CA Trial Court Upholds Claims for Improper Assignment, Accounting, Unfair Practices

Editor’s Note: In an extremely well-written and well reasoned decision Federal District Court Judge M. James Lorenz denied the Motion to dismiss of US Bank on an alleged WAMU securitization that for the first time recognizes that the securitization scheme could be a sham, with no basis in fact.

Although the Plaintiff chose not to make allegations regarding false origination of loan documents, which I think is important, the rest of the decision breaks the illusion created by the banks and servicers through the use of documents that look good but do not meet the standards of proof required in a foreclosure.

  1. I would suggest that lawyers look at the claim and allegations that the origination documents were false and were procured by fraud.
  2. Since no such allegation was made, the court naturally assumed the loan was validly portrayed in the loan documents and that the note was evidence of the loan transaction, presuming that SBMC actually loaned the money to the Plaintiff, which does not appear to be the case.
  3. This Judge actually read everything and obvious questions in his mind led him to conclude that there were irregularities in the assignment process that could lead to a verdict in favor of the Plaintiff for quiet title, accounting, unfair practices and other claims.
  4. The court recites the fact that the loan was sold to “currently unknown entity or entities.” This implicitly raises the question of whether the loan was in fact actually sold more than once, and if so, to whom, for how much, and raises the issues of whom Plaintiff was to direct her payments and whether the actual creditor was receiving the money that Plaintiff paid.  — a point hammered on, among others, at the Garfield Seminars coming up in Emeryville (San Francisco), 8/25 and Anaheim, 8/29-30. If you really want to understand what went on in the mortgage meltdown and the tactics and strategies that are getting traction in the courts, you are invited to attend. Anaheim has a 1/2 day seminar for homeowners. Call customer service 520-405-1688 to attend.
  5. For the first time, this Court uses the words (attempt to securitize” a loan as opposed to assuming it was done just based upon the paperwork and the presence of the the parties claiming rights through the assignments and securitization.
  6. AFTER the Notice of Sale was recorded, the Plaintiff sent a RESPA 6 Qualified Written request. The defendants used the time-honored defense that this was not a real QWR, but eh court disagreed, stating that the Plaintiff not only requested information but gave her reasons in some details for thinking that something might be wrong.
  7. Plaintiff did not specifically mention that the information requested should come from BOTH the subservicer claiming rights to service the loan and the Master Servicer claiming rights to administer the payments from all parties and the disbursements to those investor lenders that had contributed the money that was used to fund the loan. I would suggest that attorneys be aware of this distinction inasmuch as the subservicer only has a small snapshot of transactions solely between the borrower and the subservicer whereas the the information from the Master Servicer would require a complete set of records on all financial transactions and all documents relating to their claims regarding the loan.
  8. The court carefully applied the law on Motions to Dismiss instead of inserting the opinion of the Judge as to whether the Plaintiff would win stating that “material allegations, even if doubtful in fact, are assumed to be true,” which is another point we have been pounding on since 2007. The court went on to say that it was obligated to accept any claim that was “plausible on its face.”
  9. The primary claim of Plaintiffs was that the Defendants were “not her true creditors and as such have no legal, equitable, or pecuniary right in this debt obligation in the loan,’ which we presume to mean that the court was recognizing the distinction, for the first time, between the legal obligation to pay and the loan documents.
  10. Plaintiff contended that there was not a proper assignment to anyone because the assignment took place after the cutoff date in 2006 (assignment in 2010) and that the person executing the documents, was not a duly constituted authorized signor. The Judge’s decision weighed more heavily that allegation that the assignment was not properly made according to the “trust Document,” thus taking Defendants word for it that a trust was created and existing at the time of the assignment, but also saying in effect that they can’t pick up one end of the stick without picking up the other. The assignment, after the Notice of Default, violated the terms of the trust document thus removing the authority of the trustee or the trust to accept it, which as any reasonable person would know, they wouldn’t want to accept — having been sold on the idea that they were buying performing loans. More on this can be read in “whose Lien Is It Anyway?, which I just published and is available on
  11. The Court states without any caveats that the failure to assign the loan in the manner and timing set forth in the “trust document” (presumably the Pooling and Servicing Agreement) that the note and Deed of trust are not part of the trust and that therefore the trustee had no basis for asserting ownership, much less the right to enforce.
  12. THEN this Judge uses simple logic and applies existing law: if the assignment was void, then the notices of default, sale, substitution of trustee and any foreclosure would have been totally void.
  13. I would add that lawyers should consider the allegation that none of the transfers were supported by any financial transaction or other consideration because consideration passed at origination from the investors directly tot he borrower, due to the defendants ignoring the provisions of the prospectus and PSA shown to the investor-lender. In discovery what you want is the identity of each entity that ever showed this loan is a loan receivable on any regular business or record or set of accounting forms. It might surprise you that NOBODY has the loan posted as loan receivable and as such, the argument can be made that NOBODY can submit a CREDIT BID at auction even if the auction was otherwise a valid auction.
  14. Next, the Court disagrees with the Defendants that they are not debt collectors and upholds the Plaintiff’s claim for violation of FDCPA. Since she explicitly alleges that US bank is a debt collector, and started collection efforts on 2010, the allegation that the one-year statute of limitation should be applied was rejected by the court. Thus Plaintiff’s claims for violations under FDCPA were upheld.
  15. Plaintiff also added a count under California’s Unfair Competition Law (UCL) which prohibits any unlawful, unfair or fraudulent business act or practice. Section 17200 of Cal. Bus. & Prof. Code. The Court rejected defendants’ arguments that FDCPA did not apply since “Plaintiff alleges that Defendants violated the UCL by collecting payments that they lacked the right to collect, and engaging in unlawful business practices by violating the FDCPA and RESPA.” And under the rules regarding motions to dismiss, her allegations must be taken as absolutely true unless the allegations are clearly frivolous or speculative on their face.
  16. Plaintiff alleged that the Defendants had created a cloud upon her title affecting her in numerous ways including her credit score, ability to refinance etc. Defendants countered that the allegation regarding a cloud on title was speculative. The Judge said this is not speculation, it is fact if other allegations are true regarding the false recording of unauthorized documents based upon an illegal or void assignment.
  17. And lastly, but very importantly, the Court recognizes for the first time, the right of a homeowner to demand an accounting if they can establish facts in their allegations that raise questions regarding the status of the loan, whether she was paying the right people and whether the true creditors were being paid. “Plaintiff alleges facts that allows the Court to draw a reasonable inference that Defendants may be liable for various misconduct alleged. See Iqbal, 129 S. Ct. at 1949.

Here are some significant quotes from the case. Naranjo v SBMC TILA- Accounting -Unfair practices- QWR- m/dismiss —

Judge Lorenzo Decision in Naranjo vs. SBMC Mortgage et al 7-24-12

No allegations regarding false origination of loan documents:

SBMC sold her loan to a currently unknown entity or entities. (FAC ¶ 15.) Plaintiff alleges that these unknown entities and Defendants were involved in an attempt to securitize the loan into the WAMU Mortgage Pass-through Certificates WMALT Series 2006-AR4 Trust (“WAMU Trust”). (Id. ¶ 17.) However, these entities involved in the attempted securitization of the loan “failed to adhere to the requirements of the Trust Agreement

In August 2009, Plaintiff was hospitalized, resulting in unforeseen financial hardship. (FAC ¶ 25.) As a result, she defaulted on her loan. (See id. ¶ 26.)
On May 26, 2010, Defendants recorded an Assignment of Deed of Trust, which states that MERS assigned and transferred to U.S. Bank as trustee for the WAMU Trust under the DOT. (RJN Ex. B.) Colleen Irby executed the Assignment as Officer for MERS. (Id.) On the same day, Defendants also recorded a Substitution of Trustee, which states that the U.S. Bank as trustee, by JP Morgan, as attorney-in-fact substituted its rights under the DOT to the California Reconveyance Company (“CRC”). (RJN Ex. C.) Colleen Irby also executed the Substitution as Officer of “U.S. Bank, National Association as trustee for the WAMU Trust.” (Id.) And again, on the same day, CRC, as trustee, recorded a Notice of Default and Election to Sell. (RJN Ex. D.)
A Notice of Trustee’s sale was recorded, stating that the estimated unpaid balance on the note was $989,468.00 on July 1, 2011. (RJN Ex. E.)
On August 8, 2011, Plaintiff sent JPMorgan a Qualified Written Request (“QWR”) letter in an effort to verify and validate her debt. (FAC ¶ 35 & Ex. C.) In the letter, she requested that JPMorgan provide, among other things, a true and correct copy of the original note and a complete life of the loan transactional history. (Id.) Although JPMorgan acknowledged the QWR within five days of receipt, Plaintiff alleges that it “failed to provide a substantive response.” (Id. ¶ 35.) Specifically, even though the QWR contained the borrow’s name, loan number, and property address, Plaintiff alleges that “JPMorgan’s substantive response concerned the same borrower, but instead supplied information regarding an entirely different loan and property.” (Id.)

