HELOC LOANS WORTHLESS

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EDITOR’S NOTE: It is ironic how reality eventually catches up with illusion. While we have been pounding on the issue of principal reduction as the only realistic way out of the recession, and while the financial industry has been busy convincing people that principal reduction is somehow immoral, the contraction of home prices back to reality is having its own consequences.

In the article below the art and necessity of strategic default is revealed as mainstream in the current housing market. In the case of home equity loans or home equity lines of credit the bloating of appraisals at the time of the transactions has blown up in the face of the financial industry. Many of those home equity loans were in reality part of the initial transaction without which the buyer would have been unable to purchase the home. The transaction would have been valid if the appraisal had been valid. It wasn’t.

A simple analysis of basic fundamental figures published monthly over the last 120 years easily demonstrates that the appraised values that were unverified by the alleged “lender” as part of a nonexistent “underwriting process” could not sustain the test of time or circumstance.

In point of fact most new homeowners quickly found out within weeks or months of the initial transaction that their property was worth far less than the representations made to them at the time of closing. The true value was so far below the so-called appraised value that it didn’t cover the home equity part of the transaction even at the time that the transaction was closed.

The reaction of homeowners to the disappearance of the illusion of wealth has been entirely predictable. For the present the number of home equity loans which are going unpaid is soaring both in numbers and percentages, regardless of the borrower’s ability to pay. Any party that wishes to assert itself as the “owner” of the loan is stuck in the position of holding a predatory loan subject to numerous defenses that is completely unsecured by any equity in the home. According to this article there is at least one debt collector that won’t pay more than $500 per loan regardless of the principal amount due.

The rising number of strategic defaults on primary loans is also rising, also predictable and also inevitable. This is the obvious reaction of a marketplace seeking equilibrium and dependable valuations. Until policy makers accept the reality that the wealth of our economy is largely buried under the illusion of debt that is neither secure nor perfected arising from transactions that were illegal, predatory and fraudulent, there is no way out.

Restoring consumers to the position they were in before they were defrauded is the only way to restore confidence in our society that has permitted the privatization of the issuance of money. Financial reform without providing an easy path to restoration of wealth in the middle-class is meaningless.

August 11, 2010

Debts Rise, and Go Unpaid, as Bust Erodes Home Equity

By DAVID STREITFELD

PHOENIX — During the great housing boom, homeowners nationwide borrowed a trillion dollars from banks, using the soaring value of their houses as security. Now the money has been spent and struggling borrowers are unable or unwilling to pay it back.

The delinquency rate on home equity loans is higher than all other types of consumer loans, including auto loans, boat loans, personal loans and even bank cards like Visa and MasterCard, according to the American Bankers Association.

Lenders say they are trying to recover some of that money but their success has been limited, in part because so many borrowers threaten bankruptcy and because the value of the homes, the collateral backing the loans, has often disappeared.

The result is one of the paradoxes of the recession: the more money you borrowed, the less likely you will have to pay up.

“When houses were doubling in value, mom and pop making $80,000 a year were taking out $300,000 home equity loans for new cars and boats,” said Christopher A. Combs, a real estate lawyer here, where the problem is especially pronounced. “Their chances are pretty good of walking away and not having the bank collect.”

Lenders wrote off as uncollectible $11.1 billion in home equity loans and $19.9 billion in home equity lines of credit in 2009, more than they wrote off on primary mortgages, government data shows. So far this year, the trend is the same, with combined write-offs of $7.88 billion in the first quarter.

Even when a lender forces a borrower to settle through legal action, it can rarely extract more than 10 cents on the dollar. “People got 90 cents for free,” Mr. Combs said. “It rewards immorality, to some extent.”

Utah Loan Servicing is a debt collector that buys home equity loans from lenders. Clark Terry, the chief executive, says he does not pay more than $500 for a loan, regardless of how big it is.

“Anything over $15,000 to $20,000 is not collectible,” Mr. Terry said. “Americans seem to believe that anything they can get away with is O.K.”

But the borrowers argue that they are simply rebuilding their ravaged lives. Many also say that the banks were predatory, or at least indiscriminate, in making loans, and nevertheless were bailed out by the federal government. Finally, they point to their trump card: they say will declare bankruptcy if a settlement is not on favorable terms.

