Saturday, March 31, 2012

The Securitization Curtain is Lifting in Hawaii! | Deadly Clear

The Securitization Curtain is Lifting in Hawaii! | Deadly Clear

Wednesday, March 28, 2012

APPRAISAL DEFICIENCES: FDIC as Receiver of Washington Mutual Bank v LSI Appraisals LLC & LPS Property Tax Solutions, Inc: Exhibit C filed 2/12/2012

FDIC as Receiver of Washington Mutual Bank v LSI Appraisals LLC & LPS Property Tax Solutions, Inc: Exhibit C filed 2/12/2012

This document identifies 12 major appraisal deficiencies alleged by the FDIC as Receiver of Washington Mutual Bank.  Appraisals were conducted by LSI Appraisals LLC which is a division of LPS (Lender Processing Services). 

FDIC as Reciever of Washington Mutual Bank v LSI Appraisals LLC and LPS Property Tax Solutions Inc: 2nd Amended Complaint

FDIC as Reciever of Washington Mutual Bank v LSI Appraisals LLC and LPS Property Tax Solutions Inc: 2nd Amended Complaint

FDIC as Receiver of Washington Mutual Bank v LSI Appraisals LLC -- Documents filed 2/12/2012

FDIC as Receiver of Washington Mutual Bank v LSI Appraisals LLC -- Documents filed 2/12/2012

Includes Exhibits C, D, E attachments to 2nd Amended Complaint.  Exhibit C contains valuable information on over 200 WaMu mortgage loans with appraisal deficiencies where appraisals of property were executed by LSI Appraisals LLC.

Foreclosure Deal Gives Banks Credit for Routine Activities -

Foreclosure Deal Gives Banks Credit for Routine Activities -

Sheila Bair Told Administration Its Housing Programs Would Bomb, Was Rebuffed on Better Solutions « naked capitalism

Sheila Bair Told Administration Its Housing Programs Would Bomb, Was Rebuffed on Better Solutions « naked capitalism



Friday, March 23, 2012



Faces of Foreclosure -- Vieira Family on Vimeo

Donna Zao Vieira is in the NO JUSTICE ZONE today from 10 a.m. - 5 p.m. outside the Office of California Attorney General Kamala D. Harris at 455 Golden Gate Avenue, San Francisco.  She is in Day #3 of a hunger strike and is protesting the unfair bank settlement that AG Harris entered into.  Donna needs our help.  Go out and show your support. 


Thursday, March 22, 2012


  No Justice Zone

Homeowners No Justice Zone

Donna Zao, Community Activist on Hunger Strike
Day 1
Donna Speaks

Hunger Strike Starts on Wednesday, March 21st, 2012
Our American Dream is under attack.  We can’t break the laws to assert our justified rights! But I can go on HUNGER STRIKE to make a long-overdue point: 
Wells Fargo top executive told me to my face that “Wells Fargo will NOT correct the wrong against my family” because I asserted my rights and fought back!  

President Obama stated in his campaign trail:  "This is not just another political debate. This is the defining issue of our time," "What are we going to do to make sure that middle class families are secure and that we continue to build ladders for people who are trying to get to the middle class."

Attorney General Kamala Harris stated “Everyone shall play by the same set of rules…I tell you what is “Too Big To Fail”… I say: our middle class that is “Too Big To fail”….”

As California People’s Attorney, will Attorney General Kamala Harris watch my American Dream being stolen by fraudsters and my physical well-being wither away in front of her eye? Will she do as she promises to do, protect our rights and jail Wells Fargo top executives for intentionally stealing our American Dream???

 Day 2,392
(6 years 7 months) 
Battle against Wells Fargo Mortgage Lending Fraud
Started in August, 2005
Truth, Material Facts and Laws
Shall Matter!!!

 No one or organizations shall SELL OUT our American Dream without any consequences!!!

Please Sign the Petition to Support Our Common Cause - Justice

Ask Attorney General Kamala Harris "Is Wells Fargo “Too Big To Jail”?!

-                     January 3, 2011      Filed complaints against Wells Fargo’s appraisal and mortgage lending fraud with Attorney General Kamala Harris on the first day she took office.
Result:        No Response!

-                     May 23, 2011        Re-filed the same complaints against Wells Fargo with Attorney General Kamala Harris, the day she announced the creation of a Mortgage Fraud Strike Force.   
Result:        No Response!

 -                     September, 2011    Hand-delivered the same complaints against Wells Fargo to Attorney General’s Chief Counsel Mr. Michael Troncoso. 
Result:        Received a phone call from Mr. Troncoso’s assistant Mr. Daniel Osborn, who promised us a speedy investigation due to the previous delay.  

-           November 14, 2011,          Hand-delivered the Petition Letter with Courage Campaign and re-told our story on how Wells Fargo systematically and intentionally defrauded my family.
Result:        November 22, 2011     Attorney General Kamala Harris’ staff informed us that her Mortgage Fraud Strike Force has completed the investigation on our complaints and our file was on AG Harris’ desk, waiting for her instruction to proceed with prosecution.  

-                     November 30, 2011           Emailed Attorney General Kamala Harris’ chief counsel Mr. Michael Troncoso and Mr. Benjamin Diehl, requesting an update.
Result:        No Response!

