THE BAD BOY BANKS BITE BUNG

Eckley & Associates Video ArticleTHE BAD BOY BANKS BITE BUNG
AS THE THE VOX POPULI FINALLY STRIKES BACK!


REPRINTED FROM “COUNSELOR’S CORNER”,  Ed. 48
Current Circulation: 58,636 per Month



© ECKLEY & ASSOCIATES, P.C., 2011
APRIL 1, 2011

The Consequences of A Deaf Ear to the Ground

Well, the government finally appears to be "getting it" about the Banks.
  Somewhere in that legislative morass of mortal confusion and befuddlement we sent to elected offices it has dawned that the darkness of motive, the harshness of method and, above all, the insatiable greed of the Banks as they feed unfettered at the public trough is not subsiding and won't until prosecution is substituted for patience.  But the government finally "gets it" not because the politicians that run it want to get it.  And surely not because they care one single rip about the irreparable socioeconomic carnage the Banks have wreaked upon the rest of us as the politicians stood by wringing their hands (and filling their pockets with "donations" from the Banks).  It is instead because the politicos can see an angry mob of pissed-off, fed-up voters finally coming down the street with pitchforks, baseball bats and a noose.  They can tell by the yelling that this riot is the biggest one yet and this time it is coming not just for the Banks who have pillaged the town.  It's coming also for the politicians who let them.

"Vengeance is Ours," Sayeth the Village!

As predicted in former editions of Counselor's Corners, the final consequence of the government ignoring the financial pain and dislocation the common people of this country – tuning its head away from the cries of it's people while the back-alley lobbyists and the "black bag" law-enforcement authorities enjoy their love-fest, carved up their life-earnings and divvied up the goodies with their pals on Wall Street and at the Banks--has inevitably fermented into a groundswell of popular outrage and howls for retribution.  It's now a full-blown "Throw ALL the Bastards Out" movement and it is going to be felt not only in the courts as state and federal AGs are forced by angry voters to sue their country-club pals, but also, ultimately, it will rock every element of organized government as, one by one, the complicit incumbents are expelled by their disgusted constituencies…some of them to also be prosecuted.

It's an Easter Miracle!  The Blind Have Gained Sight and the Deaf Can Hear!

The sudden "wake-up" is startling in its proportions!  Following an interagency emergency review of foreclosure policies and practices conducted by the Federal Reserve System, the Office of the Comptroller of the Currency and Office of Thrift Supervision, the major banks who are estimated to service more than two-thirds of all mortgage volume in the U.S. were threatened by the U.S. law-enforcement authorities last month with prosecution and in some cases regulatory takeover in whole or part unless they agreed to Consent Orders against them requiring not just new actions to improve existing foreclosure practices, but, more importantly and for the first time, unless they remedied past deficiencies that have damaged borrowers!   That's right.  They not only have to make amends for the future.  They are also required to find damaged borrowers and to make reparations for what they have done to them!

As of present and future operations, the Consent Orders essentially create a dual-track of review and revision of loan servicing and foreclosure policies.  As for PAST MISDEEDS, the Banks are required to review all foreclosure actions from 2009 and 2010, determine how any borrower was disserved or damaged and establish remedial rights due to the dunned borrowers and procedures for borrowers to apply for damages and other relief.  While several successive time-lines are established by the Consent Orders, in general, Banks will have approximately until the end of May, 2011 to begin the process outlined in the Consent Orders and barring extensions of time (which are provided for in the Order), Banks must submit their plans of action and must begin compensating borrowers who were damaged by their wrongdoing around the end of 2011 or early 2012.

The banks who are subject to Consent Orders are:

Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, Ally Financial, HSBC, PNC, U.S. Bank, MetLife, SunTrust Banks, Aurora Bank, EverBank, OneWest Bank and Sovereign Bank.

