GOOD QUESTION ON WHO DO YOU OWE MONEY TO

QUESTION:

I needed to know what the following means, from my Trustee’s Deed Upon Sale … specifically the last part that reads “as Trustee for Mastr Adjustable Rate Mortgages 2004-15, Mortgage Pass-Through Certificates, Series 2004-15“. JP Morgan Chase was my Lender prior to my last re-fi in September 2004, which was done thru RBC Mortgage Company [as listed on my Deed of Trust as my Lender]. The Bank of New York I’m assuming is/was my Lender after my payments began going to GMAC [as their service provider] in December of that same year. That being said, they “skipped” a link in the chain [RBC Mortgage Company] … which I do not think they can deny or get around. They never recorded an Assignment to that effect. Except … that last section, specifically “Mortgage Pass-Through” has me a bit concerned. Is that trying to establish a link directly from JP Morgan Chase Bank to The Bank of New York ?? On my Public Records, the transactions shows myself as the Grantor, and RBC MTG CO. and also MERS as the Grantees. Trustee’s Deed Upon Sale doc attached.
The Bank of New York Trust Company, N.A., as successor-in-interest to JP Morgan Chase Bank, N.A., f/k/a JP Morgan Chase Bank, as Trustee for Mastr Adjustable Rate Mortgages Trust 2004-15, Mortgage Pass-Through Certificates, Series 2004-15“.

ANSWER:

Interesting questions posed by this. First the conveyance without covenant or warranty which makes it what we call a quit-claim deed in Florida. It conveys whatever interest the grantor has but does not guarantee that the grantor has any interest. This in itself means that the parties understand that there could be a title issue. The fact that the full amount was paid is also suspicious. Why would anyone pay 100 cents on the dollar for this mortgage and note. Even in a normal market, there would be some variance up or down. Watch out for the word “lender”. The “lender” is the one who lent you the money at the loan closing. In fact, the lender on your paperwork is a pretender lender whose name and charter was borrowed or rented by an undisclosed party for an undisclosed fee (both of which are TILA violations). Any subsequent party claiming an interest in the mortgage, note or property would be called something else. If someone claims to have ownership of the note they are called the holder. If they claim to have ownership of the note free and clear of any defenses, then they claim they are a holder in due course.

But here is the rub — by the very nature of the way they “pooled” these notes, the note lost its individual identity under the express terms of the pooling and services agreement (something that Carol Asbury noted before I did). What that means is that the revenue from the note was made part of a larger promise to pay, under which the payments under one note could be effectively applied to another note where the payment was not made. This was even more expressly provided when the pool was assigned in different parts to the Special Purpose Vehicles, that issued certificates to investors in which the investors thought they were buying triple AAA cash equivalent securities backed by mortgages and notes that were, according to the sellers of the certificates negotiable.

But a negotiable note is ONLY a note where there is an unconditional promise to pay. The pooling with the aggregator, the placement of parts of the pool into tranches (divisions) of the SPV (corporation that issued the certificates of mortgage backed securities). In this case the obligation was created by the funding of the loan. The source of the loan was an undisclosed party. That party was calling the shots, including the terms of the note that it needed to justify the presale (selling forward, which means selling what you don’t have “yet”) of the asset backed securities. With the pooling agreement at the aggregator (loan wholesaler) level combined with the re-pooling at the SPV level the note was converted from an unconditional promise to pay to a conditional promise to pay — i.e., if you didn’t pay your note, it is quite possible that a third party could and in fact did pay part or all of the payments or the principal of your note. The presence of insurance, credit default swaps, bailouts from the U.S. Treasury and Federal reserve indicate that the only party who could possibly claim to be holder in due course has been paid in part or in full and yet they continue to foreclose on property — hence the term “Fraudclosure.”

You are therefore left with two extremely high probabilities to the point of being, in my opinion, virtually certain: (1) the named lender on your loan documents was paid in full contemproaneously with your loan closing and (2) the note was negotiated despite the fact that it was non-negotiable. This leaves the “lender” on your closing documents in the position of (a) having been paid in full and probably not even taking the loan on is balance sheet and (b) lacking an argument that it “negotiated” (Sold) the note to a third party. If the note was not sold and the lender received payment in full, neither the obligation nor the security (mortgage) exists by operation of law entitling the homeowner to file a lawsuit to quiet title on his property.

For those claiming the homeowner is seeking a windfall — that isn’t true. The homeowner admits to signing a note but is merely saying that the party claiming rights to foreclose, and any party acting in furtherance of that claim is acting ultra vires (without authority, right, or justification). To do otherwise would cause the unjust enrichment of a party seeking to obtain ownership of property despite the fact that the party seeking foreclosure has already been paid in full, plus fees. Which is the windfall — a homeowner who got hoodwinked by deceptive and predatory lending practices or a thief who already got paid and now wants the property too?

And from Cesar Silvas:

The bank of New York claims to be the Trust. The Trust of securitized mortgages must qualify as a holder in due course or qualify as having the rights of a holder-in-due-course. In order to prove that they are the holder-in -due-course they must physically possess the note (a custodian could be used to hold note). To be holder in due course, there must be proper endorsement to the trust. This mean that there must be proper endorsement from the originating lender to the wholesale lender to the issuer, and finally from issuer to the trust. However, the Trust may not be able to produce the note and thus will show some paper (usually a forgeries) in order to claim to be holder-in-due-course. Another claim they may raise is that trust have the “rights” of a holder-in-due-course. I think that a good line of defense against claims of having the “rights” of a holder-in-due-course can be that a party cannot acquire rights if it engaged in fraud or illegality affecting the instrument. Example, issuer cannot acquire “rights” of a holder from wholesale lender if issuer engaged in fraud (U.C.C.§ 3-203 (b)).

There was Fraud in the Factum since securitizations often are involved. The truth is that there was fraud in the factum. The Defendants filings with the Securities and Exchange Commission (SEC) shows interconnected and affiliated parties that aided and abetted a pattern of fraud by the originating lender and, thus, trust cannot acquire the rights of a holder-in-due-course per U.C.C.§ 3-203 (b). To use participation theories, we must show that financial institutions providing lending capital for a predatory lending scheme are dictating loan terms or, at least, are aware of the predatory characteristics of the loans (England v. MG Investments, Inc., 93 F. Supp. 2d 718 (S.D. W.Va 2000)).

Such information may be found in the 8K and 10K filings with the SEC. For example, a federal district Court held that the Wall Street underwriters (Lehman Bros.) for a predatory lender could be liable to injured consumers on an aiding and abetting theory where consumer allege that the underwriter knew of the lenderʼs fraud and provided substantial assistance to the lenderʼs scheme (Aiello v. Chisik, 2002 U.S. Dist. Lexis 5858 (C.D. Cal. Jan. 10, 2002) ). Proving such a fraud can be a good defense to fight a trust’s claims to be holder-in-due-course or claims of having the “rights” of holder-in-due-course.

4 Responses

  1. […] good-question-on-who-do-you-owe-money-to […]

  2. I have been reading this site for days now trying to see if you have a solution to my problem, which is at closing no one signed my note there is no other name on my note but mine how can I find out who my lender is? my Servicer is Chase Fannie Mae is my investor but who is the lender how do I start without a sigature?

  3. Neil, Cesar … this is pure gold. Thank you both !!

    Steve
    San Diego, Calif.
    99Libra@gmail.com

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