What Did David Stern Do with the Truck of Documents He Removed from His Office?

/in /by

4ClosureFraud published another of the depositions from the FL investigation into foreclosure mill David Stern’s office. In it, Kelly Scott, the assistant of Cheryl Salmons–the woman who oversaw the robosigner aspect of their business–included details on how Salmons appears to have created her own lost title affidavits, how they would backdate affidavits of proof of service for foreclosures when the borrower hadn’t been served properly, and reclassify files to hide them from Freddie Mac when auditors would come for a visit.

But one of tidbits that seemed to surprise the lawyers had to do with Stern moving a truck load of documents offsite to another office.

Q. Did they say anything about what’s going on with Stern or Cheryl Salmons or anybody else?

A. The only concern was that they were moving files out of the office into a different office and that Eighteen Inch Freight, I think, was picking them up. Something like that. Trailer freight, something like that.

Q. Do you know where —

MS. CLARKSON: Eighteen wheeler?

THE WITNESS: Yeah, eighteen wheeler.

BY MS. EDWARDS: Q. Do you know where they were moving them?

A. Supposedly they were being moved to Orlando’s office.

Q. And do you know why they would do that?

A. No.

Q. Do you know how long ago this was going on?

A. I think a month and a half ago.

Q. What kind of office is Orlando?

A. David Stern has another law office in Orlando, Florida.

Q. What office is that?

A. I don’t know.

Q. And was it connected with the office here in Broward County?

A. Yes.

Q. And do you know which — what the office is there or what the location is?

A. No, I just know it’s another law office for David Stern that he’s opened for foreclosures in Orlando.

Q. And did he just open it a month and a half ago?

A. No. He opened it, I think it was either sometime at the beginning of this year or the end of last year. I can’t remember.

Q. 2010?

A. Yeah.

Q. Or December 2009?

A. It could be around that time. I just can’t remember.

Q. Well do you know if these files were being moved out over concern of the investigation?

A. Oh, I don’t know.

Q. Or just because they were moving files?

A. They were just moving a particular bunch of files to that office to be reviewed. That’s what — You know, my friend expressed that they were going to be reviewing them over there.

Mind you, this is hearsay, something Scott relayed that one of her friends still at the firm told her. And she has no reason to believe this is a response to the ongoing investigation into the case. (This deposition was taken on October 4, so the description of Stern moving files a month and a half ago would put it in roughly August.)

But this is the problem with the current treatment of all this fraud as mere “mistakes.” Because it leaves the chain of custody of such documents in the hands of the perpetrators to treat just as Enron did.

  1. Rayne says:

    Still digging on my end through money…wondering what the address was for the Orlando office, and if it was David Stern’s name on the door, or something more innocuous?

      • Rayne says:

        Oh, I was thinking of something like “Mid-Alantic Shredding Services” since we already know how popular this outfit has been with other folks who need lots of paper handled carefully.

        All kidding aside, most of these guys are great at vertical markets; if there’s a buck to be made anywhere along the foodchain, they owned it. There probably is a facility in Orlando owned by David Stern. Whether they store documentation there is wide open.

      • thatvisionthing says:

        David Stern was the focus of Mother Jones’ recent feature article: EXCLUSIVE: Fannie and Freddie’s Foreclosure Barons / How the housing agencies are helping shady lawyers make millions by pushing families out of their homes – By Andy Kroll | Wed Aug. 4, 2010 12:01 AM PDT. There are several mentions of Stern’s offices, though I don’t know if they’re comprehensive:

        Where in the world is David J. Stern?

        …Stern’s is hardly the only outfit to attract criticism, but his story is a useful window into the multibillion-dollar “default services” industry, which includes both law firms like Stern’s and contract companies that handle paper-pushing tasks for other big foreclosure lawyers. Over the past decade and a half, Stern has built up one of the industry’s most powerful operations—a global machine with offices in Florida, Kentucky, Puerto Rico, and the Philippines—squeezing profits from every step in the foreclosure process. Among his loyal clients, who’ve sent him hundreds of thousands of cases, are some of the nation’s biggest (and, thanks to American taxpayers, most handsomely bailed out [21]) banks—including Wells Fargo, Bank of America, and Citigroup…

        …Despite his immense wealth and ability to affect the lives of ordinary people, Stern operates out of the public eye. His law firm has no website, he is rarely mentioned in the mainstream business press, and neither he nor several of his top employees responded to repeated interview requests for this story. Stern’s personal attorney, Jeffrey Tew [33], also declined to comment…

        History:

        1993, first digs in North Miami Beach:

        …DAVID STERN WAS WELL POSITIONED to cash in on the business opportunity offered by Fannie Mae and Freddie Mac. After graduating from law school in the mid-’80s, he took a job with the firm of Gerald M. Shapiro, one of the first lawyers to automate the foreclosure process—and a partner in Shapiro & Diaz. In 1993, having mastered the ins and outs of foreclosures, he left to open his own shop in a North Miami Beach office with, in his words, “ugly blue carpet and pink walls.”…

        1997, strip mall in Plantation FL:

        …He put in his applications, and by 1997, when Fannie and Freddie [53] rolled out their most-favored-attorney program in Florida, Stern was on the list [54]. He relocated the firm to the nearby city of Plantation [55]—taking over a strip-mall space once occupied by a Stein Mart discount clothing store. He then hired a slew of rookie attorneys whose job was primarily to rubber-stamp legal documents….

