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Services include: Expert Consultation Services, Strategy, Qualified Written Requests, Case Review and Reports, Forensic Analysis Referrals, Discovery , Motions, Pleadings, Complaints to AF and CFPB, Title and Encumbrance Analysis, and Case Analysis. We coach lawyers and pro se litigants. ALL 50 STATES.

MISSION STATEMENT: I believe that the mortgage crisis has produced manifest evil and injustice in our society. Pretenders with more money and more lawyers than any consumer or borrower are stealing homes from homeowners while they undermine the investments by Pension Funds.

LivingLies is the vehicle for a collaborative movement to provide homeowners with sufficient forensic and legal resources to combat banks who are using fictitious names and entities to cover up their malfeasance.

We provide thousands of pages of free forms, articles and discussion of statutes, case precedent and policy on this site. On www.lendinglies.com I provide paid crucial analytic and presentation services that enable lawyers and homeowners to confront the lies in attempted foreclosures.

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Maxine Waters and Elizabeth Warren Propose Plans to Stop “Crime Spree” of Banks

On my way out the door for the weekend, but wanted to post this. It’s validation of what we all know. But it also puts a plan on the table to stop the continuing damage and heal some of the damage caused by the banks. The banks have been regularly and arrogantly rampaging the weaponized justice system to gain more illicit profit, destroy more lives and strip communities of taxpayer dollars.

see https://postnewsgroup.com/2019/04/18/a-new-plan-to-make-wall-street-pay-for-creating-the-foreclosure-crisis/

9th Circuit Inches Toward Decision of “America’s Wholesale Lender”

The issue is jurisdiction. Lawyers filed papers for AWL but AWL was dissolved as a corporation. The lawyers countered with the allegation, on appeal, that AWL was a fictitious name for Countrywide without specifying the location of CW. Hence no diversity of jurisdiction could be supported by the allegations in the notice for removal.

The claim of diversity was not supported by either facts or allegations establishing diversity. This is the common practice of foreclosure mills and their defenders. They simply make a claim and leave it as “implied” that the grounds exist. Attack that, and you can win.

So the issue before the 9th Circuit was whether the Federal District Court had jurisdiction to enter a dismissal of the claims for wrongful foreclosure. That in turn depended upon whether the case had been properly removed from state court by AWL. If it hadn’t been properly removed then the District Judge had no jurisdiction to enter any order other than the ministerial act of remand to the state court.

The 9th Circuit Court of Appeals approached the subject gingerly. Since AWL didn’t exist and there was no viable supporting allegation that it was the fictitious name of Countrywide the answer was obvious. AWL could not remove because it didn’t exist.

The hidden story is (a) the number of times AWL was named by lawyers as the foreclosing party with no reference to CW or anyone else claiming to use AWL as a fictitious name and (b) the number  of entities claiming that AWL was a fictitious name for them.

The real question is why should lawyers enjoy immunity from litigation under “litigation Privilege” when they file not for an actual legal entity  but for a group of vendors who all stand to benefit from the foreclosure? If there is no client why should lawyers be immunized?

see Martinez v AWL Remand

GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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Tonight! How to Plead and Prove Fraud By the Banks

Thursdays LIVE! Click in to the Neil Garfield Show

Tonight’s Show Hosted by Neil F Garfield

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

Fraud can be a very effective claim or defense. But it is not an easy claim. Fraud must be both pled and proven clearly and convincingly. Some view the burden of pleading and proof as unfair when compared to a claim for foreclosure which has a burden of proof that requires only that it is more likely than not that the claimant is real and has a real claim entitling the claimant to a remedy. That is a philosophical argument.

If fraud is used as a defense the damages are limited to the amount of the foreclosure claim. If it is used as a counterclaim or in a separate lawsuit then the statute of limitations is probably going to be an issue because the fraud most likely occurred many years before.

But the counter arguments to application of the statute of limitations are active concealment of the truth and continued misrepresentation, and then maturation of the claim which might not accrue until the foreclosure is decided against the borrower. I think the only valid argument is active concealment. But depending upon which state you are in the statute of limitations may not be applicable if fraud is alleged as an affirmative defense in recoupment.

The pleading and proof requirements for fraud in all circumstances are very rigorous. Knowing now to plead and wording the complaint or defense properly is essential to getting fraud on the table in litigation which by the way opens the door to discovery that might not otherwise be allowed if you are merely defending the foreclosure on other grounds. That said, a successful action for fraud has a high likelihood of achieving a significant verdict for compensatory and potentially punitive damages.

C&E Strategy is the beginning of a successful attack on the claimed enforcement of a mortgage or deed of trust.

Attacks on technical deficiencies of assignments of mortgage is a great place to start, but it is not the finish line.

This is a follow up with the radio show we did last week on cancellation of assignments of mortgage, and upon successful cancellation of the assignment(s), the further cancellation of the notice of substitution of trustee, the notice of default, the notice of sale, and/or the lis pendens and foreclosure lawsuit.

The C&E (Cancel and Expunge) strategy has some good and even essential attributes of the defense and counterattack on the would-be enforcer of a mortgage. But here are some potential weak points. If you are not ready for them the strategy will fail.

see https://livinglies.me/2019/04/11/cal-3d-dca-wrongful-foreclosure-you-can-cancel-the-assignment-notice-of-default-notice-of-sale-and-reverse-the-sale/

You are still on the right track — especially where the notary certifies that the person signing had authority to do so. That is simply a lie. The notary has no idea. The problem with the C&E strategy is that it appeals to lay people and not lawyers.

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The lay people like it because it sounds like a magic bullet that enables them  to avoid litigation over whether the claimant is real and whether the claim is real. The lawyers are reluctant because they know that courts will almost always side with the party who appears to be losing the benefit of an actual bargain in which the claimant paid money. It’s all about money, whether you like it or not.

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The reality is that they are both right. And the place to start is always at the beginning — when and where and why the offending document was executed.

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Lay people don’t understand what it means to have a facially valid document. They want to get a court to get rid of the whole document (and the presumed transaction behind it, whether it exists or not) because of some perceived invalid procedure in its execution. The world doesn’t work like that, nor should it.
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The court looks at the substance. If someone paid for the loan they don’t lose their money because of a signature that is missing or in the wrong place. They are at least given opportunities to correct errors. If the errors are not corrected then that is a different matter. Even a frivolous lawsuit can result in a judgment and levy against property if the defendant failed to answer or appeal. That is the way the system works.
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The court might temporarily decline to enforce an instrument because it does not comply with statutory requirements for facial validity — but it won’t invalidate the presumed transaction UNLESS the presumed transaction is either proven not to exist or the presumed transaction is not proven to exist. There is a difference between those two. Both involve proof. The difference is in who has the burden of proof.
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Even with a deed lacking a witness —- the deed is valid as between the grantor and the grantee and anyone who knows about it. There are differences between states but the substance is the same.
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If Person A executes a deed to Person B and Person B pays Person A then the court, in equity, will not allow person C to exercise the rights of a title owner in fee simple absolute unless Person C also paid Person A (assuming person A had title) AND the state has a race to record statute. If the state is not a “race” state, then the deed is valid against all who have notice of it.
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At the end of the day courts will not ordinarily issue an order in which they think a party is getting cheated out of the benefits of a legitimate deal. The dominant public policy is preservation of contracts and legitimate transactions first, not the strict adherence to statutory requirements in execution of contracts or conveyances. So the only defense that works with consistency is the one in which either the claim or the claimant’s existence is not supported by sufficient evidence. This is the gray area that lay people don’t want to hear about.
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But all that said, the attack on the assignments for lack of statutory requirements is correct in its strategy and its goals. The reason that is correct is not that the document is just defective in some technical way. The reason it is effective strategy is (a) the court should not enforce it until the needed correction is effectuated and (b) they can’t correct it without revealing the creditor who owns the debt.
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The 20 year effort to conceal the identity of anyone who owns the debt is testimony to the fact that the investment banks don’t want anyone to know. The answer would be highly complex and probably involve matters of novel fact patterns and law.
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By selling off the risk of loss did the investment bank thus sell the debt? If they sold the debt, but did not sell the rights to enforce the debt, note or mortgage, did the investment bank retain the right to enforce?  If so, that probably conflicts with all law in all jurisdictions that requires that the enforcer of a mortgage be the owner of the debt. If the enforcement is allowed what assurances does the court have that the proceeds of foreclosure will go to the benefit of the owner of the debt, however that ownership is defined?
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While the courts have assiduously avoided addressing such questions they are moving inexorably in the direction of being required to address them and to finally decide what to do with the confusion and chaos created not by borrowers, but by the investment banks who sought to and did in fact create profits that were multiples of the amount loaned without paying the borrower for use of his/her name, signature or reputation.
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So the attacks on technical deficiencies of assignments of mortgage is a great place to start, but it is not the finish line.

 

DiTech: The Pretense Continues

DiTech was not a lender. It was a sales agent or loan broker. Nonetheless a new agreement has been executed in which major creditors of DiTech are resurrecting the illusion that the current use of the DiTech name is sufficient to establish ownership of the debt, note or mortgage on any loan that was “originated” by DiTech. This is nothing less than a brazen attempt to attach orphan loans (no known creditor) to a newly conceived entity bearing little or no resemblance to the entity that once sold loans to the public  under the advertising banner of “lost another one to DiTech.” It’s a lie.

GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================

see DiTech RSA

Courtesy of Philip Koebel, Esq. and Charles Cox, here is a list of the entities involved in the consolidated DiTech Bankruptcy, which was only kept alive because it representing a legacy name that could be used to reconstitute apparent ownership of loans. The creditors are basically reversing the transactions and writing off nearly $1 billion in “debt” and then miraculously allowing orphan loans to appear as though  DiTech was the lender the whole time. It never was the lender. It didn’t own loans at the time of the bankruptcy. It never owned the loans. But the current deal allows the emga banks to use DiTEch as a vehicle of illusion and deception.

