I’ll have a few posts up in the next few days dealing with rescinding your loan, how to get the title company to prove your case and my opinion of loan modifications.

I’m keeping my cell phone close and will check my email twice daily until Friday. Contact me if you need to.

Saturday morning I should have a few new posts up. I want to talk about getting the title company to act as a witness for your case and sending your letter of rescission out.

Remember, I’m here to help.

If you use the QWR that I have drafted, there are many documents listed that the parties involved will not want to share with you. They will tell you that information is private, and outside of the scope of your transaction.

That is crap! These documents have everything to do with what happened to your loan after you left the closing table. Those actions could not have occurred had it not been for your signature, and you have every right to be able to see them. Failing to provide them helps build your case to a judge when you question what it is they are trying to hide.

If I was beginning to build a case against whomever is trying to foreclose on me, I would at least want to be able to see the following documents:

Pooling and Servicing Agreement, Assignment and Assumption Agreement, Deposit and/or Custodial Agreement, Servicing Agreement, Commitment to Guarantee Agreement and, finally, Release of Interest Agreement.

To my knowledge, these documents won’t be disclosed to you without a fight. You can request them initially and then try having your attorney send a demand letter to try to obtain them. Please forward them to me if you do obtain a copy prior to going to court.

My RESPA request letter includes many other documents that you would want to have as well, but the ones I mentioned above can be used against the foreclosing entity if they were submitted as evidence in court.  You will more than likely have to file a motion to compel the court to force them to produce these documents. I’ll discuss how to do that and their importance in a later post/category dealing with litigating your case.

There are many firms that offer these services and, should they find some type of error that violates RESPA, TILA or HOEPA, will offer to negotiate a modification of your loan with your lender in your favor and possibly getting you out of foreclosure.

I think the audit is a crucial step in building your case. That said, I’d like to go into some of the important items that need to be covered in your audit. There are many start-ups in this field, and you get what you pay for.

Here are some basics, which will provide a good start for you to begin going over your loan documents yourself for basic errors.

Here’s a quick video that stresses the importance.

The note you signed is the evidence of the debt. When your mortgage is sold, or assigned, that is what the buyer purchased. It gives the buyer the right to the revenue. Without the original note, there is no evidence proving the purchase took place. This would allow the note to be sold more than once.

What has been happening around the country is the foreclosing entity, being unable to produce the original note, has been showing up to court with affidavits that say the note was destroyed or lost. These affidavits can be attacked on numerous legal grounds for competency of witness – the person who signed the affidavit.

If the foreclosing party claims to be the holder of the note, you want to see it. Not a copy, the original. They will likely say it was lost or destroyed. Why? Because the majority of notes were sold to an undisclosed third party prior to your actually signing it. The note itself, is a forgery.

There have been stories in the news about people that changed their minds about the loan and didn’t close, only to have someone try to foreclose on them later. This could only happen if the loan was pre-sold and forged with your signature.

The original note would have your original signature (not a squiggly line) and all the indorsements of each party that transferred it up the securitization chain. If those items are not present, it’s not the original.

Remember, in Michigan the servicing company or nominee can foreclose on you and it’s not a judicial process. This is why you need to file a suit in Federal court. A Michigan appellate court ruled a few years ago that the lost note was a merely a technicality and granted the foreclosure. I personally believe the case was not litigated properly. Then again, I wasn’t in the courtroom and I’m not a lawyer.

Judges across the country are starting to realize the importance of the foreclosing party being able to prove ownership of the note, and not just through the recorded assignment, which will be the topic of the next post.

Debt collecting law firms have long-been known to lie to consumers when attempting to collect a debt, and there are laws on the books specifically enacted to protect debtors against harassment.

Law firms that represent lenders in foreclosure cases have been dubbed “foreclosure factories”. For a flat rate fee, the firm will handle all the details of the foreclosure process for the lender. This is usually all they do.

The three largest foreclosure factories in the metro-Detroit area are Trott&Trott, Orlans Associates, and Schneiderman&Sherman.

