Thursday, July 21, 2011
Wednesday, July 20, 2011
WHY I LOVE OUR CONSTITUTION 101A
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LIBERTY
WE THE PEOPLE WHO ARE WE ?
We the People", but, Who are We? - Part I
Gary Hunt
Outpost of Freedom
July 18, 2011
In some research for another article (The Fourteenth Article in Amendment to the Constitution), I ran across a rather enlightening revelation. It was, just 60 years after the Constitution, a clear and concise definition of just (and only) who the "We the People", in the Preamble to the Constitution, really are.
Now, most of us will assume that any citizen of the United States is one of, "We the People". I must admit that until recently, I, too, believed this to be the case.
Regardless of the (political) correctness of this assumption, we must understand that the law is what it was intended to be, not what we might want it to be. There is only one means by which that can be changed, and that is the amendment process defined in Article V, of the Constitution.
So, here is what was revealed to us, by the Supreme Court of the United States, with regard to a definitive answer to the question. The case is Dred Scott v. Sandford - 60 U.S. 393 (1856)
As recently as ten years before the Fourteenth Amendment was submitted to the States by the Congress, an historical, and often referred to, case was heard by the Supreme Court.
Scott was born a slave, in Missouri. As such, he was not a citizen. His "owner" laid hands on Scott, his wife and 2 children. Scott sued Sandford for assault. Scott was awarded his freedom by a Saint Louis County, Missouri, Circuit Court. The case was appealed to the State Supreme Court and reversed. The Circuit Court then reheard the case. Scott made exception to the instructions to the jury. The jury then ruled against Scott. Based upon the "Exception".
The case eventually ended up in the Supreme Court. In its decision (below), the Court pointed out that Scott had claimed to be a citizen of Missouri, which would give him standing to sue Sandford. It found that though Scott was not a citizen of Missouri, or, of the United States, that standing for the Court to hear the case was based upon the Courts acting on the fact that the question of citizenship was not in the plea that brought the matter before the Court.
You will see that even though Scott had no standing, the Court decided to hear the case, anyway. If you do not challenge jurisdiction (Sandford's obligation), the Court may assume jurisdiction, the laws of the land notwithstanding..
Chief Justice Taney delivered the opinion of the Court. Excerpts are from that decision.
"That plea denies the right of the plaintiff to sue in a court of the United States, for the reasons therein stated. If the question raised by it is legally before us, and the court should be of opinion that the facts stated in it disqualify the plaintiff from becoming a citizen, in the sense in which that word is used in the Constitution of the United States, then the judgment of the Circuit Court is erroneous, and must be reversed. It is suggested, however, that this plea is not before us; and that as the judgment in the court below on this plea was in favor of the plaintiff, he does not seek to reverse it, or bring it before the court for revision by his writ of error; and also that the defendant waived this defence by pleading over, and thereby admitted the jurisdiction of the court."
Since the matter of citizenship was not in the plea that brought the matter before the Court, the Court will not rule on Scott's standing.
However, the Court now finds that it has a forum to define just what a citizen is -- a point that had only been addressed in rather ambiguous terms in the Constitution, and not since addressed by the Congress, or the Court.
Taney goes on to ask this important question:
Can a negro, whose ancestors were imported into this country, and sold as slaves, become a member of the political community formed and brought into existence by the Constitution of the United States, and as such become entitled to all the rights, and privileges, and immunities, guaranteed by that instrument to the citizen? "
Further defining the question, he says:
The only matter in issue before the court, therefore, is, whether the descendants of such slaves, when they shall be emancipated, or who are born of parents who had become free before their birth, are citizens of a State, in the sense in which the word citizen is used in the Constitution of the United States.
While the decision covers many aspects, and many ways, of addressing the question, I will provide only those that are concise and indicative of the sense of the Court and the decision held to. Remember, as you read, that this decision predates the 14th Amendment.
The words 'people of the United States' and 'citizens' are synonymous terms, and mean the same thing. They both describe the political body who, according to our republican institutions, form the sovereignty, and who hold the power and conduct the Government through their representatives. They are what we familiarly call the 'sovereign people,' and every citizen is one of this people, and a constituent member of this sovereignty. The question before us is, whether the class of persons described in the plea in abatement compose a portion of this people, and are constituent members of this sovereignty? We think they are not, and that they are not included, and were not intended to be included, under the word 'citizens' in the Constitution, and can therefore claim none of the rights and privileges which that instrument provides for and secures to citizens of the United States. On the contrary, they were at that time considered as a subordinate and inferior class of beings, who had been subjugated by the dominant race, and, whether emancipated or not, yet remained subject to their authority, and had no rights or privileges but such as those who held the power and the Government might choose to grant them.
