Homeowner, Don't Let the Wolf in Your Door!

Your lender is threatening to foreclose? Not! If your loan has been securitized, your lender is not the current note holder and has no legal right to do so.

Millions of Americans today are in financial and psychological distress because their toxic adjustable rate mortgages have reset, forcing them into delinquency, default and foreclosure. These homeowners have been victimized by a conspiracy of predators that has fraudulently induced them into toxic loans in order to generate fees and profit. However, the lenders who originated these loans and sold them have no legal right to foreclose, per their own 8K SEC filings. They just have to be reminded in court that, when they were paid in full for the loans, plus a premium, they relinquished their legal right to foreclose as they are no longer current holders of the notes. Or as Florida attorney April Charney, known as the "Foreclosure Killer," puts it, "it seems a no brainer that a judge would make sure every foreclosure has a legal claim."

Sounds too good to be true? Not! In fact, it is simple contract law. While many players in the securitization business want to convince you that the "lost note defense" is a "legal gimmick" that will merely slow down foreclosure, recent judicial orders upholding the rights of homeowners are the current reality:

Judge Boyko dismissed 14 foreclosures attempted by Deutsche Bank, stating that "the federal court system will not be forgiving in this regard."

Judge O'Malley dismissed 32 foreclosures, stating that the lender "has not filed adequate documentation demonstrating that it was the owner and holder at the time it filed suit."

Judge Bufford found in favor of the pro se homeowner against IndyMac Bank, stating "IndyMac Bank is not the real party of interest."

Judge Rose dismissed 20 foreclosures, stating "while the plaintiffs have pled that they have standing, they may not have had standing at the time when the foreclosure was filed."

Judge Crawford dismissed a foreclosure, concluding that "MERS failed to establish that it held either the mortgage or the note at the time it filed the lawsuit."

Andrew Pizor, Counsel for Connecticut Fair Housing Association, wryly says, "Foreclosure firms are so used to actions just going through unopposed. Now people are paying attention and pointing out the gaps. When I raise these defenses in foreclosure proceedings, the shocked response from lenders is that 'it is a technicality.' Well, not paying your mortgage is a technicality, too."

And more such orders are coming every day as energized homeowners fight their mortgage wars. In fact, these judicial opinions are so thoughtfully written and so adamantly supportive of homeowners' rights, that I have included them in my new book, Mortgage Wars: How to Find Fraud and Reverse Foreclosure. These judges were also surgically critical of the mortgage giants who breezed through the securitization process, as in this quote by Judge Boyko: "The institutions worry less about jurisdictional requirements and more about maximizing returns." But despite the law, and in the spirit of protecting the conspiracy, our government wants to lend them even more money and further empower them!

No one, including the President, seems to care about the psychological carnage created as Americans are tossed on the street, forced into homelessness or residing in their cars. In his address to the nation, Obama said "if you got yourself into more house than you can afford, we can't help you." In reality, the Administration knows that it cannot convince owners of mortgage backed securities to modify their pooling and servicing agreements, if for no other reason than that no one can find them. It is one big multi-trillion dollar (and growing) mess being dumped on the very homeowners and taxpayers who have been defrauded.

Further, this lunacy fueled by the media -- that the foreclosure crisis was caused by a sudden epidemic of deadbeat liars -- isn't helping. Most borrowers were not first time homeowners and trusted the professionals to play it straight, as in "fiduciary responsibility." Consider this: what idiot would commit to a loan, knowing that in a few short months he would be out on the street, saddled with bankruptcy, bad credit, and bail out taxpayer debt to boot?

And don't think for a second that this financial blood bath hasn't contributed to our nation's post traumatic stress disorder, starting with the rigged 2000 election. Thrust into a ten year cycle of fraud, most Americans have come to accept that, if they couldn't elect a President without being overruled, and they can't stop a fraudulent war devoid of weapons of mass destruction, then how could they stop the financial wolves from beating down their doors? The irony is that the predators, so obsessed with selling derivatives, attacked the one front we just couldn't resist: our homes. Fast money for homeownership? Cheap equity lines? How about a one percent loan?

They had us at "hello."