“I am not going to be a slave to the bank,” said Shawn Schlegel, a real estate agent who is in default on a $94,873 home equity loan. His lender obtained a court order garnishing his wages, but that was 18 months ago. Mr. Schlegel, 38, has not heard from the lender since. “The case is sitting stagnant,” he said. “Maybe it will just go away.”

Mr. Schlegel’s tale is similar to many others who got caught up in the boom: He came to Arizona in 2003 and quickly accumulated three houses and some land. Each deal financed the next. “I was taught in real estate that you use your leverage to grow. I never dreamed the properties would go from $265,000 to $65,000.”

Apparently neither did one of his lenders, the Desert Schools Federal Credit Union, which gave him a home equity loan secured by, the contract states, the “security interest in your dwelling or other real property.”

Desert Schools, the largest credit union in Arizona, increased its allowance for loan losses of all types by 926 percent in the last two years. It declined to comment.

The amount of bad home equity loan business during the boom is incalculable and in retrospect inexplicable, housing experts say. Most of the debt is still on the books of the lenders, which include Bank of America, Citigroup and JPMorgan Chase.

“No one had ever seen a national real estate bubble,” said Keith Leggett, a senior economist with the American Bankers Association. “We would love to change history so more conservative underwriting practices were put in place.”

The delinquency rate on home equity loans was 4.12 percent in the first quarter, down slightly from the fourth quarter of 2009, when it was the highest in 26 years of such record keeping. Borrowers who default can expect damage to their creditworthiness and in some cases tax consequences.

Nevertheless, Mr. Leggett said, “more than a sliver” of the debt will never be repaid.

Eric Hairston plans to be among this group. During the boom, he bought as an investment a three-apartment property in Hoboken, N.J. At the peak, when the building was worth as much as $1.5 million, he took out a $190,000 home equity loan.

Mr. Hairston, who worked in the technology department of the investment bank Lehman Brothers, invested in a Northern California pizza catering company. When real estate cratered, Mr. Hairston went into default.

The building was sold this spring for $750,000. Only a small slice went to the home equity lender, which reserved the right to come after Mr. Hairston for the rest of what it was owed.

Mr. Hairston, who now works for the pizza company, has not heard again from his lender.

Since the lender made a bad loan, Mr. Hairston argues, a 10 percent settlement would be reasonable. “It’s not the homeowner’s fault that the value of the collateral drops,” he said.

Marc McCain, a Phoenix lawyer, has been retained by about 300 new clients in the last year, many of whom were planning to walk away from properties they could afford but wanted to be rid of — strategic defaulters. On top of their unpaid mortgage obligations, they had home equity loans of $50,000 to $150,000.

Fewer than 5 percent of these clients said they would continue paying their home equity loan no matter what. Ten percent intend to negotiate a short sale on their house, where the holders of the primary mortgage and the home equity loan agree to accept less than what they are owed. In such deals primary mortgage holders get paid first.

The other 85 percent said they would default and worry about the debt only if and when they were forced to, Mr. McCain said.

“People want to have some green pastures in front of them,” said Mr. McCain, who recently negotiated a couple’s $75,000 home equity debt into a $3,500 settlement. “It’s come to the point where morality is no longer an issue.”

Darin Bolton, a software engineer, defaulted on the loans for his house in a Chicago suburb last year because “we felt we were just tossing our money into a hole.” This spring, he moved into a rental a few blocks away.

“I’m kind of banking on there being too many of us for the lenders to pursue,” he said. “There is strength in numbers.”

John Collins Rudolf contributed reporting.

34 Responses

  1. […] the article here: HELOC LOANS WORTHLESS « Livinglies's Weblog Related Posts:Undisclosed Marriage or Domestic Partnership and Effects Upon …California […]

  2. Thanks for the link Bill Kay.

    I feel a change coming, something big, a bit of excitement in all of this chaos. A light at the end of a dark tunnel. Something deep inside, deep in the heart that this mess will come to an end, and when it’s over, I will pity the judgment many will face, but staying in the energy of Love, I will know it’s the right thing to do, and welcome their punishment with delight.

    I want them to be judged them without compassion and without mercy, for turning a blind eye to the light in their fellow man.

    For all men are created equal, and this foreclosure crisis has tilted the blind judges’ scales of justice to ‘inequity’.

