News Update - Mortgage Fraud

• U.S. Bank
• Wells Fargo Bank, N.A.

Action Date: December 1, 2011
Location: Eastern District, CA

On November 16, 2011, United States District Court Judge John A. Mendez denied, in part, a Motion to Dismiss filed by U.S. Bank and Wells Fargo in a mortgage fraud case brought by Billi Vogan and Harold Traupel, Case No. 2:11-CV-02098-JAM-KJN.

Most significantly Judge Mendez recognized that mortgage assignments to trusts made years after the closing date of the trust were suspect. On Page 13, lines 11 - 24, of the Order, Judge Mendez stated:

Plaintiffs also plead that Wells Fargo recorded a fabricated assignment of deed of trust assigning interest in Plaintiffs’ loan to U.S. Bank. Compl., at 14-16. As discussed above, Plaintiffs allege that the recorded assignment was executed well after the closing date of the MBS to which it was allegedly sold, giving rise to a plausible inference that at least some part of the recorded assignment was fabricated. Plaintiffs allege that such conduct, if proven, constitutes a violation of Cal. Penal Code § 532f(a)(4). Compl., at 24. That section prohibits any person from filing a document related to a mortgage loan transaction with the county recorder’s office that is known to be false, with the intent to defraud. Cal. Penal Code § 532f (a)(4).

Accordingly, the Court DENIES Wells Fargo and U.S. Bank’s motion to dismiss this claim.

The court let stand plaintiffs’ TILA claim as well as this claim brought under California’s Unfair Competition Law, §17200.

News Update - Securities and Investments

• Citigroup Global Markets

Action Date: November 28, 2011
Location: New York, NY

On November 28, 2011, United States District Court Judge Jed S. Rakoff in Manhattan rejected a $285 million settlement between Citigroup Global Markets and the Securities and Exchange Commission in U.S. Securities and Exchange Commission v. Citigroup Global Markets, Inc., Case No. 11 Civ. 7387 (JSR), USDC, Southern District of New York. The SEC filed the lawsuit on October 19, 2011. According to the S.E.C.’s Complaint, after Citigroup realized in 2007 that the market for mortgage backed securities was beginning to weaken, Citigroup created a billion-dollar Fund (known as “Class v Funding IIIU) that allowed it to dump some dubious assets on misinformed investors. This was accomplished by Citigroup’s misrepresenting that the Fund’s assets were attractive investments rigorously selected by an independent investment adviser, whereas in fact, Citigroup had arranged to include in the portfolio a substantial percentage of negative projected assets and had then taken a short position in those very assets it had helped select. (Complaint, paragraphs 1, 2, 58.)

Simultaneously with the filing of its Complaint against Citigroup, the S.E.C. presented to the Court for its signature a proposed Consent Judgment together with a Consent of Defendant Citigroup Global Markets Inc. that recited that Citigroup consented to the entry of the Consent Judgment “[w]ithout admitting or denying the allegations of the complaint.” The Consent Judgment (I) “permanently restrained and enjoined” Citigroup and its agents, employees, etc., from future violations of Sections l7(a) (2) and (3) of the Securities Act, (II) “required Citigroup to disgorge to the S.E.C. Citigroup’s $160 million in profits, plus $30 million in interest thereon, and to pay to the S.E.C. a civil penalty in the amount of $95 million, and (III) required Citigroup to undertake for a period of three years, subject to enforcement by the Court, certain internal measures designed to prevent recurrences of the securities fraud here perpetrated.”

The Court reviewed the proposed Consent Judgment to determine whether it was fair, reasonable, adequate and in the public interest. The SEC argued, however, that while the
Consent Judgment must be fair, reasonable and adequate, “the public interest is not part of [the] applicable standard of judicial review.”

