Category: Information

Wild Deeds, Assignments and ‘Dangerous Innovation’

Wild Deeds, Assignments and ‘Dangerous Innovation’

By Daniel Edstrom
DTC Systems, Inc.

As much as things change, they remain the same.  Wild Deeds, Strangers to Title, Nominee’s, Agents, Evidence, etc., have always been issues in real estate transactions.  Thanks to Monica Graham for finding this case.   Look at this excerpt regarding “dangerous innovation” decades before the mortgage meltdown:

In the present case, we would have to assume the position of Russ and Ethyl Green in the chain of title, that the Crestmore Company had complied with the statutory provisions relating to the use of a fictitious name, and that P. H. Wierman was a member of the firm with the authority to execute an assignment of the note made payable to that firm. Such assumptions, would indeed, constitute a “dangerous innovation.”

This excerpt regards proof of the chain of title:

[6c] For the above reasons it appears that plaintiffs failed to prove a valid assignment of the note and third trust deed to them. As assignees they stand in the same position as their assignor, the Crestmore Company, and must prove their chain of title to the note in question.

This excerpt is in regards to the burden of proof in proving an assignment:

The burden of proving an assignment falls upon the party asserting rights thereunder (Read v. Buffum, supra, 79 Cal. 77 [21 P. 555, 12 Am.St.Rep. 131]; Ford v. Bushard, 116 Cal. 273 [48 P. 119]; Bovard v. Dickenson, 131 Cal. 162 [63 P. 162]; Nakagawa v. Okamoto, 164 Cal. 718 [130 P. 707]). [8] In an action by an assignee to enforce an assigned right, the evidence must not only be sufficient to establish the fact of assignment when that fact is in issue (Quan Wye v. Chin Lin Hee, 123 Cal. 185 [55 P. 783]) but the measure of sufficiency requires that the evidence of assignment be clear and positive to protect an obligor from any further claim by the primary obligee (Gustafson v. Stockton etc. R. R. Co., 132 Cal. 619 [64 P. 995]). Continue reading “Wild Deeds, Assignments and ‘Dangerous Innovation’”

How to Get a Full Accounting in California

Edstrom_MortgageSecuritization_POSTER_17_x_22_v4_1How to Get a Full Accounting in California

By Daniel Edstrom
DTC Systems, Inc.

Here is an appeals court case showing how to plead a cause of action for an accounting.  In the securitization of residential loans, this issue is frequently discussed, but I have never seen it brought in a lawsuit.  This appeals court case is certified for publication and was filed on April 22, 2009.

Accounting

A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting.  (Brea v. McGlashan (1934) 3 Cal.App.2d 454, 460, 39 P.2d 877;  5 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 819, p. 236.)

An action for accounting is not available where the plaintiff alleges the right to recover a sum certain or a sum that can be made certain by calculation.  (St. James Church of Christ Holiness v. Superior Court (1955) 135 Cal.App.2d 352, 359, 287 P.2d 387.)   A plaintiff need not state facts that are peculiarly within the knowledge of the opposing party.  (Brea v. McGlashan, supra, 3 Cal.App.2d at p. 460, 39 P.2d 877.)

Full Ruling: http://dtc-systems.net/wp-content/uploads/2011/12/Teselle-vs-McLoughlin-C054919-CERTIFIED-FOR-PUBLICATION.pdf

Culhane vs Aurora Loan Services

Culhane vs Aurora Loan Services

By Daniel Edstrom
DTC Systems, Inc.

Note the following from this United States District Court case from the District of Massachusetts:

It is clear beyond peradventure that Culhane is substantially behind in paying her mortgage and appears unable to remediate her default.  This, however, does not render her an outlaw, subject to having her home seized by whatever bank or loan servicer may first lay claim to it.

Notice this from the case also:

 Nationwide, courts are grappling with challenges to MERS’s power to assign mortgages as well as its practice of deputizing employees of other companies to make assignments on its behalf. The present case is distinct only in that it is this Court’s first encounter with MERS and with the question whether its involvement in the origination and assignment of a mortgage loan clouds record title to the mortgaged property. The public has an interest in ensuring the liquidity of the mortgage market. Thus, even if Culhane is unable to exercise her equitable right of redemption and foreclosure of her mortgage loan is inevitable, title must pass free of cloud and not subject to challenge in any future action for summary process or to try title on the ground that the foreclosure process was conducted unlawfully. See Bevilacqua v. Rodriguez, 460 Mass. 762, 772 (2011); Bank of N.Y. v. Bailey, 460 Mass. 327, 333-34 (2011).

