Attorney Linda Tirelli, a rockstar in the arena of foreclosure defense, has just filed an adversarial bankruptcy suit in the Southern District of New York naming the following as defendants: Bank of America, Nationstar, U.S. Bank, and Recontrust. As many former and soon-to-be-former homeowners know, this group is a veritable rogue’s gallery of home/wealth/livelihood/sanity thieves and scam artists. The fact that Tirelli is going after this financial mafia family is heartening, because Tirelli gets results.
So I read through her complaint, filed on November 29, 2016. You can read it here. What follows are my first impressions and sections of the complaint that stood out to me.
I am thrilled to see that Tirelli is going for the jugular with this complaint, and not shying away from what her client (and millions of people who are or have been in the same situation) truly deserves. Namely, Tirelli is seeking to void the lien and to void the debt. On top of that, she is also seeking punitive damages. As we’ll see below, she has very good reason to seeking these remedies.
The Facts: When Countrywide is involved, look out
The “debtor” (I will only put that word in quotes this one time, but please feel free to add them in your mind every time you see them from this point on) is named Helen Racanelli, who “borrowed” (same deal with the quotes) $508,000 from Countrywide prior to the 2008 crisis. She sought a modification from Countrywide in October 2008 and per Countrywide’s instructions, sent them a check for almost $5,000 as part of the modification process. Countrywide refused the payment and returned it to Racanelli. That started Racanelli down the road to the eventual Chapter 13 bankruptcy she sought earlier in 2016.
The evidence marshaled against the defendants
I am interested in this case for a number of reasons, but there are two in particular: 1) it calls out fraudulent, “ta-da” endorsement of promissory notes, and 2) it involves such an endorsement bearing the names of Michele Sjolander and Laurie Meder. I have personal experience with those very same characters and a ta-da endorsement that was used to take my house back in 2012. I have written about this a number of times, notably in the posts “BANK OF AMERICA’S MAGIC WAND” and “NO ENDORSEMENT, NO NEGOTIATION–NO NEGOTIATION, NO SECURITIZATION.” So I read the following passage from the complaint with great interest:
26. The Court should further know that according to the FDIC public website, Countrywide Bank NA became an inactive institution on April 27, 2009. MERS could not have acted as a nominee for Countrywide Bank, FSB, an inactive institution, on August 9, 2009.
27. Defendants also attached a copy of the original note with a dual blank endorsement bearing the rubber-stamped signature of Michelle Sjolander and Laurie Meder (“the endorsements”) to the proof of claim.
28. BOA, as servicer for U.S. Bank, caused agents and/or employees to affix the endorsements to the back of the original note as part of a “90 day delinquent note endorsement process” involving systemic surrogate signing for notes more than 90 days delinquent.
29. BOA’s agents and/or employees affixed the endorsements by rubber stamp in anticipation of filing the foreclosure, years after origination and years after the closing date of the trust in an effort to perpetrate a fraud upon the court.
30. As discussed supra, BOA, its agents, and its corporate representative prepared false evidence and testified falsely to defraud federal bankruptcy courts and state court judges into believing the endorsements were affixed within days of origination by document custodian employees authorized to use Ms. Sjolander’s or Ms. Meder’s rubber signature stamp.
In this section, it is almost as though I am reading from the complaint I filed in my own losing case against a couple of these same defendants. Other victims of foreclosure fraud likely feel the same way. I also found—and included in my complaint–that same info from the FDIC about Countrywide being an inactive institution and had the same experience of parties acting supposedly at the behest of Countrywide after Countrywide was supposedly inactive. And of course as I already mentioned, I had the same blank endorsement bearing the names of Sjolander and Meder, about which I was able to depose Sjolander, which you can read here: Robo-stamped | Full Deposition of Michele Sjolander Executive Vice President of Countrywide Home Loans.
