non-judicial sale is NOT an available election for a securitized loan


FORECLOSURE is a judicial process herein the “lender” files a lawsuit seeking to (a) enforce the note and get a judgment in the amount owed to them (b) asking the court to order the sale of the property to satisfy the Judgment. If the sale price is lower than the Judgment, then they will ask for a deficiency Judgment and the Judge will enter that Judgment. If the proceeds of sale is over the amount of the judgment, the borrower is entitled to the overage. Of course they usually tack on a number of fees and costs that may or may not be allowable. It is very rare that there is an overage. THE POINT IS that when they sue to foreclose they must make allegations which state a cause of action for enforcement of the note and for an order setting a date for sale. Those allegations include a description of the transaction with copies attached, and a claim of non-payment, together with allegations that the payments are owed to the Plaintiff BECAUSE they would suffer financial damage as a result of the non-payment. IN THE PROOF of the case the Plaintiff would be required to prove each and EVERY element of their claim which means proof that each allegation they made and each exhibit they rely upon is proven with live witnesses who are competent — i.e., they take an oath, they have PERSONAL KNOWLEDGE (not what someone else told them),personal recall and the ability to communicate what they know. This applies to documents they wish to use as well. That is called authentication and foundation.

SALE: Means what it says. In non-judicial sale they just want to sell your property without showing any court that they can credibly make the necessary allegations for a judicial foreclosure and without showing the court proof of the allegations they would be required to make if they filed a judicial foreclosure. In a non-judicial state what they want is to SELL and what they don’t want is to foreclose. Keep in mind that every state that allows non-judicial sale treats the sale as private and NOT a judicial event by definition. In Arizona and many other states there is no election for non-judicial sale of commercial property because of the usual complexity of commercial transactions. THE POINT is that a securitized loan presents as much or more complexity than commercial real property loan transactions. Thus your argument might be that the non-judicial sale is NOT an available election for a securitized loan.

When you bring a lawsuit challenging the non-judicial sale, it would probably be a good idea to allege that the other party has ELECTED NON-JUDICIAL sale when the required elements of such an election do not exist. Your prima facie case is simply to establish that the borrower objects the sale, denies that they pretender lender has any right to sell the property, denies the default and that the securitization documents show a complexity far beyond the complexity of even highly complex commercial real estate transactions which the legislature has mandated be resolved ONLY by judicial foreclosure.

THEREFORE in my opinion I think in your argument you do NOT want to concede that they wish to foreclose. What they want to do is execute on the power of sale in the deed of trust WITHOUT going through the judicial foreclosure process as provided in State statutes. You must understand and argue that the opposition is seeking to go around normal legal process which requires a foreclosure lawsuit.

THAT would require them to make allegations about the obligation, note and mortgage that they cannot make (we are the lender, the defendant owes us money, we are the holder of the note, the note is payable to us, he hasn’t paid, the unpaid balance of the note is xxx etc.) and they would have to prove those allegations before you had to say anything. In addition they would be subject to discovery in which you could test their assertions before an evidentiary hearing. That is how lawsuits work.

The power of sale given to the trustee is a hail Mary pass over the requirements of due process. But it allows for you to object. The question which nobody has asked and nobody has answered, is on the burden of proof, once you object to the sale, why shouldn’t the would-be forecloser be required to plead and prove its case? If the court takes the position that in non-judicial states the private power of sale is to be treated as a judicial event, then that is a denial of due process required by Federal and state constitutions. The only reason it is allowed, is because it is private and “non-judicial.” The quirk comes in because in practice the homeowner must file suit. Usually the party filing suit must allege facts and prove a prima facie case before the burden shifts to the other side. So the Judge is looking at you to do that when you file to prevent the sale.

Legally, though, your case should be limited to proving that they are trying to sell your property, that you object, that you deny what would be the allegations in a judicial foreclosure and that you have meritorious defenses. That SHOULD trigger the requirement of re-orienting the parties and making the would-be forecloser file a complaint (lawsuit) for foreclosure. Then the burden of proof would be properly aligned with the party seeking affirmative relief (i.e., the party who wants to enforce the deed of trust (mortgage), note and obligation) required to file the complaint with all the necessary elements of an action for foreclosure and attach the necessary exhibits. They don’t want to do that because they don’t have the exhibits and the note is not payable to them and they cannot actually prove standing (which is a jurisdictional question). The problem is that a statute passed for judicial economy is now being used to force the burden of proof onto the borrower in the foreclosure of their own home. This is not being addressed yet but it will be addressed soon.

7 Responses

  1. Mr. Garfield, Im not sure if you have seen the merge agreement between Golden West and Wachovia. If you have not seen it I have it in PDF form but Im not sure how to email it to you. Reason being for me to research this merge is I can not find the certificate for my mortgage loan I contracted with World Savings in August 2005. I know there was a post with a step by step instructions how to research this but no matter what I do I still come up with nothing. In reading the merge agreement there is a part stating lost, stolen or destroyed golden west common sstock certificates will be issued the wachovia common stock payable under the merger agreement once such shareholder posts a bond in a customary amount. Then it goes on to say Golden West common stock certificates presented for transfer after merger completion will be canceled and exchanged for, in addition to the equivalent $18.65 per sharecash payment. Then it states after the merger there will be no transfers of shares of Golden West common stock on the stock transfer books of golden West or the surviving corporation. Im sure this is common language for mergers but Im wondering “WHERE THE H*!* IS MY/THE NOTE.? WOULD YOU LIKE TO SEE A COPY OF THIS PDF FILE? MY EMAIL ADDRESS IS Let me know.
    Sincerely and thank you
    laurie mendoza

  2. I’m not an attorney and am giving no advice here.

    I remember researching some jurisdictional cases in the early 90’s involving when federal statutes apply within the states.

    The cases involved 4 citizens that were charged with federal crimes for obstructing the right of way to an abortion clinic.

    The first three had attorneys and were all convicted. The fourth represented himself. He began by challenging the jurisdiction of the court.

    Before the case got started he got the judge to admit that he took an oath of office to uphold the Constitution of his state and then the united States and not the laws that have been enacted. He also admitted that if he knowingly ruled in favor of a law that ran counter to the Constitution he would lose his judicial immunity and could be personally sued for his decisions.

    The pro-se defendant then went on to challenge the first thing you always challenge which is jurisdiction. He showed the judge why the federal statute could only be used for a crime committed on federal territory and in this case it was not. It was in committed in I believe California, makes no difference though, it wasn’t on federal territory or an area controlled by the District of Columbia.

    The Judge ended up dismissing the charges against the pro-se and went back and reversed and dismissed the charges against the first three he convicted.

    In a non-judicial state and for that matter a judicial state as well when going to state court before I did anything I would get the judge to admit on the record that his oath of office was to uphold the constitution of his state and then the United States. Further, get him to admit he loses judicial immunity if he makes a ruling that violates the constitutions. No where in his oath does he swear to uphold the laws of the state.

    There is no way he can then rule against due process and the right to have your day in court to make the pretender lenders or whoever claims to hold your note prove their case. The fact judges are permitting the 4th amendment to be violated is sickening and they need to be put on notice and sued personally if they allow it to happen.

  3. Andrew, 5-29-2010
    I too am in mass, and have been fighting since 2008
    maybe you and I can talk about our cases, as I never see anyone from mass on these blogs. email me

  4. Hi Neil,

    I am in MA, a Non-Judicial State. I believe I understand the secuitization process and some of the hooey that has been played on US. I have been educating myself since 8-08′.

    The bank issued the foreclosure notice to me stating in Nov. 09′ the property will be foreclosed.
    I denied their ability to do this, knowing what I know.

    Next to appear in the mail was an acceleration of the Note to it’s full term and I had 30 days to respond and it came from a Law Firm in Feb 10′.

    I responded, within the 30 day window, USPS-CRRR, denying the debt in its Validity and in it’s Entirety .
    I also requested all of the documents in their possession regarding the reasoning for acceleration, also within 30 days.

    The Firm responded in 48 days stating…”We will put OUR case on hold until we investigate.”
    1 – 18 Days late…
    2 – On Hold? Investigate now?

    I returned to the Firm a very stern USPS-CRRR letter stating how I had obliged to all of the Firms requests, and how the bank has never reponded to me in writing in regards to my requests for the full document package.

    Now THEY do an investigation? THEY dont respond to my 30 day requests?

    All well and good, I guess?, NOT…Maybe standard procedure?

    Three(3) months later the bank starts calling again. I gave POA to very trusting sources to act on my behalf.

    The calls appear to have stopped.

    My questions are…

    If I “OWE” YOU the money purportedly due on this Property/Note, and you make demands for full payment of the Note, shouldn’t it be YOU/The BANK that files a suit against me in court?

    So, as i have been doing, I request you to, PROVE IT UP, and you/THEY can’t or won’t…what then?

    What’s next?

    I watch my Registry of Deeds very closely and know that the first thing to happen in MA is a CMPLT(Complaint) which will be filed in the Registry.

    I buy the local paper daily to watch the filings to make sure I don’t miss the Service Members Relief Act Notice in my name or the foreclosure Notice. I am trying to make certain I stay ahead of the FRAUD.

    TY for LivingLies Neil…been just reading mostly lately.

    Thank You,

  5. Well, it IS being addressed in VIRGINIA now. To add to the main post, the crux is that the homeowner MUST nonetheless establish a prima facie case that he/she has a meritorious defense. Otherwise, anyone can turn a non-judicial sale into a judicial one merely by objecting, and that would nullify the non-judicial foreclosure scheme in its entirety (an argument that has already succeeded in most courts). So merely objecting is not enough. Nor, of course, is it enough for the bank to say that it wins merely because the sale is “non-judicial.”

  6. I would think that if you filed suit to quiet title you reverse the burden of proof as the borrower to all lenders with any claims and make them prove they own the property. I see all the arguments here. I also see that the 29 states’ legislatures have been duped by the corporate collective (the banks) into giving them the right of sale without having to prove they’ve done anything with the notes past the origination of the loan.

    Unfortunately, there is one thing you haven’t talked about … the lending ratios are still 10:1. To fix this, laws need to be changed to make the ratios 3:1. This will in part fix the banking crisis because they can only loan on assets 3X their portfolio instead of the current 10X their portfolio.

    In so doing at present … the bank originating the loan could continue to keep the “paper” on their books despite the assignments (and the scrutiny of the regulators) and continue to loan money on the value of their falsely-injected assets, which were assigned or sold to someone else) of their loans to other parties or in this case, securitized vehicles.

    This would be like using secured collateral to pledge for another loan. I was told by my banker in the 80’s that if I did that I would be committing a felony. If the bank keeps the note on its books despite these transactions into securitization or transfers/assignments, would they not be doing the same thing? In effect, they are loaning on assets that they shouldn’t be loaning on.

  7. CA judges need to get their heads wrapped around THIS TRUE issue instead of being hung up on the idea that “the borrower is only delaying the inevitable”.

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