Fraudclosure | ‘Zombie Notes’ Live to Haunt Deed Transfers

“But Bondi’s communications director, Jennifer Meale, said in an email because the problem faced by Cruz wasn’t a common complaint received by the attorney general around the time of the Watson settlement, this particular issue wasn’t specifically addressed.”


‘Zombie notes’ live to haunt deed transfers

Thousands affected by Fannie Mae tactics

Here’s what happened, according to Lee County court documents:

David Cruz Jr. got what he believed was a great offer in a foreclosure lawsuit filed against him by giant mortgage lender Fannie Mae.

If Cruz deeded the modest Fort Myers investment house back to Fannie Mae, the government-backed company would release him from the loan’s $123,750 note: the obligation underlying his mortgage.

He deeded the house back to Fannie Mae, but court records show he didn’t get what he bargained for.

Now, experts say, he and thousands of others in Florida who took the same deal from Fannie are at risk of being stalked by a so-called “zombie note:” debt that appears dead and gone but still can come back to life.


1. Marshall Watson, the attorney for Fannie Mae and for Bank of America, sends a document called a deed in lieu of foreclosure to Cruz in late 2009. The document, when signed by Cruz, transfers ownership of the house in Tice from him to Fannie Mae.

In exchange, Fannie Mae agrees “that it is releasing the promissory note” and it won’t sue Cruz for money owed under either the note or the mortgage. Cruz signs the deed and returns it to Watson.

2. On Feb. 15, 2010, Bank of America – which was handling Cruz’s loan for Fannie – simultaneously records the deed in lieu of foreclosure and assigns its ownership of the mortgage and note back to Fannie Mae.

The bank handling a loan typically is assigned ownership temporarily so it can deal with the case. Bottom line: Fannie Mae now has ownership of the house in Tice.

3. On April 23, 2010, Fannie Mae records a satisfaction of mortgage, which discharges Cruz’s $123,750 mortgage.

The document does not, however, mention the note despite the language of the deed in lieu of foreclosure.

The holder of the note, whoever that may be, has the legal right to recover the mortgage money from Cruz.

You can check out the article in full here…

What a mess…


7 Responses to “Fraudclosure | ‘Zombie Notes’ Live to Haunt Deed Transfers”
  1. John Anderson says:

    I say we need to do something big, like flashmob the Anthony circus thats going on in Orlando.
    The sad truth is, that we have lost so much, and the rule of law, is what hurts the most.

  2. David Cruz says:

    Around the time that the Attorney General settled the case with Marshall C Watson, the Attorney General was well aware of the Deed in Lieu scam I had reported and well documented. I had provided a detailed account of events complete with correspondence and at least a dozen other(during a month and half period of time) specific instances of DIL I had pulled from Lee County Public Record to highlight the pattern of DIL fraud. The ugly truth is no ones cares unles it affects them and the tired retort from those who disagree is always the same “deadbeat should’a paid his mortgage” argument no matter how blatant the malfeasance and fraud is on the part of the banksters, judges, lawyers and government sponsored enterprises. Our entire economic system is collapsing as a result of “frack”-sionalized banking and unregulated derivatives trading that continues to this day. Lets be clear…the deadbeat argument is moot in my case because I turned the property over to FNMA based on the promise to release the note and mortgage. I wasnt one of these zero down buyers…I wasnt a squatter who wouldnt leave…..I lost my down payment along with my good credit after using up all of my savings trying to make payments after losing a job…..I didnt aproach them with the idea of a DIL, their lawyers, Law Office of Marshall C. Watson approached me a only few months after they filed for foreclosure back in late 2009.
    The AG’s settltement occurred in 2011. My issues with this DIL began early in 2010. After pursuing this issue and pretty much getting blown off by The Florida Bar, The US Office of the Comptroller of the Currency, and The FBI Economic Crimes Division in Miami I wasnt too shocked that the FL AG basically sold me out with the rst of FLoridas consumers by simply slapping Law Office of Marshall C. Watson’s wrist with a paltry 2 million dollar settlement. The AG may have sold out the consumer too quickly but the saddest part is that they seem to be the only authorities to have taken any action whatsoever in Florida. I had also tried getting getting help from Senator Bill Nelson who did make earnest effort to intervene by openeing a direct comunication with unkown powers at FNMA at least until FNMA decided I wasnt going away and instructed the Senator to close the case because they were done with it. So filing suit was my last and only option. The saddest realization I have is that due process and the rule of law seem to have died in Florida……along with everything else having to do with reason. I really dont know that I can expect out of the judiciary in Lee County regardless of the legal arguments and abundant amounts of evidence we are presenting…. only Time will tell.
    David Cruz

  3. Jason Werner says:

    That actually happened to me too.

  4. Mad as Hell says:

    Fl. Attorney General Pam Bondi has already proven to the public that she is in the pocket of “The Banksters” and a member of the organized criminal class…She gave Chase a slap on the wrist, a fine instead of prosecution. The Criminal Banksters and Financial Terrorists need to be prosecuted. Homeowners are not settling for fines only…punish the perpetrators of their crimes not the victims. She has not passed any bills to help the homeowners of Florida only the Banks. While there is a record number of American citizens currently living paycheck to paycheck, in debt, unemployed, underemployed, without healthcare, on food stamps and in poverty, as our society is breaking down, global bankers have taken our tax dollars and given themselves all-time record-breaking bonuses. The same people who destroyed our economy have been rewarded with trillions of dollars in national wealth. It is now evident that both political parties and all three branches of government, along with the mainstream corporate media, have been bought off by a global economic elite. The Economic Elite have seized our economy, tax system and government. These people are the most depraved terrorists on the planet and they have viciously
    attacked us and launched an all-out economic war on the American public. We have to get serious about defending ourselves and fighting back.

  5. Readdocs says:

    Not a mess…what a scam. They’ve discovered a loophole where they can double the money to be made on
    the same product. Better to let them foreclose, and take your chances that way, having a zombie note hanging
    over your head is not healthy.
    This is the same scenario that is going to haunt people who purchased foreclosed properties, plus having the
    foreclosed owners in the future maybe having the property returned due to fraud in the foreclosure.
    Buy a hot car? Expect to lose the car, lose the money, and have to repay the loan!

  6. Bobbi Swann says:

    And this is why I am so against any type of modification….modifying the note and mortgage….but what if the lender/servicer does not own the note or the lender cannot produce the note? This same scenario holds true for modifications as well!!! Why do you think the lender/servicers don’t EVER record the modification? If it is put on public record creating another chain of title in the debt it will definitely be impossible to initiate foreclosure proceedings in the future but not hard for a “holder” to come back and sue for the note under the UCC….

  7. StuckinSoPa says:

    What owner? What note? Nobody knows where these things are, or even if they even exist anymore. Kinda like these damn stupid judges that rule in favor of the borrower and then give the banksters another chance to produce what?…..a better forgery?……at a later date.

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