NY J Shack Explains Principal and Agent to OneWest: Robo-Case Dismissed

10.27.10 JUDGE SCHACK ROBO DISMISSAL-Onewest-Bank-F-S-B-v-Drayton[1]

With crushing clarity, Judge Shack in New York has made it crystal clear that the finesse of recording requirement for real property and splitting the note and mortgage won’t work under his watch. The quoted segments of testimony from a robo-signer shows criminal responsibility on the part of the robo-signor, the notary, and the witnesses. The admissions from the witness show that this was and remains an industry-wide practice.

The purpose was to split the mortgage from the note so the receivables could be transferred around and split up multiple times in duplicate as the “securitizers” wanted. The law cannot be more clear on this point. If the parties intentionally split the mortgage from the note, the mortgage loses its validity and cannot be restored. The reason for this principle of law could not be more simple: the purpose of property law, contract law and the UCC is to provide stability, consistency and confidence in transactions. Anything less would create chaos such that nobody would ever know if they were really the owner of anything they bought. Splitting the note from the mortgage, even for an instant, creates an automatic cloud on title, probably a defect in title, most probably a fatal defect of title and certainly prevents the transferor from honestly warranting that the title is marketable.

There is way to fix this and there is no reason to feel sympathy for the perpetrators of this scheme. The reason they wanted the note and mortgage split was precisely what the law seeks to avoid: multiple duplicate conveyances of the same interest in real property. There is no wiggle room on this. If you want to fix it, EVERYONE who could possibly have an interest must be joined in the same document or the same quiet title lawsuit — and with the best lawyers in the country, these employers of robo-signors seeking to avoid direct culpability in perjury and other criminal acts obviously know these simple legal requirements. Their problem is not that they don’t understand it. The real problem is that there are so many parties involved in the “securitization” transactions that many of them have interests each adverse to everyone else.

Logic dictates the final result: since there obviously won’t be an agreement to sign a new document or set of documents based upon premises that were never true and have now been revealed, a court must be the venue for deciding the rights and obligations of the parties. The best place for that to happen is in bankruptcy court, but not everyone is willing or qualified to petition for bankruptcy relief and most borrowers cannot qualify for lien stripping down to fair market value under current law. So a court of equity must make the decision either in Federal or State Court, applying applicable Federal and State Law.

Wall Street doesn’t like that result. Going to court and having all issues tried on the merits will open a can of worms they can never allow. By concentrating their fire power on tiny portions of the the entire transaction and depicting the borrower’s closing as the entire transaction, the pretender lenders manage to confuse some Judges, but not Judge Shack. As Beth Findsen, Esq. in Scottsdale has repeatedly pointed out, this is a relatively simple principal and agent issue.

Shack, along with an increasing number of other Judges, understands that this was a single transaction between the MBS investor and the borrower and that everyone in between is an agent. The only two principals are the MBS investor and the homeowner. Wall Street doesn’t like that either because the collateral source rule that would exclude loss mitigation payments from third parties would not apply simply because they would not be collateral sources — they are part of the entire transaction as described in the undisclosed securitization documents.

The pretender lenders want to turn non-disclosure into a virtue and use it as proof that the single transaction rule does not apply. But failing to disclose those documents and all the other antics that went with it is not the same as non-existence of those documents. They exist, they were undisclosed and they define the roles of the parties and their intention with respect to the splitting of the note and mortgage.

From Jan van Eck:

  • Counsel are particularly directed to page 19, to observe the testimony of the deponent Seck that “her in-house counsel reviewed the Order of the Court (Shack)” and instructed here not to comply.   Now THAT is impressive.
  • Note also the Court’s requirement upon re-filing that plaintiff provide the Court with evidence supporting the proposition that the original Lender (Cambridge) granted authority to its nominee MERS to do the onward transfer.  I have not seen this before.  This never seems to happen, as typically the next entity in the food chain makes a transfer as a MERS vp or by “attorney-in-fact” claims.
  • Using this Order as foundation, to the extent it can be woven into Motions, would provide powerful grounds to undo the MERS knot.
Best to all,

Jan van Eck

9 Responses

  1. Bert, please please contact me . I notice the same re the erasing of the loan number by Pite Duncan, etc. Can you please contact me at KPPI2U@gmail.com? Let’s compare notes!

  2. Judge Comment – The purpose was to split the mortgage from the note so the receivables could be transferred around and split up multiple times in duplicate as the “securitizers” wanted. . .

    Not really Judge! The note and deed are subject to divesture of one collateral for another , “a security” used by registrants for MERS in a novation or seperate revenue originating in form and substance . In the old days they called it a prefferred stock.

    Its the right to collect payments and layer off the revenue to pay a dividend seperates the two.

    Bifurcation allows for the investor claims and defenses to be seperated from the collateral rights.


  3. Jan

    Judge Schack has been asking for affidavit from the banks for years about the agency relationship between the original lender and MERS….If you read all of his decisions he deny’s without prejudice for 60 days and has them come back to correct their mistakes. The beauty is they never come back in time with what he ask’s for.

    If anybody wants to read his decisions go here and type in MERS in the botton field.


    Also, here is another great decision in NY, I think everybody should read it. Because it states that the section of the mortgage where the “BORROWER’S TRANSFER TO LENDER OF RIGHTS IN THE PROPERTY” has no effect, because its the lender who needs to authorize MERS to release the lien.


  4. All I can say is the same as BSE – Thank you, Judge Shack, Jan van Eck – AND – thank you – Neil – would not be even heard without you. Said before – and will say again – history books will include you.

  5. Judge Arthur Shack,
    Thank you for being you and taking the time to educate yourself and others on moving foward to crack this tsunami of fraud and deceit. The power of one, can be the power of many. You are an example for everyone and thanks again for caring and taking the time to be knowledgable.

  6. Bert, pls contact me. We may be able to help you.
    Burmese8@yahoo.com http://www.challengingforeclosure.com

  7. Here in California Mers stated they are Nominee for New Century Mortgage in 2008 However new Century Mortgage sold all it loans and then filed BK in 2007. ASC/Wells Fargo stated to the BK court under Penulty of Perjury American Servicing company acquired servicing rights
    to my note and deed of trust 6/30/2006 Lie Lie Lie The house was not completed and my deed of trust was not printed until nov-14-2006. Also 6/30/2006 The house was stix in the builder name. They did not file a notice of completion until oct 2006.2009 Wells Fargo Attorney Foreclosure Mills Pite Duncon LLC in San Diego california submitted a proof of claim to the federal bk court in 2009 a OG copy of a note. The 2009 note was certified and had a bar code and a mers min number. However my original loan number was erased you could see the lines. The 2010 motion for relief from automatic stay The note did not have the Mers Min Number and no bar code not evan certified.We also notice they erase the min number and my OG loan number from my Deed Of Trust. This Is a Clear Case Of Fraud On The Courts.PLEASE CONTACT ME I WOULD LIKE MY

  8. Judge Shack – Well said. Thank you Jan van Eck.
    Now he can understand, others will follow. Press on !

  9. It appears the only way to get the cloud off the title is going to be through state or federal court proceedings. There have been cases where even a full-blown quiet title action could not get rid of the fatal defect. Wall Street and the pretender/lenders need to pay for this series of crimes against the American people. The American people also includes the people out there who have bogus loans, and they don’t even know it. The American people also includes the people who have lost tens of thousand of dollars of equity in their homes and are still paying their mortgage. http://www.challengingforeclosure.com Burmese8@yahoo.com 864-241-8602

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