Chain of Title

by David Dayen

  In June 2009 a process server finally delivered foreclosure papers to Michael and Jennifer. JPMorgan Chase was listed as the plaintiff, with Florida Default Law Group, the same foreclosure mill as in Lisa’s case, representing them. Michael had met with foreclosure defense attorneys, but he felt he knew more about what was happening than they did. So even before they got served, Michael planned to have his wife act as a pro se litigant (only she could do it, because Michael wasn’t on the mortgage). He assembled hundreds of documents from counties across Florida, with the same signers as in his case, to present to the court. He couldn’t wait to see the faces of the bank lawyers. Jennifer filed a motion to dismiss, kicking off a protracted battle for their home.

  Around this time, Michael set up Google Reader, a website aggregator, to track every news article related to housing, mortgages, and foreclosures. He would crawl through the headlines every day, looking for whatever stood out. He used Facebook, Digg, FriendFeed, and a Twitter feed, @4closurefraud, to spread what he found. Tweeting media stories and blog posts, Michael gained a thousand or so followers who thirsted for foreclosure news.

  Michael would dive into comment sections of the stories Google Reader helped him find, pointing out document fraud and encouraging people to discover the truth. It was his few minutes a day to spread the message, a tentative foray into activism. But comment sections of mainstream media sites, notorious as the seedy back alleys of the Internet, weren’t receptive to idealism of any kind. It was like holding an atheism rally inside a church. “Deadbeat” was the favored term of response. Or “pay your mortgage.”

  The commenting project connected Michael to Susan Martin, the St. Petersburg Times journalist who wrote about Nationwide Title document signers Brian Bly and Crystal Moore. Michael wrote in the comments: “I have researched this in my county records and this is being done to hundreds of documents per month. In most of the cases I have seen, the ‘vice president’ assignors of mortgage are actually employees of the lender it is being assigned to.” Susan Martin asked Michael for evidence. He sent back a stack of assignments from Hillsborough County (in the Tampa/St. Pete area, Martin’s home base). “Hope this is enough to get you started,” Michael said.

  Susan appreciated the research but asked Michael, “How would this story be different from the one I already did on employees of Nationwide Title Insurance signing as vice presidents of various companies?” Michael responded that Nationwide Title was just a cleanup gang; JPMorgan Chase was doing it in-house with their own employees. “They are literally stealing homes that they have no right to for personal gain,” he wrote. Susan saw his point but had other stories to handle. She told Michael to keep in touch.

  Michael liked Lisa almost immediately. They had plenty in common, aside from both being sued by Florida Default Law Group. They were both ordinary people new to this crisis, with no doubts about who was to blame. And they were both so driven to expose the injustice that they could come off a little . . . obsessed. Maybe even crazy.

  So when Lisa asked Michael to write a guide for searching public records, he considered it a good idea. He’d been creating formal presentations since his days at Motorola, and he’d been searching foreclosure documents for a year. It only took a weekend to compile. He gave it the spartan title “Looking Up Public Records,” with a clip art cover that became his calling card: a magnifying glass focused on a house, with the dictionary definition of the word “fraud” swimming underneath. The guide begins:

  Presented here is a guide to looking up public records online for possible forgeries, fabrications and fraud when facing foreclosure. . . .

  During the housing boom, lenders passed around mortgages as if they were whiskey bottles at a frat party. Notes were lost, destroyed, sold into multiple pools. Mortgages were not recorded and exorbitant fees were collected by the big firms on Wall Street.

  Now that the bubble has burst, “lenders” are trying to collect on loans they do not own, in most cases never lent a dime on the transaction. . . . They are steamrolling the courts because hardly anyone is contesting their foreclosures.

  So I started digging around in the bowels of the Internets [sic] to see where this rabbit hole led.

