In
order for the securitization to work, banks purchasing the
mortgages had to physically convey the promissory note and
the mortgage into the trust. The note had to be endorsed
(the way an individual would endorse a check), and handed
over to a document custodian for the trust, with a
“mortgage assignment” confirming the transfer of
ownership. And this had to be done before a 90-day cutoff
date, with no grace period beyond that.
Georgetown
Law Professor Adam Levitin spelled this out in testimony
before Congress in 2010: “If mortgages were not properly
transferred in the securitization process, then
mortgage-backed securities would in fact not be backed by
any mortgages whatsoever.”
The
lawsuit alleges that these notes, as well as the mortgage
assignments, were “never delivered to the mortgage-backed
securities trusts,” and that the trustees lied to the SEC
and investors about this. As a result, the trusts could not
establish ownership of the loan when they went to foreclose,
forcing the production of a stream of false documents,
signed by “robo-signers,” employees using a bevy of
corporate titles for companies that never employed them, to
sign documents about which they had little or no knowledge.
Many
documents were forged (the suit provides evidence of the
signature of one robo-signer, Linda Green, written eight
different ways), some were signed by “officers” of
companies that went bankrupt years earlier, and dozens of
assignments listed as the owner of the loan “Bogus
Assignee for Intervening Assignments,” clearly a template
that was never changed. One defendant in the case, Lender
Processing Services, created masses of false documents on
behalf of the banks, often using fake corporate officer
titles and forged signatures. This was all done to establish
standing to foreclose in courts, which the banks otherwise
could not.
Szymoniak
stated in her lawsuit that, “Defendants used fraudulent
mortgage assignments to conceal that over 1400 MBS trusts,
each with mortgages valued at over $1 billion, are missing
critical documents,” meaning that at least $1.4 trillion
in mortgage-backed securities are, in fact,
non-mortgage-backed securities. Because of the strict laws
governing of these kinds of securitizations, there’s no
way to make the assignments after the fact. Activists have a
name for this: “securitization FAIL.”
One
smoking gun piece of evidence in the lawsuit concerns a
mortgage assignment dated February 9, 2009, after the
foreclosure of the mortgage in question was completed.
According to the suit, “A typewritten note on the right
hand side of the document states: ‘This Assignment
of Mortgage was inadvertently not recorded prior to the
Final Judgment of Foreclosure… but is now being recorded
to clear title.’”
This
admission confirms that the mortgage assignment was not made
before the closing date of the trust, invalidating
ownership. The suit further argued that “the act of
fabricating the assignments is evidence that the MBS Trust
did not own the notes and/or the mortgage liens for some
assets claimed to be in the pool.”
The
federal government, states and cities joined the lawsuit
under 25 counts of the federal False Claims Act and
state-based versions of the law. All of them bought
mortgage-backed securities from banks that never conveyed
the mortgages or notes to the trusts. The plaintiffs argued
that, considering that trustees and servicers had to spend
lots of money forging and fabricating documents to establish
ownership, they were materially harmed by the subsequent
impaired value of the securities. Also, these investors
(which includes the Treasury Department and the Federal
Reserve) paid for the transfer of mortgages to the trusts,
yet they were never actually transferred.
Finally,
the lawsuit argues that the federal government was harmed by
“payments made on mortgage guarantees to Defendants
lacking valid notes and assignments of mortgages who were
not entitled to demand or receive said payments.”
Despite
Szymoniak seeking a trial by jury, the government intervened
in the case, and settled part of it at the beginning of
2012, extracting $95 million from the five biggest banks in
the suit (Wells Fargo, Bank of America, JPMorgan Chase, Citi
and GMAC/Ally Bank). Szymoniak herself was awarded $18
million. But the underlying evidence was never revealed
until the case was unsealed last Thursday.
Now
that it’s unsealed, Szymoniak, as the named plaintiff, can
go forward and prove the case. Along with her legal team
(which includes the law firm of Grant & Eisenhoffer,
which has recovered more money under the False Claims Act
than any firm in the country), Szymoniak can pursue
discovery and go to trial against the rest of the named
defendants, including HSBC, the Bank of New York Mellon,
Deutsche Bank and US Bank.
The
expenses of the case, previously borne by the government,
now are borne by Szymoniak and her team, but the percentages
of recovery funds are also higher. “I’m really glad I
was part of collecting this money for the government, and
I’m looking forward to going through discovery and
collecting the rest of it,” Szymoniak told Salon.
It’s
good that the case remains active, because the $95 million
settlement was a pittance compared to the enormity of the
crime. By the end of 2009, private mortgage-backed
securities trusts held one-third of all residential
mortgages in the U.S. That means that tens of millions of
home mortgages worth trillions of dollars have no legitimate
underlying owner that can establish the right to foreclose.
This hasn’t stopped banks from foreclosing anyway with
false documents, and they are often successful, a testament
to the breakdown of law in the judicial system. But to this
day, the resulting chaos in disentangling ownership harms
homeowners trying to sell these properties, as well as those
trying to purchase them. And it renders some properties
impossible to sell.
