Posted on 05/29/2010 7:39:17 AM PDT by Chunga85
Florida Default Law Group filed this foreclosure case based on a defaulted promissory note.
Keeping in mind that I am not an attorney, is there a legal basis for deeming an unsigned note a negotiable instrument secured by a mortgage?
I know the banks are all gung ho on "aggressive redeeming of collateral". I have learned that forgery and fabrication of legal documents is apparently fine and dandy in the eyes of many judges. I get that the greedy homeowners deserve to be dispossessed of their homes because they were naughty enough to sign a document that was pre-planned to go into default and actually insured by the profiteering "lender" many times over for that exact occurrence. I admit that I've come to grips with the fact that a non-party to a contract can be a welcome interloper and evict a family from their home with the tacit approval of our courts, law makers, and executive branch. I am even willing now to concede that economic damages need not to have occurred for an unknown, predator bank to swoop down upon it's American prey.
(Excerpt) Read more at foreclosurehamlet.org ...
(High-tech flame suit buttoned up tight)
HUMMMMMMMMMMMMMMMM...Something for my grill!
We can’t fight Wells Fargo, JPMorgan, BOA, etc. with money.
We CAN fight them by *POLLINATING* information.
>> Local FLA governments are stuck with about $556 million in tainted securities that they can't redeem.
>> Fla has $290 million less to pay for everything from hurricane claims to health care, community colleges and care for infants with disabilities.
>> FLA counties, cities and school districts face a loss of more than $300 million for roads, sewers and schools.
>> The biggest casualty of Lehman's bust is Florida's giant public pension fund. More than $440 million disappeared from the pension fund that pays benefits for some 1 million retirees and public employees. The pension fund took a $230 million hit on Lehman stocks and bonds.
>> The FLA pension fund holds another $53 million in Lehman bonds that have lost most of their value and has $323 million tied up in tarnished mortgage-related securities purchased from Lehman. If FLA sold those securities today, the pension fund would lose about $188 million more.
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Circa February 2010 "There's a lot of foreclosures in the pipeline, and the number is going to continue to get bigger," said economist Patrick Newport at IHS Global Insight to Reuters. According to RealtyTrac, Nevada remains No. 1, with one in every 95 properties in the state getting a foreclosure notice, even though the state showed a 18 percent decrease in foreclosures from the previous year. Arizona ranked second with one in every 129 households receiving a notice, followed by California (one in 187 households), Florida (one in 187 households) and Utah (one in every 231 households.) South Dakota had the lowest rate, with one in every 25,820 properties receiving a foreclosure notice.
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Husband And Wife Plead Guilty To Massive Florida Straw Buyer Scheme
Juan and Rachael Torrens pled guilty to conspiracy charges in connection with their participation in a recent multi-million dollar mortgage fraud scheme in South Florida. The defendants acknowledged as part of their guilty plea that their scheme produced over $15,000,000 in fraudulent loans, and resulted in losses of over $5,000,000 to various lenders. With Juan and Rachael Torrens‘ guilty pleas, 15 of the original 31 defendants charged have pled guilty.
As previously reported by Mortgage Fraud Blog, defendants Juan Torrens, the de facto owner of Amsouth Trust & Investment Corp. (”Amsouth”) and president of Countryside Land & Development, Inc., Rachael Torrens, president of 1st Choice Realty of South Florida, Inc. and de facto owner of First United Mortgage USA Corp., Daniel Ramos, Alfonso A. Muxo, a State of Florida certified real estate appraiser and owner of Palm Bay Real Estate Appraisals, Inc., and Katherine Harris, former president and part owner of Floridian Home Title Corporation, were charged with conspiracy to commit wire fraud and/or wire fraud for their participation in this massive mortgage fraud scheme.
The scheme involved fraudulent mortgage loans obtained for the purchase of 28 properties located in Miami-Dade and Broward Counties, Florida, and in the City of Marco Island. All except Katherine Harris have already pled guilty, and are awaiting sentence.