The court must dismiss a cause of action for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The court must accept all allegations of material fact as true and construe them in light most favorable to the nonmoving party. Cedars-Sanai Med. Ctr. v. Nat’l League of Postmasters of U.S., 497 F.3d 972, 975 (9th Cir. 2007). Material allegations, even if doubtful in fact, are assumed to be true. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). However, the court need not “necessarily assume the truth of legal conclusions merely because they are cast in the form of factual allegations.” Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003) (internal quotation marks omitted). In fact, the court does not need to accept any legal conclusions as true. Ashcroft v. Iqbal, 556 U.S. 662, ___, 129 S. Ct. 1937, 1949 (2009)

the allegations in the complaint “must be enough to raise a right to relief above the speculative level.” Id. Thus, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'” Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “The plausibility standard is not akin to a `probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. A complaint may be dismissed as a matter of law either for lack of a cognizable legal theory or for insufficient facts under a cognizable theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984).

Plaintiff’s primary contention here is that Defendants “are not her true creditors and as such have no legal, equitable, or pecuniary right in this debt obligation” in the loan. (Pl.’s Opp’n 1:5-11.) She contends that her promissory note and DOT were never properly assigned to the WAMU Trust because the entities involved in the attempted transfer failed to adhere to the requirements set forth in the Trust Agreement and thus the note and DOT are not a part of the trust res. (FAC ¶¶ 17, 20.) Defendants moves to dismiss the FAC in its entirety with prejudice.

The vital allegation in this case is the assignment of the loan into the WAMU Trust was not completed by May 30, 2006 as required by the Trust Agreement. This allegation gives rise to a plausible inference that the subsequent assignment, substitution, and notice of default and election to sell may also be improper. Defendants wholly fail to address that issue. (See Defs.’ Mot. 3:16-6:2; Defs.’ Reply 2:13-4:4.) This reason alone is sufficient to deny Defendants’ motion with respect to this issue. [plus the fact that no financial transaction occurred]

Moving on, Defendants’ reliance on Gomes is misguided. In Gomes, the California Court of Appeal held that a plaintiff does not have a right to bring an action to determine a nominee’s authorization to proceed with a nonjudicial foreclosure on behalf of a noteholder. 192 Cal. App. 4th at 1155. The nominee in Gomes was MERS. Id. at 1151. Here, Plaintiff is not seeking such a determination. The role of the nominee is not central to this action as it was in Gomes. Rather, Plaintiff alleges that the transfer of rights to the WAMU Trust is improper, thus Defendants consequently lack the legal right to either collect on the debt or enforce the underlying security interest.

Plaintiff requests that the Court “make a finding and issue appropriate orders stating that none of the named Defendants . . . have any right or interest in Plaintiff’s Note, Deed of Trust, or the Property which authorizes them . . . to collect Plaintiff’s mortgage payments or enforce the terms of the Note or Deed of Trust in any manner whatsoever.” (FAC ¶ 50.) Defendant simplifies this as a request for “a determination of the ownership of [the] Note and Deed of Trust,” which they argue is “addressed in her other causes of action.” (Defs.’ Mot. 6:16-20.) The Court disagrees with Defendants. As discussed above and below, there is an actual controversy that is not superfluous. Therefore, the Court DENIES Defendants’ motion as to Plaintiff’s claim for declaratory relief.

Defendants argue that they are not “debt collectors” within the meaning of the FDCPA. (Defs.’ Mot. 9:13-15.) That argument is predicated on the presumption that all of the legal rights attached to the loan were properly assigned. Plaintiff responds that Defendants are debt collectors because U.S. Bank’s principal purpose is to collect debt and it also attempted to collect payments. (Pl.’s Opp’n 19:23-27.) She explicitly alleges in the FAC that U.S. Bank has attempted to collect her debt obligation and that U.S. Bank is a debt collector. Consequently, Plaintiff sufficiently alleges a claim under the FDCPA.
Defendants also argue that the FDCPA claim is time barred. (Defs.’ Mot. 7:18-27.) A FDCPA claim must be brought “within one year from the date on which the violation occurs.” 15 U.S.C. § 1692k(d). Defendants contend that the violation occurred when the allegedly false assignment occurred on May 26, 2010. (Defs.’ Mot. 7:22-27.) However, Plaintiff alleges that U.S. Bank violated the FDCPA when it attempted to enforce Plaintiff’s debt obligation and collect mortgage payments when it allegedly had no legal authority to do so. (FAC ¶ 72.) Defendants wholly overlook those allegations in the FAC. Thus, Defendants fail to show that Plaintiff’s FDCPA claim is time barred.
Accordingly, the Court DENIES Defendants’ motion as to Plaintiff’s FDCPA claim.
Defendants argue that Plaintiff’s letter does not constitute a QWR because it requests a list of unsupported demands rather than specific particular errors or omissions in the account along with an explanation from the borrower why she believes an error exists. (Defs.’ Mot. 10:4-13.) However, the letter explains that it “concerns sales and transfers of mortgage servicing rights; deceptive and fraudulent servicing practices to enhance balance sheets; deceptive, abusive, and fraudulent accounting tricks and practices that may have also negatively affected any credit rating, mortgage account and/or the debt or payments that [Plaintiff] may be obligated to.” (FAC Ex. C.) The letter goes on to put JPMorgan on notice of
potential abuses of J.P. Morgan Chase or previous servicing companies or previous servicing companies [that] could have deceptively, wrongfully, unlawfully, and/or illegally: Increased the amounts of monthly payments; Increased the principal balance Ms. Naranjo owes; Increased the escrow payments; Increased the amounts applied and attributed toward interest on this account; Decreased the proper amounts applied and attributed toward the principal on this account; and/or[] Assessed, charged and/or collected fees, expenses and miscellaneous charges Ms. Naranjo is not legally obligated to pay under this mortgage, note and/or deed of trust.
(Id.) Based on the substance of letter, the Court cannot find as a matter of law that the letter is not a QWR.
California’s Unfair Competition Law (“UCL”) prohibits “any unlawful, unfair or fraudulent business act or practice. . . .” Cal. Bus. & Prof. Code § 17200. This cause of action is generally derivative of some other illegal conduct or fraud committed by a defendant. Khoury v. Maly’s of Cal., Inc., 14 Cal. App. 4th 612, 619 (1993). Plaintiff alleges that Defendants violated the UCL by collecting payments that they lacked the right to collect, and engaging in unlawful business practices by violating the FDCPA and RESPA.

Defendants argue that Plaintiff’s allegation regarding a cloud on her title does not constitute an allegation of loss of money or property, and even if Plaintiff were to lose her property, she cannot show it was a result of Defendants’ actions. (Defs.’ Mot. 12:22-13:4.) The Court disagrees. As discussed above, Plaintiff alleges damages resulting from Defendants’ collection of payments that they purportedly did not have the legal right to collect. These injuries are monetary, but also may result in the loss of Plaintiff’s property. Furthermore, these injuries are causally connected to Defendants’ conduct. Thus, Plaintiff has standing to pursue a UCL claim against Defendants.

Plaintiff alleges that Defendants owe a fiduciary duty in their capacities as creditor and mortgage servicer. (FAC ¶ 125.) She pursues this claim on the grounds that Defendants collected payments from her that they had no right to do. Defendants argue that various documents recorded in the Official Records of San Diego County from May 2010 show that Plaintiff fails to allege facts sufficient to state a claim for accounting. (Defs.’ Mot. 16:1-3.) Defendants are mistaken. As discussed above, a fundamental issue in this action is whether Defendants’ rights were properly assigned in accordance with the Trust Agreement in 2006. Plaintiff alleges facts that allows the Court to draw a reasonable inference that Defendants may be liable for various misconduct alleged. See Iqbal, 129 S. Ct. at 1949.

39 Responses

  1. I have a loan that was originated by Americas Wholesale Lender and was assigned on 8/2011 to RBC Equites , then on 11/2011 another assignment from Americas Wholesale Lender to Bank of New York which was robosigned by an individual who has been verified as a robosigner.

