The Boston Herald reports:

Massachusetts’ highest court has issued a landmark ruling tentatively declaring whole classes of subprime mortgages unfair under Massachusetts law. “Originating loans with terms that in combination would lead predictably to . . . default and foreclosure (is) within established concepts of unfairness,” state Supreme Judicial Court justices unanimously ruled yesterday. The decision upholds a lower-court injunction issued against subprime-lending giant Fremont Investment & Loan.

Suffolk Superior Court Judge Ralph Gants handed down the injunction in February, declaring – apparently for the first time in state history – that some subprime-mortgage terms automatically violate Massachusetts law.

Ruling in a lawsuit brought by state Attorney General Martha Coakley, Gants found that many of Fremont’s Bay State subprime loans seemed “doomed to foreclosure” from the start. The judge ordered Fremont to give Coakley’s office a chance to object before foreclosing on any of 2,700 Massachusetts subprime mortgages with terms Gants deemed “structurally unfair.”

Last month, the judge issued a similar injunction against Option One Mortgage, which oversees another 8,000 questionable Massachusetts subprime loans. Although Gants’ rulings are preliminary, and subject to change as cases work their way through courts, experts still see yesterday’s SJC move as precedent-setting.

“We think this is an important milestone not just for Massachusetts, but also for other states that want to use their consumer-protection powers against unfair and deceptive (mortgage) marketing,” Coakley said.

For the story, see http://www.bostonherald.com/business/general/view/2008_12_10_High_court_hits_subprime_lenders/srvc=business&position=recent_bullet.

            A Circuit Judge in Key West, Florida has denied a Motion for Summary Judgment for foreclosure filed by the Bank of New York (“BONY”) as “Successor Trustee” to Chase Bank, with the Judge ruling that genuine issues of material fact as to the chain of title to the mortgage which were unresolved precluded summary judgment for BONY. Although the attorney for BONY filed several documents in alleged support of BONY’s “right” to foreclose, the Judge, after examining the documents, found that there was a missing link in the chain of title to the mortgage between the time it was originated and the time that BONY allegedly became the owner of the mortgage. As such, the summary judgment of foreclosure was denied and the property is not being foreclosed.

            What we have found to be occurring all too frequently is that the Plaintiff in foreclosure cases makes an allegation of “owning and holding” the Note and Mortgage, but that when pressed, there is either no complete chain or a broken chain of title to the mortgage between the original lender and the Plaintiff in the foreclosure case. As such and without proof of a continuous and proper chain of title to an assigned mortgage, it will no longer be “business as usual” for foreclosure attorneys or their clients.

            One of the most outrageous examples of “lender” misrepresentation occurred in another case in Florida where the attorney for the foreclosing party, in response to a challenge by the borrower to the foreclosing party’s Motion for Summary Judgment as to whether the mortgage was ever assigned to the foreclosing party, represented to the Court that “we have filed the Assignment”. What was in fact filed was an Assignment which was blank as to and named no assignee, yet the attorney took the position that this blank assignment (which did not name the attorney’s client) provided legal standing to foreclose. Again, summary judgment was denied.

            The lesson to be learned here, especially with foreclosure lawsuits where the Plaintiff is obviously a member of the “securitized mortgage” gang, is that you have to diligently and carefully analyze ALL documents filed by the foreclosing party. We are finding in case after case that the foreclosing party (which, more often than not, is nothing more than a servicing company, or a “trustee” of some sort, and not the original lender) does not have the documents to demonstrate proper legal standing to even institute the foreclosure case at all. The problem is that foreclosure attorneys have been so used to no opposition that they continue to file bogus documents (or no documents at all) with impunity, and continue to make the kind of arguments such as that discussed here.

            Jeff Barnes, Esq., [email protected]

In New York City, Bloomberg News reports:

Countrywide Financial Corp., the home lender acquired by Bank of America Corp., was sued by Greenwich Financial Services Fund over claims an agreement to reduce payments on mortgages by $8.4 billion would hurt investors.

The hedge fund claims investors will be harmed by Bank of America’s settlement, reached on behalf of Countrywide, with 15 state attorneys general. The value of trusts that bought 400,000 mortgages will decline under the deal, the fund said.

In the proposed class action, or group lawsuit, the Greenwich, Connecticut-based fund demands a declaration that “Countrywide must purchase at par every mortgage loan that it sold to any of the 374 securitization trusts,” David Grais, a lawyer for the fund said today in an e-mailed statement. Grais said Countrywide could owe the trusts $80 billion.