-                     January 11, 2012                Emailed Attorney General Kamala Harris chief counsel Mr. Michael Troncoso and Mr. Benjamin Diehl, requesting an update.
Result:        No Response!

-           March 10, 2012                 Emailed Attorney General Kamala Harris chief counsel Mr. Michael Troncoso and Mr. Benjamin Diehl, requesting an update.
Result:        No Response!

-           March 16, 2012,    Emailed Attorney General Kamala Harris chief counsel Mr. Michael Troncoso and Mr. Benjamin Diehl on our Open Letter to Wells Fargo’s CEO John Stumpf.
Result:        No Response!

Here are our complaints filed with Attorney General Kamala Harris’ office.

May 24, 2011

RE:  Complaints – Wells Fargo loan origination fraud, wrongful foreclosure, tax evasion and mortgage backed securities fraud.

Dear Attorney General,

We have learned that you have launched Mortgage Fraud Strike Force this week to monitor and prosecute violations at every step of the mortgage process.

We are responsible homeowners and carry no debts other than mortgage loan.  We have been living in Alameda County since 1997.   My husband is a veteran who proudly served this great nation.  Now we are self-employed working middle class working hard to preserve our financial wealth. 
However, in the past 6 years, Wells Fargo has repeatedly defrauded us and has proven to us that it has built a business model based on fraud.

This is how Wells Fargo systematically defrauded us and taxpayers in the past 6 years.

 1.         Wells Fargo’s Loan Origination Fraud:
 In August, 2005, Wells Fargo bank made a mortgage loan to us based on fraudulent and hugely inflated appraisal.

  • Wells Fargo’s fraudulent appraisal valued our home for $718,000
  • Wells Fargo’s retroactive review appraisal valued our home for $475,000.
  • In 2008, Attorney General’s Office suspended appraiser T.J. Magee’s license for committing appraisal fraud on our property.

2.      Wells Fargo’s Wrongful Foreclosure:

  • We put $151,000 down-payment. Between 2005 and 2009 we paid Wells Fargo around $350,000.
  • On June 15, 2010, Wells Fargo still foreclosed our home, knowing that it is a Category C felony to make a mortgage loan and foreclose our home based on a fraudulent appraisal.
  • Wells Fargo received a total of $25 billion bailout, but refused to carry out its promise to us and rescind its fraudulent loan.
3.     Wells Fargo’s Mortgage Backed Securities Fraud:

In 2011, Wells Fargo confirmed in writing that it had sold its fraudulent mortgage loan originated based on a hugely inflated appraisal to a pool of investors managed by U.S. Bank.
4.     Wells Fargo’s Tax Evasion:
  • January, 2011, Wells Fargo falsified IRS 1099-A form by listing Freddie Mac as our mortgage lender, and attempted to write off its fraudulent mortgage loan for Freddie Mac.
  • February, 2011, Freddie Mac confirmed in writing that our mortgage loan was not Freddie Mac’s mortgage loan.
  • We forwarded Freddie Mac written confirmation to Wells Fargo and demanded it to notify IRS that we don’t owe income tax on the deficiency on Wells Fargo’s fraudulent mortgage loan. Wells Fargo stated that it found no error on its 1099-A form by listing Freddie Mac as our mortgage lender. Wells Fargo further stated that it had sold our loan to a pool of investors managed by U.S. Bank.
  • A couple of weeks after we confronted Wells Fargo and Freddie Mac, Wells Fargo's CFO and Freddie Mac's COO both resigned just one day apart from each other. We highly suspect the resignations were triggered by Wells Fargo irregularity of fillings.
  • March, 2011, Wells Fargo updated its 1099-A form by changing the mortgage lender from Freddie Mac to Wells Fargo, knowing that it no longer owns the mortgage loan.
 This is tax fraud against us, the IRS and taxpayers!

We demanded that Wells Fargo disclose the list of investors, but Wells Fargo refused to disclose the list of investors who currently own our mortgage loan. All the investors who own our mortgage loan have the right to know the fact that Wells Fargo sold them a fraudulent mortgage loan.  

It's been a 6-year battle and almost 4 of them in Courts fighting against Wells Fargo's loan origination fraud, wrongful foreclosure and fraud on the court. Please hold Wells Fargo accountable for abusing us as consumers, homeowners and taxpayers. Let justice prevail. Sincerely,          

