Fraudulent Mortgage Assignments- Today's And The Future Problem

FRAUDULENT MORTGAGE ASSIGNMENTS BY ROBO SIGNERS

In the past ten years, hundreds of thousands of residential mortgages were bundled together (often in groups of about 5,000 mortgages and other negotiable instruments with an average worth of 1 billion dollars), and investors were offered the opportunity to buy shares of each bundle/certificates. This process is called securitization. Securitization is a structured financeprocess that distributes risk by aggregating debt instruments in a pool, then issues new securities backed by the pool. The term “Securitization” is derived from the fact that the forms of financial instruments used to obtain funds from the investors are securities. As a portfolio risk backed by amortizing cash flows– and unlike general corporate debt – the credit quality of securitized debt is non-stationary due to changes in volatility that are time-structured dependent. If the transaction is properly structured and the pool performs as expected, the credit risk of all tranchesof structured debt improves; if improperly structured, the affected trancheswill experience dramatic credit deterioration and loss. All assets can be securitized so long as they are associated with cash flow. Hence, the securities which are the outcome of securitization processes are termed asset-backed securities(ABS). From this perspective, securitization could also be defined as a financial process leading to an issue of an ABS. Thisis a highly complex process which was developed by Wall Street. Basically, Wall Street figured a way to turn a 30 year mortgage, with small monthly payments, into instant, large sums of cash, which could and was, which was sold before the borrower even signed the Note, then sold or pledged and/or utilized  multiple times over.  

Each such bundle of residential mortgages was given a name, such as

“ABC Home Loan Trust 2006 OPT-2.” The name indicates information

about the particular trust such as the year it was created (2006) and its contents

(with OPT indicating that the loans in that particular trust were originally made

by Option One Mortgage). This precludes the fact that Option One Mortgage was defunct and barred from doing business in the State of California during this time.

Each such bundle/trust has a Cut -Off Date identified in the trust documents

(specifically, in the Pooling and Servicing Agreement). The Cut Off Date is the

date on which all mortgage loans in the trust must be identified. In short, a final

list of all of the mortgages in the bundle is set out. Each trust also has a Closing

Date which is the date that the individual mortgages are transferred to the Trust

Custodian, who must certify that for each mortgage, the custodian has a

Mortgage note endorsed in blank and proof that the ownership of the note has

been transferred. This proof is most often an Assignment of Mortgage. Most

trusts included the following or equivalent language regarding the Assignments:

“Assignments of the Mortgage Loans to the Trustee (or its nominee) will not be

recorded in any jurisdiction, but will be delivered to the Trustee in recordable

form, so that they can be recorded in the event recordation is necessary in

connection with the servicing of a Mortgage Loan.”

Title insurance companies issued policies guaranteeing that the trust had clear

title to the mortgages. The problems are just beginning for the Title Companies, based on the fraud on the court which was committed by and through robo-signingcourt documents.Clear Title May Not Derive From A Fraud(including a bona fide purchaser for value).
In the case of a fraudulent transaction the law is well settled. Numerous authorities have established the rule that an instrument wholly void, such as an undelivered deed, a forged instrument, or a deed in blank, cannot be made the foundation of a good title, even under the equitable doctrine of bona fide purchase. Consequently, the fact that purchaser acted in good faith in dealing with persons who apparently held legal title, is not in itself sufficient basis for relief.

When widespread defaults occurred, Trustees discovered that the laws regarding

Mortgage Assignments varied significantly from state to state. Many issues

regarding such Assignments were simply unresolved. One of the most significant

issues was whether Mortgage Assignments could be back-dated or have

retroactive effective dates. This issue arose because Trustees and their lawyers

discovered in the foreclosure process that the Assignments could not actually be

located, or that certain states did not allow blank Assignments.

To solve the problem of the missing Assignments, new Assignments were made

and recorded. This was the beginning of the now infamous “Robo-Signing” fiasco. (for a complete list on this issue, see http://takeyourhomeback.com/?p=75 ) Because the question of retroactive Assignments had not been resolved, most of these Assignments did not set forth the actual date that the Assignment took place. The Assignments were signed and notarized as if the transfer took place many years after the actual transfer date.

The Assignments were prepared by specially selected law firms and companies

that specialized in providing “mortgage default services” to banks and mortgage

companies. In jurisdictions with a high rate of mortgage defaults, over 80% of

the filed Mortgage Assignments in the last three years were prepared and filed

by the same five or six law firms and default processing companies.

In many states, two such Assignments were prepared and filed. The first was

prepared in the name of Mortgage Electronic Registration Systems as “nominee”

for the particular bank or mortgage company. MERS “controls” approx. 62 million mortgages with a value of over a TRILLION DOLLARS. When MERS authority to file foreclosures and Assignments was challenged in most jurisdictions, with varying results, a non-MERS Assignment was prepared as well.

In all of these cases, the Assignment was prepared to conceal the actual date

that the property was acquired by the Trust. An examination of the Assignments

filed showing the grantee as the Trust – such as “ABC Home Loan Trust

2006 – OPT 2” – shows that most of these Assignments were prepared and filed

in 2008 and 2009, when, in reality, the mortgages and notes were actually

assigned  prior to the closing date of the Trust. While the exact closing date can only be determined by looking at the trust documents, any Trust that includes the year in 2006 in its title most likely closed in 2006.

If a Mortgage Assignment is dated, notarized and filed in a year after

the year set forth in the name of the grantee trust on the Assignment,

it is actually an Assignment specially, and in many cases, fraudulently,

made to facilitate foreclosures.

These Specially-Made Assignments have created havoc in the courts. In many

cases, the Specially-made Assignments are dated AFTER the foreclosure action

has been initiated, making it appear that the Trust somehow magically knew

prior to the assignment that it would acquire the defaulting property several

months after the foreclosure action was initiated.