Some highlights from the Orders:

Establishment and Maintenance of New Procedures for Loan Modification, Loss Mitigation and Foreclosures

Each bank is required, within 60-days, to submit a "Comprehensive Action Plan" to ensure, upon implementation, that "the Bank achieves and maintains effective mortgage servicing, foreclosure, and loss mitigation activities (as used herein, the phrase 'loss mitigation' shall include, but not be limited to, activities related to special forbearances, modifications, short refinances, short sales, cash-for-keys, and deeds-in-lieu of foreclosure…"  The Action Plan must include financial resources to develop and implement infrastructure to support loss-mitigation programs, organizational structures to ensure compliance therewith, metrics to measure staffing effectiveness, and "deadlines to review loan modification documentation, make loan modification decisions and provided responses to borrowers."

Much attention is paid to issues surrounding the MERS fiasco, including servicers ensuring that foreclosures were valid - issues such as robo-signers, false affidavits, lost-notes, documentation of actual ownership of notes and delivery or maintenance of original documents.  These issues, while in vogue, are not the sort of loan modification or foreclosure issues which most borrowers complain of.  Rather, it is issues such as failures to provide one-point of contact for borrowers, dual-track modification procedures (where foreclosure processes continue even as a borrower is applying for or in a trial or permanent modification), timely and accurate reporting of loan modification decisions and the like that the average homeowner suffers under. 

Among the requirements for Banks in future loan modifications and foreclosures are:

  • "Establishment of an easily accessible and reliable single point of contact for each borrower so that the borrower has access to an employee of the Bank to obtain information throughout the Loss mitigation, loan modification and foreclosure process";     "a requirement that written communications with the borrower identify such single point of contact along with one or more direct means of communication with the contact";
  • controls to ensure that a final decision regarding a borrowers' loan modification request (whether on a trial or permanent basis) is made and communicated to the borrower in writing, including the reason(s) why the borrower did not qualify…including net present value calculations utilized by the bank…by the single point of contact within a reasonable period of time before any foreclosure…"
     
  • "procedures and controls to ensure that when the borrower's loan has been approved for modification…(i) that no foreclosure or further legal action predicate to foreclosure occurs, unless the borrower is deemed in default on the terms of the trial or permanent modification; and (ii) the single point of contact remains available to the borrower and continues to be referenced on all written communications with the borrower;"
     
  • Policies and procedures to permit borrowers to make complaints about the modification or foreclosure process
     
  • "policies and procedures to consider loan modifications or other Loss Mitigation activities with respect to junior lien loans owned by the Bank";

Last, the interagency review and Consent Orders require banks to increase oversight of third-party vendors engaged to conduct loss mitigation, loan modification and foreclosure activities including law firms.  The interagency report found that many banks engaged law firms to handle foreclosures but did not enter formal contracts, ensure banks complied with state and federal laws, ensure banks had access to or returned original loan documentation and generally did not oversee, give procedures to or enforce obligations on "foreclosure mill" law firms.  The consent order will require banks to develop procedures to bring third-party vendors into compliance with the same requirements the banks will be subject to and generally to keep a more watchful eye on vendors.

Now the more important to those millions of borrowers who were ALREADY run over by Banking misfeasance and malfeasance:

Review of 2009 and 2010 Foreclosures to
Identify and Remedy Wrongful Acts

Mortgage servicers are required to hire outside firms to review every foreclosure action they had pending from Jan. 1, 2009, through Dec. 31, 2010, as well as residential foreclosure sales that occurred during this period to identify borrowers harmed by the servicers' deficiencies and compensate them.