Schedule 1
Debtor Case Number Tax ID Number Date Filed District
Green Tree Credit LLC 19-10411 (JLG) 75-3115864 February 11, 2019 S.D.N.Y
Ditech Holding Corporation 19-10412 (JLG) 13-3950486 February 11, 2019 S.D.N.Y
DF Insurance Agency LLC 19-10413 (JLG) 30-0936918 February 11, 2019 S.D.N.Y
Ditech Financial LLC 19-10414 (JLG) 41-1795868 February 11, 2019 S.D.N.Y
Green Tree Credit Solutions LLC 19-10415 (JLG) 27-1311565 February 11, 2019 S.D.N.Y
Green Tree Insurance Agency of Nevada, Inc. 19-10416 (JLG) 88-0187331 February 11, 2019 S.D.N.Y
Green Tree Investment Holdings III LLC 19-10417 (JLG) 20-0031008 February 11, 2019 S.D.N.Y
Green Tree Servicing Corp. 19-10418 (JLG) 20-0843552 February 11, 2019 S.D.N.Y
Marix Servicing LLC 19-10419 (JLG) 56-2646101 February 11, 2019 S.D.N.Y
Mortgage Asset Systems, LLC 19-10420 (JLG) 87-0798148 February 11, 2019 S.D.N.Y
REO Management Solutions, LLC 19-10421 (JLG) 27-2377787 February 11, 2019 S.D.N.Y
Reverse Mortgage Solutions, Inc. 19-10422 (JLG) 77-0672274 February 11, 2019 S..D.N.Y
Walter Management Holding Company LLC 19-10423 (JLG) 86-1059818 February 11, 2019 S.D.N.Y
Walter Reverse Acquisition LLC 19-10424 (JLG) 46-0928837 February 11, 2019 S.D.N.Y

 

Fannie Mae Explains Securitization and Distribution of Ownership of Debt

As a quasi government agency Fannie Mae is forced to be forthcoming about its role in lending. But the wording of disclosures mostly come from Wall Street investment banks.

In the latest description of Fannie’s current activities the wording is carefully crafted to avoid referring to ownership of the debt, but the substance is the same. By shifting the 95% risk of loss to investors they are transferring ownership of the debt and legal standing to those investors. By using separate agreements that are often described as “bets” they maintain the false illusion that they are not selling the debts, and that therefore they can sell 3000% of any debt because they are only selling “risk.”

The reason legal standing is at issue is simple. Only an injured party can sue. In this case Fannie retains a nominal interest while the investors move into Fannie’s shoes after Fannie has moved into the shoes of an originator by paying the investment bank that actually funded the loan. The investment bank is paid with certificates issued in the name of a “bankruptcy remote trust” that are then sold through brokers to pension funds and other types of investors.

If there are defaults on borrower obligations it is the investors who suffer a loss, directly or indirectly but not the investment bank, not the trust, not the trustee and not the “lender.”

But which investors? Apparently all of them. When Fannie acquires a loan it is described as “depositing” the loan into a “bankruptcy remote trust.” Fannie usually retains the role as “Master Trustee” but the named Trustee on the Bankruptcy Remote Trust is your familiar US Bank et al. Here is the kicker: the reason it is “bankruptcy remote” is that it doesn’t own any loans and doesn’t manage any loans and doesn’t handle any money. It is a legal fiction to take advantage of some tax avoidance structure in the Internal Revenue Code.

That doesn’t grant it legal standing. Like the NINJA loans, if there is no income, no assets and no business the trust doesn’t exist nd even if it was construed to be an inchoate trust, it still doesn’t own the loan nor suffer any injury if a borrower doesn’t pay on the debt.

In Rogue Trusts this infrastructure is presented without any reality. No loan was acquired by anyone. But the risk of loss on non performance of the debt is scattered in hundreds or thousands of instruments including but not limited to those falsely described as “mortgage backed securities” and “risk sharing instruments.”

Thus when a foreclosure is filed the lawyers are using a name that is either concocted out of thin air or appointed by some unauthorized party who sounds “institutional.” The proceeds of foreclosure never go to the named claimant. Some portion of the proceeds might find its way to investors but a large portion of then proceeds are simply retained by the investment bank and hidden in the category of “trading profits.”

Look no further than the following link to find that all the “competitors” on Wall Street are actually in tacit or express agreements as co-venturers in a scheme that only looks like securitization because the investment bank insulates itself from liability if it appears to be only an intermediary. In reality it is the principal and it sells off virtually all aspects of the debt to investors who are relying on the illusion.

seehttp://www.fanniemae.com/portal/funding-the-market/credit-risk/conn-ave.html

For purposes of foreclosure the chain started by the investment bank thus links to either no creditor or a nominal creditor with no risk of loss or shared risk of loss on debts. This means that standing might exist for many parties, because they are diversified, but not for one party. It also means that standing exists for parties who have not been identified and probably cannot be identified without recourse to the actual contract documents under which the investor counterparties assumed various portions of the risk of loss.

A tally of all such instruments far exceeds 100% of the debt so the chain started by the investment bank is all paid off with no standing and no financial injury.

But discovery of those documents is blocked by parties claiming the information is private and proprietary — until some enterprising and highly aggressive lawyer pierces through those specious arguments and gets an order from a judge requiring the documents to be delivered. At that point the case settles under seal of confidentiality and the public none the wiser  continues to think that securitization is real and that most foreclosures are actually properly done and result in paying down the debt of a borrower.

Rinse and repeat. Every borrower starts from scratch whereas the banks and servicers continue to promote their schemes.

Partial transcript of Radio Show — Cancellation and Expungement (C&E) of Assignment of Mortgage

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Hi Neil Garfield here and this is Thursday April 11th, 2019. Transfer of ownership of a debt means a purchase and sale of the debt and with it, in the form of an assignment of mortgage, the right to enforce the debt by judgment for damages or foreclosure. Bill Paatalo will join me in a moment to discuss cancellation of the assignment and related documents. He also joins me in seasonal allergies so that should be fun.
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A couple of short notes to our listeners. Now is the time to start a writing campaign to members of congress as the CEOs of the mega banks show up on capital hill for the first time since the 2008 crisis. Those members of congress don’t know what they are talking about or how to think about regulation of the mega banks and they won’t know unless you tell them. Securitization as practiced was a sham and the mega banks have taken control of the financial system with no controls. Start writing letters and let them know what you think about the banks and the failure of the government to keep the marketplace safe.
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Second, speaking of not acting fairly and legally toward borrowers and consumers, the 11th Circuit Circuit Court of  Appeals has ruled that emotional distress damages and punitive damages can be recovered by mortgage borrowers under the Fair Credit Reporting Act. So you have the FDCPA, RESPA, TILA, and the FRCA all with potential damage claims and all possible counts in a lawsuit or in affirmative defenses for recoupment.
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Back to tonight’s subject. Cancellation of assignment and related documents.
Yes you can seek to cancel an assignment of mortgage but only with a court order. And you can cancel a substitution of trustee, you can cancel a declaration of default and you can cancel a notice of sale if you reveal to a judge who agrees that the attorneys for the named claimant failed to establish that the claimant exists or failed to show that the named claimant received an effective transfer of the mortgage or deed trust. Tonight Bill Paatalo joins me to discuss the intricacies of the Rainn decision in California.
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Lest you missed it, the object of the defense is to reveal the holes in the claimant and reveal the holes in the claim. My constant advice to litigants is not to assume the burden of proving that the claimant never existed or that the claim isn’t valid. In the current judicial climate the best you can realistically hope for is that the claimant has no case, not that there is no debt, note or mortgage.
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The subtle difference between taking the defensive position and trying to take the offensive position when you can’t prove what you want to prove without the cooperation of your opposition makes all the difference between winning and losing.
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But before we get started I want to make one thing perfectly clear — this Rainn case does not stand for the proposition that you can cancel the mortgage or deed of trust. It stands for proposition that events AFTER the mortgage or deed of trust might be void and therefore any written instrument referring to such events can be cancelled. If it didn’t happen you can’t say it did. That is all.
And the Rainns Guana decision is also not a final decision even in the 3DCA of California because it was not rendered with permission to publish. At most it is persuasive authority and it is persuasive because of the logic of the opinion not because the decision is binding. So understanding the logic is essential to using the strategy of cancellation and arguing it effectively in court.
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Lastly this is not a quiet title action. You are not removing the encumbrance — the mortgage or the deed of trust. So you are not going to get clear title free of the encumbrance. What you can get is to be free of enforcement and eventually, much later, quiet title when nobody else shows up to enforce the debt, the note or the mortgage or deed of trust.
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The way debt is transferred according to the laws of every state of the union is by paying value to the owner of the debt. And once value has been paid, the debt is transferred. So it should not, theoretically, be sold again and transferred again. There is no other way. A paper transfer alone has been litigated many times. It always comes out the same way. An assignment of mortgage without transfer of the debt is a nullity.
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Litigants get lost in the weeds when the attorneys for the banks and servicers get the attention of the court directed to enforcement of the note, where a transfer can be effectuated without transfer of the debt. These clever attorneys point to the fact that the borrower stopped paying as if that’s all there is. That’s how they win.
When you get the attention of the court directed back to the law of the state which adopts the UCC Article 9 provisions requiring value be paid for the debt and where doctrine states that transfer of the mortgage without the debt are nullity, then it is the homeowner who wins.
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If the debt was not purchased contemporaneously or before the assignment of a mortgage then the assignment is a nullity and a nullity means that it is void. If it is void it must be cancelled and removed from the chain of title. That is what the court order does.
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So they are presenting the claimant as a party authorized by law to enforce the debt on behalf of the owners of the debt. But without asserting for whom they are enforcing the debt they have not presented any true claimant.
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You have two shots: one to reveal that there is no claimant asserted because of the name they used and then to assert that there is no claim held in the name of the claimant. The goal is to reveal that the evidence is missing that would show that the claimant exists, or the claim exists, or that the claim exists but there is no foundation evidence to show it is owned by the claimant or any combination thereof.
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The investment bank can’t say they are enforcing on behalf of themselves, and they don’t even though they funded the origination or acquisition of the debt. They don ’t say that because they have long since divested themselves of any ownership of the debt several times over. And so no investment bank has ever shown up in foreclosure litigation — even though they were the real party in interest at the time of the loan origination or acquisition.
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Normally the only practical defense to foreclosure is payment. But payment has already been made to the investment bank that fronted the money, so you need to show the gaps in their case without taking on the burden of proving facts you can’t prove.
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In short, the only way your opposition can win is by successfully directing a judge’s attention to the fact that the borrower stopped paying rather than the fact that the named claimant or plaintiff ever had a claim to collect or enforce the debt. That is how the investment banks hide.
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The only way you can win is be redirecting the judge’s attention back to whether the claimant exists, the claim exists and the claimant is the owner of the claim. If you do that successfully the proof fails.
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Remember that is more likely than not that if your house is foreclosed and sold, the proceeds will NOT be used to pay anyone who owns your debt. So stop feeling shaky about defending. Shame is undermining  fairness in the justice system when it comes to foreclosures.
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Remember you can always come back and listen to the show again or send it to a friend by going to blogtalkradio.com and looking up the Neil Garfield Show
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  I am broadcasting live from Duval County Florida and this show is brought to you by the livinglies blog, GTC honors, Lendinglies, AMGAR, and the Garfield firm, and this show is specially brought to you because of donations to the livinglies blog from listeners like you. Thank you. And for those of you who are not contributors we ask that you HIT THE DONATE BUTTON ON THE THE BLOG OR call 954-451-1230 or
202-838-6345  and pledge whatever you think you can afford. If this show has value for you, if  our work on the blog and our radio shows, without payment or other support has value to you then chip in. Please make a contribution to help us continue helping you and all consumers.
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Bill Paatalo is an accomplished and well respected private investigated who turned his skills toward the foreclosure marketplace many moons ago.  He has made or confirmed all the major discoveries and revelations in the foreclosure world. Bill is a friend and someone whose work I continue to admire. Welcome Bill.
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Cancellation and Expungement. Al West seminar. Every state has a provision that allows for declaratory action to remove wild deeds and other documents in the chain of title that should not be there . Lower burden of proof than proving fraud.
Go after the notary and the notarization. Attack the malfeasance in a particular document. You are attacking the validity of the document.
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File in State court. No shotgun approach. Find a party on that document who is in the state. Sue them not parties who are out of state and can remove to Federal court on diversity jurisdiction.
Backdating, robosigning etc. slander of title can arise from void assignment. NOTS, NOD, NOS all void.
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The fact remains that if the origination or funding of the loan was accomplished through funding by an investment bank then only that investment bank can claim ownership of the debt and therefore rights to enforce the mortgage or deed of trust. It is not true that a person who is authorized to enforce a note is automatically entitled to enforce the mortgage. They had to pay value to acquire the debt.
So it stands to reason, Bill, that nobody in the so-called chain of title would have paid any party other than the investment bank for ownership of the debt and thus entitlement to enforce the mortgage. Am I right?
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The strategy is to reveal the gaps in the proof by showing lack of foundation, lack of personal knowledge and lack of truth. You don’t accept the burden of proof by alleging facts that you cannot prove. The strategy is to focus on the prima facie case that the foreclosing party needs to make to support the foreclosure. Poke holes in that and you win.
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For an assignment to be void you either need to reveal that the person making the assignment didn’t own anything or that  the assignment was just on paper and not supported by an actual purchase transaction in which the debt was acquired from someone  who owned it.. It’;s simple logic.
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And if the assignment is void because there was no transfer of the debt then so is the notice of substitution of trustee, the notice of default and the notice of sale and the lawsuit in judicial states, right? So Bill, how do we reveal that the assignment is void and therefore that all documents relying on the assignment were also void and should be cancelled?
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NOTES:

