What is Mortgage Servicing Fraud? Part II

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Last week, Mike Dillon offered Part I of  a II part blog entitled Mortgage Servicing Fraud; What is it? And why you need to know. (See Part 1 here)

Mortgage Servicing Fraud, Part II (Beginning with short excerpt of Part 1)

By Guest blogger: Mike Dillon. 

I'm 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.

As 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...

Home 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 months.

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.

 The Honorable Judge raises yet another pertinent question, "In fact, the instant foreclosure summons, complaint and notice of pendency were all filed with the Kings County Clerk on November 28, 2007, two days prior to the assignment of the instant nonperforming loan."

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.

Fortunately, 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 be staggering.

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.

Now, 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.

The 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...

Mike Dillon

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It's time to do something about the abuse that these servicing companies heap on hard working American families. Where is the government oversight?

great question! The financial industry doesn't want change but we sure need it. Yet, I can't get a simple tool known as a monthly statement for all borrowers to track their payments. Letting borrowers verify how and if their payments are applied, and whether or not their escrows are handled appropriately would seem simple enough -but not so. Responsible banks should want informed consumers in order to make sure errors and fraud are caught prior to growing into major problems causing courtroom battles and foreclosures.

See the petition for monthly statements here:


Ritchie, my initial response was a little raw and off the cuff, so the slightly polished version goes like this:

The federal government apparently felt that collectively giving the servicing industry $22,282,160,000 - that's $22.28 Billion for anyone who has developed a nagging respiratory sensitivity brought on by counting commas in numbers associated with government spending these days - as of September 29th, 2009 was sufficient "oversight". Anyone can track the TARP spending, by the way, here: http://www.financialstability.gov/latest/reportsanddocs.html The HAMP Program is usually on the last two pages of the report.

Now, the AP's Dan Wagner and Alan Zibel did a great piece a few months ago on servicers receiving "bailout" funds while facing litigation - http://abcnews.go.com/Business/wireStory?id=8260078 - so I won't go into that too much. But other than the two incredibly weak civil actions that the Federal Trade Commission has brought against Fairbanks/SPS (USA/Curry v. Fairbanks) and EMC Mortgage/Bear Stearns (FTC v. EMC/Bear) not a single other enforcement action comes to my mind. To this day I get so disgusted with the USA/Curry settlement that I start yelling at the cat, especially with the additional information that I've slowly amassed through a FOIA request of the FTC. And, according to what I was told by Lucy Morris' office during a phone call a few days after the actual settlement of FTC v. EMC, that action was settled for $28 Million before anyone even knew how large the class size was going to be. Ms. Morris' office did estimate that it would potentially be "tens of thousands" though. Eighty six tens of thousand apparently...

It's not that the laws and legislation aren't out there. It's just that it seems like it would easier to push warm molasses up side of the Luxor pyramid in Vegas in August with a potato masher while slathered in chicken fat and wearing SCUBA flippers than it is to get anyone of any law enforcement capacity to actually enforce anything against a mortgage servicer. No, that's really not that much of an exaggeration, trust me...

Our good Congresspeople, Senators and Attorneys General have been hearing about Mortgage Servicing Fraud since at LEAST 2002. I've got some of the constituent letters to several state AGs and Senators Schumer, Clinton, McCain, Whitehouse and several others in both the Senate AND House just covering Fairbanks Capital - oh, and I think a few that came out of about 900 inadvertent pages of Countrywide complaints - to back that statement up. I sent a GAO review request of the Federal Trade Commission to about 45 Senators and Congresspeople myself just within the last three or four months so it's not like no one knows about the issue anymore. If you see your own Congressperson or Senator's name on the list of recipients by all means feel free to contact them and ask them what they're doing about the problem.

I am a victim of Mortgage Servicing Fraud. My story began with a broker acquired mortgage, sold to Countrywide. Countrywide either missapplied or "lost" $11400 in payments. They filed in court against us although we had proof of the payments. A we continued to dispute the amount they were in financial trouble so they sold our loan. 2 wks later they were bought by B of A. Our loan went to a new company named Quantum. They accepted $19200 in payments, but applied most of it to fees associated with the lost payments that had been sent to Countrywide.

They stopped accepting payments when we started really loudly disputing the accounting and asking again and again for an accounting of our loan and the lost payments. They sold the loan to a new company named Kondaur Capital. They refused all payments and restarted the court case originally started by Countrywide.

We contacted our State Attorney General and paid an attorney ($5K). Kondur eventually came to an agreement with us because of pressure applied by the State and our attorney. They agreed to accept our proof, wrote off the many fees (although were were still out the money that was taken by Quantum and applied to fees, not payments), stop the court proceedings and accepted our back payments ($20K). They sent us a document detailing the perameters of the agreement and required us to sign and notarize the document and wire the $20K to them within 24 hours, which we did. They accepted the next month's on time payment and then sold the loan to another company.

The new company now sent us a statement showing all the late fees and lost payments as being due and the mortgage in default. When we contacted them they said that Kondaur sent them notification that they were in discussions with us, but that there was never any agreement. We are faced with paying more legal fees and going around and around again on this already settled issue. We are frustrated, tired and angry.

