EDITOR’S NOTE: OKAY. LET’S PRETEND FOR A MOMENT THAT THE WHOLE PROBLEM IS CONTAINED TO BAD PAPERWORK. It’s like replacing the seat on a bicycle with no wheels. It’s still not going anywhere.
The problem remains and cannot be cured unless the creditor and the debtor are connected on one document or on a series of documents that are all connected, disclosed and recorded properly. In other words it is my opinion that the only way this can be fixed, in terms of the paperwork, is if they get a new signature from the borrower on a document that identifies the creditor and all of the terms of the transaction.
Good luck. It is hard to imagine a situation in which any borrower today would sign papers that contained both the terms recited on the original note and the terms incorporated in the securitization documents. The industry continues to control the narrative. However, there is no amount of paperwork from the middleman that can make up for the lack of paperwork signed by the real parties in interest.
If you think getting the borrower to sign new papers today is going to be difficult, consider the difficulty in locating and identifying “the creditor.” Besides the obvious fact that each of the loans was cut into pieces and the obvious fact that there were numerous investors, the larger problem is that each of the pieces was used multiple times in multiple ways. The current status is that the history of these transactions includes only one set of papers that were signed by the borrowers and recorded in favor of loan originators who were merely acting as brokers. That cannot be fixed without the borrower’s signature. In order to revive these transactions and have them secured by an interest in real property, the documents on record must reflect and recite an obligation from the borrower to the mortgagee or beneficiary under the deed of trust.
None of this can happen without full disclosure of all the parties in the securitization chain. None of this can happen without the borrower’s agreement to the new deal. And that still leaves the question of how much of the obligation is left after receipt of loss mitigation payments that were made without rights of subrogation. As lawyers and title examiners wade through this paperwork, the conclusion will be inescapable. An obligation was created when the borrower received the benefit of an advance of funds from an undisclosed third-party. That obligation was not described in the note. That obligation was not described in the mortgage or deed of trust. We are therefore left with a worthless note and an unenforceable self-serving “encumbrance” that by its own terms only secures the obligation described in the note. Since the payee under the note must be considered as either paid in full or as a mere broker, the note does not describe the actual obligation.
This might appear to many people as producing an unfair windfall to the homeowners. But if that is the result, it was not caused by the homeowners as borrowers under defective documentation procured under false pretenses. When this happens in business nobody seems to care that one business received a disproportionate benefit from a poorly conceived deal. Somehow when it’s the little guy the rule seems to be that under no circumstances should a homeowner or borrower receive a disproportionate benefit from the unwinding of a poorly conceived fraudulent deal.
I do not agree.
Let’s not forget how much money was actually made on these deals by these same middlemen — look at the bonuses. The truth is that there are no losses and there was no risk associated with these loans except to the actual investors who shelled out the money. Those people are looking for their money back from the same guys that are committing perjury and fraud in court now in these foreclosures. Even the Federal Reserve agrees that they were sold a “bill of goods.” So just who is going to be on the other end of some document that the borrower has signed? And why should that be the borrower’s problem?
One Mess That Can’t Be Papered Over
By GRETCHEN MORGENSON
LAWYERS representing delinquent homeowners have been shouting for years about documentation problems in residential mortgages. Now that their complaints have gained traction with investors, attorneys general and some state court officials, the question of consequences looms large.
Is the banks’ sloppy paperwork a matter of simple technicalities that are relatively easy to cure, as the banks contend? Or are there more far-reaching consequences for banks and the institutions that bought mortgage-backed securities during the mania?
Oddly enough, the answer to both questions may be yes.
According to real estate lawyers, most banks that have gotten into trouble because they didn’t produce proper proof of ownership in foreclosure proceedings can probably cure these deficiencies. But doing so will be costly and time-consuming, requiring banks to comb through every mortgage assignment and secure proper signatures at each step of the way — and it surely will take much longer than a few weeks, as banks have contended.
Once this has been done appropriately (not by robo-signers, mind you) the missing links in the banks’ chain of ownership can be considered complete and individual foreclosures can proceed legally.
None of this will be easy, however. And it will be especially challenging when one or more of the parties in the chain has gone bankrupt or been acquired, as is the case with so many participants in the mortgage business.
Still, addressing all of these lapses is possible, according to Joshua Stein, a real estate lawyer in New York. “If there are missing links in your chain of title, you go back to your transferor and get the documents you need,” he said in an interview last week. “If the transferor doesn’t exist any more, there are ways to deal with it, though it’s not necessarily easy or cheap. Ultimately, you can go to the judge in the foreclosure action and say: ‘I think I bought this loan but there is one thing missing. Look at the evidence — you should overlook this gap because I am the rightful owner.’ ”
Such an unwieldy process will make it more expensive for banks to overhaul their loan servicing operations to address myriad concerns from judges and regulators, but analysts say it can be done.
ON the other hand, resolving paperwork woes in the world of mortgage-backed securities may be trickier. Experts say that any parties involved in the creation, sale and oversight of the trusts holding the securities may be held responsible for any failings — and if the rules weren’t followed, investors may be able to sue the sponsors to recover their original investments.
