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MISSION STATEMENT: The mortgage crisis has produced manifest evil and injustice in our society.  It has hollowed out our economy.

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Cities and Counties Bracing for Flood of Zombie Foreclosures

With 40 million people out of work so far, consumer spending dropping like a stone and the prospect of recovery still over the next hill, the cessation of relief for workers and consumers at the end of July means that by September there will be fake notices of default sent to thousands, perhaps tens of thousands or even hundreds of thousands of homeowners.

Following the past track record most homeowners will fail to contest the foreclosures erroneously believing the debt still exists in the same form and amount as when it was created (less payments made).

In districts where home values are low the investment banks, through their sham conduits will initiate forfeitures through foreclosure actions — and then abandon the property. The reasons are many but chief among them is that they don’t actually care about the money. they care about getting the foreclosure to insulate themselves from false claims of securitization of debt. The sale of the debt, you see, never happened.

That leaves the cities and counties without any legal person willing to pay taxes and fees. So far, the cities and counties have missed their opportunities. But when these zombie foreclosures hit the marketplace in January and February of 2021, they will again have an opportunity to recoup their money by suing the investment banks.

But they probably won’t because the politicians are often supported by political donations and other support from Wall Street banks. That in turn leaves the taxpayers — Federal State and Local to pick up the tab for services that are no longer being funded by assessments on those properties.

 

BETA TEST OF NEW SERVICE — DISCOVERY SUPPORT

 

Discovery

How to Stop the Court from Speculating About the Identity of Claimants in Foreclosure Cases

As long as you continually attack the sub silentio assumptions of the court, you will be weakening the case against you for foreclosure. Failure to do so means almost certain failure.

Foreclosure is considered a draconian remedy equivalent to capital punishment. All US jurisdictions have adopted as a matter of law and public policy (Article 9 §203 UCC) that the remedy will only be granted to one who paid value for the underlying obligation.

If you don’t challenge the sub silentio assumptions of the court, then the judge is free is assume that the granting of foreclosure is a remedy for restitution of unpaid debt and that he/she has granted it under the assumption that the owner of the debt is going to get the money when the property is sold to a third party.

THE FIRST MISTAKE YOU MAKE IS IN ASSUMING THAT THE OBLIGATION STILL EXISTS AND HAS NOT BEEN EXTINGUISHED IN THE PROCESS OF SECURITIZATION BY PAYMENT OUT OF HIGHLY PROFITABLE SECURITIZATION SCHEMES THAT WERE PART OF THE ISSUANCE OF THE MORTGAGE AND NOTE.

None of the court assumptions are true. But you can make them true by failure to challenge the assumptions and misleading arguments presented by the foreclosure mill. It is through no doing of the homeowner that the obligation has been retired without payment from the homeowner. And the homeowner has no legal or moral reason to pay it again. BOTTOM LINE: IF NOBODY HAS AN ASSET ON THEIR BOOKS SHOWING THEY PAID FOR THE DEBT, THEY HAVE NO RIGHT TO ENFORCE IT. THEY ARE JUST A WITNESS — NOT A PARTY.

This is a procedural problem. Technically speaking, a motion to dismiss has very strict rules — taking all allegations and exhibits of the complaint, does the complaint does state a potential cause of action upon which relief could be granted. Once you introduce something outside of the allegations of only the complaint you are in the realm of Motion for Judgment on the Pleadings, Motion for Summary Judgment etc.

 
Opposing counsel is attempting to mislead the court into speculating about the identity and nature of the claim, and the identity of the parties who are named as Plaintiff. The essence of the position of opposing counsel is a sub silentio argument: i.e., presume that somebody, somewhere is going to get the benefit of payment on a debt they own owed by the homeowner. The complaint and exhibits filed do not contain allegations of ultimate facts upon which relief could or should be granted. Such relief can only be granted if the court rejects basic jurisdictional and procedural requirements. Neither the Defendant nor the court has any basis for actually knowing the identity of the claimant(s) in this action. Relief cannot be granted to the world at large. 


The issue here is that opposing counsel now admitted certain things and their own complaint basically says the opposite of their current position in court. Inconsistent statements, some of which must logically and of necessity be false, are protected by litigation immunity behind which both opposing counsel and the participants in the instant lawsuit are hiding. But just because they cannot be held accountable for misleading the court doesn’t mean that they should be permitted to do it. 


Since the complaint is clearly filed, in its own words, on behalf of certificate holders, their current position that the bank is somehow the actual party is without foundation. The complaint lacks an allegation stating that the bank is the legal representative of certificate holders and further lacks any allegation that the bank is trustee for the certificate holders who are beneficiaries of a trust. Further the complaint fails to allege that the trust exists or was organized under the laws of any jurisdiction. 


They appear to be taking the position that the bank is a plaintiff, not on its own behalf but on behalf of some third party. If it is a trust, they have failed to identify the trust or any transaction in which the subject loan was entrusted to the trustee under the terms of a trust instrument which is also not alleged. 


Accordingly, based upon the argument of counsel, the complaint fails to state the cause of action that opposing counsel is currently pursuing. This court lacks jurisdiction to hear any matter in which the Plaintiff is not identified or in which the named Plaintiff is not alleged to have suffered some injury caused by the Defendant or someone through whom the Defendant claims an interest in the subject matter. 


As it stands the complaint must be dismissed because it lacks both basic requirements for authority of the court to hear any dispute, to wit:  The identity of the Plaintiffs is concealed, withheld or otherwise not alleged and the ultimate facts upon which relief could be granted as the basis of their claim is not alleged.

The current action is based upon the implied conveyance contained within unidentified certificates, the contents of which are neither described nor attached as exhibits. And the claim is alleged to be brought on behalf of undefined holders of those certificates, who are not alleged to have any interest in the subject obligation. On the contrary, opposing counsel continues to assert the position that the plaintiff is a bank acting as trustee for an implied trust. 


Opposing counsel is attempting to have it both ways and to distract the court from the obvious conflict presented in this case. Either the claim is brought on behalf of an actual or implied trust or it is brought on behalf of holders of certificates. In either case neither the “trust” nor the “certificates” or “holders” are identified. Defendant is forced to litigate with a ghost. This court is being guided into a final judgment that grants to relief to unknown legal persons based upon assumed injury that is never alleged. 


Defendant is entitled to know exactly who she is litigating against and why. that is basic pleading practice as required by the most basic constitutional standards, statutes and rules of civil procedure. As it stands, opposing counsel is promoting a case that has not been alleged. 


Defendant asserts that the case must be dismissed without prejudice or that judgment must be entered for the Defendants. The opposition filed by opposing counsel actually corroborates every basis for the motion to dismiss that was filed. This court should refuse to consider an unspecified case with unspecified plaintiffs on an unspecified claim. To do otherwise opens the door to new doctrine in which anyone can file a lawsuits based upon facts known to them as a witness instead of a party. 

The court should reject the sub silentio argument presented by opposing counsel — that even if the the trustee, trust and holders have no right, title or interest in the mortgage, the action should proceed because they know that the homeowner did not make a payment.

The protections enunciated by the state legislature in their adoption of Article 9 §203 of the Uniform Commercial Code are not optional. Only the owner of the underlying obligation can force forfeiture of property to pay a debt. Black letter law in all jurisdictions is crystal clear: debt is not acquired without paying value for it. Black letter law is in all jurisdiction is clear: assignment of mortgage without a sale of the underlying obligation is a legal nullity. 


“even if we could entertain the argument we would reject it. The complaint alleges that US Bank claims to hold the beneficial interest and the right to foreclose, which is fully consistent with defendants’ representations in their brief as well as the judicially noticeable documents in the record. The issue is not Chase’s role as the loan servicer, but the proper identification “of the party enforcing [the] debt.” (Yvanova, supra, 62 Cal.4th at p. 937.) Yvanova makes clear that “􏰀􏰁􏰂he borrower owes money not to the world at large but to a particular person or institution, and only the person or institution entitled to payment may enforce the debt by foreclosing on the security.” (Id. at p. 938, italics added.)”

Masoud v JP Morgan Chase, Cal. 4DCA, May 26, 2020, Case #D075582.

Yvanova v. New Century Mortg. Corp., 62 Cal.4th 919, 937 (Cal. 2016) (“Defendants argue a borrower who is in default on his or her loan suffers no prejudice from foreclosure by an unauthorized party, since the actual holder of the beneficial interest on the deed of trust could equally well have foreclosed on the property. As the Jenkins court put it, when an invalid transfer of a note and deed of trust leads to foreclosure by an unauthorized party, the “victim” is not the borrower, whose obligations under the note are unaffected by the transfer, but “an individual or entity that believes it has a present beneficial interest in the promissory note and may suffer the unauthorized loss of its interest in the note.” (Jenkins, supra, 216 Cal.App.4th at p. 515156 Cal.Rptr.3d 912; see also Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75, 85161 Cal.Rptr.3d 500 ”)

Yvanova v. New Century Mortg. Corp., 62 Cal.4th 919, 937-38 (Cal. 2016) (“Nor is it correct that the borrower has no cognizable interest in the identity of the party enforcing his or her debt. Though the borrower is not entitled to object to an assignment of the promissory note, he or she is obligated to pay the debt, or suffer loss of the security, only to a person or entity that has actually been assigned the debt. (See Cockerell v. Title Ins. & Trust Co., supra, 42 Cal.2d at p. 292267 P.2d 16 [party claiming under an assignment must prove fact of assignment].) The borrower owes money not to the world at large but to a particular person or institution, and only the person or institution entitled to payment may enforce the debt by foreclosing on the security.”)

In any valid case for foreclosure, the complaining party must plead and prove the current existence of the debt, the current ownership of the debt being in the claimant or plaintiff, and the default of the homeowner as to the claimant (not someone else, about whom the court could only speculate as to their existence or their interest in the proceedings).

If they fail to make such allegations or prove that case, foreclosure must be rejected. And if the reason they failed to make such allegations is that they are pursuing a profit motive in lieu of an attempt to collect on an existing debt held as an asset by some creditor then all parties involved should be held accountable for abusing or weaponizing foreclosure process in an extra-legal and therefore illegal manner, all claims of litigation privilege notwithstanding.

*Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.*

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Tonight! Qui Tam Actions

Thursdays LIVE! Click in to the WEST COAST Neil Garfield Show

with Charles Marshall and Bill Paatalo

Or call in at (347) 850-1260, 6pm Eastern Thursdays

Qui Tam Actions generally are lawsuits in which an individual sues on behalf of a governmental entity, typically the Federal Government, with the goal of remedying a defrauding of the government by a private organization or individual. These actions typically take the form of a whistleblower exposing the defrauding actions of his or her employer. Qui tam actions in the US are often brought under the False Claims Act, a Federal law specifically empowering individuals to sue as whistleblowers to recover private funds garnered through defrauding the Federal Government.

In the foreclosure context, individuals who are connected with, or in some cases simply apprised of, the defrauding behavior, can then bring a qui tam action to remedy the fraud. As a whistleblower, the suing individual is entitled to substantial compensation, including penalties, attorney’s fees, court costs, on top of the disputed amount of the fraud. The whisteblower receives his or her compensation as a percentage of the fraud money recovered. This amount can and often does run into the millions of dollars, depending on the nature of the fraud and the amount in dispute. Bill will highlight a recent successful qui tam action and address previous qui tam matters, involving for example mortgage servicers such as Nationstar. 

Transactions with Homeowners Are Part of Securitization Scheme: Why don’t homeowners and their lawyers use this fact?

So the “RMBS” industry is pushing for “economic relief” in the Pandemic. If they get it, it will be another windfall for Wall Street and investment bankers will go from laughing to convulsing in the privacy of their board rooms.

The Wall Street Journal published an article yesterday on how the mortgage market is not behaving “as expected.” With interest rates down so low there should be a flood of refinancing. And there is plenty demand to do just that. But, as the article points out, there might be demand but there is no supply. There is no supply because investors are not buying certificates issued as RMBS (Real Estate Mortgage Backed Securities). https://www.wsj.com/articles/mortgage-credit-tightens-creating-drag-on-any-economic-recovery-11590431459

The reason they are not buying RMBS is simple. They don’t trust the economy and all of the investors have growing doubts about the valuation and risk assessment associated with RMBS. Investors see mortgage default risks as being associated with safety of their investment because the certificates state that one of the discretionary reasons why investment banks don’t need to pay them is if there are declared defaults on certain specified loans — whether or not they are owned by the investment bank or anyone else.

And since securitization is in essence a Ponzi scheme, the more difficult it is to sell new certificates, the more difficult it is to pay investors. That part admittedly is counterintuitive but nonetheless true. While homeowner’s payments actually do cover the liability of the investment bank to investors, the reality is that the investment bank continues ot make payments to investors regardless fo receipt of money from homeowners IF they are continuing to make sales of new certificates.

The practical effect of all this for homeowners is to realize that if they sign on any dotted line they are pulling the trigger on a securitization scheme, of which their receipt of money is a tiny fraction. At the end of the day there is no person, company, business entity or trust that maintains any books and records showing the homeowner’s promise to pay as an asset on their balance sheet. In plain words, the role fo the creditor has been eliminated to avoid lender and servicer liability imposed by federal and state laws.

This fact — the absence of a creditor — has been the topic of discussion for two decades. And it is has never been addressed because the investment banks, who have the greatest amount of influence over politicians, don’t want it addressed. They don’t want it addressed because if it was addressed then the role of investment banks AS LENDERS would be revealed along with their gargantuan profits from “securitization” in which the obligations of homeowners are NOT sold to anyone, much less securitized.

In practice this means that homeowners can and probably should dispute their obligation to make payments before, during and after any false declaration of default. A declaration of default is a legal nullity if it isn’t declared by or on behalf of a creditor. If there is no creditor then there can be no default. Yes it is that simple.

So that is why I have been a broken record. Criminal lawyers tell their clients to keep their mouths shut because 80% of all criminal convictions are the direct result of what comes from the mouth of the defendants. That’s why I tell professionals with grievances filed against them the same thing.

And that is why I tell homeowners the same thing —- admit NOTHING. The reason is simple — your opposition is an investment bank regardless of who is named as claimant or plaintiff. If you admit any part of what they are saying they will argue that you admitted all of it. And they may be right under current rules.

Force them to the PROOF and they will fail the test every time.

Nothing they are saying is true and none of their documents are anything more than pure fiction. Don’t admit that the transaction was a loan, that there is an obligation, that the obligation is secured by a mortgage, that the obligation is set forth in the note, that the note or mortgage has been transferred, that the default ever occurred, or that the action is a foreclosure.

Don’t admit the trust or that a bank is a trustee or that the bank has any authority to represent a trust or the holders of certificates. None of it is true. Don’t even think that the action is for the benefit of investors. It isn’t.

And don’t think that you are cheating someone out of money by not making the payments you promised to make. Anyone who was legally entitled to receive a payment from you has already been paid. It is not your doing or your fault they got paid without your money. And it isn’t your responsibility to pay them again.

If investment banks want to change this analysis and return to the world where we are a nation of laws and not a nation where men make up their own rules and go to illegal or extra-legal schemes then they must seek to legally reform (see reformation) their schemes to protect all the stakeholders and not just themselves as intermediaries with the most to gain and the least to lose.

Your position is that you entered into a transaction in which you knew only a small part of the whole transaction and that you were entitled to know about the rest of it. Your intent was to establish a loan transaction. their intent was to start a securitization scheme in which the role of lender was eliminated.

So your intent was a loan and theirs was the creation, issuance, sale, trading and hedging of securities. Without your signature the securitization would not exist. Without securitization your homeowner transaction would not exist.

You got a payment for issuance of the note and mortgage and for a disguised and unintended license to resell personal data. That part of the consideration was offset by your required (see adherence contract) promise to make payments far in excess of the transaction payment received by the homeowner.

So was there any net consideration paid to the homeowner for issuance of the note, issuance of the mortgage and license to resell personal data? Auditors might vary in their opinions on that.

And given the requirements under all lending and securities laws to disclose the whole transaction — and not just the part of it called a “loan” — how much money should the homeowner have received for triggering a profit firestorm?

We won’t know because in a free market the homeowner would have been able to bargain for greater incentives if he/she knew about the entirety of the transaction. We won’t know because in a free market competitors for homeowners’ signatures would have offered more incentives. We won’t know because in a free market, investors would have asked for much greater incentives since, besides the homeowner, they were the only real player in the securitization scheme.

And THAT is what quasi contract law and the law of quantum meruit is all about. Use it or lose it.

*Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.

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How to Deal with Claims of Mortgage Selling and “Successors”

I received a question regarding Lehman along with information that the old Lehman crowd regrouped under the name of Matrix Private Capital Group in New York. Fuld is there and in any case involving Lehman engineered “loans” I would encourage the taking of his deposition.

The simple but counterintuitive answer is that Lehman wasn’t buying anything, but it did pay. It paid for the funding of the origination of loans.

Since the payment was already made, the originator did not have to be paid again in order to acquire the note and mortgage. Since the originator had never paid anything, it had nothing to sell.

So the originator never received any payment. 

Lehman was following the business plan that was invented at Goldman Sachs. The business plan was for the issuance of multiple levels of securities based upon the appearance of the creation of loan transactions and loan obligations. The trick of the plan was to do so without ever becoming a lender that was subject to federal and state lending laws regarding disclosure of compensation and profits.

So this is why all of the documents had to be fabricated after the origination of the illusion of a loan transaction without a creditor or lender. they had to create the appearance of a sale through documentation that was completely fabricated, false, and more often than not forged and backdated. but lawyers and judges all come from law schools in which their training is directed at the written instrument as though it was the Bible. 

In this case virtually all written instruments are part of a scam. 

This is part of the reason why the “boarding process” is completely false. The records, in most cases, of the payment history are solely in the care, custody, and control of central repositories like Black Knight who, like their investment bank bosses, remain out of sight. And the records of who receives payments made to the servicers are a closely guarded secret — something that is both illegal and extra-legal. Of course you’re entitled to that information since it shows clearly who is intended to receive payments on the homeowner obligation — i.e., the so-called creditor.

Whose Lien is it Anyway? Neil F Garfield, published by GTC Honors, Inc. f/k/a General Transfer Corporation (2008)


So if you really want to manage your expectations regarding these issues, the first thing you need to do is stop believing anything you read in the documents that are prepared by or on behalf of the investment Banks. —- And you need to get comfortable with ambiguity — yes you have an obligation but no you don’t have and probably never did have a lender.

The only legal way to enforce the obligation is for some party to step up and say they paid for the obligation and that they therefore own the debt, note and mortgage. But for anyone to do so they would be asserting an interest adverse to those of investors who think that they “own” the loans without any of the responsibilities that go along with ownership of loans or their administration. So the only thing for them to do legally is seek to reform the instruments to allow for designation of a creditor even when there is none.

The law firms representing the investment banks have long understood that taking the legal route would diminish the profitability of securitization schemes since it would necessarily result in the disclosure of all manner of profits from the scheme.

So they went the illegal route with great success. It worked because they managed to get everyone focussed on the “benefit” received by homeowners and the “windfall” they would receive if the home were not foreclosed.

Here is what they don’t want anyone to seriously consider: that the payment to the homeowner or on his/her behalf was just that — payment, not a loan. And the consideration for the payment was the issuance of a note and mortgage without which there could be no securitization. Further consideration was the grant of authority to resell private loan data.

Under normal legal analysis this results in a failure of consideration because the payment was illusory. At the same time as the homeowner receives it he issues the note and mortgage in which it is pledged out again.

But the securitizations scheme went forward anyway which is why the homeowner is entitled to receive payment in quantum meruit either as a direct claim or as a defense (affirmative defense) for set off or claim of disgorgement.

This is entirely dependent upon two things — (1) the amount of money generated as revenue that can be allocated to the origination of the homeowner transaction and (2) the reasonable amount of money, in a free market economy, that would normally be paid to a person for playing the critical role in allowing the securitization scheme to proceed.

A review of such cases shows that the percentage of compensation due to homeowners is between 5% and 15% of the revenue generated. In a typical securitization scheme the amount of revenue is on average $12 for each $1 of the homeowner transaction. So that translates to the homeowner being entitled in quantum meruit to between $0.60 and $1.80 for each $1 of the nominal amount of the homeowner transaction. So the bottom line is that the homeowner owes the $1 in quantum meruit but is also owed between $0.60 and $1.80 PLUS interest.

