submitted by NY

Interestingly, with the exception of Judge Bufford and a few other judges, there has been less than adequate focus upon the UCC title issues. The next round of cases may and should focus upon the title to debt instrument. The person seeking to enforce the note must show that:

(1) It is the holder of t his note original by transfer, with all necessary rounds;
(2) It had possession of the note before it was lost;
(3) If it can show that title to the note runs to it, but the original is lost or destroyed, the holder must be prepared to post a bond;
(4) If the person seeking to enforce is an agent, it must show its agency status and that its principal is the holder of the note (and meets the above requirements).

Then, and only then, do the issues of evidence of debt and default and assignment of mortgage rights become relevant.




APRIL 3, 2009



In an era where a very large portion of mortgage obligations have been securitized, by assignment to a trust indenture trustee, with the resulting pool of assets being then sold as mortgage backed securities, foreclosure becomes an interesting exercise, particularly where judicial process is involved. We are all familiar with the securitization process. The steps, if not the process, is simple. A borrower goes to a mortgage lender. The lender finances the purchase of real estate. The borrower signs a note and mortgage or deed of trust. The original lender sells the note and assigns the mortgage to an entity that securitizes the note by combining the note with hundreds or thousands of similar obligation to create a package of mortgage backed securities, which are then sold to investors.

Unfortunately, unless you represent borrowers, the vast flow of notes into the maw of the securitization industry meant that a lot of mistakes were made. When the borrower defaults, the party seeking to enforce the obligation and foreclose on the underlying collateral sometimes cannot find the note. A lawyer sophisticated in this area has speculated to one of the authors that perhaps a third of the notes “securitized” have been lost or destroyed. The cases we are going to look at reflect the stark fact that the unnamed source’s speculation may be well-founded.


If the issue were as simple as a missing note, UCC §3-309 would provide a simple solution. A person entitled to enforce an instrument which has been lost, destroyed or stolen may enforce the instrument. If the court is concerned that some third party may show up and attempt to enforce the instrument against the payee, it may order adequate protection. But, and however, a person seeking to enforce a missing instrument must be a person entitled to enforce the instrument, and that person must prove the instrument’s terms and that person’s right to enforce the instrument. §3-309 (a)(1) & (b).


Enforcement of a note always requires that the person seeking to collect show that it is the holder. A holder is an entity that has acquired the note either as the original payor or transfer by endorsement of order paper or physical possession of bearer paper. These requirements are set out in Article 3 of the Uniform Commercial Code, which has been adopted in every state, including Louisiana, and in the District of Columbia. Even in bankruptcy proceedings, State substantive law controls the rights of note and lien holders, as the Supreme Court pointed out almost forty (40) years ago in United States v. Butner, 440 U.S. 48, 54-55 (1979).

However, as Judge Bufford has recently illustrated, in one of the cases discussed below, in the bankruptcy and other federal courts, procedure is governed by the Federal Rules of Bankruptcy and Civil Procedure. And, procedure may just have an impact on the issue of “who,” because, if the holder is unknown, pleading and standing issues arise.


Article 3 governs negotiable instruments – it defines what a negotiable instrument is and defines how ownership of those pieces of paper is transferred. For the precise definition, see § 3-104(a) (“an unconditional promise or order to pay a fixed amount of money, with or without interest . . . .”) The instrument may be either payable to order or bearer and payable on demand or at a definite time, with or without interest.

Ordinary negotiable instruments include notes and drafts (a check is a draft drawn on a bank). See § 3-104(e).

Negotiable paper is transferred from the original payor by negotiation. §3-301. “Order paper” must be endorsed; bearer paper need only be delivered. §3-305. However, in either case, for the note to be enforced, the person who asserts the status of the holder must be in possession of the instrument. See UCC § 1-201 (20) and comments.

The original and subsequent transferees are referred to as holders. Holders who take with no notice of defect or default are called “holders in due course,” and take free of many defenses. See §§ 3-305(b).

The UCC says that a payment to a party “entitled to enforce the instrument” is sufficient to extinguish the obligation of the person obligated on the instrument. Clearly, then, only a holder – a person in possession of a note endorsed to it or a holder of bearer paper – may seek satisfaction or enforce rights in collateral such as real estate.

NOTE: Those of us who went through the bank and savings and loan collapse of the 1980’s are familiar with these problems. The FDIC/FSLIC/RTC sold millions of notes secured and unsecured, in bulk transactions. Some notes could not be found and enforcement sometimes became a problem. Of course, sometimes we are forced to repeat history. For a recent FDIC case, see Liberty Savings Bank v. Redus, 2009 WL 41857 (Ohio App. 8 Dist.), January 8, 2009.


Judge Bufford addressed the rules issue this past year. See In re Hwang, 396 B.R. 757 (Bankr. C. D. Cal. 2008). First, there are the pleading problems that arise when the holder of the note is unknown. Typically, the issue will arise in a motion for relief from stay in a bankruptcy proceeding.

According F.R.Civ. Pro. 17, “[a]n action must be prosecuted in the name of the real party in interest.” This rule is incorporated into the rules governing bankruptcy procedure in several ways. As Judge Bufford has pointed out, for example, in a motion for relief from stay, filed under F.R.Bankr.Pro. 4001 is a contested matter, governed by F. R. Bankr. P. 9014, which makes F.R. Bankr. Pro. 7017 applicable to such motions. F.R. Bankr. P. 7017 is, of course, a restatement of F. R. Civ. P. 17. In re Hwang, 396 B.R. at 766. The real party in interest in a federal action to enforce a note, whether in bankruptcy court or federal district court, is the owner of a note. (In securitization transactions, this would be the trustee for the “certificate holders.”) When the actual holder of the note is unknown, it is impossible – not difficult but impossible – to plead a cause of action in a federal court (unless the movant simply lies about the ownership of the note). Unless the name of the actual note holder can be stated, the very pleadings are defective.


Often, the servicing agent for the loan will appear to enforce the note. Assume that the servicing agent states that it is the authorized agent of the note holder, which is “Trust Number 99.” The servicing agent is certainly a party in interest, since a party in interest in a bankruptcy court is a very broad term or concept. See, e.g., Greer v. O’Dell, 305 F.3d 1297, 1302-03 (11th Cir. 2002). However, the servicing agent may not have standing: “Federal Courts have only the power authorized by Article III of the Constitutions and the statutes enacted by Congress pursuant thereto. … [A] plaintiff must have Constitutional standing in order for a federal court to have jurisdiction.” In re Foreclosure Cases, 521 F.Supp. 3d 650, 653 (S.D. Ohio, 2007) (citations omitted).

But, the servicing agent does not have standing, for only a person who is the holder of the note has standing to enforce the note. See, e.g., In re Hwang, 2008 WL 4899273 at 8.

The servicing agent may have standing if acting as an agent for the holder, assuming that the agent can both show agency status and that the principle is the holder. See, e.g., In re Vargas, 396 B.R. 511 (Bankr. C.D. Cal. 2008) at 520.


For those of you who are not familiar with the entity known as MERS, a frequent participant in these foreclosure proceedings:

MERS is the “Mortgage Electronic Registration System, Inc. “MERS is a mortgage banking ‘utility’ that registers mortgage loans in a book entry system so that … real estate loans can be bought, sold and securitized, just like Wall Street’s book entry utility for stocks and bonds is the Depository Trust and Clearinghouse.” Bastian, “Foreclosure Forms”, State. Bar of Texas 17th Annual Advanced Real Estate Drafting Course, March 9-10, 2007, Dallas, Texas. MERS is enormous. It originates thousands of loans daily and is the mortgagee of record for at least 40 million mortgages and other security documents. Id.

MERS acts as agent for the owner of the note. Its authority to act should be shown by an agency agreement. Of course, if the owner is unknown, MERS cannot show that it is an authorized agent of the owner.


This structure also possesses practical evidentiary problems where the party asserting a right to foreclose must be able to show a default. Once again, Judge Bufford has addressed this issue. At In re Vargas, 396 B.R. at 517-19. Judge Bufford made a finding that the witness called to testify as to debt and default was incompetent. All the witness could testify was that he had looked at the MERS computerized records. The witness was unable to satisfy the requirements of the Federal Rules of Evidence, particularly Rule 803, as applied to computerized records in the Ninth Circuit. See id. at 517-20. The low level employee could really only testify that the MERS screen shot he reviewed reflected a default. That really is not much in the way of evidence, and not nearly enough to get around the hearsay rule.


In a foreclosure proceeding in a judicial foreclosure state, or a request for injunctive relief in a non-judicial foreclosure state, or in a motion for relief proceeding in a bankruptcy court, the courts are dealing with and writing about the problems very frequently.

