Vacate the Substitution of Trustee

“The Bottom Line is that if the REMIC transactions were real, they would have been named on the note and mortgage. The fact that they never were named or disclosed demonstrates clearly that something else was going on besides funding mortgages with REMIC money from investors. Nobody would loan money without putting their name as payee on the note, their name as lender on the note and mortgage and their name as beneficiary. The Wall Street explanation that MERS and other obscurities were necessary to securitize the loans is in fact directly contrary to the fact that the loans were never securitized, that the mortgage bonds were bogus obligations from empty REMICs with no bank account and no active manager or trustee.” Neil F Garfield, livinglies.me

A recent case I reviewed, resulted in a full analysis, and my suggestions for strategy, tactics, pleading and oral argument. It involved Bank of America,  Recontrust and BONY/Mellon.

What is again so interesting is that we are dealing with BOA in SImi Valley, CA (supposedly) with Reconstrust in in in Richardson, TX. What is interesting is that the response to my letter which was addressed only to Recontrust came from BOA. This is evidence of the fact that Recontrust are one and the same entity. It doesn’t prove it but it is evidence of it. Thus the challenge to the substitution of trustee comes under the heading that a beneficiary cannot name itself as the trustee. The statute says the TRUSTOR names the trustee on the deed of trust not the beneficiary. And while the beneficiary may change the trustee there is nothing in the statute that even suggests that a beneficiary could name itself as the new trustee. The statute says that the trustee is to substitute for a court of law and that it is to exercise (See Hogan decision and others) a fiduciary duty toward both the Trustor and the beneficiary.

In most cases, the appearance of Bank of America as a beneficiary is via “merger with BAC” which was created to take the servicing rights from Countrywide (not the ownership of the loan). Yet the debt validation letter causes a response to show that the creditor is Bank of America while the Notice of Default shows as having a REMIC as the creditor, which would make the REMIC the beneficiary. So we have a conflict of creditors that comes from the same source.

Since the REMIC is required by law and contract to be closed out within 90 days with the loans in it, and since we know they didn’t do that, the money from the investors was beyond any reasonable doubt channeled through  conduits controlled by the investment banker and not the account of the REMIC because there was no trust account, bank account or any account through which the investor money was channeled and then sued to fund or buy loans. This leads to the inevitable conclusion that the entire scheme is a smoke screen for what really occurred.

Based upon what we know, the REMIC structure was actually ignored when it came to the movement of money. Based upon what we know, Quicken Loans and others acted as “originators”, which is a word that is not really defined legally but it would imply that it was the sales entity to reel in borrowers for a deal. While Quicken Loans was shown as payee on the note and lender on the note and mortgage (deed of trust), Quicken had neither loaned any money nor secured the loan through any legal nexus between Quicken and the investors. MERS was inserted as a placeholder for title purposes. Quicken was thus inserted as a placeholder for payment purposes — all without ad  equate disclosure of the compensation received by MERS or QUICKEN in the deal (a clear violation of TILA and RESPA).

Immediately after the closing of the loan the borrower was informed that the servicing rights had been transferred to Countrywide, and thereafter BAC emerged as the servicer. BAC was formed as a wholly owned subsidiary of bank of America and then merged with Bank of America for unknown reasons, and thus the servicing of the loan was assumed to be the right of Bank of America. But what was there to service?

If Quicken did not advance the funds for the loan nor did Quicken or any of its “successors” advance money for the purchase of a perfectly performing loan, then who did? The answer comes from irrefutable logic. We know the REMIC was ignored so the money didn’t come from the REMIC. If there was an intermediary who was acting as agent for the REMIC it had to be the Trustee for the REMIC who has no trust account or bank account to show for it. Thus the money came from another source and the money taken from investors may or may not have been used to fund the borrower’s loan in this case or more likely, a larger pool of investor funds was used as the source of funding but was NOT documented with the usual promissory note and mortgage (deed of trust) signed by the borrower.