Author’s Note: If you are a member of a foreclosure factory and feel your firm’s market share is greater than the above listed firms, and would like others to know that you help your clients take homes from people when your clients have absolutely no financial interest in the home whatsoever, please leave your firm’s name in the comments section so I can give you your due.

From what I’ve been seeing in cases around the country, these foreclosure factories are not bothering to do due diligence in discovering if their clients are the proper party to initiate foreclosure proceedings.

In Michigan, foreclosure is allowed to be initiated by the servicing company that receives your payments or whomever the lender nominates. But whoever that party is, they get their authorization from someone up the chain of securitization and it’s important to find out who that party is.

The reason is, they now have to prove that they have the right to enforce the note and mortgage you signed. If they can’t, they can’t grant the authority to foreclose to the servicer or nominee.

If you contact the law firm in writing disputing the debt ask them the following questions:

Who is the original creditor?

Please verify the debt.

I have seen letters from these firms where they will state “this firm represents xyz company or the original creditor to whom your debt is owed.” Well, who is it? Why the subterfuge? You can’t even tell me who your client is? What are you trying to hide?

Another popular statement is “total estimated amount owed to reinstate and stop the sheriff auction.” Estimated? Are you kidding me? What happens if I pay that amount and it’s not the right amount? Do you go ahead and foreclose on my home because of your mistake?

Verification of the debt itself and giving you the name of the original creditor are both provisions of the Fair Debt Collection Practices Act. If you respond to their first written contact with you within 30 days and ask for those two things to happen, and they don’t do it, they’ve violated the FDCPA if they report any negative information to a credit reporting agency during that time.

Of course, there are some other important questions you’ll want to ask the attorney while you’re writing them that discuss who owns the note, what paperwork did the foreclosing entity give you that documented a default in my payments, etc. You can contact me directly and I’ll help you draft the letter. Don’t count on them answering.

One last thing. For these firms, foreclosure is a system. Step 1, do this. Step 2, do this. Step 3, do this. Any effort you make to question and fight what is happening takes your case out of the assembly line.

This costs the foreclosing party more money in attorney fees and costs the attorneys more time that would be spent foreclosing on peoples’ homes. And when the firm as named as a party to the lawsuit and not just counsel, it makes them learn that they better start doing what the law requires of them.

These links come from msfraud.org, a great site dedicated to helping homeowners facing foreclosure. If you follow the link, along the left side of the screen you’ll be able to view court papers filed from most of the big players.

MERS case dismissed in Florida

MERS case dismissed in New York

Here’s a quote from a Judge Gordon who said MERS is a sham:

“It truly concerns me, however,  that thousands and thousands of mortgage foreclosure actions have been filed with these allegations. I am not certain what remedy, if any, these people would have if it were determined that MERS was not ever the proper party notwithstanding that these folks might have been in default what their recourse, if any, would be. I’m not certain with the satisfaction of mortgages that have been filed on behalf of MERS how good those are and I’m not certain how good title to property is people bought at these foreclosure sales if it turns or becomes established that MERS was indeed not only not the right party but misrepresented by way of their pleadings and affidavits that they held something they didn’t own, so I’m not certain the consequences but it seems vast.”

As I come across new filings from other cases against MERS I will add them here. They have been successfully challenged in Michigan.

MERS Scandal Exposed.

Kevin Lamson Said,

So can anyone guess the name of “organization” that was formed by Countrywide’s, Anthony Mazillo and Fannie Mae’s, James Johnson ten years ago it start with an M? No not the Mafia. It’s Mortgage Electronic Registration Systems Inc. commonly referred to as MERS. Yes that’s right Countrywide and Fannie Mae were the lead organizers of MERS and are shareholders and “members” of MERS. Here are excerpts from an investigative report on MERS I have been working on for the last several months. This may help shed some much needed light on MERS and the cozy relationships many of its so-called ‘members” have between each other and with our congress. It may also explain why no one in congress has bothered to investigate MERS and it crazy “paperless” system that these greedy mortgage executives invented so they could line their pockets by originating and flipping phony mortgage loans into so-called mortgage backed security trusts and then selling trillions of dollars of bonds to investors around the world. By reporting false profits from these sales Fannie Mae’s and Countrywide’s executives were able to make hundreds of millions of dollars in “bonuses”.

