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PART 2 – Tribune’s Sources and Commentary – Accurate or Deliberately Misleading?
NOTE – This is Part 2 of a fact checking analysis about an article written by a Sarasota Herald Tribune writer and his sources. Because of the lengthiness of the 11 page news article and the fact checking involved, the analysis will be broken up into several postings submitted over several days. I decided to write about this topic because I see attorneys and others reposting the article blindly without knowing the real facts associated with the article and its target – a Nonprofit called keeping Kids in their Home Foundation Corp.
On August 17, 2013, the Sarasota Herald Tribune unleashed an article about a Florida nonprofit called Keeping Kids in Their Home Foundation Corp. (“Keeping Kids”). According to the article written by Josh Salman, Keeping Kids is described as a nonprofit that basically has engaged in a scheme designed to delay defaults through what the writer calls “recurrent bankruptcy filings”. In Part 1 of my analysis of this story, the facts did not support the Heralds position that Keeping Kids had filed recurrent bankruptcies for the purpose of delaying defaults, but instead, showed that Bankruptcy Judge Catherine McEwen, required the first case to be dismissed and refilled because the Debtor – Abundant Life Trust – was not properly name. The 2nd filing was dismissed because this time, although Abundant Life Trust was named, the action was brought by Keeping Kids as Trustee for Abundant Life Trust. Judge McEwen only wanted Abundant Life Trust named in the action and not its Trustee Keeping Kids so again, requested the case be refilled with a new case number. The filings were all done at the direction of the Court and were not recurrent filings for the purpose of delaying defaults as the Herald Tribune publicly reported.
This type of misreporting has placed a cloud over a nonprofit who appears to be taking a very dangerous road to help families keep their families together and stay on the path to the American Dream – homeownership! They have come under fire now and are the subject of great scrutiny. But is what the Herald Tribune and its sources reporting accurate or inaccurate? Was the purpose of the article to report, inform and heighten consumer awareness or was it written with the intent to deliberately defame Keeping Kids and its CEO Aleksandr FIlipskiy in an effort that is perceived to go directly against the banks? Let’s take a look.
The first quoted source in the Article is from Andrew Rose, a supervising special agent with the Florida Department of Law Enforcement (“FDLE”) who states:
“There’s a lot of misrepresentation here. Someone should never deed their house over to anyone without the bank’s consent. These guys are predators. It’s just sad and disgusting.”
The article fails to identify if Agent Rose’s commentary is part of a FDLE investigation or if it’s Agent Rose’s personal opinion and the Tribune is simply identifying who Rose works for. Whatever the details one thing is clear, neither the Herald article nor Agent Rose’s commentary identify exactly what the misrepresentation is let alone what constitutes “a lot” of it. For Agent Rose to state “these guys are predators” without providing any specific factual information to support the comment gives rise to questioning the credibility of the statement itself. Consumers should certainly know if “these guys are predators” based on factual information not because I’m a law enforcement official and I say so. Dangerous waters….
Melody Schimmel whom the article identifies as a certified mortgage fraud investigator and investigative aid for the Sarasota Police Department states:
“This is one of the biggest real estate fraud schemes that’s going on. industry. It’s illegal on so many levels, and there’s just so much of it going on”
however again, there is no specific factual information to support Ms. Schimmel’s comments either. The closest a reader of this article gets to any explanation of anything remotely factual is from sporadic attorney commentary which is still very non-specific. Joseph Lehn, whom the article quotes as a Sarasota foreclosure and bankruptcy attorney although Lehn’s website does not describes nor advertises his in-depth knowledge base of foreclosure defense, states:
“He’s using a loophole to create a business and taking advantage of other people’s misfortune. The system just isn’t set up to catch these people — there are too many foreclosures.”
Lehn and the article fail to identify the so-called “loophole” Lehn is actually referring to as well the facts to support the taking advantage of “people’s misfortune”. Alan Tannenbaum, whom the article identifies as a Sarasota real estate attorney states:
“There’s also a serious question” about whether the quitclaim deeds “are a sufficient transfer of money under that circumstance.”
which is probably the closest comment to the overall issue surrounding all this hub-bub – adequate consideration and did the parties to the transaction(s) actually provide it – a question at the heart of Keeping Kids entire litigation opposition strategy according to pleadings filed in state, federal and bankruptcy court.
According to Keeping Kids and prior pleadings by Filipskiy, Keeping Kids CEO, the arguments begin with whether the original lender actually provided the funding to the transaction which falls in line with the incredible cloud surrounding the securitization of mortgage loans all together. The premise of the so-called arms length transaction described in a Note and Mortgage is that the named ABC Lender lends you X amount of money and you promise to pay that money back to ABC Lender. Then what follows is the common language that ABC Lender has the right to transfer the loan, sell it etc. and you have no say so. But the problem begins with was ABC Lender the actual funding source and did it actually provide the funding to the loan transaction? These are questions that strike at the heart of simple contract consideration questions versus complex contract consideration questions. It begs the question, if ABC Lender was not the funding source to the actual transaction even though it identified itself as the Lender in the Note and Mortgage, was that a material misrepresentation under Florida and other state mortgage fraud statutes? If not the funding source, did ABC Lender provide any consideration to the contractual note and mortgage? Taking it a step further, if it is deemed ABC lender did not provide consideration did it then have any authority to assign, sell or other wise grant any authority to any other party?
