Federal Appeal Slams Lawyers and Pretender Lenders with Sanctions for Misrepresentation on Ownership of Loan

Read it and use it: judge-youngs-decision-on-nosek

Challenge everything: As we have repeatedly stated, the entire position of the would-be foreclosers is a bluff and a fraud upon the court, the borrower and the system.

Non-judicial process is improper procedure and unavailable for securitized mortgages: These astonishing breaches of ethics, duties and contract law together with manipulation of procedure to the advantage of pretenders cause unfair and illegal things to happen without seeing the light of day — especially in “non-judicial states.

For the most part it is simply true that nearly all securitized mortgages are either void, unenforceable or rescindable. It is further simply true that such mortgages are neither in default nor subject to enforcement by intermediaries who do not own the loan.

I would go further and say that the transaction is not in reality a loan transaction but a disguised securities transaction violating not only TILA (and eliminating the exclusionary language for purchase money first mortgages) but securities laws, common law fraud, deceptive business practices and a whole host of other actions resulting in extinguishing the debt, satisfying the note through third party payment and thus extinguishing any right under the security instrument (mortgage or beneficial interest).

Everyone who is some stage of foreclosure and even people who are challenging their mortgages without being delinquent should be quoting from this case. I have extracted some of the quotes that are striking. We are on the edge of enlightenment — where the entire judiciary and legal profession comes to the realization that these mortgages are worthless and that a massive transfer of wealth from the banksters on Wall Street to the middle class is in process, restoring the equities and proper position of people who were targeted only because they could sign their name.

Notable quotes from Young Decision:

Because there is probable cause to believe the Ablitt firm has violated both the disciplinary rules of this Court and those of the Massachusetts Supreme Judicial Court, it is the duty of this Court to forward a certified copy of the Order of the Bankruptcy Court and this opinion to the Massachusetts Board of Bar Overseers for such action as it deems appropriate in the circumstances.

How is it that our profession, the legal profession – which could have and should have strongly counseled against the self interested excesses that set up the collapse – instead has eagerly aided and abetted those very excesses?  How could we (all of us who profess to be lawyers) have fallen so low?

“[A]n assertion purporting to be on the lawyer’s own knowledge, as in an affidavit by the lawyer or in a statement in open court, may properly be made only when the lawyer knows the assertion is true or believes it to be true on the basis of a reasonably diligent inquiry.”

Oscar Wilde once said “It’s not whether you win or lose, it’s how you place the blame.”1  This case presents the unedifying spectacle of a litigant and its lawyers engaging in
egregious misrepresentations and, now that they have been sanctioned for such misconduct, scrambling to pass the blame on to others much like the iconic Thomas Nast cartoon of The Tweed Ring.  Thomas Nast, Who Stole the People’s Money?, Harper’s Weekly, Aug. 19, 1871, at 764

Despite the fact that it had not held the loan since 1997 or serviced it since early 2005, Ameriquest and its attorneys made contrary representations.  It filed a proof of claim and an amended proof of claim in 2002 and 2003 prepared by Buchalter, listing itself as creditor without any reference to the assignment of the loan and without attaching a copy of the power of attorney.  It filed pleadings signed by the Ablitt attorneys in 2003 stating that it “is the holder of the first mortgage . . .”  It filed an Answer signed by the Ablitt attorneys in 2005 admitting the allegation that it is the holder of the first mortgage.  It conducted an eight-day adversary proceeding in 2006, with representation by Ablitt, without ever notifying the Bankruptcy Court that it was neither the holder nor the servicer of the note and mortgage.  Id. at 4-5.

The Bankruptcy Court was apprised of Ameriquest’s actual role only after it awarded $750,000 in emotional distress and punitive damages to Nosek, and she brought an action for trustee process to collect the funds on July 27, 2007.  Ameriquest, in its opposition to the trustee process action, stated in an affidavit that “Ameriquest merely collects these funds on behalf of their owners.  It does not own these funds . . .”  Id. at 2.
This was the first time the Bankruptcy Court learned that Ameriquest was not the holder of the loan, contrary to Ameriquest’s representations throughout the course of the
bankruptcy case.

“It is the creditor’s responsibility to keep a borrower and the Court informed as to who owns the note and mortgage and is servicing the loan, not the borrower’s or the Court’s responsibility to ferret out the truth.”

“It is worth repeating as a warning to lenders and servicers that the rules of this Court apply to them.  Their private agreements and the frenzied trading market for mortgages
do not excuse compliance with the Bankruptcy Rules any more than they would justify ignoring the Bankruptcy Code.”

“That the note and mortgage were subsequently assigned to a trust holding a pool of notes and mortgages by Wells Fargo’s predecessor, Norwest, is simply another example of the layers interposed between borrower and lender in today’s marketplace.
It cannot serve as a vehicle to deflect ultimate responsibility from Wells Fargo.”