Given the extremely close relationship that MERS, its many corporate members have with the politicians who run our state and federal governments, it is not surprising that MERS and it members were able to pull off this gigantic global financial scheme without raising the brow of a State or Federal law enforcement or regulators. Only now are a few politicians and regulators paying lip service to what they refer to as the “Mortgage Meltdown”. What no politician or regulator ever seems to mention is that a millions of the mortgages that “melted down” have the name Mortgage Electronic Registration System Inc. on them.

· The Fundamentals:

In the period beginning in 1999 and ending in March of 2008, Mortgage Electronic Registration Systems Inc., a/k/a/ MERS, has been named as a “mortgagee” on over fifty million mortgages. Yet MERS has never originated a single mortgage loan nor loaned a dime to a single borrower. In 2001 the New York Supreme Court ordered the Suffolk County Clerk to accept MERS mortgages for recording as a purely ministerial duty. However the Court denied MERS request for a judgment declaring that MERS mortgages were “lawful in all respects”. The New York Court of Appeals affirmed the Supreme Court’s order directing the County Clerk to record MERS mortgages. The Court of Appeals did not reverse the Supreme Court’s denial of MERS request for a judicial declaration that MERS mortgages are “lawful in all respects”. MERS, for obvious reasons, did not want a published opinion determining that MERS mortgages are legal nullities and/or that MERS has no standing to enforce a mortgage when it is not a creditor entitled to collect a debt. The New York Court of Appeals did address and frame these two issues but left them to be decided at a future date.

MERS members, mortgage industry executives, invented the so-called MERS paperless system to short cut standing mortgage lending safe guards and circumvent the legal requirements for originating mortgage loans and/or for selling and transferring these loans to subsequent holders. This would allow MERS members like Countrywide Financial, Fieldstone Mortgage, and Option One Mortgage to make loans to anyone with a heart beat and then quickly flip these questionable loans to other MERS members such a Fannie Mae, Freddie Mac, Bear Stearns, Merrill Lynch, Lehman Brothers to name just a few. (”Secondary Mortgage Market Players’)

MERS and its so-called “system” was driven the strong desire of its founding “members” strong desire to report billions in profits as can be seen, in part, from a highly critical report issued by the Office of Federal Housing Enterprise on May 23. 2006, detailing what it called “an arrogant and unethical corporate culture where Fannie Mae employees manipulated accounting and earnings to trigger bonuses for senior executives from 1998 to 2004″. . . “The image of Fannie Mae as one of the lowest-risk and ‘best in class’ institutions was a facade,” . . . “Senior management manipulated accounting; reaped maximum, undeserved bonuses; and prevented the rest of the world from knowing”. . . “Our examination found an environment where the ends justified the means”. The Ohio Attorney General recently sued another MERS founding member, Freddie Mac, alleging and its top executives for fraud with very similar allegations to the fact found by OFHEO relating to Fannie Mae.

These Secondary Mortgage Market Players would claim to package millions of these loans, with or without being delivered the promissory notes, into loan pools or “mortgage backed security trusts” and then flip the loans by selling trillions of dollars of bonds to investors around the world. The bonds were touted by Secondary Mortgage Market Players as producing safe yet high returns. The investors who bought these bonds included many of the world’s largest national banks. Initially MERS members reported windfall profits year after year by quickly originating, packaging into pools and then flipping trillions of dollars of mortgages loans to investors. Other MERS members, such as title insurance companies, also took their cut from each of the fifty million loans that were made while this high speed gravy train was rolling. MERS itself would earn over a billion dollars a year by charging its members $250.00 for each mortgage that MERS would be named as “mortgagee”.