The State Attorney General's Office now just tells us we need to hire an attorney they can not spend any more time on one individual's problem. We have heard this is a servicer/mortgage company scam where they make agreement, take money from the homeowner and then sell the loan off without the agreement. This is fraud. I am disgusted and do not know where or how this will end. How can this happen in a country with laws?

Sue -In answer to your question -it appears we have the best laws money can buy. I put your video up on my blog! Sorry to hear of yet another victim...

See: Homeowner to Mortgage Servicing Company: "Step up and do the right thing!"

I am also dealing with Kondaur Capital Corp. My mortgage was being serviced by Wilsire Funding of Beaverton, Or. We entered into an agrrement with them to enter into Federal Mortgage Mitigation (FMM). We had to enter into two three month foreberance/stipulation agreements and had made 7 actual on time payments as we agrreed to. We have not been enrolled in the federal program and they said that we were in default (even though we sent proof that this was not the fact) and that the note had been sold to Kondaur. Kondaur does not particapate in the FMM program. We are in the process of trying to get some help on this problem, but it is slow going. The NYS banking com. has asked for an explanation and solution to this problem, there response was again not representative of the facts (I'm trying to be nice, they are either incompetant record keepers or lying?) and didn't address the question of what and why this happened. Please be careful of anything your servicer tries to get you to agee to. Also make copies of all payments and correspondance and notes with names, dates, times and topic of all calls made to and from your servicer.
Another thing that we found was that if a US Postal money order is lost or misdirected and you have another money order issued the original money order is still negotiable if eventually found. In other words according to the US Postal service a Postal Money order is as good as cash and cannot be cancelled. A money order we sent to Wilsire in April was lost or misdirected by the post office or Wilsire, it showed up at Wilsire in Sept. they forwarded it to Kondaur, they cashed it and refuse to return it. The post office sent us a bill for that amount. I just thought people should know this if they rely on postal money ordes to make payments. Thanks for your forum...

Please help!! I am facing a foreclosure with OCWEN and my paperwork has Scott Anderson as VP for CIT group, Kevin Jackson affidavit. I have been up all night reading horror stories about Ocwen. But there are things that I just don't understand in your article and some links that came with it. Mers, Nationwide Clearing inc CIT Group. A loan mod should have taken effect 2/28/09 with a trial period until May 1st then bringing our account current. This did not happen and I am unsure where to turn for help any reference would be greatly appreciated.

Thank you,

Mike brings out an unspoken issue here that needs to be addressed. The mortgage owner with a high equity to loan value that have lost their job, or are living on reduced income due to this whole mess. The very people that lived within their means had a cushion for a rainy day that is rapidly depleted!

These American's are the unrepresented "Unintended Consequence" of Dodd, Frank and the entire " we can provide it all" cabal in Washington, which to date refuse to address the abuse of the "Mortgage Servicing" industry on high equity to loan obligation mortgage holders.

This is an important issue to keep fresh here on this blog! keep up the good work here. And document, document EVERYTHING, payments regardless if late to your "Servicer". This is the tsunami that will hit hard in 2010!

I just filed a 240 page answer, countercomplaint and 2 third party complaints against BNY-Trustee for American Home Mortgage Trust 2004-4nd, AHMSI, and LPS. I also filed in support a 2-4 page book of Exhibits--including preadatory loan records, illusory teaser interest rates good for a month--but disclosed as 12 mos,etc. LPs At request of AHMSI "created" an "Assignment of Mortgage" using Judge Schacks term "many hats"--but interestingly the various named signers also used many hands---signing left-handed on one day, right the next--then apparently getting yet another signature on the 3rd day--------the notary counldnt recognize the signers signatures, nor their faces, despite having worked with them for a month in the "stamp and sign " dept at LPS/DOCX legal docx factory in Alpharetta Georgia

The signers purported to be officers of MERS--but as best I could tell from background searches were felons with multiple aliases and arrests including check fraud--note these flks have access to all of our data---

Similar processes applied widely---i attached about a dozen similar assignments and releases--i sent letters to FTC, SEC, every agency i could think of---replies--we dont deal with mortgages

now then i also sent a letter to KPMG describing newly IPO'd LPS failure to maintain proper internal controls---SEC readers didnt seem to grasp that if your business is preparing mortgage docs and you dont do it correctly --it might impact shareholders??----{no wonder Madoff was able to "make off" with other peoples' billions!}

There is no govt protection-my 1st complaint was challenged as too Breif--only 17 pages---no attachments---after all it was a state court pleading---now they undoubtedly will say its too long------the weakness in representative democracies is corruption---and the mortgage bankers wrote the book on that topic

my email address is dcbreidenbach@aol.com--let me know if you want copies--im a lawyer working for govt agency

This is all good info. But it is also frustrating info. I did my research, I could prove to the court they were presenting flse/ misleading documents to the court. Unfortunately I had 5 days to come up with something to enter into the court. I file pro se with all my documentation as exhibits, etc. They held the sale anyway...without my motion even being looked at! Then they not only refused to give me a hearing I requested but they ruled on my second motion and the same day ratified the sale (15 days earlier than the law allows, and leaving me not one minute to file exception to the sale) The Judge didn't look at ANY of my information...theres no way given what I presented to court, you couldn't see the fraud. BUT the judge has essentially rubber stamped my foreclosure which was started and continued with fraudulent documents.

