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Remember Arizona’s Senate Bill 1259 that would have required servicers to produce a declaration that they had the proper chain of title prior to foreclosing on someone’s home? You know… the one that passed the Arizona Senate 28-2 that I wrote about back on February 23rd of this year?
Remember maybe a month ago when I tried to follow up to see how the bill was proceeding in the Arizona House of Representatives… only to find out that on the way to the House… it disappeared… the text replaced by some bill about firefighting with the same number? And no one was saying a word about it? If you missed it, I wrote about it here.
Okay, well… it appears that the story is not over yet.
It seems that one Arizona homeowner set out to revive the essence of the bill, drafting an amendment and recruiting Rep. Carl Seel to propose that it be added to Senate Bill 1474, being sponsored by Senator Ron Gould.
His name is Darrell Blomberg, and he’s a Phoenix area Realtor, and a past president of one of the local boards of Realtors… who is now involved in auditing trustee sales for homeowners. Basically, he looks for some basis upon which a sale might be cancelled, or at the very least postponed. He acknowledges that it only represents a temporary solution, but it’s often important to the homeowner nonetheless. He was actually working on one such audit for Rep. Seel, which is how the two came to know each other.
I’d heard about him from another contact I have in Arizona as being someone very active in the legislation related to foreclosures, so I reached out to him over this past weekend to see what he knew. He returned my call after reading my story about the disappearing SB 1259 bill, and he certainly did have some news for me and he was very disappointed about the whole thing.
According to Mr. Blomberg, it seems that when the day came around for Rep. Carl Seel to propose the amendment, as he had agreed to do, he was running late and ultimately didn’t get there on time. The amendment was never proposed as a result.
When I first heard Darrell the story, I thought… well, maybe it was traffic. Or, a doctor’s appointment that ran late? Perhaps friends came in from out of town?
When Rep. Seel was asked what had happened to prevent him from showing up on time to propose the amendment, he explained that he had decided not to propose it because he was told there was no chance of it being adopted… something about it not being “germane,” whatever that means.
One thing though… from what Darrell explained to me, Carl Seel must have been in a very good mood the day of his unexpected tardiness, because even though he had been previously turned down twice for his own loan modification, two days before he showed up too late to propose the amendment, Ocwen granted him a PRINCIPAL REDUCTION that reduced his mortgage to $88,000 from roughly $190,000… that’s a reduction of approximately 56% give or take a few points one way or the other.
Now that is lucky, was all I could think to say. Really lucky, considering it was Ocwen, a servicer I’ve been told is among the most difficult when it comes to modifying loans. In fact, it’s almost like being the single-ticket-lottery-winner-three-days-in-a-row kind of lucky, wouldn’t you say?
So, how did Darrell know about the fortuitous timing of Mr. Seel’s generous principal reduction?
It’s quite simple really… Seel hired him to help him with his loan.
You see, according to Darrell Blomberg, Rep. Seel had asked him to conduct an audit of Seel’s trustee sale in an effort to postpone his own home’s sale, which had been scheduled after his servicer denied his loan modification application for the second time. And Darrell had forwarded the results of his examination to Ocwen in a letter outlining several discrepancies in an attempt to delay the sale date.
As a result of that close involvement, Darrell says he personally saw the paperwork indicating both the trustee sale was being cancelled and that the significant principal reduction was being granted as part of Seel’s loan modification. He even went over it with Seel, telling him he hadn’t seen many… if any… like this one.
For the record, my two calls to Rep. Seel’s office were not returned. I spoke with his assistant who answered the phone at his office. I explained that I was calling to ask Rep. Seel to comment on a recently obtained loan modification granted by Ocwen… she said she knew nothing about it, but would contact him and convey my message. I explained that I was going to run the story today and that it was urgent that I hear from him should he want to deny the report… and… well… as of 5:03 PM today… nothing… and I’ve been staring at my phone for hours.
Darrell says that his only thought at the time was that Ocwen had granted the principal reduction because of some combination of Seel playing his elected representative card and what he had done pointing out inadequacies in the documentation related to the trustee sale… Seel wasn’t scheduled to propose the amendment he had drafted for another two days, so there was no reason to believe anything else was in play.
