News Update - MSA Associates - Mortgage Auditing Services

Published: Monday, September 12, 2011, 5:38 PM Updated: Tuesday, September 13, 2011, 9:31 AM

By Brent Hunsberger, The Oregonian

Another Oregon woman successfully halted a post-foreclosure eviction after a judge in Hood River found the bank could not prove it held title to the home.

Sara Michelotti's victory over Wells Fargo late last week carries no weight in other Oregon courts, attorneys say. But it illustrates a growing problem for banks -- if the loans's ownership history isn't recorded properly, foreclosed homeowners might be able to fight even an eviction.

"There's this real uncertainty from county to county about what that eviction process is going to look like for the lender," said Brian Cox, a real estate attorney in Eugene who represented Wells Fargo.

Michelotti's case revolved around a subprime mortgage lender, Option One Mortgage Corp., that went out of business during the housing crisis. Circuit Court Judge Paul Crowley ruled that it was not clear when or how Option One transferred Michelotti's mortgage to American Home Mortgage Servicing Inc., which foreclosed on her home and later sold it to Wells Fargo.

Since the loan's ownership was not properly recorded in Hood River County records, as required by Oregon law, Crowley ruled that Wells Fargo could not prove it had valid title to the property to evict. Crowley presides over courts in Hood River, Gilliam, Sherman, Wasco and Wheeler counties.

In June, a Columbia County judge blocked U.S. Bank's eviction of Martha Flynn after finding the loan's ownership history wasn't properly recorded. But unlike Flynn's case, Michelotti's loan did not involve the Mortgage Electronic Registration Systems – a lightening rod for lawsuits over whether lenders properly foreclosed n homeowners.

"A lot of people get lost in 'Oh it's all MERS,'" said Michelotti's attorney, Thomas Cutler of Harris Berne Christensen in Lake Oswego. "The problem runs broader than that."

Crowley also rejected the bank's argument that if Michelotti had paid her mortgage, the eviction would never have occurred.

"(Wells Fargo)'s counter argument to the effect that 'if (Michelotti) had paid the mortgage we wouldn't be here' does not prevail at this junction because the question remains: are the right we here?'" Crowley wrote.

H&R Block Inc. sold Option One in 2008 to Wilbur Ross & Co., a distressed-asset investor, who merged it with American Home Mortgage Investment Corp.

But Crowley said he found no evidence of when the merger took place or why Option One's name continued to be used on loan documents.

Cox said Wells Fargo had not yet decided how to respond to the ruling.

– Brent Hunsberger

© 2011 OregonLive.com. All rights reserved.

Scappoose’s MSA Associates at forefront for tracking bank foreclosure epidemic

http://www.spotlightnews.net/news/story.php?story_id=131300093819313400

By Darryl Swan

The South County Spotlight, Aug 10, 2011, Updated Aug 10, 2011

Tim Stephenson and Matt McHugh didn’t start MSA Associates with a doe-eyed understanding about mortgage-back securities; both had worked in the trenches at brokerage firms long before opening the Scappoose business in 2009.

But even their background in working with complex financial products didn’t fully prepare them for some of the revelations they’ve experienced since the start of 2011.

This year, the MSA Associates’ principals believe, the volume of discrepancies they’ve discovered in mortgage foreclosures challenges the outlook on the nation’s already turbulent financial system.

Specifically, Stephenson and McHugh say they have unveiled systemic chain of title discrepancies and multiple instances in which loan subservicers — often going by names with familiar resonance to the loan originator, though without the authority to negotiate mortgage terms — cut unbinding and illegitimate deals with distressed homeowners. Some of the discrepancies in the mortgage foreclosure proceedings are more sophisticated.

Oregon judge voids foreclosure sale, casting doubt on others

Published: Wednesday, June 29, 2011, 7:48 PM Updated: Thursday, June 30, 2011, 6:16 AM

A Columbia County judge has blocked U.S. Bank from evicting a Vernonia woman whose home it purchased in foreclosure, concluding in a case with far-reaching implications that her lenders had not properly recorded mortgage documents.

Last week's action appears to be the first in which an Oregon judge has halted an eviction and declared a foreclosure sale void after the fact. The ruling, if it stands, raises questions about the validity of other recent foreclosures in the state and could create serious problems for lenders and title companies, as well as for buyers of such properties.

"It's a victory for a lot of people," said Martha Flynn, 62, who challenged the eviction and whose ability to stay in her home remains in doubt. "I was fighting for the principle of the thing."

A U.S. Bank spokeswoman said the bank would cease further eviction action and assess its "appropriate next steps."

Nearly all foreclosures in the state occur without a judge's involvement under so-called nonjudicial proceedings. But this ruling, legal observers say, could potentially divert more foreclosure actions into courtrooms, a more time-consuming and costly proposition that could exacerbate the state's housing slump.

"This will certainly be problematic for lenders," said David Ambrose, a Portland real-estate attorney.

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