If you suspect Mortgage Fraud you should contact the FBI. They will direct you to an orgazination that has a scam team and innitiate a report which will be fowarded to some government agencies in an attempt to stop these mortgage scammers. I recently learned that a company by the name of Conquist America in Santa Ana, Ca scammed many people of money and then just dissapeared, however I have discovered the former president of Conquist America now works at Kondaur Capital Corp also in Orange, Ca. That makes me wonder if Kondaur Capital Corp is even legite.

Mike Dillon - If you have an interest in NH rsa 477 effects in the real world of NH, you should take a look at the cases Waukewan Holdings v Jean Allan; and the related cases involving SN Servicing Corporation and Robin Arkley II et al...Although you are correct that NH law requires the recording of mortgages in County Registry of Deeds, you will find that at least in the above mentioned cases the court's did not uphold the law...No Judge Schack in NH, at least not yet...An Appeal is currently pending in NHSC for a de novo review has been filed in re:Waukewan Holdings v Jean Allan #09-051. I am representing my self pro se at this time considering that all competent attornies in state are conflicted, and I cannot get approval for out of state counsel pro hoc vice.

The associated criminal case is State v Jean Allan. The State forcibly evicted me from the property in question in Center Harbor. Then the State's Forensic Examiner filed a report that I was not competent to have standing in court. That finding is up for review in Oct, 2010. If you want to read more its on nhjustice.net under the thread Jean Elizabeth Allan, among other places. There is also a connecting thread re: my mother Agnes S. Allan and her suspicious death; and, the disappearance of her remains while in the jurisdiction of the State's Office of Forensic Examiners...My family's case shows that just because there are laws and remedies on the books, in reality, due process is hard to come by in NH courts.


Jean E. Allan

You might want to check the timeframe that they filed their action. For a couple of years SN Servicing was not licensed and was not legally able to even collect a payment, much less file a foreclosure or defend themselves in Court.

I am fighting Nationstar also, and they are using every item explained above. And when I tried to tel the judge he say's what's MERS? How the hell can the little guy get justice? Then the lawyer for Nationstar tells him their the note holder for the lender, and it's all over the internet that the borrowers are using this as an excuse to get out of paying for their debts. And the judge would not look at the page off the MERS website of who they are, and listened to the lawyer instead. What the hell is going on, and why do all the lawyers who I call to fight my case turn me down like all homebuyers are just out to get free homes? Well i'll tell you... Money$$$ the Lawyers invested into the mortgage scams that had MBS and the judges also have their retirements invested in MBS's so they wont throw a wrench into the gears of fraudlant lenders and servicers because then their investments might just be an empty bag of shells that the lenders and servicers have sold several times to different investers. But what they don't realise is that soon the tower or pyomid is going to collapse either way, and they will lose all their money in the phony investments they bought. They were too stupid to check out the portfolio first to see how poorly the MBS was put together. All and I mean All of the MERS mortgages were fraudulantly closed with the help of the banking industry and the banks even steal mortgages from each other and foreclose on homes they don't own. This is open fraud that the Federal Reserve don't want people to know about, because they do the same thing by issueing Federal Notes that have no material backing other then the government debt to pay for their fraud. Then pass it down to the tax payer, and blame the homeowners of being deadbeats, which is so far from the truth is remarkable that they didn't close aLL THE BANKS in 2008. The banks are the first scammers with preditory lending that hunted down buyers that could barely keep the mortgage payments and blamed it on the buyers stating that they cheated on their income. Then while keeping up with the payments, the servicers start forcing insurance and then suspense accounts, then late fees, and it snowballs until the buyer can't keep up with the payments. Then they sell the NOTE to another bank even after the NOTE being converted into a MBS to Fannie Mae or Freddie Mac for the tax payers to cover, then collect on the mortgage insurance for default that you paid for, and then foreclosure, then suing you for any other difference that is left for their fees and lawyers. Then they clean up with selling your home, and getting your money from the foreclosure fees, then the home is sold to another buyer they force into foreclosure and start all over again. And don't forget about all the bailouts the government gave the to big to fail banks, again the tax payer paid for that too. All by the hand of the Federal Reserve, MERS, Servicers, Banks, Fanny Mae, and a host of others that didn't lose one dime on any forclosures, but got paid twenty times over the loans value, and gave their presidents bonuses before they got money from the government bailouts. Now who do you think got the screwing of a lifetime??? Not the lenders, that's for sure, all the Big banks that were government backed were the winners while bankrupting the people and tax payers.

Your blog provides such valuable info to us related to mortgage servicing fraud. Its info which we didnt get by our teachers thanks for all your efforts.

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