WHO’S YOUR LENDER?

2,647 comments

Posted on 9th May 2013 by mary malone in Economy |Politics |Social Issues

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The cronies have effectively used propaganda and lies to convince Americans that naive and greedy homeowners crashed the global credit markets in 2008.

They blamed the crash and current economic malaise on homeowners who bought too much house.

This couldn’t be further from the truth.

The fact of the matter is that the cronies crashed the global markets when they revealed that there are no mortgages to back the mortgage backed securities. They told Paulsen there was no there there. That’s why he panicked and tossed his cookies.

They could have pulled an Iceland, told the truth, arrested the bad actors and instituted real safeguards to restore the capital markets and consumer confidence.

But they chose to continue the lies and backstop the fraud on the taxpayer’s dime. The cronies covered up their partners’ crimes and orchestrated the bailout.

They feasted on our pension money and left us with the tab.

The bare naked truth is that tens of millions of mortgages were fake securitized. The cronies who fleeced Institutional Investors of $13 trillion clouded title on all the mortgages they originated and purportedly sold on the secondary market. They stole the pension money and now they’re stealing our houses.

The fake securitization scheme will make your head hurt and your heart break. So I’m not going to travel down that rabbit hole.

In the end, it all comes down to old fashioned title. Who holds the mortgage on your home? Will you have clear title at the end of the schedule? Do you have MERS in your chain of title? Was your loan ‘Assigned’ to another entity? If so, where is the evidence that substantiates those claims?

We have abandoned our efforts to convince the mighty and powerful to do the right thing. So we’re not going to waste any more of our time trying to convince members of Congress, Governors, state Attorneys General or the DOJ to arrest the bad actors on Wall Street and K Street and end the fraud.

We’re taking the fight to every local state courthouse and giving homeowners the tools to secure their homes and restore private property rights. This is a ground game and it is entirely winnable. It takes tenacity but once you learn to navigate the local state court system it’s entirely doable.

We’re working with community organizers on the left to educate all homeowners about the fraud, how it affects their mortgages and how to use the state courts systems to get real relief. We’re restoring the rule of law one mortgage at a time.

We’re getting results. Law firms are dropping foreclosure cases and homeowners who have been trying to get modifications are uncovering evidence that gives them real clout in negotiations.

It’s time we turn the tables and use the laws they have flouted as a weapon to win back our economic freedom.

We will win this war one house at a time.

This is a crime scene, so the first step is to gather evidence about your loan. All homeowners, regardless of your payment status need to take the following steps:

MERS look-up:  https://www.mers-servicerid.org/sis/index.jsp

Fannie Mae look-up: http://www.fanniemae.com/loanlookup/

Freddie Mac look-up: https://ww3.freddiemac.com/corporate/

Capture the screen grabs, save and print. File the record in a binder or folder specifically for your mortgage documents.

Next step, send a Qualified Written Request Letter to your servicer.  This is a way to gather evidence about your loan without going to court. The letter should be mailed to the CEO of your servicer. Contact customer service and ask for the name of the exec – could be the CEO – and the company address where the QWR letter should be sent. Be sure to send it certified mail, return receipt requested. Save the receipt and file it in your binder.

The QWR letter is a feature of RESPA, which was strengthened in the Dodd-Frank bill.  The servicer is required to respond to the QWR letter in 5 business days with a written acknowledgement. Within the next 25 days they are required to deliver a written response that includes documents such as  the promissory note, mortgage, closing documents, appraisal, title policy, assignments of mortgage.

If they do not answer within the 30 days or fail to provide you with evidence you’ve requested, the servicer will have to pay you $4,000 fine. You’ll have to go into Federal Court to file a complaint and get the judgement.

Here’s a template for the QWR:

 

Date

Servicer Name

Address

 

Re: Client Name

Loan Number:

Property Address:

 

Dear Madam or Sir:

In accordance with RESPA and Section 131(f) of the Truth-in-Lending Act, 15 U.S.C. Section 1641(f) (2), please provide me with the name, address, and Telephone number of the owner of the Promissory Note signed by me and secured by the deed of trust in my mortgage loan referenced above.

By their signatures below, I authorize you to furnish me with the requested information, and any other information regarding my account and my mortgage loan.

You should be advised that you must acknowledge receipt of this request within five (5) business days, and respond within thirty (30) business days, pursuant to 12 U.S.C. Section 2605(e) (1)(A) as amended effective July 16, 2010 by the Dodd-Frank Financial Reform Act and Reg. X Section 3500.21(e)(1).

