David Shaev is featured in an article titled 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. …
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.
I’m not a handwriting expert, so I make no claim that someone forged the names and initials. Maybe Fremont had the Garcias initial multiple copies of the note when the deal was done, and they didn’t initial each identically. Perhaps the Garcias signed two copies of the note at closing. The signatures on the two notes aren’t wildly different from each other. The bottom line, however, is the notes aren’t photocopies of each other.
So, unless the Garcias took out two identical mortgages, having two signed notes is a problem. Each is separate and complete proof of a debt. …
Max Gardner’s Boot Camp graduates continue to make headlines in fighting financial institutions’ improper fees and fraudulent foreclosures.