We’ve described in various posts how evidence is growing that the participants in mortgage securitizations sometime early in this century appear to have ignored the requirements of a variety of laws and their own contracts. We believe the most serious and difficult to remedy problem results when the parties involved in the creation of a mortgage securitization failed to take the steps necessary to convey the loans to the legal entity, a trust, which was set up to hold them. As we wrote:
…. there is substantial evidence that in many cases, the notes were not conveyed to the trust as stipulated. As we have discussed, the pooling and servicing agreement, which governs who does what when in a mortgage securitization, requires the note (the borrower IOU) to be endorsed (just like a check, signed by one party over to the next), showing the full chain of title. The minimum conveyance chain in recent vintage transactions is A (originator) => B (sponsor) => C (depositor) => D (trust).
The proper conveyance of the note is crucial, since the mortgage, which is the lien, is a mere accessory to the note and can be enforced only by the proper note holder (the legalese is “real party of interest”). The investors in the mortgage securitization relied upon certifications by the trustee for the trust at and post closing that the trust did indeed have the assets that the investors were told it possessed.
It isn’t simply that the notes had to go through a particular chain of parties to get to the trust. All these steps had to be accomplished by a particular date, which was generally no later than ninety days after the trust closed. And all the assets conveyed to the trust had to be “performing”, meaning the borrower was current on his payments.
The evidence that the deal creators violated these stipulation is widespread. Borrowers fighting foreclosures often find the trustee can’t locate the note, which should be impossible if the certifications the trustee made were accurate. Another proof of the failure to adhere to these requirements is that the note are often conveyed to the trust right before the foreclosure. This fix is impermissible for three reasons: it is far too late (years after the cutoff), it is typically directly from the originator to the trust (in violation of the requirement that it go through all the intermediary parties) and it occurs after they have defaulted (contrary to the stipulation that the loan be performing).
Some investigators have been trying to provide more convincing proof of their belief that these abuses were not merely widespread but pervasive. Lynn Syzmoniak of Fraud Digest in her November 13 entry. She looked up all the foreclosure filings in five Florida counties in the month of October 2010. I’ve boldfaced her key findings:
Wells Fargo Bank was the bank that filed the most foreclosure actions in five South Florida counties in October, 2010….. The majority of these cases were filed by Wells Fargo as Trustee for mortgage backed trusts. In every case involving a trust, the original mortgage assignment to the trust was missing. Wells Fargo used Assignments prepared years later – most often within a few months of the foreclosure – and often prepared AFTER the foreclosure was filed. In many cases, JP Morgan Chase transferred non-performing loans originated by Washington Mutual Bank into these trusts. Wells Fargo’s top choice for law firms was The Law Offices of David Stern. To supply “replacement” assignments showing the trusts had acquired the mortgages, Wells Fargo used its subsidiary, America’s Servicing Company in Ft. Mills, SC. The mortgage servicing company most often used by JP Morgan Chase to get its bad loans into trusts was Lender Processing Services in Dakota County, MN.
This practice is more than a little problematic. Transferring non-preformorming loans into a trust or making an out-of-time assignment is a void act under New York trust law (and mortgage securization trusts are organized as New York trusts). Borrower’s counsel is typically not in a position to hire a New York trust expert to argue the point, but this is going to become a serious issue as this area heats up.
Syzmoniak was so kind as to send a couple of examples via e-mail. Needless to say, consumer lawyers have been seeing this sort of thing for years:
September 25, 2009 Mortgage Assignment
September 28, 2009 Mortgage Assignment
43 comments
Comments are closed.
Yves; at the risk of being tedious, I would like to ask a layperson’s question. Are the purchasers of these ‘Trust’ units registered or in any way identifiable? From my viewpoint, those are the people most directly harmed by this particular aspect of the missdeeds of the mortgage industry. It would be interesting to know who they are.
Mr Repstock:
I wonder who bought credit default swaps against those mortgage trusts. They will make money when those trusts fail.
And the counterparty will lose, but if it is AIG, well, the taxpayers own it..
I think some of them have been trying to get banks to take back a number of loans……Pimco is of them I believe,
These are usually large money management firms and they had better chance at understanding the situation ahead of time than typical homeowners. I would say the homeowners who lost what they thought was their nest egg were harmed the most.
the other thing is that these purchasers of “trust units”you mentioned had the money and the knowledge to have invested in credit default swaps that would pay them in event of default. For that matter they may have already been paid for their CDS contracts because the government bailed out the insurers months ago.
If I am understanding correctly, It could be possible that the Too big to fail banks may have been paid out on their CDS when government bailed out insurers too, I am guessing on this though but it seems plausible.
So, did AIG know why they were selling so many cds contracts? Something was smoking.
Before generalizing about what it takes for a mtg ito be conveyed to a trust please read the PSA and other docs and you will note that assigment in blank is accepted
are you sure?
others have made the exact opposite claim.
Yawningpro’s argument is but a rickety skeleton. Yves and others picked the meat off the bones long ago.
But if you have no defense based on facts, then the only defense is to continue to repeat the lies, hoping that a tautology will be accepted as fact.
Industry back scratching is not law.
Scenario 1: Party A is trying to prove that the Trustee “owns the loan.” Here the likely questions are, did the transaction steps actually occur as required by the PSA and as represented in the Prospectus Supplement, and are the Trustee’s ownership rights subject to challenge in a bankruptcy case?