And that is the rest of the story. I dare anyone from the financial community to say I am wrong. That is anyone who has a license at risk and who can produce contrary data proving that this calculation is incorrect.

*Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.*

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If you want to submit your registration form click on the following link and give us as much information as you can. CLICK HERE FOR REGISTRATION FORM. It is free, with no obligation and we keep all information private. The information you provide is not used for any purpose except for providing services you order or request from us.In the meanwhile you can order any of the following:

*CLICK HERE TO ORDER TERA

*CLICK HERE TO ORDER CONSULT (not necessary if you order PDR)

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*FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.

*Please visit www.lendinglies.com for more information.

Charles Marshall Scores Major Victory in Cal. 4th DCA on Chase-WAMU Fraud

This was no easy task. And this is exactly the ruling that all the nay-sayers said could not happen. But it did.

https://livinglies.me/wp-content/uploads/2020/05/D075582_Opinion.pdf

D075582_Opinion.pdf

We reverse because her complaint alleges facts that could support a legal theory of recovery if she were given leave to amend.

D075582_Opinion.pdf

But Masoud’s final basis for her title claims—that WaMu sold her deed of trust to unknown third parties three years before Chase assumed its assets—cannot be so easily dismissed. In sustaining the demurrer, the trial court relied on the P&A agreement between Chase and the FDIC to conclude that Chase obtained the rights to Masoud’s deed of trust. But the legal meaning of the P&A is that Chase obtained whatever assets WaMu possessed as of September 2008. It does not exhaustively list what assets those were.

D075582_Opinion.pdf

Assuming (as we must at this stage) that the allegations of the operative complaint are true, it would mean that Chase was never WaMu’s successor in interest as to Masoud’s deed of trust and that at most, it attempted to transfer an asset it never owned to US Bank in 2011. As a result, according to Masoud, a party with no legitimate claim to her deed of trust foreclosed on her house.

D075582_Opinion.pdf

This is precisely the kind of injury envisioned in Yvanova, which held that a borrower has standing to challenge a foreclosure sale ordered by a party with no authority to do so. (Yvanova, supra, 62 Cal.4th at p. 943.) This court has further clarified that the protections of Yvanova apply only in the postforeclosure context—exactly the position Masoud now finds herself in. (Saterbak, supra, 245 Cal.App.4th at p. 815.) And on at least one occasion, this court has applied Yvanova in reversing a judgment of dismissal after a sustained demurrer when a borrower alleged her deed of trust was sold twice by the same party, rendering the second sale void and the foreclosure that followed unlawful. (Sciarratta v. U.S. Bank National Assn. (2016) 247 Cal.App.4th 552, 565.)

D075582_Opinion.pdf

other than the original 2005 deed of trust that references WaMu as the lender, the judicially noticeable documents are all from 2008 or later. They shed no light on whether WaMu, after funding the loan in 2005, assigned the beneficial interest to another party or other parties later that same year such that it had no interest to transfer in 2008.

D075582_Opinion.pdf

defendants appeared to argue that even if WaMu sold the beneficial interest in 2005 (so that there was no asset to transfer to Chase as part of the 2008 P&A agreement), it nonetheless retained rights as the servicer on the

loan.7 They suggest these servicing rights transferred to Chase in 2008 such that Chase was entitled to foreclose in its capacity as the loan servicer regardless of which entity held the beneficial interest.

D075582_Opinion.pdf

even if we could entertain the argument we would reject it. The complaint alleges that US Bank claims to hold the beneficial interest and the right to foreclose, which is fully consistent with defendants’ representations in their brief as well as the judicially noticeable documents in the record. The issue is not Chase’s role as the loan servicer, but the proper identification “of the party enforcing [the] debt.” (Yvanova, supra, 62 Cal.4th at p. 937.) Yvanova makes clear that “􏰀􏰁􏰂he borrower owes money not to the world at large but to a

particular person or institution, and only the person or institution entitled to payment may enforce the debt by foreclosing on the security.” (Id. at p. 938, italics added.) Here, Masoud has alleged that US Bank wrongly claimed to be the entity to which the deed of trust had been assigned. (Ibid. [borrower “is obligated to pay the debt . . . only to a person or entity that has actually been assigned the debt”].) At this point it remains a factual question as to which persons or entities held the beneficial interest in the deed of trust at the time of the foreclosure. That Chase may have inherited servicing rights or responsibilities from WaMu does not erase Masoud’s injury if a party with no beneficial interest in her loan directed foreclosure on her house.

D075582_Opinion.pdf

Liberality in permitting amendment of pleadings, even where there have been earlier opportunities, is required by this state’s well-established public policy favoring resolution of cases on their merits wherever possible. (See, e.g., Douglas v. Superior Court (1989) 215 Cal.App.3d 155, 158.)

How to Deal with Motion for Substitution of Plaintiff in Foreclosure Actions

The single basic tool of the investment banks, who are secretly running the whole foreclosure show, is musical chairs. By rotating the players they can successfully bar the courts and the litigants from knowing or pinning down who is real and what is real. All of that ends if you sue the investment bank.

Look at any foreclosure in which claims of securitization are known or suspected and you will find “rotation”.

In nonjudicial states it starts with “Substitution of Trustee” on the deed of trust which can be done without any motion.

Before or after that there is a change in the name of the servicer, which has perplexed judges since I first entered the picture in 2006.

Then there was a change in the credit bid after the foreclosure was complete or during the foreclosure sale where a new party mysteriously ended up “owning” the property.

And now we see with increasing frequency, the substitution of a new claimant or plaintiff during the foreclosure proceedings.

Motion for substitution of Plaintiff are becoming the rage simply because most state courts require a wrongful foreclosure action to be against the party who initiated the action. So the investment banks simply took their cue from that. They designate a new Plaintiff or a new claimant during the proceeding. Presto there is no wrongful foreclosure action. But there still may be the normal abuse of process claim.

Either way, they have no right to designate the first or the new Plaintiff or claimant. 


I would say that the likelihood of successful opposition to the motion for substitution of plaintiff is very low, as long as some explanation is offered. But this should trigger aggressive discovery where you go after the transaction by which the new plaintiff became the designee.

In a nutshell no such transaction exists because there was also no transaction by which the first Plaintiff became a creditor. It is all smoke and mirror. 


I am not saying that you shouldn’t oppose the motion for substitution of plaintiff. What I am saying is that the judge will regard it as merely a housekeeping chore until you raise the central issues of your defense narrative.

The moral of the story is that if you are going to sue for wrongful foreclosure you should be naming the investment bank that was calling the shots. Everyone else is a moving target with plausible deniability. That may not always be so easy to determine, but it isn’t impossible. We can help with that.

If you go after the investment bank you will be able to overcome the plausible deniability and technical requirements of claims based upon wrongful foreclosure. You can say that the action was brought by them using the name of a sham conduit. The change in “Plaintiff” therefore changes nothing.

Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.*

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*FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT.  THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.

*Please visit www.lendinglies.com for more information.

About those tax statements you have seen or received on home “loans”

Answering your question requires tracing the convoluted strategy of the investment banks. 


Start with the proposition that each player is one of the separate business entities involved in the securities plan that claimed to “have” your loan in some manner, shape or form.

Next go to the fact that the creditor role was extinguished in the plan. That leaves the debt with nobody to pay (no creditor). Nobody has an asset on their balance sheet corresponding to your transaction that was originated as a “loan.” 


BUT you are making payments as directed by people whom you think are actually authorized to tell you where to make your payments. Those payments are sent to a company claiming to be a servicer. I’ll simply call them a receiver. So the receiver accepts the payments and then forwards money to someone (Investment Bank) who is the party from whom they accept instructions (although the instructions are actually received semi-anonymously from a third party intermediary). It’s like organized crime. The receiver keeps a portion of the payment as fees and turns over the balance. 


So the investment bank has received a payment from the receiver. It does not book the receipt of money from the servicer as interest income, return of principal or anything like that because the investment bank has no asset against which it could post such entries. So it posts it to a suspense account (with the label of the implied trust, which actually does not exist and therefore has no tax liability) that is neither income nor a reported asset, although it should be reporting the asset and an equal liability to pay it out if that was the case. This is simple double entry bookkeeping. But because of changes in GAAP that started in the 1960’s (See Unaccountable Accounting by Abraham Briloff) and were then accepted by both the Financial Accounting Standards Board and the SEC and therefore  by the IRS, these transactions are considered “off balance sheet” which is a fancy way of saying that they don’t actually report it even though it happened. 


Since there is no  bookkeeping entry as to income or expense there is no taxable event and nothing is reported to the IRS. And while payments are being made to investors (holders of certificates) by the investment bank (as “Master Servicer” on behalf of the implied “trust”) all of those payments are discretionary. 


And here is another place where it gets really complicated. Payments received from the servicer do account for most of the payments made to investors who bought certificates. But factually and legally those payments continue only as long as the investment bank wants to make them. The investment bank wants to make them only as long as it is selling certificates. (See Ponzi scheme). And in actuality the investment banks DO continue to make payments without regard to payments received from homeowners as long as they are keeping up the pretense that those payments are actually tied to the receipt of payments from “borrowers.” The goal is to sell more certificates. 


And in fact the structure of securitization in practice is such that if all homeowners stopped making payments, the investment banks would and do continue making payments — if they were still selling certificates. This actually happens where most of the loans were toxic assets. But in reality the investment banks could not continue to sell certificates if homeowners refused to pay. That would break the illusion of loan portfolios and it would be easy to see that the transactions with homeowners were not really loans because nobody ended up being a “lender” as defined under Federal and State lending laws. 


So what happens when a debt is discharged by bankruptcy? Answer nothing because nobody has it as an asset. It continues to get reported as if nothing had happened. the goal is maintain the pretense that the “loan portfolio” is operating and that “borrowers”. 
What happens when the trustee sale occurs? Answer nothing because nobody has it as an asset. It continues to get reported as if nothing had happened. the goal is maintain the pretense that the “loan portfolio” is operating and that “borrowers”. 


What happens when they sell the property using third party names? Answer nothing because nobody has it as an asset. It continues to get reported as if nothing had happened. the goal is maintain the pretense that the “loan portfolio” is operating and that “borrowers”. 

