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MISSION STATEMENT: We want to convince homeowners to fight illegal foreclosures and win — not merely delay a negative outcome. And we want them to go further — to pursue those who make false claims for monetary damages. In fact, I want homeowners to clear their title — expunging or removing or canceling the mortgage lien.

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Disqualification of Foreclosure Mill Attorney

Posted on July 5, 2022 by Neil Garfield

Over the years many lawyers and laypeople have sent me proposed motions to disqualify or bar opposing counsel from representing to the court that the bank he or she named in a complaint or claim is his client.

It seems like an open secret that virtually no lawyer engaged in the foreclosure process is actually representing that bank; it is also an open secret that no lawyer is actually pursuing a legally recognizable claim against homeowners. Instead, they have been creating false claims (virtual claims) based upon virtual loan accounts that do not exist on the books and records of any creditor much less the bank they say they’re representing.

Such attacks on the lawyers get little support from the courts. And Bar Associations that could prevent and punish such conduct are doing nothing. So I don’t think I am speaking out of turn when I say that you are not likely to get satisfactory results in filing a motion in court or a grievance with the bar association.

A recent interesting countermovement in bar associations is the current effort to remove words like “zeal” and “zealously” from the rules and oath of the lawyer. There is a growing recognition that the use of such words provides cover from unscrupulous lawyers who weaponize the legal process in order to obtain an illegal result.

I can think of no other areas of law where such conduct prevails more than in foreclosures. For nearly 25 years the courts have bent over backward allowing the remedy of foreclosure to be used solely on the basis of “zealous” representations from lawyers whose [principal objective is to make money for themselves, their law firm, the erroneously named “servicer,” and the undisclosed investment bank.

But since so many people keep returning to the subject I will admit that without lawyers being willing to undermine their own due diligence obligation (to assure the factual existence of the client and the claim). Protected by a doctrine called litigation immunity afforded to the lawyers, the investment bank, acting through lawyers with whom it has no direct contact, controls all events and actions by all actors in connection with the administration, collection, and enforcement of a debt that is fictional (virtual) instead of real.

While there have been instances in which lawyers were sanctioned for falsely representing to the court that U.S. Bank was their client acting as a trustee, such arguments are treated dismissively almost all the time. Frankly, it isn’t easy establishing that the law firm itself does not consider its attorney-client relationship is with parties OTHER THAN THE PLAINTIFF OR CLAIMANT. You can allege it, but how do you back that up with proof?

The answer lies in circumstantial evdience and in effective persuasion in court directed at a judge who for the most part has already decided the outcome of the case based solely upon the allegations.

So far I still don’t recommend that homeowners file such motions. If you fail you will make it look like you are trying to distract the court from the debt you owe instead of dealing with the fact that no such debt exists.

But, if I was going to do it, here are my notes on the subject:

Background facts:

The lawyer executes and files documents that contain or imply a short plain statement of ultimate facts upon which the remedy of foreclosure could be granted. The lawyer is naming the claimant as a bank acting as trustee of a trust that is always implied but never stated to own the underlying obligation surviving the “closing” of a transaction that was labeled as a loan. No allegation is ever made that the named claimant or Plaintiff ever paid value for the underlying obligation. The closest they come is the general allegation that all conditions precedent have been satisfied.

In truth, the lawyer has initiated the foreclosure process for the benefit of several actors, including the lawyer, and not for the benefit of the bank acting as trustee or the trust itself. In fact, the lawyer knows that any payments from the homeowner or payments arising from the forced sale of the subject property will be diverted away from the named claimant which is the bank acting supposedly on behalf of the trust, which in fact does not own any right, title or interest to the subject obligation, debt, note or mortgage. Neither the bank nor the lawyer expects or receives any flow of funds to or on behalf of the bank.

In no case do the common “trustees” (U.S. Bank, Bank of New York Mellon, Deutsch) receive or distribute money from homeowners or to any beneficiaries. In no case do the common “trustees” actively manage the affairs of a trust that owns a legal right, title or interest to the subject obligation, legal debt, note or mortgage. In no case, does the lawyer receive any instructions, information, or legal right to administer, collect or enforce an alleged unpaid loan account receivable owned, maintained or administered by the bank or any trust. In no case does such a receivable exist on the books of account for any trust or other creditor to whom the homeowner owes money.

The lawyer is using a fictitious name to further his own interest, that of the company named as a “servicer,” and the securities brokerage firm named as investment bank book runner with permission to use the name of the bank in a vaguely worded Plaintiff or claimant. If the foreclosure effort is unsuccessful no loss of income, principal or interest occurs on the books of record of any entity. If it succeeds, the proceeds are distributed to many different actors as revenue or other non-categorized receipts of money — but no unpaid loan account receivable is decreased by the receipt of such money because no such account exists.

The appearance of the unpaid loan account receivable is a fiction, but not a legal fiction. It is illegal and extra-legal. There are no provisions in statutory or common law for the administration, collection, and enforcement of a virtual debt. At the base of every legal debt is a transaction in which consideration is exchanged. The unpaid loan account must be real and it must be reflected on the books of account of the supposed creditor. And the enforcer must be a party who paid value for the underlying obligation (not the note or mortgage).

The attorney then misleads the court by both promoting and allowing untrue statements to stand as true, while the attorney knows they are false. When, for example, U.S. Bank is named as Trustee for the SASCO Trust 2006-A1, for the benefit of registered holders of SASCO Trust 2006-A1 pass-through certificates, the lawyer is making a misleading statement of claim, a misleading identification of the claimant, and promoting and active attempt to mislead the court into believing that ultimately it is investors who will compensate for their loss a rising from a claimed “default” by the homeowner.

It was my discovery in 2006 that nearly everything said about securitization consisted of bold big lies, that caused me to name my blog (beginning in October 2007) “LivingLies.”

It was a lie to send statements to homeowners indicating they had a legal obligation or even a moral one to pay the newly designated “servicer” who actually performed no servicing duties.
It was a lie to declare delinquency or default without disclosing the creditor who had suffered any loss arising out of the non-receipt of scheduled payments.
It was a lie to declare delinquency or default when no creditor suffered any financial loss arising from the alleged non-receipt of a scheduled payment.
It was a lie to imply that investors were buying pieces of mortgage loans or that foreclosures were being prosecuted on behalf of the investors, often referred to as the “holders of certificates” or “registered holders of certificates” — especially since they were not holders of any notes nor were they registered to receive any part of any payment from any homeowner.
It was a lie to assert or imply that the naming of a trust in the claim or complaint was sufficient to explain the appearance of the trust since it expressly disclaimed any economic interest in any debt, note or mortgage even if there was an assignment or endorsement — all as stated in the “Trust Agreement” or equivalent document.
It was a lie to assert that the trust had any right to administer, collect or enforce any promise or agreement with the homeowner and a concurrent lie to assert that the trustee had any right to grant powers of attorney or execute any servicing agreement for unpaid loan accounts that it did not own.
It was a lie to imply that the outcome of a “successful” foreclosure would result in the payment of a creditor.
It was a lie to assert representation of “the plaintiff” or “the claimant” when no such representation, retainer agreement, or contract existed.

The list could go further, to be sure. But the point is already made. Without lawyers willing to bend custom and norms to the breaking point there would be no successful foreclosure because the law does not allow foreclosure for fun and profit. It only allows it for restitution of an unpaid debt.

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Neil F Garfield, MBA, JD, 75, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business, accounting 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 COMMENTS ON THIS BLOG AND ELSEWHERE ARE BASED ON THE ABILITY OF A HOMEOWNER TO WIN THE CASE NOT MERELY SETTLE IT. OTHER LAWYERS HAVE STRATEGIES DIRECTED AT SETTLEMENT OR MODIFICATION. 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.

But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more. In addition, although currently rare, it can also result in your homestead being free and clear of any mortgage lien that you contested. (No Guarantee).

Yes you DO need a lawyer.
If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.

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Filed under: foreclosure | 3 Comments »

Guidance on legal argument in foreclosure cases

Posted on July 1, 2022 by Neil Garfield

OK. There are several aspects here. The most important one is to educate the judge and persuade the judge to apply existing legislative laws specifically the state laws adopting 9-203 of the UCC verbatim.

Your problem is always that the focus on the note presumes that the note is evidence of an underlying obligation owned by the holder of the note. This ignores the increased burden of proof established by 9-203 which requires that, as a condition precedent, the claimant MUST have paid value for the underlying obligation (not the assignee of the mortgage or the endorsee of the note).

The simple test is whether the alleged “holder” of the note paid cash for the underlying obligation. if so, the holder/purchaser can enforce both the note and mortgage. If not, it might be able to enforce the note but it cannot enforce the security instrument (mortgage). Contrary to dicta and opinions around the country, the law does not automatically permit enforcement of the mortgage simply because the claimant managed to involve the right to enforce the note. The law requires ownership and payment of value for the underlying obligation.

Nearly all judges miss the significance of this distinction. So you need to address their ignorance in the most respectful way possible but nevertheless aggressively to the point of risking contempt. The argument, well established by common law and statutes, is that no foreclosure is allowed which is not a remedy awarded to the creditor who has paid value for the unpaid loan account. This is not a policy argument. The question of whether that law should be applied is definitively stated in the state statute adopting 9-203. That law must be applied.

The reason why this is so important is the explosive conclusion that judges are seeking to avoid. If the claimant has not paid value for the underlying obligation then the claimant is not intended to receive the proceeds of the forced sale of the property. If that is the case, then the court has no jurisdiction to adjudicate a claim based upon financial loss that does not exist at least for the claimant that is presented.

Further, by naming a false Plaintiff, the foreclosure lawyers are intentionally by sidestepping basic required disclosure as to the ultimate facts upon which relief could ever be granted. This bars the homeowner from asserting counterclaims or affirmative defenses that would apply to whoever the real creditor might be. It also treats the most basic element of the claim as already decided — i.e., that the unpaid loan account exists.

Without evidence corroborating the assumption that the loan account exists on the books of an identified creditor (who paid value for the underlying obligation) the foreclosure lawyers are not entitled to rely on those assumptions and presumptions if the foreclosure is contested —- and as part of the action, the homeowner demands discovery, to wit: sworn answers to interrogatories demanding the identification of a creditor who maintains the loan account as an asset on its own books and records.

