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BofA Reveals Its Fraudclosure RICO Defense Strategy
Today, Bank of America filed its first official response, and exposed how it plans on defending itself, to the recently launched RICO case by the Davis family (Southern Illinois, 10-01303), seeking monetary damages for what they now claim is a fraudulent eviction on the ground that the affidavit was signed by two Robosigners: one Keri Selman and one Melissa Viveros. In its Motion to Dismiss, defendant BofA notes "Plaintiffs assert that these affidavits were “necessarily perjured” because Ms. Selman and Ms. Viveros could not have read the allegations in the complaints, examined all of the documents or exhibits “and still read all of the accompanying documentation to all of the other affidavits [ ] signed the same day." The bulk of BofA's defense is centered around a technicality: it says Plaintiffs do not “seek to reopen or disturb the judgments in [the Foreclosure Action], and instead seek only monetary damages as a result of being prematurely evicted from their houses based on perjured affidavits." The Davises also have some choice words about MERS saying it is “widely reported” that MERS was “poorly conceived and sloppily run.” Having read the motion to dismiss, it does appear that BofA may be able to get off on a series of technicalities on this one, yet that will only enable subsequent RICO suits to emerge using the weaknesses of the Davis case. And the main thing BofA does not defend against is the underlying allegation that fraudulent affidavits were used to evict the Davis family, nor, more importantly, does it present a verifiable case that it does in fact own the underlying mortgage note. As such, once the technicalities are all resolved in the next RICO lawsuit, all the holes presented by BofA's attorneys will be filled, making a technicality-based defense that much more difficult, since if BofA/CFC indeed does not own the mortgage note, there is little it can do to defend itself against an onslaught of comparable legal claims.
Some of the disclosed weaknesses in the Davis case, as presented by BofA's Dismissal Motion:
Because Plaintiffs expressly disclaim any attempt to upset the foreclosure judgments, these judgments are valid and binding on them, regardless of whether the affidavits contained some inaccurate statements. In other words, Plaintiffs fail to plead that the allegedly improper activities of Defendants caused them any harm.
In addition, Plaintiffs plead no facts to support their claim that the result, i.e., a judgment of foreclosure, would have been any different had the alleged inaccuracies in the underlying affidavit been discovered in the state court proceeding. Indeed, Plaintiffs’ issue with the affidavits is that the affiants did not have personal knowledge and the affiants’ titles were misstated, but Plaintiffs take no issue with the facts and figures showing Plaintiffs’ default on their mortgage. Thus, Plaintiffs plead no facts to show they were injured by reason of the allegedly false affidavits, and therefore do not have standing to assert a claim under RICO.
The core of BofA's defense revolves around the following argument:
Plaintiffs plead no facts to support their claim that the result, i.e., a judgment of foreclosure, would have been any different had the alleged inaccuracies in the underlying affidavit been discovered in the state court proceeding. Indeed, Plaintiffs’ issue with the affidavits is that the affiants did not have personal knowledge and the affiants’ titles were misstated, but Plaintiffs take no issue with the facts and figures showing Plaintiffs’ default on their mortgage. Thus, Plaintiffs plead no facts to show they were injured by reason of the allegedly false affidavits, and therefore do not have standing to assert a claim under RICO.
In other words there are two very opposing processes here: on one hand the fact that the mortgage borrowers did not have money (which appears to be undisputed) and that they did in fact stop making payments, yet on the other, is the much more relevant issue of whether BofA did in fact have the right to accelerate and seek a foreclosure judgment. Which it would not if it is, as the defendant claim, not in possession of a mortgage title. Ultimately, affidavit fraud in any dimension, is a merely sideshow to the main issue here, namely that without claim to the actual mortgage, the servicer does not have legal recourse to foreclose in any capacity. And this is the one issue that is glaringly avoided by BofA. To be sure, if Bank of America as successor to Countrywide does in fact have ownership of the note, then the plaintiffs' case is weak. If on the other hand, such a note is not in possession, then the plaintiff should have challenged he vary validity of the foreclosure judgment, which means unwinding a prior state-level decision, and then proceeding with a RICO suit.
Eventually there will materialize a case where BofA is found to be note deficient. And that case will serve as the basis for the required series of steps to backtrack, to set case precedent with the unwinding of a prior foreclosure, and then, if so desired, to seek a RICO case against BofA. We are confident that is only a matter of time. Until then, BofA has decided to hide behind technicalities. This will at best buy the bank a few months, and merely embolden more foreclosure fraud victims to step up and sue the bank.
We will follow this case closely to see if the Judge grants BofA its motion to dismiss. If Judge Jane Magnus-Stinson sides with the plaintiffs, and refuses to dismiss the case, look for BofA stock to plunge by 10% the second it becomes public.
