Balancing the Scales of Justice for Pro Se Homeowners


Posted by on Feb 8, 2012


This morning I spent 2  ½ hours discussing the current mortgage crisis with  Storm Bradford from Mortgage Fraud Examiners (See here for Storm’s website).   Storm brought to light a few disturbing issues that have been troubling me but I have not been able to articulate.  As a homeowner that is continuing to battle the banks one of the most frustrating aspects is being able to clearly understand what the issues are, what the law says about those issues, and what the law  says about whether I am entitled to a recovery from those issues, and what the law says that recovery should be.  I hear a lot of theories but not a lot of case law cites backing up those theories.

With all the noise out on the internet – securitization failures, no real defaults, falsified and forged documents, TILA/RESPA audits – there seems to be a myriad of solutions that ultimately are NOT solutions but rather stall tactics in delaying the inevitable, the loss of one’s home.  Some sites call these services “tools” in the foreclosure defense while others call them “scams”.  So I am going to try to cut through the chaff and noise and talk about my own personal perspective on these services and hopefully, help you gain enough insight and knowledge so that you can further investigage them and make that determination for yourself rather than letting others tell you.

We have strong emotional ties to our homes, so much so that we seek to find reasons why we should be allowed to keep our home based on what we want, rather than what is proper and legal.  Many of us have attempted “loan modifications” and have spent time (and for many, money) in having some fool lawyer submit our paperwork to the bank – only to have the bank deny the modification.  I have not spent a lot of time pursing or investigating the whole loan modification services so I do not have a lot to offer you in regards to loan modifications.   Other than I know of TWO people that have gotten one – and one of them had to write letters to our Senators, the CEO of Wells Fargo and the Obama Administration; she caught the attention of Feinstein (or was it Boxer?) and that caught the attention of Wells Fargo which ultimately lead to her getting her loan modification in the form of a more favorable rate.  She did it herself and spent many an hour writing letters and making phone calls.  I will ask her to write a guest blog detailing how she managed to get the elusive, and I say urban myth,  “loan modification”.

As loan modifications continue to be denied, homeowners have started seeking defenses to the foreclosures.  The first defense  was the Produce the Note theory; the second defense was TILA/RESPA violations can lead to rescissions; and the third defense are Securitization Audits with mortgage loan files demonstrating the Note is not in the REMIC Trust and/or is NOT in default.  Each of these defenses is being promoted by firms offering services to help you in your battle by employing the firm to conduct the service, so you can use it in your legal strategy.  There are also two other services I hear a little bit about but are not prevalent, yet  remarkably – these are the two services that most likely will result in getting the banks to the table – the first one is a Forensic  Mortgage Audit and/or Mortgage Fraud Examination and the second is a Title Audit.

Before any homeowner (you) can justify the expense of any of these services you have to first determine why you are interested in fighting your foreclosure.  We all have an emotional investment in the property that we call home as well as in our own credit scores and financial health.  When a foreclosure is looming our gut instinct is to first to save our home and if that fails, to move past the situation as fast as possible.  It is very hard to take a discerning look at your situation and make a decision based on logic rather than on the emotional gut reaction to fight and keep your home.  Yet that is exactly what you have to do.

For myself I would look at what the value of my home is, what I owe and what the value of a loan modification would be.  If I owe 500k on a house that is now worth 250k and most likely, in the next year or two will drop another 10 or 20% in value – what kind of loan modification would I want?  I had an escalating ARM that was making the payments unsustainable – I needed my ARM adjusted to a fixed rate.  This of course was 4 years ago; today I would want a principal reduction along with both a fixed AND lower rate on the Note.  If couldn’t get that I would want to do a short sale or deed in lieu of foreclosure and move on with my life.

Why would the bank be inclined to reduce my principal or rate?  Because they like me and want to be nice?  Of course not.  These are National Banks – soulless, careless money machines that only want as much money from you (and me) as possible.  So they are only going to do a modification for one of two reasons – some government program qualifies you for the modification and allows the Bank to recapture what they are losing on the loan; or there is a violation of the law somewhere in either your mortgage origination or in the servicing of your loan and you bring that violation to their attention.

You have a choice now – go investigate the government home modification programs and determine whether you 1) are qualified for the program and 2) if your bank is participating in the program; and the other choice (which you can do both by the way) – is look at your actual loan papers and determine if there are any violations of the law that you can sue under – and if you can sue, what is the recovery for those violations and is that recovery worth the cost of the fight to get the recovery?  Some people may have violations in the servicing of the loan as well as – such as forced placed insurance, misplaced or misapplied payments, etc.