In many if not almost all cases, the party seeking to exercise the rights of the creditor will be a servicing company. Servicing companies will be asserting the rights of their alleged principal, the note holder, which is, again, often going to be a trustee for a securitization package. The mortgage holder or beneficiary under the deed of trust will, again, very often be MERS.

Even before reaching the practical problem of debt and default, mentioned above, the moving party must show that it holds the note or (1) that it is an agent of the holder and that (2) the holder remains the holder. In addition, the owner of the note, if different from the holder, must join in the motion.

Some states, like Texas, have passed statutes that allow servicing companies to act in foreclosure proceedings as a statutorily recognized agent of the noteholder. See, e.g., Tex. Prop. Code §51.0001. However, that statute refers to the servicer as the last entity to whom the debtor has been instructed to make payments. This status is certainly open to challenge. The statute certainly provides nothing more than prima facie evidence of the ability of the servicer to act. If challenged, the servicing agent must show that the last entity to communicate instructions to the debtor is still the holder of the note. See, e.g., HSBC Bank, N.A. v. Valentin, 2l N.Y. Misc. 3d 1123(A), 2008 WL 4764816 (Table) (N.Y. Sup.), Nov. 3, 2008. In addition, such a statute does not control in federal court where Fed. R. Civ. P. 17 and 19 (and Fed. R. Bankr. P. 7017 and 7019) apply.


These cases are arranged by state, for no particular reason.


In re Schwartz, 366 B.R.265 (Bankr. D. Mass. 2007)

Schwartz concerns a Motion for Relief to pursue an eviction. Movant asserted that the property had been foreclosed upon prior to the date of the bankruptcy petition. The pro se debtor asserted that the Movant was required to show that it had authority to conduct the sale. Movant, and “the party which appears to be the current mortgagee…” provided documents for the court to review, but did not ask for an evidentiary hearing. Judge Rosenthal sifted through the documents and found that the Movant and the current mortgagee had failed to prove that the foreclosure was properly conducted.

Specifically, Judge Rosenthal found that there was no evidence of a proper assignment of the mortgage prior to foreclosure. However, at footnote 5, Id. at 268, the Court also finds that there is no evidence that the note itself was assigned and no evidence as to who the current holder might be.

Nosek v. Ameriquest Mortgage Company (In re Nosek), 286 Br. 374 (Bankr D Mass. 2008).

Almost a year to the day after Schwartz was signed, Judge Rosenthal issued a second opinion. This is an opinion on an order to show cause. Judge Rosenthal specifically found that, although the note and mortgage involved in the case had been transferred from the originator to another party within five days of closing, during the five years in which the chapter 13 proceeding was pending, the note and mortgage and associated claims had been prosecuted by Ameriquest which has represented itself to be the holder of the note and the mortgage. Not until September of 2007 did Ameriquest notify the Court that it was merely the servicer. In fact, only after the chapter 13 bankruptcy had been pending for about three years was there even an assignment of the servicing rights. Id. at 378.

Because these misrepresentations were not simple mistakes: as the Court has noted on more than one occasion, those parties who do not hold the note of mortgage do not service the mortgage do not have standing to pursue motions for leave or other actions arising form the mortgage obligation. Id at 380.

As a result, the Court sanctioned the local law firm that had been prosecuting the claim $25,000. It sanctioned a partner at that firm an additional $25,000. Then the Court sanctioned the national law firm involved $100,000 and ultimately sanctioned Wells Fargo $250,000. Id. at 382-386.

In re Hayes, 393 B.R. 259 (Bankr. D. Mass. 2008).

Like Judge Rosenthal, Judge Feeney has attacked the problem of standing and authority head on. She has also held that standing must be established before either a claim can be allowed or a motion for relief be granted.


In re Foreclosure Cases, 521 F.Supp. 2d (S.D. Ohio 2007).

Perhaps the District Court’s orders in the foreclosure cases in Ohio have received the most press of any of these opinions. Relying almost exclusively on standing, the Judge Rose has determined that a foreclosing party must show standing. “[I]n a foreclosure action, the plaintiff must show that it is the holder of the note and the mortgage at the time that the complaint was filed.” Id. at 653.

Judge Rose instructed the parties involved that the willful failure of the movants to comply with the general orders of the Court would in the future result in immediate dismissal of foreclosure actions.

Deutsche Bank Nat’l Trust Co. v. Steele, 2008 WL 111227 (S.D. Ohio) January 8, 2008.

In Steele, Judge Abel followed the lead of Judge Rose and found that Deutsche Bank had filed evidence in support of its motion for default judgment indicating that MERS was the mortgage holder. There was not sufficient evidence to support the claim that Deutsche Bank was the owner and holder of the note as of that date. Following In re Foreclosure Cases, 2007 WL 456586, the Court held that summary judgment would be denied “until such time as Deutsche Bank was able to offer evidence showing, by a preponderance of evidence, that it owned the note and mortgage when the complaint was filed.” 2008 WL 111227 at 2. Deutsche Bank was given twenty-one days to comply. Id.


U.S. Bank, N.A. v. Cook, 2009 WL 35286 (N.D. Ill. January 6, 2009).

Not all federal district judges are as concerned with the issues surrounding the transfer of notes and mortgages. Cook is a very pro lender case and, in an order granting a motion for summary judgment, the Court found that Cook had shown no “countervailing evidence to create a genuine issue of facts.” Id. at 3. In fact, a review of the evidence submitted by U.S. Bank showed only that it was the alleged trustee of the securitization pool. U.S. Bank relied exclusively on the “pooling and serving agreement” to show that it was the holder of the note. Id.

Under UCC Article 3, the evidence presented in Cook was clearly insufficient.

New York

HSBC Bank USA, N.A. v. Valentin, 21 Misc. 3D 1124(A), 2008 WL 4764816 (Table) (N.Y. Sup.) November 3, 2008. In Valentin, the New York court found that, even though given an opportunity to, HSBC did not show the ownership of debt and mortgage. The complaint was dismissed with prejudice and the “notice of pendency” against the property was canceled.

Note that the Valentin case does not involve some sort of ambush. The Court gave every HSBC every opportunity to cure the defects the Court perceived in the pleadings.


In re Vargas, 396 B.R. 511 (Bankr. C.D. Cal. 2008)


In re Hwang, 396 B.R. 757 (Bankr. C.D. Cal. 2008)

These two opinions by Judge Bufford have been discussed above. Judge Bufford carefully explores the related issues of standing and ownership under both federal and California law.


In re Parsley, 384 B.R. 138 (Bankr. S.D. Tex. 2008)


In re Gilbreath, 395 B.R. 356 (Bankr. S.D. Tex. 2008)

These two recent opinions by Judge Jeff Bohm are not really on point, but illustrate another thread of cases running through the issues of motions for relief from stay in bankruptcy court and the sloppiness of loan servicing agencies. Both of these cases involve motions for relief that were not based upon fact but upon mistakes by servicing agencies. Both opinions deal with the issue of sanctions and, put simply, both cases illustrate that Judge Bohm (and perhaps other members of the bankruptcy bench in the Southern District of Texas) are going to be very strict about motions for relief in consumer cases.


The cases cited illustrate enormous problems in the loan servicing industry. These problems arise in the context of securitization and illustrate the difficulty of determining the name of the holder, the assignee of the mortgage, and the parties with both the legal right under Article 3 and the standing under the Constitution to enforce notes, whether in state court or federal court.

Interestingly, with the exception of Judge Bufford and a few other judges, there has been less than adequate focus upon the UCC title issues. The next round of cases may and should focus upon the title to debt instrument. The person seeking to enforce the note must show that:

(1) It is the holder of t his note original by transfer, with all necessary rounds;
(2) It had possession of the note before it was lost;
(3) If it can show that title to the note runs to it, but the original is lost or destroyed, the holder must be prepared to post a bond;
(4) If the person seeking to enforce is an agent, it must show its agency status and that its principal is the holder of the note (and meets the above requirements).

Then, and only then, do the issues of evidence of debt and default and assignment of mortgage rights become relevant.

73 Responses

  1. That is all about the holder enforcement of promissory note secured by real estate blog summary..thanks to share it..please keep sharing.

