By Michael Olenick, founder and CEO of Legalprise, and creator of FindtheFraud, a crowd sourced foreclosure document review system (still in alpha)
“There Goes the Neighborhood,” which ran on 60 Minutes last Sunday, is a must-see piece. Scott Pelley walks through a pillaged house in Cleveland, slated for demolition in a county neighborhood stabilization program. This abandoned house is owned by Structured Asset Investment Trust 2003-BC11. An investor reports lists the property as “in foreclosure” despite no court filing. Ohio is a judicial foreclosure state, so a foreclosure filing requires a lawsuit, but there isn’t one.
According to the prospectus, Trust 2003-BC11 was underwritten by Lehman Brothers. Aurora Loan Services is the Master Servicer, though the entire trust was passed to sub-servicers. Specifically Chase, Option One, Ocwen, and Wells Fargo serviced 30.46%, 29.47%, 26.84%, and 12.19% of the loans.
The Murrayhill Company is the Credit Risk Manager. According to the prospectus Murrayhill “will monitor and advise the servicers with respect to default management of the mortgage loans.” Later, the prospectus clarifies “The Murrayhill Company, a Colorado corporation .. will monitor and make recommendations to the Master Servicer and the Servicers regarding certain delinquent and defaulted Mortgage Loans…”
Murrayhill literally wrote the book on how Aurora should deal with defaults for Trust 2003-BC11, then took upon themselves to the obligation to monitor that same book.
Colorado-based Murrayhill was founded by Sue Ellis Allon and apparently did spectacularly well back in the past. In a case study published by the Tuck School of Business at Dartmouth in 2003, the same Trust 2003-BC11 closed, Allon bragged her company enjoyed “more than 100% annual growth” for the prior three years.
Murrayhill was eventually acquired and merged into Clayton Holdings. Allon served on their Board of Directors. Eventually she formed Allonhill, her newest company, also in Colorado. Various news reports portray Allon as a “reformer,” really trying to get to the core of the housing crisis.
On September 9, 2011, Allonhill signed an engagement letter — a definitive agreement — with the Office of the Comptroller of the Currency (OCC) to review Aurora’s foreclosure practices, as part of the consent order wherein servicers agreed to submit foreclosure fraud for review by “independent” third-party companies. The engagement letter notes that Allon founded Murrayhill, “which pioneered the concept of independent third-party oversight of loans and servicers.” But there is no mention that Murrayhill was tasked with promulgating and monitoring Aurora’s default policies and procedures.
That is, OCC chief John Walsh signed off on hiring Allon to audit her prior work for fraud.
Let’s repeat that; the OCC — an arm of President Obama’s Treasury Department — signed off, allowing a company founded and managed by the woman who created Aurora’s foreclosure practices to audit her own firm’s work, and did so pursuant to a consent order and under the guise of consumer protection. Murrayhill, the firm that promulgated and enforced foreclosure policies, is based less than a mile away from the address listed for Allonhill, the firm auditing for foreclosure fraud on behalf of borrowers.
Until now there has been a mountain of circumstantial evidence that the Obama administration has been comfortable with foreclosure fraud. There is the conspicuous lack of prosecutions, unwarranted and unwelcome intervention in the 50-state Attorney General review, and references that infer robosigning is a “victimless” crime. But, until this disclosure, there has been no solid evidence the federal government is actively covering up bank-perpetrated fraud.
This arrangement clarifies that the Federal Government, at the highest levels, are comfortable, or even arguably complicit, covering up foreclosure fraud.
The section regarding Conflicts of Interest in the Allonhill contract reads “Allonhill .. represent(s) that this engagement does not create a conflict of interest…” But it is impossible to think of a more substantive conflict of interest — the notion that a former executive is supposed to bust herself — than this arrangement. Even Bernie Madoff hired a storefront accountant to robosign his audits; he didn’t have the chutzpah to appoint himself to the role.
The agreement continues, “Allonhill will implement various controls to manage conflicts and ensure that the loan review services are provided with an appropriate level of independence. These controls include: (a) Restricting any individual who was previous employed by, or otherwise under contract to provide services to, Aurora Bank from…” a long list that includes essentially everything Allonhill is supposed to be doing.
