Certified Forensic Loan Auditors, LLC.
By Bob Hurt, http://MortgageAttack.com
Subject of this report:
Warning to Borrowers Facing Foreclosure: In my opinion, a securitization audit or chain of title audit will not help mortgagors who defaulted on their loan win a foreclosure battle in court and such audit services are therefore virtually worthless. Numerous pundit and court opinions, cited below, support this warning. You might agree with me after you finish reading this article and following its links to other text.
First, understand the concept of securitization and chain of title audits from this article of denunciation I wrote years ago:
Furthermore, see how and why securitization trust beneficiaries can ratify violations of the securitization trust pooling and servicing agreement, and that the borrower has no standing to dispute or enforce such violations. Pay particular attention to the explanation by Storm Bradford in this article:
CFLA is a major purveyor of such audit services and conducts training courses to teach others to perform and sell the audits. CFLA aggressively promotes its loan audit, securitization audit, and chain of title audit services to home loan borrowers (mortgagors) who have defaulted on their loans and feel desperate to prevent foreclosure. CFLA gives such desperate borrowers false hope that the borrowers can use their audits and expert witness testimony to avert foreclosure, even though borrowers breached the terms of their loan contracts and really ought to lose their homes to foreclosure. A mortgagor in foreclosure who purchases a loan-related audit from CFLA or any other company has little to no chance of averting foreclosure because of information contained in the audit. The following statements by experts show why.
Florida Foreclosure Defense Attorney Matthew Weidner warned the public against securitization audits in his blog:
MORTGAGE LOAN SECURITIZATION AUDITS ARE A CRIME!
VIOLATIONS.””A person who violates any provision of this section commits an unfair and deceptive trade practice as defined in part II of this chapter. Violators are subject to the penalties and remedies provided in part II of this chapter, including a monetary penalty not to exceed $15,000 per violation.
Just this week I had another client in my office who almost lost their home because they had given thousands of dollars to a loan audit/securitization “expert” who told the to ignore the lawsuit that was filed against them. They did not respond to the lawsuit and the bank was prepared to set a sale. The judge did not have to let my new client defend the case, but the judge recognized that this old, immigrant family had indeed been the victim of a widespread and rampant fraud so the judge allowed them to defend their case and their home is safe…for now. Good call by the judge. Fair. Balanced. So now, I’m going to bust my hump to make sure this client fills out all their paperwork and gets the modification done. Here’s the thing….with their income, they could have had the modification done months ago….if only the scammer had not sold them up the river.
I get variations of the loan audit scam in my office nearly every single day. Hapless consumers are either directly approached by companies or they respond directly to any one of the hundreds of websites that have sprung up everywhere. Here’s the rap: The company or expert will audit their loan, show them how the bank committed fraud or their documents are bad or whatever and the homeowner can use that information to get a free house….for a small upfront fee of several thousand dollars…and maybe a small monthly fee if the mark can swing it.
ANY REPRESENTATIONS LIKE THIS ARE A VIOLATION OF STATE AND FEDERAL LAW!
“there is no evidence that forensic loan audits will help you get a loan modification or any other foreclosure relief, even if they’re conducted by a licensed, legitimate and trained auditor, mortgage professional or lawyer.”
California’s Department of Real Estate warned borrowers against forensic loan audits.
This alert and warning is issued to call to your attention the often overblown and exaggerated “sales pitch(es)” regarding the supposed value of questionable Forensic Loan Audits. It is critical to note that a loan audit (audit report) has absolutely no value as a stand-alone document.
Whether they call themselves Forensic Loan Auditors, Certified Forensic Loan Auditors (there are no such certifications in the State of California), Mortgage Loan Auditors, Forensic Attorney-Backed Foreclosure Prevention Auditors, or some other official, important or lofty sounding title(s), there are thousands of individuals and companies that have popped up and appeared all over the State of California. Most of these individuals and companies are unlicensed, and some were previously engaged in illegal foreclosure rescue and loan modification scams.
The DRE has seen a wide variety of claims and sales pitches, where impressive sounding loan review services are offered with the goal of taking your money. Quite simply, the bad players market hope – and all too often, it is false hope.