What happens with payments from homeowners that are reported as “interest” by the receiver/servicer? Answer nothing because nobody has it as an asset. It continues to get reported as if nothing had happened. the goal is maintain the pretense that the “loan portfolio” is operating and that “borrowers”. 


What happens with payments from homeowners that are reported as “principal” by the receiver/servicer? Answer nothing because nobody has it as an asset. It continues to get reported as if nothing had happened. the goal is maintain the pretense that the “loan portfolio” is operating and that “borrowers”. 


Having created a complex design that to most people is impenetrable the investment banks are now able to report anything they want for their own purposes. 


It doesn’t matter what the homeowner pays or doesn’t pay.
But they have algorithms to keep up appearances. Since those programs do not have access to any actual database, they create one what assumes, from the face value and terms of the origination loan documents, that you are paying and they send out a statement that says you paid interest on your loan. This provides the foot prints for tax evasion or avoidance. Having established nonexistent transactions as at least “reported” they can now write off the loan, take a loss and reduce their taxes. 


The interesting academic question that rises from all of this is that the whole thing is “tubular,” in my view. From the perspective the homeowner intended to make payments of interest when the homeowner was actually making payments on what the homeowner thought was a loan. It was certainly an obligation even if it wasn’t a loan, even if it might have been an unenforceable obligation for lack of consideration.

[More legal analysis: If it wasn’t a loan then the payment was in exchange for something from the homeowner — i.e., initiating and issuing instruments that started (or completed) the securitization process. If that was the consideration then was the consideration cancelled out by the homeowner/issuer’s required promise to make a payment that was more (with “interest”) than what the homeowner received?]


So from the homeowner’s perspective the payment was interest on an obligation and was not deductible unless it was an obligation arising from a homeowner “loan.” But from the investment bank’s perspective there is no interest, there is no principal. There is only cash flow to which they attach any label they want. It is my opinion that this is a major potential source of revenue for Federal and state governments who have income taxes. Because the investment banks are taking deductions without reporting the income. 


So all of this adds up to a very solid qui tam action under state and federal false claims act that cost governments money. The problem is political. Under direction from the executive branches, most dominated by politicians who have received vast amounts of money from investment banks who received vast amounts of money from investors and homeowners, so when qui tam actions are filed, the agency steps in and says “it’s ok, we were not defrauded. This is public policy to allow this.” End of Qui Tam. 

*Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.*

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*FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT.  IT IS NOT A SHORT PROCESS IF YOU PREVAIL. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION

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.*Please visit www.lendinglies.com for more information.

Largest Increase in “Mortgage” delinquencies (more than 30 days) ever recorded: 1.6 million jump in last month bringing total to 3.6 million homes

Get ready for the next tidal wave of fraudulent foreclosures.

BEWARE: MORATORIUM ON FORECLOSURES MAY NOT STOP SALES OF THE PROPERTY

In a nutshell, moratoriums will do very little for homeowners or the courts. First unless a specific moratorium order states that it bars sales and evictions it is only the foreclosure action that is temporarily suspended. At some point in the near future, homelessness will spike because of a new tidal wave of foreclosures.

Second a moratorium does nothing to forgive payments. So when the moratorium expires, all the payments are due unless you ask for and receive some sort of forbearance agreement from servicers (who probably don’t have any authority despite all appearances to the contrary).

Third, don’t rely upon your own interpretation of what you read on the Internet. There is no substitute of a three year legal education and law degree and there is no substitute for decades of experience in and out of the courtroom.

Fourth, DO use this time to prepare for a confrontation with the banks and companies claiming to be servicers. Do not admit to anything —even the existence of your obligation even if that makes you feel uncomfortable.

Fifth start the administrative process by sending out a Qualified Written Request under RESPA and a Debt validation Letter under FDCPA. But stop thinking you know how to do that. Overbroad generalizations and conclusions are a perfect excuse not to answer you or evade your questions.

*Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.*

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*FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT.  IT IS NOT A SHORT PROCESS IF YOU PREVAIL. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.

*Please visit www.lendinglies.com for more information.

Tonight! Court Bias — The Silent Killer in Foreclosures and What To Do About It. 6PM EDT 3PM PDT

Thursdays LIVE! Click in to the Neil Garfield Show

Tonight’s Show Hosted by Neil Garfield, Esq.

Call in at (347) 850-1260, 6pm Eastern Thursdays

DeSantis Extending Eviction and Foreclosure Moratorium Through May: Ice in the Winter

This is a redo of last week’s intended broadcast.

Instead of taking the opportunity to review complaints about the process of foreclosure and eviction, the Governor of Florida is issuing an order that all but assures that the foreclosures will continue to be regarded as valid — i.e., based on true facts about the status of the claimed debt, the ownership of the debt, and the authority to collect, administer and enforce the debt.

The elephant in the living room is that none of these “Securitized” transactions are being treated as securitization schemes. Lawyers come to court and say “Your Honor, this is a standard foreclosure.” NO! It isn’t.

And the moratorium, such as it is, still leaves homeowners faced with foreclosures by people who have no financial stake in the foreclosure or the “loan” except the expectation of profit.

But because borrowers believe that to be true and so do most of their lawyers, the die is cast. Everyone assumes that the only thing in play is the “loan.” And yet, the courts ignore the fact that under Article 9 §203 of the UCC the claimant must have paid value for the debt — which it must be the owner of the debt because only someone who has suffered actual financial injury can bring a claim for foreclosure. That is black letter law converted to gray because of court bias.

Court bias results from a sub silentio doctrine, which is the subject of tonight’s radio show. It explains how and why the courts are getting it wrong almost every time. It isn’t because judges are out to get homeowners or because they have been  bought off by the banks. It’s because almost nobody is taking the time or energy to present the whole transaction  to the court.  If it isn’t presented, the judge has no power to rule on it. It’s Bias but it isn’t the kind you are thinking about.

THIS IS NUTS: THE STOCK MARKET IS NOT THE ECONOMY

it seems that Wall Street has managed to get us thinking in terms of investor sentiment rather than economic fundamentals.

This is part of a larger pattern powered by Wall Street to get us thinking what they want us to think rather than asking simple, basic questions. And they continue to enjoy the misplaced trust of millions of investors and fund managers while they invent new ways for all of us, including our government, to lose money that ends up in the pockets of the Wall Street giants.

This is not an indictment of all of Wall Street which serves a necessary purpose in a capitalist system.

For those confused about what to do with their investments for retirement, there are no good choices. When Alan Greenspan was chairman of the Federal Reserve he referred to the stock market being a repository of irrational exuberance.

In 2016 the stock market was already overpriced if you look at fundamental elements of stock valuations like price-earnings ratio and book value. Once upon a time, stocks were mostly valued at a multiple of their CURRENT earnings per share.  If a company was experiencing growth it would get a higher multiple than a company whose earnings were flat or had moderate growth.

Then Wall Street figured out that the public could be easily duped into thinking stocks were more valuable than their fundamentals by simply switching (a) the basis for the multiple and (b) changing accounting standards.

Today the P/E ratio is mostly based upon future earnings which means projected earnings which in turn means whatever management says they want it to be. This dovetails nicely with advent of “Unaccountable Accounting” (the title of a book by Abraham Briloff in the 1960’s) in which certain transactions, defined again by management, could be reported either as “off balance sheet” or as a one time write-off separate from regular reports of earnings.

In turn this dovetailed nicely with the permission for securities brokerage firms to incorporate and go public which forever shifted risk from management to shareholders. This gave management the license to take risks with impunity and benefit from short-term gains even when the long-term result could be bankruptcy. (see 2008 financial crash).

So the stock market indexes took off like a rocket in both valuation and volume of trading. Stock prices, untethered by fundamental securities analysis, went wild. In simple language, individual investors and even institutional investors fail to ask themselves now a basic question: if the company they are researching is earning $1 per share, are you really ready to wait 50-80 years or more for it to earn back the $80 you just paid for a share of it?

In the 1990’s Wall Street referred to the dot.com bubble as “the new economy.” There is no new economy. At the end of the day, week, month or year, do I have more or less money than I had when I started? But under the Wall Street  labels and PR campaigns we have been deflected from asking such questions.

The most recent example of this was the increase in the stock indexes from early 2017 or the beginning of 2020. An 80% increase during a time when GDP increased only 9%. If we ever returned to basics the stock market would have a correction of more than 50% from current levels; but it seems that Wall Street has managed to get us thinking in terms of investor sentiment rather than economic fundamentals.

So I don’t know what is next for stock market. We just had a steep contraction of the economy but the stock market went up, which is another example of, I think, “irrational exuberance.” Or in plain words “this is nuts.”

Warships Use Decoys to Neutralize Attacks. Don’t fall for it

Very often the reason I won a case tried in front of judge or jury was that I wasn’t afraid to question the essence of the case against my client.  Chewing around the edges is a tacit admission that the essence is true and valid.

When I represented lenders most borrowers did not contest — and when they did it was always about mistakes in accounting. Unless the borrower could show which mistake occurred and when, they lost. Those are the rules. My strategy was to pin down the essence of the attack. More often than not, it did not really exist.

So now, representing borrowers, I challenge the essence of the claim — that there is a debt, it is unpaid and the named claimant has been injured by nonpayment. Most lawyers are afraid to ask the question because they think they know the answer — that the debt does exist, it is unpaid and the named claimant has been injured by nonpayment. But in transactions that have been enmeshed with claims of securitization, the answer is not what you might think.

When a military sea vessel or aircraft is fired upon, especially by a heat seeking missile, it scatters bright and shiny objects that give off heat, but whose destruction will not harm the ship in the least bit. Wall Street banks have been sharpening this strategy for more than 20 years.

Most of the technical attacks on lending, collection, servicing, and enforcing claimed “debts” and foreclosures are simply wasting the time, money and energy of the homeowner whose best defenses are a good offense.

The winning attacks or challenges consist of directing and enforcing questions and asking for documents to which the homeowner is entirely entitled by law and  by common sense.

There is no real world in which a Defendant is not entitled to know the name of the person suing him. There is no real world in which the Defendant is not entitled to know if the injury forming the basis of the complaint actually exists. And those rules, applied to collection and  enforcement of mortgages were written by bank lobbyists. So you are not twisting either the word or the intent of the rules or the laws.