Mind you, the market for mortgage-backed securities is huge — some $1.4 trillion of private-label residential mortgage securities were outstanding at the end of June, according to the Securities Industry and Financial Markets Association.
Certainly no one believes that all of these securities have documentation flaws. But if even a small fraction do, that would still amount to a lot of cabbage.
Big investors are already rattling the cage on the issue of inadequate loan documentation. Last week, investors in mortgage securities issued by Countrywide, including the Federal Reserve Bank of New York, sent a letter to Bank of America (which took over Countrywide in 2008) demanding that the bank buy back billions of dollars worth of mortgages that were bundled into the securities. The investors contend that the bank did not sufficiently vet documents relating to loans in these pools.
The letter stated, for example, that Bank of America failed to demand that entities selling loans into the pool “cure deficiencies in mortgage records when deficient loan files and lien records are discovered.” Bank of America has rejected the investors’ argument and said that it would fight their demand to buy back loans.
Mortgage securities, like other instruments that have generated large losses for investors during the crisis, have extremely complex structures. Technically known as Real Estate Mortgage Investment Conduits, or Remics, these instruments provide investors with favorable tax treatment on the income generated by the loans.
When investors — like the New York Fed — contend that strict rules governing these structures aren’t met, they can try to force a company like Bank of America to buy them back.
Which brings us back to the sloppy paperwork that lawyers for delinquent borrowers have uncovered: some of the dubious documentation may undermine the security into which the loans were bundled.
For example, the common practice of transferring a promissory note underlying a property to a trust without identifying it, known as an assignment in blank, may run afoul of rules governing the structure of the security.
“The danger here is that the note would not be considered a qualified mortgage,” said Robert Willens, an authority on tax law, “an obligation which is principally secured by an interest in real property and which is transferred to the Remic on the start-up day.” If, within three months, substantially all the assets of the entity do not consist of qualified mortgages and permitted investments, “the entity would not constitute,” he said.
If such failures increase taxes for investors in the trusts, Mr. Willens said, the courts will have to adjudicate the inevitable conflicts that arise.
What if a loan originator failed to provide documentation substantiating that what’s known as a “true sale” actually occurred when mortgages were transferred into trusts — documentation that is supposed to be provided no longer than 90 days after a trust is closed? Well, in that situation, a true sale may not have legally happened, and that doesn’t appear to be a problem that can be smoothed over by revisiting and revamping the paperwork.
“The issue of bad assignment has many implications,” said Christopher Whalen, editor of the Institutional Risk Analyst. “It does question whether the investor is secured by collateral.”
In other words, were the loans legally transferred into the trust, and, if not, do the trusts lack collateral for investors to claim?
For example, according to a court filing last year by the Florida Bankers Association, it was routine practice among its members to destroy the original note underlying a property when it was converted to an electronic file. This was done “to avoid confusion,” the association said.
But because most securitizations state that a complete loan file must contain the original note, some trust experts wonder whether an electronic image would satisfy that requirement.
All of this suggests that while a paperwork cure may eventually exist for foreclosures, higher hurdles exist when it comes to remedying flaws in mortgage-backed securities. The only way to wrestle with the latter, some analysts say, is in a courtroom.
“The whole essence of this crisis is fraud and unless we restore the rule of law and transparency of disclosure, we are not going to fix this,” said Laurence J. Kotlikoff, an economics professor at Boston University.
Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud |
Anonymous
Do you want to really take credit for my articles. Smiley face….I put that there so people like you would not take copyright liberties. Neil or Brad …you want to explain this? WHo is this so called contributor . really?
Really….
MSoliman
expert.witness@live.com
dny
Do not know how the smiley face got there – did not intend it.
dny
Unfortunately, even if the securities have been covered for default by swap protection – the banks will still hold borrowers accountable for the whole loan – that they really own. This is the way it works – and courts buy it.
Servicing rights are part of the mortgage loan sale and accounting gimmick by the bank.
1) bank buys loans from originator.
2) originator sells mortgage loans with “servicing retained” or “servicing released”. If they retain servicing rights – they retain a portion of fees AND – the right to purchase delinquent loans at steep discount – AND continue to service for some “undisclosed” buyer for the collections rights to the default debt.- once the receivables are charged-off and removed from securitization.
3) The banks convert the purchased loans from accounting on-balance sheet receivables to securities in off-balance sheet conduit. It is simply an accounting gimmick conversion. This accounting, however, is a gimmick – there is no complete conversion – because security receivables are separate from whole loan ownership. Once the securities are dead – the loans convert back to the purchasing bank’s balance sheet.
4) In this process, they avoid the one step that is not divulged in the chain of title for securitization – their purchase of the loans – which occurred before you even signed the dotted line at mortgage origination. This is called TABLE- FUNDING.
5) The default means the loan is no longer a security (all security pass-throughs MUST be for current income only). Therefore, the loan is no longer a part of the Trust – and the servicer is now collecting for undisclosed party who also had prior agreement to purchase default debts from the bank. This is also called a swap contract..