California Probate Code 24 – “Beneficiary” means a person to whom a donative transfer of property …

Current as of: 2017 | Check for updatesOther versions
“Beneficiary” means a person to whom a donative transfer of property is made or that person’s successor in interest, and:
(a) As it relates to the intestate estate of a decedent, means an heir.
(b) As it relates to the testate estate of a decedent, means a devisee.
(c) As it relates to a trust, means a person who has any present or future interest, vested or contingent.
(d) As it relates to a charitable trust, includes any person entitled to enforce the trust.
(Enacted by Stats. 1990, Ch. 79.)

The 2018 Florida Statutes

Title XLII
ESTATES AND TRUSTS
Chapter 736 
FLORIDA TRUST CODE
View Entire Chapter
F.S. 736.0103 Definitions.—Unless the context otherwise requires, in this code:
(4) “Beneficiary” means a person who has apresent or future beneficial interest in a trust, vested or contingent, or who holds a power of appointment over trust property in a capacity other than that of trustee. An interest as a permissible appointee of a power of appointment, held by a person in a capacity other than that of trustee, is not a beneficial interest for purposes of this subsection. Upon an irrevocable exercise of a power of appointment, the interest of a person in whose favor the appointment is made shall be considered a present or future beneficial interest in a trust in the same manner as if the interest had been included in the trust instrument.
(18) “Settlor” means a person, including a testator, who creates or contributes property to a trust. If more than one person creates or contributes property to a trust, each person is a settlor of the portion of the trust property attributable to that person’s contribution except to the extent another person has the power to revoke or withdraw that portion.
(15) “Property” means anything that may be the subject of ownership, real or personal, legal or equitable, or any interest therein.
(16) “Qualified beneficiary” means a living beneficiary who, on the date the beneficiary’s qualification is determined:
(a) Is a distributee or permissible distributee of trust income or principal;
(b) Would be a distributee or permissible distributee of trust income or principal if the interests of the distributees described in paragraph (a) terminated on that date without causing the trust to terminate; or
(c) Would be a distributee or permissible distributee of trust income or principal if the trust terminated in accordance with its terms on that date.
EXAMPLE: I NAME YOU AS BENEFICIARY OF A TRUST THAT IS INTENDED TO OWN A HOUSE PURSUANT TO A TRUST AGREEMENT BETWEEN ME AS SETTLOR AND A NAMED TRUSTEE WHO AGREES TO SERVE AS TRUSTEE. THAT DOESN’T TRANSFER THE HOUSE TO YOU. IT’S ONLY IF I TAKE THE ADDED STEP OF TRANSFERRING THE HOUSE BY RECORDED DEED INTO THE TRUST IN THE NAME OF THE TRUSTEE FOR THE TRUST THAT YOU MIGHT HAVE AN INTEREST IN THE HOUSE. AND EVEN THEN IF I DON’T OWN THE HOUSE NONE OF IT MATTERS AND IT IS ALL VOID.
IT IS THE APPEARANCE OF ALL THIS PAPER THAT CONFUSES JUDGES, LAWYERS, BORROWERS AND CONSUMERS GENERALLY.
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Small Business Loans Taking the Lead for Securitization Signaling Another Bubble

Small business owners should think about what happened to homeowners when they failed to get advice of counsel and failed to get advice from a financial adviser. Millions of homeowners lost their homes, their reputation and suffered permanent damage to their financial identity. Many ended up in divorce, suicide and stress related illnesses.

The pressure from the lender to accept more and more money based on fewer and fewer indicia of viability of the loan says that the loans are intended to fail. It might seem like a good idea, but it isn’t. Free money is never free.

You better look this gift horse in the mouth because this is no gift and that it isn’t a horse.

If it matters to you that your name, signature and reputation are in the process of being sold, resold and traded on the open market then you might want to take a step back from the proposed loan. Look for an established community bank that is actually underwriting the loan for performance — thus protecting both borrower and lender.

Between the residential loan bubble that still exists and is again growing, the student loan bubble that nobody wants to deal with, and now the small business loan bubble it is hard to imagine a scenario where another crash is not imminent leaving borrowers and the investors in the lurch AGAIN.

see https://www.mobilepaymentstoday.com/news/kabbage-closes-700m-asset-backed-securitization-for-small-business-lending/

Tonight! Cancellation of Assignments, NOST, NOD, NOS

Thursdays LIVE! Click in to the Neil Garfield Show

Tonight’s Show Hosted by Neil F Garfield and Bill Paatalo

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

see https://livinglies.me/2019/04/11/cal-3d-dca-wrongful-foreclosure-you-can-cancel-the-assignment-notice-of-default-notice-of-sale-and-reverse-the-sale/

Tonight Neil Garfield and Bill Paatalo discuss the issues in revealing void transfers of debt, note and mortgage (or beneficial interest).

The Rainn case in California stands for the proposition that a complaint is sufficient when it pleads that the party on whose behalf an assignment was made had no ownership in the debt. The proof of the pudding will be at trial. How will you prove this basic proposition. The answer is that you have taken the first step which is that you put the matter in issue. The second step is discovery. And the third step, if it ever gets to that, is establishing at trial that the supposed beneficiary under a deed of trust or the mortgagee under a mortgage deed had not satisfied its burden of proof showing an ownership interest in the underlying debt.”

Neil Garfield and Bill Paatalo discuss how to reveal that the assignment is void without getting in over your head.

See http://lawzilla.com/blog/rainn-gauna-v-jpmorgan-chase-bank/

Cal. 3d DCA: WRONGFUL FORECLOSURE — You Can Cancel the Assignment, Notice of Default, Notice of Sale and Reverse the Sale.

This decision “Not for publication” takes one more step toward unravelling the false claims of securitization that resulted in millions of fake foreclosures over at least 15 years. The pure nonsense being peddled by Wall Street investment banks still remains as the underlying basis for assumptions and presumptions that are contrary to fact and contrary to legal and equitable principles.

But the window is now open to include the investment banks as defendants in complaints for damages and disgorgement, because as this decision reveals, the courts may not be willing to take a giant leap of faith that someone must be the lender and that “someone” is part of the chain of players who are pursuing foreclosure. Without that leap of faith, without that bias, their “doctrine” is left dangling in the wind.

GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================

See http://lawzilla.com/blog/rainn-gauna-v-jpmorgan-chase-bank/

YES it does stand for the proposition that at least this court says that cancellation of instruments is the one cause of action that in fact does exist because the assignment was from an assignor that had no interest in the debt. I think that it is important to make it clear that the words “no beneficial interest” means “no ownership of the debt.” But the use of the words “no beneficial interest” implies the validity of the deed of trust by which the property was encumbered in favor of a “lender” (or its agent “MERS”) who was a sales agent and not a lender and from whom the borrower received no funds.

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This twisted concept seems to be saying to the judicial world that we know that table funded loans occur but we are not going to invalidate the enforcement of contracts lacking in consideration because there must be someone in the mix who did provide consideration and who was in some kind of relationship with the sales agent. Hecne the courts are thinking that they are following substance over form and thus preventing a windfall to borrowers. Instead they are stepping over the facts.
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The money came from an investment bank and yes the investment bank knew that the “originator” would be named as lender. The purpose of this arrangement was to shield the investment bank from liability for violations of lending laws of which we all know there were many spanning the categories of appraisal fraud, avoidance of underwriting risk (without which nobody could be considered a lender), to concealment instead of disclosure of terms, compensation etc.
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You can’t pick up one end of the stick without  picking up the other. If we are going to accept the notion that in foreclosure cases we are going to treat a contract as enforceable even though it lacked consideration and nobody else that is named in the chain has ever paid value, then the assumption is that an unnamed party who actually did pay value, is the real party in interest. That is the investment bank. And THAT can ONLY mean that the investment bank was present in underwriting and granting the loan through its naked nominee, the sales agent or “originator.”
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If that is so then the liability for lending violations MUST attach to the investment bank. And if that is so then at least in judicial states, by alleging those lending violations through the affirmative defense of recoupment, the foreclosure can be mitigated or defeated entirely. In nonjudicial states one would need to allege active concealment preventing the borrower from knowing the real party in interest with whom he was dealing.

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This could be the end of nonjudicial foreclosures at least as to LBMT-WAMU-Chase. It should be treated as such. If I had time, I could literally write a book about this decision as it is so instructive as to pleading requirements and common mistakes made by trial and appellate courts like for example, assuming that a legal default exists when nobody who owned the debt declared such a default or even said that payment was delinquent in some way.

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It also shows the lengths that many courts will go to avoid “fraud.” While they will accept the notion that something was wrongful and that the defendants knew it was wrongful, contrary to fact and law, they refuse so see it as fraud. A quick look at any FTC action will reveal that such restrictions do not apply if the same allegations come from a governmental agency.
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The case is also instructive in that it repeats a very common scenario regarding the origination and progression of the loan. This court and other courts will eventually face the day when their assertions come full circle: for now, they are saying that just because there was no consideration between then named lender and the borrower doesn’t mean there was no enforceable contract.

