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Don't Just Tell Us. Show Us That You Can Foreclose

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    Don't Just Tell Us. Show Us That You Can Foreclose

    November 27, 2010


    AFTER examining their foreclosure practices for flaws in mortgage documentation and other procedures, many of the nation’s largest banks have resumed — or will soon resume — trying to evict defaulted borrowers.

    Howard Rothbloom, a lawyer for borrowers, welcomes increased government scrutiny of banks' claims of ownership.

    JPMorgan Chase, for example, told investors this month that it had extensively reviewed its foreclosure controls, trained personnel in the unit and started new procedures to ensure that all legal requirements would be met when it moves to seize a property in default.

    “If we find any foreclosures in error, we will fix them,” JPMorgan Chase said.

    But while banks may have booted a few robo-signers and tightened up some lax procedures, one question at the heart of the foreclosure mess refuses to go away: whether institutions trying to take back a property can prove they even have the right to foreclose at all.

    Some in the industry believe that questions about this issue — known as “legal standing” — are trivial. They say it’s just a gambit by borrowers’ lawyers to throw sand in the foreclosure machine. Nine times out of 10, bankers say, the right institutions are foreclosing on the right borrowers.

    Maybe so. But the United States Trustee Program, the unit of the Justice Department charged with overseeing the integrity of the nation’s bankruptcy courts, is taking a different view. The unit is stepping up its scrutiny of the veracity of banks’ claims against borrowers, and its approach is evident in two cases in federal bankruptcy court in Atlanta.

    In both cases, Donald F. Walton, the United States trustee for the region, has intervened, filing motions contending that the banks trying to foreclose have not shown they have the right to do so.

    The matters involve borrowers operating under Chapter 13 bankruptcy plans overseen by the court in the Northern District of Georgia. In both cases, the banks have filed motions with the bankruptcy court to remove the automatic foreclosure stay that results when a court confirms a debtor’s Chapter 13 repayment plan. If the stay is removed, the banks can foreclose.

    In one case, the borrower had her Chapter 13 plan confirmed by the court early last month. About two weeks later, Wells Fargo asked the court for relief from the stay so that it could foreclose.

    Responding on Nov. 16, Mr. Walton asked the court to deny the bank’s request because it had failed to produce any facts showing that it was entitled to foreclose — either as the holder of the underlying note or as the agent for the holder.

    The other case involves a couple who had their Chapter 13 plan confirmed by the court in March 2009. A month ago, Chase Home Finance, a unit of JPMorgan Chase, asked the court for relief from the automatic stay so that it could start foreclosure proceedings.

    Again, Mr. Walton objected, asking the court to deny the request on the same grounds as argued in the Wells Fargo matter — in this case, that Chase hadn’t proved that it controlled the note on the property.

    Jane Limprecht, a spokeswoman for the trustee program, confirmed that it was ratcheting up its scrutiny on banks’ foreclosure practices.

    “The United States Trustee Program is engaged in an enhanced review of mortgage servicer filings in bankruptcy cases to help ensure the accuracy of the claim to repayment,” she said. She declined to comment on specific filings.

    A Chase spokesman said the bank is the holder of the note in the Georgia case, giving it standing to file the motion.

    A spokeswoman for Wells Fargo said that in its case, it is the trustee of a mortgage security that contains the loan, not the servicer. In its capacity as the trustee for mortgage loans serviced by others, it says it expects those servicers to abide by all required laws, processes and procedures.

    Howard D. Rothbloom, a lawyer in Atlanta who represents borrowers in bankruptcy, welcomed the actions by Mr. Walton and said he believes they show a sea change in the United States trustee’s thinking on the foreclosure mess.

    “Until now, what we had was homeowners complaining about a lack of due process,” Mr. Rothbloom said. “Now you have the federal government complaining about the abuse of the judicial process. That’s really what was missing before.”

    The judges overseeing these matters have not yet ruled on the banks’ or the trustee’s requests. And Wells Fargo and Chase may indeed be able to persuade the trustee that their filings were proper.