I think that both pro se litigants and their lawyers are afraid to get egg on their face and that is one reason why they lose so often. If you are going after a scheme make sure you are at least threatening to kill it. Don’t be afraid to ask whether the debt exists — the answer might surprise you.

*
Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
*

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In the meanwhile you can order any of the following:
*
*
CLICK HERE TO ORDER CONSULT (not necessary if you order PDR)
*
*
CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR PLUS or BASIC includes 30 minute recorded CONSULT)
*
FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT.  IT IS NOT A SHORT PROCESS IF YOU PREVAIL. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
*
Please visit www.lendinglies.com for more information.

Another Spectacular Display of Government Collusion with Big Banks: Specialized Loan Servicing Pays $1.25 Million for Failing to Comply with RESPA on $112 Billion in Claimed “Loans”

The consent order requires SLS to pay $1.275 million in monetary relief to consumers in the form of redress and waiver of borrower deficiencies, pay a $250,000 civil money penalty, which will be paid to the Bureau and deposited into the Bureau’s Civil Penalty Fund, and implement procedures to ensure compliance with the Real Estate Settlement Procedures Act (RESPA) and its implementing regulation, Regulation X.

A copy of the consent order filed with the Bureau is available at: https://files.consumerfinance.gov/f/documents/cfpb_specialized-loan-servicing_consent-order_2020-05.pdf.

I continue to be infuriated by regulators who now know the extent of illegal collection, administration and enforcement of transactions with homeowners. The entire industry that calls itself “servicers” is mostly comprised of a fully paid, indemnified coverup of false claims leading to collection of money and forfeiture of homes that are admittedly wrongfully foreclosed but the agency refuses to require the players to undo false, illegal and fraudulent foreclosures.

The Bureau’s investigation found that since January 2014, SLS violated RESPA and Regulation X by taking prohibited foreclosure actions against mortgage borrowers who were entitled to protection from foreclosure, and by failing to send or to timely send evaluation notices to mortgage borrowers who were entitled to them.  These violations also constitute violations of the Consumer Financial Protection Act of 2010. In some cases, SLS’s violations of Regulation X short-circuited the protections against foreclosure for consumers whose homes were ultimately foreclosed upon. [e.s.]

So if you want to know why this is happening, look in the mirror. You are a voter. So if you don’t vote for people who are likely to require enforcement of our laws to protect consumers and homeowners, you are part of the problem.

And if you are not interested in being part of a homeowners association that defends and lobbies for laws that strengthen protection for homeowners, you are allowing this to continue. One way or the other, it will visit your doorstep. It will be either in the form of your own home or the effects of someone else’s problem that reduces the valuation of your home.

Think I’m overstating? Google “mortgage meltdown” or “2008 financial crisis.” Or better yet Google history of “TARP” where the definition went into constant change mode. Get the facts. Then decide for yourself based upon facts.

Can you force securitization players to identify the creditor?

The creditor is by definition the party who claims to own the debt. If they own the debt then they are reporting the debt as an asset receivable on their accounting records. Since investors do NOT buy homeowner debts, there is no party anywhere that is a creditor. If there is no creditor, there can be no debt, because there is nobody entitled to receive payment.

Current law is slightly muddy; however common sense combined with common law should do the trick. But Judges, scared of toppling the entire financial system continue to find ways of making it difficult if not impossible to learn the name and address of the party claiming to be entitled to payment on obligations arising from transactions with homeowners.

This has opened the door to widespread fraud. Lawyers can come to court claiming they have a client and only implying that the client is a creditor. The fact that it is untrue neither subjects them or their client to discipline or liability because of something called “litigation immunity.”

Virtually all claims of “securitization of debt” are false. This is certainly true in transactions with residential homeowners. The reason is simple: investors, who are supplying the money for “the scheme”, are NOT buying any right, title or interest in any debt, note or mortgage. AND investors get paid based upon an entirely different formula which is applied regardless of whether or not the homeowner is making payments.

The reason why identification of creditors is consistently stonewalled is also simple: there isn’t one.

So whether it is a demand for a monthly payment or it is a foreclosure proceeding invoked, it is not happening because anyone got hurt or lost money. Everyone still is getting paid because most of the cash flow for their payments comes from the creation, sale and trading in unregulated securities — not “loan” payments. But this is counterintuitive (i.e., not believable in the context of common knowledge). As a result nearly everyone, including the homeowner who is falsely cast as a borrower, believes that here was and remains a loan of money that the homeowner has not repaid.

So thus far, because of the erroneous assumptions in “common knowledge”, everyone comes to court with the wrong idea. The results are not surprising:

  1. Foreclosure mill lawyer makes untrue representations that are assumed to be true as to status of a “loan” and the amount due and the party to whom it is “owed.”
  2. Borrower, even though counsel, admits the “loan,” and thus admits that there is an amount due and owing.
  3. Counsel for borrower has no idea that he/she is admitting that there is no defense except for technical objections in the declaration of default or in accounting.
  4. The judge assumes there was a loan and that the claimant is seeking to collect on it because the uduge must assume that in the absence of a contest by the homeowner. Even if the homeowner does contest, the judge will typically not regard the challenge as credible.
  5. Nobody gets mad because they are thinking that after all there was a loan and it hadn’t been paid. Nobody is thinking injustice because the proceeds of the forced sale and forfeiture of the homestead are being used to pay down the debt.
  6. So the Judge is presented with a “challenge” that starts with an admission of the loan, admission of the debt, admission that it is unpaid, but a technical objection to its enforcement because the debtor does not believe, but cannot prove that the party claimed to be represented by counsel is a real creditor.
  7. The Court adopts, sub silentio, a tacit judicial doctrine that enlarges the requirements for filing and pursuing judicial foreclosures beyond the statutory conditions precedent for filing such an action. The doctrine requires ultra vires judicial action in which the State statute adopting Article 9 §203 of the Uniform Commercial Code is rewritten only for purposes of foreclosure actions.
    1. Specifically, the statute requires that foreclosures be brought only by parties who paid value for the underlying debt; but the doctrine negates that statute and substitutes an unfounded assumption that eventually the proceeds of foreclosure will be used to pay off the underlying debt to an unidentified and unknown creditor. That assumption is factually, legally, ethically and morally wrong. Adherence to it promotes an unjust result.
  8. Unchallenged as such it becomes the law of the case with each new ruling by the court and the final order or final judgment entered by the court.
  9. Even readers of this blog don’t get it. If the loan obligation of the homeowner ever existed in legal terms — i.e., enforceable by laws of contract — and even if it still exists, the fact remains that this was never a loan and that the transaction with the homeowner was part of a larger transaction and a larger contract that is recognized at law as quasi contract or under quantum meruit because of the fact that the larger scheme, and all of its profits, were never disclosed to the homeowner. Until that larger contract is alleged and proven by both sides, there can be no enforcement of any obligation of either party.
  10. The terms, conditions, consideration and obligations of the parties can only be determined when the court has the entire securitization scheme under review. Without the creation, sale and trading of unregulated securities there would be no money to fund transactions with homeowners. Without the transactions with homeowners there would be no securitization scheme. Under  single transaction analysis or step transaction analysis the conclusion is clear. The transaction with homeowners is inextricably entwined with the securitization scheme such that one cannot exist without the other. In that context, attempts at invoking foreclosure are invitations to the court to ignore offsetting obligations owed TO the homeowner and to focus only on obligations owed FROM the homeowner. In courts of equity and law, this is invites error and injustice.

And one of the big problems is a very real conflict between two very real necessities in jurisprudence concerning the behavior of lawyers and their clients. On the one hand lawyers and generally their clients must have litigation immunity to prevent them from being targets every time their client loses a case. This is unalterably true even if you don’t like it.

On the other hand, lawyers and their clients have a duty of performing due diligence inquiries to satisfy themselves that there is at least a shred of truth to the position they are being hired to advocate for their client.

And on the third hand, lawyers must not mislead or misrepresent facts to the court, but it is not a misrepresentation unless the lawyer knows it is a lie. And the lawyer does not know it’s a lie if his due diligence failed to uncover the truth.

In short, there is an abundance of plausible deniability fueling the foreclosure spree that began in 2001.

Lawyers are not required to swear or even assert that the named claimant or plaintiff is actually their client. In situations where securitization is claimed the named claimant is not a client of the law firm invoking the process of forfeiture through foreclosure.

Normally such law firms get an electronic message with electronic information and they are told to utilize the services of a company who will be referred to as a servicer. The law firm is given these instructions from an unknown source commanding that the claim to be initiated in favor of a designated entity.

Here is the rub: nobody from the law firm ever speaks with or is otherwise taking instructions or questions from any living person who works for any entity that has been identified as the claimant or Plaintiff. The law firm is relying upon its receipt of electronic instructions that that have not been tested.

So the way to deal with this and get to the nub of the problem is to ask for the identity of the creditor and the status of the claimed obligation. And in many states you are entitled to get it, but enforcement of that right is troublesome in the context of false claims of securitization of debt.

And that is where we run into litigation immunity and the right to obtain payoff statements. The tendency in the courts now is to require law firms to turn over payoff statements provided by “the client” and definitely from a “servicer” for “the client.” But none of those statements ever contain a representation, guarantee or warranty that the named claimant is a client, that the named claimant is a creditor, or even that the obligation still exists and has not been extinguished off the books of every participating entity as an asset receivable.

The authors of the leading treatise on mortgages in the United States state that even in the absence of statutory law “mortgagees have a duty to respond reasonably and promptly” to inquiries regarding payoff statements. And that “the whole system of mortgage finance would break down if mortgagees refused on any wide scale to provide the needed information.” 1 Real Estate Finance Law §2:4 (6th ed.).
The Restatement (Third) of Property: Mortgages §1.6 imposes a duty on a mortgagee, even in the absence of an applicable statute, to provide information regarding the balance due and status of an obligation to the mortgagor and others, on written request, and that a mortgagee who discloses erroneous information is liable for the damages caused by the failure or error.
Under the New Jersey Home Ownership Security Act of 2002 (HOSA), N.J.S.A. 46:10B-25f, a creditor’s failure to provide payoff balances within seven days after a request is an unlawful practice under the New Jersey Consumer Fraud Act implicating treble damages, N.J.S.A. 56:8-19. And HOEPA, 15 U.S.C. Sec. 1639(t)(2), requires creditors to provide payoff balances within five business days of a request.
With the crush of mortgage foreclosures today in New Jersey and elsewhere, public policy should override the LP to ensure that borrowers, especially homeowners, are guaranteed accurate payoff and reinstatement figures during the foreclosure process.
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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2008: It’s not “almost” like they planned it — It is exactly how they planned it!