For more, see http://www.bloomberg.com/apps/news?pid=20601103&sid=aOaEM25JlUqk&refer=us

In Chicago, Illinois, Reuters reports:

A Royal Bank of Canada mortgage unit will pay $10.98 million to settle charges it gave the U.S. government false information about borrowers who took out 219 home loans that ended up in foreclosure.

RBC Mortgage Co agreed to the payment to avoid litigation but denied wrongdoing, according to Patrick Fitzgerald, the U.S. attorney in Chicago, who announced the settlement.

The civil case is related to a separate federal criminal probe that resulted in the convictions of 25 defendants, including three RBC Mortgage officers, Fitzgerald said.

For more, see http://www.reuters.com/article/bondsNews/idUSN2529275720081125.

In Sacramento, California, the San Francisco Chronicle reports:

Gov. Arnold Schwarzenegger proposed a new plan Wednesday to induce lenders to modify home loans to help struggling borrowers avoid foreclosure. […] Schwarzenegger suggests imposing a 90-day stay for the foreclosure process for owner-occupied homes that have received notices of default. Lenders could be exempted from the stay by proving they have an “aggressive modification program” to keep borrowers in their homes.

The loan modifications would be modeled on the approach used by the Federal Deposit Insurance Corp. to help borrowers of the failed IndyMac Bank.

[State officials] said the proposal would increase loan modifications by removing loan servicers’ fears that they could be sued by the investors who actually own the mortgages, and by getting the majority of companies involved in working out loans, so no one company need fear it is the only one taking such actions.

For more, see http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/06/BUEP13V1MH.DTL.

The New York Times reports:

Former Washington Mutual (WaMu) senior mortgage underwriter Keysha Cooper tells of the bank’s unethical and deceptive lending practices. According to her, “At WaMu it wasn’t about the quality of the loans; it was about the numbers.” “They didn’t care if we were giving loans to people that didn’t qualify. Instead, it was how many loans did you guys close and fund?”

According to her, when underwriters did not approve even the most questionable loans, they were punished and she believes that her unwillingness to approve dubious loans led to her ultimate lay off. According to her, she was made to approve roughly 60 percent of the loans she saw at her supervisors’ orders.

For more, see http://www.nytimes.com/2008/11/02/business/02gret.html?pagewanted=2&_r=1.

The Wall Street Journal reports:

J.P. Morgan Chase & Co. launched a plan on Friday to modify the terms of $70 billion in mortgages for borrowers who are behind on their payments or soon could be. The move by the New York bank will cover as many as 400,000 borrowers. They’ll be moved into loans carrying lower interest rates, smaller principal amounts or other more-affordable terms.

Under the plan, option Adjustable Rate Mortgages that are accumulating interest will be replaced with fixed-rate loans that are more stable for borrowers and seen as far less likely to default. J.P. Morgan said it wouldn’t begin the foreclosure process on borrowers during the next 90 days, as it opens loan-counseling centers and takes other steps to launch the program.

For more, see

http://online.wsj.com/article/SB122549543952589677.html?mod=googlenews_wsj.

The New York Times reports:

“Senators prodded government officials involved in the bank-rescue plan to do more to help struggling homeowners avoid foreclosure and expressed impatience on Thursday over the pace of the unfolding program.”

“The lawmakers on the Senate Banking Committee urged the officials, in effect, to make the banks do something for the homeowners in return for the billions that the banks are getting from Washington in infusions of capital meant to thaw the credit spigots and get the economy moving again.”

Concerns seem justified, as foreclosure filings surged past 750,000 in the third quarter. And, according to Realty Trac, a foreclosure tracking company, foreclosures seem to be rising fastest in Nevada, Florida, California and Arizona “— states where home prices soared the most during the recent housing boom.”

Fore more, see http://www.nytimes.com/2008/10/24/business/economy/24cong.html?_r=1&oref=slogin.

The Chicago Tribune recently ran several stories related to the state of foreclosures in Cook County, Illinois and the increasingly large burden placed on the county in attempting to reconcile the situation brought on the sub-prime mortgage crisis.

For stories, see:

http://www.chicagotribune.com/news/local/chi-foreclosure-russelloct20,0,610972.story

http://www.chicagotribune.com/news/nationworld/chi-foreclosure-courtoct20,0,3770516.story

http://www.chicagotribune.com/news/local/chi-foreclosure-sampsonoct20,0,6780549.story

What’s more…they’ve gad to hire additional judges to deal with the foreclosure caseload.

For the story, see: 

http://www.wbez.org/Content.aspx?audioID=29625