    I’m getting some comfort in this energy field. I may feel it more because I’m away from the home I was dispossessed from, and trying to stop the dispossession had altered my energy from love to ‘fear’.

    They did me a favor. I found my peace!
    I’m better, stronger, faster, smarter than I was a month ago.

    I TURNED OFF MY T.V.

    So you can’t get to me through that medium. No alpha waves frying my brain. I understand, just having it on in the house can still affect you.

    A change is a coming…I’m not religious.
    Had to change my address since my dispossession.
    Was going to cancel my driver’s license, but decided to change the address and saw it asked me if I was a US Citizen.
    What you give me a chance to answer that now!
    Uh….No!
    After what I’d been through as a US Citizen, you can bet your booty, I won’t be one of those things ever again! and I’ll teach me and mine that same thing.

    I am neither am I a person, nor a surety to a principal, nor a trustee, nor a beneficiary, nor a corporation. I am always in my proper person. I’m not a statutory person, I’m in propria persona…and anywhere I establish a contract, you will know.

    I registered my daughter for a different school.
    Yeah, part of being dispossessed!

    Want my signature? Okay, you get to see who I am, no matter what I sign. I take longer to sign receipts, people look at me like I’m crazy.

    On everything, if you want my signature, we are establishing a contract. Only contracts require a signature to show some sort of ‘agreement’.

    Whenever you want my name, you will know it is an ‘arm’s length transaction’, and belongs to a proper person and not a statutory person, one of your corporate control creations.

    Having that legal dictionary really opened the door to knowledge. I always thought Fraud on the Court, meant the other party was bringing a lie into the courtroom that needed to be caught by the judge. Man, using that term, can really ‘piss off a judge’ now that I ‘really’ know what it means.

    Told my daughter if they call her name in school, to answer with ‘here by special appearance’. She looked at me like I was crazy. I felt like that woman in the Terminator movie, who was teaching her son all those survival skills because her eyes was opened to the world she lives in.

    Find my self saying, ‘for the record’ when I’m having conversations. But yep, a catalyst can unlock doors to the mind. All it takes is the right situation, and then you can see the Matrix, like Neo.

    Dorothy has clicked her heels and returned to Kansas.
    Didn’t know how, before all this.
    A catalyst called a ‘foreclosure’ which is really ‘theft by judge’ showed me a door and I walked through it.

    Light and Love,
    at arm’s length,
    trespass unwanted, sui juris in propria persona.

  3. The A Man

    It is time we make life fair. Load me up..
    I am ready !

  4. BSE LIFE IS NOT FAIR. I AM JEWISH AND IN THE SAME BOAT YOU ARE IN. I WORKED MY WAY THROUGH COLLEGE AND ALL MY INVESTMENTS ARE WORTHLESS.

    BUT MOST OF THE RICH ARE ALSO IN THE SAME BOAT WE ARE IN. THE ONLY GUYS AND GIRLS WHO ARENT ARE THE BANKSTERS WHO RECEIVE FREE MONEY. AND A FEW GOVERNMENT EMPLOYEES.

    DEUTCHE BANK WAS THE ARCHITECT OF THE TRANSFER OF MONEY FROM THE GERMAN JEWS TO THE NAZI GERMANS.

    IF YOU ARE MAD THEN THEY WON. WATCH GONE WITH THE WIND. IF YOU ARE MAD YOU WILL GET SICK.

    THE MAIN DIFFERENCE BETWEEN THE POOR AND THE RICH IS THE RICH GET UP FAST AFTER THEY TAKE A HIT.

    NEVER AGAIN.

  5. Listen to him. He IS RIGHT!!!!

  6. Trespass, here is that supreme court decision with regards to FDCPA.

    Actually everyone should read this.

    http://www.supremecourt.gov/opinions/09pdf/08-1200.pdf

  7. The A Man:

    I do not know the role of DEUTSCHE BANK during the days of Hitler. Only that the Jews controlled the cash and the Germans did not. A scheme was devised to rotate the wealth into the hands of the Germans. This is beginning to sound like a similar story. But I am not Jewish but just a poor farm boy who worked hard and paid his way through college and this life. I have now been fleeced of nearly 30 years of savings. Maybe I am only here to entertain the rich. Either way ot is time to start a revolution. I am mad as hell and will stay this way until the day I die.

