Why Paperwork Matters: Consider This Mortgage Mess
Judge Shelley C. Chapman, of the U.S. Bankruptcy Court for the Southern District of New York, has ordered HSBC and Litton Loan Servicing (a Goldman Sachs subsidiary) to send officers with some juice — and not low-level types — to her Manhattan courtroom on Feb. 10 to explain themselves. More specifically, to explain their failure to provide adequate documentation about a mortgage they claim to own and service. Judge Chapman also ordered the Texas attorney who signed the documents to show up.
At issue is the fact that HSBC (HBC) hasn’t come close to proving it owns the loan, and the documents it has submitted look funny. It also doesn’t appear to have been acting in good faith when it comes to trying to modify the loan (also known as “loss mitigation”). So, the judge wants to talk to people who actually know things and can make decisions.
How Did HSBC Get the Note?
Here’s the story:
In 2004, Miguelito and Jacqueline Garcia bought a property in New York City’s borough of the Bronx, using a mortgage from Fremont Investment & Loan. Shortly afterward, that mortgage was apparently securitized, and HSBC became the trustee for securitized trust. HSBC hired Goldman Sachs’s (GS) Litton Loan Servicing to service the trust loans.
Last summer, the Garcias declared bankruptcy, and Litton Loans told the court the Garcias owed HSBC some $3,600 in missed principal, interest and fees. (This isn’t a foreclosure case, at least not yet.) To back up its claim, Litton gave the court the note — stamped “Duplicate Original” (starting on page 3 of the linked document) — and the accompanying mortgage (starting on page 10).
But the Garcias’ lawyer, consumer bankruptcy attorney David Shaev, pointed out in a letter to Litton that the note was made out to Fremont Investment & Loan, and the mortgage was made out to MERS — the Mortgage Electronic Registration Systems — as nominee for Fremont. Litton didn’t give the court any evidence that either document was transferred to the trust HSBC represented. In the first place, Fremont hadn’t endorsed the note to anyone, and second, HSBC hadn’t submitted an assignment of the mortgage to anyone.
Two Different Notes
Shaev didn’t get a meaningful reply from Litton, so he formally objected to HSBC’s claim. When Litton replied, it submitted a new note that was endorsed. But Litton’s filing didn’t address the fact that the first note it submitted wasn’t endorsed, while it now it offered one that was. Nor did Litton mention several other oddities, such as the initialing by the borrowers on the new note is in a different order and position on each of the first two pages. Even the signatures on page 3 of the note look different — for example, look at the “J,” “a” and “q” in Jacqueline.
See full article from DailyFinance: http://srph.it/fYURAC
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It’s just smoke and mirrors…..don’t let them sucker anybody. They are done. Period! The AVALANCHE is coming!
I am fighting them also, have been since 2007. My lawyer from legal services is working on a modification with these crooks because of course they would rather work out something than go to trial with me being as they have no note or anything to tie them to my mortgage at all. My lawyer tells me I better work with them because if I don’t they will go back and retrace from origination and ‘restructure’ the loan and take my house from me anyway, “because when push comes to shove they don’t have to have the note.” This was told to me today. I am floored.
oh yea… I’m fighting these very same criminals myself! hsbc,litton,fremont,quality loan.
please send carpenters to build the gallows, hanging is a GREEN approved method!
there are no notes!!!!!!!
the creditor no longer exists when a note becomes securitized. Why? Because the debt has been charged off the creditor’s balance sheet in order to capitalize the certificates of the investment trust. In other words, the note was tendered for other consideration (certificates). When a debt instruments inherent value is divested and transferred into another form of marketable security (stocks certificates, bond certificates)the note is destroyed. Both instruments can’t exist at the same time for the same debt. The charge off the creditor’s balance sheet has exinguished the debt.
Its called derecognition according to GAAP. Tender of the note for other condideration alleges the note is REGISTERED into another recognized marketable shape or form. Generally, when a security instrument is transferred,the transferee will deliver the endorsed instrument to the issuer or its transfer agent, who in turn will issue a new certificate in the transferee’s name. UCC article 8 mandates that the issuer REGISTER the transfer. So an issuer of a promissory note that is found to be a security instrument will be obliged to REGISTER the transfer and issue new notes/securities upon a transferee’s request. Guess what entity serves this purpose? If your loan has a MIN#, your note has been divested.
So as you can see, there is no note anymore by operation of law. Moreover, there cannot be an agent of nominee granted a capacity to enforce the note. Because the note has been divested and is essentially worthless, the banking interests had no incentive to meticulously archive them. This is why so many lost note affidavits have been used in the foreclosure process. Would-be-creditors have furiously attempted to reverse engineer the securitization process using robosigners and fake documents. All of that is futile because an accounting audit would reveal the destruction of the note and the charge off the creditors balance sheet. The only way a would-be-creditor recaptures the liability is to fraudulently credit bid at foreclosure auction but actually fund the bid with a loan. That would re-establish a basis in the asset and put it back on the balance sheet.
Without knowledge of the creditors identity,the debtor has no way to investigate this. The servicing rights are sold seperately to a debt collector as if the debt still exists, the debtor non the wiser.
creditor = the entity that accounts for the debt on its balance sheet.
Mers = securitization
I’m beginning to believe HSBC doesn’t have anybodys actual note. I mean can they show proof of anybodys original mortgage note? Perhaps they destroy notes on sight. It doesn’t make sense.