Chain of Title (20 page)

Michael fired up his laptop the second he got home. He grabbed a copy of the BOGUS ASSIGNEE document from the Nassau County public records. By seven o'clock the next morning, he published it at
4closureFraud
. “
Looks like DocX's ‘art department' forgot to change the wording on their assignment of mortgage template before they filed this one.”

At four o'clock that afternoon, Michael saw a comment on the post from a familiar name, DinSFLA. “
Wait . . . there is more. INCREDIBLE,” DinSFLA wrote, with a link to a YouTube video. DinSFLA was the online nom de plume of Damian Figueroa. Like Michael, he couldn't stop thinking about the BOGUS ASSIGNEE document from the previous night's happy hour. So he ran a search in his home county, Broward, and found another one.

“
I am going to show you something that is going to make you extremely mad,” Damian's video began. He stuck the original BOGUS
ASSIGNEE document next to a new mortgage assignment, also created by DocX, for a home in Pembroke Pines, Florida. It used the same language as the original document: “hereby grant, bargain, assign, transfer, convey, set over and deliver unto BOGUS ASSIGNEE FOR INTERVENING ASMTS.” Damian also showed the book and page number, so anybody watching could call up the document themselves. Korell Harp, the jailed identity fraudster, was the vice president of the mortgage servicer, Qualified Financial, on this assignment. Damian finished the video by channeling the expected thoughts of the average viewer: “Seriously, this has got to be a joke.”

In Michael's experience searching public records, as soon as you find two of anything, with a little persistence you can find thousands. So he started digging, and by the end of the day he tracked down seven more BOGUS ASSIGNEE documents. A couple of them added a new wrinkle: the company doing the transferring was also absent, replaced on the template with A BAD BENE, short for “a bad beneficiary.” The signers of the document were from the company transferring the mortgage (at least that was the theory), so right on the assignment, Korell Harp was listed as the vice president of A BAD BENE. The person who made the DocX templates had a wicked sense of humor.

Michael posted a new story with the headline “Bogus Assignee for Intervening Asmts All Over the Public Records!” He stressed that judges were allowing foreclosures to proceed based on obviously phony documents.
Karl Denninger picked up the story.

Lisa and Michael talked all day about these assignments, which seemed so blatantly fraudulent that they couldn't be ignored by the media. The more they could track down, the bigger they could build the story. So they brought in Damian and Lynn and decided to split up the country. For the next seventy-two hours the four researchers would divvy up every searchable public records database in America and look for BOGUS documents. Because they didn't have the funds to pay search fees, this limited them to Arizona, California, Florida, Georgia, Kentucky, Illinois, Michigan, and Nevada. But that included all four of the “sand states,” those hit hardest by the housing bubble's collapse. There would be hundreds of thousands, perhaps millions, of records to search. Lisa called the operation “Project BOGUS.”

Damian emailed Lisa that day: “Wowzers! That Linda Green has like 20 different signatures!” Lisa replied: “Only 20? Keep looking!”

That week felt like a dam bursting. Lynn brought the BOGUS assignment to the happy hour on Tuesday. More BOGUS documents were found on Wednesday. On Thursday, while Lisa, Michael, Lynn, and Damian searched for more, the Florida Supreme Court amended its rules of civil procedure. They accepted the recommendation of the foreclosure task force, endorsed in Lisa's comment letter, to require plaintiffs to review and verify ownership of the note and the accuracy of all documents in their complaints prior to foreclosure. The court specifically established the amendment to “
prevent the wasting of judicial resources” on lost note counts and lawsuits brought without standing to foreclose, and “to give trial courts greater authority to sanction plaintiffs who make false allegations.” The court also specifically acknowledged to Lisa that she made “
well-reasoned arguments.”

That next day, Friday, was the rescheduled hearing for Lisa's motion to dismiss for lack of prosecution. This time Judge Sasser called the hearing to order promptly at 11:05 a.m. Lisa approached the podium with butterflies in her stomach. But the adversary in the case, the David J. Stern law firm, did not even send a representative. Judge Sasser told Lisa she put a call in to Stern's office, and after a short recess the judge decided to proceed without them.

Judge Sasser asked Lisa to state her name for the record. For months Lisa had watched this judge stand mute, while homeowners lost their homes to foreclosure, without ever casting a critical eye at the evidence. But her broad smile didn't betray any frustration. “My name is Lisa Epstein, I am here as an interested person, not a party to the case.” The judge asked Lisa if she served the sixty-day notice for lack of prosecution, and Lisa replied that she sent the plaintiffs notice by fax and mail. After verifying that, Judge Sasser looked straight at Lisa and said, “I've read the entire court file, I've read your motion, and I'm going to grant your motion.”