  Using Florida as an example, the guide described precisely, complete with screenshots, how to search official records online. Michael displayed a mortgage assignment and annotated it with questions. Next to one signature, Michael wrote, “MERS as nominee for First National Bank of Arizona, Barbara Hindman, assigning mortgage over to JPMorgan Chase while employed by JPMorgan Chase?” He pasted in Hindman’s and her partner Shelley Thievin’s work histories from LinkedIn to prove they actually worked for Chase. To spot Hindman and Thievin in multiple documents, the guide explained, you simply reverse-engineer the record searches, using the keyword of the foreclosing entity. It wasn’t just Barbara Hindman and Shelley Thievin; the guide included assignments with Beth Cottrell, Whitney Cook, and Christina Trowbridge, all of whom appeared on Lisa’s mortgage documents.

  One document, which Michael dubbed the “Triple Play,” had Bill Koch, signing for MERS as nominee for Pinnacle Financial Corporation, assigning the mortgage over to . . . Bill Koch, of Select Portfolio Servicing. Michael imagined a conversation in court, where the homeowner’s lawyer questioned this activity:

  DEFENDANT: But your honor, he works for the company he is assigning the mortgage to. Isn’t that a conflict of interest, fraud?

  PLAINTIFF: He may be employed by the company that the mortgage is being assigned to, but at the time of the assignment he was acting as a representative of MERS.

  Other examples “appear to be blatant forgeries where they don’t even take the time to match signatures,” Michael wrote, illustrating this by comparing signatures of the same officials on multiple documents. Placing them side by side revealed wide varieties between signatures, allegedly from the same person. Michael explained how to check dates on the assignments, to see if they were filed after the notice of legal proceeding, a proof of fabrication. He instructed how to look up the notaries and check their business address against the address of the foreclosing agent. “I have found notaries that work in the next building over from the pretender lender foreclosing agent,” suggesting an unsavory relationship of notaries signing masses of documents without scrutiny.

  The guide included dozens of suspect signatures, misdated documents, and shady transfers. “There are thousands of them!” Michael exhorted, with “thousands” crossed out and “possibly millions” substituted. Summing up, Michael urged readers to perform their own searches and report back what they find. “Follow the Guide, research these matters deeper, and collaborate with others. . . . Let’s use the Internet in what it was intended for, exchanging raw data between researchers. All the information is there. It just needs to be pieced together.”

  On October 11 Michael posted the guide on Scribd, where you can upload large documents. Lisa immediately posted it on the front page of Foreclosure Hamlet. Michael promoted the guide everywhere—on Twitter, Facebook, and in the comments at Living Lies. “Any feedback is welcomed, good and bad. . . . If anyone needs help finding information on your ‘vice president’ or ‘assistant secretary’ just let me know.”

  Two days after Michael posted it, Karl Denninger, a popular (and rather bombastic) libertarian finance blogger who ran Market-ticker.org, published the guide on his site under the heading “A Birdie on Possible Foreclosure Frauds.” Denninger introduced it by saying, “This is so blatant and outrageous that if the federal government’s law enforcement agencies (e.g. the FBI, et al) do not immediately bring federal charges they must be deemed intentionally complicit. Ditto for the state Attorneys General.”

  The page views started rising: two thousand, four thousand, six thousand, twelve thousand. Michael checked it every half hour at work, and while he didn’t tell colleagues or his wife about it, he could hardly contain his excitement.

  Michael started getting emails and phone calls (his Google Voice number
was on the guide) from across the country, alternately thanking him and asking for help with their foreclosure cases. Many emails were addressed “Dear Sir or Madam”: on the Internet, no one knows you’re a dog. A Texas oil and gas landman emailed, claiming to have assembled 200,000 acres in leases along the Fayetteville shale. “Someone without this background who did this qualifies for some type of award,” he wrote, suggesting Michael start a business helping people file fraud suits against lenders to recover damages. This led to a series of phone calls, with the oilman wanting to enlist Michael in running title on energy leases across Texas. Michael was fascinated but had no idea what to say. It wasn’t long ago that he asked Nye Lavalle for help and was politely rushed off the phone. Now he was on the other end of the line.

