Denise Subramaniam doesn’t like to think of herself as homeless. A former software engineer, she has several chronic illnesses, including one known as multiple chemical sensitivity, which causes her to react to allergens and chemicals common in interior spaces. So this January, when LNV Corporation foreclosed on the Portland, Oregon, home she’d inhabited for 20 years, she had no option other than her Jeep.
Every morning, Subramaniam wakes up in the driveway of a friend’s subdivision. Her possessions are stored in a small shop. “I’m not on the street,” she said. “I’m trying to hang in there.”
These days, Subramaniam is less concerned with finding a place to live than with filing legal briefs at the 9th Circuit Court of Appeals.
She’s acting as her own lawyer in a case against LNV, which if successful would transform the way foreclosures are adjudicated in America. The suit alleges that LNV forged evidence to prove it owned her loan, and that the summary judgment for foreclosure issued by the lower court violates constitutional protections regarding due process.
Subramaniam is not the only litigant representing herself in a case against LNV. In fact, there are three such cases currently before the 9th Circuit, and several others across the country, all filed by members of an informal network of homeowners known as the Victims Group. The 15 participants talk and email constantly and provide research assistance with one another’s foreclosure cases. “Those of us who have survived this process have come together,” Subramaniam said. “It saves us time and makes us smarter.”
LNV’s lawyers and spokespeople for its parent company have dismissed the Victims Group as being made up of conspiracy theorists. “The allegations raised by the borrowers are categorically false,” wrote senior vice president for corporate communications Jim Chambless, and “have been disproven and vetted by the appropriate authorities all over the country.” Chambless referred to Victims Group members as not only “not credible” but as having been “in some instances found to be vexatious litigants,” a legal term meaning that the cases were frivolous or unwarranted.
Courts that have ruled in the cases have not accepted the Victims Group’s claims of deception and fraud, though several cases remain pending. And among the Victims Group’s allegations, some — like that the bank surveilled homeowners, bribed judges, and intimidated the claimants’ own lawyers — are not persuasive.
Other allegations, however, raise questions about the documents the bank has used to prove its ability to foreclose. Charges of this kind have dogged the mortgage industry for years: In 2012, banks such as JPMorgan Chase and Wells Fargo paid billions of dollars in fines when confronted with evidence of robo-signing and submission of false evidence to courts.
The plaintiffs in the Victims Group cases have focused their energies on a single target: billionaire financier and noted poker player Andy Beal, who records indicate is the sole board member of LNV Corporation. In addition to founding Beal Bank, Andy Beal also figures prominently in Donald Trump’s presidential campaign. Beal endorsed Trump in February and in August became part of Trump’s economic policy team. He also formed a Super PAC, called Save America From Its Government, which has advertised for Trump, spending $2.4 million on Trump ads just in the closing week of the campaign. In June, Trump floated that, if elected, he would put Beal “in charge of China,” to negotiate on behalf of the United States.
Though Hillary Clinton’s ties to Wall Street often get top billing, Trump’s advisers have multiple connections to the foreclosure crisis. His national finance chairman (and rumored choice for Treasury Secretary), Steve Mnuchin, ran OneWest Bank, one of the more egregious practitioners of robo-signing and improper foreclosures, disproportionately in minority communities. Private equity kingpin Wilbur Ross, co-author of Trump’s main economic policy document, owned the notorious American Home Mortgage Servicing Inc., which multiple state attorneys general have sued for deceptive practices. Ross later served on the board of Ocwen, which paid billions in fines to the Consumer Financial Protection Bureau for abusive activities.
But among Trump’s advisers, only Beal has his very own victims group.
The grievances against Beal, culled from multiple state and federal lawsuits, follow a consistent pattern. All of the homeowners originated their mortgages with companies other than Beal’s. Sometime around the collapse of the housing bubble, Beal acquired the plaintiffs’ mortgages through LNV, and assigned the servicing rights to MGC Mortgage, a company incorporated in Texas in 2008.
Members of the Victims Group allege that they never received welcome letters or notices that their loans had been transferred to MGC. “I got a call out of the blue. They said, ‘You’re behind on payments,’” said JoAnn Breitling of Dallas, Texas, describing a phone call from MGC in 2008. “I said, ‘I’ve been making my payments to Regions Bank.’ They said, ‘Contact Regions and get the money.’ I said, ‘That’s your job!’”
In August 2014, the bank’s defense attorneys supplied copies of welcome letters dated June 2008, but Breitling claims that was the first time she’d seen them.