Donna & Nuno Vieira


Dear Mr. Stumpf,  

As I’m sure you are aware Donna Vieira, her husband Nuno and their son Leo have been outspoken advocates of both their cause and the cause of thousands of other families struggling to get Banks to do the right thing amidst this unprecedented mortgage crisis. 
Donna and Nuno Vieira have collectively banked with World Savings, Wachovia and Wells Fargo for 20 years.  They are first generation immigrants.  Nuno was a proud veteran who served this great country and now, they are self-reliant and responsible small business owners.  They carry no debts other than the mortgage loan with Wells Fargo. 
Donna and Nuno had their home appraised by an individual chosen by Wells Fargo’s own appraisal company.  This individual gave the family a false appraisal, an action that ultimately led to the Attorney General suspending his license.  This action was just one in a chain of events that led their home to be over $243,000 underwater as soon as they signed Wells Fargo’s loan contract before the ink dried.  Wells Fargo promised to buy back its fraudulent mortgage loan and help the family to recover all of their losses.  However, Wells Fargo reneged on the promise.   In 2010, after they made $151,000 down payment and over $200,000 mortgage related payments, despite their repeated plea, Wells Fargo still chose to wrongfully foreclose their home. The family attempted to dispute the process, however Wells Fargo gave them no options and forced the family to take the Bank to court.  Needless to say, this has not changed the outcome of events.  There is one set of rules for the rich and powerful and another set of rules for everyone else. 
Donna and Nuno Vieira are active members of Alliance of Californians for Community Empowerment (ACCE).  They have loudly advocated for Wells Fargo to carry out its promises to them and fellow borrowers across the Bay Area, the State of California and the nation.  It has been a challenge, to say the least, to get the Bank to do the right thing.  Donna Vieira met you in person at the 2011 shareholder’s meeting in San Francisco and pleaded to you not to steal their home.  Instead of hearing what she has to say, you had the policemen arrested her for asking. 
In addition to working as members of ACCE, the Vieira’s are actively partnering with the 99% Occupy movement.  We are requesting the Bank meet with the Vieira’s regarding their home.  We hope to meet in person and come to an agreement, until then the family fully intends to continue calling public attention to their case and the case of thousands of other families.
We Are the 99%


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Wall Street Sees Big Profits In Renting Out Foreclosed Homes

Wall Street Sees Big Profits In Renting Out Foreclosed Homes

Saturday, March 17, 2012


Ocwen Looks to Increase Market Share

Recently a homeowner in foreclosure received a letter from JPMorgan Chase Bank NA notifying him that the servicing rights to his New Century mortgage had been sold to OCWEN.  This article addresses Ocwen's acquisition of thousands of loans for a fraction.

Thursday, March 15, 2012



A CASE OF FORGED DOCUMENTS: William J. Paatalo v. J.P. Morgan Chase Bank

 Just days after the banks settled with the Attorneys General across the United States, more evil acts and wrongdoings by a major bank seeking to foreclose on properties of good, decent Americans, are surfacing.  The question is this:  "Will the Department of Justice finally prosecute the evil-doers?"

For the second time within  March 2012, documents have been filed that indicate that JPMorgan Chase Bank, NA through their attorneys are engaged in the production of forged documents (Deeds of Trust and Adjustable Rate Notes) thus engaging in criminal activity both state and federal and while also attempting to perpetrate a fraud on the courts specifically the US District Court in Billings, Montana and in the US Bankruptcy Court in San Jose, California.  This bank is attempting to steal two properties owned by two decent men both of whom are "pro se" in their cases.

Chase is represented by two separate law firms who provided to the two separate plaintiffs documents through exhaustive discovery purported to be "Blue Ink" copies of the original Adjustable Rate Notes and Deeds of Trust on two separate loans in which Washington Mutual Bank, FA is the "Lender."  Both loans bear loan numbers bearing the first three as "301."

On March 14, 2012 William J. Paatalo, Plaintiff Pro Se in Paatalo v. JPMorgan Chase Bank, N.A. et al, filed a Declaration of Evidence with the US District Court, District of Montana in Case No. 1:10-cv-00119 regarding the validity and authenticity of the Adjustable Rate Note and Deed of Trust submitted to the Plaintiff by the Defendant, JPMorgan Chase Bank, NA.

On March 8th 2012 Defendant JPMorgan Chase Bank, N.A. ("Chase") through its attorneys Charles Smith, Esq. and Elizabeth Kramer, Esq. submitted an email along with two attached electronic files purporting to contain scanned color copies of the original "Note" and "Deed of Trust" and were transmitted to Paatalo at his email address.  These documents have black and white print but show "blue ink" initials and signatures.

On information and belief, Chase was representing these files as digitally scanned representations of the actual original documents (Note and Deed of Trust) corresponding to the files.  Paatalo understands that Chase was supplying these files in response to his multiple requests for color copies of the original documents.

Upon opening both attachments, Paatalo magnified the signatures of each document to "800X" on two 17" computer monitors situated side by side.  The differences in appearance of the signatures were obvious to him.  The signature line on the Deed of Trust was blue but when he moved the "scroll bar" back and forth horizontally on the computer screen with the "Note" signature, the letters in the middle initial and surname filled with unusual colors. Upon information and belief, Paatalo stated that this phenomenon occurs when a document has been altered with a computerized software program such as Adobe Photoshop.

Paatalo further states that the signature line on the Deed of Trust was also "blue" while other signature lines on the document remained "black", an obvious sign that the document had been altered. Paatalo recalls that he signed the original Deed of Trust and Adjustable Rate Note at the closing of the subject property on the same day using the same blue ink pen.  Both signatures appear vastly different.

Plaintiff Paatalo submitted the files to Dr. Laurie Hoeltzel, a professional Court Qualifed Document Examiner and Handwriting Expert by forwarding the email from Chase's counsel directly to Dr. Hoeltzel on March 10th, 2012. On March 13th 2012 in San Bernardino, California, she signed a Declaration that was duly notarized.

