submitted by Bob G


An associate came to me a couple of months ago and told me that two of his income props had been foreclosed upon by Bank of America, N.A. The bank had obtained foreclosure judgments in both cases via default, and had actually held a foreclosure sale in one case. The other case had its sale scheduled for a week hence.

Put together two Orders to Show Cause allowing my bud defendant to submit a late Answer by reason of excusable default, based on the fact that he was a pro se litigant, the bank never even included a copy of the note and mortgage in its complaint, fraud, misrepresentation, lack of subject matter jurisdiction, etc. My friend’s papers also stated that he didn’t put in an Answer because he just naturally assumed that the judge would dismiss based on lack of submission of copies of the note and mortgage.

Both judges signed the OSCs. Litigation mill attys for BAC claimed they needed extensions of time to get in touch with their client, BAC. My guy said to the judges why do they need a couple more weeks (which, by the way, turned into two months) to produce the note when they’ve already had two years to do so? The extensions were granted nevertheless.

So we sent letters to the judges and copies to BAC’s attys stating that we demanded the right to have any purported original notes submitted to the Court so that our forensic expert could examine them, using yellow dot, ink and paper analytic techniques. The letters also stated that should BAC put in lost note affidavits, they would be required to double bond the value of the notes pursuant to the UCC (in NY, double bonding is mandatory).

In the meantime, I checked Fannie and Freddie’s websites and Lo’ and Behold, guess what? Fannie owns the notes and mortgages, not BAC! So off to the judges go supplemental affidavits in further support of the OSC, showing as exhibits the Fannie web pages stating that they own the notes and mortgages.

A couple of days ago we got the first opposition papers from BAC’s attys. No lost note affidavit, no copies of notes, no addressing the fact that Fannie owns the notes. Counsel claims that they are not required to submit a copy of the note or mortgage with the foreclosure complaint. Well, pursuant to NYUCC 3-505, they are required to present the original unless presentment is waived pursuant to NYUCC 3-511. Most mortgage notes contain this waiver of presentment language. This waiver, however, only holds up if the defendant does not dispute that the plaintiff is the owner/holder of the note.

Also, in NY, CPLR 4539 also allows for a photocopy to be admitted into evidence if the original is unavailable. Since the original always seems to be “unavailable” a photocopy is usually admitted because the defendant doesn’t know how to challenge the submission. [Neil’s writings and products are excellent sources of ways to challenge this.] Essentially, these proposed submissions are challenged on the basis of lack of foundation and authentication, i.e., the photocopy must be authenticated by someone who had personal knowledge of the original note creation and execution, and can attest via personal knowledge that the photocopy is an exact replica of the original. No such person will ever be found who can so authenticate.
The next thing that BAC’s attys threw into their opposition papers was an affidavit from a BAC litigation specialist, attesting to the fact that she had examined the books and records of the plaintiff and concluded that my guy was in default under the terms of the note and mortgage. Again, this is like shooting fish in a barrel. The affiant had no personal knowledge of the actual transactions between the bank and my guy. All she was competent to testify to was that she examined the books and records of BAC and that they said my guy was in default. Pure hearsay and inadmissible if challenged. She could not testify that BAC was the actual creditor and that my guy was in default to the actual creditor, because she has no personal knowledge of such matters.

So now we come to demonstrating that it is impossible for both Fannie and BAC to own the same note and mortgage at the same time. (BTW, this note was actually an original holding of BAC, not in trust.) And this brings us to NYUCC 3-603, that states that the obligation is satisfied or discharged if payment is made by a third party even if that party is a stranger to the transaction. So we put this in his Reply Affidavits, as well. If BAC unloaded the note on Fannie, and it is sitting in Fannie’s loan portfolio and on its balance sheet, it didn’t get there by accident. Fannie paid BAC for it.

I think that BAC has sealed off all the exits on this one all by itself. It cannot now come back to the court with the original note unendorsed to Fannie. If it is endorsed to Fannie, then BAC and its attys have perjured themselves by stating that BAC was the owner of the note and mortgage. (Another BTW…there are no assignments of these notes to Fannie from BAC to be found in the county clerks’ offices.) If they show up with an unendorsed note, they will have to explain how Fannie now owns the same note. Discovery will show that Fannie paid them for the note, and so the obligation no longer exists. My guess is that BAC will try and settle discreetly prior to final judgment, and stipulate to seal the records. This would be a big mistake on my guy’s part. He needs a final judgment on the merits, so as to preclude Fannie via res judicata from coming back and suing him on the notes. Clearly BAC is the servicing agent for this note, and will be found to be in privity with Fannie so as to preclude Fannie from initiating another action in its own name.

Stay tuned for more news on this one.

Also, here’s a special treat for anyone with securitized mortgages, courtesy of Brian Davies.



I know Prof. Bloom. He has done some estate and trust work for me. He charges $500/hour. He is a renowned expert on NY trust law, and teaches at Albany Law School.
What Bloom and Adams say in their expert witness affidavits is that it was impossible for the subject loan to have been transferred into the subject trust. Readers herein would be well advised to seek these guys out when challenging the securitization of their loans.

17 Responses

  1. I just read a case from the First Department which is the Appellate Division that rules over tria decision in the Manhattan and the Bronx that says that a mortgage and a note is not a negotiable instrument that require mandatory bonding. See Felin Assoc. v. Rogers, 38 AD 2d 6 – NY: Appellate Div., 1st Dept. 1971

    “To start with, physical delivery of the original note is not mandatory since the mortgage assignment, when accepted and recorded, transfers the interest in the note and mortgage by operation of law (see Davin v. Isman, 228 N.Y. 1; Finn v. Wells, 135 Misc. 53), where as here there is no doubt that there is an intent to so transfer the interest in the note and mortgage.