I guess they overlooked that the founder and CEO of Allonhill is the same woman that created and monitored the fraud Allonhill is supposed to be monitoring while working for Aurora.
Allonhill is so massively conflicted with regards to Aurora that the decision to engage the firm taints not only the entire OCC review process into question, but also every person involved in the review, and the Treasury Department itself. It is impossible to think of any company that could be more conflicted in performing these audits. Even Aurora itself could blame Murrayhill for the problems, but Allonhill can’t, at least not without implicating its own founder and CEO.
John Walsh, the head of the OCC, should finally be fired for incompetence. His boss, Bailout King Treasury Secretary Timothy Geithner, also deserves the axe. Congress should let the subpoenas fly in every directions, including and especially towards the White House, to figure out how this could have happened.
Forget just firing Allonhill and Walsh; every reviewer has to be fired: it’s clear that the entire review process is corrupt.
Once Walsh, the Bush appointee who was reappointed by Obama (“You’re doing a heckuva’ job, John”) is gone the new director should void these contracts, start from scratch, and be sure to disqualify anybody who had anything to do with this fiasco. In the interim, there is now a persuasive argument for a nationwide freeze on foreclosures until this mess is straightened out.
As the reviews are reformulated every document, every email, every engagement letter — absolutely everything — should be released without a single redaction. Any firm that doesn’t want to work in sunlight can simply decline to bid. I’m sure they’ll have plenty of takers. I’d personally be pleased to have one of these contracts, and would staff up a firm with top-notch auditors who would find foreclosure fraud.
News reports say that President “Hope & Change” Obama, who promised Hope but gave us the ineffectual and arguably outright harmful HAMP, has apparently decided to reincarnate himself in the likeness of President Teddy Roosevelt. He might want to think about this quote from President T. Roosevelt: “No man who condones corruption in others can possibly do his duty by the community.”
Paraphrasing from a Senatorial candidate I once adored, foreclosure is not a Blue State problem, it’s not a Red State problem, it’s an American problem. And it’s long past time the White House wakes up and doesn’t something besides protect the perps who caused this mess.
Disclosure: Aurora has foreclosed against a house I purchased with an ex-girlfriend. That loan, which Lehman/Aurora purchased as they were going broke, is a full-documentation loan with a substantial down-payment and no second. I don’t live there; my ex-girlfriend does. My own home has no mortgage and is not affected. This isn’t what drew me to focus on Aurora — the house in the 60 Minutes segment is what perked up my interest — though it does explain why they told me that I had to stop paying the mortgage in order to qualify for a short-sale, a policy probably promulgated by Murrayhill .. and now audited by Allonhill.
Update by Yves: To clarify, since it is implicit, yes, sports fans, Allonhill was engaged to review Aurora. And the principal, whose legal name is apparently Margaret Sue Allon has of late taken to using “Sue Ellis Allon”.
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“This arrangement clarifies that the Federal Government, at the highest levels, are comfortable, or even arguably complicit, covering up foreclosure fraud.” –
Well, Americans could always “vote the bums out” right?
How’s that working out? Pretty sure CONgress is full of career politicians, with no sign of being threatened.
It’s great to see fellow Americans and troops being systematically brainwashed while TPTB are outright looting, pillaging and sometimes committing fraud out in the open with no worries of being prosecuted.
There’s just not enough of us to make a difference, so my guess it will continue for a very long time. Meanwhile, this destruction upon Americans wreaks ever more havoc.
I’m on the verge of throwing in the towel myself, cash out and move to my back-up while flipping the finger to Massachusetts (arguably a top contender for most corrupt State Legislatures). My State officials don’t even respond to inquiries, my CONgressional Reps. just send a form letter, if they respond at all.
Michael, your posts are always incisively done. Thank you for that. But it certainly is troubling to read specific details that show things really are as horribly broken as we suspected.
Michael,
Please consider rewriting this part of what you say: “… it’s an American problem. And it’s long past time the White House wakes up and doesn’t something besides protect the perps who caused this mess.”
This seems to follow a common misconception among people that Obama just doesn’t know what is really going on, or he is a little slow and keeps getting outfoxed by Republicans or Wall Street. He is neither.