Order: http://dtc-systems.net/wp-content/uploads/2011/11/Culhane-vs-Aurora-Loan-Services.pdf

Office of the Comptroller Handbook: Internal Control

Office of the Comptroller Handbook: Internal Control

By Daniel Edstrom
DTC Systems, Inc.

Understanding the Cease and Desist Consent Orders begins by understanding safe and sound banking.  The foundation of safe and sound banking is effective internal controls.  This handbook discusses Internal Control for National Banks.  Consider the following handbook quote:

 Effective internal controls are the foundation of safe and sound banking. A properly designed and consistently enforced system of operational and financial internal control helps a bank’s board of directors and management safeguard the bank’s resources, produce reliable financial reports, and comply with laws and regulations. Effective internal control also reduces the possibility of significant errors and irregularities and assists in their timely detection when they do occur.

In the Cease and Desist Consent Orders issued on April 13, 2011 the Office of the Comptroller is essentially saying the following:

Ineffective internal controls are the foundation of unsafe and unsound banking. A poorly designed and inconsistently enforced system of operational and financial internal control inhibits a bank’s board of directors and management from safeguarding the bank’s resources, from producing reliable financial reports, and from complying with laws and regulations. Ineffective internal control also increases the possibility of significant errors and irregularities and assists in the failure of their detection during their occurance as well as long afterwords.

 The Comptroller’s Handbook defines Internal Control as follows:

Internal control is the systems, policies, procedures, and processes effected by the board of directors, management, and other
personnel to safeguard bank assets, limit or control risks, and achieve a bank’s objectives.

The Comptroller’s Handbook says the following about regulatory requirements:

National banks must adhere to certain regulatory requirements regarding internal control. These requirements direct banks to operate in a safe and sound manner, accurately prepare their financial statements, and comply with other banking laws and regulations. The laws and regulations that establish minimum requirements for internal control are 12 CFR 30, Safety and Soundness Standards; 12 CFR 363, Annual Independent Audits and Reporting Requirements; and 15 USC 78m, Securities Exchange Act of 1934.

12 CFR 30
12 CFR 30, Safety and Soundness Standards, establishes certain managerial and operational standards for all insured national banks, including standards for internal control. Appendix A to 12 CFR 30 states that a national bank should have internal controls that are appropriate to the size of the bank and the nature, scope, and risk of its activities, and that provide for

• An organizational structure that establishes clear lines of authority and responsibility for monitoring adherence to prescribed policies.
• Effective risk assessment.
• Timely and accurate financial, operational, and regulatory reports.
• Adequate procedures to safeguard and manage assets.
• Compliance with applicable laws and regulations.

When a national bank fails to meet these standards, the OCC may require management to submit a compliance plan to address internal control deficiencies. If the bank fails to submit a satisfactory plan, the OCC must, by order, require the bank to correct the deficiency.

This is pretty much the action that the OCC has taken in the Cease and Desist Consent Orders.  It should also be of significance to note that the actions taken in many cases under the Cease and Desist Consent Orders were directed to some of the largest national banks under complex financial engineering transactions.

Download the Comptroller’s Handbook on Internal Control: http://dtc-systems.net/wp-content/uploads/2011/11/intcntrl.pdf

Interim Status Report: Foreclosure-Related Consent Orders

Interim Status Report: Foreclosure-Related Consent Orders

By Daniel Edstrom
DTC Systems, Inc.

The Office of the Comptroller of the Currency has released an Interim Status Report regarding the Foreclosure-Related Consent Orders.  The November 2011 report is available here: OCC Interim Status Report for November 2011

Independent Foreclosure Review Engagement Letters

Independent Foreclosure Review Engagement Letters

By Daniel Edstrom
DTC Systems, Inc.

The Office of the Comptroller of the Currency has posted the following on its website (http://www.occ.gov/topics/consumer-protection/foreclosure-prevention/independent-review-foreclosure-letters.html).

Independent Foreclosure Review Engagement Letters

Below are links to engagement letters submitted by the independent consultants, retained by servicers regulated by the OCC, who will be conducting foreclosure reviews pursuant to the requirements of the April 13, 2011 consent orders.  The engagement letters describe how the independent consultants will conduct their file reviews and claims processes to identify borrowers who suffered financial injury as a result of servicer deficiencies identified in the OCC’s consent orders.

