Source: https://www.scribd.com/doc/78943501/Thomas-Cox
Timestamp: 2017-10-22 14:26:23
Document Index: 377190689

Matched Legal Cases: ['§1', '§1', '§1', '§1', '§1', '§1', '§1']

Thomas Cox | Foreclosure | Mortgage Loan
January	10,	2012
ULC	Study	Committee	on	Mortgage	Foreclosure	Procedures	Thomas	A.	Cox,	Esq.
FROM:	RE:
Commentary	Responsive	to	“Issues	to	Address”	Memorandum	of	December	7,	2011	_____________________________________________________________________________________
I.	Introduction.1	As	the	JEBURPA	letter	to	the	ULC	Committee	on	Scope	and	Program	dated	May	30,	2011	(the	“JEBPA	Letter”)	asserts,	there	is	a	national	“foreclosure	crisis”.	The	JEBURPA	letter	goes	on	to	note	that	“substantial	problems	have	emerged	with	servicers,	law	firms,	and	‘foreclosure	processing’	businesses.”2	Following	these	comments,	the	JEBURPA	letter	then	makes	the	unwarranted	and	completely	unsupported	leap	to	the	conclusion	that	[m]any	of	these	problems	reflect	divergence,	uncertainty,	and	variability	not	only	between	states	with	similar	foreclosure	methods,	but	also	within	states	where	(for	example)	different	judges	within	the	same	state	may	establish	different	rules	for	foreclosure	proceedings	within	their	courtrooms.	3
1	The	author	of	this	memorandum	represented	financial	institutions	and	the	FDIC	during	the
Savings	&	Loan	crisis	of	the	late	1980s	and	early	1990s.	There	was	a	heightened	level	of	foreclosure	activity	at	that	time,	although	nothing	approaching	the	astonishing	magnitude	of	today’s	crisis.	The	observations	in	this	memorandum	are	drawn	from	that	experience,	the	author’s	nearly	thirty	years	of	private	legal	practice	in	financial	industry	and	bankruptcy	work,	and	from	has	his	full	time	work	for	the	better	part	of	the	last	four	years	in	the	Maine	Attorneys	Saving	Homes	(MASH)	project	that	is	jointly	sponsored	by	the	Maine	Volunteer	Lawyers	Project	and	Pine	Tree	Legal	Assistance.	The	observations	set	forth	in	this	memorandum	are	those	of	the	author	alone	and	do	not	constitute	policy	statements	of	those	organizations.	The	author	practices	in	a	judicial	foreclosure	state	and	does	not	presume	to	comment	upon	issues	that	relate	to	non-­‐judicial	foreclosures.
2	It	must	be	noted,	however,	that	a	major	contributing	force	to	the	foreclosure	crisis	has	nothing
to	do	with	the	problems	addressed	by	the	JEBURPA	report	and	by	this	memorandum,	but	are	the	direct	result	of	the	wild	West	lending	and	underwriting	environment	that	prevailed	until	2007.
3	JEBURPA	letter	report	dated	May	30,	2011,	4th	par.
Contrary	to	the	unsupported	conclusion	in	the	JEBURPA	Letter,	Federal	Reserve	Governor	Sarah	Bloom	Raskin,	speaking	just	three	days	ago	on	January	7,	2012,	did	not	find	differing	state	foreclosure	statues	to	be	the	cause	of	problems	in	the	foreclosure	process.	Rather,	she	found	that:	These	problems	have	included	critical	weaknesses	in	mortgage	servicers’	foreclosure	governance	processes,	foreclosure	document	preparation	processes	and	oversight	and	monitoring	of	third-­‐party	law	firms	and	other	vendors.	Raskin,	www.federalreserve.gov/newsevents/speech/raskin20120107a.htm	(last	visited	January	9,	2012).	Similarly,	the	white	paper	of	the	Federal	Reserve	entitled	“The	U.S.	Housing	Market:	current	Conditions	and	Policy	Considerations”	http://www.federalreserve.gov/publications/other-­‐reports/files/housing-­‐white-­‐ paper-­‐20120104.pdf	(lasted	visited	January	9,	2012)	submitted	by	Fed	Chairman	Ben	S.	Bernanke	to	the	House	and	Senate	on	January	4,	2012,	noted	that	investigations	of	servicers	found	“critical	weaknesses	at	all	institutions	examined,	resulting	in	unsafe	and	unsound	practices	and	violations	of	federal	and	state	laws.”	The	Federal	reserve	white	paper	goes	on	to	note	four	factors	which	“might	contribute	to	a	more	functional	servicing	system	in	the	future,	but	not	one	of	those	factors	was	involves	overriding	the	variation	among	state	foreclosure	statutes	with	new	legislation.	The	JEBURPA	Letter	fails	to	consider	what	the	causes	are	of	the	“substantial	problems”	that	it	finds	to	exist.	No	consideration	was	given	to	the	question	of	whether	and	to	what	extent	the	problems	have	been	directly	caused	by	the	foreclosure	industry	itself,	nor	was	consideration	was	given	to	whether	the	foreclosure	industry	itself	has	the	ability	and	responsibility	to	correct	many	of	the	problems	that	have	been	noted	before	remedial	legislation	is	considered.	Before	there	can	be	any	determination	made	as	to	whether	there	is	a	need	for	a	new	uniform	act	dealing	with	foreclosure	issues,	there	must	be	an	honest	accounting	of	(1)	what	the	problems	are	that	cause	legislation	to	be	considered,	(2)	what	has	caused	those	problems	to	occur,	and	(3)	only	then,	whether	the	problems	lend	themselves	to	a	legislative	solution	that	would	be	offered	by	a	new	uniform	act.	Unfortunately,	it	appears	that	the	JEBURPA	letter	of	May	30,	2011	and	all	of	the	subsequent	steps	leading	to	this	stakeholders’	meeting	have	failed	to	conduct	the	step	2	analysis.	Further,	it	appears	that	the	assumption	has	been	made	that	new	legislation	is	the	solution	to	the	perceived	problems	without	there	having	been	analysis	of	whether	other	non-­‐legislative	solutions	might	be	more	appropriate.	5th	Draft,	1/9/12	2
