The opinions expressed below are mine alone and do not necessarily reflect the opinions of my industry client, Portland Metropolitan Association of Realtors®, their officers, directors, employees or members. – PCQ

Although some may disagree, the origins of the current housing and credit crisis can be traced directly back to the explosion of the securitization industry in the early years of this decade.  For those interested in an enlightening expose’ of this issue, watch the recent Oscar-winning documentary, Inside Job.

Although securitization of mortgages had been going on for several years, the process reached a fever pitch during the easy credit days, i.e. 2005 – 2007. Securitization is a fancy word for what Fannie and Freddie had been doing for years in the secondary market, i.e. purchasing mortgage loans, pooling them, turning them into investment grade securities, and selling them to large investors, such as pension funds.  For years the process was basically sound, in large part because these two Government Sponsored Enterprises placed strict limits on the loans they would purchase – these were known as “conforming loans,” which meant that they conformed to Fannie’s and Freddie’s institutionalized standards. Continue reading “Why People Are So Angry At the Lending and Servicing Industries – Part One”

“We come in peace.”

For those who have seen the 1996 movie, “Mars Attacks!” there is a certain metaphorical similarity between the movie and the recently enacted federal law.  Both the federal law and the Martians initially seemed relatively harmless to law-abiding citizens.  But alas, once again, life has imitated art….

Background. The Mortgage Assistance Relief Services Act Final Rule, 16 CFR Part 322 [aka “MARS”], effective January 1, 2011, is a meandering and somewhat “Johnny come lately” federal regulatory effort by the Federal Trade Commission [“FTC”]. When the credit and housing crisis made its first significant appearance in 2008, there also emerged a cottage industry of faux “consultants” who touted their ability to help struggling homeowners with their distressed housing choices.  Many carpetbaggers came from out of state, supposedly affiliated with lawyers, real estate agents or mortgage brokers. Their business model included the payment of up-front fees coupled with the promise of assisting homeowners in securing lender consent for loan modifications and short sales.  For a year or more there were anecdotal stories of distressed homeowners paying large sums of money but receiving little or no effective assistance.

For a recitation of horror stories and enforcement actions, one can read the first seven pages and 103 footnotes of the Federal Register, which appears intended to explain the immediate need for the massive rulemaking exercise that was to follow.  However, nothing in the federal government occurs quickly, and now, in 2011, one must question the need for a broad federal mandate that overlaps pre-existing state laws covering the same activities. Continue reading “MARS Attacks! Oregon Realtors® Take Cover”

B.L.  Zebub: “OK everyone, listen up. The last time we had a conference call, there seemed to be an undue amount of bickering and finger-pointing between Liz Pendens, representing the title industry, and Dee Faulting representing the lender servicing industry.  By the way, Dee, you outdid yourself this month.  I heard some of our employees talking about how you saved up thousands of default notices and sent them all out on March 15th.  For the Shakespeare aficionados on this call, that’s the “Ides of March”, which, as the soothsayer predicted, was a very bad day for Julius Caesar.  Brilliant, Dee, mixing business with pleasure again!  Anyway, to save time, I will identify those in attendance besides Dee and Liz.  Of course, my trusty “Della Street” is here, Lucy Furr, will be taking notes again for us today.  As before, there are to be no recording devices used – we only turn them on to secretly record frustrated homeowners after telling them we’ve denied the loan mod they were waiting on for 14 months. We replay the tapes for the Belial Bank’s Holiday Party. [Laughter]  M. T. Remick, of the securitization industry is here, along with our intern, Les Guile, who apparently found the last conference call a real eye opener.  Isn’t that right Guile?”

Les Guile: “You got that right, sir.  Before that call, I had no idea the lending, servicing, securitization, and title industries were all in bed together…well, er, actually, er, I mean, they all have overlapping business models.  If something happens to one of them, it affects all of the others in some way. Anyway, sir, I want to thank you again for allowing me to sit in – I’m sure it will be another ‘eye-opener.’” Continue reading “Belial Bank Emergency Conference Call – Discussing MERS Bailout Legislation”

Chimera – A grotesque product of the imagination.

For the past several years in Oregon, foreclosures have been processed fraudulently and in violation of Oregon’s trust deed law.  Banks, servicers, title companies and licensed foreclosure trustees, were all aware of the problem for years, but no one did anything about it.  This was not a minor error or simple oversight – it was a patent disregard for the laws of Oregon.