Dr. Hoeltzel studied and was trained in the examination, comparison, analysis and identification of writing, altered numbers and altered documents, handwriting analysis, trait analysis, including the discipline of examining signatures with over twenty years of experience in this field. She apprenticed under some of the leading qualified Forensic Document Experts in the USA such as Don Lehew of Texas and Curt Baggett of Texas, whom are all internationally renowned handwriting and document examination experts.  She served eleven years in the U. S. Air Force, three tours in Iraq.  She obtained a PhD from Barron University in Los Angeles.

Dr. Hoeltzel concluded based upon her thorough analysis of the documents (Adjustable Rate Note, Lender Washington Mutual Bank FA dated January 3, 2007; Deed of Trust for same; Second Home rider with same):
  1. Pertaining to the documents, Adjustable Rate Note and the alleged initials and signatures of William J. Paatalo:  "It is highly probable the author of the WILLIAM J. PAATALO initials & signatures on the questioned documents were indeed altered."
  2. "This document examiner's professional opinion that WILLIAM J. PAATALO signatures on the questioned documents 'Q1' through 'Q3" are forgeries."
Dr. Hoeltzel is willing to testify to his in a court of law and states "I will prove to the Court that my opinion is correct."

  1. Declaration of Evidence William J. Paatalo v. JPMorgan Chase Bank, NA (Scribd)
  2. Declaration of Evidence James Madison Kelley v. JPMorgan Chase Bank, NA (obtained through PACER)
  3. Declarations of Dr. Laurie Hoeltzel in Paatalo case (Scribd) and Kelley Case (PACER).
  4. Laurie Hoeltzel, California Handwriting Expert 
  5. Bankruptcy Filing of James Madison Kelley 
  6. FindACase™ | William J. Paatalo v. J.P. Morgan Chase Bank

Case Number: 1:2010cv00119
Filed: October 6, 2010
Court: Montana District Court
Office: Billings Office
Presiding Judge: Richard F. Cebull
Referring Judge: Carolyn S Ostby
Nature of Suit: Contract - Other Contract
Cause: 15:1692
Jurisdiction: Federal Question        
Jury Demanded By: None 

Lynn Szymoniak, Foreclosure Victim, Receives $18 Million For Investigating Mortgage Crisis

Lynn Szymoniak, Foreclosure Victim, Receives $18 Million For Investigating Mortgage Crisis

The "Caped Crusader" Award goes to this very brave woman.  Thank you, Lynn Szymoniak -- you are my hero.  You are our "David" slaying Goliath.  Blessed be and thanks be to God for this great victory.

Wednesday, March 7, 2012

SolomonEdwardsGroup (SEG) Announces It Has Teams Ready to Solve Robo-Signing and Other Mortgage Document Issues | Reuters

SolomonEdwardsGroup (SEG) Announces It Has Teams Ready to Solve Robo-Signing and Other Mortgage Document Issues | Reuters

OCC Servicer Review Firm Also “Scrubs” Loan Files, Fabricates Documents « naked capitalism

OCC Servicer Review Firm Also “Scrubs” Loan Files, Fabricates Documents « naked capitalism

Tuesday, March 6, 2012

Reader Lisa N. pointed me to a troubling October 2010 press release by SolomonEdwardsGroup, a company that describes itself as a “national financial services consulting and staffing firm” about its remediation services for “significant loan documentation problems.” Alert readers will recognize that this is shortly after the robosiging scandal broke.
Here are the key parts of the press release:
SEG’s teams can also be rapidly deployed across the U.S., to help banks and servicers “scrub” files and determine which foreclosures may have been tainted by incorrect loan documentation and processing issues such as robo-signing….
For instance on a recent engagement, SEG quickly deployed a 25-person team to review a single-family loan portfolio containing 5,000 loans and within six weeks brought the portfolio into compliance with investor guidelines. During another recent engagement, SEG successfully completed the same type of project involving 20,000 single-family loans tainted by fraud allegations.
Needless to say, this sounds consistent to the charges we’ve heard from borrower attorneys and have even seen at trial: that of “tah dah” documents appearing suddenly in court that solved all the problems with the evidence presented. A not that unusual case occurred last week, in Kings County, New York, where in HSBC v. Sene, when the lawyers for the bank tried submitting two notes (borrower IOUs), the second attempting to remedy problems raised by the first one, each presented as the original. The judge not only ruled against the foreclosure but referred the case to the district attorney and the state attorney general.

Why the Failure to Convey Notes and Make Assignments Properly is Such a Big Deal in Mortgage Securitizations
Advanced students of “securitization fail” can skip to the next bold heading.
As we discussed in prior posts, there is considerable evidence of a widespread, perhaps pervasive, failure among the parties to mortgage securitizations to adhere to the terms of the contracts that created these deals. Specifically, they were required to transfer the notes (the borrower IOU) through multiple parties and get them to the securitization trust by a specified date. This process was laborious because each time, the note had to be signed (the term of art is “endorsed”) and the mortgage assigned (which confusingly is the lien against the home, although both professionals and laypeople often refer to the note + the mortgage, which are actually two separate instruments, as the mortgage).

