$7.5 B Lawsuit Filed Against MERS
A RICO class action lawsuit against MERS and one of the Country’s largest foreclosure law firms, David J. Stern PA has been filed, demanding a Jury trial. See ABA article here.
The court case alleges that MERS was created “in order to undermine and eventually eviscerate long-standing principles of real property law, such as the requirement that any person or entity who seeks to foreclose upon a parcel of real property: 1) be in possession of the original note and mortgage and 2) possess a written assignment giving he, she or it actual rights to the payments due from the borrower pursuant to the mortgage and note”
It also alleges that “part of the scheme was the use of words in ways inconsistent with their traditional meanings, and the creation of new terms which could be used to blur important distinctions between parties and their interests…” making it difficult to determine who had the right to receive payments and foreclose.
The 24 page lawsuit details a hilarious deposition by the attorney’s assistant who acknowledges signing documents as “assistant secretary,” and as “vice president” of MERS taken in the Defendant Firm’s office. He inquired of Ms. Samons how she could possibly have acted on behalf of MERS, and the meaning of the label “Assistant Secretary:” Part of the suit reads as follows:
Q: The question was you have no job duties as an assistant secretary of MERS, correct?
A: I do not have any job duties other than signing the assignments and mortgage. Does that help?
Q: Yes. Here, I’ll try to rephrase this. Do you attend any board meetings at MERS?
A: No, sir.
Q: Do you attend any meetings at all at MERS?
A: No, sir.
Q: Do you report to the secretary of MERS?
A: No, sir.
Q: Who is the secretary of MERS?
A: I have no idea.
[ . . . ]
Q: Where are the MERS offices located?
A: I can’t remember. Q: How many offices do they have?
A: I have no idea.
Q: Do you know where their headquarters are?
A: Nope.
Q: Have you ever been there?
A: No.
Q: How many employees do they have?
A: I have no idea.
She testified that her signatures on “these assignments,” which from all indications were and are at least several thousand in number, were in no way attestations that the statements contained therein were accurate or truthful. She further testified that she was the person with the most knowledge about the subject assignment…
To arrive at the estimated damages of $7.5 billion, plus costs and attorney fees, the suit claims that the measure of damages “is the average of the accelerated amounts demanded from the [Plaintiffs] in the subject complaints to foreclose.” Read the full suit here.
Linking the Chain of Title in Mortgage Foreclosures
A new industry has emerged. There has been much discussion about whether or not clearing title problems is a marketable idea. Well, apparently, the rash of bad titles over the last few years has shown it is. A new company, Nationwide Title Clearing is advertising
Our experience has proven that, perhaps due to the volume of foreclosures in progress, a large number of attorney requests do not match what is required when reviewing the actual recorded chain of title and unrecorded assignments in the collateral file.
Yes, with the huge volume of foreclosures, attorneys are often asking “Who holds the Note?” I recently read a good blog question asking: “Can a consumer determine who holds their note when the mortgage or DOT is registered in the MERS system?”
The returned answer was: Maybe. The response said Investors participating in MERS have options to disclose their information on the MERS System or not.
However, under TILA, the servicer must provide information regarding the holder of the mortgage loan when requested by the debtor. It states “Upon written request by the obligor, the servicer shall provide the obligor, to the best knowledge of the servicer, the name, address, and telephone number of the owner of the obligation…” 15 U.S.C. section 1641(f)(2). Servicers are also still required to notify homeowners in writing when loan servicing is transferred under RESPA, 12. U.S.C. §2601 et seq
FNMA Changes Policy on Those Who Walk Away from Underwater Homes
Press Release
This week, Fannie Mae announced policy changes designed to encourage borrowers to work with their servicers and pursue alternatives to foreclosure. Defaulting borrowers who walk-away and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure. Borrowers who have extenuating circumstances may be eligible for new loan in a shorter timeframe.
“We’re taking these steps to highlight the importance of working with your servicer,” said Terence Edwards, executive vice president for credit portfolio management. “Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting. On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time.”
Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments. In an announcement next month, the company will be instructing its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments.
Troubled borrowers who work with their servicers, and provide information to help the servicer assess their situation, can be considered for foreclosure alternatives, such as a loan modification, a short sale, or a deed-in-lieu of foreclosure. A borrower with extenuating circumstances who works out one of these options with their servicer could be eligible for a new mortgage loan in three years and in as little as two years depending on the circumstances.
Will Letters of Indemnity be Our Train Wreck?
Many title insurance companies are working from existing files these days, or just go back a deed or two. The underwriters seem to be good with this. In other cases, title proteges swap use of files between a number of companies.
But the quality of the searches and the agents doing those examinations varies significantly. Often too, we have relied on letters of indemnity to overlook title problems in those swapped files. Those letters of indemnity mean that someone along the line has not taken care of a title problem. The problem may go back two -three sales or more, and with the short cuts taken these days in title examining, there are as many bad titles out there as good I would estimate.
At some point this casual attitude about not clearing title problems is likely to wake up the title industry to a serious problem, one that is getting worse every day. What if that title agent steals funds from multiple closings and covers it up with LOI”s? Are we creating opportunities and an attractive nuisance? How many of your closings have a LOI?
In the author’s opinion, we should take a second look at what we are doing. Title defalcations, fraud and theft are serious problems we see every week in the title and closing industries. Somewhat like the mortgage debacle, where we saw the train coming and did not move, are we building a title debacle with our eyes now in the headlight of the train?
New York Judge Grants $100M in Damages in Foreclosure Case
NY couple Jane and Anthony Corcione are thrilled that the judge helped them in their 2 year lawsuit against Emigrant Mortgage Co. The judge determined that the lender pay the borrowers $100,000 in damages and deleted as much as $119,330 in questionable late charges. See the You Tube VIDEO HERE
Some Loan Servicers Run a Scam
A great article by George Mantor at RisMedia points out problems with some loan servicers. It reads in part:
“Servicing, the collecting and distributing of mortgage payments, is the land of opportunity…Who is in a better position to exploit a defaulting borrower than a person posing as someone who wants to help? And, it’s all part of a scam…”link to RisMedia article here
Home Closing 101: An Educational Initiative of the American Land Title Association
