Foreclosure Defense: How They Did it

One new answer we are getting when we ask for the identity of the real holder in due course of the note is “that information is confidential. You are not entitled to that.” Of course this is ridiculous — if you signed a note and it has been “assigned” to some third party, you have a right to know where to send your payments and to whom. There is no confidential status under any law or theory, legally, morally or ethically. And you have the right to know if the holder in due course is getting paid if there is a mortgage servicer involved. And if there is a mortgage servicer, you have a right to know whether they are indeed authorized to make collections — authorized by the real holder of the note, whoever that might be.

Lawsuits in Texas and other states indicate that the distribution reports to investors are vague at best and outright fabrications in other cases.

All of this brings us back to how they did it. How did they sell a $300,000 mortgage for $1 million and get away with it? And what happened to all that money? ANSWER: They sold the same mortgage over and over again. That is called fraud. They put the loan documents in pools that were described in tables that were impossible to decipher. See dsvrn.6m.d.htm .

They were able to do this and make it “work” because they wanted and pressured the lenders to give them the worst loans possible carrying the highest interest rates possible with the most onerous terms for prepayment etc. that were possible to insert. That is because these loans were made with a note bearing an interest rate of 16% or more but they were put into pools of assets that contained a few real loans, thus bringing the average STATED return on investment to perhaps 6-8%. This was a fictitious return because none of the 16% loans were paying anything other than zero or teaser rates.

Even though the pool contained numerous loans on homes that were appraised at 50% over market, and terms wherein the “borrower” was paying nothing to nearly nothing on the loan for the first few months or years, the loan went into the pool as a “performing loan” (because nothing was expected from the borrower) and sold as though the 16% income ($48,000 on a $300,000 note) was being paid. An unsuspecting investor would put up perhaps $750,000 to buy certificates for the $48,000 in income, especially if it was insured and carried a AAA rating. There is a $450,000 profit on a $300,000 loan — available to the investment banker only if the the loan was toxic waste (Z tranche) classified as such because there was no chance whatsoever that it could ever be repaid.

But wait there is more. If you assign the $48,000 fictitious income into multiple parts (say $8 parts of $6,000), you could assign the same note to eight different pools. In other words they were selling the same note multiple times. If you and I did that we have free room and board courtesy of the state or federal government in a prison of their choosing. But on this scale, despite the clear presence of two sets of victims that were coerced, deceived, cheated and misled (borrowers and investors) the bailout went to the thieves instead of the victims.

What this means to foreclosure defense is that your defense goes far beyond the “where’s the note” strategy. It goes to whether the note has been paid in full and whether there are multiple parties (investors) who are equity holders in the note and perhaps even the mortgage, all of whom have at least an arguable right to collection — totaling perhaps 300%-500% of your loan amount. It means that your payments probably went into the wrong pockets. It means that even if you made no payments, they probably paid the investor anyway out of reserves, overcollateralization, cross collateralization or one of several insurance products.

The reason the note is gone in most cases (destroyed in 40% of all cases) and lost in most other cases is that the terms of the note do not match up with the description that went up line in the securitization process. That leads to only two possible conclusions:

Either the note was separated from the mortgage making the secured obligation into an unsecured obligation thus voiding the power to foreclose OR the “assignments” were invalid because they were undated or otherwise defective leaving the mortgage and note intact — but PAID in full. Either there are assignees out there who have rights to the note obligation or there are not assignees with any rights.

If there are assignees with rights, you need to know who they are, how they got the loan, and whether they are proper holders and if they are still holders in due course and if the seller of your mortgage sold the same deal to other assignees.  And if so whether your payments or someone else’s payments were properly or improperly allocated to your account — not at the mortgage servicer level but much higher up at the level of the Trustee for asset backed securities series AAAA2007. You find that in the distribution reports. And if it isn’t there you find it through discovery asking for explanations of exactly where the payments went, who got them and why, along with proof of deposits and how they wer entered on the books of the receiving party.

If there are not assignees with rights, then the case is simple it is defended by one word: PAYMENT. They were paid in full by a third party, plus an undisclosed fee (TILA violation) for “borrowing” the lender’s license in a “table funded loan” where the agent (mortgage aggregator) of the investment banker, directed by the CDO Manager (Collateralized debt obligation manager) reached around the apparent lender and placed the money on the table to fund your loan. The apparent lender’s name was put on the note and mortgage. Why? Because they wanted to qualify for all the exemptions that apply to banks and lending institutions even though those institutions were not making the loans.

The apparent lender was paid a fee for 2.5% for pretending to underwrite the loan, perform due diligence, confirm the appraisal, confirm the viability of the transaction, confirm the affordability and benefits etc. The lender did no such thing. Brown’s lawsuit brought by the Attorney general of California, shows that the people doing the underwriting were under quotas that amounted to approving 70-80 loans PER DAY. 10,000 convicted felons were recruited in Florida to become LICENSED mortgage brokers. A virtual army of people were given scripts and amrching orders to get those loans signed no matter what they had to offer or what lie they had to tell.