  8. trespass unwanted

    If you fought battle then you defeated the enemy. Remember, their only gain is dust and shadows. It will all pass. It all looks the same with your eyes closed and you won the fight ! Strength and honor is on your side.

  9. HERE is a word version of a FAX template to Sen. Chris Dodd in support of Elizabeth Warren. Just download, type in your name etc., sign and fax!!

    http://www.scribd.com/FAX-TEMPLATE-to-Senator-Chris-Dodd-to-support-nomination-of-Elizabeth-Warren/d/35807907

  10. ROBIN HOOD STORY–TRIED TO HELP FORECLOSURE VICTIMS

    It’s not every day that a man can perpetrate bank fraud and look like a hero.

    But that’s exactly what’s happened to Jeffrey Gonsiewski, a banker who pled guilty Thursday to what the Chicago Tribune calls a “Robin Hood-like” loan scheme.

    According to an FBI press release, Gonsiewski was the vice president of the loan department at First Security Trust and Savings Bank in suburban Elmwood Park. During a span of time that lasted through February of 2009, Gonsiewski oversaw loan customers who, like so many around the country, were falling behind on their payments.

    The FBI describes his criminal act:

    [Gonsiewski] altered loan documents to make it appear that customers’ payments were current when he knew they were actually overdue, which prevented the bank from taking timely action to collect delinquent loans and protect its assets.

    Put in a more sympathetic light, he bought time for customers struggling with their mortgages and other loans so that his bank couldn’t “protect its assets” by foreclosing on them.

    The Tribune certainly seemed more inclined to that kind of description, writing that Gonsiewski “fancied himself sort of a modern-day Robin Hood at a time when consumers were becoming increasingly delinquent on their bank loans.”

    For one count of bank fraud, he faces a maximum penalty of 30 years in prison and a $1 million fine. His plea agreement suggests a term of four to six years.

  11. BSE THANKS

    WHAT ABOUT THE IMF?

    WHAT ROLE DID DEUTSCHE BANK HAVE IN HITLERS NAZI REGIME?

    BSE YOUR IDEA OF NOT PAYING TAXES SORRY TO SAY IS NOT PRACTICAL. BECAUSE WE DONT HAVE THE MONEY TO PAY THEM ANYWAYS. AND THE BANKS ARE PAYING OUR PROPERTY TAXES AND INSURANCE AT INFLATED PRICES. BECAUSE THEY GET THE FUNNY MONEY FOR FREE ANYWAYS.

    FROM OUR GOVERNMENT.

    THIS COULD BE SETTLED IN THE STREETS IN TWO WEEKS FLAT WITH NO CASUALTIES CITY OF BELL CASE STUDY

    GREAT JOB DANIELLA MARS WE WILL ALL BENEFIT FROM YOUR WONDERFUL VICTORY.

    NEVER AGAIN.

  12. Congrats Daniela,
    I’ve got so much on my plate, I can’t add the foreclosure and forcible detainer “fight’. I don’t fight, so I put that in double quotes.
    Anyway, I’m so happy for you.
    When I get myself together, I have two years to challenge what took place. If the home is sold, then the suit can be for damages. I think exemplary damages of triple the loss may be available to me.

    So my goal is not to get the home back anymore, I feel they can have it, it’s really to sue them really good, so they hope it was worth what they did.

    I believe they’ve already been paid, and their client is probably not on the hook for giving them a ‘bad’ case to foreclose on.

    As debt collectors they have a duty to verify the debt they are collecting.

    So it all works out in the end. Let them take it, and go back and tell them the screwed up and get something in return.

    Sort of like that supreme court case where they sued the law firm and won because of FDCPA violations.

    Have to locate it, I saved the pdf to a DVD, and I’ve been dispossessed, so I have to find it.

    Light and Love,
    at arm’s length
    Trespass Unwanted, sui juris in propria persona

  13. YES … A VICTORY BBQ!

  14. THE A MAN

    Hitler was directed to burn his own capital by the “CLUB” and blame it on the others. The “Club” includes the CFR which in some cases include US media anchors. By the way the “CLUB” does not like it when Euro dollars are traded for oil.

    I am well connected in the arena if you want to know more. It is not conspiracy theory.
    It is factual information.

  15. Daniela Mars

    Love to me you too. Maybe someday – many of us here can meet.

