Livinglies's Weblog

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I know the problem with getting representation. I consider it to be a crisis. I’m thinking about the problem. If there is a solution, maybe I’ll find it. The opposition has developed scripts that enable even the most junior lawyer to seem like he/she is unstoppable. This intimidates most lawyers. I could develop a similar script for lawyers who want to take the case but getting them to accept instruction is very challenging — it is like herding cats.

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If you look at local and regional media outlets, you will see one very consistent message: new foreclosure filings are increasing.

The measures differ depending upon geography, but the national trend, which has been apparent for months, is that the increase, year over year, is somewhere around twice what it was in 2021 and is nearing 2008 levels in many communities.

But if you look at press releases from Black Knight you will see that reported increases in delinquencies and foreclosures are at their lowest point in years.

I might add that our own services are strained by requests from homeowners — an increase of about 300%.

So why is there a difference? Or, more specifically, why does Black Knight want people to believe that foreclosures are not a problem when they are spiking? Or even more specifically, who is Black Knight trying to convince?

The answer to all of the questions is the answer to the last question: Who is Black Knight seeking to convince?

They are trying to convince prospective investors who continue to buy worthless certificates that masquerade as mortgage-backed securities. Those certificates are (a) not securities (b) not backed and (c) have nothing to do with the ownership of mortgage loan accounts.

The value of the certificates occurs strictly by virtue of an artificial marketplace that poses as an exchange, but which is entirely controlled by ICE (Intercontinental Exchange) which also owns MERS the NYSE etc.

In plain language, the “value quoted on the “exchange” is the value of the certificate even though it only represents the potential receipt of monies paid in satisfaction of a discretionary promise from investment banks who are operating under fictitious names like “U.S. Bank as trustee for the Structured Asset Security Corporation pass-through certificates series 2006-A01.”

In my time on Wall Street I learned a lesson that I gradually understood to be generally true everywhere. People move in groups often without any individual member of the group learning, absorbing or deciding on data and conduct. They do this partly because they are lazy, partly because they are gullible, and partly because even if the decision was wrong, they feel covered by the fact that everyone else was doing it.

Most money managers, fund managers, and investment gurus follow other money managers, fund managers, and investment gurus.

So once Goldman and Citi convinced some managers and gurus that their “securitization” plan was a good thing (even though nothing was securitized other than a discretionary promise from investment banks), it became apparent that not only would managers and gurus follow, but also insurance companies and rating agencies (with a little “help” in the form of threats and promises).

So back to why Black Knight is lying about current market conditions (in my opinion, but check it out yourself). The answer is simple. They are doing in a concerted effort to sell more certificates to idiotic fund managers following a crowd of other idiots.

But even idiotic fund managers know that you don’t buy assets when you know that the alleged underlying “market” is tanking. Most people have not done their homework.

They believe what the investment bank book runners and sellers have told them: that the value of the certificates is derived from the promises of homeowners to make payments, as secured by mortgage liens on their property.

They think investment banks have devised a plan to own the loans without becoming lenders or successor lenders subject to lending and servicing laws. They think they can have it both ways.

The problem for Wall Street and Black Knight is that even though there exists a complete disconnect between the certificates, the investment banks, and the ownership of any loan accounts, the market “Value” of the certificates is entirely dependent upon the perception that the connection exists.

Hence the sale of certificates is entirely dependent upon fund managers (i.e., investors) continuing their belief that they are investing in an active, healthy, and safe marketplace.

But if fund managers were to perform the due diligence that they are expected to perform, they would discover that foreclosures are increasing, which means that payments from homeowners are decreasing.

This one fact makes the promise of cash flow more unlikely to be maintained at least at the promised levels. Thus, managers would either not pay anything for those certificates or want to pay less because they are assuming more risk.

Of course, such calculations completely ignore the reality of these deals. Investors will only get paid as long as the investment banks are selling new certificates and adding the proceeds into reserve pools that are used to fund “servicer advances,” which, amazingly enough, have been subject to still more false claims of securitization.

Why is this important for homeowners and lawyers to know? Because virtually every foreclosure in the U.S. is based upon a foundation relating to false claims of securitization. The foundation is only real if the asset (loan) is sold. Otherwise, there is no securitization because there is no sale.

And THAT means that lawyers, judges, lawmakers, and law enforcement have completely missed the boat. In virtually all cases, foreclosure claims are strictly limited to claims made by attorneys who have contrived ignorance of the falsity of their claims.

They have contrived ignorance of the identity of their client and the party whom they name as Plaintiff in judicial foreclosures or beneficiary in nonjudicial foreclosures is a party with whom they have had no contact, no retainer, and no relationship.

You might not want to believe this. That is OK. But you might want to consider the fact that I have won most of the cases in which I was lead counsel or legal consultant for the defense of a foreclosure proceeding.

I won because I proceeded on the premise that the story told in this article is true. And any lawyer who wants to make money should consider this.

Any lawyer who wants to establish a reputation for winning should consider this. And no lawyer should assume they know about securitization, which is a highly complex stratospheric ball of complexity.

I only know it because I was there on Wall Street when the movers and shakers first planted the seeds for this nonsense in the early 1970s. It was one of the reasons I left, thus leaving a void at Garfield & Co. members NYSE, AMEX, and 5 other exchanges. And so that brokerage firm was sold in 1983.

Lawyers will start making reputations, profits, and windfalls when they (a) win the defense and then (b) sue for wrongful foreclosure, fraud, or abuse of process.