An	example	of	the	lack	of	analysis	of	the	causes	of	the	problems	under	consideration	appears	with	respect	the	issue	raised	by	FHFA	about	asserted	variations	in	evidentiary	standards.	Without	any	analysis	of	why	that	is	occurring,	it	makes	no	sense	to	jump	to	the	conclusion	that	a	statute	is	needed	to	set	evidentiary	standards	for	foreclosure	cases	where	statutory	proof	requirements	already	exist	and	rules	of	evidence	are	fully	developed	and	in	place.	Foreclosures	are	controlled	by	statute	and	those	statutes	are	generally	clear	about	the	proof	required	of	a	party	seeking	to	foreclose.	It	is	open	to	doubt	that	the	addition	of	new	statutory	requirements	will	resolve	variations	among	judges	as	to	how	they	chose	to	interpret	and/or	enforce	statutory	requirements.	Once	a	careful	analysis	is	conducted	as	to	the	causes	of	the	issues	being	raised,	and	once	consideration	is	given	to	potential	non-­‐legislative	solutions,	the	need	for	a	new	uniform	foreclosure	statute	becomes	murky	at	best.	The	JEBUPA	Letter	gives	no	consideration	to	the	fact	that,	since	the	inception	of	the	United	States,	states	have	developed	their	various	foreclosure	statutes	over	a	period	of	more	than	two	hundred	years,	to	meet	the	needs	of	their	own	citizens.	The	fact	the	development	of	these	various	statutes	have	produced	different	methods	of	foreclosure,	should	be	considered	to	be	one	of	the	strengths	of	this	country	rather	than	an	obstacle	to	be	overcome	for	the	benefit	of	the	foreclosure	industry	whose	problems	are	mostly	of	its	own	making.	The	author	respectfully	suggests	that	the	stakeholders’	meeting	on	January	13,	2012	should	first	address	these	issues.	It	is	further	suggested	that	the	expedited	track	of	the	Study	Committee’s	work	should	be	slowed	to	permit	it	to	conduct	a	reasoned,	full	and	fair	analysis	of	the	causes	and	other	possible	non-­‐legislative	solutions	to	the	problems	under	consideration	before	moving	to	a	decision	on	whether	to	recommend	the	commencement	of	a	uniform	act	drafting	project.	The	reasons	that	the	work	of	the	Study	Committee	has	been	set	on	an	“expedited”	track	by	the	July	21,	2011	letter	to	JEBURPA	by	ULC	President	Michael	Houghton	are	not	stated.	It	is	known	that	a	ULC	process	of	drafting	a	new	uniform	act	is	generally	a	two	to	two	and	one	half	year	process	and	that,	even	if	a	new	uniform	act	is	produced,	the	time	to	passage	in	the	various	states	is	an	additional	multi-­‐year	process	of	indeterminate	length.	The	work	of	the	Study	Committee	and	a	potential	drafting	committee,	if	they	were	to	produce	a	new	uniform	foreclosure	act,	are	not	likely	to	produce	a	solution	during	the	present	foreclosure	crisis.	These	important	issues	are	deserving	of	a	deliberate	and	careful	review,	not	an	expedited	report	produced	in	one	day	after	an	initial	stakeholders’	meeting	is	concluded.
5th	Draft,	1/9/12
II.	Identification	of	the	respective	and	differing	interests	of	the	foreclosure	industry	and	homeowners.	A	determination	of	whether	there	are	problems	and	issues	in	the	foreclosure	process	that	require	solution,	and	a	determination	of	the	nature	and	extent	of	those	problems	is	very	much	a	function	of	who	is	making	those	determinations	and	what	their	interests	are	in	the	foreclosure	process.	It	has	been	troubling	for	the	author	to	observe,	both	at	the	May	9,	2011	PEB	Stakeholders	Meeting	and	also	in	some	of	the	materials	leading	to	this	meeting,	the	making	of	assertions	that	proposals	being	made	would	be	in	the	best	interests	of	homeowners,	without	the	speakers	showing	any	awareness	of	what	the	interests	of	homeowners	truly	are.	The	mortgage	industry	is	comprised	of	financial	institutions,	and	corporations	that	provide	services	to	them,	whose	prime	interests	lie	in	maximizing	economic	returns	and	minimizing	economic	costs.	Making	money	is	the	reason	for	being	of	these	enterprises.	There	is	nothing	pejorative	in	this	observation;	it	is	simply	reality.	One	the	other	hand,	homeowners’	interests	are	far	more	diverse	and	nuanced.	Minimizing	the	costs	associated	with	mortgage	borrowing	and	minimizing	economic	losses	in	foreclosure	are	obviously	of	great	interest	to	homeowners,	but	their	interests	extend	well	beyond	that.	They	are	emotionally	attached	to	their	homes	and	their	homes	represent	places	of	safety	and	security	for	their	families4.	Losses	of	their	homes	produce	emotional	suffering,	mental	illness,	impairment	of	children’s’	educations	and	other	major	life	disruptions.	As	a	consequence,	it	must	be	recognized	that,	among	the	legitimate	interests	of	homeowners	in	the	foreclosure	process,	are	at	least	the	following:	Transparency.	Homeowners	have	a	vital	interest	in	a	foreclosure	process,	including	loan	modification	proceedings,	where	the	rules	are	knowable	and	understandable,	outcomes	are	sensible	and	predictable,	and	the	identity	and	interests	of	the	parties	affecting	the	outcomes	are	known	and	comprehensible.	4	The	individual	and	societal	importance	of	individuals’	homes	has	always	been
recognized	in	American	law	and	policy.	It	is	recognized	in	bankruptcy	laws,	income	tax	laws,	property	tax	rates,	federal	mortgage	lending	standards,	and	a	myriad	of	other	contexts.	In	the	Ibanez	case,	the	court	explicitly	recognized	this	factor.	It	stressed	that	the	securitization	of	mortgages	does	not	justify	carelessness	in	foreclosure	procedures;	those	mortgages	still	convey	“legal	title	to	someone’s	home	or	farm,	and	must	be	treated	as	such.”	Pitegoff	&	Underkuffer,	An	Evolving	Foreclosure	Landscape,	The	Ibanez	Case	and	Beyond,	American	Constitution	Law	Society	at	http://www.acslaw.org/publications/issue-­‐ briefs/an-­‐evolving-­‐foreclosure-­‐landscape-­‐the-­‐ibanez-­‐case-­‐and-­‐beyond
Honesty.	Homeowners	have	an	interest	in	a	foreclosure	process	that	is	conducted	honestly,	with	parties	in	court	proceedings	presenting	honest	evidence,	with	servicers	providing	honest	accountings	of	loan	histories,	with	loan	owners	and	servicers	presenting	honest	statements	about	loan	modification	matters	and	honest	statements	about	dual	tracking	measures.	Rationality.	Homeowners	have	an	interest	in	having	the	parties	controlling	their	mortgages	acting	in	a	rational	ways	(for	example,	an	interest	in	having	loan	owners	and	their	servicers	make	logical	decisions	to	modify	loans	when	a	net	present	value	analysis	shows	that	the	loan	owner	will	benefit	from	a	loan	modification	rather	than	a	foreclosure.)	Good	faith.	Homeowners	have	an	interest	in	dealing	with	parties,	such	as	loan	servicers,	whose	economic	self-­‐interest	does	not	motivate	them	away	from	the	making	of	honest	and	rational	decisions	and	whose	economic	self-­‐interest	does	not	conflict	with	the	best	interest	of	the	parties	who	own	the	loans	in	question.	Thus	they	have	an	interest	in	dealing	with	loan	servicers	whose	decisions	on	the	handling	of	first	mortgage	foreclosures	are	not	affected	by	these	same	servicers’	ownership	of	second	mortgages	on	the	same	properties,	and	they	have	an	interest	in	dealing	with	loan	servicers	whose	fees	structures	do	not	motivate	them	toward	foreclosures	where	loan	modification	are	in	the	best	interests	of	loan	owners.	