The legal conclusion I reach is that the mountain of paperwork starting with the “origination” of the loan is worthless paper unsupported by either consideration (funding the loan) and whose recitations of facts are at variance with (1) the actual trail of money and (2) the provisions of the documents upon which Bank of America now relies requiring assignment of the loan in recordable form into the REMIC within 90 days while it was still performing. But they couldn’t assign it into the trust because (1) the trust had no money or account with which to pay for the loan and (2) this would have prevented the investment bank from trading the loan and the loan portfolios as if it were the property of the investment bank.

Thus Bank of America is attempting to appear as the new beneficiary based upon a complete lack of any chain of transactions that would make it so. And they are using the cover of BONY as “trustee” as cover for their false and fraudulent representations knowing full well that neither BONY nor the REMIC ever received a dime from investors, borrowers or anyone else and that instead the flow of money was entirely outside the sham paper transactions upon which BOA now relies.

Having covered up an incomplete unexecuted contract without funding the loan, the securitization participants proceeded to act as though the loan transaction with Quicken was real. If they relied upon the original trustee, the original trustee would have required sufficient title and other information from BOA before taking any action against the Trustor borrower.

Thus Bank of America names Reconstrust as the substitute trustee, that will “play ball” with them because Recontrust is owned and controlled by Bank of America. The challenge, as we have said, should be to the substitution of trustee as not having named an objective third party and instead being the equivalent of the beneficiary naming itself as trustee. BY definition, the new trustee is neither likely nor able to exercise due diligence and act in a responsible manner with a  fiduciary duty to the trustor and beneficiary, if they can determine the  identity of the beneficiary.

Thus any TRO or other action should be directed against the substitution of trustee as being outside the intent of the statute and violative of due process since it provides the beneficiary with unfettered ability to sell property merely on a whim.  In order to demonstrate compliance with the requirements of constitutional dude process the legislature had to show that there was a different procedure in place that would allow for the claims of all stakeholders to be heard. Even if the substitution of trustee was valid, the mere denial of the claims of the beneficiary and accusations of fraud, false assignments, and a closing at which the mortgage lien was not perfected, on a note that did not  name the proper payee nor state the same terms of repayment that the investors received when they “bought” the bogus mortgage bonds.

Bottom Line: The Pile of paperwork is worthless and does not create nor provide evidence of an actual transaction that took place wherein the named payee and lender ever fulfilled its part of the bargain — lending money to the borrower. Nor does it present even the possibility of a perfected mortgage lien. Thus foreclosure is impossible. The trustee was and is under an obligation in contested cases to file an interpleader action where the stakeholders’ claims may be heard on the merits. The primary trustee on the deed of trust may have violated its fiduciary duties by allowing the practice that it, of all entities, would or should have known was both illegal and improper. For both procedural and substantive reasons, the notice of default and notice of sale should be vacated and purged from the county records.

22 Responses

  1. I sent this blog to my attorney. I also am dealing with Bank of America NA. My lender’s Closing Instructions states:

    Lenders Closing contact: Funding dept. (Brea Wholesale)

    To return the closing docs they were to be sent to:
    CA7-701-01-18
    Brea Wholesale Loan Center
    Bank of America
    275 S. Valencia Ave 1st Floor
    Brea, Ca 92823

    Loan proceeds will be net funder to:
    AC7-701-01-18
    Brea Wholesale Loan Center
    Bank of America NA
    275 S. Valencia Ave lst floor
    Brea, Ca 92823

    My loss payable title endorsement was to read “exactly”
    Bank of America, 744,
    Its ssuccessors and/or assigns mortgage loan # XXXXXX
    PO Box 1675
    Coraopolis, PA 15108
    NOTE; Coraopolis is a small small town.