    There is a chain of title issue with regards to the assignments , and now Sp Sevicing wants to foreclose.

    Any attorney referrals would be of great help


  2. Not endorsed–Linda DeMartini in Kemp v. Countrywide.

  3. there is deposition testimony that countrywide never and worst notes.
    ????? what

  4. “And worst” should be “endorsed.” I’m out and about, using voice texting to post…not 100% accurate, as it turns out…;-)

  5. dc,

    OK–that is a lot easier to take in. And I think you’re right. It was too much work to endorse all the individual notes. So they just didn’t do it. But when people like me came along and asked to see the endorsements, they kind of freaked out. So they just tried to prosecute the case without endorsement. And then when I finally pinned them to the wall, they decided to forge an endorsement. My originator was countrywide and there is deposition testimony that countrywide never and worst notes.

  6. @ZU

    I think the simplest way to look at it is that there are two levels of assignment: the 1st is assignment en masse of thousands of mortgage loans that occur simultaneously —from the payee [1st mass assignment] to the depositor thence by the depositor [2nd assignment]to the [supposed ] trust to get the mortgage notes receivable off the originator/payee balance sheet ——-obviously indorsement of 17,000 notes cannot occur at once—so in order to make these large trasactions occur on a specific day or in a narrow time frame there must be en masse assignments——-and that is what the securitization documents describe–that is what my experience is where i was involved with splitting up large numbers of accounts and notes receivable during the split up of large companies effective on a date specific.

    at a detail level–or on a scale of transfer of specific legal title–there would be the actual indorsement one document at a time–which frankly i have a hard time envisioning–and i think the securitizers did too–so they simply skipped that step and went with the mass assignments by schedules of loans one line at a time–the sort you see in the sec filings–except the crooked private labels

    i believe that what is reflected here is that UCC never contemplated that there would be securitizations of tens of thousands of mortgage loans —–the system is designed to process one document at a time—or short cut to perform the en masse assignments which were done atypically during corporate reorganizations

    it was so unusual i was assigned the job of researching how to do it in 1981 in context of a giant corporate split up–involving marathon oil and USSTEEL Corporation———–i had forgotten the specifics of the transaction and it sort of came back to me——the securitizations followed the mass assignment methods that we worked out at that time–there was no pattern to follow then—had to make up the methods as we went

  7. dc,
    I’m gonna have to chew on that one for a while. Not because I don’t agree, I just wanna soak it all in!

  8. @ZU
    Yes Zu–you have helped me immensely to pull together these disparate concepts.

    The mechanics of transfer of intangible assets are as follows in the context of intercorporate tranfers. In order to make a bulk transfer for tax and acctg purposes of assets: including real estate, tangible personlty, and intangible property such that depreciation starts to run from a common point in time—and other aspects of ownership shift including ongoing income streams, It is necessary for a party selling the assets in bulk to ASSIGN substantially all of the benefits of ownership –subject to burdens of ownership, usually referring to risk of loss, at a single point in time. This constitutes an equitable conversion or transfer of the equitable title. so the sales contract will describe the assets conveyed generally but list intangibles with specificity. the contract of sale will state that legal title will be conveyed as soon as practicable. The eqyuiatable conversion is effective only if the description is sufficiently clear to enable specific enforcement of the contract to record legal title. Thus I might convey all real estate owned in Missouri —all tangible personal property in arkansas. But intangibles becomes trickier. If I am conveying a portion of a stream of intangible assets such as notes and accounts receivable, then i must describe them very carefully —-all receivables accrued by sales to the listed customers of the following types of inventory—–as of COB January 1

    The conveyance of eqyutable title in intangibles that are redily identifiable is made by listing lengthy printouts and attaching them as exhibits to the sales contract. Thus if i seek to make a contract to convey equitable tile to 17,000 mortgage notes receibanble i must attach a printout with 17,000 lines.

    The conveyance of LEGAL title is accomplished by actually recording deeds to realty and by recording a general deed of conveyance to personalty under the bulk sales laws of a jurisdiction. The personalty description must be sufficient that the tax assessor and creditors can figure it out–leased propert requires affixation of labels to prevent creditors from siezing it if it is commingled with owned assrts–even for desks chairs and computer gear.

    The conveyance of LEGAL title to intangibles is accomplished by filing the SCHEDULE of intangibles with the Secretary of State of the state in which the company has its commercial domicile—–ie headquarters–or if it is a mere holding company the state of legal domicile–the state of incorporation.

    The schedule is filed as part of the UCC bulk assets or financing statement division. the purpose is that there is a place where all the word can examine the list to establish that intangibles are in fact among those conveyed.

    This constitutes the conveyance of intangibles en masse. The individual indorsement of negotiable instruments would follow as time reasonably permits –hence the 60 day rule in the REMIC rules.

    There must be a schedule of intangibles to make either an equitable conversion or a transfer of legal title–the transaction is fully consumated by the act of negotiation.

    The tax law does not contemplate the individual negotiation–the transfer of legal title is made by schedule—filed of record

    Thisstandard is actually described repeatedly in thesecuritization documents—schedule of mortgage loans recorded with SEC in a couple places –schedule of notes recorded with secretary of state of legal domicile and/or commercial domicile.

    The securitization documents typically stated that the notes were to be indorsed in blank–ie bearer paper—which was irrational–they became cash equivalents if that occurred—subject to theft and later presentment to the maker for payment [our problem today].

    What were they thinking?

    The control was of course the schedule on file in SEC and the Sec State office—but barring that —essentially the bearer paper was a mountain of cash in a warehouse –subject to all sorts of improprieties. Thus for purposes of securitization–the key to assuring conveyance–to assuring the trust had a body/corpus–was the schedule —–those entities that did not file schedules were per se frauders. They did not effect a conveyance out of the bankrupt originator—vis the private labels–thats why the bigbanks were careful to make schedules to meet the FASB requirements to get the notes off balance sheet–out of their capital requirements,

    the private labels intentionally sought exemption from electronic filing of schedules with SEC–and then 60% of the time did not file manually–there is one servicer out there that specialized in acquisition of collection rights of these unfiled schedules of notes—-these notes are likely included in multiple trusts–these notes are arbitrarily allocated to different trusts—these may have original notes floating in the possession of frauders—facilitated by this specialized sevicer.———

    In order to do that for a multi-billion dollar enterprise, lawyers will describe the real estate

  9. I have zero experience with this stuff except for my own case. I’m glad you’re able to get something out of our discussion. It’s abundantly clear that the banks did not follow the law and that judges are letting them get away with that. No question about that.

  10. Yes, that’s a little clearer. I think negotiable/non-negotiable affects securitiziation because of who the payee of the instrument is. Of course, the point of an endorsement in blank is to make ANYONE who simply has the note in his hand the payee of the note. That’s negotiation, as I understand it. But if a note is NON-negotiable, then NO ONE BUT THE PAYEE of the note can ever be the payee of the note UNLESS the payee–and no one else–assigns the payments to someone else. And that’s not what is happening, they’re using MERS to do assignments that only payees are legally able to do.

    And yeah, they typically don’t put a schedule of mortgages in the SEC filings. That’s because the securitizations were fake, of course. That way they can, as the need arises, say that a particular note WAS in a trust or that it wasn’t and since there’s no schedule, it can’t be proven either way.

  11. @ZU

    Our discussion is crystallizing my thinking–the difference btween assignment en masse by schedules vs negotiating individually——most people are hanging their hats on the individual negotiation of single notes—whereas im focusing also on the fallback –lack of assignment en mass of the scheduled list of assets—so certainly if there was no mortgage loan schedule there was no creation of a trust—–they are now trying to do basically defective late negotitiations of individual instruments to make up for a more basic generic assignment of assets en masse—–the 1st failure is the greater one–and vitiates the entire trust—-

    im used to transfering assets en masse in corporate transfers–which is what these were really—i had to list the assets in order to make a transfer of beneficial title—–followed up by individual transfers of legal title–now in this case where no loan schedules were made nor filed at the time the trust was established there was no initial transfer of equitable or beneficial title—forget about legal tranfers by negotiation years later out of already bankrupt entities

  12. dc,

    If the collection agency atty made your hypothetical statement, i.e., that the note says, in effect :“I, payee, order/assign the payment of amounts that come due under all of the terms of this instrument to Joe Blow” that would be fine IF it were the actual payee (i.e. the lender named in the note) saying that in an assignment. But in my case (and most, if not all that I have read), it WASN’T the payee/lender doing the assignment, it was MERS, and MERS is always a stranger to the note, which MERS readily admits.

