Congrats to Terry Scannell, the attorney who convinced a Washington County jury last Thursday, July 18, 2013, to rule in favor of his clients, Bela and Eva Lengyel, in one of the first – if not the first – wrongful foreclosures cases in Oregon. The fact that it is occurring only now, 5+ years after the credit and housing crash that gave us the Great Recession, speaks to the difficulty of these cases, and the perseverance of both attorney and clients. Continue reading “Chase Chased & Caught – Slapdown!”
HER: “Honey, is that you? You’re home early from the firm. Usually, on Fridays, you go over to Lucifer’s Lounge with the other attorneys for shots of Devil’s Springs Vodka, and regale each other with stories of the families you foreclosed during the week. Honey? Honey? What’s wrong?”
HIM: “I think I screwed up….”
HER: “Was it a little, itsy, bitsy, ‘No one will ever know,’ mistake – or one of those ‘Where’s my passport’ mistakes?” Continue reading “Foreclosure Mill Morality”
Following a rough and tumble year in the banking industry, Belial Bank’s feckless fearless leader, B.L. Zebub, believes it is high time to bring some levity and loyalty to the lowly troops who have been tirelessly foreclosing all the Beleaguered Borrowers they may have missed the first and second time around. Mostly, however, B.L. is concerned about the reputational damage his bank has suffered this year. Once known as the largest bank in America as measured by hubris, it is at risk of losing this mantle of distinction. On the Chinese calendar, 2012 has been Belial Bank’s Year of the Rat.
B.L. is hoping against hope to instill a sense of pride among the rank and file; he knows that his company’s promise to the feds to install a “single point of contact” [or “SPOC”] for every borrower seeking help, has become a sham. Problem is, after a couple of weeks on the job, the SPOCs either quit, get fired, or leave to take more respectable jobs in the collection and repo industries. And then there was the public relations nightmare Belial Bank suffered after it was disclosed to the press that the top brass were giving prizes to supervisors who could run up the highest number of SPOCs for a single borrower in the shortest amount of time. Last week’s big winner, Art O. DeLay, won a hundred crisp dollar bills and the afternoon off to visit The Devil’s Den Gentlemen’s Club, conveniently located just down the street from Belial’s headquarters. [Cover charge waived.] Continue reading “Belial Bank’s 2012 Holiday Planning Meeting”
Her: “Honey, is that you? It’s awfully early for you to come home. Are you ill?”
Him: “Yeh, I know it’s early. I’m OK. I just didn’t feel like working anymore.”
Her: “What’s wrong? Don’t you enjoy your work kicking people out of their homes anymore? I thought you loved having Big Bank clients who specialized in that sort of thing.”
Him: “That was then, this is now. After a couple of years of writs of executions and evictions, the thrill is gone. I’m tired of watching U-Haul trailers getting packed up and children on the sidewalks crying. I never thought I’d say it, but maybe I’m starting to grow a conscience – hard as that sounds. Whatever it is, I’m beginning to wonder if I’m playing for the wrong team. I’m noticing how people kinda shy away from me at the cocktail parties now. Like I’m some kind of monster. I remember early on when we had our soirees, I was the life of the party, regaling everyone with stories of my latest foreclosure, and how I kept postponing the auction sales letting the beleaguered borrower think they were actually going to get a loan mod, and then at the last minute, when they were on the 99-yard line, I’d drop the hammer and foreclose ‘em. I had people rolling on the floor laughing. Now no one wants to hear about this anymore. I feel like the lonely Maytag Repairman.” Continue reading “A Curious Day At The Foreclosure Mill….”
In the first Oregon appellate court ruling on the issue, the Court of Appeals, addressed, head on, whether MERS may be appointed as the “beneficiary” in an Oregon trust deed, for purposes of avoiding the law. The full opinion may be accessed here.
The decision, written by Justice Lynn R. Nakamoto’s was a “textbook” opinion; clear, concise and methodical, demonstrating a good grasp of the legal issues at play.
