CBS “60 Minutes” airs mortgage foreclosure story – “absolute, intentional fraud!”

"The Next Housing Shock"

On Sunday, April 3, 2011, “60 Minutes” featured an investigative story on foreclosure fraud, “Mortgage paperwork mess: the next housing shock?” Click on the image at right  to watch the story.

I urge you to watch this segment very carefully. Even if you’re not at risk of foreclosure, legal title to your home may be blighted beyond repair.

60 Minutes reporter Scott Pelley “explains a bizarre aftershock of the U.S. financial collapse: An epidemic of forged and missing mortgage documents.”

Unfortunately, these “forged and missing” documents come as no shock to those of us who have known for a long time now that these documents DO NOT EXIST, AND HAVE NEVER EXISTED in the first place, hence the widespread fabrication and forgeries widely documented around the country.

It’s absolutely wrong to portray banks as being “unable to find” crucial mortgage documents. After watching the segment, contact your mortgage servicing company and find out whether your mortgage has been bundled and sold. Did you get a clear answer? Did you get a copy of your mortgage paperwork to back it up?

In a previous post, I listed the documents you will need to find out whether or not your bank is the actual holder of your mortgage:

1. A copy of your original Note
2. A copy of your Deed of Trust
3. A copy of any Substitution of Trustee relating to your property, if any.
4. A copy of any Assignments of Deed of Trust, if any.
5. A copy of any Notice of Default, if any, with any attachments.
6. A copy of any Notice of Trustee’s Sale, if any.
7. A copy of any Trustee’s Deed Upon Sale, if any.
8. Any letter or correspondence you have received from your bank or mortgage servicer relating to previous attempts at loan modification.

“Chapter M” for Mortgage Bankruptcy: A solution to the mortgage fraud crisis?

“Forgive me, I must start by pointing out that three years after a horrific financial crisis caused by massive fraud, not a single financial executive has gone to jail and that’s wrong.”

For me, this quip from Charles Ferguson, director of “Inside Job,” which won for Best Documentary Film, was the best acceptance speech from the recent Academy Awards.

Bankers, predatory lenders, mortgage services, robo-signers have yet to be held accountable for the criminal practices they have wreaked on homeowners who were the victims of fraud during the mortgage meltdown.

Study after study and expert after expert has shown that the banking industry abandoned its own lending standards to ensure there were enough mortgages to fuel the insatiable securitization machine. They then turned the mortgage securities into CDO’s and CDO-squareds and credit default swaps, which multiplied the damage exponentially.

Banks knew most of these loans would default, but they sold them to pension funds (you and me) anyway, as AAA-rated investments. Homeowners were mere instrumentalities in the mortgage fraud, which have been perpetrated literally millions of times.

Think about these numbers: In normal times, banks foreclose on approximately 100,000 homes annually, but from January through September 2010, almost 2.7 million homeowners received foreclosure notices. September alone saw more than 100,000 bank repossessions. According to the Special Inspector General for the Troubled Asset Relief Program, foreclosure notices will have been sent to more than 3.5 million homes by year end 2010.

So, is there a solution to this mess? Well, while we’re still waiting for our illustrious state legislators to wake up to the national tragedy of the foreclosure crisis, and still waiting for our Attorneys General to prosecute these financial executives, Georgetown University law Professor Adam Levitin has proposed a solution called Chapter M for mortgage bankruptcy.

Many industry experts are calling Professor Levitin’s Chapter M as “the easiest and most efficient way to solve the crisis in the housing market.

The key point to Chapter M is that it would remove foreclosure actions from state courts to federal bankruptcy courts under standardized, streamline procedures.

Here’s how it would work:

• Homeowner must document the ability to pay, and the lender must document the title to the note and mortgage, but with validity of securitization transfers conclusively presumed.
• If the homeowner is willing and able to pay, then the homeowner keeps the house. A fresh appraisal is done by a court-appointed appraiser. If the homeowner re-defaults, the foreclosure process can speed up. It wouldn’t affect non-mortgage lenders. It is fast-tracked relative to traditional Chapter 13.
• The Lender may choose between an FHA short-refi with principal reduced to [90]% of LTV or a standardized loan modification with principal reduced to 100% LTV and loan restructured to 30-year fixed-rate, full amortization, market interest rate adjusted to ensure maximum [31]% DTI ratio), with 50% risk-weighting for modified loans.
• If the homeowner does not qualify, the lender gets same fast-tracked federal foreclosure and quiet title coming out of the foreclosure sale. If the lender cannot show title, then the homeowner gets quiet title to property. In all situations, the homeowner’s non-mortgage debts “ride-thru” the Chapter M bankruptcy, unaffected, but the homeowner could also file for a traditional Chapter 7 or 13 bankruptcy to address those debts.
• Is Chapter M a viable solution to the mortgage crisis? Yes! It has no cost to the federal government. It builds off existing infrastructure, and can be started immediately using existing bankruptcy courts and Chapter 7 panel trustees for sales.