Oregon’s Trust Deed Foreclosure Law. It is widely known that during the credit/housing boom, lenders frequently sold their loans between one another.  When the ownership of a loan is transferred, it is necessary to execute, in recordable form, an “Assignment of Trust Deed.”  ORS 86.735(1) governs what must occur before a trust deed may be foreclosed in Oregon; all such assignments must be placed on the public record.  This is not a new law and it is not significantly different from the laws of many other states.  Oregon’s law has been on the books for decades. Continue reading “Oregon Foreclosures: The Mess That MERS Made”

As a follow-up to my recent post regarding the problem title carriers are facing when the Big Banks try to resell their REOs, it appears the lenders are starting to wake up to the fact that their Oregon foreclosures are patently illegal.  The banks know it, and their foreclosure arms (aka “Successor Trustees”) know it as well.   As repeatedly noted here, here, and here, the Oregon courts – both federal and bankruptcy – are giving short shrift to the argument that MERS has the ability as a “nominee” to actually conduct the pre-foreclosure activity it has been engaging in openly for years.  Most recently, in the now-famous Oregon case of McCoy v. BNC Mortgage, Judge Frank R. Alley III, concluded in a succinct and persuasive opinion, that if the banks fail to follow ORS 86.735(1) which requires that all intra-bank assignments of the trust deed be recorded, their foreclosure are void. This case, coupled with several others summarized here, have apparently not gone unnoticed by the Big Banks and their foreclosure trustees. Continue reading “Why Banks Are Halting Foreclosures In Oregon”

Kelly Harpster, formerly a young brainiac associate from Davis Wright Tremaine, my alma mater, who left to make her mark on the Portland legal scene, is coming along just fine, thank you.  Attached here is her legal memo in support of a Motion for a Temporary Restraining Order (“TRO”) against Bank of America and ReconTrust, its wholly owned foreclosure arm.  Attached here is the Order of Oregon Federal Judge Anna Brown, granting the motion on February 23, 2011.  What is remarkable – and perhaps somewhat telling – is that Judge Brown issued her 22-page memorandum opinion the same afternoon she granted the motion.

There are several object lessons in such cases as Kelly’s when seeking extraordinary relief against Big Banks.  Here are a few:

Choose your battles: Don’t bring a claim if you don’t believe you can win.  The bank has more money than you. They will fight as hard on losing cases as on winning cases.  Why?  Because they want to send a message that they take all cases seriously, and that there is no such thing as an “easy” case.  So, if you’re going to climb into the ring with the Big Boys, you’d better be prepared to deliver a knockout punch.  Besides, filing a weak or poorly prepared case does no one a favor if you set bad precedent for the little guy.

Go out of your way to notify all bank defendants before filing the TRO. Even if you have a great case, moving too fast can result in a denial of the TRO.  Most judges strive to make sure that all defendants, including Big Banks, have a full opportunity to be heard.

Have a good paper trail before filing the TRO. The movant’s supporting memorandum should  show that the lawyer has done their homework and that the borrower has clean hands.  The events leading up to the TRO should also establish that the borrower and their attorney walked the extra mile with the bank to resolve the matter- the TRO was a “last resort.”

What is a “good case”? It is one that has an “Oh my God!” element.  As in “Oh my God! I can’t believe the bank did that!!”  In less hyperbolic terms, the equities should weigh heavily in your client’s favor.  Equally important is that there must be a significant risk of irreparable injury if the court does not grant the TRO.

Kelly’s work in this case is a shining example of excellent lawyering.  We wish her and her client the best.

– PCQ

SLAM!  BANG!

Her: “Honey, is that you?”

Him: “Yeh.”

Her: “Another bad day at the Firm?”

Him: “Bad?  Hellish!”

Her: “Is that alcohol on your breath?  Have you been drinking at Lucifer’s Lounge with the other associates again?”

Him: “Yeh, it’s Friday, and we just go to shoot the breeze.  Everyone’s pretty stressed out these days. This job isn’t cracked up to be what I thought it was.”

Her: “What do you mean?  I remember how happy you were to be selected to work for the Firm.  You said they did legal work for Big Banks.  That sounds pretty impressive to me.  And they do throw great parties!”

Him: “Well, no one ever told me that I’d be supervising a bunch of secretaries and paralegals, teaching them the fine art of speed signing.  And whenever I go to court these days, I’m getting my head handed to me on a platter.  I can see how those judges are looking at me…like some sort of demon.  First, it was Rinegard-Guirma; then Burgett; then Allman; then Ibanez; then McCoy; and now Agard.  Hell, some of these cases the banks are losing have been brought by pro se’ litigants without any attorney. How’d you like to lose a case to someone representing themselves? I’m starting to feel like a violist on the Titanic.  I don’t see how the Big Banks are going to survive these decisions.  And if they do, their reputation will be in tatters.  Everyone is saying MERS is just circling the drain.  Pretty soon there will be nothing left of them besides a bunch of electrons wandering around in cyberspace…come to think of it, that’s all they are right now.” Continue reading “A Bad Day At The (Foreclosure) Mill”

First American Title Insurance Co. is reportedly adding an exception to its title reports and (presumably) its guarantees, that will exclude certain matters, including the lack of insurable title after a foreclosure sale, that arise out of the failure to have recorded the Trust Deed Assignments, including all intervening assignments between the first and last assignment.  Given the size of First American, can other title companies be far behind?