A Georgia US District Court in Demilio v US Bank issued a scathing indictment of Demilio’s effort to subvert a foreclosure with a CFLA securitization audit.
Having reviewed the Complaint and all appropriate exhibits, the Court finds that Plaintiff has failed to set forth sufficient facts to show he is entitled to relief on any of his asserted claims. In fact, rather than alleging any material facts in his pleading, Plaintiff attempts to “lodge” “[t]he facts and statements made in the securitization audit attached herein.”13Frankly, the Court is astonished by Plaintiff’s audacity. Instead of providing the “short and plain statement” of facts required by the Federal Rules of Civil Procedure,14 Plaintiff requires the Court to scour a poorly‐copied, 45‐page “Certified Forensic Loan Audit” in an attempt to discern the basic facts of his case. This alone would be sufficient for dismissal.15 However, the Court is equally concerned by Plaintiff’s attempt to incorporate such an “audit,” which is more than likely the product of “charlatans who prey upon people in economically dire situation,” rather than a legitimate recitation of Plaintiff’s factual allegations.16As one bankruptcy judge bluntly explained, “[the Court] is quite confident there is no such thing as a ‘Certified Forensic Loan Audit’ or a ‘certified forensic auditor.’”17In fact, the Federal Trade Commission has issued a “Consumer Alert” regarding such “Forensic Loan Audits.”18 The Court will not, in good conscience, consider any facts recited by such a questionable authority.19
16 In re Norwood, 2010 WL 4642447, at *2.
18 Id. at *2 n.2; see (Mar. 2010), http://www.consumer.ftc.gov/articles/0130‐forensic‐loan‐audits. The State of California Department of Real Estate issued a similar alert entitled Fraud Warning Regarding Forensic Loan Audits (Feb. 2010), http://www.dre.ca.gov/Consumers/ConsumerAlerts.html.
19 See, e.g., Fidel, 2011 WL 2436134, at *1 (disregarding a “Securitization Audit and Forensic Audit” attached as exhibits to plaintiff’s complaint); accord Hewett v. Shapiro & Ingle, No. 1:11CV278, 2012 WL 1230740, at *4, n.4 (M.D.N.C. Apr. 12, 2012) (discussing various “audits” and noting that such documents “confirm the empty gimmickery of these types of claims.”).
State and federal courts across the land have denounced securitization and chain of title audits, and have uniformly ruled against the clients of CFLA or those who relied on “CFLA” audits to save their homes from foreclosure. The end of this report lists 27 court opinions which borrowers should read BEFORE deciding to spend money on a CFLA loan/securitization/chain-of-title audit. None of the judges in those case ruled in favor of the borrower. The Leadbeater v JP Morgan opinion provides this comment in footnote 9:
“Judge Madeline Cox Arleo has previously cautioned that she has “concern over the dubious nature of such reports [prepared by Certified Forensic Loan Auditors, LLC.]“Hicks v. The Bank of New York, et al., Civil Action No. 15-1620, Letter Order, D.E. 22 (Feb. 22, 2016). The FTC has recently warned consumers to be wary of “forensic mortgage loan audits.” Federal Trade Commission, Forensic Loan Audits, https://www.consumer.ftc.gov/articles/0130-forensic-loan-audits (last visited September 13, 2017) (“According to the Federal Trade Commission (FTC), the nation’s consumer protection agency, the latest foreclosure rescue scam to exploit financially strapped homeowners pitches forensic mortgage loan audits.”).”
Blogger and mortgage pundit Martin Andelman wrote this about one of CFLA’s attorney-instructors:
Patricia Rodriguez, Attorney at Law –Patricia is another of CFLA’s instructors. She also has been very active representing homeowners. Going back to June of 2012,Westlaw shows her handling 20 cases, (and you can find a list of her cases at that link).