While in the early days of the securitization industry, in he 1980s, it appears these procedures were adhered to, there is considerable evidence that they broke down over time.These deviations are serious because the agreements that govern these deals, called pooling and servicing agreements, were carefully crafted to satisfy a number of legal requirements, including securities law, local real estate law, tax law (REMIC, for Real Estate Mortgage Investment Conduit, set forth as part of the 1986 Tax Reform Act), the Uniform Commercial Code, and trust law.

The PSA requires the note (the borrower IOU) to be endorsed (just like a check, signed by one party over to the next), showing the full chain of title. The minimum conveyance chain in recent vintage transactions is A (originator) => B (sponsor) => C (depositor) => D (trust).

The correct conveyance of the note is crucial, since the mortgage, which is actually the lien (this is often a cause of confusion, since in lay usage, “mortgage” refers to the the note + the lien, when they are separate instruments), is a mere accessory to the note. The lien can be enforced only by the proper note holder (the legalese is “real party of interest”). The investors in the mortgage securitization relied upon certifications by the trustee for the trust at and post closing that the trust did indeed have the assets that the investors were told it possessed.

The PSA also very clearly provided for an unbroken chain of assignments and transfers though the parties (the A-B-C-D or more cited above). The use of intermediary parties between the originator and the trust, with a “true sale” occurring at each step, was intended to create FDIC and bankruptcy remoteness. The investors (who are called the certificate holders in the PSA) did not want a creditor of a bankrupt originator to be able to seize notes back out of the trust.

Some PSAs allowed for each party to endorse in blank (as in each owner simply had to have an authorized party sign it), but the note still had to have endorsements by all the parties in the conveyance chain, while others stipulated that each endorsement had to be to the next party in the chain. However per NY trust law (and New York law was chosen in the vast majority of cases to govern the trust), the final endorsement had to be to the trust, not in blank.

The last bit, and this is the source of considerable tsuris, is that all the notes had to be conveyed to the trust by a date certain, usually 90 days after the closing of the deal or after an aggregation period. Only very limited exceptions were permitted. The reason was to conform with REMIC rules. As indicated, the overwhelming majority of trusts elected New York law to govern the trust because it is very well settled. But New York trust law is also unforgiving. Trusts can operate only as stipulated; any move that deviates from its instructions in its governing documents is deemed to be a “void act” and has no legal force.

Law professors Anna Gelpern and Adam Levitin have described PSAs not just as prototypical rigid contracts, but as “Frankenstein contracts” and “social suicide pacts.” Normally, if there is a significant deviation from a contract, the parties can use waivers, sometimes with penalties if one party looks to have behaved badly, to remedy the breach. But the use of New York trusts, the REMIC requirement of passivity, plus the way the relationship among the parties was set up (bad incentives for the servicers, demotivated trustees because they are indemnified by the servicer and have no reason to watch out of the investors, formal consent requirements among dispersed investors, when they sometimes have conflicting interests) make changing the PSA well nigh impossible.

To put it more simply: if notes were not conveyed to the trust in the stipulated time frame, it means that someone other than the trust has the right to foreclose, presumably one of the parties earlier in the securitization chain. But no one is willing to admit that since it would mean that investors had been sold what Adam Levitin has called “non-mortage backed securities.” There is no clean way for a party earlier in the securitization chain to foreclose and transfer the proceeds to the trust. So the trust HAS to be the one to make the foreclosure, at least in the minds of everyone involved with these deals, whether it actually is the right party or not.

How SolomonEdwards “Remediates” Problem Loans

I called SolomonEdwards to discuss its press release about “scrubbing” loan files and had two conversations totaling over 50 minutes with a partner in this business. What was disconcerting about this discussion what that despite his emphasis on how thorough SolomonEdwards is in inspecting loan files (its software allows it to flag hundreds of items on a file review) and how strict it is in managing conflicts (it has over 600 people working on OCC consent orders for a single bank but would never take an OCC engagement that would put it in the position of having to review its own work, which as Abigail Field, Michael Olenick and Francine McKenna have stressed, is taking place frequently), he seemed remarkably unaware of the differences between how you can handle a loan that a bank owns versus one that was supposed to be transferred to a trust pursuant to a PSA. When I asked specifically about whether their process was different for securitized loans versus bank owned loans, he said that there were not a great deal of differences. The partner did not refer to any of the issues discussed at length above, but instead mentioned investor guidelines and who the investors were. So it seems that they check the loan files to see whether they conformed with the representations and warranties made in the PSA (for instance, they also flag as irremediable all loans with interest rates that would have them be deemed predatory) but not the transfer and custody requirements.

SolomonEdwards apparently did and continues to do a lot of FDIC-related work, and my understanding is that a lot of procedures were developed to deal with the to transfer mortgages out of banks that had failed. Those are perfectly kosher with a non-securitized loan but you just can’t do that in a PSA context. For instance, many of these actions are tantamount to trying to transfer a defaulted loan into a REMIC trust. Not only is that a void act under New York trust law (it was never contemplated, hence the trust can’t do that) but also under REMIC, a trust cannot accept a non-performing asset (which is exactly what a dud loan is).

