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WILL THERE BE AN UPTICK IN FORECLOSURES ONCE THE CORONA-CRISIS IS OVER?

(OP-ED) — The author of this post is a consultant to attorneys on foreclosure and chain of title matters and none of the following opinions should be constituted as legal advice or seek to guarantee a legal outcome. It posits what this author sees as what is to come.  It may not be the “whole new way of life” everyone thinks is going to take place due to this pandemic. 

This post is not for the faint of heart nor is it designed to make you more paranoid than most of you probably already are.  It is designed to impart some common sense rationality into dealing with the post-traumatic issues of what we collectively are all perceiving as a “crisis”.

Some of us think this whole thing is overblown.  The majority however have unknowingly allowed the “crisis” to replace common sense with survival fear … and rightly so.  It’s one thing to think that the coronavirus was just going to stay put in China when in fact, we have such an upwardly mobile society that everyone has been instilled with traveling to different parts of the world, be it on a plane, on a cruise, whatever … no one expected this would hit America and I believe we were all duped as to the “numbers” and the “purpose” for COVID-19.

Here are some interesting “takes” I’ve picked up on over the last couple of weeks …

  1. Chinese-Americans who are loyal to this country have stated to me that China well understated the numbers of dead and infected as the result of the viral spread there.
  2. The understatement was intentional, to lull us all (and I mean the World Health Organization (WHO) and the countries affected by the virus, including America) into a false sense of security so we would continue to go on about our daily lives as if this virus really didn’t matter.
  3. Knowing that we were already embroiled in political turmoil in this country, we’ve been “played” by the Chinese in a further effort to destroy the credibility of many of our elected leaders and further create political dissension in our every day lives.
  4. Most of the world was not medically ready for another pandemic.  If WHO was really concerned with the spread of this virus, it should have reacted more quickly when it was observed that the virus was spreading outside of China’s borders.
  5. We can all point fingers at our government for being “reactive”, because that is how our government has always been … reactive instead of proactive.  We weren’t ready for the virus when it hit our shores and we sure as hell aren’t ready for it now.
  6. Our medical systems in this country rely too much on non-essential and boutique surgeries and were not ready to deal with massive shortages in critical care supplies and labor.
  7. Our government’s medical “advisories” and social “responsibilities” were lacking in keeping its undisciplined citizenry safe from each other, allowing for Darwinistic opportunities to avail themselves upon an unsuspecting public.
  8. Instead of heading off the pandemic “at the pass”, state and local governments were slow to react to contain the virus and identify the “vectors”, which is what South Korea did when it first became aware of the invasion of the virus.
  9. The saving grace was that most state governments went above and beyond the federal measures enacted to stop evictions and foreclosures during the coronavirus outbreak.
  10. The not-so-saving grace is what happens after the fallout rears its ugly head, the supply chain breaks down in certain quarters and the economy can’t put enough people back to work fast enough to recover from the shock the country took in the 30-60 “stay in place” periods.

This is where thinks get “quirky”.

As was explained in some “insider” memorandums which I managed to retrieve through my back channels, the mortgage loan servicers (especially on these MERS-originated mortgages) have to pay advances on the distribution dates to the investors who funded the loans through the various REMICs (Real Estate Mortgage Investment Conduits).

There were (at last count) roughly 6.6-million people that applied for unemployment benefits, despite the economic “stimulus” package.  In my twisted mind, this is like getting a hand job by a hooker, wherein the “wham bam” happens and then you realize the relief was only temporary and you’re right back at the stress level you started from before “the act” happened.

The mortgage loan servicers who handle the payments to the REMICs (the advance payments of principal and interest on every securitized loan) every month on the distribution date, have to pay those advance payments whether borrowers make those payments or not.  I hope you got that.  No matter (during this crisis) whether you made your monthly mortgage payment or not, you are NOT in default because the servicer has been making your payments anyway.  They just won’t tell you that.

The problem becomes worse however when the servicers have to make these payments regularly over time, believing that they can collect the the past due payments from the borrowers (who are out of work or close to being out of work or short on funds) who are wanting a forbearance on their mortgage loans.  This means the servicers would have to consider putting the payments (including interest) on the back end of the loan.  This means that for those of you who (for example) were on “Payment 22” of your amortization chart on a 30-year fixed rate loan, you’re asking for Payments 22, 23 and 24 (plus interest) to be put on the back end of your loan, which is compounding interest upon principal upon interest.  Let’s face it, most Americans do NOT have the reserves to make the mortgage payments past one month, which is why they had to borrow the money to buy the home in the first place.