As an aside, footnote 2 on page 4 is very relevant as it seems to reference an interesting case law of "alleged MERS deficiencies":
Despite Plaintiffs’ devotion of a significant portion of their Complaint to discussion of the alleged deficiencies involved with MERS, the MERS system has recently been upheld as a valid recording system. Cervantes v. Countrywide Home Loans, Inc., 2009 U.S. Dist. LEXIS 87997, at *29-34 (D. Ariz. Sept. 23, 2009) (order granting motion to dismiss) (dismissing a claim that the MERS system was fraudulent because plaintiffs failed to plead that the MERS system had any affect on the their obligations under their mortgages or that MERS’ system fraudulently induced consumers to enter into loans); In Re MERS Litig, 2010 U.S. Dist. LEXIS 106345, at *59 (D. Ariz. Sept. 30, 2010) (order granting motion to dismiss) (dismissing plaintiffs’ claim that defendants used MERS to conspire to commit fraud because it was “an attack on the legitimacy of the MERS system itself,” which had already been resolved in Cervantes).
It appears the Cervantes v. Countrywide Home Loan will be used often in future cases where the validity of MERS is questioned. It would be useful if some of our legal readers chime in with their view on just how strong this case is and if it has any chance of being appealed.
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Note Deficient Bitches!!
awaiting the fall of mighty BAC.
We coulda-woulda-shoulda done it right and will, eventually, if given a Mulligan.
They fucking billed hours for that shit?!
Buahahaha.
Please let there be a judge with some moral character who finds the TBTF at fault for concrete reasons. Then a precedent we shall have.
My guess is that most judges aren't too fond of sudden onset heart attack syndrome.
Not to mention these folks have been thoroughly vetted to ensure morality is not an issue.
How do they feel about angry mobs of foreclosed on citizens?
They'll worry about those only after they begin to see them. The vast majority of sheep in this country still haven't woken up to how fully they and their children have been sheared.
Not really... This is a motion to dismiss in a district court. For any kind of precedent to be set the plaintiffs would have to have their case first dismissed at the district court level. Then they can appeal to the appelate court. If the appelate court finds some reasoning why the plaintiff's case should not have been dismissed in the first place (i.e. MERS or the nonpossession of the note) then a precedent is set for other courts within the same district.
Seeing how this case is still in its infancy, it would be at least a few months if not more before the decision and any appeal is finalized and precedent set. AND if BofA doesn't like the appelate court's verdict they can always appeal to the United States Supreme Court. It is an interesting complaint, but a motion to dismiss occurs very early in the legal process. This claim still has a long way to go (possibly years) before any cognizable legal precedent is set
or years. Enuf time for the Tea Party and Obama to serve the sovereign.
"If the appelate court finds some reasoning why the plaintiff's case should not have been dismissed in the first place (i.e. MERS or the nonpossession of the note) then a precedent is set for other courts within the same district." -
The Court of Appeals do NOT retry cases. The only way this goes to an appeal is if a rule of law is being challenged.
You only get one bite at the apple, if you don't bite it the first time, it's gone forever.
Don't count on it... See the Florida "Rocket Docket" Post...
I will be amazed if this case makes it to trial... If it does I will be surprised if it is not overturned on appeal... If this case makes it to the SCOTUS it's "Game Over Man"...
Of course, it can be argued that if the case goes through the court system to the top, it will all be moot because the US may not even be here as we know it now.
SCOTUS has already ruled that the government can confiscate your property and hand it to their developer friends (see Kelo vs. City of New London). SCOTUS will rule that any bank can make a claim against your property for any reason whatsoever. It parallels the previous case and makes perfect sense.
You see, a bank (or government) would never do anything improper. Individuals, on the other hand, are well known to exhibit impropriety. Therefore, in any case of Bank vs. Individual, the bank should and would prevail. It is only fair and just. You know it, your inaction is tacit proof.
Ah, yes, your home is your castle... unless it isn't.
BAC is just despicable. How about a ZH survey if POMO 2.0 will end green tomorrow. Like Chris M. says, it's not the same as before.
They started early. Disney is up AH. Csco to $50 by next Thursday. All aboard...
we did on on accident
can we have our cookie now?
BWAHAHAHAHAHAHAHA!!!!!!!!!
suck it, bitchez!
max keiser is right.....if everyone in america/canada bought just one silver coin next week, it would put JPM out of business! TD can we start a zerohedge movement for this....i have my order in with sprott money for 100 silver coins......
I'm in. In fact, I'll buy 100 (to make up for 99 potential welfare queens who "forget" to buy theirs).
This was a poorly prepared poorly written complaint. The plaintiff's should be ashamed and seriously consider suing their attornies for wasting time and money plus credibility of the RICO v Wall Street Bank. I have never had a formal legal class, but could tell in just reading the reuters article posted about 45 minutes ago that not only would the case be dismissed, but it will be used a precident for dismissing future RICOs. If you are going to RICO then you damn sure need to bring your A game.
Now, just who I wonder, would want a precedent like that????
Could it be, Satan? :-7
Sure, dumbfuck, because people who were recently evicted from their house due to a foreclosure are rolling in fiat to hand over to even more lawyers.
You get the justice system you can afford.
Don't call people names, please. We're all pretty much on the same side here (i.e., we're all being financially raped by a bunch of government sponsored Bernie Madoffs).