To
this day, banks foreclose on borrowers using fraudulent
mortgage assignments, a legacy of failing to prosecute this
conduct and instead letting banks pay a fine to settle it.
This disappoints Szymoniak, who told Salon the owner of
these loans is now essentially “whoever lies the most
convincingly and whoever gets the benefit of doubt from the
judge.” Szymoniak used her share of the settlement to
start the Housing Justice Foundation, a non-profit that
attempts to raise awareness of the continuing corruption of
the nation’s courts and land title system.
Most
of official Washington, including President Obama, wants to
wind down mortgage giants Fannie Mae and Freddie Mac, and
return to a system where private lenders create
securitization trusts, packaging pools of loans and selling
them to investors. Government would provide a limited
guarantee to investors against catastrophic losses, but the
private banks would make the securities, to generate more
capital for home loans and expand homeownership.
That’s
despite the evidence we now have that, the last time banks
tried this, they ignored the law, failed to convey the
mortgages and notes to the trusts, and ripped off investors
trying to cover their tracks, to say nothing of how they
violated the due process rights of homeowners and stole
their homes with fake documents.
The
very same banks that created this criminal enterprise and
legal quagmire would be in control again. Why should we view
this in any way as a sound public policy, instead of a
ticking time bomb that could once again throw the private
property system, a bulwark of capitalism and indeed
civilization itself, into utter disarray? As Lynn Szymoniak
puts it, “The President’s calling for private equity to
return. Why would we return to this?”
Update: This
story previously suggested that banks settled this lawsuit
with the federal government for $1 billion. That number is
actually the total for a number of whistleblower lawsuits
that were folded into a larger National Mortgage Settlement.
This specific lawsuit settled for $95 million. The post
above has been changed to reflect this fact.
David
Dayen is a contributing writer for Salon. Follow him on
Twitter at@ddayen.
Source:
http://www.salon.com/2013/08/12/your_mortgage_documents_are_fake/
COMMENT:
The
article above and the Complaint prove fraud and faked documents were used to establish standing to foreclose
on homes across America. This is very serious, and the
penalties for doing so can be severe.
American
law prohibits a party from presenting
false statements and faked evidence to a Court - and walking
out with a valid judgment. Once you can prove a
faked document was used to procure jurisdiction or a
judgment - at that very instant - the judgment is
PERMANENTLY void ab initio (from the
beginning). The judgment is mere waste paper. It
is as though the case never happened. Do not let anyone tell
you anything different.
Moreover,
a void judgment cannot be ratified or replaced , and a judge
is prohibited from validating a void judgment.
For
at least the last 20-years, the banking industry has been
fabricating evidence including counterfeit promissory Notes
to literally steal homes in America. Mere possession
of a counterfeit Note is a felony! Under New York law,
when an attorney discovers they are in possession of a
counterfeit promissory Note, they have only 14 days to
report it to the District Attorney.
Judges
trespass on the law when they allow copies of faked
documents to be used to establish standing to sue or obtain
judgment in a court proceeding. It is the duty
of the Court to verify it has jurisdiction, and it must
constantly monitor the case to ensure it maintains
jurisdiction.
A
Void judgment is: One
which has no legal force or effect, invalidity of which may
be asserted by any person whose rights are affected at any
time and at any place directly or collaterally. Reynolds v. Volunteer State Life Ins. Co., Tex.Civ.App., 80 S.W.2d
1087, 1092. One which from its inception is and
forever continues to be absolutely null, without legal
efficacy, ineffectual to bind parties or support a right, of
no legal force and effect whatever, and incapable of
confirmation, ratification, or enforcement in any manner or
to any degree. Judgment is a "void
judgment" if court that rendered judgment lacked
jurisdiction of the subject matter, or of the
parties, or acted in a manner inconsistent with due process.
Klugh v. U.S.,
D.C.S.C., 610 F.Supp. 892, 901.
“[I]t
is immaterial if the case is closed, as there is no statute
of limitation applying to void judgments.
A “void judgment” as we all know, grounds no
rights, forms no defense to actions taken there under, and
is vulnerable to any manner of collateral attack.
No statute of limitations or repose runs on its
holdings, the matters thought to be settled thereby are not res
judicata, and years later, when the memories may have grown
dim and rights long been regarded as vested, any disgruntled
litigant may reopen the old wound and once more probe its
depths. And it is then as though trial and adjudication had
never been.” 10/13/58 Fritts v Krugh Sup. Ct. Mich, 92 N.W.2d 604, 354 Mich. 97.
A void judgment cannot constitute res judicata. Denial of previous motions to vacate a void judgment could not validate the judgment or constitute res judicata, for the reason that the lack of judicial power inheres in every stage of the proceedings in which the judgment was rendered. Bruce v. Miller, 360 P.2d 508, 1960 OK 266 (Okla. 12/27/1960).
Maybe
homeowners can now march their void judgments and certified
property records into the court and have Robo-Judges stamp
them all: "VOID FOR FRAUD"
To
repair the tainted titles, GIVE THE HOUSES BACK TO THE RIGHTFUL OWNERS and jail EVERYONE responsible, including
the lawyers and judges who knew all along! - MSFraud