When you get to that point where the court has ordered compliance with discovery demands and there is no compliance, then the foreclosure lawyers can be barred from presenting evidence of the existence of an underlying obligation — as long as the homeowner has not already admitted the existence of the underlying obligation.

It gets pretty easy to unintentionally waive this crucial argument against foreclosure. But in cases where the argument is pursued, as early as possible in the claims cycle, homeowners either prevail in court or obtain highly favorable settlement offers most of the time (65%-80%).

The biggest problem is that neither homeowners nor their lawyers have any experience in investment banking or even basic accounting that would enable them to understand and argue this issue effectively.

The most basic element of this issue is that some company must have entries on its own books of account (ledgers) showing the reduction of cash or some other asset account in exchange for the payment and acquisition of the underlying obligation owed the homeowner to that specific creditor (no substitutions allowed).

If no such company exists then as a matter of law and generally accepted accounting principles the obligation does not legally exist. The 20-year-old practice of substituting a payment history in the name of a “servicer” is not a legally permissible substitute for reports from the alleged creditor submitted pursuant to a credible foundation from the creditor itself.

So the only reason why most foreclosures have not been barred is the erroneous but nevertheless consensus belief that the loan account does exist and that the claimant owns it by virtue of being named as a claimant. Anyone with a passing interest in logic understands that is circular reasoning. But homeowners fail to even consider that the loan account they intended to start either never was created or was extinguished in the securitization process leaving nobody with an ownership interest in the underlying obligation and therefore nobody entitled to receive money from the forced sale of the subject property.

As a result, homeowners and their lawyers fail to deny the existence of the loan account, fail to deny ownership of the account, and fail to deny authority or even factual administration by the apparent “servicer.” But the ones who do deny and who demand discovery responses that corroborate the lie that the loan account exists are the very small minority of homeowners who prevail in foreclosure litigation.

Turning to the case at hand, like many homeowners you are dealing with smoke, mirrors and a number of moving parts designed to prevent you from nailing down the illegal behavior that resulted in the false claim being asserted against the homeowner. Countrywide Home Loan Servicing LP is NOT the same as Countrywide Bank, Countrywide Home Loans or other Countrywide entities.

The merger with Bank of America consisted of several steps. First BOA created Red Oak Merger Corp. and it was that entity that acquired Countrywide Home Loan Servicing LP. There is nothing on record nor even any assertion that RedOak acquired any loans in that merger. The CW entity was established as a “servicing” entity even though it probably did not perform servicing functions that were performed by FiNTECH companies who were acting as agents for the investment bank that started the securitization cycle.

The purpose of the merger was to protect the control of the money trail without owning it and thus becoming subject to regulation as a lender, successor lender, or creditor. With the failure of CW as a conduit for data produced from the illusion of loan closings and the failure of entities like Aurora and Lehman, the objective was to sustain the securitization infrastructure that included multiple transactions (derivatives) whose value was dependent upon control, but not ownership, of the flow of money paid by homeowners who were ignorant of the fact that there was no loan account that was being reduced or debited with the receipt of funds paid in monthly installment.

All of this boils down to a very basic legally required foundation. If the transaction with the homeowner was a loan then the parties to that loan transaction needed to be disclosed, warts and all. In addition, all profits, compensation, fees, and commissions were required to be disclosed. In plain language, the existing laws and rules governing the application of loan closings under the Truth in Lending Act require the disclosure of the investment bank, its role in the transaction, and its profit along with all the other actors who were receiving fees as a result of the homeowner signing his or her name to “loan” papers.

The Good Faith Estimate at the “closing” would have disclosed that the objective of the named “lender” (MortgageIt) was merely to cajole and coax the homeowner into signing papers so that the investment bank and other actors could generate revenue exceeding the amount funded to or on behalf of the homeowner. This would open the door for homeowners to bargain for more incentives since the transaction created only a virtual loan account instead of a real one. And it would have opened the door for competitive investment bankers to offer better terms to the homeowner as well — in change for allowing a virtual loan account to be enforced as though it was real.

In short, homeowners should have had the opportunity to accept offers to become part of a securitization scheme or to reject that in favor of conventional loans.

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Filed under: foreclosure | Leave a comment »

Foundation Objections and Notices to Produce at Trial

Posted on June 30, 2022 by Neil Garfield

The assertion, allegation, or argument that the case even involves a trust or trustee requires a legal foundation. The legal foundation consists of a witness who is competent to testify about the jurisdiction in which the alleged trust was organized and is currently existing — or who can testify competently and credibly about the authenticity of the document that created the trust.

That document is a “Trust Agreement” although it could theoretically go by some other name. That is not likely because most lawyers who draft documents do so in the hope and belief that the document will be accepted, end to end, as what it purports to be. Any label other than “Trust Agreement” would diminish the authenticity of the document as having recited or memorialized the creation of the trust entity. Naming it anything other than “Trust Agreement” would raise questions rather than answer them.

Suggestion: NOTICE TO PRODUCE AT TRIAL.

1. With respect to assertions, allegations or arguments presented in the case at bar relating to the existence of an unpaid loan account in which the underlying obligation is owned by a trust entity or any agent of a trust entity including but not limited to any named trustee, please produce at trial any and all documents comprising a trust agreement, amendments and restatements thereof, or relied upon as evidence of a trust agreement, including but not limited to the following elements of all legally existing trust entities:

a. Identification of the Trust —, i.e., name of the trust and identification of the jurisdiction under which the alleged trust was organized or created.

b. Identification of trustor or settlor

c. description or identification of the property subject to the terms of the alleged trust — e.g., loans owned by the trust for the benefit of the beneficiaries

d. description of the terms of administration of the trust for the beneficiaries

e. identification of the beneficial interest

f. identification of the beneficiaries

It is really simple. If the above elements are not present, it is not a trust entity. If there is no trust entity, there is no trustee. If there is no trustee, then the bank named as trustee cannot claim the authority to manage the property that either was conveyed into the trust or will be.

BUT — if you start admitting things that you know nothing about simply because you think the facts are true, then you waive all arguments against the nonexistent trust entity for purposes of the foreclosure. You can still come back against the “trustee” and maybe the “servicer” for having faked the whole thing, but that would be in a subsequent motion or lawsuit for fraud upon the court and abuse of process.

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Filed under: foreclosure | Leave a comment »

Stop Looking for John Does

Posted on June 29, 2022 by Neil Garfield

A better use of your time is not to find the John Does and instead simply attack the names being used to assert the claim. The John Doe investigation can only be successful if conducted by government agencies. It requires a deep dive into securitization which the courts have made clear is not a basis for defense or even claims relating to recorded mortgages.

When the subject comes up, your response to some obvious and frequent questions that appear to be rhetorical is “Judge, it is not our job to put the securitization house in order. Only the investment bank that started it can do that. We are here because the lawyers are claiming that they represent a claimant who is named in this action and that the claimant owns an unpaid underlying obligation due from the homeowner. Our inability to name the real parties in interest is not a legal basis or foundation for merely presuming that status simply because the lawyer says so.”

Also consider this: the more you are saying you are looking for a real party in interest the deeper the hole you dig for yourself. By making that inquiry you are tacitly or expressly admitting that there is a real party in interest (whereas in most cases no such party exists because the alleged loan account does not exist). And by admitting that there is a real party in interest, you’re admitting the essential allegation against the homeowner —- that there is a loan account receivable on the books of a creditor. That simply is not true.

Investment banks are getting away with this nonsense simply because lawyers are not trained in basic accounting skills and principles and laypeople have no idea how companies are required to report and maintain records about financial transactions. It has always been a mystery to me as to why CPAs have not turned this situation into a lucrative expert witness revenue stream.

The Payment History you receive and the statements are not generally prepared or even known by the “servicer” in whose name those reports are generated. Such “servicers” do not handle money and do not report on their handling of money. But employees or independent contractors are hired for their ignorance — so they can’t make admissions or slip up and accidentally reveal the nature of their knowledge or the business of the “servicer”. Their job is testimony based upon a prearranged script.

When you make a payment regardless of the named payee and regardless of the apparent address, the payment is routed to either a lockbox for physical checks or an electronic equivalent of a lockbox. And the payments are not deposited to any account owned or controlled by the apparent “servicer.”

In today’s courtrooms, if it is a foreclosure case, nobody is asking for the definition of a business record. (HINT: It is a record of the business conducted by the company whose name appears on the report). If the “servicer” did not receive a payment it has no legal or accounting basis for reporting that it did.

So the Payment History is only admissible if there is a proper foundation (testimony from the robowitness) that the “servicer” received the money. Otherwise, any reports generated in the name of the “servicer” are merely second-hand reports based upon hearsay from third parties who actually did receive the money, deposit it into accounts and distribute the money to a creditor or creditors.

Since the Payment History report is not generated from any data recorded in the general ledger of the “servicer” it is not a business record and therefore cannot be used as evidence of transactions in which it was not a party. To put it in legalese, the Payment HIstory does not qualify for the business record exception to the hearsay rule excluding out-of-court statements.

And back to the main point nobody is a creditor on an unpaid loan account receivable unless they are recording it as an asset on their accounting ledgers and reports. There is not one case where any “servicer” has ever reported that it owned a loan based upon recording entries on its general ledger. It is all legal argument instead of facts.

If there is no loan account receivable it is not the burden of the homeowner to explain that absence. If there is no creditor (i.e., someone who has paid value for the underlying obligation and reports the ownership as an asset on their accounting records, it is not the job of the homeowner to figure out if there is a creditor or to identify the alleged creditor.

All of that is the job of the lawyers who are pressing these false claims. Their job is to entice you into fighting a ground game where you are seeking to prove the claim belongs to someone else, the account exists, and it remains unpaid to someone else. All of that is the prima facie case for supporting the claim. It is ONLY the burden of the claimant. But homeowners and lawyers, out of ignorance and confusion, insist on moving the needle to point back to the homeowner to prove that the claim should not be enforced.

Your quest for truth only muddies the waters creating confusion as to who has the burden of proof. The more you allege about securitization and the deeper the dive into securitization the more you are placing a burden of proof on the homeowner that can never be satisfied without an admission from lawyers and “Servicers” that this was all a sham.