American homeowners need to come together and scream out loud, "We're not gonna take it!" through filing predatory lawsuits alleging fraud and demanding quiet title actions. While there is quite a self-serving underground movement aimed at suppression, (think Deep, Deep Throat, the sequel), we still have, on our side, a little document called the United States Constitution which assures us that "Citizens of the United States shall not be deprived of life, liberty or property without due process of law."

So how do you find your own due process? If you are a victim of the conspiracy, follow my ten step war plan of engagement:

1. Get out those dusty closing documents and peruse them; they actually make for fascinating reading. You will learn all sorts of facts that your mortgage broker and lender did not want you to know, as in how they committed mortgage fraud.

2. Check your credit rating. If you have fallen to the bottom of the class and your loan is fraudulent, there is hell to pay. Your lender has violated the Fair Credit Reporting Act.

3. Compare the current value of your home to the stated appraised value at your closing. If your value has dropped significantly, it may have been fraudulently inflated to increase the loan amount, so your broker and lender could reap higher fees. Again, a major no no.

4. Is your debt to income ratio over 35%? Oops, they did it again. It is against the law to put borrowers into loans that they cannot pay back.

5. Does your income reported to the IRS match the income on your loan application? If not, check to see if your data was fudged and your signature was forged. A common enough practice which also happens to be a crime.

6. Go online and google your lender's 10K and 8K filings for the year that you signed your loan documents. See how your lender has gleefully bragged to its investors about how efficiently it securitized loans such as your own. Most lenders even go as far as to claim that no loans sold into pools were predatory in any way! (Think investor fraud.) And don't get me started on the accounting firms who certified these blatant lies. Or the credit rating agencies who stepped up to the plate with inflated ratings and outstretched palms.

7. Get your loan audited. It is the first step in building a winning lawsuit. If you can't find an auditor, go to my website www.yourmortgagewar.com and we will refer one.

8. Get a qualified attorney to file your "Qualified Written Requests" and your legal complaint. We know some of the best ones in the country who will not rip you off. No point in jumping from predatory lending to predatory lawyer.

9. Demand your loan be extinguished. After you have been defrauded, it is your legal right to demand that the predators be held accountable. Toward that end, don't waste time attempting to modify a securitized loan. Go right for the jugular, just as your lender has.

10. Break out the champagne. You have tamed the wolf. Maybe in time, you can transform him into a lovable canine companion, maybe a Wall Street born-again Marley.

And stand up for yourself. Don't fall for the media's pre-emptive attacks on your character. An examination of recent history paints an entirely different picture of a conspiracy of politicians, regulators, investment bankers, mortgage brokers and nominal lenders that would do anything -- including bankrupting the country and the globe -- to profit from the derivatives explosion.

It's time for this karmic cycle to reverse and for homeowners to take back their American dream, one lawsuit at a time.

Comments

[Reflector54]

Does anyone have experience with IndyMac Bank. I am fighting a foreclosure now Thanks

[DogLeg]

Is this a good time to take out a second for repairs and improvements?

[jerrypl]

So who actually is holding your mortgage? when they come a knocking on your foreclosed door?

http://eye-on-washington.blogspot.com

[DuganS1]

"Millions of Americans today are in financial and psychological distress because their toxic adjustable rate mortgages have reset, forcing them into delinquency, default and foreclosure. These homeowners have been victimized by a conspiracy of predators that has fraudulently induced them into toxic loans in order to generate fees and profit."

So people who took out adjustable rate mortgages and can't afford to pay the price after the reset are victims? It sounds to me that these consumers simply made very poor decisions.

[Michael McGloin]

Thought you might find this of interest.

[NHGranite]

Welch Far Go lies. We got a letter freezing our equity line because they said our value had dropped according to their AVM computer. They refused to tell me what the new value was. I insisted on escalating to a supervisor and 2 days later, she tells me my house, which they appraised by them a year ago for almost $700K was now worth $210,000. Can you say fraud? When I did, instead of making me pay for an appraisal to prove them wrong, they got a new value, back over $600K. But they will not give us back the equity line unless we financially re-qualify. It's a Catch-22. We never missed or were late on a payment, and our credit scores are over 800. When they start taking good loans down, it's over for everybody. Resistance is futile. You can write, call, beg, borrow and pay extra - the bank is gonna win.