The Parties. The persons and entities discussed in the case included two banks. One was GreenPoint Mortgage Funding, Inc. (“GreenPoint”) the lender that originated, i.e. funded, the loan at the time of closing. The other bank was GMAC Mortgage, LLC (“GMAC”), the company that was servicing the loan. GMAC, the servicer, was named as a defendant. In a bit of cosmic comeuppance, in May 2012, GMAC filed for Chapter 11 bankruptcy protection. [Apparently, defaulting is OK if you’re a Big Bank, but not if you’re a Bantam Borrower. – PCQ] The plaintiff in the case was the borrower, Rebecca Niday. Mortgage Electronic Registration Systems, Inc. (“MERS”) was also named as a defendant, along with Executive Trustee Services.
The Attorneys. The lawyers on the side of the angels were W. Jeffrey Barnes, who argued the case for Rebecca Niday. With him on the briefs were Elizabeth Lemoine and the Luby Law Firm. David L. Koen and Legal Aid Services of Oregon filed the brief amicus curiae [“friend of the court”] for the Oregon Trial Lawyers Association. Congratulations all!
Factual Background. In August 2006, Ms. Niday obtained a home loan from GreenPoint. She signed a promissory note that obligated her to repay the $236,000 debt. She also signed a trust deed, which, as security for the note to GreenPoint, was recorded in Clackamas County, where her home was located. Continue reading “MERS Smackdown! Niday Analyzed – Part One”
[This post is the second in a two-part discussion of the recent case of James vs. MERS, et. al. The full text of Judge Simon’s decision can be found here. The link to Part One of my analysis can be found here. Besides the sheer joy of (metaphorically) poking my finger in the eyes of the Big Banks, this case is a breath of fresh air for several important reasons: First, it is clearly the first in-depth analysis of the MERS issues unfolding in Oregon’s state and federal courts. This is not to say prior judicial opinions were inadequate in any way – rather, the James’ excellent legal briefing placed before the Court, well-reasoned and cogent arguments showing that the MERS model is a clear violation of Oregon trust deed foreclosure law on several levels. Second, to use a cliche’ – Judge Simon clearly “gets it.” Again, this is not to say others before him did not. In fact, perhaps that is what is remarkable in this decision over the earlier McCoy and Hooker cases – Judges Alley and Panner articulated their discomfort with the how poorly the MERS model served consumers. Judge Simon’s opinion did not reveal anything about his personal comfort or discomfort with the MERS model. Rather, it was a dispassionate, objective, and welcome, dismantling of a house of cards that has survived longer than one might imagine, given the fact that it was never adopted or approved by any local or state governments. The banks did it simply because “they could.” Of course, the reason for the MERS failure is that it was premised upon several reckless assumptions that: (a) It could woo 100% of the lending industry into it’s way of thinking; (b) That no one would notice it was depriving counties of millions of dollars of recording fees; (c) That bank securitizations would go on forever; (d) There could be no such things as a mortgage crisis, a credit crisis, or foreclosure crisis; and (e) That it could out-think, out-talk, and out-maneuver, anyone that got in its way.
So, now that I got that off my chest, let’s review the rest of Judge Simon’s opinion:
Finding: The “Law or Custom Clause” May Not Expand MERS’ Role to That of a Lender.
