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JPMorgan Brings Foreclosure Case In Mortgage In Which It Was Just A Servicer, Court Finds Bank Committed Fraud

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Thu, 09/16/2010 - 17:40 | 586409 swanpoint
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Thu, 09/16/2010 - 18:34 | 586524 themosmitsos
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As someone who's bought countless distressed properties from REOs over the last 15yrs, from before that activity became an infomercial, and who is intimately familiar with this process, I can assure you this not only sets a very important precedent, but that servicers filing on behalf of the true plaintif AND EVEN GOING SO FAR AS TO REFUSE TO DISCLOSE THE TRUE HOLDER OF THE NOTE was standard operating procedure up until this recent crisis and the Obama moratoriums, ESPECIALLY IN FEDERAL COURT.

The first WIDESPREAD instance of a Company doing this was a Company named "ContiMortgage" who was convicted of fraud in multiple states and went bankrupt ~2000. The principals of the Holding Company off-loaded a large part of the book to a new entitity who they created and who is DBA "FairBanks" Corporation [same main list of principals] who has faced a litany of the exact same type of charges from defendants [both Companies engaged in widespread standard accounting fraud of fees and charges PRIOR TO DEFAULT [read mortgage insurance for ex, late fees, and even more ridiculous act like NOT applying excess payments towards principal but instead applying them towards the next month's payment (shit you not), etc], and subsequently denied defendants FUNDAMENTAL due process, consistently fought discovery of the true noteholder, jurisdiction (different principal may mean state instead of federal & vice-versa), severability, etc, as a means of concealement of outright fraud] but my knowledge of what happened to FairBanks concludes ~5/6yrs ago as I stoppped tracking the matter, because Judges effectively throughout the nation wouldn't get into going after the proncipals of the Holding Company [there were no "recongnizable" names as principals at least not to me]. Last I knew the bulk of the matter, against FairBanks [at this point as successor---which they were still denying lol] and as a perpetrator in their own right had been consolidated in New York Federal District Court. These cases WERE THE FIRST NATIONWIDE INSTANCES OF PREDATORY LENDING AND PREDATORY PRACTISES BY LOANHOLDERS, SERVICERS, etc.

This is a BIG DEAL as with the multilayered parcing of the notes a defendant can make a valid argument that there exists no true principal noteholder with which to interact [&/or negotiate--it is IRRELEVANT whether said party would interact in this process. The hiding of who that party is represents a legal problem under severability clauses]. This is an IMPORTANT distinction as one of the many standard practises by servicer plaintiffs [of which ContiMortgage was GROSSLY guilty of, and FairBanks to a lesser extent] is refusing to provide an accurate legally binding payoff letter, which isn't riddled with disclaimers, and also not including, EVER, an full and accurate accounting of all charges. I shit you NOT. You just can't make this stuff up. Of course, all this BEFORE the real estate market tanked [ie upto ~2yrs ago]. Objective being the Banks wanted the properties [ie read equity,as values kept rising, even in the ghettos lol!]. Not sure what's up so much now. Waiting for it to drop another 20/30/40% then I'll get back into it. ;)

Thu, 09/16/2010 - 18:37 | 586574 nmewn
nmewn's picture

I believe a majority of the mortgages held cannot be identified as to who actually is holding the paper. It is a contract. Period.

This is another from a year ago;


Send lawyers, guns & money ;-)


Thu, 09/16/2010 - 18:50 | 586597 themosmitsos
themosmitsos's picture

It may be a contract, but if one can't identify one of the contracted parties, that violates severability while the contract is in good stead, and due process during litigation

I'm not talking about Identifying the "trader" ... I'm talking about identifying, effectively, the owner of the tranches. If the owner [largest %] is international for ex, he can't file in state court in many[most?] jurisdictions. Just one example. Another ex is if the tranches are owned say, 5%x20...then there is NO true holder w/whom to interact. Violates due process. Requires effectively all owners to coalesce & agree on a representative, and no, the servicer does NOT meet this requirement.

Tyler, correct link to Fannie Mae look-up


Thu, 09/16/2010 - 20:18 | 586792 nmewn
nmewn's picture

"It may be a contract, but if one can't identify one of the contracted parties, that violates severability while the contract is in good stead, and due process during litigation."

My thinking as well.

"I'm not talking about Identifying the "trader" ... I'm talking about identifying, effectively, the owner of the tranches."

Understood and agree. The link was meant to cover the issue of interested party's. It would/will be a Gordian Knot to go through.

"Another ex is if the tranches are owned say, 5%x20...then there is NO true holder w/whom to interact."


