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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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Fannie and Freddie Farce: How the Securities Brokerage Firms Are Using the Names of the GSE’s as Cover for False Claims

There are lots of false assumptions about The Government Sponsored Entities. First, just because they are called “Government sponsored” doesn’t mean that the Federal Government is actually backing all of their activities. But the vagueness of their actual business plans enabled the Obama administration to nationalize them in order to facilitate the creation of a resting place (see Maiden Lane ventures) for all the toxic mortgages and toxic “certificates” that had been sold to unsuspecting borrowers and investors.

The other assumption — equally erroneous — is that Fannie and
Freddie ever owned the debts of many borrowers who assumed that
because the names of Freddie and Fannie were invoked that they were
involved.

There were occasions where Fannie and Freddie actually paid cash. One
was where they had to pay the guarantee which was in fact backed by
the Federal government. But they were covering losses in that scenario
and not buying the debt. The foreclosure had already occurred, many
times with the court thinking that this was Fannie and Freddie
foreclosing. It wasn’t. The other was some payments in cash for
certificates issued in the name of REMIC trusts (by investment banks
doing business as the name of the “Trust”). Again The GSEs were not
buying debt, they were buying securities.

In most cases Fannie and Freddie were acting as Master Trustees
representing the sub trustees of named REMIC trusts that actually
didn’t exist primarily because neither the “trust” nor the investment
bank (securities brokerage firm) had ever received ownership of the debt. The investment bank had caused the loan to be funded through conduits but it had not received any conveyance of ownership of the debt and did not carry the loan as a receivable at all or at most it held the receivable for thirty days.

So the conclusion reached by anyone who bothers to learn the details of all this is simple: Fannie and Freddie were used as  cover for making false claims. All the securitizations schemes depended upon nobody owning the debt because that would make them lenders subject to liability for violation of Federal and State lending laws. And that is why all the documents in foreclosure are fabricated: they are solely intended for use in foreclosures and nowhere else.

The most basic black letter law in this country governing civil matters is that you can’t get a remedy in court unless you have been injured by some action or inaction of the defendant. If you don’t own the debt then you are not injured.

It is the securities brokerage firms (investment banks) that created this scenario without the knowledge, consent or even acquiescence of borrowers or investors. Neither borrowers nor investors should be required to pay for a flawed scheme that deprived both classes (investors and borrowers — of a fair share of the enormous profits created by making bad loans.

BEFORE WE START GIVING BAILOUT MONEY TO THE BANKS AGAIN, HOW ABOUT WE TAKE THIS AS OUR SECOND CHANCE TO SET THINGS RIGHT?

Look up anything I am saying here.

There is universal agreement that we got the “bailout” wrong in 2008, at least in part. It ended up rewarding the securities brokerage companies for bad behavior with money and prestige because we allowed them to “convert” (like religion) to commercial banks.

Those firms had literally made trillions of dollars, had no exposure to risk and had parked pornogrpahic profits from off-balance sheet transactions around the world in the form of ownership of precious metals distributions centers and other investments.

The “Troubled Asset Relief Program” had to be redefined multiple times because each time the premise was wrong. First it was to set off defaults on mortgages. But the banks held no mortgages. So then it was to set off losses on declining values of mortgage bonds. But the banks were selling bonds not buying them. And there was the problem that they weren’t bonds and they were not mortgage backed.

Then they abandoned any definition and simply kept the name of TARP and gave money to the banks anyway because the Fed wanted to pump money into the economy — a program that was barely effective because it turned out  that the banks were reluctant to actually risk loaning money in a recession.

So before we start “offsetting losses” this time I propose something radical. This time we require evidence of a loss before we pay for it. The fact that this might undermine the entire securitization “marketplace” (which is really a totally controlled trading zone) is not a reason to do it anyway again. It is a reason to bring the “investment banks” back into compliance with our laws, rules and regulations.

The added bonus is that the entire goal of the US Treasury and the Fed would be achieved. It would provide relief to millions of homeowners who have been screwed by the banks who have continued to bet against the loans that they were granting.

The revelation that there are no losses would also be revelation that there is no identified creditor after the current practice of “securitization” is applied. All the players get paid far more than they deserve by any metric employed. That is everyone except investors and borrowers, who are the only two parties with a real interest in “the game.”

The proposition is simple: please show us your losses before we pay them.

 

EXAMPLE. An easy example of what I am saying is the AIG bailout. AIG was an insurance company that had underwritten an “insurance” policy in favor of Goldman Sachs, a securities brokerage firm that was at the epicenter of “Securitization” of mortgage debt.

But actually it was not an insurance policy which is always defined as a contract to cover a real economic loss.

As Matt Taibbi wrote in Rolling Stone more than 10 years ago, Hank Paulson, then U.S. Treasury Secretary and former CEO of Goldman Sachs, prevailed upon President Bush (literally going down on his knees) to bailout AIG so they could pay the bet that Goldman made that the value of the certificates they were issuing as “mortgage backed bonds” would decline. Since the certificates were essentially worthless it was a good bet.

Tens of billions of dollars went to Goldman Sachs when the government bailed out AIG so it could pay off the Goldman Sachs bet. The bet was based upon a declaration of an “event” in the sole discretion of Goldman Sachs without any review or even subrogation to any remaining rights of collection. that’s because there were no rights to subrogate. And that’s because Goldman neither owned the certificates (“mortgage bonds”) nor the mortgage debts.

So Goldman received the money as pure profit. Nobody ever received compensation for actual loss on the certificates (i.e., the investors who bought the certificates) nor for any actual loss on the mortgage debts (because there were no actual losses on mortgage debts. Goldman kept the money and parked most of it offshore and paid virtually no tax on that. It wasn’t bailout. It was a gift.

 

Current Info on Consumer Foreclosure relief

See https://library.nclc.org/major-consumer-protections-announced-response-covid-19

RULES OF COURT: Judges Are Not Overlooking Anything

Sure there are some judges that don’t care what evidence is before them and make decisions based upon their own political bias. But nearly all judges are NOT doing that when it relates to foreclosure. They are just following the rules.

And homeowners who lose basically fall into one category: people who are unconvincing and fail to bring admissible facts to the judge that are inconsistent with the position taken by a a party claiming the right to foreclose.

Rule#1: You are not persuasive if you only say something once.

