Mortgage Servicing Fraud, Part II (Beginning with short excerpt of Part 1)
By Guest blogger: Mike Dillon.
a fan of The Home
Equity Theft Reporter
blog. Have been for a long time now. One
morning last week, I found a post on HET mentioning a
story recently aired by CBS Evening News showcasing NY Supreme Court Justice
Arthur Schack and his efforts to impart equal justice in his court room.
I should likewise make it known that I am a also big fan of Judge Schack. Have been for a couple of years now. Anyhow, the CBS piece focused on a Pat Antrobus and her issues with a pending foreclosure on her Brooklyn, NY home. Initially, I didn't think much of it beyond, "Excellent. Seth Doane and CBS are beginning to get the picture on Mortgage Servicing Fraud." and left it at that.
I went on with my day, though, the "Antrobus" name kept banging around in my
head. I've learned, though my own dealings with a now eight plus year battle
against a fraudulent foreclosure initiated by then Fairbanks Capital Corp.
n/k/a Select Portfolio Servicing Inc, that when something keeps flinging itself
at the back of my skull it's usually looking for attention. I gave in two hours
before finishing this piece and dove
into some research.
Part II Begins...
Turns out that there was a really bizarre game of "Six Degrees of Separation" going on in my brain of which I was not consciously aware. Follow along if you like, just turn your cell phones off so they don't distract me. If something rings or otherwise grabs my attention, this whole thing may disappear and I'll have to write it all over again. I'm extremely susceptible to "shiny things" these days. Just how my mind works...
Equity Theft and it's owner(s) have done a great job of chronicling just about
every facet of what John and Jane Q Public need to know about the often sleazy
side(s) of home ownership from mortgage fraud to mortgage SERVICING fraud to
appraisal fraud to loan modification fraud to... well, you can see the theme
developing. A quick search of HET and I found the reason there was cow bell
hammering away in my psyche despite hearing no Blue Oyster Cult songs for
HET had actually mentioned the Antrobus case a few months ago and, as I have come to expect and appreciate of them, provided a link to the actual July 31, 2008 decision rendered by Judge Schack. In his decision, which is potentially a story in and of itself for CBS or anyone else to follow up on, Judge Schack raises some very interesting questions about several of the entities involved in the Antrobus foreclosure.
Apparently, as many as five of the entities involved all share the same physical business address of 1661 Worthington Road, Suite 100, West Palm Beach, Florida 33409. This appears to be a running theme in the mortgage servicing industry. I have previously cataloged more than a dozen corporate entities including an entire Credit Suisse RMBS trust, using the 1270 Northland Road, Suite 200, Mendota Heights, MN address from which both Fidelity National Information Services and it's spin-off, Lender Processing Services, conduct their own business.
A little further reading of the Antrobus case brings me to another question that Judge Schack asks I have been pondering for some time, "The Court wonders why HSBC would purchase a nonperforming loan, seven months in arrears? Did HSBC intend to get the nonperforming loan off DELTA's books and assigned to the noteholders of plaintiff's collateralized debt obligation?" If anyone has solid, SEC compliant reason for this please don't hesitate to let me know.
In the Antrobus case, it was a fairly
simple call to make, in my own humble, non-legal opinion. A foreclosure action was filed
before the foreclosing entity had any legal standing to do so. In NH, we have
an RSA on the books, NH RSA 477:3-a, which
states, if my non-legal interpretation is correct, that various documents,
including Assignments of Mortgage, are not recognized by the state until such
time as they are recorded.
Now, I fully realize and appreciate that there are far more legitimate foreclosures happening these days than fraudulent ones. That said, fraudulent foreclosures do exist. I know firsthand as I was awarded a permanent injunction against Fairbanks Capital Corp n/k/a Select Portfolio Servicing for a fraudulent foreclosure back in 2005.
The problem that I have with more and more of the foreclosure actions that catch even my untrained eye, is that the "rule book" tends to get tossed out, especially in non-judicial foreclosure states. Foreclosure actions are filed before assignments are recorded. They're filed when chains of title are horrendously clouded, sometimes to the point that essential documents are simply missing or, in some cases, either blatantly and fraudulently or "erroneously" manufactured. It is all fine, well and good when a borrower legitimately falls behind in their payments that the note holder is allowed to foreclose. That is how a mortgage is supposed to work. But in each and every state there is a process by which a foreclosure is supposed to take place and there are certain steps that are legally supposed to happen long before a foreclosure is allowed to begin. Hence the existence of state RSAs like NH RSA 477:3-a.