  A reporter from the NBC affiliate in West Palm Beach wanted to interview Michael about his findings. Being in front of a camera was the last thing on Michael’s mind. He emailed Lisa and some others to see if they would do it, but nobody wanted to endanger their case or become the foreclosure poster child. This was the box foreclosure fraud activists often found themselves in: desperate to break the story, yet anxious about having their fingerprints on it.

  Michael soon decided that instead of sending traffic over to Living Lies or Karl Denninger, he ought to hold on to it for himself. Using a blog template from WordPress, Michael started 4closurefraud.wordpress.com on October 18, 2009. The first post? The guide to searching public records for fraud.

  While Lisa created a safe space to talk about foreclosures, Michael focused on collecting information about the scandal in one place. He posted links to foreclosure news, court opinions, commentary, and resources. One of his early posts was Nye Lavalle’s report on Scott Anderson and Ocwen (Scott Anderson’s varying signatures made it into Michael’s public records guide, too). The motto for the site was, “Fighting Foreclosure Fraud by Sharing the Knowledge.”

  A week into his new blogging life, Michael heard from Neil Garfield, the man whose site had become a big part of his world over the past year. Living Lies was holding a seminar for homeowners and lawyers on November 1 and 2 at a Sheraton in Clearwater. Would Michael like to give a presentation about how to search public records?

  Michael had never spoken at a conference before. Heck, he’d never given a speech before, at least not to more than five people. It just wasn’t his thing. Michael looked at the calendar: November 1 fell on a Sunday. Going to the conference would break his unwritten family weekend rule. And Clearwater was across the state, he might have to go up the night before, miss Halloween, they were thinking about dressing up Nicole for the first time. There was no way he could agree to this . . .

  “Sure, I’ll do it.”

  7

  WHEN MICHAEL MET LISA

  November 1, 2009

  At daybreak on Sunday, Michael Redman tried to quietly ease out of bed without waking his wife, putting on a shirt and tie and heading out for the Clearwater Sheraton. Jennifer’s eyes peeked open just in time to see Michael walk out of the bedroom. She turned over in the bed.

  The sun reflected off Michael’s mirrored sunglasses as he sped through rural Florida, past herds of cattle and tall reeds of grass sticking out of swampland. He stayed home Saturday night to escort his daughter trick-or-treating; today he would trek three hours to give a presentation to lots of people who wanted to hear from him about highly technical real estate transactions and their paper trail.

  The Sheraton Sand Key resort in Clearwater nestled against a white sand beach, on a strip of land in the Gulf of Mexico. From the top floors you could see deep-blue water on either side. Once Michael arrived, he found a quiet spot in the lobby and opened his laptop, reviewing the presentation one last time. The PowerPoint slides roughly tracked the guide he posted a couple of weeks earlier. A separate file included notes for what to say while each slide was on the screen. For a while Michael toyed with asking Neil Garfield to read the script, so he could stay out of the limelight. But he reconsidered.

  Michael picked up the event schedule for the seminar and found out that he was actually the featured speaker, the final one on the bill. So he’d have the entire day to think about this. He stepped into the big conference room where the seminar would be held. The audience was bigger than he expected, and it looked like a bunch of attorneys, with only a smattering of more casually dressed homeowners. Michael found the only person in the crowd wearing a bright 1970s-style headscarf. He went over and introduced himself.

  “So nice to meet you,” Lisa Epstein said, smiling. With her heels she was a little taller than Michael, and his naturally ruddy complexion made it look like he spent too long in the sun. Lisa asked him where he drove in from. “Port St. Lucie,” Michael answered.

  “I’m in Palm Beach. Wow, we only live about an hour from each other.”

  “I work in North Palm, at the Toyota dealership,” Michael said.

  They walked around together, chatting with other attendees over morning coffee. Michael confessed to being terrified about the presentation, but Lisa told him not to worry: “Tell you what—after the speech, whatever happens, we’ll go get some dinner.” He agreed.

