Professional Documents
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I have resided in CITY California for over 13 years and have been a homeowner for that amount of time.
I never had any mortgage problems until an unscrupulous predatory lender hounded me to refi. The
California Corporations Commissioner banned this company, Home123 Corp, from doing business in
California in Oct. of 2007.
The refi was deceptive and fraudulent from the start. Ultimately my house was foreclosed upon ON XYZ
DATE. I immediately filed lawsuits to stop my eviction and to attempt to return my property to my
name. I am NOT asking for you to do anything about my situation.
I am asking that you read the following about the new law in Arizona, a state similar to California in that
it is a non-judicial foreclosure state. AZ Senate Bill 1259.
I am asking that in this unprecedented time, you sponsor a bill just like AZ Senate Bill 1259 for all
Californians. Thousands upon thousands of homeowners in California are being rail-roaded through the
Unlawful Detainer courts (eviction) and their homes were foreclosed upon when there was NEVER a
clear chain of title due to the hidden securitization schema, which borders on RICO & PONZI.
If possible, I would like to meet with you or one of your staff to discuss this potential bill.
In my case, I have several lawsuits across the USA due to the amount of fraud involved with my home
loan and its securitization. I have seen my home loan sold in a mortgage pool to investors around the
globe!!
Even the investors are suing the bank involved for fraud on the mortgage pool my loan is contained
within.
Please, please consider sponsoring a bill like AZ Senate Bill 1259. California will never recover unless this
is done immediately. It should be an emergency bill.
I hope you can help other Californians and others who live in your district.
Sincerely.
Your name
Phone
Address
2/25/2011
ARIZONA MAVERICK LEGISLATURE ASSERTS THE RULE OF LAW
NEIL GARFIELD, ESQ (HE IS EDITOR ON HIS BLOG LIVINGLIES WEBLOG) THIS IS HIS EDITOR’S
COMMENT: MUCHO CONGRATS TO SENATOR MICHELE REAGAN AND ATTORNEY BETH FINDSEN, ESQ.
(SCOTTSDALE) WHO DRAFTED A BILL REQUIRING A WOULD-BE FORECLOSER (PRETENDER LENDER) TO
PROVE THEY ARE THE CREDITOR. DESPITE MILLIONS OF DOLLARS IN A SOLID RED STATE IN A
REPUBLICAN CONTROLLED LEGISLATURE, THE STATE OF ARIZONA IS ONCE AGAIN DISPLAYING ITS
KNACK FOR SURPRISING PEOPLE WITH A ‘MAVERICK” STANCE.
Banks were stunned when they learned that the measure had passed by a huge margin and that their
efforts to screw up the State of Arizona just hit a brick wall. Now the State is going to be in position to
collect billions of dollars in unreported and unpaid income taxes, recording fees, and fines and
penalties. In a nutshell, the bill means that if you could not prevail in a judicial action you can’t use the
power of non-judicial sale to make an end run around due process.
This bill stops 95% of foreclosures in their tracks and changes the entire landscape of title, wealth and
ownership. It also reverses the downward spiral of the Arizona economy and changes the outlook
from bleak and bleaker to a budget surplus and employment rising in a rising economy in a “right to
work” state.
Expect desperate actions from desperate banks as they try to head off similar measures in other
states. The statute merely re-states the law in the context of competing claims caused by
securitization. If someone wants to buy a house, they are going to be required to pay for it, not steal it
with a fake “credit bid.” Arizona and New York could not be more different in their politics or
demographics but apparently there is agreement from the left and the right side the political
spectrum that if the Feds won’t do the job, then the states will do it — stop foreclosures and
prosecute people who committed civil or criminal fraud.
You see, the Arizona State Senate has passed Senate Bill 1259, sponsored by Michele Reagan,
which would require the lenders that didn’t originate a loan to produce the full chain of title, or risk
the foreclosure sale being voided. The bill now goes to the House for a vote, but with the Senate
having passed it by an overwhelming margin of 28-2, it would seem that its passage is a fait accompli.
According to the Arizona Senate’s FACT SHEET FOR S.B.1259, foreclosures; proof of ownership, the
Bill’s purpose is as follows:
“Provides a chain of ownership during foreclosure proceedings and allows reimbursement of lawyer
fees for injunctions or court cases that fail to prove ownership.”
