The Neglected Auction Process as a Vehicle for Voiding Bank Title to REO Property

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After doing a lot of research and analysis on the subject to foreclosure auctions and credit bids I have arrived at several conclusions. The result is that I believe there are multiple causes of action against the “Substitute Trustee” (often with forged fabricated documents and the original trustee whose passive stance allowed the wrongful foreclosures to occur. There may well be an action in mandamus against the recording offices that maintain property records showing the mistaken title to the REO property and potentially a federal action for deprivation of civil rights in the event the state court grants relief.

Let’s start with the original trustee on a Deed of Trust. According to the legislative history of using the “power of sale” the Trustee on the deed of trust is inserted to replace the court, so that the due process rights of the homeowners could be protected. Until the 1990’s the trustee, in the event of impairment of the collateral or non-payment of the loan, would receive an instruction from the lender to sell the home according to the power of sale included in the deed of trust. The Trustee, acting exactly the same as a court would review the papers.

Seeing that the lender was the payee on the note, the lender was the beneficiary under the deed of trust, and receiving adequate assurances that the note was still payable to the lender, but the borrower had been unable or unwilling to make the scheduled payments, the Trustee was perfectly safe in issuing the required notice of default or the notice of sale. The foreclosure process would be considered launched and the borrower in Arizona for example, would have up until the day before the scheduled sale to file a Motion for Temporary Injunction, citing reasons why the sale should not proceed. Normally any defect in legal description or any allegation of payments being improperly implied would get the borrower some time, and a hearing as to whether there was any truth to the allegations. Thus the Judge would have issued a Temporary restraining order and conducted a hearing on the merits to determine if the temporary injunction should become permanent.

Assuming the Court found no merit to the borrower’s allegations, the Judge would then issue an order permitting the lender and trustee to go forward with the sale of the property. And this is where the rubber meets the road.

Up until the 1990’s the date and time of the auction would be set and while there might be communication between the lender and the trustee prior to the auction the property was sold only at the time, date and place posted on the notice of sale as required by local statutes. If the lender was $100,000, they were allowed to bid $100,000. If they wanted to bid more than $100,000 then they needed to pay cash to the trustee. If anyone other than the lender wished to bid, they could only pay in cash. A Trustee’s deed upon foreclosure is issued to the highest bidder and the deed from the trustee carries a heavy presumption of validity. The foreclosure shown in the chain of title would be no cloud, defect or question of marketability of title. Any third party purchasing the property from the bank or lender was and could be assured that title was clear and that the title insurance was real, viable, enforceable and effective. In other words the new buyer could have maximum confidence that title was clear and that he owned the property as a result of the lender’s sale to the new buyer.

The sale cannot be private. Yet today, virtually all original trustees are fired and a new or “substitute trustee” is named in place of the old trustee because of the right of the beneficiary to change trustees any time they want. But we have seen that the substitutions of trustee are virtually all robo-signed, fabricated, forged and fraudulent documents which means that the original trustee is or should be considered the trustee under the deed of trust. The acts of the “substitute trustee” are therefore void and constitute a private sale — exacerbated by the fact that most “substituted trustees” are either owned directly by the new party claiming to be the lender or beneficiary or operated by a consortium of banks and servicers who answer only to the party claiming to be the new lender or beneficiary.

Thus neither the original trustee on the deed of trust nor the substitute trustee perform any review or due diligence to match up the lender shown on the promissory note, the beneficiary shown on the deed of trust, and the new parties claiming to be lenders, creditors and servicers pursuant to documents that were never disclosed much less signed by the borrower.

The key role of the trustee has been inverted by the illegal substitution of trustee and the acts and process that followed. If this practice is allowed by state court, then the appropriate action would be a civil rights action against the state allowing the power of sale to be used without confirmation of the parties, the amount due, and the identity of the creditor, the lender, and the beneficiary.

In theory the power of sale does not violate the due process requirement of a fair hearing before the property can be taken because there are provisions allowing the borrower to object and a Trustee who acts as General master to at least confirm the bear essentials of a valid foreclosure. BUT IN THE ABSENCE OF SUCH REVIEW, THE BORROWER’S OBJECTIONS ARE OBVIATED AND THE PROPERTY IS TAKEN WITHOUT A FAIR HEARING ON THE MERITS. As applied in this case any statute allowing the power sale would be unconstitutional if it removed the Trustee and inserted the mortgagee or beneficiary.

Research or consultation with any expert in property and/or constitutional law would result in unanimous corroboration of what has been described above. submitted in the wrong order to the wrong parties. The problem with the auction is the same as the problem with securitization — in most cases it doesn’t legally or actually exist. It doesn’t legally exist because the wrong documents were submitted to the wrong party. It doesn’t actually exist because the transaction never took place (no money or property actually changed hands) regardless of what is recited on any of the fabricated documents, forged under a robo-signing or “surrogate signing” process after the documentation was fabricated out of thin air and then recorded — now with the full knowledge and cooperation of county recorders whose offices have been cheated out of millions of dollars in filing fees.