III.	The	problem	needing	attention	from	the	perspective	of	the	mortgage	foreclosure	industry.	It	appears	that	Part	III	B,	¶¶	1-­‐7	and	9-­‐12	of	the	“Issues	to	Address”	memorandum	of	December	7,	2011	sets	forth	the	problems	that	the	mortgage	industry	wishes	to	see	addressed	by	a	legislative	solution.	IV.	The	problems	needing	attention	from	the	perspective	of	homeowners’	representatives.	Paragraph	8	of	Part	III	B	of	the	Issues	Memorandum	addresses	only	very	limited	aspects	of	the	problems	experienced	by	homeowners	in	this	foreclosure	crisis.	It	thus	appears	that	there	has	been	minimal	involvement	of	homeowner	interests	in	the	framing	of	the	JEBURPA	letter	report	of	May	30,	2011	or	the	“Issues	to	Address”	memorandum	of	December	7,	2011.	A	statement	of	additional	issues,	and	a	restatement	of	some	of	the	issues	stated	in	Part	III.	B.	8.	of	the	Issues	Memorandum,	follows.	This	list	represents	only	the	observations	of	the	author	of	this	memorandum,	and	undoubtedly	would	expand	with	the	input	of	other	parties	representing	homeowner	interests.	5th	Draft,	1/9/12	5
A.	Deception	of	courts,	mediators	and	homeowners	as	to	identity	of	owners	of	loans	being	foreclosed.	1.	Deception	of	homeowners,	courts	and	mediators	by	the	GSEs	and	their	servicers,	as	to	the	true	identity	of	the	parties	owning	mortgage	loans	being	foreclosed	upon,	has	resulted	in:	a.	Inability	of	mediators	to	know	what	loan	modification	standards	apply	to	any	given	loan	coming	before	a	mediator.	b.	Inability	of	homeowners	and	their	lawyers	to	know	the	identity	of	the	party	owning	the	loans	and	having	the	ultimate	authority	to	modify	the	loans;	c.	Wasted	time	for	lawyers	for	homeowners	and	courts	in	pre-­‐trial	discovery	disputes	relating	to	determination	of	the	identity	of	the	true	owners	of	mortgage	loans	being	foreclosed	upon.	2.	The	MERS	System	has	been	and	continues	to	be	a	source	of	problems	for	courts,	mediators	and	homeowners	in	determining	the	identity	of	the	parties	who	own	loans	in	foreclosure.	5	It	was	only	under	public	pressure	that	MERS	began	to	identify	the	owners	of	the	mortgage	loans	registered	on	its	system.6	Even	now,	disclosure	of	“investor	identity”	information	on	the	MERS	system	is	voluntary	with	those	investors	5	It	is	useful	to	note	that	from	its	inception,	the	MERS	system	was	not	intended	to	provide
information	about	the	identity	of	owners	of	the	notes	secured	by	mortgages	registered	on	its	system.	In	a	lengthy	legal	opinion	letter	dated	September	1,	1997	from	the	law	firm	of	Covington	&	Burling	to	William	Hultman,	Corporate	Secretary	of	MERS,	opining	about	the	legality	of	the	MERS	system,	the	law	firm	stated	in	part	as	follows:	Accordingly,	there	is	no	reason	why,	under	a	mortgage,	the	entity	holding	or	owning	the	note	may	note	keep	the	fact	of	its	ownership	confidential.	.	.	the	security	agreement,	when	recorded,	merely	provides	notice	to	the	world	that	a	lien	has	been	placed	upon	the	debtor’s	property	as	security	for	the	note.	The	public	has	no	significant	interest	in	learning	the	identity	of	the	holder	of	the	note.
6	About	two	years	ago	MERS	began	allowing	any	member	of	the	public	to	look	up	a	specific	loan
on	the	MERS	website	(https://www.mers-­‐servicerid.org/sis/	)	and	to	determine	the	identity	of	the	servicer	and	the	investor	in	the	loan.	Within	the	last	few	months,	MERS	again	narrowed	access	to	this	information	by	requiring	the	insertion	of	individual	borrower	social	security	numbers	in	order	to	determine	the	identity	of	the	owner	of	a	loan	registered.	This	restriction	of	access	nullified	ongoing	projects	by	legal	researchers	and	scholars	to	study	and	catalog	issues	and	inaccuracies	created	by	the	MERS	system.	Similarly,	and	in	a	further	narrowing	of	mortgage	industry	transparency,	MERS	has	recently	removed	public	access	on	its	website	to	the	Merscorp,	Inc.	Rules	of	Membership,	the	MERS	Terms	and	Conditions,	the	MERS	Procedures	Manual	and	other	such	documents	which	allowed	the	public,	and	courts	to	try	to	understand	how	MERS	actually	operates.
and	thus	is	often	unavailable,	even	to	homeowners	trying	to	determine	the	identities	of	the	owners	of	their	loans.	Further,	when	a	mortgage	is	registered	on	the	MERS	System,	that	system	never	identifies	the	actual	trust	that	owns	the	loan.	Contrary	to	the	MERS	claims	that	it	accurately	tracks	the	ownership	of	mortgage	loans	registered	on	its	system,	MERS	does	not	obtain,	record	or	track	the	identity	of	the	trusts	that	own	the	loans	registered	on	its	system,	The	lack	of	this	information	makes	it	impossible	to	locate	the	pertinent	pooling	and	servicing	agreement	which	is	needed	to	determine,	among	other	things,	whether	there	are	investor	restrictions	which	limit	the	ability	of	a	servicer	to	modify	loans	in	that	trust.	B.	Abuses	by	servicers	and	mortgage	loan	owners	of	the	judicial	foreclosure	process.	1.	There	is	a	constant	pattern	of	initiation	of	foreclosures	by	servicers	where	the	foreclosing	parties	lack	the	right	to	enforce,	or	lack	proof	of	the	right	to	enforce,	under	UCC	Section	3-­‐301,	resulting	in	extensive	and	wasteful	litigation	and	waste	of	judicial	resources	when	standing	issues	are	contested.	2.	In	states	with	statutes	and/or	court	decisions	permitting	foreclosures	only	to	be	conducted	by	owners	(as	opposed	to	mere	holders)	of	mortgage	loans,	there	are	persistent	failures	of	servicers	and	their	lawyers	to	bring	foreclosures	in	the	names	of	the	actual	loan	owners.	3.	There	is	a	pattern	of	frequent	dismissals	of	judicial	foreclosures	when	servicers’	lawyers	are	confronted	with	valid	legal	defenses,	followed	by	delays	and	re-­‐ filings	driving	up	costs	of	foreclosure,	all	the	while	refusing	to	consider	affected	homeowners	for	loan	modifications.	4.	There	are	constant,	pervasive	and	truly	outrageous,	abuses	of	the	pre-­‐trial	discovery	process	by	servicers	and	their	lawyers	by	refusing	to	provide	discovery	of	legitimate	discovery	materials	such	as	original	notes	and	other	loan	documents,	payment	histories,	records	accounting	for	payments	by	homeowners	and	charges	to	the	homeowners’	loan	accounts	for	property	inspections,	forced	place	insurance,	and	other	unidentified	fees.	One	egregious	example	is	the	regular	objection	of	servicer	lawyers	to	produce	relevant	pooling	and	servicing	agreements	based	upon	claims	that	these	documents	contain	information	that	constitute	confidential	trade	secrets,	even	though	these	documents	are	publicly	accessible	on	the	SEC	Edgar	website.	5.	There	are	constant	and	pervasive	failures	of	lawyers	hired	by	servicers	to	file	legally	sufficient	summary	judgment	motions	including	repeated	and	ongoing	failures	to	5th	Draft,	1/9/12	7
