Banks quietly reducing principle balances for favored few while homeowners in foreclosure are denied loan modifications

Nicholas M. Moccia, Esq.
Law Offices of Robert E. Brown, P.C.

On July 3, 2011, the New York Times reported that banks such as JP Morgan Chase and Bank of America were quietly modifying loans for tens of thousands of borrowers who were not even in foreclosure, going so far as to reduce reduce principle balances by 50%.  This is unheard of for borrowers actually in foreclosure who are purportedly given the opportunity to apply for loan modifications.  In particular, the kind of loan that seems to be getting this special attention is the so-called pay option adjustable rate loans, which were popular in the wild late stages of the housing boom but which banks now view as troublesome.  Most troubling of all is observation of Adam J. Levitin, a professor of law at Georgetown University who observes:

Loan modifications that should be happening aren't happening, while loan modifications that shouldn't be happening are.  Homeowners of any sort, whether current or in default, would rightly be confused and angered by this.

I would like to credit Paula Odellas for bringing this article to my attention.

See original article below.  There is a zoom in option at the bottom of the frame. 


NY Time Article reporting on banks reducing principle balances for at risk loans

Judge Arthur Schack identifies three robo-signers in HSBC Bank USA, N.A. v. Taher and threatens to sanction HSBC CEO Irene M. Dorner!

Nicholas M. Moccia
Law Offices of Robert E. Brown, P.C.

Judge Arthur Schack of the Supreme Court of the State of New York, County of Kings, has identified three individuals as robo signers in a recent foreclosure commenced by HSBC Bank and its counsel, Shapiro Dicaro & Barack, LLP.  See HSBC Bank USA NA v. Taher, 2011 NY Slip Op 51208(U)(Sup. Ct. Kings County July 1, 2011).


The three individuals identified by Judge Schack as robo signers are Scott W. Anderson, Margery Rotundo and Christina Carter.

With regard to Scott Anderson, Judge Schack notes that he is aware of at least five distinct signatures on the various documents purportedly signed by Mr. Anderson in the furtherance of foreclosures.  Judge Schack cites an article in Palm Beach Post, "State details foreclosure crisis," by Kimberly Miller, dated January 5, 2011,  wherein she reports:

As foreclosures mounted, the banks appointed people to create assignments, "thousands and thousands and thousands" of which were signed weekly by people who may not have known what they were signing . . .In another example, the signature of Scott Anderson, an employee of West Palm Beach-based Ocwen Financial Corp., appears in four styles on mortgage assignments . . .

 In addition to the signature variations, Judge Schack notes Mr. Anderson's frequent, apparent conflicts of interest by signing off on transfer documents in what appear to be arms length transactions between various financial institutions.  One day Anderson signs for MERS in an assignment to HSBC, another day he signs for HSBC in an affidavit of merit, then he signs for Ocwen which services loans for HSBC, all the while posing as a corporate officer for each of these respective entities etc.  According to HSBC, Mr. Anderson has authority to sign for all of these entities, but all too often HSBC is unable to produce the requisite power-of-attorney to demonstrate Mr. Anderson's signing authority.

Similar irregularities were noted by the Court with regard to Margery Rotundo and Christina Carter as well.

Judge Schack ultimately dismisses this action for lack of standing.  Referring to the new Second Department decision Bank of New York v Silverberg, (___ AD3d ___, 2011 NY Slip Op 05002 (2d Dep't 2011)), Judge Schack notes that MERS cannot effect a valid assignment of mortgage unless it is the holder of both the note and the mortgage.  It has become well established that, as a matter of industry practice, MERS hardly ever is the holder of the note, and is given no authority with regard to the note.  For this reason, MERS assignments are not valid for the purpose transferring the requisite ownership interest and authority to commence a mortgage foreclosure.  In the instant matter, HSBC was the purported assignee in a MERS assignment.  For this reason, Judge Schack held that HSBC did not have standing to commence this foreclosure due to MERS inability to effect a valid mortgage assignment.

Most extraordinary of all, Judge Schack issued a court order  pursuant to 22 NYCRR § 130-1.1 requiring Plaintiff's counsel, Shapiro and DiCaro, as well as the CEO of HSBC, Irene M. Dorner, to show cause why the Court should not sanction the Plaintiff's CEO and its counsel.  With regard to Irene Dorner, Judge Schack notes:

[Irene M. Dorner] should not only take credit for the fruits of HSBC's victories but must bear some responsibility for its defeats and mistakes. According to HSBC's 2010 Form 10-K, dated December 31, 2010, and filed with the U.S. Securities and Exchange Commission on February 28, 2011, at p. 255, "Ms. Dorner's insight and particular knowledge of HSBC USA's operations are critical to an effective Board of Directors" and Ms. Dorner "has many years of experience in leadership positions with HSBC and extensive global experience with HSBC, which is highly relevant as we seek to operate our core businesses in support of HSBC's global strategy." HSBC needs to have a "global strategy" of filing truthful documents and not wasting the very limited resources of the Courts. For her responsibility she earns a handsome compensation package. According to the 2010 Form 10-k, at pp. 276-277, she earned in 2010 total compensation of $2,306,723. This included, among other things: a base salary of $566,346; a discretionary bonus of $760,417; and, other compensation such as $560 for financial planning and executive tax services; $40,637 for executive travel allowance, $24,195 for housing and furniture allowance, $39,399 for relocation expenses and $3,754 for executive physical and medical expenses.