Livinglies's Weblog

You could be up to date in all your payments. Your billing proves it. And yet, the person (Mr. Investor) who loaned you the money for your mortgage is not getting the payments. This person steps forward and says you owe all the payments from the date of the loan, including interest, late payments, late fees, attorney fees and costs.He’s saying you owe the money all over again. Ridiculous, right? Not so fast…..

So you say well, here is the notice I received as to where to make payments and you produce a copy. Here are my canceled checks and you produce a copy. You even took the time to write in the memo section the loan number and the month to be credited. In fact, you sent extra checks to prepay the mortgage.

So the true lender says he never received the money. And he says that the mortgage servicer you have been paying had no authority to collect those payments. And he mentions that if you made a prepayment, there is a penalty for doing that and so you owe still more money. And you say, how was I supposed to know that?

Good question, but the scenario might just play out that way. An investor might come forward and you might be able to successfully defend against prior payments that you made but which were not forwarded to him because you had no notice of the change in title of the loan — in legal language of the real holder in due course. But now here he is and produces all the proof necessary to show that he put up the money for the loan on your house.

So as to future payments, you definitely owe him, if the mortgage is valid. As to past payments he might have a claim against people who intercepted your payments and diverted them to the wrong SPV or asset backed security or maybe they just pocketed it for “fees.”

Now you get a lawyer who has read this blog or my upcoming book, Homeowner’s War, and says that you have valid defenses and can rescind the loan for fraudulent and deceptive lending practices, disclosure violations and common law fraud among other things. If the investor was unaware of the actions giving rise to your claims then you only have set off up to the amount due on the loan. The rest of your claim would be against the other people in the chain of securitization. If the investor DID know of the actions giving rise to your claims at the time he made his investment, then he is not a holder in due course either. Then there is the question of what happens if you know the investor is out there but he doesn’t step forward.

And this is the answer to the rhetoric about a windfall to borrowers. Your claim alleges no such thing. It just might end up that way because in the chaos and flood of money and documents during 2001-2008 nobody can find Mr. Investor, but that is not your fault and that doesn’t mean you owe the money to the current mortgage servicer.

Every payment you make might well be the subject of liability to the investor for the same payment. And every payment you don’t make might be completely covered by AMBAC, swap options, other insurance, or the reserve pool established in the SPV. If the holder in due course received the payments, there is no default. If there is no default, there is no basis for the foreclosure.

And if the Trustee posted a notice of sale knowing about the securitization of the loan, he breached his fiduciary duty to you. In fact, you ought to be writing to the Trustee asking who owns your note, mortgage or Deed of Trust, where you can in touch with him, it, or them, and where he is getting his instructions from and maybe ask for a copy of his authority so you can determine if he is answering to the correct party.

Then you might want to add that if the Trustee knew about all this and failed to share his knowledge with you, his knowledge might be attributed to you as your trustee or your agent, and that your payments to the mortgage servicer were therefore knowingly made (by legal definition) to the wrong party. Thus you would get no credit for them. So you would want to tell this Trustee that he should forward a copy of your letter to his errors and omissions insurance carrier because you are going to make a claim for any payments that were made to the wrong party. You might also want to mention that this is an obvious cloud on your title and that it is up to him to clear it up or pay for the entire costs of clearing your title.

Filed under: CDO, Eviction, foreclosure, GTC | Honor, Mortgage | Tagged: AMbac, default, errors and omissions insurance, foreclosure offense, holder in due course, reserve pool, trustee deed |