Lisa went silent for a second. “Motion to dismiss granted?”

“Motion to dismiss granted.”

A tear started to form in Lisa's eye. She could hear her heart beating. “Are you okay?” Judge Sasser asked. “Do you need some tissues, Ms. Epstein?”

“No, ma'am.”

The motion to dismiss was without prejudice, so U.S. Bank could always refile. But for the moment it actually worked. An “interested person” without legal training, Lisa got a foreclosure case kicked out of the Palm Beach County court system. Judge Sasser told Lisa she could have the lockbox taken off the door of the home.
Tami and Vincent Savoia could move back in if they wanted.

Before going home, Lisa stopped off at a bar and had the most satisfying glass of wine of her life. When she finally got home, she scanned the one-page order granting the motion and posted it at
Foreclosure Hamlet
. The caption read, “
Happy Valentines Day America! This is for you!”

By Sunday night, the volunteer research team—Lisa, Michael, Lynn, and Damian—downloaded thirty-six BOGUS ASSIGNEE documents, at least one in all eight states tested. None of them believed these were the only BOGUS documents out there; they came from just a few days of limited searches. “The Whole Country Is Bogus,” read the headline at
4closureFraud
Monday morning. “
At first I thought it was some kind of joke,” Michael wrote. “Well it is, and the joke is on all of us. Doesn't anyone look at these papers before filing them? Do the courts even care they are allowing people's homes to be taken away by some BOGUS document?”

Lisa punctuated her update on Project BOGUS at
Foreclosure Hamlet
by quoting the English dramatist John Webster:

       
Let guilty men remember, their black deeds

       
Do lean on crutches made of slender reeds.

A week later, Tom Lyons of the Sarasota
Herald-Tribune
wrote about the BOGUS documents. And in April, acting on a tip from Lynn,
the
Wall Street Journal
ran a story about DocX and its parent company, Lender Processing Services. The paper published several examples of mortgage assignments “that incorrectly claimed an entity called ‘Bogus Assignee' was the owner of the loan.” A spokeswoman for LPS reassured the reporters that the word “BOGUS” was merely used as a placeholder.

12

THE REVOLUTION WILL BE BLOGGED

February 2010

Matt Weidner, the young JEDTI warrior, sat in his office on the second floor of a historic building on Mirror Lake Drive in St. Petersburg, the light dancing on the lake in the warm sunshine. When not in court, Matt was usually in this office, blogging. His secretary buzzed that he had a call.

“Hey, I've been following your blog and I wanted to let you know what was going on,” the voice on the other end said.

“Who is this?”

“My name's Michael Redman. Do you know the FBI, CIA, and Department of Justice have been coming to your site?”

Matt, who knew Michael's name from
4closureFraud
, was as used to receiving strange phone calls as any lawyer. But this seemed a little outrageous. Nevertheless, when he installed Michael's tracking software and checked his site's visitors, he saw the same IP addresses: FBI, DoJ, even state agencies and district courts, from which people logged onto the site at crazy hours—3:00 a.m., 4:00 a.m.

Michael tracked visitors with a program called Stat Counter, and it may have been his favorite part of running his own site. It monitored activity in real time, so he could see individuals come in and out, click on different links, and so on. This was Michael in his element: in the shadows, watching those who watched him. In one week in February 2010,
4closureFraud
logged visits from Georgetown University, MERS, Lender Processing Services (the parent company of DocX), the county of Los Angeles, and, oddly, a
Dairy Queen. On February 22, someone from DocX popped around the site for four hours, visiting dozens of different pages. Practically every mortgage servicer, foreclosure mill law firm, major bank, regulator, and law enforcement office spent some time on Michael's site. And he watched them all.

Michael devised a simple yet labor-intensive system for
4closureFraud
, through his optimized Google Reader feed. He took in headlines from all major news sites and scraped the Web for stories tagged with several keywords (like “foreclosures” and “evictions”). This allowed Michael to find obscure reports that other people might miss. On February 13, WINK News in Fort Myers profiled
an anonymous homeowner, “Mark,” who made a modified mortgage payment to Bank of America that they erroneously posted 40 cents short. As a result of BofA's mistake, Mark was headed into foreclosure. A week later, an NBC affiliate in Moscow, Ohio, reported on a
man facing foreclosure who decided to bulldoze his own home rather than give it to the bank. Only Michael was digging up all these random bits from local news affiliates or small-town papers, revealing the crisis at its most personal level.

