In McLean, Virginia, Freddie Mac announced this week:

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March 4 press release:

• Freddie Mac […] announced it is suspending foreclosure sales on mortgages eligible for the Home Affordable Modification Program announced […] as part of the Obama Administration’s Making Home Affordable plan. […] Specifically, Freddie Mac will instruct its servicers not to complete a foreclosure sale on a mortgage eligible for the Home Affordable Modification program unless they completed their effort to contact the borrower and either the borrower did not respond or lacked the capacity or willingness to participate in the Home Affordable Modification program or any other Freddie Mac workout program.

March 6 press release:

• Freddie Mac […] announced the official launch of its new REO Rental Initiative giving qualified tenants and former owners the option to lease their recently foreclosed properties on a month-to-month basis. The REO Rental Initiative will be managed by HomeSteps®, Freddie Mac’s national real estate unit, and implemented through several national property management firms.

• Freddie Mac also announced it will continue to suspend all eviction actions until April 1, 2009 to ensure there is ample time for current occupants to learn about the options available to them under the new initiative.

Go here for the entire March 4 press release: Freddie Mac Stops Foreclosure Sales on Loans Eligible for New Obama Home Affordable Modification Program.

Go here for the entire March 6 press release: Freddie Mac Officially Launches REO Rental Initiative for Tenants Owner-Occupants After Foreclosure (Freddie Mac Continues Suspension of Evictions Through April 1, 2009).

In Brooklyn, New York, the New York Post reports:

• Aquila Rose got a $475,000 mortgage from Fremont Investment & Loan for her Flatbush home in January 2007 and made exactly one payment before defaulting. When Fremont started a foreclosure action on Oct. 15 that year, it seemed like a slam dunk – like Rose would soon be forced from her East 35th Street home.

• But Rose has not been foreclosed upon, according to court papers. Her case in Brooklyn state court is assigned to Justice Arthur M. Schack, one of a growing number of judges in the country creating a new front in the foreclosure epidemic by forcing banks and mortgage-service agents to prove they own the mortgage.

• In Rose’s case, as in most mortgages, the lender, Fremont, sold the loan and, when pressed by Schack, couldn’t prove it owned the mortgage – therefore didn’t have the right to sue.(1) So Schack stopped the proceedings in its tracks.(2)

For the story, see HOW B’KLYN WOMAN KEPT HER HOME.

For Justice Shack’s decision, see Fremont Inv. & Loan v Rose, 2008 NY Slip Op 52409 [21 Misc 3d 1137 (December 2, 2008).

Justice Schack received an “honorable mention” in this recent New York Post article.

Go here for other posts referencing Justice Arthur M. Schack.

(1) According to the story, Fremont claimed, according to court papers, that it sold the loan to GRP Loan. But Schack wanted to know why Fremont and GRP share the same White Plains office. The judge was also curious why the GRP lawyer also represents Fremont in the transfer of ownership – and threatened to sanction the lawyer for an apparent conflict of interest. Schack gave GRP until Feb. 2 to come back to court and prove that it owned the mortgage. They never showed. Meanwhile, Rose continues to live in her house.

Apparently, Fremont and GRP have a similar office-sharing arrangement that Justice Schack uncovered and referred to in another foreclosure action involving a different lender. In his written decision in HSBC Bank USA, N.A. v Charlevagne, 2008 NY Slip Op 51652 [20 Misc 3d 1128]; (August 4, 2008), he found it curious that, according to court documents filed in a number of cases he has presided over, the financial behemoths HSBC Bank USA, N.A., Ocwen Loan Servicing, LLC, Mortgage Electronic Registration Systems, Inc., Deutsche Bank and Goldman Sachs all share the same office space at “the ever popular Suite 100” at 1661 Worthington Road, West Palm Beach, Florida 33409.

(2) For a list of links to over thirty of Justice Schack’s decisions denying foreclosure to foreclosing lenders who lacked standing to initiate the legal action, see Brooklyn Trial Judge Nixes “Rubber Stamp Method” Of Adjudicating Foreclosures; Lenders, Lawyers Lacking Legal Standing To Bring Actions Get Bounced. ThetaMi

In a Federal District Court somewhere in Illinois, The Madison County Record reports:

• A class action lawsuit has been filed against three financial corporations, including banking giant Wachovia, alleging Illinois homebuyers were forced into negative amortization after the banks deceived them when they issued option adjustable rate mortgages. Lead class plaintiffs Michael and Jayme Brunkhorst claim the lenders and brokers that sold them an option ARM mortgage […], touted the minimum payment and downplayed or failed to disclose the negative amortization that could result from making such payments, according to the suit filed Feb. 17 in U.S. District Court.

***

• “Option ARM loans have been called ‘the riskiest and most complicated home loan product ever created‘ and have been termed a ‘neutron bomb’ that will kill all the people but leave the houses standing’ by an economist at the Ford Foundation,” the suit states.

For more, see Home owners file class action against Wachovia over option ARMs.

For other posts on homeowners using state & federal law to try and undo bad mortgage loans, Go Here, Go Here, and Go Here.