The Bankruptcy Court was well aware of these principles, but nevertheless, in these circumstances rejected Ablitt’s argument that it was entitled to rely, without further inquiry, on information supplied by its client.  The Bankruptcy Court carefully explained that the Ablitt firm previously had commenced foreclosure proceedings and taken action against Nosek with respect to this same property on behalf of Wells Fargo as trustee, not Ameriquest.

It is in Ablitt’s utter disregard of its own internal files that the actionable violation of Rule 9011 is to be found.  Surely, had the Ablitt firm reviewed its own files, it would have been on inquiry notice that more was required than an uncritical acceptance of Ameriquest’s statements.  Those statements simply were not “objectively reasonable,” standing alone, in light of the prior foreclosure proceeding on behalf of Wells Fargo.

14 Responses

  1. Lots of strange goings-on with foreclosures! I’m a tenant in a home that was just foreclosed, and the bank never noticed the owner!!! Apparently, there are no rules or logic anymore to this madness.

  2. I am being screwed by the same bank! I need help! I need a motion to request tat the bankruptsy judge reopen my final judgement foreclosure can you give me advice ! I am on round 2 of my bankruptsy and I do not want to loose my place . The acknowledge loss of my note and so much more yet they received final judgement . And my BK attny at the time didn’t explain any of this nor was I advised that I was forclosed upon. I was improperly served thru the mail and my danged attny responded and told me that’s how they are doing it these days. Wrong ! He proceeded to tell me don’t worry I have everything under control. But in under no circumstances did he ever tell me it was a done deal. Infact he filed my BK almost a month later. When I hired him to stop the foreclosure! I didn’t know till last month it had final judgement. In an abayance request hearing I asked t speak to the judge and I asked why I was charged all these foreclosure fees when I wasn’t ever foreclose upon. She said that needs further investigtion. Then the judge ordered I stop payments because no one was responding to our letters from the court as to actually owned this loan, and she didn’t want me to pay the wrong party. She was very upset that they fail to appear or respond to letters, she said and I quote “something smells in denmark” and suggested my attny to file for silent tittle. After we left the courtroom he refused and said that only happens on TV in the news. And I had to hound him to send out the 15 day letter she ordered him to send to all parties. Many many wrongs have been committed. We need to reopen the 5 year old foreclosure to remedy the situation. Help !

  3. […] federal-appeal-slams-lawyers-and-pretender-lenders-with-sanctions-for-misrepresentation-on-ownership… […]

  4. Unfortunately, Wells Fargo’s $250,000 in sanctions as well as Burchalter’s were vacated by the Court in june 2009.

  5. For William Burford, Esq.

    Bill – here’s a possible way to defeat this:

    Assume that you’re dealing with a bank like B of A that has checking accounts. Establish a small bank account there. Present a valid check to that bank, but don’t use the actual check…present a xerox copy. Preferably, this should be done by mail, so that you can get a written response on the bank’s letterhead. The bank is going to reject the check, because it is a copy and not the original.

    Also, you can depose an officer of the “lender” and ask him or her how loans are originated and then assigned to third parties. Ask if the “lender” if it would buy a note if the only note that was presented was a xerox of the original and not the original.

    Try asking the judge if he will accept a xerox copy of an affidavit into evidence or for filing instead of an original, or if the court clerk will accept a copy of a judicial order for filing or whether the original order is required.


  6. I recently read your entry on Nosek v. Ameriquest. Thanks for your enlightenment. In California ( non-judicial foreclosure state) the consistent mantra of the bank lawyers, and adopted by the the Courts, is that the original “note” is not required to initiate foreclosure proceedings. They consistently ignore the requirement of endorsement and delivery of negotiable instruments. Do you know of any authority on this issue?

  7. This is an awesome site. God Bless you for all the information

  8. I missed this the first time I read the case: “That the note and mortgage were subsequently assigned to a trust holding a pool of notes and mortgages by Wells Fargo’s predecessor, Norwest, is simply another example of the layers interposed between borrower and lender in today’s marketplace.” That old Norwest 1999 Trust, I would suspect, is Wells Fargo’s BUCKET #3, the repository for all the bad loans and extinguished liabilities they contine to keep on their books as “ASSETS”. That’s where my loan is.

  9. […] See also Judge Young:  federal-appeal-slams-lawyers-and-pretender-lenders-with-sanctions-for-misrepresentation-on-ownership… […]

  10. oops I am in hawaii

  11. Can we use this this argument and quote its case law if we are not in BK, Just in State Circuit court?


  12. 2009 U.S. Dist. LEXIS 44835 – May 26, 2009, Decided

    PRIOR HISTORY: Nosek v. Ameriquest Mortg. Co. (In re Nosek), 386 B.R. 374, 2008 Bankr. LEXIS 1251 (Bankr. D. Mass., 2008)

  13. The link to the case is at the very top of this article. Click it, then click the judge-youngs-decision-on-nosek link there for a PDF.

  14. I would like the case number so I can read for myself. Is it published, and who are the people involved.


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