.  We all wish (most of us, anyway) that our economic lives would just run smoothly, things going according to plan, making good income and paying our bills.   When things don’t work out that way, that’s when Bankruptcy becomes a powerful tool, especially as it relates to saving one’s home from Foreclosure.

I look forward to beginning a fruitful discussion for managing the economic crises and emerging with prosperity.

 

 

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