No “almost” about it. The key to home prices — proven over the last 140 years (see Case Schiller index) , is median income. Median income is what determines home value. Home value cannot be manipulated. But home PRICES can be manipulated. The difference between the two is what causes booms and busts.

And the ability to confuse consumers into thinking that home value and home prices are the same is what enables market manipulation. In the past, the only major factor as a restricting force in the marketplace was the risk of loss to lenders. Wall Street eliminated that risk of loss and now uses servicers and foreclosure as a means to gain extra profit.

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By controlling appraisal reports and flooding the emirate with money that appeared to be “free” the homep[roices were driven upward helped in large measure by developers who knew that every time they raised prices the homeowner would get a loan for that amount. Plus the developers started their own mortgage brokerage companies that received fees and kickbacks and bonuses in yield spread premiums.
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The higher the price the more money was paid to intermediaries including pizza delivery guys who were suddenly making $500k per year. Meanwhile the securities brokerage firms (“investment banks) were making money hand over fist on each transaction with homeowners by selling and trading multiple layers of “securities”, the revenue from which exceeded the amount of the transaction with homeowners by a factor of 12.
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But wait, there is more! Nobody knew better than the financial analysts at those securities brokerage firms what would happen in that scenario. Mortgage brokers and originators would spring up and sell defective loan products to millions of people.  That meant, especially in the highest interest rate “loans” that if you take a group of them you were guaranteed that many of them would fail even if you could not predict which ones specifically would fail.
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So the investment bankers had a sure thing. All they needed was a vehicle by which they could package the fact that in a certain group of loans (tranche), a predictable number of loans would fail. Then they purchased insurance contracts and hedge contracts from people who didn’t know about the defective financial products in the tranche.
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And they wrote into the contracts that the insurer would pay off upon a declaration from the security firm that the value of the tranche had declined to a level set forth in the contract, which was based the sole knowledge of the investment banker. This was in the sole discretion of the investment banker and could not be questioned or reviewed. So unless they were able to prove a case for fraud, companies like AIG were screwed.
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So you can see that the Paradigm of lending had changed. Whereas before there was a risk of loss that was controlling market factors, the new “lenders” were unknown to “Borrowers,” and had no interest in Lending. Their financial interest was in the issuance and trading of unregulated securities. Homeowners had no idea about the true nature of their transaction.
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At the same time that they were granting “loans” the undisclosed lenders were betting against the success of the loans knowing that they would make even more money from failure of the “loans” than from performance. 
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The payment of money to homeowners was merely a loss leader in their business plan. The undisclosed lenders had no plans to make a profit from interest payments. That’s why their receipt of money from this scheme was never booked on their own records as interest income.
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So it is not a matter of thinking that this is almost like they planned it. It is exactly the way they planned it.

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PRACTICE HINT:

One seemingly innocuous question or discovery demand could address this issue. You could demand identification of the party who received the interest payments of the homeowner as interest income and/or as return of principal due.
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The point which everyone still has a hard time understanding is that there is no such party. That leaves the foreclosure mill trying to explain how a foreclosure is justified in favor of a party who is neither owner of the loan nor the legal representative of anyone who does own the “loan.”
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The issue presented elsewhere on this blog that there is no “loan” once the transaction is subject to claims of securitization does not need to be reached. But it should be implied in argument, since that is the best tool to fend off the free house myth. Arguing that we have no way of knowing the true nature of the transaction, who was involved and how they were making money. Just because we don’t know doesn’t and shouldn’t mean a negative inference for the homeowner. This argument opens the door to the possibility that while the “borrower” may be getting the house, it could only be a completely just and proper payment for securing intangible rights to resell the homeowner’s private data and engage in a widespread securities scheme involving issuance and trading of unregulated securities. The tactic here is to reframe the issue from a windfall for the homeowner to the possibility that the homeowner is being justly paid and not unjustly enriched. 

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You defend the discovery demand by simply saying that the defense narrative as set forth in the answer and affirmative defenses or the TRO complaint is that this claimant is not the party who is foreclosing even though it is named as the claimant and that the underlying debt is not owned by the claimant or anyone who is represented by the claimant.
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Maybe you get an affidavit from a CPA that says that if it is a loan and the debt represents the obligation in the loan then the interest paid by the borrower must be booked as interest income by the owner of the debt. Maybe the CPA would be willing to state categorically that if a party does not show interest income rom the loan when the interest payments were being made then it cannot be the owner of the “loan” debt.
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Note my careful use of words here. I know that there is no such party in existence. Nobody is reporting interest income as owner of the debt, but investors are reporting cash flow and revenue from their “investment” arising from certificates purchased from the investment banker.
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Under the slippery labels used in false claims of securitization of debt, some of the money paid to investors might be reported as interest income; but in no case is it actually interest income because the investors never purchased any share of any flow if interest or principal cash flow.
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And in tax cases it has been repeatedly been concluded that investors have no right, title or interest in any debt, note or mortgage nor any enforcement or collection rights or even the right to demand that the REMIC trustee exercise rights to demand repurchase of “bad loans.” The reason is simple. Neither the trustee (i.e., the trust) nor the investors owned any loans — even if they thought they did.  
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But remember this if nothing else. Don’t bother making discovery demands if you don’t have the intent, resources and motivation to enforce those demands. You will not get any meaningful response. You will always get obfuscation, objections and motions to strike. You must be prepared to persuade the judge that you are entitled to a proper direct answer to the question or direct response to the demand for production.

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That means a motion to compel, a hearing, and hopefully an order from the judge compelling the response. Still no response will be forthcoming. So that means a motion for sanctions — for violating civil procedure and a court order. Hopefully another court order. It also means taking advantage of the inability of your opposition to respond and to start persuading the judge that it is now YOU who are entitled to the presumption that they are not the creditor and that they are not an authorized representative of a creditor. That could mean a motion in limine to prevent them from introducing evidence to the contrary since they failed to produce or respond in discovery. And it means preserving your position by objections at trial that are both timely and properly framed.

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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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Could IRS Enforcement of REMICs Bring Wall Street Into Line? Yes but they won’t do it. Investors and homeowners continue to suffer as victims of fraud.

The most obvious places to look for correction in the illegal conspiracies masquerading as securitization of residential debt were the IRS , the SEC, the FDIC and the FTC and probably later the CFPB. Qui tam (whistleblower) actions were regularly dismissed because the agency that lost money due to false claims rejected the notion that it was a false claim or that anything bad had occurred. Sheila Bair lost her job as head of the FDIC for protesting policy set by Presidents Bush and Obama that failed to hold the line.

So here is a 2014 article that talks about how we could have regulated the investment banks through IRS examination of the REMICs.

Corruption is the answer. Too many people were making too much money and were “donating” too much money to people in public office. Enforcement was impossible. The real answer is extremely simple — stop all private money in elections. All elections should be publicly funded. No exceptions.

see.. PA Journal of Business Law – REMIC Tax Enforcement

The problem remains that US government agencies refuse to police schemes that are labelled as securitization of debt. If they are securitization of debt then market forces apply and everything COULD even out in the end. The problem is that the debt was never sold into a securitized scheme and nobody cares even though that has eliminated even the possibility of the existence of any creditor.

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REMIC policing by the IRS would be ideal to reveal the fatal deficiencies and fraudulent character of these securitizations schemes. It is why the first 9 lawyers tasked with drafting the documents for securitization all quit with one declaring that she would not be party to or an accessory to a criminal enterprise. There is no entity that qualifies as REMIC in residential loans. AND the reason is very simple:  neither investors nor the trust is buying the loans.
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So all the tests and premises about having an ownership interest, and about the quality of the loans are all false tests designed to cover up the fact that there has never been securitization of any residential loan except is very specific rare circumstances where individual mortgage brokers have sold loans to small groups of investors with repurchase agreements. In most instances those turned out to be scams.
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The way they got away with it is that there was a securitization process — i.e., one in which new securities were issued, even if they were unregulated. But only those schooled in Wall Street finance grasp the fact that they were securitizing bets on data — something that is very ornate and complex.
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Once you DO grasp the idea of what they really were doing and are still doing then you see why all the documents in all the foreclosures had to be fabricated, forged, backdated and robosigned. 
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You can also see why they have robowitnesses come to court and why they show only the business records of a servicer who has no contact with the so-called principal named in the claim or lawsuit. You can see why there is never a proffer of the business records of a creditor because there is no creditor.

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There cannot be contact between foreclosure mill and trustee of REMIC trust, there cannot be contact between “servicer” and Trustee of REMIC trust, there cannot be direct contact between investment bank and any of the players because any such contact would undermine the essential ingredient of the entire plan — plausible deniability of intent or knowledge of the scope of the illegal plan.

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The job of the litigator is to assume that that the entire thing is fraudulent and to ask for what they cannot give — answers to simple questions about the ownership and authority and status of the “obligation” that in reality is nothing more than a return of the consideration paid for a license to sue the homeowner’s private data and homeownership as mere points of reference for the issuance and trading of complex securities.
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But you must make it look like all of those companies are in actual contact and that payments from consumers or from the forced sale of their property are going to a creditor. You need to do that in order to give a judge cover for ruling in favor of the investment bank who is not even in the courtroom.
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The answer is as simple as simple can be: they are making everything up.
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Documents are not real unless they memorialize something that happened in the real world. But Wall Street banks put together a plan that made it appear that a sale of the debt occured where there had been no such sale. Or to be even more specific, they made it appear that there had been a purchase by or on behalf of the investors or trusts. Nothing could have been further from the truth. The truth is that investment bankers never looked at homeowner transactions as loans. They saw the money they paid to homeowners as a cost and condition precedent to creating and selling new securities. 
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Why no creditor? Because that is how you escape liability for lending law violations. 
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Why call it a loan? Because that is how you keep consumers from bargaining for their share of the very rich pie created by investment banks in the sale and trading of derivatives, insurance contracts, hedge products and just plain bets on fictitious “movement” of data that was completely controlled, in the sole discretion, of the investment banks. 
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They were printing money for themselves. The losers were and remain investors who buy “certificates” that are nothing more than a cover for underwriting the sale of securities for a company that doesn’t exist. the losers are the homeowners whose issuance of a note and mortgage triggers a vast undisclosed profit scheme in which the wealth of America shifted from the many to the few.