Judge Rakoff disagreed with the SEC’s position, stating: “This is erroneous. A large part of what the S.E.C. requests, in this and most other such consent judgments, is injunctive relief, both broadly, in the request for an injunction forbidding future violations, and more narrowly, in the request that the Court enforce future prophylactic measures (here, for a three-year period). The Supreme Court has repeatedly made clear, however, that a court cannot grant the extraordinary remedy of injunctive relief without considering the public interest. See, e.g., eBay, Inc. v. MercExchange, 547 U.S. 388, 391 (2006).”

The Court noted also, “As a fall-back, the S.E.C. suggests that, if the public interest must be taken into account, the S.E.C. is the sole determiner of what is in the public interest in regard to Consent Judgments settling S.E.C. cases.” Again, Judge Rakoff disagreed, stating: “it is clear that before a court may employ its injunctive and contempt powers in support of an administrative settlement it is required, even after giving substantial deference to the views of the administrative agency, to be satisfied that it is not being used as a tool to enforce an agreement that is unfair, unreasonable, inadequate, or in contravention of the public interest.

Applying these standards, the Court concluded that the proposed Consent Judgment was neither fair, nor reasonable, nor adequate, nor in the public interest.

Judge Rakoff explained, “Most fundamentally, this is because it does not provide the Court with a sufficient evidentiary basis to know whether the requested relief is justified under any of these standards. Purely private parties can settle a case without ever agreeing on the facts, for all that is required is that a plaintiff dismiss his complaint. But when a public agency asks a court to become its partner in enforcement by imposing wide-ranging injunctive remedies on a defendant, enforced by the formidable judicial power of contempt, the court, and the public, need some knowledge of what the underlying facts are: for otherwise, the court becomes a mere handmaiden to a settlement privately negotiated on the basis of unknown facts, while the public is deprived of ever knowing the truth in a matter of obvious public importance. Here, the S.E.C.’s long-standing policy - hallowed by history, but not by reason - of allowing defendants to enter into Consent Judgments without admitting or denying the underlying allegations, deprives the Court of even the most minimal assurance that the substantial injunctive relief it is being asked to impose has any basis in There is little real doubt that Citigroup contests the factual allegations of the Complaint.”

In rejecting the settlement, Judge Rakoff summarized the inequities as follows: “In this case, for example, Citigroup was able, without admitting anything, to negotiate a settlement that (a) charges it only with negligence, (b) results in a very modest penalty, (c) imposes the kind of injunctive relief that Citigroup (a recidivist) knew that the S.E.C. had not sought to enforce against any financial institution for at least the last 10 years, see SEC Mem. at 23, and (d) imposes relatively inexpensive prophylactic measures for the next three years. In exchange, Citigroup not only settles what it states was a broad- ranging four-year investigation by the S.E.C. of Citigroup’s mortgage-backed securities offerings, Tr. 27, but also avoids any investors’ relying in any respect on the S.E.C. Consent Judgment in seeking return of their losses. If the allegations of the Complaint are true, this is a very good deal for Citigroup; and, even if they are untrue, it is a mild and modest cost of doing business. It is harder to discern from the limited information before the Court what the S.E.C. is getting from this settlement other than a quick headline.”

News Update - Securities and Investments

• UBS Securities LLC (Restitution/Fines/Penalties/Settlements Paid: $8,000,000)

Action Date: November 10, 2011
Location: Washington, DC

On November 10, 2011, the SEC charged UBS Securities LLC for inaccurate recording practices when providing and recording “locates” to customers seeking to execute short sales. UBS settled the enforcement action by agreeing to pay an $8 million penalty and retain an independent consultant.

Broker-dealers are routinely asked by customers to locate stock for short selling, and a “locate” represents a determination by a broker-dealer that it has borrowed, arranged to borrow, or reasonably believes it could borrow the security to settle the short sale. Broker-dealers are required under Regulation SHO to accurately record the basis upon which it has given out locates.

