Ohio Appeals Court Bangs BONY For Not Owning the Loan

see 2010-ohio-542 After-acquired interest not good BONY v Gendele

Significant Excerpts: By the way this is why we need title and escrow agents to act as experts or forensic analysts. A simple title chain analysis reveals the defect and now  Trial Judges in Ohio have a rule to follow. Will the real party in interest please stand up? See Fordham Law Review Article written more than two years ago on this very issue (under our links to the right of this page).

Gindeles argue that Bank of New York did not acquire its interest until after the foreclosure complaint had been filed, and that under our holding in Wells Fargo Bank, N.A. v. Byrd,1 Bank of New York’s complaint should have been dismissed without prejudice. We agree.

In Byrd, we held that “in a foreclosure action, a bank that was not the
mortgagee when suit was filed cannot cure its lack of standing by subsequently obtaining an interest in the mortgage.”2

the record does not reflect any understandable mistake by Bank of New York; there is no indication that the identity of the proper party was difficult to ascertain; and there is no documentary proof that Bank of New York owned an enforceable interest when it filed its foreclosure complaint.

22 Responses

  1. There is a light at the end of the tunnel, it maybe a freight train, you just never know.. The one thing you must make sure you ask for in any BONY deal, and never stop asking for it, is the original note, ask for this at every hearing, when they want to do a loan mod, tell them to show you the note with real ink… I will bet they can never produce it.. As a matter of fact I would bet my life on it..BONY is a scam from HELL, straight from the dephts of evil…they were designed to lie, cheat, and steal, they are the masters of fraud, if they are who is suing you, the chain of title is your salvation, it all starts with the assignment, it is in most cases not valid, MAKE THEM PRODUCE THE ORIGINAL INK, JUST DO IT, YOU WILL DO YOURSELF A FAVOR… DO NOT EXCEPT A COPY OF WHAT THEY CALL THE ORIGINAL… NO COPIES ALLOWED, JUST DO IT !!!!!!
    do not delay… on the note, where you sign, usually in the lower left hand corner of that page, is the beginning of all you need to reveil the evil BONY for what it is, the transfer of assignment that BONY has on that very document used as there evidence is fraudulent and is not valid because they buy defaulted loans after the forecloser action has started and can never ever have standing. not even possible I don’t believe, you couldn’t possibly ever be obligated to them, thats how the likes of countrywide and BOA and the rest of the empire are getting out of all the fraud they have committed over the course of the loan as they have used your signatures to make hundreds of thousands of dollars on your good credit when you had that, they use MERS as there nomine to act as though, and it looks good to the courts, OMG, they have this shit down to a science, but, it’s all bout ready to blow up.. When I get the attention of a Judge in Southern Ohio, he wants to know have we spoken to lawyers, and we tell him yes, many of them, but, i said this, they really have no idea how complicated this really is, and for that matter judges either, now understand this maybe the most Conservative place on earth, to admitt in a courtroom that lawyers and judges have no idea what is really happening with these forclosers, and how complicated they really are, and wants to take time to study the issues we bring to the table, and why would we want to do a loan mod with a bank that that can’t prove standing or obligation, and no your honor we can’t work anything out untill they prove that, or bring the original ink to the table, I think America is just about ready to WAKE UP and I praise God for this, because I think they are seeing the light, it might not be a freight train as we no it much longer… I sincerly wish to thank June Reno, and Neal Garfield, if it were not for them, this site, and all of you here for this same reason, well we would already be a statisic.. DO NOT GIVE UP…. MAKE THEM SHOW YOU THE INK.. and learn enough from this great site to make a difference.. and if you are one of the lucky ones that actually wins your house and money, at least give the money to these people that spend there time and money helping you, thats what we will do, and I hope and pray you would do the same…. don’t play this game to lose, play to win, and support this cause when you do….

  2. anyone any advice on this situation. I can not figure out how and what to do with the info to win my case:

    1) Sued the bank to stop nonjudicial foreclosure.
    2) laon in defualt and in a lawsuit and bank Bank sells loan to a hedge fund during.
    4) Asked for the info in admissions/discovery
    5) how do i use this to win my lawsuit. Just want to sell the home and move past.

  3. BONY boned ME.

  4. anonymous: thanks for the thoughts. Like a lot of my comments, and because I myself feel fairly “scratched and dented” from the activity of “servicers,” my comment on CDS being passe was actually sarcastic; the “masters of the universe” are apparently now using their “expertise” to profit from both the hiding of debt and then the forced economic ruin of a sovereign nation (Greece). We need not worry, however, because Fed Chairman Barnacle says he is looking into it. (More sarcasm, because I can’t help myself and can’t actually believe that Congress “buys” any of this b******t.)