In fact, the SolomonEdwards conversations confirmed what we have inferred about the widespread failure of originators to convey notes to trusts properly. When I asked how they start a file review, the partner took time to stress that they often didn’t start with file reviews, that at the big volume originators, it was often a big process just to find where the loans were; “They don’t know where it is…they all have significant problems.” That should simply not be the case with a securitized loan. It is supposed to be with the trustee, either held by them or a custodian they hired (WaMu and Chase deals are an exception, they do allow for the originator to hold the notes). Trustees provided multiple certifications to the SEC that they DID have all the loans.

Similarly, while he did say that there were some loan files that could not be remediated, such as if the note was missing and the seller/servicer was bankrupt and “no longer exists.” (in fact, the example he used, Thornburg, is still around). The methods he said they used for remediation were troubling. For instance, he said if the seller/servicer were dead, they would not be able to get a replacement note (he referred to “replacement” several times, that if you went back through the assignments or the registrations in MERS to the various parties and get a “certified” copy). Notes are like checks, they are negotiable instruments. You can’t enforce a copy or use a copy to try to recreate an original. This is exactly the sort of activity that got the notorious DocX shuttered. Yet he seemed to think the use of a copy or a “replacement” adequate. But you can’t “replace” a note; it’s an original, and you need to have the borrower’s signature for it to be binding, and I can guarantee no one is getting borrowers to sign replacement notes.

Similarly, one thing that foreclosure defense attorneys have seen as a huge red flag of servicer chicanery is the use of allonges. An allonge is a separate piece of paper used for endorsements that is required by the Uniform Commercial Code to be “affixed” to the note and used for endorsements when there is no more space left on the note for signatures. Allonges were pretty much never seen until the robosigning scandal, since all the space on a note (meaning the back and the margins) can be used for endorsements.

But SolomonEdwards official said that they’ve been able to get copies of the note from the seller and have been able to “bring them forward with allonges that were re-executed.” When asked, he confirmed that they create allonges now that confirm with the transfers that they’ve found ought to have taken place, either via the PSA, MERS, or other routes. Again, in a securitized trust, that it tantamount to trying to transfer the note now and is not valid. When I pressed him on how they did that, how they got signatures from intermediary parties, he demurred and said, “I don’t want to give away too much of our secret sauce.”

He also discussed using lost note affidavits. That is permissible only on an exception basis; indeed, many deals limited how many lost note affidavits could be used. If a firm like SolomonEdwards is seeing more than a couple of missing notes on a deal, that means transfers did not happen and there is a much more fundamental problem with the securitization, potentially a contract formation failure (if no notes were transferred by the cutoff date, the trust was not formed).

The SolomonEdwards executive also made it clear that he regarded the mortgage assignments as more important than the note, which is backwards (the lien follows the note) and that they spent more time on getting them executed. He said that his firm found “missing” mortgage assignments (“they can’t be found”) to be common. Again, since the assignments had to be completed by the cutoff date, that means they are either making obviously invalid assignments, are deliberately making back-dated assignments (not kosher) or have a time machine. Yet he said there were “potentially some things that could be done with the MERS system” or “going back” and “rebuilding a title chain” to remedy these failings. We also asked if they had ever been the professional deponent on a foreclosure, since testimony is supposed to be provided by a party with personal knowledge (hearsay is not permitted) and if they were the ones who had remediated the files, they would presumably be required to testify if the borrower challenged the authenticity of documents submitted to the court. He said that had never come up.

In fact, these reviews sound like documentation theater. The partner stressed how through SolomonEdwards was and how they had software that allowed them to record up data items and capture whether a item was material or not material and then risk rate an entire loan file. They can look at up to 12000 variants (no typo) for the OCC reviews (how many they actually look at depends on the scope of the client engagement; the difference between the number of steps, as he called them, in the OCC reviews versus the typical bank engagement is because the OCC reviews include state law requirements. Needless to say, it’s a bit curious that routine forensic investigations do not include state law matters). He also stressed that they have senior teams working on these projects, 5 years average experience for the OCC work, more than that on bank work, and that on a normal engagement, they would typically spend 3 hours per file, but if a bank had serious documentation problems, it might take as long as 12 hours.

He said that a typical bank engagement would require looking at 100 to 150 items. For a 3 hour process, that’s less than two minutes an item (and remember, that includes the time to log their findings). But the reality is that there are really only 5-10 things you need to look at: Do you have an original note? Does it have all the endorsements that the PSA says it should have? Do the mortgage assignments correspond to the endorsements? Were they all completed on time?

These multi-hour investigations are fee-padding form over substance. But this sort of thing is perfect for the bank-defending OCC, since it would take someone pretty expert to penetrate the fiction that this exercise in counting trees was designed to miss the forest.

It was disconcerting to speak to someone who obviously thinks his firm is highly professional engaged in activities that include document fabrication, which is what creating allonges now amounts to. And the worst is I have no doubt SolomonEdwards is more careful than most firms in the industry. This confirms, as we have said repeatedly, that there was a massive failure in the industry to conform to the requirement of the legal agreements that it devised. And there is a very big business, now with a government seal of approval, in covering up that fact.