Since so many people are in the middle of foreclosure (and trying to get a modification) I am going to go through the services mentioned above and how they may be used in a legal strategy to defeat the foreclosure.  Notice I said “defeat” and not stall.  Unfortunately some of these services only delay the inevitable – the foreclosure on your property.

I am going to go through these services in the priority of which I, if I were starting out today, would use the services. [nonmember] REGISTER FOR FREE AND READ THE FIVE MAIN SERVICES BEING SOLD TO HOMEOWNERS.  CLICK ON THE BUTTON FOR A QUICK EASY REGISTRATION!

         [/nonmember][ismember]       FORENSIC LOAN/MORTGAGE AUDIT:  This service looks at the actual origination, promissory note and deed of trust/mortgage and determines whether there are any contractual breaches that are a violation of the laws of your state or a federal violation which would entitle you to a recovery worth fighting for.  Read this statement again.  Contractual breaches that are a violation of the laws of your state or a federal violation that would entitle you to a recovery that is worth fighting for.   Note I am not mentioning anything about securitization because at the core of the foreclosure fight is what are the contractual breaches that violated the law.  We already know that 99.9% of the predatory lenders (that DOES include Wells Fargo and Bank of America) used fraudulent appraisals prevalently and those appraisals  overvalued the property so the homeowner was induced into a contract for a property that was already underwater.   This is a powerful argument and something an attorney can sink their teeth into.  The Forensic Loan Audit will detail the fraud in the appraisal and any other fraud/violations of law they see in your paperwork.  THIS IS THE FIRST AND MAY BE THE ONLY SERVICE YOU NEED.  You can take that report to an attorney who will be able to see a clear strategy on how to help you get what you want.  OR the audit may demonstrate that there are no violations.  So you may want to attack the foreclosure process itself.

                TILA/RESPA AUDITS:  Now I foolishly purchased one of these right out of the gate; TILA/RESPA violations are for refinance loans not purchase only loans.  That should have been one of the first questions asked by the auditor and she should have told me, even if I find them, you have no legal grounds to pursue them since this is a purchase loan, not a refinance loan.  In addition, the auditor should have asked when the loan was originated because 1) there IS  a statute of limitations and 2) the recovery is minimal so is it worth pursing?  But these are not questions someone asks or answers they give when they are cashing your check.  IMHO, the auditor should provide you with a check list to determine whether the audit is of value to you BEFORE you purchase the audit, and second, they should have provided me with a document on what each violation means and what the potential recovery value is and a really savvy auditor should give you case cites to back up the claims.  Short of getting that, it is a waste of time and money.  When I gave mine to my attorney he laughed and asked me what I wanted him to do with it.  I was not a happy camper.  I am not saying there isn’t a use or place for a TILA/RESPA audit, but the wins where a homeowner actually STOPS or overturns a foreclosure based on a TILA/RESPA violation are few and far between, and were egregious violations.  You or your attorney HAS to know what to do with a TILA/RESPA violation.

                TITLE AUDIT:  These are audits where the auditor goes to your public county court records and documents what they are seeing in the records.   They get a copy of each document on file (i.e. Deed of Trust, assignments, Notices of Default, Trustee Sale, etc.)  The auditor looks at each document for:

    1.  Who filed it? Did that party have the legal right to file it?
    2.  Who signed it? Are they a known robo or surrogate signer?
    3.  When was it filed? Signed? Notarized? Is the notary known for fraudulent notarizations?

The title audit then details where there are improprieties that may be evidence of fraud or simply a technicality in the manner in which the document was executed and filed.  Most likely you will need an attorney to look at the audit and have that attorney tell you what the violations of law are and whether there is potential recovery (either in stopping the foreclosure or monetary) that justifies hiring the attorney to purse the violations.  Keep in mind that YOU can go get the documents yourself, you do not need to pay someone to get your documents.  What the auditor should bring to the table is their being able to recognize known robo or surrogate signers (which in Missouri and Nevada are considered forgeries and are illegal) and where there are gaps in the chain of title. These are grounds to use in a legal strategy to stop (but for the most part have only stalled) the foreclosure.  The banks can overcome technicalities in most cases (though not all); if there is fraud or an actual violation of law– then the battle is on.

