Foreclosure Mills – Page 2 – Querin Law, LLC | Phil Querin

When we last left this telephone conference in Part One, Damien Faust, chief legal counsel for Belial Bank, was regaling everyone with his brilliance in creating the following legal provision that the Big Banks had quietly inserted into every lender’s trust deed forms:

“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 Instrument.”

Les Guile: “That seems kinda sneaky to me. These are standard forms. The banking industry prints them out for consumers to use so they don’t have to go to an attorney every time they get a loan. Of course the consumers don’t read it – they wouldn’t understand it if they did. But, if I were to paraphrase what this clause really says, it would be something like this:

‘Borrower understands and agrees that in order to make MERS legal under state law, it has the right to do anything the lender can do if necessary to comply with the laws and customs of that state.’

Under that rationale, if the lender also sold jelly beans, MERS could do so as well, if it was necessary to make MERS legal in that state. But this isn’t sophistry – you tried that and failed. It’s downright silly. It’s like the old Roadrunner cartoons where he escapes through a tunnel painted on the side of a mountain. The banking industry stuck a portable hole in its trust deeds that only MERS can escape through.” Continue reading “Judicial or Non-Judicial? Belial Bank Debates How to Foreclose Oregon Homeowners – Part Two”

Once again, the best and brightest minds in the banking, servicing, and title industries are on yet another conference call discussing the latest events in the ever-changing legal landscape of Oregon foreclosures. Although Belial Bank’s President and CEO, B.L.Zebub, believes that the sun, moon, and stars are lining up in their favor, he still has nagging doubts about the best way to foreclose Oregon homeowners. These doubts spring not from the conscience, but the pocketbook. Accordingly, he has convened his trusted cronies to decide whether to foreclose Oregon homeowners judicially or non-judicially. In attendance are B.L., his honest but naïve legal intern, Les Guile; title industry hand-wringer Liz Pendens; and her nemesis, Dee “Take No Prisoners” Faulting, of the default servicing industry; Damian Faust, Belial’s lead counsel and hatchet man; and lastly, the Bank’s chief schemer and PR man, Kenneth Y. Slick III (aka “KY”). B.L.’s loyal secretary, Lucy Furr, has dutifully transcribed this conversation. As in the past, I am prohibited from revealing the source of this purloined post. – PCQ

B.L. Zebub: “Hello all! The last time we held a conference call, it was triage time at the bank. We had been staggered by a couple of Oregon court rulings, McCoy and Hooker, that made us think we’d have to re-foreclose Oregon homeowners all over again – not that they don’t deserve to be foreclosed twice as a good lesson for not making their payments! Ha! But lately, we’ve seen our fortunes change. Damien, why don’t you fill us in on some of the details? Are we finally at the bottom of the 9^th inning yet?”

Damien Faust: “Well, maybe. It’s true, we scored a couple of runs for the home team. These were the Beyer decision and the James decision. The Beyer opinion is a good example of what can happen when borrowers represent themselves; the judge drinks the banks’ Kool Aid that is served up in the form of legal arguments that remain largely unopposed. But who’s complaining?! In this case, the judge actually concluded that MERS was a “beneficiary” under Oregon law because it was entitled to “benefits” – i.e. the right to receive the loan payments under the promissory note. Specifically, he said that “One right of the lender is to receive payment of the obligation, so this clause must grant that right to MERS as well.” The amazing thing is that MERS itself has never argued that. If someone sent MERS a mortgage payment, they would toss it back to them like a hand grenade without the pin.”

Les Guile: “Excuse me, Mr. Faust. I’m not sure I understand. How does the court read into the trust deed a right to receive payments under the promissory note, if MERS itself says it doesn’t accept borrower payments?” Continue reading “Judicial or Non-Judicial? Belial Bank Debates How To Foreclose Oregon Homeowners – Part One”

After several years of toil as a low paid toady for a high-powered foreclosure mill law firm, our intrepid young associate has finally won a case! [Note to the easily convinced: This post is pure satire. The case is real, the ruling is real, MERS is real, but the characters and law firm in the post are purely fictional. If the husband and wife sound like friends of yours, the resemblance is purely coincidental. And why are you hanging around with them, anyway? – PCQ]

Her: “Honey, is that you? I didn’t hear you come in. Usually the door slams, you stomp in, and are cursing under your breath.”

