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Homeowner 'Securitization Theory' BofA Claim Dismissed

Bankruptcy court rejects RICO Act claim and finds no fraud evidence

housingwire.com | August 15, 2013

By Jacob Gaffney

The Nordeens fell on hard times in Las Vegas. The couple fell behind on their $140,000 Countrywide loan backed by a rental investment. The last renters in the property nearly destroyed it, and the damage was so extensive, the Nordeen's could not afford to repair the property to rent out again.

After all options were exhausted with Bank of America (BAC), the current mortgage servicer, moved to foreclose. The Nordeen's filed for bankruptcy.

In the filing, they argued that the securitization of the mortgage represents a true sale of the note, thereby rendering the trust deed unenforceable. The indication is that the Nordeen's feel that investors assume the risk of default in such a case. The state of Nevada, unlike California, disagreed.

It is possible that the securitization pool, CWALT 2005-73CB REMIC Trust, is a true sale subprime securitization. In fact, this pool is named in the Federal Housing Finance Agency lawsuit as one of the 86 securitizations allegedly missold to Fannie Mae and Freddie Mac (bottom, page 3).

However, Ninth Circuit Bankruptcy presiding judge Bruce Markell dismissed the Nordeen's allegation of this "securitization theory".

The Nordeen's attempted to use securitization theory as an umbrella for lodging multiple bankruptcy amendments faulting the actions of Bank of America, including a charge of "possible collusion" under the Racketeer Influence and Corrupt Organizations Act.

The ruling is contrary to a similar case in California against Bank of America, when a homeowner successfully argued that securitization, through transferring the mortgage into the secondary market, breaks the title chain.

In the Nordeen's case, the bankruptcy court ruled: "The note provides that: The Nordeens understand that Countrywide may transfer the note."

Early on, the Nordeen's argued that the bankruptcy court of Nevada erred in applying state law rather that federal law in considering the fraud claims.

The court could not substantiate any claims of misrepresentations against Bank of America. Actually, in court filings, BofA appears to have serviced the loan satisfactorily.

"However, even if federal law applied, it would not help the Nordeen's," the court ruled.


Back to August 2013 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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