        …While rushing foreclosures isn’t illegal, Stern’s fledgling firm was promptly accused of something that is: gouging people who are trying to get out of default. In October 1998, Tallahassee attorney Claude Walker filed a class-action lawsuit involving tens of thousands of claimants, alleging that Stern had piled excessive fees on families fighting to keep their homes. (Walker, who visited Stern’s offices in 1999 to collect depositions, described the place as “a big warehouse” where hordes of attorneys holed up in tiny, crowded offices “like hamsters in a cage.”) After several years of battling in court, Stern settled for $2.2 million [57]. Based on that case, the Florida Supreme Court [58] and state bar association later reprimanded [17] him for “professional misconduct [59].”…

        …Stern continued cramming more employees, documents, and computers into his strip-mall headquarters. From 2005 through 2007, city inspectors repeatedly cited the firm for code violations such as blocking exits and fire sprinklers with storage, and for creating a hazard by stringing extension cords between departments.

        2008, moves down the street:

        The cases kept coming. From 2006 to 2008, as the number of Americans losing their homes doubled [61], Stern’s case referrals nearly quintupled, and lenders sent him 12 times as many repossessed properties to sell off. Gross revenues just for Stern’s administrative operations—titles, home sales, and default processing—leaped from $40 million to $200 million, and his payroll swelled from 400 to nearly 1,000 employees. (Orientations for new hires were a near-weekly affair, said a former secretary.) In 2008, flush with cash, the firm left its strip-mall digs for a luxurious building down the street overlooking a small lake….

        December 2009, infinity and beyond:

        …A NICKEL HERE, A DIME THERE, and pretty soon you’re talking real money. Stern’s back-office operations cleared more than $44 million [64] in profit last year. Last December, a Chinese acquisition fund purchased those departments and spun them off into a company called DJSP (David J. Stern Processing) Enterprises. Incorporated in the British Virgin Islands—a notorious tax haven—the new firm will continue processing Stern foreclosures, and hire itself out to handle other firms’ foreclosure paperwork, too…

  2. Gitcheegumee says:

    Just for the record,Alan Grayson is from Orlando.

    GRAYSON PUSHING TO BLOCK FORECLOSURES

    Congressman Alan Grayson (Orlando) has requested that the Florida Supreme Court halt all foreclosures involving three firms under investigation for document fraud. In a letter to Chief Justice Charles Canady, dated September 20, 2010, Congressman Grayson highlights the issue of illegal foreclosures.

  3. Gitcheegumee says:

    Anybody here familiar with HVCC? I wasn’t ,but it looks pretty intiguing-considering the deadline involved.

    [PDF] Home Valuation Code of Conduct (March 3, 2008)

    File Format: PDF/Adobe Acrobat – Quick View

    Mar 3, 2008 … Home Valuation. Code of Conduct. I. No employee, director, officer, or agent of the lender, or any other third party …

    http://www.freddiemac.com/…/docs/030308_valuationcodeofconduct.pdf –

    Portfolio.com Fannie issues appraiser guidance ahead of looming HVCC replacement‎ – 2 hours ago

    When President Obama signed the Dodd-Frank bill into law in July, regulators had 90 days to write new rules replacing the HVCC. The Federal Housing Finance …

    Housing Wire – 48 related articles

  4. thatvisionthing says:

    Reposting a comment I left at the tail end of Marcy’s previous post How Much More Foreclosure Fraud Is Under Seal? regarding how sacrosanct the physical note used to be, and how totally offbase the current procedures are. I opened my comment with the quote Marcy included by Thomas Cox, “a lawyer who volunteers at legal assistance to make right for his years of doing foreclosures,” of his “description of the errors GMAC made even after the court started looking closely, and the detail that GMAC has now spent more on legal fees trying to foreclose on this house than the house itself is worth.”:

    “When Stephan says in an affidavit that he has personal knowledge of the facts stated in his affidavits, he doesn’t. When he says that he has custody and control of the loan documents, he doesn’t. When he says that he is attaching ‘a true and accurate’ copy of a note or a mortgage, he has no idea if that is so, because he does not look at the exhibits. When he makes any other statement of fact, he has no idea if it is true. When the notary says that Stephan appeared before him or her, he didn’t.”

