House for Free? Don’t get Caught in that Trap

I’m probably partly to blame for this notion so I want to correct it. The goal is NOT to get your house for free, although that COULD be the result, as we have seen in a few hundred cases. The simple answer is “No Judge I am not trying to get my house for free, I’m trying to stop THEM from getting my house for free. They don’t have one dime invested in this deal and payments have been received by the real creditors for which they refuse to give an accounting.”

The obligation WAS created. The question is not who holds the note but to whom the note is payable, and what is the balance due on the note after a full accounting from the creditor.

So don’t leave your mouth hanging open when the Judge says something like that. Tell him or her that they have the wrong impression because they are getting misinformation from the other side which is trying to get a lawyer’s argument admitted as evidence. Tell him you want the deal you signed up for — including the appraised value that the lender represented to you at closing.

Don’t say you won’t pay anything. Offer to make a monthly payment into the court registry — not in the amount demanded, but for perhaps 25% of the amount demanded. Tell him you refuse to pay someone who never lent you the money, who is not on the closing documents and is relying on securitization documents which contain multiple conditions, many of which they have violated.

Tell the Judge you deny the default because you know they received third party payments and they refuse to allocate the payments to your loan, and they refuse to inform you or the Court as to whether these third party insurers and guarantors have equitable or legal rights of subrogation. Subrogation is taking the place of another person because you are the real party in interest.

“Why should I lose my house just because I didn’t pay them. The note isn’t payable to them. Even if they have an assignment, it violates the terms under which they are permitted to accept it, and even if they were permitted to accept it, it wold be on behalf of the true creditors who were the investors who advanced the funds and now could be anyone because of the transactions in which the investors were paid or settled.

“The question is not whether I made a payment, it is whether a payment is due after allocation of third party insurance, credit default swap and guarantee payments. Who are they to declare a default when they refuse to give a full accounting?”

75 Responses

  1. It has always been our position that the law AND the pooling/servicing agreements make it clear that the servicer is the “real party in interest.” Hence all of these standing argument suits are a waste of homeowner’s money, give them false hope, and in reality just postpone the inevitable. Attorneys, we train, know the ONLY thing that REALLY works is to find some violation of law by one or more of the agents of lender, and use that against them.

    Well the Seventh Circuit seems to understand the law as we do and shot a hole through the heart of the standing/real party in interest argument raised by those and their blind followers, who lead homeowners down the “road to perdition.”

    The case, CWCapital Asset Management, LLC v. Chicago Properties, LLC, et al., was decided on June 29, 2010. Judge Posner reversed the District Court, finding that the servicer is “much like an assignee for collection.” In this case, the servicer had standing to sue because it had a personal stake in the outcome of the lawsuit as “it receives a percentage of the proceeds of a defaulted loan that it services.”

    Judge Posner decided that under the terms of the pooling and servicing agreement, the servicer “has the whip hand; he is the lawyer and the client”; while the trustee’s duty was merely to provide support when needed. The pooling and servicing agreement delegated equitable ownership of the claim to the servicer, while the trust holds mere bare legal title. It is the equitable ownership that enabled the servicer to act as the plaintiff.

    The only hope now is that one or more other circuits hold the opposite and have it to go before the S.Ct.. But I’d bet the farm that they would uphold the 7th Cir. because in dicta they already have!

  2. Law is not always right when it leaves room for interpretation

  3. This is excellent..your posts lately have been OUTSTANDING. Thanks for drawing those of us who are paying attention a road map!


  4. Deontos:

    Much agreed!

  5. Storm,

    What is this about “straws”?

    We were talking about ABERRATIONS.
    I was just pointing out the RELEVANCE
    OF YOUR WORDS; that aberrations do HAPPEN.

    It was a very Ironic Coincidence that YOU
    should mention ABERRATIONS and
    I had just posted an aberration a few minutes

    I didn’t say or mean “grasping for straws”.
    But then again maybe you are now changing
    and calling ABERRATIONS straws? I’d have
    to agree partially.

    But this case was about arrogance and disdain
    for the Law. A sad state of affairs that an
    “Officer of the Court” would disrespect a Judges
    Order. That’s incredible. The Homeowner had
    already relinquished title to house. HE WASN’T

    But then again if this same obvious arrogance
    and disdain is a matter of normal conduct
    by alleged Creditors and their attorneys then
    what is really relevant is what the Judge said
    in her proceeding. I won’t go into the protracted
    details of that here; but she did “refer” to their
    INCOMPETENCE and IDIOCY and then
    SANCTIONED the Creditor as a sort of PORTENT

  6. Deontos:

    There have been over seven million foreclosures over the last couple of years, and all that can be provided is one case.

    Moreover, a sanction for a discovery violation, or failure to follow an order from the court has NOTHING to do with the underlying merits of the case. Nice try!

    You give new meaning to “grasping for straws”

  7. Storm

    I love aberrations!

    In fact, I JUST POSTED ONE. Look in the “Homeowners” tab on this site.

    A homeowner just got a condo FREE AND CLEAR in Florida.

    Just an ABERRATION. Occurred as a result of SANCTIONS. Foreclosure Mill and it’s wonderful client ignored a Judges Order
    to post bond in TOTAL Arrogance. THEY PAID THE PRICE.

    Now, if we could just keep the Arrogance going that disturbed the Judge so much, maybe we could get alot more ABERRATIONS.

  8. Jeff:

    That’s B.S., hasn’t happened in NJ or anywhere else, and if it did it’s an aberration.

  9. Neil states that in several hundred cases homes were gotten for free – does anyone know of this happening at least once in NJ?

  10. Can anyone cite any case were the homeowner took the house free and clear?

    Sure…its called Quiet Title


  11. House for free is a mute point. Long before Christ spoke of the debtors obligation was a debtor’s accountability a fact.

    The investor however is owed a certain debt or should I say “dividend” by lender /seller/ depositor as obligor who relies on the payments collected from a multitude of borrower loans.

    1) The servicer if an agent its limitations offer the investors only a best efforts collection assurance.

    2) If servicing is an obligor it is to provide the mandatory complete amount due regardless of pooled assets performance.

    The test is recourse and “Repo” requirement. The first cannot initiate foreclosure and has no authority to offer a modification. The latter is prohibited from modification yet it can foreclose and will . . .
    UPON EVIDENCE OF FIRST REPURCHASING THE RECEIVABLE. Without a prior repurchase there exists no basis in the asset.

    This analysis is why the lender uses a collections company to repossess assets. The lender lost the right to make claims as beneficial interest at such time of transfer.

    Basis is determined after the fact upon foreclosure sale meaning the sale is flawed by no condition precedent -only subsequent reverse purchase and after the fact.

    The sale is further made to fail under SFAS 140 accounting rule and deemed void by the fact derecognition in a transfer uses sale accounting thus barring the servicer from any repo as required to foreclose.

    Stay focused here and sees my point. The servicing agent is one in the same as a lender and therefore barred from foreclosure under sale accounting and recourse provisions. That is without reclassifying the assets sold as debt and by returning to the balance sheet billions in debt.

    Money is not created from air and like maritime law is an ignorant topic of discussion.

    Derecognition erased billions of $$$ in underlying depositor funds replaced by securities sold for cash. Other than “goodwill” accounting, it’s there you will find the source of money created from banishing the assets underlying debt.

    These arguments are a subset of the bigger picture will win back a home where no defenses are possible.

    Remember, I am not an attorney but considered a competent accountant [albeit without designation]. But I was one of them and know these issues first hand from experience.