The Indictment also charges defendants Mario E. Diaz, Aurelio Pozo, Oscar Barreiro, Lellany Rordriguez, Jose Asensi, Carlos Morales, Damaris Jimenez, Lizabeth Perez, Mario Blanco, Rene Rodriguez, Tamaris Angulo, Alicia Loaiza, Ester Crespo, Jesus Enrique Guevara, Janette Lugo, Priscilla Fleitas, Erick Clavijo, Luis DeJesus Planas, Moises Llorens, Milva Roque, Aurora Ramentol, Gladys Lens, Nancy Fundora, Yanny Cruz Pavon, Roger Rosario and Jacqueline Perez-Castillo ("the straw buyer defendants") with wire fraud for their participation in this mortgage fraud scheme. To date, guilty pleas have been entered by defendants Aurelio Pozo, Oscar Barreiro, Carlos Morales, Damaris Jimenez, Mario Blanco, Jesus Enrique Guevara, Janette Lugo, Priscilla Fleitas, Moises Llorens, Gladys Lens, and Roger Rosario.
According to the Indictment, Juan Torrens would identify sellers of residential properties who were willing to overstate the true selling price of their properties. Daniel Ramos and Juan Torrens would then recruit and pay the straw buyer defendants to pose as buyers and ostensibly participate in the purchase of the selected properties. Defendants Rachael Torrens and Juan Torrens would prepare fraudulent mortgage loan applications for the straw purchasers that included false employment verifications, pay stubs, income and funds on deposit, and IRS Forms W-2.
Thereafter, to support the overstated sales prices on the properties and the fraudulent mortgage applications, defendant Alonso A. Muxo would prepare fraudulent appraisals attesting to the inflated property values dictated by Juan Torrens. Roger Rosario, an employee of Regions Bank, assisted the fraud by providing, on at least one occasion, a fraudulent verification of deposit in connection with a mortgage loan application for one of the straw buyer defendants.
To effectuate the scheme, defendants Juan Torrens and Rachael Torrens, together with the straw buyer defendants, would create and submit to the banks and lending institutions HUD-Settlement Statement Forms, also known as HUD-1s, which falsely stated that the straw buyers brought their own funds to the closings. Once the mortgage applications were approved, the lenders would wire the loan proceeds to the title company, Floridian Home Title, for closing. At closing, Amsouth, a company owned and controlled by Juan Torrens, would receive a credit for the difference between the inflated price and the actual selling price of the property. Defendants Juan and Rachael Torrens would make the payments on the mortgage loans to maintain the loans afloat until the properties could be resold again, often to another straw buyer.
When the Torrenses failed to make payments on the loans, some properties went into foreclosure, resulting in substantial losses to the lending institutions.
Staff Reporter, 06/02/08
http://www.mortgagefraudblog.com/index.php/weblog/comments/husband_and_wife_plead_guilty_to_massive_florida_straw_buyer_scheme/
ping
I guess that depends on whether the lender or owner of the note is able to establish the note was valid and signed before it was lost and the court agrees to reinstate it as requested in their lawsuit. If it does, it is no longer enforcing an unsigned negotiable note.
Another interesting element in play here is what takes place, or more appropriately, does not take place at the County Clerk of Court.
The securitization process of residential mortgages has paved the way for “lenders” to avoid paying recording fees, doc stamps, etc.
This amounts to many millions of dollars that go uncollected and remain due and payable.
With budgets so tight these days how can this be allowed to happen?
Particularly in favor of “lenders” who have already been bailed out.
The land record data is public. If any Clerk of Court out there reads this and allows me the time, I volunteer to show you how this is happening.
More importantly, I will volunteer to show you how to recover this money and return it to the taxpayers....where it rightly belongs.
http://www.foreclosurehamlet.org
I don’t think you are talking about the County Clerk of Court. It is the County Recorder who has charge of recording legal documents for public information. At least where I am from, the Court clerk files lawsuit and other litigation papers while the County Recorder files deeds and other documents affecting legal title.
Whether a mortgage document ought to be recorded everytime it changes hands in the finance world is something I haven’t considered. Mortgaged property is recorded in the name of the buyer and not the lender. To the extent the lender is involved in recording, it is at the initial financing and is paid in that transaction.
If a buyer defaults on the debt, there is usually, within the pile of documents executed, a deed from the buyer back to the lender to be recorded at the time the lender legally takes back the property. If that happens, the lender either records the deed itself or assigned the deed to whomever now has legal right to enforce the obligation and take back the property.
I don’t see where the counties and states are losing out on money by failing to record an inchoate deed. The purpose of recording documents is to notify the public that certain individuals have a legal interest in the property and it is up to the parties themselves to decide whether they need to record the deed, and when. There is no legal requirement to record any deed, so far as I know. It is a device to protect the interest of the recording party but it isn’t required until you want to enforce it in court.