When the day came for Seel to speak for the amendment, Darrell was there, pacing the halls of the Arizona legislature, calling him repeatedly on his cell phone, wondering where he was… and why he would be so late… until it was too late.
And the amendment was never introduced in the legislature. Again. Gone without a debate, without a vote, without any consideration for the people of the State of Arizona.
In an unrelated story… or perhaps not, depending on how you look at it… Senator Michelle Reagan, who proposed the first bill pertaining to the need to declare proper chain of title prior to foreclosure, SB 1259… the one that disappeared on its way to the House after passing the Arizona senate… successfully settled her dispute with her own servicer, roughly a month after she decided to facilitate her own bill’s disappearance.
The Other Side of the Issue…
From what I can discern from talking to various involved parties, the consensus is that any bill that requires the banks or mortgage servicers to even discuss the issue of proper chain of title as being part of the foreclosure process is unquestionably doomed to failure in Arizona’s House of Representatives and therefore, there is no point in sending such a bill to the House… it is nothing more than an exercise in futility.
And it is on that basis alone that the opposition to SB 1259, or to the Blomberg amendment that was never proposed, justifies their actions to block any progress of these proposed legislative changes.
The problem with this line of thinking as it pertains to SB 1259 is that it subverts our democratic process. The Arizona state senate voted by a margin of 28-2 to pass SB 1259 into law, and the way our bicameral legislature works… when it works… is that next the House gets to vote.
If both the senate and the House pass the bill, it’s heads over to the governor’s desk where it might be signed into law… or it might be… class, class… oh, now lets not always see the same hands… it might be vetoed… that’s right boys and girls.
But not this time, I’m afraid. This time the senate passed a bill 28-2… but its opponents want me to believe that sending it to the House is nothing but a total waste of time.
Oh, really? Well, I’d like to see an example of another bill in Arizona’s legislative history that passed the senate 28-2, only to be unanimously voted down in the House. Has that ever even happened? 28-2 means someone was for it… no, check that… it means that an overwhelming majority were for it.
What’s the deal among Arizona politicians? Are Arizona’s state senators from Mars and the state’s members of the House of Representatives from Venus? Do Arizona’s state senators say the glass is half empty, while the members of the House say, “Hey, who the heck stole half my water?” If that’s the case, how in the world does any bill ever become law in Arizona? The damn state’s legislature sounds like a Push-Me-Pull-You, first discovered by Dr. Dolittle, in case you don’t remember Hugh Lofting’s childhood classic.
Look, I don’t even understand the problem here… if SB 1259 was a sure thing to be eviscerated in the House… what’s all the fuss, banker-people? Let it go there and die an honorable, democratic death. Why make it disappear in the middle of the night and then somehow make sure that no one even writes about it… until me, that is… and now look at all the commotion going on.
And banker-people… you guys should know me by now… I don’t quit, I tell the truth, and I don’t have a boss or make any money, so good luck with shutting me up. I promise you… when all this is over, you’re going to wish you had just let the dang bill get disemboweled in the House… if that’s really what would have happened.
Now you’ve got Senator Reagan… who after disappearing the bill… settled her case against her own servicer a month later. Now I’m sure the two events have not a thing to do with one another… they’re obviously entirely unrelated events… who would ever suggest otherwise… except maybe a whole bunch of those pesky voters that show up every couple of years to remind you that, as much as you might not think so… you are not actually the only people driving the state’s or our national bus.
And what about Rep. Nancy McLain… you remember Nancy… the Republican from Bullhead City… she needed Senator Reagan’s permission, but she’s the one who actually killed SB 1259 by making the decision to not even hold hearings on the bill. The state senate passed it 28-2 and it’s not even worthy of holding a hearing or two? This bill is so worthless and has no potential to pass whatsoever that it cannot even be discussed in a hearing?
My gal Nancy… who astonishingly is the Chairperson of the House Banking and Insurance Committee (I know, I couldn’t believe it either. I would have guessed Agriculture or Telecommunications), says that the bill that was passed by the senate was seriously flawed.
See… now I would have thought that a seriously flawed bill that passed the state senate 28-2 would be all the reason in the world to hold a couple of hearings on the subject. You know… to see if those serious flaws couldn’t be kicked around and perhaps even corrected, perish the thought.
