In States Requiring Mediation

More and more states are following the example set by the federal government in requiring mediation or modification attempts before going forward with litigation. We think that is a good idea in theory, but without the teeth that is in the enabling rules and statutes in Florida, you are just going to end up playing the same game of “who’s my lender.?”

Even in Florida, as in all cases, YOU must bring up the the issue of the authroity of the person being offered as a decision-maker.” 99 times out of a hundred they are not. The most they have is some authority from a dubious source to agree to some minor adjustments, like adding the payments to the back end of the mortgage.

Make no mistake about it — there is no decision-maker unless they have full power over that mortgage. That means they could if they want to, reduce the principal. They will argue that nobody has that power because the securitization documetns prohibit it. That is their little way of getting your eye off the ball.

Of course the securitization documents don’t allow certain things to be done to the mortgage. Those documents are aimed at restricting the actions of the agents of the principal (i.e. the creditor/lender).

It is ONLY an authorized representative of the investors who DO have the final say over any settlement that is needed in that mediation room and proof of that authority, which means notice to the investors, which means disclosing that notice to the investors and proof that a sufficient number of investors under the documents have approved the grant of decision-making authority to modify, amend, alter or change the obligation, note and/or mortgage.

Unless the person offered for the mediation has the authority to sign a satisfaction of mortgage on whatever terms he/she sees fit, they are not the decision-maker. If the other side refuses to comply move for contempt, sanctions and to strike their pleadings with prejudice.

If the other side fights this and they probably will, you should probably argue that this is a flat out admission that the principal (i.e., real party in interest, creditor, lender) is not represented in the proceedings because the other party in your litigation refuses to disclose them contrary to the requirements of federal law, state law and the rules of civil procedure.

If they can’t produce this authority then they also lack authority to foreclose. It might even be an admission that they are seeking to steal the house, put in their own entity and keep the proceeds of sale contrary to the interests of the investor who is entitled to be paid and contrary to the borrower who is entitled to a credit against the obligation that is due.

21 Responses

  1. […] Garfield had a recent post (today, I think) where he talked about mediation, and how do you really know that the person who […]

  2. thank you ANONYMOUS
    your depth of explanation of this is very informative ,
    myself being victimized by fremont invst & loan & M1 traunch { AA- rated ] in this 2006 FM1 EquityTrust – i’m searching for the layer that reveals the junk or charged of status of this SO CALLED debt..HA!
    I come closer to volatile everyday, WE HAVE BEEN SOOOO SOLD OUT BY OUR GOV TO THIS MAGOT BANKING CARTEL,& COURTS, JUDGES, LOCAL POLITICAL SCUM-BAGS ALL NEED THE FUKIN BOOOOOT, I am not violent by nature ..just the opposite ,i live by compassion & understanding . I Have NONE for these named vampires – I’m starting to gather my wooden stakes,sooo help me God !

  3. angry & NOT TAKING IT

    Check out the ratings on the tranches for particular Trust issue. You will find by Fitch, Moody’s, Standard & Poors. Only the top tranches, usually named “A-1, A-2”, etc., were given Triple A ratings. In order to market MBS – ratings had to high AAA. Originally, the SEC through Regulation AB insured that due diligence assured a high rating. But in 2005 SEC rules were relaxed. Nevertheless, a particular MBS issue could not be marketed without a Triple A rating.

    The lower rated tranches were usually retained by the issuer – but this also changed as hedge funds became willing buyers of the riskier rated tranches. These M tranches were not rated triple A – and only received payment after senior tranches were paid.

    The top rated tranches were protected by credit insurance. And the lower rated tranches had some inherent protection by the support of a subordinated tranche.

    The M rated tranches were combined with other Series and tranches to try to form high rated Synthetic “CDOs” – which are derivatives – backed from other securities and not directly from the asset itself.

    The crisis came so fast – as borrowers were not able to handle interest rate adjustments – and defaults quickly multiplied. The top rated tranches were downgraded. Europe was first to start dumping the securities related to the issues.

    Credit default swaps protectors – such as AIG – just did not have the capital to oblige its credit protection obligations – which quickly multiplied.. US government had to step in. And US government still holds the AIG securities (now owned via the swaps) as collateral. There is no market for these securities. Since there was nothing left to be paid to M tranche holder – it became “worthless” to the holder. This includes CDOs for which the M tranches were utilized in combination with other A and M tranches and series (this was called “leverage”. Thus, market for CDOs also collapsed.

    Tranches from issues issues were dramatically downgraded to, in effect, “junk” debt. Financial institutions and Hedge Funds cannot show profitability carrying “junk” debt., which would never perform because the A tranches are no longer performing – and M tranches were subordinate.