    I think that is the distinction that should be made–the payee vs. MERS. The payee COULD assign a non-negotiable note, but the payees DON’T assign the non-negotiable notes–they get MERS, a stranger to the note and a “nominee” only for purposes of the DOT/mortgage to do the assignment.

    So maybe they could have avoided that IF they had made MERS the “nominee” for purposes of the note and/or mentioned MERS in the note, but they didn’t.

  13. If I understand your above comment correctly, you are saying that banks are saying that securitization makes non-negotiable notes negotiable? I —no im not saying that—-im saying i just dont see how negotiable/nonnegotiable affects securitization other than that negotiation requires supposedly that there be signatures on each individual instrument whereas i think i can list contracts [nonnegotiable notes] and assign the entire group en masse——typical when corporations buy assets of other corps —transfers en masse by assigning a schedule of assets—which is what is supposed to happen in an SEC filing of mortgage loans—and all too often the originators/depositors did not even bother doing that–leading me to conclude i have attempted securitizations—there was no assignment of the notes en masse much less individual note negotiation—is that more clear?

  14. @ZU
    re hypothetical argument before the ct

    if i were the collection agency atty, id say lets look at this “negotiation”

    it says in effect “I payee order the payment of amounts that come due under all of the terms of this instrument to Joe Blow”

    I would then say alternatively the legend could say “I payee hereby assign all of my interest in this instrument or contract to Joe Blow”

    The “negogotiability aspect is exclusively to enable the bearer instrument to have equivalent of cash—–now the question would be: does the law of assignments allow me to assign my interest to an unnamed person? ie does negotiability allow assignment to bearer?

    as far as MERS interest as nominee: hmmmm——-mers is assigning an interest in a mortgage…….supposedly anyway——in many states the mortgage follows the note so —-why could not mers be the assignee in lieu of bearer?

    i think thats really what they were trying to do–in fact the mers nominee mortgages iv seen actually incorporate expressly most of the note–they left out some of the predatory parts teaser rates etc—-but most of its there–i suppose so they could say if negotiability of note was not required then geez the mers assignment of mortgage will cover assignment of note too——-i dont know–the mers business about nominees always has been an anomaly for me—-what is a nominee anyway—anything to anybody–shape-shifter–it is what i want it to be—the path to the future a grand experiment—–and it would be ok to me if only the notes or mortgages or something were actually recorded or listed somewhere–i dont ask for much–just some publicly recorded list that tells me that the party that is demanding the keys to my house be able to point to something that i can verify —so i dont have to worry im turning over my money–my house to a complete frauder–im really not asking for much am i?

    why is this so hard for these financial guys to grasp–for judges –for police—–if i am at risk of multiple claimants why cant i demand verification—what good is all this recording in county courthouses –in sec records–if i cant get that simple question answered—????

  15. dc,
    I hear you, brother–up is down and down is up.

    You said: “I dont have anything in a can that I can look to to review their description of why non-negotiable instruments alter the fact of securitization–do you have something can review or can you quote a piece for all here–im sure im not the only one–well maybe i am–im not sure of anything anymore.”

    Well, Weidner’s is really the only article I’ve read–along with the relevant portions of the pleading he attached to it. The link to that article is below. I think Neil linked to that article and even wrote one a couple years ago about the same subject.

    But what I think really nails the non-negotiable argument is just the UCC language itself. Negotiability is impossible if conditions or undertakings other than the payment of money are present.

    If I understand your above comment correctly, you are saying that banks are saying that securitization makes non-negotiable notes negotiable? I haven’t seen that anywhere. I don’t think the banks would agree that the notes are non-negotiable–until they had to do so in court when confronted with the plain UCC language.

    The banks have basically confused everything, as you point out. They argue one point one minute then the complete opposite of that the next minute and never admit that they’re contradicting themselves. They just muddy the water so much that it’s difficult to unravel what they’re doing. It’s like you have to tell the judge, “Well, they securitized it, but it was impossible for them to securitize it.” Obviously, the judge is like “What the hell are you saying?” And you’re like, “Well, they endorsed the notes and supposedly created trusts and all that, but they really didn’t.” And the judge is like, “Are you confused?” When the judge asked me that, I told him in no uncertain terms that I was not confused at all.

    That probably doesn’t help. I don’t have anything to go off, either–I’m just trying to war-game how a claim of non-negotiability might play out in pleadings and in court. I don’t have any experience with this argument either, but it’s a very clear and simple argument firmly rooted in the law. It’s kind of like “The Purloined Letter”–the answer/solution is right in front of our noses but we just can’t see it or won’t see it.

  16. @ZU
    “As I said below and as I’m sure you know, every PSA/trust indenture/trust agreement/assumption and assignment agreement/etc. I’ve ever read presumes negotiability ”

    I agree–in fact it never occurred to me to question the fact. However, Im still at a loss as to how being “non-negotiable” affects securitization other than to cause a representation as to negotiability to be inaccurate. I confess to ignorance here–not disagreement. Maybe its a nuance that Iv missed in their explanations–I dont have anything in a can that I can look to to review their description of why non-negotiable instruments alter the fact of securitization–do you have something can review or can you quote a piece for all here–im sure im not the only one–well maybe i am–im not sure of anything anymore.

  17. So the essence of the argument is this:

    1. According to UCC, conditions present in the standard FanFred note make said note non-negotiable.

    2. Since said note is non-negotiable, it could be viewed as assignable like any other contract.

    3. However, any assignment of said note would have to executed by the lender named in the note BECAUSE the note is, by law, non-negotiable.

    4. In other words, since the note is by law non-negotiable ab initio, it CANNOT be made payable to blank or to a specified person, even WITH an endorsement.

    5. Therefore, the ONLY person that can assign the non-negotiable note/contract is the lender named in the note, to whom the note remains forever payable because of the note’s ab initio non-negotiable nature.

    6. Therefore, an assignment of said note from MERS is ineffectual and legally null and void, because MERS never has been and never will be the named lender on a promissory note (whether that’s the standard FanFred note or otherwise).

    7. MERS is named the lender’s “nominee” in the DOT/mortgage, not the note and so MERS can never be construed as having any rights to, interest in, or authority under said note.

    8. All legal authorities agree that the note is the principal and “essential” document while the DOT/mortgage is merely an “incident to” the note. Therefore, a lender’s nominee in an incidental document cannot assume or presume to have authority or rights to the essential document.

    9. Therefore, the ONLY way the note could be assigned like any other contract is if the lender named in said note executed the assignment, and this (to my admittedly limited knowledge) ALMOST NEVER happens. It certainly didn’t in my case.

    10. So in the vast majority of cases, the clearly non-negotiable note was not even assigned correctly–and by “correctly,” I mean “legally.” And this can’t be fixed by a new assignment, either, because so many of the lenders named in the notes no longer exist.

    Please poke holes in this and tell me where this doesn’t make sense.

  18. Thinking about non-negotiable some more…

    Let’s say we use that as a cause of action–“Your honor, due to the conditions clearly present in this note, this note is non-negotiable under the UCC.”

    OK, so far so good. The judge says, “OK, you are clearly correct about that.”

    So we go further: “I’m glad to see you following the clear letter and intent of the law, your honor. Therefore, since the note was non-negotiable, it never was nor could it be negotiated from the lender named in the note to FanFred, to any trust, or to any other person.”

    Judge: “Well, that’s true that pursuant to the law it could not be NEGOTIATED. But could it not be assigned?”

    Bank: “Yes, your honor, that was the purpose of the assignment. It is clearly correct to say that the note was not negotiated, it was assigned because the note was in fact non-negotiable under the UCC.”

    So we come back with this–what I think is the real substance of the argument: “Your honor, it is incredibly disingenuous for the bank to now say that this note is non-negotiable and therefore transferable merely by assignment for the following reason: the bank went through all the motions of negotiation, i.e., endorsement, transfer, declaring itself the holder, and so forth.”

    So what does the judge or the bank say to that? This is where it breaks down and gets real. I imagine the judge says, “Well, there certainly is no prohibition in the UCC against taking the extra step of endorsing a non-negotiable note. There is no prohibition against the bank covering all possible bases.” Bank says, “Yes, your honor, that is correct.”

    The only thing I can think of to counter that is something like this: “Your honor, there may not be an express prohibition against endorsing a non-negotiable note, that is true. HOWEVER, (meat of the argument here?) prior to an endorsement or without an endorsement, we would all agree that the note is prima facie, ab initio non-negotiable. Since that is true, endorsement and transfer cannot then make negotiable an instrument that is non-negotiable by its very nature and on its face. In other words, all bases are NOT covered by slapping an endorsement on a non-negotiable instrument. That is to say, a non-negotiable instrument REMAINS non-negotiable regardless of what may be done to it–i.e. endorsement–after closing because the non-negotiability is written into the four corners of the note itself.”