And, in a related story… Arizona’s foreclosure defense plaintiff’s attorneys have been spotted across
the state dancing in the streets with some of the state’s distressed homeowners. Many observers of
this admittedly unusual phenomenon claim that for the most part, the attorneys and homeowners
were doing the Hokey Pokey, with several people reporting that after rolling down their windows as
they drove by, they heard the dancers exclaim: “That’s what it’s all about!”
The Senate’s S.B. 1259 FACT SHEET also listed five key “Provisions” of the bill:
1. Requires a non originating beneficiary on a deed of trust, to record a summary document that
contains past names and addresses of prior beneficiaries, the date, recordation number and a
description of the instrument that conveyed the interest of each beneficiary.
2. Requires the summary document to be recorded at the same time and place that the notice of
trustee’s sale is recorded and that a copy be attached to any notice of trustee’s sale that is required.
3. Stipulates that failure to properly record the summary document that demonstrates evidence of
title for the foreclosing beneficiary as of the date of the trustee’s sale will result in a voidable sale.
4. Allows any person with an interest in the trust property to file an action to void the trustee’s sale
for failure to comply and is entitled to an award of attorney fees and damages, to include an award of
attorney fees for any injunction or other provisional remedy related to the claim.
5. Becomes effective on the general effective date.
So, get this… I’m as curious as the bankers must be as to how in the world something like this happened.
I mean, I’ve been accusing our country’s politicians of perpetual kowtowing to the banking lobby, and
of having no first hand knowledge of what’s going on in real life, as far as the foreclosure crisis goes…
and then the Arizona’s political types go and pass something like this? I mean… go figure, right?
So… how did it happen?
Well, funny story… it seems that State Senator Michele Reagan, a Republican of all things, who was
first elected to serve in the Arizona House of Representatives in 2002, and in 2010 was elected to the
Arizona State Senate… and who is Vice-Chairman of the Banking and Insurance Committee, and
Chairman of the Committee on Economic Development and Jobs Creation… well it seems that she and
her husband were sued by their servicer, Texas-based Colonial Savings FA, when they sent the bank a
letter last July stating that they were planning to rescind their loan due to violations of the Truth in
Lending Act or TILA .
According to Bloomberg’s story on the bill’s passage:
“They claim that the bank failed to disclose certain fees, and that the underwriter of their loan
inflated their income by 12%, which violates the Truth in Lending Act.”
Colonial Savings then asked the court to declare that the couple were not entitled to rescind the loan,
it should go without saying.
Reagan and her husband, David Gulino filed their own counter claim type lawsuit, in which they argued
that they were manipulated into accepting an adjustable-rate mortgage, and that Colonial Savings, in
true servicer-style, won’t tell them who owns their loan.
According to Bloomberg, Janet Walter, a spokeswoman for Colonial Savings, declined to comment, so I
see no point in ringing her myself. And, Reagan’s attorney Beth Findsen, who told Bloomberg that she
also helped write the bill, said the following:
“It makes Michele mad that the bank servicers will not disclose to a borrower the true noteholders,”
Findsen said. “She was taken aback that such basic information was not readily available.”
And I can imagine she would be taken aback. I know I would be… and in fact was… when I was
first exposed to the problems being caused by Servicers, and I remain taken aback to this day.
Again, quoting from the Bloomberg story…
“If you foreclose on somebody you should have to tell them who owns the property,” Michele Reagan,
who sponsored Senate Bill 1259, said in a telephone interview. “People have the right in this country
to face their accusers.”
I like the way she thinks, don’t you? Even though, if I were to be picky about it, I’m not entirely sure that
the reason for passing a law that requires the banksters to produce or report on all of the specific
beneficiaries comprised in the Chain of Title has anything to do with our right to confront one’s accuser,
as described in the Sixth Amendment to the U.S. Constitution, but if that’s what works, then let’s by all
means run with it.