None were any sort of win for the homeowners… in one she was sanctioned by the court and the 19 others were dismissed, many with prejudice or without leave to amend… the three quiet title cases were all dismissed.She also filed a mass joinder lawsuit that was also dismissed.But it’sMcGough v. Wells Fargo Bank, 2012 WL 6019108 (U.S. DC N.D. Ca. 12/3/12), that deserves to be highlighted because in this case, Ms. Rodriguez ended up being sanctioned by the court for violating Rule 11 of the Federal Rules of Civil Procedure, and ordered to attend 20 hours of continuing legal education. Here’s what the court said about Ms. Rodriguez…
The Court is disheartened by counsel’s failure in this case, even in responding to the present motion, to recognize that she has erred. If she had approached her practice with a measure of common sense, Counsel might have reconsidered her position…
And on a very basic level, the Court wishes to remind counsel that if an ordinary person cannot understand what she is saying in her pleadings—a neighbor, friend, or family member—then it is very likely that the Court and opposing counsel will not be able to either. The kind of garbled pleading that counsel has three times submitted to this Court imposes a burden that all involved would like to avoid in the future.
Accordingly, the Court hereby orders counsel, Patricia Rodriguez, to attend a minimum of twenty (20) hours of MCLE-accredited legal education courses, apart from any compliance hours regularly required by the California Bar Association. These hours shall include a minimum of eight hours in complaint-drafting or other legal writing, eight hours addressing the substantive law of foreclosure, if indeed it is an area in which Ms. Rodriguez wishes to continue practicing, and two hours of legal ethics training.
And remember that Patricia is a CFLA Instructor, training lawyers and others around the country in how to represent homeowners in quiet title cases and how to use CFLA’s securitization audits in foreclosure defense.
Look, I understand that foreclosure defense has been incredibly difficult even for the most dedicated and experienced attorneys. So losing is not necessarily a bad thing all by itself. But the way CFLA markets the company’s instructors, experts and seminars as leading the industry is at least misleading.
Andelman wrote a monumental expose of CFLA at this web page, exhaustively detailing numerous reasons to doubt the validity of CFLA audit services and technical competence of its instructors. See it here: https://mandelman.ml-implode.com/2014/10/homeowner-alert-mortgage-investors-fraud-recoverys-50-2-40-program-cflas-quiet-title-audits-and-experts/ Apparently, CFLA owner Andrew Lehman threatened to sue Andelman for exposing CFLA. Andelman ended his article with this challenging rebuke:
And Andrew, don’t bother sending me another letter telling me how powerful you are, and how you’re going to sue me for whatever you think you can sue me for… I’ve got an idea of how big and powerful you are… and yet, I still wrote this… so that should clear up any questions you might have as to the nature of my response to such threats. On the other hand, if you want to present any facts that would show me that what you’re doing is actually doing some good, you’ll find me both open and a very reasonable person with whom to converse. I don’t need much, by the way. How about a couple of cases where homeowners were awarded quiet title when they still owed on their mortgages? Or, how about even one such case? How about any sort of favorable outcome based on the use of your products and services… or based on your experts testifying Anything, Andrew… can I see anything at all?
Mortgagors facing foreclosure might wonder why they cannot find more consumer complaints against CFLA at sites like RipoffReport.com. Upon visiting that site a search for CFLA under its full name will reveal multiple pages of advertising showing CFLA to be a model company, but no complaints at all. The reason: CFLA’s principal has apparently paid the principal of RipoffReport to remove all complaints against CFLA from the site and replace them with advertisements making CFLA seem honorable. It seems apparent to me that CFLA and its minions have earned so much money selling useless services to troubled mortgagors that CFLA can afford to pay bribes or issue threats to get webmasters to remove complaints and to get angry customers to retract their complaints. The court opinions that follow prove foreclosure victims cannot rely upon CFLA securitization, chain-of-title, and loan audit services. Why? Because the borrowers who tried to rely on them lost in court. Caveat emptor (let the buyer beware)…
