If you are a practicing attorney: Are you using Defense by Recoupment under 15 U.S.C.

1640(e)
as a strong affirmative defense for your clients?

If you are a consumer: Have you had your loan (from day of application to current) audited by a
forensic consumer debt analyst?

I get a fair amount of "conspiracy theory " calls or emails people who would swear that the CIA
was covertly involved in the loan they signed for and that all measures of fraud occurred against
them by everyone involved and... you get the point. My first question to this person is always:
"Great, so are you prepared for the $15,000+ retainer a good attorney is going to want to spend
their time investigating, quantifying, pleading and trying a case like that? Well, you know the
answer...

Others have read (or have heard) that a loan audit and violations of the TILA can only help you
if it's a refinance loan on a primary residence in the last three (3) years. To have the EXTENDED
RIGHT TO RESCIND, these conditions must be in place but rescission isn't the only thing that
can help someone in (or in danger of) foreclosure.

When it comes to defending yourself against foreclosure the first order of business is to establish
clear and genuine issues of material fact in the case. In a Florida foreclosure defense strategy, the
client wants to quantify these genuine issues of material fact in the foreclosure case because no
judge should ever grant a motion for summary judgment. Why?

In the state of Florida, there is extensive established law that prevents summary judgment from
being granted when there are outstanding issues of material fact. Johnson v. Boca Raton
Community Hosp., Inc., 985 So.2d 141, Murphy v. Young Men's Christian Association of Lake
Wales, Inc., 974 So.2d 565. A "material fact," for summary judgment purposes, is a fact that is
essential to the resolution of the legal questions raised in the case, Continental Concrete, Inc. v.
Lakes at La Paz III Ltd. Partnership, 758 So.2d 1214.

Successfully defeating summary judgment is a big score in favor of the consumer and can greatly
improve the chances of obtaining a viable and fair workout and thus ultimately, avoiding
foreclosure.

So, one area of practice Lane Houk and his team help consumer attorneys with is by completing
a forensic loan audit on the client's loan documents from the day they applied for that loan
through to current day. Why would a foreclosure client want this done? Let's think about it...

1. Often times, the client did not receive proper "pre-closing disclosures" under both Truth
in Lending laws (TILA) and Real Estate Settlement Procedures Act (RESPA);
2. Especially when there was a mortgage broker or interim lender involved
3. The actual "lender" in the transaction was under same timeframe obligations to make
specific disclosures to client from the day they received application
4. The many servicing abuses which could have taken place from day of closing to current
 5. Insufficient amount of certain disclosure violations
6. Escrow mishandling abuses (I've seen people nearly lose their house to a bona fide
mistake the bank made but wouldn't budge until a good attorney got involved)
7. The list goes on...

Under the TILA civil liability section [15 U.S.C. 1640(e)] regarding violations it says that any
action under that section may be brought in any United States district court, or in any other court
of competent jurisdiction, within one year from the date of the occurrence of the violation. But,
that subsection does not bar a person from asserting a violation of this subchapter in an action
to collect the debt which was brought more than one year from the date of the occurrence of the
violation as a matter of defense by recoupment...

A consumer can only bring an action for damages within one year from the date of closing.
However, the consumer is not barred from bringing a claim as a "matter of defense by
recoupment" in a foreclosure action because a foreclosure action is an action to collect the debt.
(ie. almost all foreclosure complaints are served with some level of disclosure that "this is an
action to collect on a debt") however NOT disclosing that does not necessarily preclude that any
such action is NOT an attempt to collect on the debt.)

Any such quantified claim of a violation of the TILA (Truth in Lending Act) from an expert
audit report should be brought as an affirmative defense by the attorney. This is a rock solid issue
of material fact. No summary judgment. The lender will have to bring the action all the way
through to trial. This should give you much greater leverage to obtain a workout. At the very
least, this give you/your client much greater time in the house and time to try to work something
out that works for both parties; something that is much needed these days because I still see a
great deal of servicer abuse/misprepresenations happening every single day.

I hope this little insight gives you some ideas on how you can help yourself in a foreclosure case.
If you want more information on forensic loan audit, please call me at (800) 985-4685 ext. 2 or
by email at Lane@thePatriotsWar.com

© Lane A. Houk - 2009- All Rights Reserved

Author Info: Lane Houk has 8 years of mortgage banking and finance experience and also
maintains an active real estate license in Florida. Lane has done well over 400 hours of research
on Foreclosure Defense and Consumer Rights Issues in the areas of Fair Credit Reporting Act,
Fair Debt Collection Practices Act, Truth in Lending Act, RESPA and more. He has combined
his research, reading and experience in the real estate and finance industries to develop resources
to help others who find themselves in a tough situation. You care read more on Lane's
Educational Blog at http://www.thePatriotsWar.com

Article Source: http://EzineArticles.com/?expert=Lane_Houk

Thursday, November 11, 2010
Bank of America Allegedly Foreclosing Fraudulently in Kentucky

If you were to believe the banks, the concern over foreclosure “improprieties” is way overdone.
They claim that the robo signers really weren’t doing anything seriously wrong, the banks just
need to redo some paperwork, and everything else about foreclosures is just fine.

Yet Bank of America, having made the implausible claim that it had reviewed 102,000 cases in a
few weeks and nothing was amiss, was forced to retreat and acknowledge that it’s review hadn’t
been comprehensive, and it was finding errors at a rate that could exceed 5%..

The bank position so far has been that problems so far are mere mistakes and “sloppiness”. But
as we’ve described repeatedly, the problems with securitzations run much deeper than that. It
appears that the parties to the deal often failed to take the time consuming steps necessary to
convey the note (the borrower IOU) to the trust as stipulated in the contract governing the deal,
the pooling and servicing agreement. The PSA required that each note in the deal had to be
signed by multiple intermediary parties before it got to its supposed final resting place, a trust.
And that had to take place by closing or at most 90 days thereafter.

Many foreclosures show this process was not observed on a widespread basis: the notes were
assigned (as in transferred) to the trust right before closing, a violation of the PSA, the New York
trust statutes that govern virtually all mortgage securitization trusts, and IRS rules for these trusts
(REMIC). When foreclosure defense attorneys started contesting these assignments, suddenly a
new ruse started to show up: allonges, which are sheets of paper that contained the needed
endorsements, would magically appear out of nowhere. The problem is that an allonge is
supposed to be used only when there is no space left on the note for endorsements, including
margins and the reverse side, and when it is used, it is supposed to be so firmly attached to the
original as to be inseparable. But these “ta da” allonges were always somehow discovered at the
custodian, quite separate from the note.

Bank of America appears to have improved the state of the art in the creative foreclosure
procedures department. I started hearing a few months ago about a sudden and suspicious
increase in the number of foreclosures Bank of America was making in its own name. BofA was
in effect saying that it owned these loans and had never securitized them. That seemed
questionable, since the bulk of Bank of America’s mortgages had been originated by
Countrywide, and Countrywide has said in its SEC filings that it securitized 96% of them. Why
would the courts see such an explosion in foreclosures in the relatively small proportion of
mortgage that BofA had kept on its books? Lawyers suspected that BofA was falsely claiming
that it owned the loan to circumvent questions about standing (if the note had not been conveyed
to the trust properly, then the trust might not be able to foreclose).

We now have some evidence that these suspicions are correct. A bankruptcy attorney in
Kentucky has been working with clients who have lost their homes in foreclosures in the name of
Bank of America. After taking the house, the bank has been filing deficiency judgments for the
remaining mortgage balance. The attorney files a Chapter 13 bankruptcy. In the example we
have here, Bank of America next files an objection to the bankruptcy plan. The attorney for Bank
of America makes a response to the objection. Before the confirmation hearing, the same
attorney files a second objection to the plan in the name of a Countrywide trust.

The attorney for the borrower, needless to say, raises all kinds of hell in the hearing, and wants
an explanation of how two creditors, each representing the same debt obligation, can each object
to the plan, when neither has yet filed a Proof of Claim.

Here is the juicy part. A Proof of Claim is filed later that day. It shows a series of assignments
that were executed after the judgment (meaning after the house was taken by BofA) and after the
borrower’s attorney filed the bankruptcy petition. The assignment is from MERS to Bank of
America executed on September 29. The second assignment is from Bank of America to trust
CWABS 2003-B6. This assignment has not been recorded in the land office as of November 10.
And even more fun, the allonges look odd.

SEC filings show the loan as asset of CWABS 2003-BC6.

So we have:

1. Either Countrywide lied in its 2003 SEC filings or the loan was never on Bank of America’s
books. Which would you believe?

2. Even though Countrywide appears to have intended to convey the loan to its CWABS 2003-
BC6 trust, it appears never to have completed the steps. The assignments are legally void by
virtue of being out of time and by being inconsistent with conveyance chain stipulated in the
PSA (which would have been from Countrywide through at least one intermediary entity to the
trust. So the trust does not now own the note either.

