Journalism in the Public Interest

In States Where Foreclosures Bypass Judges, New Evidence of Robo-Signers

When problems in the foreclosure process caused banks to temporarily freeze foreclosures last fall, the focus was on improperly signed foreclosure affidavits—legal documents used when foreclosure are required to go through courts.

But as we’ve noted, most states are “non-judicial” states, meaning foreclosures can proceed without a court order. And turns out, those states—where the process lacks judicial supervision and homeowners have less recourse to fight back—also seem to have problems with banks using robo-signers and taking other foreclosure shortcuts, American Banker reports. 

Typically in non-judicial states, a third-party trustee hired by the lender or servicer is required to issue a notice of default to start the foreclosure process. In a January 4 deposition, however, Stanley Silva, a title officer in Nevada testified that he signed those notices without knowing whether anything in the document is true. From the deposition:

Q  Are you familiar with the Nevada non-judicial foreclosure statute?

A  Only operationally.

Q  Is it your understanding that the Nevada non-judicial foreclosure statute requires that the company on whose behalf you're signing a notice of default has the authority to foreclose?

A  I'm not familiar with that language.

Q  Is it fair to say you have no understanding at the time you execute a notice of default whether the company on whose behalf you're actually signing that document has any authority to foreclose on the property?

A  I don't, no.

Q  You don't know whether they have any authority to foreclose?

A  Nothing direct. You know, I'm signing what gets sent, so –

Asked what documents he reviews prior to signing the default notice, Silva responded, “We don’t review any documents.” He also said he’s “not aware of” the channels that prepare the documents before he signs them:

Q  So who told you the recording was requested by LPS Title Company of Nevada?

A  I’m not understanding your question. Nobody told me anything.

Q  Oh, this gets back to your saying that you’re merely signing a document, it doesn’t mean you’re saying anything in the document is true; right?

A  Correct.

Silva was deposed as part of a lawsuit against Wells Fargo, in which he testified that he signed the default notice on behalf of his employer, Ticor Title, which was signing on behalf of another LSI Title, which was signing as an agent for National Default Servicing Corporation, an agent for Wells Fargo. Homeowners attorneys in several non-judicial states have argued that these arrangements may not be legal. From American Banker:

Walter Hackett, a lawyer with Inland Counties Legal Services, in San Bernardino, Calif., and a former banker with Bank of America Corp. and Union Bank, has filed several cases contesting notices of default, on the grounds that the employees signing such notices were working for companies that are not the noteholders — or even their appointed agents.

"A huge percentage of notices of default and notices of trustee sales are legally questionable and probably void," Hackett said. "Nobody with the authority to trigger the nonjudicial foreclosure process is triggering it — only third parties who claim they have the right to do so are triggering it."

All of companies either declined to comment or did not respond to American Banker’s requests for comment.

For more on the Nevada case, read the deposition [PDF]. It may sound somewhat familiar.

Parallel Foreclosure

Jan. 25, 2011, 2:48 p.m.

Because I probably will never learn the myriad of rules, regulations and ploys about how the banking industry operates, my approach to homeowners rights has been, what does and does not make sense when it comes to homeowners rights.

1. Non judicial foreclosure was on the top of my list of ridiculousness. Allowing private business to take back a home, AND USE LOCAL POLICE TO DO IT, seems outrageous to me.

#2 Securitizations that result in the changing of terms from the original mortgage agreement should not be valid. There can be no change in terms from the original agreement without the expressed, written consent of the homeowner.

Nothing can change on a mortgage agreement. Nothing can change in regards to penalties, fees, the ease with which one can speak to a representative, the representatives ability to correct the problem, the amount of time a payment needs to be process, the reinvestor suddenly having rights over the home owner’s right to re-finance, none of that can change from when the mortgage deal was first struck.