New York is a judicial foreclosure state and New York is lucky to have someone
like Judge Schack on the bench. With judges like Arthur Schack hearing cases,
the playing field becomes a tad more level. In the CBS interview I cited,
correspondent Seth Doane asks Judge Schack flat out, ""Do you see yourself
on a personal mission to protect the little guy?" Judge Schack answered,
"No, I see myself on a personal mission to do justice, which means if the
little guy wins he wins," Schack said. "If he loses he loses but at
least he gets a fair shot." This happens far less often in non-judicial
foreclosure states, if for no other reason than borrowers facing foreclosure,
whether legitimate or fraudulent, are scared and uninformed. If the proper research
was performed, I believe that the number of borrowers who simply give up their
homes and walk away when they have actual legal grounds on which to fight would
The problem is that, in non-judicial foreclosure states, in order to take that first step and get before a judge, the borrower needs either the requisite knowledge to bring their case by themselves (pro se) or be able to afford to hire an attorney to bring the case on their behalf. And, more often than not, by the time a borrower is facing foreclosure, they have neither the time nor the money to either educate themselves or hire an attorney to assist them.
To demonstrate, if my brain is properly processing this information, if a state has the equivalent of NH RSA 477:3-a on it's books, not only could an assignee of a mortgage not foreclose, but they could not even legally collect monthly mortgage payments from the mortgagor until such time as the assignment was actually, physically recorded at the county registry/recorder of deeds. They could not assess any fees against the mortgagor. They could not assess "force-placed" insurance against the mortgagor's property. Nothing. Period. Until such time as that assignment of mortgage was recorded. I'll come back to this theme in a minute.
Lastly, Judge Schack notes that one "Scott Anderson" was involved with the Antrobus loan. Being the incredibly astute jurist that he is, Judge Schack notes in the Antrobus opinion, that he has witnessed Scott Anderson's association with multiple corporate entities crossing his bench just within 2007. Mr. Anderson appears to have claimed to be employed by MERS, Ocwen, Deutsche and HSBC bank at various times, all in 2007. I have yet to have the privilege of reading a copy of the affidavit that Mr. Anderson was required to provide Judge Schack explaining his employment history but I'm sure that it is interesting reading. Scott Anderson's involvement with the Antrobus loan caught my attention because, as per their usual, Home Equity Theft was on top of their game and had previously chronicled stories of not only Scott Anderson's employment but also one Laura Hescott with similarly interesting employment history.
Now, just for giggles, I keep an eye on the public notices to see what is happening locally. Ocwen was fresh in my mind and I hadn't checked to see what they were doing for business in New Hampshire lately. The very first foreclosure notice I came across was one happening right in my own town and involved MERS and an "Ocwen REO Trust". Never having noticed an "Ocwen REO Trust" before, I skipped off on an internet journey to the county registry of deeds to see what had been filed.
After half an hour digging through the county registry, I came to the conclusion that, as with many other foreclosure actions that I am finding, the latest assignment of mortgage associated with the local Ocwen REO Trust foreclosure action was not recorded until August 21, 2009. Such being the case, despite the fact that the assignment purports to have been created on November 01, 2007, if my interpretation of NH RSA 477:3-a is in any way correct (Remember Alice?...This is a story about Alice...) no actions associated with the Ocwen REO Trust assignment could have legally taken place until August 21, 2009. As it was not signed off on by one Kevin M. Jackson, Manager, Ocwen Loan Servicing LLC, attorney-in-fact for Ocwen REO Trust, until August 13, 2009, I would venture to say that this assignment of mortgage was "back-dated" to November 1, 2007. Additionally, no Power of Attorney between Ocwen REO Trust and Ocwen Loan Servicing appears to have been recorded at any time in association with the subject foreclosing property.
what is even more interesting is an assignment recorded on April 24, 2008
from Gateway Funding via our friends at MERS - and yes, Scott Anderson VP of
MERS signed off on this - to Ocwen Non-Performing Loans LLC. The reason that
this assignment is of interest is because it purports to have been created April
03, 2008 and recorded April 24,
2008, a full 16 months before the November 1, 2007 assignment from Ocwen
Non-Performing Loans LLC to Ocwen REO Trust which was recorded August 21, 2009.
It's kind of like playing poker and using mortgages as chips.
As I previously mentioned, the note holders and as we learn at the end of the tale the mortgage servicers, in this case Ocwen, are betting that you as a homeowner will simply be entirely too worried about saving your home to take the time to either educate yourself enough to do a quick title search at your county registry of deeds OR that, if you truly are facing a legitimate foreclosure, you will be too broke to be able to hire an attorney to make sure everything is being done by the numbers and that your chain of title, among other things, is intact and properly recorded. That notwithstanding, the fact still remains that if the "rule book" is followed, if a foreclosing entity can't produce the original note, if a borrower's chain of title is significantly messed up, then legally the entity cannot foreclose. Of course, especially in the mortgage industry, something is only considered "illegal" if you get caught.
moral of the story?
You can swim with the various squaliforms, to borrow from Judge Roy Bean, in the vast financial ocean. You just have to be able to afford to hire someone or know how to fend them off for yourself when they attack. Assuming my various non-legal interpretations to be correct as demonstrated here, it can potentially be done. All that is needed is a little effort, education and know how. Of course, being able to wield a good consumer protection attorney with real estate and litigation experience and knowledge of Mortgage Servicing Fraud never hurts either.
I should at no time be considered any kind of legal authority on anything. Period. This is simply the manner in which my mind works these days. Nothing I can do about it...