Author: dmedstrom

Reverse Engineering and Failure Analysis - Reverse Engineering Wall Street

T.D. Service Company Auctions Property for $22k instead of $220k – CA Appeals Court Quiets Title to Bidder

T.D. Service Company Auctions Property for $22k instead of $220k – CA Appeals Court Quiets Title to Bidder

By Daniel Edstrom
DTC Systems, Inc.

Thanks to Charles Cox for this one.

Excerpts

Plaintiff David Biancalana successfully bid on a piece of real property at a trustee’s sale. Defendant trustee T.D. Service Company (TD) subsequently discovered it had erroneously conveyed the delinquency amount ($21,894.17) to the auctioneer, instead of the correct opening credit bid of $219,105 submitted by the beneficiary to TD. TD informed Biancalana of the error, declined to issue a trustee’s deed on sale and returned his cashier’s check. Biancalana retendered the check to TD and demanded it issue the trustee’s deed. When it failed to do so, he sued for quiet title, specific performance, declaratory and injunctive relief.

TD’s motion for summary judgment was initially denied. After TD successfully moved for reconsideration on the grounds of “new law,” the trial court granted TD’s motion and entered judgment in its favor.

On appeal, Biancalana argues that the trial court erred in granting TD’s motion for summary judgment as there was no irregularity in the foreclosure sale process. Biancalana also argues that the trial court erred in granting TD’s motion for reconsideration as the case it determined constituted “new law”( i.e., Millennium Rock Mortgage, Inc. v. T.D. Service Co. (2009) 179 Cal.App.4th 804 (Millennium Rock)) did not represent a change in the law, but simply applied existing law to a new fact pattern.

We agree that the trial court erred in granting TD’s motion for summary judgment and shall reverse the judgment.

 

Download the ruling here:  http://dtc-systems.net/wp-content/uploads/2012/05/Biancalana_v_TD_Service-For_Publication.pdf

 

BB&T Fraudulently Declares Default – Florida Court Orders FDIC Payments From Loss-Share Agreements to be Credited to Borrowers Loan

BB&T Fraudulently Declares Default – Florida Court Orders FDIC Payments From Loss-Share Agreements to be Credited to Borrowers Loan

By Daniel Edstrom
DTC Systems, Inc.

Thanks to Neil F. Garfield and the LivingLies Blog for this ruling.   The following are excerpts from Judge Levens orders.

Findings of Fact

This case involves a $5,182,128.00 commercial loan made by Colonial Bank to Kraz for the purpose of building and developing a mini-storage and flex space warehouse in Hillsborough County, Florida. Kearney and Harris signed limited personal guaranties of payment and performance and injected in excess of 2 million dollars of cash/equity into the venture. This subject loan was one of several loans made by Colonial Bank to Kearney and Harris and related entities with multiple other guarantors, but the subject loan was not tied to or related to any other such loans.

The terms of the subject loan provided for payment of interest only for the first twentyfour (24) months. Plaintiff was required to provide written notice of the change from interest-only payments to principal-and-interest payment, but, for whatever reason, Plaintiff never provided such notice. Colonial, due to its own internal financial distress, and while Defendants were current on all payments, began improperly demanding that Defendants make curtailment payments on the loan. Colonial improperly based such curtailment demands on the status of other, unrelated loans (which happened to have a variety of principals, obligators, guarantors, etc.).

Colonial was shut down by the Alabama State Banking Department and the FDIC was appointed its Receiver. The FDIC then assigned and sold the assets of Colonial to Plaintiff through a Purchase and Assumption Agreement (“PSA”), which makes Plaintiff the lawful owner and holder of the subject loan documents.

The evidence adduced at trial and considered by the court demonstrated that Plaintiff breached it duties of good faith and fair dealing in its contractual relationship with Defendants. The evidence also demonstrated that Plaintiff was motivated to behave in such as manner as a direct result of the PSA; that is, Plaintiff stood to profit by declaring a fraudulent default under the subject loan, collecting from the FDIC under the PSA for such default, and then enforcing the subject loan against Defendants, and retaining the property until such time as a real estate turnaround occurred in hopes to dispose of the property at the peak of the market. In fact, Mr. Bruni testified that Plaintiff may have already applied to the FDIC for a loss share payment on this loan. And Defendants’ expert, Jim Howard, explained that it was possible Plaintiff could have already applied for and received a payment from the FDIC on this loan, perhaps in an amount as high as $1,800,000.00. Notably, Plaintiff nowhere credited such potential payment from the FDIC against the amounts sought in the instant litigation; thereby giving the impression that Plaintiff might be “double dipping”, and possibly “triple dipping” if market conditions favorably change and the property likewise increases in value. Continue reading “BB&T Fraudulently Declares Default – Florida Court Orders FDIC Payments From Loss-Share Agreements to be Credited to Borrowers Loan”

The Washington Supreme Court Affirms No Bonafide Purchaser Exists For a Failure to Comply with Statutory Requirements of a Non-Judicial Foreclosure Sale

The Washington Supreme Court Affirms No Bonafide Purchaser Exists For a Failure to Comply with Statutory Requirements of a Non-Judicial Foreclosure Sale

By Daniel Edstrom
DTC Systems, Inc.

