DEPOSITION of A “REAL” VICE PRESIDENT of MERS WILLIAM “BILL” HULTMAN

From: b.daviesmd6605

Bill joined MERS in February, 1998. He brings more than 14 years of broad experience in finance and treasury. Before joining MERS, he served as Director of Asset Liability Management for Barnett Banks, Inc., Asset Liability Manager at Marine Midland Bank and Treasurer of Empire of America FSB. As a conservator for the FDIC, he managed insolvent institutions for the Resolution Trust Corporation.
Prior to his experience in the financial services industry, Bill was a partner in the law firm of Moot and Sprague, as well as an attorney at Forest Oil Corporation, specializing in the areas of securities and corporate law.

FULL DEPOSITION of Mortgage Electronic Registration Systems (MERS) PRESIDENT & CEO R.K. ARNOLD “MERSCORP”

R.K. ARNOLD Pres. & CEO Of MERS (Photo Credit) Daniel Rosenbaum for The New York Times

AN ASSIGNMENT OR A FORMALIZATION OR A MEMORIALIZATION? By LYNN E. SZYMONIAK, ESQ.

AN ASSIGNMENT OR A FORMALIZATION OR A MEMORIALIZATION?

The standard language in most of the mortgage assignments being signed by employees of Lender Processing Services (most recently, Kathy Smith, Joseph Kaminsky) has changed in one significant respect.

The effective date of the transfer from grantor to grantee is now not stated as a specific date. Instead, we have the following:

“This document has been executed and is being recorded in order to formalize and memorialize an assignment of the subject mortgage which took place prior to December 17, 2009.”

A copy of this particular “assignment” is attached.  It is signed by Kathy Smith “Assistant Secretary, MERS as nominee for American Home Mortgage.”

This language is easy enough to locate on the document because a different type font is used.

How this prior assignment took place without a document is left unexplained.

IN THE PAST MONTHS, THIS CHANGE HAS BEEN MADE BY MANY OF THE FORECLOSURE MILL LAW FIRMS DIRECTED BY LENDER PROCESSING SERVICES, SO,

THERE MUST BE A MEMO DIRECTING THIS.


This is really an acknowledgment that the document is NOT the original assignment – but a replacement.  Who will recognize this shoddy attempt to “create” standing to foreclose?  No doubt, the state court judges in Brooklyn, the federal court judges in Ohio, a few bankruptcy judges, a few Massachusetts land court judges (Keith Long) and many bankruptcy trustees.

In Florida, the scheme will perhaps be first be exposed by state court judges Bailey, Traynor or Rondolino.

DOUBLE TROUBLE: Sanctions Motion filed 5/21/2010 Against LENDER PROCESSING SERVICES (LPS)

Dear Editor:

Once again, a U.S. Trustee is leading the way in exposing fraud in foreclosures. On Friday, May 21, 2010, United States Trustee R. Michael Bolen, Region 5, Judicial Districts of Louisiana and Mississippi, by Mary Langston, Assistant U.S. Trustee, New Orleans, Louisiana, filed a Motion for Sanctions against Lender Processing Services, Inc. and The Boles Law Firm. The Motion was filed in a bankruptcy action, In re Ron Wilson, Case No. 07-11862, U.S. Bankruptcy Court, Eastern District of Louisiana.

The U.S. Trustee is seeking to sanction LPS and The Boles Law Firm for making misrepresentations in statements and/or in testimony in open court, during the course of Show Cause proceedings initiated by the Court. Show Cause Orders were entered on May 9, 2008, July 11, 2008 and July 18, 2008. The misrepresentations relate to a Motion to Lift Stay (“2d MFR”) filed on March 10, 2008 and execution of a false affidavit supporting the 2d MFR, filed on behalf of Option One Mortgage Corporation, n/k/a Sand Canyon Corporation.

The misrepresentations concern payments received but not posted by Option One, dated January 2, 2008; January 31, 2008; and March 3, 2008 (the “Unposted Payments”).

According to the Trustee, Fidelity National Information Services, Inc. (now, Lender Processing Services, Inc.) misrepresented to the Court its knowledge of, and whether it communicated with Boles about the Unposted Payments. Further, the Trustee alleges that LPS/Fidelity misrepresented that it did not function as a “go between” in this case, between Boles and Option One, with respect to the Unposted Payments.

“Boles lacked candor before this Court, based on statements that one if its attorneys made to the Court on June 26, 2008 during the OSC [Order to Show Cause] proceeding. In that hearing, the Boles attorney indicated that, although Boles possessed one or more of the Unposted Payments, Boles did not know why it had received them. Upon information and belief, the proof will show that Boles received the Unposted Payments because Boles had issued instructions directing that each of the Unposted Payments be sent to it.”