Now the mortgage loan servicers are stressed financially because the payments have to be paid into the securitized trust pool every month, regardless of the borrowers’ circumstances.  The servicers may be forced into “having to rob Peter to pay Paul”, which means the servicers will borrow from escrow accounts all over their servicing network of mortgages, in the hopes that they’ll be able to repay those escrow accounts back over time.  The problem is, when that doesn’t happen (and even at the time funds were borrowed from escrows), there is still a shortage in the escrow accounts that the servicers borrowed from to pay the REMICs their monthly payments to.  A prolonged period of these payments (6-9 months; if this crisis were to continue) would put the servicers in jeopardy.

Fast forward to the end of the corona-crisis … 

The mortgage loan servicers are out of pocket all of the advance payments they had to pay during the crisis, which means they’re going to be on an all-out campaign to try and recover as much of the shortfalls as possible to reimburse all of the escrows they borrowed from to keep everything looking “current” on the books (this is why servicers get in trouble).  This is one of the reasons why Ocwen got into trouble and ended up having to sell $600-million in securities to bolster its “advance” payment funds to investors.  That’s like chasing a large, lump-sum credit card payment, making minimum payments every month.  The debts just never seem to get paid off.  Most borrowers can understand that.  Now, factor that into a much larger scale.

By now, you’re beginning to see the “crisis” occurring within the ranks of the mortgage loan servicers.  They will be reluctant to do loan mods because that means more perks for the borrowers. Extensions the servicers really aren’t interested in “affording” because they’re already swimming in borrowed time.

Couple that with the borrower’s payment history of already-missed payments BEFORE the crisis was declared and you’ve just dumped gasoline on the already burning flame.  My suggestions here, which are simple to ascertain and follow:

  1. During the crisis, check your land records EVERY WEEK to see whether or not the servicer has “manufactured” any assignments using MERS (Mortgage Electronic Registration Systems, Inc.) as a means to assign, transfer or convey a mortgage loan into a REMIC trust in anticipation of having to do a foreclosure.
  2. If the assignment was done BEFORE the foreclosure and you’ve already become aware of it, use this opportunity to research your chain of title and see whether or not the information contained within the assignment is false and misrepresentative.
  3. Look up the state statutes to see what felonies were committed by asserting the false and misrepresentative information into the assignment, which was subsequently recorded into the public record and begin to document all aspects of it (who created the assignment, who executed the assignment, who notarized the assignment, who are the parties named in the assignment, who caused it to be recorded, etc.) for reference.
  4. DO NOT attempt to contact any of the parties creating the allegedly-bogus assignment. This is like tipping your hand in a high-stakes poker game.  I cannot stress that enough (as a consultant to foreclosure cases).  Telling the other side of your game plan is going to jeopardize your chances for recovery down the road.  What is important is to gather as much information as possible about all of the parties mentioned within the assignment without contacting them directly.  (There will be plenty of time for that in court-controlled discovery).
  5. Obtain a certified copy of your REMIC from the United States Securities and Exchange Commission while the ink is still fresh and you can take advantage of the time lapse created by the corona-crisis which allows you some advantage in preparing a suit for cancelling and expunging the suspect assignment.

For those of you that don’t get the “gist” of attacking documents, I have a kit available (in limited supply) online at CloudedTitles.com/shopThe C&E on Steroids!   This will give you a blueprint as to how to successfully challenge the phony documents in the land records.   It’s an 8-DVD video set plus a book containing the information you’ll need to arm yourself for the upcoming “fight” I think many of you are going to be involved in.

Why is this important?   If you’re facing foreclosure, even before the crisis, this moratorium will give you time to: (a.) think about Plan B; and (b.) act on that plan.  Even the 60-day window, which has already started ticking (courtesy of the federal government and extended by various state governments) will give you enough time to get your case files together, analyze them and more forward with retaining counsel (if you haven’t already) to “fight the good fight” because the corona-crisis itself was just not enough … we’ll be seeing another wave of foreclosures when it’s over because when it comes to reimbursement of an already-depleted money supply, the servicers (who are tasked with stealing the home) will stop at nothing to take your home away from you … and sadly, the government won’t be there to bail you out.

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Those who implicitly trust in the legal system will get screwed by it!

(OP-ED) — 

The author of this post is an author and consultant to attorneys (and a paralegal) on real property matters and his comments (especially in this post) are of his own opinion and not that of others in the legal system.  Those who wish to obtain legal advice must ferret out competent legal counsel and retain them while monitoring the activity of those representing them in the maze of confusion we call “the American legal system”.  This is his humble opinion and not legal advice. 