Asking Obama to wake up or stop being slow is misdiagnosing the problem. He was given all that campaign money from Wall Street for a reason. They knew he would protect their interests. They chose their minion well. He has worked very hard for his benefactors and never once failed them.
That said, I hope people like you will continue to speak out about the fraud occurring every day in the foreclosure business.
Thank you for pointing out what is really obvious-it needs to be said all over the place. Mr. Obama, Like Mr. G. Bush jr, like Mr. Clinton, Mr. Bush, Mr. Reagan and Mr. Carter are and were all puppets to the larger financial and commercial interests that supported them in such a big way. We must of course count in the whole scenario the paid editors and publishers of the press, tabloids, magazines, books TV and radio who placed their stamp of approval the whole idea of a plebiscite Presidency. A plebiscite electioneering campaign keeps the American public entertained every four years with the charade other wise known as American Democracy.
“This arrangement clarifies that the Federal Government, at the highest levels, are comfortable, or even arguably complicit, covering up foreclosure fraud.”
My vote goes with complicit.
And the complicity now spans two administrations. 1) Bush-Mukasey. 2) Obama-Holder.
The fraudocracy is now a deeply embedded infection, the rule of law for financial crimes barely a memory.
The fraudocracy is now a deeply embedded infection, Jimbo
The fraud started with “Your deposit is available on demand even though we will lend it out.”
Asset backed money is a brilliant invention and it can be implemented ethically but, too bad for us, it hasn’t been.
Holy Smoking gun!
Smoking guns aren’t enough anymore.
I don’t even think blatant acts of genocide will get a rise out of America, at least if it is against them not-so Americans like the hippies and other than white folk.
When the rising up comes though, I would not want to be one of the global inherited rich….or their puppets…..it is a very small world and there are billions of us who feel wronged by you.
I know which side of history I am on…the unwritten one at the moment.
A gutless coward like Obama doesn’t have a chance in hell of becoming a Teddy Roosevelt. His inability to stand up to evil and greed is in his D.N.A. Nothing more common than a man who will sell out others for his own personal gain. Wait and see the job he secures after his theatrical role of playing a president.
you’re right he is all theater – my belief is that a chairmanship of a hedge fund is lined up for a $50 million deferred compensation via jamie dimon initiative
nothing the guy says tracks with the actions of his administration – he is a trojan horse!
Which LPS robosigner may (allegedly) be assising in the OCC consent order audits in Minneapolis in 2011??? Inquiring minds want to know…
All of these types of article are extremely important. When I talk with people about the financial “crisis” (devastation is more accurate) the most common response I receive is –it was caused by my bad neighbors who were greedy and took out loans they shouldn’t have. I rarely hear anything about banks, even today.
Too bad it wasn’t a case of “evil loan taking neighbors” because the crisis would be over by now! As job loss hits the middle class and “responsible” borrowers, information like this will help to understand what really happened and what is still going on.
Without a proper understanding of a situation, we cannot take true corrective measures.
Its the same old shit. Remember when the chimp appointed industry insiders to head everything from Forestry to the EPA? They came out with nice sounding names like the clean water or clean air act while allowing more pollution than ever. The agencies sold huge volumes of timber to timber companies and then built roads into the timber that cost more than the total sale. Then trashed the roads afterwards. WTF is going on here? Its time people realized it really is corporate america giving the people of the world a good screwing. Our govt doesn’t do anything at all that doesn’t benefit them. Why do you think we need a military prescense around the world, if not to keep the thumb on people while corporate america steals them blind? Whoa to those who might try do something about it. Now we’re going to get the same treatment right here at home. Coming to you soon.
I’m dismayed by your post, Michael, as I’m going through this process myself against Chase and surmise that “reviewer” is probably gamed as well.
But to add a bit to the conversation, I recently finished Susskind’s book “Confidence Men” and there is a chapter where Obama had a private meeting with the heads of the TBTF banksters, who according to Susskind were shaking in their boots because Obama had them dead to rights and they were concerned about prosecutions or at the very least losing their bonuses. The result of the meeting was Obama being complicit and conciliatory. It could have been a watershed moment for millions of Americans if Obama had used the moment otherwise. But he let them off the hook, and the rest is history we must live with.