In all other types of civil cases, the lawyer comes to court and says that he represents a named claimant and that the claimant possesses a claim for which the lawyer is seeking a remedy.

The burden does not shift to the defending party. In order to get the desired remedy, the lawyer must prove that the claim exists, answer questions and produce documents that show the claim is real and that his client owns it.

But if the defending party becomes “proactive” he or she will have fallen into the trap of having accepted the burden of proof that the claim does not exist BEFORE the lawyer for the claimant proves the elements of the prima facie case supporting the alleged claim.

Filed under: foreclosure | Leave a comment »

Challenge the claim, not the system.

Posted on June 28, 2022 by Neil Garfield

Yes they are part of a scheme in which if the facts were known, would be illegal and possibly criminal. The one thing you need to be careful about is challenging the system instead of the claim. If you want to win you need to challenge the claim. Systemic challenges are generally regarded as fringe conspiracy theories.

On the other hand, you cannot conduct a successful challenge to a foreclosure claim without at least knowing that the system is based upon an illegal or extra-legal doctrine that allows anyone with knowledge of a virtual debt (created only by claims) to seek enforcement and to exercise virtual administration, actual collection and actual enforcement of a virtual claim that does not exist in the real world.

If you are looking for an analogy, the best one I can think of is slavery before the amendments to the constitution and the Jim Crow era that followed.

When Dred Scott sought protection from people who claimed to own him, the Supreme Court said he was not eligible for protection because he was not a legal person. He was virtual property declared by statutory law and contract.

This is identical to the current wave of virtual property appearing as virtual ownership of a virtual debt. Like slavery, it is antithetical to many centuries worth of laws of contract, loans, and enforcement. The property interest in both is actually intangible because the property itself is virtual rather than real. In fact, the intangible property interests is also illusory because it conflicts with our legal definition of debt.

A debt cannot exist unless there was consideration paid. It also cannot exist without a lender or creditor. And it cannot be enforced unless it still exists at the time of enforcement is claimed.

In the case of foreclosures, both common law and statutory law agree that only a party who paid value for the underlying obligation may receive the benefit of the foreclosure remedy.

The idea that Dred Scott could not possibly be property and that as a human being, born on U.S. soil, he was a legal person entitled to the rights and protections of the constitution was cast aside as a frightening attack on an entire economic system in which most wealth (in the South) was counted as slave ownership. Later after the constitutional amendments, and for the last 150 years, we are still dealing with attempts to put people “back in their place” and anger over the loss of wealth resulting from ending slavery as an institution.

The idea that consumers could not be forced to make payments on a nonexistent debt to a nonexistent creditor is similarly forced aside because of erroneous replies to questions like “You got the loan, didn’t you?”

We can expect that even after the scheme is revealed, the same thing will apply. Financial institutions will continue to press for enforcement and judges and lawyers will be slow to recognize the difference between the virtual world and the real world.

It may seem like a stretch to compare the current economic environment to slavery but to me the parallels are obvious.

A substantial amount of wealth in this country is now derived, directly or indirectly from the concept of a virtual debt that has never been allowed or even defined by any statute or common law doctrine. There is no such thing as a virtual debt anywhere in jurisprudence. And yet, it is treated as real and like people who were named or designated as slaves, it is a rare bird that a homeowner escapes illegal claims to force the sale of their homestead. In addition, the aggressive use of “virtual debt” has produced anomalies in the marketplace that has already cratered the world economy once, so far.

Virtual debt is merely a cover story for hiding unconscionable profits on a transaction that is intentionally misrepresented as a loan instead of paying for services rendered. It is only by withholding the information that consumers or homeowners are providing a service, that enables Wall Street securities brokerage firms to pretend that they have entered the lending marketplace. It is a cover story for withholding legally required disclosures of parties, profits, and consequences from a homeowner until long after they have accepted the false contract.

Those firms that originate such transactions have no stake in the outcome of the virtual loan contract. It makes no difference whether the homeowner pays or does not pay. There is no loss if he doesn’t pay and in fact, there is a gain because the Wall Street firms will take the proceeds of forced sale without ever recognizing it as income.

Virtual debt is a cover story for hiding the fact that nearly every loan in America has been subject to a tidal shift that goes against the grain of anything we have ever believed, asserted, and enforced. There is no place in jurisprudence where a transaction is allowed to create an obligation where the counterparty has no stake in the outcome of the obligation.

By the time the homeowner is confronted with foreclosure claims, the Big Lie has been told so many times that it is accepted as being axiomatically true by nearly everyone. The existence of an unpaid obligation due from the consumer is a foregone conclusion. The similarity with slavery is striking. Both rely on the fact that it has operated so long it MUST be right.

So it is impossible to attack — especially by homeowners who refuse to believe that the attack is well-founded. The new sub silencio doctrine is that the only thing that matters is that the consumer promised to make a payment and NOT whether he or she would have made that promise if the facts were known and NOT whether it is indeed representative of any underlying obligation. There is no interest in proof of loss or the existence of an injured party. It is all “presumed” because there is no reality to the claim except as a virtual claim.

The entire landscape of finance has shifted to virtual interests that are increasingly exotic in nature. Judges and lawyers are only interested in whether the consumer stopped making payments — with virtually no thought about whether the payments were still due or were ever due — much less whether the named claimant exists or has any right, title, or interest in any property or promise of the homeowner.

But attacks on the institution of virtual debt are repelled as existential attacks just like the era in which slavery or virtual slavery was enforced. It is all based upon a false premise.

And despite centuries of common law and statutes, any attempts to force the financial system to follow the rule of law is viewed as a frightening attack on a system that has only the history of having done it for a long time “and therefore it must be true.” The result has been burgeoning debt flooding the marketplace instead of wages that keep pace with inflation and provided opportunities for savings.

The bottom line is this: for most people they are subsisting on government assistance or debt. And because the only way they can “maintain” or service the debt is with more liberal debt, they will never be out from under the burden of debt. But the reality is that if they were truly informed, consumers would be able to participate in the explosion of revenue and profits arising from their signature on a debt instrument. And if the debt (risk of loss) was real, it would be less plentiful, thus forcing wages higher.

The upheaval arises from the recognition that there is no debt to pay or that it requires payment or consideration far in excess of the temporary payment at “closing.” But contrary to threats emanating from Wall Street, this revelation does not destroy the entire financial system. It merely reduces the profit from cheating homeowners and investors who erroneously believe that they own a piece of debt issued by homeowners.

The abolition of slavery forced several states to enter the real world of economics in which mutual consideration was required for any contract. The abolition or reformation of virtual debt contracts will merely force Wall Street into the real world of economics in which all required disclosures are made and people enter into contracts with eyes wide open and informed consent.

The bottom line is that real debts need to be paid. Virtual debts require no payment. If the lawyers representing the alleged creditor cannot supply you with a copy of the unpaid loan account receivable as it exists on the books and records of the alleged creditor, then it does not exist. Do NOT accept the alleged “Payment History” as a substitute for an accounting record of ownership and loss on an unpaid loan account receivable.

Filed under: foreclosure | 1 Comment »

Don’t Go Too Far in Litigation

Posted on June 27, 2022 by Neil Garfield

Recent correspondence with some of my contributors reveals the completely understandable desire to paint the opposition as thieves. The simple answer is that you don’t need to do that and you probably will not be able to prove it until AFTER the foreclosure case is over. Even then, that proof will only be accepted in most cases if you won the foreclosure case.

This is why we need more lawyers representing homeowners. And those lawyers need to study the issue instead of shooting from the hip. This is a lesson every good litigator, including myself, had to learn the hard way. The lesson is this: don’t go too far.

If the defendant in a civil lawsuit could escape liability simply by finding acts, events, and documents that were done improperly, illegally, or even fraudulently there would be no such thing as enforceable contracts.

BUT foreclosure is not about whether the opposition consists of evil-doers who made illegal deals with other parties. It is about whether the homeowner is a party to an enforceable contract with the named claimant or plaintiff.

So if you limit yourself to testing the direct assertions of the case, you are most likely headed to victory. Going further to invalidate all securitization or to invalidate the securitization scheme that produced a foreclosure is not relevant to the foreclosure case — until afterward when you file wrongful foreclosure.

The real problem is that it is an article of faith that there must have been a loan. Why else would the money have appeared from anyone? This article of faith is what stops lawyers from challenging other lawyers and judges on the basic facts forming the foundation of every foreclosure claim. It is so obvious, it must be true.

The corollary is also “obviously” true: that since the initial transaction must have been a loan, the “loan” must still exist. If the loan still exists, then the homeowner has caused financial injury to the party that owns it. And all of that is corroborated by documents that appear to be facially valid even though there are entirely fictional and fabricated.

Lawyers don’t want to look silly saying otherwise or challenging what appears to be obviously true —- even though in every case where the facts are challenged in discovery the presumed facts are untrue — and the foreclosure case fails.

Boiling most cases down to their nub, the undeniable facts are as follows: virtually all claims for foreclosure remedies are based strictly on presumptions of fact and law arising from what appears to be facially valid documents. Once those presumptions are effectively challenged, the claim fails. Judges will and do rule for homeowners who limit their attack to the case at hand. They tend to ignore or rule against arguments that challenge securitization generally (even though there is ample reason for doing so).

You don’t need to prove that there was never a loan, to begin with. You only need to undermine the claim that the current claimant owns an obligation due from you. The twist is that you will never get an honest answer to your challenges. But the law has an answer for that. Once you can establish the stonewalling behavior as the center point for your defense, the foreclosure lawyers have no choice but to dismiss their own claim or suffer dismissal from the court.

The word “believe” comes from the old English meaning that you are willing to accept the assertion. If you are willing to accept the assertion that the current claimant and servicer have no right, title, or interest to any money or property and you act on that “belief” you are very likely to prevail in foreclosure — as long as you follow the rules.

Filed under: foreclosure | 1 Comment »

Errors by the Judge do not establish foundation for vacating an order

Posted on June 23, 2022 by Neil Garfield

Greetings. I am recovering slowly from my heart attack and thank you to everyone who has sent me thoughts and prayers.