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In defense of judges, they are not “overlooking” anything. They are following established judicial doctrine and practice. It is true that 20 years ago judges would scrutinize foreclosure filings to make sure there was nothing amiss but that was unusual practice compared to other areas of the law. In the face of volume they had to drop that and go back to normal practice. That means that if you have an issue you must state it. If you have a claim you must prove it. If you have a defense you must prove it.
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It’s all legal procedure which hardly anyone outside the courtroom understands. We have rules or “elements” for every type of claim. Once stated, if you allege the elements, then the burden is on the defendant to answer. If the Defendant files affirmative defenses the Plaintiff can file a response but is not required to do so.
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A facially valid document, for purposes of judicial economy — especially in the context of high volume — MUST be considered valid for all purposes and further that everything written on it is true. Judges don’t have any choices about that even if they harbor grave doubts. It’s their job. So there is your legal presumption. The difference between an assumption and a presumption is that a presumption is legally binding. That’s the rule.
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So that is what enables and in fact requires judges to enter final judgment or summary judgments if the Defendants fails to respond or does nothing but whine about the presumption. The whole point of the court system is to move disputes through a process where there is a final decision, for better or for worse.
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We know that the presumption leads to erroneous conclusions of fact and law. But the judge is required to assume we are wrong. That is why I have emphasized how opposition to illegal foreclosures MUST be persuasive — and not merely correct. One of the fundamental doctrines that judges are required to follow is called “preservation of contract.” Once presented with a contract, the court is required to honor it. If you want the judge to say there is no contract or that the Plaintiff is not party to it, you must present the court with very convincing facts that undermine these presumptions and doctrines.
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So merely alleging that they are thieves and crooks and that they fabricated, forged, backdated and robosigned documents is not enough. You must put facts in front of the judge that makes the judge stand back and consider that the foreclosure might be defective or even a ruse. We do that in discovery. And in discovery, knowing that the documents are not valid, we ask questions and demand answers and document production that we know they can’t answer or produce.
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But the system is more elaborate than that. No claim simply gets denied because of clerical mistakes or even willful avoidance of discovery demands. We need to aggressively and repeatedly demand hearings on objections and file motions to compel, motions for sanctions and motions in limine — because the judge, all in accordance with established court doctrine — is going to give the claimant in foreclosure multiple chances to comply with court orders before the judge brings the hammer down.
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And lawyers need to be mindful of what they are getting once they  make their point and have convinced the judge that the opposing counsel is playing with the court. They should seek judgments, not dismissals, but that is not always easy to get.
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PRACTICE HINT: No fact is admissible without a predicate. So, for example, if you want the judge to believe that the traffic light was red, then you need a witness who say that. But the witness can’t say that unless the witness is competent — capable of taking an oath, perceived the red light at the time and place you are seeking to prove, can remember the situation  and context, and is able to communicate their memory of their perception in a credible manner.
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The only exception are situations where legal presumptions are in play. Facially valid documents require no predicate other than that they are facially valid. But watch that too — many documents admitted as facially valid are not facially valid. failure to perceive that fact and allowing such a document into evidence may in effect concede the whole case.
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For example, the fact that it appears to be signed does not necessarily make it facially valid. If the signature leaves the reader in doubt as to the authority of the signor it is not longer facially valid. A clear example of this is when the signor claims to be signing for a company that is claiming to be attorney in fact for a legal entity that is inadequately described.
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In such situations there are two problems with declaring such a document facially valid. The common thread in the necessity of parole evidence in order to establish validity of the signature. In the example I provided two such instances exist:
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(1) without a power of attorney having been recorded in public records and a specific reference to it in the signature block, the reader can only know if the signature was valid by asking for the power of attorney from a person whom he might not be able to find — the “authorized signor.”
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(2) the naming of an entity without sufficient description may be grounds for objection too.  So if the signature  block says something like “US Bank as trustee for the certificate holders of SASCO Trust series 2006-1A Certificates,” I think a proper objection can be made that could defeat the document being accepted as facially valid — thus avoiding legal presumptions. As grounds therefor I would state:

  • US Bank is not being specifically stated as trustee for an identified trust
  • The trust is implied not stated
  • If there is an implied trust it has not been sufficiently identified as to the jurisdiction in which it was organized or is currently doing business
  • Either US bank is trustee for the trust or it is trustee for the certificate holders.
  • If the certificate holders were beneficiaries of the implied trust then mentioning them is irrelevant. The fact that they were mentioned means on its face  (“facially valid”) that US Bank represents the certificate holders separate and apart from the trust but it doesn’t say how US bank represents the certificate holders.

The point to be argued to the judge is that this is not facially valid even if it is true. And if it is not facially valid then all you are asking is that no legal presumptions be applied and that the Plaintiff be required to prove the facts sought to be presumed including the legal validity and authenticity of the document or pleading.

This must be done artfully and persuasively. What you are really saying is that you have no idea who is actually suing or claiming foreclosure therefore cannot frame a proper defense. Your further point, driving it home, is that it is unfair to place the burden of proving the existence or nonexistence of a Plaintiff on the Defendant who obviously must go by whatever the claimant has asserted.

For example, who are you supposed to ask questions to — the party who signed or the vague entity on whose behalf the document was executed by some remote sgnor for a remote company who is not a party.

A convincing point might be telling the judge that if opposing counsel cannot identify a claimant with sufficient specificity, that there is no claimant and that opposing counsel should be sent packing to get his documents in order. Judges actually like that argument.

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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. IN FACT, STATISTICS SHOW THAT MOST HOMEOWNERS FAIL TO PRESENT THEIR DEFENSE PROPERLY. EVEN THOSE THAT PRESENT THE DEFENSES PROPERLY LOSE, AT LEAST AT THE TRIAL COURT LEVEL, AT LEAST 1/3 OF THE TIME. IN ADDITION 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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Tonight! Covid and Foreclosures 3pm PDT 6PM EDT

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

COVID-19 topics discussed on the Show today are as follows:

– How states are issuing both in judicial and non-judicial foreclosure states foreclosure and eviction moratoriums of various kinds;

– How borrowers can potentially bring in California declaratory or injunctive relief lawsuits if any notice of default (NOD) is filed against them at this time, on the basis that such an NOD per se violates Governor Newsome’s order to ‘shelter in place’ statewide, which among other things prohibits public gatherings. This order therefore makes holding foreclosure auctions impossible in California, without violating this order;

– How states such as California are closing or limiting access to county recorders, and the implications this has for the recording of notice of defaults (NODs), and Notice of Trustee’s Sales (NOTSs); – How court access both Federal and State is being heavily restricted and what this means for borrowers, from both a positive and negative point of view; – Bill will discuss the COVID-19 impact on forensic loan audits and the intel gathering he does in his investigative work on behalf of borrowers;

– Expanding on what Neil discussed last week in his own coronavirus update show, how legal procedure potentially will change in the coming months to accommodate a more virtual access to courts, legal procedure, etc, which will have impacts both positive and negative for borrowers;

What is Financial Injury or Economic Damage?

homeowners who win foreclosures are not getting a free house. they are settling for less than the amount due to them.

Just so you know, there is actual and extensive case law on the constitutional requirement of actual damage to the party claiming any violation of law, contract or duty. In foreclosures the only damages that can be claimed by the claimant is economic damage in both nonjudicial and judicial states.

The lawyers for the sham conduits and intermediaries for the investment banks rely upon an implied damage. Pointing out that the borrower did not pay their named claimant they imply that their named claimant either has suffered economic damage from the borrower’s nonpayment or is the agent for a party who suffered economic damage from the borrower’s non-payment.

This representation or implication is wholly untrue in nearly all foreclosures, since all the participants (they should not be called “parties”) purport to derive authority through “securitization.” That authority is said to be either direct, as owner of the debt through purchase of it which is a complete lie, or indirect such as being an agent or false claim of being an attorney in fact for an entity that has never paid value in exchange for ownership of the debt nor represented anyone who has paid value in exchange for ownership of the debt.

The desire, intention and expectation of profit is not economic damage unless it represents an obligation of the party owned to the party suing (or claiming as in the case of nonjudicial foreclosure). Thus in all securitization foreclosures there is an absence of authority for the court to hear the case or for a non judicial power of sale to be invoked.

This results in an anomaly. And the trial courts are loathe to recognize it and the appellate courts are struggling with it. There is no doubt that a debt was created. No reasonable argument could credibly dispute that fact. But the way securitization was practiced (see SIT, SAW SAP) the investment banks intentionally split the debt from any written document that said anyone owned it.

So the  courts are baffled by a debt that legally may not be enforced. The current practice of designating a claimant is not recognized by the law of any jurisdiction although indirectly justified by courts who twist the law out of all recognition.

