Restraint of Sale and Foreclosure Fairness

So I am not the best blogger in the world. I will admit that, but in spite of that fact, I have an excuse. In fact I have a good excuse, I have been at war with the banks. So please forgive me while I was in the trenches, but I am back with some real world information, some that you want to hear, some that you don't, but here it goes.
First Point: The banks have been prematurely sent out their notices of default. Here is what is happening, my clients are receiving the notice of default, I will assume the Pre-Foreclosure Options letter prior to the appointment of the Trustee that is sending out the letter. This is problematic because the Trustee is not authorized to do anything until such time as it is appointed. Small problem with the statute and deed of trust that the banks and trustees seem to have with figuring out what "vesting" means.
Second Point: The banks must produce the note. The question is when. The lawyers for the banks have vehemently denied that there is any authority for the production of a note, but the judges, even the very conservative judges in Snohomish County, have been willing to require the banks to produce the notes. This is something that will not happen with a simple letter of request from the borrower to the bank or whatever entity is holding your note. However, if you are in litigation, and you have the right complaint, then the judge can require production of the actual note for inspection. I recommend that you hire a forensic auditor to look it over with you. Have him bring his microscope and split some hairs.
Third Point: You have to have more than a contracts claim to win in court. If you are upset with your HAMP modification (or lack thereof), then you will still need to find a better reason to sue the bank than that. The TPP agreements, if not made permanent, then it has no teeth and will not get you through the door. I recommend some fraud mixed with some misrepresentation, and a dash of conspiracy for good measure.
Fourth Point: The foreclosure Fairness act and its Foreclosure Mediation is here. My offices are doing the letters for $150 and a full representation, including being at the mediation for $900. This process will produce positive results for you if the home is your primary residence. Don’t hesitate, you need to put your request in within 30 days of receipt of your Pre-Foreclosure Options letter.
Last Point: Keep fighting. I had a good friend who was a third degree black belt in judo and a state wresting champ out of Spokane tell me that most of his opponents weren’t willing to push for more than 8 seconds and if he pushed a little longer he would win the fight. That is true in this arena. The opponent is big, and has resources to push for a long time, but its lackadaisical in its approach and lets up at times. That is when you have to push hard and put it on its back.

If this were only a hand slap...Banks lose in court and stock market

Today, the Massachusetts Supreme Judicial Court issued an opinion on a case involving mortgage backed securities, trust funds, foreclosure, lying, fraud, coercion, and all around baddy-bad-bad badness.

Two banks, US Bank and Wells Fargo, were the banks that purportedly held the mortgages on two homes belonging to the Ibanez family and the LaRace family.  The problem on the Ibanez home, which is the headliner property in the opinion that can be found as a slip opinion here, U.S. BANK NATIONAL ASSOCIATION, trustee  vs. Antonio IBANEZ, is that US Bank didn't finish most of its documentation of owning the home until after the foreclosure process had occurred.  In fact, if it hadn't been for Mr. Ibanez being a service member, this case may have never even happened because Massachusetts is a nonjudicial foreclosure state like Washington.

Because Mr. Ibanez was a service member, the foreclosure had to proceed through the courts, and a challenge was issued against US Bank as to its ownership.  See, the note had passed from an originator to Option One Morgtgage Corp, a record holder, to Lehman Brothers Bank, FSB (now defunct) to Lehman Brothers Holdings Inc. who sold it to structured Asset Securiteis Corporation which deposited the note with US Bank National Association as the trustee for a MBS trust.  If you lost count, that was 8 different entities holding the note, supposedly.  The note was usually passed
"in blank" which means that the new holder's information wasn't filled out.  Crazy!

US Bank bought the Ibanez property for well below market value and also well below par value of the loan and asked the court to quiet title.  The court ruled against the Bank and held that the foreclosure sale was invalid because the mortgage had not been properly assigned. A motion to vacate the judgment was denied and the decision was appealed.

The bank had the authority to exercise the power of sale contained in the Ibanez and LaRace mortgages only if they were the assignees of the mortgages at the time of the notice of sale and the subsequent foreclosure sale. However, mortgage loans that are pooled together in a trust and converted into mortgage-backed securities, the underlying promissory notes serve as financial instruments generating a potential income stream for investors, but the mortgages securing these notes are still legal title to someone's home or farm and had to be treated as such.
U.S. Bank argued that it was assigned the mortgage under the trust agreement described in the PPM, but it did not submit a copy of this trust agreement to the judge. The PPM, however, described the trust agreement as an agreement to be executed in the future, so it only furnished evidence of an intent to assign mortgages to U.S. Bank, not proof of their actual assignment. Even if there were an executed trust agreement with language of present assignment, U.S. Bank did not produce the schedule of loans and mortgages that was an exhibit to that agreement, so it failed to show that the Ibanez mortgage was among the mortgages to be assigned by that agreement.

The court concluded that  the banks were not holders of the mortgages at the time of foreclosure and thus did not obtain title at the foreclosure sale.  What does this mean for the homeowners.  Well, a person that gives a mortgage is called a mortgagor and holds superior title to everyone except the mortgagee (the person receiving the mortgage and usually the one lending money), so the houses must revert to the Mortgagor, the homeowner.

There is no question that the homeowner defaulted.  The issue really was whether the banks had the right to do what they did.  In a concurring opinion, Judge Cordy stated "what is surprising about these cases is not the statement of principles... but rather the utter carelessness with with the plaintiff banks documented the titles to their assets."  This carelessness is where homeowners can forestall the process because the banks have to prove that their title is superior and they have the right to foreclose.  The unfortunate issue though, is that the only way to do that is to get into a legal battle in nonjudicial foreclosure states like Washington.

My offices are preparing a number of complaints against MBS  trust held mortgages as an effort to restrain a nonjudicial foreclosure.  Certainly there is risk in this activity, but at the same time, the ability to hold title to your property and live in it until the bank can establish its superior title is very powerful.

What does this mean for the overall economy?  Well, this could be catastrophic.  In a Reuter's article that I read, the ticker down the side showed the major banks shedding percentage points today on the news. The banks are going to the cleaners over this, the only way to prevent this type of opinion from destroying our title system is to have a legislative forgiveness passed on the MBS community.  The only way for that to come about though is for some chaotic repentance in the courts first.