    But the trustee’s intervention in these matters indicates that it wants banks to show the courts that they have the right to foreclose, rather than simply telling them they do. That had been the custom, after all. Now, Mr. Walton’s motions may serve as a warning to banks that they need to be better prepared if they want to foreclose on a borrower.

    “For years, the trustee would always take the creditors’ side,” Mr. Rothbloom said. “My strong opinion is the U.S. trustee’s perspective is that they exist to stop borrowers from cheating banks. Perhaps they are coming to the realization that banks can also cheat borrowers.”

    FEDERAL trustees in other parts of the country have also intervened in borrower cases, but many of these actions have been related to questionable foreclosure fees or to dubious legal or documentation practices. The shift to a broader focus on the issue of standing suggests that the courts may no longer accept at face value the banks’ arguments that they have the right to foreclose or represent the institution that does.

    David Shaev, a lawyer in New York who works with troubled borrowers, says the United States trustee there has also intervened in one of his cases, taking up the issue of a bank’s right to foreclose.

    In his experience, Mr. Shaev said: “The attorneys who represent the banks invariably state that they will get the collateral file for us and prove that the banks had possession of the documents at the appropriate time. But then when we review the file it doesn’t show that at all.”

    As many large banks renew their foreclosure efforts, Mr. Rothbloom says he hopes that the United States trustee will bring about a comprehensive change in bank practices.

    “I’ve gotten resolutions for clients in individual cases, but I’m just a flea on the tail of an elephant,” he said. “Resolutions of individual cases don’t bring about systemic change.”

    And systemic change is precisely what’s needed.

    http://www.nytimes.com/2010/11/28/bu...1&ref=business
    Last edited by Flamingo; 11-29-2010, 03:17 AM. Reason: To conform to posting rules
    You can't take a picture of this. It's already gone. ~~Nate, Six Feet Under

    #2
    What is really cool about this new trend in requiring proof for foreclosure, is that it is being initiated by the US Trustee's office. This really makes me believe that the bk laws are being enforced and interpreted as they were intended, to protect consumers, while trying to see that the interests of creditors are also taken into consideration.
    You can't take a picture of this. It's already gone. ~~Nate, Six Feet Under

    Comment


      #3
      Originally posted by backtoschool View Post
      What is really cool about this new trend in requiring proof for foreclosure, is that it is beinginitiated by the US Trustee's office. This really makes me believe that the bk laws are being enforced and interpreted as they were intended, to protect consumers, while trying to see that the interests of creditors are also taken into consideration.
      First and foremost don't believe all you read. What the media is not telling you: The lender's attorney is not going to file a Motion, pre or post Confirmation, if the post petition mortgage payments are current (and will immediately withdraw the Motion if payments are, in fact, current). Remember the attny is subject to Rule 11 sanctions. I will bet you dollars to donuts that in each case reported there was a post petition default thus justifying the filing of the Motion for Relief.

      Having said that. . .once the paperwork showing "standing" is in place the stay is lifted anyway. So this just delays the process allowing borrowers to remain in their homes rent free for a little while longer. This cannot be good for the Country either.

      Bottom line, a borrow can question the standing issue. A borrower can question the “show me the note” issue. But if they want to do so they must continue to make their mortgage payments, even if it is paid into the Court. The money is owed to someone. One does not get to live rent free, nor does one get a free house.

      Des.

      Comment


        #4
        Originally posted by despritfreya View Post
        First and foremost don't believe all you read. What the media is not telling you: The lender's attorney is not going to file a Motion, pre or post Confirmation, if the post petition mortgage payments are current (and will immediately withdraw the Motion if payments are, in fact, current). Remember the attny is subject to Rule 11 sanctions. I will bet you dollars to donuts that in each case reported there was a post petition default thus justifying the filing of the Motion for Relief.

        Having said that. . .once the paperwork showing "standing" is in place the stay is lifted anyway. So this just delays the process allowing borrowers to remain in their homes rent free for a little while longer. This cannot be good for the Country either.

        Bottom line, a borrow can question the standing issue. A borrower can question the “show me the note” issue. But if they want to do so they must continue to make their mortgage payments, even if it is paid into the Court. The money is owed to someone. One does not get to live rent free, nor does one get a free house.