I grew up on the west side of Detroit only two blocks away from the current CFO of the OCC. Had to get out the yearbook to verify that this morning after reading a bit of his over at Classmates.com. Then it hit me as very odd that another classmate who lived one block away was the CEO and principle owner of one of the early bank failures in Northville, MI around Oct 2008. Wonder if they had a falling out somewhere along the line – a girl perhaps? Or just a strange co-incidence.
Yves, this is terrific investigation, analysis and documentation, but it (and other articles like it) needs a summary with a governing thought and 3 simple supporting statements. (Classic McKinsey stuff) It does no good to send this to a Senator or Attorney General and ask for action because the article is too long and too complicated, and most importantly has no short punchy summary to grab their attention. Don’t stop the terrific reporting and analysis you do, but it would be great to see a punchy summary with supports that can be copied and emailed. We need to get a ground swell of easily digestible information going to senior decision makers. Thanks for all you do.
I am sick to death of hearing “what the bankers did is just immoral not illegal.” I have submitted over 300 documents showing FORGERY, back-dating of documents, notary fraud, robo-signing and Trustee Conflict of Interest.
Last I checked, forgery was a felony. I am now printing all these documents out and for every single one of them, I plan on calling the police and getting a police report. Then, I will have a DOCUMENTED case number to follow up on. I will follow this shit until they lock me up.
Michael, I would like to mention that the Agents and Brokers who handle REO properties in my area are just as honest and ethical as the servicers. My experience is limited but other Agents and Brokers I have spoken to have experienced the same.
You all must learn to vote against your current representative, regardless of his party. ONLY THAT WAY WILL THE ROTTEN STATE CHANGE.
“When in doubt, vote them out!”
No one is indispensable.
I have assisted four borrowers in calls for an IFR form from the IFR 888 number during the last ten days. Of the four calls, one Spanish customer service rep told my borrower that her case was not in their database and she should “sell her house in a short-sale”. I will swear to this as will my caller and another witness to this call. We immediately tried to lodge a complaint but were stonewalled by a “supervisor” who said that could not have happened!!
So, only 25% of the calls were “tainted”. Is this something to crow about? I guess it could have been worse.
But, let us try to make this IFR program into a value for the victims- and if it is not, let us then file suit against the OCC, THE OTS And THE FEDERAL RESERVE, alleging the same fraud, misrepresentation and other familiar torts now alleged against the banks and servicers.
It seems to me they are asking for it!
Please publish this reply- I too am sick and tired of the shabby treatment of a wonderful nation such as ours!!
Happy holidays in spite of it all!!
Sincerely, Jane M. Letwin
Why are the homeowners who have been responsible not get rewarded first? I am disgusted at the many foreclosed victims such as the ones listed in this article http://dailyproperties.com/foreclosure-victims-tactics/ getting rewarded before responsible home owners.
Is the “failure” of the Obama Administration to enforce relevant laws here enough of a “failure” to rise to the “high crimes and misdemeanors” level?
Is there an embittered officeholder still smoldering over
Obama’s deceit and treachery who would try to speak in favor of Impeachment Hearings on that issue? Kucinich? Anyone?
The tragedy of our entire nation is that this article will only be read by a few thousand and no one will act upon it. Meanwhile, the American mind is entirely OCCUPIED with sports scores and pop culture. It is the EXPLICIT responsibility of every American to get far more engaged in this war. This is not a video game…this is not a dress rehearsal…the trillions of dollars that we’re all talking about represent years of our lives and years of our children’s lives, years that will be spent in slavish servitude to the dark forces that hijacked this nation, this world. We must all do more. More writing, more speaking out, more convincing everyone around us that these are the only issues that matter…..great job Michael and Yves….and thank both of you for all the work you’re doing.
…the trillions of dollars that we’re all talking about represent years of our lives and years of our children’s lives, matt weidner
Please do not buy into that meme! Money is simply electronic bookkeeping entries and mostly unjust ones at that. It would take only a few seconds to reverse the injustice.