FORECLOSURE JUSTICE ADVOCATES ARE THANKFUL IN 2011
Nov19
Lynn E. Szymoniak, Esq., Thanksgiving 2011
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….for Nevada Attorney General Catherine Cortez Masto and Chief Deputy Attorney General John Kelleher for filing criminal charges against two employees at Lender Processing Services, alleging that these employees filed thousands of falsified documents relating to foreclosures in Nevada. Attorney General Masto never said “I wish someone would do something about all of this mortgage fraud by servicers and document companies.”
…for Congressman Elijah E. Cummings, representing Maryland’s 7th District, for his recognition of the importance of keeping families in their homes, for his battle against fraudulent banking practices and for being a constant, strong voice against fraudulent foreclosures in America.
…for Delaware Attorney General Beau Biden for filing a lawsuit against MERS for unfair and deceptive trade practices that plainly sets out the fraudulent activities done in the name of MERS, including obscuring important mortgage ownership information, acting as an agent of the true owners of mortgage loans without authority, and failing to properly oversee the MERS registry or enforce its own rules in foreclosure proceedings. (State of Delaware v. MERSCORP, Wilmington Division, Delaware Chancery Court). Attorney General Biden also intervened in the $8.5 billion settlement proposed by Bank of America to resolve claims by investors in mortgage-backed securities put together by Countrywide Financial Corporation.
…for New York Attorney General Eric Schneiderman for his determination to investigate whether securities laws were broken when mortgage loans were bundled into securities, for intervening in the Bank of America settlement, and for refusing any deal that would give immunity for criminal acts to banks or securities companies.
…for New York Judge Arthur Schack, for his intolerance of lies by banks, for exposing the massive problem of fraudulent documents used in foreclosures, and for writing the following in response to a sworn affidavit from a bank lawyer, Margaret Carucci, that an officer from Downey Savings & Loan could vouch for the accuracy of the documents: “Ms. Carucci affirmed under the penalties of perjury that she communicated on Christmas Eve with the officer of a defunct financial institution. This is a deceptive trick and fraud upon the court. It cannot be tolerated. This Christmas Eve conduct, in the words of Ebenezer Scrooge, “Bah, humbug!’” (Downey Savings and Loan Association, F.A. v. Trujillo, 2011 NY Slip Op 51517 (U)). Judge Schack has led the way to honesty in courtrooms.
…for New York Times OpEd columnist Joe Nocera for bringing the photographs of the Steven Baum Halloween party, where firm employees mocked homeowners in foreclosure, to the attention of the world.
…for Massachusetts Attorney General Martha Coakley for focusing attention on Mortgage Electronic Registration Systems, Inc. and whether MERS impaired the integrity of the state’s recording system. Attorney General Coakley also made it clear that she would do an in-depth investigation of MERS, stating, “We want to be clear we are not prepared to give a release of liability on any broad scope of MERS issues.”
…for Oscar-winning director Curtis Hanson and his HBO Film, Too Big To Fail. Can anyone ever look at Treasury Secretary Henry Paulson again without remembering William Hurt’s portrayal? When we hear the name Ben Bernake, doesn’t Paul Giamatti come immediately to mind? But James Woods, as Richard Fuld, Chariman and CEO of Lehman Brothers, will always epitomize the clueless corporate executive.
…for Florida attorneys Theresa Edwards and June Clarkson who were fired from the Economic Crimes Division of the Attorney General’s Office after targets of their foreclosure fraud investigations complained that these Assistant Attorneys General were too aggressive. Edwards and Clarkson had gone after some of the most notorious foreclosure mills in the state, including the law offices of David Stern and Marshall Watson. They were also conducting an extensive investigation of Docx and Lender Processing Services at the time they were forced to resign. Florida Representative Darren Soto of Orlando called for an investigation of the firings by the U.S. Department of Justice and by the Inspector General in the Attorney General’s office.