[Bethab]

Can someone please explain something to me? (NOT being snarky...n­eed to be educated!)

We have a mortgage that we have always been able to afford without a problem. Unfortunately, I have lost my job. I have been calling Wells Fargo every week for two months, trying to work out a loan modification. They tell me they are so far behind that it may be another two months before they even call me back. We have great credit and always pay all of our bills on time.

I have learned that our mortgage is backed by Fannie May. Without having made a single late payment (although we are getting very close to not being able to at this point), is there anything we can do? Can we proactively attempt to do what you are talking about here? Can someone explain please?

[Henry]

Beth,
You need to document your contacts to Wells (if push comes to shove they will deny you made any proactive attempts).
1) Take out your note and mortgage (deed of trust) and read default provisions several times in each document.
2) Write your congressman. They will contact the regulator for Wells and force Wells into action.
3) Get the audit of your loan from both a documentation standpoint and an amortization standpoint .
4) If you really feel you've been defrauded, then see an attorney. But line the ducks up first. Attorneys are creeps who add nothing but take big time.

[NHGranite]

Send your records of contact to them by certified mail, and make them sign that they received it.

[Kathleen Munden]

"Attorneys are creeps who add nothing but take big time." Hmmm. I have spent probably 20 hours of my time over the last two weeks helping a client keep her house out of foreclosure, at no cost to her. The mortgage companies pay my fees, not my clients. You really are doing people a disservice by telling them not to seek an attorney's help in these situations. Very few people know where to start when these situations arise, and all too often, they contact me after the foreclosure sale has taken place, when I have very little chance of helping them. I'm sorry for whatever experience made you dislike lawyers, but people facing foreclosure are generally ill-advised to try to handle things on their own. The same mortgage company that wouldn't give my client the time of day has bent over backwards to settle this matter once I got involved. I feel very good about what I do, and my clients are extremely happy and grateful for my help.

[zaboomafoohotw]

Iris, let me first say I am an attorney in California (yeah, I know, boo). I have been following this and in particular the defense work going on in Florida. My question is have people been sucessful defending foreclosures in California? We have non-judicial foreclosures, so only in the context of having filed bankruptcy or in an injunctive relief lawsuit filed by the homeowner would a court even be involved in the foreclosure. I haven't seen any reported cases yet in California (reported by the Courts). Any light you can shed would be greatly appreciated - I have a lot of clients who could benefit from this if I knew it would work in Cali. Thanks again.

[Henry]

A goodly percentage of this paper is flawed. If you look at the good faith estimate (preliminary disclosure) and match this to the Reg Z disclosure provided and signed at closing you will catch many a cause of action. (especially under the HOEPA section of Reg Z) And then the final screen the HUD-1 required by RESPA at closing. You'll find a significant range of errors and mostly overcharges not properly disclosed.
As examples: paper with fixed rates disclosed on good faith estimate but variable rates on the note. Service charges on the HUD-1 settlement form that were not part of the good faith estimate. This is the audit range and the wreckless brokers failed these regularly. At some point they could not help themselves it was too too easy to take the cash. (oops)

[tompoe]

If the bank/lender does not hold the mortgage, and goes forward with the foreclosure process, they did so knowingly. Throwing out the foreclosure isn't enough. Jail time is called for. Disbarment of every legal officer of the bank is called for. What Obama and holder need to do, is stop lying to the public, and start doing their jobs. This is the stuff impeachments are made of.

[Henry]

There is a unique attribute(s) to these subprime mortgage securitizations and that is the strips, the so-called tranches. For example: The loan of Joe Smith might be 30 year fixed at 7% with monthly payments. The loan is sold to Bear Sterns for 1.03 and Bear gets the note (which is endorsed to Bear) and the MERS electronically effects a mortgage assignment in the records of the county in which the home is located. But then Bear strips the hypothetical payment stream into its interest only payments and principal only payment streams. It puts the former into Subprime loan Securitization A and the latter into Securitization B. A trustee is setup to receive and disburse payments to eventual security holders and a loan servicer (ususally a subsidiary of Bear et al) received monthly payments from obligors and remits to trustee who remits (principal to one, an interest to another) security holders by cusip identification. Now.... here you have it: Who has legal standing to sue? Is it Bear? Is it the holders of Security A (interest only)? Is it the holders of Securities B (prin only)? And therein lies the complexity of the problem!!!