comply	with	longstanding	proof	requirements	of	F.R	.Civ.	P.	56(e),	and	equivalent	state	rules,	proof	requirements.	6.	There	has	been	widespread	irresponsibility	and	dishonesty	of	servicer	witnesses	in	affidavits	filed	in	support	of	summary	judgment	motions	in	foreclosure	and	bankruptcy	cases	and	in	proofs	of	claim	and	motions	for	relief	from	stay	in	bankruptcy	cases.	7.	There	are	constant	failures	of	servicers’	lawyers	to	attach	accurate	and	complete	copies	of	loan	documents	to	foreclosure	complaints,	affidavits,	and	bankruptcy	proofs	of	claims	evidenced	by	late	(often	years	late)	production	of	differing	versions	of	the	same	notes	showing	indorsements	and	mortgage	assignments	inconsistent	with	original	filings.	8.	There	is	substantial	evidence	of	the	fabrication	by	servicers	of	false	note	indorsements	and	false	mortgage	assignments	during	judicial	foreclosure	process.	9.	There	are	constant	refusals	of	servicers	and	their	lawyers	to	produce	original	mortgage	notes	when	seeking	judgment	in	court	proceedings	as	required	by	UCC	Section	3-­‐308(b).	C.	Obstruction	of	court	ordered	foreclosure	mediation	programs	and	in	efforts	to	modify	loans.	1.	There	is	widespread	stonewalling	by	servicers	in	mediation	proceedings	by:	a.	Failing	to	provide	information	and	loan	documents	when	and	as	required	by	mediation	rules	and	statutes;	b.	Falsely	claiming	failures	to	receive	homeowner	loan	modification	applications	or	repeated	actual	losses	of	such	documents;	c.	Failures	to	provide	servicer	representatives	to	participate	in	mediation	who	have	reviewed	the	servicer	records	and	who	have	actual	authority	to	make	decisions	on	loan	modifications;	d.	Failures	to	keep	agreements	reached	in	mediation	proceedings.
2.	There	are	constant	failures	by	servicers	to	convert	temporary	payment	plans	to	permanent	loan	modifications	even	where	numbers	show	that	loan	should	be	modified.	3.	There	are	constant	failures	and	refusals	by	servicers	to	evaluate	homeowner	applications	for	HAMP	and	in-­‐house	modifications	both	within	foreclosure	mediation	proceedings	and	outside	of	mediation.	5th	Draft,	1/9/12	8
4.	There	are	problems	with	dishonesty	of	servicers	in	foreclosure	mediation	and	other	loan	modification	efforts	with	claims	that	investor	restrictions	prohibit	modifications	when	such	is	not	true	or	when	such	restrictions	have	been	waived.	5.	There	is	a	major	problem	with	failures	of	servicers	to	evaluate	and	respond	in	a	timely	manner	to	short-­‐sale	and	deed-­‐in-­‐lieu	applications	and	sale	offers.	6.	There	are	pervasive	refusals	of	loan	owners	to	modify	loans	that	are	substantially	underwater.	7.	There	are	constant	refusals	of	second	mortgage	owners	to	modify	loans	where	even	first	mortgage	is	underwater,	thus	forcing	homeowners	into	otherwise	unnecessary	Ch.	13	cases	to	strip	second	mortgage	liens.	D.	Other	problems.	1.	Servicers	regularly	fail	to	conduct	responsible	foreclosure	auction	sale	procedures	designed	maximize	sale	prices	and	minimize	deficiency	claims.	2.	There	are	constant	failures	of	servicers	to	give	default	and	right	to	cure	notice	that	comply	with	state	statutes	and/or	with	specific	terms	of	Paragraph	22	of	Uniform	Instrument	mortgages.	V.	Causes	of	the	problems	leading	to	the	foreclosure	crisis.	The	following	are	some	of	the	causes	of	the	problems	encountered	in	the	foreclosure	process	that	have	come	to	the	attention	of	the	author.	No	doubt	other	homeowner	representatives	would	add	to	this	list.	A.	Servicer	incentives	as	cause	of	problems.
1.	The	placement	of	authority	to	conduct	foreclosures	and	to	evaluate	loans	for	modifications	in	hands	of	servicers	where	their	financial	incentives	are	not	aligned	with	investors	and	favor	foreclosures	over	loan	modifications	even	where	the	best	interests	of	mortgage	securities	investors	would	be	to	modify	loans.	See	Thompson,	Foreclosing	Modifications:	How	Servicer	Incentives	Discourage	Loan	Modifications,	86	Wash.	Law	Rev.	755;	Levitan	&	Twomey,	Mortgage	Servicing,	28.1	Yale	Journal	on	Regulation	2011.	2.	The	GSEs’	allowing	servicers	to	service	GSE	first	mortgage	loans	while	at	the	same	time	allowing	the	servicers	to	maintain	ownership	of	second	mortgages	on	the	same	properties,	resulting	in	conflicts	of	interests	for	servicers	who	refuse	to	properly	evaluate	the	GSEs’	first	mortgage	for	modification.	5th	Draft,	1/9/12	9
B.	Causes	of	servicer	and	GSE	misconduct	in	loan	modifications.
1.	Lack	of	oversight	of	servicers	and	enforcement	of	servicers’	obligations	is	a	major	cause	of	problems.	There	has	been	an	inadequate	effort	by	Treasury	to	oversee	servicers’	implementation	of	HAMP	requirements	and	little	to	no	sanctioning	of	servicers	who	fail	to	comply.	2.	Lack	of	a	private	right	of	enforcement	of	HAMP	and	other	governmental	loan	modification	programs,	leaves	little	to	no	enforcement	of	servicer	obligations	to	comply	with	the	rules	and	guidelines	of	those	programs.	3.	The	GSEs	and	the	servicers	fail	to	follow	responsible	practices	in	handling	the	short	sale	process.	This	results	in	constantly	lost	sales,	declining	property	values,	economic	loss	to	the	GSEs	and	unnecessary	deficiency	liabilities	for	homeowners.	See	December	30,	2011	story	in	the	Tampa	Bay	Times	at	http://www.tampabay.com/news/business/realestate/frustrated-­‐tampa-­‐bay-­‐realtor-­‐ gets-­‐short-­‐sale-­‐miracle-­‐from-­‐freddie-­‐mac/1208247	C.	Causes	of	servicer	and	GSE	misconduct	in	foreclosure	procedures.