6) The actual security is never transferred in a default transaction. This is because swaps are a contract – not a security. The contract removes the loan (receivable) from the Trust and transfers collection rights to the swap party – who may also then sell collection rights to another party.
7) Foreclosure mills claim to still be “attached” to the Trust. This is false. The Trust is only for current pass-through receivables – and the derivative contracts are NOT securities – AND NOT part of the Trust – They are DERIVED from the TRUST – but not part of it.
8) This is the legal technicality that attorneys THINK documents are in order for. But, they are not BECAUSE – the TRUST cannot account for any foreclosure recovery – and the Trust no longer has any right to receivables (that no longer exist).. In fact, the Trust accounts for nothing. They are only a device to pass-through the payments. Once those payments are gone – the role the Trust served is also gone – for those default loans.
9) There are derivative contracts upon derivative contracts. And, these contracts amount to trillions in dollars. Once the original loan defaults – the whole domino derivative line-up fails. This is what the government needed to save. And, in their mind – there MUST be collection upon the original asset in order to save the swap domino contracts.
9) We are small fry in the big world of financial engineering.
10) I resent this – as does everyone else here. It is simply a transfer of wealth from middle America to those that had the ability to defraud and play the game. We were the subject of the fraud. And, in this game, America is being destroyed.
Stock market is rising due to devaluation of the dollar. Fed is determined to reverse this. We cannot allow dollar to continue to fall. Once this happens……. – but, of course, they are waiting until after election, because – politics comes first.
Today, heard that Google pays 2.4% in corporate federal taxes. How do they do it? By a subsidiary in Ireland – who then transfers profits to the Bermuda – where there is no corporate tax rate. Heard other companies do the same.
Accounting gimmicks should not conceal the identity of the creditor to borrowers. But, guess what? the IRS approved the Google structure. Let that be me or you – and we would be in jail.
ANONYMOUS – I’m not wondering whether this practice splits the note from the mortgage, but whether it splits the note itself. For instance, if an “originator” (table-funding for another undisclosed party) “sells” a “loan” but “retains” “mortgage servicing rights” – how is that practice allowed by the terms of the note or security instrument? Does it render them “non-negotiable instruments?”
And with regards to what you say about what happens “after default,” I would ask “what default?” or “whose default?” Seems no “default” would be experienced if the “servicer” is complying with its agreements, yes no?
Seems to all be about accounting gimmickry and keeping legislative “friends” out ahead of anticipated “problems” by pushing thru carefully crafted, but otherwise arbitrary-appearing laws ahead of time, like the “Interstate Notary Act of 2010.”
dny,
If the note is split from the mortgage it is not because those “agreements” are split into “loan collection rights” and “receivables.”
Loan collection rights do not happen until the loan is in default – that is, receivables charged-off and collection rights sold. In the good old days – selling collections rights to charge-offs was easy. As the crisis hit – it became more difficult for banks to sell collection rights because the defaults became massive and even if distressed debt buyers/hedge funds have the capital to purchase the right – they may not do so. And, the AIG bailout means many of the collection rights remain with government via the default swaps. It was the government’s intention to eventually sell the rights to distressed debt buyers. Given all the fraudulent foreclosures and false paperwork – this is no longer so easy to do.
M.Soliman, – agree with you – much is the same as the Enron scandal in which accounting gimmicks concealed all. But, Enron executives were indicted. That is not happening here – yet.
To the borrowers – all that matters is that the true lender was concealed.
Neil has excellent post today – he writes – “This simple accounting fact would enable any homeowner to show that the transaction was table funded several times over. It would lead to the inescapable conclusion that the lender of record what NOT a party to whom any money was owed by the borrower or anyone else. ”
The important issue is that the loans were table-funded. To further complicate, temporary warehouse lines of credit were granted by the actual lender to the originators – further concealing the identity of the actual lender. All of this is in violation of RESPA – but these consumer protection laws have short statute of limitations.
At max – the SOL – is three years.
Many corporations are incorporated in Delaware due to lower taxes in the state. There is an odd regulation in Delaware that allows corporation to stay on the record for three years after they are dissolved.. Even though the corp. cannot conduct business during this 3 year period – they can act in lawsuits. Most – if not all – of the originators are now gone. But, these originators have been able to conduct litigation – because of this regulation – and, therefore, continue to conceal the actual lender. Isn’t odd that RESPA and TILA (for rescission) have the same 3 year statute of limitations – which matches the time period for the defunct originators to participate in litigation???
Who set that 3 years?? Congress.
Note and security “deed ” are not split. WTF
(wheres the Fed). The securites are classes of certficates seprating the whole loan assets pledged as capital inthe form of class B certs.
The whole loan asset is bifurcated meaning the asset is exchanged in form and subtance and its capital eqivilant certificates (thanks to MERS) used to justify the returns paid from designated earnings supported from servicing cash flow .
Loans are “tendered” for class B certificates offering a commensurate yield and pass thru tax deferred feature. The class B certs launch the trust investment like a common stock versus a preferred stock (FDIC says “dont call it a stock”)
By days end the investors a singing “We wont be fooled again”.