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Yes it does mean that in every context other than foreclosure litigation. But because of the rules in UCC Article 3 the maker of a note takes a risk when they execute the promissory note without having received any consideration because the note represents, under law, the right to enforce it, which if it is acquired for value might mean the enforcement would be free from borrower”s defenses. That liability does not create an enforceable loan contract. Even common sense dictates that for a loan contract to be enforceable there must be a loan between the parties to the contract.

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PRACTICE NOTE: All that said, this case only stands for the proposition that a complaint is sufficient when it pleads that the party on whose behalf an assignment was made had no ownership in the debt. The proof of the pudding will be at trial. How will you prove this basic proposition. The answer is that you have taken the first step which is that you put the matter in issue. The second step is discovery. And the third step, if it ever gets to that, is establishing at trial that the supposed beneficiary under a deed of trust or the mortgagee under a mortgage deed had not satisfied its burden of proof showing an ownership interest in the underlying debt.”

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The opposition to that narrative will be what it has always been. That possession of the “original” note raises the legal presumption that the named beneficiary under the deed of trust in fact was the legal beneficiary under the deed of trust. Possession of the note, they will argue equals ownership of the debt. If the judge accepts that proposition, the burden of proof will then fall on the borrower to rebut that presumption — a leap that most judges have already demonstrated they don’t want to make. So the persuasiveness of then presentation including an unrelenting march toward revelation of the truth is the only thing that carries the day.

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The banks know that what they’re doing is wrong. But history shows that they can get away with it except with the apparently rare homeowner who aggressively and relentlessly defends the foreclosure.

Florida Bankers Association Admission to Florida Supreme Court: “Original Notes Were Eliminated”

Courtesy of Bill Paatalo, I have located the stark 2009 admission by the Florida Bankers Association that original notes were destroyed contemporaneously with the loan closing.

Here is the quote:

The reason “many firms file lost note counts as a standard alternative pleading in the complaint” is because the physical document was deliberately eliminated (e.s.) to avoid confusion immediately upon its conversion to an electronic file. See State Street Bank and Trust Company v. Lord, 851 So. 2d 790 (Fla. 4th DCA 2003). Electronic storage is almost universally acknowledged as safer, more efficient and less expensive than maintaining the originals in hard copy, which bears the concomitant costs of physical indexing, archiving and maintaining security. It is a standard in the industry (e.s.) and becoming the benchmark of modern efficiency across the spectrum of commerce—including the court system.

GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================

see Florida Bankers Assoc Comment Letter

The Florida Bankers Association is the only bankers association in Florida and its members include all the community bankers whose voices have been muffled and of course all the banks that have been involved in the entire “securitization” mortgage meltdown. Note that bankers are not bad. Bad bankers are bad.

I first became aware of the practice of eliminating original documentation in 2004 and again in 2007 when I was involved in some real estate transactions in Arizona. They refused to let the Buyer or the Seller have an original contract and required the parties to only use Fax copies as confirmation of a deal. In fact, that is what prompted me to start ask questions.

I noticed for example that when buyers wanted to add landscaping or other such items to new construction they were being encouraged to add it to the mortgage rather than pay for it. This “encouragement” was opposite to good practices and very distant from best banking practices. While landscaping theoretically made the property more marketable it did little to add value.

So an 80-20 LTV was being shrunk before it even had begun. A $200,000 home with an additional $20,000 in landscaping expense resulted in a loan of $176,000 instead of $160,000, for a home that was still worth less than $200,000 since appraisals were regularly marked up by $20,000. Thus the loan was basically a 100-0 loan (and going down fast when the market made a “Correction.” After the correction the loan was upside down on average 130-0. In commercial loans borrowers are allowed to walk away from that. In residential loans consumers are stuck with it.

It didn’t take long for me to realize that a bubble was being created that was astronomical by comparison to all other financial bubbles in human history. Given my personal experience on Wall Street as an investment banker I knew that they had to be involved simply because there was no way to make money from such lending as a commercial bank. The rates were too low and the risk was not just too high, it was obviously intended. The lender would get burned. It had to be an investment bank who had a scheme.

My suspicion about Wall Street was further corroborated when I saw the intense competition to get borrowers to sign for such loans, spending hundreds of millions of dollars on advertising in virtually every media and especially targeting areas where the typical borrower would ordinarily have trouble getting any loan. This was further exacerbated when the NINJA loans were revealed — No Income No Job No Assets.

There was only one possible way to make money from this jumble. And that was to sell the same loan many times. It’s simple math. The trick was in how to hide the fact that you were assuming a risk of virtually guaranteed failure of the loan while leaving the homeowner and the neighborhood to eat it and hide the multiple sales of the same asset, keeping all the profit even in a market collapse which, as an investment banker, you knew was coming because you made it collapse.

As any embezzler knows you can’t hide it if you don’t control it. So the essence of the greatest trick of all time was to sell the loans without selling the rights contained in the paper. Sell the paper but then take back everything that is written on it. And that is what happened.

So the problem with the plan was that hundreds of years of common law and statutory law required that the original note be produced if that was the basis for a claim for enforcement of the note or ownership of the underlying debt (and therefore for a claim for foreclosure of mortgage or deed of trust).

If everyone continued to demand delivery of the original note then that loan could not be sold multiple times. Thus it became the job of the investment banks to convince investors that an image was even better than the original note, regardless of what the law requires. That was easily accomplished once the assertion appeared to be accepted by all major banks who were in on the deal and some who didn’t realize what they were doing.

And the insurers of the bogus mortgage bonds issued in the name of trusts that didn’t exist were distracted from looking for transfer of the original note. I know this partly from the reports and my interviews with hedge  fund managers who actually did peek under the hood and were horrified by what they saw and refused to buy the mortgage bonds or any hedge contract based upon the alleged mortgage bonds which were neither bonds nor actually derived in value from real mortgage loans. Certificate holders were barred or otherwise disclaimed any right, title or interest to the loans. They received a promise from an “obligor” who was actually the investment bank doing business under the fictitious name of a nonexistent trust. Sell it but don’t REALLY sell it. But by all means keep the money!

Once everyone accepted the image files it was easy to do commerce in images instead of the real thing. But then came the legal requirement to produce the original note in court so everyone was filing foreclosures based upon a lost note. That didn’t work well. It made foreclosures go judicial in non judicial states and the requirements of proving a lost note were greater than the capacity of the appointed claimant to prove it mainly because the appointed claimant had no claim.

That’s when they pulled the rabbit out of the hat. The next “industry practice” was to mechanically reproduce the original note from an image because the original had in fact actually been destroyed as revealed in the Katie Porter study when she was a law professor in Ohio in 2007. Now she is in Congress. The recreations were so good that even the borrowers could not distinguish  the mechanical signatures from their own — except when they remembered that they had signed in a different colored ink.

The real proof problem was that borrowers were unwilling to spend money on forensic document examiners to uncover the widespread practice of forgery and perjury. The strategy of the investment bankers was brilliant. They reasoned quite correctly that since the borrowers knew they had signed an original note and that there appeared to be no reason to duplicate their signature the borrowers would simply walk from their homes and never be the wiser. In addition to pornographic profit from sellign the loan multiple times, the investment banks would also get millions of homes. It worked.

So here we have a banking association representing BofA, Chase, Wells Fargo, Citi et al saying that it was OK to have destroyed the original notes and OK also not to comply with laws requiring them to prove the lost note, although their argument by stealth uses the strict requirements of establishing a lost note, as if that were the practice. In practice they were getting judges to overlook strict compliance and go with legal presumptions.

The information reviewed to verify the plaintiff’s authority to commence the mortgage foreclosure action will be drawn from the same database that includes the electronic document and the record of the event of default. The verification, made “to the best of [the signing record custodian’s] knowledge and belief” will not resolve the need to establish the lost document.

So in answer to the proposed rule that would require verification (and penalty of perjury) the association says

Verification adds little protection for the mortgagor and, realistically, will not significantly diminish the burden on the courts. The amendment is not needed or helpful.

Some form of weak verification is required in most states now — especially after the 50 state multi billion dollars settlements and other settlements now totalling nearly half a trillion dollars arising out of these morally bankrupt and lawless strategies. But the fact remains that whether verification is required or not, the investment banks have directly or indirectly convinced most members of the public, the judiciary and the legal profession that each case is about a real creditor (buried in the woodpile) against a deadbeat borrower.

And because the people in poor and middle class neighborhoods don’t have deep pockets they don’t have deep voices either. The media has long since given up on the largest economic crime in human history and so has government — which assures us and the investment bankers that it can, it will and it is all happening again. This time the emphasis is on student loans and small business loans because the residential loan market is saturated.

 

Stop Feeling Guilty — Be A Warrior

Shame is the reason why most borrowers don’t contest foreclosures. That shame turns to intense anger when they realize that they were used, screwed, abused and now they are targets in a continuing blitz to embezzle much needed money from their lives and from the financial system generally.

The genius behind companies like Citi is… Deception by Branding.  “Citi” is not a company, it’s a brand of a conglomerate of companies.  Even its subsidiary “Citibank N.A.” is deceptive.  First let’s dispel the myth that subsidiaries are equal to their parents.  Not true, not even when they are wholly-owned subsidiaries.  They are separate companies, albeit owned by a common parent. —- From Anonymous Writer
GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================

Probably the biggest goof of the court system in foreclosure litigation (and in business litigation) is mistaking a brand for a company and not realizing that there is both a business and legal distinction between even a wholly owned subsidiary and another subsidiary or parent company.

The reason that is such a big goof is that the actual transaction is being ignored while a small part of the transaction is being treated as the entire matter. That is like taking the spark plug out of car and then selling it to someone as though it was the whole car. It doesn’t work that way.

In conglomerates like “Citi” the brand intentionally blurs the factual and legal distinctions. And these distinctions make a difference precisely because the debt, note and mortgage are split and transferred multiple times between subsidiaries wherein each one is either moved off the books entirely or each subsidiary is showing an “asset” that it sells into the shadow banking market.

These practices results in a ten-fold increase in the apparent size of the asset, which is then owned by dozens, perhaps hundreds of different unrelated investors. And that enabled the banks siphon literally trillions of dollars out of the US economy and trillions more out of the world economy.

Through the devices of branding and “off balance sheet transactions” this wealth is controlled by handful of people; but this wealth is directly derived from one simple plan — to market the signature, reputation and identity of borrowers who were led to believe that they were executing loan documents. In fact they were executing the foundation documents for a string of transactions and book entries that would result in profits far beyond the amount of the loan.

These unsuspecting consumers had become ISSUERS without ever knowing it and they still don’t know it or understand it. So they still believe that somehow the investment bank behind the scheme is actually entitled to collect on a debt that the bank sold multiple times through multiple affiliates and subsidiaries in transactions that were often “off balance sheet.” And the fact that in virtually all cases the proceeds of foreclosure sales are not applied to reduce the debt owed to the owner of the debt is completely overlooked.