    Just to compare — Tanta on Calculated Risk wrote a column in 2008 about her professional experience with lost note affidavits (LNAs). I’m guessing Tanta was a mortgage officer before MERS:

    I note for y’all that I have personally executed one or two LNAs in my day, and have therefore had all known hard file folders associated with this loan (the servicing file, the branch’s copy, the custodial file, whatever there is), as well as all correspondence with the warehouse bank or custodian or whoever else might have had it brought to my desk, so I could personally root through it all once more before I put my officer’s signature on an LNA. In all but one of the LNAs I can remember executing, I had documentation from FedEx or some other shipper that a package had indeed been lost, plus clear documentation in the loan file that this specific note had been included in that specific lost shipment. (My shipping department always put the copy of the airbill in the loan file. Always.) And of course I always had a certified true and correct copy of the note to attach to the affidavit.

    I bring all this up because…not only can original notes be lost or damaged, so can car titles and any other piece of paper. (I have a friend who once had to execute over 100 LNAs after a fire in an adjoining office suite triggered the sprinkler system in her post-closing department. Those LNAs were accompanied by copies of sodden bits of semi-readable paper that had been patched together on the copier plate, one at a time.) A financial institution in the business of making mortgage loans has no business routinely losing or damaging original promissory notes, and any institution that does so should be shut down by the federal regulators and I mean that.

    Almost sounds like a fairytale now. I don’t think she’d be signing hundreds of these a day, thousands a month.

    Of note, the rest of the column is an interesting case of a man in Florida who bought a multimillion dollar house and then refused to make payments because no one could prove they owned the note. He agreed he owed money, but to who? WaMu had tried to foreclose but dropped their case when in 2003 they couldn’t produce the note. But apparently that didn’t stop them from selling the bad whatever they had to another investor, who again was trying to foreclose in 2005. Like, if WaMu can’t foreclose, how can they sell?

    As I said, Tanta’s post was in February 2008 and she did not know then what happened in that case, did not even know if WaMu had sold the interest to someone else or how it was acquired.

    • thatvisionthing says:

      The man who refused to pay until someone could prove they owned the note on his Florida house was Joe Lents. From googling, it looks like Broken Credit Blog has been following this case, at least to a point:

      March 23, 2009
      Lost or Destroyed Note

      There was a foreclosure case in Florida (still ongoing I believe) with a homeowner named Joe Lents in Boca Raton, Florida where he has been fighting the lender on this issue since 2002. In the Joe Lents case, a deposition uncovered that the lender lied in not having searched diligently for the promissory note and instead a lady on behalf of the lender stamped en masse a stack of lost note affidavits. His case is an example of the banks preferring to stall the case than to fess up and tell the truth about what is really going on behind the scenes.

      Paul

      and a posting by Joe Lents himself on April 26, 2009:

      Paul-

      Just wanted you to know that I think you’re blog provides excellent help and advice. And, yes my foreclosure is still going….My last mortgage payment was July 2002.

      The plaintiff filed a motion in June 2008, to amend their complaint stating that since they are unable to re-establish the note under FS 673.3091, they want to foreclose under an eqiuitable subrogation claim. Never been done before in Florida when they didn’t have the note!!

      On November 4, 2008, we filed for quite title. DLJ Mortgage requested an extension of time to respond (until Dec. 12th). As of April 26, 2009, they still haven’t filed an answer that was due within 20 days of Nov. 4, 2008!

      We’re getting ready to file a cross-motion for Final Summary Judgment.

      I would strongly encourage your readers to find good legal council when facing a mortgage foreclosure AND by all means fight for their home. It does work and the only way to guarantee that they will lose is if they do NOTHING!!

      Keep up the good work-

      Joe Lents

      Beyond that, I don’t know how to research this.

        • cbl2 says:

          wow, thanks for the links –

          here is (so far) the clearest explanation as to why MERS doesn’t have standing:

          scroll down to bolded “The Foreclosure Mess”, there’s a paragraph that starts with:

          Homeowners can only be foreclosed and evicted from their homes by the person or institution who actually has the loan paper

          it gets really clear from there – gonna have to go back and fully read your links – ’cause I don’t see how in the world MERS could have standing

        • thatvisionthing says:

          ehhhhhhh, think you’re wrong. Date on your story is 2007. Nebraska is MERS’s Waterloo, as I understand it, where they shot themselves in the foot. From goofy memory, MERS wanted to get out of filing fees or something and so swore to the Nebraska court that they had no interest, no skin in the game. I think they were like a telephone book, and that doesn’t make the telephone company responsible for paying property taxes or filing fees on the addresses they list? But it also doesn’t give the telephone company a right to foreclose on the debts of someone whose phone number they have recorded. So, since Nebraska, MERS can’t have it both ways, as noted by Kansas Supreme Court too. From Ellen Brown’s August story, Homeowners’ Rebellion: Could 62 Million Homes Be Foreclosure-proof?:

          Earlier cases focused on the inability of MERS to produce a promissory note or assignment establishing that it was entitled to relief, but most courts have considered this a mere procedural defect and continue to look the other way on MERS’ technical lack of standing to sue. The more recent cases, however, are looking at something more serious. If MERS is not the title holder of properties held in its name, the chain of title has been broken, and no one may have standing to sue. In MERS v. Nebraska Department of Banking and Finance, MERS insisted that it had no actionable interest in title, and the court agreed.