Thu, 09/16/2010 - 20:31 | 586818 New_Meat
New_Meat's picture

and, the courts will next have to examine standing with respect to the plaintifs' claims.

McNews had a story in like '07 where a FL owner, about to be served, said "prove that they are the owners of the note" and lasted two years.  Before court confusion.

- Ned

(nmewn-another example of Cracka and Yankee agreeing on a) system fubar and b) how do we un-fu the whole mess.  After several adult beverages, well, we forgot our perfect solution ;-) )

Thu, 09/16/2010 - 21:39 | 586932 nmewn
nmewn's picture

Remember the story well.

"another example of Cracka and Yankee agreeing"

See, I knew you'd come around to my way of thinking...LOL.

All my thoughts may not be palatable to everyone...may not quite ready for prime time just yet. But I think you would agree with most...they're old...time tested. Along the lines of de Tocqueville, Jefferson with a more modern spice.

We'll see how it goes after Nov. & a few more beverages ;-)


Fri, 09/17/2010 - 17:07 | 588598 themosmitsos
themosmitsos's picture

Wait a minute! Do I know you, kinda? Was the lawyers, guns & money thing a hint? Because I sent EXACTLY that video to somebody like 10days ago with exactly that quote. Don't worry, not outing you, but are you....you? Or just coincidence?


If at his counsel I should turn aside
Into that ominous tract which, all agree,
the Dark Tower hides. Yet acquiescingly,
did I turn as he pointed: neither pride
Nor hope rekindling at the end descried,
So much as gladness that some end might be.


Fri, 09/17/2010 - 18:50 | 588747 nmewn
nmewn's picture

No it's a coincidence. We're probably around the same age.

Fri, 09/17/2010 - 02:47 | 587284 StychoKiller
StychoKiller's picture

That web page does NOT display correctly with firefox, your Govt FRNs in action, I guess :((

Thu, 09/16/2010 - 19:00 | 586628 Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

More fun: in May, 2 courts found that MERS could not be a titleholder for a mortgage. When they were assigned as such, they broke the chain of ownership. Those people got their homes for free. 

Wanna guess how many properties have MERS's fingerprints on them? Almost 80%.

Thu, 09/16/2010 - 19:47 | 586718 Joe Sichs Pach
Joe Sichs Pach's picture

Can you post links for articles/references to these two parties getting 'their homes for free.'?  

I'm sure many folks would be interested in seeing those for precedent purposes.

Thu, 09/16/2010 - 19:58 | 586745 1fortheroad
1fortheroad's picture

It hit Fox news, I was surprised they aired it.


Thu, 09/16/2010 - 21:32 | 586926 Idiot Savant
Idiot Savant's picture

Until someone provides documentation that the homeowners received their property free and clear, I'm going to politely call bullshit.

Stopping a foreclosure, until proper chain of title is determined, is one thing. Ruling that the chain of title was broken, rendering the property free and clear, is quite another.

Fri, 09/17/2010 - 00:57 | 587021 Village Idiot
Village Idiot's picture

'Stopping a foreclosure, until proper chain of title is determined, is one thing. Ruling that the chain of title was broken, rendering the property free and clear, is quite another."


I'm not commenting on the issue of what's right or wrong here, but...in every foreclosure/short sale case I have been close to, the banks are generally ignorant, especially when they have no representation in the State they are negotiating in.  Also, I have seen banks attempt to negotiate settlements that completely overlook the borrowers legal rights so as to expedite the process of getting the property back.

Recently, I got a call from a buddy who was being asked to facilitate a short sale by his lender, Chase.  Chase, nor his agent, mentioned that my buddy would be giving up his legal right to walk away from the deficiency by allowing the sale to go through. The only way to properly dispose of the debt is for him to allow the foreclosure process to go through, not the short sale!

Long story short, he was less than 24 hours from close of escrow, and, getting stuck with a 120K deficiency bill.  No one gave a shit, and no one had a clue (or maybe they did).

OK, here's the punchline - I was so pissed that, in a classic Fight Club parry, I told him to ask Chase for the original note before the process went any further.  You know, better to read from the original contract.  If Chase can't produce the note, I've suggested that my buddy excuse the oversight...for money.

I'm not advocating that people use this tactic to try and get a free home but, borrwers should certainly use "produce the original note!" if they are feeling pressure from their lender and don't completely understand what their legal rights are.


The banks have no interest in what is best for you - only themselves.









Thu, 09/16/2010 - 20:57 | 586867 Trifecta Man
Trifecta Man's picture

Those excitable boys need a good spanking.