The answers lie in the UCC and in documents such as:
•the MLPSA’s;
•conveyancing rules of the PSA (normally Section 2.01);
•transfer and delivery receipts (look for these to be described in the “Conditions to Closing” or similarly named section of MLPSA’s and the PSA);
•funds transfer records (canceled checks, wire transfers, etc);
•compliance and exception reports provided by the Custodian pursuant to the Master Document Custodial Agreement; and
•the “true sale” legal opinions.
Some of these documents may or may not be available on the SEC’s EDGAR system; some may be obtainable only through discovery in litigation. The primary inquiry is whether or not the documents, money and records that were required to have been produced and change hands actually do so as required, and at the times required, by the terms of the transaction documents.
Another question sometimes asked when examining the “validity” of a securitization (or in other words, the rights of a securitization Trustee versus a bankruptcy trustee) is, must the Note be endorsed to the Trustee at the time of the securitization? Here are some points to consider:
•Frequently the only endorsement on the Note is from the Securitizer-Sponsor “in blank” and the only Assignment that exists, pre-foreclosure, is from the Securitizer-Sponsor “in blank” (in other words, the name of the transferee is not inserted in the instrument and this space is blank).
•The concept widely accepted in the securitization world (the issuers and ratings agencies, and the law firms advising them) is that this form of documentation was sufficient for a valid and unbroken chain of transfers of the Notes and assignments of the Mortgages as long as everything was done consistently with the terms of the securitization documents. This article is not intended to validate or defend either this concept or this practice, nor is it intended to represent in any way that the terms of the securitization documents were actually followed to the letter in every real-world case. In fact, and unfortunately for the certificate holders and the securitized mortgage markets, there are many instances in many reported cases where these mandatory rules of the securitization documents have not been followed but in fact, completely ignored.
•Often shortly before foreclosure (or in some cases afterwards) a mortgage assignment is produced from the Originator to the Trustee years after the Trust has closed out for the receipt of all mortgage loans. Such assignments are inconsistent with the mandatory conveyancing rules of the Trust Documents and are also inconsistent with the special tax rules that apply to these special trust structures. Most state law requires the chain of title not to include any mortgage assignments in blank, but assignments from A to B to C to D. Under most state statutes, an assignment in blank would be deemed an “incomplete real estate instrument.” Even more frequent than A to D assignments are MERS to D assignments, which suffer from the same transfer problems noted herein plus what is commonly referred to as the “MERS problem.”
http://www.centralvalaw.com/Publications/Articles/Your%20Clients%20Securitized%20Mortgage%20A%20Basic%20Roadmap%20PART%203%20Dealing%20with%20Notes%20and%20Assignments.aspx
Another thing to consider when MERS is the mortgagee – many of the mortgage assignments were signed by the same robo-signers who were signing affidavits without personal knowledge. I’ve found several assignments allegedly signed by the same person where the signatures are clearly different. Even the signature of the notaries differ from assignment to assignment.
A Trustee does not “own” the mortgage or note. The Trust does. A Trustee has a duty to see that the terms of the Trust are carried out.
Scenario 2: Party B seeks to prove standing to foreclose or to appear in court with the rights of a secured creditor under the Bankruptcy Code. OK, granted the UCC (§3-301) does provide that a negotiable instrument can be enforced either by “(i) the holder of the instrument, or (ii) a non-holder in possession of the instrument who has the rights of a holder.”
•Servicers and foreclosure counsel have been known to contend that this is the end of the story and that the servicer can therefore do anything that the holder of the Note could do, anywhere, anytime.
•The Fannie Mae and Freddie Mac Guides contain many sections that appear to lend superficial support to this contention and frequently will be cited by Servicers and foreclosure counsel as though the Guides have the force of law, which of course they do not.
•There are many serious problems with this legal position, as recognized by an increasing number of reported court decisions.
Authors’ General Conclusions and Observations:
•Servicers and foreclosure firms are either wrong, or at least not being cautious, if they attempt to foreclose, or appear in court, without having a valid pre-complaint or pre-motion Assignment of the Mortgage. Yet at the same time, Servicers and note holders place themselves at risk of preference and avoidable transfer issues in bankruptcy cases if, for example, endorsements and Assignments that they rely upon to support claims to secured status occur or are recorded after or soon before bankruptcy filing.
•In addition any Servicer, Lender, or Securitization Trustee is either wrong, or at least not being cautious, if it ever: (1) claims in any communications to a consumer or to the Court in a judicial proceeding that it is the Note holder unless they are, at the relevant point in time, actually the holder and owner of the Note as determined under UCC law; or (2) undertakes to enforce rights under a Mortgage without having and recording a valid Assignment.•The UCC deals only with enforcing the Note. Enforcing the Mortgage on the other hand is governed by the state’s real property and foreclosure laws, which generally contain crucial provisions regarding actions required to be taken by the “note holder” or “beneficiary.” State law may or may not authorize particular actions to be taken by servicers or agents of the holder of the Note.
•For the Servicer to have “the rights of the holder” under the UCC it must be acting in accordance with its contract. For example, if the Servicer claims to have possession of the Note, did it follow the procedures contained in the “Release of Documents” section of the Custodial Agreement in obtaining possession? Does the Servicer really have “constitutional” standing under either Federal or State law to enforce the Note even if it is a “holder” if it does not have any “pecuniary” or economic interest in the Note? In short, the concept of constitutional standing involves some injury in fact and it is hard to see how a mere “place-holder” or “Nominee” could ever over-come such a hurdle unless it actually owned the Note or some real interest in the same.