Thanking you in advance, I am

Very truly yours,

Homeowner name

cc: Law firm for servicer if there has been any correspondence

 

If they respond, carefully verify all information they have provided. If they provide you with the name of the investor of your loan, check it against the results of your MERS, Fannie and Freddie look-ups.  If they provide the name of the trust, go to secinfo.com and look-up the prospectus for that trust. The report is called a 424B. Read it and look for the closing and cut-off dates of the trust. Did your loan close within the window, or after? What parties are listed in the deal? Is your loan listed in the Pool Servicing Agreement that is contained within the Prospectus? You can spot it by reviewing all loans listed – according to principal and interest rate by state.

Find the name of the Trustee.  The Trustee contact info is located in the PSA. Call the 800 telephone number provided. The recording will tell you to send an email providing your loan number, address and contact info. Write and email to the Trustee and confirm they are in fact your true creditor. Tell them the Trust was named as investor by the servicer. You’d like evidence that the mortgage was properly securitized, which includes all assignments of mortgage (there should be 4), along with the original Promissory Note.

In several weeks, the Trustee should send you an email response to your request. We’ve sent three of these requests so far, and each time the Trustee has told us that they are NOT the investor, and the homeowner should contact the servicer.

If this occurs with your loan, print out all docs, save them in your binder. You can present this document as evidence that you have a wild deed in a Quiet Title Action.

Next step is to gather all your loan documents recorded in the county registry. Ask the Register or County Clerk to print out all pages and certify them as true copies.

Be sure to determine if there is an Assignment of Mortgage in your chain of title. Examine the wording closely. Did they assign only the mortgage, or the mortgage and the note. If just the mortgage is assigned, that means the chain of title has been broken. Everything that occurred after that assignment is a nullity.

Was the mortgage assigned by a company that s no longer in business? Did the originator declare bankruptcy? If so, did the bankruptcy or demise of the firm occur before or safer the assignment? We’ve found a number of assignments where the originator – Accredited, New Century –  was in bankruptcy months and years before the date of the assignment. In a Chapter 11 bankruptcy, companies repudiate all their executory contracts, which includes MERS. So, if you have an assignment of mortgage that features a bankrupt originator dated after they filed chapter 11, you could get the assignment declared invalid by a judge. Which of course means the mortgage was never properly assigned to another party. Your mortgage may be a defective instrument and invalid.

Back to the documents from the registry.

Compare the documents from the registry to those you received in the QWR response. Are they the same, or are there notable differences? Record the notations on a document, attach it to the docs and file in your binder.

Examine the signatures on all documents and start googling. Type in signers name, along with keywords like their title, MERS, name of lender, robo-signer. Chances are you will find their signatures on a number of other documents recorded in registries around the country. Carefully examine the signatures – are there notable differences? Is the signer an employee of the company they are purportedly signing for? You can check their Linkedin profiles to verify employment. If their title is Assistant Secretary, MERS, drill down and expand your search. Many times these signers have various titles from different companies. This is important because if you can find evidence they are not who they say they are and don’t work for the company they claim to, you have a fatal defect in the chain of title.

Be sure to examine all ‘Discharges of Mortgages’ in your chain too. We’ve found robo-signers on a number of the discharges. Real estate attorneys tell us this means that the debt has been satisfied, but the lien has not been extinguished. So, you could challenge the current mortgage and file a claim in state court arguing that the current mortgage is no longer in first position.

Lots here that can keep you busy for awhile – at least the next thirty days.

If this sounds too daunting, just take a deep breath and take the first steps of performing the look-ups and sending the QWR letter.

Once you get a response, leave me a message on TBP and I’ll help you make sense of it all.

Remember, this fight is about restoring our property rights and the rule of law.

 

MF GLOBAL – CRIME OF THE CENTURY

17 comments

Posted on 10th February 2012 by Administrator in Economy |Politics |Social Issues

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The American sheeple continue to graze and be herded towards the slaughterhouse as the banking cabal runs roughshod over our economic system, stealing $1.2 billion directly from customer accounts and using their power and wealth to conclude an investigation into the greatest fraud in history with a $5 billion foreclosure settlement. $5 billion is a rounding error for the criminal Wall Street banking predators. Where is the outrage? Where are the protests in the streets? Oh yeah. I forgot. American Idol was on last night. Nevermind.

09 February 2012

 

I did predict something like this would happen in about the second week of the scandal, didn’t I?Did you ever imagine that in America a major brokerage firm would blazenly steal over a billion dollars in customer funds and assets, and that no one would even be prosecuted?