Well, there is an interesting phrase, used in the discussion of the Fourteenth Amendment by the Senate, "remained subject to their authority".
In discussing this question, we must not confound the rights of citizenship which a State may confer within its own limits, and the rights of citizenship as a member of the Union. It does not by any means follow, because he has all the rights and privileges of a citizen of a State, that he must be a citizen of the United States. He may have all of the rights and privileges of the citizen of a State, and yet not be entitled to the rights and privileges of a citizen in any other State. For, previous to the adoption of the Constitution of the United States, every State had the undoubted right to confer on whomsoever it pleased the character of citizen, and to endow him with all its rights. But this character of course was confined to the boundaries of the State, and gave him no rights or privileges in other States beyond those secured to him by the laws of nations and the comity of States. Nor have the several States surrendered the power of conferring these rights and privileges by adopting the Constitution of the United States. Each State may still confer them upon an alien, or any one it thinks proper, or upon any class or description of persons; yet he would not be a citizen in the sense in which that word is used in the Constitution of the United States, nor entitled to sue as such in one of its courts, nor to the privileges and immunities of a citizen in the other States. The rights which he would acquire would be restricted to the State which gave them. The Constitution has conferred on Congress the right to establish an uniform rule of naturalization, and this right is evidently exclusive, and has always been held by this court to be so. Consequently, no State, since the adoption of the Constitution, can by naturalizing an alien invest him with the rights and privileges secured to a citizen of a State under the Federal Government, although, so far as the State alone was concerned, he would undoubtedly be entitled to the rights of a citizen, and clothed with all the rights and immunities which the Constitution and laws of the State attached to that character.
It is very clear, therefore, that no State can, by any act or law of its own, passed since the adoption of the Constitution, introduce a new member into the political community created by the Constitution of the United States. It cannot make him a member of this community by making him a member of its own. And for the same reason it cannot introduce any person, or description of persons, who were not intended to be embraced in this new political family, which the Constitution brought into existence, but were intended to be excluded from it.
The question then arises, whether the provisions of the Constitution, in relation to the personal rights and privileges to which the citizen of a State should be entitled, embraced the negro African race, at that time in this country, or who might afterwards be imported, who had then or should afterwards be made free in any State; and to put it in the power of a single State to make him a citizen of the United States, and endow him with the full rights of citizenship in every other State without their consent? Does the Constitution of the United States act upon him whenever he shall be made free under the laws of a State, and raised there to the rank of a citizen, and immediately clothe him with all the privileges of a citizen in every other State, and in its own courts?
The court think the affirmative of these propositions cannot be maintained. And if it cannot, the plaintiff in error could not be a citizen of the State of Missouri, within the meaning of the Constitution of the United States, and, consequently, was not entitled to sue in its courts."
It is true, every person, and every class and description of persons, who were at the time of the adoption of the Constitution recognised as citizens in the several States, became also citizens of this new political body; but none other; it was formed by them, and for them and their posterity, but for no one else. And the personal rights and privileges guaranteed to citizens of this new sovereignty were intended to embrace those only who were then members of the several State communities, or who should afterwards by birthright or otherwise become members, according to the provisions of the Constitution and the principles on which it was founded. It was the union of those who were at that time members of distinct and separate political communities into one political family, whose power, for certain specified purposes, was to extend over the whole territory of the United States. And it gave to each citizen rights and privileges outside of his State which he did not before possess, and placed him in every other State upon a perfect equality with its own citizens as to rights of person and rights of property; it made him a citizen of the United States.
Well, that makes pretty clear who could not be a "citizen of the United States". So, let us look, from the other side, at who was a "citizen of the United States".
"It becomes necessary, therefore, to determine who were citizens of the several States when the Constitution was adopted. And in order to do this, we must recur to the Governments and institutions of the thirteen colonies, when they separated from Great Britain and formed new sovereignties, and took their places in the family of independent nations. We must inquire who, at that time, were recognised as the people or citizens of a State, whose rights and liberties had been outraged by the English Government; and who declared their independence, and assumed the powers of Government to defend their rights by force of arms.
In the opinion of the court, the legislation and histories of the times, and the language used in the Declaration of Independence, show, that neither the class of persons who had been imported as slaves, nor their descendants, whether they had become free or not, were then acknowledged as a part of the people, nor intended to be included in the general words used in that memorable instrument.
Now, clearly, it is those who initiated the fight for independence that are of the class recognized by the Constitution as "citizens of the United States". Many have pointed out that one of the first to "die for the cause" was a negro named Crispus Attucks, who was shot to death in the "Boston Massacre", in 1770. This, however, in the eyes of the Court, does not qualify him as one of the people -- for which the country was intended.
