FIGHTING FORECLOSURE

Foreclosed homeowners challenge banks to prove they still hold their notes

STATE JOURNAL SPECIAL REPORT | DAY 1 OF 2
2012-03-04T11:30:00Z 2012-03-05T05:08:50Z Foreclosed homeowners challenge banks to prove they still hold their notesDEE J. HALL | Wisconsin State Journal | dhall@madison.com | 608-252-6132 | @DeeJHall madison.com

When several major U.S. banks agreed last month to pay $25 billion to settle charges of foreclosure fraud — including allegations workers faked signatures, backdated records and "re-created" missing documents — it offered some measure of resolution for millions who lost their homes in the housing bust.

But the settlement reached by 49 attorneys general and Wells Fargo, Bank of America, Ally Financial (formerly GMAC), Citigroup, and JP Morgan Chase doesn't end the trouble for those banks. With the banks' records in such disarray, some foreclosed homeowners are fighting back by making a simple demand: Prove you own my mortgage.

Increasingly, courts are taking the homeowners' side. At least five times since 2010, Wisconsin Court of Appeals panels have upheld challenges by debtors demanding to see the legal paperwork tracking their loans, and lenders were unable to do it.

"The negative perception seems to be 'You're trying to get a free house,'" said Tom Wuensch of Onalaska, who has staved off foreclosure for four years by challenging the efforts by a series of lenders to seize his home. "Really what this is about is, we shouldn't be letting banks take free houses. We bailed them out once already."

Homeowners facing foreclosure told the State Journal they have encountered documents that appear to transfer their mortgages to the banks that sued them months or even years after the foreclosure lawsuits were filed. They have discovered signatures from known "robo-signers" — often low-paid workers at signature mills who signed off on foreclosure documents without verifying them — and records they say fail to tie the bank to their mortgage.

"Fraud is an everyday occurrence in foreclosures," said Madison attorney Reed Peterson, who has represented about 80 homeowners facing foreclosure.

But many irregularities are never uncovered. The vast majority of foreclosed homeowners in Wisconsin don't contest the banks' actions, walking away from their homes, uprooting their families and leaving their credit in tatters.

The banks involved in the national settlement have admitted no wrongdoing.

Show me the documents

In 2009, Jason Abbott was diagnosed with colon cancer. The treatments left him exhausted and distracted, forcing him to leave his job as a legal assistant.

He had to decide: Pay for food and medical care, or pay his $1,200-a-month mortgage.

Selling the house wasn't an option. After the real-estate market collapsed, the value of the three-bedroom Verona townhouse Abbott bought in 2008 for $165,000 now is a little more than $100,000 — less than what he owes the bank.

Like many others, Abbott blamed the boom and bust of the nation's housing market on risky behavior by banks, which lent money to unqualified buyers, artificially driving up home prices to unsustainable levels and leading to a massive wave of foreclosures.

In September 2010, he stopped sending in his mortgage payments. In January 2011, Wells Fargo sued for foreclosure.

Abbott, who knows a bit about the law, decided to fight the lawsuit in Dane County Circuit Court. He charged his loan was no longer owned by Wells Fargo but by the Federal Home Loan Mortgage Corp., known as Freddie Mac, the congressionally chartered company that buys mortgages from lenders.

"I said, 'Show me a document that shows Freddie Mac, Wells Fargo, Jayson Abbott and 1117 Enterprise Drive,' " said Abbott, who hired Peterson to help him battle the lender. "They said, 'We don't have that.' "

What Wells Fargo did produce, he charged in court filings, were documents he said raise doubt about whether the bank is entitled to collect the debt he owes.

Wells Fargo spokesman Jim Hines disputed Abbott's allegations, calling them "baseless."

"At all times during the course of this litigation, Wells Fargo has remained holder of the note and record title holder of the mortgage," Hines said. "All documentation pertaining to Mr. Abbott's foreclosure proceedings was handled appropriately."

Study: Fraud rampant

But a California study released last month found 99 percent of 382 randomly sampled foreclosures in San Francisco County between January 2009 and October 2011 had "irregularities," including 84 percent with "suspicious activities indicative of potential fraud."

"It is not implausible that there are home-owners who are ... being foreclosed upon by lenders that might not even own such loans," according to the report, commissioned for the Office of Assessor-Recorder for the county and city of San Francisco.

In December, Massachusetts Attorney General Martha Coakley alleged just that. Coakley sued five banks and the banks' private record-keeping service, the Mortgage Electronic Registration System, saying the companies foreclosed on mortgages in which they had no legal interest and "falsely identified themselves as the present holder of certain mortgages" in sworn statements filed in court.

Madison-area attorneys say that same activity takes place in Wisconsin courts, where almost 200,000 property owners have been sued for foreclosure in the past decade.

In one case, Peterson said, three signatures purportedly from the same person appear radically different. In another case, a judge dismissed a foreclosure lawsuit and barred the bank from suing the homeowner again after it tried repeatedly and unsuccessfully to prove it owned the defendant's mortgage.