                 SECURITZIATION AUDITS:  This is the latest craze right now and there are both good audits and stupid audits.  The purpose of the securitization audit is to assist your attorney in your legal strategy by determining if the party foreclosing has a standing to foreclose and whether the actual beneficiary has incurred a default.  Just as you can go to your county recorder’s office and get your title records, you can also go to EdgarOnline and pull the securitization documents of the REMIC Trust that is listed on your Notice of Default and/or assignment.   (See Who is Edgar? To pull your documents on your own).  Now what the audit SHOULD do is:

    1. Detail who the parties are to the REMIC Trust and their roles
    2. Detail when the REMIC Trust closed and whether your Note and Deed of Trust made it into the trust; if not the report should detail the failure.
    3. Detail what the conveyance requirements of the REMIC Trust are and whether there is evidence that the parties followed the conveyance requirements or did not; if they did not, then the report should detail that failure.  (i.e. Trust requires an endorsement of all parties but your Note only shows an endorsement in blank by one party, etc.)  This audit should also detail if the Purchase Sales Agreement was followed as well as the Pooling & Servicing Agreement.
    4. Evaluates the mortgage loan files to determine if the REMIC Trust has actually incurred a default and if not provides you with a detailed analysis of how the REMIC Trust has not incurred a default.  (This in turn would mean the Notice of Default is fraudulent and a violation of CCC § 2924 (California) since ONLY the beneficiary can incur the default).

Keep in mind that the whole argument on the whether the REMIC Trust claiming rights to your Note is a “theory” that is being debated in court rooms across the country.  Can a homeowner, who is not a party to the REMIC Trust, defeat the foreclosure based on the parties not having legal standing to pursue a foreclosure?  The primary argument is that the homeowner is NOT a party to the REMIC Trust and therefore can make no claims against the REMIC Trust’s rights (this is the bank argument); the homeowners argument typically is that the homeowner is not trying to enforce the REMIC Trust documents but rather demonstrating to the court that the NOTE is not the property of the REMIC Trust and therefore, the party foreclosing has no standing.  And, if the Note IS in the REMIC Trust, the TRUST is reporting to the investors (owners) of the REMIC Trust that the Note is not in default.  This is serious legal sh** and your house is at stake.  If you are going this route, either totally understand YOUR states laws and the securitization or hire an attorney who gets it.  In fact BOTH of you should get it; because if you don’t then you are in for one long, expensive fight that right now is untested and there are some wins and many losses.

If you purchase a securitization audit and all you get is a binder full of the SEC documents (photocopies) with no legal analysis and no certified copies of the documents, demand your money back.  Those are expensive audits (upwards towards $4,000 per audit!) and you damn well better get documents you can submit at trial as “evidence” and you need to make sure that whoever did the audit can testify at court.  Most of the legitimate services will only work through an attorney – so if they aren’t demanding you have an attorney you need to ask some hard questions before you spend the money.   If you are a Pro Se, then it is imperative that the firm you are dealing with provides certified copies, has an expert evaluating the documents, an expert who can testify at court and that you totally understand how to plead the REMIC Trust’s failure to secure the Note.  I can not stress enough about making sure this is part of a total overall legal strategy — don’t take your SEC documents and then some pleading you downloaded from the interent and run into court.  LEGAL REPRESENTATION IS HIGHLY RECOMMENDED.  In fact, you should only get this audit, IMHO, if you DO have an attorney and he/she tells you to get it.  And most likely, if the attorney thinks it is a good idea, they will have resources who can do the audit for you.

UPDATED:  One final thought on the Securitization Audit – (thanks Dutch) the language can not be couched in “most likely” or “more likely than not”.  If the Audit is telling you that then you won’t be able to use it in court; you will have to do  discovery to CONFIRM it – otherwise it is just hearsay allegations.    Here is an affidavit-Tom-Adams-esq-horace-case who testified for  the Plaintiff Horace – this is the kind of testimony that is worth 4k.  Which Horace WON! (See here).

This isn’t easy stuff folks, I know that.  I am four years into this stuff and I am learning every day.  What I do know is that prevention is the best course of action.  If you are not in the foreclosure process then definitely investigate the loan modification programs (do it yourself folks, no one can guarantee the loan modification, so go see what the government is and isn’t doing and see if you qualify for one of their programs) – and get your loan papers audited.  That is where your legal strategy should start – if you do these two things right you most likely won’t need a title or securitization audit.  And definitely pass on the TILA/RESPA audits unless there is a viable violation that is worth pursuing.  Make sure the TILA/RESPA auditor can tell you all about the potential violations, the timing to bring actions against those violations ,  what the recovery is and can provide case cites to support the findings.  If they can’t have a meaningful, honest conversation about what may or may not be found in the audit, keep looking.  When you find someone who can have that conversation then you will be better prepared to dtermine if it is a viable investment of your prescious legal dollar. The actual audit will give you the details of the violations (and cites!)   (But as Storm says, the bite is in the fraud or contract violations, not TILA or RESPA).