1.	There	is	a	pattern	and	culture	of	unethical	and	dishonest	servicer	conduct	in	foreclosures	practices	going	back	well	before	beginnings	of	foreclosure	crisis.	See	FNMA	v.	Bradbury,	2011	ME	120,	___	A.3d	___,	2011	Me.	LEXIS	120	where	the	Maine	Supreme	Court,	facing	a	six	year	pattern	of	misconduct	by	the	fifth	largest	loan	servicer	found	its	practices	to	be	“reprehensible”,	that	it	was	guilty	of	“fraudulent	evidentiary	filings”	and	that	its	conduct	was	“ethically	indefensible”	and	constituted	an	“alarming	lack	of	respect	for	the	nation’s	judiciaries.”	Id	¶7.	The	dissenting	justice	in	Bradbury	concluded	that	“there	was	good	cause	to	believe	that	such	conduct	was	not	limited	to	this	case	and	that	management	of	[the	servicer]	and	Fannie	Mae,	and	their	attorneys	knew	or	should	have	known	of	the	wrongful	manner	in	which	the	affidavit	presented	in	this	case	was	produced.”	Id	¶17.	The	conduct	of	this	particular	servicer	has	been	found	by	foreclosure	defense	attorneys	to	be	rampant	throughout	all	of	the	major	servicers	and	the	default	servicers	hired	by	them.	This	servicer	misconduct	slows	foreclosures,	increases	litigation	costs	for	loan	owners	and	homeowners,	impairs	the	rational	functioning	of	loan	modification	efforts	and	can	often	be	one	of	the	sources	of	inconsistent	judicial	rulings	on	evidentiary	and	foreclosure	issues.	2.	The	hiring	by	loan	servicers	and	GSEs	of	lawyers	and	law	firms	not	competent	and/or	not	motivated	and/or	not	having	sufficient	professional	responsibility	to	properly	and	responsibly	conduct	large	volumes	of	foreclosures—for	example	the	David	Stern	firm	in	Florida	and	the	Steven	Baum	firm	in	New	York.	This	leads	to	numerous	5th	Draft,	1/9/12	10
defective	foreclosures	and	foreclosure	titles.	Further,	these	practices	are	the	cause	of	many	of	the	inconsistencies	in	evidentiary	rulings	complained	of	by	FHFA.	3.	The	failure	by	GSEs	to	remedy	practices	by	firms	such	as	LPS,	Promis,	LOGS	and	similar	back	office	default	service	providers	to	extract	technical	fees	and	similar	charges	from	law	firms	and	to	tolerate	other	fee	splitting	practices.	This	diminishes	foreclosing	law	firm	revenues	and	correspondingly	increases	the	tendency	of	such	law	firms	to	delegate	foreclosure	work	to	non-­‐lawyers	and	inadequately	trained	and	inadequately	supervised	personnel.	4.	The	failures	of	servicers	and	GSEs	to	adequately	supervise	the	conduct	of	lawyers	hired	by	them,	and	the	GSEs	systems	of	grading	foreclosure	lawyers	for	speed	without	regard	to	competency,	accuracy	and	professional	responsibility.	This	again	leads	to	flawed	foreclosure	proceedings,	unnecessary	litigation	and	waste	of	judicial	resources,	and	inconsistent	evidentiary	rulings.	The	irregular	and	improper	practices	of	the	Stern	and	Baum	firms	were	widely	known	for	many,	many	month	before	the	GSEs	took	action	to	remove	their	work	from	these	law	firms.	Responsible	levels	of	GSE	supervision	would	have	prevented	the	development	of	these	problems	in	the	first	instance	5.	The	determination	by	FHFA	to	allow	the	GSEs	to	continue	their	deceptive	practice	of	concealing	the	extent	of	their	roles	in	the	foreclosure	process	by	mandating	that	servicers	not	foreclose	in	the	names	of	the	GSEs7	causes	confusion	of	judges,	homeowners	and	foreclosure	mediators,	and	results	in	unnecessary	litigation,	and	impairment	of	the	efficacy	of	foreclosure	mediation	efforts.	There	is	no	apparent	justification	for	this	practice	of	the	GSEs	because	it	gains	them	no	legal	advantage	in	foreclosure	proceedings.	Thus,	one	is	left	to	conclude	that	the	purpose	of	these	deceptive	practices	is	to	conceal	from	the	public	and	from	Congress	the	true	scope	of	the	role	of	the	GSEs	in	the	foreclosure	crisis.	6.	The	establishment	by	servicers	and	default	servicers	of	computerized	communications	systems	with	foreclosure	lawyers	prevents	and/or	discourages	reasonable	and	necessary	attorney/servicer	communications	necessary	for	foreclosure	lawyers	to	conduct	proper	and	honest	foreclosures	and	leads	to	improper	and/or	flawed	7	For	example,	Freddie	Mac	Servicing	Bulletin	Number	2011-­‐5	dated	March	23,	2011
(http://www.freddiemac.com/sell/guide/bulletins/pdf/bll1105.pdf	)	states	on	page	2	that	“Servicers	must	prepare	an	assignment	of	the	Security	Instrument	from	MERS	to	the	Servicer	and	instruct	the	foreclosure	counsel	or	trustee	to	foreclose	in	the	Servicer’s	name	and	take	title	in	Freddie	Mac’s	name.”
foreclosure	proceedings	and	the	waste	of	judicial	resources.	See	In	re	Taylor,	655	F.3d	274,	2011	U.S.	App.	LEXIS	17651	(3rd	Cir.,	Aug.	24,	2011).	7.	The	use	by	GSEs	and	servicers	of	default	servicers	who	maintain	irresponsible	and	dishonest	default	servicing	practices	leads	to	improper	and	flawed	foreclosures.	See	complaint	filed	December	15,	2011	in	State	of	Nevada	v.	Lender	Processing	Services,	Inc.	et	al.,	pending	in	the	District	Court,	Clark	County	Nevada	as	Case	No.	A-­‐11-­‐653289-­‐B.	D.	Causes	of	misconduct	of	lawyers	hired	by	servicers	and	GSEs.
1.	Due	to	the	financial	compensation	and	flat	fee	system	set	up	by	servicers	and	the	GSEs,	law	firms	are	incentivized	to	constantly	cut	corners	in	the	prosecution	of	judicial	foreclosures.	They	avoid	taking	the	necessary	time	to	prepare	proper	motions	for	summary	judgment.	They	avoid	taking	the	necessary	time	and	to	spend	the	money	necessary	to	obtain	in	advance,	and	verify	the	accuracy	of,	all	documents	necessary	for	the	foreclosure	process.	2.	Again,	due	to	the	perverse	financial	incentives	for	the	foreclosure	law	firms,	the	law	firms	when	confronted	with	failed	foreclosure	cases,	do	not	correct	their	defective	practices,	knowing	that	they	face	opposing	lawyers	in	fewer	than	10%	of	cases,	and	knowing	therefore	that	the	profits	from	doing	all	foreclosures	on	the	cheap	will	outweigh	the	costs	to	them	in	the	small	number	of	cases	where	their	defective	and	dishonest	practices	are	challenged	and	cause	additional	expense.	3.	The	law	firms	hired	by	the	GSEs	and	servicers	often	fail	to	provide	adequate	proof	in	foreclosure	trials	because	they	do	not	have	lawyers	who	know	how	to	offer	proper	evidentiary	proof	in	contested	litigation	cases.	4.	Because	lawyers	hired	by	the	servicers	have	minimal	financial	incentives	to	do	competent	work,	and	seem	to	lack	the	professional	responsibility	to	do	such	work	even	in	the	face	of	such	perverse	incentives,	the	presentation	of	their	cases	often	lead	to	inconsistent	and	confused	court	decisions.	E.	MERS	causation	of	problems	in	mortgage	foreclosures.