Him: “Come on now, I’m not that bad. Let’s go out to dinner and celebrate!”

Her: “Celebrate what? Did the Firm finally make you a partner? Does this mean you’ll get to boss the newbie associates around, like the partners did to you? Maybe you’ll start making some real money so I can afford to shop at Nordstrom’s instead of Filene’s Basement.” Continue reading “A Good Day At The Foreclosure Mill”

“Oh what a tangled web we weave,
When first we practice to deceive!”

Sir Walter Scott, Marmion, Canto vi. Stanza 17.
Scottish author & novelist (1771 – 1832)

There are two new interesting developments on the foreclosure front in Oregon. But first, here’s a recap of where we’ve been and where we are now:

Background.

The Big Banks tried and failed to conduct illegal non-judicial foreclosures in Oregon. As pointed out in several earlier posts, here, here, and here, they have been routinely ignoring the mandatory recording requirement of ORS 86.735(1).
They got their wrists slapped by Federal Judges, Panner, Alley, and others.
They realized that even when they completed an illegal foreclosure, they likely couldn’t get title and couldn’t evict the homeowner.
As discussed here and here, their lobbyists went to the Oregon legislature, and tried to convince the politicians that real estate commerce would come to a halt, if they weren’t permitted to continue violating the law. [Note to Big Banks: Commerce did come to a halt, but it was back in 2007+ after you’d gone on your securitization binge, lent money to borrowers you knew couldn’t qualify [or didn’t care if they couldn’t], immediately got paid by selling liar loans as securities to pension funds and others who relied upon the agencies you paid for bogus investment grade ratings, and then went through four years of “extend and pretend” modifications that accomplished absolutely nothing to resolve the foreclosure crisis. – PCQ]
The Big Banks next threatened that if they weren’t permitted to violate Oregon’s non-judicial foreclosure law any more, then By Golly, they would just start suing their delinquent borrowers in court, since the mandatory recording requirement only applied to non-judicial foreclosures. Continue reading “Oregon Foreclosures – What Are The Big Banks Up to Now!?”

Arthur M. Schack is a no-nonsense New York judge. Especially when it comes to foreclosure mill attorneys (FMAs) who don’t take him seriously. Here is a recent example:

HSBC Bank USA, N.A., AS INDENTURE TRUSTEE FOR THE REGISTERED NOTEHOLDERS OF RENAISSANCE HOME EQUITY LOAN TRUST 2007-2, Plaintiff, Index No. 9320/09 vs. Ellen N. Taher, et. al., Defendants. (July 1, 2011) The facts of this particular foreclosure case do not need to be summarized in detail. They are all too familiar.

However, by way of background, as we know, the New York courts, like Florida – both judicial foreclosure states – have been inundated with foreclosure filings. But following the robo-signing scandals, including false signatures, false notarizations, and false designations of official capacity that have been detailed throughout the country, the New York courts instituted a rule requiring that FMAs submit a written affirmation certifying that they had taken reasonable steps – including inquiry to their banking and servicing clients – to verify the accuracy of documents filed in support of their residential foreclosures. [See, New York Rules of Professional Conduct (22 NYCRR Part 1200) and 22 NYCRR Part 130.] Oregon has no such certification requirement specifically for foreclosure cases, but it should.

Here are a few factual snippets from the case that so irritated Justice Schack: Continue reading “The Lender Lawyers’ Nightmare – Schack Attack!”

Have Big Banks Become Deer in the Headlights?