And that the financiers would use the courts to just keep the money, and basically tell the broker’s customers to eat shit? 

The money?  Oh no, that’s just vaporized.  Just a freak accident, practically  an act of God.   Very mysterious, but could not happen again.  Protection?  Sorry don’t know anything about that.

No one knows anything.  Except that the financial system can’t be trusted, and that nothing in it is safe.  But they are afraid to admit it.

Reuters Africa
ANALYSIS-Criminal probe trail going cold at MF Global
Thu Feb 9, 2012 10:54pm GMT

Feb 9 (Reuters) – When commodities brokerage MF Global imploded, the FBI and federal prosecutors were quick to launch an investigation to pursue what seemed obvious to outspoken regulators and lawmakers: laws were broken and crimes were committed.

More than three months later, it is far from clear that anyone will face criminal charges over the disappearance of more than $600 million in customer money as MF Global spiraled towards bankruptcy in the brokerage’s final, frantic days in the last week of October.

So far, the MF Global investigation is not tracking the early progress of other high-profile financial scandals such as RefCo, where former Chairman Phil Bennett was arrested within days of the disclosure that the futures firm had been hiding losses for years.

Lawyers and people familiar with the MF Global investigation of the firm that was run by former Goldman Sachs head Jon Corzine say that even though the hunt is still on to find out whether or not officials at MF Global intended to pilfer customer money in a desperate bid to keep the brokerage from failing, the trail at this point is growing cold.

To date, scant evidence of criminal intent has emerged in company emails, no former or current employees have sought to cut a deal to provide testimony about potential wrongdoing and seasoned defense lawyers say they are not seeing the tell-tale signs of a hot criminal investigation.

A source familiar with the work of Louis Freeh, trustee for the MF Global holding company that filed for Chapter 11 bankruptcy protection, says investigators have yet to find evidence of fraud in the multi-faceted and complex investigation.  (Perhaps stealing and then passing on stolen goods as your own does not qualify as fraud? And what is the MF Global trustee, Lous Freeh, who invokes attorney client privilege with MFG, doing running the investigation? – Jesse)

The source, who declined to be identified because Freeh’s office is still conducting its inquiry, says there was plenty of “chaos” at MF Global in its waning days, but “no evidence of fraud.” Freeh is a former Director of the Federal Bureau of Investigation…

Read the rest here.

Drei Groschen Oper – Die Moritat von Mackie Messer  English translation.

Yes We Can!
 
 
 
Posted by Jesse


Vday 15%

TOP 12 REASONS THE MORTGAGE SETTLEMENT SUCKS

16 comments

Posted on 9th February 2012 by Administrator in Economy |Politics |Social Issues

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Yves Smith at http://www.nakedcapitalism.com/ with why this settlement sucks for homeowners and taxpayers. The banking cabal and their captured politician puppets win again.

 

The Top Twelve Reasons Why You Should Hate the Mortgage Settlement

As readers may know by now, 49 of 50 states have agreed to join the so-called mortgage settlement, with Oklahoma the lone refusenik. Although the fine points are still being hammered out, various news outlets (New York Times, Financial Times, Wall Street Journal) have details, with Dave Dayen’s overview at Firedoglake the best thus far.

The Wall Street Journal is also reporting that the SEC is about to launch some securities litigation against major banks. Since the statue of limitations has already run out on securities filings more than five years old, this means they’ll clip the banks for some of the very last (and dreckiest) deals they shoved out the door before the subprime market gave up the ghost.

The various news services are touting this pact at the biggest multi-state settlement since the tobacco deal in 1998. While narrowly accurate, this deal is bush league by comparison even though the underlying abuses in both cases have had devastating consequences.

The tobacco agreement was pegged as being worth nearly $250 billion over the first 25 years. Adjust that for inflation, and the disparity is even bigger. That shows you the difference in outcomes between a case where the prosecutors have solid evidence backing their charges, versus one where everyone know a lot of bad stuff happened, but no one has come close to marshaling the evidence.

The mortgage settlement terms have not been released, but more of the details have been leaked:

1. The total for the top five servicers is now touted as $26 billion (annoyingly, the FT is calling it “nearly $40 billion”), but of that, roughly $17 billion is credits for principal modifications, which as we pointed out earlier, can and almost assuredly will come largely from mortgages owned by investors. $3 billion is for refis, and only $5 billion will be in the form of hard cash payments, including $1500 to $2000 per borrower foreclosed on between September 2008 and December 2011.

