Monday, January 25, 2010

THANKSGIVING 2009


Judge blasts bad bank, erases 525G debt


Judge KOs 525G mortgage to slap bank


By KIERAN CROWLEY, RICH WILNER and DAN MANGAN

Last Updated: 4:18 PM, November 25, 2009

Posted: 3:46 AM, November 25, 2009

A Long Island couple is home free after an outraged judge gave them an
amazing Thanksgiving present -- canceling their debt to ruthless bankers
trying to toss them out on the street.

Suffolk Judge Jeffrey Spinner wiped out $525,000 in mortgage payments
demanded by a California bank, blasting its "harsh, repugnant, shocking and
repulsive" acts.

The bombshell decision leaves Diane Yano-Horoski and her husband, Greg
Horoski, owing absolutely no money on their ranch house in East Patchogue.

Spinner pulled no punches as he smacked down the bankers at OneWest -- who
took an $814.2 million federal bailout but have a record of coldbloodedly
foreclosing on any homeowner owing money


<http://www.nypost.com/rw/nypost/2009/11/25/news/photos_stories/cropped/greg
_horoski--300x300.jpg>

YOU OWN IT: Greg Horoski won his battle to keep his Patchogue one-level
ranch home, as a judge called OneWest bank's foreclosure efforts against
Horoski and his wife "repulsive."

"The bank was so intransigent that he [the judge] decided to punish them,"
Greg Horoski, 55, said about Spinner's scathing ruling last Thursday against
OneWest and its IndyMac mortgage division.
<http://www.nypost.com/p/news/international/italian_escort_bares_secrets_in_
UdGQ7AgQdtY9Og1yCHExBN>


It erased up to $291,000 in principal and $235,000 in interest and
penalties.

The Horoskis -- who had been paying only interest on their mortgage -- had
no equity in the home.

Horoski, who had begged the bankers to let him restructure the loan, said,
"I think the judge felt it was almost a personal vendetta." Dealing with the
bank, he said, was "like dealing with organized crime."

OneWest said, "We respectfully disagree with the lower court's unprecedented
ruling and we expect that it will be overturned on appeal."

It claimed it "has been extremely active in working with consumers on home
loan modifications through the Obama administration' s Home Affordable
Modification Program and other loan modification initiatives.

The bank is owned by a private equity group that purchased the failed
IndyMac bank.

Yano-Horoski, a college professor of English and cognitive reason, and
Horoski, who sells collectible dolls online, bought their 3,400-square-
foot, one-level house 15 years ago for less than $200,000.

In 2004, court records show, they refinanced, paying off their original
mortgage with part of a $292,500 sub-prime loan from Deutsche Bank. They
used what was left for health care and for his business.

The loan carried an initial adjustable interest rate of 10.375 percent,
which soared to 12.375 percent.

It eventually ended up being either owned or serviced by IndyMac, and the
bank sued the couple in July 2005 when they began having trouble making
payments because of Horoski's health problems.

After a foreclosure was approved last January, Yano-Haroski successfully
asked for a court settlement conference.

Spinner excoriated OneWest for repeatedly refusing to work out a deal, for
misleading him about the dollar amounts at stake in the case, and for its
treatment of the couple over months of hearings.

OneWest's conduct was "inequitable, unconscionable, vexatious and
opprobrious, " Spinner wrote.

He canceled the debt because the bank "must be appropriately sanctioned so
as to deter it from imposing further mortifying abuse against [the couple]."


The bank is involved in a similar case in California, where it's trying to
foreclose on an 89-year-old woman, despite two court orders telling it to
stop.kieran.crowley@ nypost.com


Read more:
http://www.nypost.com/p/news/local/judge_kos_mortgage_to_slap_bank_28ZS1oW8Y
58z6gu1AQbWMI#ixzz3q4DAel4X




Trust does not hold the Notes, the Cash, or the Foreclosed Homes!!

I know that I just sent you this case, but I send it again with excerpts because it seems so profoundly relevant as an explanation of how banks cheat one another.

Debbie reports from the attached Deutsche Bank v BOA case that the investor banks have begun to discover the lies other banks told them. We have said this for years - the party foreclosing does not own the note. Now they learn that the trusts don’t own them either. In fact, the TRUST does not hold the Notes, the Cash, or the Foreclosed Homes!!

Excerpts from DEUTSCHE BANK, AG v. BANK OF AMERICA, N.A.

71. Moreover, between June 30, 2008 and August 4, 2009, BOA transferred over $1 billion to Colonial and other banks in numerous transfers of whole/round number amounts that bore no relation to any purchase of mortgages. Whole/round number transfers to purchase mortgages would be highly unusual because the aggregation of individual mortgages themselves would not typically be expected to result in whole/round number amounts.