“…any assignments of the beneficial interest must be recorded in order for a non-judicial foreclosure to comply with the Oregon Trust Deed Act. The defendant [borrower] presented evidence in Exhibit 104 that by December 4, 2009, and apparently through December 11, 2010, Freddie Mac was the owner of the mortgage and therefore the holder of the beneficial interest in the property. No evidence that this transfer of the beneficial interest was ever recorded was presented by plaintiff [bank], so I am concluding that the recording never occurred.” Honorable Jenefer Stenzel Grant, Circuit Court Judge, Columbia County, Oregon. [Memorandum Opinion, June 23, 2011. Parentheticals mine. PCQ]

Once again, the best and brightest minds in the banking, servicing, and title industries are on yet another conference call, as they continue to hear the distant drumbeat of defeat. In addition, we are joined by Belial’s version of cub reporter Jimmy Olson, honest but naïve, legal intern, Les Guile. The title industry is represented by Liz Pendens, whose has had previous contentious exchanges with Dee Faulting, the feisty representative of the default servicing industry. Damian Faust, Belial’s lead counsel and hatchet man, and its chief schemer and PR man, Kenneth Y. Slick III (aka “K.Y.”) have joined the conversation, as well. Lucy Furr, B.L. Zebub’s loyal secretary, has dutifully transcribed the conversation, presumably scrubbing it for any admissions that might result in a perp walk like Lee Farkas. Regretfully, I cannot reveal how this purloined post has fallen into my hands. – PCQ

B.L. Zebub: “Well gang, it’s certainly been an eventful few months, hasn’t it? Visitors 10, Home Team, zip. I’ve hastily called this phone conference to see if we can’t figure out what’s happening to our industry, and how we can turn things around. I want solid contributions from each of you. No handwringing Liz, and no bickering, Dee. I’m tired of the blame game. Les, if you have a question or two, go ahead and ask. We want to make sure your internship is a memorable one. KY, let’s start with you – and by the way, I enjoyed that “confidential” interview you gave that ended up on the Internet, with not one single redaction. You sounded pretty full of yourself – what were you thinking when you let yourself be interviewed without first having that reporter take a TSA-style enhanced body search by our security team? That hidden tape recorder was your undoing.”

K.Y. Slick: “B.L., believe me, that will never happen again. That “reporter” was the most gorgeous gal I’ve ever seen. She was a perfect ‘10’. I took her at her word when she whispered that I was the most fascinating and mysterious banking exec she’d ever met. Of course, it didn’t help that we’d had a couple of shots of Devil’s Springs Vodka at Lucifer’s Lounge before the interview. Anyway, back to business. My take on this mess, B.L., is that we’re getting pilloried by the press. It seems that whenever there’s a win for the little guy, the press picks it up and splashes it across the front page; but when we are successful in kicking another family out of their home, no one seems to notice. I just don’t get it. My thought is that we should jump-start our PR machine; get them out into the street. Have them follow the U-Haul trailers around town to see if another family has lost their home to a successful foreclosure. Hang out at the courthouses and talk to some of the foreclosure mill attorneys. Find out which cases look promising, and then stand ready near the courtroom when the judge evicts the borrowers from their home. These are human interest stories too – just the other side of the mirror. The press is sure to pick them up. And remember, “Any ink is good ink.” Continue reading “Triage Time At Belial Bank – U.S. Bank vs. Flynn”

“Foreclosure processing delays continue to mask the true face of the foreclosure situation, although there were some clues in the May numbers of what lies behind that mask,” said James J. Saccacio, chief executive officer of RealtyTrac. “First, activity spiked in May for various stages of the foreclosure process in some states, a pattern that has occurred in several states over the past few months. This pattern provides evidence that lenders are somewhat unevenly pushing batches of bad loans through foreclosure as they overhaul their paperwork and documentation procedures and as they determine that some local markets are able to absorb more foreclosure inventory.” [Emphasis mine. – PCQ] Mortgage News Daily, June 15, 2011

Considering its source, the above quote caught my attention. Here, a reliable mortgage industry news release seems to believe that the Big Banks are actually “overhauling” their paperwork and documentation procedures. The inference being, I suppose, that the next round of home foreclosures will finally comply with those pesky state laws governing the recording of mortgage and trust deed assignments. If this is so, ReconTrust apparently never got the memo.