Banks will be required to modify second liens that sit behind firsts “at least” pari passu, which in practice will mean at most pari passu. So this guarantees banks will also focus on borrowers where they do not have second lien exposure, and this also makes the settlement less helpful to struggling homeowners, since borrowers with both second and first liens default at much higher rates than those without second mortgages. Per the Journal:

“It’s not new money. It’s all soft dollars to the banks,” said Paul Miller, a bank analyst at FBR Capital Markets.

The Times is also subdued:

Despite the billions earmarked in the accord, the aid will help a relatively small portion of the millions of borrowers who are delinquent and facing foreclosure. The success could depend in part on how effectively the program is carried out because earlier efforts by Washington aimed at troubled borrowers helped far fewer than had been expected.

2. Schneiderman’s MERS suit survives, and he can add more banks as defendants. It isn’t clear what became of the Biden and Coakley MERS suits, but Biden sounded pretty adamant in past media presentations on preserving that.

3. Nevada’s and Arizona’s suits against Countrywide for violating its past consent decree on mortgage servicing has, in a new Orwellianism, been “folded into” the settlement.

4. The five big players in the settlement have already set aside reserves sufficient for this deal.

Here are the top twelve reasons why this deal stinks:

1. We’ve now set a price for forgeries and fabricating documents. It’s $2000 per loan. This is a rounding error compared to the chain of title problem these systematic practices were designed to circumvent. The cost is also trivial in comparison to the average loan, which is roughly $180k, so the settlement represents about 1% of loan balances. It is less than the price of the title insurance that banks failed to get when they transferred the loans to the trust. It is a fraction of the cost of the legal expenses when foreclosures are challenged. It’s a great deal for the banks because no one is at any of the servicers going to jail for forgery and the banks have set the upper bound of the cost of riding roughshod over 300 years of real estate law.

2. That $26 billion is actually $5 billion of bank money and the rest is your money. The mortgage principal writedowns are guaranteed to come almost entirely from securitized loans, which means from investors, which in turn means taxpayers via Fannie and Freddie, pension funds, insurers, and 401 (k)s. Refis of performing loans also reduce income to those very same investors.

3. That $5 billion divided among the big banks wouldn’t even represent a significant quarterly hit. Freddie and Fannie putbacks to the major banks have been running at that level each quarter.

4. That $20 billion actually makes bank second liens sounder, so this deal is a stealth bailout that strengthens bank balance sheets at the expense of the broader public.

5. The enforcement is a joke. The first layer of supervision is the banks reporting on themselves. The framework is similar to that of the OCC consent decrees implemented last year, which Adam Levitin and yours truly, among others, decried as regulatory theater.

6. The past history of servicer consent decrees shows the servicers all fail to comply. Why? Servicer records and systems are terrible in the best of times, and their systems and fee structures aren’t set up to handle much in the way of delinquencies. As Tom Adams has pointed out in earlier posts, servicer behavior is predictable when their portfolios are hit with a high level of delinquencies and defaults: they cheat in all sorts of ways to reduce their losses.

7. The cave-in Nevada and Arizona on the Countrywide settlement suit is a special gift for Bank of America, who is by far the worst offender in the chain of title disaster (since, according to sworn testimony of its own employee in Kemp v. Countrywide, Countrywide failed to comply with trust delivery requirements). This move proves that failing to comply with a consent degree has no consequences but will merely be rolled into a new consent degree which will also fail to be enforced. These cases also alleged HAMP violations as consumer fraud violations and could have gotten costly and emboldened other states to file similar suits not just against Countrywide but other servicers, so it was useful to the other banks as well.

8. If the new Federal task force were intended to be serious, this deal would have not have been settled. You never settle before investigating. It’s a bad idea to settle obvious, widespread wrongdoing on the cheap. You use the stuff that is easy to prove to gather information and secure cooperation on the stuff that is harder to prove. In Missouri and Nevada, the robosigning investigation led to criminal charges against agents of the servicers. But even though these companies were acting at the express direction and approval of the services, no individuals or entities higher up the food chain will face any sort of meaningful charges.

9. There is plenty of evidence of widespread abuses that appear not to be on the attorney generals’ or media’s radar, such as servicer driven foreclosures and looting of investors’ funds via impermissible and inflated charges. While no serious probe was undertaken, even the limited or peripheral investigations show massive failures (60% of documents had errors in AGs/Fed’s pathetically small sample). Similarly, the US Trustee’s office found widespread evidence of significant servicer errors in bankruptcy-related filings, such as inflated and bogus fees, and even substantial, completely made up charges. Yet the services and banks will suffer no real consequences for these abuses.

