EDITOR’S NOTE: EVERYONE KNEW if they were involved in the mortgage and foreclosure process that the system was going down the wrong the track, that the country would be hurt, that homeowners were being tricked, that investors were being deceived in much the same ways as homeowners. I was on Wall Street and had many dealings with major firms for decades. Wall Street is like a cesspool of rumors and information.
It is not possible that thousands of analysts could have missed the obvious: the mortgages were deadbeat proposals arising out of a scam on investors and that it would blow up in the face of homeowners, the nation and the whole financial system.sham trustees — both at the level of pools of investments and the level of trustees on deeds of trust.
Since Fannie MAe was designated the “trustee” of many asset backed pools that turned out to be empty, it would seem that the fiduciary responsibilities of the SHAM TRUSTEE were breached, just as they were with other sham trustees up and down the line of the nonexistent securitization chain.
The original trustees breached their responsibilities imposed by state law on handling their duties as fiduciaries for borrowers and lenders on Deeds of Trust. And the “substitute trustees” were nothing of the sort being merely sham vehicle for the pretender lenders to appoint themselves as “Trustees.”
Fannie Mae, the mortgage finance giant, learned as early as 2003 of extensive foreclosure abuses among the law firms it had hired to remove troubled borrowers from their homes. But the company did little to correct the firms’ practices, according to a report issued Tuesday.
Only after news reports in mid-2010 began to describe the dubious practices, like the routine filing of false pleadings in bankruptcy courts, did Fannie Mae’s overseer start to scrutinize the conduct. The report was critical of that overseer, the Federal Housing Finance Agency, and was prepared by the agency’s inspector general.
In one notable lapse, even after the agency reported problems to Fannie Mae in late 2010 about some of the approved law firms, it did not request a response from the company, the report said.
“American homeowners have been struggling with the effects of the housing finance crisis for several years, and they shouldn’t have to worry whether they will be victims of foreclosure abuse,” said Steve Linick, inspector general of the finance agency. “Increased oversight by F.H.F.A. could help to prevent these abuses.”
The report is the second in two weeks in which the inspector general has outlined lapses at both the Federal Housing Finance Agency and the companies it oversees — Fannie Mae and Freddie Mac. The agency has acted as conservator for the companies since they were taken over by the government in 2008. Its duty is to ensure that their operations do not pose additional risk to the taxpayers who now own them. The companies have tapped the taxpayers to cover mortgage losses totaling about $ 160 billion.
Elijah E. Cummings, the Maryland Democrat who is the ranking member of the House Committee on Oversight and Government Reform and who requested the inspector general’s report, said in a statement, “As a member of Congress and an attorney, I find the systemic failures by F.H.F.A. and Fannie Mae to adequately oversee these foreclosure law firms to be a breach of the public trust and an assault on the integrity of our justice system.”
The new report from the inspector general tracks Fannie Mae’s dealings with the law firms handling its foreclosures from 1997, when the company created its so-called retained attorney network. At the time, Fannie Mae was a highly profitable and powerful institution, and it devised the legal network to ensure that borrower defaults would be resolved with efficiency and speed.
The law firms in the network agreed to a flat-rate fee structure and pricing model based on the volume of foreclosures they completed. The companies that serviced the loans for Fannie Mae, were supposed to monitor the law firms’ performance and practices, the report noted
After receiving information from a shareholder in 2003 about foreclosure abuses by its law firms, Fannie Mae assigned its outside counsel to investigate, according to the report. That law firm concluded in a 2006 analysis that “foreclosure attorneys in Florida are routinely filing false pleadings and affidavits,” and that the practice could be occurring elsewhere. “It is axiomatic that the practice is improper and should be stopped,” the law firm said.
The inspector general’s report said that it could not be determined whether Fannie Mae had alerted its regulator, then the Office of Federal Housing Enterprise Oversight, to the legal improprieties identified by its internal investigation.
Amy Bonitatibus, a Fannie Mae spokeswoman, declined to comment on the inspector general’s report, but said that the 2006 legal analysis identified a specific issue with the practice of filing lost-note affidavits, which the company immediately addressed.
The inspector general said that both Fannie Mae and its regulator appear to have ignored other signs of problems in their foreclosure operations. For example, the Federal Housing Finance Agency did not respond to borrower complaints about improper actions taken by law firms in foreclosures received as early as August 2009, even though foreclosure abuse poses operational and financial risks to Fannie Mae.