  2. There is nice to read this summery of real estate..that is really good to thank you and please keep that……..

  3. […] Now, I have no desire to get too deep into the weeds on agency law here (and I am not a lawyer), so let me try to be succinct.  In every case I have ever read (including my own), the servicers claim that they are but agents of their principals and that their principals are the holders (and/or owners) of the promissory notes, and that anything the servicers do is and legally must be at the behest of and with direction from their principals (i.e., the noteholders).  Judges also acknowledge this in every case I have read.  In fact, here is a short and sweet explanation of this matter by two judges from a 2009 article entitled “Where’s the Note? Who’s the Holder?“: […]

  4. I was in Cook County foreclosure court today re the bank trying to strike my affirmative defenses for a second time. The bank attorney told the judge she never received a copy of my response to their strike though my response was in her latest motion to dismiss! The judge would not allow me to speak on my behalf. The Judge gave me 28 days to re-enter and the plaintiff to respond. He set a hearing date on the matter for June. This Judge is clearly lying and aiding the Plaintiff. This is beyond the pale IMHO. Anyone have any suggestions in how to handle this matter? The judge told me to get an attorney. I believe they know they are caught and the judge is trying to protect the bank. I would love to have gotten this on tape.

  5. Pease help! I am the lender (and I have two signed promissory notes) for two different people. One has not made any payments to me in 22 months and the other in about 11 months. I live in Florida (as they both did when the loans were given and notes were signed). One of them has recently moved back to Fl ad the other lives in CT. They are both on social security disability. Please advise me of how to proceed at this point in time. Any suggestions would be appreciated. Thank you for reading my question. I do look forward to any responses from you. My email adress is:
    Thanks again!

  6. Everyone is missing the REAL POINT. What does depositor mean????? A negotiable instrument is MONEY. A cash item. YOU GAVE THE BANKS MONEY.
    You need to start getting offensive SUE FOR TROVER AND CONVERSION. There was no loan! It was a currency exchange like Dollars for Rupees except at par value.
    Get your money back. The usage of the term depositor is a confession of monetization.

  7. […] le lièvre du MERS (3) L’affaire MERS sur Objectif Liberté (art. 1, art. 2) (4) En anglais, rapport des juges Bufford et Ayers sur les insuffisances du MERS (5) En anglais, un résumé des problèmes posés par le système MERS, et notamment par son […]

  8. @ Alina

    Right on Rocker! I sense you will land on your feet. We are all experiencing such an intense transformation and transcendence in which our consciousness is expanding rapidly. Dark is being seen and our light is expanding. What I am wondering, in hopes that you do work with a law firm that gets it, is the establishment of games which work. So instead of the securitization, derivitative and credit default obligation crap, what about ‘free hold’ and allodial title?

    What about conscious communities?

    Please see my new site-

    I’ll continue to root for you.


  9. Thanks Bryan. I really love your enthusiasm and energy.

    I tell you, the one thing that irks me the most is when someone misrepresents a fact. I have worked as a paralegal for 20 years and the attorneys I have worked with have all been highly ethical. They know I have very little patience, as they do, for games.

    Unfortunately, I am not well-versed in real estate matters and even less in the whole securitization schemes. But I have learned a lot in the past year. Never thought I would be scammed.

    Ultimately, when my case has been resolved, I have been seriously considering looking for a job with a law firm that gets it.

  10. @ Alina

    Right on Alina! Give ’em hell and love ’em for being stupid, lying, apathetic, dismally lit dark bastards as well. 😉 I know it is frustrating to see and experience the judge and opposing counsel feeding the illusion. I pray you, I and our conscious friends on our site here bring more light to our court systems who then in turn bring light to our financial system and turn this whole Titanic around. And if it is anything other than an about face, how about a 33 degree turn to miss the iceberg.

    Keep rocking.
    I am head bobbin’ to your song.
    Because you Rock!


  11. Philip,

    I did not receive a Notice of Default and Intent to Accelerate before plaintiff filed their foreclosure suit. This was the very first thing on my Motion to Dismiss. After I presented my argument, the judge stated that he was not familiar with TILA or RESPA and could not rule on those issues. Also, he stated that my arguments concerning the Note should be raised as affirmative defenses. However, he was concerned that plaintiff did not meet the conditions precedent to instituting suit. That is when plaintiff’s counsel advised the court that they sent the Notice of Default and Intent to Accelerate as required in Paragraph 22 of the mortgage on July 21, 2008. I told the judge that I never received the letter. The judge asked why the letter was not attached to the complaint. Plaintiff’s counsel said that was not required. The judge then ordered plaintiff’s counsel to file the letter and send me a copy. The judge turned to me and told me that plaintiff has stated a claim upon which relief can be granted as it mailed the notice of acceleration so he denied my motion and ordered me to file an answer within 20 days.

    The letter plaintiff’s counsel sent me is dated July 21, 2006 and it is not a notice of acceleration. Strategically, what is my best move? Should I wait for plaintiff’s counsel to file the letter with the court? Should I file something now before the judge signs the order denying my Motion to Dismiss? How do I bring this to the court’s attention? I am not sure which is the best course of action.

    Plaintiff’s counsel is extremely sloppy, ill-prepared, and a liar. First, he failed to show for the hearing, then he misrepresented facts. Either he has never even looked at the closing documents or he is just apathetic.

    I know that any dismissal will most likely be without prejudice. But at this point, I am so angry with this attorney’s antics that I just want to give him hell.

  12. Phil S.

    A Certified copy of the note is all that is required in Massachusetts IF the servicer can provide proof of all of the assignments of the noteleading up to its current principal and allgged holder of the note.

    As far as the power of sale I agree, and that is why I made the objection that the security follows the obligation, and therefore to discuss the mortgage before proving its principal is the current holder of the note is putting the cart before the horse.

    I was dismayed at the Judge’s decision, and realize there is education to be done in the Commonwealth.

    The reason for my post is that I have read of lost note
    affidavits submitted by servicer, but not affidavits that the keeper of records isin possession of the original note.

    There are ways to counter the lost note affidavit, and I am at a loss on how to counter the affidavits that the keeper of records swears under penalty ofperjury that he/she is in possession of mgthe original note.

    This seems to be the new strategy cooked up by servicers, and so far I cannot overcome these affidavits.

  13. Glenn Russel

    Oh yeah I forgot absence of note would be effective if they can show proof that they did pay for it and at least had it at one time & haven’t sold it to anyone else.

  14. Alina

    If you have a copy of the late notice submit it as evidence. The judge should take notice to the difference & see that they tried to use shortcuts.

  15. Glenn Russel

    If the power of sale clause was all they needed to foreclose then you guys wouldn’t be in court. You could just as easily sign a sworn affidavit saying that you have the original note and provide a certified copy of it. ANYONE CAN GET COPIES OF ALL NOTES ALL YOU HAVE TO DO IS GET THEM FROM THE RECORDERS OFFICE. IT’S THE ORIGINAL OR NOTHING

  16. Today I received a copy of the alleged Notice of Default that plaintiff’s attorney told the judge during the hearing on my Motion to Dismiss had been mailed to me prior to the institution of the foreclosure suit. Well, it was actually a late payment letter mailed on July 21, 2006, not a Notice of Default mailed on July 21, 2008 as plaintiff’s counsel indicated.

    My question is this: The judge ordered plaintiff’s counsel to file the letter and mail a copy to me. Plaintiff’s counsel has not filed this with the court yet as there was no Notice of Filing. Should I wait until plaintiff’s counsel files the “breach letter?” What type of Motion can I file with the court to bring this to the Judge’s attention. This was the reason why the Judge did not grant my Motion to Dismiss.

  17. The same lawyers from the law firm where one of the authors practices are not following the very guidelines and requirements that were outlined by their fellow shareholder…what does that say for the other fellow shareholders? Clearly the author/former judge get’s it but why don’t his fellow partners at Langley and Banack who are now representing Wells Fargo?

  18. @ Russ

    Russ I agree with you. I think what you may be running into is the reluctance of Judges to side on the better part of valor, honesty and righteousness for the sheer fact of fear and laziness that by siding with you and arguments to force banks to produce notes will open the courts to a flood of people demanding notes and absolving mortgages. If there is any truth to something I read that 40% of all mortgage holders do have original notes, then this would mitigate filings, yet I strongly believe that most, if not all banks sell our promissory note and convert debt notes into negotiable instruments. Then once they become negotiable, our signatures and original paper gets sold into a black hole of derivatives. I wish you good luck and I do vote you victory.

  19. Once again I ask, has anyone run into the servicer offering up a sworn affidavi under the penalty of perjury, by the keeper of its records, that he she has the original note, and then the servicer provides a certified copy of same.

    This is taking place in Massachusetts (non-judicial foreclosure state)

    I recently have lost two foreclosure defense cases due to this fact, and in the latest one to add insult to injury the Judge bought the servicer’s argument that the servicer did not even have to produce the note, due to the power of sale

    This was over my objection that the security follows the obligation (not vice versa), so therefore to discuss the mortgage was putting the cart before the horse.

