Conclusion
Uploaded by
Richard Franklin KesslerConclusion
Uploaded by
Richard Franklin KesslerPRESS RELEASE
October 14, 2010
For more information contact:
Richard F. Kessler
Documentary Clearing House LLC.
941-924-5608,
richardfkessler@verizon.net
cancelthemortgagenow.com
Release Date October 15, 2010
FORECLOSURE AUCXTION ILLEGAL
The one barrier to foreclosure which may, more than likely, force a nationwide moratorium is the
inability to comply with legal requirements for a public auction of the foreclosed property on the
court house steps because title to the auction property has been tainted by toxic documents so
that a reasonable member of the public will not bid for a foreclosed property known to be
uninsurable.
On October 13, Attorney General Bill McCollum sent letters to Bank of America, JP Morgan
Chase, GMAC, PNC Financial Group and Litton Loan Servicing requesting meetings to discuss
ways to promptly and effectively redeem the integrity of the foreclosure process. the letter states:
There are three reasons why foreclosure auctions, both in judicial and non-judicial jurisdictions,
cannot go forward:
1. The foreclosure proceedings have allowed toxic documents to taint title and driven away
buyers who otherwise are ready, willing and able to bid upon and buy at a foreclosure
sale.
The toxic documents have tainted the title conveyed by sheriff’s deed to the prevailing party at
public auction of the foreclosed property. As of this moment, many lenders are entering into
indemnification and hold harmless arrangements with title insurers for any REO property sold by
the institution. However, such an accommodation does not extend to properties at public auction
which have tainted titles because the foreclosure proceeding relied upon toxic documents.
Usually, a property is not withheld from public auction because of title defects. Normally a
sheriff’s deed need not and often does not convey clear title. This case is different. In this case, it
is the judicially conducted foreclosure proceeding itself which precipitated the title defect
through the admission of toxic documents. Next, it is the creditor seeking foreclosure who fouled
the nest be filing toxic documents. As a court of equity which has a legal obligation to do equity,
the defendant can object that the foreclosure itself has driven away otherwise ready, willing and
able buyers such as investors and homebuyers from the public auction.
2. The plaintiff who seeks to foreclose has tainted title with toxic documents and arranged
for title insurance for tainted title REO there rigging the bidding at public auction sop that
only the plaintiff will bid for the property and take it back as REO.
Secondly, the situation is analogous to bid rigging. In this case, first the lender who is
foreclosing files toxic documents that taint the title. Then the lender is the only party at the
auction, bids and takes the property back as REO. In this way, the lender even controls the
amount of the deficiency between what is “paid” at auction and the amount of the debt.
This legal obstacle will preclude sales at the court house steps in judicial and non-judicial
jurisdictions. The only foreclosures not affected are foreclosure of portfolio loans including
purchase money mortgages held by the original seller of the property.
Until the attorneys general of the 50 states reach an accommodation agreement with title
companies and lenders to spread the accommodation agreements to all affected foreclosure
properties, foreclosure will have to grind to a halt. It only takes one brave attorney in a local
jurisdiction to seek to enjoin all affected foreclosures until the title issue is remediated.
3. By auctioning the foreclosed property the court would aid and abet monopolization
and conspiracy to monopolize, a violation of the Sherman Antitrust Act.
The agreements being reached between lenders and title insurers create a bid rigging scheme
so that only the lender as secured creditor will bid at public auction. Such an arrangement
violates the Sherman Antitrust Act and will likely receive the scrutiny of the Antitrust
Division of the Justice Department and the Attorney General.