Again, according to the Trustee, “The respondents’ [LPS and Boles] representations were not well grounded in fact, were made in bad faith to avoid potential liability, and have resulted in unnecessarily protracted discovery and litigation concerning their roles involved with the 2d MFR and false affidavit.”

In a 19 page Memorandum of Law supporting the motion for sanctions, Trustee Mary Langston set forth that Dory Goebel, an officer and employee of Fidelity, was questioned regarding an Affidavit she had submitted regarding unposted mortgage payments. Goebel essentially denied communications between Fidelity and the Boles firm:

“Goebel testified that Fidelity would not have communicated with the Boles law firm regarding post-referral payments; rather, Option was responsible for notifying its counsel directly about such payments. Goebel further testified that she reviewed the Wilson file, and that were no communications between Fidelity and Boles regarding the Unposted Payments because “[n]o, that is not the responsibility of Fidelity. We would not know of additional payments, Option One would.” August 21, 2008 Tr. 110:18 – 111:5. Goebel’s testimony thus portrayed that Fidelity would not even know that a borrower’s post-referral payment had been received unless Option posted the payment on Option’s accounting system; and that Fidelity would not communicate with Option’s counsel about payments received.” (Memorandum, p.8)

According to Trustee Langston, “However, Goebel’s testimony simply does not comport with the evidence the United States Trustee has obtained from Option, Fidelity, and Boles through discovery.” (Memorandum, p.8) The Trustee goes through the many communications that contradict Goebel’s testimony. She concludes, “… the evidence establishes that both Boles and Fidelity had knowledge about the Unposted Payments which they misrepresented to the Court. Upon information and belief, Fidelity and Boles played an integral role in communicating about those very payments, participating in queries about how to handle the Unposted Payments.” (Memorandum, p.9)

This is not the first time that a U.S. Bankruptcy Trustee has sought to impose sanctions against Fidelity and/or LPS. Most recently, the in the case of Niles and Angela Taylor, 2009 WL 1885888 (Bankr. E.D. Pa. 2009), Judge Diane Weiss Sigmund also determined that sanctions were warranted in a foreclosure case involving Lender Processing Services. Judge Sigmund described in great detail how the default mortgage servicing and foreclosure systems really work.

Lender Processing Services (“LPS”) was described as the largest out-source provider in the United States for mortgage default services. The LPS systems frequently resulted in incorrect information regarding mortgages reported to litigants and judges in foreclosure actions. The LPS network of national and local law firms were required to communicate directly with LPS, and not the mortgage servicers, about any issues that arose in any given case. Likewise, the servicers were required to execute a 51-page Default Service Agreement with LPS that delegated to LPS all functions with respect to the default servicing work. LPS used a software communication system called “NewTrak” to deliver instructions and documents to the LPS network attorneys and to deliver any information to the servicers. LPS also had access to the servicers data-base platforms. The law firms were staffed primarily by paralegals with little supervision by attorneys. See
In re Taylor, supra, at 1885889 to 1885891.

Judge Sigmund found that he LPS system was designed to minimize human involvement. She concluded, “When an attorney appears in a matter, it is assumed he or she brings not only substantive knowledge of the law but judgment. The competition for business cannot be an impediment to the use of these capabilities. The attorney, as opposed to the processor, knows when a contest does not fit the cookie cutter forms employed by the paralegals. At that juncture, the use of technology and automated queries must yield to hand- carried justice. The client must be advised, questioned and consulted. The thoughtless mechanical employment of computer-driven models and communications to inexpensively traverse the path to foreclosure offends the integrity of our American bankruptcy system. It is for those involved in the process to step back and assess how they can fulfill their professional obligations and responsibly reap the benefits of technology. Noting less should be tolerated.”

In a case pending in the United States Bankruptcy Court for the Southern District of New York, In re Silvia Nuer, Case No. 08-17106 (REG), in a Memorandum of Law of the United States Trustee in Support of Sanctions Against J.P.Morgan Chase Bank National Association, filed January 4, 2010, the Trustee reviewed the testimony of Mr. Herndon, a witness for Chase, who testified that the chain of title for the property in question passed through three entities. Previously, however, Chase had submitted contrary documents. In particular, Chase had submitted an assignment “that appeared to show that Chase assigned its right as mortgagee to Deutsche, as trustee for Long Beach Mortgage Trust 2006-2. The Assignment was signed by Scott Walter as “Attorney in Fact for Chase (the “Walter November 1 Assignment”)…It was signed on November 1, 2008, after the Filing Date. This 2008 Assignment to a trust that closed in 2006 signed by an individual who did not in fact work for Chase has become the focus of the sanctions debate. Regarding the Walter Assignment, the Trustee states: “Here, the misconduct of Chase includes the attachment of the Walter November 1 Assignment…Chase’s own witness could not explain the Walter November 1 Assignment…”

Walter was actually an employee in the Minnesota office of Lender Processing Services.