    Agree – OPEN EVERYTHING – and DO NOT throw out anything!!!!!!!

  16. MONEY TALKS AND B—LSHIT WALKS

    REALITY

    NEVER AGAIN.

    BSE WHO FINANCED HITLER? I HOPE IT WAS’NT THE ROTHSCHILDS.

  17. BSE I JUST SAW A SHOW ON THE WAR OF INDEPENDENCE.

    DO YOU KNOW WHAT THE UNITED STATES GOVERNMENT DID ONCE WE BEAT THE BRITISH?

    ONE OF THE FIRST THINGS THE GOVERNMENT DID WAS
    RAISE OUR TAXES, HIGHER THAN WHAT THE BRITISH WERE CHARGING.

    ITS BEEN GOING ON FOR AL0NG TIME AND IT WILL CONTINUE TO GO ON.

  18. Forgot to say – Senator Dodd is maybe the N1. enemy of this country. But … Look what happen with crooks Sen. Dodd, the crook senator from Alaska just learned a lesson from God. If you harm people here – you are going to pay here. I believe in God!

  19. Thank you everybody ! BSE i love the video. Anonymous one day i want to meet you.

    The house that i won was an “investment”(it makes me insane to say this word – what a joke ) property.

    Now I have the battle for my home where 3 different companies claim they are the servicer.

    I did a mistake and I want everybody out there to know. When they file a foreclosure you start to get a lot of mail from all kinds of people right ? Open EVERYTHING.

    These other companies send me the “servicing”letters long time ago. I was so lucky that i did not put them on the garbage. Now I opened all old correspondence and I found – so I wrote them letters and they are sending me documents – of course documents that everybody can get right ? Even a blue ink copy of my mortgage that now since the attorney for the foreclosure mill filed a “colored copy”everyone can get with a hand scan … Anyway…

    when i go to the hearing next month and the judge is about to give my house to them I will ask the judge if he is 100% that they own my loan. And then I will introduce the other 2 companies as evidence at the hearing.

    I have to say that i have a lawyer on this case because my house is very important to me. I got her name from this blog.

    So thank you very much again. I feel like all of you are part of my family.

  20. I’m all for it. If I hit the Lottery I’m not giving those theives one red cent.!!!

  21. Senator Dodd’s fax number in Washington DC is
    202-224-1083

    support Elizabeth Warren — tell him you want her nominated

  22. Daniela Mars –You are amazing!! going up against big ole CitiGroup with cazillions of dollars behind themselves!!

    You need to pat yourself on the back Daniela!! You give all the rest of us more confidence.

  23. ELIZABETH WARREN-WHITE HOUSE VISIT

    –all understand Chris Dodd is still opposing her nomination to the new consumer finanicial protection bureau.

    PLS DO 2 things: fax Dodd and tell him you want her nominated and also email or fax the White House and President Obama and also tell him you want her nominated. TIME IS OF ESSENCE!!

    Financial reform advocate Elizabeth Warren was spotted leaving the White House Thursday.

    MSNBC’s Savannah Guthrie tweeted news of Warren’s apparent visit a little after 5 p.m.

    Warren, who is the chair of the Congressional Oversight Panel, is a possible nominee for a new consumer financial protection bureau created by the new Wall Street reform law.

    Senator Chris Dodd has publicly questioned Warren’s confirmability and management skills.

  24. Daniela – Congrats from me too!!

    No one knows where anyone’s loan are. Heard Bloomberg’s Pimm Fox – ask a guest – “So, the bad loans (foreclosures) are sitting on banks books, and no one knows what to do?.” Guest says “The banks have been selling off these loans to distressed debt buyers.” Pimm did not know what to say.

    And, that was the goal of the Federal Government when it bailed out the banks. To sell the “distressed Loans” to distress debt buyers at a discount. Forget the securities – they do not even exist anymore. They are done- finished. All the securities were – was an accounting conversion from whole loans to off-balance sheet securities. The loans belong to the Wall Street Bank (security underwriter) until they rid themselves of the loans by sale to distressed debt buyers for pennies on the dollar.

    Do not care whether it is credit card debt, HELOCs, subprime adjustable, or second mortgages. Some Wall Street firm owned your loan – until you default – then – it is anyone’s guess as to where that loan went. And, to cover for the secret relationships (whether debt buyer or hedge fund) – numerous documents are fabricated.