          An August 2010 article in Mother Jones titled “Fannie and Freddie’s Foreclosure Barons” exposes a widespread practice of “foreclosure mills” in backdating assignments after foreclosures have been filed. Not only is this perjury, a prosecutable offense, but if MERS was never the title holder, there is nothing to assign. The defaulting homeowners could wind up with free and clear title.

          In universal short, and thanks to MERS for making its position clear in Nebraska:

          MERS was convenient for the mortgage industry, but courts are now questioning the impact of all of this financial juggling when it comes to mortgage ownership. To foreclose on real property, the plaintiff must be able to establish the chain of title entitling it to relief. But MERS has acknowledged, and recent cases have held, that MERS is a mere “nominee”—an entity appointed by the true owner simply for the purpose of holding property in order to facilitate transactions. Recent court opinions stress that this defect is not just a procedural but is a substantive failure, one that is fatal to the plaintiff’s legal ability to foreclose.

        • wavpeac says:

          Yah, my take on it is that they can’t have it both ways…but they are getting judges who are allowing Mers cases to move forward according to my lawyer. This was just before the moratorium. There is a huge disconnect between the judges rulings and the laws. In this case it was an advantage to MERS regarding payment of taxes.

        • thatvisionthing says:

          I need to go back and figure out the chronology on that. Your article cites a 2007 case… Uh oh, ping pong:

          Re: Mortgage Elec. Registration Sys., Inc. v. Coakley, 2007 WL 1775981, 2007 Slip Op 05478, App. Div, Second Department.

          Appellant alleged MERS had lack of standing in the foreclosure action against property she owned. The state Supreme Court disagreed and the Appellate Division affirmed.

          The Nebraska case I mentioned (Mortgage Electronic Registration Systems, Inc. v. Nebraska Dept. of Banking and Finance, 2005) was quoted by KS Supreme Court in 2009 (Landmark v. Kesler) and in Ellen Brown’s article in August 2010. Her link takes you to a 2009 Vermont case (PDF), which cites both Kesler and the 2005 Nebraska case:

          The relationship of MERS to the mortgage transaction is not subject to any easy description. Landmark Nat. Bank v. Kesler, 216 P.3d 158, 164 (Kan. 2009). The Supreme Court of Kansas and the Supreme Court of Nebraska have described MERS as follows:

          MERS is a private corporation that administers the MERS
          System, a national electronic registry that tracks the
          transfer of ownership interests and servicing rights in
          mortgage loans. Through the MERS System, MERS
          becomes the mortgagee of record for participating members
          through assignment of the members’ interests to MERS.
          MERS is listed as the grantee in the official records
          maintained at county register of deeds offices. The lenders
          retain the promissory notes, as well as the servicing rights
          to the mortgages. The lenders can then sell these interests
          to investors without having to record the transaction in the
          public record. MERS is compensated for its services
          through fees charged to participating MERS members.

          Id. (quoting Mortgage Electronic Registration Systems, Inc. v. Nebraska Dept. of
          Banking and Finance, 704 N.W.2d 784, 785 (Neb. 2005).

          I don’t know, did Nebraska Supreme Court rule one way in 2005 and another in 2007, and the earlier ruling is cited by Kansas Supreme Court and Vermont in 2009? Kansas, California and Vermont depend on the Nebraska 2005 ruling, but Nebraska overruled itself in 2007?

          Oh, help.

        • wavpeac says:

          You know, I am not sure. I didn’t pay as much attention to the chronology as I should have. I’ll have to look some more.

    • Gitcheegumee says:

      Speaking of WaMu, they were purchased by Chase,

      AND looky here:

      WaMu Wins Court Approval of Seeking Creditor Votes for Liquidation …‎ – 20 minutes ago

      By Steven Church – Mon Oct 18 2010 Washington Mutual Inc., the former parent of the biggest US bank to fail, won court approval to send its …
      Bloomberg – 19 related articles

      According to this piece,the liquidation plan would divide $7 billion among creditors , based on a settlement between WaMu, JPMorgan Chase & Co., which bought the failed bank, and the Federal Deposit Insurance Corp., overseer of bank assets to bank creditors in a separate legal proceeding.======

      Treasury pays $4.77 billion in WaMu tax refund deal‎ October 13,2010- Reuters – 12 related articles

        • Gitcheegumee says:

          Thanks,cbl2.