(1) Among other remedies, the Brunkhorsts and the putative class are asking the court grant equitable relief to restructure their loans through rate buy downs, principal reduction and conversion into conventional fixed rate loans.

The Associated Press reports:

• Government-controlled mortgage finance companies Fannie Mae and Freddie Mac said Friday they have immediately suspended all foreclosure sales involving occupied single-family and 2-4 unit properties through March 6, to give troubled borrowers more time to work with loan servicers to avoid losing their homes. The move, which doesn’t apply to vacant properties in foreclosure, is ahead of the Obama administration’s roll-out of its national foreclosure prevention and loan modification program.

For more, see Fannie Mae, Freddie Mac again suspend foreclosures.

Recently, FDN has been deluged with a rash of cases where the borrowers were not provided with copies of their executed loan documents following closing and which they were provided with only after repeated demand and after a foreclosure issue arose. A disturbing pattern of conduct is emerging in these cases involving what appears to be the creation of fraudulent or altered loan documents with forged borrower initials and forged borrower signatures.

 In several cases from California and other western states, the “income” page of the loan application has been altered, including such forms as closing the loops on a number “3” so that the borrowers’ income which was put down as $3,000.00 per month was changed to $8,000.00 per month. Another situation has occurred where a number “1” placed in front of the income figure so that for example $4,000.00 per month becomes $14,000.00 per month. The borrower’s initials on these altered pages have been forged, and forged signatures have come up on Prepayment Riders, Adjustable Rate Riders, and Option ARM Riders. In more than one case, the box which the borrower marked on the loan application for “fixed rate” was “whited out”, and the “Adjustable” or “ARM” box was checked. All of these alterations were done post-closing without prior knowledge or consent of the borrower, and in situations where the loan was sold as part of the securitization process.

 As readers are aware from prior postings on this blog and others, the mortgages which were the most attractive (or necessary) for the “lenders” to provide to the aggregators and investment bankers were Option ARMs with prepayment penalties. It has become more than obvious that the lenders and their agents went to any extreme and engaged in any conduct, even illegal and felonious actions, in order to provide the “right” type of loan to the aggregator or investment banker. The innocent borrowers are only learning of this when they are threatened with or sued for foreclosure.

 The arrogance of the lenders and their counsel has also extended to the Courts. In one case in Florida, the foreclosing party (Wells Fargo as the alleged “trustee” for holders of asset-backed bonds) moved for summary judgment claiming that the borrower’s mortgage had been assigned to the foreclosing party. No Assignment had been filed with the Court. When called on this by FDN attorney Jeff Barnes, Esq., the attorneys for the foreclosing party filed an alleged “Assignment” which contained no name or identity of any Assignee, yet the attorney still attempted to proceed with summary judgment! Needless to say, the summary judgment was denied, and the Court was not amused with the conduct of the attorney for the foreclosing party. The borrower has since moved for his own summary judgment which will be heard by the Court in the coming months.

In another case in Massachusetts, the borrower entered into a forbearance agreement with the lender. The agreement called for payments to be made by certain dates. Although the borrower made the payments by the dates required, the lender refused to accept the payments, sent the checks back to an incorrect address, and then claimed a “default”, thus manufacturing a fraudulent basis for instituting a foreclosure. To add insult to injury, the lender also claimed that the payment due date had been changed (which it was not) to further the lender’s intent to fraudulently manufacture an alleged default. The intervention of FDN attorney Jeff Barnes, Esq. stopped the post-foreclosure possession action (which was taking place between New Year’s Eve and the first week of January). The borrower has sued to vacate the foreclosure and restore possession of the property.

Jeff Barnes, Esq.

www.ForeclosureDefenseNationwide.com

E-mail: [email protected]

FDN attorney Jeff Barnes, Esq. has just been successful, with the assistance of local counsel, in halting, at 1:58 p.m. today (January 29, 2009), an eviction order in Washington State which would have, as of 6:00 p.m. this evening, caused four tenants to be literally thrown out into the cold and the street as a result of an eviction order which was procured illegally by the “lender” who wrongfully foreclosed in violation of state statutes. The property owner has also sued the lender for damages and other relief.

[Lender’s name redacted] through its attorneys in Washington, obtained stay relief in the borrower’s bankruptcy proceeding to pursue a foreclosure. Washington, which is a non-judicial “trustee” state, requires that a Notice of Sale be not only recorded but sent to the borrower by certified mail 90 days prior to the date of the sale in order to place the borrower on notice of the lender’s intent to sell the property. The statute provides that if no challenge to the sale is made prior to the sale that the borrower waives any right to challenge the sale.

In blatant and deliberate violation of the Statute and in an apparent attempt to manufacture an alleged “waiver,” [lender name redacted] conducted a “sale” less than 4 days after obtaining stay relief and “sold” the property to itself without ever providing any notice to the borrower. It then sought to evict the tenants of the property incident to the wrongful foreclosure.

Swift and decisive action by FDN attorney Barnes resulted in the Superior Court entering a Temporary Restraining Order today which halted the eviction of the 4 tenants, who include a single mother with a 2 year-old child, a single man with disabilities and two other tenants with difficulties as well.