•The Servicer should have the burden of explaining the legal reasons supporting its standing and authority to act. Sometimes Servicers have difficulty maintaining a consistent story in this regard. Is the Servicer claiming to be the actual holder, or the holder and the owner, or merely an authorized agent of the true holder? If it is claiming some agency, what proof does it have to support such a claim? What proof is required? Sometimes this is just academic legal hair-splitting but many times it involves serious issues of fact. For example, what if the attorney for the Servicer asserts to the court that his or her client actually owns the Note, but the Fannie Mae website reports that Fannie is the owner? What if the MERS website reports that the Plaintiff is just the “Servicer?” What if the pre-complaint correspondence to the borrower names some entirely different party as the holder and indicated that the current plaintiff is only the Servicer?
•Finally, the Servicer always has an obligation to be factually accurate in borrower communications and legal proceedings, and to supervise employees and vendors and attorneys to assure that Note endorsements, Assignments of Mortgage, and affidavits are executed by persons with valid corporate authority, and not falsified nor offered for any improper purpose.
The focus of the default servicing industry must move from “how fast we can get things done” to “how honestly and accurately can we be in presenting the proper documentation to the courts and to the borrowers”. Judicial proceedings are not like NASCAR races where the fastest lawyer always wins. Judicial proceedings are all about finding the truth no matter how long it takes and regardless of the time and difficulties involved.
November 14, 2009
Richard D. Shepherd
The Law Office of Richard Shepherd
Is is possible for the PSA or any other private agreement to dispense with the application of applicable law? That is an interesting concept.
Note also that the second document is not an assignment of the note or an allonge to the note, but is an assignment of the mortgage, which purports to be “together with the note of obligation described in said Mortgage(s).”
I like the language “this assignment is being recorded as a formality” and that there is a reference to “the intention for the parties herein that delivery of the subject note and mortgage be established as evidenced by electronic or physical delivery..” Wow.
Then, I like the way that the language that the “Assignment of the Mortgage is made without recourse agains Assignor” – meaning I guess that the junk mortgage cannot be put back.
I like the way that five years after the mortgage was made that the trust still did not have an assignment of the mortgage and that the originator here is really Washington Mutual Mortgage. I wonder technically what is meant by “successor in interest” and what document evidences this. How is it that a non-existent entity is assigning a mortgage that the “parties in interest” intended that the mortgagee not even have. I also believe that there should be an assignment form WaMu to JPMorgan Chase -I do not think there was a merger. So, something is missing in this so-called chain.
Yawining pro, what I do not understand is that if ultimately, the mortgage would either be paid off or would be foreclosed and that ultimately the mortgagee would have to provide a satisfaction of mortgage or initiate a foreclosure. So, one wonders why the assignment of mortgage was not taken care of 5 years ago. Laziness? Saving money? It really makes no sense for a pro to do this – and really, what is this system prevents there being another trust with ownership in the same mortgage. I also wonder the Trust is qualified to be a plaintiff under Florida law.
Sorry – I was writing my replies while the other replies were being written!!!
@yawningpro.
Industry *practice* is not law. PSA is not local dirt law. It would seem there is much to see with regards to those opinions payed for and how they reflect to quantum’s. So many court rooms so little time, so many states means a hole lot of graft, will our present individuals/groups in DC has the balls to put their head in a noose just for a go at the brass ring? IDK.
Skippy…a hole lot of pissed of people of just a few…time will tell…eh.
Nit: The mortgage NOTE is conveyed to the trust. The MORTGAGE is still sitting in the courthouse. Two different documents. The difference is significant because the NOTE is governed by the UCC and the MORGAGE is not. Thus once the bona fide NOTE holder asserts rights over the foreclosed property, the NOTE holder usually wins.
Wrote this up on Reuters.
http://tinyurl.com/2bc5x3o
If the mortgage assignment is so irrelevant, as your Reuters article suggests and you state here, please explain why the foreclosing entity here felt compelled to also “fabricate” the mortgage assignment and record the mortgage. I do not accept that they filed the document here just as a “formality” only.
Remember – the mortgage is the security interest securing the note. Do not confuse the note – an obligation to pay money – with the security interest which allows the creditor to seize the property with priority as to all other creditors of the borrower. Do not the other creditors of the borrowers have a claim here against the mortgage property equal to that of the lender without full documentation?
dejavuagain,
I think you covered the pertinent issues in your response to Yawningpro above, except I believe the PSAs do require the notes be transferred according to law. To argue that the the PSAs don’t, as Yawningpro does, is not true. This has been discussed previously here on NC at some length.
And while I don’t take issue with what whalen is saying, the “nit” he raises has been cussed and discussed ad nauseam here on NC. I think everyone here and on the banksters’ payroll is very much aware of the “nit”—-that the note is the defining document—-a point you brought home when you wrote in your comment above:
Note also that the second document is not an assignment of the note or an allonge to the note, but is an assignment of the mortgage, which purports to be “together with the note of obligation described in said Mortgage(s).”
I thought the bullshit really got deep when the assinment claims to be only “a formality” and that the “delivery” of “note and mortgage” was “evidenced” by “electronic or physical delivery” that “occurred prior to the date of any litigation.” So this really isn’t an “ASSIGNMENT OF MORTGAGE” at all, but a legal argument masquerading as an assignment.