Hooray!  It’s about time.  In Oregon, ORS 86.735(1) provides that in order to foreclose a trust deed, several conditions or events must occur.  One of them is that “(t)he trust deed, any assignments of the trust deed by the trustee or the beneficiary and any appointment of a successor trustee are recorded in the mortgage records in the counties in which the property described in the deed is situated.”  This statute was first enacted in 1959, and was amended from time to time, up to 1989.  I’m not sure if the above-quoted language first appeared 52 years ago or 22 years ago – but suffice it to say, this requirement should come as no surprise to anyone involved in an Oregon trust deed foreclosure for the last several decades.  Unfortunately, it has been uniformly ignored for the past several years by Big Banks in their rush to foreclose. Continue reading “Are Title Companies Limiting Coverage For Big Banks? Another Slapdown!”

[Caveat:  As recited on my website, Q-Law.com, unless expressed otherwise, all post are solely my responsibility and do not necessarily represent the views of my clients.  This post is for entertainment purposes only.  Truth, like beauty, is in the eyes of the beholder. The satire is mine. – PCQ]

Chapter 666 – Loan Mod Callers

This Chapter describes how all loan modification phone inquiries at Belial Bank are to be handled, from the first intake call to the last.  No departures from this policy are permitted without the written consent of our bank president, B.L. Zebub.  If you are unable to reach B.L., please contact his personal assistant, Lucy Furr for further instructions.

1. Adopt a tone of complete disinterest. Do not permit yourself to interact with the caller on a personal level.  Avoid at all costs any tone of sympathy, empathy, or compassion.  Words and phrases such as, “I understand,” “Gee, that sounds horrible,” or “Tell me how I can help,” are to be avoided at all cost.  Do not address the caller by their first name.  If any attorney calls, address them as “Attorney ________ “(insert last name).  This approach sends the message to the caller that they are merely a number, much like the people queuing up to renew their driver’s license – except that those people actually get their licenses renewed!  If you have difficulty in reaching the level of required emotional detachment, we suggest that you mute your side of the call, and completely immerse yourself in clipping or filing your nails, or engage in some other personal hygiene tasks that can be accomplished without leaving your call station or removing your headphones.  If that fails, interrupt the caller to say that you’re still trying to retrieve all of their files, and tell them you are putting them on hold “for a few moments.”  Then watch a movie on your laptop.  We suggest you select from the following: Omen, Damien I, II, or III, Rosemary’s Baby, Angel Heart, or similar lighthearted and uplifting movies recommended by our Personnel Department.  If the caller is still on the phone when your movie is over, apologize for the delay (but offer no excuses), and ask them their name and loan number, as if you had never spoken to them before. Continue reading “Belial Bank – Employee Manual (Loan Modification Calls)”

“Choisissez vos combat”

It’s a rare day in the court system where a litigant wins a case and still comes out the big loser.  But MERS has managed the feat. [For a detailed background on MERS’ business model, see my earlier post here. – PCQ]

In a recent bankruptcy case, In re: Agard, the U.S. Bankruptcy Court for the Eastern District of New York, per the Hon. Robert E. Grossman, Select Portfolio Servicing, Inc., acting as servicer for U.S. Bank National Association, Trustee of a securitized trust (collectively, “the Bank”), won the right to pursue a foreclosure against a debtor (“Agard”) who had recently filed for bankruptcy.

In lay terms, this means that the although Mr. Agard was in bankruptcy, and therefore entitled to protection from creditors (the so-called “stay”), the Bank filed a motion for relief from the stay (“the Motion”), so it could proceed against him.  The Bank based its right of  foreclosure upon an assignment of the mortgage from MERS as “nominee” for the original lender, First Franklin.  Mr. Agard put up  limited opposition to the Bank’s Motion, arguing that MERS did not have the power to make the assignment to the Bank, and therefore the Bank had no standing to foreclose.  Problem was, the Bank had already obtained a judgment of foreclosure in the New York state court, which had been entered before Mr. Agard filed for bankruptcy.  Thus, under well-established legal principles [known as res judicata – PCQ], the Court had no alternative but to honor the prior state court judgment of foreclosure.  Therefore, in less than three pages into the 37-page Memorandum Opinion, Judge Grossman concluded that the Bank had the legal right to lift the bankruptcy stay.

MERS, which was not originally a party, intervened in the proceeding, based upon the following arguments: Continue reading “The Agard Case Analyzed – Another MERS Smackdown!”