For those who are curious, I picked this quote from a case that discussed the issue of what constitutes actual financial damage:

To aid lower courts with determining whether a plaintiff has properly alleged an economic injury under Business and Professions Code section 17204, the Kwikset Corp. court listed four injuries that would certainly qualify under the statute: (1) the plaintiff surrendering more or acquiring less in a transaction than the plaintiff otherwise would have; (2) the plaintiff suffering the diminishment of a present or future property interest; (3) the plaintiff being deprived of money or property to which the plaintiff has a cognizable claim; or (4) the plaintiff being required to enter into a transaction, costing money or property, that would otherwise have been unnecessary. (Ibid.) These four injuries are not “an exhaustive list” of the injuries a plaintiff may allege to properly plead an economic injury under Business and Professions Code section 17204, and “the quantum of lost money or property necessary to show standing is only so much as would suffice to establish injury in fact.” (Kwikset Corp., supra,51 Cal.4th at pp. 323-324120 Cal.Rptr.3d 741246 P.3d 877.) [e.s.]

Jenkins v. JPMorgan Chase Bank, N.A., 216 Cal.App.4th 497, 522 (Cal. Ct. App. 2013)

It doesn’t take much to see that two things are true here. First there is no legally recognizable claimant in foreclosure and second, that the original contract with the borrower required the borrower, unknowingly, to accept terms in which the borrower surrendered more than they thought and acquired less that they would have demanded and received had they known of the true value of their signature.

Judges still don’t like it even if they understand this.

But I would ask them to look deeply at this and be open to the possibility that in a truly free market where the originators obeyed the law and disclosed attributes of the “loan” transaction (including the fact that but for securitization the loan would never have occurred), two things could reasonably be expected: (a) borrowers would demand more for their signature and (b) competing originators would be offering more to borrowers to get their signature.

I don’t think those facts can be credibly disputed. So the question devolved to the question of how much the borrower would have received or should have received rather than if they are entitled to any set off.

My rule of thumb is that on average the gross revenue produced by each securitization scheme was $12 and $10 for each dollar invested. The difference lies in the second tier yield spread premium in which investors went in at one rate and the borrowers came out with a different rate.

So if borrowers knew that their $300,000 loan was going to produce about $3,600,000 in revenue, most of which would be entirely fees, commissions, bonuses and profits, what would be the commercial value of their signature in excess of the loan principal which after all is not really payment since it supposedly needs to be paid back?

This is akin to  royalty situation. So if we look at royalties we see a wide range. But if we look at investment banking we see that the mere placement of the name of an investment bank results in a premium fee of around 5%-10% of the offering.

[Of course in cases involving the underwriting of corruption the investment banks get much more for putting their names on their offering –a recent example being Goldman Sachs who received a premium equal to 100 times the normal underwriting fee for an offering of worthless securities out of Malaysia. But I digress]

So if we take the customary practice in investment banking and apply an average premium of 7.5% as the fee for signing the underwriting or loan and we assume that the underwriting is $3.6 million, then the borrower would be entitled to $270,000 due upon signing for the loan.

Adding an average prejudgement interest to that amount for a period of 10 years at a rate of 6%, the amount due to the borrower after ten years is $270,000 + $162,000= $432,000.

You may adjust up or down using different variables but it is easy to see that there is virtually no circumstances in which a loan from the early 2000’s could possible have a net amount due, once you factor in the rest of the securitization contract.

Hence homeowners who win such foreclosures are not getting a free house. they are settling for less than the amount due to them.

Fla 4th DCA Gets It Right on Article 3 UCC

Finally! A court takes its time and analyzes the chain and discovers what? Insufficient proof of standing and ERROR on the part of the trial judge in preventing even a third party purchaser from introducing evidence that the endorsement of the note was a legal nullity.

This is bad news for the foreclosure mills who receive their instructions from servicers who receive their instructions from attorneys who represent the investment banks. Up until this decision in Florida they have been able to use a series of apparently facially valid documents to create the false appearance that the chain was real and proper.

See Cox v LSF9 Trust, US Bank as Trustee- 4th DCA Florida Holds that everyone in chain must have standing to enforce -DOC031220

Every party in the chain from lender to present claimant must have had standing and rights of a holder in order to have its “indorsement” be legally effective.

Otherwise the endorsement of the note is NOT a blank endorsement but rather an Anomalous endorsement — basically equivalent to a wild deed.

The case does not address other issues in securitization but it is a strong and persuasive case, step by step on Article 3 UCC as applied to enforcement of notes.

My opinion, of course, is that the authority to enforce a note may be evidence of authority to enforce the mortgage and raises presumptions about ownership of the debt. But if the borrower rebuts that presumption then the Plaintiff foreclosure mill must actually prove its case with evidence instead of presumptions starting with the fact that the Plaintiff exists and possesses a legal claim for repayment of an unpaid debt.

Bottom Line: The foreclosure mills can’t prove that anyone has a legal claim for repayment of an unpaid debt. They can prove that the unpaid debt exists but they can’t prove that the claim seeks to achieve repayment because, in securitization cases, the claimant is never the legal owner of the debt — i.e., the party who paid value in exchange for ownership of the debt and therefore the party who is injured by nonpayment.

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BTW there is no law that the style of a case must start with the name of the first Defendant or the name as ordered by the Foreclosure Mill. I suggest changing the paradigm by refusing to refer to the Plaintiff as US Bank and instead referring to LSF9 Trust, U.S. Bank as trustee or LSF9 certificate holders depending upon how the foreclosure mill worded it.
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Don’t say LSF9 certificate holders and then add US Bank as trustee because you are then directly admitting an untrue statement, to wit: that US Bank is a trustee for the certificate holders. It isn’t. US Bank has a relationship with one or more investment banks but absolutely no relationship with the investors or certificate holders who are never beneficiaries under the trust.
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Assuming there is some technical reason that the trust can be arguably said to exist, it does not possess a claim to enforce the debt unless (a) it is the owner of the debt or (b) it possesses the original note endorsed by a holder. Under (b) they can foreclose unless the presumption of ownership of the debt is sufficiently challenged such that the presumption no longer applies.
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Once the presumption does not apply then the claim still exists and judgement can be entered only if it is proven without reference to the presumption — i.e. with relevant evidence consisting of documents and supporting foundation testimony,.
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. IN FACT, STATISTICS SHOW THAT MOST HOMEOWNERS FAIL TO PRESENT THEIR DEFENSE PROPERLY. EVEN THOSE THAT PRESENT THE DEFENSES PROPERLY LOSE, AT LEAST AT THE TRIAL COURT LEVEL, AT LEAST 1/3 OF THE TIME. IN ADDITION 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.

The New Tidal Wave of Foreclosures

Foreclosures should happen because someone was financially injured by nonpayment — not because someone wants more profit.

We are in an economic recession and this is going to affect most of the owners of property who have executed paperwork agreeing to pay back a loan — a  loan that the funding source is receiving a profit far in excess of the amount loaned and a loan which the funding source is hoping will fail because they are betting on it.

Yes it is a Ponzi scheme and it continues every day. It is what is continually undermining the strength of our economy and what left us so vulnerable to a downturn. The banks sucked trillions of dollars out of the economy and were rewarded with “Bailouts” and immunity from prosecution for obvious crimes of fraud in the execution, fraud in the inducement, mail fraud, RICO etc.. And they escaped the one mechanism that could have rectified the situation — TILA Rescission — by shear blunt force.

The basic truth is that every foreclosure represents revenue to the parties who participated in starting it, nobody gets paid for owning the debt, and homeowners lose net worth, loss of life style and other damages. There are still more than 500,000 illegal foreclosures per year and they are about to rise again with the current economic downturn.

The banks make their money every time they originate a loan (through sham conduits to avoid liability for violations of lending laws) — and they make money every time a loan fails because they bet on it. The paradigm is upside down. Foreclosures should happen because someone was financially injured by nonpayment — not because someone wants more profit.