You concluded it's a poorly written complaint based on Reuters article? Sue the lawyers who filed? A poorly filed case hurting well pleaded cases? Are you f'ing nuts?
Get in the arena. These plaintiffs are lucky they're in the game....
Regarding those two pro-MERS cases cited, they're from US District Courts, with no precedential value whatsoever. If that's the best MERS case law they can find, then they're in trouble.
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RICO is overkill; plaintiff should keep it simple
No option: without RICO, they most likely can only sue the robosigner herself while BofA plays monkey-no-hear as if they didn't conspire to have their employees do exactly that.
Why not civil conspiracy is a friendly state court?
civil conspiracy, at least in my state, is a surefire way to get a cause of action in front of the jury... it's loosely defined at best... a moving target is hard to strike. This is a cause of action that I like to throw in on bigger cases just as an insurance measure... and to cause the other side additional money fighting... it arguably applies to virtually anything done by two or more people and you don't even have to name all the conspirators as defendants... in need of reform imo, but in its present state, it's a "must include" for these types of suits.
I've been harping on this a lot... but, where are the damages? You got foreclosed on one month sooner than otherwise... OK, here's a cheeseburger. The other problem with nominal damages is that the ceiling on punitives is generally directly limited by the amount of compensable damages... in other words, in general, small compensatory damages, small punitives. Further, with tort reform, there are likely hard caps per defendant on punies... (even though this is patently unconstitutional in many states). Likewise, with tort reform, they may be required to show wanton/willful conduct on the part of the defendants, which may be a difficult sell (might be difficult standard). I suspect this is why the plaintiff's attorney tried to get creative...
That being said, it may not matter. As for the res judicata/collateral estoppel/failure to allege a meritorious defense to the foreclosure claims by BoA, seems to me these fall flat on their face. If you commit a fraud upon the court, then I'm guess in Indiana that the judgment is void ab initio. I'll also make a guess that a plaintiff attempting to set aside a judgment that is void ab initio need not show a meritorious defense... so, it would seem many of these issues BoA is going to not only lose, but laughably lose... practically speaking, if I were the judge, I would let them have it on this issue... you commit a fraud on the court and you get fucked in the ass. (these issues also seem more appropriate for summary judgment).
Jurisdictional preclusions are issues more ripe for motions to dismiss... and at first blush, it would appear that BoA has a good argument... on a cursory inspection of the brief, I'd say this is their best chance at a winner. Not sure how that stacks up with federal statutory claims though... not sure why a federal court wouldn't be the proper venue for violations of federal statutes, presuming the statutes give private causes of action (e.g. HIPAA does not).
Also, not sure why you wouldn't file this in state court... take a small judgment in front of the home court and go on. it gets your client as much money as they are likely to get elsewhere and you can make it up on volume. Hopefully this isn't a case of the plaintiff's attorney getting a big eye and forgetting to hook up the doll (weird science).
I'm guessing the Fed court is a byproduct of the RICO approach.
I hope you're right about the ab initio implications...that would be some sweet fucking irony.
It looks like their lawyer wanted to push for a settlement and went big sooner than was wise; others will learn from his mistakes and have their ducks in a row with respect to challenging the foreclosure and showing damages.
No, the attorney wanted to go for the whole enchilada and get the ridiculous cost money for being the first to file and leading the pack on the class action. S/He should have kept it in state court and gone for nuisance value of setting the judgment aside... I'd say it's worth at least $50k-100k on that alone. Not sure what the value of the property is, but I'd say that's a decent return for the client... which should be the primary consideration. Somtimes that's all you got...
It won't take long for BoA to rack up some pretty big numbers as these start piling up... How much you want to pay me not to set this bitch aside? You can either play ball and suck my client's dream's cock or you can watch the court award me my attorney's fees while the purchaser at the foreclosure sale warms up the complaint and so do all the idiots that invested in his loan. I think $100k sounds like a good round number. I'll even have my client sign a release. If I don't hear anything in the next week, the price of settlement goes to $200k... your call.
Yep, I've seen this play out so many times through the wife's insurance gig with a plaintiff lawyer who'd rather take a percentage of swinging for the fence than improve the chances of settling for something reasonable. They sue for $1M, refuse to settle for $250k, and then walk away with puni damages of $40k.
I'd like to see some people use it as leverage to negotiate cramdowns; you can pay me $100k...or write-down $100k instead of $250k when you have to mark to market in 2013...your choice, Moynihan.
I'll show you damages, if you gimme a jury. The job of a GOP appointed Federal Court judge is to keep corporations away from juries. Motions to dismiss and summary judgment. The two favorites sounds to corporations.
You'll also get that shit set aside... this isn't a jackpot/lottery case... this stuff literally happens every day (currently litigating one on the BFP's side that's likely to go to appeal after we won at trial). The most likely breadth of case law is going to be for issues related to service (which also may possibly render a judgment void) of the foreclosed party... and default thereof. The only time you're going to get a lot of money is when the property has appreciated in value since the foreclosure or was sold far below market value at the time... given the present housing environment, I'm not holding my breath on either. Hell, the plaintiff probably benefitted from having it foreclosed upon prematurely given the property has likely declined in value since then...