    Under the rules of evidence an expert witness must be able to rely on all five senses for which it can say first hand that he or she has lived the testimony


  12. This free house syndrome prejudice crap is exactly why Thomas Jefferson established that for the judiciary to be kept impartial that they be given freeholds for life(a “free house”) and be exempt from financial or other obligations that might influence and upset their balance of indiference. but I think it is obvious that they have appearently expressedly waived that right, so yes indeed then, on with the show. Where does this judge live and how much do you think we can get for her house? If she is indeed correct, then by all means we should start collection efforts immediately on all these judges who think they can just ignore their obligations as if they don’t exist and get away with a “free house”. The judge couldn’t be more right for the wrong reasons and wrong for the right reasons, our country is in major debt these cases obviously have zero affect on fixing the problem, needless to say the country is obviously sustaining an expenditure that is expendible by paying for these courts to stay open for no reason except so these courthouse squatters can get a “free house”. It would make more sense economically if we just shut the courts down permanantly(we do fine on furlough days without them), liquidated their pensions and recovered part our legal “due” by enforcing our rights as trustees, beneficiaries and creditors and sold the real estate they currently hold that they think is “free”. I’m sure if we act quick we won’t suffer too large of a loss, I mean it’s just sitting there and what their doing with it isn’t paying off the debt they owe to us. So they leave us with no other choice but to foreclose.

  13. Drew, thanks for the case. I checked it out, and it’s a successful TILA rescission + bank’s attorney’s messed up so that the debtor did not need to tender the house (or loan proceeds) upon rescission. Nice.

  14. Storm

    Ok – but wish we could pick and choose our judge. Unfortunately, it is the “luck” of a lottery. If this were not so, every case would be decided in uniformity.

  15. You’re not going to find any cases where someone got their house “free & clear” based on any securitization claim or any other claim based on same.

    However, if one can show tortrious conduct where you expose the bank to paying punitive damages, than now you’re talking.

    The choice for the bank becomes do we take the chance of having some jury awarding big bucks to the HO, or just giving them the house, the latter is usually the answer.

  16. Case Type: CA – Mortgage Foreclosure (filed prior to 6/1/2009)
    Date Filed: 09/25/2008
    Location: Div 33
    Judicial Officer: Rodriguez, Jose R
    Uniform Case Number: 482008CA024835A001OX
    Notice of Dropping Party (Judicial Officer: Rodriguez, Jose R)

    Comment (as to count II *sent to rec 1/27/10*)

    Please look at my case and tell me what can I do? I dont know what notice of droping is. I had follow your advise and it has work out fine soo far I just dont know what to expect next. Thanks

  17. Here might be a case for you to review
    First Union Nat’l Bank v. Wilson, 2007 WL 4341122, Court File No. 89284 (Ohio App. 8 Dist., December 13, 2007)


  18. Here is a case that might be a start

  19. Judy

    You are absolutely right. Cases that come close to exposing fraud are derailed into settlement so that judge will not have to make a public decision. Judges do not want this responsibility. These cases are out there, but we will not see them because contents of settlement cannot be discussed. As a result, there is no precedent setting decision.

  20. Nick,

    You are less likely to see any case where a Judge just plain signs off on the borrower getting the house for free than you are to see a case where the judge tells the banksters what they have to bring back to court and there is NO way for them to bring that properly produced document because it never existed.

    Cases of that nature are more likely to end up with either a ‘Quiet Title’ action or a private settlement agreement. Attorneys can not name names of these settlement cases but they DO exist.

  21. Can anyone cite any case were the homeowner took the house free and clear?


    Thanks to Drew’s suggestion the audio transcript of my hearing is now uploaded on YouTube.

    The hearing lasted just a tad over ten minutes (and so does this audio clip). The Court utilized about four of those ten minutes to reprimand my lawyer for his supposed late filing, so careful out there because it really looks like the Courts dislike late filings.

    Our sur-reply was supposed to be filed on May 10th and it was filed on May 10th at 8:44 PM. My lawyer still maintains that his filing was done timely and in accordance with our Local Rules.

    Here is the link:

  23. Bob

    I am doing everything I can. All I can say right now.- I have said this before.

  24. Bob G

    Not sure what you are talking about with Ron Paul – but audits are worthless if there has been accounting conversions and off-balance sheet conduits (although these are supposed to be dissolved and brought back on balance sheet – where they never should have left). This is all part of “lack of transparency.”

    My site is a Federal Reserve Opinion published in the Federal Register. Federal Reserve Opinions have great weight in court. The Opinion regards the May 2009 TILA Amendment for Creditor disclosure. The law stands – and the Federal Reserve has just clarified the definition of Creditor – due to much confusion among the public and in courts.

    For exact cite of law – see “CBA Bank Alert” May 21, 2009.

    “A duck is duck” (never get my cliches right) – but you know what I mean. A creditor is creditor – and it is not trusts/trustees/servicers/security investors.


    Mortgages could never back securities if they were not qualified to begin with. Mortgage backed securities must be triple a rated. The so called “mortgages” were just debt – and junk debt – never capable of triple AAA rating – no mater how you sliced and diced it. That is the crux of the crisis.

    And the borrowers never knew what hit them – in fact they were paying yield spread premiums ( by high interest rates) for mortgages – they THOUGHT were they were qualified for – on inflated property values.

  25. ANON

    Please let us know about this additional evidence. There are a lot of folks here whose well being and that of their families is hanging in the balance. Put yourself in their position.


  26. ANON

    Also, I think that I understand your argument that the Fed, FASB and the SEC’s interpretive actions and positions would nullify many of these foreclosure actions. But the foreclosure actions are state actions, not Federal actions. Whereas federal courts as a matter of policy defer to agency interpretations of regs and the law (for the most part), I’m not sure that a state court would find them binding on foreclosure matters before the state court. The state court is going to look to state court precedent unless there is a clear conflict between a state law and a federal law regarding the same subject matter, or unless there is only federal law covering the matter before the state court (there you run the risk of having the case removed to fed district court…for better or worse).

    As we all know, judges can be lazy. If they think that another or prior court has already disposed of a new, novel or complex matter, or an appellate court has done so, they are going to take the path of least resistance so as to dispose of that case and move their remaining caseloads forward.

    Whatever arguments that you can muster in these regards would have to be explained simpler and with more legal authority than I’ve seen presented so far. Mind you, I’m not taking any shots at you, I’m just trying to figure out how to get the judge to buy into this. It has to be so simple, obvious and COMPELLING that even a caveman (or an ex-spouse) could get it.


  27. Simon

    Mortgage backed securities must be triple rated – Underwriters combined bad loans with triple A to form CDOs derived from trust – in which all certificates were first sold to security underwriters. (this all occurred AFTER loans were sold to security underwriter parent). But many of these loans were never triple a capable – and never even qualified as a mortgage. Then, what kind of loan were you being given.

    I have additional evidence I cannot discuss here. But look into it. What I state is theory – but back up – if you research completely is strong. In fact, many “mortgages” granted were not even “new” mortgages” – they were just “modifications'” of a prior mortgage loan – which had already been converted to a debt (non compliant as a mortgage asset to back mortgage backed securities) but they were put into trusts anyway – and some disposed of without disclosure to SEC. (deregulation allowed)

    Why else do you think we had collapse – and massive securities fraud lawsuits???? But they have big law firms – we do not..

  28. ANON

    Your cite is to the Fed Register. The Fed Register is not the final reg, which would appear in the CFR.

    To your knowledge, is there a final CFR reg on this matter?


  29. The Fed has audited books already. I’m not quite sure what Ron Paul is talking about. Check out the Fed’s website.

  30. Okay

    Put this here before but – quotes below. Note – a “covered person” means a “creditor” obligated to disclose itself. Also note – from me – conversion of actual loans into “securities” is just an accounting gimmick – government is stalling. But FASB mandates that these “accounting” gimmick securities be brought back on balance sheet by June of this year!!! Certificate holders – as I have said many times, are the security underwriters to the trust – they are the ONLY certificate holders. The security underwriters then repackage into CDO “securities” (Not really securities – but synthetic) for additional pass through of receivables to CDO “investor”. The loan itself – is never passed on – only the cash flow rights to current receivable payments (Mr. Bernanke clarified this quite some time ago). And the “security investors” have lost quite a bundle – that is why they are suing – suing the security underwriters – and the underwriters’ parent.

