City of Springfield Banned all Foreclosures! How Will The Supreme Court Rule On That?

 

BOSTON – A group of Western Massachusetts banks argued before the state’s highest court on Thursday that the city of Springfield’s anti-foreclosure ordinances should be overturned.

The banks say the local ordinances contradict state laws, and a bond levied on lenders constitutes an illegal tax. “It’s not that banks are opposed to mortgage laws and reform, but to how it’s being done,” said Craig Kaylor, general counsel for Hampden Bank, one of the banks that brought the lawsuit. “These are for the state to decide, not city by city.”

But the city disagrees and says the laws are necessary to avoid blight and protect neighborhoods that have high rates of foreclosure.

“This is the city’s response to the foreclosure crisis,” said Springfield Assistant City Solicitor Thomas Moore, who argued the case before the Supreme Judicial Court. “It’s a response from the city council and mayor based on what they see every day in the city. They’ve taken the strongest stance to protect homeowners and the city itself.”

The city of Springfield passed two anti-foreclosure ordinances in 2011 as the city was being hit hard by the mortgage foreclosure crisis. One ordinance requires a bank that forecloses on a home to pay for a $10,000 bond, which can be used by the city to maintain the foreclosed properties, if the bank fails to do so.

The other ordinance requires the establishment of a mandatory mediation program to help homeowners facing foreclosure. The bank would be responsible for paying most of the cost of the mediation.

Springfield is among the top cities in the state in the number of distressed properties it has. The city says high rates of foreclosures lead to health and education problems for children in families that lose their homes, and high rates of blighted or vacant properties lead to crime and violence in those neighborhoods.

Six western Massachusetts banks, with Easthampton Savings Bank as the lead plaintiff, challenged the ordinances. A U.S. District court judge upheld the ordinances. However, on appeal, the U.S. Court of Appeals issued a stay preventing Springfield from enforcing them. The federal court then asked the Supreme Judicial Court, the state’s highest court, to answer two questions related to state law before the federal court makes its ruling. The case is Easthampton Savings Bank and others vs. City of Springfield.

The SJC must decide whether the local foreclosure ordinances are preempted by existing state foreclosure laws. The court must also decide whether the $10,000 bond is a legal fee or an illegal tax. Cities and towns cannot create taxes without legislative approval.

The banks also argue that the ordinances violate the contract clause of the U.S. Constitution by impairing the contract between the homeowner and the mortgage-holder, a question that remains before the federal court.

During Thursday’s arguments, Tani Sapirstein, an attorney representing the banks, argued that the bond is a tax because banks do not get any particular benefit from paying it – which is the criteria for calling something a fee. The way the bond works is when a foreclosed property is sold, if the city did not have to use the bond money to maintain it, $9,500 would be returned to the bank and $500 is kept by the city as an administrative fee, used to maintain blighted properties and implement the foreclosure laws.

Chief Justice Ralph Gants questioned Sapirstein on whether the bank does not actually receive benefits. “You have an interest in preserving the value of your property,” Gants said. “If there are foreclosed properties going to hell all around your property, it diminishes the value of your property and diminishes the value of what you receive on the foreclosure. Why is this concern about avoiding blight not something that would benefit the bank as well as the city?”

Sapirstein replied that eliminating blight would benefit the bank “as well as the city and other property owners in the neighborhood.” “How is that a particularized benefit?” she said.

Moore argued that the bond is a fee, which the city needs to hire code inspectors and create a database of who controls foreclosed properties.

But Justice Geraldine Hines said if she pays for a copy of her birth certificate, she gets a document in return for the fee. “Here I don’t see that,” she said. “The property owners, the mortgagees, don’t have something tangible.”

Moore said the banks get a “well-regulated industry” and preservation of their property values. In addition, when a bank registers ownership in the database, the city knows who is responsible and problems can be resolved more easily.

Sapirstein also argued that local law cannot require more than state law in an area that is regulated by the state or the result would be “a patchwork of ordinances.”

Gants indicated that the court may move to narrow the ordinances – for example, applying them only to a bank that has taken possession of a house, not a bank that is in the process of foreclosure when the homeowner is still living there. Gants said the ordinance as written could fine a bank for not maintaining a property where the homeowner still lives. As a homeowner, Gants said, “I’d say I’m still living here. This is my home. How can they be punished for not invading what’s still my home just because they happen to be foreclosing on it?” Gants said.

Moore acknowledged that the ordinance may be overbroad and said the city does not anticipate pursuing a violation in a case like that. Moore said the lenders’ lawsuit is premature because there is no information yet about how the city will enforce the laws. “We have the lenders essentially saying the sky will be falling, we are worried about x, y, z happening. None of that has happened and none of that may happen,” Moore said.

Moore said the city is still writing the regulations for the ordinances and if they are upheld, “The city is ready to go forward with implementation within a period of weeks.”

Similar foreclosure ordinances were established in Lynn and Worcester, and local banks challenged those as well. That lawsuit is pending in U.S. District Court in Worcester. The case involving Lynn and Worcester could be affected by the SJC’s ruling in the Springfield case.

Several activists supporting homeowners came in from Lynn and Springfield to hear the arguments. Candejah Pink, a Springfield homeowner and community organizer battled foreclosure for four years before reaching an agreement to keep her home. She helped write the Springfield ordinances. Pink said the bond is there to ensure that homes are maintained, which keeps crime and violence down. The mediation program, she said, is important to help homeowners come to an agreement with lenders. “We’re not asking to live in our homes for free. We’re asking for some mediation,” she said.

Neil Garfield Telling It As It Is…”Bullying As An Acceptable Way of Life – Covered By A Corporate Shell Game!