A judge in my city setting aside my puni's aside against a scum bank. Not a chance. Venue, baby.
state baby ricos are better if you got em. Don't trust judges appointed by presidents, generally.
venue's going to make or break these plaintiffs.
If the punitives are very large, there will be no incentive for the bank not to appeal... I'm not sure how familiar you are with appellate courts, but often times they can seem rather... unforgiving and even "result oriented." Punitives are also going to be substantially curbed by state tort reform. Here, in arkansas, I'm not even sure punitive damages would be available... you would have to prove that you are entitled to compensatory damages and, further, that you are entitled to punitive damages by clear and convincing evidence (more difficult than preponderance of the evidence), proving that the bank intentionally set out to harm you. Further, punitives are presently capped at $250k or 3x compensatory damages per plaintiff... so, again, this isn't quite the magical homerun it might seem... I'm just throwing a guess here in that your compensatory damages are nominal at best... which will make punies an incredibly difficult sell.
You also have the problem that the fraud (misrepresentation) was not made upon you so much as made upon the court. In other words, the bank did not lie to you when you took out your note/mortgage... the bank lied to the court when it foreclosed on you (most akin to perjury)... I can assure you that it had color of title, at least, to act the way it did... it had an agreement and/or paid value to have the right to foreclose on you. The problem is, it probably got lazy proving it and failed to follow the requisite formalities. So what damages are available to you when the bank lies to the court? It would seem wholly inequitable to rescind your obligation on the note/mortgage for the actions of a servicing bank... especially considering you were likely in default of your obligations...
If you think you can thread the needle and turn it into fraud against you, then have at it. Maybe you get punies, maybe you don't... I'll admit I'd probably take it on contingency, but I would be hesitant to do so and I would take it only because I'm interested in setting positive precedent, if available. I suspect this issue alone will prevent many foreclosed homeowners from pursuing a claim (which is a notch in the pro category for a class action). I would feel much more comfortable with a retainer on these types of cases even though it would cap the upside... I think you have a mediocre case at best... maybe I'm shortchanging your odds, but each of these are going to boil down to the facts particular to each case and there are many things about your case that may decide it that have not been revealed... but, from what I know, in general, I would be very surprised if any remotely large award of punitive damages was upheld after all appeals are taken...
" If you commit a fraud upon the court, then I'm guess in Indiana that the judgment is void ab initio. I'll also make a guess that a plaintiff attempting to set aside a judgment that is void ab initio need not show a meritorious defense..."
I think you're right on both scores:
(1) Taking every factual assertion in the complaint as true, BofA lacked standing to foreclose, and the state court judgment is void.
(2) Void judgments lack any preclusive effect; it's as if the underlying merits in the state court case were never decided.
BofA cites a lot of cases purporting to apply the Rooker-Feldman doctrine to deny plaintiffs trying to attack a state law judgment in federal court. I glanced at a couple of them (Gash and Hukic). Both cases involved a plaintiff attacking the merits of a state court decision; neither one addressed the state court's lack of jurisdiction to decide the matter to begin with.
Why the plaintiffs here didn't seek to disturb the state court judgment (assuming BofA is correct about this), I have no idea.
Worth noting that the void ab initio slam dunk issue is likely only for a default judgment. If the plaintiff made an appearance in the original case and failed to properly pursue discovery etc., he's going to have an uphill battle setting aside the judgment.
I would have filed in state court and settled for the nuisance value of turning over the judgment... not to be an asshole about it, but that's probably all this is... do it enough times and make a solid living and get your clients all they're likely to get anyway.
The BFP and bank will almost certainly have entered into an agreement not to sue to keep up appearances of a unified front...
Even though it may be void, the court would still have to decide what to do with the property... if it gets overturned and the property restored to the plaintiff, then BFP sues bank for any improvements/damages/purchase price... plus I suspect any investors in the packaged BS of the BFP also join in the fun... if not, plaintiff gets nominal damages from bank and almost certainly some attorney's fees + costs. Arguments both ways... just depends on what kind of judge you pull (the kind that is "by the book" or the kind that cannot help but to "split the baby"). Practically speaking, however it's decided at the trial level will likely prevail given the costs of appeal are going to be cost prohibitive.
"Worth noting that the void ab initio slam dunk issue is likely only for a default judgment. If the plaintiff made an appearance in the original case and failed to properly pursue discovery etc., he's going to have an uphill battle setting aside the judgment."
I'm not sure that's correct. Standing and jurisdiction are assessed when the complaint is filed, before the defendant has entered an appearance. If a court lacks jurisdiction over a case, but doesn't dismiss the it, pretty much everything it decides is an advisory opinion and void. Jurisdiction isn't subject to waiver by the parties since it goes to the court's power to decide.
Agree as to the importance of the judge you draw, as a practical matter.