Court Opinions Showing Borrowers LOSE by Relying on CFLA Audits
- Barrionuevo v. Chase Bank, NA 885 F. Supp. 2d 964- Dist. Court, ND California, 2012
- Blanchard v. FREMONT HOME LOAN TRUST 2005-D Dist. Court, WD Washington, 2017
- BARRIONUEVO v. CHASE BANK, NA Dist. Court, ND California, 2013
- JP Morgan Chase Bank, NA v. Galloway NM: Court of Appeals, 2018
- WAN v. PULTE MORTGAGE Dist. Court, D. Nevada, 2014
- MANTOVANI v. WELLS FARGO BANK, NA Dist. Court, D. New Jersey, 2018
- GILARMO v. US BANK NA AS TRUSTEE FOR CSAB MORTGAGE BACKED TRUST 2006-1 Court of Appeals, 3rd Circuit, 2016
- Sarkar v. WORLD SAVINGS FSB Dist. Court, ND California, 2014
- VIERA LOPEZ v. BAYVIEW LOAN SERVICING, LLC Dist. Court, SD New York, 2017
- IM v. BAYVIEW LOAN SERVICING LLC Dist. Court, SD New York, 2018
- Dumas v. JPMorgan Chase Bank, NA Cal: Court of Appeal, 3rd Appellate Dist., 2014
- McGough v. WELLS FARGO BANK, NA Dist. Court, ND California, 2012
- Hernandez v. RESIDENTIAL CREDIT SOLUTIONS, INC. Dist. Court, ND California, 2016
- English v. RYLAND MORTGAGE COMPANY Dist. Court, D. Maryland, 2016
- Cox v. NATIONSTAR MORTGAGE LLC Dist. Court, SD New York, 2016
- LEADBEATER v. JP MORGAN CHASE, NA Dist. Court, D. New Jersey, 2017
- Hylton v. JP Morgan Chase Bank, NA Dist. Court, SD New York, 2018
- Sanders v. SUTTON FUNDING, LLC Dist. Court, SD California, 2014
- Sylvester v. INTERBAY FUNDING LLC Dist. Court, SD New York, 2017
- Suggs v. M & T BANK 230 F. Supp. 3d 458- Dist. Court, ED Virginia, 2017
- Avila v. MORTGAGE ELECTRONIC REGISTRATION SYSTEM, INC. Dist. Court, SD Texas, 2012
- Williams v. Ward Md: Court of Special Appeals, 2016
- Stephens v. BANK OF AMERICA HOME LOANS, INC. Dist. Court, North Carolina, 2017
- Baker v. CitiMORTGAGE, INC. Dist. Court, Minnesota, 2018
- GONSALVES-CARVALHAL v. AURORA BANK Dist. Court, ED New York, 2014
- Kennedy v. WORLD SAVINGS BANK, FSB Dist. Court, ND California, 2015
* * *
Quack Attorney Neil Garfield just posted this dreck on his LivingLies blog:
Client goes into the office of an attorney and tells him/her that a notice of rescission was sent. The attorney without studying the issue says the rescission never happened. And so it goes.
In my opinion once the time limits have expired on claims arising from TILA (which includes the debt) the county recorder should remove the encumbrance from the chain of title or be ordered to do so by a court of competent jurisdiction.The attorney might be on the right track but for the wrong reason. There literally is no question about the meaning of the TILA Rescission statute 15 USC §1635 because the highest court in the land said there is no question. And without any question there is no room for interpretation. See Jesinoski.*The plain wording of the statute says that once the notice is sent the OLD loan agreement is replaced with a NEW statutory mandatory loan agreement. This is the factor that is missed by most lawyers and judges on trial and appellate courts. The wording of the statute is clear and it is effective by operation of law the moment the notice is dropped in US postal Service mail.*It’s not a declaration that the deal is completely gone. It is a change in terms required by statute. Banks have ignored it at their peril but so far successfully.*The courts have strained themselves in their rebellion against this statute because they don’t think so much power should have been vested in each borrower by the legislature. So the judges answer to the problem is to pretend that the legislative branch did not say what it said. SCOTUS thought it was putting an end to that nonsense in Jesinoski but most judges continue to ignore the mandate of both Congress and the Supreme Court.*So there we are. In simple terms the average person who has sent a notice of rescission has title to property that by operation of law has no encumbrance thereon. But the OLD encumbrance from the OLD loan agreement is still in the County records. I think the recording of the notice of rescission is sufficient to bring an action in mandamus against the county recorder’s office to remove the encumbrance from the chain of title, but I can offer no guarantee that a court will order that, even though it is legally and morally correct.*In order to do that properly I think it would be prudent to first send a demand letter to the county recorder asking that the encumbrance be removed and asking for whatever instructions they would give in accomplishing the removal.