    To me, that is the beauty of the non-negotiability argument because, while the banks can forge and fake assignments and endorsements years after the closing or trust cutoff date, they CANNOT go back and change the language of the note and it is the language of the note which confers non-negotiability on the note.

    Judge: “Well, that is a good point. So the note is non-negotiable no matter what, OK, but why is it not assignable like any other contract?”

    Maybe we say: “Well, your honor, the note was not assigned by the named lender, it was assigned by MERS as “nominee” for the lender. Unfortunately for the bank, your honor, MERS is not mentioned in the note and MERS always specifically disclaims ANY interest in the note. I think we would all agree that a party cannot assign any rights which that party does not hold (by the way, MERS said exactly this in their answers to my interrogatories.) MERS is only mentioned in the DOT/mortgage and therefore has nothing to do with the note and therefore cannot assign the note. In other words, for the purposes of the note and assignment and/or transfer thereof, MERS does not exist and has no authority to do anything with the note. So even though there has been an assignment of the note placed in the land records, said assignment does not actually assign anything–certainly said assignment does not assign the note. Therefore, we are back to square one, i.e., that only the named lender can assign the note, BUT your honor, the named lender CHOSE NOT TO DO SO. Therefore, there has been neither assignment NOR negotiation of the note, and therefore this foreclosure action by the bank here today should be found null and void.”

    How does that sound?

  19. Warning to robo-singing banks: this may result when you fail timely bribery of judges….

  20. dc,
    Well I certainly am not trying to brow-beat anyone into submission! But I do think that it would be completely absurd at this point for any bank to try to argue that they meant for the FanFred promissory note to be a simple contract as opposed to a negotiable instrument. As I said below and as I’m sure you know, every PSA/trust indenture/trust agreement/assumption and assignment agreement/etc. I’ve ever read presumes negotiability in that all those things talk about endorsements, transfers, holders, and so on.

    And that’s why I think that Gardner/Garfield/Weidner/et al. are correct that the non-negotiability argument is fatal to the banks and should be raised in every suit on a standard FanFred note. All one basically has to say is something like “The bank clearly meant for this to be a negotiable instrument but they were trying to be too clever by putting in all these conditions which actually make the note non-negotiable.” I mean, the banks can’t have it both ways, i.e., the notes can’t be BOTH negotiable AND non-negotiable.

    Another argument that is fatal to the idea that “well, the note is really just a contract that can be traded merely by assignment” is the stated goal of MERS, and that stated goal is to GET RID OF ASSIGNMENTS. So that’s all you’d have to point out in a case like mine, which has the standard FanFred note with MERS–that the conditions in the note make the note non-negotiable and that there was no intent by the banks to treat the note as a simple contract to be traded by assignment because MERS was designed to ELIMINATE assignments! As we all have read a million times, R.K. Arnold told us that MERS “eliminates the need to record later assignments in the public land records.” So given that those things are uncontroversial, neither FanFred nor some trust can come along years later and take the house because the non-negotiable note was never negotiated to anyone and therefore any assignment of a non-negotiable note is also a fraud because an assignment is merely the memorialization of a negotiation, and said negotiation is legally impossible.

    Indeed, one might point out to the court that “Well, if the original lender wanted to come and take the house, that might be legal since the note was never negotiated to any other person BECAUSE SAID NOTE IS NON-NEGOTIABLE per the plain and unequivocal language of the UCC.” But it’s almost never the original lender who tries to come along and take the house through foreclosure–it’s almost always FanFred in disguise or some bizarrely-named alphabet-soup trust.

    And I totally agree with you, dc–I will never sign another note that may be securitized again. If I see any mention of MERS or anything LIKE MERS, I WILL NOT sign it. In fact, I will insist on putting language in the note that it is non-negotiable and non-transferrable because I want to know who I am dealing with at all times. And if they won’t put that in there, I’ll find somebody who will. And if I can’t find somebody who’ll put that in there, then I’ll rent a place. No more feeding the beast–I am done.

  21. @ZU
    I may have just talked myself into agreeing with you. I thought about it awhile and remembered telling a banker recently ” id like to increase a small loan in a refi by a few thousand but Im not interested in seeking any bargain interest rates offered by Fannie or anybody because Id rather cut off a few fingers than ever have anything to do with a securitization ever again–and wouldd caution anybody same way”

    So yes i think that the notes have become personal—the concept of free transferability has been destroyed by securitization–because that is a way in which the homeowner or any payer is being used as a tool to screw both investor and borrower—as soon as you sign the deal–the servicer and lender are hell bent to violate the deal any way they can in order to run up fees—the problem is that the intermediaries have injected themselves in the deals and their interests are contrary to those of both true lenders and borrowers—–they are destroying the basic fabric of all major financing transactions—-and related business

    so in my simple case–if the banker says omygod no–everything has to be securitized–then i dont do the deal–i dont expand the loan–i dont add the building to my farm–i dont hire builders–i dont produce more food —etc–all sacrificed for the god of finance–because neither i nor 85% of americans trust the intermediaries–its not that i dont trust the lender –i understand they want to be repaid with reasonable interest–but i can only guess what ulterior motives drive the intermediaries—-will my payments get lost? will i get force plce insurance? will they come and burn my house down to quickly recover the money? will they make me a subprime borrower so even though there is no prohibtion on early payoff–neverteless i cant find anybody to rfii? i put nothing beyond them

  22. @ZU

    Non-negotiablity—means that you could have a “personal contract” that is either implicitly or explictly non-assignable. For example you are the best jockey in the world and you enter into a contract with Stephen Schwartzman to ride his racehorses at 100k per ride—you cant assign your side of the contract to another–its personal to you——similarly —-you enter into a lease with somebody to be their roommate at 50/mo—–not assignable

    or you enter into any number of contractual deals –and put in the contract “not assignable”

    thae negotiable instrument is a statutory recognition of older contract disputes over the implicit limits of assignable contract—so if you go back into old old common law what you will see are the arguments about personal contracts–ie conditions—-if there are conditions to payment then its not negotiable because some people you just wont deal with because you know they are liars and thieves who will not really meet the conditions——there is no other magic although they add a few bells and whistles –such as your opportunity to pay the same obligation twice if a frauder can induce you to pay witout presenting the original note—the servicers expect you to pay them based on their naked assetion “i hold the note–see my copy?” ——well just go to any bank with a photocopy of a check made out to you and see if they will pay it—there is no difference here although everybody wants to surround this stuff with a lot of smoke and mirrors to confuse people–nothing more

  23. dc,
    In my opinion, non-negotiability means that the notes actually were never payable to anyone but the lender listed in the note. In my case, for example, that was Countrywide. And it wasn’t Countrywide that came to take my house (they were outta business by that time), it was Fannie Mae disguising itself as MERS/Recontrust/BAC. So since my note–and all the other Fan/Fred standard notes just like mine–wasn’t negotiable, the claim of Fannie Mae to hold my note is a lie. A fraud. Illegal. Even WITH an endorsement. The relevant UCC law says this:

    “(1) Except as provided in subsections (3), (4), and (11), the term “negotiable instrument” means
    an UNCONDITIONAL promise or order to pay a fixed amount of money, with or without interest or other
    charges described in the promise or order, if it:
    (a) Is payable to bearer or to order at the time it is issued or first comes into possession of a
    (b) Is payable on demand or at a definite time; and
    (c) DOES NOT STATE ANY OTHER UNDERTAKING OR INSTRUCTION by the person promising or ordering
    payment to do any act in addition to the payment of money. ”

    Matt Weidner’s article is here:

    Now, if the non-negotiability argument became the new “produce the note” (and I think there’s every reason that it should), the banks would probably start arguing what you said below, i.e., that there is some contractual basis for XYZ Trust or whatever (i.e., someone other than the lender named in the note) to foreclose because clearly the standard Fan/Fred note does not meet the standard set out in the law for negotiability because said note contains all kinds of conditions and undertakings other than the payment of money. To counter this, one might then point out what I mentioned below, namely that Fan/Fred trust documents require negotiability and that contractual agreements have nothing to do with it.

    Certainly MERS would fall by the wayside if the banks tried the contract argument because MERS is never mentioned in the notes. So all the bogus MERS assignments would be shown for what they already are–blatant fraud. MERS is dependent on and assumes negotiability.