According to the SEC’s order instituting settled administrative proceedings, UBS employees routinely recorded the name of a lender’s employee even when no one at UBS had actually contacted the employee to confirm availability. The SEC’s investigation found that UBS employees sourced thousands of locates to lender employees who were out of the office and could not have provided any information to UBS on those days.

“Regulators must be able to rely on a firm’s records to mean what they say, especially when those records are meant to provide the key evidence of a firm’s compliance with the law and safeguard against illegal short selling,” said George S. Canellos, Director of the SEC’s New York Regional Office. “UBS permitted its employees to create records that do not accurately convey the basis upon which its employees granted locates.”

According to the SEC’s order, in judging the availability of shares for locates, broker-dealer employees often have access to electronic availability feeds that are sent by lenders to many different broker-dealers. At times, reliance on those feeds might not be reasonable, and it may be necessary to contact lenders directly to confirm actual availability of the security. UBS’s locate log purported to show which locates were granted based on direct confirmation of availability with a lender and which locates were based on electronic feeds.

The SEC’s investigation found that since at least 2007, UBS’s “locate log” that records the locates it granted inaccurately portrayed which locates were based on electronic feeds or direct confirmation with specific lenders. UBS’s practices obscured inquiry into whether UBS had a reasonable basis for granting locates, and created a risk of locates being granted based on sources that could not be relied upon if shares were needed for settlement. The SEC’s order does not find that UBS executed short sales without a reasonable basis for believing that it could borrow the stock to fulfill its settlement obligations.

The SEC’s order finds that UBS violated Section 17(a) of the Exchange Act and Rule 203(b) of Regulation SHO thereunder. Without admitting or denying the SEC’s findings, UBS consented to the order and agreed to pay the $8 million penalty and retain an independent consultant to conduct a comprehensive review of the UBS Securities Lending Desk’s policies, procedures and practices with respect to granting locate requests. The order also requires UBS to cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Exchange Act and Rule 203(b) of Regulation SHO thereunder.

The SEC’s investigation was conducted by Stephanie Shuler, Adam Grace, and Elzbieta Wraga of the SEC’s New York Regional Office with the assistance of Daphne Downes in the New York Regional Office’s Broker-Dealer Inspection Program.

News Update - Mortgage Fraud

• Allied Mortgage
• Jim Hodge
• Jeanne Stell

Action Date: November 2, 2011
Location: New York, NY

On November 1, 2011, Preet Bharara, the United States Attorney for the Southern District of New York, announced that the United States filed a civil mortgage fraud lawsuit against ALLIED HOME MORTGAGE CAPITAL CORPORATION, its affiliate, ALLIED HOME MORTGAGE CORPORATION (collectively (”ALLIED”)), as well as ALLIED President and CEO JIM C. HODGE and Executive Vice President JEANNE L. STELL. The Government’s Complaint seeks damages and civil penalties under the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (”FIRREA”) for nearly a decade of concealed misconduct in connection with the residential mortgage lending practices of ALLIED, which bills itself as one of the nation’s largest privately held mortgage lenders. In the past decade, ALLIED originated more than 110,000 FHA mortgages, more than 30% of which are in default. For loans originated in 2006 and 2007, ALLIED’s default rate climbed to 55%. To date, the Federal Housing Administration (”FHA”) has paid insurance claims totaling $834 million for mortgages originated and fraudulently certified by ALLIED that are now in default. An additional 2,509 loans are currently in default but not yet in claims status, which could result in additional insurance claims paid by HUD amounting to $363 million.

PREET BHARARA stated:

“As described in the Complaint, Allied and its CEO exploited a government insurance program to engage in a wholesale shifting of risk away from itself – playing a lending industry equivalent of heads-I-win and tails-you- lose. The losers here were American taxpayers and the thousands of families who faced foreclosure because they could not ultimately fulfill their obligations on mortgages that were doomed to fail. The alleged conduct in this case is egregious and our investigation is ongoing.”

