Source: https://loanaudit.wordpress.com/2010/04/06/foreclosure-fraud-and-the-fdcpa/
Timestamp: 2019-04-22 09:01:10+00:00

Document:
FIGHTING MORTGAGE ASSIGNMENT FRAUD – IS FDCPA THE ONLY WEAPON?
This article, in light of a recent filing of a class action complaint and news of an ongoing criminal investigation, examines the Fair Debt Collection Practices Act and its potential application by homeowners seeking damages against foreclosure trustees and mortgage default servicing companies involved in wholesale and systemic mortgage assignment fraud and other deceptive acts and practices.
The Wall Street Journal reported last Saturday that a unit of Lender Processing Services Inc (LPS), a U.S. provider of paperwork used by banks in the foreclosure process, is being investigated by federal prosecutors. Sources have indicated the investigation is criminal in nature and involves the production and recording of fraudulent mortgage assignments.
Although this may have been news to the WSJ and its readers, loan auditors and foreclosure defense lawyers have been complaining about rampant foreclosure fraud perpetuated by trustees and their attorneys for at least 18 months.
During the recent real estate boom between 2002 and 2007 millions of loans were originated and sold to securitization trusts without much attention to detail or regard for proper paperwork and as a result the majority of loan files are missing the required documentation proving chain of title and assignment of the mortgage and note from originator to the trust. In the event of default, in certain jurisdictions, the trustee cannot foreclose without evidence of a recorded mortgage assignment; but since they were never executed and many of the originators are no longer in business, to facilitate foreclosures the assignments are now being forged, backdated and recorded every time a foreclosure action is commenced.
The fraud was so widespread and blatant that in some instances mortgage assignments were notarized and recorded with the name “BOGUS ASSIGNEE” shown to be the official grantee of the mortgage and no one including the court clerks ever questioned the bogus assignments’ authenticity.
This is a single count complaint that bets the house on FDCPA and its applicability to the named defendants who no doubt will move for dismissal claiming they are not debt collectors but trustees and document providers. As such a more careful analysis of the FDCPA is in order.
There are some gray areas in the applicability of the FDCPA, but it is generally accepted that a mortgage debt and those trying to collect on it are subject to the FDCPA. The Act applies only to debts that were incurred primarily for “personal, family or household purposes, whether or not [a debt] has been reduced to judgment.” This means that the character of the debt is determined by the use of the borrowed money and not by the type of property used for collateral. For example, monies loaned that are invested in a business or used to purchase a commercial building would represent a non-consumer debt and not be subject to the FDCPA. However, regardless of the type of property that is secured by the deed of trust, if the borrower used the money to purchase a boat, jewelry, clothing or for other personal expenses, the debt would be a consumer debt subject to the Act.
Furthermore, the United States Supreme Court has held that lawyers who regularly collect consumer debts, even when their collection efforts are through litigation only, are debt collectors under FDCPA. Heintz v. Jerkins 95 Daily Journal D.A.R. 7134 (1995). However, courts have held that lenders who foreclose on their own mortgage loans are not debt collectors. Olroyd v. Associates Consumer Discount Co., 863 F.2d 23 7 (D.C., E D. Penn 1994).
Creditors who take an assignment of the debt while it is in default are generally subject to FDCPA as debt collectors. Therefore, mortgage servicers who obtained the loan while it was in default are subject to the FDCPA as debt collectors [Games v. Cavazas, 737 F.Supp. 1368 (D.C., D. Del. 1990)] but mortgage servicers who receive a loan prior to default are not covered as debt collectors (Penny v. Stewart Elk Co., 756 F.2d 1197 (5th Cir., 1985); rehearing granted on other grounds, 7611 F.2d 237).
To make matters more complicated even when assignment takes place after default some trustees may fall under the exception to “debt collector” that covers “any person collecting or attempting to collect any debt … due another to the extent such activity … is incidental to a bona fide fiduciary obligation.” 15 U.S.C.A. § 1692a(6)(F)(i) (West 1998). As such, US Bank and Deutsche Bank may claim that, because they were acting as trustees foreclosing on a property pursuant to a deed of trust, they were fiduciaries benefitting from the exception of § 1692a(6)(F)(i).