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If you ever saw the movie “My Cousin Vinnie,” you saw his description of how you build a case against someone or a defense against the claim. It is like brickwork. While some lawyers (myself included) have occasionally been successful at getting rid of a case in one fell swell early swoop, it is rare. Each element you described needs to be supported by affidavits and authenticated copies of documents that make your statement of facts likely to be true or even better, impossible to deny. The big stumbling block is that most of the information about the existence and status of any unpaid loan account is solely in the custody of third parties who are not disclosed.

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The membership rules and procedures also state that MERSCORP cannot hold liens owned or serviced by terminated members. Id. ¶ 36. The terminated member is responsible for executing a release of the security instrument upon termination. Id. ¶ 40. MERSCORP is required to provide notice to the terminated member regarding their release responsibilities, and if the terminated member fails to take proper action, MERSCORP has the right to release the liens that MERSCORP is holding on their behalf. Id. ¶ 41; Doc. 7-1 at 14- 15. After Dreambuilder’s termination, MERSCORP was not able to identify all of the liens MERSCORP might be holding on Dreambuilder’s behalf due to Dreambuilder’s failure to properly update the system. Doc. 7 ¶ 37.

see DreamBuilder-Invs.-v.-Merscorp-Holdings-Inc

Bill Paatalo and I have both commented on this case before. But there is far more to say. In order to absorb the significance of a ruling like this, the reader must be in a quiet place and be prepared to read this a few times. There is no simple way to explain it, but once mastered, it is fatal to many, if not most, attempts to invoke foreclosure procedures across the country.

The problem, of course, is always the same. There is no unpaid loan account and hence there is no underlying obligation — but everyone thinks the loan must exist since that is what was intended by the homeowner. Lawyers for the foreclosure mills capitalize on that widely held erroneous presumption and thus can gloss over, avoid and even mislead the court about the facts of the case.

While the holding is clear about the claimed authority of MERS after termination of the membership for the originator, the fact that MERS had no idea what liens could be attributed to the prior member speaks volumes about the entire MERS apparatus. MERS is merely a platform that allows access to “members” for the input of data and export of “reports,” usually in the form of an appointment of the user as an officer of MERS.

It has never been used as a source for proving ownership of anything because MERS does not know. It has no employees who are tasked with checking data to see if it is correct or true, corrupted or part of an illegal scheme. MERS doesn’t care. It is used as a sham conduit to allow for transfers of mortgage liens from one name to another despite the absence of any transaction in which the lien was sold.

You will find constant references to MERS data or MERS rules. MERS has no data, and it has no rules. The servers operated by MERS serve at the pleasure of and control of members who can say anything they want on the MERS platform, without any knowledge of any MERS officers or employees about the truth or falsity of the “statement” (i.e., data input).

The so-called “rules” are nothing more than contractual undertakings between MERSCorp. Holdings and the “member.” The use of the word “rules” is intended to give it the shine of an administrative or quasi administrative agency. It isn’t. It is not associated or affiliated with any government operation or agency. Somehow calling those terms “rules” makes it seem that the contractual provisions are law. They are not.

Note that the only legally accepted source for data regarding the chain of title for real property is in the county in which the property is located in an office that operates solely to accept documents for recording in the public record. There is no exception.

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It occurs to me that most homeowners and most consumers who think they are installment payment contracts could send the following example of a letter I recently proposed to a client. If many homeowners and other consumers of financial products did this, it would raise the level of awareness in government and might even produce some interesting results.

I think a letter like the following should be sent to your US Postal inspector: (may be also FTC complaint)

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Dear Sir:

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I am being victimized by a scheme that involves false impersonation and false agency on claims that do not exist. I am receiving correspondence and notices on PHH Mortgage letterhead on various matters, but it is apparent that PHH does not have any knowledge of these notices, has not authorized them and did not send them.

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Further, the notices and correspondence make reference to some nonexistent claims. In one case, they are even giving me a false “Claim number”  that is neither processed nor monitored by PHH. However, PHH has given permission to undisclosed third parties (FINTECH companies) to use the PHH name to cover illegal activities. They are being paid for this license to use their name.

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Attached are exhibits showing this pattern of conduct involving the use of the PHH name in several instances with me. Some refer to an actual transaction that occurred earlier that is now expired.

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To be clear, no unpaid loan account or any account receivable due from me exists on the books of any creditor/claimant.

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None of the disclosed parties has any legal or equitable authority to administer, collect or enforce any obligation from me.

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All parties who were involved in any transaction involving me as a promisor or maker under a note have been paid in full or otherwise satisfied in full. None of them claim any underlying obligation or legal debt owed by me.

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However, false agents like PHH claim to represent other actors, who falsely claim the third parties own a debt due from me. The FINTECH companies, under the PHH letterhead, merely create or use a name of a nonexistent entity that has no right, title or itnerest in any of the implied events or parties.

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Attempts to obtain an acknowledgment from such falsely named creditors have been rebuffed, meaning that they know the claim is being made, but they refuse to acknowledge that it is being done with their permission. Since they refer me and other hoemowners and consumers to the named servicer, PHH, it is apparent that are completely aware of the scheme.

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I have contacted hundreds of other homeowners and tenants who have experienced the same scheme. This needs to be addressed before more of them agree to “settlements” on claims that do not exist. They do so out of ignorance, fear, intimidation, and exhaustion.

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The perpetrators of this scheme have endlessly deep pockets. It resembles other scams like sending out false invoices to businesses in amounts under the threshold for researching the invoice’s validity. The businesses pay because it is less expensive than either rejecting the invoice or researching it.

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This is precisely within your mandate to investigate and prosecute false claims that use the USPS to commit interstate fraud. And it is right that you should do so. Forcing individual consumers to litigate these issues is putting an unconscionable burden on them — spending tens of thousands of dollars in litigation fees and costs is simply impossible for most of these victims.