Here is a handy link I think you will find helpful....
SGW’s Guide to Looking up Toxic Titles.
http://www.foreclosurehamlet.org/profiles/blogs/sgws-guide-to-looking-up-toxic
1) Clerk or Recorder depends on the State - same thing different name.
2) All liens must be properly registered against the property in which they encumber (called actual notice or notice to the world that there is a lien against real property - this dates back to 17th century property laws)
3) Modern day securities prove too complex for Main Street Recording Laws (failing to record lien holding interest)
A discharge from anyone but the real creditor means nothing.
A Straw Man’s interest won’t do (Rule 10b-5)
http://www.foreclosurehamlet.org/profiles/blogs/toxic-discharge-tutorial
Specifically, it was the "securities" or certain interest in such against the mortgage or a lien that have been sold, not the mortgage deeds ownership itself, i.e. the property buyer (mortgagor) still paid monthly payments to the original lender (mortgagee), unless in cases when the lender itself or its mortgage portfolio was acquired by another entity (e.g., Countrywide by BoA, IndyMac by OneWest).
In other words, the deed itself doesn't change lender / mortgagee name (for recording purposes) or physical place during the "securitazition" process, the bundle specifies the interest or claim on the deeds, not the change in "named ownership" or processing of the mortgage payments itself. If original lender which received the mortgage payments is still in business, it is responsible for taking possession of defaulted property.
Loss or gain in property value to the owner / interest-holder of "security" on that deed to whom it had been sold is an issue between a lender and the owner of "security"; it should have no relevance or be an issue in the foreclosure process in court.
“All liens must be properly registered against the property in which they encumber (called actual notice or notice to the world that there is a lien against real property - this dates back to 17th century property laws)”
The purpose of recording liens is to protect innocent third parties from purchasing encumbered property. It is not required to make a lien enforceable against the original party.
I will agree that modern-day securities are beyond Recorder procedures but I am not sure it is required once the original lien is recorded on the property and there is no discharge as yet filed.
As to whether a discharge is invalid, the issue would be the real creditor. Whomever or whatever holds the legal right to payment of the lien (and that isn’t always the original lender if the mortgage has been assigned to another party) is the proper party to give a discharge.
If the original loan agreement reserved the right in the lender to assign the note to another party, no borrower can avoid the debt solely because of the assignment. And since the usual mortgage deal also guarantees an assignment cannot change the material terms of the original loan agreement, the borrower has no cause to complain. Now, if it is assigned and material terms are changed (e.g., a simple change of payment address or party isn’t a material change, it requires something like a change in the payment amount or term), then the borrower would have a right to complain.
But if you want to argue that mortgages cannot be legally assigned without recording, I think you are in error. So long as there is notice a lien exists on a property and there is no recorded discharge, all innocent third parties are on notice to investigate further before investing in the property. And that is the only purpose of the recording laws.
Hi caseinpoint,
If you don’t mind let’s dissect this carefully because it’s very important. I don’t have all the answers and you genuinely seem to show an interest.
I have a friend who is a title examiner and real estate expert that has some technical knowledge that could add some value here.
Trying to get him to join FR. Let’s see if we can figure this out.
Qui-Tam
State of Tennesse v. MERS
The whole situation is a sad one because this really isn’t a black-and-white problem.
(1) The government put pressure on banks to lend to uncredit-worthy individuals, and to make deals for people who couldn’t come up with the traditional downpayments.
(2) This, in turn, meant banks were holding many risky assets. In order to keep liquid, the banks had to sell the mortgages up the line. The uncredit-worthy mortgages wouldn’t have a market in themselves but, combined into pools with good mortgages, the buyers were gambling they could cover the losses. Where they couldn’t, they had insurance to help.
(3) Rather than sell individual mortgages, the parties further up the line sold “stock” in pools of mortgages (i.e., they securitized the pool of mortgages), of which they had no real idea, thanks to Congress apparently, which proportion were owed by creditworthy debtors and which percentage would almost certainly default. Because the investors could not in any way judge the soundness of the fund, again insurance was involved.