The reported profits from the sale of these mortgaged backed securities would result in billions of dollars of salaries and bonuses being paid to the senior executives of many of MERS member corporations. Ultimately the bond investors who actually provided all the money would learn that their “safe” investment was anything but safe. As hundreds thousands and then millions of these loans fell into default. These bondholders would lose hundreds of billions of dollars. As of April 1, 2008, the largest banks around the world had already written off losses of one hundred and fifty billions dollars relating to bonds they had purchased. One Swiss bank, U.S.B., has recently reported 40 billion dollars in losses. These loses may only be the beginning. What many people refuse to admit is that because of the so-called MERS paperless “system” many of the so-called mortgage backed security trusts do not actually hold the promissory notes which evidence the debts that are supposed to be backing the bonds purchased by these investors. The situation is reminiscent to the Great Olive Oil Scandal in the late 1800’s when banks were duped into investing millions of dollars into Olive Oil only to later discover that the tanks which were supposed to be holding millions of gallons of olive oil backing their investments were mostly empty.

A June10, 2007 article in Forbes magazine details the carelessness in the securitization process by which mortgage loans were packaged and sold off to mortgage pools is now coming back to bite the trustees of these mortgage backed trusts who are now seeking to foreclose millions of loans that are in default:

· The financial engineering (i.e. mortgage securitization) helped oil the housing boom by making credit more available. But stalled housing prices and rising defaults have revealed a mess: In the rush to flip paper, lots of the new lenders or pools don’t have the proper paperwork to show they even hold the mortgage.

It appears that after MERS mortgage loans are flipped to the mortgage backed trusts the promissory notes are not actually delivered to the trustees. Nor are assignments of mortgages executed and delivered which evidence the fact the original lender has transferred the debt which is secured by the mortgage. This leaves the trusts with absolutely no paper evidence of ownership of the secured debt it purportedly owns. One informed lawyer who represents homeowners in Florida, April Charney, had foreclosure proceedings against 300 clients dismissed or postponed in 2007 for lack of standing. She is quoted as saying that “80 percent of them involved lost-note affidavits”. . . They raise the issue of whether the trusts own the loans at all,” Charney said. “Lost-note affidavits are pattern and practice in the industry. They are not exceptions. They are the rule.” Ms. Charney started challenging MERS and it members lost note affidavits after becoming skeptical of the lender could possibly lose hundreds of promissory notes.

At least two Florida judges shared Ms. Charney’s skepticism regarding the copious amounts of MERS lost note affidavits and they issued show cause orders, sua sponte, challenging MERS to show proof that it held and/or lost notes in numerous actions. After evidentiary hearings these two alert judges dismissed twenty nine (29) MERS actions to foreclose for lack of standing. One judge struck MERS pleadings as being sham.

A South Carolina court dismissed a MERS action to foreclose for lack of standing even though MERS filed an affidavit wherein a person claiming to be an officer of MERS claimed that MERS was holding a promissory note. The South Carolina court vetted the MERS affidavit claim that it was the holder of the note after the Court was apprised of the fact that MERS had previously told the Nebraska Court of Appeals that it never held promissory notes.

In late 2007 three Federal Court Judges in Ohio dismissed over fifty law suits brought by trustees of mortgage backed trusts where they could not produce the original promissory notes. Following these decisions the Bankruptcy Court in Los Angeles, California adopted a rule of practice which requires all foreclosing trustees or other plaintiffs to produce the original promissory note when bring an action to foreclose a debt or face sanctions for not doing so.

It is disturbing to know that National Banks are the trustees of thousands of trusts that may be missing millions of promissory notes. This might explain why, to date, not a single National Bank has publicly disclosed the fact that they are not actually holding what may be millions of promissory notes which evidence ownership of debts supposedly owned by their respective trusts. An independent audit of these trusts would probably be quite revealing. This writer is also unaware of any such audits that have been performed to date. These National Banks, as trustees are accountable and therefore liable for missing trust property or the documents evidencing ownership.

As more borrowers, lawyers and judges learn that neither MERS nor these trustees are actually holding the promissory notes evidencing the debts they seek to collect through foreclosure, dismissals of these foreclosure actions for lack of standing will become routine. This will also means that bondholders from around the globe will be seeking to recover their loses from the National Bank trustees.