As people lose jobs, and as asset prices decline, more and more people will give up on making payments on residential debt. They won’t stop paying because they know the money is not going to anyone who paid for the debt. They don’t know that and if they heard it they don’t believe it. They will stop paying because either they are running out of money or because the price of the house on the market is much less than the loan — or both.

In some ways this is a carbon copy of the articles I wrote starting in 2006. The math is simple.

Home values are most closely related to median income (see Case-Schiller index) because that is what determines the ability of people to pay for them. Median income has not shown much improvement. But home prices have soared. Artificially low interest rate loans makes it seem like the household income that could have only afforded a house priced at $100,000 can now afford a house at $200,000. And incentives like no closing costs push borrowers to even go for a $250,000 house because real estate always goes up, right?

Not so much.

The “free money” injected into the marketplace by Wall Street Ponzi schemes has created the same variance between home prices and home value (based upon median income) as we saw in 1996-2008. We have another bubble and it is about to burst. A new tidal wave of foreclosures will start in a month or so, and the courts will be flooded with new litigation volume that they are still not equipped to handle.

Once again due process and black letter law will be thrown out the window for all except those who have the time, resources and money to stand and fight.

 

Time for Your Congressman and Senator to Hear From YOU

This is a public health emergency so the primary answer is obviously public health. If we don’t address that then we are not even treading water. We will drown. So the first money should go to every healthcare facility, service and worker we can find.
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For better or worse we live in a consumer driven economy. The answer, stupid, is the healthy consumer. It’s not the businesses who want to sell to consumers. Giving money to consumers will buoy demand which will keep businesses afloat. Giving that money to businesses virtually assures that there will be no demand – just bloated banks and mega corporations with nothing to do except buy back their own common stock.
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This is crazy I know. But the way the Fed sees it, just like 2008, is that the banks are the vehicles for getting money into circulation to offset economic downturn. This is piling crap upon crap. This is an opportunity for the government to help consumers and small business owners get out of debt. Like FDR did in the 1930’s and 1940’s if we don’t have a viable vehicle to get money to consumers and small business owners then create one. Giving the money to banks and large corporations will only exacerbate the problem.

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As for lending, relaxing appraisal requirements is a license to sell fraudulent “mortgage backed” securities and fraudulent loan products that will fail — giving the sellers the opportunity to bet on failure. Where will this end?
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Relaxing underwriting standards only assures that more bad loans will be created and thus more bad offerings of “certificates.” How hard is it to understand that?
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Foreclosures and Evictions Grinding to a Temporary Halt

Besides giving the obvious relief to many homeowners facing dispossession from their homes, this provides homeowners with a unique period of time in which they can prepare to confront the participants who are pursuing schemes of illegal foreclosures.

While most foreclosures and evictions will be suspended don’t make the mistake of thinking they are cancelled.

USE THIS TIME TO YOUR ADVANTAGE. PREPARE

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This window of opportunity will not last forever, even though there are projections that say that the epidemic may last until we have a serum that will inoculate at least 40%-70% of the population from further damage. The projected time of arrival for that serum is 12 to 18 months. My opinion is that while I believe all foreclosures should be shut down for all time I don’t believe, based upon decades experience, that foreclosures on mortgages or tax liens will be put on hold until COVD19 is not a threat anymore.
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And while courthouses are closing down or restricting access and services, court administrators, law enforcement and law offices are getting together with third-party vendors to enable court process to resume and continue in a virtual space using computers. It is now possible with vendors like veritext.comto conduct a remote deposition from the safety of a home office in which the witness is anywhere in the continental United States, with an accurately reported court transcript that is certified.
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Remember that this makes it easier for homeowner or homeowner’s attorney to reach out and conduct depositions that might otherwise have never occurred. Opposing counsel will object to any subpoena you issue, but if you persist, you will most likely be able to force the appearance of the witness in a virtual deposition.
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So don’t get too complacent about the moratorium since it will probably not last nearly as long as the current emergency. When things start up again, you might still be self isolating at home and you might be expected to either have a computer or get to one. Those who have attorneys may be fast tracked because the lawyers can probably be forced to have connectivity to a system supported by the courthouse.
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Do not assume that you no longer have to defend your house from foreclosure just because you have heard about a moratorium. You should assume that the fight will resume shortly. Failure to do that will put you in a worse position than you already are in. So if you have been served with foreclosure papers, you should be taking this time to consider your options and among those options should be whether you are going to contest the foreclosure.
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There is good reason to contest almost any foreclosure with or without the Coronavirus.
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Nearly all residential mortgage loans in both judicial and nonjudicial state’s are subject to various claims of securitization.
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In virtually all cases where a loan is subject to any claim of securitization, the scheme employed by the investment banks is not recognized by law or nor should it be. They are merely seeking profit. They are not seeking restitution of an unpaid debt because they have already sold the debt many times over.

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In the meanwhile you can order any of the following:
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*
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. IN FACT, STATISTICS SHOW THAT MOST HOMEOWNERS FAIL TO PRESENT THEIR DEFENSE PROPERLY. EVEN THOSE THAT PRESENT THE DEFENSES PROPERLY LOSE, AT LEAST AT THE TRIAL COURT LEVEL, AT LEAST 1/3 OF THE TIME. IN ADDITION 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.

The Reason Why the PSA Becomes Part of the Loan Contract and Therefore the Borrower Has Standing to at Least Make Inquiries About the PSA Terms, Exhibits and Actual Workings of the Parties to It

The bottom line is that every decision regarding payoff, collection, forbearance and foreclosure must satisfy the conditions of the alleged REMIC securitization. The securitization is most often proffered in court in the form of a Pooling and Servicing Agreement (PSA) which in turn is supposed to have a Mortgage Loan Schedule (MLS) attached but the MLS is actually a fabricated document that didn’t exist when the PSA was created.

So if you want to settle a foreclosure, it must pass through several layers of approvals, and the authority for each level is in considerable doubt.

But all you need to do is rely upon the assertions and allegations of the foreclosure mill.

If they say that there is a REMIC trust that owns the loan and they either offer or submit to discovery demands producing the PSA, then you at least have a credible argument for saying that the alleged lender made the PSA part of the loan contract since no decision can be made without reference to the PSA and the parties who claim authority pursuant to the PSA.

Then you have the issue of whether the loan contract still exists (if it ever existed) because the borrower never agreed to securitization which was, as it turns out, an undisclosed element of his transaction that was so important that but for securitization, the loan would not have ever existed.

  • So the last provocative thought is that if the borrower never agreed to securitization and yet the foreclosure mill is relying upon securitization then when did the new contract arise?
  • After all if all decisions regarding the modification, payoff, or settlement of the loan are subject to the various documents in securitization when did those conditions arise?
  • And if they were contemplated at the time of contract with the borrower should they not have been disclosed?
  • And if there was compensation, fees or profits arising from securitization then should not that have been disclosed and is not that the proper subject for an action in disgorgement?

Interesting. Of course the elephant in the living room is that the trust does not exist and even if it did, it does not own or control the debt, note or mortgage. Hence the PSA is irrelevant but if that is the case then nobody claiming any authority through the PSA has any relevance either.

Here are quotes for the article in the link below:

Servicing Counselor identifies issues a servicer considers when a borrower requests a release

(1) Securitization Issues. A partial pay down of a loan has no negative REMIC tax consequences and will never compromise a REMIC’s tax status. See Kilpatrick Townsend, Servicer Survival Guide 2019-2020 Edition, Tom Biafore “Prepayments and Payoffs—What You Can and Cannot Do” for a discussion of the technical reasons why a pay down of a loan presents no REMIC concerns.

