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Conflict of Interest: Foreclosure Mills

Livinglies's Weblog

Despite warnings from Bar Associations and CLE courses that have been reported on this blog going back to 2008, lawyers routinely come into court and say “Good Morning your Honor, my name is John Smith and I represent US Bank.” That is not exactly true. In fact, it is a misrepresentation. In most cases the foreclosing party is named as a Trust, not a bank.  And the real client paying attorney fees is the CURRENT named servicer, who is taking instructions pursuant to some indemnification agreement with the named Master Trustee stated in the “trust instrument” (Pooling and servicing Agreement).

Not one of those parties has any interest in preserving the value of the collateral and in fact they all make a great deal of money when the foreclosure sale is “completed” and if the property is subject to a “credit bid” the proceeds of liquidation of the property to…

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