    CDS are alas, as popular and as shrouded in secrecy as ever. More today on CDS on Bloomberg at http://www.bloomberg.com/apps/news?pid=20601087&sid=apYKJ4IXYnoI&pos=5

    Like you, I am also not an attorney, so nothing I say should be relied upon either.

  5. Dny

    Should not confuse “non-performing loans” that are resecuritized with foreclosures. Certain “non-complaint” loans – loans that were deemed “scratch and dent” due to missing documents, breach of representation, and other criteria, were subsequently resecuritized if the non-performing loan could be returned to performing. This was called a “NIM” (net interest margin) resecuritization. In effect, it was not a traditional securization because the synthetic securities could not be rated AAA. These securitizations were synthetically derived and then often repackaged into CDOs. No one knows if their loan was resecuritized into a second synthetic transaction.

    Foreclosures are simply foreclosures – not a security and cannot be resecuritized. Only collection rights remain. While CDS may be passe – people have right to know who is foreclosing upon them. This was the purpose of May 2009 TILA Amendment for creditor disclosure. If you do not know your creditor – you cannot “negotiate” with anyone. Certain states have enforced mediation prior to foreclosure action but this does not help if servicers continue to refuse to divulge the actual creditor and this is why most loans mods are only temporary. Servicer abuse is rampant – and Congress put all trust in the servicers.

  6. dny:

    In the process of credit derivative defaults swaps, the actual security does not changes hands. The CDSs are contracts and not securities. But, as discussed, securities are only created by current cash payment streams – foreclosures and defaults are not current.

    In securitization, the default (securities) are subordinated to lowest (residual/equity tranche – that tranche is not sold as a security certificate to the stated security underwriters for securitization of pass-through and is usually held in the name of the servicer. Since the security is extinguished when the loan is in default, the REMIC can hold the foreclosure – but not as security or has a certificate for the securitized trust. The servicer is acting on behalf of the swap holder (or distressed debt buyer) for the bottom tranche and not on behalf of the trust. When the CDS is effectuated only collection rights are “swapped” out of the security is extinguished. Physical settlement (rather than just cash) is most usual for CDS settlement. That is, after payment, the actual loan (now charged-off) is delivered to the CDS holder for collection rights. In effect, the CDS “swaps” collection rights out of the trust. CDS are not part of the trust they are derived from the trust. So, how can a trustee, in foreclosure action, be acting for investor “security/certificate” holders for ABC trust when the default loan is no longer a security and collection rights are swapped out of the trust?

    In my opinion, the servicer has the right to foreclose on behalf of the party who claims collection rights. But the servicer has been knocked down in many courts, and therefore, the “trustee” started initiating claims on “behalf of the certificate/security holders to to the Trust”. Such assignments are bogus – since collection rights are removed “swapped” from the trust. And, collection rights are removed without actual exchange of the security that once backed by the performing note.

    Point is foreclosures are securities and cannot be passed on as current asset via a securitized trust. Further, REMICs were organized as Qualifying Special Purpose Entities and FASB 166 and 167 has eliminated QSPEs.

    “Statement 166 is a revision to Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, and will require more information about transfers of financial assets, including securitization transactions, and where companies have continuing exposure to the risks related to transferred financial assets. It eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures.”

    The banks must bring these REMICs (QSPE) back onto balance sheet this year.

    Disclaimer: I am not an attorney and this is not legal advice. This is for educational and informational purposes only.

  7. Betting against mortgages with credit default swaps is so passe, so “naughties” for the masters of the universe.

    Now they are applying their experience bringing down the American housing market to making a killing bringing down whole countries, like Greece for starters.

    See today’s NY Times article “Banks Bet Greece Defaults on Debt They Helped Hide” at http://www.nytimes.com/2010/02/25/business/global/25swaps.html?hp

  8. Meant to add, in addition, bankruptcy courts must be very diligent to identify the actual creditor as the debt must be properly discharged with the proper party. Perhaps, this is why we are seeing some success in bankruptcy related cases.

    Disclaimer: I am not an attorney and this is not legal advice. This is for educational and informational purposes only.