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In no case has any successor to MERS ever been alleged or proven. Unless some third party acquired both the originator and the underlying obligation from the defunct originator (which never happens), no party can direct MERS. 

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It is easy to skip over the main point in counterattacking MERS: the highest status it is said to hold is that of an agent who is a naked title holder with no power of transfer or satisfy the lien except that ordered by the owner of the underlying obligation, who is implied to be receiving money from the homeowner (the “borrower”). That is always the originator who, as we know, never funded anything or made any loan. The originator in most cases has gone bankrupt or otherwise doesn’t exist and it had no material assets at the time of its demise.

• At the time of the assignment of the mortgage or at the time of the appointment of the officer, who was the principal directing the MERS agency?
• Did that principal exist — i.e., was there an agency-principal contractual relationship between the parties who ordered the document to be prepared and executed and MERS?
• By asking, you produce evasion. When the evasion is challenged properly and timely, the judge has virtually no choice but to order compliance.
• When there is still no compliance (and there won’t be as all pro se and legal practitioners will attest), the court will have no choice if the matter is again challenged.

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The refusal and failure of the opposition lawyers to provide those answers after they have been properly and timely posed create a procedural conundrum for the judge, which in most cases is resolved against the claimant, to wit: if they’re unwilling to corroborate the presumptions arising from the documents used to present the claim, then they cannot introduce evidence of the truth of the matter asserted.

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The basic lesson from this is that presumptions are not evidence. They are assumptions that evidence exists. Once you ask for the evidence and the opposing lawyers refuse to give it to you, their right to use those assumptions, even as legal presumptions, vanishes.

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But this is ONLY true if you aggressively pursue the matter. The judge is a human being. He or she will initially presume the evidence exists and that the lawyers merely were negligent — until you pound on the subject and still there is no compliance.

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The relevant pleadings and motions include but are not limited to

1. Motion to Dismiss
2. Motionf or Judgment on the pleadings
3. Demand for discovery:
   1. Request for Admissions
   2. Request for production
   3. Interrogatories
   4. Subpoenas for deposition
4. Motion to Compel
5. 2d Motion to compel
6. Motion for sanctions:
   1. Evidentiary sanctions
   2. Economic sanctions
7. 2d Motion for sanctions
8. Motion in limine
9. Objections filed pursuant to trial order
10. Objections at trial

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“Title” means that legally the person possessing title has the right to treat the subject property as his/her/their own and to use such property in any legal manner.

In thumbing through the latest edition of Florida Secretary and perusing the approved forms for use in law practice, it is obvious that one thing is very clear. There is no approved form for the conveyance of a nonexistent asset or an asset that is not owned by the person who claims to be the grantor.

This common-sense conclusion is also a matter of custom and practice. Go into any bank of any size in any location and ask them for a loan based upon the collateral of a mortgage loan. They won’t give it to you except under two conditions: (a) you say you own it and (b) you do legally own it. Without both of those items being true, you won’t get any money out of your claim about the loan because the loan is not your property.

Take this example from an option contract:

Proof of Title: Optionor shall, at its expense, furnish Optionee a title insurance policy written by an insurer acceptable to Optionee, insuring the title to the Property to be free and clear of all defects except those specifically set forth below:

Or this from a warranty deed:

said Grantors do hereby fully warrant the title to said land, and will defend the same against the lawful claims of all persons whomsoever.

It is always there in every document of transfer. The grantor does not simply say that a transfer is occurring; he, she or it must assert that it owns the thing being transferred. If you don’t see that, then there is every possibility that the written instrument you are reading has no legal meaning.

And without any assertion of the title being vested in the grantor, the document fails the test of facial validity. That means no legal presumptions and THAT means the foreclosure mill must prove the claim with direct evidence of title and consideration —- something I know they can never do.

So in answer to those who are peppering me with questions about title insurance, let me answer as many of those questions in one article as possible.

Title insurance is an agreement to pay damages and to defend against claims, just like any other insurance contract. The existence of an insurance carrier does not mean it issued a policy, and the existence of a policy does not mean that it is insuring against the claims that you fear or have in mind. And it most certainly does not mean that the insurance carrier is warranting title, because that function is ascribed strictly to the owner of the real property that is the subject of the case.

At the very least, if someone is unwilling or unable to warrant title to an asset, then the title to the assets is at least questionable and the instrument supposedly transferring title to that property is equally questionable. That has legal significance.

Without a warranty of title, there is no reason to apply the statutory presumptions that attach to a facially valid document. The reason is that a facial document speaks for itself. If it does not say that the grantor owns the asset, then it does not say for sure that the asset is actually being transferred, even if it recites consideration (which mostly likely then was not and could not have been paid).

People who assume that title insurance means that the title is assured are wrong. To “assure” is not the same as “insure.” The title is not assured by any title carrier. Nor is title assured or even insured by the title insurance agent.

Without a title warranty, no approved form works to transfer title conditionally or unconditionally except a quitclaim deed which expressly asserts that title is granted only up to the point that the grantor has or may have any interest.

And whereas title agents had once produced a title report that was relied upon by the purchasing or borrowing homeowner, there I is now a disclaimer on such reports that the homeowner should not rely on such reports.

A close look at any allonge or assignment will reveal that the assignment of mortgage or the assignment of the beneficial interest under a deed of trust is more like a quit claim deed than a normal deed exchanged between the old homeowner and the new homeowner — usually called a warranty deed.

It is called a warranty deed for obvious reasons: the grantor warrants that he/she/they have (in legal language “are seized with”) title and therefore have the right to grant title to a successor or to someone to hold as collateral tos secure thepeformacne of another contract (the note) which in turn is based upon a promise supported by consideration.