In Example 1, however, the borrower’s partial pay down is associated with a release of the noteholder’s lien on Parcel C. The servicer must review the release aspect of the borrower’s request separately from the borrower’s partial loan prepayment. The release of the noteholder’s lien on part of the real property collateral (Parcel C in this example) will not cause any adverse REMIC tax consequences only if after the release of Parcel C, the borrower’s loan meets the “principally secured” by an “interest in real property” test. The “principally secured” test is met when the fair market value of the remaining real property collateral for the borrower’s loan equals at least 80% of the loan’s remaining balance. See Kilpatrick Townsend, Servicer Survival Guide 2019-2020 Edition, Tom Biafore “Modern Day Alchemy—Modifying Qualified Mortgages in REMICs” for an analysis of the “principally secured” test. Provided that the 80% valuation test is met in connection with the release of Parcel C, the noteholder’s release of Parcel C will not cause any adverse REMIC consequences.

(3) PSA Limitations. Just because a borrower’s request may be granted without causing adverse REMIC or other securitization-level tax consequences and without raising credit concerns does not mean that the servicer can approve the borrower’s request before confirming that the requirements in the PSA provisions can also be satisfied.

Most PSAs for fixed rate securitizations prohibit the servicer’s taking actions that change the amount or timing of the borrower’s loan payments. In this case, and despite the fact that the transaction may not cause any REMIC or other tax concerns and may also be regarded by the servicer as positive for the credit for the loan, the servicer must review the PSA and confirm that the release and pay down will not violate the terms of the PSA. In this case, by allowing the transaction to go forward, the servicer will be accelerating the prepayment of part of loan by the amount of the pay down of the release price which violates the standard provisions in most PSAs prohibiting the alteration of the timing of a borrower’s loan payments.

When examining these rules, it does not matter that the borrower’s loan documents contemplated that under some circumstances (which circumstances are not met in Example 1) the borrower could have paid down part of the loan prior to maturity. In Example 1, the borrower fails to meet the conditions for the release of Parcel C and the servicer’s waiving required loan document conditions for the release and pay down results in an impermissible alteration of the loan’s payment terms in violation of the PSA. (e.s.)

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In the meanwhile you can order any of the following:
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CLICK HERE TO ORDER CONSULT (not necessary if you order PDR)
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*
CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR PLUS or BASIC includes 30 minute recorded CONSULT)
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. IN FACT, STATISTICS SHOW THAT MOST HOMEOWNERS FAIL TO PRESENT THEIR DEFENSE PROPERLY. EVEN THOSE THAT PRESENT THE DEFENSES PROPERLY LOSE, AT LEAST AT THE TRIAL COURT LEVEL, AT LEAST 1/3 OF THE TIME. IN ADDITION 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.

Actual Fiction and Legal Fiction: Why the Big Settlements Are Not Reducing Borrower Debt

It’s complicated. Giving the investors money was a pay down of the obligation owed by the investment Banks, not the Borrowers. It didn’t change anything in the trust. But that begs the real question. The trust never owned anything to begin with.

The trust does not exist as a legal person under any law of any jurisdiction simply because there is absolutely nothing in it.

Therefore there is no law that could or would support any claim on behalf of a REMIC trust as a claimant in bankruptcy, a Plaintiff in judicial foreclosure or a beneficiary in nonjudicial foreclosure. Yes it is that simple. But getting there is difficult particularly when dealing with widely held misconceptions of the facts. And failure to raise the point might in effect give the lawyers for “the trust” judicial standing for the purpose of that action in court.

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The confusion is understandable. It was the investors who were the only ones who actually paid value from their own pockets. Since they did not get any instrument that conveyed any right, title or interest in any debt, note or mortgage they never became the owner of the debt.
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But most people look at the investors as though they were the owner of the debt. So when the investors get money, the common interpretation is that therefore the borrowers debt is decreased. It isn’t. People are upset about that and they should be.
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The most difficult aspect of this to wrap your mind around is the fact that the separation between payment of value and ownership of the debt occurred at the very beginning of the scheme. Legally, there is no owner of the debt. Securitization as practiced (see SAP in other articles) produced an extralegal result, which I think means an illegal result.
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The bottom line is that nobody who paid value never received an instrument that conveyed ownership of the debt AND nobody who received an instrument conveying ownership of the debt ever paid value.
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Legally, the only way anyone can foreclose on a mortgage if they are the owner of the mortgage. But any transfer that is documented in a paper instrument conveying an interest in the mortgage is a legal nullity unless the debt is also transferred contemporaneously with the document. There is no transfer of the debt without payment of value to a party who owns the debt. Therefore the seller must be someone who has paid value in exchange for an instrument conveying ownership of the debt.
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It is intricate. But it is also very logical. Constitutional Law requires that any party seeking a remedy in court must be claiming some injury. If you don’t own the debt you can’t claim that you’re being injured by non-payment.
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Therefore the multi-billion dollar settlements that have been announced either in favor of investors or Borrowers have not mentioned the trusts simply because the trust was never the owner of a debt and therefore could not have been the owner of the mortgage. No money was ever paid to any trust in any settlement.
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All of this leads to further anomalies. If there is a settlement in which the investors are paid that’s reducing the obligation from Investment Banks to the investors, the failure to allocate any part of that pay-off to the obligation of Borrowers leaves the investment Banks with a profit.
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By pretending that the obligation of the borrowers remains constant even though the investors have been paid off in whole or in part and even though the obligation of the investment bank has been reduced in whole or in part, the Investment Bank remains free to initiate collection, servicing and enforcement of loans seeking payment in full. It does so through intermediaries who never mention the Investment Bank.
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Although at first blush one might argue that this is proper, it isn’t. The payments to investors constituted damages resulting from fraudulent misrepresentation by the investment Banks. In addition, there is the legal problem in which the investment Banks have never received a document transferring an interest in any mortgage, deed of trust or encumbrance.
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This is another separation that occurred for the sole purpose hiding the Investment Bank, concealing its role, and making it difficult to pierce through corporate veils in order to enforce liability for violations of lending and servicing statutes. At all times the Investment Banks act through a series of sham conduit intermediaries wherein lawyers make false representations that are protected by something called litigation immunity. As long as they are in court they can’t be sued.
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I think that if there is one key error most people make it is when they equate investors with the trust.
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The sole purpose of the trust is to hold the assignment of mortgage, even though it is illegal nullity (absent transfer fo the debt), as agent for the Investment Bank. The investors are creditors of the investment bank doing business under the trust name. They are not beneficiaries.
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And the trust never owns any debt and therefore does not own any mortgage. So even the assertion that the trust is holding the mortgage and Trust for the Investment Bank is false, simply because the trust is not holding the debt. Therefore the one thing that is asserted to be “the thing” or Res of the trust, doesn’t really exist under law. With nothing held in trust, there is no trust. and with no registration of the trust in any jurisdiction, all references to the trust are actual fiction not just legal fiction.

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In the meanwhile you can order any of the following:
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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. IN FACT, STATISTICS SHOW THAT MOST HOMEOWNERS FAIL TO PRESENT THEIR DEFENSE PROPERLY. EVEN THOSE THAT PRESENT THE DEFENSES PROPERLY LOSE, AT LEAST AT THE TRIAL COURT LEVEL, AT LEAST 1/3 OF THE TIME. IN ADDITION 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.

