Love, death and foreclosure

Mixed results in court
MERS officials and their attorney, Domeyer, declined requests from msnbc.com for interviews. MERS also declined to answer numerous questions submitted via e-mail, including who is actually the current owner of the loan, although it did provide a prepared statement that said in part, “Numerous state and federal courts have affirmed the right of MERS to be the mortgagee in the public land records and its ability to move for relief from stay and foreclose.” But Arnold’s statement also acknowledged that MERS’ guidelines for foreclosure appeared not to have been followed in Vargas’ case.

The argument that MERS lacks legal standing to foreclose has met with mixed results in court. MERS has won several such cases in Florida; debtors have won in Ohio, Connecticut and elsewhere.

Gardner said a nationwide ruling that MERS had no standing to foreclose would raise thorny issues. “What if a court really ruled that all these foreclosures that MERS has done are invalid?” he asked. “Can you imagine what would happen to the real estate and title business?”

Bankruptcy court rulings on MERS are being keenly watched because that is where many foreclosure cases are playing out and where many more could wind up.

So Judge Bufford’s ruling in Vargas’ case was greeted with enthusiasm by Gardner and his allies. In a withering opinion, the judge said MERS “presented no admissible evidence” in its case. And he found that sanctions should be imposed against Domeyer, the attorney representing MERS, for bringing such a sloppy motion to court.

The bottom line, Bufford said, was that the true owners of the loan — “highly unlikely” to be original lender Freedom — did not come forward in court and MERS failed to prove any right to act on their behalf. He would not comment to msnbc.com beyond his published ruling.

Bufford’s ruling opened the door for Gomez, Vargas' lawyer, to file a new claim. This complaint airs Vargas’ allegations of fraud and forgery surrounding the origination of the loan. In it, he seeks $1.75 million in damages as well as to remove lenders’ liens and his obligation to repay them via “quiet title.”

Freedom, the New Jersey company that originated the loans now in foreclosure, did not respond to interview requests.

The loans appear to have been sold to Vargas on behalf of Freedom by Monta Vista Mortgage, a now-defunct Santa Ana, Calif., firm that has disconnected its phones and moved out of its offices.

Signatures disputed
Vargas said the signatures on the loans are not his and that he never met with anyone from Monta Vista nor received settlement statements explaining the transactions.

Among the few papers Vargas has from Monta Vista are a letter and two check stubs showing he received about $48,000 for cashing out $95,000 in equity. It is unclear where the rest of the funds went.

Msnbc.com located the owner of Monta Vista, Martha Lozano, in nearby Tustin. She said she was running a new company, Debt Solutions, which helps trouble borrowers seek loan modifications from lenders. She said she could find no records in her computer system indicating that her old firm, which employed 50 to 60 people, had done business with Vargas. She said any paperwork on Vargas’ transactions had likely been stolen during a burglary at a storage unit.

Lozano said many homeowners in foreclosure “now want to blame us for everything that is happening to them.” But she defended the option ARMs sold to Vargas and others, saying, “You sell what the lender is advertising.”

Asked if she would have sold such a loan to her father, Lozano quickly replied, “No way!”

As to the claim of forgery, when msnbc.com tracked down the public notary who swore that Vargas had signed the documents, he said he had no recollection of the transaction. Thomas Montaghami of Anaheim, Calif., said he is no longer a notary. He said he had lost records that notaries are supposed to keep to explain how they verified the identities of people whose signatures they notarized.

Montaghami said he had informed authorities of the loss of his records as required, but officials at the Secretary of State’s Office in Sacramento said they had no record of that.

Shown a signature that MERS claimed was his on the loan it tried to foreclose, Vargas laughed. “That’s not mine.”

His attention was diverted by the ringing phone, a telemarketer trying to sell Vargas on refinancing his home. “It’s an everyday thing,” he said. “They’re the vultures coming to pick over the bones.”

The gallows humor fits Vargas’ lack of bitterness at his plight. A guy who began adulthood carting the dead and wounded away from Normandy may have a greater capacity for forgiveness than most.

Even if he loses the house, he reckons, it was out of love for his dear Ophelia. “We were married 57 years,” he said, softly, his eyes lighting upon an urn on his mantle. “Her ashes are right there. She will be buried with me when God calls me.”

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