Never Ending Foreclosures

      Foreclosure filings were reported on 124,419 U.S. properties in January 2014, an 8 percent increase from December but still down 18 percent from January 2013.  Foreclosure filings were reported on 1,361,795 U.S. properties in 2013, down 26 percent from 2012 and down 53 percent from the peak of 2.9 million properties with foreclosure filings in 2010.  But still, 9.3 million U.S. residential properties were deeply underwater representing 19 percent of all properties with a mortgage in December 2013, down from 10.7 million homes underwater in September 2013.[1] 

            In 2006 there were 1,215,304 foreclosures, 545,000 foreclosure filings and 268,532 Home Repossessions.  By 2007 foreclosures had almost doubled – up to 2,203,295 with 1,260,000 foreclosure filings and 489,000 Home Repossessions.  2008 saw an even further increase to 3,019,482 foreclosures, 2,350,000 Foreclosure filings and 679,000 Home Repossessions.  In 20093,457,643 foreclosures, 2,920,000 foreclosure filings, and 945,000 Home Repossessions.  2010:  3,843,548 foreclosures, 3,500,000 foreclosure filings, and 1,125,000 Home Repossessions.  2011:  3,920,418 foreclosures, 3,580,000 foreclosure filings, and 1,147,000 Home Repossessions.  Then January to September 20121,616,427 foreclosures 1,382,000 foreclosure filings and 572,844 Repossessions.  The remainder of 2012 – September through December saw an additional 2,300,000 foreclosures, 2,100,000 foreclosure filings and 700,000 Repossessions.  In other words, from 2006 through 2012, there were a total of  21,576,117 foreclosures; 17,637,000 foreclosure filings; 5,926,376 Home Repossessions.  The foreclosures added to the repossessions is equal to:  27,502,493[2].  The numbers are staggering.

            Many of the homes have been wrongfully foreclosed upon, where either the party had not been in default, or the foreclosing party lacked standing to foreclose.  It has become almost as lawless as the wildwest, or comparable to a shark feeding frenzy.


[1] All of the foreclosure figures came from RealtyTrac:  http://www.realtytrac.com/content/foreclosure-market-report

[2] http://www.statisticbrain.com/home-foreclosure-statistics/Statistic Verification  Source: RealtyTrac, Federal Reserve, Equifax

New Legal Issues – Jeff Barnes Esq., Foreclosure Defense Nationwide

NEW LEGAL ISSUES COMING UP IN TRIAL AND APPELLATE COURTS

DECEMBER 16, 2013

December 16, 2013

With the release of the US Bank admissions per our post of November 6, 2013; the issuance of the opinions from the Supreme Courts of Oregon and Montana holding that MERS is not the “beneficiary”; and recent opinions from various jurisdictions which are now, finally, holding that securitization-related issues are relevant in a foreclosure, a host of new legal issues are about to be litigated in the trial and appellate courts throughout the country. It has taken six (6) years and coast-to-coast work to get courts to realize that securitization of a mortgage loan raises issues as to standing, real party in interest, and the alleged authority to foreclose, and that the simplistic mantra of the “banks” and servicers of “we have the note, thus we win” is no longer to be blindly accepted.

One issue which we and others are litigating relates to mortgage loans originated by Option One, which changed its name to Sand Canyon Corporation and thereafter ceased all mortgage loan operations. Pursuant to the sworn testimony of the former President of Sand Canyon, it stopped owning mortgage loans as of 2008. However, even after this cessation of any involvement with servicing or ownership of mortgage loans, we see “Assignments” from Option One or Sand Canyon to a securitization trustee bank or other third party long after 2008.

The United States District Court for the District of New Hampshire concluded, with the admission of the President of Sand Canyon, that the homeowner’s challenge to the foreclosure based on a 2011 alleged transfer from Sand Canyon to Wells Fargo was not an “attack on the assignment” which certain jurisdictions have precluded on the alleged basis that the borrower is not a party to the assignment, but is a situation where no assignment occurred because it could not have as a matter of admitted fact, as Sand Canyon could not assign something it did not have. The case is Drouin v. American Home Mortgage Servicing, Inc. and Wells Fargo, etc., No. 11-cv-596-JL.

The Option One/Sand Canyon situation is not unique: there are many originating “lenders” which allegedly “assigned” mortgages or Deeds of Trust long after they went out of business or filed for Bankruptcy, with no evidence of post-closing assignment authority or that the Bankruptcy court having jurisdiction over a bankrupt lender ever granted permission for the alleged transfer of the loan (which is an asset of the Bankruptcy estate) out of the estate. Such a transfer without proof of authority to do so implicates bankruptcy fraud (which is a serious crime punishable under United States criminal statutes), and fraud on the court in a foreclosure case where such an alleged assignment is relied upon by the foreclosing party.

As we stated in our post of November 6, the admission of US Bank that a borrower is a party to any MBS transaction and that the loan is governed by the trust documents means that the borrower is, in fact, a party to any assignment of that borrower’s loan, and should thus be permitted to seek discovery as to any alleged assignment and all issues related to the securitization of the loan. We have put this issue out in many of our cases, and will be arguing this position at both the trial and appellate levels beginning early 2014.

Jeff Barnes, Esq., http://www.ForeclosureDefenseNationwide.com

From Living Lies – On Stopa’s Courage, and Appellate Court’s Bias

Attorney Mark Stopa Shows Guts Confronting Appellate Court Bias

Posted on October 4, 2013 by Neil Garfield 

http://livinglies.wordpress.com/2013/10/04/attorney-mark-stopa-shows-guts-confronting-appellate-court-bias/ 

I have just received a copy of a daring and tempestuous motion for rehearing en banc filed by the winner of the appeal. The homeowner won because of precedent, law and common sense; but the court didn’t like their own decision and certified an absurd question to the Florida Supreme Court. The question was whether the Plaintiff in a foreclosure case needs to have standing at the commencement of the action. Whether it is jurisdictional or not (I think it is clearly jurisdictional) Stopa is both right on the law and right on his challenge to the Court on the grounds of BIAS. 

The concurring opinion of the court actually says that the court is ruling for the homeowner because it must — but asserts that it is leading to a result that fails to expedite cases where the outcome of the inevitable foreclosure is never in doubt. In other words, the appellate court has officially taken the position that we know before we look at a foreclosure case that the bank should win and the homeowner should lose. The entire court should be recused for bias that they have put in writing. What homeowner can bring an action or defend an action where the outcome desired by the courts in that district have already decided that homeowners are deadbeats and their defenses are quite literally a waste of time? Under the rules, the Court should not hear the the motion for rehearing en banc, should vacate that part of the decision that sets up the rube certified question, and the justices who participated must be recused from hearing further appeals on foreclosure cases. 