72. Furthermore, the payments made by BOA to the Colonial IFA on a daily basis bore no relationship to the value of the mortgages being purchased. On average, BOA, on behalf of Ocala, would receive approximately $40-50 million of mortgages for purchase each day. In order to pay for those mortgages, BOA was required to pay an amount equal to the face value of the mortgages to the Colonial IFA.

73. On some days, BOA failed to transmit the funds to the Colonial IFA necessary to complete the purchase of those mortgages. For example, on February 27, 2009, BOA transmitted only $8.8 million to Colonial despite the fact that BOA’s records indicated that $54.5 million in mortgages were acquired from Colonial that day for the benefit of DB. By failing to transmit payment for the mortgages, BOA prevented Ocala from perfecting the security interests in those mortgages that was intended to serve as the primary collateral for DB’s investment. BOA nonetheless represented in daily reports to DB that the security interests had been perfected by accounting for the mortgages as collateral securing DB’s investment.

74. On other days, BOA transmitted far more money to the Colonial IFA than was warranted to purchase the mortgages that BOA’s records indicate were acquired by BOA for the benefit of Ocala. For example, on May 29, 2009, BOA transmitted the large sum of $690 million to the Colonial IFA, despite the fact that BOA’s own records indicate that only $36.7 million in mortgages were acquired from Colonial that day for the benefit of Ocala. By conducting such transfers, BOA permitted the funds invested by DB to be transferred out of Ocala without obtaining mortgages in return.

82. In connection with its duties under the Custodial Agreement, BOA agreed to provide DB with a daily report of all such mortgage loans (the “BOA Loan Reports”), and began transmitting these reports to DB in September 2008. The BOA Loan Reports listed each mortgage loan held by BOA for the benefit of DB, and noted whether the loan was either still in the physical possession of BOA or out to a prospective third party purchaser pursuant to a BOA Bailee Letter. Having assumed this additional daily reporting obligation, BOA was
required to perform it in a non-negligent manner.

83. In August 2009, after TBW collapsed, DB discovered that the BOA Loan Reports were false. For example, the August 12, 2009 BOA Loan Report showed that there was approximately $1,160,530,265 in mortgages securing DB’s investment. BOA’s own internal information, however, shows that at least $470 million of these mortgages already had been delivered and sold to Freddie Mac at least two weeks prior to the date of the BOA Loan Report and so could not have constituted collateral securing DB’s investment. Further, on information and belief, as of August 12, 2009, there were virtually no mortgages held by BOA to secure DB’s investment.

84. This false reporting of the state of the collateral securing DB’s investment began almost a year prior to TBW’s collapse. For example, on September 15, 2008, the date on which BOA delivered the first BOA Loan Report, BOA represented that the amount of mortgages securing DB’s investment was approximately $1,147,268,192. BOA’s own internal information, however, shows that only about half of these mortgages totaling about $538 million were either still on hand or had not been delivered and/or sold to Freddie Mac.

85. On information and belief, hundreds (and potentially all) of the BOA Loan Reports delivered by BOA to DB during the period between September 15, 2008 and August 4, 2009 were similarly false.

86. Had BOA properly reported the amount of mortgages securing DB’s investment, DB would have known of the under-collateralization of its investment, and could have prevented the loss of its investment.


88. In August 2009, however, after TBW and Colonial collapsed, DB discovered that BOA did not have ownership, possession, or control of virtually any of the mortgages that were listed on the BOA Loan Reports.

89. BOA has been unable to produce the mortgages that it represented to DB as being held by BOA on behalf of DB. Moreover, BOA has been unable to account for where the mortgages are or even to establish that the mortgages were ever purchased by Ocala.

90. BOA’s inability to produce or account for the mortgages that were supposed to be the collateral for DB’s investment stems from, among other things, BOA’s failure to keep records concerning the purchase and sale of mortgages on behalf of Ocala.

91. With respect to the purchase of mortgages, BOA failed to maintain the internal documentation necessary to establish Ocala’s ownership of purchased mortgages. BOA recently admitted to DB that it failed to maintain loan level detail with respect to the mortgages it purchased. As such, BOA has been unable to prove with specificity that it paid for any particular mortgage or that it was paid by third parties for particular mortgages.

92. BOA also failed to obtain documentation from third parties necessary to establish Ocala’s purchase and ownership of mortgages. BOA failed to obtain letters from Colonial confirming Colonial’s release of its security interest with respect to particular mortgages for which BOA transmitted payment to Colonial.