But it took tremendous effort. All told, his Google Reader would reel in around thirty thousand new headlines every single day. And between waking up and going to bed, Michael had to scan every headline and mark them as read, getting thirty thousand down to zero. If he didn't, the unread headline count would rise to fifty thousand the next day. Bloggers checked off their Google Reader headlines daily the way farmers cleared invasive plants. You had to cut back the kudzu constantly, or more would return. So it became an all-consuming demand, bigger than Michael's job at Toyota, bigger than his family, bigger than everything. It weighed on his brain while he slept, and hung over his every move while awake. And out of those thirty thousand headlines a day, Michael would pull maybe three stories.

As the site grew, Michael annotated posts with images, though his graphic design skills were fairly crude. Someone named Howard Davidson contacted Michael and offered to build graphics, from parodies of bank logos to clever-looking Photoshops (one altered a For Sale sign to say “No Sale by Owner—Clouded Title”). Later Michael met Howard in New York and discovered that Howard was a woman. She was in foreclosure and
didn't want to reveal her identity, even to Michael, but the graphics allowed her to make a contribution to the cause.

Michael didn't just aggregate local foreclosure horror stories. He published dodgy documents, recent court opinions, and his own research. He briefly featured a “Foreclosure Fraud of the Week,” taking ten Palm Beach County foreclosures at random and picking the one with the most fraudulent documents.
(The winner the first week had an allonge with an obviously Photoshopped endorsement. The signature had a looping
y
that dipped below the line, at which point the line disappeared.) He would track down authors of interesting rants or opinion columns and ask permission to cross-post.
One of the first was Sam Antar, the former CFO of Crazy Eddie, who served jail time for fraud and penned inside stories about how he ripped off the public. Another was Matt Weidner.

Matt and Michael maintained a healthy rivalry, competing to be the first to post key depositions or rulings. They shared many sources, so the race to publish would often involve being in the right place at the right time. Matt had an employee in his office handle the blog when he was away from a computer. Once when Matt was on vacation, a juicy filing came out, and he frantically struggled to call his office while driving, imploring the blog minder to throw it on the site. Lisa would sometimes forward documents she found, copying Michael and Matt. Michael would call Lisa and say, “Can't you just send things like that to me first?”

At its height,
4closureFraud
received half a million unique visitors a month, modest compared to the
New York Times
but substantial for a niche website. And there weren't just one or two sites but a network, a foreclosure fraud blogosphere. Michael had
4closureFraud
; Lisa had
Foreclosure Hamlet
; Lynn had
Fraud Digest
. There were blogs by lawyers like Matt Weidner and Mark Stopa (
stayinmyhome.com
). There was Martin Andelman at
Mandelman Matters
and Jack Wright at
MSFraud
and Mike Dillon at the
Home Preservation Network
and Denise Richardson at
GiveMeBackMyCredit.com
, all of whom had been around for years. There were newcomers like Damian Figueroa, who started
Stop Foreclosure Fraud
after Project BOGUS, and Virginia Parsons at
Deadly Clear
. On really big stories, finance blogs like Karl Denninger's
Market Ticker
or
Zero Hedge
or
Naked Capitalism
would jump in. The bloggers amplified each other's posts, so one
site's reach wasn't limited to its own readers but could spread throughout the entire network. Everybody read and gained insights from each other. They weren't officially working together, but they operated like a team.

Once Lisa welcomed more visitors to
Foreclosure Hamlet
, she knew she had built exactly what homeowners fighting foreclosure needed. Americans have what counterparts in other countries might call a curiously personal attachment to their homes. They don't see it as just a domicile, or as collateral against a promise to pay. The home is a repository of memories, an investment in financial security, and a reflection of self-worth, all wrapped into one. The home is where their kids learned to walk and talk, where they signified their commitment to marriage and family, where they exemplified their arrival to friends and neighbors. One
Foreclosure Hamlet
reader wrote Lisa of his deep affection for the tree in his backyard, which held a swing he used as a child. He couldn't lose his home any more than he could lose his heart. For him and so many others,
Foreclosure Hamlet
represented the most important resource in the world.

The site's best asset was its community. Paralegal Alina Virani was a constant presence, highlighting new cases and legal strategies. Ronald Gillis, a notary from Port Charlotte and a
pro se
litigant for three years, hung out at the site and would drive 150 miles to attend the happy hours. Andrew “Ace” Delany, one of the moderators, always left positive comments. Like Ace, Paul Muckle also hailed from Massachusetts. As a
pro se
plaintiff, he filed a lawsuit against every sitting governor and Presidents George W. Bush and Obama, arguing that mortgage abuse violated the Fourteenth Amendment to the Constitution. He sought no monetary damages, just
a cease-and-desist order on every foreclosure in America. Muckle uploaded several videos about property rights, much of the information pulled from an eighteenth-century manuscript he found in his house. He also posted alien videos.

Kim Thorpe, a stay-at-home mom from Harrison, Maine, went by “KT.” She posted a comment on
Living Lies
late one night, explaining how the local sheriff handed her foreclosure papers even though she never missed a mortgage payment. The first response came from Ace, recruiting her to
Foreclosure Hamlet
. She joined up in March 2010 and never left.

