Mortgage Securitization and MERs challenges

I think the foreclosure playing field, as enormously tilted as it still is,  has changed.   My name is Jeff Greenberg, I am, among other things  a  certified forensic mortgage auditor.   This credential is recognized by NAMU, the National Association of Mortgage Underwriters, albeit rubber stamped nontheless we are one of very few mortgage auditors with the only credential available.

I have been for some time opining about RESPA, TILA, ECOA and HOEPA violations, regulation z and the merits of rescission as a method to place pressure on your lender to modify the terms of your mortgage.    At my certification class I met Doug Rian and Beth  Jacobson of PaCE-Professional Compliance Examiners, LLC from Maryland.    Now I have remained, to a significant extent  interested in the spelunkers who crawl down through the  SEC.gov website  pouring through SEC filings to find just how the subprime mortgage lenders are able to sell  a mortgage to a homeowner, transfer it 5 or 10 times until it ends up in a trust with a group of other similarly pooled mortgage assets via a pooling and servicing agreement (PSA),  create a prospectus and get a mortgage backed securities offering  approved at the SEC in such a manner that they can sell off interests in the pool to investors,  and then for those assets in the pool that are non-performing, use a substitute trustee to foreclose on a house, without proper chain of title or without endorsing the note and deed from one owner to the next   and it all be lilly white and legal.     Too many hoops,   Too many hurdles.   Somebody must have done something wrong, something must be running afoul of  federal statutes, somebody is commiting securities fraud.  Someone somewhere is without a doubt.    It plain old fashion stinks to high heaven.

Well, I thing our friends in Easton Maryland have found the treasure room in the spelunking cave.  I was extremely impressed with the knowledge these two homeowner advocates have amassed and were able to eloquently convey to a room full of securitization neophites.

Here’s the skinny.   The secret sauce is located in three places.    The pooling and servicing agreement, the prospectus for the mortgage backed securties offering and the unendorsed note.   You see, in a Mortgage backed, securitized loan purchase the PSA will typically have very specific language regarding endorsements that are required in order to perfect a proper and legal conveyance of the note into the pool.   Typically there will an entire section or article describing exactly how each subsequent owner of the note must convey title to the note or ownership of the note to the next holder of record in order to properly convey such ownership.    Without such proper and legal conveyance of the financial instrument, as with a stock, bond or even check,  the pool of mortgage backed securities has no rights to the note in accordance with IT’S OWN PSA agreement.   Nor does the trust have any ability to convey upon a substitute trustee any rights to foreclose on the note.   Having said that,  beg the obvious question?  How is this  happening every day?

Well, I think we are witnessing the largest de-frauding of the  people of the US and the federal government by Banks,   As these foreclosures are allowing the banks (without having legally documented/perfected their assignments and therefore their foreclosures)  to draw down on TARP and FDIC loss share dollars from our government, placing the future of our Country in certain  economic peril.      Why can’t we just let the investors in these mortgage backed securities eat the shite sandwich?  They were relying upon the securities brokers and broker dealers who underwrote them?    Why should the problem of this huge scandal hurt the ripped-off homeowner instead of the spoiled protected  investor?  Why is wall street more important to save than our entire economy.    I say make the  homeowner borrower whole by giving them their homes at the expense of the mis-lead investors  instead of paying for the losses of these crooked predatory bankers on our future tax revenue.   Just MHO.

Anyways:    Here is a description of what Doug & Beth at PaCE do..  They go well beyond a normal forensic audit because they trace the ownership of your mortgage from the Pool back to the day you signed your loan documents finding chinks in the custody chain.

  Professional Compliance Examiners, LLC

(PaCE)

Forensic Loan Auditing & Compliance

In Real Property Transactions

 (540)-341-1481 (Intake Line)

info@LegalForensicAuditors.com

 What is PaCE?

PaCE is the nation’s only certified forensic loan auditing team examining real property and securitized transactions!

 PaCE meets the needs of today’s homeowners by performing forensic audits that review our clients’ loan documents, loan transactions involving servicing and negotiating, and deficiency and/or foreclosure notice documents. Obtaining a loan from a borrower and negotiating its terms is a fundamental part of buying a home and that is why we review foreclosure as a basic contractual right. Contracts cannot be changed unless all parties to the contract agree. It is not possible to negotiate loan modifications unless all parties in the real property transactions know who the creditor, the secured party, is. Borrowers are as much a party in interest to securitized mortgage loans as investment banks, servicers, aggregators, and trustees because the mortgage is a basic loan transaction between the borrower and the investor.