MSoliman
This will never happen because none of the initial sales from originator to purchasing investment bank were ever disclosed. – Anonymous –
THEY ARE ACCOMLISHED FOR DERECOGNITION PURPOSES IN A REMIC. ITS CAN BE FOUND FOR REPRORTING PURPOSES (You have a good handle on things here but seem to get over burdened with somthing that is way too obvious???)
Loans are sold for cash as a receivable by FDIC BANK to PARTNERS investment banks. Here is Derecognition. Then loans are sold for cash paid for using lines of credit provided to a REMIC.
DERECOGNITION & FAS 140 GAAP VIOLATIONS:
The procedure is an off balance sheet gimmick using lines of credit shifting the liabilties of the bank line for cash from the sale of the Loans .The REMIC holds the loans to issue Base Capital Securities for the Cash received from trust investors and returns Cash from “B” Class securties to pay down the lines. Class “B” securties are capitalization for the trust investment and for Issuing Class “A” strips and varying classes of term securities.
Class “B” Securties are thereafter purchased for cash by the Bank affiliate as collateral for trust certs – who received the cash from the lines of credit – -and therefore allows the bank to hold the rights to the loans underlying shares that are registered and held in a REMIC.
Remeber the class “B” securties used to capitalize the REMIC allow the loans to stay there while offering trust investors nothing more then a dividend with a tax deferred feature. Without MERS this liquidity daisy chain could not happen.
Is there anything more questionable from a securties registration and deceptive stock offering?
Oh yeah, Synthetic CDO’s.
MSoliman
expert.witness@live.com
ENRON, TYCO & BANK of AMERICA
By M.Soliman
The capital contribution and process known as mortgage securitization is not the cause for various civil torts.It is the breach of accounting rules.
First, which the most damaging of these violations is the lenders loss of ownership for asset (“Pooled loans”) upon its sale into a securities offering under the accounting rule known as derecognition. Any means or method used by the bank to affect a controlling interest in assets sold, for the purpose of that object, will void the tax deferred status for issuing stock or “securities certificates”.
Second, More troublesome than that is now Bank of America and other banks that contributed a role in securitization-demand that a plaintiff defend its title to realty by pursuing fraud claims that challenge the integrity of disclosures made in soliciting the securities.
The beneficial interest in the early transferring by sale of its loans is done for accounting preferential treatment under a reporting scheme known as derecognition. Therein the bank transfers all economic interest for which the rewards and risks of the loans ownership are surrendered upon the sale.
Third, the mere right to service these loans, (“let alone enforce a collections effort “) breach the accounting rules set forth and diminish lenders right to prosecute the terms and conditions of the note.
These, as i have said three years now are similar offenses by past corporate violators such as Enron and Tyco.
MSoliman
expert.witness@live.com
ANONYMOUS,
I like your post. Maybe you should hold a weekend seminar
to help teach soem of us some additonal details.
It’s amazing the Double Standard these Public Pensions are pushing, Judges: “homeowners can’t afford to make their monthly payments, then they don’t need to own a home” but when they find out that they got screwed and not secured with anything it’s “whah whah, make the banks give us our rights back we don’t wanna be a part of this deal anymore, snivel snivel”(we can’t go soft on these “irresponsible investors”, they need to be held accountable for their actions). I say because of their collusive behavior in trying to conceal their greedy conflict of interest that all of their pensions(except teachers and such) be declared forfeited and they(except teachers and such) all be charged with TREASON.
Anybody in need of good precedent(aka case law), I’m putting a link to an Oversized Brief for the 9th Circuit Court of Appeals. I’ll put the link under the California Section too because there’s a lot of state citations for Cali including rescission and improper paperwork/forgery for many different scenarios that make them and any subsequent actions void. There’s mostly a lot of TILA Rescission stuff for the 9th Circuit, but there’s also a lot US Supreme Court and other Federal stuff. When I say a lot I meen A LOT, 62 pages(it’s an oversized brief). Oh and on page 12 the issue was pushed about the judges pensions being invested in the mortgage market and the Conflict of Interest, and when I say pushed the issue I mean for EVERYONE.
http://www.scribd.com/doc/40026552
Yes, but ANONYMOUS, nothing that I’ve ever read in a note or security instrument authorizes any party to split those “agreements” into “loan collection rights” and “receivables” and sell one or both separately to third parties based on other, undisclosed agreements as Neil says. Per the terms, only the note TOGETHER WITH the security instrument could be sold.
Seems the note and security instrument were breached by this “securitization” practice as you describe it? Comments?
Woops, in stating “a $420,000 for almost free” I left out the word house, so it should read “a $420,000 house for almost free”
Sorry.
Although I represent homeowners who are in trouble with their lenders (or current holder of note and DOT, I am surprised at the logic of Neil Garfield. Let’s take a homeowner who buys a house for $420,000. He obtains a loan for $400,000 and defaults on the loan for whatever reason, could be hardship. He does no pursue a modification or other attempt to pay back the mortgage based on payments he could afford. He meets attempt at foreclosure by arguing the paper work was fouled up and the investor was defrauded. He wants to pocket the $400,000 therefor and not pay it back and obtain a $420,000 for almost free because of the above. Isn’t this a classic case of unjust enrichment? Just because the banks and others in the mortgage chain make money, does that justify this guy, who has suffered only minimum damages, get something for nothing?
