Foreclosure Defense: Impact of Bank Failures

I have been thinking about this as the questions pile in. Here are my thoughts so far —

1. Be careful with the Lehman bankruptcy and any other bankruptcy filing by one of the financial services companies that was even tangentially related to the process of the securitization of mortgages. Bankruptcy law has some features that are not apparent or even comprehensible to layman and even many lawyers who do not regularly practice in bankruptcy court. If you even hear that a company went bankrupt, you should consult with a competent bankruptcy practitioner in your area and ask him whether you need to file a proof of claim or some other paper that tells the Federal Court where the bankruptcy was filed that you have claims and defense regarding your mortgage and note, that you do not intend to waive them, and that if anyone buys our note or mortgage they take it subject to your claims and defenses.

2. How this might affect your claims and defenses. The burden is still on the party seeking to foreclose on your mortgage. They must allege that they are the lender, the holder of the note and that the note is in default, subject to acceleration pursuant to the terms of the mortgage indentures and the terms of the note. As with any other situation involving foreclosure if you snooze you lose. Do nothing and the Court is allowed to and required to assume and proceed as though you have no claims or defenses. Do nothing and your house will be sold at auction and then you will be scrambling to set the sale aside, which has been done, as we have reported here, but it sure makes your position more precarious than if you act proactively before anything happens.

  • ASSUME NOTHING AND CHALLENGE EVERYTHING: Just because a letter was sent out declaring a default doesn’t mean that the person who signed it knew anything about the account or that they were properly authorized to send it, or even that their company was the proper party to declare the default, or, even that their company knew or had performed any due diligence to determine if payments to teh true holder in due course )holders of mortgage backed securities) had been paid by co-obligors acquired as the loan went up through teh chain of securitizarion.

3. Proof and evidence: The failure of a bank and the takeover by another bank creates several opportunities for borrowers that did not exist before, if you know how to navigate the system. The time is NOW to act proactively, get your audit done, announce rescission, demand satisfaction of your mortgage and note, and to file for quiet title.

4. You ALWAYS want to keep the burden on the “lender” or those claiming through the “lender.” Do everything you can to keep the burden on THEM to produce the note, produce ALL the assignments that show proper chain of title on the note and mortgage, and produce the Assignment and Assumption of Mortgage Agreement(S), and the Pooling and Service Agreement(s).

5. Thus far it appears as though there in only ONE set of master agreements executed by the lender, the mortgage aggregation and the trustee of the pool of assets. The date of these agreements will almost always precede the date the date the mortgage and note came into existence and will without exception predate the date of default. For lawyers, this presents a number of arguments that can be used to throw the other side into disarray as to what assignment, if any, was valid, and whether they were hiding third parties at the loan closing (violation of TILA) and whether they were hiding third party payments at closing (TILA violation).

6. It also gives you grounds for saying that since the REAL lender was not disclosed, the three day rescission right continued up to and including the date when the REAL lender was disclosed. Either they disclose the REAL lender and then you have all your remedies against both the pretender lender and the real lender (probably unchartered as bank or lender and even unregistered as business to do business in the state) or they don’t disclose it and you push the issue of non -disclosure by demanding the records of the mortgage servicer and the mortgage originator and the title/escrow agent to track where the money came from and where it went after closing.

7. LAWYERS TAKE WARNING: First of all remember that the competency of a witness contains four elements (oath, perception, memory and communication) and that proof can only be offered upon a proper foundation. It is here where these overnight mergers, the firings of thousands of people, and the locations of records is going to be a real challenge to the lenders.

8. DO NOT TAKE LENDER AFFIDAVITS FOR GRANTED. THEY ARE MOST LIKELY OUTRIGHT FRAUD, FORGED, OR SIGNED BY SOMEONE WITH DUBIOUS AUTHORITY. IN ALMOST ALL CASES EVEN IF THE AUTHORITY is established by a competent witness though the presentation of a proper foundation, IT IS SIGNED WITHOUT ANY PERSONAL KNOWLEDGE — WHICH IS WHY I MENTION THE ELEMETNS OF COMPETENCY OF A WITNESS AND PROPER FOUNDATION. THIS IS BASIC BLACK LETTER LAW. YOU CAN WIN, NOT MERELY DELAY CASES. AND YOU CAN DO THEM ON CONTINGENCY FEES THAT WILL ENABLE YOU TO EARN SUBSTANTIAL FEES THAT YOUR CLIENTS WILL HAPPILY PAY.

