Question:

I need to consult regarding a lien on HELOC on my house. The original note holder sold it to another bank immediately at the close of escrow in 2005. I paid the bills to the company that bought the loan until I filed Chapter 7. No recording of transfer. Debt was discharged on Chapter 7. HELOC debt disappeared on my credit report since. However, October 2016, I received collection notice from FCI Lender with threat of foreclosure if I did not pay. I found out that MERS as nominee for original lender assigned the note to a Residential Trust. Is it legal for original lender to sell the note again after it has been sold already let alone the note technically has no value as been discharged in Chapter 7? And the lien still holds even after Chapter 7 discharge, so they say. So, confusing.

I need some legal advise.

Thank you,
Felicidad

Answer:

Felicidad,

Thank you for the clarification. I have a few more questions. See below.

(1) You purchased the home you still live in today in 2005 (please confirm that it is your primary residence). Was your original mortgage registered in the MERS system at closing or after closing (if you know)? Do you have copies of your original closing documents?

(2) Not all, but most HELOCs are lines of credit in second position. Was your HELOC in the form of a first or second mortgage? If it was a second mortgage, when was it issued and by whom (if you know)?

(3) Have you ordered any property reports from our records department? If yes, would you mind forwarding a copy to me because I’m in the client services department.

(4) Have you been in contact with Residential Trust? Is FCI the current owner of the HELOC note?

(5) After the laws loosened and brokers began trading mortgage securities in the 90s, the MERS system was created by the mortgage industry so that every time a noteholder sold the note, the transfer would not have to be recorded at the county recorder’s office. The idea was, and still is, that it would be more efficient and save recording fees. Unfortunately, MERS was overwhelmed by the volume of the transactions and many have complained that the transfers/documents were not all properly registered in their system. Some people believe that MERS was created to hide the volume of transactions, but whatever the reality is, MERS is still used today and they offer assistance if you have missing documents. Here’s the link in the event you don’t have it: https://www.mersinc.org/homeowners

(6) Do you have copies of your bankruptcy documents? Was the HELOC (assuming it’s in second position) included on the list of creditors to be discharged? If it was a first mortgage, but you still have the home, then I’m confused and I will need some more information about that.

Bear with me – once I understand the facts, I will be able to refer you to an attorney who understands these issues. It’s easier when you are prepared with the facts the attorney needs to understand your legal issues, and when you make contact with the right attorney in the first place. Being referred from one lawyer to another until you find one who has enough experience in a particular area can be time-consuming and frustrating.

I look forward to hearing from you.

Thank you,

Jeannie B.
Client Services
www.UsTitleRecords.com

Client response: 

Hi, Jeanie. Thank you for your quick response. Answers to your questions are the following:

1) Yes, it is my primary residence. The original mortgage (HELOC) was registered in MERS system. I don’t know before or after closing. There was a page on these docs telling me that the loan was sold immediately to Countrywide which is now Bank of America. I paid the bills on heloc to Countrywide then to Bank of America when Bank of America purchased Countrywide. I know Bank of America and Bondcorp are members of MERS. Bondcorp Assignment of Deed has been officially recorded mentioning MERS as the nominee. Yes, I have copies of original documents. But I just noticed that my copies were not signed by either parties. But I have copies of the Recorded Note with signatures I got from County Recorder. I have the original closing docs for both my first and second (heloc). My first was with Bank of America which was transferred to Nationstar. No MERS involvement on my first.

2) My HELOC is in the form of second mortgage. Issued by Bondcorp Realty Services which immediately sold to Countrywide in March 2005. Last time I checked on MERS, Bondcorp still showed as the owner of the HELOC. That was two weeks ago. I tried to check today .For some reason, I cant remember the link or website. As of this morning, the servicer on MERS registry shows Realtime Solutions,Inc., Status-inactive. Investor-Bank of New York Mellon. Question: Why is Bank of New York Mellon still showing as the Investor if MERS already assigned/sold this note to 2005 Residential Trust 3-2? How can Bondcorp sell a note again that was already sold to Countrywide?

3) No I haven’t I ordered records from your website. I already got reports from Orange County recorder here in California before I found you. I wondered if your records were different from county recorder’s so I asked you the question; your answer was no. However, my searches could be different from yours. I did my searches under my name only. I might have missed relevant info.

4) I am in the middle of settling this junior lien. I have an attorney communicating to FCI Lenders. I have done some research to help with negotiation. I have consulted with Neil Garfield who is in Florida. He does not have a license in California. The current owner of the note currently as per Assignment of Deed of Trust is 2005 Residential Trust 3-2 located in San Francisco, California. FCI is the collection agency working for Parktree Investments. Parktree Investments formed this trust it seems. This whole thing is confusing to me. As I’ve said, Bondcorp Realty was still showing the owner of the note in MERS website the last time I checked which was 2 weeks ago. I cant seem to find the link anymore.