    Mario Kenny makes a good point about taxes. Every foreclosure action in court – should request complete remittance ledgers by the servicer to the stated Trustee for the (ha- dissolved) Trust. PSA demands the ledger. Everything MUST be paid by the servicer to the Trustee. And, the Trustee must pass-on those payments to the certificate holders of the Trust – which is the Security Underwriters. Of course, if the Trust has been dissolved – there are no more remittance ledgers.

  25. They are now talking just like me, wow, hard work does payoff in the end, right?

  26. What do I do if I have a HELOC on vacation property. It is interest only with a variable monthly interest. The property is worth $278K on the tax sheet and I owe $150K on the Heloc. My brother Joe and I are on the Deed as tenants in common. We are also on the note. They made our wife’s sign the mortgage because Wis is a Community Property State

    Stan
    Racine Wi

  27. http://www.mariokenny.wordpress.com

    So they did not pay the tax on the note? then ask the court to dismiss your case, or give you back the house, its the Florida law and there is no time limit.

    727 So.2d 302 (1999)
    Michael M. SOMMA, Appellant/Cross-Appellee,
    v.
    METRA ELECTRONICS CORP., etc., Appellee/Cross-Appellant.
    No. 98-1774.
    District Court of Appeal of Florida, Fifth District.
    February 12, 1999.
    Eric W. Ludwig of Eric W. Ludwig, P.A., Altamonte Springs, for Appellant/Cross-Appellee.
    Melissa Clark Daley of Melissa Clark Daley, P.A., Tampa, for Appellee/Cross-Appellant.
    ANTOON, J.
    The dispositive issue raised in this action to enforce a promissory note is whether the trial court was required to dismiss the action once it was established at trial that the plaintiff had failed to pay the taxes due on the note. We conclude that the trial court should have dismissed the action because a promissory note is not enforceable in any Florida court until the requisite tax due on the note is paid. See § 201.08, Fla.Stat. (1997). Accordingly, we reverse the final judgment entered below.
    In January 1997, Metra Electronics Corporation (Metra) executed a $1,893,750 promissory note in favor of Michael Somma. The note was executed in accordance with the terms of a settlement agreement reached by the parties relating to an earlier dispute. The terms of the note required Metra to pay Mr. Somma $18,750 per month for a period of ten years. The payments were to be made by the 21st day of each month and the note did not include a grace period for late payment. An acceleration clause was included in the note providing that Mr.Somma could demand the entire amount due if Metra failed to make a monthly payment.
    Pursuant to the parties’ agreement, Metra arranged to deposit its monthly payments into Mr.Somma’s Prudential investment account. Metra made an initial deposit of $348,000 with Sun Trust Bank and instructed Sun Trust to forward the monthly note payments to Mr. Somma’sPrudential account.
    The payments were made by Sun Trust in accordance with the terms of the promissory note until June 1997 when the funds contained in Metra’s Sun Trust account fell below $18,750. Since the balance in the account was not sufficient to pay the amount 303*303 due, Sun Trust did not forward the June payment to Mr. Somma’s Prudential account. Sun Trust did not notifyMetra of the deficiency until early July. Upon notice, Metra instructed Sun Trust to forward the remaining account balance of $12,554.94 to Mr. Somma’s Prudential account. This payment was made on July 2. On July 3, Metra issued a check in the amount of $6,131.55 payable to Mr. Somma’s Prudential account. Notwithstanding the payment of these sums, $63.51 remained due on the June installment payment. Mr. Somma promptly declared the note to be in default and filed this suit seeking to accelerate the balance due on the promissory note.
    The case proceeded to non-jury trial. During his case-in-chief, Mr. Somma offered the promissory note into evidence. The note did not have documentary tax stamps affixed, and Mr.Somma did not offer any evidence that the taxes due on the note had been paid. Metra moved for involuntary dismissal of the lawsuit, arguing that the trial court lacked authority to enforce the note because the taxes due on the note had not been paid. To support this argument,Metra cited to section 201.08 of the Florida Statutes which provides in relevant part:
    201.08 Tax on promissory or nonnegotiable notes, written obligations to pay money, or assignments of wages or other compensation; exception.—
    (1)
    * * * * * *
    The mortgage, trust deed, or other instrument shall not be enforceable in any court of this state as to any such advance unless and until the tax due thereon upon each advance that may have been made thereunder has been paid.
    § 201.08(1), Fla.Stat. (1997) (emphasis added). The trial court reserved ruling on the motion and the trial proceeded.
    At the close of trial the court, in an effort to reach an equitable result, denied Metra’s motion to dismiss but entered final judgment in Metra’s favor concluding that: 1) Prudential was Mr.Somma’s agent and was authorized to accept the late and deficient payments from Metra and Sun Trust; 2) the deficiency in the June payment was de minimis and Metra had substantially performed its obligations pursuant to the terms of the note; 3) Mr. Somma’s failure to pay the taxes due on the note did not deprive the court of authority to enforce the note; and 4) Metrahad waived any objection to Mr. Somma’s failure to pay taxes by failing to raise the issue sooner. Both parties have appealed the final judgment.
    Mr. Somma contends that the trial court erred in applying the equitable doctrine of substantial performance and in determining that Prudential was his agent and not merely a depository. On cross appeal Metra argues that the trial court erred in failing to dismiss the action due to Mr.Somma’s failure to obtain the requisite documentary tax stamps. Although the arguments raised by Mr. Somma have piqued our interest, we only need to determine the issue raised on cross appeal because that determination is dispositive.