#3 HAMP, the government cannot lure people into taxpayer funded programs, then actually punish them with a credit rating reduction and acceleration of loss of their home, ALL BEFORE THEY CAN EVEN APPLY FOR THE TAXPAYER FUNDS. This may be a violation of the Federal Hobbs Act, the extortion clause, using a government position to steal property under the color of right, EVEN IF IT IS ANOTHER ENTITY THAT RECEIVES THE STOLEN PROPERTY.

#4 Foreclosing on homes that have built up equity that would have allowed the homeowner a few more years time to ride out their own life situation that may involve unemployment or caretaking for a family member.

Real caretaking requires being there, and this usually means staying unemployed by choice. The government is actually advocating caretakers lose their homes that have built up equity in them because they are unemployed as they caretake for a family member?

#5 The down payment should not be lost in a foreclosure, but rather a significant portion should be applied towards continued living in the home, or as a walkaway check if the homeowner agrees to leave. Loss of the down payment creates additional incentive for the banks to foreclose on a homeowner.

None of these points will be brought up by Barack Obama tonight in his state of his mind address. What will brought up are all the ways that Barack Obama glorifies his Munchausen’s disease by proxy in which our economy could grow again if only small businesses could be loaned money.

All of this is just another example of our coming Corporatocracy to replace what used to be a Republic. 

The banks, the monied people, the very few are getting all the power to do whatever they want, and screw the people. 

The plans are dispose of the poor, reduce the middle class to poverty status, shrink the government, then drown it in a bathtub.

This is happening in spite of the Obama Administration.  Obama is not controlling this trend.

I’m in a judicial state, but I discovered something interesting last night. My mortgage, is part of a mortgage backed security trust, Long Beach 2006-4, for which Deutsche Bank is the Trustee.  In September 2010, Deutsche bank filed suit against JPMorgan Chase/WAMU claiming that WAMU made false representations about the mortgages in this and many other trusts. The complaint uses the Senate Record to make much of their case.

Here’s a bit of text from the complaint:

“The Senate Record, which is replete with internal WaMu documents, indicates that WaMu lacked effective internal controls, used shoddy lending practices, performed inadequate underwriting, failed to follow procedures, and committed critical errors in its mortgage origination and securitization. These practices by WaMu breached the Governing Documents, which, in turn, triggered WaMu’s Repurchase and Notice Obligations.”

Of course my foreclosure notice shows an after-the-fact (fraudulent) assignment of my mortgage to this trust, Long Beach 2006-4, in 2010, many years after the trust was created and closed to inclusion of new mortgages.

So Chase is foreclosing on behalf of Deutsche Bank on a mortgage that was never properly conveyed to Deutsche Bank’s trust… the same trust that Deutsch is looking to force Chase to repurchase.

Also note this bit of text from the complaint:

“Because WaMu has denied the Trustee access to records maintained by WaMu, as Servicer, and has repeatedly refused to honor the Trustee’s contractual Access Rights, the Trustee is unable to specifically identify particular mortgage loans with respect to which there have been such breaches of particular Representations and Warranties.”

Well, at least CHASE/WAMU is dealing with the Trustee in the same despicable fashion they have dealt with me! They have refused to show ownership of my mortgage, simply ignoring my qualified written request under Section 6 of the Real Estate Settlement Procedures Act (RESPA).

I have no idea what all this translates to while I lose my home, but WOW what a mess!

One thing I do know. President Obama, in tonight’s State of the Union, won’t do a damn thing to fix this mess. Not with a Chief of Staff freshly plucked right from JPMorgan Chase.

Parallel Foreclosure-You bring up some very important points. You and JS are sadly correct…Obama will not bring up one iota anything in reference to this problem tonight. Absolutely horrendous and guaranteed to only get worse. Although the more I hear in regards to your situation JS, I can’t see how things can get anymore of a mess. Only thing I know to do, is to continue to write those in charge. Worst thing we could do is remain silent and go to slaughter like the good little calves they want us to be. As a good friend of my always says, “Keep the faith”. We do have the TRUTH on our side. GOD bless us all!