[Henry]

"If your loan has been securitized, your lender is not the current note holder and has no legal right to do so."

Iris,
There is a very simple, very sane, and even psychologically fullfilling solution to this problem. The attorney for the mortgagee or beneficiary of the deed of trust simply asks the obligor if he or she signed the note and if he or she received the money. If the answer is yes, the next question (that follows) is "how do you intend to repay the balance?".

There are rumors that the assignment of mortgage or deed of trust have not properly followed the sale and endorsement of notes associated, but for you to make an absolute statement with respect to everyones note obligation is a little more than absurd. There should be no "get our of jail free cards" used to emotionally bait people in distress.

[GrahamInCanada]

Ahem, if the attorney for the mortgagee or beneficiary of the deed of trust does not establish standing in court, said attorney never gets any chance to ask the obligor (is that a word?) anything.

[Henry]

Graham,
It's a quite simple matter. If the note holder has the incorrect person it's an apology. If on the other hand the note holder has the correct person and the issue of standing is a documentation issue, you correct the documentation issue. I've seen it happen on pools of thousands of loans. Some times the assignments recordation for mortgages and deeds of trust are trailing or there was an error. You get the documents recorded and then you glimmer in front of the judge. An obligation is an obligation­... and a signed promissory note is a promise to pay, mortgage or no, eh?

[truthfan]

This needs to get out and be common knowledge. Explain this to people you know, put posters up, anything.

Keeping people in their homes is the only thing that makes sense for the ordinary people: not only does it help the threatened home owners, it means property is maintained, vandalism is reduced, neighborhood values are maintained, fewer people on the streets, fewer children disrupted from their schooling, fewer marriage breakdowns and other social issues.

[oustfan]

So, if you're dumb enough to sign a predatory loan, you deserve a free house?

Why isn't anyone looking out for the people who DON'T own homes? Whats wrong with home prices dropping so we can have a piece of the American dream without signing away our lives to a bank?

[truthfan]

Home prices have been too high. However, at the moment houses in some areas (Chicago for example) are being sold in bulk at ridiculously low prices to speculators, sometimes from abroad. They will then monopolize the property in that area and that will leave even less for the “American dream”. Then, if you are one of those who don’t own a home, you may find yourself in the clutches of one of these slum landlords – or maybe they’ll knock down those houses and use the land for some other private purpose of their own.

[oustfan]

So, the answer is to artificially inflate prices to keep speculators out? Everyone with a 30 year mortgage is a speculator. That's the problem!! Home owners have treated their homes like ATMs, taking out equity loans because they speculate that the house price will always go up even though they're adding no extra value.

[truthfan]

Being “dumb” or trusting isn’t a crime. Fraud is.

Many of the buyers had never bought property before. It was reasonable for them to believe “the professionals” would give solid advice on what they could borrow: that the lenders had an interest in being paid back. Bankers, after all, are traditionally careful and conservative.

So, not being PhD material, but still responsible citizens, they felt they had done their “due diligence” by giving full financial information. Now they’re across the desk from a polished, smooth-talking “professional”, feeling a little awed, and this person is typing into a computer, and of course they can’t see the screen…

So when the respected professional looks up, smiles and says, “your loan is approved”, they believe that all that complicated stuff just calculated it would be feasible for them to make the payments.

But they DIDN’T know that the lender couldn’t care less whether or not they could pay, as he would get his fee up front.

The “professionals” who knew what they were doing are really to blame, collecting their ill-gotten fees so fast there was not time to file the paperwork. Even if they don't answer for their fraud in court, they shouldn’t be allowed to further victimize people who thought they were doing everything right at the time.

In many cases, lenders inflated incomes to get approval; even when they didn't, they still didn’t ensure borrowers were solid, which should be considered an integral part of the process.

[oustfan]

I never said that being dumb is a crime. Breaking the terms of a contract is a crime.