PaCE believes that homeowners have a right to know who they are dealing with in a loan modification process and who is proceeding with the foreclosure process against them when their request for a loan modification has been denied. PaCEstrives to uncover the true identity and role of each party to the loan modification/foreclosure process. A forensic audit follows the ownership trail of the relevant loan documents and analyzes those documents to assure that a homeowner is not wrongly ousted from his/her home. As forensic auditors, we also examine whether the lender has complied with state and federal regulations.

Although PaCEdoes not provide legal advice, we attend court proceedings as expert auditors and witnesses,and provide expertise to law firms, realtors, and mortgage brokers who aspire to recognize a homeowner’s rights during the foreclosure/loan modification process.

We specialize in the most useful loss mitigation options which include:

-GSE-Based Loan Modifications

- Forensic Loan Auditing & Forensic Securitized Loan Examination

- Foreclosure Prevention

We also provide case analysis in the following areas:

• Securitization Defense

• TILA/RESPA Violations

• Predatory Loans

• Notice Requirements

• Short Sale Pros/Cons

• Credit & Tax Ramifications

• Challenging Status of Secured Creditor

• Mortgage Note Retrieval, Authentication, Indorsements

• Hidden SEC Pooling & Servicing (PSA) Entries

• Trustee Being Individual and/or Out of State

• Collection Rights Defense (FDCPA, FTC)

• MERS involvement (MERS is a registry and NOT a mortgagee)

• Deficiency Balances

• Auction Cease/Notification of Clouded Title Defense

• State-Specific Rules of Lawyers’ Professional Conduct

PaCE is:

 Elizabeth Jacobson is a partner at PaCE. She became a Certified Forensic Loan Auditor in June 2010.Elizabeth graduated with her American Bar Association-approved paralegal degree from Stevenson University (formerly Villa Julie College) and later attended the University of Maryland Baltimore County. Thereafter, she assisted in asbestos litigation research over an eight-year period that resulted in the largest punitive damage awarded by a jury in Maryland. Prior to co-founding PaCE, Elizabeth was also recognized as Wells Fargo’s top-producing national loan officer for nearly 10 years. In that capacity, she developed invaluable skills to help her clients maneuver through the mortgage landscape, and in 2009 penned an article for Harper’s Magazine detailing her experience. Elizabeth now focuses on assisting homeowners in saving their homes from foreclosure, and she has appeared on CNN, NPR, and the BBC for interviews related to her efforts to do so. She served as Foreclosure Prevention Coordinator for Mid-Shore Pro Bono in 2008-2009, and her expertise has been tapped by the United States Department of Justice, Federal Bureau of Investigation, Comptroller of Currency, and the Maryland Department of Labor, Licensing & Regulation. Most recently, Elizabeth appeared in Michael Moore’s documentary Capitalism: A Love Story. Although her efforts to assist homeowners have landed her many accolades, she is most proud of recently being recognized by the U.S. House of Representatives for her service to homeowners in the State of Maryland.

Douglas Rian, M.A., co-founded PaCE and is Elizabeth Jacobson’s partner. Doug became a Certified Forensic Loan Auditor in June 2010.  His background includes academia, public policy and legal/financial analysis consultation. He applies a rigorously analytic approach to uncovering little-known, rarely used defenses in areas of mortgage securitization and mortgage deficiency.  After obtaining a B.A. (cum laude) in English from the University of North Dakota, he earned his M.A. from the University of Chicago during which time he attended its School of Law and worked at its Mandel Legal Aid Clinic.  He later completed investing coursework from The Investment Analysts Society of Chicago, and worked with the Tennessee Supreme Court’s Board of Professional Responsibility while obtaining an ABA-approved paralegal certificate from the Kaplan Institute.  Doug’s research, analysis, teaching, and writing skills have been tapped by state and federal agencies and private-sector companies including the FBI’s Uniform Crime Reporting (UCR) of its Bureau of Justice Statistics, the Minnesota House of Representatives, U.S. Senator Kent Conrad, two Governors and State Attorneys-General, the Minnesota Public Service Commissioner’sPlanning Center Division, IBM, ITT Educational Services, Morningstar, Inc., and the National Association of State Boards of Accountancy (NASBA).  He recently served as Visiting Professor of Law and Politics at Universidad Espiritu Santo in Guayaquil, Ecuador. Doug has acted as a delegate to the National Conference of State Legislatures, and is a member of Pi Sigma Alpha, the International Association of Business Communicators, and the Society of American Business Editors and Writers.