10. A deal on robosiginging serves to cover up the much deeper chain of title problem. And don’t get too excited about the New York, Massachusetts, and Delaware MERS suits. They put pressure on banks to clean up this monstrous mess only if the AGs go through to trial and get tough penalties. The banks will want to settle their way out of that too. And even if these cases do go to trial and produce significant victories for the AGs, they still do not address the problem of failures to transfer notes correctly.

11. Don’t bet on a deus ex machina in terms of the new Federal foreclosure task force to improve this picture much. If you think Schneiderman, as a co-chairman who already has a full time day job in New York, is going to outfox a bunch of DC insiders who are part of the problem, I have a bridge I’d like to sell to you.

12. We’ll now have to listen to banks and their sycophant defenders declaring victory despite being wrong on the law and the facts. They will proceed to marginalize and write off criticisms of the servicing practices that hurt homeowners and investors and are devastating communities. But the problems will fester and the housing market will continue to suffer. Investors in mortgage-backed securities, who know that services have been screwing them for years, will be hung out to dry and will likely never return to a private MBS market, since the problems won’t ever be fixed. This settlement has not only revealed the residential mortgage market to be too big to fail, but puts it on long term, perhaps permanent, government life support.

As we’ve said before, this settlement is yet another raw demonstration of who wields power in America, and it isn’t you and me. It’s bad enough to see these negotiations come to their predictable, sorry outcome. It adds insult to injury to see some try to depict it as a win for long suffering, still abused homeowners.



 

HOLDER MUST GO

20 comments

Posted on 20th January 2012 by mary malone in Economy |Politics |Social Issues

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Eric Holder launched the DOJ’s investigation into massive document fraud performed by mortgage servicers when the stench could no longer be ignored in 2010.

It was dubbed robo-signing, but that term is too warm and cuddly for us.

It is document fraud. Suborning perjury.  They are creating false evidence that results in the illegal seizure of private property.

We have also uncovered a massive number of fraudulent signatures of dubious origin on “Satisfaction of Mortgages” recorded at registries across the USA.  Attorneys tell us that these documents could be deemed invalid. Meaning, the lien is still against the property – even though the mortgage has been paid off.

Back to Holder…

Reuters today breaks the news that Attorney General Eric Holder and his top lieutenants at DOJ have a conflict of interest. (Which will not be news at all to TBP readers)

What’s the conflict?

Eric Holder and his top DOJ lieutenants are all alumnae of Covington & Burling, the white shoe law firm that represents MERS. In 2004, while Holder and his pals were at the firm, Covington & Burling issued a legal opinion justifying the MERS business model to the lending and title industries.

This legal opinion is posted on the MERSCORP website. It is also trotted out at all of their conferences and appears in their marketing materials.  It is, quite simply, MERS “Get out of jail free” card.

MERS, of course, is the energizer bunny for massive MBS fraud. The MERS electronic recording system (which it turns out did not record at all) was used to ramp up the number of mortgages which would create the MBS (only they didn’t).

MERS violates 400 years of settled property law. Judges across the USA are ruling MERS assignments are illegal and ruling against the banks in foreclosure and bankruptcy cases.

MERS was the brainchild of Anthony Mozila. Need I say more?

Our research uncovers banks resistance to signing onto the MERS system in 1997-2000. The GSE’s Fannie, Freddie and Ginnie, along with the title companies, made a major push for getting MERS adopted as the primary recording system.

That’s why the Covington & Burling legal opinion is so important. It justified MERS by-passing the land recording system which is paper-based and totally transparent, with an electronic system that is secret. It was and remains a very important document that is used by banks, financial institutions to by-pass 400 years of settled property law.

Holder and his top lieutenants should have recused themselves from the investigation.

But of course, they didn’t do that, did they?

Instead, Holder orchestrated a cover-up.  He is the principal driver behind the push for 50 states Attorneys General to give lenders/servicers immunity in exchange for a reported $25 billion settlement.

A number of the Attorneys General are resisting (Massachusetts, NY, Illinois, California, Nevada, and Delaware).

Others states, like New Jersey, appear willing to settle.

The states, however, will settle at their peril. We calculated NJ taxpayers are owed $87 million in unpaid recording fees and $90 billion in transfer taxes.

New Jersey’s share of the $25 billion pales in comparison to the amount that is owed.  We, the people want our money back. All of it. Our message to Governor Christie and the new Attorney General is, “do not think about settling, New Jersey.”