Assistant Attorney General TONY WEST stated:

“During the past decade, these defendants allegedly engaged in conduct that caused substantial losses to the FHA program. The filing of this lawsuit is the Government’s first step to hold them accountable to the taxpayers for the damage their conduct has caused. ”

HUD General Counsel HELEN KANOVSKY stated:

“We will not tolerate mortgage lenders who play fast and loose with FHA’s standards. These defendants demonstrated a pattern of recklessness and utter disregard for how we do business. They’ve harmed FHA, hurt homeowners, and now they’ll be held to account for their actions.”

HUD Acting Deputy Inspector General JOHN P. MCCARTY stated:

“The allegations contained in this filing highlight the lengths to which corrupt lenders will go to put profits before prudence, while violating the trust placed in them by the U.S. Department of Housing and Urban Development, the Federal Housing Administration, and ultimately American taxpayers. Lenders who engage in deceitful practices and circumvent the basic “check and balance” approval system pose a significant threat to our already troubled mortgage industry. The HUD Office of Inspector General considers the integrity of the FHA process and the protection of FHA assets to be a priority of our investigative mission. Today’s filing underscores our unwavering commitment to working with the US Attorney’s Office and our law enforcement partners to bring the full weight of our legal system to bear in holding unscrupulous lenders responsible for their actions. “

According to the Complaint, FHA mortgage insurance makes home ownership possible for millions of American families by protecting lenders against defaults on mortgages, thereby encouraging lenders to make loans to borrowers who might not be able to meet conventional underwriting requirements. FHA mortgage insurance also makes mortgage loans valuable in the resale market. To protect the continued availability of FHA mortgage insurance funds, HUD must accurately assess the risk of default on the loans it insures. To accomplish this task, HUD relies on assurances by lenders that they, and the loans they submit for insurance, comply with HUD requirements.

As a HUD-approved loan correspondent and Direct Endorsement Lender, ALLIED originated HUD-insured mortgage loans for sale or transfer to other qualifying mortgagees, known as “sponsor mortgagees.” ALLIED was required to seek HUD approval for each office from which it originated FHA loans. ALLIED was also required to certify that it maintained a quality control program that reviewed loans that went into early payment default, and that it faced no sanctions in the states in which it operated. Although ALLIED certified to HUD that it complied with these key requirements, its certifications were knowingly false.

According to the Complaint, ALLIED operated hundreds of “shadow,” unapproved branch offices that originated FHA loans. To deceive HUD about this practice, ALLIED submitted loans from those branches to HUD substituting the ID number of a HUD-approved branch. ALLIED’s undisclosed shadow branches could not be audited by HUD and their default rates were disguised by the default rates of branches whose IDs they were using – IDs that were based on false certifications. While some senior managers questioned this practice, it was continued under the direction of HODGE.

As further alleged in the Complaint, when ALLIED sought approval from HUD for new branches – at one time they had 600 branches with HUD IDs – it was based on fraudulent information. ALLIED falsely certified that it complied with HUD requirements and maintained financial and supervisory control over the branch. In reality, ALLIED’s branch offices were not subject to ALLIED’s oversight, and ALLIED bore little risk of loss for poor lending practices by the branches. Well aware that ALLIED’s branch operations violated HUD requirements, and that both she and HODGE had legal exposure, ALLIED’s Executive Vice President routinely had another senior manager sign the certifications to HUD because she knew they were false.

For example, in an email exchange between STELL and a former employee about a 2009 HUD audit report finding that ALLIED was not in compliance with HUD rules relating to branch operations, STELL wrote, “I had [another senior manager] sign the ‘add a branch’ form for years for HUD as I knew this would eventually happen. It required that you swear the branches meet and will continue to meet HUD’s regulations. Jim [Hodge] has to be the biggest target personally for his disregard for the regulations. Serves him right never listening and thinking he didn’t have to play by the rules.”