    Nor is the plaintiff unduly subjected to any claim by a third party by being compelled to accept the assignment of mortgage without the original note. It is quite apparent that a note given in a real estate transaction in connection with a mortgage does not fall into the classification of a negotiable instrument. Certainly, absent affirmative proof this court is not and should not be required to presume that the note was negotiable. (Wright v. Wright, 54 N.Y. 437; Peterson v. Meyer, 105 Misc. 719.) We must therefore consider that the note originally given was nonnegotiable. Hence, the mortgagor could safely make payment upon the subject mortgage and underlying note without fear of being liable if the original note later turned up in the hands of a third party. As stated in New York Jurisprudence (vol. 42, Negotiable Instruments, § 582, p. 237): “The rule in regard to payment of a negotiable instrument to one not in possession does not apply in regard to a nonnegotiable instrument. Even though such an instrument has been transferred and is not in the possession of the payee, payment to such a payee made without notice of the rights of a transferee binds the transferee.” And it has been held that an indemnity bond may not be required as a condition to payment upon a lost nonnegotiable instrument. (See Zander v. New York Security & Trust Co., 178 N.Y. 208.)

  2. Hey Bob G

    I am a fellow New Yorker and work with an attorney helping poor people defend their homes.

    I would like to share notes with and get the index number and county in new york if this particular case. Please email me jamhunter@gmail.com

    also another defense that works if standing is rejected is the the hepta notice defense. Baum is notorious for not including a copy of the hepta notice in the record with the summons and complaint

  3. Hey Fighter, how did you find out the trust name? Fannie Mae says they have my note, but I have been unable to get the service provider to tell me anything about the trust it might be in. Thanks.

  4. even if BAC comes up with the note indorced in blank they will still have to proove the chain of title to it and it still leaves doubt to the actual holder and the rights to enforce the default how did ban of america obtain the note through negoiation?from fannie after the foreclosure had been initiated so its easy to say one thing but maybe diffult to proove another

  5. dny,

    Has to be conveyed properly to the trust – in order to be in “possession.” That includes ALL indorsements for the complete chain of title as outlined by the PSA — and, includes a Mortgage Schedule. But do not trust the Mortgage Schedule if they produce — there were (and now are) numerous repurchases — and non-performing loans are removed from the Trust. In that case, you need trustee ledgers and servicer ledgers to show all has been advanced by the servicer to the trustee — on behalf of the pass-through beneficial securities investors. And, remember, pass-through beneficial security investors are not the creditor.

  6. Linda, Just move back in, why do you need permission it’s your house. Enjoy!

  7. Bob G-

    BofA and BAC Home Loan Services, Lp are playing the same run around game for a loan BofA and BAC HLS,LP admitted in RESPA QWR response letters that they were the Servicer and Fannie Mae was the investor.

    1) BofA tried to foreclose in there name, the Newspaper Notice of Forclosure claimed BofA as Holder of the Note and Deed. I got that stopped

    2) Now BAC Home Loan Services, LP is claiming to be the holder in due course.

    3) Fannie has admitted they sold the loan in to a trust…and i have the trust name.

    BofA plays dirty, but the Judges believe the attorneys, because BofA hirers local, top notch attys, that are in “the club.” The Atty can say what ever in court and the Judge believes them.

  8. BobG,

    this is my situation exactly. I would like to compare notes with you: mreggs@eggsistense.com

    I swear, reading what you wrote, it sounds like you are describing my situation but for a few minor details.

  9. Would the ‘third party’ payments also include payments advanced by the servicers? This is supposedly used in some cases currently to have the judges find that the servicers themselves have standing. I find that position strange since, you would think the monies advanced by the servicer would not be considered to be a SECURED debt.

    Now, if instead of the servicers actually having ‘crossed over’ to having standing rights of their own, if their payments are instead viewed as discharged, that would sweet,

  10. What is the url to check to see who owns the note?

  11. That was priceless

  12. I have this BAC-Fannie Mae issue on my home in Utah, foreclosed on last July 2010. Fannie Mae gave tenants cash for keys to move out. Home is sitting empty. We would like to move in. I wrote to a SLC attorney and have not heard back yet. Anyone else interested in the case, please write to me at lalion@aol.com. Thanks.

  13. Is Chase next? I certainly hope so…

    “The one main thing missing from the recent escalation in charges against the major banks in regard to the fraudclosure scandal has been an internal whistleblower who can corroborate that all the charges against the various illicit mortgage practices. After all, it is one thing to lay allegations, and totally different for a court of law to find that these are validated. So far it is precisely the latter that has been missing as no court is willing to escalate an issue that could potentially unwind decades of mortgage securitization. Yet all that may be about to change.”


  14. I would also like to know the answer to the question Ian raises regarding the UCC third party payment. I have indications of those third party payments also.

    Otherwise, the posts from Brian Davies and Niel’s comments on them were terrific.

  15. Bob G: BAC will come back with a note “endorsed in blank” claiming they are simply holding for owner Fannie. What then?

  16. Neil-great post. I had never heard of UCC law indicating that the obligation is discharged if payment is made by a third party,even if they are a stranger to the transaction. Does this hold true in all states, or just in NY and a few others? It would be invaluable to see a list of all states, with a Yes or a No column alongside regarding this aspect of UCC law. How about it? Ian

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