    One cannot discuss the security instrument, without establishing that it is indeed the holder of the obligation (note).

    Any comments would be greatly appreciated


  20. Here is a case in Federal Bankruptcy court that might assist. / Case No. 08-16601-RGM (Ch. 7) Abdul Moniem Gaffar and Rajaa Tahir Shibeika,

    PRELIMINARY HEARING – RELIEF FROM STAY on behalf of Wells Fargo Bank, NA as Servicer for HSBC Bank USA, National Association as Trustee for WFALT 2007-PA02 (13266 Query Lane, Woodbridge, VA);
    Debtors Response #12;
    Order Granting Relief #15 ,
    Entry #: 10
    Trustee: Gordon Peyton for Gordon Peyton
    Creditor: Eric White for Wells Fargo Bank, N.A., as Servicer for HSBC Bank USA, National Association, as
    Joint Debtor: Scott Donovan – Rajaa Shibeika
    Debtor: Scott Donovan

    Remeber – this sale of the asset so soon to an unknown name is probably a Real Estate Settlement Procedures Act (RESPA) violation; under a “Controlled Business Arrangement.”

    Please be sure to press this argument and investigate it. Your pleading should seek “Declatory Relief”.

    HUD’s Policy Statement on Sham Controlled Business Arrangements [Federal Register: June 7, 1996 (Volume 61, Number 111)] [Rules and Regulations] [Page 29258-29264]

    From the Federal Register Online via GPO Access [] DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT / 24 CFR Part 3500 [Docket No. FR-3638-N-04]

    Office of the Assistant Secretary for Housing-Federal Housing Commissioner; Real Estate Settlement Procedures Act (RESPA); Statement of Policy 1996-2 Regarding Sham Controlled Business Arrangements

    AGENCY: Office of the Assistant Secretary for Housing-Federal Housing Commissioner, HUD.

    ACTION: Statement of policy 1996-2, sham controlled business arrangements.

    SUMMARY: This statement sets forth the factors that the Department uses to determine whether a controlled business arrangement is a sham under the Real Estate Settlement Procedures Act (RESPA) or whether it constitutes a bona fide provider of settlement services.

    It provides an interpretation of the legislative and regulatory framework for HUD’s enforcement practices involving sham arrangements that do not come within the definition of and exception for controlled business arrangements under Sections 3(7) and 8(c)(4) of the Real Estate Settlement Procedures Act (RESPA). It is published to give guidance and to inform interested members of the public of the Department’s interpretation of this section of the law.


  21. This is a NY case
    Note and Mortgage signed March 2007
    Note to REMN of NJ
    Mortgage to MERS as nominee for REMN
    Interest rate 6.875%
    Note and Mortgage signed March 2007
    Note to REMN of NJ
    Mortgage to MERS as nominee
    Interest rate 9.250 % (paid off)
    Approx 3 weeks after the signing the Note it was transferred or sold to Wells Fargo N.A.
    The servicer is Wells Fargo Home Mortgage.
    On 12/12/08 Mortgage was assigned to HSBC Bank USA, National Association, as Trustee for WFALT 2007-PA02. The person who signed the transfer for MERS is an Attorney in the same law firm that is representing HSBC. . This was recorded on 12/26/08. In my research at SEC info HSBC is the Trustee for WFALT 2007-PA02
    On the same 12/12/08 , the summons and complaint were signed and recorded on 12/15/08. The complaint states that HSBC is the holder of the Note and Mortgage.

    Can anyone tell me who can bring the Foreclosure suit. Who is the Holder in Due Course. How did HSBC get the note. I thought they couldn’t hold a Note otherwise they would become a partner in the Trust.


  22. Challenges to the note are far greater and more in depth than merely the defendants right to demand evidence of the live note. With regards to the collateral and “live” note, the principal organization (holder in due course) and or Wall Street firm sponsoring the sub prime platform will provide specific requirements of the participants and the Trustee in every area of practice for a business.

    Remember, a promissory note is unenforceable by the holder unless consideration is given for the note. The promise to pay is offset by the interest in real property and the funds needed to make the obligation. But the assignment is not coming from the capital source and assignment is offered by the nominee on behalf of “Depositor” a Special Purpose Entity (SPV). I believe an endorsement in blank sits with the funding source and FSB as does the live note.

    Interrogatories should include a demand for policy and procedures in accordance with the custodial functions. So also ask to see the filing prospectus policy and procedures addressing the collateral documents.

    A first glance tells me if the information I read below is authentic than the assignments and authority of the party endorsing the document appears to be in line a nominees role and proper conduct. However, challenges can be made as follows:

    1. The notoriety in this market makes exemplar and production demands on the holder in due course mandatory.

    2. The SEC prospectus and filings do acknowledge a blank endorsement and blank assignments issued at some time before delivery. That’s a “Red Flag” for fraudulent conveyances.

    3. Any evidence of foul play is a mandatory reason for compelling a court to demand the live documents. A lost note is arguably unacceptable in this environment.

    4. An expert’s testimony derived from a review the document copies is not without merit and should be part of a motion.

    5. The entire and broader based background check into civil and criminal history for the party providing the attestations may discredit the party swearing under oath.

    6. The location of the note is huge in the cross examination as the “Real” holder in due course may not seek to be disclosed and the certified copy circumvents discovery (true “holder” party, who I believe is an FSB institution).

    In other words, any one or more of the above examples can be exploited and sufficient to compel the beneficial interest to produce a live note. Look for the opposition to vigorously defend its claims (for providing only a certified copy of the note).

    Now the courts docket is working for you were objections and additional time and hearings are reasonable as are grounds to appeal a decision are recorded in the court.

    Courts should hear the arguments in an informal proceeding for the note to be “original.” If an original will (Probate) is misplaced or lost, the district court, in a formal proceeding has the power to accept a copy of a will under certain rules of legal evidence. The issue of whether a document is original also comes up with trusts, contracts, advance health care directives, powers of attorney and other legal documents.

    Read each line of the note. Documents, such as powers of attorney and advance health care directives, often contain a clause that says a copy of the document should be treated as an original. Some institutional defendants (Wall Street investors) will demand to see an original and then make a certified copy for its own records.

    There are a few more key “killer” bombs to throw out and we have at least one past Attorney General and a federal retired judge who may affirm or certify or disapprove our findings.

    NLS and I do have to make a living of course. (I owe Livinglies big-time as it is) So feel free to contact Neil who has my address information or NLS direct for personal assistance.

    DISCLAIMER: The Expert is entitled to share his or her views for any one or more areas related to a businesses conduct and can offer views concerning the business or business practices in question including a sectors willingness to adhere to or otherwise avoid ethical and lawful compliance with business standards.

    Those views towards business and operating standards are an interpretation of business practices and not the law. Only counsel has the legitimate legal authority to interpret and argue the law.

  23. M. Soliman, So What Are Your Thoughts?

  24. Latest ssue I am running into here in Massachusetts (due to the fact it is a non-judicial foreclosure state) Is that when I file a complaint to enjoin the foreclosure under a TRO, mortgage servicers are now presenting sworn affidavits under the penalty of perjury that the keeper of their records swears that he/she has seen (and has custody of) the original note, then a “certified copy” is presented to “verify” this as true.

    Wondering if anyone else is seeing this, and if so how are you overcoming the affidavit?

    Thanks in advance



    The recovery process is hindered and must fail under California Civl Code 2940 where the substitute trustee has wrongfully recorded its notice.

    We prevailed again today allowing another borrower to rescind its foreclosure. Here’s a letter to deliver to the trustee –

    By Maher Soliman

    February 4th 2009

    Trustee for the Beneficiary
    City, State Postal

    Re: 200 Frankston St, Galt, CA 94412
    Loan Number: 916684-4044 09510-9231

    Dear Counsel;

    Please be advised you are in violation of the statutory requirements and California codes section 2940 regarding a lawful sale and transfer of tile to the subject borrower file. A substitute trustee cannot initiate a foreclosure recovery concerning the lenders collateral when in fact it is not the true beneficiary and holder in due course.

    The substitute trustee must be specific as to its role as an agent or the substituted Trustee. In either capacity trustee is required to formally substitute by recording the instrument granting it rights to accelerate the terms and conditions of the promissory note. Furthermore it must show the recorded docket and related county filing information on such date prior to the recording of the notice of default.

    That certified copy is to be mailed within 10 days of the stamped docket.

    Under subsection (3) Performance of the functions and procedures set forth in such article if those functions and procedures are necessary to carry out the duties described in Sections 729.040, 729.050, and 729.080 of the Code of Civil Procedure.