Even while it operated more than 600 branches, ALLIED’s quality control program was either dysfunctional or entirely nonexistent. The corporation maintained only a handful of quality control employees to review its thousands of mortgages, most of whom were located in St. Croix, in the U.S. Virgin Islands, and employed by a company that HODGE set up to obtain tax benefits. According to the Complaint, when the quality control manager visited her staff in St. Croix, she discovered that they did not know what HUD was or even what a mortgage was.

HODGE’s offshore entity earned millions of dollars in management fees from ALLIED, but conducted little substantive loan review. When HUD auditors asked for up-to-date quality control reports and ALLIED could not provide them, it provided fraudulent reports at HODGE’s direction. Finally, in the annual certifications ALLIED submitted to HUD to maintain its HUD- approved status, ALLIED falsely certified that none of its employees had been convicted of a crime and that it had a clean record in the states in which it operated. In fact, ALLIED faced serious sanctions from numerous states and employed numerous convicted felons, having hired more than a dozen in a single year.
***
The Complaint seeks treble damages and penalties under the False Claims Act for the hundreds of millions of dollars in insurance claims already paid by HUD for mortgages originated by ALLIED, as well as compensatory damages under common law for the hundreds of millions of dollars in insurance claims that HUD expects to pay in the future. In addition, the United States seeks damages and civil penalties under FIRREA for the hundreds of false statements that ALLIED submitted to HUD. Under FIRREA, the United States may recover up to $1 million per violation, or (if greater) the amount of the pecuniary gain from the violation or the amount of the pecuniary loss to a person other than the violator.

By filing its Complaint, the Government also joined and expanded upon a qui tam private whistleblower lawsuit that had been filed against ALLIED HOME MORTGAGE CAPITAL CORPORATION under the False Claims Act in May of this year.

News Update - Securities and Investments

• Jon Corzine
• MF Global

Action Date: November 2, 2011
Location: New York, NY

On October 31, 2011, brokerage firm MF Global filed for Chapter 11 bankruptcy protection. MF Global was headed by former New Jersey governor and former Goldman Sachs CEO Jon Corzine. MF Global’s financial problems have been attributed to $6.3 billion in bad investments in European government debt. A possible sale had been reported to CME Group, the company that operates the nation’s largest commodity exchanges. CNN reported that the sale was thwarted when $600 million in customers’ money at MF Global was possibly missing and possibly had been co-mingled with the company’s assets in violation of the rules of the Commodity Futures Trading Commission. Both the FBI and the SEC were reportedly conducting investigations.

News Update - False Statements

• Patricia Arango
• Denise Bailey
• Docx, LLC
• Lender Processing Services
• Liquenda Allotey
• Litton Loan Servicing
• Cheryl Samons
• Shapiro and Fishman, LLP
• David Stern
• Marshall Watson

Action Date: October 25, 2011
Location: West Palm Beach, FL

JUST IN TIME FOR HALLOWEEN…

Some attorneys general might want to investigate the strange phenomenon of signatures missing from filed mortgage documents.

The problem of disappearing signatures first appeared on mortgage documents prepared by Docx, LLC.

The signatures of “MERS officers” Linda Green, Tywanna Thomas and Linda Thoresen were missing from documents filed in official county records, but the blank lines/missing signatures were nonetheless witnessed and notarized.

Next, the witnessed and notarized blank line was found on mortgage documents that were supposed to have been signed by Cheryl Samons, the office manager of the Law Offices of David Stern.

Then, from the Law Offices of Marshall Watson, came the notarized and witnessed blank line where the signature of staff attorney Patricia Arango was supposed to have appeared.

Now, from the Minnesota office of Lender Processing Services, there is the blank line where the signature of Liquenda Allotey was supposed to have been written, with the blank line “signature”
witnessed by LPS employees Laura Miller and James C. Morris and notarized by James A. Chua (Palm Beach County official records Book 23062 Page 0179). This document was prepared by the Law Offices of Marshall Watson.