    That’s what I would argue, anyway. Don’t really see much of a way around that for the banks. But as I tell everyone, I lost my lawsuit, so take what I say with a grain of salt!

  24. Good analysis of this case. I hate Twombly (re rule 12). It can be used with equal impact by either side, and that’s most often done successfully by the banksters, even if it does’t stand for what they say it does. I’m going to hazard that this complaint was well written, to start with. Other judges take the same allegations and blow them off. Imo this judge didn’t because the complaint was well-written or he’s tired of the banksters bull, or both. I’ll bet we could find five cases with sim allegations where judges granted the banksters’ mtd. Crock. Need more like him.
    Judge did cite Gomez, maybe he had to if precedential until properly challenged, wherein it was adjudicated:

    “the California Court of Appeal held that a plaintiff does not have a right to bring an action to determine a nominee’s authorization to proceed with a nonjudicial foreclosure on behalf of a noteholder. 192 Cal. App. 4th at 1155.”
    That’s one of the biggest crocks I’ve ever heard. Whether or not it forms the basis of “an action”, can’t swear, but of course a party has a right to proof of the authority of a nominee. That’s just a patent slap in the face of the law. Nominees aren’t peculiar to this mess (though the mechanics of the MERS facade are). I bet if I wanted to take the time or had the time, I could find 10 cases not involving M E R S which say otherwise in regard to the authority of a nominee, or agent, or anyone representing himself as having authority for another. This is nuts.

  25. @ZUR
    I can understand why the banks say the notes are negotiable instruments —I thnk its that is just sort of an accepted concept–wasnt raised until relatively recently–and i honestly dont have an educated opinion one way or another—–im just not seeing why non-negotiability alters anything?? please explain why—after all its pretty much accepted that the indorsements were made much later —after trusts were closed etc—just seems to me that banks are not following the negotiability arguments anyway with one exception—it seems that its easier to collect on the original note after already collecting on a copy if you can point to the UCC piece on the original being akin to cash —ie the document takes on characteristics of cash

  26. dc,

    You said “In the event that the instrument is not a negotiable instrument it still can be securitized as a set of contract rights.” You’re the attorney, and I’m sure that you are correct about that. In fact, that was one of the points made by the bank in my lawsuit–it wasn’t what they hung their hat on, exactly, but they did throw it out there.

    On the other hand, though, the judge in my case–and those in all the foreclosure challenge cases I have read–have ultimately ruled on the UCC implications of the endorsements and the negotiability of the instruments in question. I have yet to see the banks cop to the fact that the notes aren’t/weren’t negotiable instruments.

    Also, one of my Defendants was Fannie Mae, who purportedly held/holds the majority of notes in the U.S. And Fannie’s trust documents–at least for the 2007 time-frame, which was the period in question in my case–all call for endorsements in blank and transfer of the notes, indicating that Fannie was after negotiability and purporting to operate within the confines of UCC.

    That’s why I think–again, I’m not an attorney (my property law professor was Neil Garfield and my classroom was the district court)–that the non-negotiability argument could and should be the death blow to the entire securitization argument. In other words, Fannie (and I’m sure the other GSEs and banks) lived and died from negotiability per their trust documents. Negotiability was/is their bread and butter, so if and when the non-negotiability argument gains traction, I believe that Fannie will find that they are toast.

    And when I pointed out that my Defendants did not have an endorsed note and in fact made a motion in limine to exclude an endorsed/purportedly endorsed note (with or without an allonge) from trial, an endorsed note suddenly appeared! As we all know, that happens all the time (because the endorsements are faked, per the HSBC v. Rose case in FL 11th circuit). The judge in my case in fact said that if Fannie had not produced an endorsed note, then I would have won my quiet title action, saying that had they not miraculously prodced an endorsed note which they previously stated they were under no obligation to produce, “the Defendants’ [i.e., Fannie Mae] present Motion for Summary Judgment would have failed, at least with respect to the quiet title claim.” That’s what he said in denying my motion to strike the newly-endorsed note. Pretty awesome, huh–doesn’t really get any more legal-abusive than that. I mean, the judge basically said “Fuck you, zurenarrh–I know they’ve already filed two sworn affidavits that the un-endorsed note is true and correct and in fact relied on the un-endorsed note for over two years through every phase of this matter (and never produced an endorsed note until you tried to have one excluded from trial)–but you’re not gonna beat the bank because I’m going to allow this new note, for without it the bank would lose and I for one will not have a bank in which I held stock at the time this case was assigned to me lose to some low-life pro se litigant who has seen the wizard behind the curtain! Be it so ruled that the emperor is NOT naked!”

    So I think that while a contractual argument re:securitization could be made, or could have been made, the banks have hung their collective hats on negotiability (at least that’s what they’ve presented to the courts) and the non-negotiability argument is very clear and simple and destroys everything on which the banks have tried to build their cases.

  27. @JOANN

    I confess my comment is confusing–but im afraid that its going to be close to what the banks are going to say when a private label security and indy servicer is involved. The bank trustee seems to be oblivious to what is happening in its name–the servicer is actually calling all shots and the the bank is denying any fiduciary responsibility at all–it appears that even thr bank trust records are prepared by the servicer–then just put on the bank trustees site—see for example the following which appears on the trust site of a major bank in respect of trusts operated by inde servicer

    Does this sound like the statement of a fiduciary??? ie a real trustee? if so then god help the beneficiary investors who are relying on this data supposedly to decide how much to pay–whether to buy or sell MBS as to which this big bank is a trustee. it just frightens me that a trustee for a supposed “trust” that issued securities under an SEC filing can do this–receive the fees then disclaim all responsibility—thus the servicer is really the only party actually responsible for anything—and basically just a predatory debt collector—with interests at odds with the investors

    it would be even more frightening if we all knew how many other trusts this entity was “trustee” for in its core business.

    Iv seen foreclosures that string out 4 and 5 trusts —as successors –so stupid as my attempt to make an example was –reality appears worse. How can SEC FDIC FED reserve etc sit there and see disclaimers like this and just ignore them?

    I guess their attitude is that these are mostly foreign investors buying thes securities as to which this entity is a large trustee. Caveat emptor. Pension trusts dont buy the securities typically that this entity is trustee for–thank god for that much

  28. @JOANN
    Nice cites —-the issue it seems to me is either one of standing or capacity–not sure which–its unusual. If a party sues you or seeks to take action against you but does not in fact represent the entity it claims exists???

    The foreclosure state simply raise it in the caption BANK Z as trustee for ABC TRUST ….. ——the problem that eventually evolves is that if you sue BANK Z —it will claim immunity because it was acting on behalf of this ABC TRUST—–except that ABC is either gone from your jurisdiction or has wound up.

    So lets say that BANKZ sues you on the note—alleges that it as alter ego of trus is holder or otherwise is owner [eg if the note is not a negitiable instrument] —-and you settle –turn over your property for key money—–then 3 years later BANK X on behalf of QRS TRUST comes along with the original note –says ok time to pay—we arent getting the money from our servicer anymore –it went bankrupt and we dont see that you have paid him for some time—so we dont know whats been going on but pay us and here is the wet ink note and you need to pay up

    you say i settled with that other bankrupt servicer and gave my house to BANK Z for that other trust ———–

    new bank says too bad you paid the wrong party —–why did you do that——you just gave them your house without even looking at the note? No wonder they let you walk on the deficiency and gave you key money—you were defrauded—you need to sue BANK Z it appears

    so you call BANK Z and it says —–that servicer said that the note was in ABC trust —and we are just the trustee —-we didnt know anything about all that stuff—servicer was acting on his own–we didnt even get any money out of that siezed home the servicer took it–the sheriff check was made out to the servicer–youv been defrauded

    Bank Z says its a stranger to all of it–and furthermore if it was invilved it was as a trustee only and is immune under state law—and furthermore you shoulv looked at the note–you are negligent

  29. Most countries organized as a republic have a referendum system which allows the population at large to decide on a specific issue. Our US constitution does not have that mechanism. Our president isn’t even elected by referendum!!! Some hybrid entity called “electoral college” renders a final opinion and when enough money can overrule it, Bush wins against Gore and PAC money buys a new president.

    It is high time we demanded access to that mechanism. Without referendum, a country cannot claim itself to be a republic. With a referendum, people can demand certain actions be taken. Moratorium on all foreclosures is a referendum question. Jailing bankers is a referendum question. Dismantling the Federal reserve is a referendum question. Going or not going to war is a referendum question. We The People have not ONCE been asked to directly influence the future of this country. And since Congress has amply demonstrated its inability to justify its salaries and fulfill its job, reversing it and replacing it by newly elected reps has become a referendum question.