Company vault yields note

Not all such challenges are successful. Mike Hilla of Chicago is among those who used the "show-me-the-note" defense. In an interview, Hilla said he stopped paying for the rental home he owns in Fitchburg when his monthly mortgage payment ballooned by more than $800 a month to $2,280 in 2009.

But Hilla, whose job was to bundle and sell mortgages to Wall Street, saw his income plummet as the housing market collapsed.

Late last month, he lost his bid in Dane County Circuit Court after Wells Fargo brought in one of its top officials, along with what it said was the original mortgage note from a company vault in Texas.

Judge Richard Niess seemed particularly bothered that Hilla — who has failed to pay his mortgage, property taxes or insurance for more than two years — would get the Fitchburg rental home free and clear.

Hilla, whose principal balance was $402,718 at the time he stopped paying, now owes Wells Fargo at least $525,695 in taxes, insurance and other fees, the bank's operations analyst, Michael Dolan, testified.

'Linda Green,' red flag

Wuensch, the Onalaska homeowner, said he was current on his payments in 2007 when, he alleges, American Home Mortgage forced him into default by failing to pay property taxes the company was supposed to have been putting in escrow.

The company sued for foreclosure in La Crosse County Circuit Court. American Home Mortgage went out of business, and another lender came in, suing Wuensch on the same loan.

Now a self-taught mortgage fraud investigator, Wuensch demanded to see the paperwork transferring his loan. The new lender, Deutsche Bank, responded with documents he alleged were back-dated and robo-signed. Some were endorsed by "Linda Green," a fake signature that has been found affixed to tens of thousands of loans by the now-defunct DOCX company of Alpharetta, Ga.

"At that point," Wuensch said, "it was obvious they had committed fraud."

Deutsche Bank's attorney, Abigail O'Dess of Wauwatosa, said she forwarded questions submitted by the State Journal to American Home Mortgage Servicing, which manages the loan for the bank.

Wuensch said he doesn't dispute he owes money on his four-bedroom home. The balance on his loan was $360,000 when he stopped paying. The house is now worth no more than $250,000, he said. His case is pending.

Abbott is not sure he'll live to see the resolution of his foreclosure case. The Verona resident now is receiving end-of-life hospice care.

"I owe the money," he said. "If (the bank) had played by the rules, I wouldn't have a leg to stand on. But they cheated. The only thing I can think of is they got so swamped. They had so many foreclosures ... they just cut corners."

"Robo-signers" at work

Copyright 2014 madison.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(8) Comments

  1. AllAmerican11B
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    AllAmerican11B - August 18, 2014 10:34 am
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  2. Perera
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  3. JaredWinterton
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    JaredWinterton - April 30, 2013 7:07 pm
    Wow. I wonder how this case will be determined in court. I guess there is no end to the unexpected things seen in US courtrooms. I have do go into court in a few months. Can anyone recommend a good criminal attorney in placer county? If any of your could that would be amazing.
  4. 196ski
    Report Abuse
    196ski - December 16, 2012 7:26 pm
    Sully
    My best advice would be to contact the Attorney Generals office at the WI Department of Justice and talk to them. This is the division that would handle mortgage complaints.