Bottom Line: Go Get Them. They don’t have the goods and can’t produce them because if they do produce them it may be an admission of criminal fraud.

Check with local counsel before taking any action or deciding on any course of action in your particular case. This is general information only.

15 Responses

  1. We live in Pollock Pines Ca. converted our construction loan to a Green Point DEED/ note in 2002 with MERS as benificary. Our loan was sold to Countrywide[ no record recorded ] and then B of A ?
    We also have a 2nd. with Wilshire[ no record ] all of these co. together have lost our loan modification doc. 4 times…we have a fixed 8.2% first & 10.5%…we stopped making payments on purpose until they could prove that they own our home[ they don’t have our note] Once we kept pushing to produce we got foreclosed upon by Recontrust who said they had rights from the benificary MERS & Servicing co. B of A. & also tacked on over $50,000 in fees. We are in a non-juducial state and now broke> I have uncovered the fraud and took it to our local DA who was so confuesed he said he couldn’t help us> so we have no choice but to go to the media to expose…see my picket on youtube> type in HOME OWNER PICKETS…that’s me Mike Williams> The news has told my story> the local paper will not because B of A & DA are clients>>>the good news is we have a group of lawyers now ready to file a Civil case to help us expose the chain of fraud> we are demanding a jurory> Now we find that our loand was sold to over 5 investors on wall street 7 yrs. ago. None of these transactions are part of our records! Our home is worth $100,000 less than what we owe. We are asking for our home free! and damages! and all legal fees! and will have the media on our side to expose. Has anyone used an Ombious Motion?
    would love to heat from you to my e-mail… Mery x-mas.

  2. you are absolutly right, I am suing Wells Fargo bank do to an invalid assignment. they requested a summary disposition, I am doing this pro per and i got to file a response in less than 5 days. I donot know the format for filing a responsee, maybe you could give me
    some suggestions. thanks, my phone number is 248 254-2948. thanks

  3. Interesting Question: Why would a second trust deed holder pursue a trustee sale? My first trust deed is current (enough) but I’ve had to stop paying my second trust deed in order to pay my first. Now they are threatening foreclosure but no NOD filed yet. It has been 8 months since I’ve paid them.

    If the second trust deed were to go to sale wouldn’t they have to take back the property subject to the first? Currently there is enough equity in the home to cover the first but only a fraction of the second trust deed. As the market continues to slide it makes no sense to pursue a sale and right of security.

    First T.D. is with Greenpoint for $370,000 and the second is a HELOC with WAMU for $185,000. The home’s value is approx. $425,000.

    The only choice I seem to have is to stop all payments and allow the home to foreclose, continue to pay the first T.D. only until the second does ??? or sell the home and pay off the first and ask for a short sale on the 2nd. Any suggestions?

    Also, Greenpoint informed me today that they are selling many, many of their loans to Countrywide. They are unable to assist me due to their staff working on packaging up the loans for sale. Intersting.

  4. Object to the substitution

  5. Curious to see if anyone has an answer.
    We filed a Motion saying there was no standing. Just the other day the attorneys for the Plaintiff filed a Motion to Substitue Plaintiff.

    This doesn’t seem right to me. First of all the attorneys are representing the original Plaintiff, the Trustee for the Security. Now they claim to be representing the “new” plaintiff.

    There was never an assignment from the original lender to the security. But by virtue of the fact that they originally stated that the loan was in the Security are they not admitting to defrauding the investors? Is this also not fraud on the court by the attorneys?

    Any comments would be appreciated.

  6. But do not forget that the Lenders had software that was able to scan and place your original signature on these notes.I suggest you get the Promissory notes examined by a signature specialist.

  7. I am NOT a lawyer and I am NOT giving legal advice, I am telling you what worked for me. Since most of the attorneys will not admit to helping their client commit fraud or of being in a joint venture, which, they are. If you ask them for a retainer contract, they will send you a signed affidavit telling you what a “law firm should get paid by a plaintiff” but not a RETAINER. To ge them to admit anything you want, send them a TACIT PROCURATION letter. Ask questions and give them 10 days to answer and when they refuse to answer, follow it up with a TACIT PROCURATION TO CURE, meaning now send them the same questionnaire back but only this time with your answers and ask them to object to answers and also give them 10 days to respond. They will not. The same thing applies if they send you a copy of the note and if you don’t object, the court sees it as an admission on your part. Use their rules and their game to win. In your answer specify to them that you are not interested in affidavits, you want solid proof. Affidavits are nothing more than junk. If you get an assignment of mortgage is also junk. The assignment never has any evidence of it being real, so question it, ask them to produce the signatory. Deny, deny, deny. If not sure about an answer, DENY it. You need to save on your desktops the Civil Rules of Procedures in your county, state. When in doubt of any allegation, Google it. You will get enough information on how to proceed. These tactics worked for me. If after you send in your answer you get back from the attorneys a “Summary Judgment” motion, you are winning. They know they have no standing to proceed to therefore, they are asking the court to disregard your answer and rule in their favor. If that happens, object to the motion and at the same time file your motion for “Summary Judgment”. You must object to everything coming from them. Some lawyers will send you a “Motion to Strike” but if you look closely the motion will talk about a complete different subject than your summons. They want you to set aside since it doesn’t pertain to you. BE careful, it might have a copy of a note attached and if you don’t OBJECT, the note is yours. Always Google everything before you answer. You’ll only lose if you give up. God bless