Bob Hurt responds…
You might want to re-read the SCOTUS opinion and the final opinion in the Jesinoski case
- Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790 – Supreme Court 2015
- JESINOSKI v. Countrywide Home Loans, Inc., 883 F. 3d 1010 – Court of Appeals, 8th Circuit 2018.
The district and circuit court judges both ruled AGAINST Jesinoskis. They concluded that NO TILA VIOLATION OCCURRED, and therefore the Jesinoskis had NO RIGHT OF RESCISSION under TILA. And SCOTUS, in its Jesinoski opinion, made this statement:
This regime grants borrowers an unconditional right to rescind for three days, after which they may rescind only if the lender failed to satisfy the Act’s disclosure requirements.
You should know that to trigger a conditional right of rescission TILA and its supporting Regulation Z require a violation and notice of rescission within the post-consummation 3-year repose period. In order to obtain money damages for the creditor’s failure timely to tender and remove the lien, the borrower must sue within one year and 20 days after notice, or counterclaim/sue within one year after initiation of a foreclosure. As stated in the Hoang case, no federal statute of limitations exists for enforcing the rescission, so the courts must go to state law to find a pertinent statute of limitations.
Jesinoskis claimed that they did not recall receiving the requisite notices of right to cancel, and each had signed an acknowledgement of receipt of the requisite notices. For that reason the courts relied on the signed acknowledgements rather than on the Jesinoskis’ faulty memories, as indicated in the following excerpt from the opinion:
“The language of the acknowledgment as presented to and signed individually by Larry and Cheryle more than suffices to demonstrate clearly each spouse’s receipt of two copies. There is no indication on the acknowledgment that the Jesinoskis were signing jointly on one another’s behalf. As such, we agree with the Sixth Circuit which interpreted identical language and concluded, “[s]uch clarity should be rewarded with a presumption of delivery that cannot be overcome without specific evidence demonstrating that the borrower did not receive the appropriate number of copies of the Notice.””
Thus, no TILA violation occurred in the Jesinoskis’ loan. And THAT explains why the courts denied their rescission effort. It also demonstrates that YOU do not comprehend the simple language of TILA (15 USC 1601), Regulation Z (12 CFR 1026), and the SCOTUS Jesinoski opinion. For example, take note of section 12 CFR 1026.23(d)(4):
(d) Effects of rescission.
(1) When a consumer rescinds a transaction, the security interest giving rise to the right of rescission becomes void and the consumer shall not be liable for any amount, including any finance charge.
(2) Within 20 calendar days after receipt of a notice of rescission, the creditor shall return any money or property that has been given to anyone in connection with the transaction and shall take any action necessary to reflect the termination of the security interest.
(3) If the creditor has delivered any money or property, the consumer may retain possession until the creditor has met its obligation under paragraph (d)(2) of this section. When the creditor has complied with that paragraph, the consumer shall tender the money or property to the creditor or, where the latter would be impracticable or inequitable, tender its reasonable value. At the consumer’s option, tender of property may be made at the location of the property or at the consumer’s residence. Tender of money must be made at the creditor’s designated place of business. If the creditor does not take possession of the money or property within 20 calendar days after the consumer’s tender, the consumer may keep it without further obligation.
(4) The procedures outlined in paragraphs (d)(2) [and (3) of this section may be modified by court order.
A creditor who knows he did not violate TILA will naturally resist the expensive process of tendering and removing the lien, and of litigating. So he will simply foreclose (because the borrower thinks he has rescinded and will stop making mortgage payments), or wait for the borrower to sue to force the creditor to tender and remove the lien. Generally, the borrower must sue or counterclaim in a foreclosure action in order to enforce the rescission, and in section (4) above, that means a court must order the rescission.
Remember that the SCOTUS granted certiorari in the Jesinoski case because the 8th Circuit had ruled that Jesinoskis must have sued within 3 years after consummation in order to enforce the rescission effort. SCOTUS did not deal with the question of whether a TILA violation had occurred or whether and how the courts must settle the differences between borrower and lender in TILA rescission dispute arising because the creditor refused to tender or remove the lien. The Jesinoski case in the District Court had never gotten to the point of considering whether Jesinoskis had justification for demanding TILA rescission. The District Court only got to that point AFTER the SCOTUS had rendered its opinion, that the borrowers need not sue for damages within the repose period of 3 years after consummation – they needed only to send the notice of intent to rescind within the repose period.