What is an appropriate sanction for a company that repeatedly makes false statements in bankruptcy proceedings – and files false mortgage assignments and Affidavits – so that the bankruptcy judge will lift the stay and allow a foreclosure to proceed more quickly?

If the debtor engaged in these acts, the case would be referred to the U.S. Attorney so that criminal charges of bankruptcy fraud could be filed against the debtor. Why should a repeat offender deserve less?

Lynn E. Szymoniak, Ed., Fraud Digest

HUGE- A Brand Spankin New Federal Statute To Attack Foreclosure Assignment Fraud: MATT WEIDNER

Via: Matt Weidner Blog

Buried in The Helping Families Save Their Homes Act of 2009, which the President signed into law yesterday, is an amendment to the Truth in Lending Act (TILA) that calls for a notice to the consumer when a ‘mortgage loan’ is transferred or assigned.  The provision appears to be effective immediately, and violations are subject to TILA liability.

The text of the provision follows:
SEC. 404. NOTIFICATION OF SALE OR TRANSFER OF MORTGAGE LOANS. (a) IN GENERAL.—Section 131 of the Truth in Lending Act (15 U.S.C. 1641) is amended by adding at the end the following: ‘‘(g) NOTICE OF NEW CREDITOR.— ‘‘(1) IN GENERAL.—In addition to other disclosures required by this title, not later than 30 days after the date on which a mortgage loan is sold or otherwise transferred or assigned to a third party, the creditor that is the new owner or assignee of the debt shall notify the borrower in writing of such transfer, including— ‘‘(A) the identity, address, telephone number of the new creditor; ‘‘(B) the date of transfer; ‘‘(C) how to reach an agent or party having authority to act on behalf of the new creditor; ‘‘(D) the location of the place where transfer of ownership of the debt is recorded; and ‘‘(E) any other relevant information regarding the new creditor. ‘‘(2) DEFINITION.—As used in this subsection, the term ‘mortgage loan’ means any consumer credit transaction that is secured by the principal dwelling of a consumer.’’. (b) PRIVATE RIGHT OF ACTION.—Section 130(a) of the Truth in Lending Act (15 U.S.C. 1640(a)) is amended by inserting ‘‘subsection (f) or (g) of section 131,’’ after ‘‘section 125,’’.

THIS OPENS UP A HUGE NEW AVENUE OF ATTACK AGAINST FORECLOSURE AND

ASSIGNMENT FRAUD!

Calling on MERS “In fact, all the paper in the process is gone”.: Scott Cooley

Calling on MERS

VIENNA, VIRGINIA–BASED MERS IS A great example of how technological solutions can work for the betterment of our industry. MERS’story is more typical, though, in terms of how long it took the company’s solution to become mainstream.

I’ve found that typically new technologies or new technology firms take five to seven years to become successful in this industry. Of course, it is difficult for startup companies to last that long, which is one of the main reasons there is such a high failure rate among these firms. From the start, MERS had widespread support from the Mortgage Bankers Association(MBA) and all the major mortgage companies. Originally, MERS wasn’t well-funded ($5.2 million), but in 1998 it was recapitalized with significant contributions from MBA, FannieMae and Freddie Mac—mostly interms of a line of credit. Still, it took five to seven years until MERS wash and handling millions of loans. Today, it has handled more than 30 million loans and just launched it’s next endeavor, called the MERS® eRegistry. It’s a great success story overall.

MERS’ eRegistry for eNotes was started in March 2003 (see http://www.mersinc.org for details). Its purpose is to provide a“pointer” to the location of the eNote, and it holds the legal identity of the controller. Any lender can then find the vault where the eNote is stored, as well as who controls it.

MERS provides the very valuable solution of tracking the eNote’s location without trying to compete with the private industry for all of the other actions that occur around an eNote, such as storage in a vault. By MERS’ own admission, this solution will take years before it becomes mainstream.

R.K. Arnold, MERS’ president and chief executive officer, stated at the time of the eRegistry’s launch, “Although it will take many years for the industry to fully adopt this system, it will become widely used because the market place is demanding a move toward less paper in the home-buying process.” As you might guess, I’ll say it will take five to seven years.