Though the decision of the Court continues to give examples of just how the Court perceived this relationship, I would prefer to not include too many more of the over one-hundred and ten thousand words in the Decision. There are some words, however, that warrant our attention in fully understanding what was intended by the founding of this nation, and so I will provide these few additional paragraphs:
"The language of the Declaration of Independence is equally conclusive:
It begins by declaring that, 'when in the course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth the separate and equal station to which the laws of nature and nature's God entitle them, a decent respect for the opinions of mankind requires that they should declare the causes which impel them to the separation.'
It then proceeds to say: 'We hold these truths to be self-evident: that all men are created equal; that they are endowed by their Creator with certain unalienable rights; that among them is life, liberty, and the pursuit of happiness; that to secure these rights, Governments are instituted, deriving their just powers from the consent of the governed.'
The general words above quoted would seem to embrace the whole human family, and if they were used in a similar instrument at this day would be so understood. But it is too clear for dispute, that the enslaved African race were not intended to be included, and formed no part of the people who framed and adopted this declaration; for if the language, as understood in that day, would embrace them, the conduct of the distinguished men who framed the Declaration of Independence would have been utterly and flagrantly inconsistent with the principles they asserted; and instead of the sympathy of mankind, to which they so confidently appealed, they would have deserved and received universal rebuke and reprobation.
Yet the men who framed this declaration were great men-high in literary acquirements-high in their sense of honor, and incapable of asserting principles inconsistent with those on which they were acting. They perfectly understood the meaning of the language they used, and how it would be understood by others; and they knew that it would not in any part of the civilized world be supposed to embrace the negro race, which, by common consent, had been excluded from civilized Governments and the family of nations, and doomed to slavery. They spoke and acted according to the then established doctrines and principles, and in the ordinary language of the day, and no one misunderstood them. The unhappy black race were separated from the white by indelible marks, and laws long before established, and were never thought of or spoken of except as property, and when the claims of the owner or the profit of the trader were supposed to need protection.
This state of public opinion had undergone no change when the Constitution was adopted, as is equally evident from its provisions and language.
The brief preamble sets forth by whom it was formed, for what purposes, and for whose benefit and protection. It declares that it is formed by the people of the United States; that is to say, by those who were members of the different political communities in the several States; and its great object is declared to be to secure the blessings of liberty to themselves and their posterity. It speaks in general terms of the people of the United States, and of citizens of the several States, when it is providing for the exercise of the powers granted or the privileges secured to the citizen. It does not define what description of persons are intended to be included under these terms, or who shall be regarded as a citizen and one of the people. It uses them as terms so well understood, that no further description or definition was necessary.
Therefore, an attempt to apply the standards upon which this nation was founded to the morality of today, or, even, of 1856, when this case was heard, would be to deny the intention of the founders. This does not preclude the utilization of the Fifth Article (Amendment Process) of the Constitution to effect change, which was to be partially achieved eleven years later. It simply explains what a "citizen of the United States" was, prior to the Fourteenth Amendment.
Now the question arises as to whether the 14th Amendment changed who "We the People" are, or not. That will be the subject of the Part II.
This article can be found on line at We the People”, but, Who are We? – Part I
Gary Hunt
Outpost of Freedom
The conventional view serves to protect us from the painful job of thinking.
It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts.
Tuesday, July 19, 2011
we the people, but, who are we/ PART2
"We the People", but, Who are We? - Part II
Gary Hunt
Outpost of Freedom
July 19, 2011
In the first part, Justice Taney [Chief Justice of the Supreme Court who delivered the Decision in Dred Scott v. Sandford, 60 U.S. 393 (1856)], speaking from the past, explained who was, and, who was not of that class of people known as "We the People. Recapping that post:
We think they [descendents of slaves, whether free, or not] are not, and that they are not included, and were not intended to be included, under the word 'citizens' in the Constitution, and can therefore claim none of the rights and privileges which that instrument provides for and secures to citizens of the United States. On the contrary, they were at that time considered as a subordinate and inferior class of beings, who had been subjugated by the dominant race, and, whether emancipated or not, yet remained subject to their authority, and had no rights or privileges but such as those who held the power and the Government might choose to grant them.
* * *
It is true, every person, and every class and description of persons, who were at the time of the adoption of the Constitution recognised as citizens in the several States, became also citizens of this new political body; but none other; it was formed by them, and for them and their posterity, but for no one else. And the personal rights and privileges guaranteed to citizens of this new sovereignty were intended to embrace those only who were then members of the several State communities, or who should afterwards by birthright or otherwise become members, according to the provisions of the Constitution and the principles on which it was founded. It was the union of those who were at that time members of distinct and separate political communities into one political family, whose power, for certain specified purposes, was to extend over the whole territory of the United States. And it gave to each citizen rights and privileges outside of his State which he did not before possess, and placed him in every other State upon a perfect equality with its own citizens as to rights of person and rights of property; it made him a citizen of the United States.