Strong opposition to the bill’s passage is coming from the Arizona Bankers Association, the
Arizona Trustees Association, and Merscorp Inc., three great tastes that taste great together. MERS, in
case you’ve been incarcerated in a Turkish prison over this past year, is an industry-owned organization
that maintains a database containing more than 50% of all mortgages, that claims to be able to
represent the trustees that conduct foreclosure auctions on behalf of lenders. Many vehemently
disagree.
Paul Hickman, chief executive officer of the Arizona Bankers Association in Phoenix, showed up in
the Bloomberg article, to issue the banking industry’s standard WARNING & THREAT package… the one
they draw like a gun every time anything might change that affects them in any way.
“If Arizona passes this, it will be the only state in the union that will require a production of chain of
title. States that pass these types of laws will be riskier environments to lend in and more difficult
environments to get a loan in.”
Or, in other words… pass this bill and none of you in AZ will ever buy a home again because there will
be no credit available to you. Hickman didn’t add the popular refrain about how the change will also
paralyze the housing market, which will derail the recovery and basically end the world as we know it.
Oooooo… scary bedtime stories for legislators.
And by the way, Mr. Hickman… the whole chain of title thing is already the law in Arizona and
elsewhere. This new law just requires your membership to follow the existing laws and actually make
sure the chain of title is not destroyed by banker incompetence or blatant disregard for the law.
So, why would your banker buddies having to follow the law transform a geographic locale into a “riskier
environment?” Riskier for whom, exactly? Just tell the bankers that they may have to work past three
and actually care about doing things in compliance with the law from now on, and everything will be
fine… see… risk gone. Happy now?
Also, appearing alongside Hickman, the president of the Arizona Trustees Association in Phoenix,
Richard Chambliss… I prefer to call him “Dick,” echoed the industry’s message as well:
“Reagan’s bill has both technical and conceptual problems, and could add to uncertainty over title.
Lenders that don’t file mortgage assignments with county recorders offices could face borrower
challenges if the bill passes, even though the assignments weren’t required by state law.”
Dick Chambliss went on… sounding to me like he was getting a bit hot under the collar as he did…
“Is this bill intended to punish the lenders and screw up the process or address the problem that needs
to be solved?”
Actually, two out of three, Dicky my boy… it’s definitely intended to punish the lenders, although
nowhere near as severely as they should be punished, and now that we can all see how it upsets you
and your peer group, we’re more confident than ever that it will also go a long way towards solving a
couple of key problems inherent to the foreclosure crisis to-date as a result of servicer practices…
1. That servicers and lenders will actually have to follow the laws related to the chain of title, and
therefore won’t be bringing fraudulent documents into court anymore.
2. That servicers that haven’t followed the laws and therefore that have broken the chain of title will
now have an incentive to modify loans, instead of perpetuating illegal foreclosures.
But, look at the bright side… think of the money you’ll save on robo-signers, depositions, the creation of
garbage alonges… you’ll come out ahead, I just know it.
Dick had yet another question to pose…
“What is it accomplishing by requiring that the history from the birth of the deed of trust to 20
assignments down the road have to be fully identified?”
Most mortgages that were originated during the last ten years were securitized and therefore
supposedly assigned to trusts, with “pass-through certificates” entitling their holders to receive a
percentage of the payment streams generated by the mortgages in the pool offered for sale to
investors. As a result, many, many of these loans were sold more than three times before ever getting
into the trust, assuming they ever arrived.
Banks using the Merscorp’s system typically don’t file assignments because the says that the
ownership information is tracked electronically, whatever that actually means. Numerous judges don’t
agree, most notably of late, Federal Bankruptcy Court Judge Grossman in New York whose opinion a few
weeks ago, although non-binding for several reasons, removed all uncertainty as the argument as to
whether MERS should be allowed to foreclose. He says, clearly… not a chance.
Walter E. Moak, who is apparently a bankruptcy attorney in Chandler, Arizona, was quoted in
the Bloomberg story, saying that this Arizona legislation would make it easier for borrowers to negotiate
loan workouts, and depending on the details, I might even agree. But, then the story quotes this
bankruptcy lawyer as saying something that I would have to take issue with…
“Servicers often reject modification requests because the borrower doesn’t meet investor guidelines,
even as they refuse to identify the investors,” Moak said.
“The person who has decision-making power is not the servicer, it’s the investors,” he said.