    My hazard insurance policy was to show the loss payee endorsement:
    Bank of America, 133
    It’s successors and/or assigns
    Mortgage Loan # xxxx
    Coraopolis, PA 15108

    1) In California we have a Bank of America NA, another as Bank of America Corporation, another as Bank of America Home Loans in Ca. corporations filed.
    All of my documents through the years have used these names
    or letterhead, as if they are all the same. Plus, there are
    additional names used.

    2) This is in part of my letter to my attorney regarding the Substitution of Trustee and Corporate assignment of the Deed of Trust:

    (moral: check the signers facebook)

    Robo signer Loryn Stone signed the substitution of trustee and the corporate assignment of the Deed of Trust which were recorded March 12, 2012.

    The closing date of my trust was May 31, 2007.

    My loan was not transferred to the trust. Ms. Stone didn’t even start working at Bank of America until August 2009. Per her facebook page, as of January 2011 she worked for the Mortgage servicing team manager for recontrust company, NA. She states her job is to fire people.

    Further, Ms. Stone’s (heading) for work and employers are listed as Bank of America Corp. August 2009 to present. She is suggesting that Recontrust and Bank of America are one in the same.

  2. Ivent – as far as I recall, the law does not find a fiduciary between a title co. and the borrower. So if I do recall correctly, you have to find another name for any alleged bad acts by title companies.
    Cases on point regarding the dot trustee’s fiduciary to the other parties to the dot are scant, but they’re there. Have to dig.

  3. The title companies ARE THE TRUSTEES and they are hiding because…they breached their fiduciary duties….! That is criminal!

  4. Jesse Ventura on Piers Morgan saying the Republicans caused this. That’s not entirely true…Clinton repealed Glass-Steagall and signed NAFTA, etc…CNBC reported Wall Street made $60 trillion dollars in the year that Glass-Steagall was repealed,1999. Then of course CONgress severely weakened the Commodites & Exchange act under Clinton. I am not a member of either party and never was, however, we need complete honesty here. The real problems here are, too much corruption and covering up by the Crony Capitalists in both parties for the fraud being committed by the FED CREDIT SYSTEM, and Wall Street who sold investors too many investments in things that never existed.

  5. “The statute says that the trustee is to substitute for a court of law and that it is to exercise (See Hogan decision and others) a fiduciary duty toward both the Trustor and the beneficiary.” this may be true for Arizona, but in California, I only found that the Trustee owes fiduciary duty toward beneficiary only, not Trustor. Trustee owes duty of care to the Trustor. Also, in CA “Lender/Beneficiary may substitute Trustee, not Trustor. Though I would love it is to be true that Trustor can substitute Trustee, it is not the case in CA. In addition, the DOTs I looked at so far, say that the Lender may ” substitute the Trustee.

  6. Right on… Quicken is not a bank, therefore they could not be the payees on a note. They are obviously a front man organization the banks used to commit fraud from behind the scenes. Quicken are just another proxy like MERS… I hope they get severely punished. This is really criminal. They were collecting money with counterfeit securities.

  7. What goes around comes around. Maybe now these and other entities will have to answer our questions.

  8. These REMICS have been known to appear after the foreclosure is filed and transferred to another entity.

  9. WA-Recontrust Consent Decree

    Posted on August 20, 2012 by Neil Garfield

    WA-Recontrust Consent Decree

    Filed under:

    « BOA’s Recontrust Thrown Out of Washington State as Substitute Trustee

  10. ConsentDecreeFiled2012-08-14.pdf (660.1 KB) Download | Remove

    Look up WA State RECONTRUST CONSENT ORDER.

  11. http://www.palmbeachpost.com/news/business/mortgage-firm-ocwen-buys-chairmans-house-for-2-mil/nR96m/

    the interesting part on this is his move offshore—no taxes at all now–is it govt subsidized in any way

    yes boyco long time ago—-what he did not understand is that judges are supposed to agree with them in ohio—–at least then—-who knew how bad they were? do we even know yet?

  12. DCB,

    It’s all of the players. Go back to Boyko: The banks couldn’t prove they had any right to foreclose and were completely unable to name the trustee either. All they did was argue MERS. Boyko threw his issy fit when they had the temerity to tell him: “But judge, you don’t understand!”