Lest their be any mistake, and without any attempt to step on the toes of Stopa’s courageous brief on an appeal he already won, I wish to piggy back on his brief and expand certain points. The problem here might be the subject of a federal due process action against the state. Judges who have already decided foreclosure or mortgage litigation cases before they even see them are not fit to hear them. It IS that simple.

The question here was stated as the issue of standing at the commencement of the lawsuit. Does the bank need to have a claim before it files it? The question is so absurd that it is difficult to address without a joke. But this is not funny. The courts have rapidly evolved into a position that expedited decisions are better than fair decisions. There is NOTHING in the law that supports that position and thousands of cases that say the opposite is true under our system of law. Any judge who leans the other way should be recused or taken off the bench entirely. 

In lay terms, the Appellate Court’s certified question would allow anyone who thinks they might have a claim in the future to file the lawsuit now. And the Court believes this will relieve the clogged court calendars. If this matter is taken seriously and the Supreme Court accepts the certified question for serious review it will merely by acceptance be making a statement that makes it possible for all kinds of claims that anticipate an injury. 

It is bad enough that judges appear to be ignoring the requirement that there must be an allegation that a loan was made by the originating party and that the Plaintiff actually bought the loan. This was an obvious requirement that was consistently required in pleading until the courts were clogged with mortgage litigation, at which point the court system tilted far past due process and said that if the borrower stopped paying there were no conditions under which the borrower could win the case. 

It is bad enough that Judges appear to be ignoring the requirement that the allegation that the Plaintiff will suffer financial damage unless relief is granted. This was an obvious requirement that was consistently required in pleading until the mortgage meltdown. 

Why is this important? Because the facts will show that lenders consistently violated basic and advanced protections that have been federal and State law for decades. These violations more often than not produced an unenforceable loan — as pointed out in law suits by federal and state regulators, and as pointed out by the lawsuits of investors who were real lenders who are screwed each time the court enters foreclosure judgment in favor of the bank instead of the investor lenders. 

It is not the fault of borrowers that this mess was created. It is the fault of Wall Street Bankers who were working a scheme to defraud investors by diverting the real transaction and making it appear that the banks were principals in the loan transaction when in fact they were never real parties in interest. Nobody would seriously argue that this eliminates the debt. But why are we enforcing that debt with completely defective mortgage instruments in a process that confirms the fraud and ratifies it to the damage of investors who put up the money in the first place? The courts have made a choice that is unavailable in our system of law. 

This is also judicial laziness. If these justices want to weigh in on the mortgage mess, then they should have the facts and not the stories put forward by Wall Street that have been proven to be pure fiction, fabrication, lies and perjury. That the Court ignores what is plainly documented in hundreds of thousands of defective mortgage transactions and the behavior of banks that resulted in “strangers to the transaction” being awarded title to property — that presents sufficient grounds to challenge any court in the system on grounds of bias and due process. If ever we had a mass hysteria for prejudging cases, this is it. 

Neil Garfield | October 4, 2013 at 9:26 am | Tags: bias, Mark Stopa, motion for rehearing en banc, recusal, removal of judge, standing | Categories: CORRUPTION, Eviction, foreclosure, foreclosure mill, investment banking, Investor, MODIFICATION, Mortgage, Motions, Pleading, politics, securities fraud, Servicer | URL: http://wp.me/p7SnH-5GX

Why Does No One Do Anything?

Protesters Turned Into Those Whom They Were Protesting SUX!

BY NOOTKABEAR ON SEPTEMBER 30, 2013

You know, I have been thinking a lot lately about why it is that the Protesters from the 60′s and early 70′s are really pissing me off nowadays.   They act like a bunch of sheep or cattle.  The whole country is running amock and nobody says a damned thing about it.  IT SUX!  

I have come to the realization that the Protesters from the 60′-70′s turned into the very thing they were protesting, except even more so.  It SUX!

You would have thought that those protesters would have gone on to make a difference, and that there would not be all of this corruption that we deal with on a daily basis.  The flower children, peace – love and rock & roll.  What the hell happened?  Those people forgot everything about why they were protesting in the first place.  They forgot “let’s love one another”, forgot about “live and let live”.  Hell they are worse than the people they were protesting, because they are hypocrites.  

Now, they go sludging along, fuck it if everyone is being foreclosed upon, even if they paid for the property in full.  Fuck it if we have WWIII because our president is a fuck up.  Fuck it if Russia nukes us.  Fuck it if the Japanese have ended life on earth with their meltdown problem.  Fuck it if Russia’s Putin now speaks when the United States should have been speaking.  Fuck it if the Christians are being slaughtered.   Fuck it if there are no jobs.  Fuck it if Obamacare causes all of us to be denied healthcare we are entitled to.

Fuck it, Fuck it, fuck it.  THIS SUX!  This is not who we are.  This is not what are forefathers would have accepted.  This is not how we got to where we were.

So this week, the Protesters, turned cattle, sheep and couch potatoes are what SUX!!!

From the Very Well Known Foreclosure Defense Attorney, Stopa

Foreclosure Court: The Erosion of the Judiciary

http://www.stayinmyhome.com/foreclosure-court-the-erosion-of-the-judiciary/                                                                                                           Posted on September 2nd, 2013 by Mark Stopa 

I’m a big believer in the justice system.  In fact, that’s part of why I became a lawyer.  I believe in every litigant’s right to obtain a fair hearing and trial before a neutral judge and/or impartial jury.  It sounds cliché, but that’s what I do – help people navigate the judicial system in their time of need. 

In recent months, though, the judiciary in many parts of Florida (not all, but many) has turned into something I don’t recognize.  The change has been so sudden and so extreme that it’s altering the face of the judiciary and hindering that which I hold so dear – the right to fair hearings and due process.  Yes, what I consider the “core” of a fully-functioning judicial system is eroding. 

If you’re a Florida lawyer but you don’t handle foreclosure cases, you likely have no idea what I’m talking about.  After all, outside of foreclosure-world, Florida’s courts are operating like normal, business as usual.  Sure, the down economy has brought some minor changes, but all in all, our courts are functioning in a normal way. 

