Foreclosure: Debtor Who Fails to Pay Has an Uphill Battle Finding a Remedy Based on Procedural Defects

confidence gameIt appears the homeowners were victims of a nationwide predatory mortgage lending scheme, a complex confidence game – as most homeowners were, that led the Department of Justice (“DOJ”) to file suit against Bank of America, et. al., its former and current subsidiaries and partners, on October 24, 2012. USA v. BofA, et. al., USDC Southern District of NY, 12 Civ. 1422 (JSR) (Oct. 2012). Due to the nature of the DOJ case, documents were originally sealed, some were released, though many remain sealed today. The overall DOJ case did not completely resolve until May 23, 2016. The case publicly unleashed the secret that prime and subprime loans by large mortgage companies such as Countrywide and New Century Mortgage Corporation (“NC”) sold and pledged their procured loans to Fannie Mae and Freddie Mac, government-sponsored enterprises (“GSE”):

“Fannie Mae and Freddie Mac purchase single-family residential mortgages from lenders” (DOJ Intervenor Complaint, ¶18). “GSEs buy single-family mortgages from mortgage companies and other financial institutions [. . .] then either hold the loans in their investment portfolios or bundle them into mortgage-backed securities (“MBS”) that they sell to investors.” (DOJ Intervenor Complaint, ¶27)” (emphasis added).

See also the book RECKLESS ENDANGERMENT by Gretchen Morgenson and Joshua Rosner.

fraudulent concealmentIn most cases, the issues are really “fraud on the court” and “fraudulent concealment.” The wrongful fabricated assignments were supposed to have been removed from the land records offices according to the National Mortgage Settlement and several other federal agency consent orders. National Mortgage Complaint (NMS), Case 1:12-cv-00361-RMC filed on March 14, 2012, in the USDC for the District of Columbia. The Consent Judgment had a Settlement Term Sheet (“NMS Consent Order”) filed on April 4, 2012, and specifically identified the terms under which the banks and servicers must comply.

The real interesting issues that are just now surfacing include the intentional concealment of Fannie or Freddie (GSE) as the “Real Party in Interest.” They stay hidden until after the bank sale and somehow magically appear as a buyer. GSEs buy originating loans – not defaulted bad debt. So, something appears really fishy when a GSE, or GSE/Treasury troll gets involved AFTER a foreclosure sale.

It appears from the inception, FANNIE/FREDDIE’S ROLES WERE INTENTIONALLY CONCEALED. Pursuant to Fannie’s 2008 Servicing Guidelines:

Fannie Mae is at all times the owner of the mortgage note, whether the note is in Fannie Mae’s portfolio or whether owned as trustee, for example, as trustee for an MBS trust. In addition, Fannie Mae at all times has possession of and is the holder of the mortgage note, except in the limited circumstances expressly described below” (emphasis added).

Failure to disclose all parties of interest upon filing the Complaint is an omission so material in nature that not only does it void the judgments, in this case it is intentional fraud on the Court. Hazel-Atlas Glass Co. v. Hartford Empire Co., [322 U.S. 238 (1944)] (This motion asks this Court to utilize its “historic power of equity to set aside [a] fraudulently begotten judgment[]” in order to uphold the “preservation of the integrity of the judicial process”).

Fannie & Freddie (GSEs) had servicing guidelines during this period of time that required servicers to conceal them as the real party of interest as the GSE’s known debt was out of control.

fannie denied concealmentOver the years the GSEs changed their policies because the courts have rejected the notion that an action could be brought in the name of a servicer. See In re Viencek, 273 B.R. 354, 357, 59 (Bankr. N.D.N.Y. 2002) (requiring that servicing agent amend a proof of claim to identify the owner of the claim), In re Kang Jin Hwang, 396 B.R. 757 at 767, (Bankr. C.D. Cal. 2008) (finding that servicer was not the real party in interest), Bank of New York v Silverberg, 86 AD3d 274, 280 [2d Dept 2011], (“The foreclosure of a mortgage cannot be pursued by one who has no demonstrated right to the debt”).

When researching home loans on the GSEs’ database, loans in GSE securitization pools will not show up on their website “loan search.” Again, this is another example of hiding debt. MERS® System, for example, was created to specifically track investors and ownership, allowing GSEs and banks to remove debt-related assets from their accounting, while still tracking the asset.