1.	Until	its	Membership	Rule	8	was	changed	effective	July	21,	2011	(by	MERS	Policy	Bulletin	Number	2011-­‐5),	the	MERS	authorized	the	practices	of	servicers	and	loan	owners	to	conduct	foreclosures	in	the	name	of	MERS,	thereby	concealing	from	homeowners	and	courts	the	identity	of	the	mortgage	loan	owners	having	the	real	interest	in	the	foreclosure	action.	This	practice,	encouraged	by	MERS	and	expressly	approved	by	the	GSEs,	led	to	substantial	confusion	in	court	decisions	and	much	unnecessary	litigation	and	waste	of	judicial	resources.	5th	Draft,	1/9/12	12
2.	The	MERS	system	for	allegedly	tracking	ownership	of	mortgage	loans,	when	such	ownership	is	in	fact	not	accurately	tracked	on	the	MERS	System,	has	caused	confusion	in	both	non-­‐judicial	and	judicial	foreclosures	and	unnecessary	and	extensive	litigation.	The	inadequacies	of	the	MERS	System	has	led	to	the	filing	of	numerous	foreclosure	cases	where	the	foreclosing	parties	lack	the	necessary	proof	of	standing	and/or	the	right	to	enforce	the	mortgage	instruments.	3.	The	MERS	system	of	appointing	over	20,000	assistant	vice	secretaries	and	vice	presidents	who	have	no	loyalty	or	responsibility	to	MERS,	who	are	not	supervised	by	MERS,	and	who	are	solely	employees	of	servicers,	default	servicers,	lawyers	for	servicers	and	other	related	parties	has	resulted	in	repeated	filings	of	false	and	defective	mortgage	assignments.	MERS	and	its	founders,	including	the	GSEs,	could	have	set	up	an	honest	and	transparent	system	using	powers	of	attorney	to	enable	servicer	employees	to	execute	mortgage	assignments.	Instead,	its	dubious	practice	of	appointing	thousands	of	certifying	officers	and	purportedly	granting	them	status	of	corporate	officers,	created	and	atmosphere	of	widespread	judicial	deception.	With	MERS’	avoidance	of	the	use	of	powers	of	attorney,	MERS	thereby	evaded	the	proof	that	would	have	been	required	of	those	powers	of	attorney	with	each	MERS	assignment	of	mortgage	and	corresponding	proof	that	the	attorneys	in	fact	were	acting	within	the	scope	of	the	powers	granted.	By	opting	for	the	deceptive	“certifying	officers”	scheme	MERS	deprived	judges	of	proof	that	the	so-­‐called	certifying	officers	really	were	appointees	of	MERS	and	that	they	really	were	acting	within	the	scope	of	the	authority	granted	to	them.	This	scheme	has	led	to	the	recording	of	many	MERS	mortgage	assignments	by	persons	who	have	never	been	appointed	by	MERS	to	act	for	it.	F.	Judicial	errors	as	cause	of	problems	in	mortgage	foreclosures.
1.	Overloaded	and	under-­‐financed	judicial	systems	where	judges	do	not	have	the	time	to	properly	review	judicial	foreclosure	filings	have	been	one	of	the	causes	of	inconsistent	judicial	standards	of	proof.	The	use	of	retired	judges	in	the	infamous	Florida	“rocket	docket”	is	a	clear	example.	2.	The	large	numbers	of	judges	who	have	not	had	the	benefit	of	judicial	education	and	training	in	current	foreclosure	practice	in	order	to	develop	an	understanding	of	how	the	mortgage	industry	and	securitization	process	functions,	and	the	roles	played	by	servicers,	default	servicers	and	MERS	in	that	system.	This	also	has	been	a	cause	of	inconsistent	rulings.	3.	A	perhaps	small,	but	nevertheless	disturbingly	substantial,	number	of	judges	continue	to	believe	that	the	nation’s	financial	institutions	will	not	lie	to	or	deceive	them,	or	that	their	lawyers	will	not	try	to	cheat	the	judicial	system	and	that	all	foreclosure	5th	Draft,	1/9/12	13
defense	lawyers	are	being	obstructive	in	insisting	upon	competent	and	adequate	proof	of	the	right	to	foreclose.	Many	of	these	judges	disparagingly	accuse	foreclosure	defense	lawyers	of	seeking	a	“free	house”	for	their	clients	and	conclude	that	when	a	homeowner	is	indebted	on	a	mortgage	loan,	judgment	should	be	entered	for	any	plaintiff	asserting	the	right	to	enforce	it	without	regard	to	normal	standards	of	evidence	and	proof.	Thus,	the	decisions	of	these	judges	will	often	conflict	with	the	decisions	of	those	judges	who	truly	review	and	honestly	decide	each	case	on	its	merits	and	who	are	willing	to	recognize	when	parties	enforcing	mortgages	present	false,	misleading	or	insufficient	evidence.	This	disparity	in	judicial	attitude	in	judicial	foreclosures	accounts	for	much	of	the	inconsistency	in	evidentiary	rulings	complained	of	by	FHFA.	VI.	The	Study	Committee	should	recommend	against	the	commencement	of	a	drafting	process	for	a	new	uniform	mortgage	foreclosure	act.	A.	Most	of	the	problems	complained	of	by	the	foreclosure	industry	are	of	its	own	making	and	it	has	the	ability	to	resolve	those	problems	without	new	legislation.	The	litany	of	problems	and	related	causes	outlined	above	almost	entirely	flow	from	foreclosure	industry	acts	of	commission	or	omission.	The	industry	has	created	processes	for	the	handling	of	foreclosures	that	are	deceptive,	confusing,	opaque,	and	even	dishonest.	At	the	May	9,	2011	PEB	stakeholders’	meeting	one	of	the	commentators	perceptively	noted	that	new	laws	would	not	prevent	dishonest	conduct.	Similarly,	here	a	new	uniform	foreclosure	act	will	not	solve	problems	in	the	present	foreclosure	environment	until	there	is	a	reformation	by	the	foreclosure	industry	itself	of	its	practices	and	the	implementation	of	the	industry,	especially	the	GSEs,	to	properly	and	responsibly	supervise	the	servicers	and	lawyers	employed	by	them.	The	foreclosure	industry	has	the	capacity	to	resolve	most	of	the	problems	outlined	in	this	memorandum,	and	it	would	be	imprudent	for	the	ULC	to	advance	a	proposed	new	foreclosure	act	until	the	foreclosure	industry	first	reforms	itself.	B.	A	uniform	act	regarding	foreclosure	practices	and	procedures	would	not	satisfy	the	ULC	Criteria	for	uniform	acts.	While	a	potential	uniform	foreclosure	act	would	meet	ULC	Criteria	§1(a),	in	that	foreclosure	acts	are	clearly	appropriate	for	state	legislation,	it	would	not	meet	any	of	the	other	ULC	Criteria	for	New	Projects.	Such	a	uniform	act	would	not	meet	ULC	Criteria	§1(b)	because	it	is	not	clear	that	residential	foreclosure	law	is	a	subject	where	“uniformity	is	desirable	and	practical.”	The	JEBURPA	letter	of	May	30,	2011	asserts	that	uniformity	is	desirable	and	practical,	5th	Draft,	1/9/12	14