Now, guess what’s going on now… poor Nancy McLain is being accused of being a puppet for the banking industry. Oh, yes she is… how unfair is that? In response, at this past Wednesday’s Tri-City Council meeting, Nancy had the following to say, as quoted by The Daily News, which I assume is an Arizona paper:
“I do listen to their point of view. I listen to the other side and then I make up my mind. And I have to say flat out, because this is the accusation that’s been made is that I’ve somehow been paid off by the banking industry. Flat out, no. I have not received a cent from them for this vote or any other.”
Oh dear, this is not going to end well…
For one thing, now I’m going to have to dig around and find out how much Nancy has received in the past from the banking industry, and then should she ever run again, I’ll have to set up a Google Alert to pick up on any contributions she gets from the bankers for future elections. Geeze… wouldn’t you just hate to have me and a bunch of other bloggers up your tail after telling such an obvious lie as she did.
Come on, Nancy… don’t treat me like I’m six… I hate it when politicians or bankers treat me like I’m six. You Chair the House Banking Committee… why don’t you just come right out and say what the real truth is:
“Okay, I’m sorry folks but the bankers said no to this one… I know, it’s disappointing… I told them you’d be upset but they said ‘no’ means ‘no’… come on, we’ll all get over it… okay now… break it up, time to go on home… there’s nothing to see here… move along.”
At the meeting, Nancy added:
“I probably had about eight or 10 other bills dealing with various attempts to prevent foreclosures which I did not hear as well. So this was not an exception. This was one of many. Now if that makes me an even worse person, well, so be it.”
See… Nancy… we need to talk. It’s not so much that it makes you an even worse person… it’s more like it makes you entirely unsuited for public office, derelict in your duties, some might say a traitor to the people of Arizona, and in my personal opinion… an uninformed and callous bitch with a heart of ice and the brains of a ferret.
You’re worried about being an even worse person? Relax, there’s nothing I can think of at the moment that could possibly make you a worse person… it’s quite evident that you’re already as bad a person as persons can ever hope to become. You’re tipping the scales on appalling personage, Nancy my girl. If it makes you feel more at ease, I wouldn’t give another thought to the risk of worsening.
NOTE TO READERS: And for the reader who thinks I’m being too harsh… or unnecessarily harsh… I’d encourage you to keep in mind that far too many people have taken their own lives over this “fraudclosure” abomination, and there are children without fathers as a result. There are senior citizens that have been reduced to living as virtual shut-ins, afraid to answer the phone as a result of the treatment they have received by servicers.
Untold hundreds of billions in consumer wealth has evaporated because of the acts committed by Wall Street’s elite. The aggregate stress servicers have caused the people of Arizona and elsewhere is incalculable; I don’t think there’s any question that countless lives have been shortened as a result. Rep. McClain has taken it upon herself to decide that the Arizona legislature should do nothing. She deserves to be called out for what she’s done and who she is.
And besides all that, Ms. Nancy McLain, I have four simple questions: 1. Did the Arizona legislature pass a single bill with the potential to prevent foreclosures this session? 2. Last session? 3. Got anything on the drawing board for next session? 4. The session after that?
Want to know how easy my job is getting because of the banking lobby? I’m not even going to research the answers to those four questions, and I’m feeling absolutely rock solid safe in answering all four of them off the cuff, as they say:
So, let me see if I’ve got my arms around this… I guess you could call it a situation.
You had either nine or eleven bills presented to you that all proposed various ways of preventing foreclosures in Arizona… a state being utterly destroyed by the foreclosure crisis… and you alone… all by yourself… made the decision not to even hear any of them? Didn’t even schedule hearings on a one of them?
They were all that bad, I suppose… wholly devoid of any ideas even remotely worthy of debate? Basically, all nine (or possibly eleven) bills containing various attempts to at least slow the pace of foreclosures and possibly prevent the people of Arizona from being stripped of any modicum of equity or homeownership still present in the state, were essentially one step above gibberish, is that what you’re telling the people of Arizona, Ms. Nancy McClain?
Nine or maybe even eleven bills designed to mitigate the damage that the foreclosure crisis is wreaking on Arizona… and they all sucked so badly that none was even close to being worthy of debate… even though the one that got to a vote in the senate passed by overwhelming majority, 28-2?
