Re: Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish

[David Farber <dave () farber net>]

________________________________________
From: Dave Wilson [dave () wilson net]
Sent: Tuesday, February 26, 2008 12:56 PM
To: David Farber
Subject: Re: [IP] Re:    Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish

Troubled lender Countrywide apparently deliberately fabricated legal
documents in an attempt to foreclose on a house last year after
bankruptcy discharged the debt. NYT has a story here:
http://tinyurl.com/2zvkxw

Excerpt:

"

The documents were generated in a case involving Sharon Diane Hill, a
homeowner in Monroeville, Pa. Ms. Hill filed for Chapter 13 bankruptcy
protection in March 2001 to try to save her home from foreclosure.

After meeting her mortgage obligations under the 60-month bankruptcy
plan, Ms. Hill’s case was discharged and officially closed on March 9,
2007. Countrywide, the servicer on her loan, did not object to the
discharge; court records from that date show she was current on her
mortgage.

But one month later, Ms. Hill received a notice of intention to
foreclose from Countrywide, stating that she was in default and owed the
company $4,166.

Court records show that the amount claimed by Countrywide was from the
period during which Ms. Hill was making regular payments under the
auspices of the bankruptcy court. They included “monthly charges”
totaling $3,840 from November 2006 to April 2007, late charges of $128
and other charges of almost $200.

A lawyer representing Ms. Hill in her bankruptcy case, Kenneth Steidl,
of Steidl and Steinberg in Pittsburgh, wrote Countrywide a few weeks
later stating that Ms. Hill had been deemed current on her mortgage
during the period in question. But in May, Countrywide sent Ms. Hill
another notice stating that her loan was delinquent and demanding that
she pay $4,715.58. Neither Mr. Steidl nor Julia Steidl, who has also
represented Ms. Hill, returned phone calls seeking comment.

Justifying Ms. Hill’s arrears, Countrywide sent her lawyer copies of
three letters on company letterhead addressed to the homeowner, as well
as to Mr. Steidl and Ronda J. Winnecour, the Chapter 13 trustee for the
western district of Pennsylvania.

The Countrywide letters were dated September 2003, October 2004 and
March 2007 and showed changes in escrow requirements on Ms. Hill’s loan.
“This letter is to advise you that the escrow requirement has changed
per the escrow analysis completed today,” each letter began.

But Mr. Steidl told the court he had never received the letters.
Furthermore, he noticed that his address on the first Countrywide letter
was not the location of his office at the time, but an address he moved
to later. Neither did the Chapter 13 trustee’s office have any record of
receiving the letters, court records show.

When Mr. Steidl discussed this with Leslie E. Puida, Countrywide’s
outside counsel on the case, he said Ms. Puida told him that the letters
had been “recreated” by Countrywide to reflect the escrow discrepancies,
the court transcript shows. During these discussions, Ms. Puida reduced
the amount that Countrywide claimed Ms. Hill owed to $1,500 from $4,700.

Under questioning by the judge, Ms. Puida said that “a processor” at
Countrywide had generated the letters to show how the escrow
discrepancies arose. “They were not offered to prove that they had been
sent,” Ms. Puida said. But she also said, under questioning from the
court, that the letters did not carry a disclaimer indicating that they
were not actual correspondence or that they had never been sent.

A Countrywide spokesman said that in bankruptcy cases, Countrywide’s
automated systems are sometimes overridden, with technicians making
manual adjustments “to comply with bankruptcy laws and the requirements
in the jurisdiction in which a bankruptcy is pending.” Asked by Judge
Agresti why Countrywide would go to the trouble of “creating a letter
that was never sent,” Ms. Puida, its lawyer, said she did not know...."




David Farber wrote:
> ________________________________________
> From: Tom Yates [madhatter () teaparty net]
> Sent: Tuesday, February 26, 2008 8:48 AM
> To: David Farber
> Subject: Re: [IP] Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish
>
> Prof. Farber:
>
> Poss. for IP?
>
>
> On Tue, 26 Feb 2008, dewayne () warpspeed com (Dewayne Hendricks) wrote:
>
>
> > Feb. 22 (Bloomberg) -- Joe Lents hasn't made a payment on his $1.5 million
> > mortgage since 2002.
> >
> > That's when Washington Mutual Inc. first tried to foreclose on his home
> > in Boca Raton, Florida. The Seattle-based lender failed to prove that it
> > owned Lents's mortgage note and dropped attempts to take his house.
> > Subsequent efforts to foreclose have stalled because no one has produced
> > the paperwork.
> >
> > ``If you're going to take my house away from me, you better own the
> > note,'' said Lents, 63, the former chief executive officer of a
> > now-defunct voice recognition software company.
> >
> > Judges in at least five states have stopped foreclosure proceedings
> > because the banks that pool mortgages into securities and the companies
> > that collect monthly payments haven't been able to prove they own the
> > mortgages.
>
>
> It's not often that I start mumbling "Good for the US", but compare that
> legal attitude with the following story from The Guardian earlier this
> month:
>
> "
> Walton turned detective after being told by RBS that the amount he owed
> on his personal loan was much greater than he thought. He asked for a copy
> of his original loan agreement, but when he received it he knew at once
> that it wasn't the genuine article. He eventually found his original
> carbon copy, which confirmed his suspicions.
>
> Surely one of Britain's biggest banks isn't forging documents? Of course
> not - but it is controversially "recreating" them.
>
> [...]
>
> Recreating documents is not against the law; banks are allowed to supply
> replacements if the original paperwork has gone missing, provided they are
> "correct in all particulars". But some might say that when bank staff are
> "under pressure," to quote from that memo, mistakes creep in. In Walton's
> case, it was a string of errors.
> "
>
> Leaving, as in this case, the customer to prove that the bank was in
> error, instead of requiring the bank to prove that it's not.  Got to love
> it, eh?  The full story's at
> http://www.guardian.co.uk/money/2008/feb/02/banks.consumeraffairs .
>
>
> --
>
>    Tom Yates  -  http://www.teaparty.net
>
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