Foreclosure cases, though, are a totally different animal. 

I was chatting with a colleague the other day, an attorney who doesn’t handle foreclosure lawsuits, and he was shocked as I described the things I see in foreclosure court on a daily basis.  This is a seasoned attorney who was SHOCKED at what I see every day.  That made me realize … I’m not doing a good enough job of explaining the travesties I see every day in foreclosure-world. 

It’s a tough line to toe, frankly.  Bar rules prohibit me from disparaging any particular judge, so it’s sometimes difficult to explain what’s happening in foreclosure court without crossing that line.  In this blog, though, I’m going to toe that line.  Don’t misunderstand – I’m not criticizing anyone in particular.  Rather, my critique – and that’s what I see this as, a constructive critique, coupled with a hope that everyone will realize just how flawed our system has become – is aimed at the entire institution.  My concerns aren’t with any particular judge or any one ruling – they lie with the entire judicial system, the way the entire judiciary is operating right now, at least as it pertains to foreclosure cases. 

I know what you’re thinking.  I’m just a self-interested, foreclosure defense attorney who’s trying to delay foreclosures and let people live for free.  I’m upset because the courts are making that more difficult.  Right?

Before you blow off my concerns in that manner, you tell me.  Are my concerns legitimate?  Is this how a judicial system should operate?  You tell me … 

As a foreclosure defense lawyer, I’ve seen pro se homeowners attend hearings in their cases and not be allowed to speak.  Not one word.  It wasn’t that the judge didn’t hear the homeowner or didn’t realize he/she was present, either – the homeowner asked the judge to speak at a duly-noticed hearing and was not permitted to do so.  Homeowner loses, yet couldn’t say one word.  Isolated incident, you say?  I’ve personally seen it more than once. 

Not being permitted to speak has not been limited to pro se homeowners.  I have personally been threatened with criminal contempt – criminal contempt – for moving to disqualify a judge after striking my defenses without letting me say one word about those defenses.  Your defenses are stricken, you can’t talk, and if you complain about it, I’ll throw you in jail. 

In many parts of Florida, attorneys are not permitted to attend foreclosure hearings by phone – regardless of how insignificant or short the hearing may be.  Never mind that the Florida Supreme Court created a rule of judicial administration which requires phone appearances be permitted for hearings that are 15 minutes or less absent “good cause” – in many parts of Florida, attendance by phone is simply not permitted. 

I’ve heard some justify this procedure by explaining how it’s difficult to deal with phone appearances in foreclosure cases.  Really?  How is it any more difficult than in other types of cases?  Frankly, I can’t help but wonder if the prohibition on phone appearances is designed to make it harder for defense lawyers to appear in cases for homeowners, enabling the courts to push through those cases faster.  (Prohibiting phone appearances obviously makes it harder and more expensive to attend hearings, often making the difference in a homeowner’s ability to afford counsel.) 

That’s an absurd proposition, though, right?  Why would our courts care how quickly foreclosure lawsuits are litigated?  Judges are neutral arbiters – they don’t care how quickly the cases are adjudicated.  Do they? 

The answer to that question is at the heart of the problem.  In recent months, the Florida legislature has been putting immense pressure on Florida judges to clear the backlog of foreclosure lawsuits.  How much pressure?  Well, the legislature controls the amount of funding that goes to our courts – funding that is needed to retain new judges, senior judges, court staff, and clerks (basically, the funding necessary to keep all judges and JAs from being totally overwhelmed).  Unfortunately, the legislature has been giving these judges an ultimatum, kind of like parents do to their children regarding allowance.  Basically, it works like this … “if you don’t finish these foreclosure cases, we won’t give you more funding.”  As such, the legislature holds the judiciary hostage … if the judiciary doesn’t clear cases, then the legislature doesn’t give the judiciary the funding necessary to manage the many thousands of foreclosure lawsuits pending before it. 

Perhaps worse yet, and to my sheer disgust, I’m told the legislature recently cut the pay of Florida judges (for the first time in years), and the clear understanding was that it was done as a way to punish/blame the judges for not clearing up the backlog of foreclosure cases faster.  “You won’t enter judgments fast enough for our liking … we’ll cut your pay.” 

(The pay of Florida judges is public record, right?  Why is nobody talking about this?) 

The judicial system shouldn’t operate this way.  We all learned it in elementary school, how the three branches of government exist as “separate but equal” branches of government, employing a system of “checks and balances” to ensure a fully-functioning government.  But that’s not what’s happening right now, certainly not in foreclosure court.  In foreclosure-world, the legislature is king. 

You might think this is conjecture and speculation on my part.  It’s not.  I can’t go a week without hearing how the legislature is forcing judges to move cases.  Judges discuss it openly in open court, and not just to me – to everyone.  As a result of this dynamic – judges wanting to move cases – I see all sorts of crazy things I’d never see in any other area of law. 

I’ve mentioned the homeowners who can’t speak, the threats of incarcertaion, and the prohibition on phone appearances, but let’s get to some more egregious concerns. 

Judges sua sponte set trials in foreclosure cases (without a Notice of Trial having been filed, without a CMC or pretrial conference, and without discussing/clearing the date with an counsel).  This is now routine, virtually everywhere in the state. 

Judges sua sponte set trials in foreclosure cases where a motion to dismiss is outstanding and the defendant has not filed an answer. 

Judges sua sponte set trials with less than 30 days’ notice (such that, as defense counsel, you randomly receive a trial Order in the mail, reflecting you have a trial in 2 weeks). 

The sua sponte setting of trials dominates the landscape of foreclosure-world.  Banks often don’t want trials in foreclosure cases, but the judges will set them anyway.  Then, even when the plaintiffs are vocal about not wanting a trial in that particular case, judges often insist they go forward anyway.  Even stipulated/agreed Orders to continue a trial or vacate a trial Order often go unsigned. 

Sometimes, where trial has been set in violation of Rule 1.440, judges will recognize the error and fix it.  (The judges in Pinellas and Hillsborough in particular are good about this, striving to follow the law.)  In many others cases, though, judges will proceed with trial anyway.  In foreclosure circles, one county has become known for using a stamp – DENIED – right on the motion to vacate trial Order, without a hearing.  Case not at issue?  Doesn’t matter.  Less than 30 days’ notice?  Doesn’t matter.  Bank doesn’t want a trial?  Doesn’t matter.  We’re going to trial! 