So, the rights and privileges were not conferred upon those who were not citizens at the time of adoption of the Constitution, and their descendents and others. Those rights, too, are defined as inclusive, regardless of whether he is in his state or another state.
So, in 1867, the 14th Amendment to the Constitution was ratified. However, it did not convey rights, only privileges and immunities, to wit [Fourteenth Amendment]:
Section 1--All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.
However, this Amendment did not change or undo that which Taney had described as the "citizens of the United States", though a new class was created by the 14th Amendment.
Now, I know a lot of people don't see it that way. They believe that the 14th Amendment merged the ex-slaves and their descendents into the same class of people that had previously held the title of "citizens of the United States", or, "We the People". However, if you will note the wording of the 14th Amendment, you will see that "rights" were not conveyed, only "privileges and immunities". Now, this may seem small, or insignificant, though that is because we have been subjected to "political correctness" and mountains of legislation establishing "civil rights". However, the Framers never referred to the rights protected by the Constitution as civil, since civil implies granted by government -- which is exactly what the legislature has done -- enact laws granting civil rights. These fundamental rights granted by God are not granted by government, and, they are not civil rights. They were the object and goal of the colonists from April 19, 1775 to the ratification of the Constitution, 14 years later.
What is very important to understand is that when a law is enacted, or a constitution or amendment ratified, the intent at the time of enactment or ratification is, and must be, what was intended -- at that time. To think otherwise is to allow the legislation, or even the Constitution, to mean what was not intended by the sleight of redefining words, concepts, or even enforcement. If that is how we are to operate, we are not a nation of laws rather, of man, and that man who sits in Washington; Member of Congress, President,. Justice or Administrative Agency head is free to promulgate what he wants the law to be and applies not what was intended to be, rather, what he desires it to be.
As James Madison said, in Federalist Papers #62:
It poisons the blessing of liberty itself. It will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood; if they be repealed or revised before they are promulgated, or undergo such incessant changes that no man, who knows what the law is today, can guess what it will be tomorrow. Law is defined to be a rule of action; but how can that be a rule, which is little known, and less fixed?
So, as you contemplate what is said in this Part, understand that only the words of those who were alive at the time of these activities can tell is what they meant. It is only their words, not what some ACLU lawyer might try to make them out to be, that we must be obedient to. To be obedient to any other interpretation is, at best, disobedience to the Constitution.
We have seen the affect of the 14th Amendment on the right, privileges and immunities of those who were and were not of the class known as "We the People". Now the question arises as to whether the 14th Amendment changed who "We the People" are, and, if so, what proof do we have that only "privileges and immunities, not rights, were conveyed by that Amendment. That will be the subject of the Part III.
Part I can be found on line at "We the People", but, Who are We? – Part I
This article can be found on line at “We the People”, but, Who are We? – Part II
Gary Hunt
Outpost of Freedom
The conventional view serves to protect us from the painful job of thinking.
It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts.
"WHEN ALL YOU HAVE IS A HAMMER, EVERYTHING LOOKS LIKE A NAIL."
Banks continue robo signing
Special report: Banks continue robo-signing
Published July 18, 2011| Reuters
NEW YORK/IMMOKALEE, Florida (Reuters) - America's leading mortgage lenders vowed in March to end the dubious foreclosure practices that caused a bruising scandal last year.
But a Reuters investigation finds that many are still taking the same shortcuts they promised to shun, from sketchy paperwork to the use of "robo-signers."
But OneWest's paperwork is problematic. Among the snags: state law permits lenders to file to foreclose only if they already legally own a mortgage. Yet the key document establishing ownership wasn't signed and officially recorded until months after OneWest filed to foreclose on Mrs. Gunter. OneWest declined to comment on the case.
Reuters has found that some of the biggest U.S. banks and other "loan servicers" continue to file questionable foreclosure documents with courts and county clerks. They are using tactics that late last year triggered an outcry, multiple investigations and temporary moratoriums on foreclosures.
In recent months, servicers have filed thousands of documents that appear to have been fabricated or improperly altered, or have sworn to false facts.
Reuters also identified at least six "robo-signers," individuals who in recent months have each signed thousands of mortgage assignments -- legal documents which pinpoint ownership of a property. These same individuals have been identified -- in depositions, court testimony or court rulings -- as previously having signed vast numbers of foreclosure documents that they never read or checked.