So why the ploy on the part of the bank to convey the note under the heading of “ASSIGNMENT OF MORTGAGE” (I don’t know how it works in other states, but in Texas a mortgage is a document known as the Deed of Trust)? Things just keep getting curioser and curioser.
I question Whalen’s intellectual honesty. I think he’s interjecting a straw man argument. Where has Yves ever said anything except that the note was the defining document? To wit:
…. there is substantial evidence that in many cases, the notes were not conveyed to the trust as stipulated.
RC Whalen
I have now had the opportunity to read carefully Whalen’s Reuters post, in particular the Barney bashing at the end “The bad guys in the housing bust are not the banks who must foreclose on homes, but the politicians in both political parties who used reckless housing policies to further their personal interests”.
This causes one to look carefully at everything else writ by Whalen in the article; in my view, at lest, the disaster was driven by the insane desire for the investment banks for product of any quality and deal structure defective or not with or without sanity, so they could book their fees and bonuses, and make more betting against the same mortgages a la CDO’s.
But, that has all been said ad nauseum, but, to look further into your article, you cite Benedict v. Ratner.
So, I read Benedict v. Ratner, a U.S. Supreme Court decision cited by Whalen. In this case, the Court applied and interpreted NY State law as it existed in 1925, in the context of a bankruptcy case which of course applied federal law – as it existed in 1925. Since the decision was written by Justice Brandeis, a member of the New York Bar, I have no reason to dispute his analysis of NY Law at the time. But, the decision illustrates the point once again that it is state law that governs, not federal law – in a sense, Benedict v. Ratner could be overruled by a NY court in a moment.
You conclude again “What does the Benedict v. Ratner decision … mean to today’s families fighting foreclosure and communities striving to clear the real estate markets? … ALWAYS remember — the collateral follows the debt –and ownership of the debt is most clearly represented by possession of a note.
That is interesting for Benedict v. Ratner does not repeat this aphorism as to the mortgage following the note whatever that means and should not be cited for that proposition. What Brandeis says is as follows:
“That doctrine raises a presumption of fraud where chattels are mortgaged (or sold) and possession of the property is not delivered to the mortgagee (or vendee). The presumption may be avoided by recording the mortgage (or sale). ”
The official syllabus summarizes the holding as follows:
“3. Held that an assignment made by a mercantile corporation, more than four months before it was adjudged bankrupt, of its present and future accounts receivable as security for a loan was void under the above rule, so that delivery of a list of accounts, and payments made within the four months, were inoperative to perfect a lien in the assignee, but were unlawful preferences, under the Bankruptcy Act. P. 268 U. S. 364.”
This should cause great shivers through the spine of anyone receiving an assignment by a mortgagee in bankruptcy – although I would like to see an analysis of this by a bankruptcy attorney.
Whalen then states in his article: “The basis of the original “true sale” opinion for mortgages was that respected counsel in 48 states all agreed.” That is not really persuasive at all, at least to me.
In early 80s, I was lawyer with an investment bank trying to set up a 50 state mortgage origination operation. This was a daunting task, for the real estate finance and recording laws were different in every state. [It was unusual if more than one manager had knowledge of the laws of even one state.] It was even difficult to find true qualified “independent” counsel in each state. In NY, the last law firms we would rely upon for opinions in this regard were the large firms, most of which had no real world experience in enforcing remedies. In general, these firms did not have real estate departments of any size or depth, and most did little if any litigation, that being reserved to law firms of a certain type. This is not to say that there was no expertise in the large firms, but, frequently, the partners with true expertise were shunted aside within the law firms. Anyway, these were the partially blind. In many situations, the local state counsel were the partially blind being led by the partially blind. In other cases, the local state counsel had complete eyesight who might disagree with NY counsel. These fully sighted local counsel tended to be replaced by counsel who saw the world the same way as NY counsel. So, what you describe is in a way “lemming law”. The opinions may be correct, they may not be correct.
Anyway, I am quite certain from knowledgable counsel who have posted on this issue recently that some states do not follow the law in this matter as do the other states, and thus I find it questionable that “respected counsel in 48 states all agreed”.
The Whalen article is interesting and I would like to read some of the other sources to which he refers.
I did like this Whalen quotation from an e-mail by a “veteran securities attorney”:
““To survive the Brandeis logic, one must assiduously follow the UCC and avoid all the pitfalls of the Uniform Fraudulent Transfer Act,” Feldkamp said in an email last week. “Otherwise the state mortgage recording laws and Benedict v. Ratner could turn an investment record error into a fraud and may require them to rescind the investment –either under securities laws or common law fraud.”
Seems to me that Mr. Feldkamp is not as sanguine as Whalen represents and that Whalen’s explanation of the meaning of Benedict v. Ratner for those fighting foreclosure does not follow at all.
Perhaps Whalen is correct, perhaps he is not – but his citations do not support his conclusions and thank you for the gratuitous Barney bashing, for then we know where you are coming from.
PS
[I note that Mr. Feldkamp practiced in Michigan and Illinois and is not to be included in the category of NY law firms.]