I realize that servicers say this a lot… I realize that many people believe this to be the case… I know that
intellectually it may even makes sense … and I’ll even allow for some small percentage of cases where
this statement is accurate to whatever degree… BUT… for the most part, Mr. Moak’s statements are at
best incomplete, and in many instances wrong.
When a servicer tells a homeowner that they are unable to modify their loan due to something about
not meeting investor guidelines or because the investor said they won’t modify loans… well, I’m sorry
Mr. Moak, but assuming the loan has been securitized… it’s almost never true. At least nine times out of
ten, they’re just plain old lying… or shall we say they’re embroidering… or perhaps we should call it,
embellishing… no, let’s go back to just plain lying.
Pooling and Servicing Agreements, in the vast majority of cases, do not prohibit servicers from modifying
a loan that is at risk of imminent default, and besides that… servicers don’t have a relationship with the
investors… they report to a Master Servicer, who in turn reports to a Trustee, and that trustee could
theoretically contact investors, but even that is extremely unlikely as the investors we’re talking about
are often pension plans, insurance companies and sovereign wealth funds… not exactly the kind of
investors you just pick up the phone and call… and then you would have to reach some sort of a
majority… I mean… it’s just a ridiculous proposition.
Georgetown Law Professor, Adam Levitin, in conjunction with Tara Twomey of National Consumer Law
Center, two of the country’s leading experts in the intricacies of mortgage servicing as related to loan
modifications, have just published a 90-page research paper that represents “the first comprehensive
overview of the residential mortgage servicing business,” and although the subject is nothing if not
complex, some things are clear.
(I actually know Tara from the judicial conference held last April for the 9 th Circuit judges… she and I were
on the same panel speaking to the judges about the foreclosure crisis and the impacts of securitization.)
From the Levitin/Twomey research paper on mortgage servicing:
Mortgage servicing has begun to receive increased scholarly, popular, and political attention as a
result of the difficulties faced by financially distressed homeowners when attempting to restructure
their mortgages amid the home foreclosure crisis. In particular, the mortgage servicing industry has
been identified as a central factor in the failure of the various government loan modification
programs.
No one has a firm sense of the frequency of contractual limitations to modification for PLS. A small
and unrepresentative sampling by Credit Suisse indicates that nearly all PLS PSAs permit modification
when a loan is in default or default is reasonably foreseeable. Almost 60% of the sampled PSAs had
no other restrictions to modification. Of the PSAs with additional restrictions, 27% capped loan
modifications at 5% of the loan pool, either by count or balance.
The PSA sets forth two exceptions to this general limitation on loan modification. First, for defaulted
loans, the PSA provides that the servicer may write down principal or extend the term of the loan.
Thus, it appears that the servicer may write down the principal on a defaulted or distressed loan or
may extend the term of the loan.
Look, the fact is that servicers lie all the time to the homeowners who apply to have their loans
modified, and I’ve got a front row seat to that behavior almost every single day. They want to foreclose
because they make more money when they foreclose, and if they can say something to get a
homeowner to give up, they will… and they do… all the time. I can’t count the number of times when
I’ve told a homeowner to not give up and the result has been a modified loan.
If a servicer tells me that the sky is blue, I go outside and check for myself… and that’s all I have to say
about that.
Yeah, well you see the 800lb. gorilla now, right? Is this bill saying that all the bankers will be required to
do under the new law is type up a list of what shouldn’t happen but didn’t… without having to prove
anything? Because if that’s the case, then I just wasted a huge amount of time writing about something
that will soon be proven useless, and I’m not happy about that possibility at all.
I mean, typing up a chronology of what was supposed to happen and when, even though it didn’t…
strikes me as being much easier than having a robo-signer sign 10,000 lost note affidavits each month
So, all I can say is… I’m going to find out for sure tomorrow by talking to the Senator’s office, and until
then I’m going to pretend that I never even noticed that little issue, and pray like hell that this isn’t just
another Charlie Brown run at that same stupid football.
From the Bloomberg article:
Matthew Benson, a spokesman for Arizona Governor Jan Brewer, a Republican, said she doesn’t
comment on legislation until it reaches her desk.
Mandelman out.