This means the odds are awfully high that Bank of America committed multiple frauds on the
court, first on the state court in the foreclosures process, and now on the Federal bankruptcy
court.
Bank of Americ Proof of Claim– Suedkamp

This sort of abuse is far more serious than robo signing. As much as the likely misconduct here
and robo signing would both be considered frauds on the court, the robo signing is arguably cost
cutting gone mad and riding roughshod over proper legal procedures. By contrast, this practice
has all the appearances of multiple coverups of the fact that Countrywide trust did not have
standing to foreclose on the house. The steps undertaken here look to be a deliberate, concerted
effort for the bank to get its way, the law be damned. And this clearly took more parties and
more thought than the robo signing abuses.

At a minimum, the attorneys at the law firm and the parties at the servicer had to be aware of this
device. And if our reading of this document is correct, this is fraud, pure and simple. It’s high
time we see some attorneys disbarred and some law firms go out of business as a result of
foreclosure chicanery, as well as serious investigations of the people involved in foreclosure
litigation at the servicers and the banks’ general counsel’s office.
Disney Releases Earnings Early, Misses, Stuns RoboChurners, Sends Market Lower
Bullish Smoke Signals Detected at Human Genome Sciences

BofA Reveals Its Fraudclosure RICO Defense

Strategy
Courtesy of Tyler Durden

Today, Bank of America filed its first official response, and exposed how it plans on defending
itself to the recently launched RICO case by the Davis family (Southern Illinois, 10-01303),
seeking monetary damages for what they now claim is a fraudulent eviction on the ground that
the affidavit was signed by two Robosigners: one Keri Selman and one Melissa Viveros. In its
Motion to Dismiss, defendant BofA notes “Plaintiffs assert that these affidavits were
“necessarily perjured” because Ms. Selman and Ms. Viveros could not have read the allegations
in the complaints, examined all of the documents or exhibits “and still read all of the
accompanying documentation to all of the other affidavits [ ] signed the same day.” The bulk of
BofA’s defense is centered around a technicality: it says Plaintiffs do not “seek to reopen or
disturb the judgments in [the Foreclosure Action], and instead seek only monetary damages as a
result of being prematurely evicted from their houses based on perjured affidavits.” The Davises
also have some choice words about MERS saying it is “widely reported” that MERS was “poorly
conceived and sloppily run.” Having read the motion to dismiss, it does appear that BofA may be
able to get off on a series of technicalities on this one, yet that will only enable subsequent RICO
suits to emerge using the weaknesses of the Davis case. And the main thing BofA does not
defend against is the underlying allegation that fraudulent affidavits were used to evict the Davis
family, nor, more importantly, does it present a verifiable case that it does in fact own the
underlying mortgage note. As such, once the technicalities are all resolved in the next RICO
lawsuit, all the holes presented by BofA’s attorneys will be filled, making a technicality-based
defense that much more difficult, since if BofA/CFC indeed does not own the mortgage note,
there is little it can do to defend itself against an onslaught of comparable legal claims.

Some of the disclosed weaknesses in the Davis case, as presented by BofA’s Dismissal Motion:

Because Plaintiffs expressly disclaim any attempt to upset the foreclosure judgments, these
judgments are valid and binding on them, regardless of whether the affidavits contained some
inaccurate statements. In other words, Plaintiffs fail to plead that the allegedly improper
activities of Defendants caused them any harm.

In addition, Plaintiffs plead no facts to support their claim that the result, i.e., a judgment of
foreclosure, would have been any different had the alleged inaccuracies in the underlying
affidavit been discovered in the state court proceeding. Indeed, Plaintiffs’ issue with the
affidavits is that the affiants did not have personal knowledge and the affiants’ titles were
misstated, but Plaintiffs take no issue with the facts and figures showing Plaintiffs’ default on
their mortgage. Thus, Plaintiffs plead no facts to show they were injured by reason of the
allegedly false affidavits, and therefore do not have standing to assert a claim under RICO.
The core of BofA’s defense revolves around the following argument:

Plaintiffs plead no facts to support their claim that the result, i.e., a judgment of
foreclosure, would have been any different had the alleged inaccuracies in the underlying
affidavit been discovered in the state court proceeding. Indeed, Plaintiffs’ issue with the
affidavits is that the affiants did not have personal knowledge and the affiants’ titles were
misstated, but Plaintiffs take no issue with the facts and figures showing Plaintiffs’ default on
their mortgage. Thus, Plaintiffs plead no facts to show they were injured by reason of the
allegedly false affidavits, and therefore do not have standing to assert a claim under RICO.

