Foreclosure Fraud 101 – How (not) to Fraudclose on a Default When There is No Default in Order to Steal $$$ from the Govt (FDIC)

4closureFraud's picture

Foreclosure Fraud 101 - Fraudclosing on a Default When There is No Default in Order to Steal Money from the Government (FDIC)

This little gem comes over from Mark Stopa...

Take a look at this Final Judgment, where a borrower prevailed over BB&T at trial. Yes, the bank was sleazier than the skuz on the bottom of my shoes, declaring this borrower in default when there was no default. But take a close look at WHY the bank did so. As the Final Judgment reflects, the bank was financially motivated to declare a default because it knew the government was going to pay the mortgage in the event of default.

As if that’s not disgusting enough, what makes it even worse was that BB&T did not even loan the money – a prior bank did. Yet as a result of a deal with the FDIC, BB&T was in the position of pocketing millions of dollars from our government merely by declaring this borrower in default. This should piss off everybody in America – a bank that didn’t loan money wrongly declares a default so it can collect millions from our government. Where is the outrage?

Don’t believe me? Don’t take my word for it – read the findings of Judge Levens in this Final Judgment.

From the judgment...

The evidence adduced at trial and considered by the court demonstrated that Plaintiff breached it duties of good faith and fair dealing in its contractual relationship with Defendants. The evidence also demonstrated that Plaintiff was motivated to behave in such as manner as a direct result of the PSA; that is, Plaintiff stood to profit by declaring a fraudulent default under the subject loan, collecting from the FDIC under the PSA for such default, and then enforcing the subject loan against Defendants, and retaining the property until such time as a real estate turnaround occurred in hopes to dispose of the property at the peak of the market. In fact, Mr. Bruni testified that Plaintiff may have already applied to the FDIC for a loss share payment on this loan. And Defendants’ expert, Jim Howard, explained that it was possible Plaintiff could have already applied for and received a payment from the FDIC on this loan, perhaps in an amount as high as $1,800,000.00. Notably, Plaintiff nowhere credited such potential payment from the FDIC against the amounts sought in the instant litigation; thereby giving the impression that Plaintiff might be "double dipping", and possibly “triple dipping” if market conditions favorably change and the property likewise increases in value.


The evidence was clear that there was a long and unblemished record of good faith timely monthly payments by Defendants. The evidence is also clear that, both on legal and equitable grounds, a bona fide default never occurred, and the resulting loan acceleration and lawsuit were improvidently initiated by Plaintiff for purposes of trying to maximize collection simultaneously from the future sale of the property after favorable stabilization occurred. The evidence is clear that Plaintiff committed significant wrongdoing and breached the implied duty of good faith and fair dealing of a financial institution, such that the instant cause of action should be denied in its entirety.

Sounds like the plaintiff committed much more than "significant wrongdoing" but I guess when you're the bank it isn't a crime.

Now do you understand why there are so many "DEADBEATS" that do not pay their bills?

Copy of the judgment below...

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zhandax's picture

I am still outraged after reading the judgement.  It sounds like the FDIC payment is netted against the principal amount of the mortgage and the borrower will end up with an free (or greatly discounted) property, courtesy of you and I.  FDIC is simply out the moneys paid, if payment has already been made.  I probably shouldn't speed-read judgements, but does this sound like what happened to anyone else?

Westcoastliberal's picture

Zhandax, don't fall victim to "free house" syndrome, that malady imposed upon us by the big banks that supposes whenever a homeowner prevails in a foreclosure action he/she somehow receives a "windfall".

Suppose you're that homeowner, unjustly and unrightfully foreclosed upon by the bank, who now lays awake nights wondering if they'll have to move, change their kids schools, find a new place to live, etc.  And being forced to find and retain legal counsel, which isn't easy because lawyers gravitate to where the real money is (i.e. banks).

So you're forced into this charade with who knows how much grief, suffering, and cash a fair world you SHOULD get the property FREE AND CLEAR and the bankster SHOULD be doing time and hit with a huge fine, or barred from doing business in the industry.

I hope this clears things up for you.

zhandax's picture

I am not talking about what is 'fair' to the borrower; I am talking about what if fair to the taxpayer as I am one.  I just can't translate this clause any other way than any FDIC moneys received by the lender are to be netted against the principal, and borrower and lender calculate a new payment schedule based on the new (greatly reduced if we are talking $1.8mm) principal balance.  I can understand FDIC not caring to be a party to this case since they have already spent someone else' money.  It just seems that the judge in this case should have some concern for the source of his income, the taxpayer, who has an implicit interest in this case.  I suppose with a handle like Westcoastliberal, I shouldn't expect you to realize that the government doesn't have any money other than what they can steal or borrow (steal from the grandkids).

It is further ORDERED AND ADJUDGED that Plaintiff shall, within thirty (30) days of
the entry of this Final Judgment, credit the principal of the Note with all payments received by
Plaintiff from the FDIC concerning this loan per Mr. Bmni's and Mr. Howard's testimony, as
well as with any and all amounts referred to in the immediately preceding paragraph. No
payments shall be due from Defendants until Plaintiff credits all such payments it has received
against the principal, and until the parties concur on the resulting new payment schedule, which
plaintiff agrees to timely create, or until further order of this court.

MachoMan's picture

I made it to the style of the case before being able to answer your question...  considering the FDIC is not a party... 

PS, I think what you're describing would only likely be possible in the actual event of a default...  considering there was no default, I have a hard time believing your reading.

chunga's picture


This shit is getting sickening. Is there any wonder why they're getting away with it (mostly).

Mark P. Harmon, Esq. Once Again Attempts to Violate a Federal Court Order. [again]

neidermeyer's picture

If this gets any more blatant it WILL end in violence. The banks should learn to leave well enough alone , take their ill gotten winnings and continue to collect from the losers that don't understand that the notes are invalid or destroyed and nothing exists but collection rights on debt that is already paid off...

Boxed Merlot's picture

Seems a judge has finally got it.  Now, if only an actual name and face will be put on the perp. 

These are not crimes against humanity, these are criminal acts conducted by specific individuals. 

Knowingly or unknowingly, the person in charge of the business operation is responsible for the conduct of the employees and if unable to properly oversee the activities of subordinates, then the operation is too big, now fail. 

The axe is now laid to the root.  It can't happen soon enough imo.

Dingleberry's picture

See what happens when the banks basically have a CDS against your house???

Northeaster's picture

Nothing to see here:

Business is good, although I doubt King and Co. will adjust their due "compensation" in light of fraud.

juwes's picture

The king is guilty of theft and rape,
and so are his pages.
Courts drown their impotent victims,
and tyranny stages
its final act of control:
"Steal the slave's wages."

Joebloinvestor's picture

No sanctions against the lender/collector.

This shit would stop if a few of these guys were taken from the court in handcuffs.

MachoMan's picture

This shit will stop only when moral hazard is eliminated...  when central planning is removed from the market and actual, real consequences passively police the system...  (at least for a little while, until power is again concentrated and we're practically in the same boat...  thus begging for governmental intervention...  rinse, repeat).

tony bonn's picture

in my personal dealings with bb&t i can confirm that they are pieces of shit and assholes...