Challenge everything --- monthly statements, letters, delinquency notices, default
notices, sale notices, eviction and unlawful detainer, and even go after the house
you lost and vacated. Write letters and file pleadings. Letters should be certified
return receipt requested. Make reference to THEIR sworn filings with the SEC (10k
annual report etc.). GET A FORENSIC MORTGAGE AUDIT. In California and other
states a sworn pleading must be answered by a sworn pleading from the other
side. This could end the case quickly. Just because you get a sworn affidavit
doesn’t mean the person who signed it knows anything or any part of the trail of
loan origination and securitization of your loan. Ask questions.
PRELIMINARY CHECKLIST FOR FORECLOSURE DEFENSE AND OFFENSE:
We also have numerous possible stages at which a borrower can ﬁnd him/herself
1. Loan not in default but TILA claims can still be made.
2. Loan approaching default.
3. Loan in default
4. Foreclosure suit ﬁled or sale date published
5. Judgment entered
6. Sale occurred to either third party or the lender. I have advised people to go to the
sale and inform all potential bidders that the matter is in dispute which usually stops
anyone from bidding.
7. Notice to Vacate
8. Eviction notice from Sheriff
9. Evicted --- but TILA claims survive for (a) recovery of money and (b) possibly
recovery of house from lender
Origination of loan:
1. REAL BANK THAT GIVES MORTGAGE AND HOLDS NOTE THEMSELVES. Direct
relationship between the lender and borrower and it is not sold, migrated or otherwise
transferred in any manner shape or form. Borrower gave honest information, tax returns
etc. My guess is that the only claim here would be fraudulent appraisal but even that is
weak because the bank is actually at risk.
2. Mortgage broker steering borrower to worst deal for highest fees. Inﬂated income and
appraisals submitted. Lender is selling off or has entered agreements to provide
"inventory" to mortgage aggregators who will sell the aggregated loan portfolio to
investment bank who in turn will sell "derivative" securities (CMO - collateralized
Mortgage Obligations or CDO --- Collateralized Debt Obligations) to investors who are
defrauded by representations from the lender, appraiser, mortgage aggregator,
investment bank, and intermediate sellers of securities. Bank is NOT in any relationship
with borrower but that is not disclosed. Bank has no risk or interest in whether borrower
pays on loan or not.
3. MOST COMMON: A "bank" that is actually a front for one of the major players. In
actuality the bank is a mortgage broker steering customers to worst loans for highest
4. While the "lender" takes the position that they were defrauded by the borrower, the
mortgage broker and the appraiser, the truth is that they intentionally defrauded
themselves by setting up the structure and giving themselves the position of "plausible
deniability." Their intent was to create a plausible record for the mortgages and notes
they were selling to mortgage aggregators and investment bankers.
Types of Loans:
1. Fixed rate 30 year mortgage fully amortized.
2. Fixed rate 30 year mortgage amortized but partially negative --- i.e. the borrower is
paying less than the full payment and the balance owed on the note is going up.
Possible TILA violation.
3. Fixed rate mortgage interest only, negative amortization. Clear TILA violations in
4. Adjustable rate mortgage fully amortized. First adjustment after teaser rate in 1, 3, 6,
12 or more months. Borrower "qualiﬁes" for mortgage because income ﬁgures support
paying the teaser rate. At the ﬁrst or second adjustment however, they no longer qualify
and the lender knows it by deﬁnition. TILA violation, fraud, etc.
5. Adjustable rate interest only, negative amortization --- OPTION ARMS, TEASER
6. Multiple mortgages and notes for multiple properties for speculators --- usually
involves falsifying information that buyer is going to use the house as primary residence,
falsifying income and falsifying appraised values. TILA, fraud etc.
7. APPRAISAL FRAUD: Everyone at the closing and hidden behind curtains that
you didn’t even know were there had a vested interest in you signing the
papers --- to justify their sale and collection of funds from investors. Because
of the volume of money generated by sales to “qualified” (big) investors, and
because of the need to keep appearances of an upward, active market,
appraisals were vastly inflated beyond the real value of the property.
• As early as 2005 honest appraisers signed a petition to require that all
appraisers follow industry standards because the honest appraisers weren’t
getting any business.
• The difference between the inflated appraisal (made as instructed and paid for
by the “lender” who really was standing in for the true source of funds) and the
real market value was on average about 25% of the appraised value.
• Thus, a house appraised at $300,000 was really worth $225,000 at most. In many
cases the figure was 40% and so our example would be a true fair market value
• This excess accounted for the entire down payment of most buyers and a
substantial portion of the debt they acquired when they signed the loan papers.
In our example, the borrower/buyer might have suffered a loss of $120,000.
• Adding this cost to the points, interest (APR) the violations of all federal and
state laws multiply exponentially.
• Principally, it raises the specter of usury, which makes the loan voidable or
void, and provides a basis for recovery of attorney fees, and might allow for
treble or punitive damages.
Authority and ownership of loans --- Legal Standing and Jurisdiction
1. Originating lender still servicing the loan, holds note and mortgage. No assignment,
sale or other fancy ﬁnancial tricks.
2. Originating lender is actually mortgage broker, loan migrates to senior lending
institution, to mortgage aggregator to investment banker to seller of securities to
3. Trustee in non-judicial sale states posts notice of sale based upon information from a
source that (a) does not service the loan and therefore does not know if the borrower is
in default or not and/or (b) does not own the mortgage or cannot prove that it owns the
mortgage and/or (c) does not own the note or cannot prove that it owns the note. IN
most cases an investor owns the mortgage and note and the people involved in the
foreclosure don't have a clue as to which bundle of mortgages went into which bundle of
securities and how many investors bought into that bundle of sec urities, and there are
no proper assignment documents that were designed much less signed in anticipation
of being able to establish legal standing in sale, foreclosure or eviction.
4.Originating lender ﬁles foreclosure or posts notice of sale and does not have servicing
rights, ownership of mortgage or ownership of note.
1.DOCUMENTS AT AND BEFORE CLOSING
2.TILA COMPLIANCE AUDIT AND OTHER LEVELS
3.FULL FORENSIC AUDIT --- POSSIBLY NEEDED FOR LITIGATION ONLY
1.Federal Claim for TILA, Respa, RICO, fraud, USURY etc.
2.QUIET TITLE AGAINST NOMINAL LENDER, ALL OTHER KNOWN PARTIES WHO
MIGHT CLAIM INTEREST IN MORTGAGE OR NOTE AND ALL UNKNOWN (JOHN
DOES 1-100) PARTIES WHO MIGHT CLAIM AN INTEREST IN MORTGAGE OR
2. Memorandum of Law in support of complaint.
3. State Court claim for Fraud
4. State court action for stay of sale, eviction etc.
5. Emergency Petition for temporary Injunctions - State and Federal Courts and
memorandums in support thereof.
6. Motion to expedite discovery.
8. Requests for admission
9. Request to Produce
10 Notice of deposition duces tecum
11. Adversary proceeding in Bankruptpcy Court - BE CAREFUL ABOUT WHAT YOU
PUT ON SCHEDULES.
12 Memorandum and pleading in opposition to Motion for lifting stay
13. Demand letter to Originating lender -- for documents tracing where the mortgage
went and for refunds and damages, enclosing TILA audit.
14 Rescission letter
15. Form retainer agreement for audit an checklist for retaining auditor
16. Form retainer agreement for attorney and checklist for retaining attorney