93. BOA’s failure to obtain such documentation was particularly egregious because BOA was fully aware that Colonial was TBW’s and/or Freddie Mac’s agent with respect to the sale of mortgages by Ocala to Freddie Mac. BOA, therefore, would have to transfer mortgages back to Colonial (as Freddie Mac’s agent) pursuant to a BOA Bailee Letter after having purchased the mortgages from Colonial (as TBW’s agent). The possibility existed that once BOA transferred the mortgages to Colonial, Colonial could assert ownership of the mortgages and refuse to either return the mortgages or remit payment received from Freddie Mac for the mortgages unless BOA could prove that Colonial’s security interest had been released. This made it even more critical that BOA document that it properly had taken the steps necessary to release Colonial’s security interest in the mortgages, and that Colonial had in fact released that interest.

94. On information and belief, Colonial, and/or the Federal Deposit Insurance Corporation (“FDIC”) acting as receiver for Colonial, asserts that mortgages for which BOA claimed to have paid Colonial, and in which BOA claimed to hold a security interest on behalf of DB, in fact, belonged to Colonial. Colonial, and/or the FDIC acting as receiver for Colonial, contend that BOA never remitted payment to Colonial as required in the Colonial Bailee Letters pursuant to which the mortgages had initially been transferred by Colonial to BOA.
95. BOA also failed to maintain proper documentation and to track mortgages over which it had asserted control and that it subsequently released to prospective third-party purchasers.

96. Pursuant to Section 8 of the Custodial Agreement, BOA as Custodian was authorized to release mortgages to prospective third-party purchasers only if BOA accompanied delivery of the mortgage with a BOA Bailee Letter to be executed by the purchaser. BOA was further required to collect all transmittal letters executed by prospective third-party purchasers.

112. BOA has failed to provide DB with the vast majority of Borrowing Base Condition certificates. The few certificates that BOA provided are clearly and demonstrably false showing that DB’s investment was severely under-collateralized:
a. On May 20, 2009, BOA certified that it held mortgages worth $1,134,028,581 as DB Collateral. In reality, on May 20, 2009, BOA knew or should have known that it held or had a lien on approximately $547 million in mortgages as DB Collateral.

Liquidity Notes were adequately secured in accordance with the Ocala Agreements. If DB’s investment was not so secured, then the facility would be in violation of the Borrowing Base Condition, and this would trigger two important consequences: (1) the Secured Liquidity Notes would not be rolled over, but instead would become immediately due and payable, and/or (2) no new purchases of mortgages would be permitted, thus halting Ocala’s outlay of further cash, unless and until the Borrowing Base Condition was again satisfied.

112. BOA has failed to provide DB with the vast majority of Borrowing Base Condition certificates. The few certificates that BOA provided are clearly and demonstrably false showing that DB’s investment was severely under-collateralized:
a. On May 20, 2009, BOA certified that it held mortgages worth $1,134,028,581 as DB Collateral. In reality, on May 20, 2009, BOA knew or should have known that it held or had a lien on approximately $547 million in mortgages as DB Collateral.
b. On June 20, 2009, BOA certified that it held mortgages worth $1,208,009,892 as DB Collateral. In reality, on June 20, 2009, BOA knew or should have known that it held or had a lien on approximately $440 million in mortgages as DB Collateral.
c. On June 30, 2009, BOA certified that it held mortgages worth $1,226,886,314 as DB Collateral. In reality, on June 30, 2009, BOA knew or should have known that it held or had a lien on approximately $468 million in mortgages as DB Collateral.
d. On July 20, 2009, BOA certified that it held mortgages worth $1,216,398,908 as DB Collateral. In reality, on July 20, 2009, BOA knew or should have known that it held or had a lien on approximately $476 million in mortgages as DB Collateral.

126. On information and belief, on August 6, 2009, BOA requested that Colonial return all of the loans held by Colonial pursuant to the BOA Bailee Letters. The vast majority of these loans had been out to Colonial on BOA Bailee Letters for more than 60 days, grossly exceeding the fifteen-day limitation set forth in the BOA Bailee Letter.

127. On August 7, 2009, Colonial BancGroup disclosed that it was the target of a criminal investigation by the U.S. Department of Justice relating to its mortgage lending unit and related accounting irregularities, and that it might be placed under receivership.

128. On August 10, 2009, BOA as Indenture Trustee declared an indenture event of default stating that the notes were due and payable because of TBW’s loss of approved seller status.

129. On August 14, 2009, Colonial was closed by the Alabama State Banking Department, and the FDIC was named Receiver.

130. On August 20, 2009, the outstanding DB Secured Liquidity Notes in the amount of $1,201,785,714 held by DB became immediately due and payable. Ocala has failed to pay this amount.

131. On August 24, 2009, TBW filed for relief pursuant to Chapter 11 of the United State Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Florida.

132. To date, BOA has failed to recover any DB Collateral and to pay the amounts due to DB under the DB Secured Liquidity Notes.






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