Chains for Fools

Chains for Fools: In the course of analysis of documents in the context of securitization, it is apparent that the level of complexity is interfering with the presentations in court. The following is an excerpt from one of my analyses that I hope will illuminate both the hair-splitting legal arguments and the realities of the courtroom. The first thing I would point out is that the loose use of the word “chain” is going to result in stepping all over yourself. The chain of title is one thing, chain of ownership is another, holder and holder in due course are other matters, and chain of authority is something completely different even though the method of analysis is similar in all cases. I’m not saying that you should go into court and attempt a discourse on how many chains exist within the structure of a securitization scheme. But I AM saying that you should know the difference so you can stay on message.

  1. Note that Jessica Jenkins signs as Attorney in Fact for Landsafe Title Corporation and Recontrust Company NA as Trustee. This might be a conflict of interest and it certainly raises questions of authority. From what we have seen, the authority is lacking in that there are no documents that were properly and timely executed by other people with authority to represent the organization whose signatory appears as agent in fact or under power of attorney. It is the same as a chain of title problem. If there is no chain of authority, there is a “break” in the chain. That break might be fatal and it might be fixable depending upon the level at which it occurred and whether the companies in the chain are still in existence.
  2. Even if the authority were somehow presumed to be present, that authority could ONLY be to execute the document. It would not, as is frequently presumed, authorize the use of the document nor require its enforcement or acceptance. For example, if the document was an assignment of a 2004 loan that is in default, with the assignment being in 2009, the document could not be used even if it was authorized. The reason is that the securitization pool was closed out by contract and statute 5 years before and the assignment of a non-performing loan into the pool would be rejected automatically by the terms of the pooling and servicing agreement.
  3. If this is a conflict of interest, it might be used to invalidate the document but more likely, it’s value would be to show that the conflict corroborates your argument that he or she had no authority to execute the document in the first place and that no entity was bound by that signature. If no entity was bound by the signature, then nothing happened, legally speaking. It is what we call in the law a “nullity.”
  4. In the mortgage world before securitization, these hairsplitting distinctions often did not alter the outcome because the level of complexity was so much lower. A Judge could figure out what the deal was and determine whether a lien was perfected or not and make a decision all in about 30 minutes. The current context requires painstaking analysis of each step — something that most judges outside of bankruptcy court are loathe to do. So the presentation should include visual aids and narrow down to the weakest points in the various “chains.” In the real world, the weakest points in the chain are those with which the Judge would agree if presented in short, concise manner. If you can present it to a layman and the person can tell you what it means you have a good argument. If you present it to a Judge and you don’t grab his attention and keep it, that means you have a bad argument.


25 Responses

  1. btw, using the figure I used and multiplying it by 62 million loans tracked by MERS, brings the amount owd by the financial institutions to our government to over $3 trillion.

    Figure sound familiar? I had wondered for the longest time where pundits got this figure. No, I think I know.

  2. TEFRA = Tax Equity and Fiscal Responsibility Act

    However, this is a huge piece of legislation and only Sections C and D are applicable.

  3. Anonymous2,

    That is a major OUCH if the IRS ever goes after Wall St over this mess.

    BTW, mine would be slightly ore than triple the $$ you cited.

    Where is our TEFRA expert when we need them?

    (What does TEFRA stand for?)

  4. I am looking for information regarding TEFRA and the fact that a note indorsed in blank to a trust is unlawful under some state statutes (NY for one) as well as under federal law.

    Additionally, under TEFRA, any note indorsed in blank for which a bond or certificate is issued is subject to an excise tax of 1% of the value of the note for the term of the note. In other words, a $200k 30-year note, would b subject to 1% excise tax = $2,000 x 30 years = $60,000 paid to the IRS.

    If my research is correct, the IRS has been cheated out of billions of dollars by these so-called “trusts.”

  5. Angelo,

    Try the section in PSA – under Servicer responsibilities. You must also look at the section “conveyance of mortgage loans” – which usually states that Depositor is to cause the assignments and that these assignments are to be done at the set up time of the trust.
    Under the Servicer section – Trustee can appoint POA to servicer to carry through foreclosure – and may prepare transfer of title to third parties for REO properties. But, nothing there for POA authority to cause servicer to do assignments to the Trust. Servicers role is for servicing the accounts – not assignments to the trust. Servicer never own the loan – unless they purchase them – therefore, servicer cannot assign to trust – something they do not own..