What do others think?
SORRY FOR THE DUPLICATE
The missing link in the chain – is the sale of the mortgage loan (not the security) from the originator to the investment bank that securitized the receivables. Before receivables can be securitized – the whole loan must be sold.
Some PSAs/Prospectus state the the loans were sold to a subsidiary of the affiliate security underwriter’s parent – other PSAs/Prospectus do not detail the chain. For example, in some instances – the loans are sold by the originator – to the “Depositor” – which is an affiliate/subsidiary of the originator ITSELF. Of course, originators can not sell the loans to itself – this would not be a “true sale.” This would be a “shell” Trust – designed to conceal the chain. So, under any scenario, the loans were first sold to an investment bank – and NONE of the these sales are documented..
After this, the investment bank’s subsidiary Depositor – assigns the loan receivables to a Trust – set up and owned by the Depositor. The Depositor – owns the trust – and passes-through it’s receivable payments to security investors. But, like any other Trust set up, and anyone who understands Trusts – understands this – ownership of the Trust is retained by the party that legally sets up the Trust, the Depositor, therefore, still owns the loan. What is then done with any cash payment pass-through is only done by authorization of the “owner” – the Depositor. The loans are not passed on to the security investors – only the cash payments are assigned and passed-on. And, this is why the default/foreclosures are still on the books of the investment bank that purchased the loans in the first place. That is, unless they have already sold those loans to distressed debt buyers/hedges funds after charge-off of the receivables.
There is a difference between sale of loans and assignment of receivables. But, the courts do not understand the distinction. Further, some courts are so determined to put through the foreclosures – that – even when they know there is no valid claim by the party claiming rights to foreclosure – the court is determined to FIND the party who actually owns the loan (not the securities).
This will never happen because none of the initial sales from originator to purchasing investment bank were ever disclosed. And, such disclosure now – would, obviously, open investigation into that investment bank’s books and the numerous foreclosures executed by the wrong real party in interest/with valid standing.
Neil has just about got everything right – except the sale from originators to investment banks is missing. Until those sales are disclosed – this is no complete chain of title and foreclosure fraud will continue in all courts.
It is up to the judges to understand what securitization means. The ultimate question is – WHAT ENTITY REMOVED THE RECEIVABLES FROM ITS BALANCE SHEET TO SECURITIZE A PASS-THROUGH SECURITY OF CASH PAYMENTS. Once that is disclosed, only that investment bank will be able to tell you what has happened to the loan ownership (not receivable rights) since then. Then the question becomes – ON WHOSE BALANCE SHEET IS THE FORECLOSURE COLLECTION RIGHTS CURRENTLY ACCOUNTED FOR??
And, for all those judges who claim that they will find the right owner to foreclose, well, you have already denied borrowers the right to rectify any default or delinquency – by the concealment of the true owner – and subsequent whereabouts of loan ownership. You have already taken away rights of homeowner to rectify the situation. There are now DAMAGES – that must be adjudicated – even if you still want to sail through the foreclosure.
It is time to separate securities from loan ownership. The securitization process only aids us in tracing where the actual receivables went – it’s path. The security investors do not own the loan – they never did – they never will – and they have no rights to foreclosure. Their only remedy is against the security underwriter. And, that is why we now have entities such as Pimco, the Federal Reserve, and Freddie/Fannie demanding repurchases – because their claim is NOT against the homeowner – but against the entity that fraudulently securitized the receivables to the loan that THAT ENTITY OWNS – until disposable.
This is basic. Please, try to understand, securitization is just an ASSIGNMENT of receivables – it WAS NEVER the sale of the loan itself.
Neil – please take another look at this. I will not argue your theory that “loans” were paid for – BUT, I will argue that ONLY RECEIVABLES were paid for. Because – that is all securitization was meant for. OWNERSHIP of loan collection rights – is a whole other issue. And, the process was set up to CONCEAL ownership of collection rights.
The missing link in the chain – is the sale of the mortgage loan (not the security) from the originator to the investment bank that securitized the receivables. Before receivables can be securitized – the whole loan must be sold.
Some PSAs/Prospectus state the the loans were sold to the a subsidiary of the affiliate security underwriter’s parent – other PSAs/Prospectus do not detail the chain. For example, in some instances – the loans are sold by the originator – to the “Depositor” – which is an affiliate/subsidiary of the originator ITSELF. Of course, originators can not sell the loans to itself – this would not be a “true sale.” This would be a “shell” Trust – designed to conceal the chain. So, under any scenario, the loans were first sold to an investment bank – and NONE of the these sales are documented..
After this, the investment bank’s subsidiary Depositor – sells the loan receivables to a Trust – set up and owned by the Depositor. The Depositor – owns the trust – and passes-through it’s receivable payments to security investors. But, like any other Trust set up, and anyone who understands Trusts – understands this – ownership of the Trust is retained by the party that legally sets up the Trust, the Depositor, therefore, still owns the loan. What is then done with any cash payment pass-through is only done by authorization of the “owner” – the Depositor. The loans are not passed on to the security investors – only the cash payments are assigned and passed-on. And, this is why the default/foreclosures are still on the books of the investment bank that purchased the loans in the first place. That is, unless they have already sold those loans to distressed debt buyers/hedges funds after charge-off of the receivables.