    Believe if you follow the path THEY want you to believe – you are barking up the wrong tree. Trusts/Trustee/servicers/security investors ARE NOT THE CREDITOR. You are fueling their fire if you allow them to promote this fraudulent claim.

    [Federal Register: November 20, 2009 (Volume 74, Number 223)]
    [Rules and Regulations]
    [Page 60143-60153]
    From the Federal Register Online via GPO Access []



    12 CFR Part 226

    [Regulation Z; Docket No. R-1378]

    Truth in Lending

    AGENCY: Board of Governors of the Federal Reserve System.

    ACTION: Interim final rule; request for public comment.

    To become a “covered person” subject to Sec. 226.39, a person must become the owner of an existing mortgage loan by acquiring legal title to the debt obligation. Consequently, Sec. 226.39 does not apply
    to persons who acquire only a beneficial interest in the loan or a security interest in the loan, such as when the owner of the debt obligation uses the loan as security to obtain financing and the party providing the financing obtains only a security interest in the loan.
    Section 226.39 also does not apply to a party that assumes the credit risk without acquiring legal title to the loans. Accordingly, an investor who purchases an interest in a pool of loans (such as mortgage-backed securities, pass-through certificates, participation interests, or real estate mortgage investment conduits) but does not
    directly acquire legal title in the underlying mortgage loan, is not covered by Sec. 226.39.

    Section 131(f) of TILA addresses the treatment of loan servicers under the assignee liability provisions in Section 131 as well as the provisions of Section 131(g) which were added by the 2009 Act. Under TILA section 131(f)(2), a party servicing the mortgage loan is not treated as the owner of the obligation if the obligation was assigned to the servicer solely for the administrative convenience of the servicer in servicing the obligation. Accordingly, the requirements of
    Sec. 226.39 do not apply to a loan servicer in this circumstance, even if the servicer holds legal title to the loan.


    From me – Balance sheet accounting is implied under reference to Ginnie Mae “legal title” is accounting rules – which means accounting for loan ownership SOMEONE HAS TO ACCOUNT FOR – OTHERWISE WHO ARE YOU PAYING IN FORECLOSURES WITH ACCOUNTING FOR VALID AND LEGAL RECOVERY (security investors never account for recovery) – see below

    The Board has received a letter from the Department of Housing and Urban Development’s Office of General Counsel, in its capacity as legal counsel for the Government National Mortgage Association (Ginnie Mae),
    seeking to clarify Ginnie Mae’s status under Section 404(a) of the 2009 Act. Ginnie Mae guarantees securities that are collateralized by mortgage loans. HUD’s letter states that, as the guarantor of these securities, Ginnie Mae obtains equitable title in the mortgage loans but further states that the issuers of the securities retain legal title to the loans that collateralize the securities. According to HUD,
    legal title to the loans is not conveyed to Ginnie Mae unless the issuer of the securities defaults in its obligations. If the securities issuer defaults, Ginnie Mae can immediately extinguish the securities issuer’s interest in the loans and take legal title. Based on HUD’s representations and legal opinion regarding Ginnie Mae’s status, the Board believes that the requirements of Sec. 226.39 do not apply to
    Ginnie Mae until it finds the issuer in default and acquires legal title to the loans.

  31. I wonder if the Fed audit can reveal things like specific MBS assets they hold, CUSIPs and all.

  32. Anon,
    Thanks. Tell me more about the SEC in their determination that:

    “mortgage loan” negotiable instruments – when in fact – the loan was never a mortgage loan capable of backing a “mortgage security” according to SEC.

    Seems I am not understanding how you say the mortgage could never back securities.

  33. Key here is to get the judge mad at the plaintiff. That’s not hard to do. Also, draw your legal theories out in charts and pictures. You would be amazed at the transformation that can come over a judge.

    Just finished winning a SJ motion against WF. Judge didn’t see it the first time around in 2008 and 2009. He finally got it in 2010 when I started to draw him pictures in my SJ motion exhibits.

  34. Bob G

    Well, that is what my favorite attorney says – “work backward”!!!

    But do believe many judges are simply “not game.” – no matter what is done or said. And, that barrier is tough to break.

    As suggested to Neil, maybe there should be a “LIST.”

  35. ANON

    What’s the link to the Fed opinion that you’re looking at? Also, where’s the link where the Fed opines as to how these things should be accounted for on the note holders’ balance sheets? Not sure I’m looking at the same thing.

    Also, by bringing these notes back on the balance sheet, assuming that they were not real sales (i believe that’s the operative concept, no?), doesn’t this eliminate the bankruptcy remote function that the SPV’s were designed to effect in the first place?

    What the heck happens then? The certificateholders would go ballistic, wouldn’t they?

    By the way, right now the Fed Res Bank of NY is holding $1.2 trillion of Fan and Fred MBS. But they won’t say how much of each they own, or what the CUSIPS are, or whether these are newly minted MBS, MBS held on F & F’s balance sheets as investments (Believe it or not, Freddie holds many billions of dollars worth of Fannie MBS, and likewise for Fannie vis a vis Freddie. Neither will discuss it with me. They refer me to the Fed. The Fed isn’t home.

    Also, get a load of this: Freddie holds several billion dollars worth of credit card receivables on its balance sheet, as well as a variety of other non-real estate MBS. Ditto for Fannie.

  36. Something to ponder.

    PART I

    It has been my experience that you will seldom win your foreclosure case with a single knockout blow. Rather, you win by playing chess while the bank is playing checkers.
    This means you think out every move several steps ahead. Draw a decision tree if necessary. Start at the end result and work backward. End result is you win. Now what was the step that had to occur immediately prior to that “you win” step? Keep working backward until you are at your initial loan closing.

    Bear in mind that unless the judge is already predisposed to slamming banks, this is going to take some time. He needs to be reeducated. This is a process, not an event. You have to bring the judge along inch by inch. If you try and take him from zero to 3 feet in one fell swoop, you are most likely going to lose. The last inch that wins you your decision doesn’t happen in a vacuum. He has to be able to fall back on the 35 prior inches that he’s now accepted for intellectual support. Also, in his mind he is going to be thinking “if I grant the pro se defendant the relief being sought, and the plaintiff appeals and wins, I’m going to look like a fool before all my colleagues.” On the other hand, if he gets overturned by a pro se litigant’s arguments at the appellate level, he’s going to feel pretty foolish as well, but not as foolish as he would in the first instance. This is because in the first instance the pro se litigant argued the appeal and won, but in the second instance the professional plaintiff’s atty argued and won.

    In any event, think of it as a long process. You want to get the judge or the Clerk of the Court to sign your subpoena duces tecums so that they are judicial and not merely party demands. If you do this right, the plaintiff will ignore them. (Wells Fargo and Litton are really good at this.) Nothing pisses off a judge more than having his subpoenas and orders ignored. Your goal here is to start to create a reservoir of ill will between the judge and the plaintiff.

    Also, you need to start accumulating little procedural or evidentiary battle wins. Things that your adversary doesn’t think much of at the time, but things that slowly but surely start to close off all the exits for the plaintiff. This starts to establish your credibility with the judge. Remember, your adversary does this for a living day-in and day-out. This is his or her advantage over you. But he or she has been playing the same tune day-in and day-out, too. Your job is to introduce different tunes that your adversary doesn’t know the steps to. Also, you have the ability to focus laser like on the case, where your adversary does not (time constraints, volume, etc.)

