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Mortgage Fraud Examiners, the investigative firm who warned the public about the

“criminal loan modification trap” and “useless” software audits, is now warning the
public of this latest scam—“The Administrative Process”

Actually, this scam is not new; the last time it was prevalent was back in the late 1980s
and early 1990s when many Midwestern farmers were losing their family farms.
Hucksters flooded the Corn Belt promoting their openly brainless schemes managing to
convince farmers that they weren’t required under the law to repay their bank loans.
These same theories have resurfaced today in what is known as “Mortgage Elimination”
or “The Administrative Process.”

Mortgage Fraud Examiners CEO Storm Bradford explains: “The previous scams we’ve
exposed dealt mainly with companies that market “useless” software audits, and
companies charging fees for loan modifications when the homeowner can go through
HUD or non-profit organizations and get it done for free. However, this belated scam
literally instructs homeowners on how to commit federal and/or state crimes.”

“Swindlers of the “Re-conveyance By Administrative Process” scam, as it’s known,

advise homeowners that financial institutions are forced to cancel mortgages and deeds of
trust, without payment on secured promissory notes because they never lent money to the
borrower for the purchase of their home. According to them, this makes most mortgages
unenforceable against their so-called “proprietary administrative procedure.”

“You might ask why anyone would believe such idiocy when obviously the bank writes a
check for the purchase of a home, or writes the homeowner a check for a cash-out
refinance? Well, it’s because these swindlers allude to various discredited legal theories,
quote from out-of-context Federal Reserve press releases, and intermingle bogus legal
terminology to scam thousands of dollars out of unsuspecting homeowners who are not
aware of the fact, this "vapor money" theory has been squarely addressed and rejected by
various courts throughout the country for over twenty-five years.

“Homeowners in foreclosure are simply desperate for a solution, and that’s what the
scammers count on. The sad part is the desperate homeowner and his family end up in
even more desperate straits. They end up paying thousands of dollars for legal babble that
gets them nothing, except a possible criminal conviction in the end.”

There are several variations of the scam, but basically this is how it works:

1. Owner/borrower executes a substitution of trustee for the deed of trust against his
or her property (which, of course, the owner/borrower has no authority to do
because of its non revocable character). Substitution of trustee is recorded.
2. Substituted trustee executes and records a release (or reconveyance) of the deed of
trust, or
3. Substituted trustee records a notice of sale pursuant to deed of trust, followed by a
trustee's deed in favor of a third party (or trust). It appears the trustee's deed does
not follow a legitimate foreclosure sale, and the third party is a 'strawman' or
otherwise holds the title in trust for the former owner/borrower.
4. Later, property is refinanced (or possibly sold) with new title insurance being
issued to include coverage against the supposedly released or foreclosed deed of

In essence, the homeowner files a forged reconveyance on a property, making it appear

that the property is owned free and clear. The homeowner encumbers the property with a
new loan and runs off with the new loan proceeds.

"There really are many legal options available to homeowners facing foreclosure,"
Bradford concludes. “However, the only process that works is to find a REAL legal
dispute that a judge is willing to accept as a valid reason to declare the debt void, such as
tortuous misconduct, gross violation of lending laws, violations of state and federal
consumer protection acts, or appraisal fraud. Every mortgage transaction has unique
facts, every claim has different applicable law, and only a legal professional is going to
find the answers.”

Mortgage Fraud Examiners

Phone: 800.540.EXAM (3926)