    The fact you recorded the substitution subsequent to the Notice of default and prior to the Notice of Sale has no effect. In fact the circumstances have disturbed title and the deed is render defect. The deed is unenforceable under the security agreement and any sale shall fail where you seek to convey title to real property.

    Therefore the grounds for the borrower to seek a recession has merit and further provides notice that any conveyance stands void or voidable.

    Please immediately restore the condition of the collateral and rescind the above referenced foreclosure.


    Maher Soliman

  26. One more thing – The Prospectus states:

    The Mortgage Loans

    The depositor will acquire approximately 4,762 initial mortgage loans with an aggregate Stated Principal Balance as of the initial cut-off date of approximately $652,023,088 from DLJ Mortgage Capital, Inc. “DLJMC”) pursuant to a mortgage loan purchase agreement. These mortgage loans were previously
    purchased by DLJMC from various underlying sellers in one or more secondary market transactions.

    Under the pooling and servicing agreement, the depositor will assign the mortgage loans to the trustee for the benefit of the holders of the certificates.

  27. M. Soliman –

    The allonge attached to the Note is signed by Danny Bowz as Secretary and Executive Vice President of Homefield Financial. The Note is payable to Homefield Financial. That is the only signature on the allonge. There is no indorsement by MERS or U.S. Bank.

    I researched Mr. Bowz and discovered that he is an attorney who now operates loan modification companies – Homewell Mortgage, Homewell Short Sale, and Homewell Realty. His bar registration here in Texas is under the mortgage company. Additionally, he is under investigation by the California AG for fraud in conneciton with the loan modifications.

    MERS assigned the mortgage and Note to U.S. Bank, as trustee, almost 3 months after I mailed the rescission letters and more than 6 months after the alleged “default.”. The assignment reads MERS as nominee for Homefield Financial. U.S. Bank filed suit.

    The trust is Home Equity Asset Trust 2005-6. I searched their SEC filings but could not find much. I found the PSA and amended Prospectus. However, in January 2006, they filed a Form 15 – Suspension of duty to file reports.

    The PSA lists the following entities:
    Depositor – Credit Suisse First Boston Mortgage Securities Corp.
    Loan Seller – DLJ Mortgage Capital, Inc.
    Servicers – Wells Fargo Bank, N.A. and Select Portfolio Servicing, Inc. (this is the servicer on my loan)
    Credit Risk Manager – The Murrayhill Company
    Trustee – U.S. Bank National Association

  28. ISSUE: MERS assigned both mortgage and note to the Trustee and it has filed the foreclosure action, as well as filing the original note with the court.
    SOLIMAN: What’s interesting as for a challenge to the beneficiary and claims of an unlawful assignment are the contradictions at play. The roles of these strategic business relationships (trust shells) include MERS as the nominee attempting to intervene as a assignor. MERS can in fact represent the real beneficiary as a nominee and offer a custodial role and execute legal assignments and such. The assignment will absolutely have to read MERS SOLEY AS NOMINEE FOR (LENDER). So who is the lender as the DEPOSITOR is a bankrupt insulate entity that used an FSB to wire federally insured funds at settlement (loan closing).
    Are still with me?
    Nominee’s cannot assign the loan as principal where it represents itself a 1) “separate company” and whereby 2) its clearly acting as a sole and separate company and 3) in absence of any proof it offered valuable consideration to the deal at time of funding. MERS is screaming out to lawyers and interested parties to “pull their heads out” they are more a vendor and not a part nor “principal” party to the transaction.
    Challenges to the Live Note are never more prevalent than what you have here. Lender cannot lawfully assign (Trust prohibits it) nor would FSB ever think about stepping in considering it’s an incriminating move. Institutional investors represented by the Trustee are a mute point as no prior recorded assignments is likely.
    Again, with the live note issue come the possession issue and custody roles with a capacity to assign the asset becoming even more paramount in a situation such as you have portrayed. And can you tell us who endorsed the note and for what company. And do you know where the chain of assignments has taken this live note they represent to have in the possession?
    M. Soliman

  29. Phillip,

    The allonge is indorsed in blank, by the original “lender” stating “Pay to the Order of ___________ without Recourse.”

    MERS assigned both mortgage and note to the Trusee and it has filed the forclosure action, as well as filing the original note with the court.

    From the hearing Tuesday, plaintiff’s counsel has not reviewed any of the documents. He stated that this is a purchase money mortgage and not subject to rescission. I replied that this is a refinance mortgage and therefore, it is subject to TILA. The judge stated he is not very familiar with TILA and therefore could not rule with regard to the TILA rescission.

  30. Help !!!! Can someone recommend me a attorney in Los Angeles California who gets it. I currently have a loan with servicer by the name of ASC, I believe they are owned by Wells Fargo, they have to be the worst servicer ever. I have made several request to modify my loan, this was before I was late on my loan and now 4 months late. They originally told me that they are only helping people who are late on the payments and now they are telling me I do not qualify. I sent ASC a letter to provide the original note and now they filed paper work with the county to start a foreclosure. I called ASC to ask when it was filed and the said it was on 3-6-2009 but no foreclosure date has been set as of yet.

    Can someone give me some pointers on what to do next ? Once again I live in Los Angeles Ca….. If you are a attorney please contact me only if you would use the techniques mentioned in here…..

  31. alina was your loan securitized if it was then the party moving to foreclose has to prove that they are authorized agents for the investors with the MBS and are acting on there behalf, at there request.

  32. Hey Alina what about blank where it was supposed to be endorsed (signed by assignor)? No signiture no corporate seal just a blank line.

  33. I have been looking everywhere for info on blank assignments. UCC states that a blank assignment converts order paper to bearer paper, therefore, whoever has possession, is entitled to enforce.

    How do you argue against this? I am trying to use the holder in due course argument and the real party in interest. Can anyone elaborate more on this topic? Thanks.

    Also, had my hearing today on my Motion to Dismiss. First, the attorney did not appear. I let the judge know that I came from Houston for the hearing, so he had the JA call the attorney. I think it went fairly well. The judge appears to be a reasonable person. He did not dismiss the case, and he gave me 20 days to file an answer. He told me my arguments were better suited as affirmative defenses.

    Plaintiff has filed the original note.

    My case is a bit convoluted as I exercised my rescission rights a year ago. When I did not receive any response, I prepared a Complaint for Rescission to file in federal court. However, I ended up in back to back trials at work and when I was finally able to breathe, Plaintiff served me with the foreclosure suit. I filed a Motion to Dismss and had been trying to get a hearing for the past seven months. Plaintiffs’ counsel kept requesting an extension.

    I am filing the federal suit once I return Houston. Does anyone know if I can file this is in federal court in Houston? For me, it would be much more convenient as the federal courthouse is only two blocks from my office.

  34. Mr. Soliman,

  35. what happend? what’s that smile for?

  36. M Soliman: As usual, excellent 🙂

  37. Juli: Consult your local rules of civil procedure and a local licensed attorney. It’s easy.

  38. according to my lawyer he stated it wrong. I don’t know, I hired this guy back around july and he waited until the day before the trustee’s sale to file a complaint but the judge is holding me responsible.

  39. I am currently in foreclosure and want to find out how where I can download a “produce the orginal note” form. I have to be in court at the end of March and really need someone’s help with this…. I live in Colorado.

  40. Failing to attach a mortgage and note to a lawsuit is technically similar to a condition precedent because it can immediately defeat a lawsuit. If the note is lost the attachment should state missing and lost note affidavit. If not the documents are subject to a defendants challenge.

    Our understanding is that failing to attach the mortgage or note is a procedural defect that should be attacked with a motion to dismiss. It can also be included in an answer. The chances your Judge will deny your claim or refute the arguments validity will be based on a lender arguing a lost note affidavit is sufficient for recovery. Forget the appeal process and stay with me. An equitable court will look to the parties’ intent at the signing (settlement) and verifiable consideration for engaging the two parties. [This is something likely conceded to lenders in the new Bankruptcy legislation].

    I opine it is MANDATORY to understand those terms and conditions in the ORIGINAL note and for calculating a payoff and to support the request the plaintiff produce the original note for inspection needed for grinding through your discovery. The lost note argument is significant where questioning the court circumventing a defendant’s right to obtain a logical, consistent and correct payoff figure.

    Remember we act as an expert in court and I am not counsel. I won’t try to establish arguments furthering the interpretation of the law. However, with every note you want to introduce two important considerations. First is the Endorsement and second the Coporate Assignment of the asset. Therein is the likelihood those requirements for lawful transfer are likewise missing and without all three critical items the transfer of the asset will fail?