but	provides	no	support	for	that	assertion.	A	determination	of	whether	uniformity	is	“desirable”	is	a	matter	of	one’s	perspective	and	interests.	(See	Section	II	of	this	memorandum.)	From	the	perspective	of	the	mortgage	and	foreclosure	industry,	a	uniform	act	may	be	desirable	because	it	may	believe	that	a	uniform	act	will	reduce	costs	and	increase	profits.	No	analysis	has	been	presented	as	to	why	it	would	be	desirable	on	a	state-­‐by-­‐state	basis	to	have	a	uniform	act	replace	the	various	states’	developed	laws	on	foreclosures.	Indeed,	individual	states	are	creating	their	own	unique	solutions	to	the	foreclosure	crisis	and	that	where	the	development	should	be	coming	from.	Also,	with	respect	to	ULC	Criteria	§1(b),	the	JEBURPA	report	is	equally	silent	on	the	issue	of	whether	a	uniform	law	on	foreclosures	is	even	a	practical	idea.	The	practicality	of	drafting	a	uniform	act	that	will	allow	the	various	state	foreclosure	statutes	to	remain	in	place	while	overlaying	new	and	additional	requirements	is	highly	doubtful.	The	ULC	experience	with	the	Uniform	Nonjudicial	Foreclosure	Act,	which	has	not	been	adopted	in	any	state,	strongly	suggests	that	it	is	not	at	all	practical	to	believe	that	now	a	uniform	act	can	be	created	to	apply	to	judicial	and	nonjudicial	states	alike	with	any	reasonable	prospect	for	enactment	(also	a	requirement	of	ULC	Criteria	§1(c)(2)).	The	JEBRUPA	Letter	asserts	that	ULC	Criteria	§1(c)(1)	is	met	by	asserting	that	the	required	“obvious	need	for	an	act”	is	established	because	the	foreclosure	crisis	has	revealed	“structural	weaknesses”	in	the	foreclosure	system.	Much	of	this	memorandum	describes	how	problems	in	the	foreclosure	process	are	the	direct	result	of	failures	of	and	refusals	by	the	foreclosure	industry	to	conduct	itself	responsibly	and	in	accordance	with	state	laws.	The	fact	that	the	foreclosure	industry	does	not	like	various	state	foreclosure	laws	or	that	it	could	increase	profits	by	changing	them	are	not	signs	of	“structural	weakness”	in	those	laws.	There	is	not	an	obvious	need	for	an	act	as	much	as	there	is	a	need	for	the	foreclosure	industry	to	change	its	practices	and	to	respect	and	act	in	accordance	with	state	laws.	It	is	equally	difficult	to	see	how	the	requirements	of	ULC	Criteria	§(1)(c)(3)	are	met.	A	uniform	foreclosure	act	will	not	meet	the	subpart	(i)	requirement	to	“facilitate	interstate	.	.	.	relations”.	This	situation	is	not	one	like	the	UCC	or	UETA	or	Uniform	Child	Custody	Act	where	an	act	will	facilitate	the	flow	of	transactions	across	state	lines	or	will	avoid	conflict	of	laws	among	states	where	more	than	one	state’s	laws	might	apply.	Similarly,	it	is	difficult	to	see	how	the	subpart	(ii)	criteria	are	met	as	it	is	not	apparent	that	there	is	any	“need	common	to	many	states”	which	must	be	addressed.	Neither	are	the	various	states	expressing	needs	for	uniform	legislation,	nor	are	the	citizens	of	individual	states	expressing	such	needs;	rather	it	is	the	mortgage	and	foreclosure	industry	that	is	expressing	such	a	desire.	And,	under	the	subpart	(iii)	criteria	there	simply	is	no	evidence	that	the	diversity	of	foreclosure	laws	among	states	causes	citizens	5th	Draft,	1/9/12	15
of	one	state	to	be	mislead,	prejudiced,	inconvenienced	or	otherwise	adversely	affected	in	dealings	in	other	states	or	with	citizens	of	other	states	in	moving	from	state	to	state,	as	a	mortgage	and	a	foreclosure	function	only	within	the	single	state	where	the	mortgaged	property	is	located.	C.	Under	the	ULC	Criteria	§1(e)(2),	the	establishment	of	a	drafting	committee	to	prepare	a	proposed	uniform	foreclosure	should	be	avoided.	The	ULC	should	avoid	taking	on	drafting	projects	that	are	“controversial	because	of	disparities	in	social,	economic,	or	political	policies	or	philosophies	among	the	states.”	ULC	“Statement	of	Policy	Establishing	Criteria	and	Procedures	for	Designation	and	Consideration	of	Uniform	and	Model	Acts”,	§1(e)(2).	The	undertaking	of	a	project	to	draft	a	proposed	uniform	foreclosure	act	would	violate	of	this	prohibition.	There	are	indeed	“disparities	in	.	.	.political	policies	or	philosophies	among	the	states”	regarding	foreclosure	as	is	most	clearly	evidenced	by	the	fact	some	states	have	judicial	foreclosure	statutes	and	others	allow	non-­‐judicial	foreclosures.	These	differences	are	not	mere	variations	among	similar	statutes	that	can	be	rendered	consistent	by	a	uniform	act;	rather,	they	are	reflective	of	substantially	differing	viewpoints	on	what	levels	of	protection	differing	states	have,	as	matters	of	political	development	and	philosophical	approach,	chosen	to	provide	to	the	homeowners	and	mortgage	holders	in	their	respective	states.	The	variation	among	states	in	the	foreclosure	redemption	periods	is	equally	reflective	of	substantial	political	and	philosophical	approaches	among	the	various	states.	There	can	be	no	clearer	evidence	of	that	then	the	facts	cited	in	Section	III.	B.	6.	of	the	Issues	Memorandum—in	some	states	there	are	no	redemption	periods	while	there	are	substantial	redemption	periods	provided	for	in	other	states.	Section	III.	B.	6.	of	the	issues	memorandum	asks	“[w]hat	is	the	proper	scope	of	statutory	redemption	periods”.	Any	determination	of	what	“proper”	redemption	period	should	be	left	to	the	states	as	legitimate	exercises	of	their	political	powers.	The	various	foreclosure	statutes	among	the	states	are	the	result	of	years	of	development,	negotiation	and	legislative	response	to	political	policies	and	philosophies.	There	is	no	property	more	personal	than	one’s	home	and	the	varying	social	and	economic	conditions	among	the	states	have	played	significant	roles	in	the	shaping	of	their	respective	foreclosure	statutes.	These	statutes	are	integrated	in	the	sense	that	their	various	provisions	all	represent	trade-­‐offs	and	agreements	reached	over	time	to	arrive	at	comprehensive	foreclosure	schemes.	For	example,	the	existence	or	length	of	a	redemption	period	in	one	state’s	statute	my	have	been	directly	impacted	by	negotiations	over	the	content	and	length	of	any	pre-­‐foreclosure	notice	period	mandated	by	that	5th	Draft,	1/9/12	16