See Feldkamp v. Long Bay Partners, 2:09-cv-00253, U.S. District Court, Middle District of Florida where Mr. Feldman is attempting to recover a $92,000 deposit on a golf club membership. Sounds like his ox was gored there!!!
whalen, while brilliant at times, brave at others, always hedges his bets. You won’t see this man biting the sweet NY banking syndicate nipple that he suckles from.
He’ll throw ya a bone to keep up his street cred.
Prove me otherwise rc. Actions.
If the note has not been conveyed to a particular securitization trust, what business does the trust have in accpeting funds provided by borrowers against particular notes? Does such a trust have a duty to return funds accepted against notes outside the trust? Is a borrower exposed to a claim from the actual noteholder that for years and years they never got any money? Everything I know tells me I am current against my loan – does my obligation end when I send the proper monthly check to the servicer? Forget foreclosure for a minute – will I own my home clear of liens when I pay off what I owe to the party I have been asked to pay, without regard to how they may have later screwed up the conveyance of my note?
At what point will the way some states handle the issues of property rights start to impact the ability to buy or sell a house in a given state.
Some states, like Ohio and New York are taking the note chain as described more literally than say, Florida. Will people be more interested in buying property in a state that takes legal ownership seriously? Less inclined to buy in one that doesn’t care, or is anti-consumer.
Correct.
States with more clear property rights and property protections are going to be in better shape than states that tolerate digital theft, bogus documents, and rampant fraud.
At what point do tradesmen, with their tools, overalls and six packs get the tools needed to wage an effective counter attack without having to pay sharks upwards of 30K to litigate? At every step of the game, they are the victims and rarely, from politicians to judges, are the lower classes equal in our raging class war.
Doesn’t the judge interviewed in this video pretty much express the official position? If you don’t have the $30,000 price of the ticket for legal defense, it’s just tough titty. No money, no legal rights. It’s just that simple—-it’s pay to play—-and the callousness of Judge Soud knows no bounds.
Then he goes on to declare that there has been no fraud perpetrated on the court. What is being classified as fraud, he says, is mere neglect and sloppiness.
As the video explains, in Florida’s rocket docket, the time a judge spends to render judment against a homeowner on the vast majority of foreclosures is only 2 or 3 minutes.
got the proof right here: Against MERS too:,
I have the original NOTE endorsed in Blank,” Pay To The Order of __________.”with out recourse, signed by the Senior VP of RBMG. I have a sworn affidavit that states a written assignment of the note was never prepared and the SELLER into the securities stated that they WARRANT AND REPRESENT IT HAS NEVER BEEN SOLD TO ANY OTHER ENTITY.EMC(seller) had to sell the note to Bear Stearns which was the depositor into the Bear Stearns Asset Backed Securities,inc. Asset Backed certificate series 2003-2. Bear Stearns was to sell/ assign the Note to JP MORGAN CHASE as trustee of the Trust. There has been a foreclosure started on the mortgage on March, 3 2009 by The Bank OF New York Mellon as successor trustee for JP MORGAN CHASE who claims to be the owner and holder of the note. By way Of an assignment which was recorded at the ROD on March 19, 2009, 16 days after the LIS-PENDENS , and the summons and complaint . I have a letter dated July 13 2002 from Mers that states the loan has been removed from the MERS system and the MIN# deactivated. Mers had no authority to do an assignment and the assignment was done by a known “robo-signor” and in the Corporate name of RBMG that not only deactivated the MIN # but also removed the loan from MERS. RBMG was also defunct and has been since 2005 when it was aquired by NETBANK and subsequently shut down by the FDIC in 2007. The BANK OF NEW YORK MELLON produced in discovery two allonges the first was from RBMG to EMC and the second was an allonge directly to JP MORGAN CHASE from EMC. First thing is the PSA ( pooling and service agreement) the governing document of the securities describes in detail the percise chain of title it also describes who is the seller ,the depositor ,the master servicer and the trust. Even though the sworn affidavit produced by the successor trustee stated no written assignment was ever prepared, so the allonges was a direct attempt to decieve the investors and knowingly a misrepresentation which is fraud. BEAR STEARNS was the depositor into the securities. First let start with the allonges both are undated and one is not even signed: according to the UCC an allonge is only used when there is NO ROOM ON THE ORIGINAL NOTE FOR ENDORSEMENT and must be firmly attached as to become a part of the note. AN ALLONGE cannot be used to transfer interest and is invalid if there is room on the note for endorsements and is invalid it not attached. A lost note was produced from EMC but not anywhere in the document is there a conveyance, it is not a valid assignment. Here is an excerpt from the Prospectus:
Bear Stearns Asset Backed Securities Inc · 424B5 · Bear Stearns Asset Backed Certificates Series 2003-2 · On 6/30/03
Document 1 of 1 · 424B5 · Prospectus:.
