One of my friends is in the middle of foreclosure and got an advertisement from these guys.
It looks fishy to me.
Is this some kind of scam business model?
Is theirs a common business model?
Their ad copy read:
“ARE YOU STUGGLING TO MAKE YOUR MORTGAGE PAYMENT? ARE YOU FACING FORECLOSURE? IF YOU ARE PREPARED TO FIGHT TO SAVE YOUR HOME, YOU CAN TAKE YOUR PROPERTY BACK FREE AND CLEAR WITH 4 EASY STEPS!
There is an unprecedented amount of people losing their homes across America. You don’t have to be one! For years banks and wall street have perpetrated a fraud on US citizens and tax payers and recently they were caught with their hand in the cookie jar. No money down, 125% loan to value, adjustable rates were just a few ways they lured people in and when the loans failed (and they new the would) they turned to the government for the largest bailout in history. Next they started phase 2, after being “rescued” by the tax payers, its now time to foreclose on millions of Americans only to sell the properties for more obscene profits. Yep they just got paid again. To make matters worst, they feel they have the right to change the laws and rules as they proceed. Click here to watch what CBS 60 minutes recently uncovered.”
I can’t say for certain, but neither the ad copy nor the website design inspires any confidence in the legitimacy or effectiveness of their enterprise.
Okay.
Spoke to them via conference call.
What I’ll write below are my memory of what they said. I have independently verified nothing.
Looks like they have a legal strategy that involves demanding the original signature from the bank, then disputing the validity of the promissory note and/or mortgage with the courts if the bank is unable to provide the original signature in person.
The tail end of the process seems to involve filing a quiet title.
A number of clients are claimed, and due to the business’ oldest client being only 6 months into the process, and bank lawyers being big fans of continuances, no actual cases have concluded.
So the owner (who is in default) is essentially arguing that he can’t be foreclosed upon because it was never his house (that he’s been living in for ten years) in the first place?
What happens when the bank is able to provide the signature?
I can’t speak for the proprietor, but when asked by myself for percentages and hard stats, he mentioned that in no cases thus far, current numbered at less than 100, has the bank been able to provide the signature.
He also mentioned that this process has worked in the past for persons who began it in prior to his operations beginning.
Once, again I’m not vouching for the veracity of anything I heard, one way or the other.
This brings back a very vague memory of stuff like this being reported in the news. It was something like a situation where a mortgage had been transferred from one bank to another over and over, and the homeowner challenged them to prove that they actually had a right to be charging him. The paperwork had been misplaced amongst all the changes, and the homeowner won the case. Something like that. As I say, it’s vague.
Still, at best, this will work only in some percentage of cases where the mortgage holder can’t produce the documentation. The promises being made are waaaaay overblown. Not to mention horribly misspelled.
The premise of their business model is certainly one that had a lot of people talking around this time last year. The basic idea is that the infamous credit default swaps that brought down the market in '08 were, essentially, a vast shell game in which the banks sold the mortgages to Wall Street firms, and the Wall Street firms repackaged them and shifted them between buyers ad nauseam. If, in this vast shell game, the owner of your specific loan cannot be located, then the bank’s statement that you actually owe the money can be called into question. Add to the fact that MERS, the centralized agency that the banks used to register the mortgage sales, was operating with all the exclusivity and attention to detail of the Universal Life Church and you’ve got yourself a massive clusterfuffle.
That’s the basic idea, anyhow. My perception of the situation is that most, if not all, of the actions that have been brought against the banks using these ideas have not in fact been concluded. So it’s essentially an untested legal strategy, albeit one that’s not been summarily laughed out of court.
A couple of nice compendia on the situation can be found on Metafilter, here and here.
The other issue is that in many states, technically the bank or whoever is foreclosing must produce the actual paper, signed by the customer, agreeing to the mortgage. The theory is that with all the mortgage swaps, bank closures and takeovers, etc. not only is actual ownership of the mortgage rights often lost but often the paper itself too.
The party foreclosing must show the paper trail that shows they are the ones currently owning the mortgage, unless it was originally signed with them. Some states require each transfer from place to place to be documented by both parties. If Bank of Podunk just closed out shop and dumped a mountain of file boxes on the bankruptcy trustee or bank who bought them out (and laid off the people who knew what was where) Then good luck finding the document and ensuring change of ownership was registered.