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BUYING RMBS CERTIFICATES IS LIKE BUYING TULIPS JUST BECAUSE THERE IS A MOB OF PEOPLE WHO FOR COMPLETELY IRRATIONAL AND TEMPORARY REASONS THINK THEY ARE VALUABLE.
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COVID19 might be the catalyst for expert witness testimony in foreclosure cases.

The interesting thing is that the cost of producing an expert witness has just been cut by Coronavirus and COVID 19. Experts can testify via various video mediums that are now appearing in most courtrooms. So what had cost thousands of dollars in travel expense and time expense in travel has been eliminated. And in most cases the time expense for both preparation and appearance at deposition must be paid by the opposing side. Once they do that you might get the judge to accept the video deposition in lieu of live testimony. (No guarantees).

But the remaining caveats about expert witnesses remains the same. While there are a few good expert witnesses around (besides myself) most of them won’t stand up under the fire of cross examination. Bill Paatalo is a good example of an expert who knows what he is talking about and can defend it on cross examination. And like me he has a good track record of being instrumental in either favorable decisions inc orut or favorable settlements out of court or both.

Don’t underestimate the position. The will do anything to wear out or dismantle an expert. I once had my deposition taken by 16 banks for 6 straight days 9am to 5pm. It was brutal, but I survived and they never transcribed the testimony. It was a class action MERS case; unfortunately the judge ruled that the class could not be certified which had nothing to do with my testimony that MERS was the equivalent of any fictional character like “Donald Duck.” The point is — can the expert’s testimony survive 48 hours of cross examination?

You need to be careful with this. Just because somebody calls themselves an expert doesn’t mean that they are an expert. An expert is someone with greatly Superior knowledge about something that is not easily understood by the trier of fact. And just because someone thinks that they’re an expert does not mean that a judge will let them testify as an expert or, even if they do, that the judge will give any weight at all to what the “expert” says.

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So someone might be an expert, depending upon what he/she did in real estate, lending or finance. But being an expert and having any value in court as an expert witness or two different matters. the testimony of most experts is discounted by the trier of fact unless the expert has substantial credentials and makes a presentation that is clear and convincing. any presentation that leaves the trier of fact with questions, will be discounted.

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Most “experts” are just people with pet theories.

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Very few people have the understanding that I have when it comes to Wall Street Finance. Fewer still have an understanding of the intersection between what happens on Wall Street  and what happens in courtrooms.
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I was part of it and my family was part of it starting with the purchase of seats on all major Securities exchanges in 1945. I was a direct participant in bond trading from the moment I became licensed as a “registered representative” is now referred to as a series 7 license. I was certified as a financial analyst.
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I traded in undervalued bonds and I was present at relatively secret meetings of bond Traders which gave rise to Michael Milken’s junk bond plan which in turn gave rise to the mortgage bond plan. and I personally used several strategies developed in part by Goldman Sachs in which layers of entities were used to make it difficult for anyone to understand the role of any of the players.
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I was the lead underwriter on dozens of public offerings, mergers and acquisitions. I was first in my class in a two-year intensive MBA program and I graduated summa cum laude from my Law class.
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What all of that means is that on cross-examination I will NOT collapse as a witness because I actually know what I am talking about and I can present real facts to corroborate my opinions and findings. That is not true for 99% of the other “experts.” All that said, there is no guarantee that the court will rule as I suggest.

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The problem I have encountered is that people will sometimes hire me to execute an expert witness affidavit, but then they failed to call me as a witness. The affidavit is worthless unless it is admitted into evidence. Unless the opposing side stipulates or waves objection, the only way to get my testimony into evidence is by having me testify live and subject to cross-examination. virtually none of the people who call themselves experts have actually appeared in court. Besides myself, a notable exception is William Paatalo who can and does present credible, clear and convincing expert factual findings.
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The interesting thing is that the cost of producing an expert witness has just been cut by Coronavirus and COVID 19. Experts can testify via various video mediums that are now appearing in most courtrooms. So what had cost thousands of dollars in travel expense and thousands of dollars in time expense during travel has been eliminated.
*

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*
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Exactly what was that transaction with the homeowner? Was it a purchase of intangible rights or a loan? Was the homeowner paid enough money for use of his name, signature, reputation and property in creating and trading securities? Maybe we’ll find out!

Take ten steps back from the transaction with homeowners and you can see all the reasons why the documents need to be fabricated. You can also see how there should never have been a single foreclosure of any mortgage or deed of trust involving a transaction that was part of a securitization scheme.

And if you think about it you’ll realize that none of this is about a loan. It’s all about a contrived and concealed purchase of intangible rights of the homeowner by an institution who is only pursuing a plan of securitization, which means the issuance and trading of securities for profit.

So before you start saying that the homeowner owes somebody money, take a closer look at whether somebody (i.e, an investment bank) owes the homeowner money.

And before you start talking about a “free house” maybe address the real question: did the homeowner get adequately compensated for assuming the risk of inflated appraisals, bad terms and forced participation in a securitization scheme designed to cheat investors, homeowners and the government.

Do you really want to reward behavior that most people understand was wrong, not just risky?

So consider the following carefully, because I am quite certain that legal discovery in hundreds of cases over two decades has already corroborated every “theoretical” component of my current description of the true relationship between homeowners and “lenders” and their “successors.”

And if you master these concepts you too should be able to reveal the truth, to wit: that there is no company represented by the foreclosure mill who owns your obligation or even claims to own it. But they still want title to your house.

SPOILER ALERT: IT WAS ALWAYS THE INVESTMENT BANK.

  1. Contractual intent:
    1. Homeowner
      1. He/she wanted a loan and that is what he/she thought he received.
      2. He/she was unaware of any larger transaction triggered by his/her signature.
      3. Having signed the documents that originated the disclosed transaction, under judicial doctrine, presumably constitutes a loan agreement. So the transaction was presumptively a loan of money that needed to be repaid upon the terms set forth in the note.
      4. Incorporated into the loan agreement as a matter of law are certain disclosure requirements (TILA, RESPA) as to the identity, nature and compensation of everyone who received any compensation of any kind arising from the origination of the loan including appraisers, real estate brokers, mortgage brokers etc.
      5. In table funded loans the loan agreement is considered intact even if the lender was in fact not the originator. But table funded loans are against public policy because they deprive the borrower of choice.
      6. Material information was withheld from Homeowner:
        1. No person or entity involved in the creation, approval, underwriting, or terms of the transaction had or was intended to have any risk of loss;
        2. Every person involved in the transaction was being paid premium fees, bonuses, commissions, and/or profits to participate in the transaction on terms and conditions established and enforced by an undisclosed investment bank.
        3. The prime mover in the transaction was an investment bank running a securitizations cheme, the existence of which was concealed and unknown to Hollinsworth.
        4. At the conclusion of the total single transaction (see below) the investment bank had incentives to
          1. Make certain that loans would fail in order to collect on insurance and hedge products
          2. make certain that certificate series would fail in order to collect on the issuance of other “derivatives” and collect on hedge contracts and insurance policies based upon “event failure” in which the investment bank, never any third party investor, would be paid. Each event failure was declared in the sole discretion of the investment bank and was not subject to review or any test of reasonability by the express terms of the contracts.
          3. Force property into foreclosure even though alternatives would have protected the collateral on each transactions and on the housing market as a whole. This created a rubber stamp on the legality of the securitization scheme.
          4. Divest itself from any role as “lender” in the transaction with the homeowner and any retained ownership of homeowner obligations to avoid liability for violations of lending laws, fair dealing and consumer protection.
          5. Hire companies, for a fee, to falsely present themselves as “lenders” in order to commence a false paper trail of apparently facially valid documents that never reflected the economic realities of any transaction.
        5. In order for the self-created investment bank incentives to work, homeowners would need to be
            1. tricked into believing the property was worth more than it was (inflated appraisals),
            2. they would need to believe that a lender was underwriting the “loan transaction” with a stake in the success of the loan when in fact the reverse was true, and
            3. they would need to believe that the Loan transaction” was the only business event in connection with the origination of the homeowner’s transaction with a “lender.”
            4. And the homeowner must not know that the investment bank was enjoying revenue from a tier 2 yield spread premium based upon money invested by third parties into the purchase of certificates, and substantial fees and trading profits from the creation and trading of unregulated securities, as well as relabelling and recategorization of book assets created from the investment bank’s funding of the homeowner transaction. 
            5. And most of all neither the homeowner nor any lawyer or court can know that there is no legal person, company, or business entity that maintains any books and records or reports showing that a transaction occurred wherein any specific loan or any group of loans was the subject of a purchase for valuable consideration in exchange for the ownership of any underlying homeowner obligation (debt), note or mortgage or deed of trust.

            6. The goal was to create the appearance of facially valid “loan” documents and transfers when no such transfer had legally occurred.
              1. Even the origination documents were in most cases legal nullities because they were not executed in favor of anyone who had actually loaned them money.
              2. Foreclosures were useful in two ways in the securitization scheme
                1. by leveraging legal presumptions from what appeared to be facially valid documents foreclosure process effectively created a conclusive presumption that the securitization scheme was true and legal even though there was no creditor retaining any ownership interest in the underlying obligation or debt and
                2. the investment bank and all the foreclosure players in the securitization scheme would be paid vast sums of money as revenue without any need or obligation to pay anyone (i.e., investors) who had paid value because the investors had not paid for anything other than an unsecured promise from the investment bank which did business under the fictitious name of a trust.
          1. The homeowner is not meant to know and every effort is made to conceal the fact that most of the securitization players had no interest or stake in the success or failure of the homeowner transaction and the investment bank had only the incentive of failure of the transactions that were carefully grouped into tranches that would declared by the investment bank as having failed because the worst of the loans would fail causing an “event failure” that would cause outsize payments to the investment banks to reward them for being correct on their bet, not to cover any loss sustained.
      7. Contractual Intent: Investment bank would never have made any loan but for the concealed securitization scheme. Without sales of certificates the investment banks had no interest in any business plan based upon profits from residential lending.