There is a difference between sale of loans and assignment of receivables. But, the courts do not understand the distinction. Further, some courts are so determined to put through the foreclosures – that – even when they know there is no valid claim by the party claiming rights to foreclosure – the court is determined to FIND the party who actually owns the loan (not the securities).
This will never happen because none of the initial sales from originator to purchasing investment bank were ever disclosed. And, such disclosure now – would, obviously, open investigation into that investment bank’s books and the numerous foreclosures executed by the wrong real party in interest/with valid standing.
Neil has just about got everything right – except the sale from originators to investment banks is missing. Until those sales are disclosed – this is no complete chain of title and foreclosure fraud will continue in all courts.
It is up to the judges to understand what securitization means. The ultimate question is – WHAT ENTITY REMOVED THE RECEIVABLES FROM ITS BALANCE SHEET TO SECURITIZE A PASS-THROUGH SECURITY OF CASH PAYMENTS. Once that is disclosed, only that investment bank will be able to tell you what has happened to the loan ownership (not receivable rights) since then. Then the question becomes – ON WHOSE BALANCE SHEET IS THE FORECLOSURE COLLECTION RIGHTS CURRENTLY ACCOUNTED FOR??
And, for all those judges who claim that they will find the right owner to foreclose, well, you have already denied borrowers the right to rectify any default or delinquency – by the concealment of the true owner – and subsequent whereabouts of loan ownership. You have already take away rights of homeowner to rectify the situation. There are now DAMAGES – that must be adjudicated – even if you still want to sail through the foreclosure.
It is time to separate securities from loan ownership. The securitization process only aids us in tracing where the actual loan went – it’s path. The security investors do not own the loan – they never did – they never will – and they have no rights to foreclosure. Their only remedy is against the security underwriter. And, that is why we now of entities such as Pimco, the Federal Reserve, and Freddie/Fannie demanding repurchases – because their claim is NOT against the homeowner – but against the entity that fraudulently securitized the receivables to the loan that THAT ENTITY OWNS – until disposable.
This is basic. Please, try to understand, securitization is just an ASSIGNMENT of receivables – it WAS NEVER the sale of the loan itself.
Neil – please take another look at this. I will not argue your theory that “loans” were paid for – BUT, I will argue that ONLY RECEIVABLES were paid for. Because – that is all securitization was meant for. OWNERSHIP of loan collection rights – is a whole other issue. And, the process was set up to CONCEAL ownership of collection rights.
Were you properly served ? Judge void Judgment and Sale due to Defective Servicet. Read the post at :
http://4closurefraud.org/2010/10/23/foreclosuregate-sewer-service-no-service-no-problem-forgeries-fabrications-and-lies/
I will collect my check with $ 5000.00 from a notary ,
where I never see.
Check the correct Florida restriction here :
http://www.jamesmartinpa.com/fllegal.htm
To the banksters I have a tip for you
http://www.americanprisonconsultants.com/
http://www.projo.com/economy/Fighting_Foreclosure_10-24-10_7FIGCK5_v36.503440.html#
RI-MA-CT HOMEOWNERS CALL THE LAW OFFICE OF
GEORGE E.BABCOCK ESQUIRE 401-274-1905 FOR HELP ON FORECLOSURE DEFENSE.
Appeal Court Order on Defective Service
————————————————-
DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
July Term 2010
JOSE E. VIDAL,
Appellant,
v.
SUNTRUST BANK,
Appellee.
No. 4D09-3019
[August 4, 2010]
WARNER, J.
Jose Vidal appeals from a non-final order denying his motion to quash service of process. He claims that service was defective because the process server failed to note the time of service on the copy of the complaint served. Because the requirement to note the time on a copy of the complaint is a statutory requirement of service, and strict compliance
with statutory requirements of service is mandated, we conclude that failure to note the time of service renders the service defective. We therefore reverse.
Vidal obtained an equity line of credit from SunTrust. Subsequently SunTrust filed a complaint against Vidal for breach of contract to recover damages of $86,000. Vidal was served with a copy of the complaint and
summons on April 25, 2009, by substitute service on his girlfriend at his residence. The process server placed his initials and the date of service on the copy delivered to the girlfriend but did not record the time of service on the copy of the complaint left with the girlfriend. The return of
service fully complied with the statutory provisions contained in section 48.21, Florida Statutes, and noted the date and time of service; that the person at Vidal’s place of abode was over the age of 15 years; and that the process server had informed the person served of the contents of the
complaint as well as leaving a copy of the complaint with her.