  9. Ian, See Top of Page 90 of 178 of the Fordham and Creighton Law Review referenced by Neil (see link below, footnotes removed)

    “Securitization has accomplished what is known as the unbundling of the loan industry, disassembling the lending process into its constituent elements, and allowing a separate entity to undertake each element. Traditionally, lenders performed all of the functions of a loan, finding the borrowers, preparing the documentation for the loan, funding the loan, holding the mortgage during the course of the loan, and servicing the loan throughout its life. Securitization has, in the words of Michael G. Jacobides, “atomized” this process, so that one distinct entity, more often than not a mortgage broker, originates the loan, while another, perhaps a mortgage banker, funds the loan, and another may securitize the loan and sell it to investors. These investors, through their ownership of securities issued by the SPV holding the mortgage in trust with a pool of other mortgages, claim the capital represented by the mortgage, while a separate set of entities, such as master servicer under the trustee’s direction, services the loan, accepting the mortgage payments and foreclosing if necessary.”

    “This separation of the mortgage process confers on each entity in the chain a plausible deniability of the actions of the others. The securitizer can claim to be unconnected to the broker and unaware of any of his activities, however improper. The SPV and the owners of its securities can claim to be holders in due course and protected from any accountability for the fraud of the mortgage broker, through their ignorance of any such fraudulent behavior. The mortgage broker can accurately claim, once the loan is out of his hands, that he can no longer help the borrower if the servicer attempts to foreclose.”

    (Back to my voice) But it could also be as simple as this: If the originating bank still “holds” the loan on its balance sheet, even after having “sold” it, then it is paid.

  10. Anonymous, see Top of Page 86 of 178 of the Fordham and Creighton Law Review referenced by Neil, last sentence of first paragraph: “Credit enhancements can be so effective that they allow even delinquent and foreclosed loans to be securitized.”

    Is it then REMIC laws that would require a “non-performing loan” to be removed?

  11. The real party actually starting concealing their identity in credit card collection (credit cards are also securitized). Debt collectors fared better in collection when the original Bank is named as the current creditor (or the “servicer” for the original bank – servicer was the actually the servicer for securitized credit receivables trust – but this was never disclosed). Despite the fact that such collection violated the FDCPA, when the collectors went to court (and arbitration was also frequently used) they found their claims more persuasive in the name of the bank rather than in then own name. Judges were more likely to easily grant Summary Judgment without having to grant discovery and determine exactly how much the debt (collection rights) were purchased for. FDCPA law is weak, and even if it was violated, only a slap on the wrist was in order – debt collectors were not afraid. The mortgage foreclosures are just a carry over of how securitized credit card debt collection was carried out. By the way, people who defaulted on credit credit debt were a goldmine for the bank because their credit scores were low and the banks could push a subprime mortgage. The Gramm-Leahy Act repealed the Glass-Segall Act which separated commercial lending from investment banking. As a result, banks could both lend and practice investment banking in which the receivable cash flows were securitized.

    In addition, private entities do not publicly report their balance sheets to the SEC. There is no way to trace actual transactions. As the banks, as security underwriters, purchased the mortgages for the purpose of securitization, they often violated federal law (TILA/RESPA) in the process, as well as clear evidence of predatory lending. Many of these claims could be utilized against the bank in foreclosure actions – but not if there is not direct evidence of the banks involvement or that the bank still currently owns the note. Again, much easier for courts to grant summary judgment without clear evidence. And, the banks know consumers who are in trouble simply do not have the means to pursue long and costly courts battles. Also, many of the contracts may provide liability protection of certain parties in the event of successful legal actions. Banks have the financial and contractual incentive to protect the identity of certain entities, including “investors”, to continue their profit business and for guaranteed removal of bad loans from their corporate balance sheets. Ironically, the largest actions in court today, which get the most attention, are the investor lawsuits against the banks and not the individual foreclosure actions. As these cases proceed through discovery, much could be revealed for the consumer – but likely many will settle without adequate disclosure..

    Banks, who really rely on consumers business first – before investor business, make every effort to conceal business practice from the consumer in order to promote profit potential. It was Europe who first publicly dumped the US MBS when crisis unfolded. Otherwise, the US would still be practicing the subprime mortgage securitization – and the financial crisis might not yet have occurred. Congress gave the financial institutions everything wanted. And now, the banks are furiously fighting the Consumer Protection Agency as part of Bank regulation. Consumers have had no where to go to for government assistance. Agencies such as the Comptroller of the Currency, which is supposed to protect consumers – protects banks as the banks fund the OCC. The FTC does not act on individual complaints and rarely acts on volume complaints. State Department of Justices do the same as the FTC. We desperately need a Consumer Protection Agency. Courts are not doing their job. Many judges simply do not want to take on the big banks and are influenced by the banks large and powerful law firms. The media is also largely influenced by the financial institutions. When the crisis first hit, the media was quick to promote the consumer as the culprit. I remember that Treasury Secretary Henry Paulson was waiting in the lobby of a major network during first broadcasts of the crisis. Mr. Paulson knew there would be casualties of the crisis – the people – and wanted to assure that the media did not blame the banks.