    “Main article: Initiatives and referendums in the United States

    In the United States, the term “referendum” typically refers to a popular vote originated by petition to overturn legislation already passed at the state or local levels (mainly in the western United States). In industrial cities and regions, it refers to internal, union organization in terms of electing delegates or approving a collective bargaining agreement. By contrast, “initiatives” and “legislative referrals” consist of newly drafted legislation submitted directly to a popular vote as an alternative to adoption by a legislature. Collectively, referendums and initiatives in the United States are commonly referred to as ballot measures, initiatives, or propositions.

    There is no provision for the holding of referendums at the federal level in the United States; indeed, there is no national electorate of any kind. The United States constitution does not provide for referendums at the federal level. A constitutional amendment would be required to allow it. However, the constitutions of 24 states (principally in the West) and many local and city governments provide for referendums and citizen’s initiatives.

    However, a Constitutional Convention can be called by two-thirds of the legislatures of the States, and that Convention to propose one or more amendments to the Constitution. These amendments are then sent to the states to be approved by three-fourths of the legislatures or conventions. This route has never been taken, and there is discussion in political science circles about just how such a convention would be convened, and what kind of changes it would bring about.”

  30. Here is an excerpt from another Central District CA case (Case No. 3:11-cv-2091-JM-WVG) Johnson vs HSBC Bank….March 19 – different judge – provides clarity on “not a party to the psa”…..

    “A. Viability of Attack on Loan Securitization

    1. Ability to Challenge Loan Securitization

    The threshold issue of whether Plaintiff can make any claim related to the loan’s securitization affects the viability of many of the individual claims discussed below. BOA cites Rodenhurst v. Bank of America, 773 F.Supp.2d 886, 899 (D. Haw. 2011) for its statement that “[t]he overwhelming authority does not support a cause of action based upon improper securitization.” However, the discussion cited in that case centers on plaintiffs who claim that securitization itself violates the agreement between the mortgagor and mortgagee. Here, Plaintiff does not dispute the right to securitize the mortgage, but alleges that as a result of improper procedures, the true owner of his mortgage is unclear. As a result, he has allegedly been paying improper entities an excess amount.

    Ninth Circuit district courts have come to different conclusions when analyzing a plaintiff’s right to challenge the securitization process as Plaintiff has here. See Schafer v. CitiMortgage, Inc., 2011 WL 2437267 (C.D. Cal. 2011) (denying defendants’ motion to dismiss declaratory relief claim, which was based on alleged improper transfer due to alleged fraud in signing of documents); Vogan v. Wells Fargo Bank, N.A., 2011 WL 5826016 (E.D. Cal. 2011) (allowing § 17200 claim when plaintiffs alleged that assignment was executed after the closing date of securities pool, “giving rise to a plausible inference that at least some part of the recorded assignment was fabricated”). But see Armeni v. America’s Wholesale Lender, 2012 WL 603242 (C.D. Cal. 2012) (dismissing declaratory relief, quasi-contract, UCL, and accounting claims because “plaintiff lack[ed] standing to challenge the process by which his mortgage was (or was not) securitized because he is not a party to the PSA”); Junger v. Bank of America, N.A., 2012 WL 603262 at *3 (C.D.Cal. 2012).

    Here, the court finds that Plaintiff is not categorically excluded from making claims based on allegations surrounding the loan’s securitization.3 As in Vogan, and unlike Armeni, Plaintiff here alleges both violations of the PSA and relevant law. BOA has not sufficiently demonstrated that violations of law associated with the loan’s securitization can go unchecked because Plaintiff is not a party to the PSA. “

  31. @zu
    re the securitizatiin failed

    The issue of whether or not there was an “attempt to securitize” the homeowners promissory note is not necessarily dependent upon the status of the promissory “note” as a negotiable instrument or not.

    Yes iv read the materials and quite a bit more—starting May 2009—and I do not intend to diminish or disrespect the argument. In the event that the instrument is not a negotiable instrument it still can be securitized as a set of contract rights. The transfers would be by assignment rather than by negotiations and it seems to me that it would actually be easier to claim that there were assignments of contracts in bulk without the burden of the individual indorsements. Thus for example I could create 10,000 leases of residential real estate or of automobiles and assign those contracts to a trust and then sell undivided interests in that trust to 100 investors. The securitization would not fail simply because the underlying obligations were not also negotiable instruments. Now the REMIC rules may well be conditioned on that–I cant say off hand. I cant say offhand that I can even imagine all of the potential implications.

    In either case the key to securitizations as they are attemted was to establish a trust by creating a trust document—indenture—apponting a trustee and entrusting that trust/trustee with assets–which could be gold bullion if the settlor want to do that. The common denominator is that the assets if intangible [ie contract rights, negotiable instruments, patents, copyrights must be “scheduled” and provided to the trust in accordance with the terms of the controlling documents. Black-letter law states that a trust must have identified to it assets–a trust corpus. Even a trust that is to take effect in the future must have a described list of assets that it will own —thus for a future trst a schedule is also required. It is not a complex thing—-it is practical—I cant create a trust for the benefit of my kids and entrust it with some indefinte statement of “my good stuff” for example. Thus a “depositor”
    using the typical terminolgy of REMIC or REIT securitizations cant simply say “I hereby create XYZ trust and deposit 17,000 mortgage loans into that trust”. Possibly I could get away with that loose description if I only ever had 17,000 loans and it was tantamount to saying I deposit all of the loans that I own. But the point is to describe the corpus with sufficient specificity that other persons clearly know what is in and what is out. A schedule of intangible assets.

    The fly-by nite “private label” origintors –securitizeers frequently failed to schedule the intangible assets that were supposedly conveyed to the supposed “trusts” . Imagine if you will that you are a crook–you intend to hang out –sell undivided interests in two grab bags. So you have a couple groups of sleepy eyed investment managers that you wined and dined all night and said to each ill sell you 100 shares in each of these brown bags——-and each is full of slips of paper with a different loan on each slip. So each group–you just give me $4 billion and ill give you this bag full of slips and you will own everything in the bag.

    One, investment manager that arrived late and missed the all nite party says “hey how do i know that all of the slips in the bag have real loan numbers on them—and that the two bags have different slips–that no slips are duplicated?”

    This trouble-maker then says”Can I just have a few minutes to look in the bag to see if there are really 17000 loan slips in there—-that there are no blanks–and also look in the other bag and see if there are any duplicates?

    Whereupon the rest of the crowd boos and hisses and laughs and one says how could you tell anyway unless we all sat here for a week and you actually scheduled all those slips out and then laboriously cross checked–and besides there could be duplicates in the other three bags that are already sold. We cant hang around here for you to satisfy yourself—the gold rounds start at 2:00 and well just have time to get back from that and dinner is at 7:00 and the floorshow at 9:30—and you are just gonna screw this up for everybody and if youd been here last nite when seller was telling us what a great guy he is and handed out the free casino chips—–you wouldnt be wasting or time on these ridiculous questions–

    wherupon the seller in righteous indignation intejects”What do you think I am a frauder? How long would I stay in business if I lied and cheated everybody like that?”

    He then says–just to show you my heart is in the right place and i dont hold a grdge despite that awful accusation—here are the keys to that lamborghini sitting outside –now lets everybody hit the links.

    No schedule–and for good reason—and later —seller contracts a robosigning company to make the documents his “trusts” need to sieze your home which was on 3 or 4 slips in those bags. Robosigners dont want to look in the bags either.–they dont have time–and dont know what the slips say–because all the slips were made out in a starange ancient language that most people cant read.

  32. has this been posted?

    Appeals Court Ruling Could Invalidate Foreclosures in Georgia
    A decision by the Georgia Court of Appeals has added new language to a notice of foreclosure requirement case that, according to some analysts, could invalidate thousands of Georgia foreclosures.

    The court recently ruled that when an agent or servicer of the secured creditor sends a notice of foreclosure to the borrower, the notice must identify the secured creditor.

    According to an attorney with the mortgage banking group at Ballard Spahr familiar with the case, Georgia’s foreclosure notice statute requires servicers to deliver to the debtor a written notice of the foreclosure sale “by the secured creditor.”

    However, it only required that the notice include the name, address and telephone number of the individual or entity “who shall have full authority to negotiate, amend and modify all terms of the mortgage with the debtor.”