  6. dubiousnotes,

    I actually question if that is what is hidden behind the scenes with my own. Litton took over servicing of loans that were already in default. With this happening in the same time frame to more than one loan, something is ‘up’ with a debt-collector playing the role of a servicer.

  7. Frankilee:

    How do you know that it is BOA and not a debt buying lawfirm?

    Have you seen an authentic document stating that the predator lawyer has been authorized to file suit as attorney-at-law suing for the FULL alleged debt on behalf of BOA?

    They might be debt collecting attorney-in-fact, usually involved in self-dealing.

    Huge and pertinent difference.


  8. frankielee
    Please call me 540-687-0004 or give your email so that I can send you. I did try my level best but system is not letting me to do that

    Thanks a lot for helping people

    Racketeering Influence Corporate Organization (RICO) CTC Real Estate Services is wholly owned by Countrywide Home Loans Inc. (they handle all of Countrywide’s notice’s pertaining to foreclosures) Countrywide Home Loans Inc. has their own title company. (Land safe Title) Yet they are just a collection agency trying to collect payments for their investor’s.
    The other was a Settlement agreement Between “AWL”, Countrywide with Banking Commissioner
    I am trying to do but the system does not do any thing. It was Dated at Hartford, Connecticut
    this 10th day of April 2007
    Between Banking Commissioner and Country wide/AWL where some big sanctions were imposed.

  10. concerned, yes, that’s been my plan for a while now, only chap 7. To flush out the truth by claiming the pretend lender to be unsecured in BK, thus forcing their having to prove all legal standing issues.

    Having said that, with what is slowly coming to light about America’s Wholesale Lender being an obvious dead mackeral, a stinky one at that, it might be easy enough to pay an attorney to write a letter stating back off, you losers and get some results. Too much fun!

  11. Frankilee:

    How do you know that it is BOA and not a debt buying lawfirm?

    Have you seen an authentic document stating that the predator lawyer has been authorized to file suit as attorney-at-law suing for the FULL alleged debt on behalf of BOA?

    They might be debt collecting attorney-in-fact, usually involved in self-dealing.

    Huge and pertinent difference.


    I wrote a QWR to “the bank” and, among many others, asked confirmation that the debt predator lawyer has been appointed as attorney-at-law to file suit for the FULL value of the alleged debt. The emphasis is on the word FULL. I am still waiting. If I get an answer “the bank” knows who will receive a copy: My Attorney General.

    Why? ” THEY” GOT PAID, many times over (read the post below) 🙂

    The world needs legal EDUCATION not deception.
    I have no vested interest in suggesting this:

  12. Frankielee,

    You may need to use BK court to file a chapter 13.

    It is not the easiest thing to do but I do know of some resources that don’t cost a lot that can help you get the BK filed. You would then be working with your BK Trustee to ensure that the offender-pretender-lenders come up with the documents.

    You may need to file an adversarial motion in the BK court. There are examples on this site of the requests for all the docs from MERS. That was done for a BK case here in CA.

  13. BTW, Neil did a thread on the whole AWL thing not too long ago here:

  14. dubious notes, you wrote:

    Frankielee, you don’t have to prove a thing. THEY have to prove that their claim is bona fide, has substance and that the debt buying lawfirm has capacity to sue.

    I understand. It’s not a debt buying lawfirm. It’s BOA, using a local law firm to handle the foreclosure for them through a POA. However, I’m broke and being foreclosed on, and can’t afford an attorney to defend. So, short of going into court and applying egg to my own face, how do I stop them and force them to prove this prior to egging myself?

    Do I simply write the law firm and tell them they have no grounds? Ask them to prove their ground? Tell them to take a hike on their grounds, and to leave my grounds out of it? Suggestions? Thanks.

  15. Raja, is there a way that you can point me to the order that you couldn’t post? A link?


  16. >>> How to find a fatal break in the chain of authority as Neil discusses above?

    Wrong question!!!