          Here’s some ,at least to me, interesting info about MERS from Wikipedia-(I don’t know how it fits in,if at all, with the new HVCC guidelines mentioned upthread.)

          The MERS eRegistry

          The MERS eRegistry is a system of record that identifies the owner (Controller) and custodian (Location) for registered eNotes.[8] Built by MERS with the endorsement of the Mortgage Bankers Association and launched in 2004, the MERS eRegistry satisfies the “safe harbor” requirements of E-SIGN and UETA legislation.[9] Both Fannie Mae[10] and Freddie Mac[11] require the registration of eNotes on the MERS eRegistry before they are eligible for purchase.

          MISMO and MERS

          In February 2009, MERS was selected to manage the day-to-day operations of the Mortgage Industry Standards Maintenance Organization (MISMO), although the Mortgage Bankers Association will continue its full control over MISMO. MBA President and CEO John A. Courson said the selection of MERS as a management partner, “will result in the continued enhancement of data standards and transparency, which are critical to the return of investor confidence and liquidity in our marketplace.”[12]

          BTW, the Wiki states that MERS was originally founded in 1995 in Reston,Va.

        • thatvisionthing says:

          When you talk MERS, I believe you are talking Fannie and Freddie: More from the Mother Jones article:

          FORECLOSURE MILLS OWE their existence to Fannie Mae and Freddie Mac, the federally guaranteed entities that essentially created, beginning in 1968 [34], the vast marketplace where loans are traded. Their mandate was to promote property ownership by making a large pool of credit available at affordable rates. They accomplished this by buying mortgage debt from banks and packaging it into bonds, which allowed investors to get in on the action. The banks responded to the demand by lending more money to their customers, and Fannie and Freddie’s combined mortgage portfolio exploded from $61 billion in 1980 to $1.2 trillion two decades later, according to the Government Accountability Office. Their dominance gave them the clout to rewrite rules for the mortgage industry—standardizing underwriting guidelines, loan documents, and the like.

          Fannie and Freddie also reshaped the foreclosure industry. Their huge holdings meant they had to deal with thousands of foreclosures annually—even during periods when only a small percentage of loans were going bad. In the 1990s, the market expanded into subprime territory to feed the securitization beast, and borrowers began defaulting at increasingly higher rates. Hiring lawyers on a case-by-case basis was burdensome, so Fannie and Freddie put together a stable of law firms, prime contractors prepared to litigate large bundles of foreclosures quickly and cheaply. They urged these handpicked firms to bring in-house all of the related services—inspections, eviction notices, sales of repossessed properties, and so forth—or at least to retain a suitable subcontractor to handle the tasks. Thus emerged the foreclosure supermarket.

          So if anyone wants to find out about David J. Stern’s offices, they could just ask Fannie and Freddie, he’s been their hatchet man since the 1990s. From MoJo, he was on their most favored attorney program in 1997, he was Fannie Mae’s Attorney of the Year in 1998 and 1999, and as of the August 2010 MoJo article, “Fannie and Freddie have kept him as a designated counsel. A Freddie Mac spokesman cites Stern’s ‘good standing” in Florida…’ A Fannie spokeswoman did not respond to requests for comment.

        • thatvisionthing says:

          I linked above to a Daily Kos diary, BREAKING: Fannie to Servicers: Don’t Mention Mers, but to make it more explicit:

          Fannie Mae March 2010 Announcement, Miscellaneous Servicing Policy Changes PDF

          Foreclosure Actions in the Name of MERS

          Servicing Guide, Part VIII, 105: Conduct of Foreclosure Proceedings

          Effective with foreclosures referred on or after May 1, 2010, MERS must not be named as a plaintiff in any foreclosure action, whether judicial or non-judicial, on a mortgage loan owned or securitized by Fannie Mae

  5. rosalind says:

    ot: via Huffpo – Daily Beast-Newsweek Merger Off: Website Drops Out Of Talks

    The Wall Street Journal broke the news. In its story, the Journal reported that the talks between the Beast and Newsweek were stalled over what roles the three main people involved in the organizations — Brown, the Beast’s chief financial backer Barry Diller, and Newsweek owner Sidney Harman — would play in any merged institution.

    heh.

  8. parsnip says:

    The WH is running out the clock on the statute of imitations on much of the fraud … and stalling while foreclosures steamroll ahead abets destruction of evidence, and hiding the magnitude of the banks’ debt. It also lets them pillage the MBS shareholders via extracting fees for the servicers’ diligent service.