Often, judges won’t proceed with trial where the defendant hasn’t filed an Answer but will essentially force the Answer to be filed forthwith.  How is this accomplished?  Easily – either deny the motion to dismiss (often without a hearing), or sua sponte set a CMC to ensure the case gets at issue.   Some courts use CMCs as a way to, in my view, browbeat parties into settling.  One county, for example, has started setting three CMCs at once – one per week for three consecutive weeks, requiring in-person attendance, at mass-motion calendars that last an hour or more, with no input from counsel on when the CMCs are scheduled.  You’re not available?  Too bad.  You don’t need a CMC three weeks in a row?  Yes, you do.  Your case will get at issue and it will be set for trial. 

Oh, and if you want to set a hearing in this county, you have to mail in a form – MAIL IN A FORM – and wait for them to respond to you, by mail, with a form that gives you a set hearing date, without any input from you on when that hearing takes place. 

What dominates the thinking from the judiciary – again, not my speculation, but something the judges openly discuss – is their desire to “close” cases.  That’s the monster that the legislature has created – evaluating the performance of judges not based on their work as judges but based on the results set forth in an Excel spreadsheet.  How many foreclosure lawsuits were filed in that county?  How many judgments have been entered?  If the ratio of judgments entered to cases filed is high enough, then the judges in that county are doing a good job and deserve more funding from the legislature.  If not, then those judges and JAs can all suffer through the many thousands of cases without more help. 

The dynamic is so perverse that I’ve seen judges refuse to cancel foreclosure sales even when both sides ask them to. 

Plaintiff’s lawyer:  “We don’t want this foreclosure sale to go forward, judge.” 

Defendant’s lawyer:  “We are living in this house.  We don’t want this foreclosure sale to go forward, judge.” 

Judge:  “Foreclosure sale will go forward as scheduled.” 

Huh? 

This dynamic is particularly difficult to take when the parties have reached a settlement.  For example, loan modifications sometimes happen after a judgment but before a sale.  That means, essentially, that both sides are willing to forego foreclosure with the homeowner resuming monthly mortgage payments.  Incredibly, based partly on their desire to “close” a case, some judges will force a foreclosure sale to go forward even when both parties don’t want it to, having settled their dispute via a loan modification. 

Plaintiff’s lawyer:  “We have agreed to a loan modification.  We want the foreclosure sale cancelled.” 

Defendant’s lawyer:  “We have agreed to a loan modification.  We want the foreclosure sale cancelled.” 

Judge:  “Foreclosure sale will go forward as scheduled.” 

Huh? 

Even when both sides are able to resolve disputes before trial, even then they sometimes can’t escape a dress-down from the judiciary.  For instance, I’ve watched judges threaten Bar grievances against lawyers – yes, Bar grievances – where they settled the lawsuit by consenting to a foreclosure judgment with a deficiency waiver and extended sale date.  Mind you, that’s a perfectly legitimate way to compromise and settle a foreclosure lawsuit – bank gets the house, homeowner avoids any further liability and gets to stay in the house longer so as to pack up and move – but the prospect of the sale date getting pushed out 4-5 months angers some judges.  “No, you can’t settle that way.  The sale has to happen sooner.”  Yes, I’ve seen settlements like this rejected with the sale set sooner than the parties agreed.

Huh? 

There’s absolutely no rule or law that requires a sale to happen sooner where the parties agree.  Unfortunately, the judges are motivated by having that case “closed” so the numbers on the spreadsheet look better for the legislature. 

My natural response is to lament the unfairness of it all.  After all, that homeowner gave up the chances of winning at trial predicated on getting more time in the house.  I find it terribly unfair that the homeowner gave up a right to trial in exchange for an extended sale date that the judge took away … right?  Some judges would scoff at that notion.  After all, I’ve heard several times, in open court, ”there is no defense to foreclosure,” or “I’ve never seen a valid defense to foreclosure,” or words of that ilk.  Never mind that I’ve had many dozens of foreclosure cases dismissed throughout Florida, including several at trial (25 different judges have dismissed a lawsuit of mine on paragraph 22 noncompliance, for example) … there is no valid defense to foreclosure and, hence, no reason for an extended sale date. 

Another county has become known for punishing any defendants who force a trial to proceed.  I personally observed the judge begin every hearing by telling the homeowners and their counsel that they “better” accept a 120-day extended sale date, as if that “offer” was rejected then it would be “off the table” after the trial.  The implication here was obvious to everyone in the room … You want to show up and force the bank to prove its case?  You’ll lose, and I’ll punish you by ruling against you and forcing you to move out sooner. 

Some would say that the way to deal with this madness is to appeal.  Easier said than done.  Homeowners facing foreclosure are often in no position to fund an appeal.  I’ve taken some appeals for free, but there’s only so many I can handle that way.  Oh, and even if you get beyond the issue of funding, go look for published decisions that are pro-homeowner in the First DCA, Third DCA, or Fifth DCA.  Many thousands of foreclosure cases have been adjudicated in those areas in the past several years.  How many favorable rulings do you think have come out of those jurisdictions during that time?  I’ll give you a hint – not many.  In many ways, appealing in those parts of the state is like standing at the bottom of Mount Everest and being told “climb.” 

Dealing with this dynamic has been very difficult in recent months.  It’s a hard pill to swallow.  It’s difficult to watch the judicial system bend at the direction of the legislature.  It’s tough to know the concept of “separation of powers” that we all learned in elementary school is being cast aside.  It’s hard to feel like the most fundamental concepts of due process are being sacrificed to push lawsuits faster when even the plaintiffs in those lawsuits don’t so desire.  It’s hard to feel like these procedures have made it impossible for me to help homeowners in certain parts of the state.  It’s frustrating that many reading this will be upset at the entire judiciary, not realizing there are many circuit judges – particularly in Hillsborough, Pinellas, and other areas within the ambit of Florida’s Second District – who are striving to be fair and follow the law notwithstanding all of the pressure from the legislature. 