    This requires legal research on your part. But this can be expensive. So you need to check with your State Library to see what online legal services they have available to the public, services that you can access from home. But here’s a little known fact. Most State Librarys (the ones located in the State Capital) have Lexis, LoisLaw, and tons of legal periodicals that can be accessed for free from your home computer. But they’re not available to just anybody. You have to be a lawyer or a state retiree… a little known fact, even by lawyers. So you find an accommodating state retiree and ask them to obtain an online State Library card for you. Bingo—you’re in business.

    Another good source for Lexis is the academic version (doesn’t have forms or treatises but does have everything else you will need, to include Shepardizing). You access this by finding someone with a kid in a local community college. They have online access to all this stuff (again, for free) just because they’re a student. You ask their permission to use their login, and you’re good to go.

    PART II later.


  37. Bob G

    No such distinction in Fed Res Opinion. It states who is not a mortgage OWNER. (Creditor)- and servicers and pass-through security investors (beneficiaries) are NOT mortgage owners. Securitization is nothing more than pass-through of receivables – legal title to property is not acquired (unless servicer purchases this – or the property is sold the trustee – which occurs only AFTER foreclosure).

    Trust/trustees are just storing places for the real creditor – until that real creditor disposes of it to another party. Balance sheet accounting is the key to the real creditor, according to Fed Res. – and trust/trustee/security investors – never account for you mortgage loan on a balance sheet.. In fact, trust/trustee – do not even have a balance sheet – they account for no assets.

  38. Bob G

    I am not an attorney and only voicing an opinion – not to be construed as legal advise.

    All I am saying is – were these “mortgages” even really a mortgage (loan) capable of backing a mortgage- backed security (the TRUSTS). Believe they were not. And, believe they were nothing more than debts. Believe courts are applying UCC to “mortgage loan” negotiable instruments – when in fact – the loan was never a mortgage loan capable of backing a “mortgage security” according to SEC.

    This is theory – but, I believe, cause for the current government investigation, and shut down/bankruptcy of many entities. Repeat again, if there was “security investor” fraud – there was BORROWER fraud. But who is standing up for the borrowers?

    Financial institutions have fought hard to prevent Bankruptcy reform – this is for a reason. In my opinion, because the so called mortgage loans were nothing more that debts – under the guise of a mortgage loan – and incapable of being validly “converted” into a security via accounting gimmicks.

    Investors are screaming – but so should borrowers.

    Fraud starts at so-called “mortgage” origination.

    Let us call a “mortgage” – a “debt.”

  39. ANON

    Didn’t the Fed Res interim report differentiate between a creditor and a mortgagee and a noteholder? I thought that they said that they weren’t the same thing, and that only the noteholder/mortgagee could foreclose.


  40. Simon

    Supposedly people took out “mortgages”, and these mortgages (loan receivables only) were sold to secondary market – for which note endorsement was required – and endorsement could be in blank.

    But what if the “mortgage loan” was never a mortgage loan that qualified as an asset to back “mortgage backed securities”??? (cause of current investigation includes ratings agencies). Thus, “mortgage loan” was really nothing more than a loan – a debt (not a mortgage for which note was negotiable) – incapable of backing a mortgage-backed security. ( ie all those wonderful (off-balance sheet) “trusts” that supposedly passed through mortgage loan receivables). Never really a mortgage loan.

    This is what happened – and in large mass. And, once the “debt” becomes a “default” – how does the “note” endorsement even hold??? Fraud from the onset – never a mortgage, never secured, and never qualifying as a “mortgage loan asset receivable” to back mortgage backed security. Nothing more than a debt – does anyone have notes endorsed for debts????? Debts are not secured (likely reason financial institutions fought bankruptcy reform).

    In all “debt” collection, the current creditor MUST be identified.

    Really believe that many so called mortgage loans were just “debts” from onset.. Thus, if contract is invalid – as a “stated mortgage” – then how can note endorsement even apply???? Again, debt collection requires identification of the creditor. Note endorsement, therefore, is based on bogus contract at origination – and note endorsement is not sufficient alone for debt collection. Need to identify the creditor. This is why Federal Reserve was so careful (Interim Opinion) to state that servicers and pass-through security investors – are NOT the creditor. Federal Reserve knows.

    We are dealing with “debts” -not “mortgages”. Courts, aware or not, are trying to attach old mortgage and UCC law) rules to – frankly, originated “debts” that are now in default. Old law is outdated, does not apply, and should not be relied upon in foreclosure cases.

    Let us call a spade a spade – “DEBT.”

    And, that “DEBT” is causing a global crisis.

  41. ANON

    I think these stmts need some qualification:

    “Federal law has priority over state law. Any bad Florida decisions could be preempted.
    Naming actual creditor is the issue – and we have Federal Reserve opinion as to define “creditor”. Note endorsement is preempted. – if endorsement does not identify the creditor – blank or otherwise.
    We are dealing with default debt – no longer a mortgage – and was likely not even a mortgage (according to Federal guidelines) from the onset – at least not a mortgage for “mortgage backed securities” – not then – or now.”

    Federal law preempts state law when there is a conflict between state and federal law (supremacy clause). Also, Federal law should control re federal statutes and diversity issues if brought in federal court. But many times federal law will defer to state law when state law controls. I think this is particularly true with respect to UCC issues. The fed courts in their decisions will cite the state statutes or cases as controlling and will either defer to them or ask them the states’ highest courts to certify the question.

  42. Anonymous,
    What do you mean when you say “Note endorsement is preempted. – if endorsement does not identify the creditor – blank or otherwise”?

  43. TNL

    Federal law has priority over state law. Any bad Florida decisions could be preempted.

    Naming actual creditor is the issue – and we have Federal Reserve opinion as to define “creditor”. Note endorsement is preempted. – if endorsement does not identify the creditor – blank or otherwise.

    We are dealing with default debt – no longer a mortgage – and was likely not even a mortgage (according to Federal guidelines) from the onset – at least not a mortgage for “mortgage backed securities” – not then – or now.

  44. I am also interested in the Notes endorsed in Blank — … any comment as to how they play out in Florida ??

  45. To erLinda,

    I suspect our cases have a LOT in common. I’m also aware of forged documents by Marti Noriega of Litton. I have her signing for MERS. What a crock.

  46. To Daniel Gyurec,

    How can I contact you? I DO have the name of THE attorney I would like to link you with and he is in southern CA.

    canceledcwmods [at] gmail [dot] com

  47. Can anyone cite at least one case where homeowner got the house free and clear?

  48. erlinda

    Great post!!!

  49. Thursday 20 May 2010

    Thank you, Deontos. Spot on!

  50. i think with the experience i have in ca court, i found out that a non- judicial foreclosure who initiated the NOD is a debt collectors trying to collect a debts. Find out the company’s name and on NOD the debt collectors will tell you if you don’t dispute the debt with in 30 days , the debt collector assumed that the debt is valid or they would say this office is attempting to collect a debt and any information obtained will be used for that purpose and at the same this debt collectors will record a substitution of trustee naming them as ” A Substitution Trustee”. sometimes this debt collectors will record the NOD first, then record the Notice of Trustee sale and then recorded the substitution of trustee. if you have that document in that order, the non-judicial foreclosure is void because the debt collectors assuming as substitution of trustee have no power to foreclose due to the fact that the pretender trustee has no power to sale the property because the recording of their documents are faulty, the pretender trustee must record first the substitution of trustee before they could record a NOT & NTS. this were most of the errors i found out in all of documents submitted to the court by pretender attorney in my case in BK court. also, the signatures were signed in- house either by attorneys employees or pretender trustees and pretender creditors. you have to start digging your documents to begin your forensic investigation and if you have not started your case include this evidence to your pleadings. the FRAUD itself is in the documents submitted by their attorneys. the documents are all forged, false and read between the lines of each documents esp. NOD, NOT and SUbstitution of Trustee. and for all those case who were summarized dismissed by incompetent judges, don’t waste your time you could appeal it in Court of Appeal and always put in your appeal you were denied your constitutional due process right. I have one case now pending at 9th district Curt of Appeal against Litton. I am always hopeful that homeowners will prevail but we have be persistent in attaining our goal. in my case rejection is not a failure instead it makes me work hard to fight more against this pretender lenders. i objected paying automatic stay orders by BK why? because i know this pretender creditors are all bunch of debt collectors using the legal system in order to scare us homeowners. it looks legitimate when they use attorneys to collect a debts.

  51. Thanks Deontos for FR site

    Want to say that – what is the law is not necessarily what the judge perceives as the law -. This includes the UCC and “may” etc. – as Daniel points out. And Daniel, reasonably, the judge should have stayed foreclosure while you proceed with your claims. All is left up to the judge – and that is a lottery.

    Bob G – they can be given time to get “ducks in a row” – but this is unlikely given that they do not want to publicly disclose and it may very likely subject other parties to litigation. That is why they are doing things fraudulently now – they, amazingly, have no choice.

    Foreclosures are mounting – eventually government will have to step in – but if you do not keep litigation alive – you will be left out.

    you are right on the “a free house – you will lose with this goal.” except that alot of people like moi or my dad have/had been paying for a house that originally costed $75,000 when purchased in 1985 from my grandma, has been in the fam since it was built in 1955, been paying on it for over 25 years(eventually alone after mom ca$hed out on 1/2 the house in 89) and had to constantly fight off vultures that did eventually get their claws on the equity by increasing the loan amount without authorization by $85,000 in one of the refi’s and got picked off be them dispite the expressed offer while in district court proceedings to consent to a voluntary sale of property appraised for over $550,000 as the means to satisfy the so-called “tender” requirement of rescission for a “loan” that’s less than half that, which was rejected as being a valid tender(apparently even by the court). but astonishingly sold for the grand whoppin price of $0 at the “trustee’s” sale, I tried to show the UD judge telling him “look this deed was for someone with a different name, loan number an for $0 but the ud was filed against the correct name” and the judge said “oh those are just typographical errors, it doesn’t matter. sorry the sherriff will be there in 2 days to lock you out, bye”. in short the judges know even if you did win your not exactly getting a free house since youve been paying for for half your life, but all they care about is stackin up their pension plans through the puppet strings of public/private partnerships and many laws and loopholes to do their bidding hell look at the recent amendments to the Cal. Const. and tell me that couldn’t be a driving factor for more foreclosures.

  53. edgetraderplus

    Is this what you want? From prior ANONYMOUS conversation …..
    REQUIREMENT regarding actual CREDITOR

    Federal Reserve System 12 Cfr
    Part 226 Regulation Z
    Docket No R-1378
    Truth in Lending e9-27742

  54. To all of the kind souls on this blog, first of all I’d like to say two words: Thank you.


    I am 100%with you on the false assignment end of things. The Note and its endorsementSs) issue, well, it would be nice to get it finally asserted one way or the other, but obviously the Note is just one of the issues.

    I kept my original posting purposely short so as to not bog down the readers with my own case, the main purpose of my posting was to offer the “free house syndrome” Court’s audio transcript and to voice my need for an Appeals lawyer.

    I’d now like to try to resume my case in bullet points:

    – The Assignment of the DOT was executed via a Power Of Attorney 15 months after the Assignor was “deceased”. Our lawyer’s pleadings argued that under CA law when the Principal deceases so does the powers contained within the POA – the Court ruled that the Assignment was good and that the chain of title was “complete”.

    – The Assignee, BONY, “introduced” itself as the Trustee for the Trust without offering any proof of being so whatsoever. SEC docs say that the Trustee is another entity. Our pleadings raised this up, but it wasn’t even discussed during the Hearing as the Court said that “there were no other issues raised by the Debtor”.

    – Our pleadings also argued that the Trust closed more than five years before the “Assignment” was purportedly executed; more deafening silence from the Court.

    – The Note: well, by now you all know what the judge said about the Note: “it is not needed”.

    – The Judge acknowledged my adversary complaint. She –basically- said “that is fine, but for now BONY gets the house”.

    Jus to express myself on the “free house” issue: why would I ask for a free house? I am 52 years old and I never asked for anything free. This situation is quite different thought, at one point they told me this property was worth over $1MM, I –supposedly- owe $600K and the comparables say its worth is now in the low $200K. I really need to talk with the true owners of my Note. When I find him/her/it we’ll have to talk about the current market value, but we should also try to ascertain how in the world we got to this dismal point in the first place.


    Thanks for the tip, I’ll Google it.

    Jack van Eck,

    Thanks for your posting. I am a bit troubled by the fact that Wikipedia defines the UCC as an “attempt” to uniform the various State’s laws, and then it goes on to say that ultimately the Courts must rely on their own State’s laws. I’d love to have your further feedback on this definition of the UCC.

    As for our State, CA C.C. 2924 j. (a)(4) reads as follows:

    “(4) That before the trustee can act, the noticed person may be required to present proof that the person holds the beneficial interest in the obligation and the security interest therefor. In the case of a promissory note secured by a deed of trust, proof that the person holds the beneficial interest may include the original promissory note and assignment of beneficial interests related thereto. The noticed person shall also submit a written claim to the
    trustee, executed under penalty of perjury, stating the following:
    (A) The amount of the claim to the date of trustee’s sale.
    (B) An itemized statement of the principal, interest, and other

    The word “may” is troubling, I wonder if my Judge was thinking “well, the holder “may” include the original Note but it does not “have” to do so”. And even when this CA question is answered I will still be worry about any applicable Federal law that may overrule or eclipse CA law..

    Of course the chance is always there that I may be reading the wrong CA Code section altogether, I am not a lawyer and I do not have any legal training either.


    Thanks for asking Anonymous for the Federal Reserve Opinion, I will surely like to read that myself.


    Youtube is a great idea, thank you. I never posted anything in it but I will explore it right away.

    Dear Readers/Contributors: as always this Blog is extremely useful and informative, but my little time-bomb keeps ticking. Unless I overlooked something I do not see any choice other than to file an Appeal. If anyone thinks that there is a lawyer that I should talk to please be sure to let me have his or her number.

    My email is

    Thank you.

  55. Daniel Gyurec

    You can post it to you tube

  56. ANON

    Agree w/u that securities investors aka certificateholders are not the creditors entitled to foreclose on the mortgages and homeowner. At best they could sue the note holders/owners for some tort (fraud perhaps) and obtain a judgment and then execute and levy upon the actual notes and mortgages, and then go on to foreclose. But that’s an intermediate step and authority that they do not possess until such time as they would obtain a judgment against whoever actually owns the notes and mortgages.

    With respect to 3rd party payment of the debt: u r probably correct when u say that the mortgagor is not entirely free of the debt and obligation. however, i believe that it is the lawful creditor who got paid off via insurance or cds that can no longer foreclose against the homeowner. But his subrogee can if that party has subrogation rights, and absent any other valid defenses that the homeowner mortgagor might have by statute or common law.

  57. Jan Van Eck

    What about the Notes endorsed in blank?


  58. Wednesday 19 May 2010


    Not to be a bother to have you repeat information already posted, can you direct me to the Federal Reserve Opinion you have mentioned on several occasions in various threads.

    It is hard to find previous articles on this site.

    Many thanks,







  60. who goes from law school to becomE a judge.

    a lawyer who cant make it in the real world.


    judges have the most cushion jobs in america.


    I BET YOU JUDGE SHACK WORKS HARD. That is why he is a stand out.