Who does this hurt? ANSWER: GSE investors, taxpayers, homeowners, and probably the judges that have mutual funds that contain GSE (MBS) shares, for example, Vanguard, PIMCO.

bailout barofskyBTW – Homeowners have wanted to pay and more often than not were induced by the government HAMP program that advertised calling the servicer for a modification. That program was a scam – see the book BAILOUT by Neil Barofsky, Chapter 8, Foaming the runway. Once homeowners were sucked into the default process the majority had a difficult time getting back into a payment program. The homeowners were not allowed to make payments – it appears the banks, GSEs and Treasury wanted foreclosures rather than long term payment programs because liquidity is essential.

This is research – this is not legal advice. Contact an attorney to see if you have an alternative action. Closely research and dissect your documents. Ask if, for example, a Rule 60(b) and/or FRCP 60(d)(3) is an option.


Turner v. Wells Fargo Bank N.A. (In re Turner), 859 F.3d 1145 (9th Cir. 2017) –

The debtors brought multiple claims following foreclosure of their residence. After the bankruptcy court dismissed the claims in a decision that was affirmed by the Bankruptcy Appellate Panel, the debtors appealed to the 9th Circuit.

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CA Judge: HELOC Notes Are Not Negotiable Instruments — Possession Is Not Enough — Pretender Lenders Must Prove the Debt and Ownership

Livinglies's Weblog

Here we have a ruling that firmly states the obvious, with widespread ramifications. HELOC (Home Equity Line of Credit) promissory notes represent evidence of a debt depending upon how much the homeowner borrows, repays or otherwise receives advances. It is not a promise to pay a single unqualified amount of money.

While the mortgage or deed of trust on the primary mortgage carries with it obligations to pay variable sums, the promissory note does not, which is why judges treat the note as a negotiable instrument if it is valid on its face.

What you are going to see is that the HELOC is left out of foreclosure because the pretender lender cannot prove the debt or its ownership. If the HELOC and the primary mortgage involve the same pretender lender, then discovery on the HELOC is relevant both because the HELOC might convert the first mortgage from a purchase…

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SIGTARP’s concerns over servicer misconduct contributing to homeowner redefaults in HAMP have been borne out. Treasury’s findings in its on-site visits to the largest seven mortgage servicers in HAMP over the most recent four quarters show disturbing and what should be unacceptable results, as 6 of 7 of the mortgage servicers had wrongfully terminated homeowners who were in “good standing” out of HAMP.

These staggering findings clearly show that servicer misconduct is contributing to some homeowners falling out of HAMP. Homeowners were wrongly terminated from HAMP by their servicer despite making timely mortgage payments, putting them at risk of losing their home. These homeowners were forced out of HAMP through no fault of their own. Mortgage servicers did not give these homeowners a fair shot. As these instances were found through sampling, Treasury does not know how many other homeowners were also wrongfully forced out of HAMP. Continue reading

Plan Valuation of Secured Claims: What Happens When Foreclosure Value Is Higher Than Without Foreclosure?

If you can find a jury that would “feel sorry” for the banks, good luck. It appears this was originally a HUD deal and the agency isn’t structured as a “for profit” entity. It is structured to enable affordable construction of low-income housing. When the 2008 crash hit (and continues) as a result of the corrupt unregulated derivative scheme, the construction industry was, and still is, devastated. Construction, construction materials, labor & housing were the 2 driving wheels on the truck of the economy – and have been flattened due to the illegal antics of the past 20 years, and particularly the last 10 years. If a debtor, or any homeowner is capable of making payments pursuant to a reasonable plan – for the sake of the economy, the plan should move forward.

After TRILLION$ paid out by the banks in bailouts, fines, settlements and compensation for corruption and illegal activities, banks don’t deserve the benefit of doubt – or gifts from the courts. “Our courts should not be collection agencies for crooks.” — John Waihee, Governor of Hawaii, 1986-1994.