(4) Flush with cash from the securitization, and encouraged by ballooning home prices, the mortgage industry went into overdrive to find home buyers. The result was aggressive marketing by so-called mortgage professionals who turned out not to be so professional.
(5) Potential buyers and current homeowners, lured by the market, gambled their homes would continue to increase in value to the ether so they entered unrealistic mortgage agreements or drained the equity of their homes as quickly as they could.
(6) Congress, not wanting to face the music of their own complicity, continues to point the finger everywhere but at themselves and continue to promise homeowners they can stay in homes they realistically can’t afford. This means postponing the inevitable and keeping the market artifically high so more homebuyers are priced out of the market.
So no one has clean hands here. Everyone was caught up in the boom of home prices and got greedy: the banks wanted more mortgage deals and to get rid of risky ones; Congress wanted the votes that come from social largesse; traders wanted another exciting financial product to market; investors wanted in on the housing boom; homebuyers wanted homes they really couldn’t afford.
But housing has always been a gamble and gamblers sometimes lose. It was unrealistic for anyone to believe the market had only one direction to go. It is time for many homebuyers to cut their losses and go for more affordable housing. This will bring down the prices and bring more in line with economic reality. To the extent there was real fraud, that should be handled on a case-by-case basis. But the securitization of mortgages wasn’t the villain here and attempting to void valid contracts based on failure to record a securitization isn’t the answer.
By the way, if you attack securitization, you should know you will constrict the funds available for mortgages and the price of mortgages will go up, even if the housing prices go down.
I feel badly for many caught up in this situation. Some have been hurt by the economic downturn and are losing their homes. There are others who simply got greedy and behaved unrealistically by buying too much or tapping their equity. A backyard neighbor of mine bought his home in 1996 for $190k, a great deal at the time. In the next few years they refinanced the house five times, each time upping the principal based on inflated home prices. The last mortgage was for $565k, without any appreciable increase in the value of the home. The money went to boat, trailer, cars, vacations. They lost the home about a year ago. The home is still worth more than the original $190k but they had become greedy and gambled on the housing market. Yes, there were plenty of parties enticing them to do so but in the end it was their own decision to take the risk. I have a hard time feeling sorry for those people.
It may seem harsh but it is probably better to let the economy take its toll and let these people move on with their lives than try to maintain some artificial finger in the dike only to see the flood drown them later. The country is strong but it can take only so much of a system which privatizes gains and socializes losses. It has to be private gain and private loss, or public gain and public loss to be fair (and that public part isn’t sustainable at all).
I would only add the names and the role of GSEs Fannie Mae and Freddie Mac (along with government's own FHA) who helped inflate the mortgage bubble by reducing the risk to loan originators and lenders through buying the lowered standards sub-prime or Alt-A mortgages, either mandated by CRA / Community Reinvestment Act or by extending their own "creative" terms - ("it can take only so much of a system which privatizes gains and socializes losses.")
Congress, not wanting to face the music of their own complicity, continues to point the finger everywhere but at themselves and continue to promise homeowners they can stay in homes they realistically can’t afford.
They keep doing this to this day, by shifting the blame from CRA / Fannie-Freddie-FHA and various other regulations and tax incentives or disincentives by pointing the finger on anything else, like repeal of Glass-Steagall by Gramm-Leach-Bliley Act, simply because it has Republicans names on it. Reinstating Glass-Steagall or crippling securitazition of financial products will only lead to reduced liquidity in all kinds of U.S. markets and make people's lives poorer for it.
“So no one has clean hands here.”
That should be the basis of this debate.
The entire purpose of the recording statute is to give notice to subsequent lenders and purchasers. Recording the lien does not validate it, it only perfects it against other third parties. So, if a lender fails to record its mortgage and a subsequent lender then lends money against the same property and records it mortgage, the second lender holds the superior position because the first lender failed to give notice of its lien.
The original borrower, however, was always fully aware of the mortgage. Actual notice always supersedes the recorded notice.
Thanks for backing up what I said.
You are better informed on the details as am I. I would love to put some individual names on this debacle on the part of Congress. I only wish it were possible to hold Congress responsible for the mess as badly as they want to hold BP responsible for the oil well blowout. Hearings, I want hearings, and perp walks, and forfeited pensions. And I am as likely to see that as see Santa Claus.
The American voters have for years chosen their Santa Claus, but in the past they have insisted that national security be maintained even as it was compromised. They never learn.
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