Assignment of the Mortgage Loans; Repurchase At the time of issuance of the certificates, the depositor will cause the mortgage loans, together with all principal and interest due with respect to such mortgage loans after the cut-off date to be sold to the trust. The mortgage loans in each of the mortgage loan groups will be identified in a schedule appearing as an exhibit to the pooling and servicing agreement with each mortgage loan group separately identified. Such schedule will include information as to the principal balance of each mortgage loan as of the cut-offdate, as well as information including, among other things, the mortgage rate,the borrower’s monthly payment and the maturity date of each mortgage note. In addition, the depositor will deposit with Wells Fargo Bank Minnesota, National Association, as custodian and agent for the trustee, the following documents with respect to each mortgage loan: (a) except with respect to a MOM loan, the original mortgage note, endorsed without recourse in the following form: “Pay to the order of JPMorgan Chase Bank, as S-40——————————————————————————–
trustee for certificateholders of Bear Stearns Asset Backed Securities, Inc., Asset-Backed Certificates, Series 2003-2 without recourse,” with all intervening endorsements, to the extent available, showing a complete chain of endorsement from the originator to the seller or, if the original mortgage note is unavailable to the depositor, a photocopy thereof, if available, together with a lost note affidavit; (b) the original recorded mortgage or a photocopy thereof, and if the related mortgage loan is a MOM loan, noting the applicable mortgage identification number for that mortgage loan; (c) except with respect to a mortgage loan that is registered on the MERS(R) System, a duly executed assignment of the mortgage to “JPMorgan Chase Bank, as trustee for certificateholders of Bear Stearns Asset Backed Securities, Inc., Asset-Backed Certificates, Series 2003-2, without recourse;” in recordable form, as described in the pooling and servicing agreement; (d) originals or duplicates of all interim recorded assignments of such mortgage, if any and if available to the depositor; (e) the original or duplicate original lender’s title policy or, in the event such original title policy has not been received from the insurer, such original or duplicate original lender’s title policy shall be delivered within one year of the closing date or, in the event such original lender’s title policy is unavailable, a photocopy of such title policy or, in lieu thereof, a current lien search on the related property; and (f) the original or a copy of all available assumption, modification or substitution agreements, if any. In general, assignments of the mortgage loans provided to the custodian on behalf of the trustee will not be recorded in the appropriate public office for real property records, based upon an opinion of counsel to the effect that such recording is not required to protect the trustee’s interests in the mortgage loan against the claim of any subsequent transferee or any successor to or creditor of the depositor or the seller, or as to which the rating agencies advise that the omission to record therein will not affect their ratings of the offered certificates. In connection with the assignment of any mortgage loan that is registered on the MERS(R) System, the depositor will cause the MERS(R) System to indicate that those mortgage loans have been assigned by EMC to the depositor and by the depositor to the trustee by including (or deleting, in the case of repurchased mortgage loans) in the computer files (a) the code in the field which identifies the trustee and (b) the code in the field “Pool Field” which identifies the series of certificates issued. Neither the depositor nor the master servicer will alter these codes (except in the case of a repurchased mortgage loan). A “MOM loan” is any mortgage loan as to which, at origination, Mortgage Electronic Registration Systems, Inc. acts as mortgagee, solely as nominee for the originator of that mortgage loan and its successors and assigns. S-41——————————————————————————–
The custodian on behalf of the trustee will perform a limited review of the mortgage loan documents on or prior to the closing date or in the case of any document permitted to be delivered after the closing date, promptly after the custodian’s receipt of such documents and will hold such documents in trust for the benefit of the holders of the certificates. In addition, the seller will make representations and warranties in the pooling and servicing agreement as of the cut-off date in respect of the mortgage loans. The depositor will file the pooling and servicing agreement containing such representations and warranties with the Securities and Exchange Commission in a report on Form 8-K following the closing date. After the closing date, if any document is found to be missing or defective in any material respect, or if a representation or warranty with respect to any mortgage loan is breached and such breach materially and adversely affects the interests of the holders of the certificates in such mortgage loan, the custodian, on behalf of the trustee, is required to notify the seller in writing. If the seller cannot or does not cure such omission,defect or breach within 90 days of its receipt of notice from the custodian, theseller is required to repurchase the related mortgage loan from the trust fund at a price equal to 100% of the stated principal balance thereof as of the date of repurchase plus accrued and unpaid interest thereon at the mortgage rate to the first day of the month following the month of repurchase. In addition, if the obligation to repurchase the related mortgage loan results from a breach of the seller’s representations regarding predatory lending, the seller will be obligated to pay any resulting costs and damages incurred by the trust. Rather than repurchase the mortgage loan as provided above, the seller may remove such mortgage loan from the trust fund and substitute in its place another mortgage loan of like characteristics; however, such substitution is only permitted within two years after the closing date. With respect to any repurchase or substitution of a mortgage loan that is not in default or as to which a default is not imminent, the trustee must have received a satisfactory opinion of counsel that such repurchase or substitution will not cause the trust fund to lose the status of its REMIC.
I’m not a MOM loan the loan transferred off of MERS, Mers no longer tracked the assignments and let’s not forget I HAVE IN MY POSSESSION THE ORIGINAL NOTE ENDORSED IN BLANK NEGOTIATED TO ME FROM RBMG. The note is date stamped MARCH 18 2002 and has been in my possession since May of 2004 along with a letter from the RBMG stating the loan is fully paid and satisfied.
the UCC is clear:U.C.C. – ARTICLE 3 – NEGOTIABLE INSTRUMENTS
§ 3-201. NEGOTIATION.
(a) “Negotiation” means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder.
(b) Except for negotiation by a remitter, if an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its indorsement by the holder. If an instrument is payable to bearer, it may be negotiated by transfer of possession alone.
§ 3-301. PERSON ENTITLED TO ENFORCE INSTRUMENT.
“Person entitled to enforce” an instrument means (i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to Section 3-309 or 3-418(d). A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.
§ 3-302. HOLDER IN DUE COURSE.