So here are the problems.

  1. The use of a faulty, forged, defective, forged substitution of trustee, recorded or not, means that there was no legal substitution. In most cases this cannot be cured because the loan originators named on the origination papers are long gone, which is why the banks and servicers started the illegal document fabrication mills.  In my opinion, the original trustee should be sued for damages and sued for an entry of a mandatory injunction requiring the original trustee to assume the duties of the trustee, which would include voiding all transactions and documents performed in the name of the substitute trustee.
  2. The use of a faulty, forged, defective, forged substitution of trustee, recorded or not, means that there was no legal substitution. In most cases this cannot be cured because the loan originators named on the origination papers are long gone, which is why the banks and servicers started the illegal document fabrication mills.  In my opinion, the substitute trustee should be sued for damages and sued for an entry of a prohibitive injunction requiring the substituted trustee to stop any and all actions undertaken by them as Trustees under the deed of Trust and a mandatory injunction requiring the substituted trustee to file disclaimers in the records of all such foreclosures and chain of title appearing in the title registry of the recording office which would include voiding all transactions and documents performed in the name of the substitute trustee. An action naming the the title registrar might be required to comply with the court’s order.
  3. Even if the substitute trustee was real or joined with the original trustee the actual facts and behavior at and before the auction are wrongful, illegal and potentially criminal. In most cases trustees show up at the auction with a statement that they have already received a credit bid from the “lender” in excess of the value of the property, thus eliminating any competition and since the arrangement was made before the scheduled time of the auction it constitutes a private sale.
  4. But the most egregious defect in the auction comes from the exercise of common sense which is shown under the law and statutes. All such auctions must be a sale to the highest bidder or else the borrower is potentially still liable or possibly entitled to excess proceeds once the accounting is done. Since the actual bidder is not an actual creditor, the logical interpretation would require either that the sale never legally took place or that the borrower is entitled to the proceeds or outcome of the sale which would be the home or the value of the home.
  5. However there is no such accounting and despite the laws that clearly state the terms upon which one may submit a bid, these statutory requirements are routinely ignored. Without any proof or even submission to the trustee, substituted or otherwise, a stranger to the borrower’s transaction is allowed to buy the property not for cash, but for the value or amount due under the borrower’s obligation. In other words, your  Aunt  Sally can go to the auction and submit papers to the trustee that are totally false and then submit a “credit bid” on any property that the trustee calls for auction and where the bank, servicer or their attorney fails to show or otherwise create an appearance.
  6. Aunt Sally could become rich very quickly buying property without cash and the use of a little elbow grease creating false documentation. If the trustee received the papers from someone looking like a lawyer and sounding like they were an authorized agent or representative, they probably would get away with it — simply because the substitute trustees are all low paid clerks ordered by the pretender lenders to question nothing. What is one more pretender lender, more or less in a sea of fraudulent documents? What stops the average Joe from gaming the system in the same way the banks and servicers are gaming the system?

Nothing in this article should be construed as legal advice with respect to your property or any other property. Before taking any actions at any auctions or any other legal proceeding you should consult the services of legal counsel who is licensed in the jurisdiction in which the property is located.

For more information on auctions and credit bids, especially under the laws of the state of California, please see —-> foreclosure_bidding strategies

17 Responses

  1. GOD BLESS EACH ONE OF YOU PEOPLE!!! Many people complain about how our Top Government Officials, Law Enforcement agencies, Court Judges, public workers at our counties recorders office that are co-participants of the greatest fraud committed against the citizens The People of United States of America, that originated by inflation and ended with deflation as declared by one of our Presidents and Founding Fathers Thomas Jefferson:
    “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered…I believe that banking institutions are more dangerous to our liberties than standing armies… The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
    SO THANK YOU FOR ALL OF YOU THAT HAVE TAKEN YOUR TIME TO SHARE ALL OF THE ABOVE INFORMATION, EXPERIENCES, SINCE THIS SHOWS THAT THE REAL HEROES ARE NOT THOSE WHO PRETEND TO HELP PEOPLE, BUT THOSE WHO ARE REALLY DOING SOMETHING TO STOP THIS REPUGNANT ABUSE OF THE RIGHTS OF THE PEOPLE AND THAT VIOLATES ALL PRINCIPALS OF THE LAW OF THE LAND, OUR CONSTITUTION. Please be aware that the platform for the new cycle of inflation is already set… and as i have been sharing for the last couple of years with some of my friends the majority of them attorneys is that what is about to take is a way of justifying a war, and we are either going to have a major terrorist attack or something similar to justify a new War, which creates the spark of the flame for inflation, ( about this this there is so much to share and explain) and then again around 2017-2020 there will be another new financial crisis just like it happened back in 2005-2008 and prior to that 1994-1997. So once again thank you for your posts and thank you on behalf of many to the owner or creator of this blog.

    my email address is: angel@mielexecutives.com, for any of those that have information in how to execute an objection of the substitution of trustee in the most proper and effective way. or for any of you that needs any assistance or help in regards to access to property information and research.

