Mortgage Servicer's Libel Suit Against "Victim" Of "Engineered" Foreclosure To Begin Today; Firm Admits Loan Was Current When Legal Action Started

In Dallas, Texas, MSNBC.com reports:

• On the surface, the trial scheduled to begin Monday morning in the Dallas courtroom of U.S. District Judge Jane J. Boyle is your basic libel suit. Orix Capital Markets, a $1 billion financial services company, says its reputation is being seriously damaged by allegations posted on a Web site that mocks its very name.

• Indeed, the Web site’s shocking claims of massive fraud and deceit by a prominent member of the mortgage-servicing industry have captured the attention of high-powered attorneys and others immersed in the current foreclosure crisis.

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• Cyrus Rafizadeh, a defendant in the libel case, says the lawsuit is the work of an evil corporate giant determined to silence him, a 20-year-old law student, “computer nerd” and self-taught expert on mortgage securitization and trusts.

• Rafizadeh says he is using his Web site, Predatorix.com, to expose a vast scam by Dallas-based Orix, information that is directly related to the current U.S. mortgage meltdown and is of vital interest to investors, regulators and taxpayers.

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• The libel suit was filed as a counterclaim to a 2006 suit against Orix by a company called Super Future Equities, in which Cyrus Rafizadeh was a corporate officer. SFE owned shares in the securitized mortgage trust that held the loan on his family’s foreclosed apartment complex. Rafizadeh said much of the material in SFE’s lawsuit, which was dismissed by Judge Boyle in December 2007, was the fruit of his thousands of hours of research into Orix, the mortgage-servicing industry, real estate trusts and the securitization process.(1)

For more, see Libel trial begins over mortgage scam charges (Current showdown is latest chapter in 8-year, Texas-sized legal drama).

(1) According to the story, Rafizadeh told msnbc.com that he became interested in the topics after Orix foreclosed on the family’s Louisiana property. Orix, “engineered the default because they figured out you make more money in foreclosure and default than if the borrower makes all the principal and interest payments,” which his family was doing, he reportedly said to msnbc.com.

The story further reports that Orix attorney Greg May acknowledged to msnbc.com, as noted by Cyrus Rafizadeh, that principal and interest payments were not in arrears when Orix foreclosed on the Louisiana property. “The monthly payments of principal and interest were being made but there were big deferred maintenance and life-safety issues on the property,” May reportedly said. “It was a slum and they were running it as a slum.” A state court judge agreed with Orix that the Rafizadehs had failed to maintain the property as required by the loan and, further, ruled that fraud had been committed in obtaining financing for its purchase, according to the msnbc.com story. In 2004, the court entered a judgment of nearly $11 million for Orix.