In the pro-MERS trust deed forms used by the lending industry, they inserted a sort of safety net provision; i.e. one essentially saying that if MERS’ model as a “nominee” or “agent” of the lender somehow fails to comply with local law, that:
“Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender’s successors and assigns) has the right to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to releasing and cancelling this Security Agreement” [Underscore mine. PCQ]
Judge Mosman in the Beyer decision relied upon this “law or custom” clause to bootstrap MERS into the role of the “lender,” thus giving it a “benefit” i.e. the receipt of borrower payments. Once it could be said that MERS receives a “benefit”, it was easy to conclude that MERS was a “beneficiary” under ORS 86.705(2). And once MERS was deemed to be a “beneficiary,” it then had the power reserved to beneficiaries under the OTDA to assign the trust deed to a lender in order to initiate the foreclosure. Surprisingly, Magistrate Stewart, in the James decision, came to the same conclusion. Continue reading “Another MERS Slapdown! The Recent James Case Analyzed (Part Two)”
It has recently been reported that Big Banks must have ‘living wills’ in place by July, 2012. In estate planning circles, a “living will” is a document one creates in the event they should later become incapacitated or incompetent, and are unable to make important decisions for their long term care. More to the point of the article – apparently the FDIC had unanimously voted to require banks with $50 billion or more in assets to prepare and submit these so-called “living wills” to “…ensure comprehensive and coordinated resolution planning for both the insured depository and its holding company and affiliates in the event that an orderly liquidation is required….” This, according to FDIC chairman Martin Gruenberg.
In the case of the Big Banks, the idea here is to avoid a repeat of the Bear Stearns and Lehman Bros. debacles that occurred in 2008, setting off a chain reaction and causing credit to seize up to the point of nearly collapsing our country’s entire financial system. Several weak banks were either absorbed by more stable ones, filed bankruptcy, or taken over by the FDIC. Today, some of the country’s largest banks are still struggling.
I guess the thinking is that some Big Banks are still viewed as “systemically important” – using the currently accepted term – rather than those nasty pejoratives “Too Big To Fail” or “TBTF” [an acronym that could refer to any number of expletives about Big Banks. – PCQ]
I find the use of the term “living will” an interesting choice of words, as it tends to humanize Big Banks – a task of Herculean proportions – even Dr. Frankenstein failed on that count. On the other hand – put yourself in the bankers’ shoes; this whole idea must raise some uncomfortable feelings at the highest executive levels. I mean, how would you feel, if every time you turned around, someone wanted to perform a “stress test” on you – digitally poking around in one orifice or another? And then after performing the tests, the examiner promptly suggests that you might want to make arrangements for the time when you can no longer care for yourself. It’s like facing the Grim Reaper mano a mano. Does the Fed know something the Big Banks can see but refuse to admit? After reading his patients’ charts, does Dr. Bernanke fear the end is near? Does he foresee these symbols of wealth and power now becoming “Zombie Banks”? Mere shells of their former selves, soulless, disembodied creatures, aimlessly lurching across the financial landscape, frightening everyone, as they hemorrhage the last vestiges of their life-sustaining cash reserves – this sounds like a scene out of Thriller. Well, if that’s what’s in store, “Yes!” – By all means, Living Wills are definitely in order!
In an effort to discover what plans some of the Big Banks have made toward drafting their Living Wills, I recruited a trusted associate to see if he might quietly find me a copy of one such document. I am happy to report that the mission was hugely successful and I am now in possession of one of the few known Living Wills that has been drafted for submission to the FDIC this July. What appears below is a redacted copy of the original: Continue reading “‘Living Wills’ For Big Banks?”