    We should ask each member of the predation industry:

    Do you have admissible evidence before the court that there is a chain of [title, ownership, authority, fill in the word] LINKING DEFENDANT TO THE ALLEGED CREDITOR?

    Stutters, lies, hot air, forged documents and fraudulent MAIL-IN affidavits will be the answer!

    Based on constitutional law (not VooDoo law) it is for a plaintiff to invoke a courts’ jurisdiction through sufficiency of non-fraudulent pleadings.

    If there is no justiciable content before the court, then the court, applying basic rules and canons, is OBLIGED to come to the conclusion that the plaintiff is a BOGUS plaintiff. Otherwise it’s a void judgment.

    Frankielee, you don’t have to prove a thing. THEY have to prove that their claim is bona fide, has substance and that the debt buying lawfirm has capacity to sue.

    After all, “THEY” GOT PAID, many times over. Fraudulent accounting kept extinguished “debts” alive and created the debt predation industry. Your children’s tax base is the one and only “creditor”.

    That’s all there is to it.

  17. ANON

    What section in the PSA would there be the power granting the POA or limited POA. Im going thru mine and cant seem to find it.

  18. Wow folks, I can’t believe what you guys have offered up here. Concerned….thank you….I have also come to the conclusion as you have that AWL appears defunct. Even wikipedia states that CW wasn’t absorbed into BOA, so as to keep it BK remote. There’s still work to be done there. Figuring out how AWL stands is key. It’s looking good however.

    Raja….thank you so much for the case. I was aware of Pagano, even talked with a guy in Maine who had used that defense who had posted about it on this blog. However, the addition of the new case is a huge feather in the cap. Many thanks.

    Anon….as always, you add something valuable to the mix. Your input is always helpful and needed. Many thanks.

  19. Anonymous,

    Okay, the PSA says the ‘Depositor’ is to do certain things, etc.

    The actual FILED assignment that is recorded now with the county, goes DIRECTLY from “America’s Wholesale Lender – A Corporation” TO BoNY F/K/A Trustee for the CWABS 2005-xx certificateholders.

    There is no ‘A=>B=>C=>D’ set of assignments, just the ‘A=>D’.

    So what can the originally named ‘lender’ per the Deed do as far as assignments?

    Prior to this FILED assignment, the servicing moved from CountryWide in 2009 to Litton. Someone needed to have a POA to do that, I presume.

    Funny thing is, in 2009, a court case caused Litton to claim in court filings that the investor was already CWABS (with BoNY as trustee).

    So Litton should have been working from BoNY/CWABS certificateholders already.

    Looks like there is a tangled web or even a noose here somehow.

  20. Raja,

    Could you post the case number/reference name for the other case? I had been aware of the Pagano case but I still had question of whether I could get it to ‘fit’.

    Does a trade name have standing to sign an assignment? Can CountryWide (behind the scenes) give power of attorney to anyone to sign for ‘AWL’, it’s trade name? If so, how long is that POA good for? Can any POA survive the buyout of the like occurred with CountryWide and Bank of America?

    Notice that they did not use the trade name to institute these latest actions, BUT the recoreded assignment came into being in 2010!!!! Both the date on the assignment AND the recording date are in 2010.

    Oh, and add that they did this DURING the BK.

  21. Raja

    Good work.

    And, want to add here that everyone should look closely at the Power of Attorney or Limited Power of Attorney. Go to the PSA to find exactly who can grant POA, then check the date of the POA., and the “limited” role of any POA.

    Servicers cannot grant POA – and neither can originators. Trustees, under PSA, can grant POA – but this POA is limited. POA cannot be granted for assignments to a Trust or Trustee. Under most PSAs – only the Depositor can cause assignments to the Trust/Trustee. In fact, it was the Depositor’s obligation to cause the assignment at the time the REMIC was set up.

    POAs are often ignored – but most are simply – invalid.

