McDonnell Property Analytics (“MPA”) has the tools, technologies, and know-how to assist Class Action Law Firms, State Attorney General’s Offices, the Consumer Financial Protection Bureau, Federal Trade Commission, Federal Bureau of Investigation, U.S. Securities and Exchange Commission, etc. in identifying widespread mortgage fraud schemes and in designing and conducting Mortgage Fraud Investigations.
Like identity theft and money laundering, mortgage fraud has been institutionalized because it is a lucrative, though illegal, profit center. Mortgage fraud can be perpetrated against real property, individuals, financial institutions, and investors. The detection of mortgage fraud requires the involvement of an expert who possesses unique and specialized skills, knowledge, experience, education, training, and the integrity necessary to function in the financial forensics discipline.
Many states have enacted statutes that define “mortgage fraud” as a criminal act. In the wake of the 2008 Financial Crisis, for example, Massachusetts adopted M.G.L. Ch. 266 §35A, eff. 8/7/2010, criminalizing mortgage fraud which states in pertinent part:
(b) Whoever intentionally:
(1) makes or causes to be made any material statement that is false or any statement that contains a material omission, knowing the same to be false or to contain a material omission, during or in connection with the mortgage lending process, with the intent that such statement be relied upon by a mortgage lender, borrower or any other party to the mortgage lending process;
(2) uses, or facilitates the use of, any material statement that is false or any statement that contains a material omission, knowing the same to be false or to contain a material omission, during or in connection with the mortgage lending process, with the intent that such statement be relied upon by a mortgage lender, borrower or any other party to the mortgage lending process;
(3) receives any proceeds or any other funds in connection with a residential mortgage closing, knowing such proceeds or funds were obtained in violation of clause (1) or (2); or
(4) files or causes to be filed with a registrar of deeds any document that contains a material statement that is false or a material omission, knowing such document to contain a material statement that is false or a material omission, shall be punished by imprisonment in the state prison for not more than 5 years or by imprisonment in the house of correction for not more than 2 and one-half years or by a fine of not more than $10,000 in the case of a natural person or not more than $100,000 in the case of any other person, or by both such fine and imprisonment. Any person who engages in a pattern of residential mortgage fraud shall be punished by imprisonment in the state prison for not more than 15 years or by a fine of not more than $50,000, in the case of a natural person, or not more than $500,000 in the case of any other person, or by both such fine and imprisonment. (emphasis supplied)
Throughout her career, Marie McDonnell has played a bold, independent, active role in exposing ways in which the mortgage banking industry has evaded regulations, mainstreamed predatory lending practices, and created shortcuts to reduce costs and enhance its profits. Here are some examples of Ms. McDonnell’s groundbreaking efforts.
Marie McDonnell played a pivotal role in two landmark cases decided on appeal by the Massachusetts Supreme Judicial Court on January 7, 2011, U.S. Bank, National Association v. Ibanez, and Wells Fargo Bank N.A. v. LaRace, collectively referred to as Ibanez.
On April 28, 2009, the Massachusetts Land Court, Division of the Trial Court granted Ms. McDonnell’s motion to intervene as a “friend of the court” after plaintiffs’ attorneys filed post-trial motions to reconsider the Land Court’s decision to vacate two foreclosures based on the fact that neither plaintiff had received an assignment of the mortgage prior to noticing the sale and conducting the foreclosure.
Ms. McDonnell’s seminal contribution was to reinforce the Land Court’s ruling, but also, to turn the Land Court’s attention to defects in the securitization process that proved plaintiffs were not the present holders of the mortgage at the time plaintiffs noticed and conducted the sales. The Ibanez decision rendered by the Massachusetts Supreme Judicial Court was the first in the nation to address the complexities of securitization within the context of residential mortgage foreclosures, and it is cited widely by courts in many other jurisdictions nationwide.
In January 2011, The Honorable John L. Obrien, Register of Deeds for the Essex County (Southern District) Registry of Deeds in Salem, Massachusetts commissioned McDonnell Property Analytics to perform a forensic examination to test the integrity of his registry due to his concern that Mortgage Electronic Registration Systems, Inc. (“MERS”) was undermining the accuracy and reliability of his Registry by privatizing transfers of beneficial rights in mortgages for its members-only. Register O’Brien was also concerned about the fact that invalid, robo-signed transfer documents were being recorded that corrupted the chain of title to the properties under his jurisdiction. (See 60-Minutes exposé of DOCX, LLC and Lorraine Brown, which first aired on April 4, 2011: https://www.youtube.com/watch?v=IKwB1BaFu9Q)
The results of MPA’s audit revealed widespread, systemic, patterns of practice employed by or on behalf of several of the nations’ largest banks that had eroded the transparency and corrupted the chain of title to real property records maintained by the Essex County Registry of Deeds. (See https://salemdeeds.com/salemdeeds/DownLoadFile.aspx?newsid=87)
McDonnell Property Analytics’ forensic examination was the first registry audit of its kind in the United States, and it prompted other officials to audit their public land records, some of whom instituted lawsuits against certain banks and their private electronic recording utility, Mortgage Electronic Registration Systems, Inc.