    DFI (Department of Financial Institutions)
    1-800-452-3328, (608) 264-7969

    Don't waste your time or risk getting bad advice from a friend or message board. You need to talk to the Man.
    DON'T WAIT, call Monday morning and good luck to you.
  5. scully
    Report Abuse
    scully - December 16, 2012 6:54 pm
    I am in serious need of advice. I had found out this past Thursday my home has been foreclosed and even sold back to the lender. I had stopped working in December 2009 and had been behind two months on my mortgage. In January of 2010 the credit union that I had financed my mortgage with started foreclosing on my home. I had purchased a disability policy at the time of financing my home that would pay my mortgage in the event I was unable to work therefore I asked the credit u nion to imitate the policy. The bank manager had refused but eventually another employee did which caused some delay for the insurance company to make payments. As soon as the insurance company approved my claim the credit union no longer continue with the foreclosure. Almost two years have past and the credit union I had my mortgage with had closed and my loan was transferred to another credit union. On Thursday I found out the new credit union foreclosed on my home and purchased my home. I only found out because my son called me that a guy had stopped at our home telling him we need to pack our things and leave because he owns our house. I can’t truly express how I felt. I am out of state with my Step Father who has terminal cancer and in hospice care. I called the person that told my son this unbelievable story. It was past business hours but I did receive a call first thing Friday morning. He explains to me that the previous credit union had started foreclosing on my home. I explain to this I have a disability policy that has been paying on my home and the credit union was satisfied. He said that the foreclosure was not vacated therefore he had every right to foreclose on my home. I asked why I wasn’t served papers of which he replied that I was in 2010. He said that he had stopped at my house and left a business card and he tried calling me but didn’t have a current number. This is insane he never made any effort to contact me as the previous credit union had my cell phone number, email address and my parent’s number. He was unaware of any insurance policy paying the mortgage but admitted to receiving a checks over four thousand. I have communication from the previous credit union from April of this year and it is obviously they were not actively proceeding foreclosing. Do I have any options or do I have to pack up my things and leave?
  6. scully
    Report Abuse
    scully - December 16, 2012 3:17 pm
    I could really use some help or advice.
    I was unable to work as of December 29th of 2009 and was a month behind of my mortgage well actually would have been two including December. The credit union I had my mortgage with started foreclosing on my home. I had purchased a insurance policy when I financed my home that would pay my mortgage if the even I was unable to work. The bank manager at the credit union refused to start the process but eventually another employee did. I took about 4 months for the insurance company to start paying but the did and continue to pay. The claim forms required my doctor statement each month even though I sent the insurance company the documentation I was on permanent disabilit, therefore the monthly payments were late. The credit union never continue with the foreclosure nor did they intend to as i have a email from the bank manager in April of 2012. Sometime in 2012 the credit union i had my mortgage through had closed and my mortgage was transferred to another credit union. A few days ago my son is home and a person knocks on the door. He tells my house he own our home and we need to pack our things and get out. I am out of state staying with my father who is being cared by hospice as he has terminal cancer. I am floored because I have no idea why. I am behind on my taxes of $1978. The other credit union had always paid the taxes and add it to my loan. I had asked for some help with the Veteran Services which is beside the point. I had called the number my son and received and it was after business hours so I left a message. First thing this past Friday morning I get a call from this person. I am still unclear what his title is but he is afilulated with the new credit union. He told me that they had not only foreclosed on my home but it has already been auction off. The new credit union purchased the home for $30,000. I had originally financed $67,000 but I had a been paying for the home for four years through a land contract. I explain to him the mortgage was being paid by a disability insurance policy I had purchased when I finaced the home. I asked him if he had been receiving the payments. He yes said two payments of over two thousand each. My mortgage payment is just over five hundred a month. I asked how could happen when the mortgage was being paid and with atleast me not being served. He said I had been served in 2010 by the previous credit union. I told him what had happen and once the the insurance claim was filed and approved there was no need for them to continue. He said that the foreclosure was never vacatted so they had every right to do what they did. He was not aware of the insurance policy I had and did ask for the number to the insurance company. The entire day Friday I was calling whoever I could think to get this worked out. Late Friday afternoon I got a call back from the guy I spoke with earlier and he verified my insurance. He said the policy limit is $50,000 and what would be my intentions after that, I said I would pay it but that will be a long time at five hundred a month. I am not sure why he asked that question because he said he is going forward and we will be forced to move. I am not sure how much time we have but I think its ten days. My only income is disabiliy conpensation and cant afford to hire a attorney. I am sure they are aware of my financial situation and antisipate i will not have the funds for Attorney. Does anyone know if I have a case in the event I come up with funds to pay for legal help. Any advice I would be greatly appreciate. My home is in Wisconsin.
  7. davidsnieckus
    Report Abuse
    davidsnieckus - July 18, 2012 3:34 pm
    dee:
    Let me try again
    david

    As Independence Day has come and gone would you give ANY consideration to my argument:
    Here: http://www.opednews.com/articles/The-REAL-secret-of-the-fra-by-David-Snieckus-120710-406.html


    There was no legal initial mortgage contract to begin with as there was:
    • No Consideration...i.e. no money....no loan: …..can only be considered a purported loan/ Has Fictitious or Illusionary Consideration; (see Montgomery vs. Daly)
    • An interest bearing Mortgage Contact can not possible be fulfilled by everyone because of usury ( Where does the interest come from if there was only one mortgage contract in the world.) therefore it is Civilly Void and Unenforceable;
    • False statements are signed by the borrower. i.e A False Document
    • Part of a Bait and Switch; The bankers and lawyers string you along into signing these false documents thinking you have a loan and are the borrower when in fact you are the creditor and have GIVEN them or they HAVE STOLEN your credit.
  8. davidsnieckus
    Report Abuse
    davidsnieckus - July 18, 2012 3:14 pm
    DEE
    TRY THIS ON AND CALL ME
    DAVID


    As Independence Day HAS COME AND GONE would you give ANY consideration to my argument:
    Here: http://www.opednews.com/articles/The-REAL-secret-of-the-fra-by-David-Snieckus-120710-406.html


    There was no legal initial mortgage contract to begin with as there was:
    • No Consideration...i.e. no money....no loan: …..can only be considered a purported loan/ Has Fictitious or Illusionary Consideration; (see Montgomery vs. Daly)
    • An interest bearing Mortgage Contact can not possible be fulfilled by everyone because of usury ( Where does the interest come from if there was only one mortgage contract in the world.) therefore it is Civilly Void and Unenforceable;
    • False statements are signed by the borrower. i.e A False Document
    • Part of a Bait and Switch; The bankers and lawyers string you along into signing these false documents thinking you have a loan and are the borrower when in fact you are the creditor and have GIVEN them or they HAVE STOLEN your credit.
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