Question to the state Attorneys General: Did Eric Holder and his pals tell you about their association with MERS? Did they discuss how their Covington & Burling pensions are affected by the settlement? Clearly the revenue derived from MERS account affects their future compensation, does it not? What is Covington & Burling’s legal exposure to crafting the MERS legal opinion? Will the firm be sued by state Attorneys General?  Will they be sued by homeowners? If so, how does that affect their pensions and future employment prospects?

It’s obvious that Holder and his DOJ lieutenants had a lot to lose if MERS and its charter members (which were all cited for massive document fraud by OCC, SEC, and Senate) were to be held criminally liable for their acts.

So, what did they do?

Well, the DOJ/FBI was directed to partner with the Mortgage Banking Association (MBA) on the 2010 mortgage fraud investigation. The MBA is the trade association for the banks that are under “investigation” for committing massive fraud.

So here’s where we move from “conflict of interest” to “obstruction of justice.”

The FBI and DOJ created a definition of mortgage fraud that does NOT include the bad acts of the banks. No Siree.  The definition focuses on homeowners and flim-flam artists who commit fraud AGAINST THE BANKS.

This is the reason why not one single senior executive from the TBTF banks that have destroyed American property records, clouded title on 60-100 million properties and committed massive document fraud have not been investigated. Or subsequently tried and convicted of their crimes.

Many in law enforcement (retired FBI agents and Federal Prosecutors) have told us they believe Holder is running down the clock on the statute of limitations.

The window on charging top executives who have created, implemented and covered-up MBS and foreclosure fraud is almost closed. The people who stole $11 trillion from MBS investors and $6 trillion from homeowners are about to get away with the largest heist in world history.

Eric Holder must go.

 

 

Insight: Top Justice officials connected to mortgage banks

Wed, Jan 11 2012

By Scot J. Paltrow

Fri Jan 20, 2012 9:31am EST

(Reuters) – U.S. Attorney General Eric Holder and Lanny Breuer, head of the Justice Department’s criminal division, were partners for years at a Washington law firm that represented a Who’s Who of big banks and other companies at the center of alleged foreclosure fraud, a Reuters inquiry shows.

The firm, Covington & Burling, is one of Washington’s biggest white shoe law firms. Law professors and other federal ethics experts said that federal conflict of interest rules required Holder and Breuer to recuse themselves from any Justice Department decisions relating to law firm clients they personally had done work for.

Both the Justice Department and Covington declined to say if either official had personally worked on matters for the big mortgage industry clients. Justice Department spokeswoman Tracy Schmaler said Holder and Breuer had complied fully with conflict of interest regulations, but she declined to say if they had recused themselves from any matters related to the former clients.

Reuters reported in December that under Holder and Breuer, the Justice Department hasn’t brought any criminal cases against big banks or other companies involved in mortgage servicing, even though copious evidence has surfaced of apparent criminal violations in foreclosure cases.

The evidence, including records from federal and state courts and local clerks’ offices around the country, shows widespread forgery, perjury, obstruction of justice, and illegal foreclosures on the homes of thousands of active-duty military personnel.

In recent weeks the Justice Department has come under renewed pressure from members of Congress, state and local officials and homeowners’ lawyers to open a wide-ranging criminal investigation of mortgage servicers, the biggest of which have been Covington clients. So far Justice officials haven’t responded publicly to any of the requests.

While Holder and Breuer were partners at Covington, the firm’s clients included the four largest U.S. banks – Bank of America, Citigroup, JP Morgan Chase and Wells Fargo & Co – as well as at least one other bank that is among the 10 largest mortgage servicers.

DEFENDER OF FREDDIE

Servicers perform routine mortgage maintenance tasks, including filing foreclosures, on behalf of mortgage owners, usually groups of investors who bought mortgage-backed securities.

Covington represented Freddie Mac, one of the nation’s biggest issuers of mortgage backed securities, in enforcement investigations by federal financial regulators.

A particular concern by those pressing for an investigation is Covington’s involvement with Virginia-based MERS Corp, which runs a vast computerized registry of mortgages. Little known before the mortgage crisis hit, MERS, which stands for Mortgage Electronic Registration Systems, has been at the center of complaints about false or erroneous mortgage documents.

Court records show that Covington, in the late 1990s, provided legal opinion letters needed to create MERS on behalf of Fannie Mae, Freddie Mac, Bank of America, JP Morgan Chase and several other large banks. It was meant to speed up registration and transfers of mortgages. By 2010, MERS claimed to own about half of all mortgages in the U.S. — roughly 60 million loans.