Both pro se litigants and lawyers (and thence judges) often skip the consideration issue. But in contacts 101 in the first semester, indeed in the first class, we learn in law school that no contract is enforceable (even if it is written) unless there is mutual consideration. Writing down a promise to convey title to an aircraft carrier does not mean you can do it. And without receiving consideration, you are under no obligation to do it. The written promise is a legal nullity — although it might be evidence of a scam.

So in your case (whatever it might be), skip the idea about title insurance because it doesn’t mean anything. The fact that a new pretender leader is reported to accept the title policy is not a statement entitled to a presumption of title.

But absolutely DO LOOK AT ANY ASSIGNMENT. Because what has been missing from all such meaningless documents since securitization claims began is any hint that the named grantor owned the underlying obligation, the legal debt, note, or mortgage, much less the generally required warranty of title such s that found in a warranty deed.

A quit claim deed does not raise the presumption of title. It merely precludes the grantor from claiming the title in the future. An assignment without a warranty of title to the asset (i.e., the underlying obligation or loan account receivable) also is facially deficient in raising the presumption used by hundreds of foreclosure mills — i.e., that the transfer of title to the lien was completed.

Hence, if they want to foreclose on the lien they just first allege and prove they are the owners of the lien as required by statute, which is always the same verbatim adoption of §9-203 UCC. And THAT means they must have paid value for the transfer of ownership of the lien; otherwise, under the laws of all jurisdictions, a purported transfer of ownership of the lien without a corresponding transfer of the underlying obligation is a legal nullity.

Why is this important to all homeowners with a lien recorded against their property? Because when push comes to shove, and someone tries to enforce the lien, the would-be enforcer cannot use the legal presumption that statutes provide from facially valid documents.

The failure to warranty title means the document is not facially valid to prove the truth of the matter asserted, to wit: that the lien was transferred from one legal owner to another. AND the failure of consideration means that the purported assignment is not substantively valid either.

The moral of the story is that just because something is in writing does not mean it is true, that it is from a trusted source or that it is proffered in good faith. None of those things are true in the current foreclosure marketplace.

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the lawyer representing you might consider forcing the issue and asking whether the claimant is asserting HDC status. Or the lawyer might assert to the judge that the presumptions the lawyer from the foreclosure mill wants the court to use in considering the arguments of the case are the equivalent of treating the claimant as having HDC status. (And if not, why not?)

Practically all cases presented to me in the last several years have been the product of paperwork executed by the homeowner as part of an alleged transaction that was sold and labeled as “refinancing.”

This is true even in “closings” that supposedly took place recently. An offer is quickly made to refinance the “loan.” The entire scenario is usually a ruse. The flurry of musical chairs, changes in apparent “servicers,” and changes in apparent “lenders” or successor lenders,” creates a cloud that obfuscates the simple truth. The paperwork is merely a snowstorm. There is no transaction.

The names used by the actors in this scenario are widely used as vehicles for laundering servicing rights and then used as laundering title to the alleged lien.

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Both serve only one purpose: to obscure the real actors’ identities and roles. That, in turn, results in obscuring the loan balance as reflected on the books and records of the company that has been designated as the claimant/creditor (successor “lender”). They need to obscure the “loan balance” because there is no “loan” and there is no “balance.”

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The general point of law here is that no amount of paperwork will make a transaction real if there was no money paid. And no amount of arguing to the contrary is legally recognizable or acceptable — unless one simply presumes the transaction was real regardless of whether it happened or not.

The corollary is that the transaction documents need to be reformed if the consideration is less than what was reported. Without reformation, they cannot be enforced. Nobody can enforce a “loan” for more than they loaned.

The consideration is less than the amount reported on closing statements when the transaction is labeled as a “refinancing” transaction.

Many or most of the existing transactions floating out there in the marketplace are designated as “refinancing.” In most such cases, there is a common underlying investment bank, and thus there is no consideration paid to pay off the “prior lender.”

And that in turn is because the investment bank retained control of the transactions but not any attribute of ownership of any unpaid loan account receivable.

This happens when a company that has been designated as a lender is supposedly lending money to the homeowner in a  refinancing wherein the homeowner is “cashing out” on equity (a practice I don’t recommend, as it interrupts both retirement plans and transfer of intergenerational wealth).

The money that is reportedly paid to the “prior lender” is never paid because none is due. And the money paid to the homeowner from his/her equity is the only real cash that flows from the transaction.

In plain language, the homeowner is agreeing to pay back a “loan” that does not exist — i.e., the part devoted to paying off the prior nonexistent lender. In truth, of course, these cash payments that actually are paid to the homeowner are merely incentives to execute new paperwork that enables the investment bank to start a new securitization structure based upon the new paperwork for the old transction.

Homeowners get easily confused by these shenanigans. They make references to more than one loan. I need to know that I am working on the correct transaction – which of course, is not a loan.

So I generally ask for title searches that go back at least two (2) owners and maybe four (4). What I am looking for are the transaction documents for the origination of both transactions (or multiple transactions). Some properties are “Refinanced” multiple times. The issue gets increasingly sophisticated for Wall Street because they are steering would-be borrowers in the direction of companies that serve as sham conduits to “feeders” or fronts for a common investment bank.

 In such cases, the homeowner is merely cooperating with a Ponzi scheme. The transaction that is labeled as “refinancing” is merely an excuse for issuing a new series of unregulated securities. In effect, this multiplies the exorbitant revenues and profits earned by the investment bank by a factor of two. You might think of it as selling your transaction twice and still coming after you for a nonexistent “balance.” But it is more complex than that. 