    Other courts have addressed procedural issues arising from the fact that at trial the plaintiff failed to establish that the requisite taxes had been paid on instruments which they were seeking to enforce. For example, in Owens v. Blitch, 443 So.2d 140 (Fla. 2d DCA 1983), the trial court refused to admit a promissory note into evidence because the documentary tax stamps on the note had been belatedly purchased. On appeal, the second district reversed this ruling, holding that “[n]othing in Florida law would deny enforceability of promissory notes merely because documentary stamps have been belatedly affixed.” Id. at 141.
    Similarly, in Klein v. Royale Group, Ltd., 578 So.2d 394 (Fla. 3rd DCA 1991), the plaintiff sued the defendant for failure to pay a promissory note. After the plaintiff rested his case, the defendant moved to dismiss the action on grounds that the plaintiff had failed to pay the necessary tax on the promissory note. The court scheduled a hearing on the motion; however, before the hearing commenced the plaintiff paid the tax due and affixed the documentary stamps to the note. Nevertheless, the trial court dismissed the action without prejudice. On appeal, the third district reversed, holding that “there is nothing in the statute or the case decisions 304*304 that deny enforceability merely because the required documentary stamps have been belatedly purchased and affixed.” Id. at 395.
    In Silber v. Cn’R Industries of Jacksonville, Inc., 526 So.2d 974 (Fla. 1st DCA 1988), the plaintiff sought recovery on a promissory note. At trial, after the close of the plaintiffs case, the trial court allowed the plaintiff to reopen its case, remove the note from evidence, and affix the requisite documentary tax stamps in order “to correct [the] legal impediment to enforcement of the note”. Id. at 977. On appeal, the defendants argued that the trial court erred in so ruling and should have instead granted their motion to dismiss the action without prejudice to refiling after payment of the tax due. The first district found the trial court’s ruling “troublesome” primarily because the court had permitted the plaintiff “to reopen its case, change the evidence to alter the existing facts, and then adduce proof of the new facts as altered by using the evidence of such changes.” 526 So.2d at 978 (emphasis in original). By so ruling, the trial court not only allowed the plaintiff to prevail on the substantive claim but also subjected the defendant to the payment of prevailing party attorney’s fees. Such fees would not have been incurred had the court dismissed the action. In reviewing the matter, the first district refused to dismiss the action since all of the issues “were fully and fairly tried free of error”. 526 So.2d at 979. However, the court vacated the prevailing party attorney’s fee award and remanded the matter to the trial court with instructions to either allow the plaintiff the option of waiving the fees incurred prior to the purchase of the stamps, or having the case dismissed without prejudice.
    The facts of the instant case are distinctively different from those in the cases cited above. Evidently, this action has proceeded through trial and appeal even though the promissory note is statutorily unenforceable. Inexplicably, once Metra pointed out that the documentary tax had not been paid, Mr. Somma did not request permission from the trial court to purchase and affix the required stamps. In fact, neither the instant record nor the appellate briefs suggest that Mr.Somma has yet purchased the requisite documentary tax stamps.
    Section 201.08(1), Florida Statute (1997), clearly states that in an action to enforce a promissory note the plaintiff must establish, as a condition precedent to pursuing the action, that the taxes due on the note have been paid. The prohibition against actions to enforce promissory notes until the required documentary taxes have been paid applies to “any court” including ours. The obvious purpose of this statute is to ensure payment of statutorily mandated taxes. “This statutory provision is concerned primarily with enforcement of the taxing statutes and collecting monies due the state for documentary stamps on designated instruments.” Silber, 526 So.2d at 977. To this end, section 201.08(1) constitutes an injunction prohibiting courts from enforcing rights created by instruments upon which required taxes have not been paid. Accordingly, since no evidence was submitted at trial to prove that Mr. Sommahad paid the taxes due on the note, this lawsuit should have been dismissed.
    Mr. Somma argues that his failure to pay the documentary tax constitutes an affirmative defense, not a limitation upon the court’s authority to adjudicate the lawsuit. He argues further that, like all other affirmative defenses, the defense relating to the failure to pay documentary taxes is waived if not timely raised. See Fla.R.Civ.P. 1.140. Applying this argument, he submits that Metra waived its right to assert the defense of his failure to pay the taxes due on the note by waiting to raise the issue until trial. We disagree.
    Unlike an affirmative defense, section 201.08 was not enacted for the protection of any particular class of defendants, nor was it enacted to preserve the integrity of the judicial proceedings. Therefore, a defendant’s failure to plead a plaintiff’s noncompliance with section 201.08 does not waive the state’s right to receive payment of the requisite taxes nor does such noncompliance excuse the court from complying with the prohibition contained in the statute. We note that the record before us does not disclose that Metra had knowledge of Mr.Somma’s failure 305*305 to pay the documentary tax prior to the note being offered into evidence. Perhaps this lack of knowledge explains the lateness of the objection. In any event, since the failure to pay taxes due on a note does not constitute an affirmative defense, defendants are not required to undertake pre-trial discovery in order to determine whether the plaintiff has complied with the terms of the statute.
    In summary, promissory notes for which documentary taxes have not been paid are, as a matter of law, unenforceable by any Florida court. In an action to enforce such a note, once the court discovers that the documentary taxes have not been paid, the court must dismiss the action without prejudice, or upon proper motion abate the action for a time sufficient to enable the plaintiff to purchase documentary stamps and affix them to the note. See Kotzen v. Levine,678 F.2d 140 (11th Cir.1982). Accordingly, we reverse the final judgment entered below and remand this matter to the trial court for proceedings consistent with this opinion.
    REVERSED and REMANDED.
    GRIFFIN, C.J., and THOMPSON, J., concur.