Tonight! Coronavirus and Foreclosure Update! Neil Garfield Show 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

We are at the beginning of an epidemic. As usual information has been scarce and only highly placed government officials and scientists are in possession of the real data, and analysis and projections. What we do know is that more and more local governments and businesses are leading the way to contain the spread of the Coronavirus. Among those steps have been enforced  social distancing, closing malls, bars, restaurants, cruises and flights, and various forms of moratoriums on evictions, foreclosure filings, and other legal proceedings.

Neil hosts tonight show with tips on how to use this short window of opportunity to your advantage and some tips on how to avoid getting trapped into thinking that the foreclosure is gone.

A good time to start the challenge is with each new statement or notice received from some third party claiming the right to administer, collect, service or enforce your debt. Starting early brings the best results. And the best results are when the homeowner wins the case.

What Aggressive Discovery Looks Like and What Eventually Happens to Stonewalling Servicers and Banks

If you persist you will most likely get an order compelling answers to interrogatories, production of documents and an award for attorney fees.

After that when your opposition still doesn’t respond you have the right to seek sanctions and that includes striking the pleadings of your opposition or the court announcing that the homeowner is entitled to the presumption or at least inference that the claimant lacks ownership, authority or both.

But since hardly anyone persists, the banks continue to stonewall. Despite the fact that the foreclosure is a hoax, they win because homeowners either give up or don’t pay a lawyer enough money to really litigate the case for them. They want the result without paying for it. Our system doesn’t work that way.

So here is an example of litigating with ooomph.

seehttps://app.ediscoveryassistant.com/case_law/27103-grande-v-u-s-bank-nat-l-ass-n

Plaintiffs served written discovery on the Defendants on July 8, 2019; on September 5th, Defendants responded to the requests with a production that Plaintiffs describe as “completely deficient.” (Dkt. No. 40, Declaration of Christina L. Henry (“Henry Decl.”), 3-5.) Following the production, Plaintiffs sent a letter summarizing the numerous defects in the discovery responses and requesting a discovery conference. (Id., 6.) The Parties held a discovery conference on October 16 and Defendants served amended responses several weeks later, on October 7. (Id., Ex. C.) Plaintiffs indexed these documents and determined that large numbers were duplicative and Defendants’ production remained deficient. (Dkt. No. 39 at 5.)
Plaintiffs then drafted a Request for a Joint Submission to the Court pursuant to Local Rule 37, seeking assistance in resolving disputes over the outstanding discovery. (Id., Ex. C.) Defendants’ attorney declined to use the joint submission but claimed that the document provided him with “additional information” that clarified the alleged discovery deficiencies and asked for Plaintiffs’ counsel to “work with him” to resolve the discovery dispute. (Id., 18.)
The Plaintiffs held another discovery conference on November 21, 2019 and Defendants agreed to supplement production with additional documents totaling 1,000 pages, voice recordings of four phone calls made by the Plaintiffs to Nationstar, a full life of loan history, and communications that had not been previously produced, all before November 28. (Id., 20-21.) The Defendants produced the 1,000 pages but none of the other material. (Id.  22, 25.) Defendants did not communicate with Plaintiffs regarding the additional items, submit a privilege log, or seek a protective order. (Id.)
On January 11, 2020 the Plaintiffs filed the present Motion to Compel, seeking complete responses to a dozen Interrogatories and Requests for Production. (Dkt. No. 39.) Several weeks later, Defendants produced additional documents, a privilege log, and supplemental discovery responses. (Id. at 2; Dkt. No. 50, Declaration of Taylor T. Haywood (“Haywood Decl.”), 3-7.) Defendants did not, however, produce documents responsive to Request for Production No. 17; Plaintiffs continue to seek these documents as well as their attorneys’ fees and costs incurred in bringing this Motion. (See Dkt. No. 49 at 5; Dkt. No. 52.)
Motion to Compel
*2 Plaintiffs contend they are entitled to documents responsive to Request for Production No. 17, which seeks:
[A]ll loan modification guidelines in effect for US Bank at the time the Grandes were participating in the FFA mediation from August 17, 2016 and through April 16, 2018 in regards to Promissory Note which is secured by a Deed of Trust lien on the PROPERTY that is the subject of this litigation.
(Henry Decl., Ex. A at 16.) Defendants resist producing the guidelines, arguing that the documents (1) are not relevant, and (2) are confidential, proprietary, and trade secrets. (Dkt. No. 49 at 5.) The Court finds these objections unpersuasive.

 

First, the requested documents are relevant under the broad civil discovery standard, which allows litigants to “obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party.” Surfvivor Media, Inc. v. Survivor Prods., 406 F.3d 625, 635 (9th Cir. 2005). A request for discovery should ordinarily be allowed under the concept of relevancy unless it is clear that the information sought can have no possible bearing upon the subject matter of this action.” Ragge v. MCA/Universal Studios, Inc., 165 F.R.D. 601, 604 (C.D. Cal. 1995). Here, Plaintiffs contend that documents responsive to this request provide “information about the policies, processes, and procedures Defendants used to make various decisions regarding the Grandes’ loan modification application.” (Dkt. No. 39 at 10.) Where Plaintiffs allege that Defendants’ evasive, shifting explanations for denying their loan modification were bad faith attempts to avoid their obligations, comparing Defendants’ policies to their behavior is relevant to Plaintiffs’ claims. (See Compl. at 32-34, 38-41, 54.)

 

Second, Defendants have not demonstrated that the policies are confidential, proprietary, or trade secrets. (Dkt. No. 49 at 5.) “In the federal judicial system trial and pretrial proceedings are ordinarily to be conducted in public.” Olympic Ref. Co. v. Carter, 332 F.2d 260, 264 (9th Cir. 1964). As an exception to the general rule of public access to pretrial litigation discovery, a party may move for a court order “to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including…requiring that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a specified way.” Fed. R. Civ. P. 26(c)(1)(G).

 

Here, Defendants have not moved for a protective order or listed the documents on a privilege log. (Dkt. No. 52 at 4.) Nor have they explained how these policies are trade secrets that give them a competitive advantage over competitors. (Id.) “If the court were to issue a protective order based upon such a generalized showing, the general principle of open access that underlies the judicial system would be eviscerated.” Braack v. Home Depot U.S.A., Inc., 2007 WL 2156371, at *4 (W.D. Wash. Jul. 23, 2007); see also Noble v. Wells Fargo Bank, N.A., No. 114CV01963DADEPG, 2017 WL 531883, at *6 (E.D. Cal. Feb. 8, 2017) (denying motion for a protective order where the bank failed to explain with particularity why its eviction procedures were trade secrets that gave it a competitive advantage over competitors).

 

II. Request for Attorneys’ Fees
The Court also finds that attorneys’ fees are warranted. Under Federal Rule of Civil Procedure 37(a)(5), the Court must award reasonable expenses associated with a motion to compel discovery, including attorneys’ fees, if the moving party prevails on the motion. Exceptions to this rule apply if: (i) the movant filed the motion before attempting in good faith to obtain the discovery without court action; (ii) the opposing party’s failure to comply was substantially justified; or (iii) other circumstances make an award of expenses unjust. Id.

 

Here, Plaintiffs brought this Motion after several good faith attempts to obtain the requested discovery, (Henry Decl., 6, 20-21; id., Ex. C), and nothing before the Court suggests that Defendants’ delay was justified or that an award of expenses would be unjust. To the contrary, Defendants’ substantial delay in responding to the discovery requests has delayed the trial in this matter (see Dkt. No. 55) and necessitated the present Motion (Dkt. No. 39 at 6-7). Therefore, Plaintiffs request for attorneys’ fees is GRANTED.

 

 

Motion to Vacate Judgment: Jurisdiction Is About Authority — Not Whether the Judge Was Wrong or Biased

Judges are required to consider anything in front of them, decide on its admissibility, and then give it the weight that the judge thinks it deserves. Pro se litigants have no way of knowing much about arguments concerning jurisdiction.