Among the review criteria set out in the Consent Order are en vogue issues of lost notes or false affidavits and robo-signers.  For example, the review should determine:

  • Whether at the time of foreclosure the Bank "had properly documented ownership of the promissory note and mortgage (or deed of trust) under relevant state law, or was otherwise a proper party to the action…"

However, more applicable to the common borrower, the review must also determine:

  • "whether a foreclosure sale occurred when an application for a loan modification or other Loss Mitigation was under consideration; when the loan was performing in accordance with a…modification" or when the loan was not actually in default permitting foreclosure under the terms of the contract and state law;
     
  • "whether, with respect to non-judicial foreclosure [trustee's sales], the procedures followed…(including the calculation of the default period, the amounts due, and compliance with notice periods) and post-sale confirmations were in accordance with the terms of the mortgage…and state law"
     
  • "whether loss mitigation Activities with respect to foreclosed loans were handled in accordance with the requirements of the HAMP, and consistent with the policies and procedures applicable to the Bank's proprietary loan modification…programs, such that each borrower had an adequate opportunity to apply for a Loss Mitigation option or program, an such application was handled properly, a final decision was made on a reasonable basis, and was communicated to the borrower before the foreclosure sale;"
     
  • "whether any errors, misrepresentations, or other deficiencies identified in the Foreclosure Review resulted in financial injury to the borrower or the mortgagee"

With 45 days of submission of the above review, the Bank must submit a plan "to remediate all financial injury to borrowers caused by any errors, misrepresentations, or other deficiencies…by:

(a)  reimbursing or otherwise appropriately remediating borrowers 

(b)  taking appropriate steps to remediate any foreclosure sale where the foreclosure was not authorized as described in this article"

Within 60 days after the remediation plan is approved, the Bank "shall make all reimbursement and remediation payments…"

Now we're getting somewhere!

Schedule for Foreclosure Review Process

The Consent Order forms the baseline for determination of the deadlines Banks must meet, and was dated April 13, 2011.  By approximately November 9, 2011, the Banks must submit a report regarding the findings of the foreclosure review (30 days after completion of the foreclosure review);  by approximately December 24, 2011, Banks must submit a plan for remediation of borrower damages identified in the foreclosure review report (45 days after submission of report); by approximately February 22, 2012, Banks must make compensation payments or take those actions set out in the plan for remediation (60 days after supervisory non-objection to the plan for remediation).

No More "Mr. Nice Guy"

There you have it!   It's like a scene from the 70's classic move "Network" in which the citizens of the country—accosted by petty thugs in the street and masterful thugs in their government—finally, in frustration at all of it and in their impotence to correct it, radicalized, opened their windows in every city and yelled "I'm mad as Hell and I'm not going to take it anymore!"  And didn't.  

These findings and these amazingly bold Consent Orders against the Banks will not be the end-all.  Not by a long shot.  They will also likely be challenged and numerous attempts will be made by the shadowy forces of the Politico-Legal-Banking Complex to filibuster, divert and subvert them against us and our families once more.  So the big news in them is as much that under public pressure the Banks have been "outed" as the villains they surely are, it is not even that as a result of our acrid political approval polls the Banks have now promised in Court, on pain of contempt, to bring their future legal conduct back into something less felonious than Atilla the Hun.  It is that they have admitted on the record that they owe us for what they did!   To lawyers who do not work for The Dark Side, this is an admission of Banking skullduggery and sets a standard for borrower lawsuits against future misconduct of the Banks.  But for those whom the Banks have already ruined, it finally grants an avenue to apply for the damages the Banks have done.

But first the borrower has to apply for the money.  And that's tough when there is no form for it yet in existence!  For now, the borrower has to invent one to assure he gets into the claims line-up!

     The author of this Article has tried his hand to help.  Attached to this Article is a form invented by the author to make application for the borrower damages and other relief directed by the Government Report and the Consent Orders or at least to alert the banking establishment that you are there waiting for the right form.  If at any time from 2009 until today, in a former or present home loan, a Bank has ignored you, misdirected you, sabotaged you or your loan or ignored, muffed or mishandled your loan modification program, otherwise stiffed you, lied to you, swindled you, lost payments, lied about a loan status, went back on its promises, pitched you out of your home, chased you in a wrongful collection, stolen you home or money or life or committed any of a long line of predations in varieties only the black-hearted Banking Establishment can think of upon you, don't take a chance of being missed, MAKE YOUR CLAIM!  The author cannot guaranty there will not someday be an "official form" you will need to use or even that your claim is a good one and you are entitled to or will get relief, but the author can guaranty one thing:  IF YOU DON'T PUT YOUR HEAD OUT OF THIS LEGAL WINDOW SOMEHOW AND IN SOME WAY TO LET THEM KNOW THAT YOU ARE MADDER THAN HELL AND WANT REDRESS, YOUR PLIGHT WILL NEVER BE KNOWN OR HEARD!

