NY Federal judge slams Wells Fargo for forged

mortgage docs
By Catherine Curan

January 31, 2015 | 8:34am

Modal Trigger

Photo: Getty Images

Judge Robert Drain has a message for Wells Fargo: “Forged” foreclosure documents don‟t cut it in New
York‟s federal courts.

In a stunning 30-page decision on January 28, Drain, a federal bankruptcy judge in New York‟s
Southern District, blasted Wells Fargo, America‟s largest mortgage servicer, for false documents it used
in trying to prove its right to foreclose on Westchester County resident Cynthia Carrsow Franklin‟s
home.

Drain shredded Wells Fargo‟s arguments regarding two crucial documents needed to prove ownership of
a loan: an indorsement (another term for endorsement) on a note and an assignment of mortgage.
These documents have to be created properly within a certain time frame, or they won‟t hold up in court.

The issue lies at the heart of the foreclosure crisis, and continues to haunt hardworking New Yorkers
like Franklin, a speech pathologist for autistic children, to this day.

“… [T]he blank indorsement, upon which Wells Fargo is relying, was forged,” wrote Drain in a stinging
rebuke to the bank. “Nevertheless it does show a general willingness and practice on Wells Fargo‟s part
to create documentary evidence, after-the-fact, when enforcing its claims, WHICH IS
EXTRAORDINARY,” wrote Judge Drain with emphasis.

Drain went on to say that “it is conceivable that all of Wells Fargo‟s newly created mortgage
assignments and newly created indorsements were proper” but that the burden was on Wells to show
that, and it didn‟t.

A Wells Fargo spokesman said, “Wells Fargo‟s processes ensure that all note endorsements are done
legally and appropriately, and we strongly dispute the conclusions in this case,” adding, “we are troubled
by the additional comments about our general practices that are unsupported by the evidence.”

The judge‟s ruling delves deeply into the work of Herman John Kennerty, who was deposed for this case
by Franklin‟s attorney, Linda Tirelli.

Drain casts a harsh eye on Kennerty‟s statements about his work as a manager heading up a “default
documents” department for Wells Fargo at the time of Franklin‟s foreclosure.

Kennerty admitted to signing between 50 and 150 original documents each day related to administration
and enforcement of Wells‟ defaulted loans, according to the ruling.

Drain added: “Moreover, Mr. Kennerty‟s testimony does not stop at describing manufactured mortgage
assignments. He also testified that his „assignment team‟s‟ duties were not limited to processing
assignments, including, when determined necessary, creating them; in addition, the „assignment team‟
included people tasked with endorsing notes.”

The Post first reported on Franklin‟s case in March 2014, when Tirelli alleged in court papers that Wells
Fargo set up detailed internal procedures in a 150-page Wells Fargo Foreclosure Attorney Procedures
Manual (created Nov. 9, 2011, and updated Feb 24, 2012) to fabricate foreclosure papers on demand.
Wells Fargo denied the allegations.

Franklin told The Post, “I feel relieved … I‟m hoping this case will help other people.”

She added, “Reading this opinion … it feels very calculated. It wasn‟t like I was lost in the shuffle
somehow. And you know, if someone writes me a check and they forget to sign it, I can‟t cash it. If in
my job I turn in paperwork and I forgot to check something or to write in a code, it‟s kicked out. I don‟t
get paid. That‟s how it works with everybody else.”

Wells Fargo has about two weeks to file a notice of appeal. The megabank lost this round, but the judge
also made it clear that Franklin‟s debt remains.

Drain‟s ruling followed another major loss for Wells Fargo in a residential foreclosure case last week —
and another smackdown, this time from a Missouri state court judge. This in turn comes after Wells
Fargo and three other big banks were hit with a $2.7 million penalty to settle allegations of unlawful
foreclosures in Massachusetts.

On Jan. 26, Judge R. Brent Elliott of Missouri‟s 43rd Judicial Circuit awarded $2.9 million in punitive
damages to a Missouri couple who spent years in limbo after Wells wrongfully foreclosed on their
home. Wells sold it to Freddie Mac on Aug. 15, 2008, even after agreeing to a reinstatement of the loan
following a disputed debt.

Elliott also blasted Wells Fargo for “outrageous and reprehensible” decisions and “deceptive and
intentional conduct” that “displayed a complete and total disregard for the rights of David and Crystal
Holm.

“Defendant Wells Fargo operated from a position of superiority provided by its enormous wealth,”
Brent wrote in a blistering nine-page decision. “Wells Fargo‟s decision took advantage of an obviously
financially vulnerable family,” the judge continued, noting that Wells Fargo showed no evidence of
remorse for the harm caused.

“In fact, the Court recalls the lack of remorse and humanity illustrated by a Wells Fargo corporate
representative who testified, „I‟m not here as a human being. I‟m here as a representative of Wells
Fargo,‟ ” the judge wrote.

The couple and their 12-year-old daughter got their home back, along with a total of $3.25 million in
damages.

“We have modified more than 1 million mortgage loans and have forgiven $8.4 billion in principal since
the beginning of 2009. There‟s a lot more to this case than the decision reflects, and we have strong
arguments to appeal the judgment and the unwarranted damages that were awarded,” a Wells Fargo
spokesman said of the Missouri case.