I applaud MERS in taking this step and for building the eRegistry in short order. Still, I’m calling on MERS to take it to the next level. In its current form, I expect the eRegistry might save the industry a few dollars per loan. Yet, MERS is so close to providing the one key component of a solution that I believe will save the industry hundreds of dollars per loan. This solution is what I call the virtual loan folder (VLF), and I consider it the holy grail of mortgage technology.

VLF is the use of an electronic vault where the entire loan file is stored—not just the note but every document from all the various parties. MERS would be the pointer so the industry’s computer systems will know where to look to post, retrieve or just view a document. Every person involved in the loan process would use the VLF. A few examples follow.

■ Realtor: The Realtor would post a purchase agreement and other supporting documents, and might also view the Good Faith Estimate to know about the terms of the loan.

■ Loan Officer: The loan officer would post the loan application and other supporting origination documents. He or she would also retrieve documents such as the appraisal, preliminary title and credit report.

■ Borrower: The borrower could view his or her predisclosure and closing documents, and could post documents such as a copy of a W-2.

■ Appraiser: The appraiser could view the loan application and would post the entire appraisal.

■ Loan Underwriter: The underwriter could view all of the documents and post a list of conditions.

■ Loan Closer: The closer could view the upfront disclosures and post the entire closing package.

■ Loan Servicer: The servicer could view all of the documents, even while talking on the phone with the borrower, at any time during the life of the loan.

Today, most of the aforementioned parties are shipping the documents at great cost through carriers such as Federal Express. With VLF, all such shipping and the manual handling of the traditional loan folder is eliminated. In fact, all the paper in the process is gone. Yes, this is a form of imaging that some mortgage companies are using today. However, it goes much further, in that it would be used by all parties involved with each loan. In addition, it would also store the electronic data file of the loan and do so in a Mortgage Industry Standards Maintenance Organization Inc . (MISMO) format.

All of the software systems in use by our industry would need to be modified to support the VLF system. Each system (such as title plant software, Realtor systems, appraiser software, loan origination systems, etc.) wouldinterface to the VLF to store and retrieve the documents and the data.

MERS is an important piece because it contributes to marketplace competition and adds validity to the system. The known problem with the VLF system is that if the vault is owned by a single entity, the power of that entity would become enormous (generating almost unlimited profits).

There have been reports that the government-sponsored enterprises (GSEs) have considered promoting the development of a VLF system for the industry, and they would then own the vault. However, it’s better if we have many vaults that would each compete on price and service. MERS would simply provide the pointer for every VLF. The vault would charge fees for posting and retrieving documents. Having many vaults would keep such transaction fees to a bare minimum. If MERS adopts a VLF solution, I believe the industry would move faster to adoption. MERS would certainly add validity to the concept, and it would push others to build the needed technological pieces.

Another significant contribution that MERS provides is the industry-standard MERS Identification Number (MIN). The MIN is more crucial than it might otherwise seem, because it’s the only way to uniquely assign an identification number for every new loan originated. Without the MIN, it would be almost impossible for all the computer systems to correctly identify each loan for such circumstances as a borrower applying for the same home loan with two different mortgage companies at the same time.

The step MERS has taken with eRegistry is a good one, but it’s just a baby step in terms of what needs to be done. I challenge MERS to announce a broader initiative with the hope of having something tangible in a year or so. From that  point in time, I know it’ll be five to seven years before the industry will be operating far more efficiently, and originating loans for about half the cost of what it takes today, in my opinion.

Scott Cooley is an independent mortgage technology consultant, analyst and author based in Los Gatos, California. He  can be reached at scooley@scooley.com.

M O R T G A G E B A N K I N G . J U L Y 2 0 0 5

R E P R I N T E D  W I T H  P E R M I S S I O N  F R O M  T H E  M O R T G A G E  B A N K E R S  A S S O C I A T I O N  ( M B A )

LPS Using TARP Funds to Cover-Up Assignment of Mortgage

Consumer ID thefts or consumer identity thefts is one of the main crimes that cause financial as well as emotional anguish. The rubber-stamping of Assignments of Mortgage and the Double Dipping of foreclosure fees and cost expedite the foreclosure process and line the silk pockets of these attorneys, banks and LPS executives.

This is a copy of the September 14, 2009 e-mail from Adrian Lofton to Bradley Johnson, lead Attorney at Taylor, Day, Currie, Boyd and Johnson apprizing him of their TARP fund violations.

Brad, your firm has created a conflict of interest by representing these banks. In addition to the aforementioned, you are not legally entitled to accept TARP funds to represent these banks after your firm implicated them in these federal violations.
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