  28. Daniela Mars … GOOD JOB!

  29. Daniela Mars

    This is for you..Click the link below:
    http://www.youtube.com/watch?v=z7X2_V60YK8

    If necessary, we can stack these usurious S.O.Bs five feet high and use them
    as sand bags. We will need em once the revolution starts.

  30. Daniela Mars

    GREAT NEWS ! CONGRADULATIONS
    THER ARE MORE BATTLES to BE WON !

  31. To Daniela:

    YOU GO GIRL!!! Hopefully I’ll be right behind ya with the success – we’ll see – hearing is 8/24!

  32. Congrats Daniela. Awesome job.

  33. Won my battle against CitiMortgage… foreclosure dismissed because they never show the Note. Defended PRO SE using the tools I’ve learned here. It took me 2 years. At least I recoup some of my money back. Thank you all ! I am going to sue the foreclosure mill.

    As I get the good news I also get the news that they sold the servicing rights to another company. I just mailed them a QWR.

    On the Heloc – BOFA is oferring 60 cents on the dollar
    yeh right !!! I am with you BSE!!!!!!

  34. Strength in numbers. Let’s teach these usurious S.O.Bs not to mess with the honest home owner.
    Design Loans to fail, Deflate my property value and turn my neighborhood into a ghetto…

    You bastards will learn if it takes very US Taxpayer to be a patriot and stop their payments.
    It is 1776 all over again. But this time the British are inside on Capital Hill. My powder is dry and my guns are loaded. I urge everyone in this position to join the revolution. STOP YOUR PAYMENT !

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