Among them: Christina Carter, an employee of Ocwen Loan Servicing of West Palm Beach, Florida, a "sub-servicer" which handles routine mortgage tasks for banks. Her signature -- just two "C"s -- has appeared on thousands of mortgage assignments and other documents this year.
In a case involving a foreclosure by HSBC Bank USA, a New York state court judge this month called Carter a "known robo-signer" and said he'd found multiple variations of her two-letter signature on documents, raising questions about whether others were using her name. That and other red flags prompted the judge to take the extraordinary step of threatening to sanction HSBC's chief executive officer.
In a phone interview, Carter acknowledged signing large numbers of mortgage assignments this year, but said they all were legally done. To her knowledge, she added, no one else used her name.
'CUTTING CORNERS'
One of the industry's top representatives admits that the federal settlements haven't put a stop to questionable practices.
Some loan servicers "continue to cut corners," said David Stevens, president of the Mortgage Bankers Association. Nearly all borrowers facing foreclosure are delinquent, he said, but "the real question is whether the servicer complied with all legal requirements." The loss of a home is "the most critical time in a family's life," and if foreclosure paperwork is faulty homeowners should contest it. "Families should be using every opportunity they can to protect their rights."
Federal bank regulators signed settlements in March with 14 loan servicers -- banks and other companies that perform tasks for mortgage investors such as collecting payments from homeowners and when necessary, filing to foreclose. The 14 firms promised further internal investigations, remediation for some who were harmed and a halt to the filing of false documents. All such behavior had stopped by the end of 2010, they said.
Of these companies, Reuters has found at least five that in recent months have filed foreclosure documents of questionable validity: OneWest, Bank of America, HSBC Bank USA, Wells Fargo and GMAC Mortgage.
So have half a dozen large servicers that weren't party to the agreements, including Ocwen Financial Corp and units of Credit Suisse Group AG.
Spokesmen for the banks and servicers named in this article said that they halted any wrongdoing after disclosures last autumn of robo-signing led them to revise their practices, and they denied filing false documents since then.
In general, they said their foreclosure cases were legitimate, but for a small number of exceptions, and that criticism by defense lawyers and judges of some types of documentation is based on misinterpretation of the law.
The persistence of the paperwork mess poses a dilemma for American policymakers and society at large.
The vast majority of homeowners in foreclosure are in fact delinquent on their mortgage payments. Many bankers and judges view the issue as a technicality. Regardless of legal niceties, they say, people should pay up or lose the collateral on the loans -- their houses and condos.
Increasingly, though, courts are holding that the trusts suing to foreclose don't actually own the mortgages. Judges have ruled that foreclosing based on flawed or missing evidence violates longstanding laws meant to protect all Americans' property rights.
In a landmark decision in January, the Massachusetts Supreme Judicial Court overturned a foreclosure because of a lack of proper documentation.
"The holder of an assigned mortgage needs to take care to ensure that his legal paperwork is in order," wrote Justice Robert Cordry in a concurring opinion. "Although there was no apparent actual unfairness here to the (homeowners), that is not the point. Foreclosure is a powerful act with significant consequences, and Massachusetts law has always required that it proceed strictly in accord with the statutes that govern it."
(U.S. Bank National Association, trustee, vs. Antonio Ibanez, 458 Mass. 637.)
A THOUSAND QUESTIONS
Reuters reviewed records of individual county clerk offices in five states -- Florida, Massachusetts, New York, and North and South Carolina -- with searchable online databases. Reuters also examined hundreds of documents from court case files, some obtained online and others provided by attorneys.
The searches found more than 1,000 mortgage assignments that for multiple reasons appear questionable: promissory notes missing required endorsements or bearing faulty ones; and "complaints" (the legal documents that launch foreclosure suits) that appear to contain multiple incorrect facts.
These are practices that the 14 banks and other loan servicers said had occurred only on a small scale and were halted more than six months ago.
The settlements included the four largest banks in the United States -- Bank of America Corp, Wells Fargo, JP Morgan Chase & Co, and Citigroup Inc. The other parties were lending units of Ally Financial Inc, HSBC Holdings PLC, MetLife Inc, PNC Financial Services Group Inc, SunTrust Banks Inc, U.S. Bancorp, Aurora Bank, EverBank, OneWest Bank and Sovereign Bank.
The pacts were struck with the Office of the Comptroller of the Currency, the main regulator of national banks, as well as with the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of Thrift Supervision.
Some state and federal officials have called the settlements weak. Authorities are still working out financial penalties to be imposed on the 14 firms. The banks didn't admit or deny wrongdoing, and many of the practices banned were previously illegal anyway, such as filing false affidavits and making false notarizations. And regulators left it to the banks to oversee their own internal investigations.