[It is hard to remember that in 1983, the size of the “shadow banking market” was not $1.4  quadrillion dollars. By all accounts, it was zero. The estimates of the real currency in the world vary but are generally around $100 trillion, give or take 10%-15%. So the “shadow banking market has “nominal values” equal to more than 12x fiat money (i.e., all the money in the world)]

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What I have told clients of mine is that when seeking a lawyer who will play ball with us, you should see what pushes their buttons.

Still, the main message is that “we know a guy who has won cases all over the country in which Judges ruled that the named claimant never owned any loan account due from the homeowner despite the presence of fabricated documents.”

If he or she wants to see copies of some of those final judgments, I can send them to him. And I can help him or her do the same thing and establish themself as a winner with a very profitable niche.

I do NOT suggest you try to sell the strategies and tactics that I successfully employ. You don’t understand them and can’t answer questions about them.

And I would repeat myself: pro se litigants rarely prevail in litigation. Your notion and beliefs about right and wrong are NOT the same as the rules of civil procedure, the laws of evidence, and the rules governing pleading, discovery, and motion practice.

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But if you have decided to represent yourself, then you need two or three people to help you:

1. A legal consultant like me. Someone with extensive over 2000 trials) trial experience, especially in the field of foreclosure defense.
2. Local counsel who can tell you how to format, how to file and how to request hearings on motions.
3. A fact finder who will support the defense narrative that your legal consultant has developed fro your case. (like Bill Paatalo).

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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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I  have received a number of chat inquiries and registration statements in which homeowners have fat-fingered their own email addresses. They are probably thinking that the free service we say we are offering is just a sham. But the real problem is that I have no way of contacting them if their email address does not exist. In cases where they add a telephone number (like on the registration statement), I have been able to get the correct email address. Otherwise, it stays out in the ether.

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The homeowner has committed no sin. If a scheduled payment has been missed, nobody loses any money. And the homeowners who are making the scheduled payments are contributing to the revenue and profits of entities who have obtained the signature, reputation, and property of the homeowners under false pretenses.

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Practically all law — i.e., every requirement of societies — arises from a collective sense of disgust, repudiation or condemnation of an act committed by some human being. Someone claims injury caused by someone else. The law sets up a procedure by wich it is determined, for the sake of social harmony, whether the injury occurred and what compensation should be due to the person who made the claim.

Going back to ancient civilization the law as all about lex talionis —- retribution for the sin committed. This was the whole eye for an eye, tooth for a tooth, death for a death business. For most of what we refer to as western civilization, the recitals of things that we don’t like goes back to Hebraic (biblical) practices.  It was then enshrined in Latin, as I have already stated, nad now is mostly in English with throwbacks to Latin phrases. Ask any lexicographer.

Things we don’t like are written as statutes. We don’t like murder. If you do it, we will kill you. We don’t like liars, if you do it, and your lies damage someone, we will punish you, possibly by death. And we don’t like people who break promises. If you break your promise, society will make sure you live up to your promise or that something is taken from you as punishment (foreclosure). Whatever is taken from you is given to the person you made the promise to, as long as its value does not exceed the promise you made. You get the difference if that something is worth more than your promise.

Later it appears in the Law of Æthelberht, written on Old English in the 7th Century, and then, in a more evolved state and status in the Magna Carta in 1215. The language of the Magna Carta was broader than that intended by either king John or the 25 nobles for whom it afforded special rights and protections. Still later, combining the legal procedures originally devised by Hebraic tradition, the Magna Carta served as the foundation for most founding legal systems of countries starting in the 1770s — including the USA of course.

In all cases, there had to be an injury for anyone to take notice. Nobody other than the King could say that someone should be compensated or punished simply because the complainant liked or didn’t like what someone had done.  Over time, the whole idea of monarchy became more symbolic than a form of governance.

And, of course, I raise all of this because we all know that virtually all current foreclosures are based not on the injury but rather on the breach of a promise. And the promise must be enforced to assure social harmony and confidence in the marketplace even if the promise was made under some false understanding by the promisor — unless a lie created that false understanding from the person who received the promise, in which case the law says that such agreements will not be enforced.

In very plain language, if there is a breach, you still don’t have a claim —- unless there is also injury. US courts are prohibited from issuing advisory opinions and restricted from deciding issues that are not in controversy. An issue is not in controversy if there is no allegation of breach and injury.

I ask the question because it occurs to me that a promise to pay is viewed under the law as a contract between two parties- the promisor and the promisee. Suppose the promisor fails to pay when money is due to the promissee. In that case, the society allows the promissee to exact retribution through a judgment for damages that can be executed against the property of the promisor. Or, in the case of a foreclosure, the judgment includes the order to sell the property — and give the money proceeds of the sale of the property to the promissee — but only up to the amount owed to that promissee.

And that is the problem. Our society has accepted the mantra and myth from Wall Street that not paying a bill is a sin —- except when big companies and financial institutions do it.  The sin by the individual promisor is a sin against society. If they break their promise and don’t make a scheduled payment, most people now accept the premise that the sinner should be punished through the loss of their home —- regardless of who gets the money from the sale or why.

I take issue with that. Law is not about some sense of morality defined by Some PR spokesman for private interests. It is what a legislature says it is. It is not what a court says it is unless the law is ambiguous. The law regarding debts and obligations is not ambiguous or unclear. But the current trend, since around 1999, is to allow the courts to discard custom and practice, and law.

The rule has become that the homeowner sins when he or she fails to make payment even if nobody claims to own the debt — i.e., the unpaid loan account. If you look at any foreclosure these days you will see that the lawyers for the foreclosure mill are not saying they have a client who owns the debt — even though the law (§9-203 UCC) says they need to if they want to foreclose on a security instrument.