Thanks to Charles Cox for this one.

Excerpt

The trial court ruled that despite procedural noncompliance, the purchaser was a BFP under the statute and quieted title in the purchaser. The Court of Appeals reversed, holding that failure to comply with the statutory requirements was reason to set the sale aside and that factually, the purchaser did not qualify as a BFP.  We affirm the Court of Appeals ruling.

Here were the issues the Supreme Court was looking at:

  1. Whether a trustee’s sale taking place beyond the 120 days permitted by RCW 61.24.040(6) warrants invalidating the sale.
  2. Whether, under the circumstances of this case, a borrower waives the right to bring a postsale challenge for failing to utilize the presale remedies under RCW 61.24.130.
  3. Whether a bona fide purchaser can prevail despite an otherwise invalid sale.

Conclusion

The nonjudicial foreclosure proceedings here were marred by repeated statutory noncompliance. The financial institution acting as the lender also appeared to be acting as the trustee under a different name; the lender repeatedly accepted late payments and, at its sole discretion, rejected only the final late payment that would have cured the default; and the trustee conducted a sale without statutory authority. Equity cannot support waiver given these procedural defects and the purchaser’s status as a sophisticated real estate investor or buyer who had constructive knowledge of the defects in the sale.

We conclude the trustee sale was invalid. We affirm the Court of Appeals and remand to the trial court to enter an order declaring the sale invalid and quieting title in Tecca as against Dickinson. We also affirm the Court of Appeals’ decision reversing the trial court’s judgments for rent, costs, and statutory attorney fees in favor of Dickinson.

[bold, italics and underline added by author]

Download the ruling here: http://dtc-systems.net/wp-content/uploads/2012/05/WA-Supreme-Ruling-Albice-v-PremierMortgage.pdf

 

Two Days Before Illegal Wells Fargo Eviction Ventura Man Commits Suicide – His Widow Needs Your Help

Two Days Before Illegal Wells Fargo Eviction Ventura Man Commits Suicide – His Widow Needs Your Help

By Daniel Edstrom
DTC Systems, Inc.

Oriane Rousseau, whose husband tragically took his own life in the face of wrongful foreclosure by Wells Fargo will tell the story of about the shameful behavior of Wells Fargo that led to this preventable tragedy. If you can’t come to the event, visit the event page and send a message of support to Mrs. Rousseau.

Thanks for your help!

More Information:

There will be a press conference at the home of Oriane Rousseau, whose husband tragically took his own life in the face of wrongful foreclosure by Wells Fargo will tell the story of about the shameful behavior of Wells Fargo that led to this preventable tragedy.

Tuesday, May 22, at 12pm, Rousseau Family Home, 580 Wilshire Place, Newbury Park, CA

Facebook event page: https://www.facebook.com/events/175588909235756/

Tax deductible contributions to help Mrs. Rousseau with relocation and funeral expenses can be made at https://www.networkforgood.org/donation/ExpressDonation.aspx?ORGID2=27-1487442
An account of her story can be found at http://www.alternet.org/news/155442/wells_fargo_has_blood_on_its_hands:_desperate_man_commits_suicide_after_shocking_foreclosure_mistreatment_/?page=entire

 

GMAC Residential Capital Lists 200-999 Creditors, Failing to Disclose Tens of Thousands of Homeowner Claims

GMAC Residential Capital Lists 200-999 Creditors, Failing to Disclose Tens of Thousands of Homeowner Claims

By Daniel Edstrom
DTC Systems, Inc.