We have to start cleaning up this mess. Now.

Chapter 7 vs. Chapter 13 Bankruptcy

SUMMARY of Transcript:

Chapter 13 bankruptcy is more appropriate for someone who got a little behind on their mortage payment, and they want to pay back debts over time. A Chapter 13 bankruptcy gives them a chance to reorganize their finances, and gives them up to 5 years to pay back their debts.

Chapter 7 is more appropriate for someone who has a lot of debts that they want to wipe out completely. Most of the time these are credit cards debt, personal loans, or business lines of credit. These are the kinds of debt we can help wipe out for our clients.

Chapter 7 vs. Chapter 13 Bankruptcy

Chapter 7 is commonly used when:		Chapter 13 is commonly used when:
You have little property except for the basic necessities like furniture and clothing.		You have significant equity in a home or other property and you want to keep it.
You have little or no money left after paying basic expenses each month—or you’re not even meeting basic expenses.		You have regular income and can pay your living expenses, but you can’t keep up the scheduled payments on your debts.
Advantages of Chapter 7:		Advantages of Chapter 13:
Most unsecured debts can be completely eliminated.		You can keep most of your property (house, car, business) while making payments over time to pay past due accounts.
You may receive your discharge in just 4 months.		You can create a payment schedule with your bankruptcy trustee to pay off your delinquent accounts over a 3-5 year period.
You cannot be contacted by creditors while the automatic stay is in effect.		After making one monthly payment to the trustee for distribution of payment to your creditors, you will no other direct contact with creditors during the protection period of 3-5 years.
		Co-signers may be protected.
Who can file under Chapter 7?		Who can file under Chapter 13?
Debtors who have qualified under the ‘means test’ and completed a required pre-filing session with a credit counselor.		Any individual debtor whose unsecured debts are below $336,900 and whose secured debts are less than $1,010,650.
Record of bankruptcy remains on credit record for up to ten years from the date of filing.
Contact REYES LAW GROUP, APLC, to see which bankruptcy option is best for you.

Court voids foreclosures when lenders, banks fail to prove ownership of mortgage

California homeowners facing foreclosure, or who may already have been foreclosed upon have been given a big dose of hope this week, thanks to the Massachusetts Supreme Judicial Court (“Foreclosure Case Deals Big Blow To Banks, Lenders”)

In a hearing of two consolidated cases, i.e., the U.S. Bank vs. Ibanez and Wells Fargo vs. LaRace, that state’s highest court invalidated the seizure of two homes after Wells Fargo & Co and US Bancorp failed to show they held the mortgages on these homes at the time they foreclosed.

The banks that made the loans to homeowners subsequently sold them, as part of a pool or bundle comprised of thousands of other mortgages, to other entities as part of the securitization process. However, in order to perfect ownership for the buyers of these pools, the notes and mortgages had to comply with strict and timely procedures. This court held that because those procedures weren’t followed, the buyers (investors) in those mortgages had no right to foreclose.  It is widely believed that those defective procedures in the securitization process are more pervasive than the banking industry would care to admit.

The ruling sent shock waves throughout the banking industry, as it may affect foreclosures nationwide, including those in California, where our attorney general along with AGs from all other states, is examining whether lenders are forcing people out of their homes without proper documentation.  There is a growing trend for courts to more closely examine claims of ownership and proper documentation by the banks, refusing to take the claims of mortgage lenders and servicers at face value.

I have no doubt that this case ruling will reverberate in all the other states, including California. Although this ruling is binding only in MA, the legal basis and reasoning is fundamentally sound and correct. In fact, my firm, REYES LAW GROUP, APLC, is handling more than a hundred cases using similar litigation strategies, and raising the same legal issues with respect to securitization, as those used in Massachusetts. I am looking forward to the day when the judiciary in California catches up to Massachusetts and the rest of the country.

In the meantime, here are the documents you will need to bring to your legal representative to see whether or not your bank is the actual holder of your mortgage:

1. A copy of your original Note
2. A copy of your Deed of Trust
3. A copy of any Substitution of Trustee relating to your property, if any.
4. A copy of any Assignments of Deed of Trust, if any.
5. A copy of any Notice of Default, if any, with any attachments.
6. A copy of any Notice of Trustee’s Sale, if any.
7. A copy of any Trustee’s Deed Upon Sale, if any.
8. Any letter or correspondence you have received from your bank or mortgage servicer relating to previous attempts at loan modification.