    That may mean without original attachments the assets are not only impossible to convey but remain assets of the original beneficial ownership (forget MERS here). Therefore, the Trustee as custodian is subject to breech and negligence claims and can be terminated. It establishes the potential triggers for certain claims whereby an asset is not qualified as a trust income derivitive. If this is a pattern as we suspect an action should include a lender further substantiate claims against the appropriate insurance entity. Each state civil rule differs so take a look.(civil rule 10).



    The following is taken from the Prospectus Supplement for FIRST FRANKLIN MORTGAGE LOAN TRUST 2003-FFB Mortgage Pass-Through Certificates, Series 2003-FFB. / The files we have audited over the last 18 months show a true or actual Debt to Income [DtI} ratio in excess of 80% combined. That includes PITI and consumer monthly outflow. At 50% on average you are at the high end of the risk weighted scale. At anything over 60% your risk is compounded by the impossible likelihood for any borrower savings from disposable income.

    At 70% DTI or higher there is no chance for a structured pool of mortgage receivables or pledged assets to not run the risk of default. The defaulted paper we see and review are “Stated Income and Stated Asset loans with upwards of 100% combined debt to income borrower ratios.

    Please read –
    Under the Direct Access Program, the Originator requires that the Credit Bureau Risk Score of the primary borrower (the borrower with at least 51.00% of total income for all loan-to-value ratios) be used to determine program eligibility. Credit Bureau Risk Scores must be obtained from at least two National credit repositories, with the lower of the two scores being utilized in program eligibility determination. If Credit Bureau Risk Scores are obtained from three credit repositories, the middle of the three scores can be utilized. In all cases, a borrower’s complete credit history must be detailed in the credit report that produces a given Credit Bureau Risk Score or the borrower is not eligible for the Direct Access Program. Generally, the minimum Credit Bureau Risk Score allowed under the Direct Access Program is 600.

  42. Neil, Brad…

    What are your thoughts on this discrepancy?

  43. dude… that is crazy! How do these banks keep getting away with this sh#t! yikes! I hope you turn this around and win!

  44. I got a letter from the civil minutes saying I was denied ex parte it states that defendents loaned me $440,000, performing their part of the lending agreement. The actual loan amount that I got was for $273,000 the notice of trustees sale says the amount of unpaid balance and other charges $308,049.95. IF THIS IS NOT PROOF THAT THEY PULLED OUT MORE THAN ONE LOAN I DON’T KNOW WHAT IS.

  45. I have asked for the promissory note five times and they keep sending me a copy of the security agreement, I know the difference but they keep ignoring what I am asking for. I would like to get your comments on this. I am going to demand the promissory note or take legal action and have the court demand it… Any suggestions

  46. Here is another interesting tidbit. Yesterday, I searched all recorded assignments in my county for the servicing company on my loan. The guy who signed the assignement as Asst. Sec. for MERS, has also signed as Document Control Officer for the servicing company and as either an asst. sec or Document Control Officer for other banks. Each signature was notarized by the same person and witnessed by the same persons acknowledging that this person is ________ of _________ company. Assignors and assignees all have the same address.
    Additionally, same law firm and same company prepared the assignment, a company out of Missouri. Definitely smells of fraud, a big smelly fish.

    This is right along the lines of the King County, NY decision.

    Don’t know how to present this evidence to the Court. Any suggestions? I was thinking of doing a Request for Judicial Notice. Thanks.

  47. The structure for the Real Estate Trust prohibits ownership of Assets. Depositor and the Pass-through enitities including custodial roles and Master Servicer. must remin bankrupt insulate. Otherwise its debt and a big hypotheication.

    If the assets are detemined to be held by any of the above the affilliates the Trust falls apart (I assue that would begin with the Sponsor / Depositor who acts as the TRS in a REIT).

    These loans are treated as recievables with no regard for regulatory requirements – NO CAN DO.

    SEC and HUD are in conflict and markets remain confused. The security remains tied into the UCC filing and the investors interest is fractionalized as are the other interests in the cash flow.

    I have been waiting for this and that is the governments intereference into the real determination of accountability. Bernake revealed a sweeping change to GAAP and FASB interpretations of accounting policy….accountability rests with IRS reporting under the appropriate method of accoounting,

    In other words the combinations will pass through revenue or show income and earings on a profit and loss. Basis accountig for the assets and any gain or loss on sale / reversion will likley fall onto the Federal Saving Bank. This is a capital reserves maintenance crisis for the FSB’s who are sheltered uner this mess.

    M Soliman

  48. Allan: File motion with the court declaring you have not been served. If you want, go to Florida Bar Website and file grievance.

  49. I recorded a lien back in 2004 that put everyone on notice that borrower lacked capacity, that her identity was stolen, that her signatures were forged.

    In 2005, after I reinstated the mortgage, it got securitized and placed by WAMU in SASCO 2005 RF5.

    USBank N.A. claims it is the trustee for SASCO certificate holders. When I attempt to track down SASCO, all I come up with is Barclay’s. How does one track if SASCO still exists?

    The IMPORTANT question here is, in this scenario, with assignments unrecorded and hastily assembled well after the lawsuit, WHO is “holder in due course”? and what rights do they have?

    Also, Florida Default Law Group has been engaging in unethical tricks, including scheduling hearings on Summary Judgment Motions WITHOUT notice to me, though it certifies to the Court it has sent copies to me. What to do with such antics? Is there a Board of Bar Overseers? Do they have any teeth?


  50. @ Alina

    Brilliant Alina, brilliant!

  51. Bryan,

    My argument exactly. U.S. Bank would fall under the definition of a “business trust.”

    The business trust and its assets are managed for the benefit of persons who hold transferable certificates issued by the trustees. The ownership shares into which the beneficial interest in the property is divided are called “shares of beneficial interest.” These shares can be issued in the names of the beneficiaries or held by the trustees in “bearer form” (no designated owner name for each share).

    Both Willey and Corcoran deal with a trust trying to foreclose. Per Willey, the trust cannot bring suit without including the trustee(s).

    And per Corcoran, no business trust can bring suit on a mortgage and note in the State of Florida without authorization from its original state.

    In my case, the purported assignment is to the trustee, not the trust.

    Still researching all this. Also, reseraching FTC Holder in Due Course.

  52. @ Alina

    Reading your post, I am encouraged to question the purpose of the distinction between a business trust and a protective trust. To me this distinction is very important. A trust which is formed for the protection of assets or property is in essence performing its function as a trust to enforce protection of property and asset… let’s say it is a defensive position. And if ‘the trustee’ is claiming it has been ‘attacked’ then it is possibly in a good position to ask for legal relief based on it purpose of formation.
    Yet, if the Trust is established as a Business Trust for gaining profits and sharing those profits, then I consider this an ‘offensive’ position. The profits were already made when Bank A turned your debt instrument into a negotiable instrument and sold it to Bank B. Additionally, Business Trust probably also purchased an insurance policy against your loan and did other crazy investments to get ‘all in’ the massive 700-1000 Trillion (1 Quadrillion) Derivative Market. They certainly already made their profits and re-leveraged those profits in their own massive poker game which became a ponzi-scheme of their own demise. It reminds me of what I heard was the origin the insurance game. A group of mid-level aristocrats created a pact that the last one living would inherit / win all of the land of the dead ones. Hence, 100 becomes 1.
    So what happened is these guys played musical chairs with some crazy whack music playing where they thought it was cool to purchase 30 different insurance policies on an inflated value of default, of an underlying security / equity which is only valued based on it’s ability to produce income.

    And if the Federal Reserve artificially inflates currency then it is a ‘high on the hog’ time and profits are rolling, yet when the Federal Reserve pulls the plug on the dancing music and sets up the last 5-10 chairs of their cronies, nepotistic hand outs, loyal defenders or followers then the shakedown will and is happening now.

    So what do we do?


  53. One more thing on the business trust issue:

    Willey v. W. J. Hoggson Corporation, 90 Fla. 343, 106 So. 408 (1925), contends that since the note and mortgage involved in this litigation are payable to a business trust, any action on those instruments must be brought by all the members of the trust-not just the trustees.

    My research shows that both Corcoran and Willey are good case law.