Thu, 09/16/2010 - 21:52 | 586957 wisefool
wisefool's picture

Agreed entirely. Hurst talks about his "color" and JP talks about his rail lines. It is about whether you play AJ off suited without position. "Denim my boy. That is the future."

Fri, 09/17/2010 - 02:52 | 587287 StychoKiller
StychoKiller's picture

"Bad Boys, get Spanked!"



Thu, 09/16/2010 - 20:04 | 586760 Getagrip
Getagrip's picture

This is so true. That's why folks have been able to stay in their homes without paying the mortgage. No one knows who owns the lien... Gotta love the process...  

Fri, 09/17/2010 - 08:06 | 587476 THE 4th Quadrant
THE 4th Quadrant's picture

I think they know who owns what. What JPM and others are trying to do here is to crook the books. Making it appear that FredFan has not foreclosed on too many properties so CNBC can report about the green shoots. You can do whatever you want when you own Madien Lane. Especially, facilitate the peaceful unwinding of assets over time.

Why not just have Madien Lane buy the toxicity from FredFan?

Thu, 09/16/2010 - 21:42 | 586877 Idiot Savant
Idiot Savant's picture

FYI - Fairbanks Capital Holding Corporation changed its name to Select Portfolio Servicing, Inc.

I wouldn't make too big of a deal out of this, it's been going on for years. If (stressed) the defendant has funds to retain counsel, the foreclosure will be invalidated. But it will be re-filed at a later date when all the assignments are in order, and Plaintiff's Original Petition is amended, to reflect the proper note holder. However, 99% of people facing foreclosure can't afford counsel.


Bottom line: there's no free ride and the foreclosure will eventually be validated. There's no double jeopardy in civil actions.

Thu, 09/16/2010 - 22:38 | 587040 wisefool
wisefool's picture

But how can this be mercantiled to the masses? Be'en a male an slept with the right ammount of locals but I never made a play for princess Diana. Lets say the cadre respects me but does not think 'I a threat. Can I buy a house with no money down, not pay, and pass the first five sweeps of the kings law?

Tell me the equation and I will be a professor!

Fri, 09/17/2010 - 16:57 | 588575 themosmitsos
themosmitsos's picture

Thx! As I mentioned, I haven't dollowed up in some time. Funny thing is I've heard of select portfolio, and similar allegations against them! And certainly your point is valid. And under all circumstances the borrower,as a contracted party, is obligated to his end [payment]. But so is the Lender. Courts function under a defacto assumption the lender has always met his obligations simply by providing the loan. ContiMortgage,FairBanks, & Select Portfolio have a pattern of using lender status to defraud the borrower. This materially affects the status and standing of both parties under contract against the lender and in favor of the borrower, especially when the dispute leads to the borrower's default [fu, I'm not paying late fees, or for ex, I have insurance, etc], and even more so once the Lender even under these circumstances refuses any/all attempts at resolution with the borrower. Borrower is then entitled to damages because he's being taken to court fraudulently, but this is precisely what the banks are counting on, that defendants are too stupid and poor to retain counsel and be successfully able to pursue the matter. You sound by your 2-3 sentences like you know all this though--details were for everyone else. ;)

At no point was I ever talking about the borrower getting the property for free,though I know others are [to my astonishment!--had not heard any of that!]

Fri, 09/17/2010 - 00:10 | 587146 RockyRacoon
RockyRacoon's picture

Some eye candy for the real estate aficionados here.

Some more eye candy .

Thu, 09/16/2010 - 18:20 | 586527 nmewn
nmewn's picture

Lower tranchez bitchez...LOL.

You mean you still have a right to face your accuser in court and have a discovery process?

What's this nation coming to ;-)

Thu, 09/16/2010 - 18:36 | 586570 themosmitsos
themosmitsos's picture

Remember, remember the Fifth of November,

The Gunpowder Treason and Plot,

I know of no reason

Why the Gunpowder Treason

Should ever be forgot.


Bitchez ;)

Thu, 09/16/2010 - 18:38 | 586575 nmewn
nmewn's picture


Thu, 09/16/2010 - 18:56 | 586618 Spalding_Smailes
Spalding_Smailes's picture

My ass still hurts from VXX. :-P

Thu, 09/16/2010 - 19:37 | 586705 nmewn
nmewn's picture

I'm still painfully holding both my ass & VXX...LOL.

It's a small position 50 shares. I have found, for myself, that I am a risk taker but not a martyr...holding a trading account keeps me from doing really stupid stuff with the bulk of my money.