        1. The named originator would not have made any loan because it had no money to make the loan and because it had no interest in any business plan based upon the receipt of principal and interest.
        2. The contractual intent of the investment bank was to secure the signature of the homeowner for the sole purpose of triggering issuance and trading of unregulated securities (“securitization”) in a closely controlled market.
        3. The concealed contractual intent of the investment bank was to retain no residual interest, liability or obligation in connection with the existence, administration, collection, servicing or enforcement of any homeowner obligation created by the transaction origination documents.
        4. The issuance, sale and trading of unregulated securities were conditions precedent and conditions subsequent to the payment of any money to any homeowner including the subject homeowner.
        5. The payment to the homeowner was never intended by the investment bank as a loan and after the conclusion of the entire transaction — involving the homeowner’s signature, name, reputation and property — there was no loan on the books of any company (i.e. there was no asset receivable either specific or generic that included the subject homeowner transaction.
      8. Contractual intent: there was no meeting of the minds because the investment bank and all of its intermediaries and conduits concealed the totality of the transaction from the homeowner, who was paid for his signature in order to trigger enormous profits greatly exceeding the entire homeowner transaction. 
      9. Since there was a failure of mutual contractual intent, and the failure was caused by circumvention of lender regulations and laws, the contract must be construed under quasi contract doctrine or quantum meruit. The homeowner was never given an opportunity to assess the transaction  in the light of the enormous undisclosed profits and in the light of investment bank being the actual prime actor.

      10. The securitization scheme generated enormous revenues such that convicted felons and food delivery people with no knowledge of the financial products — other than a script provided to them by the investment banks bank through intermediaries — were hired to sell these defective financial products and earn hundreds of thousands of dollars per year — JUST ONE example where adding payment of compensation, cost of advertising, fees, expenses, and other third party payments resulted in costs and expenses so high that if the transaction were actually a loan nobody could possibly have been paid the entire principal obligation nor would the interest have resulted in any profit. 
      11. Moral of the story: The profit they were seeking didn’t come from what they had falsely labelled as a loan. And if it came from something else, that wasn’t disclosed to the homeowner. And that means the homeowner was tricked into a contract that he/she knew nothing about.

      12. So the real question is what was in the real contract — the one that included securitization and how much benefit did each side get from this contract. It is only a secondary question that involves the issue of how can anyone foreclose on an obligation (debt) when there is literally nobody claiming to own it?
        1. Failure to conduct discovery and enforce discovery together with failure to make timely and proper objections in court is the reason why false documents are admitted into evidence. It is not up to a judge to teach you the rules of evidence. If you go to court you are required to already know them.

        2. Note that nobody says they own the debt in these situations. Nor do they say that they have suffered financial injury.
        3. In a classic head fake the foreclosure mills are alleging duty and breach of duty by the homeowner but they make no allegation that anyone was financially injured.
        4. The counterintuitive answer to this phenomenon is that nobody did suffer any economic loss resulting from any action or inaction of the homeowner. Securitization takes care of everyone without payment from homeowners.
        5. Foreclosure is not necessary but it is profitable.
        6. Payment histories are admitted into evidence without any foundation testimony or business records that could show they represent the business records of the owner of the obligation because there is no owner of the obligation. Such business records would show, as per GAAP, the existence of the alleged obligation as an asset and reductions of that asset to offset payments received. No such records exist because no such entity exists.
      13. The total single transaction was therefore only a securitization contract in which the homeowner was lured into playing an indispensable role in exchange for a payment that the homeowner pledged to return with interest. This may amount to failure of consideration that would void the contract altogether but that would leave the homeowner without any adequate compensation for a scheme that produced geometric profits to the investment bank and all the securitization players which they retain to this day.

      14. Since the homeowner and investment bank cannot be reasonably be returned to their positions before the origination of the concealed total contract, it is therefore up to the court to fashion a remedy in equity in which a reasonable amount of compensation to the homeowner is calculated and set off against the presumed homeowner obligation.

      15. In addition, since the foreclosure was part of the for-profit securitization scheme and not with any intent or purpose to compensate or provide restitution for any legally existing owner of any legally existing obligation owed to any of the foreclosure players, the court should award compensatory and punitive or exemplary damages for a scheme that not damaged the lives and property of the the subject property owners.
      16. The actors in this scheme should be punished in civil court based upon their culpability in the foreclosure part of the securitization scheme as part of a pattern of conduct in which thousands of other homeowners who have been victims of false claims of collection, administration, servicing and enforcement of money based upon direct, knowing misrepresentation of the ownership  and status of the homeowner transaction, and the title to their property has been unalterably slandered.

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Texas Two Step: Wishing won’t make it so…. and neither will relitigating the same points over and over again.

lawyers and pro se litigants have littered the judicial landscape by a Texas two step: first they admit that they have a loan contract and second they try to get out of it. First they admit a breach and then they try to deny the breach. First they admit a loan and then they deny the loan. First they admit an an enforceable contract and then they deny its enforceability.

Every time they do that, they are falling through a trapdoor built just for them. Every time they do that they are making it worse for anyone who has a valid defense.

So there is a law against murder. Everyone knows that. And if you see someone shoot a person in the head in cold blood after thinking it over for a few days that is capital murder, warranting the death penalty in states that permit the death penalty. All of that is true.

Here is what else is true. Once the matter has gone to court the decision is final unless there are very exigent circumstances. So if the killer is acquitted they are not guilty even though you saw him or her do it. If the killer is convicted, they are guilty even if they didn’t do it. It doesn’t matter. It’s final.

Most people come to me with complaints about judges, lawyers, banks, servicers and sheriffs after something has already happened. Spoiler alert! Once something has happened in a law case, it is the law or fact of that case unless overturned by proper notice and procedure. It is the law of that case even if it isn’t the law or fact in another case with the same facts that was presented and decided differently. What is done is done.

It is mostly lawyers who understand one fundamental truth about our judicial system. It is an institution to resolve disputes with finality so the dispute doesn’t go on forever. So if you forget to say something in court and the decision has been entered, it doesn’t matter what you have to say. It’s done in the eyes of the law. It’s over. Justice often takes a second seat to finality.

Lay people want to file motions to say something they should have said before or to say something better than they did before. Lawyers do this too. The judge always turns them down. The judge is required by law to turn down such pleas.

New evidence is not admissible either unless you can show (1) you had no practical way of having received it at the time of the hearing and (2) it helps A LOT if the reason you couldn’t have received it before is that your opposition was violating a court order requiring them to turn over documents and answer questions in the discovery phase of litigation.

So that is why DNA evidence — after conviction and sentencing — showing the accused was not the person who committed the crime, is still not allowed absent some other showing of innocence and even then, it takes years you overturn the conviction and sentence even while everyone knows of the actual innocence of the accused — and even with  concurrence from the prosecutor.

Bedrock doctrine in the courts is to prevent people from coming back and relitigating stuff. If it’s done, it’s done.

People who dislike the investment bank securitization schemes, like I do, often make the mistake of calling out the judge as biased. He or she isn’t biased for making a final decision based upon what was presented at the time of the hearing. And they are not biased for rejecting new submissions afterwards. If you want a different system take it up with the legislature, not the judge.

BUT, all that said, there are reasons for filing a motion to vacate, motion for reconsideration, notice of appeal and a new lawsuit seeking declaratory, injunctive and supplemental relief based upon the fact that there was fundamental mistake, error, or unfairness arising from the fact that your opposition actively mislead the judge into thinking that the creditor was present when it wasn’t.

That could be a void a judgement.

Or the judge might have misapplied the law such that you were unable to present your defense. That is appealable error. But a decision that you think is wrong will NEVER be overturned on appeal if there is any basis in the court record upon which a reasonable judge could have been arguably justified in ruling the way they did. The fact that appellate judges would have decided it differently is not reason for reversing the trial judge.

Constitutional arguments are avoided by judicial doctrine. So if they CAN reach a decision without deciding a constitutional issue, that is what they are required to do. If you want something different take it up with the legislature. Find a candidate running for office that wants to see a change in the law.

As a general rule if you are arguing the same points you have always been arguing then if you have already lost, you are barking up an imaginary tree.

BUT one point that is jurisdictional, constitutional, factual and legal that has not been argued properly except in a few cases is that the creditor was never present in court despite opposing counsel’s representation and assurances to the contrary.  Ooops! That is a case where the court granted relief to a foreclosure mill who didn’t have a client in court.

AND YET, here is the problem. If you could have brought up the issue before and you didn’t you’re still stuck unless the issue is of such manifest importance such that the entire case was unjustly concluded. BUT that is not a subjective term. Not liking the decision is not the same as saying the court had no power to make that decision. And that is different from saying that the court SHOULD NOT have power to enter a decision the way it did.

It is not enough to go after the foreclosure mill on technicalities although sometimes that can and does work, at least temporarily.

Going back the murder at the beginning of this article. If you say “I don’t think he pulled the trigger in the right way” you are being virtually irrelevant in a murder trial. Either he did it or he didn’t.

So as a homeowner the sole question of interest to the judge is either you breached a loan agreement or you didn’t. Either you have set off against the amount demanded or you don’t. Either they followed procedure or they didn’t. Either you followed procedure or you didn’t.

Everything I have written on this blog has been directed at one simple fact, to wit: you can’t be sued,  subject to judicial or nonjudicial foreclosure, or even be given notice of anything or a statement of anything from someone with whom you have no contract. Period. End of story. And if you happen to pay such an unauthorized person you are entitled to receive the money you paid as disgorgement possibly with interest and maybe sanctions or punitive damages depending upon the case. There is a good chance on some claims on recovering attorney fees.

But lawyers and pro se litigants have littered the judicial landscape by a Texas two step: first they admit that they have a loan contract and second they try to get out of it. First they admit a breach and then they try to deny the breach. First they admit a loan and then they deny the loan.

So if you are looking for advice from me or any lawyer, the first rule is listen. Don’t tell a lawyer how to think about your case. If they can’t figure it out themselves you are in the wrong office. Stop arguing with the lawyer. Just move on.

And second either you get it or you don’t. If you are not willing to believe there is no creditor and you’re just trying to get out of what you believe is a real debt that you really owe to the people trying to collect it, you have already lost.

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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT.  IT IS NOT A SHORT PROCESS IF YOU PREVAIL. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
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Please visit www.lendinglies.com for more information.

 

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