Repeatedly, courts have asked Trustees to explain why they were acquiring non-performing loans and whether such acquisition was a violation of the trustee’s

fiduciary duty to the Trust. No Trustee has ever come forth and explained that

the Trust actually acquired the loan years before the Assignment. As a result,

there are many decisions with observations similar to this observation made by

Judge Arthur M. Schack of Kings County, New York, (see link in http://www.foreclosureself-defense.com/the-library/linksresources/ )in HSBC Bank v. Valentin, 21 Misc. 3d 1124 [A]:

Further, according to plaintiff’s application, the default of Defendants Valentin and Ruiz began with the nonpayment of principal and interest due on January 1, 2007. Yet, four months later, plaintiff HSBC was willing to take an assignment of the instant nonperforming loan. The Court wonders why HSBC would purchase a nonperforming loan, four months in arrears?

.

Further, the Court requires an explanation from an officer of plaintiff DEUTSCHE BANK as to why, in the middle of our national sub-prime mortgage financial crisis, DEUTSCHE BANK would purchase a non-performing loan from INDYMAC… Federal Judge Boyko of Ohio questioned Deutsche Bank extensively with the final outcome being the dismissal of 14 foreclosure cases

In Massachusetts in October, 2009, Land Court Judge Keith Long reaffirmed a

March, 2009, ruling that a lender cannot begin foreclosure proceedings before

the lender has filed and recorded the Assignment, stating:

The blank mortgage assignments they possessed transferred nothing…in Massachusetts, a mortgage is a conveyance of land.

Nothing is conveyed unless and until it is validly conveyed. The

various agreements between the securitization entities stating that

each had a right to an assignment of the mortgage are not themselves an assignment and they are certainly not in recordable form. U.S. Bank National Association v. Ibanez, Massachusetts Land Court Misc. consolidated with two other cases.

Many authors expect the Massachusetts Supreme Court to reverse the Ibanez

decision, but the uncertainty itself, as in the case of the MERS challenges,

caused lenders to flood recording offices with new Assignments.

In cases where the Trust failed to get a valid Assignment, the problem is

complicated by the bankruptcy of the major loan originators, including American

Home Mortgage, Option One Mortgage, and Countrywide Home Loans.

When these big mortgage companies filed for bankruptcy, they did not disclose

the mortgages already sold to the trusts as assets, because the transfers

occurred months and years prior to the bankruptcy filing. Years later, when the

Assignments were required for foreclosures, a bankruptcy court’s permission was

needed to Assign billions of dollars in mortgages. Most likely in fear that a

Bankruptcy Judge would not rubber stamp such a request, no such permission

has ever been sought. In Ohio, Judge Boyko did the complete opposite and dismissed 14 foreclosures WITH PREJUDICE.

Part of Judge Boyko’s Decision:

“There is no doubt every decision made by a financial institution in the foreclosure process is driven by money,” Boyko wrote in a footnote. “And the legal work which flows from winning the financial institution’s favor is highly lucrative.”

“The lenders rush to foreclose on delinquent buyers. But when taking back the properties, they delay recording the deeds, leaving cities to board up empty houses and mow lawns”

The pools, some containing bad loans like the 14 from Deutsche Bank, are bought and sold electronically by Wall Street investment firms, leaving behind little or no paperwork showing who holds the notes.

Boyko ruled that without written proof, Deutsche Bank has no right to foreclose. As part of the ruling, he complained that lenders displayed a condescending attitude that this is the way they always do business and that the court just doesn’t understand the world of high finance.  (No it’s called FRAUD, writer’s opinion, not part of decision)

“Finally put to the test, their weak legal arguments compel the court to stop them at the gate,” he wrote.

Boyko’s colleague, Judge Kathleen O’Malley of the U.S. District Court of Northern Ohio, threw out 32 foreclosure cases the same week for the same reason.

The “robo-signing of affidavits and Assignments of Mortgage and all other mortgage foreclosure documents served to cover up the fact that loan servicers cannot demonstrate the facts required to conduct a lawful foreclosure. If it turns out that robo-signers did indeed sign off on loans without review, they committed fraud by claiming knowledge of a financial matter of which they had no personal knowledge. It could also mean that some people are wrongly being evicted from their houses.

From underwriting fraudulent mortgages; to shuffling it through the mortgage securitizationchain without following proper legal procedures like the simple act of passing along paperwork; to concealing or doctoring basic facts when securitizing the mortgages and selling them to investors, large lenders and their partners on Wall Streetcould face hundreds of billions of dollars in losses by being forced to buy back faulty mortgages, some of which have already defaulted, from misled investors.

MAIN WEBSITE- WWW.FORECLOSURESELF-DEFENSE.COM

SECONDARY WEBSITE- WWW.TAKEYOURHOMEBACK.COM

FACEBOOK- http://www.facebook.com/?ref=home#!/4closuredefense

TWITTER- https://twitter.com/4CLOSUREDEFENSE

YOUTUBE VIDEOS- http://www.youtube.com/4closuredefense

GMAIL- [email protected]

BEFORE ITS NEWS- FORECLOSURE DEFENDER – /bio/

BLOGS- http://foreclosureselfdefense.wordpress.com/

ADMIN DIRECT E-MAIL- [email protected]

DISCLAIMER-

SEE FOR FULL TERMS AND CONDITIONS

http://www.foreclosureself-defense.com/disclaimer/

This Author of any stories contained in this website is in no way compensated by the companies they link to or promote.  In accordance with Title 17 U.S.C. Section 107, any copyrighted work in this message is distributed under fair use without profit or payment for non-profit research, informational and educational purposes only.

.