I am constantly getting letters and emails from people who are “getting nowhere” using the services of attorneys.  They’re either being overcharged or under serviced, sometimes both.  What’s “fair” (a liberal term) in the “legal system” (conservative in nature, for the most part) will not be achieved a majority of the time. Many litigants (or wannabe litigants) attempt a feeble shot at going pro se, which can spell doom if you later decide to retain counsel after you’ve already screwed things up.

The legal system is rigged to benefit those who can afford to play in it.  I don’t care what any attorney tells you, if you don’t have money to pay them, what justice is “served” becomes limited in nature.  I have only found a handful of attorneys that I would consider to be “competent” to handle real property law matters and I’ve been researching this area of law for over 10 years.  That doesn’t make me an expert either.  I actually have an attorney who IS an expert witness in real property matters that many attorneys who are litigating foreclosure cases will NOT call to the stand to testify because it “might upset the judge” which they have to appear before regularly.  So the client loses his foreclosure case.  This happened last month in a courtroom in Tallahassee, Florida.  The attorney for the homeowner clearly had the bank and its witness in a vice, then opted NOT to “close the door” using his own witness to “slam the bank’s lawyers” for bringing false and misrepresentative statements on the Court.  This is what happens when attorneys DON’T DO A THOROUGH JOB because they lack the smarts, the sensitivity or at least, common sense, as to HOW TO “tighten the noose”.  Remember, most winning cases have to be appealed. Cases which have implications of criminal behavior by opposing counsel may never see an appellate court (but may rather be settled out of court, many times to the benefit of the homeowner) … or even the light of day, if they are litigated properly.

In other cases, clients are paying attorneys a monthly fee (in addition to a hefty retainer) and not getting proper billing statements as to WHAT work is being done and HOW many hours it took to accomplish said work.  Some attorneys take fees specifically to conduct depositions and then don’t take them (for whatever reason).  Whenever the client asks the attorney to supply them with a statement on account, the attorney rebukes them, makes them feel like a debtor in a debt collection action, or strong-arms them in a legal stranglehold of the attorney’s own making.  Justice benefits those who work in the “system”.  If an attorney is holding you “hostage”, you may wish to consider replacing them.

It’s no wonder I’m seeing an uptick in pro se litigation.  It’s no wonder I’m seeing more and more pro se litigants lose.  Pro se litigants generally did NOT go to law school.  They don’t trust attorneys … but they’ve never argued a case.  They are like electricity (they want to take the path of least resistance).  As long as there are banks out there trying to steal peoples’ properties, the American legal system will be afflicted with burgeoning dockets and implicit behaviors, both from the bench and the attorneys’ tables. Pro se litigants wandering into these venues uninformed are more than likely going to get crucified.

The American judiciary (both state and federal) have various “agendas”.  I have found that you have to research the judge you’re appearing in front of (what cases they’ve ruled on; how many were appealed and reversed; are they pro-bank, etc.).  You will never know whether you or your attorney “coulda, shoulda, woulda” been able to have succeeded unless you know who the referee is.  If the referee pays monthly on his mortgage, you can bet they’ll want you to do the same.  You then have to be able to handle “agenda questions” like:

(1.) When’s the last time you made a house payment? and

(2.) Are you in default?

When you hear questions like this from the bench, the judge’s agenda is: “This is my courtroom and I will find facts to determine WHO loses their home today!”  Most if not all pro se litigants will blindly think that the judge is entitled to these answers and will freely give them, not realizing that the judge’s agenda is to “clear his docket” as quickly as possible and/or is pro-bank.  The judge will get YOU to admit to these questions so he can “close the door” on you and move onto the next case.

I have read numerous cases where the court record indicates that the homeowner admitted they were in default.  What horseshit is that?  HOW do they know they’re in default?   Is it up to them to prove they’re in default or is it up to the bank to prove they are in default?  If a REMIC is involved, I’ve seen court records (and talked to attorneys who have seen court records) wherein the BANK’S SERVICER actually made the payments for the homeowner when the homeowner couldn’t make them, so then, WHEN and WHO made the house payment becomes an issue that most homeowners (pro se) and their attorneys (who aren’t in the know because they don’t have, or take, the time to do their research) miss that argument altogether.  Did you get that?  THE SERVICER MADE THE PRINCIPAL AND INTEREST PAYMENTS FOR THE HOMEOWNER, then went into court and lied to the judge and told the judge the homeowner was in default, when in fact, the REMIC’s investors were getting paid every month!

