Bulletin: SLS00200

Date:
April 30, 2004
To:
All Issuing Offices
RE:
Mortgage Avoidance Plan/Sham Releases
Dear Associates:

Escrow/closing and title examiners should be alerted to this scheme, or any scheme involving the steps described below, since some might otherwise overlook an unauthorized substitution of trustee and pass on a potential failure of title. Especially troubling is the fact this scheme is marketed to unsophisticated consumers.

" America 's Advantage," is offering a "Loan Elimination Process" by which financial institutions (banks and mortgage lenders) may be forced to cancel consumer mortgages and deeds of trust, without payment on secured promissory notes. Once a loan is eliminated, the consumer is free to refinance and use the plan again, since lenders cannot legally discriminate against America 's Advantage clients.

It appears the "procedure" may have several variations that should be of concern to title underwriters. Here are the steps:

1. Owner/borrower executes a substitution of trustee for the deed of trust against his or her property (which, of course, the owner/borrower has no authority to do). Substitution of trustee is recorded.

2. Substituted trustee executes and records a release (or reconveyance) of the deed of trust, or

3. Substituted trustee records a notice of sale pursuant to deed of trust, followed by a trustee's deed in favor of a third party (or trust). It appears the trustee's deed does not follow a legitimate foreclosure sale, and the third party is a 'straw man' or otherwise holds the title in trust for the former owner/borrower.

4. Later, property is refinanced (or possibly sold) with new title insurance being issued to include coverage against the supposedly released or foreclosed deed of trust. (Note the America's Advantage website stresses need for new title insurance, to provide for defense and indemnity against claims by the former lender.)

On its website, America's Advantage appears to have an address in Midvale, Utah, although its telephone and fax numbers use an area code dedicated to New Hampshire. Here's the link to their website: http://lep1121.americasadvantage.us/

If you have any questions, please contact the following individual:

Patty Hoesl
Claims & Litigation Paralegal
Stewart Title Guaranty Company
1980 Post Oak Boulevard, Suite 710
Houston, TX 77056
800-729-1902
713-629-2248 FAX
Email: phoesl@stewart.com

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THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

 

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None