(a) Subject to subsection (c) and Section 3-106(d), “holder in due course” means the holder of an instrument if:
(1) the instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and
(2) the holder took the instrument (i) for value, (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument described in Section 3-306, and (vi) without notice that any party has a defense or claim in recoupment described in Section 3-305(a).
(b) Notice of discharge of a party, other than discharge in an insolvency proceeding, is not notice of a defense under subsection (a), but discharge is effective against a person who became a holder in due course with notice of the discharge. Public filing or recording of a document does not of itself constitute notice of a defense, claim in recoupment, or claim to the instrument.
(c) Except to the extent a transferor or predecessor in interest has rights as a holder in due course, a person does not acquire rights of a holder in due course of an instrument taken (i) by legal process or by purchase in an execution, bankruptcy, or creditor’s sale or similar proceeding, (ii) by purchase as part of a bulk transaction not in ordinary course of business of the transferor, or (iii) as the successor in interest to an estate or other organization
(a) “Negotiation” means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder.
(b) Except for negotiation by a remitter, if an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its indorsement by the holder. If an instrument is payable to bearer, it may be negotiated by transfer of possession alone.
§ 3-301. PERSON ENTITLED TO ENFORCE INSTRUMENT.
“Person entitled to enforce” an instrument means (i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to Section 3-309 or 3-418(d). A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.
§ 3-302. HOLDER IN DUE COURSE.
(a) Subject to subsection (c) and Section 3-106(d), “holder in due course” means the holder of an instrument if:
(1) the instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and
(2) the holder took the instrument (i) for value, (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument described in Section 3-306, and (vi) without notice that any party has a defense or claim in recoupment described in Section 3-305(a).
(b) Notice of discharge of a party, other than discharge in an insolvency proceeding, is not notice of a defense under subsection (a), but discharge is effective against a person who became a holder in due course with notice of the discharge. Public filing or recording of a document does not of itself constitute notice of a defense, claim in recoupment, or claim to the instrument.
(c) Except to the extent a transferor or predecessor in interest has rights as a holder in due course, a person does not acquire rights of a holder in due course of an instrument taken (i) by legal process or by purchase in an execution, bankruptcy, or creditor’s sale or similar proceeding, (ii) by purchase as part of a bulk transaction not in ordinary course of business of the transferor, or (iii) as the successor in interest to an estate or other organization
I would suggest that the chain of evidence you posess places your life in danger. Thee documents should be stored in a fireproof container and secretly be transported to your wife’s second cousin. I doubt that there are many cases of such complete documentation in public hands. I don’t think that bank vaults might be the best places to store them.
Given the far reaching implications of the apparent breakdown of the financial integrity, most people are probably naive of the lengths to which the benificiaries might go to maintain control of the system.
Obviously, in the rush to securitize mortgages wall street was sloppy to say the least and to think wall street lawyers not capable of reviewing loan package to the extent of being properly filed is ridiculous, so they are complicit by virtue of trying to make a fast buck for the banks (then investment houses).
Only an act of Congress will save the banks now as investors will have to eat losses and banks can only recover at today’s market values. They all lose even if they take turn suing each other.
Concerns on whether timely payment from a home buyer are in reality arriving to the proper note/deed holder are well taken for in the long run who’s not to say another entity shows up asking for repayment(s) years later.
States could make a fortune in fining for fraud while Courts might be delaying judgment while awaiting guidance from Congress, a rewriting of contract law.
Even an act of Congress may not be enough to save the banks’ bacon.
Say Congress pass a sweeping law that exonerates each and every sin of the banksters, mortgage lenders and MERS.
You think States will just look away and let this stuff happen?
Not a chance in hell: RE law is a state prerogative, and for the life of me, I can’t imagine the States forgoing such a prerogative that could have vast future implications for their tax base. Remember that real estate taxes finance the school systems and countless other basic services. A couple of legal changes as to what constitute “real estate” and “taxable real estate” and Houston! We have a problem!
Yup. The liklihood that all the municipal governments are going to willingly let themselves be bankrupted because of this degree of fraud strikes me as something less than ‘zero’.
ok, so i have asked this before but i will try again…
echoing what Eric says above,
what does this mean for those of us who are current on our loans?
I sent a letter requesting a copy of the note. they sent me a copy of the original note i signed at closing, but it has no other signatures, stamps, or addendums of any kind. it lists Quicken Loans as the Lender. they (indymac) included a letter saying that Fannie Mae is the trust and OneWest is the servicer (which i confirmed on the FannieMae website and MERS).
i am writing the servicer to ask for more information, and i am not sure what to ask for. shouldnt they have a copy of the note with endorsements to the trust (through intermediaries i assume…)?
i want to know that when i sell the house that i wont have a lien from Quicken Loans!
help
I’d try looking for help from your State’s Attorney General.
At least get a copy of any related documents from your local County Recorders office. A specialized attorney dealing in foreclosure fraud and forensics in documentation is about the only option if you are trying to track down the change of hands.
Congress could make it all futile.
Gents:
I have a question regarding today’s news of DJSP Enterprises Inc, a foreclosure law firm run by Florida lawyer David Stern, under investigation by FL State AG, now supposedly in default and may close. If the firm goes out of business, does that mean all the ‘incriminating’ evidence is going out the door also? What a timely event, if so.
I’ve been following this issue ever since a property I own received a Notice of Default listing Deutsche Bank National Trust Company, as Trustee for GSR 2007-OA1.
