Max Gardner’s Top Resasons for Wanting a Pooling Servicing Agreement
Every time I file a civil action against a mortgage servicer the very first document I want is a copy of the “Pooling and Servicing Agreement.” This is the legal document that creates the securitized trust of mortgage loans and also strictly provides for the duties of all entities who are assigned the responsiblity of servicing loans for the Trust.
For all “public placements” or “public offerings,” the Pooling and Servicing Agreement is always filed on Form 8-K with the Securities and Exchange Commission. All such documents can be found by conducting a search of the SEC’s website through an internal search engine known as “Edgar.” But, what is a PSA? Why do I want to see it? What can be found in the PSA? Kevin Byers, a forensic accountant, who works with me on these cases, has assisted me in developing the following list of reasons why any consumer must have the PSA. The reasons are as follows:
Pooling and Servicing Agreements (PSA)Top Twenty Reasons to Request ProductionKevin Byers and O. Max Gardner III
In no particular order, these are some of reasons you need to request through formal discovery in any mortgage-related case the PSA Agreement and why it is relevant:
1. It is a contractual document naming the parties to any given securitization, important for standing issues. The document will list the Sponsor, the Trustee for the Securitized Trust, the Master Servicer, and all primary and secondary servicers.
2. It provides address for all necessary parties including “notice” addresses for the service of legal process. 3. It outlines the specific duties of the Servicer and/or the Master Servicer as well as the Trustee on behalf of a respective trust. 4. It contains the representations and warranties of all parties to the agreement, including the Servicer and/or Master Servicer.
5. It includes all representations provided by the Depositor of the loans into the trust as the same relate to important consumer protection issues related to the underwriting and origination of the loan, such as conformity with anti-predatory lending laws, full-file credit reporting, title insurance coverage, and validity and content of individual loan files.
6. It gives the conditions under which a prepayment penalty may be waived or modified by the Servicer and/or Master Servicer. 7. It oftentimes will outline specific loss mitigation and foreclosure avoidance measures available to the Servicer, including, for example, forbearance and loan modification, principal reductions, interest reductions and interest changes.
8. It defines a “defective mortgage loan” and describes the circumstances and process by which the lender must repurchase a loan.
9. It establishes the rights of the Trustee under the Trust to force the Depositor/Originator of any loan to repurchase a loan under the recourse provisions. 10. It describes the specific process by which a delinquent loan can be charged off and the subsequent servicing party and procedures that apply to such charged-off loan. 11. It provides guidelines on loan-level advances that must be paid by the servicer. 12. It provides details regarding the mechanics of how the Servicer must go about foreclosing on property, what documents need to be requested and/or recorded and what authorizations need to be granted to foreclose, and in whose name the foreclosure must be filed. 13. It provides guidance on the fees a Servicer may retain as compensation in the administration of the loans, for example, NSF fees, late fees, loan modification or assumption fees.
14. It will contain the Mortgage Loan Schedule, important to verify the ownership of the loan on behalf of the Trust.
15. It details the requirements for mortgage assignments and when these will or will not be recorded and the implications of the failure to record such assignments. 16. It details the specific loan documents contained in each loan file that will be delivered to the Trustee or Document Custodian on behalf of the trust, establishing who holds the original Note and where it may be found.
17. It describes the credit enhancements that have been deployed to enhance the rating of the most secure certificates of investment in the Trust.
18. It provides rules and procedures for the rights of the Master Servicer or the Primary Servicer to accept a deed-in-lieu of foreclosure or a short sale of the property so as to avoid a foreclosure.
19. It describes the rights the Originator/Depositor may retain the Residual Value of the Trust and the extent to which the residuals may be used as credit enhancements.
20. It will name a default servicer and describe when a loan is considered to be in default and outline the process for the transfer of servicing rights.
O. Max Gardner IIIHistoric Webbley House
Shelby NC 28151-1000704.487.0616 (v)704.487.0619 (f)maxgardner@maxgarnder.comhttp://www.maxgardnerlaw.comhttp://www.maxbankruptcybootcamp.com
February 4th, 2008 at 10:50 pm
I was reading Mr. Garner’s article regarding to 20 Top Reasons for Wanting a “Pooling Servicing Sgreement.”
Reasons number 6, 7, 8, 9 10, 11, 12, 13, 14, 18, 19 and 20.
I have few questions:
Q #1. If there are two Servicers namely the “Master Servicer” and “Primary Servicer”, which one is the investor?
Q #2. In order to reach an amendment agreeable to all parties involved (Which this was included in the modifiied loan agreements that never followed through. Not forbearance) they would have to have at first used all possible “loss-mitigation tools first (Which never was used)?
Q #3. If a mortgagtee ask one of her children to assist her in understanding the terms and conditions of everything going on (At the time she was 73 years old with COPD, Diabetes Type2, Emphysema, High Blood Pressure, Asthma and was being severely harassed, caused undue stress and admissions to ER and hospitalization at times.) along with writing letters with her approval, does that her son/daughter have to sign off the house in a short-sale agreement (The agreement was that my mother and I couldn’t revisit the events that unfolded. In other words, even though they were WRONG as “two-left shoes” and “crooked as the highway to hell” that they didn’t do anything wrong and we don’t have the rights to commence any legal remedies or compensation.) EVEN THOUGH his or her name WAS NOT on the mortgage to begin with at origination? Yes you read this right… I had to sign off or I WOULD HAVE BEEN THE CAUSE OF MY MOTHER LOSING HER HOUSE OF 41 YEARS! And now my mother and I cannot pursue them.
My mother and I have written to via email and U.S. Mail and sent proofs to many Conusmer Lawyers… at that time all of this wasn’t blowing up like it is now. We even had the Michigan Office of Financial and Insurance Services (OFIS) assisting us. But at times we thought OFIS didn’t care until they start finding out that the foreclosure process was ILLEGAL and unethical. I almost forgot… she wasn’t given any notices about the sheriff’s sale, thus she was blantantly denied her rights on several points here (One of them is “Giving of Notices.” Yes, we sent OFIS I believe about a thousand pages of evidence.
But this is how it ended up… time frame is extremely small, my mother seeks out Reverse Mortgage according to their ads about how it can help her financially and all those testimonials… NOT! So the Mortgage Servicer company’s Investor ended up accepting the $33,500.00 a long way from about $80,000.00. Hmm m this much within four months?
So yes indeed, something’s definitely stinks in Denmark anytime a LENDER “Recreates” Courts Documents. And thus is the very reasons why this Subprime is such a phenomenally excessive problem and people are getting busted left and right like it’s going out of style.