  61. To Daniel and Deontos:

    The requirement for a “proper Indorsement of the Note” is contained in the UCC – Uniform Commercial Code. try Sec 302. Note specifically that an “allonge” is the attachment of additional paper when the blank space on the Note is ALREADY taken up with Indorsements in succession.

    The UCC flows from the old “law merchant” of trade merchants over the past 400 years. This is very old, foundational Law. Nobody is going to dispute this, even the craziest Judge. If the Note is not properly Indorsed, it cannot be enforced except by the party that has the last proper Indorsement. However, if he no longer owns the Note – having sold it – then unless the Note becomes properly Indorsed or ge5ts sold back to the last proper Indorsed party, then you end up with no “Holder” and hence no ability to actually enforce the Note.

    So the Obligation continues to exist, and can be paid voluntarily of course, but it cannot be enforced by foreclosure of the security interest. You have a “Standing” issue.

    Does this clear it up?

  62. Daniel Gyurec

    Do a google “site” search on LivingLies
    for ALLONGES

  63. Daniel Gyurec

    Main area of focus for me – is false assignments – you are a victim. BONY is NOT the creditor.

    Foreclosure attorneys watch this blog, they have been able to quash the note theory. But the assignments are bogus – and Federal Reserve Opinion states that security pass-through investors (Trust/trustees) are NOT the creditor. Focus MUST be directed to the fraud – and assignment fraud. Time to regroup. They want to claim the Trust/trustee is the creditor? – use it to contradict their claim, assignments, POA, etc..

    Your judge has made a mistake. California is the worst. Speculative, but orders are coming from somewhere in CA as to how to deal with foreclosure actions. California – once the front runner in law – is way behind the eight ball. California is a big problem – they want their taxes because they are in dire need – and will stop at nothing. But foreclosures are increasing. – need to stop CA.from proliferating the fraud.

    CA – you may have a big budget deficit – but do not use fraud to try and fund it – it will not work in the long run.

    People in CA have to unite – and stop the tide of fraudulent foreclosures in CA. CA sets a precedence for the rest of the country – and what CA is doing is simply bad law.


    Agree – most are not looking for a free house.

    Orders coming down from courts are horrendous – and decided on “whim” and with no “discovery” granted. The original “mortgage loan” mills have now become the court foreclosure “mills.”

    Someone is directing this – not just in CA – but elsewhere. I believe Geithner and H.. Paulson had large role in what is currently going on.

    Word from top contact – at the time of crisis – was that Geithner and Paulson was promoting foreclosures to “clear the market” – they simply did not care about the people.

    TARP Oversight Panel recently quoted Geithner as stating that “moral hazard questions prevent help to home borrowers” – (not exact quote). That translates to – “lobbyists (financial institutions) are preventing help to homeowners” – because other people – who were not victims – do not want others to get help.

    As a product of the 60/70s – I witnessed a country that stood up to Congress/Administration for what was right. I have been watching was has been going on for years – long before homes were foreclosed upon in mass. Warned about it. But it is time for people to join together – and fight for your home – not just in the courts – but also before influential officials.


  64. I don’t believe it’s anyone’s goal here to acquire a free house. That’s a dodge used by the banks and it’s a cheap cover for an incompetent judge too fracking lazy to do her job.

    Everyone here just wants to pay the right folks. They want to obtain a fair modification to the contract they signed and to negotiate that modification with the correct party…the party who owns the note and who, by law, has the right, title and interest in the contract to do the modification. As one Judge noted, “securitization does not relieve the borrower from the obligation.” That’s true. The point is to get all the right parties before the court to hash out these issues.

    I think it would be better to tell the Judge, “No, my goal is not to get a “free house” as these morons state. My goal, your honor, is to modify this contract so that I can pay my debt in a manner that I can afford. And the only way I can do that is to get the party who owns the note in here so we can sit down and pound out a settlement that’s agreeable to everyone. You can’t modify a contract with an entity that doesn’t have the contractual authority to execute a modification. The only entity that can modify this contract is the person HOLDING the promissory note. So, where the heck are they? Have they been notified? We need to get them in here. Period.”

    If you keep pounding on the idea that you want a modification in order to pay your obligation, then you are in a much better position. The courts want these matters settled. They do not want to have to conduct a lengthy and expensive and complicated trial. So keep pounding on “settlement”, on modification of the terms and conditions because, as in any business venture, conditions change and modifications of contracts happen all the time.

    It’s the old widgets example from Contracts 101. Buyer and seller enter into a contract to sell widgets for $1000 to be delivered in two months. Seller can’t perform because the factory workers went on strike. But, the strike will be over in three months and he can deliver in month four. If buyer still wants the widgets, they write a modification. Bingo, bob’s you uncle! If buyer doesn’t want the wigets then he can void the contract and buy from someone else and if there’s been some money advanced that money gets returned.

    Seller can’t modify the contract with anyone else but the guy he made the contract with. Buyer’s Aunt Tilly doesn’t count. So, there you have it. We want to modify our notes so we can perform on the contract so that the right party gets paid and we can pay it.

    I hope this makes sense.

  65. Mike H.

    Hard to disagree with you there but……

    Could you please , or anyone else for that matter, point me to the specific law(s) in which we rely when we say that the Note must be properly endorsed?

    I am NOT asking for legal advice (that I know of this blogspot does not offer it anyways:-)), I am just asking for for a little pointer.

    Thanks in advance.


  66. Personally, systematically and summarily PISSED OFF.

    At NO TIME , when visiting /posting on this blog was it ever assumed or thought that the information disseminated would provide anyone with a “FREE HOUSE”!….

    Just would like to know who has a “FREE HOUSE” and why… so many have to suffer?

  67. This may not be a widely held view, but I believe it
    is historically accurate.
    “Mort-Gage” in French means “death-gamble”. You
    put up the deed, the lender puts up the cash. Whoever
    dies first, loses! 99% of the time, the lender wins because most Americans die, not broke, but in debt
    up to the neck! Therefore, the lenders win all your toys!
    Once in a while, because of greed and stupidity,
    massive numbers of lenders “die” at the same time,
    without “lawfully assigning the debt”. When this happens, as now, the borrowers “win” the “death
    gamble” and get to keep their “toys” free and clear.
    The Bible calls it a “Jubilee Year”.
    This Judge in California is a corrupt ignoramus who never met a “Robber Bank” she didn’t love. She
    needs to be removed from office!

  68. Surrender my ass. My entire neighborhood is a foreclosure or short sale. The few of us that are left are upside down between $ 250 and $ 300 K. I do not expect a free home. But I will not pay for a crime of misrepresentation and a position of usury. Some dirty bastard needs to be jailed.
    If it were not this website I would have walked away 2 years ago. I thank Neil for the insight
    and his efforts.