    At some point the economic incentive to foreclose will zero out, but there’s no reason to stop the party now.

    ew: Here’s one for your sleuthing. The HuffPo article The New Tax Man: Big Banks And Hedge Funds describes the next step, in which newly-created bank subsidiaries, hedge funds and private equity swoop in and buy up hundreds of thousands of foreclosed homes at tax lien sales. The report goes into a fair amount of detail, naming names, but fails to tell us how so many homeowners fell into tax arrears. I suspect the servicers are to blame, as a part of the overall bank strategy of reclaiming the homes with clear titles. Titles to homes purchased via tax lien sales come all cleaned up of all other liens.

    wavpeac has described how the servicers intentionally tack on bogus fees, then credit payments first to the fees, then whatever is left over goes to the MBS, leaving the tax escrow accounts possibly deficient. Do the servicers’ pay the taxes? I’ve read of intentional late payment of taxes by servicers in order to incur late fees. This kind of scheme is not beyond their realm of deviousness.

      • scribe says:

        It was me.

        Note also that one of the leading investors in this is one Mr. Mudd, who is noted as having been the head of Fannie (or Freddie) when they got into the business of pushing subpime, liars loans and all the other predatory practices which set this whole train in motion. Sounds like he had a plan back then. One is compelled to wonder who else was in on that plan.

    • thatvisionthing says:

      Back to MoJo’s article on David Stern:

      Consider the case of Holly and Rory Hewitt, who for years faithfully made monthly payments on their modest one-story house on what was once an orange grove in Loxahatchee, Florida. In October 2007 their lender, Countrywide, erroneously informed the couple that they were in default. The Hewitts, who had the money, immediately called and asked how much they owed so that they might get things straightened out. Soon after, a reinstatement letter arrived on the letterhead of Countrywide’s legal counsel—the Law Offices of David J. Stern.

      The $18,500 bill was larded with charges—property inspection, title, and late fees that seemed exorbitant even in an industry renowned for arbitrary fees, plus monthly loan payments that weren’t yet due. In addition, Stern charged the Hewitts for serving legal papers not just on Rory and Holly, but on a nonexistent spouse for each. In all, the couple was being gouged for thousands of dollars. The Hewitts took their story to a local legal aid organization, which passed the case to a private attorney. It would eventually become the core of another class-action suit [PDF][15]—one of two pending cases alleging that Stern had dumped junk fees on some 3,500 homeowners who were trying to escape default.

      Stern’s attorney insists publicly that the fees were reasonable and legal. But the lawsuits claim that Stern’s firm often tripled the standard title fee, charged for serving papers on fictitious people, and demanded payments and fees that homeowners plainly didn’t owe—violating Florida laws against predatory debt collecting and deceptive trade practices. Stern, the filings allege, is personally to blame.

      @4 mentioned Alan Grayson’s attempt to have the FL Supreme Court halt all FL foreclosures until system fraud could be assessed, and as I recall the FL Supreme Coutt’s answer was we can’t, but go to the Bar. Has anyone, and what’s holding that up? Hell, charging for serving papers on fictitious people? Foreclosing on people who aren’t late in payments and gouging them for fees? Even if his records are in China or Cheney’s shredder, fictitious people — there’s nothing to document.

    • bobschacht says:

      ew: Here’s one for your sleuthing. The HuffPo article The New Tax Man: Big Banks And Hedge Funds describes the next step, in which newly-created bank subsidiaries, hedge funds and private equity swoop in and buy up hundreds of thousands of foreclosed homes at tax lien sales. The report goes into a fair amount of detail, naming names, but fails to tell us how so many homeowners fell into tax arrears.

      What most people may not remember is that one’s mortgage payment pays multiple sources: not just the lender, but your taxes, certain insurance, etc. Don’t neglect to notice the “escrow account,” which adds a flat fee to your monthly mortgage to cover things like your property taxes. If you are depositing your mortgage payments into a special account rather than your lender, you have to remember to pay your property taxes out of that.

      Bob in AZ

  9. parsnip says:

    Gitcheegumee @ 10 ….. and everywhere else at FDL that you post links. Copying and pasting from somewhere that results in a link with …….. in the middle of the link means that the link is missing something where those dots are, and will not work. You need to copy and paste in the full link separately, anew, each time. Copying and pasting an old comment that dotted the interior portion of a link won’t cut it.

  10. parsnip says:

    cbl2 @ 21

    Mason linked to the article in David’s MERSy post this morning. HuffPo posted the article today, although it’s part of an ongoing investigation into the tax lien vulture scheme. I read the article and posted about it on David’s subsequent ‘Law Expert’ post, suggesting he look into how the homeowners manage not to pay their taxes. I can’t believe HuffPo didn’t look into that aspect.