However, the fact that trustees foreclosing on a deed of trust are fiduciaries only partially answers the question. Rather, the critical inquiry is whether a trustee’s actions are incidental to a bona fide fiduciary obligation.
In Wilson v. Draper, 443 F.3d 373 (4th Circuit 2006) the court “concluded that a trustee’s actions to foreclose on a property pursuant to a deed of trust are not “incidental” to its fiduciary obligation. Rather, they are central to it.” Thus, to the extent the trustees use the foreclosure process to collect the alleged debt, they could not benefit from the exemption contained in § 1692a(6)(F)(i).
(B) become subject to any practice prohibited by this subchapter.
(14) The use of any business, company, or organization name other than the true name of the debt collector’s business, company, or organization.
(16) The false representation or implication that a debt collector operates or is employed by a consumer reporting agency as defined by section 1681a (f) of this title.
If the debt collector is in violation of the FDCPA, he/she may be held liable for: (1) any actual damages sustained by the consumer (including damages for mental distress, loss of employment, etc.), and, (2) such additional damages as the court may allow, but not exceeding $ 1,000.
In the case of the class action, the court may award up to $500,000 or one percent of the debt collector’s net worth, whichever is less.
Evidently some advocates believe that without the FDCPA and its provisions which prohibit misrepresentation and deceitful conduct by debt collectors, homeowners as a class have little or no recourse against banks that choose to lie, cheat and defraud the court, while aided by judges who are complicit in the fraud for turning a blind eye and rubber stamping Orders. However, borrowers may have various other causes of action individually, which may or may not be economically feasible to litigate. As always the best advice is to have the loan file audited by a skilled forensic loan auditor to detect violations of federal and state laws followed by consultation with a seasoned foreclosure defense attorney.
My name is Charles, I found your blog doing a quick internet search. We started a new social networking site that helps address foreclosure issue that I believe you would be interested in and hopefully can share to your readers. Can you check out the site (semi-private beta), and send me an email to the address I provided above? Thanks! Would love to chat! I am also on twitter we can share something things!
Typo, I just noticed I posted “things” twice!
I am involved in a “fraudulent assignment” scam involving the bank and the law firm representing the bank. How can I find the federal prosecutors that are going after LPS?
Contact your own state’s attorney first.
An excellent presentation of the facts while having to cite case law.
Remember, no lender in my recollection can act in such an obvious abusive manner and with such a high degree of negligence. The rules of accounting are in jeopardy of giving defaulted homeowners their homes back.
The homeowners make a few fundamental mistakes from what I can see in their defenses.
1)	Denial and the forward thinking resolution to slow the race to the wire by filing first and removing the matter from limited jurisdiction, procedural hearings and /or a bench trial.
2)	Recognizing the reasons why things are happening using the original terms and conditions set forth under FASB and GAAP for trusts organized under a SPE.
3)	Seek to find where any one significant effort to force compliance is offset by another major error in judgment.
4)	To have translated the accounting rules and in plain English use them to construct arguments.
Very well organized and well written material.
Good article I am also a victim of assignment fraud. The US District court rubber stamped in favor of the Bank and LLPs even though they failed to even show for court , dismissing my request for TRO.I currently have it in appeals court and am waiting to get my voice heard. This whole ordeal has taught me Justice is sorely lacking in our courts.
[10:50:28 AM] jeff greenberg: We need your help. Please post a link prominently on this site for http://www.BankClassActions.com . We are aggregating class members for Class Action Law Firms against predatory lenders and their foreclosure mills. We are also studying the data with our Law Firm clients to find commonalities for new class action case theory. This is important, the foreclosure mills are gearing to start up again. The text should also invite anyone who has been foreclosed upon to go to the site and post their information, it is kept private.
Audit Reveals Putative Lender Did Not Exist And Hence The Promissory Note Is Void Ab Initio.
FIGHTING MORTGAGE ASSIGNMENT FRAUD - IS FDCPA THE ONLY WEAPON?

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