Looking at our Rule 60 of civ. pro. and comparing it to the same federal rule, we're vastly more strict than federal court... and, looking at the annotated cases on grounds to set aside judgment for fraud, it seems as though this issue generally has a lot of precedent. Essentially, extrinsic (upon the court not the party) fraud opens the court's powers to set aside anything, despite our general 90 day limitation to set aside judgments. Obviously this does not mean it has to... but, certainly would provide a solid basis for doing so. In other words, because there is not a default judgment does not preclude the court from setting aside the judgment, so I concede the issue (although, intrinsic fraud is not necessarily a ground for overturning).
However, the court's main purpose is to administer justice... and in a case where overturning the judgment would make difficulty on the BFP and the homeowner was in default at the time, you'll just have to take each case as you get it... and who it gets assigned to... Also could run into limitations if you should have discovered the fraud, etc.... or enough time passes anyway (impossible to put the parties back where they were), e.g. laches.
Of course, this may be like a dog chasing a car... ok, we caught the car (got past the motion to dismiss for failure to state a meritorious defense), now what? Meaning, we still have the issue of damages... (which would be a reason for the court to not set aside the judgment because it would necessarily divest the BFP of the property). Seems to me that compensatory damages would naturally be limited to the change in value (increase) between the time of divestment of ownership until the motion is filed... but, if the property was sold near the time of divestment and the owner given credit for the proceeds of sale or if the property has decreased in value since the time of the sale, then the owner was actually thrown a bone by the foreclosure, seems to me there are little if any compensatory damages... and you'll need compensatory damages before you rustle up much in the way of punies... What I ran into on another case is that post sale, the property appreciated substantially and all the previous owner wanted to do was set aside the judgment... so, really, there is no compensatory damage in this case, you just seek to recoup the property and then you'll automatically be awarded any appreciation... but, I doubt we have that in the case of underwater mortgages... maybe unlawful detainer, etc. will get you some more... but pure economical damages may put a damper on tort claims... maybe statute will have some statutory penalties to collect...
Best bet still seems to me to threaten to overturn the judgment, take a settlement, and let your client use it as a down payment on another house s/he can't afford or use it to set off their deficiency after sale... I'm sure some venue shopped mississippi jury is going to award some idiot $20m in punies on a $100k house, but I'm not holding my breath.
Just picked this up on Huffington Post
http://www.huffingtonpost.com/2010/11/11/matt-taibbi-florida-foreclosure...
read this. man, this country is f'ed up.
http://livinglies.wordpress.com/2010/11/11/pardon-livinglies-obtains-wall-street-playbook-mers-to-be-legitimized-by-act-of-congress/
Dear Deadbeats,
If you miss your payments, we can do whatever we want. We can lie, cheat and fornicate on our legal filings, so long as you can't prove our behavior damaged you anymore than you damaged yourself by being deadbeats.
Signed,
Your Sovereigns.
P.S. You're 9 days late on your 30% interest credit card payment for October and you started fucking your neighbors wife last week. Don't fuck with us.
That was an absolutely fabulous summation of Matt's Rolling Stone article.
Mortgage Electronic Registration Systems, Inc.: A Survey of Cases
Discussing MERS’ Authority to Act
John R. Hooge Lawrence, KS
Laurie Williams Chapter 13 Trustee
Wichita, KS
What follows is a survey of the cases analyzing
the legal authority of Mortgage Electronic
Registration Systems, Inc. (MERS) to act for its……
http://www.ritholtz.com/blog/2010/10/a-survey-of-cases-mers/
it's hard to tell from reading the case what "the case against countrywide is" exactly. having said that the most important aspect is "where's the harm." this is "the big one" in law and it's really big in a RICO suit. RICO suits involve organized crime "and da tiff" so "there's your harm." He's called "a dead guy." It's pretty much impossible to argue before the court that a Bank is organized crime syndacite VIS A VIS THE GOVERNMENT which is what RICO is all about EVER IF IT IS TRUE. Simply put--"argument is severely restricted before a court" and for a prosecuting attorney "you can't just simply call a bank a mafia" even if it is true! As such the defense attorney's have gone "right for the juggular" by asking "where's the harm?" It might sound obvious: "they were foreclosed on." But it's not that easy since "that's a legal process." If it were me I'd focus in on housing discrimination and avoid RICO. The goal would be to "tie the sytem into a massive gordian knot" such that "it could never determine ownership." Since "possession is 9/10 the law" if "i'm living in it, so long as I am there, it's mine." But that's just me.
that why the Congress made it treble damages, to dissuade little future frauds too.
Pretty sure the "CountryWide case" would be this...
http://articles.latimes.com/2010/aug/02/business/la-fi-countrywide-20100803
or this...
http://www.zimbio.com/Future+In+Foreclosure/articles/110/Countrywide+Set...
or maybe Angelo's troubles (beyond carcinoma, obviously)
http://www.sec.gov/news/press/2010/2010-197.htm
Hell, take your pick, they're crooked as Bill Clinton's dick in Thailand.