    Any thoughts or comments would be greatly appreciated. Thanks

  54. Not sure if this has already been covered on this website but thought it is worthwhile to mention.

    “As yet, no Florida case has held that the trustees of a business trust can maintain suit on a note and mortgage payable to a trust, absent statutory authorization in the state of its origin.” Corcoran v. Brody, 347 So.2d 689 (Fla App. 1977)

    Business trusts, also called Massachusetts Trusts, often involve trusts created by beneficiaries as a device to carry on a profit-making business and thus do not involve a trust created by a settlor to simply protect or conserve property for beneficiaries (Treas. Reg. ß 301.7701-4(b)). This means that whether a trust will be initially considered an ordinary trust or a business trust will depend on whether it is imbued with both (1) an objective to carry on a business and divide its gains (business purpose issue) and (2) associates (associates issue). [Legal Court Decision: “In business trusts, the object is not to hold and conserve a particular property, but to provide a medium for the conduct of business and the sharing of profits. The court held that the nature of a trust as a business organization is to be determined primarily from the intent of the parties as manifested in the terms of the trust agreement. Koenig v. Johnson, 71 Cal. App. 2d 739, 163 P.2d 746 (1945)”, as cited at In the Interest of Green Valley Financial Holdings, Colorado Court of Appeals No. 00CA2060, August 16, 2001]

    The U.S. Supreme Court held that the Massachusetts Trust as a form of business organization, common in Massachusetts, comprising of an arrangement wherein real estate (or other assets) is transferred in title to one or more trustees, pursuant to written trust provisions.

    U.S. Bank, the entity who filed for foreclosure on my property, is a business trust not qualified in the State of Florida. for this reason they had to post bond with the Clerk.

    What say you all?

  55. @ Alina-

    You may choose to get in contact with John Gliha.
    He is in Florida and has a real good, grounded perspective. His website is and it is a landing page. When you get to chat with him, you’ll understand why I think he is a cool dude.


  56. Ny,

    I am in Orlando, but work in Houston, which complicates matters a bit. I am a civil litigation trial paralegal (toxic tort defense) and the majority of my cases are on the federal level.

    To be on the safe side, I am preparing an Answer, Affirmative Defenses, and Counterclaim. I hope to defeat the original note using F.S. §673.3021(1)(b)(3), (4), (5), and (6) (Fla. UCC) as the assignment was done three months after I mailed rescission letters to all involved. At the time, I had no clue who U.S. Bank was, but they got a letter anyway, so they were on notice. Additionally, I followed up with a demand letter and QWR a few weeks later. Also, the assignment was done more than six months after the alleged default. They cannot claim they were not on notice of defects. My only concern is that it appears they may have the original in their “hot, little hands.” But again, I believe that does not automatically mean they have the right to enforce it. Your thoughts?

    In the beginning, I looked for an attorney in Orlando and left messages with several attorneys. None returned my calls, so I decided to go it alone. I have a “friend” who is a real estate attorney, but when I told him about the case, I never heard from him again.


  57. Alina, on February 25th, 2009 at 3:14 PM Said:


    I have a hearing on my Motion to Dismiss set for March 17. Yesterday, I received a Notice of Filing Original Note, Original Mortgage, and Orginal Assignment. The Note has an allonge attached to it signed by the VP of Homefiled Financial. It is blank stating “Pay to the Order of ___________ without Recourse.” The Mortgage was in the name of MERS, as nominee for Homefield and the Note is payable to Homefield. U.S. Bank, as trustee filed the foreclosure lawsuit.

    Can you please give some direction on this?

    Alina, I strongly suggest you get a good lawyer, if they filed all these things you say they filed, although might be bogus, you may not know how to defend it. If you’re in Miami, I can recommend a very good one.

  58. Anyone having problems with HSBC / Beneficial Mortgage producing the note? I have requested for this note since 2004 and they have never produced the note, any suggestions?

  59. Ny,

    This is great. I checked the Miami-Dade docket for the Ana L. Fernandez case and discovered that the Plaintiff also filed a Notice of Filing Original Note and Mortgage. Unfortunately, the order vacating is handwritten and there is no history of the case or case law. But it is reassuring that even though the Plaintiff filed what they purported by the original note, they could not show that the note had been assigned and they were the holder in due course.


  60. Guess What Got Lost in the Loan Pool?

    WE are all learning, to our deep distress, how the perpetual pursuit of profits drove so many of the bad decisions that financial institutions made during the mortgage mania.

    But while investors tally the losses that were generated by loose lending so far, the impact of another lax practice is only beginning to be seen. That is the big banks’ minimalist approach to meeting legal requirements — bookkeeping matters, really — when pooling thousands of loans into securitization trusts.

    Stated simply, the notes that underlie mortgages placed in securitization trusts must be assigned to those trusts soon after the firms create them. And any transfers of these notes must also be recorded.

    But this seems not to have been a priority with many big banks. The result is that bankruptcy judges are finding that institutions claiming to hold the notes that back specific mortgages often cannot prove it.

    On Feb. 11, a circuit court judge in Miami-Dade County in Florida set aside a judgment against Ana L. Fernandez, a borrower whose home had been foreclosed and repurchased on Jan. 21 by Chevy Chase Bank, the institution claiming to hold the note. But the bank had been unable to produce evidence that the original lender had assigned the note, which was in the amount of $225,000, to Chevy Chase.

    With the sale set aside, Ms. Fernandez remains in the home. “We believe this loan was never assigned,” said Ray Garcia, the lawyer in Miami who represented the borrower. Now, he said, it is up to whoever can produce the underlying note to litigate the case. The statute of limitations on such a matter runs for five years, he said.

    A spokeswoman for Capital One, which is in the process of acquiring Chevy Chase, did not return a phone call on Friday seeking comment.

    Mr. Garcia has another case in which a borrower tried to sell his home but could not because the note underlying a $60,000 second mortgage cannot be found. The statute of limitations on the matter will expire in October, he said, and if the note holder has not come forward by then, the borrower will be free of his obligation on the second mortgage.

    No one knows how many loans went into securitization trusts with defective documentation. But as messes go, this one has, ahem, potential. According to Inside Mortgage Finance, some eight million nonprime mortgages were put into securities pools in 2005 and 2006 and sold to investors. The value of these loans was $797 billion in 2005 and $815 billion in 2006.

    If notes underlying even some of these mortgages were improperly assigned or lost, that will surely complicate pending legislation intended to allow bankruptcy judges to modify mortgage terms for troubled borrowers. A so-called cram-down provision in the law would let judges reduce the size of a loan, forcing whoever holds the security interest in it to take a loss.

    But if the holder of the note is in doubt, how can these loans be modified?

    Bookkeeping is such a bore, especially when there are billions to be made shoveling loans into trusts like coal into the Titanic’s boilers. You can imagine the thought process: Assigning notes takes time and costs money, why bother? Who’s going to ask for proof of ownership of these notes anyhow?

    But as the Fernandez case and others indicate, bankruptcy judges across the country are increasingly asking these pesky questions. Two judges in California — one in state court, another in federal court — issued temporary restraining orders last month stopping foreclosures because proper documentation was not produced by lenders or their representatives. And in another California case, a borrower’s lawyer was awarded $8,800 in attorney’s fees relating to costs spent litigating against a lender that could not prove it had the right to foreclose.

    California cases are especially interesting because foreclosures in that state can be conducted without the oversight of a judge. Borrowers who do not have a lawyer representing them can be turned out of their homes in four months.

    Samuel L. Bufford, a federal bankruptcy judge in Los Angeles since 1985, has overseen some 100,000 bankruptcy cases. He said that in previous years, he rarely asked for documentation in a foreclosure case but that problems encountered in mortgage securitizations have made him become more demanding.

    In a recent case, Judge Bufford said, he asked a lender to produce the original of the note and it turned out to be different from the copy that had been previously submitted to the court. The original had been assigned to a bank that had then transferred it to Freddie Mac, the judge explained. “They had no clue what happened after that,” he said. “Now somebody’s got to go find that note.”

    “My guess is it’s because in the secondary mortgage market they have been sloppy,” Judge Bufford added. “The people who put the deals together get paid for the deals, but they don’t get paid for the paperwork.”

    A small but spirited group of consumer lawyers has argued for years that the process of pooling residential mortgages into securities was so haphazard that proper documentation of the loans was never made in many cases. Leading the brigade is April Charney, a foreclosure lawyer at Jacksonville Legal Aid in Florida; she now trains consumer lawyers around the country to litigate these cases.

    Depending on the documentation defect, lawyers say, investors in the trust could try to force the institution that sold the loan to the trust to buy it back. Many of these institutions would be unable to do so, however, because they are defunct. In the meantime, when judges are not persuaded that the documentation is proper, troubled borrowers can remain in their homes even if they are delinquent.

    THE woes brought on by sloppy bookkeeping in securitizations will be on the agenda at the American Bankruptcy Institute’s annual spring meeting on April 3. An article titled “Where’s the Note, Who’s the Holder,” co-written by Judge Bufford and R. Glen Ayers, a former federal bankruptcy judge in Texas, will be the basis of a discussion at the meeting.