…for Locke Barkley, the standing Chapter 13 Trustee for the Northern District of Mississippi, and her attorneys, Nick Wooten and D.W. Grimsley, for filing a class action complaint in federal court against Lender Processing Services alleging a kick-back scheme and unlawful fee splitting between LPS and the attorneys in its network.
…for New York Bankruptcy Court Judge Robert E. Grossman for issuing the first federal court ruling that MERS cannot transfer and assign mortgage through its electronic registry system. Judge Grossman rejected the argument that the banks had the authority to arbitrarily change state property laws, stating, “This Court does not accept the argument that because MERS may be involved with 50% of all residential mortgages in the country, that is reason enough for this Court to turn a blind eye to the fact that this process does not comply with the law.” (In re Agard, 10-77338, U.S. Bankruptcy Court, Eastern District of New york (Central Islip).
…for Louisiana Bankruptcy Judge Elizabeth W. Magner for imposing sanctions against Lender Processing Services, stating: “The fraud perpetrated on the Court, Debtors and trustee would be shocking if this Court had less experience concerning the conduct of mortgage servicers. One too many times, this Court has been witness to the shoddy practices and sloppy accounting of the mortgage service industry. (In re Wilson, U.S. Bankruptcy Court, Eastern District of Louisiana.)
…for Guilford County Recorder Jeff Thigpen for showing in painstaking and incontrovertible detail how foreclosure fraud has permeated county recording offices, for standing up for the rights of homeowners, and for explaining how foreclosure fraud affects ALL homeowners, not just those in foreclosure.
…for Massachusetts Register of Deeds John O’Brien and Marie McDonnell who studied the records of the Southern Essex County Registry of Deeds and found massive fraud. O’Brien released findings that 75% of the mortgage assignments in the registry are fraudulent. “My registry is a crime scene…” said O’Brien, who also has assisted other country recorders throughout the United States in understanding mortgage fraud issues and identifying robo-signers.
…for Illinois Attorney General Lisa Madigan and Michigan Attorney General Bill Schuette for issuing subpoenas to mortgage servicers Lender Processing Services and Nationwide Title Clearing as part of criminal investigations into the practices of mortgage servicing companies. Just when the mortgage servicing companies thought they had worked out a wonderful settlement with the OCC where they were free to investigate themselves and report back, along came these serious criminal law enforcement efforts.
…for Ingham County, Michigan Register of Deeds Curtis Hertel, Jr. for investigating foreclosure fraud and robo-signing and reporting his findings. Hertel found that banks were continuing to produce foreclosure paperwork without proper reviews and signatures, despite promises of reform.
…for Dallas County, Texas, District Attorney Craig Watkins and Duval County, Florida, Clerk of the Court Jim Fuller for bringing class action lawsuits against MERS. The lawsuits allege that MERS acts as a “shadow recording system” for buying and selling mortgages in the United States. The lawsuits attack the system that lists MERS as the mortgagee on millions of loans throughout the country when MERS did not originate the loans, lend any money or own or hold any promissory notes.
…for Massachusetts Supreme Court Justice Ralph Gants who upheld a lower court ruling that two foreclosures were invalid because the banks did not prove they owned the mortgages which had been transferred into residential mortgage-backed trusts. The case was expected to affect all foreclosures done without proper documents. Judge Gants wrote, “the mortgages securing these notes are still legal title to someone’s home or farm and must be treated as such.” The case was seen as a significant warning to all purchasers of foreclosed properties to be certain that an unbroken chain-of-title could be established prior to making any purchase of residential real estate.
…for Scott Pelley, Robert G. Anderson and Daniel Ruetenik of 60 Minutes for their segments “The Hard Time Generation” and “The Next Housing Shock.” Americans needed to see school buses stopping at cheap motels in Orlando for children who have lost their homes and to hear that the poverty rate for children in America would soon hit 25%. For tens of thousands of people with mortgage documents signed by Linda Green, the image of Chris Pendley forging Green’s name to mortgage documents was the best possible confirmation that something is rotten in the state of Denmark. This segment provided the impetus for country recorders with conscience to take action against mortgage fraud.