Vidal filed a motion to quash service of process on grounds that service was insufficient because the time of service was not noted on the complaint. SunTrust opposed the motion, arguing that the return of service filed by the process server noted the time even if the copy served
on Vidal’s girlfriend did not. The trial court denied the motion, and Vidal appeals. Vidal contends that where a party fails to comply with the statute on
service of process, service is defective and must be quashed. We review questions of law by a de novo standard of review. See S. Baptist Hosp. of Fla., Inc. v. Welker, 908 So. 2d 317, 319 (Fla. 2005). Strict compliance with the statutory provisions governing service of
process is required in order to obtain jurisdiction over a party. See Schupak v. Sutton Hill Assocs., 710 So. 2d 707, 708 (Fla. 4th DCA 1998); Sierra Holding, Inc. v. Inn Keepers Supply Co., 464 So. 2d 652, 654 (Fla.4th DCA 1985); Baraban v. Sussman, 439 So. 2d 1046, 1047 (Fla. 4th
DCA 1983). This strict observance is required in order to assure that a defendant receives notice of the proceedings filed. See Electro Eng’g Products Co., Inc. v. Lewis, 352 So. 2d 862, 865 (Fla. 1977). As we noted
in Haney v. Olin Corp., 245 So. 2d 671, 672 (Fla. 4th DCA 1971), “The major purpose of the constitutional provision which guarantees ‘due process’ is to make certain that when a person is sued he has notice of the suit and an opportunity to defend.”
Section 48.031(1)(a), Florida Statutes, which sets forth the
requirements for service of process, provides:
(1)(a) Service of original process is made by delivering a copy of it to the person to be served with a copy of the complaint, petition, or other initial pleading or paper or by leaving the copies at his or her usual place of abode with any person residing therein who is 15 years of age or older and
informing the person of their contents.
In 2004 the Legislature amended the statute to include a requirement of noting the time and date of service on the copy delivered to the person to be served. Section 48.031(5), Florida Statutes, provides:
(5) A person serving process shall place, on the copy served, the date and time of service and his or her identification number and initials for all service of process.
Since at least 1971, Florida Rule of Civil Procedure 1.070(e) required that
“[t]he date and hour of service shall be endorsed on the original process
and all copies of it by the person making the service.” It appears that the statute as amended in 2004 incorporates the long-standing requirement of the rule.
The requirements contained in section 48.031(1)(a) have the purpose of assuring that notice is given to the defendant when the defendant is not personally served. The process server must leave it at the person’s “usual place of abode,” with a person at least fifteen years of age who is
also a resident. One can assume that the Legislature considered a person of that age or older sufficiently mature that the complaint would be delivered to the person to be served. In addition, to assure that the
person upon whom substituted service is sufficiently apprised of what he or she is receiving, the statute requires that the process server orally inform the person who receives service of the contents of the complaint.
These requirements insure that notice is conveyed to the defendant.
The provisions of section 48.031(5) do not appear to have anything to do with assuring notice to the defendant. Noting the time and date of service on the copy of the summons left with the person to be served does not insure that the defendant receives d u e process notice.
Nevertheless, where other requirements for service of process, which do not directly implicate due process, have been violated, courts still have determined that service is defective, a n d no jurisdiction h a s been obtained over the defendant. For instance, section 48.021 provides who
may serve process. Where service is made by a person not legally authorized to serve process, service is defective, and jurisdiction is not acquired over the person, even though the defendant received actual notice of the suit. See Cheshire v. Birenbaum, 688 So. 2d 430, 430-31
(Fla. 3d DCA 1997); Abbate v. Provident Nat’l Bank, 631 So. 2d 312, 315
(Fla. 5th DCA 1994).
Although n o case has ever dealt with the failure to include the notation of time of service on the copy of the complaint left with the served party, the Legislature has deemed it to b e a requirement of service. As strict compliance with all of the statutory requirements for service is required, the failure to comply with the statutory terms means
that service is defective, resulting in a failure to acquire jurisdiction over the defendant.
While SunTrust disdains such a requirement as trivial, it should direct its comments to the Legislature which included the provision in the statutory requirements. Having looked to the case law, the commentary on the rule, and the reports prepared by the legislative staff o n th e 2004 amendments, we could find n o explanation for the requirement that the time of service be noted on the copy delivered to the
party. However, we might infer that such a requirement is intended to assure the integrity of service of process. A process server makes a return of service which is filed with the court. It includes the date and time of service. The return should match the information noted on the served copy.
Some statutes require that process be served within certain hours.
For example, section 48.031(3)(b), whic h deals with subpoena of a criminal witness, requires that three attempts to serve be made at
“different times of the day or night on different dates.” Along similar lines, service made pursuant to section 48.031(2)(b) allows substitute service on a sole proprietorship at his or her place of business during regular business hours. The notation of time on the copy being served
would reflect whether the service was made “during regular business hours.” Requiring that the process server note the time of service on the copy being served assures that the party has the necessary information to contest the validity of service in both of these examples. In addition,
the time notation provides additional information regarding service to assure that proper service has been documented.
The legislative direction is clear and unambiguous. It is not for the court to disregard the specific statutory language. The service of process was defective, and th e court erred in denying the motion to quash service.