The clear issue that investment banks have been avoiding is that every one of their originated loans is part of a larger intended transaction, and that the homeowner gets absolutely no clue or disclosure that the bulk of the transaction is actually very different from a loan and actually the antithesis of a loan. Clearly the two were both unrelated and related.

The borrower thought it was a loan and it was a loan but the loan was a part of a larger transaction in which the attributes of a loan were shredded. So the loan was essentially a sham entry to allow the investment banks to profit regardless of the performance of the loan. Hence the transaction was not really a loan anymore. This is true even for loans acquired after origination by an actual lender.

Risk underwriting, the most basic part of lending, was thrown to the winds because it was irrelevant. And legally required disclosures were also thrown to the winds because lending laws (TILA) clearly state that compensation received after the loan closing must be disclosed.

What would have happened if the borrowers knew their signatures, reputation and identity were the real subject of the transaction and that they would be sold in a myriad of way producing compensation far beyond the amount of the loan. How would bargaining have changed? It’s obvious.

Even the most unsophisticated homeowner would have gone shopping for someone who would offer a share of the bounty. And that is why the “free house” PR gimmick is a myth. If the investment banks had not concealed the major attributes of the transaction, the mortgage meltdown would never have occurred.

And if “securitization” had proceeded anyway then homeowners would have received immediate and possibly total reductions in the amount due. Yes I recognize that this is a contradiction because if there is no loan then there are no derivatives to be sold. But that is not a problem created by homeowners or borrowers or consumers. It is a problem created by fraud and deceit by the investment banks.

In the final analysis the investment banks used homeowners and investors to issue unregulated securities and instead of turning the proceeds over to the issuers they kept the money. In any world of law enforcement they should have been jailed for that.

The goal was to get the signature and then sell it. That is not a loan. And the failure to disclose it violated everything about Federal  and State lending laws that require disclosure of identities of the real parties in interest and the amount of money they are getting as compensation for their role in “the transaction.”

The investment banks chose to unilaterally define “the transaction” as just the part dealing with the origination of the debt, note and mortgage. That was a lie. It concealed the fact that the borrower was in fact a real party in interest in a much larger transaction in which at each step profits, fees, and other compensation would be distributed in amounts vastly exceeding the amount that was disclosed to the borrower as the value of the transaction. For each $1 “loaned” there was $20 in profit.

By concealing this information the investment banks took all of the profit, fees and compensation without allowing the homeowner to participate in what amounted to a monetization of their signature, reputation and identity.

Thus the most essential part of the Federal and State lending laws was thwarted: that the “borrower” must know the identity of the parties with whom he/she is dealing and the “borrower” must know the amount of compensation being earned as result of the “borrower” signing documents at loan closing.

Instead the homeowner had become the issuer of unregulated securities, the proceeds of which were largely concealed and withheld from the homeowner. No lawyer would have permitted their client to enter into such a scheme — if the facts were known.

Borrowers get lost in the weeds when they make these allegations because they can’t prove them. Truth be told, even the bank could not prove them because of the number of transactions that occur “off balance sheet.” Abraham Briloff (in his book Unaccountable Accounting) first observed over 50 years ago, the invention of this ploy of “off balance sheet” transactions was an open door to fraud that would likely occur but might never be proven.

We are a nation of laws not opinions. Our laws depend upon findings of fact, not opinions or political views. That is the only control we have to prevent fraud or at least bring fraudsters to justice, or at the very least prevent them from continuing to reap the rewards of their multiple violations of statutory laws, common law  and the duty of good faith, honesty and fair dealing.

So when the robowitness signs affidavits, certifications or other documents or testifies at deposition or in court, be aware that in nearly all cases, he/she is either an independent contractor with absolutely no knowledge or authority concerning the subject transaction (as a have defined it herein) or an employee of a subsidiary with no connection to any transaction involving the homeowner or both.

You can reveal the lack of actual personal knowledge and thus then lack of foundation for evidence proffered in a foreclosure by discovery, motions to enforce discovery, motions in limine and good cross examination which always depends upon one single attribute to be successful: follow-up.

And in many cases the robowitness is not nearly as stupid as his/her script makes him out to be. The  robowintess often knows everything that is contained in this article. Good cross examination can frequently reveal that — that is where the case turns from enforcement of a legitimate debt to a case in which both the claim and the claimant have not been proven by any standard.

That is all you need to win. You don’t need to prove how they did it. You only need to reveal the gaps that exist because the substance is not there — the claiming parties have all long since divested themselves, at a profit,of any interest in the debt, note or mortgage. There is no debt left to pay, at least not to them. Stop feeling guilty and be a warrior.