Mostly, though, I’m disappointed.  I’m disappointed that such perverse procedures are happening in our courts every day yet nobody is talking about it – and many don’t even realize it’s happening.  I’m disappointed that the justice system I knew is eroding.  I’m not going to find a dictionary definition, but that’s what erosion is – a slow process of deterioration such that, before too long, that thing which previously existed is no more. 

I hope everyone shares this blog.  I hope my friends, colleagues, attorneys and homeowners all understand what’s happening in our courts.  I hope everyone stands up to the legislature and demands it stop this madness.  Most of all, I hope the erosion of our judiciary stops … soon.

DOC X IN HOT WATER AGAIN!!!

STATE OF MICHIGAN ATTORNEY GENERAL
BILL SCHUETTE FILES CRIMINAL CHARGES
AGAINST FORMER MORTGAGE PROCESSOR
PRESIDENT FOR ROLE IN FRAUDULENT
ROBOSIGNING
http://www.michigan.gov/ag/0,4534,7-164-46849_47203-290350–,00.html

http://www.linkedin.com/osview/canvas?_ch_page_id=1&_ch_panel_id=1&_ch_app_id=49029150&_applicationId=103900&appParams=%7B%22document%22%3A%22cf986799-3863-43e3-91bd-69e1d8db8438%22%2C%22method%22%3A%22document.view%22%2C%22layout%22%3A%22layout_blank%22%2C%22target%22%3A%22blank_content%22%2C%22surface%22%3A%22canvas%22%7D&_ownerId=57736655&completeUrlHash=_Vxg
November 26, 2012

LANSING – Michigan Attorney General Bill Schuette today announced he charged Lorraine Brown, former president of mortgage document processor DocX, with racketeering for her alleged role in authorizing the fraudulent signing of mortgage documents filed in Michigan. The felony charge comes as the result
of an ongoing Attorney General investigation into questionable mortgage documentation filed with Michigan’s Register of Deeds offices during the foreclosure crisis.
"Shortcuts like robo-signing are just one piece of the mortgage foreclosure crisis," said Schuette. "Our investigation remains ongoing, and we will bring to justice every lawbreaker we find."
In April 2011, Schuette launched an investigation after county officials across the state reported that they suspected Assignment of Mortgage documents filed in their offices may have been forged. A "60 Minutes" news broadcast had shown that the name "Linda Green" was signed to thousands of mortgage-related documents nationwide, but with many different variations in handwriting. County officials in Michigan reviewed their files and found similar documents, thus raising questions about the authenticity of the documents filed.
As part of his investigation, Schuette reviewed documents filed in Michigan and prepared by DocX, a document processing company located in Georgia. DocX processed mortgage assignments and lien releases for residential lenders and servicers nationwide. Schuette’s investigation revealed that former DocX president Lorraine Brown, 51, of Alpharetta, Georgia, allegedly established and orchestrated a widespread scheme of "robo-signing," a practice in which employees were directed to fraudulently sign another authorized person’s name on mortgage documents in order to execute these documents as quickly as possible.
Internally, DocX identified this practice as "facsimile signing" or "surrogate signing." Schuette alleges that from 2006 through 2009, these improperly executed documents were created and recorded at Brown’s direction. Schuette’s investigation revealed that more than 1,000 unauthorized and improperly executed documents were filed with county registers of deeds throughout Michigan.
Lorraine Brown has been charged with one count of Conducting Criminal Enterprises (Racketeering), a 20-year felony, in Kent County’s 61st District Court. Arrangements are being made for Brown to surrender to Michigan authorities, and arraignment will be scheduled at a later date.
In 2010, DocX suspended operations, halting its work as a mortgage document processor. Schuette noted that while the criminal charges against Brown address her role in the scheme, his office’s overall investigation into robosigning remains ongoing and is not yet complete.
A criminal charge is merely an accusation, and the defendants are
presumed innocent unless proven guilty.

The Securitization Curtain is Lifting in Hawaii! | Deadly Clear

Deadly Clear

Derivatives are financial weapons of mass destruction… potentially lethal. -Warren Buffet

The Securitization Curtain is Lifting in Hawaii!

Posted on March 29, 2012 by Deadly Clear

“One of the most important decisions for Borrowers Rights in the history of Hawaii has been made with this decision,” remarked Honolulu attorney Gary Dubin. Honorable Judge J. Michael Seabright of the Hawaii United States District Court, today GRANTED the homeowners’ Motion to Dismiss the case filed against them in federal district court by Plaintiff Deutsche Bank National Trust Company, as Trustee Morgan Stanley ABS Capital I Inc. Trust 2007-NC1 Mortgage Pass-Through Certificates, Series 2007-NC1.

The Williamses (Leigafoalii Tafue Williams and Papu Christopher Williams), who were represented by Honolulu attorney, James J. Bickerton (Jim), of Bickerton Lee Dang & Sullivan, filed a Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1), in which they argue, among other things, that Plaintiff has no standing to foreclose because it has not established that it was validly assigned the Mortgage and Note.

The Court noted that: “Because the court finds that Plaintiff has failed to establish its standing to bring this action, the court need not reach the Williamses’ other arguments for dismissal.”

Honorable Judge J. Michael Seabright gets it! And his ORDER was detailed. In the Discussion, Judge Seabright notes an argument that homeowners have being trying to persuade the courts (especially at the lower state levels) to grasp: STANDING and JURISDICTION.

Standing is a requirement grounded in Article III of the United States Constitution, and a defect in standing cannot be waived by the parties. Chapman v. Pier 1 Imports (US.) Inc., 631 F.3d 939,954 (9th Cir. 2011). A litigant must have both constitutional standing and prudential standing for a federal court to exercise jurisdiction over the case. Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 11 (2004). Constitutional standing requires the plaintiff to “show that the conduct of which he complains has caused him to suffer an ‘injury in fact’ that a favorable judgment will redress.” Id. at 12. In comparison, “prudential standing encompasses the general prohibition on a litigant’s raising another person’s legal rights.” Id. (citation and quotation signals omitted); see also Oregon v. Legal Servs. Corp., 552 F.3d 965, 971 (9th Cir. 2009).”

Let’s continue – but we’ll get back to that injury issue later in the post.

The WILLIAMSES’ ORDER continues: “The Williamses factually attack Plaintiff’s prudential standing to foreclose, arguing that there is no evidence establishing that Plaintiff was validly assigned the Mortgage and Note on the subject property. The issue of whether Plaintiff was validly assigned the Mortgage and Note is inextricably intertwined with the merits of the Plaintiffs claims seeking to foreclose…”

Of course, this was a New Century Mortgage (Home123) and the Plaintiffs were taking part in a fabricated assignment in 2009 to a 2007 Trust… (that boat had sailed 2 years before because theTrust had long since closed) – but even more compelling in the Motion to Dismiss-Memorandum was the Williamses assertion that New Century aka Home123 was in a liquidating bankruptcy as of August 1, 2008 and they had nothing to assign in January 2009.

Deutsche argued that the Williamses were not parties or beneficiaries to the assignment such that they cannot challenge it… [we’ve heard that before, yeah?]. However, the Judge Seabright clarifies a valid point:

“Plaintiffs argument confuses a borrower’s, as opposed to a lender’s, standing to raise affirmative claims. In Williams v. Rickard, 2011 WL 2116995, at *5 (D. Haw. May 25, 2011), — which involved the same parties in this action and in which Lei Williams asserted affirmative claims against Deutsche Bank – Chief Judge Susan Oki Mollway explained the difference between the two:

“…Standing” is a plaintiff’s requirement, and … Defendants must establish “standing” to defend themselves.”

Judge Seabright continues: ”Deutsche Bank asserts affirmative claims against the Williamses seeking to enforce the Mortgage and Note, and therefore must establish its legal right (i.e., standing) to do so. See, e.g., IndyMac Bank v. Miguel, 117 Haw. 506, 513, 184 P.3d 821, 828 (Haw. App. 2008) (explaining that for standing, a mortgagee must have “a sufficient interest in the Mortgage to have suffered an injury from [the mortgagor’s] default”).”

Attorney Bickerton faced off in court and explained to the Judge in oral argument that the banks didn’t just miss the date to file their assignments or needed to tidy up paperwork, this was a ‘Business model using the loans for overnight lending.’ Bickerton told the Court that if this wasn’t dismissed, his first line of discovery would be geared to uncover the outside financial advantages being derived from the use of the Williamses’ loan.

Understanding the premeditated intentions of these banks, how they pledge, collaterize, swap, sell, lease,and trade these loans that are SUPPOSED to have been in a static trust will open the eyes of lawmakers to the real moral hazard – the fraud upon the homeowners, the courts and the state.

Jim Bickerton profoundly says that, “every foreclosure in the state is a victim of this shadow banking scam.”

James J. Bickerton
Bickerton Lee Dang & Sullivan
Fort St Tower
745 Fort St Ste 801
Honolulu, HI 96813
808-599-3811
Email: bickerton@bsds.com

“Security trusts will no longer be able to hide behind the hocus pocus of the pooling and servicing agreements. The ramifications of this decision are extraordinary,” praises Gary Dubin.

INJURY – Remember that issue from above?

Let’s discuss the trusts. We can see by the assignments that they were not made timely and NY trust laws call them VOID. The REMIC has failed. But maybe the investors ARE getting paid with the behind the scenes shadow banking scheme.

And let’s suppose we can see the trading in the trust is active, numerous investors have already been paid off – where is the “injury”….hmmm?

We’re connecting the dots, people with above average intelligence are realizing, just like Judge Seabright, that there are huge schemes behind the scenes of an everyday mortgage that the borrower never intended to participate in… and eventually we’ll know whether the application for a mortgage started the securitization process before the borrower signed the note making them securities with no disclosure, how many insurance policies were attached to the loans and when (we never agreed to be over insured which would give someone the incentive to “off” us)… it’s coming soon – to a court room near you…

…and the Securitization curtain will be lifting for the big show.

___________________________________________________________________

Details by DeadlyClear

Honorable Judge J. Michael Seabright – Thank you. Mahalo!
This is why he gets the “Gets It” award:

http://archives.starbulletin.com/2005/04/28/news/story5.html

An assistant U.S. attorney who prosecuted several high-profile white-collar criminal cases here is on his way to becoming Hawaii’s fourth full-time federal judge. Michael Seabright: As an assistant U.S. attorney, he put three isle politicians behind bars.

The U.S. Senate voted 98-0 yesterday to confirm J. Michael Seabright as a U.S. district judge for the District of Hawaii. ”I’m very honored to have received that vote,” said Seabright, 46, an assistant U.S. attorney since 1990 and head of the white-collar crime section since 2002.

Image of the Honorable John Michael Seabright from http://www.grainnet.com/articles/usda_cited_by_federal_judge_for_permitting_violations_in_hawaii-36404.html

Federal Judge Magner: Wells Fargo’s Behavior “Highly Reprehensible” – Mandelman Matters

 

Federal Judge Magner: Wells Fargo’s Behavior “Highly Reprehensible”

Does anyone know what’s happened at Wells Fargo Bank?  If so, please let the rest of us know, because in a line up of TBTF bank CEOs, to stand out as being particularly awful is no easy task… and yet Wells Fargo’s CEO, John Stumpf has risen to the challenge and then some.

At the beginning of April of this year, Judge Elizabeth Magner, a federal bankruptcy judge in the Eastern District of Louisiana, characterized Wells Fargo’s behavior as being “highly reprehensible.”  Think about that for a moment.  That means that the judge decided that to describe Wells Fargo as merely “reprehensible,” wasn’t enough.

Wow, that is something.  Can you imagine someone saying that about you… a federal judge, no less?  I’m thinking that if a federal judge ever has the occasion to describe my behavior as being worse than “reprehensible,” I’m going to jail for a long time.

Of course, no danger of anything like that happening here… bankers don’t go to jail in this country, every one knows that.  But, in this instance, after more than five years in litigation with a single homeowner, Judge Magner ordered Wells Fargo to pay the New Orleans man $3.1 million in punitive damages.

Now, if that sounds like a paltry sum for the likes of Wells Fargo, that’s only because it is.  And that it represents one of the largest fines ever levied related to mortgage servicing misconduct hardly makes it feel any better.

It’s kind of like being forced to eat dog turd ice cream, but finding out that it’s okay if you pour motor oil on top.  Does that improve your circumstances?  I guess so, but…

Judge Magner, in her opinion, wrote…

“Wells Fargo has taken advantage of borrowers who rely on it to accurately apply payments and calculate the amounts owed, but perhaps more disturbing is Wells Fargo’s refusal to voluntarily correct its errors. It prefers to rely on the ignorance of borrowers or their inability to fund a challenge to its demands, rather than voluntarily relinquish gains obtained through improper accounting methods.”

So, what was Wells Fargo doing exactly?  Well, they were systematically over-charging the people least able to do anything about it… those filing bankruptcy.  In this case, Wells Fargo improperly charged the borrower $24,000 in fees, but it wasn’t done by hand, it was the bank’s automated systems doing precisely what they were programmed to do.  Like, anything but an isolated incident.

After the borrower fell into default on his mortgage, Wells Fargo’s automated system began applying his mortgage payments to interest and fees that had accrued instead of to principal, as required by his servicing contract, which in turn led to him being charged with a virtual waterfall of additional fees and interest.  And even after the borrower filed bankruptcy, Wells Fargo continued to misapply his payments, according to Judge Magner’s written opinion.

And why wouldn’t they?  I know, it sounds weird to say it, but I think I would have been disappointed had Wells stopped there.

There’s even a terme de l’art for this scenario used by consumer lawyers… they call it a “rolling default.”  I suppose the name refers to the idea that once the scheme gets rolling, it’s all downhill from there.  I think it should be called a “boiling default,” because once it’s boiling, you’re goose is most assuredly cooked.

Or, wait a minute… hang on… how about we call it: “Getting Stumpfed.”

(Come on, admit it… I’m good.)

Judge Magner went on to describe Wells Fargo’s litigation tactics as involving the filing of dozens of briefs, motions and other filings clearly designed to slow down legal proceedings to such a point that anyone thinking of mounting a legal challenge against a bank quickly finds it essentially impossible.

And since it’s only through costly litigation that the insidious crimes of Wells Fargo become apparent, all the bank has to do is prevent those with limited resources from doing what they can’t do with limited resources.  Now there’s a winning business model for you.  Like making billions by stopping blind people from seeing.

What sort of a company engineers this sort of strategic core competency anyway?  Remember Ford’s infamous Pinto strategy… rather than fix the problem, just settle them as they exploded?  Well, this Wells Fargo stuff makes that look as benevolent as Girl Scouts selling cookies after church.

Wells Fargo actually engineered a strategy and built a system to rampantly abuse the individuals in our society least able to defend their interests.  This is a bank that deserves to have a statue erected in its likeliness and even its own Lazarus-styled sonnet.  I’m just thinking out loud here, but how about…

“The Statue of Larceny”

And inside the base, engraved on a bronze plaque, could be these words…

Give us your jobless, injured, bankrupt filers, whose lawyers won’t work free. 

The wretched refuse against whom in court we’ll always score. 

Send them one by one, homes all sold by substitute trustee,

We’ll rape them, rob them, force them out Wells Fargo’s golden door.

Not bad, right?  No?  Sheesh… tough crowd.

Judge Magner, in an interview with Ben Hallman of Huffington Post, said that she personally analyzed the loan files of twenty borrowers in her court and found supposed “errors” in every single instance.  So, at least we know the systems are working properly, and somehow I find that oddly reassuring.

I don’t know why but there’s something even more terrifying about the idea that we might be getting ripped off by banks in an entirely random way.  Like one day you get hit for a hundred… and the next day not only is your entire IRA gone, but two weeks later you learn that the bank bounced one of your checks to the IRS for the penalty on the early withdrawal.

I know, right?  Now, that would be rude.

I guess I only have a couple of questions I’d like to ask, and the most obvious is: Why would anyone whose read about this decision continue to bank at Wells Fargo?

I mean, if they do this sort of thing systematically… AND THEY UNQUESTIONABLY DO, how do you know where the other spots are that are picking your pocket for twenty here and twenty there.  Because you’re not going to tell me you think this case has uncovered the only place at Wells Fargo where this sort of thing goes on, are you?  Come on… what are you, six?

And, my second question is: What do our elected representatives do these days… I mean specifically?  State or federal, I don’t care which… you pick.  Because it kind of seems like we’ve quietly been transformed into a lawless society in many ways, don’t you think?

Like in this bankruptcy case… the judge has uncovered the systematic stealing from the defenseless, but it’s not like it’s a major news story, or anything.  To the contrary, it’s nowhere.  Doesn’t anyone but me find that amazing?  How do they do that?  Where have all the journalists gone?

I can tell you that I receive more complaints about Wells Fargo refusing to approve loan modifications than any three other mortgage servicers combined.  But then, Wells did modify one of the homeowners I wrote about a few months back.  I don’t know why, maybe it was an accident.

Here’s one more thing Judge Marner said about Wells Fargo in her written opinion…

“These are loans of working-class people who bought homes they could afford and whose loans were not administered correctly from an accounting perspective,” Judge Magner said. “I think that these types of problems occur in almost every [defaulted] loan in the country.”

Good Lord.

So, Mr. John Stumpf… Wells Fargo’s CEO… you just go ahead committing those criminal acts with impunity.  Don’t change now… go down with your ship.  Besides, I’m sure there are deceptions your people haven’t thought of yet.

Do you have a program that targets autistic children yet? Or what about something abusive for unmarried pregnant chicks that never finished high school? Or, what about the elderly, are you doing enough to take advantage of the elderly?

I’m sure you’ll think of something, which is why I’ve told my wife and daughter to stay out of banks for the foreseeable future.  We only make deposits at the ATM at night, which may sound crazy, but I’m betting will one day soon prove considerably safer than being inside during the day.

Lo siento.  Que se mejore pronto.

Mandelman out.

Federal Judge Magner: Wells Fargo’s Behavior “Highly Reprehensible” – Mandelman Matters

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