    Financial institutions were given reprieve from new accounting rules to bring the off-balance sheet conduits and any investments, back onto balance sheet. But this is now being completed and they are are required to complete this year.

    Financial institutions tried to repackage (resecuritize) tranches – but this did not have much success as security investors realized repackages were just repackaging of “junk.”

    The party with the largest proportional position in the Trust must disclose itself as the Current Creditor to borrower, even though there may still be a few M tranche investors – who have not written off – but hold a much smaller proportional interest in the loan.

    There are numerous academic journals ant testimonies on how tranches in Trusts were organized and rated and marketed. Interesting one is below.

    My focus on all of this is distinguish between “security investors” and “investors.” The certificates to the Trust are always first sold to the security underwriter (parent accounts for) – they may share ownership with “tranche” buyers – “investors.” They “investors” are limited and become fewer and fewer as write-offs multiply. Your creditor – who must disclose itself -is the party with the largest position in the “pool” – which must now be brought onto balance sheet.

    is there documentation avail to public to corroborate these statments? [where would 1 go about researching this?

    “The market collapsed before M holders got anything – they were left holding the bag – and simply wrote off their investment.”

    ” The M tranche holders are meaningless because – they got nothing – and are entitled to nothing. Any resecuritization of the M tranches – was just resecuritization of “default debt”

  5. usedkarguy

    The equity tranches are not the A1/A2 tranches – the equity tranche is the residual tranche of the trust – usually held by the servicer. This is the tranche – through which- default loans are removed from the Trust. Once the loans are bumped out of the Trust – for whatever reason – the servicer (who holds equity tranche) acts on behalf ot the undisclosed debt buyer who purchases collection rights.

    The M tranches only received any left over interest or principal after the A tranches have been paid. The market collapsed before M holders got anything – they were left holding the bag – and simply wrote off their investment. The A tranches holders were paid via government bailout of AIG and other swap providers to insure that these Triple A MBS security holders received the principal back. Any continued performing loan payments go to the government. The Trust is dissolved – bailed out – as were the swap providers (AIG). The M tranche holders are meaningless because – they got nothing – and are entitled to nothing. Any resecuritization of the M tranches – was just resecuritization of “default debt” – or mortgages dumped from the SPV pass-through structure for missing documents/breach of representation/ early payment default ( which was not likely reported accurately).

    Anyway you look at – security investors are not the Creditor.

    To Deb Wynn-

    In order to rescind – you need a creditor or assignee of the creditor. The original definition of “creditor” according to TILA stand 1) must make loans DIRECTLY 2) name must be on face of instrument. The TILA Amendment expands the definition of “creditor” to “Covered persons”. A trust is not a person and is not an entity. A trustee is not a person and is not an entity. And, security investors in pass-through securities are NOT the creditor/covered person. Your creditor is the party that accounts for recovery on your mortgage loan – it may the original security underwriter (parent corp.) or some “investor” in debt collection rights. BUT it is not a security investor – the loan is charge-off – and cannot be collateral for a pass-through.

    According to the Amendment – the CREDITOR must be identified. According to Bankruptcy law – the CREDITOR must be identified. Foreclosing under the name of a “trustee” or “trust” is invalid – and – simply fraud. Neither a Trustee nor Trust was EVER the Creditor.

    So – who is your creditor??? Federal Reserve tells us it is the party with the largest position, now recorded on their balance sheet, to account for your loan.

    Most in foreclosure are being denied the right to directly negotiate with their true creditor. And, the American economy will continue to suffer as a result.

  6. I really need an attorney that gets it in Western Washington State. None of the attorney’s on this list for my state will help and have not been receptive when I’ve requested a “lawyer that gets it”. Please help!

  7. If the investors that supplied the funding arnt or can’t be considered the creditor then as a party to a contract which is a negotiable instrument how can I negotiate fair and square mhy rescission tender minus equitible setoff did not help my request for satisfaction of the mortgage ect ect was ignored. My understanding when i signed the contract was misplaced entirely I’m still peeling the onion to understand here

  8. ANONYMOUS: I believe you speak of the difference between the “equity tranches” (A1, A2) and the subordinated interest/principal and interest only (M) certificates. The sponsors (depositing bank/originator) usually held the equity tranches for themselves (first to be paid), and sold the interest bearing tranches to the investors. As the certificates failed (and the investors lost their money) the bank (sponsor) continued to collect their funds first, not only through the equity tranches, but also through the “Z” tranche, or “irregular income” (foreclosures and monies collected other than current receivables). You’re right! There is no “investor”, only the sponsoring bank. This is the reason the plaintiff’s counsel insists that the party foreclosing is “confidential”. It’s the bank that made the loan; the originator who committed the fraud; the one who hides behind “holder in due course”; and held harmless by way of the securitization structure.