Finally, from Litton Loan Servicing in Harris County, Texas, comes the blank line where the signature of Denise Bailey was supposed to have been written, with the blank line notarized by Texas notary Brenda McKinzy (Palm Beach County official records Book 23063, Page 0142). This document was prepared by the Florida law firm, Shapiro & Fishman, LLP.

Law officers investigating these fraudulent documents have also mysteriously disappeared.

News Update - Bank Fraud

• Docx, LLC
• Law Offices of David Stern
• Lender Processing Services
• Cheryl Samons

Action Date: October 24, 2011
Location: West Palm Beach, FL

HURRICANE CHERYL DESTROYS LAND RECORDS IN PALM BEACH COUNTY

In the six month period from September 1, 2008 through February 28, 2009, 502 mortgage assignments, signed by Cheryl Samons, were filed in the official records of Palm Beach County, FL.

Samons was the office manager for the Law Offices of David J. Stern, but she signed as a MERS officer.

Mortgage-backed trusts were the primary beneficiary of these Samons Assignments.

Mortgage Assignments Signed by Cheryl Samons Filed in Palm Beach County from September, 2008, through February, 2009:

• September, 2008: 75
• October, 2008: 125
• November: 2008: 56
• December, 2008: 85
• January, 2009: 101
• February, 2009: 60

Multiplied by three, in the 18-month period from July 4, 2008 though January 4, 2009, Samons is likely to have signed 1,506 Assignments.

This is the same 18-month period that 1,742 Docx Assignments were being filed in Palm Beach County. These had a stated mortgage value of $560,239,797 or an average mortgage value of $321,607 per assignment.

Samons Palm Beach County assignments filed from July 4, 2008 through January 4, 2009 have an estimated value of $484,340,182, nearly half a billion dollars.

This does not include the assignments signed by other Stern employees, associate Beth Cerni or paralegal Carol Wasserman.

The combined value of mortgages, primarily transferred to mortgage-backed trusts, for one county for one 18-month period: $1,044,579,939.

While Docx Assignments were only filed for 18 months in Palm Beach County, Samons assignments appeared regularly from 2007 through 2010.

News Update - Mortgage Fraud

• Mortgage Electronic Registration Systems
• Pillar Processing, LLC
• Steven J. Baum, P.C.

Action Date: October 7, 2011
Location: New York, NY

On October 6, 2011, a settlement agreement was signed regarding the practices of one of the largest foreclosure mills in the country, Steven J. Baum, P.C., a law firm operating from Amherst, New York. The settlement was obtained by Preet Bharara, the U.S. Attorney for the Southern District of NY. The investigation was conducted by the Civil Frauds Unit of the United States Attorney’s Office for the Southern District of New York which investigated under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (”FIRREA).

Under the settlement, the Baum Firm is required to pay $2 million and make significant reforms, but is still allowed to say (paragraph 4): “This Agreement does not constitute a finding by any Court or Agency that Baum has engaged in any unlawful practice or wrongdoing of any kind.”

Most significantly, Baum employees - including the very prolific robo-signing associate, Elpiniki Bechakas, may no longer sign mortgage assignments as officers of Mortgage Electronic Registration Systems, Inc. (”MERS”). (Bechakas is not specifically named in the Agreement, but has been singled out by NY judges, including the Honorable (and very savvy) Arthur Schack of Brooklyn, as a Baum attorney with very questionable practices.)

The relief provided in the Settlement Agreement is very much prospective relief, and in that regard, is very comprehensive.

For those pending cases, however, the relief in paragraph 15(a) may seem grossly inadequate:

“Baum shall provide the following notification:

a. In any pending foreclosure action where an application for a judgment of foreclosure has not been submitted to a court, if Baum has filed an assignment of mortgage as a corporate officer of MERS, Baum shall disclose that fact to the court in the application for the judgment of foreclosure, or earlier. Such disclosure shall not be required if the Baum firm does not file a proposed judgment of foreclosure (e.g. because another law firm has been substituted as counsel for the matter prior to the filing of a proposed judgment of foreclosure, because the action is dismissed, etc.)”