    Mr. Ayers, who is a lawyer at Langley & Banack in San Antonio, said he expects that these documentation problems will halt a lot of foreclosures. That will mean pain for investors who hold the securities. The problem for those who expect to receive the benefit of the note, Mr. Ayers said, is that they “may not be able to show to the judge they have a right to foreclose.”

    “It’s a huge problem,” he added. “It’s going to be expensive, I don’t know how expensive, ultimately to the bondholders.”

  61. I wonder if the ‘unconditional promise to pay’ and specific ‘ascertainable sum’ provisions of Article 3 of the UCC for defining negotiable instruments can be challenged. Highly detailed default loan servicing provisions requiring additional undertakings of the owner and holder of the loan might serve to defeat the negotiable status.

    Perhaps wishful thinking, but you have to admit that the toxic/complicated/detailed/confusing loan types that have been concocted in the past few years probably weren’t contemplated when each state adopted it’s version of the UCC.

    I know there’s case law (in Florida at least) that an adjustable rate loan can be considered a negotaible instrument but there was also a FL case that decided that a hybrid loan that allowed the lender to share in the appreciation of the property did NOT qualify as a negotiable instrument. Option ARMS anyone?

    Hey, Neil or anyone else, can someone post a link to the HSBC v. Valentin decision? Dismissed with prejudice; both nice and unusual.

  62. Are you aware he named 37 defendants in a lawsuit filed in federal court against sheriffs, DA, county commissioners, and countless others. After reading the Complaint, I walked away with the thought it certainly seemed like a winnable case. There were roughly 117 filings made in all. Defendants all had counsel (who of course barraged Plaintiffs with Interrogs and RFPs) Thanks again. Jenifer

  63. Hi, I am trying to locate livinglies, in follow-up of a posting made by that identity on 1FEB2009 in reference to message he had received from Miguel Gutierrez, 19JAN2009. I am certain Miguel spent a great deal of time on this website. I’ve seen the astronomical volumes of filings produced and answered over a 2-3 year period by Miguel. He represented himself in a most enlightened sort of way. I can’t help be impressed. He did all work Pro se. I assume your site provided him with the direction and foundation necessary to undertake such a large task. He put up a brave and good fight right up until the end. I’m sorry he had to die in the course of attempting to achieve justice and find out the truth. He and Inga lived under the most extreme hostile conditions I have ever been aware of. Inga is incarcerated and has not been allowed to make calls or receive visitors. Miguel’s body has been cremated. I am happy to tell you they have retained good counsel. Well, this short note has turned into more of a long oration. Thank you for reading my thoughts on this truly hateful, dark, conspiratorial and tragic story. It took a posse of 100 plus officers and armored vehicles and robot to finally take him out, as he had predicted they would. Jenifer

  64. Ny,

    I have a hearing on my Motion to Dismiss set for March 17. Yesterday, I received a Notice of Filing Original Note, Original Mortgage, and Orginal Assignment. The Note has an allonge attached to it signed by the VP of Homefiled Financial. It is blank stating “Pay to the Order of ___________ without Recourse.” The Mortgage was in the name of MERS, as nominee for Homefield and the Note is payable to Homefield. U.S. Bank, as trustee filed the foreclosure lawsuit.

    Can you please give some direction on this?

  65. Great post Neil! I am glad to hear lightbulbs are going on and Judges are taking stands against what will be seen in our future as the final straw of ‘money changers’. With your permission, I will re-blog your brilliant posting.

  66. I have been a Southfield, Michigan resident since 2000. I have a first and a second mortgage. I owe a combined total of $193,000. My first mortgage is a 3/1 ARM ($158,000 – 5.75%). The second mortgage is a HEL ($34,600 – 9.75%). After the second rate adjustment two years ago, I could no longer afford the payments. Since then, I have managed my credit well (middle score 709), so that I could use it to fall back on each month, to cover monthly expenses in excess of $900 that my paycheck does not cover. I work hard to remain current on my mortgage payments and charge cards. My home has been on the market for 18 months. Two weeks ago, I submitted a Short Sale package to my lender for approval. Included in the package was an Offer for $77,400 ($115,600 underwater). This was the highest of three Offers I received. My lender is Flagstar Bank, FSB. My loss mitigator has already told me that as long as I’m current, there is nothing they can, or will do for me. Hence, I’m certain my Short Sale Package will not be approved. I cannot refinance. I do not qualify for any of the Programs the Obama Administration is rolling out for troubled Homeowners in March 2009. I am at my wits end, and ready to walk away and destroy my credit. Can you recommend a knowledgeable, credible Attorney in Michigan, that could work with me to conduct a Forensic Audit of both my mortgages? I’m certain there are TILA, RESPA etc., violations contained in both mortgages.

    Thank you.


    We have prepared the private placement memorandum. We were part of the first set of REMICS offered in 1998;

    Do you Lawyers in the “Know” see a problem with the dificulty in generating a lost note affidavit. Here’s a problem –

    On the lost note theory- With a lost note argument comes the issue of attached endorsements and assignments.

    We make a claim of a document and endorsement made therein versus an allonge. And not every corporate assignment is recorded and subject to questions.

    The authenticity of the endorsements is questionable where the live signature is also lost for good. Is the corporate assignment / signatory the same as the one on the original.

    Do the corporate minutes specify the authority of the new signor in a lost note affidavit challenge? What if that person (orignal) is gone and so is the company who assigned the asset.

    An attorney’s opinion letter is always necessary as the inducement to grant a commercial line of credit and authorizes the enterprise to engage in limited activities.

    It’s like an attestation but even better.

    The pooling and servicing agreement provides that the depositor assigns to the trustee for the benefit of the certificate holders without recourse all the right, title and interest of the depositor in and to the mortgage loans. No integrity can be restored in the lost instrument

    Lost note affidavits are challengeable from many different perspectives.

    M. Soliman

  68. Massachusetts Foreclosure Defense Class Action Asks Lenders, “Who The Hell Owns These Promissory Notes???”
    In Mattapan, Massachusetts, WBZ-TV Channel 38 reports:

    * “I thought this was going to be my American dream,” said Deborah Nicholas, looking at her Mattapan home. But two years after purchasing the green-trimmed two-family house, Deborah Nicholas is living the new American nightmare. “We are in foreclosure right now.”

    * Foreclosure attorney Gary Klein argues it wasn’t done legally. “We’re arguing there have been hundreds, maybe thousands of unlawful foreclosures in Massachusetts because the lenders don’t actually own the mortgage at the time of the foreclosure,” said Klein.


    * In a class action lawsuit, Klein argues her mortgage holder and others moved to foreclose before they actually had the paperwork. “Our research shows that 15 to 30 percent of foreclosures are affected by this problem. That is, in 15 to 30 percent of these cases, the lenders don’t have the legal authority to foreclose at the time they begin the foreclosure process.”

    For more, see Thousands Of Unlawful Foreclosures In Mass.? (read story) (watch video).

    For earlier articles on this story, see

    * Boston Herald: Lawyer to lenders: Prove you own mortgages (or try here for a free version), and
    * The Boston Globe: Lenders’ right to foreclose is challenged. KappaMtgDocsMissing

  69. You all need to send this to your lawyer, the judge and everybody of interest. There are still lawyers and judges that do not know these things. If you lose pro se or with counsel, go see an appeals lawyer and bring this article to them. Remember, you’ll only lose if you give up. If you can pay your attorney, please do so but make sure person understands problem. God bless.

  70. If you have not read the Home Equity Theft Reporter Blog, I highly recommend it.

    A post from February 20, 2009, details cases from various states aroung the country in which the legal “standing” issue was raised.

    Hopefully,the “show me the note” theory is taking hold.

    In this context, Neil’s corresponding theory that these Special Purpose Entity defaulted assets (MBS – Mortgages) have already been indemnified by the likes of AIG and AMBAC, and thus these “securities” are now left basically as unsecured debt!

  71. NY, you SOB! Trying to steal the thunder….


    More to follow.


  72. This post is epic. Excellent walk-through the issues and examination of case-law. Thanks for contributing.

  73. my assignment of mortgage purports fdic as conservator for superior bank sells… effective dec 31, 2001 to lasallle
    problem with that is superior bank sold the loan to lasalle eff july 33, 1998 according to itts pooling & service agreement, they nevered recorded that assignment, isn’t the fdic bogus fraudper se, becaus eit purports a sale that never happened and the fdic had to mortgage to sell lasalle?

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