And that (as everyone but you seems to know) means the District Court must settle the matter when the creditor (as in the Jesinoski case) claims no TILA violation occurred and therefore refuses to tender or remove the lien until a District Court judge orders it. That, after all, is why the Jesinoskis sued to enforce the rescission.
When will you stop misleading borrowers into thinking they can rescind under TILA more than 3 years after consummation, or that they can rescind even though no TILA violation occurred?
⚓ Bob Hurt
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⚡ Mortgage Attack to Beat the Bank
The typical home mortgage comprises two closely related transactions. The first is a contract between the borrower and the lender under which the lender agrees to pay the borrower money in exchange for a promise to repay that money with interest. This is the note. As a condition for entering into that contract, the lender requires the borrower to give the lender a security interest in their property. This is the mortgage. The borrower is the mortgagor and the lender is the mortgagee.
The lenders’ right under the mortgage is like a non-possessory property interest that the borrower effectively repurchases with each payment on the principal of the loan. While the note gives the lender an “in personam” right against the borrower, the security interest gives the lender an “in rem” right against the property. Hence, destruction of the property — say by a hurricane or fire — might destroy the value of the lender’s in rem right, but will not destroy its in personam right to collect the full value of the loan from the borrower even though the property no longer exists.
Now, if the homeowners want a chance to save their homes, it’s necessary and imperative to have the mortgage transaction analyzed. Because the FDIC found that 83% of the mortgage transactions have problems, and 76% of the appraisals as well.
There’s only one firm in the country that provides that mortgage transaction analysis service–Mortgage Fraud Examiners www.mortgagefraudexaminers.com
In an opinion issued today, Florida’s Fifth District Court of Appeal joined other Florida appellate courts in holding that the five-year statute of limitations to bring an action to enforce a promissory note and/or mortgage does not prohibit a lender from collecting amounts more than five years past due.
In Grant v. Citizens Bank, N.A., slip op., Case No. 5D17-726 (Fla. 5th DCA Dec. 26, 2018), the Fifth District, sitting en banc, examined whether the trial judge erred in awarding to a foreclosing lender interest that had accrued more than five years prior to acceleration and the filing of the foreclosure complaint. The court noted that while Florida has a five-year statute of limitations to foreclose, the impact of the statute of limitations is simply that acceleration and foreclosure must be based on a default that occurred within the five year period prior to filing the foreclosure action. Each missed monthly installment payment constitutes a new default on which foreclosure may be based. Furthermore, forbearance from accelerating the note upon a borrower’s default does not constitute waiver of the lender’s right to subsequently seek all sums due and owing. Therefore, even if the lender does not file an action on a note or mortgage until more than five years after the borrower’s initial default, the lender may still recover amounts more than five years past due so long as the action commences within five years of maturity or a subsequent missed installment payment.
In reaching this conclusion, the Fifth District receded from its previous opinions in Velden v. Nationstar Mortgage, LLC, 234 So. 3d 850 (Fla. 5th DCA 2018) and U.S. Bank, N.A. v. Diamond, 228 So. 3d 177 (Fla. 5th DCA 2017), cases in which the court concluded that the statute of limitations prohibited the collection of amounts more than five years past due. With Grant, the Fifth District now joins the Third and Fourth District Courts of Appeal in holding that a lender is entitled to recover all outstanding payments upon maturity or acceleration, even those that came due more than five years earlier. See Bank of Am., N.A. v. Graybush, 253 So. 3d 1188 (Fla. 4th DCA 2018); Gonzalez v. Fed. Nat’l Mortg. Ass’n, — So. 3d —, 2018 WL 3636467 (Fla. 3d DCA Oct. 1, 2018).
The First and Second Districts have not directly addressed the interaction between the statute of limitations and the amounts a lender may collect. Given that neither those appellate courts nor the Florida Supreme Court has spoken on the topic, and now that there is no longer interdistrict conflict between the Third, Fourth, and Fifth Districts on the issue, trial courts in all districts of Florida are bound by the Grant, Graybush, and Gonzalez opinions. Thus, lenders throughout the state of Florida are able to recover all amounts owed to them—not just those that accrued within the previous five years.