  22. The system does not let me send the other order

  23. Concerned, and Frankielee

    Please read following court order
    (AC 24592)

    Schaller, Dranginis and Berdon, Js.
    Argued October 15, 2004—officially released February 15, 2005
    (Appeal from Superior Court, judicial district of New Haven, Hon. Donald W. Celotto, judge trial referee.)
    Patrick W. Boatman, with who, on the brief, was John H. Grasso, for the appellants (named defendant et al.).
    Peter A. Ventre for the appellee (substitute plaintiff)
    DRANGINIS, J. This appeal is similar to the appeal in America’s Wholesale Lender v. Pagano, 87 Conn. App. 474, A.2d (2005), which we released on the same date as this opinion. The dispositive issue is whether a corporation that brings an action solely in its trade name, without the corporation being named as a party, has standing so as to confer jurisdiction on the court. We conclude that because a trade name is not an entity with legal capacity to sue, the corporation has no standing to litigate the merits of the case. We therefore reverse the judgment of the trial court.
    The following facts and procedural history are relevant to our disposition of this appeal. On October 16, 1998, the defendants Linda K. Silberstein and Morton
    H. Silberstein1 executed and delivered to the original plaintiff in this action, America’s Wholesale Lender (America’s), a note in the amount of $440,000 and a mortgage on the defendants’ real property. America’s is the trade name for Countrywide Home Loans, Inc. (Countrywide), a corporation with its principal place of business in California.2 On April 22, 2003, America’s commenced this action, alleging that the defendants were in default on the note and seeking to foreclose on the defendants’ property. On July 9, 2003, the defendants filed a motion to dismiss, arguing that the court lacked subject matter jurisdiction because America’s did not have the legal capacity to sue. On July 28, 2003, America’s filed a motion to substitute Mortgage Electronic Registration Systems, Inc. (Mortgage Systems), as the plaintiff to reflect an assignment of the note and mortgage that Countrywide had made to Mortgage Systems on October 16, 1998. The court, on July 28, 2003, denied the defendants’ motion to dismiss and granted the motion to substitute Mortgage Systems as the plaintiff. The court concluded that Countrywide had commenced an action in the name of the wrong person and, therefore, substituted Mortgage Systems pursuant to General Statutes § 52-109. The court ultimately rendered summary judgment in favor of the substitute plaintiff, the defendants’ default on the note not being disputed. This appeal followed.
    On appeal, the defendants claim that the trial court improperly denied their motion to dismiss challenging Countrywide’s standing to bring an action solely in a trade name. The defendants argue that because the action was brought under a trade name, which is a fictitious name, the court lacked subject matter jurisdiction to decide the merits of Countrywide’s claim. The defendants further argue that Countrywide could not cure this jurisdictional defect by substituting Mortgage Systems as the plaintiff.
    This case is controlled by our decision in America’s Wholesale Lender v. Pagano, supra, 87 Conn. App. 474, in which we held that the court lacked subject matter jurisdiction because Countrywide had commenced an action solely in its trade name. Our decision in that case rested primarily on the mandate that parties not use fictitious names except in the rarest of cases, in which the issues litigated and the interests of the parties demand the use of a fictitious name. Id., 478; see also Buxton v. Ullman, 147 Conn. 48, 60, 156 A.2d 508 (1959), appeal dismissed sub nom. Poe v. Ullman, 367 U.S. 497, 81 S. Ct. 1752, 6 L. Ed. 2d 989 (1961). We also recognize the heightened interest of the public in knowing who is financially and personally liable for the actions of entities doing business under trade names. America’s Wholesale Lender v. Pagano, supra, 479–80. These interests are no less important whether the argument is that the initial filing contained a circumstantial error, as in America’s Wholesale Lender v. Pagano, supra, 477, or that the initial filing was in the name of the ‘‘wrong person,’’ as the substitute plaintiff claims on appeal in this case. In reaching this conclusion, we look to the language of § 52-109, which provides in relevant part that the court may allow the substitution of a party plaintiff ‘‘[w]hen any action has been commenced in the name of the wrong person . . . .’’ Such a person, while perhaps not aggrieved in the manner necessary to have standing, possesses the legal capacity to sue. No such person commenced the action in this case, as a trade name is not a recognized legal entity or person.
    Mortgage Systems, the holder of the mortgage and the note at the time the action was commenced,3 claims, however, that any jurisdictional defect was cured when it was substituted as the plaintiff. An assignee, however, may not commence an action solely in a trade name either, regardless of the entity to which the trade name applies, because a trade name is not an entity with the legal capacity to sue. Nor could Countrywide cure the jurisdictional defect by substituting a party with the legal capacity to sue on behalf of the trade name. The named plaintiff in the original complaint never existed. As a result, there was no legally recognized entity for which there could be a substitute. See Isaac v. Mount Sinai Hospital, 3 Conn. App. 598, 602, 490 A.2d 1024, cert. denied, 196 Conn. 807, 494 A.2d 904 (1985). Furthermore, because America’s had no standing to bring an action, no action in this case ever was commenced, as it was void ab initio. In the absence of standing on the part of the plaintiff, the court has no jurisdiction. Golden Hill Paugussett Tribe of Indians v. Southbury, 231 Conn. 563, 570–71, 651 A.2d 1246 (1995).
    The judgment is reversed and the case is remanded with direction to grant the defendants’ motion to dismiss and to render judgment dismissing the complaint.
    In this opinion SCHALLER, J., concurred.
    1 The other defendants in the underlying action, Konover Construction Company, Larry M. Loeb and Linda R. Silberstein, did not appeal. We therefore refer in this opinion to Linda K. Silberstein and Morton H. Silberstein as the defendants.
    2 America’s, in its complaint, alleged that it was incorporated in Texas. On the mortgage, New York is indicated as the state of incorporation. These inconsistencies, however, do not inform our decision in this case, as all parties agree that America’s is a trade name by which Countrywide does business and not a corporation organized under the laws of any state.
    3 In a foreclosure action, the assignee may commence an action either in its name or in the name of its assignor. See, e.g., Jacobson v. Robington, 139 Conn. 532, 539, 95 A.2d 66 (1953); Dime Savings Bank of Wallingford
    v. Arpaia, 55 Conn. App. 180, 184, 738 A.2d 2d 715 (1999).