5) I have researched a little bit about MERS. I have read about the fraud regarding MERS and some legal problems involved in their transactions in the past. I don’t know if the problems have been corrected. I understand too that MERS can transfer/sell without recording officially in the county recorder among members. It’s common practice. The question is, what they are doing which cause this confusion and gaps in the chain of ownership of the notes is legal?

6) I have copies of bankcuptcy docs. HELOC is second position and been discharged in bankruptcy in 2012. Greentree was the servicer then so it was Greentree that was listed for this particular account. The HELOC has not appeared on my credit report since discharge. I have not checked today but I doubt that they will put it on since that would be a collection attempt which is prohibited in Chapter 7 discharge.

You are right about the importance of working with the right attorney. I have gathered information that I thought would be material to the negotiation. I gave them to my attorney and he did not think that they were relevant. Maybe, he is right. Nevertheless, I want a second opinion. I want to make sure that we are talking or dealing with the rightful owner/holder of the note. Bondcorp already sold the note to Countrywide and I was paying to Countrywide then Bank of America. I never paid to Bondcorp and if I did probably only one time or two. Then Bondcorp after 12 years all of sudden sold the note which supposedly did not have any value to 2005 Residential Trust 3-2? On the Assignment, it says; “For Value Received”. What I can think of is they (whoever they are) saw that the value of the property has gone up so they will try to get something whatever they can; either I pay off or they foreclose. So, I’m now in the middle of that settlement. 2005 Residential Trust denied our offers, first and second times. They want full value paid. My original loan was $87,500 in 2005 paid thru 2010. Defaulted in 2010 filed Chapter 7 which was discharged in 2012. Now their assessment as of November 2017 my total is $137,500. FCI has been sending me bills since October 2017 of course with normal standard disclaimer on bankruptcy that it is not an attempt to collect.

By the way, my attorney representing me to settle is a bankruptcy lawyer, not my original lawyer though. His approach was telling them that I am reopening my Chapter 7 to convert it to Chapter 13 and do a lien strip. However, I want to get a second opinion from an attorney who has experience or expertise on this transfer of notes which got so confusing to me. How could a Residential Trust be a recorded owner when my loan was already sold to Countrywide and I was paying to Countrywide then Bank of America. MERS if it assigned the note to 2005 Residential Trust 3-2 would it not show in the registry that 2005 Residential Trust 3-2 is the new owner and the investor? Bank of New York Mellon still shows as the investor. Real Time Solutions Inactive Servicer. Does not MERS have a legal obligation to change that on their registry? Also, does the original note holder have an obligation to inform the borrower that the loan has been sold to another lender as did Bondcorp inform me when it sold my heloc to Countrywide. Bank of America snet me a copy of the recorded assignment when it transferred and assigned the deed of trust on my first to Nationstar Mortgage now called Mr Cooper. I did not receive any notice of sale from Bondcorp or MERS when it recorded the Corporation Assignment of Deed of Trust to 2005 Residential Trust 3-2. I only found out after I went to County Recorder to verify information when I received notice of collection from FCI Lenders with threat of foreclosure.

I hope I answered most of your questions if not all. I would be very appreciative if you can refer me to the right attorney.

Sincerely,
Felicidad

Answer: 

Felicidad,

I suggest double-checking with MERS to get as much information as possible. I included the link in my original emails but here is is again: https://mersinc.org/homeowners.

I would also put together a timeline leaving blanks where there is missing information. Include as attachments any and all documents you have in your possession (preferably with dividers and numbered tabs) and anything you are able to get from MERS. For example:

00/00/00 (date of closing) – Closing documents (1)
00/00/00 – Note assignment from ______ to _______ (2)
etc. . .
00/00/00 – Chapter 7 bankruptcy (numbered tab w/ copy of BK documents including list of creditors discharged in bankruptcy)
00/00/00 – Chapter 7 bankruptcy discharge
etc. . .

Please make sure to include copies of the foreclosure letters/documents/notices/filings, etc. – also in chronological order.

I would then summarize all your legal questions, i.e., were all the assignments legal, does the entity have legal standing to foreclose, etc. Also, you will want to summarize any pending negotiations, and disclose whether and to what extent you are represented by a lawyer now. Based on what you have described, it sounds you may benefit from consulting with an attorney who has experience with wrongful foreclosures and a bankruptcy attorney. It might be most convenient to consult with a lawyer or firm that handles both.

Below are two law firms you may want to contact:

http://www.mcfarlinlaw.com

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Please let us know if you have additional questions or need more information.

Thank you,

Jeannie B.
Client Services
www.UsTitleRecords.com

Felicidad,

I do not know what kind of legal timelines are relevant to your issues. To be safe, I’d like to suggest that you contact an attorney for assistance as soon as possible.

Thank you,

Jeannie B.
Client Services
www.UsTitleRecords.com

See below:

http://financial-advisors.credio.com/l/111958/Felicidad-Cabrillos