Hypocrisy: [c.1200, ipocrisie, from O.Fr. ypocrisie, from L.L. hypocrisis, from Gk. hypokrisis “acting on the stage, pretense,” from hypokrinesthai “play a part, pretend….” Online Etymology Dictionary]
Example: When banks lend money today, they demand absolute transparency of their borrowers. Every “T” must be crossed and “I” dotted. Signatures, income, credit, employment, all must be verified and re-verified to the nth degree. But when banks foreclose their borrowers today, they throw transparency to the wind. Everything becomes opaque. The banks move into the shadows, transferring obligations behind the scenes, employing lackeys to sign their most important foreclosure documents, and using servicers to do their dirty work, all the while whispering “We Care” to beleaguered homeowners, when that is the farthest thing from their mind. – PCQ
Background. On July 23, 2004, Mr. and Mrs. Sharpe borrowed $194,750.00 from their lender, Washington Mutual Bank (“WaMu”). They signed a Promissory Note and Trust Deed. Here’s what these documents said:
- The Note informed them that their lender could transfer it to a third party, which would entitle the new entity to receive the Sharpes’ payments;
- The Trust Deed stated that the Note could be sold without prior notice to them;
- The Trust Deed stated that the “Loan Servicer” [i.e. the entity to whom they were to make all Note payments – PCQ] could change;
- The Servicing Disclosure Statement [a separate lender-created document – PCQ] informed them that WaMu was to initially act as servicer of their loan – but that could change in the future;
On September 16, 2004, WaMu sold the loan to Fannie Mae, although it [WaMu] retained all servicing rights. This means that while Fannie Mae owned the Trust Deed and was the holder of the Note, WaMu acted as the collection agent and was thus earning servicing fees on the Sharpes’ loan even after they had sold it to Fannie Mae. Continue reading “Sharpe vs. Wells Fargo Home Mortgage – A Critical Analysis”
The following Frequently Unanswered Questions have been provided in an effort to better understand Big Banks and their systemic inability to explain, answer, or even address, basic questions that pervade the Oregon foreclosure landscape. Since the they have not offered the slightest explanation to frequently ask questions, I am compelled to do so. If I am wrong, perhaps a Big Bank attorney will let me know. – PCQ
Question: When the Big Banks halted their foreclosures in light of the robo-signing scandal last year, and resumed again this year, what precisely did they do to correct the earlier problems?
Answer: Nothing. In fact, when they rescinded their Notices of Default, the merely recorded the same ones oftentimes with little or nothing changed. Since several months had elapsed, one would think they would at least have updated the information, but normally they did not. Continue reading “Oregon Bank Foreclosures: Frequently Unanswered Questions”
FROM: Personnel Dept.
SUBJECT: Upcoming Holiday Party
We know it’s been a hard year for all of you. Many of our secretaries have developed Carpal Tunnel Syndrome due to the long hours of repetitive robo-signing.
Our paralegals have had to do double-duty, working for one or more attorneys and returning phone calls to unrepresented defendants frantically trying to find out if we’re going to go after them for a deficiency judgment. [We regret that the Firm’s decision to have every lawyer’s phone line permanently set for “DND” has forced this task upon you, but we don’t want our lawyers speaking with the very people they’ve sued in foreclosure – we just can’t afford to lift that veil of anonymity. It’s the same reason executioners wear hoods. We knew you’d understand.]
And our attorneys haven’t had it so easy this year, either. While they are well compensated for their work, they have to go home to their families every night and answer the same question: ‘So, honey, how many families did you foreclose on today?’
So we understand the need to unwind from time to time. It seems like many of you are looking for almost any excuse today to have a party! That’s why, here at Holmes Knott Furr Long, LLC, we take your need for mindless diversion seriously. Accordingly, we have created the following valuable tips on conducting yourselves at our upcoming Holiday Office Party.
- Check your conscience at the door. We don’t want the combination of alcohol and that uniquely human trait known as “guilt,” to ruin everybody else’s fun.
- If you’re going to “talk shop” trying to top each other’s stories of your latest foreclosure exploits, don’t name names. Every once in a while, we learn that one of our attorneys has foreclosed a secretary’s parent or other family member. This can have an immediate dampening effect, and distracts from the humor of the story.
- If you feel the need to impress your spouse or S.O. by taking them out on a “Tour of Homes” that you’ve recently foreclosed, please use a designated driver if you’ve had anything to drink. And for goodness sake, don’t do what [name redacted] did last year. He had far too much Devils Spring Vodka, and started yelling “Serves Ya Right!” in front of the homes.
- And lastly, along with your conscience, please check your cameras and smartphones at the front desk. As you may know, the New York Times ran the following picture taken at a foreclosure mill’s Halloween Party…and that was the end of the firm:
It seems their employees’ love of work spilled over to the evening’s festivities, and some decided to dress up as homeless people who had recently been foreclosed. For more on the story, go to this link.