In other words there are two very opposing processes here: on one hand the fact that the
mortgage borrowers did not have money (which appears to be undisputed) and that they did in
fact stop making payments, yet on the other, is the much more relevant issue of whether BofA
did in fact have the right to accelerate and seek a foreclosure judgment. Which it would not if it
is, as the defendant claim, not in possession of a mortgage title. Ultimately, affidavit fraud in any
dimension, is a merely sideshow to the main issue here, namely that without claim to the actual
mortgage, the servicer does not have legal recourse to foreclose in any capacity. And this is the
one issue that is glaringly avoided by BofA. To be sure, if Bank of America as successor to
Countrywide does in fact have ownership of the note, then the plaintiffs’ case is weak. If on the
other hand, such a note is not in possession, then the plaintiff should have challenged he vary
validity of the foreclosure judgment, which means unwinding a prior state-level decision, and
then proceeding with a RICO suit.

Eventually there will materialize a case where BofA is found to be note deficient. And that case
will serve as the basis for the required series of steps to backtrack, to set case precedent with the
unwinding of a prior foreclosure, and then, if so desired, to seek a RICO case against BofA. We
are confident that is only a matter of time. Until then, BofA has decided to hide behind
technicalities. This will at best buy the bank a few months, and merely embolden more
foreclosure fraud victims to step up and sue the bank.

We will follow this case closely to see if the Judge grants BofA its motion to dismiss. If Judge
Jane Magnus-Stinson sides with the plaintiffs, and refuses to dismiss the case, look for
BofA stock to plunge by 10% the second it becomes public.

As an aside, footnote 2 on page 4 is very relevant as it seems to reference an interesting case law
of “alleged MERS deficiencies”:

Despite Plaintiffs’ devotion of a significant portion of their Complaint to discussion of the

alleged deficiencies involved with MERS, the MERS system has recently been upheld as a valid
recording system. Cervantes v. Countrywide Home Loans, Inc., 2009 U.S. Dist. LEXIS 87997, at
*29-34 (D. Ariz. Sept. 23, 2009) (order granting motion to dismiss) (dismissing a claim that the
MERS system was fraudulent because plaintiffs failed to plead that the MERS system had any
affect on the their obligations under their mortgages or that MERS’ system fraudulently induced
consumers to enter into loans); In Re MERS Litig, 2010 U.S. Dist. LEXIS 106345, at *59 (D.
Ariz. Sept. 30, 2010) (order granting motion to dismiss) (dismissing plaintiffs’ claim that
defendants used MERS to conspire to commit fraud because it was “an attack on the legitimacy
of the MERS system itself,” which had already been resolved in Cervantes).

It appears the Cervantes v. Countrywide Home Loan will be used often in future cases where the
validity of MERS is questioned. It would be useful if some of our legal readers chime in with
their view on just how strong this case is and if it has any chance of being appealed.

Full filing (pdf)

BofA V Davis 11.10

Attachment Size
BofA V Davis 11.10.pdf 60.19 KB
More on this topic (What's this?)
Bank of America Allegedly Foreclosing Fraudulently in Kentucky (naked capitalism, 11/11/10)
PIMCO, NY Fed Pressuring BofA to Repurchase Dud Mortgages (Empty Threats Edition) (naked
capitalism, 10/19/10)
New York Fed Suing Bank of America... (Wealth Daily, 10/19/10)
Read more on Bank of America, Foreclosure at Wikinvest

This entry was posted on Thursday, November 11th, 2010 at 4:48 pm and is filed under Immediately available to
public. You can leave a response, or trackback from your own site.

Illinois – House of Representatives

• Bean, Melissa L., Illinois, 8th

• Biggert, Judy, Illinois, 13th
• Costello, Jerry, Illinois, 12th
• Davis, Danny K., Illinois, 7th
• Foster, Bill, Illinois, 14th
• Gutierrez, Luis, Illinois, 4th
 • Hare, Phil, Illinois, 17th
• Halvorson, Deborah "Debbie", Illinois, 11th
• Jackson Jr., Jesse L., Illinois, 2nd
• Johnson, Timothy V., Illinois, 15th
• Kirk, Mark, Illinois, 10th
• Lipinski, Daniel, Illinois, 3rd
• Manzullo, Donald, Illinois, 16th
• Quigley, Mike, Illinois, 5th
• Roskam, Peter J., Illinois, 6th
• Rush, Bobby L., Illinois, 1st
• Schakowsky, Jan, Illinois, 9th
• Schock, Aaron, Illinois, 18th
• Shimkus, John, Illinois, 19th

Senators of the 111th Congress

What is a class?