    The ruling could help increase foreclosure process transparency in a state that continues to have the nation’s third highest foreclosure rate behind Nevada and Arizona.

    The decision was taken following an appeal to a lawsuit against Provident Funding. In Reese v. Provident Funding Associates LLP, the plaintiffs alleged that the notice of foreclosure sent by mortgage lender and servicer Provident Funding did not comply with the Georgia law.

    The notice identified Provident as the “lender” and stated that Provident was authorized to negotiate, amend and modify the mortgage, explains Ballard Spahr associate, Sarah Reise, in a recent report.

    What made the servicer liable, was the fact that Provident admitted that it did not hold the note evidencing the mortgage loan, Reise writes.

    After funding the loan, Provident sold and transferred the note to another company but continued to service it on behalf of the new note holder.

    Provident maintained that that the foreclosure notice complied with the law “because, as the servicer of the loan, Provident could properly send notice on behalf of the secured creditor.”

    But the Court of Appeals found “the notice of foreclosure contained material misrepresentations because it falsely identified Provident as the secured creditor and failed to identify the third-party note holder as the true secured creditor.” The conclusion rules the foreclosure sale invalid.

    Most importantly, according to Reise, the ruling may have a significant, and possibly unintended, impact on loans owed by Freddie Mac or Fannie Mae.

    While the requirement that a notice of foreclosure identify the “secured creditor” is not particularly burdensome, she argues, it “does not appear in the plain language of the statute.” As a result, the decision “likely will make thousands of foreclosures susceptible to challenge.”

  33. Keiser Report: Capital Punishment for Crimes Against Capital (E322)

  34. dc,
    Yes, the securitization “failed.” It was meant to fail. It is, and was meant to be, an illusion. If you haven’t already, check out Matt Weidner and Max Gardner–and Neil Garfield–on the non-negotiability of the typical Fannie/Freddie note. Their argument is simple: the UCC states that for a note to be negotiable it can spell out no undertaking or condition other than the payment of money. The Fan/Fred notes, meanwhile, have all KINDS of conditions, i.e., IF a judge finds, IF you pre-pay, IF this, IF that. Also, Abigail Field did a good article on “Securitization Fail.” You may have read all that, seen all that–just pointing it out for those who didn’t.


    response to Brian Davies Fannie/Freddie post in comment section of above link:

    “…much accurate, but I disagree as to the process. Brian fails to understand that loans sold to Fannie/Freddie were falsely placed in default, with collection rights sold, insurance collected. I have physical proof of this. These “collection rights” were securitized into the bogus MBS trusts we now know as “toxic assets.” Who invested in these toxic MBS?? Big investor was Fannie/Freddie. Why?? Because they paid a higher interest rate than Freddie/Fannie could have achieved had they retained the whole loan.

    The securitization process conceals who the real “investors” are. As a security investor in the toxic MBS, Fannie/Freddie is not the lender/creditor/investor. We need to open Fannie/Freddie default records, and accounting records. FHFA has blocked this — and government does nothing.”

  36. Dave Krieger: Attack of the Robo-Signers!

  37. @ALL
    As state above: “For the first time, this Court uses the words (attempt to securitize” a loan as opposed to assuming it was done just based upon the paperwork and the presence of the the parties claiming rights through the assignments and securitization.”

    In my opinion this may be the single most important piece of the entire case–or the article—with the most substantial legal and economic implication. In my view, the robosigning issue was the hot topic of election year 2010—and had the result of causing 2 years of recriminations and a substantial amount of “noise” in the press as well as in the courtrooms. In the end however, the robosigning facts were not substantively significant in practice. The parties caught simply refiled the void paperwork and the juggernaught rolled on. Even the settlement that was touted as $25 billion was really a farce. Little if any actually worked its way down to people. The OCC review process from the very beginning was an uphill struggle—-which seemed to violate the most basic tentes of administrative law. Example: in December 2011, when supposedly people were to have a mere 6 months to make claims—-they were forced to wait until the OCC revieweres successfully contacted them to let them know they might have a claim. We all get these sorts of things from law firms frequently”you may have an interest in this class action—file your claim by giving us a bunch of personal info” that may more likely be used to steal your identity than lodge a valid claim.

    I for one simply wanted to prepare myself for what sort of information was needed–what the process was–who was doing it, etc. I was trying to figure out how to help local OWS to set up an outreach program just for military –low hanging fruit–little to prove it seemed. I identified myself as an attorney trying to prepare myself by just getting the form —and was flatly refused by multiple layers of duly-appointed OCC reviewers. It was policy that they had to decide that a person was eligible before the person could apply —pre-judgment–unavoidable. It was a guessing game–which servicers were part of the program? There was a published list–that list did not correspond to the list that the reviewers were told to “accept” as being in the program such that the applicant could actually apply. Some were successors to entities published. So the call went like this: “May I have a blank copy of the application?” answer NO! “But Im an atty trying to prepare–” answr “It doesnt matter what you are”

    “You must tell us the servicer name–then we’ll tell you whether your client might be eligible” My question: “well iv got a list that was published 14 or so–is that all of them?” answer “No there are 24 on my list”

    my question: “Well ok –would you tell me what servicers are on your list?” answer “No–not tIm not going to take the time to go thru the whole list”
    My question: ” well is such and such ?” answer “yes” well what about so and so—-[not on the published list] “yes”

    ok so i felt like I was playing “sink the battleship” –i had a hit!

    Question: “ok please give me the list so I can tell potential clients if they ask me if they are eligible”

    answer “No–[now they were angry] as I told you–you must tell us the name of the servicer, the name of the peron on the loan, and the property address and the loan number–then wel tell you whether your client is eligible”

    Now I knew this was near hopeless because typically when a LOAN went into default, the “loan #” was replaced with a [collection] “account #” —-which special number was i supposed to provide?

    At any rate this was the high water mark of consumer “relief” from the robosigning scandal as corrected—-
    The defect was procedural–and not taken seriously–apparently even by the govt. that worked out the much publicized settlement.

    However as noted above, the point made in this article is that maybe the securitization failed. That has much more potential impact. If the securitization failed–did not occur—then the “trust” that seeks to foreclose does not exist–that is the implication of this statement. if the “trust” does not exist, then there are several critical implications for the homeowner and for the investor and for the servicer. The servicing agreement is a contract between the “trustee” and the servicer. If there is no securitization there is no trust–there is no trustee–somebody may have standing to collect on that note, to accelerate the liability, to foreclose but not a non-existent “trust”

    Similarly a non-existent trust cant hold a deed in its name as REO or otherwise. The purported “trustee” of a non-existent “trust” cant release the party from debt on the note either. Even if it was refinanced–paid in full—–if the homeowner did not obtain the original note as part of the resolution –whether by way way of refi–cash pay off–or deed inlieu–etc—-the holder in due course is still lurking out there and may pop up and proceed against the maker of the note years later —-or against his estate –his life insurance proceeds—

    this is a serious problem—-the REO is held in the name of a defunct “trust”———-if you are the proverbial Canadian sucker that the collection agency has targeted as its new victim—what happens to your title if one of the parties in your chain of title never existed? never was authorized to sell the house?

    Its akin to buying a ROLEX watch on street corner in NYC from a guy with a vowel at the end of his last name —–at a great price–are you a bona fide purchaser? You are on notice there is likely a problem just because the price is too good to be true. And this is how it came to be. Defective trusts–which include trusts as to which no loan schedule was placed on record at the SEC.

    You as a buyer are on constructive notice of the defective trust as well as the low price. Caveat emptor—-beware the guys who are selling these properties today are the same ones that sold swampland in Florida a few years back–this time they have better pictures.

  38. I knew eventually, if would come down to that. What was missing up until now was enough of a significant case law to really bank on such allegations. This case, however, seems to open the door wide to what Anonymous has been claiming for years.

    Now is the time to sue on securitization or lack thereof. Before that, it would have been premature and would have constituted a risk not worth taking in the presence of other, tried and true allegations and defenses. Harping on it a year ago without showing any intention to personally test those theories, while inciting others to make the plunge, was disingenuous. Harping on it in order to sell some product or audit one knew not to be admissible or backed by case law was dishonest. The tide has finally turned.

    It will come full circle. I wouldn’t be surprised if, within a very short period of time, a nationwide moratorium on foreclosures wasn’t declared, even though TPTB has resisted as long at it could. It is now completely beyond TPTB. Whoever gets elected will make no difference: the machine is set in motion.

    It would make sense to check if the plaintiff is represented and by whom. Then, i would contact the attorney and see what it would take for him/her to represent me.

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