Stop blaming Obama for the mortgage mess. Blame your next door Realtor and Mortgage broker for loaning you money without the ability to repay just so they could make big fees. It took eight years to form this mess and will take that long or longer to fix.

I work with people in foreclosure and the tales I hear would curl your hair. Banks have been taking incredible liberties with homeowners, and there should be retribution.

Non judicial states like California should consider throwing out the current system and going with an arbitration panel when one or the other party requests it.

Appropriate arbitrators should include a community member representing the neighborhoods affected by the blight of foreclosure and the ensuing losses to community values. These panels ought to have the right to compel lenders to modify loans under certain circumstances, when the mortgage itself is under question for its validity.

Make it an assembly line: financial docs must be pre-submitted and in order or the other party wins.

Only after these foreclosures are resolved will we get the economy moving again in the right direction.

Nancy C-You are on to something. Good luck with the banks allowing it to happen.
Harold-Your damn right I am blaming Obama…for putting together a plan to give false hope to homeowners and not enforcing the rules. Also there is alot more to consider in regards to this mess than just the points you submit. You are either misinformed or ignorant of all the facts. Maybe both!

Just when you think you’ve heard it all… the fruad gets even more unbelievable

“According to the lawsuit, the Bear traders would sell toxic mortgage securities to investors and then sell back the bad loans with early payment defaults to the banks that originated them at a discount. The traders would pocket the refund, and would not pass it on to the mortgage trust, which was where it should have gone to be distributed to the investors who owned the bonds.”
“In 2007, when Ambac started to realize something was very wrong with its high-rated bonds, it demanded Bear provide loan-level detail and reviewed 695 non-performing loans in its portfolio. Ambac’s audit concluded that 80 percent of the loans showed an early payment default. This meant they should have never have been packed in the bonds Bear sold and were required to be repurchased. Bear refused, and of course had already been pocketing buyback money for itself from the originators. Bear also never told investors that its auditor Price Waterhouse and Coopers submitted an internal review in August 2006 that this repurchase process was not in-line with its due diligence standards and not typical for the industry. By January 2007, a Bear internal audit also reported the firm had collected $1.7 billion in repurchase claims—a 227% increase over the previous year. Yet Marano’s group of traders continued their double-dip payment scheme and kept selling the toxic loans with full awareness of the poor quality of the due diligence.”
“Eventually, as Ambac kept demanding a repurchase of the bad loans, Bear acknowledged in late 2007 it would have to buy some back. The lawsuit lists over $600 million in claims with $1.2 billion in damages from the soured mortgage securities it invested in and insured against. But according to the lawsuit, in the spring of 2008, JPMorgan dismissed an outside audit review of the loans’ need to be repurchased and once again refused to pay Ambac. The suit asserts JPMorgan knew a repurchase would result in a huge accounting liability that would put their balance sheet in serious trouble at that time.

Last week, JPMorgan CEO Jamie Dimon said it will take years to get through mortgage litigation risk the bank inherited and had set aside around $9 billion for litigation-related risk. Yet in the bank’s January earnings call, Dimon suggested that the bank may not have to buy back any soured mortgages from private investors and said that the issue is “not that material” for JPMorgan. Still, Ambac recently won a court order in December to add accounting fraud against JPMorgan to its suit, which can double or triple lawsuit awards. So it’s hard to tell whether America’s largest bank is prepared to pay for the sins of Bear. JPMorgan did fight tooth and nail for the Ambac suit not to be made public, however, because the firm argued it could damage the reputations of senior bank executives currently working in the industry. Individuals named as defendants in the amended complaint include: Jimmy Cayne, Alan “ACE” Greenberg, Warren Spector, Alan Schwartz, Thomas Marano, Jeffrey Mayer, Mary Haggerty, Baron Silverstein, Jeffrey Verschleiser, and Michael Nierenberg. But the court chose to fold these individuals into the charges against JPMorgan as the case goes through appeal.”