There is never an allegation of any damage to the named claimant. It is implied, and the courts are accepting that as sufficient. As such, especially in uncontested foreclosures, judgment and sale is allowed despite the absence of anyone who suffered any form of economic or other injuries proximately caused by the homeowner’s “breach.”

The fact that the homeowner did NOT breach any promise made to the claimant is disregarded. The fact that the claimant does NOT allege directly that it paid value for the promise (as required by §9-203 UCC) and currently owns it as an asset owned by the claimant is also disregarded.

In fact, there is a complete absence of any allegation made by the claimant in nearly all cases. In current foreclosures, all allegations are made through attorneys who are protected by litigation immunity. In turn, the attorneys say they rely on companies designated as “servicers.”

But the lawyers never say they represent the climaint or speak for the client because (a) they don’t and (b) it is implied by simply signing a pleading naming the claimant as a party seeking “relief.”

And to satisfy their sub silentio challenge to what is written as law, the courts have also extended it to mean that any document that asserts a conveyance of ownership of a lien interest is absolutely valid — not just presumptively valid — regardless of who is the transferee, assignee or endorsee of the note and regardless of who owned the lien.

Anyone who signed the document is treated as presumptively owning the right to transfer ownership of the underlying obligation, note, and mortgage without regard to any business transaction in which value was paid by the transferee.

And in discovery, courts have taken to denying inquiries into whether such assertions, arguments or presumptions are true. Thus all of society — except for people like me — agrees that the homeowner should leave their home because they sinned — even if their “retribution” makes someone rich. This is accepted even if no person, business entity, party or financial institution receives the money as anything other than revenue.

For 16 years so far, I have been saying that is wrong. I am sure of it. I know it for a fact because I was physically present and in attendance at meetings in the early 1970s where the current iteration of what is now called “securitization” was planted as a seed. I actively participated in various schemes of what is now referred to as “layering” or “laddering.” I was the attorney who drafted the documents and I was part owner of some of the schemes in the 1980s.

The homeowner has committed no sin. If a scheduled payment has been missed, nobody loses any money. And the homeowners making the scheduled payments are contributing to the revenue and profits of entities who htave obtained the signatures, reputations, and property of the homeowners under false pretenses.

If the homeowners understood that the sales of securities completely eliminated the entire risk, two things would have occurred. Homeowners would have demanded and they would have received full disclosure of the identity of the actors in the securitization scheme and the amount of money that they were generating as revenue and profit. As a result, they would have bargained for better terms than to return the money that they received.

Next, competition would have occurred in offering financial packages that were in reality, business opportunities to participate in a securities scheme and not a lending contract. There is no lending contract if there is no lender. There is no lender if there is no loan account.

The creation of a payment history is not evidence of the existence of a loan account. Only the owner of that loan account could produce evidence in support of the truth of the matter asserted: an unpaid loan account exists, and the homeowner has created a financial loss to the owner of that account by failing to make a scheduled payment.

In thousands of cases in which I was either lead counsel or lead legal consultant, there has not been one case in which such an owner came forward. There are only lawyers who are naming parties who have no relationship or contract with the homeowner. And those lawyers have established law firms that made millions of dollars before they went out of business.

If there is no debt owner, there must be a reason for that. And my experience on Wall Street, and in hundreds of interviews and litigated cases, has established beyond any reasonable doubt that there is no owner because the transactions with the homeowner are a farce.

It was never intended to be an entry into the lending business. Still, it was intended to milk the lending marketplace dry — along with the rest of the economy as we learned in 2008 in the great recession invented and brought to you by companies calling themselves “investment banks.”

Thus the question posed in the title of this article is really a trick question. There is neither any sin against any individual or company nor anything against society when a homeowner fails or refuses to make a payment to satisfy a promise that was made under false pretenses – especially when the satisfaction of that promise will simply result in making somebody totally unrelated to the deal incredibly rich.

If you don’t believe it, you can test it yourself. There was an article published and then buried. It was written by law students and law professors at Fordham University Law school. It was entitled “will the real holder in do course please stand up?” That was in 2007, before the great recession — and a year after I started warning about the great recession.

Figures don’t lie, but liars do a lot of figuring. I was able to predict within a few months the timing of the crash in 2008. Anyone who has a copy of the seminar I presented in September 2008 can see me predicting the crash, which entities would crash with the crash and order in which they would crash, which was scoffed at right up until they fell like dominoes in the order in which I had predicted.

If any sin was committed, it was never the homeowners who committed it; everyone understands that on some level. Nobody is doing anything about it on a grand scale because of the acceptance of the original sin promulgated by Wall Street and the fear of the threat of collapse also promulgated by Wall Street.

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Many of the cases are technically “won” by homeowners who successfully point out that at the time the foreclosure commenced, the named claimant (plaintiff/beneficiary) did not have possession or construction possession of the promissory note and therefore had no legal standing to file suit.

Common law precedent asserts that the judge is mandated to dismiss without prejudice which means the lawyers can file again when they possess the note.

There are several problems with how this is being processed in American jurisprudence.

The first is the assumption that the named claimant is the owner of the loan account and not just the possessor or intended possessor of the promissory note.

In the cases I have tried, one judge entered a Final Judgment for the homeowner because there was insufficient evidence to prove ownership of the loan account — condition precedent to enforcing any security instrument under §9-203 UCC, adopted verbatim in all US jurisdictions). The judge also found that the documents that were introduced were fabricated.

At some point in the litigation, the lawyer frot he foreclosure mill introduces a document entitled “Limited Power of Attorney” (LPOA) without introducing the referenced “servicing agreements.” But those servicing agreements completely change the implication of the LPOA.

