Lenders Definition of Fraud

Lenders Definition of Fraud

By Daniel Edstrom
DTC Systems, Inc.

I was reviewing the closing documents for a loan when I came across this definition of fraud from Countrywide (now allegedly owned by Bank of America):

 

Fraud, Misrepresentations, Falsehoods

  1. A fraud or scheme related to the transaction has been or may be committed.
  2. Any party to the transaction, including but not limited to Lender, Borrower, Seller, Real Estate Broker or Agent, Builder, Mortgage Broker, Title Insurer, Appraiser, Signing Agent or Settlement Agent, or an employee of any such party, has made a material misstatement.
  3. A loan document or invoice has been tampered with, falsely generated, bears any incorrect or falsified data, bears different names or addresses for the same party, or bears a fictitious name.  A ficitious name does not include an assumed name field of public record.
  4. A party’s handwriting or signature is inconsistent on the loan documents.
  5. Borrower is being paid to lend credit or identity to the transaction.

Note also that Freddie Mac has the following definition of straw borrower:

A form of fraud where one person purchases property or takes out a mortgage for another to conceal the identity of the real borrower. Usually the real borrower would not qualify for the mortgage.

Does Freddie Mac or any other lender apply this same definition to straw lender?  I would define straw lender as:

A form of fraud where one entity acts as the payee of a note for another to conceal the identity of the real lender. Usually the real lender would not qualify as a mortgage lender.

 

State of Missouri 136 Count Indictment – 68 Class C Felonies for Forgery and 68 Class B Misdemeanors for False Declarations

State of Missouri 136 Count Indictment – 68 Class C Felonies for Forgery and 68 Class B Misdemeanors for False Declarations

By Daniel Edstrom
DTC Systems, Inc.

Thanks to Charles Cox and George Christian for locating this indictment.  Each count lists either a forgery or a misdemeanor.  DOCX LLC is named throughout the indictment.  On April 13, 2011 the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Officer of Comptroller of the Currency, and the Office of Thrift Supervision issued a Cease and Desist Consent Order against Lender Processing Services, Inc., DocX, LLC and LPS Default Solutions, Inc. making the following findings:

WHEREAS, in providing document execution services to Examined Servicers, including services that facilitated completing foreclosures, LPS and its employees allegedly:

(a) Executed numerous affidavits and similar sworn statements (collectively, “Affidavits”) making various assertions, such as the ownership of the mortgage note and mortgage (or deed of trust), the amount of principal and interest due, and the fees and expenses chargeable to the borrower, in which the affiant represented that the assertions in the Affidavit were made based on personal knowledge or based on a review by the affiant of the relevant books and records, when, in many cases, they were not based on such knowledge or review. LPS executed these Affidavits on behalf of Examined Servicers knowing they would be filed in state courts and in connection with bankruptcy proceedings in federal courts; Continue reading “State of Missouri 136 Count Indictment – 68 Class C Felonies for Forgery and 68 Class B Misdemeanors for False Declarations”

Irreconcilable Differences… I want a Mortgage Divorce!

Irreconcilable Differences… I want a Mortgage Divorce!

By James Macklin
Secure Document Research

Promissory Note Terms Vs. PSA/Prosectus Terms

When we are handed a voluminous stack of documents at the closing table for our mortgage transaction, a Borrower is expected to make a decision based upon the duty and care that the party who drafted these “investment contracts” has placed into them. However, none of us at the closing table has any idea what most of the words, phrases, and legal terminologies actually means… especially those affecting our rights as a consumer and as a real property owner.
Within the typical language of a Pooling and Servicing Agreement executed by the players of the securitization financing, there are countless references to the “interests” of the asset being conveyed, or, your Note and Deed. Interests are a finicky word of art used. The word simply means this: the asset, along with all of its’ benefits and liabilities. These are the “interests” being conveyed with the sale, set-over, transfer, conveyance, etc. So, under the terms of the Note we signed, look to the section titled: “Who is obligated under the Note” (usually sec. nine (9)). Here you will find that myriad entities may be, and probably are, also obligated under this same Note. These are the terms you have agreed to and bargained for. But the banking intermediaries would have us believe otherwise, as exhibited in the PSA under such language as: “The Depositor, Sponsor/Seller, Swap Counterparty, Master Servicer, Trustee do not intend for any obligation of themselves or their agents or employees to arise as a result of this Agreement”. This is contradictive to the terms and conditions that we have agreed to. Because the intervening assignments are a functional necessity to the bankruptcy remoteness of these assets, the specific substance of the PSA must be followed, including the mandate for the indorsement of each intervening assignment, along with the recordation of those assignment in the proper land title records office within the State of jurisdiction.
Let’s go back to the language of the “Who is Obligated” section of our Note. Notice that anyone who endorses the instrument is also obligated under the Note. Does this create an unknown Obligor at closing? If an un-named Beneficiary is the result of the unilateral agreement known as a Promissory Note”, how do we have the understanding necessary to execute such a critical document? It is the contention of this author, supported by the very agreements signed under oath and filed for record with the SEC, that “interests” and “obligations” are synonomous within the four corners of the agreement we signed…and the agreements signed by the intermediaries. A court of competent jurisdiction shall be posed these foundational questions very soon, and often. Are we a party to these agreements known as PSA/Prospectus? If we do a simple word search on each of these and look for references to: Borrower, Mortgagor, Obligor, we find these terms are typically used in excess of 60-75 times. Yet we were never disclosed the terms and conditions of the actual “loan” transaction as it truly was executed, and the rights, duties and responsibilities of the intermediaries. These are material disclosures relative to fees, expenses and various credit enhancements which are attributed to the Borrowers’ payment stream.
A divorce from this menagerie of deceit is not only appropriate, but a right that is being tried in many courtrooms. I believe that the judiciary will be tested on many platforms and small but visceral victories shall carry the day.