All that the banks need to do under this settlement in pending cases is to sub in another law firm that may use the Baum assignments to foreclose, without even making any further disclosure to the courts such as “the signers are really employees of the Baum Law Firm who previously represented the banks in this matter.”

While it is true that most defense attorneys will no doubt raise this point, it is also true that most homeowners in foreclosure proceed pro se and are likely to be completely unaware of this Settlement Agreement, and the actual employer of Elpiniki Bechakas and other Baum signers.

Then there is the matter of the tens of thousands of homeowners who have lost their homes in cases where Baum employees signed mortgage assignments as officers of MERS. Most often, they assigned mortgages to mortgage-backed trusts so that the trusts could foreclose, even though such transfers did not take place on the dates and in the manner set forth on the Baum assignments. These Baum Assignments appear throughout the New York courts, but often in the Courts of other states as well.

Two million seems to be the magic number. This is also the amount paid by the Law Offices of Marshall Watson in Florida whose associates engaged in similar practices of signing as MERS officers, assigning mortgages after foreclosure actions were initiated, etc.

Further relief may be forthcoming, from both criminal prosecutions, the NY Bar, and most certainly from private class action and RICO lawsuits brought by private litigants.

Investors in mortgage-backed securities must ask for reports from the Trustees of how much they have paid for these Baum Assignments in the last five years, how much they have lost and how much more they will lose when foreclosures are successfully defended because the loan documents relied on by the trustees were “Baum-made.”

This is a first-of-its-kind settlement with one significant party in the foreclosure fraud morass.

News Update - Bank Fraud

• American Home Mortgage Servicing
• Deutsche Bank
• Docx, LLC
• Lender Processing Services
• Wells Fargo Bank

Action Date: October 6, 2011
Location: West Palm Beach, FL

A study of every mortgage assignment prepared by Docx, LLC, and filed in the official records of Palm Beach County, FL, shows that there were 1,742 such assignments filed, with a total mortgage value of $560,239,797. These were filed from July 1, 2008 to January 4, 2010. Residential mortgage-backed trusts were the beneficiaries on the majority of these. Deutsche Bank was the trustee on most of these, with 699 assignments. American Home Mortgage Servicing was the beneficiary on 317 assignments and Wells Fargo was the beneficiary on 306 assignments. Docx and its parent, Lender Processing Services, agreed to a Consent Order by the FDIC, and other regulators, on April 13, 2011. Docx and Lender Processing Services have never notified Florida courts and homeowners that the filed documents were fraudulent or deficient and contained false information about the mortgage transfers. According to the Consent Orders, the false information included the identity of the parties and the dates of the transactions. For more details, see the latest article on Fraud Digest.

News Update - Mortgage Fraud

• American Home Mortgage Servicing
• Fannie Mae
• Freddie Mac
• Lender Processing Services

Action Date: September 23, 2011
Location: Washington, DC

The Washington Post reported on September 23, 2011 that the Inspector General of the Federal Housing Financing Agency found that Fannie Mae failed to establish an acceptable and effective way to monitor foreclosures from 2006 - 2011. Fannie reportedly knew as early as 2005 that law firm employees were signing documents they had not read, and using fake signatures on mortgage documents.

In addition to knowingly using documents forged by law firm employees, Freddie Mac often used mortgage assignments prepared by the now infamous Docx office of Lender Processing Services. In thousands of cases across the country, mortgage assignments were filed in county records showing the Federal Home Loan Mortgage Corporation had acquired mortgages. But those assignments were often signed by Linda Green, Tywanna Thomas and other LPS employees whose named were forged on tens of thousands of documents, and who used phony job titles on the documents they signed.

Fannie, Freddie, LPS and American Home Mortgage Servicing, frequent users of these assignments, have NEVER come forward with a list of the fraudulent and defective documents so that the great clean-up of mortgage records can begin.