I have recently received a question from multiple people citing case law or quotes from treatises about errors made by Judges. Non-lawyers jump to the conclusion that the presence of an error is sufficient to vacate a prior ruling. This is not the case. If the judge or justices reviewing the error determine that the outcome would not change by correcting the error of law or fact, then the ruling stands. Usually, that shows up on appeal as “per curium affirmed.”

A recent decision that established the fact that an error does not need to be obvious to be overturned, is leading some people down a rabbit hole. I reviewed the decision. I strongly doubt this will do us any good — tactically or strategically.

The existence of a mistake is NOT sufficient to change anything. It is only if the mistake altered the outcome. The general view of nearly all judges is that this falls under damnum absque injuria — an error that did not cause anyone injury. That is where bias comes in, but it is permissible bias. The assumption is that there was a loan, a loan account was created, the act of the homeowner in making payments corroborated that it was a loan transaction and that the Payment History supplied by the so-called servicer leaves no doubt as to the existence of a breach of contract (default).

So if the decision is made that the foreclosure was probably the proper remedy in the situation, even though all the documents should not have been admitted into evidence for example, then the error will not result in vacating or overturning the decision of the trial judge. But, continuing with that example, if all the documents should have been excluded from evidence, then the result would change because that results in failure to establish any prima facie case against the homeowner.

Each case in which homeowners have prevailed in contested foreclosure cases is the result of the exclusion of evidence. Evidence is excluded from the court record mainly because there is a lack of foundation for the introduction of the evidence or because it is undermined in cross-examination.

But the primary issue confronting homeowners and their lawyers is their own bias, which results in tacit or explicit admissions about the existence, ownership, and authority over an unpaid loan account. This is the unfortunate result of a lack of knowledge regarding investment banking. This ignorance makes it impossible to think that the transaction and the history were anything other than what is being represented by the lawyers seeking a forced sale of the property.

It is the failure of homeowners and their attorneys to attack the initial premises that causes most contested foreclosures to be decided against the homeowner. If you assume there is a loan account on which the homeowner was paying and then stopped, the entire defense turns into a “yes but” defense that the court can permissibly ignore.

Filed under: foreclosure | 2 Comments »

Heart Attack Message

Posted on June 14, 2022 by Neil Garfield

For obvious reasons, I need to keep this short.

On June 2, 2022, I suffered a massive heart attack. It is known in the medical community as the “widow maker,” because the immediate consequence is the cessation of blood flow anywhere in the body. It is death. I was fortunate because when it occurred, I was already on the operating table for a related procedure.

It took 20 minutes of very aggressive CPR to (a) keep blood flowing and (b) re-start a normal heart rhythm. It was and remains a nightmare scenario for both members of my family and the excellent team of doctors who saved my life at UF Health in Jacksonville.

The events that followed fall into many categories. The bottom line is that I am left in a very weakened condition that affects every physical aspect and movement of my body and my life. As my body recovers from the heart attack and the CPR used to save my life, I must also endure the lingering mental, emotional and cognitive effects.

My recovery and rehabilitation are likely to span 4-6 months — although the bulk of the improvement may be apparent within 2 months.

All of this has vastly reduced the amount of productive time I have to spend on writing, analysis, and performing services. Based on the consensus of doctors, it appears that I’ll be running on most of my cylinders within a few weeks, but I will be slowed by my temporary disabilities. And I will be constantly fatigued by mental or physical effort.

None of this changes my overall plans. 16 years ago I did everything I could to alert the public to the largest economic crime in human history — luring homeowners into executing documents that failed to comply with law, failed to disclose the real terms of the deal, and failed to adequately compensate and protect homeowners for their involuntary participation in an illegal unregulated securities scheme.

My job would be done if everyone had reached an understanding of the scheme. But that is not the case. So I will continue as long as I can.

Everything I have to say, and all the proposed strategies and tactics I recommend to beat back the banks flow from one simple premise: when put to the test, the law firm representing the “lender” cannot and will not corroborate the asserted or implied right to enforce anything. It is all a sham. Even under court order, the lawyers cannot do it, the “lender” cannot do it, and the “servicer” cannot do it.

So the obvious answer is to put these actors to the test, knowing they will fail. That is how I win, it is how dozens of other lawyers have won and it is how every homeowner can win against these actors.

Filed under: foreclosure | 17 Comments »

Notice of Temporary Absence Due to Medical Emergency

Posted on June 6, 2022 by clg5645

Thank you for visiting the LivingLies blog.

Mr. Garfield has had a medical emergency requiring his absence from the blog and his work. If you are researching resources for Foreclosure Defense, you can continue to research using the search bar on the homepage. Mr. Garfield hopes to be back to work sometime next week.

Filed under: foreclosure | 9 Comments »

Finding a Lawyer Who Wants to Win Your Case

Posted on June 3, 2022 by Neil Garfield

This issue is so common that I making a blog post out of my answer.

The most common question I received is whether I know of a lawyer who “gets it” and who practices in the jurisdiction in which the subject property is located. We are not a lawyer referral service primarily because it is challenging and expensive to keep track of lawyers who will accept these engagements.

I think the primary obstacle to finding a lawyer is probably the homeowner’s desire to find a lawyer who already accepts the basic premises of a successful foreclosure defense strategy. This is an unnecessary restriction.

It requires lawyers to have at least baseline knowledge of securitization and Wall Street practices. That knowledge, while helpful, is not required for a successful challenge to current claims to administer, collect or enforce any debt.

Lawyers generally have no interest in getting the whole story as long as they have the necessary information and tactical plan to win the case. They only need to understand that if the challenge is made, the legal presumptions that follow from the apparent facial validity of fabricated documents will collapse.

In any US jurisdiction, there have been at least a dozen lawyers who have been active in foreclosure defense. They seem to come and go.

A frequent subset of questions that I receive relate to the Chase-WAMU situation. homeowners are unnecessarily restricting their options by insisting that the lawyer already know that Chase never acquired any loan from the Washington Mutual bankruptcy estate or the Washington Mutual receivership that was controlled by the FDIC.

You would probably be best off with an attorney who has training and experience in trial practice more than any experience with Washington Mutual Bank. I can provide the background narrative for the merger of Chase with WAMU. it is important that you present as a good client able to pay fees. So you want to insist on paying for a lawyer’s time even if they are offering a free consultation. The next thing to do is to schedule a conference call between me and the lawyer you have found. You could be included in that conference call.

If you are looking for my assistance, I think that the most cost-effective way of handling the issue is if you order the Preliminary Document Review (Plus or Premium) from us. This gives me an opportunity to review your case and make some preliminary suggestions for the next steps. It includes a consultation. The consultation includes an oral report on my preliminary findings. The conference call is recorded and a transcript is produced through artificial intelligence.

All this information is helpful in presenting your case in an orderly fashion to a prospective attorney.

As a side note, it appears that the most common profile of an attorney who might accept this engagement is as follows: between three and seven years of trial experience, not just motion practice, and an open mind to accepting the possibility that despite the legal presumptions raised from apparently facially valid documentation, there is (a) no unpaid loan account, (b) nobody owns a debt that is due from you even if you think you owe a debt, and (c) there is no default (because there was no loss).

The initial reaction from the lawyer will be that foreclosure defense will generally result in failure and that the client probably has very limited resources to pay for effective litigation, including discovery and motion practice. You can overcome this resistance by presenting a plan that they can understand and demonstrating your commitment to completing the task.

If you can get the prospective attorney to attend a telephone conference with me and you, I am usually successful at convincing the prospective attorney that there is a high probability of success and that there is a business case for accepting the engagement.

Depending upon the current status of your case, you might also want to consider the Administrative Strategy (see below) which includes all the elements of the PDR PLUS or PDR Premium.

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Nobody paid me to write this. I am self-funded, supported only by donations. My mission is to stop foreclosures and other collection efforts against homeowners and consumers without proof of loss. If you want to support this effort please click on this link and donate as much as you feel you can afford.

Please Donate to Support Neil Garfield’s Efforts to Stop Foreclosure Fraud.
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FREE REVIEW: Don’t wait, Act NOW!

CLICK HERE FOR THE 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. You will receive an email response from Mr. Garfield usually within 24 hours. In the meanwhile you can order any of the following:

Click Here for Preliminary Document Review (PDR) [Plus or Premium) includes 30-minute recorded CONSULT). Includes current title search.

Yes you DO need a lawyer.
If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.

Please visit www.lendinglies.com for more information.

Filed under: foreclosure | 1 Comment »

Before you use the word “Default” know this:

Posted on June 2, 2022 by Neil Garfield

Upon reflection, I think part of the problem is that most people including judges, don’t truly understand the meaning of the word “default.”

A default does not exist just because someone declares it. If it isn’t a creditor known to the debtor then it is not even facially valid.
A company named as a designated “servicer” is not necessarily working for the named creditor and probably is not. So anything that said “server” sends out is lacking in facial and substantive validity. Watch for more news about FINTECH. Those companies are the “real” servicers in the sense that they physically collect homeowner payments and deposit the proceeds into posting accounts controlled by the investment bank — not the named “creditor” and not the named “servicer.” As such the records of the putative creditor and servicers are hearsay and do NOT meet the elements of a business record exception to the hearsay rule. Those”records” are not even “records” in the sense that they do not reflect any business on any debt conducted by that company.
Here is the tricky one. The fact that a homeowner failed to make a scheduled payment is NOT a default unless it is owned and due to an identified creditor who will suffer a financial loss arising from its ownership of alleged unpaid loan accounts receivable. Non-payment is not a default. Non-receipt of a payment due IS a default for the creditor who is supposed to receive it.
A default ONLY exists, for purposes of foreclosure, if a creditor — one who owns the unpaid loan account receivable due from the homeowner is not paid — fails to receive the payment and suffers a financial loss as a result.
Defaults can be cured by payment to the creditor or an authorized collection agent that is designated by the creditor (i.e., not designated by third parties claiming the right to make such appointments). This one fact provides the foundation for a legal strategy that will give angina to your opposition:

Demand proof that the named creditor has paid value and owns the unpaid loan account receivable if it exists.

Demand proof that the named servicer has been appointed or hired by that servicer.

Refuse to pay anyone else. In fact, sue anyone else demanding payment for interfering with your right to cure the default.

Do not accept documents from a putative creditor unless there is a warranty or acknowledgment of ownership of the unpaid loan receivable.

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Filed under: foreclosure | 3 Comments »

The important point is not so much being right as it is being the winner in litigation.

Posted on June 1, 2022 by Neil Garfield

I think the biggest problem for homeowners can be summed up in two sentences. First they believe there is something they should feel guilty about. Second, they don’t know the difference between (a) documents that can say anything and be prepared at any time and (b) original source (best evidence) documents.

Homeowners are regularly outwitted by Wall Street investment firms. They are the victims of a crime practically every time they sign “loan” documents. Each scheme is designed to prevent them from knowing that they are entitled to a fair share of the securitization scheme. They are victims and they have nothing to be guilty about.

For most lay people, a document is a document and as soon as you call it a document it is evidence of the truth of the matter asserted in the document. So if someone produces an assignment or endorsement even the homeowner assumes that there was a source transaction for which there are source documents (e.g. cancelled checks, correpsodnece etc.).

The thing to remember always is that nobody ever produces the source documents that occurred at the time of the source transction (assignment or indorsement). The homeowner must ask for that and if they can’t produce it, they no longer have a valid legal claim for anything.

I receive many emails every day that basically complain about the corruption of the courts or why they should win any case brought against them by lawyers seeking the remedy of foreclosure on behalf of a name (usually a long name) that may or may not identify an actual legal entity like a natural person, business entity trust. Much of what they say is correct.

The important point is not so much being right as it is being the winner in litigation. I think they practically prove their points in their emails. The banks are not right but they keep winning anyway. Being right is the furthest thing from their minds. They only want to know if they can win.

I think we have all spent too much time elaborating on the basic premise that the banks should not be allowed to prevail in foreclosure actions if they are based upon fabricated documents and false testimony. Or to put it another way, false claims should not be the basis for awarding any remedy in court.

Under our judicial rules, there is no reason to toss out a false claim just because the opposition denies the claim. But important practice note: failure to deny engraves the claim in stone and gives rise to a number of judicial presumptions that favor the lawyer pursuing the foreclosure and against the interests of the homeowner.

While it is helpful to know the reasons why you should win, it is essential that you understand the role of the judge and established court procedure. You can make any outlandish claim and you will win the case if the opposing party fails to defend.

Generally speaking, the party who wins in litigation is the party who controls the narrative. And generally speaking, the party who initially controls the narrative is the attorney that is pursuing the remedy of foreclosure.

Homeowners that win foreclosure cases might cast doubt about the authenticity or validity of the fabricated documents that have been forged and backdated. But casting doubt does not win cases except in criminal law. Homeowners that win the case achieve success because they undermine the legal presumptions arising from those fabricated documents.

Each of those documents might appear to be facially valid, especially if they are not inconsistent with other documents that have been presented. Facially valid generally means that it conforms to statutory requirements, the rules of civil procedure, or custom and practice. Such a document is entitled to a legal presumption as to its authenticity and validity.

Attacking the facial validity usually dooms the homeowner to failure. But attacking the legal presumption arising from the facially valid document is generally a valid path for the homeowner seeking to repel the illegal claims of the opposition.

In plain language, this means that if a document appears to memorialize a transaction in which some elements of title were purportedly conveyed as part of a purchase and sale, the homeowner should simply require the opposition to produce documents that were generated at the time of the alleged transaction. If they cannot produce the original source documents, then the homeowner is in a position to rebut the legal presumptions arising from the facially valid documents upon which the opposition relies.

The fundamental reality of all homeowner defense work is that the opposition possesses no legal claim against the homeowner. The homeowner seeking to prevail in litigation can only achieve success if the basic premises of the case in foreclosure are left unsupported. Once you remove the legal presumptions, the opposition is left without any support simply because there was no valid claim, to begin with.

The role of the judge is to call balls and strikes. Picking a winner or loser should come at the end of each case not at the beginning. Sometimes judges need to be reminded. But nothing moves the needle more than when the judge grants a motion to compel and the opposition continues to stonewall a discovery request. The case changes from the perspective of the judge. At that point, the case becomes judge versus the lawyer for your opposition instead of a bank versus the homeowner.

Foreclosures are about restitution for an unpaid debt. The fundamental elements of a prima facie case in support of the remedy of foreclosure consist of three things.

First, is the existence of an unpaid loan account receivable.
Second, the ownership of that unpaid loan account receivable by the party who is named as the claimant or plaintiff.
And third, a financial loss is reflected in that unpaid loan account receivable. [This third element is the key. If there is no loss caused by the behavior of the homeowner there is no default and there is no cause for bringing a claim against the Homeowner.]

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CLICK HERE FOR THE 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. You will receive an email response from Mr. Garfield usually within 24 hours. In the meanwhile you can order any of the following:

Click Here for Preliminary Document Review (PDR) [Basic, Plus, Premium) includes 30 minute recorded CONSULT). Includes title search under PDR Plus and PDR Premium.

Yes you DO need a lawyer.
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Please visit www.lendinglies.com for more information.

Filed under: foreclosure | Tagged: original source documents | 1 Comment »

If you want a bold result you must take bold action

Posted on May 31, 2022 by Neil Garfield

I am rapidly coming around to the view that the only effective defense narrative is one that challenges the existence, ownership, and status of the alleged unpaid loan account due from the homeowner.

I think if you don’t make that challenge the judge, in any case, is going to assume and even apply legal presumptions such that as the trier of the fact he or she will conclude — with good reason — that the unpaid loan account exists, that it is owned by the named designated claimant, and that its status is being accurate reported by an authorized servicer.

The typical question from both pro se litigants and inexperienced lawyers is “How do I prove that?” And that question is fueled by a desire to see a judge declare the whole securitization infrastructure as a criminal enterprise, which is probably true.

THE GOAL IN LITIGATION IS TO WIN AND NOT MERELY MAKE A POINT THAT MAKES YOU FEEL BETTER.

The opposition has a burden of persuasion and a burden of proof. The goal of homeowners is to undermine the ability of the opposition to satisfy the requirements of a prima facie case.

The first step is to introduce the defense narrative that the implied (but never stated) unpaid loan account does not exist, is not owned by the named designated claimant, and is not being managed by an authorized company that is performing the servicing functions of receipt, accounting, and disbursement of actual money paid by homeowners. As part of that narrative, you should allege that you will prove it in discovery.

The purpose of establishing the defense narrative (by denials and/or affirmative defenses) is to open the door that would otherwise be closed in the window of time in which discovery is conducted.

The second step is to draft and serve well-conceived and well-written demands for discovery. This should be done as early as possible.

And the final step is to create a pressure cooker in the issue of stonewalling — until you ask for and receive a court order that says that since they are unwilling to answer basic questions and produce basic documents relating to the existence, ownership, and status (balance due), the court imposes evidentiary sanctions, to wit: the loss of use of legal presumptions arising from the fake, fabricated, and forged documentation that is quicksand for most homeowners.

Once you get that order, it is smooth sailing. The reason is not that you proved that the other side is lying or that they’re bad guys or thieves. It is because, under the rules of court, they are barred from introducing evidence that was demanded during discovery.

PRACTICE NOTE: Why does this work? It is because, despite all appearances, there is no unpaid loan account, there is no creditor, and there is no authorized servicer. As to the servicer, the company that the homeowner refers to as “the bank” or the “servicer” is not performing any serving duties relating to the receipt, accounting, or disbursement of funds.

That is all done by FINTECH companies who are NOT in contractual privity with the named designated as “servicer.” FINTECH servicers perform all such work.

Their records might qualify as “business records” to allow the introduction of the activity reports generated from data that memorialized actual transactions conducted by FINTECH. But printouts proffered on behalf of the designated, named “servicer” are not business records because they are not a record of any business conducted by that company, even though they were referred to as the “servicer.”

The FINTECH companies were regarded as outside data processors up until a few days ago. Now FINTECH companies are referred to as servicers by the CFPB because that is who does the servicing. When homeowners think they are dealing with Ocwen for example, they are most likely to be dealing with CoreLogic, Fiserv, or Black Knight.

That letter, notice or statement you receive was generated and sent by FINTECH companies operating for the benefit of their Wall Street employers. That correspondence is sent out under the letterhead of the Ocwen, for example, even though Ocwen did not write it or authorize it. But Ocwen did confirm that any FINTECH appointed by the Wall Street brokers was allowed to use the Ocwen name, just like U.S. Bank, N.A. is allowed to be used as part of the name of a nonexistent business entity

The FINTECH companies divide their tasks such that there is more than one required to fulfill the full “servicing” function. Each FINTECH is authorized not by Ocwen, for example, but by a handful of underwriting securities brokerage firms that stay hidden behind veils.

The FINTECH company takes its orders from Wall Street brokers who did the underwriting on the creation, sale, and trading of certificates. Those Wall Street firms maintain control without any legal claim to ownership of the alleged underlying obligation.

The loan account is a fantasy that is useful in extorting money from homeowners. It otherwise has no reality or purpose.

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Nobody paid me to write this. I am self-funded, supported only by donations. My mission is to stop foreclosures and other collection efforts against homeowners and consumers without proof of loss. If you want to support this effort please click on this link and donate as much as you feel you can afford.Please Donate to Support Neil Garfield’s Efforts to Stop Foreclosure Fraud.
CLICK TO DONATENeil F Garfield, MBA, JD, 75, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business, accounting and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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Filed under: foreclosure | Leave a comment »

OK I Sent a QWR and DVL. Now what?

Posted on May 30, 2022 by Neil Garfield

The first thing you need to know is that there is no obligation to answer the notice if the questions are not related to confirming the balance due, existence, ownership, servicing, and status of the underlying obligation.

I have seen many letters entitled “Qualified Written Request” or “Debt Validation Letter” that read like a discovery request that would be struck down by a judge because it seeks information not covered by the FDCPA and RESPA and is too long. The bottom line is get to the point with your challenge on the basic questions and don’t muddy the waters.

Depending upon what you want to do, the next step would be a complaint filed with the CFPB and State AG. Be aware that the CFPB, under its charter authority has clarified the enforcement of RESPA and FDCPA. It became custom and practice before the clarification by CFPB that Dodd-Frank Act created a de facto federal preemption for enforcement.

This led to bottlenecking at the CFPB which lacks the funding, facilities, and personnel to enforce the enumerated statutes for everyone across the country. The Act said that both States and the Federal government (CFPB) had jurisdiction to enforce and should do so. So the CFPB released a statement that specifically tasked the Attorneys general to enforce violations of the FDCPA and RESPA and the other enumerated statutes in Dodd-Frank.

It remains to be seen how much the situation will change. The enumerated laws in Dodd-Frank also create a private right of action (lawsuit). So any homeowner or consumer aggrieved by the violation can sue for injunctive relief and both statutory and compensatory damages. Last year the Supreme court weighed in on this and came up with an “interpretation” that you can’t get statutory damages unless you have actual damages (compensatory).

So the bottom line is that the next move is yours. You can file a claim with the CFPB, which will have an effect because the companies about which you are complaining must answer, knowing that their answer must be truthful or arguably truthful — because lying to a Federal agency is a crime.

It is often true that the answer to the CFPB complaint is not the same as their response to the QWR or DVL. It also contains statements that are inconsistent with the response or non-response to the QWR and DVL — thus proving your point that they are misleading and misdirecting the consumer, in addition to withholding basic information about the existence, ownership, and status of an unpaid loan account.

If you file the complaint with the CFPB you can also file the same complaint with the state AG who should be reminded about their right to enforce — and perhaps how it might be politically expedient to enforce.

But practically speaking the only way you are likely to achieve any meaningful results is by filing suit.

My tactical preference is to file the administrative complaints before filing suit. It provides a record of events to which you can refer that shows (a) you have exhausted all other remedies and (b) that they continue to stonewall the basic questions about the existence, ownership, and status of the alleged underlying debt or unpaid loan account.

The highest likelihood is that you will not be offered any tangible relief by anyone until after you have filed suit and the litigation moves into the window of discovery.

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If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.

Please visit www.lendinglies.com for more information.

Filed under: foreclosure | 2 Comments »

It’s like baseball. 3 Strikes and they are out (not you)

Posted on May 27, 2022 by Neil Garfield

Batter up! When a player steps up to home plate to take a pitch it doesn’t matter that he tends to hit a lot of home runs. No run or point is tallied in the absence of actually hitting the ball over the fence. And if he swings and three pitches and misses, it doesn’t matter that he could have hit the ball or that dust got in his eye. Each miss is a strike and three strikes mean he is out of the lineup until the rotation puts him back at home plate.

I am coming back to the original strategy and tactics I advocated in 2006. But I would be more pointed about it by asking voir dire questions directed at the judge. It is not a common procedure but it ought to be.

The question is whether the judge has already made up his/her mind that the transaction was a loan and that there is an unpaid loan account owned by the named claimant — or if the court is open to the possibility that the attributes of a loan transaction were dropped and the payment to or on behalf of the homeowner might have only been part of a payment due to the homeowner for participating in a securitization transaction.

Another way of asking is whether the court agrees that the burden of proof, at least in UD, is on the party claiming to have procured legal title without fraud. The subcategories of questions are basically accounting and auditing questions.

Does the court agree that the prima facie requirement for a UD claim is that the claimant must have owned an unpaid loan account receivable due from the homeowner when foreclosure proceedings were commenced? Does the court agree that in the absence of such an unpaid loan account there was no basis for starting the foreclosure proceeding and therefore no legal foundation for the sale?

The strategies and tactics of the banks in these cases is the Texas two-step. They never come out and say that the named claimant is a creditor. They say it is a holder. They never come out and say that the creditor lost money when the homeowner didn’t make a scheduled payment. But everyone assumes that the loss is implied. They have built their entire legal strategy on implied assertions plus legal arguments that certain presumptions apply. You have never seen an assertion that the owner of the unpaid loan account is XYZ and here is a copy of the unpaid loan account and balance due — not since 1995.

The reason is that going into the transaction with the homeowner, the investment bank (acting through intermediaries), was launching a securitization transaction and not a loan transaction.

We measure that by intent. If the intent was to start a loan account why is there no loan account? Again the implied assertion is that the FINTECH compilation that is proffered in court as the “Payment History” of a designated company acting as servicer is the loan account. But if that was true it would show withdrawals to pay investors or beneficiaries.

And as the CFPB just confirmed, these FINTECH companies (CoreLogic, FiServe, Black Knight, et al) are the only ones who actually interact with homeowners and keep records. What is produced in court or in answer to QWR or DVL is not a record of business activity conducted by the company designated as servicer. As such, those reports are not records at all, much less business records, that could be proffered as an exception to the hearsay rule barring out-of-court statements without being subject to cross-examination.

The “servicer” has no interaction with homeowners and handles no money paid by homeowners nor any disbursements to investors or beneficiaries under the alleged trust agreement which is rarely proffered because that would disclose the beneficiaries as the investment banks that handled the underwriting of the certificates.

The actors who really perform work are paid by the investment banks, not the designated “Servicer.” Now that the CFPB has recognized FINTECH as the source of servicing functions, both homeowners and their lawyers should sit up and take note. When they ask for discovery or demand answers to a QWR or DVL, they should be asking for the identity of the FINTECH that actually received payments, that actually recorded conducting that business, and that actually made disbursements.

But be careful. The answer is likely to surprise you and the judge if you ever get to it. All three functions might be performed by three separate companies all answering to the investment bank but whose separation creates an additional layer or ladder (as Goldman Sachs likes to call it) through which the homeowner, with limited resources, must pierce before he could discover that there is no loan account and there never was.

But you don’t need to prove that. You need to prove by clear and convincing evidence, that the opposition has failed or refused to corroborate the existence, ownership, and status of the alleged or implied loan account.

Tactically and strategically you only need to get the judge or nudge the judge into the position of calling balls and strikes.
No answer to discovery is strike one.
No answer after order compelling the answer is strike 2.
And no answer even if the judge gives them a third chance to comply with the rules and the court order is strike 3.
Both economic and evidentiary sanctions are available then.

You want evidentiary sanctions that prevent the lawyer for the foreclosure mill from introducing any evidence that the unpaid loan account exists if he continues to withhold any corroboration that the account exists. The direct sanction would be loss of the use of the legal presumptions arising from documentation used and relied upon in the foreclosure.

With no ability to rely on the fabricated conveyance documents, the lawyer for the foreclosure mill has nothing.

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11th Circuit Ct of Appeals Breaks New Ground — in favor of homeowners!

Posted on May 26, 2022 by Neil Garfield

Daniels v. Select Portfolio Servicing, Inc., No. 19-10204 (11th Cir. May 24, 2022)

The fact pattern sounds like something out of Gulliver’s travels. Statements are regularly sent to homeowners using the letterhead of a designated company who is claimed to be a servicer. Those statements are submitted because they are legally required to be sent to the homeowner. But they also are used as the foundation for claims to administer, collect or enforce the debt.

Such Statements of “account” misrepresent virtually everything — including the source of the statement, which is the work of a FINTECH third-party servicer working in this case on behalf of an investment bank and not SPS. Most of all they do not accurately describe the balance due on the alleged unpaid loans account and they are misleading because they imply such an account exists.

Any random survey of foreclosure cases on appeal in any jurisdiction reveals that there is always some component argument that the loan account is established, it is unpaid, it was a loan, and that someone is losing money because the homeowner did not make a scheduled payment.

This usually occurs because homeowners still believe the misrepresentations that were made to them at the time of “the closing” of what appeared to be a loan transaction. Hence, it never occurs to the homeowner or their lawyer to contest the original transaction or how it is reported later.

The Gulliver aspect of this is that lawyers who say they are representing banks who are trustees of trusts in which the loan account is owned and maintained have successfully argued that the statements are mandatory and not an attempt to collect a debt and therefore cannot result in liability under the Fair Debt Collection Practices Act (FDCPA) — even if the balance claimed as due is misstated or fraudulently represented.

This kind of hair-splitting is what sends homeowners screaming out of the courthouse with complete disrespect for the court system because they know what is right and they know that what just happened to them in court was wrong.

The 11th Circuit pierced through all of this in its analysis and decision, stating that the “servicer” can be liable for violations of the FDCPA by misstating material facts about the alleged claims in its statements and communications with the homeowner.

I should add that nobody addressed the elephant in the living room. Specialized Portfolio Services is owned and controlled by Credit Suisse which is (a) the source of credit to investment banks that arrange funding for “closings” with homeowners and (b) a co-underwriter of the certificates that are sold to pay back the loan.

Any such inquiry would result in the inevitable conclusion that these were not loan deals and that no lender or unpaid loan account receivable emerged from the transaction cycle.

As usual, the initial decision in Federal District Court was against the homeowner. The Circuit Court of Appeal reversed.

Daniels v. Select Portfolio Servicing, Inc., No. 19-10204, at *1 (11th Cir. May 24, 2022) (“Constance Daniels sued Select Portfolio Servicing under the Fair Debt Collections Practices Act, 15 U.S.C. §§ 1692 et seq., and the Florida Consumer Collection Practices Act, Fla. Stat. § 559.72, alleging that a series of monthly mortgage statements misstated a number of items, including the principal amount due. She claimed that, by sending her the incorrect mortgage statements, Select Portfolio violated the FDCPA’s prohibitions on harassment or abuse, false or misleading representations, and unfair practices. See 15 U.S.C. §§ 1692d, 1692e(2)(A), 1692e(10), 1692f(1). She also claimed that the statements violated the FCCPA’s prohibitions on harassment and on attempts to collect on debt that is not legitimate. See Fla. Stat. §§ 559.72(7), 559.72(9). The district court dismissed Ms. Daniels’ complaint with prejudice, agreeing with Select Portfolio that the mortgage statements in question were not communications in connection with the collection of a debt and therefore not covered by the FDCPA and the FCCPA.”)

Outcomes like that are entirely predictable when all parties agree that the claim of “loan” is true. But that only happens when the homeowner and forensic experts fail to recognize that the money paid at “closing” (if any payment was made at all) was not a loan but instead was a partial payment for launching a virtual loan account without which securitization could not exist.

By lying to homeowners about the true nature of the transaction, the sellers are able to convince homeowners to sign documents, promising to pay back the incentive payment. The addition of interest and fees just adds insult to injury.

Cases under my direction rarely result in a loss for the homeowner. By centering in on what must be obviously true in discovery, in QWRs, in DVLs, the homeowner finds a gold mine of violations of the FDCPA, TILA, FCRA, UDAAP etc.

Subsequent actions by homeowners naming the “Servicer” et al usually result in decisions for the homeowner —- but only after they have won the foreclosure case filed against the homeowner. This case opens the door to such actions even before the homeowner wins the foreclosure case.

The discovery process in such actions is more liberal than what homeowners find in the principal foreclosure action. So bringing the claims for statutory violations could produce enough information to assist in defeating the false foreclosure action.

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The Fiction of Deceleration Violates Separation of Powers

Posted on May 25, 2022 by Neil Garfield

The State of New York, along with many other states is struggling with problems arising from an array of legal fictions created by the courts to justify claims for administration, collection, and enforcement of virtual debts (instead of actual debts in the real world).

These attempts violate the constitutional separation of powers under the Federal and State constitution. Besides legislating the terms of transactions, state and federal courts are writing a “get out of jail free” pass to every actor who claims to have some right, title, or interest to administer, collect or enforce a debt that turns out to be missing a creditor.

The fact that there is no law permitting such action and that such doctrines violate due process requirements of every state constitution and the federal constitution has not stopped the wholesale legislation from the bench because the Wall Street securities firms were unable to get the laws changed the normal way.

A recent article illustrates the problem and the prior assumptions that are false and wrong in every sense.

https://www.mayerbrown.com/en/perspectives-events/publications/2022/05/the-past-is-the-present-new-york-legislature-passes-retroactive-foreclosure-bill

Exactly how a lender may “de-accelerate” a loan in New York has largely been left to courts to decide.[e.s.] In 2021, the New York Court of Appeals (New York’s highest court) held that a lender’s decision to voluntarily dismiss a foreclosure action constituted a revocation of the lender’s decision to accelerate. In that case, the lender brought a foreclosure action against the borrower within six years of accelerating the borrower’s loan. However, the lender had previously accelerated the loan in 2008 and brought a foreclosure action, which it voluntarily dismissed in 2013. The lender later accelerated the loan for a second time and brought a subsequent foreclosure action in 2015. Thus, had the six-year statute of limitations continued to run from the date of the original acceleration in 2008, the lender’s second foreclosure suit would have been time-barred. The Court of Appeals, however, agreed with the lender that the lender’s voluntary dismissal of the first foreclosure suit constituted a revocation of the lender’s option to accelerate, thus re-setting the statute of limitations to bring a suit on the entire debt. Because the lender’s dismissal of the foreclosure action revoked the earlier acceleration, restoring the parties to where they were prior to acceleration, the court held that the lender only needed to bring the current foreclosure suit within six years of any subsequent acceleration—which the lender had.

Thus without any assertion, announcement, or notice from the parties to the documents that supposedly memorialize the terms of a transaction — requiring full disclosure of the material elements of the transaction — the courts have created a brand new provision about something called “deceleration.”

So if the actors claiming rights to administer, collect or enforce an alleged debt (i.e., a virtual debt) lose and get their foreclosure action dismissed “without prejudice” or they dismiss the foreclosure case on their own, a new term — deceleration — becomes written into the documents and thus subject to “interpretation” by the court.

Let me be clear. Such a proclamation from any court forces both parties to accept terms that were never in the subject documents. The event happens without consent or due process. Yet such “Doctrines” are widely in use around the country.

I have one case where we have a final judgment incorporating findings by the court that the “trust” never proved it had any ownership of the subject alleged debt, that the documents used to prove the foundation for the claim were fabricated and that the actor whose name was used in the foreclosure had failed to prove it had any ownership, possession or right to enforce the promissory note and that possession was only proffered after the commencement of the case.

The declaration of default occurred during the time when there was no evidence of possession of the note. The assertion was that Ocwen was a servicer based solely on a Power of Attorney that was mistakenly fabricated to reflect a signature from Chase Bank, who was not in the case, instead of U.S> Bank who was in the case.

The findings of fact and conclusions of law were incorporated into a Final Judgment that dismissed the foreclosure claim without prejudice because that is what current doctrine holds. The old doctrine of finality that basically said “You had your chance” has been replaced by “Take another whack at it.” In any other type of case, the failure to prove the essential elements of the case would end the case forever regardless of who was “right” or what was “just.”

The quote from the article is that this concept has largely been left to the courts. And then it goes on to discuss other issues. But deceleration is not found in the note or mortgage. And no legislative enactment exists that defines or allows deceleration.

I don’t think that deceleration can be legally incorporated into the transaction documents except as an offer of settlement. Deceleration is an act, not a magical event. Current doctrine allows and even requires courts to hold that even if the act of deceleration did not occur, the court will impose that view on the transaction thus allowing a second bite of a rotten apple.

The Bartram rule in Florida which is somewhat mirrored in NY law creates a fictitious event allowing the foreclosure players to sidestep statutes of limitation. Such an interpretation before securitization would have been laughable. The only thing that changed is the advent of virtual debts instead of real ones. The problem is that while the debts are only virtual the enforcement is very real.

Deceleration is spun out of thin air. It is an unconstitutional grab and violation of the separation of powers. No court has the authority to make new laws. That is strictly a legislative function. The false equivalent would be a legislature passing a law that says John Smith is guilty of some crime or other violation of a statute. That can only happen in the courts and nowhere else.

The problem, like most violations, is how do you challenge it? Constitutional litigation is very expensive. This would be no exception.

On the first level of litigation, the trial courts would feel bound by precedent in which the “new law” (asserted by the Courts) inserts deceleration into the transaction documents.

On the second level the appellate courts would no doubt rule the same way and for the same reasons. This is an example of “we did it and therefore it must be right.” Federal appellate courts might allow for discussion but in the end, they would most likely defer to “state law” which would add insult to injury.

Then you have SCOTUS which has already shown its stripes. Even though they smacked down the lower court objections unanimously, rescission has become an unavailable remedy because the Supreme Court refuses to hear any additional case in which violation of rescission under TILA is the issue. So while Scalia was even sarcastic about the lower courts’ attempt to ignore the law, the Supreme Court is allowing that to continue.

The real problem, in my opinion, is that we continue to be dominated by false labels. The ONLY path left is what I said 15 years ago — a direct attack on the nature of the transaction. But even that is at least partially blocked by the fact that nearly all lawyers who could litigate the issue, believe the transaction was and remains a loan even if there is no lender or successor lender. Once you accept the label of “loan” (asserted or implied) the rest falls like dominoes.

This requires lawyers to attack the transaction without saying they are challenging the label. This leads to confusion in the courts and mixed results at the trial and appellate levels. The CFPB is creeping up on this. Current invitations to propose rule changes, combined with the recent announcement of changes and definitions (particularly as to the definition of a servicer) are moving toward the goal of establishing that there is no unpaid loan account receivable that is being enforced. There is only an expectancy based upon a virtual debt that is not allowed by law.

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State Enfrocement of Deceptive Consumer Financial Practices Just Became More Likely

Posted on May 24, 2022 by Neil Garfield

Wall Street investment brokerage firms acting as investmetn banks or commerical banks are now jittery about the possibility of 50+ attorneys general taking a hard look at the sale of complex financial products to consumers.

Those firms know that feelings on main street are still raw. An ambitious State AG who seeks higher office might be spurred to action by this latest development.

The wheels of justice grind very slowly and I would agree with the view that in the case of the 2008 crash it was too slow. The CFPB sounded good but it was universally regarded as federal preemption of enforcement of consumer protection laws. That is not what the Dodd-Frank law said, but it was what everyone thought.

The net result was that enforcement practically ground to a halt. All enforcement was concentrated into one new federal agency and all other agencies — state and federal — went about other business.

I had pointed out repeatedly that there was concurrent jurisdiction to enforce all consumer protection laws enumerated in the Dodd-Frank law but Wall Street had too tight a grip on those who had their hands on the levers of power.

So you could file a complaint with the State AG, but regardless of how flagrant the violation of consumer rights, they generally did nothing even with continuous nudging. Now there is a green light that takes down the barriers to other state or federal agencies. The CFPB has essentially invited them to start prosecuting — something that should have been done 15 years ago.

see https://www.consumerfinancialserviceslawmonitor.com/2022/05/cfpb-issues-interpretive-rule-bolstering-enforcement-efforts-by-states/

On May 19, the Consumer Financial Protection Bureau (CFPB or Bureau) issued an interpretive rule, describing states’ authorities to pursue companies and individuals that allegedly violate any of the federal consumer financial laws enforced by the CFPB.

CFPB Director Rohit Chopra described this action as “promoting state enforcement, not suffocating it.” It openly invites states to exercise their authority under Section 1042, “Preservation of Enforcement Powers of States,” of the Consumer Financial Protection Act of 2010 (CFPA) to not only bring lawsuits in federal court for unfair and deceptive acts and practices (UDAAP) violations under the CFPA, but also bring federal actions for any violations of the “enumerated consumer laws” enforced by the CFPB.

PRACTICE HINT: None of this means that the consumer complaint can get action without specifying the violations that have occurred and attaching the proof. Stay away from direct attacks on securitization and focus on the unwillingness of the opposition to answer simple questions about the existence, ownership, and status of the debt. Once you get past the typical defensive positions in which servicer names are used as both shields and swords, it is like the old French Maginot line. There is nothing left for the opposition to litigate.

You should remember always that a payment history report is not evidence of the existence or ownership of the alleged obligation. It is evidence at most of some of the alleged activity of the borrower and the servicer. And that evidence is not admissible unless it was actually the servicer who was interacting with the consumer. If it isn’t a record of the business conducted by the servicer it is not a business record and should be barred by proper and timely objection under the hearsay rule.

But if you don’t make the timely and proper objection it becomes a piece of admissible evidence that is hard to rebut.

The other recent announcement by the CFPB drills in this point. The FINTECH companies operating behind the servicer curtain are the real servicers. So only a representative of the FINTECH company that received or disbursed money could testify or provide the foundation for records of the FINTECH company as a business record — i.e., a record of the business conducted by the FINTECH company acting as “servicer-in-fact.”

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The investment bank was the casting director and you were the audience.

Posted on May 23, 2022 by Neil Garfield

It is by exposing the virtual nature of the transactions that allows homeowners to win in high numbers. It is by suppressing the truth about the transactions that the Wall Street investment banks and securities brokers make all their money.

In one of my consulting jobs, I am assisting the homeowner — along with local counsel — in understanding the realities of what is called “Securitization.” First, you need to remember that “securitization ” is only a word with very little meaning. In the context of Wall Street, it is supposed to mean that assets are split up or collected and sold in pro-rata pieces to investors.

Wall Street convinced both homeowners and investors that the substance of securitization meant the creation of a loan transaction and then the sale of that loan transaction and the financial expectancy of payment to multiple investors. But the securities brokerage firms never intended any of that.

They had to be convincing or else the plan wouldn’t work. The real plan called for selling the “Loan” over and over again by giving attributes of the transaction different names. So in the end, if they paid $200,000 to or for a homeowner, they would sell it for at least $2.5 million.

What they could never say, under their plan, was that they were selling a virtual loan with no value in lieu of a real loan consisting of a lender or successor paying for an unpaid loan account. It is by exposing the virtual nature of the transactions that allows homeowners to win in high numbers. It is by suppressing the truth about the transactions that the Wall Street investment banks and securities brokers make all their money.

So the question in this project was who is the Plaintiff? That should seem obvious but it isn’t. Interestingly, the suit that was filed against the homeowner does not yet sue for enforcement. That is a head fake, as we shall see. If the homeowner fails to contest the case the legal standing of the plaintiff will have been established as the law of the case and the existence of the loan account will have also been established as the law of the case.

For the uninitiated, the law of the case can loosely be translated as “for purposes of this case x is the truth even if the truth is y.”

So once they sue for foreclosure, the case is virtually over if the homeowner failed to defend.

The case involves U.S. Bank as trustee of a “title trust.”

The opposing lawyers want the wiggle room to pretend the plaintiff is USB or a trust. But USB is the representative — and USB is the only party that could legally claim to act for the trust — if the trust exists. The use of the phrase “title trust” is an experiment to see if that will get you off their backs. It is also being used to deflect legal liability for sanctions and damages.

As to syntax, there is probably nothing wrong with identifying the plaintiff as USB as trustee for the title trust. But the claimant is only the title trust. And the powers of the named trustee are limited to what is in the trust. If the res of the trust consists of bare naked title to something subject to the instructions of a third party principal, there is nothing in the trust.

If something were to happen to the trustee, then state law would require looking to the trust agreement to see if there are any provisions for succession and then, if not, allowing for a petition to reform or restate the trust such that a new trustee could be appointed by the court.

You can think of it in terms of a family trust. If you convey assets to your uncle George to hold in trust for your children, and you specify the manner of administration and distribution of the assets you conveyed, you have created a trust, which has its own separate identity and name. Even if you forget to name it, it will still carry your name as trustor or settlor followed by the word “trust.”

Your uncle George can’t make a claim regarding the administration, collection or enforcement of rights relating to those assets unless he does so on behalf of the trust and the proceeds go to the trust. If he makes the claim with the intention of the proceeds going to a third party he is violating the trust agreement — unless the third parties are named beneficiaries.

In this case, there is nothing of financial value in the presumed trust even on its face. As title trustee, it is the trustee in name only. The actual asset (financial expectancy arising from the claimed debt) is never paid to USB or the trust. That is what they’re hiding.

They are hiding it because several people (entities) get paid revenue from proceeds of payments or sales of property but none of them have a right to receive it. And they did it that way so they could, in substance, sell the same transaction multiple times to multiple investors without ever having to credit an unpaid account receivable —- because an unpaid account receivable does not exist on the books of any person or entity.

In a cynical way, I give this a grade of “pure genius.” The entire success depends upon the homeowners believing the myth. Once they start challenging these cases in numbers the entire scheme collapses. While the frequency of such challenges is increasing, we are a long way off from critical mass. In overwhelming numbers, homeowners believe ( and insist) their transaction is a loan. They feel guilty even questioning the foundation of claims to enforce.

When presented with evidence that the loan account does not exist or a lack of credible evidence that the loan account exists, most homeowners know “in their hearts” that they owe the money. That is bias. And that is the bias you encounter in the courts.

The reality is that the homeowner did receive some money in most instances (not all) or did receive some benefit from the payment of money on behalf of the homeowner. But that money was always viewed by the investment bank as an incentive payment for homeowners to get lured into a securitization scheme without the homeowner getting any compensation. It was never to create a contractual loan which would have limited the sales of the transaction to once, to avoid charges of fraud.

There has never been a securities brokerage firm that would invest their own money in exchange for a net return on investment of 2-3%. And yet somehow starting in 1995, they convinced the public that they could turn that into enough money to boost the profits of every player to levels never seen by the players hired to act out their parts.

The investment bank hired good actors to play the parts one would expect in a loan transaction. That is how they sold this scheme.

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Homeowners with Courage and Conviction Generally Win Foreclosure Cases

Posted on May 18, 2022 by Neil Garfield

I often receive links to cases that either corroborate what I have been saying or challenge my conclusions. Many of those links are opinions from trial courts, and most of those are from Federal DIstrict judges (mainly because most, but not all, state court judges do not issue opinions justifying their rulings.

Even in best-case scenarios, the opinion of a trial judge is not binding as a precedent on anyone. But reading such decisions does inform us about the assumptions, presumptions, and biases confronted by homeowners.

One such decision comes from Pennsylvania Federal Court. U.S. Bank N.A. v Gerber. U.S. Bank v. Gerber, 380 F. Supp. 3d 429 (M.D. Pa. 2018). Some people like the way that the District Court Judge says that the lawyers who supposedly represent U.S. Bank N.A. are missing the mark. And the decision does raise some interesting points about strategy and tactics for homeowners.

This particular decision says that the argument employed in thousands of cases “misses the mark.” The Judge is referring to the erroneous argument that since homeowners were not a party to the chain of transactions that were supposedly memorialized by assignments of mortgage and endorsements, they (the homeowners) have no standing to challenge them even if they are false.

I agree that this one conclusion by this trial judge is an important rejection of one of the most common “defenses” raised by lawyers for the banks. But it does not create a precedent such that any other court needs to follow it. You can show it to another judge as a persuasive authority but it has no precedential authority — i.e., a requirement that the next judge must follow the reasoning or conclusions of the trial judge who issued it.

I think the larger issue is the elephant in the living room. Reading the case law on foreclosure litigation, one thing has become crystal clear: Despite the APPARENT accuracy of homeowner defenses, such defenses will only be considered relevant to the case if they are worded such that the connection to the prima facie case in foreclosure is perfectly clear.

The problem is that lawyers and pro se homeowners are too scared to unambiguously challenge the existence, ownership, and authority over an allegedly unpaid loan account.

It is perfectly within the scope of good pleading to make a statement and then say that you will prove it during discovery. (Just don’t make a statement about a fact that you have already admitted). It is equally permissible to say that the opposition refuses to supply answers to your discovery demands and that both evidentiary and monetary sanctions should apply.

This is why I keep pressing homeowners to secure the services of competent trial counsel or to find counsel who is responsive to direction from attorneys who win these cases. And it is why I emphasize to homeowners the importance of understanding securitization.

Gerber, without realizing it, saddled up his horse using all the right gear and then rode off bareback on another horse. This is a common failure of lawyers and pro se litigants. For example, it is not enough to say that securitization changed the contract. The judge says quite clearly that this might be true but that the burden of pleading is on the one who makes the statement. So if Gerber had alleged the ways in which the contract was changed with much greater specificity, the judge would have taken the defenses more seriously.

I do think the judge was probably wrong in construing some of the reasons the contract was changed as not specific enough. But with the weight of securitization infrastructure surrounding everything, the only thing that a judge will respond to is that the current claimant has no claim and will not be able to produce evidence corroborating their claim and implied assertions in discovery.

In essence, the homeowner is forced under current judicial doctrine to boldly state that there is neither a contract nor a debt owed by the homeowner to the designated Plaintiff or Beneficiary.

The defense needs to be that the named Plaintiff (U.S. Bank as trustee) is pursuing a false claim, has never collected any money, and has no intention of receiving any proceeds from the forced sale or collection from the homeowner or his/her property.

But both homeowners and their attorneys are afraid to state that because of the possibility that the lawyers for the designated Plaintiff will come up with some actual proof of payment of value in exchange for a valid conveyance of ownership of the underlying obligation, the legal debt, note, and mortgage. Nobody likes to look stupid.

As with all cases, the timid lose even if they are right. What stops homeowners from winning is the fear that the “Banks” will be able to produce an admissible record corroborating the existence, ownership, and authority of U.S. Bank or any other designated claimant. They can’t and if they could they would have done so 20 years ago.

The plain facts support two main points:

(1) the documents upon which the foreclosure mills place reliance are false — i.e., they memorialize transactions that never occurred, meaning that the final designated claimant never came to own the alleged loan account, never suffered any economic loss, and never had a record of ownership of any loan account; and

(2) the investment banks have used their outsized influence to change both pleading and proof requirements in foreclosure litigation, resulting in the courts changing the laws governing such transactions in ways that are inconsistent with the intent and content of laws passed by Congress and the laws of any State legislature.

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Of course that in and of itself is unconstitutional because only legislatures can make laws. And only courts can enforce them.

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Nobody paid me to write this. I am self-funded, supported only by donations. My mission is to stop foreclosures and other collection efforts against homeowners and consumers without proof of loss. If you want to support this effort please click on this link and donate as much as you feel you can afford.

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Neil F Garfield, MBA, JD, 75, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business, accounting 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 COMMENTS ON THIS BLOG AND ELSEWHERE ARE BASED ON THE ABILITY OF A HOMEOWNER TO WIN THE CASE NOT MERELY SETTLE IT. OTHER LAWYERS HAVE STRATEGIES DIRECTED AT SETTLEMENT OR MODIFICATION. 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.

But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more. In addition, although currently rare, it can also result in your homestead being free and clear of any mortgage lien that you contested. (No Guarantee).

Yes you DO need a lawyer.
If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.

Please visit www.lendinglies.com for more information.

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