One of the more interesting things about the limited power of attorney supplied by the opposition is that it is often dated AFTER the claims began.

That being the case the only proper foundation would be testimony or exhibits showing that the relationship existed before the date of the document or a recital in the document that the document should be considered effective at an earlier time. I have frankly seen no such document in any case.

In my opinion, such documents are introduced as a tool to launder the apparent authority of the “servicer” and to launder the title to the lien. Good lawyers pick up on this and win the cases. Most homeowners do not know the difference.

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There is usually no reference to it being effective at an earlier date.  This is especially interesting if the entire action depends on events that occurred before that date that were subject to claims related to the administration, collection, and enforcement of a “loan account” due from the defendants to the named claimant (e.g., US Bank).

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From Wikipedia, here is a description of some of the activities surrounding the collapse of LTCM (Long-Term Capital Management in 1998:

At the beginning of 1998, the firm had equity of $4.7 billion and had borrowed over $124.5 billion with assets of around $129 billion, for a debt-to-equity ratio of over 25 to 1.^[17] It had off-balance sheet derivative positions with a notional value of approximately $1.25 trillion, most of which were in interest rate derivatives such as interest rate swaps. The fund also invested in other derivatives such as equity options.

John Quiggin’s book Zombie Economics (2010) states, “These derivatives, such as interest rate swaps, were developed with the supposed goal of allowing firms to manage risk on exchange rates and interest rate movements. Instead, they allowed speculation on an unparalleled scale.”^[18]

Secret and opaque operations[edit]

LTCM was open about its overall strategy, but very secretive about its specific operations, including scattering trades among banks. And in perhaps a disconcerting note, “since Long-Term was flourishing, no one needed to know exactly what they were doing. All they knew was that the profits were coming in as promised,” or at least perhaps what should have been a disconcerting note when looked at in hindsight.^[19]

Opaqueness may have made even more of a difference and investors may have had even a harder time judging the risk involved when LTCM moved from bond arbitrage into arbitrage involving common stocks and corporate mergers.^[19]

My point is that LTCM was collapsing and being saved by all the major investment houses because they were launching an exaggerated version of the LTCM scheme. As long as the money keeps flowing, nobody is asking any questions. But when it stops, the finger-pointing and ankle-biting will commence.

Please also note that when the notional value of LTCM paper had reached $1.25 Trillion, everyone thought that was an exotic number. Where are those people now that the “shadow banking market” has topped $1.4 Quadrillion — more than one thousand times the size of the LTCM catastrophe and more than 15 times the value of all legally recognized currency (fiat) in the world?

And finally, let me remind you of the predictions of Abraham Briloff in the book “Unaccountable Accounting,” published in the 1960’s. The notion of “off-balance sheet” numbers and figures was idiotic and remains so — yet it has perniciously crept into the lexicon as though it is a fine thing. I think it is eating away at the bottom of our economic tub. Nothing happens until the bottom falls out.

Just as LTCM was having its meteoric rise and flame out, a company called Mortgage Electronic Registration Systems, later MERSCORP, and now known as MERS (despite three corporate iterations) was being formed, and the Intaernational Commercial Exchange (formed in YSK (2000) was taking shape to literally — not virtually — control most finance, law, and government worldwide.

The absurd trading in “derivatives” in the 1990s was not over. That was the trial run — just as the Madoff scam was a trial run for Wall Street. One example: UBS (Union Bank of Switzerland) was a big backer of LTCM. And it made substantial $300 million) commitments to bail out the “situation.” As derivatives pivoted to the long-term and short-term lending marketplace, Lehman Brothers was one of the key players that used the same quantitative models. When Lehman collapsed, guess where many of the people went? Answer: UBS.

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A REMIC trust is an acronym for Real Estate Mortgage Investment Trust. The problem, as we shall see here in this article, is that no such entity exists in most cases. That, in turn completely undermines claims by the lawyer representing the foreclosure mill, the claims asserted allegedly on behalf of the so-called REMIC TRUSTEE, and the claims (authority)of the Master Servicer, the “servicer,” and the “subservicer” all of whom claim powers derived from REMIC trusts, which do not exist.

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Elements of a trust agreement without which there is no trust:

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I will generally not be available for communications or work on Monday, Wednesday or Friday starting at 1:30PM until November of 2022 when I complete cardiac rehab.

Sincerely,

Neil Garfield

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Based upon 16 years of research, an investigation by our company, an investigation by third-party forensic analysts, and an investigation by law enforcement and law markets (see 50 state settlement, for example), it is legally, factually, and axiomatically true that lawyers who initiate foreclosure actions are most likely doing so without the benefit of a client who has a legally recognizable interest in the outcome of the litigation or nonjudicial foreclosure.

The bar to suing those lawyers whose client is most likely another law firm who in turn has been hired by yet another law firm (none of whom have an interest in collecting money from the subject homeowner or the sale of the homeowner’s property), is something called litigation immunity which absolves the lawyer or at least protects the lawyer from all manner of misleading statements in court, whether in writing or orally.

But it need not end there. In my opinion, it is time for homeowners who are faced with false claims of securitization to file complaints or grievances with the governing bar association under certain circumstances.

Here is a direct quote from the report of disciplinary actions contained in the most recent issue of the Florida Bar Journal. A lawyer was disciplined for “repeated failures to respond to court orders in two pending matters and failure to comply with the court’s Rules of Practice and Procedure.”

This brings up an interesting point. As every pro se homeowner litigant knows and every lawyer representing homeowners knows, if timely and proper discovery demands are served on the lawyer presenting the foreclosure mill, there will be a response — consisting of objections and evasions, plus production of newly fabricated unsigned documents or documents containing the signature of people who either don’t exist or who don’t know that their signature was used on those documents. Even if they knew, they had no access to information that would support the truth of the matters asserted in those documents.