Burris, Roland W. - (D - IL) – to be replaced by Mark Kirk Class III

387 RUSSELL SENATE OFFICE BUILDING WASHINGTON DC 20510
(202) 224-2854
Web Form: burris.senate.gov/contact/contact.cfm

Durbin, Richard J. - (D - IL) Class II

309 HART SENATE OFFICE BUILDING WASHINGTON DC 20510
(202) 224-2152
Web Form: durbin.senate.gov/contact.cfm

Message about legalizing MERS

ALERT: Congress is Considering Retroactively Making MERS ‘Legal’

That would be an ex-post-facto law, and is explicitly barred by The Constitution.

Such a bill, were it to be promulgated, would be an act of intentional subversion of The

Constitution and a violation of the oath of office of every Congressperson who votes or
argues for it.

If such a law is in fact introduced it would turn the rule of law on its ear and make clear that we
now live in a nation where literal theft will be made legal retroactively by the Congress and
President in an explicit form and with the impact of literally stealing millions of privately-held
homes.

I expect you to stand with Obama’s veto of HR 3808. Our notarization rights should be within
OUR STATE and not in control of the Feds. Furthermore, HR 3808 is a way to legalize
mortgage electronic registration system (MERS). This pernicious entity, cooked up by the big
banksters, has DEFRAUDED our state of millions (possibly BILLIONS) of dollars in revenue in
the past 12 years. MERS must be left to crumble and so should the big banksters. My family and
I are VERY, VERY TIRED of the bailouts to “Too Big To Fail,” and in NO WAY should MERS
be legitimized or the big banksters subsidized ANY LONGER. There are over 7,000 HEALTHY
local and community banks who are equipped to handle the fallout. Let Too Big To Fail FAIL!

To see Robinson case below use this link: (Good complaint – MERs – securitization, etc.)

http://dockets.justia.com/docket/arizona/azdce/2:2010cv01829/547491/

Robinson et al v. Bank of New York Mellon et al

Share |
Plaintiffs: Van M Robinson and Polly R Robinson
Defendants: Bank of New York Mellon , BAC Home Loan Servicing LP , MERSCORP Incorporated , Mortgage Electronic
Registration Systems Incorporated , ReconTrust Company NA , On Q Financial Incorporated , Darla Sproles ,
Naomi Dudek and Unknown Parties

Case Number: 2:2010cv01829

Filed: August 26, 2010

Court: Arizona District Court

Office: Phoenix Division Office [ Court Info ]
County: Maricopa
Presiding Judge: Frederick J Martone

Nature of Suit: Real Property - Foreclosure

Cause: 28:1331
Jurisdiction: Federal Question
Jury Demanded By: Plaintiff

Access additional case information on PACER

Use the links below to access additional information about this case on the US Court's PACER system. A subscription to PACER is
required.
Access this case on the Arizona District Court's Electronic Court Filings (ECF) System

1. Loni says:

August 12, 2010 at 1:11 PM

I agree if the securitization voids the contract thats that. Why should homeowners not
benefit just as much as the banks when it comes to this whole situation? My issue is I
 can’t take speculation and opinion into court. I have the UCC3 however it would be
helpful to have the SEC requirements and a copy of the Secutization and pooling
agreement contract and (I could get that in discovery I suppose) and it would be super
helpful to have case law in support of this position. Otherwise I and others like me are
pathfinders.

Reply

2. Mike says:

May 3, 2010 at 11:18 PM

Interesting opinion but I think you’re missing the boat on the whole deal. The real issue is
UCC 3 statutes and the separation of the note from the mortgage from inception.

Up until this point, the easy way to go is challenge the standing to file suit or foreclose.
As has been pointed out the paperwork is no where in line. So make them get it right. If
they can do that, then the next thing is to make them show how they ended up with the
note.

If the note has been securitized then the mortgage is no longer security for the note. You
also make them prove the note hasn’t already been paid for through cross
collateralization, insurance, credit default swaps and even TARP. If it has then the notes
been canceled. Just read any of the SEC filings these banks used when packaging the
notes and they even state the mortgage was not collateral for the notes. What else do you
need?

What do I know, I’m just an interested party looking in?