  8. does anyone have a link or info about hte lady in tennessee that was forclosed on the first time by someone that did not own the note, then sued for flroclsure a second time by the real note holder?

  9. Anyone?….. Normaly i would be asking my Lawyer but it seems like everytime I call him to talk about the case he just asks me if i paid him this month and puts his secratary on the phone also I gave him all my original Load docs to copy off and he has yet to return them. I just recieved 2 letters from litton one an adjustment notice and the other saying they may or may not have already started foreclosure proceedings, after I told them Don’t send that here send it to my Lawyer .

  10. What if the Chapter 7 Trustee deems a party to be the proper “lender” even though there are no papers that prove they are the owner of the mortgage and in fact a title search shows to contrary. That “party” who caused you to file the 13 and then it be converted to a Chapter 7.
    That “party” agrees to pay the Chapter 7 Trustee $100,000 for
    “deeming” them the proper party.
    Court has already found that the house has “significant” equity – I believe approximately $300,000 in equity.

  11. Home foreclosed in Oct 07 & sold to Mortgage Company Trustee Nov 07; We’re still living in the home; Did a (1)Motion to Stay Execution of Writ of Possession and (2)Motion to Vacate Final Summary Judgment indicating defenses that was never mention before (Fraud & TILA Violations-Judgment is Void); Apr 08 Filed a copy of the Notice of Rescission Letter into State Court Case; Players(Mortgage Co., Trustee & Attorney) did not respond after 20 business days. Sent a non-responsive (default) letter players still did not reply; Sent a demand letter, players still did not reply. What should be my next move w/this rescission? State case is still open judge has not ruled on my two motions that was filed in May 08. Filed Chapter 7 Bankruptcy in Bankruptcy Court have had the creditors meeting, now we have a preliminary hearing Tues., Nov 4. The Mortgage Co is asking to have the automatice stay lifted. Do you know if the Bankruptcy case will have any bearing on the State Open Case? Is there anything I need to do or tell the judge in the Bankruptcy Case in reference to the Open State Case and/or Rescission?. We did tell the trustee that we will surrender the home if need, based upon the State Court Judge decision.

    Is there anyone that can help me with this issue? I am Pro Se.

  12. Questions… I sent Litton Loan a VOD dispute certified notice they claim they didn’t get until a later date but anyhow they sent me back a packet of papers (copies of the trust deed transaction history), but no proof of assignment and a letter talking about confidential license information. In the transaction history dated the aleged assignment it says “New Loan No Cash”…. Wouldn’t that mean they Themselves financed a loan to pay off my debt without securing any obligation to me? Also doesn’t them sending billing statements trying to collect without providing proof of assignment Violate the FDCPA?

  13. re: The apparent lender’s name was put on the note and mortgage. Why? Because they wanted to qualify for all the exemptions that apply to banks and lending institutions even though those institutions were not making the loans.

    this is what happened to me, the real lender allinace funding aka superior bank, could not make the loan under the alternative parity act
    so it got a pa bank to front for it, when you say
    all the exemptions what other ones are there?
    I have filed a quiet tiitle action against emc mortgage, so the info would be helpful.

  14. Something to consider…My “lender’s” attorney firm sent me a copy of the original promissory note as “verification of the indebtedness”; however, I have used their own “awareness” of the terms of this promissory note to point out areas where “their client” (since they are claiming their client’s right to foreclose) has not complied/ breached the agreement. One area of my promissory note specifically states, “All notices given by Borrower or Lender in connection with this Security Instrument must be in writing.” I have asked them for proof of all assignments from my original “lender” named on my promissory note as well as proof/ identity of the current holder-in-due-course of my note since the note specifies that all notices in connection to the note must be in writing…

  15. Simply unbelievable … the levels these banks and so-called lenders have sunk to !! Unbelievable that they could have conceived of it in the first place, and unbelievable that they actually thought they’d never get caught in the act. Well, now they have … but sadly, not until many of us have already lost our homes. These bastards deserve to go to the Guantanimo Bay Hilton right alongside Al Qaeda.

    San Diego, Calif.

Contribute to the discussion!

%d bloggers like this: