Is It Time to File Quiet Title Actions on Foreclosed Homes?

In the past, foreclosed homeowners and their attorneys have discussed the utility of filing quiet title actions where homes have been seized and deficiency judgments entered by various foreclosure claimants that purport to unknowingly rely on faulty documentation. There are dangers. A buyer that has acquired a foreclosed home or the foreclosing entity itselfmay bring an action against a dispossessed person seeking redress. A pro se plaintiff or an attorney that represents the wronged homeowner may be subject to sanctions for raising a spurious or improperly supported claim. Today facts appear to put a defense attorney at risk of malpractice if he does not preserve his clients interesteven post foreclosureunless he apprises the client of the opportunity to regain title to the family home. Courts have notice of these defects by reason of withdrawals of support documentsbeyond GMAC. Recent disclosures and admissions by document creation groups, together with widespread newspaper reported facts open avenues to additional discovery and formulation of academic legal opinion. These will open the door for claims to set aside erroneous judgments and/or pursue damages against those servicers, Indenture Trustees and document preparers that either knowingly, negligently, or acted with willful disregard to perpetrate fraud on the courts and the hapless homeowners. Mortgage-backed securities investors may also find an interest in these activities. Failed documentation may disguise outright fraud. Attestations and sworn affidavits serve a fundamental purposeprevention of fraud. These are not mere technicalities as propounded by some industry apologists. Certainly, homeowners with continuing duties of enforced silence may have opportunity to re-open their settlements in light of these possible fraudulent impositions and inducements. There are at least two sets of circumstances raised to date whereby potentially void or voidable documents have been used to push homeowners into the streets and into bankruptcy; Complaints in foreclosure supported by assignments of mortgage from purported representatives of MERS to various entities Motions for Summary Judgment supported by Affidavits of Claimantsmost notably GMACs Jeffrey Stephan On September 23, 2010 the Washington Post added to the furor surrounding the (majority) federal government owned [ALLY] GMACs revelations from earlier this week. GMAC used affidavits executed by an employee, Jeffrey Stephan, who admitted in deposition testimony in December 2009 and June 2010, that he did not actually verify the mortgage foreclosure information to which he was testifying in connection with the foreclosures of two families. In addition, he admitted signing these affidavits, and passing them for later notarization in bulk, a violation of proper notary procedure. Mr. Stephan signed off on 10,000 mortgage documents per month according to his June deposition and the
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Post article. GMAC, in this instance, took the honest and safe course of temporarily suspending some foreclosure-related activities in 23 states as reported by several large newspapers, including the New York Times, Bloomberg and The Washington Post. The temporary suspension allows for evaluation of the impacts of this admitted breakdown in the system, rather than blatantly defrauding foreclosure courts in judicial foreclosure states. The New York Times on the 22nd speculated that: [GMAC] actions suggest concern about potential liability in evicting families and selling houses to which it does not have clear title. [Emphasis added] The same article notes that; The lender said it was also reviewing completed foreclosures where the same unnamed procedure might have been used. [Emphasis Added]. The step referred to in these articles, preparation and filing of an affidavit in support of a Motion for Summary Judgmentalong with the Motion itself occur well into the foreclosure process. However, there is another critical document created and filed by a claimant with the foreclosure court at the beginning of foreclosure. This document, the Assignment of Mortgage, is supposed to support the claimants right or legal standing to press the Complaint in Foreclosure. The Complaint is the basis for the foreclosure and creation of a deficiency judgment the amount left owing by the homeowner after the claimant sells the house for less than the amount owed and includes added fees and charges. The claimant uses the deficiency judgment to seize the homeowner assets and future paychecks. In most instances the assignment is the only document before the court that associates the claimant with the borrower. The complaint and supporting assignment frequently surprise and confuse the homeowner by naming an entity or sham trust that the homeowner has never heard of before. The Assignment of Mortgage is significantly more important than the affidavit in support of the Motion for Summary Judgment, if for no other reason sheer numbers. Typically most homeowners have undergone a psychological bruising and beating from the loan servicer by the time the actual Complaint in Foreclosure is filed. Often the family has lost the pay of one, if not both, wage earners and seeks some relief from one of the high cost, predatory loans created 2003-2007. Unfortunately the servicer typically refuses to discuss modification or any relief unless the homeowner has fallen behind in payments. The servicers may rely on terms limiting its authority within the securitization documents in respect of this hard-nose approach. The hard-nose response gives the servicer cover for actions or abuses that often characterize its subsequent conduct. At that point, the servicer transfers the loan to the default department or outsources to a default management operation. This is an aggrandized term for collection agency. The department or collection agency often calls the family up to six or more times a day demanding moneyrarely the same caller twice. Typically, this will throw the family into confusion and despair. Pleas for relief fall on deaf ears unless the family meets demands to make up late payments and added fees. Its just the beginning of a process that has the effect, if not the purpose, of destroying the familys morale. The servicer may follow up with notices tacked on the homeowners door, a barrage of ominous if not outright
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threatening letters and other actions aimed at driving the homeowner to abandon the home and neglect a legal defense. If the homeowner is either nave enough to believe that the touted voluntary [for servicers] relief programs actually operate, or desperate to keep a roof over the familys head, the loan modification dance begins. Under the guise of compliance with HAMP, the collection agency demands an array of homeowner financial and employment information. Irrespective of the use that the homeowner desires for that information, it will be of great help to the collection agency to locate assets and paychecks down the road to collect the looming deficiency. But today the information rarely satisfies the servicer in respect of moving towards a modification. The demanded documents are often purportedly lost by the servicer, or deemed inadequateanything to drag out the nightmare and break the familys spirits. After submitting and resubmitting documents, explanations, and hours on the telephone day after day, week after week, any false hopes that are raised are destroyed by a denial. Homeowners often will be told to try again-with the same results. After about 3-4 months, perhaps even while the family thinks that a modification is soon to be forthcoming, the ax falls instead. An assignment is created and the Complaint is filed. Usually the family gives up without opposition at this point. The servicer may go so far as to place a note on the door offering to further discuss modification leaving a phone number. When the number is called by the confounded homeowner, the servicer representative may explain: we didnt really mean that; we just wanted to see if you have left yet! In some cases born of desperation, the struggling family may contact an attorney who demands $1000-$5000 just to open the case. The family has 30 days to raise the money to cause someone to simply look at the demands in the Complaint and the Assignment. In the vast majority of cases still remaining, the family gives up now, abandons the property, and no response is ever filed to the Complainta default judgment is entered in favor of the claimant. Most often, the family is not even aware that the demands seek more than just the home. That realization may take years to occurwhen another collector knocks on the door demanding the long-forgotten deficiency. The process is aimed at breaking the familys will, at winnowing out the homeowners. The servicer wants the home! The articles printed prior to Sep 23, 2010 in connection with GMACs unnamed procedure did not focus upon the issue of potential forgery or related systemic fraud on the courts in connection with preparation of Assignments of Mortgage. By way of background, by reference to numerous anecdotes, it appears that often a claimant in possession of a list of homeowner loans in default provides superficial information to a default services company in respect of the borrower and property. One of the largest default service providers, by its own admission, is two-year old publicly traded Lender Processing Services (LPS), a spin-off from FINS. Approximately 50 percent of all U.S. mortgages by dollar volume are serviced using LPS Mortgage Servicing Package (MSP) The lender, a servicer or Indenture Trustee contracts with LPS for creation and delivery of an Assignment of Mortgage to the requesting entity. (see exhibit at end) This document is often sent directly by
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LPS through the mail to County Recorders to be file-stamped and recorded in the county property records. These steps lend false authenticity to the piece of paper. By the time the targeted family sees the Complaint and attached Assignment, the assignment has been file-stamped by their local County Recorder, the Clerk of Courts and probably was attached to a subpoena served upon them by their County Sherriff. The family is thoroughly intimidated by the Assignment of Mortgage, which has been used to convert the familys local authorities into apparent agents and enforcers of the distant claimant. The assignment is a powerful weapon in the war of intimidation. The Washington Post, September 23, 2010, correlated the GMAC admitted breakdown in verification of loan files and notarization process with the assignment creation process operated by LPS. LPS document creation division in Alpharetta, Georgia operating under LPS DOCX trademark, churned out thousands of assignments. The Post identified one prolific signatory, Linda Green. The article set out in its body several examples of Ms. Greens signaturewhich differ dramatically one to another. The Post stated the likely observation that the signatures were made by other LPS employees in addition to Ms Green. She is but one example at one LPS office: there are others with similar handiwork including Tywanna Thomas and Korrel Harp at that office. Mr. Harp has the added dubious distinction of having been jailed for and plead guilty to Knowingly Possessing False Identification relating to an arrest in Oklahoma in 2008. At the age of 24, Mr. Harp was signing as Vice-President of Mortgage Electronic Services Inc., aka MERS. MERS has been nominal owner of 65 million home mortgagesand receives mortgage title to 60% of all new mortgages. As a VP of MERS the 24 year-old Harp, like Ms. Green and Thomas, purportedly possessed the power to transfer mortgages with questionable oversight to LPS clientsperhaps others? Based on the signatures of Harp, Green, Thomas and other varied, yet purportedly notarized signatures, Courts across the country have foreclosed on homes and granted deficiency judgments. One of the in house LPS notaries was only 18 years old at the time she notarized signature for Harp, Thomas and others at DOCX. Michelle Kersch, a senior vice president for Lender Processing Services, made limited explanations by email in the Post article but did not elaborate due to the pending criminal investigation. Like GMACs Stephan, LPS stamp and sign department was a high volume operation. Powers of attorney were not consistently attached to the crucial assignmentsif at all. In the case of Linda Green, there was no power of attorney to represent MERS on an original assignment of mortgage dated October 17, 2008 and filed on October 13, 2009. This technicality was disclosed in a corrective filing of assignment by Florida foreclosure firm Shapiro and Fishman dated August 11, 2010 in Lee County, Florida in support of a foreclosure by servicer AHMSI. The POA status of other prolific signers such as Harp seems equally uncertainbut as Harp has emphatically stated Im sure everything is legal. There seems to be little observable difference between the conduct of GMACs Stephan and the LPS high
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volume signersbut for the possible failure of the LPS signers to have representative capacity to sign at all. LPS has also made admissions that GMAC seems to echo in terms of problematic processes. In the companys 2009 Annual Report on file with the Securities and Exchange Commission, published in March 2010, under regulatory mattersRecently, during an internal review of the business processes used by our document solutions subsidiary, we identified a business process that caused an error in the notarization of certain documents, some of which were used in foreclosure proceedings in various jurisdictions around the country. Subsequently, April 3, 2010, the Wall St. Journal published an article regarding the issues with LPS and notary deficiencies; US Probes Foreclosure-Data Provider. Foreclosure activists in Florida did not let the admission pass. These persons identified and brought to light signed and notarized Assignments that actually conveyed mortgages to named entities, Bogus Assignee and Bad Bene. These clearly established undeniable proof that LPS internal controls were compromised and virtually any name could be inserted as a claimant in a foreclosure action. LPS CEO Jeffrey Carbiener authored a Letter to the Editor of the Florida TimesUnion responding to an article published May 14, 2010 referring to bad bene and bogus assignee. In his open letter admissions in the press Carbiener asserted that the bogus names were placeholders put in the signed and notarized assignment documents until the missing information [claimant name] was provided Carbiener noted that the forms, as well as the data inserted, were based on instructions from clients with the placeholders used until more data is provided. This amounts to a Nuremberg Defense. The Carbiener comments attempt to place the onus of error in naming mortgage claimants on his clientsbut for the obvious so-called placeholders. However, Carbieners comments have great significance beyond LPS role. This explanation is an admission that assignments were prepared in blank based on client information. According to Carbiener, it would appear that the named claimant was subsequently determined by the client and inserted. This process allows substantial opportunity for abuse, suggesting that a servicer determined that a loan was in default, and then someone engaged in a separate process to identify a claimant to whom the proceeds of foreclosure would be awarded. The difficulties, or opportunities, for a servicer and his client Indenture Trustees to shift the benefits among potential investor beneficiaries are more apparent when one reviews the SEC filings of now bankrupt mortgage note originators such as American Home Mortgage group (AHM) and Option One. Both originated loans that were supposedly stuffed into trusts. On paper the trusts supposedly issued mortgage-backed securities to trusting investors. However, purported trust-sponsors AHM and Option One and the Indenture Trustees were at best haphazard in meeting basic commitments and representations that were
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plainly stated in the securitization documents they themselves filed. The trust documents clearly state that the lists of loans included in the trusts were filed with the SEC and the appropriate Secretary of State (UCC). The securitization documents provided detailed descriptions of the information to be included in the filed list. This information was sufficient that a homeowner could determine if the trust owned his/her loan and was the proper party to receive his payments. Investors in the trust MBS could look to the list to determine the principal amount of the loans that backed the investment, as well as loan to value ratios and other relevant information that would indicate the value of the loansand provide information adequate to determine if the same loan was placed in multiple trusts. However, for AHM, 7 of the 12 investment trusts filed with SEC lacked the lists. The schedule stated, manually filed, but the manual filing was not made in many instances. The actual manual filings made are identified on the SEC dockets for the trusts as SE for scanned exhibit. Under the SE docket entry, the list would be found in specificity. One such example of a trust with a proper loan list was American Home Mortgage Investment Trust 2005-2. In motion practice in connection with a homeowners motion to dismiss a naked claim by one of Korrel Harps or Linda Greens appointed mortgage assignment beneficiary trusts, one could note that the trust lacked a loan list and ownership of the loan could not be independently verified by reference to government records as intended. In so doing, it was possible to refer the court to the properly filed loan lists to note the clear distinction and value of the list. It was possible to prove that the lists were not intentionally missing due to some overriding concern for homeowner privacya common speculation. It was also useful to prove that missing loan lists were not customary industry practice. The filed list was a government record freely accessible to the public online. That changed between July 21, 2010 and September 02, 2010. Loan lists that had been on file and available for investors and homeowners to view online on the SE site were unceremoniously deleted. The lists are no longer freely accessible. A demand is now necessary under Freedom of Information Actthe proper loan lists can no longer be referenced in motions to dismiss. The effect was equivalent to, if not the same as, intentional destruction of evidence by the SEC. It is of interest that on the same day as the Washington Post detailed the LPS similarity to GMAC in terms of uncertain document authenticity, the WSJ also ran a front-page article detailing questionable actions taken in recent months by SEC. Washington Post, September 22, 2010, SEC Blasted on Goldman. In summary, SEC failed to require actual filing of loan lists by the trust sponsors and the Indenture Trustees. This failing has lead to LPS and GMAC transfers of claims to unverifiable beneficiaries. This the Times suggests, creates a cloud on the title of the new home buyers of foreclosed properties. Then to complete the injury and remove opportunity for homeowners to defend unsupported claims, SEC destroys evidence that could be useful to homeowners being foreclosed and investors seeking to prove fraud. The mortgage fiasco has roots in SEC failure to regulate and its continuation and concealment of potential fraud is an abuse of discretion by SEC, which is supposed to support disclosure of informationnot hide it.
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Excerpted from: DOCX eAssignTM brochure (no longer found online) eAssign utilizes the industrys most robust property records database and data capture capabilities to significantly reduce timelines and costs for lienholders when creating (emphasis added) and recording lien assignment documents.

This article was contributed by an anonymous supporter of StopForeclosureFraud.com 2010 FORECLOSURE FRAUD | by DinSFLA. All rights reserved. www.StopForeclosureFraud.com

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