I absolutely agree with this next bit:
32. Rather than dismiss those cases, pay attorney’s fees and new filing fees to refile the cases after endorsing the original notes, BOA engaged in fraud upon the court setting up a cover story that the surrogate signed endorsements of Michelle Sjolander, David Spector, Laurie Meder and Christina Schmidt were affixed within days of origination by document custodian employees acting under proper authorizations.
I couldn’t have said it better myself.
I was incredibly encouraged to see that Tirelli cited the testimony of Bank of America employee Linda DeMartini—in the case of Kemp v. Countrywide—that Countrywide/Bank of America did not endorse notes in the normal course of business and that she had “never seen an actual note that has an endorsement on the bottom.” According to DeMartini, the only time endorsements were bothered with was when they were needed as a defense at trial. It’s really incredible that this explosive testimony has not already taken down Bank of America’s foreclosure machine.
Incredible report on Fannie Mae and the effect of UCC-9
Tirelli continues her damning deluge of evidence by describing an incredible report that I had not heard about until reading this complaint, and I try and make it a point to keep abreast of such things:
46. In 2001, New York State adopted the Uniform Commission on Laws Recommendations to Amend Article 9 of the Uniform Commercial Code to include the sale of promissory notes in the law governing secured transactions and to codify the common law rule that the mortgage follows the note.
47. These 2001 amendments codified that, upon proof of purchase of the debt evidenced by the signed agreements from the closing of the securitized trust documenting a complete chain of title for each loan, the mortgages would follow the note for all the loans in the securitized transaction, without need for further evidence.
48. In 2006, in response to allegations of widespread improprieties made at a Fannie Mae shareholders meeting, the international law firm of Baker Hostetler issued a report to Fannie Mae to address the allegations (“the BH Report”). On February 4, 2012, the New York Times published this report online. http://www.nytimes.com/interactive/2012/02/05/business/05fannie-doc.html?action=click&contentCollection=Business%20Day&module=RelatedCoverage&pgtype=article®ion=EndOfArticle&_r=0 See Request for Judicial Notice Tab A.
49. The 2006 BH Report to Fannie Mae concluded at page 35 “that foreclosure attorneys in Florida are routinely filing false pleadings and affidavits regarding the Plaintiff’s – MERS or servicers – interest in the proceedings and regarding lost, missing or destroyed promissory notes. The practice could be occurring elsewhere3. It is axiomatic that the practice is improper and should be stopped.”
Tirelli goes on to make a great point about the Article 9 amendment:
“61. Despite the clear changes to New York and Florida law confirmed by the BH report, the Defendants BOA and Nationstar, on their own and/or as agents of Defendant US Bank N.A., as Trustee, continue to misrepresent to this court and courts throughout this nation that Article 3 of the UCC controls and that the effect of a note endorsed in blank as alleged here provides them with sufficient evidence of standing without regard to Article 9.”
Tirelli even alleges—correctly, I might add—that the so-called “uniform” promissory notes that are used to secure mortgages throughout the country are arguably not negotiable and therefore cannot be securitized:
64. The Debtor avers that the Note is a non-negotiable instrument as the parties contracted out of the UCC definition of “Holder” in ¶1 of the promissory note which states: “… Lender or anyone who takes by transfer and who is entitled to receive payments under this Note is called the “Note Holder.” Therefore, a party in possession of the original note with a blank endorsement would still need to prove it took by lawful transfer and had entitlement to receive payments. Article 3 of the UCC says even a thief can enforce a blank endorsed note. This note does not permit such a result.
65. The Debtor further avers that the Note is a non-negotiable instrument pursuant to ¶6 of the promissory note which provides any loan charge later found to be illegal may, at lender’s option, result in a reduction in principal. Accordingly, the reader must refer to the outside source in order to determine the value of the instrument.
66. The Debtor further avers that the Note is a non-negotiable instrument pursuant to ¶11 of the promissory note which provides there are additional protections for the Note Holder in the mortgage if the borrower fails to keep its promises. Accordingly, the note is governed by and subject to the various provisions of the mortgage that affect the amounts due under that note.