Note that the original article has been updated to fix my mistake of showing 299 creditors when the number of creditors listed on the Voluntary Petition was 200-999.  On April 13, 2011 the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation issued a Cease and Desist Consent Order against Ally Financial Inc. fka GMAC LLC, Ally Bank fka GMAC Bank, Residential Capital LLC (and its direct and indirect subsidiaries) and GMAC Mortgage LLC.  During the period of 1/1/2009 to 12/31/2010, the Mortgage Servicing Companies completed 89,998 foreclosure actions, representing less than 4 percent of the Servicing Portfolio over such such time period.  View the attached Voluntary Petition below to see the number of creditors identified.   The regulators found the following:

WHEREAS, in connection with the process leading to certain foreclosures involving the Servicing Portfolio, the Mortgage Servicing Companies allegedly:

  1. Filed or caused to be filed in state courts and in connection with bankruptcy proceedings in federal courts numerous affidavits executed by employees of the Mortgage Servicing Companies or employees of third-party providers making various assertions, such as the ownership of the mortgage note and mortgage, 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;
  2. Filed or caused to be filed in courts in various states and in connection with bankruptcy proceedings in federal courts or in the local land record offices, numerous affidavits and other mortgage-related documents that were not properly notarized, including those not signed or affirmed in the presence of a notary;
  3. Litigated foreclosure and bankruptcy proceedings and initiated non-judicial foreclosures without always confirming that documentation of ownership was in order at the appropriate time, including confirming that the promissory note and mortgage document were properly endorsed or assigned and, if necessary, in the possession of the appropriate party;
  4. Failed to respond in a sufficient and timely manner to the increased level of foreclosures by increasing financial, staffing, and managerial resources to ensure that the Mortgage Servicing Companies adequately handled the foreclosure process; and failed to respond in a sufficient and timely manner to the increased level of Loss Mitigation Activities to ensure timely, effective and efficient communication with borrowers with respect to Loss Mitigation Activities and foreclosure activities; and
  5. Failed to have adequate internal controls, policies and procedures, compliance risk management, internal audit, training, and oversight of the foreclosure process, including sufficient oversight of outside counsel and other third-party providers handling foreclosure-related services with respect to the Servicing Portfolio. Continue reading “GMAC Residential Capital Lists 200-999 Creditors, Failing to Disclose Tens of Thousands of Homeowner Claims”

GMAC Residential Capital Declares Bankruptcy

GMAC Residential Capital Declares Bankruptcy

By Daniel Edstrom
DTC Systems, Inc.

According to Residential Funding Corporation, GMAC was one of the largest entities securitizing loans in 2000.  This bankruptcy probably has an impact on nearly every single GMAC based loan or loan that was securitized by GMAC.  Many of the GMAC deals pledged the loans to the trusts but never actually perfected the transfer.  This could mean that your “lender”, “creditor” or “owner” of these loans is one of the many related entities of Residential Capital (RESCAP) – which may be a problem because they have probably been paid in full.  Many of these entities had a security interest in the money advanced to fund the loans, even though they were not the named lender.  Many of these entities were required and obligated to make payments on the borrowers loans – and they did in fact make payments.  Many of these entities had guarantee agreements with other parties (such as servicers) to reimburse them for payments of principal and interest made on borrowers loans.

Here is the list of related entities RESCAP is attempting to consolidate into one bankruptcy:

Fannie Mae Announces Year-End Servicer Performance Scorecard Results

Fannie Mae Announces Year-End Servicer Performance Scorecard Results

By Daniel Edstrom
DTC Systems, Inc.

Quote from news release dated March 15, 2012:

The STAR Program was created to establish standards and recognize excellence among Fannie Mae servicers in their overall performance, customer service, and foreclosure prevention efforts.

Another Quote:

Overall STAR performance rankings are issued on an annual basis each April.

Apparently Fannie Mae missed the flood of Cease and Desist Consent Orders issued by various government regulators on April 13, 2011 for unsafe or unsound foreclosure policies and practices.  The government regulators were the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Federal Housing Finance Agency.

Fannie Mae has apparently missed the fact that nothing has changed and the servicers are not abiding by the Cease and Desist Consent Orders, unless they are doing this in secret or on a limited basis.

Here is the text of the news release, followed by the STAR Scorecard results for the previous quarters in 2011. Continue reading “Fannie Mae Announces Year-End Servicer Performance Scorecard Results”

New Century Mortgage Corporation Bankruptcy May “Restart” Because Residential Borrowers Were NOT Notified of the Bankruptcy

 

 

 

New Century Mortgage Corporation Bankruptcy May “Restart” Because Residential Borrowers Were NOT Notified of the Bankruptcy

By Daniel Edstrom
DTC Systems, Inc.