[Lender’s name redacted] has also recently engaged in fraudulent conduct in another case in Florida. After previously selling a borrower’s mortgage and note to [lender’s name redacted] as of the date of the closing in 2005, [lender’s name redacted] allegedly “assigned” the mortgage to an entity called “Liquidation Properties, Inc.” in 2008. Written confirmation has been obtained that Citimortgage still owns the subject mortgage and thus the “Assignment” filed with the Court by [name redacted] and [name redacted] attorneys (which assignment was drafted by the same attorneys) was per se fraudulent and utilized to fraudulently obtain a foreclosure. The borrower has filed for post-judgment relief and the actions of the offending attorneys are being investigated by regulatory authorities.

Tiffany Goldwater

FDN Professional Assistant

In Baltimore, Maryland, The Maryland Daily Record reports:

• Attorneys for the city of Baltimore and Wells Fargo traded arguments in federal court about the viability of the city’s first-of-its-kind “reverse-redlining” lawsuit against the nation’s biggest consumer bank. The San Francisco-based bank has asked the judge to dismiss the case, in which the city claimed Wells Fargo systematically targeted Baltimore’s black neighborhoods and borrowers for high-rate subprime loans — a practice the city alleged is illegal under the federal Fair Housing Act.

For more, see Attorneys spar in ‘reverse-redlining’ suit against Wells Fargo.

See also, The Baltimore Sun: City says Wells Fargo mortgages were predatory (Bank says complaint doesn’t prove that subprime loans hurt black neighborhoods).

For the lawsuit alleging predatory lending filed by the City of Baltomore, see:

• Mayor and City Council of Baltimore v. Wells Fargo Bank, N.A., et al. (approx 9.74 MB). DiscriminationPredatoryLendingAlpha

Reuters reports:

• Countrywide Financial Corp has agreed to provide an estimated $150 million in mortgage relief and cash assistance for Pennsylvania homeowners to settle a state lawsuit over its lending practices, officials said on Wednesday.

• Countrywide, once the nation’s largest mortgage lender and now part of Bank of America Corp, also agreed to freeze foreclosure proceedings until it determines whether borrowers are eligible to take part in the settlement. […] The settlement would provide them with loan modifications, relocation assistance and foreclosure relief as well as waivers of default or delinquency fees, Pennsylvania Attorney General Tom Corbett said.

Source: Countrywide settles Pa. lawsuit for $150 million.

In Columbus, Ohio, WTTE-TV Channel 28 reports:

• The Ohio Supreme Court says a foreclosure mediation program it launched less than a year ago is now available in all 88 counties. The high court provides step-by-step instructions to common pleas courts around the state to try to reach solutions in foreclosure cases. The local courts gather information from homeowners and lenders to reach a mutual agreement.

• Some courts are using court staff, while others are using contract mediators. Others are using volunteers. Counties began joining the program after it launched in February. Local courts are to submit data to the Supreme Court so that the effectiveness of the county programs can be measured.

Source: Foreclosure mediation available in Ohio counties.

For the Ohio Supreme Court’s “11 Step Program,” see The Foreclosure Mediation Program Model.

In Decatur, Georgia, The Atlanta Journal Constitution reports:

• [C]itigroup and Wells Fargo say [68-year old Zella Mae] Green has failed miserably as a homeowner and is nine years behind on her payments. And they want to take the house. “Nine years? There ain’t no way,” Green said. “Ain’t no way you can stay someplace for nine years without paying anything.”

• Determining whether a homeowner is truly years behind on a mortgage seems like a straightforward question. But Green and a string of lenders have been arguing about the matter in court for years now — with no resolution in sight. Her lawyer says the lenders have not even proven who owns the mortgage, let alone established how much Green owes.

• Green’s case illustrates the complexities of the modern mortgage market and just how difficult it can be to unwind the history of a mortgage. Most mortgages are originated by one lender, then sold — often repeatedly — to other lenders or groups of investors. Other companies are often brought in to process payments and manage escrow accounts.

•  “I’m just trying to find out two things: What Ms. Green’s proper loan balance is and who she owes it to,” [her bankruptcy attorney Howard Rothbloom] said. So far, who owns the mortgage has not been resolved.

• A lender proves ownership of a mortgage by producing the “promissory note,” the document signed at closing in which the borrower agrees to the debt. The note is valuable and can be bought and sold by lenders. But like a personal check, it is only valuable in its original form. Green’s lenders have admitted in court documents they can’t find her note. Legal experts say that’s a big deal.

• “There is no excuse for the inability of mortgage lenders to know where the note is,” said Frank Alexander, an Emory University law professor and a leading expert on real estate law. “Without the note, you have virtually nothing. That is the one thing that is always locked in a vault.”

        For more, see Mortgage market clouds who owns woman’s house.

• For posts that reference the failure of mortgage lenders and their attorneys to prove ownership of the promissory note when starting foreclosure actions, Go Here, Go Here, Go Here, Go Here, and Go Here.