    Pissed him off big time. Know why? Because, indeed, he didn’t understand. He couldn’t make sense of it and they had the nerve to make him feel inadequate over it when it had been purposely blurred.

  13. @ENRAGED

    THATS JUST MERS RIGHT——? They used to do this in Ohio or even now? Iv been through ours quite a bit–but havent seen just MERS—more lokiely about 6 trusts in 18 months–im sure they can document that

  14. “The nonjudicial foreclosure proceedings were marred by repeated statutory noncompliance. The financial institution acting as lender also appeared to be acting as the trustee under a different name…and the trustee conducted a sale without statutory authority. Equity cannot support waiver given these procedural defects and the purchaser’s status as a sophisticated real estate investor or buyer who had constructive knowledge of the defects in the sale…We conclude the trustee sale was invalid…”

  15. @DCB,

    No. It happened everywhere, even here. Go to the Court of Common Plea sight and check out the motions in foreclosures being defended: you’ll see that it’s starting to be one of the arguments in the defense case.

    And if you recall, that’s what Boyko was balking about in 2007 when he wiped out 14 foreclosures: the MERS bit that completely blurred the real creditor’s identity and what he believed had become an unsecured debt, dischargeable in bankruptcy.

  16. TRUE? BETTER? CONSISTENT?

    ONE ESTABLISHED AUTHOR ASSERTS The notes were retained and traded by investment banking houses rather than placed immediately into the trusts: “The legal conclusion I reach is whose recitations [of facts relating to transfer of notes] are at variance with (1) the actual trail of money and (2) the provisions of the [securitization] documents upon which Bank of America now relies requiring assignment of the loan in recordable form into the REMIC within 90 days while it was still performing. But they couldn’t assign it into the trust because (1) the trust had no money or account with which to pay for the loan and (2) this would have prevented the investment bank from trading the loan and the loan portfolios as if it were the property of the investment bank. http://livinglies.wordpress.com/2012/09/17/vacate-the-substitution-of-trustee/ OR AS IN THIS CASE AS STATED IN THE PARENT’s 2004 AUDIT REPORT; THE LOAN WERE SIMULTANEOUSLY USED AS COLLATERAL(FOR TRADING PURPOSES?) AS WELL AS SOLD TO TRUSTS.

  17. “…For both procedural and substantive reasons, the notice of default and notice of sale should be vacated and purged from the county records…”

    YES, PLEASE.

  18. correct?
    ONE ESTABLISHED AUTHOR ASSERTS The notes were retained and traded rather than placed immediately into the trusts: “The legal conclusion I reach is whose recitations [of facts relating to transfer of notes] are at variance with (1) the actual trail of money and (2) the provisions of the [securitization] documents upon which Bank of America now relies requiring assignment of the loan in recordable form into the REMIC within 90 days while it was still performing. But they couldn’t assign it into the trust because (1) the trust had no money or account with which to pay for the loan and (2) this would have prevented the investment bank from trading the loan and the loan portfolios as if it were the property of the investment bank. http://livinglies.wordpress.com/2012/09/17/vacate-the-substitution-of-trustee/

  19. AUTHOR SAID: “The fact that they never were named or disclosed demonstrates clearly that something else was going on besides funding mortgages with REMIC money from investors. Nobody would loan money without putting their name as payee on the note, their name as lender on the note and mortgage and their name as beneficiary. The Wall Street explanation that MERS and other obscurities were necessary to securitize the loans is in fact directly contrary to the fact that the loans were never securitized, ”

    This means MERS was not “nominee” for XYZ Co originator on mortgage or DOT? Just MERS “disclosed”
    Am i wrong?
    if so did this happen only in non-recourse states–where people dont care about recovery of notes because they are only liable up to amount of seized value of house?

Contribute to the discussion!

%d bloggers like this: