Stopa: Servicer Cannot be Plaintiff in Foreclosure

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Editor’s Comment: Stopa is right on here. If the servicer is allowed to foreclose, and the auction is conducted, the property sold, what happens to the rest of the obligation that the servicer was not entitled to receive? How do the real creditors collect? How much can the Servicer submit as a credit bid? Why can the servicer submit anything as a credit bid on a transaction in which the servicer was not a party?

If the servicer claims they were a party by virtue of the securitization documents, then they are admitting that the loan origination documents were defective or at least are not the complete evidence of the terms of the loan and the identity of the lender. If they admit that, then their sole claim to agency for a principal is based upon a PSA that requires the manager or trustee of the pool to reject a non-performing loan submitted to the pool after the 90 day cutoff.

If the loan never made it into the pool and it is now obvious that most did not, then the claim of servicing rights arising from the pool documentation don’t apply giving the servicer no rights at all.

Plaintiff as Servicer? I Think Not.

by Mark Stopa

http://www.stayinmyhome.com/blog/2012/02/plaintiff-as-servicer-i-think-not/

I observed a foreclosure trial today, and one aspect of it in particular really bothered me. The plaintiff prosecuting the case was not the owner of the Note, but merely the servicer. Many judges and, of course, plaintiffs’ attorneys, seem to think this is fine, arguing the servicer can foreclose because it’s the “holder” of the Note, even though, by its own admission, it’s not the owner. In other words, the plaintiff/servicer concedes it does not “own” the Note, i.e. it’s not the plaintiff’s Note, but because it has the Note in its possession, and the Note is indorsed in blank, it can foreclose.

I’ve thought about this argument a lot, read a lot of case law, and see some fatal problems. Frankly, I’m frustrated these problems are largely being ignored and hope that everyone starts arguing and adjudicating this issue appropriately.

First off, taking the plaintiff’s argument to its logical extreme, anyone can steal a Note with a blank indorsement – literally, be a thief – but because he possesses the Note, and the Note is indorsed in blank, he could foreclose simply because he’s the holder. That sounds insane, but once you accept the argument that the plaintiff need only be the “holder,” and that ownership is irrelevant, that’s what you’re allowing – a thief can foreclose. Anyone can foreclose. Come to court with a Note with a blank indorsement, and how you obtained that Note is irrelevant – you can foreclose.

Respectfully, that’s just not the law. It can’t be the law. There’s no way the law can allow or would allow a thief to foreclose. Undoubtedly, this is why Rule 1.944 requires the plaintiff be the “owner and holder.”

I can hear the plaintiffs’ attorneys now. “But many Florida cases say being a holder is sufficient; they don’t have an ownership requirement.” To a limited extent, I suppose that is true, but read those cases. For example, Riggs v. Aurora Loan Services, 36 So. 3d 942 (Fla. 4th DCA 2010), talks at length about whether the plaintiff was the holder, and plaintiffs’ lawyers love to cite Riggs for the proposition that being the “holder” is all that matters. However, the issue of ownership wasn’t a question in Riggs – in that case, the plaintiff showed it was the “owner and holder.” Respectfully, it is totally misguided to take a case where ownership was not in question and use that case for the proposition that ownership is immaterial. It may have been immaterial in that case because ownership wasn’t disputed, but that certainly doesn’t mean ownership is immaterial in all cases.

Consider, again, my thief example. Once you accept that a thief cannot foreclose, you necessarily accept that the plaintiff who forecloses must own the Note.

Again, I can hear the plaintiffs’ lawyers. “But a servicer can foreclose because the servicer is the holder and has a servicing agreement with the owner, so it’s foreclosing with the consent of the owner of the Note.” This was the argument being espoused at the trial I observed today – the servicer doesn’t own the Note, but is foreclosing with the consent of the owner.

This argument may sound unique or complicated, but it’s one the Florida courts have adjudicated for many years in a number of contexts – that of principal and agent. Here, the plaintiff is saying that it, the servicer, is acting as the agent of the owner, the principal, by prosecuting the foreclosure case. This is the dynamic we see in thousands of foreclosure cases – the servicer alleges it can prosecute the case for the owner under a theory of agency.

In my view, this begs the question of when can an agent bind the principal? Let’s say that again:

Under what circumstances can an agent bind a principal?

There are zero Florida cases that discuss this concept in the context of foreclosure cases, so let’s look to case law in other contexts.

In Fla. State Oriental Med. Ass’n v. Slepin, the First District ruled an attorney was not entitled to collect attorneys’ fees incurred representing a corporation because the attorney (the alleged agent) did not have the authority to act on behalf of the corporation (the alleged principal). 971 So. 2d 141 (Fla. 1st DCA 2007). The attorney said he was acting on the corporation’s behalf, and he purported to act on its behalf, but the First District ruled he wasn’t, in fact, an agent and didn’t have the authority to bind the corporation. In so ruling, the court explained:

A finding of actual authority would require evidence that a principal acknowledged an agent’s power, that the agent accepted the responsibility of representing the principal, and that the principal retained control over the agent’s actions.

Similarly, the Florida Supreme Court has explained:

Essential to the existence of an actual agency relationship is (1) acknowledgment by the principal that the agent will act for him, (2) the agent’s acceptance of the undertaking, and (3) control by the principal over the actions of the agent.

Villazon v. Prudential Health Care Plan, 843 So. 2d 842 (Fla. 2003).
Let’s read those requirements closely, and break them down, one by one.

1. The principal acknowledged the agent’s power.

2. The agent accepted the responsibility of representing the principal.

3. The principal retained control over the agent’s actions.

In the trial I observed today, the plaintiff/servicer admitted it did not even know who the owner of the Note was. Think about that for a minute. The servicer was supposed to be acting on behalf of the owner, with the owner’s consent, but it didn’t even know who the owner was. On these facts, how on earth could the servicer possibly prove the owner/principal “acknowledged the agent’s power”? Clearly, it couldn’t, and it didn’t. The servicer couldn’t even identify the owner, much less prove the owner authorized the servicer’s actions.

This argument is so simple it’s ridiculous.

“I have authority to foreclose.”

“Who gave you authority?”

“I don’t know, but I have authority.”

I can just see my kids making this argument to me and my wife.

“I have permission to stay up until 10:00. That’s my new bedtime.”

“Who gave you that permission?”

“I don’t know, but it’s allowed.”

These arguments don’t even begin to make sense, but that’s what the servicer was arguing today. “I don’t know who gave me authority, but I have authority.”

As I see it, to prove the requisite authority, the servicer must either (a) introduce a servicing agreement into evidence; or (b) provide testimony from the owner as to the servicer’s authority. Without one of those two things, I just don’t see how the servicer can possibly show the owner of the note authorized the servicer to foreclose. Do you disagree? You tell me … without a servicing agreement or testimony from the owner as to the servicer’s authority, how can the servicer prove the owner “acknowledged the servicer’s power”? Once you conclude there is no such answer, then you necessarily agree that a servicer cannot foreclose without such proof.

Similarly, in the trial I observed, the plaintiff/servicer failed to show the owner of the Note “retained control over the agent’s actions.” After all, how could the servicer possibly show the owner of the Note “retained control over the servicer’s actions” when the servicer couldn’t even identify the owner? Clearly, the servicer was acting as its own boss here, answering to nobody.

I realize that some of the arguments being espoused by servicers in foreclosure cases seem unique, and there appears to be an absence of case law setting forth these issues. However, once you realize a servicer purports to act on behalf of the owner, and is hence just another fancy word for an agent, it should become clear that basic principles of law regarding agents and principals must apply, as quoted above. This requires proof in foreclosure cases that, many times, is simply not forthcoming.

Mark Stopa Esq.

http://www.stayinmyhome.com

40 Responses

  1. UCC-3.203 is clear enough: only a holder in due course can foreclose. and the holder in due course can only acquire all right/title/interest from the original lender/beneficiary, showing special endorsements (named endorsee) and the corresponding written agreement (usually the assignment of mortgage/deed of trust) according to the Statute of Frauds – transfer of real property.

    The reality is this: no securitized mortgage (whether you can track it into a trust or not) has a ‘party entitled to enforce’ (“Pete”). These loans were void ab initio. Note and mortgage split at closing and Note further split- note intangible (payment stream) directed to the trust ‘investors’ and the tangible note digitized and destroyed.

    A multi-trillion dollar Ponzi that has collapsed the central banks of the world.

    Only one solution: Jubilee.

  2. Plaintiff fails to attach any documentation, such as plaintiff’s servicing contract, authorizing it to foreclose on the Note/Mortgage clearly in the name of another. See Elston/Leetsdale LLC vs CW Capital Management LLC (FLA 4th DCA 2012).

    Allowing an alleged note holder to commence a foreclosure action relying on UCC 673 Florida Statute without alleging present note ownership as some commentators favor is equivalent to allowing a party to foreclose without alleging lien rights still exist. Foreclosure is an in rem action to enforce the lien instrument, not an in personum action to enforce a note for money damages, and lien rights only exist as long as the note’s stored value presently resides on somebody’s general ledger.

    Complaints which fail to presently “allege ownership” of the Mortgage Notes in question fail to state a cause of action on the security instrument and should be dismissed. Smith v. Kleiser, supra; see also Morales v. A1Iright Miami, Inc., 755 So. 2d 198 (3d D.C.A.Fla. 2000); Dollar Systems v. Detta 688 So. 2d 470 (3d D.C.A. Fla. 1977).

    Plaintiff is not the “holder” of the promissory note at issue in this case. Florida Statutes §671.201(21) defines “Holder” as
    “The person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.”

    While Plaintiff might eventually prove to be the bearer of the instrument, Plaintiff, also presently alleging it’s the mortgage servicer of the subject note and mortgage, would not have the right to seek to make collection or obtain payment of a claim under the subject note on behalf of themselves pursuant to 24 C.F.R. $3500.2(b) (defining the act of “servicing” under the Real Estate Settlement Procedures Act as “receiving any scheduled periodic payments from a borrower pursuant to the terms of any mortgage loan…and making the payments to the owner of the Ioan or other third parties…pursuant to the terms of the mortgage servicing loan documents or servicing contract.”) (emphasis mine)

    The instrument before this Court is not payable to the person in possession because a series of further transactions must have to occur for plaintiff to allege it’s the current mortgage servicer of the note and mortgage. Thus the Plaintiff fails the second prong of the definition. See Troupe V. Redner, 652 So.2d 394 (Fla.App. 2 Dist. 1995) and Booker V. Sarasota, Inc., 707 So.2d 886 (Fla.App. 1 Dist. 1998) Title rights include (1) the power to demand payment; and, (2) the right to be paid consideration for the loan whereby, plaintiff, as an alleged mortgage servicer, is not the holder of title nor a person entitled to unilaterally enforce the subject instrument because it would only be authorized to demand payment from the borrower under a separate servicing agreement apart from the subject note; a contract which plaintiff doesn’t even bother to attach to its complaint (emphasis added).

  3. When does the agent bind the principle? And can a thief foreclose? if you can answer that and find a way to add some punitive damages thrown in for good measure, you’ve solved this whole mortgage crisis, and I think you know that.

    We’re rooting for ya!!!!

  4. It actually simplifies the whole process, if we allow the Servicer of a Loan that was never securitized to foreclose on that mortgage, we are recognizing that an agreement was made between the Servicer and Investor, eg wells fargo and deutsche bank, before any refinance occurred, to allow a mortgage purchased in secret, never registered.to be service without a valid mortgage assignment, and contrary to all sec regulations as well as the psa agreement of the Trust. By giving validity to Servicer to foreclose, we give validity to this most illegal and immensely profitable relationshiip between investor and servicer. Therefore once Servicer, eg wells fargo, sues to foreclose, The State as was well as Defendant’s attorney can sue the Investor, eg deutsche bank, for every time the derivitive, eg., 106×03 deutsche bank pmsr wells fargo cts ACE 2005 HE-5, has been securitized in a Trust, up until the billion dollar REMICS they are still securitized in today, plus punitive damages.

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  6. Awesome Nancy! Thank You! You have your “Drum Roll” They are turning on each other …. Get the Popcorn Ready!

  7. Word Mark REED SMITH LLP
    Goods and Services IC 042. US 100 101. G & S: LEGAL SERVICES. FIRST USE: 20001016. FIRST USE IN COMMERCE: 20001016
    Mark Drawing Code (5) WORDS, LETTERS, AND/OR NUMBERS IN STYLIZED FORM
    Serial Number 76139560
    Filing Date October 3, 2000
    Current Filing Basis 1A
    Original Filing Basis 1B
    Published for Opposition July 17, 2001
    Registration Number 2632831
    Registration Date October 8, 2002
    Owner (REGISTRANT) REED SMITH LLP LIMITED LIABILITY PARTNERSHIP PENNSYLVANIA 435 SIXTH AVENUE PITTSBURGH PENNSYLVANIA 15219
    Assignment Recorded ASSIGNMENT RECORDED
    Attorney of Record Louis M. Heidelberger
    Prior Registrations 1258828;1293150;1722726;1735449;AND OTHERS
    Disclaimer NO CLAIM IS MADE TO THE EXCLUSIVE RIGHT TO USE “LLP” APART FROM THE MARK AS SHOWN
    Type of Mark SERVICE MARK
    Register PRINCIPAL
    Affidavit Text SECT 15. SECT 8 (6-YR).
    Live/Dead Indicator LIVE

  8. IN COURT, THE PLAINTIFF IS

    DRUM ROLL PLEASE ….

    REAL CASE:
    PLAINTIFF BENEFICIARY:
    FIRST AMERICAN TITLE LOSS MITIGATION …
    THEY ARE NOT NAMED BUT ARE IN COURT!
    AND IN THE EVENT ‘TRIAL’ THEIR COUNSEL APPEARS
    REED SMITH DIANE B. ESQ. WHO APPEARS WHEN BENEFICIARIES OF ‘TITLE’ DISPUTE IN FRONT OF COURT;

    THE FILING BY THE ROBO-FIRM WHO IS THE CURRENT SERVICER OF AN UNSECURE DEBT ATTEMPTS TO ‘CLEAR TITLE’ FILING IN PUBLIC RECORD AND LAND RECORD NOTICE OF DEFAULT THROUGH A LIS PENDENS, AND ASSIGNMENT OF MORTGAGE.

    THE CUSTODIAN – WELLS FARGO BANK NA LENDER LAST RECORDED MERCHANT BANK LENDER & INSTITUTIONAL SERVICER OF SECURITIZED INVESTMENTS, TURNED OVER ‘SERVICING’ OF CURRENT ESCROW ADVANCE DEFAULT TO ROBO-FIRM IN STATE PROPERTY LOCATED.
    IN ORDER TO PURSUE UNDER FAIR DEBT COLLECTIONS PRACTICES ACT, THE EXISTING SERVICER WITH OBLIGATION OF COLLECTION FROM EITHER THE ‘MORTGAGE BROKER/INVESTOR’ TRUSTEE OR THE HOMEOWNER/TRUSTOR, MUST ADVANCE ESCROW IN THE MEANTIME, AND THE EXISTING OBLIGATION IS NEVER IN DEFAULT THAT IS CLAIMED TO BE IN DEFAULT.

    THE NEW SERVICER, IS GIVEN THE ADVANCE ESCROW PROMISSORY NOTE RIGHTS IN THEIR PORTFOLIO TO COLLECT UNSECURED LIEN CLAIMED TO BE DUE ‘SERVICER’ WELLS FARGO BANK NA LENDER – THEY ONLY BECOME THE LENDER WHEN THEY BEGIN TO ADVANCE ESCROW FROM THE ‘REMIC’ FUNDS.

    THE ROBO-FIRM FILES NOTICE AND PURUSES LIEN OF CURRENT ESCROW ADVANCES THE SERVICER CLAIMS TO BE DUE.

    ‘LIEN’ NOTICE OF LIS PEND ENS AND ASSIGNMENT OF MORTGAGE – IS AN ATTEMPT TO FORCE A ‘SHORT-SALE’ BETWEEN THE BENEFICIARY AND SUCCESSOR BENEFICIARY WHO WILL TAKE INTO THE EXCHANGE PIPELINE THE RELATED ‘INDIVIDUAL VARIABLE RIDER/NOTE’ INVESTMENTS, COLLATERAL, TO MARKET.

    ‘SUCCESSOR BENEFICIARY’ C/O SUBSTITUTE TRUSTEE USBANK NA SERVICER REMIC WILL SETTLE UP ‘SHORT-SALE’ AFTER ‘SUMMARY JUDGEMENT’ WHEN ‘SHERIFF – TRUSTEE SALE’ THE JUDGE AS A REAL ESTATE LAWYER SIGNS THE ORDERS – MULTIPLE ORDERS – 1) FOR SALE; 2) ORDER TO RELEASE PROCEEDS FOR SETTLEMENT OF SHORT-SALE; GUESS WHAT – THE DEFENDANT NOT A PARTY TO THE SHORT-SALE SETTLEMENT (THEY ARE PURPOSEFULLY EXCLUDED – IF THEY KNEW THEY HAD RIGHTS TO PURCHASE LOAN FOR TEN CENTS ON THE DOLLAR WHAT WOULD HAPPEN?

    WAKE UP – LOOK AT THE TRANSACTIONS – THERE IS NO PUBLIC AUCTION!!! HOW COULD ‘EVERY STATE’ COURT OF EQUITY COOPOERATE ?

    BENEFICIARY AND TRUSTEE AND SERVICER ANYBANK NA ‘CURRENT SERVICER’ ROBO-FIRM; AND SUCCESSOR BENEFICIARY SUBSTITTUE TRUSTEE…

    THE BENEFICIARY IN ALL ‘SECONDARY MARKET’
    ‘MORTGAGE LOANS’ WHERE SALES CONTRACT WAS EXCHANGE FOR DEED

    AND THIS MEANS YOU, YOU AND YOU….

    WHAT SALES CONTRACT?

    THE INDIVIDUAL VARIABLE RIDER/NOTE ‘ATTACHED TO’ PROMISSORY NOTE

    THE INDIVIDUAL VARIABLE RIDER/NOTE (MULTIPLE INVESTMENTS) INCLUDES ‘SPECIAL’ INDIVIDUAL VARIABLE ANNUNITY
    BENEFITS (WHERE DID THEY GO?)

    ALL ‘MORTGAGE LOANS’ SOLD IN SECONDARY MARKET FOR ‘CORRESPONDENTS’ ARE RESALE OF MORGAGE LOAN RIGHTS IN WHICH
    YOU, YOU, YOU AND YOU …

    SIGNED PROMISE TO ADVANCE ESCROW FOR ALL OF THE MANY INVESTMENTS AND …

    YOU … YOU … YOU … AND YOU….
    PROMISED TO ADVANCE CASH FOR ESCROW FOR THESE INVESTMENTS..

    AND THIS ‘CONTRACT’ AND ‘DEAL’ LIKE ALL OTHER ‘CONTRACTS’ ARE INSURED IN THE EVENT THIS PARTICULAR ‘AGREEMENT’ DEFAULTS THE INSURANCE ‘GUARNATOR’ THE REMIC! WILL PROTECT THE ‘SHORT-SALES’ AND SETTLEMENTS!

    HELPING HOMEOWNERS ACROSS AMERICA (sm)
    Goods and Services IC 036. US 100 101 102. G & S:
    Mortgage foreclosure mitigation and
    loan default mitigation services,
    namely,
    acquisition and
    lease-back of real estate
    Filing Date June 26, 2008
    Owner (APPLICANT) National Trust Loss Mitigation, Inc. CORPORATION FLORIDA 280 Esplanade 52A Royal Palm Place Boca Raton FLORIDA 33432
    Type of Mark SERVICE MARK
    Register PRINCIPAL
    Abandonment Date April 21, 2009

  9. Just a comment about Nancy Drew posts: they look like there’s a host of great information, however they need to be sequential and explained for some of us laymen.

    I appreciate your help, but please, break it down.

  10. @Chris,
    That’s crazy! I don’t think anyone can self appoint themselves as Trustee. I think someone either creating the trust, or the beneficiary of the trust can set up the appointment. Trust law is complex for sure, but I think they file a lot of papers to create an illusion of right when if you know how a Trust is created and administered, you’d find out they ‘can’t do that!’.

    A breach of trust happened long before this property stealing began. Someone, somewhere setup a trust and then created all these Trustee relationships we know nothing about. We end up ‘representing’ the beneficiary’ but we don’t have the benefits of a beneficiary and we should be the beneficiary by birth right. I was reading the other day someone called a ‘breach of trust’ with the Trustees and demanded the rents from the use of their estate while they were ‘presumed dead’ from the way this system has benefitted some and oppressed others.

    If this is true, it may take a while to get the leech off the system. I mean sucking the life out of the host is what leeches do. You can’t say, ‘Leech, it’s time for you to get off, oh and by the way there is no other host for you to suck the life out of so you gonna die.’ The leech is not going to want to hear that…it may do a number of things to the host before it lets go…that’s for sure.

    Well leech, this host plans to survive and you are no longer welcome to take, take, take, and not give back, so you have to go. We want you gone. Please leave peacefully, as while you were leeching off of us we were peaceful.

    @Nancy Drewe,
    Wow, that’s some piece of work you posted. I got half way through and lost my focus, so I’m going to make sure I see what you are telling us in the post. Thanks for the details.

    Trespass Unwanted, Corporeal, Life, Sovereign by Divine Right, A Free and Independent State, a Free People, In Jure Proprio

  11. @Chris,

    I understand your strategy. Keep yourself covered regardless. Those guys can be really, really vicious and have no soul.

    Question… You may want to look it up.

    Apparently, you’re dealing with a lowlife crook. I would suspect that you are not the only one to have, if that guy handles foreclosures. Have you considered checking all the cases in your state in which he was representing the plaintiff servicer, looking up the kinds of result he has obtained, zeroing on defense attorney(s) who beat him at his own game and contacting him/them to see whether it would be possible to start a class action/petition with the bar againt that A.H.?

    Just a thought but, at this juncture, I’m afraid that’s all I have to offer.

    The reason I am asking is that, more and more, attorneys are going after other attorneys… I like that. I like that very much. And it always carries more weight when attorneys go after their own…

  12. @ Enraged

    You are correct, but I don’t want to stir the pot, just yet. If I leave him in play I can use the information and documents against him, at least that’s my plan. If I stir the pot now, I may run the risk of getting the “illegal” things he did, in the name of the servicer and he, the Plaintiff/Attorney/rustee, cleaned up. He’s dug a whole…he needs to hold onto the shovel, he’s going to need it, so he doesn’t suffocate in the whole.

    Complaints will be made, with documentation, all in time. I have found in this process, one needs to pay attention, verify, document and wait! Strategy and timing is just as important as the case. Thoughts?

  13. I would like to bounce this approach off anyone who cares to answer it. Rip it apart, add to it, polish it up, explore if this approach, from a tactical point of view, holds any merit for the defendant., or am I trying to reinvent the wheel?

    Assuming that discovery has already taken place in a CONTESTED foreclosure case, a Plaintiff ultimately files a motion for summary judgment,

    Once the defendant receives notice that the plaintiff has filed their summary motion, the defendant likewise files a summary judgment of their own.

    By filing their motion, they (plaintiff) are saying in effect to the judge, that no more issues of material fact exist, therefore, the judge should rule in their favor.

    At the hearing for summary judgment, the judge hears both motions at the same time. Civil Procedure dictates that the plaintiff speaks first.

    They state their reasons why the judge should rule in their favor and finish by saying there are no more issues of material fact your honor.

    Before the judge rules on plaintiff’s motion, defendants object and say there are several issues of material fact still remaining your honor, the defendant’s then present strong evidence or a convincing argument challenging the plaintiff’s motion. (Rule has it that the judge MUST rule in favor of the defendant if there is the slightest possibility that genuine issues of material fact exist.)

    Before ruling, the judge now hears the defendant’s motion for Summary Judgment.

    The defendants simply say to the judge, your honor, counsel for the plaintiff just stated that there are no more issues of material fact remaining in their motion. Therefore your honor, THE PLAINTIFF HAS BY THEIR OWN ADMISSION, NO ISSUES OF MATERIAL FACT SUFFICIENT ENOUGH TO CHALLENGE THE DEFENDANT’S MOTION FOR SUMMARY JUDGMENT.

    If I am correct, this tactic has effectively used the plaintiffs own admissions against them and used them to support the defendant’s own motion for summary judgmemt.

  14. ACTIVE TRUST
    A TRUST WHERE THE TRUSTEE IS HELD ACCOUNTABILE FOR ADDITIONAL RESPONSIBLITIES. IN RESPECT TO CONTROL OR MANAGEMENT OF TRUST, COLELCTION OF RENT, PROFKITS, AND SALE PROCEEDS, ADMINISTRATION OF TRUST PROPERTY, AND PASSIVE TRUST, TRUSTEE PERFORMS NO ACTIVE DUTIES. SO HOW SCARY IS THE FOLLOWING? A TRUST IS A RELATIONSHIP WHERE THE TRUSTOR ‘YOU ARE THE HOMEOWNER TRUSTOR IN ALL REAL ESTATE DEALS WITH TRUSTEE’. THE TRUSTEE HOLDS TITLE, YOU HOMEOWNER/TRUSTOR VESTED TO AGENT ANOTHER PERSON, THE TRUSTEE, THE RIGHT TO HOLD TITLE TO A PROEPRTY AND ASSETS FOR BENEFICARY. ARE YOU IMPAIRED? OR ARE YOU UNINFORMED? WHAT DETERMINES CONCEALMENT ? WHERE THERE IS AN ORGANIZED GROUP NATIONWIDE OF AGENTS, DEALERS, DISTRIBUTORS, BROKERS WHO TAKE POSSESSION OF PROPERTY FOR UNKNOWN THIRD PARTIES THROUGH DECEPTIVE ACTS, AND CONGESS PROVIDED CIVIL REMEDY FOR SUCH CONCEALMENT. ST. GERMAINS – IN THE EVENT THE REAL LENDER BECOMES AWARE THAT THE ‘REAL BORROWER’ TRANSFERRED OWNERSHIP THE REAL LENDER MAY IGNORE OR ACCELERATE THE TITLE. A RESTRICTION TO YOU HOMEOWNER/TRUSTOR IS THE REAL BORROWER WITHHELD ANY RIGHT TO NEGOTIATE, AND WITHELD RIGHT TO SELL LOAN TO THRID PARTY.
    THE REAL LENDER MAY CALLTHE FULL BLANCE DUE UPON SALE OR TRANSFER OF OWNERSHIP OF THE PROPERTY.
    The “due on sale” (aka “acceleration clause”) is a provision in a mortgage document that gives the lender the right to demand payment of the remaining balance of the loan when the property is sold.

    It is a contractual right, not a law. This means that if title to the property is transferred, the bank may (or may not), at its option, decide to “call the loan due.”

    ACTUALLY ITS THE ‘DUE ON SALE CLAUSE’ BANKS INSERTED DURING THE 1970’S THAT CAUSED THE SAVINGS & LOAN COLLAPSE. FOR THE FIST TIME IN OUR HISTORY THE US TREASRY UNABLE TO MEET OBLIGATION OF CREDITORS ALLOWED PRIVATE TRUST FUNDS, SUCH AS ‘VARIABLE INVESTORS TRUST FUNDS’

    PRIVATE EXCHANGES OF DEFAULT REAL ESTATE ASSETS DURING TRUSTEE SALES.

    United States Supreme Court case, Fidelity Federal Savings and Loan Association v. de la Cuesta, 102 S.Ct. 3014, (1982), thereafter, Congress passed the “Garn-St. Germain Federal Depositary Institutions Act” (12 U.S.C. 1701-j) which codified the enforceability of the “due on sale” clause, despite state statute or case law to the contrary. Civil Remedry.
    Borrower transfer of Title to third party consumer-homeowner/trustor and grantor – fact is Congress assured that there is no “due on sale” jail, no consumer regulation of the Secondary Market related to predatory lending in all purchase money loans meaning real borrower holds obligation as investor and agreed to sale of mortgage servicing collection rights. There is no one who will help any consumer harmed in secondary market!
    The Agents know that transferring title to a property secured by a “due on sale” mortgage is not illegal. To be “illegal,” you must be in violation of a criminal law, code, or statute. There is no federal or state law which makes it a crime to violate a “due on sale” clause.
    The Mortgage Broker/Banker allows the sale to third party as long as the sale ‘mortgage’ recorded in land records. If the lender discovers the transfer, it may at its option, call the loan due and payable. If it cannot be paid, the lender has the option of commencing foreclosure proceedings

    Are you willing to take a property subject to a mortgage containing a “due on sale” clause ? That is exactly what we all did!

    The Federal Home Loan Bank Board, which was disbanded in 1989 and replaced by the Office of Thrift Supervision, takes the absurd position that the Act only applies to owner-occupied homes. [See 12 C.F.R. 591.]

    However, the clear language of Garn Act specifically states that it applies to residential one-to-four family homes. There is no mention that it must be “owner-occupied.”

    Concealment challenge … would or would not — be in direct conflict with the Congressional statute therefore would probably be struck down in court as being “ultra vires.”

    A land trust is a form of a revocable, living trust which is exempted under the Garn Act. A land trust, like a living trust, is create by two legal documents:

    1.A trust agreement between the creator (called “grantor” in legal terms) of the trust and the trustee that defines the trust arrangement

    2.A deed from the creator of the trust to the trustee

    The trustee holds title for the benefit of the grantor. (In this case, the grantor is also the “beneficiary.”) If you place title to your property into a land trust, you have not violated the “due on sale” (so long as there is no change in occupancy).

    Let’s say that you come across a seller who is willing to give you title to his property. The only “glitch” is that the loan is not assumable because the mortgage has a “due on sale” clause. Here’s the process for getting around it:

    REAL ESTATE MORTGAGE INVESTMENT CONDUIT “REMIC”
    A land trust is a form of a revocable, living trust which is exempted under the Garn Act. A land trust, like a living trust, is create by two legal documents:

    1.A trust agreement between the creator (called “grantor” in legal terms) of the trust and the trustee that defines the trust arrangement

    2.A deed from the creator of the trust to the trustee

    The trustee holds title for the benefit of the grantor. (In this case, the grantor is also the “beneficiary.”) If you place title to your property into a land trust, you have not violated the “due on sale” (so long as there is no change in occupancy).

    Let’s say that you come across a seller who is willing to give you title to his property. The only “glitch” is that the loan is not assumable because the mortgage has a “due on sale” clause. Here’s the process for getting around it: REMIC.

    ‘SELLER’ SIGNS TRUST AGREEMENT WITH YOU AS TRUSTEE OF TRUST AND SELLER ‘TRUSTEE’ NAMED AS BENEFICIARY OF THE TRUST (INDIVIDUAL VARIABLE RIDER/NOTE) SALE OF NOTE TO REMIC C/O AURORA LOAN SERVICES, INC. CONDUIT FOR INDENTURE TRUSTEE, AND OWNER TRUSTEE RELATED TO INVESTORS VARIABLE TRUST FUND (UBS WARBURG, … CREDIT SUISSE…), FOR EXAMPLE. SELLER SELLS ‘TRNASFE’R TITLE TO TRUSTEE (NO VIOLATION OF ‘DUE ON SALES CLAUSE’.
    SELLER SIGNED TRUST AGREEMENT WITH YOU AS BENEFICIARY AND SELLER TRANSFERS TITLE TO TRUSTEE, AND SELLER QUIENTLY ASSIGNS ‘SELLERS’ INTEREST’ UNDER TRUST TO YOU THE INVESTOR, MORTGAGE BROKER/BANKER, SIMILIAR TO TRANSFER OF STOCK IN A CORPORATION, AND THIS ASSIGNMENT IS NOT RECORDED IN ANY PUBLIC LAND RECORD, YOU THE SELLER ‘MOVE OUT’ AND THE INVESTOR MOVES IN, AS BENEFICIARY OF THE TRUST, AND YOUR TRUSTEE MAKES PAYMENTS OT THE LENDER, US WE ARE THE HOMEOWNER/TRUSTOR. WE ARE THE ‘TRUSTEE’ WHO BEGINS MAKING PAYMENTS TO THE LENDER.
    SELLER’S INTEREST UNDER TRUST DOES TRIGGER DUE ON SALE BUT WHO IS GOING TO TELL THE LENDER?

    THE LENDER WILL DISCOVER THE SALE IN ONE OF THREE WAYS:
    1. CHANGE OF NAME ON DEED. WHOSE GONNA TELL IN THE OFFICE OF THE CLERK? THEY JUST RECORD WHAT THE BENEFICARY OF THE TRUST SENDS THEM TO RECORD! OFFICE OF THE CLERK NATIONWIDE MERCHANTILE – DON’T ASK AND DON’T TELL JUST RECORD RECORDS.
    WHERE IS THE NOTICE OF WHAT A COUNTY CLERK RECORDER DOES AS MANDATED BY THE STATE TREASURY? SHOULD THERE BE LEGISLATION FOR ALL STATE COUNTY CLERKS TO RECORD THEIR OBLIGATION TO THE TREASURY AT LEAST?
    WILL THE LENDER NOTICE THAT THE NAME ON THE CHECK IS NOT THE REAL BORROWER? NOT LIKELY SINCE THE SERVICER IS THE BENEFICIARY NOW UNDER AGREEMENT FORWARDS MONIES DUE FOR ‘PORTFOLIO OF MORTGAGE LOANS’ TO THE LENDER.

    WILL THE LENDER NOTICE THE CHANGE OF HAZARD BENEFICIARY? NOT WHEN THE BENEFICIARY IS THE INSURANCE COMPANY’S AFFILIATE!

    IF YOU NOTIFY YOUR INSURANCE CARRIER OF A CHANGE IN INSURANCE BENEFICIARY, THE LENDER, IS ALSO A NAMED BENEFICARY? NO THE ‘SERVICER’ IS THE NAMED BENEFICIARY!
    THE ‘SELLER’ PERCEIVED TO HAVE IMPLEMENTED AN ESTATE PLANNING DEVICE (INDIVIDUAL VARIABLE RIDER/NOTE POLICY) FOR LENDER WHO IS AN INSURANCE BENEFICIARY, AND THE SERVICERS ARE THE BENEFICIARIES OF THE PROCEEDS OF SALE FROM THE REMIC THE ‘HEDGE’ FOR THE SECONDARY MARKET RISK AND LENDER’S ACCELERATION OF TITLE RELATED TO DUE ON SALE CLAUSE.

    LAND TRUST NEW BENEFICIARY IS ASSIGNED, THE LENDER WILL NOT BE NOTIFIED, SINCE THE INSURANCE BENEFICIARY HAS NOT CHANGED. STRATEGY SIMILAR TO TRANSFERRING TITLE DIRECTLY FROM SELLER TO BUYER (CALLED TAKING A DEED ‘SUBJECT TO”). LENDER HAS CONTRACTED WITH ‘SERVICING COMPANY’

    California Association of Realtors contain provisions contemplating a “subject to” transfer. [See, e.g., form LRO-14, Residential Lease with Purchase Option.]

    The Official Utah Division of Real Estate forms also contain provisions for transfers in the face of a “due on sale” provision. [See Seller Financing Addendum to REPC.]

    Form 3248, the “official” real estate contract used by New York Attorneys (jointly prepared by the New York State Bar Association and the New York State Land Title Association), contains a specific paragraph contemplating the buyer taking “subject to” an existing mortgage.

    The state bars have no problem with lawyers helping clients conceal a transfer either. In Matter of Sabato, 560 N.E.2d 62 (Ind. 1990), the court found no ethical problem with an attorney helping a client circumvent a “due on sale” provision using a land trust as described above.

    WHICH LEADS US IN THIS DISCUSSION TO SHERIFF SALE OR TRUSTEE SALE IN WHICH ACCELERATION OF TITLE C/O SERVICER BENEFICIARY TAKES PLACE.

    ORIGINATION OR DEFAULT
    CONSUMERS PERIL AT OWN RISK!
    WARNING LABEL TO BE AFFIXED TO ALL
    REAL ESTATE TRANSACTIONS WITH SERVICER ‘AGENT’ FOR TRUSTEE – THE CONSUMER IN ‘FIDUCIARY RISK’
    FOR THE SALES ESCROW INSURANCE AGENT NATIONWIDE ARE ACTUALLY CONCEALING THEY ARE SELLING AT RETAIL Individual Variable Riders/Notes) attached to deals for unknown third parties. The SERVICER agents, dealers, brokers, distributors do not act in best interest of consumer rather are trained and certified to act in best interests of TRUSTEE.
    Warning: NATIONWIDE ‘STOREFRONTS’ ARE FULL OF SALES PEOPLE WHO ACT AS sales force for Trustee. Real Estate Brokers partner with Sales Agents who get deals approved by TRUSTEES. The Real Estate Broker’s Sales Agent may act independently and is not performing in BEST INTERESTS OF BOTH BENEFICIARIES’ BEST INTEREST – AND I DO MEAN YOU! CONSUMER – YOU DEAL ON THE TELEPHONE WITH A SALES REPRESENTATIVE, AGENT, WHO DEALS WITH THE REAL ESTATE LAWYER IN THE STATE THE PROPERTY LOCATED,
    AND BOTH CLOSE IN SECRET DEALS FOR TRUSTEE, WHO TAKES BENEFICIAL OWNERSHIP AND CONCEALS FROM CONSUMER ‘PURCHASER OF PROPERTY’ ALL ENTITLEMENTS, ENCUMBRANCES, LIENS, RESTRICTIONS OF EXISTING ‘GRANTORS/GRANTEES’ WHO ARE ATTACHED TO PROPERTY FOR LIFE OF LOAN. YOU CONSUMER AS A CO-BENEFICIARY HAVING DONE BUSINESS WITH AN AGENT WHO IS REWARDED FOR SALE OF INDIVIDUAL VARIABLE RIDERS/NOTES, AND MAKES DEAL WITH TRUSTEE WHO ACCEPTS AS COLLATERAL A ‘MORTGAGE’ RECORDED IN PUBLIC DOMAIN AS PLACEHOLDER OF LIEN IN WHICH THE ‘SERVICER’ IS THE ACTUAL OWNER OF THE ‘OBLIGATION’ OF THE ‘COLLECTION RIGHTS’ IN WHICY YOU CONSUMER, YOU PROMISED TO PAY CASH ADVANCES FOR THE INDIVIDUAL VARIABLE ANNUNITY! AND THE MONTHLY BENEFITS ARE HELD IN TRUST? ARE HELD WHERE?
    ASK YOURSELF AND DO THE FOLLOWING. GO OUT AND LOOK AT PROPERTY WITH A REAL ESTATE AGENT, AND LOOK AT REAL ESTATE OWNED PROPERTIES AND PROPERTIES IN FORECLOSURE. DECIDE IF THE SALE AGENT AND REAL ESTATE AGENT HAVE YOUR BEST INTERESTS WHEN THEY GET REWARDED FOR THE DEAL IN WHICH YOU ARE SOLD PROPERTYOWNED BY A THIRD PARTY WHO IS NOT RECORDED IN THE PUBLIC LAND RECORDS. AGENT ACTS ON TTHEIR OWN SELF-INTERESTS TO CREATE LOANS FOR TRUSTEE TO GET REWARDS – CONSIDERATION FOR TRANSACTIONS. THESE SALES AGENTS, ARE PERCEIVED TO BE TREATED LIKE ANY INSURANCE AGENT, WHO RECEIVES MONTHLY STIPENDS FOR ACTIVE CONTRACTS.
    HOW CAN A TRUSTEE’S SALES AGENT SELL NATIONWIDE ‘INSURANCE/LOAN STRUCTRCTURED PRODUCTS’ AND NOT BE LICENSED, CERTIFIED, TO SELL ? THEY HAVE YOU SIGN A BLANK MORTGAGE BROKER CONTRACT!

    Best interests who conceals benefits due homeowner/trustor. risking that the trustee is not achieving the best value for the beneficiary.
    Example: Fund Manager (agent) making more trades than necessary for a client’s portfolio is a source of fiduciary risk, fund manager slowly eroding client’s gains by incurring higher transaction costs than needed.
    ‘SETTLEMENT AGENT’ Servicer handles ‘settlement of trade’ in which actual securities and money are exchanged. Settlement will occur several days after the original transaction. Settlement Agents are responsible for settling the accounts of traders and making the process more efficient. The duites of a Settlement Agent can extend to examining land titles to accuracy, pro-rating property fees for current year of the transactions and interacting with local and state agencies to notify them about the transfer of ownership. Since the funding of escrow related to ‘Structured Products’ in sale of encumbrances, liens, entitlements, restrictions attached to property, the sale conducted in the state the property located by specially certified and trained real estate lawyers who are under contract with Qualified Intermediaries who take possession of real estate property first closing in secret several days prior to consumer signing promissory note, and during default, and during Sheriff Sale repeat the process. e.g. TRUSTEE SALE in JUDICIAL STATES, DEED ISSUED AND RECORDED IN PUBLIC DOMAIN.
    THE DEED EXECUTED
    BY SHERIFF, AUTHORITY THROUGH COURT OF EQUITY, AND SIGNATURE OF JUDGE, WHO IS A REAL ESTATE LAWYER. HAS TO BE IN ORDER TO CONDUCT SALE BACK TO TRUSTEE.

    CONVEYANCER, also known as Settlement Agent, Closing Agent

    The Judge signs the Sheriff Deed and MUST BE A REAL ESTATE LAWYER, one certified to CONDUCT THE SALE OF A STRUCTURED PRODUCT, who Clears Title and sells back to Beneficiary Trustee SERVICER ANYBANK NA ‘REMIC’ who purchases for $100 does business with the SUBSTITUTE TRUSTEE THE SUCCESSOR BENEFICIARY
    WHO WILL SETTLEUP WITH THE TRUSTEE OWNER C/O SERVICER WHO IS THIRD PARTY LENDER IN SECONDARY MARKET.

    WHY IS NO ONE LOOKING BACK FROM POINT OF SHERIFF SALE?

    THE JUDGE ISSUES ADDITIONAL ORDERS WHICH ARE NOT SENT TO ‘DEFENDANT’ WHO HOMEOWNER/TRUSTOR BUT ARE SENT TO ‘DEFENANT’ SERVICER THE OBLIGOR AND PARTY RESPONSIBLE TO PAY THE INDIVIDUAL VARIABLE RIDER/NOTE DURING PERIOD OF DEFAULT AND IS THE BENEFICIARY OF THE TITLE INDIVIDUAL VARIABLE RIDER/NOTE -BENEFITS HIDDEN FROM THE ‘HOMEOWNER/TRUSTOR’!

    THE BENEFICIAL OWNERS ‘SERVICER ANYBANK NA’ REMIC SET UP CREDIT ENHANCEMENT FOR ‘TRUSTEE OWNERS’ IN WHICH THE VALUE OF THE ASSETS ARE PROTECTED AT THE FULL APPRAISED VALUE AND RETAIN POWER TO HOLD REAL ESTATE OWNED PROPERTY FOR ‘DEALERS’.

    SETTLEMENT AGENT
    JUDGE, Court of Equity, completing transaction between a Buyer and a Seller, through the transfer of Securities to the buyer and the transfer of cash or other compensation to the Seller.

    Real Estate professional for buyer conveying selling interest from buyer to seller ensuring orderly transfer of legal title from seller to buyer through the closing process.

    “HERE COMES THE JUDGE” NO LONGER FUNNY … Sorry Flip Wilson… for the Judge does not copy on orders the Defendant the orders to issues proceeds of sale ‘cash settlement’ nor order ending period of settlement.

    ORDER TO DISTRIBUTE PROCEEDS OF SALE (CASH SETTLEMENT OF FUTURES CONTRACT ‘REMIC’ HEDGE BENEFICIAL INTERESTS OF ‘TRUSTEE’ )

    CASH SETTLEMENTS
    PART OF THE UNBUNDLED ‘PACKAGED SECURITIES’
    ‘PROCESS’ WHEREBY ‘SETTLEMENT DATE’ AND ‘SETTLEMENT PERIOD’

    Foreclosure, a process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership of the propertY c/o SALE BY STATE COURT OF EQUITY, AND SIGNATURE OF REAL ESTATE LAWYER WHO DEEDS, ‘CLEARS TITLE’ RECORDING ENCUMBRANCES, ENTITLEMENTS, LIENS, RESTRICTIONS TO ‘SUCCESSOR BENEFICIARY’ ALSO KNOWN AS THE SUBSTITUTE TRUSTEE.

    SHERIFF WARRANTY DEED CLEARS WAY FOR SETTLEMENT OF CASH OVER EXTENDED PERIOD AS AGREEDED TO BY THE SUCCESSORY BENEFICIARY AND BENEFICIARY TRUSTEE SERVICER ‘REMIC’.

    STARTING WITH MISREPRESENATIONS AND WARRANTIES OF ‘SHERIFF SALE’ OF ‘TRUSTEE SALE’
    THE OFFERING OF ‘COLLATERAL’ ATTACHED TO PROPERTY PLACED FOR SALE TRACKED INSIDE SERVICERS PRIVATE EXCHANGES….FOR EXTENDED PERIOD OF TIME

    THE ‘PUBLIC NOTICES’ ARE IN ADDITION, CAPTURED INSIDE THE RECONSTITUTIONAL POOLING AND SERVICING AGREEMENT OF A DEFAULT, AND ARE IN ADDITIONAL TO AGREEMENTS IN CONTRACTS AND PRIVATE EXCHANGES.

    TRUSTEE’S SALE, THE PROPETY IS NOT SOLD DURING THE PUBLIC AUCTION AT RETAIL, INSTEAD, THE
    BENEFICIARY TRUSTEE SERVICER ANYBANK NA ‘REMIC’ SUCCESSOR BENEFICIARY AND ‘TRUSTEE’ SETTLEMENT PERIOD ASSIGNED.

    THE ‘LENDER’ SECONDARY MARKET WILL BECOME OWNER
    WHO IS VESTED WITH BENEFICIAL INTERESTS IN TITLE INCLUDING ENTITLEMENTS OF TITLE, ENCUMBRANCES, LIENS, RESTRICTIONS, FORWARD SOLD TO SUCCESSOR BENEFICIARY

    E.G. DIRECTORS MORTGAGE ASSET CONDUIT DBA ‘WELLS FARGO BANK NA’ DBA PREMIER ASSET SERVICES CO-JOINED WITH LENDERS PROCESSING SERVICES ASSET MANAGERS, AND SERVICER OF MORTGAGE LOAN
    ATTEMPT TO SELL PROPERTY ON ITS OWN THROUGH ‘REAL ESTATE BROKER’ AND ASSISTANCE OF REAL ESTATE OWNER ASSET MANAGER, AND PROPERTIES ARE REFERRED TO AS BANK OWNED, AND THE ‘LENDER’ MAY REMOVE SOME OF THE LIENS AND OTHER EXPENSES IN ATTEMPT TO MAKE RESALE OF PROPERTY TO PRIVATE INVESTORS IN FIRST LIEN MARKET MORE ATTRACTIVE.

    FOLLOWING THE SHERIFF SALE, THE PUBLIC DEED RECORDED ALLOWS THE TRUSTEE TO TAKE OWNERSHIP AND CHANGES STATUS TO NON-OWNER OCCUPIED AND TREATS PROPERTY AS INVESTMENT PROPERTY – EVEN IF COURT CASE IN APPEAL.

    A CHEAPER ROUTE FOR WELLS FARGO BANK NA ‘LENDER’ AND ITS ‘ASSET MANAGERS’ AND ITS BENEFICIARY TRUSTEE IS TO AGAIN DECEIVE CONSUMER AND SELL BACK REAL ESTATE OWNED PROPERTY WHICH IS A SALE FOR DEED WITH HARD MONEY LENDER, AND THE PROCEEDS OF SALE, AND POWER OF SALE, LEAVE TITLE TO PROPERTY CLOUDED, AND SECRETLY THE COURT ALLOWS SALE TO UNKNOWN THIRD PARTY WHO WILL IN THE FUTURE ATTACH BALOON LOAN AFFIXED TO ‘HUD1’ !!!! HOW IS THIS POSSIBLE BUT WITHOUT ‘SHERIFF SALE’ AND JUDGE LOOKING THE OTHER WAY!

    BESPOKE PROCESS

    SHERIFF SALE – NOTICE TO CONSUMER
    BENEFICIARY TRUSTEE SERVICER ANYBANK NA REMIC NEW OWNER RECORDING IN PUBLIC RECORDS UPDATED DEED.
    ALL THAT HAPPENED IS STATE COURT OF EQUTY ‘CLEARED TITLE’ FOR TRUSTEE TO TAKE BACK PROPERTY.

    THE DEED WILL NOT LIST IN ‘PUBLIC’ DOMAIN PRIVATE ‘RECORD OF DEFECTS’ WHICH INCLUDE ENTITLEMENTS, AND ENCUMBRANCES, LIENS, RESTRICTIONS OF PRIVATE EXCHANGES WHICH ARE WET-INK OBLIGATIONS, LOANS AND SETTLEMENTS OF CASH, WHICH ARE ATTACHED TO THE PROPERTY.

    THE JUDGE AND/OR ASSOCIATE JUDGE ACTING AS ‘TRUSTEE FOR STATE’ AND AS ‘REAL ESTATE LAWYER’ UNDER POWERS OF SALE

    BENEFICIARIES
    TRUSTEES
    STATE SELLS PROPERTY TO NEW ‘SUCCESSOR BENEFICIARY’ AND ORDERS ‘CASH SETTLEMENT’

    “same-day settlement” C/O SERVICERS ANYBANK NA ‘REMIC’
    ‘Compliance’ the fund sets the share price

    Closed End
    IPO-Yes; Exchange-traded Yes; SEC Regulated YES; Price Setter Market; Redeemable “NO”; Investment Advisor: Yes

    Compare to UIT IPO – Yes; SEC Regulated YES; Price Setter Market; Redeemable: “YES”; Investment Advisor “NO”

    Compare to HEDGE, IPO Yes or No; Exchange Traded “NO”, SEC Regulated “NO’ Price Setter ‘NAV’; Redeemable YES; Investment Advisor “NO”

    Compare to OPEN END (MUTUAL), IPO NO, Exchange Traded No, SEC Regulated YES; Price Setter NAV; Redeemable YES, Investment Advisor “NO”

    NAV – NET ASSET VALUE
    REMIC FOR EXAMPLE

    you just established a balanced fund and today you issue your first shares to the public. You have published a prospectus stating that you are starting with $100,000,000 in cash. Your starting NAV is easy enough to determine: $100,000,000.

    But tomorrow it will be harder to compute because of two complications:

    First, you will have invested your cash in stocks, bonds and money-market instruments, and you will have to deal with their changes in market price as well as accrual of interest and dividends.

    Second, you will have issued shares, let’s say 1,000,000 of them – and the important number is not NAV itself, but NAV per share, or NAVPS

    CASH SETTLEMENT:
    A settlement method used in certain future and option contracts whereby, upon expiry or exercise, the seller of the financial instrument does not deliver the actual but transfers the associated cash position.

    For sellers not wishing to take actual possession of the underlying cash commodity, cash settlement is a more convenient method of transacting futures and options contracts.

    For example, the purchaser of a futures ‘obligation’ cash settled, rather than being required to take ownership of physical commodity.
    Purchaser pays the difference between the current value price of commodity and the futures price.

    A settlement term in a contract that stipulates that the underlying asset of the contract will not be delivered on the delivery date – rather, the net cash value of the position will be transferred to the applicable party instead.

    Futures Contracts, Cash Delivery’ during which the trade details are entered into the books and records of the trading parties – typically occurs at a later time.

    Cash delivery is exceptional, because all of this happens in the same day settlement. Example: REMIC Closing Date books the current settlement value of future trade

    Rather than deliver underlying commodity (bearer papers) or asset to contract holder, much easier to simply transact net cash value of futures positions instead, allowing INVESTORS to hedge against price changes in underlying asset without having to worry about taking physical delivery. The Settlement Price calulated daily in private index exchanges as well as value of shares of public exchanges such as REMIC’s.

    Cash Settlements
    Seller of the financial insturments does not deliver the actual commodity but transfers the associated cash position.

    AN EXCHANGE – ‘APPROVED DELIVERY FACILITY’
    May be Private or Public
    FINRA and TRACE 2003 forward continued to allow ‘non-disclosure’ of Private Trades

    APPROVED DELIVERY FACILITY GENERALLY ‘BANKS’
    MERCHANT BANKS ‘SETTLEUP’ C/O SERVICERS ANYBANK NA.

    investment companies are considered the instrument of choice for the least sophisticated, and therefore most vulnerable, investors. Investment company distributions must comply with far more oversight than those of any other form of security.

    DERIVATIES
    “BESPOKE CDO’S”
    COLLATERALIZED DEBT OBLIGATIONS
    AND BESPOKE CDOS NO SECONDARY MARKET

    The buyer of a credit swap receives credit protection,
    whereas the seller of the swap guarantees the credit worthiness of the product.

    By doing this, the risk of default is transferred from the holder of the fixed income security to the seller of the swap.

    For example, the buyer of a credit swap will be entitled to the par value of the bond by the seller of the swap, should the bond default in its coupon payments

    e.g. CREDIT SWAPS A swap designed to transfer the credit exposure of fixed income products between parties;

    A substitute for a swap arrangement that is terminated before it matures. A swap may be ended early if there is a termination event or a default. If a swap is terminated early, both parties will cease to make the agreed-upon payments and the counterparty who caused the early termination may be required to pay damages to the other counterparty.

    A replacement swap is likely to have different terms, or interest rates, than the original swap since market conditions usually will have changed. As such, the damages (called “termination payments”) will factor in the difference in interest rates between the original swap and the replacement swap.

    Possible termination events include legal or regulatory changes that prevent one or both parties from fulfilling the contract terms (“illegality”), the placement of a withholding tax on the transaction (“tax event” or “tax event upon merger”), or a reduction in one counterparty’s creditworthiness (“credit event”).

    Failure to pay or a declaration of bankruptcy by either party are examples of default events.

    To give a real-life example, when Lehman Brothers declared bankruptcy in 2008, entities that were involved in swaps with Lehman had to seek replacement swaps

    REVERSE SWAP

    An exchange of cash flow streams that undoes the effects of an existing swap.

    Reverse swaps are used, instead of simply canceling the original swap, because they allow investors to avoid negative tax or accounting implications.

    Reverse swaps also allow investors to mitigate the original risk that they are exposed to upon entering a swap, or to cancel a position if they feel that market conditions will change in such a way as to give the original swap a negative value.

    swaps are private transactions that are traded over the counter, and as such are subject to credit risk.

    These contracts exchange assets, liabilities, currencies, securities, equity participations and commodities.

    They are generally used for risk management by institutions, and are less common among individual investors.

    Packaged securities is the collective term for investment companies, variable annuities and REITS, each of which will be defined and discussed in turn. These, combined with the array of retirement and estate planning accounts recognized by the Internal Revenue Service, comprise the major vehicles available to investors.

    Because the general public tends to not to be as Wall Street-savvy as many experienced analysts who tend to trade exotic instruments, the federal government takes great pains to regulate these popular funds so that unscrupulous traders and advisors do not take advantage of the general public.

    Real Estate Investment Trusts (REITS): these are trusts that hold real estate and must satisfy certain criteria. The REIT must have at least 75% of its assets invested in real estate, cash,government bonds, other REITS or mortgages. It must pay out at least 90% of its annual taxable income, exclusive of capital gains, as dividends to shareholders, must have at least 100 shareholders with concentration of less than 50% of the outstanding shares with five or fewer shareholders and at least 75% of the REIT’s gross income must derive from rents, gains from the sale of real property or mortgage interest. Finally, REITS are generally liquid and trade on exchanges, though some are not.

    Direct Participation Programs (DPPs): these programs allow for the investor to participate directly in the flow-through of tax advantages. Examples are real estate, oil and gas, and cattle programs. Many of these programs are organized as limited partnerships, with the general partner bearing unlimited liability and the limited partners being liable only to the extent of their partnership investment. Some are organized as limited liability corporations (LLC) with similar flow-through benefits. Some large limited partnerships that trade publicly on exchanges are referred to Master Limited Partnerships (MLP).

    Investment Companies: Where assets are pooled and managed professionally.

    Open End Companies (Mutual Funds): shares are purchased directly from the fund either by the investor him- or herself or with the assistance of a representative. When the client sells the shares, they are redeemed through the company. These companies sell shares on a continuous basis, rather than a fixed number of shares. Therefore, a prospectus is always issued to the purchaser. For reasons of strategy, the fund’s trustees may decide to close a fund if it is getting too large and presenting the portfolio manager or management team with difficulty in putting new money to work. Mutual funds invest in fixed income, equity, real estate and cash, as well as combinations of the foregoing, in pursuit of a particular strategy or objective. Funds can pursue a particular investment style, such as small cap core or large cap value. Some funds are characterized as stock picker or ‘go anywhere’ funds that seek opportunities across a broad spectrum of investment types.
    Closed-End Companies (closed-end funds): a type of investment company that issues a fixed number of shares at an initial public offering and trades in the secondary market like a stock. The fund may trade at a premium or discount to its net asset value (fund assets minus liabilities). These funds do not continuously sell new shares. As a result, the prospectus is only delivered to investors at the fund’s initial public offering (IPO). Like their open-ended brethren, closed-end funds invest in various asset classes in pursuit of a particular objective.
    Exchange-Traded Funds (ETFs): operate much like a closed-end fund, but are typically passive, in that the strategies track various indices of specific market and may be purchased on margin and sold short. Their structure effectively minimizes arbitrage opportunities, which means that the premium and discounts to the fund’s net asset value are considerably less. Though most are passive, some funds use derivatives to pursue excess return (alpha), rather than the market return only (beta). Arbitrage opportunities are reduced as they create and redeem shares with the expedient of an authorized participant (AP), a large institutional investor (hedge fund, market maker or broker/dealer).

    i. The AP puts together a securities portfolio matching that of the ETF.
    ii. The AP delivers the securities or creation basket to the ETF and receives a creation unit or large batch of ETF shares based upon its net asset value.
    iii. The AP breaks down the basket into smaller shares, selling them to the public or retaining them.
    iv. Redemption of shares reverses the aforementioned process.

    Unit Investment Trusts (UIT): these have characteristics of both open-end and closed-end companies. The UIT makes an initial offer of a fixed number of shares which, in turn, are used to purchase a portfolio of securities that are not managed, but, rather, held to maturity. The UIT may redeem shares and terminates at some future date. A trustee oversees the portfolio and how it is to be sold. There is no investment management company. There is a secondary market for UITs
    Hedge Funds: these are privately organized investment vehicles (often designed as limited partnerships) that manage publicly and privately held securities and, depending upon the strategy, derivatives. The hedge fund may invest long and short and utilize leverage. Though the regulatory trend has been toward greater disclosure, it is less than that required for more garden variety types of investments, as these funds are offered to accredited investors who must satisfy income and net worth requirements (minimum net worth exceeding $1,000,000 or income in each of the previous two years of $200,000 for an individual or $300,000 for a married couple) and the expectation that earnings will equal or exceed these amounts in the year of investment.
    •Market Directional – This type of strategy takes positions in securities based upon a belief as to the direction of their price.
    •Equity Long/Short: this type of fund both buys securities and sells them short (e.g. borrows money, sells them in the expectation that they decline in price and repurchases them at the lower price). The objective is to capture potential upside in the long position and downside in the short one. One position may offset the other, minimizing losses or preserving some gains.
    •Equity Market Timing: this strategy attempts to time the purchase of securities
    •Short Selling
    •Corporate Restructuring – These funds utilize strategies that attempt to be on the right side of trades that involve securities of companies, in events such as mergers acquisitions and bankruptcy.
    •Distressed Securities: funds purchase severely undervalued securities in the expectation that a re-organization will benefit their value.
    •Merger Arbitrage: when two companies combine, often the shares of the acquired company experience an increase in value, with the expectation that the acquiring company would achieve better results. By contrast, the acquiring company may assume a significant debt burden to acquire the company, which would negatively impact its share price.
    •Event Driven: these funds take advantage of any number of situations involving corporate restructuring, including spin-offs, with a view to selecting the security expected to benefit from the restructuring.
    •Convergence Trading
    •Fixed Income Arbitrage
    •Convertible Bond Arbitrage
    •Statistical Arbitrage
    •Relative Value Arbitrage
    •Opportunistic – These funds, by design, look to take advantage to earn alpha (the excess return over what the market yields) or beta from whatever opportunities present themselves.
    •Global Macro: one of the better know and more highly publicized strategies, global macro funds invest in equities, fixed income and currencies across the globe, looking to take advantage of favorable conditions in different markets.
    •Fund of Funds (FOF): this is a fund that contains several hedge funds with varying strategies. The FOF utilizes tactical asset allocation among the funds to select the ones whose strategies are apt to outperform and exit those expected to deliver a mediocre performance.
    Private Equity: refers to securities that are privately purchased and not publicly traded. The four common strategies subsumed under this rubric are the financing of start-up companies known as venture capital, public companies repurchasing all of their stock to become private with the assistance of leverage known as leveraged buy outs (LBOs), a mix of private debt and equity financing known as mezzanine financing (a type of bond with an equity sweetener such as a warrant), and investment in troubled private companies known as distressed debt investing.

    Principal Protected Securities (PPS): a structured product, PPS offer returns from a basket of equities and have a fixed term of five to seven years, after which they return principal and gains. In this sense, they resemble a bond. The PPS caps returns in exchange for protection of principal. The caps vary by PPS and employ options, stock futures and zero-coupon bonds that mature simultaneously with the PPS to secure return of principal.

    Structured Products: given their complexity, it is not surprising that scholars and practitioners may offer differing definitions of what constitutes a structured project. In general, they are designed to utilize techniques to create a bespoke process to meet funding, liquidity, risk transfer or other needs of the asset’s owner, when an off-the-rack product cannot. Such transactions typically involve some combination of interest rate and credit derivatives in a separate entity that a financial institution uses to satisfy tax, accounting or risk transfer objectives. A wide ranging treatment of these instruments is beyond the scope of the Series 7 exam. What follows is a list of some of the more common structured products.
    •Interest rate derivatives: options, caps, floors, swaps, futures and forwards.
    •Credit derivatives: credit default swaps, asset swaps, total return swaps.
    •Securitization: collateralized debt obligations (cash flow and synthetic),
    •Credit-linked notes and structured notes.
    •Project financing

    According to a 1940 Act of Congress, an investment company is an issuer primarily engaged in investing in securities, then issuing certificates in shares of the portfolio of securities it has acquired. The investment company invests the money it receives from investors on a collective basis, and each investor shares in the profits and losses in proportion to his or her interest in the investment company as a whole. The performance of the investment company will be based on, but not identical to, the performance of the assets it owns.

    There are three types of investment companies:

    Closed-end funds
    Open-end funds, more commonly known as mutual funds
    Unit investment trusts (UITs)
    Closed-end funds
    These funds generally do not continuously offer their shares for sale. Rather, they sell a fixed number of shares in an initial public offering, after which the shares typically trade on the NYSE or Nasdaq.

    •The price of closed-end fund shares that later trade on a secondary market is determined by the market and may be greater or less than the shares’ net asset value (an important term that will be defined soon).

    •Generally, closed-end fund shares are not redeemable: in other words, a closed-end fund is not required to buy back its shares from investors upon request.

    •Some closed-end funds, commonly referred to as interval funds, offer to repurchase their shares at specified intervals.

    •The investment portfolios of closed-end funds usually are managed by separate firms, known as investment advisors, that are registered with the SEC.

    •Closed-end funds are permitted to invest in a greater amount of illiquid securities – ones that cannot be sold within seven days – than mutual funds.

    •Because of this feature, funds that seek to invest in markets where the securities tend to be more illiquid are typically organized as closed-end funds.
    Open-end Funds (Mutual Funds)
    A company that pools money from many investors and purchases stocks, bonds, short-term money market instruments and other securities.

    •Investors buy mutual fund shares from the fund itself or through its broker, but cannot buy the shares from other investors on an exchange.

    •The price investors pay for mutual fund shares is the fund’s per share net asset value (NAV) plus any shareholder fees the fund imposes at purchase, such as sales loads.

    •Mutual fund shares are redeemable, meaning mutual fund investors can sell their shares back to the fund or to its broker at their approximate NAV, minus any fees the fund imposes at that time, such as deferred sales loads or redemption fees.

    •Generally, mutual funds sell their shares on a continuous basis, although some funds will stop selling when they become too large.
    The investment portfolios of mutual funds, like those of closed-end funds, typically are managed by investment advisors registered with the SEC.

    Unit investment trust companies are a hybrid of open- and closed-end funds. Like mutual funds, UITs typically issue redeemable securities. However, like closed-end funds, UITs typically make a one-time public offering of a fixed number of shares which are known as units

    Many UIT sponsors maintain a secondary market that allows owners of UIT units to sell them back to the sponsors and other investors to buy UIT units from the sponsors.

    A UIT will have a date when the UIT will terminate and dissolve; this date is established when the UIT is created.

    However, there is no set lifespan that applies to all UITs, and some may take more than 50 years to terminate.

    In the case of a UIT investing in bonds, for example, the termination date may be determined by the maturity date of the bond investments.

    When a UIT terminates, any remaining investment portfolio securities are sold and the proceeds are paid to the investors.

    A UIT does not actively trade its investment portfolio: rather, it buys a relatively fixed portfolio of securities and holds them with little or no change for the life of the UIT.

    Because the investment portfolio of a UIT generally is fixed, investors know what they are investing in for the duration of their investment.

    Investors will find the portfolio securities held by the UIT listed in the UIT’s prospectus.

    A UIT does not have a board of directors, corporate officers or an investment advisor to provide advice during the life of the trust.

    Exchange-Traded Funds (ETFs)
    ETFs are investment companies that can be legally classified as either open-end companies or UITs.

    •ETFs differ from traditional open-end companies and UITs because, by SEC orders, shares issued by ETFs trade on a secondary market and are only redeemable in very large blocks (for example, blocks of 50,000 shares).

    •ETFs are not considered to be, nor are they permitted to call themselves, mutual funds.
    The following articles contain useful information about ETFs, from the different varieties to choose from, to their benefits and how they are created:

    •Introduction to Exchange-Traded Funds
    •Advantages of Exchange Traded Funds
    •An Inside Look At ETF Construction
    Exclusions
    Some types of companies that might initially appear to be investment companies may actually be excluded under federal law.

    Private investment funds, sometimes called hedge funds, have no more than 100 investors or their investors all have a substantial amount of other investment assets. These funds are not considered investment companies, even though they issue securities and are primarily engaged in the business of investing in securities.

    Series 7 – Packaged Securities

    Tutorials Investopedia:
    1. Getting Started1.1 Introduction
    1.2 Explore Your Options
    1.3 Getting Your Foot In The Door
    1.4 What FINRA is Testing
    1.5 Series 7 Exam Format
    1.6 Important Series 7 Terms
    1.7 Calculating Simple and Compound Interest
    1.8 The Time Value Of Money
    1.9 Basic Statistical Concepts
    1.10 Covariance
    2. Risk and Tax Considerations2.1 Introduction
    2.2 Investment Risk (Part 1 of 2)
    2.3 Investment Risk (Part 2 of 2)
    2.4 Stock Classification Risks
    2.5 Income and Taxation
    2.6 Tax Considerations
    2.7 Foreign Securities and Taxation
    2.8 Wash Sales and Substantially Identical Securities
    3. Equities3.1 Introduction
    3.2 Equity Terminology
    3.3 Common stock
    3.4 Types of Stock
    3.5 Dividends and Stock Splits
    3.6 Preferred Stock
    3.7 Other Equities
    3.8 Determining Gains and Losses
    3.9 Shares from Conversion
    3.10 Direct Participation Programs (DPPs)
    3.11 Special Products
    4. Debt Securities4.1 Introduction
    4.2 Corporate Bonds
    4.3 Retiring Corporate Bonds
    4.4 Bond Ratings
    4.5 Government Debt
    4.6 Treasury Bonds
    4.7 Agency Bonds
    4.8 Treasury STRIPS
    4.9 Collateralized Mortgage Obligations (CMOs)
    4.10 Yield
    4.11 Computing T-bill Discount Yield
    4.12 Accrued Interest
    5. Municipal Securities5.1 Introduction
    5.2 Issuing Munis
    5.3 Muni Pricing
    5.4 Muni Taxes
    5.5 Determining Muni Suitability For Clients
    5.6 Long Term Munis
    5.7 Short Term Munis
    5.8 Special Munis

    Section 6 to 10
    6. Packaged Securities
    6.1 Introduction
    6.2 Investment Companies
    6.3 Unit investment trusts (UITs)
    6.4 Other Types of Investment Companies
    6.5 Compliance
    6.6 Net Asset Value (NAV)
    6.7 Dollar Cost Averaging
    6.8 Mutual Fund Management
    6.9 Types of Mutual Funds
    6.10 Mutual Fund Distributions
    6.11 Variable Annuities
    6.12 Purchasing Variable Annuities
    6.13 Valuing a Variable Annuity Contract
    6.14 Real Estate Investment Trusts (REITS)

    7. Retirement Accounts
    7.1 Introduction
    7.2 Individual Retirement Accounts (IRAs)
    7.3 Types of Employee-Sponsored Plans
    7.4 Other Retirement Plans
    7.5 Federal Estate and Gift Tax
    7.6 Custodial Accounts

    8. Derivatives
    8.1 Introduction
    8.2 What Are Options?
    8.3 Trading Options
    8.4 Calls and Puts
    8.5 Closing Transactions
    8.6 When To Exercise An Option
    8.7 Graphical Interpretations for Calls
    8.8 Graphical Interpretations for Puts
    8.9 Option Positions
    8.10 Option Styles
    8.11 Spread Option Strategies
    8.12 Straddle Option Strategies
    8.13 Other Options Strategies
    8.14 Long Term Equity Anticipation Securities (LEAPS)
    8.15 Index Options
    8.16 Other Options
    8.17 Tax Treatment of Options

    9. Securities Markets
    9.1 Introduction
    9.2 Self-Regulatory Organization (SROs)
    9.3 Prohibited Activities
    9.4 Rules Regulating SROs
    9.5 Primary Market
    9.6 Registration
    9.7 Blue Sky Laws and the Securities Act of 1933
    9.8 Regulation A & D
    9.9 Secondary Offerings and Shelf Distributions
    9.10 Primary Market for Bonds
    9.11 The Securities Exchange Act of 1934
    9.12 Over the Counter (OTC) Markets
    9.13 The Currency Market
    9.14 The Securities Investor Protection Corp. (SIPC)
    9.15 The Federal Deposit Insurance Corporation (FDIC)
    9.16 The Business Cycle
    9.17 Economic Indicators (Part 1 of 2)
    9.18 Economic Indicators (Part 2 of 2)
    9.19 Keynesian Theory
    9.20 Monetarist Theory
    9.21 The Federal Reserve Board
    9.22 International Economic Factors

    10. Customer Accounts
    10.1 Introduction
    10.2 Types of Brokerage Accounts
    10.3 Other Types of Accounts
    10.4 The Prudent Man Rule
    10.5 Opening a Brokerage Account
    10.6 Opening a Retirement Account
    10.7 Important Account Rules
    10.8 Closing Accounts
    10.9 Margin Accounts
    10.10 Managing Margin Accounts
    10.11 Margin Account Calculations
    10.12 Stock Price Changes and Margin Requirements
    10.13 Purchasing Additional Shares On Margin
    10.14 Special Memorandum Account
    10.15 Short Sales
    10.16 Market Value of a Short Position
    10.17 Plus Tick Rule
    10.18 Costs And Fees Associated With Investments
    10.19 Required Disclosures

    Section 11 to 14
    11. Determining Customer Objectives11.1 Introduction
    11.2 Client Income Statement
    11.3 Client Balance Sheet
    11.4 Financial Considerations
    11.5 Determining A Client’s Risk Tolerance
    11.6 Questions To Ask Your Client
    11.7 Investment Objectives
    12. Portfolio Management12.1 Introduction
    12.2 Diversification
    12.3 Capital Asset Pricing Theory
    12.4 Security Market Line
    12.5 Capital Market Line (CML)
    12.6 Securities Analysis
    12.7 Market Indexes and Averages
    12.8 Technical vs. Fundamental Analysis
    12.9 Technical Analysis
    12.10 Fundamental Analysis
    12.11 LIFO and FIFO Valuation of Inventory
    12.12 Depreciation
    12.13 Ratio Analysis
    12.14 Mutual Fund Analysis
    12.15 Municipal Bond Analysis
    12.16 Revenue Bond Analysis
    12.17 Sources of Information
    13. Securities Transactions13.1 Introduction
    13.2 Types of Securities Orders
    13.3 Filling and Confirming Orders
    13.4 Executing Trades
    13.5 Settling Transactions In The Secondary Market
    13.6 Settlement Rules
    13.7 Record Keeping
    14. Rules and Regulations14.1 Introduction
    14.2 Requirements for Registration
    14.3 Reporting Outside Business Activities
    14.4 Investment Advisors
    14.5 Exceptions to IA Registration
    14.6 Registering As An Investment Advisor
    14.7 Standards for Public Communications
    14.8 Options Disclosure Document
    14.9 Municipal Security Advertising Standards
    14.10 Investment Company Product Advertising
    14.11 Political Contributions
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  15. @Chris,

    I think those guys need to be simply disbarred!!!!!

  16. @ Trespass Unwanted

    I have a servicer, Plaintiff, who is trying to foreclose, with their attorney, who assigned himself, Trustee and transferred the rights to proceeds of the note to himself “as a party in interest”, into his own company,while the party enabling the possible sale works for the servicer and the attorney and the notary works for the attorney and with a Federal Case in process, went to the District Court to get an order from a judge to foreclose. Nice behavior…I think these guys need to get some remedial classes in the law.

  17. funny.
    The servicer is the named mortgagee (beneficiary) on my Deed of Trust from a refinance over 7 years ago.It just so happened the servicer (beneficiary) went away and another servicer (not named, not a beneficiary, not assigned to the trust) wanted to take it’s place. Without an assignment to a new beneficiary, the prior beneficiary abandoned the trust. The property within the trust was not assigned to another beneficiary.

    The Trustee was continuing to administer a voidable trust as there was no beneficiary. Without a beneficiary no one could administrate the trust for anyone’s benefit, it needed to be dissolved and the property conveyed back to the Grantor.

    The Trustee was there for the benefit of the beneficiary who basically didn’t want the asset and the Trustee can’t just assume the role of beneficiary because you can’t be trustee and beneficiary of the same trust.

    The beneficiary was not around to appoint another trustee, and this trustee could not appoint himself the beneficiary nor appoint another trustee.

    It would be interesting if the Trustee sought out the new servicer to figure out a way to pass the assets of the trust forward rather than giving the assets back to the Grantor of the Trust who was called the Borrower but was also the one who Granted the property into the trust in the first place.

    A new servicer without assignment assigned a substitute trustee, (something they can’t do because they didn’t have the right…you can’t convey a right you don’t have), and the mess got messier.

    So I can see where the author is coming from, but it brings into question, when I refinanced, how did the servicer get between me and the original lender. I got my original loan papers back showing the loan obligation was paid in full, but the refinance was with the servicer who also eventually folded, dissolved, or went away by some means.

    Trespass Unwanted, Corporeal, Life, Sovereign by Divine Right, A Free and Independent State, a Free People, In Jure Proprio

  18. Yes….it is cool. MERS shut Ocwen out in 2008 (I think) for non-payment of hundreds of thousands of dollars in owed fees, Ocwen filed suit! Ha, Ha, Ha…bitches (no offense anyone)!

    Right now, I have 2 Federal Suits pending, 1 at Ocwen and the other @ New Century…I am gathering information to file a claim on the title insurance…what my hope is, they deny the claim (sounds stupid, I know) stating why and do an investigation yielding any and all results of title matters, that I can acquire, as part of my discovery, which is very difficult to get from the parties. I’ll try another approach. Everything has some value. Then, I am thinking about filing a suit against, the errors and omissions insurer from the Ocwen attorney (haven’t figured out how yet and if it is doable), for forgery, fraud,etc…trying to get my ducks in a row, all the eggs in 1 basket, is a limited outcome.

  19. chris- you must be referring to Scott Anderson. Nye Lavalle identified 42 variations of Anderson’s signature, there is a link over at 4closurefraud, I think. Also, in MERS v. OCWEN, it was stated in the complaint that Scott Anderson was the ONLY person at OCWEN authorized to initiate foreclosures. The mers v ocwen suit was about ocwen owing mers about $700k for processing fees or whatever, and ocwen retorting that the fees were due to unauthorized persons signing things- how about that?!

  20. @ Sal

    Not directed at you, but MERS is not, I repeat not, the party who assigned my note. IN my possession I have forgeries, by a man claiming to work at or have an interest in New Century, VP of MERS, VP of Loans Department @ Ocwen, US Bank, and Chase all around the same time frame. Federal Judge Shack, NY went after him and demanded his W-2’s or 1099’s, which were never produced.

    I am so damned angry at the lies, still being promoted. The AG’s have given the banks a free pass, get-out-of jail free card. I thought the taxpayer’s paid the AG to represent them, not a private corporation? Am I wrong here?

  21. Hey NancyDrewe- these posts could be dynamite if I could figure out what a Service Mark was.

  22. They are not trying to hide the fraud anymore? See service mark of ‘Bank of America’

    MORTGAGE TO LEASE

    Word Mark MORTGAGE TO LEASE
    Goods and Services IC 036. US 100 101 102. G & S:
    Financial services, namely,
    loss mitigation services for under- or
    non-performing mortgage loans
    Serial Number 85541223
    Filing Date February 13, 2012
    Owner (APPLICANT)
    Bank of America Corporation
    CORPORATION DELAWARE
    100 North Tryon Street
    Charlotte NORTH CAROLINA 28255
    Attorney of Record Randel S. Springer
    Type of Mark SERVICE MARK
    Register PRINCIPAL
    Live/Dead Indicator LIVE

  23. In order to have a colorable claim, the mortgage servicer plaintiff must be entitled via separate agreement with its principal to enforce the debt owner’s property rights and interests provided to the debt owner by the note and lien instrument. A mortgage servicer may have possession of the genuine note, but it is never an owner of the property rights and interests the note is supposed to evidence and represent. The note was stripped and denuded of those property rights and interests when they were irrevocably assigned to a pool in order to capitalize a securities offering.

    Revised UCC Article 9 contains a series of provisions that broadly expand the property rights and interests that may be assigned, regardless of anti-assignment language in contracts or other state statutes. These rules are not limited merely to restrictions prohibiting an assignment. They also override restrictions that permit assignment only with the consent of a third-party obligor or with restrictions that simply declare that assignment will constitute a default. The party that takes the right to collect via a distinct assignment of the lender’s inherent collection right in lieu of a negotiation and conveyance of the whole and inseparable loan contract is not a successor to the lender under the terms of the mortgage instrument. Likewise, the party that takes the lender’s inherent right to payment via a distinct assignment of the lender’s beneficial interests in lieu of a negotiation and transfer of the whole and inseparable loan contract is not a successor to the lender under the terms of the mortgage instrument. Both parties are considered partial assignees provided for in UCC article 3-203(a). A partial assignee is never a mortgagee and this is the real reason why MERS was created. MERS acts as a lien holder strawman, or bailee, whereas otherwise the lien would be vanquished due to these distinct property assignments. MERS allows the lien to survive these intangible property assignments and it placated the ratings agencies whereby they granted AAA status to the MBS offerings.

    The servicing agreement is never attached as an exhibit to the complaint because if it ever saw the light day, it would reveal that the defendant’s payments were being remitted by the servicer for the benefit of a party lacking contract privity with the defendant and that the contract holder is not an aggreived party nor did it suffer default. Neither the servicer or its principal have contract privity with the defendant. The contract holder has executed UCC article 9 assignments of its property rights and interests for the benefit of strangers to the loan contract whereby the note it possesses is a carcass or relic of the property rights and interests it used to evidence. Proof of this is contained within the notice of servicing transfer whereby it should state that the “right to collect” has been sold, assigned or transferred. The “right to collect” is a property right of the lender provided by debt ownership, it doesn’t just appear out of thin air. That property right is required to be reported as a distinct loan asset on the mortgage servicers balance sheet. Ask yourself how the servicer can report the “right to collect” as a distinct loan asset and also claim to report the note as a distinct loan asset.

    Blank endorsements act as a smoke screen for these distinct article 9 assignments and any endorsement exhibited on the note in favor of a mortgage servicer is bogus because all the property rights and interests of the debt owner were not transferred with the conveyance of a whole and inseparable loan contract. The “right to collect” was stripped and assigned to the servicer separate and independant from the loan contract. Section 20 of the lien instrument provides that these property rights and interests can be assigned independent and separate from each other. Section 13 grants the lien binds and benefits the lender’s successors and assigns (except under the circumstances provided for in section 20). Taken together, the mortgage instrument grants the lien only transfers with a conveyence of the real property and not an assignment of the lender’s intangible property rights and interests. Under Florida law, contracts are construed in accordance with their plain language, as bargained for by the parties. see Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000).

    The foreclosure complaint filed by the mortgage servicer plaintiff is an in rem action in equity to enforce a mortgage instrument not an in personam action at law for enforcement of a note for money damages see, Sun Trust Mortgage v Fullerton FLWSUPP,1612, (6th Circuit Court, Pinellas County, Oct 2009). Be advised only the mortgagee or anyone authorized in writing by the mortgagee may accelerate the debt and file a lawsuit to foreclose on the mortgage because of the Florida Statute of Frauds Title XLI.

    The servicer doesn’t qualify as an entity entitled to enforce the note and mortgage because it doesn’t have contract privity with the defendant. An entity lacking contract privity with the defendant is not the mortgagee nor can it grant or convey a higher status to another than what it possesses. A simple pre foreclosure QWR asking for the name of loan investor will reveal the servicer’s principal but not substantiate the principal is the note owner and holder. Thereby, a written agreement with a substantiated note owning principal granting the servicer administrative authority to enforce the lien instrument must be attached to the complaint. FL R Civ P 1.130(a) provides in pertinent part “All bonds, notes, bills of exchange, contracts accounts or documents upon which action must be brought or defense made, a copy thereof or a copy of the portions thereof material to the pleadings must be incorporated in or attached as an exhibit to the complaint.”

    #1 The defendant is predjudiced in its ability to raise certain defenses without attachment of the written servicing agreement as an exhibit to the complaint.

    #2 When provisions contained within exhibits are inconsistent with the plaintiff’s allegations of material fact as to whom the real party at interest is, such allegations cancel each other out. Fladell v Palm Beach County Canvassing Board 772 So 2d 1240 (FL 2000), Greenwald v Triple D Properties, Inc. 424 So 2d 185, 187 (FL 4th DCA 1983)

    #3 In Florida, prosecution of a foreclosure action is by the owner and holder of the note see Your Construction Center Inc. v Gross 316 So 2d 596 (FL 4th DCA 1975) Florida is a fact pleading State and plaintiff’s failure to plead and show competent evidence it or its principal is both owner and holder of the note renders the complaint fatally defective on its face.

  24. The confidential report to Fannie May regarding the accusations made by Nye Lavelle was leaked on the internet a few days ago. It is an eye opener. The link to the whole document is below and I quoted the section regarding the Servicer’s standing to foreclose below.


    CONFIDENTIAL – ATTORNEY-CLIENT PRIVILEGE

    REPORT TO FANNIE MAE
    REGARDING
    SHAREHOLDER COMPLAINTS
    BY MR. NYE LAVALLE
    OCJ CASE NO. 5595
    BAKER & HOSTETLER LLP

    May 19, 2006

    E. Servicers Standing to Foreclose
    While MERS took the brunt of the public criticism for false affidavits, servicers’ counsel were the ones representing MERS and filing the false statements. There is no reason to believe they are acting any differently when representing servicers directly.66 The legal issue of whether servicers have standing to bring foreclosures also is unresolved, although there are more precedents supporting servicer standing.

    Fannie Ma e ‘ s position is that servicers have a beneficial interest in the mortgages they service, the servicing rights.67 When borrowers remit their fees to servicers each month, the servicers forward most of the payment to Fannie Mae, the owner or trustee of the notes, but they also receive a portion of the payments as their servicing fee. Fannie Ma e ‘ s position is that ownership of servicing rights is a sufficient interest to give servicers standing to bring foreclosure actions.68

    At least one court has found specifically that a mortgage servicer has standing to foreclose. Fairbanks Capital Corp. v. Nagel, 289 A.2d 99 (N.Y. App. Div. 2001) (servicer had standing to sue based on the trustee’s delegation of authority over the mortgage). Bankruptcy
    court precedents also support the servicer. (In re Raymond C. Q.K. T.N W Tainan, 48 B.R. 250 Bankr. E.D. Pa. 1985) (servicer in its capacity as representative for collection purposes of
    Fannie Mae was a real party in interest); Greer v. O’Dell, 305 F.3d 1297 ( l1th Cir. 2002) (credit card servicer was a real party in interest).

    Mr. Lavalle, nonetheless, suggests that foreclosures could still be unwound because an indispensable party, the owner of the promissory note, was not a party to the action.
    Three cases from lower courts do not resolve the issue, and therefore the accuracy of pleadings is particularly important to avoid misleading borrowers and the courts. Fannie Mae is entitled to
    take the legal position that MERS or servicers have standing to sue, provided the pleadings clearly set forth the facts.

  25. @Scot,

    My point all along!!!!!!!!!!!!

    If bank A, who “owned” a $200,000 note, is ready and willing to transfer/assign it to bank B for a measly $10, the only possible conclusion is that, at some point in time before that, bank A got the remaining $199,990 from somewhere/someone else. Otherwise, how did bank A decide on a $10 transfer value? Based on what? Where is the accounting? Did bank A eeny-meeny-miny-moe, rock-paper-scissor?

    Now, if bank A decided on the $10 BEFORE having received anything more on that $200,000, bank A is obviously run by absolute morons who have no business whatesoever being in the banking industry. Further, bank A employs accountants who have no business whatsoever being in the accounting business. In short, bank A has absolutely no qualifications to operate anything other than one of Gingruch’s kiddie janitorial seedy operations (and even then, I’m not so sure…)

    The fact that no one, and I mean absolutely no one, wants to hear that most elementary question, let alone attempt to answer it, is simply revolting and insulting to any quarter-brain out there. If there is one question to pound on over and over and over, it is eaxctly that one: what was the consideration?

    Plaintiff: I own the note
    Def.: You do? How did you acquire it?
    Pl.: It was assigned to me via transfer.
    Def.: By and/or from whom?
    Pl.: From ABC trustee (or CDF servicer, or whatever)
    Def.: In exchange for what?
    Pl.: What do mean?
    Def.: What did ABC trustee (or CDF servicer, whatever applies) get in exchange for “transferring” to you a $200,000 note?
    Pl.: I don’t understand what you are looking for.
    Def.: What consideration did you give or pay ABC for a note valued, in your opinion, at $200,000? Would any business transfer to you something valued at $200,000 for nothing? Are you saying that you never paid anything to get the transfer/ownership of something allegedly valued at $200,000? Are you saying that ABC simply took something it owned, valued at $200,000, and simply GAVE IT TO YOU FOR FREE? That you never paid one cent for it? That it was a GIFT to you?

    (Defendant, winking at jury: “Is it any surprised then that bank A had to be bailed out to the tune of of 87 billions?”

    Def,: This is a very valuable gift if you paid nothing for it. Don;’t you have a legal obligation to report it to the IRS? Was it reported to the IRS?

    Etc., Etc.

  26. tnharry, you are correct, the UCC allows the transfer of notes endorsed in blank but transfer and redeeming are 2 completely different animals. Also if you are going to claim legal standing to file a foreclosure complaint in court you must also prove damage. Meaning you would also have to provide hard proof as to what you paid for the note / mortgage. I see a lot of mortgage assignment where the compensation is $10.00 plus a valuable consideration or just valuable consideration. This is not good enough. In court one does not assume one must prove beyond a shadow of doubt with cold hard facts. You must show and prove what you paid for the note / mortgage. What was the valuable consideration. If you only paid $10.00 you cannot claim in a court of law you damages were $200,000.00. Your actual damages are only $10.00. If one wished to retain status of holder in due course one must pay due compensation.

    This goes for the whole chain of title. If the originating lender bank A assign the note or mortgage to bank B for the valuable consideration of $10.00 bank B does not obtain the status of holder in due course and bank B could than assign the note / mortgage to bank C for full value of $200,000.00 but the status of holder in due course is not transferred to bank C. If bank C were to file a foreclosure complaint against the homeowner and the homeowner through discovery proved the chain of title was broken bank C would not have a claim against the homeowner but against bank B for not transferring the note / mortgage in good faith. The status of holder in due course stopped with bank A.

    The problem with the alleged securitization process is that the alleged lender on the note and mortgage never funded the recorded alleged loan. (Request a copy of the certified check or wire confirmation that actually funded you loan and this will provide the evidence as to who funded your loan. Your real lender. This is could hard facts. You have to ask the courts to make the banks provide their could hard evidence not assumptions. What did the bank pay for the note / mortgage. The whole chain of title must provide a copy of the check both front and back showing what they paid for the note /mortgage.

  27. Thanks, Matt. Very poignant.

  28. …in blank…anyone can sign it! And what about the assignments and transfers, sales, etc…you can make copies and sell these notes a thousand times, without anyone catching it.

    Where does this shit all end?

  29. @ Ian

    I’m back at contract law; offer, acceptance and consideration?

    I signed papers (offer), I received NO signature of formal acceptance from anyone. Now the consideration was funds transferred to me for the seller, however the caveat here is “who did I get the consideration from”? Was it the broker of the loan? The originator? The person who transferred the funds? The lender (unknown)? The servicer?

    We play the shell game…and for me, we/I have not met the elements of a contract. Who do I have a contract with? That is who I owe!

    Just my $.02

  30. tnharry- the UCC allows blank endorsement. But only if “instrument is dated”. Sorry, but don’t know what UCC number this is under. And that is endorsement in blank of a……negotiable instrument? I’m a bit weak on this, can you quote relevant portions thereof?

  31. from Mr.Stopa:

    “…I realize that some of the arguments being espoused by servicers in foreclosure cases seem unique, and there appears to be an absence of case law setting forth these issues.”

    Yup…all part of their “master plan”…no case law means they win…

  32. @Scot – that’s simply not true. The UCC provides for and explicitly allows blank endorsement. Your solution may provide some degree of clarity, but isn’t a requirement under the law.

  33. I cannot get it any more simpler than my scenario. You have to teach the courts on small step at a time.

  34. @Scott,

    Duh! Goint to the bank with a check made out to John but not endorsed by him and presenting an “allonge” signed by Jack will never, ever allow Scott to get a penny. Likewise for the mortgage note. There is something inherently wrong with “allonges”. I have yet to see one note having been endorsed by so many entities that there was no room left any longer and an “allonge” was rendered necessary.

    We need to go back to the most simple explanation to reach judges.

  35. @Java,

    You bet! But, as any real war, it must be openly declared and it must be sanctioned by Congress. So far, i don’t see Congress having the least interest in taking a stand.

    Too busy wasting our time and money reopening closed cases such as contraception… Insanity turned into an art form.

  36. In non judicial they foreclose quickly with a lost note affidavit. Who cares about something that doesn’t exist

  37. Stopa needs to acknowledge that some jurisdictions allow a thief to foreclose. See eg Horvath in Virginia that holds just that

  38. i have been saying this all along. If a party only need to in possession of a copy of the note and mortgage or assignment to foreclose than why can’t everyone just go to the register of deeds and start printing off notes and mortgages / assignments have the register of deeds certify the the documents as true and correct copies. This way you are not technically lying when you tell the courts that you are the holder of the note and mortgage because certified copies are by statute the same as the originals.

    I don’t care if the note is endorsed in Blank. Pay to the order of ____________. Pay to the order of WHO? Is the question that should be raised. IF YOU WANT TO ENFORCE THE NOTE YOU MUST ENDORSE THE NOTE !!! They Plaintiff must at the very least fill in the blank with their signature. Until the Plaintiff endorses the note the party that actually endorsed the note can lay claim to the note.

    It is not different than if you receive a personal check or a pay roll check. If you want to enforce the check / redeem for cash you must first endorse the check with your signature. If you wish to assign your right to redeem / cash the check to a third party you must first endorse the check with your signature and before the third party can redeem / cash the check they must first endorse the check with their signature. This way if something is wrong with the check or any of the parties that endorsed the check claims foul play the parties and or authorities are able to track the history of the check. Or with a note check the chain of title of the note to verify status of holder in due course not just status of holder.

    IF YOU WANT TO ENFORCE THE NOTE YOU MUST ENDORSE THE NOTE!!!

  39. a catch22 of fraud no matter which way they turn that only trampling over the law will allow them to get away with……ITS WAR

  40. If servicer is authorized agent then please provide proof. If you look to the right on this blog the ARK supreme court MERS ruling talks alot about agency and principal.

    Agent can only act with instructions from the principal.

    I think this is key and Mr. Stopa seems to be making it into a simple and clear argument.

    I would add that these judges seem to fret over whether the homeowner attempted to mitigate losses or applied for HAMP etc.

    I think it would be good for the lawyers to hammer away on the servicer per this agency authorization problem and add that the homeowner could NEVER negotiate avoiding foreclosure with a servicer who was never legally authorized to do so.

    I think this issue goes to the original mortgage contract which has NOTICE provisions for the ‘lender’. The lender/originator NEVER responds to the NOTICE provisions per the contract. I sent the lender a certified letter and it came back address no good.

    I never sent a letter to MERS because MERS never owns anything, etc.

    That leaves the homeowner negotiating with a servicer who is not authorized to negotiate and won’t reveal the trust/true creditor.

    I wonder if the lender is in breach of contract under the NOTICE provision per the mortgage contract. The lender does not owe the borrower forebearance/modification etc per the contract but they owe the borrower a valid point of contact.

    You could now argue with the OCC consent orders, HAMP, and TARP etc they now owe atleast potential review for forebearance etc.

    I would love to be able to show that the servicer was never authorized to collect payments all along.

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