Transcript from Neil Garfield Show on Discovery

Hi Neil Garfield here and this is Thursday April 4th, 2019. Get rid of the shame, get rid of the doubt, and get rid of the feelings of inferiority. Homeowners who signed papers were in fact unknowingly issuing unregulated securities for the sole benefit of investment banks. No sharing with homeowners. Almost no sharing with investors.
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The investment banks (we used to call them brokerage houses) kept virtually all the money they created. Those investment banks converted their roles as intermediaries, that is to say securities brokers, to acting as though they were principals and then keeping the money concealed from the real parties in interest — the investors who put up the money and the borrowers who signed loan papers.
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So stop feeling guilty about cheating the poor banks out of payment to which they are NOT entitled. This wasn’t banking and despite all appearances to the contrary it was not really lending either when you back up and look at it end to end. And that is the part that is missing from the analysis when lawyers look at it as strictly a loan transaction.
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The true picture is full of holes. It is up to the foreclosure defender to reveal those holes until a judge is uncomfortable with the proof. That is when the rubber stamp judge’s head turns and that it when he/she rules for the so-called borrower .
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Judges do not rule for borrowers because they believe that securitization is a scam. They rule for borrowers when the securitization scheme or scam fails on the proof. And the way you reveal that failure is the secret to winning foreclosure cases.
Every time you defend a foreclosure you are throwing a monkey wrench into a well planned well oiled fraudulent scheme to deprive society of the benefits of a level marketplace where everyone has a chance to participate.
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The entire scheme depends completely on concealing the fact that the loan is the cornerstone of a larger transaction wherein the players are going to make money in multiples of the amount loaned. If they disclosed that they were going to resell the name, identity, signature and reputation of the borrower and the borrower stills signed then so what?
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But they didn’t disclose it and if they had borrower’s would have gone shopping for people who would let them share on the bounty or they wouldn’t have signed at all because they didn’t like   banks selling their name and reputation and their  future in the open market.
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Winning foreclosure cases. Sometimes it is the homeowner. If it’s the homeowner it’s only because the homeowner defended aggressively and the bank or servicer had nothing. Tonight I am going to discuss how foreclosure defense attorneys win cases in which they are defending homeowners from foreclosures,.
Keep in mind that the sole purpose of securitization in every form is diversification of risk. So the risk of loss is diversified. And by definition that means the owners of the debt are diversified because only owners of debt can suffer a loss due to non payment.
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So when the banks present a single claimant they are doing so in defiance of the basic black letter principles of securitization.
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If they are presenting a single claimant then by definition that claimant must be acting in a representative capacity, and not as owner of the debt. So they are presenting the claimant as a party authorized by law to enforce the debt on behalf of the owners of the debt. But without asserting for whom they are enforcing the debt they have not presented any true claimant.
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And that is where the first big hole is. They can say they are enforcing on behalf of certificate holders but the facts are that the certificate holders have not right, title or interest to the debt. Ask the right questions and insist on answers and that notion collapses.
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Certificate holders have a promise from an obligor who is supposedly the REMIC Trust but in reality is the investment banker doing business as the Trust.
They won’t say they are enforcing for contract holders because that would expose the basic holes in what they are calling securitization but is really a Ponzi scheme. The contract holders have no right to enforce the debt, note or mortgage even though they may hold equitable or legal title.
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And the investment bank can’t say they are enforcing on behalf of themselves, even though they funded the origination or acquisition of the debt because they have long since divested themselves of any ownership of the debt, several times over.
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If securitization was real then the REMIC Trust would not merely be a fictitious name used by the investment bank to  sell certificates and order foreclosures. No, the REMIC Trust would actually BE the owner of the debt. SO the lawyers would then be able to say that the ReMIC Trust paid for the debt and they would be able to prove that. Has anyone seen such an allegation or assertion by lawyers in court? I haven’t. You never will because securitization today is a sham and scam.
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Normally the only defense to foreclosure is payment. But payment has already been made, so you need to show the gaps in their case without taking on the burden of proving facts you can’t prove. Truth be told not even then investment banks could prove some of those facts because of all the off balance sheet transactions that got spun out into the shadows banking market where they are now virtually untraceable.
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Tonight we talk about how both the banks and the lawyers are getting away with it and what we can do to force them to actually prove their case and be held accountable when they present false claims.
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Remember that is more likely than not that if your house is foreclosed and sold, the proceeds will NOT be used to pay anyone who owns your debt. So stop feeling shaky about defending. Shame is undermining  fairness in the justice system when it comes to foreclosures.
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Remember you can always come back and listen to the show again or send it to a friend by going to blogtalkradio.com and looking up the Neil Garfield Show
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  I am broadcasting live from Duval County Florida and this show is brought to you by the livinglies blog, GTC honors, Lendinglies, AMGAR, and the Garfield firm, and this show is specially brought to you because of donations to the livinglies blog from listeners like you. Thank you. And for those of you who are not contributors we ask that you HIT THE DONATE BUTTON ON THE THE BLOG OR call 954-451-1230 or
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The path to victory in defending foreclosures is based upon the simple premise that the claimant or the claim does not actually exist. If your adversary really owns your debt because they paid for it then they are entitled to payment, unless of course they owe you money in recoupment for abusing the loan closing process to mask a much larger fraudulent scheme, of which the loan was only a small piece.
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The strategy is to reveal the gaps in the proof by showing lack of foundation, lack of personal knowledge and lack of truth. You don’t accept the burden of proof by alleging facts that you cannot prove. The strategy is to focus on the prima facie case that the foreclosing party needs to make to support the foreclosure. Poke holes in that and you win.
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I’ve seen hundreds of cases where a so-called rubber stamping judge ruled for the borrower on key issues that caused either a judgment for the homeowner or more often than not, resulted in a confidential settlement. The settlement occurs because your opposition must avoid, at any cost, the publication of cases in which the claim or the claimant is shown to be nonexistent. That could effect not only your case but thousands of other cases.
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Your job is to get to the point where you present a credible threat that your case will reveal the sham nature of the claim and the claimant.
The tactics used to achieve this are ordinary litigation tools that are set forth in every compilation of the rules of civil procedure.
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Motions directed at the pleadings are not generally successful unless you get a judge willing to listen to the fact that a claimant has not actually been named.
So the next step is to file an answer in judicial cases and a complaint in nonjudicial cases that challenges every single assumption or implication of the claim without exception. In judicial cases you would also add actions in recoupment to your affirmative defenses that a track the formation of the alleged contract, seek disgorgement, and even quiet title if the fact patterns supports it.
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Then comes the real work that most pro se litigants and many lawyers are unable or unwilling to do. Most cases are won and lost in discovery. The mistakes involved with discovery are many but they all emanate from the belief that discovery is really just a thing to do rather than an effective tool you are going to use against your opposition.
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If it’s just a thing to do then don’t do it. All you are doing is telegraphing a defense that enables your opposition to surprise you at trial with some novel argument that you are unprepared to contest.
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If you really want to win, then you need to send out careful constructed demands for discovery at the very least in the form of Interrogatories, Requests for Admission and Requests for Production.
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Next you must create footprints in the sand to show that you tried to resolve disputes amicably. Then file motions to compel and when they still don’t comply file motion for sanctions and eventually motion in limine. And be prepared to object to testimony or documents based upon violations of discovery at trial as well as objections based upon hearsay, foundation, relevance, etc. Those objections are easy because most lawyers don’t know how to ask the right questions in the right way,. If you catch them at it, the evidence is excluded. That is how some cases end up deiced contrary to what seems obvious. Bad presentation of evidence.
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[Editor’s notes: Beware of pretrial orders since they often have the effect of barring objections or evidence if you don’t  comply with them. Objections must often be anticipated and preserved when a pretrial order is rendered.]
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In foreclosure, bad presentation of evidence and bad presumptions are the foundation for every defense. This requires patience and persistence to gradually turn the head of a judge who came into the courtroom annoyed that you are contesting an inevitable result. But that same judge will rule in your favor if you can persuade the judge that too many things are missing to allow the foreclosure to go through.
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It becomes a matter of procedure, which is to say that the judge doesn’t want to allow sloppy paperwork and unsupported testimony to price a benefit even though the judge might think that the party making the errors has a valid claim. Judges, at their root, are there to calls balls and strikes.
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So let’s look at these steps, one by one starting with your answer or the basic elements of your complaint to stop a foreclosure in a nonjudicial state.
Answers to foreclosure complaints filed in judicial states should say it’s true or it’s false by simply stating admitted or denied.
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Complaints must, because of non judicial procedures, essentially do the same by stating the implied allegations and then denying them point by point. In some ways this gives the homeowner greater leverage and more freedom to set forth the issues of the case than in the judicial states where you are limited to denying only the allegations that are made.
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Since you are writing the complaint you can say anything you want about their claim and lay out what is implied in their notice of substitution of trustee, notice of default and notice of sale. Then deny it and state your reasons without asserting too many actual facts because the facts you allege are the facts you must prove.. Your real strategy is to say there is an absence of foundation for the existence of the claim or the claimant.
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In judicial foreclosures it is wise to file affirmative defenses with your answer. Those affirmative defenses establish matters in issue and generally support your reasons for wanting discovery which will be challenged if you strike a nerve. If  you haven’t struck a nerve then you have not filed the right affirmative defenses. You should be asking for disgorgement of all money paid by the homeowner since there was no right to collect it, quiet title and recoupment, not damages,  for violation of the FDCPA and perhaps other statues like RICO. Remember that the SOL does not apply to recoupment in most states. Check with local counsel on that.
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In Non judicial states you can’t plead recoupment because it is an affirmative defense.
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Then move immediately into discovery and put the pressure on. Don’t use boilerplate forms. Judges hate that and on the Federal bench they are looking at ways to ban it. They need to be tailored to this specific case and the specific issues that are matters to be decided at trial.
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Since you are probably limited in the first set of Interrogatories to 25 questions including subparts you need to go straight to the heart of the matter but first you need to identify exactly who is answering and what is the basis of their knowledge for answering these questions. This step is often skipped.
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By failing to have someone with actual knowledge answer the questions they have opened themselves up for sanctions. Every Motion to Compel Motion to Compel, Motion for Sanctions and Motion in Limine brings to the attention fo the court that the issue of the viability of the claim and the status of the claimant is front and center.
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You also need to identify custodians of records that you think will show the absence of a claim or the status of a claimant.
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Then you need to go to the heart of whether the debt is owned by anyone in the chain and if so who that is and how you can confirm that assertion.
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Ask for the title of certain documents and where they are kept and by whom. But more importantly ask what are known as contention interrogatories. They start off with language like this “Do you contend that the Plaintiff’s name is US Bank?” Do you contend that the Plaintiff’s name is US Bank as trustee for SASCO certificate series 2007-123A. Do you contend that said named Plaintiff is the owner of the debt, to wit: is the Plaintiff a legal entity maintaining books and records that include the subject loan as an asset receivable.
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You want to smoke them out in clear unequivocal language so when they refuse to answer, and they will, or if they answer evasively, you can file a motion to compel and get an order  for them to answer the question as written without evasion. When they do it again you file a motion for sanctions.
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While the court won’t usually strike their pleadings, and sanctions may be light  the next step is the one that counts. After they have repeatedly failed to answer direct questions about the claimant’s status or the ownership of the supposed claim you may then file a motion in limine. Motions in limine are not granted often but when they are here is what happens and why I think you should file the motion if you have the grounds to do so.
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You have grounds to do so if the claimant wishes to put on evidence that supports its claim for enforcement of the note and foreclosure on the mortgage or deed of trust and that evidence that they wish to put on was not given to you in response to direct questions you asked about such issues they you are entitled to a pretrial order preventing them from putting on that evidence.
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Remember also to use Requests for admissions since they usually are grounds for the award of fees if you prove the matter that they denied, even if you lost the case. Such rules are especially helpful when you win the case as you can ask for fees when most interpretations don’t allow fees for homeowners in foreclosure cases. With Requests for admissions the court does not have much choice but to award something especially where you won.
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So that is a summary of some of the tactics and strategies to use to win cases involving foreclosure defense.
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We are here to help you as needed. Just go to www.lendinglies.com or send us a Registration statement for a free preliminary review.
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LISTEN TO OTHER NEIL GARFIELD SHOWS

Discovery from REMIC Rules

I have added to my templates for discovery questions  and requests relating to a claimant that is named “XYZ Bank, N.A. as trustee for the ABCDE Corp. Trust Series 12345-4321A Certificates” and where, as in most cases, there is a PSA and/or a Trust Instrument that identifies the “trust” (if ti exists) as a REMIC — Real Estate Mortgage Investment Conduit. It turns out that the Internal Revenue Code provides some guidance that might get you through objections to your discovery.

Keep in mind that there is very often a “Trust Agreement” that is different from the PSA and that there is very often a “Servicing  Agreement” that is different from the PSA.  It’s somewhat like saying “Do as I say not as I do.”

Also keep in mind that the only trust relationship I can decipher out of the so called trust instruments and associated documents is that the Trustee is basically a naked nominee (like MERS) for the investment bank, for which it is paid a monthly fee with no rights of administration nor any duties or obligations.

Thus the investors as beneficiaries is a red herring distraction from the truth. Hence any power of attorney executed in the name of the named Trustee is worthless because you cannot create a right by purporting to transfer it. The trick in litigation is revealing that the named Trustee is not a legal trustee and should not be so named because it lacks all indices of power attributed to a trustee.

Thus a “trust” might indeed exist even if it is not anything like what is being presented in court. And the res of the trust is the nominal title to documents like a note and mortgage to hold at the direction of but necessarily for the benefit of the investment bank. But since the nominal  title is without value there still is probably no res and hence no trust nor anything to administer.

While the investment bank once had a claim as owner of the debt, it has long since divested itself of any right, title interest or obligation with respect to the debt, note or mortgage.

GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================
IRC § 301.7701(i)-1 Definition of a taxable mortgage pool.

(a)Purpose. This section provides rules for applying section 7701(i), which defines taxable mortgage pools. The purpose of section 7701(i) is to prevent income generated by a pool of real estate mortgages from escaping Federal income taxation when the pool is used to issue multiple class mortgage-backed securities. The regulations in this section and in §§ 301.7701(i)-2 through 301.7701(i)-4 are to be applied in accordance with this purpose. The taxable mortgage pool provisions apply to entities or portions of entities that qualify for REMIC status but do not elect to be taxed as REMICs as well as to certain entities or portions of entities that do not qualify for REMIC status.

(b)In general.

(1) A taxable mortgage pool is any entity or portion of an entity (as defined in § 301.7701(i)-2) that satisfies the requirements of section 7701(i)(2)(A) and this section as of any testing day (as defined in § 301.7701(i)-3(c)(2)). An entity or portion of an entity satisfies the requirements of section 7701(i)(2)(A) and this section if substantially all of its assets are debt obligations, more than 50 percent of those debt obligations are real estate mortgages, the entity is the obligor under debt obligations with two or more maturities, and payments on the debt obligations under which the entity is obligor bear a relationship to payments on the debt obligations that the entity holds as assets.

Subject to considerable editing and fine tuning, this gives rise the the following recitations and questions:

  1. Contention Interrogatory: Do you contend that the claimant is a REMIC?
  2. Do you contend that the subject REMIC is subject to IRC §301.7701(i)-1 Definition of a taxable mortgage pool?
  3. Contention Interrogatory: Do you contend that the subject REMIC is the actual and legal owner of the subject debt, note and mortgage?
    1. If Yes, please describe the manner in which the subject debt, note and mortgage were acquired or became entrusted to XYZ Bank as Trustee of the named REMIC.
  4. Does the subject REMIC maintain books of account and business records relating to the ownership, transfer and management of REMIC assets?
    1. Please describe how the books and records are maintained, along with the description of the persons or entities who are authorized to keep or maintain or make entries in those books and records.
  5. Does the named REMIC make payments to any party as an obligor (the REMIC)?
    1. Do those payments bear a relationship to payments to payments received by the REMIC on debt obligations that the entity holds as assets?
      1. Please Describe such payments including the categories of recipients as referenced on the books of account maintained by the REMIC.
      2. Please describe the relationship between the debt obligations that the REMIC holds as assets and the obligation of the REMIC as obligor to third parties.
  6. If yes, please answer the following
    1. Is the Pooling and Servicing Agreement (PSA) as found at url _________ the document upon which the REMIC was organized and still exists.
      1. If not, please describe the document upon which or by which the REMIC was created, organized and still exists.
    2. Is the identity of the claimant in foreclosure the same as the identity of the named Trust in the PSA.
    3. As stated in §301.7701(i)-1 Definition of a taxable mortgage pool, does the named REMIC qualify as a legal entity?
    4. Does the named REMIC own assets?
      1. If yes, please describe the assets.
      2. Are substantially all the claimed assets categorized as debt obligations?
      3. Is the debt in the subject disputed loan one of the assets owned by the named REMIC?
        1. If yes please describe the date, parties and location of the transaction in which the named REMIC became the owner of the subject debt.
        2. If yes please list and describe the date and parties involved (as Payors or Payees) in the distribution of any money by or on behalf of XYZ Bank relating in any way to the subject REMIC and relating in any way to the subject contested loan.
        3. Please list all other foreclosure proceedings initiated under the name of this subject REMIC as the claimant.
          1. Please list which of the previous cases have been concluded with a foreclosure sale and subsequent liquidation (sale) of the property.
            1. Please list the cases in which the property was sold where the named REMIC herein received the sale proceeds.
            2. Please list the cases in which XYZ Bank received money from the sale proceeds in any capacity.
            3. Out of those cases please describe the manner in which XYZ Bank received the money and the manner in which the money was distributed.

