Various Fraudulent Mortgage Transaction Issues – Part II

legal help for homeownersFraudulent Mortgage Assignments

There are a variety of types of fraud which banks engage in related to the assignment of mortgages. Sometimes the assignment contains signatures of individuals claiming to be corporate officers of the bank and/or mortgage company when in fact they were never employed by these institutions. On other occasions, mortgage assignments are signed by individuals who claim to be corporate officers of financial institutions which went out of business or filed bankruptcy many years earlier. There are also many examples of assignments of mortgages which are notarized by notaries who were actually in a different state at the time of the transaction. These notaries never witnessed the signatures of the individuals they notarized.

Ownership of the Note and Mortgage

There is a United States Supreme Court Case which stands for the proposition the foreclosing institution must own the note and mortgage at the time of the initiation of the foreclosure lawsuit. The case is Carpenter v. Longan, 83 U.S. 271. In this case, the United States Supreme Court stated “plaintiff failed to show that it owned the mortgage at the time the complaint was filed.” As a result the court ruled the plaintiff financial institution did not have standing in the foreclosure case. The financial institution must not only be the holder and owner of the original note, but also must be the holder and owner of the mortgage as well. In Carpenter v. Longan, the United States Supreme Court held the plaintiff lacked standing to initiate and prosecute the foreclosure case and therefore the case was dismissed.

New York foreclosure defense attorney IslandElliot S. Schlissel, Esq., is a foreclosure lawyer representing homeowners throughout the Metropolitan New York area. He defends homeowners whose homes are subject to being foreclosed upon. He also helps homeowners obtain mortgage modifications.

Various Fraudulent Mortgage Transaction Issues – Part I

foreclosure defense help in New YorkPhony Appraisals

Many fraudulent mortgage transactions start out with the appraiser coming back with an inflated value of the home for which the purchaser seeks to obtain a mortgage. In cases where the purchaser actually couldn’t afford the home to begin with, the mortgages they were offered were mortgages involving negative amortization. Negative amortization refers to a situation where instead of paying down the mortgage, a portion of the interest gets added to principal and the homeowner ends up owing more money than they started out borrowing.

Truth in Lending Law Violations (“TILA”)

The Truth in Lending Law requires banks to abide by a certain ethical code of conduct. Predatory lending is defined under the Truth in Lending Law as any pattern of conduct in which the actual lender is hidden through subterfuge. Violations of the Truth in Lending Law allow the damaged party to recover their attorney’s fees, and treble damages.

When purchasers attend a closing they sign numerous documents. The two most significant documents are the note and the mortgage. The note is an I Owe You. It is documentation that a debt exists. However, the evidence of the existence of the debt is subject to being rebutted. The mortgage creates a lien pursuant to a written contract. The contract is a contract to enforce the note. If the note is invalid, is unenforceable or can be rebutted, in theory, the mortgage should be able to be set aside. Unfortunately, the courts in New York currently do not see things this way.New York foreclosure defense attorney Island

Citigroup Pays $7 Billion Regarding Improper Mortgage Practices

mortgage modification attorneysCitigroup recently settled with the Justice Department a lawsuit with regard to its being involved with fraudulent practices concerning residential mortgages. As part of the settlement, Citigroup will be expending more than $7 billion.


Citigroup is required under the settlement with the Justice Department to modify mortgages of financially troubled homeowners. However, due to the numerous problems Citigroup has had with regard to financing residential mortgages, they do not have sufficient existing mortgages to satisfy a $7 billion settlement with the federal government. Therefore, in addition to being involved in providing mortgage modifications to its struggling mortgage holders, Citibank has agreed to finance affordable housing to be rented to individuals in “high cost of living areas.”

No Criminal Prosecutions

Commentators with regard to the settlement have found the federal government has not held banks accountable to the level they should regarding the real estate crisis created in the United States by faulty mortgage practices. It should be pointed out no Citibank executives were charged criminally or prosecuted with regard to their fraudulent mortgage activities.

Attorney General Eric Holder however, has indicated the settlement with Citibank does not absolve the bank or its employees of the possibility of facing criminal charges. He went on to state, “the bank’s misconduct was egregious.”

Affordable Housing

Citibank has agreed to provide $108 million for affordable housing as part of this settlement. The rental housing component of the settlement will cause Citibank to provide financing for housing developments may result in financial losses to the bank. Justice Department spokesman Tony West, recently stated regarding the settlement, “we hope this measure will bring relief to families who were pushed into the rental market after losing their homes in the wake of the financial crisis.”

assisting homeowners on Long IslandElliot Schlissel is a foreclosure attorney. He litigates predatory lending issues, bad bank practices, fraudulent mortgage practices, and other issues involving financial institutions. He also helps his clients obtain mortgage modifications. Elliot is the former President of the Commercial Lawyers Conference of New York.

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