ANSWERING A QUESTION FROM WASHINGTON STATE: BACK TO SINGLE TRANSACTION THEORY

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

MY ANSWER TO A QUESTION RECENTLY RECEIVED

  1. The matter at hand is not legal, it is political. Your strategy must be to force the Judge into a corner and give him a way out that applies only to this case. There are 80 million mortgages that could be effected by a broad ruling in favor of a borrower or against MERS. If you read my recent articles you will see what I perceive to be the problem. I have no doubt that we are right on the law “on all four corners” — but that has been the case from the beginning. Your strategy and tactics must be courageous and push the Judge into the corner with a court reporter taking down every word. Remind the court reporter that under law, she works for you and NOT the Judge, so unless YOU tell her stop taking things down, she is to continue regardless of instruction from the bench.
  2. I don’t think any negative case is legally a problem because your legislature sucks when it comes to writing legislation. I’ll analyze Vawter if you want me to, but it is distinguishable on several grounds. It will be easy to characterize the Washington statute, taken together with other sections as unique or at least unusual (even if it really isn’t) and then find ways to distinguish your case from others (even if it a distinction without a difference). The strategy should be to get the Judge to agree with you on SOMETHING that is a lynchpin of your case and work it from there. This isn’t about all cases, it is about this case.
  3. MERS information is coming out daily. You ALWAYS have the option of introducing new evidence that was unavailable at the time of the last motion when it comes to MERS. Remember that JPMorgan Chase abandoned MERS for the same reasons we attack it. They did that in 2009. They are a party in your case.
  4. The line that I am encouraging lawyers to use now is that a pretender who could not normally plead much less prove a regular judicial foreclosure case should not otherwise be allowed to prevail just because the court doesn’t have time to hear the case on the merits. That seemed to change the minds of even some tough judges. You might want to try it.
  5. If the above statement is true, then it is necessary to make sure the parties are aligned properly. Do some research on this and you’ll find it is a very powerful procedural tool. Simply stated, the alignment of parties MUST be that the party seeking affirmative relief is the Plaintiff and must plead a full case with sufficient facts and exhibits such that relief could be granted of all the allegations and exhibits were true. That party is always the pretender in a foreclosure action. The fact that the rules require the borrower to “speak up” do not change the basic rules of due process and civil procedure. If the borrower denies the default, the authenticity of the documents, or otherwise denies the standing of the pretender, then the judicial foreclosure is over even if we stay in the same venue. At that point, the pretender must plead and prove  their case. The only burden on the borrower is a denial, which if not made in good faith subjects the borrower and attorney  to various sanctions.
  6. If the above statement were untrue, then we would see the confusion that is now apparent in Washington State— the borrower is required to anticipate the case of the pretender, plead it, deny it and then accept the burden of proof of proving the borrower’s denial when the other side has not filed any pleading and the facts showing the failure of the pretender to have the ability to win on the merits are uniquely in the hands of the pretender, who won’t give it up despite Federal Law (TILA and RESPA).
  7. A direct appeal under original jurisdiction to the Supreme Court of your state in mandamus on this issue is appropriate and I believe likely to succeed if placed in the hands of a competent appellate attorney.
  8. The cases that are being decided either at trial level or the appellate level, are mostly picking at hairs. The simple question is whether the pretender can avoid pleading untrue facts and thus avoid the requirements of proving facts that only the creditor could plead and prove. If the answer is that the pretender wins, then the floodgates they are so worried about will really open because it gives any speculator a chance to set aside a previous foreclosure or to foreclose on any property that appears to be in default. There is already a popular scam across the country in which non-owners rent out the house as long as they can — many times for years. This is only possible because of the moral hazard introduced by the reticence of courts to apply black letter law that has existed for centuries and which is necessary to maintain an orderly society with certainty in the marketplace that the rights clearly set forth in the contracts, laws, rules, regulations and common law precedent will be applied in a consistent manner.
  9. An example is the notice of default. Under the PSA the servicer is required to keep paying the creditor even if the borrower stops. There is no default. There is potentially a claim by the servicer against the homeowner for unjust enrichment but it certainly isn’t secured.
  10. WAIVER: You can’t waive fraud. Every one of these loan closings was conducted under false pretenses with the real party advancing funds absent from the table (hence the term “Table funded loan, because the name of the lender is not present). The documentation thus refers to a  transaction that never occurred. Beyond that, the lender received an entirely different package of documents with terms and parties completely unknown and undisclosed to the borrower. The borrower and the lender never appear on the same document. Hence the documentation refers to a transaction that did NOT occur and the transaction that DID occur in which money was loaned to the borrower, is without documentation of any kind — i.e., documentation in which the borrower and lender agree to the same terms and conditions. The reference to the promissory note is a fraud.
  11. SINGLE TRANSACTION RULE, STEP TRANSACTION DOCTRINE: The lender would never have accepted the deal were it not for the documentation the lender received (the bogus mortgage backed securities with the infamous AAA ratings based in part on the infamous fraudulently inflated property appraisals, relied upon by both lender and borrower). The borrower would never have accepted a deal wherein the real value of the property was considerably less than the principal due on the loan. Any reading of any chain of securitization documents can arrive at only one conclusion — there was no liability intended to accrue in favor of the lender or investor nor any recourse except in the unlikely even some money was received by a sub-servicer (serving at the will of the Master Servicer whose existence is hidden from both homeowner and investor). The bogus “bond” received by the lender was never signed by the borrower and unknown to most borrowers even today. THIS IS WHY YOU MUST CONCENTRATE ON THE SINGLE TRANSACTION DOCTRINE USED IN TAX LAW AND OTHER CIRCUMSTANCES WHERE FRAUD IS ALLEGED OR AT LEAST INFERRED. If you allow yourself to be drawn into a fight over the hairs of an individual document that neither the borrower nor the lender signed or even knew about, you are falling into the rabbit hole.

27 Responses

  1. Scot, Okay:
    http://www.scribd.com/doc/21417441/MERS-RULES-OF-MEMBERSHIP
    I have one submitted in an action in 2010, but it’s likely the same.

  2. swarm the banks; You are correct. If you want to know who actually funded your loan. Request a copy of the Wire Confirmation that funded your loan from the title company or escrow company that closed on your loan. You may be surprised to find out the source of the funds and the name of the lender on your note and mortgage do not match. The name on your note and mortgage is the name of a broker or pretend lender who was paid a premium to bring this loan to the funder/investor. This by itself should be enough to multiple defenses for you the property owner.

  3. John Gault, you stated that you, (I have not seen all amendments to the agreement) to the MERS contract. Would you please post a copy of this contract.

  4. Hate to sound like a broken record. I am going to keep reminding people about what MERS is and isn’t until I feel there is a general consensus among we the people and the judiciary. MERS is a software program created by MERScorp. Companies sign up to “MERS, Inc” whom I dont’ believe even owns the computer system; I think MERSCorp does – to become ‘members’, which means they can do ‘certain things’. Once a member, when a loan is closed, the “MERS’ deed of trust is used, alleging that MERS is the nominee of the lender. The original deed of trust showing ABC lender and MERS as alleged nominee of that member and its ‘successors and assigns’ is recorded in the land records. When the note is transferred, members are to enter the transfer into the computer software program.
    But, NO one knows or CAN know if this is done by the members or not. It’s strictly voluntary and there is no diligence nor can there be by a business, MERS, which doesn’t even have any employees. Wouldn’t matter if they did have employees; there would still be no way to know if proper entries are made or not. There are computer techies who actually work for MERSCorp, but they are not responsible for entries of transfers, the members are. Only members’ employees and NOT MERS’ employees enter transfers. MERS has no employees. There is NO one, NO one, not one single person in the whole world who can tell if an entry is made properly or is not made when it should have been. MERS’ computer software program ‘records’ are simply not reliable. Since they’re not reliable, they can’t be trusted and cannot possibly evidence anything.

    MERS’ membership contract provides that the only time a member may actually assign a deed of trust is when the note has been transferred to a non-MERS’ member, like a trust. In that case, a member shall execute and record in the land records an assignment of the deed of trust to the non-MERS member who now owns the note and the loan is to be de-activated from the MERS computer software program because MERS no longer represents the note owner. Otherwise, members are not to do assignments. (I have not seen all amendments to the agreement)

    So when we hear ‘MERS did this’ and ‘MERS did that’,
    it is a misnomer, because MERS doesn’t do anything
    because it’s only a computer software sytem, a wholely volunteer registration of transfers of notes. When we hear MERS did anything, it is what a member did, NOT “MERS’, because it is only members who do anything. “Mers” doesn’t do assignments, “MERS” never foreclosed. The members alls have MERS’ ‘certifying officers’ so they can sign things in MERS’ name. When we see an assignment allegedly by MERS, what we are generally seeing is an assignment by an employee of a MERS’ member to itself. So if there is an assignment to B of A, say, that assignment was done by a B of A employee incognito as a MERS’ certifying officer.
    See? No real MERS, just a B of A employee wearing an extra hat for the moment, assigning a deed of trust to his employer. And at any rate, the assignment should have been executed by the last owner of the note, not B of A to itself by use of its straw officer.

    MERS, which does have corporate officers, is finally starting to get some of the scope of its liability. They are recognizing the peril of these self-assignments and the liability additionally imposed by the robo-signors in its name. While MERS per se does nothing other than provide a computer software program, its officers have allowed, if not created, an industry which has run afoul of the law.
    That’s why it has said no more foreclosures in its name. And that’s why it is trying now, in the year 2011, to mandate some ‘training’ of the straw officers of its members. As if. You can’t ‘train’ them to make
    voluntary entries. I mean, first of all, it can’t even be known if members do or not. They might as well be trying to teach the straw officers to type. Nothing they try to do can replace the diligence which is impossible by the very nature of the beast, the volunteer computer software system.

    The point here is we need to start thinking like this:

    MERS = computer software program

    MERS’ members = do all activity we ever see in the name of MERS (foreclosures, assignments, declarations)
    THE PRINCIPAL ACTS IN THE NAME OF ITS ALLEGED AGENT (nominee, whatever)

    Here, again, is a link to a longer disertation:

    http://www.scribd.com/doc/48563245/Mers-is-Being-Had-by-Its-Members

  5. I might appeal it. It was a form from the Judge’s office with a box checked: “Decision by the Court. This action came to trial or hearing before the Court. The issues have been tried or heard and a decision rendered.” Obviously, they never “heard” anything. It is appealable, however.

    In the mean time, opposing counsel said they want to settle. Since the Quiet Title basically says they do NOT have standing and have broken SC law regarding filing of appropriate documents to maintain the chain of title and question the f%^&*d up origination process. The note is void because of the broken chain of title or that it was already paid for by the government. Burmese8@yahoo.com

  6. Louise- so the judge wouldn’t allow you to bring in a court reporter? How the hell did he word that order? I am extremely curious

  7. Ian, I filed a TRO and request for permanent injunction so that my house would not be sold before the Quiet Title could be adjudicated. Judge denied the TRO. I asked for a court reporter for the hearing as well. Judge knows that with the right transcript it can be appealed. They don’t want me in the courtroom at all. However, even if I lose my house, I will continue to litigate the Quiet Title, and it is a doosey even if I do say so myself. Burmese8@yahoo.com

  8. seattlematt- good idea to make force the ‘banks’ to prove the chain of title before foreclosing in nonjudicial states. Now,how about forcing the ‘banks’ to prove chain of title before foreclosing in JUDICIAL states? After all, 99.9% of foreclosures are uncontested. Judicial states’ status is no guarantee of anything.

  9. For those in Washington:

    It is time to get involve now! We need to start pushing hard for an Arizona style requirement that the pretenders prove the chain of title BEFORE they can foreclose nonjudicially. We are trying to push hard to get this done and need as much help as possible. Get on the phone and start writing letters.

  10. john gault-while I cannot remember the particular PSA , the wording was to the effect that “should these payments not be made,servicer can get the payments from the borrower” . Meaning that the borrower is somehow viewed as an afterthought. Sorry I can’t provide a link or more definitive information.

  11. “In the federal courts, it is well established that a national bank has not power to lend its credit to another by becoming surety, indorser, or guarantor for him.”’ Farmers and Miners Bank v. Bluefield Nat ‘l Bank, 11 F 2d 83, 271 U.S. 669.
    “It has been settled beyond controversy that a national bank, under federal Law being limited in its powers and capacity, cannot lend its credit by guaranteeing the debts of another. All such contracts entered into by its officers are ultra vires . . .” Howard & Foster Co. v. Citizens Nat’l Bank of Union, 133 SC 202, 130 SE 759(1926).
    fwiw

  12. john gault,

    As to “x” amount of time — yes, incentive to falsify. But, the real creditor also knows this — and condones foreclosure mill behavior – as it’s legal representative and agent. Both are responsible — but we only know the “agent.”

  13. john gault

    Servicers are only obligated by PSAs, generally, to advance delinquent payments — until – like any other debt collection — servicer deems the debt as “non-collectible”. It is my estimate that delinquent payments are advanced for about three months — that is an estimate — but, do not believe they are advanced for any period much longer than three months. Which means, – the trustee is NOT receiving “continued” payments from servicer, and, therefore, the trust/trustee is NOT the creditor as often stated in courts across the country (we already know they are not the creditor — but, remittance/distribution ledgers would provide additional evidence).

    But, as Ian states – have never seen a court grant discovery production of ledgers. These are critical documents that are being concealed.

    Louise —

    Unfortunately, I also agree with you. There are numerous instances in which victims are prevented from speaking out — and issues are silenced. This is also a “dignity”/rights issue that some states have recently become concerned about..

  14. Ian,
    You know, I read these things and I write these things on information and belief. But it is still hard to believe
    all this could be kept secret by way of no evidence. I mean we all know loose lips sink ship, right? Why are there no loose lips? Employees of these companies are our neighbors, maybe even our friends. I mean, the hands-on people had to get clearance akin to the FBI or something. What?
    Well, mortgage brokers were able to keep their
    service-release and yield spread premiums quiet for years.

    W

  15. Okay, then while we’re at it, I believe it is also so that foreclosure mills/law firms are also penalized for the amount of time over x amt of time it takes to ‘snarf’ the collateral. They get paid a contractual amount, which appears to be how you get in the ‘club’ – agree to a contractual amount, kind of like medical providers who want in insurance company networks. They have to absorb any costs over the contractual amount, and further are otherwise penalized if they don’t perform in x amt of time. Or so I’ve heard.
    This unfortunately can be a big ‘motivator’.

  16. Louise- the judge won’t let you SPEAK???? Can you explain further?

  17. John Gault- the second ledger to which you refer is call the Remittance Ledger. This records payments from 3rd parties,insurance payments on “defaulted” loans,PMI payments, overcollateralization,Net Interest Margin(NIM)overage,etc. This ledger has never been produced in a court of law, and never will. Unless of course you can get a disgruntled ex-employee with a conscience to sneak in and make a couple of copies. That would be a great idea.

  18. Jeff, that was funny! To think I was once, well, proud to own G-S stock.

  19. If the psa’ s oblige the servicers or master servicers (or someone) to continue the payment stream to the investors, the note is not in default. Default may only be called by the note owner or maybe its authorized agent. But, the loan is not in default. Even if the servicers were the ‘owners’ agents, they may not call a note in default on their own behalfs regarding another matter, that is, their guarantee. The borrower was not involved in the guarantee and the guarantor is in fact a “volunteer”, which is a legal term as used.

    Default may be called on a note, but the owners’ note is not is default. The servicer/pretenders are stuck making the payments but the note may not be called because it’s not in default. The ‘noteholder’/owners will not (or should not) call the note in default because it isn’t in default.

    So, since the banksters know this, they bring in MERS, who is nobody, (remember, there is NO MERS – it’s just a computer software program with voluntary-only entries by its members regarding transfers of notes) but still the best they can come up with to try to go after the property that way. The (possible) member stuck making the voluntary guarantee payments just has its straw officer, otherwise known as that member’s own employee, assign the deed of trust to itself (collusion), or they skip even this and just go in and declare this is my note (it isn’t, of course), or they pretend they are acting for the noteowner, which they’re not, relying on alleged holder status under the UCC when the endorsement in blank was for the benefit of another party altogether (theoretically the investor), the trust, but not the servicer. But, it is of no avail, because the note is not in default. Someone please tell me they weren’t devious enough to plan this when they came up with MERS to ‘offset’ the voluntary guarantee.

    Maybe the recogiition of this (latest) liability to MERS (which while having no employees likely has assets) is one of the reasons MERS recently issued a memo to its members: No more foreclosures in MERS’ name. To be clear, what I mean (on this score) is the liability that is created by foreclosures done based on a default on a note which default does not exist.

    When the banksters and servicers, bad actors, claim THEY are owed anything or that the loan is in default, they are lying, because it isn’t. They just don’t want to continue the payment stream they voluntarily guaranteed. But, they are legally volunteers and have no right to reimbursement, and anyway reimbursement is not about or a path to the note being in default. ‘Reimbursement ‘ of their voluntary payments has nothing to do with the note itself.

    This means the note is unenforceable in regard to foreclosure and as to the borrower since it is not in default because of the voluntary guarantee payments. It would be enforceable against the borrower, of course and assuming other ducks in a row, if the volunteer guarantors quit making the payment stream, but they can’t contractually.
    Whether or not the volunteer guarantors could prevail on a claim of, say, unjust enrichment against the borrower I can’t think just now, but I doubt it. It was a voluntarily ASSUMED RISK, which is an affirmative defense available to the homeowner. But, there is no collateral for an unjust enrichment award even if they got one. It would still not be a path to the borrower’s home. Sure, they could obtain judgments month by month right after month by month litigation with the homeowner, (or I guess they could stock-pile a few months), but then they could just get in line with everyone else. By everyone else, I mean all the borrower’s other unsecured creditors. They cannot sue even in equity for any voluntary payments which have not been made by them yet – they may only TRY to collect each month, on some equitable theory. There is no statutory or contractual basis with the borrower for a reimbursement claim. Therefore, it would be a claim ‘in equity’, but even then, only available as a claim in equity as each voluntary payment is made.
    So they use and hide behind the MERS’ deeds of trust. The deed of trust is being used, at least, to allege an interest by a Mers’ member (servicer, etc., guy stuck with the guaranteed payment stream) and then the note and dot would in fact be bifurcated, but really no independant right is created by a deed of trust without the note, so the deed of trust is also unenforceable as to foreclosure since the note is not in default.

    Now, regardless of the veracity of ALL the above, if the volunteer guarantor is in fact making the payment to the ‘owner’, each payment made reduces the principle of the note appropriately. But then, the servicer or other pretender turns in a proof of claim or other form depending on the venue, showing an amount due on the loan which does not include the principle reduction made by the volunteer guarantor’s payments, and further showing accrual of unearned interest and other charges, which accrual and charges as to the note are fiction.