But evidence in numerous state and federal court cases around the country has shown that MERS authorized thousands of bank employees to sign their names as MERS officials. The banks allegedly drew up fake mortgage assignments, making it appear falsely that they had standing to file foreclosures, and then had their own employees sign the documents as MERS “vice presidents” or “assistant secretaries.”

Covington in 2004 also wrote a crucial opinion letter commissioned by MERS, providing legal justification for its electronic registry. MERS spokeswoman Karmela Lejarde declined to comment on Covington legal work done for MERS.

It isn’t known to what extent if any Covington has continued to represent the banks and other mortgage firms since Holder and Breuer left. Covington declined to respond to questions from Reuters. A Covington spokeswoman said the firm had no comment.

Several lawyers for homeowners have said that even if Holder and Breuer haven’t violated any ethics rules, their ties to Covington create an impression of bias toward the firms’ clients, especially in the absence of any prosecutions by the Justice Department.

O. Max Gardner III, a lawyer who trains other attorneys to represent homeowners in bankruptcy court foreclosure actions, said he attributes the Justice Department’s reluctance to prosecute the banks or their executives to the Obama White House’s view that it might harm the economy.

But he said that the background of Holder and Breuer at Covington — and their failure to act on foreclosure fraud or publicly recuse themselves — “doesn’t pass the smell test.”

Federal ethics regulations generally require new government officials to recuse themselves for one year from involvement in matters involving clients they personally had represented at their former law firms.

President Obama imposed additional restrictions on appointees that essentially extended the ban to two years. For Holder, that ban would have expired in February 2011, and in April for Breuer. Rules also require officials to avoid creating the appearance of a conflict.

Schmaler, the Justice Department spokeswoman, said in an e-mail that “The Attorney General and Assistant Attorney General Breuer have conformed with all financial, legal and ethical obligations under law as well as additional ethical standards set by the Obama Administration.”

She said they “routinely consult” the department’s ethics officials for guidance. Without offering specifics, Schmaler said they “have recused themselves from matters as required by the law.”

Senior government officials often move to big Washington law firms, and lawyers from those firms often move into government posts. But records show that in recent years the traffic between the Justice Department and Covington & Burling has been particularly heavy. In 2010, Holder’s deputy chief of staff, John Garland, returned to Covington, as did Steven Fagell, who was Breuer’s deputy chief of staff in the criminal division.

The firm has on its web site a page listing its attorneys who are former federal government officials. Covington lists 22 from the Justice Department, and 12 from U.S. Attorneys offices, the Justice Department’s local federal prosecutors’ offices around the country.

As Reuters reported in 2011, public records show large numbers of mortgage promissory notes with apparently forged endorsements that were submitted as evidence to courts.

There also is evidence of almost routine manufacturing of false mortgage assignments, documents that transfer ownership of mortgages between banks or to groups of investors. In foreclosure actions in courts mortgage assignments are required to show that a bank has the legal right to foreclose.

In an interview in late 2011, Raymond Brescia, a visiting professor at Yale Law School who has written about foreclosure practices said, “I think it’s difficult to find a fraud of this size on the U.S. court system in U.S. history.”

Holder has resisted calls for a criminal investigation since October 2010, when evidence of widespread “robo-signing” first surfaced. That involved mortgage servicer employees falsely signing and swearing to massive numbers of affidavits and other foreclosure documents that they had never read or checked for accuracy.

Recent calls for a wide-ranging criminal investigation of the mortgage servicing industry have come from members of Congress, including Senator Maria Cantwell, D-Wash., state officials, and county clerks. In recent months clerks from around the country have examined mortgage and foreclosure records filed with them and reported finding high percentages of apparently fraudulent documents.

On Wednesday, John O’Brien Jr., register of deeds in Salem, Mass., announced that he had sent 31,897 allegedly fraudulent foreclosure-related documents to Holder. O’Brien said he asked for a criminal investigation of servicers and their law firms that had filed the documents because they “show a pattern of fraud,” forgery and false notarizations.

(Reporting By Scot J. Paltrow, editing by Blake Morrison)

OCCUPY THE REGISTRY!

10 comments

Posted on 12th January 2012 by Yojimbo in Economy

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[I am stunned that someone in government is standing up for the rule of law. This one is for Mary Malone.]

 http://www.valleyadvocate.com/article.cfm?aid=14360

John O’Brien isn’t camping out on the streets of New York with Occupy Wall Street, but he might as well be. O’Brien, the embattled register of deeds for Southern Essex (Salem), has been carrying on his own fight with the big banks, which, he says, have ruined his registry of deeds by swamping it with fraudulent documents and victimizing registry users.