    • cbl2 says:

      sounds like it was our scribe then – he laid the tax lien scheme out – the kind of thing we see in late night informercials –

      p.s. it came up in response to my general question as to whether Banksters were bothering to pay property taxes on foreclosed properties

  12. parsnip says:

    cbl2 @ 27

    Yes, I obviously read scribe’s comment (my reply is downthread) and synthesized what he wrote with my understanding of the HuffPo piece. And also added in wavpeac’s input about bogus fees.

  13. Peterr says:

    I’m sure there’s a simple explanation for all of this.

    The sprinkler system in the office probably went off one day, and he simply took everything home to dry all the papers slowly and carefully in his oven.

  14. scribe says:

    Just a general comment on the main article: The kind of rank hearsay described in that deposition is, in and of itself, enough to support a search warrant for those documents. It does not take much to support one.

  15. parsnip says:

    scribe @ 34

    I was thinking the same thing: conspiracy many years in the making. Reading the HuffPo article one realizes that the hedge funds, private equity and TBTF banks have gone to a lot of trouble creating dozens of shell companies with mail drops under whose cloak they are carrying out their endgame of vulturing-up the tax liens. That would only make sense if they were assured of volumes of houses in the pipeline, which makes me even more certain that failing to pay the taxes was part of a planl.

    So not only do we have masses of foreclosures, but a second pipeline leading to the end that not only do the ‘little’ people have all of their equity stripped via defective mortgages, but in the end the MOTUs get all the houses for keeps too.

    Putting this together with Kelo presents even worse possibilities for those who own their homes outright but are perceived to be ‘in the way’ of somebody’s renewal plan.

    • thatvisionthing says:

      Look how well that turned out:

      The City eventually agreed to move Kelo’s house to a new location and to pay substantial additional compensation to other homeowners. The redeveloper was unable to obtain financing and had to abandon the redevelopment project, leaving the land as an empty lot.

    • thatvisionthing says:

      I was thinking the same thing: conspiracy many years in the making. Reading the HuffPo article one realizes that the hedge funds, private equity and TBTF banks have gone to a lot of trouble…

      Think of what Elizabeth Warren said at Netroots Nation this summer about a sponsorless amendment in the 2005 bankruptcy act that made Lehman’s failure in 2008 not a bankruptcy but a run on the bank giving the fantasy casino banksters a head start on pulling out real assets over everyone else? My paraphrase, here’s my transcript (more at link):

      ELIZABETH WARREN: And if you want to understand the Lehman bankruptcy, understand Lehman was in many ways not a bankruptcy. Because Lehman didn’t have the fundamental protection of the automatic stay. Everyone could come in with their credit default swaps and their derivatives and their repo agreements and so on and continue to take things out of Lehman.

      In other words, what we have in the case of these big companies and financial products, it’s like the old bank runs. You know, the first one to come in and seize is the one who’s going to get paid in full, and if you don’t get in there fast enough, you don’t. The bankruptcy system doesn’t work right now for financial products. Lehman showed us that, and yet the financial reform bill could not be brought so far as to stitch up this part of the hole on financial products.

      So all I can say — I will only finish on Matt’s point by saying, everyone else understands the tools. The insiders get it, and they get it big time. And they know not only how to play the system as it exists, they know how to change the system to work it to their advantage. And bankruptcy is just one of the many examples. And who ends up paying for that? All the rest of us.

  16. wavpeac says:

    I have a feeling that because Nebraska is a pro corporate state they may have over ruled themselves. I know my Lawyer did not care about the MERS stuff or proving that they had the note. He’s more interested in suing for my balance and forcing them to prove that I owe what they say I do. But then again, I am not certain that he understands or has kept up with all this information.

    • thatvisionthing says:

      Your balance… that’s the thing that gets me, that if you didn’t default and did everything right, in 30 years after diligently paying off your mortgage you can find that there is no title.

      Good luck.

  18. JohnJ says:

    I like oversimplifying: this reminds me of the story I heard about the talking trees in Jamaica.

    The first tree has a guy behind it saying “psst..buy some ganja? Great stuff!!” When the tourist buys some, the first tree’s cousin steps out from behind the second tree with a badge and confiscates the bag then demands a fine to be paid (in cash to him of course) or you go to jail. Now the cousins have your money AND your dope and wait for the next sucker to come by.

    The MOTU convince everyone that home ownership is the ONLY way to achieve the “amerikan dream”, charge more than than the price of the bait for the fee (interest) on the right to use the item (the loan), then use every trick in the book to trip you up. If you trip up, they use their ownership of the legal system to take your money AND get their bait back to set up the next sucker. Even if you succeed in navigating all the obstacles, you still only “own” something worth a fraction of what you paid for it.

    Simple huh? Whose dream is this?

    • bobschacht says:

      Simple huh? Whose dream is this?