They flail about and basically submit motions to vacate that say to the judge “You made the wrong decision.” That argument is potentially the subject for appeal which fails most of the time.

In general, the motion to vacate can be based on one of two grounds: (1) fraud, which everyone like to use and nobody proves and (2) jurisdiction which everyone cites but never argues. Hence most, but not all, motions to vacate are denied.

[Practice Note: Not all scrivener errors can be corrected by a foreclosure or final judgment. If you see one that has a facial effect on recorded title, unless the Final Judgment or Final order specifically corrects the problem, it may still exist and be grounds for either vacating or amending the final judgment. If the Judgment is amended it could mean that the entire process allowing for motion for rehearing and appeal is re-started.]

So here is the response I sent to one client regarding her pro se motion to vacate.

This is not as strong as I would like it to be on the issue of jurisdiction. Your points are well taken but they are not strongly made in the context of an argument that shows that the court never had authority over the claim, debt, note or mortgage. Your argument sounds more like the court was wrong rather than the court had no jurisdiction.

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I also think that you need to ask for an evidentiary hearing on whether the trust exists and whether the trust ever had any right, title or interest in the debt, note or mortgage.
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[Practice Note: In active litigation cases this should be the subject of discovery and a motion for summary judgment by the borrower.]
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I would suggest filing a memorandum of law that makes the following points:
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  1. The named plaintiff does not exist and never existed.
    1. While Deutsche Bank National Trust Company exists as a legal entity, the named plaintiff is misleading.
    2. The subject debt has never been entrusted to Deutsche Bank National Trust Company nor has it ever been alleged to have been entrusted to that entity.
    3. Long Beach Mortgage Loan Trust 2006-WL3 does not exist as a legal entity anywhere.
    4. Further, the alleged trust has never been named as party to any transaction in which value was paid for the subject debt.
    5. Lastly, even if the trust existed, the documentation submitted to the Securities and Exchange Commission shows that neither the trust nor the trustee possessed any power to administer any aspect of the subject debt, note or mortgage.
    6. While opposing attorneys struggled to imply ownership or authority on the part of the trustee, the trust or the servicer, no document exists, nor was any document or testimony ever submitted or proffered to that effect. And any presumption by the court that ownership and authority existed lack any foundation in the court record.
  2. This court lacks authority to grant any remedy to a non-existent claimant.
  3. This court lacks authority to grant any remedy claimant with a non-existent claim.
  4. This court was misled by misleading argument and misrepresentations proffered by opposing counsel on behalf of a client that did not exist and with whom there was no attorney-client relationship.
So you could also file a motion to set an evidentiary hearing on your motion to vacate. The content, including the above, would serve to supplement your existing motion. The wherefore clause would simply ask the court to set a 30-minute hearing to hear evidence on whether the plaintiff existed and whether the plaintiff ever had a claim and perhaps whether opposing counsel misrepresented the existence of a client and the attorney-client relationship.
 
Although it is unlikely, I have seen several situations in which a motion with this particularity has provoked settlement offers from the other side.

FREE REVIEW:

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 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. IN FACT, STATISTICS SHOW THAT MOST HOMEOWNERS FAIL TO PRESENT THEIR DEFENSE PROPERLY. EVEN THOSE THAT PRESENT THE DEFENSES PROPERLY LOSE, AT LEAST AT THE TRIAL COURT LEVEL, AT LEAST 1/3 OF THE TIME. IN ADDITION 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.

Virtual Depositions in Post Corona World

Just a friendly reminder that it is now easier than ever to conduct virtual depositions from the comfort of your home work-space.

See Veritext | Court Reporting Agency

I just received their email promoting their service and I wanted to personally encourage lawyers to prepare for and take deposition testimony not only in a notice of deposition for also in subpoenas for deposition. It isn’t that big a deal to set it up and it ramps up pressure on your opposition. Make sure you have strong arguments for your subpoena of any specific individual. Whatever you do, your efforts will be not only opposed but ridiculed whenever possible.

Basically you want them to explain who owns the subject debt and how they came to own it. Then explore the relationships between the various third party “vendors” and the name used to state or proffer a claimant. I don’t think they can explain it without admitting to a conspiracy to commit illegal acts.

Select people who should know even if they don’t know anything. This game is all about plausible deniability and contrived ignorance. Challenge that and they will fold. This is no magic bullet. It takes tedious work to prepare for and take testimony at a deposition and a good strategic plan. You don’t want to ask questions that merely prepare the other side for trial.

 

Who Can Foreclose?

The plain truth of SAP — Securitization in Practice — is that nobody who paid value received ownership of the debt and nobody who received an instrument of ownership of the mortgage paid value. 

Thus SAP — securitization in practice — splits payment of value from ownership of the debt which produces an extra legal situation because all US law requires that transfer of a mortgage or beneficial interest under the deed of trust is a legal nullity unless accompanied by a transfer of the debt. All US law requires that transfer of the debt can only be accomplished by payment for the debt.

The bottom line is only a claimant who paid value in exchange for ownership of the debt can satisfy the condition precedent in Article 9 §203 of the UCC as adopted in all US jurisdictions. Everything else is just an attempt at justification or rationalization for how the claimant has satisfied that condition.

Understanding the above explains completely why all documents after the loan closing are fabricated, false, forged, backdated and supported by  perjurious testimony. Foreclosure mills are bridging a gap created by investment banks through false statements.

So don’t get lost in the weeds. Most courts and therefore most attorneys get irretrievably confused when the discussion turns to possession, holding or rights to enforce a note. And lawyers fail to object when legal presumptions are applied to situations where possession of the note does NOT imply ownership of the note or the debt.

Note that there is huge difference between standing in the pleading and standing in the proof. In pleading the mere allegation of facts is sufficient to establish standing to proceed. But at trial the claimant is required to actually prove standing, not merely assert it. In practice this means the use of presumptions to arrive at the factual conclusion that the claimant paid for the debt when in fact that never happened.

Point #1: In situations where there is a claim of securitization, there is no case (not ever) in which the claimant (trust, trustee, certificates, certificate holder etc.) is ever alleged to be or ever proven to be the holder in due course (HDC). HDC status means that the claimant can avoid nearly all potential defenses of the borrower. Securitization claimants don’t have this status because they did not purchase the debt for value without knowledge of the borrower’s defenses. Very simple. The object of foreclosure mills is to be treated as HDC without asking for it. The defense narrative is to reveal that HDC status does not apply — not  necessarily because they didn’t pay for it but because the foreclosure mill has never asked for HDC status. Thus the court has no business applying HDC rules.

Point #2: The claimant must own the debt as a creditor — i.e., as a party who paid value in exchange for receiving evidence of ownership of the debt. This is the only party who can claim injury from non performance of the obligation and therefore the only party with standing to bring the claim.

Point #3: Standing to seek judgement on a promissory note does not equal standing to foreclose unless the claimant owns the debt. This is the beginning point of where lawyers, judges, borrowers and everyone else gets confused. In the mind of the public debt=note=mortgage. Legally, equitably and morally the debt, note and mortgage are separate and distinct each carrying its own legal rights that are not necessarily consistent. Receipt of money creates a demand debt (liability) unless there is a clear indication of a gift. Execution of a promissory note creates a liability even if there is no debt — hence mere possession or even rights to enforce a note is not necessarily sufficient to establish standing to enforce the debt or mortgage.  The mortgage, regardless of what it says, can only be used to secure payment of a debt, the terms of which might be contained in a promissory note. Since foreclosure is a process of forfeiture the rules allowing for foreclosure are much more stringent than the rules of getting a judgment on the liability created by a note. A holder in due course may get judgment on the note, and a judgment of foreclosure on the debt. Nobody else can do so. If they have not paid value in exchange for ownership of the debt, they are not legally allowed to foreclose.