Be prepared for objections and long memoranda of law.

Comments welcome

Tonight! How to use discovery in revealing fraudclosures!

Thursdays LIVE! Click in to the Neil Garfield Show

Tonight’s Show Hosted by Neil F Garfield

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

Tonight’s Agenda:

  1. Interrogatories
  2. Request to Produce
  3. Request for Admission
  4. Motions to Compel
  5. Motions for Sanctions
  6. Motions in Limine

The devil is in the details. The details in litigation lie basically in discovery — asking and responding. Very few pro se litigants know how to construct good Interrogatories, Requests to Produce, or Requests for Admission. They know even less about how to use the responses, if they get any.

And they know still less about how to use inconsistencies or lack of response as the basis for enforcement and motions for contempt and sanctions and ultimately to limit the evidence that can be introduced by the claimant in foreclosure.

Failure to know about this is fatal because it is failure to understand the nature and procedure of litigation. Most lawyers don’t suffer from that ignorance. But they often do suffer from lack of motivation and thus they head for failure when they could be heading for success.

Judges are getting increasingly irritated by sloppy and bad discovery practices by both sides in litigation.

See Exterro-EDRM Judges Survey 2019 Series-…iscovery Specialists (ACEDS) – JDSupra

UCC: The Internet is no substitute for law school

The way that borrowers lose cases is by picking out one thing from a case or statute and treating it as a magic bullet. If the law were that simple a computer would be deciding all cases. The distinctions between possessors of a note, rights to enforce, status as a holder, owning the debt and the status as holder in due course are extremely detailed and they are fairly rigid. That is because the UCC was designed to effectuate the free flow of commerce and protection of both parties under a set of rules that must be rigid to accomplish the goals of free commerce and protection.

To assist foreclosure defense attorneys and pro se litigants I offer my take on application of UCC rules to residential foreclosures. As to my foundation for doing so I offer the following: I was the winner of the American Jurisprudence book award in law school for bills and notes; I was deeply involved on wall street with the actual trading of bills and notes; I was the original drafter of hundreds of deals involving bills and notes; and I have spent 43 years litigating cases involving bills and notes.

GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================

Confusion arises because of references to holder in due course. A holder in due course is one who purchases a note for value in good faith and without knowledge of the borrower’s defenses. If such a transaction actually occurred it would be difficult in this context to say that the buyer was not acting in good faith or knew of the borrower’s defenses.

Here is a key rule to guide all foreclosure litigation: As long as the judge thinks that the sale of the home will be used to pay the down the borrower’s debt to a party who owns the debt the court will find any possible way to rule for the party claiming rights to foreclose.

The converse is equally true — after step by step takedown of the evidence of the claimant — no judge will knowingly allow a claimant to force the sale of a home where the proceeds are more likely than not going to be used for profit rather than paying down the debt.

Most losing attempts are based upon the premise that there is a way to block the remedy. Most winning defenses are based upon the premise that there is no remedy because there is no claim and there is no claimant.

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So if good faith and knowledge are off the table that leaves payment of value. As a practical matter payment of value would be translated as purchase of the debt, rather than simply purchase of the note. In today’s context there is an actual question about that but for now just consider the purchase of the note to be the purchase of the debt IF the seller of the note owned the debt.
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That is where the analysis gets dicey. In most cases, but not all, the purchase of the note was not actually a purchase of the debt because the seller may have had ownership of the note but had not paid value or otherwise possess ownership of the debt.
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You can ONLY acquire the debt by payment of money to the owner of the debt (or an agent authorized to accept payment on behalf of the owner of the debt). The job of defense counsel  is to show that the opposition refuses to disclose the identity of the creditor (owner of the debt) thus blocking the defense and the court from confirming that the authorization is real. That refusal should either be taken as an admission against interest or it should be the basis for a motion in limine (or trial objection) to bar the claimant’s proffer of evidence of authority at trial.
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The UCC governs how these paper instruments and their enforcement are governed. In all events the mere delivery of the original note is sufficient under most circumstances to raise the legal presumption that the delivery was intended to convey ownership of the note and the rights to enforce it. Exceptions exist but there is case law that even a thief could sue to enforce the note, although  with any defense the thief would lose at trial. Their possession of the note would be sufficient to establish standing to sue, but not, as some courts have done, establish standing at trial.
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Thus almost anything gives a party claiming possession of the note, the right to sue to enforce the note. That doesn’t mean they have the right to enforce the mortgage because in order to do that they must show that they paid value for the debt, that they paid it to the owner of the debt and that the debt was transferred to them.
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It also doesn’t mean that they will win at trial because possession is insufficient to establish a prima facie case. They must show the right to enforce and that is where the mythical securitization claims get in the way of truth. The right to enforce means by definition that someone who owns the debt has authorized one or more intermediaries to enforce the note on behalf of the owner of the debt,  and the authorization allows the intermediary to sue in its own name, leaving the question of how to divide the proceeds up to the real parties after the litigation is over.
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The problem has been that the courts are presuming that such an owner of the debt exists rather than asking for disclosure as part of the prima facie case. So what foreclosure defense lawyers are all complaining about is that they are stuck with an undisclosed creditor suing through intermediaries who claim they are authorized but whose authority cannot be challenged or tested.
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Without that, neither the court nor the borrower has any way of knowing that if the suit is successful the proceeds will actually go towards paying down the debt. In fact, the reverse is true. Another party could emerge afterwards and claim that he had no knowledge of the previous parties claiming authority, and that those parties had no authority and that they didn’t have the real original note. Such a party could also get a judgment against the maker of the note unless the borrower could show some sort of apparent authority of the thieves who first sued him.
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So since the debt must be owned and in most instances, but not all, the payment of value for the debt and the delivery of the promissory notes makes the buyer a holder in due course, the shorthand way of referring to that is saying that the enforcer of the mortgage or deed of trust must be a holder in due course, even if that is not completely and always accurate. A holder in due course, by law, takes the note free from borrower’s defenses except where outright fraud is involved and can be proven.
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So references to the effect that in order to enforce the note you must be a holder in due course are wrong. You can enforce a note without being the holder in due course.
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And while there are presumptions that enforcement of the note is the same as enforcement of the debt, that is ONLY true if the enforcer owns the debt — i.e., has paid value. It is the legal presumption to the contrary that trips up defense lawyers.
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And references to the effect that only a holder in due course can enforce the mortgage are mostly true; it remains possible for someone to pay value for a note without becoming a holder in due course because the note was already declared in default, because they were not acting in good faith ro because they had knowledge of the borrower’s defenses. So not being a holder in due course is not a total bar to enforcement of the mortgage or deed of trust.
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The wrong turn on the road to justice and truth, was where the courts decided that standing to sue was the same thing as standing in a prima facie case and then the other turn, where they treated the holder of a note under the same rules as a holder in due course. This resulted in discounting or completely ignoring the borrower’s defenses and the judicial recitation echoed across the country that the loan was made, the borrower stopped payment, the rest is bullshit.
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Foreclosure defense attorneys all understand that the deck is stacked against them. Yet they still win cases because they cast considerable doubt by undermining the assumption that the case is brought by an injured party (owner of the debt) who will suffer further financial injury of the property is not sold, and whose collection of the proceeds of sale will go to pay down the debt. They are successful when they reveal the gaps in the prima facie case through discovery and cross examination and properly placed timely objections at trial.
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As a summary of my premise that has been expounded upon throughout this blog for 12 years, here is the reason why foreclosure defense works if properly applied.
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The actual creditors (owners of the debt) change over time. In securitization it starts with the investment banker.
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The sale of certificates is not a sale of any right, title or interest to the debt, note or mortgage, all of which is retained by the investment bank. It is in the sale of “contracts” to subsequent investors who are betting one or or another on the success of the certificates that the rights of ownership of the debt have been sold.
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So by the time foreclosure comes up, the entire chain is missing the actual creditors. Neither the certificate holders nor the owners of contracts have any rights to enforce the note or mortgage.
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So the investment bank controls the paper but cannot enforce the mortgage because it has sold the debt and the investors cannot  enforce the mortgage because they have waived the right, title and interest to enforce the note or mortgage.
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Hence in the many successful foreclosures the proceeds are retained by the investment bank legally in accordance with their contracts, and booked as trading profit rather than as payment on a receivable they hold on their books as reported to the public and regulatory authorities. That is because they do not hold the receivable on their books of account.
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This is not an indictment of securitization. It is a description of how claims of securitization were false. Borrowers have no role in creating this mess.

Common Sense Prevails: SCOTUS Broadens Primary Liability for Fraudulent Schemes

For quite some time, the courts have struggled with the concept of primary liability for a lying liar and secondary liability for a liar who passes on the lie knowing that it was a lie. Scotus, in the Lorenzo decision has now said that is a distinction without a difference.

It is not a secondary issue of aiding and abetting, it is a primary issue where the agent, employee, officer or representative of the liar is equally liable for the dissemination of a lie if they know it is a lie.

BUT you still need to prove intent to lie along with the other elements of fraud. A lie is not actionable if the recipient knew it was untrue or should have known or did not rely upon it. If the lie is not material then it is presumed to belie upon which nobody relied.

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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see https://www.morganlewis.com/pubs/supreme-court-adopts-broad-interpretation-of-primary-liability-in-sec-antifraud-case

See Lorenzo v. Securities and Exchange Commission

The interesting part of this decision is that it is parallel to false securitization claims where various lawyers, servicers and others say things that are lies to mislead the recipient of such information into thinking that the trust has assets that everyone who knows, knows that the trust doesn’t have those assets (i.e., loans).

Justice Breyer writes:

Petitioner Francis Lorenzo, while the director of investment banking at an SEC-registered brokerage firm, sent two e-mails to prospective investors. The content of those e-mails, which Lorenzo’s boss supplied, described a potential investment in a company with “confirmed assets” of $10 million. In fact, Lorenzo knew that the company had recently disclosed that its total assets were worth less than $400,000.