After the victory on the motion to dismiss for lack of prosecution, Lisa wanted to follow up by sending sixty-day notices on dead dockets all over
the state. Lisa even checked with the Florida bar, making sure she could continue to file as an “interested person” and not get sanctioned for unlicensed practice of law. In the meantime, she paid to have Palm Beach County run a report on all cases with no docket activity for over ten months. Andrew Delany called other counties, but they wanted cash up front to produce the report. When Palm Beach County's data came back, they found thirteen thousand cold cases. So just sending a notice to each party would cost tens of thousands of dollars. Lisa needed a grant to get the project off the ground, but it never came together. In fact, Lisa was about to lose a source of income, not gain one.

She could not concentrate anymore. Previously a hard worker, she performed her nursing duties less capably, preoccupied with foreclosures and unendorsed notes and fabricated assignments. Projects filled her head: letters to public officials, requests for grant assistance, lists of documents to examine. Many days Lisa would stop in the small chapel before work and look up at the ceiling, whispering, “I need some guidance here.” She felt impossibly entangled in a strange world. Returning to a normal routine would be like climbing back up the sheer sides of a deep hole. Oncology nursing was a good job at a time when there weren't many good jobs available. But though Lisa didn't know where her foreclosure obsession came from, she finally decided she had to see it through.

She went to management and told them she wanted to take a leave of absence. An administrator asked her if she was experiencing menopause, and she said no. “This is a huge story and I have to work on it,” she told them. The practice had always accommodated her requests: they gave her maternity leave in 2007 and sick leave for Jenna in 2009, and they let her restructure her schedule to a four-day work week. And it initially looked like they would accommodate her again. Lisa trained her own replacement before the leave of absence. But in March 2010, before she officially left, she was fired. The cancer center never gave a reason; Lisa believed they wanted to save a buck instead of paying two nurses for one job. Under Florida law, fired workers were ineligible for unemployment. Lisa checked her savings and made some calculations. Stopping payment on the Gazetta Way mortgage in 2008 allowed her to rebuild savings; if she cut way back, she could use the money to keep herself and Jenna fed for a while.

Lisa had gone from married and employed to no husband and no job in just over a year. And yet she was doing exactly what she wanted.

Lynn Szymoniak, along with co-counsels Dick Harpootlian and Ken Suggs, filed a class action lawsuit in U.S. District Court in Florida on February 17, 2010, on behalf of four plaintiffs picked up through newspaper ads.
Michael posted the complaint on
4closureFraud
, of course. Lynn sued two trustee banks, Deutsche Bank and U.S. Bank, and their third-party document fabrication providers, Lender Processing Services and DocX, for violations of the Fair Debt Collection Practices Act. The complaint distilled Lynn's six-week whirlwind of research to twenty-nine pages. She summed it up succinctly: “The entity seeking to foreclose can never prove the chain of ownership.” That was the original sin, the failed securitizations that broke chain of title by neglecting to transfer notes and mortgages to the trusts. The document fraud merely covered this up.

Though filed on behalf of only four plaintiffs, the lawsuit asserted that the class action could include thousands of similarly situated homeowners. The complaint sought damages incurred in the foreclosures plus the maximum allowable $1,000 per class member in statutory penalties, along with attorney's fees. More important, Lynn hoped, a successful class action would bar trustees from foreclosing with false documents.

The case was assigned to William Zloch, the most conservative judge in the Eleventh Circuit. Dick and Ken were wary of trying the case in front of an ideologue, but Lynn said, “Maybe that's who we want! He sentences harshly in white-collar cases!” However, presumed allies at the National Association of Consumer Attorneys went ballistic, screaming at Lynn on the phone for days, calling her unsophisticated in consumer law and bound to lose. Lynn figured these consumer lawyers wanted to protect their turf from well-heeled attorneys like Dick and Ken. Finally Lynn got a message from a legal services office in Chicago: “I hated to do it, but you didn't return my last two calls, so I just filed a bar complaint against you.” Lynn hadn't received a bar complaint in thirty years of practicing law. She called the man back to yell at him. He replied, “You don't know what you're doing!” The attorney explained that an unreported Eleventh Circuit case held that
the Fair Debt Collection Practices Act didn't apply to banks. He said Judge
Zloch would take the opportunity to extend that to servicers and trustees. “You're going to screw us all!”

Lynn found the unreported case and broke the news to Dick and Ken. Luckily, they were able to withdraw the case before the judge entered orders or served anyone. The worst part was calling the plaintiffs, homeowners in the middle of foreclosure, and telling them that the case had to be dropped.