The report cited a media report from early 2008 detailing foreclosure abuses by law firms doing work for Fannie Mae.
Nevertheless, a few months later and just before its takeover by the government, Fannie Mae began requiring the banks that serviced its loans to use only those law firms that were in its network. By then, 140 law firms in 31 jurisdictions were in the group. Among the largest firms in the network was the David J. Stern firm in Plantation, Fla., which was handling more than 75,000 foreclosure actions a year before Fannie Mae terminated it because of vast problems with its legal work.
Finally last fall, after an outcry over apparently forged foreclosure documents and other improprieties, the Federal Housing Finance Agency began investigating the company’s process. In a report issued early this year, it determined that Fannie Mae’s management of its network of lawyers did not meet safety and soundness standards. Among the reasons: the company’s controls to prevent or detect foreclosure abuses were inadequate, as was the company’s monitoring of the law firms. “If a law firm self-reported no issues as it processed cases,” the inspector general said, “then Fannie Mae presumed the firm was doing a good job.”
The agency is still deciding how to handle the lawyer network, the inspector general said.
Mr. Cummings has asked the federal housing agency to consider terminating the program.
Officials at the housing agency agreed, however, with the recommendations in the inspector general’s report. Corinne Russell, a spokeswoman for F.H.F.A. said the agency was concluding its supervisory work in this area and would direct Fannie Mae to take necessary action when the work was completed.
In a response, the agency said that by Sept. 29, 2012, it would review its existing supervisory practices and act to resolve “deficiencies in the management of risks associated with default-related legal services vendors.”
EDITOR’S NOTE: BOA and Recontrust, their puppet “substitute trustee” have stumbled into a quagmire and attorney John Christian Barlow has seized the opportunity to shine a light on the illegal foreclosures by BOA and Reconstrust. This might have national implications.
BOA and Recontrust made all the way through the usual fake auction and some underling signed a Trustee Deed. Under State Law the Trustee is presumed valid, which is to say, properly procured. But Barlow attacked the validity of the sale in the eviction action where BOA sought to obtain possession. As in other cases he recently started fighting, he attacked the validity of the sale. By raising serious issues concerning the auction, “sale” and the pattern of conduct, Barlow succeeded in overcoming the presumption of the validity of the Trustee Deed.
This left BOA with a naked deed that needs to be authenticated and validated by the Utah State Court. BOA and Reconstruct actually stumbled twice by invoking their “right” to Remove the case to Federal Court where the Judges have been friendlier to banks. Tearing apart the arguments one by one, the Federal Judge said that Recontrust and BOA had argued themselves into a corner thus depriving the Federal Court of jurisdiction since this was obviously a matter to be heard in state court, as to whether the eviction could proceed.
The written opinion of the Federal Judge alerted the State Judge to inconsistencies in the positions argued by BOA and Reconstrust. So the whole case now is going to be heard judicially as to whether the eviction is proper — a finding that is entirely dependent upon whether the Trustee’s Deed will stand up to scrutiny and be sustained — or if the Trustee’s Deed is removed or expunged from the title records because of the various illegal actions with which we are all now too familiar.
Once the Trustee Deed is discredited (it is already put in doubt by Attorney Barlow and the findings of the Federal Judge), title reverts back to the homeowner and they get to stay in their home and they can negotiate with the real creditor in good faith.
Utah law is not the same, but is similar to many other states. Check with a lawyer before you assume anything or do anything. But the fact remains that removal to state court can be challenged (Motion for remand) and the non-judicial sale can be converted into a judicial foreclosure proceeding — something no banks wants because they must allege and prove things that are simply not true. That it was done in an eviction proceeding is all the more impressive but it is also logical that it occur there because it is not until after the pretender has committed itself in writing to each and every act that they can no longer play musical chairs or musical documents to give the Judge “what he wants.”
(Salt Lake City, UT) – St. George attorney John Christian Barlow, representing homeowners who have lost their home to the Bank of America’s (NYSE: “BAC”) foreclosure machine ReconTrust, may have finally achieved a measure of success in the battle of Utah homeowners against ReconTrust’s illegal foreclosures.
Federal Judge Clark Waddoups Thursday returned to Utah Fifth District Court in St. George a case in which ReconTrust was named as a third-party in the complaint claiming immunity under the National Bank Act in an unlawful detainer action. (ORDER and MEMORANDUM DECISION)
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