An article about this I read a few years ago also mentioned that many banks had shredded these documents. with the collusion of compliant judges and courts, they worked under the assumption that simple registrations and a well-paid lawyer meant the judge would not enforce the letter of the law. A few judges began ruling against them…
The home-owner OWNS his home. A bank simply owns (allegedly) a mortgage, a piece of paper that says “if you don’t pay your debt, I can take ownership of the property.” If the bank cannot prove it holds the mortgage, the house belongs to the owner.
Of course, I assume a lot of people are not lucky enough to have a house that falls into these convenient circumstances of Bermuda Triangle paperwork. The bank produces the signed mortgage. You or your lawyer starts to play games, questioning a valid signature. I suspect a lot of judges won’t stand for someone being a goof… but if stalling buys you a few months or more of free living, and you’re going to lose your home anyway - as long as you don’t end up in jail for contempt or resisting eviction, who cares?
Apparently MERS was involved in the record-keeping of this mortgage. If I believe the WHMN folks, MERS routinely scanned and then shredded the original papers.
That being said, I can’t imagine that a few million mortgages are void just because judges don’t like photocopied signatures.
Whether the banks are any wiser now I will leave open to debate, but I would expect that not too many parties would be interested in buying your mortgage from your bank these days.
This was part of what was in the article I read. They assumed that an electronic copy was sufficient, whereas some enterprising lawyers argued that the law states the ORIGINAL signed document must be presented to the court as proof of the mortgage obligation. Apparently when some lawyers began arguing this, the response was along the lines of “we’re a big bank. You should take our word that this is a real mortgage”. Some judges started to not buy this line.
It all depends on the law which may vary from state to state. If the law demands the original document to foreclose, then yes, the bank is toast. If the law simply requires reasonable proof of an explicit contract on the the mortgage, then a scanned copy should be sufficient. IIRC the article I read mentioned Florida and Ohio. YMMV.
So if the letter of the law is to be believed, some banks are stupid and some mortgage bonds have absolutely no validity - a billion-dollar shredding fiasco. I wonder which clever person designed the procedure to scan and shred?
If this starts to become a problem for the banks, why wouldn’t they just start to, you know, make sure everyone always has the requisite paperwork to hand? It seems easy enough to figure out what is needed and then produce it, so it can be presented to the courts and end this nonsense about people not having to fulfil their obligations. It might have the odor of illegality to it, but, then, so does attempting to wriggle your way free of your responsibilities.
That, or just change the laws about the records required.
For clarity, some of these banks’ agents appear to have intentionally destroyed the paperwork they needed, based on their belief that photocopies are enough.
I’m sure that if they haven’t already stopped doing that, they’ll stop doing it shortly.
This is happening to my brother in law right now, but in his case it’s the bank claiming they never got paid, and his holding canceled checks that prove he paid someone. The bank hasn’t been able to provide the paperwork that shows the mortgage was tranfered from A to B to C while my BIL was still paying A. And it’s not a matter of being able to provide “originals” materials, it’s an issue of there not being a clear record of transfer.
But - and I want to emphasize this strongly - MY BROTHER IN LAW IS WORKING WITH AN ACTUAL ATTORNEY AND HAS A TRAIL OF PAPER TO SUPPORT HIS SIDE OF THE STORY. He is not risking his house and possible bankruptcy trusting a badly written website!
kunilou,
That is one of the weirdest parts about the website. They do a healthy amount of work themselves, but then they actually send you to a lawyer towards the end phase.
They don’t seem to mention using a lawyer on the site. It seems that would add credibility.
If you click the “Our Service” link at the top, it reads like all they do is help you send the paperwork to request the original note. Then, I assume if they can’t produce the note, you lawyer up and go to court.
You can rebuilt your own engine, or build your own house, if you know what you are doing.
Similarly, if you know what you are doing you can represent yourself. However, when it comes down to risking your house and probably hundreds of thousands already invested, it’s probably a good idea to pay a professional who knows their stuff. Yes, use a lawyer if you have legal issues.
The web site sounds like one of those things where they charge you money to tell you the obvious.
I suppose that’s another aspect of the mess, too - that not only does the bank system lose track of the necessary documents, and fail to do the proper transfer of ownerships, but they also lose track of who is paying, has paid, and supposed to pay and to whom.