Nancy… I must know… do you make sense to you when you hear yourself talk?
Here’s Nancy’s rationale for killing this bill, SB 1259:
“To my way of thinking, it gave false hope to people who are honestly trying to save their homes from foreclosure and due to whatever circumstances, they weren’t able to make their mortgage payments. And suddenly, you hold out this idea, well, if you make the bank show you the chain of title and they can’t do it, then they can’t foreclose. Well, they can. It’s the servicing agent that forecloses, not the actual bank that holds the title to it, so they can still be foreclosed upon.”
Okay, Nance… do you mind if I call you Nance…
Nance… you’re just not understanding the bill or the laws governing foreclosures. Allow me to help you with this.
First of all, the servicer is already supposed to make sure the chain of title is intact and the documents are in order prior to foreclosing. You know, it’s to make sure that the loan hasn’t been sold to anyone else… or perish the thought… to two or three different people. That’s already the law.
This bill, SB 1259 only required the servicer to double check that everything is hunky dory before foreclosing and then submit a declaration confirming the same. It’s a declaration saying that we’ve checked it all out… as the law has always required us to do… and it’s clear sailing foreclosure-wise. Signed, Mr. Banker-Servicer.
And Nance… the OCC, OTS, and Federal Reserve concluded their investigation just over a week ago, and they concluded that the whole chain of title thing is right as rain. It’s true, I swear… here’s what the federal banking regulators had to say on the subject in their report:
“Examiners generally found adequate evidence of physical control and possession of original notes and mortgages. Examiners also found, with limited exceptions, that notes appeared to be properly endorsed and mortgages and deeds of trust appeared properly assigned.”
See… so you can just calm your little banker friends down right this instant. Everything’s going to be just fine… it’s all in order. I mean, that is unless your banker buddies somehow deceived the federal banking regulators to get them to conclude something that wasn’t true, and I just refuse to believe that there’s one single banker in this country that would ever even think of doing something like that. (I refuse to believe there’s one banker, but 12,000 of them? Oh yeah, that I’d believe fore sure.)
So, since I’m one to always take federal banking regulators at their word, as I’m quite certain you are as well, there should be no problem having servicers or bankers or trustees for that matter sign a declaration saying they’ve checked and they do actually own the loan they’re about to foreclose upon, and haven’t sold it to anyone else during the chaos of the meltdown or during the go-go days of the real estate boom.
Why is this so important now? There are a couple of reasons but it’s actually quite simple: You’d have to be a witless dolt to believe anything the banking industry says about anything.
Here’s what the federal banking regulators said after concluding their six or so month investigation of the country’s largest mortgage servicers:
1. Foreclosure governance processes of the servicers were underdeveloped and insufficient to manage and control operational, compliance, legal, and reputational risk associated with an increasing volume of foreclosures. Weaknesses included:
- Inadequate policies, procedures, and independent control infrastructure covering all aspects of the foreclosure process.
- Inadequate monitoring and controls to oversee foreclosure activities conducted on behalf of servicers by external law firms or other third-party vendors.
- Lack of sufficient audit trails to show how information set out in the affidavits (amount of indebtedness, fees, penalties, etc.) was linked to the servicers’ internal records at the time the affidavits were executed.
- Inadequate quality control and audit reviews to ensure compliance with legal requirements, policies and procedures, as well as the maintenance of sound operating environments.
- Inadequate identification of financial, reputational, and legal risks, and absence of internal communication about those risks among boards of directors and senior management.
2. Examiners found inadequate organization and staffing of foreclosure units to address the increased volumes of foreclosures.
3. Individuals who signed foreclosure affidavits often did not personally check the documents for accuracy or possess the level of knowledge of the information that they attested to in those affidavits. In addition, some foreclosure documents indicated they were executed under oath, when no oath was administered. Examiners also found that the majority of the servicers had improper notary practices, which failed to conform to state legal requirements.
4. Examiners found weaknesses in quality control and internal auditing procedures at all servicers included in the review.
Nance… hi… I’m back. Did you catch all of that, my little Banking Committee Chair-Sweetie? And do you have children, Nance? If your kids came home with a report card that read like that, would you say that from now on either you or their father is going to have to check their work before they hand it in at school? I’m betting you’d do at least that, wouldn’t you Nance? Me too, by the way… it would be the only responsible thing to do, Nance, don’t you think?