Breitling is not alone in believing that her payments were misappropriated or never reached their intended recipients. MGC put Tennessee resident Catherine Gebhardt into default, claiming it never received any payments; but an exhibit in her case shows a $6,000 cashier’s check that she paid to MGC on October 24, 2008. The check is stamped “Received” and was paid out of Gebhardt’s Tennessee State Bank account. In a response to an inquiry from the office of Gebhardt’s congressman, Phil Roe, MGC claims it took over servicing “on or around July 1, 2009,” despite the October 2008 payment.
In some cases, the transfer to MGC disrupted homeowners’ attempts to remedy their loan situations. Marcia Swift of Batavia, Illinois, tried to refinance her loan in August 2008, but before she could get a payoff statement from her servicer, the company sold the servicing rights to MGC. “I said, ‘Why the hell would you do that, we have a closing set!’” said Swift, describing a conversation with a GMAC representative. “He started laughing on the phone, said that’s how it is. Like our lives didn’t matter.”
These confusions in payments have often led to foreclosures. Subramaniam has alleged in court filings that the Beal victims were often “seniors, disabled, minorities, and single females,” and many of them “had considerable equity in their homes.” That would make their properties lucrative targets for the foreclosing entity, if it could re-sell them at or near market value.
Numerous Beal subsidiaries were involved in the foreclosures, including LPP Mortgage, CLMG Corporation, Property Acceptance Corporation, Loan Acceptance Corporation, and LNV Corporation. In a 2014 deposition, MGC employee Bret Maloney confirmed that MGC, Beal Bank, LPP, CLMG, Property Acceptance, Loan Acceptance, and LNV “are all affiliated companies under the same corporate umbrella” known as Beal Financial Corporation. All of these companies used one of two corporate addresses in Dallas, which actually refer to the same building.
Most homeowners do not contest foreclosures, but this small network of victims did, challenging multiple instances of what they allege to be forged evidence in their cases.
“The mortgage instruments … that LNV submitted to the State court to support their foreclosure complaint are intentionally manufactured forgeries,” claims JoAnn Breitling in a 2016 U.S. district court filing, “made with intent to deceive the courts about LNV’s standing to bring such an action against Plaintiffs and Plaintiffs’ property.” (That case was dismissed in October; Breitling has a pending federal appeal with the 5th Circuit.)
In Denise Subramaniam’s case, she took issue with the original promissory notes, which are traded between companies with endorsements, the way individuals endorse a check. Generally speaking, holders of the notes have the legal right to foreclose on a defaulted borrower. “The simple truth is that we are the legal owners of the notes in question,” said Jim Chambless of Beal’s organization. “The original notes with fresh ink signatures have been locked in our vaults since acquisition.”
But Subramaniam submitted several allonges, pages attached to the original promissory notes, endorsed with the signature of Jason Vecchio, listed as a “post funding manager” for Residential Funding Company LLC. The allonges came from three different cases filed by members of the Victims Group in different states. But the Vecchio signatures align perfectly with one another, suggesting that they were created with a stamp. All three allonges were purportedly endorsed before 2010. But Vecchio’s official name prior to 2010 was Jason Vecchio-Smith, as confirmed by notarized documents showing the name change.
Attempts to reach Vecchio for comment were unsuccessful. Beal representative Jim Chambless told The Intercept that the bank’s note endorsements were proper, and LNV asserted in a filing in Subramanian’s case that it became the rightful holder of the note after Residential Funding Company assigned it to LNV.
Multiple signatures on what purport to be original documents in the case of Robert Youngblood of Tennessee and Marcia Swift of Illinois feature an identical “floating j” along the side of the signature line, which the Victims Group claims “may be evidence of digital alteration,” allegedly showing that the documents were cobbled together in Photoshop. Asked about the “floating j” marks in his 2014 deposition, MCG employee Bret Maloney replied that he didn’t know what they were and had never seen such marks on other mortgage documents.
If these pieces of evidence were altered or fabricated, they would comprise insufficient proof of standing to foreclose. In any court proceeding, companies must prove ownership of loans in order to enforce the lien.
Beal’s attorneys categorically deny the many charges the Victims Group has lobbed against them. In LNV’s response to Denise Subramaniam’s 9th Circuit appeal, for example, the company accuses her of pursuing “a conjured conspiracy woven entirely of whole cloth relying upon imagined forged documents and cloak-and-dagger intrigue.”
Chambless, the Beal representative, said that in Subramaniam’s and the other cases, LNV Corporation has “every right under the terms of the notes, mortgages, and the laws of each jurisdiction to foreclose… The allegations of the Borrowers you have identified are not borne out by the facts.” He alleged that the members of the Victims Group had failed to pay their mortgages, property taxes, or insurance, and that they had instead “devoted their energies to slandering Beal and its founder with savage and outlandish personal attacks utterly divorced from the truth.”