When I searched GSR 2007-OA1 I found the Prospectus and that they had 120 days to transfer the note. Looking up the county transfer records I found that the transfer date was 3/22/10 (three years late) but it also had the robo signer issues. It wasn’t notarized until 7 days later on 3/30/10. But the NOD was filed on 3/29/10 – before they even had the paperwork filed to attempt to transfer the property to the closed pool. So how could they start a foreclosure procedure if they didn’t legally own the note yet?
This one is pretty straightforward as the recording from the original note holder (GMAC) was properly transferred to Countywide in 3/07 due to a re-fi. And then it was supposedly put into the securitzation pool almost immediately after the closing.
I was corresponding with a Washington Post writer and she went so far as to contact the law firm that holds the binder for the list of loans in GSR 2007 OA1 and was told only the Trustee could have access to it.
So, who owns the note at this point? I’m in California so it is a non-judicial foreclosure but I’m wondering if the NOD and NOS were filed by the wrong entity. I might add that the sale date has been being postponed since July, before BofA (the servicer) put all foreclosures on hold in CA.
What can the homeowners facing foreclosures do in a non-judicial state? Foreclosures don’t go through the court system. Even if you find so many irregularities in foreclosure documents, original securitization, etc., what can you do with the information?
take them to court and make them prove their case
Here’s a question I’d love to know the answer to.
If a mortgage is conveyed to a securitization trust after the deadline for REMIC tax pass-through qualification, what are the consequences? Who owes the taxes, and is there any sign that the IRS is taking action to pursue collecting them?
I don’t understand the problem. I am unable to insert into this comment a notice from the Denver Post. It said that on August 12, 2010, the Public Trustee of Denver County, Colorado recorded a Notice of Election and Demand and published a Notice of Sale. The beneficiary of the Deed of Trust, which was recorded on July 13, 2006, is MERS as a nominee. The current holder of the Note is Citibank as Trustee. The borrowers borrowed $875,000 in 2006 and now owe $934,173. Why would they want to contest the sale and owe more? The sale is going to go through on December 9th.
WHAT IS THE PROBLEM THAT YOU ARE WRITING ABOUT?
. Does anyone have any information as how to contact Richard D. Shephard Esq. of the Law Office of Richard Shephard?
2. Does anyone have any information on Deutschce Bank National Trust Company as Trustee For Long Beach Mortgage Loans 2006-2?
info on Long Beach Mortgage Loans 2006-2:
http://www.sec.gov/cgi-bin/browse-edgar?company=&match=&CIK=&filenum=333-109318-16&State=&Country=&SIC=&owner=exclude&Find=Find+Companies&action=getcompany
i have a problem with carrington mortgage forclosed in me and used deutshe bank as the trustee blank assignment three years later robo signer need help on california law
To everyone writing that they need legal help:
Go get a lawyer. A comment section on a blog is not the place to search for representation, you need to seek legal counsel in real life. You will likely not be able to figure out the problems with your mortgage and the correct strategy to take without an attorney. There’s a reason lawyers go to law school and bas state examinations.
MrSunburn is absolutely right. These issues are far too complicated to handle yourself. Not only do you need a lawyer, you need a lawyer licensed to practice in your state who has the experience and knowledge to handle these types of issues. Don’t be put off by stories that you need 30k to fight a foreclosure. Find someone who knows what they’re doing and ask how much it will cost.
What no one seems to want to talk about is whether these homeowners who are being foreclosed out of their homes SHOULD be foreclosed upon. I get that many originators, banks, investment banks, lawyers, etc., may have royally screwed up the paperwork and not followed the requirements of various state and federal laws regarding transfers and securitizations. This paperwork argument may very well delay or derail many foreclosures and keep people in their homes longer. But what happens to the principle that borrowers need to pay back what they borrowed? It seems that many posters here are implicitly arguing that borrowers be let off the hook entirely.
Somebody borrowered money from these banks and lenders, and they knew and intended that the loan would be secured by an interest in their home. If they don’t or can’t pay back what they borrowed, they cannot now be surprised when the bank (or a successor in interest) comes knocking at the proverbial door asking for their keys. It’s understandable to try to delay, and it seems clearly apparent that the current morass is one exacerbated by the banks, and their surrogates, themselves. But if a borrower doesn’t pay back what they borrowed on a loan secured by their home, a foreclosure is the proper and just remedy for the lender. We can make the banks and Wall St. out to be the villians here all we want, and they have brought much of this upon themselves, to be sure, but I have yet to hear or read anything substantive about borrowers being foreclosed upon who were current on their mortgage. All the focus on “improper foreclosures” definitely gives the impression of exactly that, however, and this what primarly irks me.
Seems to me everyone involved should be ready to accept some apportionment of blame: borrowers who took out loans they couldn’t reasonably afford to repay, originators who were clearly too eager to put people into loans they didn’t fully understand; banks who funded, bought and/or packaged these loans without enough care about borrower’s interests or a fully-complete documentation package, Wall St. investment banks who securitized them with very little real concern about perfecting the transfer of assets into the trusts, and investors who were more concerned with expected returns to understand or care that the underlying asssets (the notes) could be enforced through proper foreclosures.
Many issues remain in our housing finance system, but all the other issues aside the contract between the borrower and the original lender (as evidenced by the note and mortgage together) still needs to be enforceable.