Real Estate News | Residential Real Estate
Private Mortgage Fraud Investigator Zeroes In on Deutsche Bank
By Alex Finkelstein | February 26, 2009 11:55 AM ET
(BOYNTON BEACH, FL) -- A private forensic mortgage auditing firm is burning the business air waves today. Germany-based Deutsche Bank is the target.
MFI-Miami LLC says it is narrowing its multi-state investigation into illegal home foreclosures by focusing exclusively on Deutsche Bank.
"Deutsche Bank is named as the trustee on nearly 50 percent of the fraud investigations we have done in the past six months," says Stephen Dibert, president of MFI-Miami, an 11-month-old firm he founded in West Palm Beach, FL.
Dibert, a licensed mortgage broker, says, "In the majority of these cases, Deutsche Bank or its servicer almost never produces or refuses to produce the original note and mortgage, or proof that the transfer of the note has been validated.
"They freely admit this in the actions filed in court. However, some minority homeowners don't have the legal expertise to understand how important these documents are to their case. They assume they have no defense and don't show up for the hearing."
In most of the cases MFI-Miami examines, Deutsche Bank has purchased these mortgages and notes on the secondary market as part of a pool with other mortgages.
"These mortgages have been traded by fund managers like baseball cards," charges Dibert.
"In many of these cases, it appears that Deutsche Bank management gave their approval to buy a lot of worthless paper on the secondary market."
Dibert maintains "Deutsche Bank retains law firms that aren't interested in defending the legitimacy of their claim. Their purpose is to intimidate, obtain default judgments, and foreclose as fast as possible against homeowners who are uneducated about the legal foreclosure process."
He cites Joseph DeYounks of West Palm Beach as "a perfect example"
Dibert says Deutsche Bank "purchased his note on the secondary market and is now attempting to foreclose on his home. The bank hasn't provided proof that it's the legal owner, and the originating lender violated Florida law by funding this loan without the proper lending license."
Banks in South Florida are bringing foreclosure actions at an unprecedented rate, says Dibert. Miami-Dade County averaged about 10,000 to 11,000 foreclosures in 2006. In 2008, according to the Miami-Dade County Clerk of Courts, foreclosures topped 56,000.
"The practices of Deutsche Bank underscore the disorganized process financial firms used in buying and selling mortgages on the secondary market, which is done secretly behind closed doors," says Massachusetts bankruptcy attorney Glenn F. Russell Jr.
"They are turning the foreclosure process into the Wild West, and many of these foreclosures are plainly illegal."
Miami foreclosure defense attorney Shaun Rice, of De Armas, Millich, & Rice, PL, says, :"I strongly believe that minorities have suffered disproportionately as a result precisely from banks like Deutsche Bank who often never had a legitimate claim to bring a foreclosure action in the first place."
Adds Dibert: "Deutsche Bank is displacing minority homeowners at a methodical rate."
(NOTE: at press time, Real Estate Channel could not reach Deutsche Bank officials in Frankfurt for comment.)
Dibert came up with the loan-auditing idea while working for a broker in Traverse, MI. He claims MFI-Miami is the only private Florida mortgage auditing firm "and only one of about five nationally that does their forensic auditing by hand."
Besides Boynton Beach, MFI-Miami currently has offices in metro Washington, DC, Detroit and Boston.