Foreclosure Offense and Defense for Borrower’s and Their Lawyers

Start with GARFIELD’S GLOSSARY ABOVE: HERE IS ARE SOME OF THE RECENT ADDITIONS TO THE GLOSSARY AND TACTICAL CONSIDERATIONS:

Deed of Trust
An instrument signed by a borrower, lender and trustee that conveys the legal title to real property as security for the repayment of a loan. The written instrument in place of mortgage in some states.

AS APPLIED THE CREATION OF THE TRUSTEE AND THE POWERS GRANTED TO THAT TRUSTEE (AND LATER APPLIED) PROBABLY VIOLATE THE DUE PROCESS REQUIREMENTS OF BOTH THE U.S. CONSTITUTION AND THE APPLICABLE STATE CONSTITUTION WHICH ORDINARILY ADOPT IDENTICAL OR NEARLY IDENTICAL LANGUAGE REGARDING DUE PROCESS. THE ABILITY TO POST A SALE NOTICE, ESPECIALLY UNDER THE MORTGAGE MELTDOWN CONTEXT, PROBABLY ALSO VIOLATED THE FIDUCIARY OBLIGATION OF THE TRUSTEE GIVING RISE TO A CLAIM FOR DAMAGES FROM THE BORROWER, THAT IS ORDINARILY COVERED BY THE ERRORS AND OMISSIONS INSURANCE POLICY COVERING THE TRUSTEE. See Non-Judicial sale, Default, Asset Backed Security (ABS).

Default — PRIMARY DEFENSES IN MORTGAGE FORECLOSURE ACTIONS AND BANKRUPTCY ACTIONS:

SEE APPRAISAL, SPECIAL PURPOSE VEHICLE (SPV), STRUCTURED INVESTMENT VEHICLE (SIV), ASSET BACKED SECURITY (ABS)

In a conventional mortgage transaction, a mortgage is in default when any of its terms are breached. While there are cases where the default consists of compromising the security (e.g. failure to insure — favorite among predatory lenders who “force place” insurance at exorbitant rates without just cause), the most common default claimed is in the event that the borrower fails to make the payments as agreed to in the original promissory note.

In the Mortgage Meltdown context, the entire concept of default has been redefined by

(1) disengagement of the borrower’s obligations from the security instrument and note

(2) substitution (novation) of parties with respect to all or part of the risk of default

(3) substitution (novation) of parties with respect to the obligations and provisions of the security instrument (mortgage) and promise to pay (promissory note)

(4) merger of mortgage obligations with other borrowers

(5) addition of third parties responsibility to comply with mortgage terms, especially payment of revenue initiated in multiple mortgage notes and

(6) a convex interrelationship between

(a) the stated payee of the note who no longer has any interest in it

(b) the possessor of the note who is most frequently unknown and cannot be found and therefore poses a threat of double liability for the obligations under the note and

(c) cross guarantees and credit default swaps, synthetic collateralized asset obligations and other exotic equity and debt instruments, each of which promises the holder an incomplete interest in the original security instrument and the revenue flow starting with the alleged borrower and ending with various parties who receive said revenue, including but not limited to parties who are obligated to make payments for shortfalls of revenues.

It may fairly be argued that there is no claim for default without (1) ALL the real parties in interest being present to assert their claims, (2) a complete accounting for revenue flows related to a particular mortgage and note including payments from third parties, sinking funds, reserve funds from proceeds of sale of multiple ABS instruments referencing multiple portfolios of assets in which your particular mortgage and note may or may not be affiliated and (3) production of the ORIGINAL NOTE (probably intentionally destroyed because of markings on it or other tactical reasons or in the possession of an SIV in the Cayman Islands or other safe haven.

In ALL cases, including recent ones in Ohio, New York, Maryland and others, it is apparent that the “lender” is either not the lender or upon challenge, cannot prove it is or ever was the lender. Wells Fargo definitely engaged in the practice of pre-selling loans upon execution of loan applications rather than assignment AFTER a loan had actually been created. In nearly all cases the Trustee or MERS or mortgage service operation has no knowledge of where the original note is, has no interest in the note or mortgage, and has no knowledge of the identity, location or even a contact person who could provide information on the real parties in interest in a particular mortgage note.

The “clearing and settlement” of “sale” or “assignments’ of mortgages, notes, ABS instruments and collateral exotic derivatives whose value is derived from the original ABS of the SPV which received representations from an unidentified SIV (probably off-shore).

The abyss created in terms of identifying the actual owner of the mortgage and note was intentionally created to avoid liability for fraudulent representations on the sale of the derivative securities to investors. The borrower’s signature on an application or closing documents was part of the single transaction process of the sale of ABS unregulated security instruments to qualified investors based upon fraudulent appraisals of (1) the underlying real property, (2) the financial condition of the “borrower” and (3) the securities offered to investors.

Thus the claim of “default” is by a party who has no standing to assert it, no knowledge to prove it, no possession of the original note, and no authority to pursue it. IT IS FOR THIS REASON THAT THE SCHEDULES FILED IN BANKRUPTCY SHOULD NEVER NAME THE ORIGINATING LENDER AS A SECURED CREDITOR FOR A LIQUIDATED AMOUNT. THE “LENDER” MAY BE EFFECTIVELY BLOCKED FROM GETTING RELIEF FROM STAY IF (A) THE SCHEDULES DO NOT SHOW THE CREDITOR AS A SECURED CREDITOR AND INSTEAD SHOW THE CREDITOR AS AS NOMINAL PARTY THAT MIGHT ASSERT A CLAIM FOR AN UNLIQUIDATED AMOUNT AND (B) THE SCHEDULES SHOULD SHOW JOHN DOE ET AL AS PERSONS, ENTITIES OR PARTIES THAT MIGHT ALSO EXPRESS AN INTEREST IN THE BORROWER’S BANKRUPTCY ESTATE FOR AN UNLIQUIDATED AMOUNT SUBJECT TO RESCISSION REMEDIES UNDER TILA, STATUTORY LAWS, COMMON LAW AND SECURITIES LAWS, AND SUBJECT TO REFUNDS, REBATES AND DAMAGES.

IT IS ALSO FOR THIS REASON THAT WE RECOMMEND THAT JOHN DOE BE SUED FOR QUIET TITLE AND SERVED BY PUBLICATION, NAMING ALL KNOWN PARTIES WHO WOULD EXPRESS AN INTEREST, NONE OF WHOM CAN PRODUCE A SINGLE ALLEGATION OR PIECE OF EVIDENCE SUPPORTING THEIR LEGAL STANDING OR LEGAL COMPETENCY AS WITNESSES.

One Response

  1. Hi,
    I had a line of credit with Wamu, I faced some financial struggles and was unable to make payments on my loan, they now served me with forclosure papers. On the summons it states they are asking the court to reestablish a promossory note, since they lost the original.
    The amount they show I owe them it’s incorrect. They attaced a copy of what was recorded in the clerks office with my signature on it. Can they forclouse on my home without showing the original note ?
    Thank you for your help !

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