Point #4: In practice claiming possession of the note is treated as claiming title to the debt and thence incidentally a claim as holder in due course. It may not be logical or legal but there it is. So the presumption arises as though the claimant was a holder in due course which effectively destroys any defense — if not challenged. The borrower should deny that the claimant has any right to foreclose because it has not in fact paid value in exchange for ownership of the debt. Any purported transfer of a mortgage is a legal nullity without transfer of the debt also. Then the borrower should simply ask a contention interrogatory as to whether the claimant contends that is has paid value for the debt in exchange for ownership of the debt. And a request  for production should ask for evidence of such payment. The refusal to answer or respond is sufficient, after the foreclosure mill has been given several chances to respond, to raise an inference in favor of the borrower. That inference defeats the presumption that the claimant has paid value for the debt in exchange for ownership, which means that any paper transfer of the mortgage is void — unless proven otherwise at trial with evidence instead of presumptions. In actuality, all the borrower is doing is forcing the foreclosure mill to stop using legal presumptions and actually prove their standing,  right to collect, ownership and right to enforce the debt. If they had evidence of payment they would do so. But they can’t because nobody who paid value received ownership of the debt and nobody who received an instrument of ownership paid value.

Here are some quotes from a case in Florida that might help:

At trial, a litigation manager for Bayview testified. He was not a records custodian for RCS or for Bayview. He was not familiar with the computer systems that either of the prior servicers, CitiMortgage and RCS, used for compiling information on the loan or how it was inputted into the systems. He had no information as to whether the information on the loans was inputted into the prior servicers’ systems correctly. He could not testify to the truth or accuracy of RCS’s records, just that they were provided to Bayview.

Seffar v. Residential Credit Solutions, Inc., 160 So. 3d 122, 124 (Fla. Dist. Ct. App. 2015)

He testified that Bayview was the servicer and holder of the note. He believed that Bayview had acquired the note through a purchase agreement with RCS, but he had not seen the agreement, nor did he have a copy of it. His belief that Bayview was the owner of the note under the purchase agreement was based on “a screen shot of our capital assets systems, which has information in regards to the status of the loan with us.” This screen shot was not produced at trial.

Seffar v. Residential Credit Solutions, Inc., 160 So. 3d 122, 124 (Fla. Dist. Ct. App. 2015)

As to the allonge with the blank endorsement from ABN, he did not know when it was executed or whether the signature on it was a “wet ink” signature or a stamp. He did not know whether the allonge was affixed to the note prior to it being filed in the court file. He did not know if the vice president who signed the allonge on ABN’s behalf was in the employ of ABN in November 2009, when Bayview’s records showed that servicing of the loan had been transferred from ABN to Franklin Bank.

Seffar v. Residential Credit Solutions, Inc., 160 So. 3d 122, 124 (Fla. Dist. Ct. App. 2015)

we agree that it presented no competent evidence that RCS was the holder of the note at the time it filed suit or that it was a nonholder in possession and entitled to enforce the note. Therefore, Bayview failed to prove standing.

If the note does not name the plaintiff as the payee, the note must bear a special endorsement in favor of the plaintiff or a blank endorsement…. Alternatively, the plaintiff may submit evidence of an assignment from the payee to the plaintiff …

Even in the absence of a valid written assignment, the mere delivery of a note and mortgage, with intention to pass the title, upon a proper consideration, will vest the equitable interest in the person to whom it is so delivered.

Seffar v. Residential Credit Solutions, Inc., 160 So. 3d 122, 125 (Fla. Dist. Ct. App. 2015)

“Because a promissory note is a negotiable instrument and because a mortgage provides the security for the repayment of the note, the person having standing to foreclose a note secured by a mortgage may be … a nonholder in possession of the note who has the rights of a holder.” Mazine v. M & I Bank, 67 So.3d 1129, 1130 (Fla. 1st DCA 2011).

A “person entitled to enforce” an instrument is: “(1) [t]he holder of the instrument; (2)[a] nonholder in possession of the instrument who has the rights of a holder; or (3)[a] person not in possession of the instrument who is entitled to enforce the instrument pursuant to s[ection] 673.3091 or s [ection] 673.4181(4).” § 673.3011, Fla. Stat. (2013). A “holder” is defined as “[t]he person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.” § 671.201(21)(a), Fla. Stat. (2013). Thus, to be a holder, the instrument must be payable to the person in possession or indorsed in blank. See§ 671.201(5), Fla. Stat. (2013).

Seffar v. Residential Credit Solutions, Inc., 160 So. 3d 122, 125 (Fla. Dist. Ct. App. 2015)

Coronavirus Covid19 and Foreclosures

I’m getting questions about moratoriums etc. Here are the best answers I can give.

  1. There is no moratorium — at least not yet.
  2. There are increasing reports about sheriffs delaying forcible removals from homes simply because of the risk to the sheriffs and the risk to the communities of displacing people from their homes and all their belongings.
  3. Many courthouses are either shutdown or restricting activities to essential functions. This does not mean that foreclosures can’t be electronically filed in many jurisdictions.
  4. Foreclosure activity is slowing but that only means a spike later when they catch up and exacerbated by people who may lose their jobs.
  5. Anyone entering a foreclosed home is entering a space with unknown risks. That is especially true where people have been recently dispossessed. Investors beware!
  6. At this point anyone going to a courthouse is taking a big risk and anyone coming back from a courthouse is risking the health and lives of others.
  7. There is no legal restriction against filing documents that initiate or pursue foreclosures (other than the fact that most of them are illegal.)
  8. Stay safe and sane! Use any delay you get to prepare the fight!

Rubber Stamping Lying Liars and Their Lying Lawyers

It will take a political movement to force the state bar associations to address this issue.

Bill Paatalo writes:

Just filed by Russ Baldwin to the Oregon Supreme Court. The excerpts by the court are priceless. Here the court flat out catches the bank lawyers lying to the court and providing false declarations, yet signs off anyway. Up the chain it goes, and the Appellate court does the same. The court states that if attorneys cannot be trusted, the whole system falls apart, yet proceeds to let the system “fall apart.”
*
The question is obvious – if the foreclosures were in anyway legitimate in terms of who was attempting to foreclose, there would be no need to resort to perjury and fraud upon the court.
*
“The circuit court opined:
*
THE COURT: So here’s — you know, frankly, here’s my concern. I
can’t tell you how many foreclosure defaults I sign a month. And all I’ve got
in a default situation is reliance on the integrity of the lawyer that’s
submitting it, right? Because there’s no way I can go behind and figure out.
If people put an affidavit in there that says they — no one said they were
going to appear and we did the publication and it’s all — I sign it, right?
And the end result is if you do that wrong, like let’s say there was no
lawyer in this case, the end result would have been that this house would
have been foreclosed on and who knows how long it would have been before
the issue came up, if at all. Because different defendants have different
abilities to even identify the issue, right?
MR. BONFIGLIO: Correct.
* * *
THE COURT: What — what happened? Why, after defense counsel
called I guess it was your office and spoke with somebody and said I’m
going to appear, why, in a million years, would somebody then file for a
default judgment after knowing they didn’t serve properly? I mean, all you
have to do is look and you know, ooh, this publication is wrong. Not — it’s
nothing to take much to look at it. You just see that it’s not even in Lane
County and you know. And then make these false declarations.
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