I am fighting foreclosure right now against Chase Bank on the basis of MERS; we do not have a court date set. However, my attorney has won several MERS battles in other states and notes about these are found at this web site -- scroll down especially for the Oregona case-- here:
http://www.ForeclosureDefenseNationwide.com
Idiots rule
"Plaintiffs assert that these affidavits were “necessarily perjured” because Ms. Selman and Ms. Viveros could not have read the allegations in the complaints, examined all of the documents or exhibits “and still read all of the accompanying documentation to all of the other affidavits [ ] signed the same day."
this sounds like they are making excuses for the burdens that come with being BIG. Funny they are too big to fail and now they are complaining they are too big to do all their paperwork.
I sued BOA to stop a non-judicial foreclosure. Asked for a TRO. BOA appeared. Judge granted the TRO. BOA removed it to federal court. Motion to remand pending.
This all started because I had to miss two payments. When I asked to make a workout arrangement, the BOA drone said that I had to stop making payments to be considered. 10 months later of no payments while trying to make a deal, BOA starts foreclosure.
So it's on.
The nugget in my case is that under local law, a note a trust deed are not a security unless they are sold in pieces. If split into pieces, then they are a security. If offered and sold without a local or federal registration, then it is an unregistered security and cannot be enforced by a party to the contract or anyone who took from a party with knowledge of the facts.
My note was securitized, but the final transfer was made three years after the pool was closed and not in accordance with the registration statement.
Therefore, it is not enforceable by BOA or the pool trustee who purportedly paid for and accepted the late assignment, then tried to start a foreclosure.
The state court judge liked the argument. BOA attorney was apopleptic. TRO granted.
The drama continues.
sweet. that's a good one, seen a few others like it. GL
LOL. Nice one. Good luck with it.
perfect set-up... you have the court's sympathies at the same time you get to stay in your house... best of luck. Can't see you getting out of paying for the house, but I can see the possibility of a nice settlement that can be used to offset those payments and get you back out of default...
most people don't understand that the issue of standing is to be raised as a defense to a foreclosure, not as a sword to get out of their note... basically, you have to wait to fire til you see the whites of their eyes. Hope you get some decent loot out of the deal... not everyone gets a lottery ticket.
I want to point out that some of ZeroHedge's analysis is misfocused:
Even if the servicer does not have standing to foreclose, some entity does (the entity with the last valid assignment on the chain of title).
Someone is going to claim the asset in foreclosure, and whoever does claim that asset arguably holds the asset in constructive trust for whoever paid for that asset, even if the asset was not validly assigned. In other words, there are legal (really equitable) remedies to make sure that we achieve an equitable result.
Not necessarily. Some states and courts aren't going to let someone foreclose on a property to hold in trust for the real owner. This creates a standing issue. You must have standing in order to have a legal claim. So if BA forecloses (acting as a servicer) on behalf of a MBS trust (the note holder) then I believe that most state courts will not rule in favor of foreclosure because BA does not have standing.
I don't think states will let BA hold the property in trust for the MBS trust property owners. Instead, the MBS trust will have to enact the foreclosure on the mortgage in default. This buys the family more time and slows down the whole process. Eventually, it might get worked out but its going to take a long long time.
Bingo.
If worse comes to worse, you name everyone in the chain of title as a party, tell the court you dont know who owns it but someone out of the bunch does, and pray for the court to determine who owns it (you could do this before foreclosure and without naming the homeowner as a party)... practically speaking, the court is not going to look at it and whoever has it last and/or whoever the banks want is going to become the established holder... if the mortgage has been sacrificed in the mayhem, then you should still be able to sue on the note at least... albeit unsecured... and then when judgment isn't paid, foreclose... this is why priority is the big issue and the moratoria only protect the first in priority... those unrecorded/screwed up docs got divested of their priority... doh.
mostly a process for delay, not windfall.
I don't like it. Standing rules dissuade fraud, mischief, and judicial waste (working out constructive trusts later potentially cost taxpayers TWICE the amount of getting it right first. FRAUD: What if the property is owned by the FRB (taxpayers) and they've conspired with a bank to lose the paperwork so the bank shareholder of FRB gets paid TWICE for one property.
There are countless reasons, including tax issues, to get the standing right first.
I'd like to bring up Tyler's question about the Cervantes case. I don't know the specifics of the Cervantes case but I did see that its a ruling from a federal court in Arizona. The case concerns Arizona state property law and for whatever reason, there are a variety of technical possibilities, it was tried in Federal court. As such, the Cervantes case is not binding on courts outside of Arizona.
The Davis court in Indiana, at its discretion, could find that the ruling of the Cervantes court was persuasive and agree with the ruling assuming that Arizona property law and Indiana property law are the same. But, the Davis court is in no way bound to agree with the Cervantes court. The Davis court must apply Indiana property law in their ruling so the Cervantes ruling, because it applies Arizona law, might not have anything to do with the Davis case. The BA lawyers put it in their motion to dismiss to make their argument look stronger. But the court and the lawyers all know that the court can decide however it wishes (unless there is already a precedent in the matter in Indiana and I don't believe there is).
It also doesn't look like the Cervantes case had anything to do with Federal RICO law so the Davis issue about a RICO violation probably won't be affected by Cervantes. Although, the Davis lawyers may have improperly plead the RICO pleadings. Its hard to tell without seeing their complaint.