American courts should no longer tolerate or close a blind eye to the fact that the MERS has no standing to commence any legal actions relating to peoples properties because they do not hold any legal or equitable interest in the debt or in the properties. The Court’s must protect the integrity of our court system by enforcing our laws of commerce as they have existed and not allow parties to come into our courts and commence actions relating to debts that they do not own and/or have no proof of ownership.

MERS founders and members went about foisting their so-called “paperless” system on the American economy and indirectly upon the global economy. MERS studiously avoided seeking any legislative changes of long standing commercial laws relating to promissory notes, mortgages and public recording of assignments in any of the 50 states that it would ultimately be operating. It is possible that this blatant abuse, of the UCC and state recording laws might have passed itself off as the new way off doing business in our computer age. But MERS member companies, under clear instructions from their leaders, guarantied disaster by pumping up and them dumping these shaky loans onto investors through trust they set up for this purpose. These investor/bondholders are jut now discovering that they were duped. They just don’t know how badly they were duped.

Perhaps this is what the global economy is really all about. Seeing who can dupe international banks and governments out of trillions of dollars depositor and taxpayer money and do so with complete impunity. Yet, to my knowledge, after learning that they invested trillions of dollars into these questionable loan pools n/k/a/ cesspools, not a single National Bank has ordered an audit of these cesspools or trusts to determine the actual contents and the value.
As a matter of sound public policy our courts should not allow MERS or its so-called “members” to circumvent and/or violate long standing laws of commerce, simply because some greedy mortgage executives thought they could shoe-horn their so-called “paperless system” into the framework of our current system of commerce. Our system still requires such sundry instruments as promissory notes be used to evidence debts and also requires that these instruments to change hands when sold or transferred to a new owner. Our system also requires a new holder of a promissory note to record an assignment of security interest or mortgage in order to enforce a lien which secures the debt evidenced by the promissory note. No one should be able to simply ignore these long standing laws just so they can reap billions of dollars in illicit bonuses by quickly originating and then flipping loans without the attendant delivery of notes and assignments of mortgages. Our system of commerce does not operate this way. This is because we have laws of commerce including the UCC which regulates our system of commerce.

The MERS paperless system simply provided an expedient way for MERS and its members to fleece the investor on a global basis, by loaning money to people who couldn’t or wouldn’t pay the money back and then flipping trillions of dollars of these bogus loans to third party investors. The MERS system does not comply with our current laws of commerce. While the computer age has admittedly changed how business is transacted it has not eliminated or replaced the legal requirement for such things as promissory notes, mortgages and assignments of mortgages, when a loan is made, a mortgage given and the loan is subsequently sold and/or resold. This is precisely why a competent and prudent lender who makes a loan to a qualified borrower takes back a promissory note and if the loan is to be secured the borrower executed a mortgage or security agreement naming the lender as the mortgagee or secured party. The lender must then record or file its mortgage or security agreement to prefect its lien. If the lender decides to sell the debt it is owed to a third party it must endorse and deliver the promissory note to the third party. And in order for the third party to enforce either a mortgage lien or security interest the original lender must execute an assignment of mortgage or security interest, which must then be recorded or filed by the third party to give evidence and public notice of its status as assignee of the lien securing the debt it had purchased. Only the holder of the promissory note is entitled to enforce the note and/or any lien which secured the debt.

Given the extremely close relationship that MERS, its many corporate members have with the politicians who run our state and federal governments, it is not surprising that MERS and it members were able to pull off this gigantic global financial scheme without raising the brow of a State or Federal law enforcement or regulators. Only now are a few politicians and regulators paying lip service to what they refer to as the “Mortgage Meltdown”. What no politician or regulator ever seems to mention is that a millions of the mortgages that “melted down” have the name Mortgage Electronic Registration System Inc. on them. American courts should no longer tolerate or close a blind eye to the fact that the MERS has no standing to commence any legal actions relating to peoples properties because they do not hold any legal or equitable interest in the debt or in the properties. The Court’s must protect the integrity of our court system by enforcing our laws of commerce as they have existed and not allow parties to come into our courts and commence actions relating to debts that they do not own and/or have no proof of ownership.