…for California Attorney General Kamala Harris for her determination to investigate and expose the root causes of California’s mortgage crisis by issuing subpoenas to Fannie Mae and Freddie Mac.
…for U.S. District Judge William Pauley in Manhattan for 4
recognizing the significance of the Bank of America settlement when he wrote, “This action concerns far more than the financial interests of a few sophisticated investors,” and when he decided, “The intervention of the state AGs in this action will protect the interests of absent investors.” (Bank of New York Mellon v. Walnut Place, LLC, 11-cv- 05988, USDC, Southern District of New York (Manhattan).
…for Academy Award Winning Director Charles H. Ferguson for the movie Inside Job which documents the 2008 financial meltdown and why it was avoidable. Ferguson himself has said that the film is about the systemic corruption of the United Sates by the financial services industry. There is a reason this film won the Academy Award for Best Documentary as well as many other film critic awards. It is chilling to watch.
…for filmmaker and author Michael Moore and his advocacy on behalf of a nationwide moratorium on home foreclosures and his work to expose “liar liens.”
…for Florida Appellate Court Judge Juan Ramirez, Jr., who wrote in his dissent, “I dissent because I cannot condone the unprofessional and unethical means used by the bank’s counsel, with the trial court’s complicity, to obtain an amended final judgment in this case…This case is the quintessential denial of due process. Due process requires notice and an opportunity to be heard. Here appellant was granted neither. A final judgment was amended from $216,485.73 to $529,630.64, and the appellant was only informed after the fact when he received the conformed copy in the mail…In my view, to affirm what happened here requires that we turn a blind eye to the Florida Rules of Civil Procedure, the Florida Bar Rules of Professional Conduct, and the Code of Judicial Conduct, to say nothing of the Constitutions of the United States and the State of Florida.” (Phillips v. Centennial Bank, No. 3D10-2910, (Fla. 3rd DCA 2011).
…for Dylan Ratigan for making the word “fraudclosure” part of the American vocabulary and for telling the story of tens of thousands of American families impacted by fraudulent foreclosures when much of the rest of the country would only focus on investors’ losses.
…for Max, April and Nye – because when everyone in a movement knows you by your first name, you have fought the longest and been an inspiration to the most.
…for Jack Wright who gives us MSFraud.org.
…for Massachusetts Land Court Judge Keith C. Long for his careful, thoughtful common-sense ruling in the case of Antonio Ibanez, a case eventually upheld by the Massachusetts Supreme Court.
…for the Bankruptcy Trustees and Judges including Hon. Tracey Hope Davis (Northern District of New York), Hon. Martin Glenn (Southern District of New York), Hon. Harry C. Dees, Jr. (Northern District of Indiana), Hon. Diane Sigmund Weiss (Eastern District of Pennsylvania), Hon. Joel B. Rosenthal (Massachusetts), Hon. Joan M. Feeney (Massachusetts), and, of course, Hon. Christopher Boyko (Ohio) for carefully scrutinizing the evidence presented by the banks regarding ownership claims of notes and mortgages.
…for Hon. William G. Young of Massachusetts who put the blame squarely on the legal profession, stating:
After 43 years at the bar, the saddest thing about this case is the conduct of the lawyers — all the lawyers. A careful reading of the briefs in this case reveals only a single recognition that counsel did anything amiss in their misrepresentations to the Bankruptcy Court. There’s blame aplenty, of course, each one blaming everyone else — including the hapless bankrupt homeowner. … How is it that our profession, the legal profession —which could have and should have strongly counseled against the self interested excesses that set up the collapse — instead has eagerly aided and abetted those very excesses? How could we (all of us who profess to be lawyers) have fallen so low?” (In re Nosek, 386 B.R. 374 (Bankr. D. Mass. 2008)
…for Neil Garfield and his Livinglies weblog for his endless efforts to educate consumers and their lawyers on “the largest economic fraud in human history.” Neil is the source of so much valuable information – he is a one-man Consumer Protection Bureau and THE SOURCE for foreclosure defense.