First Southern Nat’l. Bank v. Sunnyslope Housing Ltd. P’ship. (In re Sunnyslope Housing Ltd. P’ship.), 859 F.3d 637 (9th Cir. 2017)

A creditor appealed a bankruptcy court order valuing a secured claim at $3.9 million for purposes of a Chapter 11 plan. The district court affirmed, but the Court of Appeals panel reversed and remanded. Then the 9th Circuit granted a rehearing en banc. The primary issue was how to value property subject to low-income housing restrictions. The court also addressed the proper “cramdown” rate and feasibility of a 40-year balloon payment plan.

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JPMorgan Says Family Awarded $8 Billion Verdict Deserves Nothing

Who ever the Hoppers had for their legal team was terrific! Too bad juries can’t award prison sentences.

Justice League

JPMorgan Chase & Co. urged a judge to throw out a stunning $8 billion jury verdict over a mismanaged inheritance, saying the family deserves nothing.

“The law and evidence do not support any claim against JPMorgan, much less the unprecedented multi-billion-dollar punitive damage award, which the heirs have already admitted is unconstitutionally excessive,” the bank said in a filing in Dallas probate court.

Two children of Max Hopper, a former American Airlines executive who died in 2010, have already asked that the damages for them and their father’s estate be reduced to about $74 million, while his widow has yet to weigh in with any adjustment to the ninth-largest verdict in U.S. history.

Read on.

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“The Court has absolutely no confidence in any of Green Tree’s financial documents.”

If you are wondering why Fannie Mae and Freddie Mac (GSEs) are slithering through the swamp looking for a path to release them from the bondage of Conservatorship, let this Plaintiff GREEN TREE SERVICING LLC, amended to DITECH FINANCIAL, LLC case begin to open your eyes to the corruption racket behind scenes since 2008.

Illegal actions aren’t limited to just Green Tree. These are standard business practices among the banks, known – and it appears generally accepted by, the GSEs. Continue reading

American Nightmare – The Plight of GSE Investors and American Homeowners

By Sydney Sullivan

This will be one of several posts on the future of Fannie Mae and Freddie Mac. Your thoughts and your owns stories are welcome in the comments section.

Nearly a decade ago, in September 2008, US Treasury Chief Hank Paulson unveiled his historic government takeover of twin mortgage buyers, putting the government in charge of the mortgage giants and the $5 trillion in home loans they back. The plan eliminated the top executives which were out and replaced with Wall Street titans.

The House Oversight and Government Reform Committee held a hearing on the financial collapse of Fannie Mae and Freddie Mac, their takeover by the federal government and their role in the financial crisis. The video below is a 4 hour review of a planned response to the crisis in the housing and mortgage markets at the time of the economic meltdown and crash of 2008.

The titans that replaced Freddie CEO Richard Syron and Fannie CEO Daniel Mudd  were two Wall Street finance veterans and were charged with restoring the mortgage magnates to health. Herb Allison formerly served as president of Merrill Lynch was Continue reading

Special Seventh Year Anniversary of The Foreclosure Hour, Sunday October 22, 2017 – 3 PM HST

Wells Fargo Bank v. Erum — When Is a “Notice of Default” a Notice of Default and When Is It Not?

Nationstar Mortgage v. Akepa Properties — When Is a Foreclosing Plaintiff’s “Lack of Standing” a Jurisdictional Defect and When Is It Not?
For too long most of our courts have cavalierly discriminated against homeowners by consciously or otherwise going out of their way to protect foreclosing plaintiffs, applying legal doctrines against mortgagors differently than in other areas of the law. Continue reading

Where’s the Beef? Hell if the Banks know.

Livinglies's Weblog


To listen to the West Coast Foreclosure Show:

Note: For those readers too young to remember, in 1984, the Wendy’s corporation launched an epic ad campaign called, “Where’s the Beef?” It was aimed at McDonald’s and insinuated that the hamburgers at McDonald’s skimped on the beef.  This campaign was launched at the same time McDonald’s was accused of using earthworm as meat filler.  The campaign was a huge success and began Wendy’s expansion.

By J. Guggenheim

Investigator Bill Paatalo joined attorney Charles Marshall on the West Coast Foreclosure show to discuss why the major banks are unable to provide a bank witness in litigation who has knowledge of the loan.  Bank witnesses are unable to provide information regarding the note location, who the creditor is, what the bank paid for the loan, or if the loan was transferred in compliance with the Trust’s Pooling and Servicing agreement.  When deposed, the…

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