New Century Financial Corporation and its related entities filed voluntary bankruptcy on April 2, 2007.  Persistent Pro Se homeowners are holding the New Century Bankruptcy to task by insisting they, like thousands of other homeowners (if not tens of thousands) were never notified of the New Century bankruptcy.  Homeowners with claims would be considered “creditors” in the New Century bankruptcy.  If the judge resets the bar date, the bankruptcy would “start over”, or at least the claims period would be opened once more.  If this occurs, it is possible New Century would have to notify homeowners with New Century loans that they may be potential creditors.  Because of the fraudulent paperwork created by mortgage services and lenders, the number of claims by residential borrowers skyrocket.

The New Century Liquidating Trust insisted the Pro Se borrowers were wrong and everything was fine.

The next hearing on the matter is May 23 2012 in Judge Carey’s courtroom in Delaware.  On April 25, 2012, this is briefly what happened at the Omnibus hearing according to “Abby”:

Judge Carey came out for the homeowners in today’s telephonic hearing.  Hahn  & Hessen, the appointed trustee’s counsels from NYC, wanted to do the substantive arguments TODAY..but Carey shot them down.  They wanted to have only a cross examination of Atty. Uhland on May 23rd and Carey shot them down – he said no. He expected direct and cross.  He is taking this as a WHOLE NEW evidentiary hearing.  Atty. Uhland had been responsible for the bar date publication for one day each in the Wall Street Journal and the Orange County Register.

Homeowner/borrowers were never notified of the bankruptcy even though New Century had the contact data for each homeowner/borrower.

Also, the appointed bankruptcy trustee, Alan Jacobs was ordered back for the hearing on May 23, 2012 as well as Atty. Uhland.   Pro se Homeowner/borrowers will have about a month to prepare their questions for testimony from Atty. Uhland and the bankruptcy trustee Alan Jacobs.

For a list of other loan originators who have imploded and declared bankruptcy, such Mortgage Lenders Network USA, Inc. and Accredited Home Lenders, Inc., go to the infamous “Implode-O-Meter” (TM) website (http://ml-implode.com/) from Martin Andelman, author of the Mandelman Matters Blog (http://mandelman.ml-implode.com/)

Omnibus Reply of the New Century Liquidating Trust to Objections to Motion for Entry of An Order to Determine That the Debtors Have Complied with the Order Establishing Bar Dates for Filing Proof of Claim and Approving Form, Manner and Sufficiency of Notice Thereof [D.I. 1721]:  http://dtc-systems.net/wp-content/uploads/2012/04/NCLT_DI-10853_re_Bar_Date.pdf

Response of Molly S. White and Ralph N. White in Objection to the New Century Liquidating Trust Motion Requesting an Order That the Debtors Have Complied with the Bar Date Order for Filing Proofs of Claim and Approving Form, Manner and Sufficiency of Notice:  http://dtc-systems.net/wp-content/uploads/2012/04/Pro_Se_objection_to_NCLT.pdf

New Century Liquidating Trust 1st Quarter 2012 financials:  http://dtc-systems.net/wp-content/uploads/2012/04/1st_qtr_2012_financials.pdf

There are numerous other objections from other Pro Se’s, but this is the only one we currently have.

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.

 

U.S. Bank Nat’l Ass’n v. Ibanez 458 Mass. 637 (2011) – The High Cost of Litigation

U.S. Bank Nat’l Ass’n v. Ibanez 458 Mass. 637 (2011) – The High Cost of Litigation

By Daniel Edstrom
DTC Systems, Inc.

This case is a fiasco beyond imagination.  This boarded up house was the subject of the Massachusetts Supreme Judicial Court decision where US Bank as Trustee of a securitized trust lost in an attempt to obtain a judicial declaration of clear title.  The investors now have an accounting that they can review.  The losses keep coming month after month and may not be finalized for many more years.  Here is what is being reported to the investors and ratings agencies as of February 2012:

Current Amt: $0.00

Paidoff: 9/2008

Last Report Date: 2/2012

Liquidation: $102,077

Curr Loss (as of 2/2012): $29,832.56

Cumulative loss: $274,340.89

Loss Severity (%): 268.76%

Original Amount: $103,500

The cumulative loss and loss severity are extremely high.  This is not a record high for the amount or the loss severity percentage.  But for a boarded up house that is probably not worth $100,000.00 it sure is quite a hit.   Good thing there are still 440 or so loans in this trust with a current balance of over $88 million.  That makes this small amount easy to swallow.  In reality the loss amount is very low because the loan amount is low.  Another loan in this same pool had a cumulative loss of $770,630.99 and a loss severity of 86.41%.  The loan amount was $900,000.

Now for the real question.  How does a loan for $103,500 actually cost the investors a loss of $274,340.89?  Where does the “exta” amount come from to pay for the loss of this property?