But, there’s something else, Nancy McClain… I realize you’ve been busy, what with all the legislation you’re not holding hearings on, so I’ll catch you up if you haven’t already heard the news.
The first of the banking and mortgage industry CEOs was criminally convicted last week… the CEO of Taylor Bean & Whittaker, Lee Farkas, is most assuredly headed to the Big House, having been convicted on all 14 counts of wire fraud, bank fraud, securities fraud and conspiracy. You knew that? Okay, I thought you might… but that’s not the part of the story that’s ‘germane’ here, Nance.
Here’s the part of the Taylor Bean & Whittaker story that you need to acknowledge, and I’m quoting from my story about the conviction:
“Taylor Bean’s financial hole grew to over $100 million, so Taylor Bean and a handful of Colonial Bank executives hatched a plan in which Taylor Bean would simply sell hundreds of millions of dollars in mortgages… THAT HAD ALREADY BEEN SOLD TO OTHER INVESTORS… to Colonial Bank. “
Now… let’s put it all together, shall we Nancy McClain?
When you combine what the federal banking regulators said about the servicers being entirely out of control, with no adequate process or audit trails… or anything else for that matter, with the fact just established by federal prosecutors in the criminal conviction of Taylor Bean & Whittaker’s CEO that the same mortgages were sold more than once… what do you have?
I’ll tell you what you have… you have the express need for servicers to at the very least double check to make sure they have the proper chain of title and assignment documents required by existing law in order to foreclose on a home in Arizona.
Because we can’t even be sure that the mortgages were only sold to one investor… as has now been established by federal prosecutors… the same mortgage sold to more than one investor by Taylor Bean & Whittaker..
And, since we have also received confirmation that mortgage servicers, among many other equally damning charges had:
Individuals who signed foreclosure affidavits often did not personally check the documents for accuracy or possess the level of knowledge of the information that they attested to in those affidavits. In addition, some foreclosure documents indicated they were executed under oath, when no oath was administered.
And further, servicers overall:
Foreclosure governance processes of the servicers were underdeveloped and insufficient to manage and control operational, compliance, legal, and reputational risk associated with an increasing volume of foreclosures.
So, in conclusion…
A bill that requires the servicer to be diligent and make certain that the chain of title and related documentation, in compliance with existing laws governing foreclosures in the State of Arizona is in order prior to foreclosing and signs a declaration stating the same prior to foreclosure is entirely warranted, and in fact to not pass such a bill in light of the evidence before us today, would be the equivalent of continuing to allow passengers with box cutters in their carry-ons to continue to fly on commercial aircraft after 9-11.
Do you not see that now that I’ve helped to frame the issues involved properly, Banking Chair Nancy McClain… Senator Michelle Reagan… and Rep. Carl “Principal Reduction” Seel?
Once again, all the SB 1259 would do is require servicers to double check everything so they could sign a declaration that existing Arizona laws are being followed prior to foreclosing. That’s it and that’s all. And in light of the evidence of servicer misconduct and abuses… I think it’s safe to say that many would consider such a bill the most gentle response imaginable.
Nancy McClain had one more thing to say…
Nancy McClain also made a statement about SB 1259 creating a loophole for people who have no intention of paying their mortgage, and I think it has to be mentioned.
Once again, as quoted by The Daily News, McClain said:
“They’ve got a place to live for two, three, four years, however long it takes to get resolved and they’re getting a free ride. So I thought, for those reasons, it was a bad bill and that’s why I chose not to hear it.”
In the spirit of full disclosure, I’m quite sure that Nancy McClain and I do not speak the same language. I’m quite certain that she would not understand me, and I think she’s nothing more than a corrupt political potted plant, owned by the banking lobby and programmed to do only their bidding regardless of the facts before her.
So, with that being said… what in the world is she talking about above? “They’ve got a place to live for two, three, four years,” and then something about how some group is “getting a free ride.” And that’s why she decided it was a bad bill and not to hear it? But, I thought she said that it would offer false hope? And that servicers would still be able to foreclose… so, now she’s saying… what is she saying?