Cases are rarely dismissed if there is any possibility of a triable issue in federal courts. It appears that the Davis' have at least some type of claim. However, it is possible that their lawyers may have screwed the pooch by not pleading properly (once again, its hard to tell without having their complaint). We'll see. If the case is dismissed the Davis' will be able to re-file the case with a more accurate pleading.
rarely, except for securities class actions you mean!
TD should post the original complaint for anyone to judge the pleadings. All I've seen is a motion to dismiss and that's not worth a bucket of spit. However, the reply brief to the MD would be most helpful. I didn't think anything in the MD was dispositive. In fact, it looked evasive. Whether the fraud would have altered a specific state court decision doesn't seem to defend Rico. RICO was specifically enacted to get the bad guys when you couldn't get them under anything else, state or federal. So, I was a little lost without the complaint or reply.
But - I'm not buying BA's brief. To conclude on ONE brief by ONE side, it would literally have to be a SLAM DUNK (pun intended), but seriously, you know it when you read it. This brief had too many alternatives for a slam dunk.
Agreed. Its tough to tell without the complaint but looked like the MD was beating around the bush.
But wait, when the banks fuck up their first attempt to foreclose, they get another one. And when they fuck that one up, they get another one, and another one, ad infinitum, until either a) the borrower runs out of money to pay his attorney for defense, or b) they manufacture enough documents so a facially correct paper trail seems to exist.
If the Davis case gets dismissed on a series of technicalities, they can keep bringing new actions, right? You know, repairing the case a little bit more very time they get dismissed, right?
No? Well, smack me on the ass and call me a bitch, I could have sworn that's how it works.
Amended complaints are doable but the feds aren't as flexible as the states...
I'd appreciate an opinion from an attorney re: a somewhat different scenario -
I am in the process of refinancing two non owner properties in California. I have a commitment to lend at below market rates and there is an expiration date, so i have to close on time (60 days). As part of the demand for repayment, I believe I am entitled to review the original note and deed (?) to satisfy my concern that I am paying the correct entity.
Assuming I have given my lenders reasonable time (60 days) to produce documents requested, am I in a position to go after them for damages (loss of favorable rates = more expensive long term carrying costs) if they cannot perform in time to meet my expiration?
The more desirable 'end game' for me would be to have my existing lenders meet the terms I have already secured, in the event they can't produce the documents.
Bottom line: If they hold me up because they can't produce, are they on the hook? Thanks for any input.
EDIT: I have posted my thoughts regarding this tactic before, but would really be interested to know if this angle has merit? If so, the strategy could be very useful to those who are in a position to refinance, and offer some pain to the offending banks. Thanks again.
The law imposes a duty on you to mitigate your damages. If you are going to suffer forseeable damages as a result of the lender's breach, then you need to be proactive to avoid the damage... meaning, close and see what happens later. If you discover that there is some issue with title, etc., you should be able to go after the banks. This rule often poses ridiculus situations to people when they're damned if they do, damned if they don't... just be forewarned that you will be second guessed about EVERYTHING, whichever way you choose.
If you want any shot at ensuring they're on the hook, you must notify them of your deadline... get something in writing.
I would strongly discourage you from going into default if you fail to refinance... especially if there is any equity whatsoever in the properties.
Yes, you have a right to determine if you are paying the correct party... this means seeing the assignments/sales tracing back to your original documents. Practically speaking, you may have waived the issue though after payments for years to the "wrong" party... as between you two, you've probably established the issue through payments already... if not having signed that right away in your original note/mortgage.
Also, why are YOU looking at this? You need some type of determination letter/insurance as to the proper party... costs more, but worth the peace of mind... depending on the value of the property of course.
Thanks for the reply, Macho. I am not in a position of default, only looking to improve my rate. I am prepared to make my request in writing and submit it along with my demand. the general idea here - I have a willing and able lender who is prepared to fund my loan. there is a time limit in which to secure financing. If I make the request from my lender and for whatever reason they aren't able to provide me with documentation, as is my legal right, whithin a reasonable period of time, wouldn't they be on the hook?
The tactic being that I have secured financing at terms that cannot be duplicated. If BAC, in this case, can't perform in a reasonable period of time, and I lose my lock, wouldn't they be liable?
Your reply would be greatly appreciated. btw, any variation on this theme is ok with me. And if it's a waste of time, i'm ok with that too.
Does your prospective lender require documentation that only BAC has and that you cannot otherwise obtain? The delay by BAC is going to have to be the cause of your damages (loss of favorable rate). If the prospective lender does not require the documents or, if it does, and you can obtain them in an alternative fashion, then you have nominal damages at best. Seems to me you're in need of statutory damages... i.e. damages that say, "if BAC does not perform X activity by Y time, then Village gets Z amount." Not saying they don't exist, but off-hand I don't have any guestimates and I'm not sure of your jurisdiction.
Also, out of curiosity, why do YOU have to obtain this information? Are you not using a closing agent? Generally, the title company/closing agent handles requests to BAC and makes this information available at closing... so that they can ensure the note is paid and the lien by BAC is extinguished/released.