  9. how do we prove the lower M tranches were disolved?
    a trustee for [bla bla trust ] has no power to act without a trust to act for!?
    Mr matt Weidnerlaw of Fla posts some very relevant legal questions & answers that should be furthered for all of our benefit and to end this consumer eradication!

    The best way to prove this mess all got dissolved is to go to the website and look for the publication # 938 for 2006 through the present. This is where you will see that the gain on sale reporting etc all stopped as the securitization machine was turned off temporarily in late 2007.

    The trusts were all named and reporting until the end of 07 then 08 is missing??????.
    They restart the reporting in 09 but it is down to only Ginnie/Freddie/Fannie/JPM/Citi and random trusts that have been created. The government absolutely knows what happened yet seems to help cover this up thinking we are too dumb to catch it.

    2009 reported in 2010

    2008? is missing and reverts to the 2009 file?? Don’t believe me. try it.–2009.pdf

    2007 reported in 2008–2007.pdf

  10. This posting is very important for quote: “Unless the person offered for the mediation has the authority to sign a satisfaction of mortgage on whatever terms he/she sees fit, they are not the decision-maker.”

    Problem still is with “investor” in the post. There is a distinction between “security investor” and “investor”. Trusts were set up with levels of A and M tranches. The A tranches were triple A rated and, therefore, a security pass-through (M tranches never had a Triple A rating). The security investors in the A tranches – are NOT the Creditor. The loan ownership remains with the bank.that purchased the loans- or it’s subsidiary depositor – all that is passed through to security investors are current payments.

    The M tranches (much smaller proportions of “pool” allocation) were not a pass-through. “Investors” who bought these tranches were only paid if anything remained after the “security investors” were paid. The M tranches were basically utilized for CDO composition to try synthetically form a Triple A CDO – which was impossible and part of cause for the financial collapse. The CDOs have just about been written off completely.

    The Triple A rated tranches have been paid by the swaps – and any MBS rights are likely with the US government by the bailout and until “collection rights” can be sold by security underwriter’s parent to distressed debt buyers. The M tranches – that were sold by the security underwriter- have also likely been written off – and the entire Trust conduit brought being brought back onto balance sheet of parent corp. The “investors” in M tranches lost their money – and are the subject of many investor lawsuits against the bank.

    Bottom line – we are not dealing with numerous “security investors” who have authority. The creditor is the bank that has consolidated the Trust onto it’s balance sheet. And, even if you still want to still believe that the Trust is still alive, there would only be a few “investors” – at most – who still own the tranches. That would be the security underwriter – and any party to whom the tranche was originally sold – if that “investment” tranche has not been written off.

    Have to be careful as to how “investor” is defined. The foreclosure attorneys want courts to believe there are still many many “security investors” that they represent. This is simply false. And, the “security investors” never were – and never could be – the Creditor.

  11. Remember last year when CA was issuing ‘script’? The state got a bail-out and the legislature started immediately passing the pro-Bankster legislation. Brown switched from ‘consumer advocate’ to ‘consumer impediment’. He uses the new laws to hobble the attempts of legit businesses to help homeowners.

  12. Mr Brown is a loaf him, every attorney in Cali along with every judge State and Federal are only interested in maintaining their “investment” which is the leeching off of & sucking all the GOD giving life out of Californians. Just look at the Amendments to the California Const. since 2000, what are their main goal? Make sure Brount eDmracula’s and the Judackal Troll’s retirement funds are nice and plump so they’ll have a nice fat juicy pension to sink their dentures into. there truely is no longer predatory living than the undead legal profession who absolutely refuses to uphold the law because it might interfere with their supper. If god can make miricles happen I pray he develops an incureable life threatening disease that spreads like wildfire throughout this defunct legal profession.

  13. […] Garfield had a recent post (today, I think) where he talked about mediation, and how do you really know that the person who […]





  15. who are the foreclosure mills in California. Why is Mr Brown only going after the loan modifiers?

  16. Agreed. It seems like the mediation order has slowed the rate of foreclosure filings but I think it’s going to be another hoop the parties will have to jump through before they go to court.

  17. The Florida Supreme Court today issued an Order denying the Motions for Rehearing filed by foreclosure mill law firms Ben-Ezra and Shapiro.

    Additionally, the Supreme Court revised the amendments to the Florida Rules of Civil Procedure regarding foreclosures. The amendment requiring attorneys to verify the complaint remained the same.