More often than not, homeowners either win the case or force a very favorable settlement by timely and properly enforcing their discovery demands by seeking and obtaining a court order compelling compliance with the Rules of the Court, the discovery demands, and the Court’s order.

In most such cases, the discovery demands are served but never enforced and thus become a nullity in the process of litigation.

But in many other cases, the lawyer for the foreclosure mill will refuse to comply with the court rules and court orders by filing repeated motions and memorandums about why compliance should not be required or ordered— even when it has already been ordered.

In nearly all such cases, the judges let them get away with it —even granting summary judgment to the opposing lawyer, who lacks a client with an interest in the disputed MONEY. Remember that foreclosure is about money. Suppose the parties or actors involved have no expectation or entitlement to receive any money. In that case, they have no business issuing a declaration of default, a notice of sale, or filing a lawsuit in foreclosure.

So that brings us to my point, which will most likely incur the wrath of most people in the legal profession. When it comes to the prosecution of foreclosure claims, the bar associations have universally assumed that such claims are valid and true without the benefit of a trial on the merits in which the proof of the matters asserted is ever presented. They are merely following suit on the requirements that the court follow the legal presumptions from facially valid documents.

So the bar associations are prosecuting claims against foreclosure defenders and never against lawyers who pretend to have a valid claim. In most cases, they are right in refusing to bring disciplinary proceedings against the lawyers representing foreclosure mills with other law firms as clients.

As long as the lawyer has some basis to believe that he has a client and the client has a claim, then he or she can name the plaintiff or beneficiary and proceed with the foreclosure action.

The exception comes went the lawyer manifests repeated failures to respond to court orders in pending matters and failure to comply with the court’s Rules of Practice and Procedure.

Violating a court order is not worthy of bar discipline. We all do it from time to time. And we are allowed to cure the violation. But if we don’t cure it and instead refuse to comply with the court order, thus violating the basic rules of civil procedure — along with the requirement of good faith — then there are grounds for the lawyer to be disciplined, and there are hundreds of cases in which lawyers have been disciplined for exactly that reason.

If more people were to file such complaints with the bar, the bar would be required to investigate those complaints. After finding that the lawyer never had a client other than another law firm (who also had no right, title, or interest in the alleged debt or underlying obligation), they would have multiple grounds to issue discipline — and, in my opinion, they would be required to do so.

If that happened, the foreclosure mill business plan would disintegrate since they would all risk losing their licenses. In turn, that would unravel the entire securitization scheme and foreclosure schemes precisely because there is no claimant plaintiff or beneficiary.

Without the umbrella of litigation immunity and tactical immunity conferred by bar associations, nobody would be authorized to imply or argue a nonexistent claim.

This ends the illegal practice of invoking foreclosure procedures in cases where this is no debt owed to any of the actors.

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The securitization scheme invented back in early 1970,s and gradually introduced into the lending marketplace starting in 1983, is so complex, convoluted, and misleading that it is easy to miss the focus of the plan and, therefore easy to miss the opportunities presented to homeowners and other consumers when they challenge claims.

Summer Chic asked the question about suing the investors. After all, they knew the money they paid for certificates was being used to pay off loans taken by the investment bank, and those loans were the source of money paid to or on behalf of homeowners.

Here is my answer:

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You have zeroed in on the primary question: how do investors get paid?

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You’re presuming they get paid from collections from homeowners, which is partially true. The shortfall is paid from proceeds of sales of certificates, including but not limited to new sales of new certificates and derivatives from other securitization schemes.

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But the real questions remain unasked and, therefore, unanswered.

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First is the legal liability to investors owed by homeowners or someone else? A quick review of the text of every indenture reveals that it is a liability of the securities brokerage firm that sold them the certificates —and it is neither secured nor is it definite.

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Litigation initiated by investors has consistently resulted in the wholesale rejection of their contention that they had any right, title, or interest in the payments, obligation, legal debt, note, or mortgage issued by any homeowner.

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Thus while part of the payments received by investors undoubtedly is derived from the collections from homeowners, they are getting paid by the “investment banks” that are in control of those collections —- even though they have no right to receive those collections.

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The investment banks will continue paying, like any Ponzi scheme, to sell more certificates, the proceeds of which are used to pay prior investors.

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The second question is whether the unpaid “loan account” exists, and the corollary question is whether it was intended to exist. Again it is now obvious and subject to corroboration that the point of securitization is neither the apparent “loan account” nor the ownership of the illusion of an underlying obligation.

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The absence of a loan account acknowledged and affirmed by the business entity that is designated as a creditor reveals the true nature of every scheme that is advertised as securitization of debt, to wit: no debt is sold, and therefore it is legally and logically impossible for the debt to have been securitized.

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The alchemy of the current illusion of “Securitization” eliminates any loan account even while the illusion is being created. That being the case, the investors are victims as much as homeowners, neither of whom are getting the deal they thought they were getting.

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But you are right that the investment fund managers most likely had access to all the necessary information to decide as to whether to buy the certificates. But their negligence, if it exists, only mitigated the damages that they could receive if they were able to prove misrepresentation by the investment banks. That is not a liability of the investors owed to the homeowners.

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Indeed many investors did receive compensation in settlements worth a total of nearly $1 trillion for exactly that reason. It was masked as “bad underwriting” because the fund managers did not want to state the obvious: that the certificates were either worthless or worth less because they represented discretionary IOUs that (a) could go on paying forever or (b) terminate at any time.

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If the fund managers admitted that they would be causing the write-down of the assets held by the fund, it would result in the termination of their employment contracts.

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