As discussed in an earlier post here, ReconTrust, the wholly owned subsidiary of Bank of America, had previously suspended their foreclosures toward the end of last year. Although no explanation was ever given, most observers believed it was to “re-examine” their procedures and bring them into compliance with local laws. Since the suspension of foreclosures followed Judge Alley’s decision in the McCoy case, the hope was that lenders were going to review processes, locate old trust deed assignments, and record them, before foreclosure.

A more cynical view was that the banking industry was waiting to see what would happen at the Oregon Legislature, where there was a stealth campaign going on by the lender lobby, to persuade politicians to remove the “successive recording” requirement of ORS 86.735(1), which is the foundation of Oregon’s non-judicial trust deed foreclosure law. [Without requiring the recording of successive trust deed assignments, non-judicial foreclosures in Oregon could be conducted by virtually any lender asserting the right to do so. In fact, this has been the case for the past few years; lenders have routinely ignored Oregon’s recording law, before commencing a trust deed foreclosure. As a result, lenders who had never before appeared in the chain of title, could simply assert that they now have the right of foreclosure, based upon an assignment from a bogus MERS “officer.” Judge Alley’s decision was an effort to stop that practice. – PCQ] However, as noted in my earlier post, the lenders’ efforts to avoid Oregon’s foreclosure law and Judge Alley’s ruling, were, in the immortal words of Arch Villain, Snidely Whiplash, “foiled again.” Continue reading “Recon Redux”

Snidely Whiplash, Arch Villain, Rocky & Bullwinkle Cartoon

This post follows on the heels of my discussion of Oregon’s Foreclosure problems, here. At this time, we know two things: (a) The lenders and servicers cannot change our trust deed foreclosure law to accommodate their foreclosure practice; and (b) In fact, they likely don’t have the necessary paperwork to record even if they wanted to comply.

Here are their choices:

Continue to ignore ORS 86.735(1), the successive recording law they sought to repeal, and record only one assignment [which usually issues from a sham corporate officer on behalf of MERS or the originating lender – PCQ]. But even if you’re a Big Bank, it’s pretty hard to ignore two federal judges who have already said that the resulting foreclosure would be invalid. Moreover, as pointed out in my earlier post on the marketability issue, the title companies are now balking at insuring title for the banks’ REO sales if the underlying foreclosure failed to comply with Oregon’s law.
But let’s look at what would happen today if lenders actually continued doing their foreclosures illegally in Oregon? Probably what is going on right now, i.e. a fear that the deeds out from the lenders to good faith buyers who pay fair consideration without knowledge of the problem. [These people are known as “Bona Fide Purchasers” or ”BFPs.” Normally the law gives them great protection. However, it questionable whether BFP protection can trump a void sale. – PCQ] So how will the banks deal with the risk that a couple of years down the road, a former foreclosed borrower might come back and assert ownership to the property due to an invalid foreclosure? Here are some suggestions for the Big Banks to consider: Continue reading “Solutions to the Foreclosure Mess in Oregon”

“While I recognize that plaintiffs have failed to make any payments on the note since September 2009, that failure does not permit defendants to violate Oregon law regulating non-judicial foreclosure. The Oregon Trust Deed Act “represents a well-coordinated statutory scheme to protect grantors from the unauthorized foreclosure and wrongful sale of property, while at the same time providing creditors with a quick and efficient remedy against a defaulting grantor.” Staffordshire Investments, Inc. v. Cal-Western Reconveyance Corp., 209 Or.App. 528, 542, 149 P.3d 150, 157 (2006). In part due to the legislature’s desire ” to protect the grantor against the unauthorized loss of its property,” a party conducting a non-judicial foreclosure must demonstrate strict compliance with the Act. Id. As demonstrated above, the MIN Summary demonstrates the defendants failed to comply with the Oregon Trust Deed Act.” – Honorable Owen M. Panner, Memorandum Order, Ivan Hooker and Katherine Hooker, Plaintiffs v. Northwest Trustee Services, Inc., Bank of America, N.A., Mortgage Electronic Registration System, Inc., Defendants.