    SMACKDOWN- 2nd DCA Reverses Another Summary Judgment
    June 2nd, 2010 · No Comments · Foreclosure
    The Second District Court of Appeals brought us BAC Funding, Verizzo and now add Howell to your list of must-cite cases whenever you go to argue against Summary Judgment. These lines of cases stand for the proposition that, for all proper purposes, Summary Judgments should not be granted in foreclosure cases as they are currently plead and practiced by the foreclosure mills. Although it is not cited as a foreclosure case, it in fact was a foreclosure and the same analysis applies. Read on and enjoy:

    35 Fla. L. Weekly D1215d
    Civil procedure — Summary judgment — Error to enter summary judgment to quiet title and for ejectment before the filing of answer where plaintiff did not establish to a certainty at hearing on motion that no answer which defendant might properly serve could present a genuine issue of fact
    DAVID B. HOWELL and DAVE B. HOWELL, LLC, Appellants, v. ED BEBB, INC., Appellee. 2nd District. Case No. 2D09-3664. Opinion filed May 28, 2010. Appeal from the Circuit Court for Polk County; Karla Foreman Wright, Judge. Counsel: Matthew J. Conigliaro, Annette Marie Lang, and Stephanie C. Zimmerman of Carlton Fields, P.A., St. Petersburg, for Appellants. Thomas C. Saunders of Saunders Law Group, Bartow, for Appellee.
    (WHATLEY, Judge.) David B. Howell and Dave B. Howell, LLC (collectively referred to as Howell) filed this direct appeal of a final summary judgment to quiet title and for ejectment entered in favor of Ed Bebb, Inc. We conclude that Bebb did not establish that it was entitled to summary judgment at this stage in the pleadings and reverse.
    Bebb filed an amended complaint against Howell asserting counts to quiet title, take possession of real property, require specific performance, foreclose on a mortgage, and for ejectment. Howell filed a motion to dismiss, and while the motion was pending, Bebb filed a motion for summary judgment. After a hearing on Bebb’s motion, the circuit court entered final summary judgment in favor of Bebb.
    Generally, “[a] movant is entitled to summary judgment ‘if the pleadings, depositions, answers to interrogatories, admissions, affidavits, and other materials as would be admissible in evidence on file show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.’ ” Estate of Githens ex rel. Seaman v. Bon Secours-Maria Manor Nursing Care Ctr., Inc., 928 So. 2d 1272, 1274 (Fla. 2d DCA 2006) (quoting Fla. R. Civ. P. 1.510(c)). But if “a plaintiff moves for summary judgment before the defendant has filed an answer, ‘the burden is upon the plaintiff to make it appear to a certainty that no answer which the defendant might properly serve could present a genuine issue of fact.’ ” BAC Funding Consortium Inc. ISAOA/ATIMA v. Jean-Jacques, 28 So. 3d 936, 937-38 (Fla. 2d DCA 2010) (quoting Settecasi v. Bd. of Pub. Instruction of Pinellas County, 156 So. 2d 652, 654 (Fla. 2d DCA
    1963)). Thus, the standard to establish entitlement to summary judgment requires the plaintiff to establish that “the defendant could not raise any genuine issues of material fact if the defendant were permitted to answer the complaint.” Id. at 938.
    The trial court in the present case appears to have used the wrong standard in ruling on Bebb’s motion for summary judgment, as it asked Howell if he had filed any affidavits or anything that would create a material issue of fact. At the hearing on the motion for summary judgment, Howell noted issues of material fact that could be raised in an answer to the complaint. However, Bebb based its argument for summary judgment on the failure of Howell to file affidavits establishing genuine issues of material fact. On appeal, Bebb does not contend that it established to a certainty at the hearing that no answer which Howell might properly serve could present a genuine issue of fact.
    Accordingly, it was improper to enter summary judgment in favor of Bebb at this stage in the pleadings, and we reverse the judgment and remand for further proceedings.
    Reversed and remanded. (NORTHCUTT and LaROSE, JJ., Concur.)

  19. Over at Matts site he has a juicy Florida Supreme Court smackdown of a foreclosure mill that seems to think they don’t have to comply with FL rule 1.110(b) and disclose the real party in interest / verify their filings accuracy.

  20. Another incremental victory in Virginia.

    Homeowner filed for Chapter 7 in the U.S. Bankr. Court for the Eastern District of VA. A pretender lender (Chase) filed a motion to lift stay to be able to proceed with its bogus foreclosure. Debtor then filed an answer and an opposition to the motion, asserting about 10 defenses and arguing that Chase did not have the right to enforce the subject obligation.

    Chase in response filed an affidavit by an FDIC official alleging that Chase got the subject loan by operation of law. The problem was, the affidavit did not establish that the official had any personal knowledge of the events he was testifying too. Debtor challenged the affidavit on evidentiary grounds.

    On the day of the hearing, Chase’s attorney said “your
    honor, we are not prepared to address Debtor’s objections; we request a continuance. The case was continued beyond the date the automatic stay would normally last (60 days), so the continuance was tantamount to a denial of Chase’s motion.

    Let’s get ‘em!

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