Monday, March 5, 2012


If these charges described below are found to be true, then could every foreclosure action brought by CHASE be in question?

On January 13, 2012 the Law Office of J. Arthur Roberts in Newport Beach, California filed a Class Action Complaint, Ernest Michael Bakenie and others vs. JPMorgan Chase Bank, NA and Does 1-10, in the United States District Court, Central District of California located in Santa Ana.  Case No.  SACV12-0068 JVS (MLGx) This is a class action for over $10,000,000.00 where at least one plaintiff is diverse from one defendant.  The Defendants are conducting business in the state of California.
A federal class action lawsuit is founded on California's unfair/unlawful acts statute and alleges JPMorgan Chase routinely falsifies documents to deceive bankruptcy judges into believing Chase is the beneficiary in bankruptcy cases, and goes so far as to Photoshop documents to “create the illusion” of standing “in tens of thousands of bankruptcy cases.” The action alleges among other things that JPM engaged in perjury, fraud and intentional misrepresentation by manufacturing a chain of title transfer evidence in order to falsely prove it stands in thousands of bankruptcy matters; andused manufactured evidence to deceive the bankruptcy court and other bankruptcy players as to the identity of the true beneficiary or creditor of Class Members’ non-negotiable promissory notes (MLNs).

The plaintiff, Ernest Michael Bakenie, owns real property in Newport Beach, CA.

JPMorgan Chase Bank NA ("Chase") is a national banking association organized and existing under the laws of the United States, headquartered in the State of New York and doing business in the State of California.

Injunctive relief is sought.

  1. CHASE is engaged in systemic fraud upon the Bankruptcy Courts and other bankruptcy players for financial gain.
  2. That CHASE has violated federal perjury statute 18 USC 1621.
  3. Plaintiff believes and alleges that CHASE is "engaged in the business practice of deceiving" bankruptcy judges, Chapters 7, 11, and 13 Trustees, the Offices of the United States Trustee, creditors, creditor attorneys, debtors in possession, debtors, and debtors attorneys as to CHASE's "status as a secured creditor in tens of thousands of bankruptcy cases filed nationwide."
  4. Bakenie further alleges that through the use of fabricated assignments, endorsements and affidavits that purport to transfer Deeds of Trust, Notes, and rights to all monies due under the terms of tens of thousands of non-negotiable promissory notes that CHASE has demonstrated a patter and practice of playing "hide-and-seek" with debtors, judges and other bankruptcy players.    
  5. CHASE intentionally conceals the identity of the true parties in interest to enforce the tems of tens of thousands of residential non-negotiable promissory notes for its own financial benefit to the detriment of the integrity of the bankruptcy system.
  6.  CHASE services tens of thousands of residential home loans, many of which are pledged to Mortgage Backed Security Trusts.
  7. CHASE allegedly acquired the assets of WASHINGTON MUTUAL BANK NA (WAMU) from the FDIC after WAMU failed and was placed in receivership.
  8. CHASE network attorneys file proofs of claims and Motions for Relief from Automatic Stay and falsely claim to be the party entitled to the monies due under the terms of the Notes
  9. That the PSA (Pooling and Servicing Agreement of each private Mortgage Backed Trust serviced by CHASE contemplates no less than THREE true sales of each MLN from originator to sponsor to depositor and finally to the Trustee of the MBS (the "Chain of Title").
  10. CHASE and agents frequently lack evidence of the multiple transfers required to establish legitimate standing in bankruptcy, particularly in the case of WAMU originated Notes.
  11. CHASE et al refuses to offer the actual evidence of the transfers due to costs associated with providing standing of the true "chain of title."
  12. Rather than prove up its own standing or the standing of the MBST, CHASE systematically misrepresents CHASE or a designated MBST to be a creditor in vast numbers of bankruptcy cases by utilizing manufactured documents.
  13. That CHASE et al "fabricated evidence is 'photo-shopped' and is HIGHLY PERSUASIVE and authentic in appearance so as to ensure legal victory in bankruptcy courts for unjust enrichment.
  14. That the said practice allows CHASE to dump defaulted loans that were never properly securitized b WAMU and other originators acquired by CHASE by creating "the illusion of a valid transfer."
ROBOSIGNERS identified in the law suit include  KIMBERLY M. HORNE and ANGELA NOLAN.

 For More Information:

Saturday, March 3, 2012


Homeowners in foreclosure and/or their attorneys should carefully inspect any documents that are given to you which have been represented as copies of originals. Insist on color copies. You will not be able to discern the alterations on Black and white copies.  You will need a forensic expert to inspect your documents.
The experience described herein is not unique to the homeowner who is sharing his experience in order to help others save their homes and obtain a modicum of justice over a bank that systematically as a matter of court attempts to deny homeowners of due process because they more likely than not cannot prove they are the owner of the loan nor that they have legal standing.  The homeowner in this article has been engaged in an unnecessarily protracted legal fight as a plaintiff for four years in a Chapter 11 Bankruptcy case and adversarial action in the US Bankruptcy Court in California.  Chase and their attorneys have dealt with the homeowner in typical Chase fashion -- delay, withhold, delay, obfuscate, delay, obstruct.