On November 20, 2012, Assistant U.S. Attorney General Lanny Breuer announced an agreement in which Lorraine Brown, the founder the chief executive of DocX LLC, plead guilty to conspiracy to commit mail and wire fraud. “Lorraine Brown participated in a scheme to fabricate mortgage-related documents at the height of the financial crisis,” said Assistant Attorney General Breuer. “She was responsible for more than a million [1,000,000] fraudulent documents entering the system, directing company employees to forge and falsify documents relied on by property recorders, title insurers and others.” (See https://www.justice.gov/opa/pr/former-executive-florida-based-lender-processing-services-inc-admits-role-mortgage-related)
Register O’Brien was concerned that the DocX, LLC documents recorded against the title to his constituents’ properties are now void as a matter of law due to the admission of Lorraine Brown that they are forgeries. Moreover, these DocX, LLC filings (most of which do not involve properties that are or have been in foreclosure) are defective for other reasons and further compromise the good, clear, and marketable title to real property that Register O’Brien’s constituents have a right to expect.
Register O’Brien asked that Ms. McDonnell examine a sampling of the 10,567 DocX, LLC discharges and assignments that were recorded in his Registry of Deeds from 1998 through 2011. After an intensive examination, Ms. McDonnell found that the majority of these documents evidence gaps in the chain of title or constitute wild deeds because, among other defects, they fail to connect the original mortgagee with the entity who is discharging or assigning the mortgage.
On January 11, 2013, Marie McDonnell submitted an Affidavit in Support of Register of Deeds John L. O’Brien’s Affidavit and Request for Restitution in the sentencing of Lorraine Brown.
On March 22, 2012, Marie McDonnell conducted a one-day training in the New York City Office of Attorney General Eric Schneiderman to educate Assistant Attorneys General (civil and criminal divisions), Assistant U.S. Attorneys, Special Agents and Investigators on the securitization of residential mortgage loans; the systemic breaches of the representations and warranties made to investors in securities offerings; and the fraudulent cover-up that ensued in the wake of the Mortgage Meltdown of 2007 and the 2008 Foreclosure Crisis.
In February 2013, McDonnell Property Analytics conducted a three-day training in Washington, D.C. under contract from the U.S. Treasury Department at the request of the Office of the Inspector General for the Federal Housing Finance Agency. The purpose of the training was to educate the attendees in various aspects of the Residential Mortgage Backed Securities marketplace; the function of Mortgage Electronic Registration Systems, Inc. in streamlining the sale and securitization of residential mortgage loans; the resultant corruption in our land evidence recording systems; and the use of tools and technologies for conducting market surveillance. Among the attendees were: Special Agents of the Office of the Inspector General, Department of Justice, Secret Service, Homeland Security, FBI, Assistant U.S. Attorneys, and Postal Inspectors.
On June 25, 2013, the law firm of Kohn, Swift & Graf, P.C. engaged Marie McDonnell to provide expert witness services on behalf of Nancy Becker, Recorder of Deeds for Montgomery County in her lawsuit on behalf of all Pennsylvania counties against MERSCORP, Inc. and Mortgage Electronic Registration Systems, Inc. “to remedy the Defendants’ illegal scheme to avoid paying fees associated with properly recording mortgages and mortgage assignments in violation of Pennsylvania law.”
In December 2014, McDonnell Property Analytics was commissioned by the Seattle City Council to analyze assignments of deeds of trust involving Mortgage Electronic Registration Systems, Inc. to determine whether those assignments were valid in light of the Washington State Supreme Court’s ruling in Bain v. Metropolitan Mortgage Group, Inc., 175 Wash.2d 83, 285 P.3d 34 (Wash., 2012)
McDonnell Property Analytics engaged Real Estate Services and Technology to adapt its technology platform to meet MPA’s specifications, and in doing so, created a scalable Registry of Deeds Audit Model attuned to the objectives of the City of Seattle Review of Mortgage Documents. (See REST: http://www.reservicestech.com/)
On September 8, 2015, McDonnell Property Analytics delivered a 436-page report with exhibits and appendices to the Seattle City Council titled City of Seattle Review of Mortgage Documents. (Add a hyperlink to the Report)