The OCC confirmed it has received complaints that questionable practices continue. But spokesman Bryan Hubbard said the settlements "are intended to address many of the root causes of improper foreclosure actions," thus preventing future harm.
WAVE OF FORECLOSURES
The collapse of the housing boom in late 2006 led to a wave of foreclosures. Federal Reserve data show that some 4.5 percent of U.S. mortgages are in foreclosure. In 2010, 2.5 million foreclosures were initiated, with a similar number expected this year.
In the housing boom, lenders created millions of new mortgages, packaged them into pools, and securitized them rapidly for sale to investors in so-called mortgage-securities trusts.
The agreements setting up the trusts, called "pooling and servicing agreements," require that key documents, properly executed and endorsed, be turned over immediately for each mortgage when a trust is established. The two most important ones are a promissory note and mortgage assignment.
A mortgage really has two parts. One is the actual mortgage (in some states called a "deed of trust"). Its purpose is to pledge the home as collateral for the loan. To transfer ownership of this collateral pledge, the seller must issue a document called a mortgage assignment. The other is the promissory note, which is the loan agreement itself. The homeowner signs it, promising to pay principal and interest.
The Reuters examination turned up thousands of instances --more than 2,000 in Florida alone -- involving recently filed mortgage assignments which ostensibly transferred mortgages to these trusts years after they were formed.
The problem, according to Georgetown University law professor Adam Levitin, an expert on securitization: About 80 percent of all trust agreements provide that New York State law applies, and under New York law, any mortgage assignments made later than specified in the agreements would be void.
Reuters has also uncovered problems with the other key document used in foreclosure cases, the promissory note.
To foreclose, a trust, bank or mortgage finance giant such as Fannie Mae or Freddie Mac must possess the original "blue ink" signed promissory note. The crucial parts of the note are at the bottom -- the endorsements, somewhat like those on the back of a check. The agreements establishing trusts require a proper chain of endorsements showing legal transfers of a note from the original lender, through any intermediary owners, and finally to the trust itself.
Attorneys defending homeowners contend that improper endorsements are rife. Reuters obtained from public court records and defense attorneys more than 100 examples of notes that for various reasons appear to be improper.
MYSTERY OF MARY ARTHUR
One example: The attempt by Credit Suisse unit DLJ Mortgage Capital to foreclose on Mary Arthur of Dobbs Ferry, New York. Mrs. Arthur, 63 and legally blind, works part time as an assistant in a doctor's office. Originally from Trinidad, Mrs. Arthur became delinquent on her $427,500 loan after her parents and sister died and she ran up debts traveling home for the funerals, according to her attorney, Linda Tirelli.
The loan servicers, Select Portfolio Servicing of Salt Lake City, threatened to foreclose on DLJ's behalf. Mrs. Arthur arranged with Select Portfolio a trial mortgage modification to see if she could keep up with the reduced payments. She made the payments but, Tirelli said, Select Portfolio filed to foreclose.
DLJ filed in two separate court cases what it said were authentic copies of Mrs. Arthur's promissory note. Because they were supposed to be copies of the same document, the endorsements filed with both courts should be identical.
But a look at the documents shows that the version filed in state court and the one filed in bankruptcy court had completely different endorsements on them -- naming different owner banks and signed by different people. Tirelli said she has brought this to the attention of the bankruptcy judge and is awaiting a ruling.
Credit Suisse, which owns both DLJ Mortgage Capital and Select Portfolio Servicing, declined to comment, as did Casey Howard, the lawyer representing DLJ in the bankruptcy case.
Bank of America, meanwhile, is coming under fire from a New York federal bankruptcy judge.
Last Tuesday, Judge Robert Drain ordered an investigation involving a foreclosure case brought by the bank. Two earlier copies of a promissory note filed in court had lacked any endorsement, but then one appeared on the note when bank lawyers produced the original.
The judge said the sudden appearance of an endorsement, and his own close look at it, raised questions about whether it had been added illegally to make the note look legitimate.
It "raises a sufficiently serious issue as to when and more importantly by whom this note was endorsed," the judge said.
A Bank of America spokesman said the bank will produce evidence that "will demonstrate to the court's satisfaction that the endorsement is proper."
(In re: Priscilla C. Taylor, Debtor, United States Bankruptcy Court, Southern District of New York, Case # 10-22652.)
MISSING SIGNATURES
These banks aren't alone in filing doubtful documents. Reuters found cases in which Wells Fargo didn't obtain mortgage assignments -- and hence the right to foreclose -- until well after it had filed foreclosure cases.