Limited proprietary and personal information has been redacted from the engagement letters.  Examples of information that has been redacted include, but are not limited to: names, titles and biographies of individuals; proprietary systems information; references to specific bank policy; fees and costs associated with the engagement; and specific descriptions of past work performed by the independent consultants.

Since the acceptance of the engagement letters in September of this year, the independent consultants have further refined and made adjustments to the processes, procedures, and methodologies outlined in the engagement letters in consultation with OCC supervision staff.  Therefore, in many cases the review processes being implemented may differ in some respects from those described in the engagement letters because of subsequent coordination with the OCC.  In particular, there were a number of changes made to integrated claims process to ensure a single, uniform process among the servicers.

Pursuant to 12 C.F.R. § 4.12(c), the disclosure of the engagement letters at the OCC’s election has no precedential significance.

Another Giant Foreclosure Mill Shuts Down – Steven J. Baum PC

Another Giant Foreclosure Mill Shuts Down – Steven J. Baum PC

By Daniel Edstrom
DTC Sytems, Inc.

From:

http://www.businessweek.com/news/2011-11-21/steven-j-baum-pc-new-york-foreclosure-firm-to-shut-down.html

One of the largest law firms in New York State is shutting down after losing business from Fannie and Freddie.  Apparently the firm agreed to pay the U.S. $2 million and change its practices to resolve a probe of faulty foreclosure filings.

State of Nevada Brings 606 Count Indictment against Two Alleged Robo-signers – Including 404 Felonies

State of Nevada Brings 606 Count Indictment against Two Alleged Robo-signers – Including 404 Felonies

By Daniel Edstrom
DTC Systems, Inc.

The indictment is 440 pages long and contains 606 counts against two individuals.  102 misdemeanors and 204 felonies against one person and 100 misdemeanors and 200 felonies against a second person.  It sure seems to me that in a case like this involving recorded documents that mail fraud would be involved.  This is because usually the recorded documents are sent through the mail.

Many, if not all of the documents involved in the indictment are Notices of Default.  If these are forged documents, how can the non-judicial foreclosures have been strictly complied with?  Of course I am not a lawyer, but it would sure seem to me that any document recorded after the Notice of Default would also be void.  But who knows, maybe there is another law that says if the parties performing a non-judicial foreclosure commit 1 misdemeanor and 2 felonies you still lose your house.  This seems unlikely since most non-judicial foreclosure states usually call for strict compliance with the non-judicial foreclosure statutes.

One notary has already pled guilty to one count of notarizing the signature of an individual not in her presence.

http://dtc-systems.net/wp-content/uploads/2011/11/robosignnotarypleading.pdf

http://dtc-systems.net/wp-content/uploads/2011/11/TracyLawrenceCriminalInformation.pdf

Homeowner Taxpayers are Third Party Beneficiaries of HAMP

Homeowner Taxpayers are Third Party Beneficiaries of HAMP

By Daniel Edstrom
DTC Systems, Inc.

Georgia judge provides colorful order denying motion to dismiss against US Bank.  Phillips asserts that compliance with HAMP is a condition precedent to foreclosure.

http://dtc-systems.net/wp-content/uploads/2011/11/Phillips-vs-US-Bank-Homeowners-are-3rd-Party-Beneficiaries-of-HAMP.pdf

Interagency Independent Foreclosure Review – File Your CLAIM

Interagency Independent Foreclosure Review – File Your CLAIM

By Daniel Edstrom
DTC Systems, Inc.

The following regarding the numerous Cease and Desist Consent Orders issued against servicers and others for unsafe or unsound foreclosure policies and practices is available here: http://www.independentforeclosurereview.com/

Independent Foreclosure Review

Looking for information about the Independent Foreclosure Review? Si usted habla español, tenemos representantes que pueden asistirle en su idioma.

Homeowners whose primary residence was part of a foreclosure action between January 1, 2009 and December 31, 2010, and whose home loan was serviced by a participating servicer, may be eligible for an Independent Foreclosure Review.

The Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency (federal bank regulators) have required an Independent Foreclosure Review by an independent consultant to identify eligible customers who may have been financially injured due to errors, misrepresentations or other deficiencies in their foreclosure process. If the review finds that financial injury occurred, the customer may receive compensation or other remedy.

To qualify, your mortgage loan would need to meet the initial eligibility criteria: Continue reading “Interagency Independent Foreclosure Review – File Your CLAIM”