Chambless also notes that the district court rejected Subramaniam’s claims in November 2015. “Ms. Subramaniam has sued us three times. She has lost every time,” Chambless said. Beal’s lawyers threatened to sue The Intercept if any of what they deemed “false allegations” were published.
The Victims Group believes many judges have neglected to consider the facts. “The land records are filled with fabricated documents, and no one cares,” said JoAnn Breitling. She has even filed motions in her cases to disqualify judges in the Dallas courts for what she claims are connections with Beal and the law firm that represents his companies, Locke Lord. None of those efforts have been successful.
Breitling has been in and out of court for six years on the home she shares with her husband and her adult son, who has Down syndrome and an auto-immune disorder. Breitling estimates that Beal’s companies have spent far more than what her house is worth to take it away from her family.
LNV won a foreclosure judgment against Breitling in state court and has responded to every subsequent claim by arguing that the matter has already been litigated. Breitling lost her appeal to the Texas Supreme Court on October 14, and on October 4, U.S. District Court Judge Jane Boyle called the homeowner’s accusations “legally and factually unfounded.” Breitling is now appealing that federal ruling. Chambless calls Breitling’s intimations that Beal intimidated judges and lawyers “very serious false allegations.”
The Victims Group has set up an information-sharing network to help its members identify document irregularities. The members found one another while researching other Beal-related cases online, and most of them have never met in person. “We’ve become like family,” said Breitling. “I met Cathy [Gebhardt], and we couldn’t stop crying and hugging.”
Most of the victims started out with attorneys, but the years of effort and thousands of dollars in legal costs drained their resources, forcing them to act in their own defense. Outgunned financially (Forbes puts Beal’s net worth at $8.9 billion) and legally, the group’s members haven’t seen many successes, but most remain in their homes.
Stuart Hamm of Dallas recently stopped the foreclosure sale on his home. In Marcia Swift’s case, LNV voluntarily withdrew right as the judge was about to issue a ruling on the notice of default. The company re-filed the case in June. “It just doesn’t stop,” Swift said.
Subramaniam was evicted in February after a 10-year battle. She alleges that LNV completed the foreclosure on her home in county court without serving her papers. The Oregon Court of Appeals dismissed an appeal based on this allegation on November 2. She says that contractors packed her belongings and moved them into storage. “I had family heirlooms destroyed, a painting of my mother, they threw it in a box with sharp pieces of wood.”
Having lost in state court, Subramaniam took her concerns to a federal venue. Her case before the 9th Circuit takes a big swing, challenging the constitutionality of summary judgment orders in foreclosure cases. In summary judgments, judges find for one party without requiring a full trial. When a bank moves for summary judgment, it is asserting that none of the facts in the case are disputable. Subramaniam believes this technique short-circuits due process for homeowners, particularly those who act in their own defense as pro se litigants, as they cannot subsequently mount a defense by presenting evidence.
“These summary judgment rules allow judges to abuse judicial discretion; and to ignore their constitutionally mandated oaths of office,” writes Subramaniam in her court filing, which quotes several law professors and judges who agree with her that summary judgments are used too frequently. JoAnn Breitling’s federal case, before the 5th Circuit Court of Appeals, makes a similar claim.
If banks could not receive summary judgment in foreclosure cases, the process would become far more costly, and homeowners would have a greater chance not only to challenge foreclosure, but also to negotiate workable solutions to avoid eviction.
Subramaniam filed her case this summer and has been awaiting response from the 9th Circuit. Two other members of the Victims Group, Kelly Randle and Robynne Fauley, also have pending cases that the appeals court has not acted upon.
Members of the Victims Group want to save their homes, but they have another objective as well: obtaining a measure of justice against a system that they believe has failed to protect them. That explains their perseverance against very long odds. “I don’t know what keeps me going,” said Marcia Swift. “It’s very draining. There are days when you can’t get out of bed. But something keeps telling me God put us in this place to do something with this.”
This story was produced with support from the Economic Hardship Reporting Project, a nonprofit devoted to journalism about inequality.
Update: November 7, 2016
On Monday, JoAnn Breitling filed a motion for rehearing at the Texas Supreme Court.
Correction: November 7, 2016
An earlier version of this story incorrectly stated that Save America From Its Government spent $2.4 billion on Trump advertisements in the final week of the campaign; this story has been updated to reflect that the correct number is $2.4 million.