I think that we will start seeing more and more cases involving the robo – surrogate signing and false notarizations of documents.  I am not clear how the homeowner uses these in their legal arguments and as I research and understand it better, I will definitely tell it to you here.  I do get the securitization audits but am wary of how they are being done and whether homeowner’s expectations are being managed properly on what the audit can and cannot do.   I believe that they do have a place in legal strategies yet they bring a layer of complexity that is vexing for most people, including judges.  The cleanest simplest way is to attack the underlying contract (the promissory note) and the process in which you entered that contract.  When you can’t attack the contract, then attacking the foreclosure through a Title and Securitization Audit are worth considering.   As I gather up case law on these issues I will definitely let you know. [/ismember] I would love your feedback on whether you have used any of these services and if so, were they helpful or not?







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  1. Storm Bradford

    Firstly, TILA/RESPA audits are basically useless.

    Mortgage Fraud Examiners exposed this problem of bogus forensic loan audits over three years ago in a press release: “Beware of the Latest Foreclosure Rescue Scam—“Forensic Loan Audits.”

    Secondly, securitization audits are basically worthless as well.

    The majority of courts have ruled thusly: “[S]ince the securitization merely creates a separate contract, distinct from plaintiffs’ debt obligations under the Note and does not change the relationship of the parties in any way, plaintiffs’ claims arising out of securitization fail.” Lamb v. MERS, Inc., 2011 WL 5827813, *6 (W.D. Wash. 2011) (citing cases); Bhatti, 2011 WL 6300229, *5 (citing cases); In re Veal, 450 B.R. at 912 (“[Plaintiffs] should not care who actually owns the Note—and it is thus irrelevant whether the Note has been fractionalized or securitized—so long as they do know who they should pay.”); Horvath v. Bank of NY, N.A., 641 F.3d 617, 626 n.4 (4th Cir. 2011) (securitization irrelevant to debt); Commonwealth Prop. Advocates, LLC v. MERS, 263 P.3d 397, 401-02 (Utah Ct. App. 2011) (securitization has no effect on debt); Henkels v. J.P. Morgan Chase, 2011 WL 2357874, at *7 (D.Ariz. June 14, 2011) (denying the plaintiff’s claim for unauthorized securitization of his loan because he “cited no authority for the assertion that securitization has had any impact on [his] obligations under the loan, and district courts in Arizona have rejected similar arguments”); Johnson v. Homecomings Financial, 2011 WL 4373975, at *7 (S.D.Cal. Sep.20, 2011) (refusing to recognize the “discredited theory” that a deed of trust “ ‘split’ from the note through securitization, render[s] the note unenforceable”); Frame v. Cal-W. Reconveyance Corp., 2011 WL 3876012, *10 (D. Ariz. 2011) (granting motion to dismiss: “Plaintiff’s allegations of promissory note destruction and securitization are speculative and unsupported. Plaintiff has cited no authority for his assertions that securitization has any impact on his obligations under the loan”).

    That’s why securitization audits are basically worthless, which will be exposed in our next press release due out this week: “Beware of the Latest Foreclosure Rescue Scam-Securitization Audits.”

    • Aysha

      EMC is a joke they told me i didn’t qafiuy for a loan modifcation and they wanted me to pay 1800$ i’m still paying the 1097$ they gave me before can anyone help me deal with these ppl

  2. Deborah Watson MFE is the biggest fraud of all! Just check out who this self proclaimed hero really is!

    • Koluya

      Mortgage Mod? Hilarious! I have just spent about two weeks trying to get a moagrgte mod on my home with no luck. I have a B of A loan with a $730K balance on a home now worth $460K (I just had it appraised). Not only was I denied, I was told that our debt to income ratio is too high! Well of course- that’s why I wanted a loan mod. We have had a steadily decrease in income the last few years and my husband cannot find a job! The worse part is the ONLY thing I asked for was a temporary rate reduction (we are currently at 6.375%) and that our adjustable moagrgte be turned into a 30 year fixed (our moagrgte will readjust in 4 years- not soon but I know it won’t be worth what we owe now so I won’t be able to refinance). I also told them we could start the 30 years now (we have been paying on the loan for 3 years to the tune of about $125K already). They reviewed our situation for a week and called us back and told us that they were denying us but if we wanted to work out a short sell they would be willing. WHAT?? If we short sell they will get AT MOST $460K for this house not including their carrying costs, realtor fees etc.. I DON’T GET IT!! We are willing to keep the house for what we owe on it (I did NOT ask for a principal reduction) and start over on our loan basically giving them $125K that we have paid and start the 30 years over! Who is making these decisions and the Obama administration is crazy if they think this is working. We are stupid for even wanting to keep the house but I am trying to not disrupt my 4 kids lives. I had heard the B of A was hard to deal with but stupid I wasn’t expecting ..


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