  69. your attorney could make use of any of the following, but just in case… I recently got this from “Taxcore:”
    For those that may have wondered how a loan works in a fiat currency debt based banking system here it is. Here’s how a “bank loan” really works.
    Interviews with bankers about a foreclosure. The banker was placed on the witness stand and sworn in. The plaintiff’s (borrower’s) attorney asked the banker the routine questions concerning the banker’s education and background.
    The attorney asked the banker, “What is court exhibit A?”
    The banker responded by saying, “This is a promissory note.”
    The attorney then asked, “Is there an agreement between Mr. Smith (borrower) and the defendant?”
    The banker said, “Yes.”
    The attorney asked, “Do you believe the agreement includes a lender and a borrower?”
    The banker responded by saying, “Yes, I am the lender and Mr. Smith is the borrower.”
    The attorney asked, “What do you believe the agreement is?”
    The banker quickly responded, saying, ” We have the borrower sign the note and we give the borrower a check.”
    The attorney asked, “Does this agreement show the words borrower, lender, loan, interest, credit, or money within the agreement?”
    The banker responded by saying, “Sure it does.”
    The attorney asked, `”According to your knowledge, who was to loan what to whom according to the written agreement?”
    The banker responded by saying, “The lender loaned the borrower a $50,000 check. The borrower got the money and the house and has not repaid the money.”
    The attorney noted that the banker never said that the bank received the promissory note as a loan from the borrower to the bank. He asked, “Do you believe an ordinary person can use ordinary terms and understand this written agreement?”
    The banker said, “Yes.”
    The attorney asked, “Do you believe you or your company legally own the promissory note and have the right to enforce payment from the borrower?”
    The banker said, “Absolutely we own it and legally have the right to collect the money.”
    The attorney asked, “Does the $50,000 note have actual cash value of $50,000? Actual cash value means the promissory note can be sold for $50,000 cash in the ordinary course of business.”
    The banker said, “Yes.”
    The attorney asked, “According to your understanding of the alleged agreement, how much actual cash value must the bank loan to the borrower in order for the bank to legally fulfill the agreement and legally own the promissory note?”
    The banker said, “$50,000.”
    The attorney asked, “According to your belief, if the borrower signs the promissory note and the bank refuses to loan the borrower $50,000 actual cash value, would the bank or borrower own the promissory note?”
    The banker said, “The borrower would own it if the bank did not loan the money. The bank gave the borrower a check and that is how the borrower financed the purchase of the house.”
    The attorney asked, “Do you believe that the borrower agreed to provide the bank with $50,000 of actual cash value which was used to fund the $50,000 bank loan check back to the same borrower, and then agreed to pay the bank back $50,000 plus interest?”
    The banker said, “No. If the borrower provided the $50,000 to fund the check, there was no money loaned by the bank so the bank could not charge interest on money it never loaned.”
    The attorney asked, “If this happened, in your opinion would the bank legally own the promissory note and be able to force Mr. Smith to pay the bank interest and principal payments?”
    The banker said, “I am not a lawyer so I cannot answer legal questions.”
    The attorney asked, ” Is it bank policy that when a borrower receives a $50,000 bank loan, the bank receives $50,000 actual cash value from the borrower, that this gives value to a $50,000 bank loan check, and this check is returned to the borrower as a bank loan which the borrower must repay?”
    The banker said, “I do not know the bookkeeping entries.”
    The attorney said, “I am asking you if this is the policy.”
    The banker responded, “I do not recall.”
    The attorney again asked, “Do you believe the agreement between Mr. Smith and the bank is that Mr. Smith provides the bank with actual cash value of $50,000 which is used to fund a $50,000 bank loan check back to himself which he is then required to repay plus interest back to the same bank?”
    The banker said, ” I am not a lawyer.”
    The attorney said, “Did you not say earlier that an ordinary person can use ordinary terms and understand this written agreement?”
    The banker said, “Yes.”
    The attorney handed the bank loan agreement marked “Exhibit B” to the banker. He said, “Is there anything in this agreement showing the borrower had knowledge or showing where the borrower gave the bank authorization or permission for the bank to receive $50,000 actual cash value from him and to use this to fund the $50,000 bank loan check which obligates him to give the bank back $50,000 plus interest?”
    The banker said, “No.”
    The lawyer asked, “If the borrower provided the bank with actual cash value of $50,000 which the bank used to fund the $50,000 check and returned the check back to the alleged borrower as a bank loan check, in your opinion, did the bank loan $50,000 to the borrower?”
    The banker said, “No.”
    The attorney asked, “If a bank customer provides actual cash value of $50,000 to the bank and the bank returns $50,000 actual cash value back to the same customer, is this a swap or exchange of $50,000 for $50,000.”
    The banker replied, “Yes.”
    The attorney asked, “Did the agreement call for an exchange of $50,000 swapped for $50,000, or did it call for a $50,000 loan?”
    The banker said, “A $50,000 loan.”
    The attorney asked, “Is the bank to follow the Federal Reserve Bank policies and procedures when banks grant loans.”
    The banker said, “Yes.”
    The attorney asked, “What are the standard bank bookkeeping entries for granting loans according to the Federal Reserve Bank policies and procedures?” The attorney handed the banker FED publication Modern Money Mechanics, marked “Exhibit C”.
    The banker said, “The promissory note is recorded as a bank asset and a new matching deposit (liability) is created. Then we issue a check from the new deposit back to the borrower.”
    The attorney asked, “Is this not a swap or exchange of $50,000 for $50,000?”
    The banker said, “This is the standard way to do it.”
    The attorney said, “Answer the question. Is it a swap or exchange of $50,000 actual cash value for $50,000 actual cash value? If the note funded the check, must they not both have equal value?”
    The banker then pleaded the Fifth Amendment.
    The attorney asked, “If the bank’s deposits (liabilities) increase, do the bank’s assets increase by an asset that has actual cash value?”
    The banker said, “Yes.”
    The attorney asked, “Is there any exception?”
    The banker said, “Not that I know of.”
    The attorney asked, “If the bank records a new deposit and records an asset on the bank’s books having actual cash value, would the actual cash value always come from a customer of the bank or an investor or a lender to the bank?”
    The banker thought for a moment and said, “Yes.”
    The attorney asked, “Is it the bank policy to record the promissory note as a bank asset offset by a new liability?”
    The banker said, “Yes.”
    The attorney said, “Does the promissory note have actual cash value equal to the amount of the bank loan check?”
    The banker said “Yes.”
    The attorney asked, “Does this bookkeeping entry prove that the borrower provided actual cash value to fund the bank loan check?”
    The banker said, “Yes, the bank president told us to do it this way.”
    The attorney asked, “How much actual cash value did the bank loan to obtain the promissory note?”
    The banker said, “Nothing.”
    The attorney asked, “How much actual cash value did the bank receive from the borrower?”
    The banker said, “$50,000.”
    The attorney said, “Is it true you received $50,000 actual cash value from the borrower, plus monthly payments and then you foreclosed and never invested one cent of legal tender or other depositors’ money to obtain the promissory note in the first place? Is it true that the borrower financed the whole transaction?”
    The banker said, “Yes.”
    The attorney asked, “Are you telling me the borrower agreed to give the bank $50,000 actual cash value for free and that the banker returned the actual cash value back to the same person as a bank loan?”
    The banker said, “I was not there when the borrower agreed to the loan.”
    The attorney asked, “Do the standard FED publications show the bank receives actual cash value from the borrower for free and that the bank returns it back to the borrower as a bank loan?”
    The banker said, “Yes.”
    The attorney said, “Do you believe the bank does this without the borrower’s knowledge or written permission or authorization?”
    The banker said, “No.”
    The attorney asked, “To the best of your knowledge, is there written permission or authorization for the bank to transfer $50,000 of actual cash value from the borrower to the bank and for the bank to keep it for free?
    The banker said, “No.”
    Does this allow the bank to use this $50,000 actual cash value to fund the $50,000 bank loan check back to the same borrower, forcing the borrower to pay the bank $50,000 plus interest? ”
    The banker said, “Yes.”
    The attorney said, “If the bank transferred $50,000 actual cash value from the borrower to the bank, in this part of the transaction, did the bank loan anything of value to the borrower?”
    The banker said, “No.” He knew that one must first deposit something having actual cash value (cash, check, or promissory note) to fund a check.
    The attorney asked, “Is it the bank policy to first transfer the actual cash value from the alleged borrower to the lender for the amount of the alleged loan?”
    The banker said, “Yes.”
    The attorney asked, “Does the bank pay IRS tax on the actual cash value transferred from the alleged borrower to the bank?”
    The banker answered, “No, because the actual cash value transferred shows up like a loan from the borrower to the bank, or a deposit which is the same thing, so it is not taxable.”
    The attorney asked, “If a loan is forgiven, is it taxable?”
    The banker agreed by saying, “Yes.”
    The attorney asked, “Is it the bank policy to not return the actual cash value that they received from the alleged borrower unless it is returned as a loan from the bank to the alleged borrower?”
    “Yes”, the banker replied.
    The attorney said, “You never pay taxes on the actual cash value you receive from the alleged borrower and keep as the bank’s property?”
    “No. No tax is paid.”, said the crying banker.
    The attorney asked, “When the lender receives the actual cash value from the alleged borrower, does the bank claim that it then owns it and that it is the property of the lender, without the bank loaning or risking one cent of legal tender or other depositors’ money?”
    The banker said, “Yes.”
    The attorney asked, “Are you telling me the bank policy is that the bank owns the promissory note (actual cash value) without loaning one cent of other depositors’ money or legal tender, that the alleged borrower is the one who provided the funds deposited to fund the bank loan check, and that the bank gets funds from the alleged borrower for free? Is the money then returned back to the same person as a loan which the alleged borrower repays when the bank never gave up any money to obtain the promissory note? Am I hearing this right? I give you the equivalent of $50,000, you return the funds back to me, and I have to repay you $50,000 plus interest? Do you think I am stupid?”
    In a shaking voice the banker cried, saying, “All the banks are doing this. Congress allows this.”
    The attorney quickly responded, “Does Congress allow the banks to breach written agreements, use false and misleading advertising, act without written permission, authorization, and without the alleged borrower’s knowledge to transfer actual cash value from the alleged borrower to the bank and then return it back as a loan?”
    The banker said, “But the borrower got a check and the house.”
    The attorney said, “Is it true that the actual cash value that was used to fund the bank loan check came directly from the borrower and that the bank received the funds from the alleged borrower for free?”
    “It is true”, said the banker.
    The attorney asked, “Is it the bank’s policy to transfer actual cash value from the alleged borrower to the bank and then to keep the funds as the bank’s property, which they loan out as bank loans?”
    The banker, showing tears of regret that he had been caught, confessed, “Yes.”
    The attorney asked, “Was it the bank’s intent to receive actual cash value from the borrower and return the value of the funds back to the borrower as a loan?”
    The banker said, “Yes.” He knew he had to say yes because of the bank policy.
    The attorney asked, “Do you believe that it was the borrower’s intent to fund his own bank loan check?”
    The banker answered, “I was not there at the time and I cannot know what went through the borrower’s mind.”
    The attorney asked, “If a lender loaned a borrower $10,000 and the borrower refused to repay the money, do you believe the lender is damaged?”
    The banker thought. If he said no, it would imply that the borrower does not have to repay. If he said yes, it would imply that the borrower is damaged for the loan to the bank of which the bank never repaid. The banker answered, “If a loan is not repaid, the lender is damaged.”
    The attorney asked, “Is it the bank policy to take actual cash value from the borrower, use it to fund the bank loan check, and never return the actual cash value to the borrower?”
    The banker said, “The bank returns the funds.”
    The attorney asked, “Was the actual cash value the bank received from the alleged borrower returned as a return of the money the bank took or was it returned as a bank loan to the borrower?”
    The banker said, “As a loan.”
    The attorney asked, “How did the bank get the borrower’s money for free?”
    The banker said, “That is how it works.”