This writer has been investor in real estate since 1976, and has owned properties in eight states and three countries. Over the last thirty two years I have witnessed and heard of many illegal or fraudulent schemes involving real estate finance. The MERS “paperless system” is the kind of scheme that is hatched in some internet boiler room in Nigeria, not in the boardrooms of our once prestigious American financial institutions. This gigantic scheme completely ignored long standing law of commerce. The effect of the system has already had a catastrophic effects on both the American and global economy. Yet many of the investment “trusts” which supposedly hold thousands of original promissory notes are hard pressed to produce them when legally required to do so. MERS admittedly does not hold any promissory notes. A party must have possession of a promissory note in order to have standing to enforce and/or otherwise collect a debt that is owed to another party. Given these facts how will these investors ever recoup there investments if the debt they were suppose to own can not be legally enforce or collected? What will be the status of title to properties that were purportedly foreclosed by MERS where MERS admittedly had no legal right to foreclose or otherwise collect debt which are evidenced by promissory notes held by someone else.

In Michigan this is probably either the servicing company that accepts your payments or MERS, neither of which have any financial interest in your home. When they bring foreclosure action against you they are doing it on someone else’s behalf. That party could be the “lender” or the trustee.

The first step I recommend you do is to call the servicing company and ask them some specific questions. Keep in mind that the person you are talking to just works there and will probably not be able to answer these questions for you. Even if you get a supervisor on the line, the answers to your questions will not be readily available. Don’t take it personal or get upset.

Question 1: When I send in my payments, who are they forwarded to?

The servicer acts in an administrative capacity. They may keep a small portion of your payment as their fee, but they send the remaining balance on to someone else who is actually due that money.

Question 2: Who was the investor that actually funded my loan?

They will probably not know or tell you that is confidential information.

Question 3: Was my loan part of a larger securitized transaction?

In most cases it was, but there are some exceptions that we’ll discuss in another post.

Question 4: Does your company own both my mortgage and my note?

If it was securitized, they don’t. If they say yes, ask where those original documents are located.

Question 5: Who actually granted your company the authority to begin the foreclosure proceedings against me?

The reason for asking these questions even though you know before asking them that you probably won’t get any answers is because you want to have a reason to request answers to your questions in writing. Be sure to ask for the correct address to where you send written questions regarding your loan. Also be sure to document the date and time you called, and who you spoke with.

The Real Estate Settlement Procedures Act puts the servicer in a position that if they receive a “qualified written request” asking questions about the servicing of your loan, the servicer is required to do the following:

-Within 20 days of receiving your request, they must send out verification that the request was received.

-Within 60 days of receiving your request, they must formally answer all of your questions in writing.

Failure to do so violates RESPA and allows you to bring an action against the servicer in Federal Court. It also entitles you to monetary damages of $1000 plus damages and attorney fees.

The trick to ensure that the violation actually happens is to load up your RESPA request with questions they will not want to answer. They may respond with “that is confidential”, “that is outside of the scope of your loan”, or “we don’t have access to that information”.  They more than likely will not answer at all.

When you ask the questions over the phone and in writing, you’ll be able to tell the judge that you don’t understand what it is they are trying to hide. All of the questions you ask relate to your loan and should be made available to you.

If you decide to utilize my services I will provide you with a 17 page “qualified written request” and request for documents to send to anyone that has ever serviced your loan. This document questions everything; the amount of money they say you need to reinstate your loan, the fees they charge, who owns the mortgage and note, and requests that they produce copies of all the necessary paperwork you would need to properly audit your mortgage.

It is a great way to put the servicer on notice that you are aware of some of the fraudulent activities that take place in the mortgage industry and will give you the chance to request certain important documents when you go to court to be used as evidence against them.

While the topics discussed here are applicable to defending against foreclosure in any state, I will do my best to keep it specific to Michigan residents.

I hope to have most of the content posted by the first of the year, but will be adding pages as I have the time. If in the meantime you are in foreclosure and would like my assistance, please feel free to contact me after reading What Really Happened.