As far as possible causes of action, I think it would take some creativity and stretching if not expressly prohibited by statute. Maybe a breach of contract: (a) if the express terms of your contract require BAC to produce the documents as you desire or, if not, then (b) through a breach of the duty of "good faith and fair dealing," which is implied in contracts and basically means one party cannot do anything "immoral" or that unreasonably hinders or delays the other party from performing his/her/its contractual obligations or exercising contractual rights... it's not a slam dunk by any means.
The best thing you can do is get some type of affirmative statement by BAC that the documents will be provided by X date... and get it in writing... that may open the door for more causes of action. As it stands, BAC is not privy to any agreement you may have with a prospective lender...
Also, as a practical matter, why would BAC not want to get paid on the note and release the lien? Seems to me that dragging its feet to get paid is counterintuitive...
Sorry for the tardy reply - and I should have been more clear on what I am attempting to do here. I am trying to put a spin on the "show me the note" theme. I want to put BAC in a position where by, if they can't produce the original note, et al, they will be forced to honor a rediculously below market interest rate.
I have a lender who is ready to provide me with a 3% no cost 30 year fixed rate (legitimate private investor). I have a fixed amount of time to close with this lender. If BAC is unable to provide "the documents" that seem to be a problem for them, and they have been given reasonable time, wouldn't they responsible for my loss? I am trying to fu&k with BAC here.
In reading you post, though, I am getting the sense that it's not so black and white.
The basic problem I see with your fact pattern is that your prospective lender and BAC have no privity of contract and BAC does not have to ask how high when your prospective lender says jump. In other words, your prospective lender does not get to control the terms in which BAC complies with any requirement to provide you documents of assignment or agency... presuming they are even required to do so (check your note/mortgage provisions regarding assignment). I realize you are trying to circumvent this issue with the "reasonable time" standard, but that presumes that the time you require for BAC to produce the docs is reasonable... I think reasonability is to be determined by a totality of the circumstances and I think you may be stretching here... BAC would certainly have some excuses for not being able to conjure up the docs in a jiffy... especially if those docs are literally not available.
Here is my problem, BAC's delay has to be the cause of your damage. If you can obtain the documentation on your own or have not otherwise received notice of any other transfer... then you need to pay BAC and go on. If they don't release their lien in a reasonable period of time, or within a statutorily prescribed time, sue.
Seems like to me that if you go to get a title opinion done and they come back and say, this bitch is uninsurable because we have no clue about the chain of title, then you sue. But if they come back with, "pay X", then you're probably barking up the wrong tree.
The issue that acts as your launching pad for a lawsuit is when the bank erroneously/fraudulently files documents with the court. Until then, you're just asking the bank to get its shit together for you specifically. The court is going to ask you why all of a sudden did you get the urge to finally inquire as to the holder of your note? After making all those payments all these years...
Simply put, if you don't get credit for paying off your note, then you sue BAC for fraud and hit a homerun. If you do, but title is uncertain, given the release is from a party not in the recorded chain of title (potentially), then petition the court to quiet title. Get your attorneys fees paid and some nominal damages and enjoy poking BAC with a stick.
I guess my question, in summary, is what would keep you from closing with your investor if you did everything in your power (within your control) to close?
I guess my question, in summary, is what would keep you from closing with your investor if you did everything in your power (within your control) to close?
short of - I didn't get to see my shit, nothing. I see your point. Thanks for taking me through the exercise. I'll let you know if my title company tells me we've got a cloud.
Why aren't the banks being prosecuted for fraud?
This shouldn't be a civil action. It should be a criminal action.
Ah but...
It is criminal fraud. Unfortunately, our executive office and justice department lack the desire to prosecute because the banks are their buddies. Check out the Taibbi article for more examples of massive systemic fraud.
I read it completely before commenting. I'm just staggered to see such mass-produced industrial systematic fraud going on under the apparent blessing of the judiciary and with such blatant disregard for both due process and the public good.
People who push the system and get away with it are going to push it a little further next time, and a little further the time after that. That's the mindset of fraud. Start small. Sometimes starting by accident. Get away with it. Get more daring. Do it again bigger. Bigger. Bigger. Bigger.
The vampires are still sucking the lifeblood out of the system. Failure to take action against them means they think it is their right to keep on sucking. QE is just giving them blood faster. At this rate all the wealth and all the future wealth will be locked in a few hands while they reduce the rest of us (and our children and grandchildren) to a life of serfdom under a kleptocratic system.
What statute are you referring to that imposes criminal liability for the acts? Just curious...
Stupid me! The honest services law got gutted earlier this year.
Surely there must be some statute that applies.
How are they moving forged documentation around? Mail fraud? Wire fraud?
I think the investor action is probably the key. But then the UK banks who bought a lot of this crap got bailed out by the UK taxpayer. Who else bought? Any chance of this happening? Or is it wishful thinking.
Its too easy to apply the "these are deadbeats who deserved it" argument to borrower action. Even though there is blatant perjury and falsification of records.
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