President Obama recently urged an overhaul of the country’s decades-old mortgage finance system, winding down the government-backed Fannie Mae and Freddie Mac and instead essentially giving the private sector a monopoly on the issuance of mortgage-backed securities.
However, our Miami foreclosure lawyers understand that call is being re-evaluated in light of recently unsealed documents in the case of USA et al v. American Home Mortgage Servicing Inc et al, handled by the South Carolina District Court. What those documents show is that a great deal of those mortgage-backed security issuers never had legal title to the mortgages backing their securities.
As David Dayden of Salon.com reports, the production of false documents, signed by “robo-signers,” was a foregone conclusion because in many cases, the actual physical delivery and endorsement of the promissory note and mortgage in most of these cases never occurred. The forged documents were needed by the banks in order to establish their legal standing in court to foreclose.
In the end, the result was that some $1.4 billion in mortgage-backed securities to this very day are based on phony mortgage assignments, according to the lawsuit plaintiff, Lynn Szymoniak. A former white-collar fraud expert, the Floridian uncovered these problems while battling her own foreclosure over the course of the last several years.
Her lawsuit, filed on behalf of the federal government, 17 states and 3 cities, was previously settled last year by a host of large banks for nearly $1 billion – $18 million of that going to Szymoniak as a whistleblower. In her own case, she underwent a foreclosure back in 2009, prompting her to begin researching the entire system. She uncovered a massive amount of fraud. For example in her case, documentation listed Deutsche Bank as the owner of the mortgage. Yet, records showed the bank only legally acquired the mortgage four months after it filed foreclosure.
A total of 28 banks, mortgage servicers and document processors were named, though not all of them settled.
It’s only now that the documents are being unsealed. Szymoniak and her legal team is now planning on targeting some of the other named defendants that chose not to settle, including Bank of New York Mellon, US Bank and HSBC.
Recovery of some of that money through the settlement agreement is certainly a start. However, it’s not going to be much of a consolation if we simply return to the old system. In fact, it’s going to get exponentially worse if we’re going to give the private sector even more power over the market by withdrawing Fannie and Freddie.
Foreclosures from this era are still ongoing. Foreclosed homes have been re-sold and still, many of these mortgage servicers lack the proper documentation. Most people don’t understand this when the bank files default or foreclosure action against them. They have a strong shot at being able to battle these cases for the simple fact that the mortgage servicer is often unable to prove any legal rights to the property.
Before you give up, consult with an experienced Miami foreclosure defense attorney.
If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.
New Fraud Evidence Shows Trillions Of Dollars In Mortgages Have No Owner, Aug. 13, 2013, By Alan Pyke, ThinkProgress.org
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Eminent Domain Mulled by Municipalities to Cope With Foreclosure Glut, Aug. 12, 2013, Miami Foreclosure Lawyer Blog