6 Responses

  1. Nice post. I like the part about produce-the-note. I live in Tampa and know one person he helped, and it actually worked. Well it did not work like some of the newspapers reporting, but they did get new terms that were very favorable and they were able to avoid foreclosure. It really varries by situation and probably the laws of your state on how far this goes. This site has all the videos they have done. Watch all the videos here:

    http://tinyurl.com/bozo2d

  2. quick question if a trustee conducting a foreclosure was also the lenders attorney in a bankruptcy, wouldn’t that be conflict of interest?

  3. This website has been a great help to me. people who are in foreclosure. To people like Mario ,Linda , Libr99, Tim Cotten and let’s us not forget Neil I want to thank you immensely for treating me with respect and most of all honesty. Even though my time is numbered in my home I am going forward to file a complaint against the bank who foreclosed on my home. In addition, I reveiwed my foreclosure documents only to find that the bank said they recorded the servicer in the County clerks office. The personal who made this merit of affivdavit stated in the documents that the mortgage was assigned to Homecomings. There is no record of it in the county register. Neither in the foreclosure documents.
    However, there are people who frequent this site who are unscrupulous. Please be mindful. I was caught by an individual who said they could help me. If they have no legitimate business do not deal with him/her. They are seeking to make a quick buck on the poor. I will keep everyone up to date. To those who are in the struggle keep on fighting!

    susan

  4. This question is based on the California statutes listed below.

    When sending the Letter of Rescission, could you also have that Notice Recorded based on the statutes below??

    After your home has been sold to the previously “unknown” or “supposed” Lender, could the Borrower file a Notice of Recission based on the statutes below based on fraud??

    A cloud on the title will certainly guarantee your a day in court!!

    Constructive notice is notice that is imputed by law. If an instrument is recorded pursuant to a statute that makes the effect of the recording constructive notice, all persons so designated by the statute will be charged with knowledge of the contents of the instrument, unless the instrument is void, fraudulent, outside the chain of title, invalid, or not entitled to be recorded. But if an instrument not entitled to be recorded is recorded, its recordation will constitute actual notice to one who has seen it in the record; and if an incorrect instrument is recorded, its recordation gives constructive notice to subsequent purchasers and encumbrancers if the instrument is accurate enough to put the subsequent purchaser or encumbrancer on inquiry as to its inaccuracies. In order to give constructive notice to third persons, a document that affects an interest in real property must be recorded in the county where the land is situated.

    Cal Gov Code 27280.
    Instruments and judgments recordable; Change in ownership statement

    (a) Any instrument or judgment affecting the title to or possession of real property may be recorded pursuant to this chapter.

    Cal Gov Code � 27280 (2008)

    Where a person had been fraudulently induced to convey her property, and shortly thereafter a notice of rescission of the conveyance upon the ground of fraud, undue influence, and want of consideration, was served upon the grantee and recorded, the recordation of such notice was authorized by this section. Dreifus v. Marx (1940, Cal App) 40 Cal App 2d 461, 104 P2d 1080, 1940 Cal App LEXIS 131.

    Dreifus v. Marx, 40 Cal. App. 2d 461

    Quieting Title–Deeds–Fraud–Rescission–Notice–Recordation–Statutory Construction. –In this action to cancel a deed of trust and to quiet title, where plaintiff, who was aged and infirm, was fraudulently induced to convey her property, and shortly thereafter a notice of rescission of the conveyance upon the ground of fraud, undue influence and want of consideration, which described the real property involved and was signed and acknowledged by plaintiff, was served on the grantee and recorded, the recordation of said notice was authorized by section 1158 of the Civil Code, and was sufficient to give constructive notice of a defect in the grantee’s title to defendant, who subsequently accepted a deed of trust on the property from said grantee as security for a loan.

    In said action, the failure of the trial court to find that defendant had notice of the failure of consideration for the conveyance as well as of fraud, duress and undue influence was immaterial, where constructive notice of the service of notice of rescission was notice of all of the contents of such writing.

    In said action, where defendant, before his negotiations for the loan were concluded and before the escrow was completed, learned that a title company had refused to insure the title to the property “because there was some discrepancy over the deed or something”, and he made no effort to determine the nature of the discrepancy, the facts of which defendant had knowledge were such as to put a person of ordinary prudence upon inquiry, and defendant was negligent in failing to take notice or discover the defect in the title, and was required to bear the loss occasioned by his own negligence.

    Sal

  5. What happens if your home ‘s value was inflated to get a refi done and the home is not worth the amount you borrowed?

  6. My beloved WAMU is gone.

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