O’Brien, who has been waging his war with the banks since before OWS first camped out in Zuccotti Park, says his registry is “a crime scene because of Bank of America, Wells Fargo, JP Morgan Chase.” The big banks, he says, have left the registry awash with more than 30,000 robo-signed or otherwise fabricated documents.

O’Brien calls the flooding of registries across the U.S. with falsified documents “the largest scandal to affect the integrity of the land recordation system in this country since its inception.” He uses the services of a mortgage fraud analyst to help identify false documents, and he and his staff maintain a list of people they know to be robo-signers not actually working for the lenders they sign for. He invites people to bring him paperwork they believe is fraudulent, and he supplies them with affidavits they can take to court attesting that the documents are suspect.

The militant register is angry not only at the chaos the phony documents are creating, but at the use to which they’re being put.

“I don’t record robo-signers,” O’Brien told the Advocate. “These banksters should be sitting across the table from people, saying, ‘How can we help you stay in your house?’

“I see people come into my registry—they’re losing their homes, they don’t have a job, and nobody’s helping them. I’m giving them a sworn affidavit saying that the documents are fraudulent and they’ve been signed by a robo-signer.”

And O’Brien goes farther than that. Since last April, he’s been trying to get the state to let him take his registry’s deposits—which he estimates have grown by $15 million since the spring—out of Bank of America, and put the money in a local bank.

Why, he asks, should Bank of America profit from a registry in which it, along with Wells Fargo and other “too big to fail” institutions, has made a mess of the recording process?

“I really and truthfully do not think we should be depositing any taxpayer money in a bank that has infected my registry with thousands of fraudulent documents,” O’Brien insists.

*

It used to be that registers in the commonwealth, including O’Brien, who has been at his post since 1977, could place registry deposits in whatever institutions they chose. O’Brien deposited his registry’s revenues in Bank of Boston, but after a series of mergers the money landed with Bank of America. Meanwhile, in 2000 the state took over the registries.

Now O’Brien has to ask permission to move the money, which amounts to some $25 million a year. From April until last week he was bounced back and forth between the Massachusetts Secretary of State and the state Treasurer, he says, and has been unable to get a clear statement about whether he can move the money or not.

In particular, O’Brien wants his registry’s money out of any bank that’s part of the Mortgage Electronic Registration System (MERS), a system used by a number of large lenders. Touted as a system that streamlines the technicalities of deed and mortgage transfer and recording, MERS has faced many court challenges because it blurs roles—acting, for example, both as mortgage assignee and agent for the assignee—in ways that muddy the question of who actually owns a mortgage and has the right to foreclose. Among other things, it can circumvent state land transfer recording rules. Earlier this year, the network was served with a cease and desist order by federal regulators for “deficiencies and unsafe or unsound practices.”

At press time, state treasurer Steve Grossman had issued an invitation to banks to bid for the registry’s deposits. But in a letter transmitted to the Advocate by the treasurer’s office, Grossman wrote O’Brien that the treasurer’s office could not exclude any potential bidders because it was obliged to look for the best deal for the commonwealth, and because the state could be sued for “arbitrarily excluding” possible bidders.

But O’Brien, who moved the registry’s money half a dozen times before the state takeover in 2000, wants it in a local bank that does not belong to MERS and that follows the commonwealth’s protocols for recording deeds.

*

In the Valley, registers of deeds are also concerned about falsified documents; as Franklin County register Joseph Gochinski put it, “It’s frustrating. Sometimes I feel that my hands are tied.”

But they’re waiting for guidance from state Attorney General Martha Coakley on exactly what they should do when they are presented with suspect documents by registry users. “Once we get an opinion, we will have the legal process to reject these documents,” said Hampshire County Register Patricia Plaza.

“We have listed the names we thought were robo-signings and the AG is investigating it,” said Hampden County Register of Deeds Donald Ashe, whose website posts an invitation to registry users to check with their lenders about who holds their mortgages, and to consult the registry about anything suspicious.

For his part, O’Brien isn’t waiting for anything. He’s determined to mobilize registers around the country, and has made a start by holding Webinars to educate them. Squarely in his camp is Jeff Thigpen, the register of deeds for Guilford County, N. C., who has found his own registry contaminated with forged documents.

“I’ve got registers across the country joining with me,” says O’Brien. “I’m trying to get registers every single day. I have to defend the integrity of the land recordation system despite the fact that these banksters think it’s a joke.”