    I will post one more order

  24. Frankielee,

    I have information about “America’s Wholesale Lender” but I do not have the ANSWERS you seek. I’m also interested in the SAME (plus a bit more, as you will see).

    “America’s Wholesale Lender – a Corporation” is on the assignment I have to the Bank of New York Trustee for the CWABS certificateholders.

    AWL, as I call them, is a ‘TRADE NAME” or “D/B/A” that CountryWide used. Even though my original DOT and Note call ‘AWL’ a ‘CORPORATION’, it NEVER was one.

    Now, as far as the PART of CourtryWide that it was the ‘Trade Name’ for, we may get mired into the area where BofA is recently claiming that SOME parts of CountryWide are not absorbed into BofA. For my own case, since BofA claimed to be the successor beneficiary to the part of CountryWide that I had sued, I think it may be that AWL would be considered defunct since BofA is not using the trade name.

    In CA, the “America’s Wholesale Lender” name was never registered that I can find. I did find the New York filing in 2004 of the ‘DBA’. It was SUPPOSED to be a New York Corporation.

    By the way, be aware that there IS a DIFFERENT UNRELATED corporation with this name. CountryWide stepped on their corporate name.

    What I would like to know is WHAT MERS membership was used to put our mortgages into the MERS system originally. I do not see “America’s Wholesale Lender” as a member. Also, how can any entity have the right to use MERS to sign for a company that is not a member when doing the assignment?

    One explanation I have gotten is that the ‘REAL’ membership being used is that of the ‘latest’ owner of the mortgage in the MERS system. That really sounds like the last owner gets to assign it to themselves.

    Somehow, I still see that as a problem with mine: The trust that it was assigned to is not a listed MERS member either.

    There are NO intervening assignments.

  25. This is a very timely column for me Neil, I appreciate it. I’ve recently been trying to get a handle on the foreclosing attorney (hired gun) for the bank signing as VP for 5 different entities as well as assigning himself POA for the bank via his own signature, a seemingly contorted feat, to say the least.

    My question, if anyone should know the answer….this gunslinger recently signed an assignment from America’s Wholesale Lender to Bank of America. AWL’s been long gone. I wonder how one would go about finding out the arrangements that would/could/might have been made for signing authority….how long they typically last….is it something that is fairly standard….rules….regs?

    How to find a fatal break in the chain of authority as Neil discusses above?

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