Wells Fargo, as a trustee, has moved to foreclose on homeowners who have mortgages from now-defunct Option One Mortgage Corp. In June, a bankruptcy appellate panel of the federal Ninth Circuit Court of Appeals overturned a decision to allow Wells Fargo to foreclose on an Option One mortgage. It said that there was no evidence that the note and mortgage had ever been turned over to Wells Fargo as trustee.
In court files of Florida foreclosure cases by Wells Fargo on Option One mortgages, none of the promissory notes filed as exhibits in 10 cases found by Reuters had any endorsements on them.
A Wells Fargo spokeswoman said it is possible that proper endorsements exist but were omitted from the copies of the promissory notes filed in court.
In other cases reviewed by Reuters, Wells Fargo and GMAC Mortgage, a unit of Ally Financial, this year assigned mortgages from defunct lender New Century Mortgage Corp., which went under in 2007. Securitization lawyers say it is technically impossible for a defunct company to directly assign a mortgage over to another owner.
Documents and statements made to courts that are found to be false can amount to crimes under state and federal laws. Daniel Richman, a Columbia University law professor and former federal prosecutor, said such acts can be perjury, and preparing fraudulent documents can be prosecuted under federal mail and wire fraud statutes. The Sarbanes-Oxley Act makes it a crime punishable by up to 20 years in jail to file false documents in a bankruptcy case, including foreclosures.
ROBO-SIGNERS RETURN
Reuters also found that loan servicers are still using the corner-cutting tactic that most captured the public imagination last year: robo-signing.
The investigation identified six known robo-signers who have continued to churn out large numbers of mortgage assignments since the beginning of 2011 - months after the industry vowed to stop the practice.
Among them is Bryan Bly, an employee of Nationwide Title Clearing of Palm Harbor, Florida.
Bly testified in a July 2010 foreclosure case in Florida that he signed up to 5,000 mortgage assignments per day at the loan-servicing company. Although he is an employee of Nationwide, he signed the documents as a "vice president" of Option One Mortgage, Deutsche Bank, CitiBank and other institutions. (Case # 2009-CA-1920, Circuit Court of the Fourth Judicial District, Clay County, FL)
In his deposition, Bly said Nationwide multiplied his output by electronically stamping his signature on additional mortgage assignments that Bly said he never saw. He testified, too, that all the documents then were falsely notarized. Nationwide's notaries were given stacks of the already-signed documents, he said, and attested falsely that Bly had signed the legal papers in front of them. Bly said he didn't verify the information in the papers he signed, and that he didn't understand key words and expressions in them.
Despite these disclosures, a Reuters search of county clerk records in Florida, New York and Massachusetts shows that Bly continued to sign thousands of mortgage assignments this year.
A Nationwide spokeswoman said there is nothing illegal about signing large numbers of mortgage assignments. After Reuters inquired about Bly, however, she later said that because of recent questions raised about him by Nationwide customers, Bly has been moved to a job at the firm that doesn't involve signing documents.
R. Christopher Rodems, a lawyer for Bly, said there is nothing improper about signing large numbers of mortgage assignments. Rodems said Bly had received death threats after a videotaped deposition Bly gave in November 2010 was posted briefly on YouTube, in which he testified about signing massive numbers of mortgage assignments.
A LAWYER'S NAME
Robo-signing isn't limited to low-level employees at loan servicers.
Lawrence Buckley is a lawyer who manages the Dallas, Texas law firm Brice, Vander Linden and Wernick. In March, he testified that he had allowed his electronic signature to be affixed to sworn court documents that he had never seen. The documents, known as "proofs of claim," included one filed with the federal bankruptcy court in New York. It sought permission for Deutsche Bank to seize the Bronx, New York, house of 59-year-old Virginia Obasi. (United States Bankruptcy Court, Southern District of New York, Case # 10-10494 MG)
Buckley said he had never seen the document, and that another lawyer at his firm had filed it using Buckley's electronic signature. The signature appears on the document as "/s/ Lawrence J. Buckley."
Buckley said that other lawyers at his firm were permitted to use his signature to file documents electronically with bankruptcy courts. He testified that it was standard practice at the firm not to review any of the original documents the claim was supposed to be based on, such as the original promissory note and mortgage.
Luke Madole, a lawyer for Buckley, said he saw nothing wrong with Buckley letting lawyers he directly managed use his electronic signature. Later, in an e-mailed statement, Madole added that what occurred "is nothing like 'robo-signing'" and to use "that loaded term would be unfair in the extreme."
A JUDGE INVESTIGATES
Robo-signer Christina Carter resurfaced in a ruling earlier this month, when Arthur Schack, a New York State court judge in Brooklyn, threw out an attempt by HSBC to foreclose on a Brooklyn house.