4 legal issues that may prevent a bank from foreclosing on your home

1. Filing of fraudulent, perjured or fabricated documents
   Loan servicer employees have testified to signing tens of thousands of foreclosure documents without proper verification or notarization. As a result, all 50 states have launched a joint investigation of documents handled by these “robo-signers,” forcing Bank of America to suspend foreclosure proceedings in all 50 states, and GMAC Mortgage and JPMorgan Chase to suspend foreclosure proceedings in 23 states
2. Absence of legal title to the note and mortgage
   Courts are starting to rule against mortgage holders who are foreclosing because it could not produce the documents proving that it had been assigned the rights in the mortgages when they were securitized. When banks and mortgage servicers securitized, packaged, sold, and resold mortgages, they created a system where it is often impossible to figure out who actually owns mortgage notes and therefore has the authority to foreclose on properties.
3. Wrongfully assessing improper fees & Force-placed insurance on a homeowner’s account:
   Mortgage servicers’ routinely engage in practices that speed homeowners into foreclosure, including wrongfully padding fees, such as late fees, broker-price opinions, inspection fees, attorney’s fees, and other fees. They also have been found to misapply payments, leading to the homeowner’s payments for principal and interest being improperly applied to the servicer’s fees, which in turn can improperly cause the loan to be considered to be in default. Forced-place insurance premiums are two to four times the cost of standard homeowners’ insurance, which in turn cause servicers to collect these premiums before applying the payments to principal and interest, leading to foreclosure on otherwise up-to-date loans
4. Failure to contact homeowner in good faith to explore loan modification prior to filing Notice of Default
   A notice of default must be provided to the borrower at least 30 days before the Notice of Sale is recorded in the county auditor’s office. In increasing cases, court records are showing that despite false or missing notices from lenders of the foreclosure sale, borrowers are being foreclosed upon.

Foreclosure fraud crisis is not just a “paperwork problem!”

On October 18, 2010, CNNMoney.com reported a story on the ongoing foreclosure crisis: “Housing mess: You can’t stay if you don’t pay.” Basically, the article warned that delinquent borrowers aren’t likely to avoid a foreclosure just because of paperwork problems.

“Paperwork problems?”

The media needs to educate itself about the legal issues, and stop churning industry propaganda. This is not a “paperwork problem.” This is an endemic and systemic fraud perpetrated by the servicing industry and their outsource providers.

Think logically: Why do you think it was necessary to fabricate assignments of mortgage? Because without these false documents, banks are unable to prove that they own the loan, because they don’t. Is your mortgage allegedly owned by a securitized trust?

The loans were never conveyed into the trusts that claim to own them, and the investors whose money was used to “buy” those mortgage pools are also victims.

The coming flood of loan buyback requests and lawsuits coming from those investors have already begun: First group of MBS investors take first step to suing Countrywide/BofA for $47 billion in bad loans.

The finance industry already knows this. Bank stocks are taking a beating, and soon many of the biggest banks will be insolvent from buybacks and write-downs.

Consult a competent attorney asap, as your mortgage may not be legally owned. By anyone!

Faulty Paperwork Prompts Deepening Foreclosure Problem

Yesterday’s PBS News Hour aired this report on the recent foreclosure fraud. An excellent segment which clearly explains the main issues in this housing foreclosure debacle!

Minority Homeowners Hit Hardest by Fraudulent Mortgage and Foreclosure Practices

New studies show the foreclosure crisis has hit minority communities the hardest, and predatory lending aimed at racially segregated minority neighborhoods led to the mass foreclosures that fueled the U.S. housing crisis.

Although the data in the recent studies breaks down mainly for African American and Hispanic groups, many other minority groups are affected by the foreclosure crisis. Consider these statistics:

• Stockton, which once had the largest population of Filipino Americans in the U.S., reportedly has the highest foreclosure rate in the country;
• Vallejo, which has the highest number of Filipino elected officials in California, also has the highest foreclosure rate in the San Francisco Bay Area;
• Daly City, which boasts of a 35% Filipino population, has the highest foreclosure rate in San Mateo County;    Las Vegas, which has the fastest growing Filipino community in the US, continues to have one of the highest rates of foreclosures in the country.

When you consider that the top three cities and counties in California with the highest percentage of foreclosures are also the top three cities and counties with the highest population of Asian and Filipino Americans, then you can easily assume that a disproportionate number of Asians and Filipinos have lost or will lose their homes to foreclosure because of predatory lenders and illegal foreclosure procedures.

We launched our firm’s aggressive foreclosure litigation approach earlier this year challenging the banks’ and mortgage servicers’ alleged ownership of a homeowner’s mortgage, and the bank’s alleged rights to foreclose on the property.

The tide is finally turning in favor of homeowners facing or in the process of foreclosure. It’s all crashing down on the entire servicing industry which participated in filing fraudulent documents in order to steal real homes belonging to real people, including Asian and Filipino Americans!

Reyes Law Group, APLC Offers Multi-Language, Multi-Cultural Services to Educate Minority Homeowners Hit Hardest by Fraudulent Mortgage and Foreclosure Practices