The rest is cash, bonds, real estate & metals. Have some PHYS too. Any stock held in IRA's or 401's is the result of withdrawing the principal back to cash and holding what I term "free" dividend paying shares.

VXX is not an investment...it is my speculation, a gamble, that they can't prop it much longer.

Thu, 09/16/2010 - 19:54 | 586736 Spalding_Smailes
Spalding_Smailes's picture

Patience is a virtue ...

I have 250 shares not much this is my dice roll .... My "Black Swan" bet ...

Thu, 09/16/2010 - 20:15 | 586783 Getagrip
Getagrip's picture

I have 1700. Time will tell, but I think there's a little too much happy happy joy joy...

Thu, 09/16/2010 - 20:23 | 586798 Getagrip
Getagrip's picture

The lowest it can go is 10ish. The real risk is not hedging your portfolio if/when something blows up in the next month or so..

Thu, 09/16/2010 - 20:47 | 586848 Thunder Dome
Thunder Dome's picture

Better off shorting XXV than buying VXX.  Being long VXX have to pay for slippage when contracts roll.  If short XXV can benefit from the behind the scenes thievery.

Thu, 09/16/2010 - 20:07 | 586770 Getagrip
Getagrip's picture

Put a shirt on and keep buying. You'll be fine...

Thu, 09/16/2010 - 20:21 | 586794 nmewn
nmewn's picture

LOL...I said martyr not satyr.

Thu, 09/16/2010 - 20:34 | 586822 Spalding_Smailes
Spalding_Smailes's picture

Can u believe I dumped my fucking RIMM to get VXX. I miss 3% the last 3 days then the fucking thing pops 7% after the market closed today. Fuck me ... I only made 4% over 2 weeks prior... Lol'

Thu, 09/16/2010 - 20:42 | 586835 New_Meat
New_Meat's picture

you'll have another chance at a directional RIMM, small bites (sometimes each way) - Ned

Thu, 09/16/2010 - 21:02 | 586875 Dagny Taggart
Dagny Taggart's picture

Don't feel bad, I sold 4000 shares of Ford last week.... bought at $4, sold at $11 and change... still going up at $12+, lost my stomach for long plays.

Thu, 09/16/2010 - 23:05 | 587084 snowball777
snowball777's picture

No worries; you'll smile about it later.

Thu, 09/16/2010 - 22:37 | 587033 Village Idiot
Village Idiot's picture

thanks for the link.

Thu, 09/16/2010 - 22:38 | 587037 Village Idiot
Village Idiot's picture

You are welcome, buddy.  Eloquent posts, btw.  I've been following you.

Thu, 09/16/2010 - 22:48 | 587058 Spalding_Smailes
Spalding_Smailes's picture

Have you seen my rescue hybrid ?

Thu, 09/16/2010 - 22:56 | 587068 Village Idiot
Village Idiot's picture

do you want to hit me with it?

Thu, 09/16/2010 - 23:05 | 587078 Spalding_Smailes
Spalding_Smailes's picture

Just got here on vacation I hid my pills in the shaft ...

Thu, 09/16/2010 - 23:43 | 587087 Village Idiot
Village Idiot's picture

That was rich, lol. 


Edit: unless you are serious - in which case I feel for you.

Double Edit:  Hide it in the 1-iron. They never go for the 1-iron.

Fri, 09/17/2010 - 00:28 | 587173 Spalding_Smailes
Spalding_Smailes's picture

Village how fucked are we with housing, really how bad is it from an insider ...

Is it going to blow soon? The games are done to protect mbs ...?? Or did the whitewash of siv's like citi's 300 billion awhile back get all this cleared up?

Fri, 09/17/2010 - 01:31 | 587210 Village Idiot
Village Idiot's picture

You're talking to a front-line originator and someone who has been lucky enough to have had good timing with RE. MBS and SIV's? I'm not really qualified to give an opinion.  Personal experience tells me that if we just look at the last housing downturn*, 1989-1996, we aren't even close to this party being over. Everyone capitulated back then - no kicking the can.  If they can hold it all together until pricing power returns, good for them.  I don't see it happening.  Securitization was a wonderful thing for RE.  Slow death.


* Southern California

Fri, 09/17/2010 - 11:06 | 587847 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

do you honestly have a 1 iron or can even hit the ball with a 1 iron. you guyz are hilarious.

Fri, 09/17/2010 - 14:56 | 588347 Village Idiot
Village Idiot's picture

That's why they never look in the 1 iron - no one ever uses it.  Old TSA trick.

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