Announcing a Mandelman Matters Contest: Deciphering Nancy McClain
Be the first person to email me with a plausible explanation of what Nancy McClain is saying just above and you’ll receive two tickets to see the hottest upcoming animated feature: Hoodwinked Too – Hood vs. Evil, at your choice of Edwards, Regal or AMC theaters.
It’s easy to win, just read the paragraph above, decipher what the heck the woman is talking about, and send your explanation of what she’s saying and what it has to do with SB 1259 or anything this article is discussing, along with your choice of theater chain and your mailing address to: firstname.lastname@example.org.
The last word: Want to know a secret?
Real quick… do you want to know a secret about where all this resistance to SB 1259 is actually coming from… why the bankers want this bill or any like it to disappear? It’s not the requirement that the servicer sign a document asserting that the chain of title is sufficient to foreclose… how could it be that… these are the same servicers that were perfectly willing to forge hundreds of thousands of lost note affidavits… they certainly don’t care about a declaration.
It’s the private right of action and provision for attorneys’ fees that the bankers cannot allow the rest of us to have.
In case you’re not following me, one of the things that I’ve learned this past year is that there are quite a few laws in this country that lack such provisions, and that means that even if these laws are broken and you’re damaged as a result, you can’t sue because the law doesn’t permit it.
Lawyers call it a private right of action, and it means that you can sue if the other party to the contract breaks the law and you are damaged.
A clear example is found in what are called the HAMP guidelines. It’s no secret that servicers break the rules of HAMP constantly, but the rules do not provide for a private right of action, so even when servicers break HAMP’s rules and you the homeowner are damaged as a result… tough cheese.
The other thing the banking lobby hates just as much, if not more, as homeowners having the right to sue, is the provision that says that if the homeowner wins the suit, the attorney handling the case for the homeowner is entitled to collect his or her fees from the bank who lost the lawsuit. Provisions for attorneys’ fees mean that lawyers can take your case knowing that if they win the bank will be on the hook to pay their fees.
But, notice how no one talks about either issue… Because it doesn’t sound good to say that a homeowner can’t sue if damaged by the bank breaking the law… that stinks, as a matter of fact.
So, under SB 1259, were a servicer to bring in a declaration stating that the chain of title is sufficient to foreclose, but the homeowner didn’t believe the servicer and filed suit… and it’s proven that the servicer’s declaration was false… the lawyer who took that case might be able to collect his or her fees from the bank… so the homeowner could very likely sue in such circumstances without having to come up with a dime.
Okay, so you get it? Watch it closely… if the bill or anything like it looks like it might come back… watch for the end run by the banking lobby to get rid of the private right of action and provision for attorneys’ fees.
P.S. Lots and lots more coming. The lies, spin and misinformation, emanating from the banking industry will not prevail… right always wins out over wrong in this country… eventually. It’s tiring to combat what is happening, I readily agree. In fact, I recently took a month off in an attempt to recharge my batteries… and even so it was hard for me to return to the fight.
People say things to me like: It’s hopeless… we can’t win… no one cares… Americans are too complacent… what can we do? And I tell them that although I understand what they are saying, and am capable of having the same thoughts… none of it is reason to do nothing. None is a rationale to give up the fight. I have a 15 year-old daughter… I’m fighting for her future, not mine.
Then yesterday morning, after having dinner with ex-Ohio Attorney General Marc Dann the night before, he introduced me to Elizabeth Warren… in the flesh… I shook her hand, introduced myself… and we spoke about the fight for the American middle class… what I’m doing… what she’s doing. She asked me to call her assistant at the White House and I will be doing so next week. She is a true American hero.
And, as I drove home from that meeting, I realized without question that if she can continue to fight for you and me… while being shot at from all sides… well, than you and everyone else had better believe that I can and will too. In fact, if you thought I was motivated before… you haven’t seen anything yet.
Hey, banker-people… let’s rock… I’ve written 455 articles exposing your crap and your crimes… I’m not proud… or tired… so what say I do another 455 and we see where we are at that point?
So… and I’ve always wanted to say this… hell’s coming… and I’m coming with it.
Thank you Professor Warren and Marc Dann… we’ll talk again soon… and I’ll keep writing about what matters.
As always, you can contact me at email@example.com.