    Know I am talking too fast again. You have a very important point about taxes. Since many 1099-Cs are filed by the wrong party (IRS does not care), principal reductions could be a big problem (and short-sales). Another reason banks are simply not doing them.

    In addition

  12. 1) Sued the bank to stop nonjudicial foreclosure.
    2) laon in defualt and in a lawsuit
    3) Bank sells loan to a hedge fund
    4) Asked for the info in admissions
    5) how do i use this to win my lawsuit. Just want to sell the home and move past.

  13. Anonymous- let me turn the question around, then- why are all the foreclosing entities hiding behind the trusts and or trustees? What do you think the advantages are of illegally hiding behind the guise of the trust, versus actually just coming out and foreclosing in the name of the bank holding the security and the note? I can’t think that far ahead, especially about something I don’t know anything about.

  14. Ian

    I do not know about evasion of taxes, but due to deregulation – who is watching?

  15. To Anonymous- I forgot to ask- briefly, taking into consideration your post below, and all other relevant, known and unknown info, if the trusts,the banks, the hedge funds or whomever buys/sells/owns/pledges any of these mortgages or securities- IF they were to evade federal and state taxes, fees, filings, notices, etc, what would they do and how would they do it? Please type slowly, I don’t read very fast.

  16. To anonymous- very succinct explanation of the asset backing the security having to be current, and negating the security interest when in default. I suspect that you are an industry insider in a past life or currently, in light of your posts. Keep it coming. You and everyone else making meaningful conributions to the site are greatly appreciated. Speaking of which, where is LA Dodger today- I wanted to give his phone number to a collection agency, maybe they could annoy each other.

  17. Good case – but it is just the tip of the iceberg. BONY (as trustee) has no right to act as agent for the securitized trust. The trust was set up as a pass-through of current cash payments. Securitized assets are only for current payment streams. Once a note (loan) is in default – it is removed from the pass-through securities since there is no current payment. Further, many loans never even made into the trust as they were deemed “non-compliant”. However, the CDOs were synthetically structured as derivatives even for the non-compliant loans. Meaning these CDOs were separate and from the securities trust that securitized the current loan “payment stream” that the trustee still falsely claims to be acting on behalf of. Any assignments to BONY, as trustee, is not for the original trust, but for the swap holders, CDO holders, or distressed debt buyers.

    Contact in NY confirmed that Hedge Funds are purchasing mortgage backed securities at steep discounts from the security underwriters (banks). The purchase price is based on negotiation between the banks and hedge funds and reflect potential loan modifications and foreclosures. At all times the actual note (loan) remains on the balance sheet of the bank (security underwriter) and is not passed on along with the purchased “discounted” mortgage backed securities. I continue to emphasize that securities MUST be for current cash flow payment streams and non-current loans are extinguished and, reasonably, no longer current and, therefore, not a security or certificate. Only collection rights are passed on in default loans – and these rights are not part of securitized trusts since the loans are not current. Demand to know who the trustee is really acting as as an agent for – and, as stated before by Mr. Garfield- demand to to know on whose balance sheet the loan (or collection rights) are accounted for. NO trustee, as a fiduciary, has a balance sheet – neither does a trust.. The loan collection rights must be accounted for. This has totally escaped judicial oversight.

    Also, listened to Mr. Bernanke speak before Congress today. Almost no representative brought up foreclosures or under-water mortgages. It was as if no one ever contacted them to complain about what is happening. However, it was clear, very often, that the bank’s lobbyists had influenced certain representatives. If we do not speak up to Congress – we will not be heard. This needs to be done in conjunction with all the efforts Mr. Garfield has set forth.

    And, to Mr. Garfield – you are the only one out there who is vocally truly standing up for the people. A million thanks for all that you have done – and continue to do. You may make history textbooks.

  18. so BONY just re-files it’s foreclosure suit, right?

  19. Good, it’s about time. I f-ing hate Bank of New York, aka BONY … as they’re the pretender-lender who stole my house.

  20. I have asked Mr. Geiser re: your article on ca statue 33-808 which was also published included in the workbook I ordered.
    I can’t seem to find this statute in California. I did however find it under Arizona statute.
    Can you please explain? I still have not received answer to this question. I am confused.

  21. Fordham Law Review Article

    did anyone find the Fordam article he aid was on this blog, i could n ot find a link for it…would love to read it.

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