      Bill Clinton’s? Robert Rubin’s? They were the ones who wanted to help Middle Class workers to achieve the American Dream, and implemented policies to match. At the basis was a reasonable idea that got taken over by a team of sorcerer’s apprentices who relaxed the criteria for getting a home loan too far, and then the Bushies came along and seized on it as a scheme to fleece the Middle Class for the benefit of the aristocracy.

      Bob in AZ

  19. alinaustex says:

    Wouldn’t this be a great closer to motivate the base for the mid term GOTV to have Prof Elizabeth Warren out there talking about the illegal foreclosure ie thatvisionthing@42 … But oh wait that would mean that the Obama administration really does care about consumer protection and the middle class. My self identified” elderly cranky conservative little C neighbor” out here in the country in Central Texas has a faded bumper sticker from the 2008 cycle – Vote against the Audacity of Hype /Vote Republican . He asked me yesterday by the mail boxes if I had to choose between Obama and Eisenhower who would I choose ?

    • bmaz says:

      Having Liz Warren out “talking” about some simple minded pablum is not going to do diddly squat other than further defraud American citizens. And you can bet that is exactly what Obama has in mind, creating some half ass way to paper over this to help the banks, in return they will attempt a few more “modifications” (likely another HAMP clone where the banks actually use the process to gain further advantage over distressed citizens) and once again the further dying American people are screwed in favor of big banks and big business. And you think Obama using Liz Warren as a traveling snake oil salesman for this is a good idea? Really?

      Gee, I thought the big lure of Warren joining the administration was that she was going to be the technocrat really setting up the complex infrastructure of an extremely complex CFPB structure; well that sure as hell is not what is occurring if her time is being spent using her as just another gadfly the administration sends out in the fields to sell their crap to the masses. So, what is it; is Warren the technocrat that will help the entire country by working up the hard details on the CFPB or a talking shill for a bunch of hollow Obama pablum?

      The odds are almost perfect she was never the former in the eyes of Obama and Geithner and coopting Warren to sell their useless dredge in favor of banksters is always what they had in mind for her. The question is why anybody would think this is a good thing.

  21. wavpeac says:

    When I began collecting info on this stuff in 2004, I couldn’t find anything about GMAC/was Homecomings financial (ditech, lending tree…etc…)owned 51% by cerberus since 2001. Wells fargo was mentioned in articles as were other banks, and there were plenty of complaints online. The complaints often had posting from Homecomings right below them basically calling the complainer a liar who hadn’t paid their loans. There was a full court press by GMAC to keep this stuff on the quiet. It was maddening. Even the complaints would be scrubbed to the point that I couldn’t find the complaint boards at times, but they would always come back with brand new complaints.

    GMAC knows darn well what they have done. They purposely became involved with the Katrina survivors and donated 1 million in funding for a reason. What they did to those folks was absolutely sickening.

    • MadDog says:

      And relatedly, the NYT’s Charlie Savage had this piece yesterday:

      U.S. Pushes to Ease Technical Obstacles to Wiretapping

      I found this part of Charlie’s story less than credible (I’m not saying that Charlie fibbed, but that his sources aren’t passing the smell test):

      …To bolster their case, security agencies are citing two previously undisclosed episodes in which major carriers were stymied for weeks or even months when they tried to comply with court-approved wiretap orders in criminal or terrorism investigations, the officials said…

      [snip]

      …Starting in late 2008 and lasting into 2009, another law enforcement official said, a “major” communications carrier was unable to carry out more than 100 court wiretap orders. The initial interruptions lasted eight months, the official said, and a second lapse lasted nine days.

      This year, another major carrier experienced interruptions ranging from nine days to six weeks and was unable to comply with 14 wiretap orders. Its interception system “works sporadically and typically fails when the carrier makes any upgrade to its network,” the official said.

      In both cases, the F.B.I. sent engineers to help the companies fix the problems. The bureau spends about $20 million a year on such efforts…

      • MadDog says:

        And in case anyone is foolish enough to still believe in Santa Claus, just a friendly warning that all our toobz are DOD’s now:

        “Reflecting President Obama’s strong commitment to building an administration-wide approach to combating threats to our cyber networks and infrastructure, the Department of Defense (DoD) and the Department of Homeland Security (DHS) have signed a memorandum of agreement (5 page PDF) that will align and enhance America’s capabilities to protect against threats to our critical civilian and military computer systems and networks…

      • bobschacht says:

        Yeah, “technical obstacles” my foot. Its that dam* Constitution getting in the way of the fascist takeover of our country, once again.

        Bob in AZ

      • thatvisionthing says:

        Rot spreads, and cancer kills its host. Too bad for the cancer cells in the end, no? They’re not protecting anything, they’re killing their legitimacy as my government, and yours, and yours… One by one, each by each. There is no brain, there is only useless paranoia. Maybe that’s the eleven-dimensional way to return power to the people or to get us to realize we had it all along? So Lincolnesque, the best way to end a bad law is to enforce it strictly.