  Living Lies ran seminars from coast to coast, and they all had the same format. The two-day conference split its focus, with one day concentrating on homeowners and one on attorneys, though given the expense, attorneys tended to dominate the room both days. Neil Garfield and his business partner, Brad Keiser, welcomed attendees, and Garfield gave a speech. He would tailor his remarks to wherever he found himself, be it a judicial or non-judicial foreclosure state, and depending on the attitudes and rulings of local judges. But it was usually the same patter. “We’re not going to convert you into lawyers today,” he’d say in his gravelly voice and rumpled, stakeout-cop demeanor. “We’re not going to make you experts in securities and the securitization of loans. We’re going to teach you the basic language and the basic concepts that are important, so that if you have to go to court, you’ll know in a very short period of time whether the attorney, or the judge for that matter, understands a word that you’re talking about.”

  Garfield also supplied an antidote to the truckloads of shame typically heaped on foreclosure victims. “You’ll hear lawyers on the other side say, ‘Well, you didn’t make the payment due and so you’re in default,’” Garfield said. “You will find that in many cases, if not most, they have been paid in whole or in part by federal bailouts or insurance. . . . Imagine if you could insure your house against fire for the full value, and then you could buy another thirty policies just like it. They insured those pools that they knew were going to fail, that they created to fail. They insured those pools thirty times over. So if you had a $300,000 mortgage, courtesy of the U.S. government and AIG, they were paid off $9 million.”

  In other words, banks were rewarded handsomely for their securitization schemes, unlike the poor stiffs living in the raw materials they bought and sold. Holding banks accountable for proper chain of title wasn’t a trick or a technicality; it was the only way to put an end to the thievery. The banks had no place on the moral high ground, especially because their lack of attention to who actually owned the mortgage and note threatened every homeowner in America, regardless of whether they catered to the prevailing standard of being “responsible.”

  What made foreclosure defense such a slog was that each state—each circuit, even—had particular procedural rules. A defense might work on one judge but have no chance in the next courtroom over. Still, the banks’ game plans were identical, whether they pursued foreclosure in California or Florida or Montana: conceal their fraud. “They’re pushing you to the wall. They are doing everything they can to avoid an evidentiary hearing,” Garfield explained. “They are doing everything they can to avoid appeal. . . . They will use every means to intimidate you. They will use every means to fool you.”

  While Garfield warned homeowners to avoid scam mortgage rescue specialists or substandard lawyers, he charged for access to the conferenc
e, asking that people come back more than once. Garfield also marketed “securitization audits,” a forensic analysis that would track down the trust containing a particular mortgage. Garfield’s rivals discounted the importance of these audits in court: the key evidence was not the trust location but the assignments and notes. Sometimes foreclosure relief specialists attacked each other more vociferously than the banks. Vulnerable homeowners had to negotiate a thicket of would-be saviors promising relief for a fee, and it was hard to know whom to trust. But Garfield’s I’m-on-your-side pitch proved persuasive. “I’m on a mission here, I don’t need to do this at all,” he would say.

  After Garfield wrapped up, a few other speakers covered securitization, Florida foreclosure procedures, and other topics. While Lisa awaited Michael’s presentation, her cell phone rang. The number was unfamiliar. She walked out into the hall and answered.

  “Hello, this is the Florida attorney general’s Economic Crimes division. Am I speaking with Lisa Epstein?”

  Holy shit, Lisa thought. It worked.

  Once Michael explained to Lisa how to look up public records and directly identify instances of foreclosure fraud nationwide, she felt compelled to inform pretty much everyone. Whitney Cook could not be working for ten different banks simultaneously, and people had to know she was claiming this. So Lisa initiated a rule. She would send five letters every night to law enforcement, regulatory, political, and media figures across America, presenting her findings and urging them to investigate the Great Foreclosure Machine. It didn’t matter how big or small their office or jurisdiction. She would start with Barack Obama and work her way down.