Thursday, January 20, 2011

Homeowners' response to banks' dual track mod/foreclosure system

Homeowners are rightfully disgusted with the banksters' loan mod / foreclosure dual track system, whereby a bank will pretend to negotiate a modification, put the homeowner on a "trial period" of 3 months, then extend the trial period to about a year, and then suddenly announce that the homeowner does not qualify for a permanent modification.  The bank will then re-start the process of negotiating for a mod, but at the same time will put the homeowner on the foreclosure track, and then foreclose behind the homeowner's back under this loan-mod/foreclosure "dual track" system.

It's time for the homeowners to fight back.  Clearly, the banks have much more incentive to squeeze the borrowers out of another year of payments and then take the house by foreclosure on top of that. The government's $1000.00 "incentive" per permanent mod is laughable compared to all the incentives to foreclose.

So the way for the homeowners to fight back is to put the banks on a dual track system. It goes like this.  Homeowner will pretend to negotiate a mod just like the bank is pretending to do so.  At the same time, however, homeowner will file a Quiet Title action against the parties of record.

You see, most "bubble" loans, especially MERS loans, contain a latent defect. The defect is that the loan has been transferred away from the original pretender-lender, but the new party's interest is not recorded.  At least not until default, when the new party will start preparing to foreclose.

As long as that interest remains unrecorded (and that is that party's choice and not your fault), the new party is not entitled to any notice as to any changes in the ownership of the property or adding/removing encumbrances, nullification of a prior deed of trust, etc.

So, if the homeowner successfully challenges the encumbrance (the deed of trust or mortgage) based on TILA/RESPA violations, table-funding, unrelatedness to the reality of the transaction (failure to name actual parties, etc.), and other defects, the pretender-lender will not even have a chance to defend against such challenge for the simple reason that its putative "interest" is unrecorded and they are not entitled to any notice, while the party whose interest is recorded does not care anymore, as they have sold/transferred the loan.  Moreover, the original pretender-lender is likely long gone, in bankruptcy, etc.

Those of you especially with MERS loans – its time to stop this loan mod nonsense at the expense of taxpayer bailouts and play hard ball. Put your bank, which doesn't usually have a scintilla of interest in your home, on a dual track system of loan-mod/quiet-title!


  1. According to TILA (2009 Amendment) and Federal Reserve Opinion (now rule) — the creditor must be identified and neither a servicer, trustee, trust, or MERS – is the creditor (none reflect the loan ownership on balance sheet).

    Upon request, the servicer must provide the name, address and contact information for the creditor. The section for TILA is: § 1641(g)(1)

    You may want to file a complaint for violation of the law in federal court. First, do a demand to servicer. They may try to name a trust/trustee — but Fed Opinion says beneficial pass-through security investors are not the creditor. Since, your payments are current — they would be passed on to beneficial security investors – but, again, they are not the creditor. However, tranche certificate holders could be considered the “creditor” — this would be the security underwriters to the trust — or, if security underwriters sold to another financial institution. But, tranches are limited in number (likely less than 20) — and many have been paid off by swaps. So there would only be a limited number of tranches left.. The entity with the largest position on its balance sheet must identify itself to you under the TILA.

    The below case is the only case I currently know to address. Do not know final outcome.

    CONSUMER SOLUTIONS REO, LLC, Plaintiff, v. RUTHIE B. HILLERY, et al., Defendants.
    No. C-08-4357 EMC


    2010 U.S. Dist. LEXIS 37857

    March 24, 2010, Decided
    March 24, 2010, Filed

    xerpt from

    I do not know who is the author but makes real sense.

  2. This is precisely what I have experienced. Weeks of questions and answers where I was made to feel like a criminal. Weeks of repeating the same information over and over and over again. Weeks of providing documents only to be told my application had been rejected.

    During the entire period I kept my cool and was as polite as anyone could imagine. I did everything they told me to do. Of course, foreclosure proceedings continued.

    Today, after getting rejected, I get another call "following up". Following up for what I asked. Loan modification application.
    But I got a rejection letter.
    Oh, I see. Have you called our lawyer?
    Why would I call your lawyer?
    Listen, my friend. I worked patiently with you for a long time. I spoke to approximately 30 different people to explain the identical set of facts. I tried to work with you. Now I realize that we are not on the same team. You are working against me and you will try to screw me as much as I let you. I will not talk to your lawyer, I will talk to my lawyer.
    Yes, Sir, I understand

    6 minutes later - recorded message on telephone call. "You have been pre-approved for a loan modification with Citibank...."

    As I have said many times before, the solution to this problem is as simple as anything. Take the 12 most senior executives at each of the top 5 banks. Behead them. Place their decapitated heads on pikes along Wall St. I guarantee you all this will stop immediately.