The securitization of a loan into the secondary market shed light on some things but creates even more darkness over the life of a homeowners loan. For example, was the purpose of the note and mortgage in a loan the subject of a greater financial strategy and effort wherein it was already known ABC Lender was not going to be the funding source to the loan transaction but would place itself as the named lender for the purpose of hiding the undisclosed funding source from potential liabilities? Is that not in fact more misrepresentation under Florida and other state mortgage fraud statutes not including TILA and RESPA disclosure requirements? Was there two transactions taking place at the same time wherein one was identified to the borrower under the guise of the note and mortgage while the other was completely undisclosed? This is what securitization suggests and provides ample facts to support. In the securitization of a loan, the Sponsor may be the funding source who funds the loan transactions and once complete, the so-called named lender otherwise referred to as the “loan originator” transfers the note and mortgage to the Sponsor who in turn, sells and transfers the note, mortgage and other relevant documents to the Depositor how in turn sells and transfers it to the Issuing Entity which is the Trust each of these mortgage loans were pooled into usually governed under New York Trust Law. As we see more and more Trustee’s coming into court claiming they own the subject debt like U.S. Bank, Deutsch Bank, Wells Fargo and so many others, a valid concern has arisen, is this the party to whom the debt is actually owed to? Different from the question of was the named lender on the note and mortgage the actual funding source to the transaction, if NY Trust Law was not properly followed in the securitization chain as to how loans were actually conveyed, these transfers may very well be void and Trustees coming into court like Wells Fargo, Deutsche Bank, U.S. Bank and so many others may not actually own the subject debt.
In Wells Fargo v. Erobobo, a New York State Supreme Court case, the Court gives one of the most thorough analysis’ of New York Trust Law and the transfer of these securitized loans. The Court clarifies the difference between standing and capacity as a party of interest. Important points in the Court writing are:
- The Plaintiff in this case is Trustee of an asset backed certificate trust. The trust acquires mortgages, pools them and then issues securities secured or backed by the mortgages it holds. The investors receive interest or principle, or both, from the mortgages assigned to those specific securities or obligations.
- The manner in which the trust acquires the mortgages, issues the securities and pays the income from the mortgages to investors, is governed by the trust’s pooling and servicing agreement (PSA).
- The terms of the PSA require that the trust does not operate or take any action that would jeopardize its REMIC status. Section 9.01(f) of the PSA.
- The PSA specifically requires the Depositor to have transferred all of the interest in the mortgage notes to the Trustee on behalf of the trust as of the closing date. PSA Article II, Section 2.05 (iii).
- Mere recital of assignment, holding or receipt of an asset is insufficient to transfer an asset to a trust. The grantor must actually transfer the asset. EPTL §7-1.18.
- The assignment of the note and the mortgage which affected the transfer was dated July 16, 2008, however, pursuant to the terms of the PSA the trust closed on November 14, 2006.
- Section 9.02 of the PSA specifically prohibits the acquisition of any asset for a REMIC part of the fund after the closing date
- Since the trustee acquired the subject note and mortgage after the closing date, the trustee’s act in acquiring them exceeded its authority and violated the terms of the trust. The acquisition of a mortgage after 90 days is not a mere technicality but a material violation of the trust’s terms, which jeopardizes the trust’s REMIC status.
- Section 9.01(f) of the PSA provides that neither the Trustee, the Servicer or Holder of the Certificates shall cause any REMIC formed under the PSA, by action or omission, to endanger the status of the REMIC or cause any imposition of tax upon the REMIC.
- Under New York Trust Law, every sale, conveyance or other act of the trustee in contravention of the trust is void. EPTL §7-2.4. Therefore, the acceptance of the note and mortgage by the trustee after the date the trust closed, would be void.
This is relevant to Keeping Kids position that for a Creditor of a loan that was sold into the secondary market to have a valid claim, it must submit sufficient evidence to prove it is in fact the true party in interest. To do so it must be prepared to explain and prove the above especially when it comes in the name as Trustee for an alleged Trust. Any instance where an Assignment of Mortgage is post trust closing date is in effect a RED FLAG because it suggest a potential fraud has occurred. Readers of every newspaper across the nation have been made aware of these frauds as they apply to robo-signers and MERS Assignments where the authority signing was never an employee of MERS, never received a paycheck but was a vice-president etc. So why does Florida law enforcement officials like FDLE supervising agent Andrew Rose and mortgage fraud aides like Melody Schimmel with over 40 years of banking experience and the many others who are charged with investigating mortgage fraud in the State of Florida and across the country, allow the banks to continuously file these false, misleading and fraudulent documents for the sole purpose of taking something that clearly they are not legally entitled to take? The answer may lay in agent Rose’s comment that no one should ever deed their house over to anyone without the banks consent. Given the shell game the banks play with Sponsors, Depositors, Servicers, Sub-Servicers and the fact that basically all it takes is for someone named Joe Blow to send you a letter in the mail saying “hey there bud, I’m your new servicer start making payments to me now”, who exactly is the bank you should get consent from?
Nonetheless, no different from readers speculating about what facts the Herald Tribune and its sources are relying upon, a particular naiveness is in the air as to who is actually committing a fraud here. So what actually prompted the Herald Tribune to launch this so-called investigation into Keeping Kids? Amazingly enough, that answer is found in a nicely nonchalant paragraph that reads:
An attorney representing one of the creditors caught on to Filipskiy’s efforts in April, asking a federal judge to dismiss a bankruptcy case involving Abundant Life Trust, one of Filipskiy’s shell companies, because it was fraudulent.
This creditor seems to be at the heart of what prompted this article and for everyone to get excited. The question is, does the unnamed attorney or their client creditor have clean hands? That’s an important question as Part 3 of this article analysis will analyze the creditors Chapter 7 Petition to determine if it was completely truthful or did it contain false and/or misleading information that would be deemed criminal under the bankruptcy code. In addition, we will dig into the alleged source that prompted this investigation into Keeping Kids. We will look at who is covered under litigation privilege and can’t be sued by Keeping Kids for tortious interference and defamatory claims versus who may be subject to civil action.