'Nuff said.


DEMAND FOR DETERMINATON OF BORROWER ELIGIBILITY FOR FORECLOSURE REVIEW AND FOR RELIEF UNDER YOUR UNITED STATES CONSENT ORDER DATED APRIL 13, 2011

DATE:___________________________

TO:  "X"- MARK ON LINE AS APPLICABLE:

________ Bank of America

________JPMorgan Chase

________Wells Fargo

________Citigroup

________ Ally Financial

________HSBC

________ PNC

________U.S. Bank

________MetLife

________SunTrust Banks

________Aurora Bank

________EverBank

________ OneWest Bank

________Sovereign Bank

AT THE ADDRESS OF:

___________________________________________________________________________

(WRITE STREET OR P.O. ADDRESS OF BANK WHERE BANK HAS INDICATED IN ITS WRITTEN LOAN AGREEMENT OR BILLING STATEMENTS WHERE CONSUMER COMPLAINTS ARE TO BE SENT – CALL  THE BANK FOR THE ADDRESS IF UNSURE)

_________________________________________________________________________(CITY, STATE ZIP FOR BANK)                                        

GREETINGS:

PURSUANT  to the Consent Order(s) between YOU and The Office of the Comptroller of the Currency/The Office of Thrift Supervision, dated April 13, 2011 (hereafter "Consent Order"), and Article VII (Foreclosure Review), Section (2)(a)(iii) thereto, the borrower

_________________________________________________________________________(NAME OF BORROWER AS APPEARED ON LOAN)

(hereafter "Borrower") whose loan number is _____________________________________:

(BORROWER: PUT "X" ON LINE WHICH APPLIES, BELOW):

________on which adverse or modification action was/is pending by YOU  

________which was foreclosed by YOU or on or about the____day  of_______________,20___

To the adversity and detriment of Borrower:

HEREBY GIVES NOTICE OF BEING DAMAGED THEREBY HEREBY DEMANDS DMAGES AND RELIEF and a DETERMINATION OF ELIGIBILITY FOR FORECLOSURE RELIEF REVIEW AND ELIGIBILITY pursuant to said Consent Order and the Guidelines therein.

The BORROWER deems himself/herself/themselves financially injured by the certain errors or omissions relating to the above referenced acts and omissions by YOU and elects to make a claim against YOU pursuant to Article VII (Foreclosure Review), Section 5(a) and 5(b) of the said Consent Order and is seeking reimbursement for financial damages and/or remediation of the foreclosure.

BANK'S  REQUIRED RESPONSE

TO THE BANK:  Article VII (Foreclosure Review), Section (2)(a)(iii) of the Consent Order  REQUIRES THE BANK  to conduct a Foreclosure Review for those loans identified by "review of borrower claims and complaints." The borrower hereby makes a complaint and claim against YOU and its affiliates and subsidiaries, which is based upon the following loan modification, loss mitigation or foreclosure activities which occurred leading up to, during, or the actions, omissions or foreclosure related, below.

If YOU believe that another form is required to give these notices and complaints, kindly provide the same within 60 days of the date of this Notice; no response will be deemed by Borrower to be your assurance that no further Notice or information is required, that the Notice and complaints are perfected with YOU and Borrower will rely thereon.