    It’s my understanding that pursuant to the PSA, or other agreement, these payments made by the volunteer guarantors are to be made and kept in a separate ledger, which I have yet to see unearthed.
    Ask for them.
    If this is all true, then obviously, in addition to the rest of it, false numbers are being submitted.
    As Neil said, you must make arguments based on an
    honest assessment of fact. Now if people start posting and introducing these psa’s routinely referring to these guarantee payments, then it would be fair, I think, to suggest your loan is such a loan, and at least the judges would get used to the truth.
    Hey, is that a new motto? “Get used to the truth”? So, if you have one, maybe you should post it where we can find it.
    If your loan is such a loan, then if nothing else, the
    numbers being submitted are bogus and you should have a right to demonstrate this, which would require discovery.
    BTW, while courts prefer litigants to make their arguments, courts have a duty to ferret the truth, but again, that’s another story for another day.

  20. I hope MERS & Citi get hammered in court tomorrow at 10:30.

    Especially after MERS trumpeting of so-called “victory” in a badly-botched (on the homeowner’s attorney’ part) CA appeals court case – which thankfully is being appealed to the supreme court.

    http://mandelman.ml-implode.com/2011/03/in-re-walker-part-deux-%e2%80%93-march-3rd-2011-may-just-be-a-huge-day-for-california-homeowners/

  21. Louise, sounds like you are in California. The judges in CA wear Goldman-Sachs t-shirts under their robes.

  22. We have servicers who do not own the loan foreclosing on homeowners. I filed a TRO and Permanent Injunction on my Quiet title Action, and the judge will not even let me speak in court. Of course, I asked for a court reporter. This is very fishy. Burmese8@yahoo.com

  23. Would this include Fannie Mae or any GSE?

  24. please explain the single transaction rule/ step doctrine you are referring to in your answer and how it applies to fraud. I’ve read the rule and doctrine unde the tax code but am having a hard time applying it to your comments on fraud.

    thank you

  25. During the fall 2010 congressional hearings, some of the committee members who took statements from the experts would recite how they thought loans occurred.

    It seemed to me that their view was based on pre-securitization. It seemed to me that they thought that loans were backed by money printed by either our own government or the fed (I assume they are not one and the same), either way, this was NOT investor money.

    The banks were supposed to qualify home loans and use the discount in the interest rate they get from the fed or the government as their profit margin.

    It seems to me that once securitization entered the scene, that suddenly mysterious unknown investors were involved and that they had supreme power over the homeowner’s mortgage. This is the fraud in my opinion.

    the moment a homeowners relationship with the location of the loan origination source is compromised by a secret third entity who is not concerned with helping the homeowner, the system broke down and the judges need to step in save the homeowner.

    It’s as if all that pension investment money floating around that is looking for a solid but safe investment is in competition with the fed itself. The Pension money is beholden to the pensioners who fund it, the fed is beholden to the homeowner’s promise to be a solid citizen.

    I think we need to identify and separate these two sources of funds when getting a home loan. The blending of all money sources as being the same is the fraud that needs to be unwound.

  26. Neil, may I give a copy of this to my attorney, and if so, how much, if any, could he quote? I’m not sure what the protocol (copyright, legal ethics, etc.) is about something like this, so forgive my ignorance if this would be an inappropriate use of your writing.

    I am not in Washington state, but this is very clear and helpful information anywhere, or it seems so to me.

  27. Would it not be prudent to to ask the lender that actually funded the loan if they funded the loan giving them the date of funding and the property address. If they confirm they funded the loan than ask for the all the closing documents that shows they lent the funds to you to fund your loan all the documents including the note, mortgage and right to rescind if it were a refinance. They will not be able to produce the documents. They would have to admit they lent you the money to fund your loan but cannot produce the required RESPA documents.

    Regarding Chase no longer being associated with MERS as of 2009. I also heard this but as of today MERS still lists Chase as servicers and lenders on their website. If Chase is your servicer and you have a MERS MIN number you will see for yourself. You might also find that MERS will list Chase as the investor but a different pretend lender is foreclosing on your property. MERS per their website states the note is assigned to Chase while at the same time MERS assigned the mortgage to the entity that is foreclosing against you. Per MERS own admission than they split the note from the mortgage voiding both the note and the mortgage making both unenforceable.

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