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It is excellent news concerning the KS Supreme Court not recognizing the Mortgage Electronic Registration Services (MERS)as a legal entity with standing to foreclose in Kansas.  No doubt this is going to have a monumental effect in housing and foreclosure in Kansas.  Unless this case makes it to the SCOTUS however where is the relief for the millions of homeowners that are illegally being foreclosed upon as we speak?  Here is my story of how I have taken a sock full of quarters to the head of Countrywide and its co-conspirator MERS.  Hopefully this will help others that are having their homes taken from them by fraud, greed and deception.

As background, let me first state that I was a successful stockbroker for Merrill Lynch, Pierce, Fenner and Smith in the 1980's.  I left Merrill several years after the crash of 1987 because of investment products that I believed were not good investments that Merrill was pushing at the time.  Dabbling in real estate at the time I became an (urban)real estate developer doing smaller infill projects in fringe areas of my hometown, eventually making my way to downtown whereby last year I was the top homebuilder in my downtown. Before anyone starts to read "luxury condos", my market is moderately priced loft condos and rentals for the urban dweller.  I am solvent today, struggling like everyone else however, and have watched mentors around me file bankruptcy.  I have a financial background and considerable knowledge of real estate and real estate financing.  Here is my story.

In 2001 I bought a single family house with the intent to renovate and sell.  I financed the house with a two year construction loan from a local bank.  After renovating the house I decided that I wanted to keep the house to live in.  Since my current loan's term was coming up I sought permanent financing.  A mortgage broker friend suggested Countrywide due to low interest rates offered at the time.  In Dec., 2003 I refinanced with Countrywide.  The problems started immediately.  After 4 months I was informed by my insurance agent that the house was uninsured.  After checking I discovered that Countrywide had failed to pay the insurance premium that was forgotten in the closing escrow account.  I immediately insured the house however paid a fortune given that the house was uninsured.  Shortly thereafter, Countrywide started diverting a small amount of my monthly mortgage payment into an "escrow account".  They also began reporting me as late to the credit bureaus, charging a late fee, and of course, the multiple daily phone calls from collections.  I spent months, and I truly mean tens of hours on the phone or on hold with Countrywide trying to straighten this out.  Countrywide claimed that the escrow was to pay the taxes and insurance.  I explained to them that this was a refinance and that I paid my taxes and insurance once a year in lump sum.  It was obvious to me that the dozens of people that I spoke with had absolutely no intention of correcting the problem, let alone, providing any sort of service.  I began telling others in my field that Countrywide was the Enron of the mortgage business.  What happens over the next several years and my subsequent discovery of their fraud bore this out in ways I could have never imagined.

After putting up with this crap for over a year, with my credit in shreds due to their inaccurate reporting, Countrywide claimed that the amount owed past due equaled a mortgage payment and filed suit to foreclose on my house.  My mortgage buddy contacted Countrywide on my behalf and told  someone that actually cared "you have messed with the wrong person" as I had already contacted an attorney before they filed suit.  Within 3 days Countrywide dismissed the lawsuit!  The problem was that my credit was now shot.  I contacted Countrywide in attempt to get my account straightened out and my credit repaired.  Nothing happened for months. Then they diverted an entire mortgage payment to buy insurance on the house even though the house was insured!  I filed suit for 6 counts of fraud and stopped paying the mortgage (why pay if it was just going down a big black hole with no accounting?).  Countrywide filed suit again to foreclose.  The war was on...

Countrywide's lawsuit was filed in the name of Countrywide as loan servicer, and MERS as mortgagee.  I thought it strange that some unknown entity (MERS) was in a fight with me.  I started doing research.  This is what I found (explained in layman's terms).  Countrywide had sold the note to a trust that had been set up by the gurus on Wall St.  There were 16,000 notes in the trust owned by god knows how many investors.  They of course could do this because for the first time in the history of world finance, these "gurus" had separated the mortgage (collateral) from the note.  MERS holds my mortgage which is recorded per law at my county court house.  They don't and will never be my, or your, note holder.  This separation of the note and mortgage gives Wall St. the ability to "transfer/sell" my note at a click of a mouse thus circumventing the age old process of recording the transfer in my county court house.  This slight of the hand is the fraud that created the entire secondary mortgage market and eventually the trouble we are in today.  Countrywide is my loan servicer...which means they are nothing but a bookkeeper and collection agency.  The holder of my note was yet to be determined.

Doing business in the rough and tumble industry of real estate development necessitates having a crack team of attorneys.  My guys don't mess around.  After discovery we went into court and asked the judge to make them produce the note.  Counsel for Countrywide stated in court that of course Countrywide was the holder of the note and they would be glad to produce the note...six months later we still had nothing.  One day my attorney received a call from their counsel.  In fact, as I am sure you all have guessed, Countrywide did not hold the note.  We asked that the foreclosure lawsuit be dismissed.  The judge allowed time for counsel to find the note and the note holder.  Several months later, counsel turned up in court with the note and stated that the Bank of New York was the trustee for a trust in which the note was held.  The judge allowed for the Bank of New York to be substituted for Countrywide.  Countrywide was dismissed in their lawsuit against me however they continue as a defendant in my fraud lawsuit.  Here is where it gets real interesting.  Under the United States Fair Debt Collection Practices Act, every foreclosure in the United States is required to file a statement with the foreclosure that states that the entity filing the suit is the note holder.  Bingo!  Someone is in big trouble here.  And in my case, they broke this law twice by filing two false foreclosures!

The "produce the note" strategy has been well documented.  At best though, if they do eventually produce the note, it is a delaying tactic.  Here is how to hit them where it hurts.  In my case, they have destroyed my credit for years.  They have filed two fraudulent foreclosures thus further damaging my credit, and forcing me to bring on a partner to finance my real estate projects thus costing me hundreds of thousands of dollars in profits.  Countrywide's counsel now admits to Countrywide's "mistakes" (some involving record keeping that even they can't reconcile thus proving they are just pulling numbers out of thin air).  They claim that their "mistakes" resulted in nominal damage to me.  Under the Fair Debt Collection Practices Act, a violation of the law results in the debt collector (which is what Countrywide really is) paying for all damages.  I am as we speak getting letters from the banks that turned me down, an appraisal of my real estate, and we are soon sending a demand letter to counsel for Countrywide for hundreds of thousands of dollars of lost profits.

The "produce the note" strategy is a good first line of defense.  It is not the end all though.  Eventually they will find most of the notes in the nation's foreclosure crisis.  The real sword in this battle is that Countrywide has no standing to file the suit originally, is nothing but a debt collector, and is in violation of Federal Law.  The millions of people whose credit has been ruined by these bogus lawsuits have, no doubt, damages stretching into billions of dollars.  This is the real leverage here.

I have sold the house which closes in two weeks.  I will pay (I guess to the Bank of New York who is now being added as a defendant in my fraud case) the obscene amount they claim is owed to transfer clear title to the buyer, and am going to fuck these people up royally unless they settle.  My trial date is this December.

I hope that some of you and your family and friends might find some help in this diary to combat these criminals.  

Originally posted to Hangin in the Highlands on Wed Sep 23, 2009 at 08:15 AM PDT.

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