In fact a Class Action lawsuit has been filed against Chase for similar issues.   

In late January 2012, a few days before discovery cutoff, attorneys representing  JPMorgan Chase Bank, NA provided a California homeowner by email a copy of a Deed of Trust, an Adjustable Rate Rider, a Promissory Note and a Prepayment Penalty Addendum which Chase represented to each be  a copy of the original documents held in the office of this law. The files provided to the homeowner were  digitally scanned color images of the purported original documents (Deed of Trust, Adjustable Rate Rider, Promissory Note, and Prepayment Penalty Addendum).

The appearance of such documents after nearly four years of formal legal requests by the homeowner was suspicious. The production of the documents just four days before discovery cutoff smacked of an attempt to setup a Court ambush because it allowed no time for forensic inspection. When he requested to personally meet and inspect the documents, the law firm became non responsive which added further to suspicions that the documents were possibly bogus.

The homeowner inspected the files using Adobe Reader.  He magnified the initials and signatures on the files that were purported to be his original blue ink scribbling. At between 3X and 5X Adobe Reader magnification the alterations of the documents become obvious.
The homeowner afterwards acquired the services of a forensic expert who  inspected the documents provided by Chase and determined that someone colorized the homeowner's initials and signatures using either Adobe Photoshop or other similar product to colorize black and white initials and signatures in an effort to make it seem like this was a true copy of the "Original" documents.  For what purpose -- possibly to steal a home!
The purported "Note" provided to the homeowner by Chase bears a "blank endorsement" by Cynthia Riley, Vice President, Washington Mutual Bank, FA.  The purported  "blank endorsement" by Cynthia Riley on the purported original promissory note bears no date and no signature. Rather the endorsement is a stamp with the facsimile of her alleged signature. The stamp can easily be created utilizing Adobe Photoshop. The purpose of said endorsement is that it would  allow Chase to claim possession of the promissory note so that it can foreclose under the UCC-3 in order to  demonstrate standing in bankruptcy court.

Chase's attorney informed the homeowner that the law firm had the note (original blue ink copy) in their office and that they could foreclose on that basis. A clear reflection of their intent and the motivation for their suspected fraud. This law firm has not filed these documents with the Court.  Filing manufactured or falsified documents in the US Bankruptcy Court or other courts would constitute a fraud on the court that could result in sanctions being imposed by the Court or worse. This further underscores the conclusion by this homeowner that Chase is a completely unscrupulous bank represented by lawyers of the same ilk.
"Photo Shopped" documents can easily be discerned by looking at the images at 3X and 5X using Adobe Reader.Photoshop and equivalent software permits a signature to be lifted off one black and white copy, colorized and placed on another copy pretending to be a wet ink original. You can detect this in your own documents by following what the homeowner had to do.The signature is copied and then inked using the "Magic Wand" tool in Photoshop. The shape of the signature is captured by the "Magic Wand". The signature color can then be changed to any color using the "color palette" and either the "Paint Can" or the "Color Replacement Tool". (There are many other tools as well.)

Photoshop and equivalent software permits a signature to be lifted off one black and white copy, colorized and placed on another copy pretending to be a wet ink original. You can detect this in your own documents by following what he had to do.

As Chase has produced no original documents over a period of four years for either of the homeowner's first or second mortgage and due to the above representations, the homeowner has concluded the following: 
Chase does not have the original loan documents. If they did have the originals,, Chase would have produced them in discovery long ago.  Chase has consistently refused to produce chain of title or chain of holders of the note over the period of 2008-2012.  One can surmise that the actual evidence probably indicates that Chase does not own the loan.  Let me reiterate -- Chase has produced no original documents in 4 years for either the first or the second. This homeowner is not the only litigant having this "Chase experience" in a court of law.
The forensic issue is whether the documents are "Photoshopped." It is not whether the signature looks like your signature. Just about anyone with limited Photoshop skills can easily lift a signature from a Black & White copy and colorize it. You must seek out a forensic expert with Photoshop expertise. The cost is about $600 for an opinion.

Please refer to ERNEST MICHAEL BAKENIE vs JPMORGAN CHASE BANK NA et al (a Class Action, Case # SACV12-0060 JVS (MIGx) filed  January 13, 2012 in the US District Court in Central California in Santa Ana.  The plaintiff, Bakenie, alleges that Chase has been passing off fabricated documents in court rooms across California in literally thousands of cases. So you must understand that this is how Chase does business and this particular case is not unique.  That is why you are also at risk.

Link to case filing:

To fix this problem our legal statutes should require  "Blank Endorsement" should   be signed and dated by a person who has actually identified themselves. The documents used in taking someone's home from them should required to be produced upfront before a foreclosure can commence so as to allow real due process for the borrowers.
As a side bar, the use of blank endorsements on promissory notes creates a huge untraceable marketplace where drug and other criminal operations can launder vast amounts of money without government scrutiny.

  1. Are California homeowners losing their homes to foreclosure on the basis of forged or manufactured documents?
  2. Are banks perpetrating a fraud on our Courts?
  3. Are banks actually the party "trying to get a house for free"?
  4. What can we do about this?