  2. @ Shelley A. Erickson

    Your contact info did not work. I took what looked to be the extra “i” out of work, but still no go. Please repost, or you and anyone else may reach me at jim@jdcunningham.com

    I’d be happy to post up the petition here, if someone would tell me how. 😎

  3. @ Jordana Lipscomb- In many counties robo-signers record by just emailing forged docs. to county-recorders who never even see them!!

  4. evoldog1234
    I wrote to Sam Olens twice about the foreclosure fraud. Remember he was the one who campaigned on the promise to prosecute the banks? Then shortly after election no more mention of criminal charges. Somebody got to him. Could you email me a copy of your filing? thanks. jamaclaypod@comcast.net

  5. In one California county, I checked several random Substituions of Trustee recorded and signed by CalWestern Reconveyance (CWR) on behalf of National City Mortgage in 2008. I found out that most of them were postdated to the day (+- 1-2 days) when the Notice of Default was issued; however, recording did not take place for a couple of months after NOD was issued. Also, in many of them, CWR signed as trustee when it was not a trustee of record. The pattern is the same. I almost choked when the first record I pulled had no NOD recorded prior to Notice of Trustee and Trustee’s Deed. The sale was obviously defective, and the owner most likely does not even know that.

  6. Thanks, E. Tolle. I was hoping for a different result too–at least a trial on the merits. At least for the judge to consider my arguments and evidence. But, alas, it was not to be. So I will be publishing my arguments and evidence on a blog very soon so others can use it. Or not.

  7. Massive waives of complaints would get attention. Complain about our AG’s and the fraudclosure attorneys for the banks. Breach of Oath of office, violation of mandated 18USC2,3,4 statutes and treason and embezzelment of property. All officers of the court, which are all attorneys and judges and most likely the AG’s are mandated to be loyal first to the court and justice and to report fraud not enable it.

  8. @ zurenarrh, really bummed to hear your result. You’ve been around here a very long time. I was really hoping to hear a different ending.

    evoldog1234, I hope you kick some serious butt. Good going and good luck. Keep everyone informed, please.

  9. I dont trust the bar either but look at this. Everyone whom has a gripe about an attorney for the banks and any attorney that has not done their job for you should be turned in- in every state to the bar. For non compliance with 18USC 2,3,&4 and breach of oath of office and breach of contract if they allowed yours to go unargued or were not licensed. Remember there are good attorneys and bad judges Just because you did not win does not mean the attorney was bad. In that case the judges are officers of the court and should be turned into the bar also.
    http://stopforeclosurefraud.com/2012/04/11/tsunami-of-foreclosure-complaints-swamps-fla-bar/
    At the same time show support for the good judges and great attorneys. They need our support.

  10. evoldog 1234, that is great, wish I had the knowledge to file against our Washington AG, as pro se. I want to really bad. Let me see your brief also. Shelleystotalbodyworiks@comcast.net. Our government official should not be allowed to get away with this outrageouis behavoir. In State of Washington V RECONTRUST found on the web Rob McKenna states the statutes that allow him to file against the foreclosers. He has the ability to help Americans and has betrayed Americans.

  11. @evoldog1234,

    That sounds pretty daring. Please do keep us posted. Dying to see the outcome.

  12. evoldog1234…you did not leave any contact info.
    E-mail me eddarsom@gmail.com

  13. evoldog,
    Go for it! That is some serious mojo. I wish you the very best–it’s clear that these “courts” we have are simply not doing their jobs at the very least and at worst are actively involved in the fraud along with the banks.

  14. I and two co-plaintiffs have recently filed a state action in GA against the gov, lt. gov., AG, sec of state, legislative counsel (lawyer for the general assembly) and the general assembly, all in both their pers and prof capacities; for mandamus/prohibition, oath of office, state due process, declaratory judgment, impeachment, damages, injunctive relief, color of office, color of law, misprison of felony and fraud.

    Mand/prohibition to compel AG to compel all superior court clerks to review all docs filed for ‘improper attestation” and to void any not properly attested to.

    The GA supreme court sent a certified question to the N. Dist. of GA LAST YEAR, that was ruled on I believe March 25, 2011. The dist court UNAMBIGUOUSLY ruled that any docs not legally attested to as required by law – a/k/a robo-signing – are not legal recordings – PERIOD. So, all this time, the courts have been supposedly wrestling with so called robosigning, and for a whole year, there has been an applicable federal ruling declaring same to bee a clear violation of law.

    Also mandamus to compel the gov, lt gov, ag and sec of state to ENFORCE THE LAWS ON THE BOOKS – all have falsely claimed to have no jurisdiction to enforce our laws, and because we have no “pertinant forreclosure fraud legislation” on the books – which is bullshit – how did the AG find jurisdiction to sign a consent order relative to violation of those very laws he claims to not have jurisdiction to enfore?

    Case # 2012CV213083 filed in Fulton County Superior Court in GA.

    We will be filing a companion fed action, and it may be merged with another we are working on which deals with civil rights.

    As soon as we get it “shrunk down” I’ll post up the lawsuit – otherwise, I suppose you can get it with lexisnexis.

    All of the actionable conduct, at the least, is violation of oath of office, which at the least should yeild impeachment, and maybe jail time.

    Our goal is, at a minimum, to impeach and remove all from office and force them or their replacements to perform their constitutionally mandated ministerial duties, with as many as possible thrown in jail.

    We welcome all verifed pieces of evidence of fraud/forgery, etc.

  15. Try #5 to leave a comment – this is getting old

  16. And now for the ‘twist’ in all of the “Ameica’s Wholesale Lender Corporation” loans that I’ve seen: there is a specific clause in the later pages of the Deed of Trust that is on the sole topic of the substitution of the trustee. It sets out that ONLY the LENDER has the right to substitute the trustee. It even specifies that there shall be NO OTHER METHOD allowed to do so. The LENDER was also identified as being that ‘AWL’ CORPORATION.

    Now, “Ameica’s Wholesale Lender Corporation” did not exist back at the time of the origination of these mortgages.

    CountryWide was claiming to be only the servicer. Only upon supposed default does it come to light that CW supposedly securitized these loans. They can not properly claim to be the successor in interest because they never formed the AWL Corporation and someone else did so later on. CW only has d/b/a’s that they TRY to convince some judges are sufficient. The judges who have not been bought and are awake do not buy into that crock.

    So, with the loans showing NO relationship with CountrWide, there is no place on just about all of them where the “CountryWide D/B/A America’s Wholesale Lender” shows up, CW should have no easy way of claiming to be the successor. Normally they will try that D/B/A anyway.

    So, with a LENDER that did not exist, yet a DOT that says only the LENDER can name the SOT, when the servicer uses MERS to generate the SOT anyway, the SOT needs to be attacked. Besides, AWL Corp did not have a membership in MERS. No accord can possibly exist that lists who is allowed to sign as the nominee for AWL Corp.

    Oh, and another thing about that DOT: The document states that the LENDER is to be the one that declares a DEFAULT has occurred. It does indicate the servicer can act at the direction of the LENDER, but since the LENDER is not even around to do that necessary determination of the DEFAULT, how can the servicer be acting at the direction of that LENDER?

    How can the SERVICER show any relationship with a loan that states the LENDER was a particular corporation but the specified corporation did not exist when the document was originated?

    Other than the smoke and mirrors with the D/B/A that is not on the document anywhere (court cases verifiy this), how can this mess be white-washed as simply document ‘defects’?

    CW BENEFITTED by keeping these loans and pledging them at the Fed window while also collecting from the investors. Most likely, there was also a heafty ‘fee’ charged to the investors for the loans that CW ‘acquired’ from the supposedly ‘outside’ brokerage ‘firm’ America’s Wholesale Lender Corp.There HAD to be some big chunk of cash that CW collected on when they originated these loans with the improper name for the LENDER. They had lost on foreclosure cases already due to the named lender yet the continued to originate in that ‘AWL’ Corp name.You can not convince me that hundreds of thousands of loans were poured out of CW with the wrong name of the LENDER without some BIG monetary gain to CW for the risk of the loans they already KNEW they were taking on with regard to loans they would not be able to foreclose on due to that intentional defect.

    I just wish someone would dig into this last facet and expose it. The investors would raise a stink and the attention would be brought that these loans are not ones that CW and BofA should be able to have securitized.

  17. I’ve been trying for months now to think of a way in which I could illicit the help of the county recorders of the offices in which I have located robosigned and forged documents with the names of notorious robosigned and examples of evolving signatures. This tactic will only work in jurisdictions with non- judicial foreclosures and action must be brought by aggressive attorney office in that jurisdiction. Please contact me for the information I’ve collected on various robosigned at Wells Fargo in county recorders offices throughout the US. I could simply send these to the recorder and bring the discrepancies to his/her attention, but I’d rather provide it to an attorney who can file this case. My email address is jordanalipscomb@gmail.com and I would love to assist.

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