During th e pe n d e n c y of this appeal, SunTrust requested
relinquishment of jurisdiction to re-serve Vidal. This court granted the motion “to allow for issuance of an alias summons and attempt at service of process.” The Clerk of Court then issued an alias summons, and Vidal
was served. SunTrust argues that its re-service of Vidal upon relinquishment of jurisdiction by this court renders any decision in this case moot. We disagree. Vidal filed a motion to quash that service of process, which is still pending. He also alleges that SunTrust could not make the second service without the first service being quashed. Rule 1.070(b) provides, in pertinent part: “When any process is returned not
executed or returned improperly executed for any defendant, the party causing its issuance shall be entitled to such additional process against the unserved party as is required to effect service.” Because issues remain as to whether the second service was proper and authorized, we conclude that the second service does not render this appeal moot. The
validity of the original service must first be determined before the trial court can rule on the pending motion.
For the foregoing reasons, we hold that the service of process on Vidal was defective. We reverse and remand for further proceedings.
5
TAYLOR and MAY, JJ., concur.
* * *
Appeal of a non-final order from the Circuit Court for the Fifteenth
Judicial Circuit, Palm Beach County; Diana Lewis, Judge; L.T. Case No.
502009CA008539XXXXMB.
Thomas E. Ice of Ice Legal, P.A., West Palm Beach, for appellant.
Stephen Maher and Aliette D. Rodz of Shutts & Bowen LLP, Miami, for
appellee.
Not final until disposition of timely filed motion for rehearing
Again, I am going to relate something of importance here …
I spoke with an attorney that represents banks in lawsuits …
He admitted to me that there is no legal way that a bank can come in and completely legally reconstruct an entire chain of title.
That is also largely due in part that you have to get this done by Court order, because it is a felony in all states to alter, tamper with or destroy public records.
Remember that when you file your quiet title actions.
If you’re in Arizona, remember the $5 deal …. you need to use that proper system and remember to list all potential claimants, otherwise, your suit is going to get tossed and you’ve wasted lots of cash.
For more info, visit http://www.cloudedtitles.com … the new videos are up!
DEFECTIVE SUMMON SERVICE PROCESS – FORECLOSURE
LAWSUIT , SALES CAN BE VOID
————————————————————————-
http://www.mattweidnerlaw.com/blog
Defendants are Not Getting Notice / Due Process in Foreclosure Cases
Our entire justice system is based on the quaint notion that lawyers and their employees, like process servers, are telling the truth. Here’s a big secret…….THEY’RE NOT ALL TELLING THE TRUTH.
The depositions from David Sterns’ employees describe disturbing, systemic failures and abuses of the system and reports rolling in from all over the state of flawed Service of Process and no notice of hearings and proceedings are very disturbing. Process servers are not delivering proper service on Defendants and some of the foreclosure mills in some cases are not sending notices of hearings and other pleadings to defendants. Any defense practitioner can cite any number of cases where they are not receiving hearing notices and pleadings….and if it’s happening when a Defendant is represented by counsel, what do you think is happening to unrepresented people? Let me sketch this out on a chart….
No Service of Process = No Due Process
No Service of Process = The Homeowner Still Owns The Home
Homeowner Ownership Claims = Massive Title Insurance Claims
Massive Title Insurance = Insolvency of the Title Insurance Market
Just wait until the smaller local press picks up on these issues and starts advising the minority members of the community about their Constitutional Right to Due Process. (The minority communities are going to be hardest hit by abuses by the process servers and the trash out companies.) It’s going to be hard to explain how Rosita Diaz got served on January 1, 2009 in Miami Dade when she just happened to be in Puerto Rico at the time. Process in some cases is just thrown on doorsteps or tossed at strangers….but we know that in too many cases, the process servers have abused the process. Forget about Robo Signers, Sewer Servers are where the real title claims are going to come from and you cannot just ignore those issues.
Attached below is an example of claims of no service based on a local attorney who I know well. I am certain that this attorney has absolute confidence and belief in his client’s claims and we are going to see many more such claims going forward. Remember, there are no statues of limitations on No Service of Process claims and that any Final Judgments or Titles to property based on fraudulent service of process is void. I expect that we’re going to hear wild stories and see quite a bit of documentation that will show just how out of control and flawed the process servers have become in the middle of this foreclosure chaos…..
http://mattweidnerlaw.com/blog/wp-content/uploads/2010/10/NoService.pdf
Take a look your summon servce process to find any defec then file Motion to Quash Service and Vacate the Jugdment if applicablet,
Order the Orange Jump Suits
So you think they can ‘paper-over’ the foreclosure doc problem when the problems shown with the foreclose is that the assignment of the DOT (and an attempted assignment of the NOTE) occurred just about FIVE (5) YEARS too late? Get REAL.
I can not see that there is any way to ‘paper-over’ a problem with the mortgage documents that involves the assignment of the loan into the pool.
If they now try to generate and record a DIFFERENT set of documents than those they recently recorded, that will only heap more problems on the court. As I see it, that is the only way they could POSSIBLY try to convince the courts and the IRS that the assignment was not done properly.
I have never heard of anyone being able to get an existing assignment of the Deed of Trust ‘unrecorded’ from the county recorder’s office. I have my certified copies.