THE BORRROWER COMPLAINT

(BORROWER:  PUT "X" ON LINE FOR APPLICABLE ACT OR OMISSION BY BANK—CHECK AS MANY AS APPLICABLE AND IF UNSURE, CHECK THE LAST LINE BELOW, MARKED "GENERAL"):

_____ YOU engaged in a "dual-track" modification in which a foreclosure was pending and progressing during the existence of a trial, temporary or permanent modification or a borrower's application or inquiry regarding such programs but prior to a bank decision;

_____ YOU failed to comply with applicable state law foreclosure notice procedures as described more fully in the additional comments section, below, and otherwise as the record may show;

_____ YOU failed to communicate in writing the reason for or unreasonably rejected a borrower's application for loan modification or loss mitigation activities

_____ YOU failed to identify the owner of the note or deed-of-trust or otherwise claimed the owner or "investor" had either made a decision on the loan modification or loss mitigation activities when it did not, or failed to accurately communicate whether the owner or investor had delegated decision-making authority to YOU;

____  YOU, in post-sale confirmations, failed to comply with applicable state or federal law as described more fully in the additional comments section, below, and otherwise as the record may show;

_____YOU, in loss mitigation or loan modification activities, failed to comply with applicable state or federal laws such as HAMP, HAFA, 2MP Hope, or YOUR own proprietary procedures;

____ YOU failed to adequately consider loan modification or loss mitigation activities with respect to a junior lien held by YOU;

____ YOU engaged in other loss mitigation, loan modification or foreclosure activities that were inconsistent with state or federal law or the Bank's proprietary procedures for such activities, as described more fully in the additional comments section below, and as otherwise shown by the records in the causes.

BORROWERS COMMENTS:

In addition or supplement to the above, but not exhausting Borrower's claims which are restated as a matter of record, Borrower advises BANK as follows: 

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________
 

BORROWER'S AVOWAL:

     AVOWED and SIGNED this______day of____________________________, 20____

By:

X____________________________________
(BORROWER SIGNATURE)

X____________________________________
(CO-BORROWER SIGNATURE IF ANY)

(ONLY ONE BORROWER SIGNATURE REQUIRED)

"Borrower(s)"

BORROWER'S CURRENT MAIL ADDRESS OR E-ADDRESS:

(NOTICE:  BANKS MAY USE PHYSICIAL ADDRESSES FOR PURPOSES ADVERSE TO THE BORROWER.  E-ADDRESSES ARE OFTEN BETTER):

_________________________________________________
(NUMBER, STREET)

_________________________________________________
(CITY, STATE, ZIP)

E-mail: _______________________________

BORROWER'S CURRENT TELEPHONE NUMBER (OPTIONAL):

(________)___________________________________________.

FILING AFFIRMATION

FILED AS FOLLOWS this_____day of_________________________________, 20___:

  • Depositing One Copy by mail through the U.S. Postal Service to Bank at Above Address

INFORMATIONAL COPIES (OPTIONAL) TO:

  • Depositing One Copy by e-mail to Comptroller of the Currency at the address of:

Office of the Comptroller of the Currency
Customer Assistance Group
1301 McKinney Street, Suite 3450
Houston, TX 77010-9050

  • Depositing One Copy by mail through the U.S. Postal Service to the State Banking Department or Equivalent for the State of:

____________________________________ , USA

(Find your state Banking Department on internet or phonebook and insert address here).


ABOUT THE AUTHOR:

J. Robert Eckley is a multi-state attorney, successful litigator, portfolio planner, tax and investment strategist popular writer, educator and national speaker with an immense personal and professional involvement in forefront issues over the past three decades. He has prosecuted and defended both debtors and creditors throughout the crash of the 1980s and currently.  He has established precedent at the Supreme Court and co-founded transactional laws, rules and forms in many states that guide practitioners today. He has received leadership awards and honors from U.S. President Reagan and Arizona State Governor and now U.S. Secretary of Homeland Security, Hon. Janet Napolitano, among many others. His practice serves every aspect required by domestic or foreign business, investment and private clientele. Often as entertaining as he is practical and enlightening! See more at eckleylaw.com   You can reach Mr. Eckley at (602) 952-1177 or by going to his website at eckleylaw.com.  If you want to remain on the “broadcast hotline” for future supplements and news of future presentations, write to education@eckleylaw.com and ask.