Cases are won and lost based on a series of arguments, misstatements and missteps.   If the judge in your case is largely moved to rule against you based on emotional ploys by the bank’s attorneys (use of the term “deadbeat”; “They’ve lived in this house for 10 years without making a payment your Honor and we want our house back now.” … that sort of thing), then you are sunk before you walk in to their courtroom.  It helps to attend trials in their courts if at all possible (some judges don’t allow anyone but the actual litigants on the docket to appear in their courtroom for a reason) to see how they act and react to the various arguments.  Conversely, if you don’t do your homework (or your attorney doesn’t do his), you’ll lose anyway.  This is why over 95% of all homeowners who are facing foreclosure RUN AWAY!  This is why we have so much shadow inventory.

Not all attorneys are competent and honest. If it’s your house we’re talking about here, then the question becomes, “What are you willing to do to protect it from unscrupulous or unlearned attorneys?”  If an attorney that was representing me called me “out of the blue” and said I needed to send him $5,ooo right away, I’d ask them what the money would be used for.  If I didn’t get what I paid for, I’d demand the money back or get another attorney.  Attorneys should provide billing statements to their clients; however, most sole practitioners have no time for that, which is the “downside” to retaining them.  I would not want an attorney who only specializes in personal injury cases to represent me in a foreclosure matter because they haven’t won any cases in those kinds of forums; it isn’t their specialty; and they lack the knowledge to be able to defend against unscrupulous bank attorneys in those “shark-infested waters”. That’s like hiring a dentist to do brain surgery on your next of kin.

I am not an attorney referral service.  Most states require you to be licensed to have an attorney referral service.  Most people do not ask an attorney how many cases they’ve won in a particular area.  I can recite the names of attorneys who have won quiet title actions; however, when you then dissect how many were tax deed cases versus the harder-to-accomplish quasi in rem foreclosure cases, the number of successful attorneys diminishes ten-fold (at least what we know from the court record).  You have to vet the attorney to make sure you’re getting what you pay for. You have to discuss with them how many cases they’ve won based on what causes of action.

Many cases don’t make the court record (by design).  We already have learned this through other honest attorneys’ publications, where they have challenged certain legal publications’ decisions to only put in cases that favor the banks and not pro se homeowners (or in the alternative) or the more competent attorneys’ wins.  This is another unwritten fallacy of American jurisprudence.  As a result of closed-door settlements and sealed pay-offs, most homeowners do not know WHO won the foreclosure cases and why (because they were deliberately hidden from public view).  A classic example is that of Bank of America trying to get a federal bankruptcy judge to “delete” the massive case against them, which the judge refused to do Sundqvist-Memo-Opinion and rightfully so.  Here, we have an honest judge that wants to do the right thing by not just the homeowner, but also the public at large.

Pro se litigants not only miss filing deadlines … but when it comes to pleading cases, they don’t know how to plead cases.  Take for example one appellate decision out of Texas:  In this particular instance, the author of the pleading (the homeowner) decided to make use of quotes out of my book Clouded Titles, which is a book, not a legal primer in which to quote diatribe to bolster your legal arguments:

Brown v BANA_Tex 5th App Dist No 05-12-01382-CV (Nov 25, 2013)

It does not bother me that the Texas 5th Appellate District knows who I am, but the fact the homeowner extensively quoted my research (as shown on Page 4 of the ruling) even stymies me.  What’s worse, the term “robosigning” has more of an emotional connotation to it, sort of related to fraud claims, which have also fallen on deaf ears in the courts, as in the Texas case of Reinagle v. Deutche Bank National Trust CompanyReinagle v Deutsche Bank Natl Trust Co, 5th App Cir No 12-50569 (Jul 11, 2013)

I put this stuff in here to show you the following:

(1.) Homeowners get so bent out of shape that they use stuff in their pleadings that they shouldn’t;

(2.) They do not attack the sufficiency (or the lack there0f) of the other side’s pleadings;

(3.) They express their complaints using meaningless allegations, rather than defeat the other side’s attempts in making unfounded declarations without objection; and

(4.) They quote from my book, which is like letting stuff out of your research arsenal that is meaningless to the Court.

To prove a suspect robosigning issue, one would have to take depositions of everyone involved in the creation and execution of the document to see who ordered it; who acknowledged it; who typed it up; where it went to after it was recorded; what powers of attorney are connected to it, etc.  Taking timely depositions in a court case is vital to its success.  Generally, I’m seeing civil conspiracies pop up as the result of document manufacturing; however, failing to depose all of the involved parties will prove fatal in knocking out an Assignment of Mortgage or Deed of Trust from the land records in a Cancellation & Expungement action (C&E).   We managed to succeed in a Tampa, Florida case in getting a Release of Mortgage cancelled and expunged from the land records. Now the end game claimant has more hurdles to jump over in attempting foreclosure.

The bottom line here … knowledge may be power … but not having the wisdom to use it may cost you more than it’s worth.

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