statute.	It	would	be	inappropriate	for	the	ULC	to	presume	to	replace	those	judgments	and	compromises	and	other	state	inputs	into	the	development	of	their	own	unique	foreclosure	statutes.	D.	A	new	uniform	act	would	deprive	states	of	their	traditional	and	unique	roles	in	development	and	evolution	of	their	own	foreclosure	procedures	statutes	pertaining	to	the	homes	of	the	residents	of	their	states.	The	body	of	state	law	regarding	foreclosures	in	each	state	has	developed	along	its	own	path.	The	similarities	and	differences	have	existed	for	well	over	two	hundred	years.	Foreclosures	have	occurred	under	this	variety	of	state	laws	without	any	huge	uproar	until	recently.	The	mortgage	finance	industry	originated	and	securitized	the	trillions	of	dollars	of	mortgages	loans	now	in	or	at	risk	of	foreclosure	knowing	full	well	the	variety	of	legal	landscapes	from	whence	those	mortgages	were	flowing.	Indeed,	the	September	1,	1997	legal	opinion	letter	to	MERS	from	Covington	&	Burling	referred	to	in	footnote	5	above	describes	with	care	the	law	firm’s	effort	to	obtain	of	local	legal	opinions	on	the	legality	of	the	MERS	system	from	lawyers	in	all	fifty	states.	The	variety	of	state	mortgage	statutes	was	not	seen	as	any	impediment	to	the	implementation	of	the	radical	new	MERS	scheme	for	the	tracking	of	ownership	of	mortgage	loans.	Most	of	the	“substantive	issues”	outlined	in	the	December	7,	2011	“Issues	to	Address”	memorandum	really	are	serious	foreclosure	policy	issues	that	are	most	appropriately	left	in	the	hands	of	the	various	states.	For	example	with	respect	to	the	,	Issue	6	question	note	above	addressing	“the	proper	scope	of	statutory	redemption	periods”,	the	memorandum	boldly	asserts,	without	any	adequate	basis,	that	“[t]here	is	a	need	for	harmonization	with	regard	to	statutory	redemption.”	This	conclusion	suggests	that	the	stakeholders’	meeting	is	starting	off	as	window	dressing	for	conclusions	already	reached.	Further,	it	is	not	possible	to	understand	why	the	ULC	would	presume	to	make,	or	to	have	the	ability	to	develop,	a	determination	of	a	single	“proper”	redemption	period	for	any	single	state	or	for	all	states	together.	This	is	uniquely	a	part	of	individual	state	foreclosure	law	that	should	be	left	with	the	states	Valuable	innovation	in	state	laws	in	the	area	of	residential	foreclosure	laws	is	exemplified	by	the	various	efforts	of	a	number	of	states	to	develop	foreclosure	mediation	programs.	Some	programs	have	been	highly	successful,	and	some	not	so	much	so.	The	states	have	created	these	programs	largely	in	response	to	the	failures	of	the	servicers	to	open	and	maintain	reasonable	and	responsible	means	for	homeowners	to	seek	and	achieve	loan	modifications.	Many	if	not	most	of	these	various	mediation	programs	have	all	encountered	substantial	difficulty	in	achieving	compliance	from	servicers.	For	example,	Nevada’s	Supreme	Court	laid	these	problems	bare	in	two	recent	decisions.	5th	Draft,	1/9/12	17
Pasillis	v.	HSBC	Bank,	USA,	255	P.3d	1281(Nev.	2011)	and	Leyva	v.	National	Default	Serv.	Corp.,	255	P.3d	1275	(Nev.	2011).	There	is	no	reason	at	this	early	stage	in	the	development	of	these	state	programs	to	suddenly	pull	away	from	the	various	states	their	abilities	to	continue	to	experiment	with	and	develop	the	programs	that	are	most	effective	in	and	suitable	to	their	respective	jurisdictions	and	which	are	most	able	to	protect	their	homeowners	against	the	ongoing	failures	of	the	servicers	to	be	responsible	participants	in	these	programs.	F.	The	highly	politicized	nature	of	the	debate	over	foreclosure	issues,	nationally	and	within	specific	states,	makes	it	unlikely	that	a	new	uniform	act	would	be	enacted.	It	is	not	possible	to	overstate	the	highly	charged	political	climate	that	the	ULC	is	entering	in	its	consideration	of	a	uniform	foreclosure	act.	The	financial	industry	brought	the	country’s	economy	to	its	knees	with	its	imprudent,	irresponsible	and	often	illegal	and	fraudulent	lending	practices.	Having	achieved	that,	it	has	attempted	to	collect	these	loans	by	foreclosures	upon	millions	of	homeowners	through	practices	found	to	be	“reprehensible”,	“fraudulent”,	and	“unethical”.	FNMA	v.	Bradbury,	2011	ME	120,	¶6,	___A.3d	___.	Courts,	legislators,	regulators,	the	media	and	the	public	have	condemned	the	foreclosure	industry’s	practices.	Yet	it	continues	to	fail	to	act	to	correct	the	practices	that	are	the	cause	of	so	many	of	the	present	problems.	A	suggestion	from	the	ULC	to	state	legislators	that	they	should	surrender	their	developed	bodies	of	foreclosure	statutes	and	case	law,	in	favor	of	a	new	statute	designed	to	benefit	the	foreclosure	industry	and	to	streamline	its	practices	just	does	not	make	practical	or	political	sense.	Such	an	effort	will	unleash	a	firestorm	of	criticism.	It	is	truly	difficult	to	imagine	that,	in	this	climate,	a	proposed	uniform	foreclosure	act	would	stand	any	reasonable	chance	of	enactment.	VII.	Conclusion.	A	careful	review	of	the	ULC	Criteria	for	New	Projects	establishes	that	the	creation	of	a	drafting	committee	to	create	a	new	uniform	foreclosure	act,	to	be	applied	alike	to	judicial	and	nonjudical	foreclosure	states,	should	be	avoided.	If	the	Study	Committee	is	not	prepared	to	make	such	a	recommendation	immediately	following	the	January	13,	2011	stakeholders’	meeting,	then	the	Study	Committee	should	avoid	making	any	recommendation	until	it	has	conducted	a	thorough	and	non-­‐expedited	study	of	the	problems	and	their	causes	that	have	led	to	the	calls	for	a	new	uniform	foreclosure	act.	Such	a	study	will	show	that	the	problems	in	current	foreclosure	proceedings	are	predominately	caused	by	the	foreclosure	industry	itself	and	susceptible	to	resolution	by	the	industry	itself	without	the	need	for	new	legislation.	5th	Draft,	1/9/12	18
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