Amazing. Even in a non-judicial state where the law is solidly on the side of the lender, foreclosures are not being handled in a properly. How hard is it to find a person with authority to read and sign legal documents? What possessed companies to compel people without proper authority to sign documents? It makes you suspect they are hiding something even more disturbing and illegal, if that is possible.


Jan. 26, 2011, 3:12 a.m.

Ok we got another one, This time Mr. Harold on his comment Yesterday at 7:47 Yes, Another one blaming everybody else but the Banks, Mr Harold your logic is the same logic as blaming passengers of a discount airline for their deaths if it turn out to be that the plane have been flown by monkeys and then say: shouldn’t they have known they should pay more? In reality the gushing profits of the collateralized debt markets meant the original lenders had no motive to actually vet the recipients instead they would do anything to entreat first Realtors and brokers with incentives and then consumers to borrow far beyond their means, reassuring them that in a booming economy they’d be suckers not to buy buy buy buy.  This madness was allowed to develop without significant supervision or regulation and is a tribute to the limitless power of Wall Street lobbyist and the corruption of political leaders who did their bidding while sacrificing the public interest.
And I am sorry but Obama is nowhere to be found in these matters, I never ever heard them mentioning the foreclosure and FRAUD-CLOSURE crisis, have you?

Money Talks-

A few weeks ago in NJ, a judicial foreclosure state, the Banksters bought themselves a judge who wrote an opinion stating the banks to foreclosure no longer need a signed note to do so. All they have to do is say “we lost it”.

Of course this contradicts 200 years of Uniform Commercial Code, but who cares.

The truly sad thing is the Banksters not only ripped off people, they also ripped off governments with their MERS scam and distorted and stole income owed to the states by these same Banksters.

To file a mortgage and note, the proper way, the way it was suppose to be done by law,  after it was sold for securitization, would have cost the Banksters some serious money, probaly billions owed to state, county and municipal governments, but you don’t see any of these state attorney generals, pursuing that crime to recoup that money even though MERS has been exposed.

If the state government and the state courts won’t stand up for their employers, why would any normal person believe that the courts will stand up for them.

Its one cover-up after the next cover-up and the press and the media won’t go near it.


Jan. 26, 2011, 8:06 a.m.

Thank you again Propublica for reporting on the housing crisis. 

If you live in a non-judicial state and get a Notice of Default (NOD), that is first notice that foreclosure will follow.  You can either hire an attorney or try to attempt fighting the bankster on your own.  The first thing you should do is get a temporary restraining order (TRO) to prevent the bankster from proceeding with foreclosure.

If you do hire an attorney, contact your State Bar Association and ask if there have been any ethics complaints filed against the attorney.  Google the attorney in quotes and type the word complaint after typing in the name of the attorney.  Many attorneys take money from clients, promise to save their home, but do nothing. Ask the attorney for names and telephone numbers of references. Contact the references.  Ask the attorney to prove his/her track record and give you a list of the cases he has fought in court.  Most court records are online and if they are not, you can go to your local courthouse and research the cases your potential attorney is involved in.  Check consumer complaint websites.  Be careful when hiring an attorney.  Even the attorneys who write articles about this crisis may not be able to provide you with the service you deserve.

Thank you for this article!

JD - do you have a url to that complaint about Chase from Deutche? I believe my loan my be in that pool and I would love to track this.

The mortgage industry has not changed its stripes one bit in the three years I have been a consumer advocate, helping first myself and then others try to get a loan mod. It is a nightmare of epic proportions that no one can really know unless you have gone through it.

And about that attorney mentioned in this article. Be careful. That’s all I’m sayin.

Sorry BC, I intended to include the link in the original post.

Here it is:

And here is another link where they mention the 44% foreclosure rate in Long Beach 2006-4

Very nice post, I am also associated with real estate, foreclosure Los Angeles County, California taxes and properties. I enjoy reading new stuff on this subject, and I hope you will be adding new and fantastic posts on property services. Thanks for writing such a wonderful post.

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