        Des.
        I totally agree Des. Mortgage money is owed to someone, and eventually the paperwork will get sorted out. At some point, prolonging the fight in order to live rent free only prevents one from moving on. And questioning paperwork will never equate to getting the house for free.
        You can't take a picture of this. It's already gone. ~~Nate, Six Feet Under

        Comment


          #5
          I agree that there's no free lunch here. If a secured asset isn't correctly secured it sounds as if the house will wind up with the chapter 7 trustee to liquidate it for all the creditors unless it's in a state with a 100% homestead exemption.

          This is just my opinion and a lawyer can best determine this.
          The essence of freedom is the proper limitation of Government

          Comment


            #6
            Originally posted by banca rotta View Post
            I agree that there's no free lunch here. If a secured asset isn't correctly secured it sounds as if the house will wind up with the chapter 7 trustee to liquidate it for all the creditors unless it's in a state with a 100% homestead exemption.

            This is just my opinion and a lawyer can best determine this.
            well if the property was or is surrendered the property which is the collateral serves as the payment to the bank....there are simply no "free" meals here. i still find it difficult to understand how people stay for as long as they are "thrown" out in the streets. once we were served we were out within 30 days since we chose not to answer the summons nor fight the foreclosure.

            a trustee can only liquidate if there is, in fact, equity to be had....

            banca...des...in my opinion is most possibly the BEST atty around these parts...i'd take what he says as "true" to point.
            8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

            Comment


              #7
              There are several issues related to standing being argued in courts and congressional testimony right now.

              First issue- what most people don't understand is that the note and the mortgage were split at the securitization point ( the slicing and dicing and selling into trusts immediately after origination), making the mortgage an unsecured debt- no longer linked to the house as collateral. The paperwork was sloppy, hundreds of years of real estate property laws were ignored, hence the "standing" issue we have now.

              So yes, money is owed to someone, but it is unsecured now- the trust cannot foreclose on the house to get payment. They (or the true creditor who actually lent the money-which is difficult to determine) can pursue payment like any other unsecured creditor. The problem is getting the foreclosure judges to understand securitization- most don't. Sounds like the BK judges and Trustees have a better grip on the situation as they deal with creditor claims on a regular basis. In BK court, you must prove your claim- not so in most foreclosure courts, unfortunately. You can say you are the lender and the judges assume you are telling the truth- that's why homeowners want to see the note.

              Which brings us to the second standing issue-I have yet to see a case where the bank has actually produced the original wet ink note. The note is kind of like a check- if the bank signed it over to a trust or someone else, that someone else could come after the homeowner years later with the actual note. Most banks file a robo-signed "lost affidavit" (as in "lost " the note) How can millions of notes be lost? Why can't a bank produce the original note? How do you know if someone else has the original note?

              That is what the issue of "standing" is about. If your mortgage has any MERS language in it, then this effects you.

              As a side note, after 30yrs. of paying a bank for your mortgage, you may not be able to get clear title because of the securitization issues. Titles are clouded with no clear chain of title due to the slicing and dicing.

              There's a lot of info on the web. Google mortgage securities fraud and foreclosure fraud for starters.

              Way too complex to explain here. I've been researching the foreclosure issues for months. I'm not a lawyer, but have been listening to the congressional testimony of some very highly respected financial pros and these are the issues they have brought up.
              All posts are opinion only- I am not an attorney.

              Comment


                #8
                You hit the nail on the head sofarsogood2! Here is a list of specific websites that have a wealth of information on this. Everyone please educate yourselves. This is the biggest fraud in American History committed by the banks:
                http://legalmodifications.com/wp-content/uploads/2023/12/8d8c133b-6a80-456e-b60a-00119dd745d7.mp4

                MSFraud.org Mortgage Servicing Fraud Documenting Mortgage Servicing Fraud Learn the truth behind the biggest unpunished heist in world history.

                – Fighting Foreclosure Fraud BY SHARING THE KNOWLEDGE

                Comment

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