Some quotes from an article (see link above) on this highly important decision:

In a decision beneficial to the US Securities and Exchange Commission, the US Supreme Court has affirmed that those persons who disseminate statements containing material misrepresentations or omissions are primarily liable for such misstatements even if they did not directly make them.Private securities litigants will likely rely on Lorenzo v. SEC to assert claims against secondary actors—including bankers, lawyers, and accountants—who disseminate statements made by others that they allegedly know are materially misleading, and the Commission is now clear to charge such persons as primary violators without demonstrating that the person who actually made the statement also violated federal securities laws.
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the Court endorsed the SEC’s approach to scheme liability against those who distribute materially misleading statements with scienter, regardless of whether they are actually the maker of the statements. By holding that a nonmaker can still violate Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, it is expected that private securities litigants will rely on Lorenzo to assert claims against secondary actors who, with scienter, disseminate alleged misstatements made by others. Lorenzo may also further embolden the Commission to allege primary violations against “gatekeepers” and others who did not make the alleged misstatements, but are nonetheless alleged to have been involved in their dissemination.
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At the request of his supervisor, Lorenzo, an investment banker, sent two emails that he did not draft to prospective investors. Lorenzo’s supervisor provided the content of the two emails, which Lorenzo merely copy and pasted into his own emails. Lorenzo then transmitted the emails and included his signature block with a note that he could be contacted with any questions, but also stated in each email that he had sent it at the request of his supervisor. Although Lorenzo did not draft the content of the emails, the Commission found he acted with intent to defraud because he knew some of the content was false or misleading when he sent them.
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Before Lorenzo, the Janus and Central Bank decisions seemed to impose strict limits on claims brought by private plaintiffs. The Supreme Court’s new decision affirms that those who disseminate misstatements can commit a primary violation of Rule 10b-5, rather than just a secondary aiding and abetting violation, for which there is no private right of action. Accordingly, Lorenzo may curtail the effect of Janus and Central Bank, and could be interpreted to mean that a secondary actor (e.g., banker, lawyer, accountant) may, under similar facts, be held primarily liable under a scheme liability theory.[19]
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It will therefore be left to lower courts to determine how far Lorenzo—which on its face appears to limit primary liability to “those who disseminate false statements with intent to defraud”—will stretch primary liability in private actions, if at all. Indeed, plaintiffs will still be required to plead with particularity that the “nonmaker” had such an intent.

Begging to Lose Money? Think About It!

There are two morals to this story. First always use a legal and financial adviser if you are about to make the largest investment of your life. Second, there is no such thing as boilerplate or standard clauses.

So you have a “lender” who is offering to lend you money, even though you have trash credit and no visible means of support, at a very low rate and they offer to further reduce the monthly payments for as much as five years, and they are paying wild commissions and salaries to everyone involved while spending hundreds of millions of dollars just to get your signature. And good news the appraisal came in $20,000 higher than expected so you already have “equity!”

Some of the rates have been as low as 2% or even less in certain cases. Many if not most of the loans in certain classes were nearly certain to fail. Yet onward and upward the banks persisted in driving up the money supply and raising housing prices like the tulip craze back 400 years ago.

It was all coming from Wall Street investment banks who caused the 1929 crash. The investment banks made money lending money like that starting around 1996. The loans failed and still they made money. They didn’t need the bailout but they took it anyway.

So I ask you to consider the fact that the investment banks were indeed making a lot of money on 2% loans. How? By selling your signature, your name and your financial reputation all without disclosure or even a wink at getting your consent. That’s because they don’t want to share the bounty with you. They didn’t just make money. They practically invented a printing press without the need for physical printing. All the contracts, all the notes, all the mortgages, all the closing documents exist only in digital images and data.

So those 2% loans, even though they failed, made about $20 for every dollar loaned. And that’s the dirty secret they are hiding behind the “free house” myth that most people believe.  And now, adding insult to injury, they want your house too, even though the proceeds of sale will not be used to pay down the debt.

 

Why Homeowners Should Win Foreclosures: It’s the Moral Thing to Do.

The reason why thousands of cases have been confidentially settled with satisfactions of mortgages, payment of attorney’s fees and damages is that the banks are willing to pay anything necessary to preserve the tree (certificates) and the branches (derivatives) and the leaves (minibonds and contracts like credit default swaps). The risk to the investment bank is enormous if the tree falls. All that profit turns into liability. Borrowers and their attorneys miss the point when they value the case based upon the principal due or the amount of arrearages. The banks don’t actually care about that because they already recovered that money long ago — after the loan closing.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================

The currently prevailing view is that the foreclosure presumably results in the payment of a debt to a creditor who is owed the debt and would otherwise suffer a financial loss. A lot of forensic material is interesting but does not address this fundamental bias. I think the fundamental error committed by most borrowers and their attorneys is not understanding the practice of securitization — PLUS not taking time to analyze the timeline of ownership.

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The Judges are right when they say “you got the loan didn’t you?” In most cases the answer is yes. At the moment that the money from the loan was paid to or on behalf of the borrower a definable creditor existed. It may have been the “lender” or not. But someone advanced those funds and they would be construed as the creditor at the time of the loan closing. That doesn’t include MERS or any sham conduit and certainly does not include entities posing as lenders when they did not legally exist.
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The error by foreclosure defense attorneys is the failure to continue the analysis. Most of them feel a little guilty about getting a free house, attorneys fees and damages for someone who had “defaulted” on their loan. That guilt is traceable to a belief that someone is getting cheated out of money that they loaned. That belief is misplaced.
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After the loan closing the debt is split up into many pieces. If you speak with closing agents who will candidly admit that they now know something was amiss, the fake securitization scheme is hatched in the shadows of what happens after the loan closing. It can be seen in the “Return to” instructions and the instructions to the closing agent of where to fax the note and where to send the original note for   shredding. According to several closing agents I interviewed it was the the mortgage broker who came in and signed the “allonge” creating facially valid bearer paper. This was all done after closing.
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Before the loan closing the prospect of the debt is split up into many pieces. Within 30 days after origination or acquisition of the loan by the investment bank, the loan is not on the balance sheet as an asset because the investment bank has already been paid off by investors who waived their right, title or interest to the debt, note or mortgage. At that point in time nobody has the loan as an asset on their balance sheet. 
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There are dozens of entities that have advanced the money by which the investment bank was able to remove the loan from its balance sheet. None of those entities owns rights to enforce the debt but all of them have either equitable or legal rights to ownership of the debt, without the right to enforce.
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The laws requiring that the debt owner must be present for enforcement of an encumbrance (deed of trust or mortgage) are breached if the debt owners are not named; but more importantly perhaps is the fact that enforcement in their name would reveal in discovery that they had no rights to enforcement because they explicitly waived those rights.
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The derivative contracts held by investors derive their value from the existence of the debt and the debt certainly does exist. So for trading purposes that is all they need. But they have disclaimed severed the legal right to demand collection, declare a default or initiate foreclosure. This is what protected the investment bank from liability for selling the debt multiple times.
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A foreclosure initiated by a servicer or Trustee or Trust or group of investors fails to comply with applicable law and should fail. None of them actually own the debt directly and none of them have the right to enforce the debt. But that is not the real reason they should fail.
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They should fail because all of them have received a benefit and some of them have received a windfall derived from trading on the borrower’s signature on the note and mortgage in an amount far exceeding the principal amount loaned. The bulk of the windfall was received by the investment bank who was the original creditor of the new or acquired loan.
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And those “benefits” or trading profits” were derived strictly because they were trading on the signature of the borrower, together with the borrower’s name and reputation, without disclosure to the borrower of compensation to be received arising from the origination of the loan and without consent from the borrower to trade on his/her name, signature and reputation.
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Contrary to popular belief, it really is that simple. If there was no signature from the borrower, none of the trades could have occurred, and none of the sales of certificates could have occurred.
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To give a free house to the investment bank via an empty nonexistent trust represented by a “trustee” with no trustee duties and a servicer whose authority derives from the nonexistent trust is to add insult to injury. Most of the foreclosed loans have been the result of “refinancing” wherein hard sell salesmen convinced borrower’s that their home was worth twice what they thought it was worth and gave them a loan based upon the artificial price rather than the real value. When the market crashed none of the risk associated with this practice was absorbed by the investment banks that set it in motion. All of it was forced on borrower’s who believed the lender’s appraisal.
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The goal of the investment bank as creditor was not to make money on a loan but to make money by trading in “securities” whose value was derived from the existence of the loan — all without actually granting the normal rights to title and interest to the debt, note and mortgage. This preserved the right to sell the same debt multiple times.
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It is this fundamental undeniable fact that most people are missing when they litigate or even negotiate modifications. The bank’s ONLY concern is the preservation of the appearance of the loan as the base to a virtual tree and branches of derivatives that were traded in which the investment bank was not only relieved of any risk, but in which the investment bank received “trading profits” equal to many times the amount loaned. Those trading profits turn into liabilities for the investment bank if the tree is cut down.
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All foreclosure litigation is thus a high stakes game for the banks who continue to conceal their true motives and intent. When foreclosures are granted and the property is sold the money goes to the investment banker who simply keeps the money rather than crediting it to any other party who has paid the investment banker for the debt. This happen because paying off everyone would mean paying many times the principal amount of the debt and many times the allegedly accrued interest. Investors actually know this and don’t care because the value of their “Securities” is based upon market valuation in the shadow banking market where all values take on a life of their own.
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The reason why thousands of cases have been confidentially settled with satisfactions of mortgages, payment of attorney’s fees and damages is that the banks are willing to pay anything necessary to preserve the tree (certificates) and the branches (derivatives) and the leaves (minibonds and contracts like credit default swaps). The risk to the investment bank is enormous if the tree falls. All that profit turns into liability. Borrowers and their attorneys miss the point when they value the case based upon the principal due or the amount of arrearages. The banks don’t actually care about that because they recovered that money long ago.
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Given the fundamental breach of the lender’s obligation to make a viable loan, it seems like quackery to then give the investment bank, who is no longer a creditor, a free house and the proceeds of sale. Given the trading on the borrower’s signature,, name and reputation without disclosure much less consent, it seems like outright theft to reward them with a house or the proceeds of foreclosure.
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While some blame can be attributed to the borrowers for not being more careful the Federal and State lending statutes make it clear that the duty of creating a viable loan is squarely on the “lender,” who in most cases was nowhere to be seen. This problem was solely invented by the banks without any input from prospective  borrowers or regulators.
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In a perfect world the blame would be shared proportionately according to the level of blame. It’s not the fault of borrower’s that the world of foreclosures is imperfect. Millions of homeowners did not wake up some morning and go to a meeting where it was decided to screw the financial system. We all know it was the other way around. Until that is addressed voters will continue their anger because they know it too.
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This scheme was conceived in the context of a belief that they could get away with it and so far, they have in all but a few thousand cases in which the borrower’s have mounted an aggressive defense revealing gaps in the claimant and gaps in the claim. The painful truth is that most people who left their keys on a clean kitchen counter were  delivering a free house to a band of thieves who had already screwed them several times.

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