…for Michael Olenick of LegalPrise for building Findthefraud.com, allowing citizen researchers the power to view documents quickly and thoroughly, eliminating the impediments in the systems set up by many county recorders.
…for the ACLU for fighting for the rights of homeowners and for exposing courtroom injustices.
…for Floridians Lisa Epstein, Damian Figueroa, Michael Redman, and Matt Weidner for speaking the truth on their blogs, at great personal cost, assisting tens of thousands of citizens across the country who educate themselves regarding foreclosure fraud and injustice, and reporting what actually goes in in county courtrooms every day.
…and finally, for JPM Chase’s CEO Jamie Dimon for his definition of foreclosure as debt relief, for BOA’s CEO Brian “We have a right to make a profit” Moynihan, for the partiers at the Steven Baum Halloween party, to Cheryl (“David Stern buys me a new BMW every year”) Samons, for Stern crony Miriam (“Let ME find the fraud”) Mendieta and for screaming Representative Joe Walsh, for illustrating this quotation from historian David C. McCullough:
History is not the story of heroes entirely. It is often the story of cruelty and injustice and shortsightedness. There are monsters, there is evil, there is betrayal. That’s why people should read Shakespeare and Dickens as well as history – they will find the best, the worst, the height of noble attainment and the depths of depravity.
WHY INVESTORS, HOMEOWNERS AND THE ECONOMY BENEFIT FROM PRINCIPAL WRITE-DOWNS
Nov2
CITIZEN RESEARCHERS: PLEASE HELP WRITE THIS ARTICLE
Principal write-downs have been condemned as morally hazardous. Failure to include such write-downs may well sink any chances of an economic recovery. To demonstrate the value of write-downs, this research documents the history of homes now on the market due to foreclosure, and the losses to investors from failure to negotiate a meaningful modification.
- 1. Please limit your research to homes owned by Trusts (look for the words “trustee for” in the name of the plaintiff.)
- 2. Search official records (or, in Florida, for a much easier search, use findthefraud.com) and search document type “Jud” (Judgments).
- 3. Find the amount of the judgment.
- 4. Be sure to include the county, CFN or Book and Page Number for easy verification.
- 5. The actual street address almost always follows the legal description of the property.
- 6. Final step: enter the address of the property on Google. If the property is on the market, a listing will almost always appear from the street address.
- 7. Please send your research to: szymoniak@mac.com for compilation.
- 8. Please include your name if you would like to be listed in the authors section of this article.
Example:
106 Devonshire Circle Royal Palm Beach, FL
Sold for $510,772 on April 15, 2005
Final Judgment of Foreclosure Entered for $537,415 on 12/29/2010
Palm Beach County CFN: 20110000161 in favor of Deutsche Bank National Trust Co., Trustee for IMH Asset-Backed Bonds, Series 2005-5
Now Empty and on the Market for $229,900
THANK YOU FOR PARTICIPATING!
News Update - Securities and Investments
Nov21
- 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
Nov29
- 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
Nov18
- 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
Oct24
- 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
Oct21
- 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
Oct24
- 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
Oct28
- 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.
NEEDED: PHOTOS OF BLIGHTED FORECLOSED HOMES
Oct24
In neighborhoods across the country, banks, Fannie & Freddie are failing to maintain the homes that they acquire through foreclosures. Photos of such homes should be sent to the Attorney General in every state - with a demand that the Attorney General requires that the banks, Fannie & Freddie maintain these homes to prevent further destruction of neighborhoods and devaluation of remaining properties. Copies of such letters will be posted here on Fraud Digest (szymoniak@mac.com) and shared with the foreclosure prevention blogs.