Schack said he had instructed HSBC's chief lawyer in the case, Frank Cassara, to confirm key facts directly with HSBC officials. The judge said Cassara subsequently "affirmed 'under the penalties of perjury'" that he had done so. But the judge said it turned out that Cassara had never checked with anyone at HSBC, and that the employees Cassara had said he spoke with at HSBC actually worked for a loan servicer.
The judge also said signatures on documents in the case were filed by known robo-signers, three of whom he identified by name, including Carter of Ocwen Loan Servicing. He personally had examined multiple examples of their signatures, the judge said, and found wide variations, raising the possibility that other people had been signing their names.
Judge Schack then took an unusual step: He formally threatened HSBC's CEO, Irene Dorner, as well as lawyers for the firm, with sanctions for relying on known robo-signers, filing false documents and making false representations to the court. The possible sanctions could range from an oral reprimand to financial and other penalties.
"If HSBC has a duty to make money for its stockholders," Schack wrote, "why is it purchasing nonperforming loans, and wasting the Court's time with defective paperwork and the use of robo-signers?" [ID:nN1E76612C]
HSBC spokesman Neil Brazil said that the servicer, Ocwen, was responsible for what occurred in the case, and that HSBC had had no role in it.
Paul Koches, Ocwen's general counsel, said in an e-mail: "To our knowledge, there was nothing submitted by our legal counsel to the court that was in any way misleading as to who is the owner of this mortgage and note, nor was there any conduct of any kind that would justify sanctions."
Carter says she did nothing improper, and left Ocwen voluntarily in May for another job.
DOWN IN FLORIDA
The bank now trying to foreclose on Marjorie Gunter has produced a troubled paper trail. OneWest submitted a document signed this February to prove that the original lender for her mortgage, a company called MortgageIT, had signed over ownership to OneWest. But MortgageIT, owned by Deutsche Bank, wasn't in business in February. It had ceased operations three years earlier, in 2008.
A Deutsche Bank spokesman declined to comment.
Even if the February document were authentic, it wasn't recorded until nearly 10 months after OneWest had launched its foreclosure action, which began in May 2010. Real estate law throughout the United States requires that before moving to foreclose, a trust or bank must already own the mortgage and related promissory note. Otherwise, courts have ruled, a forecloser has no right to seize a house.
OneWest also filed two separate copies of what it said was the 87-year-old homeowner's original promissory note. The first had an endorsement only from MortgageIT to now-defunct IndyMac Bank. Weeks later, OneWest filed a second copy of the note, with the addition of a "blank" endorsement -- an endorsement by IndyMac, but with the name of the payee left empty. OneWest has filed no evidence in the case that the note was subsequently transferred to Fannie Mae.
OneWest declined to explain the multiple apparent discrepancies in the Gunter foreclosure documents. A spokesman said in an e-mail: "OneWest is dedicated to ensuring that it meets the needs of its customers, acts in accordance with applicable laws, and complies with its contractual mortgage servicing duties to the highest standards."
A Fannie Mae spokeswoman said Fannie does own the Gunter note, but declined to explain how the mortgage finance giant obtained it, "due to it being in active litigation."
The judge in the Gunter case hasn't ruled yet on OneWest's documents. (20th Judicial Circuit Court in Collier County, FL, Case number 10-2982-CA).
Mrs. Gunter lives in Immokalee, a scrubby town 34 miles inland from Fort Myers on Florida's Gulf coast. About 40 per cent of the townspeople live below the poverty line, census data show. She shares her home with her three dogs; her one surviving son lives in a nursing home.
In an interview at her house, on a dusty road off the main highway, Mrs. Gunter said she doesn't understand why the bank is foreclosing.
OneWest says that Mrs. Gunter now is delinquent by more than $160,000. Her lawyer, Joseph Klein of the Legal Aid Service of Collier County, argues there are extenuating circumstances.
Copies of her mortgage application forms show that in December 2006, an agent for Deutsche Bank's MortgageIT unit signed up Mrs. Gunter for a $149,900 mortgage. The forms, listing her income, show that the agent knew that the monthly payments -- $1,151, including insurance -- were more than her monthly income of $800 from Social Security plus about $200 in food stamps.
In an affidavit filed in court, Mrs. Gunter said she had asked the salesman for a "reverse mortgage," which allows senior citizens to remain in their homes without making mortgage payments, with the value of the house going to the bank when they die. But the documents the salesman gave her to sign were for an ordinary 30-year mortgage.
Losing her place would be a devastating blow, Mrs. Gunter said. "If they take the house," she said, "they'll take me, too."
(Scot Paltrow reported from New York and Washington, Tom Brown from Immokalee; editing by Michael Williams and Claudia Parsons)