    According to CA Bankruptcy Judge Meredith Jury we can forget about the Note being properly endorsed. She sais that in CA “the Law is clear” the Note itself is not even needed as long as there is a “proper Assignment” of record.

    That is the way she ruled on my RFS Motion this past week, so she gave BONY the green light to go on with the foreclosure.

    Obviously every case has its own particular set of circumstances, in our case one of those particularities is the fact that BONY does not even appear to even be the Trust’s Trustee; we raised this issue, BONY completely ignored it and so did the Court.

    There are other issues, such as the fact that the purported beneficiary’s Trust had a cutoff date was October 31, 2003 and yet the Assignment was recorded on December 5, 2008. We raised this issue as well but only to get more of the same: it went completely ignored by both the other side and the Court.

    The Judge also gave subtle but unequivocal comments, to a good listener those comments pretty much indicate that a TRO is not going to get anywhere; our lawyer also opines that a Motion for Reconsideration is bound to get us only sanctions. So it appears to be that the only avenue left to us is an Appeal, obviously an intense and costly proposition.

    Yesterday I went to see the Court’s Clerk and got a couple of things: 1.) and audio transcript of the 10’ Hearing, 2.) a copy of the Local Rules.

    1.) I believe that this audio transcript is an interesting one because in it the Judge explains her views on what she calls the “free house syndrome”. If someone could come up with an easy way to upload and share this 5MB .wma file I’d be happy to make it available.

    2.) The Local Rules present us with having to make one of three choices: who do we Appeal to? Apparently we can appeal to BAP, CDC or the 9th Circuit.

    We haven’t yet identified a lawyer to handle our appeal, let alone decide who to Appeal to.

    If anyone happens to know of a Southern CA lawyer that could handle this Appeal please pass his/her contact info along. And please worry not, if the lawyer does not work out my family and I will never blame the people that provided the contact info, guaranteed.

    Best to All,


  71. Neil,

    You have NOT preached the “cancel the note” theory to anyone here so you are not to blame.

    If we lose our homes, we should at the very least, surrender it to the right party and not allow the least entitled party to just swoop it away for their own unjust enrichment.

  72. I don’t think everyone here is trying to get a house “free and clear.”
    I’m hoping for:

    1. Court mandated mediation leading to modification of my loan with a payment that I can afford.
    2. Stall for time so I can save some more jingle in case I don’t get a modification.
    3. Prevent the pretender lender from walking away with a house “free and clear.”

    I’m really pushing for 1. because then I could file a Chapter 13 instead of a Chapter 7. So, those are my objectives.

  73. Quote from article above “The goal is NOT to get your house for free, although that COULD be the result, as we have seen in a few hundred cases. The simple answer is “No Judge I am not trying to get my house for free, I’m trying to stop THEM from getting my house for free.” end quote.


    Wow, what a powerful first paragraph to your article. I stopped reading to make sure I complimented you on how good your opening paragraph was. It says so much about the people who like to accuse the financially burdened with judgement and scorn.

    I started swarm the banks to increase the efficiency and speed with which we can all keep up with each other. Hopefully, eventually everybody listed on Swarm the Banks will put a link up on their site as well.

  74. […] Posted by 4closureFraud on May 19, 2010 · Leave a Comment  Posted on May 19, 2010 by Neil Garfield […]

  75. Neil,

    You are not to blame for anything, without you the people would have no avenue. As I have said before, you may go down in history as someone dedicated to the truth in this period of great injustice.

    I agree with you that no one should be asking for a free house – you will lose with this goal. I agree with everything you say – except “investor funding” – and that the distinction between “investor” and “security investor” should be clarified – they are not the same.

    I would like to add that payment by another party (via default swap or guarantee) does not negate fact that borrower still owes the money – this has always been the way with debt collection. The problem is that borrowers have a right to know their creditor – to whom the debt is owed – and the creditor cannot be a servicer or security investors (which rules out Trust/Trustee pass-through).

    Swaps are multi-trillion dollar market – and do not think we will ever see, in our lifetime, full accounting – and I was a front-runner in calling attention to swaps before the crisis hit. However, the bottom line is that homes are being taken away, without discovery, with invalid assignments, forgeries, and with fraudulent contracts from the onset. As Judge Schack once said – “if you are going to take away peoples homes – the people have a right to know who is doing it.” (not exact quote).

    Thank you for everything that you do for the people. Disagreement is minor. Your blog is amazing. Any thoughts I provide are meant to be constructive – and that is all.

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