It seems things have been ominously quiet since U.S. Bankruptcy Judge Alley’s holding in McCoy. Well, no more. On May 25, 2011, the Honorable Owen M. Panner, U.S. District Court, came to the same conclusion as Judge Alley:

“I agree with Judge Alley that “Oregon law permits foreclosure without the benefit of a judicial proceeding only when interest of the beneficiary is clearly documented in a public record.” In re McCoy, 2011 WL 477820, at *4.”

In the Hooker case, the plaintiff borrowers, sought a judicial declaration – known as a “declaratory judgment” – that Bank of America’s nonjudicial trust deed foreclosure was wrongful, since the bank had failed to record on the Jackson County public records, all successive assignments of the trust deed sought to be foreclosed.

As I have posted on multiple occasions [here, here, here, here, and here], ORS 86.735(1) is pretty clear. It reads in relevant part as follows:

“The trustee may foreclose a trust deed by advertisement and sale in the manner provided in ORS 86.740 (Notice of sale to be given to certain persons) to 86.755 (Sale of property) if: (1) The 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….”

So what would prompt the banks to think that this statute, written long before MERS existed, didn’t mean what it said? Why would they think MERS, that great electronic registry in the sky, would be an adequate and legal substitute for recording on the public record? Since the lenders and their attorneys aren’t confiding in me, I will submit my own theory: First, I suspect back in the early 90’s, when MERS was just a doodle on the back of a bar napkin, it seemed like a good idea. It permitted the Big Banks to pass around their trust deeds like a bottle of bourbon at a frat party. There was no public accountability – just a members-only “registry”, where, in theory, participants would “electronically register” the transfer of their mortgages and trust deeds. In this way, Big Banks could securitize their loans faster, rather than complying with those time consuming and pesky state recording laws. But wait! There’s more! As an added bonus, lenders would save millions of dollars in recording fees! The opportunity seemed too good to pass up – back then. Continue reading “Another MERS Slapdown! The Hooker Case Analyzed”

Regretfully, I cannot disclose how the following transcript fell into my hands. I have guaranteed the complete anonymity of my source, who participated in the surreptitious recording of a recent face-to-face interview with Kenneth Y. Slick, III, chief lobbyist and head of public relations for Belial Bank. Mr. Slick has been affiliated with Belial Bank ever since it was a small local Midwestern bank with three branches. Today, Belial Bank is the largest and most powerful bank in the country, as measured by hubris. Belial Bank has come to metaphorically represent all Big Banks, due to its aggressive foreclosure tactics – some would say “mean-spirited” – and its apparent inability to avoid controversy and litigation. Humility is not – according to Mr. Slick – a recognized banking term. What follows is a redacted transcript of Mr. Slick’s interview, which, due to the ground rules he demanded, was not to be recorded. You will find it revealing. [BTW, there is no Belial Bank. This post is pure satire…except where it’s true. You decide.]- PCQ

Xxxxxxxxx “Mr. Slick, it’s a real honor to….”

Slick: “Just call me ´KY` – all my friends do. I prefer monikers and first names Xxxxxxxxx.”

Xxxxxxxxx (Resuming) “All right, ´KY`. It’s a real honor to be able to speak with you. Your reputation for secrecy and avoiding the public limelight is renowned. So, I’m very pleased you agreed to take time out of your busy schedule to speak with me. To review the ground rules that you and Belial Bank have set, I understand that I’m entitled to ask any question on any topic, but I’m limited to taking only handwritten notes. I am not to record this conversation. I further understand that you and Belial Bank have absolute and final editing rights before anything goes to print.”

Slick: “That’s right Xxxxxxxxx. No recordings. I’ve put my foot in my mouth too many times years ago when I was less disciplined – sort of like Joe Biden today. I’ve come a long way since then, and if there’s one thing I’ve learned, recorded interviews provide less room for obfuscation and denial. They have a way of coming back to bite you. With that being said, be my guest – ask away.” Continue reading “Exclusive Interview with Belial Bank’s Chief Lobbyist and PR Man Ѱ”