67. Specifically, the mortgage defines the term “loan” at §(G) as all amounts due under the note and mortgage. The mortgage further provides at page 6, ¶2, the application of payments goes first to interest, then principal, then amounts due under ¶3 of the mortgage, then late charges, then any other charges under the mortgage, then to reduce the principal. This renders the note subject to the mortgage and affects the amount due under the note.
68. The Debtor further avers that the Note is a non-negotiable instrument pursuant to page 5, ¶5 of the promissory note which provides the lender may force place insurance which provides any amounts lender pays to protect the property all become additional debt secured by the mortgage that accrues interest at the note rate.
69. Moreover, at pages 6 and 8, the mortgage provides the lender may use any “insurance proceeds” or “miscellaneous proceeds” to reduce the amount due under the note. This also renders the note subject to the mortgage and affects the amount due under the note, all and any of which destroy the notes negotiability.
70. Even if the note were a negotiable instrument, the “mortgage follows the note” doctrine has been codified by Article 9 of the NYS Uniform Commercial Code. The exclusive statutory means to prove purchase of the debt is by N.Y. U.C.C. Law § 9-203(b) (McKinney). Only then does the mortgage follows the note under N.Y. U.C.C. Law § 9-203(g).
Bombshell Sjolander info
I always wondered what the rest of the story was with Sjolander after my case ended. I never heard much of anything else that went on. Apparently a lot, as can be seen here. She’s been deposed quite a bit and here are some highlights of that testimony that Tirelli provides:
146. According to the testimony of Ms. Sjolander and Ms. Garner, only Ms. Meder and Ms. Sjolander were authorized signors legally allowed to endorse original notes.
147. Plaintiff’s corporate representative conceded in a sworn videotaped deposition that both Ms. Meder and Ms. Sjolander lacked any present intention to adopt the signatures on the original note at the time they were made.
148. Teams of unauthorized signors used rubber stamps to affix Ms. Sjolander and Ms. Meder’s signatures outside their presence and control.
149. These teams were not the same people identified in the authorization agreements produced in discovery to explain the use of rubber stamps to affix the signatures of Ms. Sjolander and Ms. Meder onto endorsements on original notes.
150. Ms. Garner and Ms. Sjolander both testified falsely under oath that these rubber stamped signatures were affixed to the original note within days of origination in March of 2009.
151. BOA engaged in a systemic practice using rubber stamps to surrogate sign endorsements onto original notes years after origination.
152. BOA engaged Sourcecorp to scan original notes after going through a “90 Day Delinquent Note Endorsement Process” where the surrogate signing occurred.
153. This systemic surrogate signing practice first began with notes already in foreclosure with a complaint that alleged a lost note count.
154. In those cases, BOA’s counsel was in possession of the unendorsed original note before filing the lost note count and attached to that complaint a copy of the original note in their possession which had no endorsement. Years later, Plaintiff surreptitiously surrogate signed undated endorsements onto original notes.
155. The sworn video-taped deposition testimony of Ms. Sjolander and Plaintiff’s Corporate Representative, Marie Garner, that these endorsements were “surrogate signed” by document custodian employees using a rubber stamps outside the signor’s presence within days of origination is false.
In short, Tirelli doesn’t miss an argument that can be made against these greed creeps and their heretofore unhindered marauding of the wealth and well-being of the American middle class.
Just sample the rest of the subject headings that Tirelli addresses:
E. The Robo-Signing Scandal and the Various Settlements that Followed
F. MERS Is Still Being Used as an Instrumentality of Fraud
F. [sic] BOA’s Fraud Upon the Court Began in 2008 and Still Continues
The beautiful thing is that these bastards will have to respond to each of these allegations in their answer, which will no doubt be convoluted and full of tortured logic—in short, incredibly interesting to read. Tirelli is essentially attempting to put the entire mortgage banking system on trial here, and her past successes are any indication, things do look too good for the system.